    [House Hearing, 106 Congress]
    [From the U.S. Government Publishing Office]

     DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES APPROPRIATIONS FOR 2000

    _______________________________________________________________________

                                    HEARINGS

                                    BEFORE A

                               SUBCOMMITTEE OF THE

                           COMMITTEE ON APPROPRIATIONS

                             HOUSE OF REPRESENTATIVES

                           ONE HUNDRED SIXTH CONGRESS
                                  FIRST SESSION
                                    ________
       SUBCOMMITTEE ON THE DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES

                          RALPH REGULA, Ohio, Chairman
     JIM KOLBE, Arizona                   NORMAN D. DICKS, Washington
     JOE SKEEN, New Mexico                JOHN P. MURTHA, Pennsylvania
     CHARLES H. TAYLOR, North Carolina    JAMES P. MORAN, Virginia
     GEORGE R. NETHERCUTT, Jr.,           ROBERT E. ``BUD'' CRAMER, Jr.,
    Washington                              Alabama
     ZACH WAMP, Tennessee                 MAURICE D. HINCHEY, New York
     JACK KINGSTON, Georgia
     JOHN E. PETERSON, Pennsylvania

     NOTE: Under Committee Rules, Mr. Young, 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.
       Deborah Weatherly, Loretta Beaumont, Joel Kaplan, and Christopher
                                     Topik,
                                Staff Assistants

                                    ________

                                     PART 9
                                                                       Page
     Secretary of Agriculture.........................................    1
     U.S. Forest Service..............................................   65
     Secretary of Energy..............................................  201
     Office of Fossil Energy..........................................  277
     Energy Conservation..............................................  403
     Energy Information Administration................................  535

                                    ________
             Printed for the use of the Committee on Appropriations
                                    ________
                         U.S. GOVERNMENT PRINTING OFFICE
     57-173                     WASHINGTON : 1999

                            COMMITTEE ON APPROPRIATIONS

                       C. W. BILL YOUNG, Florida, Chairman

     RALPH REGULA, Ohio                    DAVID R. OBEY, Wisconsin
     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               STENY H. HOYER, Maryland
     TOM DeLAY, Texas                      ALAN B. MOLLOHAN, West Virginia
     JIM KOLBE, Arizona                    MARCY KAPTUR, Ohio
     RON PACKARD, California               NANCY PELOSI, California
     SONNY CALLAHAN, Alabama               PETER J. VISCLOSKY, Indiana
     JAMES T. WALSH, New York              NITA M. LOWEY, New York
     CHARLES H. TAYLOR, North Carolina     JOSE E. SERRANO, New York
     DAVID L. HOBSON, Ohio                 ROSA L. DeLAURO, Connecticut
     ERNEST J. ISTOOK, Jr., Oklahoma       JAMES P. MORAN, Virginia
     HENRY BONILLA, Texas                  JOHN W. OLVER, Massachusetts
     JOE KNOLLENBERG, Michigan             ED PASTOR, Arizona
     DAN MILLER, Florida                   CARRIE P. MEEK, Florida
     JAY DICKEY, Arkansas                  DAVID E. PRICE, North Carolina
     JACK KINGSTON, Georgia                CHET EDWARDS, Texas
     RODNEY P. FRELINGHUYSEN, New Jersey   ROBERT E. ``BUD'' CRAMER, Jr.,
     ROGER F. WICKER, Mississippi            Alabama
     MICHAEL P. FORBES, New York           JAMES E. CLYBURN, South Carolina
     GEORGE R. NETHERCUTT, Jr.,            MAURICE D. HINCHEY, New York
    Washington                             LUCILLE ROYBAL-ALLARD, California
     RANDY ``DUKE'' CUNNINGHAM,            SAM FARR, California
    California                             JESSE L. JACKSON, Jr., Illinois
     TODD TIAHRT, Kansas                   CAROLYN C. KILPATRICK, Michigan
     ZACH WAMP, Tennessee                  ALLEN BOYD, Florida
     TOM LATHAM, Iowa
     ANNE M. NORTHUP, Kentucky
     ROBERT B. ADERHOLT, Alabama
     JO ANN EMERSON, Missouri
     JOHN E. SUNUNU, New Hampshire
     KAY GRANGER, Texas
     JOHN E. PETERSON, Pennsylvania

                     James W. Dyer, Clerk and Staff Director

                                      (ii)

    DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES APPROPRIATIONS FOR 2000

                                  ----------

                                             Wednesday, March 10, 1999.

                         U.S. DEPARTMENT OF AGRICULTURE

                                   WITNESSES

    HON. DAN GLICKMAN, SECRETARY OF THE DEPARTMENT OF AGRICULTURE
    HON. JIM LYONS, UNDER SECRETARY OF AGRICULTURE FOR NATURAL RESOURCES
        AND THE ENVIRONMENT

                                Opening Remarks

        Mr. Regula. We will get the committee started. We are happy
    to welcome you, Mr. Secretary, and your team from the Forest
    Service.
        I just have a few comments. I hope that in the course of
    this hearing you will address the problem of backlog
    maintenance. I think the matter of campgrounds, bridges and
    many other facilities is perhaps somewhat neglected.
        And the second concern I have is forest health. I believe
    that we need to focus more on that. Thirdly, the wildfire
    prevention and suppression program is of concern. You are down
    to 67 percent of the most efficient level. I would be
    interested in an explanation. And you slashed the Forest
    Management Program which goes to the question of forest health.
        Lastly, recreation. Obviously, recreation is a much
    expanding activity in the Forest Service; it does not appear
    that you have addressed that. Also, I have some concerns about
    the state purchases of easements. It seems to me that before we
    get into buying more land or in another form, in easements, we
    need to take care of the existing challenges that I just
    mentioned.
        As you know we have a National Academy of Public
    Administration study on your budget structures and procedures
    so we will wait until we get that to get into it more
    seriously. Mr. Dicks, would you like to make any comments here?
        Mr. Dicks. No, Mr. Chairman. I would just like to welcome
    the Secretary and say how much we want to work with them on
    these Forest Service issues.
        Hopefully the roads problem that we have had over the last
    couple of years is now behind us and we can focus in on the
    backlog on roads. Secretary Lyons and I tried to do something
    in ISTEA or TEA-21 to see if that funding could not help us
    address that backlog and I want to continue those efforts.
        I understand that Fish and Wildlife Service and some of the
    Interior Department Agencies, did not get some transportation
    help. I thing our committee needs to work with the
    Transportation Committee on backlog road issues which I still
    think is one of the most serious ones that we face.
        And out in our area, roads are a major contributing factor
    to the salmon problem. If they wash out the sediment gets down
    into the rivers and streams, and has a negative impact on fish.
    Even the money that we secured on watershed restoration issues
    and habitat improvements is mostly spent dealing with road
    issues, because it is the most serious environmental problem we
    face out there.
        So trying to help the Forest Service deal with this road
    issue and do a better job on maintenance is hopefully something
    that we will be unified on rather than having the kind of
    conflict that we have had over the last several years regarding
    subsidy and other issues. I just want to welcome both
    Secretarys and Mike Dombeck, who are all trying to do a good
    job and we appreciate what has happened out in the northwest.
        And I also wish to thank them for the fact that we are able
    to sustain the assistance to the northwest through the Year
    2000.
        Mr. Regula. Thank you. I am struck by the fact that they
    have over 400,000 miles of roads and of course that means
    probably thousands of bridges. So that is an enormous challenge
    to begin a maintenance program.
        Mr. Dicks. The other thing, Mr. Chairman, culverts--the way
    the river goes underneath the road--and the maintenance of
    those culverts are absolutely crucial. The backlog there is
    also significant.
        Mr. Regula. Well, Mr. Secretary, now that we have outlined
    the problem, we will turn to you for the answers. Your full
    statement will be made a part of the record and you can
    summarize as you choose.
        [The statement of Mr. Glickman follows:]

    [GRAPHIS(S) NOT AVAILABLE IN TIFF FORMAT

                               Statement Summary

        Mr. Glickman. Thank you. Well, first of all, Mr. Chairman,
    Mr. Dicks, thank you for your leadership. We also appreciate
    your participation in the honor to Mr. Yates that we had. I
    thought that was one of the nicest events we have had in the
    Department for some time. Mr. Dombeck is here. I think that he
    has done an outstanding job as Chief, and he will be here to
    answer a lot of the specific questions you have on Forest
    Service management.
        I think that we have a natural resources agenda that is
    multi-functional, multi-use, and related to all the different
    purposes of the forest from recreation to habitat protection to
    sustainable timbering. We do have some money problems, and over
    the past several years I think that we have not had the
    financial accountability that we needed to have. I think that
    that is now changing under Mr. Dombeck's leadership.
        Without repeating my statement, I would say there are five
    major priorities that we have for the Forest Service which are
    reflected in this budget and are also reflected in our
    operations. One is watershed health. In terms of the resources
    that we are putting into money, we have an increase of $50
    million for watershed health. Many if not most of the rivers in
    this country begin in our national forest lands so the health
    of the Nation's watersheds is a number one priority.
        Mr. Regula. Do you see that as connected with forest
    health?
        Mr. Glickman. Yes, it is. Forest health is somewhat related
    to that issue. The second priority issue is roads and road
    maintenance. You talked about the fact that we have more miles
    of roads than we have in the interstate highway system. We have
    put some additional funds in the budget for road maintenance.
    That also relates to the fact that the Chief has announced a
    policy on roadless areas as well.
        The truth of the matter is, that we have a huge quantity of
    roads under serious repair problems and the question is how
    many new roads should we be building under those circumstances?
    What existing roads ought to be closed? It does relate to
    forest management as well, but it is a much bigger issue than
    that. A lot of folks use our roads. Some of these roads should
    not be used. There is a safety problem associated with that as
    well. Road construction, road reconstruction and road
    maintenance are clearly a big part of this issue.
        The third priority is Lands Legacy. In this budget, we are
    talking about, $268 million that is being proposed for pass
    through programs to the states. This includes for example, the
    Forest Legacy Program and Urban and Community Forestry and
    national forest land acquisition. As you know, the President
    feels that states, municipalities and many small communities
    are in real jeopardy of losing much of their open space to
    suburban sprawl. We need to provide options for dealing with
    the problems tailored to the specific needs of local areas.
        In some cases conservation easements on private lands or
    better management of urban forests are called for. In other
    areas where federal ownership patterns are a factor in the
    preservation of open space, we need the flexibility to take
    advantage of these opportunities. Lands Legacy is a priority.
        The fourth priority is research. We especially need to get
    the proper science foundation for management of our forests and
    working with you I think we have made some improvements in this
    area. But this remains a big issue.
        The fifth priority is accountability, particularly
    financial accountability which I mentioned before. It goes part
    and parcel with managing public land. The Chief has kept his
    promise to me to bring on an experienced financial management
    team. We have a new Chief Financial Officer who previously was
    Chief Financial Officer of the Customs Service.
        The Chief has a strategy for implementing this financial
    management improvement plan. I know that the 2000 budget could
    have been more generous in providing money to fund it, but with
    some priority setting I think we can make significant progress.
    We look forward to working with you in all of these areas. Jim
    is going to not give a statement so we can answer some of the
    questions.
        You have posed some questions that I think need to be
    responded to and perhaps Jim might want to talk about some of
    these, including wildfire preparedness and infrastructure. Some
    of the other questions that you raised I think we need to
    respond to.
        [The statement of Mr. Lyons follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 infrastructure

        Mr. Lyons. Thank you, Mr. Chairman, and Mr. Dicks. I will
    be brief because I know the time that we have with you this
    morning is short. As you know, we agree completely on the
    infrastructure issue. You and I have talked about this many
    times. And we are trying to tackle that issue. It is a huge
    issue for us. This includes not only the infrastructure as we
    traditionally think of it, such as buildings and facilities
    associated with the National Forests, but it also includes road
    maintenance issues which you have already mentioned.
        Infrastructure is the investment in the roads, buildings,
    and facilities that provide access to the public for recreation
    opportunities and which support the entire range of Forest
    Service activities. We have a tremendous backlog, and that has
    been well recognized. In roads alone, it is eight billion
    dollars. In facilities, we also have a mult-billion dollar
    backlog. In fact, we only have enough money in our budget, and
    this budget only requests a slight increase, to maintain about
    25 percent of the road system that is the most heavily used
    road system.
        There are 80,000 miles of roads which provide primary
    access routes. So this is a tremendous problem for us. It is
    one of the reasons Mike initiated the roads policy. As he likes
    to say, when you are in a hole, the first thing you ought to do
    is stop digging. We have stopped building new roads in roadless
    areas to reassess the inventory. In the case of forest health
    and fuel treatment which are issues we have discussed over the
    years, we are attempting to make investments to deal with the
    needs that you mentioned.

                                   watersheds

        I think these do fall under the larger umbrella of
    watershed health concerns. Most of the watersheds in the major
    metropolitan areas in the western United States are on National
    Forests. And their health and the quality of that water, which
    impacts everything from potable water to salmon habitat, are
    critically linked to how well we invest in thinning and salvage
    work.
        Mr. Regula. I have a question on the watershed. What
    percentage of it is forested and what percentage would be open
    land?
        Mr. Lyons. Well, I think generally the way the watersheds
    are set up, and maybe Mike can amplify this, is that most of
    the headwaters, the upper reaches, are on National Forest
    System land. Often those waterways flow through private land, a
    portion of which we are involved in helping to manage through
    the State and Private Forestry Programs and working
    cooperatively with the State Foresters.
        My other side, Mr. Skeen's area of jurisdiction, the
    National Resources Conservation Service is involved in working
    on farms and ranches that usually are lower down in those
    watersheds. But forested lands are a substantial part of those
    areas as well. I do not know if you want to amplify that Mike.
        Mr. Dombeck. Yes, out of the 192 million acres of National
    Forest System Lands, less than 40 million are rangelands and
    the rest of it is forested lands. And in fact it is interesting
    that about 80 percent of the streams in the United States begin
    on National Forests, even here in the east with the Potomac and
    the watersheds.
        So water is an issue that is incredibly important in both
    the east and the west. In addition to managing the forest,
    foresters deserve a lot of credit for what they do for
    maintaining water quality and watersheds.
        The fact is the cleanest water in the United States is
    coming off of forested lands. And we need to keep it that way.
        Mr. Lyons. But let me just say, with regard to that
    investment, we are attempting to put more money into programs
    like timber stand improvement, brush disposal and the like. We
    appreciated the flexibility you have provided us with to shift
    some resources around so as to make additional investments.
    This is particularly important for reducing fuels so as to
    prevent devastating wildfires in the long run.
        Roads are a key to improving watershed health, as I
    mentioned. As Congressman Dicks indicated, we had an
    unfortunately failed attempt to secure funds in TEA-21 to help
    begin to address that backlog, and I am afraid, Mr. Chairman,
    that an infusion of funds of that nature is going to be
    necessary to really start to get on top of this critical issue.

                                   recreation

        But I think we are moving in a direction that is consistent
    with a lot of the dialogue we have had. You mentioned
    recreation. That too is a priority. I would express
    disappointment in the marks we got for recreation and a lot of
    other priorities. We were not able to make the investment
    there, though you have been most helpful in providing
    authorization for recreation fee demonstration, which is a
    program that is going to help us in the recreation area.
        We have also proposed some concession reforms. Did you know
    the Park Service got concession reform legislation last year?
    We think we can help ourselves there, but again, I think in
    recreation we are going to need some additional resources to
    get the job done.

                                    wildfire

        Mr. Glickman. Do you want to address wildfire issues? I
    think we need to address that very quickly for you because of
    the money.
        Mr. Lyons. Why do you not let Mike run down the details.
        Mr. Dombeck. From the standpoint of hazardous fuel
    reduction we have ratcheted up that program significantly from
    the mid-1990's. This is really part of watershed restoration
    because of the damage from catastrophic fires or stand
    replacing fires rather than a cool burn as the forests would
    have had in a historical regime.
        We were doing about 750,000 acres of fuel treatment per
    year. The 2000 budget proposes to do 1.3 million acres through
    a hazardous fuels reduction program. Then if we look at some of
    the other programs that contribute to that effort, we will be
    treating about 2.2 million acres. The track that we are on is
    to have the backlog of high-risk lands dealt with by about
    2015, so we have ratcheted that program up significantly as
    well.

                             funding state programs

        Mr. Regula. Let me tell the committee members the Secretary
    has to leave by 11:00, so we will have our questions for him
    first and then we will go to Mr. Dombeck at about 11:00. First
    of all, Mr. Secretary, you talk about state and private
    forestry programs, and I see you have an $80 million increase
    there.
        I find that questionable given the fact that we have all
    these backlog maintenance needs that are unmet; given the fact
    that we are not doing nearly as much as we should in recreation
    programs, to say nothing of wildfire and so on. And yet I read
    in the Wall Street Journal this morning that the states'
    revenues are up. I just had a chart, I do not have it with me,
    but every state, with the exception of one, has surpluses.
        Alaska could shut down their revenues for three years and
    still function. They have three years' worth of revenues in the
    kitty. So I think we are talking about a pass-through to the
    states. They should be passing through to us, because in terms
    of financial situations, they are better off than we are. Do
    you want to comment on that?
        Mr. Glickman. Well, I would say that largely this is part
    of the Lands Legacy Initiative.
        Mr. Regula. Well, I understand that.
        Mr. Glickman. But I am just explaining it from,
    conceptually where it comes from. It is money that is proposed
    to keep land from going into suburban sprawl, and a lot of
    other conservation related measures where we are finding more
    and more that we need to cooperate with states and work jointly
    on these programs.
        About $40 million has been budgeted in this particular
    area. I understand the point that you are raising. It also
    relates to the fact that more and more we are finding that the
    efficacy of these programs is based upon whether local
    conservation districts and states go along with this and work
    with this.
        Mr. Regula. Well they can cooperate, but they can just use
    their own money to cooperate. We have a community of about
    30,000 people near where I live, and they built a golf course.
    They built it with their own money. It is so successful, they
    are adding another nine or 18 holes, and they have not gotten a
    penny of Federal money. And yet some of your pass-through
    funding would go for that kind of thing.
        Mr. Glickman. Well, I would hope that we would not be
    building golf courses.
        Mr. Regula. Well, you do not have control once it gets out
    of your hands.
        Mr. Glickman. One consideration is that a lot of these
    watersheds are multi-state and so we are working with many
    different units of government, and in many cases, they do put
    money into these projects as well.
        Mr. Lyons. Mr. Chairman, I am aware of your concerns with
    programs like UPAR in the past and this is not a UPAR Program.
    But for example in Forest Legacy, we have been able to use
    conservation easements to protect millions of acres of land,
    both in the northeast and in the west.
        And I think what is important----
        Mr. Regula. Federal lands? They are now Federal?
        Mr. Lyons. No, the lands are administered either by the
    states or the states can transfer management responsibility to
    non-profits who can assume responsibility for those lands. For
    example, we have done projects in New England. I know there has
    been a lot of attention paid to New England lately because of
    the large amount of private forestland that suddenly is coming
    up for sale.
        Working with the Governors of New Hampshire, Vermont, New
    York and Maine, we have used the Legacy Program to protect many
    millions of acres that would face development. The key is that
    for the minimal investment we make, the states do put in
    additional resources, and often leverage private resources, so
    it really multiplies our investment manyfold. That is the
    benefit of those investments.
        Mr. Regula. Does your program propose that anything that
    comes by way of Federal money has to be matched at least fifty-
    fifty?
        Mr. Lyons. Yes. We have a match. I am not sure what the
    exact match is, but we do have a matching requirement for
    Forest Legacy.

                            uncontrollable expenses

        Mr. Regula. Another dimension of this proposal, in addition
    to not doing backlog, is the fact that your uncontrollables are
    $72 million. Yet you eat up the growth for these other
    programs. Are you going to put a freeze on your
    uncontrollables?
        Mr. Lyons. Well, do you want to address that?
        Mr. Regula. Operations and some funds for pay raises, that
    type of thing?
        Mr. Dombeck. Obviously we do not have control over the pay
    raises. In fact for 2000 we are looking at something in the
    neighborhood of $50 million----
        Mr. Regula. But it adds money to your budget, and yet you
    do not have the money budgeted for that. It adds cost.
        Mr. Dombeck. Yes, it does add the cost.
        Mr. Regula. How are you going to pay these, if you are
    going to spend all this money on all these other things?
        Mr. Dombeck. Well, again, it is a matter of balancing
    priorities----
        Mr. Regula. I understand that, but you have not done that.
    You have balanced in favor of buying more land and doing a
    whole host of things, but not in favor of something that looks
    to me like it is almost a must. And that is your operations.
        Mr. Dombeck. Well, managing the operations and balancing
    the needs are incredible jobs. But another point is with the
    State and Private Forestry programs, we have got about 9.9
    million private woodland owners. The quality of management, the
    technical expertise available to those landowners, is important
    to all the aspects of what forests do for us.
        Mr. Regula. No, I am not quarreling with that. But when I
    look at your numbers here, you do not have the money, you have
    not budgeted the money to fully cover fixed costs. Now
    something has got to give. You cannot have all these programs
    and still meet your fixed costs. Then I hear this morning that
    we are going to not raise the budget caps. That seems to be a
    bipartisan agreement which is going to affect your budget in
    many different ways.
        So we are going to be faced with some pretty tough priority
    choices in this committee.
        Mr. Glickman. The fact is that this is not just true of the
    Forest Service; our USDA budgets do not absorb COLA increases
    as well. And so unless we find the money someplace else, those
    dollars will have to be absorbed within the operations of the
    Department as a whole.
        Mr. Regula. I know. So we may have to come back to you to
    reassess your priorities when we get down to doing our markup,
    recognizing that we have got to do the fixed costs.
        Mr. Glickman. I agree with that.
        Mr. Regula. Where do you think it should come from?
        Mr. Glickman. Well, I do not know.
        Mr. Regula. Not at this juncture, but I am talking about
    prospectively.
        Mr. Glickman. I think we have to generally reflect our
    priorities in whatever decisions that we make. That is the best
    I can tell you. But we have to pay our people as well.

                                   recreation

        Mr. Regula. Yes, I think that is number one, at least the
    audience would agree. Mr. Lyons, your budget request calls for
    level funding, effectively a decrease to the recreation
    management activity and yet I hear you saying that recreation
    has a high priority. How do you square that?
        Mr. Lyons. Well the honest answer, Mr. Chairman, is that in
    the priority setting debate, recreation did not come out as
    well as some other programs. We initially made a request for a
    significant increase in recreation, knowing that recreation use
    is skyrocketing. But in the order of priorities, we were not
    able to sustain that request.
        Mr. Regula. It is OMB's priorities that are reflected here?
        Mr. Lyons. Well, let us just say higher authorities thought
    that priorities ought to be set in a little different way. Now
    let me say this, that I think part of their philosophy is that
    we are developing new tools to help cover the funds for
    investment in infrastructure, et cetera, and to some degree
    that is true.
        I would candidly say that I think an additional investment
    in recreation programs is important because of the recreation
    impacts on the National Forest System and on wilderness areas.
    These impacts are becoming a significant concern. Mike and I
    are constantly challenged with trying to deal with those
    issues.
        Mr. Regula. It seems to me too, that you are using the rec
    fee money to replace appropriations. And we have made a
    commitment not to do that.
        Mr. Lyons. That would be illegal, Mr. Chairman.
        Mr. Regula. So you are saying that you are not going to
    use----
        Mr. Lyons. We are not going to do that.
        Mr. Regula [continuing]. Rec fees for what we should be
    doing by standard appropriations.
        Mr. Glickman. That is correct that we will not do that.
        Mr. Regula. All right. Mr. Dicks.
        Mr. Dicks. I thought that you were close to $50 million
    below last year, is not that the number? Where was that number
    on trails? It's my understanding that the trail construction
    budget is down 50 percent. That looks to me like you are going
    to then take the rec demo money and use it for that purpose. Is
    that not a way of using this money to replace appropriated
    funds? Use of the ten-percent timber receipts?
        Mr. Lyons. Well as you just heard, what happened was we had
    to shift some funds around from the ten-percent fund to cover
    some additional costs in the recreation area. So trail
    construction maintenance, for example, is down and that is an
    area where we would have liked to have maintained an
    investment.
        It is not an offset to rec fee demo, I want to be clear
    about that. And we have fought that, whenever that issue has
    come up in other circles, I want to assure you. But in fact, we
    have had to commit the ten-percent funds to another area and
    not invest it in trails, which is what accounts for the trail
    funding being below what it was last year.

                              deferred maintenance

        Mr. Dicks. Is it true that on this one, deferred
    maintenance on roads and bridges, is $4,000,020,000? And what
    you need for annual maintenance is $442 million, but you only
    have $100 million in the budget. Is that basically right?
        Mr. Dombeck. Yes, I believe so.
        Mr. Dicks. Are we basically going to fall further and
    further behind?
        Mr. Dombeck. That is right. What we have to do is to really
    face the problem that we have had with roads. Now we need to
    work to move forward by looking for funding, and adjusting our
    priorities and we are doing that. In fact, the request for the
    roads budget would bring us up from having the funding to
    maintain 18 percent of our roads to the environmental and
    safety standards for which they were designed, to about 22 or
    23 percent. We just need to continue to keep on ratcheting that
    up.
        Mr. Dicks. Now at the same time you are doing some road
    decommissioning or road deconstruction, is that correct?
        Mr. Dombeck. Yes.
        Mr. Dicks. But I am told that is very expensive. Is that
    also correct?
        Mr. Dombeck. It can be depending upon the situation. When
    we asked the question about what do we do with the roads that
    perhaps we do not need, some of them are turned into hunter
    trails, hiking trails, or biking trails. Some may be gated.
        Mr. Dicks. Is that less expensive than decommissioning
    roads? Is that a better investment?
        Mr. Dombeck. Yes.
        Mr. Dicks. How much is that roughly per mile, say in the
    northwest?
        Mr. Dombeck. Let me see if we can get you the breakdown of
    the costs in the various parts of the country.
        [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Dicks. I would just like to know what the difference is
    in cost. I've been told there is a desire on the
    Administration's part to decommission some of these roads, but
    it is very expensive. Could we take that money and use it to
    more properly maintain a greater percentage than 23 percent of
    these roads? Is that a better investment?

                             transportation funding

        But obviously we need to, you know, we need to take another
    look at TEA-21. And Mr. Secretary, I think that is going to
    require your help here, you know, with the Department of
    Transportation and with the Congressional people up here.
    Because somehow we have got to get this into the TEA-21 thing
    or we are never going to get this under control.
        Mr. Glickman. We made an attempt before.
        Mr. Dicks. A little late though.
        Mr. Glickman. Yes, that is correct. Obviously there were a
    lot of other priorities competing in that process. I have
    talked to Secretary Slater about this and this issue just has
    to have higher priority.
        Mr. Dicks. Apparently there is a technical corrections Bill
    coming up right now.
        Mr. Glickman. For that?
        Mr. Dicks. For TEA-21. And I am told that this Bill may be
    expanded beyond just technical corrections.
        Mr. Glickman. If anybody knows, you would know. [Laughter.]
        Mr. Dicks. I have heard rumors to that effect. So I just
    wanted to alert you that you might want to look there. Because
    I do not see how we are ever going to get this straightened out
    unless we get some help from the Highway Trust Fund.
        Mr. Dombeck. In fact, I think 1999 was the first year that
    we have received $750,000 from the Federal Highway
    Administration for planning and inventory work to prioritize
    and begin to move forward. We expect some help from the Federal
    Highway Administration in future years as well.
        Mr. Regula. I think you mentioned paved roads. I do not
    think of forest roads as paved roads. Is the implication of
    that that you have roads going through the forest that serve
    more than just forest purposes? This would fit in with what Mr.
    Dicks is saying ought to be in TEA-21.
        Mr. Lyons. Well that is precisely the case, Mr. Chairman.
    We have an extensive road system, but about 75,000 or almost
    80,000 acres are for primary access, so they are paved or
    gravel roads. They really are the primary transportation routes
    in many rural parts of America.
        Mr. Glickman. He means miles, not acres.
        Mr. Lyons. Oh, did I say acres?
        Mr. Glickman. Yes.
        Mr. Lyons. Oh, miles, 78,000 miles of road. And we can
    provide the committee with a breakdown of those and it may be
    even better to give you some examples of what they look like.
    For example, if you were to travel to ski at Vail, Colorado in
    the White River National Forest, some of those paved roads are
    National Forest System roads maintained either by the National
    Forest or in cooperation with the counties. Those are obviously
    expensive to maintain. They get millions of visitors every year
    and that is where our costs start to escalate.
        [The information follows:]

        There are 61,000 miles of Forest Service primary access
    roads we call arterial and collector roads. The arterial roads
    provide access to large land areas and are operated for long-
    term land and resource management purposes. The arterial roads
    usually are integrated with State and county roads to link
    rural and urban communities with the national forests and often
    provide through access from one community to another. The
    collector road system serves a somewhat smaller land area and
    ``collect'' traffic from the local roads and feed the traffic
    into the arterial road system.
        The standards of the arterial and collector roads range
    from single-lane with gravel surfacing to double-lane with
    paved surfacing, depending on the types of traffic and the
    traffic volume.
        The Forest Service has approximately 9,000 miles of paved
    roads as part of its arterial and collector road system.

        Mr. Dombeck. I want to just add that I grew up on Forest
    Road 164 in Sawyer County on the Chequamegon in Wisconsin and
    today that road serves as a bus route and it also is a mail
    route. It is paved and gets all sorts of tourist traffic and a
    few logging trucks still roll down that road as well. But with
    the arterial and collector roads that Jim spoke of we are
    actually reducing the miles of those roads on which a family on
    vacation could travel in their station wagon because of our
    inability to maintain those roads. An investment in the roads
    infrastructure is also an investment in the recreation and
    access as well.

                                timber user fees

        Mr. Dicks. I need a little bit more explanation about how
    charging a timber sale purchaser a user fee will result in more
    money for the Treasury. How is that going to work?
        Mr. Lyons. Everyone looked at me. Well, Mr. Chairman, and
    Mr. Dicks, as you know the budget includes some offsets that
    assume some revenue generated from various sources. Well, user
    fees for timber purchasers is one of the ideas that has been
    floated. I would say that we would love to work with the
    committee to figure out a way to generate revenues, and I must
    be candid and tell you that we have not quite figured out the
    particulars on how we might actually charge a fee.
        Mr. Dicks. I think they would have to take that fee into
    account when they bid for the timber.
        Mr. Lyons. Yes, and I think ultimately that is going to
    mean that you will get a reduced offer. That is an issue which
    we discussed as the Congress dealt with the purchaser credit
    issue last year. We anticipated that reductions would occur. My
    straightforward answer is that this is something we need to
    work on.

                                county payments

        Mr. Dicks. And then finally, county payments stabilization.
    You want to decouple from receipts. What do you think the
    prospects for that are?
        Mr. Lyons. Well, you may know better than I do. But we
    think it is a critical component in the program. And as you
    know, roads and schools in rural counties across the United
    States are dependent upon timber sale receipts. Receipts have
    declined and it creates an atmosphere where counties have no
    certainty and do not know how to budget in future years for
    critical things like education.
        We believe a stabilization of payments based on a
    historical average would be more beneficial to the counties,
    would provide greater stabilization and would allow us to put
    together a Forest Management Program that is responsive to
    resource conditions and not driven by a desire to generate
    additional receipts.
        Receipts are important, but it really makes the children in
    these school systems pawns in this debate over Timber Sale
    Program levels year in and year out. I think it is an
    inappropriate way to put together the program. So we would like
    to see this decoupling and a stabilization of payments so that
    the counties know what they are going to get year in and year
    out for schools and roads.
        Mr. Dicks. Would that become an entitlement? We have done
    that actually in the northwest, I believe under the northwest
    forest plan.
        Mr. Lyons. Yes, this was similar to, in fact this was
    modeled after, the program that you helped us to put in place
    in the northwest. I think it has been very successful.
        Mr. Dicks. I do too. But money has to come from somewhere.
    In that case, there was something in the tax code that we gave
    up that allowed corporations certain deductions which we
    eliminated. It saved us enough money to fund the program for
    ten years.
        Mr. Lyons. And we have built into the budget sufficient
    funds to cover this new proposal as well.
        Mr. Dicks. So you have the resources to do this?
        Mr. Lyons. Yes. Now we are dealing with some technical
    issues related to the potential for absorbing inflation costs,
    et cetera, which may result in some minor increase in cost and
    we are looking at that issue right now.
        Mr. Dicks. Well, for the record, if you can show us where
    this is, we would love to hear from you?
        [The information follows:]

        The 1999 budget for the Department of Agriculture proposes
    a number of changes in programs that are considered ``direct
    spending'' under current budget legislation. For the most part,
    these proposals would require changes in permanent statute and
    would be under the jurisdiction of the Congressional
    legislative authorizing committees rather than the
    Appropriations Committees. This is the case with the proposed
    change in the Forest Service Payments to States program.
    Changes that result in increased direct spending require
    offsetting reductions in other direct spending programs or,
    alternatively, increased revenues such as user fees. This is
    generally referred to as the PAY-AS-YOU-GO or PAYGO
    requirement. The requirement applies to direct spending as a
    whole. Offsets do not have to come from programs within the
    same agency or even the same cabinet department. In other
    words, to stay within the limits for direct spending, the
    Administration's proposed spending increases, taken as a whole,
    are offset by the proposed decreases and increased user fees,
    again taken as a whole.
        The PAYGO proposals in the President's 2000 budget are
    identified on pages 369-371 of the BUDGET OF THE UNITED STATES
    GOVERNMENT: Fiscal Year 2000. While, the estimated increase in
    direct spending resulting from the Administration's Payments to
    States stabilization proposal ($27 million in 2000) is offset
    within the overall budget, only $17 million in reductions or
    increased receipts are shown for the Forest Service in the
    entry for ``Change fair market value for timber/Forest
    Service.'' This does not mean that the remaining $10 million is
    not offset. It merely means that it is not possible to relate
    to any one specific increase in receipts or reduction in other
    direct spending activities among the many shown for the entire
    government.

        Mr. Lyons. Thank you.
        Mr. Glickman. I would also say that many people would think
    that we would end the Timber Program without the 25-percent
    fund. We are not going to do that.
        Mr. Dicks. Okay.
        Mr. Glickman. I want to make that clear.
        Mr. Regula. Mr. Peterson.

                                rural priorities

        Mr. Peterson. Yes, good morning. I appreciate the
    opportunity to visit with you this morning. I have been
    listening to the conversation and I guess I want to preface my
    questions with a few comments. I come from the most rural
    district east of the Mississippi so I am rural. About 20
    percent of Pennsylvania is rural.
        I spent 19 years in state government and the issues are the
    same. I was one of a handful that was concerned about the state
    forest budget and the state parks budget. And most urban
    members did not really worry about whether they got cut or flat
    funded year after year and so forth.
        But I guess as I listen here this morning, it seems to me,
    in the 21 years I have been in government, 22nd year now, rural
    America, and you are a vital part of rural America. You are a
    huge player in rural America. There is never the money to do
    the things that are going to help the economy and the overall
    quality of life in rural America.
        And here we are today talking about an $80 million program
    that deals with urban sprawl. Now this is my personal reaction.
    Urban sprawl is a problem. But it is caused by the richest of
    America. It is the richest part of America that is creating
    urban sprawl. It is the most wealthy people that are moving out
    of the cities into the suburbs and then continue to sprawl out
    as they want to live in more open spaces than they currently
    have.
        And some people have moved a couple times in a lifetime to
    get back out. I struggle a little bit that that should come out
    of the neck of rural America's budget. And here we have flat
    funding for recreational management. Underfunded, and you know
    that, I mean you know to really utilize the land we own in
    America, to allow people to really go out there and enjoy, and
    it is urban people too, it is all kinds of folks, but it is
    part of our rural economy.
        It was the same with the state, it was always next year.
    There was never money for our backlog of roads and bridges on
    Forest Service land this year. It was always next year. But
    there was always an urban issue that seemed to take up the
    money. And here we are, I guess I would like to have you
    respond to that. How do we prioritize $80 million, to help deal
    where the richest live and flat funding for where the poor,
    rural people live?
        Mr. Glickman. Well, I appreciate your question, since we
    are Rural Department, we not only have the Forest Service but
    also the programs that deal with rural American farm
    communities. I would like to say that local communities in
    rural America also want to keep their open spaces in order to
    avoid becoming overpopulated. It goes both ways.
        As you may know we are seeing this particularly in the
    south. I think you raised a good point. The only thing I can
    tell you is, that we have seen a lot of urban spread. As people
    want to move out of urban areas, we have a growing urban/
    wildland interface that is causing real watershed degradation
    and fire problems.
        We particularly see this in the Rocky Mountain area around
    Denver and all of the areas along the Front Range. So you can
    see, there are legitimate problems we must deal with in
    protecting forestlands. The other thing that you probably faced
    in the State Legislature, and one of our challenges as always,
    is how do we get an increasingly urban America and an
    increasingly urban electorate to support funds for rural
    America. This is a problem for the forests as well as the
    farms.
        We have tried to develop a series of programs that all
    people can support because they can see the relevance to their
    lives. You know, I think you have to look at the Lands Legacy
    Initiative in that context. It does reinforce the fact that
    everybody has a stake in our forests.
        I have thought about this many times before. How do I
    convince people in the country that do not live anywhere near
    our national forests and our national wilderness areas that
    these are critically important for their future? The watersheds
    of most of our rivers are located on our forestlands. Fire is
    an international type of problem. The forests are the most
    visited area in the United States. All those kinds of things
    need to be considered.
        More people visit our forests than visit our parks. I
    understand your question and I hope that you understand that we
    have a funding crisis in the protection of your forests.
        Mr. Peterson. But we expect you to be our advocate. We
    expect you to be fighting for rural America. I mean, you know,
    here we are veering off on urban problems.
        Mr. Glickman. No, no, no, no. First of all, most of the
    budget that we have got here is the operational budget.
        Mr. Peterson. But the new money goes to where your
    priorities are.
        Mr. Glickman. Let me just say again, those programs protect
    the rural areas as well. In addition to the wildfire problems
    in the urban/wildland interface, they also help to support an
    overall coalition of Americans who support our forests. Nothing
    gets done without that.
        Mr. Regula. Let us suspend, and what we will do is go to
    vote. Then when Mr. Kingston gets back, he can ask his
    questions. Then we will come back to you.
        Mr. Peterson. Okay.
        Mr. Regula. So we can get you out by 11:00, Mr. Secretary.
        [Recess.]

                            lands legacy initiative

        Mr. Kingston [presiding]. The committee will come to order.
    And let me reiterate the words of my colleagues welcoming Mr.
    Secretary, you and your panel and Mr. Lyons and Miss Kennedy.
    She is here? Okay. All right. A question about the land and
    water conservation fund. The budget requests $62 million from
    the land and water conservation funds that are in unauthorized
    projects in the Forest Service State and Private Forestry
    Program.
        And it also includes a $10 million transfer to the USDA
    Rural Business Cooperative Service to support loans. And that
    last part, Mr. Secretary, I certainly have some curiosity in
    serving on that committee and wonder if it should not be in
    another committee, in the Ag Approps Committee. But generally
    my question is, with unauthorized activities as you know, we
    always get accused of things. And so just what is your view on
    that?
        Mr. Glickman. I would ask Mr. Dombeck to respond because he
    can answer your question more specifically.
        Mr. Dombeck. Well our proposed budget includes the language
    that would be required for anything that is new. The fact is
    that we are very, very firm about staying within the
    authorities that we have and we will continue to do that.
        Mr. Glickman. Okay, but can you get more specific as to his
    question, the $10 million issue.
        Mr. Lyons. I think I might be able to address that,
    Congressman. We are looking at how those funds would be
    transferred to the field and be used by rural residents. So we
    are evaluating possible disbursement mechanisms. And it may be
    that instead of going through rural development, we could just
    develop a cooperative arrangement through the states and have
    that money dispersed directly to the field.
        Mr. Kingston. What kind of loans are those? What is
    included in rural development?
        Mr. Lyons. I will let Anne address that, she has been
    working on this issue.
        Ms. Kennedy. I always get the really tough issues. We are
    working with OMB to evaluate various administrative processes.
    For example, we are considering a mechanism for providing the
    stewardship money to landowners. We are looking at the
    possibility of changing the proposal to just provide the funds
    through the state foresters for stewardship activities.
        The idea would be to have a revolving loan program with
    loans to be repaid over a 30-year period for certain
    stewardship practices such as replanting of trees and that kind
    of thing. We are developing the idea now and we can get back to
    you on that.
        Mr. Kingston. Okay.
        Mr. Glickman. Let me just ask. Would this require a
    legislative change in language to do this or appropriations
    language?
        Mr. Kingston. Or a budget amendment?
        Ms. Kennedy. We do not think so at this point. But we are
    still looking at that matter and we will get back to you and
    the committee.

