[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
                      ENERGY AND WATER DEVELOPMENT
                        APPROPRIATIONS FOR 1999

========================================================================

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION
                                ________

              SUBCOMMITTEE ON ENERGY AND WATER DEVELOPMENT

                JOSEPH M. McDADE, Pennsylvania, Chairman

HAROLD ROGERS, Kentucky              VIC FAZIO, California
JOE KNOLLENBERG, Michigan            PETER J. VISCLOSKY, Indiana
RODNEY P. FRELINGHUYSEN, New Jersey  CHET EDWARDS, Texas
MIKE PARKER, Mississippi             ED PASTOR, Arizona
SONNY CALLAHAN, Alabama              
JAY DICKEY, Arkansas                 

NOTE: Under Committee Rules, Mr. Livingston, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.

       James D. Ogsbury, Jeanne L. Wilson, and Donald M. McKinnon,
                            Staff Assistants
                                ________

                                 PART 5
                                                                   Page
 Secretary of Energy..............................................    1
 Departmental Administration......................................  193
 Energy Research, Renewable Energy, and Nuclear Energy............  607
 Power Marketing Administrations.................................. 1021
 Federal Energy Regulatory Commission............................. 1350
 Nuclear Regulatory Commission.................................... 1509

                              

                                ________

         Printed for the use of the Committee on Appropriations
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                       COMMITTEE ON APPROPRIATIONS                      

                   BOB LIVINGSTON, Louisiana, Chairman                  

JOSEPH M. McDADE, Pennsylvania         DAVID R. OBEY, Wisconsin            
C. W. BILL YOUNG, Florida              SIDNEY R. YATES, Illinois           
RALPH REGULA, Ohio                     LOUIS STOKES, Ohio                  
JERRY LEWIS, California                JOHN P. MURTHA, Pennsylvania        
JOHN EDWARD PORTER, Illinois           NORMAN D. DICKS, Washington         
HAROLD ROGERS, Kentucky                MARTIN OLAV SABO, Minnesota         
JOE SKEEN, New Mexico                  JULIAN C. DIXON, California         
FRANK R. WOLF, Virginia                VIC FAZIO, California               
TOM DeLAY, Texas                       W. G. (BILL) HEFNER, North Carolina 
JIM KOLBE, Arizona                     STENY H. HOYER, Maryland            
RON PACKARD, California                ALAN B. MOLLOHAN, West Virginia     
SONNY CALLAHAN, Alabama                MARCY KAPTUR, Ohio                  
JAMES T. WALSH, New York               DAVID E. SKAGGS, Colorado           
CHARLES H. TAYLOR, North Carolina      NANCY PELOSI, California            
DAVID L. HOBSON, Ohio                  PETER J. VISCLOSKY, Indiana         
ERNEST J. ISTOOK, Jr., Oklahoma        ESTEBAN EDWARD TORRES, California   
HENRY BONILLA, Texas                   NITA M. LOWEY, New York             
JOE KNOLLENBERG, Michigan              JOSE E. SERRANO, New York           
DAN MILLER, Florida                    ROSA L. DeLAURO, Connecticut        
JAY DICKEY, Arkansas                   JAMES P. MORAN, Virginia            
JACK KINGSTON, Georgia                 JOHN W. OLVER, Massachusetts        
MIKE PARKER, Mississippi               ED PASTOR, Arizona                  
RODNEY P. FRELINGHUYSEN, New Jersey    CARRIE P. MEEK, Florida             
ROGER F. WICKER, Mississippi           DAVID E. PRICE, North Carolina      
MICHAEL P. FORBES, New York            CHET EDWARDS, Texas                 
GEORGE R. NETHERCUTT, Jr., Washington  ROBERT E. (BUD) CRAMER, Jr., Alabama
MARK W. NEUMANN, Wisconsin             
RANDY ``DUKE'' CUNNINGHAM, California  
TODD TIAHRT, Kansas                    
ZACH WAMP, Tennessee                   
TOM LATHAM, Iowa                       
ANNE M. NORTHUP, Kentucky              
ROBERT B. ADERHOLT, Alabama            

                 James W. Dyer, Clerk and Staff Director


















          ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR 1999

                              ----------                              

                                           Tuesday, March 10, 1998.

                          DEPARTMENT OF ENERGY

                                WITNESS

HON. FEDERICO F. PENA, SECRETARY OF ENERGY
    Mr. McDade. The committee will come to order.
    We are very pleased this morning to begin the hearings on 
the FY 1999 appropriations for the Department of Energy. We are 
delighted to have the Secretary here with us, a distinguished 
public servant.
    Mr. Secretary, you proceed in your own way, either filing 
your statement or informally, whatever suits you. We are glad 
to have you here, Mr. Secretary.
    Secretary Pena. Thank you very much, Mr. Chairman.

                               roll call

    Mr. McDade. Let me interrupt one second. We have a business 
and housekeeping thing to take care of. The Chair recognizes 
the gentleman from California.
    Mr. Fazio. Thank you, Mr. Chairman.
    Because the Subcommittee on Energy and Water Development 
will be dealing with national security and other sensitive 
matters at its hearings on atomic energy defense activities, I 
move that the hearings on the 17th and 18th of March be held in 
executive session.
    Mr. McDade. The Chair will put the question. The clerk will 
call the roll.
    The Clerk. Mr. McDade?
    Mr. McDade. Aye.
    The Clerk. Mr. Rogers?
    Mr. Rogers. Aye.
    The Clerk. Mr. Knollenberg?
    [No response.]
    The Clerk. Mr. Knollenberg?
    Mr. Knollenberg. Aye.
    The Clerk. Mr. Frelinghuysen?
    Mr. Frelinghuysen. Aye.
    The Clerk. Mr. Parker?
    [No response.]
    The Clerk. Mr. Callahan?
    Mr. Callahan. Aye.
    The Clerk. Mr. Dickey?
    [No response.]
    The Clerk. Mr. Livingston?
    [No response.]
    The Clerk. Mr. Fazio?
    Mr. Fazio. Aye.
    The Clerk. Mr. Visclosky?
    Mr. Visclosky. Aye.
    The Clerk. Mr. Edwards?
    Mr. Edwards. Aye.
    The Clerk. Mr. Pastor?
    Mr. Pastor. Aye.
    The Clerk. Mr. Obey.
    [No response.]
    Mr. McDade. The vote is 9 to zero, and the hearings will be 
held in exceutive session in accordance with the motion.
    Mr. Secretary, you are recognized.

                      Statement of Secretary Pena

    Secretary Pena. Thank you very much, Mr. Chairman and 
members of the committee.
    Let me first offer my formal testimony for the record, and 
I have, I hope, a much briefer opening comment to help us start 
the hearing.
    Mr. Chairman, it has been almost a year since I last 
appeared before you as the newly sworn in Secretary of Energy. 
I remember right after I was sworn in, I had six hearings 
within a period of, I think, a week or two.
    Let me first thank you and members of the subcommittee who 
have actively helped us to address the many challenges facing 
the Department of Energy.

                        management improvements

    This morning, let me talk about three particular areas. 
First, I want to report on several major management 
improvements and changes that we have made because we had much 
dialogue about that a year ago. Secondly, let me briefly 
summarize some of the programmatic accomplishments that we have 
made this past year, and then, third, let me get into some of 
the specifics in a very broad way of the highlights of the 
budget request that we have before you.
    Let me first address management improvements, and I want to 
start with this subject, Mr. Chairman and members, because I 
remember we had an extensive conversation about your concerns 
and, frankly, my concerns about some of the past management 
issues in the Department.
    Since 1995, we have reduced our Federal work force by 
nearly 3,000 people, approximately 22 percent. Contractor 
employment has declined 29 percent from an all-time high of 
148,000 people in 1992 to just over 100,000 this past year. 
Since I have become the Secretary, the Department has met both 
its 1998 and its 1999 target, which was outlined in the 
strategic alignment initiative. In other words, we are over a 
year ahead of schedule in reducing the work force of the 
Department.

                          contract competition

    Since 1994, we have completed competitions for eight 
management and operating contracts worth more than $24 billion, 
and since I have been Secretary, I have directed competitive 
procurements for every management contract requiring my 
decision.
    I recall we were all concerned about the lack of 
competition, particularly for the large management and 
operation contracts. I think we are doing a much better job in 
that regard.
    Mr. McDade. Mr. Secretary, let me interrupt you because 
that is one of the issues that we are going to discuss with 
you. This committee passed Section 301 last year, which 
required the Department to be competitive on the M&O contracts 
and others unless there are special circumstances.
    Can you flesh that out for us? How many contracts have come 
up, and how may have been let competitively? If any have been 
let non-competitively, tell us what they are.

                          contract competition

    Secretary Pena. There are two ways I can discuss this, Mr. 
Chairman. One is on dollar value, and one is on number of 
contracts. Let me at least give you the dollar value.
    Mr. McDade. Please.
    Secretary Pena. In 1985, the Department was competing 
approximately 50 percent on a dollar value on its total 
contracts. We are now competing 85 percent on a dollar value of 
our contracts. So we have made a significant improvement over 
that period of years.

                          contract competition

    Secretary Pena. As respects my tenure as Secretary, on the 
M&O contracts where I think there has been most of the concern, 
on the non-M&O contracts, I think the record is we are almost 
at 90-percent competition on the non-M&O contracts, but on the 
big M&O contracts, as you know, I took action to replace the 
Brookhaven operation, which had been in place for 50 years. I 
believe I am the first Secretary to have done that. We re-
competed that one in 6 months, which was a record.
    Mr. McDade. And we congratulate you, and supported you in 
that decision.
    Secretary Pena. I appreciate that, Mr. Chairman.
    Secondly, I have made the decision to compete the National 
Renewable Energy Laboratory in my home State of Colorado. We 
have also decided to compete the contract on Bettis Atomic 
Power Laboratory in Pennsylvania. There were some questions 
about that, but we think that is the right thing to do. So, 
those three major contracts will be subject to competitive 
procurements.
    There were some that had already been, in a sense, decided 
prior to the time that I came on board. For example, the 
previous Secretary decided not to compete the Los Alamos 
contract with the University of California, with some changes 
in the contract. I followed through with that, made those 
changes, the off-ramp provision, et cetera, and that was done. 
But, essentially, we have competitively bid the ones that I had 
an opportunity to take on firsthand.
    Mr. McDade. You mentioned three specifically.
    Secretary Pena. Yes.
    Mr. McDade. If we looked at it from the total number of 
contracts, with emphasis on M&O contracts that were issued by 
the Department the last fiscal year or up to today, could you 
tell us how many were let and how many of those were 
competitive?
    Secretary Pena. In the past 12 months or----
    Mr. McDade. Yes. From the time we had you here last year 
until today, do you have a total number?
    Secretary Pena. I could get that for you, Mr. Chairman. 
Again, I am doing this by memory. The big one, obviously, was 
the University of California, but that was already in play when 
I became the Secretary.
    [The information follows:]

                          Contract Competition

    Section 301 of the Energy and Water Development 
Appropriations Act, 1998 (Public Law 105-62) precludes the use 
of funds appropriated by that Act or a prior Act to 
noncompetitively award a management and operating contract 
absent a Secretarial ``waiver.'' Section 301(b) requires that 
notice of any such waiver be provided to Congress 60 days prior 
to a noncompetitive award. I have provided such notice to the 
Committee for those conditional extension decisions made by the 
former Secretary of Energy prior to enactment of this 
provision, but where award had not yet been effected prior to 
the date of enactment. They include extensions for the Stanford 
Linear Accelerator Center, the Pacific Northwest National 
Laboratory, the Oak Ridge National Laboratory and the Oak Ridge 
Y-12/K-25 Site. With respect to the latter two cases, the 
former Secretary authorized two year extensions to facilitate 
the recently competitively awarded Oak Ridge Environmental 
Management and Integration contract and directed competition at 
the completion of their terms.
    Since enactment of the Act, I have directed, or concurred 
in, competition for the National Renewable Energy Laboratory, 
the Bettis Atomic Power Laboratory, Paramilitary Security 
Services for the Savannah River Site, and Security Services for 
the Nevada Test Site. The latter two contracts are being 
competed as other than management and operating contracts.
    I also provided the Committee notice of the competitively 
awarded follow-on contract for the Brookhaven National 
Laboratory after termination of the incumbent contractor. 
Because the competition was limited to nonprofit organizations, 
I provided ``waiver'' notice to the Committee although we have 
been advised that such notice was not necessary. In the future, 
I will be providing the Committee with notification that I have 
authorized short-term extensions for the aforementioned on-
going competitive actions in the event that additional time is 
needed beyond the contract expiration date to complete the 
competitions. I am taking such action to ensure that we do not 
run into timing problems with respect to the 60 day advance 
notification requirements. A number of additional decisions on 
management and operating competitions may be made in Fiscal 
Year 1998. In the event that any such decision results in a 
``waiver'' of competition I will provide the Committee with the 
required notification.

                          contract competition

    Mr. McDade. What is the value of that one? I forget.
    Secretary Pena. I think it is three different labs. It is a 
very substantial contract.
    Mr. McDade. If you can, put it into the record.
    Secretary Pena. I would be happy to do that, Mr. Chairman.
    [The information follows:]

                          Contract Competition

    In fiscal year 1998, the Department awarded a full term 
contract for the management and operation of the Brookhaven 
National Laboratory. This contract was awarded competitively, 
albeit with competition limited to nonprofit organizations. The 
Department also awarded a competitive full term contract for 
the management and integration of the environmental aspects of 
the Oak Ridge site. This work was broken out of the management 
and operating contract for Oak Ridge and competed as a non-
management and operating contract. During this period, the 
Department also entered into short term extensions for the 
Stanford Linear Accelerator Center and the Pacific Northwest 
National Laboratory. I have also authorized the Naval Reactors 
program to exercise a 2-year contract option under its 
management and operating contract for the Knolls Atomic Power 
Laboratory. The Department is also engaged in, but has not yet 
awarded, competitive procurement for the management and 
operation of the National Renewable Energy Laboratory and the 
Bettis Atomic Power Laboratory. Additionally, former management 
and operating contracts for paramilitary services at the 
Savannah River Site and the Nevada Test Site are being competed 
as other than management and operating contracts.
    In fiscal year 1997, the Department awarded full term 
noncompetitive extensions of the management and operating 
contracts for the Lawrence Livermore, Lawrence Berkeley, and 
Los Alamos National Laboratories. Additionally, shorter term 
extensions were effected for the Oak Ridge National Laboratory, 
the Oak Ridge Y-12/K-25 sites, the Oak Ridge Institute of 
Science and Education (ORISE), the Stanford Linear Accelerator 
Center, and the Pacific Northwest National Laboratory. The 
first two Oak Ridge contracts were identified for competition 
following their short term extensions. The ORISE contract was 
extended to permit completion of a study regarding the future 
of the Department's smaller research laboratories.

    Mr. McDade. And do it numerically and by dollar value, Mr. 
Secretary.
    Secretary Pena. I would be happy to do that. Thank you.
    [The information follows:]

                   University of California Contract

    The University of California currently manages 3 national 
laboratories for the Department of Energy--the Lawrence 
Livermore and the Lawrence Berkeley National Laboratories 
located in California, and the Los Alamos National Laboratory 
in New Mexico. The current contracts were awarded in September 
of 1997 as a result of the former Secretary of Energy's 
decision to noncompetitively extend the predecessor contracts 
for 5 additional years. These contracts now expire on September 
30, 2002. The Lawrence Livermore contract is valued at $1.02 
billion for fiscal year 1998 funding. Fiscal year 1998 funding 
for the Lawrence Berkeley contract is approximately $389.3 
million. The Los Alamos contract is valued at approximately 
$1.3 billion for Fiscal Year 1998.

                         major accomplishments

    Secretary Pena. I have covered the ones that I have been 
able to do since I have been Secretary. The other major 
accomplishment was the very successful sale of the Elk Hills 
Petroleum Reserve, which brought in $3.6 billion, about two 
billion dollars over the Congressional Budget Office estimate.
    We have made substantial improvements in our environmental 
privatization programs from a procurement, legal, and safety 
and health review perspective. We have taken steps to begin to 
train our personnel, do a better job of pricing competitively-
bid contracts, and, more importantly, we have brought in a new 
person to head an Office of Contracting Reform and 
Privatization, which I committed to you to do a year ago. This 
person comes from the private sector. I will send you his 
resume so you can see his background, but we are very pleased 
about his private sector background to help us take control of 
the privatization efforts in environmental management, in 
particular.
    [The information follows:]

              Office of Contract Reform and Privatization

    Mr. Walter S. Howes is serving as a consultant for this 
office as of March 16, 1998. A copy of his resume is provided 
for the record.
    [The information follows:]

[Page 7--The official Committee record contains additional material here.]


                   additional management improvements

    Secretary Pena. We have dramatically decreased the amount 
of money spent on support service contracts. In 1994, we spent 
$700 million. We have reduced that by $247 million, a 35-
percent reduction.
    However, Mr. Chairman and members, I realize we still have 
a ways to go. We are making some improvements, but we have much 
more work to do.
    One thing we have to do a better job in is ensuring that 
our contractors who have work with subcontractors are willing 
to hold people's feet to the fire. For example, I think I sent 
a message when I took the action on the Brookhaven National 
Laboratory contract, and I think it was heard.
    Our major contractor at Hanford has recently issued a cure 
notice to the subcontractor managing the K-Basin. In past 
years, that probably would not have occurred.
    The same has occurred with the Pit 9 subcontractor, where 
the contractor there has issued a cure notice to the 
subcontractor in that very controversial case. So we are trying 
to change the way in which we relate to our contractors to 
ensure that they perform and that they meet our expectations 
and that they are meeting our guidelines.
    We are also trying, Mr. Chairman, to do a better job of 
project management, integrating our facilities, matching our 
work force to our evolving missions, increasing the 
responsibility for environment, safety, and health, resolving 
critical safeguard and security issues, and assuring top-level 
integration of key cross-cutting functions.
    We were very impressed with the need to improve our project 
management. We have just received the report making a number of 
recommendations on project management. We are going to support 
those and move on those recommendations.
    I have asked the Under Secretary to increase the 
integration of our Department's research and development 
programs so that they are more focused.
    In addition, the Department will be intensifying its 
evaluation of grant award processes. These were questions 
raised, for example, in energy efficiency. The Office of Energy 
Efficiency and Renewable Energy decided to issue two 
comprehensive, competitive solicitations to attract top 
technologies in buildings, renewables, and the industries 
sector. That was a main concern that a number of you had raised 
last year about lack of competition in energy efficiency. I 
believe we are now doing that.
    Mr. Chairman, let me very quickly just summarize key 
accomplishments in energy security. We have now published our 
comprehensive national energy strategy. We are receiving 
comments. We hope to finalize that in April.
    In environmental cleanup, we shut down our Nation's largest 
plutonium processing plant, the PUREX plant at Hanford. We did 
that a year ahead of schedule and $78 million under budget. We 
have completed the cleanup of a major defense facility in 
Florida, the Pinellas plant, and that has now been turned over 
to the community for its use.
    In stockpile stewardship, we are now, with the new super 
computers we have on board, able to certify to the President 
that our stockpile is safe, secure, and reliable, without 
underground testing. We have done that two years in a row.
    We are making progress on the National Ignition Facility, 
which is on time and on budget. And for the first time in terms 
of our work overseas, we are at every one of the 53 known sites 
in Russia and in the newly independent countries to secure 
material in facilities which previously had not had adequate 
safeguards. These are major accomplishments.
    In science and technology, we have made a number of 
breakthroughs. I will not list all of those.

                         fy 1999 budget request

    Let me just focus on the budget. Our budget request is $17 
billion for programs within your jurisdiction. That is a 7-
percent increase over 1998. Let me simply remind us all that 
when you compare previous years and adjust it for inflation, we 
are 30-percent below our appropriation in 1981 and 20-percent 
below what we were in 1993.
    With the $1 billion increase that we are requesting, the 
increases are primarily in, number one, $156 million to 
emphasize research and development in renewable energy and 
nuclear energy. You will recall that the President's Committee 
of Advisors on Science and Technology recommended that we, as a 
Government, invest more in R&D in these areas. We are trying to 
do that.
    We are proposing a $246 million increase for investments in 
basic science programs and facilities, the Spallation Neutron 
Source, the Large Hadron Collider, the Next Generation 
Internet, and some others.
    We are also asking for a $421 million increase to fully 
support our stockpile stewardship program under the 
Comprehensive Test Ban Treaty as well as on nonproliferation 
and materials disposition programs, and beyond that, we are 
asking for a $317 million increase to continue our 
environmental cleanup privatization initiative.
    Mr. Chairman and members, let me end with these very brief 
comments. I wanted to give you a broad overview of the 
management improvements we have made, the new ways of doing 
business, also highlight some of the challenges we still have 
before us because they are very real, and then summarize the 
main points of the budget request we have before you.
    I am very happy to be here, and, again, I want to thank you 
for the strong support this committee has provided us, and I 
look forward to working with you in the future.
    [The prepared statement of Secretary Pena follows:]


[Pages 10 - 24--The official Committee record contains additional material here.]


                           general provisions

    Mr. McDade. Mr. Secretary, thank you. We appreciate very 
much your summation, which was interesting and detailed. We are 
pleased to see that you are trying to point the Department in a 
new direction. All of us concluded the first day you came in 
that that was essential. A lot of people think it is 
impossible, but we will keep trying together.
    In that connection, let me just run down some actions the 
committee took last year and just get a little report from you.
    We have already discussed Section 301 which required 
competition in contracting by law, and you have alluded to that 
in your opening statement. So we will not go back to that.
    Section 302 required the Department to follow the Federal 
Acquisition Regulations. We discovered and informed the 
Department, and we talked about it, that because of the history 
of the Department, you are exempt from following those 
procurement regulations. Are you now following those 
procurement regulations?
    Secretary Pena. Mr. Chairman, I believe we are doing our 
very best to follow those regulations. Again, I would be happy 
to give you a more detailed answer in terms of particular 
projects, but we are doing our best to make sure that we are 
complying with that directive.
    Mr. McDade. We put a waiver section in, you will recall, so 
that if you had to go out in circumstances that were 
appropriate, let us say, to the history of the Department, you 
did not have to comply with the Federal Acquisition 
Regulations.
    When you send some information to the committee, tell us 
how many times you have used that waiver provision, and make a 
justification for each one of them, please.
    Secretary Pena. I would be happy to do that, Mr. Chairman.
    [The information follows:]

                     Section 302, Public Law 105-62

    The Department has issued formal policy direction to all 
Department of Energy contracting elements to implement the 
Secretarial and Congressional notification requirements of 
Section 302. The policy directive, which applies to both 
management and operating (M&O) contracts and to non-M&O 
contracts, specifically addresses these requirements by 
establishing strict standards for deviating from provisions and 
clauses prescribed in the Federal Acquisition Regulation (FAR). 
These standards are consistent with the requirements contained 
in the FAR governing deviations. Specifically, the directive 
requires that all requests for deviations from the FAR be 
justified in writing and, following Headquarters review, be 
submitted to the Secretary for decision and, as appropriate, 
Congressional notification. It should be noted that, while the 
FAR recognizes M&O contracts, it does not prescribe provisions 
or clauses for use in such contracts. The prescription of 
provisions and clauses for management and operating contracts 
is left to agency implementation. The Department has 
supplemented the FAR by prescribing provisions and clauses for 
use in its M&O in Department of Energy Acquisition Regulation 
(DEAR) Part 970. Thus, as a stand-alone supplemental 
regulation, DEAR Part 970 does not constitute a deviation from 
the FAR. It should be further noted that the Department's 
authority to supplement the FAR in this manner was recognized 
by the conferees who directed that the Department be cognizant 
of and utilize those provisions of the FAR that permit 
exceptions to the FAR, and those provisions intended to address 
the special circumstances entailed by management and operating 
contracts.
    To date, I have not authorized any deviations.

    Mr. McDade. Mr. Secretary, Section 303 prohibited the use 
of funds to provide enhanced severance payments and other 
benefits to certain Federal employees. Was that prohibition 
followed?
    Secretary Pena. To the best of my knowledge, it was, Mr. 
Chairman, but I will double check and get you a more specific 
answer.
    [The information follows:]

           Enhanced Severance Payments for Federal Employees

    The Fiscal Year 1998 Supplemental budget request includes a 
technical amendment that would revise section 303 to allow 
payment of post-separation career retraining benefits of up to 
eight employees who agreed to remain at the Pinellas plant 
until the site's formal closure, consistent with treatment of 
federal workers at this site who utilized this benefit prior to 
Fiscal Year 1998.

    Mr. McDade. Please. We want to be specific about it.
    Section 304 limited to $61 million in funds that can be 
used to pay enhanced severance payments and other benefits to 
contractor employees and provide community assistance grants. 
Has Section 304 been followed?
    Secretary Pena. Mr. Chairman, I will give you a very 
specific answer on that, also.
    [The information follows:]

                      Enhanced Severance Payments

    The Office of Workers and Community Transition (WT), in 
consultation with the Chief Financial Officer and the Office of 
General Counsel, has provided the following guidance to field 
offices for implementing section 304. The Director of WT 
discussed the proposed implementation guidance with 
Subcommittee staff prior to it being issued to the field to 
assure that it was consistent with Congressional intent.

                        implementation guidance

    Consistent with this new policy direction from the 
Congress, the Department may fund ``enhanced severance payments 
and other benefits under the provision of section 3161'' during 
FY 1998 only from the funds the Congress has appropriated for 
this purpose. This includes any payments that are not 
associated with contract provisions, or existing company 
policy, but are directly related to initiatives included in 
work force restructuring plans.
    This includes the incremental cost of voluntary separation 
incentive payments, construction worker benefits, post-
separation education benefits, relocation and outplacement 
assistance at defense nuclear sites, that are not required by 
contract, or part of company policy, and that are developed 
specifically as part of this work force restructuring plan. 
Costs incurred after October 1, 1997, associated with 
education, relocation, and outplacement benefits for prior year 
separations should also be included as an ``enhanced benefit'' 
payable only out of the $61,159,000.
    Costs that are not included in the $61,159,000 include: 
regular severance costs (including the portion of voluntary 
incentive payments equal to regular severance if the voluntary 
separation avoids an involuntary separation); displaced worker 
medical costs (which preceded section 3161 and are governed 
under DOE Order and Acquisition Letter); pre-separation 
education or training that is associated with an agreement to 
leave employment voluntarily through attrition and thus results 
in a savings to the government compared to severance costs; 
outplacement assistance or other benefits provided under 
contract or as part of contractor human resources policy or 
practice that predates section 3161 or is otherwise independent 
of section 3161.
    For the current fiscal year, the Office of Worker and 
Community Transition will strive to manage the transition to 
this new funding mechanism to maintain prior funding 
commitments. If sufficient funds are available, the Worker and 
Community Transition appropriation may be used to pay for 
restructuring costs associated with contract requirements or 
company policy in order to alleviate funding problems at 
individual sites. However, program budgets will have primary 
responsibility to cover these costs.
    This new policy will require priority determinations for 
allocating limited resources. Prior to implementing any program 
including enhanced benefits, Field Offices shall submit to the 
Office of Workers and Community Transition a request for 
funding. Requests shall include an estimate of the number of 
participants and costs associated with a proposed benefit 
offering. Field Offices are encouraged to provide this 
information as early as possible so that the Office of Worker 
and Community Transition can make informed decisions on 
priority for allocating funds. Preliminary estimates for the 
following fiscal year should be provided within one month of 
the submissions of the President's budget request for that 
fiscal year. Formal requests should be submitted as soon after 
the enactment of appropriations as possible. Requests will be 
evaluated based on the following criteria:

      Evaluation Criteria for Review of Enhanced Benefit Requests

    A. The scope of immediate and cumulative restructuring at 
the site.
    B. Previously-offered enhanced benefits, including 
voluntary separation programs, that were available to impacted 
employees.
    C. Level of contract-related benefits provided.
    D. Local economic conditions.
    E. Past performance in demonstrating use of enhanced 
benefits to provide new career opportunities.
    F. Coordination of programs with community transition 
activities.
    G. Average cost estimate of enhanced benefits per 
recipient.
    H. The extent that benefits will mitigate the impact to 
workers at current and former defense nuclear facilities who 
were hired prior to September 27, 1991.

    Mr. McDade. Okay. Let us go to Section 305, which 
prohibited the Department from initiating RFPs for a program, 
if the program was not yet even funded. Has the Department 
followed that prohibition?
    Secretary Pena. I believe we have, Mr. Chairman.
    [The information follows:]

                     Section 305, Public Law 105-62

    The Department has issued formal Department-wide policy 
direction implementing the notification requirements of Section 
305 of the Energy and Water Development Appropriations Act, 
1998 (Public Law 105-62). This policy directive was 
disseminated through the Department's formal distribution 
process to all contracting offices and affected program 
offices. Consistent with the Law, this policy prohibits 
departmental program and project managers and budget officials 
from initiating and certifying procurement requests for goods 
and services that are in support of a program for which funding 
has been specifically denied. In addition, the policy directive 
prohibits contracting officers from preparing or issuing RFPs 
for which funds have not been properly certified by a 
designated authority. We have no evidence to date that would 
indicate that RFPs have been issued contrary to the 
restrictions of Section 305.

                        independent assessments

    Mr. McDade. We have alluded to this, Mr. Secretary. I want 
to get a little more detail from you. As you know and as you 
have referred to, we have provided additional funding for the 
Department for an independent assessment of the construction 
project management system and independent cost validations for 
individual projects.
    You have obviously complied with that section of the Act, 
and you have used the money, we hope, wisely. I would like you 
to tell us a little bit about what you have done in terms of 
cost validation and making us comfortable about the management 
system, to the extent that you can.
    Secretary Pena. Mr. Chairman, first of all, let me thank 
you for that support and that guidance. We fully agree with the 
notion that we needed to improve in both those areas.
    We have conducted the report. The National Academy of 
Sciences has made that report to us. We will, first of all, 
have 32 of the top projects identified, which will begin at 
least initial independent assessments by April of this year. We 
will follow up on the others, but this whole notion of having 
additional reviews of these cost estimates by outside experts 
is one that we fully embrace.
    Beyond that, we also believe it is very important that we 
do a much better job of estimating, pricing in particular, for 
competitive contracts, which means we must do a better job of 
getting design estimates of a larger proportion of a project 
before we proceed.
    Let me be more specific. We realize that in past projects, 
only perhaps 5 or 10 percent of design was done, and then we 
made an estimate of what the project would cost, and we 
subsequently learned we were off by a large factor. So we are 
now changing that and doing a much more intense design review 
to get a better handle on long-term costs before we commit 
ourselves to a longer-term project.
    Thirdly, I have tasked the leadership in headquarters to 
personally review performance-based contracts because, in the 
past, it was my view that much of this work was being done in 
the field without much guidance. We have now issued guidance to 
our field managers. We are improving our training, but, more 
importantly, we are reviewing those estimates in that work in 
headquarters.
    We have also reconstituted the Secretary's board, which had 
been in existence for many years, but for some reason had been 
discontinued. Now we bring together all of our top people, and 
we review major projects like the National Ignition Facility, 
the Spallation Neutron Source, and others to make sure that all 
the top managers in the Department are focused on these very 
large projects to ensure that the Department is using its best 
expertise and judgment.
    Of course, I have talked already about what will be done in 
the area of privatization with the new position we have 
created.
    Mr. McDade. We are glad to hear that because the history, 
not on your watch, but the history of the lack of coordination 
of those major projects and the cost explosion was very 
disturbing to us. We are glad to see that you are taking it on, 
head on.

                           general provisions

    Mr. Secretary, Section 501, you can answer for the record. 
That is the prohibition against using any dollars appropriated 
to lobby the Congress, and I am sure you are complying with 
that.
    Secretary Pena. Yes, sir.
    [The information follows:]

                         Lobbying Prohibitions

    The Department has taken action to ensure that appropriated 
funds are not being used to lobby Congress. The Department has 
issued two notices to apprise Federal and contractor employees 
of the requirements of section 501 of the Energy and Water 
Development Appropriations Act for Fiscal Year 1998. On 
December 8, 1997, the Department issued a ``Joint Acquisition/
Financial Assistance Letter'' which provides guidance 
applicable to acquisition and financial assistance instruments. 
The Letter was issued to Departmental contracting offices, and 
directs that a clause on the lobbying restrictions of section 
501 be incorporated into applicable solicitations and awards of 
Departmental contracts and financial assistance instruments 
when the instruments are to be awarded using funds made 
available under the Energy and Water Development Appropriations 
Act. Further, on January 9, 1998, the Department issued an 
electronic message to approximately 114,000 Department and 
contractor employees, which set forth the lobbying restrictions 
of section 501. The restrictions also were referenced in a 
``Lobbying . . . What you Need to Know'' brochure prepared for 
distribution to Federal employees, contractors, cooperative 
agreement participants, and grantees. This has resulted in 
heightened sensitivity throughout the Department of the 
concerns associated with improper lobbying activities.

                   use of support service contractors

    Mr. McDade. We are very glad to hear that.
    Mr. Secretary, let us go back now to support services, an 
area that is of great interest to the committee, and you 
indicated that after we directed the Department through the 
conferees to be careful about those contracts, pay more 
attention to them, and focus on what ought to be inherently 
governmental functions and not contracted out. We would like to 
hear how that is proceeding because there is a lot of money on 
the table, you will remember----
    Secretary Pena. That is right.
    Mr. McDade [continuing]. And the Department had been in the 
past engaging in contracting out what are clearly inherent 
governmental functions.
    Would you comment on that, again, please, Mr. Secretary?
    Secretary Pena. I will, Mr. Chairman.
    First of all, let me say that I personally verified the 
truth of the statement and your observations. Let me tell the 
members about how I do that.
    I do not use my private elevator. I use the elevator in the 
building. So I walk in with everybody else, and when I walk in 
the building, I introduce myself, and I ask them who they are 
and what they do.
    From the very first day that I got there, I got to meet a 
lot of contractors who were working in the building, and I was 
surprised that every day I would meet someone who was a 
contractor. Very quickly, I understood we had a problem. So we 
agree that we have too many contractors working in our 
building.
    So we take this very seriously, Mr. Chairman. I have talked 
to you about the 35-percent reduction in support services and 
that kind of contracting, which ought to be done in-house, or 
if we are not going to do it in-house, we are not going to do 
it at all.
    So we are going to continue to work on this. We are going 
to reduce those costs even more. I am very concerned about what 
appeared to be a practice that had been in the Department for 
some time.
    Mr. McDade. We are very grateful for your direction in that 
end, Mr. Secretary. We believed in this committee that that was 
a glaring error, and we are glad to hear that you are complying 
with it. I am thrilled to hear you use your own elevator, the 
public elevator.
    Secretary Pena. The public elevator.
    Mr. McDade. It is a great way to find out what is going on.
    Secretary Pena. It is amazing what you learn.
    Mr. McDade. You bet.
    I beg your pardon?
    Mr. Fazio. It is energy conservation.

                    departmental priorities--cleanup

    Mr. McDade. Mr. Chairman, you in your statement detailed 
the changes that you are attempting to effect within the 
Department and guiding it to serve the national interest.
    As you look ahead, would you spend a few minutes and detail 
for the committee what you believe are the major priorities 
that you have as you look downstream to try to make the 
Department more effective as a national instrument?
    Secretary Pena. Mr. Chairman, let me share with you what I 
believe to be our biggest challenge, and it has to do with the 
work that we do in cleanup at our sites around the country. I 
can spend time talking about others, but this is the big one.
    It is my view that for reasons that are historical and I am 
sure had a very legitimate basis, the Department entered into 
commitments with a number of States to reach certain cleanup 
standards within a certain time frame and in a certain way.
    Many of those agreements were reached almost 10 years ago 
in some cases. The Department is still having problems meeting 
those milestones for a number of reasons.
    Number one, the work that we are doing in many cases is not 
being done anywhere else in the world. When we go into tanks, 
for example, at Hanford, and we discover a concrete block in a 
tank that 9 years ago no one would have anticipated we would 
have found, that is the kind of unexpected problem that no one 
can anticipate.
    When in doing work at one of our other facilities, we 
discovered that there are toxic gases, which are being 
developed in the work there, no one could have contemplated 
that.
    So we have a very serious challenge in trying to clean up 
these properties using, in many cases, new technologies which 
had never been used before, trying to meet time tables that 
were committed to a long time ago, and as we look into the out 
years, a declining budget.
    So, for example, when we completed the accelerated closure 
plan, and we have now had that out for comment, the goal is to 
try to clean up as many sites by 2006 or 2010, et cetera, and 
we projected over the long term what the costs were going to 
be.
    We have a very significant budget shortfall to do that. It 
is my view, after having spent time with a number of Governors 
who are concerned about this, some of whom are now, to be very 
candid, arguing that if we do not meet those milestones, they 
will close their borders and not allow us to move material into 
their sites. This, in my view, will shut down the entire system 
nationwide, where we are trying to ship materials across the 
country. It is my view that what we have to have is a national 
consensus on how we are going to deal with this cleanup in the 
long term, and that means bringing in the key Governors and the 
key States, having an understanding with the Congress about 
what are going to be the long-term funding commitments.
    Obviously, the Department has to be committed to better 
management to ensure that we are using those dollars wisely, 
and we do not make the mistakes we have made in the past. We 
must also try and reach a consensus on how we are going to 
proceed, and that will mean, in my view, agreements by States 
to work with us to, in some cases, accept certain waste streams 
so that we can reduce the overall national cost to the entire 
complex.
    Mr. Chairman, I see this as a national priority because the 
work that was done at these sites was on behalf of our national 
security, and, therefore, I think it is our national 
responsibility as Americans to respond to the cleanup problems 
of those Americans who are now concerned about these wastes in 
their home States. That, I think, is the most significant 
management and budgetary challenge we have in the future, and I 
look forward to working with you to try to find an answer to 
that problem.
    Mr. McDade. Mr. Secretary, let me ask you, how many 
Governors are directly involved that you have to negotiate?
    Secretary Pena. I think we have at least six.
    Mr. McDade. Six of them?
    Secretary Pena. There could be others that have other 
roles.
    Mr. McDade. I know last year, for example, when some of our 
colleagues appeared from the State of Washington talking about 
the problem there, we told them just what you said, that the 
Nation has a commitment to those people and that we are going 
to see it through. It is a very difficult problem, as you know 
better than anybody.
    If you had it to do over again, you might not have accepted 
the job as Secretary of Energy, but we are glad you are there.
    At this time, I am pleased to yield to my distinguished 
friend from California, Mr. Fazio.
    Mr. Fazio. Thank you, Mr. Chairman.
    Mr. Secretary, welcome. You are one of very few Americans 
who has had the privilege of being a Cabinet Secretary with two 
different agencies, and it is obvious your management skills 
are being sharpened up to the moment. Obviously, you have been 
very responsive to the concerns the chairman and the committee have 
had, and I appreciate that.
    I would like to get into some substantive issues 
immediately, and let me begin with FUSRAP. As you know, in the 
FY 1998 energy and water development appropriations bill, we 
transferred authority to the Corps of Engineers. Could you tell 
me what the Department has done to help the transfer?

                                 fusrap

    Secretary Pena. I would be happy to, Congressman.
    First, I think within a couple of weeks of the Bill's 
enactment, I sent a letter to Secretary Cohen stating that we 
were transferring the program fully to the Department of 
Defense. Immediately thereafter, my staff had extensive 
meetings with the Corps of Engineers to fully explain the 
program and outline all of the issues that we have pending 
before us to make sure that we had a smooth handoff. We did not 
want to see any of the work slowed down in any way, and I 
believe the work has essentially kept on pace.
    I must say, Congressman Fazio, that there is one issue that 
has not yet been resolved. It may require additional action on 
the part of the Congress, and that is the question of who 
provides regulatory oversight over these matters.
    As you know, in the past, when FUSRAP was the 
responsibility of the Department of Energy, we were the self-
regulator, and today, there is still a legal question, at least 
according to our lawyers, about who has the responsibility in 
terms of providing regulatory oversight, and that may need some 
additional attention.
    Mr. Fazio. So you are currently providing that regulatory 
oversight?
    Secretary Pena. Congressman, at this point, we have 
transferred the program over to the Department of Defense.
    Mr. Fazio. OK.
    Secretary Pena. If you were to ask the Corps of Engineers 
who was providing regulatory oversight, I am not sure they can 
answer that question today. There is a little bit of a gap here 
in terms of deciding who has regulatory authority, and there 
are some very complex legal and policy questions about who 
should have that responsibility, but, again, we are happy to 
work with you and others to see how we can correct that.
    Mr. Fazio. It is your lawyer's opinion then a simple 
memorandum of understanding would not suffice to transfer the 
regulatory authority, and that is where you think we need to 
give you additional legal authority and statute?
    Secretary Pena. Congressman, my understanding from our 
lawyers is as follows. Under current law, the Department of 
Energy can only, in a sense, transfer its regulatory authority 
to a contractor. It cannot transfer that regulatory authority 
to another Government agency or department, and so we need to 
address that.
    Secondly, there is the question of a longstanding policy in 
the Government that these sorts of matters dealing with these 
kinds of materials would remain in a ``civilian agency.'' So 
these are the policy questions which I think have to be 
addressed.
    I do not have answers to these questions right now, but, 
again, we are happy to work with you and others to see how we 
can correct them. I think they should be corrected.

                         stockpile stewardship

    Mr. Fazio. Well, I appreciate your putting them on our 
agenda. I think it is something we have got to work together on 
to see if we can complete the circle here and make sure that we 
do not leave a gap, a hiatus, in obviously a very important 
area.
    Let me ask about the stockpile stewardship program. The 
committee is being asked to include $4.5 billion for that 
program. I think it is imperative that we support it, but I do 
think there are problems both in the general public and on 
Capitol Hill in fully understanding the importance of it.
    It is obviously the precondition of the Comprehensive Test 
Ban Treaty, but it also gives us the scientific capability we 
need to do everything from doing an adequate job of inspecting 
weapons in Iraq to perhaps dealing with the problem of rogue 
nations like North Korea.
    It seems to me that we could do more, the administration 
could, to make the public aware of why we are making this kind 
of expenditure for members who have been traditional supporters 
of testing. We need to build their confidence, and for those 
who oppose testing, we need to build theirs.
    Is there going to be something, frankly, that will help 
educate the Congress and the public and make this committee's 
task easier to accomplish?
    Secretary Pena. Congressman Fazio, the answer is yes, and 
we have started that process, but more needs to be done.
    When the President submitted the Comprehensive Test Ban 
Treaty to the Senate for ratification, we then started 
participating in some hearings--Senator Domenici had one 
hearing, and I believe others are planned--and some public 
outreach to begin to educate the Congress and the American 
people about our stockpile stewardship program.
    If I might, let me just briefly say that when we first made 
the estimate of the cost for stockpile stewardship, it was 
about $4 billion. That was done in 1995.
    Today, our estimate is that it will cost $4.5 billion. Why? 
We are committed, since it has been 5 years since we have 
conducted nuclear tests in our country, not to have any more 
underground testing under the Comprehensive Test Ban Treaty.
    In order to do that, the three laboratory directors have 
advised us that they need additional tools and technologies to 
allow them to make the same judgment about our weapons as we 
used to do.
    Secretary Cohen and I just one month ago certified to the 
Congress--and this was the second year in a row we have done 
this--that our nuclear stockpile is, in fact, safe, secure, and 
reliable without underground testing.
    Our scientists, however, have told us that in future years 
as the weapons age, we will need the National Ignition 
Facility. We will need computers that do 100 trillion 
operations per second by the year 2004. We will need some 
additional capabilities as our engineers begin to retire in 
part of the next decade and to use that computer simulation to 
take the data from the past 1000 tests we have conducted, 
simulate that, and then use that information with the new 
engineers we are bringing on board to continue to maintain our 
stockpile safely and securely without testing.
    That is the message that you are asking that we need to 
communicate to the American people and others about why this 
program is so important, and we need to do a better job in 
communicating that message.
    Mr. Fazio. I appreciate that. I think Vic Reis has the 
confidence of many on this committee, if not all, but I think 
as you have indicated, this is a job for you and Secretary 
Cohen. And we look forward to having that effort made because I 
do think we have got to build far more public support than 
exists.

                  climate change technology initiative

    Let me go to the global climate technology initiative. 
There is $2.7 billion in new technology funding requested and 
$3.6 billion in tax increases--pardon me--in incentives. They 
are not increases. That is over the next 5 years.
    I am sure even within this committee there remains a good 
deal of skepticism about the scientific basis upon which the 
global warming debate has thus been carried, but I understand 
that you believe that for purposes of industrial 
competitiveness, for general reasons of quality air, and even 
national security and electric restructuring, there are reasons 
to proceed on these initiatives, even if you put aside the 
continuing debate about global warming.
    Would you speak to why you believe this committee should 
bear its burden, its share of the total, and why you think this 
is important to do on more than simply grounds of scientific 
evidence about global warming?
    Secretary Pena. I would be happy to, Congressman.
    Setting aside global climate change, if one reviews the 
recommendations of the President's Committee of Advisors on 
Science and Technology who are a relatively distinguished group 
of Americans who have looked at our research and development 
investments as a country and compared them to other countries, 
they have strongly recommended that in energy research and 
development, we invest more. In fact, they recommended dollar 
amounts that are fairly similar to those the President has 
proposed, and they had recommended this to accomplish more 
energy security so that we are less reliant on imported oil. 
They have recommended this to reduce energy costs to consumers. 
They have recommended these investments in order to deal with 
environmental challenges in addition to the other two matters I 
have described.
    So you will see that, with respect to the Department of 
Energy, the dollars that we are asking for, for 1999, build on 
programs that we have already had, in renewable energy, in 
energy efficiency, and in breakthrough technologies that are so 
important, like fuel cells which are going to be key to the 
development of new cars.
    I think the only area--and it is a relatively small amount 
of money--that we have requested in 1999 that is, in a sense, a 
new type of program is in carbon sequestration, which frankly 
will help U.S. companies today that are concerned about their 
carbon emissions.
    So, for all those reasons, even if we did not have a Kyoto 
Protocol to deal with--and as you know, we have not submitted 
that to the Senate for ratification yet because we do not have 
meaningful participation on the part of developing countries--I 
believe these are things we ought to be doing, anyway.
    We ought to be using our energy more efficiently. We ought 
to be driving down costs for the American consumer. We ought to 
be finding a way to be less dependent on foreign oil, and for 
all those reasons, I think these investments supported by the 
scientists of our country are very wise for the future of our 
economy and for the future of our well-being as Americans.

                          million solar roofs

    Mr. Fazio. In this regard, could you give the committee 
your reasons for asking for the million solar roofs initiative 
to be adopted, and how is that going to operate?
    Secretary Pena. Frankly, Congressman, it is operating 
surprisingly well.
    The President issued a challenge when he spoke to the 
United Nations last year that by the year 2010 to have a 
million solar roofs and a million solar facilities installed 
throughout the country.
    We then started reaching out to utilities and others, and 
we have essentially received feedback from a number of these, 
such as, for example, the Sacramento Municipal Utility District 
in California who I think has committed to do 20,000 
themselves, and already are close to the 500,000 mark. So we 
are about halfway there.
    So I feel very confident that we are probably going to 
surpass the one million mark, but we are asking for additional 
funds here to help in certain areas, bring down the costs of 
certain technologies, and in particular help us do some 
breakthrough technologies that we think will be more market-
oriented so that we can, generally speaking, see a much greater 
infusion of solar and wind and other technologies throughout 
the economy. I think we are doing fairly well, and I feel very 
confident we are going to meet that goal.

