[Senate Hearing 107-125]
[From the U.S. Government Publishing Office]
S. Hrg. 107-125
GRILES, OTIS, ROBERSON, BROWNELL,
AND WOOD NOMINATIONS
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
on
THE NOMINATIONS OF J. STEVEN GRILES, NOMINEE TO BE DEPUTY SECRETARY OF
THE INTERIOR; LEE SARAH LIBERMAN OTIS, NOMINEE TO BE GENERAL COUNSEL OF
THE DEPARTMENT OF ENERGY; JESSE HILL ROBERSON, NOMINEE TO BE ASSISTANT
SECRETARY FOR ENVIRONMENTAL MANAGEMENT OF THE DEPARTMENT OF ENERGY;
NORA MEAD BROWNELL, NOMINEE TO BE A MEMBER OF THE FEDERAL ENERGY
REGULATORY COMMISSION; AND PATRICK HENRY WOOD III, NOMINEE TO BE A
MEMBER OF THE FEDERAL ENERGY REGULATORY COMMISSION
__________
MAY 16, 2001
Printed for the use of the
Committee on Energy and Natural Resources
U.S. GOVERNMENT PRINTING OFFICE
75-052 WASHINGTON : 2001
_______________________________________________________________________
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC
20402
COMMITTEE ON ENERGY AND NATURAL RESOURCES
FRANK H. MURKOWSKI, Alaska, Chairman
PETE V. DOMENICI, New Mexico JEFF BINGAMAN, New Mexico
DON NICKLES, Oklahoma DANIEL K. AKAKA, Hawaii
LARRY E. CRAIG, Idaho BYRON L. DORGAN, North Dakota
BEN NIGHTHORSE CAMPBELL, Colorado BOB GRAHAM, Florida
CRAIG THOMAS, Wyoming RON WYDEN, Oregon
RICHARD C. SHELBY, Alabama TIM JOHNSON, South Dakota
CONRAD BURNS, Montana MARY L. LANDRIEU, Louisiana
JON KYL, Arizona EVAN BAYH, Indiana
CHUCK HAGEL, Nebraska DIANNE FEINSTEIN, California
GORDON SMITH, Oregon CHARLES E. SCHUMER, New York
MARIA CANTWELL, Washington
Brian P. Malnak, Staff Director
David G. Dye, Chief Counsel
James P. Beirne, Deputy Chief Counsel
Robert M. Simon, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
C O N T E N T S
----------
STATEMENTS
Page
Allard, Hon. Wayne, U.S. Senator from Colorado................... 7
Allen, Hon. George, U.S. Senator from Virginia................... 4
Boucher, Hon. Rick, U.S. Representative from Virginia............ 9
Brownell, Nora Mead, Nominee to be a Member of the Federal Energy
Regulatory Commission.......................................... 12
Burns, Hon. Conrad, U.S. Senator from Montana.................... 26
Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado........ 1
Griles, J. Steven, Nominee to be Deputy Secretary of the Interior 18
Murkowski, Hon. Frank H., U.S. Senator from Alaska............... 1
Otis, Lee Sarah Liberman, Nominee to be General Counsel of the
Department of Energy........................................... 16
Roberson, Jesse Hill, Nominee to be Assistant Secretary for
Environmental Management of the Department of Energy........... 17
Warner, Hon. John, U.S. Senator from Virginia.................... 2
Wood, Patrick Henry III, Nominee to be a Member of the Federal
Energy Regulatory Commission................................... 14
APPENDIX
Responses to additional questions................................ 49
GRILES, OTIS, ROBERSON, BROWNELL,
AND WOOD NOMINATIONS
----------
WEDNESDAY, MAY 16, 2001
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 9:52 a.m. in room
SD-366, Dirksen Senate Office Building, Hon. Frank H.
Murkowski, chairman, presiding.
OPENING STATEMENT OF HON. FRANK H. MURKOWSKI,
U.S. SENATOR FROM ALASKA
The Chairman. We are going into the second part of the
hearing. We have five presidential nominees before us. First is
Patrick Henry Wood, who has been nominated to be a member of
the Federal Energy Regulatory Commission. Since I gather that
no one is going to be introducing--well, I notice that nobody
is introducing Patrick Wood III, so I will defer the order to
accommodate the Senators who are going to introduce some of the
nominees. We seem to have some confusion associated with this,
but nevertheless we have Senators here and they are a voice to
be heard from.
So I would ask Senator Wayne Allard to introduce Jesse Hill
Roberson. Jesse has been nominated to be Assistant Secretary
for Environmental Management, Department of Energy. Senator
Allard, please proceed.
[A prepared statement from Senator Campbell follows:]
Prepared Statement of Hon. Ben Nighthorse Campbell, U.S. Senator
From Colorado
Thank you Mr. Chairman. I am honored and pleased to be here at this
hearing to consider the nominations of all these folks nominated to
serve in the administration. They are all overwhelmingly qualified and
the right people for their respective agencies.
Before I focus on the nomination of Steve Griles, I want to briefly
comment on the FERC nominees, especially since the ongoing problems in
California are not going away. Both of you are going into a job that
needs to be executed efficiently and completely. The FERC has a big
role that is crucial to the West and I believe that you both will do a
fine job. I support both of your nominations.
Now, moving on to the Griles nomination, I believe that Steve
Griles will complement the team in place and that he is the right
person for this job. Steve's experience will help accelerate and
improve work at the Department of the Interior and across the nation as
well. He already has worked eight years at Interior where he made the
hard decisions about managing our lands. He demonstrated then that he
could resolve conflicts and get the job done.
Steve Griles has been a powerful voice for promoting and enhancing
our land management policies. He has an institutional knowledge as well
as extensive experience in lands issues. Also, Steve understands the
Western ethic of land use and conservation which was questioned and
ignored by the previous administration. Steve is an outstanding
professional who will do great things as Deputy Secretary of the
Interior.
His demonstrated abilities will enable him to excel in his new
capacity, if confirmed as we all know he will be, as Deputy Secretary
of the Interior. I strongly support and applaud Steve Griles'
nomination and soon to be confirmation as our next Deputy Secretary of
the Interior.
Thank you Mr. Chairman.
Senator Allard. Mr. Chairman, I would be willing to yield
to my colleague from Virginia, Senator Warner. He has got a
commitment there as chairman of Armed Services that he has to
be at, and I can join that meeting a little bit later. But I
think if it suits the committee, I would be happy to----
The Chairman. I would be happy to accommodate Senator
Warner.
STATEMENT OF HON. JOHN WARNER, U.S. SENATOR
FROM VIRGINIA
Senator Warner. I thank my colleague.
The Chairman. Senator Warner, you have been a victim of the
alphabet. That is all there is to it.
Senator Warner. Not to worry about a thing.
The Chairman. Allard and Allen and Warner, and that is how
they rolled it in.
Senator Warner. Fine. Let me just point out my only regret
is I did not stay on this committee. If I had I would have been
in that chair right now where you are.
[Laughter.]
The Chairman. Well, I wonder if I would be given the same
treatment. I am sure I would.
So Senator Warner is here to introduce Lee Sarah Liberman
Otis.
Senator Warner. No, I am here to introduce Steven Griles
and Mrs. Otis.
The Chairman. Lee Sarah Liberman Otis.
Senator Warner. Right.
The Chairman. And J. Steven Griles. Please proceed, Mr.
Senator.
Senator Warner. What I will do is ask unanimous consent
that my statement may be placed into the record.
The Chairman. Without objection.
Senator Warner. I point out I know both of these
individuals. I commend the President and indeed the Secretary
for submitting to the Senate two eminently qualified
individuals. When I came to the Senate 23 years ago, one of my
earliest recommendations to the then President was Steven
Griles to take a position in the Department of the Interior,
and I have known this man these many years and I have
unqualified recommendation for this committee and the Senate as
a whole.
Now, Mr. Chairman, I find in today's Washington Post a very
constructive article on page A21 entitled ``Symbol of a Shift
at Interior.'' As I read through it, it is my judgment that
this article simply indicates the shift towards an individual
who has had great experience and success in the private sector.
In my humble judgment, I say to the chair and the members of
this committee, if the United States is going to work itself
out of this energy crisis it will, yes, have a framework of
leadership from the Executive Branch, but it will be the
private sector in the end that will work to get us out.
I think our nominee is prepared to answer each and every
question as it relates to that article and others that will be
propounded by this committee.
With that, I depart and leave it to my distinguished
colleague George Allen. Good luck. You are on your own.
[The prepared statement of Senator Warner follows:]
Prepared Statement of Hon. John Warner, U.S. Senator From Virginia
Mr. Chairman, Ranking Member Bingaman, and members of the
Committee, it is my distinct honor this morning to join my colleague
from Virginia, Senator George Allen, in introducing J. Steven Griles,
nominated to be Deputy Secretary of the Interior and Lee Liberman Otis,
for your consideration as General Counsel for the Department of Energy.
LEE LIBERMAN OTIS
With your permission Mr. Chairman, I will begin with Mrs. Otis. I
had the pleasure of meeting with Mrs. Otis in my office on Monday to
discuss her nomination and the challenges she will face at the
Department of Energy. I am pleased to report she is a Virginian with a
distinguished record of public service and impeccable credentials.
I understand Mrs. Otis has several family members here including
her husband Bill, and her stepmother Nadine. I welcome her entire
family here today to the Committee.
Because Mrs. Otis has a long history of accomplishments, I will
merely relay the highlights to you. She clerked for Supreme Court
Justice Antonin Scalia. She served as Associate White House Counsel for
the first President Bush. And she has served in this body as Chief
Counsel to the Immigration Subcommittee of the Senate Judiciary
Committee and as Counsel to Senator Abraham.
It is fortunate Mrs. Otis' background is so impressive, because she
will need to draw upon her vast experience when grappling with the
enormous challenges facing the Department of Energy. When Mrs. Otis and
I met on Monday, I relayed to her my fear that this nation may once
again be facing an energy crisis.
I don't need to explain this to the members of this distinguished
committee, as you are all energy experts, but I wanted you to know Mrs.
Otis aware of the magnitude of the problem and is enthusiastic about
the challenge. I am confident these issues will be examined in great
detail during this hearing.
Mr. Chairman, thank you for the opportunity to introduce Lee
Liberman Otis. I enthusiastically recommend her and urge her speedy
confirmation.
Now, Mr. Chairman, with your permission, I will turn to Steve
Griles.
J. STEVEN GRILES
I have known Steve Griles since 1979 when I began my service in the
Senate. I can say with confidence that Steve is a man of unquestioned
integrity and impeccable character.
Steve has a large and wonderful family, many of whom are with him
today. I welcome to the Committee his mother Elsie, daughters Kimberly
and Maegan, sons Timothy and Matthew and brothers Joe and Dwayne.
Steve is an outstanding Virginian who brings to the position a
wealth of experience in both State and Federal government and the
private sector.
In 1981, with my strong support, Steve came to Washington where he
served in various positions at the Department of the Interior.
In 1985, I had the pleasure of introducing Steve to this Committee
as President Reagan's nominee for Assistant Secretary of Lands and
Minerals Management.
After four successful years in that position, Steve returned to the
private sector as Senior Vice President for a Virginia based natural
resource company.
In the last 6 years Steve has built his own energy and
environmental consulting firm where he has concentrated on renewable
energy projects and other forms of energy production.
Mr. Chairman, I strongly recommend to the Committee the nomination
of Steve Griles, a man of unquestioned integrity, superb judgment and
exceptional knowledge.
I know he will do a good job for the American people, and I urge
the Committee to recommend his confirmation.
Thank you Mr. Chairman.
The Chairman. Thank you very much, Senator Warner.
We will hear from Steven Griles, who is the nominee for the
Department, the Secretary of the Interior, as the Deputy
Secretary, in a few minutes, as well as Lee Sarah Otis as
General Counsel for the Department of Energy. We will now move
to accommodate either Senator relative to the next nominee.
Gentlemen.
STATEMENT OF HON. GEORGE ALLEN, U.S. SENATOR
FROM VIRGINIA
Senator Allen. I would ask Wayne or the chairman. I
understand you have several panels. Ms. Otis is on the first
panel, Mr. Griles is on the second panel. If you would permit
me----
The Chairman. There is just one panel, I might add. We are
probably going to add a chair or two, but we think we can do
it. But go ahead, whichever.
Senator Allen. Well, I have to be over in the Commerce
Committee to introduce another fine Virginian.
The Chairman. Well then, I would suggest, Senator Allen,
you proceed.
Senator Allen. Do you suggest, Mr. Chairman, that I
introduce both Mr. Griles and Ms. Otis at this moment?
The Chairman. I would suggest that might be appropriate.
Senator Allen. Okay. Well, first I want to thank Senator
Allard and thank the chairman, Senator Bingaman, and all the
members of the committee.
First let me talk about Ms. Otis. It is a privilege to
introduce her. She is here with her husband, Bill, her sister
and her nieces.
The Chairman. Would you be recognized, please. Stand up.
Senator Allen. They are back there somewhere.
The Chairman. Stand up.
Oh, you have got a whole family.
Senator Allen. A whole passel of Otises and Libermans with
us.
The Chairman. Good.
[Applause.]
Senator Allen. I am pleased to join with Virginia's senior
Senator, John Warner, in introducing both these individuals.
Now, the role of Ms. Otis is particularly important in Energy
these days as General Counsel. She will certainly work very
hard and capably to formulate and implement a much-needed
national energy policy, and I think she will balance the
Nation's needs for more energy production with also
conservation of our resources, and, most importantly, also look
to innovations in technology to help meet our needs.
As you see, Ms. Otis received her bachelor's degree in
English from Yale, her French baccalaureate from Elysee
Francais, before earning her law degree from the University of
Chicago. She has an extensive record in clerking for judges,
outstanding judges, and professorships at George Mason and
Georgetown Law Schools.
You all probably most recently know that Ms. Otis worked as
Chief Counsel to the Senate Judiciary Committee, Subcommittee
on Immigration, and thanks to her efforts H-1B visa waivers for
non-immigrant visas were raised, and that is very important to
technology companies, not just in Virginia but across the
country.
During my term as Governor, I was very fortunate to have
her serve on our Virginia Advisory Council on Self-
Determination and Federalism. I know she will bring steady
principles, great diligence and determination and drive to her
work at the Department of Energy. She will continue now to
contribute to the people of America, especially now that we are
at this vitally important crossroads and challenging time for
the Department of Energy.
So I am very pleased to present and introduce her and give
her my wholehearted endorsement.
Now, so far as Steve Griles is concerned, Steve Griles is a
long-time good friend. The first time I talked to him was on a
train years ago. I was in the House of Delegates and got to
know Steve Griles, and he was telling me about his term and
service previously in the Department of the Interior.
This is a man who loves the West, and I look at this
committee and the furthest east anyone is from is Nebraska and
South Dakota. He is a man who loves the resources of the West,
the beautiful monuments.
Senator Dorgan. Senator Allen, California.
Senator Feinstein. California, do not forget California.
Senator Allen. What did I say? I said the furthest east on
this committee was Nebraska.
Senator Craig. We consider California----
Senator Allen. What did you say, furthest west? I meant
furthest east. If I said furthest west, I am sorry. Thank you.
I meant furthest east.
Senator Craig. George, California is just unique to itself.
[Laughter.]
Senator Allen. No, I made a mistake and thank you for
correcting me. I was dropped in California, so I should know. I
was almost born in Sioux City.
But at any rate, now, Steve is I think, Steve Griles is one
of the very best choices out of outstanding choices that
President Bush has made. I have known him. He is always a
person who worked well, not just at the Federal level, but the
State level, with the Virginia Department of Conservation. He
has a great reputation. His professional reputation is one of a
problem solver, and it can be illustrated by the letters of
support which I would like to have put into the record from
people with the Chesapeake Bay Local Assistance Board, the
Outdoors Foundation, the Virginia Land Trust, and board
members, a former board member of the Nature Conservancy, as
well as on the board of trustees for the Chesapeake Bay
Foundation.
I would like those letters to be put into the record.
The Chairman. Put into the record as noted.
[The material referred to follows:]
Tidewater Consulting Incorporated,
Tallahassee, FL, May 9, 2001.
Senator Frank Murkowski,
Dirksen Building, Washington, DC.
Dear Chairman Murkowski: I write in support of the nomination of J.
Steven Griles for the position of Deputy Secretary of the U.S.
Department of the Interior. By way of introduction I am a former member
of the board of Audubon of Florida, and was most recently Environmental
Policy Coordinator for Governor Jeb Bush, and served as his
``Everglades Czar.'' I speak, however, for myself.
When asked to evaluate his suitability for this post, I
investigated his background and spoke with his personally. I was
particularly pleased at his prior work in and commitment to the
Everglades. I believe that he has a background that will bring balance
and an orientation that will serve the administration, the citizens and
the environment well. His work, in and out of government, will bring
balance in his duties.
We have worked very hard to build bridges between the business and
environmental communities here in Florida. Our success was highlighted
in the signing by Governor Bush of Florida's Everglades set in 2000.
Sugar barons, environmentalists, compelling agencies bends and partisan
politicians all who put aside former differences for common good
flanked him. You need more of this in D.C. I believe Mr. Griles will
help bring this attitude change.
Yours truly,
J. Allison DeFoor, II.
______
Senator Frank Murkowski,
Chairman, Senate Energy and Natural Resources Committee, Dirksen
Building, Washington DC.
Dear Chairman Murkowski: We are writing to express our support of
the nomination of J. Steven Griles for the position of Deputy Secretary
of the United States Department of the Interior. Like Steve, we are
Virginians who are deeply concerned about conservation. We have devoted
a significant portion of our lives to ensuring that our children will
enjoy the environmental treasures that we were fortunate enough to
inherit. The signatories of this letter represent over 100 years of
dedication to issues ranging from the restoration of the Chesapeake Bay
to the preservation of Virginia's agrarian heritage and protection of
much needed open and untamed spaces.
Today, Virginia benefits from the numerous contributions Mr. Griles
made both while serving in the Commonwealth's Department of
Conservation and in the private sector. During his tenure in state
government, Virginia expanded and added numerous state parks, including
the Chappokes Plantation State Park, the Sky Meadows State Park, the
False State Park, the Grayson Highlands State Park, and the Leesylvania
State Park.
While with the Commonwealth, Mr. Griles worked with conservation
groups to change regulations to protect the environment from ``bad
actors'' in the coal industry. He made significant efforts to initiate
reclamation of abandoned mine sites and to eliminate environmental
loopholes that led to scarring of the landscape and polluted runoff.
Ultimately, Mr. Griles' leadership resulted in the strengthening of
Virginia's environmental laws to protect streams and rivers from mining
activities through the enactment of Virginia's Surfacing Mining and
Reclamation Act.
At the United States Department of the Interior, these state
accomplishments were mirrored through the reformation of the Coal
Surface Mining and Reclamation Act, the expansion of federally
designated wilderness areas by 16 million acres, protection of the Rio
Grande River, and acquisition of the West Water Canyon on the Colorado
River, among other significant environmental gains. Mr. Griles
exhibited a high level of corporate responsibility for the environment
while at United Company in southwest Virginia.
There are those who have chosen to use intolerant rhetoric and
apply negative labels to Mr. Griles in an effort to taint public
perception. There are some who will never acknowledge that a person's
career can accommodate both public and private sector service. However,
like most Americans, we prefer to take a more deliberative approach
when considering an issue of such importance. It is after such
deliberation that we are pleased to support the nomination of J. Steven
Griles for this post.
Sincerely,
James C. Wheat, III, Former Member of Board of
Trustees, the Nature Conservancy, (Va.
Chapter, Member of Board of Trustees, the
Chesapeake Bay Foundation; Paul Ziluca,
Chairman, Virginia Outdoors Foundation;
Linda Porter, Past President, Virginia Land
Trust, Board of Directors, Virginia Land
Trust; T. Gaylon Layfield, III, Vice Chair-
Board of Trustees, the Chesapeake Bay
Foundation; Louis Clifford Schroeder, Sr.,
Chair-Chesapeake Bay Local Assistance
Board, Commission for the Future of
Virginia's Environment, Chesapeake Bay
Partnership Council, Vice-Chair, Va. Oyster
Reef Foundation.
Senator Allen. He is one who I always looked at as an
adviser on conservation and mining issues when I was running
for Congress, when I was running for Governor, and also in the
U.S. Senate. This is a man with a great deal of credibility, a
great deal of experience that he will bring as Deputy
Secretary.
Most importantly, Mr. Chairman and members of the
committee, he will love his job. If someone loves their job,
that is infectious, that is contagious. I know he has a great
personality and I strongly and proudly recommend Steve Griles,
a fellow Virginian. He will bring vitality, experience,
knowledge, and integrity to this very important leadership
position.
So thank you very much.
The Chairman. Thank you, Senator Allen. I appreciate that
statement.
Senator Allen. Later Rich Boucher will also be speaking on
behalf of Mr. Griles. I know that as well.
The Chairman. Are there any questions for the Senators
before we call on Senator Allard?
[No response.]
The Chairman. If not, you are excused. There is a mailman
going to get you on the way out. But outside of that--that does
not require an answer here. It might require your glasses to
read it.
But in any event, Senator Allard, would you care to proceed
since you are the last one that is on the list? It says the
first shall be last, and that pertains to you. Please proceed.
STATEMENT OF HON. WAYNE ALLARD, U.S. SENATOR
FROM COLORADO
Senator Allard. Mr. Chairman, thank you very much, and
Senator Bingaman, members of the committee. Thank you for
having me here today to introduce and recommend a person who I
believe is an exceptional and deserving nominee to be the next
Assistant Secretary for Environmental Management at the
Department of Energy, Ms. Jesse Roberson. Ms. Jesse Roberson is
sitting here on my right.
Jesse has 17 years of private and public sector experience
in the nuclear field, with an emphasis on environmental cleanup
and restoration, low level waste management, nuclear reactor
operations, and project management and safeguards and security.
Currently, Ms. Roberson is the board member of the Defense
Nuclear Safety Facilities Board, referred to as the DNSFB. The
DNSFB is the oversight body which ensures the nuclear health
and safety activities at all of DOE's nuclear weapons complex.
She has been a board member since January 2000.
Prior to being a board member, Ms. Roberson was with the
Department of Energy. In her 10 years at the Department, she
was at the Rocky Flats environmental technology site in Golden,
Colorado, and the Savannah River site in Aiken, South Carolina.
It was during her time at Rocky Flats that I met and befriended
Ms. Roberson. In 1996, she became the manager of the Department
of Energy's Rocky Flats field office. She was ultimately
responsible for the integration and performance of all
environmental cleanup activities at Rocky Flats.
Before becoming the site manager, Rocky Flats was scheduled
for a 2015 cleanup and closure date, but once she stepped in as
manager she, along with Kaiser Hill, put into place a more
robust and vigorous plan to close the site at the end of 2006.
I can say unequivocally that without her leadership this
ambitious plan would never have been a reality.
While I believe Ms. Roberson's credentials and experience
alone speak for her qualifications to become the next Assistant
Secretary for Environmental Management at the Department of
Energy, she has also received numerous awards and honors and in
1998 she was recognized as one of the top 25 newsmakers in the
construction industry with the 1997 Newsmaker Award by
Engineering News Record.
Now, in 1997 Fort Valley State University awarded her the
platinum achievement award for outstanding leadership in the
field of education. Plus, the Girl Scouts Mile High Council
awarded Jesse the woman of distinction award. In 1996 Ms.
Roberson was honored with the black engineer of the year award
for professional achievement in government and the NAACP
scientific achievement award by the Conicue County Branch.
Mr. Chairman, I would like to insert into the record an
April 3, 2001, Denver Post editorial entitled ``Roberson a Top
Flight Pick.'' *
---------------------------------------------------------------------------
* Retained in committee files.
---------------------------------------------------------------------------
The Chairman. Without objection.
Senator Allard. If you will indulge me, I would like to
quote one line from the editorial: ``The Department's
environmental management job in fact is one of the toughest
positions on the Federal Government. There likely is not a
better person around to tackle the task, however, than Jesse
Roberson.''
That statement sums up my feelings regarding Ms. Roberson.
I have worked with her for many years and have seen her make
many tough and sometimes not always popular decisions. However,
she stood her ground, took care of business, and got the job
done. This editorial shows that Jesse worked with the State and
local communities to accomplish this task. She kept everyone
involved informed, and as a matter of fact Governor Bill Owens
strongly supports Jesse's nomination as well.
Due to her efforts of cooperation at Rocky Flats, today our
local communities are the biggest supporters of the closure
activities at Rocky Flats. Not all closure sites, I might add,
can claim this.
Mr. Chairman, given Jesse's extensive experience and
qualifications, I strongly recommend her swift approval for the
position of Assistant Secretary for Environmental Management at
the Department of Energy. I am very proud to call Jesse a
friend and hope to soon call her Madam Assistant Secretary.
Again, thank you for allowing me to be here today and to
speak on behalf of Jesse.
The Chairman. Thank you very much, Senator Allard.
We welcome you, Jesse Hill Roberson, as the nominee to be
Assistant Secretary for Environmental Management of the
Department of Energy. Thank you very much. Actually, we will
hear from our friend from across the park, Representative Rick
Boucher from Virginia's Ninth District, who will be introducing
Mr. Griles. Mr. Griles is going to be well introduced, having
been introduced by George Allen and Senator Warner as well.
Please proceed. Nice to have you over on our side of the
fence. Please.
STATEMENT OF HON. RICK BOUCHER,
U.S. REPRESENTATIVE FROM VIRGINIA
Mr. Boucher. Thank you very much, Mr. Chairman. I am
honored to be here this morning for the purpose of introducing
to the committee Steven Griles, whom the President has
nominated to be the Deputy Secretary of the Interior. I can say
that Steve and I have known each other and we have worked
together since we were both in our late twenties. At that time
I was beginning my public service as a member of the Virginia
State Senate and Steve at that time was an Assistant Director
of the Virginia Department of Conservation and Natural
Resources and was performing admirably in that work.
