[Senate Hearing 111-99]
[From the U.S. Government Publishing Office]
S. Hrg. 111-99
NORRIS, GARCIA, AND PIZARCHIK NOMINATIONS
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
TO
CONSIDER THE NOMINATIONS OF JOHN R. NORRIS, TO BE A MEMBER OF THE
FEDERAL ENERGY REGULATORY COMMISSION, JOSE ANTONIO GARCIA, TO BE
DIRECTOR OF THE OFFICE OF MINORITY ECONOMIC IMPACT, DEPARTMENT OF
ENERGY, AND JOSEPH G. PIZARCHIK, TO BE DIRECTOR OF THE OFFICE OF
SURFACE MINING RECLAMATION AND ENFORCEMENT, DEPARTMENT OF THE INTERIOR
__________
AUGUST 6, 2009
Printed for the use of the
Committee on Energy and Natural Resources
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52-594 WASHINGTON : 2009
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
BYRON L. DORGAN, North Dakota LISA MURKOWSKI, Alaska
RON WYDEN, Oregon RICHARD BURR, North Carolina
TIM JOHNSON, South Dakota JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana SAM BROWNBACK, Kansas
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
ROBERT MENENDEZ, New Jersey JOHN McCAIN, Arizona
BLANCHE L. LINCOLN, Arkansas ROBERT F. BENNETT, Utah
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
EVAN BAYH, Indiana JEFF SESSIONS, Alabama
DEBBIE STABENOW, Michigan BOB CORKER, Tennessee
MARK UDALL, Colorado
JEANNE SHAHEEN, New Hampshire
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
McKie Campbell, Republican Staff Director
Karen K. Billups, Republican Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Garcia, Jose Antonio, Nominee to be Director of the Office of
Minority Economic Impact, Department of Energy................. 10
Grassley, Hon. Chuck, U.S. Senator From Iowa..................... 2
Harkin, Hon. Tom, U.S. Senator From Iowa......................... 3
Martinez, Hon. Mel, U.S. Senator From Florida.................... 5
Nelson, Hon. Bill, U.S. Senator From Florida..................... 4
Norris, John R., Nominee to be a Member of the Federal Energy
Regulatory Commission.......................................... 7
Pizarchik, Joseph G., Nominee to be Director of the Office of
Surface Mining Reclamation and Enforcement, Department of the
Interior....................................................... 11
APPENDIX
Responses to additional questions................................ 25
[Due to the enormous amount of materials submitted for the record,
additional correspondence and copies of electronic messages have been
retained in committee files.]
NORRIS, GARCIA, AND PIZARCHIK NOMINATIONS
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THURSDAY, AUGUST 6, 2009
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 10:05 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Jeff
Bingaman, chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. Why do we not get started here with the
hearing?
The committee meets this morning to consider three
nominations: John R. Norris, to be a member of the Federal
Energy Regulatory Commission; Jose Antonio Garcia, to be the
Director of the Office of Minority Economic Impact at the
Department of Energy; and Joseph G. Pizarchik to be the
Director of the Office of Surface Mining Reclamation and
Enforcement at the Department of the Interior.
Mr. Norris is currently the Chief of Staff for Secretary of
Agriculture Tom Vilsack. He has previously served as Chairman
of the Iowa Utilities Board. He has extensive experience with
electric utility regulation. He has been nominated to the seat
that was left vacant by the resignation of Joseph Kelliher for
the 3 years remaining on that term.
Like Mr. Norris, Mr. Garcia is also a former State public
utility commissioner. He served as Chairman of the Florida
Public Service Commission. Mr. Garcia was nominated to head the
Office of Minority Economic Impact, which has the duty to see
that minorities have the opportunity to participate fully in
the Department's programs. He will bring to the job his
experience both as the Executive Director of the Cuban American
National Foundation and as President of his own small business,
Archon Consulting.
Mr. Pizarchik has served as the Director of the
Pennsylvania Bureau of Mining and Reclamation since 2002 and
was legal counsel to Pennsylvania's Mining Program for 11 years
before that. He will bring to the Office of Surface Mining over
17 years of experience with regulating coal mining and
abandoned mine land cleanup in Pennsylvania.
President Obama has nominated three experienced and highly
qualified individuals to these important offices, and I am
pleased to welcome all three to the committee this morning.
Senator Murkowski was not able to be here, but she asked if
we would include in the record a statement of hers, which we
obviously will include at this point.
[The prepared statement of Senator Murkowski follows:]
Prepared Statement of Hon Lisa Murkowski, U.S. Senator From Alaska
I would like to thank Chairman Bingaman for holding this hearing
today, and our nominees for their willingness to serve.
While all of these positions are important, I look forward to an
interesting discussion with Mr. Norris, our FERC nominee.
FERC would have the responsibility for implementing some of the
most controversial pieces of the energy bill reported by this Committee
earlier this year, and Mr. Norris' views on these issues will be of
great interest.
I also anticipate an interesting discussion with Mr. Garcia.
According to the to the University of Alaska's Institute for Social
and Economic Research, rural Alaska Natives were paying 47% of their
median family income for home energy use last fall, more than 13 times
the national average of just over 3%. And energy prices that find fuel
still selling for an average of nearly $6 a gallon in rural Alaska, has
driven up the price of food where a loaf of bread is still selling for
$6 in Barrow, a gallon of milk $10 and a dozen eggs are costing $4.60.
I look forward to working with Mr. Garcia regarding the role that
DOE can play with regard to improving the affordability and reliability
of energy for native Alaskans as this nomination process continues.
The Chairman. Let me go ahead and recognize my colleagues
who are here to introduce these nominees. Senator Grassley and
Senator Harkin are both here to introduce Mr. Norris, and
Senator Martinez is here to introduce Mr. Garcia. So let me
just start on the left and we will go right across the line.
Senator Grassley, go right ahead.
STATEMENT OF HON. CHUCK GRASSLEY, U.S. SENATOR
FROM IOWA
Senator Grassley. Thank you, Mr. Chairman. I appreciate
very much this opportunity to introduce an outstanding Iowan to
the committee to serve the people of this country. I am here to
introduce John Norris, and of course, I am here with my
colleague, Tom Harkin. I am pleased to support his nomination
for the commissioner to the Federal Energy Regulatory
Commission.
As members of this committee know well, the commission is
an independent agency with critical responsibilities regulating
energy markets. The commission has the important mission of
promoting our Nation's energy infrastructure, maintaining
competitive markets, and preventing manipulation in energy
markets. It is important that these commissioners on FERC have
a thorough understanding of Federal policies relating to
interstate transmission of electricity, natural gas, and oil.
Our country runs on energy and having a robust, reliable energy
delivery system is essential.
So that brings me to the nominee, John Norris. He does, in
fact, have the necessary experience and understanding of our
energy markets to serve well, should he be confirmed.
Just his background. He has a B.A. from Simpson College,
Indianola, Iowa from 1981. He graduated with distinction from
the University of Iowa Law School in 1995. In March 2005, John
was appointed by then Iowa Governor Tom Vilsack to the 3-member
Iowa Utility Board and was Chairman of that board from 2005
until 2009. He was Co-Chair of the 2009 National Electricity
Delivery Forum. He also served as a member of the National
Association of Utility Commissioners, serving on the
Electricity Committee and as a member of the Demand Response
Collaborative. John was also the President of the Organization
of Midwest Independent System Operator States and chaired this
organization--the Demand Response Working Group part of it.
Prior to his service on the Iowa Utility Board, John was Chief
of Staff to Governor Vilsack, as well as Chief of Staff to Iowa
Congressman Leonard Boswell. He is currently Chief of Staff to
Secretary of Agriculture, Governor Tom Vilsack.
I believe John is very well qualified to serve as a member
of the Federal Energy Regulatory Commission. So I am here
because I strongly support his nomination.
Thank you, Mr. Chairman.
The Chairman. Thank you very much for your statement,
Senator Grassley. I appreciate it.
Senator Harkin, go right ahead.
STATEMENT OF HON. TOM HARKIN, U.S. SENATOR FROM IOWA
Senator Harkin. Mr. Chairman, it is an honor to join with
my colleague, Senator Grassley, in introducing John Norris,
President Obama's nominee to serve as a commissioner on the
Federal Energy Regulatory Commission.
There is no question that Mr. Norris is superbly qualified
for this critical regulatory position. I do not know that I
need to go through again all of the different positions that
Senator Grassley just went through, just to point out again
that he served as the Chief of Staff to Congressman Leonard
Boswell, also Chief of Staff to the Governor of Iowa, Governor
Vilsack, and then as was mentioned, he chaired the Iowa
Electric Restructuring Task Force in Iowa and then went on
later to chair the Iowa Utilities Board from 2005 until earlier
this year and then came to Washington to be the Chief of Staff
for Secretary Vilsack, as you mentioned in your opening also,
Mr. Chairman.
So he has a distinguished background. He has worked on a
lot of things in Iowa.
I might also say that he has held very many top positions
in a lot of Presidential campaigns. I should also mention that
in 1992 he was the director in Iowa of my campaign for
President, though I urge members of this committee not to hold
that minor lapse in judgment against him.
[Laughter.]
Senator Harkin. As was stated earlier, he has a degree at
Simpson College, which is in my home county, Warren County. I
knew him then well.
Let me just put it this way. I have known John since he was
a high school kid, a farm kid in Montgomery County, Red Oak,
Iowa. I have followed his career. He has always been involved
in my efforts and political efforts in Iowa, working for good
causes. In the 1980s, John was one of those individuals that
worked very hard to help family farmers in my State who were
facing foreclosures. It was one of the toughest eras in family
farm agriculture in our country, second only to the Great
Depression. In the 1980s, we had farmers all over Iowa
committing suicide, losing farms, families being broken up.
John worked very diligently during those years on behalf of
those family farmers to help them stay afloat, to help them
stay on the farm and to keep their families together. He was
just one of the driving forces behind that whole rural effort
of helping people that just had nowhere else to turn. So I have
always admired him for what he did during the 1980s for our
family farmers.
He is a tough guy. He was a former Golden Gloves boxer, I
might put it that way. That is why I never got in an argument
with him.
He has a profound understanding of energy issues and their
impacts on ordinary Americans. We are looking ahead, Mr.
Chairman, to major shifts in our electricity systems in the
years ahead. We all know that. It will be valuable to have a
commissioner with John's knowledge, his background, his
expertise to help ensure that we have a fair and equitable
treatment of all parties, including consumers, utilities,
generators, and transmission developers.
So I just have the highest praise and affection and respect
for John Norris.
Let me just also note that John's wife, Jackie Norris, is
here today, a longtime school teacher in Iowa, and now serves
as a senior advisor to the Corporation for National Community
Service. So they are both hardened public servants and work to
make sure that our country and our system works for the benefit
of all. I just have the highest regard for both of them.
Mr. Chairman, I just would close on this. John Norris is a
public servant of exceptional honesty, intelligence,
competence, and experience. I urge this committee to send his
nomination to the full Senate posthaste with a positive
recommendation.
The Chairman. Thank you for your statement. I appreciate it
very much. Let me just indicate if you gentlemen wish to be
excused, I know you have busy schedules.
Senator Nelson has arrived and Senator Martinez is here.
Senator Martinez, you were first to arrive. If you would like
to go ahead and make your statements----
Senator Martinez. I would like to defer to my senior
colleague and let him go first.
The Chairman. Senator Nelson, we are glad to hear from you
as to your views on the nomination of Mr. Garcia.
STATEMENT OF HON. BILL NELSON, U.S. SENATOR
FROM FLORIDA
Senator Nelson. Thank you, Mr. Chairman. Mel and I will
basically share the same information with you that Joe Garcia
has had an exemplary record. He was the Chairman of our Public
Service Commission. It is an appointed position, appointed by
the Governor. It is one of the most sought-after appointed
positions in State government and it has an enormous
responsibility and portfolio in overseeing and basically
regulating all of the electric utilities and other utilities in
the State of Florida. Then his fellow commissioners elected him
Chairman of the Public Service Commission.
He is born and raised in Miami Beach. Did you go to Beach
High?
Mr. Garcia. No.
Senator Nelson. There are a lot of famous people that have
come out of Beach High.
But he has been very prominent in the Hispanic community,
particularly the Cuban American community, and has done a lot
of charity work. I could go on and on and give you so many
details, but I am going to defer to my colleague and any
additional information that you need. Obviously, Senator
Martinez and I being here--we want to commend him to you for
your favorable consideration.
The Chairman. Thank you very much.
Senator Martinez.
STATEMENT OF HON. MEL MARTINEZ, U.S. SENATOR
FROM FLORIDA
Senator Martinez. Mr. Chairman, thank you. It is great to
be with you this morning to introduce Joe Garcia, a fellow
Floridian, a fellow Cuban American.
I will focus on two aspects of his career where we have
intersected. While Joe was still a law student, he worked in a
nonprofit refugee resettlement program that reunited more than
10,000 families that had emigrated out of Cuba and had, in
desperate conditions, gone all over Latin America. This program
was run at no cost to the American taxpayer. It was really
purely done as a private effort by Cuban American families in
the south Florida area. This project was an enormous
undertaking and a great humanitarian undertaking, and Joe led
that effort with great distinction. I was proud to work with
him in that.
Then as he served in the Florida Public Service Commission,
as Senator Nelson noted, I was at that time also serving in the
Orlando Utilities Commission which is a municipal utility in
Orlando. So Joe and I had an opportunity to intersect a great
deal, work together on pro-consumer issues, as well as good
ideas on how to best regulate our State utility scheme in a
State that, frankly, was so fast-growing at the time that these
issues were not without a great deal of challenge.
I will admit that in recent years he has been involved in
some projects where we have not worked nearly as closely, but
we have always maintained a very cordial relationship.
I commend Joe for his appointment. I know he will do a
great job for the Department and also to look after a lot of
the issues that will relate to the economic impact on minority
families. So I commend him to your committee and thank him for
his willingness to serve.
I wish his beautiful family was here with him. They are out
of the country, but that is another great credit to him.
Thank you.
The Chairman. Thank you very much for your statement. Both
of you, obviously, are excused. Thank you for being here and
taking time out of your busy schedules.
Let me call the three nominees up to the witness table.
Before you sit down, just go ahead and stand there and let me
go through a little procedure we always do with nominees.
The rules of our committee that apply to all nominees
require that they be sworn in connection with their statements.
So if you would each raise your right hand. Do you solemnly
swear that the testimony you are about to give to the Senate
Committee on Energy and Natural Resources will be the truth,
the whole truth, and nothing but the truth?
Mr. Norris. I do.
Mr. Garcia. I do.
Mr. Pizarchik. I do.
The Chairman. Please be seated.
Before you begin your statements, let me ask three
questions that we in this committee address to each nominee
that comes before the committee. No. 1, will you be available
to appear before this committee and other congressional
committees to represent departmental positions and respond to
issues of concern to the Congress? If each of you could answer
that, please.
Mr. Norris.
Mr. Norris. I will.
The Chairman. Mr. Garcia.
Mr. Garcia. I will.
The Chairman. Mr. Pizarchik.
Mr. Pizarchik. I will.
The Chairman. The second question, are you aware of any
personal holdings, investments, or interests that could
constitute a conflict of interest or create the appearance of
such a conflict should you be confirmed and assume the office
to which you have been nominated by the President?
Mr. Norris.
Mr. Norris. Yes, Mr. Chairman. My investments, personal
holdings, and other interests have been reviewed by myself and
the appropriate ethic counselors within the Federal Government.
I have taken appropriate action to avoid any conflicts of
interest. There are no conflicts of interest or appearances
thereof to my knowledge.
The Chairman. Thank you very much.
Mr. Garcia.
Mr. Garcia. Senator, all my personal assets have been
reviewed by both myself and by appropriate ethics counselors in
the Federal Government. I have taken appropriate action to
avoid any conflicts of interest.
The Chairman. Mr. Pizarchik.
Mr. Pizarchik. Senator, my investments, personal holdings
and other interests have been reviewed both by myself and the
appropriate ethics counselors within the Federal Government. I
have taken appropriate action to avoid any conflicts of
interest. There are no conflicts of interest or appearances
thereof to my knowledge.
The Chairman. All right. The third question that we always
ask is, are you involved or do you have any assets held in a
blind trust?
Mr. Norris.
Mr. Norris. No.
The Chairman. Mr. Garcia.
Mr. Garcia. No.
The Chairman. Mr. Pizarchik.
Mr. Pizarchik. No, I do not.
The Chairman. All right. At this point, we always invite
nominees, if they do have family members present, to introduce
them, if they would like to. Mr. Norris, did you want to
introduce anybody?
Mr. Norris. Yes. I have with me today my wife, Jackie
Norris, and my three wonderful sons, Sam, Cole, and Hunter
Norris.
The Chairman. We are glad to have them here.
Mr. Norris. Our nanny who is the reason we look so composed
today, Diana Sturbek, right back here, and my good friend,
Jeannie Murray, in the room as well. So thank you.
The Chairman. We are glad to have them all present. Thank
you for having them here.
Mr. Garcia.
Mr. Garcia. Senator, my family was in Europe, but I had the
good fortune of having one of my best friends, almost a brother
to me, visiting the city, and so I encumbered him with coming
with his family. So I have a surrogate family here which is
Roland Sanchez Medina, his daughters, Alesandra and Mariana.
The Chairman. We are glad that they could come.
Mr. Pizarchik.
Mr. Pizarchik. Senator, with me today is my wife, Teresa,
and I also have with me my sister Koreen and her husband David
and my sister Mary, as well as my brother Tony and friend
Marian and her daughter Jane.
The Chairman. That is a good representation. Thank you very
much for introducing them and I thank all of you for coming
today.
At this point, why do we not go ahead with your statements,
any opening statements you would like to make? We will include
your full statement in the record, but if you could just
summarize the main points, that would be terrific. Mr. Norris,
why do we not start with you?
STATEMENT OF JOHN R. NORRIS, NOMINEE TO BE A MEMBER OF THE
FEDERAL ENERGY REGULATORY COMMISSION
Mr. Norris. Thank you, Chairman Bingaman. It is an honor to
be here today as a nominee for the Federal Energy Regulatory
Commission. I would like to express my appreciation to
President Obama for nominating me to this position and to thank
the committee for considering my nomination.
I also want to acknowledge and express my appreciation for
my two home State Senators, Senator Grassley and Senator
Harkin, for their support for me and for their great service to
Iowa and this Nation.
I also want to thank Secretary of Agriculture Tom Vilsack
for his confidence in me that played a considerable role in my
being here today. When I was serving as his Chief of Staff in
Iowa, he early on appointed me to chair or take over chair of
the Iowa Restructuring Task Force, Iowa Electric Restructuring
Task Force. I did that for a year and a half, refocused the
effort of that Restructuring Task Force to identify what were
Iowa's real needs for the future and how we could address
those. The result of that was landmark legislation for advanced
ratemaking principles that developed a great deal of new
renewable energy for Iowa and baseload and intermediate
generation. As a result of that, Iowa is now a world leader--
national leader--excuse me--in wind generation and has had a
reliable supply of electricity at stable prices for the past 10
years.
The past 4 years, prior to my service now as Chief of Staff
at USDA, I was Chair of the Iowa Utilities Board. I think that
experience on a regulatory commission is a valuable experience
that I would bring to the Federal Energy Regulatory Commission.
During my time on the Iowa Utilities Board, I also was
active in the National Association of Regulatory Utility
Commissioners on the Electricity Committee and the Energy
Resources and Environment Committee.
I was also very active with the Organization of MISO
States, serving as a board member, Secretary, and then
President of that organization. So I dealt extensively with the
work of regional transmission organizations and the issues that
they face.
I have also been involved with the National Regulatory
Research Institute to deal with emerging regulatory issues
throughout the Nation.
I would be honored to join in the important work FERC is
doing on improving the reliability and security of the
electricity grid, incorporating renewable energy into the
system, the grid, for the benefit of customers and the
environment, and promote the development of smart grid policies
that will improve the efficiency of our system and provide
consumers with better choices. If confirmed by the Senate, I
will make these issues a personal priority and I look forward
to working with the members of this committee as it prepares to
move legislation addressing them.
I know you are also aware of the serious challenges created
by the uncertainty facing the industries regulated by the FERC.
Investments in such capital-intensive industries as electric
generation and transmission, hydroelectric power, natural gas
infrastructure, and more are jeopardized by an uncertain
future. There is a need to address such concerns as the
reliability of our Nation's energy supply, containment of costs
for consumers, upgrading of our electric transmission grid, and
development of renewable energy and energy efficiency
technologies. If confirmed, I look forward to working with
members of this committee and Members of Congress in general to
address our Nation's energy needs and resolve some of the
uncertainties facing that sector of our economy.
So I believe my experience both as Chairman of the
Utilities Board, the Iowa Restructuring Task Force, activities
with NARUC and involvement with the Organization of MISO States
will all be an asset to my ability to serve this Nation at the
Federal Energy Regulatory Commission.
I also recognize the FERC's role as an independent
regulatory agency in carrying out its statutory
responsibilities Congress has given to it. It is essential that
FERC continue to provide its expertise and assistance to the
Congress in the development of Federal energy legislation. If
confirmed by the Senate, I pledge to work closely with this
committee toward that end.
I appreciate the opportunity to testify here today and am
happy to answer any questions you may have.
[The prepared statement of Mr. Norris follows:]
Prepared Statement of John R. Norris, Nominee to be a Member of the
Federal Energy Regulatory Commission
Chairman Bingaman, Senator Murkowski, and distinguished members of
the committee, I am honored to be here today as a nominee for the
Federal Energy Regulatory Commission (FERC). I would like to express my
appreciation to President Obama for nominating me to this position and
to thank the committee for considering my nomination.
I also want to thank Secretary of Agriculture Tom Vilsack for his
confidence in me that in large part is responsible for my being here
today. While serving as then-Iowa Governor Vilsack's Chief of Staff in
1999, I was asked to take over as Chairman of Iowa's Electric
Restructuring Task Force. I spent the next year and a half working with
the Task Force to focus first on Iowa's energy needs for the future and
then on how we could best meet those needs. The result of that process
was the passage of landmark advanced ratemaking principles legislation
that led to the construction of significant new electric generation
capacity for Iowa, including baseload, intermediate and renewable
generation. Iowa is now a national leader in wind generation as a
result of the work of the Task Force and has had a reliable supply of
electricity and stable electric prices for the past decade.
Beginning in March of 2005 until this past February 2009, I served
as Chairman of the Iowa Utilities Board. I believe my service on a
state regulatory commission is a valuable experience that I would bring
with me to the Federal Energy Regulatory Commission. While serving on
the Iowa Utilities Board I was a member of the National Association of
Regulatory Utility Commissioners (NARUC) and worked on that
organization's Energy Resources and the Environment Committee and
Electricity Committee. I also was the Co-Chair of the Department of
Energy/NARUC 2009 National Electricity Delivery Forum.
From 2005 through 2009 I was also deeply involved in the issues
facing Regional Transmission Organizations. During that time I served
as a Board Member and was elected to Secretary and then President of
the Organization of Midwest Independent Transmission System Operator
(MISO) States, and was Chairman of the MISO Demand Response Working
Group. I also had the privilege of serving on the FERC/NARUC Demand
Response Collaborative.
I have also benefitted greatly from my years of service as a Board
Member of the National Regulatory Research Institute and my
participation with the Institute of Public Utilities Regulatory
Research and Education at Michigan State University.
I would be honored to join in the important work the FERC is doing
on improving the reliability and security of the electric grid,
incorporating renewable energy into the grid for the benefit of
consumers and the environment, and promoting development of smart grid
policies that will improve the efficiency of our system and provide
consumers with better choices. If confirmed by the Senate, I will make
these issues a personal priority and look forward to working with the
members of this Committee as it prepares to move legislation addressing
them.
I know you are also aware of the serious challenges created by the
uncertainty facing the industries regulated by the FERC. Investments in
such capital-intensive industries as electric generation and
transmission, hydroelectric power, natural gas infrastructure and more
are jeopardized by an uncertain future. There is a need to address such
concerns as the reliability of our nation's energy supply, containment
of costs to protect consumers, upgrading of our electric transmission
grid and development of renewable energy and energy efficient
technologies. If confirmed I look forward to working with members of
this Committee and the members of Congress in general to address our
nation's energy needs and resolve some of the uncertainties facing this
sector of our economy.