                                 fusion

    Mr. Fazio. I heard the word ``fusion'' as part of a word 
you used there. I will take that as a segue to my last 
question, Mr. Chairman, and that is the fusion program.
    The Department's proposed increases in FY 1999 for energy 
research are premised in part at least on the PCAST report, 
but, in fact, the PCAST report and the Department's own fusion 
energy advisory committee have recommended a $250 million or 
$20 million increase, for fusion energy sciences for FY 1999.
    Could you reconcile the decision that was made, obviously, 
a budgetary decision, to not support the recommendations of 
those two agencies?
    Secretary Pena. Congressman, I think perhaps we need to 
explain what we have done in fusion a little better.
    As I understand it, in the past fiscal year, we had a 
significant contribution to the ITER program. This year, we 
have significantly reduced that contribution, and so we are 
taking that base money that was used for ITER and transferring 
it over to the fusion program. That, perhaps, we did not 
clarify in the budget.
    So, in that sense, we have, I think, solidified our work in 
fusion, given the transfer we have made away from the ITER 
program, but I can give you much more information about that.
    Mr. Fazio. If you would for the record, I am sure it would 
be of interest to the community that is very concerned about 
this funding level.
    Secretary Pena. I would be happy to.
    [The information follows:]

                                 Fusion

    The distribution of the requested funding within fusion is 
generally consistent with the guidance of the reports of the 
President's Committee of Advisors on Science and Technology and 
the Department's Fusion Energy Sciences Advisory Committee. 
Areas such as facility operations and alternate concepts have 
been emphasized as well as efforts to achieve low-cost 
International Thermonuclear Experimental Reactor (ITER) design 
options. The magnitude of the fusion request, however, is based 
on budgetary considerations and the priority for fusion 
research.
    FY 1998 funding for ITER of $52,579,000 is accounted for in 
FY 1999 by a $1,496,000 reduction in the total fusion funding, 
and by a reallocation of the remaining $51,083,000 as follows:

          REALLOCATION OF FISCAL YEAR 1998 ITER PROGRAM FUNDING         
                            [B/A in millions]                           
------------------------------------------------------------------------
                                                                Change  
------------------------------------------------------------------------
Alcator C-Mod/DIII-D facility operations/research..........         +6.8
Alternate Concept experiments..............................         +5.8
Theory.....................................................         +1.7
Plasma Technologies........................................        +16.1
Fusion Technologies........................................         +5.5
Advanced Design............................................        +15.2
                                                            ------------
    Total..................................................        +51.0
------------------------------------------------------------------------

    A large portion of the reallocated ITER funds has been 
allocated to the operation of DIII-D and C-MOD in order to 
ensure that the U.S. continues to have significant technical 
influence with the international fusion program in future 
years. Both Europe and Japan have strong tokamak programs in 
support of ITER. In concert with our international partners, 
the U.S. intends to contribute to the tokamak database and 
pursue tokamak improvements through increased operation of 
DIII-D and C-MOD. Similarly, the theory funding is increased to 
pursue increased understanding of fusion science. At the same 
time, the funding shifted to alternate concepts will assure 
that the U.S. continues to play an important role in the 
evolution of fusion concept development over the longer term. 
The plasma and fusion technologies funding is increased to meet 
the needs of the U.S. domestic fusion program, thereby, 
enabling existing and planned U.S. plasma physics experiments 
to fully exploit their performance capabilities. Some of this 
technology work will also benefit ITER and will be considered 
dual-purpose. The advanced design funding is increased to 
support ITER joint baseline design ($12 million) as well as to 
begin identifying an attractive path toward fusion energy 
including investigation of potential non-electric applications 
of fusion as well as a broad range of low cost design options 
to supplement the ITER design ($3.2 million).

    Mr. Fazio. Thank you, Mr. Chairman.
    Mr. McDade. The Chair recognizes the distinguished 
gentleman from Kentucky.

                         stockpile stewardship

    Mr. Rogers. Thank you, Mr. Chairman.
    Mr. Secretary, it is certainly good to see you here.
    I want to take you back to the stockpile stewardship 
program because you are asking for this year, for 1999, $2.188 
billion. That is an increase of $330 million, almost 18 percent 
above the current appropriations. So, obviously, it is a big 
expenditure and expensive.
    I am looking for some assurance that the computer 
simulations will work. As are you, I am sure. There is a recent 
story in the National Journal where many nuclear scientists say 
that it is very complex, highly complex, very expensive, as we 
are seeing, and no one can say with confidence whether the 
goals of the program can actually be attained.
    So, one, I am looking for assurance from you and from, 
pardon me, some nuclear scientists----
    Secretary Pena. Absolutely.
    Mr. Rogers. That can give us some assurance that this will 
work because we have a lot riding on this, not just money, 
obviously. Money is the least of the things that can happen if 
it does not work.
    So can you help me out?
    Secretary Pena. I will try my very best, Congressman, and 
you are absolutely right. I think it is always very helpful to 
hear directly from the scientists and from the laboratory 
directors. I spend a lot of time with them because I ask the 
very same questions, and the reason I ask those questions is 
because I have to sign my name on the annual certification to 
the Congress and to the American people, together with the 
Secretary of Defense, that our nuclear stockpile is, in fact, 
safe, secure, and reliable without doing underground testing, 
and we have to do that on an annual basis. So I have spent a 
lot of time with our scientists and our laboratories 
understanding the processes they use.
    Let me try to answer your question. With respect to the 
super computing capabilities that our scientists need, we are 
making remarkable progress.
    In December of 1996, the Department announced for the first 
time in the history of the world a 1 trillion operation-per-
second super computer. By the end of this year, we will take 
that up to 4 trillion operations per second.
    We have issued a contract to take that then to 10 trillion 
operations per second, then 30 trillion operations per second, 
and then to 100 trillion operations per second.
    Now, to a layman like myself, when people tell me that we 
are going to make these leapfrog advances in computers, I 
pause. Obviously, those are gargantuan increases in super 
computing capability.
    The response that I hear from our scientists is that we are 
meeting our goals. No one thought that we would be at 3 
trillion operations per second this year. It was originally 
estimated we would not be there until the next century.
    So far, they have been very optimistic about the super 
computer capabilities and our ability to meet those targets, 
and let me emphasize one point because I think this is very 
important. Please remember that your Department of Energy is 
the world super power in super computers. No other country in 
the world is close to us, and we need to continue to keep that 
lead in my judgment, not just for our stockpile stewardship 
capabilities, but because it has enormous applications to the 
private sector and to the work we do in other aspects of 
society.
    So, thus far, the laboratory directors and those who work 
on super computers feel very good about the super computing 
program.
    As you stated, there are other aspects to the stockpile 
stewardship program, including the National Ignition Facility, 
and some other tools. The questions that I ask our scientists 
are, do we have a high degree of confidence that when those 
facilities are built--and, thus far, the National Ignition 
Facility is on budget and on time--we will have the kind of 
capability we need to be able to certify to the President and 
to you that our nuclear stockpile is safe, secure, and 
reliable. Thus far, they are saying the answer is yes, but this 
will be an annual certification, and any time that I or any 
future Secretary of Energy or Secretary of Defense, based on 
the certifications we get from our laboratory directors, have 
any information that somehow we cannot continue this program 
because we need to revert back to underground testing, we would 
not sign the certifications to the American people and to the 
Congress.
    Mr. Rogers. Well, in the National Journal article that I 
mentioned, there is a quote in there, and I am quoting, ``There 
is not a man or a woman involved in stockpile stewardship 
willing to say with certainty whether the goal of the program 
is attainable.'' Is that a fair statement?
    Secretary Pena. Well, if the question is, can anyone sit 
here today and say that in the year 2010, the stockpile 
stewardship program will be a success without underground 
testing, I do not think anyone is going to come up here and 
give you that kind of a definitive answer.
    I think what they will tell you is that the program, thus 
far, is on track. We are now in our second year of 
certification. We are on track with the technologies that we 
need to develop, and with the safeguard--I think it is 
Safeguard F--in the Comprehensive Test Ban Treaty, is that if 
in any future year, any future scientist, laboratory directors, 
or the Secretaries of Energy or Defense have information that 
does not allow us to make that certification; the certification 
will not be made.
    Mr. Rogers. Let me try to clarify this. As I understand it, 
Mr. Secretary, the Presidential directive, which established 
the stockpile stewardship program, provided for the Commander 
in Chief to issue a ``supreme national interest'' waiver to 
nuclear testing if the Secretaries of Defense and Energy and 
the Joint Chiefs and the U.S. Strategic Command certify that 
the stockpile is not safe and reliable, and, yet, the 
administration is urging the Senate to ratify the Comprehensive 
Nuclear Test Ban Treaty.
    So the question arises. Suppose the Senate ratified the 
treaty. Could that supreme national interest clause of the 
Presidential directive still be invoked with the treaty in 
force to allow nuclear testing?
    Secretary Pena. Yes, and the way it would be invoked is 
under, I believe it is, Safeguard F, which is part of the 
treaty submitted to the Senate. In the future if this annual 
certification could not be made, then the President would have 
the authority to exercise, in effect, the waiver of national 
security and argue that the country should go back and resume 
underground testing.
    Mr. Rogers. Under the program now in place, when will we 
get to the point where we can be assured that the stockpile can 
be certified as not only safe, but armed and effective without 
nuclear testing?
    Secretary Pena. We are there today, Congressman. We had 
made that certification last year. We have made that 
certification this year. Based on the information that I have 
before me, we expect to make it next year.
    So, thus far, we are 2 years into this annual 
certification, and if I might, let me just spend a minute to 
explain how I do it, and I can give you a little sense of how 
the Secretary of Defense does it.
    First of all, the laboratory directors, each one of them, 
evaluate the work of their own scientists, and what we are 
doing with our weapons is, in effect, inspecting them with more 
precision than we used to do, and that means taking apart, on a 
sampling basis, each of the components of a weapon, and in the 
event we find a problem, we then can correct it. Thus far, we 
have been able to do that.
    After they have done that and after they have made their 
own certifications, they then send their certifications to me. 
The Nuclear Weapons Council then meets and reviews those 
certifications from the laboratory directors. They then make a 
recommendation to me, and then I make my own independent 
certification.
    Parallel to my work is the work done by the Secretary of 
Defense. He has his own parallel process where he uses 
STRATCOM, headed by General Habiger. General Habiger has his 
own separate advisors of either former lab directors and other 
scientists who give him advice. They make their determination, 
and then they send their separate certification. Then he and I 
literally sign the same document indicating that our own 
independent views here allow us to certify to the Congress that 
our nuclear weapons complex is safe, secure, and reliable 
without underground testing.
    So, in a sense, we check each other, and anywhere along the 
line, if either one of us are not able to make that 
certification, then the provision of the Comprehensive Test Ban 
Treaty, Safeguard F, would be triggered.
    Mr. Rogers. I am a little bit confused. I think you earlier 
said that there is no way you can 1,000 percent certify based 
on present knowledge that the stockpile is safe and reliable.
    Secretary Pena. No, Congressman. You were asking me a 
question about the future, and I answered the question, can I 
today make that prediction about the year 2010. This is an 
annual certification process. We do it every year. So we had 
annually certified, last year and this year, that, in fact, our 
nuclear stockpile is safe, secure, and reliable without 
testing.
    Mr. Rogers. How can you say that? How can you say it is 
safe and reliable without testing when the super computing 
operation is not quite yet wrapped up to racetrack speed?
    Secretary Pena. Because we do not need them today. We will 
need that super computing capability in approximately the year 
2004, 2005, 2006, because at that time the weapons material 
will be aging, and we will need that new technology to make 
predictions about materials in the weapons in that time frame 
with this new technology, but we do not need that technology 
today to make the certifications.
    Mr. Rogers. Why not?
    Secretary Pena. Because, number one, we have weapons which 
are not as old. We have the information from about 1,000 
nuclear tests that were done before. We have better information 
based on our physical inspection and surveillance of the 
weapons which is now done much more thoroughly and much more 
robustly than in the past, and we have the capability to make 
adjustments to those materials as we find them.
    So, based on all these techniques that we use today, on a 
system of weapons that is not ``aged'' compared to where they 
might be 10 or 15 or 20 years from now, all of our scientists 
and engineers and the laboratories are able to certify to me 
and others that our stockpile is safe, secure, and reliable 
without underground testing. This is an annual certification 
process, and we have to do it and repeat it every year and 
reach the same level of certainty. Otherwise, we will not make 
the certification.
    Mr. Rogers. Thank you.
    Mr. McDade. The Chair now recognizes the gentleman from 
Texas.

            nonproliferation of weapons of mass destruction

    Mr. Edwards. Thank you, Mr. Chairman.
    I am going to ask a couple of questions, Mr. Secretary, as 
long as my voice holds out, but I will follow up with written 
questions if necessary.
    I would like to focus on the issue of nonproliferation of 
weapons of mass destruction. I first want to commend you for 
your efforts in dealing with getting our arms around the 
nuclear situation in the former Soviet states.
    Having said that, though, I am bothered by the disconnect 
between the President saying that the issue of nonproliferation 
of weapons of mass destruction is a national emergency, and 
then looking at page 56 of your budget report, which in the 
area of nonproliferation and national security has a freeze in 
three different areas: nonproliferation and verification R&D, 
intelligence, and security investigations.
    When we can up the highway budget by $10 or $20 or $30 
billion, when we decide to, if we can provide hundreds of 
millions of dollars of increases and requests for renewable 
energy resources, all of which are important programs, it seems 
to me that when literally the lives of American civilians 
living in the United States are at risk to a terrorist today, 
especially from chemical and biological weapons, why has 
administration been so tepid in its response to what it is 
calling a national emergency?
    Secretary Pena. Congressman, it is my judgment that we have 
not been tepid, if I might respond to your question directly.
    In Russia and in the newly independent states--in the sites 
where we are doing work, it is going well. It is a relatively 
new program. We are now in 53 sites. I asked the question, how 
many more sites can we be in? The answer is these are all the 
known sites that have been made publicly available to us, or at 
least that we know about where we have this challenge of 
securing those sites. We are in every one of those sites.
    So, until we learn that there are more sites--and it could 
be that in 2 or 3 years, we learn that there is another site 
someplace--the money that we have for that program is what is 
needed to get that work done.
    In the arms control part of our budget, there are some 
additional funds for nonproliferation and verification, which I 
think we need to bring to your attention, Congressman. So I 
think when you look at all aspects of our budget, you will see 
that I think we have got a fairly healthy commitment to this 
whole area of nonproliferation and verification, but let me get 
that in a more precise way so I have a fuller understanding of 
what our total budget looks like.
    [The information follows:]

        Increased Support For Critical Nonproliferation Efforts

    We are rapidly expanding the Department's efforts to secure 
the hundreds of tons of material in Russia, the Newly 
Independent States and the Baltics in order to implement 
systematic and rapid MPC&A upgrades. We are very pleased with 
recent progress in the naval and transportation sectors with 
the Russian Federation which will accelerate our efforts in 
these areas.
    In support of the Helsinki Summit Statement to meet 
specified lower levels for strategic warheads as well as 
transparency of strategic nuclear warhead inventories and the 
prescribed reductions and destruction of the weapons components 
and fissile materials, we are requesting additional funding to 
support the increased workload.
    The FY 1999 request provides additional funding to assist 
Kazakhstan to meet urgent security and storage requirements for 
plutonium-bearing spent fuel located at the Aktau Reactor in 
Kazakhstan. This additional funding will assist Kazakhstan to 
meet the long-term security and storage requirements for the 
fuel.
    Increases in the International Safeguards area reflect 
enhanced support and technical assistance to the International 
Atomic Energy Agency (IAEA) for the development of new 
strengthened international safeguards policies and methods; 
additional work toward the development and implementation of 
the U.S., IAEA and Russian Trilateral verification program to 
apply IAEA safeguards measures on U.S. and Russian excess 
nuclear material; and support for continued IAEA inspections on 
U.S. nuclear material under IAEA safeguards and the submission 
of additional U.S. excess material from the 200 metric tons to 
IAEA safeguards.

                           Emergency Response

    Mr. Edwards. Mr. Secretary, as I said in prefacing my 
questions, I think you have done a good job with your resources 
in regard to nuclear proliferation, but I think we are probably 
less than tepid in responding to the national emergency of 
potential threats to not only our forces abroad, but civilians 
right here at home, to biological and chemical weapons. A 
freeze in three accounts does not seem to me to be a national 
emergency response.
    Let me ask you this specific question. If a terrorist from 
abroad were to get enough anthrax that would fill this water 
jug and this afternoon, either via truck or with aerosol spray 
or in a Cessna 172 fly over Washington, D.C., and release this 
amount of anthrax, again applied with aerosol in Washington, 
D.C., what would happen, and what would be our response? And do 
we have the antidotes to in any way save the lives of, I 
assume, millions of people who could die?
    Secretary Pena. The results would be catastrophic, 
Congressman.
    We have recently had discussions not only in my Department, 
but throughout the administration about how we can, with all 
the Departments involved, utilize our intelligence-gathering 
operations, which are the best offense in trying to anticipate 
and identify potential individuals who might be engaged in 
that----
    Mr. Edwards. And you have a freeze in your intelligence 
budget request.
    Secretary Pena. There are other Departments, Congressman, 
who are responsible for that aspect of this entire program; the 
Department of Defense, which also has responses in this area; 
FEMA, which has jurisdiction in terms of coordinating responses 
if there were a problem; and the technology that we are 
developing in the Department of Energy where, for example, in 
Iraq we provided to our armed forces technologies that can 
predict the plume of a biological release so that we can warn 
our troops that in 50 minutes a plume will be coming your way, 
which is our responsibility.
    We have made better efforts to coordinate all the work in 
the administration in the area of biological and chemical 
weapons which, you are right, the President has declared 3 
years in a row as a national priority.
    So I think, compared to where we were 3 years ago, we are 
both in terms of budgetary response and overall Government 
coordination, focused intensely on this issue because it is a 
very high priority.
    Let me, if I might, give you additional information in 
writing about other budget categories we have in our overall 
Department, which will respond to the questions you have 
raised.
    [The information follows:]

          Chemical and Biological Weapons Detection R&D Budget

    While the Nonproliferation and Verification Research and 
Development budget is flat, the chemical and biological 
nonproliferation program is funded at $19 million for FY 1998 
and FY 1999 and is focused on the problems related to 
countering a terrorist action. The program will provide 
technologies or technical capability which will assist first 
responders in planning for, responding to, and detecting/
identifying terrorist acts using chemical or biological agents. 
The goal of the Department's chemical and biological 
nonproliferation research and development program is to develop 
and field advanced technologies that will dramatically improve 
the nation's capabilities to prepare for, detect, and respond 
to terrorist use of chemical or biological weapons. The DOE 
program will advance the state of technology in four key areas: 
chemical and biological agent detection; modeling and 
prediction of agent dispersal in complex, urban terrain; 
decontamination and restoration; and biological agent forensics 
and attribution.
    In addition, the Initiatives for Proliferation Prevention 
(IPP) program has instituted projects which facilitate broad 
access to NIS chemical and biological facilities in order to 
achieve close working relationships of DOE laboratory 
scientists and engineers and their NIS colleagues to promote 
openness and transparency. Of its total budget to date of 
$114.2 million, IPP has funded $4.9 million in chemical weapons 
(CW) and biological weapons (BW)-related projects: $1.4 million 
of projects involving former CW or CW-related institutes (all 
in Russia); $2.1 million of projects involving former Russian 
BW or BW-related institutes; and $1.4 million of projects 
involving former Kazakhstani BW or BW-related institutes. This 
represents approximately 6% of the total IPP funding through FY 
1997. As a goal, IPP seeks to expand its cooperation in this 
area to 20 percent of its funds on CW and BW-related projects. 
(The remainder focused directly to nuclear-related projects.) 
There are currently ten IPP CW and BW-related projects in the 
final approval process.

    Mr. Edwards. Could you specifically respond to the question 
of what would we do if this amount of anthrax were spread 
throughout any major city in the United States? I will finish, 
Mr. Secretary, with a comment.
    Secretary Pena. I will provide that information.
    [The information follows:]

   What Would We Do If Anthrax Were Spread Throughout Any Major City

    The Department historically has focused on the nuclear 
threat because that falls within our core mission area. 
However, in recent years in our research and development 
program we have been leveraging our vast knowledge in the 
nuclear arena to provide technologies to deal with the chemical 
and biological concerns.
    In the event of a chemical or biological attack in the 
United States, the Department of Energy would provide support 
and assistance to federal agencies and state and local 
governments by ensuring that our emergency management 
capabilities and response assets that can be utilized to 
protect the health and safety of the American public are fully 
mobilized to provide all assistance possible. These emergency 
management capabilities are primarily located at our facilities 
and are focused on response to industrial chemical and 
radiological hazards. Our assets are deployable and both our 
assets and our fixed capabilities would be offered to assist in 
response, mitigation, and/or recovery from attack. I would like 
to point out that we would not provide a direct, on-the-ground 
response to a chemical agent or biological release in the 
United States. We do not have the specialized, trained 
capabilities required. Immediate response would be provided by 
local agencies with supporting expertise from other federal 
agencies such as the Departments of Defense, Health and Human 
Services, Justice, and the Federal Emergency Management Agency.

    Mr. Edwards.  I am not just being critical of the 
administration. I think Congress has had its attention focused 
on the nuclear issue from the day I was in grade school and the 
Cuban missile crisis. So Congress and the administrations of 
the past responded to this generation of fear of nuclear 
fallout, but I think we are missing the boat.
    I think the answer to my question is there is not a heck of 
a lot we would be able to do today if this amount of anthrax 
were spread over Washington, D.C., given that I understand 
intelligence is one way to prevent that.
    I look forward to working with you some more on this and, 
hopefully, assist in this team effort. We in Congress have to 
make a priority of this as well.
    Mr. Chairman, thank you for your time.
    Secretary Pena. Mr. Chairman, if I could, just on that 
note, invite the members to a display of technology that we 
will have--it was with the House side yesterday, and I believe 
it will be on the Senate side tomorrow, which has a number of 
the technologies that DOE is now using, experimenting, for 
example, with New York City on some LIDAR equipment, et cetera. 
So you can get a sense of some of the technologies that we are 
developing, particularly to deal with chemical and biological 
releases in our country and how we can detect them.
    Mr. McDade. The Chair now recognizes the gentleman from 
Michigan.
    Mr. Knollenberg. Mr. Secretary, how are you?
    Secretary Pena. Fine.
    Mr. Knollenberg. Speaking of elevators, we rode up on one 
just the other day, as I remember. It was a general, generic 
elevator.
    Secretary Pena. That is right.

           Management of the Environmental Management Program

    Mr. Knollenberg. Sometimes it does not work.
    I want to very quickly ask you--and I do appreciate your 
coming and your testimony. I want to focus on a concern that I 
had with respect to the vacancy of the Assistant Secretary of 
Environmental Management. That position has not been filled. It 
has been vacated since the fall.
    Secretary Pena. January. No, January, sir.
    Mr. Knollenberg. I recall it was back in November when I 
got the call. Did he not remove himself, or was he not removed 
before the beginning of the year?
    Secretary Pena. I will go back and look at my records.
    [The information follows:]

       Date of Former Assistant Secretary Alvin Alm's Resignation

    Al Alm resigned from his position as Assistant Secretary 
for the Office of Environmental Management on January 30, 1998. 
He announced his intention to resign around November 1, 1997, 
and members of the Subcommittee were notified of Mr. Alm's 
pending departure in November.

                    Environmental Management Vacancy

    Mr. Knollenberg. I am just concerned, more significantly, 
about who is in the wings, who are you considering?
    I know you have an interim individual. Interim suggests 
that that is exactly what they are. They are interim. They are 
not positioned permanantly. Do you have someone in mind, or is 
that expected shortly?
    Secretary Pena. Congressman, let me assure you that we have 
a number of issues we are dealing with in terms of personnel in 
the Department. This is right at the top.
    I think this is perhaps one of the most difficult jobs in 
the Government today, and the fact is that in the many 
interviews I have had with a number of individuals--and we are 
in particular trying to find someone who has privatesector 
experience who understands how to deal with complex projects, who 
understands how to work with the private sector, who knows how to get 
these kinds of things done, which is a unique experience----
    Mr. Knollenberg. So you do intend to make the appointment 
as soon as possible?
    Secretary Pena. Absolutely, Congressman. We are working on 
interviewing lots of people.

                          accelerated cleanup

    Mr. Knollenberg. Let me go to a point that is very 
important to me. You and I have talked about this, both last 
year and during this year. It has to do with bringing to 
closure some of these individual sites, and, in particular, I 
want to focus on Rocky Flats.
    As you and I have discussed, we have a lot to gain by 
bringing to closure these locations because, frankly, in the 
long run, we save a great deal of money. That is obviously an 
advantage for you and for us and for the country.
    I am stacking some books up in front of me. When I first 
became a member of this subcommittee, we got the 1995 BEMR. I 
think that is what we called this guy right here. And there 
were three volumes, and that kind of disturbed me, but I 
thought, well, okay, three volumes.
    Then we had the 1996 BEMR, and that is this guy. It is, in 
terms of weight, it is more than double.
    Then I have the 1998. There was nothing in 1997. The 1998, 
now we have some 12 volumes that are packaged inside this band 
here. I am beginning to wonder if this thing is getting more 
difficult or simpler. Apparently, it is getting more difficult.
    I looked also at some of the reports within each of these, 
1995, 1996, 1998. We are talking about a 75 year projection for 
bringing these things to closure. Incidently, in 1996, that was 
one volume more than 1995, and they reduced the cost projection 
from $230 billion to $227 billion.
    We just received a DOE draft report. That is this right 
here, which evolved from the 10 year plan, and this report is 
made up of about a dozen volumes. I would say that we will 
spend about $189 billion over a 75 year period. That is a $38 
billion reduction.
    If I were to make an observation from all of this, for 
every volume that we had to the EM cleanup plan, we save about 
$3 billion.
    So one of the things I might suggest, and I do this 
humorously, is go back, bring forth 100 volumes of this kind, 
and we will be done with the whole thing. It will be over.
    I know that is not possible, but now we can move the books. 
Thank you.
    We are still concerned about this whole draft program. That 
is just for illustrative purposes, but you see what we have to 
decipher, and, yet, we still have not brought to an end 
anything but a 75 year projection.
    You were going to let us know when we might expect the 
completed report on accelerating the cleanup, and, also, what 
your analysis of the entire EM program was.
    I am concerned about this, and I just mention it to you 
because I know, a year ago, you mentioned to me in this 
meeting, the same meeting, that with respect to Rocky Flats, 
you expect to see that come to closure by the year 2006. That 
is in the record.
    I know that the ``Paths to Closure'', the closure plans, 
assume a funding baseline of $6 billion for 1999, but the 
administration only requested $5.78 billion. I have to wonder, 
did the DOE find some additional savings somewhere in order to 
come in with that figure that is under $6 billion, and would 
you respond?
    I think that is valid. $6 billion for 1999 was what the 
closure plan projected, but you have come in at $5.78 billion. 
I have a reason for asking this because there is a follow-up 
question to that. Why is the DOE amount less than the level of 
funding that was anticipated?
    Secretary Pena. Congressman, I know that when we did 
``Paths to Closure'' in that multi-year analysis, we had 
assumed for estimating purposes that we would have $5.75 
billion every year, I believe, for the next 10 years.
    If we look at the current outlay numbers, we are not going 
to have $5.75 billion per year. Of course, outlay numbers are 
outlay numbers, and we know that every year is a different 
budget.
    The point we were trying to make in that document is that 
overall we are going to have a funding shortfall over a period 
of years if we want to meet the targets that we have outlined 
in this new strategy. It was illustrative, but I think the good 
thing about this work is that we now have a closure strategy 
for each one of the projects in the country, and I think that 
is a first. So, hopefully, that will give us some guidance 
about how to proceed, but let me get back to you and answer 
this.
    [The information follows:]

             Environmenal Management FY 1999 Budget Request

    The budget request for Environmental Management (EM) for FY 
1999 totals $6.1 billion. This request includes $5.6 billion in 
traditional budget authority, and an additional $517 million in 
budget authority for privatization projects.
    The draft strategy, Accelerating Cleanup: Paths to Closure 
uses an assumed funding level of $5.75 billion (in current year 
dollars) to establish baselines and to demonstrate what can be 
accomplished with a constant funding level over time. EM 
established the assumed funding level last October prior to 
receiving final FY 1999 and out-year budget targets from OMB. 
It was essential to establish an assumption at that time in 
order to produce a draft report by February 1998 when the 
President's budget was submitted to Congress.
    It is important to understand that Paths to Closure is not 
a budget or decision document. Rather, it provides a useful 
planning tool for assisting in annual budget formulation and 
site and project planning.
    Given the constant funding levels assumed in Paths to 
Closure and the underlying requirement used to establish the 
site baselines in Paths to Closure, differences between site 
baselines and the budget are inevitable. The Environmental 
Management program recognizes that there will also be 
differences in future iterations of Paths to Closure between 
assumed funding levels, budget requests and appropriations due 
to the dynamic nature of the budget process.
    The FY 1999 Congressional budget request was designed to 
provide a funding level sufficient for EM to conduct operations 
in a safe manner; achieve regulatory compliance goals; achieve 
completion and closure goals; and provide essential landlord 
services and activities (i.e., security, site infrastructures, 
etc.).

                          rocky flats closure

    Mr. Knollenberg. Let me share some information with you 
that I received in a meeting last week with some of the 
contractors at Rocky Flats.
    They gave us a pretty compelling chart. I am going to ask 
that that chart be circulated. That suggested how many projects 
they anticipate they will not be able to complete due to the 
reduced level of funding.
    Does everybody have that chart? It is a three-column 
affair, and it has three columns of the various projects. The 
first column demonstrates how much will be completed if we had 
and continue to fully fund Rocky Flats to the so-called paths 
to closure draft for fiscal years 1998, 1999, and 2000.
    Even under this funding scenario, Rocky Flats would not be 
closed until 2010. The second column, which is a shorter list 
of projects, demonstrates again how many will be completed if 
we increase the funding level to, again, the paths to closure 
draft levels.
    The scenario places closure by 2010 in jeopardy, and, yet, 
the DOE request, as I have said, is below this amount. The 
third column demonstrates how many projects will be completed 
if we only fund Rocky Flats at the reduced DOE request level of 
those fiscal years 1998, 1999, and 2000, and it virtually 
guarantees, if it is valid, that we will not be able to close 
the Rocky Flats site by 2010.
    You can see how many fewer projects will be completed under 
the reduced funding scenario, and, again, I want to stress, 
even if we had fully funded Rocky Flats at the paths to closure 
level, the contractors stated they would be able to close by 
2010. They are not even discussing the year 2006.
    So I would like you to respond. Do you still believe that 
we will be able to complete the cleanup of Rocky Flats by the 
year 2006?
    Secretary Pena. Congressman, that is certainly our goal, 
and let me be very specific about Rocky Flats, since I have 
spent some time on this subject.
    There are legitimate differences of opinion, and I respect 
those, between the views of the contractor, between the views 
of our field operation, and headquarters, and I have asked my 
team to come to final closure about those legitimate 
differences of opinion.
    We all are on the same page in the sense that we want to 
hit the 2006 goal. That has not changed. I have not changed my 
view about that. No one in EM has changed their view about 
that, but, as I said, I think there are some legitimate 
questions.
    For example, how do you quantify the value of the vault 
that is not going to be built at Rocky, but is going to be 
built at Savannah River? It is for the benefit of Rocky, but we 
do not carry the value of that vault in the Rocky budget. So, 
if you look at the Rocky budget, it looks like it is less, and 
that was a concern about last year's budget compared to this 
year's budget, and someone argued we had $7 million less last 
year.
    Well, we did not count the vault for the budget this year, 
but building that vault in Savannah will allow us to move the 
material out of Rocky to Savannah, significantly bringing down 
the costs to Rocky, but that is an example of the kind of 
question about how you count that number, and that is all I am 
saying. There are some legitimate differences of opinion, but I 
want to answer your question.
    Our goal is to clean up Rocky by 2006. We are going to 
bring these parties together where there are some differences 
and finally come to closure on what we agree on and then come 
back to you with a fuller answer.
    Mr. Knollenberg. It just seems to me that if, in this year, 
if we are that short of the amount that has been projected to 
be needed to bring it about to closure in 2006, it would be 
somewhat scary, I think, and it suggests why wouldn't we fully 
fund that closure?
    I think on that sheet, it indicates the three different 
levels of funding for the three different areas of projects 
that would be covered, and I think this committee has some 
concerns about completing cleanup. I know that I do. And I 
think if we could just for once bring one of those, one of 
those huge locations to closure--I mean, this is your home 
State. It's Rocky Flats. It is Boulder. It is Denver, and I 
have traveled there, as you know, and been there to look the 
situation over. It seems that everybody is together.
    Secretary Pena. That is right.
    Mr. Knollenberg. The city, the community, the State, the 
environmentalists, almost everyone feels, as far as I know, 
let's do it. It would seem to me if we could just concentrate 
on doing that, we could show the country, the world, that we 
are done, and I am just concerned about some of these numbers 
that do not add up. I know that it is difficult to maybe make 
some projections, but I think what we have to do is get some 
answers on this. If there are problems, maybe we can intercede 
in some fashion to help you.
    I know you want to bring this about.
    Secretary Pena. Yes.
    Mr. Knollenberg. And we have talked about that. So I would 
just urge you, and I guess I am over my time, to put some heavy 
emphasis on that, to bring in somebody, to take that position, 
as soon as possible, and we can get on this together.
    Thank you.
    Secretary Pena. Thank you, Congressman. I agree, and thank 
you for your support. We will get back to you with a more 
specific answer on Rocky. I could not agree with you more about 
the overall agreement in Colorado and in our Department about 
bringing this to closure in 2006.
    Thank you.
    [The information follows:]

                          Rocky Flats Closure

    The Department's Rocky Flats Closure Team, consisting of 
the Field Office, Department of Energy Headquarters (DOE) staff 
and the contractor Kaiser-Hill are committed to fully support 
2006 closure of Rocky Flats Environmental Technology Site as an 
aggressive but achievable goal. There are a number of 
conditions that must occur to accelerate closure from 2010 to 
2006. These include: policy initiatives largely in the hands of 
DOE Headquarters, funding assumptions and work efficiencies 
largely in the hands of the site, and funding provided by 
Congress. To facilitate accelerated closure, DOE is committed 
to pursuing the following:
    Accelerated removal of plutonium residues as waste to WIPP 
by 2002;
    Accelerated shipment of plutonium metals and oxides offsite 
by 2002;
    Shipment of plutonium pits to Pantex by 12/98;
    Shipment of highly enriched uranium to Oak Ridge by 9/99;
    Removal of all remaining transuranic, mixed low level and 
low level waste off-site;
    Maximizing opportunities for dispositioning excess 
property; and
    WIPP opening on schedule to begin receiving Rocky Flats 
wastes before the end of this fiscal year.
    These activities are on the critical path for Rocky Flats 
closure and must be completed in order to reach our site 
closure goal by 2006.
    In addition, DOE will review and validate the Life Cycle 
Baseline for Rocky Flats closure in order to identify 
opportunities for redirecting funds to accelerate work scope. 
DOE is working to establish the scope and schedule for the 
validation. The validation will be independent and will include 
reviewers from other DOE elements, field organizations and 
outside expertise. We expect to complete the initial validation 
in June 1998.
    As you can see, there are many activities that must be 
completed, along with funding efficiencies identified, in order 
for DOE to meet the aggressive goal of Rocky Flats closure by 
2006, but we are committed to pursuing this goal.

                   Solar and renewable energy budget

    Mr. McDade. The Chair now recognizes the gentleman from 
Arizona.
    Mr. Pastor. Thank you, Mr. Chairman.
    Good morning, Mr. Secretary. First of all, let me apologize 
for going back and forth. As you know, we have two committee 
meetings going on, and so we apologize, at least I apologize, 
for not being here for the entire hearing.
    I have two questions, Mr. Secretary. The first one, I see 
in your testimony that there is an increase for solar and 
renewable resources technology, and I am very happy to see that 
your budget includes $78.8 million for photovoltaics, which is 
an increase of $13.3 million from the last year.
    Last year, as I recall, most of the money was going into 
application and development. The development, you pretty much 
have done, but the application of the solar shingles 
technology, I wanted to know how that is coming. Secondly, 
where do you think we are going to go into further research in 
the Department in that area?
    Secretary Pena. Congressman Pastor, let me say you are 
absolutely right. We had a high priority on the solar shingles, 
and they are basically out. You can now purchase them. So 
people can find them at various stores.
    We believe that there is more work to do in the area of 
solar R&D. I just came back from a visit to the National 
Renewable Energy Laboratory in Colorado which is spending a 
considerable amount of its resources in trying to find more 
breakthrough technologies for solar.
    We still want to reduce the cost for certain technologies, 
and we think that there is great promise there. We are going to 
do a $10 million competitive solicitation to help us develop 
and deploy even more promising solar technologies, and that 
will be 70 percent shared by the private sector. So we think 
that will be very helpful.
    We are also seeking additional money for photovoltaics, 
which will again be a cost-shared R&D program with industry to, 
again, cut down the cost for manufacturing technology and 
production costs. So those will be more commercial.
    So that is the overall strategy that we are using to help 
us bring down these costs and to help do some of these 
breakthroughs in cooperation with the private sector, so that 
solar panels, shingles, and other technologies will be more 
available throughout the economy.
    I think we are making progress. The one million solar roof 
initiative has been very successful thus far. People are quite 
interested in participating in that, and we have seen just a 
renewed sense of interest and enthusiasm for the whole solar 
industry.

                  Renewable energy incentive programs

    Mr. Pastor. As you well know, in the West, especially on 
the reservations, you have a poor infrastructure of getting 
electricity into those areas. Most recently, I was on Navajo 
and Hopi reservations, and they have attempted to address that 
problem with solar panels. I think that maybe the shingles 
might be a possible solution, but, like anything else, their 
resources are very limited.
    Do you think that you would have in the future some kind of 
incentive program that would help those isolated areas to take 
advantage of the shingles and also provide further information 
on whether or not they are working?
    Secretary Pena. Congressman, we can provide additional 
information to the reservations, and we are happy to do that.
    In addition, there are tax credits that are available in 
this area that the President has proposed. So there are a 
number of different techniques that can be used here to 
encourage people to move in this direction, particularly in a 
very isolated area.
    I have been informed that one utility in Southern 
California is now finding that it is more cost effective 
themselves to install a solar panel, for example, in a certain 
community because it is far more expensive to rip up the 
pavement and install long lines to get to certain areas, and it 
also helps them deal with the baseload problem they have during 
the day when most electricity is being used in that part of the 
country.
    So we are finding in the private sector itself and some of 
the utilities themselves are now realizing that in certain 
unique circumstances, it is helpful to their bottom line to 
actually provide these technologies to some of their customers, 
but let me follow up on your particular request and see if we 
can have some people engage with the individuals you are 
referring to.

                          educational programs

    Mr. Pastor. As a short reminder, as you know, at Arizona 
State University, we have a facility that does a lot of 
research. As you continue your research and development for 
photovoltaic, hopefully you will take them under consideration 
because they are ready to help in any way they can.
    The second question deals with the laboratories. I know 
that in areas that are close to the laboratories, you have 
developed and you are very supportive of educational programs 
in the elementary schools and the high schools around the labs.
    One of the problems, at least for the people I represent, 
is they are a little further down from the labs, and sometimes 
it is difficult for them to take advantage of the programs that 
you have initiated. I would just like to hear from you what 
future plans you have to extend those type of programs so that 
students at least close enough to the labs--not nearby, but say 
the students from Arizona can get to the New Mexico labs, as an 
example.
    Secretary Pena. Congressman, thank you for that question, 
and let me address this to all of the members because I think 
this will be of interest.
    We have proposed a relatively modest $15 million addition 
to our education initiative, and let me tell you how we are 
going to use these dollars.
    We would like to have our scientists and technicians in our 
laboratories develop math and science tutorials from 
kindergarten through twelfth grade and put them on the Internet 
so that they will be available to any child and any science or 
math teacher anywhere in the country as more and more 
classrooms are now being connected to the Internet, and we are 
seeing that happen all over the country.
    We think that given the extraordinary technologies and 
resources we have in the Department, we have, for a relatively 
modest amount of investment, here an opportunity to make a huge 
difference.
    You all recently heard of Secretary Riley's report on how 
our twelfth-graders are performing in science and math. We are 
almost at the bottom of the list in terms of our competitors 
worldwide, and while we are not a Department of Education, we 
think there is a very helpful role we can play in providing 
these kinds of assistance to teachers and students around the 
country, so that all you have to do is be connected to the 
Internet.
    Secondly, we are expanding our work and encouraging 
students to come into our labs from throughout the country, and 
science and math teachers themselves can come in, get 
additional training, develop their own home page for their own 
school, but the whole idea is for us to share our resources not 
only in the geographic proximity where our labs are located, 
but throughout the country, so we can have a much better impact 
on how our children are performing in science and math.
    I think this Department has an extraordinary 
opportunityhere to make a big difference for future generations, and 
our country, I believe, cannot fall behind in science and math as we 
produce the next generation of scientists and engineers that are going 
to be sorely needed if we are going to be competitive in the world.
    So I hope the members will look at that proposal. I think 
it has great promise, and, again, I think we can have an 
enormous impact for kids around the country.
    Mr. Pastor. Mr. Chairman, I will submit the other questions 
for the record. Thank you very much.
    Mr. McDade. We thank you.
    I am pleased to recognize now the gentleman from New 
Jersey, Mr. Frelinghuysen.

                         stockpile stewardship

    Mr. Frelinghuysen. Thank you, Mr. Chairman.
    Good morning, Mr. Secretary.
    I am a veteran newspaper article-clipper, and my office is 
full of old clippings, yellowed, some new. Also, when I attend 
my town meetings, I have looking over my shoulders alumnus from 
Bell Labs, Lucent, what is left of Bell Corp, AT&T, and 
pharmaceutical companies that make up a good portion of 
Northern New Jersey. Many of them get on my case relative to 
the nuclear stockpile stewardship issue, as to the vast amounts 
of money we spend on this program.
    I did get some reassurance when I visited, through your 
good offices, a couple of your laboratories, earlier this year. 
But somewhat piggybacking on Mr. Fazio's earlier questions, and 
Mr. Rogers as well, I would like your reaction to some of the 
comments that appeared in a New York Times editorial in late 
November where they described spending for the program, and I 
quote, ``While some spending is required, the program devised 
by the Clinton administration and Congress is extravagant.'' 
The editorial goes on to say, ``Some effort to maintain 
necessary skills is appropriate. So, too, are computer 
simulations and mechanical sampling to learn more about what 
happens, to bomb-trigger mechanisms or plutonium decays. 
Adequate supplies of tritium must be ensured in case the 
warheads need to be replaced, but the stewardship program has 
not subsidized unrelated experimentation or allowed any effort 
to design and build more advanced weapons.'' Then it goes on to 
say, in conclusion, ``The Congressional Budget Office has 
proposed less expensive ways to assure weapons reliability.'' 
One approach would be to consolidate the work at one of the 
existing labs and do without the NIF, the National Ignition 
Facility. Another would rely on commercial reactors to produce 
tritium instead of calling for a new government plant.
    When you read, and the New York Times is one of many 
papers, these types of editorial comments and then a couple of 
weeks later, Stephen A. Schwartz writes his comment here. He is 
a writer, a director of the U.S. Nuclear Weapons Cost Study 
Program, Brookings Institute--obviously, Brookings may have a 
certain agenda. He writes, ``Your editorial of November 30th 
criticizing the administration's nuclear weapons stockpile 
stewardship and management program as extravagant is on the 
mark. From 1948 to 1991, the Department of Energy and its 
predecessors spent nearly $150 billion to research, develop, 
build, and maintain more than 70,000 nuclear warheads,'' et 
cetera, et cetera. An additional $160 billion was expended 
producing the nuclear materials to fuel these weapons,'' and he 
goes on to say, ``Now with production halted, the arsenal 
shrinking and nuclear tests likely to be banned forever, the 
administration proposes to spend at least $45 billion over the 
next decade maintaining the arsenal, $800 million more per year 
than what was spent on average during the cold war.''
    When you read these types of comments as a member of 
Congress--and public perception is everything--even though I 
want to be a believer, can you tell me that we are now, in 
fact, for instance, doing some unrelated experimentation that 
is not necessarily--or are we doing unrelated experimentation 
that might not conceivably be considered to be under the 
certification process?
    Secretary Pena. The direct answer, Congressman, is no. Let 
me try to respond to the editorial, which I also read, and some 
of the other concerns that have been raised by others.
    Number one, we would be happy to provide you a side-by-side 
analysis of the cost to the government of our old program when 
we had nuclear testing compared to the costs that are 
envisioned in the stockpile stewardship program. We would very 
respectfully argue that the costs that we are using for this 
program are less than the costs of the old program.
    [The information follows:]

[Pages 53 - 54--The official Committee record contains additional material here.]


                         stockpile stewardship

    Secretary Pena. I am not including, by the way, in that 
analysis the cost of cleanup that was part of the work we did 
in the so-called old days, reference to the gentleman who wrote 
that article, and if you want to include those costs in, we 
have no comparison.
    Secondly, there are some statements made in the editorial 
which are, in effect, incorrect about the purpose of the 
stockpile stewardship program. Perhaps I need to spend some 
more time with that newspaper to clarify our program.
    Mr. Frelinghuysen. Would you specifically comment on the 
subsidization of unrelated experimentation issue?
    Secretary Pena. I do not know what that is in reference to. 
We are not subsidizing unrelated work. The National Ignition 
Facility----
    Mr. Frelinghuysen. I must say, I was excited about what I 
saw in California----
    Secretary Pena. Absolutely.
    Mr. Frelinghuysen [continuing]. And, obviously, I know you 
have got the brightest and best in the Nation working on some 
very basic research that perhaps could not be done anywhere 
else, certainly in a private facility, but is it all tied in to 
the nuclear weapons stockpile safeguard issue?
    Secretary Pena. Yes, it is. And we can go through each of 
those technologies, whether it is the NIF or any others, or our 
super computer program, and explain very clearly why they are 
essential to our stockpile stewardship program.
    The NIF, for example, is necessary to test the heat and the 
pressure of a nuclear weapon explosion without actually having 
any detonation.
    We are conducting our subcritical experiments which do not 
reach criticality because we still need that kind of 
information.
    We have to continue to produce at least some number of pits 
in Los Alamos. We have to produce tritium because the fact that 
tritium is declining by 12.5 percent, I think, in a cycle.
    Mr. Frelinghuysen. Relative to that, do we need a new 
government plant, and why can't we rely on commercial reactors?
    Secretary Pena. Congressman, as you know, my responsibility 
this year is to make a decision on the tritium options that we 
have before us, and we will be making that decision.
    There are two options that we are pursuing. There was a 
third option or a parallel option that was put in place by 
Secretary O'Leary, which was to keep the Fast Flux Test 
Facility on standby condition. So we are looking at all of 
those options, but we are going to make a decision about that 
this year and come to closure on what process we are going to 
use for tritium production.
    Mr. Frelinghuysen. The overall proposals from the CBO, have 
you responded specifically to the CBO's findings, and have you, 
in fact, embraced any of their recommendations?
    Secretary Pena. Congressman, let me ask our defense program 
team if they have had an opportunity to respond to the CBO. I 
am going to assume they have, but I am not certain they have.
    Mr. Frelinghuysen. I think it is a fairly basic question.
    Secretary Pena. Let me find out if they have.
    Mr. Frelinghuysen. Some could say maybe they do not have 
the scientific base or knowledge or responsibility you have, so 
they may not know what they are talking about, but, certainly, 
from our perspective, I think it would be good.
    Secretary Pena. Let me check to make sure we have responded 
to that.
    [The information follows:]

CBO Report Entitled ``Preserving the Nuclear Weapons Stockpile Under a 
                        Comprehensive Test Ban''

    Attached is a letter dated September 30, 1997, from 
Secretary of Energy Pena to the Congress, which responds to the 
May 13, 1997, letter from Senator John Glenn concerning the 
Congressional Budget Office Report entitled, ``Preserving the 
Nuclear Weapons Stockpile Under a Comprehensive Test Ban.''

[Pages 57 - 59--The official Committee record contains additional material here.]