Our work together began when I noticed an absence in the
State of Virginia of any State laws regulating the
environmental effects of oil and gas project development. The
oil and gas industry in those days was just beginning its
operations in Virginia and some environmental controls were
necessary. As a member of the State Senate, I proposed the
first comprehensive State program to provide those
environmental controls, and in the effort we really needed help
from the Virginia Department of Conservation and natural
resources. Steve Griles provided that critical assistance and
was a champion of our effort, and with the work that he and I
did together we were able to pass a landmark law which still
regulates oil and gas development in the State of Virginia.
In later years when Steve was called upon to serve in the
U.S. Department of the Interior, we stayed in contact. I was
elected to the U.S. House of Representatives in 1982 and we
have been in very close association since that time. Steve has
provided helpful advice on a variety of matters as I have
undertaken my work in the Congress.
The advice that he has offered over the years has always
been based on a deep knowledge of the subject matter and a
balancing of various competing policy considerations. He has
always been objective, he has always been thoughtful, he has
always been well-balanced in the positions that he has taken.
The congressional district that I represent contains all of
Virginia's coal production and my constituents highly value
conservation and the environment. The advice and suggestions
that I have been privileged to receive from Steve Griles over
the years have been invaluable to my ability to work through a
wide range of difficult policy choices that frequently confront
members of Congress who report mining regions across the United
States. That advice has been helpful. Those suggestions have
been material to some of the successes I have been able to
achieve, and I thank Steve very much from what he has done in
that area.
I am pleased to count Steve Griles among my friends. I
respect his judgment, I respect his integrity, I respect his
commitment to public service and the balance that he brings to
his work, and I strongly recommend his confirmation by the
Senate as Deputy Secretary of the Department of the Interior.
Mr. Chairman, I am pleased to note today that Steve has a
large and a wonderful family, and many members of that family
are here in the room. I would like to welcome to the committee
Steve's mother Elsie, his daughters Kimberly and Meagan, his
sons Timothy and Matthew, and his brothers Joe and Dwayne.
Thank you, Mr. Chairman, for permitting me to make these
comments on behalf of Steve Griles. I wonder if they could be
recognized, his family. Please stand up. There they are.
[Applause.]
The Chairman. Have you concluded, Representative Boucher?
Mr. Boucher. Yes.
The Chairman. I want to thank you very much for that very
warm statement. I might add I neglected to note that you are of
the Democratic persuasion, which we appreciate because
obviously those on my left are of the same persuasion. But I
did want to make that known because I overlooked it in your
introduction.
Is that the extent of your remarks?
Mr. Boucher. Thank you, Mr. Chairman.
The Chairman. Thank you very much.
I believe that we are ready for the panel. Let me call you
up in the order that I have you: Patrick Henry Wood III, and we
have appropriate signs that at least we can read, if we do not
put any water cups in front of it. Mr. Wood has drawn the seat
on my far right.
Norma Mead Brownell. Please come on up. Then Lee Sarah
Liberman Otis, Jesse Hill Robertson--Roberson, excuse me; I am
sorry--who has been up before; Mr. J. Steven Griles, and I
guess that is it.
I would suggest that we offer the two FERC nominees an
opportunity to present their statements, followed by the two
DOE nominees, followed by Steve Griles, if that is in
agreement, unless you have other demands on your time.
Maybe we would start with Nora Brownell. Ms. Brownell has
been nominated to be a member of the Federal Energy Regulatory
Commission, commonly known and regarded as ``FERC.'' I asked
her why she was anxious for this opportunity to serve and she
looked rather startled because I followed it by asking, I
wonder why anybody would want to accept that responsibility.
But she will proceed to tell us why. But we are very
pleased to have you here and please proceed, Ms. Brownell.
Ms. Brownell. Thank you, Mr. Chairman, Senators. I
recognize that our time this morning is constrained, so I will
ask that my statement be entered into the record and I will
make only a few brief comments.
The Chairman. Without objection.
Do any of you have family that were not introduced that are
here?
Ms. Brownell. We do.
The Chairman. Patrick Wood, please introduce your family.
Mr. Wood. Mr. Chairman, my wife Kathleen, my parents and
sister and uncle are here from Texas.
The Chairman. Would you please stand up and be recognized.
[Applause.]
The Chairman. Ms. Brownell.
Ms. Brownell. Mr. Chairman, my children, my brothers, and
the first friends are here, and I am appreciative of their
support.
The Chairman. Please stand up and be recognized.
[Applause.]
The Chairman. Ms. Otis.
Ms. Otis. Thank you, Mr. Chairman. I think the Virginia
Senators were kind enough to recognize my family, so I will not
inflict all of their names on you. But I would like to ask them
to stand.
The Chairman. Ms. Roberson.
Ms. Roberson. Thank you, Mr. Chairman. I would like to
introduce my daughter Jessica.
[Applause.]
The Chairman. Jessica, how are you.
Mr. Griles, I believe we have introduced your folks.
Mr. Griles. Yes, sir.
The Chairman. It is going to be necessary that I swear you
in, so if you would care to stand. The rules of the committee
which apply to all nominees require they be sworn in in
connection with their testimony. Please raise your right hands.
Do you solemnly swear that the testimony you are about to
give to the Senate Committee on Energy and Natural Resources
shall be the truth, the whole truth, and nothing but the truth.
Mr. Wood. I do.
Ms. Brownell. I do.
Ms. Otis. I do.
Ms. Roberson. I do.
Mr. Griles. I do.
The Chairman. I am going to ask each of you a couple of
questions and you can respond right down the line. Before you
begin your statement, I will ask you three questions addressed
to each nominee before the committee. Will you be able to
appear before this committee and other congressional committees
to represent departmental positions and respond to issues of
concern to the Congress?
Mr. Griles.
Mr. Griles. Yes, sir.
The Chairman. Ms. Roberson.
Ms. Roberson. Yes, sir.
The Chairman. Ms. Otis
Ms. Otis. I will.
The Chairman. Ms. Brownell.
Ms. Brownell. Yes.
The Chairman. Mr. Wood.
Mr. Wood. Yes, sir.
The Chairman. Are you aware of any personal holdings,
investments, or interests that could constitute a conflict 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. Griles. No.
Ms. Roberson. No, sir.
Ms. Otis. My holdings have been reviewed by the Ethics
Office in Energy and the Office of Government Ethics and we
have worked out an ethics agreement that should cover it.
Ms. Brownell. My investments, personal holdings, and other
interests have been reviewed by both myself and the appropriate
ethics counselors with the Federal Government. I have taken the
appropriate action to avoid any conflict of interest. There are
no conflicts of interest or appearances thereof to my
knowledge.
The Chairman. Mr. Wood.
Mr. Wood. My investments, personal holdings, and other
interests have also been reviewed by myself and by the
appropriate ethics counselors within the Federal Government.
I've taken appropriate action to avoid any conflicts of
interest and there are no conflicts of interest or appearances
thereof to my knowledge.
The Chairman. Let me ask the last question. Are you
involved or do you have any assets held in blind trusts? Mr.
Griles?
Mr. Griles. No, Mr. Chairman.
The Chairman. Ms. Roberson.
Ms. Roberson. No.
The Chairman. Ms. Otis.
Ms. Otis. No, sir.
The Chairman. Ms. Brownell.
Ms. Brownell. No, sir.
The Chairman. Mr. Wood.
Mr. Wood. No, sir.
The Chairman. Please proceed. We would appreciate--we will
take your statements, enter them into the record as if read.
You may proceed as you see fit.
TESTIMONY OF NORA MEAD BROWNELL, NOMINEE TO BE A MEMBER OF THE
FEDERAL ENERGY REGULATORY COMMISSION
Ms. Brownell. Thank you. I'll keep my comments brief. I'm
honored to come before you this morning. We are at a time in
history which is almost unparalleled. At a time of enormous
growth, we are faced with uncertainty and stress in our energy
markets. Our neighbors in the West are suffering as we grapple
with developing energy policy that ensures reliability,
efficiency, and accessibility.
We need both short-term and long-term solutions. This is
about the continued economic development of our country, about
the wellbeing of its citizens and the stewardship of our
resources. I believe we can and we must move forward with
thoughtful, innovative--thoughtfulness, innovation, and
urgency. If confirmed, I commit to do just that.
[The prepared statement of Ms. Brownell follows:]
Prepared Statement of Nora Mead Brownell, Nominee To Be a Member of the
Federal Energy Regulatory Commission
Chairman Murkowski, Senator Bingaman, and distinguished members of
this Committee, I am deeply honored to appear before you today. I would
like to thank Senators Specter and Santorum for their work on my behalf
and their leadership on behalf of the citizens of Pennsylvania. I am
also very honored by the President's confidence in me and thank him for
nominating me to the Federal Energy Regulatory Commission.
As my biography indicates, I am member of the Pennsylvania Utility
Commission and president of NARUC, the National Association of
Regulatory Utility Commissioners. Prior to joining the Commission, I
was Executive Vice President of Meridian Bank. I managed our corporate
affairs department, which included community and economic development.
While in that position, I observed first hand the value of successful
economic development for communities and the citizens who live there.
In the interest of full disclosure, I am a believer in free
markets. Free markets bring innovation and efficiency that monopolies
never have and never will. In Pennsylvania, while we transition
ourselves to a fully functioning electric market, we are beginning to
see these benefits manifest themselves in new generation and investment
in new technology. However, markets do not happen overnight. They
require monitoring to ensure that they have a chance to develop and
grow.
In the Pennsylvania market, we view electric competition as an
economic development issue, pure and simple. We have resisted the
inclination to argue over jurisdiction. We have avoided framing issues
in contexts such as environmentalists versus industry or incumbents
versus marketers. As we approached our transition to competitive retail
markets in Pennsylvania, we wanted a policy that would bring certainty
and reliability and attract the investment we need to maximize benefits
for all Pennsylvanians.
I also point to some benefits that are not immediately measured in
price. Free markets bring innovation and efficiency that monopolies
never have and never will. Pennsylvania's model was created with
several principles in mind:
First, everyone must benefit;
Second, markets are fragile and must be nurtured over time;
Third, demand and capacity must be kept in balance;
Fourth, the independent service operator must be truly
independent;
And, finally, market transparency is essential.
Guided by these principles, competition is steadily moving ahead in
the Keystone State. Let me share some statistics.
More than 750,000 customers are purchasing their energy from
a competitive supplier.
Over 20,000 megawatts of new generation is expected to come
on line in the next four years.
New fossil generation will not and should not solve all of our
energy problems. The advent of electric choice in Pennsylvania has
taught us that customers want the opportunity to purchase
environmentally friendly power. In fact, more than 10% of the shopping
customers have chosen a green energy provider.
The marketplace has responded to this consumer demand by investing
in wind generation. By the end of 2001, Pennsylvania will feature 5
wind farms with a generating capacity of 84 MW, or enough to power
31,000 homes. In Pennsylvania, through our restructuring process, we
were able to facilitate the development of sustainable energy by
infusing over $70 million in new money to support sustainable energy.
Our goal is to leverage those dollars with other investments to make
Pennsylvania a center for energy technology.
Lessons learned from other states have also taught us that
customers will accept a demand side response program when they are
reimbursed for energy they do not use. Both environmentally friendly
energy and demand side response programs are good for the environment
and good for the marketplace. If confirmed, I will continue to support
the development of sustainable energy in addition to programs that
promote new technologies.
During my association with NARUC, I have had the opportunity to
work with my colleagues across the country as we have attempted to deal
with the issues in today's markets. I have the utmost respect for my
colleagues in other states as, time after time, they have worked
through regional differences and looked beyond purely parochial
interests to arrive at consensus positions on very controversial and
complex issues. This ability to move toward solid, well-grounded
resolutions is desperately needed today. I hope to continue to work
with NARUC and its members as well as other stakeholders. Should I be
confirmed, I will work with my colleagues toward solutions which
reflect unique regional situations.
While serving on the Pennsylvania Commission, I have had the
opportunity to implement and direct similar processes of consensus
advancement. However, this effort was not initiated within a system
that was known for consensus building efforts. In order to move to a
market-based system, the Pennsylvania Commission revamped the way it
used to do business. Simply put, markets will not wait for a nine-month
rate case. Nor will markets pause while litigants pursue years of trial
and appellate litigation.
Recognizing this, Pennsylvania demanded and received parties' good
will in pursuing consensus and settlements wherever and whenever
possible. We pursued swift and relatively inexpensive informal issue
resolution. This is contrasted to formalized litigation which had been
both time and resource intense. The Commission also examined the
settlements proposed to ensure that the public interest was actually
advanced. We succeeded in moving into the transition phase in a timely
manner and with well thought out initiatives. We succeeded without
lengthy appellate litigation. And we succeeded by re-engineering the
manner in which we expected parties to bring issues to us and the way
our agency conducted issue resolution.
As I worked through the complex issues surrounding electric and gas
restructuring in Pennsylvania, my approach was one of inclusion. By
that I mean that I listened to and worked with a wide array of
interests and constituencies. The goal was always the same: to provide
the best service for Pennsylvania's consumers. But in order to get
there, I believed that I must take into account the interests of as
many stakeholders as possible.
There is no question that we are faced with very real problems. As
a FERC commissioner one of my primary goals would be to reach out to
the various stakeholders to seek input on how to solve regional and
national problems. I still believe that today. Having worked through
the highly complex details of restructuring in Pennsylvania's electric
industry and the extraordinary technical nuances of telecommunications,
I can tell you that one simply cannot be guided by a focus group of
one. The more complex the issues are, the steeper the learning curve is
and the greater the need for innovative thinking.
If confirmed, I look forward to working with Chairman Hebert,
Commissioners Massey and Breathitt and my fellow nominee, Pat Wood, to
address these extraordinary problems. Thank you for the opportunity to
appear before you today. I am prepared to answer any questions you may
have.
The Chairman. That is the extent of your statement? We
appreciate your brevity. Thank you.
Mr. Wood, can you match that?
[Laughter.]
The Chairman. If you do, you might get our vote.
TESTIMONY OF PATRICK HENRY WOOD III, NOMINEE TO BE A MEMBER OF
THE FEDERAL ENERGY REGULATORY COMMISSION
Mr. Wood. Mr. Chairman, if confirmed for this position I
will look forward to serving this Nation with the same
collegiality, vigor, and purpose that I have served the people
of Texas in my current position.
[The prepared statement of Mr. Wood follows:]
Prepared Statement of Patrick Henry Wood III, Nominee To Be a Member of
the Federal Energy Regulatory Commission
Chairman Murkowski, Senator Bingaman, and 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 Bush for his trust in me. It has been a privilege to serve
him and the people of Texas for the past six years at the Public
Utility Commission of Texas. And, if confirmed for this position, I
look forward to serving the nation with the same collegiality, vigor
and purpose I have brought to utility regulation in my native state.
I bring some relevant experience with me. As the Chairman of the
Texas PUC, I have worked to implement the Federal Telecommunications
Act of 1996, which has opened up our local telephone monopolies. With
two superb colleagues, I have also presided over Texas' transition from
a fully regulated electric power market to a competitive wholesale and
retail marketplace.
Texas is unique in that electric providers serving some 86 percent
of Texans are in the Electric Reliability Council of Texas (ERCOT), and
thus under the retail and wholesale jurisdiction of the Texas PUC. In
other parts of Texas, as in all other parts of the nation, wholesale
electric jurisdiction is under the FERC. In ERCOT, this situation has
allowed the Texas PUC to move forward to address the identical market
opening issues that the FERC is addressing.
The absence of jurisdictional ambiguity has allowed Texas to move
assertively in setting up its wholesale electric market. Our ability to
formulate a market vision and then implement detailed rules on market
structure was unfettered. Early on, Governor Bush asked my fellow
commissioners and me to set out clear and predictable incentives so
that companies would be confident about investing in Texas. Our
policies on streamlined generation siting, regional transmission
planning, expedited transmission licensing, transmission cost
responsibility and retail cost recovery have stimulated an
extraordinary investment in new, clean power plants and record
investment in new transmission projects. Our market-based approaches
toward distributed generation, renewable energy, demand-side bidding
and conservation have garnered significant attention.
Texas is on the verge of opening its retail markets to competition.
One potential blemish is the insufficient number of retailers who have
announced plans to serve customers in the non-ERCOT regions of Texas.
It discourages me that the basic wholesale market infrastructure is not
in place outside ERCOT to allow Texas customers there to benefit from
retail electric competition. Congress mandated wholesale electric
competition in 1992. It is within FERC's power to establish robust
regional wholesale electric markets, and I am committed to getting them
in place across the nation this year.
Workable wholesale markets require a number of key ingredients:
adequate generation (including a reserve margin), adequate
transmission, the ability for at least some customers to respond to
prices, a timely and accurate settlement system, standardized rules/
protocols and a vigilant market cop walking the beat.
Earlier in my career, I was legal advisor to FERC Commissioner
Jerry Langdon. In 1992, the FERC promulgated Order No. 636, which
completed the transition to a competitive natural gas market. I have
been proud to have been a part of that effort. Recently, as constraints
in the gas delivery system are starting to abound, some have questioned
whether competitive natural gas markets are still working well. I
applaud the aggressive approach the FERC has taken in recent months to
overcome this infrastructure lag. I recognize that staying on top of
the supply, delivery and demand situation in the broad energy
marketplace is a continuing obligation of the FERC.
Hydroelectricity is a key part of the electric power picture in
some regions of the country. Of the three substantive areas of FERC
responsibility, this is the one in which I have the least direct
professional experience. Nonetheless, with the substantial numbers of
transmission line certificates I have worked with in recent years at
the Texas PUC, I am intimately familiar with the process of working
with expert agencies in a timely manner to address environmental
concerns in the licensing process.
There is simply no substitute for investment in pipelines, in
transmission lines, in power supplies (both big and small) and in
demand-side resources. The energy industry is the heart of our economy
and should not be immune from the benefits that new technology and
market forces have unleashed in the telecommunications industry. In the
short seventeen years since major parts of the phone industry were
opened up to competition, the explosion of entrepreneurial innovation
has transformed our entire culture. Can the loosened electron be any
less?
The demands of the nation require that states and the FERC work
aggressively to get ahead of the investment curve, leaving
jurisdictional arguments aside. There is plenty of work for everyone to
do. A broad net must be cast, including environmental regulators,
siting authorities, and state legislators.
Traditional regulation requires regulators to serve as substitutes
for a market. Speaking from direct experience in that world for the
last decade, it is inefficient, wasteful, subject to erratic changes
and rife with bad incentives. But, if we are to supplant a century of
traditional regulation, it ought to be with a better system. Wholesale
energy markets are in their infancy, and it is important to get them
firmly established on a strong foundation. I have a record of doing
just that, but more importantly, that record is one based on broad
industry-wide collaboration.
A regulator's job isn't to know the answers; it's to get the people
that do know them a place at the table and to have the good sense to
learn from them. My job for the past six years has been to serve as a
catalyst for people from all sides of my state's electric power
industry to work together, address the full range of issues and work
through the many necessary details to implement a market. Throughout
this transition, my chief role has been to keep everyone's eye on the
ball: a competitive market that delivers benefits to all customers. If
that is not the result, then we go back to the table.
Today the nation faces extraordinary challenges on the energy
front. Every industry participant has to understand that our mutual
benefit from solving these problems together far exceeds any individual
benefits if we fail to comprehensively address them. And working
together to implement a comprehensive solution is what we shall do.
Chairman Hebert and Commissioners Breathitt and Massey have faced
daunting issues over the past year. If confirmed, I look forward to
joining their team with my close friend Nora Brownell, as we work with
Congress and the Administration to address our nation's energy
concerns.
I appreciate this opportunity to testify before you today and will
be happy to answer any questions you may have.
The Chairman. The balance of your statement will be entered
into the record.
Mr. Wood. Thank you, sir.
The Chairman. Well, it is rather refreshing to hear the
statements of the two FERC nominees, and we hope you'll be able
to make decisions that concise, succinct, and lasting.
Ms. Otis, would you care to go next?
TESTIMONY OF LEE SARAH LIBERMAN OTIS, NOMINEE TO BE GENERAL
COUNSEL OF THE DEPARTMENT OF ENERGY
Ms. Otis. Thank you, Mr. Chairman. It's a great honor to be
here as President Bush's nominee as General Counsel of the
Department of Energy. Having just come from the Senate, I'm
well aware of the importance of mutual respect and cooperation
between the Executive Branch and the authorizing committees and
I very much want to work with this committee on the very
important matters that will be coming before it concerning the
energy challenges facing this country.
Thank you very much for convening this hearing.
[The prepared statement of Ms. Otis follows:]
Prepared Statement of Lee Sarah Liberman Otis, Nominee To Be General
Counsel of the Department of Energy
Mr. Chairman and members of the committee:
It is a great honor to be here before you today as President Bush's
nominee for General Counsel of the Department of Energy. I would like
to thank Secretary Abraham for his confidence in recommending me for
this position. And I very much appreciate the Chairman''s convening of
this hearing.
The Administration and this Committee have already spent a good
deal of attention and effort on the various urgent energy-related
challenges facing our nation. As a nominee awaiting action by this
body, I have not been involved in these discussions to date. Over the
coming months, however, I am sure the Administration and this Committee
will continue to discuss how to move forward together on these matters.
My recent experience as chief counsel to an authorizing Subcommittee
here in the Senate, as well as my past experience providing legal
advice in the executive branch, will help me in providing legal
assistance in connection with these discussions. I look forward to
working with all of you on these important questions.
Indeed, in that connection, I do want to note one point. Having
just spent a very rewarding four years as chief counsel of an
authorizing Subcommittee here in the Senate, I am keenly aware of the
importance of cooperation and mutual respect between the executive
branch and authorizing Committees. I worked hard to foster that kind of
cooperation in my prior position. I intend to do the same at the Energy
Department should I be fortunate enough to be confirmed.
Recent general counsels have also spent significant attention and
effort in assisting the Department in its efforts to clean up its
legacy sites. This is plainly a monumental task, involving 113 sites in
30 states covering over two million acres. The Secretary has made clear
that while he is pleased with the progress that has been made since the
program was established, he believes that a time horizon of 70 years
for completion of this work--which is what Department officials have
informed him is what current projections call for--means that this is
just taking too long. He wants to see the Department move significantly
faster in completing the cleanup of remaining sites. If she is
confirmed, the task of determining how to do this will principally fall
to my colleague on this panel, Ms. Roberson, working with other senior
officials at the Department. But I do want to assure her and all of you
that if I am confirmed, I pledge to work not only reactively but
proactively with her and other interested parties, including Members of
this Committee and State and local officials, in this challenging
endeavor.
Finally, as this Committee no doubt knows, the Office of General
Counsel is known both within and without DOE for its high standards of
professionalism. If I am confirmed, I shall endeavor to perpetuate
those standards and to work with the hard working and talented lawyers
there to produce nothing short of the highest quality legal product.
With that, I would be pleased to respond to your questions.
The Chairman. Thank you very much, Ms. Otis.
Ms. Roberson.
TESTIMONY OF JESSE HILL ROBERSON, NOMINEE TO BE ASSISTANT
SECRETARY FOR ENVIRONMENTAL MANAGEMENT OF THE DEPARTMENT OF
ENERGY
Ms. Roberson. Thank you, Mr. Chairman and Senator Bingaman
and other members of the committee. It is a privilege to appear
before you today as the President's nominee----
The Chairman. Why do you not pull that mike a little closer
so we can hear you.
Ms. Roberson. Thank you.
The Chairman. Thank you.
Ms. Roberson. As the President's nominee for Assistant
Secretary for Environmental Management at the Department of
Energy. I thank the President and Secretary Abraham for their
support and look forward to serving under Secretary Abraham in
this critical position.
I also thank you, Mr. Chairman, and your staff for moving
rapidly on my nomination. I pledge to work closely with this
committee and all of the Congress in meeting the many
challenges our Nation faces in managing the capability of our
nuclear complex.
I am committed to safety, to our workers, to the public,
and to the environment. After all, safety is the net goal of
all of our efforts in the cleanup program. Getting the cleanup
done more quickly and more efficiently is a key way to advance
safety. It is incumbent upon us to manage the often hazardous
work of DOE so that we maintain an increased safety margin as
we do it. I know this can happen and must be done.
Finally, I commit to informing and consulting with the
Congress, the States, and individual citizens of our policies
and decisions. Nothing that I do will be a surprise to you or
other DOE stakeholders. Openness, accessibility, and
accountability are core values to me personally, and they are
certainly critical to the success of our efforts.
Perhaps I can summarize my thoughts by saying I intend to
learn, to communicate, to encourage, and to act, and finally,
devote my fullest energies to the task every day that I serve
in this position.
Thank you, Mr. Chairman.
[The prepared statement of Ms. Roberson follows:]
Prepared Statement of Jesse Hill Roberson, Nominee To Be Assistant
Secretary for Environmental Management of the Department of Energy
Good morning, Mr. Chairman, Senator Bingaman and other Members of
the Committee.
It is a privilege to appear before you today as the President's
Nominee to be the Assistant Secretary for Environmental Management at
the U.S. Department of Energy. I thank the President and Secretary
Abraham for their support, and look forward to serving under Secretary
Abraham in this critical position. I also thank you, Mr. Chairman, and
your staff, for moving rapidly on my nomination. I pledge to work
closely with this Committee and all of Congress in meeting the many
challenges our nation faces in managing the cleanup of DOE's nuclear
complex.