I believe my experience as Chairman of the Iowa Utilities Board and
my work as a member of NARUC and the Organization of MISO States will
be assets at the FERC. I also recognize the FERC's role as an
independent regulatory agency in carrying out the statutory
responsibilities Congress has given to it. It is essential that the
FERC continue to provide its expertise and assistance to Congress in
the development of Federal energy legislation. If confirmed by the
Senate, I pledge to work closely with this Committee to that end. I
have enjoyed my years of public service, and should I be confirmed it
would be a privilege and an honor to continue that public service at
the Federal Energy Regulatory Commission.
I appreciate the opportunity to testify before you today and am
happy to answer any questions you may have.
The Chairman. Thank you very much.
Mr. Garcia, go right ahead.
STATEMENT OF JOSE ANTONIO GARCIA, NOMINEE TO BE DIRECTOR OF THE
OFFICE OF MINORITY ECONOMIC IMPACT, DEPARTMENT OF ENERGY
Mr. Garcia. Thank you and good morning, Mr. Chairman. It is
a pleasure to be here with you today and as well to thank my
two State Senators, Senator Nelson and Senator Martinez, for
their presence.
It is a privilege to appear before you as President Obama's
Director of the Office of Economic Impact of the Department of
Energy. It is an honor to be asked by the President to serve
particularly at this transformational time in our Nation's
history, a time when we need to call upon all Americans and all
communities to help our economy not only recover, but prosper.
The American innovative spirit, coupled with the opportunity to
succeed through hard work, is the very essence of the American
dream that brought my parents to this country from communist
Cuba years ago. This same spirit will help small businesses and
disadvantaged communities create the jobs of tomorrow.
If confirmed by the Senate, I look forward to working with
Secretary Chu to carry out the statutory duties of the Office
of Minority Impact and collaborate with his team to advance
energy priorities that the President has outlined for our
Nation.
President Obama has challenged the Department of Energy
with the importanttask of implementing significant programs
under the American Recovery and Reinvestment Act of 2009. I
will make it a priority to ensure that small and disadvantaged
businesses, including those owned by women, minorities, and
veterans, as well as minority educational institutions, are
included in these important programs.
My experience as a public servant and consumer advocate in
the utility industry have formed my belief that hard work is
paramount to personal success, and I will apply the same level
of commitment to service and advocacy toward small businesses
and disadvantaged communities. I will dedicate myself to be the
Department's voice in support of those with innovative ideas
and those willing to work to ensure they can all participate in
the advanced energy opportunities our Nation offers.
In conclusion, I would like to reiterate my sincere
gratitude to President Obama and Secretary Chu for nominating
me for this position, and I want to assure the committee that I
will work with the Secretary of Energy, with this committee,
and with Congress to carry out the duties as Director of the
Office of Economic Impact.
Thank you and I am, of course, available for questions.
[The prepared statement of Mr. Garcia follows:]
Prepared Statement of Jose Antonio Garcia, Nominee to be Director of
the Office of Minority Economic Impact, Department of Energy
Good morning, Mr. Chairman, Ranking Member Murkowski, and members
of the Committee.
My name is Joe Garcia. It is a privilege to appear before you today
as President Obama's nominee for the position of Director of the Office
of Minority Economic Impact at the Department of Energy.
It is an honor to be asked by President Obama to serve,
particularly at this transformational time in our country's history--a
time when we need to call on all Americans, and all communities, to
help our economy not only recover, but prosper. The American innovative
spirit, coupled with the opportunity to succeed through hard work, is
the very essence of the American dream that brought my parents to
America from communist Cuba years ago. This same spirit will help small
businesses and disadvantaged communities create the jobs of tomorrow.
If confirmed by the Senate, I look forward to working with
Secretary Chu to carry out the statutory duties of the Office of
Minority Economic Impact and to collaborate with his team to advance
the energy priorities that the President has outlined for our nation.
The Office of Minority Economic Impact was created to advise the
Secretary of Energy on the impact of the Department's policies,
regulations, legislation, and related activities on minority
communities, businesses and educational institutions. This Office has
the important responsibility of ensuring that minorities participate
fully and actively in the programs of the Department of Energy.
I commit to you today that, if I am confirmed, I will work
aggressively to carry out these responsibilities. By doing so, I
believe I will advance the Department's goals across its many missions,
because success will require fully tapping the talents of all of our
people. That is why I am committed to the idea of making the Department
of Energy as the model agency for addressing issues of diversity and
for providing support and assistance to small and disadvantaged
businesses and minority educational institutions. I believe that the
United States cannot afford to continue to underutilize small and
disadvantaged businesses, or continue the under-representation of
minorities in the technical and scientific workforce and industries.
President Obama has charged the Department of Energy with the
important task of implementing significant programs under the American
Recovery and Reinvestment Act of 2009. I will make it a priority to
ensure that small and disadvantaged businesses, including those owned
by women, minorities, and veterans, as well as minority educational
institutions are included in these important programs.
Small businesses must play a critical role in creating new energy
technologies. Their ability to innovate remains unsurpassed, yet they
need the support of the Administration to remain in the global
forefront of effective energy development strategies. According to the
U.S. Small Business Administration, small businesses represent 99
percent of all employers in the country. If I am confirmed for this
position, I will ensure that DOE becomes a leader in utilizing small
businesses to create the competitive jobs of tomorrow.
My experiences as a public servant and consumer advocate in the
utility industry have formed my belief that hard work is paramount to
personal success. I will apply this same level of commitment to service
and advocacy towards small businesses and disadvantaged communities. I
will dedicate myself to be the Department's voice in support of those
with innovative ideas and those willing to work hard to ensure that
they all can participate in advanced energy opportunities.
In conclusion, I would like to reiterate my sincere gratitude to
President Obama for nominating me to this position. I want to assure
this Committee that I will work with the Secretary of Energy, with this
Committee and the Congress to carry out the duties as Director of the
Office of Minority Economic Impact at the Department of Energy.
Thank you, and I will be happy to answer any questions from the
Committee.
The Chairman. Thank you very much for your statement.
Mr. Pizarchik, go right ahead.
STATEMENT OF JOSEPH G. PIZARCHIK, NOMINEE TO BE DIRECTOR OF THE
OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT,
DEPARTMENT OF THE INTERIOR
Mr. Pizarchik. Thank you, Chairman Bingaman, Senators. I am
honored to appear before you as President Obama's nominee to
head the Office of Surface Mining Reclamation and Enforcement
in the Department of the Interior. I thank President Obama and
Secretary Salazar for their confidence in me and I thank you
for considering my nomination.
The majority of my career has been in public service to
Pennsylvania. My experience there has given me exposure to the
many facets of the mining industry that make up the
responsibilities of OSMRE.
For the past 17 years, I have been engaged in
Pennsylvania's mining program, first as legal counsel and then
as Director of the Bureau of Mining and Reclamation where I
oversaw the development and implementation of a policy to
protect streams from underground coal mining subsidence without
shutting down mining. I also oversaw the resolution of a post-
mining discharge liability matter that was blocking progress on
the Flight 93 National Memorial. Pennsylvania's mining program
encompasses a broad array of issues and my tenure as Director
required knowledge of a broad range of laws and interaction
with various agencies.
I understand and appreciate the interests and duties of the
States and Federal Government and the roles of citizens,
environmentalists, and industry in protecting the environment
and our people while helping to meet America's energy needs.
Each plays a critical role. I have the experience, temperament,
and skills to work with stakeholders. I understand the value of
an objective, honest approach to resolving matters whether they
are complex, simple, controversial, or mundane. I am
comfortable working with people of divergent backgrounds.
As a member of the executive branch, I see my duty as
executing the law.
On a more personal note, I grew up on a small farm in
southwestern Pennsylvania with my parents and six brothers and
sisters. Survival was a collaborative effort. The entire family
had to pitch in. We all had our responsibilities. When I was
10, my brothers and I assumed full operation of the farm. We
handled the crops, livestock, equipment, and buildings. My
brother Tony, who is here with me today, now owns and runs that
family farm. Through that experience, I learned the value of
hard work, cooperative decisionmaking, work distribution, and
completing a job the right way the first time. Those values and
work ethic instilled in me as a kid are still with me today.
Coal was a part of our daily lives. That is how we heated
our home. I also knew many people who worked in the mines. I
saw firsthand the value placed on a job in the mines, tempered
by the effects of poor safety regulations and the environmental
havoc wreaked by unfettered mining. I have also witnessed the
benefits of improved safety and improved environmental laws
over the years.
Like four of my siblings, I worked my way through college.
I earned my bachelors degree from Penn State and my law degree
from the University of Arkansas at Little Rock.
It would be an honor and a privilege to serve America, its
citizens, and the environment and President Obama as the
Director of the Office of Surface Mining Reclamation and
Enforcement.
Thank you, Mr. Chairman, for the opportunity to testify. I
am ready to answer questions.
[The prepared statement of Mr. Pizarchik follows:]
Prepared Statement of Joseph G. Pizarchik, Nominee to be Director of
the Office of Surface Mining Reclamation and Enforcement, Department of
the Interior
Thank you, Chairman Bingaman and Senators. I am honored to appear
before you as President Obama's nominee to head the Office of Surface
Mining Reclamation and Enforcement at the Department of the Interior. I
thank President Obama and Secretary Salazar for their confidence in me
and I thank you for considering my nomination.
I appreciate the opportunity to present my background and
qualifications. The majority of my career has been in public service
for the Commonwealth of Pennsylvania. My experience there has given me
exposure to the many facets of the mining industry that make-up the
responsibilities of OSMRE.
For the past 17 years I have been engaged in Pennsylvania's mining
program, first as legal counsel and then as the Director of the Bureau
of Mining and Reclamation, where I have worked on a variety of
projects. Under the guidance of Kathleen McGinty, then Secretary of the
Pennsylvania Department of Environmental Protection, we developed and
implemented a policy, based on sound scientific and legal principles,
to protect streams from underground coal mining subsidence without
shutting down mining. I was also assigned the responsibility and did
resolve a postmining discharge liability matter that was blocking
progress on the Flight 93 National Memorial. While working closely with
the Pennsylvania State Police and the Pennsylvania Office of Homeland
Security, I led the state effort to secure explosive storage magazines.
These security measures, the only ones of their kind in the country,
greatly reduced the risk to the nation's capital and other major East
Coast cities. The number of break-ins and thefts of explosives in
Pennsylvania dropped from one of the highest in the country to zero.
Notwithstanding dire industry predictions, zero is also the number of
explosive industry firms that left Pennsylvania or went out of business
because of the security requirements.
Pennsylvania's mining program encompasses more than coal permits.
It also includes water quality and stream encroachment permits,
Environmental Good Samaritan projects, remining and reclamation of
abandoned mines, industrial mineral mining, blasting and explosives
regulation, mine subsidence insurance, and bonding. The breadth of
Pennsylvania's program requires knowledge of a broad range of laws and
interaction with various agencies.
I understand and appreciate the interests and duties of the states
and federal government and the roles of citizens, environmentalists,
and industry in protecting the environment and our citizens while
helping to meet America's energy needs. They each play a critical role
in effective development, implementation, and enforcement of our mining
program and regulations. I have the experience, temperament, and skills
to work with stakeholders for pragmatic and creative solutions.
I have represented Pennsylvania as both the client and attorney in
litigation, legislative, regulatory, and programmatic matters. Through
these experiences I understand the value of an objective, honest
approach to resolving matters, whether they are complex, simple,
controversial, or uninteresting. I am comfortable working together with
people of divergent backgrounds and interests, whether an average
citizen or high government official.
As a member of the Executive Branch, I see my duty as executing the
laws enacted by the legislators and, at times, as interpreted by the
courts. The laws are to be implemented for the benefit of America and
not used to the detriment of an individual or interest.
If confirmed, I will be leaving a corps of state government
employees dedicated to implementing the laws to protect Pennsylvania's
environment and people while meeting the country's mining needs, but I
will be joining a group of similarly dedicated federal employees and
officials in OSMRE, EPA, and elsewhere in the Obama administration.
Together we will work with the states, citizens, and industry to build
on past successes, correct past missteps, and craft new solutions as we
strive to meet America's environmental and energy needs.
On a more personal note, I grew up on a small farm in southwestern
Pennsylvania with my parents and six brothers and sisters. My dad, a
World War II veteran, worked in the steel mill in addition to farming.
Survival was a collaborative effort; the entire family pitched in. We
all had our responsibilities, which started at a very young age. Like
my siblings before and after me, by the time I started school I had
already moved from feeding the dogs to feeding and caring for the
chickens. Life on the farm involved recycling before there was an Earth
Day. We practiced conservation measures that arose out of the Dust Bowl
era and cared for the environment upon which we were so dependent.
When I was 10, my brothers and I assumed full operation of the
farm. We planted and harvested all of the crops, cared for the
livestock, and repaired and maintained the equipment and buildings. My
brother owns and runs that farm today. Through that experience I
learned the value of hard work, cooperative decision making, work
distribution, and completing a job the right way the first time. The
values and work ethic instilled in me as a kid are still with me.
Coal was a part of our daily lives; that's how we heated our home.
I also knew many people who worked in the mines so I saw first-hand the
value placed on a job in the mines tempered by the effects of poor
safety regulations and the environmental havoc wreaked by unfettered
mining. Through friends and family I witnessed the benefits of improved
safety and environmental standards.
Like four of my siblings, I worked my way through college using a
combination of summer jobs, work study, education grants, and Social
Security, as my dad died while I was in high school. I have worked as a
laborer for masons, in general construction, in a plant that fabricated
steel buildings, in flood cleanup, and as a security guard. After
getting my BA from the Pennsylvania State University I attended law
school and received my law degree from the University of Arkansas at
Little Rock.
It would be an honor and privilege to serve America, its citizens
and environment, and President Obama as Director of the Office of
Surface Mining Reclamation and Enforcement.
Thank you, Mr. Chairman, for the opportunity to testify. I am ready
to answer questions.
The Chairman. Thank you for your statement as well.
Let me start and ask each of you a question or two, and
then I am sure Senator Menendez will have some questions as
well.
Mr. Norris, you referred to the substantial amount of wind
generation that has been created in Iowa during the time that
you chaired the Public Utility Commission. What role do you see
for the Federal Energy Regulatory Commission in promoting the
development of renewable generation of electricity and also in
developing the additional infrastructure needed to get that
generation to market?
Mr. Norris. One of the most pressing needs we need to
address for the utilization of renewable energy is upgrading
the electric transmission grid both for local distributed
generation and for the transportation of renewable generation
across the country. So I think one of the most critical roles
that the FERC can do is to assist in the efficient and
economical development of the transmission grid so we can get
renewable energies from generation to the load centers.
The Chairman. Very good.
Mr. Garcia, let me ask you what steps--maybe this is
premature, but do you have in mind particular steps that you
would take if confirmed to reach out to these minority
institutions and businesses to ensure that they compete fairly
for grants and contracts that the Department is involved with?
Mr. Garcia. I think it is a two-step process, Senator.
Thank you for the question. But it is a two-step process. One
is the Department of Energy's contracts that we put out tend to
be highly technical and highly skilled, and for a long time,
they were controlled by a relatively small group or very
technical group. Clearly, minorities and disadvantaged
businesses had not been given an opportunity. So part of that
is to get the work force to the level that they can do some of
this work and, more importantly, to offer more opportunities.
In fact, next week the Department has a conference in Long
Beach, California where we have 200 exhibitors. Most of those
are labs and large contractors with the Department of Energy.
We have over 1,100 participants already signed up. The idea is
to get those procurement officers and create mentoring programs
with existing contractors and with new contractors, smaller
contractors, so they can participate in the opportunity that a
new energy field offers all of us.
The Chairman. All right. Thank you.
Mr. Pizarchik, there has been a great deal of concern
expressed about Pennsylvania's policy on placing utility coal
ash in coal mines and the possible impacts of that on water
quality. Can you briefly describe what Pennsylvania's policy on
mine placement of coal ash is and how Pennsylvania's policy
comports with the recommendations of the National Academy of
Sciences?
Mr. Pizarchik. Yes, Senator, I can do that. In
Pennsylvania, we have what has been referred to by some as one
of the best programs for ash placement in coal mines in the
country. It was originally developed in the mid to late 1980s.
Under the process, not all ash is suitable for use at a
mine site to assist in reclamation. The ash has to, first, be
tested in accordance with EPA standards and tests to make sure
that it will not leach out any hazardous metals or
contaminants. Then it needs to be certified for a particular
use. Once it has been tested and certified, then the applicant,
the mining site, has to apply through the normal permitting
process with public involvement to get approval to use the ash
at that particular site. The ash and the site have to be
adequately analyzed and characterized to make sure there will
not be any problems. There are monitoring wells that are put in
place to monitor the groundwater to make sure that the ash does
not, in fact, leach any contamination out into the site.
A few years ago, we started reexamining our program to see
if there were areas needed for improvement. We had a lot of
public scrutiny from various citizen groups and concerned
members of the public. The National Academy of Sciences had
conducted its study, and as a result of that review and the
recommendations of the National Academy of Sciences, in April
of this year, Pennsylvania updated its coal ash beneficial use
program in mine sites to include the recommendations of the
National Academy of Sciences.
We are now monitoring 40 parameters instead of just 27 from
a few years ago. We have also required all of the sites where
coal ash is being beneficially used to upgrade their monitoring
systems, and we have increased the monitoring from annually to
quarterly on the sites. Certification of the ash at the
powerplants has to be tested at least twice a year, instead of
once a year. We have also increased the requirements for how
long you have to monitor the ash after the placement ends. That
period is now 10 years.
So in addition to implementing the National Academy
standards, we also made a number of changes that were
recommended by various citizen groups and environmental groups,
but we did not stop with just the policies which we used to
implement that. Recently we have also in Pennsylvania--the
State has published proposed rulemakings that incorporate the
national recommendations, as well as the other improvements to
take a good program and make it even better. With the science
that we have, we have not had any evidence of pollution of
groundwater caused by the use of coal ash at these mine sites.
The Chairman. Thank you.
Let me go ahead and defer to Senator Menendez for his
questions.
Senator Menendez. Thank you, Mr. Chairman.
Congratulations to all of you on your nominations.
Mr. Norris, we have an energy bill that, as currently
drafted, would allow FERC to approve lines anywhere and for
almost any reason, as it relates to transmissions. It concerns
me because, one, it could lead to more dirty coal power being
piped into our State, a concern that 10 Governors of the
Northeastern States have also voiced. We understand the need
for greater transmission. The question is for what purposes.
So since FERC has such a significant impact in its
decisionmaking here, especially if we were to give it this very
wide authority, give me your thoughts on what the Federal
Government's role should be in siting transmission lines.
Mr. Norris. I would bring, first of all, my experience as a
State utility commissioner to the table and respectful of the
rights of States and traditional rights of States in siting
infrastructure and give great deference to States on this.
There is a need to upgrade our transmission grid and that
is not an easy process. As we look at how we get renewables
built in this country, there has to be the capacity to get that
renewable energy to the load centers. So there is going to have
to be an upgrade in our electric transmission grid.
I think, depending on what Congress--the power of the
Congress decides to give to FERC, we have to use it very
sparingly and judiciously where we would be respectful of the
State process and the State input in this process.
With regards to does that enable carbon emission generation
sources to be on that same grid, as you well know, you cannot
control the electrons once they are on the grid. But I think
what we are looking at is the development of renewable energy
in this country, and the increased capacity of our transmission
grid should be utilized to enable renewable generation to get
on the grid as a priority.
If I understand the current legislation that gives FERC the
siting authority or backstop authority for 345 kv and above and
the 400 dc line and then the feeder lines for renewable energy,
I think that is a key element that helps ensure that we can
work to make sure that the renewable energies have the access
to any upgrades in transmission.
Senator Menendez. I appreciate your answer. Let me just say
right now, as mapped out, the entire State of New Jersey would
be subject to transmission lines going through. The entire
State. I am sure that if I were taking the entire State of Iowa
and throwing transmission lines through it, you all might not
look at it so well.
So my concern and my interests, because if FERC is given
this power as envisioned under the legislation, it would be in
my view almost unlimited power. So what commissioners at FERC
decide to do with that unlimited power will be very important.
So my hope--I heard about your deference to States, but that
deference can be as simple as listening and then disregarding.
So it is my hope that we are going to see a view that there
is a role here that we understand we have a need for
transmission, but we want to see more of that transmission be
for renewable energies and we want to watch the consequences of
how we site those lines to States like my own. It is not that
we have a swath that is open to it. We have an entire State
that is open to it. Whether that goes right through the
Highlands of New Jersey, which is one of the few open space
areas that we have in a State that is the most densely
populated per square mile in the Nation, or whether that goes
through major residential areas, the consequences of that are
very significant.
I also want to ask two other questions, if I may, about net
metering and interconnection standards. My legislation, the
Grid Access Act, tries to help us create some national net
metering and interconnection standards. It basically would then
allow any individual or business to put a renewable energy
project on their State without local authorities using
arbitrary rules to prevent it.
What are your views on that in general, and should
utilities really be able to shield themselves from competition
by putting up arbitrary market barriers?
Mr. Norris. No. I think as we look at changing the energy
system of our country and empower renewables, we have to enable
people to be a part of that process. So access through net
metering or other means through interconnection agreements to
enable local generation, local distributed generation to be a
part of the solution I think is important.
Senator Menendez. I have another question, but I will
submit that one for the record.
Mr. Garcia, I am glad to see your nomination. I know you
personally. I think you will do an excellent job in this field.
Your experience speaks wonders. So I do not want you to think
that a lack of a question to you is meaning that I am slighting
you. The chairman basically asked what I hoped to get a sense
of where you were headed.
I do hope that one of the Department's efforts in
attracting more Latinos, African Americans, women, and others
into the field is incredibly important. If we are going to be
competitive globally, we are going to have that human capital
at the end of the day be there. There are Department
initiatives to try to get more of our young people engaged in
this respect and also moving in the college areas. So I hope
that in addition to the whole question of getting access to the
opportunities that the Department of Energy provides, there
will also be opportunities for the educational pursuit that
will lay the foundation of the human capital and intellect in
the country that we will need to achieve. So we look forward to
working with you on that.
Finally, if I may, Mr. Pizarchik, I have seen that Kathleen
McGinty, your former colleague and a pretty nationally
respected environmental leader, has heartily endorsed your
nomination.
But I have to be honest with you. I have received so many
e-mails from people concerned about your nomination. I heard
you respond to the chairman before, but I would like to give
you the opportunity to respond to critics who say that in your
work in Pennsylvania, you, one, ignored evidence that certain
ways of disposing of the coal ash degrade water supplies, and
they also say you are not open-minded about their concerns.
So I would like to hear your response to that and, at the
same, time how you are going to be in the midst, if you are
confirmed, about how we protect people from the disastrous
effects of mountaintop removal. I would like to know how you
intend to, if confirmed, implement the plan and what ideas do
you have on how to tighten mountaintop removal regulations.
Mr. Pizarchik. Senator, that was a pretty long list there.
If I do not get to them all, please bring me back to those.
Regarding the first question on the coal ash and how we
used it in Pennsylvania and been open on that, we have engaged
with stakeholders and people who have an interest in the safe
management of coal waste, coal ash materials in the sites. I
have had a number of meetings with those folks over the past
year plus. We have received good input from the citizens and
the activists, many of whom are not even from Pennsylvania but
who bring value to the table as well.
Through the changes that we have made in our program, many
of those are based on input that we received from the citizens.
A number of those improvements were designed to develop higher
quality data so that we can have a better data field with which
to assure the public that the use of coal ash at these mine
sites in Pennsylvania is not polluting the groundwater and has
not polluted the groundwater.
In regards to a series of analyses that they have performed
and published, there was a very large document that they put
together and submitted to us. We have expended considerable
resources going back and double checking every allegation to
find out whether or not there is any merit to that. On each of
those cases where we have looked, we have not found there to be
pollution resulting from the use of the ash at those mine
sites.
As far as being open-minded, I listened to everybody who
comes in. I make myself available to the citizen groups, to the
environmentalists, and to the regulated community to hear their
perspectives. Where the requests have a valid basis in the law
and in the sciences, we will act upon them. But as a member of
the executive branch, I carry out the laws as they have been
enacted, and I do not go off and do things for one particular
interest group or another. That would be contrary to the law
which I am charged with executing.