                               program priorities

        Mr. Kingston. Okay. Now you have, and this question may
    have been asked. In terms of the backlog for roads and
    restoring habitat because of insect and disease and because of
    recreational demand, there is a great need to increase forest
    management to reduce fire danger. Now given the shortage, how
    would you prioritize your request for rural planning loans and
    purchasing private land easements compared to the fundamental
    responsibilities of taking care of the public lands
    administered by the Forest Service?
        Mr. Dombeck. Well, from the standpoint of priorities, we
    have a risk map. Let me ask State and Private Forestry people
    if they have a copy of it, that I could show you. This
    identifies for the first time where the high-risk areas are on
    a nationwide basis. It projects within those high-risk areas
    what activities would be prioritized. We are working with State
    Foresters, private landowners, as appropriate, as well as the
    National Forest System lands.
        Mr. Lyons. If I could add to that, Congressman, let me just
    make one point because you commented about the primary focus on
    public lands. I just want to emphasize that the Forest Service
    has multi-dimensional roles, not solely focused on management
    of the 191 million acres of public land. We play a huge role in
    working with the Sstate Foresters on private lands through the
    State and Private Forestry program. That involves everything
    from insect and disease control to wildfire prevention.
        Our budget really attempts to provide additional investment
    in that element of the program as well. We want to work
    cooperatively with the state agencies. As you know from your
    district, private lands are really the key to commodity
    production, recreation access, and watershed health.
        We are trying to make an investment as a partner to work
    with the State Foresters to try to improve the private
    landowners, ability to manage their lands as they would like.
    That is really where those funds are headed.
        Mr. Dombeck. We talked about the Stewardship Incentives
    Program just briefly on an earlier question. We have 9.9
    million private woodland owners in the United States and yet
    less than 20 percent of those landowners have professional,
    scientifically-based plans for their activities. We view
    providing that technical assistance, such as the information on
    this map, as very important to helping private landowners.
        Mr. Kingston. But you are not forcing your agenda on them.
    If they have a specific agenda that might not be politically
    correct in terms of somebody somewhere, they----
        Mr. Glickman. It is totally voluntary.

                            asian longhorned beetle

        Mr. Kingston. Okay. Let me ask you this. The Asian
    Longhorned Beetle, which I know APHIS is doing things on and
    the Department of the Interior is also. Does that attack living
    trees?
        Mr. Glickman. Yes.
        Mr. Kingston. It does? And in this area, are you
    aggressively looking at that? Because I know there has been a
    change in the way that fumigation has been done. A question
    came up on the Asian Longhorned Beetle. I believe there was a
    regulatory change in December. Is it mostly lumber that is
    being imported from China that is being fumigated now in China
    rather than state-side because we did not want to have the
    methyl bromide used? Are they still using it?
        I am just wondering if it ties into----
        Mr. Glickman. As you know, that regulatory change
    restricted shipments from China using wood packing materials
    unless they are treated or the shipments are packed in some
    alternative material. We told the Chinese that we would no
    longer allow untreated packing materials to come into this
    country. There have been two outbreaks of Asian Longhorned
    Beetle that have required our attention. One in the Chicago
    area and one in the New York/Long Island area.
        Both of these infestations are somewhat related in their
    proximity to airports. I thought this was going to become a
    major problem in getting the Chinese to comply. But there seems
    to be reasonable compliance so far. We have limited ability to
    monitor because of the numbers of people required to do the
    oversight, but we are finding reasonable compliance.
        Now I am not exactly sure how they are treating this wood.
    I do not recall specifically whether methyl bromide or other
    insecticides were used to actually treat the wood.
        Mr. Kingston. I am just wondering if they are as thorough
    as American pest control people would be on it. If that might
    be leading to the problems in Chicago and New York.
        Mr. Glickman. There is no question that untreated Chinese
    wood packaging material led to the problems. That is the
    uniform view of APHIS and the Forest Service.
        Mr. Kingston. It makes me wonder, you know, a Communist
    country certifying wood, how reliable it really is, as opposed
    to our own inspection. I have the same fear when we import food
    from Mexico and some of our NAFTA and GATT partners when we
    bring in food, do they have the same food safety standards in
    their Inspectors that we do in America.
        Mr. Glickman. The only thing I can tell you is we have
    stopped some products from entering this country through the
    inspection process. As you know, these are our rules, not
    theirs. It is up to us to enforce them, and I hope we have the
    resources to do that.
        Mr. Lyons. And the Secretary did provide additional
    resources to increase inspections in China. We are in a trust-
    but-verify mode I would say, Congressman, in that we have
    stepped up inspections. And where we have outbreaks, because
    the Asian Longhorned Beetle does attack live trees,
    particularly Maple trees as one of its preferred hosts, we have
    been aggressive in eliminating those trees. This requires us to
    basically burn them, because there is no other way to go.
        Mr. Kingston. Yes, I remember, did you not say you cut down
    1,300 trees or something like that? I do not know why that
    stuck in----
        Mr. Lyons. I believe the first outbreak in New York
    involved an effort of that magnitude. We have had additional
    removals now in Chicago.

                               Invasive Specieis

        Mr. Dombeck. If I could, Mr. Chairman I would like to add
    to that. We are making additional investments in research in
    this area. Exotics, both plant and animal, are one of the most
    significant natural resource issues we face in the country
    today. Whether it is weeds out west or the Gypsy Moth or Asian
    Longhorned Beetle, we are requesting increases for investments
    in research.
        This is another example where the investments we make in
    research are important both to private lands as well as
    national forests. Another area that I have to mention is the
    importance of an international program. When we are looking for
    biological controls to deal with some of these exotics, it is
    better that we learn as much as we can about them before they
    are on our shores.
        Mr. Kingston. What about inter-domestic migration, things
    like the armadillo and living on I-95, all RV's go down to
    Florida and bring all the love bugs back north. Is that a
    problem?
        Mr. Dombeck. Transport of exotics by vehicles is a problem.
    For example, out west we require outfitters and guides to use
    certified weed-free hay for horses. We certainly encourage
    inspection of vehicles, cleaning, and that kind of thing. That
    is important.

                                Road Maintenance

        Mr. Kingston. All right, in January of '98, there was a
    moratorium on building new roads. And I do not think it was
    implemented until recently. How long is that going to be, what
    is going to be the status of that?
        Mr. Dombeck. The rule appeared in the Federal Register on
    the 15th of February and it will be in place for 18 months.
    During that timeframe we are developing a long-term roads
    policy. The situation that we faced which we discussed somewhat
    earlier, before you arrived, is that we have 380,000 miles of
    roads in the National Forest System.
        We have a backlog of over $8 billion in reconstruction and
    maintenance for the road system. This has been a tough problem
    for the Forest Service for at least 20 years, and the objective
    of a long-term policy, which is that we use the most up-to-date
    science and technology to underpin our roads programs.
        A lot of the roads that are in the National Forest were
    built in the '20's, '30's, '40's and '50's for logging
    purposes. Today we have about 1.7 million vehicles a day on
    National Forest System roads associated with tourism and
    recreation. We also have a tremendous backlog in the
    maintenance of 7,700 bridges.
        Mr. Kingston. We get complaints that there was not enough
    local input and public input in general before a decision is
    made on closing a road. What is the process? Is it, is it
    opened enough? And also, the 18 months, when does that start
    and when does that stop?
        Mr. Dombeck. I believe it started about March 1st.
        Mr. Kingston. This year?
        Mr. Dombeck. Yes. So it has just been in effect now for one
    or two weeks. In the process we used in developing the
    temporary suspension of road-building, we received well over
    50,000 comments. In fact, we had hoped to have the rule
    completed earlier than we did.
        Mr. Kingston. Do you get input from local, say a Chamber of
    Commerce, a Trade Union, how it is affecting their jobs and the
    ability to get work?
        Mr. Dombeck. In each Region we hold a variety of sessions,
    hearings, and focus groups to encourage individuals to
    understand the issue and to help us gather input. In fact, I
    view the rule-making process as one of the more fair processes
    in this democracy, because it puts everyone on an equal footing
    whether you are a local logger, an industry or whether you live
    in an urban area. Everybody had an equal opportunity to
    comment.
        Mr. Kingston. Okay, but the moratorium was announced
    January, '98, but it did not go into affect until March of this
    year. Were roads built during that period? Because, you know,
    are we, even though it is for 18 months, did we really back it
    into a longer period of time?
        Mr. Dombeck. The proposal was made in January 1998 and put
    out on the street. The rule did not go into affect until quite
    recently.
        Mr. Kingston. So roads were being built, there was not----
        Mr. Dombeck. There was not a formal halt, that is correct.
        Mr. Glickman. I think it is, however, in order to be
    completely clear with you, I think that there was not an active
    road-building campaign during that time period. Those roadless
    areas, we are talking about a moratorium in roadless areas.
        Mr. Dombeck. The fact is in many of our National Forests,
    the Forest Supervisors on their own had not been building roads
    in roadless areas for a number of years. This is because of the
    level of controversy associated with building roads and
    roadless areas.
        Mr. Glickman. And this again affects a very small part of
    the forest. These are roadless areas. So we are not talking,
    Jim says less than one percent of the total forest. There was
    other road construction going on in the forest.

                               Revenue Generation

        Mr. Kingston. Okay. All right, now, I think you touched on
    this and I think you were talking to Mr. Dicks when I walked
    into the room about the activities which you may be able to
    charge for recreational cabins and telecommunications sites,
    hydroelectricity facilities, ski areas. There are a number of
    areas where the Forest Service is, you know, has the ability to
    charge for things but is lagging in terms of making a defined
    program.
        And this is how we are going to get our fair market value
    and so forth. Are you working right now on that and are you
    willing to continue to work with Congress to see that we can
    help you?
        Mr. Dombeck. Yes, we are actively working on updating the
    fees for homeowner permits, communication sites, rights-of-ways
    and those kinds of things. In fact we are working cooperatively
    with other agencies like the Bureau of Land Management, so that
    we have a consistent policy. One customer may have to deal with
    two different agencies and we think it is important that
    customer service and consistency be there.
        I believe we are on track to do the reappraisals as
    required for our recreational residences. We are now about
    halfway through in the five-year process.
        Mr. Kingston. And you are willing to work with this
    committee and this committee's staff and make sure that we are
    walking down this road together and everybody understands where
    everybody is?
        Mr. Dombeck. What we can do is promise to keep the staff
    informed on a regular basis as to our progress on revenue
    generation.
        Mr. Kingston. All right, let us see. I guess this is my
    last question. In terms of your budget, the importance of
    recreation, the request for recreation funding is level and yet
    there is a lot of discussion about having more recreation. What
    are we doing here, why is that?
        Mr. Glickman. Jim? [Laughter.]
        Mr. Lyons. I guess the short answer on that----
        Mr. Kingston. You are the one who is talking about it, as a
    matter of fact.
        Mr. Lyons. We will take whatever you can give us for
    recreation. We requested additional resources and in the
    balancing of priorities we did not secure them. We think
    recreation is having a larger impact on forest resources and is
    increasingly more valuable for rural communities. It is a
    critical component of the agenda that Forest Service is
    following.
        We certainly see the need for additional investment in
    recreation. We did not secure the additional resources.
        Mr. Kingston. Well let me ask you this and you might not
    want to answer it immediately. But is it, you wanted it plussed
    up, but in order to plus it up with the knowledge that we will
    have to reduce funding in another department. And then when we
    reduced funding in one department, often some of the folks in
    the Administration criticize this Congress for lots of things
    and that might be an area wherever we get the money to increase
    it in recreation, where you know we mutually want it higher,
    but then we are going to get, take the PR hit for this other
    area.
        Is that what is going on, or not? I do not know what really
    happens in a budget meeting.
        Mr. Lyons. Well, I cannot speak to all that myself, either.
    But I will be so bold as to say that any more money you want to
    give USDA we are fine with. [Laughter.]
        Mr. Glickman. When I opened my statement I talked about our
    budget priorities this year. Recreation happens to be one of
    our priorities. However, there were other priorities competing
    for resources. Watershed health was a priority. Road
    maintenance was a priority. Land Legacy, research, and
    accountability were priorities as well. I talked about them
    all.
        We have done the best that we could within a total
    aggregate limited budget. I understand the caps are going to be
    even more difficult and onerous than we ever believed they
    would be. We will just have to work with you. It is clear that
    more and more people are using our forests. They are the most
    popular place for personal recreation in the country. We need
    more resources for them, but we also have a lot of other
    problems.
        Mr. Kingston. Well, I know a trend, for example, with the
    National Park Service it is always more fun to buy new land
    than it is to take care of what you have already. And you know,
    you do have to maintain but then you talk about watershed
    health and okay, we pull a little money out of that and
    suddenly we are accused of putting salmonella in water that
    children swim in.
        Mr. Lyons. Well, I am not going to touch that, but I think
    the point is, Congressman----
        Mr. Kingston. To take a swim or you mean topically.
    [Laughter.]
        Mr. Lyons. Salmonella is another story. But you know, as
    the Secretary said, we are seeking to establish a balance here.
    I think the reason that we received less in base funding for
    recreation is that we are developing new tools to provide
    alternative sources of recreation funding. You know, as a
    result of the commitment we have made as a nation to a balanced
    budget and the tough spending caps that go with it, we have had
    to be creative in coming up with new sources of revenue. We
    certainly appreciate the rec fee demo that this committee has
    been very helpful with.
        We are looking at concession reform. We have even proposed
    some unique ideas, like charging timber purchasers for timber
    sale preparation costs. I do not know if the ideas are
    realistic or not. So we have been forced to be creative because
    our costs are escalating. And I think that probably was the
    rationale for not increasing funding in recreation. There may
    be some other ways.
        Mr. Kingston. I think that is why it is important that as
    we look at our structure for charging for telecommunication
    sites and hydroelectricity and ski resorts and so forth, that
    we keep in mind that we want that money to go back into
    recreational things. Well, those are all the questions that I
    have. Mr. Peterson, if you have more questions, you can----
        Mr. Peterson. I have a couple dozen.
        Mr. Kingston. Do you want to take the Chair?
        Mr. Peterson. Do you have to vote?
        Mr. Kingston. I have to vote, but I had one other question
    for the Secretary, off the record. No, it has to do with
    another committee and it is something totally unrelated to this
    committee. So if we could recess for one minute and then maybe
    you could take the Chair? Did you have something to say?
        Mr. Glickman. No, I was just going to respond further to
    his question.
        Mr. Kingston. Okay.
        Mr. Peterson. I will pretend that there is somebody there,
    I can just sit here. Ralph is on his way back.
        Mr. Kingston. Okay, on his way, like on the tram right now?
        Mr. Peterson. Well, he was on the elevator with me and
    suddenly thought of something he forgot to do and he said he
    would be right back.
        Mr. Kingston. Okay, why do not we adjourn for two minutes
    or until Mr. Regula comes back, whichever is first.
        Mr. Peterson. Okay.
        [Recess.]

                             protecting open spaces

        Mr. Regula [presiding]. Okay. You are back on, Mr.
    Peterson, as soon as the Secretary gets ready.
        Mr. Peterson. Okay. You were going to respond further.
        Mr. Glickman. I think you raised a very good question but
    let me tell you, one of the biggest issues that I find in rural
    America is the desire to protect open spaces, farmland and
    natural resource areas from encroachment. For example, I was at
    the Farm Bureau annual meeting and one of their biggest issues
    was farmland protection. We can provide ways to protect
    farmland by putting easements on the land or taking other
    actions to protect it against development.
        And a lot of the work in the Lands Legacy program is, for
    example, buying easements along stream banks for watershed
    protection. This can ensure that people will not have to sell
    their land due to increased urbanization. What I am saying is
    that it works both ways. Lands Legacy is not only an urban
    initiative, but also a rural initiative to keep the areas
    pristine, clean and in many cases, undeveloped.
        That is why we are trying to get more money in farmland
    protection.
        Mr. Peterson. But you are reaching into suburban areas to
    do that. Let me just give you another reaction to that,
    something we do not talk about. I shared it with the Director
    of the Fish and Wildlife Service yesterday. Something that is
    happening in my district, I think it is happening over rural
    America. We are not farming nearly as much land as we used to.
    I hunted this fall on a piece of land I hunted on when I was a
    youngster and it was open meadows.
        And now it is a six- to eight- to nine-inch pole woods, it
    is timber. And what I find happening in rural America is an
    awful lot of farmland that was cleared when people came here to
    farm, is going back, and I call it the rural habitat expansion.
    Nobody talks about that. But in rural America, there is a whole
    lot more wildlife habitat than there was a few years ago.
        Millions of acres. In Pennsylvania alone, I have been
    working on these issues for 20 years. We had 14 million acres
    of commercial forest in Pennsylvania 20 years ago, today we
    have 16 million. So in rural America, much of our farmland,
    much more than is going into urban sprawl, is going back to
    brush and to woods, eventually. You know it starts with brush
    and in time, it becomes a very good forest. In other areas, it
    is not as good. You know, it depends on what species seeded
    there, what is locally grown and somewhat on the soils too.
        So we have a lot of our farmland that is, 10 or 12 years of
    no activity, nobody going in and cutting, it starts to return
    to woods. And so I do not think anybody is talking about that.
    The statement that prompted me to say that yesterday was we are
    not gaining any habitat. We are gaining a lot of habitat in
    America for wildlife, because a lot of our farmland, when you
    are farming land extensively, wildlife can use it but they do
    not really live there, you know what I mean?
        But it is going back to wildlife habitat. And so there is a
    huge change out there of farmland going back to timber that I
    do not think anybody is talking about, and to brushland.
        Mr. Glickman. Well, as you know, we have a very large
    program called the Conservation Reserve Program where we have
    up to 36 million acres in this country on which we let farmers
    retire land. The program is funded by Mr. Skeen's subcommittee.
    We do have an extensive increase in habitat, so I think what
    you are talking about is true.
        We must also be mindful, however, that there are many areas
    in this country where, because of the changing nature of the
    population patterns, there is interface between urban and rural
    America. Often in such situations we find that the forests are
    directly threatened. One of our goals is to try to preserve the
    integrity of these forested areas so we do not get massive
    fires and so the watersheds are protected.

                             local fire departments

        Mr. Peterson. Yeah, but I think you also ought to inventory
    the acres of commercial forests in America today and I think
    you will see it increasing every year. And nobody is talking
    about that. The issue I want to talk to you about, again, is
    very important to rural. I find that my, oh, I cannot think of
    the name of, the lands owned by the Fish and Wildlife Service,
    the refuge areas, yeah.
        They have contracts with the local Fire Departments to
    provide service. I met last fall with the eight or ten Fire
    Departments that service the Allegheny National Forest and they
    have serious concerns that they can continue to provide
    emergency services. They not only provide for fire, but they
    also provide emergency services to all our visitors and our
    recreational people.
        And sometimes, way back in, sometimes in the winter on the
    reservoir when somebody gets hurt or lost, they are out there
    searching for a day or two to find people that are lost. I do
    not think, personally, we are appropriately helping them for
    the services they are providing. I see you have a million
    dollars in the budget for Fire Departments. But that is not
    very much when you look at the size of the property that you
    have to manage.
        Mr. Glickman. Maybe Mr. Dombeck would comment on that.
        Mr. Dombeck. Well, this is like the other areas that we
    have been talking about such as recreation. There is not any
    program area that I feel is adequately funded. I think most
    organizations are like that. The programs to provide surplus
    equipment to Volunteer Fire Departments, training and those
    kinds of things are important. There are also a lot of
    jurisdictions where we have reciprocal agreements.
        One of the most important concerns we have is ensuring that
    everybody is adequately trained because structural firefighting
    is very, very different from wildland firefighting and requires
    special training.
        Mr. Glickman. This budget does provide more money in state
    fire assistance, an increase from $21 million to $31 million.
        Mr. Peterson. That would be for states to fight forest
    fires?
        Mr. Glickman. That is correct.
        Mr. Peterson. But I am talking about the Fire Departments
    that provide fire service and emergency services on our land.
    And I think we are very inadequate there.
        Mr. Lyons. As a former Volunteer Fireman, I would say that
    critical additional investments are warranted. We do have
    mutual agreements with many of the rural fire companies. We do
    have a Rural Fire Assistance Program. We support providing
    additional resources in that program, so we are continuing to
    work to improve the situation.
        Mr. Peterson. How about EMS?
        Mr. Lyons. Well, we do not directly fund Emergency Medical
    Servcies. In many respects we provide mutual support. In fact,
    the rural fire companies do work with us on emergencies on
    National Forest System lands.
        Mr. Peterson. But my Fire Departments feel very inadequate.
    In fact, some of them have huge acreages and have a township
    population base of 200 people and they are maintaining this
    Fire Department. Basically they are maintaining it for us, I
    mean for the forest.
        Mr. Lyons. You are correct. In many respects they are an
    initial attack force on wildland fires, and that is why we
    provide training and equipment and such. We are trying to help.
        Mr. Peterson. I think we need to ask if we are adequately
    helping them. I do not think we are, personally. Is my five
    minutes up or do I have another shot here?
        Mr. Skeen. If you have got something else then shoot.
        Mr. Peterson. One more issue, okay. I have one more good
    one for you.
        Mr. Glickman. The only thing I have to tell you is that I
    was supposed to leave at 11:00 and I know Mr. Skeen has a
    question and Mr. Dombeck is going to stay here.
        Mr. Peterson. Okay. Well, then I will let Mr. Skeen go
    ahead. I will always bow to the senior member.

                               endangered species

        Mr. Skeen [presiding]. That is the first time you have ever
    said that and I do appreciate that. And Mr. Secretary I
    appreciate you being here. Really, I dropped in to make sure
    that they treated you fairly well because they are not
    accustomed to giving you the kind of money that we offer you
    over there. [Laughter.]
        So I do not want you leaving us and using this as a----
        Mr. Glickman. You do not have to worry about that.
        Mr. Skeen. I would like to ask you a question on an
    endangered species issue. And that is the proposed listing of
    the mountain plover. It is a small bird that winters in
    southern California and spends the rest of the year on the east
    side of the Rocky Mountains and the high plains states. And
    according to the information that I received that the
    Conservation Reserve Program appears to work to the detriment
    of this bird. Is this----
        Mr. Lyons. I know, we will have to check this out for you.
    What is it, the mountain?
        [The information follows:]

        The western great plains--found in western Kansas, western
    Nebraska, eastern New Mexico, eastern Montana, eastern
    Colorado, the Texas panhandle, eastern Wyoming, and western
    Oklahoma--historically supported shortgrass prairies. The
    mountain plover nests primarly in shortgrass prairie, in
    particular that which has been grazed even shorter by bison,
    prairie dogs or cattle. As it is currently being implemented,
    the Conservation Reserve Program (CRP) involves the planting of
    non-native species such as alfalfa, sweet clover, and other
    tall-statured grasses and forbs which are much taller than the
    native shortgrass prairie species. This, combined with the
    grazing restrictions associated with the CRP, does have
    negative effects on the suitability of these lands as habitat
    for the mountain plover. Tall vegetation is a barrier to this
    plover, which depends upon vision to detect predators.

                                baca acquisition

        Mr. Skeen. Mountain plover. One other question. Is anything
    happening on the proposed acquisition of the Baca location
    ranch in northern New Mexico?
        Mr. Glickman. Do you want to talk about the Baca?
        Mr. Skeen. I understand that the owner said no to the
    purchase.
        Mr. Lyons. That is correct, Mr. Chairman. And we are still
    talking to the family about this issue. We certainly would like
    to be able to acquire that property. We think it is a national
    treasure. But we have not made any recent progress on that to
    my knowledge.
         Mr. Skeen. So it is sort of suspended?
        Mr. Lyons. Yes, sir.
        Mr. Skeen. I do not have anything further. Well sir, they
    say that we have done all the damage we can do for one day.
        Mr. Glickman. Mr.--if you have one more----
        Mr. Peterson. Just one, okay.
        Mr. Skeen. If my colleague has another question, he is
    certainly----
        [Laughter.]

                                county payments

        Mr. Peterson. Thank you, Mr. Secretary. The decoupling
    issue, 25 percent. I guess, I am going to say prove to me that
    we will get it. I was amazed when I came here. At the state
    level I was one who got our local payment in lieu of tax
    doubled from 60 cents to a $1.20 an acre, which I think is
    appropriate. Just a flat fee per acre, game commission land,
    Forest Service land in Pennsylvania, we pay $1.20.
        PILT, Payment In Lieu of Taxes for rural America, it never
    goes up in authorization and we never even 50-percent fund it.
    Now how do we justify not funding the pittance of PILT. I call
    it pittance. How do we justify that we take all this out of the
    tax base locally and we do not even fund the authorized amount?
    I am going to share with you that in the military side we have
    a very handsome payment.
        I think military bases bring a much bigger bang to the buck
    to the local economy, in fact, I am not so sure they would need
    a PILT payment. But it is more urban/suburban. Out in rural
    America, we cannot get a couple pennies an acre. It has been
    about 40 percent funded and it is not your fault, it has been
    prior to you. It has gone on forever.
        I was amazed. They have never fully funded PILT and it does
    not have any escalation clause. So if you give us 25 percent
    for timber now, are we going to get it, or are we going to get
    40 percent of it like we do for PILT? Is there ever going to be
    inflation increases, probably not. I mean it is like accepting
    the beginning of the end.
        Mr. Glickman. I think it is a fair question. I would say
    there is a history of making the payments and when the
    northwest forest plan was put together, we went down this road
    and we have honored our full commitment under that plan to make
    those payments. I believe that is correct.
        Mr. Lyons. That is correct and in fact this proposal for
    decoupling is based on the experience with the northwest forest
    plan where we worked with the delegations to try to come up
    with a formula that assured a sustainable level of funding. We
    have based this proposal on that experience. And I think we
    have a very good track record in making 25-percent payments
    throughout the history of the organization.
        Mr. Peterson. But see my experience is PILT. And it is
    pretty bad. I think that is a legitimate concern.
        Mr. Lyons. I know you brought that up with the Department
    of Interior when they appeared before you because that is their
    legacy, not ours.
        Mr. Glickman. We hear you. As I said, it is our intention
    to fulfill our commitment as we have done in the northwest
    forest plan.
        Mr. Peterson. Okay.
        Mr. Skeen. Mr. Secretary, we are going to adjourn so you
    can take your leave.
        Mr. Glickman. Thank you very much.
        Mr. Skeen. And we appreciate you being here and thank you
    once again, the check is in the mail.
        [Additional questions for the record follow:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                             Wednesday, March 10, 1999.

                                 FOREST SERVICE

                                    WITNESS

    MIKE DOMECK, CHIEF, FOREST SERVICE
        Mr. Skeen. We now have Mike Dombeck, Chief of the Forest
    Service.

                            Chief's Opening Remarks

        Mr. Dombeck. That is correct, Mr. Chairman. Thank you. In
    fact, I have the Deputy Chiefs here with me. And if need be, we
    can have people come up to the chairs, because what we want to
    do is provide----
        Mr. Skeen. Do you have your statement?
        Mr. Dombeck. Yes, what I would like to do, Mr. Chairman, is
    ask that my full statement be entered in the record and I would
    just like to make a couple of points. I have been in this job
    now about two years and it is a real experience being part of
    the evolution and the controversies of public land management
    and the national forest system.
        Mr. Skeen. You do not look like you are worn out.
        Mr. Dombeck. Well, I have got a few more gray hairs.
        Mr. Skeen. You have been holding yourself together pretty
    well.
        Mr. Dombeck. I am hanging in there.
        Mr. Skeen. We are glad to have you this morning.
        Mr. Dombeck. Well, thank you.
        In fact, the Secretary mentioned the elements of the
    Natural Resource Agenda deal with roads, recreation,
    sustainable forest and grassland ecosystem management, and
    watersheds.
        So I will save that dialogue for the questions and answers,
    but the issue I would like to mention is accountability. As you
    know, I think I have probably been subjected to more hearings
    on the issue of financial management accountability and so on
    than probably any other Chief of the Forest Service and we have
    got the message.
        What we are doing is we are working very, very hard to put
    the infrastructure in place to move forward on this. In fact,
    Vincette Goerl is here with me as our Chief Financial Officer.
    She was successful in getting the Customs Service a clean
    financial audit. In my years at the Bureau of Land Management--
    in fact, in 1995--we got our first clean financial audit at
    BLM. Of course, the Forest Service is a significantly more
    complex organization, a much larger organization.
        I have made management of our fiscal resources
    accountability a top priority within the agency. We ask your
    continued support and interest of this Committee in doing that.
    With that said my hope is that we can deal with natural
    resource issues; that there is a significant debate around some
    of these issues; and that we not lose sight of the importance
    of the business side and the financial management of the Forest
    Service. Because it does not matter what our philosophy is on
    resource management--I think everybody wants to see a smooth
    running operation of the Forest Service that is efficient,
    effective and that can respond quickly. We intend to do that
    and place a very high priority on that.
        In fact, we have signed a contract with the National
    Academy of Public Administrators at the request of the
    subcommittee; they will be assisting us to make sure that our
    budget structure, the infrastructure that we put in place, the
    accounting procedures are what they are and we look forward to
    continuing to work with the Committee on this respect. With
    that, I would say that, as has been said before, the National
    Forests' 191 million acres are the lands that are of increasing
    value to the American public from the standpoint of the forest,
    the recreation opportunities, the water, the fish and wildlife
    habitats, the forage, all those kinds of things.
        We have a world-class research organization. Probably the
    premiere research and development organization in the world,
    plus the state and private forestry program that provides
    assistance to private landowners, transfer technology, things
    like the fire programs that we talked about earlier are very,
    very important.
        As I work through the controversies, I continually remind
    myself that we have got the best wildland firefighters. We have
    got some of the best foresters, the best resource managers,
    biologists in this agency and in this country and we really
    need to be proud of that. We appreciate your continued support
    and good morning, Mr. Nethercutt. We would be happy to answer
    any questions you have.
        As I said for the sake of efficiency to get the most
    accurate information down quickly, we have got the Deputy
    Chiefs here and some of them may be rotating, depending on the
    interest of the Committee.
        [The statements of Mr. Regula and Mr. Dombeck follow:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Skeen. Your choice, any time you want to have those
    persons come forward, would be fine.

                            fire season preparations

        Could you tell us about how the Forest Service is doing the
    preparation for this fire season that we keep talking about,
    particularly in the southwest? We are very interested because
    we have had a sustained drought going on and it is a very--to
    use a euphemism, a combustible situation.
        Mr. Dombeck. Well, in fact, one of our executives, Phil
    Janik, our Chief Operating Officer, stayed back from this
    hearing so he could participate in the Drought Commission
    Meeting for me this afternoon and that----
        Mr. Skeen. Where is he?
        Mr. Dombeck. Pardon me?
        Mr. Skeen. Where is he holding that?
        Mr. Dombeck. I believe the meeting is in the Department of
    Agriculture. But a Commission has been set up to deal with the
    issue, to take a look at what opportunities there are for us to
    increase efficiency, provide information and deal with the
    whole issue of drought. But I have got to say that the
    southwest, particularly right now, is a literal tinderbox and
    all of the safety meetings, all of the pre-fire season efforts
    are going on right now, so we will be fully ready to respond as
    needed.

                               hispanic employees

        Mr. Skeen. I appreciate that. One other question that I
    would like to broach with you. Hispanic groups in my district,
    we have a large Hispanic population, continue to complain about
    the treatment of Hispanic employees by the Forest Service in
    the Southwest Region. First, can you explain what the
    complaints are and what you are doing about them and then could
    you provide for the record some statistics, say back to 1990,
    as to the number of Hispanic employees in the different Regions
    and by grade?
        [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Dombeck. Yes. We would be happy to provide the
    information that we have. In response to that I want to add,
    though, at the direction of the Secretary, civil rights issues
    have been very high on the radar screen of all of USDA and in
    fact, in the Forest Service we have moved forward in
    implementing procedures to--in fact, we set up five centers in
    the Agency to deal with the issues of complaints.
        All of the senior executives in the Forest Service have
    been part of negotiations, resolution of cases to move forward,
    but the thing we are dealing with is, I think, we are dealing
    with some of the problems and now we have got to turn and deal
    with, not the symptoms, but the real problems. We are making
    significant investments in civil rights. In training, we have
    got a continuous improvement process, and an employee survey
    has been done now for several years to become aware of
    specifically what the problems are and then what we need to do
    to address those problems.
        Mr. Skeen. It sounds like you have got a very large program
    or very good initiative going.
        Mr. Dombeck. Well, we are, again, we are very much aware of
    the problem. I do want to let you know though that we have got
    a ways to go in resolving it. It is not something that----
        Mr. Skeen. We appreciate the effort. That is what we really
    want to get at.
        Mr. Nethercutt.
        Mr. Nethercutt. I would defer to my colleagues who came in
    ahead of me.
        Mr. Skeen. I am sorry. Whoever is up next. Mr. Cramer.
        Mr. Cramer. I am next?
        Mr. Skeen. You won the doily.
        Mr. Cramer. All right. I will reach and grab it.
        Mr. Skeen. Yes sir.
        Mr. Cramer. I want to say on behalf of my district, and I
    did not get the chance to say this to Secretary Glickman as he
    left here, we appreciate our working relationship, especially
    on my farmers' behalf that we have with DOA.

                             AGREEMENTS WITH STATES

        On the Forest Service side, I want to talk to you. I have
    got a close working relationship with Alabama's cooperative
    extensive system. They are in Alabama and on forestry issues, I
    have heard them express some frustration at the way that they
    move through the system. The State Cooperative Extensive
    System, the State Forestry Commission, the U.S. Forest Service,
    representatives in my state, they all have a close working
    relationship and they come to agreements and as they move up
    the ladder though, it seems that things sit still for an awful
    long period of time and that in fact we get feedback that there
    are turf battles within USDA over some of their recommendations
    and they do not get passed on.
        Are you aware of any problems like that? Is my state unique
    or would you know? And if you do not know, could you get back
    with me?
        Mr. Dombeck. I would say your state is not unique and one
    of the things that we have made significant progress on, but
    need to continue to make more progress, is interagency
    coordination. For example, in parts of the country, we are
    focusing on customer service and one-stop shopping. I think
    specifically in Alabama, in fact, Deputy Chief Clyde Thompson,
    who is here, was part of a workshop, I believe, that was held
    in--it was Alabama, was not it, Clyde?
        That was to provide landowners, particularly small farmers,
    with information, and just knowing where to go to get the
    information you need is very important.
        Mr. Cramer. When was that conference? I assume it was a
    success. December? So this past December.
        Mr. Dombeck. In fact, we are real proud of that. I am proud
    of the work of the state and private forestry staff of the
    Forest Service who have developed the model for the agreements
    for this to move forward. We will be expanding this kind of
    effort in other parts of the country to make sure that the
    needs of under-served individuals are met--and this would apply
    to the Hispanic community in the Southwest as well, Mr. Skeen,
    because program delivery is an important aspect of what we do.
    Making those programs available to all sectors of our
    constituencies in the communities is very important.
        Mr. Skeen. I appreciate that.

                      recreation fee demonstration program

        Mr. Cramer. I have one other question. You are proud of the
    success that you have made with the recreation fee
    demonstration program and what, if any, changes would you
    recommend about the program in future legislation?
        Mr. Dombeck. What I would do is--we are pleased with it--
    one of the things with the demonstration pilot is, having now
    more experience under our belt, we are learning about what
    works where and why it works and what things we need to change.
    I think what I would do is I would ask Ron Stewart to give you
    some more details on that.
        Mr. Stewart. One of the proposals the Administration has
    brought forward is to make it permanent. That is one of the
    issues now, since it does have a sunset on it and it really
    allows only up to 100 projects. It is difficult to do long-
    range planning, particularly since one of the big benefits that
    we are seeing is the money goes back to the local unit to
    improve facilities.
        And some projects require significant investment. And so
    the thought that they may have the project in before they have
    accumulated sufficient resources to make the final completion
    of whatever the improvements are going to be has been an issue.
    So permanent authority and expansion of it would be very
    helpful.
        As part of the demonstration though, we have identified a
    number of issues and they really--some of them did not become
    evident until the agencies involved in it, Interior and Forest
    Service, began expanding the program towards the hundred max
    that each has. That is, where you have units close to each
    other from different agencies, we have different fees, a
    different fee structure, and charge for different kinds of
    things. It has been very confusing to the public.
        Again, having permanent authority and expansion of
    authority will help lead to some solutions of those kinds of
    problems. So I think the biggest thing is, we would like to see
    that authority become permanent and expanded, and to continue
    to learn from it. As I said, we have made some mistakes when we
    first started. It was intended to be a demonstration and as it
    expands we discover new things. And one of the big issues is
    this idea of the potential for proliferating fees and for fees
    charged by different agencies. We really do need to work
    together on that.
        It was not an issue when there were only a few units
    because so few of them were close together. Now that we have
    got more of them in the program, they are oftentimes right next
    to each other.
        Mr. Cramer. Well, thank you for that information. It would
    seem to me as a new Member of the Committee that the
    demonstration programs were intended to allow you a certain
    degree of trial and error with what works and what does not
    work and would encourage you to be flexible to see that, if you
    continue to improve and make yourself more user friendly, that
    you in fact do so.
        Mr. Dombeck. In fact, one of the important things is
    customer service, because particularly, in parts of the country
    where you have BLM, National Parks, National Forests, to make
    it simple and convenient for users to--so they do not have to
    be dealing with a bunch of different agencies--I think is very,
    very important. The people just want good service.
        Mr. Cramer. Thank you, Mr. Chairman.
        Mr. Skeen. Thank you, and I apologize for not recognizing
    you right off the bat.
        Mr. Nethercutt.

                                roads moratorium

        Mr. Nethercutt. Thank you, Mr. Chairman. Welcome, Mr.
    Dombeck, ladies and gentlemen. I want to talk with you, if I
    may, briefly about the roads moratorium that has been placed. I
    am sorry I missed your testimony earlier, Mike, to the extent
    you may have commented on that today.
        I am aware of the facts that comprise the roads moratorium
    decision, March 1, moratorium went into effect, February 11th
    was the proposed rule or the interim rule was announced. You
    got an 18-month time period where you want to do some analysis
    as I understand it.
        When you testified before the House Resources Subcommittee
    on Forests and Forest Health in March, just a week or so ago, I
    am informed that you stated three key steps that outline the
    Administration's policy on road-building.
        The current rule to temporarily suspend road-building is
    designed to allow you to develop a permanent policy to develop
    a road analysis procedure and then look to revise current
    regulations.
        I am wondering if you could, for the Committee, elaborate
    on what type of road analysis procedure you intend to develop,
    what current regulations do you intend to revise?
        Mr. Dombeck. The team has been working for some time now on
    the long-term policy, because that is what is really important,
    and with the premise that we base our decisions on the best
    science and technologies because many of the roads have greater
    recreation use. They are used for different things than they
    were. But we hope to have the proposed long-term rule on the
    street for public review by early summer. We will at that time
    be very judicious about public involvement, the opportunity for
    people to know exactly what we are proposing and so on and we
    will--now, there was another couple of parts to your question.

