[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



                 DEPARTMENT OF THE INTERIOR AND RELATED

                    AGENCIES APPROPRIATIONS FOR 2003

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS
                             SECOND SESSION

                                ________

   SUBCOMMITTEE ON THE DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES
                     JOE SKEEN, New Mexico, Chairman
 RALPH REGULA, Ohio                  NORMAN D. DICKS, Washington
 JIM KOLBE, Arizona                  JOHN P. MURTHA, Pennsylvania
 CHARLES H. TAYLOR, North Carolina   JAMES P. MORAN, Virginia
 GEORGE R. NETHERCUTT, Jr.,          MAURICE D. HINCHEY, New York
Washington                           MARTIN OLAV SABO, Minnesota 
 ZACH WAMP, Tennessee
 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 7
                                                                   Page
 U.S. Forest Service..............................................    1
 Oversight Hearing--Fish Passage Barriers and Pacific Salmon 
(Forest Service and Bureau of Land Management)....................  261
 Department of Energy: Energy Efficiency and Renewable Energy.....  335
 Department of Energy: Fossil Energy Budget.......................  423
 Oversight Hearing--Energy Research--Measuring Success, Department 
of Energy.........................................................  487
 National Capital Planning Commission.............................  543

                                ________

         Printed for the use of the Committee on Appropriations

                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
 79-807                     WASHINGTON : 2002

 



                       COMMITTEE ON APPROPRIATIONS

                   C. W. BILL YOUNG, Florida, Chairman

 RALPH REGULA, Ohio                  DAVID R. OBEY, Wisconsin
 JERRY LEWIS, California             JOHN P. MURTHA, Pennsylvania
 HAROLD ROGERS, Kentucky             NORMAN D. DICKS, Washington
 JOE SKEEN, New Mexico               MARTIN OLAV SABO, Minnesota
 FRANK R. WOLF, Virginia             STENY H. HOYER, Maryland
 TOM DeLAY, Texas                    ALAN B. MOLLOHAN, West Virginia
 JIM KOLBE, Arizona                  MARCY KAPTUR, Ohio
 SONNY CALLAHAN, Alabama             NANCY PELOSI, California
 JAMES T. WALSH, New York            PETER J. VISCLOSKY, Indiana
 CHARLES H. TAYLOR, North Carolina   NITA M. LOWEY, New York
 DAVID L. HOBSON, Ohio               JOSE E. SERRANO, New York
 ERNEST J. ISTOOK, Jr., Oklahoma     ROSA L. DeLAURO, Connecticut
 HENRY BONILLA, Texas                JAMES P. MORAN, Virginia
 JOE KNOLLENBERG, Michigan           JOHN W. OLVER, Massachusetts
 DAN MILLER, Florida                 ED PASTOR, Arizona
 JACK KINGSTON, Georgia              CARRIE P. MEEK, Florida
 RODNEY P. FRELINGHUYSEN, New Jersey DAVID E. PRICE, North Carolina
 ROGER F. WICKER, Mississippi        CHET EDWARDS, Texas
 GEORGE R. NETHERCUTT, Jr.,          ROBERT E. ``BUD'' CRAMER, Jr., 
Washington                           Alabama
 RANDY ``DUKE'' CUNNINGHAM,          PATRICK J. KENNEDY, Rhode Island
California                           JAMES E. CLYBURN, South Carolina
 TODD TIAHRT, Kansas                 MAURICE D. HINCHEY, New York
 ZACH WAMP, Tennessee                LUCILLE ROYBAL-ALLARD, California
 TOM LATHAM, Iowa                    SAM FARR, California
 ANNE M. NORTHUP, Kentucky           JESSE L. JACKSON, Jr., Illinois
 ROBERT B. ADERHOLT, Alabama         CAROLYN C. KILPATRICK, Michigan
 JO ANN EMERSON, Missouri            ALLEN BOYD, Florida
 JOHN E. SUNUNU, New Hampshire       CHAKA FATTAH, Pennsylvania
 KAY GRANGER, Texas                  STEVEN R. ROTHMAN, New Jersey    
 JOHN E. PETERSON, Pennsylvania
 JOHN T. DOOLITTLE, California
 RAY LaHOOD, Illinois
 JOHN E. SWEENEY, New York
 DAVID VITTER, Louisiana
 DON SHERWOOD, Pennsylvania
   
 VIRGIL H. GOODE, Jr., Virginia     
   
                 James W. Dyer, Clerk and Staff Director

                                  (ii)

 
DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES APPROPRIATIONS FOR 2003

                              ----------                              

                                         Wednesday, March 13, 2002.

                      UNITED STATES FOREST SERVICE

                               WITNESSES

DALE N. BOSWORTH, CHIEF, USDA, FOREST SERVICE
SALLY COLLINS, ASSOCIATE CHIEF
HANK KASHDAN, DIRECTOR, PROGRAM AND BUDGET ANALYSIS

                   Opening Remarks of Chairman Skeen

    Mr. Skeen. I want to welcome you all today for an important 
hearing.
    The Forest Service gets more funding than any other agency 
in our bill and because the full committee is holding ten other 
hearings right now, I want to get this one done soon.
    Chief Bosworth, you have had nearly one year on the job and 
we are very interested in your vision for the Forest Service. 
We are especially interested in seeing the National Fire Plan 
implemented. You need to make this your top priority.
    We expect the Administration to continue working with the 
States and communities on the Fire Plan and we need to see the 
whole effort is funded. Some folks downtown don't seem to get 
it, so please keep after them. We need to get the deal done, 
you need to be accountable and we hope to be a help to you.
    Mr. Dicks?

                      Opening Remarks of Mr. Dicks

    Mr. Dicks. I want to join the Chairman in welcoming Chief 
Bosworth to the hearing this morning. Dale is a career forester 
who has brought great experience and good judgment to his post. 
I enjoyed our brief meeting yesterday in my office and look 
forward to working with you this year on each of the issues we 
discussed yesterday, especially Forest Service roads, culverts 
and out in the northwest trying to do a little thinning on some 
areas that need it very desperately.
    With regard to the budget proposal for the Forest Service 
this year, I have concerns. I think it is wholly inadequate for 
firefighting, both funds for suppression and preparedness. 
While the non-fire portion of the request appears benignly flat 
in the aggregate, there are internal cutbacks that I seriously 
question. These include reductions in ongoing research programs 
that have proven effective as well as cutbacks in 
infrastructure funding in numerous areas. I find it very hard 
to believe, given the needs in this agency, that it makes sense 
to reduce staffing by more than 1,200 positions. While these 
are justified as necessary to finance uncontrollable expenses 
such as pay increases, I am hopeful alternatives can be found 
other than those in the budget.
    I look forward to your testimony, though I must tell you I 
am skeptical about the budget as presented.
    Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Kingston?
    Mr. Kingston. Thank you, Mr. Chairman.

                    Opening Remarks of Mr. Kingston

    Mr. Bosworth, it is good to see you again. I unfortunately 
fall under that travel guy, I have three committee hearings at 
once, so I am going to have to leave, but I did want to make an 
opening statement.
    We appreciate all the good work you are doing with forest 
fires, forest protection, forest health, rangeland protection 
and recreation. On the subject of recreation, which also ties 
into law enforcement, we have a specific issue I am very 
concerned about in the Chattahoochee-Oconee National Forest, 
one of management and inadequate safety, a disbursement of 
funds which is being withheld as a reason to keep four-wheel 
vehicles off the premises. We are very concerned about some of 
the management practices. When I say we, I mean we as the 
Georgia congressional delegation.
    I will look forward to talking with you or your staff at a 
later, more appropriate time specifically on that. I do have 
bill language I plan to offer to try to rectify this situation, 
but if we can work with Congressman Deal in that area and try 
to get things straight, that would be more desirable.
    I just want to say again, I appreciate all that you do. I 
hate to pull you into a micro-picture when we are here to talk 
about the mega-picture. Just keep up the excellent work and we 
are behind you. This committee is always supportive of the 
Forest Service.
    I regret I cannot be here today but I did want to put that 
on your radar screen as friends and allies.
    Mr. Bosworth. Thank you. I will follow up.
    Mr. Kingston. Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Bosworth, it is your turn now. In the 
interest of time, so we have a chance to ask questions, please 
summarize and your full statement will be included in the 
record.

                  Opening Statement of Chief Bosworth

    Mr. Bosworth. Mr. Chairman, I will do that. I will 
summarize and go through this very quickly.
    First, I would like to say that I appreciate the 
opportunity to be here and to discuss the President's budget 
for the fiscal year 2003. I am accompanied today by Forest 
Service Associate Chief Sally Collins and also our Director of 
Program and Budget Analysis, Hank Kashdan.
    As I said, it is a great privilege to be here. I am just 
winding up my first year as Chief of the Forest Service. I want 
to say I am pretty encouraged by the level of skill and 
commitment that I have found throughout the agency as I have 
traveled around the country and visited people at our research 
stations at our national forests and our State and private 
areas. I knew that we had good people but having had the chance 
to get out on the ground and see the kind of quality work our 
folks are trying to do, it just makes me really proud of them.
    I would also like to say that just a few weeks ago I had 
the pleasure of going to Salt Lake City and the surrounding 
areas to observe some of the Olympics. Two of the Winter 
Olympics signature events, the downhill and the Super G, took 
place on the Snow Basin ski area which is on the Ogden 
RangerDistrict of the Wasatch-Cache National Forest. The Forest 
Service's main goal for the Olympics was to help ensure the Olympic-
related activities were safe and that they were environmentally 
responsible. I am really happy to say that due to the dedication of the 
Forest Service people as well as the cooperating visitors, the part we 
contributed was very successful.
    For the fiscal year 2003 President's budget request, the 
Forest Service is requesting almost $4.9 billion. This level of 
funding is going to emphasize protecting the public, protecting 
employees, protecting property and resources. It will also be 
providing benefits to communities, improving forest and 
rangeland health and meeting the growing recreation demands for 
both goods, services and other amenities by the public.
    One of the things I will be focusing on again this year is 
reestablishing the bias in our organization in favor of 
accomplishing the work of the agency on the ground. ``Analysis 
paralysis'' or ``process gridlock'' is directly affecting our 
agency's ability to get that work done on the ground. We find 
it more and more difficult to protect communities from 
catastrophic fire, difficult to provide communities with a 
stable, sustainable flow of forest products, and difficult to 
get our employees in the field where they need to be. If we are 
going to get the job done on the ground, we have to have our 
folks in the field doing the work, not in the office doing more 
process and pushing more paper.
    We are going to put a lot of attention on that in this next 
year to see if we can help solve the problem. We could sure use 
some help from you folks in solving that problem.
    We are going to be concentrating on the restoration of 
ecosystems to fire-adapted conditions. The National Fire Plan 
is a top priority for the Forest Service. Our primary focus 
will be on reducing the number of communities that are at 
extreme risk from wildland fire. Hazardous fuels reduction is 
the critical piece of the National Fire Plan. We are going to 
be doing this and are doing this in cooperation with the 
Department of Interior as well as other partners and the 
States.
    The Forest Service plays a key role in maintaining benefits 
to communities. The type of opportunities the agency will 
engage in will be based on local needs and local interests 
while we still remain consistent with the overall mission and 
priorities of the agency.
    In the coming months, I will be talking more and focusing 
more on the invasive species problem. Invasive species are 
becoming a huge ecological and economic impact across the 
country. It will have to become a major part of our efforts in 
the future.
    I think I will conclude my opening remarks with that and 
have my entire testimony submitted for the record. I would be 
happy to answer any questions.
    [The written statement of Mr. Bosworth follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                    ACCOMPLISHMENTS AND FRUSTRATIONS

    Mr. Skeen. You had your first hearing ever as Chief before 
our subcommittee almost one year ago. What do you feel has been 
your greatest accomplishment and greatest frustration during 
this year?
    Mr. Bosworth. I wish I could say there have been huge 
accomplishments but making changes and accomplishments takes 
time. I do feel there have been a number of successes. When I 
first came to this job, one of the things I promised was to 
reconnect the field with the national headquarters. I believe 
we have made some significant progress in terms of that 
reconnection, although we still have a ways to go. We are 
trying to get our focus on getting work done on the ground. In 
order to do that, we have to have a good connection between 
headquarters and our regions, stations and the actual work 
being done in the field.
    I am working hard at getting a higher percentage of the 
dollars on the ground. That means we have to take less money in 
our national headquarters and get more money out to the 
regions, to the forests and the ranger districts. We are 
working real hard at trying to relieve the field of some of the 
unnecessary processes and procedures. We are making some 
progress but we have a long ways to go.
    We are improving the collaborative role of the National 
Leadership Team and I am thinking specifically about our 
Associate Chief. I believe we are working better together than 
we ever have. We have made a number of personnel changes. 
Probably half to two-thirds of the senior executives in the 
Forest Service have been reassigned to different positions and 
I believe into places where they can be the most effective. I 
am particularly proud that at the upper level, we have people 
who are working together trying to accomplish the needs of the 
organization with a focus on the field and trying to serve the 
American public in a better way.
    You asked about frustrations. I don't have a lot of 
frustrations but I am fairly frustrated about our analysis 
paralysis, about the high bar we have to get over in terms of 
analysis in order to get work done on the ground. I am fairly 
frustrated with the amount of time our people have to spend 
doing procedural kinds of things that don't add value to the 
decisions, to the community, to the public or to the quality of 
the work being done on the ground. That is a frustration.

                          CLEAN AUDIT OPINION

    While I wouldn't call it a high frustration, one of the 
things I am very concerned about is getting a clean audit and 
getting our financial house in order. I am optimistic that we 
are on the right track to get that done, and get a clean audit 
in the 2002 fiscal year. That has been a difficult job and 
there are frustrations here and there with trying to get that 
completed. I believe we are on the right track.
    Mr. Skeen. Mr. Dicks?

                           LEGISLATIVE RELIEF

    Mr. Dicks. Let me ask you this. I am sympathetic about some 
of the requirements. Is there anything you can do to come 
forward with a legislative proposal seeking relief from some of 
these obstacles? Is that in your plan?
    Mr. Bosworth. Let me tell you what we are doing and then I 
will answer that more specifically. Right now, we are about to 
complete a report that tries to outline the problem. It seems 
to me it is important that we get some common agreement of what 
the problem is and then come up with solutions to the problem. 
What I am trying to avoid is coming out with a bunch of 
solutions when we really don't have agreement yet that we have 
a problem or what that problem is.
    I would say most people I have talked to admit there is a 
pretty significant problem but they all characterize it 
sometimes in different ways. There will be a report we will 
share with you and hopefully after that report comes out, we 
can find out whether or not there is any kind of agreement. 
Then once we identify the problem, there are three areas we 
need to look at in terms of solutions. One would be what things 
can we do in terms of leadership and changes internally to the 
Forest Service, our own regulations and things we have done to 
ourselves and our own capability of managing the process. There 
are probably things we need to look at there. We need to look 
at regulatory changes but we need help from other agencies such 
as the Council on Environmental Quality and Fish and Wildlife 
Service in terms of Section 7 consultation. The third area 
would probably be whether we need legislative changes. Then I 
think we would have to see whether or not there would be some 
proposed legislation we would want to come forward with.
    Mr. Dicks. My point is, it is one thing to grouse about 
these things but it is another thing to say here is what we are 
going to do, what we are going to ask Congress to do to change 
them. We are the Appropriations Committee and this would be 
before the authorizers more than likely. Sometimes there might 
be things that we have in statutes here that could be adjusted 
if that would provide relief and make it easier for you to do 
your job.

                              FIRE BUDGET

    Let me go to the question of fire. I want to review with 
you some of the numbers in the fire budget. First, you tell the 
subcommittee how much the Forest Service spent on fire 
suppression last year, during fiscal year 2001?
    Mr. Bosworth. Last year about $690 million.
    Mr. Dicks. Our 2001 fire season has been described as an 
average to below average fire season in terms of severity. I 
believe in terms of acres burned, it was 30 percent below 
average. Would you agree last year was a relatively mild fire 
season?
    Mr. Bosworth. In terms of acres burned, it would be less 
than average, although you have to look also at what kind of 
fires we had, where they are located. If they are located near 
communities, the suppression cost would be increased, so you 
can't go directly on an acre-for-acre basis and come to a 
conclusion that the numbers would be wrong.
    Mr. Dicks. How much is included in your 2003 request for 
fire suppression cost and what was the basis for this estimate?
    Mr. Bosworth. $443 million was our request and our request 
is based upon the average, over a ten-year average fire 
suppression costs.
    Mr. Dicks. I thought we were like a third below last year's 
level and we had $690 million last year. Those numbers don't 
seem to add up.
    Mr. Bosworth. Last year we ended up having to borrow 
dollars from other accounts in order to get through the fire 
season. We had a choice of borrowing dollars from other 
accounts, generally things like contracts we hadn't quite let.
    Mr. Dicks. Have you paid that money back?

                          BORROWING FIRE MONEY

    Mr. Bosworth. There are dollars that were appropriated and 
emergency funding that is currently in OMB. It is about $280 
million and I requested those dollars be released. They haven't 
been released yet.
    Mr. Dicks. How much is owed? I know we have the Knutson-
Vandenberg and other accounts that we borrow money from. How 
much has been borrowed that has never been paid back?
    Mr. Bosworth. The Knutson-Vandenberg Fund is about $350 
million.
    Mr. Dicks. Is owed? Are there other accounts where money is 
owed?
    Mr. Bosworth. There are other accounts that we sometimes 
borrow money from but there are no other accounts in terms of 
trust fund accounts that are owed.
    Mr. Dicks. From last year?
    Mr. Bosworth. Other than last year's borrowing, correct.
    Mr. Dicks. If you could put in the record or have your 
staff put in the record for us a list of the accounts that 
money is borrowed from, all of them, not just trust fund but 
all of them and maybe the last year or two what the history has 
been.
    [The information follows:]

    The following table lists the accounts and funding 
``borrowed'' from them to finance fire suppression operations:

------------------------------------------------------------------------
                                                   Fiscal year--
                Accounts                 -------------------------------
                                               2000            2001
------------------------------------------------------------------------
Deferred Construction and Maintenance...     $51,000,000              $0
Timber Purchaser Election...............      24,000,000               0
Timber Salvage Sales....................      15,000,000               0
Working Capital Fund....................      51,000,000               0
Knutson-Vandenberg Trust Fund...........      20,000,000     276,000,000
Hazardous Fuels Projects................      39,000,000               0
                                         -------------------------------
      Total.............................     200,000,000     276,000,000
------------------------------------------------------------------------

    Mr. Bosworth. Let me add for a minute here. In the past, 
ten years ago, five years ago, we borrowed from those trust 
fund accounts like KV and our Salvage Sale Fund. Those are 
fairly large accounts we could borrow from when we had the fire 
seasons that exceeded our capability or our cost. Those 
accounts now are very low.
    Mr. Dicks. So there is no money to borrow?
    Mr. Bosworth. There is no money to borrow from so last year 
we borrowed some from the KV but we also had to stop some of 
the contracts for other kinds of work and made sure we had the 
dollars.
    Mr. Dicks. Do you have legal authority to do that?
    Mr. Bosworth. Yes, we have legal authority to do that but 
obviously when we borrow from those accounts, then we are not 
getting the work done that you appropriated the dollars for us 
to do unless they get paid back. It cries out for long-term 
solution because if we get budgeted every year, the ten 1-year 
average, half the years are going to end up exceeding our 
costs. If every other year we exceed our costs, then we either 
have to stop fighting fire or we have to have some other means 
of borrowing the money.

            CONSULTING WITH OFFICE OF MANAGEMENT AND BUDGET

    Mr. Dick. Have you had a chance to talk with Mr. Daniels at 
OMB about this?
    Mr. Bosworth. I have not talked to Mr. Daniels personally.
    Mr. Dicks. Has your staff talked to him, the Associate 
Director of OMB?
    Mr. Bosworth. Our staff has had a number of conversations 
with folks in OMB.
    Mr. Dicks. Speaking as Chief of the Forest Service, do you 
believe that $423 million will be adequate to suppress fires in 
2003 if we experience an average fire season?
    Mr. Bosworth. I don't know that I can predict that, to be 
honest with you. I do know that the odds are very high that if 
we have an average or better fire season, depending on where 
the fires are located, we would exceed our costs and we would 
have to borrow. That is just the way it is. We are going to 
have to borrow probably.
    Mr. Dicks. Can you tell the committee how much the Forest 
Service requested for fire suppression costs in your original 
2003 request to OMB?
    [The information follows:]

    The Forest Service's fiscal year 2003 request to the U.S. 
Department of Agriculture for fire suppression operations was 
$423,300,000. The U.S. Department of Agriculture's request to 
the U.S. Office of Management and Budget for fiscal year 2003 
fire suppression operations was $321,365,000.

    Mr. Bosworth. I don't have that information right now, but 
I can supply that for the record.
    Mr. Dicks. We would like that for the record.
    Are we correct that the ten-year average which was the 
basis for this cost has not been updated either to reflect the 
increased cost of new firefighting policies and techniques 
that, in fact, it has not even been updated to show inflation?
    Mr. Bosworth. I believe our ten-year average is natural 
average of experienced fire costs over the last ten years, so 
each year that would be updated to the most recent year. It is 
a rolling ten-year average. It does not make adjustments for 
inflation.

                         FIRE SUPPRESSION COSTS

    Mr. Dicks. It seems more logical to me that we use the 2001 
spending for suppression as a hypothetical base for costs in an 
average year. If we assume that this budget assumes no more 
than $321 million for suppression in 2002 and $423 million in 
2003, would it be fair to surmise that this budget underfunds 
fire suppression costs by cost to $400 million in 2002 and just 
under $300 million for 2003?
    Mr. Bosworth. Again, a lot depends upon weather, location 
of fires and the circumstances that face us in any given fire 
season. Let me have Hank Kashdan give a more specific response 
to that.
    Mr. Kashdan. Mr. Dicks, the standard method we have used 
has been the ten-year average, strictly mathematical. If you 
were to take a five-year average adjusted for inflation, you 
would be approaching in the neighborhood of $600 million. So 
you can see, depending on the method you use, you do get up 
higher. A five-year average adjusted for inflation would 
approach $600 million.

              PERSONNEL CUTBACKS IN FULL-TIME EQUIVALENTS

    Mr. Dicks. One final question. Tell me about the reason for 
cutting back 1,225 FTEs? I understand a lot of that is going to 
be from the firefighting area. Is that correct?
    Mr. Bosworth. We have not identified that the numbers are 
going to come from firefighting. There are a number of 
initiatives we are looking at. One would be to do more 
outsourcing and more contracting. We are looking at a reduction 
in our overall work force over the next few years which would 
generally be happening through attrition but it is not just 
focused on fire. It would depend upon individual programs.
    Mr. Dicks. Does your budget say you are going to cut1,600 
out of fire?
    Mr. Kashdan. Mr. Dicks, the presentation of FTEs in the 
budget justification does reflect a reduction of I believe 
about 1,225 FTEs in fire. The 1,225 FTE figure is an 
expectation that we would accomplish based on competitive 
sourcing, contracting. Fire happens to be an area where there 
are----
    Mr. Dicks. You don't really save any money if you contract 
it out, do you?
    Mr. Kashdan. I think that would depend on the area you 
contract out. Let me mention on the 1,225 that in essence we 
are accountable for the agency-wide reduction of 1,225. The 
fact that it is reflected in fire, probably in retrospect, it 
should have been spread more across the board.
    Mr. Dicks. I know you will exercise good judgment in this. 
We only ask these questions because they are in the documents 
you sent to us. There is a rather large increase in fire when 
fire is a major problem.

                      CONTRACTING FIRE SUPPRESSION

    Mr. Bosworth. Let me respond to the contracting and whether 
we save money. We are not out to do contracting if it is going 
to be more expensive than hiring our own employees. Often there 
are many hidden costs when you hire employees than if you were 
doing it through contracting, it is cheaper. It may be things 
like contracting for kitchens, we do a lot of that already, for 
project fires; it may be more contracting for engines and 
engine crews. We may find rather than have them locate in one 
district, through a contract you are only paying them while you 
have them on the fire, not paying them throughout the whole 
fire season. We have to do cost analysis to see where the 
dollars are saved and to make sure we are effective and 
efficient. We are not going to go out and contract just for the 
purpose of contracting if we can't save some dollars doing 
that.
    Mr. Skeen. Mr. Wamp?
    Mr. Wamp. Chief, welcome, and the whole team here.

                          MAINTENANCE BACKLOG

    The subcommittee has continued to pursue reduction in the 
backlog maintenance and obviously we have a large stake in the 
fee demo program. I want an update on both of those just from 
your perspective. What progress are we making on whittling down 
the backlogged maintenance and what progress are we making 
generating new revenues to invest on-site with the amenities 
that people love?
    Mr. Bosworth. Let me talk about the deferred maintenance 
first. We have talked for a number of years about the huge 
backlog we have in deferred maintenance. At the current rate, 
we still fall short of even maintaining the level we are in 
terms of deferred maintenance. We need a certain amount of 
money in order to keep from losing ground. At this point, we 
would still be losing some ground. I will have Hank give you 
specific numbers on that.

                  RECREATION FEE DEMONSTRATION PROJECT

    I also want to say in terms of the recreation fee 
demonstration projects we have had going on over the past 
number of years, we found many places where they have been 
successful and we have also learned from places where they 
haven't been quite so successful. I believe the time has come 
to get more permanent legislation for recreation fees. I 
believe we can apply that in a way that would be very 
satisfactory to the public that uses the national forests for 
recreation, especially focused on certain kinds of activities 
in certain areas.
    I have found in talking to people that when we put the 
dollars back out on the ground in the area where they paid the 
fee, most of the time people are fairly happy with that. If 
they see actual improvements taking place based upon their fees 
they paid, they seem to be pretty open to that. If they don't 
see any good things happening, they believe they are just 
getting wrapped up in process and paperwork and administrative 
kinds of dollars and they are not going to be happy paying 
additional fees. Our approach is to make sure 80 percent of the 
dollars get back to the ground on those specific locations. 
That is something for which we would need longer-term 
authorization.
    Mr. Wamp. Let me hear from Hank on some numbers and then I 
have two other questions I will hold until we return.

                      DEFERRED MAINTENANCE BACKLOG

    Mr. Kashdan. On the issue of deferred maintenance, let me 
give you a couple of examples. In roads and bridges, probably a 
notable area, the annual maintenance level to avoid continued 
decline or increase in backlog approaches about $624 million. 
If you contrast that against a budget level of about $240 
million, you can appreciate the issues we face as far as 
reducing the facilities creating the backlog or the backlog 
tends to increase. I think that is one example represented 
across the board, but roads and bridges is probably a clearer 
case that shows that.
    Mr. Wamp [assuming chair]. Let us adjourn until we return 
after this vote.
    [Recess.]
    Mr. Nethercutt [assuming chair]. The subcommittee will be 
back in session and we will proceed with Mr. Wamp's questions.

                          SOUTHERN PINE BEETLE

    Mr. Wamp. We talked about backlog maintenance and rec fee 
demo. Then I came around the table and saw you all were doing 
your homework on Southern Pine beetle. Somehow you read my mind 
and knew that was the next question I was going to ask but we 
are very interested in the previous year's budget where we had 
$120,000 just for the Cherokee National Forest and Southern 
Pine beetle suppression and in the coming year's budget--two 
years ago it was $120,000, this year it is $100,000. I just 
want to ask how can we and are we staying ahead of this problem 
with Southern Pine beetle?
    Mr. Bosworth. Obviously the Southern Pine beetle is a huge 
problem and we have outbreaks of Southern Pine beetle from time 
to time. Right now we are experiencing one of the largest 
outbreaks we have ever had.
    I want to also say that the ongoing research we do in our 
research program is hugely important for outbreaks of Southern 
Pine beetle as well as a lot of other species. Now we have $12 
million for emergency pest and pathogens which would include 
the Southern Pine beetle. There is also some money that was 
allocated late last year in fiscal year 2002, about $8 million, 
that included some carryover from 2001 emergency funds.
    Expect that the populations of Southern Pine beetle are 
going to remain high for fiscal year 2002 as well as 2003. We 
don't expect population reduction, so we are going to have a 
continuing need to treat these infestations. I can have Hank 
get into more specific dollars if you would like.
    Mr. Wamp. We have the problem off Forest Service property 
as well as on Forest Service property, so we are trying to make 
sure there is coordination between State foresters and the 
State Department of Agriculture. I put money in a supplemental 
last year to address the non-Forest Service property problem as 
well so that they could reforest some of the lands that aren't 
covered under any other Federal program.
    We will continue to work in a coordinated effort to deal 
with this problem but it is literally as close as my back yard 
where I live. Trees are falling left and right.
    Mr. Bosworth. It is a problem on both private lands and 
some of the National Forest lands. We have really good 
relationships with the State foresters in terms of trying to 
deal with these issues.

                          LABORATORY CLOSURES

    Mr. Wamp. One final question about research, the entire 
forest inventory program and the word that there may be lab 
closures as a result of the President's budget on research 
programs. Is that true?
    Mr. Bosworth. Our research budget essentially would remain 
about the same in terms of total dollars. The program would 
emphasize forest inventory and analysis and redirect a 
significant amount of dollars into forest inventory and 
analysis. That would potentially have effects on some of our 
other ongoing research as well as some of our labs. I can't be 
specific in terms of which laboratories or specifically which 
programs would be affected. We are doing some analysis to try 
to sort through that, but we need to wait until we find out 
what you folks are going to do in terms of the budget before we 
complete that, before we can tell you specifically how that 
would be affected.

                     FOREST INVENTORY AND ANALYSES

    There is strong support from State foresters and private 
landowners especially for the forest inventory and analysis 
information and to have that annualized. It is a program that 
we very much support so that we can have that good information 
for folks.

                           LEGISLATIVE RELIEF

    Mr. Wamp. Your whole frustration you explained earlier, it 
is good to hear that you are fired up about that. I hope there 
is a longstanding resolve on your part to do something about it 
as Mr. Dicks said because I clearly believe from listening, the 
morale is good through the Forest Service and I have a large 
interest in my district but I do think the things you talk 
about, the obstacles, the hurdles, the paperwork and the 
burdensome regulations that doesn't bring value added, is a 
problem that we must really stay on top of, both the 
Legislative Branch and the Executive Branch until something 
breaks, instead of just carrying the debate forward each and 
every year and the problems continue to mount.
    Let us persevere on that while times are relatively good 
elsewhere and we don't have extra fires and other things we 
have to put out, so to speak, and let us try to do something 
about that.

                      OMB RELEASE OF FIRE FUNDING

    Mr. Skeen [resuming chair]. A lot of funding for wild-fire 
is being held up by the OMB right now. How does this impact 
your field personnel and planned projects and getting contracts 
out for bid?
    Mr. Bosworth. One result in terms of the $280 million that 
has not been released yet, some of those dollars will affect 
our fire suppression readiness. This is the time of year when 
we recruit new firefighters. This is also the time of the year 
when we let contracts for fire tankers, helicopters, other 
kinds of contracts we need for fire suppression.
    The longer we go without knowing for sure whether we are 
going to have those dollars, pretty soon it almost becomes too 
late to be effective in terms of getting those dollars prepared 
for the fire season. If we don't get those dollars, there will 
be a fairly significant reduction in our fire readiness.
    Mr. Skeen. Mr. Dicks?

                          CLOSURES IN RESEARCH

    Mr. Dicks. We have a list here of locations where there are 
going to be closures. Is that list inaccurate? This is out of 
your budget, the President's budget proposes to terminate 16 
research work units and close 10 locations and redirect the 
funds to those units to pay for the five initiatives proposed. 
Is this list not accurate?
    Mr. Bosworth. I think the list you are looking at would be 
with zeroing out.
    Mr. Dicks. The proposed location for closures.
    Mr. Bosworth. If we zero out the earmarks. If you decide to 
put some of those back in, that would have a different effect, 
but right now the earmarks are zeroed out in the budget. 
Depending on what we finally end up with, we will have to look 
and see whether some of those----
    Mr. Dicks. These aren't earmarks. Let us go through them: 
Auburn, Alabama; Bent Creek Experimental Forest, Asheville; 
Bozeman, Montana; Coweeta Hydrological Laboratory, Franklin, 
North Carolina; Fresno, California; Laramie, Wyoming; Logan, 
Utah; Redding, California; Reno, Nevada; and West Lafayette, 
funding to be redirected and employees affected at locations to 
be closed in fiscal year 2003. It has a list of how much money, 
$12,783,000, number of employees affected, 125.
    Mr. Bosworth. I don't believe you would find those in our 
budget proposal that we are planning on closing those down. 
What we are trying to do is look and see--
    Mr. Dicks. This is under your budget.
    Mr. Bosworth. We are trying to figure out what would 
happen, what kind of effects there would be from this budget. 
There would be the potential of closures of some labs and the 
potential of redirecting those dollars to forest inventory and 
analysis. That means that some good research at some good labs 
would not be done. It is not in the budget justification.
    Mr. Dicks. It has the little Forest Service right here on 
the top. It says, ``Forest Service, U.S. Research and 
Development.'' Did someone make this up? Is this a fantasy?
    Mr. Bosworth. Our research folks have looked at what they 
believe----
    Mr. Dicks. Is this a proposal?

                     FOREST INVENTORY AND ANALYSIS

    Mr. Bosworth. The President's budget proposes to redirect a 
certain amount of money into forest inventory and analysis. We 
start looking through those and see what kind of effects may 
happen. When we get a final budget, I am going to be looking 
personally to see what kind of impacts there will be a we get 
closer to a final budget that Congress is going to pass. Those 
are some of the kinds of effects that could occur. That is what 
our folks were trying to look at.
    Mr. Dicks. It does say ``proposed location closures.'' We 
thought that was the proposal.
    Mr. Bosworth. We are not proposing to close locations. What 
we are talking about, we are trying to analyze what would be 
the effects of redirecting dollars to forest inventory and 
analysis.
    Mr. Dicks. Unless Congress saves you, right?
    Mr. Bosworth. We can always hope.
    Mr. Dicks. Don't say too much, you might not be around too 
long. [Laughter.]
    We will work with you on this. I have a few more questions, 
Mr. Chairman.

                          FIRE SEASON OUTLOOK

    Based on current timber conditions and the ongoing drought, 
is the Fire Center expecting an average or worsethan average 
fire season this year?
    Mr. Bosworth. I guess I am going to have to check. I don't 
know. When I think about across the country, we do have 
projections and I can get this information. It will be 
different in different parts of the country. I think across the 
country, it is appearing, it is shaping up at this point to be 
a worse than average fire season. I am talking about coast to 
coast. You can look at individual geographic areas.
    Mr. Dicks. Overall, it is supposed to be worse?
    Mr. Bosworth. Overall, coast to coast, I believe it is 
shaping up to be worse than average. That can change with the 
weather. We look at drought indexes all winter and spring and 
try to do some predictions.

                      OMB RELEASE OF FIRE FUNDING

    Mr. Dicks. On a technical point, OMB has argued that the 
delay is partially due to a technical issue which appears to 
require that all funds be designated as an emergency at the 
same time and that the $66 million of 2002 suppression money 
does not yet meet this test. It appears to me that a legal 
argument can be made that the funds could be designated all at 
once but then obligated as needed.
    Has the Department had discussions with OMB about this 
technical problem?
    Mr. Bosworth. We have had many discussions. Both the 
Department and the agency have had many discussions. I will let 
Hank talk about the specific discussions he is aware has taken 
place.
    Mr. Kashdan. There have been several discussions in that 
regard. You are right, the language in the 2002 Appropriations 
Act is essentially worded as all-or-nothing type language. In 
other words, the President would have to declare the emergency 
on the $346 million and all of it would have to be released; 
that includes three components--the $66 million for 
suppression; $80 million for current-year fire plan activities; 
and then $200 million to repay prior-year borrowing. So there 
has been some discussion about that issue with no resolution 
yet.

                         TIMBER HARVEST LEVELS

    Mr. Dicks. The number in the budget showing levels of 
timber harvest are somewhat difficult to follow. I would like 
to review the current request for clarification.
    On page 2 of 6 of the budget justification, you indicate 
that you anticipate timber harvests of 2.6 million ccf in 2001, 
3.7 million ccf in 2002 and 3.6 million ccf in 2003. Are we 
reading these charts correctly?
    Mr. Bosworth. How about I talk in board feet which I can 
understand. It would be a little easier to relate to.
    Our timber offer volume that we had in 2001 was 2.015. The 
program from 2002 is 2.001, right at 2 billion board feet. We 
expect to meet that. The estimate for 2003 in our budget 
proposal would be 1.999 or 2 billion.
    Mr. Dicks. So it is level in all three years? This is what 
you are going to offer?
    Mr. Bosworth. That is offer.
    Mr. Dicks. What are you going to sell?
    Mr. Bosworth. We expect to sell close to what we offer. It 
depends on whether or not the industry purchases what we offer. 
We expect to meet that in 2002; we expect to sell what we offer 
in 2002. When you get to the harvest volumes, that is what we 
project is going to be harvested from sales we sold last year, 
this year and what we project will be harvested. The harvest 
varies depending upon individual operators.

                          ROADLESS AREA POLICY

    Mr. Dicks. Last spring, the Administration announced it 
would not change the overall policy regarding roads in so-
called roadless areas but you would be conducting a review of 
the policy in certain national forest areas. Can you tell us 
whether the roadless policy has been modified for any area 
during the last year and whether any changes are expected in 
the near future?
    Mr. Bosworth. Let me explain to you what has happened in 
the last year. When the roadless conservation plan was signed, 
we had many lawsuits. Judge Lodge in Idaho enjoined us from 
implementing the roadless conservation plan and that has been 
subsequently appealed to the 9th Circuit by intervenors.
    I think about June or July, I sent a letter to the regional 
foresters holding to myself the decisions on entering any 
roadless area, except in certain conditions that were the same 
conditions in the roadless conservation plan. The roadless 
conservation plan allowed for certain exceptions and I 
continued to allow those same exceptions to take place.
    I also said in that letter that any forest that completed a 
forest plan that evaluated the roadless conditions, then I 
would delegate the decision to the regional forester to decide 
if they wanted to enter the roadless areas.
    That is essentially all we have done. We did go out with an 
advance notice of proposed rulemaking in the fall asking about 
ten different questions, trying to find out from the public 
whether or not they had some different ideas on how we could 
resolve this issue. So we have a number of court cases that are 
pending right now, about nine I believe, and we are evaluating 
the comments we got under that ANPR. Pretty soon we will find 
out what those comments were and see if there are any new or 
different ideas.