Senator Menendez. So you are open-minded. Within that
context you have just described, you are willing to continue to
follow the opportunities for people to have input.
Mr. Pizarchik. Absolutely.
Senator Menendez. If their input is both within the law and
in fact, you are willing to consider that in terms of how you
decide.
Mr. Pizarchik. Yes. My track record, I think, in
Pennsylvania documents that. A number of years ago, we had a
rulemaking package regarding coal mining and underground
longwall mining, mine subsidence on that. There were a variety
of issues on that where there was a difference of opinion as to
how effectively Pennsylvania's law met the minimum requirements
of the Federal law.
Through the course of working out the differences that
existed, I led the work group for Pennsylvania that met with
the citizens who were interested in this area, as well as the
regulated community. It was a bit of a controversial atmosphere
in that those two groups refused to be in the same room
together with each other. So we literally had to have meetings
in the morning with one group and in the afternoons with the
other group. But it was worthwhile. We got good input from the
public. We made a lot of changes to implement the concerns.
By meeting with those folks, I find that it helps me as a
government official to better understand the concerns of the
public and what the basis of those concerns are. If you have an
understanding of the basis of a person's concerns, you can
better assess whether you can accommodate those concerns within
the bounds of the law or whether there may be other means that
you need to do to address those concerns.
Senator Menendez [presiding]. My time is way past gone. So
I will wait for either the next round or ask you to respond to
my second question for the record.
The chair has had to step out and he has asked me to
preside. With that, Senator Barrasso is next.
Senator Barrasso. Thank you very much, Mr. Chairman.
I want to thank you both, Mr. Norris and Mr. Pizarchik, for
taking the time to come and visit with me in the office and
discuss a number of these issues.
Mr. Pizarchik, we talked quite a bit about coal when you
had the chance to visit, and while coal mining in the East is
different than coal mining in the West, I think you bring
strong credentials and an important State perspective to the
job for which you have been nominated. We know that coal is an
abundant, affordable, reliable, and secure source of American
energy. Wyoming supplies 40 percent of our Nation's coal. Coal
mining creates good paying jobs for hard-working folks in my
State and your State of Pennsylvania. It provides revenues for
the State and for local government. If confirmed, I would like
to invite you out to visit one of Wyoming's coal mines and see
the wonderful and excellent job they do with reclamation.
We talked about coal leasing and the coal bid bonuses. We
talked about abandoned mine land money. We talked about the
self-bonding rules. I would like to spend my time on the
abandoned mine land funding.
Washington owes Wyoming hundreds of millions of accumulated
abandoned mine land funds. Washington also owes significant
amounts of money to many other States. After more than a decade
of politically finding a solution, a bipartisan compromise was
reached that satisfied the States, satisfied Washington a few
years ago. The law ensures that Wyoming and other certified
States and Indian tribes would receive the money that they were
promised without strings attached. It also provided States with
their share of future fees collected from coal mining.
President Obama, as well as Secretary Salazar, when they
were Senators, both voted for this bill signed into law.
Unfortunately, the administration now with President Obama and
Secretary Salazar proposed a budget earlier this year that
called for ending the payments to the certified States, the
same payments that the President and Secretary voted for while
they were members of the Senate because they knew the impact on
their home States.
Are you familiar with this abandoned mine land funding
issue?
Mr. Pizarchik. Thank you, Senator. Thank you for your
compliments, and I will take you up, if confirmed, on visiting
your State. I would be happy to do that.
Regarding the abandoned mine land funding, I am not
familiar with the intimate details of it. I know of the issue
generally. I know that a few years ago when the States were
trying to get reauthorization, that there was a lot of effort
put in by many States, including Wyoming, for a successful
resolution of that. But at this time, I am not familiar with
the details of the proposal or the basis for the proposal. So
it would not be appropriate for me to speculate.
Senator Barrasso. As a State official, formerly a State
official now to come into this new position, do you think that
States are entitled to their share of revenues from development
within their borders?
Mr. Pizarchik. Senator, with the familiarity that I do have
with the law, I believe Congress has specified how that money
is to be handled on that, and I would defer to implementation
of the law, should I be confirmed.
Senator Barrasso. When you were working for the people of
Pennsylvania, you felt, if there was an obligation to the
people of Pennsylvania, they would have a right to get that
money.
Mr. Pizarchik. Again, Senator----
[Laughter.]
Mr. Pizarchik [continuing]. If confirmed, I will execute
the law. I understand Wyoming's position on that. I understand
the other States' position. But at this point, it is not
appropriate for me to speculate.
Senator Barrasso. You talk about executing the law, and I
am going to read a little bit from the law because the bill
that is signed into law required that the States be paid back
money owed in seven equal installments. I will read it. Quote:
``The Secretary shall make payments to States or Indian tribes
for the amount due for the aggregate unappropriated amounts
allocated to the State or Indian tribe,'' and then it says
under these subparagraphs. ``Payments under subparagraph (a)
shall be made in seven equal annual installments beginning with
fiscal year 2008.'' Seven equal annual installments beginning
fiscal year 2008.
The Interior Solicitor interpreted that stating that what
Congress meant was that the funds must be paid back in the form
of a grant and not in seven equal installments. When you talk
about the law, what is the interpretation of ``seven equal
installments''? I mean, the trick question is do you agree or
disagree with the Solicitor's opinion. I do not want to put you
in that position.
But I think Congress tries to write laws and we try to be
very clear, and then the administration, whichever
administration it is, comes up with different interpretations.
So I would like to hold you to your statement of I will follow
the law and hopefully not try to reinterpret the law as written
by the Members of the House and the Senate.
So thank you very much.
Thank you, Mr. Chairman. My time has expired.
Mr. Pizarchik. Thank you, Senator.
Senator Menendez. Thank you, Senator.
Senator Cantwell.
Senator Cantwell. Thank you, Mr. Chairman.
Mr. Norris, congratulations on your nomination. It is good
to see--I think your family was here. It is good to have them
with us in Washington, DC.
There is a tremendous amount on FERC's plate, obviously, in
the deregulation of energy markets, being a policeman on the
beat and new technologies and obviously our aging
infrastructure. Certainly we have had a chance to talk and I am
impressed with your background.
But I wanted to talk to you about there are some who want
to give FERC a very new and very different and very large
responsibility to police a new multi-trillion dollar carbon
market. I personally have yet to hear a compelling case from
anyone--I should say anyone that does not work on Wall Street--
why we should set up this giant trading system. But suppose
that we did. This is, obviously, a challenge in having
predictable and stable carbon prices.
Do you think FERC is up to the task of regulating a new
trillion dollar carbon market? How many new employees would
that take, and what would the structure need to be for FERC to
do a good job of that?
Mr. Norris. Thank you, Senator, for the question and for
your kind remarks.
Is FERC up to the task? I think FERC has a great deal of
talented, professional citizens who work there. I think this
will be a challenging task for whatever agency is delegated
this responsibility from Congress, should it delegate that
responsibility. Having worked for a State independent
regulatory agency, I often found myself frustrated because we
would do things and have expertise there that could be very
useful to policymakers, but because of the independent
regulatory agency aspect of us, we are not involved in some of
those decisions.
Let me get back to the point here. The point is I think
FERC is capable. I think there are a number of agencies that
are capable of doing that. It will take significant resources
of smart, intelligent, committed people to get it done. I have
no reason to think the employees of FERC and the people we
would have to add there could not do that job, but I do not
know as I would advocate it is a better place than someplace
else. I think we will have to leave that decision to you.
Senator Cantwell. How many people do you think it would
really take to police carbon markets?
Mr. Norris. I have not studied it at all. I have heard, I
think, 1,100 or 1,400 additional employees just in general
conversation, but I have no background to be able to tell you
if that is accurate or what it will take. But if it is going to
take that much at FERC, it would probably take that much
wherever you decide to put it.
Senator Cantwell. If I could switch to another subject
about natural gas refunds. Last fall, five of the FERC
commissioners were all on record supporting legislation to
change the process for issuing refunds to consumers for unjust
and unreasonable natural gas rates. This change basically would
allow the effective date for the overcharge to be the date of
the filing of the case as opposed to current law which only
allows the refunds to start at the date the case is completed.
What happens is, obviously, people change their practice once
they are ruled against, and then obviously, all of that
overcharge is not returned to the consumer.
So in January, Chairman Kelliher sent a letter to the
Energy Committee recommending that we consider the change here,
and under the current law, it is estimated that natural gas
pipelines overcharged consumers by something like $3.7 billion.
This is just for a 5-year period from 2003 to 2007. So we are
talking about significant problems here.
So we have, obviously, had legislation on this. So I just
wanted to find out whether you support changing that effective
date for the natural gas pipeline to the date the cases are
filed.
Mr. Norris. I mean, I think the authority in the Federal
Power Act to go retroactive with regard to electric rates has
been effective. I think it has worked effectively and worked
well. There is certainly a deterrent effect, as you said in
your remarks. Whether that is necessary in the natural gas
market or not, I do not know other than to say we have to have
adequate tools to protect consumers and use those responsibly.
So I do not know if I would advocate one way or another in
terms of the change in the law, but I think if given that
authority, FERC would use it effectively to make consumers are
treated fairly, and it could be a deterrent effect.
Senator Cantwell. But you think it has been working well in
other areas that currently FERC has the authority on.
Mr. Norris. FERC, I believe, has authority under the
Federal Power Act with regard to retroactivity.
Senator Cantwell. Electricity and----
Mr. Norris. Electricity, yes.
Senator Cantwell. You think it works well there.
Mr. Norris. To my knowledge, it has worked well there, yes.
Senator Cantwell. I thank the chairman.
Senator Menendez. Thank you, Senator Cantwell.
Since I see no other members here, two last questions.
Mr. Norris, you and I talked about regional transmission
organizations, RTOs. My own view is they often do not
adequately protect consumers. Now, I am aware that FERC has
found parties to have engaged market manipulation at times, and
while the commission has imposed penalties, I am not aware that
FERC has ordered refunds in any of those cases. This suggests
to me that consumers failed to receive some of the much-needed
relief when there were clearly unjust and unreasonable rates as
determined by the commission itself.
So do you believe as a general rule that consumer refunds
should accompany any commission finding of market manipulation?
Mr. Norris. I think you would have to review the facts of
the case. I think it can be used at appropriate times to deter
inappropriate behavior.
Senator Menendez. Sometimes penalties are just simply a
cost of doing business unless the penalties are large enough in
which the excess profits, because of market manipulation, were
eliminated by virtue of the penalty. Then the penalty is fine.
It does not do much for the consumer but maybe it acts as a
deterrent.
My personal view is that if the commission gets to the
point that they find that, in fact, parties have been engaged
in market manipulation, that penalties that basically leave
them short of the consequences of saying, well, I will get that
penalty and I will go back to it again because I will make a
lot more than whatever the penalty is does not really act, one,
as a deterrent and, two, does not do very much for consumers.
Mr. Norris. I mean, FERC's authority now for a million-
dollar-a-day civil penalty I think has been regarded as an
effective deterrent, and whether more authority is needed for
penalties, I will obviously leave it to this body to----
Senator Menendez. I do not know whether it is a question of
more authority. It is whether what the commission does with its
authority. I am just urging you to consider that when there is
a determination of market manipulation, that in fact the
commission use its authority both in its penalty authority, as
well as in its rebate authority to consumers as a very strong
deterrent not to have market manipulation. So I hope you will
consider that. I hope you will consider that.
Mr. Norris. Absolutely.
Senator Menendez. That is about as easy as it gets.
[Laughter.]
Mr. Norris. You are asking us to do our job, and I consider
that part of the job, yes.
Senator Menendez. Mr. Pizarchik, last question to you. I
had asked you the question. I just want to remind you what it
is. Both the EPA, the Department of the Interior, and the Army
Corps of Engineers came to an agreement on how to protect
people from the disastrous effects of mountaintop removal. It
stated that these three agencies, one of which you will
represent most particularly, if you are approved, will
implement a plan that will minimize the environmental impacts
of mountaintop removal mining in the short run and tighten
regulations in the long run.
How would you work to implement that plan, and what ideas
do you have as it relates to tightening mountaintop removal
regulations?
Mr. Pizarchik. Senator, if confirmed, I will get involved
in that project and learn more about the different perspectives
held by the Environmental Protection Agency, the Army Corps of
Engineers, as well as the other stakeholders of interest, the
citizens, environmentalists in those areas, or the State
agencies that regulate the actual mining activities that occur,
as well as the agency. Getting involved and getting a better
handle on the details of that, how that is actually being
implemented, I think, and getting an understanding of the facts
would be the first basis to determine what has transpired in
the past, has that activity been done in accordance with the
law as enacted by Congress and the regulations adopted by the
State and Federal agencies, and then looking at those facts and
deciding what would be the appropriate action to take at that
time. It is my understanding those agencies are currently
working on that with the MOU that they have announced. I have
not been privy to those details or what is going on. So my
first step would be getting involved to learn more about the
facts and details of that.
Senator Menendez. I appreciate your answer, but there is
one common goal that the three agencies came to in their
memorandum of understanding, and that is, that they will
institute a plan that minimizes the environmental impacts in
the short run and tightens the regulations in the long run. So
I hope that, if confirmed, you are going to pursue that with
the vigor of what the agreement intended.
Mr. Pizarchik. Senator, without knowing the nuances and the
details of that, but if confirmed, I will be working for the
President and I will be carrying out the course charted by the
administration on that.
Senator Menendez. All right. With that, I see no other
members present, but members will have until 5 o'clock tomorrow
to submit additional questions for the record. If they are
submitted, we urge the nominees to answer them as expeditiously
as possible.
With that, the committee stands adjourned.
[Whereupon, at 11:05 a.m., the hearing was adjourned.]
APPENDIX
Responses to Additional Questions
----------
Responses of Jose Antonio Garcia to Questions From Senator Murkowski
indian energy
Question 1. In the Energy Policy Act of 2005, Congress approved an
Indian Energy title with some grant aid to develop energy projects on
Indian lands, tribal reservation lands in the Lower 48 and on Native
corporation lands in Alaska, plus provided $2 billion in loan guarantee
money to help Indian energy projects proceed. While the office of
Indian/tribal energy has made a few grants in the past two years, the
Department's response to make this program work has been truly
underwhelming for those of us from Western states.
a. What is your view of what should be done with the Indian Energy
program?
b. Do we need to rewrite the law by adopting new amendments during
Senate consideration of a pending energy bill?
c. Is the problem purely that we have not appropriated enough
funds, even though the administration sought very little funding for
implementation in its FY 2010 budget?
d. What can we do and what would you propose that we do to help
Indian energy project assistance proceed?
Answer. As I understand it, the Office of Minority Economic Impact
is not directly responsible for the Indian Energy program, but I do
believe that this office should play a key role in championing
diversity and assuring that program offices across the Department
routinely reach out to native-owned small businesses to assure their
participation in energy and technology development opportunities. This
is particularly important now as we work to build a 21st century
economy powered by innovative and sustainable clean energy. If
confirmed, I look forward to working with my colleagues in the
Department to make energy projects for rural and native communities a
greater priority, in the lower 48 states as well as in Alaska and
Hawaii.
Just this past week, Secretary Chu announced up to $13.6 million in
multi-year funding for new clean energy projects on tribal lands,
including over $3 million in Alaska. As I understand the overall DOE
budget at this point, I believe there is sufficient authority and
funding to make the Indian Energy Program work. If confirmed, I will
certainly work with others in the Department to encourage effective
implementation of the Department's American Indian and Alaska Native
Tribal Government Policy.
renewable energy on native lands
Question 2. In Alaska we have a host of excellent potential
renewable energy projects on Native-owned lands. The Fire Island wind
farm owned by Cook Inlet Regional Corp., the Lake Chakachamna lake-tap
hydroelectric project being pursued by TDX Power, a subsidy of the St.
Paul Native village corporation, small hydro development at Thayer
Creek near Angoon being pursued by the Kootzoowoo Native village
corporation of Angoon, to name just three. While there is no program
yet approved to provide actual grant aid nationwide for renewable
energy project construction, there is such aid for Alaska. In Sect. 803
of the Energy Independence and Security Act of 2007, such aid was
authorized, but it has not been funded and the Administration did not
support such funding as part of the stimulus bill earlier this winter.
What is your view about whether Congress should make grant assistance
available for construction of Native energy projects both in Alaska and
nationwide?
Answer. If Congress appropriates funds for Section 803, I would
look forward to working with the leadership of the Department to invest
those funds responsibly.
______
Response of Joseph G. Pizarchik to Question From Senator Bingaman
Question 1. The Committee has received a number of complaints from
environmental groups and citizens about policies you may have promoted
or actions you may have taken as Director of Pennsylvania's Bureau of
Mining and Reclamation. Specifically, these complaints allege that
you----
Promoted the use of surface coal mines for disposal of coal
ash and resisted adopting safeguards recommended by the
National Academy of Sciences;
Weakened Pennsylvania's stream buffer rule, allowing the
filling of stream valleys with mine spoils;
Failed to require sufficient bonding for coal mines and
resisted correcting bonding deficiencies;
Promoted long-wall mining; and
Resisted public participation and transparent decision-
making.
Please respond to these assertions.
Answer. Thank you, Mr. Chairman, for giving me the opportunity to
address these assertions. Before I address each of these points below,
let me first say that none of them is true. It is important to provide
you with some detail in my response.
Coal Ash.--I have not promoted the use of surface coal mines for
disposal of coal ash; in fact, I have consistently taken the position
that Pennsylvania mines are not dumps to be used for the disposal of
waste. However, the beneficial use of certified coal ash, i.e., only
that coal ash that meets certain chemical and physical requirements,
for mine reclamation was authorized in 1986 amendments to the
Pennsylvania Solid Waste Management Act, and Pennsylvania's program for
the use of coal ash was developed, and has been in use, since the mid-
to late 1980's. That program does fall under my jurisdiction as
Director of the Bureau of Mining and Reclamation, and I am responsible
for its implementation.
Under Pennsylvania State law and regulations, the use of coal ash
for reclamation activities is stringently regulated. Applications made
for such beneficial uses must include a detailed operational plan, with
identification of the ash source; a certification from the ash
generator; amount of ash to be used; purposes of the ash utilization;
operational details of how the ash is to be handled and incorporated
into the site; a demonstration that the ash is chemically and
physically suitable for the proposed use; documentation of the
hydrogeology of the use area; and a monitoring program, including
background data collection, designed to show any influence of ash use
on surface and groundwater quality. In addition, public notice and
participation are an integral part of the review process for all
beneficial uses of coal ash on mine sites.
During my tenure, we carried out a self-examination of the program,
and that examination, along with consideration of citizen concerns and
scientific analyses, led us to change the State's policies governing
use of coal ash at mine sites. These changes include more stringent and
increased ground water sampling; improved sampling techniques; more
stringent ash testing and monitoring requirements; and the addition of
controls for temporary storage of ash. The coal ash approved by the
PADEP mining program for the use at coal mines has occurred on a site-
specific basis to facilitate reclamation such as the elimination of
dangerous highwalls or abandoned pits, to facilitate revegetation of
sites lacking suitable soil, or to improve water quality previously
degraded by historic unregulated mining.
Stream Buffer Zone.--I have not weakened Pennsylvania's
longstanding stream buffer zone rule but have diligently implemented
the law, which does not allow the filling of stream valleys.
The State's stream buffer zone regulation has remained unchanged
for over 20 years. Under the regulation, coal-mine operators in
Pennsylvania cannot put mine spoil into streams. Filling streams with
spoil would violate State law as well as adversely affect streams'
aquatic communities. In 1994, the Pennsylvania General Assembly amended
the Coal Refuse Disposal Control Act, replacing the absolute
prohibition on disposing of coal refuse within 100 feet of any stream
with a variance procedure that allows for certain streams to be put
into a pipe or underdrain and then covered with coal refuse, provided
the operator mitigated adverse impacts by restoring or improving other
streams, but those amendments pre-date my tenure as Director of the
Bureau of Mining and Reclamation.
Bonding.--I have not failed to require sufficient bonding for coal
mines, nor have I resisted correcting bonding deficiencies, but have
spent significant time improving the financial guarantee system.
In fact, beginning with my service as program counsel in 1992, I
participated in the drafting of amendments to Pennsylvania's Surface
Mining Conservation and Reclamation Act and regulations to address
shortfalls in Pennsylvania's now-defunct alternate bonding system for
surface coal mines. When Pennsylvania terminated this alternate bonding
system, I helped draft the appropriation legislation that authorized
conversion assistance financial guarantees that prevented defaults by
mine operators due to changes in the State's bonding requirements after
permits had been issued. I developed the legal basis and helped draft
the documents for Pennsylvania's trust fund program, the first program
in the country that provided a means for the State to perpetually treat
post-mining discharges in the event an operator defaulted on its
obligation.
I have proactively sought such funding as well. In 2003, I notified
30 mine operators holding 59 permits that they must post additional
funds to guarantee the State could treat their discharges in
perpetuity. From the time the State began tracking it in 2007, the
total amount of bond posted has grown from about $122 million to
approximately $264 million. Additionally, during my tenure the bond
rate guidelines for calculating surface mine reclamation bonds have
been adjusted annually to reflect the State's actual costs for
completing reclamation; bond rates for underground mines were adjusted
for the first time in over 20 years. I led the effort in Pennsylvania
to develop a legally enforceable funding stream to pay for treatment of
discharges on sites forfeited under the defunct alternate bonding
system, mentioned above. Through my efforts, a consensus solution was
developed and implemented with input from the regulated community, the
Mining and Reclamation Advisory Board, the public, and members of the
General Assembly.
Longwall Mining.--I have not promoted longwall mining but have
advocated for landowner protections and the use of science-based
decision-making.
In fact, as program counsel and Director, I worked on two
rulemakings designed to implement landowner protections from the 1994
amendments to the State statute and advocated for an interpretation of
the provisions that required operators to repair or compensate for
damage to all dwellings in place at the time of mining. This
interpretation provided more inclusive coverage and enabled the State
to demonstrate that its subsidence program was as effective as federal
counterpart regulations. I also led the team that developed the surface
water protection policy, which is based on science. Whole areas of the
State are off limits to mining because of excessive risk to streams
posed by longwall mining-induced subsidence. At the same time, sound
science was used to identify the areas where responsible longwall
mining would not threaten stream integrity. As Director, I have
steadfastly supported decisions to deny longwall mining plans that
would have resulted in permanent flow loss in overlying streams.
Public Participation and Transparency.--Finally, I have not
resisted public participation and transparent decision-making but have
been an advocate for increased public participation during my tenure as
Director.
During my tenure as Director, the Pennsylvania Bureau of Mining and
Reclamation has routinely used email distribution lists--in fact it has
three separate lists--to notify interested persons and organizations of
draft policies, regulations, and program changes. BMR routinely answers
public information requests without requiring the submittal of a formal
Right to Know Request, which is the State's version of the Freedom of
Information Act. Since 2002, we have answered over 1,100 such requests
while formal requests have been, I believe, less than a dozen.
I have also provided opportunities for public participation in the
drafting of policies and regulations that are over and above those
required by State policy or law. For example, currently the State is
conducting voluntary meetings with coal ash stakeholders, including the
Environmental Integrity Project, Earth Justice, Mountain Watershed
Association, Sierra Club and others to obtain their input on
establishing regulatory trigger mechanisms for when to institute site
assessments and when to initiate corrective action in the event coal
ash used at a mine site begins to leach pollutants that could affect
ground water. These meetings are not required by law; I elected to hold
them in order to obtain more information and a better understanding of
stakeholder views on these two points. I have also held similar
meetings with other interested groups that have resulted in input and
information considered in developing other regulations and standards.
Responses of Joseph G. Pizarchik to Questions From Senator Murkowski
state role in interagency action plan on surface mining
Question 2. The Interior Department recently signed an MOU with EPA
and the Corps of Engineers to develop an interagency action plan on
surface coal mining. Among the ``short term actions'' identified, OSM
has been tasked with determining how it may alter agency oversight of
state permitting, enforcement, and regulatory activities.
How do you envision these directives aligning with the exclusive
jurisdiction vested in the states under the Surface Mining Control and
Reclamation Act for the regulation of coal mining operations?
Do you believe that there should be an official role for the states
in the process of developing any recommendations or reaching any
decisions in the context of this interagency action plan?