I come before you today with a comprehensive understanding and deep
respect for the magnitude of the task I am undertaking. I am a child of
the formal south, born and raised in Alabama, and educated in
Tennessee. My formal training is as a nuclear engineer, educated at the
University of Tennessee. Over the last 20 years I have worked in many
facets of the nuclear business: as a project engineer for Georgia
Power, as a contractor and subsequently a federal manager at the
Savannah River Site in South Carolina. Finally, I served as head of
environmental cleanup and then Manager at Rocky Flats in Colorado.
Currently I am a Member of the Defense Nuclear Facilities Safety Board,
overseeing and advising the Department of Energy nationally on nuclear
safety. I have been a production manager, a reactor operator, an
environmental cleanup manager and an independent safety advisor. I have
worked in the field and in Washington. I consider myself well versed in
the complexities and challenges presented by this program. Closing and
managing the environmental legacy of the cold war nuclear production is
an awesome national responsibility.
I am not daunted by the task, however. Rather, I am eager and
anxious to get on with the challenge. I share Secretary Abraham's
impatience with 70-year schedules and mind-boggling budget outlooks.
The challenge of this program is great, but it does not mean taking
three generations to see results. I do not want to leave this for my
daughter's children to figure out. We can and we must do better.
Mr. Chairman, I plan to acquire deep understanding of the technical
strengths and weaknesses of the existing environmental program. I need
to know successes, failures, where the program has inspired public
confidence, and where it has disappointed public expectations. But make
no mistake, cleaning up this complex will mean tough decisions. To be
effective, the Assistant Secretary needs to step up to the plate and
take on the hard questions. Neither the Department, the Congress, nor
the nation will be served by anything less.
I recognize fully that hard decisions like these will not please
everyone. Nonetheless, decisions must be made and carried out. I will
challenge the employees in my charge from top managers, to the hands-on
employees in the field to satisfy our commitments.
I am committed to safety--to our workers, to the public, and to the
environment. Safety is the goal of all of our efforts and it must
inform our work at every step. Getting the cleanup done more quickly
and more efficiently is a key way to advance safety. It is incumbent on
us to manage the often-hazardous work of DOE so that we maintain and
increase safety as we do it. I know this can, and must be done.
Finally, I commit to informing and consulting with the Congress,
the States and individual citizens of my policies and decisions.
Nothing I do will be a surprise to you or to other DOE stakeholders.
Openness, accessibility and accountability are core values to me
personally. They are critical to the success of our effort, especially
when the time comes to make the tough decisions.
Perhaps I can summarize my thoughts today by saying that I intend
to learn, communicate, encourage and act, and finally devote my fullest
energies to the task every day that I serve in this position.
Mr. Chairman and other Members of the Committee, I will be pleased
to answer any questions you may have.
The Chairman. Thank you very much, Ms. Roberson.
Please, Mr. Griles, please proceed.
TESTIMONY OF J. STEVEN GRILES, NOMINEE TO BE DEPUTY SECRETARY
OF THE INTERIOR
Mr. Griles. Mr. Chairman, Senator Bingaman, members of the
committee: It's really an honor to have this opportunity to
appear before you today as Deputy Secretary of the Interior
nominee. I wanted to--I'm going to summarize this statement
with a couple of points that I'm going to pull from it.
Secretary Norton when she was confirmed and has now adopted
at the Department of the Interior a protocol that's known as
the Four C's: consultation, cooperation, and communication, all
in the service to the shared national idea of conservation. My
role as the Secretary has defined it will be to ensure that the
Secretary's mandate is to be applied to all aspects of the
Department's activities.
Mr. Chairman, if I could for a moment, I just want to add a
personal perspective. As a native Virginian from Southside, my
dad taught me how to fish and hunt. When he used to walk
through the fields and streams and all, he taught me a lot
about how to handle a gun safely and how to hook and cast a
line. He taught me about how to look at the ripples of the
water when fish are feeding. He taught me how to track the
quarry of an animal and he taught me, more important, the
judgment to know when to shoot, what was right, and which prey
was fair game.
I spend a lot of time each summer with my kids hiking the
Appalachian Trail. We ski the West. We enjoy our national
parks. We have been to a lot of them. My family has been
introduced to you today.
My point in all of saying this is we've rafted the Colorado
River, fished the Snake River, and I've been to the beautiful
State of Alaska and spent time there. We have an obligation to
protect and preserve this national wealth of America, but not
without that obligation--more importantly and more sacred than
those of us who have the privilege that I have, to have 18
years of serving in government prior to this, and with this new
opportunity to serve in this new government that is before us
today, we have a responsibility to provide for economic
security for our Nation.
Those two goals of conservation, economic security, are not
incompatible. If I am not--if I am confirmed, I pledge a
commitment to do exactly that, to bridge those two obligations,
to protect the land and our resources and to provide for
rational careful management of those resources for our citizens
now and in the future.
I look forward to your questions, Senators.
[The prepared statement of Mr. Griles follows:]
Prepared Statement of J. Steven Griles, Nominee To Be Deputy Secretary
of the Interior
Mr. Chairman, Senator Bingaman and Members of the Committee, it is
a privilege and an honor to appear before you today as the President's
nominee for Deputy Secretary of the Interior. President Bush and
Secretary Norton have paid me the highest compliment by recommending me
for this position. As a son of Virginia, having been raised in
Southside, my parents taught me the value of conserving our natural
resources--and protecting them for our children. More than 30 years
ago, in my first job with the Virginia Department of Conservation,
these common sense values helped me with each decision I made.
The Virginia Department of Conservation was responsible for the
oversight of numerous state programs including management of the
Commonwealth's parks, forests and mining activities. During my tenure
some of the Department's many accomplishments were creating five new
state parks, creating Virginia's litter control and prevention program,
and leading the effort for Virginia to secure state administration of
the Federal Coal Surface Mining and Reclamation Act.
I ended my service with the Commonwealth of Virginia to join the
Department of the Interior in 1981. I originally served as the Deputy
Director of the Office of Surface Mining, Reclamation and Enforcement.
I held several other positions within the Department before being
confirmed by this Committee and the full Senate for the position of
Assistant Secretary of Land and Minerals Management in 1985. Two of the
more significant achievements during this time period at Inferior were
directly related to my close working relationship with members of
Congress. Let me briefly explain.
As this Committee is well aware, energy and mineral laws and
regulations are complex. Occasionally the laws enacted to address these
complexities result in the unintentional creation of loopholes--paths
for ``bad actors'' to circumvent the spirit and intent of the law. In
other cases, there is the opportunity for outright fraud. I took these
challenges and worked as a common sense problem solver. I was
privileged to work in a bi-partisan manner with the late Congressman Mo
Udall to eliminate the abuse of the Coal Surface Mining and Reclamation
Act known as the ``two-acre exemption.'' I also had the honor of
working closely with Senator Dale Bumpers to secure the passage of
amendments to the Mineral Leasing Act that eliminated fraud in onshore
oil and gas leasing. As in Virginia, I also worked to protect our most
treasured unspoiled landscapes and recommended the increase of
federally designated wilderness areas by more than 6 million acres.
At the time I left the Department of the Interior in 1989, I had
spent my entire professional career in public service. I looked forward
to taking my extensive experience from government and use it to foster
better partnerships between public and private groups to work in
concert to solve many of our Nation's most serious and challenging
problems. While in the private sector, I have had the opportunity to
work with all forms of energy production. For example, I have worked
closely with one of the largest renewable energy companies in America--
specializing in geothermal, solar and wind energy. I have worked to
secure additional electrical generation capacity in California, and I
have extensive experience working with coal bed methane development in
the West. In that effort, I was successful in securing additional funds
to hire more Bureau of Land Management personnel to review and inspect
coal bed methane development, not only to issue permits but also to
ensure environmental protection.
My combined public and private sector experience has afforded me
the opportunity to gain different, and very valuable, perspectives to
the issues that the Department of the Interior now faces. I realize the
decisions relating to our nation's parks, wildlife, minerals and lands
are complex. In addition, I am keenly aware of the Department's special
obligation to American Indians, Alaska natives and the citizens of our
territories. There are no easy solutions to the problems confronting
the Department's leadership--but I look forward to tackling problems
and finding solutions through collaboration and partnerships.
Over the years, I have had the good fortune of working with this
Committee on many critical issues. I've learned a great deal about how
government works with the private sector. I've learned the importance
of community input. But just as importantly, I have learned the value
of listening to all interested parties before making decisions. This is
crucial to ensuring the public's interests are. served. The decision
making process must include a visible and participatory process where
all parties have a seat at the table.
The issues and challenges facing the Department of the Interior are
many and varied. The Department has the mandate to balance many
interests and needs, and to be exceptional stewards of our precious
lands for the sake of our children and for future generations of
Americans.
Under Secretary Norton, the Department of the Interior has adopted
a protocol known as the FOUR Cs: Consultation, Cooperation, and
Communication, all in the service to the shared national idea of
Conservation. My role as Deputy Secretary will be to ensure that the
Secretary's mandate is applied to all aspects of the Department's
activities.
If confirmed, I pledge to work in a forthright, bi-partisan and
cooperative manner with this Committee, and with all members of the
House and Senate. I pledge to listen to your interests and hear your
concerns. It's my commitment to you that I will represent President
Bush, the Department of the Interior and the American public to make
sure that when we leave office, our water will be cleaner, our
environment will be safer, and our public lands will be in better
condition than when we found them.
Thank you again for the opportunity to appear before you, and if
there are any questions, I would be pleased to try to answer them.
The Chairman. Thank you very much, Mr. Griles. We're going
to proceed with questions to the nominees and we'll proceed in
the order that members have come to the committee, and we'll
limit. We have a timer on over here for about 7 minutes. Is
that agreeable with you, Senator Bingaman?
Senator Bingaman. Yes.
The Chairman. I'd like to ask the two FERC nominees a
question relative to our interest in assisting California. And
I know Senator Feinstein, who's on our committee, is vitally
interested in some relief, and I pledged to work with her to
find a tangible way to provide that relief. But I want to make
sure that that relief is realistic and is forthcoming in the
addition of new power generating facilities that will actually
be built and financed.
I think we have a little difference of opinion on the
concept of wholesale rate caps and what it will or will not do
without the assurance that those caps are at a level, if indeed
there's any effort to seek relief through wholesale rate caps,
that they're at a level that we've seen exist, say, in Texas
or, for that matter, Pennsylvania, which are in the area of
1,000 or thereabouts.
My concern is that we have the commitment from the
financial community who are going to finance these power
generating units that they actually will be completed. It's one
thing to receive a permit; it's another thing to have
unconditional financing commitments. It's my understanding that
at least some that we've made some inquiries on have suggested
that the financing is conditional upon the assurance that
there's a reasonable rate of return.
My concern is if we explore wholesale price caps and these
caps are so tight that they don't provide in the minds of the
investor some degree of certainty on the reasonable rate of
return we might find ourselves in a condition where we do have
wholesale caps, but we don't have the relief that we need in
the building of the new facilities.
Now, at a hearing yesterday that we conducted we heard that
the State of California and the California local gas
distribution companies, specifically PGE and Sempra, have
opposed the construction of a new natural gas pipeline to
California. Now, FERC is in charge of authorizing these
pipelines. This one specific was the Kern River. We also are
concerned about California having adequate supplies of natural
gas.
So my question to you is what are your views independently
on this dilemma of how we can protect California from
unreasonable price gouging, which has occurred and which FERC
is investigating with diligence, I think, which was noticeably
missing under the makeup of FERC prior to the new
administration. I don't mean to be partisan on that, but I
think it's a reasonable observation that, even with the limited
makeup of FERC with two Democrats and one Republican, they are
moving expeditiously to try and bring these matters to a halt,
and they're initiating investigations and so forth.
So my question is broad in one sense, but more definitive
in another, of what your views are on how to address this
legitimate dilemma in California?
Ms. Brownell. Senator Murkowski, you've identified a series
of very complicated issues that don't lend themselves to a
simple answer, which I know that you and your colleagues have
been really focused on in the last number of months. We need to
do everything we can to expedite the development of
infrastructure in California and indeed throughout the country.
We need to move forward expeditiously at FERC and we need to
send the assurances to the financial community that there will
be an adequate rate of return.
Rate caps are one of many things that need to be
considered, but need to be considered, as you've indicated, in
an extremely cautious way. We don't want to do anything to
upset the balance in the investment community, whose capital is
critically needed to move forward with infrastructure,
powerplants, and a number of other additions. So that I think
that I would be very cognizant, as we have been in
Pennsylvania, of achieving a balance of certainty in the
market, a clear set of rules, expedited treatment, at the same
time sending messages to the investment community that there
will be expectations of fair rates of return and there will be
expectations of judicious treatment of applications.
We have financed and under construction in Pennsylvania
about 15,000 megawatts of new generation that should come on
line over the next couple of years. So we've seen that, sending
the right economic signals, markets can and do work.
The Chairman. Mr. Wood.
Mr. Wood. Mr. Chairman, I would only add to that a critical
component that is also under FERC's jurisdiction of electricity
is the supply of natural gas. I do applaud the action that FERC
has taken in recent months to really accelerate the delivery of
gas through the interstate grid to California and to other
States. I also recognize that there's also a role for the State
to play, and California in particular regulates its own
pipelines inside the State's borders in some cases. So it's
important that we on the FERC and the State commissioner
colleagues in California and Pennsylvania and other States work
together to make sure that the full delivery system is
dependable.
I think that's one issue that has shown up more lately, is
that there are some constraints and some aspects of the gas
transmission system that are under strict scrutiny right now
and need to continue to be looked at closely. I know there are
some pending matters at the commission looking at these issues
specifically, that we look forward to, if confirmed, getting to
the bottom of.
The Chairman. One of the opportunities that we had when
FERC Chairman Hebert was with us was in his example of cost of
service accounting or cost of service as a method of
determining, if you will, how to price, and they brought in
boxes of detailed information, indicating the complications it
would be for FERC to do this. It's certainly a suggested way.
The practical aspects of that obviously are the responsibility
of FERC.
Some suggested, well, that's their job anyway, regardless
of how many boxes you bring in here. Would you conclude by
commenting on your evaluation of the practicality of that
methodology being looked at?
Mr. Wood. Certainly. Cost of service ratemaking is
something that regulators can do and have done for probably a
century. Doing that on a monopoly industry is a different
process than doing it on somebody that's open to the market. So
taking a market participant and then putting a cost of service
regulation on them, yes, it's doable. I think, quite honestly,
in the amount of time it would take to establish a fair rate we
might well have enough powerplants to kind of negate the whole
point in the first place.
But I should admit, yes, it is doable. But it is, I think
as was probably demonstrated here by Chairman Hebert, it is no
small task from a regulatory perspective.
The Chairman. Well, you may respond to this. My time is up.
But it has been suggested, and I don't think we know, how
gigantic a task it would be, but I think I've got a feeling for
it because there are different costs associated with your
ability to produce power depending on what your source of
energy is, the cost of that, all kinds of factors.
So am I not correct in suggesting that it's different in
many, many of the mixes that come in in the generation of
energy? Can you tell us a little bit why it's impractical and
what you would suggest as a more practical methodology?
Ms. Brownell. As Commissioner Wood indicated, it could be
done, but the reality is in transforming markets and in moving
forward it's important that we develop new tools to respond to
market development issues. Cost of service would not, as
Commissioner Wood indicated, respond to the crisis in
California possibly in a timely enough manner to really bring
that short-term relief that we're looking at.
Certainly I think the commission in its recent orders has
been extremely forward-looking and innovative in using a number
of tools, including closer market scrutiny, to respond to the
issues that they're confronting. No regulation can, of course,
replace the supply or develop the supply that we need in the
very short-term future. What we can do, however, is make sure
that we're sending the signals that get that supply to the
market as quickly as possible.
So cost of service has worked, but the reality is in these
kinds of changing times and evolving times we need to develop a
number of new tools to respond to those.
The Chairman. My time is up.
Senator Bingaman.
Senator Bingaman. Well, thank you all very much for being
here.
Let me just follow up on this issue that we've been talking
about. There's a 1975 case out of the Court of Appeals here in
the District of Columbia, where the court makes an interesting
statement. They say of the commission's--this is talking about
the Federal Power Commission, which is the predecessor to FERC.
It says: ``Of the commission's primary task there is no doubt.
That is, to guard the consumer from exploitation by
noncompetitive electric power companies.''
Would you agree with that statement, that that is the
primary task of FERC?
Ms. Brownell. Yes.
Mr. Wood. I would.
Senator Bingaman. I guess that would lead to sort of a
philosophical type question: Do you see competitive markets as
a tool that can, using the court's phrase, ``guard the consumer
from exploitation,'' or do you see those competitive markets as
an end in themselves, regardless of what effect they have on
the consumer?
Mr. Wood. Senator Bingaman, regulators have regulated in
the past, including now, because monopolies existed. Whether
they were natural monopolies or legislated monopolies, they
were monopolies, and to protect the consumer regulation was put
in place, folks like Nora and I were drafted to do the job in
our States.
I think there was a general consensus on many of the
economically regulated industries in the late seventies here in
Congress and in the early eighties that substituting market
forces where possible would allow regulation to back out of the
way. So the surrogate for regulation would be a workably
competitive market. At that point and not before would be the
step where the regulator could step back. So competition first,
then ultimately deregulation where it's feasible.
So I think, yes, sir, markets are not the end; they are a
means by which the customer continues to be protected against
undue exercise of market power.
Senator Bingaman. Thank you.
Ms. Brownell. Senator, I would agree. I would also point
out what we have discovered in our States as we've moved to
competitive markets, and that is that these are transitions
which happen slowly, and there are certainly oversight
responsibilities to the consumer to ensure that in this
transition they are not being taken advantage of and their
needs are being met.
We have played a very active role and I think commissions
everywhere will not abandon the consumer. Indeed, their first
responsibility will be consumer oversight, consumer education,
and consumer empowerment.
Senator Bingaman. So let me just conclude with one other
question. When the Federal Power Act declared that unjust and
unreasonable wholesale rates are unlawful and directs FERC to
monitor that and where they determine that there are unjust and
unreasonable wholesale rates FERC is directed to go ahead and
set just and reasonable rates. Do either of you have a problem
with that responsibility which you would be taking on?
Mr. Wood. No, sir.
Ms. Brownell. No, sir.
Senator Bingaman. Thank you very much.
Let me ask Mr. Griles a few questions if I could. You have
had a very successful practice representing oil and gas and
coal companies and various others before the Congress and
regulatory agencies in recent years, and certainly that is in
the finest tradition of advocacy in this town. But what I'm
concerned about is trying to determine what assurance you can
give us that the public interest and the interests of the
public in seeing its resources protected and its laws and its
regulations strictly enforced. What assurance can you give us
that that interest will now be your primary and only concern
and that you can avoid a conflict as a result of the prior
representation that you've been engaged in, which as I say has
been quite honorable in the private sector, but certainly would
be a problem if it continued now that you're taking on these
public duties?
Mr. Griles. Well, Senator, thank you. I have had the honor
to work with you personally on some legislative efforts and we
have been successful in doing that, and thank you for your help
in those areas.
Senator, I spent 18 years prior to my leaving government in
public service. It is an honorable profession. It is one which
we enter into with a sacred trust that we have to honor and we
have the raise the public trust above all other issues. In that
regard, I have recused myself on all the recusal forms and
identified all prior clients and I have worked with the
Government Ethics Office to make sure that there is no
misunderstanding or mistake about what I will and will not do.
I will not be involved in any activities or any clients,
any of the issues, that I have been associated with in terms of
my prior private practice. But I think, Senator, you know, it's
an honor to be in public service. Each of the Senators sitting
here and all your staff are in public service. I'm entering
back into that profession because it is an honorable
profession, and I will do my utmost and assure you not only to
prevent the appearance of any improprieties or conflicts in
terms of my prior associations and will do my best to uphold
that honor for which we all are serving, sir.
Senator Bingaman. Well, thank you.
Let me ask about some actions that occurred toward the end
of your tenure as Assistant Secretary of the Interior for Lands
and Mineral Management. The Minerals Management Service at that
time adopted a final rule that allowed coal companies to deduct
black lung taxes, abandoned mine fees, and State and local
severance taxes from the value of the coal that they paid
royalty on to the government. As I understand it, that final
rule was adopted and then when Secretary Lujan came into office
10 months later he reversed that.
I don't know if you can give us insight as to what role you
had in that rule, what your view is on the decision to reverse
it or to adopt it initially. I think it was signed by your
deputy, James Cason.
Mr. Griles. Senator, it's been more than 12 years ago and
the facts are not--in terms of the exact nature of which rule
you're speaking of. The issue of the deductibility of State
severance taxes and the black lung taxes and all was something
that Secretary Hodel himself was directly involved in and he
made that decision based on presentations that were made and
information that was provided to him. It was a call of the
Secretary of the Interior at that time, Don Hodel.
The implementation of that occurred. I was not involved in
the implementation or the signing of that rule. In fact, I
recused myself, Senator, in the fall of 1988 from any of those
kinds of activities as I was seeking outside employment. That
regulation was signed by, as you say, Mr. Cason in the acting
capacity in concert with the Secretary of the Interior, for
which I was not involved in.
Senator Bingaman. My time is up, Mr. Chairman. Thank you.
The Chairman. Thank you, Senator Bingaman.
In the order, Senator Burns on my far right.
STATEMENT OF HON. CONRAD BURNS, U.S. SENATOR
FROM MONTANA
Senator Burns. Well, I just want to congratulate the folks
here before us today for public service. I think we discussed
in our private meeting some of the concerns I had, and most of
it is the relicensing of some of our dams and power generation
and hydro. We've been very slow in doing that. The process has
been very slow and painstaking, and I think there'll be further
discussions on maybe it might take some actions of Congress in
order to facilitate relicensing and to accelerate that
licensing if we possibly could.
As you know, around 15,000 megawatts of hydroelectric
capacity in California alone will be up for relicensing in the
next 15 years. Now, that constitutes 4 to 8 percent of their
production, and right now they're not in any mood of losing any
of their capacity to generate electricity in California. So
that concerns a lot of us with the relicensing.
So I thank the chairman and I have no questions for the
folks at FERC or with anybody else. We've pretty much talked
over those situations as we met in our office, and we
appreciate you coming by and answering and responding to those.
I thank the chairman.
[The prepared statement of Senator Burns follows:]
Prepared Statement of Hon. Conrad Burns, U.S. Senator From Montana
Thank you, Mr. Chairman, for the opportunity to address the
Committee this afternoon. I welcome the nominees to this hearing and
thank them for giving us the opportunity to engage in this discussion
today. As we fill these positions people who will set the course for
the future, I am glad to say we have very capable people. After
learning more about each of them I am confident that their combined
knowledge and experience will serve the American people well.
There is no doubt that today we will hear a lot of different
opinions today on the role of the Departments of the Interior, Energy,
and the Federal Electric Regulatory Commission.
These are subjects very close to my heart, because my home state of
Montana contains so much public land managed under the Department of
the Interior. Additionally, the challenges of balancing the interests
of people, wildlife, and different types of land use are becoming
harder all the time. Montanans are affected very deeply by decisions
regarding federal land, because they are the ones trying to make a
living on that land, or live next to it, or use it for recreation.
Montana also has a vital stake in the development of a sound
domestic energy policy. Since we are a net producer of energy, and have
access to large reserves of energy resources, the decisions about how
these resources can be used could make or break our economy. Right now
it's a struggle to keep many of our industries afloat, and with the
added pressure of region-wide electricity shortages and what looks to
be an upcoming drought, things are looking to get even tighter as we
move through the year. I am interested to see how the FERC nominees
will propose to address these challenges in Montana and elsewhere.
I know from experience that it is very possible for the Department
of the Interior to be a one-way street and hand down regulations
unilaterally. I know that with our new Secretary Norton in place, this
will not be the case. She needs a Deputy Secretary who can help to
manage the Interior as an fair and balanced agency. Tough decisions
will need to be made, and we need someone who is confident in making
them. I support Steve Griles because he brings outstanding credentials
to the job. Having served in a number of high level positions within
the Department of the Interior, and in the private sector, his
knowledge regarding public lands policy will serve him well. He will
look for answers to the hard questions, and I am confident he will do a
great job.
There are a few specific issues I would like to mention to note how
important they are in Montana, and also for many other states. When we
look at public lands, energy development and access to public land are
vital to Montanans. These issues will be coming up again and again over
the next few years, and I look forward to working with my colleagues in
the Senate and with the all our nominees today to craft sound policy
with respect to maintaining a reliable supply of domestic energy and
making sure our public lands are available to the public.
When you look across this country, you see high prices for
petroleum, for natural gas, and electricity. This means high fuel
prices, and pressure on families who are trying to heat their homes,
and manufacturing companies that have to shut their doors because they
simply cannot afford to keep the power running. There is no way we can
form a comprehensive energy policy for this country without looking at
the whole picture. This means that the nominees we have in front of us
today will need to work together to ensure that all the sides of this
issue are addressed. This will include everything from access to energy
resources on public land, siting new energy production, transmission
and pipelines, and streamlined licensing procedures.
These examples that I have mentioned are complicated problems, that
will require well thought out answers, and I am confident the nominees
we are listening to today have what it takes. Thank you, Mr. Chairman.
The Chairman. Senator Thomas, and then followed by Senator
Johnson, who I guess--Senator Feinstein would be after that.
Senator Thomas. Thank you, sir.
Mr. Griles, this newspaper thing says ``represents the
movement of pro-industry and anti-regulation conservatives.''
How do you respond to that?
Mr. Griles. I'm not sure how you respond to the Washington
Post, Senator, and I don't know that today is my day to try.
Senator, I've had a long history of public service. I have my
own personal views about how government should work. It should
work for all people. It should protect our resources and it
should provide for economic opportunity.
And I think, Senator, as we look at all the issues the
Department of the Interior is faced with, as I said in my
opening statement, we have to have cooperation and
communication and we have to have compliance with all the rules
and regulations, and we have to do that under the ethic that is
called conservation. That's my objective. That's what the
Secretary has announced and that's what I'll try to achieve
with her as we move forward.