                        ROAD MAINTENANCE BACKLOG

    Mr. Dicks. Give me your latest estimate of the maintenance 
backlog for repairs on Forest Service roads--if you could give 
us both a dollar estimate and your view of the seriousness of 
the situation.
    Mr. Bosworth. First let me talk about the seriousness of 
the situation. It is a problem when we have roads that we are 
not able to maintain to both a safe or environmentally sound 
manner. We have a lot of roads throughout the National Forest 
system that we are unable to maintain to the level we would 
like.
    All of the forests are going through a road analysis 
process where they are trying to figure out which roads they 
want to keep, which need to be reconstructed. If there are any 
roads that need to be decommissioned, we would identify those 
and also help set priorities for the maintenance of roads. As 
far as completing it that road analysis process gives them a 
better way of prioritizing where they are going to put the 
work.
    In terms of the backlog of deferred maintenance, we are at 
about $5.3 billion right now.
    Mr. Dicks. Is that down from the estimate of the previous 
Administration? Have you reanalyzed this?
    Mr. Bosworth. The numbers have been fairly consistent. I 
think it is down a bit based upon--I guess it is fairly 
constant in comparative terms. I know that we have talked about 
figures of six. I am saying $5.3 million right now.
    Mr. Dicks. That is a billion dollars?
    Mr. Bosworth. That is correct.
    Mr. Dicks. That is money I am deeply concerned about. I 
think this is one area we need to work together when we redo 
the Highway Trust Fund. The Forest Service didn't get in last 
time. I think, as a committee, we need to work with you totry 
to convince our friends on the Transportation Committee that you should 
be included because I don't see how we are ever going to get this thing 
under control short of your being involved in that entitlement program.
    Mr. Bosworth. We do need to find some solutions like that. 
The numbers I gave you were just for roads and bridges. 
Sometimes I know in the past there have been questions about a 
deferred maintenance backlog which could include trails or 
bridges. That is why some of these numbers change, whether you 
are talking about all deferred maintenance or just roads and 
bridges, trails, whatever. It is a serious problem; we are 
looking for all sorts of creative ways of trying to provide 
some solutions. The road analysis process and doing a better 
job with the dollars we get would be one place.
    I also really believe that our ability to get a higher 
percentage of the dollars to the work on the ground--whether 
decommissioning roads, maintaining roads, replacing culverts, 
whatever--if we can get a higher percentage of the dollar on 
the ground doing that, then that would help significantly as 
well. That kind of goes back to my desire for us to find a way 
to deal with the analysis process, the analysis paralysis we 
are in.
    Mr. Dicks. Thank you.
    Mr. Skeen. Mr. Nethercutt?

                           NATIONAL FIRE PLAN

    Mr. Nethercutt. Welcome to all of you. I want to focus a 
bit on this issue of wildfire and the National Fire Plan.
    As you know the Secretary of Interior and the Secretary of 
Agriculture signed a Memorandum of Understanding with the 
Governors recommitting to the National Fire Plan. Apparently 
they have completed a ten-year strategy for implementing the 
plan. It has four major components: fighting fires, reducing 
hazardous fuels, restoring fire-prone ecosystems, and community 
assistance.
    Despite this support at the top levels, the budget request 
has virtually no funding for two of the components: the 
restoration and the community assistance. I am wondering as I 
listened to your testimony about the expectations for more fire 
problems in the country, how do you justify this kind of budget 
request when you are going to be looking at more fires but yet 
you are cutting the money to essentially level the budget?
    Mr. Bosworth. Obviously the situation we are in is looking 
at tradeoffs and trying to figure out where the highest 
priorities would be. My belief is that in the long term, the 
most important thing we can do is deal with the fuels, starting 
with the fuels close to the communities, the urban interface. 
If we don't deal with that, we are going to be faced with even 
greater problems ten years from now and even greater problems 
20 years from now. I would like to see us keep the focus on the 
fuels.
    I also believe that the entire National Fire Plan is very 
important and we want to implement as much of that as we can 
but we are still going to have to look at the tradeoffs with 
limited dollars.
    Mr. Nethercutt. I understand you have tradeoffs but 
essentially you are balancing the budget on the backs of the 
National Fire Plan and these critically important components of 
it. I am wondering how you define the urban interface. How do 
you define that? Is it clearly definable?
    Mr. Bosworth. I don't think I could read you a specific 
definition for urban interface. I really can't do that because 
it changes depending on the conditions you are in. We need to 
be looking at those areas where there are communities at risk 
based upon the fuels loading, the weather patterns and past 
fire history. It may be a bit different in one place or 
another.
    I would like to give you some personal examples. I was 
forest supervisor on the Wasatch-Cache Forest which is in Utah 
on the Wasatch Front. There is a pretty defined line where the 
national forest stops and the community starts. There are over 
a million people that live on the other side of that line. That 
is a pretty defined wildland-urban interface.
    I was also regional forester in the northern region in 
Montana and northern Idaho where we had the fires in 2000 in 
the Bitter Root Valley. That doesn't fit the same definition of 
a very fine line of a wildland-urban interface. A lot of the 
homes are scattered up and down some of the valley bottoms and 
some of the drainages. There may be only ten houses to a square 
mile or two houses to a square mile but there are still 
community areas that are under particular threat from wildfire 
with the fuels conditions the way they were. They are not there 
now because the fires burned through.

                  BURNED AREA EMERGENCY REHABILITATION

    Mr. Nethercutt. We had some fires in my district up in 
northeast Washington State, some tough fires. We were 
frustrated with the inability to get in after the fire was put 
out to do restoration work and have any sense of harvesting 
still merchantable timber. It was essentially a no win 
situation because of the time delays that would be attendant to 
challenges to any kind of sale.
    I think that is an issue you need to focus on and try to 
figure out because in timber starved areas, harvest starved 
areas where the economy is dependent but also the forest health 
is dependent on getting in there after a fire and doing some 
restoration work, yet accomplishing some economic objective, I 
think that is the best situation but we were hamstrung up there 
by the inability to get in in a timely fashion. We had about 18 
months to do it.
    Mr. Bosworth. We do a very good job of getting in and doing 
our emergency rehabilitation. We have special authorization to 
go in and do things like putting in catch basins if necessary, 
to do some reseeding, to do erosion control, to help prevent 
mud slides and whatnot the following year.
    When we start talking about the overall restoration, which 
may include some salvage, often our decisions end up being made 
by default because of delays due to our process. I don't mind 
so much a conscious decision to not salvage or not do certain 
work. What I don't like is the decision being made by default 
simply because of different approaches toward delaying the 
project. That is my frustration with the analysis paralysis and 
the process gridlock I want to deal with.
    Mr. Nethercutt. I agree and appreciate your comment about 
it. I think we need to do something about that because the 
delay is used as a weapon to accomplish another objective by 
those who don't want to have any harvesting or salvage at all 
in our systems. It would help the forest.

                         NON-HARVEST TIMBER BIDS

    The Forest Service proposes legislation that permits 
conservation and recreation groups to bid on timber sales. You 
already commented about the questionable timber sales goals 
being reached this year for 2003 and the budget allocated to 
it.
    We have had such a decline in timber sales over the years I 
am wondering whether this proposal would allow successful non-
harvesting bidders to change the forest management objectives 
in ways that won't comply with legally required national forest 
management plans.
    Maybe you could comment on the wisdom of that or the 
challenge it poses to you in the days ahead where you, in the 
broad sense, the Forest Service system manager, makes them 
healthy and have a multiple use attached.
    Mr. Bosworth. Let me talk about that from a general sense. 
We have two kinds of sales--timber sales for the purpose of 
supplying wood material and also a number of timber sales, 
probably 60 percent of our sales, that use timber harvest as a 
tool to accomplish some kind of land management objective such 
as fuels reduction or habitat improvement, watershed 
restoration. This would apply only to that group of sales and 
would be strictly for the purpose of providing wood fiber and 
return to the Government in terms of dollars.
    If we were to allow others to bid on that, we may get 
higher bids on those and maybe that would be a greater return 
to the Treasury but we are still working on the legislation. 
Its final form will depend on a lot of different viewpoints.
    Mr. Nethercutt. I think we have to be careful about it 
because again your obligation seems to me to be to make sure we 
have a healthy forest and that means some thinning and 
harvesting as opposed to purchasing it, putting a fence around 
it and saying we won the sale, we are not going to do anything 
with it.
    I would be happy to work with you and the subcommittee as 
well to make sure your objectives as well as our objectives are 
able to be met in that regard with respect to timber sales.
    Mr. Bosworth. We would look forward to working with you on 
it.
    Mr. Skeen. Mr. Hinchey?

                        NEW YORK CITY WATERSHED

    Mr. Hinchey. The Forest Service under the previous 
Administration announced a natural resources agenda that 
established land health as the agency's highest priority. First 
among those was the protection of watersheds. I am particularly 
interested in the New York City watershed.
    I know that in the fiscal year 2003 budget, the Forest 
Service has identified the New York City watershed as one of 
the Forest Service's 24 large-scale watershed projects. The 
approach you are taking is designed to use indigenous products 
for filtration of water runoff and things of that nature.
    I would like to know whether there are any new initiatives 
from the Forest Service this year to protect watersheds or is 
this a continuation of the ongoing work?

                         WATERSHED RESTORATION

    Mr. Bosworth. One of our high priorities is watershed 
restoration. That covers a pretty wide area of potential 
activities that would take place. One of the right things we 
have been trying to do the last several years is put a greater 
focus on cleaning up watersheds and watershed restoration.
    There are different approaches you can take but we need to 
do this watershed restoration in partnership with communities, 
particularly those in and around those watersheds.
    I have a bit different philosophy than what we have done in 
the past few years in terms of how we would fund and work 
toward this watershed restoration. My view is to stop trying to 
pull dollars off the top at our national office and set those 
dollars aside for specific watersheds but rather to allocate 
those dollars out to the Stations, the Area office, the Regions 
so they can identify those priorities closer to the ground, 
work with the communities and do the watershed restoration that 
needs to be done.

                        NEW YORK CITY WATERSHED

    Mr. Hinchey. Can you give any specifics with regard to the 
approach you are taking with the New York City Watershed? You 
probably haven't focused on that or had an opportunity to focus 
on specific watersheds. If you are unable to answer at this 
point, and I understand you probably are not, could you have 
someone get in touch with me to give me some indication as to 
what the specific approach will be?
    Mr. Bosworth. Yes, I will. I would be happy to get back to 
you for the record. I was up in Philadelphia last week meeting 
with the State and Private Forestry folks up there where they 
went over a huge number of projects taking place in the 
northeast, including the New York City Watershed. I haven't 
retained the specifics of the New York City Watershed, so I 
would be happy to get back to you.
    Ms. Collins. Let me also add that the entire leadership 
team of the Forest Service was briefed on that New York 
Watershed Partnership, the large-scale program, last year and 
to complement everyone that was part of that because that is a 
huge partnership. We were able to take a little Federal money 
and make it go ten times further with those large-scale 
watershed plans.
    The other thing we are hoping to do in terms of taking this 
to the next step is not just have 24 special projects but have 
the notion of partnering with all the other agencies in the 
watershed and the other nonprofits and communities in a 
watershed and be more institutionalized in the way we do 
business everywhere.
    Mr. Hinchey. That sounds very sensible. I appreciate it.
    Do you have a specific plan for land acquisition as part of 
this program?

                            LAND ACQUISITION

    Mr. Bosworth. We have a land acquisition plan that is not 
necessarily specific to that program but across the country.
    Mr. Hinchey. In the context of watershed protection, is 
there a part of your plan that calls for acquisition of 
property to protect the watershed?
    Mr. Bosworth. That is one of the main criteria that we use 
when we identify our priorities for land acquisition.
    Mr. Hinchey. Thank you.

                           RESEARCH CUTBACKS

    There is a reduction in the budget for forest and rangeland 
research for the wildlife, fish, water and air program. As I 
read the budget, it is cut by about almost 18 percent, 17.7 
percent. Could you enumerate for us the impacts these cuts will 
have on the wildlife, fish, water and air program? In the 
fiscal year 2000 budget, the Forest Service requested an 
additional $10 million for high-priority research on various 
species. I understand that little information currently exists. 
I wonder where you think this program is going over the course 
of the next several years?
    Mr. Bosworth. First, the research program in the Forest 
Service is extremely important. We are a science-based 
organization and have some of the best research that takes 
place in the world. It is pretty easy to get passionate about 
every individual research project going on, plus numerous 
others we would like to get into.

                     FOREST INVENTORY AND ANALYSIS

    This budget redirects some of the dollars to our Forest 
Inventory and Analysis Program, also extremely important 
andpart of the Research Branch. It is also important in terms of 
providing information particularly to States and private landowners on 
an annualized basis so they will know what condition the forests are 
in.
    The effect of redirecting those dollars to the Forest 
Inventory and Analysis Program would be a number of tradeoffs 
of ongoing research and potentially closure of some of our 
labs. I can't be specific about the fish and wildlife part of 
our research but I can get back to you on what those effects 
would be.
    Until we get closer to a final budget, it is going to be 
difficult to really assess our options. There would be some 
discretionary dollars we would be able to direct to certain 
places but I don't know exactly where that would be at this 
point. I would be happy to work with you because our research 
projects are very important.
    Mr. Hinchey. I agree. I think the Forest Service does a 
very good job and that work is very valuable. I wouldn't expect 
you to be able to answer in detail at this moment, but if you 
could get back to me on it, I would appreciate it.

                    ELIMINATION OF RESEARCH EARMARK

    Last year, there was a request for $10 million. That 
request has been virtually eliminated in this particular budget 
request. That request was for examination of particular 
species, including small woodland species, anadromous fish 
species, as well as upland species fish.
    Since the money was requested last year, I assume there was 
a perception there was a need. Now that money has been cut, I 
wonder what the current perception is and how that changed. Has 
the work been done or is this just a change in priorities?
    Mr. Bosworth. I would say it is more of a change in 
priorities. It is not necessarily a view that the work being 
done was not needed; it is really more of a redirection of 
priorities towards some things like the Forest Inventory and 
Analysis Program and some other research priorities as well.
    Mr. Hinchey. You will get back to me with some details on 
that? I would appreciate it.

                    ROADLESS AREA CONSERVATION RULE

    I would like to talk a bit about the roadless program and 
ask a bit about where that is going because there is some 
evidence that causes me, and some others, to be concerned about 
the direction we are taking.
    The Roadless Area Conservation Rule, which was issued by 
the previous Administration, was the result of the most 
extensive public rulemaking process in the history of the 
country. The rule sought to set aside 58.5 million acres of our 
last wild national forest lands. Almost immediately in this 
Administration, the policy's implementation was delayed. Then 
there was a suit brought by the timber industry. The 
Administration refused to defend the suit and the Federal judge 
granted the timber industry's request for an injunction to 
prevent that rule from taking effect.
    I also understand that the Administration has removed the 
moratorium preventing new road building in undeveloped national 
forests and that the Administration has eliminated protections 
for more than a dozen national forests in this regard, 
including the Tongass National Forest. This forest is the 
Nation's largest old-growth forest and the Forest Service is 
now planning timber sales in areas that would have been 
protected.
    Last Friday, the Forest Service proposed a timber sale of 8 
million board feet on approximately 500 acres in the Tongass 
National Forest. This proposal includes five miles of new road 
construction in southeast Alaska. According to what was 
published in the Federal Register, ``Approximately 65 percent 
of proposed sale units are located within inventoried roadless 
areas on Wrangell Island.''
    My question is, how is the USDA fulfilling its promise to 
protect roadless areas? Are there currently any protections in 
place for roadless areas, and what is the current status of 
roadless areas 1,000 to 5,000 acres in size? Is there any 
inventory going on? Wasn't the Administration going to 
reinventory those areas?
    Mr. Bosworth. From the time the decision was made on the 
roadless conservation plan, a number of lawsuits were brought 
against the plan, something like nine lawsuits. Some were 
brought by States, some by various interests. We lost the case 
in Idaho and got an injunction preventing us from implementing 
the plan.
    Mr. Hinchey. Did the Administration defend against any of 
those suits?
    Mr. Bosworth. I would say yes. That is the only lawsuit we 
actually have been to court on. We lost. Subsequently 
intervenors have appealed to the 9th Circuit and there has been 
no decision from there.

                         RESERVED TIMBER SALES

    Shortly after we lost the lawsuit, I sent a letter to our 
regional foresters telling them I wanted to hold to myself any 
decisions to enter any roadless areas, except for those 
exemptions allowed in the Roadless Conservation Rule.
    Mr. Hinchey. The rule promulgated by the previous 
Administration?
    Mr. Bosworth. Right. So we used the same exemptions that 
were in there. If it fell under those, I would allow them to 
make that decision. The only other exception was for recently 
completed forest plans, plans that did evaluate roadless areas. 
Those decisions could be made locally rather than me making 
those decisions. We subsequently put that in an interim 
directive and that is still our policy right now.
    I have had no requests from any regional forester to enter 
roadless areas. The only time a decision like that would be 
made would be ones where they either had the exemption or they 
had a recently revised forest plan.

                 TIMBER SALE ON TONGASS NATIONAL FOREST

    The Tongass Forest is one that has a forest plan completed 
just a couple of years ago. About 90 percent of the Tongass is 
roadless, so just about any activity they do would probably end 
up being in some of those roadless areas. The Tongass Forest 
has made some decisions to enter roadless areas but they have 
not implemented any of those decisions at this time. That is 
because of another court case we have in the Tongass.
    Mr. Hinchey. The proposal that came out last Friday, the 
one for this 8 million board feet of sale in the Tongass, is a 
proposal you anticipate going where?
    Mr. Bosworth. I don't know that specific one but my 
expectation is that was a decision they believed was within 
their authority to do based upon the Tongass National Forest 
Plan but the fact we have an injunction on that forest about 
entering any roadless areas, they wouldn't be able to implement 
it. They made the decision but won't be able to implement it 
until the judge completes the evaluation.
    Mr. Hinchey. You propose not going into roadless areas but 
this proposal calls for the construction of five miles of 
additional road?
    Mr. Bosworth. That sounds reasonable.
    Mr. Hinchey. Is that something you would encourage?
    Mr. Bosworth. For those forests that have a completedforest 
plan where they did the public involvement, went through the forest 
planning process and decided there are certain areas they would enter, 
then I am okay with the forest making those decisions.
    I am not okay with entering these areas, the bulk of them 
roadless areas, without me making the decision, they have a 
recently completed forest land and thoroughly evaluated the 
roadless characteristics in that particular area in an open, 
public manner.
    Mr. Hinchey. You are going to look specifically at the 65 
percent of the proposed sale units located within roadless 
areas on Wrangell Island?
    Mr. Bosworth. Probably I will have to get back to you for 
the record on that because I don't know the specific sales on 
Wrangell Island.
    Mr. Hinchey. My information is that the sales proposed on 
Wrangell Island, 65 percent of the proposed 500 acres, is in a 
roadless area which would require roads to be built. Based upon 
what you have been saying, that this 65 percent would be off 
limits, you wouldn't propose going in there.
    Mr. Bosworth. Since the Tongass Forest has a recently 
completed forest plan, where they evaluated the roadless 
characteristics, they made decisions at that time to allow 
roads to be built in some roadless areas. If they are within 
the scope of that forest plan, then I would allow them to go 
forward. I don't have to make that decision myself, they can 
make those decisions if it is within their forest plan.
    Mr. Hinchey. Based on the information you have at this 
moment, you are unable to answer the question with definition, 
so you will get back to us on the full answer?
    Mr. Bosworth. Correct.

                       ROADLESS AREA INVENTORIES

    Mr. Hinchey. With regard to the current status of roadless 
areas 1,000 to 5,000 acres in size, is there any sort of 
inventory going on with regard to roadless areas of that size? 
I understood the Administration was going to reinventory those 
areas.
    Mr. Bosworth. I don't think we have ever had an inventory, 
so we wouldn't be able to reinventory. We have never had an 
inventory of roadless areas other than the inventory we did 
about 15 years ago which was 5,000 acres and larger. That is 
what we refer to as our inventoried roadless areas.
    When we had a moratorium put on about three or four years 
ago about entering roadless areas, we also talked about areas 
that were 1,000 acres and adjacent to some of these larger 
inventoried areas. We wanted to treat those differently than 
standard operating procedure.
    That has been a problem. We don't have an inventory and it 
would be very difficult to inventory things smaller than 5,000 
acres on the 193 million acres. Just to define the shape, the 
size, you can have two roads a quarter of a mile apart parallel 
to each other for several miles and that might total 1,000 
acres. Yet you can throw a rock from one road to the other. It 
is very difficult when you get down to those small acres to try 
to do a reasonable inventory.
    We do ask the forest to do their forest plans by using the 
road analysis process to evaluate their transportation system. 
They need to look at the roadless values of any area that 
doesn't have roads in it before they make any kind of decision 
to build a road. We have very few miles of road we are 
proposing to build in fiscal years 2002 or 2003.

                     NATIONAL FOREST MANAGEMENT ACT

    Mr. Hinchey. I understand the Forest Service is expecting 
to issue proposed changes in the National Forest Management 
Act, which are the regulations by which you implement that Act. 
This governs the local forest planning process.
    A draft of those changes in regulations was circulated in 
June. That draft indicates the Forest Service is considering 
rolling back any of the ecological safeguards built into the 
forest planning process. Can you tell me where this process 
stands and what kind of amendments you are going to propose or 
implement?

                DRAFT REVISIONS TO PLANNING REGULATIONS

    Mr. Bosworth. Let me make a few comments and I will ask 
Sally to add to those because she has been tracking it very 
carefully.
    I believe the regulations that came about a year ago, need 
to be changed. The reason I believe they need to be changed is 
because it would take us forever to complete a forest plan. It 
would be very difficult, when you read those regulations, for 
any person in the field to understand when and how they could 
complete the work in order to complete the analysis. There is 
no end to how much you might keep wanting to do. They needed to 
be redefined and to be more concise about the expectations.
    I was a forest planning staff officer at one time and 
worked through the development of a forest plan. You need to 
have rules more specific than those were. The principles behind 
that rule of sustainability, the principle of collaboration 
with the public and maintaining biological diversity, using 
science as a basis for our decisions, those principles will 
still be in the new regulations we are working on.
    The draft that might have been circulated last June could 
have been one of many drafts that different groups and staffs 
in the Forest Service were looking at. We have lots of 
different proposals, thoughts and ideas. It will be rolled out 
and somebody will pick it up and view it as the agency's 
position at that time. That is not correct. We haven't come out 
with a position at that time.
    Mr. Hinchey. I was not referring to some internal document 
that was being submitted from one group to another internally. 
This was a draft plan circulated internally for everyone's 
review and comment. It wasn't just something that somebody came 
up with and was putting out there for some reaction. This was 
an actual draft plan that was circulated.
    Ms. Collins. We had an internal draft, several internal 
drafts that we circulated. It was really the point in the 
process where we were trying to generate some different ideas. 
We have a lot of planners out there and a lot of people like 
Dale and me who have written forest plans, have implemented 
forest plans for years and have a lot of experience and also 
some frustrations with pieces of that 1982 regulation.
    We were watching what was in that 2001 rule and really 
fearful of some of the requirements, exacerbating some of these 
analysis paralysis concerns we have. We really were interested 
in exploring some different ideas, so a lot of those got kicked 
around and were reviewed internally in a number of draft 
documents which is probably the one you looked at.
    We feel we have a lot of input now and we have a draft 
coming out this spring in the next couple of months and a final 
we hope by the fall. I think what will happen and what you will 
see is that these principles Dale talked about will be in 
there. Many of the principles in the rule from last year will 
be there but a lot of the process requirements that were 
inthere will not be in the regulation. They didn't belong in the 
regulation in the first place as far as I was concerned. Some of that 
will just be incorporated in some internal direction.
    We are feeling really good about where these regulations 
are coming out and what they will be able to do for us.
    Mr. Hinchey. You expect that in the spring sometime?
    Ms. Collins. Yes.
    Mr. Bosworth. In most cases now, to do a forest plan has 
taken us 8 to 10 years to do a 15-year forest plan. In some 
cases, that number is increasing. It doesn't make sense to be 
putting that kind of dollars and time into trying to develop a 
forest plan that is going to last that period of time.
    As an example, when I was regional forester in the 
Intermountain Region of the Forest Service, I signed a plan for 
a national forest. Subsequently, I transferred to the Northern 
Region and spent four years there as regional forester and then 
came back here just in time to evaluate the appeals made on my 
decision four years earlier. That is not a good process when 
four years later I show up and I have to recuse myself. I can't 
review my own decision although I know what my answer would 
have been. It is not a good process when it has taken that long 
and that much time, energy and effort to work through these 
things. That is what we are trying to correct.
    Mr. Hinchey. We will look at the draft with great interest 
and eagerly anticipate it.
    Mr. Chairman, I wonder if I might continue for another 
couple of minutes since you and I are the only ones here or 
shall I stop now?
    Mr. Skeen. You can have two minutes or do you need more 
than that?
    Mr. Hinchey. Two or three. Thank you.

                          MAINTENANCE BACKLOG

    On the roads, the budget indicates the Forest Service will 
conduct a lower level of road maintenance and decommissioning 
in the upcoming fiscal year than the current fiscal year. Given 
the enormous backlog and need for road maintenance, I wonder 
why the Forest Service isn't requesting more money for this. 
According to the budget, the current backlog of road 
maintenance exceeds $5 billion. This is a $3 billion reduction 
from previous estimates. I wonder how that happened. How is it 
the road maintenance backlog decreased by $3 billion over the 
course of last year?
    Ms. Collins. One of the things we were talking about a bit 
ago is that we have an overall maintenance backlog of 
everything from roads and bridges to culverts to buildings, et 
cetera, of about $13 billion. Sometimes the categories of those 
get mixed up. What we have down here for roads and bridges is 
something between $5 and $6 billion. That is the number we are 
using right now.
    I think it is just sometimes the numbers are different 
because the categories are mixed.
    Mr. Hinchey. I understand that but I am talking about the 
distinction between this year's budget request and last year's 
request. Last year, it was $8 billion, this year it is just a 
little over $5 billion. I am wondering how that $3 billion 
reduction occured?
    Mr. Bosworth. My understanding was we were about static, 
about current in terms of those dollars, so we need to sort 
through that.
    Mr. Kashdan. There are really two issues I hear in your 
question. One is what is the road maintenance program we are 
requesting for the fiscal year. If you take both the 
conservation strategy as well as the regular road maintenance 
strategy, it is very flat, very similar. However, when you do 
weigh it as Sally noted, the backlog as I explained to Mr. 
Wamp, the annual maintenance has quite a disparity. The annual 
maintenance level to avoid further increasing the backlog, 
there is quite a disparity.

                     DEFERRED MAINTENANCE INVENTORY

    There are also a couple of factors that make the inventory 
of deferred maintenance change. As Sally noted, there are 
figures as high as $13 billion. Some of the factors that enter 
into it, some figures you hear are direct cost, some include 
overhead and, also, the inventory is enhancing in its quality 
annually. So as we conduct a greater inventory, that figure 
gets refined. What is contained in the present budget 
justification is probably the best refinement of that deferred 
maintenance backlog. Then you do need to address some overhead 
on top of that.
    Mr. Hinchey. I am still not clear about this. It is still 
kind of a mystery to me but we will continue to pursue it and 
see if we can come to some understanding of exactly what 
happened.
    Mr. Bosworth. We would be happy to meet with you or your 
folks, try to go over it in a real detailed way if you like.

                          TIMBER SALES PROGRAM

    Mr. Hinchey. One last thing. Each year the Forest Service 
spends over $1 billion to prepare and offer timber sales on 192 
million acres of the public land it manages. Despite the high 
value of this commodity, the Forest Service fails to recover 
the cost of the program. This is no reflection on you, this is 
something that has existed for a long time. The taxpayers 
subsidize these timber companies to the tune of about $400 
million each year.
    According to the General Accounting Office, serious 
accounting and financial reporting deficiencies precluded GAO 
from making an accurate determination of the total Federal 
costs associated with the timber sales program.
    The timber sales program is something that interests me a 
great deal. I am trying to figure out what is going on with it, 
whether or not it makes any economic senses, and how we 
continue to lose money on the sale of a commodity that is very 
valuable.
    I am going to ask some questions that you will not be able 
to respond to now in details but if you would kindly get back 
to us, I would appreciate it.
    First of all, how can we justify requesting an increase in 
funds for timber sales when we have not completely accounted to 
the Treasury for what we are doing with regard to timber sales 
and we have this big gap?
    Shouldn't we be responsible for reporting on the fiscal 
impacts of the timber sale program, how exactly is this going, 
whether we are making money on it, what its purpose is, and how 
this is working out?
    For example, when will we have available to us the public 
costs associated with the timber sale programs that occurred 
over the course of the last three fiscal years?
    Mr. Bosworth. Let me talk in general and make sure we get 
specific answers for the record.
    The timber sale program over the years has changed 
significantly. At one time, we were selling upwards of 12 
billion board feet of timber and we sell about 2 now. At least 
60 percent of the timber sales is for purposes other than 
providing forest products. We are doing it for fuels reduction, 
habitat improvement, certain wildlifespecies or for some 
restoration purposes. There are other reasons why we do it. We look for 
the lowest cost approach to achieve those land management objectives.
    There are a number of tools we might use in order to 
achieve those objectives. It might be a service contract where 
we pay someone to go in and remove some material to get the 
conditions correct. We may do it with Forest Service crews. We 
may use stewardship contracts which we have gotten authority in 
the last couple of years to experiment with. And we may use a 
timber sale as a tool to accomplish that if a timber sale will 
actually achieve that.
    In many cases, the cost of achieving land management 
objectives is going to be more than the material there is worth 
but we want to accomplish certain objectives on the lands so we 
want to use the least-cost method. In some cases, the timber 
sale is the least-cost method but it still cost more than the 
value of the material out there.
    There is another segment of the timber program: our purpose 
is to provide raw material for the people of this country as 
well to hopefully get a return to the Treasury. That is a 
different segment.

                          FINANCIAL ACCOUNTING

    We do have problems with our financial accounting. We are 
in the process of fixing that. I believe at the end of this 
fiscal year, we will be able to get a clean audit opinion. As 
we get our financial management program in better shape, we 
will be able to give more specifics in terms of individual 
programs and their cost, and what benefits we are getting.
    Mr. Hinchey. There are two concerns here. First, we are 
concerned about the trees on public land, particularly old-
growth forest and maintaining that. These are absolutely unique 
and they ought to continue to be not cut and sold. The 
maintenance of these old-growth forests and other lands 
publicly owned is of great concern.
    Secondly, there is the simple market situation. Most of the 
timber in America is on privately owned lands. I think we have 
to be careful about what we do to interfere with the market 
mechanisms and the market costs of timber on privately held 
lands as well.
    Those are two things that we have concerns about. I 
appreciate and thank you for your answers to these questions.
    Mr. Chairman, thank you for your consideration.
    Mr. Skeen. Thank you for your testimony today.
    This hearing is now adjourned.
    [Questions and answers for the record follow:]

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                                         Wednesday, April 10, 2002.

                           OVERSIGHT HEARING

                FISH PASSAGE BARRIERS AND PACIFIC SALMON

                               WITNESSES

TOM THOMPSON, DEPUTY CHIEF, NATIONAL FOREST SYSTEM, U.S. DEPARTMENT OF 
    AGRICULTURE
NINA R. HATFIELD, DEPUTY DIRECTOR, BUREAU OF LAND MANAGEMENT, U.S. 
    DEPARTMENT OF THE INTERIOR
PETER A. BISSON, RESEARCH FISH BIOLOGIST, USDA FOREST SERVICE, PACIFIC 
    NORTHWEST RESEARCH STATION, OLYMPIA, WASHINGTON
BARRY T. HILL, DIRECTOR, NATURAL RESOURCES AND ENVIRONMENT, U.S. 
    GENERAL ACCOUNTING OFFICE

               Opening Remarks of Acting Chairman Taylor

    Mr. Taylor [assuming chair]. We will bring the subcommittee 
to order. We welcome each of you to this hearing. This hearing 
was requested by my good friend, Mr. Dicks, who is Ranking 
Member on the subcommittee. I will let him go into the hearing 
more in detail.
    We have two panels. First, we have Dr. Peter A. Bisson, who 
is a Research Fish Biologist with the Forest Service, who will 
set the stage, and then Barry Hill of the GAO will explain 
their recent work. We are glad to have you, since GAO is under 
my subcommittee, and we get to see each other a lot of times.
    The second panel will include Deputy Directors for the 
Forest Service and the BLM, who will explain their programs. I 
encourage the witnesses to be brief.

                      Opening Remarks of Mr. Dicks

    Mr. Dicks, would you like to make a statement?
    Mr. Dicks. Thank you, Mr. Chairman. I would like to start 
by thanking you and Chairman Skeen for holding this hearing 
today on the GAO report that I requested dealing with fish 
passage barriers, known by some as culverts.
    I look forward to the opportunity to examine the findings 
in the report more fully, and am expecting a thorough response 
by the Federal agencies.
    I am deeply troubled to learn the extent of the problem on 
both Forest Service and BLM lands in the Northwest. The GAO 
findings were staggering. Efforts to restore fish passage may 
ultimately cost over $375 million and take decades.
    The report goes on to show that the agencies have not made 
sufficient funds available to do all the culvert work 
necessary, primarily because road safety is always put before 
resource protection, even though this is, in my judgment, a 
clear violation of the Endangered Species Act.
    What this ultimately means is that unless we separate these 
two functions and devote dedicated funds to resource 
protection, the problem will only worsen.
    My region has been dealing, as I mentioned, with the 
Endangered Species listing for many years on the Columbia 
River. Now the salmon and steelhead listings on the coast and 
in Puget Sound are the first fisheries ESA listings to ever 
affect a major urban area.
    The region is acting responsibly, and Congress has helped 
by expanding existing conservation programs, boosting agency 
staffing, and creating an entirely new West Coast salmon 
recovery initiative.
    Congress has come to the aid of the region in its attempt 
to comply with the Federal Endangered Species Act. What this 
GAO report shows, however, is that some of our Federal agencies 
under the jurisdiction of this subcommittee are not complying 
with the law to protect these species.
    Recovering salmon is complicated, and this GAO report 
highlights only one impediment to their recovery; but it is an 
important one. The agencies have already identified nearly 
2,600 fish blocking culverts, an estimate that more than twice 
that number may actually exist, so we may be talking 5,000, not 
2,600. I find this unacceptable, when we know how to fix them.
    It goes on to show that often the State and Federal 
environmental permitting process slows culvert repair. Surely, 
we should be able to streamline permitting, when a culvert is 
blocking all fish passage.
    Even when the agencies do fix or replace them, there is 
almost no monitoring or evaluation of the completed projects.
    Mr. Chairman, having served on this subcommittee for 25 
years, I am keenly aware of the budget problems faced by the 
Land Management Agencies in their attempt to deal with their 
backlogs. Only a few weeks ago, we were told by the Forest 
Service that the roads backlog is anywhere between eight to 
thirteen billion dollars.
    But we cannot continue the current practice of pitting road 
safety against resource protection on our road systems, where 
we have Federally-listed endangered species.
    I look forward to working with both the Forest Service and 
the BLM to craft a solid plan to direct funds, prioritize these 
projects, and put in place a thorough monitoring system that 
ensures that any money we spend actually pays off and aides in 
fish passage.
    Finishing and replacing these culverts is ultimately the 
most cost effective thing we can do for these declining stocks. 
Dr. Bisson, in his testimony, states the dramatic effect this 
can have in restoring badly needed habitat.
    So again, thank you, Mr. Chairman, for holding the hearing. 
I appreciate the opportunity to bring this matter to the 
attention of our subcommittee, and I look forward to working 
with you to find a solution to this pressing issue.
    Mr. Taylor. Thank you, Mr. Dicks.
    Dr. Bisson, if you will summarize your remarks, we put it 
all in the record.

                    Opening Statement of Mr. Bisson

    Mr. Bisson. Thank you, Mr. Chairman and members of the 
subcommittee. Thank you for the invitation to brief you on the 
importance of improving fish passage at road crossings.
    I am Dr. Peter Bisson, and I am a research fish biologist 
for the Forest Service's Pacific Northwest Research Station in 
Olympia, Washington. I have been asked to provide a scientific 
perspective on the importance of this issue. This is a summary 
of my statement, which is attached to Mr. Thompson's testimony.
    I would like to make several points. First, habitat losses 
are widespread, affect all aquatic species, and have 
undoubtedly contributed to salmon declines, as well as 
thedeclines of many other species nationwide. Road crossings that block 
the migrations of adult and juvenile salmon are part of the problem.
    Given the present state of scientific knowledge, it is 
impossible to relate salmon declines precisely to each 
potential cause.
    Pacific salmon have been extirpated from approximately 40 
percent of their native range south of the Canadian border, and 
migration barriers have played a major role in excluding them 
from historical spawning and rearing areas. The most obvious 
blocks are mainstem dams, such as Grande Coulee and Hells 
Canyon in the Columbia River Basin.
    The significance of other types of blocks is less well 
known, but nonetheless important, because there are so many. 
These include small dams, tide gates, and impassable culverts.
    Water quality problems such as low flow, high temperature, 
or water pollution can also obstruct fish migrations. So there 
are many types of blocks, ranging from large to small.
    My second point is that road crossings are often a problem 
for fish in small streams, because engineering options favor 
culverts over bridges. Species that prefer small streams, such 
as coho salmon, steelhead, and cutthroat trout may be 
particularly vulnerable, while others remain relatively 
unaffected.
    Third, culverts may pass large adult salmon, but not 
juveniles. Impassable culverts result from fish being unable to 
enter them at a suspended outfall, shown on the side by the 
photograph on the left; from excessive water velocity in the 
culvert, caused by a steep gradient; from water in the culvert 
being too shallow, also as shown in the photograph on the left; 
and from the culvert being obstructed by debris.
    Many culverts were originally engineered to permit adult 
fish to pass upstream. Adult salmon are strong swimmers, and 
can jump several times their body length. So they are often 
able to swim through otherwise impassable culverts.
    But juvenile salmon and other species are much weaker 
swimmers, and a culvert that passes an adult salmon can easily 
block a small fish. The consequences of keeping adult salmon 
from their spawning grounds are obvious. Less obvious, but 
equally important, are the consequences of preventing juvenile 
salmon from reaching an area needed to complete their 
lifecycle.
    My fourth point is that restoring passage at road crossings 
may be one of the most cost-effective tools in our arsenal of 
recovery options, especially when blocks to migration elsewhere 
in the river system are adequately addressed.
    Improving passage through culverts provides clear benefits. 
Large amounts of high quality habitat can be made available in 
a short time period. Fixing an impassable culvert below several 
miles of healthy stream may be more cost-effective than 
rehabilitating several miles of stream with degraded habitat.
    Permitting access to many streams allows salmon to spread 
the risk among a larger number of spawning and rearing areas, 
thereby rendering the overall population less vulnerable to 
local disturbances.
    Additionally, fish often seek out places of refuge from 
harsh conditions. Young salmon can move considerable distances 
to seasonably favorable habitat, such as a cool water tributary 
in summer or a sheltered floodplain pond in winter. They 
usually pass under several roads to reach these areas.
    Finally, the Forest Service and Bureau of Land Management 
are taking steps to remedy the problem. Decision support tools 
such as ``FishXing'' have been developed jointly by physical 
and biological scientists, to assist engineers in designing 
road crossings that are invisible to migrating fish. These 
tools are widely used by State and private landowners, as well 
as Federal agencies.
    Fixing an impassible culvert in a headwater stream is of 
limited value if there is another block downstream. A 
comprehensive look at fish passage problems throughout entire 
river systems would be of immense help to managers, as they 
sequence projects to do the most good in the shortest time.
    Although it is impossible to forecast how many salmon will 
result from fixing culverts, providing access to high quality 
forested streams will surely be beneficial, especially when 
integrated into comprehensive recovery strategies that address 
the multiple causes of salmon declines.
    This concludes my statement. I will be happy to answer your 
questions. Thank you.
    [The written statement of Mr. Bisson follows:]

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    Mr. Skeen [assuming chair]. If you could please summarize 
your testimony, and then we will have questions.