Answer. The Surface Mining Control and Reclamation Act, which
incorporated the concept of state primacy, envisions OSM and the states
working together cooperatively. I believe that it is critical to the
success of the interagency action plan for state regulatory authorities
to participate in developing any recommendations.
opportunity to respond to criticism
Question 3. The Mountain Watershed Association has said, in
opposing your nomination, that ``we need a consensus builder and
someone who thinks outside of the box to help solve this nation's
energy challenges, not someone who totes the company line regardless of
the impacts.'' Do you care to respond to their criticisms?
Answer. I do not agree with this assessment of my approach. I have
worked with stakeholders to reach solutions on a variety of matters
during my tenure. For example, I initiated a process of face-to-face
meetings that, to my knowledge, had not been used in Pennsylvania to
resolve program differences between the State, the federal government,
citizens, and the regulated community. These meetings and the candid
discussions that ensued led to a better understanding by all of the
other stakeholders' positions and views. In these instances, my
initiation of such a process led to successful resolution of the
issues--without resort to litigation. If confirmed, I hope to utilize
such innovative means and foster cooperation among stakeholders as
Director of the Office of Surface Mining Reclamation and Enforcement.
cooperative federalism approach taken by smcra
Question 4. Coming from a State program, you have clearly developed
an understanding of the meaning and importance of State primacy, which
allows States to have exclusive regulatory jurisdiction within their
respective borders.
If you are confirmed as OSM Director, will you pledge to respect
the longstanding principle of state primacy established in SMCRA?
What specific role do you see the states playing under the Act and
how do you envision federal oversight in light of this role?
Answer. I recognize and fully support the importance of state
primacy. The states have the primary responsibility for implementing
SMCRA's requirements, and OSM must ensure that the states'
implementation is appropriate. As I noted at my confirmation hearing,
this can and should be done cooperatively. If confirmed, I will seek to
ensure that it is.
opportunity for public comment on rulemakings
Question 5. The Administrative Procedure Act establishes a process
for federal agencies to follow regarding changes to their rules and
allowing for public notice and comment on those decisions. When taking
major policy actions, will you commit to do so in a transparent and
open manner that allows public participation through the Administrative
Procedures Act process?
Answer. During my tenure as Director of the Pennsylvania Bureau of
Mining and Reclamation, I have been a strong proponent of increasing
public participation in the processes under my management jurisdiction.
If confirmed, I commit to ensuring that OSM's rulemaking process fully
complies with the public participation provisions of the Administrative
Procedure Act.
1872 mining law reform
Question 6. This Committee has jurisdiction over the 1872 Mining
Law, and may consider changes to that statute in the coming months.
While not directly related, you have some valuable experience in the
areas we'll be considering--you were one of the authors of
Pennsylvania's Environmental Good Samaritan Act and you were actively
involved in the administration of that State's abandoned mine clean up
program. While there is not necessarily an explicit role for OSM, but
understanding the experience you bring to the table, will you commit to
working constructively with us on developing effective reforms to the
1872 Mining Law?
Answer. Yes. I am aware that Secretary Salazar has indicated that
reform of the 1872 Mining Law is a priority. I stand prepared, if
confirmed, to work constructively and in any capacity needed to bring
this law into the 21st century.
Responses of Joseph G. Pizarchik to Questions From Senator Wyden
Question 7. Coal ash disposal in coal mines is a controversial
issue in Pennsylvania and elsewhere. In 2005, the National Research
Council (NRC) completed a study concluding while disposal in coal mines
might serve as a possible disposal alternative to a vexing
environmental problem, it could pose significant environmental risks if
not properly carried out. During your tenure, how many mines have been
permitted to receive coal ash in Pennsylvania to date, on what dates,
and for what volumes of waste? What changes were made in your program
and regulations following release of the NRC report to conform to its
recommendations?
Answer. As the chart below indicates, since my tenure as Director
began in 2002, 21 permits were issued or amended for coal ash use at
mines. An additional eight reclamation contracts were issued that
utilized coal ash. The reclamation contracts are short-term projects
(usually one year) that typically use small volumes of coal ash to
manufacture soil or to stabilize the surface. For comparison,
approximately 170 mine sites and reclamation contracts have been issued
under this program for coal ash use approval since 1988. An average of
about 50 sites are utilized every year with the others remaining
inactive or completed.
Volumes of ash placed at each site vary due to methods of
compaction and differing uses, but can range from a few hundred tons
for soil amendments to several million tons used to fill abandoned
pits. Individual site volume is generally tracked on a site-specific
basis through District Mining Offices and is not readily available in
our central office. However, the volume of coal ash used collectively
for mine sites in Pennsylvania was tracked beginning in 2007, when an
aggregate of 11.4 million tons were used, and 2008, when 11.0 million
tons were used.
Mine permits issued or amended for coal ash beneficial use since 2002
------------------------------------------------------------------------
------------------------------------------------------------------------
02020201 Robindale Renton 2002
Energy Svc
Inc.
------------------------------------------------------------------------
03050105 Amerikohl George 2006
Mining Inc.
------------------------------------------------------------------------
11020202 Ebensburg Power Nanty Glo 2002
Co. West
------------------------------------------------------------------------
11070202 Ebensburg Power Nanty Glo 2007
Co. East
------------------------------------------------------------------------
13070101 Keystone No 2 Strip 2007
Anthracite
Marketing
Corp.
------------------------------------------------------------------------
16070103 RFI Energy RFI 548 2007
North
------------------------------------------------------------------------
17010102 Compass Coal Camp Run 2002
Co. Mine
------------------------------------------------------------------------
17030112 U. S. Operating North Camp 2003
Service Run Mine
------------------------------------------------------------------------
17990103 River Hill Coal Kasubick 2003
Co.
------------------------------------------------------------------------
24020102 P & N Coal Co Benezette 2003
Inc.
------------------------------------------------------------------------
24030103 Amfire Mining KPB 127 2003
Co LLC Buhler
West
------------------------------------------------------------------------
43020103 Ben Hal Mining Schumann 2003
Co.
------------------------------------------------------------------------
61970102 Rusnak Coal Co. Hawk Run 2003
Mine
------------------------------------------------------------------------
10030101 Quality Hindman 2003
Aggregates
------------------------------------------------------------------------
11940201 Amfire Mining, St. Michael 2003
LLC Pile
------------------------------------------------------------------------
11070201 Fuel Recovery Lilly 2007
Inc. Refuse
Pile
------------------------------------------------------------------------
11070203 Ridge Energy, Marstaller 2007
Inc. Pile
------------------------------------------------------------------------
32040202 Robindale Charles 2004
Energy Svc., Refuse
Inc. Pile
------------------------------------------------------------------------
49050101 Farragut Farragut 2005
Anthracite Mine
------------------------------------------------------------------------
56070201 Robindale Penn 2007
Energy, Inc. Pocahontas
------------------------------------------------------------------------
16090101 RFI Energy 548 NORTH 2 2009
MINE
------------------------------------------------------------------------
Reclamation Contracts--not
mine sites
------------------------------------------------------------------------
10-06-02(GFCC) Quality Marett 2006
Aggregates Project
Inc.
------------------------------------------------------------------------
32-03-02 Robindale Blacklick 2003
Energy Svc GFCC
Inc.
------------------------------------------------------------------------
32-04-01 Robindale Heilwood 2004
Energy Site
Services, Inc.
------------------------------------------------------------------------
32-06-01 (NCC) Gator Coal, LP 2006
------------------------------------------------------------------------
32-07-05 Robindale Ballas 2007
Energy Svc Refuse
Inc. Site
------------------------------------------------------------------------
65-05-04(GFCC) Bedrock Mines 2005
LP
------------------------------------------------------------------------
65-06-02 GFCC) Robindale Whitney 2006
Energy, Inc
------------------------------------------------------------------------
11-07-01 Robindale Beaverdale 2007
Energy Site
Services, Inc.
------------------------------------------------------------------------
Following release of the NRC report and after consideration of
citizen concerns, we implemented the following changes to the program
for use of ash at mines:
Background groundwater sampling was doubled from six to at
least twelve monthly samples covering the complete hydrologic
cycle.
Groundwater sampling methods have been expanded from 27 to
40 different testing parameters.
Groundwater sampling of all 40 parameters now occurs every
quarter instead of once per year.
Water samples collected are tested for total and dissolved
metals instead of just total metals.
Sampling techniques have been improved, including purging of
monitoring wells to improve quality of the data.
Monitoring must include three or more downgradient points
and at least one upgradient to obtain the necessary data.
Monitoring will occur for at least 10 years after ash
placement stops.
Testing of ash for use approval now requires leaching
parameters for 32 substances, up from 20, and is a centralized,
standardized process to ensure consistency.
Ash testing at the generation facility doubled to at least
four times per year.
Acceptable leaching limits were lowered for arsenic, lead,
selenium and boron.
Controls for temporary storage will be required.
Added assessment procedures for when monitoring indicates a
potential problem.
Added corrective action procedures should the assessment
find a problem caused by the ash.
Amount of ash used at a mine is to be reported by generator
and mine operator.
A 50% increase in the amount of ash to be used on a mine
requires new public notice.
Ash generated from fuels other than coal or waste coal are
required to obtain a waste general permit approval and mine
suitability determination.
Question 8. An extensive 3-year study by the Clean Air Taskforce of
15 mines where the Pennsylvania Department of Environmental Protection
(PADEP) permitted the disposal of coal ash, entitled Impacts on Water
Quality from Placement of Coal Combustion Waste in Pennsylvania Coal
Mines was completed in 2007 and concluded that PADEP's data indicated
that ash is contaminating nearby water supplies in two-thirds (10) of
the mines studied with arsenic, lead, cadmium, selenium, nickel, zinc,
sulfate, chloride, manganese, boron and other contaminants exceeding
drinking water standards, health advisories, or water quality standards
often by orders of magnitude. In your testimony before the Committee,
you indicated that your agency had reviewed the claims made in the
report and found them to be without basis and that no additional
pollution was attributable to ash disposal. Please confirm whether this
is, in fact, your view and please provide the technical analysis that
supports your position.
Answer. I did indicate that the PADEP review of the allegations did
not find pollution that resulted from the coal ash placed at the sites.
The PADEP response to the allegations of pollution from the placement
of coal ash and the PADEP response to Environmental Integrity Project
allegations are available at: http://www.dep.state.pa.us/dep/deputate/
minres/bmr/programs/beneficial.htm, and include the following titles:
PDEP Response to Clean Air Task Force Report (2007);
PADEP Response to EIP Allegations of Lead Pollution Related
to BD Mining (2009)
PADEP Response to EIP Allegations to Trace Metal Pollution
Related to McDermott and Ernest (2009)
For your convenience, I am also including these documents as
attachment A* to these responses.
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* Documents have been retained in committee files.
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The agency has also produced a publication entitled ``Coal Ash
Beneficial Use in Mine Reclamation and Mine Drainage Remediation in
Pennsylvania (2004)'' that can also be accessed on the website. This
publication is intended as a peer-reviewed document on the beneficial
use of coal ash in mine reclamation and mine drainage remediation in
Pennsylvania.
Question 9. It is my understanding that permits issued under the
Pennsylvania program for the beneficial use of coal ash in mines have
been found deficient by an Administrative Law Judge in your own
department and by judges of the Interior Board of Land Appeals (IBLA).
In Citizen Advocates United to Safeguard the Environment Inc., v.
PADEP, EHB Docket No. 2006-005-L (Consolidated with 2005-329-L) (Issued
Nov. 2, 2007), a state administrative law judge found that a monitoring
system approved by the Department for a mine reclamation site permitted
to take 10 million cubic yards of residual wastes, primarily a river
dredge-coal ash mixture, was not capable of detecting offsite
groundwater contamination from the waste despite offsite drinking water
wells found in all directions around the site. In Robert Gadinski, 177
I.B.L.A. 373 (2009), the IBLA sided with a citizen and groundwater
scientist and against PADEP finding that the public wells used in
Tremont, PA are potentially threatened by the failure to characterize
and sufficiently monitor groundwater flows from a nearby ash minefill.
Do you agree that such deficiencies in a mine ash placement permit, as
identified in these decisions, which can lead to the contamination of
offsite water supplies, are a fundamental violation of SMCRA? If not,
why not? Does SMCRA require the issuance of permits for surface mining
that demonstrate clearly, through effective characterization,
monitoring and safeguards, that such damage will be avoided? What
corrective actions has the Department taken, or in the IBLA case, does
it intend to take, as a result of these decisions?
Answer. Before I answer your specific questions, let me offer some
clarification regarding the two decisions that you mention.
First, Citizen Advocates United to Safeguard the Environment Inc.,
v. PADEP did not involve the use of coal ash at a permitted coal mine,
but was an appeal from a Determination of Applicability of a Residual
Waste Beneficial Use General Permit issued by the PADEP's Waste
Program. Further, the site itself is a Brownfield Remediation site
involving an old landfill, abandoned surface mining areas, and old
deep-mining impacts. As Director of the Bureau of Mining and
Reclamation and its programs, I have no authority for permits issued by
Pennsylvania's Waste Program or over actions taken by the Brownfields
Remediation Program or the Bureau of Abandoned Mine Reclamation. SMCRA
was not applicable to this site because it was a Brownfield site being
remediated under a consent order and agreement pursuant to the Land
Recycling and Environmental Remediation Standards Act, 35 P.S. sec.
6026.101 et seq.
My understanding is that the EHB upheld the General Permit but
considered the groundwater monitoring plan insufficient primarily
because of the complexity of the site, with its underground mine pools,
draining of pools to a mine tunnel, and other complicating hydrologic
features. The expert testimony raised some questions about whether
additional monitoring wells and characterization of the site was
needed, and the EHB remanded to PADEP for the purpose of improving the
groundwater monitoring plan.
Second, the appeal in Robert Gadinski was from an OSM informal
review and approval of a PADEP response to a Ten Day Notice that there
was no violation because no contamination of the public water supply
well had occurred. The IBLA decision involved the OSM standard of
review, and the question was whether the record (i.e., the data
provided by the State to OSM) was sufficient for OSM to reach its
conclusion. The IBLA determined that it was not, and that OSM should
have ordered a federal inspection pursuant to 30 CFR 842.11(b).
The IBLA made no finding regarding contamination of water supply
wells at the site. While the IBLA raised the issue of whether the
hydrologic balance of the site had been impacted by ash placement
activities, it made no finding to this effect. Regardless, the State
was not informed of this appeal to the IBLA by OSM, and PADEP did not
have any opportunity to explain its investigation or supplement the
record before the IBLA.
With regard to your specific questions, I agree that failure to
properly characterize a specific coal ash as suitable for use at a
permitted mine site and failure to properly characterize a mine site
before the regulatory authority authorizes the placement of mine ash
could have the potential to lead to contamination of offsite water
supplies. Contamination of offsite water supplies is not authorized by
SMCRA. Further, when permitting surface coal mines, PADEP will not
issue a surface coal mining permit if there is evidence that the
proposed mining will adversely affect a public water supply.
As a result of the Gadinski decision, the State has met with the
OSM's Harrisburg Field Office regarding an investigation as to whether
the hydrologic balance of the site has been impacted and has proposed
that a thorough joint investigation be performed. I expect that
investigation to begin once approvals from OSM are received. I have
also arranged with OSM that the State bureau will be informed of any
similar federal administrative appeals so that PADEP can intervene and
present its investigation and expert findings. This cooperative
approach should significantly reduce the time needed to resolve citizen
complaints and should provide IBLA the information necessary to render
a decision.
Question 10. It is my understanding that according to Pennsylvania
Department of Environmental Protection (PADEP), one of the primary
justifications for approval of the dumping of millions of tons of coal
combustion waste in mines is to neutralize or cure acid mine drainage.
How many mines in Pennsylvania have been successfully remediated or
cleaned up by this process? Can you please provide the committee with a
list of these mines? Do you require long-term monitoring at these sites
to ensure that the alkalinity of the coal ashes is not exhausted
resulting in the release of metals and other ash constituents to water
at these sites.
Answer. As I noted in response to a previous question, the State's
mining program does not allow permitted mines to be used as dumps for
coal combustion wastes or other wastes. Only coal ash that qualifies
for use certification can be placed at a permitted coal mine in
furtherance of the reclamation of the mine. I understand that there
have been 33 mines where coal ash has been approved for use as alkaline
addition, and I am providing a list of those mines below.
Unfortunately, the results of the use of ash at these sites are not
maintained in PADEP central office files, and I have requested that our
district offices identify sites successfully addressed. Specific
examples that I am aware of where the removal of waste coal and
reclamation with coal ash has improved water quality include the
Leechburg site and the Revloc site, both listed below. As of April 18,
2009, PADEP requires monitoring to continue for 10 years after the last
year of ash placement.
Alkaline Addition sites
Permit Company Site Municipality
02020201 Robindale Energy Svc Inc. Renton Plum Borough
11020202 Ebensburg Power Co. Nanty Glo West Nanty Glo Borough
11070202 Ebensburg Power Co. Nanty Glo East Nanty Glo Borough
11900201 Maple Coal Company, Inc. Colver Barr
11970201 Maple Coal Company, Inc. Rail Yard Site Barr
32950201 Cambria Reclamation Corp. Ernest White
32950202 Cambria Reclamation, Inc. Lucerne Center
56743701 Robindale Energy Services, Inc. Custom Coals Laurel Shade
24020102 P & N Coal Co Inc. Benezette BENEZETTE
24030103 Amfire Mining Co LLC KPB 127 Buhler West HORTON
43020103 Ben Hal Mining Co. Schumann SANDY LAKE TWP
61970102 Rusnak Coal Co. Hawk Run Mine IRWIN
10-06-02 Quality Aggregates Inc. Marett Project ALLEGHENY
17990107 River Hill Coal Co. Mid-Penn #1 Bigler
11833026 Greenley Energy Holdings of PA Mine 42 Scalp Level Borough
11880201 Ebensburg Power Co. Revloc Cambria
11890201 Greenley Energy Holdings of PA Mine 42 A Scalp Level Borough
11930102 EP Bender Coal Company 54 Job Dean
11960202 Ebensburg Power Co. Revloc 2 Cambria
11980103 Laurel Land Development McFadden No 2 Mine Blacklick
16910104 TDK COAL SALES INC SANDY HOLLOW MINE MADISON
17950111 SKY HAVEN COAL INC BLOOM 1 MINE Bigler
17950115 LARSON ENT INC SWAMP POODLE MINE Morris /Cooper
17970101 Sky Haven Coal Inc. E. M. Brown #1 Lawrence
17980114 LARSON ENT INC GRAHAM 2 MINE Graham
32940105 Kent Coal Mining Company Lucerne #2 Center
32980108 Amerikohl Mining, Inc. JACKSONVILLE SURF MINE Young
65050102 Bedrock Mines Marco Washington
32-00-04 Amerikohl Mining, Inc. Ernest Refuse Area 4 Rayne
32-98-01 Amerikohl Mining, Inc. JACKSONVILLE HILL SITE Young
33-00-02 ACV POWER CORP Soldier Project WINSLOW
CO&A Leechburg site
11950102 Laurel Land Development McDermott Jackson
Question 11. How many of the mines where coal ash disposal has
occurred have long-term monitoring (defined in federal waste
regulations as 30-year post-closure monitoring) to ensure that
hazardous chemicals do not escape the disposal areas and enter water
supplies?
Answer. To clarify, coal ash disposal does not occur at permitted
coal mines in Pennsylvania but is carried out instead in landfills.
Permits for this type of disposal are issued by PADEP's Waste Program,
not the Bureau of Mining and Reclamation, in accordance with the Solid
Waste Management Act, the Clean Streams Law, and the regulations
promulgated pursuant to those statutes.
As I noted in response to a previous question, permitting the use
of certified ash--ash that has been certified to meet certain chemical
and physical requirements--for placement as part of the reclamation of
mines began in the mid-to late 1980s. All sites that are currently
using ash for reclamation purposes will be required to be monitored for
at least 10 years after placement of ash concludes.
Question 12. Are there specific corrective action standards in the
permits for these sites that require cleanup of contamination from ash
if it exceeds certain levels? Please provide a list of those permits.
Answer. The permits contain monitoring requirements for the coal
ash and for the groundwater and surface water sampling points and
reporting requirements for updated maps and volumes each year. The
permits do not contain corrective action standards, but as noted in my
response to a previous question, the ash must be certified to meet
certain quality standards, including a dry weight analysis and leachate
values, before it can be used for reclamation purposes. The current
frequency for testing these samples is 4 times per year, and a pattern
of exceedance of these quality standards will eliminate the source from
use in a reclamation project. A one-time exceedance triggers increased
sampling and an investigation as to the cause of the result.
For water monitoring, samples are submitted quarterly. The data is
assessed to see if any degradation trends are occurring. An anomalous
sample result is investigated first by the operator (through a
resample) and then, if necessary, by the agency.
Currently, typical compliance actions related to coal ash use are
related to missed, late or incomplete sampling rounds or reporting.
There are instances in which ash sources ceased to be used due to
exceeding parameters; placed ash material was required to be amended
due to a low pH caused by a generator malfunction; and on various
occasions, operators on site were cited for failure to follow operation
procedures (such as requirements for compaction, dust suppression,
temporary stockpiles, etc.). The Department has not taken corrective
action for remediation of groundwater because no polluting events have
been attributable to coal ash beneficial use.
Question 13. How many of these mines have bonds or other financial
assurance specifically directed to ensure that hazardous chemicals in
the ash, should they escape into water supplies, can be remediated by
the mine owner or the utility dumping the waste and not the taxpayer?
Answer. Permitted coal mines are not used as dumps for chemically
hazardous ash. Ash used for reclamation purposes must be tested and
certified for the specified use before it can be used at a mine. The
mine operator must demonstrate, and the State must find, that there is
no presumptive evidence of potential pollution from the ash before the
permit will be amended to allow the use of coal ash for reclamation
activities. Permit amendments are subject to public notice, comment,
and appeal. Because there is no evidence of pollution resulting from
coal ash used for these reclamation purposes, no bond is required to be
posted to pay for corrective action. Should site monitoring determine
that coal ash is causing pollution, PADEP has authority to require the
mine operator to post the bond necessary to complete corrective action
and has used that authority when coal mining has caused water
pollution. If the operator does not post the additional bond, the State
will proceed to forfeiture, ultimately resulting in the permittee and
all owners and controllers being banned from domestic coal mining.
Question 14. How many of the surface mines in Pennsylvania where
coal ash disposal has occurred have liners to ensure that toxic
chemicals in the ash do not migrate from the disposal site?
Answer. To my knowledge, three coal refuse disposal/ash placement
sites are lined with either clay or synthetic lining. These sites are:
EME Homer City, generation site;
Rosebud Mining Co., Lady Jane Preparation Plant; and
TJS Mining, CRD #2
Question 15. How many of these coal ash disposal sites are required
to dispose of the toxic industrial waste above the seasonal high
groundwater table so that groundwater doesn't come into contact with
the toxic materials and is not thereby contaminated by heavy metals
that can leach out of the waste?
Answer. Again, coal ash that has been approved by the PADEP mining
program for use in a reclamation project is tested and certified for
the specified use before it can be used at a mine; permitted coal mines
are not used as dumps for chemically hazardous waste. Nevertheless, it
is my understanding that in every coal mine site where coal ash use has
been approved, it is placed above the local groundwater table. No other
ash placement occurs within the saturated zone (or groundwater table).
All collected/perched water is required to be removed from a pit prior
to ash placement at a mine site. All best management practices employed
minimize the contact of ash with runoff water.
Question 16. As discussed in detail in the NRC report, substantive
improvements are needed in the leach tests used to characterize coal
combustion wastes placed in mines. You indicated that you have
incorporated the recommendations of the NRC report into your mine ash
placement program. Can you tell us what improvements are being made to
the test(s) that you will require for coal ashes placed in mines under
your program?
Answer. In this instance, for the reasons discussed below, we are
continuing to use the best currently available, EPA-approved test. I
apologize, as I could have been more precise in my testimony.
Unfortunately, no test yet exists to characterize coal ash as if it
were placed in a mine before it is actually placed in a mine, so it
would be impossible to implement such a test. The PADEP uses the
Synthetic Precipitation Leaching Procedure, or SPLP, which is deemed
more representative of the leaching conditions of rock/soil material
than the Toxicity Characteristic Leachate Procedure, which is used for
solid waste at landfills. While there are some concerns about the
validity of the SPLP testing under real-world conditions, this test
remains in widespread use.