                            road analysis procedures

        Mr. Nethercutt. Yes. I am wondering what the road analysis
    procedure will be. In other words, what are you going to look
    for in terms of standards for whether to allow or not allow
    road construction or maintenance of existing roads? What
    factors are you looking at?
        Mr. Dombeck. What I will do is, I will--and it should be
    available in a couple of weeks, the science analysis of that--
    look at things from the geology, the soil stability, all the
    factors. And another important point that I want to make is
    that the decisions for roads will be made by local managers
    working with local communities and interest groups in this
    area. This is not an issue that is going to be dealt with at
    the national level. I know there has been some concern about
    that. But the important thing is that the transportation
    infrastructure of the national forests meshes with the needs of
    the local communities, the adjacent landowners and stuff.
        Ron, in fact, just participated in the House Roads Hearing.
        Mr. Stewart. Yes, in fact, with Mr. Peterson.What I was
    going to offer is, the analysis procedure is being field-tested
    on six national forests and undergoing scientific review, so my
    guess is there will be some changes. But there is a handbook
    associated with that that describes the procedure. We would be
    glad to provide that to the Committee or to anyone who would
    like to have it. It is a process, as I said, that is undergoing
    some reviews so it could have some changes in it, but it does
    reflect what is being tried right now.
        Mr. Nethercutt. That would be helpful and I would
    appreciate that and request it.
        [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                           economic impacts analysis

        You have commented about local managers, Mr. Dombeck. I
    agree with you that that is advisable and I am wondering if you
    will be looking as you look at the local decision-making
    capability, looking at the economic impacts on these
    communities. Is that a factor in determination of providing
    this kind of road analysis that you are going to be doing?
        Mr. Dombeck. Yes. In fact, again, if you look at the
    backlog of our construction and our backlog of reconstruction
    and maintenance and replacement of bridges and this sort of
    thing, with an over $8 billion backlog--these are tremendous
    opportunities for contractors on local jobs. The way that the
    work is done varies from forest to forest where, you know, in
    some cases we have our own work force, but in most cases we
    have cooperative agreements with the townships, with counties
    or contract out to local contractors. But part of the problem
    we have is, we have more roads than we can afford to maintain.
    So then what do we do with those roads, the ones that we cannot
    afford? That again is the decision at the local level. Do you
    turn them into hunter/walking trails, hiking trails, biking
    trails? Do you gate them? Are they causing enough environmental
    problems, sedimentation, that they need to be decommissioned,
    obliterated? Those decisions need to be made at the local
    level. But then the commitment that we need from the local
    communities is, we need a support base to maintain the roads
    that everybody wants.
        Mr. Nethercutt. No, I understand that and that is part of
    the economic analysis that probably will have to be undertaken
    as well and at least out my way in eastern Washington there, a
    lot of people say to me, I would be willing as a citizen, they
    say, to try to go in and assist the Forest Service in the
    maintenance efforts. But what they do not want to do is have a
    gate be put up and say well, geez, I have been walking this
    trail forever and ever and now suddenly I cannot. I do not
    perceive that I am doing any harm to the process. I am not in
    logging or whatever else I might use the forest to do. So I
    think you will find support, at least in my part of the
    country, community support for the effort that needs to be
    taken, under the management practices that you have.

                        regulatory flexibility analysis

        I just ask one final question, Mr. Chairman. Along that
    line with regard to small communities, there is federal law, my
    staff informs me and thank goodness for them, that requires a
    final regulatory flexibility analysis to be done when a final
    rule is published. They cite 5 U.S.C. Section 604. And it
    requires that this regulatory flexibility analysis must include
    a statement of the need and objective for the rule, a summary
    of the significant issues that are involved, record-keeping
    requirements and what steps the Agency, Forest Service in this
    case, has taken to minimize the impact on small communities.
        And I am wondering if you are planning to do that
    regulatory flexibility, final regulatory flexibility analysis
    as required by law, at least as our staff sees it?
        Mr. Dombeck. Well, if it is required by the law, we are
    going to do it.
        Mr. Nethercutt. I understand. Just maybe you could respond
    for the record what steps you intend to undertake to comply
    with that requirement?
        Mr. Dombeck. We will do that. Unlike you, I have several
    attorneys that are looking at that and that keep me advised and
    we will provide that information for you.
        [The information follows:]

        The Forest Service considered the direction of Executive
    Order 12866, the Unfunded Mandates Reform Act of 1995, and the
    Regulatory Flexibility Act in determining the appropriate
    economic analysis. Executive Order 12866 provides guidance on
    the requirements for undertaking an economic analysis to inform
    policy decisions. The Unfunded Mandates Reform Act includes
    direction to assess regulatory impacts if annual expenditures
    are $100 million or more. The Regulatory Flexibility Act
    required federal agencies to give special consideration to the
    impact of regulation on small businesses. Although the annual
    effects of the proposed interim roads policy are estimated to
    be less than $100 million, an economic analysis was undertaken
    and is included in the Environmental Assessment as Appendix H.

        Mr. Nethercutt. Thank you. I will stop for a moment and
    then come back with another round, if I may, Mr. Chairman.
        Mr. Regula. Okay. You have some more questions you would
    like to ask and Mr. Peterson. Okay. We will go forward with
    you, Mr. Peterson.
        Mr. Peterson. Thank you, Mr. Chairman. I was kind of
    perusing the budget here and listening as we have been
    answering questions.

                           program budget priorities

        As you look at the $172 million request of additional money
    for your budget this year over last, and then I look at the
    facility maintenance budget where you claim you need $255
    million per year, since you asked for $55 million, on the road
    maintenance budget you claim you need $431 million a year and
    you ask for $122 million; 50-percent cut in the trail
    construction budget; a $6 million cut in the reconstruction of
    facilities. I guess those who oppose the resource use on our
    public land whether it is timber, oil or gas, or other
    resources are saying we are going to make it back in
    recreation, we are going to get this, but everything that will
    fuel recreation has not been adequately funded.
        How do we get to where recreation becomes the aid to rural
    America when all of the things that will equal additional
    recreation, more access to the forest, more use of the forest
    are being so under-funded?
        Why are those not getting on the priority list, yet we have
    $172 million of new dollars in the budget.
        Mr. Dombeck. Well, as Jim Lyons mentioned in his earlier
    answer, there is never enough money for the needs. One area is
    road maintenance, which is important. We will, with the
    proposed budget, increase maintenance from being able to
    maintain 18 percent of our roads to standard, up to 22 to 24
    percent. What we are doing on our arterial and collector roads
    is, over the course of the last four or five years, we have
    lost in excess of 10,000 miles of those roads that somebody
    could drive down in a station wagon with a family because of
    washouts, bridge load limit problems, because of safety
    standards and that kind of thing. But just from a philosophical
    standpoint, I think a good discussion for us to have, and to
    continue in the future--and I know the Chairman is very
    interested in this--is the Forest Service is in transition from
    the standpoint of how do we deal with this tremendously growing
    recreational work load. I mean, it affects law enforcement. It
    affects our ability to maintain our infrastructure. More people
    mean more wear and tear, more cars, more wear and tear on the
    roads and this sort of thing. And I believe the agency has been
    in this transition for some years, but you know, we are trying
    different things and appreciate things like the fee demo
    program. It is very, very important that that not be a
    replacement for other programs and those dollars go
    specifically into those sites where they were generated. But
    that is that, as a community of people responsible for the
    national forests, we need to continue to work very diligently.
        Mr. Peterson. I would caution you because when I dealt with
    budget secretaries at the state level under two
    Administrations, under both parties, they both gave me the same
    answer. We gave Pennsylvania their fees and that is to take
    care of their maintenance, but they flat-funded them
    thereafter. It was like, oh, they get fees now. We do not have
    to fund them. Do not let that happen to you because you will
    lose in the end. They did.

                           forest road system debate

        The road issue. How many miles of roads do we have in the
    Forest Service?
        Mr. Dombeck. About 383,000 miles.
        Mr. Peterson. People talk like this is an immense amount of
    roads, but you know I have counties in my district that have
    3,000 to 4,000 miles of road in them and they are rural farm
    counties. So when you take the 200 million acres we have, it is
    a pretty sparse road system really. What I would like to ask
    you is do you have it prioritized? It seems to me a portion of
    your road system is providing local service. Do you know how
    many miles do that?
        Mr. Dombeck. Of the road, the breakdown of the road system
    and if someone has, I am not sure staff has the breakdown of
    the miles, but we have somewhat of--about in the neighborhood
    of about 90,000 miles that are arterial and collector roads and
    these would be, some of them could be hard-surfaced. You know,
    as I mentioned earlier, one of the roads that I grew up on is
    now hard-surfaced. It is blacktopped and a school route and a
    mail route. And also, then, a large portion of the roads, the
    largest portion, would have been for timber access and forest
    management and those kinds of things.
        Mr. Peterson. Some of the next level would also be for
    recreational access too, would it not?
        Mr. Dombeck. Yes.
        Mr. Peterson. It seems to me it is vital to you to break
    that down and get past this argument, because we have those who
    do not want resources taken off of the forest but also seem to
    oppose roads because they equate that to resources. If a fourth
    or a third of your road system is actually part of the local
    community, we ought to identify that and we ought to do our
    best to get it into the highway funding scheme that funds the
    rest of the roads in America. And I would be one glad to help
    you do that.
        But we need those figures and then we can argue about the
    rest of the roads. But personally, I think we are just losing
    the road argument on and on and on because everybody is tagging
    it to resource use and saying well, the way to stop resource
    use is to not fund the roads. But then they also argue that we
    are going to expand recreation. Well, you are not going to
    expand recreational opportunities without roads. Some roads
    should be for very limited use, for four-wheel-drive vehicles
    and so forth that are not for regular vehicles. Other ones
    maybe should become trails, but you can still get in in
    emergencies. Because I think we also have to think as people go
    deep into the forest, we have to have the ability to get them
    out when they have a heart attack or a stroke or have an
    accident. We have to think about that. And you have to have a
    road and there will be some kind of vehicle that can get in
    there and so some of our roads need to be very basic. Then some
    need to be a little bit improved and some need to be part of
    our local community system because they are mail routes and bus
    routes. I think we need to get much more sophisticated in how
    we deal with that and then we have got to get roads on the
    priority issue or recreation is just not going to grow.
        Mr. Dombeck. I would like to respond on three or four of
    your points and first, thank you for your offer to support us
    in the Highway Trust Fund. In fact, this year, in 1999 was the
    first year that we received $750,000 for inventory and planning
    to prioritize those needs.
        The second point I want to make is that about 90 percent of
    the roads are used for recreation purposes and that will only
    continue to increase because we have got 10 times the
    recreation use of forest roads today than we had in 1950. And
    the other thing I want to mention is: We were all part of a
    fairly tough debate last year with the roads proposal, but I
    want to point out that this past fiscal year was really the
    first year in probably 20 years where there was not an
    acrimonious debate on either the floor or the House or the
    Senate over the Forest Service roads program. We had a time
    period where we were within one vote in the Senate of losing
    the program and just within a handful of votes in the House. I
    think what we did was, we were beginning to redefine the
    program to where it was viewed as the program that was totally
    associated with timber harvest and therefore I am against it,
    if that is your philosophy. The fact is, understand that these
    roads are important for recreation, for local uses, school
    buses that drive down some of them. And we need to look at the
    road situation more broadly and move the debate out of this
    narrow spectrum of road-building and roadless areas which is
    where the bulk of the organizational energy was spent. And
    really, the reason that I made the decision I did knowing that
    it would be a challenging debate--but I think we are making
    progress in redefining it. Now if we can take it to the next
    step of getting the funds to deal with the arterial and
    collector roads, the bridges and so on, from the appropriate
    sources, I think we are on the right track.
        Mr. Peterson. The timber-ton-mile tax that loggers pay,
    where does that go? Does that stay on that forest or does that
    go into a national fund? They pay a per-mile tax if they haul
    logs on your route or something?
        Mr. Dombeck. It stays within the state that it is
    collected.
        Mr. Peterson. The state.
        Mr. Dombeck. Yes.
        Mr. Peterson. So it stays on the forest?
        Mr. Dombeck. Yes. It is generated in the state, and in the
    case of Pennsylvania, it would stay within the Allegheny.
        Mr. Peterson. So then it is used for what?
        Mr. Stewart. I think the tax you are talking about would be
    used by the state to maintain their portions of the roads. We
    are able to collect fees from the timber sale in order to do
    road maintenance and road reconstruction and so forth. We pay
    for it through a different way, now through appropriated funds.
    It used to be through purchaser credits which we, of course, do
    not use now. But basically, the road system was maintained
    through collections from the timber sale.
        Mr. Peterson. Okay, thank you.
        Mr. Stewart. And that does stay locally.
        Mr. Peterson. The Chairman has a question and I think
    George has another question. I will suspend.
        Mr. Regula. Well, Mr. Nethercutt.

                              timber salvage sales

        Mr. Nethercutt. Thank you, Chairman and thanks, John. Mr.
    Dombeck, my understanding is there is some proposed forest
    health salvage sales for the Colville Forest and also the
    Panhandle of Idaho. I am wondering if you are committed to
    going forward with those sales?
        Mr. Dombeck. Yes. In fact, in the case of the Panhandle,
    Dave Wright, the forest supervisor, has been in and briefed
    interested members of the delegations as well as our staff, and
    we will move forward with those.
        I am not familiar with the details of the Colville.
        Mr. Nethercutt. I understand.
        Mr. Dombeck. But if there is any information you would
    like, we would be happy to provide that.
        Mr. Nethercutt. That is great and I will have some other
    questions for the record if I may, Mr. Chairman, I will submit
    to you for answers as fast as possible and I thank you.
        Mr. Regula. Thank you. Well, I have a statement, more than
    a question, and that is as I have looked at your budget, you
    are proposing a lot of money pass-throughs, while at the same
    time you do not have money for your fixed costs. You do not
    have adequate funding for accounting, for the accounting
    programs that you know are absolutely important and that is one
    of the reasons we have asked for the NAPA study.
        You do not have adequate money for recreation, and it seems
    to me that you have to rethink your priorities. In all of this,
    you have requested $172 million in new funds and just this
    morning, there seems to be an agreement that we are not going
    to break the caps which, of course, means that we are going to
    be restricted on what is available.

                          budget allocation priorities

        I guess the sum and substance of what I am saying is that
    you need to rethink some of your priorities. As we get an
    allocation and we know what we will have to work with, we want
    to come back to you to say in light of all this, do you have
    some additional priorities or changes that you might make,
    recognizing I think, that fixed costs have to be done. I think
    recreation is extremely important. Obviously, the fee program
    is designed to enhance the visitors' experience and should be
    used for that. We had some indication that those rec fees may
    get moved into other priorities that the Department might have
    and I would not want that to happen. Certainly I want the fees
    to stay where they are collected.
        That is the contract we have with the American public which
    is paying for these things. So we will be back in touch with
    you once we know what we are going to have and we are
    interested in working with you in terms of what your priorities
    are, but I think some of what you have requested probably
    reflects OMB priorities. Fire is another problem. And we will
    have to have some additional discussion in an effort to get a
    bill that is good policy for our national forests. I do not
    know if you want to comment.

                            financial accountability

        Mr. Dombeck. Well, I would like to say while you had to go
    vote I did reaffirm our commitment to the study by the National
    Academy of Public Administrators to assist us in both the
    budget structure issues and the various things that have been
    said with regard to accountability. The one thing that we want
    to be very judicious about is the efficiency of the
    organization. The fact is no matter what our resource
    philosophy is, everyone wants a smoothly running, efficient
    organization where our books balance and we get a clean
    financial audit. That is very, very important to me. I am
    pleased to have somebody of Vincette's stature here. In fact,
    Vincette is president-elect of the D.C. Chapter of the
    Association of Government Accountants. We have a pro here and
    she has a good staff working with her. We hope you continue to
    encourage us to achieve a goal of accountability.
        Mr. Regula. Looking at your budget, I hope she knows the
    secret of that fishes and loaves story from the Bible.
        Ms. McDougle. Mr. Chair, I would like to add something on
    this very quickly. Thank you for the opportunity. We in state
    and private forestry believe that it is not either/or. It is
    both. We cannot get forest health conditions improved by
    looking at the green lines alone. We have to look inwardly. We
    have to look outside. And an example is in the South. Forest
    removals now exceed the growth for the first time in 30 years.
    Also in the South, the Forest Service owns the red-cockaded
    woodpecker because of that. As fragmentation and other things
    occur on private lands, the critters come to us. We are the
    corner. And so what that does, in turn, is reduce our decision
    space.
        So we think that there are opportunities outside the green
    lines that the Forest Service should also pay attention to for
    sustainable forestry.
        Mr. Regula. You are talking in terms of the pass-through to
    the states and our local communities. That is appealing, except
    the states are flush, and we are not. I have a hard time
    reconciling that when 30 percent of the United States is
    presently public lands, and we have many deficiencies in this
    budget in recreation, et cetera, et cetera, that we should be
    passing through to buy more lands.
        I understand it would be nice. It is like farmers. All they
    want to own is the land they have and what is next to it. But
    you reach a point where you have to make priority judgments,
    and I think we need to encourage the states to cooperate with
    the national forests. But they have to take some
    responsibility.
        Ms. McDougle. And they do. They do. We leverage our dollars
    with theirs, half and half. And so they do.
        Mr. Regula. Well, if we have to choose and we may very well
    have to do that between doing the primary responsibilities of
    the Forest Service and passing through money. That is when it
    gets tough, and that could be the decision depending on what we
    have available.
        Ms. McDougle. These programs are wildly popular with our
    line officers in the field and the communities.
        Mr. Regula. I understand. We are going to be back to you.

                               forest health map

        Mr. Dombeck. Well, I would just like to give you--while you
    were voting, I passed out the forestland risk map that actually
    includes red dots in all of your districts and that pertains to
    all lands.
        Mr. Regula. This is probably a forest health issue and one
    that we need to emphasize in the assignment of our resources.
        Well, thank you. I have to leave, but Mr. Peterson is going
    to have some more questions. Then he will adjourn the hearing,
    but we will be back in additional conversations.

                            rainbow family gathering

        Mr. Peterson [presiding]. Thank you. I will not keep you
    long. I can tell you are getting hungry. This is sort of an
    individual question. I try to stay in the broader perspective,
    but on the ANF I see that the Rainbow group is coming back this
    year. They come back periodically, the 1960s group. I know it
    takes a lot of police work because they bring a lot of problems
    with them. And does that come out of the ANF budget or is that
    a special allocation? How do you handle that?
        Mr. Dombeck. We have--just starting a couple of years ago,
    in fact, how many years has it been, Ron?
        Mr. Stewart. Last year was the first year.
        Mr. Dombeck. Since then we set up nationally, basically, an
    incident command team-type structure with law enforcement so
    the appropriate services are there. I personally toured the
    Rainbow gathering in Arizona last year and it is an amazing
    thing to see.
        Mr. Peterson. That is what I am told.
        Mr. Dombeck. But we do have a strategy that Ron is much
    more familiar with, the details of it, if you would like to
    discuss it. I do know that our--I have asked our staffs to keep
    your office informed because this is--there is potential for
    issues. I am not very comfortable with it with in the Forest
    Service because I think a lot of risk is associated with
    safety, those kinds of things. Over the long haul, we need to
    get a better handle on it than we have now.
        Mr. Peterson. Yes. Someone you may want to talk to, in that
    county, Warren County, there was a state trooper who was
    barracks commander for almost a decade or two decades and he
    reminded me of the day of the efforts that it cost the local
    state police and the efforts and what goes on there. It is
    interesting.
        Mr. Dombeck. In fact, I would say it takes a large
    proportion of the energy of the National Forest or the District
    that it is on for a month or more.
        Mr. Peterson. Yes. But I just wondered, is there a national
    pot of money that can help a forest deal with that?
        Mr. Dombeck. Yes.
        Mr. Peterson. Because it is not a normal situation.
        Mr. Stewart. Just because of the way these events have been
    going, and they often draw 30,000 or more people, there is no
    way that a local forest or a local Region could handle that. So
    a decision of several years ago was made jointly by the
    regional foresters and the Washington Office to pool the money
    for large group gatherings, those defined to be 10,000 or more.
    And so there is, as the Chief said, an incident command team
    that is put together that moves with these large groups so they
    have the experience built from dealing with them. They know
    what to expect. They know how to work with the local
    communities. They use the local resources who usually have the
    local cooperators like the Sheriff's Department and so forth.
    And then the money is available for the management, for the
    additional resources, and for cooperative law enforcement for
    clean-up afterwards. That has always been an issue. We always
    try to get them to do the best we can.
        There have been attempts in the past. Often communities
    would rather they not have them. The courts have ruled that
    they have a right to assemble and we have to honor that right.
    So our general philosophy is, if you will, to contain and
    control. It would be difficult to go in, no matter how many law
    enforcement officers you have, to control 30,000 people, if you
    decide to go in and try to arrest a lot of people. But they do
    make arrests, when appropriate. They do work very closely with
    local communities.
        I do not know whether, in the briefing of your staff, they
    have provided the internal document to sort of lay out some of
    the background and the role of the incident command team, but I
    would be glad to leave this with you.
        Mr. Peterson. I had a staff person attend Monday, but I do
    not know what she received.
        Mr. Stewart. Why do not I just leave this with you and give
    you a chance to look at it in advance of that meeting.
        Mr. Peterson. You can set it right there. I appreciate
    that. I know the law enforcement people have a difficulty too
    because in warm weather they do not wear clothes. They do not
    have identification. When they try to arrest, it is hard to
    figure out who they are because they are from all over the
    country and some of them are very prominent citizens, heads of
    corporations and leadership in cities, but they come without
    identification.
        Mr. Stewart. One characteristic of the Rainbow Family is
    there are no leaders.

                               forest health map

        Mr. Peterson. That is right. As I was looking at this
    Forest Health Map now, the red I take it is lands at risk from
    insect and disease. Is there a figure put to this of what it is
    going to take to deal with this?
        Mr. Dombeck. Let me ask state and private forestry to give
    us some details on that. Janice? Janice McDougle is from state
    and private forestry.
        Ms. McDougle. What we have done for the field is to
    identify those areas that probably will need further analysis
    on the ground as to what treatments would be the most
    effective.
        I think that represents about 38 million acres and--58
    million acres. And all of those acres will not be treated.
    Sometimes you just have to do different things to reduce the
    risk.
        Mr. Peterson. Are we focusing our resources to the really
    red areas? I mean there are some areas that are almost solid.
        Ms. McDougle. Yes.
        Mr. Peterson. Is that where we are focusing our attention?
        Ms. McDougle. Yes.
        Mr. Peterson. Is most of this disease or insect related?
        Ms. McDougle. Both.
        Mr. Peterson. But there is no actual budget figure to deal
    with this?
        Ms. McDougle. Yes, it is. It is in our forest health
    protection budget to deal with that. Some is in our timber
    budget to deal with that. So it is in a number of different
    places to do that. This is just another tool for the field to
    look at their priorities and what needs to be dealt with to
    affect forest conditions.

                            below-cost timber sales

        Mr. Peterson. Another issue I just want to mention is, I do
    not think it has been discussed here today. There is a lot of
    publicity every year of you losing money on your timber sales,
    but is not a fairly large portion of your timber sales really
    not timber sales as far as going out and selling timber? It is
    where you are removing dead and waste and diseased trees and
    fire? It seems to me you have got everything categorized as a
    timber sale when it should not be. I just think when you are
    treating forestland to remove diseased timber, to remove the
    dead wood that causes your fire hazards and so forth and so on,
    to categorize that as a timber sale and then allow people to
    say that you are losing all this money on selling timber, when
    you are really selling something that is of very low value, but
    you need to get it out of there if you are going to preserve
    the rest. Should there not be some change in how you do
    business?
        Mr. Dombeck. Yes, in fact--the accounting procedures
    associated with that--my personal philosophy is that we should
    not even be talking about below-cost timber sales. We ought to
    be talking about the condition that we want the forest in, the
    condition we want the watershed in, and how do we get there.
    Because there has been a significant transition. For example, I
    believe about 80 percent of the timber sales provide ecological
    watershed treatments that are beyond the objective of getting
    the commercial timber out. And all those things need to be
    taken into consideration. The TSPIRS issue and so on are things
    that we need to take a close look at.
        Mr. Peterson. But should not you name them something
    different? I mean should you be calling them timber sales when
    you are----
        Mr. Dombeck. Well, my view is that in a lot of the debate
    with regard to timber harvest, we need to change the lexicon.
    We need to talk about the condition we want the forest in. How
    do we get it there? How do we apply the science, technology,
    and management treatments to get it there? The lexicon we are
    moving away from is the fact that if you look at a watershed
    and you say well, I can get X million board feet out of there,
    there is going to be a debate. There are going to be issues
    associated with it.
        If we look at it from the standpoint of applying the
    science and technology; getting the resources out that we can;
    accruing the economic benefits from those resources--it is
    important because the common ground that I think we all have is
    that if we take care of the land, we can produce fiber, we can
    take care of our water quality, our wildlife and fish habitats,
    and those kinds of things. By the way, I was going to ask you
    how you did on your hunting on the tract of land that you were
    at this past year versus when you were a kid.

                               Forest Succession

        Mr. Peterson. Well, it is not as good as deer hunting.
    Well, I hunted on it when it was open fields. I hunted on it
    when it was brush. And that is when I shot some bucks there.
    But it was little open spots and part of it grown up. And now
    it is pole woods and there is deer around, but it is not he
    same kind of hunting. It is a woods now. The deer are on the
    edges and in the thickets. That used to be a thicket. I
    remember when it turned from a field into a thicket you could
    not walk through. It has been interesting to watch it happen,
    but I do not think we are aware of how much that is happening.
        Mr. Dombeck. You know, that story points out an important
    fact about long-term objectives. Species require, certain
    species require early seral stages--rough grouse, you need edge
    effect and all these kinds of things. If you think about
    emulating what goes on in nature, you have got blowdown. You
    have fires. The evolution of land, habitats, plants and animals
    has been a constant over time. If the objective is to focus on
    the mosaic of different ecological seral stages, different
    habitats that you need out there, that is the place the
    dialogue needs to go, I believe.

                               Storm Damage, 1985

        Mr. Peterson. Well, as far as hunting and wildlife, when
    there has been forestry practiced, two or three years later it
    is much better hunting. Blackberries and some of the spots have
    been opened more. But something I might suggest and I had not
    thought of this when I had discussions with you is in 1985, we
    had the blowdowns with the series of tornados and some of them
    went through the ANF. I do not know whether your research
    people there at the lab, but it seems to me, it may be a little
    late, but I do not think it is still too late. We are just 14
    years in. But what has happened is there were areas a mile wide
    where every tree was torn down. Everything with any size at all
    was twisted to the ground. I mean it was one of the most
    powerful storms I have ever seen. It has been interesting to
    watch what has come back there, the kind of wildlife that has
    come back there. The thickness of the habitat and how fast and
    how tall it is today. It is 25 to 30 feet tall today. And I do
    not know whether you have done any research on that, but it
    would be interesting to me what has happened, what kind of
    critters came there, what kind of species are there today. It
    would be interesting.
        Mr. Dombeck. Dr. Robert Lewis is head of our research and
    development program. He is the Deputy Chief for that area.
        Mr. Lewis. Right, and I know that area extremely well. And
    good morning, by the way.
        Mr. Peterson. Good morning.
        Mr. Lewis. I was former director at the Northeastern
    Experiment Station and I flew over those spots, those sites in
    1986, and I remember when it happened in 1985. And Susan Stout,
    the project leader up there, and David Marquis, who was in the
    position before she came, implemented studies on disturbance
    ecology. They were right on the site, right on the spot,
    actually, right after the storm occurred. And so we have good
    research data on that.
        Mr. Peterson. Has anybody determined what kind of habitat?
    I know I have been told that songbirds that were not normally
    seen were prevalent, because it was really a thick wilderness
    that came back in many areas where there was a lot of seed
    stock. It just exploded into life and it is so thick a few
    years ago you could not walk through it. I have not tried
    recently, but for a while you could not walk through it.
        Mr. Lewis. They have been working on the regeneration of
    those sites. As you know, oak regeneration is a major problem
    up there.
        Mr. Peterson. Cherry does better.
        Mr. Lewis. And cherry as well. Big problem with hyacinth
    fern which was very thick as well. They have collected data,
    but we still have a major problem with a large deer population.
    And I know some of the hunters do not think that we have too
    many.
        Mr. Peterson. See, that is the problem back to the road
    issue. If you do not have roads, hunters are not going in
    there. The average hunter today is not the average hunter of 20
    years ago. They will not go more than a mile or two from the
    car. So if you want the hunters to shoot the deer, you have got
    to have a trail for them to get in and not walk too far.
        Mr. Lewis. Right. They are not willing to walk a long way.
        Mr. Peterson. Well, I want to thank you very much and I
    guess we appreciate your willingness. I would love any
    information you have on those blowdown areas because it is an
    interesting forest coming there. With that, I guess this
    hearing is adjourned.
        [Additional committee questions follow:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                          Wednesday, February 24, 1999.

                              DEPARTMENT OF ENERGY

                                   WITNESSES

    HON. BILL RICHARDSON, SECRETARY, U.S. DEPARTMENT OF ENERGY
    HON. DAN REICHER, ASSISTANT SECRETARY
    JAY HAKES, ADMINISTRATOR, ENERGY INFORMATION ADMINISTRATION
    ROBERT KRIPOWICZ, PRINCIPAL DEPUTY ASSISTANT SECRETARY, FOSSIL ENERGY
        Mr. Regula. Good morning. The subcommittee will come to
    order.
        This morning we will receive testimony from the Honorable
    Bill Richardson, Secretary of Energy. We're delighted to
    welcome you, Mr. Secretary. This is your maiden voyage in front
    of this committee in your role as Secretary. Your entire
    statement will be made a part of the record, and we would
    appreciate it if you could summarize.

                                Opening Remarks

        Secretary Richardson. Mr. Chairman, thank you very much.
    First, let me say that it's an honor to return to this room. I
    used to as a member of this body be a supplicant to this
    committee, as I am here today, mainly for my New Mexico
    district and my Native American programs, and I will always
    remember the very generous ways that this committee treated me.
        Mr. Chairman and Mr. Ranking Member, let me just try to
    explain how the Department of Energy is working for America
    today. When I took over the Department I knew I was facing a
    challenge. What I would like to discuss with you is some of the
    decisions that I have made, some tough decisions on tritium
    productions, on assessing the viability of Yucca Mountain,
    contracting procedures on energy issues. Let me give you an
    example of how we are dealing with some of the problems that
    are facing us that are in our budget.
        First, the oil and gas situation, the dire situation of our
    industry. Last December I appointed an internal oil emergency
    task force to deal with this problem. I asked the task force to
    go into the oil patch to feel out the industry. We've already
    done several initiatives that I would like to briefly mention
    to you.
        To enhance the nation's energy security, we will shortly be
    putting 28 million barrels of federal royalty oil in the
    Strategic Petroleum Reserve. In a related move, we are offering
    unutilized space in the Reserve for commercial storage with
    storage fees to be paid in oil. For the first time in recent
    memory we have mechanisms to refill the reserve during
    peacetime. These first of a kind efforts are designed to make
    the most of today's low prices. By putting oil in the reserve
    today, we will receive a higher rate of return tomorrow;
    specifically, energy security, more strategic assets, and a
    great buy for the taxpayer. I especially appreciate the
    positive words of support that you and Mr. Dicks offered
    following my announcement.
        The Administration has also altered its requirements for
    federal leaseholders to diminish the threat that near-term low
    prices hold for long-term production. This change would allow
    stripper well operators to temporarily suspend production
    without losing their leases or having to plug their wells. To
    help see small operators through tough times, the
    Administration is also offering various types of federal
    royalty relief and is actively considering additional
    categories of relief.
        To help lower the cost of production, we have just
    committed $18 million for a technology-driven industry cost-
    share program to improve oil recovery from endangered domestic
    reservoirs. We also kicked off a program to assist small
    independents, those with less than 50 employees, which have
    specific production problems ranging from reservoir
    characterization to environmental complaints. We have launched
    a large-scale pilot program in six States--California, Texas,
    Ohio, Utah, Wyoming, Colorado--to decrease production costs
    through the use of new energy efficient technologies. A similar
    small scale pilot in Kansas has shown promising results,
    lowering the cost of production by 77 cents per barrel.
        Just last Friday we announced another innovative pilot
    program in Texas that could be the first towards paperless
    regulation. This new on-line permitting system could save the
    industry millions of dollars in administrative costs and
    countless hours of labor.
        Let me just deal, Mr. Chairman, briefly with the fiscal
    year 2000 budget request. The Department of Energy is
    requesting a total of $1.229 billion for fiscal year 2000 from
    the Interior Subcommittee. This is nearly 2 percent below the
    fiscal year 1999 appropriation.
        Let me deal with energy efficiency. On transportation, the
    Department builds on a record of strong accomplishments. Back
    in 1992, America had trailed Japan in car production for 13
    consecutive years. The last five years, America's auto builders
    have led the world in auto and light truck production. This
    turnaround was made possible, in part, by technology
    breakthroughs by our nation's scientists and engineers and by
    programs which the subcommittee funded, such as the Partnership
    for a New Generation of Vehicles (PNGV) which has the goal of
    developing an 80 mile per gallon automobile.
        We have made progress this past year when we shared costs
    with industry to develop a smarter, smaller, less expensive
    electric powered system for the cars of the future. Working
    together, we have already shrunk the system from the size of a
    large suitcase to smaller than a shoebox, and now we are
    working to cut the $10,000 cost to less than $500.
        For fiscal year 2000, we are requesting $143 million to
    focus on key component technologies, including fuel cells,
    advanced direct-injection engines, exhaust control, advanced
    batteries, and electronic power controllers. A Clean Cities
    request of a little over $10 million will advance
    infrastructure development to deploy alternative fuels to over
    65 communities.
        Let me turn to industries. The Energy Department is working
    with nine industries that account for 75 percent of the energy
    used in manufacturing, working to remake them as industries of
    the future. I know, Mr. Chairman, this is an important program
    for you. These include forest products, steel, aluminum, metal-
    casting, chemicals, petroleum refining, agriculture, mining,
    and glass. These industries also account for most of the
    emissions and waste produced by U.S. manufacturing. So we have
    developed new efficiency methods. We have developed innovative
    technologies to help these industries boost efficiency and
    competitiveness with less pollution. To realize these efforts,
    our budget requests $171 million for the Industries of the
    Future program.
        Buildings. America's homes and offices represent
    significant opportunities for boosting efficiency and cutting
    environmental risk. Heating and lighting our homes and
    workplaces account for over one-third of American carbon
    dioxide emissions. We need to do better there, and our new
    buildings need new energy-saving technologies to help us do so.
    Therefore, we are requesting $145 million to bring our R&D
    resources to bear on this challenge.
        I ask for your support, Mr. Chairman, for the Department's
    request for the Appliance Standards Program. The appliance
    standards rulemaking is now underway will result in billions of
    dollars in savings for consumers. It represents my highest
    priority in the Department's Office of Buildings. We are also
    requesting $154 million for the Weatherization Assistance
    Program, where we're weatherizing nearly 80,000 low-income
    houses for warmer winters, cooler summers, lower utility bills,
    and we're requesting $37 million for State Energy Programs.
        The Energy Smart Schools Project is supplying schools with
    the information they need to cut energy costs and save money.
        Federal Energy Management Program. Buildings like this one
    offer considerable opportunities for efficiency and saving of
    taxpayer dollars. The Federal Government spends $8 billion a
    year on energy. That's too much. We are requesting about $32
    million to help accelerate the Federal Energy Management
    Program which helps Federal agencies identify, finance, and
    implement energy efficiency improvements for their facilities.
        Management. Mr. Chairman, in response to your request, the
    Department of Energy is working with the National Academy of
    Public Administration (NAPA) to undertake an independent review
    of our financial management and procurement practices. This
    review will address concerns expressed by you and other members
    of the subcommittee, including the extent of carry-over
    balances, cost-sharing, and competition in our acquisition and
    financial assistance processes. We're working with NAPA to
    develop an appropriate statement of work and are now completing
    the steps required to award a contract. NAPA has proposed
    completing review by the end of August and will document its
    findings including any recommendations for reforms to the
    business practices of our agency in these programs. We look
    forward to working with NAPA and expect its contributions will
    help us.
        Mr. Chairman, with me today is the Assistant Secretary for
    these programs, a very able individual who in the course of
    some of the questions I may want to turn to, Assistant
    Secretary Dan Reicher.
        Mr. Chairman, let me turn to fossil energy research and
    development. Our fiscal year 2000 request for fossil energy
    research and development is $364 million, a slight reduction
    from the $384 million appropriated for fiscal year 1999. In
    this portion of the budget we continue to address three primary
    challenges. One, developing new technologies that can provide
    the nation with cleaner air at lower cost; secondly, research
    into affordable options for greenhouse gas controls; and
    thirdly, ways to enhance our energy security.
        Bob Kripowicz from our program is also here, Mr. Chairman,
    and Jay Hakes from the Energy Information Agency, who has every
    statistic you will ever want to know about.
        Let me turn to coal. Mr. Chairman, our request for advanced
    coal technologies is $122 million, about the same as was
    appropriated in fiscal year 1999. At the core of this program
    is our research on the Vision 21 energy concept, our goal of a
    virtually pollution-free powerplant in the post 2010 timeframe.
    This is an energy facility that could be twice as efficient as
    today's nuclear power plants, reduce greenhouse gases by more
    than 40 percent, and co-produce fuels and chemicals in addition
    to electricity.
        In our coal program, we also include exploratory research
    in carbon sequestration. This is an extremely important
    research priority. We've increased our budget request from
    $5.89 million in fiscal year 1999 to $9.1 million in fiscal
    year 2000. If we can develop low cost ways to capture and
    permanently dispose of carbon dioxide, we could make future
    climate change policies much easier to implement here and
    abroad.
        Natural gas. Our natural gas budget request is $105
    million. I should point out that there is another $114 million
    of gas-related R&D conducted by other offices in the
    Department. A significant portion of this budget is to assure
    that we have affordable gas supplies in the future. This is
    particularly important given projections that gas demand could
    increase by a third in the next decade, perhaps more if gas is
    used to meet climate change strategies.
        Our gas R&D budget also includes funding for two high
    priority power generation technologies--advanced gas turbines
    and fuel cells. We are within a year of running the first test
    of a revolutionary new gas turbine that will far surpass any
    other utility turbine in the world both in efficiency and in
    environmental performance. Our fiscal year 2000 budget
    continues to fund the final phase of this effort.
        On oil, we have increased our funding slightly for the Oil
    Technology Program. Within our $50 million request, we will
    continue to fund several high priority initiatives that I
    announced in the last couple of weeks. First, I plan to return
    to the nation's most endangered oil reservoirs with cost-shared
    projects to keep these fields from being abandoned, and second,
    work with independent producers to solve specific oil field
    problems by applying new technologies.
        Clean coal technology. In the clean coal technology budget,
    I know this is a big interest of yours, we are requesting that
    $246 million of prior budget authority be deferred until fiscal
    year 2001 and later. This program continues to produce results.
    For example, fully one half of all coal-fired plants in America
    are today equipped with low polluting combustors that resulted
    from our Clean Coal and R&D programs. Within the next year or
    so, the figure will be 75 percent. Of the 40 projects in the
    program, only 2 will not be fully funded by fiscal year 2000.
    These two are still in the pre-construction phases and have
    sufficient funds to carry them through the year 2000. Because
    of this, we can defer the funding without impacting the pace of
    the program.
        Global climate change. I know this is of great interest to
    you and especially Mr. Dicks. Global climate change poses major
    environmental challenges for the entire world. We are going to
    continue to dialogue on the Kyoto Protocol to help improve the
    framework that it provides. At the same time, we will continue
    research and development and push for accelerated use of energy
    efficient and clean energy technologies, all components of the
    President's Climate Change Technology Initiative. Even without
    the Kyoto Protocol, we believe these investments are wise
    national policy--boosting national security, improving air
    quality, strengthening our national economic competitiveness
    while protecting American jobs.
        Our budget is looking to increase support for CCTI programs
    by about 13 percent. Included among this broad and balanced
    energy R&D portfolio are clean, advanced fossil energy
    technologies, carbon sequestration, and energy efficiency
    applications in the building, industry, and transportation
    sectors. These programs are part of the Administration's larger
    Climate Change budget which include activities at four other
    agencies and $3.6 billion in tax incentives over five years for
    energy efficient homes, fuel efficient cars, and renewable
    energy.
        Finally, Mr. Chairman, management changes back our work at
    home, specifically within the Department and among our
    management. Today, the Department is functioning smarter and
    leaner, working with the Congress and with you, we have reduced
    our Federal employee workforce by 25 percent--I repeat, 25
    percent--in less than four years, beating our goal by almost
    two years. We've also reduced our contractor employment by 29
    percent since its peak in 1992. But this streamlining has left
    gaps in departmental skill areas. To resolve this, Mr.
    Chairman, I initiated Workforce 21, a targeted effort to bring
    specialized skills into the Department as part of our Workforce
    21 initiative. These efforts will bolster the strength of our
    skills and our comprehensive expertise department-wide. We are
    going to improve diversity, making sure women and minorities
    are better represented within the Department. I would ask for
    your support in this undertaking.
        Management study. We are taking a comprehensive look at the
    structure of the Department looking for ways to improve
    efficiency, strengthen management, ensure accountability, and
    improve reporting requirements. We're looking at the
    relationship between our field offices and headquarters to
    enhance communications and capability. Mr. Chairman, I know you
    have heard this before, but I am really going to make an effort
    to improve the management of this Department, and I can tell
    you, it needs it.
        In summary, I would like to state for the record that our
    Department's proposed budget for fiscal year 2000 will provide
    our scientists and engineers with the tools, facilities, and
    talented personnel necessary to help lead this country into the
    new millennium. The technological breakthroughs which lie ahead
    will provide improvements to the quality of life of everyone.
    And with this subcommittee's continued support, the Department
    of Energy will produce the science, security, and energy to
    power this nation into the 21st century.

