Senate panel takes aim at reform for federal labs, drilling, grid authority

By Katherine Ling, Nick Juliano, Hannah Northey | 06/08/2015 07:26 AM EDT

Reforming federal bureaucracy and authority on energy issues will be the subject of a final hearing in the Senate Energy and Natural Resources Committee this week before committee leaders turn to hashing out a comprehensive energy bill.

Reforming federal bureaucracy and authority on energy issues will be the subject of a final hearing in the Senate Energy and Natural Resources Committee this week before committee leaders turn to hashing out a comprehensive energy bill.

The "energy accountability and reform" session will focus on more than three dozen bills aiming to tweak programs and authority under the Energy Department, the Interior Department, the Federal Energy Regulatory Commission and other federal agencies regarding the commercialization of federal labs, energy resource standards, oil and gas leasing, energy markets, research programs, manufacturing and federal loan guarantees, among other issues.

Chairwoman Lisa Murkowski (R-Alaska) said she would like to start considering the full energy package as soon as this month, after holding several previous hearings on bills pertaining to energy supply, infrastructure and energy efficiency.


One issue that has growing bipartisan support is a revision of DOE management of the 17 national laboratories and their ability to move experiments into the marketplace. Several reports have criticized the agency’s "micromanagement" of the labs and the strict rules on private-public partnerships as inhibiting innovation in a post-Cold War era (Greenwire, Sept. 16, 2014).

The national labs already play an important economic role, especially in the regions where they are located. A report released last week found the National Renewable Energy Laboratory alone contributed $872.3 million to the nation’s economy and $701 million to Colorado in fiscal 2014, according to a study by the University of Colorado, Boulder’s Leeds School of Business.

Murkowski has sponsored S. 1229 to codify changes to the national labs recommended by an ongoing commission examining how the labs support and are aligned with DOE’s mission and priorities. The nine-member commission has been meeting for more than a year and released an interim report in the spring on impediments to a "lack of meaningful change," a need to streamline and reduce costs for public laboratory users, and needed flexibility for lab-directed projects.

The commission is now exploring a second phase of its review looking at "opportunities to more effectively and efficiently use the capabilities of the national laboratories, including consolidation and realignment, reducing overhead costs, reevaluating governance models using industrial and academic bench marks for comparison, and assessing the impact of DOE’s oversight and management approach."

Norman Augustine, former CEO of Lockheed Martin and a member of the commission, has been beating the drum for Congress to strengthen its support, and even more importantly its spending, for the national labs and energy research.

"Despite its importance to our economy and future, federal energy innovation investments have stagnated over the last five years," Augustine said in a statement last week. "America now ranks 29th among developed nations in the fraction of research that is governmentally funded. America must compete, and if it’s going to compete, it needs to invest in ingenuity. We need to increase investments in energy technology innovation, as well as maximize the returns on those investments through thoughtful reforms."

Leveraging the expertise and technology at the laboratories to boost U.S. competitiveness and support business innovation could help attract the political support necessary to boost federal funding.

Sen. Martin Heinrich (D-N.M.) has championed the issue of opening up the labs for business, including bills that would establish national microlabs to give businesses and the public more access and convenience to lab resources — S. 784 as well as S. 1259, to provide lab expertise vouchers to small business (Greenwire, March 19).

In February, Energy Secretary Ernest Moniz created the Office of Technology Transitions to boost DOE’s support for commercialization of national lab research. The office will oversee more than $20 million Congress directed to advance technology transfer and commercialization and to develop metrics to measure success (Greenwire, March 17).

Sen. Chris Coons (D-Del.) has also been a leader on reforming the lab system. He introduced S. 1187 to improve management of the national laboratories, enhance technology commercialization and facilitate public-private partnerships. A similar bill, H.R. 1158, authored by Rep. Randy Hultgren (R-Ill.), passed last month by voice vote in the House.

Coons is also the co-sponsor of a bill sponsored by Sen. Lamar Alexander (R-Tenn.). S. 1398 would reauthorize the Advanced Renewable Project Agency-Energy (ARPA-E) and DOE’s Office of Science — providing 4 percent funding boosts for the next five years — as well as funding competitive grant programs while eliminating and consolidating roughly a dozen programs. Murkowski and ranking member Maria Cantwell (D-Wash.) are also co-sponsors of the bill (Greenwire, May 20).

It is the energy portion of a larger science and energy research and education reauthorization bill known as COMPETES, which expired in 2013. The House recently passed its version — with significantly less long-term funding then the Alexander-Coons bill — largely along party lines and with a White House veto threat (E&E Daily, May 21).