The continued use of the SPLP test has proven to be effective in
Pennsylvania in predicting whether harmful substances will leach out of
the certified ash once it is placed in the coal mine environment. We
have been successfully using this test on permitted coal mine sites for
approximately 20 years.
PADEP staff has extensive experience in leach testing and has
examined protocols in various laboratory settings. While the NRC
recommends alternate methods that require a higher degree of skill by
the collector and the laboratory, which leads to higher costs, these
new types of batch, column, and multipoint leach tests have not been
used extensively enough to evaluate their effectiveness. The NRC report
concedes that more research is needed in the area of predicting
characteristics through leach testing. Both the Pennsylvania Waste and
Mining programs attempt to keep abreast of all new research results
related to this topic and are willing to examine new tests for
feasibility and to make necessary changes to the procedures if
warranted.
The new leaching tests that have been proposed for use by some
environmental groups are still under development; methods have not been
standardized and labs are not equipped to conduct these tests. When
these issues are overcome, it is expected that new and better leach
tests will be adopted by various environmental agencies as a new
standard. In addition, local industry representatives for coal-burning
energy plants have expressed interest in conducting additional research
and monitoring of coal ash placement areas to help answer some
questions regarding long-term chemical and physical stability of the
ash material.
Question 17. As noted in the NRC report, coal ash disposal
practices are not clearly covered at the Federal level by either the
Surface Mining Control and Reclamation Act (SMCRA) nor the Resource
Conservation and Recovery Act (RCRA) and their respective regulatory
regimes. As a state regulator who has permitted this practice and as
someone being nominated to be in charge of implementing SMCRA, what is
your view on what actions should be taken at the federal level to adopt
national standards for both the disposal of coal combustion wastes and
their use in mine reclamation?
Answer. Based on my experience, it is clear that not all coal ash
is the same nor is all coal ash suitable for use at mine sites, either
coal or other types of mines. It is also clear that not all mines are
suitable for the placement of coal ash. The chemical and physical
properties of ash can vary significantly due to the source of the coal,
the combustion technology used, the pollution controls, and the types
of other fuels used. If confirmed, I look forward to working with
others in the Administration and in Congress toward developing policies
on how to best manage coal ash use and disposal based on sound science
and crafted to protect the public and the environment.
Question 18. Following the 2008 TVA ash disaster, the U.S.
Environmental Protection Agency announced in March of this year that it
intended to issue regulations governing coal ash disposal. Given your
extensive experience with the disposal and regulation coal ash what is
your view on whether coal ash disposal should be regulated by U.S. EPA
under the Solid Waste Disposal Act or RCRA and if it should be
regulated, to what extent? If confirmed as the Director, what role do
you intend to play in EPA's rulemaking effort? What role should EPA and
the standards that it promulgates play in the regulation of coal ash in
surface mines?
Answer. As I noted in my response to the previous question, my
experience as a state regulator has led me to conclude that not all
coal ash is created equal. Consequently, the regulation and management
of coal ash should be based on the chemical and physical properties of
the ash and the character of the site where it would be placed. If
confirmed as Director, it is my intention to actively engage with
others in the Administration and to work cooperatively in the
development of a practical and protective regulatory framework for the
management of coal combustion residues in order to protect the
environment and the public.
Question 19. In a letter to the Committee the Sierra Club and Earth
Justice contend that in 2001, as primary regulatory counsel, you
supervised the drafting of state regulations that weakened the state's
stream buffer zone rule allowing the filling of stream valleys in
Pennsylvania. What role did you play in drafting the Pennsylvania
regulations on stream buffer zones? On April 27, 2009, Interior
Secretary Salazar announced that the Interior Department would move to
rescind the 1983 Federal stream buffer rule allowing valley fill and
mountaintop removal. Do you believe that the existing Federal stream
buffer zone rule should be revised and if so, in what way?
Answer. The Pennsylvania mining program has two stream buffer zone
rules. The rule that applies to coal mining has not been changed in
over twenty years, and requires the applicant that seeks a variance to
demonstrate ``beyond a reasonable doubt'' that there will be no
``adverse hydrologic impacts, water quality impacts or other
environmental resource impacts . . . .'' 25 Pa. Code 86.102(12). For
example, at my direction, violation of this rule as a basis for permit
denial was added to the permit denial letter where an applicant
proposed using spoil to bury one and a half mile of streams.
The other SBZ rule applies solely to coal refuse disposal, and
appears in the Coal Refuse Disposal Control Act (CRDCA), 52 P.S.
section 30.56a(5), and in the coal refuse disposal regulations, 25 Pa.
Code 90.49. As program counsel, I assisted the Department in drafting
changes to the regulations that were necessary to ensure that those
regulations were consistent with requirements contained in amendments
to the State statute that were enacted in 1994 to authorize variances
with required prevention or mitigation of adverse impacts. As counsel,
my role was also to ensure that the revised regulations were not
inconsistent with and were as effective as federal SMCRA and that the
revised regulations did not violate the federal Clean Water Act and
would not contribute to violation of applicable state and federal water
quality standards. I approved the revised regulations for form and
legality.
Those revised regulations were approved by OSM and the
Environmental Protection Agency, with input from the U.S. Fish and
Wildlife Service and the Army Corps of Engineers.
With regard to the stream buffer zone rule, I believe that
Secretary Salazar announced in April that he was asking the district
court to vacate and remand the Bush Administration's last minute change
to the 1983 stream buffer zone regulations. During the public comment
period on that Bush Administration proposal to change the 1983
regulation, my program provided comments indicating that Pennsylvania
did not support the proposal.
Question 20. In letters to the Committee from the Sierra Club/Earth
Justice and PennFuture, the groups contends that the Pennsylvania coal
program under your leadership had significant deficiencies in its
bonding program. They contend that you did not take action to correct
these deficiencies until the program was found insufficient by a
Federal Appeals Court (Pennsylvania Federation of Sportsmen's Clubs,
Inc. V. Kempthorne, 497 F.3d 377 (3d Cir. 2007). However, despite
recent changes, the result, they contend, is a program that is still
not in conformance with SMRCA requirements for financial guarantees to
reclaim land and prevent water pollution from coal mining. Do you
believe that the Pennsylvania bonding program fully complies with the
letter and intent of SMCRA, and if so, on what basis?
Answer. I believe the Pennsylvania bonding program fully complies
with the letter and intent of SMCRA. Program amendments submitted to
OSM on August 1, 2008, provide a detailed explanation of how the
State's bonding is consistent with and as effective as federal law.
This information can be accessed at the following link: http://
www.dep.state.pa.us/dep/deputate/minres/bmr/bonding/
Response_to_Part732_Notices/Submittal/Notices_folder01.htm
The program amendment describes the changes PADEP made to its
bonding program and explains how the changes meet the federal
standards. PADEP terminated the alternate bonding system to halt the
accumulation of more reclamation costs. All mine operators must post
bonds equal to the full cost of the amount it would take the State to
complete reclamation. PADEP demonstrated that it has sufficient money
to complete the land reclamation on the forfeited sites, to build mine
drainage treatment systems on sites forfeited under the defunct
alternate bonding system, and that it has a legally enforceable
mechanism in place to generate the funds necessary to perpetually treat
these discharges. The program amendment addresses the Part 732 Notices
and the required demonstration and or program amendment codified in 30
CFR section 938.16(h).
An update of the status of efforts on implementing these changes is
also available at: http://www.dep.state.pa.us/dep/deputate/minres/bmr/
bonding/Primacy_ABS_Bond_Forfeiture_Update_January_2009/
Primacy_ABS_Bond_Jan_2009.htm.
During my tenure as program counsel and as Director, I have worked
extensively on correcting identified deficiencies. Beginning in 1992 I
participated in drafting amendments to the State's version of SMCRA and
regulations to address shortfalls in the State's now-defunct alternate
bonding system for surface coal mines. When Pennsylvania terminated
this alternate bonding system, I helped draft the appropriation
legislation that authorized conversion assistance financial guarantees
that prevented defaults by mine operators due to changes in the State's
bonding requirements after permits had been issued. I developed the
legal basis and helped draft the documents for Pennsylvania's trust
fund program, the first program in the country that provided a means
for the State to perpetually treat post-mining discharges in the event
an operator defaulted on its obligation.
I have proactively sought such funding as well. In 2003, I notified
30 mine operators holding 59 permits that they were required to post
additional funds to guarantee the State could treat their discharges in
perpetuity. From the time the State began tracking the amount of bond
posted in 2007, the total amount has grown from about $122 million to
approximately $264 million. Additionally, during my tenure, the bond
rate guidelines for calculating surface mine reclamation bonds have
been adjusted annually to reflect the State's actual costs for
completing reclamation; bond rates for underground mines were adjusted
for the first time in over 20 years. I led the effort in Pennsylvania
to develop a legally enforceable funding stream to pay for treatment of
discharges on sites forfeited under the defunct alternate bonding
system mentioned above. Through my efforts, a consensus solution was
developed and implemented with input from the regulated community, the
Mining and Reclamation Advisory Board, the public, and members of the
General Assembly.
Question 21. In your testimony before the Committee, you testified
that you carried out a policy of transparency and openness. In a letter
to the Committee from a number of Pennsylvania citizens (Citizens
letter), the claim is made that you were resistant to citizen input by
limiting public testimony in permitting proceedings and holding
hearings only during agency work day hours. In addition, the Sierra
Club/ Earth Justice and PennFuture letters contend that you joined with
the Bush Administration in attempting to prevent citizens from
obtaining information under the Freedom of Information Act (FOIA) by
claiming in an amicus curiae filing before the Third Circuit that
correspondence between PADEP and the Office of Surface Mining was
eligible for protection from public disclosure as ``intra-agency
memorandums or letters.''
Did you take or recommend such actions?
How will you, if confirmed as Director of OSM, specifically address
these issues and promote meaningful participation of citizens in
permitting proceedings and rulemakings, promote transparency in
decision-making by providing full access to agency documents, and
ensure access to public meetings for members of the working public?
Answer. During my tenure as Director, the State mining program
operated with serious fiscal limitations due to reduced state and
federal funding. My program was under a Department-wide policy that
prohibited the payment of overtime, which was required for State
employees who would attend evening public hearings. A decision was made
at the Department level that foregoing evening public hearings was one
option that could save funds and have the least adverse impact on our
programs. During briefings with Congress, I and my counterparts in
other states that were experiencing similar funding shortfalls apprised
staff of how limited funding was adversely affecting our ability to
effectively implement SMCRA. Congress ultimately appropriated
additional funds in the 2008-2009 fiscal year, but State revenue is
still suffering. PADEP is holding, when requested, evening public
hearings with management staff, which does not require payment of
overtime.
I did not recommend that the State file the amicus curiae brief
with the Third Circuit regarding the Freedom of Information Act
litigation. Moreover, I did not participate in the development or
implementation of litigation strategy regarding the freedom of
information request. As I noted in response to a previous question, if
confirmed as Director I will dutifully implement the relevant federal
laws and the Administration's policies regarding these matters.
Question 22. The Citizens letter also claims that you have ``shown
little regard for SMCRA's purpose to minimize harm'' in developing
Pennsylvania's regulations regarding long-wall mining. Specifically,
the letter claims that you were insensitive to the impact on landowners
from subsidence due to long-wall mining. The letter asserts that you
defended the impacts based upon the prior sale of mineral rights
regardless of the fact that the technology now being employed, long-
wall mining, and its potentially destructive consequences did not exist
at the time of the transfer of such rights. What is your position on
land owner rights where long-wall mining is occurring? And what is your
interpretation of the minimization of harm obligations under SMCRA?
Answer. I understand the impacts of longwall mining can be very
traumatic and stressful to landowners. However, it is my understanding
that Pennsylvania's statutes and property law limited what PADEP could
do through a rulemaking. It is true that longwall mining did not exist
when the mineral and surface support rights were severed from the
surface, but it is also true that high extraction mining did occur then
and did damage surface structures. I have taken steps that are
sensitive to landowners. For example, as Bureau Director, I issued a
memorandum clarifying that, where enforceable building codes are in
effect, repairs must meet applicable standards regardless of whether or
not the damaged structure was constructed according to code. It also
specified that, when compensation is offered as settlement, the amount
must be sufficient to repair or replace the damaged structure in
accordance with the applicable building code.
As program counsel and director, I worked on two rulemakings
designed to implement landowner protections from the 1994 amendments to
the State statute and advocated for an interpretation of the provisions
that required operators to repair or compensate for damage to all
dwellings in place at the time of mining. This interpretation provided
more inclusive coverage and enabled the State to demonstrate that its
subsidence program was as effective as federal counterpart regulations.
Section 516(b)(1) of the Act provides that the operator of an
underground coal mine (but not longwall mining) prevent subsidence
causing material damage to the extent technologically and economically
feasible. Section 516(b)(11) provides operators of all underground
mines must, to ``the extent possible using the best technology
currently available, minimize disturbances and adverse impacts of the
operation on fish, wildlife, and related environmental values.'' I
fully support all of these federal statutes and the implementing
regulations.
Response of Joseph G. Pizarchik to Question From Senator Shaheen
Question 23. I have heard from a number of concerned environmental
groups about the environmental impacts associated with surface mining,
particularly as it pertains to mountaintop mining and surfacing mining
involving valley fills.
Several studies have shown that mountaintop removal is having a
significant impact on watersheds in the Appalachian regions where it is
being conducted. Selenium, mercury, lead, and other heavy metals and
chemicals are released during the surface mining process into the
watersheds of central Appalachia and are harmful to ecosystems and
water quality. The studies also illustrate that there are severe
ecologic and hydrologic impacts from mountaintop removal operations.
As Director of the Office of Surface Mining Reclamation and
Enforcement, to what degree will science and science-based reporting
affect policy decision-making within OSMRE?
Answer. If confirmed as Director, I will ensure that the Office of
Surface Mining Reclamation and Enforcement uses sound science-based
information to administer the requirements of the Surface Mining
Control and Reclamation Act of 1977 and to implement the applicable
policies of the President and the Administration. The better
understanding we have of the environmental impacts of mining and the
processes that cause such impacts, the better we will be able to target
our policies to achieve our policy goals.
Responses of Joseph G. Pizarchik to Questions From Senator Barrasso
Question 24. The Mineral Leasing Act provides for the deferred
payment of bonus bids for coal leases in equal installments. Under
current regulations, federal coal lessees pay the bonus in five equal
installments. The current system makes sense because cost is so
significant--in Wyoming bonus bids for a federal coal lease can cost
hundreds of millions of dollars.
The Interior Appropriations bill passed by the House requires full
payment up front. Requiring payment of the bonus bid in one up front
payment would undermine domestic coal production, disadvantage smaller
companies that lack the financial resources, and likely reduce
government revenues from coal leasing in the long run.
Given your experience with coal mining in Pennsylvania, do
you think requiring total payment of bonus bids up front--which
could be tens to hundreds of millions of dollars--could
discourage investment?
Do you believe smaller companies would be at a disadvantage?
Answer. Because the coal in Pennsylvania is virtually all privately
owned, my experience in the State does not involve federal coal leases
or bonus bids for coal. Additionally, the Bureau of Land Management in
the Department, not the OSM, implements the Mineral Leasing Act
provisions under which these payments are made. Therefore, if
confirmed, I do not expect to have any involvement in determining the
payment structure for federal coal leases.
Question 25. In March 2006, the Wyoming Secretary of State
submitted an amendment to its Coal Regulatory Program (referred to as
Wyoming Rule Package 1-U) proposing changes to the rules concerning
self-bonding requirements. The rule included important additions and
revisions designed to address Wyoming-specific circumstances taking
into account the substantially larger size of the surface coal mines in
the state.
It is my understanding the Solicitor's office approved the final
rule in March 2009. OSM management then returned the rule to the
Western Region for additional changes. The State of Wyoming has worked
with OSM on this rule for over three years.
Is it a normal part of the process to send it back to the
Western region after the Solicitor's office approves a final
rule?
Answer. I have been informed that the Solicitor's Office provides
advice, counsel, and legal representation to OSM, including reviewing
draft regulations to ensure legal sufficiency. The Solicitor's Office
staff does not approve or disapprove program amendments but reviews
proposed decisions, the legal basis for those decisions, and advises
its clients of any relevant findings before publication.
Why was it sent back to the region for further changes?
Answer. I understand that once review in the Washington Office was
completed, the document was returned to the Western Region for final
preparation, after which it will ultimately be submitted to the OSM
Director for a decision.
What steps remain in the approval process?
Answer: I am informed that the remaining steps are a decision by
the OSM Director, and publication in the Federal Register.
Do you commit to finalizing the Wyoming Rule Package 1-U in
a timely fashion?
Answer. Yes. If confirmed, I will commit to ensuring that a final
decision is made in a timely fashion.
Responses of Joseph G. Pizarchik to Questions From Senator Sanders
Question 26. Several environmental groups, including The
Environmental Integrity Project, Earthjustice, and the Sierra Club have
raised concerns regarding your nomination. Particularly they have
raised concerns about a lack of transparency and citizen input
opportunities during your time working as a state official in
Pennsylvania. How do you respond, and are you willing to commit that in
your role as Director of the Office of Surface Mining Reclamation and
Enforcement you will be a strong supporter of federal laws requiring
transparency and public accountability in decision-making, such as the
National Environmental Policy Act and the Freedom of Information Act?
Answer. As I noted in response to an earlier question, I have not
resisted public participation and transparent decision-making but have
been an advocate for increased public participation during my tenure as
Director. If confirmed as Director of the Office of Surface Mining
Reclamation and Enforcement, I will comply with the federal laws
requiring transparency and public participation and be a strong
supporter of transparency in government decisionmaking.
During my tenure as Director, the Pennsylvania Bureau of Mining and
Reclamation has routinely used email distribution lists--in fact it has
three separate lists--to notify interested persons and organizations of
draft policies, regulations, and program changes. BMR routinely answers
public information requests without requiring the submittal of a formal
Right to Know Request, which is the State's version of the Freedom of
Information Act. Since 2002, we have answered over 1,100 such requests
while formal requests have been, I believe, less than a dozen.
I have also provided opportunities for public participation in the
drafting of policies and regulations that are over and above those
required by State policy or law. For example, currently the State is
conducting voluntary meetings with coal ash stakeholders, including the
Environmental Integrity Project, Earthjustice, Mountain Watershed
Association, Sierra Club and others to obtain their input on
establishing regulatory trigger mechanisms for when to institute site
assessments and when to initiate corrective action in the event coal
ash used at a mine site begins to leach pollutants that could affect
ground water. These meetings are not required by law; I elected to hold
them in order to obtain more information and a better understanding of
stakeholder views on these two points. I have also held similar
meetings with other interested groups that has resulted in input and
information considered in developing other regulations and standards.
Question 27. What are your views on mountaintop mining and its
impacts on surrounding communities and water quality?
Answer. The Pennsylvania Department of Environmental Protection, in
which my State Bureau of Mining and Reclamation resides, does not
authorize mountain top removal mining in Pennsylvania. If confirmed, I
will become more familiar with how the practice has been conducted and
its impacts. I am also aware that Secretary Salazar and others within
the Administration have recently taken steps to ensure that the federal
agencies involved in these activities are coordinating efforts and
making real progress toward reducing the environmental impacts of
mountaintop coal mining. Should I be confirmed, I will work to ensure
that these goals are met.
Question 28. Do you believe that water quality can be negatively
impacted by the practice of using coal mines as storage sites for coal
combustion wastes?
Answer. Water quality can be negatively impacted. However, it
depends on several factors, because not all coal combustion residues
possess the same chemical and physical properties and not all mines are
suitable for the use of coal combustion residues. Depending on the
properties of the coal combustion residues and the characteristics of a
particular coal mine, some coal combustion residues could be safely
stored at some mines, but not all residues could be safely stored at
all mines.
Responses of Joseph G. Pizarchik to Questions From Senator Menendez
Question 29. The Administration has expressed an intention to
tighten regulations on mountaintop removal mining. Specifically, what
aspects of the practice do you think need further regulation? Would you
be supportive of banning the practice or do you think the practice can
continue without public health or environmental harms?
Answer. As a state regulator in the Commonwealth of Pennsylvania, I
have no direct experience with mountaintop removal because those types
of mines do not occur in my home state. However, if confirmed, I will
become informed on the practice and current issues surrounding this
type of surface mining. As I said in my confirmation hearing, it is my
intent to work with the Environmental Protection Agency, U.S. Army
Corps of Engineers, and the Administration to carry out the Surface
Mining Control and Reclamation Act (SMCRA), Clean Water Act, and
related environmental statutes effectively. Should I be confirmed, I
will carefully and thoroughly research the issues with the other
federal agencies and stakeholders. Only after such a review, can I
judge if additional or revised SMCRA regulations are necessary.
Question 30. According to the Office of Surface Mining Reclamation
and Enforcement website the Surface Mining Control and Reclamation Act
``ensures that coal mining operations are conducted in an
environmentally responsible manner and that the land is adequately
reclaimed during and following the mining process.'' Can land be
``adequately reclaimed'' following a mountaintop removal operation?
Answer. As I noted in the response to the previous question, I have
no experience judging mountaintop removal reclamation because it does
not occur in Pennsylvania. I do understand that Congress authorized
steep slope and mountain-top removal mining in SMCRA under certain
conditions. However, there are many performance standards and
reclamation requirements that apply under SMCRA. If confirmed, I will
work to address the concerns raised about ensuring adequate reclamation
following a mountaintop removal operation.
I am also aware that Secretary Salazar and others within the
Administration have recently taken steps to ensure that the federal
agencies involved in these activities are coordinating efforts and
making real progress toward reducing the environmental impacts of
mountaintop coal mining. Should I be confirmed, I will also work to
make sure that these goals are met.
Question 31. The Department of the Interior recently rejected the
Bush Administration interpretation of the Stream Buffer Zone Rule (SBZ)
and said the department would return to the original intent--to prevent
mining within a 100-foot buffer zone along intermittent and perennial
streams. How will you enforce this interpretation? Are there any
current mining operations that will have to cease or change their
practices to be in compliance?
Answer. As a result of the recent decision by the District Court
for the District of Columbia on August 12th, it is my understanding
that the Department is working with the Office of the Solicitor to
chart a path forward. If confirmed, I will be guided and informed by
the statutes, regulations, and best science to make decisions about
interpretations of the Stream Buffer Zone rule.
Question 32. Coal ash disposal is a highly controversial topic.
Approximately how many mines have been permitted to receive coal ash in
Pennsylvania to date? Are these mines required to set aside funds to
remediate damages if toxins should leach onto water supplies? How are
these mines being monitored to ensure that hazardous chemicals do not
escape? Are these mines required to have liners to ensure that toxic
chemicals in the ash do not migrate from the disposal site? How will
you apply your work on coal ash disposal in Pennsylvania to your work
in the federal government?
Answer. Approximately 170 mine sites and reclamation contracts have
been issued under Pennsylvania's program to date. An average of about
50 sites are utilized every year with the others remaining inactive or
completed. Because not all coal ash is the same, coal ash must be
tested to determine whether it has the chemical and physical properties
that make it environmentally acceptable to use at a mine for the
specific reclamation purpose. If it is found acceptable, it is
certified for use. The individual mine site is also evaluated to
determine whether the certified ash can be safely used at the mine.
Pennsylvania law requires that the mine operator, either in the permit
application or in the permit amendment application, demonstrate that
there is no presumptive evidence of potential pollution of the waters
of the Commonwealth and PADEP must make such a written finding before
coal ash can be allowed to be used on the mine. Because there is no
evidence of pollution resulting from coal ash used for these
reclamation purposes, no bond is required to be posted to pay for
corrective action. Should site monitoring determine that coal ash is
causing pollution, PADEP has authority to require the mine operator to
post the bond necessary to complete corrective action and has used that
authority when coal mining has caused water pollution. If the operator
does not post the additional bond, the State will proceed to
forfeiture, ultimately resulting in the permittee and all owners and
controllers being banned from domestic coal mining.
In addition, as part of the permit approval process the mine
operator is required to establish a groundwater monitoring plan that
will be in place for at least 10 years after placement of the ash
concludes. The mine operator is required to collect water samples and
have them tested for certain parameters. In April 2009, the groundwater
monitoring was increased from annually to quarterly. The number of
parameters tested was increased to 40 (previously, testing covered 27
different parameters). PADEP also periodically collects and tests
groundwater samples. The certified ash the PADEP mining program has
approved for the specific reclamation use on a mine has been placed
above the sites' groundwater table, and liners have not been required.