Senator Thomas. When you talk about the mission of the
Department of the Interior, I presume you talk about
conservation, you talk about preservation of the environment,
but also multiple use of those lands and resources; is that a
fair statement?
Mr. Griles. Yes, Senator. We have--the crown jewels of
America are under our protection. Those national parks must be
protected and we will protect them. We also have the unique
opportunity of managing multiple use lands that have been
designated as multiple use by the Bureau of Land Management,
and they need to be managed in a multiple use fashion.
Within the Bureau of Land Management, we also have
wilderness areas. We have beautiful areas that have been
designated as monuments under the Bureau of Land Management. We
have all lands for all people, and that's how we must manage
them, to protect those that ought to be protected to the
highest degree, and those which can be used in a multiple use
purpose, we should allow that use with some conservation
principles being applied.
Senator Thomas. How important to you is the concept of
access, so that people who are the owners of these lands, the
owners of the park and so on, the first responsibility is to
protect the resource, but isn't there a second responsibility,
to allow people to have access, for instance on managed and
cleaned-up snow machines, for example?
Mr. Griles. Obviously, access to our beautiful parks, which
I have, as indicated, had the opportunity to experience, is
very, very important. We are in some instances loving our parks
to death, and we need to make sure that the health or the
future of those parks, that they're preserved.
Some of the issues that you're alluding to are in
litigation, specifically on the snowmobile question, and I
think it would probably be best if I didn't speak direct to
that issue. But we need to assure that our parks are protected,
but they're enjoyed by all Americans.
Senator Thomas. With respect to FERC, I understand FERC is
a regulatory agency, but do you feel like there's any value--
you talk about, you know, what needs to be done and the fact
that you need transmission and a grid. Do you feel like there's
any role for FERC to have suggestions as to how we fill the
needs for energy needs? Or do you just--is your job just to
regulate ideas that other people have?
Ms. Brownell. Senator, that's a good question. Certainly in
Pennsylvania as commissioners we see it as our responsibility
to be resources to our legislatures, to our executive branch,
to the people that we serve. So that we play an active role in
talking through issues, in trying to design new solutions to
new problems. We see ourselves as problem solvers and
resources, and I think within the bounds, of course, by which
we're guided, we would certainly--I would certainly see it, my
role, to be working with you and others to come up with
solutions.
We're in a new world, in a new market, with a lot of
challenges, so we all better be as creative as we can.
Mr. Wood. I think the only thing that I would add to that,
Senator Thomas, is yes, there is a clearinghouse role.
Certainly with the Department of Energy and the commission,
there is probably some overlap there and I think probably some
ability to synchronize a little bit better where appropriate
the role of the commission and of the Department. But in doing
some kind of future planning about not only where the grid is,
but where are powerplants being located, where are sources of
fuel, do we have the infrastructure to get those fuels to the
appropriate markets, generally participants in the market will
respond in an appropriate way as to where those ought to be.
But I think we also need to kind of have a fallback provision
that if they don't, is there some kind of nudge where we direct
investment to a certain area so that infrastructure problems
don't kind of meet a train crash?
So yes, I think there's probably not a dominant role, but
certainly a supportive role, a very active, vigilant role, that
the regulatory commission would and should play in monitoring
the health of the energy markets.
Senator Thomas. It's a great change, as you well know
better than I, in the electric industry, for example, where it
used to be if I was a distributor and a generator I would build
a transmission line to serve my needs. Now we're talking about
merchant generators and we're talking about moving on a
national grid. So there needs to be some input.
One of the interesting things for all of you is, and I'm
glad the Vice President is doing it, when we talk about energy
it's not just the Energy Committee any more. It's also
Interior, it's also the regulatory people, it's also EPA, all
of whom have very important roles to play in where we go. Just
the miles of transmission, for example, are not the issue. It
also has to do with the voltage. It makes a lot of difference
on how much you can carry.
So I hope that you regulate, of course, which is your task,
but also are willing to give some advice and counsel as to how
we set up energy policy and a distribution system that'll work
for us.
Thank you.
Senator Bingaman [presiding]. I believe Senator Feinstein
is next.
Senator Feinstein. Thanks very much, Mr. Chairman.
There are probably no two appointments that I will have an
opportunity to ask questions of in this entire administration
that are more important to the State of California than the two
FERC commissioners, because you can make the difference between
life and death. It sounds overly dramatic, but it isn't.
California effectively stands at a precipice. So your
answers to these questions are very important to me. Let me
begin. California's peak demand last week--my yellow light
already went on and I didn't have a chance to ask the question
yet.
Senator Bingaman. I agree. I think we'll ignore that. It's
back to green, as you can see.
Senator Craig. Jeff, I'm controlling the dial.
Senator Bingaman. I see.
[Laughter.]
Senator Feinstein. Oh, that's what it is.
California's peak demand last week reached 32,000
megawatts. Its normal summer peak is 45,000 to 47,000
megawatts. Yet last week we had rolling blackouts and we had
electricity selling at $1900 a megawatt hour. How do you
explain that and how could FERC address it?
Mr. Wood. I'm not sure I know how to explain that, Senator
Feinstein. I think if confirmed I'll have the opportunity to
address that and explain it. I also read with interest the
reports of the megawatt hour price for a non-emergency market
sale as well. I think that, of course, you know, it is
difficult with these pending matters that I definitely would
like a chance to vote on without having to recuse myself before
the commission.
The commission, as you know, initiated the proceeding last
summer when the San Diego complaint was filed and that began a
series of related complaints that I think I don't need to
belabor the committee with--I think you know as well as I do--
it's led to an order in the recent past 3 weeks that the
commission has passed that said, here's how we're going to get
back to just and reasonable rates. I'm not sure under the terms
of that order if that sale that you refer to is captured or
not. I think we will have the opportunity very soon to look
into the fact as to whether it is or not and do something about
it.
But Senator Bingaman's question was really the core and
it's one I believe that you and I had the opportunity to visit
about, Senator Feinstein. unjust and unreasonable rates. The
commission found in fact that under certain circumstances, in
their December order, there were unjust and unreasonable rates
being charged in California. They began a plan to do something
about getting them to just and reasonable levels, and again
that's a work kind of under construction as we speak and it's
one I look forward to getting all the facts from the whole
arena.
Certainly I could react to a news story, but I don't know
that that would be what you would want in a prudent regulator.
I think it's important for us to get to the bottom of the full
story there and find out why in fact a $1900 per megawatt hour
sale fits under the ``just and reasonable'' rubric.
So I wish I could give you a detailed answer based on facts
and knowledge. I don't have the full amount of both, but I do
look forward, if confirmed, to getting to the bottom of that
and a number of the other issues that are very important to you
and your home State.
Senator Feinstein. Mrs. Brownell.
Ms. Brownell. Senator, I would add in addition to the
things that Pat outlined, it's clear that there is something
very broken. In addition to what is obviously a serious supply
problem, there are other factors at work that are not fully
understood by us because we're not in possession of all the
facts. We need to be aggressive and we need to act with a sense
of urgency to bring transparency to the transactions that are
going on throughout the West, to take whatever steps are
necessary to respond to things that we find that may in fact
not be appropriate.
And we appreciate the risk at which your constituents find
themselves and commit to moving as quickly as we possibly can
if we're confirmed. We need to end the uncertainty and tragedy
that's occurring for all of the constituents of California and
indeed throughout the West.
Senator Feinstein. Thank you.
Yesterday natural gas was selling for $11.52 in southern
California and $3.31 in the San Juan Basin. I understand that
before FERC issued Order 637 in February 2000 the
transportation cost to move gas from San Juan to southern
California could not exceed 70 cents. At one point last
December the differential was more than $40. What accounts for
that in your view?
Ms. Brownell. Senator Feinstein, you've hit I think upon an
ingredient in the dysfunctionality that we do not fully
understand. In fact, both Pat and I have asked a lot of
questions and have been unable to get answers that are
satisfactory to us. Clearly, there is information at the FERC
that may shed some light on that. But I can't explain that. It
really doesn't make sense, and without being in full possession
of the facts I can assure you that that is one aspect that will
not go ignored.
There are many factors moving in a market and we can't
afford to ignore any one of them. We need to have a full
understanding of exactly what's going on with each contributing
segment of the market.
Mr. Wood. I think the only thing I would add, Senator, I
mentioned that in response to Chairman Murkowski's question. I
think there is a big piece of the puzzle, not just at the lack
of generation facilities, which is indeed a very big concern--
and I was pleased actually the day we visited to go through the
data of the different plants that are out there and coming on
line--but the fuel that runs those plants and how that actually
gets to California and how it goes from the price it comes out
in Texas or San Juan, for example, to an end point in
California.
There are some constraints on the system. I've been made
aware of those. But the interplay between a regulated rate of a
regulated pipeline, whether that's a FERC-regulated line or a
California PUC-regulated line, and you add to that a market
price of a gas commodity, the math doesn't add up. I think, as
she has said, we're looking--we've been asking really
excessively--not excessively, but a lot--of different players
in the market: Where's the money going? Which pocket is it in?
Who's got it? And I'm not sure I've got the right answer to the
question, but I think that is the salient question that I would
look to get an answer at pretty quick when we get over there,
if confirmed.
Senator Feinstein. Just so everybody knows, the FERC order
essentially took off the transportation cap on the
transportation of natural gas, and that's when the prices
exploded.
My next question is, how would you address the issue of
bundled transactions in the grey market? Would you support
greater transparency of these transactions?
Mr. Wood. Again, that's the core. This Order 636--637, as I
understand it, would apply to just a limited range of
transactions in the very short-term market. But there are still
these other ones, as you labeled them, the grey market, where
you get just a delivered price, this is what you're paying to
get gas at your burner tip. It includes whatever the gas costs
me to buy it, whatever the gas costs me to transport it, and
whatever else I want to add on here to give you a final price.
The unbundling of that price certainly gives the market
participants some knowledge about what each component of their
product is costing them, and I think there's probably a fair
argument to be made for transparency. Where in a totally
competitive market, like the price of a car, you don't get the
price of the door and the seat and the steering wheel, but you
do get a final delivered price, this has a monopoly price stuck
in the middle, whether that's FERC-regulated or CALPUC-
regulated. That's a regulated rate, and I think there's a good
argument to be made that the customer deserves to see what that
rate actually is, and if there is some markup there then it's
at least shown to him or her what that markup would be.
Ms. Brownell. I would only add, Senator Feinstein, that
markets don't work without transparency. All of the
participants need to have the confidence that they're getting
the right information in real time, so they can respond with
buying decisions and risk decisions. So I would encourage any
effort to bring transparency to markets because that's the only
way they work.
Senator Feinstein. Thank you very much.
Thanks, Mr. Chairman.
The Chairman. You bet, Senator.
Senator Cantwell is next.
Senator Cantwell. Thank you, Mr. Chairman. To the various
panelists, thank you for being here. I'm going to submit
questions to Ms. Roberson and Ms. Otis in regard to Hanford
clean-up issues and direct my questions to the FERC nominees.
Like Senator Feinstein, our State has grave concerns about
the actions or lack thereof that FERC is taking, and if I could
ask you specifically about your beliefs about the prices
currently being charged in Washington State: do you think that
they are reasonable or not.
Mr. Wood. Not have full knowledge, Senator Cantwell, of
exactly what the charges are, certainly it would be difficult
for me to say that they're----
Senator Cantwell. They're 11 times what they were a year
ago.
Mr. Wood. And I know that the hydro power is really a lot
lower than it was, and I'm not sure where in fact the megawatts
are coming from at all. So it would be useful for me to know
which powerplants are actually being called upon to deliver
that kind of power. I think that is really what the FERC has
initiated that West-wide inquiry about a few weeks ago, so it
gives us the opportunity to, if there are unjust and
unreasonable rates being charged, not just in California but
across the West, including Washington, Oregon, Idaho, that
we've got really the hook to go back in and look at those rates
if they are in fact unjust and unreasonable, which I think is
what your question implies, that we have the ability to restore
those to a just and reasonable level.
But I think it would really depend on----
Senator Cantwell. About 75 percent is normally coming from
hydro and then, obviously, the problem arises if you're buying
in the spot market. I mean, we can get into the question about
what FERC thinks should be done about the level of reserves,
but the fact is consumers are now being held ransom because
we've had one of the worst droughts in 30 years, and utilities
are increasingly going out on the market. And I want to get to
Ms. Brownell in a second about her dysfunctionality, because I
want to know whether you think the market is dysfunctional or
not.
But we really have a situation where we have had a unique
environmental situation with a drought, the worst in 30 years,
and are being forced to go out and buy power on the spot
market, which has got us looking at 11 times the wholesale
prices from 1 year ago.
Mr. Wood. Again, not knowing anything else other than 11
times, yes, that sounds high. But compared to hydroelectricity,
which is very relatively low-cost power, again I'd have to
know.
Senator Cantwell. Well, if ratepayers are seeing a proposed
200 percent rate increase, it's pretty hard--even if rates are
at a starting point that may be lower than other places. And 40
to 50,000 jobs are being estimated as the economic loss in the
State. That's significant.
I don't know, Ms. Brownell, if you want to address that?
Ms. Brownell. Well, I would simply add that our job is to
determine whether rates are just and reasonable, and we are
committed to getting all of the facts to make that
determination. And if in fact the facts lead us to the
conclusion that those rates are not just and reasonable,
there's going to be prompt and serious response to that.
If you want me to respond now, too, to your question of
dysfunctionality, markets require a number of things to
actually work and markets----
Senator Cantwell. I'm sorry, were you referring to the
market when you used that term?
Ms. Brownell. Yes. The critical thing that markets require
is that supply and demand be in balance. So just from that
regard alone, there's a dysfunctional market.
I think the second point, however, I would make is that in
a period of transition you really don't have markets. They
don't happen overnight, and there are a number of issues that
need to be dealt with in order to respond to and create a
sufficient wholesale market in which people can have confidence
and a sufficient retail market where people have choice.
So that there are a lot of issues that I think recent
orders of FERC have begun to address that will bring all the
pieces of the puzzle, as we say, together. One of the problems
with some kinds of responses is that the pieces in the end, if
you do them without looking at them as a whole, in the end
don't fit together, and I think we've seen some of the impact
of that.
So that's what I meant by a dysfunctional market.
Senator Cantwell. Do you think that the section 206
investigation that was ordered West-wide is broad enough to
answer those questions about why we have a dysfunctional
market, because it's limited in what it's investigating.
Ms. Brownell. I think that alone might not get all the
answers that you need, but there is a series of actions that
the FERC has taken, I think, that will bring us more answers
and more clarity. If it doesn't or if, when and if we are
confirmed, we get there and we determine that in fact more
information is needed, certainly I think I would be the first
to ask for that. And I know my colleagues join me in that.
Senator Cantwell. Well, I would love to hear Mr. Wood's
comment on that?
Mr. Wood. I think that the scope of the inquiry appears to
be pretty broad. I think what you might be referring to is that
the remedies that are proposed, I think they're limited to just
certain periods of time, might not be broad enough if the FERC
found in fact something was--I was just reading the comments of
parties the other day that responded to this inquiry and I
think the concern from some of the parties said, well, if you
find something that is not functional, to use Nora's term, have
you actually put the parties on their 60-day notice that you're
going to go do something about it?
I'm not sure that that part is as broad as perhaps may be
necessary.
Senator Cantwell. I'm most specifically referring to the
real time trades of 24 hours or less.
Mr. Wood. Because that's what the comments referred to as
well, stage one, two, and three emergencies, which might well
be 24-7 this summer or into the fall. That may not cover the
full period of time. If in fact there's more power on the grid
than 7 percent extra, then that would not be covered by the
scope of the remedy phase in the order.
So that would need--that would require that the order then
be re-issued to broaden it to the full term if necessary.
Senator Cantwell. Well, I appreciate your comments and
interest in an expeditious pursuit of these issues. There are
some communities that have already witnessed a 40 percent
increase in rates and BPA is proposing somewhere between a 100
and 200 percent rate increase to take place in October. So a
very expeditious action by new FERC members would be very
helpful to the State of Washington and to the economy, and I
appreciate, Ms. Brownell, your comments about the electricity
markets.
I know my time is almost up, but I appreciated, Mr. Wood,
your comments about the relicensing process for hydro. You do
qualify your statements as not having a lot of experience with
it, but indicating that you do want those environmental and
licensing process issues addressed in a timely manner. Perhaps
we could submit a question to you on furthering that, because
the process of taking many, many years to relicense these
projects is costing us. We need more efficient policy, and it
is a very difficult issue to balance. But I appreciate FERC's
attention to that issue as well and will submit a question on
that. Thank you.
Thank you, Mr. Chairman.
The Chairman [presiding]. Thank you very much, Senator
Cantwell.
I have checked the order again in response to a challenge.
I am told that Senator Craig is next, followed by Senator
Dorgan, and, for reasons that are unknown to me, Senator Wyden
appears to have been the last one to have shown up.
Senator Wyden. Mr. Chairman, I am certainly not filing any
challenges to my friends, but I think I was the first one to
show up. I am definitely going to respect the chair's ruling.
Senator Craig. This is a tough question, Mr. Chairman.
The Chairman. Well, I do not know. We have two clerks here
that supposedly are pretty good at counting their fingers. But
I apologize if you were here first and you should go ahead.
Senator Wyden. No, absolutely not. For purposes of today,
because I have two friends here, I am definitely going after
Senator Craig and Senator Dorgan.
Senator Dorgan. Mr. Chairman, I might have greeted both of
them as they arrived.
[Laughter.]
Senator Dorgan. But maybe not.
The Chairman. I won't say we have bigger fish to fry, but--
I would suggest you promptly move, Senator Craig. What we're
going to try and do is, we have a vote that is probably coming
up in about 20 minutes, so maybe we can handle everybody. Is
that fair enough?
Senator Craig.
Senator Craig. Gentlemen, thank you. I'll be quick. Let me
congratulate all of you for having been nominated. Obviously,
by that action the President believes in you and trusts that
you will execute your responsibilities in the necessary and
appropriate ways.
Both of our FERC nominees I've had the opportunity to visit
with at length on a variety of issues. I asked the FERC about a
month ago to come to the West and they did, and they held a
hearing in Boise, Idaho, and 11 States testified. 11 States'
power authorities, commissioners, some governors; almost all of
them agreed that the market in the West was broken and in many
ways dramatically dysfunctional, based primarily on what
California had done and was doing or failing to do, but also
other contributing factors: transmission, adequacy of
transmission, certainly the high profile of a drought in the
West and the less capable hydro system this season than last.
Now, of all of that, your responsibility rests with only
about 50 percent of it, because 50 percent of it in general are
the publics and about 50 percent are the privates, and of
course your relationship to the wholesale market is clear by
law, and what you can do there I think is understandable. Do
you believe that under the just and reasonable clause in our
deregulating of wholesale rates you have the adequate authority
to move in the wholesale markets to bring some stability?
Either of you can respond to that, or both.
Mr. Wood. Senator Craig, I think certainly with the
limitations that you put out there, that are facts, that there
are a significant number of non-jurisdictional entities that
are part of the wholesale market out West. California, the
Northwest, really across the country, there are significant
holes in the Swiss cheese. It is a challenge to make the just
and reasonable mandate for the whole market work as easily as
probably it could.
I think the commission in its order in April attempted to
reach to the people that, while they're not jurisdictional to
FERC, they use FERC jurisdictional transmission. That was a
technique that the FERC also used to reach a broad market to
regulate the gas markets 10 years ago. So clear authority is
always welcome. I mean, I've asked for that at the State level
for 6 years now and we've gotten it. It does make things move
quicker when you don't have to spend 10 years in the courts
trying to wrangle it out.
But whatever the will of the Congress is, we'll make it
work, and I think the current law has been around a long time
and has been tested quite a bit.
Ms. Brownell. Senator, I would merely add that in
Pennsylvania we found where we don't have jurisdiction--and we
have fairly broad jurisdiction--we've been able to forge
relationships with entities and work to resolve problems. We,
for example, do not regulate coops, but we have a very strong
relationship with them, often work with them to solve problems
with other entities.
So it would appear, of course, there are limitations, but I
think we can overcome those limitations by reaching out to
others to work with them. I think we all agree that a solution
is the responsibility of many and we need to reach those many.
I applaud the commission from their visit to Boise and we would
hope to be doing more of that.
Senator Craig. Thank you both.
We've talked about hydro. My colleague from Montana
mentioned it. I think you all sense the importance of it in the
process that you have some control over in the relicensing, but
not all. There may well be an effort here to help shape that to
some degree, while still allowing all the stakeholders to play,
as they should.
I know that the administration plans to be expressing to
some degree an importance of that, and largely because the
licensing process has at least historically diminished the
generating capability of the hydros, and oftentimes has driven
their costs up. And in the West, with 15,000 megawatts at play,
a 10 or 12 percent reduction in that production system,
generating system, over the next 15 years by a licensing
process would in itself be damaging. It would simply have to be
replaced by much more expensive energy resource. Do you not
agree?
Ms. Brownell. Absolutely. The importance of hydropower has
never been clearer than it is today, and nothing should take 3,
4 years and that expense, particularly when we need every
megawatt. So we agree that the process needs to be expedited
and we will do whatever we can to be part of that.
Mr. Wood. Senator Craig, just to add, I understand that the
FERC office that deals with this has a more recently policy of
trying to squeeze more megawatts out of these relicenses than
possible. So getting that is important, but also maintaining
the ability to do operational--the beauty of hydro is it's
there when you need it. So it can really--if you've got a runup
of heat in Boise or in Sioux Falls or anywhere, you can follow
that electric demand with very finely precise, tuned
hydroelectricity generated power, and that's unique, and that
needs to be certainly a top priority for maintaining hydro.
Senator Craig. Thank you both.
Jesse, we've not forgotten you, nor Lee. You two will play
a very valuable role in my State, as DOE has a large presence
there, with a national laboratory. It also has a large
responsibility to the State and the citizens of the State of
Idaho, Ms. Roberson, as it relates to environmental management.
It is my belief at this time that the President's suggested
budget misses the mark by about a billion dollars as it relates
to commitments and milestones within the agreements established
by the Department of Energy with its laboratories across the
country. The Secretary is doing a bottom-up, top-down review of
this to try to understand why environmental management is so
expensive.
What is your understanding as it relates to the objectives
of the approached review? And it appears that it's going to be
your responsibility to help carry that out once confirmed and
in place.
Ms. Roberson. Yes, Senator Craig, it would be my
responsibility to conduct that review on behalf of the
Secretary. Some of the elements that I understand the review is
intended to look at involve application of DOE orders and
requirements, and identifying opportunities that simplify that
application. It will look at the sequencing of work. It will
look at opportunities, try to identify opportunities for better
integration across the complex, specifically in the waste
management area.
Those are some of the elements that the review would take
into consideration. Obviously, the goal of the review is to
find opportunities to accelerate cleanup and meet our
commitments, and that would certainly be my goal.
Thank you.
Senator Craig. So are milestones legally binding
commitments by the Department? And if they are and they fail to
meet them, wherein lies the problem?
Ms. Otis. Yes, Senator. I have not--I should say, I have
not reviewed all the agreements that the Department has entered
into, so I am hesitant to comment on exactly what the legal
status is of each of them. I think that the one in your State
is somewhat unique in that it is a consent decree, but they are
legally binding in the following sense: that they represent the
things that, if the Department does them, the State will
refrain from taking enforcement actions against the Department,
and therefore they're certainly very important in obtaining
compliance.
Senator Craig. Thank you both.
Steve, I'm out of time. It isn't that I've forgotten you.
It's just that you need to remain relaxed and comfortable.
Thank you.
The Chairman. What I would suggest is that, we've got--the
first bell has rung, but that's 15 minutes, and maybe between
the two of you you can split that time. My intention, unless
anybody wants a second round, is that this would conclude the
hearing. Is that fair enough?
Senator Dorgan. Fair enough.
The Chairman. Fair enough. Well, we have Senator Smith.
Senator Smith can conclude the hearing.
Please proceed, Senator Dorgan.
Senator Dorgan. Mr. Chairman, thank you very much.
Mr. Griles, because I don't have a substantial acquaintance
with your background, let me ask. I know that Senator Bingaman
asked you a series of questions for responses. Let me ask that
you do respond, at least in writing, with respect to the story
that appeared today. I know you indicated this in the
Washington Post, but I think it's important. The story raises
at least four or five, I think, significant issues.
It raises issues with three people who worked with you at
the time. Just as one member of this committee, I think it's
important for you to give us a written response to it so that
we understand your perspective on what is alleged in the
article. If you would do that, I would be appreciative.
Mr. Griles. Senator, I welcome the opportunity to do that
and will definitely do that. When we are in the positions we've
been in, policy disputes arise. There are differences of
opinion and I have had those. I would like to give you
something in writing on those and I will do that, sir.
Senator Dorgan. I appreciate that. One final point. The
story indicated you helped coordinate the State of Virginia's
lawsuit against the new Federal mining law. Now you are being
asked to enforce the same law which you opposed. And you also
indicated, times change, things change. Give me your
perspective about the law that you will now be required to
enforce.
Mr. Griles. Senator, that issue is one that arose in 1978,
1979, when I was a career State employee employed by the
Commonwealth of Virginia. My effort, at the request of the
Department of Conservation, was to pull together a program that
responded to the Surface Mining and Control Act. I'm not a
lawyer. I didn't argue the case, I wasn't part of the case. I
was a State employee, a career State employee, providing
information to the elected officials of the Commonwealth, the
Governor and the attorney general.
Senator Dorgan. But is that answer suggesting that your
heart really wasn't in the challenge, or were you a part of the
challenge because you felt, as did the State of Virginia, that
the new Federal mining law should be overturned?