While the administration’s veto threat was mostly based on funding issues, the White House also took issue with the House provisions to streamline DOE oversight of the national labs, which could be significant for the Senate’s efforts in its comprehensive energy bill. The House bill would "increase the exposure of the federal government to risk and liabilities while also conflicting with the execution of the DOE mission," the White House said in its policy statement.

Oil and gas

On the issue of oil and natural gas authority, one bill likely to receive substantial attention at the hearing is S. 1312 from Murkowski, Heidi Heitkamp (D-N.D.) and others. It would lift the ban on exporting crude oil that has been in place since 1975 and direct the federal government to study needed infrastructure improvements and find ways to link energy markets between the United States, Canada and Mexico, among other provisions.

Several other oil and gas bills also are on the agenda:

  • S. 15 from Sen. Orrin Hatch (R-Utah) would prevent Interior from regulating hydraulic fracturing on public lands in states that already regulate the practice.
  • S. 1216 from Murkowski would allow individuals or companies investigated by FERC for allegations of market manipulation under the Natural Gas Act to seek de novo district court reviews of their cases, rather than being required to meet a higher evidentiary standard in appellate courts. Subjects of FERC market manipulation investigations pursuant to the Federal Power Act already have a right to such reviews, but that right was inadvertently not given under the gas act when Congress last updated the law in 2005.
  • S. 1230, also from Murkowski, aims to improve coordination between Interior and states regarding management of oil and gas drilling on public lands. The bill would require the Bureau of Land Management to respond to governors’ requests to "create consistent rules and processes" between the state and federal regulation of oil and gas production.
  • S. 1310 from Sen. Ed Markey (D-Mass.) would increase royalties on offshore oil drilling and use the proceeds to decrease the deficit. Markey says the bill is meant to close a "loophole" that has let some companies avoid paying royalties on their offshore production in the Gulf of Mexico.
  • S. 1311, also from Markey, would increase penalties that Interior can assess for violating onshore and offshore drilling regulations. Onshore penalties would increase twentyfold, from $5,000 per incident per day to $100,000, while offshore penalties would go from $40,000 to $250,000.

Grid, cybersecurity

Concerns about the effect of new U.S. EPA rules like the Clean Power Plan and cyberattacks on the nation’s electric grid are also on tap.

The Senate panel will take up Murkowski’s bill, S. 1221, which would amend the Federal Power Act to require reviews of major federal rules on the grid that would then be submitted to FERC.

The language, which mirrors a similar effort in the House, would require grid overseers to prepare a "reliability impact statement" to assess the effect of proposed major federal rules on the grid, to enter those findings into the record and "spur" a response from the rule-issuing agency.

Agencies like U.S. EPA, for example, would be required to address the effects of any proposal in the final rule, as well as alternatives to protect grid reliability. Grid overseers would also be called on to report to Congress and FERC every three years to report on regional reliability challenges.

Many of Murkowski’s concerns stem from a host of new EPA rules and their effect on the grid. The senator earlier this year took the agency to task for calling a high-profile review of the Clean Power Plan "premature" and downplaying the findings (E&ENews PM, April 21).

Other members are eyeing the Federal Power Act to bolster the nation’s cyberdefenses and licensing of renewables.

Republican Sen. James Risch of Idaho joined Heinrich to introduce S. 1068, which would amend the federal law to allow the secretary of Energy to take immediate action in dealing with cyberattacks.

It’s not the committee’s first time considering such a request.

Federal regulators tasked with protecting the U.S. electric grid from cyber and physical attacks and massive solar blasts have for years asked Congress for more authority to counter sudden, serious threats, but Capitol Hill has resisted (Energywire, April 9, 2014).

Chairwoman Cheryl LaFleur, a Democratic member of FERC, called for Congress last year to empower a federal agency — not necessarily FERC — with clear and direct authority during a cyber or physical attack on the country’s grid.

The long-standing and oft-debated point is that no single federal entity is designated under the Energy Policy Act of 2005 to respond during an emergency. And in a world where transmission lines and equipment and power plants could be threatened by physical and cyber attacks, Congress is wondering whether that language should be rethought.