If confirmed as the Director of the Office of Surface Mining
Reclamation and Enforcement, I will use my experience with coal ash in
Pennsylvania to be actively engaged within the Administration in the
development of a scientifically sound, practical, and protective
approach for the management of coal combustion residues in order to
protect the environment and the public.
______
Responses of John R. Norris to Questions From Senator Murkowski
future energy needs
Question 1. What are your views on the future role of baseload
coal-fired and nuclear power generation? Do you agree with Chairman
Wellinghoff's statements that the nation's future power needs can be
fully met by renewable energy sources and efficiency improvements?
Answer. The nation currently depends on our existing coal and
nuclear generation facilities to ensure a reliable supply of
electricity. At the moment, about 70 percent of the electricity
generated in the U.S. comes from these sources and it is likely that
the country will continue to rely heavily on coal and nuclear energy
resources for many years to come. Decisions to build new coal and
nuclear generation facilities will be made as result of market forces.
The markets are likely to be influenced by the amount of new renewable
generation available, the availability of capital and most importantly
legislation Congress may enact to address carbon dioxide emissions,
transmission infrastructure improvements, demand response and a host of
other issues. That being said, I cannot predict how much new
conventional nuclear and coal fired generation may be built. In any
event, my understanding of Chairman Wellinghoff's view (as stated, for
example, at an August 6, 2009, hearing of the Senate Committee on
Environment and Public Works) is not that our power needs can be fully
met by renewable energy sources and efficiency improvements but that,
depending on factors such as the structure and function of our energy
markets and whether climate change legislation is adopted by Congress,
it may be possible to use resources such as renewable energy (including
solar, wind, geothermal, hydrokinetics and biomass), energy efficiency,
demand response and natural gas to transition to a low-carbon energy
future.
transmission (general)
Question 2. In your opinion, what are the current obstacles to
financing and siting new transmission?
Answer. First, the question of whether there is going to be a
federal renewable energy standard (RES) and/or a national carbon policy
needs to be decided since these policies will significantly impact
renewable energy demand and any economic decisions concerning energy
supply choices. Assuming there are both a RES and a carbon policy,
there are several obstacles to financing and siting new transmission.
One of the primary issues is ``who pays'' or cost allocation. Without
giving FERC the ability to properly allocate costs, new national
policies like a RES or carbon reduction will not be properly
implemented. Besides cost allocation, some of the obstacles to siting
new transmission infrastructure include: the lack of a regional and
national coordinated planning process; delays in federal land right-of-
way approvals; and delays in state utility commission approvals. Under
the Commission's current backstop siting authority, the single largest
obstacle to the siting of new transmission is the 4th Circuit Court of
Appeals decision that limits the Commission's authority to instances
where a state has not made a siting decision within one year. An
individual State's decision to deny a project within its boundaries,
can prevent the construction of new transmission even when these
projects may be in the national public interest.
Question 3. Absent legislative changes, how can FERC and the states
work most effectively to expedite planning and siting of multi-state
transmission projects and provide regulatory certainty on cost
recovery? What actions can FERC take under its existing statutory
authority in these areas?
Answer. With regard to transmission planning, in Order No. 890 the
Commission required jurisdictional utilities to engage in regional
planning to ensure adequate and reliable transmission service within
regional markets.\1\ States have generally been very supportive of this
requirement for regional transmission planning. Order No. 890 requires
all transmission providers to develop an open and coordinated
transmission planning process that involves ongoing coordination and
input from stakeholders, including state and local retail regulatory
entities. This process provides an ongoing opportunity for states to
work with utilities in planning as well as with the FERC in addressing
transmission related issues since they often choose also to participate
in Commission proceedings related to planning and cost allocation for
transmission in interstate commerce.
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\1\ Preventing Undue Discrimination and Preference in Transmission
Service, Order No. 890, 72 FR 12,266 (Mar. 15, 2007).
---------------------------------------------------------------------------
Order 890-A further required transmission providers to address
issues involving comparable treatment of resources in the planning
process, cost allocation and regional coordination. To evaluate the
effectiveness of the implementation of the regional transmission
planning process and address issues, the Commission has scheduled a
second series of regional technical conferences to begin in September
of this year. These conferences will involve all stakeholders,
including state and local retail regulators in addressing regional
transmission planning, coordination, and cost allocation issues. The
Commission seeks, through stakeholder feedback at these conferences, to
determine if further refinements to the planning process are necessary.
With regard to transmission siting please see my response to your
question #6.
Question 4. Chairman Wellinghoff has stated that one of his
priorities is to integrate renewable, efficiency and demand response
into the interstate grid--do you share that goal? If so, what
specifically would that entail in the way of new policies and programs
from FERC?
Answer. Yes, I support the Chairman's goal of integrating
renewable, efficiency and demand response into the interstate
electricity grid. In that regard, the Commission is undertaking several
initiatives that would help achieve the Chairman's goal. These include:
Renewables.--FERC staff is conducting a technical study to
determine the appropriate metrics for use in assessing the
reliability impact of integrating large amounts of variable
renewable power generation into power grids.
Efficiency.--To support participation of energy efficiency
resources in wholesale electricity markets, the Commission has
accepted proposals by ISO-New England and PJM to allow energy
efficiency resources to receive capacity payments in exchange
for taking on capacity obligations in their respective capacity
markets.
FERC recently issued a Smart Grid Policy Statement to
prioritize and accelerate the development and adoption of
interoperability standards and protocols necessary to ensure
smart-grid functionality and interoperability in interstate
transmission and in wholesale electricity markets. Such
standards are important for unlocking the potential efficiency
benefits of the Smart Grid.
Demand Response.--FERC recently completed a rulemaking
ordering the removal of specific barriers to the participation
of demand response in the organized wholesale markets (Order
No. 719, October 2008). In addition, it directed each RTO and
ISO to submit, and each has now submitted, a report identifying
and explaining how it will remove any remaining barriers to
demand response in cooperation with its stakeholders. Also, the
Commission is developing a National Action Plan on demand
response, as required by the 2007 Energy Independence and
Security Act. This plan will facilitate the development of
demand response as a resource and business area through
increased communication of its benefits to consumers and
stakeholders.
Going forward, I support Chairman Wellinghoff's recent
Congressional testimony on reforming national transmission policy, in
which he called on Congress to enact legislation that will:
Enable transmission developers to invoke federal authority
to site transmission facilities where necessary to interconnect
renewable power to the electric transmission grid, after states
have had an opportunity to address the proposal first;
Clarify FERC's authority to ensure that state and regional
planning is consistent with national energy goals; and
Clarify FERC's authority to allocate the costs of
transmission infrastructure necessary to accommodate the
Nation's renewable energy potential to all load-serving
entities within an interconnection, when it is appropriate to
do so.
transmission siting
Question 5. Do you believe that transmission should be an asset for
all generation resources? What is your view of efforts to mandate that
new transmission be limited to renewable or low-carbon emitting
resources?
Answer. I believe that improvements to the interstate electric
transmission grid can be an asset for all generation resources. New
transmission facilities clearly are necessary in order to deliver
renewable and low-carbon emitting resources to the market. At the same
time, increasing the flexibility and the reliability of the grid, as
well as reducing congestion, can result in the more efficient use of
generation from other resources, with resultant benefits to consumers
and the environment.
Question 6. Although the provisions are different, S. 1462, the
American Clean Energy Leadership Act of 2009 reported by this Committee
and H.R. 2454, the American Clean Energy and Security Act of 2009
passed by the House of Representatives, would give FERC additional
authority over transmission siting, including the ability to consider
applications where a state denies a siting permit.
a. Do you support providing additional siting authority to FERC?
Answer. Yes. I believe that there is a national interest in the
siting of interstate electric transmission facilities that warrants a
federal role, although I also believe that federal authority should be
exercised, to the maximum extent possible, with due regard for the
concerns of the states.
b. S. 1462 provides FERC with backstop siting authority for those
projects that are identified in the planning process as High Priority
National Transmission Projects if a state fails to act within one year
on the application or if the state rejects that application. Do you
support this Committee's approach to transmission siting?
Answer. Yes. While, as a former state regulator, I am confident
that the states will render appropriate decisions on proposed
interstate electric transmission facilities in the vast majority of
cases, the strong national interest in an efficient interstate electric
transmission grid justifies providing FERC backup authority.
c. H.R. 2454, as passed by the House, leaves the National Interest
Electric Transmission Corridor process from the Energy Policy Act of
2005 largely intact for the Eastern Interconnection. The process for
federal siting in the Western Interconnection is, like the Senate
language, tied into the new planning process. Do you believe federal
siting authority in the area of transmission should be uniform in the
Eastern and Western Interconnection?
Answer. As a general matter, a uniform approach to federal
transmission siting would appear easiest to administer and most likely
to provide consistent, predictable regulation. That said, I believe
that there is more than one possible approach to transmission siting
and that FERC will be able to fulfill whatever role Congress chooses to
give it.
transmission cost-allocation
Question 7. What, in your opinion, should be the standard or
principle that governs who should be assessed costs for new
transmission lines?
Answer. I do not think a ``cookie-cutter'' approach works when it
comes to allocating transmission costs. Rather, I believe the
Commission needs to have the flexibility to apply a cost allocation
methodology that addresses the circumstances of the case. As a general
matter, I think that the beneficiaries of a transmission project should
bear the costs of that project. However, I also think that at times it
is appropriate to broadly construe who are the beneficiaries of a
project, e.g., those who benefit from a project that helps meet a
renewable portfolio standard. I also think it is important when
allocating costs to balance the state, regional and, if applicable,
national goals for developing renewable energy and reducing carbon
emissions, as well as to weigh the reliability and economic benefits
created by the transmission upgrade.
Question 8. One issue this Committee really grappled with during
consideration of S. 1462 was the issue of cost-allocation for new
transmission projects. The House found this issue to be so complex that
it did not even address it in H.R. 2454. As initially drafted, the
transmission legislation allowed for the broad allocation of
transmission costs--what some deemed the ``socialization'' of costs--to
make projects more economical. During markup, the Committee adopted an
amendment offered by Senator Corker, by a vote of 13-9,
a. Please offer your perspectives on the issue of ``socializing''
the costs of building new backbone interstate transmission.
b. Under this socialization concept, is it true that entities could
be charged for the costs of building new transmission, even though they
do not actually use that transmission to move power or receive power?
c. What would be the basis for such charges? What benefit would an
entity receive from a new transmission line if it does not use that
line for transmission service?
Answer. As a general matter, I believe that the decision on whether
to allocate transmission costs broadly should be made on a case-by-case
basis, depending on the circumstances of each case. As noted in my
response to Question 7 above, I do not think a ``cookie-cutter''
approach works when it comes to transmission cost allocation. I also
believe that a broad allocation of transmission costs would be
supported by the establishment of national renewable energy or carbon
policies affecting the need for new transmission lines. While it is
possible under a broad allocation of costs that entities that will not
actually use a particular new transmission line could be charged for a
portion of the costs of building that transmission, I do not believe
such a result is typical nor is it an outcome I desire. However, I
believe it is appropriate in certain instances to broadly construe who
are the beneficiaries of a project, which may extend to include
entities beyond those who directly use a line. This approach may be
appropriate in instances where a transmission upgrade includes general
reliability or economic benefits (e.g., upgrades to relieve a
transmission constraint on one part of a system can produce reliability
or economic benefits on other parts of the system), or where there is
shared responsibility for any national goals or mandates.
transmission (incentives)
Question 9. FERC's authority to provide incentive based rate
treatment to promote construction of new or upgraded transmission
facilities to address reliability and accommodate the integration of
renewable resources can assist transmission investment.
a. In your opinion, has the Commission given appropriate incentives
to promote investments in transmission?
Answer. In general, I believe that the Commission's policy of
evaluating whether incentives are necessary to encourage new
transmission investment on a case-by-case basis has enabled the
Commission to grant incentives in appropriate cases to promote
investment in needed transmission.
b. What types of projects do you see as meriting incentive-based
rate treatment?
Answer. As a general matter, I find reasonable the Commission's
current case-by case approach of determining which projects merit
incentives. First and foremost, the Commission considers whether a
project ensures reliability or reduces congestion, consistent with
Section 1241 of the Energy Policy Act of 2005.\2\ In addition, the
Commission requires an applicant to demonstrate that the total package
of incentives is tailored to address the demonstrable risks or
challenges faced by the applicant in undertaking the project. Finally,
the applicant has to demonstrate under section 205 of the Federal Power
Act\3\ that the rates it will charge to consumers are just and
reasonable and that costs were prudently incurred. I believe that
additional incentives may be appropriate in some cases where the
project advances important national policy.
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\2\ Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594,
315 and 1283 (2005) (codified at Federal Power Act Sec. 219, 16 U.S.C.
Sec. 824s (2006)).
\3\ 16 U.S.C. Sec. 824d (2006).
c. Are there additional criteria that you think more fairly
---------------------------------------------------------------------------
determines the merits of a project seeking incentives?
Answer. I believe the criteria the Commission uses in its current
analysis is appropriate for determining whether incentives are
warranted for a transmission project in most cases. However, if
confirmed, I am open to considering additional criteria for determining
whether a project merits incentives, particularly when the criteria
advance national policy goals, such as providing access for renewable
resources to the interstate grid.
transmission (planning)
Question 10. Chairman Wellinghoff has announced that FERC will be
conducting several regional technical conferences on transmission
planning:
a.Is it your impression that the regional planning process under
Order 890 is not working well? If so, where is it coming up short of
expectations?
b. Are these technical conferences going to explore the possibility
of creating an interconnection-wide planning process? Do you support
such an exploration?
Answer. Commission staff is holding a series of three technical
conferences on regional transmission planning in Phoenix, Philadelphia
and Atlanta in September. ``As stated in an August 3, 2009 Commission
notice, The focus of the 2009 regional technical conferences will be:
(1) to determine the progress and benefits realized by each
transmission provider's transmission planning process, obtain customer
and other stakeholder input, and discuss any areas that may need
improvement; (2) to examine whether existing transmission planning
processes adequately consider needs and solutions on a regional or
interconnection-wide basis to ensure adequate and reliable supplies at
just and reasonable rates; and (3) to explore whether existing
processes are sufficient to meet emerging challenges to the
transmission system, such as the development of inter-regional
transmission facilities, the integration of large amounts of location-
constrained generation, and the interconnection of distributed energy
resources.''
While, as a general matter, I believe that the current planning
processes are working well, I have an open mind as to where and how
there may be room for improvement in these processes. I believe that
the upcoming conferences and the subsequent written comments that will
be filed with the Commission will help inform my thinking on this
matter should I be confirmed. Finally, I believe that the Commission,
the states and market participants benefit from exploring all options,
including the possibility of creating an interconnection-wide planning
process.
congestion on interconnection queue
Question 11. The focus on interconnecting renewable resources to
the transmission grid has created significant back logs in some
interconnection queues, creating additional congestion and reliability
concerns. There is concern that FERC's current interconnection policies
do not adequately address these issues and projects that are not viable
or not developing as rapidly as others are clogging the queues. How
should FERC update its current interconnection policies to ensure that
viable projects addressing the needs of all generating resources,
including renewable resources, are not stuck in the interconnection
queues?
Answer. In Order No. 890, the Commission encouraged transmission
providers to file queue reform proposals when they encounter queue
problems. Additionally, the Commission held a technical conference on
queue reform issues and issued a subsequent order on March 20, 2008,
giving further guidance on its flexibility to entertain queue reform
proposals. In the past two years, the Commission has approved major
queue reform proposals filed by the California ISO (to address
interconnection queue problems), the Bonneville Power Administration
(to address transmission queue problems), Northwestern Corporation (to
address transmission and interconnection queue problems), the Southwest
Power Pool (to address interconnection queue problems) and the Midwest
ISO (to address interconnection queue problems). It is my understanding
that most if not all of these queue reform filings were made to address
large numbers of requests from renewables that are trying to obtain
service. Similarly, the Commission has demonstrated flexibility to
address narrower queue issues by granting waivers of tariff
requirements. For example, in August 2009 the Commission granted a
tariff waiver to El Paso Electric Company to allow it to interconnect a
solar power generator that will assist it in meeting a State of New
Mexico RPS requirement. Given these actions, I believe that the
Commission has taken positive steps to assist industry efforts to
address the queue backlog, but nevertheless, should continue to work
with the RTOs/ISOs, other planning entities and stakeholders to
identify additional reform proposals to move critical projects through
the queue.
renewable electricity standard
Question 12. In a report last year, the California Public Utility
Commission noted that ``flexible resources such as fossil peaker
plants, dispatchable demand response, and energy storage will likely be
needed to provide grid support services for intermittent renewable
resources.'' According to the CAISO's analysis of a 20% RPS, ``as wind
generation further increases, the amount of variability will increase
non-linearly. . .an increase of the RPS to 33% could more than double
the integration problems and costs.'' As a FERC Commissioner, how would
you avoid these integration problems and associated costs if Congress
enacts a federal RES mandate?
Answer. The amount and type of ``grid support services'' needed to
accommodate the variability of renewable resources are influenced by
the Commission approved Reliability Standard. The ``users, owners and
operators'' of the interconnected electric energy transmission network
must plan for and provide sufficient ``grid support services'' to at
least achieve the requirements of those Reliability Standards. As such,
I would assure the costs are consistent with achieving reliable
operation by assuring that those Reliability Standards are technically
sound and necessary for reliability and by assuring that all resources
and entities are doing their part in supplying the services and not
requiring or using more services than are appropriate to assure system
reliability.
renewable energy standard
Question 13. S. 1462, the American Clean Energy Leadership Act of
2009 reported by this Committee and H.R. 2454, the American Clean
Energy and Security Act of 2009 passed by the House both contain new
federal Renewable Electricity Standards. However, S. 1462 tasks the
Department of Energy with running the new program, while H.R. 2454
gives this responsibility to FERC. As a FERC candidate, I assume you
believe FERC is the appropriate agency to manage the RES, correct? If
so, why do you think FERC is the most effective agency to play this
role?
Answer. Yes, I believe that FERC is the appropriate agency to
manage a federal renewable electricity standard program. Because of
FERC's experience regulating complicated wholesale energy markets and
the electric industry, the agency has an unusual combination of skills,
knowledge, access to data, and expertise that make it well suited to
effectively manage a transparent national market for the sale or trade
of renewable energy credits and energy efficiency credits. Furthermore,
FERC has experience in administering civil penalty provisions to
enforce the proper functioning of these markets.
cybersecurity
Question 14. S. 1462, as reported by this Committee, provides DOE
with the authority to deal with cybersecurity threats and FERC with the
authority to deal with cybersecurity vulnerabilities. Do you support
this shared responsibility?
Answer. I take the task of dealing with cyber security threats and
vulnerabilities very seriously and, if confirmed, will do all I am able
to make sure FERC meets the nation's needs in whatever cyber security
responsibilities Congress delegates to the FERC.
My understanding is that the FERC Chairman supports legislation
giving FERC authority to require actions to address existing, known
cyber security threats to the reliability of the bulk power system and
also authority to require actions to address future cyber or other
threats to the reliability of the bulk power system if the President or
his designee determines that a national security threat exists. FERC
representatives also have pointed out that such authority, if limited
to the bulk power system, would leave a gap in Federal authority to
protect facilities that do not come within the definition of bulk power
system as that term is defined in the Federal Power Act.
S. 1462 would give the FERC authority to order actions to protect
critical electric infrastructure against cyber vulnerabilities.
Critical electric infrastructure is defined to include systems and
assets used for generation, transmission or distribution of electric
energy affecting interstate commerce that, as determined by FERC or the
Secretary of DOE, are so vital that their incapacity or destruction
would have a debilitating impact on national security, national
economic security, or national public health or safety. S. 1462 also
would give the Secretary of Energy authority to require immediate
actions as needed to protect critical electric infrastructure against
cyber security threats. If confirmed as a FERC Commissioner and if S.
1462 is enacted, I would do all I could to see that the FERC implements
its authority effectively to protect against cyber vulnerabilities.
Question 15. How can FERC work most effectively with NERC on cyber
security protection? What guidance or direction should FERC provide to
NERC on these matters? What input would you seek from industry on these
issues?
Answer. The primary means that FERC works with NERC is through the
FPA Section 215 process. Throughout this process, FERC can direct NERC
to either create or modify a cybersecurity standard that becomes
mandatory and enforceable to all users, owners, and operators of the
bulk power system. However, FERC cannot author or modify these
standards, but must rely on an industry self-regulatory organization--
the Electric Reliability Organization--to develop and propose standards
for its approval. (The North American Electric Reliability Corporation,
or NERC has been certified by FERC as the ERO.) These standards are
developed through a consensus-based process whereby all users, owners,
and operators are afforded the opportunity to provide input and then to
subsequently vote on the draft standard before it is submitted to FERC
for approval. In this manner, FERC works directly with NERC to provide
both guidance and directives to create or modify the standards in order
to make them more effective. When issuing a directive for a new or
modified cybersecurity standard, FERC can and has employed the
rulemaking procedure first issuing a preliminary assessment, then a
notice of proposed rulemaking and lastly a final rule. During the
process, FERC solicits, considers, and answers the comments of industry
before issuing a final rule.
The FPA Section 215 process however, is not adequate to protect
against cyber or physical security vulnerabilities and threats that
endanger national security. Because the standards development process
is open, inclusive, and controlled by stakeholder ballot it is also
non-confidential, slow, and not necessarily responsive to FERC's
directives. These factors make it inadequate for use when protecting
national security.
smart grid
Question 16. Pursuant to the Energy Independence and Security Act
of 2007 (EISA), FERC is directed to promulgate rules for the smart grid
once ``consensus'' has been reached by the collaborative on protocols
being conducted by the Commerce Department's National Institute on
Standards and Technology:
a. How do you define ``consensus''? Does it require all involved
stakeholders to agree to the protocols in question?
Answer. The standard definition of ``consensus'' is a general
accord or agreement. To me, this does not imply unanimity. Thus, I do
not think that all stakeholders involved in NIST's process must be in
agreement before FERC promulgates rules on smart grid interoperability
standards. That said, I recognize that the question of consensus around
smart grid standards is difficult. If confirmed, I will weigh the many
perspectives involved when determining when or if particular standards
should be adopted.
b. Would FERC follow the usual notice and comment process to
promulgate rules under this provision?
Answer. I assume that FERC would rely on all the customary
rulemaking processes when adopting smart grid standards including
notice and comment procedures, as required by the Administrative
Procedure Act.
c. What would be the effect of any such rules? Do you anticipate
that FERC would require utilities to adopt any standards or measures
reflected in such rules?
Answer. According to FERC's Smart Grid Policy Statement issued in
July, EISA does not give FERC authority to make any smart grid
standards mandatory or to enforce any standards that are adopted. The
Policy Statement also notes that EISA does not authorize FERC to direct
states to implement any particular policies or programs, although
states could on their own initiative implement and enforce any
pertinent interoperability standards. If the FERC were to make smart
grid standards mandatory, it would have to rely on authority that
already exists in the Federal Power Act. I expect that FERC would weigh
the importance of particular interoperability standards and the nature
and scope of its jurisdictional powers when determining whether to
require utilities to adopt any.
d. Would any such standards or measures be treated, after
promulgation, as reliability standards under section 215 of the Federal
Power Act? For example, would the first level of enforcement of any
such standards or measures be conducted by NERC, subject to FERC
oversight? Or would FERC be the first line of oversight and
enforcement?
Answer. My understanding is that only those standards filed by NERC
and approved by FERC under Federal Power Act section 215 would be
treated as Commission-approved reliability standards and enforced
pursuant to that provision. As is currently the case, NERC may enforce
reliability standards, subject to FERC oversight, and the Commission
may also order compliance with reliability standards and impose
penalties on its own motion or in response to a complaint. I have not
yet had the chance to familiarize myself with this area enough to
suggest options for enforcement of standards that have not been
approved under section 215.
e. How would you approach the regulatory effort in Smart Grid areas
where there are no NIST endorsed standards?