                        laboratory consolidation

    Mr. Frelinghuysen. Could you comment on the idea of 
consolidating the work at one of the existing labs, a lot of 
this work, the consolidation issue? I know each one of these in 
and of itself is a remarkable facility. I mean, the brain power 
there, the experimentation, cross-pollenization, which I assume 
is worldwide in facilities and between facilities, but from a 
layperson's view, it does seem to me that we have the potential 
there for a tremendous amount of duplication.
    Secretary Pena. Congressman, I agree that those are 
questions that are very legitimately asked. I am very happy to 
give you much more detail, but let me give you a general answer 
today.
    Number one, the three laboratories we are discussing do, in 
fact, have different and distinct missions. However, when it 
comes to the stockpile stewardship program, one of the 
byproducts that we get from having the different labs is our 
ability to cross-check using completely different approaches to 
stockpile stewardship to make sure that, in fact, the analysis 
being done by one group of scientists is verified by a second 
group of scientists.
    That has been, for better or worse, the approach that our 
country has used in much of the defense work going back many 
decades to ensure that we have this kind of verification on 
such sensitive issues, like nuclear security. I do not think we 
want to abandon that kind of an approach because it has worked 
very well in the past, and I think we ought to continue to have 
it. Again, there are distinct missions that are undertaken by 
those labs. It is my view that they are necessary, and we think 
the work they are doing is fully justifiable, but I would be 
happy to give you a much fuller answer describing very 
specifically the work that they do and why there is not 
duplication.
    [The information follows:]

                  Three Defense Programs Laboratories

    The three Defense Programs nuclear weapons laboratory 
configuration is particularly important because it provides the 
differing scientific approaches, span of technologies, and 
technical peer interactions that are integral to stockpile 
stewardship without nuclear testing.
    In February 1995, the Galvin Commission recommended that 
the Department of Energy (DOE) give consideration to 
consolidating nuclear weapons activities in two vice three 
laboratories. In response to that recommendation, the 
Department has carefully examined the roles, missions and 
responsibilities of each of the three Defense Programs 
Laboratories--Los Alamos National Laboratory, Lawrence 
Livermore National Laboratory and Sandia National Laboratories. 
With the commitment of the nation to a Comprehensive Test Ban 
Treaty (CTBT), and the resulting need to pursue a stockpile 
stewardship program capable of maintaining the safety, security 
and reliability of the nation's nuclear stockpile without 
underground testing, the Administration determined that 
retaining all three weapons laboratories is critical. This 
decision was announced by the President on September 25, 1995.
    Stockpile Stewardship is a technically challenging program 
and requires a broad spectrum of capabilities to ensure 
success. The retention of two nuclear design laboratories--Los 
Alamos and Lawrence Livermore--is particularly important. 
Together, these two facilities have the responsibility for the 
weapons' nuclear explosive packages. Because each takes an 
independent approach in addressing the scientific and technical 
issues associated with stockpile stewardship, the two provide 
each other with critical peer review--something made even more 
crucial now that the weapons will not be tested by nuclear 
explosion.
    The activities of all three laboratories are coordinated 
and integrated in support of the Stockpile Stewardship Program. 
Each has common capabilities in critical ``core'' areas and 
individual specialities in various supporting technologies. 
This arrangement provides for the full range of required 
capabilities, a system of checks and balances, and effective 
use of limited resources. Some examples of individual 
specialties critical to stockpile stewardship include:
    Accelerators and spallation neutron sources (Los Alamos), 
High-power lasers (Livermore), Radiation-hardened electronics 
(Sandia), Plutonium processing (Los Alamos), Radiochemistry for 
nuclear test readiness (Livermore), and Pulse power 
(microsecond, Los Alamos; nanosecond, Sandia).
    The three-laboratory configuration has proven itself 
essential in the development and peer review of the W87 life-
extension program. In addition, the three-laboratory 
configuration is fundamental to two formal processes required 
by the Stockpile Stewardship Program--namely, dual revalidation 
of all stockpile weapon systems over a multi-year cycle, 
beginning with the W76, and annual certification of each weapon 
system in the stockpile. Both of these processes began in 1996.
    Both nuclear design laboratories apply a wide spectrum of 
weapons-related scientific and technical core capabilities to 
their unique responsibilities. Of particular importance, each 
laboratory continues to be responsible for the weapons systems 
it originally designed. Sandia maintains capabilities in non-
nuclear component development, assessment and system 
integration for all systems. By making detailed decisions on 
actual weapons issues and engaging in revalidation and 
recertification projects, each laboratory maintains its 
expertise (and trains new weapons scientists) in the science 
underlying nuclear weapons.

                          laboratory research

    Mr. Frelinghuysen. At the chairman's suggestion, and 
certainly if you serve on the committee, you have some 
responsibility to visit DOE facilities, and I have a lot more 
to visit. As excited as many of the men and women were who 
showed me what they were working on, it did seem to me, since I 
do get around, some of these projects seem to be similar to 
what are going on in other research facilities around the 
country. It is almost like we have a little piece of 
everything. In terms of the Human Genome Project, I mean, there 
are plenty of these types of efforts which appear to be going 
on in major universities around the country.
    I just think the potential here--and I would specifically 
like you to address the unrelated experimentation issue. 
Everybody showed me their piece, advanced cancer research. I 
mean, with all due respect, humankind may benefit from a lot of 
this work, but it does seem that the annual certification that 
you certify appears to be quite a large rug to put things 
under. Maybe that is the wrong analogy, but it is a huge 
umbrella here, and I think the New York Times has raised some 
legitimate issues, and members of Congress need to raise these 
issues.
    Thank you, Mr. Chairman.
    Mr. McDade. The Chair recognizes the gentleman from 
Indiana, Mr. Visclosky.

                      stockpile management budget

    Mr. Visclosky. Thank you, Mr. Chairman. Mr. Secretary, 
welcome.
    Mr. Secretary, looking now to fiscal year 2003, there is a 
significant increase in the stewardship funding for stockpile 
stewardship. There is not a corresponding increase in the 
stockpile management funding. Would you want to comment on 
that?
    I have, I must tell you, just a concern that we are not 
investing enough in our plant infrastructure as far as the 
management program.
    Secretary Pena. Congressman, I do not have--I am going to 
do this from memory.
    Mr. Visclosky. Yes. The exact figures are unimportant. I 
guess my generic comment is that I am concerned this year, 
next, and in the outyears, we are not maintaining the physical 
plant facilities that we have in our ability to use the new 
technologies and the stewardship program.
    Secretary Pena. Congressman, as I have visited our labs, I 
observed that we are going to have some challenges in the 
future in a number of areas, basic infrastructure, for example, 
and plant maintenance. Again, those are outyear numbers.
    We, of course, do an annual budget which I think responds 
to the immediate needs that we have, but let me give you a more 
specific answer about the difference for the 2003 number for 
stewardship as opposed to management. It may have to do with 
some of the technologies that are coming on board in those out 
years, but I don't have the information in front of me at the 
moment.
    Mr. Visclosky. Secretary, I am not, again, so much 
interested in the ratio or, in this case, the justification for 
the stewardship program. It just obviously caught my eye, and 
we certainly had comments and complaints raised that we are 
running dangerously close as far as our under-investment, as 
far as the plants, the equipment, the wiring, computerization, 
to implement, if you would, the stewardship program as far as 
those weapons plants.
    So I am more interested in the concern looking out, if we 
are close, if those are outyear numbers, why are they outyear 
numbers and they are not numbers now. That would be the 
response I would be looking for, if I could.
    Secretary Pena. I will get you a fuller answer.
    [The information follows:]

                     Stockpile Stewardship Funding

    The overall level of $4.5 billion throughout the period 
recognizes the technically challenging workload in the 
stockpile stewardship and management plan, as well as the need 
to provide for major new experimental facilities while 
significantly downsizing capacity in some older facilities that 
were geared for a larger stockpile and the large production 
quantities of the past. Precise funding requirements for FY 
2000 through FY 2003, using the FY 1999 level as a baseline, 
will be determined in conjunction with the appropriate fiscal 
year budget cycle.
    It is important to understand that Stockpile Stewardship 
and Stockpile Management are budget and accounting decision 
units, not programs. Historically, most laboratory funding was 
contained in the Stewardship decision unit, and most plant 
funding was contained in Management; however, that distinction 
is less clear today. In fact, Defense Programs is considering 
budget structure changes to move to a single decision unit in 
FY 2000 to more accurately portray the total integration of the 
laboratories and plants in carrying out the Stockpile 
Stewardship Program activities. We will be discussing any 
proposed changes with the Congress in the near future.
    The five year planning budget estimates you reference for 
Core Stockpile Stewardship activities provide an average growth 
of about 2 percent annually. This near term growth is related 
principally to experimental facility construction. Funding is 
included to complete the 2nd axis of the Dual Axis Radiographic 
Hydrotest Facility and to complete the National Ignition 
Facility. Assumptions include the option to begin construction 
of an advanced hydrotest facility and/or an advanced pulsed 
power research facility at the end of the five year period, 
depending upon the outcome of research and technology 
development activities currently underway. The Accelerated 
Strategic Computing Initiative continues to grow throughout the 
five year period consistent with aggressive program plans 
through 2004.
    Funding for Core Stockpile Management activities declines 
about 4 percent by the end of the five year period. This 
reflects the progression of the Stockpile Management 
Restructuring Initiative construction projects to downsize the 
capacity of the weapons production plants consistent with the 
recommendations of the Programmatic Environment Impact 
Statement. Simultaneously with the physical downsizing, funding 
for advanced manufacturing, design and production technology 
nearly triples during the five year period to develop and 
integrate new technology into the remaining stockpile 
surveillance, manufacturing and operations facilities. Funding 
is also included for activities to reestablish pit 
manufacturing capability in the complex. The Enhanced 
Surveillance Program concludes during the five year period, 
with the last year of funding projected to be 2002.

                           work force skills

    Mr. Visclosky. Thank you very much.
    The next question I have, also, looking at the plants 
themselves, it is my understanding that by the year 2005, 90 
percent of the skilled trades work force at the Kansas City 
plant, for example, will have been hired between 1977 and 1981, 
and, again, concern about a bulge as far as retirement of the 
personnel at those plants.
    I assume--and, again, in varying degrees--that may be 
fairly typical of some of the other plants. I may be incorrect 
in my assumption.
    What concerns do you have, does the Department have, and 
what actions is the Department looking at?
    Secretary Pena. Congressman, we have the same concerns.
    We had a prior conversation about the fact that we are 
losing some of our scientists and engineers in that time frame, 
but we are losing lots of other highly technical people in that 
time frame.
    So we are very focused on two things. One is making sure we 
have the technologies which will allow us to bring on this new 
leadership of scientists and engineers who are coming out of 
our universities. Defense programs, for example, now has a very 
specific program focus on key universities to make sure that we 
are generating the right kind of graduate and postgraduate 
students who will have those technologies. So we are trying to 
link two key universities now to make sure we have that stream.
    Mr. Visclosky. That includes Notre Dame, I assume, Mr. 
Chairman?
    Mr. McDade. One would assume so. [Laughter.]
    Secretary Pena. But it applies to other skill mixes that we 
have in the Department, and so we are focused on that and 
trying to anticipate those shortages and trying to determine 
how we are going to recruit the next wave of technical people 
to fill those slots. That is going to be a challenge.
    We are looking at various options right now about the kinds 
of incentives or changes in our personnel procedures needed to 
allow us to have some flexibility to do that, but it is going 
to be very targeted, and it is going to have to be done in a 
way that will allow us to keep people that we need to keep and 
yet, bring in these new skills that are needed in that time 
frame. So we agree with your concern, and we will be very 
focused on it.

                          weapons reliability

    Mr. Visclosky. A final question, Mr. Chairman. My 
understanding is DOD is making or planning a number of changes 
as far as existing warheads. My understanding is that DOD has 
expressed some concern about the possible safety and 
reliability of the warheads given these changes. How are the 
two Departments matching up on that controversy?
    Secretary Pena. If I understand your question correctly, 
Congressman, we work in tandem to ensure that from the 
stockpile stewardship perspective and for the annual 
certification that we agree that the work we are doing in 
verifying the weapons is of the same degree of confidence, and 
we have that today.
    If the question is what levels of weapons we are using 
either under START I or START II, there is still a difference 
between both Departments about what we are doing. DOD has asked 
us to use START I numbers for the work that we are doing, but I 
believe in some areas, they may be using START II numbers, and 
that is a function of how quickly we get to START III.
    But if your question is geared at some issues that we have 
discovered in certain weapons in our particular surveillance 
and investigation, my view is that we have addressed all of 
those to the satisfaction of DOD, and that is why this year, 
Secretary Cohen and I were both able to certify the safety and 
security and reliability of our weapons.
    I do not know if that was the question you were asking, but 
I am trying to hit at least three different parts of the 
concerns that may be out there.
    Mr. Visclosky. Mr. Secretary, thank you very much.
    Thank you, Mr. Chairman.

                          budgetary priorities

    Mr. McDade. Mr. Secretary, let me ask you this question. We 
have had a good relationship built between you and the 
Department and this committee, and it may come as we go 
downstream that we are going to hit some financial glitches. We 
usually do.
    Your Department has about a $1.1 billion, I think it is, or 
a bit more increase in this fiscal year. Can you prioritize 
either the growth of the $1.1 billion or the baseline as to 
where you might be putting your priorities or, in effect, to 
the committee volunteering lower-priority programs? I know that 
is a hard question for you, but we may come to that. We 
probably will. We usually do, and I want to ask you up front.
    Secretary Pena. Mr. Chairman, I have not done that 
analysis. Obviously, let me take your question under advisement 
and see how we think about that.

                          external regulation

    Mr. McDade. We will be in contact with you, and we would 
love you to take a look at it.
    One of the issues that percolates around is the external 
regulation of a DOE facility. As you know, this has been an 
ongoing question for a long period of time. There have been 
some pilot projects, as we understand it, that have 
demonstrated the kind of regulation that could be applied 
externally works very well.
    The pilot plants moved along efficiently. There was a lot 
of money saved, and the external regulation appears to be, by a 
large consensus, the way to go. What is your position on that, 
please?
    Secretary Pena. Mr. Chairman, we support the notion of 
external regulation. We have embarked on two pilot projects 
with the Nuclear Regulatory Commission. They are not completed, 
however. We have just started them, and they will probably go 
on for at least a year, almost perhaps 2 years before we 
finally have the results of those pilot programs, but, thus 
far, they are on track, and we try to find very discrete 
aspects of DOE work that were most amenable to NRC, the 
supervision and regulation here.
    So we will continue to work on this, and, obviously, the 
more confidence we see as this work continues, we can then 
begin to work in more complicated areas, but I want to avoid, 
if I might, the mistake that I think this Department has made 
in past years, and that is to bite off more than we can chew 
too early and then find out we have made a serious misjudgment.
    Mr. McDade. We do not, of course, want you to do anything 
like that, but, on the other hand, there seem to be areas 
within the Department that would not have to wait for a year or 
two to make decisions about whether or not they ought to be 
externally regulated. Some of them are less complicated, it 
seems to us.
    My question to you is, can you segment the complicated from 
the ones that might be easier solved for external regulation 
purposes?
    Secretary Pena. I think we can, Mr. Chairman, and we would 
be happy to look at whatever suggestions you might have of 
other areas that we might be looking at. We would be happy to 
look at that.
    Mr. McDade. All right. Take a good look at it because it 
appears that in terms of efficiency, in terms of savings, that 
there can be a significant amount of money on the table and a 
great deal more efficiency in terms of accomplishing the 
Nation's objectives.

              laboratory operations board recommendations

    One of the things that everybody has looked at and talked 
about here greatly today is the operation of the laboratories, 
and as you know, the board issued a series of findings. They 
were quite critical of headquarters operations and its contract 
structure.
    Now, you talked about that a bit in your opening remarks, 
and I was delighted to hear you addressing that. It is a 
serious problem.
    Will you articulate a little bit more for us about how you 
intend to cope with those problems? First, do you agree with 
the findings of the board?
    Secretary Pena. Yes, we do, in the sense that we have a 
problem with, number one, communication, lines of 
responsibility between headquarters, the field, and some of our 
other facilities. Yes, we have to do a better job in that area.
    Mr. McDade. What can the committee look forward to seeing 
you do to implement the recommendations to the board?
    Secretary Pena. Well, we have already started to take 
several actions.
    First of all, we have put together a Research and 
Development Council which is chaired by the Under Secretary, 
which, we believe, will be able to make sure that across the 
Department, our R&D work is more focused and that we do not 
duplicate the work that we are doing.
    Secondly, we have reconstituted the Secretary's Energy 
Advisory Board which reviews all major projects. As I said 
earlier, that had been discontinued in years past. We now have 
that working again, to look at major projects to make sure that 
we are using the best expertise in the Department.
    So there are other cross-cutting areas where we are, I 
believe, doing a better job of making sure we are synchronizing 
the work across the complex, so that we have better 
communication.
    There is more work that needs to be done, and there are 
other recommendations in the report that we are still 
reviewing.
    Mr. McDade. We will look forward to that.
    The committee was furnished with a management chart of the 
Pantex plant which is so important, and I do not know if you 
have had a chance to see it, but we would recommend it to you, 
just to kind of look at the way there is need for improvement 
in the management of the contracts as we have an opportunity to 
speak today.

                             yucca mountain

    Let us talk a bit about the nuclear waste repository at 
Yucca Mountain. We know that the administration continues to, 
as a policy, oppose interim storage. What proposal is the 
Department going to make about how to solve that problem? Do 
you have anything in mind, Mr. Secretary?
    Secretary Pena. Mr. Chairman, our position, I think, has 
been very clear. We believe that the solution to take in these 
wastes is the long-term geological disposal facility that we 
are working on.
    Last year, we completed the 5-mile tunnel. This year, we 
will complete what we are calling a cross-drift, which is 
another segment of the tunnel to give us more information. We 
are now heating the mountain in ways that no other country is 
doing anywhere else, to test the moisture and the capacity of 
the mountain.
    At the end of this year, we will complete the viability 
assessment. Next year, we will begin the preliminary 
environmental impact work for a record of the decision in, I 
believe, 2001 and then get to a suitability determination about 
the mountain. That is the work program that we have in place.
    As respects the immediate problem, which is the fact that 
the Department has not been able to take waste physically as of 
January of this year--and as you know, there is litigation 
about that. Right after I became Secretary of Energy, I sat 
down with representatives of the plaintiffs in that matter and 
offered a number of different options.
    Number one, I talked about the possibility of the 
Department taking legal title to the fuel.
    Number two, I talked about our interest in perhaps paying 
some kind of damage or compensation for costs that are being 
incurred by the utilities while they were still paying into the 
fund, and, yet, maintaining the material on their own site. And 
there were other suggestions that we made at that time.
    I must tell you, Mr. Chairman, there was no interest in 
those options, and the parties that I met with simply explained 
to me that the only solution they had in mind was the passage 
of the legislation pending before the Congress.
    You know the administration's position, which is 
longstanding, long before I became Secretary of Energy, and 
that has not changed. So we will continue to work on the Yucca 
Mountain Project. We want to continue to make sure we are using 
the best science and engineering analysis we have. On the other 
hand, I am still pleased to sit down and have additional 
conversations with the plaintiffs in the litigation.
    Mr. McDade. We are gratified by that comment, Mr. 
Secretary. We know it is a hard problem, and there are kind of 
intractable positions on the people who are contesting, but we 
hope you can work something through. We encourage you to 
continue.

                    debt collection improvement act

    There was a new act called the Debt Collection Improvement 
Act--you can answer this for the record, Mr. Secretary--
expediting methods by which Departments can get back the debt 
that arose. The Department apparently has a debt of $2.3 
billion outstanding. Will you indicate to us, please, what 
steps you are going to take to remedy that situation?
    Secretary Pena. I will provide that for the record.
    [The information follows:]

                    Debt Collection Improvement Act

    Delinquent debt in the Department, totaling approximately 
$2.363 billion as of December 31, 1997, is comprised almost 
entirely (about 97 percent) of amounts to be collected from 
firms that engaged in alleged or adjudicated violations of 
petroleum price and allocation regulations established as a 
result of the Emergency Petroleum Allocation Act of 1973. These 
petroleum pricing violation (PPV) receivables are in various 
stages of litigation and bankruptcy. The remaining delinquent 
debt, totaling about $65 million, consists of amounts due from 
utilities from the sale of electric power and related services 
from the Department's power marketing administrations and other 
miscellaneous administrative debt.
    The Department has taken aggressive action to meet the 
requirement contained in the Debt Collection Improvement Act of 
1996, which directs Federal agencies to transfer to the 
Secretary of the Treasury debts delinquent for more than 180 
days. As of December 31, 1997, the Department had $2.309 
billion of debt delinquent for more than 180 days. PPV and 
other Departmental debt in bankruptcy or at the Department of 
Justice for enforcement action comprise all but $103 million of 
this amount. About $78 million of the $103 million has already 
been transferred to Treasury for collection with an additional 
$4 million expected to be transferred by the end of this month. 
Substantially of the remaining $21 million is either at legal 
counsel for action, will be written off, or is in dispute. The 
Department's Chief Financial Officer is working diligently with 
the field chief financial officers to facilitate the prompt 
resolution of delinquent debt and the timely transfer of all 
eligible and appropriate debt to Treasury. Field performance is 
also being monitored on a quarterly basis.

                           grant deliverables

    Mr. McDade. Also, the IG report that was issued about final 
deliverables from grants indicated that there were a lot of 
final reports, technical or financial, that were not, in fact, 
presented to the Department as a final product. I do not 
understand why that would not occur.
    Have you had a chance to look at that, Mr. Secretary?
    Secretary Pena. I am not familiar with that particular 
report, Mr. Chairman. The concern regards deliverables 
conducted by contractors?
    Mr. McDade. Yes. The final report does not show whether it 
is technical. The final report on costs are not showing up. 
This is your IG who looked at it.
    Secretary Pena. Let me look into that again, Mr. Chairman.
    [The information follows:]

             Inspector General Report on Grant Deliverables

    The report in question cited instances where the grantee 
failed to provide final technical and/or financial reports and 
yes, we have looked into the matter and have taken corrective 
action. The Department's regulation provides that Contracting 
Officers shall take appropriate enforcement actions when a 
recipient is in noncompliance with any grant term or condition. 
However, our review showed that the procedures regarding 
enforcement actions needed to be strengthened and that a more 
aggressive approach was required to follow-up on late 
deliverables and implement subsequent noncompliance actions.
    To correct the situation, direction will be provided to all 
field activities regarding actions which must be taken during 
preawarding, administration, and closeout phases of the grant 
award cycle to ensure that reports are received in accordance 
with the requirements of the award. We will also require field 
offices to identify all overage reporting requirements and 
provide immediate notice of the consequences of a recipient's 
failure to provide reports. In the absence of a positive 
response from the recipient, the matter may be referred to the 
Department's debarring official for consideration of 
Government-wide exclusion from receiving future Government 
grants.

                       electricity restructuring

    Mr. McDade. We would appreciate it if you would.
    There is an issue that may well be the most significant 
issue, energy issue, affecting the country in the next 20 
years, deregulation of the utility industry, electrical utility 
industry in the country. We have not really heard anything 
about the Department's position with respect to that or whether 
you had an opportunity to look deeply at it or whether we are 
going to get recommendations or what kind of leadership the 
Department is going to provide the citizens of the country when 
this enormously important decision is reached.
    What, if any, is the position of the Department on 
deregulation, et cetera, and what do you recommend?
    Secretary Pena. Mr. Chairman, the Department has been the 
lead in the administration on this issue, and we have basically 
completed a year-and-a-half analysis of the various approaches 
we would take as respects restructuring the industry.
    In the way the administration normally presents its formal 
position to the Congress, we have engaged in an interagency 
discussion about this. We are very close to reaching final 
conclusions about this as an administration. Obviously, this is 
being coordinated by the White House, and we hope to be able to 
make that public as soon as possible, but, prior to that time, 
we have discussed in a general way principles that we believe 
ought to be a part of any restructuring package, but we want to 
be engaged with the Congress.
    There is work both in the House and in the Senate. We think 
that it is helpful for us to be engaged, and we very much want 
to be at the table to be part of that discussion.
    Mr. McDade. A lot of the States are moving right out, 
smartly, on it now as we speak.
    Secretary Pena. That is correct.

                           education programs

    Mr. McDade. We will be grateful to hear from you.
    There was an issue that came up involving Department of 
Energy's pre-college program management fund which was reported 
by the General Accounting Office to be inefficiently managed. 
The Department did not request any money. The Congress did not 
provide any money.
    We were informed, nevertheless, that activities which had 
been previously carried on were still being carried on, no 
request from your budget, no appropriation from this committee.
    I wrote a letter to the department, addressed to you, but 
down to the people that run the department, asking what 
authority was being used since there had not been an 
appropriation and since there had not been a budget request to 
continue these activities, and the letter back said, well, we 
are using the authority of prior Congresses. That is a letter I 
would like you to look at again. As far as the committee is 
concerned, that is a declaration of war.
    Secretary Pena. We do not want that, Mr. Chairman. 
[Laughter.]
    Mr. McDade. Article 1 is pretty specific about who does 
what. So take a good hard look at it, and as soon as you can, 
get a paper back up to the committee so that we can see what 
occurred there.
    Secretary Pena. I would be happy to, Mr. Chairman.
    [The information follows:]

                    University and Science Education

    I would like to provide additional details regarding the 
Department's science education activities at the precollege 
level. In particular, I would like to address your concerns 
about the Department's authority to carry out these activities 
and about my letter to the Committee on December 10, 1997. To 
put this information in perspective, I think it would be useful 
to step back to preview the status of science education 
activities at the Department of Energy when I was confirmed in 
1997.
    During my first appearance before your Committee, on March 
19, 1997, in response to a question from Congressman Pastor, I 
stated my interest in continuing and expanding our 
laboratories' work in sharing their assets with America's youth 
to ``expose these young kids to the excitement of what we're 
doing, and, hopefully, generate more interest and more 
talent.''
    On April 9, 1997, as part of the Subcommittee's hearings on 
the FY 1998 request, the Department's Controller, Betty 
Smedley, provided the Committee information on our science 
education programs, including precollege activities for which 
she reported the Department had spent $10,192,000 in FY 1996; 
$7,224,000 in FY 1997; and, as of that point, was proposing 
$5,849,000, for FY 1998. Most of these activities are carried 
out by our national laboratories, with guidance and approval 
from our program officers, and involve school systems and 
students in areas near their facilities. In addition to the 
funding Mrs. Smedley reported, the laboratories also dedicate 
some indirect funding from overhead and other sources, 
including non-Departmental, to operate these successful 
activities that have been ongoing for decades. Brookhaven 
National Laboratory, for example, has had an active science 
education program for high school teachers since 1958. Over the 
decades, our other laboratories also have developed significant 
educational materials and courses for college students, 
teachers and students at all levels. The funding amounts for 
all the science education activities reported by Mrs. Smedley 
were allocated in compliance with the Committee's FY 1997 
report language concerning science education which directed 
that ``to the extent such activities benefit and are a 
byproduct of the line programs, those programs should, within 
available funding, be the educational sponsor.''
    Regarding the mention in my previous letter to you of 
existing legislative authority for the Department to engage in 
science education activities at all levels, I regret any 
misunderstanding which might have occurred. There is no 
specific appropriation in FY 1998 for precollege science 
education activities within the Department. As mentioned above, 
in compliance with the Committee's FY 1997 directive, 
individual programs do sponsor precollege activities from 
within their appropriated program funding. The Department has 
provided for these activities since its inception, following 
specific authorizing language included within the 1977 
Department of Energy Organization Act and the Department of 
Energy Science Education Enhancement Act of 1990, as well as 
other Acts. In FY 1998, the program accounts are continuing to 
provide for precollege science education activities, which the 
Department believes to be in compliance with existing law and 
the Committee's directives. However, if the Committee believes 
this interpretation is not correct, we certainly will work with 
the Committee staff to assure that we follow both the letter 
and the intent of the Committee's directions. I assure you that 
the Department will follow Congressional direction regarding 
its science education activities.
    The Committee's language included in its FY 1998 Report, 
concerning the Department's science education efforts, directed 
the Department to ``continue to place a high priority on 
graduate and post-graduate students.'' The Department is in 
compliance with the Committee's directions. As you know, the 
Department provides grants to colleges and universities for 
basic research programs totaling approximately $600 million 
each year. This investment supports research which yields new 
knowledge from which the Department's scientific programs 
benefit greatly. Also, the graduate and post-graduate students 
providing this research, at universities throughout the nation, 
derive significant educational benefit from their research 
efforts. Thus graduate and post-graduate education does 
represent the majority of the Department's investment in 
education. I have directed that the appropriate Departmental 
personnel work with your staff to assure our Department remains 
in compliance with Congressional direction regarding the proper 
balance to maintain among the four major activity areas within 
our science education programs: precollege; undergraduate; 
graduate; and science literacy.
    Finally, let me address the issues raised by the General 
Accounting Office report on science education. This report was 
completed by the GAO in 1994 and evaluated the precollege 
education programs in fiscal years 1990 through 1993. Prior to 
the issuance of the report in September 1994, the Department 
began a process for evaluation of existing programs and 
development of criteria for future funding. There is now in 
place a process for assessment and evaluation of programs 
administered by the laboratories, which we believe addresses 
the concerns raised by the GAO.
    I hope this response provides the information you were 
seeking. I look forward to continuing our discussions on the 
Department's science education activities.

    Mr. McDade. I now recognize the gentleman from California.
    Mr. Fazio. Thank you, Mr. Chairman.
    Do not worry, Mr. Chairman. It is just conventional war in 
this case. We do this every year. [Laughter.]

                        next generation internet

    Mr. Fazio. I wanted to ask a question about the Next 
Generation Internet. This is the second year in which the 
administration has requested funding in this bill, and I think 
there are six agencies that total about $110 million this year, 
$22 in your budget.
    There is no question on the part of any of us that the 
Internet has grown tremendously since 1968, 400 percent a year, 
but as you said earlier in responding to some other questioner, 
you have the biggest computers and probably the most technical 
competence of any of the agencies in the Federal Government for 
this.
    I guess I am concerned, as are others, that a large number 
of agencies as well as university and laboratory beneficiaries 
make this program a little bit unwieldy, and I am wondering 
about how we are going to perform as an interagency effort and 
what sort of interaction we are going to have with the national 
scientific community.
    There were clearly other beneficiaries in the original 
Internet's development, universities, labs. Have we got them 
all factored in? Are they all participating? They are clearly 
all going to benefit.
    Secretary Pena. Congressman, you are right.
    First of all, this is an administration. Different 
Departments are taking different parts of this Next Generation 
Internet.
    As respects the Department of Energy, our immediate need is 
for our own scientists in our own laboratories. When you visit 
our labs, you will see, and when you talk to our scientists, 
their need for having this new generation of Internet 
communication so that they can do their work simultaneously and 
particularly with the new challenges we are going to be facing 
in the subject we talked about earlier, and that is the 
stockpile stewardship program.
    So, for our own scientific work, for our own in-house 
capabilities, particularly in the next decade, we need the Next 
Generation Internet for the DOE, but we are going to make sure 
that as we develop this, with your support and with other 
Departmental interactions with universities and the private 
sector, we find a way to make sure that this is done in a way 
that will have broader use, but we need it immediately for our 
own use in the Department of Energy.
    Mr. Fazio. Well, I think there is an assumption on the part 
of some of us that given all the investment we are making in 
computers, there ought to be a way to make sure that we perhaps 
make a contribution to the Next Generation Internet without 
necessarily additional funding. There may well be ways to make 
savings and find opportunities for synergism between the 
efforts that we are going to be making to build up your 
computer capacity and, at the same time, expand the usage of 
the Internet.
    Secretary Pena. Congressman, let me do this. Let me give 
you a more specific explanation about why we need additional 
funds as opposed to the monies we are now using for our super 
computers. That in and of itself is a big enough challenge just 
to do that, and that is to make our commitments for the next 
super computing power we are going to need. The Next Generation 
Internet effort is, in effect, a distinct program, and we 
believe we need additional funding, but let me give you some 
more information about that.
    [The information follows:]

                        Next Generation Internet

    The Department's investments in high performance computing 
are absolutely critical to our missions. The Accelerated 
Strategic Computing Initiative (ASCI) program, a cornerstone in 
our commitment to support the Comprehensive Test Ban Treaty, 
has made detailed estimates of the level of computing required 
to accomplish its task. Investment in high performance 
computers are also essential if we are to fulfill our mission 
of maintaining the leadership of the U.S. in science and 
technology R&D, leadership which is critical to the future 
economic and national security of the country. With today's 
level of investment in high performance computing to support 
basic research we are only able to fulfill a quarter of our 
researchers' demands for these capabilities. Therefore, 
reducing the rate at which we invest in high performance 
computers could endanger our ability to accomplish our 
missions.
    In fact, recent events, including the National Center for 
Atmospheric Research's attempt to purchase a Japanese 
supercomputer and the fact that most of the climate modeling 
data used at the Kyoto conference was provided by European 
researchers, suggest that we are underinvesting in this area 
now. The modest additional investment that we are proposing for 
the Next Generation Internet (NGI) leverages this underlying 
investment in computers as well as our investment in unique 
experimental facilities. It will enable us to successfully 
address the challenges of making these resources available to 
remote users at other DOE laboratories, universities, and 
industrial partners in ways that make remote access the same as 
``being there.'' In addition, the investment in the NGI, 
coupled with our ongoing investments in computing, and the 
Department's long history of leadership in computing and 
communications R&D will enable us to develop a new 
collaborative science and engineering applications that will be 
the foundation of U.S. leadership in the next century.

                            nonproliferation

    Mr. Fazio. Let me just conclude by saying I think we need 
to hear also from the private sector as to the value of the 
NGI. We have seen a lot of support from the various agencies 
involved, but I think Congress needs to get a better picture of 
the overall advantage of moving on this, and we need to hear 
from people who have used the Internet as a method of expanding 
commerce as well as the benefits that have accrued to the 
private sector.
    One last question as it relates to nuclear 
nonproliferation. You have in the material protection control 
and accounting program an increase for $15 million in 
additional funds. Given the problems we face around the world 
with issues of nuclear materials being lost and perhaps falling 
into the hands of terrorist, I wonder if you could describe the 
benefits of this program and indicate why you think this 
increase is important.
    Secretary Pena. Congressman Fazio, I think that if one 
looks at this program, which I believe is only 4 years old, 
which essentially was started from scratch, and when one 
recognizes that today we are in 53 different sites in the 
former Soviet Union entities, it has been a remarkably 
successful program. The fact that we are asking for more money 
indicates that we want to expand that in terms of more work at 
those sites.
    When I visited the Kurchatov Institute, for example, in 
Moscow, outside of Moscow, and I saw pictures of the old 
facility and I went in and saw the new facility and I saw not 
only the fences, the cameras, the computerized system that now 
accounts for the materials, whereas they used to do it by hand, 
the new vaults, the new systems that are needed to get in these 
facilities, I am reminded of just how important this work is, 
and given the enormous volumes of material throughout those 
countries and now that many of these sites are now open which 
had previously been closed, we have got to make sure that we 
are doing our very best to work with them to secure those 
materials.
    So it is a high national security priority. I think we are 
on track, and the amount of money we are requesting will allow 
us to do an even better job.
    Mr. Fazio. Are we getting the kind of cooperation from the 
Russian government that makes it possible for us to spend this 
money successfully?
    Secretary Pena. Yes, we are, Congressman.
    In fact, the Russians are here this week, and we are in our 
tenth Gore-Chernomyrdin meeting. This is one of the issues that 
we talk about.
    There are bureaucratic administrative issues that come up 
every once in a while, but we are trying to resolve those. By 
and large, this program has been enormously successful.
    In fact, we have now expanded it to include the Russian 
Navy, and in my meetings with the Russian Navy, they have 
indicated their, at first, concern about our being involved 
with the Navy, and now that they see we can do this in a way 
that does not jeopardize any classified information, they are 
strong believers in it and want us to be even more involved 
with their materials.
    Mr. Fazio. So the submarine ballistic missile launching 
platforms in the Soviet Navy are now going to be looked at as 
well? The materials they have maintained separately and apart 
from land-based nuclear weapons?
    Secretary Pena. These are materials that their Navy has in 
preparation for use, and which need attention.
    Mr. Fazio. We hear a good deal about the degree to which 
the, former Soviet, Russian Navy continues to be a nuclear 
threat. You are telling us that we are beginning to turn the 
corner on that element of Russian weaponry as well?
    Secretary Pena. I think, Congressman, the work that our two 
governments have done in trying to defuse the nuclear tensions 
has been extraordinary. We continue to make very good progress 
there. We are hopeful that the Duma will ratify START II very 
soon so we can get on with negotiations in START III, but, in 
the meantime, the work that we have done in Russia in 
particular and making sure that materials are safeguarded is 
work that is very important to our national security.
    Mr. Fazio. I guess the real problem is the Duma and not 
President Yeltsin and his administration.
    Secretary Pena. Well, we are still hopeful that the Duma 
will move forward.
    Mr. Fazio. We all are.
    We thank you very much for your testimony today. We 
appreciate your being here.
    Mr. McDade. The Chair recognizes the gentleman from 
Arkansas, Mr. Dickey.
    Mr. Dickey. Thank you, Mr. Chairman.
    Hello, Mr. Secretary.
    Secretary Pena. Hi.
    Mr. Dickey. How are you doing?
    Secretary Pena. Fine.

                       russian arms proliferation

    Mr. Dickey. I have two lines of questions. One is 
continuing on the Russian idea. Russia, I guess about a year 
and a half ago, maybe a year ago, sold three nuclear submarines 
to China, as I recall. We are spending a lot of money trying to 
help them, and I think, to some degree, they are standing aside 
and saying if you are going to spend money to help us in our 
nonproliferation efforts, we will just let you keep spending 
the money.
    Do we have any leverage when Russia sells arms to North 
Korea or Iraq or Iran or China? Do we have any leverage to get 
some of that money applied to their responsibility in doing 
what we are doing in Russia?
    Secretary Pena. Congressman, the answer is yes. What we 
attempt to do is have an understanding from the Russian 
government about the resources that they are applying in this 
work, so that we know how our resources are leveraging, if I 
can use that word, the resources of the Russian government.
    Congressman, I think it is well known that the Russian 
government and the Russian people have their own economic 
challenges that they are dealing with. They are working very 
hard on those issues, and I believe that the relationship we 
have established at least in the MPC&A program and other 
programs has worked well in order for us to make sure that we 
work on these issues together and that we maximize our limited 
resources on both sides.

                      retrofitting energy systems

    Mr. Dickey. Good.
    As far as a domestic matter now, I think it is called the 
State University of New York at Buffalo, has just retrofitted 
its--I was reading--has just retrofitted its energy system, 
delivering heat and air-conditioning, and they are saving 
either $6 or $9 million a year. Are you familiar with that?
    Secretary Pena. Not with that particular retrofit, 
Congressman.
    Mr. Dickey. What are we doing? I have got at least five 
universities in my district. It seems like that is a fertile 
field. What are we doing to encourage institutions like that to 
retrofit and to save that amount of money for energy?
    Secretary Pena. We have issued what are called--they are 
sort of like energy audits--and we bid these competitively. 
Companies will come in and win these bids, which then gives 
them the prerogative of working with Federal departments. We 
are doing this on behalf of the entire government.
    For example, we issued a competitive bid for the western 
part of the United States which allows any Federal facility 
from any Department to participate, and what it permits is for 
a company to come in, into one of our facilities, and say that 
we will install at our own cost the new technologies, the 
energy-efficient technologies in your building, and we predict 
we will save you 30 percent of your energy bill. They do that, 
and if they make that mark, they then get compensated from the 
savings the Department achieves from those efficiencies. We are 
now doing that throughout the government in different 
Departments, and it is working very well.
    When I recently addressed State legislators, mayors and 
others, I asked that they work with us to see if they can, in 
effect, piggyback on the contracts that we now have out so that 
they perhaps can also capitalize on this work, so that they do 
not have to go out and do their own contract solicitations 
themselves.
    There may be some technical and procedural issues we have 
to work out, but I think there is a way for State institutions 
to utilize our Federal contracts for their benefit.
    We have now done our second contract for the South. Later 
on this year, I believe we will do the Northeast and complete 
the entire country, I think in about a year, and in that sense 
have all of the Federal facilities in the United States 
covered.
    So we will continue to work with universities and State 
institutions and others to see if there is a way that they can 
participate in these contracts.
    Mr. Dickey. Good.
    I have only one other question that I do not think I can 
even read. It is so complicated that I would like to provide 
for the record. But I also want to say that I think you have 
done an excellent job in your testimony for the time I have 
been here, and you seem to be doing an excellent job in your 
position, Secretary Pena.
    Secretary Pena. Thank you.
    Mr. Dickey. Thank you, Mr. Chairman.
    Mr. McDade. The gentleman from Texas is recognized.

                          caspian sea reserves

    Mr. Edwards. Thank you, Mr. Chairman.
    Secretary Pena, thank you for your excellent testimony 
today.
    Let me ask you, briefly, and it probably would be 
appropriate to respond in greater detail in writing, but 
recognizing the time, in just a few minutes, could you briefly 
summarize what we are doing in terms of the Caspian Sea 
reserves, recognizing that the recent actions by Saddam Hussein 
remind us how incredibly overdependent we are upon oil from a 
very unstable part of the world?
    I know you have taken a leadership role in this area, but 
perhaps you could briefly update us on what you and the 
Department have done over the last 12 months regarding the 
Caspian Sea.
    Secretary Pena. I would be happy to, Congressman, and it is 
a very important issue, and I am glad that the media, in 
particular, has focused more on the whole Caspian area.
    We begin first with a part of our national energy security 
strategy which calls for diversifying world oil supplies so 
that, speaking for the United States, we are not overly 
dependent on one particular part of the world.
    We have made some progress there. For example, Venezuela is 
now our largest exporter of oil to the U.S. I think Mexico is 
second. I think Saudi Arabia is third. That is very different 
than it was several years ago, but the Caspian Sea area is, we 
think, the next most important part of the world for 
diversifying oil supplies.
    I recently took a Presidential mission to the Caspian where 
I met with the presidents of five of the key countries in the 
Caspian area, and we have reached general agreement that we 
should explore a concept called multiple pipelines, which means 
that oil which comes out of the Caspian Sea should not have 
only one route.
    Today, the early oil coming out of, for example, 
Azerbaijan, goes primarily north to Russia, but in the fall of 
this year, the consortium will make decisions about other 
pipeline routes, for two reasons, one, our own national 
security and, two, for world stability. We think it would be 
very helpful to have what is called an east-west series of 
pipelines, taking oil across the Caspian to Baku and 
Azerbaijan, north perhaps to a place called Supza, and then 
down through Turkey.
    The reason we believe that is important from a national 
security perspective is because we fundamentally disagree with 
the actions being taken in Iran, where Iran is attempting to 
become a dominant player in that part of the world, as respects 
energy. We disagree with that for many reasons.
    But, secondly, we think that for the economic stability of 
the countries in the Caspian, energy is going to be the life 
blood for their economic security and stability in the future, 
and we believe that by having multiple pipelines that go east 
and west, there will be more benefit to more countries in the 
region, again, making that oil available for world supplies.
    So that is a brief summary of our strategy. We are working 
very hard on this. We are making some progress. There are still 
some issues to be resolved, but I think that we now have at 
least a very firm and specific policy in the Caspian region.
    Mr. Edwards. I will be glad to yield to the gentleman from 
Indiana.
    Mr. Visclosky. Were the Armenians included in those 
discussions?
    Secretary Pena. Yes. I visited with the then-president who 
is, as you know, no longer the president of Armenia, but I did 
visit with him, also.
    Mr. Visclosky. They are included in those discussions?
    Secretary Pena. Yes.
    Mr. Visclosky. Okay, thank you.
    Mr. Edwards. Thank you. Perhaps in your written answers, 
without putting you in the uncomfortable position of asking you 
to lobby when we are telling you not to, if you could perhaps 
list what are the areas of policy that this Congress and the 
next Congress must deal with, whichever direction we go to 
facilitate the development of the Caspian Sea energy reserves.
    Secretary Pena. I would be happy to do that, Congressman.
    [The information follows:]

                      Caspian Sea Energy Reserves

    The most important action the U.S. Congress could take is 
to repeal Section 907 of the Freedom Support Act. This 
statutory restriction on assistance to the Government of 
Azerbaijan limits our ability to advance U.S. interests in 
Azerbaijan. The Clinton Administration has from the start 
opposed this restriction. Section 907 hinders U.S. policy 
objectives, including support of the Nagorno-Karabakh peace 
process, and promotion of U.S. investment opportunities in 
Azerbaijan. Section 907 restrictions have placed American firms 
at a disadvantage because they limit the ability of the U.S. 
Government to provide financial support, such as risk insurance 
and grants for pipeline studies, to companies that are involved 
with the Azerbaijani government or its institutions, including 
the State Oil Company of Azerbaijan (SOCAR). Section 907 
prevents the U.S. from offering many kinds of technical 
assistance and exchange programs offered to other governments 
throughout the region and which are needed to help create an 
attractive business climate and commercial infrastructure. When 
the European Union, Japan, Iran, or international financial 
institutions step in to fill this void, the U.S. loses 
influence and U.S. businesses lose opportunities.
    More generally, we need the help of the U.S. Congress in 
structuring assistance to the region to encourage economic 
reform and the development of appropriate investment climates 
in the region. Continued U.S. government support through 
technical assistance is essential in assisting these countries 
to establish strong market economies and encourage the 
emergence of financially vibrant energy sectors. Transparent 
legal and regulatory environments, and restructured and 
privatized energy sectors in these countries will ensure the 
commercial viability of new investments and expand 
opportunities to U.S. industry. To a great extent, the U.S. 
Government's ability to tailor assistance strategies to address 
U.S. interests is hampered by restrictions on how assistance 
money can be spent. Besides the restrictions imposed by Section 
907 on assistance to Azerbaijan, Congressional earmarks limit 
assistance flexibility and often channel money away from 
projects and programs which might further U.S. interests more 
rapidly. We recommend that earmarks and other restrictions be 
kept as low as possible, if not completely eliminated.

    Mr. Edwards. Thank you, Mr. Secretary.
    Mr. Chairman, thank you.
    Mr. McDade. The gentleman from Michigan is recognized.

                        year 2000 computer issue

    Mr. Knollenberg. Mr. Chairman, thank you very much.
    Mr. Secretary, we are getting down, I think, closer to the 
end here. This is a very quick question. It may have been 
brought up, but I didn't hear it. What is the status of the DOE 
being on-line to handle the computer problem in the year 2000? 
Is that a quick answer?
    Secretary Pena. We are very focused on this, Congressman. I 
have a team of people who are determined to make sure that we 
comply.
    The President raised this himself in a recent Cabinet 
meeting. So we are determined to meet our goals.
    We have, I think, 370, what are considered, critical 
mission items. We are making our target in ensuring that we 
resolve the Y2000 problem, but we have to do it. It is a 
priority. We have to do it. There is just no question about it.
    Mr. Knollenberg. Have a gun at your head, I guess, almost.
    Secretary Pena. Absolutely.

                       rocky flats support costs

    Mr. Knollenberg. One of the problems I have with Rocky 
Flats in particular, and coming back to that subject, you may 
think I am a broken record, but let me tell you why I am a 
little confused about the end game or the closure date and some 
of the numbers that are in the budget that we discussed on the 
last time around.
    Just last Thursday, my office received from the Department 
of Energy a notebook entitled the Functional Cost Data Report 
for 1994 through 1997, for each of those 4 years. In this 
report, there is a variety of charts. I am sure your staff has 
those, perhaps, with them. I have a couple or three copies 
here, but in these reports are various charts of the EM sites. 
This is just for the EM sites.
    Under each site, there is a chart that demonstrates the 
trend of cost over the last 4 years, and these charts are 
broken down into three categories. One is the mission direct 
cost. That is the cleanup guys. Then there is the mission 
support cost, and then there is the general support cost.
    Now, the mission direct is indicated by a red line. You 
cannot see that from here, and I am more than willing to share 
these with you, but, for example, I should say that the mission 
support costs are a yellow line. Finally, general support costs 
are a blue line.
    In the cleanup operations, where we are trying to bring to 
closure like in Rocky Flats, it would seem to me that the 
mission direct folks should be top heavy because you are trying 
to bring it together.
    To give you an example, and I do have the charts here, 
Rocky Flats, if you look at this, and I know perhaps you cannot 
see it, but the yellow line is at the top, and that, we think, 
should be the least top heavy. It should be down here 
someplace. The red line is where the real cleanup activity 
should be taking place. Now, if I am wrong in that assumption, 
tell me, but that is what I have always been led to believe. 
The blue line then, of course, is the general support.
    To give you an example, Fernald is in a closure status; I 
think you can see that is pretty clear. The red line is way on 
top, and your other activity, your other dollar amounts for 
cleanup or for other activities is way down, and that is what I 
would think it should be or we should be moving toward at Rocky 
Flats.
    Savannah River is somewhat the same way. It is kind of top 
heavy with some of the mission support people, but the real 
mission-direct activity, as you can see, is this red line.
    What is disturbing about Rocky Flats is that the mission-
direct moved below the other two in 1997. They are kind of 
flat, so to speak, but it still moved below.
    I am wondering if maybe we are not getting the kind of 
support that we need more heavily in the mission-
directcategory, and that would bring about, I think, more of a feeling 
from us, if these charts are to be believed, that we are moving closer 
to an end game in sight here.
    I just wanted to get your thoughts about that as to why the 
apparent inconsistency about the support costs that seem to be 
moving away from mission-direct, particularly at Rocky.
    Secretary Pena. Congressman, let me get to the bottom of 
that and get you a very specific answer about those lines.
    Obviously, the reason we are trying to close Rocky as 
quickly as possible is because some of these indirect costs are 
so high. Because they are so high and they should not be there, 
for the benefit of the entire complex, we want to close it as 
quickly as possible, but let me get back to you with a 
comparison between the other two sites you indicated and try to 
detail why it is those lines are where they are.
    Mr. Knollenberg. I would remind you, and I am sure you 
know, there is one for every single site.
    Secretary Pena. Yes.
    [The information follows:]

                       Rocky Flats Support Costs

    I agree that the mission support costs at Rocky Flats 
appear to be high, higher than at other sites. This is a 
category of costs that is generally viewed as supporting direct 
cleanup work, rather than doing the actual cleanup. It is 
important to keep ``mission-direct'' and ``mission-support'' 
costs in proper balance if we are going to meet our ambitious 
goals for closing Rocky Flats.
    However, it can be difficult to compare one site with 
another. It is difficult to determine whether support costs at 
Rocky Flats are inappropriately high, or are a function of 
legitimate site differences, or the way costs are counted and 
aggregated. First, it is important to understand the type of 
activities DOE includes in the support cost category. For 
example, under the definitions DOE currently uses, waste 
management and property disposition activities are classified 
and reported as Mission Support, although they should probably 
be considered Mission Direct activities for an EM closure 
project.
    In addition, the unique ``Integrated Management Contract'' 
structure at Rocky Flats may affect the support cost totals 
when compared to the traditional Management and Operating 
structure. Despite this, the total funding for support 
activities, including both General and Mission Support Cost 
categories, has dropped considerably at Rocky Flats since FY 
1995 and is expected to drop again in FY 1998.
    Responding in part to concerns raised by this Committee, we 
have formed a team to investigate the underlying reasons for 
the disproportionately high support costs. The team consists of 
Federal DOE personnel from Headquarters and the Rocky Flats 
Field Office and includes representatives from DOE's Office of 
the Chief Financial Officer (CFO). The team is now reviewing 
the CFO and Environmental Management reports to develop a 
common understanding of the issue. If this joint review 
concludes the Rocky Flats support costs are indeed unacceptably 
high, the team will develop recommendations for reducing 
support costs at Rocky Flats and throughout the Department 
complex.