                     Opening Statement of Mr. Hill

    Mr. Hill. Thank you, Mr. Chairman and members of the 
subcommittee. It is a pleasure to appear before this 
subcommittee to discuss the condition of culverts on fish-
bearing streams in the States of Oregon and Washington, and the 
Federal efforts to identify and restore culverts that are 
impeding fish passage on BLM and Forest Service lands.
    Before I begin, I would like to introduce my colleague. 
With me today is Linda Harmon, who is responsible for 
developing the information we will be presenting today.
    My testimony today will highlight the findings of our 
report, which we issued last November. Specifically, I will 
discuss the following three issues: first, the number of 
culverts that may impede fish passage on BLM and Forest Service 
lands in Oregon and Washington; second, the factors affecting 
the agencies' ability to restore passage through culverts 
acting as barrier culverts; and third, the results of the 
agencies' efforts to restore fish passage.
    Let me start by discussing the number of culverts that may 
be impeding fish passage. According to BLM and Forest Service 
estimates, over 10,000 culverts exist on fish-bearing streams 
in Oregon and Washington. However, neither agency knows the 
total number of culverts that impede fish passage.
    Agency inventory and assessment efforts are ongoing, and 
have already identified nearly 2,600 barrier culverts. However, 
the agencies estimate that there may be, in total, up to 5,500 
barrier culverts.
    Based on this number, the agencies estimate that efforts to 
restore fish passage may ultimately cost over $375 million and 
take decades to achieve.
    Although the agencies recognize the importance of restoring 
fish passage, several factors are inhibiting their efforts. 
Most significantly, the agencies have not made sufficient funds 
available to do all the necessary culvert project work.
    In allocating road maintenance funds, the agencies assign a 
relatively low priority to fish passage projects, because road 
safety is a higher priority than resource protection. As a 
result, the agencies allocate most maintenance funding to 
address their large road maintenance backlogs, rather than 
culvert projects.
    In addition, the often lengthy process of obtaining Federal 
and State environmental clearances and permits to perform 
culvert work, as well as the short seasonal window of 
opportunity to do the work, affects the agencies' ability to 
restore fish passages quickly.
    Furthermore, the shortage of experienced engineering staff 
limits the number of projects that the agencies can design and 
complete. Currently, each barrier removal project generally 
takes one to two years from start to finish.
    Finally, I would like to quickly summarize the results of 
the agencies efforts to restore fish passage. The Forest 
Service and BLM completed 141 culvert projects from fiscal year 
1998 through August 1st, 2001. These projects removed barriers 
to fish and opened up an estimated 171 miles of fish habitat.
    Neither agency, however, knows the extent to which culvert 
projects ultimately result in improved fish passage, because 
neither agency requires systematic, post-project monitoring to 
measure the outcomes of their work. The agencies say they do 
not systematically perform monitoring because of limited 
funding and staff availability, and because they assume that 
culverts built using current standards should allow fish 
passage.
    State and local entities using these same standards, 
however, require systematic post-project monitoring to ensure 
that they use the most effective methods for improving fish 
passage under various conditions.
    Oregon's monitoring results, for example, indicated that 
retrofitting culverts with devices that slow the flow of water 
effectively restore fish passage.
    Without such systematic monitoring, neither the Forest 
Service nor BLM can ensure that the Federal monies expended to 
improve fish passage are actually achieving intended results.
    On the basis of the information developed during our 
review, we recommended, and both agencies agreed, to develop 
guidance for systematically assessing completed barrier removal 
projects to determine whether they are improving fish passages 
intended.
    Mr. Chairman, this concludes my testimony. I will be happy 
to respond to any questions that you or other members may have.
    [The information follows:]

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                        CONFIDENCE IN ESTIMATES

    Mr. Skeen. Mr. Hill, do you have much confidence in the 
Forest Service and BLM estimates of funding needed to repair 
the culverts?
    Mr. Hill. The confidence will grow as they complete their 
assessments. Right now, it is just an estimate, based on, in 
the case of the Forest Service, they have completed their 
assessment, but they are still analyzing the data and inputting 
it into the computer; and the BLM is continuing their 
assessment as part of their watershed analysis.
    So once those assessments are complete, they should have a 
firm figure of the number of barrier culverts, and then I think 
the estimate will be more precise. But right now, it is looking 
like it is going to be approaching $400 million, based on the 
estimates they have got right now.

                          CULVERT REPAIR SITES

    Mr. Skeen. Dr. Bisson, tell us about the specific places, 
in your experience, where culvert repair has aided fish 
habitat.
    Mr. Bisson. Mr. Chairman, the improvement of fish passage 
along mainstream log-haul roads has opened up many areas along 
the flood plains of our major river systems in the Pacific 
Northwest to juvenile fish, entering them to spend the 
wintertime.
    Thirty years ago, these places were under appreciated. Now 
because of improvements of fish passage along mainstream haul-
road culverts, fish now have access to riverine ponds, beaver 
ponds, and other areas that are important wintering areas for 
the fish. This has resulted in significant improvements in 
their survival.
    Mr. Skeen. Mr. Dicks?

                        SALMON RECOVERY EFFORTS

    Mr. Dicks. Dr. Bisson, you are heavily involved with the 
salmon recovery planning in the Northwest. Can you explain a 
bit about how this issue of culverts fits into the broader 
scope of all salmon recovery efforts?
    Mr. Bisson. Many of the so-called last best places in the 
Pacific Northwest for salmon are located on Federal lands; many 
on Forest Service and Bureau of Land Management lands. These 
are the areas that are expected to anchor recovery of wild 
salmon populations over time. Having access to these places is 
critical.
    Also, as populations and other areas that are targeted for 
restoration begin to improve, having connectivity between these 
last best places and newer areas is very important.
    Mr. Dicks. Do you consider culverts that impede fish 
passage on Federal land a serious problem?
    Mr. Bisson. Yes, I think they are a very serious problem. 
The GAO report, along with the agency's own inventories, 
indicate that there are well over 1,000 to 2,000 miles of 
streams blocked from access, many of which have excellent 
habitat.

                           REPAIRED CULVERTS

    Mr. Dicks. How many culverts were fixed between 1998 and 
2001? Was it like 120?
    Ms. Harmon. 141.
    Mr. Dicks. 141, thank you, and because of that, 171 miles 
of fish habitat was restored?
    Ms. Harmon. Yes.
    Mr. Dicks. I mean, if you extrapolate that, the 141, if you 
could fix 5,000 of these, it would be an enormous amount of 
habitat restored in the Northwest for fish. I cannot think of 
anything else that we could do that could have a more dramatic 
effect than just fixing these culverts, which we know how to 
do. Do you agree with that?
    Mr. Bisson. I agree with that.
    Mr. Dicks. Does the GAO agree with that?
    Ms. Harmon. Yes, sir, we do.
    Mr. Dicks. If there can be additional dollars found to help 
salmon, would you agree that expanding our efforts to repair 
culverts and restore fish passage would be beneficial; and I 
think you have just answered that.

                          INTERAGENCY EFFORTS

    Given your experience with interagency work, what are the 
best ways to ensure that efforts made by the Forest Service and 
BLM will compliment actions taken by the State, the county, and 
private landowners?
    Because I think your point is, you have got to look at the 
entire watershed. These roads crisscross over the rivers, and 
you have got to kind of take a watershed approach. You have got 
to kind of prioritize which of these watersheds are the most 
crucial, which ones have the endangered fish, which ones have 
the best chance of restoring significant runs.
    I think sometimes we pay all the attention to endangered 
species, rather than trying to protect the healthy runs that we 
have also got. I mean, do you not have to look at the whole 
watershed?
    Mr. Bisson. Yes, and three efforts currently come to mind: 
Oregon's plan for salmon, Governor Kitzhaber's plan; 
Washington's Wild Salmonid Policy; and the sub-basin planning 
process now being developed by the Northwest Power Planning 
Council and the Federal Cause.
    These all emphasize the importance of coordination between, 
State, Federal, private, and tribal organizations. That, I 
think, it is critical to making sure we are doing the right 
thing in the right place.
    Mr. Dicks. You know, I recognize that we did not do an 
exhaustive review. Northern California and Alaska should 
probably be included in that. We did not look at all the 
Federal agencies. There are other agencies like the Park 
Service, the Bonneville Power Administration, and others in the 
Northwest, that also have roads and have similar issues.

                        CULVERT RESTORATION WORK

    Can you discuss what steps needs to be taken to ensure that 
culvert restoration is done properly, and that completion is 
actually translates into fish utilizing the new habitat?
    Mr. Bisson. I believe that it is monitoring the results, 
not only the effectiveness of replacing a culvert or fixing a 
road crossing, to make sure this is done correctly, and 
ensuring that fish actually use the new habitat that is 
provided for them.
    As we move further along the line towards validation 
monitoring, I think that it will become important to plan those 
longer-term monitoring efforts into the whole funding process, 
as these go forward.
    Mr. Dicks. Mr. Hill, I was pleased to see that completed 
GAO report on culverts. I requested the report because I felt 
this was a substantial problem that needed to be looked at more 
closely. Your report seems to concur.

                            SCOPE OF PROBLEM

    Can you comment, in general, on the scope of this? Well, I 
think you have done that in your statement.
    In your opinion, there is no way to solve this, without 
devoting more resources to the problem, right? I mean, there's 
no way to fix this, without money.
    Mr. Hill. It would require additional funding and effort, 
in order to address the culvert problem, yes.
    Mr. Dicks. Did you assess culverts that are not considered 
barriers, but whose small size or poor design may prevent 
juvenile fish from passing through?
    Ms. Harmon. Well, we really relied on the agencies' 
assessments. What we did is ask both BLM and Forest Service 
about the culverts that they had on their lands, how many they 
considered barrier culverts, and how many they had actually 
assessed to date; and then what their total estimated amount 
was. So we were hoping that they were including all fish 
bearing streams.
    Mr. Dicks. You know, this is a pretty bad story, and the 
agency is the one that provided the data, right? So, I mean, it 
could be, if we went out and really looked closely at the other 
5,000 culverts or the 10,000, that there may be certain 
deficiencies there. Because they do not really know, because 
they have only been doing this, I think, in response to this 
effort.

                           AGENCY ASSESSMENTS

    Mr. Hill. I think you would have to ask the agencies what 
they included in their assessment. Our understanding is that 
they were looking at fish bearing streams and culverts, and 
trying to identify those that would present some type of a 
problem or a barrier to the fish.
    Mr. Dicks. Well, it is just my judgment, and I am going to 
yield here to the other members, that without a major effort 
here, this will just go on and on and on.
    And they are not the only culprits here. The State of 
Washington, I am sure, and the State of Oregon on their 
forestlands have similar problems. I am sure there are people 
in the private sector that have problems.
    But it just jumps out at you that when you look at the 
ability to restore habitat for these fish and other species, 
that fixing these culverts, and having a more coherent plan to 
do that, just has to be done; and I think there is a major 
problem with the road deterioration, also. That is another 
factor that contributes to the problems with fish.
    So I appreciate your being generous, Mr. Chairman, with 
time. I will be ready to come back, when the others finish with 
their questions.
    Mr. Skeen. Mr. Taylor?

                      LENGTHY RESTORATION PROJECTS

    Mr. Taylor. I will pose this question to Mr. Hill at GAO. 
Why does it take so long for the restoration projects? Now I 
heard it mentioned a moment ago about the permits. Is that the 
only reason, or is that the sole reason?
    Mr. Hill. No, the permits are one of the reasons. That is 
kind of the up-front work that has to be done; getting the 
various permits and complying with the various environmental 
requires, the NEPA, the ESA Section VII requirements.
    But once they get beyond that stage, there is a need for 
engineers who can properly design these culverts. Apparently, 
we have been told there is a shortage of those types of 
engineers and that type of expertise.
    Then a complicating factor is a so-called window of 
opportunity. When they actually do the construction, there is 
only a short window of time, usually a two- or three-month 
window of time, when they can actually go in the stream and do 
the work, without doing any damage or having any adverse 
effects to the fish or the habitat.
    So if there are delays in any part of this process, if they 
had delays in getting that permit or getting an engineer to 
design it and they missed that window of opportunity, then it 
is going to slip for like nine or ten months, before they can 
actually do the work.

                         TIMELINES FOR PROJECTS

    Mr. Taylor. Could you break it down, timewise? It takes how 
much time to get the permits and follow the permits? You put 
forth three areas there. I just wondered how you proportion 
that.
    We cannot change nature, so the last one, we have very 
little control over. The first two are more bureaucratic items 
that we might be able to change. Design seems like you are not 
designing the San Francisco bridges. You are doing culverts. It 
seems to me like you would have some choices that could work on 
small mountain roads.
    I am from a mountain area in the East, and it is the same 
thing. We do not have fish migrating, but we have to do a lot 
of road work and culverts are essential.
    Ms. Harmon. What we did is, we took a look at 56 of the 
completed projects, and we did a time line out for each of the 
different projects.
    So just to get the environmental clearances, we found that 
it ranged from four weeks, all the way up to 113 weeks, with an 
average of 31 weeks.
    Doing the design work, that ranged anywhere from four weeks 
on the short end, to 78 weeks, on the long end, with an overall 
average of 19 weeks. Then the actual construction of the 
culverts or the restoration of it ranged from four weeks to 61 
weeks, with an average of 10 weeks.
    So even if everything worked perfectly by the average, we 
are still talking basically at least 60 weeks.

                          NEPA PROCESS DELAYS

    Mr. Taylor. You may or may not know this. But in 1995, Mr. 
Dicks and I worked on a salvage bill. We came up with this 
situation. We operated for two years, and the Clinton 
Administration signed the bill, provided it closed in two 
years, at the end of 1996. So it was in place for most of 1995 
and 1996.
    We had a situation where NEPA and SOHO were followed, but 
it was quick action with one appeal with a Federal Judge. We 
went through that in a short period of time, because salvage 
would not wait for the time.
    Could we do something like that maybe in this area, to 
bring it down? I think we were doing about, what was the number 
of weeks, do you recall, on the salvage legislation, how much 
time it took to go through a NEPA process and the other?
    There was less than three months, and maybe less than a 
month, because the Trial Court, I think, had to respond in 
about three weeks. So the whole action was probably within 90 
days or less.
    If we could do something like that, would you think that 
would be appropriate?
    Mr. Hill. It is hard for us to respond to that. We did not 
do any detailed work, looking at what were some of the 
problems, or some of the things that lengthened the process to 
get these clearances.
    But one would hope that both BLM and Forest Service will be 
analyzing their experiences in doing these culverts and finding 
out just what is taking the time, what is causing the delays, 
and work together with the responsible agencies to iron out 
some of the things that can be ironed out.
    If there are things that are required that they can't 
administratively iron out, then they would hopefully come back 
to Congress and ask for some type of relief.
    Mr. Taylor. There is more bureaucracy, or it seems to be, 
in the delay than there is in the construction time.

                          RIVER-WIDE APPROACH

    Let me ask you a question, Mr. Hill. Dr. Bisson and others 
have stressed the need for taking a comprehensive river-wide 
approach to setting priorities for culvert road repairs. Do you 
agree?
    Mr. Hill. Absolutely, and I will give you an example. 
Imean, if you fix a barrier culvert upstream, and there are barrier 
culverts downstream, the fish are not going to get through to get 
upstream to that culvert.
    As Mr. Bisson said, you have to determine where the habitat 
is, what streams the fish are using, and then where the 
barriers are; and then deal with it in a watershed basis.
    Mr. Taylor. Do you see these happening in the two States 
that we are referring to here? Do you see that approach 
happening in these two States or not?
    Mr. Hill. I am going to let Ms. Harmon answer that. But I 
will say, I think the approach we are seeing right now is, with 
the limited funds they are working with, I mean, they are 
prioritizing the work at the District or the furthest level.
    I think they are attempting to do this on a watershed 
basis, but it is very difficult, I guess, with the amounts of 
funds that they are working with and the amount of work that 
has to be done.
    I do not know if Ms. Harmon has any additional perspectives 
on this.
    Ms. Harmon. Right, we found that both BLM and the Forest 
Service were trying to work very closely with the States and 
the local watershed councils.
    BLM and Forest Service participated in some of the local 
watershed councils. They were trying to work to find out what 
are the highest priority culverts that they could start looking 
at, start assessing, and really work towards that.
    Mr. Taylor. Thank you, I appreciate that.
    Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Nethercutt.
    Mr. Nethercutt. Thank you, Mr. Chairman.
    Welcome to all of you. I appreciate the committee holding 
this hearing, and having a chance to discuss this issue a bit.

                         INVENTORYING CULVERTS

    You folks took an assessment of Oregon and Washington, and 
you also did an assessment of BLM and the Forest Service. Are 
you convinced that these agencies have come up with a plan for 
setting priorities and inventorying the culvert problems and 
the passage problems? Did you come to any conclusions in that 
regard, as to how they should inventory and track?
    Ms. Harmon. We did not really assess it from that 
perspective. BLM has been doing a lot of their assessments on 
the watershed basis, as a result of the Pacific Northwest 
Forest Plan, trying to look at it and what are the highest 
priorities.
    The Forest Service started their culverts assessment back 
in fiscal year 1999, because they recognized that it was 
potentially a problem, and they did want to systematically go 
out and look at all 19 forests that they had up there in that 
area.
    So they have gone out. They have finished assessing the 
culverts, but they are still massaging the data to get it in 
their database. So they are chipping away at it, but it is a 
long process. There are only certain times of the year that 
they can actually access the culverts to go look at them.
    Mr. Taylor. Wait a minute, would you yield on that point?
    Mr. Nethercutt. Sure.
    Mr. Taylor. Are you saying that they cannot go out and even 
look at the culverts?
    Ms. Harmon. Well, sometimes, like in the real high 
mountains, if it is covered with snow, from a weather 
standpoint.
    Mr. Taylor. Oh, I see.
    Mr. Nethercutt. So it is seasonal. They cannot just go as 
they desire. They have got to wait for the weather.
    Mr. Taylor. There is no law that says they cannot.
    Ms. Harmon. Oh, no, no, no. [Laughter.]
    Mr. Nethercutt. Do you know when those reports will be 
forthcoming? Probably, we can talk to them, too.
    Ms. Harmon. Well, what they had told us, BLM said that it 
may still be several years, because they doing it on a 
watershed-by-watershed basis.
    Mr. Nethercutt. Do they prioritize those watershed 
analyses?
    Ms. Harmon. As I understand it, that is the focus out 
there. Then the Forest Service will be getting all the 
information into their database, and then hopefully using that 
to set their priorities.
    Mr. Nethercutt. Your assessment is that it will cost $375 
million?
    Ms. Harmon. That was the agency's assessment.
    Mr. Nethercutt. How much confidence do you have in that 
assessment? Did you analyze that?
    Ms. Harmon. No, no, it was just from a standpoint of where 
there were still so many culverts that had not actually been 
assessed at that point in time. We could not have given it any 
particular reliability checks.
    Mr. Nethercutt. I see; yes, of course.

                        PRIORITIZING ASSESSMENTS

    Do you believe the agencies know where some of their 
highest priority work will be, where they need to go, what they 
need to do, and when they need to do it? Did you come to any 
conclusions with respect to that?
    Ms. Harmon. Well, I think that where they are doing the 
assessments on a forest-by-forest basis, they are actually 
fairly familiar with their landscapes and are able to identify 
what the highest priorities are within the individual forests.
    Now if you go from a regional standpoint, I do not know 
whether they have really done anything to say whether the 
culverts on one forest are a higher priority than another.
    Mr. Nethercutt. I have one final question, and then I know 
there are other members who want to ask questions.

                        MONITORING CULVERT WORK

    You stressed the failure of these Federal agencies to 
monitor their culvert work, as contrasted with the active 
monitoring schemes implemented by Washington and Oregon. Why do 
you think their assessments are inadequate and the monitoring 
is inadequate?
    Mr. Hill. Well, they just do not have any systematic 
monitoring effort. The reason they gave us was, there is just a 
shortage of staff and a shortage of funds, and all the staff 
and funds they have are really going towards assessing the 
extent of the problem and actually doing corrective work on the 
culverts, themselves.
    Mr. Nethercutt. We have got a dilemma, do we not; to figure 
out how to get money into the system to allow them to do it, 
and then make sure there is a system in place to have them do 
it.
    Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Kingston.
    Mr. Kingston. Thank you, Mr. Chairman.

                        STAKEHOLDERS IN PROCESS

    I wanted to find out the stakeholders in this process. Do 
you have a cooperative group that is helping you now, or are 
they fighting you the way they fought the timber business?How 
is it shaking out on the politics of getting the job done?
    Mr. Hill. You would have to direct that to the Forest 
Service.
    Mr. Kingston. That is not a problem that you guys looked 
at, I guess, right? You did not have to identify the 
personalities, and the conflicts and the costs?
    Mr. Hill. We did not do that in this job.
    Mr. Kingston. Dr. Bisson, do you want to speak on that?
    Mr. Bisson. There are a lot of zeroes in the salmon 
recovery budget for areas like the Columbia Basin. The stakes 
are high-because so many areas of the region are affected by 
salmon recovery actions.
    The GAO report did not address those, but as Representative 
Dicks said in his question earlier, fixing barriers at road 
crossings that allow access to high quality habitats is a win/
win situation.

                         COST ESTIMATE ACCURACY

    Mr. Kingston. The $375 million, is that accurate; is that 
conservative? That is not an Arthur Anderson amount, is it? 
[Laughter.]
    Mr. Hill. It is a number that was provided to us by the 
Forest Service and BLM. We do not verify it. It is actually 
their number. You might want to direct that question to the 
agencies.
    Mr. Kingston. And it is only for the two States, too.
    Thank you.
    Mr. Skeen. I am sorry to do this. You are very vibrant 
people, and you have been a great help to us.
    Mr. Dicks. Mr. Chairman, I would just like to compliment 
the GAO again for the great job they did on this.
    Mr. Skeen. We compliment you.
    Mr. Dicks. They worked hard, and we thank Dr. Bisson for 
his good statement.
    Mr. Skeen. With the culverts in New Mexico, it is going to 
be a real fashionable place to fish. [Laughter.]
    [Recess.]
    Mr. Skeen. You all are very persistent and stayed. We 
appreciate that and thank you very much.
    Now we will move on to the Forest Service, Tom Thompson, 
and Nina Hatfield of the BLM. Welcome to the dungeon. 
[Laughter.]
    Mr. Skeen. Mr. Thompson.

                   Opening Statement of Mr. Thompson

    Mr. Thompson. Thank you, Mr. Chairman. It is a pleasure to 
be here this afternoon and appear before you to discuss the 
topic of fish passage in culverts. I am Tom Thompson. I am the 
Deputy Chief for the National Forest System.
    The Administration strongly supports efforts to improve and 
maintain passage for fish and other aquatic organisms. The 
Forest Service, BLM, and the General Accounting Office have 
identified critical shortcomings in our existing fish passage 
systems.
    We look forward to working with your committee and others 
to accomplish the needed culverts replacement work and restore 
passage.
    In recent years, the area of greatest interest and focus 
has been the Pacific Coast, from Northern California to Alaska. 
However, the aquatic passage issue is national in scope and 
impacts every geographical region of the country. Healthy fish 
and aquatic populations are vital to our Nation providing 
sources of food, recreation, and cultural value to our people.
    Even though there were few roads that existed in the early 
history of the Forest Service, we now have more than 380,000 
miles of system road on the national forests.
    Fish passage efforts, early on, were mainly focused on 
adult needs, and this was between 1950 and the mid-1970s. When 
we were installing culverts, we were trying to provide for 
adult fish passage. This was especially true in the Pacific 
Northwest, where Pacific salmon life cycles were largely 
understood.
    Current inventories of culverts installed during this era 
show that 80 percent continue to pass adult salmon today.
    By the 1970s, when we identified problems with adult fish 
passage, we took corrective measures. Legislation and 
regulatory opportunities required aquatic passage be developed. 
The Clean Water Act and the National Forest Management Act were 
instrumental in increasing consideration for providing fish 
passage.
    In the late 1970s and 1980s, Forest Service research 
efforts were greatly expanded and focused on improving the 
understanding of fish migration and behavior, engineering 
solutions to slow water under roads, and stream hydrology.
    Engineering and biological research resulted in a much 
improved knowledge of fish passage design criteria and the 
development of open bottom structures, such as identified in 
the picture to your left, showing a culvert before and one 
after, where you have an open bottom structure that is more 
natural in its function. That particular picture was taken on 
the Twist Ranger District.
    Unlike culverts, these open structures do not constrict the 
natural stream channel nor negatively affect fish passage.
    Biological research also showed the need to provide passage 
for juvenile fish and other less vigorous swimming aquatic 
organisms such as amphibians.
    Hydrology research improved our understanding of discharge 
regimes for small streams and land management-induced changes. 
Culvert sizing methodology was greatly improved, as well.
    Research results were transferred to technical and 
professional field employees through the development of 
handbooks, training manuals and programs, and other aids, such 
as the CD ROM that Dr. Bisson showed before.
    After decades of learning and hard work, we are now able to 
consistently design and construct stream-crossing structures 
that assure fish passage and survive major storm events. There 
will be more advances, I am sure, in the future, as we continue 
to study aquatic invertebrates and other fish species, 
particularly those found in areas of high biodiversity, such as 
the southern States.
    In recent decades, the Forest Service has emphasized 
replacing culverts that did not pass aquatic organisms. We have 
incorporated culvert replacement as a priority in our aquatic 
restoration program. Many culverts were replaced through timber 
sale contracts, special flood repair programs, and regular 
appropriations.
    We have also developed and implemented a road analysis 
process. This process insures that our transportation road 
system is periodically assessed for current and future needs.
    In 2000/2001, the GAO examined fish passage issues on BLM 
and Forest Service-managed lands in the States of Washington 
and Oregon. Based on the information provided by the Forest 
Service, the GAO report identified culvert replacement needsin 
the States of Oregon and Washington at $331 million, and estimated the 
work would take decades.
    Since that time, the Forest Service has continued to 
inventory additional culverts for passage concerns. We have 
also conducted inventories in Alaska, Northern California, and 
other geographical areas.
    The table that is included in my written testimony shows 
the status of culvert evaluations and estimates as to the total 
identified and estimated needs that we currently have as of 
this date.
    [The information follows:]

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    Mr. Thompson. The grand total for just Alaska, the Pacific 
Northwest, and the Pacific Southwest is now estimated to be 
6,326 culverts replacements that have been assessed or are in 
need of replacement.
    Culvert inventories are in progress or planned in all other 
regions, as well as the non-anadromous portion of Region 5. 
Region 1, which is the northern region; Region 5, which is 
California; Region 6, which is Oregon and Washington; and 
Region 10, which is Alaska, are planned to all be completed by 
fiscal year 2004.
    The President's 2003 budget for the Forest Service has 
proposed approximately $240 million for the road construction 
and maintenance budget line item, $15 million for the 10 
Percent Roads and Trails Fund, and approximately $51 million 
for infrastructure improvement.
    It is estimated that $65 million of these funds will be 
used to fund critical deferred maintenance for roads. The 
remaining funds will be used for timber sale roads support, 
critical deferred maintenance for trails and facilities, 
critical annual road maintenance needs, and indirect costs. 
Region 6 estimates $12.5 million will be utilized on culvert 
replacement activities in fiscal year 2002.

                      STRATEGY TO ADDRESS CULVERTS

    Our strategy to address this culvert replacement backlog 
includes continuing the culverts inventory and roads analysis 
process, and prioritizing replacement sites so public benefits 
are maximized. We will continue to replace culverts that 
provide the greatest benefit first, both in terms of miles of 
stream opened up and improving the status of Federally listed 
and sensitive species.
    As referenced in the GAO report and the Statement of 
Action, we will implement a post-project monitoring protocol 
for new and existing culvert sites. Improving our understanding 
of passage needs for other aquatic needs is also a priority.
    The Forest Service is committed to improving aquatic 
organism passage by working cooperatively with Congress, Tribal 
groups, State and local governments, interest groups, private 
landowners, and regulatory and other land management agencies 
in a total watershed approach. The Administration fully 
supports healthy aquatic ecosystems, and recognizes the great 
benefit to people and communities.
    Thank you for holding this important hearing. I would be 
pleased to answer any questions from you or members of your 
subcommittee.
    [The written statement of Mr. Thompson follows:]

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    Mr. Skeen. Thank you very much.
    Ms. Hatfield, if you could please summarize your testimony, 
and then we will have questions for both of you.

                   Opening Statement of Ms. Hatfield

    Ms. Hatfield. Thank you very much, Mr. Chairman.
    Good afternoon, Mr. Chairman and members of the committee. 
We thank you for the opportunity to give the views of BLM 
regarding the GAO's final audit of culverts, which are barriers 
to fish passage on BLM and Forest Service lands in Oregon and 
Washington.
    The Bureau appreciates the GAO efforts in compiling and 
integrating useful information that focuses attention on the 
important subject of restoring fish passage through barrier 
culverts to help restore endangered fish stocks.
    We concur with the report's conclusion that the Director of 
the BLM and the Chief of the Forest Service should develop 
guidance for systematically monitoring completed fish barrier 
projects, to determine whether these projects are achieving 
their intended purpose.
    We are coordinating with the Forest Service on such an 
approach to monitoring, and we have also initiated planning 
with the Federal and State agencies, as well as non-
governmental agencies, on a research program to help refine 
relationships between culvert design, environmental factors, 
and fish passage, to support monitoring culvert replacement 
projects.
    We are also working with the State of Oregon and the Corps 
of Engineers to streamline permit processes, in order to 
shorten the time needed to implement a barrier culvert project.
    In addition, the Bureau, along with the Forest Service and 
U.S. Fish and Wildlife Service and the National Marine 
Fisheries Service, have streamlined the ESA consultation 
procedures for listed fish species.
    The ESA consultation on barrier culvert projects is now 
completed on a region-wide basis, rather than for individual 
projects.
    Most importantly, we are continuing to remove, replace, and 
upgrade culverts as a part of our fish habitat and watershed 
restoration efforts. In doing this work, we are using the 
developments in fisheries research and engineering to design 
more fish-friendly structures, particularly for juvenile fish.
    Certainly, a key factor for us is working with our 
partners. To that end, the managers in BLM are working with the 
Forest Service, and the States of Oregon and Washington, to 
engage in project prioritization with State agencies, our 
Federal partners, local governments, and private landowners, to 
identify the passage projects that will have the greatest 
cumulative benefit to fisheries and aquatic resources.
    As outlined in the report, BLM has approximately 2,800 
culverts existing on fish-bearing streams in Washington and 
Oregon, and approximately 700 of those are estimated to be 
barriers to fish passage.
    Between 1998 and 2001, we completed 68 fish barrier removal 
projects, opening access to about 95 miles of fish habitat. 
Since that report was completed, the BLM has completed an 
additional 31 projects. In fiscal year 2002, we plan to replace 
another 65 culverts that will improve fish access to 72 
additional miles of habitat.
    I would like to thank the GAO and the committee for 
focusing attention to the issues of culverts and fish passage 
in the Pacific Northwest. BLM is certainly committed to 
addressing this problem of fish barrier culverts, and looking 
to how we can monitor our work to improve our effectiveness and 
efficiencies.
    I would be happy to answer any questions you may have.
    [The written statement of Ms. Hatfield follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Skeen. Mr. Thompson, can you please talk about your 
overall agency backlog in deferred maintenance, especially in 
roads.

                   DEFERRED ROAD MAINTENANCE BACKLOG

    Mr. Thompson. Mr. Chairman, the deferred maintenance 
category of road funding needs is about $5,300,000. This is 
deferred maintenance. This is work that has not been done, that 
needs to be done.
    The road system, 380,000 miles of road, incurs just normal 
wear and tear. Equipment, culverts, bridges, over a lifespan of 
20 or 30 years, wear out and need to be maintained.
    The deferred maintenance category is one that totals a very 
significant amount of money. Obviously, it will take many, many 
years to accomplish.
    I believe that when you look at this particular issue of 
culvert replacement, it is also one that times change. As I 
said in my testimony, when these culverts were first put in, 
they were intended to pass adult fish. Later on, we have come 
to the knowledge that we also need to be worried about the 
smaller life stage.
    So obviously, there are cumulative costs, as science finds 
more answers, and our maintenance costs increase, as well.

                 FISH PASSAGE OUTSIDE PACIFIC NORTHWEST

    Mr. Skeen. Mr. Thompson, to what extent do you have similar 
problems in other parts of the country, besides the Northwest?
    Mr. Thompson. Well, as I had indicated briefly, all across 
the country, in all geographic areas, there is a need to be 
concerned about aquatic systems and movement of organisms, 
whether it be fish, amphibians, or other creatures that demand 
that ecosystem. The more natural appearing and the more access 
that those critters have up and down the stream, the better off 
you are.
    In particular, the southern part of the country probably 
has the highest biodiversity of any parts of the United States. 
Even though they do not have anadromous fish, they have a 
significant need to be concerned about providing access across 
roads, and culverts provide that access.
    In the Rocky Mountains, there is obviously no anadromous 
fish, but there are certainly needs for resident trout and 
other species that need to move up and down the system.
    Mr. Skeen. In New Mexico, we have the trout over there, but 
we have not thought about the business of cars driving over 
culverts. They are better fisherman than people that have been 
driving off to the side.
    Mr. Dicks?
    Mr. Dicks. Thank you, and again, thank you, Mr. Chairman, 
for holding the hearing. I appreciate the Forest Service being 
here and the Bureau of Land Management.

                         STATE OF UNDERSTANDING

    Mr. Thompson, I am a little bit struck, and maybe Dr. 
Bisson, we ought to get you back up here. You know, what did 
you guys think these fish did when they went upstream? Did you 
not think they were going to lay their eggs and do their thing, 
and then there are going to be little fish coming down the 
stream, to go back out to the stream?
    I mean, if the Forest Service did not understand that in 
the 1970s, I am somewhat astonished. You said that three 
separate times here today. I mean, what did you think these 
fish were going to do up there? What is the design of the 
culverts?
    Mr. Thompson. The design of the culverts, at the time, was 
to create an ability for the adult fish to move.
    Mr. Dicks. Well, we wanted them to go up the stream for 
what purpose, Mr. Thompson?
    Mr. Thompson. To spawn.
    Mr. Dicks. And then what happens after they spawn? The 
little fish come down the stream.
    Mr. Thompson. That is exactly right.
    Mr. Dicks. We did not take that into account? Are you 
saying that seriously?
    Mr. Thompson. I am telling you what the state of the 
knowledge was, and where the design criteria were, back in 
1970/1960s and in the 1950s.
    Mr. Dicks. Dr. Bisson, would you come back up?
    Can we have him come back up, the scientist here from the 
Northwest?
    Do you agree with that? Is that accurate?
    Mr. Bisson. Mr. Thompson's statement about design criteria 
for culverts is largely correct. These structures were designed 
to pass the 50-year high flow event, and to allow adult salmon 
to pass upstream, which meant that there could be usually no 
more than a one foot waterfall at the outfall of the culvert, 
enough depth in the water for an adult to swim through it, and 
not so long or so steep that it could not make it.
    Now that would have gotten the adults up, but it would not 
have passed the juveniles that wanted to get up to cooler 
water.
    Mr. Dicks. The juvenile could not go back up.
    Mr. Bisson. It could not go back up. The juvenile could 
come down, but it just could not go back up.
    Mr. Dicks. Is that what you were saying? I thought you were 
saying that they were not thinking about getting the juveniles 
down.
    Mr. Thompson. No, I was not saying that.
    Mr. Dicks. Well, what are you saying?
    Mr. Thompson. I just said they were for passage of adults 
up the stream.
    Mr. Dicks. So it was incidental that we want to get the 
fingerlings back out to the ocean, to keep the fish runs going?
    Mr. Thompson. Well, going downstream, I do not think was 
the serious problem. It is going upstream, and juveniles do 
move upstream, too.
    Mr. Dicks. I know the juveniles do. But you are saying that 
the adults were going upstream, but there was no thought about 
getting the fish back, once they reproduced.
    Mr. Thompson. I think the thought was that there was not 
the understanding that juveniles also need to go upstream and 
back down.
    Mr. Dicks. All right, I just did not quite connect here.
    Mr. Thompson. The understanding was that the fish are going 
to come down the stream, the juveniles.
    Mr. Dicks. Yes, but you want to design it so that the 
adults can go up, and the juveniles can come down. The way you 
said it, or at least the way I understood it, three separate 
times, was that you only were concerned about getting the fish 
up the stream, and were not concerned about getting the 
juveniles back down.
    Mr. Thompson. Well, I apologize, if I was misunderstood.
    Mr. Dicks. Now this is the problem. The problem is, the 
Forest Service and the BLM have not paid much attention to 
this. We just went back, according to GAO, and looked at the 
numbers. According to GAO, about 29 percent of the funding used 
in Region 6 to address culverts was Federal 
HighwayAdministration funding.
    However, that was all emergency funding to respond to 
flood-related damage. Another 19 percent was ``Job-in-the-
Woods'' funding. That is not in the fiscal year 2003 request. 
Roads and trails funds, which funded 29 percent of culvert 
work, can be diverted to other road projects.
    Can you elaborate on how, with these unreliable and 
inconsistent sources of funding, you are able to plan and 
complete projects; or is it like you suggested in your 
statement, you take care of all these other things, and 
whatever little dribble is left, that goes into culverts?

                         BACKLOG OF REPLACEMENT

    Mr. Thompson. Well, there is a significant amount of 
backlog, obviously. The number of culverts that need replaced, 
as I said, is a very large number. We are trying to set forth a 
series of priorities, so that we replace those that are the 
highest priority, that have the greatest benefit.
    The culvert on the picture to the right is one that was 
done in partnership with seven different partners. It was done 
with the 10 percent road and trail funding. That particular 
replacement was a $95,000 project.
    You know, I think there have been significant efforts to 
replace the high-priority ones. But when you look at the full 
picture, there is a significant backlog of projects that need 
to be done, and it is ever-changing.
    In particular, that project, if you look at that culvert to 
the left, there is a very high likelihood that when that 
culvert was put in a number of years ago, the stream channel 
was up, and perhaps did provide passage. But natural erosion in 
the stream and hydraulic changes have probably made it 
impassable. So it is a matter of keeping that kind of dynamic 
in the picture.
    Mr. Dicks. And it is hard to know, when you do not do any 
monitoring or assessment.
    Mr. Thompson. I would say that certainly not in a 
systematic way, as we are now. We probably were not doing the 
inventory in the past that we needed to do.
    But there were efforts being made to inventory on a range 
of districts, enforced, and certainly there were replacements 
being made over the years, and certainly, there have been many 
accomplishments. These were not to the extent that we see now 
that we should have been doing.
    Mr. Nethercutt. Norm, will you yield for a question on 
this?
    Mr. Dicks. Yes, of course.
    Mr. Nethercutt. What is the date on the before picture; do 
you know, sir?
    Mr. Thompson. No, I do not.
    Mr. Nethercutt. Is there a range, a guesstimate; is it the 
1970s or the 1960s or the 1930s; or do you know for sure?
    Mr. Thompson. I don't know the year of the first 
installation.
    Mr. Nethercutt. Thank you, sir; thanks, Norm.
    Mr. Dicks. But this is not rocket science. We know how to 
do this, right? It is just a lack of money, is it not, or lack 
of priority by the Forest Service?
    Mr. Thompson. Absolutely, as far as the lack of priority, 
it is a priority; but there are a lot of other priorities, as 
well, and it is a matter of having enough resources to 
accomplish all the things that you all and we would like to do.
    Mr. Dicks. So you have got 5,500, in your own estimate now, 
of these barrier culverts blocking hundreds of thousands of 
miles of habitat; and habitat is one of the crucial issues for 
these fish. Is that not correct?