Answer. In terms of standards development, if confirmed, I might
pursue informal discussions with NIST about the need for additional
standards and the status of the development of such standards. In terms
of rate regulation, the approach taken by the FERC in its Smart Grid
Policy Statement appears reasonable. There, the Commission determined
to accept rate filings submitted by public utilities to recover the
costs of their smart grid deployments during the period of smart grid
standards development if (among other things) the utilities are able to
demonstrate that they have made appropriate protections to guard
against security vulnerabilities and stranded investments. If
confirmed, I would support this method of guiding utility activity in
the absence of technical certainty.
f. Before consensus is reached and a rulemaking is issued, how can
FERC most effectively coordinate with the states clearly define what is
under the authority of the states and FERC?
Answer. As a former state commissioner and member of NARUC, I
believe that the NARUC/FERC Smart Grid Collaborative is an effective
body for purposes of discussing and coordinating the boundaries between
federal and state authority in this area. If confirmed, I would support
additional collaboration through this body.
Question 17. On July 16, 2009, FERC released a policy statement
outlining how the Commission intends to facilitate smart grid
technologies. In particular, FERC found that ``EISA grants the
Commission the authority to adopt smart grid standards--such as meter
communications protocols or standards--that affect all facilities,
including those that relate to distribution facilities and devices
deployed at the distribution level.''
a. Do you agree that standards for smart grid systems are in the
national interest?
Answer. Yes, I do believe that the continued development of
standards for smart grid devices and systems will help to further the
deployment of technologies that promote the nation's energy
independence, offer opportunities to reduce the demand for electricity,
and ensure a reliable and secure electricity infrastructure, among
other goals.
b. Do you believe that FERC has the jurisdictional authority to set
appropriate national smart grid standards at the distribution level?
What about facilities owned or operated by municipalities and electric
cooperatives?
Answer. EISA section 1305(d) provides that FERC shall adopt certain
interoperability standards and protocols, namely those that ``may be
necessary to insure smart-grid functionality and interoperability in
interstate transmission of electric power, and regional and wholesale
electricity markets.'' I believe this language indicates that FERC is
authorized to adopt standards that apply throughout the electricity
system. If this were not the case, then it is difficult to understand
how interoperability could be assured, as two-way communications will
cross between the transmission and distribution systems. The specifics
of who owns or operates particular equipment do not influence the
necessity for various devices and systems to be able to communicate. In
order for interoperability standards to be effective, they will need to
apply to any equipment involved in inter-system communication, as
appropriate for each application.
Question 18. Some in the industry would like to accelerate the
Smart Grid rulemaking process. However, in comments before NARUC this
past February you stated that Smart Grid should be carried out
``incrementally'' and that there will have to be ``some type of rate
impact cushion'' to protect consumers. Please explain.
Answer. My comments during the NARUC winter meeting were not
directed toward the interoperability standards development and
rulemaking process. Rather, these particular comments were directed
toward the actual deployment of smart grid technologies. Even assuming
that interoperability standards can be developed more rapidly, the
question remains as to how rapidly to deploy new smart grid equipment
that adheres to those standards, including how quickly to replace
existing equipment and what the cost impact of various replacement
rates might be on consumers. While it may sometimes be necessary to
replace current, non-compliant equipment that still has years of
remaining life with new smart grid equipment in order to achieve
certain smart grid capabilities, we should not assume that this will
true for every smart grid application. The costs and benefits of such
replacement should be considered in each case.
I believe that the FERC recognized this in its smart grid policy
statement. It stressed the need for an appropriate migration plan to
minimize the stranded costs of legacy systems as they are replaced with
smart grid systems. In other words, the actual deployment of smart grid
equipment must be carried out in a thoughtful manner that balances the
costs and benefits to consumers. Accelerating the standards development
process will certainly help with that effort, but it does not eliminate
the need for a thoughtful approach to actual smart grid deployment
decisions.
hydropower
Question 19. Do you consider hydropower to be a renewable resource?
Please state your views on the hydropower resource and its contribution
and value to the nation's energy mix.
Answer. Yes, I believe hydropower is a renewable resource, although
I believe that limiting its use in meeting a federal renewable energy
requirement is a decision for the Congress to make. In fact, it is the
largest renewable resource in the U.S., providing about 8 percent of
the nation's electricity. Analysts say that capacity can double in 30
years, rivaling the growth predicted for the nuclear power industry and
at a fraction of the cost. The Federal Energy Regulatory Commission is
reviewing more than 30,000 megawatts worth of new projects, equal to a
third of all existing hydropower capacity and big enough to power the
New York metropolitan area.
Question 20. The hydropower industry is undergoing a
transformation. Recent reports, as well as permit and license
applications at the Commission, demonstrate that thousands of megawatts
of this clean, emission-free power can be tapped from a variety of
sources such as capacity additions and efficiency improvements; pumped
storage; small hydro; powering existing non-powered dams; and ocean,
tidal and instream hydrokinetics As the agency responsible for
permitting and licensing hydropower projects, what can FERC do to
promote and enact policies supporting hydropower's development
potential?
Answer. The FERC has been proactive in assisting in the development
of all types of hydropower projects to assure the environmentally
acceptable growth of this renewable resource. FERC has been especially
active in the hydrokinetic area. Since the Commission's first technical
conference to discuss hydrokinetic challenges in 2006, staff has
responded by: (1) discouraging the ``hoarding'' of permits that would
prevent timely project development; and (2) developing and implementing
an expedited licensing process for hydrokinetic pilot projects.
Because the complexity of the regulatory environment for
hydrokinetic projects, as well as the lack of information regarding
their environmental effects, were identified as challenges to their
orderly development, the Commission has worked to reach out to other
agencies to better define relationships. In 2008, Memoranda of
Understanding (MOU) to better coordinate siting in state waters were
signed with both Oregon and Washington. In 2009, the Commission and the
Department of Interior signed an MOU clarifying the jurisdictional
responsibilities of each agency and committing to work together to
streamline the authorization process for projects on the Outer
Continental Shelf and both staffs have produced a guidance document
with details on how the agencies will implement the MOU. Commission
staff has met repeatedly with representatives from the Army Corps of
Engineers, the U.S. Coast Guard, the U.S. Navy, the U.S. Committee on
the Marine Transportation System, EPA, and the National Oceanographic
and Atmospheric Administration, concerning programmatic concerns as
well as project-specific procedures. The Commission has also
participated in the international effort to identify environmental
effects and solutions. FERC and MMS staffs are co-chairing, on behalf
of the Department of Energy, an International Energy Agency-Ocean
Energy Systems annex that is working to develop a database of
environmental information.
In addition to its extensive work on hydrokinetic policy, the
Commission has continued to support the development of small and
incremental hydro. The FERC website contains guidance on small hydro
development and provides a hotline for applicants. The Commission has
also published an informative brochure targeting developers of small
hydro projects.
Finally, if confirmed, I would continue to promote the Commission
staff's open-door policy with regard to maintaining a dialogue with the
hydro industry and other stakeholders. Staff periodically provides
outreach events in states and for specific projects, meets with
potential developers, continually updates the public website, and
recently published a citizens' guide to hydropower licensing. The
Commission should continue to proactively communicate with the public
and work to address challenges in new hydropower development. 1.
Question 21. As we seek to increase renewable power generation, one
question that has been raised is the ability to integrate variable
sources of power on the grid. What are your thoughts on these
integration issues and the role both conventional hydropower and pumped
storage have to play in addressing them?
Answer. Conventional hydropower and pumped storage power have
characteristics that can accommodate the variable characteristics
associated with renewable resources. They are more flexible than most
conventional generation in their ability to start quickly, have good
governor response and can increase their output quickly to accommodate
rapid increases or decreases in the differences between demand and
resources for any reason.
Question 22. This year, FERC signed an MOU with the Minerals
Management Service setting forth an agreement on a process of lease
sales, permitting, and licensing of hydrokinetic projects on the Outer
Continental Shelf. Do you believe any additional follow-up by the
agencies is necessary in order to ensure that this process works
smoothly and provides energy developers the certainty needed to move
forward on these projects? Can FERC do anything more under its
authority to aid this developing industry?
Answer. I have not had the opportunity to familiarize myself with
this matter in great detail. However, if confirmed, I will be open to
considering proposals to aid the development of the new hydrokinetic
industry. Also, it is my understanding that the staffs of the MMS and
FERC have developed a guidance document explaining to the public how
the two agencies' processes for regulating hydropower projects on the
Outer Continental shelf will interrelate, and that this document is
available on the Commission's website.
Question 23. In Alaska we have nearly 250 sites that hold good
potential for conventional hydroelectric development. But there appears
to be growing interest in companies and municipalities to file for
preliminary licenses that allow holders three years to investigate the
feasibility of projects. Do you have any feeling whether that period
should be expanded to perhaps 5 years to give holders more time to
advance to the second, construction phase for hydro projects. Do you
have an opinion on whether three years is too long, too short, or about
right for preliminary licenses? I ask that because of a current filing
issue before the commission involving a license for a part of the
potential Thomas Bay hydro project near Petersburg, Alaska.
Answer. The Federal Power Act (FPA) limits the maximum term of a
preliminary permit to three years. I understand that many developers of
conventional and hydrokinetic projects are not able to perfect a
license application prior to the expiration date of their 3-year
preliminary permit. This introduces uncertainty for these developers as
to whether they will be successful in maintaining priority of
application for a license by obtaining a subsequent preliminary permit
while they complete their license application. This can have a negative
effect on the ability to finance the project. The FPA also requires the
Commission to give preference to municipal entities when granting
preliminary permits. This fact adds additional uncertainty as to
whether a private developer will be successful in obtaining a
subsequent preliminary permit. Under the Commission's Integrated
Licensing Process (the current default licensing process), it could
take more than the three years afforded by a preliminary permit to
perfect an application for license, especially if two years of studies
are necessary. For that reason, a longer permit term may be warranted.
demand response
Question 24. How would you define the term ``wholesale demand
response''? Isn't all demand response really retail in nature, since it
involves reductions in consumption by end users of electricity? If you
do believe demand response is essentially retail in nature, do you
think FERC ought to coordinate its demand response policy with those of
the states?
Answer. I agree that ultimately most demand response is retail in
nature. However, it is also the case that a utility that is a wholesale
buyer of power can reduce its own demand for the energy purchased from
others. It can do this in at least two ways. One, it can call on its
own retail customers to reduce their demand, which we would call retail
demand response. Second, if it has electric generation of its own, it
can use more of its own generation when this costs less than buying
from others in the wholesale market. The second way involves no demand
response by a retail customer. Either way, the utility's action reduces
its demand for energy in the wholesale market, which is what I call a
wholesale demand response. The term also is often used for demand
response offered by both wholesale and retail customers into organized
ancillary services markets and capacity markets.
Wholesale demand response can also refer to other actions. If the
utility is in an RTO or ISO, it may bid that wholesale demand response
into the RTO's or ISO's organized market and be compensated according
to the wholesale market rates approved by the FERC. Alternatively, a
third-party curtailment service provider may aggregate the demand
responses of that utility's retail customers and bid this demand
response into the FERC-regulated market. Wholesale demand response may
also refer to participation by either retail or wholesale power buyers
in various demand response programs offered by RTOs and ISOs and
approved by the FERC, including the emergency and economic load
response programs.
Regardless of whether all demand response is considered retail in
nature, I believe that it is important for the Commission to coordinate
its demand response policies with the states. Because many demand
response programs can be affected by both state and federal
jurisdictions, I support the NARUC-FERC Demand Response Collaborative
established by the FERC and the National Association of Regulatory
Utility Commissioners as a forum to discuss common demand response
issues.
Question 25. When you were the Chairman of the Iowa Utilities Board
(IUB), the IUB issued some orders granting waivers for a requirement
that utilities inform electricity customers on the importance of peak
usage reduction. According to the IUB, ``additional language might
increase confusion and send a mixed message to customers.''
a. As a FERC Commissioner, how would you avoid confusing customers
and educate the public on the benefits of peak demand reduction?
Answer. During the time I was Chairman, the Iowa Utilities Board
(IUB) granted to MidAmerican Energy Company (MidAmerican) temporary
waivers of 199 IAC 20.11, which provides that each electric utility is
to inform its customers of the significance of reduction in the
consumption of electricity during hours of peak demand. The IUB found
that language in the peak alert notice regarding delaying the need to
build generating facilities or buy additional power could be confusing
to customers in light of the publicity that surrounded MidAmerican's
generation investments, which included coal, gas, and wind facilities.
In each of its orders on the subject, the IUB encouraged MidAmerican to
continue to educate customers about the benefits of energy efficiency
programs that conserve energy throughout the year, not just at times of
peak usage. With each waiver filing made by MidAmerican the company
included examples of communications to customers regarding various
energy efficiency programs, including the importance of energy
efficiency efforts throughout the year. MidAmerican had and continues
to have an extensive program of energy efficiency measures offered to
customers that were approved by the IUB in MidAmerican's energy
efficiency plan, with ongoing monitoring and evaluation efforts by the
IUB that included periodic reports detailing the success of each
measure.
FERC is currently engaged in the development of the National Action
Plan on Demand Response. According to the statute directing this Plan,
an important component of the Plan is the identification of
requirements for implementation of a national communications program
that includes broad-based customer education and support. I believe a
principal goal of the communications program should be to educate the
public about the benefits of peak demand reduction.
b. How would you avoid sending mixed messages when rolling out new
technologies and rate designs while also encouraging conservation and
efficiency?
Answer. I believe that to meet the future energy needs of the
American consumer and the U.S. economy while coping with climate change
at a reasonable cost, we need to use all available cost-effective
resources, including conservation and energy efficiency together with
various new technologies and rate designs. If confirmed as a FERC
commissioner, I would make it clear that these programs are not at odds
but are complementary and highly necessary for our energy future.
c. How can FERC encourage consumer behavioral changes and
technology adoption that could decrease peak demand?
Answer. In several ways, the FERC has and can in the future
encourage consumer behavioral changes and technology adoption that
could decrease peak demand. FERC has been engaged for several years in
efforts to remove barriers to demand response in the markets it
regulates. One way to encourage customer behavioral changes and
technology adoption is to send accurate price signals. In its recent
Order No. 719, FERC took a number of steps to ensure that the wholesale
prices accurately reflect the value of energy during periods of
operating reserve shortages. FERC has also called for comparability
between generation and demand resources in the reliability standards it
has approved. Also, at the direction of Congress, it produces a
comprehensive informational report each year on demand response and
advanced metering. Recently, also at the direction of Congress, the
FERC issued a National Assessment of Demand Response Potential and is
now in the process of producing a National Action Plan on Demand
Response. The Plan is required by law to identify actions to achieve
demand response goals by (1) identifying requirements for technical
assistance to States to allow them to maximize the amount of demand
response resources that can be developed and deployed; (2) identifying
requirements for implementation of a national communications program
that includes broad-based customer education and support; and (3)
identifying analytical tools, information, model regulatory provisions,
model contracts, and other support materials for use by customers,
States, utilities and demand response providers.
climate change
Question 26. The House-passed climate legislation would give FERC
the oversight responsibility for trading in greenhouse gas emission
allowances. Do you support this provision?
a. If so, why do you think FERC is the appropriate and most
effective agency to play this role?
b. Will FERC require a significant increase in personnel and
spending authority to oversee and regulate the allowance trading
markets?
Answer. FERC has the benefit of many years of experience and
expertise in regulating complex markets and if given this
responsibility would carry it out effectively. Whichever agency is
delegated this authority will need significant personnel and spending
authority to oversee and regulate the allowance-trading market.
Question 27. In comments before NARUC this past February you stated
that there is a ``tremendous disconnect between the ability to achieve
carbon reduction and the means to do it.'' You further cautioned that
we ``shouldn't put an emphasis on carbon reduction at the expense of
the customer's bill.'' Please elaborate.
Answer. I believe there is a lot of misunderstanding about the
current technology, our capacity to fully integrate renewable energy
onto the grid, our ability to sequester carbon, our ability to store
energy and more. These and other technological possibilities offer
great hope to achieving long term carbon reduction but they will take
varying degrees of time and investment to achieve full utilization. I
believe there is still a disconnect for a lot of people in
understanding what is possible now and what will be possible in the
near and long term future. I am optimistic in America's ability to meet
the challenge of reducing our carbon output to sustainable levels. We
also have to be vigilant at minimizing the costs to consumers while at
the same time setting high but achievable goals, adequately funding
research and development of new carbon reduction technologies, and
maximizing efficiencies through such efforts as good transmission
planning, energy conservation, demand response, energy efficiency and
more.
market manipulation
Question 28. S. 1462, as reported by this Committee, provides
``cease and desist'' authority to FERC to invalidate a transaction if
it determines that an entity is manipulating, has manipulated, or is
attempting to manipulate the wholesale electric energy markets. In some
cases, the Commission can take such action without providing prior
notice and an opportunity for hearing. There is concern that providing
FERC with such broad, unrestrained authority could deny due process and
chill competitive electricity markets. Do you believe FERC needs such
new authority or is the current authority sufficient to deal with
energy market manipulation?
Answer. Whatever authority Congress delegates to FERC to enforce a
fair wholesale electric Energy market should be exercised with great
respect for due process and recognition of the impact it may have on
the competitive electricity market. I believe the cease and desist
authority being contemplated is a valuable tool to assist the
Commission in ensuring that markets are well-functioning and free of
market manipulation. FERC's current authority to prohibit market
manipulation does not currently enable FERC to prevent a suspected
manipulator from dissipating assets during the pendency of an
investigation. FERC's inability to do that may ultimately result in the
manipulator escaping with its gains.
organized markets
Question 29. What is the appropriate path forward with respect to
organized and bilateral markets? Can and should they co-exist or should
all utilities ultimately be in organized markets?
Answer. I believe that organized and bilateral markets can and
should co-exist. As long as FERC continues to work to improve
competition in both organized and bilateral markets, through such
efforts as open-access transmission tariff reform, market-based rate
reform, and its Competition Final Rule (Order No. 719), there is no
reason why FERC should attempt to impose a single market structure on
all regions. Both organized and bilateral market structures are capable
of supporting competitive markets.
Question 30. Do you think that FERC's oversight of electricity
markets is sufficient to ensure that the wholesale electric rates meet
the ``just and reasonable standard'' of the Federal Power Act? If so,
what is the basis for this conclusion? If not, how could FERC do a
better job?
Answer. Yes, I believe that FERC's oversight of electricity markets
is sufficient to ensure just and reasonable wholesale electric rates.
In addition to recently strengthening competition in the electric power
markets through its Competition Final Rule issued in 2008 (Order No.
719) and its 2007 order to prevent undue discrimination and preference
in transmission service (Order No. 890), FERC now more closely monitors
these markets for anomalous market behavior.
Question 31. Do you think that, based on currently available data,
the wholesale electricity markets operated by Regional Transmission
Organizations (RTOs) are achieving net benefits for consumers? If so,
what is the basis for this conclusion? If not, are there actions, other
than those identified in Order 719, which FERC can take to better
protect consumers in the RTO markets?
Answer. I have not had the opportunity to work directly with all
the RTOs, therefore I am currently unable to speak authoritatively
about the benefits of each. However, I have had the opportunity to work
with the Midwest ISO. Having served on the Board of Directors of the
Organization of Midwest ISO States from 2005 through January of 2009, I
am familiar with the benefits achieved through the Midwest ISO
operations. I would like to limit my comments to their benefits, but I
assume that other RTOs can demonstrate similar benefits (however they
may be limited by other factors such as the scale of the organization).
For example performance measures for Midwest ISO would indicate the
following:
1. Improved reliability through reductions in both the
average size of outages and the average duration of outages.
The systems developed by the Midwest ISO exceed the North
American Electric Company (NERC) standards.
2. Increased economic efficiency in the commitment of
generation units and dispatch of energy by combining 23
individual regions into one single region.
3. Improved dispatch of support services such as regulation,
operating reserves and supplemental reserves. The formation of
the Midwest ISO along with the implementation of an Ancillary
Services Market allowed the Midwest ISO to improve the dispatch
of these services.
4. Investment in generation has been deferred because the
scale and geographic diversity of the Midwest ISO has enabled
the reserve margin to be about 2.7% less than what it would
have been without the Midwest ISO.
5. More efficient regional transmission planning has been
implemented.
Question 32. Last September, the Government Accountability Office
released a study finding, among other things, that FERC ``has not
conducted an empirical analysis to measure whether RTOs have achieved
these expected benefits or how RTOs or restructuring efforts more
generally have affected consumer electricity prices, costs of
production, or infrastructure investment. . .'' FERC has since reported
that it is working on developing standardized performance measures for
RTOs. What do you see as the most critical measures of success for
these markets?
Answer. While the standardized measures are under development, in
my opinion, the most critical measures of success for these markets are
as follows: (1) customer benefits, in particular reduced customer
costs; (2) reliability, specifically long-term reliability as measured
by increasing capacity available for peak load conditions and short-
term reliability as measured by no violations of NERC or regional
reliability standards and success in implementing tools such as
security constrained economic dispatch, security constrained unit
commitment, state estimators and rapid response protocols for system
emergencies; (3) improved system efficiency and diversity as measured
by increased transmission flows, efficient dispatch, increased plant
availability, and increased transmission capacity additions,
interconnections and MW of renewable and demand resources added; and
(4) increased competition as measured by new resources and new
facilities being added to RTO markets. If confirmed, I look forward to
reviewing what is developed by the FERC staff and working with my
colleagues to develop effective measures.
Question 33. Do you think the indicators provided by the RTO market
monitors in their annual reports are adequate measures of the
competitiveness of the wholesale electricity markets? If not, what
improvements could be made to these reports?
Answer. Yes, I think that the indicators used by the RTO market
monitors are adequate for evaluating RTO/ISO market competitiveness.
The RTO market monitors provide extensive data and analysis on the
competitiveness of wholesale electric markets in their annual reports,
by looking at, for example, ease of entry for new resources, price
trends, transmission additions, and the liquidity of the market, among
many other indicators.
Question 34. Do you think that there is an adequate level of
transparency in the pricing and other relevant data from the
electricity markets, especially those operated by RTOs?
Answer. FERC has made efforts to increase the transparency of
electricity markets including RTO markets. Currently, prices for all
power sales within the Commission's jurisdiction are reported quarterly
to the Commission and available to the public, and all RTOs post
location-specific prices for the public on an hourly basis. FERC has
also recently improved transparency in regional markets through reforms
to its Open Access Transmission Tariff. FERC is also in the process of
implementing Order No. 719 to increase transparency with respect to
demand response and long-term power contracting. Whether these efforts
are providing an adequate level of transparency, if confirmed, is a
topic I will consider closely as I become more familiar with the
numerous data resources available.
Question 35. What is your assessment of the success of pricing
incentives in the RTO markets, such as locational pricing
differentials, to spur infrastructure development and address
transmission congestion?
Answer. The organized energy markets in most RTOs rely on
Locational Marginal Pricing (or LMP), which is a system that allows
prices to vary at different locations and at different times to reflect
the market conditions and costs of meeting demand in those areas. The
LMP system sends price signals to market participants regarding where
generation resources are most needed, where reductions in demand are
most valuable, and where transmission constraints are the most severe.
The transmission planning processes employed by the RTOs considers the
congestion price signals in developing transmission expansion plans. Of
course, the ability to pursue upgrades identified in those transmission
expansion plans would require a number of regulatory approvals in the
states that they traverse. So, while the price signals sent by the
RTOs' markets are an important factor in encouraging efficient
transmission expansions where they are needed, they alone are not
sufficient to develop infrastructure; other factors also are important.
ferc authorities
Question 36. S. 1462, the American Clean Energy Leadership Act of
2009 reported by this Committee and H.R. 2454, the American Clean
Energy and Security Act of 2009 passed by the House of Representatives,
provide FERC with extensive new authority in areas such as renewables,
energy efficiency, demand-side management, retail consumer interests
and climate change. If confirmed, how do you intend to reach out to the
states to help promote regulatory certainty?
Answer. As a former President of the Organization of MISO States
and previously active member of NARUC, I understand the value of
federal coordination with states to promote regulatory certainty. The
recent Smart Grid Collaborative, a joint effort between NARUC and FERC
to develop the criteria for establishing preconditions under which
Smart Grid projects would be funded through the American Recovery and
Reinvestment Act of 2009, is an excellent model of a collaborative
effort between the federal government and the states that will help to
provide regulatory certainty. If confirmed, I will get involved in or
encourage additional collaborative efforts, communications, and
outreach projects with states for any new areas of FERC authority.
ocean marine renewable energy
Question 37. Another hydro power issue is how to proceed to
encourage the development of marine hydrokinetic power. FERC and the
Minerals Management Service signed an MOU this spring to work out
permitting issues between your two agencies for ocean wave, tidal and
current projects. Alaska, of course, has dozens of great sites for such
projects. If you are aware of the terms of the agreement, what is your
opinion about it? Will it work in your view to permit enough permitting
and siting certainty to allow projects to be financed and proceed in a
timely manner? If not, what would you as a commission like to see done
to further marine renewable energy in the future?