Mr. Griles. I never felt that the Surface Mining Act should
be overturned. The challenge that the Commonwealth initiated
was over several specific provisions of the statute. Those
statutory provisions have been found constitutional.
In 1981, I entered into service to the Federal Government.
My primary role in 1981 through 1983 was to enforce that very
statute, and we rewrote some of those regs, but we also I think
put in place the mechanisms and the organization today that
have resulted in this program working much better than it did
20 years ago, Senator.
Senator Dorgan. Mr. Griles, if you will just put in writing
the response I would appreciate it. I think all of us will be
advantaged by that.
Let me ask--thank you very much. Let me ask the two
nominees for FERC a question. I have been critical of FERC,
some would probably say unfairly critical. I have said that
they are doing a wonderful imitation of potted plants while we
have this massive energy problem developing, especially on the
West Coast, but particularly in California.
I hope we can put some people down in this regulatory body
that really want to follow the trail and be involved in cases
where the market system doesn't work. Let me ask the two
nominees whether you think FERC has been a vigilant market cop
because, I think, Mr. Wood, you have used the term the FERC
needs to be a vigilant market cop walking the beat. Sometimes
markets are perverted, sometimes they don't work. In those
cases you need a referee.
Do you think in your judgment, has FERC been a vigilant
market cop the last couple of years with respect to the energy
situation in California?
Mr. Wood. I think it's difficult to judge somebody without
walking in their shoes. If I'm confirmed, I'll be glad to
answer that one a year from now after we have to walk it. But I
will say, in my role as the regulator in Texas we have parallel
jurisdiction to FERC. It's a unique anomaly of the electric
grid. In setting up a market for the first time in an industry
that's been regulated for 100 years, there are a lot of
opportunities for error and for oversight.
Senator Dorgan. How about manipulation?
Mr. Wood. I'm talking about on the part of the regulator.
Certainly--that's what we've got to oversee. Having sufficient
authority to remedy that I think is important. I think the
Federal law has given that to the FERC. So that's an important
thing, do you have the power to do something about it once you
catch it, yes.
Senator Dorgan. The question I'm raising, are they using
that power, in your judgment?
Mr. Wood. I think they have started to use it. Certainly
the December order--the October--I think from October forward
the FERC has put the Western markets on notice that they can go
back and do just about anything they need to to right what may
be wrong. So I think we saw the runup shortly before that. I
think it was a relatively prompt response. I know there's
been--I acknowledge there's been some difference of opinion as
to whether some of the response has been appropriate, and I
think that's always fair on any decision.
But they did move relatively fast. The San Diego news hit
the California newspapers about the time a complaint got going
at FERC. So perhaps something could have been done in advance
of that, but I really don't want to judge somebody on that
issue because I do think that they were moving relatively
swiftly and have been so since last summer.
I think the broad question is could something have been
done prior to then, and I think I'd like to look into that once
I get there, if confirmed. But there is never too much you can
do in a transitioning market. I think there's no A-plus grade
you can get in this job.
Senator Dorgan. But one can try to avoid failure, right?
Mr. Wood. Certainly.
Senator Dorgan. Ms. Brownell.
Ms. Brownell. Senator, I would merely add that earlier I
spoke of a sense of urgency and I feel a sense of urgency, as I
believe my colleagues do. One of the clear lessons immediately
apparent in the Pennsylvania market when we opened it is that
markets don't wait for the classic responses that we've
designed in regulation. So what we need to do is, as I spoke of
earlier, bring new solutions, bring expedited solutions, and,
frankly, bring mediated solutions so that we don't have to
waste time in endless litigation while the constituents suffer
from uncertainty, blackouts, and high prices.
Senator Dorgan. Just one final question. Would you agree
that when you have no price transparency and you have very
large traders and companies selling from unregulated markets
into regulated markets with really no opportunity to understand
what the pricing practices are, that you're really blindfolded
in your ability to evaluate what your responsibilities are
there?
Ms. Brownell. Senator Dorgan, as I said earlier,
transparency is what makes markets work. So I will be committed
to getting that transparency and working with my colleagues and
with you and the legislature to ensure that that happens.
Senator Dorgan. Would you agree that FERC has been rather
timid in doing that in the last couple of years, especially
with respect to California?
Ms. Brownell. Senator, I would be reluctant to be a Monday
morning quarterback. As Pat said, when you're in a transition
market you're learning new things every day. The reality is
it's quite clear to all of us that the transparency issue is
one that has to be dealt with expeditiously.
Senator Dorgan. My time is up. I think that these are
important issues. I will support your nominations. I reserve
the right to receive Mr. Griles' response. I don't make a
judgment about it one way or the other, but I appreciate your
willingness to do that.
I will support your nominations, but I hope you are tigers
when you get down there. I mean, the whole purpose of this
agency is to be helpful and protective of the consumers and
make sure markets work, and these markets are broken. They
simply are not working.
Thank you very much.
The Chairman. Senator Wyden. I'm sure Exxon will be happy
to hear there's a tiger in the tank.
Senator Wyden. Mr. Griles, as you know, there's enormous
environmental opposition to your appointment, and in response
to that opposition what you've essentially said is you've
changed. You've changed your outlook. I've heard that when we
talked and on other occasions. I'd like you to describe
specifically how you've changed and how you would bring that
changed outlook to the extremely important position that you
would have if confirmed.
Mr. Griles. Senator Wyden, first I want to thank you for
having a chance for me to spend some time with you yesterday or
the day before and discuss viewpoints on how we move forward.
Change is a matter of perspective as well as age, and as
one looks at issues. My viewpoint on all of these issues are
that with communication, cooperation, and consultation we can
change the debate. You and I talked about specific examples in
the West where we have an opportunity----
Senator Wyden. But you said you had changed. I want to hear
how you've changed, because certainly these examples from the
past don't reflect to me that the environmental view will get
equal treatment with the industry view. You, to your credit,
said: I hear that argument; I've changed. I'd like you to tell
me how you've changed and how that would be implemented in the
day to day work that you do at the Department.
Mr. Griles. Senator, I believe that in terms of myself what
I am indicating to you is the change that is necessary is
consultation and communication, that I believe I understand how
to do that. I have had a valuable experience of learning, of 18
years of public service, 12 years of private sector, and in
that time I have learned that through listening and bringing
people together better solutions can occur.
I will promise you that's my objective in the future. I
will make that the commitment that I bring to this job. Is that
a change? I hope that if that's what we need to do, and I think
that's the only way we can make public policy work, Senator.
Senator Wyden. I'm not ready to support your candidacy
unless--and I'm going to take a third crack at this question--
if you're telling me: Senator, I didn't consult with the
environmental side like I should have in the past and I'm going
to change and do a better job of working with those people so
that we have a more balanced approach in the future. That
strikes me as a change and gives me a rationale to vote for
your candidacy.
But if you just tell me the world has changed and, by gosh,
if I get on down there I'm going to try to change, too, that
doesn't cut it. Are you telling me that you're changing in
terms that you didn't consult with the environmental side
enough in the past and you want to do more of that in the
future?
Mr. Griles. Senator, I have indicated to you in my private
conversation that over the last 3 weeks I have consulted with
and met with a huge number of environmental groups, and my
objective is to make sure--and I committed to them, as I
committed to you--that my door would be open. Have I changed my
viewpoint on that? I don't think I ever had a viewpoint that I
didn't consult, but it's clear from the viewpoint that's been
expressed by some that I didn't consult enough, and I have
changed my viewpoint. I will consult as much with you as with
them in order to assure that their message and their needs are
understood and are communicated to the Secretary.
Senator Wyden. Any other changes that you would bring to
the Department from your past? As I told you, I'm looking to
have you give me a rationale to support your candidacy. I'm not
there yet and you're going to have to give me some evidence
that you would look at these issues in a different way.
As you know, Senator Craig and I wrote a precedent-setting
bill with respect to forestry, probably the most important
forestry law for the Forest Service in the last 30 years,
because we took some fresh approaches. When you talk about
changes, you've indicated to me on the consultation question
that you would be willing to look at that differently. Are
there any others so as to give me some reasons to support your
candidacy?
Mr. Griles. Well, Senator, as I said to you on the
consultation question specifically, as well as looking at how
one views these issues, we have to set up not a--we have to set
up a process of consultation that is in fact true. We have to
allow the local people of the West, particularly on a lot of
the issues that concern you and Senator Craig and others, an
opportunity to be involved in that consultative process.
It can't be just--it has to be real. It has to be listened
to. The Bureau of Land Management is a good example, where I
think with the need for energy we need to set up a process in
the West on these very critical areas which are going to be
coming under review, as energy development. We've got to have
the local environmental groups, we've got to have all the
efforts put together, so that the consultative process is real
and it's not transparent.
Senator Wyden. What you're telling me, though, is that
other than consultation you're going to do business the way you
did it in the past with respect to your basic approach. I want
you to know that's not going to be good enough. We'll have more
time between now and the committee vote and the floor vote. My
door is open to you. But if the only change is that you're
willing to talk to environmental folks, that's not going to be
enough for me. My door is open to you.
One question for you, if I might, Ms. Roberson. As
colleagues have said, there's going to be a big cut in the
cleanup budget and a number of us are very troubled with it.
We've got a $10 million cut at the plutonium finishing plant.
That means four metric tons of unstable plutonium that's stored
there.
Now, at the Defense Nuclear Safety Board you criticized the
Department for the slow progress in fixing a pretty significant
nuclear safety problem. I guess my question is were you wrong
to criticize the Department or is the Department wrong now to
propose funding cuts that would address the problem?
Ms. Roberson. Senator Wyden, I would say that as a part of
the Defense Nuclear Safety Board I don't believe we were wrong.
The Board looks at the conduct of the work and I think provided
insight into opportunities resulting from better planning and
sequencing of the work to get that done. I believe that the
Board was correct, and if confirmed I would work to make sure
that we satisfy the concerns raised by the Board.
Senator Wyden. I don't have any specific questions now for
the FERC appointees. I want it understood, as we talked about
in the office, that I believe that with energy being traded as
a commodity it's time to lift this veil of secrecy around this
country's energy markets. You've got Enron and a variety of
these marketers, Enron, Reliant, a variety of them buying and
selling energy constantly, and yet a lot of folks are in the
dark with respect to transmission, outages, and the like.
Both of you indicated to me that you would be generally
supportive of the legislation I'm going to introduce that would
open up these markets, lift the veil of secrecy, and make it
possible for folks to get information. So I think I'm going to
quit while I'm ahead with you two at FERC and just repeat the
fact that I heard you say that in the office and I'm
appreciative of it.
Mr. Griles, I think you know the challenge for you in the
days ahead. I want it clear I am not prepared to support your
appointment as of now, but I will leave it open, particularly
on the question if you can give me further concrete examples of
how you would change the way you do business other than in the
consultation arena, which I would be to first to say is a
welcome approach.
My colleague is here and I think he's going to wrap it up.
Senator Smith [presiding]. Thank you, Senator Wyden.
May I extend my welcome to each of you and my
congratulations for your nominations. I look forward to
supporting it. Mr. Griles, I visited with you yesterday and I
talked briefly about the plight of the Klamath farmers, and I
have been deeply frustrated with how to help them, because the
crisis that has literally turned off their water is not just
nature, it's literally the operation of Federal law under the
Endangered Species Act.
I believe when we get this tax issue behind us the
President is going to send up a supplemental appropriation, an
emergency appropriation, that I hope that the first item on it
will be real dollars to help some real folks in need in the
Klamath Basin.
Can you assure me that that will be the case?
Mr. Griles. Senator, I assure you that if confirmed in this
position that request will be included in some discussions at
Interior.
Senator Smith. If ever there was a case of equity to help
some people in California and in Oregon, it's this one. It's
the most amazing story. But in any event, there's a lot of
human suffering as a result of the two biological opinions, one
from Commerce, one from Interior, one to save the short-nosed
sucker and the other to save the coho salmon, that leave birds
and farmers out of the equation. I'm not sure that that was
what was ever intended.
But in any event, I hope that you'll be mindful of the
Klamath situation and liberal only in the sense that you'll
help them.
I want to welcome our nominees to FERC. You're coming in at
the best of times and the worst of times. I'll bet not one in a
thousand Americans could tell you what ``FERC'' means, but I
would predict to you that the end of summer nearly every
American will know what the FERC means. I think we're in for an
interesting experience, and a lot of people are going to look
to you for answers.
I think before I arrived others questioned you and I
understand you both acknowledged that in the Northwest the spot
market in the middle of April 2000, the spot market for a
kilowatt was $16, and that you acknowledged today that it is
$287. I wonder if you think that that's just and reasonable, in
that farmers, small businesses, seniors, families on fixed
incomes, should they regard a 1700 percent increase, should
they regard that as just and reasonable?
Ms. Brownell. Senator, the experience that your
constituents--farmers, small businesses--are having with the
volatility in these energy markets is painful. It's clear, I
think, as we indicated earlier, that the market is
dysfunctional. We talked about various ways in which we need to
get the information as soon as possible to make the
determination of what is just and reasonable and what is not.
Certainly the FERC has made a good start at that. I think
we've concluded with the input from you and your colleagues
that we need more information to look at broader issues and we
will do that.
It is not just and reasonable to cause people economic
harm.
Senator Smith. Are you open to expanding your current 206
investigation to cover all the Western United States? It's
already been done for California and I believe it includes some
kind of a price cap, a circuit breaker mechanism not unlike
that of Pennsylvania and Texas. Is that a fair evaluation?
Mr. Wood. I would say that probably it's a little bit less
of a circuit breaker and a little bit more of a real-time, day
before tuning of what would be the acceptable price for the
next day. So it is a bit more customized for the market.
The question you asked right before that, Senator Smith,
was broadening the 206 inquiry. FERC in late April did broaden
it. Ms. Cantwell asked me a question a moment ago about the
nature of how broad it would be. I think one of the open
questions there is, if some of the problems that have been seen
in California are kind of structural things that we see out
West, that those really are in fact unjust and unreasonable,
has FERC put the parties on notice that it can go after those
transactions and examine those and perhaps order some refunds?
I think that what was proposed as a remedy there might be
narrower than the full universe of transactions. Certainly I
would be open to considering whatever breadth is necessary to
provide that market stability and to establish some long-term
signals about what kind of investment's needed and where it's
needed, as well as some short-term appropriate pricing that is
consistent with the Federal law.
Senator Smith. I just have a belief that your active
engagement of this issue on a broader basis in the Western
United States will send a signal also to generators that, don't
gouge here, be careful, because this will generate emotions
that may not translate into good policy. So my fear, for those
who want deregulation, is that they're pricing themselves back
into re-regulation. So this is a perilous time for everyone in
the energy business because, frankly, turning on a light switch
and filling your tank up with gasoline--that doesn't have
anything to do with you, but energy companies it does--these
are not, these are not luxuries to the American people. They
count on them, and they count on them to be affordable.
I think those who would gouge do so at the peril of their
own interests long term. So I think you can perform a great
public service just by being aggressive in this.
That brings me to my next question, which is the rehearing
on the December 15 order. That may have been asked by an
earlier colleague. I was tied up in the Foreign Relations
Committee, but wanted to be here to ask these questions. Are
you going to attend that rehearing on the whole issue of the
December 15 order?
Mr. Wood. Unless it's voted before we take office, yes,
sir, we would sit for the rehearing of that. And it's actually
I think just a paper--I don't know that there's actually a
formal hearing for it. But we would be able to vote on the
different petitions that people have raised to maybe change
that order or to reaffirm that order. That would be something
that should still be open and it is open today. If it's not
voted on between now and the time we, if confirmed, join the
commission, then yes, we would.
Senator Smith. I think that's important if people are going
to have the opportunity to benefit by any finding you might
have of unjust and unreasonable. So I would encourage strongly
the FERC to participate in that and to broaden it to include
States beyond California.
Do you--both of you, do you support electricity reliability
legislation? I have introduced some to enhance reliability of
the high voltage transmission grid. Are you familiar with that
and do you support such a thing?
Mr. Wood. Is this from the last session, Senator Smith?
Senator Smith. Yes, it is. Senator Gorton introduced it in
the last session, and I.
Mr. Wood. Certainly the concept of empowering either the
commission or whoever Congress wants to be empowered to enforce
reliability standards is a good thing. One of the experiences
that I've had in our own market in Texas is that if you have
the reliability standards being done at a different location or
a different group of people than the market opening is done,
then you might get some conflict and it really is probably
counterproductive.
So yes, sir, certainly the concept of giving some
responsible outside entity the ability to enforce reliability
standards, to encourage them to be adhered to by all the market
participants, is important. I just would suggest, sir, that
maybe combining that function with where the commission's going
with these regional transmission organizations, you would put
reliability, market operations, long-term planning, which I
think is a big issue here today, not just for transmission but
for generation--siting that in one entity or one type of
entity, like the FERC is moving toward with the regional
transmission groups, is probably a good way to go.
I think certainly you've identified a key problem here.
It's one thing to have standards. It's another one to make them
really stick. Yes, sir, anything that can be done to make those
stick is going to be very important in a competitive market.
Senator Smith. You're from Texas and, Ms. Brownell, you're
from Pennsylvania. These are two States that are held up as
models of how to deregulate. But I think it would be important
to have on the record that as part of your deregulation you
actually do have a price cap mechanism, a circuit breaker it's
called.
Ms. Brownell. We do.
Senator Smith. Can you describe how that works and how that
might be applicable to FERC in this very crucial time?
Mr. Wood. I'll start, because we actually borrowed ours
from FERC had approved for the Pennsylvania market. My
colleague in the Texas commission, Commissioner Walsh, had been
concerned that in the opening years of a market there could be
some, whether it's a computer glitch as we had seen in the New
England power pool, where power went up to $6,000 a megawatt
just because of a way that the computers registered people--and
I don't know all the details. But it was really kind of almost
a gaming opportunity that was exploited.
Senator Smith. Is some of that gaming going on now?
Mr. Wood. In New England or just everywhere?
Senator Smith. In the West.
Mr. Wood. We'll find out.
Senator Smith. I think it is. I think you understand the
issue. I hope you'll pursue it aggressively, because I think
some real gaming's going on.
Mr. Wood. What we tried to do on the thousand dollar per
megawatt hour cap was for a 2-year period set a cap that would
basically be a circuit breaker if something really was awry.
We've got prices in our market, $40, $50, $80 at the peak, so
$1,000 is quite well above what would be permitting good
incentives for people to build new powerplants and the like.
Senator Smith. Could it be lower than $1,000 without
discouraging investment?
Mr. Wood. Well, we actually calculated this. Based on the
price of gas--we wanted to make sure that peakers, which are
these units that run maybe three days a year, that those guys--
they have to recover their costs over those three days. So we
wanted to make sure that it was set at a level such that those
peakers found Texas a good place to invest.
So we looked at the price of gas, we looked at what their
fixed costs were, and actually calculated. It was about $900
something, or it was either $1,100 and we rounded down or $900
and we rounded up. But we did say $1,000, but it was actually
based on a calculation of keeping the kind of powerplants that
we need to fill all of the space in Texas, keeping those on
line.
Senator Smith. Is there any reason why the FERC could not
provide such a mechanism for the whole country?
Mr. Wood. I think it has moved forward to do that where
it's been suggested.
Senator Smith. Not only is that common-sense policy as we
transition from a regulated to a deregulated environment,
doesn't that just make a whole lot of sense in order to protect
the concept?
Mr. Wood. Again, it is a different price cap, I think, than
the price cap that has been talked about in D.C.
Senator Smith. I grant that it is a different one, but I'm
raising it simply to say that those who would just
ideologically reflexively say no price cap are denying the fact
that they already exist. They're there in States that have
deregulated, and I'm just simply saying, if for no other reason
than political protection, an aggressive FERC ought to
establish one and defend the folks on fixed incomes, the small
business, the seniors, so many folks who are, frankly, very
subject to being gouged by those who would game this market.
I don't know where the ideology comes in. It seems to me we
have price caps. We just have to make sure that they are
enforced and work.
Yes, Ms. Brownell; can you talk about Pennsylvania?
Ms. Brownell. Yes, Senator Smith. I can just add a little
bit because Pat described the model. The reality is the
existence of that price cap, which was agreed upon by the
market participants actually, I think has served to send a
signal to the market that we are looking and that there are
controls and framework in place.
It's interesting that in the last year or so, 2 years,
we've only seen prices reach that price cap in a period of heat
wave and it's only happened once and only happened for a couple
of hours. So clearly it has worked in Pennsylvania. We also
have the benefit, of course, of excess capacity, so that the
supply and demand balance also helps in the market.
Senator Smith. Absolutely.
Well, I just, I hope--if I agree to vote for you, will you
promise to take the Texas and Pennsylvania models to the FERC?
That's really important to me because I would like to be able
to go home and say the FERC's going to work, they're showing
up, they're putting in place mechanisms to make sure you folks
don't get gouged. Can you make that commitment?
Mr. Wood. My history is why I'm here. I mean, Governor Bush
appointed me to the Texas commission to--my mandate was: Pat,
get to a market. So that's what we've done, and that's what I
think we need to do here, not because a market is the end
point, but because market is a replacement for the C-plus grade
that we get for regulation for the last 80 years.
So there's a lot to take. I think, quite frankly, we based
so much of what we did on their good State's effort that
there's a lot of similarity here. But yes, sir, that's who I am
and that's my professional background, is what we have done in
our State's market. I recognize, lest everybody start cringing,
not everything in Texas is exportable to the national model,
but there's a lot that is, and I look forward to making sure
that we optimize the best practices of the whole country, what
is the best model for our country.
Senator Smith. Am I mistaken? It's my understanding that it
was then-Governor Bush who signed this deregulation bill in
Texas; is that right or am I wrong?
Mr. Wood. Absolutely.
Senator Smith. He signed it, with a circuit breaker price
cap model?
Mr. Wood. We added that at the administrative agency. The
statute was not that detailed, so we've added that.
Ms. Brownell. Senator, you absolutely have our commitment.
We believe that markets can and should work and they should
work for the benefit of all consumers. They should bring new
products and innovation to market. And we are going to do and
have done in our own States whatever it takes to make that
happen, including I think the issue of transparency, which you
and some of your colleagues have brought up.
We need to have--we need to have credibility in those
markets for people to feel comfortable.
Senator Smith. Well, thank you. I look forward to
supporting you, all of you, on the floor of the Senate, and I
wish you the very best. You're here at an auspicious time and
at a time when you can do a whole lot of good for our country,
and I think for our President as well. I think he may not like
the model Senator Feinstein and I are working on, and I grant
that.
I don't want to discourage new investment. I know markets
can work. I know that personally. But I also know that energy,
unlike green peas, is a necessity. I wish green peas were a
necessity. They're a luxury. But I really think it's important
that we not lose sight of the fact that people need it and they
can't go without it and there is an expectation that the
Government will do something to intervene to make sure that
those most vulnerable amongst us are not victimized by a few
who can game the system to enormous profit, to the enormous
harm of folks on fixed incomes.
I have been asked to announce at the conclusion of this
hearing that all additional questions for the record should be
submitted to the Chief Counsel's office by 5 p.m. this
afternoon. I thank you all and wish you all well, and we are
adjourned.
[Whereupon, at 11:56 a.m., the hearing was adjourned.]
APPENDIX
Responses to Additional Questions
----------
May 17, 2001.
Hon. Frank Murkowski,
Chairman, Committee on Energy and Natural Resources, U.S. Senate,
Washington, DC.
Dear Mr. Chairman: Enclosed you will find my responses to your
written questions following my confirmation hearing before the Senate
Energy and Natural Resources Committee on May 16th.
If I can be of further assistance, please let me know.
Sincerely,
J. Steven Griles,
Deputy Secretary-Designate.
[Enclosures]
Responses to Questions From Senator Wyden
Question 1. Mr. Griles, I asked you at your confirmation hearing to
provide me with actual examples of how you and your approach to natural
resource management have changed since your tenure with the Reagan
Administration from one of exclusion to one of inclusion. I also asked
how you intend to work at the Department of the Interior within the
context of those changes. I need to know how you plan to create an
open, transparent, inclusive work environment so that allegations, such
as those raised by the May 16, 2001 Washington Post article about you,
could have no standing under the Bush Administration. Please provide
those examples of change and your plan for implementing them in
writing.
Answer. As I have gotten older, and perhaps wiser, I have learned
that the process used to reach a public policy decision is critical to
ensuring that the underlying decision is both correct and sustainable.
By engaging local communities, interested stakeholders, and state
entities in a real and substantial dialogue early in the decision
making process, an individual can maximize the likelihood that the
final product will be a sound, broadly supported, public policy
decision. Thus, I intend to reach out to a wide variety of groups to
ensure that interested parties are brought into the decision making
process as early as possible.
Specifically, and as I indicated in my meeting with you, I believe
this type of decision making will be needed as policy is developed in
the area of oil and gas development. For example, in the over thrust
belt where controversy exists associated with wildlife values and other
special considerations, we will set up a process where all affected
groups will be involved in developing a consensus on how to resolve the
issues and move forward.
Question 2. Mr. Griles, if there was ever an area that needed
collaborative problem solving, it's natural resources. Senator Craig
and I proved, by the county payments legislation, that the impossible
can be achieved if you get everyone talking together--the industry, the
environmental community, the local folks and the government--and work
out a compromise. Senator Craig and I passed the first major natural
resources legislation in 20 years, unanimously in both the House and
the Senate.
How would [you] use this sort of collaboration at the Department of
the Interior and what sort of priorities would you address using it?
Answer. Collaborative problem solving is the model I intend to use
in developing natural resources policy. Moreover, as the Secretary
explained to Departmental staff in her first address to them, the
Department must dedicate itself to collaboration, consultation and
communication, all to achieve our conservation goals--the so called
``4C's''. I will dedicate myself to fulfilling the Secretary's
directive. As I stated during the confirmation hearing, I have always
supported including all affected parties in the decision making
process. If confirmed, I will use this model for developing management
plans for lands managed by the Department.