                    SPIRIT OF ENDANGERED SPECIES ACT

    My view is, and you might want to argue about this, that 
either a crime of omission or whatever, this is a violation, at 
least in the spirit of the Endangered Species Act, because you 
are stopping those juvenile fish from getting back down; or you 
are stopping the adults from going up and getting suitable 
habitat, where they can lay their eggs and reproduce, because 
of these barriers. Is that not true?
    Mr. Thompson. It certainly is a priority.
    Mr. Dicks. No, but is not what I just said true, though, 
that you are denying these fish habitat that they really need 
to survive?
    Mr. Thompson. On a stream that a fish cannot get up, 
obviously that is true.
    Mr. Dicks. So I think, you know, that I am very concerned 
here, that the thinking of the regulators, the Forest Service 
and the BLM, by not fixing these culverts are, in spirit at 
least if not in actual fact, and I would love to see this 
litigated, violating the Endangered Species Act, which you, as 
a Federal agency, are supposed to be supporting.
    Mr. Thompson. As I said in my testimony, this last year, we 
have spent $12.5 million in replacing culverts in the Pacific 
Northwest in Oregon and Washington.
    Mr. Dicks. Let me ask you something. If you spent $12.5 
million every year, how many years would it take us to fix 
5,500 culverts, and how many new culverts would be a problem 
during the time we were fixing those with $12.5 million a year?
    Mr. Thompson. You have identified the problem. It would be 
many years.
    Mr. Dicks. Hundreds?
    Mr. Thompson. It would be a long, long time.
    Mr. Dicks. Thousands?
    Mr. Thompson. Longer.
    Mr. Dicks. Why do you not try to calculate it for the 
record?
    Mr. Thompson. I will not even begin.
    Mr. Dicks. Well, for the record, go back and see what you 
can do.
    Mr. Thompson. We will give you an estimate.
    Mr. Dicks. You have admitted to decades.
    Mr. Thompson. It would be many decades.
    Mr. Dicks. Many decades? So we are not going to get this 
problem fixed.
    Here we are, spending a lot of taxpayers' money. 
Congressman Nethercutt and I worked diligently to try to get 
the resources for the salmon recovery programs in the 
Northwest.
    Here, we have got this obvious way to do it. This is low-
tech. I mean, we will get you a law that says you can do it, 
because it is a pro-environment step. I mean, we ought to be 
able to figure out a way to do it, more than just two or three 
months a year.
    I mean, you know, I understand those fish used to be able 
to move down the river. But when you have got these culverts, 
they cannot. So if you are going to do something about fish, 
you have got to fix this problem.
    I mean, this is ridiculous. For the Federal Government, who 
is sworn to protect these fish under the Endangered Species 
Act, we should be setting an example from the State of 
Washington and the State of Oregon.
    In fact, they do a better job on this than we do. They are 
pretty pathetic, too, but they are not as pathetic as the 
Federal agencies, in terms of dealing with this problem, 
because they, at least, go out and do the monitoring.
    Do you do any of this, where you try to slow the water 
down, so that the fish have a better chance of getting down the 
river?

                          BAFFLES AND CULVERTS

    Mr. Thompson. Do you mean, through baffles and culverts?
    Mr. Dicks. Yes.
    Mr. Thompson. We have done some baffles in some places. 
They work fine. In other places, they can create problems by 
slowing down water and trash building up. You know, it just 
depends. It is a tool, but it is not a solution to all 
problems.
    Mr. Dicks. Do you really want to testify that you guys do 
not go out and do any monitoring or assessment, because you do 
not have personnel? Do you at least do some?
    Mr. Thompson. We have a protocol right now that we are 
working with the BLM, with the States of Oregon and Washington, 
looking at the needs; looking at all life cycles, all parts of 
the life cycle of the fish; looking at all flow regimes, and 
looking at hydrological needs.
    We are working very hard to do the inventory. The inventory 
numbers that I just gave to you are an example of using that 
protocol to come up with the needs for replacement of culverts.
    So you can say, we are 85 percent complete with Oregon and 
Washington, as far as looking at every possible culvert that 
needs to be replaced. So we have the inventory. You have 
identified the problem, and the problem is----
    Mr. Dicks. It is the money.

                    COMPREHENSIVE WATERSHED ANALYSIS

    Mr. Thompson. That is a big part of the problem. It is also 
making sure that we work together in a collective sense, as has 
been previously talked about, by a watershed, and not just 
replacing a culvert by itself, but looking at the entire 
stream, to see if there are any other ownerships that also have 
culverts, that might not make the one that we are replacing 
effective, because there is a problem downstream.
    So looking at it in a comprehensive way is exactly what we 
are trying to do. I think we have some very good examples of 
success in that regard.
    Mr. Dicks. That is watershed analysis.
    Mr. Thompson. That is watershed analysis.
    Mr. Dicks. How many of these ESUs have you guys done, in 
terms of watershed assessments?
    Mr. Thompson. I could not tell you the number. We certainly 
could get it to you.
    Mr. Dicks. Yes, would you put it in the record?
    Ms. Harmon. Certainly.
    Mr. Skeen. Mr. Nethercutt?
    Mr. Nethercutt. Thanks, Mr. Chairman. I just want to follow 
this line of questioning for a second. It is interesting.
    I would agree that there is an argument that can be made, 
that there is an obligation on your part, the Federal 
Government, to follow the Endangered Species Act and try to 
protect species.
    On the other hand, it seems to me that it is a catch-22. 
You have a bit of an impediment to even getting into the 
stream, into the water system, in terms of following the 
Endangered Species Act requirements procedurally to do what you 
need to do to fix the problems, so you can comply with the ESA 
to fulfill your obligation to protect species.

                        PROCEDURAL STREAMLINING

    I heard you testify about streamlining ESA procedures. My 
sense is that they are not streamlined enough. It seems to me 
that we ought to be thinking about, for this purpose, enhancing 
fish habitat at all levels. We ought to have a waiver of some 
kind, and waiver is a tough word, but I would prefer it, so 
that you can do the work necessary; and in the name of Habit 
and Fish Recovery, the Endangered Species Act could be waived 
and should be waived, under fair circumstances.
    Is that something you would support?
    Mr. Thompson. Well, I certainly think that streamlining and 
looking at ways of moving through the process in a much more 
timely way is the objective.
    In this particular case of culvert replacement, once we 
have identified a need, it is a matter of prioritizing that 
need, and setting up an appropriate schedule to attack the most 
serious problems first.
    In some cases, perhaps if we have a certain amount of 
capacity, for example, in the Pacific Northwest, we probably 
could use effectively, in a given year, maybe $30 million to 
replace culverts.
    Mr. Nethercutt. Let me stop you. If you look out on the 
road, you know, we could be working on those that need to be 
worked on, three or four years from now.
    Mr. Thompson. Sure, but certainly, the ESA, you know, 
speeding it up and moving through in a more timely manner would 
be very helpful.
    Mr. Nethercutt. I am a bit stunned that it cost $95,000 to 
do that, and maybe that is in my district-to-be, so to speak, 
Okanogan County.
    But I mean, for $95,000, I am sure it is well done. But how 
much of that $95,000 would you attribute to the design 
restrictions or design requirements, or all that goes with 
being able to sign off on a project like that? Would it be 
better for us to think about privatizing that? Could we do it 
for $50,000, instead of $95,000, and get more culverts done?
    Mr. Thompson. I believe the $95,000 figure that I suggested 
for that is basically just the cost of the replacement itself, 
not the indirect costs of planning and design.
    Mr. Nethercutt. What would those be?
    Mr. Thompson. I do not know, but they would be, you know, 
several thousands of dollars, for sure.
    Mr. Nethercutt. Well, half as much, or is it that much?
    Mr. Thompson. I could get that information, but I do not 
have it now.
    Mr. Nethercutt. Maybe you could think through that.
    Mr. Thompson. We have got a lot of information on this one, 
so I can provide it for you exactly.
    Mr. Nethercutt. Maybe I am just missing it, but that seems 
like a lot of money to do that work. But on the other hand, 
given the rules and regulations that you have to follow on road 
construction for a timber sale, I mean, the design requirements 
are high, as I understand it.

                        EASING REGULATORY BURDEN

    I mean, you are sort of building highways out there, and 
maybe it looks like you are building a fish highway there that 
is pretty expensive. Maybe we ought to think in terms of easing 
your regulatory burden, and maybe looking at other ways to get 
more work done, so we can help with that.
    Mr. Thompson. Well, we would certainly be glad to work and 
look at evaluating some kind of a waiver like what youare 
talking about.
    Mr. Nethercutt. You said there is 380,000 miles of road. Is 
that in Oregon and Washington?
    Mr. Thompson. No, that is nationwide.
    Mr. Nethercutt. I was going to say, that made me wonder. 
That is a lot of roads. How much is in Washington and Oregon, 
would you estimate?
    Mr. Thompson. I can probably get that number for you. I do 
not have it, right off the top of my head.

                         PRIORITY PROJECTS LIST

    Mr. Nethercutt. Will you be doing a priority list, and 
maybe I missed this, of where you believe, in our Northwest 
States, they ought to be worked on first instead of second or 
third?
    Mr. Thompson. Yes.
    Mr. Nethercutt. You will be doing that?
    Mr. Thompson. Yes, we will.
    Mr. Nethercutt. How long will it take you to compile that 
list?
    Mr. Thompson. Well, right now, we are pretty much finished 
with our inventories.
    Mr. Nethercutt. That is the 85 percent?
    Mr. Thompson. That is the 85 percent complete. I would 
imagine that within the next few months, we will be able to put 
some pretty good priority on those.
    Mr. Nethercutt. Is that budgeted for in your 2003 budget?
    Mr. Thompson. As far as the analysis, I believe it is.
    Mr. Nethercutt. But I cannot recall precisely what budget 
numbers you might have attached to the culvert maintenance and 
repair or updating. Is there a number in there for that?
    Mr. Thompson. I do not have that, specifically.
    Mr. Nethercutt. Do you believe there is one, in either BLM 
or Forest Service budgets?
    Mr. Thompson. I do not know.
    Mr. Nethercutt. Maybe someone could let us know.
    Ms. Hatfield. We have a combination of funding sources that 
we are using.
    Mr. Nethercutt. Transportation money and other things?
    Ms. Hatfield. Well, ``Jobs-in-the-Woods'' money, deferred 
maintenance money, the Secure-Rural-Schools money, to about a 
total this year of about $5.2 million.
    Mr. Nethercutt. On your list of priorities as agencies, 
where does this come in? I mean, how high up the list is it for 
you, as you look at your entire responsibilities, both 
agencies?

                          HIGH AGENCY PRIORITY

    Mr. Thompson. Well, I would say that it is very high. The 
Highway Safety Act forces us to give deference to the 
requirements of that act. As far as a priority, it is an 
extremely high priority; but needs are great, and there are a 
lot of priorities to sort through.
    That, in particular, is the biggest issue, the safety 
considerations on the public roads. I think we have something 
like 80,000 miles of those 380,000 that are actually passenger 
car-driveable.
    So, you know, there are a lot of needs out there for the 
roads. The roads funding is significantly less than it used to 
be.
    Mr. Nethercutt. Do you agree with that assessment?
    Ms. Hatfield. Yes, it is a very high priority for us. Like 
Mr. Thompson, in the Bureau of Land Management, we are trying 
to balance not only the actions we need to take with regard to 
this set of endangered species, but also endangered species on 
lands that we manage all over the West.
    But it is a very high priority for us, and we have put a 
lot of effort into working on these kinds of projects over the 
last 20 years, and we are continuing to do that. I think the 
things that we are doing in terms of trying to streamline the 
permitting process is indicative of how we are trying to make 
it go more smoothly.
    But I would also point out that it is not only the ESA 
permits and consultation that we have to do, but it is also 
State permits, Corps of Engineer permits, and some other 
processes in there, too.
    Mr. Nethercutt. Is NMFS involved? Are you communicating 
with them?
    Ms. Hatfield. Yes, they have been involved with us in terms 
of the streamlining of the consultation process. We have a 
programmatic agreement with them.
    Mr. Nethercutt. I would just yield here, Mr. Chairman. But 
I would just end by saying, you know, we in the Northwest, and 
Norm and I know this better than probably anybody, spend 
hundreds of millions of dollars on fish, hundreds of millions; 
Bonneville, PUDs, everybody is putting money into fish.
    It seems like we are not getting the results that we ought 
to be getting. You know, we see instances like this and we see 
other instances where there must be a better way. Maybe it is 
more than money, but we are putting an awful lot of money into 
this effort. The Federal agencies involved are, I think, 
critically important in just circumstances like these.
    So I appreciate the fact that you came here. I believe you 
are trying to address this. We urge you to do so with all great 
efforts, because it is important for us, out our way, so thank 
you.
    Mr. Skeen. Mr. Dicks?
    Mr. Dicks. I have just a couple more here, Mr. Chairman, 
thank you.

                   ACCURATE COUNT OF BARRIER CULVERTS

    It seems like the BLM is somewhat behind the Forest Service 
in terms of getting an accurate count of just how many barrier 
culverts there are out there in the Northwest. Have you made 
any progress since the GAO report came out?
    Ms. Hatfield. Yes, sir. We are continuing to do our 
watershed analysis across the west side of Oregon, and we have 
most of those done. We are, between Districts, somewhere 
between 85 and 100 percent done.
    That constitutes most of the fish-bearing streams that we 
think will have culverts on them that could create barriers.
    Now, there are clearly some other areas of the country that 
we would do some analysis on. But at least with regard to the 
Oregon and Washington area, we have done most of those.
    I might also add, we have doubled the amount, or actually 
more than doubled the amount, of funding that we have put into 
removing these barriers over the last two years. This year, we 
plan to do almost as many projects as we did the three years 
prior to that.
    Mr. Dicks. What did you say, $5.7 million?
    Ms. Hatfield. $5.2 million.

                           NUMBER OF PROJECTS

    Mr. Dicks. How many can you do for that?
    Ms. Hatfield. We are planning to do about 65. So it is 
still a long-term issue for us, but we are certainly trying to 
put effort into it.
    Mr. Dicks. Now Mr. Thompson, you said the Forest Service 
has in its budget about $12.5 million?
    Mr. Thompson. $12.5 million in 2002.
    Mr. Dicks. Yes, this year; how many projects will that do?
    Mr. Thompson. I cannot give you the number, right now, as 
far as the number, but I could get that number for you.
    Mr. Dicks. Yes, put it in the record, would you? We would 
like to know that, like the BLM has laid out here, how many 
projects you can do.
    Mr. Thompson. That was just for Oregon and Washington, the 
$12.5 million.
    Mr. Dicks. Well, you know, yes, just how many projects you 
can do. It is not just where you are going to do them. I mean, 
you know, we realize that it is Northern California, 
Washington, Oregon, and probably Alaska.
    In your testimony, can you explain your chart again with 
the numbers on it? I was having a little difficulty 
understanding this chart.
    Mr. Thompson. Do you have it in front of you?
    Mr. Dicks. Yes, I have got it here.
    Mr. Thompson. It is on page three.
    Mr. Dicks. Yes, let us just look at Alaska.
    Mr. Thompson. Okay, in Alaska, the number of culverts on 
fish streams is 2,016. So there are other streams that may not 
have fish in them.
    Mr. Dicks. Right.
    Mr. Thompson. The next column are the number of culverts 
that were assessed for passage, okay. So that is 1,490. So of 
that 2,016, they have looked at 1,490. The number of barrier 
culverts that were identified on that 1,490 was 1,311.
    Mr. Dicks. So that is close to like 90 percent.
    Mr. Thompson. In Alaska, that is the number of culverts 
that were assessed. Looking at the additional barrier culverts 
that are estimated, given the difference there, they are 
estimating around 1,574 that are identified and estimated to be 
needing a replacement.
    Mr. Dicks. That is out of 2,016. So you are looking at, it 
looks like, about 80 percent.
    Mr. Thompson. And some of those may be very small culverts; 
some of them may be larger culverts. There is a wide range of 
variability between what those culverts might be.
    Mr. Dicks. Now then you would go down to Washington. You 
estimated the number of culverts on fish streams as 1,400, the 
number of culverts assessed for passage as 600, and the number 
of barrier culverts, are you saying it is 100 percent?
    Mr. Thompson. Of those that were looked at----and again, it 
goes back to that juvenile, you know, being able to move 
upstream, that is the major cause of that----there might be a 
little waterfall that the small fish cannot go up.
    Mr. Dicks. So you are saying that in Washington State, you 
have got 1,400 of these culverts on fish streams, and 1,400 of 
them are barrier culverts.
    Mr. Thompson. That is what the inventory is showing.
    Mr. Dicks. So every single one of them has to be fixed.
    Mr. Thompson. That is what this chart is indicating.
    Mr. Dicks. Do you agree with that, Dr. Bisson?
    Mr. Bisson. I have not been to all the culverts, so I do 
not know.
    Mr. Dicks. That is rather astonishing, almost.
    Mr. Thompson. It is surprising to me.
    Mr. Dicks. I would say that if every single one of them is 
a problem, it is very hard for me to understand how you can 
testify that this is a priority.
    You know, I am a Congressman and you are a government 
official, and priorities are determined by where you put your 
money, where your budget is. That is where your priorities are. 
If you are not spending any money on it, then it is not a 
priority. You may say it is an important objective, but it is 
not a priority.
    Mr. Thompson. As I had indicated before, with the culvert 
picture to your left, the indications or one of the reasons 
that so many of the pipes are now not functioning for juveniles 
is because of the heavy rain and runoff from El Nino. As the 
water came out, it has created a small lip at the bottom of the 
culvert. Now on the lower water levels, you know, fish cannot 
get out.
    As I said in my testimony, this evaluation is done for all 
water levels in the stream and all life cycles of the stream. 
So even though it may appear to be a good culvert today, you 
know, when you have low water fall or water levels, it may not 
be.
    So it is a margin of difference, when you are talking about 
juveniles, that is very small. So even though it may have been 
designed and installed properly and everything else, as time 
goes on, it may need replacement. I would assume that is what a 
lot of those are.

                     CONSERVATION SPENDING CATEGORY

    Mr. Dicks. Well, let me ask you both this question. This 
year, the Administration was $120 million short on the 
Conservation Spending Amendment. I mean, if we put in $25 
million to $30 million, and divided it between the agencies, 
kind of based on the need, could you effectively utilize that 
money to accelerate this program and make it a priority?
    Mr. Thompson. Absolutely.
    Ms. Hatfield. We certainly would be able to prioritize, in 
terms of where we can get the best benefit from the moneys 
appropriated to us. In the budget, there are some funding 
sources that we are hoping would help us.
    Mr. Dicks. At least we have got a start in the budget.
    Ms. Hatfield. Right.
    Mr. Dicks. If we added money and gave you a more 
significant program, I assume you would be able to use the 
money effectively and accelerate your efforts to start on the 
highest priority streams, which you have to consult with the 
people in the area, the scientists, and accelerate this 
program. I mean, it is possible to do that, right?
    Ms. Hatfield. Well, we certainly have begun working with 
our partners, in terms of prioritizing where the need is. So we 
have a vision of where the need is, and we certainly have the 
capability to address those. Again, it is a matter of working 
that into other priorities. But with additional money, we would 
be able to do additional work.
    Mr. Dicks. I have no further questions, Mr. Chairman.
    Mr. Skeen. Are there any other questions from anybody else?
    Mr. Dicks. I appreciate your help here. I appreciate the 
witnesses.
    Mr. Skeen. Thank you all for your work today. This hearing 
is now adjourned.
    [Questions for the record follow:]

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                                       Thursday, February 28, 2002.

                 ENERGY EFFICIENCY AND RENEWABLE ENERGY

                                WITNESS

HON. DAVID GARMAN, ASSISTANT SECRETARY FOR ENERGY EFFICIENCY AND 
    RENEWABLE ENERGY, DEPARTMENT OF ENERGY

                   Opening Remarks of Chairman Skeen

    Mr. Skeen. Welcome. We are glad to have you here.
    Mr. Garman. Thank you, Mr. Chairman.
    Mr. Skeen. For the second round hearing today we will hear 
from David Garman, Assistant Secretary for Energy Efficiency 
and Renewable Energy. Thank you, sir.
    Mr. Garman. Thank you.
    Mr. Skeen. We are glad to have you here. Tell us about it.
    Mr. Garman. All right. And I will be brief, to allow lots 
of time for questions and answers.
    Mr. Skeen. We like that, too. [Laughter.]

                    Opening Statement of Mr. Garman

    Mr. Garman. I appreciate the opportunity to come before you 
today and present the 2003 budget request of the Office of 
Energy Efficiency and Renewable Energy. This budget request is 
rooted in, of course, the President's National Energy Plan, the 
first time I have had an opportunity to present a budget to you 
since the National Energy Plan came out. The National Energy 
Plan stresses energy efficiency and renewable energy. As much 
as 54 of the 105 recommendations in the plan pertain to energy 
efficiency and renewable energy.
    Our budget request is split, as you know, between the 
Interior and the Energy and Water Development Appropriations 
bills. As a consequence of the National Energy policy and our 
own strategic program review, our overall budget request for 
fiscal year 2003 is $1.31 billion, which is up $10.3 million 
over the amount appropriated last year. For our Interior 
programs in fiscal year 2003, we request $904.3 million, a 
slight decrease below fiscal year 2002 appropriations, but 
nearly $150 million above last year's request.

                           BUDGET HIGHLIGHTS

    Some of the highlights of our requests are as follows. In 
total for the building technology, State and community sector, 
we are requesting $408.8 million, or a 7.5 percent increase 
over fiscal year 2002 enacted. The large majority of that is 
for grants, of which $277.1 million for weatherization. With 
that money, we hope to be able to weatherize 123,000 homes, 
saving $2.10 for every dollar we spend in the weatherization 
effort.
    The balance of the requested funding in that category, or 
$92.9 million, would be directed toward research and 
development on lighting, windows, appliances, and other 
building elements, building codes, appliance standards, 
training programs and the Energy Star program.

                        INDUSTRIAL TECHNOLOGIES

    For our industrial technologies program, we are requesting 
relatively level funding, with a few exceptions. We have 
requested no funding for the Petroleum Vision program, based on 
the successful completion of the Petroleum Vision and Road Map. 
This was a relatively small $2.8 million program. We believe 
that the petroleum industry should be able to fund R&D for this 
purpose in that area.
    We have requested a $1 million increase for the 
Agricultural Vision program to expand the agriculture education 
initiative, which would support the establishment of a graduate 
curriculum of bio-based products and bio-energy.

                   FEDERAL ENERGY MANAGEMENT PROGRAM

    In our Federal Energy Management Program, we are requesting 
$27.9 million, an increase of $4.5 million over the fiscal year 
2002 enacted level. We believe this funding will help us 
attract between $80 million and $120 million in private sector 
investment through energy savings performance contracts, and 
help the Federal Government be able to meet its energy savings 
goals as required under the Energy Policy Act of 1992.

                           POWER TECHNOLOGIES

    For our power technologies, or distributed energy resources 
programs, we have requested essentially level funding of $63.9 
million. In our transportation technology program, we are 
seeking decreases in our transportation related work in the 
Interior appropriations bill, but increases in some of the 
supporting hydrogen work that is funded in the energy and water 
development bill.

                               FREEDOMCAR

    Our flagship program in transportation funding is of course 
FreedomCAR, which is a partnership to develop technologies that 
will ultimately result in hydrogen fuel cell vehicles that 
require no foreign petroleum or emit no greenhouse gases. For 
fiscal year 2003, we are requesting $150.3 million for the 
entire FreedomCAR program which includes $25.8 million from the 
Energy and Water Development appropriations.

                         POLICY AND MANAGEMENT

    With regard to policy and management, we continue to 
aggressively strive for administrative efficiencies. We are 
requesting $42.7 million for these activities, a $3.7 million 
decrease from the fiscal year 2002 enacted levels. So I think 
that is really enough from me as sort of a broad overview, and 
would welcome any questions that the Chairman or members of the 
Committee might have, either today or after the hearing in 
writing.
    [The written statement of Mr. Garman follows:]

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    Mr. Skeen. You have done a good job today, so we are not 
going to interfere with it. We are pleased to have you, and 
appreciate the fact that you have a good program going and you 
know where you are going with it. We want to help you.
    Mr. Garman. Thank you, sir. I appreciate your support and 
the continuing support of this Committee.

              PARTNERSHIP FOR A NEW GENERATION OF VEHICLES

    Mr. Skeen. We funded the partnerships, as I told you, the 
Partnership for a New Generation of Vehicle programs, since 
1993 through 2002. The goal has been producing energy efficient 
vehicles by 2004. To what extent do we see our investment in 
the vehicles being available for sale by 2004?
    Mr. Garman. You will see tangible results from the 
investment in the Partnership for New Generation Vehicle 
program, most notably in some of the vehicles that the 
President had on display on the south lawn of the White House 
on Monday. Among them was the 2003 Ford Escape, which is a 
light sport utility vehicle that is expected to get upwards of 
40 miles per gallon. It is a gasoline-electric hybrid vehicle. 
It was supported by the power electronics work, the battery 
work, the electric motor work and some of the other work that 
was done under the auspices of the Partnership for New 
Generation Vehicles.
    So this work will be utilized. We are at the point where we 
are seeing it enter the marketplace, and we are looking forward 
to that.
    Mr. Skeen. The FreedomCAR initiative is different from the 
Partnership for a New Generation of Vehicles program?
    Mr. Garman. It is different. The Partnership of New 
Generation Vehicles was of course a 10 year program that was 
slated to end in 2004 without achieving one of its principal 
goals, the achievement of an affordable family sedan that got 
80 miles per gallon. Even though it did not achieve that goal, 
it did achieve, as I indicated before, some of the technologies 
that you will be able to buy in the 2003 model Ford Escape.
    In thinking about the changes we wanted to make to that 
program, of course, through the leadership and direction of 
Secretary Abraham, we are mainly focused for long-term 
approaches that will yield, manifest themselves in the hydrogen 
fuel cell vehicle. We are not going to stop some of the shorter 
term activities, we will still be continuing activities in 
power electronics, batteries, electric motors and some of the 
other things that we expect to see in the market prior to the 
time when hydrogen vehicles are ready.
    Mr. Skeen. When do you project these vehicles will be 
ready?
    Mr. Garman. Hard to say. We have a rigorous technology 
milestone for the next 10 years. These are measurable, highly 
defined milestones. I will give you an example of one of them, 
an electric propulsion system with a 15 year life at 55 
kilowatt hours for 18 seconds, 30 watts/kilowatt at a system 
cost of $12 per kilowatt peak. These are things we can measure, 
we can determine if we are making progress toward these goals. 
If we meet all of our technology goals, between now and 2010, 
we believe we will have the systems and the components that 
come very close to producing a workable, affordable hydrogen 
fuel cell vehicle.
    Now, I do not expect to see commercially available hydrogen 
fuel cell vehicles until somewhat later. Some time in that 2010 
to 2015 time frame, we would have to make sure that we had the 
kind of hydrogen infrastructure to support those vehicles, as 
well as the auto makers would need to make some tough calls 
about commercialization of these technologies. But if we hit 
these technology goals, we think that we will be in a good 
position to make a decision about a truly revolutionary method 
of light transportation.
    Mr. Skeen. Mr. Wamp.

                                HYDROGEN

    Mr. Wamp. Where do we get the hydrogen?
    Mr. Garman. Hydrogen can be made from virtually anything. 
Most of the hydrogen that we make today comes from natural gas 
through a steam reformation process. We are exploring other 
methods of hydrogen production which could include even coal. 
Coal, if we were to be successful in gasifying the coal, 
sequestering the carbon, the sulfur, and the other, if you 
will, bad actors with the coal, in geologic storage where the 
coal came from, we could split the hydrogen off the coal gas 
and get it from that as well.
    Mr. Wamp. Transportation solutions, more hybrid in the 
future? We are going to have to come up with a combination of 
all the technology breakthroughs that we can find and put them 
all together somehow? It is not like one silver bullet 
solution, right?
    Mr. Garman. You are exactly right. I think one of the 
issues we had with the Partnership for New Generation Vehicle 
program is that they were focused on a single car, a single 
vehicle, a family vehicle that got 80 miles per gallon. Our 
focus is more on systems and components. Because you are 
exactly right, we have to put together a suite of different 
systems and components.
    In the near term, hybrids are going to be extremely 
important. That is why we are hopeful that the Senate follows 
the good lead of the House and passes the hybrid tax credit to 
make these vehicles more affordable.

                           ELECTRIC VEHICLES

    Mr. Wamp. We are moving apparently away from electric 
somewhat. Do we have battery problems, environmental problems, 
disposal issues, sources of energy problems? Is that a trend?
    Mr. Garman. I think electric vehicles will play a very, 
very important role in niche applications, neighborhood 
vehicles, small commuter vehicles. But you are right, a pure 
electric vehicle having the kind of range and performance that 
a consumer expects does not appear to be in the offing. Because 
we really have not had dramatic battery breakthroughs that we 
would need to make that happen.
    I think we have all kinds of opportunities for electric-
gasoline hybrids, even grid-connected electric-gasoline 
hybrids, where it would still be a gasoline-electric hybrid, 
but you would plug it in and use more and more of the battery 
and power around town, but still have that capability of having 
the gasoline motor when you wanted to go over the highway.
    Mr. Wamp. In terms of fuel cells and hydrogen vehicles 
being on the ground in 2015, you just used that word, maybe?
    Mr. Garman. Commercially, I do not think so. I think we 
will have lots of demonstrations, maybe in the tens of 
thousands of vehicles in a demonstration capability by that 
time frame.
    Mr. Wamp. Here is what I want you to share, though, because 
I think our professional staff and certainly members that take 
a keen interest in this need to know. I was not surprised to 
see the change in direction. But we need to know if the big 
four are excited about this new direction. Because I always 
felt like with PNGV, they were doing it because it was 
politically correct, but they really never hadtheir heart in 
it. As a result, it just did not happen as far as it should have.
    Here, I think the news you are bringing us today is, this 
is not going to happen very fast, either. I want to know, is 
their heart in it? I mean, really. And I know this Secretary 
knows these guys really well. Is their heart in it? Or is this 
something else we are just going to have to drag them through 
while we continue to build Excursions and super-duper lengthy 
Explorers and everything else. Are we really going to go in the 
direction of new, alternative vehicles?
    I think there is a lot of bipartisan support on this 
Subcommittee for funding breakthroughs to get us there before 
2015.
    Mr. Garman. I believe the auto makers are genuinely excited 
about this. We had an event unveiling FreedomCAR at the Detroit 
auto show in January. I was told, and it has been my own 
observation, that such an event would not have been possible 
two or three years ago. Because quite candidly, the questions 
and concerns of the auto makers, and their belief in our 
ability to deliver on the infrastructure side was such that 
they would not have come together in the FreedomCAR partnership 
two or three years ago.
    Yet they are doing it now, they are doing it 
enthusiastically. And yes, we have had plenty of meetings down 
at the engineer, worker bee levels in the companies, and I 
think they are genuinely excited and challenged by the 
opportunity we face.
    Mr. Wamp. Let me say for the record, too, my home State of 
Tennessee was not even in the automobile business 20 years ago. 
We are now, in a pretty significant way, and have way moved up 
the ladder in terms of production of transportation systems. We 
have gotten into alternative transportation, and are making 
very clean vehicles and exporting them slowly. But we want to 
be in this game. And we have been in the research game on PNGV 
as well.
    But we want to be in the hydrogen fuel cell, hybrid, 
whatever the next breakthrough is. I just want to say that for 
the record, because I think that as the Secretary and yourself 
promote this, the more we can spread the missions around the 
country, the more support there will be, so that this is not 
just perceived as the State of Michigan's alternative to 
cleaner, more environmentally friendly transportation systems 
for the future.
    I do believe right now there is real fertile ground for 
diversifying transportation in this country. A lot of after-
effects of September 12th, one of them is, do we need to 
diversify more the way people get around in this country and 
the systems that take them. So the fields are ripe for us to 
really move in this direction. So I want to encourage that.

                   WEATHERIZATION ASSISTANCE PROGRAM

    While I have the floor, I need to talk a minute about 
weatherization. We had a mild winter, so you do not hear the 
clamor which we hear in some Februaries, pretty noisy around 
here. But that does not mean we should not be really talking 
about this and thinking about this. Again, I hate to be the bad 
guy, but the budget requests are not significant enough to 
invest today for the problems that we will face tomorrow. I 
know we are going to face them.
    And we are going to be back here again, February of next or 
two years from now, saying, did we invest enough to make these 
housing components more efficient and save energy, and now we 
have a problem. We do not have a problem now, because the good 
Lord gave us a mild winter, so far. But what can you say about 
your desire to work with the Subcommittee to increase these 
accounts as much as possible?
    Mr. Garman. Congressman, let me make two very quick points. 
One, I cannot leave the subject of transportation and the role 
of the State of Tennessee without saying this. I know you have 
toured it and I have as well, the power electronics lab at Oak 
Ridge. Power electronics in transportation are a very important 
part of either a long term fuel cell car or shorter term hybrid 
car.
    The power electronics work that has been done at Oak Ridge 
is nothing short of phenomenal. You have power electronics 
components that can out-perform that that is commercially 
available in some of the Japanese hybrids, you have it now. And 
Oak Ridge will continue to play a very important role in 
transportation, regardless of whether it is tilted toward 
hybrids or tilted toward fuel cells, in the short and the long 
term because you have the power electronics expertise.
    With respect to weatherization and the R&D split in 
general, obviously I guarantee you that I will work with this 
Committee and other committees of the Congress. I worked in the 
Congress myself 21 years, and I am a creature of the Congress 
and understand the relative roles of Congress and the 
Administrative Branch in terms of the power of the purse and 
what is said in Article I of the Constitution. So I guarantee 
you that I will faithfully and enthusiastically work with this 
Committee toward that end.
    Mr. Wamp. Just one final note. Back to the other issue, 
there is a tremendous amount of private sector interest in 
investing in these technologies for transportation in our 
region, particularly where I live in the city of Chattanooga. 
It is almost like, if any of the big guys want the small guys 
to invest, we have the people that want to invest in fuel cells 
and breakthroughs for transportation technology, just to try to 
create export manufacturing jobs. Because in our region of the 
country, we have lost a lot of manufacturing jobs.
    We want to try to get ahead, yet we have made a lot of 
money in food products and different service businesses, and a 
lot of our citizens are saying, where can we invest in these 
breakthrough technologies, and all geared towards a more 
sustainable future for our country. I see good people from both 
sides of the political spectrum wanting to do what is right for 
the seventh generation from now.
    So the President has chosen you wisely and I really look 
forward to working together with you as the co-chairman of the 
Renewable Energy and Energy Efficiency caucus here in the 
Congress, which is right at 200 members now. We have strong 
bipartisan support for your programs and your missions in the 
future. I am real excited about the days ahead for us.
    Mr. Garman. Can I make one comment? Again, you have hit on 
something that is very important. People forget that the big 
three auto makers are really just system integrators. They 
stamp some steel and they build cars. But all the parts and the 
pieces come from tier one and tier two suppliers that are 
located literally all over the country.
    You have a lot of tier one suppliers in your State. It is 
my expectation that little or none of the money in FreedomCAR 
will go to big three automakers. There will be money that goes 
to labs, there will be money that goes to universities. But most of the 
money is going to go to the tier one suppliers who actually do the work 
behind these components and systems. Again, components and systems are 
our focus in FreedomCAR. I think that is where the work and the 
innovation happens.
    Mr. Wamp. Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Hinchey.
    Mr. Hinchey. Thank you very much, Mr. Chairman, and Mr. 
Secretary, it is nice to meet you and have an opportunity to 
speak to you.
    In many respects, the budget this year is much better than 
the submission that we had last year. Last year we saw cuts of 
30 percent in energy efficiency programs essentially across the 
board. But although this one is better, nevertheless, it still 
presents us with another cut in most of the energy efficiency 
accounts. If we are serious about energy independence so that 
we can use the limited energy we have more effectively, how can 
we give lip service to the need for energy independence, while 
we are cutting programs for energy efficiency at the same time?
    Mr. Garman. I think the way we think about our budget, and 
it is very hard when you are only focused on the Interior 
appropriation section of the budget, but the entire portfolio 
of course is up. We are investing a lot of money in solar 
photovoltaic, in wind turbines, on the renewable side of the 
fence. And those are long term investments. We understand that. 
Those are long term investments.
    So to balance our portfolio, we have put some short term 
money in weatherization. Because a dollar spent on 
weatherization in the short term produces immediate results. We 
believe that that is a good balance between the long term and 
the short term. And also with the ancillary benefit of being 
able to assist those low income people who spend a 
disproportionately large share of their income on energy.
    Mr. Hinchey. That is a very good, intelligent, and 
political answer. But it circumscribes the issue, the problem. 
You and I know, for example, that about 90 percent of our 
energy goes into transportation. So if we are going to do 
anything about our energy problem, it has to be focused on the 
transportation sector. I am very much for the photovoltaics and 
all that. I do not think you are doing anywhere near enough on 
that issue. Nor did the previous Administration go far enough 
in deference to the observations made by my friend Zach a few 
moments ago. I do not think that we have done enough, that any 
Administration, except for the Carter Administration, frankly, 
has done anything nearly enough in this area.
    But as we focus on the major portion of our energy 
consumption sector in our economy, transportation, you are 
moving away from the hybrid vehicle. Now, the hybrid vehicle 
was not going to produce the results on time, by whatever it 
was, 2003, 2004. But we anticipated that it was going to 
produce results by 2004, 2005. We were going to begin to see 
solid results.
    Now, we are moving into the so-called FreedomCAR. While I 
am a very strong supporter of fuel cells, and I think we ought 
to be putting a lot of our attention into fuel cells, I think 
it is a mistake to put all of our eggs in one basket. Secondly, 
it causes me to believe that this is a budget that is an oil 
budget. It is a budget that is designed for the oil industry. 
Why? Because now we are not going to make any advances in the 
reduction of our consumption of oil in the transportation 
sector, which accounts for 90 percent of our use, effectively 
until the year 2015, with the so-called FreedomCAR.
    It seems to me like this is a serious public policy 
blunder, and it plays right into the hands of the oil 
companies. Because what is their biggest fear? Their biggest 
fear is that people are going to reduce consumption of oil 
derived products.
    Mr. Garman. I agree with you that we should not put all of 
our technology eggs in one basket. I do not believe we are with 
this budget.
    Mr. Hinchey. We are focusing on the transportation sector.