                               Written Statement

        [The statement of Mr. Richardson follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Secretary Richardson. I see my good friend from New Mexico
    and would say good morning to him.
        Mr. Skeen. Good to have you back, Kotter. [Laughter.]
        It's an inside joke. From New York to New Mexico is a big
    span. We're glad to have you back.
        Mr. Regula. Thank you very much.
        How would you describe in a brief sentence what the
    Nation's energy policy is, or do we have one?

                            National Energy Strategy

        Secretary Richardson. Increase our energy security, reduce
    our dependence on foreign oil, maintain our lead in science and
    technology, preserve and maintain our nuclear weapons, and
    develop alternative sources of energy, at the same time, Mr.
    Chairman, recognizing the importance of coal, of nuclear, or
    our basic energy industries. I think one of the main objectives
    of our energy policy is to help our domestic energy producers
    across the board.
        Mr. Regula. Have you done an estimate of what the energy
    needs of this nation will be in let's say 20 years down the
    road and how we meet those?
        Secretary Richardson. My Energy Information Administration
    Director has, Mr. Chairman. Could I call him up?
        Mr. Regula. Yes, certainly.
        Secretary Richardson. Jay Hakes.
        Mr. Regula. State your name for the record, please.
        Mr. Hakes. Jay Hakes, Administrator of the Energy
    Information Administration. Assuming that current laws stay in
    effect, we would see the biggest growth in natural gas, there
    would be a strong coal component as coal continues to be burned
    more at the existing plants, and we would be projecting that
    under current laws nuclear would decline over this period. Gas
    would be the major fuel substituting for nuclear. Of course,
    changes in economics, changes in environmental regulation, and
    other things could change that outlook.
        Mr. Regula. Do you see a growing consumption of energy in
    this country? Obviously, appliances have proliferated a lot in
    the last 25-30 years and industry is using more.
        Mr. Hakes. Basically, energy consumption has been rising at
    about the rate of population growth, which is a little over 1
    percent a year. In some ways, given the size of our economic
    growth, that's an impressive achievement. Again, if current
    laws continue and current strong economy continues, that will
    be an engine to drive up energy consumption in the future. It
    won't be as high as it was in the 1970s and 1980s because of
    more technologies that are very efficient. But economic growth
    does cause people to drive more, build bigger houses, and do
    things that do drive up energy consumption.
        Mr. Regula. I notice when you look at the numbers that at
    one time the fossil budget was about equal to energy
    conservation, but each year energy conservation becomes
    dominant in relation to fossil. Do you see that as a continued
    pattern, and what is the rationale for it?
        Secretary Richardson. Well, Mr. Chairman, let me say that
    on the fossil budget it's a little bit lower than last year. I
    must tell you, we undertook quite a battle within the Executive
    branch to move it back almost as close as last year's number.
        What I want to stress to you, Mr. Chairman, is I don't want
    you to look at a flat fossil energy budget, but I would like
    you to consider the other steps that we've taken that deal with
    the oil initiatives I announced last week as part of our fossil
    energy package--the SPR initiative, the initiatives to help the
    oil and gas industry with commercial spacing, with paperless
    regulations, and the ways to help them within the interior and
    Federal lands so that they can drill with less red tape. What I
    would like to say to you, Mr. Chairman, is that I would like to
    do a lot more for fossil energy but we have budget caps.
        When I look at the energy efficiency and renewables budget,
    I don't see it as just climate change. I think this is
    important to our energy security. What they do in terms of our
    budget is the clean fuels, the energy conservation programs,
    they promote our energy security by reducing energy consumption
    in the country, they create jobs by encouraging new
    technologies, they help address our air quality standards by
    reducing emissions, they help address some of the climate
    change concerns by reducing CO2 emissions. We've
    improved the management of these programs, as I think Mr.
    Reicher can point to, in terms of contracting, in terms of
    streamlining. I think he runs this department very well. I have
    seen the management changes that you have proposed and that
    have helped us. We have to do a better job of selling these
    programs.
        Mr. Chairman, I'm not trying to de-emphasize the fossil.
    This is big for me. I come from New Mexico where we have
    uranium and coal and natural gas. In fact, I had more in my
    district than Mr. Skeen did. So I understand.
        Mr. Skeen. We're down the stream from you, though.
    [Laughter.]
        Secretary Richardson. So I understand the importance of
    these programs.
        Mr. Regula. You mentioned management. Do you have a policy
    of reevaluating programs to determine if they have outlived
    their usefulness? I think there is a tendency to start a
    program, and it just goes on and on and on.
        Secretary Richardson. I've been there five months and I
    want to do that, Mr. Chairman. We do have some programs that
    maybe have outlived their usefulness. And I commit to you, I
    have put forth a serious management review that looks at what
    programs are duplicative, which ones we don't need anymore. I
    kind of came in a little late for this budget to do that as
    effectively as I could. But I would be prepared to review them
    with you in terms of which ones you think may have outlived
    their usefulness.
        Mr. Regula. I commend you for the program on the filling of
    SPR. I think this is an imaginative way to deal with two
    problems.
        What are we doing to reduce imports of foreign oil,
    anything? We're now still over 50 percent, and, obviously, many
    of our military policies are driven by the need to depend on
    foreign imports of oil.

                                   vision 21

        Secretary Richardson. Well, I think a key is helping our
    domestic production, Mr. Chairman. In coal, as I mentioned to
    you, I've got the Vision 21 program, the coal-fired plants.
    We're promoting alternative sources of energy, as I mentioned.
    I think there is enormous potential still for solar, wind,
    biomass. I think we need to do more in those areas. Nuclear,
    the budget is up a little bit in terms of research. Natural
    gas. I want to shift that balance. It is, as you said, at about
    50 percent.
        Mr. Chairman, I have gone to Saudi Arabia and to Mexico and
    Venezuela, these are allies, these are friends, so we want to
    secure their energy independence and relationships with us. But
    at the same time, we are promoting our own domestic production.
    I know the oil and gas industry is going through some hard
    times. What we don't want to do, Mr. Chairman, is do anything
    that effects oil prices in the marketplace, that goes in and
    tampers with markets that doesn't push the free market
    philosophy that we have and the view that the market is the one
    that dictates prices.
        Mr. Regula. One more question and then we'll move on. I
    have a lot and most of them I'll put in the record.
        Do you agree with the statement that fossil energy, coal,
    oil, and natural gas, will continue to provide the vast
    majority of worldwide energy requirements for the foreseeable
    future?
        Secretary Richardson. Yes, I do.
        Mr. Regula. Mr. Dicks.
        Mr. Dicks. Mr. Richardson, we're very glad to have you up
    here in your new capacity as Secretary of Energy. I want to
    compliment you on the job you're doing. I think in every area
    that I have seen you are providing very real leadership and the
    Department of Energy needs that, as you mentioned before, in
    terms of management, and I commend you on your initiatives.
        Secretary Richardson. Thank you.

                                 climate change

        Mr. Dicks. You mentioned this briefly, but I would like to
    address an area where the Department of Energy's effective
    leadership has been making a real difference. The issue is
    reducing carbon emissions. Before we talk specifics, I want to
    establish on the record that the Department is complying fully
    with last year's congressional direction not to take any action
    required solely by the Kyoto Protocol on Global Climate Change
    before Senate ratification of the treaty, which has not been
    submitted yet to the Congress. Is that the case?
        Secretary Richardson. Yes, Mr. Dicks. Let me just answer
    your question also by saying we are not trying to implement the
    Kyoto Protocol through back door channels with funding for the
    President's Climate Change Technology Initiative. The answer is
    we are complying. Climate Change goals are one of many policy
    goals addressed by these investments. But the Congress has to
    enact any tax legislation and appropriate any funds to help the
    United States begin to move its greenhouse gas emissions rate
    off its business-as-usual path.
        I do think that the energy R&D investments in the budget
    are important for increasing our energy security, decreasing
    oil import dependence, maintaining our lead in science and
    technology, maintaining abundant supplies of affordable energy,
    and maintaining a strong national economy.

                                    hanford

        Mr. Dicks. Well, I want to commend you on that. I think
    those are all very appropriate initiatives.
        A couple of issues that affect Washington State. I'm sure
    you are aware of the urgency of the reprogramming request of
    $56.3 million at the Hanford site for the Tank Waste Program.
    The lay-off notices could be sent to nearly 1,000 employees as
    early as March 15. Can you tell me the status of that
    reprogramming request?
        Secretary Richardson. Yes, Mr. Dicks. Because of your very
    strenuous efforts, I am proud to tell you that today we are
    submitting the reprogramming request.
        Mr. Dicks. From OMB? Or just the Energy Department?
        Secretary Richardson. No, no, no. I took care of the whole
    thing.
        Mr. Dicks. The whole thing?
        Secretary Richardson. Yes.
        Mr. Dicks. It's going to be up here?
        Secretary Richardson. It will be up here today.
        Mr. Dicks. That's what I like to hear.
        Secretary Richardson. And we won't have any disruptions.
    Hanford is very important in our priorities.
        Mr. Dicks. I appreciate that. I just would also mention
    that I understand John Wagner, who has been the long-time
    manager out at Hanford, is retiring and that James Hall, the
    manager of DOE's Oak Ridge Operations Office, would serve as
    acting manager until a permanent replacement can be found. Can
    you tell me what you think the timeline is on the Department's
    selection of a new site manager at Hanford?
        Secretary Richardson. Thirty days. I want to select
    somebody very soon. We have a wide core of applicants. I want
    the strongest person there. Hanford is one of our priorities.
    We have not met our standards there. We need to improve our
    performance.
        Mr. Dicks. I want to compliment you, though. You met with
    the governor and the attorney general and they were very
    pleased with the meeting you had. They felt that you are
    keeping the commitments the Federal Government has made on this
    cleanup effort.
        Secretary Richardson. We signed a consent decree recently
    with the State of Washington that commits us to a new tank
    cleanup performance, and we're going to meet it.
        Mr. Dicks. It's a tough problem and we will be supporting
    you on this.
        I wanted to mention one other thing. There is a start-up
    company in my district that has built a prototype engine
    demonstrating the application of ram-jet technology to
    electrical generation. This ram-gen engine offers tremendous
    advantages over combustion, turbines, and all other operations
    including lower capital and maintenance costs and substantially
    higher efficiencies. In addition, it can use a wide range of
    fuels including methane from coal mines and other currently
    wasted gases and thereby eliminate these greenhouse gases.
        Representatives of the company have briefed your staff
    about the new technology and the company is currently preparing
    a request for assistance from the Department. I would
    appreciate it if you would review the potential of this
    technology and consider sending technical staff from the
    Department to evaluate the data that is now being collected
    from the prototype testing. I actually went out and took a look
    at this a few weeks ago and I think this could be a tremendous
    breakthrough.
        Secretary Richardson. Well, as you mentioned, our energy
    staff met with company representatives yesterday. We're going
    to make sure they're eligible for solicitation bids to compete.
    We will send people to evaluate them, and my staff tells me
    they were very impressed with these people.
        Mr. Dicks. Thank you, Mr. Chairman.
        Mr. Regula. Will you yield?
        Mr. Dicks. Yes.
        Mr. Regula. Can you describe how one of these works, I'm
    just curious.
        Mr. Dicks. This is remarkable technology, you have this
    great round turbine engine in which fuel and air are
    compressed. We tried to create this ram-jet technology for the
    aerospace plane and this thing is very close. It minimizes the
    emission of nitrogen oxides and greenhouse gases.
        Mr. Regula. Does it use gas?
        Mr. Dicks. Yes, it uses several different energy sources
    including gas.
        Mr. Dicks. I can give you more background, bring in some
    more detail. Actually, if you want to get a briefing on it,
    these guys are tremendous. I've seen this thing work and they
    think they can be very competitive and use these gases that
    today create part of the greenhouse problem.
        Mr. Regula. They still need some research money.
        Mr. Dicks. Yes. They are still trying to develop this
    thing. But they've actually demonstrated it, so they may be
    able to do it all in the private sector. We're testing that.
        Mr. Regula. Thank you.
        Mr. Peterson.
        Mr. Peterson. Yes. Thank you, Mr. Chairman.
        Good morning, Mr. Secretary. I wanted to commend you also
    for your efforts at filling the reserve. That's a step in the
    right direction. Is there a game plan of when we would have it
    full?
        Secretary Richardson. Yes, 60 days. We would complete the
    28 million barrels that we announced last week. It would take
    60 days to finalize the plan. Then there is still a remainder,
    as you know, Mr. Peterson. My goal is eventually to fill the
    entire SPR.
        Mr. Peterson. How long would that take?
        Secretary Richardson. Well, I've got----
        Mr. Peterson. How many days supply does that give us?
        Secretary Richardson. With our new initiative, we would
    have 64 days.
        Mr. Peterson. If that's full, how much would we have?
        Secretary Richardson. Probably about 75 days.
        Mr. Peterson. Okay. About two and a half months.
        Secretary Richardson. So with the help of many of you here,
    we were able to make that announcement.
        Mr. Peterson. I was also pleased to hear you talking a lot
    about helping independents. I guess you are more optimistic
    than I am. In Pennsylvania, New York, Ohio, and West Virginia,
    which primarily have stripper wells, in a few more years it's
    over. We're just out of the business, period. And I'm told by
    people in Louisiana, Texas, and other states that we're just
    going to lose--I don't know how long it takes to crank up an
    oil business, but it takes quite a while. If we have people
    with wells out of production, wells capped, wells plugged--I'm
    not sure we're really thinking about what happens down the
    road.
        I think we're drunk on cheap oil in this country. I don't
    we realize what will happen. The next issue down the road is
    how can we help an industry that cannot make it on $9 oil? I
    don't think you could subsidize them enough to make it. There
    is no way to make $9 oil profitable. So how long we have $9 oil
    dictates whether or not we have a future oil business in many
    parts of this country.

                               refining capacity

        And the issue I want to raise from that is, if all things
    remain the same at EPA, we won't have much refining capacity in
    this country in a decade. We're quickly losing our refining
    capacity and I don't think anybody is even talking about that.
    But if we lose our refining capacity, you will never regenerate
    an oil business because you can't generate here and haul it
    someplace else to refine it, the costs prohibit it.
        Is there anybody monitoring the refinery capacity in this
    country?
        Secretary Richardson. Well, we're working with EPA on this
    and we're sensitive to what you just said. Let me also mention
    that we want to come out with more initiatives to help our
    stripper wells and our small independents. We're working on
    that. It's a global problem.
        Mr. Peterson. Work fast.
        Secretary Richardson. I understand. It is a global problem.
    In fact, we're looking at some emergency loans that we might
    consider for some of those that are not in good shape. We're
    also within the Administration discussing tax relief, although
    it is not Administration policy yet. Let me also mention to you
    that we have tried in terms of regulations to reduce the number
    of regulations that independents have to go through. We are
    also looking at ways that on federal land we can make the
    process of drilling and development easier. We're working on
    that.
        But I understand the urgency. I represented many of these
    oil and gas producers in my State and I know that they're
    hurting. The only consolation that I would offer is that oil
    prices over the years have been cyclical and things will
    hopefully get better, and we're working on that.
        Mr. Peterson. I don't think we ever face the glut of cheap
    oil that appears to be coming from all parts of the world.
    Countries have built their economies on oil and as the price
    goes down they have to sell more to maintain their economies.
    So they've lost their ability to squeeze us like they used to.
    But aren't we close to 60 percent foreign import now?
        Secretary Richardson. No, we're at about 50-51 percent.
        Mr. Peterson. We're still producing almost half of our oil
    in the U.S.?
        Secretary Richardson. Yes.
        Mr. Peterson. Now that's in the United States?
        Secretary Richardson. Yes.
        Mr. Hinchey. And Alaska.
        Secretary Richardson. Alaska.
        Mr. Dicks. That's part of the United States. [Laughter.]
        Secretary Richardson. Well, I know that. But I heard it and
    thought it was a very helpful comment, so I repeated it.
    [Laughter.]
        Mr. Dicks. Senator Stevens will appreciate that.
    [Laughter.]
        Mr. Peterson. Is there a goal of how far we can go?
        Secretary Richardson. We want to reduce it--I don't want to
    get into a fixed percentage, but we are constantly investing in
    new energy technologies, in our traditional technologies. My
    hope is during my tenure to go under 50 percent as much as we
    can.
        Mr. Peterson. Thank you.
        Mr. Regula. I would just like to follow up. I can remember,
    and I think some of you at this table may also, when we were in
    late night sessions trying to figure out what to do about oil
    when it was $40 a barrel. Today, it's $9. What would you say
    has made that difference? Is it that more is being produced, or
    less consumption? Why suddenly has there been that enormous
    price drop?
        Secretary Richardson. I think, Mr. Chairman, it is
    international economic conditions of global marketplace. The
    financial situation in Asia is a contributing factor, in Latin
    America. I think our strong economy also is an engine that
    internationally has allowed us to survive this. At the same
    time, our consumers, and we also represent consumers, I think
    we have to have a balance between continuing our policies of
    ensuring our domestic production is there and giving the
    consumers the best options that they have and that they need.
        Mr. Regula. Mr. Hinchey.
        Mr. Hinchey. Thank you very much, Mr. Chairman.
        Mr. Secretary, we still miss you up here but we very much
    appreciate the jobs you're doing for the Administration and for
    the country. It's great to see you again, Bill.
        Secretary Richardson. Thank you, Maurice.

                          strategic petroleum reserve

        Mr. Hinchey. The issue of the Strategic Petroleum Reserve
    and our dependence on foreign oil is I think a critical
    question. And so I would just like to follow up a little bit on
    what Mr. Peterson was talking about. Is that reserve adequate
    do you think, two and a half months?
        We're in a situation now where oil is very, very cheap and
    from the country's point of view, not from the oil producers'
    point of view but from the general economy's point of view,
    that's a good thing. But it is going to change at some point
    and one of the questions is will it change precipitously or
    will it change gradually so that we will have an opportunity to
    make some adjustment. If it changes precipitously, we may be
    caught off guard and it may create some very serious
    disruptions in the economy. So I would appreciate your thoughts
    on that.
        Secretary Richardson. Well, I think this is why--and before
    you came in I thanked everybody on the subcommittee that was
    instrumental in helping us make this decision--we were able
    with the 28 million barrels to get the SPR filled at a time
    when prices are low, so we're saving for a rainy day. So I
    think that's good energy policy, good energy security. My hope
    is that in the course of the next year through other measures
    we can refill the SPR. We have also said that we are willing to
    lease commercial space and have it paid through oil. I think
    that will allow more barrels in SPR. We have also said to some
    of our friends that we are willing for them to store some of
    their oil, like Venezuela, like Mexico, in the SPR, provided
    they pay, and maybe they can use that oil as collateral for
    some of their loans in this country.
        Our goal in the end is to fill it. We were able to fill it
    by transferring so it didn't cost the taxpayer a cent. So we
    were very pleased with how we were able to do this within 60
    days. This sends a signal that we have an energy policy and
    we're saving for a rainy day. You're right, things can change.
    Although Mr. Hakes, who heads our Energy Information
    Administration, makes these projections and, as I understand
    it, we are looking at slight increases for the price of oil in
    the next year. Do you want to hear from him on this?

                               economic estimates

        Mr. Regula. We might hear his comment. I'm sure some oil
    companies here would like to know about that. [Laughter.]
        Mr. Hakes. The price decrease that we're seeing now is more
    sustained than the price drop in 1986 which, as you remember,
    was a pretty major bang in and of itself, and also deeper than
    the 1993 drop which was a milder drop. There is a lot of excess
    supply around the world that is slowing the return of prices to
    a more normal level.
        However, U.S. production at the end of last year was
    500,000 barrels a day less than it was 12 months earlier.
    That's a pretty substantial drop.
        Mr. Regula. Is that from lack of demand or lack of wells?
        Mr. Hakes. Shutting down wells and not being able to
    produce at the low price. And we have less precise data on the
    North Sea, but one would accept a similar reaction there
    because it is high priced production compared to places like
    the Middle East where it is cheaper to produce.
        That will over time readjust the world market and quite a
    bit of equilibrium between supply and demand. We certainly see
    prices going up during 1999 and further in 2000. But we
    wouldn't see them getting back into the normal range until
    probably at least 2001. The reason being that you've got these
    excess supplies out there that have built up over several years
    with the mild winters. And, of course, Asia, which the
    Secretary mentioned earlier, was growing at about 800,000
    barrels a day each year and that was soaking up a lot of the
    supply. Last year, Asian demand actually went down slightly. So
    there is this imbalance, but it is cyclical. This is just the
    deepest down cycle that we've seen probably since we've been
    keeping statistics.
        Mr. Regula. I purchased gasoline last week back in Ohio for
    79 cents a gallon, and 43 cents of that is tax.
        Mr. Hakes. The national average as of Monday was 91 cents,
    and in the Midwest and Lower Atlantic States, the average is
    below 90 cents in some states.
        Mr. Hinchey. You mentioned prices getting back up to normal
    range in two or three years. What do you regard as normal
    range?
        Mr. Hakes. Well, for West Texas Intermediate, which is a
    very good class of oil, the normal range would be in the $17 to
    $21 a barrel range. A lot of the oil that is produced on shore
    in the U.S. is a heavier grade of oil that could sell for $3 or
    $4 less than that. We've seen heavy oil being sold recently for
    $6 a barrel, which, as one person pointed out, you can now buy
    42 barrels of crude oil for what you would spend for one cup of
    coffee in a ritzy restaurant. So, for our producers, the normal
    range in many cases, unless they're producing West Texas
    Intermediate, would be somewhat lower than that, maybe in the
    $15 range. But most people can produce and make money at that
    range.
        But there's a lot of potential around the world and, of
    course, the Middle East is a big unknown with their potential.
    Some of those countries could be producing double what they
    produce now.
        Mr. Hinchey. Also, you can pay more for bottled water today
    than you're probably paying for refined petroleum products.

                              energy conservation

        I would like to talk for a few minutes about the
    Department's initiatives on energy conservation, which in the
    present climate might seem almost unnecessary to people. But we
    know that this is going to change and I think the energy
    conservation initiatives that you're taking are very important.
    I know that is one of the major increases that you are
    requesting in the budget. I wonder if you could talk to us a
    little bit specifically about some of the things you're
    proposing with regard to improving efficiency of buildings,
    community weatherization programs, and also the industrial
    sector--such as how you are approaching improving industrial
    efficiency.
        Secretary Richardson. If I could have our Assistant
    Secretary answer that. He can get into some of the specifics. I
    am very proud of this program. We got an increase in it and
    we're going to push it very hard. We hope this committee is
    generous on it.
        Dan, just briefly highlight what the Congressman asked.
        Mr. Reicher. Congressman Hinchey, in the industries area,
    we're very proud of the work we're now doing, for example, and
    have asked for new money, with the oil refining industry, with
    the agriculture industry, the mining industry. Those are
    industries that use a great deal of energy and where there is a
    great deal of energy to be saved which could go directly to the
    bottom line for those industries in terms of their
    productivity. And I think also it addresses some of the oil
    challenges we face. That program has improved greatly in terms
    of the return on the dollars invested and the amount of energy
    saved per home. Also we are becoming more effective in working
    with states directly on energy conservation.
        In the buildings, in terms of R&D and demonstrations, we
    have asked for increases to accelerate our development of
    standards for various kinds of appliances. There's several
    billion dollars of savings for consumers represented by
    improving the energy efficiency of appliances. And also we are
    demonstrating with industry a whole host of new technologies in
    commercial buildings and in residential buildings, ways to save
    energy and lower the cost of operating buildings, lower the
    price of buying a building. So there's a broad range of things
    and they all show very good returns on investment.
        Mr. Hinchey. Can you give us some idea of what we would
    save in terms of BTUs or barrels or however you would like to
    put it if your objectives are realized.
        Mr. Reicher. There is a variety of ways you can measure
    this. We project individual homeowners can save hundreds of
    dollars a year in their energy bills to operate a home. We
    estimate that commercial building owners can save tens of
    thousands, hundreds of thousands of dollars a year. There is a
    brand new building being built in New York City where we're
    able to demonstrate savings of on the order of $500,000 a year
    in operating an office building in New York with a very small
    incremental cost up front, a return of about three to five
    years in terms of the incremental cost. That goes directly to
    the users of those buildings.
        In terms of the work on actual replacements for oil, there
    are a whole host of alternative fuels from natural gas to
    ethanol where we can show direct correlation between the use of
    those fuels and reduction in imported oil. And so bringing the
    prices of those down, improving the technologies for developing
    them goes directly to energy security.
        Mr. Regula. Mr. Skeen.
        Mr. Skeen. Thank you, Mr. Chairman.
        Mr. Secretary, it is good to have you back.
        Secretary Richardson. Thank you.

                         waste isolation pilot project

        Mr. Skeen. And, as usual, I appreciate your knowledgeable
    background in energy production from our perspective in New
    Mexico and so forth. Let me ask you a question. I know that
    you've already made some pronouncement about the Waste
    Isolation Pilot Project. I am hopeful that we can get this
    thing going. The highways networking has come a long ways and
    so forth. I think that we're in a position now that we can get
    over the hump and get this material down in the facility. I
    just wanted you to know I appreciate the stand that you took.
        Secretary Richardson. Thank you. Congressman Skeen, let me
    say that I'm going to need your help and your intervention in
    the next few months because this is a critical period for WIPP.
    As you know, the court has set March 12 as the date for the
    oral arguments in the WIPP case. It is our hope that the first
    shipment of transuranic waste would occur shortly thereafter,
    this is the one from Los Alamos to WIPP. We also have another
    commitment and that is to the State of Idaho.
        Mr. Skeen. And to Colorado.
        Secretary Richardson. And Colorado. The Idaho one is more
    imminent because it is the end of April. I have to tell you
    that we are frustrated with the State of New Mexico's delay and
    with statements that they've made about when we can move this
    waste. The RCRA permit is eluding us; the State is not
    providing it. They are giving us different timeframes and I am
    faced with having, by a settlement decree, to abide by the
    agreement I made with Idaho to have it before April of 1999.
        We had some meetings with the State officials from New
    Mexico yesterday. We hope to get some better answers than we've
    had. But I have to tell you that the Department is becoming
    increasingly frustrated with the New Mexico Environment
    Department's constant changing of the goal posts, and I want to
    work with you to try to deal with these problems.
        Mr. Skeen. But it also involves a concerted effort not only
    from the executive branch in New Mexico, but you've had the
    folks like Mr. Hancock and some of the rest that have made a
    career out of this thing.
        Secretary Richardson. Right.
        Mr. Skeen. But I think it is really abused, because the
    technology has proven to be wise. I think we've gone through
    all the careful planning and appropriations process to get this
    thing done.
        Secretary Richardson. I agree with you. WIPP is ready to
    open now, that's our view. It is certified through the EPA. You
    and I worked on this over the years. I know you weren't totally
    happy with every initiative I made when I was here.
        Mr. Skeen. Oh, Bill, I've always appreciated every one,
    particularly today. [Laughter.]
        Secretary Richardson. But we're together today and we want
    to open this.
        Mr. Skeen. Together again. [Laughter.]
        Mr. Skeen. We've had a good liaison with this situation,
    and you're well aware of what it is. I think we can overcome
    this situation. As I've said in jest, some of the detractors
    were going to lay down in front of the trucks that are moving
    the stuff and so forth, I said, no, don't let them do that,
    just use them as a hood ornament. [Laughter.]
        Mr. Skeen. You can at least move it.
        On the oil and gas, you've got a good background in this
    area. You know that our production in New Mexico is largely
    stripper wells, and we're also leading in technology and
    development of underground resources with deep penetration
    radar systems and other technology. So the picture is kind of
    bad now from the standpoint of the price on oil, but there's
    not much we can do about that. I might even suggest that since
    we have disaster payments for agriculture and so forth, we
    might do that for the oil business. But I can see right now
    that would be a tough nut to crack.
        Secretary Richardson. Well, we're working, as I told Mr.
    Peterson, on ways that we can support them in terms of some of
    the problems that they've had. We hope to announce something
    soon, not like the payment in agriculture, but of other ways
    that they can get some help.
        Mr. Skeen. Well, we always appreciate it. And once again,
    welcome back.
        Secretary Richardson. Thank you.

                           black liquor gasification

        Mr. Regula. Mr. Cramer.
        Mr. Cramer. Thank you.
        Mr. Secretary, welcome to the committee. Good to see you
    again as well. I want to turn your attention to the issue of
    black liquor gasification. The ultimate question I want to get
    to is how much do you anticipate spending on black liquor
    gasification in fiscal year 2000. And as a way of maybe telling
    you the way I see this, it appears to me that in your fiscal
    year 2000 budget you've got $21 million for research related to
    forest and paper products industry under your Energy Efficiency
    Program. And of that amount, $11.5 million is set aside for
    ``research targeted to increase the industry's fuel
    flexibility, improve process, energy efficiency, and ultimately
    allow the industry to become essentially independent of fossil
    fuels.''
        I just wondered, we've got a black liquor gasification
    project proposed by Champion International which is to be
    carried out at a significant plant of theirs that happens to be
    in my district, and I think that fits into that definition. But
    how much do you anticipate of the $11.5 million that I assume
    would be available would be spent on black liquor gasification?
    Will there be one project, more than one project, or do you
    know?
        Secretary Richardson. I'm going to have Dan get specific.
    Let me just say that we have separated this proposal and
    another one into an engineering and cost study, as you know,
    for fiscal year 1999, and a follow-on construction and
    demonstration phase for fiscal year 2000 and beyond. Right now
    that engineering study is being reviewed by a panel of experts
    consistent with our procurement process. We should finish this
    review process by the end of this April, to be followed by an
    award or awards shortly thereafter.
        But, Dan, can you answer the Congressman?
        Mr. Cramer. Excuse me, Mr. Secretary, did you say ``award
    or awards''?
        Secretary Richardson. Award or awards shortly after.
        Mr. Cramer. Okay.
        Secretary Richardson. Can you get more specific?
        Mr. Cramer. Or, if you can't now, I would follow up.
        Mr. Reicher. Yes. Let me just say Champion is one of the
    companies that we are talking with right now about some money
    in fiscal year 1999.
        Mr. Cramer. Exactly.
        Mr. Reicher. We're working towards that and we hope to be
    able to, as the Secretary said, announce the initial conceptual
    study phase of this with real money in April and we're hopeful
    that Champion will----
        Mr. Cramer. This April, of course.
        Mr. Reicher. Correct. And then in the fiscal year 2000
    budget, as you said, there's on the order of, depending on how
    you count, somewhere between $9 and $11 million that we've
    requested for gasification work, including black liquor
    gasification. That would allow companies like Champion through
    a competitive process to go forward and actually do large scale
    gasification projects in actual plants to demonstrate this
    technology, which has the prospect of dramatically reducing
    energy use in the forest products industry, literally turning
    forest products companies into net exporters of electricity to
    the grid. Under a deregulated grid, you could actually see this
    industry sending electricity and getting paid for it. And it
    would also reduce pollution very substantially. So we're very
    excited about gasification technology overall, black liquor
    gasification particularly with the forest products industry.
        Mr. Cramer. And I would hope you wouldn't spread your
    limited resources over too many projects. [Laughter.]
        Mr. Reicher. No, we will not spread it over too many,
    because we want to actually demonstrate two or three
    technologies very quickly in real, live, large-scale plants.
    And so if we get this funding request met on the order of $9 to
    $11 million, we're going to be able to go forward with a small
    number of very focused projects in large-scale plants and
    really demonstrate this technology quickly and get it into
    common use.

                             doe and research labs

        Mr. Cramer. Thank you.
        Mr. Secretary, on another issue that you and I have had
    some dialogue over, Lawrence Livermore Labs and the
    relationship between DOE and the labs. I've been very concerned
    about the relationship between DOE and the labs for a number of
    years dating back to when I was on the Science Committee and we
    examined it and targeted hearings to the management
    relationship between DOE and the labs and basically on efforts
    to change the institutional behaviors of some of the labs.
        I've gotten a lot more interested in it since a constituent
    company of ours, Time Domain, has been engaged in protracted,
    litigation with Lawrence Livermore Labs. I sat down with George
    Brown a couple of weeks ago and we reviewed and unraveled
    information about the labs in this particular kind of
    technology. And I just want to warn you that issue is not going
    to go away and it doesn't seem to me that DOE really has a
    handle, especially in this case, on Lawrence Livermore and
    holding them accountable and seeing that they come to the table
    and try to negotiate through a very difficult situation. So I
    hope you can help us deal with that.
        Secretary Richardson. I know how you care about this. The
    U.S. Patent Office, as you know, is reviewing this. We have
    asked Livermore to contact Time Domain to see if they can
    jointly market these proposals. But also I've asked my Under
    Secretary Ernest Moniz, who is the chief scientist, and he's
    around here testifying somewhere, to see how we can deal with
    our transferred technology activities and see if we need to
    correct some things, because I know how much you care about
    this. I promise you from our standpoint it won't go away either
    and we need to resolve this.
        Mr. Cramer. Thank you, Mr. Secretary.
        Thank you, Mr. Chairman.
        Mr. Regula. Mr. Wamp.
        Mr. Wamp. Thank you, Mr. Chairman.
        Welcome, Mr. Secretary. First, I want to thank you, Mr.
    Secretary, for the great way in which you deal with the
    Congress. Having been here and certainly your service
    throughout the years on a variety of fronts, you're my third
    Secretary of Energy after O'Leary and Pena, each of you had
    different styles and I enjoyed working with each of you, but,
    clearly, you've got the best relationship with us and I thank
    you for that. I also want to make the point, you said Ernie
    Moniz is testifying somewhere around here, I think everybody
    from downtown is testifying somewhere around here today because
    I'm just hopping from one committee to another and seeing all
    the important people. So, welcome.
        Assistant Secretary Reicher will tell you I continue to be
    concerned about this climate change/global warming issue in
    that we must continue to study climate change and try to get to
    the bottom of it. But it seems like recently even former
    Secretary O'Leary has kind of taken issue with some of the
    Administration's approaches to global warming.
        The concern that I have coming from the TVA region, and I
    appreciate your cooperation in the TVA region, but we have a
    high dependency on coal-fired plants. If these policies do, in
    fact, as the estimates indicate, lead to an increase in
    electric rates of 20 to 80 percent, we need to throw a big
    gauntlet down here and say make sure the hurdles are high
    enough that we don't go rushing in. At some point, this economy
    is going to turn down. When it does, if we are in the middle of
    raising energy costs in this country severely through an
    implementation of, in many cases in my opinion, unproven
    results, we are at risk of really weakening our economy. I
    think there's got to be a balance as we approach this issue.
    And my question to you is, do you think Ms. O'Leary is right,
    or where do you come down as the Secretary of Energy on these
    issues of going forward with any of the Kyoto Protocol
    requirements until which time that the Senate embraces them?
        Secretary Richardson. Well, thank you for your very nice
    words. Let me say, Congressman, I, personally, and this
    Department has a very positive view of coal's future, I can
    assure you of that. We're developing more clean, more efficient
    technology. Our request of $122 million is similar to last
    year's. We foresee in the next 20 years or more that coal is
    going to supply half of the nation's electricity; it is 55
    percent today. Low cost coal is why we have the cheapest
    electricity of any free market economy.
        Let me turn to climate change. I don't know where Secretary
    O'Leary made that statement. If she did, I would differ with
    her. I would simply say that the major challenge that we have
    in the next 10 years is to reduce the cost of pollution
    controls. We have some new air quality controls. We believe
    that we are able in the year 2010, I said this earlier speaking
    about the Vision 21, the possibility of developing a pollution-
    free powerplant that would have no harmful air emissions of any
    type. It is a Vision 21 concept that we have.
        Mr. Wamp. Is that a coal-fired plant you're talking about?
        Secretary Richardson. Yes. Yes. Maybe in 2010 I'll be back
    to talk to you about it. I doubt it.
        Mr. Regula. You may be here, but----
        Secretary Richardson. But we have to find ways to capture
    and dispose of these greenhouse gases. Let me just say to Mr.
    Wamp that in terms of this Department, what we want to do is,
    we realize we have to, bridge the gap between the developing
    countries and the developed countries. We know that we don't
    have too many supporters within the developing countries. In
    fact, in the last meeting in Argentina, Khazakhstan and
    Argentina were the only two developing countries that were
    basically with us that had the goal of reducing emissions by a
    certain target.
        What we want to do is use technology--turbines, coal-
    generated technology--with these developing countries so we can
    have a win-win situation. They reduce their greenhouse gas
    emissions, we create jobs, we work together. That's got to be a
    major task. But I can assure you we are not trying to back-door
    the Kyoto Protocol by asking you to fund certain projects.
    These projects that Dan Reicher has in his shop are to promote
    our own energy security, our own conservation. They are good
    projects. They are in your area--in coal, in oil, in natural
    gas, in many areas that I think in the end improve our energy
    security.
        Mr. Wamp. I think it is appropriate for this subcommittee
    to keep a short leash on your activities, so to speak, because
    China, for instance, you mentioned some of the smaller
    countries, but China really is the big question with the coal
    reserves that they have. What Ms. O'Leary actually said is the
    Administration's support of the Kyoto Protocol is ``wrong-
    headed,'' her words, because she said it did not invest enough
    in R&D for coal combustion, and that is really the issue. If we
    invest in R&D on coal, you don't have to wipe it out, you can
    through the technology, as you say.
        So I think it's going to take constant monitoring of your
    working with us throughout this process. Let's not kill the
    goose that laid the golden egg. Let's just shape that goose up
    to make sure it lives. In that way we're not giving countries
    like China that are not even required to participate in this
    Protocol a huge advantage in the global marketplace and putting
    our country at a disadvantage. This should not be about pulling
    down the developed nations so that the undeveloped nations can
    rise. This should be about bringing them all up to our level.
    And that's an important big, broad policy issue that we cannot
    take lightly in the Congress.
        Secretary Richardson. I understand and I respect everything
    you said.
        Mr. Wamp. Thank you.
        Mr. Regula. Well, I think we have time for another round of
    questions.
        China, as I understand it, will be 90 percent dependent on
    coal for energy in the foreseeable future; is that correct?
        Secretary Richardson. That is close. I believe your
    statistic is correct.
        Mr. Regula. And I think I read that they will be producing
    more emissions of greenhouse gases in about 10 or 12 years than
    we are even though they're not as developed industrially.
        Secretary Richardson. That's right. Mr. Chairman, this
    presents us with a great opportunity of American investment in
    technology in China, them using our technology to reduce their
    greenhouse gas emissions. I think there's a great opportunity
    with China. I hope to make China, India, Brazil, Mexico,
    Pakistan as five countries that we need to target in the Kyoto
    Protocol and getting them to work with us to reduce their
    greenhouse gas emissions. I think Mr. Wamp and you are
    absolutely right. We can do this through our technology. We are
    developing technologies in climate change that China would find
    very attractive. This creates jobs for us.
        Dan, do you--do you want to hear from Dan or not really?
    [Laughter.]
        Mr. Regula. We're always happy to hear from Dan.
        Mr. Reicher. I just wanted to say that with respect to
    developing countries, as the Secretary said, there are a whole
    host of technologies on the fossil side, the efficiency side,
    renewables that are big, big markets for us. And we are, in
    fact, working with the Chinese on their use of advanced fossil
    fuel generation, they are very interested in our wind
    technologies because they have big wind resources, they are
    very interested in our industrial efficiency technologies
    because as they grow they don't want to use per unit of output,
    the kind of energy they might otherwise use. As they develop
    and own their own homes and businesses progress, we want to be
    sure that U.S. companies are represented there in building
    those homes and in supplying efficient appliances. So there's
    big, big opportunities in those countries.
        I also wanted to mention in the context of coal and TVA,
    one of the interesting projects that we're working on directly
    with TVA, and that they are very supportive of, is mixing coal
    with biomass and burning it in traditional powerplants. It is
    great for farmers, it is great for the forest products people,
    it is great for the coal industry, it reduces pollution, you
    can use traditional plants. So as we bring down the pollution
    in those plants and provide alternative fuels to those plants,
    we can kind of have a win-win situation.
        Mr. Wamp. Would the gentleman yield?
        Mr. Regula. Yes.
        Mr. Wamp. I would just like to ask Assistant Secretary
    Reicher, on the exportation of these technologies to China on
    these new frontiers, do you work with the Department of
    Commerce? How do we encourage private sector investment in
    China? I think that is our best link to China because I'm not
    going to trust them as far as the government, frankly. But if
    more and more of our private interests are allowed into that
    country to do business, to export our technologies, sooner or
    later we'll get to the point where we can trust them. I think
    the free enterprise system is the best thing we have to offer
    them, and if you can work with Commerce, I'm actually meeting
    Secretary Daley for lunch today, that's a great way I think of
    helping our national security interests abroad.
        Secretary Richardson. I just wanted to mention we are
    participating in Secretary Daley's trip to China next month
    where we're going to do precisely what you mentioned. We have
    two representatives from the Department of Energy on his trip.
        Mr. Reicher. I would just add one thing. I also wanted to
    mention that in the nuclear area we have worked on behalf of
    U.S. nuclear companies to open markets in China for U.S.
    nuclear technologies as well as for power generation. So we
    span the spectrum from renewables to efficiency to coal, gas,
    and then end-use efficiency, the industrial, transportation,
    and building efficiency as well.