    Mr. Knollenberg. So there seems to be a consistency about a 
lot of them, most of them in fact, but this one bothers me a 
little bit because now I am seeing focus on an activity that 
should be secondary in purpose. So we would appreciate some 
details on that, and I look forward to that.
    Finally, I just want to say thank you again for coming 
before us. Everything that we are trying to do, I hope you 
realize is a mutual thing. It is something that you want. It is 
something that we want, and we have talked about that. So we 
will continue to work with you.
    Thank you.
    Secretary Pena. Thank you.
    Mr. Knollenberg. I appreciate it.

                        year 2000 computer issue

    Mr. McDade. Mr. Secretary, let me conclude on the issue 
that my friend from Michigan raised about the computer 
conversion. Can you tell us how many computers have been 
converted and how many remain to be converted within the 
Department of Energy?
    Secretary Pena. I cannot give you the exact numbers today. 
I know that we had approximately, at last count--I believe this 
is correct--370, what are called, mission-critical systems, and 
we have a specific schedule for making sure that those issues 
are addressed before, obviously, the year 2000.
    The other point about this and the reason this is urgent is 
because the budget we have before you is, in fact, the last 
budget that will allow us, where we have to buy computers, to 
go out and get them now, so we can install them the early part 
of next year and have them ready.
    OMB has given us a target, I think, of March of next year 
or April of next year. So we are not waiting until we get to 
2000. We are trying to anticipate that and hit it before that 
deadline.
    [The information follows:]

              Number of Computers Converted for Year 2000

    The Department, as of the February Report to the Office of 
Management and Budget (OMB), has identified 370 mission-
essential systems. Approximately one-third (125) of these 
systems are already Year 2000 compliant. The remaining two-
thirds are scheduled to be repaired (114) and replaced (120) as 
part of the Department's efforts to achieve Year 2000 
compliance. Eleven of the 370 systems are scheduled to be 
terminated. In the February report to OMB, the Department 
provided its projected implementation schedule through the Year 
2000; it shows that the Department is slightly ahead of its 
implementation schedule.

                               computers

    Mr. McDade. When you talk about mission-critical computers, 
are they all on the defense side? Would you be more specific 
about what you mean?
    Secretary Pena. This is a general definition that OMB has 
used with all of the Departments that basically makes the 
point. These clearly must be addressed before the year 2000 
because they have a critical function in the Department. Some 
of them are defense, obviously, but there are others that are 
not defense-related.
    Mr. McDade. Across the spectrum.
    Secretary Pena. Across the spectrum.
    Mr. McDade. Would you give us----
    Secretary Pena. I would be happy to give you a list of----
    Mr. McDade. Well, no, I was going to ask you, if you would, 
just spread upon the record at this juncture the consequences 
if your Department and others--you are the lead agency for the 
Federal Government--if it does not get done expeditiously, what 
are the consequences?
    Secretary Pena. They are draconian, Mr. Chairman. Just 
speaking very generally, it would affect our ability to do 
stockpile stewardship. It would affect virtually all of the 
science work we do throughout the complex. It would affect, 
again, major operations of the Department, and that is why it 
is a must-do priority.
    Mr. McDade. I agree with you. It is, to a lot of people, 
kind of a peripheral issue. In fact, it is a core issue that we 
have to deal with.
    Secretary Pena. It is a core issue, absolutely.
    Mr. McDade. Mr. Secretary, there are no more questions from 
the subcommittee. We want to thank you for your appearance. You 
have done a fine job, and your testimony will be very helpful 
to the committee in reaching its conclusion.
    Secretary Pena. Thank you very much, Mr. Chairman.
    Mr. McDade. It is a pleasure to see you, Mr. Secretary.
    Secretary Pena. Thank you.
    [The questions and answers for the record follow:]

[Pages 81 - 605--The official Committee record contains additional material here.]


                                         Wednesday, March 11, 1998.

         ENERGY RESEARCH, RENEWABLE ENERGY, AND NUCLEAR ENERGY

                               WITNESSES

DR. MARTHA A. KREBS, DIRECTOR, OFFICE OF ENERGY RESEARCH
DAN W. REICHER, ASSISTANT SECRETARY FOR ENERGY EFFICIENCY AND RENEWABLE 
    ENERGY
DR. TERRY R. LASH, DIRECTOR, OFFICE OF NUCLEAR ENERGY, SCIENCE AND 
    TECHNOLOGY
    Mr. McDade. The committee will come to order. We are 
pleased this morning to welcome Dr. Krebs and Mr. Reicher to 
discuss energy resources with us. Dr. Krebs, we would like you 
to lead off. You are an old pro up here. You have been here 
many times. We are delighted to welcome you and to hear your 
testimony.

                   Oral Statement of Dr. Martha Krebs

    Dr. Krebs. Thank you, Mr. Chairman and members of the 
subcommittee. It is, again, a pleasure to be here, and I would 
like to submit my remarks, my written remarks for the record.
    Mr. McDade. Without objection. You may proceed as you wish, 
Dr. Krebs.
    Dr. Krebs. Thank you. I am going to limit myself to very 
brief remarks this morning and to talk only about the major 
elements of the Energy Research budget request, and that means 
I am going to leave a lot unsaid. As you assume something about 
me, I am assuming something about you in terms of your 
familiarity and awareness of Energy Research's programs.
    We have a history of great science and effective management 
of scientific facility construction and operation. It 
continues. I think all of us can be proud of it, in the 
administration and here in the Congress.
    The fiscal year 1999 budget request is about $2.7 billion. 
It is $246 million above the fiscal year 1998 appropriations, 
or a 10 to 11 percent increase.
    From my perspective, that is good news for science. It 
builds on and sustains our investments in large scale 
scientific user facilities. It establishes and enhances some 
research agendas that will advance science, but also enhance 
the economy as well.
    Within the increase, a major element of that increase is 
associated with the Spallation Neutron Source to be built at 
the Oak Ridge National Laboratory. This facility that will 
advance neutron science in this country and the energy and 
science agendas and missions of the Department of Energy has 
been on the scientific community's agenda specifically since 
1984, and before that in less specific terms for at least 20 
years. Neutron science is something that was discovered, or not 
neutron science, but neutron diffraction, the effect that we 
are taking advantage of, was discovered at Oak Ridge National 
Laboratory and was one of the Nobel Prizes that I talked about 
a few years ago that was given to Cliff Shull and his 
colleague.
    We are very proud of that. But in addition to the 
scientific value, the use of neutron science in the Department 
of Energy has resulted in improved casting and forging 
technologies for gears and brake disks and improved performance 
of automobiles. It has enabled industry, the chemical industry, 
not only to develop improved fibers, but also improved 
processes, more energy efficient processes for developing new 
fibers and plastics. Drug companies have identified neutron 
diffraction as a mechanism for developing higher potency, low 
side effect drugs. Magnetic materials have been developed, 
identified and characterized by neutrons, and have appeared in 
efficient electric generators, in improved magnetic recording 
tapes.

                       spallation neutron source

    The Spallation Neutron Source facility, we are asking for 
$157 million in FY 1999, the first increment to enable us to 
build this facility.
    Mr. McDade. If I may interrupt you there, I think we ought 
to get on the record the investment we are going to make in 
this.
    Dr. Krebs. It is a $1.3 billion facility.
    Mr. McDade. $1.3 billion complex. We appropriated last year 
$23 million?
    Dr. Krebs. $23 million associated with R&D and conceptual 
design.
    Mr. McDade. The request this year is----
    Dr. Krebs. $157 million.
    Mr. McDade. The purpose of that money is?
    Dr. Krebs. To begin construction, to do detailed design and 
initiate construction.
    Mr. McDade. If colleagues come up to me on the floor and 
say, you know, tight budget, we should not be spending this 
money, once we appropriate this, we are going to be underway, 
it is construction money, it is the new start, et cetera.
    Dr. Krebs. Yes.
    Mr. McDade. As you know, this committee has been supportive 
of it. What is your response to someone that says it is the 
wrong time to get involved in a new start approaching $2 
billion?
    Dr. Krebs. What I can say is as far as the administration 
is concerned, we have included the outyear funds for the 
construction of this project on top of the targets that have 
been established for the Department of Energy science programs.
    Mr. McDade. It is within the----
    Dr. Krebs. Within DOE's planning processes and the 
administration's.
    Mr. McDade. And coordinated within the budget caps?
    Dr. Krebs. That is from our perspective.
    Mr. McDade. I guess I have to correct the record. It is 
proposed by the administration to fund this outside the budget 
caps through the settlement of the tobacco money. Is that the 
indication?
    Dr. Krebs. It is very clear that there are--within the 
administration's proposal for the budget, some additional 
revenues have to be identified. The impact of these revenues 
associated particularly with the science programs is something, 
my understanding is that if we donot find the revenues in the 
discussions with the Congress, that there will have to be reductions 
taken across the board in Federal Government activities.
    Mr. McDade. However, once we appropriate the money this 
year for construction, if we want to be efficient and hold the 
costs, et cetera, we are going to have to go all the way 
through with it. This is the real critical decision here.
    Dr. Krebs. That is correct.
    Mr. McDade. Would you again in three sentences, what is the 
national interest in doing this?
    Dr. Krebs. The national interest in doing this is improved 
materials for better energy production and use, and multi-
consequences for improved drugs and other scientific 
achievements. I think it supports the mission of the Department 
of Energy.
    Mr. McDade. It is opening a whole new door in research, 
isn't it?
    Dr. Krebs. That is right. It will be world class.
    Mr. McDade. I am sorry to interrupt you. I thought it was 
important to talk about it.
    Dr. Krebs. You helped me to make all the extra points I was 
going to make.
    Mr. McDade. You and I get along very well.
    Dr. Krebs. Indeed, the one thing I did not say, is we are 
going to be ready to go. This is a cost and schedule profile 
that is optimized. We have had it reviewed by external experts 
at various times, several times in the last 6 months, and we 
believe that if you appropriate this, we will be able to do it 
right.

                  climate change technology initiative

    Another element of the increase that we are proposing to 
you is associated with the President's Climate Change 
Technology Initiative, coordinated with our Colleagues in 
Energy Efficiency, Fossil Energy and Nuclear Energy. We have a 
total of $27 million identified in the energy research programs 
associated with materials for improved efficiency and renewable 
energy. There is a special emphasis in carbon sequestration 
through natural processes, ocean sequestration, as well as 
subsurface sequestration in coal and oil-gas reservoirs and 
aquifers.

                           science facilities

    Another element, just as we are going forward or propose to 
go forward with the Spallation source, we are taking care of 
our existing facilities. We have increased the operating 
dollars going into our facilities from $915 million in 1998 to 
$1 billion in FY 1999. This is an initiative that we first 
proposed in FY 1996 which was very strongly supported by the 
committee, and we appreciate it.
    In addition to running our existing facilities at the most 
productive level, we will also be bringing on in FY 1999 
several new facilities, the B-factory at Stanford, the Fermi 
Main Injector in Illinois, the Relativistic Heavy Ion Collider 
at Brookhaven, and we believe that we cannot be compelling in 
our arguments for starting new facilities if we are not taking 
care of the existing ones.

                        next generation internet

    Another initiative in this budget is the Next Generation 
Internet. This is an inter-agency effort. We have $10 million 
in our base program that will enable activities like the DOE 
2000 efforts, the network R&D, and some of the work we are 
doing in visualization, to be fully coordinated with the NGI 
effort and even an additional $12 million to enable us to more 
fully participate and take advantage of the very high speed 
network research that is being done in NGI and also to make our 
energy science network more fully incorporated into the efforts 
of NGI, which is the ESnet. ESnet is one of the premier 
production, science production networks, in the country, which 
currently we cannot incorporate into the NGI.

                           science education

    Finally, there is a $15 million request for increasing our 
efforts in science education and to use our laboratory assets 
more fully to cooperate with NSF and the Department of 
Education.

                     large hardon collider and iter

    There are also activities in the budget associated with 
increased effort in the Large Hadron Collider. We have fully 
entered into an agreement with CERN that governs our 
investment. For the fusion budget, though not increased over 
last year, we are in the process of transitioning that program 
more fully from the commitments to the ITER design towards one 
which is a domestic program emphasizing science and trying to 
get the most out of our domestic facilities.
    I would be happy to answer further questions on that during 
the question period. Overall, I am very pleased to be able to 
present the budget to you. I believe this serves science in a 
way that is consistent with bipartisan values for and 
recognition of the contributions of science to our lives, and I 
welcome the opportunity to work with you.
    [The statement of Dr. Krebs follows:]

[Pages 611 - 652--The official Committee record contains additional material here.]


                     Oral Statement of Dan Reicher

    Mr. McDade. Doctor, thank you for a fine statement.
    Mr. Reicher, would you like to give us your statement? You 
may proceed in your own way. If you wish to file and 
extemporize, you are encouraged to do so.
    Mr. Reicher. Thank you. I appreciate the opportunity to 
appear before you today for the first time and to discuss the 
fiscal year 1999 budget of the Department's Office of Energy 
Efficiency and Renewable Energy.
    Mr. Chairman, there is an unfortunate tendency, I think, to 
view energy efficiency and renewable energy as somehow 
different from our traditional energy investments, as some 
green alternative to the real business of energy. Given that 
over 90 percent of the energy we consume today comes from 
fossil and nuclear fuel, we must use these sources as 
efficiently as possible. The investments we make in energy 
efficiency do not simply save energy, they represent one of the 
best public investments we can make to ensure the productivity 
and competitiveness of our economy and one of the cheapest and 
least intrusive ways of accomplishing our environmental 
objectives.
    Renewable technologies are also far more than just some 
green alternative. They are, in fact, essential elements of our 
energy mix today, tomorrow, and in the coming decades. Today, 
hydropower, just one renewable, provides approximately 10 
percent of the total U.S. electrical generating capacity.In 
fiscal year 1999, we propose to begin engineering design of an 
efficient friendly turbine that will better protect fish, while 
allowing existing hydropower facilities to function at capacity. 
Without these and other technological improvements, the Nation risks 
losing a large portion of this existing clean energy source.
    In terms of tomorrow's energy market, wind is well 
positioned to become another major renewable energy source. In 
fiscal year 1999, we propose to continue our work with the wind 
industry to design and test the next generation of wind 
turbines which will reduce energy costs to as low as 2\1/2\ 
cents per kilowatt hour by 2002.

                        wind turbine tax credits

    Mr. McDade. Let me ask a question if I may. Was there a tax 
credit or some kind of a tax incentive built into the code for 
wind energy?
    Mr. Reicher. Yes, there exists a tax credit today.
    Mr. McDade. Will you elaborate on that? Give me an example 
of how it would work.
    Mr. Reicher. It is a tax credit of about, I think, a penny 
per kilowatt that is provided as a production tax credit for 
wind. It has been on the books for several years. It is due to 
run out quite soon. There has been a proposal made to extend it 
for another 5 years. But it has provided a credit against that 
cost of about a penny.
    Mr. McDade. A penny per----
    Mr. Reicher. Per kilowatt hour.
    Mr. McDade. Take an average stand that successfully 
operates in your judgment.
    Mr. Reicher. I am sorry, one and a half cents per kilowatt.
    Mr. McDade. If you took a stand that was producing wind 
energy and I had invested X amount, you pick the amount, could 
you give us an illustration of how it would work? How much 
energy does an individual stand, because I understand people 
bought a lot of them who invested in them, they bought a field. 
Is that pretty accurate?
    Mr. Reicher. Mr. Chairman, they have been invested in 
different ways, but several of them, of the projects, 
particularly in California, were developed with large numbers 
of turbines. The investments were made. This penny and a half 
tax credit encouraged these investments.
    Mr. McDade. Sure.
    Mr. Reicher. Wind is now down to a cost of about 4 to 6 
cents per kilowatt hour, which makes it slightly higher than 
what we generate electricity, for example, from coal or from 
natural gas. But where we are headed, and this is the important 
thing, is that in the next couple of years, with some 
development work that is going on, we will produce turbines 
that can operate in large parts of the country where there are 
moderate wind speeds as opposed to simply the heavy wind speeds 
out in California and other areas like that.
    This will open up the upper Midwest, for example.
    Mr. McDade. What I am trying to get into the record is an 
example, assume you are an investor and you are making a 
judgment about whether or not you want to invest in wind 
energy. You pick the number. I don't know what it costs to 
build a field or anything else. And if you make a decision to 
go and the production is--you figure the normal production 
rate, what kind of a tax credit would you get? How much would 
it amount to?
    Mr. Reicher. I am sorry, you would get a penny and a half 
production tax credit for each kilowatt hour you produce.
    Mr. McDade. I understand that. What is the norm after 
production of kilowatt hours for a stand of wind energy?
    Mr. Reicher. A typical turbine is half a megawatt, or about 
500 kilowatts.
    Mr. McDade. So the investment tax credit would be how much?
    Mr. Reicher. It would be 500 kilowatts times a penny and a 
half per kilowatt hour.
    Mr. McDade. Have you got a mathematician in the room?
    Mr. Reicher. $7.50 per kilowatt hour.
    Mr. McDade. Is that continuing for the life of the program?
    Mr. Reicher. Yes. This is available to investors for 
development of a wind turbine system before the expiration of 
the tax credit, for the life of the system. It is a ten-year 
tax credit.
    Mr. McDade. So if you are trying to make a judgment as an 
investor, period, and you look at what the government might 
help you with, there is a tax credit on the one end that you 
went through and tried to help us put a number on. What about 
at the other end, in terms of the appropriations you are asking 
us for? What do you do if that investor shows up in your shop 
and says I am thinking about doing this? What can you do for my 
company or my research project or whatever? What is the answer 
to that?
    Mr. Reicher. There are two different things. One is that if 
you are a developer of turbines, you are a technology company, 
we have entered into competitive contracts with those 
developers to improve the state of the technology. We announced 
a major one last summer that will develop two new designs in 
the next couple of years that will bring the price down. So 
that is if you are a technology developer.
    If you are a builder, there are programs that are available 
where there can be cost sharing, again competitively done, with 
the government, to take some of these new turbine designs and 
begin to deploy them and test them out in a more commercial 
setting.
    For example, there is a new project that was just developed 
in the State of Vermont, a 6-megawatt project. That was cost 
shared. It took a relatively new design, tested it in 
northeastern conditions, in cold weather conditions. It is up 
and running, it is doing reasonably well, and we are learning a 
lot from that.
    On the new set of turbines we have contracted for, when 
they come on line, we may well ask you for some funding to 
again do some cost share to test out the deployment of those.
    Where this is all headed, and we have had a very nice ramp 
down from costs that were in the 30 to 40 cents per kilowatt 
range down to this 4 to 6 cent range, moving down we hope to 
the 2 to 4-cent range, which at that point will make these very 
competitive in large areas of the country.
    Mr. McDade. I was going to ask you what number you have to 
come to to be competitive.
    Mr. Reicher. In the 2- to 4-cent range, particularly with 
the turbines that can operate in the moderate as opposed to 
heavy wind speeds. So states in the upper Midwest, where there 
are large expanses, windy expanses, where these turbines can be 
built.
    For example, we are seeing quite an increase just this year 
alone in various companies investing in turbines. There are 
several hundred megawatts being installed in Minnesota and in 
other states in the central part of the country. So this is 
truly beginning to take off.
    One more point, I am sorry. It is to emphasize that the 
turbines we are dealing with today have worked out a number of 
the bugs--let me call them the bugs--that have existed for 
turbines that were put in 10 and 20 years ago, problems with 
their reliability, problems with bird kills, a whole host of 
things. They have also, as I say, been designed to operate at 
lower wind speeds, which becomes critical.
    Mr. McDade. We thank you for your explanation. Continue, 
please.
    Mr. Reicher. Thank you.
    As I said, by building these kinds of turbines that can 
operate at moderate wind speeds, we can open up major areas of 
the country, particular the Nation's midsection, as we call it, 
the Nation's ``Saudi Arabia of Wind.''
    We will also establish, and this is important, Mr. 
Chairman, a U.S.-based certification organization to certify 
U.S. wind turbine systems, to certify them to be what we say 
they are, what they will produce, their reliability, so we can 
compete better internationally where there is a rapidly 
expanding market for wind turbines across the globe, and U.S. 
companies wanted to get a bigger share of the development in 
countries like China and India, in Russia and other places 
where there are major investments being made.

                           biomass co-firing

    I would also like to mention our rapidly expanding efforts 
to burn energy crops and agricultural wastes in combination 
with coal in existing power plants. There is strong industry 
interest in this co-firing technology, particularly in 
agriculture states, because it could provide a cost-effective 
option to meet more stringent environmental regulations for 
coal-fired power plants and provide new agricultural markets, 
particularly in the agricultural areas of the country, for both 
crops and crop wastes.
    I would be happy to talk about that.
    Mr. McDade. Let me just ask a question. Do we have plants 
up and running now that are combining those products and 
generating electricity?
    Mr. Reicher. Yes, there are a limited number of coal-fired 
power plants that are testing the burning of agricultural waste 
and agricultural crops. For example, in some of the 
agricultural areas of the dairy country in upstate New York, 
there is testing of dedicated crops. It is a willow crop, 
actually, being grown on land that has been taken out of dairy 
production. Those are being tested now in two coal-fired plants 
there.
    The way this technology works is that up to about 10 
percent of the coal that goes into an average coal-fired power 
plant can be replaced, without doing major tinkering to the 
coal-fired power plant, with agricultural wastes or dedicated 
crops. These could be dedicated crops like certain kinds of 
trees, certain kinds of grasses, and it also can be the wastes 
that we leave in the fields in the production of a whole host 
of agricultural crops.
    Mr. McDade. Would you kindly insert into the record a 
listing of the facilities that are out and operating, and some 
idea of the capital investment in them, and what it is costing 
to produce electricity at the other end?
    [The information follows:]

 Electric Power Plants Co-Firing Agricultural Crops and Residues With 
                                  Coal

    Although the Department did not help fund the retrofit of 
the New York State Electric and Gas plant, we have been helping 
to establish the willow crop as part of our Biomass Power for 
Rural Development initiative. There are three utilities 
involved in the project and we have contributed about $1 
million towards willow crop development for all three 
facilities which will eventually be co-firing with willow.
    New York State Electric and Gas is currently cofiring with 
willow when it is available. By 2002, it is projected that the 
dedicated willow crops will be providing a major portion of the 
co-firing material for the plant. The modification to the 108 
MW coal plant cost on the order of $2 million. The $2 million 
will be spent on feed handling and preparation. Because the 
material that is presently being co-fired is from pilot 
projects, a precise calculation of the cost of producing 
electricity is not available. Once these willow plantations are 
fully operational, more accurate estimates of the costs will be 
available.
    In addition to the current co-firing operations at the New 
York State Electric and Gas plant, Niagara Mohawk Power 
Corporation plans to permanently retrofit their Dukirk facility 
for co-firing operations during 1998. No other plants are 
currently cofiring with crops or crop residue, though several 
have performed short-term tests.

                  solar and renewable program overview

    Mr. Reicher. Yes. I would like to emphasize one of the 
great interests we have in the fiscal 1999 budget is, in fact, 
to move that to be a much more general kind of operation with 
these coal-fired power plants.
    Looking to the future, Mr. Chairman, our R&D investments 
are stimulating the development of entirely new technologies 
that will fundamentally change the energy landscape. 
Superconductivity, which allows electricity to move through 
wires without resistance, has potential to reduce the Nation's 
electrical system logs by 50 percent, equivalent to the output 
of 60 conventional power plants. In our fiscal year 1999 
budget, we propose to transfer breakthrough technologies to 
industry so that we can eventually manufacture miles, instead 
of just meters, of superefficient wires.
    Our R&D programs not only build the foundation for our 
energy future, but also open markets for U.S. manufacturers of 
advanced energy technologies. The World Bank hasestimated that, 
over the next four decades, developing countries alone will require 5 
million megawatts of new electricity capacity, and this compares to the 
world's current total installed capacity of 3 million megawatts. That 
is 5 million on top of the current 3.
    In order to meet this explosive energy demand and reap the 
resulting sales and jobs, we must invest in research, 
development, and, yes, in appropriate circumstances, the 
deployment of energy technologies. With Federal support, for 
example, the U.S. photovoltaics industry has grown more than 20 
percent annually over the last 7 years and now holds over 40 
percent of the world markets. We expect even greater market 
penetration with the Million Solar Roofs Initiative.
    As part of our focus on the most promising technologies, we 
are increasing the level of competition in selecting 
contractors, and we are proposing a $10 million R&D 
solicitation to stimulate the best proposals for crosscutting 
renewable technologies to address economic competitiveness, air 
quality, and climate change. We are also better coordinating 
our research with state energy R&D programs.
    I want to emphasize that state energy R&D programs have in 
total in excess of $200 million spent annually on energy R&D. 
We wanted to better coordinate with those programs. Just last 
week, we signed an agreement with the California Energy 
Commission to increase R&D cofunding and decrease duplication 
between our investment programs. We are also expanding our 
collaboration with other DOE programs, including fossil energy, 
energy research, and nuclear energy.
    Mr. Chairman, just as we are committed to a wise R&D 
strategy, we are also dedicated to managing taxpayer dollars 
responsibly. I recognize that we must put our financial house 
in better order. I have already mentioned our expanded emphasis 
on competition. We are also looking carefully at our 
noncompetitive grants and contracts. We are focusing closely on 
program evaluation and terminating projects that have reached 
their goals or don't measure up. In 1999, for example, we will 
finish testing and conclude our work on the Solar Two power 
tower. We are also developing a clearer budget and more open 
budgeting process.
    I thank you and members of the subcommittee for the 
opportunity to discuss our budget request. I truly look forward 
to working with you and your staff over the coming year.
    Mr. McDade. We thank you for a very informative statement.
    [The statement of Mr. Reicher follows:]

[Pages 659 - 680--The official Committee record contains additional material here.]


               unified solar and renewable energy budget

    Mr. McDade. Let me ask you a couple of questions, if I may, 
please.
    Last year, the committee recommended a more unified budget 
of solar and renewable research and development to give what we 
thought was a much better picture of the effort, the total 
effort, that we are trying to make as a Nation in this area.
    Tell us how you have complied with that recommendation, 
please.
    Mr. Reicher. By a unified budget, we have done a number of 
things with respect to our budget that I think are responsive. 
First of all, we have tried to be much more clear about what we 
intend to accomplish, what we are asking for the dollars, how 
we measure that progress against the goals that we set in the 
budget.
    Mr. McDade. Well, how many funding streams have you 
included in the gross total this year in this account, 
renewables, et cetera?
    Mr. Reicher. I don't know the number of budget lines or the 
number of codes.
    Mr. McDade. Is it easier if I say the programmatic lines 
and the funding that follow you have joined in one place to 
show the effort?
    Mr. Reicher. There are on the order of, I don't know, 10 or 
so; 10 or 15 budget lines. I need to get you that specific 
answer.
    Mr. McDade. You may answer that question for the record, if 
you would. When you go back downtown and have a chance to 
prepare it, send it up to the staff so we can have a look at 
it, please.
    Mr. Reicher. I will do that.
    [The information follows:]

      Number of Budget Lines in the Eere Energy and Water Request

    There are 15 separate budget lines in the Office of Energy 
Efficiency and Renewable Energy based on the FY 1999 request 
for Energy and Water Development activities, each representing 
a discrete area of research, development or program support.

               use of foreign versus domestic technology

    Mr. McDade. There was a concern last year that there was 
some money that, taxpayer money, spent collaborating with 
Japanese and German manufacturers in renewable technologies. 
Are you familiar with that controversy that arose?
    Mr. Reicher. Mr. Chairman, unfortunately I am not.
    Mr. McDade. Well, the Department's policy, I would assume, 
would be to reserve taxpayer dollars for U.S. research in this 
country, absent some very strong, compelling reason to have to 
go offshore to achieve a result.
    Mr. Reicher. Yes. Let me say as a general matter, I am 
familiar that there are some detailed requirements in law and 
regulation that govern how we collaborate with foreign 
entities. I know that as a general matter, having worked at the 
Department for several years. I unfortunately don't know the 
details of what you are referring to with respect to the 
Germans and Japanese.
    Mr. McDade. Amplify it for the record, and in the same 
procedure get a letter or whatever you want to do up to the 
committee so we can have a better idea.
    Mr. Reicher. We will do that expeditiously.
    [The information follows:]

          Funding to Japanese and German Affiliated Companies

    Given the overwhelming globalization of commerce and the 
rise of multi-national corporations, it is inevitable that the 
Office of Energy Efficiency and Renewable Energy (EERE) would 
deal with organizations having foreign affiliations. In 
virtually every instance, however, foreign affiliated 
organizations under contract with EERE have U.S. operations 
where the work is performed. In most cases as well, the 
organizations are cost sharing and have existing or planned 
manufacturing facilities in the U.S. The following contracts 
are with Japanese or German affiliated companies.
    ASE Americans (German affiliation); $600,000; photovoltaic 
cell R&D.
    Siemans Solar (German affiliation); $1,300,000; 
photovoltaic PVMaT (manufacturing technology) development; 
photovoltaic copper indium diselenide cell development.
    United States Systems (U.S./Japanese joint venture); 
$600,000; photovoltaic thin film R&D.
    Voith USA, Inc. (German affiliation); $478,000; hydropower 
hydro turbine R&D.

                      commercialization activiies

    Mr. McDade. One issue that we have a lot of problems with, 
and, I am sure, you do, too, is the balance of basic research 
and the level of development of renewable energy technologies. 
We have a problem in that we have not been getting the 
necessary information we need to help us understand that 
balance.
    I want to ask you, are we comfortable that the level of 
commercialization activities in the fiscal year 1999 budget is 
fully accurate?
    Mr. Reicher. Mr. Chairman, we have done our best to 
describe in the fiscal year 1999 budget those activities which 
are best described as fundamental research, applied research, 
development, deployment, demonstration, and we will provide any 
and all information to further clarify that.
    Mr. McDade. We get guidance that the Department is not 
involved in the business of commercialization.
    Mr. Reicher. Let me answer that for you. Obviously these 
terms, starting with basic research on one end and going all 
the way to commercialization, are not bright line terms. 
Commercialization means different things to different people. 
Let me say very candidly to you, there are a limited number of 
activities that some might consider commercialization or 
commercialization-like in what we do.
    For example, the Commercialization Ventures Program, which 
the Energy Policy Act directed us to carry out, that is a 
program that we have undertaken, is ramping down now.
    The Geothermal Heat Pump Program some might consider 
commercialization or commercialization-like. That has been a 
program that you have funded and has actually shown quite a bit 
of success.
    But they are limited, and I commit to you today, as I have 
committed to your staff, that we will give you any and all 
information and be as clear as we can to divide these different 
areas along this research spectrum.
    Mr. McDade. We realize the difficulties of definition, but 
we want to make sure that we are fully informed as you go 
along.
    [The information follows:]

                           Commercialization

    The Office of Energy Efficiency and Renewable Energy's 
(EERE) does not generally undertake commercialization 
activities. EERE's research and development activites are 
balanced across the technology development continuum. These 
efforts range from:
    Basic (or fundamental) and Applied Research, which are 
needed to specify and conceptualize the technology; to
    Development, which advances the technology from concept to 
feasibility testing (in an engineering sense); to
    Pre-Commercial Demonstration (or pre-commercial 
deployment), to prove that a technology will be viable, both 
technically and economically, under actual market conditions.
    In most instances, the Federal role does not include 
commercialization activities. Commercialization is properly the 
role of the private sector. Upon occasion, however, there may 
be compelling reasons for the Federal Government to engage in 
early efforts to facilitate later commercialization. These may 
include introducing, in a limited manner, a technology or range 
of technologies for which market penetration faces numerous 
institutional, financing, infrastructure support, information 
and training barriers.
    Two programs funded by Energy and Water Development 
appropriations are considered to be contributing to 
commercialization efforts by industry: the Commercialization 
Ventures program and the Geothermal Heat Pump program. These 
are described below
    The Department's Commercialization Ventures program, 
mandated by EPACT, was intended to assist newly emerging 
renewable technologies to enter the marketplace. The program 
provided up to 50 percent matching funding for projects 
intended to showcase technologies for potential future 
commercialization. The program is currently closing out its 
operations and managing the remaining ten projects funded 
through competitive solicitations issued in FY 1994 and FY 
1996. No funding was provided to the program in FY 1997 and no 
funding was requested in FY 1998 and FY 1999. The ongoing 
projects are located in California (two projects), Arizona, 
Arkansas, Massachusetts, Florida, Colorado, Wisconsin, Virginia 
and New York. The Denver Regional Support office is managing 
the close-out of this program.
    Both DOE and the EPA support geothermal heat pumps (GHPs) 
as a major option for saving energy and reducing emissions. 
However, the technology, even though commercially available, is 
not widely employed or even familiar to most consumers. We 
believe that utilities are the key to increasing GHP market 
penetration. The utilities, GHP industry and DOE are working 
together to increase the annual sales of GHPs to 400,000 
annually early in the next century by educating building 
owners, architects and engineers, and contractors. We are also 
reducing the cost of the ground heat exchanger through research 
in advanced design software, improved thermally conductive 
grouts and drill bits. A program partner, the Geothermal Heat 
Pump Consortium (and organization of over 200 utility members 
who together serve the majority of the nation's electric 
meters), has committed over $25 million in utility funds to be 
program.

         marketability of photovoltaics and biomass technology

    Mr. McDade. It would seem like the most dramatic 
improvements in the marketability of renewable technology have 
been in photovoltaics and biomass. Would you agree with that?
    Mr. Reicher. There have been dramatic improvements across a 
broad spectrum. Photovoltaics and biomass have shown quite a 
degree of success in recent years.
    Mr. McDade. What others would you include, if you think 
there are others out there that are comparable?
    Mr. Reicher. I think there has been--I think the wind 
program, I think geothermal has shown success. I think there 
have been various significant areas of success in most of the 
renewable areas. But, frankly, we face the challenge of 
continuing to bring costs down for many of them, particularly 
as we restructure the U.S. electricity industry.

                         utility restructuring

    Mr. McDade. Do you think that deregulation of the utility 
industry and electricity around the country--everybody is 
saying it is a better deal for the consumer. Prices are going 
down. Do you agree with that?
    Mr. Reicher. The expectation is that with restructuring, 
state by state, and potentially with Federal restructuring, 
that prices will drop. That is the expectation. I think it is 
too early in the state restructuring process to see the results 
of that, but that is the expectation.
    Mr. McDade. Okay, that is everybody's expectation. What the 
committee wants you to do is keep us on the curve of the 
research projects that may fall out as being noneconomic. I am 
sure there will be some that you just will not be able to 
continue working with.
    Mr. Reicher. If I could, let me respond to that briefly.
    Mr. McDade. Please.
    Mr. Reicher. Restructuring holds the promise of increasing 
competition, and with increasing competition could come the 
increased emphasis on efficient production of electricity. It 
also holds the promise of distributed generation of 
electricity, which would figure well for renewables. As we also 
are seeing state by state, starting in California and moving on 
to other states, states are making strong provisions for 
renewables in their restructuring legislation to better ensure 
that renewables have a role in our energy mix and continue to 
provide the diversity of energy supply that they are important 
for.
    So, we think that a combination of competition emphasizing 
efficient energy production bodes well for some of our 
programs. We also think that distributed generation bodes well, 
that electricity restructuring will provide, and also the 
provisions states are making for renewables, will be supportive 
of what we do.
    We are analyzing this, though, quite intensively as we move 
forward with restructuring in what are now, I am told, about 47 
states across the country that are in some state of 
restructuring, either beginning to look at it or actually 
having adopted something.
    Mr. McDade. Just a cautionary word for you. When the oil 
shock hit the country, I think every economist in the country 
said the price was going to $35-40 a barrel. Because of that, 
the Nation tried to get into all kinds of alternative sources 
of energy, from oil shale to synthetic gas to everything 
imaginable. Well, the economists were wrong. Every one of those 
plants never produced any real energy. They are boarded up. It 
was a bad experience for the country based on cost assumptions.
    So, keep us apprised as you go along of what it looks like. 
We want to be in on the take-off, if you please.
    Mr. Reicher. Absolutely. Thank you.
    Mr. McDade. There will be other questions.
    I want to now turn to Dr. Lash.

              reprogramming of funds within nuclear energy

    Mr. McDade. Mr. Lash, you have been the subject of interest 
to the committee, as you know.
    Dr. Lash. Yes, sir.
    Mr. McDade. We have been disturbed, to put it mildly, by 
some of the actions that have been taken in your shop, and you 
are aware of that, aren't you?
    Dr. Lash. Yes, sir, I am.
    Mr. McDade. How many years have you worked at the 
Department of Energy?
    Dr. Lash. I have been an employee for almost 4 years.
    Mr. McDade. And before that you were in government----
    Dr. Lash. I was in Illinois State government.
    Mr. McDade. So, if I were to ask you your total life in 
public service doing these kinds of things, it would be how 
long?
    Dr. Lash. In government itself, it would be about almost 10 
years.
    Mr. McDade. Yes. I assume that in all that time you were at 
the Department of Energy, you were responsible for preparing 
the budget estimates that were sent up here?
    Dr. Lash. I have always been involved in the budget.
    Mr. McDade. You probably engaged in reprogramming actions?
    Dr. Lash. I have been aware of or approved of 
reprogrammings.
    Mr. McDade. There is one that is highly troublesome, as you 
know.
    Dr. Lash. Yes, sir, I do.
    Mr. McDade. It was one in which the committee zeroed out a 
program in 1996, and from our perspective, that was ignored by 
you. Even though we zeroed out the program, you set out to find 
a way to fund it. Indeed, the zeroed program was funded; isn't 
that accurate?
    Dr. Lash. May I give a little bit longer response?
    Mr. McDade. Sure.
    Dr. Lash. The program was proposed to do work on the core 
conversion project to shut down the three remaining plutonium 
production reactors in Russia for fiscal year 1996. It was 
proposed. We did not have a program, but it was proposed.
    Prior to the beginning of fiscal year 1996, money was found 
internally at the Department of Energy, including using some 
lines that had appropriate authorization for this kind of 
project and reprogramming close to----
    Mr. McDade. Dr. Lash, let me ask you a question. Did 
anybody in the Department advise you that that was 
inappropriate conduct, to tap those streams of money?
    Dr. Lash. No.
    Mr. McDade. Nobody?
    Dr. Lash. No. At the initial part of this, no. And there 
was----
    Mr. McDade. What fiscal year are you talking about now?
    Dr. Lash. I am talking about the end of fiscal year 1995.
    Mr. McDade. Go ahead.
    Dr. Lash. At any rate, so there was approximately $3 
million of Department of Energy money that was to be combined 
with about $2 million from the State Department in their 
nonproliferation and disarmament fund.
    These monies, and Congress was notified of this by the 
chief financial officer, I believe, these monies were to pay 
for two feasibility----
    Mr. McDade. Excuse me, how was Congress notified? Verbally? 
Was there a letter written?
    Dr. Lash. I have seen a letter from----
    Mr. McDade. Do you have it with you?
    Dr. Lash. I don't believe I have it with me, but from the 
chief financial officer, it was Joe Vivona at the time.
    Mr. McDade. We are not aware of notification in the 
committee.
    Dr. Lash. Okay. Well, I will be happy to provide that.

           explanation of use of funds within nuclear energy

    Dr. Lash. As I say, 2 of the 3 million was out of accounts 
where the Department judged there was authorization to use the 
money for these feasibility studies. Close to $1 million 
additional was internally reprogrammed. That was combined with 
what at that time we thought we could get about $2 million from 
the Department of State.
    At that time, which was the August-September 1995 time 
frame----
    Mr. McDade. Dr. Lash, I have to interrupt you. The 
threshold for reprogrammings in your shop was how much money at 
that time?
    Dr. Lash. At that time, my understanding was up to $1 
million.
    Mr. McDade. Did you exceed that amount when you requested 
the reprogramming?
    Dr. Lash. No. As I say, the notice came over from the chief 
financial officer, and that was for less than $1 million. The 
notice came over for less than $1 million.
    Mr. McDade. Didn't you have a conversation up here with the 
committee staff in which they were upset that you didn't notify 
them of this activity?
    Dr. Lash. I recall a meeting with committee staff at that 
time where there was----
    Mr. McDade. Because there was no notification.
    Dr. Lash. Well, I know there was a great deal of 
unhappiness about that project going forward.
    Mr. McDade. I am talking about notification. You said the 
Congress was notified. I am trying to discover where and when, 
and I am pointing out to you that as you met with the committee 
staff, they chastised you for taking that money without 
responding to the notification requirements of this committee.
    Dr. Lash. I recall that the committee was very unhappy with 
this project.
    Mr. McDade. Why? Why? Why?
    Dr. Lash. Because at the time----
    Mr. McDade. What were you doing?
    Dr. Lash. Congress was considering a proposed fiscal year 
1996 budget for--what we had proposed for the core conversion 
replacement project, and we got started early through the use 
of other accounts and this internal reprogramming. Staff 
expressed their great unhappiness about that.
    Mr. McDade. How much money did you reprogram to start 
early?
    Dr. Lash. As I say, close to $1 million, a little under $1 
million was reprogrammed.
    Mr. McDade. Are you sure the number is not $3 million?
    Dr. Lash. The total amount was $3 million. There were three 
accounts used. Two of the accounts--one of them from the Office 
of Nonproliferation and Arms Control said they had the 
authority to use those funds for these feasibility studies. 
They provided that money to Pacific Northwest National Labs for 
the feasibility studies.
    In addition, my office had at that time, a different 
account that was used for international activities, and the 
authorization for that was quite broad. That account supplied 
$1 million. That is two.
    In addition, there was $1 million under the control of the 
Chief Financial Officer that had a variety of carryover funds 
from Nuclear Energy.
    Mr. McDade. You are still in fiscal 1995?
    Dr. Lash. Yes. And these are carryover funds. That money 
was internally reprogrammed, and it was close to $1 million, 
bringing the total close to $3 million that was available from 
the Department of Energy for the feasibility studies.
    My understanding from having been shown a piece of paper 
recently was that the Chief Financial Officer informed the 
Congress, and I will have to see exactly who or how, that this 
$1 million was reprogrammed. I don't know about any 
notification of the use of the other funds, since my 
understanding is the determination was that those monies had 
sufficiently broad authorization and could be used.
    Mr. McDade. I have a lot of problems with your recitation 
as being unfactual. I don't like saying that to you, because I 
want you to be forthcoming to the committee.
    Dr. Lash. I am trying to be forthcoming. That is my 
understanding of it.
    Mr. McDade. Well, when did you last look at the events that 
led to this discussion this morning?
    Dr. Lash. I have reviewed staff papers prepared for me just 
very recently.
    Mr. McDade. Did you find a notification sent to this 
committee?
    Dr. Lash. As I say, I can't remember which committee was 
notified. I did see a letter from Joe Vivona, the Chief 
Financial Officer, to some part of Congress. Now, whether it 
went to this committee or not----
    Mr. McDade. Do you remember being chastised by the 
committee for not notifying them?
    Dr. Lash. I remember a very strong meeting.
    Mr. McDade. You were not able to cure that. You didn't 
provide a letter to the committee at that juncture that had 
been prior sent, did you?
    Dr. Lash. I did not send a letter.
    Mr. McDade. What did you do after they chastised you about 
the procedures that you engaged in for inappropriate conduct?
    Dr. Lash. Well, let me say that I met with the 
committeestaff. I talked about why we were interested in pursuing this 
project. There was an agreement between the Vice President of the 
United States and the Prime Minister of Russia. There were also 
agreements signed by the Secretary of Energy to go forward, and I 
explained that as far as I understood, if----
    Mr. McDade. You are getting far afield now. You are talking 
about actions that occurred downtown and actions generally 
supported by this committee.
    Dr. Lash. Let me say, what I was trying to say is I didn't 
understand that I was to provide any further materials to the 
committee after that meeting with staff.
    Mr. McDade. Could you have?
    Dr. Lash. Would I----
    Mr. McDade. Could you have?
    Dr. Lash. Absolutely. And if asked, I certainly would.
    Mr. McDade. You know that notification was a key issue when 
the committee staff spoke with you rather sternly.
    Dr. Lash. I know that the committee staff was very upset 
that we were going forward with this project.
    Mr. McDade. But you made no effort to show that there was a 
notification exigent at that time that you are now claiming was 
in existence?
    Dr. Lash. I have no recollection of being asked to show any 
documentation personally. Now, I can't speak for anybody else 
at the Department. I have no recollection of being asked to 
produce anything following that meeting or as a result of that 
meeting. I mean, we explained at the meeting what we had done 
and what we were proposing to do and why, and I know that there 
was a great deal of unhappiness with that action. I attributed 
that to a policy disagreement between the committee and the 
administration.
    Mr. McDade. You are quite wrong.
    You also reprogrammed $3 million, didn't you?
    Dr. Lash. No, we reprogrammed close to $1 million 
internally at the Department of Energy. We used another $2 
million where the authorization----
    Mr. McDade. You reprogrammed within the Department. You 
went to other accounts and applied them to this account?
    Dr. Lash. We reprogrammed close to $1 million to be used 
for these feasibility studies.
    Mr. McDade. Did you send a reprogramming up to the 
committee?
    Dr. Lash. I personally did not, no.
    Mr. McDade. Did the Department? Were you aware of a request 
coming to the committee?
    Dr. Lash. No, I was not aware of a request from the 
committee, but I----
    Mr. McDade. Coming to the committee, from your Department.
    Dr. Lash. I was aware of--this morning I was shown a letter 
from the Chief Financial Officer to the Congress, and I am 
sorry, I don't, it was just this morning, and I don't remember 
to whom it was addressed, but it was to Congress----
    Mr. McDade. Let me say something to you. This is not a new 
conversation that you are engaging in. You have been talking 
about this issue with members of the staff, with people who are 
examining your conduct, a host of people who want to know what 
you were doing and what you were thinking of when you engaged 
in individual inappropriate conduct. This is not new to you 
when you say you just saw it this morning. All of this issue 
has been on the table for some time, hasn't it?
    Dr. Lash. It has not been on my table for some time, sir. I 
am sorry. I was trying to provide some background as to what 
was done before fiscal year 1996. The questions more recently 
that have come up have to do with the $690,000 that was made 
available, it wasn't reprogrammed, that was made available to 
Pacific Northwest National Laboratory, and it was only more 
recently that I asked questions of the staff to provide me with 
documentation about the original $3 million that was provided 
by the Department for the feasibility studies.
    The staff has just given me the letter that I had seen 
before. It was addressed to the staff director of the Committee 
on Science.
    Mr. McDade. The Committee on Science. You didn't notify us.
    Dr. Lash. I personally did not notify----
    Mr. McDade. Who was that signed by?
    Dr. Lash. Joe Vivona.
    Mr. McDade. Read it, please.
    Dr. Lash. Enclosed--it is to Mr. David Clement, the staff 
director.