                         TRANSPORTATION SECTOR

    Mr. Garman. Yes, sir, and the transportation sector will be 
spending 93 percent this year, we propose to spend 93 percent, 
on hybrid vehicle technology of what was given to us last year. 
We are not stopping work on hybrid vehicles and on the power 
electronics, the batteries and the electric motors that are 
part of hybrid vehicles.
    Mr. Hinchey. What are you asking for in the future? What do 
you anticipate in the future?
    Mr. Garman. Because these are the same components that you 
also find in the fuel cell cars.
    What we are doing is we are shifting, again, the technology 
portfolio. We look at this the way an individual investor would 
look at a stock portfolio. You have some short term, low risk 
plays, and some long term, high risk plays. What we are doing 
is shifting the portfolio somewhat toward the long term and 
toward the high risk. But we are still holding in that 
portfolio a lot of the short term activities such as hybrid 
cars.
    The good news is that where you do see reductions, and I 
invite you to look very, very closely at our budget, where you 
do see some reductions, say, in some of the building tools 
technology programs, we know what to do. We know, and in fact, 
the auto makers will be putting out hybrid vehicles available 
for sale, the U.S. auto makers, in 2003. That is the good news.
    In some of the broader areas, such as refrigerators or 
building technologies, we know what needs to be done. We are 
either coming up to the edge of what we think we can achieve 
with R&D, I mean, we have new refrigerators now that just use 
75 watts, less than most of the light bulbs in your home. The 
trick and I need the help of this Committee as we work on this 
together, how do we get those technologies, how do we do a 
better job to get those technologies out into the field and the 
market place?
    Buildings is a particular conundrum with me. There are very 
simple, low-tech ways that we need to make buildings much more 
efficient and comfortable. Sealing ductwork, putting the ducts 
inside the building envelops, and basic insulation. It is not 
rocket science. But the trick is they add a little bit more 
cost up front to the building. How do we convince builders and 
consumers, who are purchasing those buildings, to ask for those 
things to absorb a little bit more cost up front, but garner 
those cost savings and comfort benefits that they will derive 
the life of the building?
    Mr. Hinchey. The answer to that is that you manipulate the 
tax system. You know that.
    Mr. Garman. Yes, sir.
    Mr. Hinchey. You manipulate the tax system in order to 
encourage people financially to make those kinds of 
investments.
    But let us return to the transportation sector again. 
Youtold me a moment ago that you are spending 93 percent of the money 
that was provided for the hybrid car in this year's budget, which ends 
on September 31st.
    Mr. Garman. Yes, sir.

                 HYBRID CAR FUNDING IN FISCAL YEAR 2003

    Mr. Hinchey. What are you going to do in that regard in the 
fiscal year beginning now?
    Mr. Garman. In the budget before you now, the 2003 budget 
beginning October 1st is 93 percent of what you have us 
spending in the current fiscal year. So again, we are not 
walking away from hybrids. Hybrids are very important. In terms 
of deploying them in the market, as you correctly point out, 
that is one of the reasons the President brought us all 
together on the south lawn of the White House on Monday, was to 
encourage the Senate to do what the House has already done, and 
pass a tax credit for the purchase of hybrid vehicles.
    Because when the Ford Escape is offered next year, a small 
SUV that gets up to 40 miles per gallon, Ford is probably going 
to have to charge $2,000 or $3,000 or $4,000 more for that 
vehicle than the comparably equipped gasoline model, because it 
costs more to build. That is where the tax credit would, to the 
consumer and the showroom, make that an equivalent choice and 
tilt them toward the hybrid.
    Mr. Hinchey. My time is up, Mr. Chairman, but I will keep 
going if you let me.
    Mr. Skeen. We will hold you a little while so you can 
regenerate. [Laughter.]
    Mr. Peterson.
    Mr. Peterson. Staying on the hybrid car, is it not our role 
to get them--they are in the marketplace. Much of the success 
now will be in how they sell, people choosing them. I have 
friends who have bought them and like them. If that 
acceptability in the public grows, and if the President's tax 
credit gets passed, the people purchasing it will increase and 
we have achieved. In other words, do we keep funding something 
when we already have it in the marketplace? Is that not the 
theory? Because it has worked does not mean we should be 
spending more money on it, we should be moving on to the next 
step?
    Mr. Garman. There are a couple of ways to answer that 
question. I am one of those hybrid vehicle owners myself. I 
have one. It is working very well for me now. There is a lot of 
question about how much extra, I paid more for it than I could 
have paid for a comparably equipped Toyota Corolla.
    Mr. Peterson. Can I ask you a question? Do you believe you 
will save in fuel, what you paid extra?
    Mr. Garman. Not at current fuel prices, no, I will not.
    Mr. Peterson. That is the other side.
    Mr. Garman. I do not think so.
    Mr. Peterson. It will not be a winner.
    Mr. Garman. It will not be a pure economic winner.
    Mr. Peterson. You are just being good to the country.
    Mr. Garman. That is why we promote the tax credit, and it 
is why we have not cut off funding on hybrid vehicle 
technologies. Because we need to continue to bring those costs 
down to make them more competitive.
    Mr. Peterson. But part of that has to be the marketplace. 
Government is not the manufacturer of vehicles.
    Mr. Garman. That is probably the primary lesson of PNGV, 
was, yes, we can build in 2004 a family sedan that gets on the 
order of 70 miles per gallon and that is a diesel-electric 
hybrid engine. But it is not affordable in the showroom, and 
since half of our purchases, half of our purchases today are in 
the light truck category that includes light trucks, sport 
utility vehicles and minivans, it is clear that we have to 
broaden our scope from family sedans and be reactive to what 
people are buying and the kinds of cars that people want. So 
that is why we are focusing again on systems and components 
that can be applied across a fleet of vehicles instead of just 
looking at one particular kind of car.

                          NATURAL GAS VEHICLES

    Mr. Peterson. Natural gas vehicles, were you here when we 
talked about them earlier this morning?
    Mr. Garman. I was in the other room, kind of listening.
    Mr. Peterson. Okay. Well, do you think we should be 
pursuing, for the following reason that natural gas is 
something we produce ourselves, we are not importing it from 
the Mid-East, so you get the wealth production there, and we 
have growing reserves, it is a wise use in our cities to get 
clean air attainment, where cities are out of attainment, to 
incentivize, especially the bus companies that we fund, we 
basically own the bus companies, why not have them using 
natural gas? Then once the fueling stations are there, do some 
incentives for taxicabs and delivery trucks?
    Mr. Garman. I think that is exactly right. Natural gas 
vehicles are superb and they are commercially available in both 
light cars and heavier trucks. The difficulty is range, 
consumer range.
    Mr. Peterson. But delivery trucks do not----
    Mr. Garman. That is right. Fleet vehicles are perfect 
applications, buses and other kinds of fleet vehicles are very 
good applications for natural gas vehicles. We are continuing 
to work through our Clean Cities program to continue to 
encourage and partner with cities. I think we have 83 now 
across the country with special emphasis on those non-
attainment areas, to get them using more natural gas vehicles.
    Mr. Peterson. You are discontinuing natural gas engine 
research.
    Mr. Garman. Right.
    Mr. Peterson. Have we accomplished what we needed to 
accomplish?
    Mr. Garman. I think we have. And I know that that will be a 
contentious issue for the Committee, there will be people who 
come to the Committee and discuss that. And our recognition is 
that there are excellent natural gas vehicle engines on the 
market. John Deere, Cummins-Detroit all make good heavy duty 
vehicles. And of course, you can buy a Honda Civic natural gas 
powered vehicle that is again a very good vehicle, does a 
superb job. We think that R&D on the engines themselves is not 
a high priority. The high priority is doing a better job.
    Again, I struggle with the Committee on this. I am not 
satisfied with the work that we have done in some of the 
deployment activities. And I do not have a ready answer yet on 
how we do a much better job of it.
    Mr. Peterson. Is natural gas, being large buses can use it, 
is it a potential for trucks?
    Mr. Garman. Yes. We are looking at that, particularly 
liquified natural gas trucks over longer haul routes, 
particularly in Californiaand Nevada. We need to stick with 
compressed natural gas for consumers, but in certain truck 
applications, liquified natural gas, because it gives you greater 
range. It is tougher to keep it in the tank. It boils off at ambient 
temperatures, and it is probably not a good consumer play. But we are 
experimenting with that in some clean cities corridors in southern 
California.
    Mr. Peterson. Well, the trucks that run the interstates, it 
would be easier to have fueling systems.
    Mr. Garman. That is right. I mean, the refueling 
infrastructure is the issue. I think perhaps a better short 
term approach, and we have been thinking about this in the 
context of fuel cell vehicles. When you fly over Los Angeles, 
you see that it is literally ringed with truck terminals. The 
thought is to, because what happens, the long haul, over the 
road highway vehicles drop their loads at the terminal and then 
pick up a new load and head right back out over the long haul 
highway. The loads are split and disseminated within the 
metropolitan area by smaller fleet vehicles.
    We think that the smaller fleet vehicles are probably the 
best play for natural gas and the early plays for fuel cells, 
because you do not have such a difficult refueling 
infrastructure problem.
    Mr. Peterson. Well, it is possible fuel cells could be 
using natural gas as their fuel also, right?
    Mr. Garman. That is right, that is correct.
    Mr. Peterson. Should we be looking at helping invest in 
infrastructure for natural gas fueling systems?
    Mr. Garman. We do, and we do that mainly in the energy 
supply budget on the energy and water appropriations budget. 
That is where our hydrogen program is located, and that is 
where we are increasing our funding in that area, to work on 
the infrastructure problem.
    Mr. Peterson. Thank you.
    Mr. Skeen. Mr. Wamp.
    Mr. Wamp. Just a follow-up. What is the percentage, I think 
it is 85 percent, of all petroleum that our country uses, that 
Mr. Hinchey referred to earlier, is used in transportation in 
that sector?
    Mr. Garman. Our petroleum sector is 95 percent dependent. I 
am sorry, our transportation sector is 95 percent dependent on 
petroleum. I think it is two thirds, 67 percent, of all of our 
petroleum goes directly into the transportation sector.
    Mr. Wamp. It is a huge issue.
    Mr. Garman. Absolutely.
    Mr. Wamp. I mean, we do not have enough people around this 
room today, truthfully, and there needs to be more attention 
paid to it. Then just one follow-up on Mr. Peterson's line of 
questioning there that I am very interested in. I think people 
thought several years ago that all of this was just plain 
market driven, that people would only buy where it made 
economic sense.
    But I can tell you that some of the little pilot programs 
are proving otherwise. The green power program with the 
Tennessee Valley Authority, for instance, is very popular. It 
is much more popular than people thought it would be, where 
people actually pay a little more to have power charged to 
their bill that is clean. It has surprised everybody. It 
surprised the consumers, the munis, the municipalities that 
actually got in the program. And the TVA leadership, that 
people would actually pay a little bit more.
    So the point is with these tax credits, Mr. Hinchey and 
others, is you have just got to get close. You do not 
absolutely have to go into a profit category to have consumers 
actually do the right thing. Our consumers are responsible and 
they are proving it. We just have to get close. We have to get 
closer quicker, so that they will have that option. I think 
some of them will invest just because they know it is the right 
thing to do.
    Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Hinchey.

                               HYBRID CAR

    Mr. Hinchey. Thank you very much, Mr. Chairman.
    Just to clarify on the issue of the level of spending that 
you are carrying forward, do you anticipate at least carrying 
forward into the next budget year, with regard to the hybrid 
car? As I look at what you have submitted, it tells me that 
nevertheless, your concentration in the hybrid area is in a way 
that continues to depend upon fossil fuel, essentially the use 
of gasoline. You are not moving in a direction that takes us 
away from the use of petroleum, or using petroleum sources, for 
transportation with the hybrid.
    So the hybrid, even as you continue to develop it, if not 
enthusiastically, at least continue to develop it, does not 
show any signs of significantly reducing or at least continues 
to focus its attention on the use of gasoline in the hybrid 
car. Is there not something else we could do to get away from 
petroleum use?
    Mr. Garman. Yes, sir. And that is the essence of 
FreedomCAR. A gasoline-electric hybrid will always require 
petroleum. And that----
    Mr. Hinchey. But is there not a hybrid that can sharply 
reduce the amount of petroleum?
    Mr. Garman. Yes, sir, and that is what we hope to achieve 
in hybrid technology. To be free of petroleum is why we have 
the new emphasis and the increased emphasis on hydrogen fuel 
cells. Because that is----
    Mr. Hinchey. I am still not clear. But are you still 
continuing to concentrate on hybrid vehicles that are going to 
continue to use mostly petroleum, mostly gasoline as you move 
forward in the hybrid area?
    Mr. Garman. We think that in the near term the hybrid 
vehicle is the method that can reduce our petroleum dependence. 
In our budget request, in 2003, we are asking for $38,500,000 
for hybrid systems R&D. The 2002 appropriation, which you 
provided us last year, was $41,615,000. So we have----
    Mr. Hinchey. The hybrid budget is going to focus on 
vehicles that are not dependent upon petroleum?
    Mr. Garman. All hybrid vehicles are dependent on petroleum 
to some degree.
    Mr. Hinchey. Not dependent in the majority, for the most 
part, on petroleum. You have to be very precise in the 
questions that I apply.
    Mr. Garman. And it is very difficult to give you the 
answer. Because what we are looking at is a continuum from 
today, where we use more petroleum, to the future, where we 
will use no petroleum, hopefully, in the transportation sector. 
Of course hybrids are going to use some petroleum. The better 
job we do on battery technology, on power electronics, on 
electric motor efficiency and some of these other things we are 
working on, the less petroleum we will use.
    Mr. Hinchey. That is self evident. But what I am trying to 
understand is what your concentration is. We put confidence in 
you when we provide you with a certain amount of money. The 
only means by which we have to monitor your behavior, to make 
sure that from our perspective it is in the public interest, is 
to ask you these kinds of questions and try to direct you as 
you move forward. I am not getting any satisfaction out of your 
answer.
    Mr. Garman. I am trying to understand your question, 
Congressman.
    Mr. Hinchey. My question is, are you going to continue to 
develop the hybrid vehicle?
    Mr. Garman. Yes, sir.
    Mr. Hinchey. A Hybrid vehicle, no matter what we do, is 
always going to be dependent on petroleum to some extent.
    Mr. Garman. Yes, sir.
    Mr. Hinchey. What are you doing to aggressively reduce the 
amount of petroleum that will be required by the hybrid vehicle 
as you move forward with that technology?
    Mr. Garman. Improvements in battery technology, power 
electronics and electric motor efficiency.
    Mr. Hinchey. I know that. But what percentage of the amount 
of money that you spend will be used to reduce the amount of 
petroleum?
    Mr. Garman. We can give you a breakout on the component 
technologies of that $38.5 million we are proposing to spend. 
To the extent that we achieve our R&D goals, and those are in 
the marketplace, that is when we hope to be able to see the 
petroleum use reduced.
    [The information follows:]

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                             BATTERY BUDGET

    Mr. Hinchey. The battery budget, as you know, is cut in 
half, or at least you propose to cut the battery budget in 
half.
    Mr. Garman. Yes, sir.
    Mr. Hinchey. Why do you do that?
    Mr. Garman. Let me explain that. The battery work that is 
being closed out are those batteries that are directed toward 
the pure electric vehicles. Electric vehicles in the future are 
going to mainly occupy niche markets. And the good news is that 
they are reaching----
    Mr. Hinchey. But the niche markets will be where most of 
the people are.
    Mr. Garman. Right. And Ford, beginning next year, will be 
offering for instance its THINK fully electric vehicle in those 
markets for consumers. That is going to be available. That work 
has shown benefits. But we are in that mode of battery 
technology for pure electric vehicles of diminishing marginal 
returns. We look at where the next incremental dollar can be 
spent.
    And we are saying, okay, we have achieved some successes in 
hybrids, those are coming into the market, we have achieved 
some successes in electric vehicles, those will be in the 
market in niche vehicles. We need to now shift some of that 
money for the longer term, for that brass ring if you will of 
the transportation system that does not need petroleum at all.

                  CORPORATE AVERAGE FUEL ECONOMY-CAFE

    Mr. Hinchey. Do you support the idea that we ought to 
increase CAFE standards for the vehicles that are now 
dominating the highway? About two thirds of the cars that are 
sold in America today are SUVs and light trucks.
    Mr. Garman. Yes.
    Mr. Hinchey. Are you going to tell the Congress to increase 
the CAFE standards for those vehicles?
    Mr. Garman. Sir, it is a recommendation in the President's 
National Energy Plan that the Department of Transportation 
adopt CAFE rulemaking to consider increased CAFE standards for 
light trucks and sport utility vehicles.
    Mr. Hinchey. But that is just procrastinating. That is just 
talk. That is just continuing to talk and not do anything. That 
is just pretending to do something by putting the rhetoric of 
doing something in the budgets, or the budget requests, but not 
really implementing anything.
    Mr. Garman. It is the policy of the Administration, rather 
than having Congress to mandate a CAFE standard in legislation, 
but to go through a rulemaking where the complex interplay of 
vehicle safety and some of the other factorsthat NHTSA and the 
Department of Transportation looks at when they promulgate a CAFE 
standard, to consider those issues as well.
    Mr. Hinchey. You are an expert in this. You are far more 
expert than I am. And your memory has got to be at least as 
good as mine. You know very well that every advancement in 
technology and safety and reduction in dependence upon fossil 
fuels has come about not as a result of innovations within the 
industry, but as a result of industries being told to do it by 
the Government.
    Mr. Garman. Right. And as you know, the Department of 
Transportation, by operation of law, was precluded from even 
considering an increase in the CAFE standards until December of 
last year.
    Mr. Hinchey. Yes, well, that was a bad mistake that the 
Congress made. But we----
    Mr. Skeen. What was that? [Laughter.]
    Mr. Hinchey. I must say that it was not the only one, Mr. 
Chairman.
    Mr. Skeen. Thank you, Mr. Hinchey.
    I am very satisfied with the way both you have discussed 
this.
    Mr. Hinchey. Do we have any more time? I would like to ask 
a couple more of questions outside of the energy sector, if 
that is permissible, Mr. Chairman.
    Mr. Skeen. I will let you go for two questions.
    Mr. Hinchey. Thank you.

                  ENERGY EFFICIENCY SCIENCE INITIATIVE

    There is a lot of focus in the budget on weatherization, 
which is terrific and I think everybody will support that. But 
you are cutting back on R&D, and you are cutting back on the 
basic research. For example, the energy efficiency science 
initiative, is zeroed out. This is the kind of basic research 
that the industries are not going to do, nobody is going to do 
it. It only takes place at the universities and research 
centers. Should we not be continuing to fund that if we are 
going to continue to make progress in this area?
    Mr. Garman. We do fund a good deal of basic research. We 
are trying to improve our relations with the science branch, if 
you will, of the Department of Energy to do just that. While we 
are not asking for money that is split----
    Mr. Hinchey. If you are trying to improve your relationship 
with them, you are not going to make friends with them by 
cutting their budget.
    Mr. Garman. Let me give you an example. This is a light 
emitting diode that is a very important component of what we 
think will be the next generation of lighting. It is made 
possible as a consequence of very basic research.
    Mr. Hinchey. The kind of thing that you are cutting out in 
your budget, you are zeroing out.
    Mr. Garman. No, sir. We are increasing our lighting R&D 
budget. We will not simply do applied research. We intend to do 
basic research as well. The energy efficiency science 
initiative was a setaside in the budget to make sure, I guess 
you could say, that we played well with the basic researchers 
and ensured that their work got incorporated into our work. 
What I am suggesting in not seeking funding for that is the 
commitment that we are going to try to do that without being 
directed to. We are going to try to do it because it is the 
right thing to do.
    Mr. Hinchey. Who is going to do it, because it is the right 
thing to do?
    Mr. Garman. The Department. Yes, sir, we are in our R&D 
program. We think that you cannot----
    Mr. Hinchey. But your R&D budget is dropping. How are we 
going to make progress in an area which has been defined by the 
Administration as critical? We have got to move forward on the 
issue of energy independence if you are cutting the budget and 
then saying that you are going to take the basic energy 
efficiency science initiative out of a budget that you are 
cutting for other areas.
    Mr. Garman. Our overall budget in energy efficiency and 
renewable energy is increasing. It is true that the R&D portion 
of that budget----
    Mr. Hinchey. But you are doing that only in the 
weatherization area. You are doing a good job in the 
weatherization area.
    But when you look at the basic research, the basic kinds of 
advances that are going to be required if we are going to 
achieve any significant level of increased energy independence, 
those are the areas that you are cutting in your budget.
    Mr. Garman. Again, we are trying to--you are right, we are 
accepting a certain amount of higher risk by reducing some of 
the R&D funding. We are balancing that, I think, with short 
term gains that we achieved through weatherization. Again, it 
is the way we see our approach toward a balanced portfolio.
    Mr. Hinchey. This is a linguistic dance that we are engaged 
in here.
    Mr. Skeen. Mr. Secretary, I think that you are the opponent 
in the dance. [Laughter.]
    You make a good partner.
    Mr. Hinchey. Indeed, he does. Especially on the intricate 
steps, Mr. Chairman. [Laughter.]
    Mr. Skeen. Mr. Garman, we appreciate your presence very 
much.
    Mr. Garman. Thank you very much, Mr. Chairman.
    Mr. Skeen. I will ride with you any time, batteries or 
whatever.
    Mr. Garman. Any time you want to, sir.
    Mr. Skeen. Thank you.
    [Additional questions for the record follow:]

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                                       Thursday, February 28, 2002.

               DEPARTMENT OF ENERGY: FOSSIL ENERGY BUDGET

                               WITNESSES

HON. CARL MICHAEL SMITH, ASSISTANT SECRETARY FOR FOSSIL ENERGY, 
    DEPARTMENT OF ENERGY
GEORGE RUDINS, DEPUTY ASSISTANT SECRETARY, OFFICE OF COAL AND POWER 
    SYSTEMS, DEPARTMENT OF ENERGY
RICK FURIGA, DEPUTY ASSISTANT SECRETARY, OFFICE OF PETROLEUM RESERVES, 
    DEPARTMENT OF ENERGY
GUIDO DEHORATIIS, JR., ACTING ASSISTANT SECRETARY, OIL AND GAS, 
    DEPARTMENT OF ENERGY

                   Opening Remarks of Chairman Skeen

    Mr. Skeen. Good morning. This morning we have two hearings 
with the Department of Energy on the 2003 budget request. First 
we will hear from Carl Michael Smith, the Assistant Secretary 
for Fossil Energy. Welcome, Mr. Smith.
    Mr. Smith. Thank you, Mr. Chairman.
    Mr. Skeen. We're glad to have you here. I'd like you to 
summarize your testimony. Your full statement will be inserted 
into the record. Before you begin, I'd like to defer to Mr. 
Hinchey for any opening remarks that he would like to make.
    Mr. Hinchey. Thank you very much, Mr. Chairman. I have no 
opening remarks. I am very anxious to hear the Secretary's 
testimony and to have an opportunity to ask some questions. 
Thank you very much for being with us.
    Thank you, Mr. Chairman.
    Mr. Skeen. Thank you.
    The floor is all yours.

                     Opening Statement of Mr. Smith

    Mr. Smith. Thank you very much, Mr. Chairman.
    With the Chair's permission, I will submit my prepared 
testimony for the record and also would like to thank the 
Chairman and members of the Subcommittee for inviting me to 
testify here this morning.
    I am of course pleased to see you again, Mr. Chairman. I 
know from past experience that you and I share a common view of 
the importance of our domestic energy resources. We both come 
from States that play major roles in providing the fuels that 
heat our homes, power our factories and keep America on the 
move. I believe we share a common view that energy security is 
part and parcel of national security. To make Americans more 
secure in the future, we must find ways to produce and use the 
energy resources within our borders to their fullest potential.
    Mr. Chairman, I am here today to present the 
Administration's fiscal year 2003 budget to the Subcommittee. I 
do not appear before you under the pretense of being an expert 
in the content of our budget submission. As you are aware, I 
have been a part of Secretary Abraham's team at the Department 
for slightly less than a month. The budget proposal you have 
before you was prepared well in advance of my arrival. I am 
still in the process of learning its details, and I suspect 
that you and your staff have a greater familiarity with its 
nuances than I do at the present time.
    Therefore, Mr. Chairman, rather than summarize the numbers 
in my oral remarks, I would like to use this opportunity to 
describe how I plan to approach my new job over the next 
several months. The first thing Secretary Abraham asked me to 
do at the Department was to undertake a top to bottom review of 
the fossil energy program. To take a step back, he told me, and 
determine if we were directing our resources toward the right 
national priorities, and whether our programs reflect the 
appropriate Federal role.
    I had the privilege a couple of weeks ago to hear the staff 
of this Subcommittee, along with their counterparts in the 
Senate, describe how members are likely to respond to our 
budget request. I will tell you, sir, I was extremely impressed 
with their candor and their grasp of the issues we face. I 
believe the Secretary shares many of the same views. We must do 
a better job of identifying our priorities, explain why they 
are important to our Nation, and perhaps most of all, 
communicate more clearly the progress we are making toward our 
goals.
    Secretary Abraham asked that I report to him by July 1. My 
report will cover the full scope of the fossil energy program. 
It will examine the strengths and weaknesses of our current 
program, how well it fits within the President's national 
energy policy and our fossil energy mission statement and 
whether we are achieving the maximum benefit for the American 
public.
    In the coal area, the Secretary has emphasized that the 
Federal track record for new emission reduction technologies is 
impressive, but more needs to be done. Coal is our Nation's 
most abundant source of energy, yet it has been almost a decade 
since the Federal Government undertook a major effort with 
industry to bring a new generation of clean coal technologies 
out of the laboratory.
    I want to ensure, number one, that our coal program, from 
basic research through demonstration, is bringing full value to 
the taxpayer. Number two, that it is adequately funded to 
achieve the Nation's needs, and number three, that it is 
directed at the most important national priorities. The 
Secretary has asked that I pay particular attention to our oil 
and gas program.
    You have seen in this budget submission that the 
Administration's request for oil and gas research funding is 
significantly less than last year's budget. Frankly, Mr. 
Chairman, we need to address some critical issues in our oil 
and gas program. Most of our research support benefits smaller, 
independent companies or is targeted at innovative projects 
that would not be otherwise done by industry.
    We need to take a hard look at where our dollars are going 
and the results they are producing. We need to be able to say 
to this Committee and to others in the Congress that our 
budgets are providing funding that would not otherwise be 
supplied by the private sector. We need to be able to assure 
you that our projects are successful. The result will be a 
measurable increase in the amount of oil and gas that flows 
from U.S. fields.
    We will also be including the Strategic Petroleum Review. 
The President has set on course to fill the Reserve to 
itsmaximum current capacity, and we are well on our way to that goal. 
But we need to make sure that we have not overlooked any aspect of the 
program. We want to make sure that the reserve is not only filled, but 
that all of our operational and administrative processes are 
effectively geared toward making the reserve fully responsive to the 
President should there be an emergency situation.
    So this too will be part of our review. The top to bottom 
review will be a comprehensive effort. The Secretary made it 
very clear that it is my highest priority. It also meshes well 
with this Subcommittee's interest in defining a better set of 
performance measures to track the dollars we spend and the 
progress we make.
    Mr. Chairman, the bottom line is results. I came into this 
program with a clear direction to define where our fossil 
energy priorities should be, how well we are making progress in 
achieving them, what the benefits will be when we are 
successful. We have a good team in our office. Several of them 
are seated behind me. I believe we have a very good story to 
tell. The challenge is to make sure that we stay focused, that 
our focus will be meaningful to the American public.
    I want to work with this Subcommittee at every step along 
the way as we carry out our internal review and as you 
formulate your fiscal year 2003 appropriations, so that the 
results of both efforts move us toward a fossil energy program 
that is truly responsive to the energy, environmental and 
national security needs of our Nation. Thank you, Mr. Chairman.
    [The written statement of Mr. Smith follows:]

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    Mr. Skeen. Thank you.

                       DECREASE IN OIL TECHNOLOGY

    The United States imports more than one half of its crude 
oil. Over 70 percent of this imported crude oil comes from 
politically unstable regions of the world. Two thirds of the 
known U.S. oil resource remains unrecovered after conventional 
production has taken place. Why does this not argue for an 
increase in our oil technology research, rather than a 
decrease?
    Mr. Smith. Sir, that is certainly, Mr. Chairman, part of 
the review that I will be undertaking. I am very concerned 
about that. My own home State of Oklahoma, for instance, has 
produced since statehood over 12 billion barrels of oil. The 
geological survey that was in my cabinet area when I was in 
office in Oklahoma has advised me we have an additional 12 
billion barrels of oil. In other words, as much as we have 
already produced, that could be recovered with technology.
    Certainly the oil and gas budget that we propose has taken 
a bit of a hit from last year, as we know. We have realigned 
those priorities, but as I review it, and as we have reviewed 
it already, Mr. Chairman, we certainly have addressed some oil 
and gas technology that we think will allow particularly small 
independents in our country to continue to produce that oil.
    Mr. Skeen. Thank you. I appreciate that, because as next 
door neighbors to your state in this production we have in our 
part of the world a large commitment on our part in doing it. 
So you are covering the bases.
    Mr. Smith. Certainly the program will affect the Permian 
Basin as well as the San Juan Basin, as well as our other 
producing areas.
    Mr. Skeen. Mr. Hinchey.
    Mr. Hinchey. Thank you very much, Mr. Chairman.

              DRILLING IN ARCTIC NATIONAL WILDLIFE REFUGE

    Mr. Smith, I very much appreciate your focus on the need to 
produce energy here in our country, as opposed to being 
dependent upon foreign sources. I certainly share that view and 
objective. I think we part company as to how that might be 
done.
    I wonder about some of the tactics we've taken. For 
example, we know that oil is in short supply globally and that 
the demand for oil is going to increase, perhaps exponentially 
depending on the expansion of other economies, particularly the 
Chinese economy. This will make that resource more and more 
valuable as time goes on. We have an oil reserve that we have 
established in Texas. The purpose of that oil reserve is to 
allow us to have a stable reserve of oil for emergencies.
    At the same time, we are proposing, or at least the 
Administration I believe is proposing, to drill for oil in the 
Arctic National Wildlife Refuge. Would it not make sense to 
keep that oil in the ground, particularly recognizing the 
fragility of that environment, the fragility of the landscape, 
and the environmental consequences of drilling now? Would it 
not make more sense to keep that oil in the ground, for such a 
time in the future when we may need it much more so than we do 
now?
    We have reliable sources of energy from outside the 
country. In fact, the price of oil today is lower than it was 
back in the mid-1970s. Why would we not continue to exploit the 
availability of energy in other places and leave the energy in 
the ground that we have here in anticipation of a time when it 
would be infinitely more valuable than it is today?
    Mr. Smith. Yes, sir. Congressman, that is a question that 
has been asked of me for several years, both in my private 
life----
    Mr. Hinchey. I am sorry to hear that. I thought it was 
original. [Laughter.]
    Mr. Smith. And it is a very good question. It is a very 
complicated answer, but I will try to give you a short one, as 
short as I can.
    The technology that we develop in this country, a lot of 
which is developed in fossil energy, has been a big resource 
toward finding and producing oil and gas in places that wedid 
not think it existed before, and in a better, more economical, more 
environmentally sensitive way. Certainly, there are oil reserves 
domestically around the country that pose difficult challenges, both in 
terms of drilling technology and environmental challenges.
    But much of the information that we have gleaned from prior 
activities, and I will limit it to the last 10 or 20 years, 
because that is the period of time when the real technological 
advances have occurred, have shown us the way to reserves 
around our country that we thought were unproductive before, 
particularly in keeping our marginal wells alive, in keeping 
reservoirs around the country still productive that we thought 
were no longer productive, and leading us on a path, I think, 
to not--we can never be totally energy independent on the oil 
side. But certainly we can be less dependent on foreign 
sources. Hopefully we can move toward that.
    As far as leaving our reserves and looking to other parts 
of the world for reserves, if oil and gas production were 
stored in tanks in the ground, if it was simply a matter of 
pulling it out, like you could pull commodities off a shelf, 
that might work. But the physical nature of oil and gas 
production and the technology that is needed, you have to 
continue to explore these technologies. Part of it is new areas 
of drilling, where we can learn new ways to do things and to 
protect our domestic supplies.
    If you cease doing that, then you lose not only your 
competitive advantage but your technological advantage. I have 
often maintained that the oil and gas production in the mid-
continent part of the country, where I am from, may not even 
exist in 2002 if it were not for technology. The 
computerization of the industry, the 3-D technologies, safer 
down-hole drilling, safer production and transportation 
techniques and all of that is all part of a huge package.
    Believe it or not, Congressman, that was my brief answer.
    Mr. Hinchey. Well, I would like to hear the longer one. 
Because that one does not make much sense to me. Unless I 
misunderstood it.
    What I am hearing you say is that we need to drill in the 
Arctic National Wildlife Refuge in order to develop new 
technologies for drilling.
    Mr. Smith. A lot of what we have learned in the Prudhoe Bay 
area, for instance, that has been drilled and produced, has 
been applied in the lower 48. A lot of those techniques, and a 
lot of it has been applied offshore. A lot of what we are 
learning in the deep Gulf technology as far as a smaller 
footprint, by that I mean a smaller drilling location, drill 
site. Just a few years ago in my home State, for instance, if 
you drilled a 10,000 foot well, you needed about three or four 
or five acres of location. Now with modern technology, you can 
do it on one acre, and you can drill several wells from one 
particular location.
    Mr. Hinchey. My argument would be that drilling in a place 
that is so vulnerable and so unique is an awful high price to 
pay. If we are only going to drill in the Arctic National 
Wildlife Refuge, not to produce oil particularly, because there 
is a lot available right now in various places on the planet, 
but to find new technologies, I think that we could do that in 
other ways. For example, we could do that in a laboratory. You 
could do it in a variety of ways.
    We only have a relatively small percentage of the known oil 
reserves in the world. What is your information on that? What 
percentage of the known oil reserves in the world do we possess 
in the continental United States, including Alaska?
    Mr. Smith. I believe the last, and I am speculating here, 
Congressman, the last numbers that I have seen I think are 4 or 
5 percent.
    Mr. Hinchey. Three is the one that I have seen, 3 percent. 
We have 4 percent of the world's population, 3 percent of the 
known oil reserves, and we use on a daily basis 25 percent of 
the oil. So if those numbers are correct, we have 4 percent of 
the world's population, and let us compromise on the number 
about the oil reserves. I say 3, you say 5, let us say it is 4. 
We have 4 percent of the known oil reserves, and we are using 
25 percent on a daily basis.
    Given those numbers, in simple mathematical terms, how do 
you ever get to a point of energy independence without engaging 
in some very creative ways of using energy more effectively, 
more efficiently, and producing alternative energies? Or even 
by producing energy in alternative ways?
    Mr. Smith. Well, we need to do all of those things, in my 
view. It is all part of our energy mix, it needs to be 
balanced.
    Mr. Hinchey. The President's budget does not reflect that. 
The President's budget calls for reductions in energy 
conservation funding and calls for reductions in funding of 
alternative energy approaches. So I agree with you, we need to 
do all of those things and they will have to be part of a mix. 
You and I might disagree as to the percentage of the 
percentages involved in the mix, but I do not think most people 
would disagree with what you just said about having it to be a 
general mix.
    But the proposed mix to me does not make any sense. You are 
increasing spending for oil exploration and development when we 
only have a tiny fraction, when I think it is just abundantly 
clear that it would make much more sense for us to leave that 
oil in the ground. We should just leave it where it is, until 
such time as we may desperately need it, and use the oil that 
is available now.
    The Russians are willing to sell us an abundance of oil. We 
know about the enormous potential in the Caspian Sea area. We 
are getting oil from the Middle East at a relatively low cost 
right now, in fact it is at a very low cost. We should continue 
to do that at the same time that we put much more of our 
resources into alternative energy and energy efficiency.
    The numbers that I have with regard to energy efficiency, 
for example, show that we get more energy out of, and through 
the production of, less work through energy efficiency than we 
do by any other means. It totals about 25 percent through 
energy efficiency and about 20 percent out of natural gas and 
coal each year. We could do a lot better than that.
    That is why I am confused about the President's priorities, 
or at least by those priorities as they are reflected in the 
budget. I am confused because they cut funding for alternative 
means and conservation at the same time that they want to 
explore and produce the oil that we do not really have. What is 
the explanation for that?
    Mr. Smith. Congressman, the amount of money that we are 
asking in this budget certainly is a lower amount than we had 
last year for oil and gas research. We have made some hard 
choices on that. And we are trying again to review as part of 
our review that I will have for the Secretary on July 1, 
address some of those hard choices.
    As far as other budget submissions, I am just simply not 
familiar. But I can tell you that with regard to the fossil 
energy budget that we are going to do a complete review, and as 
I mentioned in my opening statement, make sure that these 
priorities are addressed and make sure that the fossil energy 
part of our portfolio is a big part of our Nation's energy mix.
    Mr. Skeen. Mr. Wamp.
    Mr. Wamp. Thank you, Mr. Chairman.

                    FUEL CELL COMPONENT TECHNOLOGIES

    Welcome, Mr. Smith. We have had members of the Subcommittee 
in the last six years since I have been on the Subcommittee 
that have really taken a keen interest in some of the new 
technologies that you are working on and our solutions to some 
of the challenges that we face today. Two and a half years ago, 
the Solid State Energy Conversion Alliance was set up. These 
friendly solid oxide fuel cell modules were to be pursued. Last 
year, we directed, trying to encourage a coming together around 
these new technologies, we encouraged the Department to 
increase the funding for the fuel cell component technology 
under the Solid State Energy Conversion Alliance. Yet the 
request there is also less than last year.
    I want you to speak to that issue. What I would hope we 
could do is have the Administration come together with this 
Committee where we have hearings constantly on what is working, 
what is not working. And also comment on Congressional earmarks 
that have been removed from the process. We had a little bit of 
a war between the Appropriations Committee and the 
Administration a few weeks ago because there was like arbitrary 
reductions in Congressional earmarks.
    I just want to say that when we have the hearings, and we 
listen to the needs and we understand what is working and what 
is not working, sometimes we are going to earmark and say, 
through the Constitutional responsibilities that we have, this 
is where money needs to flow. I would ask the Administration to 
be very sensitive to the work that we have done. I think of 
Chairman Regula and the keen interest that he took in these 
programs. I would plead with this Administration to be 
sensitive to the progress that we have made and try to follow 
our instruction.
    But I want you to comment first on why the Administration 
did not increase the funding request for these fuel cell 
component technologies that we have shown to be more 
environmentally friendly, and the technologies of the future.
    Mr. Smith. Thank you, Congressman. Mr. Chairman, I will 
have to defer to one of my staff to really fully answer that 
question.
    Mr. Skeen. Feel free. Welcome.
    Mr. Smith. If I could, Mr. Chairman, I would like to 
introduce Mr. George Rudins, who is our Deputy Assistant 
Secretary for the Office of Coal and Power Systems.
    Mr. Skeen. Welcome, sir.
    Mr. Rudins. Thank you very much, Mr. Chairman.

              SOLID STATE ENERGY CONVERSION ALLIANCE--SECA

    Mr. Wamp, to answer your question, we share your view of 
the importance of SECA, is the acronym for that activity. It is 
a high priority activity for us. And our fuel cell program is 
shifting its priorities, completing the work that we have had 
on the traditional fuel cell development activities and 
refocusing them on the SECA $400 a kilowatt fuel cell 
development goal, which of course if successful would be very 
revolutionary indeed and it is very important for fuel cells.
    But the SECA program builds on that traditional work that 
we have had ongoing at a number of locations. As that work is 
completed, we do anticipate being able to shift resources in 
the future to put in additional resources to bear on SECA. In 
the current year budget, a number of programs, we would have 
like to have seen additional funds for. But within a finite 
budget, one has to prioritize activities and make some choices. 
While we are trying to complete some of the ongoing activities 
in fuel cells to position some of the developers that have been 
working on fuel cells for a number of years to be able to make 
commercial offerings in the near term, we would like to 
complete that work as opposed to terminating it early to enable 
additional resources to be applied to the SECA program.
    So that was a judgement that was applied. Subject to the 
review that Secretary Smith talked about, we in fact see that 
as a growth area even if it may not be reflected as a growth 
area in the current budget.
    Mr. Wamp. So the goals you have for SECA are ambitious, and 
they are bold, but for whatever reason, this year's budget 
request is not an increase. Is that a summary of what you said?
    Mr. Rudins. If you look at the wealth of priorities in the 
fuel cell program, it is not that one can immediately just 
shift paths. We want to complete the developmental activities 
that are underway that are also important to SECA in the sense 
of developing a fuel cell that could be commercially introduced 
early and establish an industrial base and engineering base, a 
manufacturing base for fuel cells in general, which would help 
SECA as well.