Other legislation

The hearing will also address a smattering of other issues, from coal to manufacturing to boosting U.S. capacity in supercomputers:

  • S. 454 would amend the DOE High-End Computing Revitalization Act of 2004 to improve high-end computing research and development program. A similar provision passed as a stand-alone measure and part of a comprehensive bill in the House (Greenwire, May 20).
  • S. 1033, to amend the DOE Organization Act to replace the current requirement for a biennial energy policy plan with a Quadrennial Energy Review and for other purposes.
  • S. 1054, to direct the secretary of Energy, in coordination with the National Academies and other appropriate federal agencies, to develop a national smart manufacturing plan and to provide assistance to small and medium-sized manufacturers in implementing smart manufacturing programs.
  • S. 1181 would expand the Advanced Technology Vehicle Manufacturing Program to include commercial trucks and U.S.-flagged vessels to return unspent funds and loan proceeds to the U.S. Treasury to reduce the national debt.
  • S. 1218 would establish an interagency coordination committee or subcommittee with the leadership of DOE and Interior, focused on the nexus between energy and water production, use, and efficiency.
  • S. 1223 would amend the Energy Policy Act of 2005 to improve the loan guarantee program for innovative technologies.
  • S. 1241 would require the secretary of Energy to carry out programs for research, development, demonstration and information-sharing for cybersecurity for the energy sector.
  • S. 1256 would establish an energy storage research program, loan program, and technical assistance and grant program.
  • S. 1258 would establish a distributed energy loan program and technical assistance and grant program.
  • S. 1263 would establish a fund to assist U.S. businesses with exporting clean energy technology products and services.
  • S. 1274 would amend the National Energy Conservation Policy Act to reauthorize federal agencies to enter into long-term contracts for the acquisition of energy.
  • S. 1275 would create a DOE program to provide financial assistance to promote energy efficiency and on-site renewable technologies in manufacturing and industrial facilities.
  • S. 1277 would allow the General Services Administration to enter into the lengthy renewable energy power purchase agreements currently reserved for the military (E&E Daily, May 14).
  • S. 1293 would establish DOE as the lead agency for coordinating all requirements under federal law with respect to eligible clean coal and advanced coal technology generating projects.
  • S. 1306 would require DOE to study an $8 billion fossil fuel loan guarantee program that has yet to support any projects. The committee reviewed similar bills in previous hearings on the prospective energy package (E&E Daily, May 15).
  • S. 1338 would amend the Federal Power Act to provide licensing procedures for certain types of hydropower projects.
  • S. 1340 would put a moratorium on leasing pending reforms, overhaul the process for determining coal’s fair market value, produce public appraisal reports and ensure regulators take exports into account and require Interior to develop a leasing plan modeled after offshore oil and gas leasing to promote competition (E&ENews PM, May 15).
  • S. 1346 would require the secretary of Energy to establish an e-prize competition pilot program to provide up to four financial awards to eligible entities that develop and verifiably demonstrate technology that reduces the cost of electricity or space heat in a high-cost region.
  • S. 1363 would require the secretary of Energy to submit to Congress a report assessing the capability of DOE to authorize, host and oversee privately funded fusion and fission reactor prototypes and related demonstration facilities at sites owned by the agency. A similar provision passed as part of a comprehensive bill in the House (E&E Daily, May 14).
  • S. 1405 would require a coordinated response to coal fuel supply emergencies that could affect electric power system adequacy or reliability.
  • S. 1407 would promote geothermal, solar and wind energy on public land through changes in permitting, environmental reviews and interagency coordination.
  • S. 1408 would boost research, development, demonstration and commercial application in vehicle technologies at DOE.
  • S. 1420 would collect information on critical energy supplies — including oil inventories and other physical oil assets owned by the 50 largest traders of oil contracts — and to establish a Working Group on Energy Markets with relevant energy and financial federal agencies.
  • S. 1422 would establish a comprehensive program to improve education and training for energy- and manufacturing-related jobs to increase the number of skilled workers trained to work in energy and manufacturing-related fields.
  • S. 1428 would amend the USEC Privatization Act to require the secretary of Energy to issue a long-term federal excess uranium inventory management plan (E&E Daily, May 22).
  • S. 1432 would require DOE to conduct a study on the technology, potential life-cycle energy savings and economic impact of recycled carbon fiber.
  • S. 1434 would amend the Public Utility Regulatory Policies Act of 1978 to establish an energy storage portfolio standard (Greenwire, May 28).
  • S. 1449 would amend the Energy Independence and Security Act of 2007 to add certain medium-duty and heavy-duty vehicles to the advanced technology vehicles manufacturing incentive program.
  • H.R. 35 would require the National Academies to conduct a study assessing the current status and development of a long-term strategy for low-dose radiation research.

Schedule: The hearing is Tuesday, June 9, at 9:30 a.m. in 366 Dirksen.

Witnesses: Lynn Orr, undersecretary for Science and Energy, DOE; Colleen McAleer, commissioner, Port of Port Angeles, Washington; Norman Augustine, board member, Bipartisan Policy Center; Karen Harbert, president and CEO, Institute for 21st Century Energy; Duane Highley, president, CEO and chief accountability officer, Electric Cooperatives of Arkansas; and Mark Mills, senior fellow, Manhattan Institute for Policy Research.

Reporter Manuel Quiñones contributed.