    Dear Mr. Clement: Enclosed for your information is the 
Department of Energy's fiscal year 1995 base table as of 
September 30th, 1995. This table consists of two sections. 
Section A reflects all Energy and Water Development 
Subcommittee appropriations, and section B reflects all 
Interior Subcommittee appropriations. A detailed summary of 
changes occurring in the first quarter of fiscal year 1995 is 
also provided, see enclosure A. I hope you find this report 
useful. Please let me know if I can be of further assistance.

    I believe it is in these attachments that the close to $1 
million is referred to.
    Mr. McDade. You can have your staffer make a copy of it and 
submit it.
    Dr. Lash. Sure, I would be happy to do that.
    Mr. McDade. Before the day is done.
    [The information follows:]

                           Base Table Letter

    A copy of the letter from Joseph F. Vivona, Chief Financial 
Officer to David Clement, Staff Director, House Science 
Committee dated November 13, 1995 is provided for the record.
    [The information follows:]

[Pages 690 - 692--The official Committee record contains additional material here.]


              reprogramming of funds within nuclear energy

    Dr. Lash. You can probably have this copied now.
    Mr. McDade. Let's go to FY 1996.
    Dr. Lash. Yes.
    Mr. McDade. You used a figure of about $700,000.
    Dr. Lash. Yes.
    Mr. McDade. Roughly. We are rounding.
    Dr. Lash. Yes.
    Mr. McDade. You are aware of that money?
    Dr. Lash. Yes.
    Mr. McDade. And how did you come to spend it?
    Dr. Lash. As I mentioned, the Department had this $3 
million made available for the feasibility studies and the 
Department of State's nonproliferation and disarmament fund was 
to make about $2 million available for the feasibility studies.
    At that time, around August and September of 1995, it was 
believed that this money would be sufficient to pay for all the 
feasibility studies. The feasibility studies were conducted 
between about September of 1995 and December of 1995, with a 
report submitted to the Chernomyrdin Commission in about 
January of 1996.
    Somewhere around then the State Department made clear that 
the funds from the nonproliferation and disarmament fund could 
be used only to pay for work that was conducted in Russia, 
there were several Russian institutes that were involved in 
these feasibility studies, and that none of this money could be 
used to pay for work done by the Pacific Northwest National 
Laboratories in Richland, Washington, in this country.
    The amount that was not therefore covered was 
approximately, as you say, $700,000; somewhat less.
    I asked the staff to see if there was a way of paying for 
this, and I didn't hear anything for quite some time. There was 
a possibility, I am told, that the State Department had other 
funds that they might be able to make available, and we so 
reflected that in questions and in answers to questions 
submitted to this committee in April of that year, 1996.
    Later, towards the end, I believe it was about August or 
so, the Richland operations manager of DOE wrote to my office 
or notified my office that there was a problem with the PNNL, 
Pacific Northwest National Laboratory accounts, that it was for 
the work--they weren't yet compensated for the work that was 
done on the feasibility studies in the amount of close to 
$700,000, and that unless we found some way of paying for that, 
they were going to take the funds out of the International 
Nuclear Safety Program account.
    So I again, you know, said to staff, we have got to solve 
this problem. My deputy director, to whom I had assigned this 
responsibility, saw the problem, told me that they had found 
funds within the Department's--within my office's accounts----
    Mr. McDade. Tell me when this happened, Mr. Lash. What 
month are we talking about?
    Dr. Lash. Well, the letter authorizing PNNL, that they 
could use these funds, was, I believe, early September of 1996.
    Mr. McDade. And you say----
    Dr. Lash. These discussions took place somewhat before 
that.
    Mr. McDade. How much before; do you know?
    Dr. Lash. I am sure it was in August, and, you know, maybe 
September 1st.
    Mr. McDade. Pretty close to the date of the letter?
    Dr. Lash. Yes.
    Mr. McDade. Who among your staff did you speak to?
    Dr. Lash. The principal person I spoke with was Ray Hunter. 
He is my deputy director. He is the one I assigned the problem 
to and asked him to find a solution. Then he reported back to 
me that he had found a solution and that we could make these 
funds available to the Pacific Northwest National Labs. He sent 
the letter saying that Pacific Northwest National Labs could 
have access to these funds.
    Mr. McDade. Mr. Lash, let me say that the committee has had 
an opportunity to examine what is allegedly a notification, and 
it doesn't comply at all with standard procedures. It is dated 
November 13th, which was, of course, post-fact.
    I really want to come to closure on this and get specific 
responses. I am concerned that the committee is not getting the 
specific responses that are actually the facts. I am very 
concerned about that. I am about to put you under oath and 
require you to answer questions under oath. I don't want to do 
that, Mr. Lash. I would rather have you be forthcoming with us 
and not talk about, I didn't reprogram $3 million, only $1 
million, when you know you did $3 million. You were chastised 
by the staff. We never got notification, and we haven't even 
gotten into discussing the $700,000 yet.
    Dr. Lash. Mr. Chairman, I apologize if I am not. I am doing 
the best I can to answer these questions. I am not a budget--
you know, I am not trained in budget matters. I have no 
recollection of being asked----
    Mr. McDade. Mr. Lash, we talked about your career in 
government. You have been down there 5 years. You have been 
putting the budgets together. You submit them up to your 
agency, to OMB and to the Congress. You initiate reprograms out 
of your Department. You have a broad base of knowledge, Dr. 
Lash, about how this process is supposed to work.
    Dr. Lash. Mr. Chairman, when we want to reprogram money, we 
go to the Chief Financial Officer's staff and raise it with 
them, and they are the ones who tell us whether this is proper 
or not. Now, frankly, I am not clear on who within the 
Department of Energy specifically has the responsibility to 
notify your committee of proposed changes. I certainly wish 
that I had contacted you or your staff and talked about this 
issue, particularly the $690,000, and I apologize for not doing 
that. I am very unhappy with myself that I did not take the 
initiative to do that. But quite frankly, I am not clear about 
who actually has that formal responsibility within the 
Department to do that.
    Mr. McDade. When you came to the government, you took an 
oath to uphold the Constitution; did you not?
    Dr. Lash. Absolutely.
    Mr. McDade. You know that Article 1 of the Constitution 
provides that the Congress appropriates money to programs. You 
are aware of that, aren't you?
    Dr. Lash. Oh, yes.
    Mr. McDade. And if you engage in activity which in effect 
has you appropriating the taxpayers' money, you are very much 
in violation of the procedures of the Department, the 
procedures of this committee, and indeed, in my view, your 
constitutional oath.
    Now, you took that $700,000 from a nonrelevant program, 
didn't you?
    Dr. Lash. Mr. Chairman, what my staff told me was that this 
money could be used appropriately for that purpose. There is 
language in what was submitted that I didn't look at at the 
time. I admit I did not review this at the time.
    Mr. McDade. Did anybody tell you that you were doing the 
wrong thing in the Department?
    Dr. Lash. No.
    Mr. McDade. Nobody?
    Dr. Lash. No. In fact----
    Mr. McDade. I am going to come back to that question. I am 
going to have you answer it under oath if I have to.
    Dr. Lash. I would be happy to answer that under oath. I 
know there is a Department employee that may have a different 
view.
    Mr. McDade. There may be some others, Dr. Lash.
    Dr. Lash. Well, I have absolutely no recollection of anyone 
suggesting anything of that sort, and I do have a specific 
recollection of my deputy director assuring me, after having 
talked to people, other people, within my office and within the 
CFO's office, that this was an appropriate action to take. So I 
said to Mr. Hunter, okay, Ray, go ahead. I did not personally 
go over all the papers. I have no recollection whatsoever of 
anyone telling me, you shouldn't do this because it is improper 
or anything like that.
    Mr. McDade. Do you know Sterling Franks?
    Dr. Lash. I know Mr. Franks, yes.
    Mr. McDade. Did you have a colloquy with Mr. Franks about 
this issue?
    Dr. Lash. I recall a meeting in my--in the entrance to my 
office----
    Mr. McDade. My first question is did you have a colloquy 
with him about this issue?
    Dr. Lash. Mr. Franks expressed his displeasure with the 
proposed use of these funds.
    Mr. McDade. He told you you were wrong, didn't he?
    Dr. Lash. I don't recall the exact words he said.
    Mr. McDade. If he came to a conclusion, would the 
conclusion be you were wrong, you shouldn't do it?
    Dr. Lash. No, he told me he didn't want the money used for 
that purpose.
    Mr. McDade. Why?
    Dr. Lash. Well, these were monies that were in his program 
that he didn't want used for that purpose.
    Mr. McDade. They were also monies that were zeroed out of 
the budget, weren't they? You got zero for this account in 
1996.
    Dr. Lash. For the----
    Mr. McDade. For this program.
    Dr. Lash. I am sorry?
    Mr. McDade. The Russian Studies Program.
    Dr. Lash. Yes. Monies were not appropriated by Congress for 
fiscal year 1996 for this program.
    Mr. McDade. So you went over across the way and tried to 
get the money out of Frank's budget, didn't you?
    Dr. Lash. In the end when there was a shortfall, I looked--
--
    Mr. McDade. Is the answer yes, and then you can explain? Is 
the answer yes?
    Dr. Lash. Monies were transferred from that program--
weren't transferred, they were made available to Pacific 
Northwest National Laboratory for these feasibility studies, 
yes.
    Mr. McDade. You engaged in that discussion with Mr. Franks, 
didn't you?
    Dr. Lash. Mr. Franks came down to my office. It was not a 
long conversation. He said he was not happy with this. He 
didn't want it to happen.
    Mr. McDade. He told you he thought it wasn't the right 
thing to do, didn't he?
    Dr. Lash. I don't remember his precise words.
    Mr. McDade. Did you believe it was the right thing to do?
    Dr. Lash. I thought it was an appropriate thing to do, and 
I didn't think there was anything improper or illegal about it.
    Mr. McDade. In other words, you don't understand if there 
is a program zeroed out of the budget by the Congress, that it 
is supposed to be zeroed?
    Dr. Lash. What I understood was leading up to this, when we 
had the $3 million available, there were accounts that were 
used where the authorization was broad enough in the opinion of 
the people of the Department to use for this project. That is 
what I was told for this particular sum of money.
    Mr. McDade. We are not talking about authorization, and it 
is a cute use of the word. You know the difference between 
authorization and appropriation, don't you?
    Dr. Lash. Yes, I do, sir.
    Mr. McDade. Well, we are talking about appropriation, sir.
    Dr. Lash. Yes.
    Mr. McDade. There was zero appropriated to the program.
    Dr. Lash. That is correct.
    Mr. McDade. Against which you put $700,000 to continue it.
    Dr. Lash. Yes.
    Mr. McDade. In addition to the $3 million that you had 
reprogrammed.
    Dr. Lash. Yes.
    Mr. McDade. Do you think that was the right thing to do?
    Dr. Lash. I quite honestly feel at the time it was, but 
believe me, when I have looked at this now, I wish we hadn't 
done it. If I had it to do over again, first of all, I would 
have paid attention to it, I would have been more serious about 
this, and I apologize, I wasn't. And given my review of it and 
hearing the committee's concerns, no, I wish we hadn't done it, 
quite honestly. It was a mistake.

                        appropriations authority

    Mr. McDade. It was even more than a mistake, it seems to 
me. It was willful conduct. It was absolutely egregiously 
negligent to try to fund a program that had been defunded. 
Don't you agree with that?
    Dr. Lash. I understand your opinion, sir.
    Mr. McDade. Do you agree with it?
    Dr. Lash. I don't believe--no, I don't.
    Mr. McDade. Well, where do you get the authority to 
appropriate money?
    Dr. Lash. I don't have authority to appropriate money. I 
understood----
    Mr. McDade. If a program is zeroed, does that mean it is to 
go forward or stop?
    Dr. Lash. It means there is no money appropriated by 
Congress to conduct that activity.
    Mr. McDade. Does it mean the program is to be stopped?
    Dr. Lash. I don't know what--I mean, at the time----
    Mr. McDade. Come on. You know, Dr. Lash.
    Dr. Lash. I am not trying to be cute, sir, and I apologize. 
As I say, I wish we hadn't done it. I think it was a mistake. 
It was not a willful mistake. I was not trying to go against 
the will of Congress. I did not pay attention to this. I 
delegated this problem to be solved, and I am sorry I did that.

                 assertation of committee prerogatives

    Mr. Fazio. Mr. Chairman, if I could comment at this point, 
we have a lot of important issues before us, and I think from 
my perspective, the Chairman has been right in taking the time 
to lead this inquiry.
    It seems to me, Mr. Lash, that you have either knowingly 
done something you shouldn't have done or been inept in the way 
in which you went about doing it, one or the other. I think 
that point has been made clear.
    The merits of this case are not the issue. In fact, this 
committee in the next fiscal year provided funds, and then the 
Foreign Ops Committee under Nunn-Lugar continued the program. 
But there is a prerogative that the Congress feels strongly 
about, and that is that we make decisions. And moving money 
around so that you don't breach the $1 million limit and get to 
appropriate $3 million is wrong. I am glad to hear you say that 
you wish you hadn't done it. I wish you hadn't done it at the 
time you did it.
    It seems to me that it is pretty clear that the committee 
has reasserted its prerogatives and its role, and I hope not 
only in the Department of Energy, but in all the 
departmentsthat the committee deals with this sort of behavior will not 
take place at any time in the future.
    But, Mr. Chairman, I don't know what more we can obtain. I 
don't think we are going to get to the goal we have, and that 
is a complete satisfaction that the work the committee staff 
has done will be corroborated by Dr. Lash. It seems to me you 
have done the right thing and sent a very powerful message 
today, and I hope we could leave it at that and move on and get 
back to some of the more important policy issues.
    Mr. McDade. Vic, I thank you very much for your comments, 
and they are right on with respect to the conduct of Dr. Lash 
and his awareness of what he was doing, and I have a hard time, 
my friend.
    You are not a rookie in government. You have been around a 
long time. For me to believe it is just an honest error is very 
difficult.
    I haven't sworn in a witness in 26 years--in 36 years--and 
you are very close to being the first. I am going to drop this 
matter for now--for now. We may have to have you back, Dr. 
Lash. If you think of anything you want to provide to the 
committee at the conclusion of this hearing or in the balance 
of the week or whenever, you are encouraged to do so.
    In the meantime, we will proceed with questioning. I 
recognize the gentleman from California.
    Mr. Fazio. Thank you, Mr. Chairman. I would like to welcome 
all of you, even you, Dr. Lash, at this point.
    Dr. Lash. Thank you.

                           budget constraints

    Mr. Fazio. Martha, I would like to go right to the heart of 
one of the dilemmas this committee faces this year. As you 
know, we have had a fairly decent budget submitted from the 
Department of Energy in terms of putting money behind the 
Department's priorities. Regrettably, we haven't had the same 
on the other side of our jurisdiction. In an El Nino year, 
which is also an election year, we had a reduction of $829 
million in the Corps of Engineers construction budget. We may 
have some assistance from the full committee, but frankly, it 
will not be enough, I am sure, to mitigate the impact that that 
will have on our overall funding.
    In the face of that, we have the Spallation Neutron Source 
as really the most significant new investment made by the 
Department, $157 million for fiscal year 1999. In light of what 
you said in your earlier comments about all the investments we 
have made at Argonne, Lawrence Berkeley, Brookhaven and Fermi, 
what is the first liability of the Department to spend $157 
million, and when in the outyears can we anticipate the DOE 
science that would lead us to conclude we could actually 
utilize these newly burnished investments for the good of all 
the various purposes they are pursuing?
    I guess we are all concerned about buying into an 
expensive, however valuable, investment that might dilute what 
we could do in so many other areas and so many other ways that 
are important to the country. I would like to get your general 
reaction, specific and general.
    Dr. Krebs. Yes. I will try to do it briefly, and then I 
would like to be able to expand on it for the record.
    [The information follows:]

[Pages 699 - 700--The official Committee record contains additional material here.]


                       spallation neutron source

    First of all, can we spend it? As I indicated earlier, we 
have paid a great deal of attention to the cost of this 
project, to have it reviewed and to have it validated. We have 
paid a great deal of attention to the management structure and 
putting in place the right people at the lab, at the field 
office, in headquarters, to make this thing happen.
    We believe that the budget and schedule is now optimized to 
provide this facility, which has basically been recommended to 
us, as I said, for the last 20 years.
    In addition, as we go forward, the administration is 
committed to putting the outyear funds, or to meet the funding 
profile for this facility, over the targets or over the base 
budget of the science program. So I feel that this 
administration has made as much of a commitment as it can and 
for that I am extraordinarily grateful.
    In the long run, the operation of this facility, I believe, 
would be covered within the construction profile if we can 
manage to keep that. That, of course, is something that I can't 
guarantee, what will happen in 2005 and beyond, but I believe 
that we certainly have put the facilities on line that we have 
there that way, and although we are always struggling to 
maintain their productivity, I think we have done a reasonable 
job of that as well.

                            outyear budgets

    Mr. Fazio. What sort of years, outyear budgets, are we 
going to be anticipating to ramp up to the completion of this? 
What we fear is the crowding out of other important work to be 
done in our existing facilities. I know the entire lab 
community and others in the university community have all 
gotten behind this one, because I think it is something that 
they all see as needed and feasible. But we worry about it 
being affordable, and I am sure they do as well.
    Dr. Krebs. I think the peak, and I am going to have to get 
you this for the record, but the peak is somewhere between 
$250- and $275 million.
    [The information follows:]

                                                  SPALLATION NEUTRON SOURCE--FY 1999 PRESIDENT'S BUDGET                                                 
                                                              [B/A in thousands of dollars]                                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Previous                                                                                 
                                                                 years    FY 1999   FY 2000   FY 2001   FY 2002   FY 2003  FY 2004   FY 2005     Total  
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TEC..........................................................  ........   128,400   196,100   254,900   253,200   184,900   78,300    43,000   1,138,800
TPC..........................................................    38,503   157,000   214,000   268,000   263,000   195,000   96,900   100,397   1,332,800
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    That is what the peak spendout on this, I believe, is. One 
of the reasons why in my testimony I focused on the increases 
we have provided for facilities utilization is exactly to 
convey the seriousness which I personally, but more 
significantly, the Department and the administration, take 
this.
    This is something that we are going to have to deliver on 
every year, I believe, to you. But I take great heart and 
believe that the administration has made a very significant 
commitment when it says it is taking care of the outyears for 
this facility.
    Mr. Fazio. I think that is the major question this 
committee is struggling with, and I know the Department would 
be as well. I assume OMB is, because ultimately they will have 
a lot more to say about it than those of you sitting here.
    Dr. Krebs. And in my opinion, they have, for our outyear 
budgets.
    Mr. Fazio. Well, again, this committee is struggling with 
the other responsibilities we bear, and I hope you understand 
what we face.
    Dr. Krebs. We do.

                          carbon sequestration

    Mr. Fazio. Maybe there is a relationship to global climate 
change. Who knows. We don't know whether El Nino is or isn't a 
factor. But this committee seems to be bearing the brunt of 
expenditure on both sides, and I wanted to ask you about carbon 
sequestration in that regard. That is one of the issues in 
climate change that this Department is going to be taking some 
responsibility for. I know it is an ongoing program in some 
ways, but it is being consolidated and reemphasized.
    I wondered if you could comment on your office's role in 
that and what you might see as some benefits to global warming 
to be derived?
    Dr. Krebs. Well, I believe in the discussions we have had 
over the last year inside the Department and within the 
scientific community for both basic research and applications, 
one of the really significant opportunities that has emerged is 
this area of carbon sequestration. One of the opportunities 
that has been identified, because of our advances in 
understanding natural ecosystems and plant science, because of 
our recognition that there might be opportunities for injecting 
carbon from fossil fuel power generation into deep subsurface, 
not potable aquifers, that this has opened up a new area of 
research for a long-term response to climate change. It 
actually could sustain and lengthen the time in which we might 
be able to use fossil fuels, both domestically and around the 
world.
    As a consequence, we have taken a look at our research 
programs. And when you see what we would invest in the basic 
science area, we would put it into deep subsurface science to 
understand better the possibilities of sequestering carbon in 
deep formations. In some new ocean research, that would focus 
not only on sequestering in oceans as sort of bodies of water, 
but also to paying attention to the biological mechanisms that 
are involved, and then looking at terrestrial systems and the 
possibility for enhancing the sequestration in plants and 
forests.
    Mr. Fazio. I don't want to go on too long on this, but I 
don't think this is an issue the committee is very familiar 
with. Could you put in context the problem of global warming as 
it is being defined generally, what contribution could we 
derive from this particular approach? I know Mr. Reicher and I 
had a conversation about this as well. If you want to join in, 
you may.
    Dr. Krebs. Dan may actually have some of the numbers a 
little more in his head than I do, but I certainly can provide 
for the record some of the estimates that are associated with 
the amount of carbon, the tons of carbon we are sequestering in 
the environment now and the possibilities that we envision if 
we are successful in being able to access this kind of 
sequestration.
    [The information follows:]

   Context and Benefits for the Climate Change Technology Initiative

    The Climate Change Technology Initiative is a research and 
development program to reduce this Nation's emissions of greenhouse 
gases. While there are those who would argue that reduction of 
greenhouse gases is unnecessary, all should be in favor of the 
development of new, cost-effective technologies that save energy and 
lessen our dependence on foreign oil, while sustaining our growing 
economy. These are the goals of the Climate Change Technology 
Initiative.
    The Department's activities under the government wide initiative 
were developed with input from a broad spectrum of scientific experts. 
The President's Committee of Advisors on Science and Technology (PCAST) 
``Report to the President on Federal Energy Research and Development 
For the Challenge of the Twenty-first Century'' provided pivotal 
guidance. Similarly, the DOE 5-lab study, ``Scenarios of U.S. Carbon 
Reductions; Potential Impacts of Energy-Efficient and Low-Carbon 
Technology by 2010 and Beyond'' and the DOE 11-lab study, ``Technology 
Opportunities to Reduce U.S. Greenhouse Gas Emissions'' provided 
important input to the identification of research and development 
activities to be supported under the Climate Change Technology 
Initiative.
    Within the Department, the Initiative includes $261 million within 
the Office of Energy Efficiency and Renewable Energy budget; $30 
million in the Office of Fossil Energy budget; $27 million in the 
Office of Energy Research budget; $10 million in the Office of Nuclear 
Energy budget; and $3 million in the Energy Information Agency budget. 
Research and development efforts across the Department will focus on 
low carbon technologies and carbon sequestration.
    Within Energy Research, both the Biological and Environmental 
Research (BER) and the Basic Energy Sciences (BES) programs, will 
undertake fundamental studies in carbon sequestration science, focusing 
on underground sequestration, ocean sequestration, and enhancing 
natural terrestrial sequestration. Clearly, for the foreseeable future, 
fossil fuels will continue to be a dominant source of energy in this 
country, and we need to minimize the impact of their use on the 
environment. If we can develop the fundamental understanding that will 
enable us to sequester in large reservoirs the carbon dioxide that is 
produced by fossil fuel usage, then, as we continue such usage, the 
damage that they cause to the environment will be lessened. Using 
extant technologies, one of the greatest costs in carbon sequestration 
is separating the carbon from other by-products. Natural sequestration 
does not require such separation; thus, if natural sequestration can be 
enhanced, there is significant potential for cost savings.
    The development of new sources of sustainable energy that are 
carbon-free or carbon neutral requires advances in a wide range of 
fundamental scientific disciplines. For example, while there have been 
many technological developments that enable the use of hydrogen as a 
clean fuel source, the efficiency of hydrogen production, separation, 
storage, and transportation is not yet what is needed to enable us to 
reduce significantly our reliance on fossil fuels. Similarly, 
biological systems and biomass hold a vast potential to provide 
sustainable energy sources, but more fundamental understanding of 
metabolic pathways and energy-producing and carbon storing mechanisms 
must be provided before technology can capitalize on this potential. 
The BER and BES programs will seek to provide that necessary 
understanding.
    The BER and BES programs will support those parts of the CCTI 
fundamental science activities for which they have the greatest 
expertise, developing joint activities across Energy Research and with 
the Department's technology offices, as appropriate. Discussions are 
underway at both the level of individual subprograms and office-level 
to enhance the interplay between the fundamental science that Energy 
Research provides that underpins the Climate Change Technology 
Initiative and the relevant activities within the sister Departmental 
technology offices.
 estimates of tons of carbon now sequestered and what we envision for 
  the future if the climate change technology initiative is successful
    As discussed on p. 26 of the January 1997 report, DOE Order No. DE-
AF22-96PC01257, entitled ``CO2 Capture, Reuse and Storage 
Technologies for Mitigating Climate Change'', if the Climate Change 
Technology Initiative is successful, we will be able to sequester 
5,100-100,000 gigatons of carbon dioxide in the deep oceans; 320-10,000 
gigatons of carbon dioxide in deep aquifers; 500-1100 gigatons of 
carbon dioxide in depleted gas reservoirs; and 150-700 gigatons of 
carbon dioxide in depleted oil reservoirs. This potential sequestration 
would build on a current baseline of essentially zero sequestration for 
these technologies.

                          CARBON SEQUESTRATION

    Mr. Fazio. We are so frequently using the term 
``sequestration'' in budgetary terms, I don't think we all have 
fully appreciated it. What are we talking about here? Mr. 
Reicher?
    Mr. Reicher. Well, very simply, I think it is an 
unfortunate term. It is a complicated one. It is a big word.
    Mr. Fazio. I am looking for something even Members of 
Congress could understand.
    Mr. Reicher. Or my simple mind.
    Mr. Fazio. That is why I am calling on you.
    Mr. Reicher. Thank you.
    That is right. It simply means how do we keep carbon 
dioxide, the chief global warming gas, out of the atmosphere, 
which is where it causes warming. You can put it any number of 
other places. You can put it deep underground. You can have it 
taken up by plants and trees. These are the so-called sinks; 
that is the term that people use. You can do any number of 
things to basically keep it out of the atmosphere and put it 
somewhere else, bind it up with something else. So the whole 
effort is focused on the opportunities to do that.
    If you look in sort of a three-part strategy, as some of 
our labs have looked at, in terms of climate, the real 
opportunities in the near term are to improve the efficiency of 
energy use. The next opportunity, sort of in the second decade 
beyond that, are renewables and other kinds of clean energy. 
The labs have said really it is in the decade after that where 
if the work that we are hoping to do, with your support, in 
sequestration proves out, that sequestration could be at a 
point where it could have a significant impact on 
CO2 emissions.
    Mr. Fazio. So the $42 million we are being asked to spend 
this year really doesn't pay off for a couple of decades.
    Mr. Reicher. The lab work indicates it is going to take 
some sustained R&D work in sequestration to show the big 
payoffs that many believe it could show, but we are at the very 
beginning. Our Fossil Energy Program earlier this year put out 
a $2 million solicitation for the best early ideas in carbon 
sequestration, and in the near future we are going to make an 
announcement of the results of that competition and we are 
going to get going. But that is a pretty small down payment.

                       SCIENCE AND MATH EDUCATION

    Mr. Fazio. Martha, let me ask you, we have seen recent test 
scores on science and math that are appalling to those of us 
who like to think we are a major power. My State of California, 
one you know well, has been really lagging and probably 
contributes, even more than I would like, to add myth to those 
lower scores.
    We have four national laboratories in and around northern 
California, certainly within our state and region.
    What can we do to get the help that these test scores 
obviously indicate we need for students in this country, 
certainly in this area, to try to make--in fact, just like our 
most recent conversation--a real impact two and three decades 
from now by improving the education of our children?
    Dr. Krebs. Well, when those test scores came out, the day 
before in the science section of the New York Times, there was 
an article about the fact that IQ scores have been increasing 
in this country. I thought how ironic that the capability of 
our--or at least the demonstrated possibility of our children's 
capability was going up, and yet we were not even engaging them 
in science in a way that was effective for them or effective 
for our Nation.
    So I feel very passionately about this. I feel that there 
is a problem here that needs the capabilities of all of our 
science and technology and engineering assets to be brought to 
bear. The national laboratories are not educational 
institutions per se, but they have human capacity, and they 
have technology that can be made available to educators, and 
the experience of that research environment for educators 
throughout the educational spectrum is critical.
    We have been providing that experience for people, young 
people, for undergraduate through graduate schools. The need in 
K through 12 is something that can also be addressed, and it is 
within that framework that we have made the proposal to 
increase or reestablish an education program, a separate 
corporate education program, for the Department that would 
enable our laboratories to be even more effective than they 
have been in the past.
    As you know, in California, the laboratories have been very 
engaged in their local communities. Just last weekend Livermore 
ran and Sandia ran an Expanding New Horizons program for young 
women in the whole Central Valley area close to them. This is 
only one example of the kind of activities they carry out.
    Mr. Fazio. This is something all of the labs nationwide are 
participating in and hope to do more as a result of our budget 
this year.
    Dr. Krebs. Hope to do more.
    Mr. Fazio. I have a very important question on biomass, 
which I will put in the record for you, Mr. Reicher. I don't 
have time. I would love to, but I don't want to take my 
colleagues' time at the moment.
    Mr. Fazio. I do appreciate the clarity of the renewable 
budget request, and I know that the committee staff believes 
you are off to the right start, and I am hoping we will be able 
to find internal agreement on your share of the budget. 
Generally I just would like to thank those of you who have been 
working in that particular area for your improving 
presentations, because I think it will have some effect.
    I thank the committee for the indulgence.
    Mr. McDade. We thank you, Vic.
    The gentleman from Michigan is recognized.

                 energy efficiency prior year balances

    Mr. Knollenberg. Mr. Chairman, thank you very much.
    Welcome, panel.
    I do want to at the outset associate myself with the 
Chairman's concern about the specifics of the approach that was 
used in this matter of appropriating funds. I don't think--that 
may not be the proper choice of the word, but misallocation, we 
can work into that later. But there is--I think it is very 
disturbing and it bothers me that we have that to deal with.
    Let me move right into this whole idea of prior year 
balances. I have always been disturbed by the various agencies 
coming before Congress, coming before this committee, asking 
for money, when in fact they have unspent balances. I notice 
that there is some $166 million in unspent, unobligated 
balances that appeared in the last day of the fiscal year 1997 
for the Office of Energy Efficiency and Renewable Energy.
    Now, I don't know how much of that was done in the year 
1997. Perhaps it is over a period of years. You don't have to 
comment now, but I would like an answer specifically as to 
where that money--in what accounts is it; in fact, does it go 
beyond DOE, does it go into Interior? I would like to know the 
specifics of that. You can present that, if you would. I will 
formalize that with a request for the specifics.
    [The information follows:]

[Pages 707 - 708--The official Committee record contains additional material here.]


                            kyoto conference

    Mr. Knollenberg. Let me get into Kyoto. As some of you may 
know, I attended the Kyoto Conference as a part of the 
congressional delegation last December. I frankly was a little 
unhappy, in fact, quite unhappy, with the decision reached 
there. The signatories decided they would bind the U.S. to that 
7 percent factor below the 1990 standards. By the time, I think 
2010, or 2008 through 2012--and I still have a problem with all 
the exempt nations in that grouping. I know yesterday or last 
week it was widely reported if this were to come to pass, if 
the Senate ratified it, it would only amount to about $110 per 
household.
    I have heard and been on panels with individuals from the 
various organizations who have said it may be $600, it may be 
as much as $2,000 a household. So the answer is probably 
somewhere in between. I don't believe it is going to be at the 
low end. I don't know if it is going to be at the high end, but 
there is something disturbing about that.
    I think my question touches on each of you, and you don't 
have to all respond, but how much does the DOE spend in 
programs dedicated to the Climate Change Technology Initiative? 
Again, it is a multiagency thing, but how much does DOE spend 
as it applies to the initiative to reduce greenhouse gases?
    Mr. Reicher. Mr. Knollenberg, the Climate Change Technology 
Initiative, as you say, spreads across the administration, and 
the largest proportion of it is in the Department of Energy, 
and that is spread among the Offices of Energy Efficiency, 
Renewable Energy, the Fossil Energy Office, the Nuclear Office, 
and the Office of Energy Research. And the total identified is 
$331 million that is identified as the Climate Change 
Technology Initiative as part of the larger proportion of the 
administration.
    Mr. Knollenberg. Is there funding outside of the Climate 
Change Technology Initiative?
    Mr. Reicher. Within the Department of Energy?
    Mr. Knollenberg. Yes.
    Mr. Reicher. Let me step back and answer that. What is 
difficult in answering a question like this is that so much of 
what we do related to energy across the various offices of the 
Department of Energy relates to issues like climate change and 
clean air. So the answer to your question, are there other 
dollars that we spend across our various programs that relate 
to climate change, the answer is a definite yes. In fact, I 
would say that much of the budget in the various offices had 
some climate connection.
    Mr. Knollenberg. Could you not necessarily now get that 
information if it is not something you can put a dollar value 
on now? I am willing to wait for that information, but I do 
want to raise that question as to how much more money is being 
spent.
    Mr. Reicher. We can amplify on that. Just not to take your 
time, but I just want to emphasize that this energy work 
responds to multiple drivers, economic competitiveness, clean 
air, energy security, climate change. It is difficult to 
disaggregate.
    Mr. Knollenberg. I understand. But there is other spending. 
You can get the specifics to me.
    [The information follows:]

[Pages 710 - 711--The official Committee record contains additional material here.]


             nuclear energy as an answer to climate change

    Mr. Knollenberg. Nuclear energy, in Kyoto, in Japan, which 
was a strong proponent of that treaty, obviously can meet its 
goal very easily, I think, simply by advancing its nuclear 
program. They intend to add some 20 new plants. They have 44 
now. Some 40 percent, as you know, 40 percent of their energy 
is supplied by nuclear energy.
    We don't seem to have anything like that in the U.S. There 
is nothing ongoing. As a matter of fact, the Nuclear Energy 
Research Initiative and the Nuclear Energy Plant Optimization 
programs play some role, obviously, in our Nation's nuclear 
energy program, but I see nothing we are doing that would 
compare with Japan. They have got kind of a pass on this thing. 
They are going to be able to meet their requirements simply 
with nuclear power. No such thing seems to be the case in this 
country.
    I don't know what the DOE is doing with respect to 
expanding any kind of concentration or interest in improving 
our capacity, our interest, at least, in starting a new plant. 
There is nothing on-line that I have heard anywhere. Is there 
anything being done to do something to bring about a greater 
awareness of nuclear power and hopefully to put it in the form 
of advancing some plant construction?
    Dr. Lash. Mr. Knollenberg, we are very interested in seeing 
a strong nuclear industry in the United States, including the 
cost-effective and continued operation ofexisting plants, as 
well as to have an opportunity for utilities to select new nuclear 
power plants in the future if it fits their plans.
    We have not proposed a specific number of new plants, as 
have Japan and a few other countries, but the proposal to 
Congress is to address both the existing plants, to see that 
they can operate, be relicensed and operated effectively into 
the future, and have an opportunity for new plants.

                            interim storage

    Mr. Knollenberg. Let me interrupt a second. The thing that 
bothers me is DOE has affirmatively taken a stance against the 
creation of an interim nuclear waste facility out in Yucca. And 
even though the Department cannot comply with the Nuclear Waste 
Policy Act of 1982, which states, as you know, that the Federal 
Government has a legal obligation to manage used fuel from 
nuclear power plants beginning in 1998. What I have a hard time 
trying to understand is why should this committee support 
placing these two nuclear energy programs in the care of the 
same Federal agency who is working against resolving this 
dispute, this nuclear waste issue?
    I know you don't have jurisdiction over all of that, so 
perhaps you don't have to weigh in on making a response to 
that. We will get a chance tomorrow to talk to some people who 
have more direct answers or responses to that. But that is a 
question I raise. Why should we give the same agency that 
responsibility?
    Dr. Lash. As you indicated, my office does not have 
responsibility for that. But, on the other hand, I think it is 
clear we are working very hard as a Department to check out 
whether Yucca Mountain is going to be satisfactory for waste 
disposal. A great deal of progress has been made on that.
    Mr. Knollenberg. Interim is the key word for that.
    Dr. Lash. Well, you know the issues on that. I will leave 
that to those who are most directly involved. But I want to say 
I care a lot about, and my office cares a lot about, solving 
the waste management, waste disposal problem. I think there is 
good progress at Yucca Mountain, and we hope that that will 
prove to be acceptable with further studies.

                      nuclear energy r&d programs

    Mr. Knollenberg. One of the concerns I have, Dr. Krebs, I 
wanted to relate, too, and I will yield back. I do support the 
nuclear R&D programs, particularly the university programs. I 
know that you are aware of that.
    Dr. Krebs. Yes.
    Mr. Knollenberg. But I am torn as to whether DOE should 
have this responsibility for those funds if we don't have some 
certainty, some guarantee, they will be appropriated and used 
specifically for those programs, both the university program, 
of course, and the nuclear R&D.
    Dr. Krebs. May I make a comment on that? I think that we in 
Energy Research as well as in the Department overall, are very 
enthusiastic about the initiative that has been started in the 
Nuclear Energy Science and Technology Program aimed at a 
competitive peer-reviewed program that will be open to 
universities and laboratories. We have been working with the 
staff in the program to identify the mechanisms and the 
processes by which we go out to the scientific community and 
make this as effective a program as it was envisioned to be.
    Mr. Knollenberg. We could do more, I think. We really truly 
could.
    Thank you, Mr. Chairman.
    Mr. McDade. Thank you, Joe.
    The gentleman from Indiana is recognized.

                        alternative fuel sources

    Mr. Visclosky. Thank you, Mr. Chairman.
    Mr. Reicher, let me ask you, what do you consider 
alternative fuel sources? I have biomass, solar, wind, 
geothermal. As far as any major categories, should I be adding 
anything to that?
    Mr. Reicher. Hydropower, which, in fact, represents the 
largest percentage of the renewable energy sources in terms of 
today's electricity generation.
    Mr. Visclosky. I believe you mentioned in your testimony 
that represents about 10 percent of the power used to generate 
electricity in the United States?
    Mr. Reicher. Correct.
    I would add to that the work we are doing related to 
hydrogen.
    Mr. Visclosky. And you had also mentioned, I think, between 
nuclear and fossil fuels, that represented about 90 percent of 
the power generated in the United States?
    Mr. Reicher. Actually of total U.S. energy. So beyond 
electricity generation, if you look at the full range of 
energy, that would be transportation fuels, fuels for industry, 
as well as electricity, when you add that all up, you arrive at 
that number.
    Mr. Visclosky. Ninety percent.
    Mr. Reicher. Correct.
    Mr. Visclosky. Using that same standard then, what 
percentage is hydro, so we are comparing apples and apples?
    Mr. Reicher. On the order, I am told by my colleagues, 
about 3 or 4 percent of total U.S. energy. What I was told was 
electricity accounts for about a third of total U.S. energy.
    Mr. Visclosky. Okay. That takes us to 93 percent. So would 
I be correct in understanding then the other 6 or 7 percent 
comes from biomass, solar, wind, geothermal, et al.; about, 
give or take?
    Mr. Reicher. Yes. I think--I am getting all sorts of 
numbers thrown at me. A fair proportion of the remaining is 
renewables; for example, biomass. For example, there are many 
states, as you know, where, actually, wood is used 
substantially to heat homes in the wintertime and where we burn 
municipal solid waste. Things like that are relatively 
significant portions of energy in that remaining percentage.
    Mr. Visclosky. Okay.
    Mr. Reicher. I am sorry, I don't have the exact figures.
    Mr. Visclosky. That is fine.
    You also mentioned, I just wanted to make sure, I forgot 
what the definition was, but I remember the figure 3 and 8. Was 
that for the developing world as far as a proportion of energy?
    Mr. Reicher. Oh, yes. The current installed electrical 
generation capacity in the world is about 3 million megawatts. 
What is going to have to be added, particularly to meet the 
needs of developing countries, is on the order of 5 million 
megawatts over the next couple of decades, the next four 
decades.
    Mr. Visclosky. Is that primarily because of industrial 
development?
    Mr. Reicher. It is expanding population. It is increasing 
the standard of living in large countries. It is industrial 
development, and it is represented in countries like China and 
India, and as the per capita energy use increases, those are 
the big challenges we face.
    Mr. Visclosky. Mr. Chairman, I have a line of questioning, 
but I am----
    Mr. McDade. We have a vote in the House, ladies and 
gentlemen. There is about 6 minutes left. Mr. Knollenberg is 
going to vote and return and accommodate the Members who have 
to ask questions. So if you wish, you can keep going until we 
get down to about 4 minutes, or you can leave now and come 
back.
    Mr. Visclosky. Can we leave now?
    Mr. Pastor. Mr. Chairman, what I am going to do is submit 
the questions for the record. They basically fall on the 
increases on Federal research, and also a question on what 
happens to communities that are not close to the labs and how 
are they going to be served in the future.
    Mr. Reicher, if you can give me the information on the ASU 
proposal, I would appreciate it.
    [The information follows:]

                        Arizona State University

    After extensive search we could not find a proposal 
submitted by Arizona State University (ASU) to the Department 
of Energy. We have also contacted both the Chairman of the ASU 
Research and Development committee and a member of the ASU 
President's staff. Neither could locate the referenced 
proposal. Arizona State University has been instrumental in 
promoting the need for increased university funding in the 
Photovoltaic R&D Program, especially in regards to experimental 
equipment. In FY 1998, the Photovoltaic R&D Program is 
increasing university participation by issuing two 
solicitations, one for ``Future Generation PV Research'' with 
$1.5 million in funding and one for ``University PV Research 
Equipment'' with $1.0 million in funding. Both solicitations 
have been finalized and will be issued by the end of April 
1998. We will send both solicitations to Arizona State 
University and encourage their response.

    Mr. McDade. It is also good to have questions from the 
gentleman from Arizona.
    The committee will stand in recess until approximately 
12:15.
    [Recess.]

                     million solar roofs initiative

    Mr. Knollenberg [presiding]. The meeting will come to 
order. I am going to entertain one quick question, and by that 
time I hope some of our voting folks will return. We will 
resume with Mr. Visclosky, who was in the process of asking his 
questions.
    On the matter of solar and renewable energy, I notice that 
this year the requests have been in this order, 88 percent 
increase for solar building technology, 53 percent for biomass-
biofuels energy systems, 35 percent for wind, which has already 
been talked about, 56 percent for national renewable energy 
laboratory, and that is a good chunk, and 540 percent increase 
for the international solar energy program. The smallest 
increase anywhere is 20 percent for all of the renewables or 
the solar programs.
    This may be a question for Mr. Reicher or anyone that wants 
to jump in, but how much is it going to cost? I have been told 
specifically the Federal Government wants to sell some 1 
million solar roofs by the year 2010, and I have some concerns 
about why the government is saying that. Why shouldn't that be 
determined in the marketplace? I keep coming back to that.
    I ask how much will it cost to install 1 million solar 
roofs? Any estimate of that? Mr. Reicher.
    Mr. Reicher. Actually, Mr. Knollenberg----
    Mr. Knollenberg. How much will be paid for with Federal 
funds?
    Mr. Reicher. What I need to get you for the record, if I 
could, is the actual total cost, because the Federal component 
of this is not, by and large, to buy solar systems to put on 
these 1 million roofs. In fact, it is very much the opposite of 
that. We have asked for a little over $6 million in this year 
for the 1 million solar roofs campaign, initiative.
    [The information follows:]

                     Million Solar roofs initiative

    As part of the Million Solar Roofs Initiative, the 
Department is reviewing Federal loan and mortgage guarantee 
authorities that already exist in various agencies. These 
authorities include provisions to assist in financing solar 
technologies on buildings. Several programs are designed to 
support Native Americans, such as the Department of Housing and 
Urban Development Section 184 Indian Housing Loan Guarantee 
Program. In addition, the Department of Agriculture's Rural 
Utility Service makes low interest loans to rural utility 
cooperatives, including those owned by Native Americans. Also, 
as part of the Initiative, the Department is discussing special 
loan products with large private lenders who have also 
expressed an interest in serving the Native American Community.
    The proposed Solar Roof tax credits for 15% of system costs 
up to $2000 would be available for Native Americans.

    Mr. Knollenberg. Are these for residences, for businesses, 
for commercial, for everything?
    Mr. Reicher. This is any kind of a building, and it is for 
really two different types of solar technology. One is solar 
hot water systems.
    Mr. Knollenberg. So they are not independent of other 
heating sources, is that right? Or are they?
    Mr. Reicher. This can be in addition to an existing heating 
source. This can replace, for example, one's gas or electric-
fired hot water heater. That is one type. They can be used for 
different types in a home. And solar electric or photovoltaic 
systems, to provide electricity to a home or business or 
office.
    Mr. Knollenberg. Wouldn't the building with solar roofs 
have to have some other form of energy as a source? Wouldn't 
they have to have--they couldn't be totally independent, could 
they?
    Mr. Reicher. There are a variety of applications of solar, 
many in use today, where people are not hooked up to the 
electricity grid and the solar energy does in fact provide 
most----
    Mr. Knollenberg. In Michigan?
    Mr. Reicher. Most, if not all of them.
    Mr. Knollenberg. I could have said Alaska, but I didn't.
    Mr. Reicher. There are examples included all over the 
country, including cloudier areas of the country, where people 
off the grid are supplying most, if not all, of their power 
using various solar technologies. In fact, the rule of thumb, 
it is a pretty general one though, is if you are more than 
about a quarter of a mile away from an electric line and you 
have to put in an electric line to your home, that makes solar 
in many parts of the country, including, as I say, in cloudier 
parts of the country, fairly cost effective as an alternative 
to digging that line and paying the large costs to put in power 
from the grid.