Question 3. The previous administration, in response to a GAO
Report regarding the fees collected for uses of federal lands,
responded by proposing to dramatically increase the right-of-way fees
for fiber optic telecommunications. Even more troubling than the size
of these fee increases, which could have slowed or in some cases halted
the expansion of high-speed telecommunications services to some parts
of our country, was the close-door process utilized by the Bureau of
Land Management and other agency counterparts to develop these new
regulations and fees.
In the meantime, I understand that the BLM has proceeded this year
with what it is calling ``market data collection'', by approaching
private sector fiber optic cable builders and network owners, and
asking them to share their prices, data, and rights-of-way rental
agreements. This also is proceeding outside any normal rulemaking
process. Nobody knows what that data will be used for.
Are you committed to the development, in cooperation with Congress
and impacted stakeholders, to a fair, open, regulatory process which
recognizes not only the value of federal lands, but the need to promote
the development of a robust national telecommunications infrastructure?
Will you commit now to seeing that at a minimum, that regulatory
process proceeds on the basis of valuing fiber optic rights-of-way over
federal lands based on the impact on the land, rather than extracting
taxes for the commerce traveling through that cable?
Answer. My general view is that regulatory processes should be
fair, open and developed in cooperation with the Congress and impacted
stakeholders. As you may be aware, in my agreement letter to the
Department of the Interior, I agreed to recuse myself for a period of
one year from my appointment from any particular matter involving
specific parties in which any of my clients is or represents a party.
Some of my former clients were in the fiber optics industry. In light
of my recusal, I will seek the guidance of the Department's ethics
office before participating in regulatory matters directly affecting
the fiber optics industry. I remain committed to ensuring that
consultation with all affected parties and stakeholders is meaningful
and that those interests are considered in any regulatory process
developed on my watch.
Response to Question From Senator Feinstein
Question. What is the administration position on oil and gas
drilling offshore the California coast?
Answer. The Administration supports the current moratoria on
leasing offshore the California coast. The Administration will continue
with the current process to evaluate plans for exploration and/or
development of the few existing leases off California. I understand
that an extensive environmental review of these plans is underway and
will provide a full opportunity for comment by State and local
governments and the public.
Response to Question From Senator Craig
GEOLOGIC MAPPING
Question. The budget request for FY 2002 cuts the funding for the
geologic mapping program within the U.S. Geological Survey. The State
Map part of this program produced 311 new geologic maps in 2000 and has
committed to producing 1,300 maps in 2001.
What are your views on the importance of geologic mapping? Would
you reconsider the proposed funding cuts to this program?
Answer. Geologic mapping is the essential scientific foundation on
which land-use and resource-use decisions are based. Geologic maps are
fundamental for understanding where our future energy, mineral, and
groundwater resources will come from. Modern digital geologic maps, and
many derivative maps that can be made from them, are the best way to
display and understand the information decision-makers need to address
complex natural resource, environmental, and hazard issues, as well as
public health, land management, and emergency response issues facing
industry, governments, and communities across the Nation.
I understand that the USGS considers the National Cooperative
Geologic Program to be a model for Federal, State, and university
partnerships. While budgetary limitations require the Administration to
make difficult choices about funding levels for all Federal activities,
I recognize that this is a viable and important program and I look
forward to working with you to see that such partnerships are
maintained to the degree possible within available resources.
Responses to Questions From Senator Akaka
OFFSHORE DRILLING
Question. Your experience during the Reagan Administration as
Assistant Secretary, Lands and Minerals Management in the Department of
the Interior, was a valuable introduction to mining and leasing policy
on federal lands. Your biographical material states that under your
tenure you leased more federal offshore oil and gas acreage during
1984-1989 than in any prior period of federal leasing activities.
Can you please share your current thoughts on offshore drilling and
any plans to pursue offshore drilling in particular areas such as
California or the Gulf of Mexico? Do you plan to keep up your earlier
pace of leasing offshore areas?
Answer. I agree with the Administration's support for the current
moratoria on leasing lands offshore California and Florida. Major oil
and gas resources are available in the non-moratorium zones in the Gulf
of Mexico and the nation is heavily dependent on the natural gas and
oil from leases there. I support continued leasing in that area.
PARKS AND REFUGES
Question. As Deputy Secretary of the Interior, you will see a much
broader range of public lands issues than you did under your previous
position in lands and minerals management. As Deputy Secretary, you
will oversee and provide stewardship over our national parks and
wildlife refuges, wild and scenic rivers, national historic trails, and
other well-loved areas that the public enjoys. With your background in
economics, I am sure that you understand that certain areas have value
far beyond what is called a market valuation. You will be responsible
for upholding and maintaining the aesthetic and non-market values for
millions of acres of national parks, wilderness areas, and cultural
resources.
Do you feel that your policy experience in the Department of the
Interior with mineral and gas leases, coal valuation rules, coal
royalties and opening federal lands to mining and drilling has prepared
you well for managing the public side of lands management? What
initiatives do you propose to support the development of non-market
values of public lands in our national parks, refuges, and wilderness
areas?
Answer. Yes. I believe my policy experience at Interior has
prepared me well for the public side of lands management. In my
previous capacity at Interior, I oversaw the multiple use management of
over a quarter billion acres of public land. The management of our
national parks, refuges, and wilderness areas will be undertaken
primarily by the Assistant Secretary for Fish, Wildlife and Parks.
Having said that, I strongly support protecting the resources in our
national parks and designated wilderness areas and conserving the
wildlife and wildlife habitat on our National Refuge System. To
accomplish these goals, we need to expand our partnerships for natural
resource stewardship to include individuals and organizations outside
the Park Service and Wildlife Refuge System to assist in the protection
of these resources. Informing and teaching the public about the non-
market values of public lands is an important function of the
Department.
I support the President's initiative to eliminate the backlog of
maintenance needs in the National Park System and to invest in research
at our National Parks through the Natural Resource Challenge. These
investments are critically needed to safeguard public facilities and to
protect the environment, ensuring that visitors have an experience that
helps them understand the values we are working to protect.
I support the President's initiative to fully fund the Land and
Water Conservation Fund and to increase the flexibility of states to
use the money for habitat conservation through landowner incentives and
technical assistance. That flexibility in the President's plan will
enable us to work with engaged and informed local landowners to
increase the total acreage of protected species habitat to a level
which has never been reached before. This is an excellent approach to
enhancing habitat protection and I look forward to working with
Congress to find other ways we can create productive partnerships with
States, local governments and private landowners.
Question. As Deputy Secretary for the Department of the Interior,
you will have wide-ranging responsibilities for native peoples through
the Bureau of Indian Affairs and other legislative mandates. As you
know, I have long supported the rights of indigenous peoples on an
international level as well as domestically. I'd like to discuss the
issues involving Hawaii's indigenous peoples.
Public Law 103-150, commonly referred to as the ``Apology
Resolution'' was signed into law in 1993. In summary, the resolution
apologizes to Native Hawaiians on behalf of the people of the United
States for the overthrow of the Kingdom of Hawaii on January 17, 1893,
and calls for the reconciliation between the United States and Native
Hawaiians. In 1999, representatives from the Department of the Interior
and the Department of Justice began public consultations with Native
Hawaiians as the first step in this process of reconciliation. On
October 23, 2000, the Departments released a report about the public
consultations with recommendations for additional steps in the
reconciliation process.
The reconciliation process is an incremental process of dialogue
between the United States and Native Hawaiians to resolve a number of
longstanding issues resulting from the overthrow of the Kingdom of
Hawaii. The Department of the Interior has had the lead in this process
as the agency that deals with indigenous peoples within the United
States jurisdiction. What assurances can you provide regarding the
continuation of this important process between Native Hawaiians and the
United States?
Answer. Although the matter of reconciliation between the United
States and Native Hawaiians is a new one for me, I believe this
important subject deserves careful attention by the Department of the
Interior. Once confirmed I intend to review carefully the October 23,
2000 report of the Department of Justice and the Department of the
Interior with the appropriate Departmental staff. I look forward to
having further discussions with you on this subject.
Question. One of the recommendations from the report released on
October 23, 2000, is the establishment of an office within the
Department of the Interior to focus on issues involving the indigenous
peoples of Hawaii, Native Hawaiians. The office would continue to
facilitate the reconciliation process and would assist Native Hawaiians
in addressing the political and legal relationship between Native
Hawaiians and the United States. What are your thoughts regarding the
implementation of this recommendation?
Answer. As I stated in my previous response, although the issue of
reconciliation is a new one for me, I believe it deserves careful
attention by the Department of the Interior. Upon confirmation I will
review the October 23, 2000, report, and will pay special attention to
the recommendation that an office to focus on Native Hawaiians be
established.
Responses to Questions From Senator Gordon Smith
Question 1. The previous administration, in response to a GAO
Report regarding the fees collected for uses of federal lands,
responded by dramatically increasing the right-of-way fees for fiber
optic telecommunications. Even more troubling than the size of these
fee increases, which could have slowed or in some cases halted the
expansion of high-speed telecommunications services to some parts of
our country, was the closed-door process utilized by the Bureau of Land
Management and other agency counterparts to develop these new
regulations and fees.
In the meantime, I understand that the BLM has proceeded this year
with what it is calling ``market data collection'', by approaching
private sector fiber optic cable builders and network owners, and
asking them to share their prices, data, and rights-of-way rental
agreements. This also is proceeding outside any normal rule making
process. Nobody knows what that data will be used for.
Are you committed to the development, in cooperation with Congress
and impacted stakeholders, of a fair, open, regulatory process which
recognizes not only the value of federal lands, but the need to promote
the development of a robust national telecommunications infrastructure?
Will you commit now to seeing that at a minimum, that regulatory
process proceeds on the basis of valuing fiber optic rights-of-way over
federal lands based on the impact on the land, rather than extracting
taxes for the commerce traveling through that cable?
Answer. My general view is that regulatory processes should be
fair, open and developed in cooperation with the Congress and impacted
stakeholders. As you may be aware, in my agreement letter to the
Department of the Interior I agreed to recuse myself for a period of
one year from my appointment from any particular matter involving
specific parties in which any of my clients is or represents a party.
Some of my former clients were in the fiber optics industry. In light
of my recusal, I will seek the guidance of the Department's ethics
office before participating in regulatory matters directly affecting
the fiber optics industry. I remain committed to ensuring that
consultation with all affected parties and stakeholders is meaningful
and that those interests are considered in any regulatory process
developed on my watch.
Question 2. What is the status of the independent peer review of
the Hardy flow studies on the Klamath River? Please provide me with the
names of the current reviewers selected by Dr. Hardy and their
credentials.
Answer. I have been informed by the Bureau of Indian Affairs that
the Phase II flow study effort has not yet been completed. Therefore, a
peer review has not yet been initiated. I have been informed that the
names of the current reviewers selected by the Department are:
Dr. Arle Harby, of Trondheim, Norway. He is a member of the Eco-
hydraulics Committee for the International Association of Hydraulic
Research and co-leader of the Crof 626 program of the European Union to
define the state of the art in instream flow and eco-hydraulics
modeling.
Dr. Klaus Jorde, of the Institute of Hydraulic Engineering,
University of Stuttgart, Norway. He is a member of the Eco-hydraulics
Committee for the International Association of Hydraulic Research and
co-leader of the Crof 626 program of the European Union to define the
state of the art in instream flow and eco-hydraulics modeling.
Dr. Michel LaClerc, of the Institut National de laf Recherche
Scientifique (National Institute of Scientific Research), University of
Quebec. He serves as the secretary of the Eco-hydraulics Committee for
the International Association of Hydraulic Research and co-leader of
the Crof 626 program of the European Union to define the state of the
art in instream flow and eco-hydraulics modeling.
Dr. Mike Acreman, of the Center of Ecology and Hydrology in
Wallingford, England. He is the head of the research group at Center of
Ecology and Hydrology for Instream Flows.
The Department has also sought the recommendation of an independent
peer reviewer from the Klamath Water Users Association.
Question 3. I have repeatedly asked the Department for copies of
the actual contracts with Dr. Hardy to conduct the flow studies on the
Klamath River. Please provide me with those contracts now.
Answer. Following the March 21 oversight hearing regarding Klamath
issues, I understand that the Secretary's Indian Water Rights Office
provided your staff and the staff of Representative Greg Walden, in a
letter dated March 29, 2001, the documents within the Department
related to the retention of Dr. Hardy for Klamath flow study efforts. A
copy of that letter is attached. Those documents included complete sets
of the scopes of work for both Phase I and Phase II and the interagency
agreements between the Bureau of Indian Affairs and the Department of
Justice. As the interagency agreements show, the Department of Justice
actually contracted with Dr. Hardy. Therefore, the Department of the
Interior does not have the record contracts. I have been informed that
it is the understanding of the Indian Water Rights Office that the
contracts incorporate the scope of work already provided by the
Department.
Responses to Questions From Senator Bingaman
COAL ROYALTY REDUCTION
Question. In 1988, while you were an Assistant Secretary for Land
and Minerals Management, the Bureau of Land Management proposed a rule
that would have reduced the royalty rate on underground coal from 8 to
5 percent. What role did you play in proposing and promoting the
proposed rule?
Answer. The proposed rule was developed by the BLM in response to
concerns that had been raised to the Bureau and the Department about
the economic viability of underground coal mines during a period of low
market prices. When the issue was initially raised, I was briefed by
BLM staff and I asked for an economic analysis of the effect of
considering the royalty reduction. The draft report I received did not
provide, in my opinion, the appropriate level of analytical evaluation.
After a more thorough evaluation was prepared--consistent with the
normal rulemaking process--the rule was drafted by the Bureau and it
included the more complete economic analysis which supported the
proposed course of action. As Assistant Secretary, I was required to
approve the rule for publication. However, prior to that decision, I
had recused myself from involvement in this action since I was
considering employment opportunities outside the government.
Ultimately, the Deputy Assistant Secretary approved publication of the
proposed rule for public comment.
REDEFINITION OF VALID EXISTING RIGHTS
Question. In December 1988, after you had recused yourself from
matters affecting the coal industry, the Department proposed a rule
that would have redefined ``valid existing rights'' so as to permit
coal companies to mine sensitive areas otherwise protected by the
Surface Mining Act. What role did you play in proposing and promoting
this proposal?
Answer. After my recusal in September 1988, I did not participate
in the rulemaking process for proposed revisions to the definition of
``valid existing rights.'' Any decisions that were made after that date
and leading up to the rule's publication on December 27, 1988 were made
by higher-level Department officials. Prior to my recusal, as Assistant
Secretary for Land and Minerals Management, I had been involved in the
rulemaking process, but the proposed rule itself was actually signed on
May 6, 1988, four months before my recusal, by James E. Cason, the
Acting Assistant Secretary. The delay between Cason's approval and
publication in the Federal Register resulted from the OMB clearance
process.
REGULATORY PHILOSOPHY
Question. The coal valuation, coal royalty, and valid existing
rights proposals provide three concrete examples of the policies that
you promoted or at least supported while you were at the Interior
Department before.
What assurance can you give the Committee that, if confirmed, you
would not pursue initiatives like these in the future?
Answer. If confirmed as Deputy Secretary, I will function as chief
operating officer of the Department. Initiatives such as those you list
will be the primary responsibilities of the Bureau Directors and
Assistant Secretaries rather than of the Deputy Secretary. With regard
to the specific examples listed, the proposals were the result of
either responses to the need to define standards contained in
regulations or statutes, or in response to requests for the public to
address these issues. As to the Office of Surface Mining's rule
defining ``valid existing rights,'' it is my understanding that OSM
subsequently promulgated a final rule which was challenged in National
Mining Association v. Norton, No. 01-283 (D.D.C) and that case is
currently awaiting a decision in United States federal district court.
At this point, it is appropriate to await the Court's ruling and
guidance on this issue.
Question. In what ways, if any, has your thinking about the
environment and mining policy changed since 1988?
Answer. Since 1988, I believe the mining and environmental programs
have matured. For example, passage of the 1990 Clean Air Act affected
the market for various types of coal with a shift to western low sulfur
coals. What I think is needed in these areas of environment and mining
policy is regulatory certainty. With regulatory certainty, market
mechanisms will assure that stringent environmental goals are met in
the most cost effective manner. This encourages industry to be
innovative and develop new technologies. I recognize that these issues
have become more complicated. Now more than ever we must take advantage
of the opportunity to develop consensus and move forward through a
collaborative process that includes Congress, state and local
governments, tribes, and all other interested public and private
parties.
THE OFFICE OF SURFACE MINING
Question. (A) While you were Deputy Director of the Surface Mining
Office from 1981 to 1983, the Office experienced a major upheaval.
Several hundred employees were fired, resigned, retired, or were
transferred; citations against mine operators fell; and most of the
federal surface mining regulations were rewritten. Critics contend that
you and OSM director James Harris carried out a systematic campaign to
weaken the enforcement of the Surface Mining Act.
How do you explain what happened in the Office of Surface Mining
while you were its Deputy Director?
Answer. When I joined the Office of Surface Mining early in 1981,
the states, in accordance with the requirements of SMCRA, were moving
toward primacy. The result was that OSM's mission was evolving from one
of federal control, to oversight and assistance for the states. This
change, which was initiated by the Carter Administration, resulted in
the need for fewer OSM inspectors and other employees.
Congress approved this reduction as part of OSM's fiscal year 1981
and 1982 budgets. I wanted to ensure that the cuts were not made at the
expense of the environment. At the beginning of the reorganization, OSM
had approximately 875 full-time permanent employees on board. At the
conclusion of the reorganization in 1982, OSM had approximately 650
permanent full-time employees. We reduced the number of federal
inspectors, but we increased the funding for state regulatory grants to
cover the new SMCRA-authorized state inspections.
With regard to revising the regulations, we did undertake an
intensive review and rewrite of the 1979 regulations. We believed that
the design standards in the 1979 rules were far too rigid and
complicated to be understood and enforced. Additionally, in a 1981
report, the National Academy of Sciences emphatically stressed the need
for changes in the regulations and presented a convincing argument for
making the entire set of regulations more flexible in application to
specific mining operations. Thus, we revised the rules to establish
performance standards that were a great deal easier to implement and
measure than design standards.
I am reminded that while I was at the Department of the Interior,
both at OSM and as the Assistant Secretary who oversaw OSM,
appropriations for abandoned mine land reclamation increased by more
than 350 percent. We inherited an appropriation of $82 million in
fiscal year 1981, which increased to $115 million in fiscal year 1982,
$213 million in fiscal year 1983, $271 million in fiscal year 1984 and
$296 million in fiscal year 1985. That $296 million is the highest
level of funding the program has ever achieved. As this record shows,
we recognized early and throughout our Administration the importance of
the AML program in reclaiming lands and waters damaged by past coal
mining and the need to increase support for it.
Question. Did you ever fire, reassign, or pressure any OSM employee
to resign because you perceived the employees to be enforcing the
Surface Mining Act too strictly?
Answer. No. However, one of the primary purposes of OSM's
reorganization in 1982 was to link centralized decision-making in
Washington with consistent implementation of decisions throughout the
country. Thus, we created 13 Field Offices throughout the nation. As
these new offices were established, some employees chose not to
relocate and resigned their positions. Also, as with any reduction and
reorganization, some staff were adversely affected. We were, however,
compassionate in determining position reassignments, relocations and
separations.
Question. (B) Your critics have also alleged that, as Assistant
Secretary for Land and Minerals Management, you orchestrated the
removal of Office of Surface Mining employees who enforced the law
against coal companies too aggressively, and replaced them with people
more sympathetic with the industry.
Is there any truth to these allegations?
Answer. No.
Question. Did you, at any time after you began discussing a job
with one of the largest coal mining companies east of the Mississippi
River, have any role in the appointment of the Office of Surface Mining
official who would be responsible for strip-mining enforcement in that
region?
Answer. No.
OIL AND GAS LEASING OFF THE CALIFORNIA COAST
Question. In April 1988, the Fish and Wildlife Service made
comments critical of a proposal to lease over a million acres off the
coast of northern California for oil and gas development. The Fish and
Wildlife Service raised serious concerns about the high risk of a spill
if the lease sale took place, and about the serious harm to the
environment that would result from such a spill.
In response, you sent a note to Bill Horn, the Assistant Secretary
for Fish, Wildlife and Parks that was sharply critical of the Fish and
Wildlife Service's assessment. You told Mr. Horn that the Fish and
Wildlife Service's concerns ``could prove very damaging'' to the
proposed lease sale if they became known.
What does this incident tell the Committee about your willingness
to consider the environmental consequences of the Department of the
Interior's actions and the balance you would strike between competing
energy and environmental goals?
Answer. I want to assure the Committee that I am very willing to
consider the environmental consequences of energy development. With
regard to the specific incident that you referred to in your question,
I thought at the time and still believe it is important that the two
Departmental bureaus (MMS and FWS) work together before any public
statements are made so that we may benefit from their collective
expertise.
Question. Do you support the continuation of existing Outer
Continental Shelf leasing bans?
Answer. I agree with the Administration position that supports the
current moratoria on leasing on Federal offshore lands.
May 17, 2001.
Hon. Byron Dorgan,
U.S. Senate, Washington, DC.
Dear Senator Dorgan: I am writing in response to your request at my
confirmation hearing that I respond to the issues raised in the
Washington Post article that appeared on Wednesday, May 16. I hope this
letter will sufficiently address your questions.
Let me first comment on the reference in the Washington Post
article that I twice suppressed Departmental studies during my service
in the Department as Assistant Secretary for Land and Minerals
Management. I assume the two studies in question are the proposed coal
royalty reduction and an offshore oil and gas leasing and drilling
report for Northern California.
The draft coal royalty reduction analysis and proposed rule was
developed by the Bureau of Land Management (BLM) in response to
concerns that had been raised to the Bureau and the Department about
the economic viability of underground coal mines during a period of low
market prices. When the issue was initially raised, I was briefed by
BLM staff and I directed an economic analysis to be prepared on the
effect of considering the royalty reduction. The draft report I
received did not provide, in my opinion, the appropriate level of
analytical evaluation. After a more thorough evaluation was prepared--
consistent with the normal rulemaking process--the rule was drafted by
the Bureau and it included the more complete economic analysis which
supported the proposed course of action. As Assistant Secretary, I was
required to approve the rule for publication. However, prior to that
decision, I had recused myself from involvement in this action since I
was considering employment opportunities outside the government.
Ultimately, the Deputy Assistant Secretary approved publication of the
proposed rule for public comment.
With regard to the offshore drilling study, it is my recollection
that the April 1988, Fish and Wildlife Service (FWS) comments were
prepared in the FWS Regional office and were communicated to the
Regional office of the Minerals Management Service (MMS). The MMS
prepared a memorandum that I forwarded to my counterpart, the Assistant
Secretary for Fish and Wildlife and Parks. A meeting then occurred
between the professional scientists at MMS and FWS and myself and the
Assistant Secretary for Fish and Wildlife and Parks. The result of the
meeting was a unified Department position on the minimal risks
associated with offshore exploration and development.
In response to questions about my involvement, as the State of
Virginia's senior mine regulator, with the lawsuit that had been filed
on the Federal Surface Mining Control and Reclamation Act (SMCRA)--as I
stated during my confirmation hearing, I was a career public servant
for the Commonwealth of Virginia when the SMCRA was passed in 1977. I
was not a lawyer. My sole duty in that dispute was to assist the
Attorney General of Virginia in representing the State in its
constitutional challenge on several specific provisions of the Act. As
I indicated in my statement during the confirmation hearing, I consider
one of my greatest accomplishments to be ``leading the effort of
Virginia to secure state administration of the Federal Surface Mining
Control and Reclamation Act.''
With respect to questions related to my service in the Office of
Surface Mining Reclamation and Enforcement (OSM), when I joined the OSM
early in 1981, the states in accordance with the requirements of SMCRA,
were moving toward primacy. The result was that OSM's mission was
evolving from one of federal control, to one of oversight and
assistance for the states. This change, which was initiated by the
Carter Administration, resulted in the need for fewer OSM inspectors
and other employees.
Congress approved this reduction as part of OSM's fiscal year 1981
and 1982 budgets. I wanted to ensure that the cuts were not made at the
expense of environmental protection. At the beginning of the
reorganization, OSM had approximately 875 full-time permanent employees
on board. At the conclusion of the reorganization in 1982, OSM had
approximately 650 permanent full-time employees. We reduced the number
of federal inspectors, but we increased the funding for state
regulatory grants to cover the new SMCRA-authorized state inspections.
With regard to revising the regulations, we did undertake an
intensive review and rewrite of the 1979 regulations. We believed that
the design standards in the 1979 rules were far too rigid and
complicated to be understood and enforced. These rules took a
``cookbook'' approach to mining and reclamation practices that did not
recognize the unique topographical and climatic differences among the
coal-producing states--differences such as the vast plains of North
Dakota and the mountainous terrain of West Virginia.
Additionally, in a 1981 report, the National Academy of Sciences
emphatically stressed the need for changes in the regulations and
presented a convincing argument for making the entire set of
regulations more flexible in application to specific mining operations.
Thus, we revised the rules to establish performance standards that were
a great deal easier to implement and measure than the design standards.
I am reminded that while I was at the Department of the Interior,
both at OSM and as the Assistant Secretary who oversaw OSM,
appropriations for abandoned mine land (AML) reclamation increased by
more than 350 percent. We inherited an appropriation of $82 million in
fiscal year 1981, which increased to $115 million in fiscal year 1982,
$213 million in fiscal year 1983, $271 million in fiscal year 1984 and
$296 million in fiscal year 1985. As this record shows, we recognized
early and throughout our Administration the importance of the AML
program in reclaiming lands and waters damaged by past coal mining and
the need to increase support for it.