Answer. I am not familiar with the details of the document, but am
generally aware that it reflects an agreement between Chairman
Wellinghoff and Secretary of the Interior Salazar that the Commission
and the Minerals Management Service can without conflict exercise their
respective responsibilities with respect to the development of
appropriate hydrokinetic projects on the Outer Continental Shelf. I
support this outcome. If confirmed, I will become more familiar with
this issue.
alaska gas pipeline project
Question 38. The biggest potential energy project on the horizon in
the country is construction of an Alaska natural gas pipeline project.
FERC back in 2005 issued an order to permit in-state use of the gas,
offtake points, and to deal with pipeline expansion issues. At this
time I don't see the need for additional FERC rulings on those issues.
But for this project to proceed, FERC will have to devote considerable
staff and effort to rapidly processing any application for a line
certificate, perhaps after next year's open season periods end. Do you
commit as a commissioner to do everything possible to complete timely
review of a certificate request for any project that successfully
finishes an open season process? Do you have any ideas on any changes
Congress should be making either in the loan guarantee program or in a
regulatory way to further the chances for this project?
Answer. I commit to doing whatever I can to ensure the completion
of timely review of any application for an Alaska natural gas
transportation project that is filed with the Commission. It is my
understanding that in the Alaska Natural Gas Pipeline Act of 2004,
Congress mandated that FERC issue a final environmental impact
statement (EIS) no later than 18 months after receipt of a complete
application for an Alaska natural gas pipeline project, and that FERC
issue a final order no later than 60 days after issuance of the EIS. I
am confident that FERC and its staff will make every effort to meet
these deadlines.
lng
Question 39. On January 15th of this year FERC issued a final
environmental impact statement for an application to build a liquefied
natural gas facility in Sparrows Point, Maryland. This decision came
nearly 2 years after the application was filed with FERC. The State of
Maryland has appealed this decision and requested a rehearing of the
decision. What is your position on matters of upholding or overturning
prior FERC decisions such as this one?
Answer. If confirmed as a Commissioner, my obligation would be to
decide all matters based on the record before the Commission,
applicable legal standards, and appropriate policy considerations. I
would vote to affirm or overturn decisions made prior to my joining the
Commission based on an objective consideration of these matters.
Question 40. Since the passage of the Energy Policy Act of 2005,
only one LNG application has been granted a final environmental impact
statement under the rules promulgated as a result of this law. The
EPACT 2005 process was designed to front load the design and review of
facility plans. This committee and the Congress also recognized the
need to expedite review of those applications. Since that exhaustive
process has taken over 2 years to date and is currently pending
rehearing, what is your view on a reasonable duration of time before a
rehearing should be completed?
Answer. Because the time needed for the Commission to act on
rehearing in a given case will depend on the extent and the complexity
of the matters raised on rehearing, and because I do not yet have
extensive experience with the Commission's review process, I cannot
suggest a generally applicable deadline for the Commission to act on
requests for rehearing. However, I do believe that the Commission
should act as quickly as possible, and it is my understanding that the
Commission's policy is to do that.
Responses of John R. Norris to Questions From Senator Wyden
Question 1. The energy bill recently reported out of the Senate
Committee on Energy and Natural Resources expands FERC's authority with
regard to the nation's electric grid. Given your experience in leading
the utilities in the State of Iowa to modernize the electric
infrastructure and to build additional sources of renewable energy,
what do you believe FERC's role should be in fostering the
modernization of the electric grid by the power utilities?
Answer. FERC should take a leadership role to foster modernization
of the electric grid in the following ways: (1) create better federal/
state/industry coordination to implement new energy efficient
technologies, (2) accommodate the transmission needs of all generation
types, including renewables, (3) encourage additional demand-side
management programs, and (4) continue to emphasize planning to enable
expansion of the interstate transmission system.
Question 2. What will you do as FERC Commissioner to encourage the
use of innovative solutions for electric grid improvements and
modernization? Specifically how will you promote the use of storage
technologies to integrate intermittent sources of renewable energy,
such as wind and solar, into the grid; alleviate the need for
additional generation through peak shaving; and minimize the need for
additional transmission capacity?
Answer. As you mention, there are many potential benefits of bulk
energy storage, from supporting the integration of intermittent
renewable generation to enabling a more efficient use of existing
generation and transmission facilities. It is important to recognize,
moreover, that there is a wide array of storage technologies that
perform different functions and, as a result, may be able to provide
existing services in a better way. For example, there is growing
evidence through pilot projects that fly-wheel energy storage devices
and utility-scale batteries may be better suited than traditional
generation to provide certain ancillary services like frequency
regulation. However, most current regulatory practices and structures
were designed during a time when these new storage technologies were
simply not available. As a FERC Commissioner I will strive to identify
and seek to address barriers that unduly hamper the development of new
storage capacity, in all of its useful forms. Specifically, I will
support reforms that enable all resources, whether supply-side or
demand-side, to participate on a comparable basis in the energy markets
regulated by the Commission.
Question 3. As energy storage systems are added into the electric
grid infrastructures, some issues have arisen as to whether the costs
of these storage systems can be included in transmission rates or
whether they should be treated as generation assets. Do you believe
that the costs of storage systems should be allowed as part of the
electric grid infrastructure? If so, under what circumstances or
conditions should they be allowed?
Answer. Given the variety of storage systems, such as short-term
flywheel systems and long-term pumped storage systems and their
different possible uses, I believe that storage systems need to be
evaluated on a case-by-case basis when determining whether they should
be included in transmission rates or be treated as generation assets.
If confirmed, I will pay close attention to the complicated issue of
how costs are allocated for storage systems used to sell electricity in
energy markets.
Question 4. FERC recently issued a report assessing the potential
for demand-response to reduce peak demand (A National Assessment of
Demand Response Potential, FERC Staff Report, June, 2009). The only new
technologies that were considered in the report were advanced metering
and direct load control. Based on this report, FERC must now create a
National Action Plan.
Answer. The FERC staff report, National Assessment of Demand
Response Potential (Assessment), analyzed quantitatively the potential
for realizing the nation's demand response potential using advanced
metering and direct load control. It did recognize, in Chapter IV, that
technologies other than advanced metering and direct load control may
have significant potential to reduce demand. These technologies include
emerging smart grid technologies, distributed energy resources,
targeted energy efficiency programs, and technology-enabled demand
response programs with the capability of providing ancillary services
in wholesale markets (and increasing electric system flexibility to
help accommodate variable resources such as wind generation.) However,
the demand response achievable with these other technologies was not
assessed quantitatively because there was not sufficient experience
with these resources to estimate their potential reliably. However, the
Commission has considered and should continue to consider opportunities
to allow these other technologies to prove themselves.
Question 5. Since the scope of this report was somewhat limited,
thus limiting its range of solutions, what will you do as a
Commissioner to ensure that the National Action Plan, which will set
the course of action for the next 5 to 10 years, has a more forward-
looking scope?
Answer. If confirmed as a FERC Commissioner, I will pursue
opportunities to allow a broad range of demand response technologies to
prove themselves. Nothing in section 529 of the Energy Independence and
Security Act of 2007 (EISA) requires the Commission to limit the scope
of its National Action Plan on Demand Response to the technologies
identified in the National Assessment. Further, in forming the Action
Plan, the Commission should--and I understand has already begun to--
solicit and accept input from a broad range of industry stakeholders,
including proponents of all demand response technologies. If confirmed,
I would support that approach.
Question 6. What will you do to ensure that the Demand Response
National Action Plan makes recommendations that new technologies be
considered for their potential in alleviating peak demand as well as
providing increased reliability, specifically what will you do as a
FERC Commissioner to include renewable sources of energy and storage
systems in solutions that reduce the peak demand for electricity?
Answer. If confirmed as a Commissioner, I will ensure that the
recommendations of the Demand Response National Action Plan consider
new technologies--such as smart grid applications, electric storage
technologies, and energy efficiency programs--based on their potential
to reduce peak demand in a cost-effective manner. Reliability is
paramount, however, as the costs to the nation of a major blackout are
huge and long-lasting, so that every technology should be required to
be fully tested, cybersecure, and maintain its performance throughout a
reasonable performance life in a reliable manner. If confirmed, I will
endeavor to provide consumers with the opportunity to select from a
full range of resources that best meet their overall goals and energy
needs by ensuring that all resources, including renewable sources of
energy and storage systems, are able to be considered if they are
reliable.
Question 7. Although statutorily authorized to establish an Office
of Public Participation (16 USC Sec. 825q-1), FERC has never
established such an office. This office would coordinate assistance to
the public for people who wish to intervene or participate in matters
before the Commission. Because the office would also provide
compensation for fees of attorneys and expert witnesses, it would serve
to let other voices be heard. Do you agree that FERC should establish
the Office of Public Participation?
Answer. Participation by the public and stakeholders is a critical
part of the FERC decision-making process, and is consistent with FERC's
responsibility under the Federal Power Act to protect the public
interest. If confirmed, I will look into ways, including the possible
establishment of the Office of Public Participation, to ensure that the
public has sufficient and appropriate participation in FERC processes.
Question 8. If confirmed, what steps will you take to help ensure
that the office is created and properly staffed?
Answer. If confirmed, I will carefully evaluate whether the Office
of Public Participation should be established and, if so, how that
office should be structured and staffed to provide effective assistance
to interests that may be underrepresented before the Commission.
Specifically, if the Office of Public Participation is established, I
will examine whether the office staff should include attorneys,
technical and financial analysts, and/or engineers.
Question 9. What additional statutory authority, if any, do you
believe the Commission would require to ensure that all of FERC's
jurisdictional responsibilities for electricity, natural gas, and oil
pipelines were covered by the Office of Public Participation?
Answer. Participation by the public and stakeholders is a key part
of the FERC decision making process. If confirmed, I will look into
whether FERC has the necessary authorities to ensure sufficient and
appropriate participation by the public in the FERC process.
Question 10. FERC insists, as a matter of policy, that even when
multiple natural gas projects are being proposed to serve the same
market it need not determine which of the projects are actually needed
to serve the market, or which would best serve that market. In Oregon,
three separate LNG terminals and two pipelines from the Rocky Mountains
have all been proposed and are currently being permitted. The quantity
of gas proposed to be delivered by these projects dwarfs the actual
amount of gas that can (1) be used in the Northwest, and (2) can even
be transported in the existing interstate pipelines to which they will
connect. Why shouldn't FERC look at which projects are truly needed,
and which will, in fact, best serve that market?
Answer. The projects in Oregon that you refer to are currently
pending before FERC, so it would not be appropriate for me to comment
on those specific projects. To date, the Commission has taken the
position that its role is to determine whether a proposal is
environmentally acceptable, safe and secure, and to approve only those
projects which are found to be in the public interest. Ultimately, the
market and the customers of that project will decide whether the
projects are commercially viable enough to move forward. While I agree
generally with the notion that markets largely will decide which of
several projects might ultimately be built, I also believe that the
Commission could take steps to better understand the cumulative effects
of multiple projects and factor that understanding into its decision
process.
Question 11. In response to questions for the record during the
Committee's 2005 hearing on LNG permitting, the former Director of the
Office of Energy Projects testified that ``The Commission is supportive
of competition within the energy industry and of the idea that the
market drives infrastructure development. Past experience, particularly
since the restructuring on the gas industry following Order No. 636,
has demonstrated that market forces can serve the same end as a
competitive or ``Ashbacker'' hearing. Where the Commission approves
multiple projects to serve a similar market, only an economically
viable project will actually be built, i.e., only where customer
commitments ensure new service will fulfill a genuine need.'' This
continues to be the Commission's policy. How is this policy consistent
with the obligation of the Commission to make an affirmative finding of
public convenience and necessity under the Natural Gas Act? Do you
agree with this policy that competitive or ``Ashbacker'' hearings need
never be conducted where multiple projects are proposed for a given
market? Are there circumstances where you believe that it is ever
appropriate for the Commission to conduct competitive or ``Ashbacker''
hearings where multiple projects are being proposed to serve a single
market? If so, when?
Answer. I do believe that the market can be an effective arbiter in
selecting between competing energy infrastructure projects. Consumers
are in the best position to decide whether, and under what conditions,
they will support a given project. I do not think that it is
necessarily inconsistent with the Commission's obligation to make a
finding that a proposed project is consistent with the public
convenience and necessity if, after ensuring that proposed projects
meet exacting safety and environmental standards, the Commission allows
demand to determine whether one or more competing projects has the
public support, and thus the financial wherewithal, to be built. That
said, I do not understand it to be the Commission's policy that an
Ashbacker hearing is never appropriate, nor do I believe that to be the
case. Rather, I think that Ashbacker hearings are one of the regulatory
tools that the Commission may elect to use. I cannot identify the
specific circumstances in which I would deem an Ashbacker hearing to be
the best method for dealing with competing energy infrastructure
projects, but I will have an open mind on the matter.
Responses of John R. Norris to Questions From Senator Barrasso
The Energy and Natural Resources Committee approved legislation
that expands FERC's eminent domain authority. It allows FERC to
override State rejections of proposed transmission lines.
Question 1. Do you believe FERC should have the authority to
override a State rejection of a transmission proposal?
Answer. Siting of interstate transmission lines is often a very
contentious process at the state level. There are a variety of reasons
for a state's rejection of a transmission proposal including, but not
limited to, local opposition and parochial interests. In the Energy
Policy Act of 2005 Congress determined that it is in the national
interest to site, build, and maintain a robust interstate electric
transmission system to ensure a secure and reliable supply of
electricity and integrate renewable energy. FERC has the necessary
expertise to review and make national public interest determinations
for electric transmission projects, since the Commission has extensive
experience successfully siting linear infrastructure projects under the
Natural Gas Act.
In the case of transmission siting, interstate benefits must be
carefully considered when siting decisions are made. These include
consideration of whether the line is needed to relieve congestion,
improve system reliability, access renewable generation, or meet
growing energy demand. Some states will not (or cannot) take into
account these regional or national benefits when making a siting
decision. Accordingly, it is quite probable that a single state could
prevent construction of a needed interstate transmission project by
simply denying approval within its state borders.
Authority to override a state's rejection of a transmission
proposal does not guarantee that a particular proposal would be
approved by FERC. The Commission could also deny the same project.
Under FERC's siting authority and permit review process, consideration
of an application before the Commission requires a careful evaluation
of all stakeholders' interests and concerns, including the record
supporting a state's public interest determination.
Question 2. Do you believe Washington is better qualified to make
transmission siting decisions than State and local officials?
Answer. States are best qualified to make certain transmission
siting decisions particularly for intrastate proposals, and it should
be the Commission's preference that states retain primacy in siting
such transmission projects. However, it has proven to be a more
daunting challenge for states to make siting decisions on interstate
transmission facilities due to opposition or lack of statutory
authority to consider regional or national benefits when making public
interest determinations. In those instances, FERC's expertise and
experience in making national public interest determinations could
better facilitate the siting of needed interstate transmission
projects.
Responses of John R. Norris to Questions From Senator Shaheen
I was pleased to read in your testimony about your commitment to
containing costs in order to protect consumers. I wholeheartedly agree
with this goal. As we discussed in our meeting earlier this week, a key
issue before the FERC regards the approval of favorable return on
equity incentives when constructing new transmission lines.
While I agree that improvements to our nation's transmission system
are necessary to ensure reliability, connect renewable energy and make
smart grid improvements; I am troubled by what some see as a prolific
use of rate incentives by the FERC for new transmission projects.
In EPAct 2005, Congress authorized the FERC to establish higher
incentive-based rate treatments for new transmission. FERC finalized
its rule to provide for these incentive rates to encourage improvements
and investments in new transmission in July, 2006.
FERC has long had the authority to regulate the rates, terms, and
conditions of wholesale electricity transmission. Typically, FERC has
approved an average rate of return of 11% on equity for utilities'
investments in transmission and generation. However, under FERC's
incentive rate making rules, utilities have been able to receive return
on equity rates approaching 14 percent. These incentives are borne
directly by ratepayers.
Question 1. How risky do you think it is to build new transmission
lines?
Answer. The risks associated with building a new transmission line
vary depending on the specifics of a project and in some cases the
risks can be substantial. This is the reason for the Commission's
current approach of reviewing requests for incentives on a case-by-case
basis.
Generally speaking, I think incentive rates implies the need for a
greater return to reflect a higher than average investment risk. I
believe it would be my responsibility as a member of the Commission to
see that any incentive rate award is justified by a showing of a higher
than average risk associated with a specific transmission project.
Question 2. From an investment standpoint, do you think
transmission facilities are good investments?
Answer. As a general matter, I believe that transmission projects
can be good investments. However, a decision whether or not to
undertake investment in a particular project depends on many factors,
and is highly dependent upon the specific facts and circumstances of
each individual transmission project.
Question 3. In your view, is there a lack of investment capital for
new transmission?
Answer. I believe that there is a continued need for investment in
new transmission. Historically, investment in transmission facilities
in real dollar terms has declined significantly in the past few
decades. This decline in transmission investment in real dollars has
occurred while the electric load using the Nation's grid has increased.
Further, the aging infrastructure has to be updated to provide reliable
and affordable service, to accommodate increased consumer demand, and
accommodate large amounts of renewable generation.
Given the current investment climate, utilities may cancel or defer
spending on transmission projects because they need to access very
large amounts of capital at a higher cost, in addition to facing
tougher competition in the debt and equity markets for limited capital
over the next several years.
Question 4. Would you agree that once siting, permitting and
regulatory approval have been completed, the risks for most
transmission projects is relatively low?
Answer. Even though siting, permitting and regulatory approvals may
reduce the risk faced by transmission projects, there are several other
types of risks and challenges that a transmission project faces that
will continue to exist.
Question 5. Do you think the return on equity incentives should be
tied to the risks of getting the transmission facility approved?
Answer. As discussed in my previous responses, the risk of
regulatory approval should be one, but not the only, factor considered
when determining a request for return on equity incentives. The
Commission's case-by-case approach enables it to determine the
appropriate return on equity commensurate with the risks and challenges
of a particular project. If confirmed, I am committed to weighing all
relevant factors when examining the risks associated with a
transmission project.
Question 6. In your view, what are the risks that would justify
additional incentives for owners of new transmission facilities?
Answer. In my view projects that advance national policy goals,
such as providing access for renewable resources to the interstate
grid, and face higher than normal risks and challenges may warrant
additional incentives for transmission facilities. I believe the
Commission's existing case-by-case approach enables it to review the
specific facts and circumstances of an individual project in order to
determine whether additional incentives are warranted.
Please also see my answer to question 3 above.
Question 7. Section 1241 of EPAct 2005 authorized FERC to establish
incentive-based rates for new transmission facilities ``for the purpose
of benefiting consumers by ensuring reliability and reducing the cost
of delivered power by reducing transmission congestion.'' Would you
agree that unless a transmission project ensures reliability or reduces
congestion, there is no basis for a rate incentive?
Answer. In addition to Section 1241 of the Energy Policy Act of
2005, which you cite, the Commission has broad authority under section
205 of the Federal Power Act to encourage investment in transmission
through the application of incentive pricing for projects that may
provide benefits to consumers other than ensuring reliability and
reducing the cost of delivered power by reducing transmission
congestion. For example, an entity is not precluded from seeking
incentives from the Commission for transmission facilities to
interconnect large amounts of renewable power to the transmission grid.
If confirmed, I will ensure that any actions are well grounded in
authorities granted to FERC by Congress.
Question 8. In one recent case, the FERC approved a return on
equity of 14.3 percent for a proposed transmission project (Allegheny
and AEP's PATH project). In her partial dissent, Commissioner Kelly
noted that FERC made the determination about the 14.3 percent return on
equity without holding an evidentiary hearing, which has been
traditionally been FERC's practice. Commissioner Kelly stated by
skipping the evidentiary hearing and making a determination on the
return on equity directly in the order, it ``reinforces the notion that
the Commission has adopted an ad hoc approach to granting transmission
incentives in general.''
Would you agree that evidentiary hearings, where parties have the
opportunity for cross-examination, rebuttal, and oral argument, are
essential elements when making return of equity decisions?
Answer. Evidentiary hearings are one of the ways the Commission can
choose to decide the return of equity for an applicant. The issue of
whether a case needs to be set for evidentiary hearing depends on the
adequacy of the record before the Commission and whether the Commission
has sufficient facts to decide the case. If the Commission has a
sufficient record upon which to make a reasoned decision, there may not
be need to obtain additional information or hold a hearing. If
confirmed, I would support an evidentiary hearing in any case where I
felt such a hearing is necessary to receive needed information in order
to reach a reasonable and well informed decision.
A compounding factor for me is the escalating costs of
transmission projects. One such project is the Middletown to
Norwalk, Connecticut transmission project. In 2004, the project
was estimated to cost $690 million. That figure now stands in
excess of $1.3 billion. In New England, we share in
transmission upgrades regardless of where the project is built,
so these cost escalations have a direct impact on New Hampshire
rate payers.
For this project, FERC granted a 50 basis point incentive for
the underground portion of the project for using advanced
technologies. However, at this point the project was well into
the construction phase and there was little doubt the project
would not be built without the additional incentives.
Additionally, Connecticut law requires that underground
transmission lines must be used to the maximum extent possible
and the Connecticut Siting Council (``CSC'') ordered in April
of 2005 that the only acceptable method for construction of
this project was to install 24 miles of underground XLPE cable.
Therefore, no incentive was needed to encourage the use of this
advanced technology, it was the only way the project would be
allowed to be built.
It should also be noted that this project was already granted
a 50 basis point return on equity (ROE) incentive that is give
to projects build by Transmission Owners who have joined
Regional Transmission Organizations such as ISO-NE and 100
basis points awarded to all new transmission projects in New
England. These incentives were granted to the entire final cost
of the project.
The total ROE on the project is difficult to calculate (as
the 50 basis points adder for the use of advanced technology
was only applied to the underground portion of the project),
however a good estimate would be 12.5% to 12.7%.
Not only are the ROE incentives questionable, but they are
compounded, in my view, by the higher costs of the project--
which effectively doubled.
Question 9. Do you believe return on equity incentives should be
applied in cases where state law required advanced technologies to be
used or the technologies are not truly advanced?
Answer. In Order No. 679, the Commission explained that to the
extent that applicants seek additional incentives for advanced
technologies, the Commission will consider the propriety of such
incentives on a case-by-case basis.\1\ If confirmed, I will examine
each-case to determine whether an applicant has justified its request
for additional incentives for using advanced technologies.
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\1\ Promoting Transmission Investment through Pricing Reform, Order
No. 679, FERC Stats. & Regs. 31,222, at P 289-292, order on reh'g,
Order No. 679-A, FERC Stats. & Regs. 31,236 (2006), order on reh'g,
119 FERC 61,062 (2007).
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Question 10. Do you think it is appropriate for return on equity
incentives to apply to estimated costs of a project and not be applied
for cost over runs?
Answer. As a general matter, I support the Commission's established
policy for ensuring that only prudently incurred costs are recovered
under section 205 of the Federal Power Act.
However, the specific issue you raise is pending before the
Commission on rehearing and to avoid prejudging the issue, I cannot
discuss it further at this time.
Question 11. Do you agree that a case-by-case analysis is critical
for determining whether ROE incentives are, in fact, truly necessary?
Answer. I find reasonable the Commission's current approach of
determining the level of the return on equity on a case-by-case basis
when an application for an incentive-based return on equity is filed
with the Commission.\2\ This approach enables the Commission to
authorize a unique return on equity appropriate to the specific facts
and circumstances of each case.\3\
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\2\ Order No. 679 at P 93.
\3\ Order No. 679-A at 65.
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Moreover, the Commission requires an applicant to demonstrate that
the total package of incentives is tailored to address the demonstrable
risks or challenges faced by the applicant in undertaking the project.
Therefore, if some of the incentives in the package reduce the risks of
the project, that fact should be taken into account by the Commission
in any request for an enhanced return on equity.\4\
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\4\ Id. at P 27.