                               windmills

    Mr. Knollenberg. One of the things that I am troubled by, 
and I draw a comparison from the amount of money we are putting 
into the Grenoble program, particularly wind. For example, my 
staffer went out to, I am not sure, Palm Springs, California. 
On the day he was there, maybe it was an unfortunate day, all 
of these windmills were like statues in Statuary Hall. They 
were not doing anything. They were just there. Not a single one 
turned.

                       support for nuclear energy

    I go back to the nuclear point. We are doing nothing to 
subsidize nuclear. In fact, we are doing nothing, and here we 
are subsidizing this technology, hoping it will work. I am 
hoping it will work too, but I am really concerned about the 
commercial viability, to how much investment that the Federal 
Government, if you want to call it that, how much subsidizing 
there is that takes place.
    So you can respond to that, if you will, but there doesn't 
seem to be anything of substance that is being done to promote 
nuclear. Not subsidize it, I am not asking for that, but we 
continually subsidize these other programs to the extent that 
the return just doesn't seem to be practical.
    Mr. Reicher. I will let Mr. Lash amplify, but, of course, 
in the last couple of years, we have in fact asked for 
additional funds to support nuclear power, and----
    Mr. Knollenberg. In regard to the specific initiative? 
Which one? Mr. Lash.
    Dr. Lash. Well, of course, we did have a program on 
advanced light water reactors and supported that, and the 
administration request was not granted by Congress, so right 
now we have no nuclear energy program per se and have had to 
move staff into other activities. But we do have these 
proposals, increasing support for universities in nuclear 
energy R&D, as I mentioned before, for working with the 
industry to make existing plants more cost effective and able 
to operate for a longer period of time.
    Mr. Knollenberg. No new plants too.
    Dr. Lash. And to conduct more advanced research into such 
matters as ultra high burnup fuels that will make nuclear power 
even more attractive in the future.
    Mr. Knollenberg. As new plants?
    Dr. Lash. In new plants, yes.
    Mr. Knollenberg. I am going to halt at that point and defer 
to my colleague, who has yet to provide any questions. So 
Congressman Frelinghuysen.

                      fusion--alternative concepts

    Mr. Frelinghuysen. Thank you, Mr. Chairman. Most of my 
questions will go to Dr. Krebs.
    Dr. Krebs and gentlemen, good afternoon. We are past high 
noon, so I realize that everybody wants to get out of here, but 
I do have some questions relative to fusion research, something 
that is important to the Nation, and certainly important to my 
State.
    Dr. Krebs, last year the Office of Fusion Energy Sciences 
solicited proposals for innovative or alternative approaches to 
fusion. Personally, I feel that alternative concepts at a range 
of scales are important, but may require additional funding.
    Could you tell me how many proposals have been received?
    Dr. Krebs. I can tell you more than that.
    Mr. Frelinghuysen. Please. How many of them were funded and 
what and where. Are they all?
    Dr. Krebs. Sure. We received a total of 40 proposals, and 
we have funded 8 new proposals and then continued, renewed, two 
other proposals.
    The kind of proposals, the five top rated proposals were 
concepts such as the dipole confinement of fusion, relevant 
mass, that is at MIT, a proposal from Livermore in a certain 
kind of spherical configurations, magnetic configurations, and 
then a joint theory proposal from Princeton Plasma Physics Lab 
and the University of Washington and Cornell. Then there were 
some renewals at Cornell and at Los Alamos.
    So we are making fairly substantial forward progress in 
exploring alternative concepts. I would like to add data for 
the record.
    [The information follows:]

                         Fusion Energy Sciences

    Last year, the Office of Fusion Energy Science solicited 
proposals to increase alternate confinement concept research. A 
total of 40 proposals were received. A total of eight new 
proposals and two renewal proposals have thus far received 
funding as a result of this process.
    Topics of the five top-rated new proposals include:
    Dipole confinement of fusion relevant plasmas in a magnetic 
dipole field will be studied at Massachusetts Institute of 
Technology in collaboration with Columbia University. This 
dipole field is similar to that of the earth's magnetic dipole 
field, which traps the particles responsible for the aurora 
borealis.
    New stabilization principles for straight current carrying 
pinches, one of the simplest fusion systems, will be carried 
out at the University of Washington.
    The possibility of sustaining small spheres of magnetized 
plasma (spheromaks) at high plasma temperature will be studied 
at Lawrence Livermore National Laboratory.
    Studies of the physics of magnetic helicity of importance 
of spheromak sustainment will be carried out at the California 
Institute of Technology.
    A joint theory proposal from Princeton Plasma Physics 
Laboratory, the University of Washington, and Cornell 
University will study stabilization of a class of fusion 
systems where the plasma itself provides its own confining 
fields (reversed field configurations).
    Topics of the two renewal proposals are: ion rings at 
Cornell University to produce self-sustained configurations 
capable of using advanced fusion fuel: and penning traps for 
fusion at Los Alamo National Laboratory using confinement 
physics principles similar to those used in the recent 
experiments that demonstrated Bose-Einstein condensation for 
the first time.
    In addition, three small grants have been established to 
continue the study of new ideas. Of these, two are in the 
compact stellarator area at Auburn University and the 
University of Texas, and the other is studying rotating plasma 
confinement at the University of Maryland.

    Mr. Frelinghuysen. Could you talk about some of the dollar 
levels for fiscal years 1998 and 1999?
    Dr. Krebs. Yes. I know some of the FY 1998 numbers, but 
what I would suggest is I provide you that for the record, if 
that is okay. I have some FY 1998 records, but I don't really 
have them in my head.
    [The information follows:]

                         Fusion Energy Sciences

    The total funding for these proposals is $4,200,000 in FY 
1998, and a similar amount is planned in FY 1999. This is in 
addition to an ongoing research effort in alternative concepts 
that includes a variety of university-scale efforts as well as 
the larger National Spherical Torus Experiment. The total for 
all of these other alternative concept activities in FY 1998 is 
$33,200,000, and about $46,700,000 is planned for FY 1999.

          funding for alternative confinement fusion concepts

    Mr. Frelinghuysen. If OFES received additional dollars for 
funding alternative confinement concepts, I would be interested 
in knowing also perhaps for the record how that money would be 
used.
    Dr. Krebs. All right.
    [The information follows:]

                         Fusion Energy Sciences

    If additional funds were to be made available, significant 
starts could be made in several new programs, and existing 
programs could be significantly strengthened through hardware 
upgrades and the addition of scientists from other 
institutions.

        fy 1999 funding for national spherical torus experiment

    Mr. Frelinghuysen. The completion of the National Spherical 
Torus Experiment (NSTX) and its efficient operation is a high 
priority program mission performance measure in the 
administration's budget. Is the completion of this project, its 
advanced diagnostics and heating systems, fully funded in the 
fiscal year 1999 budget?
    Dr. Krebs. There are two parts to that question. I believe 
that we are committed to completing the original concept of the 
NSTX. The issue of the advanced diagnostics, I believe we have 
at least begun to make a start on that. Whether that is fully 
included in the FY 1999 budget, I will have to get back to you 
on.
    [The information follows:]

                         Fusion Energy Sciences

    With this request, the National Spherical Torus Experiment 
(NSTX), located at the Princeton Plasma Physics Laboratory, 
will begin operation in FY 1999. The NSTX research program will 
address fusion science issues such as current drive by radio 
waves, very high power density, and nearly total self-
generation of the plasma current that helps to confine the 
plasma. This program will be organized as a national 
collaborative experiment. The conversion of a Tokamak Fusion 
Test Reactor neutral beam heating system for reuse on NSTX will 
add significantly to NSTX heating and diagnostics capability 
when it is completed in FY 2000.
    The FY 1999 request is $26,300,000. This provides for fully 
funding the device itself, preparations for a Neutral Beam (NB) 
heating system during FY 2000, and some of the associated 
advanced diagnostics that will be provided by July of FY 2000.

    Mr. Frelinghuysen. Would any additional funding be required 
to complete that?
    Dr. Krebs. I will let you know. I have to explore that.
    [The information follows:]

                         Fusion Energy Sciences

    Additional funding in FY 1999 would be used to expand 
participation of collaborators from other institutions, advance 
the installation of the neutral beam system and the associated 
diagnostics to earlier in FY 2000, and install several advanced 
diagnostics.

    Mr. Frelinghuysen. How many run works are planned for the 
NSTX in fiscal year 1999?
    Dr. Krebs. I will have to provide that for the record as 
well.
    [The information follows:]

                         Fusion Energy Sciences

    The National Spherical Torus Experiment is a new facility 
that is to begin operations in April 1999. It is scheduled for 
6 weeks of operation during the second half of FY 1999.

                  operating weeks at fusion facilities

    Mr. Frelinghuysen. In regard to our other major tokamak 
facilities, how many weeks will the DIII-D, the General 
Atomics, the one at MIT, the alcator C-MOD operate during 
fiscal year 1999 under the current budget proposal?
    Dr. Krebs. I don't have the specific number but I will 
provide it. What I do know is as a result of decreasing our 
investment in the joint baseline design with ITER, we are 
redirecting some of the funds from the FY 1998 participation to 
increased numbers of operating weeks at the facilities you 
mentioned.
    [The information follows:]

                         Fusion Energy Sciences

    In the current FY 1999 budget proposal, DIII-D will operate 
for 14 weeks, and Alcator C-Mod will operate for 18 weeks.

    Mr. Frelinghuysen. What is considered full utilization?
    Dr. Krebs. I am going to have to provide that.
    [The information follows:]

                         Fusion Energy Sciences

    Full utilization for DIII-D would be 24 weeks, and full 
utilization for Alcator C-Mod would be 26 weeks.

               usage of fusion facilities by researchers

    Mr. Frelinghuysen. Since both the General Atomics and the 
MIT are user facilities, what percentage of those who actually 
wish to use them are actually able to do so?
    Dr. Krebs. Obviously not 100 percent, and that is basically 
because indeed these facilities are not operating at the levels 
that we would like to see them operate at. But the details I 
will provide.
    [The information follows:]

                         Fusion Energy Sciences

    In FY 1998, only about 30 percent of the experiments 
proposed for DIII-D at General Atomics and 60 percent of those 
for C-Mod at MIT were included in the experimental programs 
because of limited runtime. The proposals themselves are 
usually jointly proposed by multiple users from the 45 
institutions represented on DIII-D and the 22 institutions 
participating on C-Mod.

                 scientific facilities user initiative

    Mr. Frelinghuysen. All right. Has the DOE used any of its 
Scientific Facilities User Initiative dollars for the purpose 
of modernizing or better utilizing existing fusion experiments 
at all scales from university base to user facilities? Is it 
possible to increase the overall funding for this initiative to 
include fission?
    Dr. Krebs. The fusion facilities, when we began the 
scientific facilities initiative, or the facilities utilization 
initiative, the fusion program and the fusion facilities were 
not included because at that time they were not seen as user 
facilities. We have made a transition in the program during 
this period.
    The funding in the other programs for which we have seen an 
increase in our commitment to the utilization of the 
facilities, whether it is Basic Energy Sciences or High Energy 
and Nuclear Physics, has, in general, come from within those 
programs, but with a change in the investment direction. As we 
have rolled off construction of facilities, we have been able 
to put it into utilization.
    In the fusion program, there is not a separate pot of money 
for the facilities utilization program. This is something we 
have been doing and paying attention to within the funds that 
we have available. And similarly, within the funds that we have 
had available for the fusion program, we have tried to increase 
productivity and operation of those facilities as well. As I 
said earlier, it is always a struggle, and we never make our 
users happy. But we try to make them as productive as we can.
    Mr. Frelinghuysen. I have a lot of questions that relate to 
fusion, and I would like to get them in the public record, Mr. 
Chairman.

                                  iter

    Mr. Frelinghuysen. The last I would like to have Dr. Krebs 
comment on, what is the present status of the ITER negotiations 
and what are the positions of our international partners on the 
question of the redesign of the ITER project?
    Dr. Krebs. The current status of the ITER agreement, I 
think, is that our partners, Russia, the European Union and 
Japan, would like--and we--would like to extend the agreement 
that governed our engineering design activities during a 
transitional period where the partners from Europe and Japan 
examine whether or not they would like to go forward with 
offering up some sites for the construction of ITER.
    The continued participation of the United States is 
contingent on both a reduction of the dollar level of our 
involvement during that period, and on the consideration of 
ways to reduce the costs of ITER.
    We believe at this time we are all in agreement that it is 
important for all of us to examine cost reductions associated 
with the ITER design, and, as a result, at a meeting a few 
weeks ago, the representatives initialed the conditions for 
accepting an extension, and that is just the next step. We will 
have to do some stuff with the State Department to actually 
agree to extend.
    Mr. Frelinghuysen. Just for the record, how much money for 
international collaboration is in the fiscal year 1999 budget 
and what about those contributions from our international 
collaborators?
    Dr. Krebs. I will have to provide you the details for the 
record. What I know is that we are going to put--we are putting 
$12 million into joint baseline design activities with ITER. We 
have other activities in fusion and plasma technology that will 
utilize facilities in Europe and Japan, the JT-60. There are 
other activities in our domestic program, the redirection, that 
we think will also benefit our international partners, but are 
not immediately directed towards that.
    I will have to provide you for the record the dollar level 
of those international collaboration.
    [The information follows:]

                         Fusion Energy Sciences

    In FY 1999, there is a total of $4,200,000 direct funding 
for non-ITER international collaboration in Science and 
$1,000,000 in Technology. The funding in Science is for 
collaborations from PPPL ($3,220,000) and ORNL ($980,000), 
mostly on tokamaks and some on stellarators, in Europe and 
Japan. The funding in Technology will support hardware 
development and deployment on foreign fusion experiments, in 
support of the physics collaborations.
    The major non-ITER foreign contribution to the U.S. fusion 
program is in the materials area in which the Japanese provide 
about $2,000,000 annually for materials testing in the High 
Flux Irradiation Reactor at ORNL. This is expected to continue 
in FY 1999. In the physics area, the foreign programs 
contribute to the U.S. Program through their participation in 
the U.S. experiments. In FY 1998, there were the equivalent of 
8-10 European, Russian, and Japanese scientists (about 40-50 
individuals) working on the U.S. experiments and other fusion 
physics issues. These exchanges, which also include some U.S. 
scientists from DIII-D and C-MOD working on foreign facilities, 
contribute to effective exchange of ideas and data and increase 
the pace of progress and understanding.

            wind project at bonneville power administration

    Mr. Frelinghuysen. Thank you, Mr. Chairman.
    Mr. Knollenberg. Mr. Visclosky, back to you.
    Mr. Visclosky. Mr. Reicher, if I could continue my line of 
questioning, it was my understanding in September of last year 
the Department of Energy announced the Bonneville Power 
Administration would participate as a partner in a 41-megawatt 
wind energy project. Could you tell me what the cost of this 
project is, including the land design construction transmission 
infrastructure and other environmental costs?
    Mr. Reicher. Congressman, I don't have the answer to that, 
but I would be happy to provide that for the record.
    [The information follows:]

                    41 Megawatt Wind Energy Project

    The total capital cost of this project is about 
$55,950,500. Including the cost of the transmission line 
connection results in a total cost of about $64,274,680. BPA, 
however, is not a partner in the project but, rather, has 
agreed to purchase part of the electrical generation from two 
of the project partners, Eugene Water and Electric Board and 
PacificCorp. BPA's power purchase from those two utilities will 
be 37% of an anticipated project output of 41.4 megawatts.

    Mr. Visclosky. When you are doing that, if you could give 
us an estimate as to the cost per kilowatt produced from that 
new facility.
    Mr. Reicher. I would be pleased to do so.
    [The information follows:]

                   Cost Per Kilowatt of Wind Facility

    The expected capital cost per kilowatt of project capacity 
is about $1,350 excluding the transmission line connection, and 
$1,552 including the transmission line. The levelized cost of 
energy (in constant 1998 dollars) is expected to be about 42 
mills per kilowatt hour or 4.2 cents per kilowatt through the 
25 year term of BPA's power purchase arrangement.

    Mr. Visclosky. Also, if you could give me an answer as to 
what the comparable costs would be if we simply installed a new 
gas turbine project.
    Mr. Reicher. I would be happy to.
    [The information follows:]

                  Comparable Costs to New Gas Turbine

    Comparable costs for a new combined-cycle gas turbine 
project are about $747 capital costs per kilowatt of capacity. 
The kilowatt hour cost of generation varies according to the 
price of gas, but in today's West Coast market situation, it 
would be about 33 to 35 mils per kilowatt hour or 3.3 to 3.5 
cents per kilowatt hour.

    Mr. Visclosky. And also if we could have an explanation if 
we are trying to foster a domestic industry, why the managers 
apparently chose a Japanese built wind turbine system.
    Mr. Reicher. I will look into that as well and determine 
the answer to that as well.
    [The information follows:]

                        Why Japanese Technology

    BPA has been informed by the project partners, that the 
original agreement with Kenetech required that the turbines be 
designed to have a 30-year life. When SeaWest acquired 
Kenetech's Wyoming Wind Project assets through a Bankruptcy 
Court, the utility project partners insisted that SeaWest honor 
the 30-year commitment as a condition of proceeding with the 
project. SeaWest solicited bids from turbine manufacturers on 
that basis. According to the project partners and SeaWest, the 
only manufacturer that both expressed interest and that was 
judged by them to be capable of standing behind such a 
commitment was Mitsubishi.

    Mr. Visclosky. Am I correct in understanding that the 
managers chose the Japanese built wind turbine?
    Mr. Reicher. I don't know that. I will ask staff right now 
to get an answer to that.
    Mr. Visclosky. If you could.
    Mr. Reicher. The deputy assistant secretary for our 
utilities program said he was not aware of that.
    Mr. Visclosky. If you could, for the record, that would be 
great.
    [The information follows:]

                   Confirm--Is It Japanese Technology

    BPA has been informed by the project partners, that the 
original agreement with Kenetech required that the turbines be 
designed to have a 30-year life. When SeaWest acquired 
Kenetech's Wyoming Wind Project assets through a Bankruptcy 
Court, the utility project partners insisted that SeaWest honor 
the 30-year commitment as a condition of proceeding with the 
project. SeaWest solicited bids from turbine manufacturers on 
that basis. According to the project partners and SeaWest, the 
only manufacturer that both expressed interest and that was 
judged by them to be capable of standing behind such a 
commitment was Mitsubishi.

                      forest waste ethanol program

    Mr. Visclosky. Would you hazard a guess as to whether or 
not the program as designed is cheaper per kilowatt hour than a 
gas turbine project?
    Mr. Reicher. I would hazard a guess that the cost per 
kilowatt hour, the installed cost per kilowatt hour, is more 
expensive than with a new gas-fired plant.
    Mr. Visclosky. Mr. Reicher, on page 12 of your testimony, 
in talking about an ethanol program, the phrase used is ``This 
will enable us to pursue opportunities such as utilizing forest 
underbrush to produce ethanol to also reduce the risk of 
catastrophic forest fires in the West.''
    I admit my prejudice. Growing up in Gary, Indiana, we cut 
our trees down a long time ago. They are gone. We don't have 
forest underbrush. How do you collect and who collects and how 
much does it cost to collect enough forest underbrush for an 
ethanol program to be cost efficient?
    Mr. Reicher. I don't know the details. The concept is that 
with the need, as I understand it, with the need for forest 
thinning to prevent some of the major fires that have occurred 
out West, there is a large collection of underbrush, and the 
question is what you can do with that, those resulting forest 
wastes. What we are looking at in a couple of different 
technologies is how one could take those forest wastes, just 
like agricultural wastes in your own State and, using a variety 
of technologies, produce a usable fuel.
    As you know, we have a major industry in this country 
devoted to corn-based ethanol, which produces a great deal of 
fuel. What the challenge here is are there other natural 
materials, either agricultural wastes or forest wastes or some 
other dedicated crops that could be used also to produce 
ethanol. That is what we are seeking funding to do. If we do 
what we think we can do and there are plants being pursued that 
rely on wastes, it will be quite a cost effective way to 
produce fuels.
    Mr. Visclosky. So the underbrush would have been collected 
as a matter of course with fire prevention and the question is 
what do you do with the underbrush?
    Mr. Reicher. I don't know the details of how it is 
collected, but the idea here would be that it would be 
collected in some efficient fashion.

                          ethanol tax subsidy

    Mr. Visclosky. On ethanol, my understanding, and I stand to 
be corrected, is that we voted last year to phase the tax 
subsidy program for ethanol out over the next five years.
    Mr. Reicher. I don't know the answer to that.
    Mr. Visclosky. I don't know if that has anything to do with 
your particular program, but as far as a policy issue.
    Mr. Reicher. My colleagues are saying that is not the fact. 
We will check on that for you.
    [The information follows:]

                      Ethanol Tax Subsidy Program

    The current partial Federal excise tax exemption, which 
equates to 54 cents per gallon of ethanol used in blended fuel 
with gasoline, is scheduled to expire October of the year 2000. 
Last year efforts were made by some members of Congress to 
terminate this exemption sooner. However, on March 11, 1997, 
the Senate voted 71-26, in favor of extending the ethanol tax 
incentive through 2007, as part of the Senate's highway 
reauthorization bill, S. 1173. The legislation reduces the 
benefit to 53 cents per gallon in 2001, 52 cents per gallon in 
2003, and 51 cents per gallon in 2005. A companion House of 
Representatives bill to extend the ethanol incentive had 48 co-
sponsors as of February 19, 1998.

                costs and benefits of funding renewables

    Mr. Visclosky. I guess my point is the concern I have about 
the cost-benefit for dollars spent on renewables vis-a-vis 
other dollars we could spend to make what we have today more 
efficient, I understand the issue of fossil fuels and the 
environment, but I am wondering if money spent on turbine 
research, transmission research, that has been discussed here 
today, storage of energy, improving the life and the economics 
of nuclear facilities, for dollars spent per additional 
kilowatt gained on a cost basis would be more effective for us 
to do? If you could just comment on that?
    Mr. Reicher. I would like to do that, and also Mr. 
Knollenberg asked a similar sort of question. I think there are 
a variety of cost effective applications of renewable energy 
that exist today and more coming down the pike. They respond to 
some significant challenges that we have in the form of meeting 
new and more stringent clean air requirements, in reducing our 
dependence on foreign energy sources, in responding to climate 
change, and some great opportunities in terms of sale of 
technology by U.S. companies abroad. So that is what is driving 
this.
    Let me quickly get to the fundamental question of what are 
the cost effective technologies today or soon to be developed. 
We talked about solar a few minutes ago. As I said, off-grid 
solar is quite cost effective. We should understand there are 
2.2 billion people who live in the world today who are off the 
grid. The explosion in sales for solar responds in part to the 
needs of those individuals who are off the grid and do not have 
electricity. So that is a cost effective example, both in our 
own country off the grid and in other countries, much more 
predominantly there.
    On the grid in terms of solar, I talked to a utility the 
other day. I asked them, ``why did you just install three solar 
systems in your service territory?'' They said it was very 
simple. They were faced with upgrading a power line to provide 
additional electricity. It was expensive to upgrade the power 
line. They determined that it was far more cost effective to 
install solar as an alternative.
    Mr. Knollenberg, if I could, in your own state, in 
Michigan, there is a company that makes, I brought one today, 
this shingle.
    Mr. Knollenberg. I have been there.
    Mr. Reicher. This is a replacement for an asphalt shingle, 
when one goes to reshingle a house. This can be put on, the 
solar panel is here. There would be wires on the back. They 
would be wired together.
    Now, let me be very candid about this. This is an expensive 
technology today, but the costs are coming down as a result of 
a lot of work we are doing at DOE with industry to reduce the 
production costs and increase the cost effectiveness.
    There are foreign builders that are buying these today, 
because they find themselves in places in the world where they 
are quite cost effective. The opportunity, in this example, to 
at the same time put on a new roof or replace your old roof and 
provide a power source for your house, is quite an opportunity.
    So that is in the solar area. Let me give you another very 
cost effective technology today, and that is geothermal heat 
pumps. This takes existing heat in the ground or in water close 
to the surface, runs it through a heat exchanger in the form of 
a heat pump, and puts it in a building. The Army has made major 
investments in this. They found it to be very cost effective. 
McDonald's has put them in McDonald's around the country. 
Texaco has been putting them in gas stations. There are 
thousands being installed, and the source of energy is the 
surface geology of the Earth. This is not geothermal in the 
sense of having to drill deep wells and having to find really 
hot water. This is just the ambient temperature not too many 
feet below the surface. Cost effective today.
    Mr. Knollenberg. Mr. Reicher, there is a subsidy involved 
too in a great, great many of those programs. We can't discount 
that.
    Mr. Reicher. There is no subsidy.
    Mr. Knollenberg. The shingle, are you saying it is not 
subsidized?
    Mr. Reicher. Quite the opposite, there have been government 
dollars cost shared with industry. But, Mr. Knollenberg, as you 
know, we have cost shared in many energy technologies quite 
successfully across the sector. We are bringing on line a whole 
host of energy technologies throughout the past decade through 
very generous government-industry partnerships.
    If I could finish, biomass, I particularly point out in the 
agricultural states, you probably know this better than I, but 
I am told we leave about half of a corn crop on the ground in 
the field after we take the cobs. We have just signed an 
agreement with the National Corn Growers Association and the 
National Soybean Association to find new uses for the 
agricultural wastes that we leave behind. We signed this 
agreement a week ago. The corn and soybean growers are very 
excited about it. The use falls into several categories. First, 
you can take biomass and burn it directly, as I mentioned, in 
coal-fired power plants. Secondly, you can take biomass and you 
can make it into fuel, either into ethanol fuel or actually 
turn into another kind of gas and fire a turbine. Third, you 
can actually take these waste, forest and agricultural 
products, and replace it in the production of things like 
plastics. If you look at the bottom of a piece of paper that 
says soy-based ink, thatis the result of soybeans grown and 
used as a feedstock to replace the oil in the production of ink. You 
can use it for fuel, you can use it for power, you can use it for 
products. So I would assert whether you look at--there are areas of 
solar that are quite cost effective, there are areas of biomass that 
are cost effective, or soon will be, there are areas of geothermal that 
are cost effective, and, indeed, we are making great progress in the 
area of wind to bring down those costs. As I said, if you looked at the 
cost curve, it has come down dramatically.
    Mr. Visclosky. I don't mean to interrupt, but I have asked 
for cost figures on wind projects. I have a number of other 
questions. I don't dispute, Mr. Reicher, that there are 
benefits to the research. No question. And Mr. Fazio had 
mentioned earlier, we are under incredible pressure, and for 
dollars spent on improving turbine efficiency, transmission 
efficiency, storage efficiency, are we going to be better off 
for that dollar being spent?

                      new starts in nuclear energy

    Dr. Lash, if I could, on the nuclear program, looking at 
the research and development budgets, there are two new items 
this year. One is on Nuclear Energy Research Initiative, and we 
also have--that is for, I believe, $24 million. Then an 
additional $10 million for Nuclear Energy Plant Optimization.
    On the Nuclear Energy Research Initiative, that is a new 
program, and I would understand that part of the emphasis there 
is on the issue of proliferation.
    Dr. Lash. That is correct. It is a new start. It is a new 
initiative on our part, and we expect, based on input we have 
received from the national laboratories and industry, that one 
of the areas where there is a great deal of interest is on 
proliferation resistant reactors, particularly smaller ones 
that might be useful for export to countries that can't, 
frankly, handle at least today the very large nuclear power 
plants.
    Mr. Visclosky. Could I ask how that differs from the 
international nuclear safety program that the Department of 
Defense has asked for $35 million for?
    Dr. Lash. I am not familiar with the Department of Defense 
request. I would like to stress that both the programs on 
energy research and plant optimization would be conducted by an 
entirely new process for the office. This would be a peer 
reviewed process. We are using as a model the work that is done 
in the Office of Energy Research. In fact, staff in Energy 
Research has been very helpful in setting this up.
    So what would happen is that we would designate areas, such 
as proliferation resistant reactors, and solicit proposals from 
industry, universities and the national laboratories. These 
proposals would then be peer reviewed independently of the 
staff at the Department of Energy, and ratings made, and then 
the higher priority research proposals funded within the limits 
of the appropriation.
    So we can designate areas in which we are interested in 
having such research done, but we cannot tell you at this stage 
precisely which proposals will be accepted, and we wouldn't be 
able to until the peer review process comes to an end.
    Mr. Visclosky. That is under the research initiative. That 
is the new program.
    Dr. Lash. That is under that, as well as the plant 
optimization proposal. Plant optimization would focus on the 
existing nuclear power plants, what kinds of upgrades and 
improvements can be made there, what kind of help can we 
provide in answering questions that may come up during license 
renewal, that kind of thing. The Nuclear Energy Research 
Initiative would be on new technologies, including development 
of fuels that might be used farther in the future.

                  international nuclear safety program

    Mr. Visclosky. The international nuclear safety program is 
run out of your shop.
    Dr. Lash. Yes, that program is in our shop, and the request 
there is for $35 million.
    Mr. Visclosky. The initiative is not duplicative of those 
efforts?
    Dr. Lash. No, the programs are very different. The 
International Nuclear Safety Program is focused on improving 
the safety of 65 reactors in Central and Eastern Europe and the 
former Soviet Union. We have activities in nine countries.
    Now, American technologies are used to improve those 
reactors. We are a key part of that the transfer of U.S. 
technologies to those countries, the nine countries with those 
reactors, so they use American technologies. But it is not an 
R&D program, and it is focused on the biggest safety problems 
associated with those reactors in the nine countries.
    Mr. Visclosky. Just so I understand that program, our 
subcommittee funds that out of a defense function. Is that 
supplemented, is that $35 million supplemented through other 
appropriations, through other agencies and departments of the 
government?
    Dr. Lash. Yes. Typically, the Agency for International 
Development, using foreign appropriations funds, asks that same 
staff to oversee activities funded with monies that they 
transfer to us. In the current fiscal year, the biggest such 
activity has to do with the Chrenobyl nuclear power plant, 
which is a G-7 initiative. The United States has allocated 
through foreign operations some significant money to work at 
Chrenobyl, and we are responsible for managing several million 
dollars of that.

                  international nuclear safety program

    Mr. Visclosky. Could you for the record detail where the 
monies for the International Nuclear Safety Program come from 
and which agencies are providing you the funding for that, just 
so I have an understanding, because my sense is there are 
several sources of money, and I am very concerned that we are 
looking at it as a whole program.
    Dr. Lash. We would be happy to do that. We can certainly 
tell you what has been transferred to us from AID currently. We 
can also tell you what current discussions with AID staff 
suggest will come next fiscal year. But those are always 
estimates on our part, because AID changes its priorities from 
time to time, and comes to us and asks us to do additional 
work.
    But we have certain things that are fixed now, certain 
estimates are available for fiscal year 1999. We would be happy 
to provide those to you.
    [The information follows:]

              International Nuclear Safety Program Funding

    In FY 1997 the Department of Energy (DOE) received $45 
million in direct appropriations for the International Nuclear 
Safety Program. This funding supported a core program that 
includes activities such as operator training improvements, 
fire safety upgrades, safety system equipment upgrades, flaw 
detection equipment, emergency procedures development, 
configuration management, safety assessments of Russia's older 
plants, and operational safety improvements. The Agency for 
International Development (AID) provided supplementary funding 
of $36 million in FY 1997 for safety upgrades to the Armenia 
nuclear power plant and for Ukraine in three specific areas: 
(1) safety parameter display systems, (2) plant training 
simulators, and, (3) safety analysis reports.
    Likewise, in FY 1998 DOE received $35 million in direct 
appropriations for its core program and expects to receive $30 
million from AID to continue the same activities funded by AID 
in FY 1997. In FY 1999 DOE has requested $35 million in direct 
appropriations for its core International Nuclear Safety 
Program. For FY 1999, AID has indicated that funding may be 
provided to complete the activities begun with AID funds in 
previous years.

                       nuclear facilities program

    Mr. Visclosky. My final question I would have is under the 
budget request you have a reduction of about $3 million in 
requests for facilities. I had expressed concern to the 
Secretary of the department yesterday that we have good people, 
we are doing good work, and our facilities need a lot of 
upgrading. I note in the budget that we have a $3 million 
reduction.
    From a program standpoint, is that fully funding your 
needs, or are we starting to fall short as far as facility 
operation maintenance and upkeep?
    Dr. Lash. Well, I share your concern about the upkeep of 
facilities, and there is a great deal of work, more work that 
can and over time will have to be done. Unfortunately, that is 
true of other areas of my office's budget and other parts of 
the budget. So that is an amount that we judged appropriate for 
next year, but, yes, there are additional things that will have 
to be done with time in the facilities area and should be done 
over time. We are addressing in this budget some important 
safety issues, such as out in Idaho, and over time we are going 
to have to do more of that.
    Mr. Visclosky. Thank you very much.

                            year 2000 issue

    Mr. Frelinghuysen [presiding]. Thank you very much for your 
comments. I know everybody's blood sugar is low at this hour, 
but that doesn't mean we are through. I have just a couple of 
questions. Maybe your blood pressure is high. I am not sure 
there is a relation. To Dr. Krebs, the year 2000, the potential 
computer meltdown, how are you handling that issue? You have 
got more advanced computers than anybody, some remarkable 
people operate them. Where do we stand relative to an orderly 
transition?
    Dr. Krebs. Well----
    Mr. Frelinghuysen. You don't sound very confident.
    Dr. Krebs. Well, first of all, I think this is an area of 
responsibility within the department that I know the Deputy 
Secretary is intimately familiar with and concerned about, and 
she has relayed her concerns and given each of the assistant 
secretaries who have responsibility some very clear marching 
directions. So I have received mine. There is no question about 
it.
    So I am aware that the Department of Energy has, you know, 
quite a few critical systems that have been identified as 
problematic. I am aware of the systems that are within my 
responsibility. In fact, the real issue here is less the big 
scientific computers, for which I have some responsibility----
    Mr. Frelinghuysen. I thought you had major responsibility.
    Dr. Krebs. Dr. Reis in Defense Programs also has major 
responsibility. But it is our administrative computers in the 
Department of Energy, in the field offices, and at our 
laboratories, where people depend on the year 2000 turning over 
correctly for their salaries, for environment, health and 
safety, record keeping, for these sorts of things, that I think 
the year 2000 issue is as important as anything else.
    So what I can tell you is that we are paying attention in a 
very clear and urgent way, and we are being kept track of.
    Mr. Frelinghuysen. I am not sure I have got the answer I 
seek. Is the DOE, or at least your portion of the DOE, 
organized on this issue?
    Dr. Krebs. I believe we are. I mean, we are working to 
upgrade, to take care of the systems.
    Mr. Frelinghuysen. How much money specifically is dedicated 
to this issue?
    Dr. Krebs. Within energy research, I can't tell you that 
number.
    Mr. Frelinghuysen. I think the committee would benefit 
knowing DOE-wide how this issue is being addressed and what 
types of dollars are being committed to the effort.
    Dr. Krebs. Yes.
    [The information follows:]

[Pages 730 - 732--The official Committee record contains additional material here.]


                  co-firing in coal fired powerplants

    Mr. Frelinghuysen. I was intrigued by Mr. Reicher's 
response to an earlier question. You are suggesting we start 
burning corn stalks as a way to meet renewable energy demands? 
Did I hear that right?
    Mr. Reicher. Yes.
    Mr. Frelinghuysen. Coming from New Jersey, and I don't want 
to get the gentleman from Indiana excited, we are on the 
receiving end now of quite a lot of particulate and other types 
of matter, and you are suggesting that there is some excitement 
afoot about the burning of corn stalks?
    I thought, and I am not a farmer, that one of the things 
you do is that you actually plow those back into the earth and 
that is a way of renewing the soil. Is there something afoot 
that I am not aware of?
    Mr. Reicher. Let me answer. First of all, you are obviously 
on the receiving end of a great deal of air pollution, and the 
predominant source of that are coal-fired powerplants. The 
proposal here----
    Mr. Frelinghuysen. I didn't mention that, but thank you for 
mentioning it. I am glad to have that as a part of the record. 
Mr. McDade may want to come back and seize the microphone away 
from me, but go right ahead.
    Mr. Reicher. I point that out only to say that the idea of 
co-firing, that is, taking a small percentage of the coal that 
goes into a coal-fired powerplant and replacing it with any 
number of biological kinds of materials, either dedicated 
crops, where you grow the crop to mix it with the coal or waste 
from agricultural or forests, actually can have a salutary 
environmental effect and, for example, it can reduce----
    Mr. Frelinghuysen. How is that though? Explain to me how is 
that salutary?
    Mr. Reicher. Let me talk about it in terms of climate.
    Mr. Frelinghuysen. If you could do it very briefly.
    Mr. Reicher. Very simply. Crops that you grow in the Earth 
take CO2 out, and then when you burn it, they put 
the CO2 back. This is a net zero in terms of 
CO2 in the atmosphere. Whereas coal, the coal stream 
produces the CO2 that has not been in the 
atmosphere.
    So what we say is these renewable crops that we replace a 
small percentage of the coal with are net CO2 zero 
kinds of substances. So from a climate perspective, you can 
reduce emissions.
    I think there is also substantial possibilities to reduce 
other kinds of more traditional pollutants as well. Again, this 
is a small percentage of the coal stream, but other kinds of 
traditional pollutants as well that come from these 
powerplants.
    Mr. Frelinghuysen. I would welcome any rebuttal to that if 
anyone wishes to submit it for the record. Anything further?

                             Year 200 Issue

    Mr. Visclosky. Just one question, following up on the year 
2000, Dr. Krebs. I was told by a constituent from Hobart, 
Indiana, who claimed that he had a good Lutheran education, 
that the other problem in the year 2000 is it is not a leap 
year for the first time in 400 years, and because we will not 
have a February 29th, is that also going to cause an 
administrative problem?
    Dr. Krebs. I can't answer that question.
    Mr. Frelinghuysen. Dr. Krebs, you have lots of work ahead 
of you. Unbelievable.
    Mr. Visclosky. Thank you, Mr. Chairman.
    Dr. Krebs. I will certainly relay that to the people who 
are paying attention.
    [The information follows:]

                        YEAR 2000 AND LEAP YEAR

    Members of the DOE Year 2000 Project Team are aware of the 
special leap year situation associated with the century date 
change as it is mentioned in the Department's Year 2000 Project 
Plan. A reminder will be included in future communications with 
the Team and details about the leap year will be available on 
the Department's Year 2000 website for reference purposes. Year 
2000 is a leap year and this could cause problems in two ways.
    The rule laid down by Pope Gregory in 1582 is that leap 
years are those that are divisible by four. Century years are 
only leap years if they are also divisible by 400. So the year 
2000 is a leap year but 1900 was not, even though it is 
divisible by four. If the computer thinks it is dealing with 
the year 1900, not 2000, it will have a problem because 2000 is 
a leap year, but 1900 was not. Therefore, all entries for 
February 29, 1900, will be rejected.
    A more likely scenario is that the computer system may 
recognize that the year is 2000, but because of programming 
error, may not understand that it is a leap year. Software 
programmers sometimes forget about leap years or have not 
provided for all the exceptions. An Internet site with an in-
depth explanation (http://www.gmt-2000.com/leap.html) quotes 
from the Latin version in which Pope Gregory XIII defines 
``anno vero MM'' (Year 2000) specifically as a leap year.

    Mr. Frelinghuysen. As one of your true fusion advocates, I 
am disappointed you can't answer that question. The committee 
is through, and we stand in recess until 10 a.m. tomorrow. 
Thank you very much for participating.
    [The questions and answers for the record follow:]

[Pages 735 - 1020--The official Committee record contains additional material here.]


                                          Thursday, March 19, 1998.

                   ALASKA POWER ADMINISTRATION (APA)

                 BONNEVILLE POWER ADMINISTRATION (BPA)

                SOUTHEASTERN POWER ADMINISTRATION (SEPA)

                SOUTHWESTERN POWER ADMINISTRATION (SWPA)

                WESTERN AREA POWER ADMINISTRATION (WAPA)

                               WITNESSES

RODNEY L. ADELMAN, ADMINISTRATOR, APA
JACK ROBERTSON, ACTING ADMINISTRATOR, BPA
CHARLES A. BORCHARDT, ADMINISTRATOR, SEPA
MICHAEL A. DEIHL, ADMINISTRATOR, SWPA
MICHAEL S. HACSKAYLO, ACTING ADMINISTRATOR, WAPA
    Mr. McDade. Please be comfortable, gentlemen.
    The committee will come to order.
    We want to welcome our power administrators to the Nation's 
capital. We are looking forward to hearing your testimony. And 
I have seen your statements, which we are grateful for, and 
they have been made available to the members of our 
subcommittee. If there is no objection, I would appreciate it 
if each of you would submit them for the record, and proceed in 
that order.
    A couple of brief observations, if I may, as we begin, and 
you are invited to comment. First, the PMAs have been the 
subject of some harsh criticism, and we have seen lots of 
proposals, as you are aware, to privatize, sell them, or move 
them to a market-based pricing system. And in response, there 
have been prohibitions to say don't even look at that issue; 
these are crown jewels and we don't want them touched.
    Today we are rather at a crossroads as the States, one by 
one, participate in deregulation and restructuring, and 
fundamental questions are being asked about the role of the 
power marketing administrations in this new competitive 
environment.
    I expect the members of our subcommittee have some strong 
views about what the Federal role ought to be, and we welcome 
their ideas and hope their questions are penetrating. If we are 
not sufficiently skillful at penetrating questions, please, you 
be penetrating. You are the experts.

         challenges facing the power marketing administrations

    I want to ask each of you to take whatever time--not too 
long, please, but take what time you think is necessary to 
concisely share your thoughts on the challenges that you see 
facing the power marketing administrations in the emerging 
national electricity market. We heard it said in here, and I 
don't think any of you would disagree, that this is probably 
the most significant energy step the Nation may take during our 
lifetime. It is entirely possible it is that significant.
    So, Mr. Adelman, if you would kindly kick it off and get us 
started, we would like to hear your comments.

                      alaska power administration

    Mr. Adelman. Mr. Chairman, Alaska Power Administration is a 
somewhat unique and isolated situation in Alaska with only two 
projects, and our solution, if you will, to deregulation has 
been the enactment of the Alaska Power Administration Asset 
Sale and Termination Act in 1995. So essentially we are about 
to complete the sale of our assets to the local utilities and 
be out of the business of power generation and transmission.
    Mr. McDade. How soon do you expect that to occur?
    Mr. Adelman. I expect to sell the final project this July 
and to have the agency totally closed by the end of fiscal 
1999.
    Mr. McDade. You sure have a clear-cut path, and we 
congratulate you for knowing exactly what you are going to do.
    [The statement of Mr. Adelman follows:]

[Pages 1023 - 1028--The official Committee record contains additional material here.]


                    bonneville power administration

    Mr. McDade. Mr. Robertson, we would like to hear from you.
    Mr. Robertson. Thank you, Mr. Chairman.
    Let me say, first of all, I understand you may be retiring 
at the end of the term, and I wanted to thank you personally--
--
    Mr. McDade. Guaranteed, sir.
    Mr. Robertson. Yes. I just want to thank you for your 
leadership and help on the committee side; Mr. Fazio also. I 
just want to express thanks to members of the committee who 
have done a tremendous amount of good for Bonneville and the 
West Coast and wish you well in retirement.
    Mr. McDade. Thank you, and we welcome you here. We know 
that you have been in public service a long time.
    Mr. Robertson. Thank you.
    Mr. McDade. And we are grateful to hear from you.
    Mr. Robertson. Let me just make--I will try to boil my 
statement down and make some of the most important points that 
I want to leave with the committee.
    Mr. McDade. Please.
    Mr. Robertson. First of all, this is Bonneville's 60th year 
and we had a very, very good year. The Bonneville news is very 
good at this point. We are going to come up with net revenues 
of $118 million, we expect, in fiscal 1997, which was the 
highest net revenue mark since 1991. We have made our 1997 
annual payment of more than $775 million to Treasury. This is 
the 14th straight payment in a row; we are very proud of that 
record.
    Mr. McDade. Mr. Robertson, can I ask a question? How is 
that calculated?
    Mr. Robertson. It is a calculation against the total debt 
that Bonneville has for both the transmission--
    Mr. McDade. It is total debt, not on income?
    Mr. Robertson. Federal debt, against Federal debt for dams 
and transmission systems in the Northwest.
    We have paid about $14 billion total to the Treasury 
through 1997. Our finances are in good shape. We expect to make 
our Treasury payment this year of $614 million; we expect to 
make another one next year and probably in the years after 
that.
    Our power sales are going strong. We have gone out with a 
presubscription contract to test the future market. We have 
contracts guaranteeing our revenues through 2001. We are going 
out to test the market post-2001--we went out with a test of 
about 1,200-1,300 megawatts, and we have already sold over 700 
megawatts, and that is about the equivalent to the City of 
Portland. We have achieved prices that are at or above our 
existing rates. And we expect to have a rate reduction coming 
up in the next rate period.
    Mr. McDade. Would these all be new starts as far as 
companies coming in? Relocations, expansions, that kind of 
thing?
    Mr. Robertson. These are mostly sales, Mr. Chairman, to 
existing utilities or other marketers in the Northwest. In some 
cases, there are sales to public utilities that we already sell 
to now; in some cases there are sales to other marketers or 
investors or utilities.
    Our financial reserves are at $400 million this year. The 
average for the last 5 years has been $313 million. We are 
watching El Nino. El Nino has had an enormous impact on the 
water year in the Northwest. It has been about a 90 percent of 
average water year, so actually we end up looking like we are 
going to lose about $90 to $100 million simply on not having 
what would be a normal water year in the Northwest, but we hope 
to manage our costs such that we will maintain our reserve 
levels at or near $400 million.
    We have cut costs since we met last--I don't think we have 
been in front of the committee for a couple of years. We have 
cut $600 million a year in our budgets since 1995. We think 
this has contributed greatly to our competitiveness.
    Mr. McDade. Yes.
    Mr. Robertson. We have----
    Mr. McDade. Can I interrupt you there, because we 
appreciate your expertise.
    Of that $600 million, how would it--I am sure part of it is 
downsizing efficiencies. Could you comment--spend a minute and 
describe how you were able to achieve that?
    Mr. Robertson. You bet. We cut costs in virtually all 
program areas except fish and wildlife funding. We cut in 
operations and maintenance, we cut in transmission planning, we 
cut in conservation and renewable energy areas, we cut in our 
overheads. We had about 3,750 Bonneville employees in 1994. We 
have cut 20 percent of those employees; at the end of this 
year, we expect to be down to 2,755 employees, which is the 
lowest level Bonneville employed since 1965.
    So it was an across-the-board cut except in the area of 
fish and wildlife where----
    Mr. McDade. Anything but fish and wildlife was on the table 
for examination?
    Mr. Robertson. Yes, correct.
    So we cut those costs, and to make a long story short, that 
resulted in a 13 percent rate reduction which we put in place 
for this 5-year period, 1996 to the year 2001, and again we now 
have solid contracts and solid revenues. And that is the reason 
we think that our reserve levels will increase over time. It 
puts us in an excellent position to begin to market in the 
post-2001 period, so that we can provideadditional stability 
and guarantees of Treasury payment in the long term.
    And the most important thing, I just want to leave a couple 
of points and then I will stop, Mr. Chairman, I have a couple 
of high priorities for this year particularly. We need to 
continue our cost-cutting. We have had recommendations from an 
independent, outside cost review panel that looked at our 
overall structure and said, we have made a lot of progress, we 
can make more--the panel suggested about $140 million in 
additional cuts not just from the Bonneville budget but from 
the Corps, Bureau, and other indirect budgets that Bonneville 
also supports. We are going out to the region to discuss how we 
can accomplish increasing the cost-cutting.
    We need to stabilize fish and wildlife costs for another 5-
year period. We have done that through 2001, and we want to 
come up with a mutually acceptable agreement in the region 
between 2002 to 2006.
    When we add that to our cost structure, we then can turn to 
my highest priority, which is to begin to offer all of 
Bonneville's basic power supply in long-term, subscribed 
contracts beginning this summer. If we do that and get that 
done and accomplish it over the course of the next year or two, 
we will have stable prices not just through year 2001 but 
through 2006; and so we will then have over 10 years of 
stability, and we will be able to guarantee a continuation of 
our objectives for the committee.
    So with that, I have other things I can say, but I will 
just leave it open for questions in the end.
    Thank you for your----
    Mr. McDade. Thank you, Mr. Robertson.
    [The statement of Mr. Robertson follows:]

[Pages 1032 - 1039--The official Committee record contains additional material here.]


                   southeastern power administration

    Mr. McDade. Mr. Borchardt, we are delighted to hear from 
you. Give us the benefit of your expertise.
    Mr. Borchardt. Yes, thank you, Mr. Chairman. I appreciate 
very much the opportunity to meet with you all today.
    The Southeastern Power Administration is located in 
Elberton, Georgia, and it markets power in 11 States stretching 
from southern Illinois to Florida and from Mississippi over to 
Virginia. We market within that quadrant approximately 3,300 
megawatts of capacity and a little over 8 billion kilowatt 
hours of energy.
    Last year we were----
    Mr. McDade. Can I ask a question there? Eight billion 
kilowatt hours?
    Mr. Borchardt. Yes, sir.
    Mr. McDade. I can't--I have a hard time relating to that. 
How can you explain it to me as a layman about how much----
    Mr. Borchardt. It is not as big as you think it is.
    Mr. McDade. Around here billions are billions.
    Mr. Borchardt. A billion here, a billion there, it all adds 
up.
    But basically, to give you an example, in our region, in 
the 11-State region, our energy constitutes a little less than 
3 percent of the total amount of energy. So it is about 2.7 
percent. So, relatively speaking, it sounds like a big number, 
but it is not that large.
    Mr. McDade. Okay, that helps, thank you very much.
    Mr. Borchardt. Last year we paid a little more than $35 
million on the Federal investment. Up to fiscal year 1997, we 
paid about $582 million on the Federal investment. We still 
have approximately $913 million yet to recover in our effort.
    We do feel like we are in a good position financially. To 
directly respond to your question about the impact of the 
restructuring of the utility industry generally, we are still 
in the throes of negotiating transmission arrangements.
    Southeastern, unlike the other power marketing 
administrations, does not own any of its own transmission 
facilities at all. So we achieve the transmission and marketing 
of power through wheeling contracts with neighboring utilities, 
and have done that since we came into business in 1950.
    The restructuring of the electric business has brought into 
question some technical problems in regard to transmission. I 
don't want to bore you with all the details, but the concept of 
being able to obtain network transmission service as opposed 
to, say, point-to-point transmission service has been a big 
issue with us, and we think we have finally resolved that issue 
with the Federal Energy Regulatory Commission.
    Mr. McDade. Would you define those two----
    Mr. Borchardt. Yes, point-to-point service basically means 
that you have to designate a source of generation to a 
particular customer's load. That takes away the diversity of a 
hydropower system where one day we may have generation out of 
one project, the next day it may be from another project that 
we want to generate power from. So it gives us a great deal of 
flexibility with a hydropower system.
    We have no thermal generation facilities to back up the 
hydropower so----
    Mr. McDade. Mr. Borchardt, will you kindly pull that mike 
over a little bit? I am having a little bit of----
    Mr. Borchardt. Yes, how's this? Is this on?
    So technical issues such as these have slowed down some of 
our transmission contract negotiations, but these are coming 
around.
    Mr. McDade. Who are you negotiating with?
    Mr. Borchardt. Well, we have several customers--I mean, 
several entities that we negotiate with, the Southern 
Companies, Duke Power, Santee Cooper out of SouthCarolina, 
Virginia Electric and others--Kentucky Utilities----
    Mr. McDade. A lot of folks at your table, Mr. Borchardt.
    Mr. Borchardt. Yes, sir.
    Mr. McDade. Go ahead, sir.
    Mr. Borchardt. Basically we feel like we are poised to 
recover the costs of the Federal investment, and we are 
positioned to work well in a restructured utility industry. I 
would be glad to take any questions you might have.
    Mr. McDade. Thank you, we appreciate your testimony.
    [The statement of Mr. Borchardt follows:]

[Pages 1042 - 1049--The official Committee record contains additional material here.]


                   southwestern power administration

    Mr. McDade. Mr. Deihl, we will be delighted to hear from 
you.
    Mr. Deihl. Thank you, Mr. Chairman. It is a pleasure to be 
here this morning to present Southwestern's FY 1999 budget.
    I agree with you. I have 22 years in Federal power systems, 
since 1992 as administrator, and these are probably the most 
challenging times, I think, that I am aware of and exciting 
times. I think there is a lot of opportunity here for us. 
Southwestern is in good financial shape. I believe we are well 
positioned to deal with the changes that we are aware of right 
now in the electric utility industry, and I think we will be 
able to handle what comes down the pike to us.
    We have filed open access tariffs with FERC. Even though we 
are a nonjurisdictional entity, the Department of Energy has 
taken a position that we should support those efforts. We have 
actively participated in and are a strong proponent of 
participation in the Southwest power pool. We are in total 
support of region-wide tariffs and working with them.
    We are also actively working with them to develop an 
independent system operator for the future, and at the end of 
1998, we are estimating that we will pay back $433 million of 
approximately a $1 billion Federal investment; and our net 
revenues for that year--we believe we have got a pretty good 
water year going this year--will exceed $100 million, which we 
will return to the United States Treasury this year.
    And with that--I will keep it brief--I would be happy to 
answer any questions I possibly can here today.
    Mr. McDade. Thank you, and we appreciate your 22 years. We 
need to hear from you on your expertise, so don't hesitate to 
inform us. That is why we are here.
    Mr. Deihl. Thank you.
    [The statement of Mr. Deihl follows:]

[Pages 1051 - 1055--The official Committee record contains additional material here.]


                   western area power administration

    Mr. McDade. Mr. Hacskaylo, we are delighted to have you 
here and appreciate your testimony.
    Mr. Hacskaylo. Thank you, Mr. Chairman. I am pleased to be 
here.
    Western Area Power Administration is well situated to 
participate in the changes in the electric utility industry in 
the upcoming years. We are taking very seriously the direction 
and guidance from the conference committee in last year's 
appropriation act that we need to keep our wholesale rates as 
competitive as possible while maintaining as robust a repayment 
stream back to the Treasury as possible.
    To that end, we reduced our budget by $48 million, 
approximately 13 percent over the last 2 years. We have reduced 
staff by about 25 percent, over 300 people in the last 2 years. 
We have filed with the Federal Energy Regulatory Commission our 
open access tariff that will permit anyone who is interested to 
have access to Western's 17,000 miles of transmission line 
throughout the western United States.
    We are participants in the major restructuring initiatives 
with regard to independent grid operators, independent 
transmission operators and security coordinating centers in the 
western United States. We are playing a significant role with 
the Western Systems Coordinating Council with regard to the 
changes that we are dealing with in terms ofreliability and 
improved communications, and improved system reliability. We are well 
situated.
    In fiscal year 1997 we made a $107 million payment to 
Treasury on our debt. We had revenues of $882 million last 
year. We are situated, we are ready to go, we look forward to 
changes. It is a challenge for all of us. It is going to be 
very, very interesting.
    Mr. McDade. We thank you very much for your testimony and 
all of you.
    [The prepared statement of Mr. Hacskaylo follows:]

[Pages 1057 - 1066--The official Committee record contains additional material here.]