As a matter of my management philosophy, I believe that regulators
should have the flexibility to look at innovative solutions to
challenging problems. There are many instances where flexible resource
management tools can result in greater conservation benefits. For
example, by leveraging limited federal resources with the efforts that
private landowners contribute, more wildlife habitat may be protected,
without taking land off the local tax rolls or adding to the federal
estate.
In closing, my thirty-year career in public and private service was
incompletely summarized in this Washington Post story. It failed to
mention my bipartisan work with the late Congressman Mo Udall to end
the abuse of the ``two-acre exemption'' or my close work with Senator
Dale Bumpers to eliminate fraud in onshore oil and gas leasing. It is
that commitment to bipartisanship that I pledge to continue if
confirmed by the United States Senate.
Sincerely,
J. Steven Griles.
______
May 21, 2001.
Hon. Frank Murkowski,
Chairman, Committee on Energy and Natural Resources, U.S. Senate,
Washington, DC.
Dear Mr. Chairman: Enclosed are my responses to questions for the
record of the Senate Energy and Natural Resources Committee's May 16,
2001 hearing to consider my nomination to be a member of the Federal
Energy Regulatory Commission.
If you have further questions or need additional information,
please let me know.
Sincerely,
Nora Mead Brownell.
[Enclosure]
Responses to Questions From Senator Murkowski
Question 1. Everyone seems to agree that the licensing process for
hydropower projects is broken--it takes too long, it's too expensive,
and it's fraught with uncertainty. What are your views about ways to
improve the process for relicensing the nation's non-federal hydro
projects?
Answer. From everything that I have read to date, it seems clear
that the hydroelectric licensing process is in need of significant
improvement which will bring operational discipline to the process. If
confirmed, I look forward to working with this Committee, my fellow
Commissioners, and other interested groups to advance that goal. I will
continue to familiarize myself with the FERC licensing process; the
analysis of streamlining options recently completed by FERC staff;
legislative proposals by Members of this Committee, including Senators
Craig and Bingaman; as well as the viewpoints of other hydro licensing
stakeholders.
Coordination with senior policy makers at agencies involved in the
process is crucial. Such coordination should strive to establish
priorities and deadlines, eliminate redundancies and enhance data
exchange in order to tighten up the process. Although it may be
necessary to seek legislation, administrative reforms should be a
starting point and may go far in addressing a substantial part of the
delay. If confirmed, I look forward to conducting my own analysis and
working with Congress to design the most appropriate response to ensure
expeditious treatment and a realistic balance among all interested
parties. Our goal is a more timely and less costly licensing process
that addresses our continuing power needs while also protecting and
fostering our nation's environmental resources.
Question 2. As you know, over 15,000 MW of hydroelectric capacity
in California and the Pacific Northwest face relicensing over the next
15 years. This is a significant amount of power that can make a big
difference in whether the western states will have sufficient
electricity to meet demands. What can we do to minimize the loss of any
of this capacity during the relicensing process?
Answer. I am very much aware that hydropower is a very critical
piece of the Western supply picture. Within the territory served by the
California Independent System Operator, hydropower accounts for
approximately 25% of the resource capacity. In the Northwest, that
figure grows to approximately 66% of the available resource capacity. I
understand that to date there has been no net loss of hydroelectric
capacity as a result of the recent rounds of relicensing. I will
certainly make every effort to continue in that fashion. In addition, I
believe that we should encourage license applicants to consider
applying to increase their projects' generating capacity within
appropriate environmental constraints in order to take full advantage
of the available flows.
Question 3. In a report submitted to Congress last week, FERC staff
concluded that: ``Many specific factors contribute to delays [in the
hydro licensing process], but the underlying source of most delays is a
statutory scheme that disperses decision-making among federal and state
agencies acting independently of the Commission's proceedings.'' Do you
agree with this statement and that legislative improvements are needed
to fix the hydro relicensing process?
Answer. Although I have not had the opportunity to examine the FERC
staff report in any detail, it does suggest that the current
legislative framework of dispersed decision-making is a significant
factor in licensing delay. The report also strongly suggests that the
Congressional mandate that the Commission give equal consideration to
power and to the environment is clearly affected by the mandatory
conditioning authority of various resource agencies, which do not have
the same equal-consideration mandate. My preliminary view is that
legislation may clarify priorities and accountability. However, before
suggesting that legislation is essential or the form such legislation
should take, I want to develop a clear understanding of the issues and
the allocation of authority among agencies. A more coordinated and
cooperative effort by all concerned may address a significant portion
of the delay problem. If confirmed, I look forward to working with all
involved elements to reach the appropriate resolution to this issue.
Responses to Questions From Senator Gordon Smith
Question 1. In a report recently submitted to Congress, FERC staff
stated, ``Many specific factors contribute to delays [in the licensing
process], but the underlying source of most delays is a statutory
scheme that disperses decision-making among federal and state agencies
acting independently of the Commission's proceedings.'' Do you agree
with this statement?
Answer. While I have not yet had the opportunity to review the
staff report in detail, I do know that the current dispersed decision
process is one of the critical factors mentioned. Even without specific
knowledge about the delays related to the dispersal of decision-making,
common sense suggests that a dispersed scheme will be slower and less
efficient than a unified one. Dispersal of decision making can cause
policy confusion, redundancy, overlap and inefficiency. We need to
determine the most expeditious process which includes, but is not
limited to: a clear understanding of policy priorities for all involved
in decision making, time deadlines, and data sharing so everyone who is
working on the same case shares the same base of knowledge.
Question 2. The recommendations laid out in the FERC report
underscore the need to legislate improvements to the hydro licensing
process. Do you agree that some sort of legislation is needed if we are
to get to the root of the problem and fix the licensing process?
Answer. Before reaching any position on this, I want to have an
opportunity to hear the views of the state and federal resource
agencies who under existing law share authority over the licensing
process. It may be possible that better coordination and cooperation
among the involved agencies can address a significant part of the
delay, as I have outlined above. However, I certainly will work to
address legislative changes if that is called for. If confirmed, I look
forward to working with Congress and others to develop the most
appropriate response to this problem.
Question 3. Several regional transmission organizations are
developing in the Western United States. Do you support the manner in
which these entities, including RTO West, are developing?
Answer. Order 2000 provided for a voluntary process for regional
transmission organizations (RTO) formation with input from interested
stakeholders. While voluntary, the eventual outcome must meet the
standards set forth in Order 2000. I am aware that both RTO West and
Desert Star (a proposed RTO organization in the Southwestern United
States) have engaged in extensive stakeholder discussions regarding the
formation of such organizations. As long as that process shows prompt
and meaningful progress in the formation of RTOs that will successfully
meet the needs of their regions and meet the standards set forth in
Order 2000, it should be continued. To me, meaningful progress would
include transparency and open and equal access to RTO processes as well
as to the transmission infrastructure. There should be a role for the
RTO to engage in long term planning. In addition, I would expect
parties to be disciplined in their start-up costs. I would urge parties
to examine successful ISO ventures such as PJM Interconnection, L.L.C.,
New York ISO and ISO New England. Adoption of best practices already in
place can only shorten the formation time frames as well as hold start-
up costs to reasonable levels.
Responses to Questions From Senator Cantwell
Question 1. Consider the situation in Washington State. As you are
probably aware, we've already experienced retail rate increases in the
high double-digits, suffered plant closures and job loss as a result of
skyrocketing electricity costs, and are facing the prospect of a BPA
rate increase this fall that threatens to further undermine the
economic health of the entire region. Based on this anecdotal
information--and the fact prices at the Mid-Columbia trading hub has
increased 11-fold over the prices paid last year at this time--do you
believe prices in the Pacific Northwest are just and reasonable?
Answer. Clearly, there are very grave problems in the Northwest as
well as in California. If confirmed, I will approach these problems
with a great sense of urgency. I believe prices in the Pacific
Northwest may not be just and reasonable under current market rules and
under certain conditions. Therefore, I agree with the Commission's
recent decision to institute an investigation into the rates, terms and
conditions of certain wholesale sales within the Western Systems
Coordinating Council.
Question 2. As you are no doubt aware, many have questioned the
effectiveness of FERC's price mitigation plan for California--that it
is riddled with loopholes and far too narrow to provide any significant
relief. I absolutely agree with that analysis. But even more pressing
from my perspective is the fact FERC has done nothing to help the
Northwest--even though our prices have actually been higher than
California's by some measures. Specifically, while the average daily
peak price at the Mid-Columbia hub increased by $140/MWh between June
1999 and June 2000, the associated increase in California was $113/MWh
during peak. Daily peak average prices in our region have ranged from
$155/MWh to $460/MWh from Feb. 2001 through April 2001, and dropped
below $200/MWh on only 6 days throughout the course of those three
months. Given this information, do you believe FERC has fulfilled its
statutory mandate to uphold just and reasonable rates--especially in
the Northwest? If these circumstances don't trigger required action by
FERC, what would?
Answer. The section 206 investigation recently instituted by FERC
is certainly an appropriate step in ensuring that rates in the Pacific
Northwest and other parts of the West are just and reasonable. As I
stated at the hearing last week, I do not have access to all of the
information available to the Commission as it deliberated on that
matter. Accordingly, I would hesitate to judge whether I would have
acted differently at that time. With regard to possible future action,
I cannot prejudge at this time what action the Commission may take as a
result of the investigation, since I would certainly wish to
participate in that decision, if confirmed. However, I can certainly
state that I am deeply concerned about the circumstances in the West.
There are very substantial problems which require swift attention.
Question 3. It is true FERC in its April 26 order initiated a
Section 206 investigation throughout the West and proposed that it may
move forward with a California-type mitigation plan that would include
the Northwest. I am concerned, however, because our problem with
wholesale prices is in no way limited to the types of transactions
covered by the investigation-real-time trades of 24 hours or less,
during periods when reserves dip below 7 percent. As you are likely
aware, most of our sales in the Northwest are done under bilateral
contracts. Further, because of our reliance on hydro resources, it's
not clear how or when that 7 percent reserve level would apply within
Northwest control areas. Do you believe this investigation is broad
enough to reflect what is actually happening in NW markets? If
confirmed, would you support broadening it? Could you also comment on
whether and how it would be possible to adapt FERC's price mitigation
plan for California to Northwest markets--especially given the fact we
do not have a centralized, auction-like market?
Answer. First, I cannot prejudge what the Commission will do as the
result of its Section 206 investigation. The Commission will be
receiving comments and conducting its own analysis. Until that
investigation has been completed, there is no way to know what the
Commission will do. However, you do raise important issues which will
have to be carefully considered. It is possible that the scope of the
investigation may have to be reviewed but without additional
information, I cannot arrive at a position on that issue at this time.
In addition, the scope of any mitigation plan the Commission may
develop and which transactions it should include will have to be
carefully considered. I am aware that the Northwest relies on bilateral
contracts. Accordingly, applying a California-type mitigation plan to
the Northwest will present some challenges. I can state that if I find
that the scope of the investigation is insufficient, or the existing
steps are unresponsive to the unique market conditions in the
Northwest, I will act accordingly.
Question 4. In the Pacific Northwest, BPA and investor-owned
utilities have worked with regional stakeholders to develop a proposal
for a regional transmission organization called RTO West. Movement to
an RTO would be a significant change for my constituents. Before this
proposal moves forward too quickly, we must be certain there has been
considerable input and participation from all regional interests, and
that the RTO's costs and benefits are sufficient to merit such a
change. Do you agree that when striving to meet national policy
objectives--as FERC has outlined in Order 2000--that individual regions
should be encouraged to find solutions that meet their unique needs and
fit their characteristics, and that regional processes and solutions
should be respected and acknowledged?
Answer. My experiences in Pennsylvania with the PJM
Interconnection, L.L.C. in its role as an independent system operator
clearly indicate that voluntary processes among stakeholders are
critical to the successful transformation of the market. I am also
aware that Order 2000 acknowledged that RTOs may take different forms
that reflect the unique needs of the region. As long as seams issues
are successfully managed, I do not believe that we must impose a ``one
size fits all'' approach to the formation of RTOs. Consensus solutions
achieved through regional processes involving input from affected
stakeholders should be given all due consideration, subject to
Commission review to ensure the overall conformity of any proposal with
the requirements of Order 2000. A careful cost analysis, disciplined
budget planning and an independent board are important ingredients in
RTO formation. Regardless of the precise form adopted for a particular
RTO, open and transparent markets must serve the wholesale market with
free flowing information on a real time basis. With regard to cost, the
current charge for PJM, L.L.C. is approximately .37 cents per MWh. This
cost is relatively small considering the engineering and economic
market functions that ISO provides.
Question 5. Again, on the topic of RTO West, there is significant
concern within the region about FERC's push for a single, West Coast-
wide RTO. While the NW is still working hard to find answers that work
within the region, this emphasis on a West-wide RTO seems premature at
best. What is your position on the establishment of a West-wide RTO?
Answer. At this point, I do not feel that I have sufficient
information to have reached a position on that issue. However, I do
know that historical trading patterns in the West indicate that there
is a regional relationship between and among the transmission systems
and the generating resources located in that area. A West-wide RTO may
well be a desirable end-state for the region since the West is a
natural marketplace. However, such a result will not be accomplished
immediately. If there is a move toward such an entity, existing
organizations that support the current operating, planning and
reliability needs of the Western Interconnection as well as proposed
organizations just now moving forward will have to be considered. I
would also note that recognition of regional characteristics is
important to provide for smooth transaction flows.
Question 6. The RTO West proposal is for the creation of a not-for-
profit, independent system operator. Do you support the creation of
this type of structure (a non-profit organization)?
Answer. I have not reviewed the RTO West proposal in detail at this
point. However, I believe that as proposed, RTO West will be a non-
profit system operator while one of its anticipated transmission owner
members will be a for-profit transmission company. This company will be
formed through the purchase of the transmission facilities of several
of the public utility companies currently operating in the Northwest.
The Commission approved this hybrid structure after a finding that both
organizations satisfied the independence standards of Order 2000. I am
aware that Order 2000 provided some flexibility for entities to choose
an appropriate organizational structure, whether non-profit, for-
profit, or a combination of the two, that best serves the parties'
attempt to fashion an RTO that provides the greatest benefit to the
region. But whatever the structure, the entity must bring transparency,
equal and non-discriminatory access, certainty, and efficiency. RTOs
must be value added.
Question 7. Can you describe your views on the RTO's role in
transmission planning and expansion authority? Do you support RTO's
that have strong planning and expansion authorities?
Answer. Without referring to any specific RTO filing now pending
before the Commission, I do believe that an RTO needs to have a
substantial role in planning on a regional basis. A truly independent
RTO can provide for a neutral planning process that ensures that
necessary expansion and transmission planning will occur in locations
and at a pace that will promote reliability for the grid as well as
financial stability and the participation of all stakeholders. Long
range planning on a regional basis is also necessary to attract capital
to transmission and regional business development. In addition,
planning is essential to provide for growth of regional energy markets.
From an engineering standpoint alone, an RTO would be a logical entity
to provide those essential planning and coordination roles. From a
market perspective, an RTO is uniquely placed to oversee
interconnection timing and data flows. This is also one very real
reason why an RTO's independence is so crucial. Accountability is an
issue that must be addressed to ensure that any planning process takes
into account basic principles of nondiscriminatory open access as well
as local and environmental concerns. Obviously, I believe that a well
functioning RTO must have a role in transmission planning and
expansion.
Question 8. Are you aware that Congress has specifically defined
the Commission's authority to review Bonneville Power Administration's
power and transmission rates under the Northwest Power Act, and that
the Commission's authority to regulate Bonneville's transmission rates
under the Federal Power Act is limited?
Answer. Yes. Clearly the Commission must act within its
jurisdiction as defined by Congress. I am also aware that Congress
requires FERC to ensure that the rates, terms and conditions of all
jurisdictional services under the Federal Power Act are just and
reasonable. In its April 26 Order, the Commission concluded that it
could not fulfill this FPA requirement without conditioning non-public
utilities' voluntary participation in the California ISO's markets or
use of the ISO's open access transmission tariff on their agreement to
abide by price mitigation. If I am confirmed, I would need to
participate in the decision on rehearing of this conclusion, so I
cannot state at this time whether I agree with the Commission's
decision on this point.
Question 9. Utility executives and risk managers have serious
concerns about potential widespread, uninsurable liability stemming
from system outages. This concern has increased due to the intensified
use of the electric transmission grid resulting from the 1992 Energy
Policy Act, the aggregation of transmission systems under RTOs, and the
possibility of mandatory national reliability standards. Would you
support some kind of wholesale tariff liability limitation for
transmission system owners similar to what exists in many states for
retail transactions?
Answer. Tort liability is generally governed by applicable state
law. To date, the Commission has declined to impose a federal standard
of liability for transmission service that would preempt applicable
state law. See New York State Electric & Gas Corp. v. FERC, Docket No.
00-1228 (D.C. Cir. May 15, 2001) (affirming Commission policy).
However, I have an open mind on whether the formation of an RTO
warrants reevaluation of the Commission's decision not to preempt state
law.
Question 10. The Commission recently attempted to extend its
jurisdiction to include non-public utility entities in the California
wholesale power market dockets. Even in the face of an emergency,
wouldn't you agree that Congress, not FERC, defines the scope of FERC's
jurisdiction? There are those states, such as Texas, that have been
very successful in avoiding FERC jurisdiction. Aren't you troubled by
Federal expansions of authority, at the expense of local control, over
energy matters?
Answer. As I stated above, the Commission has no authority to
exceed its jurisdiction as defined by Congress. However, FERC also has
a statutory duty to ensure that the rates, terms and conditions of all
jurisdictional services under the Federal Power Act are just and
reasonable. In its April 26 Order, the Commission concluded that it
could not fulfill this FPA requirement without conditioning non-public
utilities' voluntary participation in the California ISO's markets or
use of the ISO's open access transmission tariff on their agreement to
abide by price mitigation. If I am confirmed, I would need to
participate in the decision on rehearing of this conclusion, so I
cannot state at this time whether I agree with the Commission's
decision on this point.
Question 11. I understand that over 15,000 MW of existing, non-
federal hydroelectric capacity in the Pacific Northwest and California
must go through the FERC relicensing process in the next 15 years.
These are energy resources that are very important to my state and
region. All stakeholders seem to agree that the relicensing process is
lengthy, complex, disjointed, expensive for all involved, and in need
of improvement. Delays often result in resources being spent on process
rather than on-the-ground environmental improvements. Clearly, this
process requires refinement in terms of cutting time and expense, but
at the same time, we must be extremely careful to give environmental
issues due consideration. I believe this process must be refocused on
outcomes--and outcomes based on sound science. Do you believe
legislation is needed to address these problems? How would you approach
reform and the delicate balancing act that FERC must perform as part of
its statutory mandate?
Answer. My preliminary view is that legislation may be necessary to
address this issue. At this point, the Commission is mandated by the
Electric Consumers Protection Act of 1986 to give equal consideration
to power and to the environment. However, the federal and state
agencies holding mandatory conditioning authority over licenses have no
such equal-consideration mandate. Whether it is accomplished
legislatively or through administrative cooperation, a more coordinated
approach is definitely necessary.
Regulatory agencies can find themselves having to balance the
understandable desire for ever more scientific testing with the need to
make timely decisions on matters affecting other aspects of the public
interest. What is important is to continue gathering information about
project impacts after a license has issued, and to make the appropriate
adjustments based on that information. I believe this is what the
Commission's licenses now provide for.
______
Department of Energy,
Washington, DC, May 21, 2001.
Hon. Frank Murkowski,
Chairman, Energy and Natural Resources Committee, Dirksen Senate Office
Building, Washington, DC.
Dear Mr. Chairman: I want to thank you and Senator Bingaman for the
opportunity to appear before the Committee on Energy and Natural
Resources as General Counsel nominee at the U.S. Department of Energy.
Enclosed for the record are the answers to the post hearing
questions submitted to me in writing by members of the committee.
Please let me know if I can be of any further assistance.
Sincerely,
Lee Liberman Otis.
[Enclosures]
Responses to Questions From Senator Murkowski
Question 1. If confirmed as the Department's General Counsel, will
you make it a priority to comply the terms and spirit of the Economy
Act to ensure that federal sites are only used for services, such as
disposal of low-level radioactive wastes, that cannot be performed as
conveniently and cost-effectively as qualified commercial enterprises
in the private sector?
Answer. If confirmed, I will direct attention to assuring that all
the terms of the Economy Act are complied with when that authority is
used by the Department. In addition, I would agree that the business
principle of using convenient and cost-effective commercial vendors is
a sound one to apply in all of the Department's activities.
Question 2. If confirmed, will you rigorously enforce the
Competition in Contracting Act to ensure that the Department uses full
and open competition in the award of its contracts?
Answer. If confirmed, I will emphasize the need for the Department
to comply with the Competition in Contracting Act, including its
limitations on the circumstances in which an agency may depart from
full and open competition in awarding contracts.
Responses to Questions From Senator Cantwell
Question 1. As I've previously expressed to this committee, the
Hanford Nuclear Reservation and the clean-up of its 54 million gallons
of dangerous high-level radioactive waste is of tremendous importance
to me and the State of Washington. As you know, the states with DOE
nuclear sites have issued regulatory orders setting forth DOE's legal
obligations. In Washington, the Tri-Party Agreement between the State,
EPA and DOE is a legally enforceable pact that obligates DOE to clean-
up Hanford on an agreed-upon schedule. If confirmed, do you commit to
fulfilling DOE's legal obligations under the Tri-Party Agreement? What
would you do differently than prior Administrations to ensure that DOE
lives up to these obligations?
Answer. If confirmed, I am committed to doing everything in my
power to see to it that DOE complies with all its regulatory
obligations, including those set out in the Tri-Party Agreement. I
completely understand why the cleanup of Hanford is of tremendous
importance to you and the State of Washington. I believe it is also of
tremendous importance to the Department of Energy and to Secretary
Abraham. I understand that there is considerable frustration about
missed deadlines both at Hanford and at other cleanup sites. Indeed the
Secretary has indicated that he would like to see cleanup expedited at
all DOE's legacy sites and has directed a top-to-bottom review to see
how this can be done.
If confirmed, the Assistant Secretary-designate for the
Environmental Management program will, in accordance with the
Secretary's directive, develop a current assessment of the status of
cleanup at Hanford and options for completing it as promptly as
possible. Doing so will undoubtedly require more cooperation and trust
than the Department and the State have been able to achieve to date.
The principal reason I believe this may be possible to achieve is that
the individuals the President has nominated as Assistant Secretary for
the Environmental Management program and Under Secretary have a record
of having succeeded in a similar endeavor in the past at Rocky Flats.
If confirmed, I view my role as lending them whatever assistance I can.
Question 2. Do you understand that the citizens of Washington State
are expecting DOE to meet its binding commitment to construct a waste
treatment facility that will glassify the tank waste by 2007? Can you
reconcile DOE's promise to meet this deadline with the failure of this
Administration to request sufficient funding to do so?
Answer. I do understand that the Tri-Party Agreement calls for
construction of a waste treatment plant that will begin operations by
2007. I understand there is disagreement over whether or not that
target can be met if the project is funded at the level proposed in the
President's budget. I believe that the Secretary told the Committee a
few days ago, at its hearing on the President's budget on May 8, that
he is not prepared to say that the budget will result in any compliance
obligations, including this one, not being met. The Secretary also
acknowledged that the Congress obviously plays an important role in the
budget process, which is ongoing.
Question 3. Did you know that, over the past 12 years, DOE has
repeatedly requested extensions of the schedule for treating the tank
waste at Hanford? Do you understand that Washington citizens are
increasingly skeptical of DOE's commitment to meet its legal
obligations to treat this waste? What would you do to build confidence
in our citizens that DOE will address this growing threat to human
health and the environment?
Answer. I completely agree with you about the importance of getting
the Hanford tank waste addressed so as to avoid very significant
potential future health and safety problems. I have not personally
reviewed what has happened in the past, but I am aware that there is
considerable frustration about missed deadlines, accompanied by lack of
trust on the part of the regulators and the community. If confirmed,
one of the first things I will do is to work with the Assistant
Secretary for the Environmental Management program and the Under
Secretary to get their assessment of where this project stands and how
they think it most prudent and realistic to proceed. I would hope we
would then be able to discuss that assessment with the regulators, the
community and you in a way that would earn everyone's confidence. The
Assistant Secretary-designate and the Under Secretary-designate have a
record of having done this at Rocky Flats, where I believe there was a
similar history that had to be overcome. It seems to me that this
background and record make them ideally suited to the key task you
correctly identify of restoring trust, so as to allow everyone to move
forward constructively. If confirmed, I would want to lend them my
assistance in this important endeavor.
Question 4. The Attorney General of the State of Washington has
indicated that the lack of progress in the design and construction of a
tank waste treatment facility--combined with the failure of DOE to seek
sufficient funding to meet its legal obligations--may leave the state
no choice but to seek a judicial remedy. What, if any, alternatives to
litigation can you suggest for the state to ensure that DOE lives up to
its commitments?
Answer. My hope is that if we promptly engage in the process I
describe in my previous answers, the result will be both a more
effective working relationship between DOE and its regulators and an
agreed-upon, realistic assessment of how this project will proceed.
That in turn should facilitate resolving issues without the need for
litigation and its attendant costs.
______
Department of Energy,
Washington, DC, May 21, 2001.
Hon. Frank Murkowski,
Chairman, Energy and Natural Resources Committee, Dirksen Senate Office
Building, Washington, DC.
Dear Mr. Chairman: I want to thank you and Senator Bingaman for the
opportunity to appear before the Committee on Energy and Natural
Resources as the Assistant Secretary for Environmental Management
nominee at the U.S. Department of Energy.
Enclosed for the record are the answers to the post hearing
questions submitted to me in writing by members of the committee.
Please let me know if I can be of any further assistance.