                                FUNDING OFFSETS

        Mr. Regula. Two questions. Mr. Secretary, GAO testified
    here recently that you have a substantial carry-over balance,
    as much as $319 million, and at least $74 million is available
    for fiscal year 2000. Could we not take that into account in
    establishing our appropriation number?
        Secretary Richardson. Well, I think we dispute that amount
    from GAO.
        Mr. Reicher. Mr. Chairman, our view is that virtually all
    of that $74 million is what is called uncosted balances, money
    that is already under contract, already has been obligated, and
    that its use to offset the budget in fiscal year 2000 would
    have impacts on existing programs. It could slow contracts,
    could force us to break contracts, and it could have a whole
    host of consequences that we really need to avoid.
        Mr. Regula. But I notice [in fossil] you offset in the NPR,
    Naval Petroleum Reserve account, but not in conservation. If
    offsets are good in fossil, they ought to be good in
    conservation.
        Mr. Reicher. This is the clean coal offset which is a
    different situation.
        Bob, do you want to speak to that?
        Secretary Richardson. This is Bob Kripowicz, my coal man.
        Mr. Dicks. A former staffer on this subcommittee.
        Mr. Regula. Very familiar. Highly regarded up here.
        Mr. Kripowicz. The uncosted obligations in the Naval
    Petroleum Reserves came about because of the sale of the Elk
    Hills oil fields. Those balances cannot be applied to any other
    programs and they don't apply to existing contracts, so they
    can be used for the work in fiscal year 2000. I think that's a
    different situation than Dan has, where there are uncosted
    balances on existing contracts.
        Mr. Regula. I think GAO may dispute with Dan as to whether
    or not these are obligated.

                              fuel efficient cars

        One last question and then I'll go to Mr. Dicks. PNGV. We
    are spending a lot of money to develop fuel efficient cars. But
    here's Ford producing the Excursion which is a monster as far
    as gas consumption and impact on the use of fuel. It weighs 3
    tons. We're giving money to the industry to get fuel efficient,
    but because of profits they're producing these huge guzzlers.
    There's a little inconsistency here.
        Secretary Richardson. Mr. Chairman, I was in Detroit about
    a month ago and Ford and the Big Three are producing efficient
    vehicles, too. I saw some hybrids, fuel cell, natural gas. Yes,
    there are some vehicles that based on their demand they are
    producing. I have to tell you I was very attracted, Ford is
    bringing back the Thunderbird. I don't know if you've seen
    that.
        Mr. Regula. I have and I like it.
        Secretary Richardson. I do, too. I don't think I probably
    could buy one.
        Mr. Regula. What does it get per mile?
        Secretary Richardson. I'm not going to answer that. But
    this partnership with natural gas vehicles, Mr. Chairman, is
    working well. The Big Three chairmen like it. We're investing
    together. We have some targets. It's the right thing to do. I
    think we're pushing a little bit to put some of these vehicles
    into the market. They are developing the technology. They said
    to me they wanted to see some of the tax credits moved more
    into the technology area rather than the performance area. That
    is being addressed right now. The Administration will probably
    submit some kind of tax incentive package soon on this. But I
    think it is a very good program. I would urge you if you get a
    chance to talk to the Big Three and also to Honda and Toyota.
    They actually have some very, very interesting vehicles,
    they're hybrid--is that right, Dan?
        Mr. Regula. Toyota and Honda both have hybrid vehicles on
    the market, but I don't think they participate in this research
    effort.
        Secretary Richardson. Well, we're working on a way to make
    it more inclusive but there is some sensitivity on the part of
    our guys which we're respecting.
        Mr. Reicher. Just on the issue of the large sport utility
    vehicles and light trucks, another part of the work that you're
    funding this year is work with the diesel engine manufacturers
    to put those kinds of engines which are far more fuel efficient
    into sport utility vehicles and light trucks. The challenge
    there is to bring the emissions down to a level where they will
    meet upcoming standards. There is very good progress being made
    in that area and we expect that you could cut fuel use in sport
    utility vehicles and light trucks by 35 percent.
        Mr. Regula. With diesel engines?
        Mr. Reicher. With diesels that can also meet stringent air
    emissions if we continue to make the progress we think we can
    make. And you could see those in vehicles in the next three
    years being actually used. So that's another part of this
    technology development program.
        Mr. Regula. Mr. Dicks?
        Mr. Dicks. I would just like to say on this subject the
    Administration's fiscal year 2000 budget has a significant
    commitment to global climate change technology programs. One of
    the elements of this program is a partnership for the new
    generation of vehicles we were just talking about, which is a
    significant part of the Department of Energy's portfolio. I
    would just like to mention the State of Washington has
    developed the Northwest Alliance for Transportation Technology,
    which is part of the PNGV program, developing light weight
    vehicles for automobiles and, increasingly important, sport
    utility vehicles and light truck programs.
        I think this has got the potential to reduce emissions,
    increase mileage. In our area, we see aluminum as a potential
    here to get the weight of these cars down and hopefully that
    would help on the efficiency side, too. So I kind of think we
    need to stay with this thing.
        Secretary Richardson. This is a very good coalition. I
    think in my last trip I met with some of their representatives
    informally. These are the kinds of coalitions we're trying to
    promote around the country, and I think the Northwest region is
    far ahead of others.
        Mr. Dicks. The staff says that maybe we should do more in
    this area and less in other areas, Mr. Secretary. I will leave
    that to your consideration. We might even help you in that
    area.

                                nuclear reactors

        Let me ask you, you not only have served as Secretary of
    Energy but as our Ambassador to the United Nations, and one of
    the issues that we're concerned about still is the question of
    the Russian nuclear reactors and the ones in the Ukraine
    particularly. I visited Chernobyl several years ago and have
    taken some interest in this. I'm concerned about what the
    Administration's overall policy is regarding these reactors,
    and what can or what should the United States be doing with
    them in trying to deal with this problem, especially the
    Chernobyl reactors which I understand they are now going to
    keep operating.
        Secretary Richardson. Right. We think this is a key
    priority and for fiscal year 2000 we're asking for $34 million.
    We think it is an important program that continues some of the
    safety improvements we've done. There's a total of 65 reactors
    if you take the whole Soviet Union in Central and Eastern
    Europe. We think this is a very important program. It's about
    $30 million more than we requested last year.
        Mr. Dicks, you've been to Russia and you know that this is
    a problem. This is an issue that is important to our national
    security, making sure that Russian scientists don't defect to
    the Iraqs, Irans, North Koreas, making sure that these nuclear
    weapons are safe, making sure that these nuclear reactors are
    safe, are operating effectively and efficiently.
        And in that connection, let me just mention, I cannot
    resist, Mr. Chairman, we have asked your committee, and I have
    called the Chairman, to reprogram about $14 million for Y2K
    improvements in Soviet reactors, in Russian reactors and we
    hope you will favorably consider this. We have not reprogrammed
    yet because we want to hear from the committee. I know there
    may be some division here. But Mr. Dicks, maybe you can help us
    with this. This is very important. Y2K is something that is not
    just our problem. You can imagine in Russia just how serious it
    is. We are asking on an emergency basis to see if we can
    transfer this $14 million to deal with these Y2K problems in
    Soviet reactors. That is pending before your committee right
    now.
        Mr. Dicks. Okay. I yield.
        Mr. Regula. Mr. Peterson?

                              Accounting Problems

        Mr. Peterson. I want to just go back for a moment to the
    conservation program balances that the Chairman brought up. Two
    weeks ago in testimony here the evidence that was given to us
    was the following--I think you have some accounting problems in
    the Department that are hiding money. The statement was given
    that if you have a new lease on a property for five years, you
    had to reserve five years' worth of money. If you had a three
    or four year contract with me for doing some sort of research,
    that you had to reserve three or four years' money. Well,
    that's not how government works in many other areas. You would
    reserve one year at a time for that year's budget. I understand
    if you have a little slush, but not multi-year leases and not
    multi-year contracts for research where money is held in
    abeyance. If that's really true, that's money that could be
    spent and not harm you.
        Secretary Richardson. Let me just say, because a lot of
    these issues are in some of the conservation programs that Dan
    Reicher has, I can say to you that the uncosted balances in
    Dan's department, which is called EE, maybe in my seventh month
    I will find out what EE and all these abbreviations at DOE are,
    have decreased by 38 percent from fiscal year 1996 until now.
    The reason for this, Mr. Peterson, is that when you have
    uncosted balances you have a very heavy reliance on R&D
    contracts, subcontracts with industry, with universities, other
    entities, competitive ways to award these funds. This is sort
    of a normal way you do business. So I don't think we are trying
    to hide this money. But Dan I know told me when I came in this
    was one of the main concerns of this committee. He has a plan
    to deal with it, and I think based on that review by that NAPA
    that you've made some progress.
        Mr. Peterson. If you have appropriate accounting
    procedures, we could all understand the need for the money, I
    don't think you have that today.
        The second issue, back to helping independent producers. I
    would just like to make a suggestion. I was in State government
    for 19 years and came from the oil patch personally, I never
    was in the oil business but came from the area where it all
    started, where the first well was drilled, and I would like to
    suggest that you need to bring the oil patch States together
    with their regulatory agencies, the Federal Government trying
    to reach out and help them individually really won't work, but
    if you could bring the States in conjunction with the
    regulators, because they need to get involved, too, that's the
    only way we can reach out to help this industry.
        Secretary Richardson. Congressman, I think that's a very
    good idea. Let me tell you what was very useful to me when I
    became Energy Secretary. The governor of Oklahoma, Governor
    Keating had a summit of all the energy and gas States and they
    came out with recommendations. We've adopted three out of the
    five. I agree with you. One of the things that I've said to my
    Department, with all due respect to the Congress, is that we
    have not had the kind of relationship we need to have with
    States, with governors, with county commissioners, with State
    regulatory agencies. I've beefed up my operation, not too much,
    to deal with that problem. But I can assure you that that's a
    suggestion we will take.
        Like Congressman Skeen, we think of perhaps oil and gas
    mainly in the Southwest and other parts of the country. I'd
    like to familiarize myself more with the energy situation in
    your part of the country.
        Mr. Peterson. We'd love to help you do that because we're
    also where coal started.
        Secretary Richardson. I know.

                               Refining Capacity

        Mr. Peterson. Refining capacity, do we have numbers of
    where we're headed? Could that be furnished to us?
        Secretary Richardson. I think for the record.
        Mr. Regula. Let's put that in the record.
        Mr. Peterson. Yes. I'd like some history and what's
    happening and what you project.
        [The information follows:]

      Percent of Petroleum Productions Refined in the United States--1993-
                                      2003

        Please see attached chart.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 Kyoto Protocol

        Mr. Peterson. Back to the Kyoto protocol and greenhouse
    gases, you've mentioned that a number of times. Which of the
    greenhouse gases are you referring to? Which ones are you most
    concerned about?
        Secretary Richardson. Dan, do you want to respond?
        Mr. Reicher. The primary gas is carbon dioxide. That
    represents the bulk of the emissions that we worry about. But
    there are other gases, methane and some of the others as well.
        Mr. Peterson. But CO2 is the one that you'd like
    to regulate?
        Mr. Reicher. CO2 is the gas that we are
    analyzing in terms of its significance in terms of climate
    change.
        Mr. Peterson. Have you looked at the numbers that have been
    brought together by some of the scientists on what percentage
    of the current greenhouse gases come from manmade efforts?
        Mr. Reicher. There has been work done. I don't know those
    numbers.
        Mr. Peterson. Well, it's interesting to look at them when
    you look at the percentage factor. Of course, CO2 is
    a life-producing gas for all plant life. Has there been any
    studies done on the capacity of a young growing forest, or
    agricultural land to absorb CO2?
        Mr. Reicher. Yes. A great deal of work has been done and a
    lot more is being done. I would say with respect to the natural
    versus manmade there is no issue that anybody has with the fact
    that there is a large base level of CO2 produced by
    nature and that is, in fact, what gives us the warmth on this
    planet that we have today. The issue is the increased
    CO2, the manmade CO2 over that base level
    and what it will do to temperatures around the globe.
        Mr. Peterson. I guess Russia right now would say it hasn't
    had much positive impact on them. I think we ought to be
    monitoring the potential of warming. But I personally have
    studied this issue a lot and I think we're really reaching to
    say that it has happened. I guess I have a feeling this
    Administration is working as if global warming has been proven,
    it's a fact, and you're working from that premise. I want to
    tell you that it is not a fact.
        Mr. Regula. Thank you. Let me say to the members that if
    you have questions for the record, try to get them in today
    because they only have five days to respond. We're under a real
    tight timetable in getting our bill out.
        Mr. Peterson. Can I ask one quick question of Bill?
        Mr. Regula. Okay.
        Mr. Peterson. Where are we headed on the Nuclear Waste
    Policy Act implementation?
        Mr. Regula. That's a quick answer, too.
        Secretary Richardson. Congressman, I'm going to testify on
    that tomorrow.
        Mr. Peterson. Send me a copy.
        Secretary Richardson. I will.
        Mr. Regula. Fair enough.
        Mr. Nethercutt.

                                Medical Isotopes

        Mr. Nethercutt. Welcome, Mr. Secretary. Nice to see you
    again. I'm sorry I missed your testimony but I've had
    conflicting hearings, as all of us do, this morning.
        I want to focus your attention if I may on the fast flux
    test facility on which you need to make a decision by I believe
    April 1 relative to whether the civilian use of that facility
    would be allowed for production of medical isotopes. I don't
    know if you've touched on that today.
        Secretary Richardson. No, I haven't.
        Mr. Nethercutt. Do you believe your Department will be
    making a decision on this by April 1, as expected?
        Secretary Richardson. Yes, I am.
        Mr. Nethercutt. I notice in the budget request for FFTF it
    is $30 million for fiscal year 2000, yet I understand the costs
    for a decision either way are estimated at $40 million to do
    the Environmental Impact Statement and $60 million to shut the
    facility down. I really think there is value in this medical
    isotope potential with this facility. Bill Magwood has done a
    good job of communicating with those of us who care about it,
    and I want to compliment you for him and his effort.
        Have you looked at where the shortfall would come from if
    you go ahead and authorize it, approve it? You know, $30
    million doesn't add up to $40 million or $60 million to shut it
    down. I am just wondering what your thinking might be as to
    where it might come from.
        Secretary Richardson. As you know, Congressman, Magwood and
    his team were just out there at Hanford and they have an
    advisory committee that is supposed to report to me very soon.
    I told Magwood, I saw some statements in the press, I said that
    I will make the decision. I also recognize those cost factors.
    I visited the facility, I think you may have been there in my
    earlier meetings, but I visited the facility when I was making
    the decision on tritium. I said then that we would look at
    April at seeing if there was further use for the facility. I
    have a very technical team that is looking at this. Your view
    is that we should continue the medical isotopes, is that right?
        Mr. Nethercutt. Right. At least the evidence that I have
    been provided is that it has high opportunities in the medical
    side, the medical isotope use, with a lack of material and
    ability to deal with the medical side of nuclear involvement. I
    think it has some potential based on what a lot of people have
    talked to me about.
        Secretary Richardson. I agree with you. I have tried to
    deal with the medical isotope issue in another context. At
    Savannah River they were pressing me. I think as a nation we
    have to develop the right mix of commercial-public-private
    partnership in this and we need to do that as a country. But I
    will take your comments very much under consideration. I am
    going to stick to that deadline. I hate to put things off. It's
    the worst thing you can do I have found, especially in this
    Department where it seems that every decision was put off for
    me to make. [Laughter.]

                            Electricity Deregulation

        Mr. Nethercutt. Lucky you, Mr. Secretary.
        I know we have a vote, and I don't know if I'm edging up on
    my time, but I will be very brief. With regard to the issue of
    electricity deregulation, that's not a prominent item at this
    moment. But being from the Northwest, we have a special
    circumstance there relative to electricity deregulation,
    especially as it relates to Bonneville. I am wondering if you
    are planning to re-introduce the proposal that your Department
    had previously. I am involved as co-chairman of the Energy
    Caucus in the House and am very concerned about the future and
    the impact of deregulation as it relates to our part of the
    region, hydropower and the low cost of hydropower. So I am
    wondering what you can advise the subcommittee about that.
        Secretary Richardson. Well, Congressman, the answer is,
    yes. We hope to have an Administration bill for you within four
    to six weeks. We think it is a priority. We are going to work
    with the Congress to pass a bill. We are fine tuning it policy-
    wise, improving it, making it a little more acceptable to get a
    few more votes. At the same time, we're trying to ensure that
    we have looked at BPA and some of the other public entities. We
    want to work with you. We hope your Energy Caucus puts this at
    the top of your list because it will be a big priority of ours.
    Congressman Wamp and TVA, all of these issues, we are dealing
    right now on an interagency basis to come out with a bill that
    is slightly changed from last year making it policy-wise more
    competitive, giving the States the option that they deserve to
    opt-in or opt-out, dealing with public entities, making sure
    that rural customers and Indian tribes are properly taken care
    of, the whole transmission reliability. This will be a big
    priority.
        Mr. Nethercutt. And I hope there is some credit for hydro-
    electric power since cost-wise we are way below others. Thank
    you.
        Mr. Regula. Mr. Hinchey.

                                 Climate Change

        Mr. Hinchey. Thank you very much, Mr. Chairman.
        I just want to return to this issue of greenhouse gases for
    a moment. The fact of the matter is that we are, that is, all
    of us living on this planet, are conducting a planet-wide
    chemistry experiment which in its most basic form could be
    described as how much more of these gases can we pump into the
    atmosphere on top of those that are ordinarily produced by
    nature without disrupting weather and climate patterns around
    the world. There is some evidence that we are already seeing
    the effects of the disruption of those climate and weather
    patterns. And if it continues, indications are that they are
    going to get only worse and the cost of that is incalculable.
        So it is important that this problem be faced up to
    honestly. And if it is going to be addressed honestly, and if
    it is going to be solved without global catastrophe, it is
    important that we have American leadership. I think that
    includes leadership in international treaties such as Kyoto. I
    think it also includes technological leadership. I know that
    your Department, Mr. Secretary, is doing some breakthrough work
    on technologies relating to environmental protection, control,
    remediation, things of that nature in this area. I congratulate
    you for that and I would like very much to be informed of
    technical aspects of this work.
        Secretary Richardson. We will do that. And you are right,
    this is our strength, the technology side of climate change. It
    creates jobs, cleans up pollution. We will work with you and we
    will have a major initiative with developing nations in this
    area to convince them in Africa, in Latin America, the five
    countries I mentioned, the Island States that this is in their
    interest to reduce greenhouse gas emissions and, at the same
    time, with our technology.
        Mr. Hinchey. I think you are absolutely right. Those five
    countries that you mentioned will be the predominant markets
    for an entirely new industry that is being created as a result
    of this phenomenon. We can be on the ground floor of that
    industry and that industry can produce an enormous amount of
    jobs and be very, very important to our economy as well. So I
    thank you for that.
        I would just like, if I may, Mr. Chairman, to ask if you
    could also tell us a little bit about some of the breakthrough
    work you are doing in the transportation sector with regard to
    energy efficiency. I know that you are working on things like
    fuel cells and hybrids.
        Secretary Richardson. Hybrids, fuel cell, natural gas
    vehicles.
        Mr. Hinchey. Yes.
        Mr. Regula. Make this brief. I know Mr. Wamp has one quick
    question and we've got the vote on.
        Mr. Reicher. Yes, very brief. We are basically working to
    put on the road by the middle of the next decade hybrid
    vehicles, electric-gas, electric-diesel, fuel cell-powered
    vehicles, advanced natural gas vehicles, all electric vehicles.
    There's a whole host of opportunities with passenger cars. And
    then we are also trying to get at what is the real emerging
    fuel challenge, which is the sport utility vehicles and light
    trucks. We think we are making good progress. It is a very
    strong partnership with the industry and we are doing well.
        Mr. Regula. Mr. Wamp, last question.
        Mr. Wamp. Really a word of encouragement. If I had been
    asleep for the last 20 years and woke up to find out that we
    are being asked to put $14 million to basically keep the lights
    on in the Soviet Union and make sure that those reactors are
    safe at Y2K and that we are promoting the development of
    nuclear reactors in China, I would ask what in the world
    happened in the last 20 years? But when we went on the Kyoto
    Conference 15 months ago, one of the top four ways to reduce
    CO2 emissions in the atmosphere was nuclear power. We don't
    have a single nuclear reactor construction permit underway in
    this country, yet we are promoting it in China. Something is
    wrong here. Isn't nuclear still a safe and efficient, if it is
    not over-regulated and we are efficient as a Government, isn't
    it a great alternative to safe, clean power so that we can
    reduce the dependence on coal-fired plants?
        Secretary Richardson. Congressman, we did at the Buenos
    Aires Conference on Climate Change acknowledge the role of
    nuclear, the United States delegate did do that. We recognize
    that and we are working on that. Now the reactors that I was
    talking about were in Russia.
        Mr. Wamp. I understand that.
        Mr. Regula. The committee will be in recess until 1:00.
        [Additional Committee questions follow:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                              Thursday, March 18, 1999.

                           U.S. DEPARTMENT OF ENERGY

                                   WITNESSES

    ROBERT W. GEE, ACTING ASSISTANT SECRETARY FOR FOSSIL ENERGY
    ROBERT S. KRIPOWICZ, PRINCIPAL DEPUTY ASSISTANT SECRETARY FOR FOSSIL
        ENERGY
        Mr. Regula. We will get the Committee started. I think the
    other members will be here shortly. We are pleased to welcome
    you, Mr. Gee and also, of course, our old friend, Bob
    Kripowicz. You feel right at home, here, I assume?
        Mr. Kripowicz. Yes, sir, I hope so.
        Mr. Regula. Your full statement will be made a part of the
    record, and we will appreciate your summarization of the
    highlights.

                                Opening Remarks

        Mr. Gee. Thank you, Mr. Chairman.
        I am pleased to be here today and very pleased to have Mr.
    Bob Kripowicz, who is also well-known to this subcommittee, as
    you know, seated beside me.
        I am going to rely on Mr. Kripowicz to fill in many details
    during our discussion this morning.
        My formal statement describes the content of our fiscal
    year 2000 proposal. Let me take just a few minutes to describe
    the reasons behind our budget request.
        Mr. Chairman, some of your colleagues often ask, why
    support fossil fuel research and development? The coal, oil and
    natural gas industries are mature industries and should not
    need Federal support. Let me answer that question in two ways.
        First, much of the research we are proposing is research to
    achieve two national benefits: a cleaner environment and a
    growing economy. Americans are being asked to pay more for
    cleaner air, safer drinking water, and healthier living
    conditions.
        The research proposed in this budget, however, can
    substantially reduce the burden of future environmental costs
    by literally billions of dollars each year while sustaining
    environmental progress. That is good for consumers, good for
    the economy and good for the environment.
        For example, we have research in this budget that will
    significantly reduce the costs of meeting new smog and ozone
    controls that 22 eastern and midwestern states must implement
    in the coming years under the Clean Air Act amendments.
        We have research that will help tell us where microscopic
    airborne particles, called PM 2.5, are being emitted and how to
    control them. We have research that will give us new ways to
    remove mercury and other air toxics from the exhaust of power
    plants if that becomes necessary in the future.
        These are programs that can benefit our environment and our
    economy over the next 10 years. But a major portion of our
    budget looks beyond that time frame to the next wave of
    powerplants that will be built in 2015, 2020 and beyond. We
    believe technology----
        Mr. Regula. Excuse me, what will those plants be fueled
    with?
        Mr. Gee. They would be fueled with a variety of feedstocks:
    coal, natural gas.
        Mr. Regula. The same mix we have now?
        Mr. Gee. Yes. The same mix of fossil fuels.
        Mr. Regula. They would be additional capacity with perhaps
    more energy efficient boilers?
        Mr. Gee. They would be much more energy efficient. We are
    targeting in our research efforts to significantly reduce or
    even potentially eliminate the traditional pollutants that we
    control today.
        Mr. Regula. So, a lot of your research is designed to make
    sure that the new generation of power plants are more
    environmentally friendly?
        Mr. Gee. Correct. And fuel efficient.
        Mr. Regula. Yes.
        Mr. Gee. To make them competitive.
        Mr. Regula. Thank you.
        Mr. Gee. As I said, the next wave of power plants will be
    built to meet the challenges of 2015, 2020 and beyond. We
    believe technologies are in sight that can make those plants
    nearly pollution free, as I have just indicated. That means not
    just reducing the release of airborne pollutants but virtually
    eliminating them.

                                   vision 21

        This is our Vision 21 Power Plant Program. It is perhaps
    the best example of research that is too long range and too
    high risk for industry to do on its own, yet, the payoffs could
    be tremendous. The Vision 21 concept is applicable to a wide
    variety of fuels, as I have indicated, Mr. Chairman, but is
    perhaps most relevant to coal.
        Coal is one of the true measures of this nation's energy
    and economic strength. It generates 56 percent of our
    electricity. It is our lowest cost fuel. And one of the primary
    reasons why the United States has the lowest cost of
    electricity of any free market economy.
        Mr. Regula. Would you anticipate that that percentage would
    remain fairly constant in the foreseeable future?
        Mr. Gee. Our estimates show, and I think the estimates of
    our Energy Information Administration show that coal will
    continue to have a significant share as a fuel feed stock for
    electric power generation. It will still range at or near 55
    percent by our calculation.
        Mr. Regula. In the foreseeable future?
        Mr. Gee. For up through 2020 at least, yes, over the next
    two decades.
        Mr. Regula. Thank you.
        Mr. Gee. There is no reason why with the right technology
    we cannot continue to rely on coal and at the same time improve
    the quality of our environment. We have solid evidence on our
    side that demonstrates what research and development can do.
    Let me give you two examples.
        Twenty years ago, there was basically only one way to
    remove large amounts of air pollutants from coal. That is by
    installing expensive, sometimes unreliable, scrubbers. Today,
    because of public and private research and development,
    scrubber costs are way down and reliability is way up.
        The government helped move these advancements forward and
    they have saved consumers more than $40 billion in the last 20
    years. Or consider that 10 years ago devices to control
    nitrogen oxide (NOX) pollutants cost nearly $3,000
    per ton of NOX to install and operate.
        Today, because of government and industry research and
    development and the Clean Coal Technology Program, low
    NOX burners cost only $200 per ton, a savings of
    more than tenfold. As a result, nearly three-quarters of U.S.
    power plants will have them installed in the next few years.
        The track record is good, Mr. Chairman, and you can see
    evidence of it in the hundreds of fluidized bed combusters
    operating throughout the world; in the state-of-the-art coal
    gasification power plants, like the Tampa Project, all of which
    can trace their roots to the Fossil Fuel Federal Energy
    Program.
        So, what about the truly long range, the next 30 or 50
    years? What if the world community ultimately decides that it
    must address another major environmental issue, climate change?
    Plants like Vision 21 will help. They will be more efficient.
    In fact, nearly twice as efficient as today's powerplants and
    that will reduce the release of greenhouse gases. But if we
    have to go beyond that, we will need other options. We are
    exploring one of those options in this budget.
        We are asking for a slight increase in funding for research
    into carbon sequestration. This is potentially revolutionary
    research, Mr. Chairman. Theoretically, it may be possible to
    recapture and permanently dispose of all the carbon dioxide
    released by energy systems. Sequestration could not only become
    a major tool for reducing carbon emissions, it may be essential
    for continued large-scale use of fossil fuels.
        We also recognize that when we talk about the environment
    we must also talk about natural gas. It is the cleanest of our
    fossil fuels. Demand for gas could increase by a third over the
    next 10 years. To meet this demand at reasonable prices it is
    important to diversify our domestic gas supplies. There are
    projects in this budget to develop tools that will find and
    produce gas in formations that are deeper, denser and more
    difficult to produce than those being tapped today.
        There is also an effort to look again beyond the near term
    to gas supplies that may be needed 20 or 30 years into the
    future. One of those future gas supplies may be methane
    hydrates. We have asked for a moderate increase in hydrates
    funding because, among other reasons, it is a resource that
    could be 5,000 times larger than all of the world's current gas
    reserves.
        I said there were two reasons why the federal government is
    involved in fossil fuel programs. One is to produce national
    benefits, such as a cleaner environment and a vigorous economy;
    the other is because there is clearly a strategic interest. The
    strategic value of crude oil is one of the main reasons we are
    requesting funding for oil technology research.
        We import more than half of our oil today. If prices stay
    low, that figure could be 65 or possibly 70 percent in the next
    20 years. The key reason why much of our domestic industry is
    in difficulty today is because our largest oil reservoirs have
    been producing for 40 or 50 years or more.
        That does not mean we are running out of oil. In fact, for
    every barrel we produce in this country there are still two
    barrels in the ground. It does mean, however, that producing
    domestic oil is becoming more expensive. It often costs more to
    pump it from the ground than the oil brings on the market.
        Mr. Regula. Can those two barrels be recovered with proper
    technology?
        Mr. Gee. We believe that a significant share of those two
    barrels is still recoverable through advances in technology.
    Yes, Mr. Chairman.
        Research and development can help lower those costs, but
    the companies that can most afford research and development are
    no longer concentrating here, in the United States. They have
    moved to more lucrative prospects overseas.
        Smaller, independent producers now drill 85 percent of the
    wells in our country. Most of them have less than 20 employees
    and for many of these companies and the oil they produce it is
    the Federal Fossil Energy Research and Development Program that
    will make the difference between continued production or
    shutting-in those wells.
        Finally, the strategic value of oil is the reason why we
    maintain support for the Strategic Petroleum Reserve in this
    budget. As members are aware, we have announced initiatives in
    the last few weeks to add oil to the reserve without having to
    ask this Committee for additional appropriations.
        In summary, we are recommending continued support for our
    fossil energy budget because fossil fuels supply 85 percent of
    our nation's energy and that percentage is likely to grow in
    the coming years. A commitment to fossil fuel technology and a
    commitment to maintaining our Strategic Petroleum Reserve mean
    that this nation can continue to benefit from fossil fuels at
    the same time we continue to improve the environment, grow the
    economy and enhance our energy security.
        Thank you for giving me the opportunity to present the
    reasoning behind our budget request, Mr. Chairman. With Mr.
    Kripowicz's assistance I will be pleased to answer any
    questions you may have.
        [The statement of Robert W. Gee follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Regula. Thank you.
        I have several and I am sure Mr. Moran does.
        First of all, you mentioned the Tampa project. I visited
    that site. Is that working out well?
        Mr. Gee. It is going very well.
        Mr. Regula. It looked like the state-of-the-art to me.
        Mr. Gee. It definitely is state-of-the-art in terms of the
    integrated gasification combined-cycle process using the
    particular type of coal, known as Ohio-type. It has been very
    successful.
        Mr. Regula. I am just curious, is it more efficient? In
    other words, does it transfer more of the BTUs in the coal into
    power than conventional systems?
        Mr. Gee. What is the efficiency rate at this time?
        Mr. Kripowicz. Mr. Chairman, the rate is around 40 percent
    efficiency. Replications of that plant would be in the mid-40
    percent range.
        Mr. Regula. Which is pretty high?
        Mr. Kripowicz. The current fleet average is about 33
    percent The best state-of-the-art facility that you can put on
    now is probably about 37 or 38 percent. So, it is very
    efficient.
        Mr. Regula. It was very impressive. I wonder what their
    costs are per KWH? Is it higher than the rest of their plants?
        Mr. Kripowicz. Yes, sir. On an overall basis the cost is
    probably $200 to $300 a kilowatt more than the cost of the
    pulverized coal plant.
        Mr. Regula. There is a downside, and that is the cost of a
    plant of that kind.
        Mr. Kripowicz. That is one of the reasons that we are
    continuing the research in that area to drive down the costs
    and also increase that efficiency. We hope to get it in the
    neighborhood of 60 percent which then gets you a considerable
    fuel savings in addition to the capital cost reduction.
        Mr. Gee. That is our target number that we are looking for
    right now, 60 percent.
        Mr. Regula. That would be pretty efficient.
        Mr. Gee. Right.
        Mr. Regula. You mentioned climate change and carbon
    sequestration. Can you describe some innovative things you are
    contemplating in the sequestration program?
        Mr. Gee. Sequestration focuses on two areas. One is trying
    to capture the carbon at the point of use of the fossil fuel or
    even at the point of developing the fuel resource in the case,
    for instance, of natural gas or in the case of oil development,
    reinjecting that carbon dioxide (CO2) back into the
    ground.
        Mr. Regula. Would that be reinjected after the burning
    process?
        Mr. Gee. That, too. It would be capturing the carbon at the
    point of burning and finding ways to use that carbon. You can
    actually use it in an industrial process. Oil and gas
    development capturing the CO2 at that time,
    reinjecting it into the ground for lifting purposes. And then,
    thirdly, another way we are looking at sequestration is through
    biological means, perhaps genetic research that would lead to
    creating what are known as sinks that would simply absorb the
    excess CO2.

                                methane hydrates

        Mr. Regula. You mentioned that there is an enormous supply
    of methane hydrates. Tell me about it. What is it? How do you
    get it? Where do you get it?
        Mr. Gee. Methane hydrates as I understand it, and I am not
    a geologist or a chemist, are methane molecules that are
    trapped in ice formations located generally in deep sea beds.
    It is estimated that if those methane sources could be tapped,
    in both an economically rational as well as a safe means, so as
    not to disturb the sea bed, it could yield potentially 5,000
    times the volume of proven known reserves that we have of all
    natural gas.
        We are beginning the process of trying to characterize the
    reservoirs that are generally within our domain to see what is
    the potential. Ultimately, obviously, it would require more
    intensive analytical research into how best to get that methane
    out of those sea beds.
        Mr. Regula. So, no one is doing it at the moment?
        Mr. Gee. That research is already being conducted in part.
        Mr. Regula. You mean there is no production.
        Mr. Gee. No, that is correct. It is not a commercially
    viable method being used by industry today, correct.
        Mr. Regula. Is it in deep water? Or is it too deep to drill
    with today's technology?
        Mr. Gee. I believe it is located in--if we turn to our
    geologist--it is located offshore generally in some of the
    deeper sea beds. Now, whether that would be a certain distance
    from the Outer Continental Shelf I probably would have to defer
    on that to some of our experts.
        Mr. Regula. I wonder if any other countries like the UK or
    Norway, are researching the same thing?
        Mr. Gee. It is my understanding that this is of keen
    interest internationally. Australia, I know, has already sensed
    the potential in developing their methane hydrates.
        Mr. Regula. Would they come out of the reservoir in a
    gaseous form?
        Mr. Gee. I believe they are locked in ice crystals that are
    in the sea bed. So, the method is to try to find a way to get
    it out without it migrating to the surface without being
    captured, so that you can capture sufficient volumes and also
    so that you do not lose a lot of that methane in the production
    process because that could have a destabilizing effect on ocean
    craft, who would be in the process of trying to develop it.
        Mr. Regula. The experimentation you would be doing is going
    to be pretty much fully government funded. Could you get a
    match? Is the private sector interested enough to match on this
    kind of a program?
        Mr. Gee. I think as the program begins to develop--and as I
    understand right now we are proposing a modest increase in our
    budget at this time--as it progresses closer to a fuller
    research effort, I do believe that there will probably be
    significant interest from the private sector to cost share.
        Mr. Regula. You are in a pioneering stage?
        Mr. Gee. Correct. Right now, we are just in the process of
    spending a little money to characterize some of our reservoirs
    on the Outer Continental Shelf and elsewhere both in the Arctic
    as well as off our lower 48 coastline to see what is out there.
        Mr. Regula. It sounds fascinating.
        Mr. Gee. I think it has tremendous potential if it can be
    done in a commercially feasible way and also so as not to
    disturb the sea bed.
        Mr. Regula. Do the Norwegians and/or the British share with
    you or are they on their own? It seems you should not both be
    reinventing the wheel.
        Mr. Gee. I do not know if there has been any discussion
    thus far of any consortium.
        Mr. Regula. Is there any sharing of research?
        Mr. Gee. Bob, do you know if----
        Mr. Kripowicz. We actually are in a program with the
    Japanese. They are extremely interested because they have no
    indigenous resources of their own. So, they have a healthy R&D
    program and we have actually been involved with them and the
    Geological Survey in a well in Canada in the permafrost looking
    at hydrates.
        The Indians are also interested in it and we have had
    discussions with the Government of India that have been
    disturbed somewhat by the hiatus in our relations for a while
    but they also are interested in methane hydrates.
        We have not had much work at all with the Europeans because
    evidently the North Sea has plenty of gas resources right now
    and, so, they are not concentrating on that.