            ROLE OF PMAS IN A DEREGULATED ELECTRIC INDUSTRY

    Mr. McDade. We have referred obviously to the competitive 
environment that is going to exist when we get to deregulation, 
and I think we are all agreed that it is coming. That is going 
to develop a whole new scenario of competition, and I hear you 
saying that you know you are cutting costs, you are downsizing, 
you are leaning out for the fight, if you will.
    How do you see your role when you get to a new environment 
where the--theoretically, the country is totally deregulated 
with respect to electricity. What do you see as the niche that 
you will fill, the purpose that you will serve when that time 
comes?
    Suppose we go the other--Mr. Hacskaylo will start.
    Mr. Hacskaylo. The initial Western feeling is that we have 
close to 17,000 miles of high voltage transmission line 
throughout the western United States in our service territory. 
We are interconnected with all of the major utilities in the 
West, both publicly owned and privately owned. We have 
contractual arrangements with all of them. We handle power for 
them, they handle power for us. So we see our role as a 
transmission provider as being very significant in this 
deregulated industry at the wholesale level.
    We also see that we will continue to sell both firm power 
and nonfirm surplus energy in good water years, helping keep 
costs low for consumers throughout the entire 15-State service 
territory that we serve.

                          TRANSMISSION SYSTEMS

    Mr. McDade. You mentioned that the transmission miles--to a 
person from the East it sounds like a lot, but I look at your 
territory, and it sort of sounds like that might be a drop in 
the bucket in terms of--I am not saying it is insignificant, 
17,000 miles is enough to get anybody's attention, but the 
geography that you serve is so large. Who, for example, would 
be the biggest transmission outfit in that area and how big 
would they be in relation to you?
    Mr. Hacskaylo. Okay, well Western has the third largest 
transmission system in the western United States. Other very 
large transmission providers are PacificCorp, PG&E, Los Angeles 
Department of Water and Power, Southern California Edison 
Company. So it is a mix of companies in the West.
    Mr. McDade. Explain L.A. Power to us, will you? Is that 
municipally owned? It sounds like it.
    Mr. Hacskaylo. Yes, the Los Angeles Department of Water and 
Power is municipally owned. It has an extensive transmission 
system interconnected with Western's Boulder Canyon project at 
Hoover Dam, from which Los Angeles buys power.
    Mr. McDade. But you see no bumps coming your way as a 
result of the deregulation around the country?
    Mr. Hacskaylo. Sir, we see plenty of bumps coming, but I 
think we are poised, we are situated to deal with those bumps, 
all of us in the electric utility industry----

                     MAJOR DEREGULATION CHALLENGES

    Mr. McDade. What is the top mountain you have to climb?
    Mr. Hacskaylo. The top mountain we have to climb is that we 
need to be able to maintain a good solid core staff of Federal 
employees to deal with the competitive wholesale industry. That 
is the major challenge I face as acting administrator.
    Mr. McDade. Mr. Deihl, would you like to comment, please?
    Mr. Deihl. Thank you.
    Southwestern is very similar to Western Area Power 
Administration's situation, but on a much smaller scale. We 
serve a six-State region, and we have about 1,400 miles of 
transmission line. In addition to being a fairly important 
player in the transmission systems of that area, and in 
integrating our systems with theirs, Southwestern has a very 
important role in the management and assisting in the 
management of scheduling power out of multipurpose hydro 
projects.
    Not being a profit-based organization we have cost-based 
rates. We feel we play an important role in the management of a 
valuable resource, and that is the water which goes through 
those dams to generate that power. And I believe that is one of 
our most important roles in our part of the country.
    Mr. McDade. And you will continue to exercise full 
authority over that deregulation or not, won't you?
    Mr. Deihl. Authority over the water?
    Mr. McDade. Yes, you will still have the same abilities no 
matter what happens with deregulation.
    Mr. Deihl. The actual authority of scheduling the water 
lies with the Corps of Engineers, not with the Federal Power 
Marketing Administration, but----
    Mr. McDade. They're talking to you pretty regularly, aren't 
they?
    Mr. Deihl. Yes, sir, we work hand-in-hand daily.
    Mr. McDade. There won't be any interruption or impediment 
in that relationship.
    Mr. Deihl. No, sir, that will be a continuing relationship. 
In fact, it is getting stronger and we are scheduling and have 
conducted our first joint conference with the Corps, the public 
in the areas we serve and the Power Marketing Administration to 
discuss future issues and how best to manage the power systems 
and the hydrosystems.
    Mr. McDade. Mr. Borchardt.
    Mr. Borchardt. Yes, we at Southeastern, of course, like the 
other two PMAs that just spoke, do market power in the 
wholesale area. We, unlike the other two, or really other PMAs 
here--of course, do not own any transmission facilities; and as 
I mentioned earlier, that has become a bit of a challenge, but 
we feel like we are surmounting that.
    One of the biggest challenges I believe we face is the 
unknown--the fallout of deregulation and the decreasing prices 
that may be occurring in the wholesale area; and our customers 
may be wanting to give up some or all of their allocation. We 
want to be flexible and be able to meet whatever needs need to 
be met in the area. I think--reflecting what Mr. Hacskaylo said 
earlier, what we need to do there is maintain a core of 
competent Federal employees to meet that challenge and be 
rather flexible.
    Mr. McDade. Thank you.
    Mr. Robertson.
    Mr. Robertson. Mr. Chairman, Bonneville markets about half 
the electricity consumed in the Pacific Northwest region--
Montana, Idaho, Oregon and Washington. We own about 75 percent 
of the high voltage grid in the Northwest, and we also act as 
the U.S. entity for the U.S. Canadian treaty which governs the 
flow of the Columbia River across Canada and the United States.
    What is most important to me as deregulation 
approaches,first of all, we feel we went through deregulation in 1992 
when the wholesale deregulation occurred. For Bonneville, it caused a 
major change in cost structures. Bonneville met that challenge by 
cutting costs, as I described earlier, and through a whole variety of 
actions, and we now feel like we have turned the corner in that 
competition and we are well prepared to now move the competitive costs 
at the wholesale level out to the retail level as retail competition 
begins to take place state by state and is considered in the Congress.
    My biggest objective in all of this is to meet my Treasury 
payment obligation, which is very large, one of the largest I 
think in the country, to meet my public purpose obligations, 
which means we have to integrate a complex hydrosystem across 
four states. We have to provide open access and very 
competitive transmission rates and allow others to use the 
transmission system freely in order to encourage competition.
    We have to continue managing the Canadian treaty system. We 
also provide a series of public benefits in the region that are 
key and provide about $400 million a year in fish and wildlife 
program moneys which is the largest, at least financially, I 
think, the largest such program of its kind in the country or 
the world.
    We provide conservation and renewable energy; we have 
provided about $2.5 billion in energy exchange benefits to 
higher-cost utility customers throughout the region since 1980 
and a variety of other objectives that we meet on an integrated 
basis under a variety of laws that govern Bonneville.
    Mr. McDade. Thank you, Mr. Robertson. It is an interesting 
discussion.
    Mr. Adelman.
    Mr. Adelman. Mr. Chairman, with Alaska's capital city 
Juneau being an electrical island, there is really no impact 
with the sale of this national project. In the case of 
Anchorage, essentially our role has been to get out of the way. 
By selling the Eklutna project, we have essentially turned over 
the transmission lines to the three potentially competing local 
utilities.
    Mr. McDade. Mr. Adelman, there are a lot of folks down here 
looking for a good employee. There are none better than you, it 
sounds to me.
    I am pleased to recognize my friend from California.

                      Post 2004 CVP Marketing Plan

    Mr. Fazio. Thank you, Mr. Chairman, and let me thank you 
for scheduling this hearing because there are some important 
issues that are vital not only for the regions impacted, but 
for the country as a whole; and I am pleased to have a chance 
this year to have some interaction.
    I wanted to indicate, by the way, that Mr. Pastor had been 
here and misses the opportunity to interact with you all, but 
he has taken on one of those unique assignments here, the 
Ethics Committee, and he is in a bunker somewhere all day and 
won't be able to come out for air. So he isn't here with us, 
but he may have some questions for the record.
    I have a lot of constituents, city council members, mayors 
in California, some directly in my area, who are very pleased 
with the public process that we have been going through to 
extend CVP power contracts; and as Mr. Hacskaylo knows, it will 
be the one we are particularly focused on, negotiating at the 
moment would be about to expire in 2004.
    A lot of money and a lot of work have been spent in this 
process up to now. I am wondering if you could give us some 
sort of a reading on how the process is proceeding and whether 
or not we are going to get where we need to get before that 
date.
    I know we have had extensions in the Midwest and the 
Southeast; I assume we are operating on a similar premise. But 
I think particularly in light of the importance of the Central 
Valley Project to Western Area Power Administration's purview, 
I would like to hear from you, Mr. Hacskaylo.
    Mr. Hacskaylo. Yes, sir, Mr. Fazio.
    Western Area Power Administration's post-2004 marketing 
plan is on schedule. We have completed our environmental 
documentation, and our public process involving all interested 
parties and stakeholders. Where we are now is reviewing policy 
issues within the Department, and we hope to be able to make 
some decisions in the near future with regard to bringing the 
marketing plan to successful closure.

                    Competitive Electric Power Rates

    Mr. Fazio. I know the Chairman has asked about how we are 
all going to be responding to restructuring. You know, I think 
that we might as well talk about it publicly here, concerns 
that some of our colleagues have that the PMAs provide 
municipal utilities with an unfair advantage in a deregulated 
electricity market. I would be interested in your reaction to 
that, and then perhaps some of your colleagues here on the 
panel.
    Mr. Hacskaylo. Yes, sir.
    With regard to concerns about an unfair advantage, I don't 
see any unfair advantage, given the fact that Western's power 
rates are competitive in the industry at the wholesale level. I 
might also add that with regard to our nonfirm energy sales, 
that is, energy that is generated with surplus water in fiscal 
year 1997, we sold about $110 million of that to investor-owned 
utilities as well, so the benefits----
    Mr. Fazio. This year could be an even bigger year.
    Mr. Hacskaylo. Given the amount of rain in California, 
given the amount of moisture in the upper Midwest, we expect to 
have again quite a bit of surplus generation.
    So I think we do provide public benefit to the public at 
large. Our rates, as I said, are competitive; there are power 
marketers out there that are beating our rates, that have rates 
lower than we do because of natural-gas-fired generation. That 
is why we are working very hard to cut our costs, control our 
costs, maintain our costs to keep our rates competitive, to 
stay in business, and to ensure that we can repay the Treasury 
for the investment allocated to power.
    Mr. Fazio. Let's go down the panel, and I would like to 
hear, you know, response in general to some of the arguments 
that we occasionally pick up here in Congress as we review your 
budgets. We have often had some asset sale proposals that in 
the past have troubled this committee, and I hope would 
continue to.
    Mr. Deihl.
    Mr. Deihl. Thank you, Mr. Congressman.
    As you know, it is an issue that has been around quite 
awhile; it is not a new issue. But as our rates compare in the 
area--for an example, our composite 1,200-hour peaking power 
rate is about 3.04 cents per kilowatt hour. If you look across 
the board to the customers that we serve, their average rate is 
about 3.5 cents per kilowatt hour. There is not a big 
difference there.
    The one thing that has always troubled me when we talkabout 
rates is comparing apples to apples. For Southwestern Power 
Administration we sell 1,200-hour peaking power contracts, and it seems 
like we get caught up in the comparison with nuclear and coal, all 
these other facilities that have fuel costs. We don't have fuel costs 
and we have never done any kind of detailed study on market rates in 
the Southwestern Power Administration. We are prohibited by law from 
studing anything like that as far as the sale, so we haven't, but I 
think it would be interesting to take a look.
    Mr. Fazio. Your First Amendment rights have been imposed 
upon, we realize that. [Laughter.]
    Mr. Deihl. Thank you, sir.
    Well, I am sitting between two attorneys. [Laughter.]
    Mr. Fazio. That is why we want to listen to you.
    Mr. Deihl. I would like a copy of the record so when I 
talk--the point I am trying to make here is that there are a 
lot of discussions about ``on a level playing field,'' and I 
guess I would just encourage all Members of Congress, and 
everybody really, to take a hard look at this to make sure we 
are comparing apples to apples; and when we talk about a level 
playing field, especially with the market the way it is going, 
it is changing, I am not so sure you are ever going to get a 
level playing field with anybody. To me, the playing field is 
always going to be tilted--the one that has the lowest rates in 
the competitive markets is going to be the winner.
    So I guess that is my contribution to that, sir.

                          pma responsibilities

    Mr. Fazio. Mr. Borchardt.
    Mr. Borchardt. I would second a lot of what my colleague, 
Mr. Deihl, just got through saying; but I would add, too, that 
as far as Southwestern and Southeastern, I know a little bit 
about Southwestern, having worked there previously, but I do 
know that we--let me just talk about Southeastern; maybe I will 
be on safer ground that way.
    We have primarily just a hydropower system. We do not have 
any kind of thermal generation to back that up, so the bottom 
line is, when it rains, we can sell power. When we are in 
drought conditions, though, we have to purchase power to meet 
our contract commitments.
    Our contract commitments are based upon average water 
conditions. So consequently, in good water years, we have 
surplus energy to sell and we generate more revenue. That is 
offset, of course, by drought conditions.
    I think people--I would also add that we do not have 
utility responsibility; that is to say, if somebody comes to us 
and says, we want to purchase power from you and we want you to 
supply energy and power to our town or our home, we cannot do 
that. We have very limited generation facilities. We are one 
purpose in a series of multiple-purpose hydropower projects.
    On the other hand, investor-owned utilities and certain 
state agencies do have that utility responsibility. If somebody 
comes to them and says, hey, we want electricity and we want it 
reliable and we want it now, if the utilities don't have it, 
they have got to go out and build those generation facilities 
and see that the people have it. It is a tremendous 
responsibility, but it is far----
    Mr. Fazio. Or conserve it these days.
    Mr. Borchardt. But it is far different from what--the way 
we operate.
    I do think that the multiple-purpose aspect to these 
projects is overlooked. We have to compete with the use of the 
water for many other purposes at the project--flood control, 
water quality, recreation and fish and wildlife, and 
navigation. A lot of times we have--I can't say a lot of times, 
but sometimes we will be generating, and they will ask us to 
stop generating at one project and start generating at another 
because they simply have a barge hung up on a sandbar; and we 
have got to be flexible in doing that.
    Mr. Fazio. You have a wide variety of other public 
pressures on you to balance the use of the resource.
    Mr. Borchardt. That is right, and the Corps has to balance 
those.
    Mr. Fazio. And you don't really have the operational 
authority to override any of those agencies?
    Mr. Borchardt. We can make requests to the Corps of 
Engineers in our case.
    Mr. Fazio. Right, I get the impression that they don't 
always respond to those requests because they have got other 
pressures on them.
    Mr. Borchardt. That is true.
    Mr. Fazio. Some of which we bring.
    Mr. Borchardt. That is very true.
    Mr. Fazio. Mr. Robertson.
    Mr. Robertson. Yes, Mr. Fazio, I just have to add to a 
couple of points in the comments that have already been made.
    Bonneville has paid off all of its debts. It remains 
constant on its debts, and we also have a very large public 
mission in which the cost-based rates that we provide are 
funded, a $400-million-a-year fish program in addition to all 
the other things I had mentioned earlier.
    We went through a regional review as to how Bonneville 
would sell its power in the context of a new deregulating 
environment. In the last couple of years, the region's 
governors came together and came up with a plan, and basically 
the plan was for Bonneville to come back with its cost-based 
rates to provide sales to public utilities and then to farms 
and homes of the investor-owned utilities of the region, and 
beyond that to the industries in the region and then to 
California, so there is a plan. Bonneville is not going to 
compete at retail. We are basically providing wholesale 
service, we think at very competitive, cost-based rates while 
adding a large public mission that we don't see anybody else 
providing.
    Mr. Fazio. I appreciate your response because it really 
leads into this whole question of whether you should be forced 
to charge cost-based rates or market-based rates in the future, 
which the Congress may well want to deal with in the context of 
the overall restructuring.
    Do you think it would be? And maybe we should start back 
the other way. Mr. Adelman? I don't know what you want to add 
at this point.
    By the way I liked your bio, recovering parent of two 
teenagers.
    Mr. Adelman. Thank you.
    Mr. Fazio, as you well know, the idea of competition in 
Alaska is probably not very meaningful, except possibly in the 
Anchorage area, and I would think when the Alaskans think of 
the level playing field, they would think more of the 
difference between what it costs for electricity in the 
ruralareas, 50 cents per kilowatt hour, or upwards and maybe down--
really, that is the only thing that I could offer with respect to this 
question.

                           market based rates

    Mr. Fazio. Well, maybe we could go back and specifically 
focus in on what Mr. Robertson has put on the table here, and 
that is this potential for Congress to try to--or even perhaps 
the administration--to recommend that we go to a system of 
market-based rates.
    Mr. Borchardt, I guess Mr. Robertson said pretty much what 
he had to say on that subject.
    Mr. Borchardt. Well, by statute, our rates are based upon 
our costs, and certainly if Congress changes that, we will go 
with the mandate Congress gives us. But I hear the term market-
based rates and cost-based--market-based rates tossed around 
here frequently; and I am not real sure exactly what that 
means. We, for example----
    Mr. Fazio. Courageous to say that most of us wouldn't admit 
it, but I think it is true as well.
    Mr. Borchardt. Well, in my homestate the investor-owned 
utility there is Georgia Power Company, which is part of the 
Southern Company. They don't sell their power at market-based 
rates; they have a specific rate that they have for their 
power, and that is based upon their costs and a reasonable 
return of revenue and so forth.
    I don't know how you would go about composing or obtaining 
a rate for a resource primarily that is dependent upon the 
water. If we have the water, we have it; if the water drops 
below the power pool, we can't market. We sell peaking power, 
it is not like you are selling out of a coal fired plant which 
is a base-load plant. The thing that bothers me most is how you 
would go about composing or obtaining the actual market-based 
rate, so to speak.
    Mr. Fazio. Um-hmm.
    Mr. Deihl.
    Mr. Deihl. Well, I would concur with what Mr. Borchardt 
just said. All of us have talked at different times, and we 
always end up back at this point: What are ``market-based 
rates''? What does that mean? So to me the first obstacle would 
be to define it, establish the equation of what those market-
based rates would be.
    I think the only other thing I might add to this discussion 
is, I believe it was in the CBO report, there was a number 
quoted in there, about a 40 percent increase, to the market-
based rates, and I have never figured out how that number was 
arrived at. I don't understand that other than perhaps I go 
back to my apples-to-apples type of thing.
    I don't know how that number was arrived at, and if we were 
to seriously look into that, if Congress looked into this, as 
you are authorized to do, or go to market-based rates, I think 
our energies would first have to be focused on establishing the 
equation of what that is.
    Mr. Fazio. Tends to have a bias in the outcome of the 
debate when you come up with that kind of a number out of thin 
air.
    Mr. Deihl. I believe so.
    Mr. Hacskaylo. The only thing I have to add, Mr. Fazio, is 
that with regard to Western Area Power Administration, we 
compete at the wholesale level. If there is upward pressure on 
our rates, the question we really have to face is what that 
will do to our efforts to repay the investment we are required 
to repay by law. It could make us unmarketable, and that is a 
significant concern.

                    environmental mitigation at wapa

    Mr. Fazio. Just for you Mr. Hacskaylo, and this will be my 
last question, give the committee some feel for how WAPA works 
to integrate its environmental mitigation. I know you and 
Bonneville have tremendous problems, growing problems in this 
regard with your hydropower producing capabilities, which are 
your major sources of supply obviously. And how would this be 
impacted--by some sort of privatization or restructuring which 
would include you?
    Mr. Hacskaylo. Well, in the western United States, water is 
released through the dams by the Bureau of Reclamation not to 
meet hydropower requirements, but to meet other requirements 
ahead of hydropower, such as flood control, navigation, 
municipal and industrial water supply, and irrigation. What we 
have been tasked to do by the Congress both in the Central 
Valley Project of California and on the Colorado River is to 
provide, through power revenues, moneys to restore the Central 
Valley Project as part of the Central Valley Project 
Restoration Act of 1992.
    We are doing the same thing with regard to the Grand Canyon 
under the Grand Canyon Protection Act of 1992 as well. So our 
revenues are applied to assist in mitigation and restoration of 
environmental issues, environmental concerns, on both of those 
major river systems.
    With regard to the Colorado River and Glen Canyon Power 
Plant, the power plant itself effectively has been de-rated by, 
I believe, 400 megawatts or so, because of a change-in-flow 
regime to benefit downstream environmental uses. So what is 
happening is, the resource we market is being reduced as we 
work with other Federal agencies to comply with the 
environmental requirements of law.
    Mr. Fazio. Mr. Robertson, do you just want to comment on 
that, as well, and that will be the end for me.
    Mr. Robertson. We have been engaged since before 1990--
well, since 1980, Bonneville has had responsibility for 
mitigating damage for fish and wildlife in the ColumbiaBasin, 
and that program has grown, as I indicated earlier, to a base level 
program of costs of about $252 million, on average, per year for the 
next 5 years and a flow regime that literally changes the flow of the 
Columbia River and costs, depending upon if it is a high-water year or 
a low-water year, some place between $90 and $280 million, depending on 
what goes on.
    In fact, just yesterday I was involved in negotiations with 
the National Marine Fishery Services regarding biological 
opinions associated with prospective listings of endangered 
stocks in the Columbia River basin. We are engaged constantly 
in discussions with other Federal agencies, tribes in the 
region, and states in the region, about how to integrate the 
river for both environmental purposes, but also for energy 
efficiency and economy purposes.
    Mr. Fazio. Thank you.
    Mr. McDade. Ladies and gentlemen, you probably are aware we 
have some votes called in the House of Representatives and we 
have to absent ourselves. We will be back. We are going to 
recess for approximately 15 minutes, and we will see you then.
    The Committee stands in recess.

                           sale of pma power

    Mr. Knollenberg [presiding]. The committee will come to 
order.
    Let me focus on--in my questions on some specifics on the 
auction of PMA power. By the way, I want to thank all of you 
for being here. We appreciate your testimony.
    It seems to me that when the Federal Government enters into 
contracts to sell its resources--this includes coal, timber, 
oil and natural gas--the process is governed by a series of 
statutes such as the Mineral Leasing Act, the National Forest 
Management Act; and it is my understanding that these programs 
require open and public bidding; number 2, the disclosure of 
all bids and prices; and number 3, the careful determination of 
fair market value. However, the PMAs seem to sell their excess 
electricity with virtually no oversight. In fact, the Federal 
Government has more protections, I mean, for the sale of scrap 
paper, than it does for the PMAs and their sales of millions of 
dollars of electricity.
    Specifically and for example, it is my understanding that 
in 1996 the Bonneville Power Administration contracted to sell 
a minimum of 200 megawatts of power to new energy ventures in 
California.
    The question--I think this will be for Mr. Robertson--I 
know that you are the acting administrator, but I presume this 
would fall under your background there, in your time in the 
arena:
    One, were there any competing bids in that transaction?
    Mr. Robertson. If I may go back over that a little bit, 
what happens in this situation, specifically with respect to 
surplus sales of power into California, is that we went out to 
the region and we said okay, we look like we have a measurable 
amount of surplus for a certain period of time, we want to go 
market that in California; and because California is 
deregulating, because it is a complex environment, we said we 
want to engage, as we have historically, with various 
marketers, including NEV, but also with other utilities and 
marketers in the region to sell our power at the highest price 
we can achieve. We indicated, as a result of that, that we 
would not go out into those California markets without 
achieving----
    Mr. Knollenberg. Was that minimum bid price set?
    Mr. Robertson. Yes. What we said was that we would want to 
make sure that any product we sold to California would meet or 
exceed the existing priority firm rate of Bonneville in the 
region. We set a criterion which said we wouldn't do an 
arrangement with NEV or anybody else that wouldn't meet our 
minimum cost standards, or exceed that over time; and the NEV 
deal, among others, that we are hoping and proposing to do in 
California, would meet that standard.
    Mr. Knollenberg. Was that information made available to the 
public?
    Mr. Robertson. We went through a public process to 
establish both the amount of the surplus we had and the amount 
of surplus that would be made available; and in that public 
process and record of decision, we described how we would sell 
the power and under what terms we would sell the power.
    Mr. Knollenberg. So there was sunlight on the whole 
process?
    Mr. Robertson. On the structure. Now there is not sunlight 
on the entire process, I have to be honest and say what we have 
done is, we set up and created a box within which we would then 
go market power within criteria that were set in the public 
process. Within that box, because the market is so dynamic, we 
needed to have the flexibility to market to what we think are 
the highest cost bidders, the highest value responders.
    And so in that context, the NEV deal fits within that 
context. But no, the specific NEV deal did not go through a 
public process to check it out before we went forward; and if 
we did, we would be worried that we wouldn't be able to 
complete processes necessarily because there would be 
potentially a lack of folks competing for the----
    Mr. Knollenberg. Was any EIS statement required?
    Mr. Robertson. We completed a record of decision generally 
associated with the surplus power sale to California and we did 
an EIS on our general business plan. We covered all sales of 
Bonneville, and this also included surplus sales to California. 
There was not a specific EIS on the NEV arrangement, but it did 
go through a public process, and it was directly related to 
actions taken by Congress allowing us to----
    Mr. Knollenberg. There was some daylight, but there was 
also, some of it was behind closed doors; is that what I'm 
getting?
    Mr. Robertson. We agreed to set up the structure and to 
assure the people in the region that we would not sell the 
product in California at less than that which was being sold in 
the Northwest.
    Mr. Knollenberg. Can we in Congress have the assurance that 
this--and the committee, know that the taxpayers did get a fair 
shake on this? Is there a way that we would know that?
    Mr. Robertson. Well, I think that we certainly are adding 
up all of the sales we make. As I indicated earlier, we sold 
about 700 megawatts of power, right now about the equivalent of 
the City of Portland; and we are selling additional--we expect 
to sell an additional 500 or 600 megawatts in our early sale 
offerings. We will put the total accumulated sales on the 
table; we will describe, and already have described generally, 
where those sales are going and at what prices those sales will 
be achieved at.
    Mr. Knollenberg. For the record, I would appreciate itif 
you could provide information on other contracts that Bonneville might 
have; and also the other individuals here representing your various 
entities, information on anything like the New Energy Ventures/
Bonneville undertaking. If there is any other out there, we would like 
to have that information for the record, as well, and if you would also 
provide how much power was included, the contracts and at what price?
    Can you provide that? Not now, but can you get that 
information and get it to us, all of you?
    Mr. Robertson. We will work with the committee to get you 
that information.
    Mr. Knollenberg. All right.
    [The information follows:]

[Pages 1078 - 1085--The official Committee record contains additional material here.]


                    voluntary separation incentives

    Mr. Knollenberg. Let me go on now to the so-called--may not 
be what would be referenced as ``golden parachutes'' in some 
people's minds, but as you know, in fiscal year l996 the 
Bonneville authority gained--the Bonneville facility gained the 
authority to dole out some $25,000 separation incentive 
packages; and in bill language that year, the Bonneville 
administrator may offer, it says, ``employees voluntary 
separation incentives, as deemed necessary, which shall not 
exceed $25,000. Recipients who accept employment with the 
United States within 5 years after separation shall repay the 
entire amount to the Bonneville Power Administration.''
    How much has Bonneville reduced the number of their FTE 
since 1996?
    Mr. Robertson. Well, if I may, in 1994 we had 3,755 FTEs, 
in 1996 we had 3,160 FTEs. We expect to have, by the end of 
1999, about 2,755 FTEs.
    Mr. Knollenberg. How many FTEs does Bonneville have today?
    Mr. Robertson. Today, we expect to have 2,930 FTEs at the 
end of fiscal year 1998 .
    Mr. Knollenberg. How many of these $25,000 packages have 
been used as an incentive for voluntary separations for those?
    Mr. Robertson. We have had--I will give you specific 
numbers going back to 1994 if you like. In 1994 we used 240 
VSIs.
    Mr. Knollenberg. Meaning?
    Mr. Robertson. Voluntary separation incentives, yes.
    In 1995 we used 192; in 1996, 138; in 1997, 138; and as of 
December 30, 1997, we have used 82 for fiscal year 1998. If I 
may say, this was provided by Congress. It has been a 
tremendously valuable tool in getting Bonneville down to an FTE 
level that is now equal to our 1965 level. So this is one of 
the things that was very helpful.
    Mr. Knollenberg. How much total money has Bonneville spent 
in arranging for these packages since--well--let's go back to 
1994, and if you don't have that number on hand, you can 
provide it for the record.
    Mr. Robertson. I would be happy to do that. I don't have it 
on hand. Do you want the total number associated with the VSIs?
    Mr. Knollenberg. How much they spent in voluntary 
separation packages for the last 4 years. Really, I think that 
falls into that time frame that you were just expressing.
    Mr. Robertson. Yes, we will provide that.
    [The information follows:]

[Pages 1087--The official Committee record contains additional material here.]


                    voluntary separation incentives

    Mr. Knollenberg. All right. Do you plan to, and I presume 
you do--plan to reduce the number of employees in the coming 
year?
    Mr. Robertson. Yes. We have a fairly extensive reduction 
effort underway. In fact, we just had an outside management 
review suggest that we cut overhead by 50 percent at 
Bonneville, and that will mean that we cut hundreds of 
additional employees not just in the next year, but going 
through the year 2001.
    Mr. Knollenberg. Are there any other power administrations 
that are able to give their employees $25,000 voluntary 
separation incentives?
    Mr. Hacskaylo. Mr. Knollenberg, Western Area Power 
Administration has, in the past, used the legal authority 
provided by Congress to the government as a whole, to the 
executive branch as a whole, for these voluntary separation 
incentives, yes, sir.
    Mr. Knollenberg. Good.
    Mr. Deihl.
    Mr. Deihl. And that also applies to Southwestern Power 
Administration.
    Mr. Knollenberg. Mr. Adelman.
    Mr. Adelman. Congressman, we have used a total of three 
buyouts in trying to reduce our staff from 31 in 1996 down to 
the five that we have today.
    Mr. Knollenberg. Mr. Borchardt.
    Mr. Borchardt. We have that authority. I just offhand don't 
know how many we have used, if any.
    Mr. Knollenberg. Again, if you would, we would like to have 
the information for the record on each case--even in the three, 
if you wouldn't mind, Mr. Adelman. And I presume that the--at 
each of the other locations, the other entities have reduced 
their FTEs in the last 4 years as well?
    How much would you say that--and if you don't know this 
number, I think that may have been in my previous question. 
What I would like to know is how much money has been spent 
voluntarily to separate employees from the entire group of 
PMAs, and if that is something that needs to be requested in 
writing, we can do that, but I would like to know that in 
addition.
    I would appreciate all of that information going back--it 
would actually be through fiscal year 1996, I guess, wouldn't 
it? That would give us the time frame we are talking about to 
be consistent with everybody. Or are you going back to----
    Mr. Robertson. I go back to 1994. I think we provided this 
information last year, Mr. Chairman, and we would be happy to 
supply it with all of the other PMAs.
    [The information follows:]

[Pages 1089--The official Committee record contains additional material here.]


    Mr. Knollenberg. I am going to conclude at this point and 
will bring back the Chairman--oh, okay, I will bring back the 
Chairman in just a little bit, but first of all, let's 
recognize Mr. Visclosky, who is next in line.

                  SALE OF ALASKA POWER ADMINISTRATION

    Mr. Visclosky. Thank you very much, Mr. Chairman.
    Does the Alaska Power Administration cease to exist at some 
point in time here?
    Mr. Adelman. Yes, Congressman. Within one year of the sale 
of the final project, the Snettisham project, which is now 
targeted for July 15th of this year, the Alaska Power 
Administration will be totally terminated and it will no longer 
exist.
    Mr. Visclosky. And that last sale was anticipated to take 
place sometime in the summer of this year; am I correct?
    Mr. Adelman. It is targeted for July 15, but under the 
terms of the purchase agreement it must take place no later 
than August 20 of this year.

                      FY 1999 PMA BUDGET REQUESTS

    Mr. Visclosky. Okay, and as I understand it, you are not 
asking for an appropriation and Bonneville is not asking for an 
appropriation, is that correct? If I am correct, Southwest, 
Western and Southeast are asking for appropriations this year.
    Mr. Adelman. That is correct.
    Mr. Visclosky. And Western's request is $215 million, 
thereabouts; Southeast is about $8.5 million, as I understand 
it; and Southwest is about $25.2 million.
    Okay, if I could just ask a couple of philosophical 
questions because apples and oranges had been raised earlier. 
Mr. Fazio had a line of questioning; I think I was one of the 
people he had in mind at least for a portion of his questions.
    Mr. Fazio. You were listening.
    Mr. Visclosky. And Mr. Pastor, who was going back to 
captivity, on the elevator reprimanded me as well, so he is 
here certainly in spirit if not in person.

             FUEL COSTS AND FEDERAL, STATE AND LOCAL TAXES

    Someone had mentioned in their testimony that you don't 
have any fuel costs. I think Bonneville is the only--I mean, 
nonhydro, but you have nuclear if I understand it.
    Mr. Robertson. We are about 85 percent hydro and about 15 
percent nuclear from one nuclear plant.
    Mr. Visclosky. And everybody else is water?
    And so somebody had said here, you don't have fuel costs; 
and in response to some questions, obviously you have 
environmental costs, and other utilities have environmental 
costs, too; is that correct?
    Okay, do any of you pay Federal taxes?
    Mr. Deihl. No, sir, like all other Federal agencies we are 
exempt.
    Mr. Visclosky. Do your private competitors pay Federal 
taxes?
    Mr. Deihl. I would assume they do.
    Mr. Visclosky. So kind of talking apples and oranges in 
another fashion, do you pay State taxes?
    Mr. Deihl. No, sir.
    Mr. Visclosky. Do you pay State taxes?
    Mr. Borchardt. No.
    Mr. Visclosky. Do you pay local tax?
    Mr. Robertson. No.
    Mr. Visclosky. Mr. Chairman, I don't have any other 
questions.

                       INTEREST RATES ON PMA DEBT

    Mr. McDade. At this point, I am going to relinquish the 
chair to Mr. Frelinghuysen, because I have to adjourn to a vote 
upstairs in a markup; and in that capacity, he will ask his 
questions because he's next in line.
    Mr. Frelinghuysen.
    Mr. Frelinghuysen. Good morning, gentlemen. Following along 
with some of my colleague's questions of a few minutes ago, do 
the PMAs pay private sector interest rates on their volunteer 
loans?
    Mr. Hacskaylo. The Western Area Power Administration pays 
interest rates in accordance with a formula established by 
Congress.
    Mr. Knollenberg. Well, to answer my question, do you pay 
private sector interest rates on your bonds?
    Mr. Hacskaylo. With regard to the appropriations that 
Western utilizes, Western does not have any bonds.
    Mr. Knollenberg. You don't?
    Mr. Hacskaylo. No, sir, we do not, with regard to the 
appropriations that Western and the Bureau of Reclamation 
utilizes for construction ofprojects, we repay those costs with 
interest. The interest rates we use, as I mentioned, are set by 
Congress in terms of a formula. Some of those rates are above private 
sector rates, some are below.
    We would be happy to provide an interest rate table or 
schedule for you, if you would like, sir.
    [The information follows:]

                             Interest Rates

    On September 1, 1983, the DOE, the Department of the Army, 
the Commissioner of Reclamation, and the Administrators for 
Bonneville Power and Western Area Power Administrations agreed 
upon interest to be charged in repaying the power features of 
federal multiple-purpose water projects. For the period 1971 to 
1983, many of the multiple purpose projects continued to use 
project interest rates of 3% for the power features rather than 
market based rates. Department of Energy Order RA 6120.2 was 
modified on October 1, 1983, to reflect the agreement. Section 
11 of the order defines the calculation of the market based 
interest rates used in the repayment of the power features for 
those projects not having interest rates defined in 
legislation. The table below contains interest rates calculated 
by fiscal year based on the Colorado River Storage Project 
(CRSP) legislation and definitions contained in Department of 
Energy Order RA 6120.2.

[Pages 1092 - 1094--The official Committee record contains additional material here.]


    Mr. Frelinghuysen. Any other of you have a comment relative 
to that response?
    Mr. Deihl. Same applies to Southwestern.
    Mr. Borchardt. And with Southeastern, too.

                            ferc rate review

    Mr. Frelinghuysen. Does FERC or any other regulatory body 
have meaningful authority to review PMA rates--to one of you, 
perhaps, speaking for all?
    Mr. Hacskaylo. Speaking for Western Area Power 
Administration----
    Mr. Frelinghuysen. You have a name like mine which is 
difficult to pronounce. That is why I'll call on Mr. Robertson 
next.
    Mr. Hacskaylo. Thank you, sir.
    With regard to Western Area Power Administration, I do 
believe that the Federal Energy Regulatory Commission has 
meaningful authority and oversight with regard to Western power 
and transmission rates. FERC regularly schedules reviews of our 
rates, and when we file them, we have, in terms of the public 
process opportunity for parties to intervene, both when we set 
our rates and before the Federal Energy Regulatory Commission. 
We have had contested rate proceedings in years past.
    Mr. Frelinghuysen. So they literally challenge your basic 
cost estimates. Is that a fair assumption on all of your parts?
    Mr. Robertson. Yes, it is relatively the same as 
Bonneville's.

                   open access to transmission lines

    Mr. Frelinghuysen. Are PMAs required to provide open access 
over their transmission lines?
    Mr. Deihl. Speaking for Southwestern, yes, sir, and we just 
recently filed open access tariffs with FERC.
    Mr. Frelinghuysen. Is that true with the rest of you?
    Mr. Borchardt. Well, I will just add that Southeastern has 
no transmission----
    Mr. Frelinghuysen. Yes, you mentioned that earlier, I 
remember that.
    Mr. Robertson. Bonneville has also provided open access 
tariffs with FERC. We think we have run a pretty open 
transmission system for the last 60 years; we think we set a 
standard for that, and we are doing our best to voluntarily 
comply with FERC regulations separating generation and 
transmission.
    Mr. Hacskaylo. Western Area Power traditionally has 
provided open access to anyone who asks. We have filed open 
access tariffs with the Federal Energy Regulatory Commission.

                      repayments of costs and debt

    Mr. Frelinghuysen. The General Accounting Office--I am sure 
most of you are aware of this--in September of last year found 
that net costs to the Federal Government in the four PMAs--and 
I assume that excludes Alaska--total $3.5 billion between 1992 
and 1996. GAO also found that, quote, ``The revenues earned by 
these entities do not cover the full costs of their 
operations,'' end of quotation marks.
    The Congressional Budget Office in March of 1997 found that 
PMAs are selling their electricity at some $200 million 
annually below market rates. The Oregonian, which is the paper, 
I understand that Mr. Robertson sort of covers your territory, 
the leading paper in your hometown of Portland, Oregon, notes 
and I quote, ``U.S. taxpayers do keep the Northwest rates low. 
Much of Bonneville's $7.8 billion Federal debt originated as 
discount loans from the Treasury. Current interest rates are 
set well below the market. These loans guarantee that 
Bonneville will never repay the full costs to taxpayers. In 
1996 alone these discount loans cost taxpayers and saved 
Northwest ratepayers $270 million in interest, according to the 
Oregonian's loan analysis,'' end quotes.
    Another interesting statistic from that paper, for every 
dollar BPA has borrowed from the U.S. Treasury, it has paid 
back only 14 cents.
    I would like to know whether you contest some of those 
comments.
    Mr. Robertson. I do.
    Mr. Frelinghuysen. Would you be good enough to succinctly--
--
    Mr. Robertson. I don't know if I can be succinct, but I 
will be happy to try to take you through our logic in terms of 
our responsibilities under repayment provisions.
    First of all, Bonneville owes today about $4.5 billion in 
appropriated debt and about $2.5 billion in bonded debt vis-a-
vis Federal appropriations, the Federal Government.
    If I could just go back, Mr. Chairman, the basic argument 
about Bonneville is whether or not we have been subsidized, an 
argument about whether or not we had low interest rates going 
back to the origination of Bonneville Grand Coulee Dam and so 
on. And the answer is, of course, we have to pay off in 50 
years the debt stream associated with the Bonneville Dam, or 
the Grand Coulee Dam or any other Federal dam. We took on that 
debt in the 1930s and the 1940s, at the rate that was 
prevailing at the time, and we have paid that debt off.
    In fact, as of now, the original Bonneville Dam and the 
original Grand Coulee Dam have been completely paid off. Using 
a home mortgage analogy, we paid the debt off on time and with 
interest. In this case, the mortgagee, the person who owns the 
mortgage and pays it off, is in the form of the ratepayers in 
the Northwest through Bonneville, and the banker is in the form 
of the Federal Government that gets to keep the house.
    So we think that there is high value in the fact that 
Bonneville has paid it off, and continues to pay it off--has 
paid over $14 billion in repayment to the Treasury, and 
continues to make timely payments for the 14th year in a row. 
We also went through a refinancing of our old debt 2 years ago, 
and we refinanced it at today's market--at that day's market 
interest rates, which averaged about 7.1 percent. We added $100 
million to the net present value. Bonneville, the 
Administration, and Congress accepted that arrangement. That 
bill passed, and the purpose of that bill was to essentially 
end the question about long-term or historic subsidies.