                         FUEL CELL DEVELOPMENT

    Mr. Wamp. What do you think the potential is for that fuel 
cell development in terms of our overall power utilization in 
the future?
    Mr. Rudins. In terms of SECA fuel cells? The SECA fuel 
cell, if we are successful in achieving that kind of 
development goal, of $400 a kilowatt, will be very 
revolutionary. It could in fact possibly be the key technology 
for enabling distributed generation. Small systems are very 
much cost sensitive and cost driven. And the fuel cell, if we 
could achieve that kind of cost target, would indeed be very 
revolutionary.
    Mr. Wamp. Two other questions on these fuel cells. It is 
interesting to me that on another hearing with the Secretary of 
Energy later. I am sure we are going to discuss his proposals 
to move away from the PNGV program and move more towards 
hydrogen and fuel cells and automobile and transportation. So 
it just seems to me like there is a lot of momentum behind the 
use of fuel cells across the board. I would like to see your 
department also really spend more emphasis here.
    Last year the budget request came over before the Energy 
Bill was out. The budget request for energy conservation and 
renewables was very inadequate. We advocated on this 
Subcommittee in a bipartisan way for increasing those accounts 
and we did. Then the energy bill came out and in fact, the 
priorities matched, because we increased the funding. I hope we 
don't get behind the curve again on things that are happening, 
and make sure the Administration and this Subcommittee are in 
agreement on where you need to invest.
    I understand your explanation on the prioritization, but 
the fact is, we need to hunt where the ducks are. If we are 
going to be more environmentally sensitive, and we are going to 
be futuristic, we have to invest in the future. I would 
encourage you to be sensitive to that.
    Let me switch gears just for a second and talk about the 
difference between independent oil producers and major oil 
companies and how much we need to, are we too reliant on the 
majors, and is there potential for independents?

              INDEPENDENT VS. MAJOR OIL COMPANY PRODUCTION

    Mr. Smith. Congressman, as far as domestic oil production 
is concerned, historically in our country the oil and gas 
business was fairly well dominated by the major oil companies. 
By major, I define a major as a company that is vertically 
integrated, in other words, owns filling stations, is our 
general shorthand for that.
    Over the years, as our oil fields matured in this country, 
it was very common for the larger companies to leave a 
particular oil field that they could not economically produce. 
They would turn it over to an independent, which is generally 
regarded as a company that has 50 employees or less. Most of 
them have less than 50 employees. They do it on what is called 
a farmout, in other words, they own the lease, but yet they 
farm on some terms, some contract terms, to the independent.
    Currently, about 85 percent of our drilling is from 
independents. Most of the work that is done in our budget 
through our laboratory and our oil and gas program is with 
independents. That is simply because by and large, the larger 
oil companies have gone to areas where there are greater 
potential for new reserves. The production that we have in this 
country is about six million barrels a day. Almost half of it 
is produced by independents.
    The typical well in my State, for instance, of Oklahoma, 
produces about three barrels a day of oil and about 10 or 12 
barrels a day of water. So it is expensive to produce. It costs 
anywhere from $12 to $15 a barrel, depending on your 
circumstances, to produce that oil. So when the price of oil 
drops, as it did two or three years ago, to $8 a barrel, you 
are in real trouble.
    A lot of the technology that we have accomplished in years 
past, and again I am reviewing that top to bottom because I 
want to make sure that we are accomplishing what we need to 
accomplish, has been through independents. It has been to help 
them not only produce more oil out of existing reservoirs, 
which is in our Nation's interest, but also to do it in a more 
environmentally sensitive way, ways that protect the 
environment both at the bottom of the hole and up through the 
production string and through the production and transportation 
facilities.
    It has been my observation over the years that the Fossil 
Energy Office at the Department of Energy has been very 
successful in that.
    Mr. Wamp. On the oil exploration, though, and production 
research funding, do you not think the independents need the 
Federal Government to invest more in that research in order for 
them to grow and should we not be increasing those accounts 
instead of decreasing those accounts for research?
    Mr. Smith. Again, that is part of our review, Congressman. 
I am going to take a hard look at that by July. The amount of 
money that we are proposing in this budget gives great 
deference to our programs with independents. Because they 
certainly are vital. And you are right, they cannot afford to 
do the research that we are doing.
    Mr. Wamp. We really do appreciate your leadership. But I 
would implore you to work closely with this Subcommittee so 
that we are working together and you understand what we know 
through the hearing process and our professional staff 
experience here. Because it is really a very valuable asset for 
the Administration to use through this process.
    Thank you. Thank you, Mr. Chairman.
    Mr. Smith. Thank you, Congressman. I am committed to doing 
that.
    Mr. Skeen. Mr. Peterson.
    Mr. Peterson. Good morning, and welcome.
    We will shift gears here a minute. Though we may have 3 or 
4 or 5 percent of the world's oil, I think we have at least 45 
percent of the world's coal. Some call us the Saudi Arabia of 
coal. They have not been treating us real well recently, but in 
my view, the last Administration kind of turned the switch off 
on coal, I think erroneously. Why have we not seen a widespread 
use of many of the technologies developed under the old Clean 
Coal program, and how will the new Clean Coal Power Initiative 
ensure that we do not repeat the problems experienced in the 
past?
    Mr. Smith. Thank you, Congressman. Again, if I could call 
on Mr. Rudins to more fully answer that question. He is very 
versed in our coal program.
    Mr. Skeen. Glad to have you.
    Mr. Rudins. Thank you very much.

                           CLEAN COAL PROGRAM

    To answer your question, if one looks at the Clean Coal 
Program, actually there have been successes in getting 
technologies into the marketplace. The initial wave of clean 
coal technologies that were demonstrated were emission control 
technologies for SO2 control. In fact, those technologies have 
penetrated the market quite a bit and reflect a significant 
cost advantage for the ratepayers of the Nation.
    Our internal estimates for Government and industry efforts 
associated with reducing the cost of scrubbers saved the 
taxpayer a cumulative of about $50 billion from inception to 
around 2005 as a cumulative benefit.
    Low NOX burners have actually entered the marketplace quite 
successfully as low cost vehicles for NOX control. About 75 
percent of existing coal power plants that are capable of using 
low NOX burners have installed them, with again the cumulative 
benefit through Government-industry efforts in our internal 
estimates being about $25 billion through the year 2005.
    So the technologies have entered the marketplace. We also 
learned quite a bit from projects that have not yet entered the 
marketplace. In part, it has been changing market conditions, 
as you can appreciate. Electricity prices have varied. Many of 
these projects are multi-year, five, six year projects where 
the economic conditions changed in the course of it and some of 
the market conditions that changed delayed the introduction or 
deferred the introduction of technologies.
    But there are two very innovative power technologies, 
integrated gasification, combined cycle, that currently just 
completed demonstration and are performing extremely well. They 
are candidates, those technologies, for replication and 
introduction into the marketplace. The rate at which they will 
be introduced very much depends on market conditions and price 
conditions. All new technologies, when they first enter the 
marketplace, have a higher initial costthan more mature 
technologies. That is always a hurdle.
    But we have learned quite a bit and in fact, we are 
applying those lessons learned as we go through the new clean 
coal projects as part of the President's initiative.
    Mr. Peterson. How do we get the new technologies into the 
old, inefficient plants? How do we accomplish that? Because 
that has been one of our problems, is the old power plants are 
heavy emitters. How do we get them up to speed cost-
effectively?
    Mr. Rudins. In the development of new emission control 
technologies for existing plants, clearly the first step you do 
is the research, then you do the demonstration. Then if again 
the market economics are right, they would enter on their own. 
If not, some incentives may be needed to help get over that 
initial hurdle for the first few plants. So that is something 
that internally we have also been discussing and a number of 
energy bills have looked at that are here.
    But it may require some form of incentive.
    Mr. Peterson. Are we getting adequate cooperation from EPA 
and regulatory agencies that in my view had a bias against 
coal, period?
    Mr. Rudins. Well, we have been working with EPA and other 
agencies in the interagency process very closely. So we have 
been trying to make it a team effort in terms of the products 
that come out of the Administration.

                  CLEAN COAL POWER PROJECTS IN PROCESS

    Mr. Peterson. How many clean coal projects are currently in 
process and how many of them do you expect to come to fruition?
    Mr. Rudins. There are a total of 38 projects, of which 27 
have been completed. Of the remaining 11 projects, 3 are in 
final reporting, 2 are in operating, 2 are in construction, and 
4 are still at early stages.
    Mr. Peterson. Do you expect them to be completed?
    Mr. Rudins. It is anticipated they will be completed. There 
is some uncertainty with that. But we anticipate that they will 
go forward.
    Mr. Peterson. Are you aware that the one they make jet 
fuel?
    Mr. Rudins. I am not exactly----
    Mr. Peterson. The Penn State project, they make jet fuel 
from coal.
    Mr. Rudins. Yes. That one is not part of the clean coal 
demonstration program per se. It is part of the clean coal 
research program. And yes, we are. It is a very good project 
and very good work is being done there.

                      STRATEGIC PETROLEUM RESERVE

    Mr. Peterson. What is the status of the storage area? How 
much do we have in? Are we getting the Strategic Reserve 
filled?
    Mr. Smith. Yes, we are, Congressman. I will ask Mr. Furiga 
to join us, who is our Deputy Assistant Secretary for the 
Petroleum Reserves. I believe that around 560 million barrels 
are currently in the Reserve. As you know, the President has 
directed that it be filled to its maximum current capacity of 
700 million barrels. It is my understanding that we are ahead 
of schedule on that fill.
    Mr. Peterson. Do you have the numbers?
    Mr. Furiga. Five hundred sixty million barrels is the right 
number as far as the inventory today. We have an additional 60 
million barrels under contract, scheduled for delivery between 
now and next January. That will bring us to 620 million 
barrels. That will leave 80 million barrels to fill to the 700 
million capacity. We would intend to obtain that 80 million 
barrels through the royalty in kind program, which we are using 
right now.
    As the Secretary said, we are a bit ahead of schedule. The 
contractors were not supposed to start delivering until April. 
The contractor is delivering almost a million barrels early 
this month. So we are ahead of schedule.
    Mr. Peterson. Do I have time for one more question?
    Mr. Skeen. Yes, you do.

                              NATURAL GAS

    Mr. Peterson. Natural gas. State College, Pennsylvania is a 
community that I represent that is going to have the first on 
the east coast bus system that is all natural gas. Has there 
been any work done to look at especially the suburban areas? It 
would seem to me that a win-win, taking away the need for 
petroleum and replacing it with natural gas, something that we 
are about 90 percent self-sufficient, I do not think we import 
much natural gas, would it not make sense to develop incentives 
in the urban marketplace to have buses, taxicabs and delivery 
trucks using natural gas?
    Mr. Smith. Yes, sir, Congressman, I agree. Number one, 
natural gas is our domestic fuel. We actually have about 85 
percent produced domestically, about 15 percent is imported. 
That is imported, most of it comes from Canada.
    Certainly there has been a lot of research on natural gas 
technology for vehicles over the years. There has been a lot of 
fleet conversion to natural gas. In fact, I rode over here this 
morning on a natural gas van. We have a lot of private vehicles 
that are propelled by natural gas.
    The challenge has been the infrastructure, the filling 
stations, if you will. I think that is always the challenge on 
alternative vehicles. We are moving along toward that. The 
market is solving some of those challenges, because people are 
demanding alternative vehicles, and the marketplace responds to 
demand. Certainly, the use of natural gas has been very 
successful as part of the fuel choices that help clean the air, 
particularly in very congested urban areas. They have made a 
lot of, on buses, yes, there has been an awful lot of 
technology.
    Mr. Peterson. It would seem to me it is a wiser use of 
natural gas than making electricity. I have never been real 
comfortable with that. I am for expanding the use of natural 
gas, but to me this was a double win because you get cleaner 
air in the cities where we have the attainment problems, and 
you expand the market. But it would seem to me that being 
Government, basically totally funds mass transit. I mean, it is 
a huge Government-subsidized system, with Federal dollars often 
buying the buses and often even States giving a lot, too. But 
those operate with Federal and State money almost exclusively. 
The ratepayer pays a small percentage of mass transit costs.
    It seems to me that we have the clout there to start with 
the bus system and then maybe some incentives to have the taxi 
system and the delivery trucks using those same fuel centers. 
But it would seem to me if we used our clout because we put the 
money up, we could take the bus system in this country and have 
it natural gas fairly quickly.
    Mr. Smith. Yes, sir.
    Mr. Peterson. Do you agree with that?
    Mr. Smith. Well, I certainly think again, it is part of the 
mix. We need to look at all areas. Different parts of the 
country have different challenges, both in termsof air quality 
and environment and the availability of natural gas. You cannot move it 
by truck. It has to be piped.
    We have a very aging infrastructure in this country. Quite 
frankly, our natural gas infrastructure has been developed over 
the years, primarily to serve commercial, industrial and home 
heating markets with local distribution companies and such. So 
there are some challenges there, too. But it is part of the 
mix, there is no question.
    Mr. Peterson. Thank you.

                       NATURAL GAS INFRASTRUCTURE

    Mr. Skeen. Mr. Secretary, following up on that same part of 
this, I am concerned about the state of the natural gas 
infrastructure in this country. Therefore, your proposal to 
discontinue research in this area alarmed me. We're next door 
neighbors to you over there, and we produce a lot of it.
    What research are you currently doing?
    Mr. Smith. Mr. Chairman, if you please, and I do want to do 
part of the answer to that question. But specifically, I would 
like to call on Mr. Guido DeHoratiis. He is our Acting Deputy 
Assistant Secretary for Oil and Gas Technology. If he could 
give you a summary of what we are doing now and the 
infrastructure challenges in the budget.
    Mr. DeHoratiis. I would be happy to answer your question. 
Currently in our natural gas infrastructure program, our 
program is focused on reliability of the system that we have, 
both the existing system, trying to make it more reliable, and 
expansion of the system to make it more efficient for the 
future. Right now we are doing work in sensors that can be used 
inside of lines to be able to predict when maybe there will be 
problems with the system. Also coming up with remote sensing, 
that we be able to sense, from a remote location, where there 
may be problems with the infrastructure system prior to an 
event happening.
    Also looking at more advanced technology, such as robotics, 
to be able, once you know there may be a problem, to be able to 
send a robotic instrument into a line to be able to repair it. 
Those are the types of things we are doing right now.
    Mr. Smith. Mr. Chairman, there certainly is a challenge 
there. That is going to be part of my top to bottom review. 
Because I have been very concerned, with my experience both in 
the private sector and the public sector, about our natural gas 
infrastructure needs in this country. It is much like a lot of 
our other energy infrastructure, it is aging. And a lot of it 
has not kept up with current technology. That is part of the 
challenge for us in fossil energy, is to help assist with that 
technology.
    There are numerous other challenges that are probably both 
too numerous and too complicated to get in our limited time 
this morning. But certainly, that is going to be part of my 
review, Mr. Chairman, is to see how to best direct our 
resources toward maximizing natural gas infrastructure 
technology.
    Mr. Skeen. In that circle of work, I think you are working 
on the right side of the thing to get this particular area 
interested in that situation. We would like to support that.
    Mr. Smith. Thank you, sir. I look forward to working with 
the Subcommittee on that.
    Mr. Skeen. Mr. Hinchey.
    Mr. Hinchey. Mr. Chairman, thank you very much. I just want 
to underline your concern about the infrastructure issue. The 
infrastructure for natural gas is as you describe it, Mr. 
Secretary, it is aging and inadequate. And the fact of the 
matter is that the infrastructure of our country across the 
board is aging and inadequate, especially in transportation all 
across the board. I know that this is an area that concerns 
you, and I hope that we can work together to do something with 
at least this part of the infrastructure or our country, which 
is really in desperate need of upgrading.
    Mr. Smith. Thank you, Congressman. I agree.

                 SOLID STATE ENERGY CONVERSION ALLIANCE

    Mr. Hinchey. I would like to follow up, on the points made 
by both Mr. Wamp and Mr. Peterson if I may, with a couple of 
questions. On the Solid State Energy Conversion Alliance, Mr. 
Wamp made the point that you are proposing a reduction in 
spending there for fuel cells. Last year it was $27.1 million 
for the year we are in now, and you are proposing to reduce it 
to $22.5 million in spite of the fact that, as Mr. Wamp pointed 
out, this Subcommittee directed the Department to continue to 
increase funding for this important program.
    It points out, I think, a problem that we have to some 
extent across the board. We are losing momentum in areas where 
we ought to be gaining it. We set goals and we start programs 
and then we starve them for resources. Then we wonder why the 
goals are not being achieved and the programs are not producing 
the results that we need.
    So let me ask you again, if I may. Why was this direction 
not followed, given the Solid State Energy program's great 
potential, and the fuel cell energy's great potential? Why are 
you not following the direction of this Committee and following 
the direction which I sense that you believe is the right 
direction to follow?
    Mr. Smith. Yes, sir, thank you, Congressman. I do not know 
the answer to that, in my 23 days on the job. But certainly, 
that is going to be a question I am going to be asking during 
my review that is due July 1st. It is top to bottom, it is 
comprehensive, and it will include those programs. I certainly 
will have more for you in the future on that. And I do look 
forward to working with you and the rest of the Subcommittee on 
these issues.
    Mr. Hinchey. Thank you, Mr. Secretary. That is a very fair 
and honest answer, and I appreciate it very much. We will 
continue to try to work very, very closely with you, because I 
share Mr. Wamp's concern about this program. I think it has 
great potential, and I know you do too. We ought to follow it 
up.

                           CLEAN COAL PROGRAM

    With regard to Mr. Peterson's questions about the Clean 
Coal program, let me just read to you, if I may, an excerpt 
from the budget on the issue of clean coal. Here is what it 
says, and I am quoting directly from the budget. ``The old 
Clean Coal Program was intended to demonstrate technologies 
that could reduce acid rain producing emissions from coal fired 
power plants. Projects requiring a minimum 50 percent cost 
share from industry. Commercially successful projects were 
supposed to reimburse the Federal investment. Less than $2 
million of the $1.6 billion expended, about one tenth of 1 
percent, has been repaid. Of the 50 projects funded, 12 costing 
$97 million were terminated or withdrawn prior to completion.''
    The General Accounting Office examined 13 projects. Six 
were behind schedule by two to seven years, and two were 
bankrupt. Now, I do not expect you to know much about this in 
your 23 days, Mr. Secretary, but I just read that to point out 
what the Administration recognizes in the budgetproposal as the 
problems associated with this program. I think one of the problems is 
that the Clean Coal program really ignores the threat to global 
warming.
    So the Administration is acting a little bit schizophrenic 
here. The Administration has made proposals with regard to 
global warming. Many of us think that they do not begin to go 
far enough. But at least, they have given some expression to 
the problem.
    There is really no technology that anyone knows of that in 
effect would repeal the laws of physics. You cannot get the 
carbon dioxide out of the burning coal. So the question is, 
what do you do given the fact that we do want to produce coal 
that burns more efficiently and more cleanly? What does that 
mean? It means that we are not putting contaminants into the 
air, causing acid rain, causing global warming, etc., we want 
to do that. But we do not have the technology to do it, because 
the law of physics does not allow that. And no one has been 
able to overcome that law of physics.
    So the only thing that we could be doing sensibly is to 
reduce the emissions. The clean coal technology ought to be 
concentrating on technologies that reduce emissions. But the 
budget does not reflect that.
    I would just ask you, in your review in examining the 
issues associated with clean coal, if you would pay very 
special attention to the problem of the emissions and ways in 
which we can reduce the emissions. Reducing emissions is the 
only way you are ever going to get public acceptance in the 
present environment, at least, public acceptance of so-called 
clean coal technology. This must be done because the clean coal 
technology, based upon the President's own statement in the 
budget, does not exist and has never succeeded, in spite of the 
fact that we have spent $1.6 billion trying to find ways to 
make it succeed. The only way to do it is to reduce the 
emissions. So I wonder if you would comment on that.
    Mr. Smith. Certainly that will be part of the review. I 
share your concerns. I think our Clean Coal initiative has 
great potential to reduce the emissions that you are concerned 
with. Also the pollutants that we have discussed, I think it 
really does have great potential. But again, I want that to be 
part of my review. I want to make sure that the dollars that we 
have spent get results. Certainly I am not prepared to comment 
on failures of the past, and we certainly need to look forward 
and not repeat the same mistakes. I certainly agree.
    Mr. Hinchey. Could I ask Mr. Rudins two specific questions 
in this regard?
    Mr. Smith. Yes, sir.

                     OLD VS. NEW CLEAN COAL PROGRAM

    Mr. Hinchey. Talking now about the new program on clean 
coal, to what extent do you expect the new program to fund 
retrofit technology to improve efficiencies and reduce 
emissions at existing power plants? There are 270 existing coal 
burning power plants. Will the new Clean Coal power initiative 
ensure that we do not repeat the problems experienced with its 
preceding programs?
    Mr. Rudins. Congressman, the answer to your first question, 
retrofit technologies in fact are eligible technologies for the 
private sector to bid under the public-private partnerships 
that we are setting up. We do not know in advance what specific 
technologies will be bid, but that is one of the areas of 
emphasis, in fact, to reduce emissions from existing plants as 
well as raise efficiency. From existing plants and new plants 
as well. There are two lines of attack, CO2 reduction and 
efficiency enhancement.
    The second one, which is also an eligible technology under 
the Clean Coal Power Initiative, is carbon sequestration. It 
may be too early for carbon sequestration projects to be bid. 
But the combination of efficiency plus sequestration would go a 
long way toward carbon reduction.
    Mr. Hinchey. I appreciate that. But my response is that I 
do not believe that what you are describing is going to achieve 
a fraction, even a tiny fraction of what both Mr. Peterson and 
I would like to see achieved, of better use of this resource in 
ways that do not contaminate the air. This bidding program that 
you are describing is just like a spit in the ocean. It is a 
tiny fraction of what we ought to be doing. We need to be doing 
a lot more. You do agree with that, do you not?
    Mr. Rudins. I appreciate your comments. The----
    Mr. Hinchey. You do agree with it, do you not?
    Mr. Rudins. My judgement is----
    Mr. Hinchey. When I see you shaking your head, that tells 
me you agree. [Laughter.]
    Mr. Rudins. The answer is that we indeed need to do more. 
But I believe within the budget we are doing more, and the 
President's commitment of $2 billion over 10 years will take us 
a long way there. Because that would be in direct support of 
our longer range program, the Vision 21 program, which by 2015 
hopes to get to near zero emission coal plant technology, which 
is what I think you are discussing, Mr. Congressman. There we 
are trying to push the technology envelope dramatically beyond 
what you could do today and take the plant efficiencies into 
the 60 percent range as compared to today's fleet average of 33 
percent, and have technologies that are so-called sequestration 
friendly, where you can integrate carbon sequestration 
technologies in a very cost effective way, so that in fact, 
even the carbon emissions might approach the zero level.
    Mr. Hinchey. How long have you been doing this now, more 
than a month?
    Mr. Rudins. Twenty-five years.
    Mr. Hinchey. In the Department?
    Mr. Rudins. In the Department.
    Mr. Hinchey. So you are the guy I need to be talking to. 
[Laughter.]
    Mr. Hinchey. Let me ask you this question. Why have we not 
seen a widespread use of many of the technologies developed 
under the old Clean Coal program? Also, now that we are going 
into a whole new Clean Coal program, which so far is undefined, 
what kind of assurances do we have that anything developed 
under this so-called Clean Coal program is going to show any 
benefits?
    Mr. Rudins. I just responded to a question that was asked--
--
    Mr. Peterson. I asked that same question.
    Mr. Hinchey. I guess I didn't get the answer. Please say it 
again.
    Mr. Rudins. Part of the answer is that there has been 
widespread introduction of clean coal technology into the 
marketplace. The earlier demonstration projects focused on 
emission control systems, like improved scrubber technologies, 
SCR, low NOX burners.
    Mr. Hinchey. Excuse me, sir, but that contradicts what 
issaid in the President's budget. The President is saying that 
commercially successful projects were supposed to reimburse the Federal 
investment. Less than $2 million of the $1.6 billion expended, one 
tenth of 1 percent, has been repaid. And of the 50 projects funded, 12 
costing $97 million were terminated or withdrawn prior to completion. 
That is what you are telling us in your budget.
    Mr. Rudins. But let me give you a context for that, Mr. 
Congressman, if I may. With regard to a Clean Coal project, 
there are two forms of repayment to the taxpayer. One form are 
the benefits associated with the demonstration and deployment 
of these technologies, which is the reduction in the cost that 
ratepayers pay for electricity, for environmental improvement, 
things of that sort. Those are the numbers I cited earlier as 
contributing a national benefit.
    That is the primary objective of pursuing the clean coal 
technologies, is those benefits associated with the deployment 
of those technologies.
    The second benefit is the repayment. And the repayment 
schedule is based on a 20 to 30 year projection or 20 to 30 
year period, including grace periods. You are correct in that 
statistic that to date the repayment has been small in terms of 
direct repayment. But the national benefit has been quite large 
in terms of the deployment of some of those technologies and 
the benefits associated with it.
    A context for the other statement that you cited from the 
GAO was that not all projects were successful. Well, that is 
true. When one pursues R&D and new technology development, one 
pursues a portfolio of technologies where you do not expect, 
unless you are awfully lucky, to have a 100 percent success 
rate. The National Academy of Sciences in a recent review made 
that point and observation as well.
    The GAO observations that you have made that were in the 
budget are accurate. But the context of that, in the testimony 
the GAO gave about six months ago here on the Hill, they also 
added nevertheless, that the Clean Coal program has been a 
success and a good example for all in Government to use as a 
good example of public-private partnerships.
    So you are right in the statistics. But in fact, if you set 
the context, the overall context, the program has been quite 
successful. Has it been perfect? No. No, obviously. Have we 
learned lessons? Clearly, we have. We hope to apply those 
lessons to the new fleet of technologies that we are going to 
try to demonstrate.
    Mr. Skeen. Would you like to hold up on this initiative--
    Mr. Hinchey. Can I ask one thing, Mr. Chairman, very 
briefly?
    Mr. Skeen. Sure.

              NATIONAL BENEFITS OF THE CLEAN COAL PROGRAM

    Mr. Hinchey. Could you just provide me with the national 
benefits that you are mentioning?
    Mr. Rudins. I would be happy to do so, sir.
    [The information follows:]

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    Mr. Wamp. Just one quick point, thank you, Mr. Chairman, 
for yielding, because we have to go vote and this may be the 
end of this panel. I just want to point out, because I was here 
for four years under the Clinton Administration, the budget 
request for fossil energy every year was less than the previous 
year under the Clinton Administration. So this is not a new 
phenomenon. We have been wrestling with every administration on 
clean coal technology, requests for the year not matching the 
rhetoric in the budget.
    So it is not new. It has been going on. Same thing. I 
almost repeated the same words that you said, Mr. Hinchey, when 
President Clinton was President, every year at this 
Subcommittee, saying, if you are for this and you are for 
improving the environment, why are you not increasing the 
budget for clean coal technology. So it is just a continuation 
of a tradition.
    But we would like to see over time for everybody to come 
together in a bipartisan way. Thank you, Mr. Chairman.

                           CO2 AS A POLLUTANT

    Mr. Peterson. Can I make one reaction? I guess I would just 
like to react a moment to the gentleman from New York's 
question and his premise, if I understood him. You spoke of CO2 
as a pollutant. The scientific community is not there yet. If 
CO2 is a pollutant and we are not going to expand anything that 
puts CO2 in the air, fossil fuels are out, period, all fossil 
fuels. In my view, declaring CO2 as a pollutant is a jump that 
the scientific community has not determined.
    Mr. Hinchey. You and I are reading different sciences.
    Mr. Skeen. We will have to leave it at that, Mr. Secretary.
    Secretary Smith. Thank you, Mr. Chairman, very much, and 
members of the Committee.
    Mr. Skeen. Thank you.
    [Additional questions for the record follow:]

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                                         Wednesday, April 17, 2002.

                           OVERSIGHT HEARING

                   ENERGY RESEARCH-MEASURING SUCCESS

                               WITNESSES

ROBERT FRI, RESOURCES FOR THE FUTURE, NATIONAL RESEARCH COUNCIL
MARK W. EVERSON, CONTROLLER, OFFICE OF MANAGEMENT AND BUDGET CARL 
    MICHAEL SMITH, ASSISTANT SECRETARY FOR FOSSIL ENERGY, DEPARTMENT OF 
    ENERGY
DAVID GARMAN, ASSISTANT SECRETARY FOR ENERGY EFFICIENCY AND RENEWABLE 
    ENERGY, DEPARTMENT OF ENERGY

                   Opening Remarks of Chairman Skeen

    Mr. Skeen. Today we are meeting to talk about how best to 
decide to appropriate the mix of energy research projects in 
the Interior bill. To help us in this we have Bob Fri on behalf 
of the National Research Council, Mark Everson from the Office 
of Management and Budget, Mike Smith and David Garman from the 
Department of Energy.
    Gentlemen, your full statements will be put in the record. 
I ask that you briefly summarize those statements. First, let 
me turn to Mr. Dicks, the Ranking Minority Member, for any 
opening remarks he would care to make.

                      Opening Remarks of Mr. Dicks

    Mr. Dicks. Thank you, Mr. Chairman.

                NATIONAL ACADEMY OF SCIENCES BACKGROUND

    In 1999, the Committee contacted the National Academy of 
Sciences and asked the Academy what the Academy could do to 
help us answer the question of whether or not we were making 
the best use of our energy research dollars through the 
Interior appropriation. We had invested over $22 billion in the 
22 years since the establishment of the Department of Energy. 
The question is, was it worth it?
    In the fiscal year 2000 budget, we funded a study with the 
Academy to answer that question. The Academy developed a 
measurement matrix and applied it retroactively to a sample of 
39 energy research programs, 17 in energy efficiency and 22 in 
fossil energy. The Academy in its report released in 2001 found 
that there were significant benefits from the programs 
reviewed.
    However, the Academy noted that DOE was not using a 
consistent methodology for measuring and reporting program 
benefits, and that DOE's evaluation relied too heavily on 
economic benefits from technology deployment rather than a 
broader array of benefits, environmental and otherwise. The 
Academy also found that how DOE research programs were 
organized and managed made a real difference to the benefits 
that were produced.
    Since the report was released, the Committee has been 
working with the Academy, the Department of Energy and the 
Office of Management and Budget to develop a means to 
prospectively apply the Academy's matrix to the decision making 
process for future energy research funding. This effort is 
particularly timely in light of the Administration's efforts to 
implement program and management reforms.
    Prospectively, predicting the success of research is at 
best an inexact science. The Academy's matrix provides a 
thoughtful and tested tool to use as a starting point. 
Modifications will be necessary and we need to talk about what 
those modifications should be. We need a consistent, sensible 
measurement tool, and we need to have the fortitude to drop or 
scale back dramatically research that is not yielding 
significant results. Likewise, we need to be prepared to 
accelerate or change course on projects that are promising.
    In applying a benefit measurement methodology, we need to 
respond to changing conditions. The world around us does not 
remain static while we pursue energy technology options. As the 
overall energy and environmental picture changes, we need to 
adjust appropriately our research priorities.
    Finally, we need to have an independent, objective, 
periodic review to ensure the measurement criteria are being 
applied appropriately and that timely decisions are made on 
whether or not to proceed with individual projects or programs. 
Today we will hear from the National Academy, the Department of 
Energy, and the Office of Management and Budget. I believe we 
need to reach a consensus on how we are going to address this 
issue so that we can walk hand in hand from the start and 
throughout the fiscal year 2004 and 2003 budget process.
    Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Fri, you lead off the panel.

                      Opening Statement of Mr. Fri

    Mr. Fri. Thank you, Mr. Chairman.
    My name is Bob Fri, and I was chair of the National 
Research Council committee that wrote the report to which Mr. 
Dicks just referred, and who gave an excellent summary of it, 
so I won't have to do that again. Let me, in summarizing my 
remarks, just touch on what seem to me to be a few key things 
that make this methodology work. The methodology is composed of 
two parts, essentially, one is a matrix, an accounting 
framework that allows us to lay out the various benefits of 
research programs in a way that's relatively easy to 
understand. The second is a long and technical list of 
definitions and instructions about how to fill out every box in 
the matrix, and I won't bore you with the details of that.

              MATRIX APPLICATION HISTORY AND OBSERVATIONS

    But let me just say, in our experience, having applied it 
to 39 programs, and continuing to work with it over the last 
several months, here are the things that strike me. First of 
all, it's important to track the full diversity of benefits. 
Our experience suggests that all of the elements of the 
benefits matrix, of which there are nine, are important. We 
found, however, that program advocates tend to concentrate on 
only one realized economic benefits, which is perfectly 
understandable, because they're easy to deal with.
    But public sector research has produced benefits that the 
private sector cannot justify. Therefore, the other parts of 
the matrix which deal with those kinds of benefits is 
absolutely important.
    Secondly, it's important to make the evaluation methodology 
intuitive and transparent for decision makers. We think that 
the matrix we've produced and the experience we've had with it 
suggests that it meets that criteria. Most decision makers 
don't want to get bogged down in a lot ofanalytic detail, but 
need some kind of a framework to deal with. And the matrix approach 
seems to work.
    Thirdly, it's important to keep the method tractable for 
analysts. The burden of data collection that we placed on the 
departmental staff was enormous, as was our own analytic task. 
And we didn't use very sophisticated techniques, in some 
regards, in processing that data. But in my judgment, our 
results wouldn't have been much affected had we used more 
elegant techniques. I think that doing a few key things right 
is more important than doing things elegantly.
    Fourthly, it's important to insist on conceptually sound 
and consistent definitions. It's easy to overlook because it's 
highly technical, but the definitional cookbook that I referred 
to a moment ago in our report is absolutely critical.
    Finally, it's terribly important to apply rigorous rules to 
fuzzy concepts. There are lots of fuzzy concepts in evaluating 
research, the proportion of total benefits that assign to 
Government funding versus private funding, the degree of 
technology acceleration that DOE can claim as opposed to the 
private sector, and so forth.
    Our experience shows that these assumptions significantly 
determine the outcome of the benefits calculations. So we 
insisted on rigorous and conservative rules in these areas, and 
placed on the program advocates the burden of showing why they 
were unreasonable. As you can imagine, that wasn't particularly 
popular, but it made a huge difference in the outcome, and I 
think produced a consistent set of results.
    But probably the greatest lesson that we learned from 
analyzing these 39 case studies presented in our report is 
simply that the methodology works, that it is feasible to 
design and to apply consistently a uniform methodology to a 
diversity of applied research programs. And if that is 
possible, then the stakeholders in DOE's applied research 
program, the Congress, OMB, the public and the Department 
itself, can reasonably expect the Department to develop and 
apply a uniform method for benefits estimation.
    In my view, the leadership for this task can only come from 
DOE management. I would certainly encourage you to encourage 
the Department to take up this responsibility at the highest 
level.
    At the same time, both Congress and OMB should require 
careful oversight to ensure that the critical features of the 
methodology are in fact incorporated in DOE's work. It seems to 
me that establishment of this oversight mechanism should go 
hand in glove with setting up the operational responsibility at 
the top level of the Department.
    Finally, let me thank you for giving us this task. It 
turned out to be one of the more difficult and interesting ones 
I have run into in my 25 years of working with energy research 
and development. And for my colleagues and myself on the 
subcommittee and on the Academy's board on energy and 
environmental systems, let me say we're fully committed to 
providing whatever help we can to make the implementation of a 
uniform method of benefits estimation successful.
    Thank you, and I'd be happy to answer questions at the 
appropriate time.
    [The written statement of Mr. Fri follows:]

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    Mr. Skeen. We will hold questions until the panel has 
concluded.
    Mr. Everson.

                    Opening Statement of Mr. Everson

    Mr. Everson. Thank you, Mr. Chairman and members of the 
Committee. I'm pleased to be here today. What I'll try to do is 
speak about the initiative at DOE on better research and 
development investment criteria within the context of the 
President's overall management agenda.
    We appreciate very much your leadership and your efforts, 
those at DOE and also of the National Research Council in all 
the work that's been done to support this important effort.

                     PRESIDENT'S MANAGEMENT AGENDA

    I serve as the vice chair of the President's management 
council, which is the group of chief operating officers of the 
various departments and agencies throughout Government which is 
tasked with implementing the President's management agenda. So 
I'm the acting head of that group. We are actively working on 
five Government-wide initiatives, the strategic management of 
human capital, competitive sourcing, improved financial 
management, expanded electronic Government, and budget and 
performance integration.
    Budget and performance integration is an attempt to 
introduce into the resource allocation process discussion of 
results, outcomes, performance. We are very clear that it will 
not be the only basis that funding decisions are taken on 
programs, but it is a starting point, and if you look at the 
President's 2003 budget request, you will see that we've begun 
that process of evaluating programs.
    There are nine agency specific initiatives. The initiative 
at the Department of Energy to provide better research and 
development investment criteria is one which is really the 
subject of your hearings today. Part of our strategy as we 
implement the management agenda is consistent with what my 
fellow panelists just indicated, we want these initiatives to 
be driven and taken on by the agencies themselves. They are not 
something that OMB does. So your remarks are entirely 
consistent with our own approach.
    What I would say is, when you turn to the research and 
development activities themselves, we're particularly 
interested in this effort. Because if we can be successful here 
in having rigorous, to use the same word, and good standards 
for evaluating these programs, these projects, then certainly 
if we can do it here, where there are very long term issues 
involved in terms of judging success, then we'll be able to do 
it when we evaluate whether we are making progress in diabetes 
or education or the other broader Government programs that we 
are seeking to address and that fit Government-wide initiative.
    If you look at the project itself, what we've done is 
piloted with DOE in the last year in certain selected areas 
that my colleagues in the Administration will speak to.We've 
done that on the basis of six established criteria that we think are an 
important guidepost for consideration of projects. They are, whether 
the research is part of a Presidential priority, where there is a clear 
public benefit and private sector investment is less optimal due to 
market failure, whether investment in research represents the best 
means to have the Federal Government participation as opposed to other 
policy, legislative or other initiatives, whether the proposals are 
comprehensive, complete and they have performance indicators, what's to 
be delivered at certain points in time and according to certain time 
lines.
    Finally, the last two would be whether there is competitive 
merit based process. We think that's a hallmark of something 
that needs to be done. And looking, finally, the sixth category 
is whether, again, whether milestones are being achieved.
    What I'd like to say in closing is, in preparation for the 
hearing, I spoke yesterday with the President's science 
advisor, Jack Marberger, because I wanted to get his assessment 
of what this pilot, how we should view this pilot that has been 
just undertaken and will lead to the expanded and the 2004 
budget process. What Jack told me, this is a quote, the pilot 
has given us experience with the process and added to our 
confidence that we can move forward to broaden the areas of 
science that will be included in this type of assessment.
    So as far as we're concerned at OMB, and the President's 
science advisor, what we've done to date in this area has been 
successful. We think we can expand it within DOE and now as we 
go to the 2004 cycle, expand it even more broadly to DOD, NASA, 
NSF and some of the other larger players in the science 
community.
    Thank you, sir.
    [The written statement of Mr. Everson follows:]

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                    Opening Statement of Mr. Garman

    Mr. Skeen. Thank you. Mr. Garman.
    Mr. Garman. Thank you, Mr. Chairman. I'm pleased to join 
with my colleague from DOE, Mike Smith, to discuss how we're 
integrating the recent recommendation to the National Research 
Council into our performance measurement systems and how the 
President's management agenda is complementing those efforts. 
We have a joint statement we would like to enter into the 
record.
    First, I want to thank you, Mr. Chairman, and this 
Committee, for your leadership in this area. The National 
Research Council study that you commissioned provided us with 
great insights into the complexities of benefits measurement 
and offered recommendations on how to advance the methodology 
we currently use to assess benefits. We've taken their 
recommendations very seriously.
    I also want to thank the National Research Council for 
their fine work.
    Improvement of investment criteria for DOE's applied 
research was also singled out, as Mr. Everson said, as one of 
the nine agency specific reforms highlighted in the President's 
management agenda, and performance is a key criterion for our 
investment, and it should be. The President has made it clear 
to us that we're not here to mark time, but to make a 
difference. Secretary Abraham has challenged us to leapfrog the 
status quo and pursue dramatic environmental benefits.
    Determining how we are going to manage our R&D portfolio to 
achieve results is an important challenge if we are to meet the 
expectations of the President, of the Congress, and of the 
public. The National Academy of Science study explored a 
critical piece of this picture, retrospective benefits. Their 
task did not address the Government Performance and Results Act 
or the President's management agenda. Our challenge now is to 
integrate their insights into our broader responsibilities.
    We've been working with our colleagues in fossil energy to 
develop an overall complementary strategy designed to provide 
quality, consistency and transparency in that work. This fiscal 
year our goal is to develop the basic methodology and to use 
this methodology to complete the development of a framework 
based on that National Academy of Sciences framework, that 
benefits matrix, with specific characterization of how each 
type of benefit should be measured. Much work will be needed 
beyond fiscal year 2002 but we think that the activities we 
have underway will start to have a beneficial impact in our 
2004 budget submission.
    During fiscal year 2003, our goal is to pilot some of these 
models, building confidence that the basic methodology we're 
developing this year is cost effective and is producing useful 
results. By 2004, we should be prepared to begin a validation 
of full application of this next generation approach to 
benefits estimation. This will require that we collect and 
analyze market data.
    Developing a robust model for estimating the full set of 
benefits across the Department's entire energy R&D portfolio is 
a tall order. Nonetheless, we believe it is fundamentally 
necessary if the Department is to be a wise steward of taxpayer 
dollars. We appreciate very much the work that Dr. Fri and his 
team has done. They provided us a matrix framework to begin 
that work. We're taking it very seriously. We're overlaying the 
R&D criteria that the President's management agenda has asked 
us to do, and we look forward to working with this Committee in 
the future as we undertake that work.
    And as always, we're pleased to respond to any questions 
you have today or in the future about these activities. Thank 
you, Mr. Chairman.
    [The written statement of Mr. Garman and Mr. Smith 
follows:]

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    Mr. Skeen. Thank you.
    Mr. Smith.