                                   clean coal

        Mr. Regula. Two additional questions. I notice you want to
    defer an additional $256 million from the Clean Coal Program.
    We deferred $40 million last year. And, yet, you say coal is
    the fuel of choice, will be for the foreseeable future, at 50-
    plus percent, and that your goal is to reduce emissions.
        Now, there seems to be an inconsistency. How do you explain
    that?
        Mr. Gee. The $246 million that we have asked deferral for
    relates to two projects out of the 40 projects that were
    originally authorized and appropriated. The other 38 have
    already been fully funded and, in fact, 23 of those 40 are now
    complete and final reports are being written for the final
    three. Nine of those 23 are in operation. I think seven are in
    the construction stage and one is under construction.
        The two projects, for which the costs are being deferred,
    do not need the appropriations for this coming budget year
    because they are in a situation where they are setting up teams
    right now in a very early stage.
        Mr. Regula. You can defer them without prejudice?
        Mr. Gee. Correct.
        Mr. Regula. And the two of those total $256 million?
        Mr. Gee. Correct. $246 or $256, whatever that number is,
    yes.
        Mr. Regula. We have some additional questions on that for
    the record.

                                  oil recovery

        Mr. Regula. The last question at the moment is that you
    were talking about enhancing the recovery of oil. You mentioned
    that for every barrel we have extracted there are two in the
    ground. And that you would hope that this process would help
    the smaller companies because they obviously do not have the
    capital to do the technological development. Do you feel
    optimistic about being able to get some of those additional
    barrels and recover them?
        Mr. Gee. Yes, we do, because based upon the experience we
    have had thus far where we have engaged in research on 3-D and
    4-D seismic research to help characterize reservoirs more
    cheaply and more effectively, finding ways to lower the lifting
    costs through advances in modern technology and bringing that
    to the field and informing those small operators that with
    those continued efforts we can do two things.
        One is keeping our domestic oil industry financially afloat
    during these lean times; secondly, finding ways to characterize
    the outstanding reservoirs that are before them and do it in a
    way which is more time efficient finding them, and developing
    those fields and reservoirs more quickly and getting them on-
    stream. Through all of these efforts, we think that we are
    optimistic that we can continue to maintain our domestic
    production capacity.
        Mr. Regula. I notice that there is a decrease in funding
    for the reservoir class revisit program in fiscal year 2000 and
    that does not quite reconcile with what you just told me.
        Mr. Gee. I think our reservoir class visit program began
    when was it, back in 1992, 1993? The overall class program. And
    what we are doing now, I believe, is we are reopening a number
    of the classes that had--the program had already expired as I
    understand it, and they did a first cut of a number of
    reservoirs.
        They are going back now to see what other additional wells
    and reservoirs should be included in the original program. So,
    that the amount of funding, while it may be smaller than the
    historic levels, is simply an effort to try to go back.
        Mr. Regula. If you had additional funding there, the
    program could utilize it effectively. Would that be a fair
    statement?
        Mr. Gee. I would have to be honest, I certainly would not
    turn away additional funding, Mr. Chairman.
        Mr. Regula. The honest man.
        Mr. Gee. Right. We would find a way to use it, Mr.
    Chairman.
        Mr. Regula. Thank you.
        Mr. Moran.

                                methane hydrates

        Mr. Moran. Thank you, Mr. Chairman.
        Our phenomenally astute minority staff here, Mr. Del Davis,
    tells us that one major limiting factor to methane hydrates is
    that to get the product to market it would probably be gasified
    in Alaska's North Slope and would require construction of a gas
    pipeline to Valdez at an estimated cost of around $15 billion.
        That probably means that it is cost prohibitive right now.
    Do you want to address that? I assume this is completely
    accurate information?
        Mr. Kripowicz. It is accurate in what it says but it does
    not give you the context and that is the fact that most of the
    methane hydrate resource is not in Alaska but it is in the
    offshore areas of the United States. Secondly, there is
    considerable effort going on in the Department on gas to
    liquids technology that would convert gas, such as the gas that
    is already on the North Slope that is not transportable, to an
    economic fuel that could be put in the existing Trans-Alaskan
    Pipeline.
        And that technology is also underway and would be completed
    well before we actually had commercial production of methane
    hydrates.

                             electric restructuring

        Mr. Moran. That is interesting.
        Mr. Chairman, there are three things that come to mind in
    this subject area. One of them is that with electric
    restructuring there is less incentive for any single power
    company to really make the investment in research and
    development. So, increasingly, it is going to fall to the
    Federal Government to be making that kind of investment because
    we are not going to have the resources concentrated in as many
    firms that would have the financial luxury of making R&D
    investments.
        You can comment on this issue if you would like, but I
    gather the answer is, yes. That is a concern with deregulation
    and restructuring of the electricial industry.
        The second thing is that there is a fascinating process
    that we came into contact with that involves biological agents
    being used to convert coal to methane. Basically termites are
    used to change the coal into methane gas through a process that
    obviously is environmentally benign and is very low cost. Have
    you ever heard about this process?
        I have actually seen it on a small scale.
        Mr. Gee. Let me address Congressman Moran's question first
    the point on electric restructuring, and then I am going to
    turn to Mr. Kripowicz, our expert, to see what he knows about
    using termites to convert coal.
        Mr. Moran. Well, let us just say biological agents because
    some people may think it is goofy to talk about termites. But,
    you know, I do not think we are close to using this process on
    a commercial scale yet.
        Mr. Gee. In terms of the effect of electric restructuring
    on the private sector's willingness to continue long-term
    research and development you are absolutely correct. What we
    found in our discussions with the industry is that the industry
    members are now less willing to commit to long-term research
    because of the competitive pressures of keeping their rates
    competitive against their neighbors. So, this is something that
    we know will grow and continue to be of concern to have
    sufficient research for long-term purposes.
        Short-term, obviously, if it is to their commercial
    advantage they will do what they need to do to survive as a
    competitive business. Long-term is a problem. That is the role
    that the government can play.
        Let me turn to Mr. Kripowicz and see what he knows about
    the other subject.

                                 bioprocessing

        Mr. Kripowicz. In bioprocessing of coal we have a small
    program, roughly a million dollars in 1999, increasing somewhat
    to $1.4 million in fiscal year 2000. And it has looked at a
    variety of concepts on a small scale including both our
    national laboratories and some industrial firms.
        And the technology is basically in its infancy and, you
    know, we continue to look at it but we have not found anything
    that we consider, at this point, a breakthrough that would push
    us to a larger scale. But we continue to look at it.

                              caspian oil reserves

        Mr. Moran. Thank you.
        There is one last thing, if I could, Mr. Chairman.
        If I am not mistaken, Mr. Gee worked extensively on the
    Caspian oil pipelines and he has quite a bit of knowledge on
    the Caspian oil reserves. I would just like to get your
    comments, since you are an expert. It seems to me that largely
    because of internal political considerations we have made
    Azberbaijan a political pariah in terms of foreign policy in
    order to, show our support for Armenia.
        But in the process we have cut ourselves out of being a
    major role player in the development of the Caspian Sea
    reserves, despite the fact that it may be one of the largest
    reservoirs of oil and could have a profound influence upon the
    distribution of wealth and influence in that part of the world.
        Where the pipeline goes, who has control over it, who
    benefits primarily from it, these are all major issues that
    will affect the long-term use of fossil supplies and their
    affordability.
        Could you address what is happening with the Caspian Sea
    oil reserves and our role in the development and distribution
    of it?
        Mr. Gee. Congressman Moran, our position in the Caspian has
    been that we think that there is a significant potential for
    those reserves to play a role in contributing to the worldwide
    supply of crude oil that is going to be necessary over the next
    20 to 30 years. It is estimated that those reserves could be
    roughly equivalent to the volume that is found in the North
    Sea. And it would be important, certainly, to stabilizing the
    worldwide price of oil.
        The reasons why the United States is interested in
    developing those reserves along with our companies is three-
    fold. The first is obviously energy security. Diversification
    of additional sources of supply. Not to the detriment, I may
    add, to our own domestic industry which is important, but to
    the extent that we need to find more oil abroad just to
    maintain a more stable source of supply for worldwide price
    stability purposes.
        The second reason we are involved is geostrategic. And that
    is because Azerbaijan as a newly independent State, along with
    some of the other former members of the Soviet Union, needs the
    hard currency that the oil sales could provide to stabilize
    their economies and bring about further democratization of
    their regimes.
        And then, finally, and no less important, obviously, is
    commercial and that is to see that U.S. companies have a piece
    of the business opportunities in Azerbaijan and elsewhere, both
    to develop those reserves and to build infrastructure
    particularly the pipelines, as well as the wells that are being
    spotted to develop those reserves.
        We continue to press forward to meet those three
    objectives, and we continue to support a Trans-Caspian Oil
    Pipeline that would connect Kazakhstan with Azerbaijan and go
    all the way down to the Southern port of Turkey in Ceyhan. We
    also support a Trans-Caspian Gas Pipeline that would connect
    the Kazaki gas reserves to Azerbaijan and also provide gas to
    Turkey as the ultimate end-use market. We are hopeful that
    those infrastructure projects will move forward in a
    constructive way eventually.
        Obviously, right now, with the worldwide price of petroleum
    you have to factor that into the economic equation. The timing
    of the building of the pipelines may be moved back from what I
    understand. I am not visiting this issue on a day-to-day basis
    any more. That was in my prior job but I am keeping abreast of
    what is going on.
        I understand that the thinking now is that there could very
    well be an announcement on the site of the pipeline, the oil
    pipeline, some time by the end of the year.
        With respect to our relationship with Azerbaijan, as you
    know, our assistance to Azerbaijan is restricted by, I believe,
    it is Section 305 of the Freedom Support Act which basically
    prohibits U.S. assistance in various forms. Our Administration
    is supportive of the repeal of that so that we can remove
    shackles and help us provide greater assistance to Azerbaijan
    because we do believe that they are a significant player and of
    vital strategic importance to the United States.
        Mr. Moran. It is a very informed answer.
        Thank you, Mr. Gee.
        Thank you, Mr. Chairman.
        Mr. Regula. Mr. Cramer.

                        university coal research program

        Mr. Cramer. Thank you, Mr. Chairman.
        Would you comment further on your university research
    programs, the initiatives. How many participated in those and
    what you hope to accomplish?
        Mr. Gee. Let me turn to Mr. Kripowicz, who knows the
    details of your answer, Congressman.
        Mr. Kripowicz. The specific dollars for our University Coal
    Research Program which is not the only area in which our
    universities participate, but the University Coal Research
    Program is about a $3-million-a-year program, which is very
    highly competitive. I cannot give it to you now, but I can
    provide you some more detail for the record. But there are a
    considerable number of universities that participate in this.
        [The information follows:]

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        Mr. Cramer. Participate or compete or both?
        Mr. Kripowicz. They compete. Both. We do multiple awards,
    usually for a two or three year period. So, we probably at any
    one time have 20 or 25 universities participating in the
    program.
        Mr. Cramer. What have you accomplished through that
    program?
        Mr. Kripowicz. We have done some research in the gas to
    liquids area that I know started in the university program. We
    have also done some catalyst research that has been applicable
    to the coal program and some gas cleanup research. I can
    provide you with some specific examples of projects that have
    gone forward and then been picked up by the main program and
    moved into the commercial arena.

                  historically black colleges and universities

        Mr. Cramer. I would appreciate that. And if you would,
    either now or later, also, talk to me about your growing
    emphasis on increasing research activities at HBCUs.
        Mr. Kripowicz. We have a very active program with
    Historically Black Colleges and Universities (HBCUs), which are
    funded at approximately $1 million a year. It has not really
    increased. It has been about at that level.
        Mr. Cramer. It has not increased?
        Mr. Kripowicz. No, sir. It has been at about that level
    give or take $100,000 for quite some time. What we have been
    trying to do is work with the HBCUs and other minority
    institutions--it has been expanded to more than just HBCUs--to
    establish an expertise and program so that we can develop
    trainees in those areas that can work for both government and
    industry.
        In addition to the research that they do, we have an
    internship program also where they come and work for the
    government for summers and we have also started a program with
    industry so that the students work with industry in the summers
    in order to allow them to get the experience to move into the
    private sector.
        Mr. Cramer. Approximately how many colleges and
    universities participate in those programs?
        Mr. Kripowicz. There are over 100. And, again, I can get
    you the exact number. They are all eligible to participate.
    There are some, obviously, that have better programs than
    others, but probably at any one time in the program we would
    have a dozen or so active participants.
        Mr. Cramer. I would like more information on that.
        Thank you, Mr. Chairman.
        [The information follows:]

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        Mr. Regula. Mr. Hinchey.
        Mr. Hinchey. Thank you, Mr. Chairman.
        I can recall back in the 1970s thinking that the Clean Coal
    Technology Project, both from a strategic point of view as well
    as an environmental point of view made a great deal of sense.
    And it may be that at some point in the future it makes a great
    deal of sense again. But at this particular moment, one is hard
    pressed to see that. I see that the Department has asked for, I
    believe, it is $247 million in deferred spending on clean coal.
        Is that the entire amount that is deferred in that category
    or is it a larger number?

                                   clean coal

        Mr. Gee. Congressman, that is the entire remaining amount
    that we need to complete two of the remaining 40 projects that
    already have been fully funded and we are committed to
    completing those two projects. We do not need the money for
    this coming budget year, for fiscal year 2000 because as I
    understand it, those two projects, one of which is an
    integrated gasified combined cycle plant, I believe in
    Illinois, and another one is a combined electric steel making
    plant in Utah, neither of them require appropriations for the
    forthcoming year because they are in a very preliminary stage
    of planning and trying to get assembled teams to work on the
    project.
        We do anticipate, because of our commitment to see the
    fruition and completion of those two projects, coming back in
    subsequent budget years for the remaining balance of the
    funding of our original Clean Coal Technology Program.
        Mr. Hinchey. Now, a number of those projects have been
    deferred for some period of time. I know there is a Lakeland
    Project, does that fit into that category?
        Mr. Gee. That may be another project.
        Mr. Hinchey. Lakeland 4-A and Lakeland 4-B?
        Mr. Gee. Bob, do you know which----
        Mr. Kripowicz. Yes, sir. Both of those projects are at one
    site in Lakeland, Florida, at the municipal utility there and
    they are doing the environmental impact statements right now
    and then they have a final agreement with Foster Wheeler, the
    technology vendor to construct the plant. And all they have to
    do is finish the environmental work and they will be started.
        All of that money is obligated to the project, however.
        Mr. Hinchey. I know those projects have been around for a
    long time; one about a decade, the other six years or so, is
    that correct, something like that.
        Mr. Kripowicz. They have been around for a while; I do not
    know the exact number of years, but, yes.
        Mr. Regula. Will you yield?
        Mr. Hinchey. Yes.
        Mr. Regula. We have rescinded about $400 million where
    projects were proposed and for whatever reason did not go
    forward. So, that has been rescinded over the past several
    years.
        Mr. Hinchey. Thank you, Mr. Chairman.
        There is a project in Utah, could you describe that
    project, the Utah Project?

                                     CPICOR

        Mr. Kripowicz. Yes, sir. That is the CPICOR project, so-
    called. It is a----
        Mr. Hinchey. What is it called.
        Mr. Kripowicz. CPICOR. That is Geneva Steel is the company
    that is using a technology called Hismelt which will
    essentially allow the direct use of coal in the steel-making
    process without having to go through the coke-making process,
    which can be very polluting and also it is not very energy
    efficient. And it would produce the raw steel as well as
    producing significant quantities of gases that will be used to
    generate electricity.
        This has not been done on a large scale; it has been done
    on a pilot scale in other countries. And that is what this
    particular project would do.
        Mr. Hinchey. What is the energy source for that project?
        Mr. Kripowicz. Coal.
        You mix coal with the iron ore and rather than having to go
    through the coke making and blast furnace process, it is a
    direct reduction of the iron ore to make raw steel. It is not a
    finished steel at that point but then it can be refined.
        Mr. Hinchey. I understand it now, thank you, very much.
        The discussion you had a few moments ago with Mr. Moran on
    the Caspian Sea is a very interesting one. Although I think it
    does not specifically come under our jurisdiction. To some
    extent----
        Mr. Regula. Oil is oil.
        Mr. Hinchey. I love that attitude, Mr. Chairman, thank you.
        [Laughter.]
        Mr. Regula. So, go ahead.

                              CASPIAN Oil Reserves

        Mr. Hinchey. Information that I have seen indicates that
    the quantity of known reserves in the Caspian Sea is greater
    than that in Saudi Arabia, in the Arabian Peninsula.
        Could you comment on that?
        Mr. Gee. I am not aware of that particular estimate. It
    depends on--there are a number of experts who are trying to
    evaluate what they think could be in the ground and all of it
    is really just, if I may say, somewhat conjectural. Wells are
    being drilled, exploratory wells are being drilled as we speak
    today to try to characterize the reservoirs in that entire
    area. And more will be known over the next few months about
    what the total magnitude of those reserves could be.
        The number I have heard is roughly equivalent to the North
    Sea. Saudi Arabia is in a universe of its own. It has so much
    potential and it is also significantly lower in cost to
    produce, which makes it somewhat unique.
        With the Caspian Sea, as I understand it, there are costs
    associated with lifting that production out of the ground. They
    are probably not as high as you would find here, in the United
    States, because of the fact that we are now going through a
    secondary and tertiary recovery process. But I do not believe
    that the costs associated with the Caspian Sea are as cheap as
    we know they are in Saudi Arabia, which puts Saudi Arabia sort
    of into a class of its own, both because of the magnitude of
    the reserves as well as the cost of production.
        Mr. Hinchey. What is the best source of information on
    potential reserves in the Caspian Sea?
        Mr. Gee. I would like to say probably our Energy
    Information Administration. Their numbers are largely taken,
    however, from industry estimates but they take in all the
    totality of what is known in the community, certainly. They
    talk to the experts and we will be happy to provide you with
    sort of the numbers that they have come up with based on their
    discussions with the various private sector experts.
        Mr. Hinchey. I would appreciate that very much.
        Mr. Gee. Okay.
        [The information follows:]

                        Caspian Sea Oil and Gas Reserves

        The latest data is contained in the report, ``Caspian Sea
    Region,'' published in December 1998 by the Energy Information
    Administration (EIA), the independent statistical and
    analytical agency within the U.S. Department of Energy.
        EIA reports that: ``Most of the oil and gas reserves in the
    Caspian region have not been developed, and many areas of the
    Caspian region remain unexplored. Most of Azerbaijan's oil
    resources (proven as well as possible reserves) are located
    offshore, and perhaps 30%-40% of the total oil resources of
    Kazakhstan and Turkmenistan are offshore as well. Proven oil
    reserves for the entire Caspian Sea region are estimated at 16-
    32 billion barrels, comparable to those in the United States
    (22 billion barrels) and the North Sea (17 billion barrels).''
        EIA's report also states that: ``The prospect of
    potentially enormous hydrocarbon reserves is part of the allure
    of the Caspian region. Besides the 16-32 billion barrels
    currently proven, the region's possible oil reserves could
    yield another 163 billion barrels of oil if they become proven.
    This is roughly equivalent to a quarter of the Middle East's
    total proven reserves (however, the Middle East also has it own
    vast possible reserves).''
        The December report is not based on an independent
    engineering review by EIA, but depicts a range of reserve
    estimates based on published and commercial sources. The range
    of reserve estimates are large due to the uncertainty over the
    economics of oil development in the region and discrepancies in
    the reserve estimation methodology between those methods
    accepted by Western experts and the system that was employed
    during the Soviet era.

        Mr. Hinchey. Thank you.
        Mr. Gee. Thank you.
        Mr. Regula. Thank you.
        Mr. Peterson?
        Mr. Peterson. Good morning.

                              Domestic Oil Market

        I come from Pennsylvania where the energy issue started. In
    my district, five miles from my home, was Drake Well, where the
    first oil well was discovered at 68 feet, dug by hand. A lot of
    people do not know that but oil was oozing out of the ground
    all the time and they started digging and hit oil, which has
    changed the world.
        But I guess as we talk I am sure there has been an oil
    producer in Pennsylvania that has closed up shop. Where do you
    see the market place? You know, I am from the Penn Grade Crude,
    which is really Ohio, New York, Pennsylvania, West Virginia.
    And then, of course, you get over into the other States,
    Oklahoma, Louisiana, Missouri, where we know that they are
    shutting up shop by the thousands.
        Where do you see the market price over the next year or
    two?
        Mr. Gee. Right now, I think that West Texas Intermediate
    and I think Brent is somewhere hovering between $14 and $15 per
    barrel. And it is coming up. I think it just went up about 60
    cents just yesterday. There were some recent discussions
    between some of the OPEC countries on an agreement on output
    cuts. I think that, if I recall, our Energy Information
    Administration, which usually does these projections of where
    they think the price is going to go, I think their projections
    show that it still is going to remain at or around that level
    for the next couple of years.
        What that means for our domestic industry is that they
    still will not have sufficient cash flow in order to preserve
    some of the marginal wells that are now being shut in as we
    speak, with a significant loss not only to our productive
    capacity but also the human resource impact; people that are
    simply leaving the oil sector and moving on to other
    occupations, which in the long-term is not good for us because
    you simply cannot get those people back, even if you could
    reopen some of the shut-in wells and try to get some of that
    production out.
        We are working intensively within the Department of Energy
    to try to find ways to do a number of things to help our
    domestic industry, including trying to find ways to lower their
    production costs. We are working with the Department of
    Interior to try to find ways to ameliorate some of the royalty
    burdens that they now face.
        We are working with Treasury talking about the tax burdens.
    We had an excellent meeting that some of you may know about
    between the industry and the White House staff earlier this
    week with Secretary Richardson and Secretary Rubin and Chief of
    Staff John Podesta, and the Chairman of the National Economic
    Council, Gene Sperling, to talk with the industry about the
    problems they have been having. Secretary Richardson was happy
    to announce just yesterday, I believe, that there will be the
    formation of an interagency task force to look at the problems
    of the industry to see what this administration can do.
        It is of deep concern to us because of the impact on our
    domestic national energy security.
        Mr. Kripowicz. We have for you the United States security
    demand in a global context.
        Mr. Peterson. We also have, in Pennsylvania, I know that
    the hundreds of thousands of orphan wells, where they have just
    been abandoned because people went broke, so there is nobody to
    go back on. And they are just abandoned.
        But I had an interesting contact two weeks ago at a major
    university, research university came in with a couple of their
    people and they have a new concept. They tried to get a grant
    last year through Energy Department but were unsuccessful,
    where they use ultrasonic sounds and they feel they have it
    down to where all they need is a field demonstration to prove
    this, that the high ultrasonic sounds would clean the bore and
    get rid of all that often keeps oil from coming out and how
    they corrode up and would clean the bore. Then the low
    ultrasonic sounds would release the oil from the sands and they
    feel it will be far more effective than if we went to hydro-
    facking, which again, got another part of the oil that we did
    not get when we just originally shot a well.
        Mr. Gee. Right.
        Mr. Peterson. So, how can we help them in the Energy
    Department get funded because they said it would work in all
    the fields, not just the paring field.
        Mr. Gee. Bob, would you like to answer that? Mr. Kripowicz,
    is our technology man. So, rather than my trying to stumble
    through an answer, I think he can probably give you a sharper
    answer.
        Mr. Kripowicz. We have two procurements that have just been
    released currently. One is on revisiting our class program to
    which this technology might be applicable. We also have a small
    program to help independent producers, which this may also fit
    under. I would also suggest that they could contact us and talk
    to our people, and also our office to see if there are any
    other procurement mechanisms available and talk to them about
    the technology.
        I can give you the specific information about the
    procurements.
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        Mr. Peterson. We thought there were some weaknesses in
    their original submission. They did not make the cut last year,
    but they are reworking it and I should have it in a week or
    two. Shall I get a copy over to you to see if they are doing it
    right? I am not sure they knew how to do it to get into the
    stream. But it really did sound exciting, and I mean this is
    something that they have been tinkering with for a long time,
    and they feel pretty confident that it would help stripper
    wells all over to release more oil than has been released by
    any other process. And also it had another factor of releasing
    contaminants from soil. Where you have contaminated soil and
    chemicals you could get those to separate from the soil so this
    technology could also be utilized in waste cleanup.
        So, I mean I just thought it was an exciting thing that we
    ought to be taking a look at.
        Mr. Gee. If it is a novel technology that has multiple uses
    and can be done cost efficiently, then I think it is something
    we ought to take a look at, certainly.
        Mr. Peterson. We will share that with you.
        Mr. Regula. There are a lot of stripper wells out there.
        Mr. Peterson. Oh, there sure are, both in your State and
    mine.
        Mr. Regula. Right.
        Mr. Nethercutt.
        Mr. Nethercutt. Thank you, Mr. Chairman.
        Welcome, gentlemen.
        Mr. Secretary, I took an interest in your comments about
    Central Asia and the political situation that exists there
    relative to allowing our country to deal more forcefully and
    forthrightly and beneficially with Azerbaijan. I hope that the
    administration will continue to push that policy position
    relative to changing the law. I think it makes sense.

                               fuel cell research

        I have an interest in fuel cells and I noticed that in your
    budget request you go down roughly $4.5 million in fiscal year
    2000 on fuel cell research. And I see the benefit of fuel cell
    research and the implementation of fuel cell technology in the
    West, in rural areas like my own. And I am wondering why the
    reduction? To what extent is this going to interrupt an
    existing partnerships that I think have great potential for
    energy production in my part of the world, as well as around
    the country.
        Mr. Gee. Let me state first, that although the number shows
    a slight reduction, it does not signal any lessening of our
    commitment to plumb that technology as a future fuel resource
    to make it commercially feasible and fully deployed in multiple
    uses. In particular, a lot of our research, I believe the
    predominant focus of our research is on utility size fuel cell
    research that can be used for utility generation purposes.
        It is a highly efficient environmentally benign technology
    that merits the full commitment on our part. And
    notwithstanding the slight reduction in funding that we are
    seeking for this fiscal year, we hope that it does not signal
    any lessening of our commitment to explore that.
        Let me turn to Mr. Kripowicz and he can give you a little
    more detail about how we got the numbers.
        Mr. Kripowicz. In actuality there is $5 million in fuel
    cell-related research that has been moved to the coal program
    under the gasification program because one of our fuel cell
    contractors is working on hybrid gas turbine fuel cell
    technology that would be applicable to coal gases. And, so, we
    have identified a portion of that research in the coal-related
    budget rather than in the gas-related budget in fuel cells.
        If you take that $5 million it essentially means that we
    are funding the three major contractors that we have at the
    same levels as last year.
        Mr. Nethercutt. In a restructured electricity market, would
    you say that fuel cells would be competitive? How would you
    rank the competitiveness as an alternative or as a consequence,
    shall we say, of restructuring the electricity?
        Mr. Gee. I would say as of today, as a stand-alone
    technology, it is probably not competitive just because it is
    at the point where it is not at what I would consider a
    commercially feasible stage to be competitive one-on-one with
    other fuel sources. Over time, obviously, as the technology
    becomes more widely deployed and the economies of scale are
    realized and the costs of manufacturing come down, it can be
    made to become competitive as the market begins to absorb it
    more and more.
        In terms of how the electric sector is being restructured,
    I think it has significant potential because of its ability to
    provide for distributed generation. So, that you can meet
    electric power demands in outlying areas without having to
    build large 345-KV transmission lines and without having to
    build a large central station power plant to serve particular
    communities, particularly in rural communities or areas where
    it just does not make sense to build new capacity.
        And I think that it has some significant potential to meet
    the challenges because we know that customers are ultimately
    going to want to choose their source of supply. And I think
    distributed generation is going to play a significant role in
    that and fuel cells as part of the distributed generation
    market, I anticipate would play a significant share of that.

                                turbine research

        Mr. Nethercutt. Are you doing any research on hydro-power
    turbine generation? In other words, I know you are doing some
    advanced turbine research.
        Mr. Gee. Right.
        Mr. Nethercutt. But does it apply at all to hydro power?
        Mr. Gee. The hydro research is being done by our Office of
    Energy Efficiency and Renewable Energy and I believe they are
    doing some hydro-turbine research to try to make it what they
    call a fish-friendly turbine. So that it does not chew up as
    many fish.
        Mr. Nethercutt. Right. We need it desperately out West.
        Mr. Gee. We want to be able to help you save the fish stock
    so that you can use it for other purposes, obviously.
        Mr. Nethercutt. It will generate power and not tear down
    dams.
        Mr. Gee. Right. I think that is the core of their research
    effort in the hydro sector from what I understand.

                              carbon sequestration

        Mr. Nethercutt. Let me ask one quick, final question. I sit
    on the Agricultural Appropriations Subcommittee and there is a
    substantial amount of research that is going to carbon
    sequestration. And I see it is in your budget request as well.
    And as one who advocates a production oriented research rather
    than necessarily a global warming type of research, how are you
    coordinating with USDA, if you are, or other agencies that
    might be doing the same thing that are comprising a substantial
    amount of the budget numbers through the administration?
        Mr. Gee. I believe, and I am going to turn it over to Mr.
    Kripowicz to give you more details, we are very closely
    coordinating our efforts with USDA, particularly, I believe, in
    terms of the research that relates to development of
    sequestration opportunities in the form of what we call, sinks,
    or particular soils that can be cultivated so that they would
    absorb greater volume of carbon dioxide.
        Now, let me turn to Mr. Kripowicz, to see if he can give
    you some more details.
        Mr. Kripowicz. We are in the process of putting a
    comprehensive document together that assesses all of the things
    that you need to do for carbon sequestration. And we are doing
    that with our Office of Science. And in that process we have
    talked to all of the other agencies and had workshops with all
    of the other agencies. Once we get this document put together
    we are going to put it out for review, not only by the other
    agencies, but also by the total scientific community. And the
    idea is to put this thing together on a coordinated basis so
    that we do not do the same things that the Department of
    Agriculture does or the Geological Survey does.
        Mr. Nethercutt. When will that be forthcoming and when it
    is forthcoming, would you provide a copy to this subcommittee?
        Mr. Kripowicz. Yes, sir. We expect to be able to have that
    working document released within the next week or so. When we
    first started talking about carbon sequestration, a year or so
    ago, we had very little detailed information about what we were
    really after. Now, we have a very comprehensive look at it
    which includes all of the other government agencies.
        Mr. Nethercutt. Thank you very much.
        Thank you, Mr. Chairman.
        Mr. Regula. Will there be an executive summary on that? I
    would like to put it in the record if it is not too copious.
        [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Kripowicz. I believe there is. You know, there are
    executive summaries and then executive summaries. But I believe
    that----
        Mr. Regula. Would you coordinate and let us know if it is
    practical to put it in the record.
        Mr. Kripowicz. Yes, we will get it to you.
        Mr. Regula. Mr. Dicks.
        Mr. Dicks. Well, I want to welcome our witnesses. I regret
    I was unable to be here earlier. I have some questions for the
    record from Mr. Mollohan that I would like to have inserted.
        Mr. Regula. Without objection, these will be submitted.
        [The questions of Mr. Mollohan follow:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                            research and development

        Mr. Dicks. Thank you very much, Mr. Chairman.
        Let me ask you, I hope you did not get into this too
    heavily, but I would like to ask you: The President's Committee
    of Advisors on Science and Technology in the past report on
    Federal Energy Research and Development for Challenges in the
    21st Century include the following observations: While the
    challenges looming in the energy future of the United States
    and the world have been growing in recent years, expenditures
    on R&D have been declining. The most recent systematic study of
    energy industry R&D trends found that the industry spending for
    R&D fell 40 percent in real terms between 1985 and 1994. The
    R&D spending of the 112 largest U.S. operating electric
    utilities fell 38 percent between 1993 and 1996 alone, and the
    R&D of the four U.S. oil firms with the largest research
    efforts, approximately, halved between 1990 and 1996. Japan
    however, increased its public sector energy R&D spending from
    about $1.5 billion in 1974 to $4.2 billion in 1980, by 1995,
    the figure was $4.9 billion, about twice as high as DOE's
    energy R&D spending.
        The PCAST paints a bleak picture. How long can these trends
    continue without a calamity or major energy restructuring? Or
    do you think there is a problem?
        Mr. Gee. I think that you have highlighted a very
    significant challenge for our government and for our private
    sector, Congressman Dicks. In particular, in Japan, there is a
    much larger commitment on the part of their government,
    frankly, to work in a unique way with their private sector to
    provide them with the backbone for R&D which would make their
    energy private sector competitive, particularly in exporting
    technologies, energy technologies that would be deployed in the
    developing world.
        We believe the reason why we are here today is to support a
    research budget within our budget limitations that would make a
    contribution to the efforts that our industry needs. I cannot
    represent to you that that is going to fill the gap though.
    Obviously we are at a crossroads where our private sector,
    particularly in the electricity utility industry, is shaving
    back as we have indicated on their commitment for long-term
    R&D.
        Mr. Regula. Will the gentleman yield?
        Mr. Dicks. Yes, I will yield.
        Mr. Regula. I think you are touching on an extremely
    important subject that affects the future, since energy is key
    to everything. You mentioned the Japanese numbers. Now, many of
    our projects have a private match which would--and I wonder if
    those numbers that you are using, Mr. Dicks, reflect that and
    those cases is 100 percent of their research Government funded?
    Because that would change the relationships.
        Mr. Dicks. Most of what we are talking about is done by the
    private sector, right? Yes, the Japanese number is all
    Government funded. But our number was Government and private
    sector.
        Mr. Gee. Was that a combined number?
        Mr. Dicks. Well, I guess we mentioned here, energy industry
    spending for R&D fell 40 percent in real terms. I do not think
    we have the Government spending in our figures. These are all
    industry numbers.
        Mr. Regula. I was just trying to get apples and apples in
    terms of the effort.
        Mr. Dicks. Yes. Because I am sure they have some private
    sector numbers that we do not include here. But the question
    I'm asking is this because of low oil prices, energy prices?
    Does the R&D effort kind of fall off when energy is so
    plentiful?
        Mr. Gee. Well, one reason is market pressure. In an
    environment when you have low crude oil prices, in the private
    sector or in any business, for that matter, the first place you
    cut is your long-term R&D just as a matter of strategic
    business survival. So, it is true that our oil firms are
    lessening their effort in R&D simply because they do not have
    the money.
        The same holds true, obviously, for the electric sector
    where they are moving towards a more competitive market both
    for now in the wholesale markets and ultimately in the wider
    retail markets. And they are not able to carry those R&D
    budgets that were financed in a monopoly arrangement they used
    to have with their customer base.
        And, so, that is where that pressure is coming from. And
    that means that the challenge is to find and sharpen and
    justify government as hopefully an entity through which a lot
    of these long-term R&D efforts can be maintained.
        Mr. Dicks. Thank you very much.
        I regret that I cannot stay but I have a meeting with the
    Democratic leader.
        Mr. Regula. Thank you.

                              domestic oil market

        I have a couple of questions and then I will go back to
    either of you before we adjourn. And this fits with your
    interest, Mr. Peterson. The question: You have proposed a
    preferred petroleum upstream management program for $500,000.
    And you have had the discussion with Mr. Peterson on the
    decline in domestic oil production. I note that you asked for
    $5 million in your initial request, and I presume OMB cut you
    back to $500,000.
        Well, it does not make sense if we are going to have a
    program to deal with domestic oil production because I heard
    you using the numbers of 60 and 70 percent of our oil petroleum
    consumption would be from offshore sources, and it seems that
    creates an enormous dependency in the event of world turmoil. I
    would like your comments.
        Mr. Gee. Obviously, as you have indicated, we could have
    used more and we have had to tailor our request within a
    smaller budget number. From our Departmental standpoint, that
    does not signal any lessening of the commitment, as you know,
    about the importance of this program. What it does is it
    provides for the transfer of known technology to a lot of the
    small operators so that they can find ways to incorporate these
    better practices in their operations to reduce their costs and
    to keep them operating through this difficult period.
        It is a very successful program that we already have
    underway in terms of talking with our independent industry and
    we are going to use the money as best we can.
        Mr. Regula. $500,000, though. You are going to have to
    downsize that program, are you not?
        Mr. Gee. Well, we are going to have to make more with less.
        Mr. Regula. Does the domestic industry (and they have oil
    and gas associations in Ohio and I assume in Pennsylvania,
    where there are a lot of the stripper wells) offer to
    participate in research, or is it pretty much 100 percent
    Federal money?
        Mr. Gee. I believe it is 100 percent federal in this
    regard. We have worked with and we have a network of different
    organizations that we work very closely with so that they act
    as the information conduit. The trade associations and the
    regional associations work very closely with us to spread the
    word on how to get these technologies deployed out into the
    field. Let me turn to Mr. Kripowicz for a moment and he can
    tell you a little bit more.
        Mr. Kripowicz. Yes. Our R&D program is very highly cost-
    shared. Our work with the oil associations we do not actually
    do any of our funding through the oil associations but a lot of
    our information gets spread through those associations and
    through the Petroleum Technology Transfer Council. And even the
    Petroleum Technology Transfer Council is partly cost-shared by
    the industry.
        There is no direct contribution from the associations but
    the individual companies do end up putting money into the
    programs.
        Mr. Regula. Mr. Hinchey, any further questions?
        Mr. Hinchey. Thank you, Mr. Chairman.
        Just a couple of things. I know that we are increasingly
    dependent upon foreign sources for our energy supplies,
    particularly petroleum. And I think that is now around
    somewhere in the neighborhood of 50 percent of our petroleum is
    imported from other places in the world.