                            subsidized power

    Mr. Frelinghuysen. You should know where I am coming from. 
I come from the Northeast, and when I go to town meetings, 
people say to me, why are we subsidizing these power market 
authorities?
    I know this committee, by nature, thank goodness, has 
always been relatively congenial and that you are all likable 
people, but I find at times the present power marketing 
authority situation to be totally indefensible. I know you are 
here to defend the status quo, but from the perspectiveof many 
of the people I represent, the origins of PMAs came out of the New Deal 
and Franklin Delano Roosevelt, and they can't understand for the life 
of them why these types of entities exist in the 1990s. They consider 
it--even though you are good people, we understand you represent, you 
know, millions of people and provide good services and you do things 
for fish and wildlife, you work with the Army Corps--we like the Army 
Corps in this committee. Many people view this type of subsidy, and you 
are saying it doesn't occur, as an anachronism.
    And this is why we have a responsibility not only to 
represent our district, but I do think that there are many 
Members of Congress that are uncomfortable looking at the 
global marketplace, an era of deregulation that we have, these 
types of entities within our overall energy picture nationally.
    I am not sure that I need to have a response from each of 
you, but you should know where some of us come from on this 
committee.
    I would like to recognize at this point Mr. Edwards.

                   revenues returned to the treasury

    Mr. Edwards. Thank you. I haven't had any of those 
questions at my town hall meetings, but what they do ask me 
about is Federal subsidies to mass transit in the Northeast.
    Mr. Frelinghuysen. I will let you have a shot across the 
bow.
    Mr. Edwards. But I think the point has been well made. 
There is an economic benefit given to you, and that was done 
for public policy reasons; and I think it is appropriate that 
members ask, is their existence valid in today's environment. I 
think that debate is very healthy.
    We also established that you don't pay Federal taxes, and I 
don't have any numbers later than 1995, but am I correct, ball 
park, that in 1995 we appropriated you approximately $272 
million, but you returned to the Treasury $3.5 billion; is that 
correct? Does that sound like it is a ball park figure for you?
    Mr. Deihl. I guess I will take a stab at that, it sounds 
about right, but we would have to check.
    Mr. Edwards. Some of you did mention numbers. Could you 
maybe mention--maybe go down the line, in the last 2 years, for 
example, what you were appropriated by the Federal Government 
and what you returned? We could call it taxes or we could call 
it general revenue, but looking at the outflow and the inflow, 
I think it is helpful. Whatever we decide to do, we at least 
need to do it with the recognition that if we did not have not 
only your revenue, but the appropriations to you we would have 
to find a cut of around, according to my numbers, $3 billion in 
the budget.
    But just let me be sure at least we are, whichever 
perspective we come from, we are on a level playing field with 
the facts and the numbers. Could each of you mention last year 
or the last 2 years that you have information on, both 
appropriations and revenues?
    Mr. Hacskaylo. Sir, with regard to Western Area Power 
Administration our gross revenues in fiscal year 1997 were 
$881.6 million; our appropriations, I believe, were in the 
neighborhood of $230 million.
    We would be happy to check up on that for you.
    [The information follows:]

           Appropriations Versus Dollars Returned to Treasury

    Western's gross operating revenue for Fiscal Year (FY) 1997 
was $881.6 million. From these revenues, Western deposited $1.0 
million into the Falcon and Amistad Dam Maintenance Fund. 
Western appropriations for FY 1997 consisted of $109.0 million 
for Program Direction, $34.0 million for Operation and 
Maintenance, $74.2 million for Purchase Power and Wheeling, 
$29.8 million for Construction and Rehabilitation, and $5.4 
million for Utah Mitigation and Conservation. Western's total 
program for FY 1997 amounted to $252.5 million. Use of $66.5 
million of prior year balances reduced Western's overall budget 
authority (current and permanent) for the year to $186 million. 
These appropriations do not include any funding for Western's 
revolving funds.

                   revenues returned to the treasury

    Mr. Edwards. So about $600 million in net income to the 
Federal Government?
    Mr. Hacskaylo. That is accurate, but we need to factor into 
that, as well, that we have carryover that is involved in the 
budget calculation itself. But certainly our annual operating 
revenues far exceed the annual appropriations to Western, yes, 
sir.
    Mr. Deihl. For Southwestern Power Administration, FY 1997 
unaudited numbers, we had a total budget request of $27.8 
million. We returned $102.4 million to the United States 
Treasury.
    In FY 1998 the total budget request was $26.5 million. We 
estimate right now--our current revenue estimate is $95.6 
million; I do believe it will be somewhat higher than that. We 
are starting to run into some good water months. I anticipate 
that should exceed $100 million.
    In FY 1999 our budget request has been reduced by a half 
million dollars, down to $26 million, and we estimate our 
revenues to the Treasury would be $93.2 million. But I would 
make a point, in these outyears where we estimate, those are 
based on average water years. So if we have good rainfall, we 
traditionally return more. On average, I believe Southwestern 
for the last 16 years has produced more than $100 million into 
the Treasury.
    Mr. Edwards. Okay. Thank you.
    Mr. Borchardt. For last year, Mr. Congressman, we had a 
budget request of about $12.2 million. We had revenues in the 
neighborhood--this is FY 1997, in the neighborhood of $160 
million. I will get those exact figures for you. Those are the 
ones I have with me right now.
    [The information follows:]

           Appropriation Versus Dollars Returned to Treasury

    Southeastern's FY 1997 budget request was $16,359,000. Our 
total revenues in FY 1997 were $163,433,000.

    Mr. Edwards. Thank you.
    Mr. Robertson. Mr. Edwards--we do not borrow, we do not 
receive appropriated dollars from the committee, we have a 
permanent indefinite fund, we borrow money and to kind of maybe 
put it in the context of your question, we borrowed this year 
about $258 million, we will return to Treasury, we think, $614 
million, and our budget overall as an agency is about $2.3 
billion.
    Mr. Edwards. Very good. Thank you.
    Mr. Adelman. Congressman, we will get down to some small 
numbers with us. Our appropriation for 1997 was $4 million and 
we collected about $10 million in revenues. Our appropriation 
for 1998 is $13.5 million; we will collect approximately $8 
million in revenues, not counting the about $85 million we will 
collect for the sale of the two projects.

                  sale of alaska power administration

    Mr. Edwards. Let me ask, in the sale--in the Alaska 
situation for the potential sale this July, is that a bidding, 
an auction process? What sort of process do you have and how 
many utility companies or other kinds of companies are 
interested in bidding for that entity?
    Mr. Adelman. Congressman Edwards, the sale will take place 
about July 15 in accordance with the Alaska Power 
Administration Asset Sale and Termination Act, which was passed 
in 1995, and a purchase agreement that was negotiated in 1989. 
To get us to that purchase agreement in 1998, it was a 2-year 
public process where we essentially opened up the process to 
not only the type of bidders, but also how we would actually go 
about selling the projects. There has been a public process, 
but that process has long since been completed.

                       Electricity Restructuring

    Mr. Edwards.  Okay. One other question if I could.
    Just last month EPA projected that by the year 2010 there 
will be an increase of 553,000 tons of nitrogen oxides and 62 
million tons of carbon as a result of electric restructuring. 
Subsequently, the agency recommended that in order to prevent 
those types of increases, any administration electric 
restructuring bill must include the authority to cap and trade 
programs.
    Could either one of you or all of you make comments on this 
recent development in the electric restructuring debate?
    Mr. Robertson. If I may, on behalf of Bonneville, 
Bonneville recently received an award by the National Resources 
Defense Council as the cleanest utility in America with respect 
to pollution, so if there is in fact a credit system 
established for renewable credits, for example, we expect to 
receive high value for that, since we do not add a single 
particle of pollution to the air at this point.
    Mr. Edwards.  Thank you.
    Mr. Chairman, let me also say in fairness that when some 
Texans recently suggested that we equalize highway spending 
between Texas and the Northeast, some people in New York 
recommended cutting defense spending in Texas so, you know----
    Mr. Frelinghuysen. Since you were good enough to open up 
the issue again, my State of New Jersey in terms of what we 
send in terms of income tax dollars to Washington, we are 50 
out of 50 in terms of what we get back. So like you--your good 
self, we don't apologize obviously for getting our fair share 
for mass transit since we are--we are the ultimate donor State 
in the Northeast in terms of tax dollars going to Washington, 
we get so little back. So I think we are both--you know where 
we are both coming from.
    Mr. Edwards. I think we are both on the same end of that 
spectrum. Thank you, Mr. Chairman.
    Mr. Frelinghuysen. Thank you, Mr. Edwards.
    The Chair recognizes the gentleman from Alabama, Mr. 
Callahan.

              Value of the Power Marketing Administrations

    Mr. Callahan. Well, I am going to join forces once again 
with the South.
    Mr. Freylinghuysen, Chet Edwards indicated that he was 
firing a shot over your bow; I am aiming for the midsection. I 
want to sink this ship that you and Congressman Knollenberg I 
think are on with respect to your philosophical thoughts about 
PMAs and to tell you that you seem to question things about the 
fact that they are not paying taxes.
    Well, let me inform you that the utilities don't care 
whether or not they pay taxes because all they do is pass their 
taxes on to the users. So if Alabama Power Company in south 
Alabama, or any place in the South, they include that tax in 
their rate base, who do you think pays those taxes? It is those 
people who come to our town hall meetings.
    And, Rod, while I have the most respect for you--and you 
know that because I have told you that, and we serve on several 
committees together, and we have become very close friends--you 
are off base, and I would invite you to come to Alabama and to 
get out of that rural, godforsaken area of New Jersey.
    Mr. Frelinghuysen. Southern Alabama especially; isn't that 
right?
    Mr. Callahan. And to come and to look and to see the rural 
programs and to understand how necessary these programs are--
affordable power to rural areas of my district, for example. I 
know in some areas of your--the areas of the country that you 
lived in, they are so upset about the cost of power there that 
they are now reverting to such things as the privatization 
themselves of utility companies.
    You have a utility company, a powerplant being built in New 
York, but simply because they cannot afford to pay the 
excessive rates that are caused by government regulations, by 
taxes on top of profits for the utility companies. So this 
system of providing power to rural utilities is working in the 
South, and it has been--it has been a godsend to us because not 
only with these agencies through the PMA, but then you have the 
TVA that actually was responsible for people even having power 
in south Alabama.
    You all so devastated us with Sherman coming through 
Georgia and blowing up every possible asset we had, that set us 
back so many years that it has become--it became an absolute 
necessity in the 1930s and the 1920s to recognize that we 
needed to electracize all of the South, all of the country, not 
just the rural areas of New England.
    So I am here to tell you that I am going to join 
Congressman Edwards not only in fighting to keep the PMAs in 
business, but to stop this single shouting because what the 
administration is doing--well, you are joining hands with the 
liberals, and you are not a liberal.
    What the administration is requesting that they do, what 
you all think we ought to do, piece by piece, is that we start 
with the poorest area, we start with Georgia, and we start 
abolishing the PMAs piece by piece.
    So as long as I am a member of this subcommittee, and as 
long as we have the brilliance of people like Congressman 
Edwards there to join with me, and as long as we can get a 
conservative majority of this committee, nothing is going to 
come out of here that would do detriment to PMA. So you know 
the respect I have for you; I invite you to come to a town hall 
meeting in Foley, Alabama, or come to a town hall meeting in 
Monroe County or in--and listen to what our people have to say, 
the people who have a lower level of income than the blessed 
people of New Jersey, a people who talk slower than the people 
of New Jersey, people who even speak English in contrast to 
some of the people in New Jersey.
    So you know I say all of this in jest, Mr. Chairman, but I 
am very serious in our passion about the importance of this; 
and while I recognize the few people that have come to you at 
your town hall meetings expressing some dismay, I just want to 
let you know that this is a very, very important thing to a 
great number of people in south Alabama and that we are going 
to do everything we can to preserve the status quo.
    So I don't have any questions. I think they are doing a 
good job, and I will yield back the balance of my time.
    Mr. Frelinghuysen. I can't resist saying--something.
    Mr. Callahan chairs a committee that I serve on, so I have 
to step very gingerly here.
    One of the benefits of serving in Congress is you get to 
have a good idea as to the caliber of the men and women 
thatrepresent the entire United States; and I have never been to 
Alabama, but I am looking forward to specifically a visit to southern 
Alabama.
    Let me just say, last year in this committee we took some 
controversial steps. We never seem to take any relative to the 
PMAs, but we did take some steps that I thought were absolutely 
necessary, and a majority of Members on the House side did try 
to remove the subsidy for the TVA, Tennessee Valley Authority.
    And while we can argue till the cows come home, it is 
interesting that that particular behemoth has been able to--the 
ratepayer, the consumers have not had an increase in their 
electric rates for 11 years now, and I understand--and I know 
that the people that I represent have been paying each and 
every--with every bill an increase in their power rates. So I 
do feel that there is a degree of unfairness.
    I understand that we take a little--a few bites at the 
apple each and every time, but we will try to take as few out 
of the hides of those of Alabama as possible.
    Mr. Callahan. Fine with me.
    Mr. Frelinghuysen. Mr. Visclosky.

                          Payments to Treasury

    Mr. Visclosky. I would simply, to help the Chair here with 
Mr. Callahan, reference that I must be another one of those 
liberals who wanted to cut spending here, so I would want to 
defend some of the criticism, and do sit here and wonder 
sometimes who actually won the recent unpleasantness, but I 
think I am beginning to learn that.
    Also I think really this hearing is a classic textbook 
example; what makes the United States Congress such a 
fascinating place in which to work is the balance that we have 
to strike. And I just have one question, in seriousness.
    Mr. Hacskaylo, Mr. Edwards, I think rightfully, brought up 
a good point as far as payments that go back to the Treasury 
from each one of the administrations. Just so I understand what 
those payments represent, there is an appropriation, but in 
your case, I guess there is about $600 million that goes back. 
What is that for and how does that operate? Why is the direct 
appropriation still necessary if money is being returned--
seriously, so I can understand?
    Mr. Hacskaylo. I would be pleased to respond to that, sir.
    With regard to Western Area Power Administration, we set 
our power rates at levels sufficient to recover all of our 
annual expenses--my salary, for example, the electricity that 
we use to run the lights in our office buildings. We set power 
rates sufficient to recover a portion of the investment 
allocated, the capital structure, and the transmission system, 
with interest.
    We recover in our power rates every year sufficient amounts 
to deal with all of our operations and maintenance expenditures 
to maintain the reliability of the transmission system. We set 
in our power rates a cost component to recover the cost 
allocated to the power generation system run by the Bureau of 
Reclamation and the Corps of Engineers with interest.
    Congress requires us to come back every year for 
appropriations for almost all of our program. What we do with 
our revenues, those revenues are deposited directly into the 
reclamation fund to the Treasury as required by law. We do 
accounting then to determine where the moneys do flow.
    Last year we repaid to Treasury $107 million of principal 
in addition to our annual expenses, I believe of about $500 
million. So that is how our cost accounting works, how we set 
the rates, how the revenues are divided within the Treasury.
    Mr. Visclosky. Thank you, Mr. Chairman. Thank you very 
much.
    Mr. Frelinghuysen. Mr. Knollenberg.

                             Burden of Debt

    Mr. Knollenberg. I don't want to go back to the recent 
unpleasantness, whatever that was, but I do have--and in fact I 
wish the Chairman had remained for a few moments, because there 
are some questions that not just we, but this country has, the 
taxpayer does have about a seemingly nonlevel playing field 
when it comes to the utility companies, the private companies 
and, of course, your operations.
    And I quote, for example, with respect to electricity 
deregulation. There are some who doubt that the PMAs will exist 
after electricity deregulation, and that is because open--the 
opening free market situation, the end of subsidies, if that is 
going to come about, the end of tax breaks.
    And also there is a thing that we haven't talked about 
today, and it is called debt; there is some huge debt that is 
outstanding out there. One of the references in this article 
from the--from the National Journal suggests that, for example, 
Bonneville is no longer, no longer produces the cheapest 
electricity in the Nation. In part that is because the 
authority is still paying off the imposing $7 billion debt left 
over from its ill-fated investments in a variety of plants, 
including nuclear power. That debt is still out there.
    And the other thing I wanted to mention, too, is that I am 
referencing this article and the authority that put this in 
print says that in all of the--he mentions, of course, that--
the other critics have already mentioned this as well, that the 
government entities have an unfair advantage because they were 
built with taxpayer dollars, pay no State or Federal taxes and 
have access to Treasury-backed financing.
    Another point is that in all the deregulation movements 
today putting airlines, telecommunications and trucking, this 
is the first one where the government is the participant. That 
is the statement that is made. I would like for you to--maybe 
start with Mr. Robertson--just reflect on this print as to your 
point of view and the accuracy of those statements; and refer 
also, if you would, to the debt situation.
    Mr. Robertson. Let me describe our debt if I could. We have 
approximately $4.5 billion in appropriated debt today. We 
refinanced that, as I described earlier, at existing market 
rates. In fact, we refinanced it at a rate of 7.1 percent, 
which is significantly higher than existing market debts today. 
So I think if we had refinanced it today--about $40 or $50 
million less per year, I think, that is flowing to the Treasury 
as a result of that debt having been locked in at a 7.1 percent 
rate a couple of years ago.
    In addition to that, we have provided $100 million as a 
result of that refinancing and net present value to the 
Congress and to the American public as a result of the 
bipartisan refinancing agreement on that effort.
    We have $4.5 billion in appropriated debt resulting from 
the refinancing; we have about $2.57 billion in Bonneville 
bonds which are backed by Bonneville; and we have about $6.6 
billion in debt you refer to as ``old nuclear debt''; and the 
answer is absolutely.
    Mr. Knollenberg. It is all nuclear, but it is----
    Mr. Robertson. It is virtually all nuclear. It is related 
to nuclear plant investments that were made back in the late 
1970s and early 1980s. They were not, in retrospect----
    Mr. Knollenberg. Private sector has these same problems.
    Mr. Robertson. I would say, in deference, that we certainly 
wish in retrospect that we hadn't made those investments, but 
there is a whole group of the country that made large 
investments in large, single, central station generation back 
then and everyone, including utilities, is dealing with that.
    Many utilities in the country have a big stranded cost 
problem because of that, but because of Bonneville's relatively 
low hydrobased rates, we are still able to compete straight up 
in a very competitive market, even carrying that debt load.
    Now, in addition to that we don't pay taxes, and I think 
that is a fair point. On the other hand, I have to be fair and 
honest in saying we have great costs, public responsibility 
costs that no other similar private utility shares. We pay 
about, on average, $252 million plus about $150-$160 million 
for hydro operations. This is for fish and wildlife recovery, 
for example. For every dollar we generate, 20 cents of that 
goes to environmental mitigation, gross.
    Now, I don't know any system in the country that is making 
that kind of investment in long-term environmental advantage. 
We have a series of other public responsibilities that we have 
paid for, about $1.5 billion in energy conservation in the last 
15 years, about $2.5 billion in transfers to ratepayers of 
privately owned utilities.

                    electricity market deregulation

    Mr. Knollenberg. What do you say to the folks out there, 
critics that say that your survival is going to be challenged 
by virtue of deregulation?
    Mr. Robertson. I think, as I said earlier, that when 
Congress enacted the NEPA legislation in 1992 and opened up 
wholesale legislation--excuse me, wholesale competition in 
electric energy, we really faced a very difficult challenge, as 
did everyone else in the wholesale business. And so, to be 
completely honest and fair with you, a couple of years ago when 
we were working through these $600 million in cost reductions 
and trying to become competitive, we were really working hard 
to get our costs down to where the marketplace was.
    Right now, we feel we have turned that corner, we are 
solid, we are making Treasury payments to 2001; and we are 
testing the market out beyond that period. We are finding 
people are very interested in our product again.
    So I have to be honest that, yes, we do have a large debt 
load; it is a serious challenge for me and for the agency. But 
we have managed that, we have turned the corner. In the long 
run, we will become even more competitive as that WPPSS debt, 
the nuclear debt, simply begins to disappear in the year 2000, 
gets paid off beginning in 2011.

                          residential exchange

    Mr. Knollenberg. I think this applies to Bonneville, and 
this is my last question.
    In your written testimony--I believe it was you, Mr. 
Robertson, that stated that you reached a phase-out agreement 
with all the public utilities; am I misrepresenting you--you 
reached an agreement with all public utilities that have 
participated in the exchange program--this is a residential 
exchange phase-out--and that all but one investor-owned utility 
is out there. Who is that?
    Mr. Robertson. Portland General Electric Company.
    Mr. Knollenberg. And what is the status of that?
    Mr. Robertson. We are trying to negotiate that out right 
now. We have had discussions on it as recently as last week, 
and we feel, at least at this point, that we are approaching, I 
think, an agreement.
    Mr. Knollenberg. Are these agreements phased out?
    Mr. Robertson. They will have phased out the residential 
exchange program by the year 2001.
    Mr. Knollenberg. Three years?
    Mr. Robertson. Yes, and our plan then is, instead of 
exchanging money, which is what the exchange was basically all 
about, we want to sell Columbia River power directly to the 
consumers of these investor-owned utilities, pass it through 
directly at its relatively low cost and get out of the money 
exchange business and into a simpler power sale.
    Mr. Knollenberg. Is the financial relief front-loaded or 
back-loaded?
    Mr. Robertson. The financial relief in terms of the 
exchange? Well, the exchange goes back to 1980, and since then 
we have paid about $2.5 billion in rate relief during that 
entire period; and what has happened is, it is now phasing out 
kind of in stages over the next 3 or 4 years, and it will be 
phased out by congressional directive by the year 2001, and 
then we will replace that.
    Mr. Knollenberg. Wait until 2001 to really see any 
substantial financial relief, is that what you are saying?
    Mr. Robertson. No, we have received financial relief by 
phasing it down in the last few years, so the exchange costs 
were above $200 million per year. That is being phased down, 
and then what we are going to do is sell power directly to 
consumers throughout the region after 2001 and get the value of 
the Columbia River by the sale of power rather than the 
exchange of dollars.
    Mr. Knollenberg. Mr. Chairman, I have no further questions, 
and I thank the panel.

                             stranded costs

    Mr. Frelinghuysen. Thank you, Mr. Knollenberg.
    Just a few additional questions, Mr. Robertson, relative to 
the stranded cost issue. How are those costs being addressed? I 
understand that you are trying to shift some of those costs 
onto others through a transmission charge.
    Mr. Robertson. No. First of all, let me just say, I think 
that we will not have stranded costs exposure if we succeed in 
the subscription process that begins this summer to sell our 
product entirely post-2001; and initial indications are that we 
will be successful in that. We are talking now about the 2002 
to 2006 period, so it is a projection ahead.
    Mr. Frelinghuysen. So you don't anticipate being saddled 
with the stranded costs?
    Mr. Robertson. What Congress is considering is that if the 
market changes dramatically downward and surprises people and 
it goes back down to less than 2 cents, or significantly less 
than 2 cents, Bonneville hopes to be able to meet that through 
cost-cutting. If we can't, the Northwest delegation, as part of 
our regional agreement, is looking at the ability of Bonneville 
on a transition basis to recover whatever coststhere may be 
that we couldn't cover through power rates, through a temporary 
transmission tax or fee.
    Mr. Frelinghuysen. Is there legal authority?
    Mr. Robertson. We believe we have legal authority to do 
that. The legislation would clarify that authority. The purpose 
of the transitional tax would be to simply assure that we can 
meet our Treasury payment to the taxpayers no matter what 
market conditions we face. I will provide Bonneville's analysis 
of this issue for the record.
    [The information follows:]


[Pages 1107 - 1111--The official Committee record contains additional material here.]


    Mr. Frelinghuysen. Does DOE agree with you?
    Mr. Robertson. DOE would like to see, and I think Members 
of Congress would as well, the assurance that we can cover our 
Treasury payment obligation under any circumstance.

                 management of salmon recovery program

    Mr. Frelinghuysen. A recent audit of the management of your 
salmon recovery programs reveals many serious shortcomings. 
This is of tremendous concern to this committee, considering 
that Bonneville has spent $3 billion on these efforts.
    I am sure you are familiar with--found that competitive 
bidding for this work is nonexistent, that awardees are allowed 
to electronically withdraw funds from a Bonneville account long 
before submitting invoices and that invoices did not match 
payment. The audit is cited as an appalling lack of controls at 
Bonneville. What is being done to correct these problems?
    Mr. Robertson. That was a serious audit, and we took the 
results of it very seriously. We have already corrected the 
electronic transfer issues, and we have in fact taken a number 
of steps to correct that as early as last year.
    What is really fundamentally at stake here is making sure 
that the investments, which as you said are quite large, are 
being managed efficiently under contracts that demand specific, 
measurable results. We must assure that we obtain those 
results, and if we don't, we must pull the contract.
    We did not have those kind of guarantees in place in 
previous years. It is a complicated story about how we get this 
done with State and tribal involvement, fish agencies and other 
program managers. However, we have instituted those as a result 
of this audit; and I am hoping by the time we talk next year, 
we will have a structure not just in place, but working to 
assure that there is high efficiency in the fish program.
    Mr. Frelinghuysen. Your local paper, again the Oregonian, 
reported that the BPA has not spent nearly $300 million in 
revenues earmarked for salmon recovery programs. Would you 
describe briefly to the committee the discrepancy between the 
amounts estimated for that recovery and the amounts actually 
spent?
    Mr. Robertson. When we put together the 5-year fish and 
wildlife agreement about 2 years ago, we tried to come up with 
a number which guaranteed stability for fish and wildlife 
investments, and also provided certainty in terms of what our 
cost structure would be. Back then we estimated that the 
measures that were contained, on average for the 5-year period, 
would add up to $252 million in direct and indirect payments to 
specific efforts, including the Corps and Bureau and so on; and 
then on top of that, there was a flow regime in the Columbia 
River which was put in place, a series of measures of flow and 
spill that reshaped the river toward migration for juvenile 
salmon.
    That flow regime, depending upon whether it is a low-water 
year or a high-water year, can cost someplace between $90 to 
$280 million. The average back then was calculated, because of 
market conditions, to be about $183 million. So adding the $252 
million to the $183 million, we thought that the average for 
the 5-year period would be about $435 million.
    What has happened in the first 2 years, fortunately, is 
that we have had two record-water years or near-record-water 
years, and so the costs that we thought were going to be, on 
average, about $183 million per year were only about $100 
million; a little more than $100 million each year, at the low 
end of that spectrum for the operational costs.
    This year is a dry-water year because of El Nino. It is dry 
in the Northwest and we could end up having operation costs 
significantly above $183 million.
    So in simple terms it was two good water years that allowed 
us to not have to spend the money for those flow regimes, as 
was contemplated in the agreement. We also did not spend as 
much money in the $252 million category because Congress did 
not appropriate all of the funds as was conceived--in the time 
frame we conceived in the deal, in 1995, and there were some 
other delays that we are going to catch up on. That money is 
being transferred forward and will be spent sooner or later.
    Mr. Frelinghuysen. Thank you for your response. And, 
gentlemen, on behalf of Chairman McDade and all members of the 
committee, I want to thank you for your participation. We 
appreciate your time and your testimony, and committee members 
will be submitting some questions and we would appreciate a 
prompt reply.
    The committee stands adjourned. Thank you.
    [The questions and answers for the record follow:]


[Pages 1114 - 1858--The official Committee record contains additional material here.]











                           W I T N E S S E S

                              ----------                              
                                                                   Page
Adelman, R. L....................................................  1021
Borchardt, C.A...................................................  1021
Deihl, M.A.......................................................  1021
Hacskaylo, M. S..................................................  1021
Krebs, Dr. M. A..................................................   607
Lash, Dr. T. R...................................................   609
Pena, Hon. F. F..................................................     1
Reicher, D. W....................................................   607
Robertson, Jack..................................................  1021









                               I N D E X

                              ----------                              

                          Secretary of Energy

                                                                   Page
Accelerated Cleanup..............................................    44
Accelerated Strategic Computing Initiative.......................    84
Acquisition Workforce Training...................................   530
Acting Senior Level Employees....................................   113
Advanced Computational Technology Initiative.....................   386
Advisory Committees..............................................   503
Aircraft, Department of Energy...................................   496
Aircraft, Department of Energy Chartered.........................   497
American Textiles Partnership (AMTEX)............................   387
Anticipated Litigation Costs.....................................   538
Asset Management.................................................   412
Biography--Secretary Pena........................................    24
Board of Contract Appeals........................................   572
Budgetary Priorities.............................................64, 83
Caspian Sea Region...............................................   183
Caspian Sea Reserves.............................................    74
Charging Federal Agencies for Use of DOE Facilities..............    85
Chemical and Biological Defense Programs.........................   178
Chemical and Biological Weapons Detection........................   180
Chemical and Biological Weapons Nonproliferation R&D.............   182
Climate Change Technology Initiative.............................    33
Computer Security................................................   484
Congressional and Intergovernmental Affairs......................   559
Construction Project Management..................................    86
Contract Competition.............................................     3
Contract Management..............................................86, 87
Contractor Employee Protection Cases.............................   579
Contractor Employment Levels Table...............................   490
Corporate Information Program....................................   439
Cost Savings Related to International R&D........................   554
CRESP Program....................................................   146
Debt Collection Improvement Act.................................67, 127
Department Sponsored Conferences.................................   506
Departmental Administration....................................413, 485
Departmental Priorities--Cleanup.................................    29
Electricity Restructuring.......................................68, 134
Emergency Response Funding.......................................   120
Emergency Response to Chemical and Biological Warfare............    41
Employees Assigned to Work in Executive Office of the President..   409
Environmental Cleanup............................................   114
External Regulation..............................................64, 94
Financial Information............................................   144
Foreign Travel by Federal Employees and Contractors..............   555
Fusion Energy Sciences..........................................35, 145
FUSRAP...........................................................    31
FUSRAP, Transfer of Program......................................   154
FY 1999 Budget Request...........................................     9
General Counsel Employee Levels..................................   536
General Provisions..........................................25, 28, 395
Grant Deliverables..............................................67, 125
Historically Black Colleges and Universities...................188, 540
Independent Assessments..........................................    27
Inspector General Employees Located at Field Sites...............   578
Inspector General, Priorities....................................   580
Inspector General, Use of Funding Increase for the Office of the.   582
Interim Storage..................................................   122
Internal Reprogramming and Use of Prior Year Balances............   436
Investment Incentives for Efficient Power Plants.................   148
Kyoto/Climate Change Technology Initiative.......................   391
Kyoto Protocol...................................................   394
Laboratory Consolidation.........................................    60
Laboratory Directed Research and Development Funding.............   193
Laboratory Operations Board Recommendations......................    65
Laboratory Research..............................................    61
Legislation Required to Implement Budget.........................   537
Line Item Veto...................................................   132
Major Accomplishments............................................ 5, 81
Major Foreign Energy Development Programs........................   556
Management Improvements..........................................  2, 8
Management of M&O Contracts......................................   103
Management of the Environmental Management Program...............    43
Management Structure of the Department of Energy.................   102
Million Solar Roofs..............................................    34
National Institute for Global Environmental Change (NIGEC).......   393
National Laboratories............................................   177
NESCAUM Report...................................................   150
Next Generation Internet..............................70, 133, 147, 381
Nonproliferation.................................................39, 71
Nonproliferation Technologies, Transfer to Public Agencies.......   153
Nunn-Lugar Cooperation...........................................   181
Organization Chart for DOE.......................................   404
Partnership for a Next Generation of Vehicles....................   382
Performance Commitments and Measures.............................   389
Personnel Management.............................................   105
Personnel, Year-End Strengths....................................   486
Preparation and Analysis of Reports by Federal Employees.........   552
Public Affairs, Distribution of Federal and Contractor Staff.....   561
Public Affairs, Office of........................................   560
R&D Management and Planning......................................   104
Renewable Energy Incentive Programs..............................    49
Reprogramming Procedures.........................................   605
Retrofitting Energy Systems......................................    73
Rocky Flats Closure..............................................    46
Rocky Flats Support Costs........................................    77
Russian Arms Proliferation.......................................    73
Schedule C Employees.............................................   523
Science Education............................49, 68, 135, 187, 192, 385
Solar and Renewable Energy Budget................................    48
Statement--Oral--Secretary Pena..................................     1
Statement--Written--Secretary Pena...............................    10
Stockpile, Confidence in the.....................................   176
Stockpile Management Budget......................................    61
Stockpile Stewardship Funding....................................    83
Stockpile Stewardship Program...........................32, 36, 50, 149
Support Service Contracting in the Field.........................   532
Support Service Contractors, Use of..............................    29
Support Service Contracts........................................   119
Training.........................................................   526
U.S. Global Change Research Program..............................   388
U.S. Oil Imports.................................................   558
Uncosted Balances Report.........................................   414
Viability Assessment.............................................   123
Weapons Plants and Labs, Funding for.............................   175
Weapons Plants and Labs, Staffing the............................   174
Weapons Plants and Labs, Future of...............................   171
Weapons Reliability..............................................    63
Work Force Skills................................................    63
Working Capital Fund.............................................   583
Year 2000 Computer Issue....................................76, 79, 128
Yucca Mountain...................................................    66
Yucca Mountain Site--Regulatory Barriers.........................   124

                            Energy Resources

Accelerated Strategic Computing Initiative.....................962, 969
Advanced Radioisotope Power Systems..............................   918
Alternative Fuel Sources.........................................   713
Aluminum Matrix Composite Development............................   915
Appropriations Authority.........................................   696
Arizona State University......................................715, 1017
Assertation of Committee Prerogatives............................   697
Assurance that Funding for Westinghouse R&D Benefits the U.S.....   819
Basic Research Versus Commercialization..........................   737
Biography--Dan Reicher...........................................   680
Biography--Dr. Martha Krebs......................................   652
Biomass Co-Firing................................................   656
Biomass Power Program.....................................878, 974, 977
Biopower/Biofuels Energy Systems Budget Split....................   980
Brookhaven, Update of Remediation Work at........................   950
Budget Constraints...............................................   698
Carbon Sequestration.............................................   702
Climate Change, Nuclear Energy as an Answer to...................   712
Climate Change Technology Initiative................609, 710, 832, 1009
Co-Firing in Coal Fired Power Plants.............................   733
Commercialization Activities.....................................   682
Contract and Grant Awards........................................   765
Contract Competition.............................................  1016
Depleted Uranium Cleanup.........................................   987
EBR-II...........................................................   934
Electric Energy Systems and Storage............................914, 916
Electricity Restructuring......................................684, 982
Electrometallurgical Program.....................................   928
Energy Efficiency, Federal Employee Travel.......................   897
Energy Efficiency, Program Taxes Within..........................   866
Energy Research Programs, Government Versus Private Sector.......  1013
Ethanol from Rice Straw..........................................   981
Ethanol Tax Subsidy..............................................   724
Experimental Program to Stimulate Competitive Research.......1003, 1018
Fast Flux Test Facility..........................................   932
Federal Buildings/Remote Power Initiative........................   917
Fish Friendly Turbines...........................................   910
Forest Waste Ethanol Program.....................................   723
Funding for Non-Governmental Organizations.......................   767
Fusion.........................................................955, 995
Fusion, Alternative Concepts.....................................   717
Fusion Facilities, Operating Weeks at............................   719
Fusion Facilities, Usage by Researchers..........................   720
Fusion, Funding for..............................................   966
Fusion, Funding for Alternative Confinement Fusion Concepts......   718
Fusion, Funding for National Spherical Torus Experiment..........   719
Fusion, Program Direction........................................   957
Fusion, Utilization of Facilities................................   972
Galvin Report....................................................   954
General Provisions, Lobbying Prohibition.........................   847
General Provisions, Requests for Proposals.......................   838
Geothermal Heat Pump Program.............................902, 973, 1011
High Energy/Nuclear Physics......................................   942
How Are Funds Spent..............................................   740
Hydrogen/Fuel Cell Programs......................................   904
Hydropower.......................................................   907
Hydropower, Advanced Turbine Engineering Goals...................   909
Interim Storage..................................................   712
International Nuclear Safety Program.............................   727
International Partnerships.....................................816, 820
International Thermonuclear Experimental Reactor.................   958
Inventions and Innovation Program................................   990
Isotope Programs.................................................   985
ITER.............................................................   721
Kyoto Conference.................................................   709
Large Hadron Collider............................................   964
Large Hadron Collider and ITER...................................   610
Light Water Reactor and Russian Power Replacement Programs.......   937
Management of Grants.............................................   846
Marketability of Photovoltaics and Biomass Technology............   683
Million Solar Roofs..................................715, 872, 975, 992
National Institute for Global Environmental Change...............  1007
National Renewable Energy Laboratory.............................   899
New Spending Programs............................................   821
Next Generation Internet..................................610, 961, 968
Non-DOE, Federally Funded Research at DOE Labs...................   945
Nuclear Energy, New Initiatives in...............................   983
Nuclear Energy, New Starts.......................................   726
Nuclear Energy R&D Programs......................................   713
Nuclear Energy, Support for......................................   716
Nuclear Engineering Education Research Program...................   988
Nuclear Engineering Research Initiative Program..................   989
Nuclear Facilities Program.....................................728, 931
Nuclear Power, Future of.........................................   984
Nuclear Regulatory Commission Commercial Reactor Safety Program..   927
Nuclear Technology Research and Development......................   924
Oak Ridge Landlord...............................................   930
Photovoltaics....................................................  1015
Photovoltaics, Funding Assistance for Foreign Manufacturers......   736
President's Committee of Advisors on Science and Technology......   851
Prior Year Balances, Energy Efficiency.........................705, 854
Proposal Management..............................................   953
Relativistic Heavy Ion Collidor..................................   944
Renewable Energy Production Incentive..........................885, 978
Renewable Energy Technologies....................................   856
Renewable Indian Energy Resources................................   912
Renewable Technologies, Environmental Impacts of.................   869
Renewables, Costs and Benefits of Funding........................   724
Reprogramming of Funds Within Nuclear Energy.....................   685
Research and Development Council, Funding for....................   852
Science Education...................................610, 704, 998, 1014
Science Facilities...............................................   609
Scientific Computing and the Next Generation Internet............   971
Scientific Facilities User Initiative............................   720
Secretary of Energy Advisory Board, Funding for..................   852
Solar and Renewable Energy, International Activities in..........   896
Solar and Renewable Program Overview.............................   657
Solar and Renewable Projects, Programs Plans for.................   858
Solar International..............................................   894
Solar Photoconversion............................................   901
Solar Program Support..........................................888, 976
Solar Programs, Funding for......................................   871
Solar Technology Transfer........................................   898
Solar Thermal....................................................   877
Spallation Neutron Source.................................608, 699, 946
Statement--Oral--Dan Reicher.....................................   653
Statement--Oral--Dr. Martha Krebs................................   607
Statement--Written--Dan Reicher..................................   659
Statement--Written--Dr. Martha Krebs.............................   611
Superconducting Supercollider....................................   965
Terminations.....................................................   825
Unified Solar and Renewable Energy Budget......................681, 735
Use of Foreign Versus Domestic Renewable Technology..............   681
Wind Energy......................................................   880
Wind Project at Bonneville Power Administration..................   722
Wind Turbine Tax Credits.........................................   653
Windmills........................................................   716
Year 2000 Issue...........................................729, 733, 959
Year 2000 Issue and the Next Generation Internet.................   960

                    Power Marketing Administrations

Affordable Electricity...........................................  1248
Allocation of PMA Resources......................................  1258
Alternative Financing............................................  1128
APA, Sale--Benefits Realized.....................................  1170
APA, Sale--Contingencies and Delays..............................  1166
APA, Sale--Federal Commitments After Sale........................  1167
APA, Sale--Lessons Learned.......................................  1168
APA, Sale of.....................................1021, 1090, 1099, 1165
Biography--Mr. Adelman...........................................  1028
Biography--Mr. Brochardt.........................................  1049
Biography--Mr. Deihl.............................................  1055
Biography--Mr. Hacskaylo.........................................  1066
Biography--Mr. Robertson.........................................  1039
Bonneville, Antitrust Exemption..................................  1294
Bonneville, Attrition............................................  1202
Bonneville, Borrowing Authority..................................  1182
Bonneville, Cash Reserves........................................  1180
Bonneville, Cost of Breaching Dams for Salmon Recovery...........  1278
Bonneville, Cost Review of the Fed. Columbia River Power System..  1314
Bonneville, Elwha Dam Removal....................................  1178
Bonneville, Energy Efficiency....................................  1310
Bonneville, Firm Power Sales.....................................  1289
Bonneville, Fish Mitigation......................................  1288
Bonneville, FTEs.................................................  1209
Bonneville, ISO Participation Authority..........................  1207
Bonneville, Market Price Projections.............................  1277
Bonneville, Net Billing Obligations..............................  1307
Bonneville, Pre-Subscription Process.............................  1290
Bonneville, Regional Cost Review.................................  1203
Bonneville, Repayment............................................  1179
Bonneville, Revenue Financing....................................  1183
Bonneville, Sale Contracts.......................................  1275
Bonneville, Salmon Recovery Program..........................1112, 1175
Bonneville, Severance Payments...................................  1184
Bonneville, Stranded Costs...................................1105, 1271
Bonneville, Treasury Payments................................1208, 1276
Bonneville, WNP-2 Operating Costs................................  1286
Burden of Debt...................................................  1102
Carryover Balances...............................................  1142
Competition in a Deregulated Electric Utility Industry...........  1114
Competitive Electric Power Rates.................................  1070
CSRS Cost Recovery...............................................  1121
Cumulative Investment............................................  1164
Debt Repayment...................................................  1163
Electricity Restructuring....................................1099, 1104
FERC Authority...................................................  1292
FERC Order Nos. 888/889, Impacts of..............................  1125
FERC Oversight...................................................  1154
FERC Rate Review.................................................  1095
Fish Friendly Turbine Program....................................  1141
Fish Recovery Activities.........................................  1136
Fuel Costs and Federal, State and Local Taxes....................  1090
Full Recovery of Other Costs.....................................  1122
FY 1999 PMA Budget Requests......................................  1090
GAO Reviews of PMAs..............................................  1146
Generation, Net..................................................  1161
Generation, PMA Power Statistics.................................  1160
Interest Rates on PMA Debt.......................................  1091
Maintenance Expenditures.........................................  1268
Market Based Rates.....................................1073, 1266, 1348
Means-Testing of PMA Power.......................................  1262
National Performance Review Report...............................  1119
Open Access to Transmission Lines................................  1095
Payments to Treasury.............................................  1267
Pension/Health Costs, Recovery of................................  1285
PMA Original Purpose.............................................  1260
PMA Responsibilities.............................................  1071
PMAs Role in a Deregulated Electric Industry.....................  1067
PMAs Role in New Electric Utility Industry.......................  1117
Post 2004 CVP Marketing Plan.....................................  1069
Power Contracts..................................................  1078
Power Marketers, How are the PMAs Different......................  1127
Privatizing Federal Utilities....................................  1259
Rates, Composite Average.........................................  1162
Renewable Energy, PMA Promotion of...............................  1156
Repayments of Costs and Debt.....................................  1095
Residential Exchange.............................................  1104
Sale, Elements for a Successful..................................  1172
Sale of PMA Power................................................  1075
Sale of PMAs.....................................................  1263
SEPA, Customer Financing.........................................  1282
SEPA, Major Litigation...........................................  1219
SEPA, Rates..................................................1252, 1256
SEPA, Reimbursement Authority....................................  1211
SEPA, Renewals and Replacements..............................1251, 1255
SEPA, Repairs and Maintenance Funding............................  1217
SEPA, Retirement Benefits....................................1249, 1253
SEPA, Richard B. Russell Project.................................  1210
SEPA, Selling at Bus Bar.........................................  1212
SEPA, TVA Proposal for Cumberland System.........................  1215
SEPA, Upgrades...................................................  1213
SEPA, Water Conditions Outlook...................................  1218
Statement--Oral--Mr. Adelman.....................................  1021
Statement--Oral--Mr. Borchardt...................................  1040
Statement--Oral--Mr. Deihl.......................................  1050
Statement--Oral--Mr. Hacskaylo...................................  1056
Statement--Oral--Mr. Robertson...................................  1029
Statement--Written--Mr. Adelman..................................  1023
Statement--Written--Mr. Borchardt................................  1042
Statement--Written--Mr. Deihl....................................  1051
Statement--Written--Mr. Hacskaylo................................  1057
Statement--Written--Mr. Robertson................................  1032
Subsidized Power.................................................  1097
SWPA, Closure of Oklahoma Office.................................  1222
SWPA, Major Litigation...........................................  1225
SWPA, Reimbursable Authority.....................................  1223
SWPA, Truman Project.............................................  1221
SWPA, Water Conditions Outlook...................................  1224
Taxes, Federal Income............................................  1152
Taxes, PMAs......................................................  1257
Taxes, State and Local...........................................  1153
Transmission Systems.............................................  1067
Treasury Repayments..........................................1097, 1102
Value of Power Marketing Administrations.........................  1100
Voluntary Separation Incentives..................................  1086
Western, Basin Electric Overcharge...............................  1226
Western, Boulder Canyon Project..................................  1237
Western, Carryover Balances......................................  1247
Western, Construction/Rehabilitation Budget Level................  1246
Western, Cumulative Repayment....................................  1241
Western, Environmental Mitigation at.............................  1074
Western, FY 1997 Deficit.........................................  1228
Western, Joint Transmission System Rate..........................  1279
Western, Major Litigation........................................  1238
Western, MBMPA Transmission Service..............................  1281
Western, Meter Calibration...................................1270, 1283
Western, Operation and Maintenance Decrease......................  1236
Western, Performance Measures....................................  1235
Western, Pick-Sloan Program......................................  1284
Western, Purchase Power and Wheeling.........................1233, 1244
Western, Radio Replacement.......................................  1243
Western, Shasta Dam Temperature Control Device...................  1227
Western, System Reliability......................................  1242
Western, Utah Reclamation Accout.................................  1231
Western, Water Supply Outlook....................................  1230

                  Federal Energy Regulatory Commission

Ad Valorem Tax Refunds by Kansas Natural Gas Producers...........  1499
Annual Charges Collections for Other Agencies....................  1486
Budget Request to Congress.......................................  1368
Budget Dependence on Annual Charges and User Fees................  1482
Collaborative Process in Hydro Relicensing.......................  1497
Consumer Impact of Natural Gas Order No. 636.....................  1495
Dam Safety Record................................................  1495
Economic Analysis of Hydro Projects..............................  1498
Electric Industry Restructuring Progress.........................  1490
Electric Industry Restructuring Legislative Proposals............  1491
Electric Power Program Overview..................................  1353
Ex Parte Concerns in Hydro Project Relicensing...................  1499
Exit Fees........................................................  1484
FERC First Management Review Initiative..........................  1487
Hydro Project Relicensing and Ex Parte Concerns..................  1499
Hydro Project Relicensing Improvements...........................  1496
Hydro Project Relicensing and the NEPA Process...................  1498
Hydro Project Relicensing and Outreach to Other Agencies.........  1497
Hydropower Program Overview......................................  1361
Judicial Review Win-Loss Record..................................  1489
Kansas Natural Gas Producer Ad Valorem Tax Refunds...............  1499
Management Review Initiatives................................1483, 1487
Mandatory Conditioning Authority in Hydro Relicensing............  1497
Merger Approval Policy for Electric Utilities....................  1492
Merger Activity in the Electric Power Industry...................  1492
Natural Gas Issues...........................................1357, 1494
Natural Gas and Oil Pipelines Program Overview...................  1357
New Initiatives..................................................  1364
Overview.........................................................  1350
Performance Plan.................................................  1465
Power Marketing Administrations and Restructuring................  1485
Questions and Answers for the Record.............................  1482
Regional Transmission Authority..................................  1493
Reliability of Electricity Supply................................  1483
Statement for the Record, James J. Hoecker, Chairman.............  1350
Workload Changes Resulting from Competition......................  1488
Year 2000 Software Problem.......................................  1490

                   U.S. Nuclear Regulatory Commission

Administration...................................................  1691
Agency for International Development.............................  1556
Agreement State Program, State Liaison...........................  1655
Appropriations and Financial Summary.............................  1582
Appropriations Legislation.......................................  1583
Budget--Fiscal Year 1999.....................................1571, 1844
Budget and Performance Plan......................................  1559
Prepared Written Statement of
    Shirley Ann Jackson......................................1509, 1581
    Hubert Bell..................................................  1563
Common Defense and Security and International Involvement........  1673
Commonwealth Edison Plants Status................................  1529
Contractor Services..............................................  1847
Convention of Nuclear Safety.....................................  1558
Cost-Competitiveness and Safe Nuclear Operations.................  1532
Decommissioning........................................1533, 1683, 1812
Department of Energy:
    External Regulation of.......................1547, 1662, 1713, 1831
    Privatization................................................  1549
Electric Grid Reliability........................................  1533
Electric Utility Deregulation................................1532, 1806
Enforcement............................................1628, 1658, 1749
Excellence Initiative............................................  1516
Fees.............................................................  1853
Fuel Facilities Licensing and Inspection.....................1649, 1675
GAO Assessment...................................................  1531
Gore-Chernomyrdin Commission.....................................  1557
High-Level Waste.......................................1540, 1667, 1818
Import/Export Licensing Reviews..................................  1679
Inspector General................................................  1706
International Activities...............................1553, 1676, 1840
Investigations.........................................1629, 1659, 1811
Legislative Program Projections..................................  1711
License Renewal/Extension....................................1536, 1810
Licensing........................................................  1608
Low-leveled Waste................................................  1671
Management and Support...........................................  1688
Materials Program: Status........................................  1544
Materials Safety.................................................  1645
Medical Oversight................................................  1654
Millstone....................................................1527, 1802
Molybdenum-99....................................................  1839
Nuclear Waste Safety.............................................  1664
Performance Assessment.................................1525, 1620, 1801
Planning, Budgeting and Performance Management Process...........  1515
Protecting the Environment.......................................  1681
Reactor Inspection...............................................  1617
Reactor Safety...................................1523, 1604, 1748, 1800
Regulatory Effectiveness.....................................1516, 1731
Reimbursable Work Agreements.....................................  1718
Research.............................1551, 1630, 1638, 1660, 1685, 1833
Risk-Informed, Performance-based Regulation......................  1517
Rulemaking.......................................................  1838
Safety Violations................................................  1746
Spent Fuel Storage.....................................1543, 1666, 1829
Staffing.........................................................  1850
Standard Reactor Designs.........................................  1622
Strategic and Regulatory Excellence Plans........................  1515
Technical Training...........................................1626, 1658
Test And Research Reactors.......................................  1621
U.S. Enrichment Corporation Oversight............................  1546
Unobligated/Uncosted Balances....................................  1843
Uranium Recovery Licensing and Inspection........................  1654
Watch List Plants................................................  1526
Year 2000 Systems Corrections....................................  1521