Sincerely,
Jessie Hill Roberson.
[Enclosures]
Responses to Questions From Senator Murkowski
Question 1. I understand that the production site managers at the
Y-12 Plant at Oak Ridge and the Savannah River Site are concerned about
the negative impact on their operations due to cuts in the
Environmental Management budget. Specifically, the concern is that the
on-site waste, which falls under the EM budget, may not be removed
under a constrained budget and will cause further disruption to the
operations of the defense facilities.
If confirmed, what would you do to ensure that processing and
removal of waste from the production sites are funded so that
operations of these facilities are not adversely impacted?
Answer. Y-12 at Oak Ridge and Savannah River Site present unique
challenges to DOE since these facilities contain activities managed by
EM and by NNSA. It is critical that EM and NNSA coordinate closely and
integrate their activities to ensure effective management of these
facilities and projects. I am committed to managing EM wastes at these
facilities in a manner that does not negatively impact NNSA or other
activities but also contributes to the success of the cleanup program.
Question. Please explain how you plan to apply the closure site
model pioneered by you at Rocky Flats to large sites such as Hanford,
specifically the tank cleanup effort managed by the newly-created
Office of River Protection.
Answer. I believe that the strategies that were successful at RF
are instructive for other sites, but should not be regarded as a cookie
cutter or a one size fits all approach. There are several initiatives
that were effective at Rocky Flats that may be helpful in other places,
but each site is different and each site will require a unique mix of
approaches.
At Rocky Flats, we successfully worked with regulators and the
community to develop risk based priorities. The regulators and the
community agreed that the nuclear stabilization activities needed to be
conducted first, even if it meant postponing lower risk environmental
work. We realized that we could not let some disagreement over about
10% of the work holdup progress on the 90% of the work on which we
agreed.
At Rocky Flats we determined that minor, administrative milestones
stretching many years ahead were not helpful. Instead, we instituted a
system of fewer, major milestones. We kept long term goals present as
common agency and community objectives, but we stuck to short range
targets as our milestones.
In exchange for this greater regulatory flexibility, DOE gave the
regulators and the community a far greater role in our process for
establishing a baseline of activities and prioritizing that baseline.
Stakeholder and regulator involvement in our work and budget process is
built into the regulatory agreement. The agreement acknowledges that
certain factors may be beyond our control, but it makes the regulators
and the community our partners on those factors that are within our
control.
In general, we learned that we needed to earn the trust of the
community and of the regulators, and that the onus is on DOE to behave
in a manner that elicits trust. We found at RF that baby steps on trust
lead to baby steps on flexibility, which leads to performance. This in
turn earns more trust, and allows the cycle to continue.
Question 2. As the Department proceeds with its ``top-to-bottom''
review of the Environmental Management program, a key issue is
obviously getting more cleanup done for less money. One sure-fired way
to reduce costs is to encourage competition with the private sector.
In this context, would you agree that the Department should
consider using licensed commercial sites which offer a competitive
price for the disposal of low-level waste?
Answer. I do agree that there is enormous potential in utilizing
licensed commercial facilities for low-level waste disposal, when it is
cost effective for the taxpayers. At Rocky Flats, we made extensive use
of such facilities when I was manager.
Question 3. It appears that the Department is planning on building
new on-site disposal cells at sites like Oak Ridge, Paducah, Portsmouth
for disposal of its low-level radioactive waste.
Before DOE commits substantial resources to construct these new
disposal sites, shouldn't the Department fully evaluate using existing
commercial disposal sites?
Answer. I support using whatever method of disposal is most cost
effective for the Department and for the taxpayer. It is my
understanding that this is already DOE policy. As ASEM, I will continue
to seek the best available options at all of our sites for waste
disposal, and I will seek better opportunities for efficiencies through
greater complex wide integration.
Responses to Questions From Senator Cantwell
Question 1. Your experience at Rocky Flats is instructive for what
needs to happen at Hanford, and many residents in Washington State and
I are looking forward to working with you. As you know, at Hanford--
like Rocky Flats--we are trying to accelerate cleanup with incentive-
based contracts that move us toward a completion point. Using Rocky
Flats' model, investing more up front in Hanford's tank waste treatment
program should significantly reduce long-term costs and accelerate the
schedule considerably. I think this is everyone's goal. What are your
plans to apply the closure site model that you helped make a success at
Rocky Flats to Hanford's tank cleanup program, managed by the Office of
River Protection?
Answer. I believe that the strategies that were successful at RF
are instructive for other sites, but should not be regarded as a cookie
cutter or a one size fits all approach. There are several initiatives
that were effective at Rocky Flats that may be helpful in other places,
but each site is different and each site will require a unique mix of
approaches.
At Rocky Flats, we successfully worked with regulators and the
community to develop risk-based priorities. The regulators and the
community agreed that the nuclear stabilization activities needed to be
conducted first, even if it meant postponing lower risk environmental
work. We realized that we could not let some disagreement over about
10% of the work hold up progress on the 90% of the work on which we
agreed.
At Rocky Flats we determined that minor, administrative milestones
stretching many years ahead were not helpful. Instead, we instituted a
system of fewer, major milestones. We kept long term goals present as
common agency and community objectives, but we stuck to short range
targets as our milestones.
In exchange for this greater regulatory flexibility, DOE gave the
regulators and the community a far greater role in our process for
establishing a baseline of activities and prioritizing that baseline.
Stakeholder and regulator involvement in our work and budget process is
built into the regulatory agreement. The agreement acknowledges that
certain factors may be beyond our control, but it makes the regulators
and the community our partners on those factors that are within our
control.
In general, we learned that we needed to earn the trust of the
community and of the regulators, and that the onus is on DOE to behave
in a manner that elicits trust. We found at RF that baby steps on trust
lead to baby steps on flexibility, which leads to performance. This in
turn earns more trust, and allows the cycle to continue.
Question 2. As we've discussed, the funding cuts are of great
concern to us in Washington State. Again, given your experience at
Rocky Flats, do you believe it would make more sense to keep funding
for Hanford's Waste Treatment Project level at $690 million over the
next few years, rather than counting on a funding spike next year to
$880 million, to comply with progress deadlines? Do you think a
measured, level funding base would be more consistent with the goal of
the ``top-to-bottom'' review Secretary Abraham alluded to last week--
making clean-up more efficient?
Answer. It is my intent to use the EM program review as an
opportunity to find efficiencies and opportunities to get our work done
more quickly and more effectively. I will look at management
strategies, opportunities for complex wide integration, unnecessary DOE
requirements and other aspects of our program. The budget process is
still ongoing. The President has proposed a budget. Congress is now
considering and may choose to modify this budget.
At any funding level, it is critical for the Department to make
progress on the Hanford Waste Treatment project in FY 2002. I plan to
look closely at this project if I am confirmed. I will review closely
the necessary funding profile for this project, as well as any
management strategies that may be needed to expedite this project. I
also intend to work closely with members of Congress, the regulators
and the community as we proceed.
Question 3. Clean-up of the corridor along the Columbia River is
another important priority at Hanford, in addition to construction of
the waste treatment plant. This remediation effort is proceeding
extremely well, and with a 2012 completion date, it fits the closure
site concept pioneered by you at Rocky Flats. I would appreciate it if
you would explain your plans to keep the momentum going on the Hanford
River Corridor cleanup project--especially when the program has not
been funded at levels supported by the local site manager.
Answer. I recognize the importance of cleaning up the corridor
along the Columbia River, and recognize its importance to the
community. I also recognize that this project has the potential to
reduce the ``mortgage'' or fixed-costs associated with Hanford, and
therefore does follow the Rocky Flats model. At any funding level, it
is critical for the Department to make progress on this project in FY
2002. I will review closely the necessary funding profile for this
project, as well as any management strategies that may be needed to
expedite this project. I also intend to work closely with Members of
Congress, the regulators and the community as we proceed.
______
Public Utility Commission of Texas,
Austin, TX, May 21, 2001.
Hon. Frank Murkowski,
Chairman, Committee on Energy and Natural Resources, U.S. Senate,
Washington, DC.
Dear Mr. Chairman: Enclosed are my responses to questions for the
record of the Senate Energy and Natural Resources Committee's May 16,
2001 hearing to consider my nomination to be a member of the Federal
Energy Regulatory Commission.
If you have further questions or need additional information,
please let me know.
Best regards,
Pat Wood, III,
Chairman.
[Enclosure]
Responses to Questions From Senator Murkowski
Question 1. Everyone seems to agree that the licensing process for
hydropower projects is broken--it takes too long, it's too expensive,
and it's fraught with uncertainty. What are your views about ways to
improve the process for relicensing the nation's non-federal hydro
projects?
Answer. If confirmed, I would plan, within the first 30 days of
taking office, to ask my fellow commissioners to convene an open
hearing to receive a comprehensive status report from the FERC staff
and staff from the affected federal and state resource agencies on each
pending hydro re-licensing project, and other hydroelectric projects
meriting an update. My service on the Texas Commission has shown that
direct Commissioner interest and oversight tends to accelerate
procedural handling of licensing applications. In light of the
President's instruction to federal agencies last week to expedite
applications such as these, I hope the FERC will receive significant
support from sister agencies in this endeavor. While I don't expect
this will solve all issues relating to licensing project timetables, it
will more clearly delineate the issues. Should there be issues
requiring legislative remedy, I will recommend the FERC bring them to
the Congressional oversight committees expeditiously.
Question 2. As you know, over 15,000 MW of hydroelectric capacity
in California and the Pacific Northwest face relicensing over the next
15 years. This is a significant amount of power that can make a big
difference in whether the western states will have sufficient
electricity to meet demands. What can we do to minimize the loss of any
of this capacity during the relicensing process?
Answer. Hydropower is critical to keeping the lights on in the
West. I understand that to date there has been no net loss of
hydroelectric capacity as a result of the recent rounds of relicensing.
I will seek to maintain this record and encourage license applicants to
increase their projects' generating capacity within appropriate
environmental constraints to take full advantage of the available
flows.
Question 3. In a report submitted to Congress last week, FERC staff
concluded that: ``Many specific factors contribute to delays [in the
hydro licensing process], but the underlying source of most delays is a
statutory scheme that disperses decision-making among federal and state
agencies acting independently of the Commission's proceedings.'' Do you
agree with this statement and that legislative improvements are needed
to fix the hydro relicensing process?
Answer. Although I have not examined the FERC staff report in
detail, it strongly suggests that the current framework of dispersed
decision-making is a significant contributor to licensing delay. The
report also strongly suggests that the statutory mandate that the FERC
give equal consideration to power and to the environment is clearly
affected by the mandatory conditioning authority of resource agencies,
which do not have the same equal-consideration mandate. To the extent
this staff conclusion is borne out by the comprehensive status review,
I propose in my response to Question 1, I envision that the FERC would
formally develop and recommend specific legislative remedies.
Responses to Questions From Senator Gordon Smith
Question 1. In a report recently submitted to Congress, FERC staff
stated, ``Many specific factors contribute to delays [in the licensing
process], but the underlying source of most delays is a statutory
scheme that disperses decision-making among federal and state agencies
acting independently of the Commission's proceedings.'' Do you agree
with this statement?
Answer. I do not yet have enough information to evaluate this.
Before concluding that the current system is unworkable, I would like
the opportunity to learn more. If confirmed, I would ask my fellow
commissioners to convene an open hearing within 30 days to enable us to
get a comprehensive status report from the FERC staff and staff from
the affected federal and state resource agencies on each pending hydro
re-licensing project, and other hydroelectric projects meriting a
status update. My service on the Texas Commission has shown that direct
Commissioner interest and oversight tends to accelerate procedural
handling of licensing applications. In light of the President's
instruction to federal agencies last week to expedite applications such
as these, I would hope that the FERC would receive significant support
from sister agencies in this endeavor. While I don't expect this will
solve all issues relating to licensing project timetables, it will
focus our attention on those issues that cannot be resolved
administratively. I will recommend the FERC bring those issues that
require statutory change to the Congressional oversight committees
expeditiously.
Question 2. The recommendations laid out in the FERC report
underscore the need to legislate improvements to the hydro licensing
process. Do you agree that some sort of legislation is needed if we are
to get to the root of the problem and fix the licensing process?
Answer. The FERC staff report indicates that the current
legislative framework of dispersed decision-making is a significant
contributor to licensing delay. It suggests that the statutory mandate
that the Commission give equal consideration to power and to the
environment is clearly impacted by the mandatory conditioning authority
of resource agencies which do not have the same equal-consideration
mandate. To the extent this staff conclusion is borne out by the
comprehensive status review I propose in my response to Question 1, I
expect that the Commission would formally recommend legislative
remedies. I commit to moving expeditiously on this process, after
having the opportunity to hear the views of the state and federal
resource agencies that under existing law share authority over the
licensing process.
Question 3. Several regional transmission organizations are
developing in the Western United States. Do you support the manner in
which these entities, including RTO West, are developing?
Answer. Yes. In 1996, as Chairman of the Texas Commission, I was a
catalyst for one of the first RTOs in the nation, the Electric
Reliability Council of Texas Independent System Operator (ERCOT ISO).
The ERCOT ISO oversees one of the country's three electrical
interconnections, and because of its intrastate nature, it is the only
one which is non-FERC jurisdictional. The combination of reliability,
market facilitation, transmission planning and resource adequacy duties
in one independent body is critical to the health of our nation's
electric industry. The FERC process has been somewhat slow to move
forward, but it is moving in the right direction. Relying on a regional
collaborative approach and resisting a ``one size fits all'' solution
is appropriate, and bears the highest likelihood of long-term success.
Moving forward on establishing these entities across the country would
be a primary goal for me in this position. To date, both RTO West and
Desert Star (a proposed RTO organization in the Southwest) have engaged
in extensive stakeholder discussions regarding the formation of such
organizations.
Responses to Questions From Senator Cantwell
Question 1. Consider the situation in Washington state. As you are
probably aware, we've already experienced retail rate increases in the
high double-digits, suffered plant closures and job loss as a result of
skyrocketing electricity costs, and are facing the prospect of a BPA
rate increase this fall that threatens to further undermine the
economic health of the entire region. Based on this anecdotal
information--and the fact prices at the Mid-Columbia trading hub has
increased 11-fold over the prices paid last year at this time--do you
believe prices in the Pacific Northwest are just and reasonable?
Answer. Even considering the shortfall of several thousand
megawatts of hydroelectricity, I believe prices in the Pacific
Northwest may not be just and reasonable under current market rules and
under certain conditions. Therefore, I agree with the FERC's recent
decision to institute an investigation into the rates, terms and
conditions of certain wholesale sales within the Western power markets.
Question 2. As you are no doubt aware, many have questioned the
effectiveness of FERC's price mitigation plan for California--that it
is riddled with loopholes and far too narrow to provide any significant
relief. I absolutely agree with that analysis. But even more pressing
from my perspective is the fact FERC has done nothing to help the
Northwest--even though our prices have actually been higher than
California's by some measures. Specifically, while the average daily
peak price at the Mid-Columbia hub increased by $140/MWh between June
1999 and June 2000, the associated increase in California was $113/MWh
during peak. Daily peak average prices in our region have ranged from
$155/MWh to $460/MWh from Feb. 2001 through April 2001, and dropped
below $200/MWh on only 6 days throughout the course of those three
months. Given this information, do you believe FERC has fulfilled its
statutory mandate to uphold just and reasonable rates--especially in
the Northwest? If these circumstances don't trigger required action by
FERC, what would?
Answer. I believe the section 206 investigation recently instituted
by the FERC is an appropriate step in ensuring that rates in the
Pacific Northwest and other parts of the West are just and reasonable.
However, I cannot prejudge at this time the actions the Commission may
take as a result of this investigation, since I would expect to
participate in the FERC's decision, if I am confirmed.
Question 3. It is true FERC in its April 26 order initiated a
Section 206 investigation throughout the West and proposed that it may
move forward with a California-type mitigation plan that would include
the Northwest. I am concerned, however, because our problem with
wholesale prices is in no way limited to the types of transactions
covered by the investigation-real-time trades of 24 hours or less,
during periods when reserves dip below 7 percent. As you are likely
aware, most of our sales in the Northwest are done under bilateral
contracts. Further, because of our reliance on hydro resources, it's
not clear how or when that 7 percent reserve level would apply within
Northwest control areas. Do you believe this investigation is broad
enough to reflect what is actually happening in NW markets? If
confirmed, would you support broadening it? Could you also comment on
whether and how it would be possible to adapt FERC's price mitigation
plan for California to Northwest markets--especially given the fact we
do not have a centralized, auction-like market?
Answer. Until I have reviewed the confidential transaction data,
the public comments and the investigator reports, I cannot state what
my conclusions are. I would like to participate in this and related
proceedings, if confirmed. In response to a question from you at our
hearing last week, I stated that it may be appropriate to broaden the
investigation to include all transactions, rather than just those
referenced in the FERC's April 26th order. The scope of any mitigation
plan ultimately adopted by the Commission may be less than the full
universe of transactions, but due to legal notice issues, it is better
to announce a broad inquiry and narrow it down, rather than vice versa.
Clearly applying a California-type mitigation plan to the Northwest
will present some challenges because the Northwest relies on bilateral
contracts rather than a centralized auction.
Question 4. In the Pacific Northwest, BPA and investor-owned
utilities have worked with regional stakeholders to develop a proposal
for a regional transmission organization called RTO West. Movement to
an RTO would be a significant change for my constituents. Before this
proposal moves forward too quickly, we must be certain there has been
considerable input and participation from all regional interests, and
that the RTO's costs and benefits are sufficient to merit such a
change. Do you agree that when striving to meet national policy
objectives--as FERC has outlined in Order 2000--that individual regions
should be encouraged to find solutions that meet their unique needs and
fit their characteristics, and that regional processes and solutions
should be respected and acknowledged?
Answer. Yes. Order No. 2000 acknowledged that RTOs may take
different forms that reflect the unique needs of the region. I agree
that it would be counter-productive to impose a ``one size fits all''
approach to the formation of RTOs. Further, I believe that consensus
solutions achieved through regional processes involving input from
affected stakeholders should be given appropriate deference, subject to
Commission review to ensure the overall conformity of any proposal with
the requirements of Order No. 2000. This is consistent with the
approach we at the Texas Commission used in setting up the Electric
Reliability Council of Texas Independent System Operator (ERCOT ISO), a
non-FERC jurisdictional entity in 1996. With regard to costs, we have
been able to more than offset the costs of the RTO by removal of
redundant costs from numerous utility rate bases. I would expect the
FERC to be able to do the same with all other RTOs.
Question 5. Again, on the topic of RTO West, there is significant
concern within the region about FERC's push for a single, West Coast-
wide RTO. While the NW is still working hard to find answers that work
within the region, this emphasis on a West-wide RTO seems premature at
best. What is your position on the establishment of a West-wide RTO?
Answer. A West-wide RTO is a desirable end-state for the region
since the West is a natural marketplace. I believe that electric retail
customers are better served by an efficiently run, broadly scoped,
independent transmission entity. To the extent such an entity evolves
from the existing organizations that support the current operating,
planning and reliability needs of the Western Interconnection, it
should be beneficial.
Question 6. The RTO West proposal is for the creation of a not-for-
profit, independent system operator. Do you support the creation of
this type of structure (a non-profit organization)?
Answer. Yes. The ERCOT ISO, with which I have been intimately
involved since its creation, is a not-for-profit entity that controls
the interconnected transmission facilities owned by some 30+ entities.
As I understand the RTO West proposal, RTO West will be a non-profit
system operator while one of its members will be a for-profit
transmission company. This company will be formed through the purchase
of the transmission facilities of several companies in the Northwest. I
support the flexibility granted in Order No. 2000 for entities to
choose an appropriate organizational structure, whether non-profit,
for-profit, or a combination of the two, that allows an RTO to become
operational. The important factor is that it be workable and effective,
I believe it is possible to move forward more swiftly with the ISO
model, since it does not require current transmission owners to divest
themselves of ownership of their facilities immediately. An ISO can
evolve to a larger stand-alone single transmission entity over time.
Question 7. Can you describe your views on the RTO's role in
transmission planning and expansion authority? Do you support RTO's
that have strong planning and expansion authorities?
Answer. An RTO should have four key objectives: network
reliability, market facilitation, transmission planning and resource
adequacy. Prior to the establishment of the ERCOT ISO, grid planning in
Texas was a utility-specific affair. In that era, robust
interconnectivity between various utility control areas was not a
primary goal. When the ERCOT ISO was created, a substantial mindset
change was called for. Since that time, regional planning has led to a
significant reorientation of transmission construction. As a regulator,
one of the most important aspects of RTO transmission planning is that
new transmission projects are ultimately recommended by an independent
expert body, which reviews the plans on the basis of sound engineering
and regional stability, not just the interests of a single utility.
Once the ERCOT ISO approves an annual transmission plan, the Texas
Commission then directs specific transmission providers to construct
the needed critical facilities. In the past 18 months, my colleagues
and I have approved over $1.5 billion in new transmission construction
in Texas, much of that resulting from the regional planning process at
our RTO. Few observers dispute the need for more transmission across
the nation; I believe that regional transmission organizations are the
appropriate forum to facilitate the right kind of grid planning and
investment.
Question 8. Are you aware that Congress has specifically defined
the Commission's authority to review Bonneville Power Administration's
power and transmission rates under the Northwest Power Act, and that
the Commission's authority to regulate Bonneville's transmission rates
under the Federal Power Act is limited?
Answer. Yes. The FERC has only that authority granted it by
Congress. At the same time, however, Congress requires the FERC to
ensure that the rates, terms and conditions of all jurisdictional
services under the Federal Power Act are just and reasonable. In its
April 26 Order, the Commission concluded that it could not fulfill this
FPA requirement without conditioning non-public utilities' voluntary
participation in the California ISO's markets or use of the ISO's open
access transmission tariff on their agreement to abide by price
mitigation. I understand this issue is pending rehearing before the
FERC.
Question 9. Utility executives and risk managers have serious
concerns about potential widespread, uninsurable liability stemming
from system outages. This concern has increased due to the intensified
use of the electric transmission grid resulting from the 1992 Energy
Policy Act, the aggregation of transmission systems under RTOs, and the
possibility of mandatory national reliability standards. Would you
support some kind of wholesale tariff liability limitation for
transmission system owners similar to what exists in many states for
retail transactions?
Answer. Generally, applicable state law governs liability for
torts. I understand that, to date, the FERC has declined to impose a
federal standard of liability for transmission service that would
preempt applicable state law. However, I have an open mind on whether
the formation of an RTO warrants reevaluation of the FERC's decision
not to impose a standard of liability. The Texas Commission has
approved tailored limitations on liability for transmission utility,
distribution utility and ISO actions that are beyond their control and
which would not have been reasonably anticipated and prevented through
use of reasonable measures. We also have restricted transmission
utility, distribution utility and ISO liability for damages related to
outages/interruptions of service due to reliability or repair
situations. This limitation of liability does not reach to gross
negligence or intentional misconduct.
Question 10. The Commission recently attempted to extend its
jurisdiction to include non-public utility entities in the California
wholesale power market dockets. Even in the face of an emergency,
wouldn't you agree that Congress, not FERC, defines the scope of FERCs
jurisdiction? There are those states, such as Texas, that have been
very successful in avoiding FERC jurisdiction. Aren't you troubled by
Federal expansions of authority, at the expense of local control, over
energy matters?
Answer. Congress has defined the scope of FERC's jurisdiction. In
its April 26 order, the FERC indicated that it believes the current law
permits non-public utility entities to fall under its jurisdiction
under certain conditions. I understand this issue is still pending
review before the FERC.
The ERCOT part of Texas is wholly within one state, connected only
by three direct current (DC) ties to the interstate and international
markets and thus, its intrastate activities are not under FERC
jurisdiction, except for imports and exports over those DC ties. The
Texas Commission has jurisdiction over the transmission facilities of
for-profit and publicly owned utilities, because both own parts of the
overall interconnected network. The remainder of Texas, including my
hometown, is under FERC jurisdiction, and the Texas Commission has
repeatedly asked the FERC to be aggressive in asserting its proper
authority under federal law to regulate interstate wholesale markets.
It is simply not practical for a single state to fairly regulate that
which is, by the laws of physics, spread over several states.
Question 11. I understand that over 15,000 MW of existing, non-
federal hydroelectric capacity in the Pacific Northwest and California
must go through the FERC relicensing process in the next 15 years.
These are energy resources that are very important to my state and
region. All stakeholders seem to agree that the relicensing process is
lengthy, complex, disjointed, expensive for all involved, and in need
of improvement. Delays often result in resources being spent on process
rather than on-the-ground environmental improvements. Clearly, this
process requires refinement in terms of cutting time and expense, but
at the same time, we must be extremely careful to give environmental
issues due consideration. I believe this process must be refocused on
outcomes--and outcomes based on sound science. Do you believe
legislation is needed to address these problems? How would you approach
reform and the delicate balancing act that FERC must perform as part of
its statutory mandate?
Answer. I do not yet have enough information to evaluate this.
Before concluding that the current system is unworkable, I would like
the opportunity to learn more. If confirmed, I would ask my fellow
commissioners to convene an open hearing within 30 days to enable us to
get a comprehensive status report from the FERC staff and staff from
the affected federal and state resource agencies on each pending hydro
re-licensing project, and other major hydroelectric projects. My
service on the Texas Commission has shown that direct Commissioner
interest and oversight tends to accelerate procedural handling of
licensing applications. In light of the President's instruction to
federal agencies last week to expedite applications such as these, I
would hope that the FERC would receive significant support from sister
agencies in this endeavor. While I don't expect this will solve all
issues relating to licensing project timetables, it will focus our
attention on those issues that cannot be resolved administratively. I
will recommend the FERC bring those issues that require statutory
change to the Congressional oversight committees expeditiously.