                            long-term energy outlook

        And I was reading in your testimony that natural gas which
    is in abundant supply begins tapering off by the year 2015. And
    if we were talking about Social Security or Medicare that would
    be cause for great alarm. I am wondering what your view is of
    our long-term energy situation? I am saying, you know, let us
    say, by into the middle of the next century, where our energy
    is going to be coming from, how much energy are we going to be
    using? Those questions, I think, are questions that are on
    people's minds vaguely, but not clearly enough.
        Mr. Gee. Let me offer a comment. Every time we have done a
    projection on how we are consuming, what volume we are going to
    consume over the next 20 to 30 years and at what price, we are
    almost always wrong. But, notwithstanding that, let me try to
    jump in and be responsive to your question, Congressman.
        The number that you have noted in terms of the volume of
    contribution of natural gas is what we have also heard. What
    that means though is that we need to find ways to characterize
    a larger number of our existing reservoirs to get the gas out
    of the ground more effectively, to go after those reserves that
    we think have not yet been found and get them out of the
    ground.
        Also, as we have indicated, methane hydrates is a potential
    for new gas reserves and we have just scratched the surface
    there. So, the use of natural gas as a fuel source could change
    over time, over the next 15 to 20 to 30 years, depending upon
    how successful we are in moving forward on those technologies.
        But you are quite correct, there is only a finite amount of
    natural gas in the ground, proven and known and discoverable in
    reserves at the moment. So, our projections can only
    incorporate that to find out exactly what role that plays.
        It also means that we are going to have to diversify our
    fuel resources over the long-term going into the middle of the
    next century. There is no question about that. As we have
    indicated, coal will continue to play a significant role. We
    want to find a way to make it more cost effective through
    higher rates of efficiency; to make it more environmentally
    benign so that it can continue to be used as a vital fuel
    resource. It means we need to continue our R&D efforts on
    natural gas. It means we also need to continue our R&D on other
    sources of generation, such as renewables.
        I think that what I can say is that we look to having a
    diversified portfolio of fuel resources sometime around the
    middle of the next century. That is most expert projections,
    sort of arm-chair thoughts of where this market is going. But
    it does not mean we are going to exclude any particular
    resource or that there is going to be a diminution of the role
    that fossil fuels are playing.
        We anticipate that fossil fuels will continue to probably
    have the lion's share under most reasonably foreseeable
    economic scenarios.
        Mr. Hinchey. I appreciate how difficult these projections
    are. I can recall back in the 1970s, Government agencies,
    including the Central Intelligence Agency, suggesting that the
    price of oil today would be about $100 a barrel, when we know
    it is quite different from that.
        Mr. Gee. In 1978, when Congress passed the Natural Gas
    Policy Act, again, using numbers provided by the experts, I
    think they anticipated that in 1985 natural gas was going to be
    sold at a price equivalent to about $100 for a barrel of oil
    and that was a number from 12 years ago or 13 years ago.
        Mr. Regula. We both can remember when they said nuclear
    will be almost free.
        Mr. Gee. Right. Too cheap to meter.
        Mr. Regula. Too cheap to meter.
        Mr. Hinchey. Nuclear power, too cheap to meter.
        Mr. Gee. Yes, right.
        Mr. Hinchey. Yes, I remember that, Mr. Chairman.
        Mr. Regula. I have not found that meter, yet. [Laughter.]

                                 stripper wells

        Mr. Regula. Mr. Peterson?
        Mr. Peterson. Yes. I am meeting with the Pennsylvania Oil
    and Gas Independent Producers at 3 o'clock and could we kind of
    click down through. You talked about efforts you want to do to
    help the immediate industry, especially the stripper wells. But
    what all are we doing to assist them? What can I tell them?
        Mr. Gee. Let me see if I can tell you off the top of my
    head some of the things we are doing and then I can turn to Mr.
    Kripowicz who has got something he can read from, as well.
        One of our objectives is to lower the cost of production.
    And what we are doing is we are working with the industry to
    try to find ways, as we indicated, to bring about and to make
    known existing technology that they can now deploy out in the
    field that would reduce their lifting costs, simply through
    better management practices using new technology or existing
    technology rather.
        Secondly, we have a program with the National Association
    of State Energy Officials to try to find ways to work with the
    electric utilities to lower the electric utility bills. The
    lifting costs that a lot of our operators experience,
    electricity makes up 30 to 40 percent or so of the lifting
    costs. If we can find a way to just cut that in half that would
    make a tremendous difference in improving the economic survival
    of these operators who have these stripper wells.
        We are also working with our sister agencies to try to find
    a way to help ameliorate some of the regulatory burdens that
    they face both in terms of royalty levels, perhaps trying to
    postpone the imposition of them, particularly royalties on
    certain categories of production. We are trying to find a way
    to ameliorate that. I believe Interior already has the
    authority to grant royalty holidays on a case-by-case basis in
    hardship cases. So, we are working with Interior to try to find
    ways to ameliorate that.
        We are also working to try to find ways to bring about
    better and more streamlined regulatory procedures. We are
    working with our sister agencies, such as Interior, to try to
    find ways to simplify some of their regulatory burdens so that
    it could lower the costs of compliance. We have an on-line
    permitting project with some state agencies, such as the Texas
    Railroad Commission, to try to find ways to have permits
    granted for production now on an on-line electronic system,
    rather than through paper.
        And we anticipate that that could yield a tremendous volume
    of cost savings to our industry just by filing for permits
    electronically.
        Let me turn to Mr. Kripowicz and see if there are other
    things he might want to add.
        Mr. Kripowicz. Well, I think those items, plus our R&D
    program which we had previously discussed. We also did sign a
    memorandum of understanding with the SBA for them to promote
    their loan program for small businesses in the oil industry.
    They have not been active in doing that before. So, now we are
    working with them.
        Plus, setting up the interagency group to continue to look
    at ways that we can assist the industry that the Secretary just
    announced, I think, is very important. And part of that will be
    looking at the possibility of some sort of tax relief and in
    that area we will also be working very closely with Congress, I
    assume.

                   interstate oil and gas compact commission

        Mr. Peterson. May I make a suggestion?
        I, coming from an oil State, would seem to me if you--I
    think I made the same suggestion to Interior when they were
    here, to bring together the oil producing States, you know, and
    have someone represent the administration or Governor and maybe
    who runs the oil regulatory part. And see if collectively,
    because we are kind of, you know, the Federal Government is
    pretty far removed from the little producer that is down in the
    woods. And you cannot really reach out and touch them like the
    State can. The State people are out there and if we could work
    something out rather quickly with the oil regulators at the
    State level where you developed a common approach of how to
    help.
        Because I want to tell you, they are rolling over and dying
    as we talk. I mean it is just--and they are going to go broke,
    they are broke. And we are just going to have these hundreds of
    thousands or millions of orphan wells and that is going to be
    another whole problem if we let this industry collapse.
        Mr. Regula. Go ahead.
        Mr. Gee. Congressman, we appreciate your concern and your
    suggestions. We have a very vigorous dialogue with the state
    officials through the Interstate Oil and Gas Compact Commission
    which is comprised of the oil and gas producing states, both at
    the governor level as well as the Secretary of Energy level,
    with the various states. They are very active. We have
    communication with them virtually on a day-to-day basis now to
    try to assess what the conditions are and things that we can do
    to help them out. And those efforts will continue.
        Mr. Peterson. Thank you.
        Mr. Regula. I think it is a good idea and I am glad to hear
    you are doing it. I was just going to suggest we try to put it
    together, but apparently you are ahead of us on this one.
        Mr. Peterson. Could you keep us posted though?
        Mr. Gee. Yes, we will.
        Mr. Regula. We have the same problem in Ohio, just
    identical.
        One last question. You are deferring $256 million in Clean
    Coal Program, $21 million in NPR previous funds, $35 million in
    two other programs. That is about $300 million in deferred
    programs. How are you going to restore that into the base
    budget in the future? In effect, you are using these programs
    as a bank for your other programs. And that is an interesting
    concept, but you have to put money back in the bank.
        Mr. Kripowicz. Yes, sir, you do have to put money back in
    the bank. [Laughter.]
        And we will request that. [Laughter.]

                            naval petroleum reserve

        Mr. Kripowicz. The $256 million is an actual deferral. I
    think that what we are doing in the Naval Petroleum Reserve is
    using prior year obligations because we had extra funding.
        Mr. Regula. Do you have any unobligated balances? Are you
    using that here?
        Mr. Kripowicz. That is what we are using to offset the
    funds in the Naval Petroleum Reserve, for example, and to some
    extent the fossil energy budget, yes, sir.
        But it is only one deferral. The others have the same
    effect.
        Mr. Regula. But you do understand that it has got to be
    replaced----
        Mr. Kripowicz. Yes, sir.
        Mr. Regula [continuing]. At some future time.
        I had another question, but I will save it.
        Okay.
        Mr. Gee. We fully appreciate the money is going to have to
    come from somewhere. That message is not lost on us.
        Mr. Regula. Thank you, very much.
        It has been a good hearing. I think that we do not pay
    enough attention to energy because we have plenty. And as Jim
    Wright said, he was advised by one of his constituents when we
    had the big energy shortage, that well, there is no problem,
    you just use more electricity because all you need is a switch
    to get that.
        I think that for the foreseeable future fossil is going to
    be a key player. And you are it, and I am glad that you are
    sensitive to that.
        Thank you for coming.
        Mr. Gee. Thank you.
        Mr. Regula. The Committee is adjourned.
        [Additional Committee questions follow:]

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                                               Thursday March 25, 1999.

                              DEPARTMENT OF ENERGY

                                    WITNESS

    DAN W. REICHER, ASSISTANT SECRETARY OF ENERGY FOR ENERGY EFFICIENCY AND
        RENEWABLE ENERGY
        Mr. Regula. Good morning. We'll get this hearing started.
    We're pleased to have the Department of Energy represented here
    this morning. Mr. Reicher, I see you have your team with you,
    so if we have any tough questions, you'll have backups, kind of
    like solar energy, a good backup.
        Mr. Reicher. It's a bright team, too. [Laughter.]
        Mr. Regula. Your full statement will be put in the record,
    and if you'll summarize for us.

                               Opening Statement

        Mr. Reicher. Thank you, Mr. Chairman.
        A year ago I first testified before the subcommittee, and I
    told you my goals and plans for the Office of Energy Efficiency
    and Renewable Energy. I also committed to put our financial
    house in better order.
        Mr. Chairman, one year later, I believe we've made a great
    deal of progress. In the next few minutes, I want to do three
    things. First, briefly describe our management improvements,
    highlight some of the results we've achieved and explain the
    important benefits of our fiscal year 2000 budget.
        At the outset, I want to dispel the notion that our work on
    energy efficiency is just some green alternative to the real
    business of energy. Given that over 90 percent of the energy we
    use in this country comes from fossil and nuclear fuel, we must
    use these sources as efficiently as possible as we develop new
    clean power options.
        I also need to stress that despite a lot of current
    rhetoric, our work is driven by much more than climate change.
    In fact, if there had never been concern about greenhouse gas
    emissions, or if Kyoto had never entered the environmental
    lexicon, we would still be advocating the budget we do today,
    to cut our nation's energy bill, to fight air pollution, to
    enhance national security, and to improve U.S. competitiveness.
        A year ago, I committed to improve the way we manage our
    office, particularly the way we spend precious taxpayer
    dollars. We've met that commitment, although I'm the first to
    admit that we can do even better. We've increased competition
    for our funds and broadened the range of entities receiving
    support. For example, there were more than 400 competitors for
    a recent solicitation for funding of information dissemination
    and public outreach, much of which was previously awarded on a
    sole source basis.
        Today, I'm pleased to announce 15 awards selected from 38
    proposals in one transportation area. These awards will
    support, for example, work related to natural gas vehicles,
    alternative fuel vehicles for airports, and medium and heavy
    duty trucks.
        Mr. Regula. Do most of these projects have a public or
    private match?
        Mr. Reicher. Many of them have a cost share, yes. That's
    what we strongly encourage.
        Mr. Chairman, we've also cut our uncosted balances
    substantially, office-wide by more than 58 percent since the
    beginning of fiscal year 1996, and we're continuing to bring
    them down. We are making better use of the Government
    Performance and Results Act and peer reviewed measures of our
    progress.
        We have developed, at your urging, closer working
    relationships with state and tribal organizations, including
    the Association of State Energy Research and Technology
    Transfer Institutions, the California Energy Commission, the
    New York State Energy Research and Development Agency, and the
    Council of Energy Resource Tribes.
        With encouragement from the subcommittee, we are also
    working with the National Academy of Public Administration on
    our financial management practices. I've also established a
    management improvement team to insure that our management
    reforms take root. Of course, Mr. Chairman, better management
    does not mean much if we're not also delivering results, real
    results, for the American taxpayer. I'm proud to say we're
    doing just that in all of our sectors.
        In our buildings program, we've made terrific progress
    toward developing new energy efficiency standards for key
    appliances, standards that are technologically feasible,
    economically justified, and good for consumers. We're showing
    through our Building America program that developers across the
    country can build homes that are 30 to 50 percent more
    efficient at no extra cost. And I really emphasize that last
    point.
        Through our Rebuild America program, we're helping cities,
    towns, school districts, Indian reservations, and small
    business owners renovate hundreds of millions of square feet of
    existing buildings in an energy efficient manner. This year we
    will cut the annual energy bill of another 60,000 low-income
    American homes by about $200 through our weatherization
    program.
        In our transportation program, the Partnership for a New
    Generation of Vehicles is producing solid results that gives us
    confidence that an 80-mile-per-gallon family sedan will be on
    the road in the middle of the next decade that will be
    affordable, safe, and environmentally friendly, and that will
    be built by U.S. workers. I need to stress that despite recent
    breakthroughs highlighted intensely by the press, we still have
    a good distance to go in developing technologies and driving
    down costs so we can put these 21st century vehicles, lots of
    them, on the road.
        In the meantime, we're helping to put hundreds of thousands
    of alternative fuel vehicles, cars, trucks, and buses on the
    road in scores of cities across the nation, operating on clean
    natural gas, ethanol, and electricity.
        In our industry program, we are helping to slash energy
    bills, cut pollution, and increase productivity in our nation's
    most energy-intensive industries: from steel, aluminum,
    chemicals, mining, and agriculture to glass, forest products,
    metal casting, and most recently, oil. Across these industries,
    we advance technological development and deployment in
    efficient electric motor systems, steam, compressed air,
    sensors, controls, combustion, materials, and many other vital
    areas.
        I'm proud to say that in our advanced turbine work we've
    delivered what we promised, high efficiency economic natural
    gas-fired turbines for energy; work we are now ramping down in
    our budget to make room for other high priority activities.
        Mr. Chairman, our efforts to reduce the federal
    government's own $8 billion energy bill are also bearing fruit
    on behalf of U.S. taxpayers. As of this month, we now have in
    place a stable of pre-selected energy service companies and $5
    billion in contracting authority. This will allow federal
    building managers to simply access billions of private sector
    dollars to pay for energy retrofits of our 500,000 federal
    buildings, and share the resulting savings between the agency
    and the energy service company.
        To date, we have close to 200 delivery orders in the works
    under these contracts on behalf of agencies ranging from NASA,
    the National Park Service, and the Navy to the Coast Guard, the
    National Gallery, and GSA. One recent delivery order for NASA
    buildings in Texas will involve tens of millions of dollars of
    investment by Johnson Controls, one of our pre-selected
    companies, and save NASA almost $2 million annually at this
    particular facility.
        Mr. Chairman, we've accomplished a great deal in the past
    year, but the opportunities and the challenges of the next
    decade loom large. Our fiscal year 2000 budget, including our
    requested increases, are carefully designed to seize these
    opportunities and confront these challenges: by helping the
    U.S. steel industry compete against foreign imports by
    radically reducing energy costs; by helping the U.S. oil
    industry confront historically low oil prices by cutting energy
    use and costs in oil production and refining; by helping U.S.
    agriculture, which is in crisis in many parts of the nation, to
    find new outlets for its crops and waste, to produce power,
    fuels, and chemicals; by helping the U.S. forest products
    industry, which is facing crippling foreign competition, to
    turn its wastes into clean energy to power its mills and sell
    the excess to the electricity grid; by helping the U.S.
    automobile industry and its workers lead the world in the
    production of high efficiency, low emissions cars, trucks,
    mini-vans, and sport utility vehicles; by helping the natural
    gas industry find new uses for this clean and abundant energy
    source in buildings, industry and transportation; by helping
    U.S. appliance and equipment makers build more efficient,
    consumer-friendly products; by helping the construction
    industry, which is facing boom times in parts of our country,
    build and renovate tens of thousands of energy-smart schools
    and millions of energy efficient homes and businesses that cost
    no more up front and save big dollars to operate; and finally,
    by helping American taxpayers save billions of dollars in
    operating federal buildings.
        All of these benefits we can deliver. Cost savings,
    pollution reduction, productivity gains, and energy security
    require significant investment from both government and
    industry in research, development, and deployment. We realize
    we make our request for a budget increase in the face of tight
    caps in the Federal budget.
        We commit to working with you, Mr. Chairman, Mr. Dicks and
    members of the subcommittee, to outline our top priorities. At
    the same time, we will continue to press the case for the
    importance of our programs and the budget which supports them
    to the American people.
        In conclusion, Mr. Chairman, I believe we've done what we
    said we would do. We have put our financial house in order and
    delivered real results. Now we look to the subcommittee to help
    us help American industry deliver even more benefits to the
    nation.
        Thank you.
        [The statement of Mr. Reicher follows:]

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                       budget consolidation and increases

        Mr. Regula. Thank you.
        I wonder why you mentioned consolidating and streamlining
    your operations, but your budget request has a $148 million
    increase. It would seem to me that efficiency should result in
    a decrease.
        Mr. Reicher. Mr. Chairman, we have consolidated, we have
    streamlined, but we are also facing new challenges and new
    opportunities. We have eliminated various projects and
    programs. But there are a lot of new issues, a lot of new
    opportunities, and a lot of new challenges in a host of areas.
    So I think that is in fact why we've made this budget increase.
        We're working with a new set of industries; for example,
    oil, mining, and agriculture. We're trying to accelerate our
    development of appliance standards and to accelerate our work
    in developing the next generation of automobiles. All of those
    programs do in fact cost more to do.
        Mr. Regula. Last week we had the fossil energy program
    people here. They have requested decreases, and yet you have
    increases. Why in your judgment is funding for research in your
    area more important than in fossil energy? Even you mention the
    fact that you have developed different techniques for burning
    fossil fuels more efficiently.
        Mr. Reicher. The work in fossil energy is extremely
    important, and we work closely in a variety of areas. We work
    in natural gas, we work in turbines, and we work in fuel cells.
    There's a lot of crossover between the two programs.
        I think our increase is justified for a number of reasons,
    one of which is that ultimately the best way to improve energy
    security in this country, the best way to cut air pollution,
    and one of the best ways to improve competitiveness is actually
    to use energy more efficiently, to use fossil and nuclear
    energy more efficiently. It's often the cheapest investment one
    can make to improve the outlook for the environment and
    economics in this country.
        So that is in fact why we think that working closely with
    the Fossil Energy Office, taking advantage of what they're able
    to do to produce more natural gas and to develop clean coal
    technologies, we can take that the next step and take the
    energy that's produced by fossil energy and use it in the most
    highly efficient way possible, in transportation, in buildings,
    and in industry.
        Mr. Regula. It would seem to me that at a minimum, they
    should be equally important, but the budget numbers submitted
    by the Department do not reflect that.
        Mr. Reicher. One thing I do want to stress is that a large
    component of our budget is actually very much fossil fuel
    oriented. We have, for example, on the order of $100 million of
    our budget that is for natural gas work. We have parts of our
    budget that directly support work on coal; for example, coal
    firing, coal and biomass, and mixing them together.
        As I've also mentioned, we're doing new, and I think very
    important and exciting, work with the oil industry. So I think
    if you disaggregate our budget, look at the fossil parts of
    that, combine it with what's going on in fossil, and indeed,
    even combine it with some of the work going on in the Office of
    Science, I think you'll see that there's actually quite healthy
    support for both the production side of fossil and the end-use
    side of fossil-derived energy.
        Mr. Regula. You try to make sure you don't duplicate each
    other's work?
        Mr. Reicher. Very important question. Each year that goes
    by, I think we're doing a better and better job of avoiding
    duplication. For example, they work on larger turbines, power
    generation turbines. We work on smaller, industrial and micro-
    turbines. They work on larger fuel cells; we work on smaller
    fuel cells.
        We really are dividing this work up in, I think, a pretty
    smart way. And equally important, the relations are very good
    between the two offices.
        Mr. Regula. I notice there are many offsets from prior year
    funds in the Fossil budget. Would this not also work in yours?
        Mr. Reicher. We did take a $25 million offset from the
    biomass energy account in our budget. The offsets there, I
    think, were in the clean coal area.
        Mr. Regula. They were in petroleum and oil shale reserves,
    too.
        Mr. Reicher. There were some deferred dollars there.
        Mr. Regula. Of course, the biomass offset is not from
    unobligated balances. I don't think you took any offsets from
    your unobligated balances.
        Mr. Reicher. We did not take them from those balances, but
    we did take them from the bioenergy account.
        As I said in my opening statement, we've come down very
    substantially in these uncosted balances. We're continuing to
    bring them down. There will be disruption to our programs if we
    were to take those uncosted balances.

                                 global warming

        Mr. Regula. Global warming, I have some questions on that.
    A report in the March 11 issue of ``Nature'' magazine states
    that carbon dioxide levels did not remain constant up to the
    onset of the Industrial Revolution as previously thought.
    Instead, while average global temperatures stayed stable,
    carbon dioxide levels fluctuated considerably.
        How will this finding be factored into the climate change
    work you are doing?
        Mr. Reicher. I don't know that specific study. I can supply
    some information about it for the record. What I can say is
    that, in recent times in the history of man, what is
    inescapable is the fact that carbon dioxide levels in the
    atmosphere have gone up substantially. There is pretty
    widespread agreement that that increase or much of that
    increase is the result of man-induced activities, particularly
    the use of fossil fuels.
        Mr. Regula. I don't think the article in Science quite
    agrees with that. Also the paper in the March 12 issue of
    Science contradicts the belief that atmospheric carbon dioxide
    levels increase before global temperatures increase. Instead,
    the study found that temperature rise comes first, followed by
    a carbon dioxide increase 400 to 1,000 years later. So the
    correlation is called into question by this scientific paper.
        Mr. Reicher. Yes. I wasn't making that case. I was simply
    making the case that carbon dioxide emissions have gone up in
    the last few hundred years quite substantially. The reason that
    the Administration is spending literally hundreds of millions
    of dollars each year on the science of climate change is to get
    at that very question that you are asking, and that has been
    raised about the relationship between the inescapable fact that
    we're putting a lot of carbon dioxide into the atmosphere, and
    the impacts of that on temperature.
        The bulk of the scientific opinion is that temperatures
    will rise. The question is by how much. Then the question is
    what the impacts will be to the globe with those temperature
    rises. I am the first to admit that there is still a lot more
    work to be done on the science of climate change. Our point
    today is that separate from that issue, what we are doing and
    what we propose to have supported in the fiscal year 2000
    budget, is very good for traditional air pollution, for energy
    security, for U.S. competitiveness, separate from the impact,
    the very positive impact, it can have on reducing carbon
    emissions.
        Mr. Regula. According to Jean Lynch Stieglitz of Columbia
    University, one can conclude from the findings published in the
    journal, ``Nature,'' that we can expect that as the climate
    warms, the terrestrial biosphere will probably be capable of
    holding more carbon than it can today. How do you respond to
    that?
        Mr. Reicher. Again, that's exactly the issue that this
    scientific work we're very heavily supporting looks at. NOAA is
    doing work, DOE is doing work, and EPA is doing work. At
    Interior and Agriculture, there's a very carefully put together
    integrated program to look exactly at that question. For
    example, what will forests do to pull carbon dioxide out of the
    atmosphere? What will be the impacts of agriculture on that?
    What will the impacts of this increasing temperature be on the
    cycling of carbon?
        Lots of open questions. I think the key though is that the
    bulk of the scientific community believes that these increases
    in carbon dioxide will have some impact on global temperatures.
        Mr. Regula. Well, you've asked for a 23 percent increase in
    funding for the climate change technology initiative. That
    translates into $121 million of the $146 million increase in
    your budget. Yet in your testimony you said you're not focusing
    on climate change as such, but to put $121 million out of $146
    million on climate change, it would seem to me that there is a
    disconnect here.
        Mr. Reicher. Mr. Chairman, let me first say, we in fact are
    focusing in part on climate change. One of the reasons is that
    it's an important element, it's an important driver for our
    budget.
        I think there's something that's too often not recognized,
    and that is virtually all of our budget, with the exception of
    weatherization, is accounted for as under the Climate Change
    Technology Initiative. Because all of what we do in efficiency
    and clean power technologies can reduce, will reduce, carbon
    emissions. So all of it is accounted for, except the
    weatherization program.
        So the increase that we've requested is simply an increase
    that reflects the fact that most of that budget is climate
    related. What's not accounted for are the weatherization
    dollars.
        But to go back to the point, well beyond what this can do
    down the road to deal with climate, it can have major impacts
    today on key challenges that we face in this country. I'll just
    stress one, which is traditional air pollution, sulfur
    emissions, nitrogen emissions, particulates, and ozone. One of
    the cheapest, most effective ways to cut air pollution is to
    increase the efficiency of the use of fossil fuels and to
    develop clean power technologies.
        Mr. Regula. Isn't that Fossil Energy's primary mission?
        Mr. Reicher. No, we focus in many regards on the end-use
    technologies. We're developing the advanced turbines, we're
    developing fuel cells, and we're developing renewables, a whole
    host of things, both fossil and non-fossil related.
        The fossil program, as I explained earlier, is also working
    on some of those end-use technologies. For example, the large
    power generating turbines. So we've split up the territory in a
    way that makes a lot of sense, and we're working well together.

              partnership for a new generation of vehicles (pngv)

        Mr. Regula. One last question, PNGV. It sounds good, and
    you've been at it for five years. Yet the statistics clearly
    indicate that Americans like the big cars. The Ford Excursion
    is a classic example, and obviously market research indicates
    there is a market for the larger vehicles. I see that SUVs,
    including pickups, are better than half, 50 percent of the
    market. If you get this 80 mile per gallon vehicle, how are you
    going to make the public use something that they don't want to
    use?
        Mr. Reicher. First of all, let me say that we're very
    cognizant of the dilemma you've just pointed out. That's in
    fact why our budget is directed at developing this 80-mile-per-
    gallon sedan which will seat five or six passengers. Also,
    we're very focused on greatly increasing the fuel efficiency of
    light trucks, mini-vans, and sport utility vehicles. That's why
    we're working with the diesel manufacturers on improved diesel
    engines that can improve the fuel efficiency of sport utility
    vehicles.
        We're actually taking a lot of what we learned in PNGV in
    terms of engine technology, lightweight materials, and control
    systems. We're going to be able to transfer that knowledge, and
    are transferring that, into the work on sport utility vehicles
    and light trucks. So there's a lot of interplay, and we really
    are addressing this dilemma.
        Mr. Regula. You're saying the technology you gain from PNGV
    can be translated into better efficiency on the heavier units?
        Mr. Reicher. Correct. In fact, you can both move up from
    the sedans to the heavier units; you can also move down from
    the very heavy trucks and some of the things you learned there
    to the lighter trucks.
        The other thing I wanted to say, Mr. Chairman, is that
    there is no doubt that gas is quite cheap today. But if gas
    were to become more expensive, $3 and $4 a gallon as in Europe
    and other parts of the world today, buying habits will change
    here. They have changed in the past, and if gas goes up, they
    will change again.
        What we want to be able to do is have those vehicles in
    place, first, to meet the market that exists today. It still is
    a very large percentage of the market that is oriented towards
    sedans.
        Secondly, if fuel prices go up, we want to make sure
    American companies and American workers are building fuel
    efficient vehicles.
        Mr. Regula. Are you factoring in affordability in this
    study?
        Mr. Reicher. Absolutely. In fact, if there is one hallmark
    of this government-industry partnership, which in many ways
    perhaps distinguishes it from other government industry
    partnerships, it is that affordability is at the top of the
    list. We know how to produce an 80-mile-per-gallon car. In
    fact, I was at the American Museum of History this past
    weekend, and I saw a 300-mile-per-gallon vehicle.
        Mr. Regula. Do you push it?
        Mr. Reicher. Pretty close. So 80 miles per gallon,
    technically, we can build those vehicles. The issue is, can we
    build it affordably, will people want to buy it, will it be
    comfortable, and will it have the performance characteristics.
    Essentially, will they walk into a showroom and not know any
    difference between that and what they would otherwise have
    bought, except for the fact that it will get 80 miles per
    gallon and put out radically less pollution. That is the
    hallmark of this program.
        That's in fact why it's a lengthy program to get there. It
    took 5 years into a 10-year program. We've met every major
    milestone we've set for the program. I have every reason to
    believe that if we push on, we will get there. The American
    public and the American workers in the automobile industry and
    other industries will be the beneficiaries.
        Mr. Regula. Mr. Dicks.
        Mr. Dicks. Thank you, Mr. Chairman.
        Mr. Secretary, nice to have you here again.
        Mr. Reicher. Thank you.

               northwest alliance for transportaiton technologies

        Mr. Dicks. For the past 2 years, the Department of Energy
    has been supporting the Northwest Alliance for Transportation
    Technologies, which is a partnership among lightweight
    materials industries, universities, and the Pacific Northwest
    National Laboratory, to sustain efforts within the partnership
    for a new generation vehicles program, to develop an automobile
    for the 21st century that will triple its fuel efficiency
    without compromising safety or comfort. This program, which I
    am very excited about, is already showing tremendous benefit.
        Unfortunately, I note in your budget for the fiscal year
    2000 that the materials technologies program was reduced from
    the enacted level last year. Can you tell me why the agency
    sought a reduction to this program?
        Mr. Reicher. Mr. Dicks, one of the judgments we have to
    make across all of our programs, particularly in the vehicle
    program, is where to put our dollars. Part of that decision
    depends on the research and development requirements in a given
    area. One of the things that we've looked at is that in
    materials technology, we've made a great deal of progress. For
    example, in the use of aluminum in automobiles, to the extent
    there are now commercial vehicles out there that use aluminum
    in significant ways.
        With limited dollars, we made a judgment that that area of
    the budget could be reduced in order to put those dollars into
    higher risk technologies and challenges, for example, hybrid
    vehicles. So we have decided in our request to reduce the
    materials budget. But it is still a healthy budget, and in
    fact, we are still very supportive of the Northwest Alliance
    for Transportation Technologies and doing a substantial amount
    of work with them in aluminum, in plastic sheet composites, in
    automotive glazing, for example, window glass, a whole host of
    things that bring together the industries in your region to
    support these big advances in automobile technology.

                                   fuel cells

        Mr. Dicks. I think it's a good program and I'm pleased to
    hear that you're still supporting it. Let me go on here.
        Fuel cells, as you know, could offer the automobile
    industry near zero emission vehicles with long range, good
    performance and rapid refueling. Because fuel cells do not have
    a combustion process, they do not generate airborne pollutants.
        I understand that neither market drivers nor financial
    returns attributable to transportation cells exist yet, and
    that collaboration will be needed to provide a primary path for
    commercialization of this technology.
        Can you tell me what the Department is doing to further the
    collaboration with private industry and move the technology
    forward?
        Mr. Reicher. Absolutely. The Partnership for a New
    Generation of vehicles, both the industry side and the
    government side, are very committed to the development of fuel
    cell powered vehicles. The big challenge with fuel cells is to
    develop a technology and to radically bring down the cost of
    putting fuel cells on board a car. We are working with fuel
    cell makers, we are working with automobile manufacturers, and
    we are working with various suppliers to get us to a point
    where fuel cells can be a cost effective power source on board
    an automobile.
        A couple of weeks ago, as you know, Daimler-Chrysler made
    an announcement of a fuel cell powered vehicle, a concept
    vehicle, which has shown some good advances with respect to
    fuel cells. What, of course, was pointed out and what they
    clearly admitted was that the price of the fuel cell on board
    that car, which was in the $30,000 range, was simply for the
    fuel cell system. We need to make some great progress in
    bringing down those prices if we're going to make this sort of
    affordable 80-mile-per-gallon car that we are striving for in
    the PNGV.
        So we've come a long distance, but we have a long distance
    to go in fuel cells.
        Mr. Dicks. In terms of the economics?
        Mr. Reicher. In terms of both the technology and the
    economics, correct.
        Mr. Dicks. I would also be curious if your agency has any
    information on research about foreign auto makers developing
    and using fuel cell technology and how close they are to
    bringing this to market versus where we are in the United
    States.
        Mr. Reicher. There is a race going on across the globe for
    the technologies of the vehicles of the next decade. There is a
    race with respect to fuel cells and there is a race with
    respect to the so-called hybrid vehicles that link electric
    motors and either gas or diesel engines. So we are doing well
    in this country. There are also foreign manufacturers that are
    investing heavily. We hope that our program, in collaboration
    with the automobile manufacturers and the major suppliers, will
    put those vehicles on the road in the middle of the next decade
    in a cost effective way, and we will have a big share of the
    world market.

                       weatherization assistance program

        Mr. Dicks. Weatherization assistance program again this
    year has a large increase requested in the budget. How much
    funding is devoted to weatherization in the low income home
    energy assistance program funds through the Department of
    Health and Human Services?
        Mr. Reicher. Mr. Dicks, I don't know the LIHEAP numbers. I
    know they are larger than the weatherization dollars. They
    support fuel assistance to low income people, among other
    things.
        What the weatherization program does is directly improve
    the energy efficiency of 60,000 to 70,000 American homes every
    year. There is a backlog of 24 million homes of low income
    Americans that have not been weatherized. We've shown great
    gains in the success of this program, to the extent that we're
    saving annually for low income homeowners about $200 in energy
    bills. For a low income individual, that's a lot of money to be
    saved annually.
        So we're very proud of this program. We want to do more
    with it, and we're going to continue to push up its cost
    effectiveness.
        Mr. Dicks. How do you decide who gets the benefit of this
    program?
        Mr. Reicher. There are a variety of criteria that the local
    agencies which do the weatherization work use: income, elderly,
    and disabilities. There's a whole host of factors that are
    used, but these tend to be very poor people, the elderly and
    disabled.

                       federal energy management program

        Mr. Dicks. You mentioned the program to reduce energy
    consumption in the federal government buildings, etc. Tell us
    again, how is that doing?
        Mr. Reicher. It's doing well. We put in place a much more
    simplified mechanism, beginning about 2 years ago, that made it
    very simple for a federal building manager to find a private
    energy service company willing to invest its own dollars in
    retrofitting the federal building. It made it quite simple.
        I can provide this for the record, Mr. Chairman.
        Mr. Regula. Without objection, it will be made a part of
    the record.
        [The information follows:]

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        Mr. Reicher. We were virtually doing no performance
    contracting with federal buildings around the country up until
    a couple of years ago. As you can see, we are close to 200
    projects now in the works.
        Mr. Dicks. That's a tremendous accomplishment and I'm very
    supportive of your efforts. The committee put some language in
    I think that helped you in getting this off the ground.
        Mr. Reicher. Not only did the committee put in language,
    but we actually got some increased funding. What we do is
    actually help these other agencies, from the Navy to the Park
    Service to the Coast Guard, get up the learning curve, so they
    know how to contract with these pre-selected companies and get
    them in and do the work and begin to benefit from the savings.
        Mr. Dicks. Do you have any estimates about how much we're
    saving because of this program?
        Mr. Reicher. Well, let me give you what we project through
    improved performance contracting. We project we can be saving
    in excess of $1 billion a year in powering the federal
    government through the implementation of performance contracts.
    We're also seeing savings as a result of the work of individual
    utilities in their own regions, going into federal buildings,
    which is another approach that we're also very supportive of.
        What we've essentially been able to do, Mr. Dicks, is
    replace the federal taxpayers dollars which used to be used to
    retrofit federal buildings; those dollars have gone down and
    they're close to zero now. What we've been able to replace them
    with is private sector investment, where these companies share
    in the savings to pay themselves back and make a profit. I
    think it's a great example of privatization.
        Mr. Dicks. Well, I commend you on that, keep that one
    going. Also, anything we can do to encourage other agencies to
    do the same, because I think it's a tremendous way to save a
    lot of money all over the country in all these federal
    facilities.
        Mr. Reicher. Well, I would say there are some impediments.
    We are going to be sending up some suggestions in the near
    future about how we can get over some impediments.
        For example, I'll just give you one. Where there's a
    contract in excess of $750,000 to do this kind of work, there
    actually has to be Congressional notification given, often
    having to go through the cabinet secretary's office in a
    particular agency before the work can begin. We'd like to raise
    that level to about $10 million.
        Mr. Dicks. Even though the private sector is spending the
    money?
        Mr. Reicher. Correct.
        Mr. Dicks. Maybe we can help you on that, too. Thank you,
    Mr. Chairman.

                       weatherization assistance program

        Mr. Regula. Following up, what do you think of requiring
    the States to cost share in weatherization and in these
    projects such as you've outlined?
        Mr. Reicher. In weatherization, various states do provide
    various weatherization dollars. It depends.
        Mr. Regula. Not as a cost share though. They do it on their
    own, is what you're saying?
        Mr. Reicher. As part of the total weatherization dollars in
    a state. In my recent visit to Ohio, when I was there with you
    a couple of weeks ago, I visited a home. Actually within this
    specific home, different parts of the weatherization were paid
    for out of different accounts, some federal, some state, and
    some local. So these are put together in different fashions in
    different states.
        But we coordinate very closely with the state and local
    weatherization providers. In the next month or two, we are
    going to send you some ideas about how we could make further
    improvements in the weatherization program to improve the
    coordination, to reduce some of the barriers, and to increase
    flexibility in weatherization, so we can get even more for the
    dollars that you appropriate.
        Mr. Regula. I don't think States appropriate money. They
    may get money in by various means but I don't believe there's
    any requirement that the States appropriate money to match the
    Federal money.
        Mr. Reicher. Oh, no, I'm in no way suggesting that. What
    I'm saying is that individual states, particularly cold weather
    states and some of the high air conditioning usage states,
    provide their own weatherization dollars. What the
    weatherization providers do, working with us and working with
    the state energy offices, is coordinate the use of those
    dollars to maximize them.