                     Opening Statement of Mr. Smith

    Mr. Smith. Thank you very much, Mr. Chairman.
    I want to express my thanks, Mr. Chairman, to the 
Subcommittee for allowing us to appear today, and particularly 
my opportunity to testify with Assistant Secretary Garman to 
discuss our efforts to build on the work that's been discussed 
already by the National Research Council and, as Assistant 
Secretary Garman mentioned, implement the President's 
management agenda.
    We have spent a lot of time in the past working on benefits 
measurement. But these measurements did not appear to play much 
of a role in the program evaluation process. Part of the 
problem was that our stakeholders did not understand how we got 
those estimates and did not really have confidence in them. 
Through the National Research Council study that you, Mr. 
Chairman, and the Subcommittee commissioned, we now have a 
framework that will help the different DOE energy research and 
development offices approach benefits estimation in a 
consistent, hopefully transparent and credible manner. The 
timing for these activities is excellent, because we are also 
working hard to implement the President's management agenda.
    Potential benefits are an important component of the 
investment criteria that are being developed under the agenda. 
While R&D investments are extremely difficult to assess, we are 
determined to show that taxpayer dollars are being invested 
wisely due to effective R&D planning and program management.
    The NRC benefits report focused on past benefits, as 
Secretary Garman mentioned. And much of our effort since the 
report was released last fall has been devoted to extending 
these results to the estimation of future benefits. In March of 
this year, four DOE research organizations, including Fossil 
Energy, Energy Efficiency and Renewable Energy, sponsored a 
workshop with participants from DOE, industry, the academic 
community and private research institutions met to exchange 
insights and discuss approaches.
    The workshop developed many insights, some of which are 
discussed in our joint statement that we have submitted for the 
record, Mr. Chairman. But I would like briefly to comment on 
the general findings, which in fact were not surprising.
    For example, I think the three that are the most important, 
and most beneficial for the Committee's work is the fact that 
they stated, don't compare tomorrow's technology with 
yesterday's. Existing technology will continue to improve on 
its own, and this may make some new technology less attractive.
    Secondly, don't ignore competition from other advanced 
technologies. For example, Fossil Energy, Nuclear Energy and 
the Office of Science and Energy Research all have technologies 
that can compete in the electricity market in the long term, 
and this needs to be considered in the analysis. Thirdly, don't 
assume that we know what the world will be like 10 or 20 years 
from now. Certainly we've seen in the last 10 to 20 years how 
much change there's been and how much change there's been in 
the energy industry. Historically, forecasters have not had a 
very good track record in forecasting very far into the future. 
So it's important to consider more than one future energy 
scenario.
    We do intend to study benefits estimation as we move along, 
and I can assure you that each year, starting with the fiscal 
year 2004 budget, improvements will be evident, including the 
areas just cited. As part of this process, there will be an 
increased opportunity for key energy stakeholders to review our 
efforts.
    There are some things that will take a while. For example, 
integrating fossil energy's oil and natural gas supply models 
will take a couple of years. But the resulting model will be 
more user friendly and more effective for addressing R&D 
planning and policy issues.
    I join Assistant Secretary Mr. Garman, Mr. Chairman, in 
thanking the Committee and would echo his comments that we look 
forward to continued discussion and working with the 
Subcommittee. We would be happy to answer any questions, Mr. 
Chairman.

                         ACADEMY MATRIX PROCESS

    Mr. Skeen. Does the Academy matrix provide a transparent, 
easily applied measurement system that can be employed with a 
lot of administrative time and money? If you would please 
explain how this works.
    Mr. Smith. Would you like for me to comment on that first, 
Mr. Chairman?
    Mr. Skeen. Yes.
    Mr. Smith. Certainly. As far as fossil energy is concerned, 
we think that it will not impact our budget process, that we 
will be able to provide that transparency and implement these 
recommendations in a cost-effective manner. We estimate that we 
have planning already for the next two or three years of 
several hundred thousand dollars in our budget to solve these 
challenges that we have.
    Mr. Garman. And we too believe that our analytical budget 
can support this effort. As we develop this model of benefits 
framework that we want to employ, we want to make sure, as Dr. 
Fri has pointed out, that we only collect the data we need to 
collect. We don't want to layer bells and whistles on the 
analysis that add cost without adding much value. It's going to 
be a challenge for us to make sure, and we want to continue to 
work with the Academy to make sure that we're doing just that.
    One of the things that we learned in the benefits workshop 
that Assistant Secretary Smith discussed is that some people 
really go overboard on analysis, and they spend a lot of money 
for analysis that doesn't necessarily add value. So that's 
going to be our challenge in working with you to define this 
comprehensive and transparent framework that does add value 
without adding a lot of cost and expense to our analytical 
efforts.
    Mr. Skeen. Mr. Dicks.
    Mr. Dicks. Do you agree with Mr. Fri that in order for this 
to happen, it's going to take the top leadership at the 
Department of Energy, in order to implement something like 
this? In other words, the people who are making the grants 
don't really have a great incentive to do this. So it's going 
to take you and Mike Smith to implement this thing?
    Mr. Garman. I absolutely agree. We're committed to do so.

                 GOVERNMENT PERFORMANCE AND RESULTS ACT

    Mr. Dicks. Let me ask you this. You mentioned the 
Government Performance and Results Act. Tell me, what does that 
add to this? And I certainly understand why you would have to 
build that into it. But tell me what that adds to this.
    Mr. Garman. Sure. The Government Performance and Results 
Act asked my office to evaluate its programs, specifically in 
terms of the amount of energy use avoided and emissions 
avoided. It asked us to estimate, prospectively, what kindof 
benefits we are going to garner in the future from the adoption of 
these technologies. We have done this for years, and we have used 
outside contractors to validate and in this case, Arthur D. Little, to 
validate the work that we do.
    What the NRC framework has given us, and what the 
President's R&D criteria has given us, are different methods of 
adding value to that foundation of analytical measurement we 
already undertake. I totally agree with Dr. Fri in terms of the 
importance of trying to measure, say, environmental benefits 
beyond just economic benefits.
    Mr. Dicks. For security or homeland defense----
    Mr. Garman. Exactly. Those are very difficult. It's 
difficult to measure and assign a number to the value of a 
national security benefit. Those are the sort of questions that 
we're grappling with as we build this model that we can test 
and validate and take into the future.
    We're trying to build something that is going to stand the 
test of time. We understand that the R&D work that we do is not 
going to, in some cases, yield benefits for 5, 10 or 15 years 
into the future. It's very important that we undertake a 
comprehensive effort that is not only going to satisfy you, 
it's going to satisfy the public, it's going to stand up to 
peer review and it's going to be transparent and 
understandable, so people can understand what it is we're doing 
and how we're counting the benefits.
    Mr. Dicks. When you're talking about this, and in Dr. Fri's 
statement, he talks about, we've done the retroactive look at 
what, 39 of these programs. I think that's very important. I 
don't think you really, you have to go back and analyze, what 
have you gotten done. But then the big challenge is, how do you 
then develop a matrix to deal prospectively with new grants 
that are being made, and look at the diversity of concerns? I 
think one of the points in his statement is that too much of it 
has been, what has this proved in the marketplace, rather than 
what has it added to overall knowledge base, what has it added 
to improving the environment. There are other issues that 
Government should be involved in, other than just market 
concerns, don't you agree with that?
    Mr. Garman. Yes, sir, I do. I think there are public 
benefits in terms of, for instance, reduced emissions, clean 
air, that aren't always valued in the marketplace. We have to 
somehow be able to capture that value as we undertake this 
analysis.

                        MATRIX FOR FUTURE GRANTS

    Mr. Dicks. What about the perspective? What do you think 
about having a matrix for future grants?
    Mr. Garman. As we've grappled with this, of course, none of 
us have a crystal ball, none of us know what oil prices or gas 
prices will do in the future. For instance, an alternative 
energy technology that we develop might be very attractive to 
the marketplace if natural gas prices are $4 a thousand cubic 
feet. But if they're $2 a thousand cubic feet, it might not be 
that attractive in the marketplace.
    So what we have to be able to build into a prospective 
analysis is to understand what kinds of different economic and 
regulatory scenarios we might face in the future. Now, of 
course, that can take us down a trail of analysis that could be 
paralyzing if we're not careful. I think one of the models that 
we're thinking of is to come to an agreement on a projected 
base case scenario, perhaps predicated on what the Energy 
Information Administration believes is going to happen with 
future markets and situations.
    But then beyond that, to ask ourselves, well, what happens 
if the Energy Information Administration is wrong and natural 
gas prices or oil prices are much higher or lower than they 
estimate? What kind of sensitivity will that have to the 
analysis that we're undertaking? Those are sort of the 
alternative scenarios that we also want to be mindful of as we 
undertake the analysis.

                  CURRENT LEGISLATION AND REGULATIONS

    Mr. Dicks. It seems to me that you need to look at current 
legislation and known regulations when measuring benefits. If 
you start making too many assumptions about future legislation 
and future regulations, you become grounded in speculation 
rather than reality. Would you comment on that?
    Mr. Garman. Absolutely. I would agree with that, and that's 
why I think it's important that this analysis be transparent. 
So the public understands what the assumptions were made 
underlying that analysis. That's very important.
    Mr. Dicks. Mr. Everson, would you like to comment on that?
    Mr. Everson. I agree with everything that's been said. The 
work that's been done, I think, is clearly a piece, what you've 
done is clearly a piece of the broader set of criteria that we 
feel need to be applied in this area. Again going back to my 
conversation yesterday with Dr. Marberger, he said we need to 
be flexible in how we apply all these standards because of the 
complexities of science. We agree to that.
    The concept of the evaluation that we're working out with 
the Department and with the science advisor's office, it isn't 
a series of gates that would say yes or no, based on bright 
lines on a particular criterion, it's more a rigorous process 
to try and make sure that all of a set of issues or parameters 
have been looked at and considered before a decision is taken 
going forward. I support what was just said.
    Mr. Dicks. Mr. Fri, did you want to comment?
    Mr. Fri. Mr. Dicks, it seems to me everybody's pretty much 
on the same page as far as I can tell from the comments today.
    Let me just stress one thing about the matrix we've talked 
about so much, precisely because it is difficult to quantify 
and measure many of the public benefits, security benefits, 
environmental benefits. What the matrix does, and can help do 
prospectively as well as retrospectively, is simply to provide 
an organized way of talking about these things. Otherwise they 
just sort of all fall together in one big lump and it's hard to 
sort out.
    The matrix is just a simple minded way of finding places to 
put each piece so that you can talk about it in a way that's 
kind of intuitively attractive. Nothing particularly elegant, 
it just works. And I think it's important to keep that concept 
in whatever we do going forward, because people on this 
Committee, the public, senior decision makers at the Department 
of Energy, need to be able to talk about these things in a 
common language, and that's all it is, is a common language.
    Mr. Dicks. Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Wamp.

                      Opening Remarks of Mr. Wamp

    Mr. Wamp. Thank you, Mr. Chairman.
    I find this very helpful, and I want to thank our 
professional staff for reminding us how important some 
accountability is in getting our bang for the buck in 
energyresearch, both at the Government level and through these other 
partnerships. I know as a member that's been here for five and a half 
years on this Subcommittee, I'm oftentimes more interested in what is 
the latest breakthrough, what is the actual technology we can expect to 
go home and tout than I am the accountability of whether or not your 
systems and your long term holding accountable the programs is really 
beneficial.
    But I'm very interested today, just sitting, listening and 
understand what you're doing, whether or not we're approaching 
a time in our country where we're more in a crisis and we're 
going to have to--if we were just totally at peace, we didn't 
have the homeland security challenges, we didn't have the 
environmental problems that we had today, then I can kind of 
see how you would establish some long term matrix for better 
management and improvement of bottom line through long term 
basic research investment, through the Government, etc.

                 GETTING TECHNOLOGY TO THE MARKETPLACE

    But we're now at a point where I'm feeling like we'd better 
get some of this research to the marketplace sooner than later. 
Did you look at all, or can you assess the cost benefits and 
how they ramp up based on us pushing the applied technologies 
more to get some of this research further along? For instance, 
when we talk about the hot button items, the fuel cells and 
hydrogen and things that clearly would bring national security 
benefits and environmental benefits rapidly if we expedited 
that, how can we analyze a shorter term business plan to get 
these things done and do the cost and benefits stay intact if 
we push the envelope?
    I asked Secretary Abraham at an energy and water hearing 
recently when the freedom car might be on the road. I think the 
range really realistically is 2015 to 2020. But the truth is, 
for me, the highest bang for the buck at OMB would be to move 
that up and free up our country. That's why they call it the 
freedom car, because that's where most of the fossil fuels, 
most of the imports are going to transportation, that sector. 
I'd rather see us push it.
    Do you all have any commentary on how that would change 
your management structure and your study and all that, to try 
to push the envelope on getting these technologies to the 
marketplace quicker?

                             WEATHERIZATION

    Mr. Garman. I'll try to take the first cut at that one. We 
do have, among the activities we undertake, deployment 
activities that are designed to push these technologies into 
the marketplace. The most common example of a deployment 
activity is of course our weatherization program, where we are 
guaranteed a sure benefit. We know that for every dollar we 
invest in weatherizing the home of a low income American, we 
know that we're going to get $1.80 worth of return.
    That's part of the portfolio balancing that we do, short 
term deployment. It's rather, compared to some of the other 
technologies that the NRC pointed to in our portfolio, that's a 
relatively low return. But it's a sure fire return. We balance 
those against some of the longer term higher risk activities 
that we do undertake.

                              FREEDOM CAR

    You mentioned Freedom Car. There are substantial risks, 
technological risks that we have to confront in terms of the 
cost and durability of fuel cells, not to mention the ability 
to store and manufacture at an affordable fashion the hydrogen 
that will be needed to fuel them. To rush that before some of 
the basic technology is in place to ensure that we can do it I 
think would put some taxpayer resources at risk.
    Mr. Wamp. Including the large infrastructure to actually 
have hydrogen units that people could draw their fuel from, 
correct?
    Mr. Garman. Right. And I wouldn't want to start investing 
heavily in that infrastructure until we had some certainty that 
we are going to be able to deal with the cost and durability 
issues with the fuel cell stack itself in the vehicle. So those 
are some of the tradeoffs we're constantly dealing with. I 
think that what you have helped us do, what this Committee has 
helped us do, we know without any analysis whatsoever we should 
start with a portfolio approach that balances short and long 
term, high risk and low risk.
    The President's management agenda has given us a series of 
very important questions that we need to ask about any R&D 
activities we undertake. On top of that, the benefits matrix 
suggested by the National Academy has given us even more value 
to allow us to sharpen the pencil a bit more on what we can 
expect from these technologies and when we can expect them and 
the kind of benefits that we should expect from them.

                                 FUSION

    Mr. Wamp. Do you have a lower cost benefit on the research 
issues like fusion that are a little farther out there than the 
ones that we're clearly right in the middle of, like fuel 
cells? Is there a direct line there?
    Mr. Garman. I would not venture to comment on fusion. 
Fusion has been one of those things that's always been 25 years 
away as far as I've known. That's all I've known about it. It's 
always slightly out of our reach.
    Dr. Fri. I've been at it for 25 years, and I have the same 
view. [Laughter.]
    Mr. Everson. I'll just go to the broader implications of 
your question first. Obviously, Government is not known for its 
speed. I think that's one of the issues you're getting to. 
Clearly, if you look at two of the six criteria that the 
President has articulated, the first is, the program, support 
and area identified by the President is a high priority. That's 
a standard that we're holding the Department and other 
Departments accountable to as we broaden this initiative. I 
think that gets to your point.
    The last criterion is programs are making progress toward 
milestones and projects are producing benefits on schedule and 
cost effectively. One of my observations across Government, and 
not just looking into this area, is that everything we do is 
just extended, we extend the due dates constantly on when we 
are going to realize certain benefits. We think that by 
developing the grids that we're developing, working with the 
Department, we'll get more attention to this, there will be 
less slippage, there will be more serious discussions when we 
get to the budgeting discussions internally as to priorities. 
We welcome the Committee weighing in on where the priorities 
ought to be, of course.
    Mr. Wamp. Mr. Garman, you're a good person to answer this 
question. I'm interested in whether or not--we're in a period 
here after the Republican majority in 1995 and then the Senate 
went back the other way and we've had a Democratic President 
and a Republican President, we're in a period of time where 
things are going back and forth. There's no ideological mandate 
driving the agenda, there's no party mandate driving the 
agenda.
    Are we losing in terms of long term investment and long 
term planning, are we losing any cost benefit because of 
thechange. We jump, PNGV, freedom car. Examples like that, does that 
slow us down in terms of long term planning, or is there enough 
coordination by career people that keep these matrices on line long-
term regardless of which ideology has the majority that given year?
    Mr. Garman. I think that the Government Results and 
Performance Act is the basic statutory underpinning that tries 
to make sure that we're linking the delivery of public benefits 
with the expenditure of every public dollar. And that basis, I 
think, has provided us with some analytical capabilities that 
have been constant. That's not to say that we can't do a lot 
better. And I believe we can do a lot better. I think as I said 
earlier, both the President's management agenda and the NRC 
benefits framework gives us some new tools to add value to that 
work that's always been done.
    But we understand the budgetary situation over the long 
term. And we understand that budgets are going to be squeezed 
and we're going to be in a higher level of competition, not 
only me competing with Mike for dollars within DOE, but the 
Department competing with other federal agencies in Government 
for dollars. We're going to have to be able to show and 
demonstrate the value of our work or we're not going to get the 
dollars.
    Mr. Wamp. One final question for now, Mr. Chairman. I'll 
give you like three examples, because I want to know what kind 
of cost benefit ratios we have when we partner with either the 
private sector or universities.

                              PARTNERSHIPS

    We have a thing called ``idle air'' that's trying to lower 
the fuel use of 18 wheelers while they're parked and the 
drivers are sleeping because they have to now. Yet their trucks 
continue to run. And if they had an alternative way of keeping 
the equipment going without the gas being burned, you would 
dramatically lower your fuel costs.
    But that's a private organization that would like to 
partner with trying to get that technology through the research 
and determining the cost and benefits and get it on the ground. 
Our universities clearly want to partner more, and I would 
assume the cost benefits would have to escalate if we're 
sharing the burden of research with the States through their 
universities. And then we have an organization in Japan, I 
think, that wants to partner with TVA right now in some steam 
gasification technology that's breaking through. They want to 
invest their money in our country, and I can't see anything 
wrong with that, if it brings technology to the marketplace 
quicker that reduces the emissions and goes in an alternative 
form of producing electricity.
    Do our cost benefits increase when we partner?
    Mr. Garman. Absolutely. I would just categorically on near 
and mid-term R&D, coast sharing and partnering with the private 
sector is very important. Nothing is more compelling than to 
see a private company willing to put up some of its dollars and 
match it with public dollars. That's very, very important.
    Now, there are some long term technologies that are just 
beyond the scope of any interest on the part of the private 
sector of investing in. We encounter that, too, and we 
understand there are some long term technologies that 
Government will be investing in alone or with universities or 
with the national labs. Because there is very little private 
interest in partnering or sharing in the costs of dollars that 
aren't going to deliver commercial benefits for 15 or 20 years 
down the road.
    Mr. Fri. I might just comment, Mr. Wamp, on your earlier 
point about accelerating some things. We looked, in the course 
of our study, at some of the early projects in trying to 
develop alternative fuels, like coal liquefaction and so forth. 
Those were things the Government undertook at a very rapid 
rate, trying to make something happen.
    Basically, we learned two things out of that. One was, it 
is absolutely essential to have a partner, an industrial 
partner, that will take that product to market. And I think in 
the case of hybrid vehicles and fuel cell cars, that seems to 
be taking place. But that's essential, it was pretty clear when 
the Government thought up a great idea that the private sector 
wasn't interested in, nothing, nothing happened.
    But the other lesson, and in some respects more important, 
is be prepared to fail. You can go ahead and devote a lot of 
resources to a high priority item, which is fine. But you are 
taking two risks. One is a technical risk, that Mr. Garman 
mentioned, and the other is a policy risk. You may decide five 
years from now that the reason for that acceleration is not as 
compelling as you thought it was, which is precisely what 
happened when oil prices fell through the floor in the mid-
1980s.
    But if one is willing to accept those risks and be 
accountable for them, it is certainly possible to try and push 
the program ahead as fast as you can.
    Mr. Wamp. Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Nethercutt.

                   Opening Remarks of Mr. Nethercutt

    Mr. Nethercutt. Thank you, Mr. Chairman. Welcome, 
gentlemen. I'm glad you're all here. Mr. Smith, I had a nice 
conversation with you yesterday. I appreciate your coming in.
    I'm sorry I missed Mr. Wamp's questioning. I had to make a 
phone call. But I understand he was talking about fuel cells. I 
want to just ask you about fuel cells.

                               FUEL CELLS

    I would refer you to an article that appeared in my local 
paper in Spokane on the 12th of April, how the Guard puts fuel 
cells to the test. What's happened is, there's a 3,000 watt 
electricity powered by fuel cells at Fairchild Airport Base, 
actually Geiger Field nearby. It powers the National Guard 
facilities.
    It's been a great success so far, and it's like apparently, 
the Department of Defense buys 2 percent of all the electricity 
used in the USA. So there is this great potential, I think, for 
fuel cell technology that is being deployed now at six 
locations for the National Guard around the country that I 
think has great potential. So I echo his point of view that if 
we can bring this technology to the marketplace sooner and 
faster and better, it's going to benefit the country.
    Mr. Everson, I noticed in your R&D criteria in your 
testimony you made reference to number two, projects support 
research in which there is a clear public benefit and private 
sector investment is less than optimal due to market failure. 
That sounds in part positive, but it sounds fairly negative. In 
other words, if the private sector failed and there is no 
market and nobody is going to invest in it, maybe the 
Department of Energy would.
    I can see some examples where that might be valuable. But 
maybe it needs a little clarification. We're not going to take 
up failed technology, at least where there's no private market, 
that the Government will somehow step in and help.Will you 
clarify that?
    Mr. Everson. I think that's exactly right. As we work with 
these overall guidelines, again as I said, I think you were out 
of the room, sir, these are not gates that should be applied 
there, as my fellow panelists were indicating. They are 
considerations that we should run projects through to see, that 
is, that there is full consideration of all the issues. That's 
not to say market failure is something that has to have 
happened here.
    Mr. Nethercutt. I understand. I appreciate that. I'm glad 
it was clarified for the record.
    Mr. Everson. Right.

                INTERNATIONAL FOSSIL FUELS PARTNERSHIPS

    Mr. Nethercutt. Let me ask the two Secretaries what your 
view might be on the situation facing our country and OPEC and 
the challenges that we face in the middle east. To what extent 
do you believe there is potential for partnering or developing 
energy technology in this country that could be partnered with 
other countries of the world? I heard Mr. Wamp talk about a 
Japanese partnership possibly.
    What do you see as the problem, number one, is it rather 
acute, as I perceive it to be? Or is it not? And second of all, 
what might we do with non-OPEC countries to encourage their 
energy technology interest in U.S. companies?
    Mr. Smith. Congressman, thank you. The challenges are 
great. You're certainly correct. Just to put things in a bit of 
historical perspective, that might help answer your question, 
back in 1973, early 1970s, when we experienced the embargo that 
caused the long gasoline lines, we were 36 percent dependent on 
foreign sources for our petroleum products. Today we're right 
at 60 percent, nearly double. It is perilous, and you only need 
to pick up the newspaper or turn on the television and story 
after story in different parts of the world add to that 
concern, if you will.
    There's a bit of good news, though. Since 1973, the 
industry has not only developed incredible technology in 30 
years, that has led us to the ability to find, produce, deliver 
more and more fossil fuel, fossil energy, but also deliver it 
in a very environmentally safe way that has added to our, the 
United States', ability to have sources of energy to make up 
that 60 percent from areas of the world that aren't quite as 
unfriendly as they were in 1973.
    We've developed, we being the oil and gas industry around 
the world, resources all over the world that didn't exist 30 
years ago. That's the good news. And certainly the instability 
that's been mentioned by my three colleagues here today in part 
of their testimony, the volatility in part of creating the 
matrix that we're visiting about today, certainly comes from 
oil and gas prices that are extremely volatile.
    My office in Fossil Energy over the years has developed a 
very strong program internationally in oil, natural gas and 
coal, working with other countries around the world to help 
export some of our technology that allows these emerging 
nations that are developed just now, if you will, in the 
initial stages of developing their fossil energy, to be able to 
do that in a very responsible way and avoid some of the 
mistakes, quite frankly, that we in the United States made the 
last 100 years, simply because A, we were plowing new ground, 
and B, we didn't have the technology to fully develop resources 
and do it in an environmentally safe way.
    So we are constantly working with colleagues around the 
world to export that technology. I've made the statement 
publicly before, Congressman, that if it were not for 
technology and the developments that we've made, such as three 
and four D seismic and horizontal drilling and other completion 
techniques that have allowed us to get more production out of 
the ground, we would be in severe trouble in this country. We 
would be producing a lot less than just 40 percent of our oil 
needs, for instance, and our natural gas deliverability would 
be less than it is today.
    So the technology, part of which we're talking about, 
certainly today these matrices we're developing are there and 
the challenge that Assistant Secretary Garman and I have is to 
adapt to some of this. As Congressman Dicks asked a moment ago, 
will we have leadership from the top? The answer is yes, 
because we view this as a way to address some of these 
challenges I've mentioned and work with partners around the 
world to ensure that our energy needs come from stable sources.
    Mr. Garman. Congressman, Mike focused of course on the 
production side of things, and we're mindful of the fact that 
we're 56 percent dependent on foreign oil, 66 percent of our 
oil is used in the transportation sector. Our transportation 
sector is 95 percent dependent on oil. And that as a 
consequence has made that our number one priority in terms of 
trying to reduce our use of oil through gaining, and getting us 
eventually to the freedom car program and the use of fuel cells 
off of oil as a transportation fuel some day altogether.
    You mentioned international partnerships. We're noting, as 
far as we can tell, Japan is probably spending more on PEM fuel 
cells, proton exchange membrane fuel cells, our transportation 
fuel cells, probably more than we are for the first time. And 
that's a wakeup call for us, that we can either compete with 
them or collaborate with them on this breakthrough that would 
help both of our nations. We do have some existing science and 
technology cooperative agreements with Japan and we will be 
exploring those as possible venues for working together on fuel 
cells. It would help both of our nations get away from 
petroleum in the long term.
    Mr. Nethercutt. If I could just ask one quick question, Mr. 
Chairman.
    Mr. Skeen. Go ahead.

                    ARCTIC NATIONAL WILDLIFE REFUGE

    Mr. Nethercutt. I know your history with respect to Alaska, 
Mr. Garman. I respect that, and I'm one who feels that we can't 
ignore ANWR. In your shop, your offices, would we benefit 
technologically from the effort to extract gas on the North 
Slope in such a fashion that it would assist you and the 
development of technology for other countries of the world as 
we cooperate internationally? Is there a net benefit to 
technology by using the latest on the North Slope?
    Mr. Garman. Absolutely. And I know I'm kind of getting in 
Mike's area here. But some of the breakthroughs that he 
discussed, 3-D and four dimensional seismic work, directional 
drilling, those are the very technologies that allow you to 
extract the potential reserves of the coastal plan of the 
Arctic National Wildlife Refuge from a very, very tiny 
footprint. And that is technology that should be replicable 
around the world with a view toward reducing the environmental 
impact of oil development.
    Mr. Nethercutt. Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Taylor.

                     Opening Remarks of Mr. Taylor

    Mr. Taylor. Mr. Chairman, thank you very much.
    I can put this out to any one of the three of you, ifyou'd 
like. It runs along the line somewhat that Mr. Wamp was talking about, 
the technology or the analysis you're doing, and I appreciate the 
analysis you're doing.
    But I look back over the history, 1974 was probably when we 
started getting serious about energy in most States, because of 
that crisis. And of course, again in the last 1970s when the 
shortage of gasoline erupted.
    But despite our concern in the 1970s twice, at least, and 
of course in the 1980s and now up through today, when you 
examine what we're doing, we seem to be leaning more toward the 
Luddite mentality of the crowd and doing foolish things. I 
wonder, do you have some responsibility or do you feel some 
responsibility to speak out on things that have no real meaning 
in energy?
    As an example, look at nuclear. In 1979, we stopped our 
work in that whole area, Britain and France moved ahead. I have 
visited both facilities there. They haven't had the world come 
to an end, and they have used nuclear to supplant a lot of 
fossil fuels. With the contribution that's made to the air, 
that's positive also.
    They very tenaciously used 97 percent of their fuels, we're 
spending billions of dollars with about 25 percent of our fuels 
on where we're going to put it. Most of it is lying around, and 
maybe some time we will get around with more billions where 
we're going to put it. That is a direct result of the Luddite 
mentality I'm talking about of a group of people, well-meaning, 
I suppose, that stopped the policy dead in its tracks. That's 
why I say, the public can't make a judgment, because few of us 
are nuclear engineers and can comment when we get these 
ridiculous sorts of things put forward. It's hard to make a 
real comment.
    Fossil fuels, the same sort of thing in ANWR. I've been to 
ANWR, the things there have improved wildlife wise over what it 
was. The heat of the pipeline made the musk oxen more amorous 
and they've multiplied like you would not believe. And we know 
there's 20 million acres and all the things going on in that 
area. I go on to timber and wood, we know that it takes eight 
times more energy to make a table out of steel than it does 
wood, not to mention how you can re-use the wood, and you have 
a self-renewing source. Yet we have that same mentality, never 
cut a tree.
    Those are examples. So I suppose maybe Mr. Everson would 
like to answer, or anyone else. Do we have any responsibility 
from the Administration to try to come forth with part of our 
experience and our resources and educate in this area of 
reality in so many areas where the hysteria sort of rules to 
help the public make some decisions by themselves?

                               GPRA FOCUS

    Mr. Everson. You covered a lot of territory there. Let me 
respond on a very broad level, because this morning, we talked 
about GPRA, the Government Performance and Results Act. It's 
been part of a number of the questions.
    If you look at this fifth Government wide initiative of 
budget and performance integration, it gets to the nub of your 
observations: what are the outcomes of Government programs. Not 
how much are we spending and are we hiring 100,000 police 
officers or teachers, are the streets safer and do the kids 
read. I think that's the thrust of where you're going, sir. We 
want to have that debate, we want to have that debate not just 
in energy programs, as in the areas that you're citing, but 
more broadly across Government. So the oversight of the 
Committee, the raising of these questions is, we think, very 
pertinent to the process we're trying to apply to the resource 
allocation process. So we support that.
    Mr. Taylor. You have a history, we made a conscious 
decision, the Government did in 1979, to go our way, or go no 
way or whatever. We have countries in western Europe that went 
on in further research. What has made the difference is that we 
have a laboratory example for what, 20 some years to look at. 
The same sort of thing in forest management and modern 
silviculture, we have 100 years of our best universities and so 
forth that you can step forth and say, what does that mean, 
when we take these decisions that either are totally contrary 
to the best management we're hearing, what is it going to mean 
to our Nation in the area of energy?
    It's not to develop a new automobile, it's not discovering 
some fuel that comes out of the air or whatever, but it is 
impacting, whatever position the Government is making is going 
to impact the energy situation substantially. We need to speak 
out on that. That's why I was asking, and thank you for your 
comment.

                             NUCLEAR POWER

    Mr. Garman, would you like to add something?
    Mr. Garman. I would only add, we're trying to turn some of 
these things around, Congressman. You mentioned nuclear. Of 
course we've come out aggressively and are trying to address 
the waste problem, which is a problem that has contributed to 
the hiatus in nuclear power development and use. The Secretary 
has spoken out and has made a determination, and the President 
has made a determination that nuclear waste can be safely 
stored at Yucca Mountain. We are working with the Congress and 
urging that Congress follow us in that determination and make 
that determination so we can get on with the future of nuclear 
energy in this country.
    Mr. Taylor. Have you compared what Sellafield, for 
instance, in England, can we not say, this has been done for a 
number of years without consequences that most people predict?
    Mr. Garman. Yes, sir. Like you, I have also been to 
Sellafield, and La Hague in France, the Thorpe facility that 
you visited. They of course are recycling plutonium into mixed 
oxide fuels. That's a way of having a little bit of uranium 
last a very, very long time. That's something that the 
Administration is mindful of, yes, sir.
    Mr. Taylor. Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Hinchey.

                     Opening Remarks of Mr. Hinchey

    Mr. Hinchey. Thank you very much, Mr. Chairman. I want to 
thank you gentlemen for the work you've done. I think you've 
given all of us on this Committee and the Congress a lot of 
food for thought and some very helpful analysis. So I very much 
appreciate that.
    Your charge was rather narrowly focused. You were asked to 
just produce the benefits that resulted from energy efficiency 
and fossil energy research and development essentially since 
1978, although that's big enough, there are certainly broader 
questions that we have to involve ourselves with as well.

                           ENERGY EFFICIENCY

    From my point of view, one of the interesting findings, was 
that for every dollar we invest in energy efficiency, we get 
back more than $4 of return over that period of time. So it 
would seem that this is an area where we ought to be paying a 
great deal more attention. We don't seem to be paying enough 
attention. That's my observation.
    Do you have any recommendations for us as to what we ought 
to be doing additionally in the area of energyefficiency, so we 
can take advantage of the multiples of returns that are available to 
us?
    Mr. Garman. We have submitted in the context of our 2003 
budget request what I regard as a very healthy request in the 
areas of energy efficiency and renewable energy, a substantial 
increase over what we requested last year and overall, an 
increase in what the Congress provided us last year. We have 
found a very beneficial working relationship with this 
Committee, and focusing in on those energy efficient 
technologies that do pay. We will continue to do that, and we 
very much appreciate the support that you all have provided to 
these programs.

                     INVESTING IN ENERGY EFFICIENCY

    Mr. Hinchey. Are we investing enough in energy efficiency?
    Mr. Garman. It's a difficult question. Pay grades higher 
than mine are vested with the decision of making choices 
between dollars invested for energy efficiency as opposed to 
dollars invested to cure cancer. And these are very difficult 
choices, and I try to do my part to vigorously----
    Mr. Hinchey. I'd like to put it in a different context. I 
want to invest the dollars for solving the cancer problem as 
well as the energy efficiency problem. You could use any 
comparison, dollars invested in energy efficiency as compared 
to dollars invested in the Star Wars program as another 
example. I think people might come to a different conclusion if 
you use that kind of comparison.
    Mr. Garman. I understand. Ultimately, Congress will 
appropriate funding for these activities and we will follow the 
direction given us by Congress.

