[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:]

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    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:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    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.
    [The information follows:]

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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:]

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    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:]

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                        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:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                           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:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                   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:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    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:]

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                               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

                                
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