                               funding priorities

        Mr. Regula. As you know, if you've been reading the news,
    we may have cuts in our allocation, so I hope you'll be
    prepared to tell us if requested as to what priority-wise you
    would most like to see cut. That's a poor way of phrasing it,
    perhaps. [Laughter.]
        Mr. Reicher. I can definitely tell you what we'd least like
    to see cut. But seriously, we worked with members and staff
    last year to outline priorities. We know what you're facing. At
    the same time, as I said in my opening statement, we will be
    vigorous proponents of the importance of these programs. But we
    also very much will cooperate.
        Mr. Regula. We'll communicate with you, because we want to
    be sensitive to your priorities. We also want to be sensitive
    to the best use of the perhaps limited resources.
        Mr. Wamp?
        Mr. Wamp. Thank you, Mr. Chairman.
        Four quick points, Mr. Assistant Secretary. Welcome back.
    First, progress on uncosted balances. I want to acknowledge
    that you're making progress and encourage you to continue
    making progress. From GAO to your reports, we see progress
    being made. But you're still not down there yet where you need
    to be. You can't really take it to zero without disrupting
    existing contracts. We understand that.
        But keep making progress. I want to encourage you to work
    with the committee closely in the coming months, so that we all
    are aware of which contracts may be placed in jeopardy as you
    keep declining your uncosted balances down to something that's
    more normal. Obviously when we started this analysis, you were
    abnormal, and you're heading toward normalcy, so keep going.
        Secondly, this climate change-global warming issue
    continues to be discussed here. At times, I see it like the old
    Texas two-step, and you have to do a lot of dancing. Climate
    change research was ongoing prior to the Kyoto talks, but the
    Kyoto talks have caused committees in both the House and the
    Senate to be concerned with how much of this is Kyoto-driven.
        I want to say, even though climate change research is
    carried out in my district, I want to make sure we do not get
    in a position of heading towards Kyoto protocol enactment in a
    roundabout way. That is, I think, the major concern, that we
    are sensitive to how climate change research must continue, but
    that there's not any kind of concerted effort to head in the
    direction of global warming regulations or initiatives, when
    the science, as you said a few minutes ago, is not conclusive
    on some of this climate change research, which I think we all
    agree should continue.
        You said earlier there's a carefully put together
    integrated plan to pull together Ag, Interior, NOAA, etc. I
    also serve on Commerce, Justice, State and Judiciary where NOAA
    is funded. All of a sudden you show up at several of these
    committees and you see initiatives that are supposedly well put
    together and integrated taking place, and they're all asking
    for money, and you just wonder, well, where do they meet, when
    do they meet and who's in charge of those meetings, and where
    are they going.
        Sometimes I think an agency or an administration might say,
    well, the best way to do this is everybody split up, we all
    know what we're doing but they won't know what we're doing
    because we're all split up. I just say all that because I think
    it's important that we continue to separate the Kyoto protocol
    from the issue of climate change research.
        Do you want to comment on that before I keep going?
        Mr. Reicher. No, go ahead. I'll respond to your points.
        Mr. Wamp. Number three, on PNGV. I want to encourage the
    committee, Democrats and Republicans, to recognize, as you said
    earlier, that oil prices certainly seem to be now going back up
    and could continue to go up. It's kind of like investing in
    military technology when you're at peace. That's the time to do
    it, so that when you're at war, you're ready for whatever. Same
    thing applies here, frankly. We must continue to make progress.
        Then on the flip side, I want to encourage DOE to recognize
    that we shouldn't be funding applied technology initiatives
    once they are ready for the marketplace. So you all have got to
    keep the pressure on the private sector. I think there's going
    to be a public debate, Detroit versus DOE or however it shakes
    up.
        I think reason needs to set in, but please again recognize
    the difference between our basic research investment in
    emission-less, more efficient vehicles, and the applied
    technology of the marketplace which says it's got to be market
    driven and the marketplace needs to be brought along. I think
    both sides at times have a tendency to try to stretch the truth
    or make their case. We just need to find reason, as a
    committee, in the middle of all that.
        The fourth issue is kind of a new issue. The GAO report
    says this. About 90 percent of DOE's training, according to a
    departmental estimate, is not mandated by laws and/or
    regulation. The DOE has not developed criteria on the type of
    non-mandatory training that is appropriate.
        As a result, DOE offers a wide range of non-mandatory
    training courses such as a course on determining social styles
    in the work place, and one on employees facing mid-life
    questions. From Secretary O'Leary--as you know, I'm involved in
    DOE daily; with Secretary O'Leary, there's a lot of diversity
    stuff. I think a lot of that is very good. She was big on
    diversity and it led to some good things.
        However, I mentioned to Secretary Richardson when he was
    first confirmed some of the followup to that might not be
    considered by average citizens. I had quite a few complaints in
    Oak Ridge about the use of Government space, Government time
    for alternative lifestyles, etc. I would just say that your
    training budget is actually higher than the average Federal
    agency as well, according to the GAO study. Some of it is not
    mandated.
        I would just encourage you to take a look at that and be
    careful. Because what people do in their private life is
    absolutely their business. But what they do on Government time
    with Government resources and where some of this training may
    end up day to day without careful oversight might not be
    acceptable.
        I would just say that carefully, but just throw that out
    there as a recommendation that you all internally take a look
    at this on a day to day basis. Those are my four points.
        Mr. Reicher. Thank you, Mr. Wamp.
        On uncosted balances, let me just say I appreciate your
    support for the direction that we're headed. I would say that
    in a sense, there are no contracts in jeopardy, per se, as we
    bring the uncosted balances down. The situation we would face
    is if these uncosted balances were applied to next year's
    budget. It would be at that point that we could see some
    jeopardy in terms of existing contracts, either slowing them
    down or terminating them.
        But we will work with you and we will work with the
    subcommittee to bring those balances down and keep you
    informed.

                                 climate change

        On Kyoto, the Administration has said on many occasions,
    and I will reiterate it here, we are not in the business of
    implementing the Kyoto treaty. What we are doing is both
    advancing the science of climate change, figuring out these
    interactions between carbon dioxide and temperature and all
    those very complex things, and advancing the technologies that
    could address climate change.
        But as I stressed to the chairman, these very technologies
    are the same technologies that can well address issues like
    traditional air pollution, U.S. national security, economic
    competitiveness, take advantage of restructuring of the
    electricity industry, and a whole host of reasons, as I said in
    my opening statement, that we would be doing the very same work
    we are doing today if there was no climate issue, if there was
    no Kyoto discussion. We would be doing it, we would be
    advocating the very same budget. Because it makes sense for
    lots of other reasons.
        How is climate change science coordinated? There actually
    is a coordinating mechanism through the Office of Science and
    Technology Policy. There is a regular research plan that's put
    out on an annual basis. There are regular meetings. I am not
    part of that, because my office does not work on the science of
    climate change, we work on the technologies that could help us
    address it.
        But I will give you some confidence; I can't tell you that
    it's a perfect coordinating system, but there is a coordinating
    system in place.

              partnership for a new generation of vehicles (PNGV)

        On PNGV, I thank you for your support. We are very mindful
    of the issue of when technologies develop to a point where they
    are no longer high-risk, where commercialization is eminent,
    and where private industry can take over the work. That's what
    we need to do. In fact, Mr. Chairman, if I could show you one
    device here. This is an example of a technology that if we're
    going to get anywhere with these next generation of vehicles,
    for example, diesel-electric hybrids, gas-electric hybrids,
    this is where we have to go.
        This is what the so-called electronic brain of one of these
    cars is going to have to look like if we're going to put them
    on the road in substantial numbers and in a cost effective way.
    Today, in the concept vehicles that you read about in the paper
    that are being built one at a time, you're looking at something
    that's much larger, that's extremely expensive, and is simply
    not ready for commercialization.
        What we're doing, working with a variety of companies,
    large and small, working with the national laboratories, is to
    move to a point where this electronic brain that will tell the
    electric motor, allow the electric motor and the gas or diesel
    engine essentially to talk to each other, this is where we've
    got to get to. We know we're close to this in terms of the
    technology, in terms of size. Even getting rid of the heat of
    something this dense, which all this electronics, generates.
    We've got to figure out an efficient way of getting rid of the
    heat so the thing doesn't melt.
        So there's a long distance to go. And it's work like this
    that is really where government, industry and labs can work
    together very effectively.
        Mr. Regula. What does Honda do? They have this vehicle
    that's good back and forth.
        Mr. Reicher. Yes.
        Mr. Regula. Have they accomplished already what you're
    talking about in the future?
        Mr. Reicher. Let me tell you about the Honda and indeed the
    Toyota vehicles. They are vehicles that, in the case of the
    Honda, it's a two passenger vehicle getting probably 50 miles
    per gallon, not 80 miles per gallon. It has a pretty serious
    cost penalty associated with it, or a subsidy provided for its
    sale. We think it's a great step forward, I'm the very first to
    admit that what Honda and Toyota have done is a big step
    forward.
        But they are not to a point where they need to be, and
    nobody is, in terms of the electronic module bringing down the
    cost of this, shrinking the size so you don't take up a good
    part of the trunk with the electronic brain of these cars.
        So again, there are vehicles that are coming out which are
    part of the way there toward the PNGV goal. But it's that next
    push, the 80 miles per gallon, and true affordability and true
    equivalence of performance, safety and emissions, where we've
    got to get. We have a good distance to go.
        I know it's confusing to people, because when you read that
    Honda is putting a vehicle on the road or Toyota is putting a
    vehicle on the road, or Daimler-Chrysler is announcing its fuel
    cell vehicle, there is this tendency to think that we're
    already there. But if you look carefully at the numbers, the
    passengers, the milage, the costs, the performance, we've got a
    long way to go.
        Mr. Wamp. Thank you, Mr. Chairman.
        Mr. Reicher. I'm sorry, I didn't answer your question on
    training. I apologize.
        Could I take one moment?
        Mr. Regula. Sure.
        Mr. Reicher. I also wanted to say that on training, I am
    mindful of training and I actually recently looked at the
    training numbers in my office. The real guts of training is to
    train people in management, to train them in finance, to train
    them in the incredible complexities of procurement and all the
    things that it takes to run a complicated government office or
    government agency.
        Mr. Wamp, I'm very mindful of what you say about being
    careful how we spend this money and we will look even more
    carefully at our dollars.

                                 climate change

        Mr. Peterson. Good morning. I wanted to go back just for a
    moment to the climate change issue. I just wanted to share with
    you an observation and let you react to it. You were talking
    about the science of it. I think we're all very comfortable
    that we have our scientists continuing to monitor and determine
    where we're at, to work with climate change if it's a fact.
        But many of us have the opinion that this Administration
    has jumped beyond the science some time ago. It amazes me how
    many departments have a budget to deal with climate change. I
    guess we've looked at it as a mass marketing tool, number one,
    convince the American public that the climate has changed and
    that we must do many things to deal with that.
        So I guess my comment is that I don't think any of us are
    uncomfortable with the scientific assessment of where we're at.
    If the scientists and the science is really where we're at. But
    I think we're in the PR business, of selling climate change. I
    notice it's been very quiet in March, a colder month than
    normal. I haven't heard anybody talking about climate change.
        But last fall, when we had some extremely warm months, we
    had many of our national leaders talking about the tremendous
    climate change, even though other parts of the world were
    having cold summers. The climate issue is a world issue, not
    just an American issue. So I'd like to have you react, is in
    fact a lot being done on this issue that's more or less selling
    it than it is a fact, rather than the science side?
        Mr. Reicher. I don't believe so, actually. I think there is
    very good work being done on the science of the issue by
    government agencies, by national labs, and by the private
    sector. It is admittedly a complex subject. There's a great
    deal of data, there is increasing scientific consensus. But we
    do need to go further in those terms.
        I don't think that we're engaged in a PR campaign when it
    comes to the climate budget. In fact, the budget of the office
    I run is actually a substantial part of the climate change
    technology initiative. Our budget is designed to get at very
    practical things in terms of our economy, such as lowering the
    cost of energy use in industry, which by the way can help
    reduce carbon emissions. Lowering energy use in automobiles,
    which by the way can reduce carbon emissions. Increasing the
    energy efficiency of federal buildings, which also, by the way,
    can reduce carbon emissions.
        So we're focused on work that we would be doing even if
    there was no climate issue, even if there was no Kyoto
    discussion. In fact, so much of our work precedes those
    discussions and is a continuation of work begun in previous
    Administrations, and in fact, well back into the late 1970s and
    early 1980s.
        So I'm very comfortable with our approach to these
    technology issues. Ultimately what we're doing with respect to
    climate is putting in place those technologies that if in fact
    the science establishes what increasing number of scientists
    believe, and that is that the globe is warming and it will have
    deleterious impacts, we will be ready to respond, we won't be
    playing catch-up. I think that's important. It is in a sense an
    insurance policy against that eventuality.
        But the wonderful thing is, even if you don't believe in
    the insurance policy as a basis for funding these technologies,
    we would want to be funding them anyway to reduce our reliance
    on foreign oil, to cut traditional air pollution, and to help
    U.S. companies compete globally.
        Mr. Peterson. I guess I would just urge you to check the
    numbers of scientists. You said a growing majority. I have not
    seen that evidence. I think a majority of scientists do not
    agree that the climate has changed measurably, or that there is
    evidence that it really has changed to the point of where it's
    a problem.
        Mr. Reicher. I'm sorry, I didn't----
        Mr. Peterson. A majority is not the right word.
        Mr. Reicher. I didn't, I talked about, there is a growing
    scientific view, a growing scientific consensus on a number of
    subjects, one of which is that we have increased carbon
    emissions in the atmosphere, and that there may well be impacts
    to the globe.
        Mr. Peterson. You changed what you said. But that's all
    right. Let's move on.

                       weatherization assistance program

        The chairman had brought up the weatherization issue. Have
    you seriously thought of requiring States to be partners? I'm
    from State government, and I think we serve best when we work
    as partners. Have you seriously thought of requiring States to,
    what would be your reaction if we would require States to have
    a match?
        Mr. Reicher. I'm going to need some help from my
    colleagues. As I explained earlier, states are providing
    weatherization funds.
        Mr. Peterson. Sure, some are. But we don't require it. Do
    we? I wasn't aware we did?
        Mr. Regula. If you will yield.
        Mr. Peterson. Sure.
        Mr. Regula. Staff advises me that the funds that states do
    use are other Federal funds in other programs, they're not
    really State tax money. There are no appropriations on the
    state level at this point to match or cost share on
    weatherization. So I think that's an important element.
        Mr. Peterson [assuming chair]. What Pennsylvania used was
    the Exxon settlement for 10 years, or one of the other oil
    company settlements that they used, but it was not their money.
    I don't remember State tax dollars. We may have, but I don't
    remember it.
        Mr. Reicher. Mr. Chairman, let me introduce Mark Ginsberg,
    who is our Deputy Assistant Secretary for our Buildings
    program, which is where the weatherization program resides.
        Mr. Ginsberg. As a former state official who ran a
    weatherization program in addition to other energy efficiency
    programs, I know that there have been efforts in the past to
    try to require a match for the weatherization program. I think
    states have the same difficulty the federal government has of
    how do we allocate funds for these needs.
        There are a few states that are providing some funds. Now,
    with utility restructuring, some of the states are providing
    some of their utility restructuring funds for weatherization.
    There are 35 million eligible households, so the needs are
    still very great.
        I think if you were to require a match, you would see some
    very difficult realities on the state side that they would not
    have, typically, funds to provide that match. It sounds
    tempting, but states are facing the same constraints you are.
        One of the sources I think we need to continue to push is
    in the utility restructuring, that these programs be allowed to
    fund the low income weatherization program. That may be a
    better alternative than requiring a match.
        Mr. Peterson. I might disagree with you on one point, I
    think States are financially pretty strong right now. I know of
    many States carrying huge surpluses. But I guess if a State
    matches it, it shows they have a commitment, they feel the
    need, the pressure is there. And I just think we serve well.
        I guess I would urge you to toy with that idea.

                               hydrogen research

        Where are we with hydrogen research? What do you see as its
    potential?
        Mr. Reicher. We are doing a substantial amount of hydrogen
    research. It is funded primarily over in the energy and water
    account within our office. We are very bullish about the
    potential for hydrogen. First of all, our research looks at
    lowering the cost of producing hydrogen and figuring out better
    ways to store it. For example, turning it into a hydride, more
    of a solid, as a more effective means of storing it, so we can
    use it in a larger variety of circumstances.
        Hydrogen is obviously at the core of a fuel cell. What a
    fuel cell automobile or a fuel cell powered building needs in
    that fuel cell is hydrogen. So it has great relevance to where
    we head with fuel cell technology.
        Ultimately, people talk about a hydrogen economy in which
    we've been able to lower the cost of producing hydrogen, for
    example, from renewable energy, by splitting water into
    hydrogen and oxygen, and using that to fuel fuel cells, using
    that to burn directly, essentially creating a situation where
    we have an inexhaustible supply of energy.
        We're a long way away from that. But there are some near-
    term successes, fuel cells, fuel cell vehicles, are an example
    of where hydrogen is extremely important and where we're making
    lots of progress.
        Mr. Peterson. How much are we spending on hydrogen now?
        Mr. Reicher. I think we're in the $30 million a year range.
    The 1999 appropriations, $22,250,000, fiscal year 2000 request,
    $28 million.
        Mr. Peterson. Okay. That will get the job done, for making
    progress?
        Mr. Reicher. It will allow us to continue to make progress.
    There's huge research needs out there, and with more dollars,
    obviously, we could satisfy more of those. But we can continue
    to make good progress on both hydrogen production, hydrogen
    storage, creating hydrogen infrastructure, and experimenting
    with its use in a whole host of ways.
        Mr. Peterson. Is it really one of the long term bright
    spots, you might say?
        Mr. Reicher. It has great long term potential, it truly
    does. Given that, if we could bring the costs down, that you
    could actually pull it out of water and use it as a fuel
    source, either to burn it directly or use in a fuel cell, it's
    quite interesting.
        I heard an idea several months ago where hydropower dams
    where we create a lot of electricity, instead of sending that
    electricity through the grid, you could literally take the
    water behind that dam, use the electricity from the dam,
    electrolyze the water, that is, cut it into its hydrogen and
    oxygen molecules, and literally be creating hydrogen at these
    hydropower dams, which could then be used in transportation and
    buildings in an overall energy system.
        Again, we're a long way away from a hydrogen based energy
    system. But it's definitely worth the investment, and it is
    quite a bright spot.
        Mr. Peterson. Thank you. I think I've more than utilized my
    time. Mr. Hinchey.
        Mr. Hinchey. Thank you, Mr. Chairman.
        Mr. Reicher, good to see you.
        Mr. Reicher. Nice to see you.

                              appliance standards

        Mr. Hinchey. You've requested in your budget some
    additional money for energy efficiency standards. I know that
    over the course of the last 20 years, the Department has made a
    substantial amount of progress in that regard, and the savings
    that have accrued to the Nation as a result of these energy
    efficiency standards have been quite substantial.
        Can you tell us what you plan to use the additional funding
    that you're requesting for specifically, and give us some idea
    about how the progress in energy efficiency standards has
    benefitted the country over the last couple of decades or so?
        Mr. Reicher. The energy efficiency standards give us an
    opportunity for real savings in terms of energy use in this
    country. I think we've made a commitment to set good standards
    that are technologically feasible, that are economically
    justified, that do good things for consumers. We're moving in
    that direction.
        Let me give you one statistic. By the year 2010, the
    cumulative national effect of standards for five appliances,
    refrigerators, dishwashers, clothes washers, clothes dryers and
    room air conditioners, will be 5.9 quads of primary energy
    savings. One quad is the amount of energy that 5.1 million
    homes use in one year. So this is, just these alone is about 30
    million homes worth of energy. And $24 billion in savings to
    consumers, that's in 1997 dollars.
        So you get extraordinary savings to consumers, you have
    extraordinary impacts in terms of environmental protection.
    Because you're reducing that much energy that otherwise would
    have to be produced or you're having to use it more
    efficiently.
        Mr. Hinchey. Could you translate that into energy power
    plants that would not have to be built?
        Mr. Reicher. A large number. I would have to get you those
    statistics. I will supply those for the record. It's one of the
    very biggest elements of energy savings.
        [The information follows:]

                        Savings From Appliance Standards

        The current rate of electricity savings from appliance
    standards implemented to date is roughly equal to the output of
    fourteen 600-megawatt coal plants. The rate of savings and
    associated number of avoided power plants. Continue to increase
    as more and more new appliances are purchased by consumers.
    These values do not include additional savings pertaining to
    gas appliances, which are currently about 25 percent of the
    total savings.

        Mr. Reicher. You asked me a second question, which is, what
    would we do with these additional dollars that we've requested.
    We are embarked on a very important set of new appliance
    standards for clothes washers, water heaters, central air
    conditioners, and the ballast for electronic lighting. We are
    pushing to get three of them in the year 2000 and the fourth in
    2001. They will also have extraordinary savings.
        So the first thing we would use these extra dollars for is
    to move towards setting those standards.
        Secondly, also under statute we are required to develop
    standards for commercial kinds of equipment, boilers and
    furnaces and those sorts of things in the commercial setting.
    One of the standard setting organizations called ASHRAE is
    about to set a new set of standards and again by statute, we
    have to update our standards to reflect what this standard
    setting body has done.
        So the second thing we would spend these dollars on would
    be to update those equipment standards on the equipment side as
    well.
        Mr. Hinchey. Some of these savings can be translated into
    savings of tax dollars, for example, because the savings will
    accrue to public buildings, such as schools, things of that
    nature. Give us an idea about what the benefits would be in
    that arena.
        Mr. Reicher. Absolutely. Both the typical home appliances,
    which have use in public housing, in schools, in a whole host
    of public settings, those can mean real savings to taxpayers
    who otherwise would have to fund those energy bills for those
    public institutions. Then over on the commercial side, the
    commercial equipment I talked about, obviously powers lots of
    activities in publicly-funded buildings. So again, there's a
    big taxpayer savings there as well.

                          transportation technologies

        Mr. Hinchey. Most of the energy we consume in the United
    States goes for transportation. I know you've spoken a little
    bit about that already. Is there anything else you would like
    to say about ways in which we can save in the areas of
    transportation, as well as in that context addressing some of
    the hybrid vehicles that are being developed?
        Mr. Reicher. Transportation is a big use of energy. I think
    there are really two focuses in our work. One is to increase
    the fuel efficiency of vehicles. That's what the Partnership
    for a New Generation of Vehicles is about, that's what our work
    with the diesel engine makers is about.
        The second thing we're doing that I would really want to
    stress, is looking to make greater use of alternative fuels;
    natural gas, ethanol, electricity, methanol, and propane.
    There's a whole host of alternative fuels out there. We
    literally have about 400,000 vehicles on the road today in the
    United States that are alternatively fueled.
        What we're trying to do is, with support from this
    subcommittee, increase the infrastructure that's available to
    fuel them, to improve the cost effectiveness of the fuels
    themselves. For example, in the area of ethanol, both on the
    energy and water account and this account, we're trying to
    improve our production of ethanol. In fact, making it from
    waste, from the forest industry, from agriculture, and from
    municipal solid waste, which would dramatically reduce the cost
    of a gallon of ethanol.
        We are also working with the corn ethanol makers, to allow
    them to use the rest of the corn plant, the stalk, the cob, the
    leaves, and make that into ethanol as well as the starch in the
    small corn kernels. We've got some major technological
    breakthroughs now behind us. We've got a major plant being
    constructed in Louisiana that will demonstrate this. More
    plants we hope to go on-line in New York and California and
    other States, which will show how you can take waste and make
    it directly into ethanol. That would be a big step forward.
        Mr. Hinchey. You're also doing some work, aren't you, on
    hybrid energy sources for buses? I know there is a major
    manufacturer in New York that is engaged in some activity on
    that.
        Mr. Reicher. Yes. There is a whole host of opportunities in
    larger vehicles, buses in particular: natural gas powered
    vehicles, fuel cell powered buses, and diesel electric hybrids.
    There are a variety of ways you can power buses and reduce the
    costs to the bus company and often to taxpayers who subsidize
    that, and actually cut pollution as well.
        Buses actually are often great platforms for these advanced
    technologies, like the hybrid technologies, because they are
    big. You don't have to make all the progress you make putting
    it into a small automobile, in terms of some of the power
    systems that I was talking about before. You have a lot of room
    to work with, and you can do a lot of good.
        And we've asked for, I'm told by one of my colleagues, $8
    million for hybrid heavy vehicle work in our budget, to support
    that very work.

                            energy savings to states

        Mr. Hinchey. Good. Finally, I would ask about information
    you might have with regard to energy savings that have accrued
    to the various states and your ability to compile information
    in that way. I know I would be interested in that, I think some
    of the other members might be interested in having information
    as to the success or any savings that come about as a result of
    your activities in the various states.
        Mr. Reicher. We would be happy to provide that kind of
    information, both the savings and also, I think it's
    interesting to look at what individual states spend on energy,
    and how much they produce in state versus how much they import
    from out of state, and what that means essentially to the state
    gross domestic product (GDP). It can have big, big impacts, the
    more states can produce in state, the more those dollars
    circulate with all the multipliers and the more it can do for
    the state GDP. We are looking at those numbers as well.
        Mr. Hinchey. And you'll be able to give that to me for New
    York and for the Chairman for Ohio and the others?
        Mr. Reicher. Yes. They are complicated calculations, but
    we'll do our best to get you those, yes.
        [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Hinchey. Thank you.
        Mr. Peterson. Mr. Cramer.
        Mr. Cramer. Thank you.

                           black liquor gasification

        Mr. Reicher, welcome back to the committee. I'm sorry I
    missed some of your testimony. I think you might recall that
    I've asked you before, under the industries of the future,
    forest products section of your budget, the black liquor
    gasification project, where do we stand with that?
        Mr. Reicher. Mr. Cramer, I'm actually pleased to announce
    that today we have made a decision to take a first step with
    respect to two of those projects, the Champion project in your
    State, where we've decided, subject to some further work on the
    actual agreements, to provide $1 million toward the first step
    in black liquor gasification.
        In the case of the Georgia Pacific, we are going to
    undertake further negotiations with that company looking at
    their proposal. So we're making most of those announcements
    today with respect to black liquor gasification. We think it's
    a technology with great, great promise in the forest products
    industry, a way to deal with the black liquor waste that comes
    from kraft paper making, a much more efficient way to do it.
        In an amazing way, we could turn paper mills from net users
    of energy to actual exporters of electricity to the grid. I was
    looking at numbers that go up into the tens of thousands of
    megawatts of power that these paper companies could be sending
    into the grid, particularly with electricity restructuring.
    Actually, that would flow right to the bottom line for these
    companies.
        Mr. Cramer. I'm pleased to hear that. As you know, I think
    that program and the demonstration projects that are carried on
    have amazing potential. I know you realize that as well.

                       federal energy management program

        Hearing the bells go off, I think you've already been asked
    by Mr. Dicks about the Federal Energy Management Program. How
    is your work going with NASA on that initiative?
        Mr. Reicher. Very well. NASA is one of the major agencies
    taking advantage of these simple contracting vehicles that
    we've now put in place to get private sector investments. One
    example is in Texas. Recently, a major NASA agreement was
    negotiated under our standing contracts, to do energy retrofits
    to Johnson Controls, which is one of our preselected companies.
    They're going to invest tens of millions of their own dollars
    in a NASA facility in Texas that will result in savings of
    almost $2 million a year.
        We're also doing work in your State with NASA on a whole
    host of projects, bringing this performance contracting
    mechanism to these facilities and basically being able to take
    the taxpayer and the appropriations subcommittees out of the
    business of having to pay for these up front.
        Mr. Cramer. I'm also glad to hear that. I want to thank you
    for the information that you've been able to give my office on
    the issues that we've expressed interest in.
        Back to the Federal Energy Management Program, I hope the
    subcommittee will be able to support it at the requested
    funding level. Again, I think that's exactly what we need to be
    doing.
        Considering the time, Mr. Chairman, I will forego further
    questioning.
        Mr. Peterson. I think we have a few minutes.
        One quick question. What's the status of the financial and
    contract management study being conducted by the National
    Academy of Public Administrators?
        Mr. Reicher. The work is underway. We've reached agreement
    on the scope of work and that's underway. I think we're
    expecting results from that in October. So we appreciate the
    subcommittee's encouragement of us to enter into this
    agreement. They are a good organization and we're going to
    learn a lot from them and further improve the operation of our
    office.

                       alternative-fueled transit system

        Mr. Peterson. In the east, I have one of the first
    communities that their transit system is going to be all
    natural gas, Penn State University and the town of State
    College, PA. Are there any, do you have any incentives for mass
    transit systems? Also once they prepare their fuel station,
    making it available to local industry and business, because it
    would seem to me there's a great opportunity with delivery
    trucks, with the service vehicles that are working in limited
    distances, that if there was a refueling station that was
    convenient.
        Mr. Reicher. Mr. Peterson, that's exactly what we're trying
    to do in our program through what we call Clean Cities, where
    we're working with now almost 70 cities around the country to
    help them put the infrastructure in place for fleets like that,
    and to make that infrastructure available as widely as
    possible.
        We do provide limited dollars for infrastructure support,
    for analysis, for essentially putting together a network that's
    big enough to actually support a natural gas infrastructure,
    for example, in a region. Then what's very exciting is we're
    getting to a point where there's enough of these we can
    actually begin to link them as corridors. One could actually
    travel in an alternative fuel vehicle from one area to another
    and have enough stations along the way to ensure the
    availability of fuel, whether it's natural gas or ethanol or
    one of the other sources.
        So these are great projects, and it's a great way to move
    this along. Obviously, the more money we have to support this
    kind of infrastructure, the more we can do in these projects.
        Mr. Peterson. I want to commend you on that, because I
    think it has great potential. It's interesting, the manager of
    this unit was in to see me last week. For the last few months,
    natural gas was not the cheapest fuel he could buy, but I think
    we're back to maybe where that will equalize.
        Mr. Hinchey has a quick question.
        Mr. Hinchey. Just one last thing. I was very interested,
    Mr. Reicher, in what you were saying before about the paper
    mills, how they could be net producers of electricity to the
    grid. I would like to see that information, if you would be
    kind enough to send it to me.
        Mr. Reicher. Absolutely. As a former resident of upstate
    New York, I know about the paper mills. There is great promise
    in this technology.
        I mentioned becoming net exporters of electricity. This
    will also have some major impacts in terms of cutting pollution
    and increasing the efficiency of those paper mills. Obviously
    with a forest products industry that's pretty challenged these
    days internationally, every way we can help is important.
        [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Hinchey. Thank you.

                                 climate change

        Mr. Reicher. Mr. Peterson, just one last thing. You asked
    me about climate science, and I wanted to be clear about that.
    First of all, I am not a scientist, it is not my day to day
    work, climate science. I am the advocate for the technological
    solutions.
        But let me tell you what I think we know in terms of
    scientific consensus. That is that the CO2 levels are rising in
    the atmosphere, in the last couple hundred years. Warming will
    likely happen. The warming would likely have net negative
    impacts.
        Where there is not consensus is the timing of the impacts,
    and the level of the impacts. I just wanted to give you our
    view.
        Mr. Peterson. Thank you. The March 11 issue of Nature and
    the March 12 issue of Science, we urge you to read those. I
    recently participated in a conference and heard the other side
    of the story.
        It's an interesting issue. I personally think we've jumped
    over the discussion that CO2 is automatically going
    to increase temperatures. I think we've jumped over the
    science, that's my opinion. Or some people have, I haven't. And
    that we're already moving toward a solution, and we're selling
    the concept that it has happened, it's going to be detrimental.
    If you look back in the 1400s, there was a period of time when,
    for numbers of years, the temperature had risen seven degrees,
    and it was beneficial, actually, the agricultural belt
    increased. There was not a lot of detriment.
        And I'm not saying that it's all conclusive on any side. I
    personally think this Administration has jumped over science
    and is trying to sell global warming as a fact, and that it's
    going to be catastrophic. I think that's a mistake, because I
    think we should be having a meaningful discussion with the
    scientists, because they are not in agreement.
        Mr. Reicher. As I say, it's the timing of the impacts and
    the level of the impacts where we clearly do need greater work
    done. That's what's underway. I will close by saying,
    independent of science, what we're here today to ask you to
    support are things that would be good, even if there wasn't a
    climate issue.
        Mr. Peterson. We appreciate that. Thank you for your
    candor.
        Mr. Reicher. Thank you.
        Mr. Peterson. The hearing is completed.
        [Additional Committee questions follow:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                   I N D E X

                                  ----------

                         U.S. Department of Agriculture

                                                                       Page
    Asian longhorned beetle..........................................    32
    Baca location....................................................    40
    County payments..................................................27, 44
    Deferred maintenance.............................................    24
    Endangered species...............................................    40
    Funding State programs...........................................    21
    Infrastructure...................................................    19
    Invasive species.................................................    33
    Lands legacy initiative..........................................    30
    Local fire departments...........................................    39
    Opening remarks..................................................     1
    Program priorities...............................................    31
    Protecting open spaces...........................................    37
    Questions from the Committee.....................................    43
    Recreation.......................................................20, 23
    Revenue generation...............................................    35
    Road maintenance.................................................    34
    Rural priorities.................................................    29
    Statement summary................................................    12
    Timber user fees.................................................    27
    Transportation funding...........................................    26
    Uncontrolled expenses............................................    22
    Watersheds.......................................................    19
    Wildfires........................................................    20

                                 Forest Service

    Agreements with States...........................................    84
    Below-cost timber sales..........................................   100
    Budget allocation priorities.....................................    97
    Chief's opening remarks..........................................    65
    Economic impacts.................................................    92
    Financial accountability.........................................    97
    Fire season preparations.........................................    80
    Forest health map...............................................98, 100
    Forest road system debate........................................    94
    Forest succession................................................   101
    Hispanic employees...............................................    80
    Program budget priorities........................................    93
    Questions from Mr. Hinchey.......................................   176
        Mr. Kolbe....................................................   183
        Mr. Kingston.................................................   195
        Mr. Nethercutt...............................................   168
        Mr. Obey.....................................................   173
        Mr. Skeen....................................................   185
        Mr. Taylor...................................................   197
        The Committee................................................   103
    Rainbow family gathering.........................................    98
    Recreation fee demonstration program.............................    85
    Regulatory flexibility analysis..................................    92
    Road analysis procedures.........................................    87
    Roads moratorium.................................................    86
    Storm damage, 1985...............................................   101
    Timber salvage sales.............................................    96

                             DoE Secretary Hearing

    Accounting Problems..............................................   237
    Additional Committee Questions...................................   245
    Black Liquor Gasification........................................   229
    Climate Change.................................................221, 242
    DoE Research Labs................................................   231
    Economic Estimates...............................................   226
    Electricity Deregulation.........................................   242
    Energy Conservation..............................................   227
    Fuel Efficient Cars..............................................   235
    Funding Offsets..................................................   234
    Hanford..........................................................   222
    Kyoto Protocol...................................................   240
    Medical Isotopes.................................................   241
    National Energy Strategy.........................................   219
    Nuclear Reactors.................................................   236
    Opening Remarks..................................................   201
    Questions Submitted by Congressman Charles Taylor................   271
    Questions Submitted by Congressman George Nethercutt.............   272
    Questions Submitted by Congressman Jack Kingston.................   274
    Questions Submitted by Congressman Joe Skeen.....................   265
    Questions Submitted by Congressman Norman Dicks..................   261
    Refining Capacity..............................................224, 238
    Strategic Petroleum Reserve......................................   225
    Vision 21........................................................   220
    Waste Isolation Pilot Project....................................   228
    Written Statement................................................   207

                      Department of Energy--Fossil Energy

    Bioprocessing....................................................   307
    Carbon Sequestration.............................................   324
    Caspian Oil Reserves...........................................307, 314
    Caspian Sea Oil and Gas Reserves.................................   315
    Clean Coal.....................................................304, 313
    CPICOR...........................................................   314
    Domestic Oil Market............................................315, 342
    Electric Restructuring...........................................   306
    Fuel Cell Research...............................................   322
    Historically Black Colleges and Universities.....................   311
    Interstate Oil and Gas Compact Commission........................   345
    Long-Term Energy Outlook.........................................   343
    Methane Hydrates...............................................303, 305
    Naval Petroleum Reserve..........................................   346
    Oil Recovery.....................................................   305
    Opening Remarks of Robert W. Gee, Acting Assistant Secretary.....   277
    Prepared Statement of Robert W. Gee, Acting Assistant Secretary..   281
    Research and Development.........................................   341
    Reservoir Class Revisit Program..................................   318
    Stripper Wells...................................................   344
    Technology Development with Independents Program.................   320
    Turbine Research.................................................   323
    University Coal Research Program.................................   308
    Vision 21........................................................   278
    Additional Committee Questions:
        Administrative Provision.....................................   357
        Advanced Research and Environmental Technologies.............   357
        Advanced Turbines Programs...................................   373
        Clean Coal Technology........................................   348
        Cooperative Research and Development.........................   389
        Cost Sharing for Fossil Research.............................   354
        Effective Environmental Protection/National Laboratory
          Partnership................................................   385
        Fossil Fuels.................................................   391
        Fuel Cells...................................................   362
        Gas Upgrading/Coal Mine Methane..............................   386
        Gas to Liquids...............................................   384
        High Efficiency Gasification Combined Cycle..................   372
        High Performance Power Systems...............................   370
        Life Extension...............................................   357
        Natural Gas Research/Methane Hydrates........................   381
        Naval Petroleum and Oil Shale Reserve........................   349
        Offsets for Fossil Energy Research...........................   353
        Oil Technology...............................................   386
        Petroleum Account............................................   356
        PM 2.5 Monitoring and Control................................   378
        Program Direction............................................   388
        Strategic Petroleum Reserve..................................   354
        SynGas Program...............................................   389
        Vision 21....................................................   367
    Questions Submitted by Congressman Mollohan:
        Clean Coal Technology Program................................   338
        Critical Infrastructure Protection (Natural Gas and
          Electricity)...............................................   340
        Fossil Energy's Budget.......................................   336
        Fossil Fuel Usage............................................   338
        Fuel Cells...................................................   337
        Methane Hydrates.............................................   336
    Questions Submitted by Congressman Moran:
        Clean Coal Technology........................................   401
        CO2 Emissions................................................   400
        The Green Scissors Report....................................   399
    Questions Submitted by Congressman Wamp:
        University of Tennessee Space Institute......................   392
        Vision 21....................................................   392

                   Department of Energy--Energy Conversation

    Alternative-Fueled Transit System................................   451
    Appliance Standards..............................................   435
    Black Liquor Gasification........................................   450
    Budget Consolidation and Increases...............................   419
    Climate Change............................................430, 432, 455
    Energy Savings to States.........................................   438
    Federal Energy Management Program..............................425, 450
    Forest Products Industry.........................................   453
    Fuel Cells.......................................................   424
    Funding Priorities...............................................   428
    Global Warming...................................................   420
    Hydrogen Research................................................   434
    Northwest Alliance for Transportation Technologies...............   423
    Opening Statement of Dan Reicher, Assistant Secretary............   403
    Partnership for a New Generation of Vehicles...................422, 431
    Prepared Statement of Dan Reicher, Assistant Secretary...........   407
    Savings from Appliance Standards.................................   436
    Transportation Technologies......................................   437
    Weatherization Assistance Program.........................425, 427, 433
    Additional Committee Questions:
        Advanced Gas Turbines........................................   481
        Alternatively Fueled Vehicles................................   462
        Building Programs............................................   488
        Clean Diesel Program.........................................   480
        Cooperative Efforts with Fossil Energy and the States........   506
        Exemplary Buildings Program..................................   494
        Federal Energy Management Program............................   499
        Federal Energy Technology Center.............................   504
        Fuel Cells for Transportation................................   479
        Global Warming...............................................   456
        Hybrid Lighting..............................................   489
        Industries of the Future.....................................   484
        Industry Research Programs...................................   481
        Lighting Research............................................   489
        Measuring Energy Consumption--Source versus Site.............   501
        Microturbines................................................   487
        Motor Challenge..............................................   483
        National Laboratory Funding..................................   525
        Natural Gas Research and Development.........................   501
        Natural Gas Vehicle Research and Development.................   477
        Overview of the Budget Request...............................   456
        Partnership for a New Generation of Vehicles.................   464
        Policy and Management........................................   516
        Priorities within the Buildings Program......................   496
        Priorities within the Industry Program.......................   486
        Priorities within the Transportation Program.................   481
        State Grant Funding within Program Elements..................   516
        Training.....................................................   514
        Transportation Program Increase..............................   462
        Weatherization and State Grants..............................   496
    Questions Submitted by Congressman Moran:
        Building Technology, State and Community Sector Program......   530
        Federal Energy Management Program............................   528
        Uncosted Balances............................................   530
        Workforce....................................................   529
    Questions Submitted by Congressman Nethercutt:
        Hydropower...................................................   533
        Industries of the Future.....................................   534
        Materials Technology.........................................   532

                       Energy Information Administration

    Additional Committee Questions...................................   542
        Budget Increase..............................................   542
        Customer Satisfaction........................................   547
        In-House vs. Contract Analysis...............................   547
        Reimbursable Work............................................   545
        Staffing.....................................................   548
    Statement of Jay E. Hakes........................................   537

                               W I T N E S S E S

                                  ----------
                                                                       Page
    Domeck, Mike.....................................................    65
    Gee, R. W........................................................   277
    Glickman, Hon. Dan...............................................     1
    Hakes, J. E......................................................   537
    Hakes, Jay.......................................................   201
    Kripowicz, R. S..................................................   277
    Kripoqicz, Robert................................................   201
    Lyons, Hon. Jim..................................................     1
    Reicher, D. W....................................................   201
    Reicher, D. W....................................................   403
    Richardson, Hon. Bill............................................   201