               ENERGY POLICY OF THE CARTER ADMINISTRATION

    Mr. Hinchey. The Congress is composed of a lot of lay 
people, people who are not terribly sophisticated in the area 
of energy. And that's one of the great values of the document 
that you produced; it helps us become a little bit more 
sophisticated in this area. So the Congress needs to rely upon 
the recommendations of people who spend their lives looking at 
these questions. I don't think that we're frankly getting the 
best advice, or if we're getting the best advice, I haven't 
seen it. And those who are getting it aren't acting upon it 
very effectively.
    So there's obviously a lot more that we can do just in the 
area of energy efficiency. If we had been pursuing that much 
more aggressively, we'd be a lot better off today.
    Several years ago, I asked the Department of Energy to 
answer a broader question, and that was, if we had continued to 
pursue the energy policies that were put into place by the 
Carter Administration, beginning around 1978, 1977, what would 
be the results today? How much more energy efficient would we 
be? How much less dependent upon fossil fuels from foreign 
sources would we be? What would be our overall energy situation 
if we had continued to pursue this with the same vigor that was 
demonstrated during those less than four years of the Carter 
Administration through subsequent Administrations up to the 
present time?
    I have not been able to get an answer to that question. 
Before the change in Administration, we had a preliminary 
answer. But since the Administration has changed, there has 
been a reluctance on the part of the Department of Energy to 
produce anything that would be like an answer to that question. 
Do you think you could help us with that?
    Mr. Garman. It's a fascinating question. I think it's a 
question that one might consider posing to somebody other than 
the entity that might be seen as benefiting from that study. If 
you ask my office of Energy Efficiency and Renewable Energy to 
talk about the value of energy efficiency and renewable energy, 
you're going to get a pretty positive answer, I would think. 
And some might dismiss it immediately as self serving.
    I think it's a fascinating question, and it would be an 
interesting and fascinating question to ask an independent 
entity without a dog in the fight. It's a report I would love 
to read.
    Mr. Hinchey. Well, it's a report I'd love to see you 
produce. [Laughter.]
    Mr. Garman. I worry that the public response to a report 
that we produce about our own programs might be taken with a 
grain of salt.
    Mr. Hinchey. Well, if it's only taken with a grain of salt, 
I can't see the great harm that would be done as a result of 
that. I think it would be something that would be very useful. 
It would be useful to the Congress and instructive to the 
country, if we could get that kind of information out of the 
Energy Department, as that agency of the Government is, vested 
with this responsibility to carry out our energy programs. We 
certainly can't do it on this Committee or anywhere else in the 
Congress for that matter.
    You have the expertise, you have the people who are well 
versed in this. And if necessary, I suppose you could go out to 
some academic source and produce a report of that kind. Or 
maybe we ought to do two reports, and give us an opportunity to 
compare them, one from the academic community and one from the 
Government.
    But God knows that it would be awfully useful to see that 
kind of information. Because you I think that all of us around 
this table, people elsewhere in this room, and I all know that 
if we had simply continued to do the things that we started as 
a result of the experiences of 1973, during the first oil 
embargo, if we had continued to pursue those programs, we would 
be a lot safer, a lot healthier, and a lot better off today 
environmentally. We also would have saved a lot of money, and 
would be better off in terms of national security.
    But we can't document that, because we can't find someone 
who will produce it. Why? Other than the fact that you think 
somebody might take it with a grain of salt.
    Mr. Garman. Well, hindsight is an interesting exercise.
    Mr. Hinchey. It's not hindsight. This isn't hindsight. This 
is foresight. This is planning ahead based upon experience. 
This is using an analysis of what could have been done if we 
had followed those policies, which will tell us what we can do 
in the future if we begin to follow those policies again today.
    Mr. Garman. Congressman, if we can find a credible, 
outside, independent source to do such an analysis, I pledge to 
you that my office will cooperate and provide information that 
this outside source might require.
    Mr. Hinchey. Will you tell me how I can cooperate with you 
to help you achieve that objective?
    Mr. Garman. Yes, sir, let me work with you on that.
    Mr. Hinchey. I would appreciate that. Thank you very much.
    Mr. Dicks. National Research Council. [Laughter.]
    Mr. Hinchey. Mr. Chairman, during the break in the 
activities here, why don't we just ask the National 
ResearchCouncil to comment on that question, if we may?
    Mr. Fri. I was kind of hoping, Mr. Hinchey, you wouldn't 
get around to me. [Laughter.]
    I think we learned something from the study that you have 
in front of you that does bear on that. That is the following, 
that while it is important to support the private sector, 
research funded by the Government ought to produce significant 
public benefits, whether it's creating options for the future 
that can be used when the need arises or creating environmental 
benefits that aren't priced in the market and therefore markets 
don't tend to do them.
    It's pretty clear from the retrospective look that we took 
that those kinds of benefits are really important and indeed, 
when those benefits predominate is really when the Government 
gets the most bang for its research buck. At least that's my 
interpretation of the results.
    I think what you were saying back in the Carter days and 
even the Ford days before that was a terrific concern over the 
energy problem and a lot of investment in things that might or 
might not turn out to be economically feasible in the short run 
but were thought to be very useful things to do in the long 
run. As it turned out, the markets decided to drop the price of 
oil by two-thirds in 1985, and much of that activity went by 
the boards.
    And I suppose one could argue that had we been more careful 
in continuing to seek out options to require public benefits 
when the need arose in the future, if we had had that kind of 
foresight, we would be better off today. So I don't know the 
answer to your question. I think what our study does is suggest 
that what I perceive to be the idea behind it is in fact right 
at the heart of why you do energy R&D with public money.
    Mr. Hinchey. Well, that's an interesting answer and I think 
it's very honest and straightforward. But the debate that we're 
engaged in now, over our energy question, particularly with 
these developments in the middle east, is couched in the idea 
as to whether or not we're going to drill in the Arctic 
National Wildlife Refuge, or whether we're going to reinstate a 
nuclear energy program. The later of which people were very 
fearful and doubtful of back during the Three Mile Island 
episode, the Chernobyl episode, and other incidents that 
occurred. We are not couching this debate in how much energy we 
can save, how much more independent we can become, or how much 
more aggressive we should be with energy efficiency when we 
know if we put in $7 billion we get out $30 billion.
    How much more can we do with reducing our dependence on oil 
when we've just heard you say that 95 percent of our 
transportation is dependent upon oil, and 60 percent of that is 
from foreign sources? And we have a debate in the Congress that 
refuses to elevate CAFE standards for one third of the fleet on 
the American highway. We are, I mean, this is absurd. If Pogo 
were writing the cartoon, it would be, we have met the enemy 
and he is us.
    The irrationality with which we are approaching this 
problem is astonishing. I think you helped us penetrate some of 
that rationality with this report and some of the information 
you produced. But we've got an awful lot more to do in areas 
that make more sense. If we drill in ANWR, even if that goes 
through, it's a decade before we see any benefits. If we up 
energy efficiency, the benefits will show up immediately. And 
we get a more than four to one return on investment in that 
area.
    If we were to elevate the CAFE standards on one third of 
the fleet, we would get an immediate return on benefits. Those 
cars could be rolling off the assembly line within a year or 
two. But no.

               BUILDING TECHNOLOGY AND TRANSPORTATION R&D

    Mr. Dicks. Will the gentleman yield? Your point is well 
taken. Notwithstanding a four to one cost benefit for energy 
efficiency research, the Administration's 2003 budget proposes 
a 12 percent cut in building technology research and a similar 
cut in transportation related research, which is hard to 
understand.
    Mr. Garman. Let me respond to that, Congressman. Building 
research is one of those examples where the R&D activities 
we've undertaken, whether that be in the form of refrigerators, 
which is an item that was covered in the report that showed a 
tremendous return on investment, but you come to a point in 
certain applications of research where----
    Mr. Dicks. You've done it all?
    Mr. Garman [continuing]. We've got our modern 
refrigerators, the biggest refrigerator you can buy at the 
Sears, an Energy Star model, uses no more electricity than a 75 
watt light bulb. Now, to get much better than that we're going 
to have to somehow change the immutable laws of physics, which 
is something that no amount of R&D can do.
    So there are times in the development of technologies where 
you look and you shift technologies accordingly. Similarly in 
the transportation area, while the overall number appears to be 
reducing, we're also ramping up dollars in some of the key 
areas, such as fuel cell work and hydrogen work, which we think 
is the real long term benefit that we should be investing in.
    So there are instances where you can see shifts in funding 
levels that don't necessarily track with--they are more in 
keeping with where we are in the R&D pipeline with certain 
technologies than how you would assign the overall priority by 
the Administration. The priority of the Administration is very 
high on both renewable energy and energy efficiency activities. 
Our budget, what we're submitting is higher than Congress 
provided us last year. Or in nominal dollars, higher that 
Congress has provided us in any year in the last 20.
    So we think we have a very healthy budget request. We're 
mindful of what the Congress does, and we will continue to work 
with you to try to optimize that spending.
    Mr. Dicks. Thank you for yielding.
    Mr. Hinchey. Mr. Garman, that's very much appreciated, and 
you're right about the amount of money that is being spent. But 
we've spent very little in the last 20 years, you know, since 
the drop-off in oil prices occurred. We had universal amnesia, 
everybody agreed to just forget what happened in 1973 and 1979. 
We made a mutual pact with each other, let's just put that out 
of our minds, we're going to make believe that never happened.
    And we stopped spending. So now it's jacked up a little 
bit, and that's okay. But I don't think we can feel sort of 
complacent about that.
    There are other aspects of our policy that clearly are 
difficult for me to understand. First of all, I think if we 
could just get a policy and stick with it, we'd be probably 
better off. A policy on transportation, up until recently, was 
to develop a hybrid car, which seemed to make sense, because 
you could phase in from where we are into a hybrid vehicle. 
That's been put aside now. We're not going to dothat any more. 
Now we're going to go into hydrogen.

                      HYBRID TECHNOLOGIES SPENDING

    Mr. Garman. Sir, to be honest, 92 percent of the dollars we 
were spending on hybrid technologies last year we proposed to 
spend next year. So we are not----
    Mr. Hinchey. How much did you spend last year?
    Mr. Garman. I believe on the order, and I will have to 
provide that for the record, on the order of $40 million, I 
think.
    [The information follows:]

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    Mr. Hinchey. Forty million?
    Mr. Garman. On the variety of technologies, just on hybrid 
technologies. There are power electronics, electric motors. The 
value of this work is that many of those are shared components 
between both hybrid cars and fuel cell cars. Electric motors, 
batteries and power electronics are shared components between 
those two sets of vehicles. We are still continuing that work 
and we will continue that work. We think that provides us a 
good transition.
    And we're pleased at some of the work we've done in the 
past you'll see in the showroom next year, in the Ford Escape 
and the Chevy Silverado, in hybrid vehicles that you'll be able 
to buy and drive. So this is part of the continuum. We're not 
halting our work in hybrid vehicles.

                    HYBRID VS. HYDROGEN TECHNOLOGIES

    Mr. Hinchey. Then can you tell me what is the policy with 
regard to hybrid vis-a-vis hydrogen?
    Mr. Garman. We think they are both important. We see----
    Mr. Hinchey. What is the allocation of resources, and how 
do you see each of these paths being taken in the future? Where 
is the emphasis going to be?
    Mr. Garman. The nearer term emphasis is clearly on hybrid 
technologies, and the longer term emphasis is clearly on 
hydrogen technologies. In the near term, we think----
    Mr. Dicks. Hydrogen fuel cells?
    Mr. Garman. Yes, sir. I drive a hybrid vehicle and have an 
order in for the new Ford hybrid that's coming out next year. I 
believe in the technology, I think it's tremendous. And I think 
it is along the pathway that leads us to hydrogen fuel cells.
    The thing about hybrids, they're more efficient in the 
short term. But no degree of efficiency can make them petroleum 
free. That's the value, I think, of eventually moving to 
hydrogen, because that can be petroleum free if we're 
successful in our technology milestones.

                           HYDROGEN VEHICLES

    Mr. Hinchey. Under your most optimistic scenario, when 
would that occur, when would we be successful with putting 
hydrogen vehicles on the road in any significant number?
    Mr. Garman. The freedom car program has a series of 
technology milestones geared toward the 2010 time frame. At 
that time, if we're successful in meeting those milestones, the 
auto makers would be in a position to make a commercialization 
decision. In other words, we're not the ones who will 
commercialize this technology. The private sector will do that. 
But we believe we will be able to validate and demonstrate the 
technologies along that 2010, 2012 time frame, where they can 
say, we can do this, or we can't, and here's why we can't, and 
here's what we need to do to make sure we can.
    So it is a long term time frame. Because in part, fuel 
cells are still an order of magnitude higher in cost than they 
need to be before they can be put in a commercial, affordable 
vehicle. We have not solved the storage issue, we can't put 
high pressure hydrogen on a vehicle to the extent that it would 
give a driver the kind of range they would want. These are all 
technological issues we have to tackle.
    Mr. Hinchey. Thank you very much.

                 HYBRIDS TECHNOLOGY IN OTHER COUNTRIES

    Mr. Dicks. Mr. Chairman, can I just ask one quick question 
on this issue before we move one?
    What are other countries doing on this, on hybrids?
    Mr. Garman. Japan, as you know, has invested in hybrid 
technologies. They have made government investments in hybrid 
technologies, as we have. Our auto makers will be coming in 
with their first hybrids in the 2003 model year and on. Those 
are the only two nations I know of, although there may be more.
    There is a cost premium to be paid. It's been estimated 
that the Toyota Prius, for instance, which sells for about 
$21,000, costs Toyota more money than that to make. They're 
doing it because they're getting valuable experience. They've 
limited the size of the fleet. If you've tried to buy a Toyota 
Prius, you know it's hard, they make you wait six months and 
they trickle them into the country, I think in part because 
they need to find out how battery performance, battery life is 
going to work in a real world environment. They had test 
marketed it for three years in Japan before they even thought 
of bringing it over here. We're looking forward to our first on 
the road experience with American auto makers next year.
    Mr. Dicks. Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Nethercutt.
    Mr. Nethercutt. Thank you, sir.
    It's easy to theorize about conserving our way out of our 
energy problems, it just isn't going to happen. It's easy to 
theorize about the use of oil in the world. Oil is the fuel of 
choice, and we're not going to get over that for a long, long 
time. So we can kid ourselves and be naive about all these 
great things that we might have done or might could do. It does 
take private industry, private industry and jobs and job 
creation is a critical component to energy development.
    So it's one thing to say, let's have the Government spend 
more money to do energy research in energy efficiency and new 
technologies, which is a good thing. But it isn't all goingto 
happen through the Government. I think it's commendable that this 
Administration has an energy policy that's been developed. And the 
Congress, the House, passed it, a comprehensive energy policy that 
includes conservation, it includes biomass, fuel technology, all kinds 
of different ways to deal with our energy problem.
    So I'm proud of this Administration having done what it's 
done to develop an energy policy that this country hasn't had 
in a long, long time. So I think you're to be commended. It 
isn't just a function of money. You can argue that we're 2 
percent down or 3 percent down or whatever it is. It's how are 
you using that money, it seems to me, gentlemen. And as long as 
you're using the money wisely and developing technologies to 
the extent that the Government can help develop technologies 
and greater efficiencies and so forth, I think that's your 
role.
    So I commend you on it. I would just ask a question. To 
what extent do you believe your agency has developed sufficient 
evidence of the support that you've given to energy technology, 
and have you broadcast widely enough your successes? I suggest 
maybe you haven't, that there's more that you can tell about 
what you've done and why you've done it which would then give 
people who have questions about it better knowledge of what 
progress we've made.
    Mr. Garman. Yes, sir, I'd agree. I think first of all, this 
very report, which has talked about the benefits that we have 
had from this technology, is one element. We've just completed 
a strategic program review in our office looking at them, and 
it was something that the President and the Secretary asked us 
to do in the context of the President's energy plan, asked us 
to evaluate the historical benefits of our technologies. It is, 
I think, a very positive story.
    Mike is just underway in doing a very similar effort in his 
office. So we thank you for those comments, Congressman, and we 
will try to do a better job of talking about the benefits that 
our work has provided.

                   COST OF OFFSHORE WILDCAT DRILLING

    Mr. Nethercutt. Mike mentioned to me when we talked 
yesterday, it takes--maybe tell the story about the wildcatter 
and the cost of developing energy in this country. It isn't 
just something you go out and do tomorrow and bingo, you have 
energy relief. Maybe you can speak to that a little bit.
    Mr. Smith. Sure, thank you, Congressman. You're quite 
right. I use an example of offshore drilling in the Gulf that's 
pretty staggering, the cost. I think I mentioned to you that it 
all goes back to energy education. You touched on it. So many 
of our people don't understand how difficult it is to drill and 
complete and produce oil and natural gas and coal. Not to 
mention the renewables that we've talked about because of the 
tremendous technological challenges that we have for those.
    They all add to the mix and of course, all add to the 
balance. As you touched on, the President's plan calls for a 
balanced approach. We certainly support that.
    I just used the example to you yesterday, Congressman, of a 
company that I know that is drilling a deep offshore well that 
even four or five years ago, technologically could not have 
been possible to drill. And it's a rank wildcat, it's 26,000 
feet deep in 4,200 feet of water. If it's a dry hole, it's 
going to cost them $90 million with no return. That's one well.
    And it's difficult, that's the state of our domestic oil 
and gas industry. We have for 100 years drilled and produced 
the easy to find oil. The technology that my office is involved 
in is allowing our producers, most of whom are independents, by 
the way, small, 50 employee or less, small businessmen, to take 
this technology and operate wells more efficiently and get more 
production out of those wells.
    The oil and gas is not in a giant tank down there that's 
like under your service station. It's trapped in little tiny 
pore spaces. And with conventional drilling and completion 
technology that we had up until 10 or 20 years ago, you only 
got about 20 to 30 percent out of most formations of the 
recoverable oil and gas, ultimately recoverable oil and gas. 
Now the technology, with secondary and tertiary recovery 
methods and a lot of the things I mentioned earlier are 
allowing our producers to produce that oil and gas more 
efficiently, and as Dave mentioned, with a smaller footprint 
and drilling fewer holes, so less surface disturbance.
    All of these things have added to our energy mix. But the 
point that I was thinking, as Dave was talking about some of 
these new vehicles, and I'm excited, too, about the fuel cell 
research, I think it really has possibility and long term 
hydrogen that we're moving to, that we'll have some 
application, it's choice for the American public. That's the 
whole point. And the more items you have on the buffet table, 
if you will, the better off you are. Because those items are 
less expensive, because they compete.
    And so all of that benefits us. This technology that we're 
talking about, quite frankly, I mentioned earlier, has saved 
the domestic oil and gas industry in this country, in my view. 
I don't know where we'd be without it, I really don't. So 
working----
    Mr. Dicks. You do think there is a role for Government in 
the energy area?
    Mr. Smith. Sure.
    Mr. Dicks. That was a major issue just a couple of years 
ago.
    Mr. Smith. Sure there is was.
    Mr. Dicks. Some people were saying we didn't need a 
Department of Energy. I'm glad to hear today there's new 
consensus on both sides of the aisle that we ought to have a 
Department of Energy. [Laughter.]
     And we have a Secretary of Energy who thinks that we ought 
to have a Secretary of Energy. [Laughter.]
    Mr. Smith. Well, since I'm probably----
    Mr. Dicks. That was a good explanation, I appreciate that.
    Mr. Smith. Well, thank you, Congressman. Since I'm probably 
the newest Federal employee in this room, I bring a State and 
industry perspective also. There's been a lot of complaint from 
a lot of quarters, John Q. Public and industry people, about 
the functions, the overall functions, as Congressman Hinchey 
mentioned, of what we've done in the past.
    But you can't look back. You have to look forward. And 
we've made mistakes, we've all made mistakes. Certainly you 
learn from those. That's part of this exercise that we're 
talking about today.
    Mr. Dicks. Now, wait, the Research Council says you have to 
do both, you have to look backward and forward, that's part of 
the matrix.
    Mr. Smith. Well, you certainly want to look backwards 
tokeep from repeating your same errors, that's right. But it all mixes 
together. That's what's important, is what we deliver to the American 
public. Bottom line, it really is. And how we're able to provide this 
country with the energy it needs. Energy is as important as air, water 
or food to this country.
    Mr. Dicks. Absolutely.
    Mr. Smith. And it's not just transportation fuel, although 
two-thirds of our oil is used for transportation. Everything in 
this room is made of petroleum products, practically. And 
fossil energy is going to have a huge role for the world for, I 
don't know, 100 years, pick a number. I have no idea.
    But certainly it's an area that needs our attention. Our 
country has to have it. Things change. We've talked about who 
in the world could have predicted 9/11 and what it's done to 
our country, and how it's underscored our energy security 
issues as well as our energy economics issues.
    Mr. Nethercutt. Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Taylor.

                        FOSSIL FUELS TECHNOLOGY

    Mr. Taylor. Thank you, Mr. Chairman.
    Let me ask another question that maybe we're doing 
technology research for replacement of fossil fuels and so 
forth, or how to be more efficient in fossil fuels. And without 
getting into the question of whether or not we need to broaden 
the bureaucracy as a new energy department or put it under 
Interior and lessen the bureaucracy, that sort of thing. Mr. 
Dicks, I agree with you that it is a great subject that the 
Government has to be involved in, in not replacing private 
industry where the real work is going to be done as far as 
marketing products and trying to get the greatest efficiency, 
but guiding, much as we do in transportation or any other 
infrastructure.
    And having said that, in World War II, if we hadn't 
dominated fossil fuels, we couldn't have won the war. 
Fortunately, we started going down well after World War II or 
we would not have had the ability, I think, or it would have 
taken much longer at a much higher price. Since then, 
everything has shifted to one basic source in the middle east 
to a large extent. I believe this Administration is trying to 
broaden the fossil fuels, especially, around the world, so that 
there are not the total dependency in one critical area which 
dominates foreign policy and everything else.
    Having said that, are we working with Russia in a way, with 
the enormous amount of potential they have and the dearth of 
capital to move that area forward? I know the President is 
going there in May. I was curious, if we could consider a large 
capital infusion in a way that did not wind its way into 
military or any other way, and it can be done easily, but would 
include private sector in both countries, but it has to be a 
deal that's authorized and signed off by the two governments, 
because there's too much problem in the commercial law and so 
forth that hasn't settled itself in Russia enough to make it 
possible.
    Can we do that and build the infrastructure in the east for 
the Russians while we, with the money that they're earning 
through the oil, while we're getting and opening a large 
alternative front for ourselves in the free world, before the 
money we're furnishing China makes China so strong that they're 
going to take Siberia? That's just a little aside.
    Mr. Smith. Well, Congressman, I'm not really sure about all 
the foreign policy implications that you've asked. But I will 
say this, without getting country specific. We have worked, 
through my office, over the years, to expand our technology 
around the world. And certainly Russia has vast reserves. Just 
coincidentally, next week, I've never been to Russia. And next 
week I'm accompanying Under Secretary Card on a mission there. 
Part of it is to visit the oil fields in Siberia. I am really 
looking forward to it, because I have heard the stories for 
years, and I'd like to see it first-hand. Maybe I can report to 
you a little better, answer your question a little better after 
that trip.
    But I won't limit my answer to just that part of the world. 
I think all around the world, we have very effectively and will 
continue to work with other countries to advance their 
technology. Because it's important to their economies, and it's 
very important to their economies that they do it right, that 
their techniques that they use protect their environment and 
are as efficient as they can be and provide, quite frankly, the 
best return for their investment.
    We're working closely with lots of countries in that area.
    Mr. Taylor. And many of them just don't have the capital, 
in many cases, they don't have the technology, but they 
certainly don't have the capital to do it right and in the most 
efficient method. If they are able to furnish more oil to the 
world, it's better for all of us, rather than inefficient 
waste.
    Mr. Smith. Certainly. Well, again, the private sector is 
very good at going around the world, now fairly quickly, where 
geologists say drill here, because of the ability to find 
economically recoverable hydrocarbons, if you will. So the 
companies that are, the oil companies and the service companies 
that provide the industry that technology around the world 
works closely with the governments, the host governments and 
the host companies to not only work with them to protect their 
areas, their environment and their drilling prospects, but are 
a good source of good technology.
    Mr. Taylor. Beyond that, it's not just the technology 
andthe drilling and that sort of thing, but in areas like the vast 
areas of Siberia, the infrastructure, the hundreds of billions of 
dollars of infrastructure that will have to be put in to be utilized in 
a reasonable period of time. That's where I think a capital discussion 
could be, far beyond any of the domestic companies, I think, in Russia.
    Mr. Smith. Sure. Well, again, the easy oil and gas has 
already been found and produced. That that's really available 
now is in hard to reach places, either geographically hard to 
reach or very deep under the Earth's surface. So all those 
things are challenges. And you're right, the capital 
expenditure to bring that product to market is immense.
    Mr. Taylor. We have less than, Russia has less than 1 
percent of the world's invested capital, they have almost 
nothing from the United States. We put more, and I'm not 
advocating aid as such, but we put more in most of the 
republics than we do the whole country of Russia. From a 
capital standpoint, that's where I think, for the enormous 
amount that we ought to be moving to make this happen a lot 
faster than it is going to happen through natural courses.
    Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Hinchey.
    Mr. Hinchey. Mr. Chairman, thank you very much, and thank 
you again, gentlemen. I think the report is very, very valuable 
for any number of reasons, particularly because it emphasizes 
the value of research and development in a whole array of ways. 
But just looking at the monetary value in fossil research, you 
point out, I think, a $4.5 billion investment produced about 
$7.4 billion in benefits.
    It's important for us to understand the continued necessity 
to use our fossil fuels as wisely and as efficiently as 
possible. With 4 percent of the known oil reserves in the 
world, there is no way we can drill our way to energy 
independence. The only way we can be more independent is by 
using our fossil resources more wisely and more efficiently, 
and by using energy more wisely and more efficiently. The fact 
that you have emphasized that energy efficiency produces four 
times the benefits in accordance with the cost ought to tell 
policy makers something about the need to invest more, not just 
in research, but also in the actualization of energy 
efficiency.
    So it's not speculative or naive, it's simply hard headed 
and realistic to understand that we have a tiny amount of the 
oil in the world. We use about 25 percent of it on a daily 
basis. And that is a killer situation. You just cannot sustain 
that for any prolonged period of time. Energy efficiency is the 
only answer and alternative energy production combined with 
energy efficiency is the only long term answer for the United 
States. If we're going to maintain our economy and maintain our 
standard of living, we're going to have to focus more and more 
of our attention in those two areas.
    That's what you've shown us in this report, more than 
anything else. I'm very, very grateful to you for it.
    Mr. Skeen. Mr. Dicks.
    Mr. Dicks. Mr. Chairman, I just hope that, we've talked 
about a lot of things today, but I hope we don't forget about 
the Academy's matrix and the importance of trying to use that 
in the future on our decisions about energy research and we 
will look forward next year to seeing how the Department 
implements this and we think it's a good piece of work and that 
it's time to get started.
    I have certainly heard from Mr. Garman and Mr. Smith a 
willingness to do this in conjunction with, of course, the 
Administration's approaches. We have no problem with that in 
existing law.
    But I want to thank Mr. Fri for a good job, and I think 
just going through this proves that we need to have something 
like this. I think it's good the Committee recommended it, and 
we appreciate your good work.
    Mr. Fri. Thank you very much.
    Mr. Dicks. Thank you, Mr. Chairman.
    Mr. Skeen. Thank you all.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    


                           W I T N E S S E S

                              ----------                              
                                                                   Page
Bisson, P.A......................................................   261
Bosworth, D.N....................................................     1
Collins, Sally...................................................     1
DeHoratiis, Guido, Jr............................................   423
Everson, M.W.....................................................   487
Fri, Robert......................................................   487
Furiga, Rick.....................................................   423
Garman, David..................................................335, 487
Hatfield, N.R....................................................   261
Hill, B.T........................................................   261
Kashdan, Hank....................................................     1
Rudins, George...................................................   423
Smith, C.M.......................................................   423
Thompson, Tom....................................................   261


                               I N D E X

                              ----------                              
                                                                   Page
Accomplishments and Frustrations.................................    12
Accountability...................................................     9
Benefits to Communities..........................................     7
Biography of Mr. Dale Bosworth...................................    11
Deferred Maintenance:
    Backlog......................................................17, 33
    Inventory....................................................    33
Financial:
    Accounting...................................................    35
    Clean Audit Opinion..........................................    12
Fire:
    Borrowing Fire Money.........................................    14
    Budget.......................................................    13
    Burned Area Emergency Rehabilitation.........................    25
    Consultation with Office of Management and Budget............    15
    Contracting Fire Suppression.................................    16
    National Fire Plan........................................... 6, 24
    Release of Fire Funds by Office of Management and Budget.....19, 21
    Season Outlook...............................................    21
    Suppression Costs............................................    15
Forest and Rangeland Health......................................     7
Forest Inventory and Analysis....................................19, 20
Funds to the Ground..............................................     9
Gridlock and Analysis Paralysis..................................     6
Land Acquisition.................................................    27
Legislative Proposals............................................    10
Legislative Relief...............................................12, 19
National Forest Management Act (NFMA)............................    31
    Draft Revisions to NFMA......................................    31
New York City Watershed..........................................26, 27
Opening Remarks:
    Mr. Skeen....................................................     1
    Mr. Kingston.................................................     2
    Mr. Dicks....................................................     1
Opening Statement of Mr. Bosworth................................     2
Personnel: Cutbacks in Full-Time Equivalents.....................    16
Recreation.......................................................     8
Recreation Fee Demonstration Projects............................    17
Research:
    Closures.....................................................19, 20
    Cutbacks.....................................................    27
    Elimination of Earmarks......................................    28
Road Maintenance Backlog.........................................    23
Roadless Area:
    Conservation Rule............................................    28
    Inventories..................................................    31
    Policy.......................................................    22
Safety...........................................................     5
Southern Pine Beetle.............................................    18
Statement of Mr. Bosworth........................................     2
Timber Harvest:
    Levels.......................................................    21
    Non-Harvest Bids.............................................    25
    Reserved Timber Sales........................................    29
    Sale Program.................................................    34
    Tongass National Forest......................................    30
Watershed Restoration............................................    26
Written Statement of Mr. Bosworth................................     5
Questions for the Record.........................................36-259
    Accounting and Accountability................................   132
    Backlog Maintenance..........................................   218
    Capital Improvement and Maintenance..........................   211
    Conservation Education Programs..............................   109
    Field Leadership.............................................    69
    First Year as Chief (multiple subjects)......................    36
    FFIS.........................................................   142
    Forest Legacy................................................   112
    Forest Plans.................................................   145
    Forest Stewardship...........................................   168
    Getting Funds to the Field...................................   130
    Human Resources..............................................    85
    Indirect Costs...............................................   136
    Invasive Species.............................................   176
    Land Acquisition.............................................   226
    Law Enforcement..............................................   221
    Legislative Ideas............................................   228
    Management Initiatives.......................................    64
    Minerals, Energy Resources...................................   151
    Payments to States...........................................   141
    Process Gridlock.............................................   106
    Rangeland Inventory..........................................   109
    Recreation.................................................147, 230
    Research....................................................90, 184
    Roads Policy.................................................   217
    State and Private Forestry...................................    91
    Timber Issues..............................................152, 228
    Trust Funds..................................................   227
    Vegetation Management and Forest Health......................   161
    Wildfire:
        Fireplain Easements......................................    59
        Funding Requests for Annual Activities...................    57
        Hazardous Fuels..........................................    55
        National Fire Plan.......................................    38
        Suppression Costs........................................    48
    Wildlife and Fisheries.......................................   174
    Questions from Mr. Peterson..................................   232
    Questions from Mr. Dicks.....................................   235
    Questions from Mr. Hinchey...................................   251

 U.S. Forest Service/BLM Oversight Hearing: Fish Passage Barriers and 
                             Pacific Salmon

Accurate Count of Barrier Culverts...............................   310
Agency Assessments...............................................   280
Backlog of Replacement...........................................   304
Baffles and Culverts.............................................   306
Comprehensive Watershed Analysis.................................   307
Confidence in Estimates..........................................   278
Conservation Spending Category...................................   312
Cost Estimates Accuracy..........................................   285
Culvert Repair Sites.............................................   278
Culvert Restoration Work.........................................   279
Deferred Road Maintenance Backlog................................   302
Easting Regulatory Burden........................................   308
Fish Passage Outside of the Pacific Northwest....................   302
High Agency Priority.............................................   309
Interagency Efforts..............................................   279
Inventorying Culverts............................................   283
Lengethy Restoration Projects....................................   281
Monitoring Culvert Work..........................................   284
NEPA Process Delays..............................................   282
Number of Projects...............................................   310
Opening Remarks of:
    Mr. Dicks....................................................   261
    Mr. Taylor...................................................   261
Opening Statement of:
    Mr. Bisson...................................................   263
    Mr. Hill.....................................................   268
    Ms. Hatfield.................................................   294
    Mr. Thompson.................................................   285
Prioritizing Assessments.........................................   284
Priority Projects List...........................................   309
Procedural Streamlining..........................................   307
Questions for the Record:
    Bureau of Land Management....................................   314
    Forest Service...............................................   319
Questions from:
    Mr. Skeen....................................................   330
    Mr. Dicks....................................................   331
Repaired Culverts................................................   278
River-Wide Approach..............................................   282
Salmon Recovery Efforts..........................................   278
Scope of Problem.................................................   280
Spirit of Endangered Species Act.................................   305
Stakeholders in Process..........................................   285
State of Understanding...........................................   302
Strategy to Address Culverts.....................................   289
Timelines for Projects...........................................   281
Written Statement of Mr. Peter Bisson............................   265
Written Statement of Mr. Barry Hill..............................   270
Written Statement of Ms. Nina Hatfield...........................   296
Written Statement of Mr. Tom Thompson............................   290

  Department of Energy: Energy Efficiency and Renewable Energy Budget

Battery Budget...................................................   358
Biography of Mr. David Garman....................................   344
Budget Highlights................................................   335
    Federal Energy Management Program............................   336
    FreedomCAR...................................................   336
    Industrial Technology........................................   336
    Policy and Management........................................   336
    Power Technologies...........................................   336
Budget Request...................................................   338
    Buildings....................................................   339
    Federal Sector...............................................   340
    Hybrid Car...................................................   351
    Industry.....................................................   340
    Integrated Biomass R&D Program...............................   342
    Policy and Management........................................   343
    Power........................................................   341
    Transportation...............................................   341
Corporate Average Fuel Ecoomy--CAFE..............................   358
Electric Vehicles................................................   346
Energy Efficiency Science Iniative...............................   359
Federal Energy Management Program................................   336
FreedomCAR.......................................................   336
Hybrid Car.......................................................   354
Hybrid Car Funding...............................................   351
Hydrogen.........................................................   346
Industrial Technologies..........................................   336
Natural Gas Vehicles.............................................   352
Opening Remarks of Mr. Skeen.....................................   335
Opening Statement of Mr. Garman..................................   335
Partnership for a New Generation of Vehicles--NGV................   345
Policy and Management............................................   336
Power Technologies...............................................   336
Transportation Sector............................................   350
Weatherization...................................................   348
Written Statement of David Garman................................   337
Questions for the Record........................................361-421
    Building Equipment, Materials and Tools......................   379
    Buildings Programs...........................................   378
    Clean Cities.................................................   376
    Cooperative Research with the States.........................   400
    Distributed Generation.......................................   385
    Electric Vehicles............................................   368
    Energy Conservation Employee Buy-Outs........................   404
    Energy Efficiency Science Initiative.........................   399
    FreedomCAR...................................................   365
    Fuel Cells for Transportation................................   361
    Heavy Vehicles...............................................   369
    Hybrid Lighting..............................................   380
    Hybrid Systems and Combustion Engine Research................   372
    Industry Research Programs...................................   384
    National Academy of Public Administration....................   397
    National Energy Technology Laboratory........................   405
    National Laboratory Funding..................................   406
    Natural Gas Vehicle R&D......................................   368
    Regional Support Offices.....................................   395
    State Energy Program Grants..................................   384
    Strategic Plan for Transportation Programs...................   374
    Transportation Materials.....................................   366
    Weatherization and State Grants..............................   381
Questions Submitted by Congressman Dicks.........................   410
    Energy Conservation Budget Cuts..............................   410
    FreedomCAR and Corporate Average Fuel Economy (CAFE) 
      Standards..................................................   411
    Weatherization and State Energy Grants.......................   412
Questions Submitted by Congressman Moran.........................   415
    Abandoning Research in Hybrid and Natural Gas Cars...........   421
    Corporate Average Fuel Economy (CAFE)........................   420
    Weatherization vs. Conservation..............................   415

               Department Of Energy: Fossil Energy Budget

Arctic National Wildlife Refuge..................................   436
Biography of Carl Michael Smith..................................   435
Clean Coal:
    Program....................................................443, 447
    National Benefits............................................   452
    Old vs. New Program..........................................   449
    Projects in Process..........................................   444
Coal Research Initiative.........................................   426
CO2 as a Pollutant...............................................   457
Distributed Power Generation System..............................   429
Fuel Cell Component Technologies.................................   439
Fuel Cell Development............................................   441
Independent vs. Major Oil Company Production.....................   441
Natural Gas Program..............................................   445
    Infrastructure...............................................   446
    Technologies.................................................   429
Naval Petroleum Reserves.........................................   434
Oil Technology.................................................431, 436
Opening Remarks of Mr. Skeen.....................................   423
Opening Statement of Mr. Carl Michael Smith......................   423
Other Fossil Energy Research and Development.....................   432
Solid State Energy Conversion Alliance--SECA...................440, 447
Strategic Petroleum and Northeast Home Heating Oil Reserve.....433, 444
Written Statement of Mr. Carl Michael Smith......................   426
Questions for the Record:
    Clean Coal Power Initiative..................................   464
    Clean Coal Technology........................................   471
    Cooperative Research and Development.........................   474
    Energy Use and Emissions Reductions..........................   465
    Fossil Energy Employee Buy-Outs..............................   474
    Fuels Research...............................................   460
    Gas Hydrates.................................................   461
    National Laboratory Partnerships.............................   463
    Natural Gas Infrastructure...................................   463
    Offsets for Fossil Energy Research...........................   473
    Oil Technology...............................................   458
    Other Fuel Cell Research.....................................   468
    Plant and Capital Equipment..................................   473
    Program Direction............................................   473
    Ramjet Technology............................................   469
    Sequestration Research.......................................   467
    Solid State Energy Conversion................................   467
    Transfer of Clean Coal Funding...............................   470
Questions Submitted by Mr. Dicks.................................   476
    Clean Coal Initiative........................................   479
    Fossial Energy Budget Cuts...................................   476
    National Research Council Review.............................   480
    Ramgan and Novel Generation..................................   478
    Solid State Energy Conversion Alliance--SECA.................   483
    Strategic Petroleum Reserve..................................   481
    Transfer of Gas Infrastructure Program to the Department of 
      Transportation.............................................   478
Questions Submitted by Mr. Moran.................................   484
    Fossil Energy................................................   484
    Fossil Fuel Research--Advanced Separation Technology (Va. 
      Tech. Issue)...............................................   484

  Department of Energy Oversight Hearing: Energy Research--Measuring 
                                Success

Academy Matrix Process...........................................   516
Action Plan for the Future.......................................   509
Arctic National Wildlife Refuge..................................   525
Biography of Mr. David Garman....................................   513
Biography of Mr. Carl Michael Smith..............................   514
Building Technology and Transportation R&D.......................   531
Cost of Offshore Wildcat Drilling................................   536
Current Legislation and Regulations..............................   518
Energy Efficiency................................................   528
Energy Policy of the Carter Administration.......................   529
Fossil Fuels Technology..........................................   538
Freedom Car......................................................   520
Fuel Cells.......................................................   523
Fusion...........................................................   521
Getting Technology to the Market Place...........................   519
Government Performance and Results Act...........................   517
Government Performance and Results Act Focus.....................   527
Hybrid Technology in Other Countries.............................   535
Hybrid Technology Spending.......................................   532
Hybrid vs. Hydrogen Technologies.................................   534
Hydrogen Vehicles................................................   534
International Fossil Fuels Partnerships..........................   524
Investing in Energy Efficiencies.................................   528
Matrix Application History and Observations......................   488
Matrix for Future Grants.........................................   518
National Academy of Sciences Background..........................   487
Nuclear Power....................................................   527
NRC Study:
    Implementation...............................................   496
    Lessons Learned..............................................   493
    Methodology..................................................   492
    Prospective Evaluation.......................................   495
    Response to the Study........................................   508
Opening Remarks of:
    Mr. Dicks....................................................   487
    Mr. Hinchey..................................................   528
    Mr. Nethercutt...............................................   523
    Mr. Skeen....................................................   487
    Mr. Taylor...................................................   526
    Mr. Wamp.....................................................   519
Opening Statement of:
    Mr. Fri......................................................   488
    Mr. Everson..................................................   497
    Mr. Garman...................................................   504
    Mr. Smith....................................................   515
Partnerships.....................................................   522
President's Management Agenda..................................497, 499
Weatherization...................................................   520
Written Statement for the Record from Mr. Kingston...............   541
Written Statement of Mr. Fri.....................................   491
Written Statement of Mr. Everson.................................   499
Written Statement of Mr. Garman..................................   506
Written Statement of Mr. Smith...................................   506

                  National Capital Planning Commission

Questions for the Record.........................................   543
Testimony of John Cogbill III, Chairman..........................   563
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