[Senate Hearing 107-31]
[From the U.S. Government Publishing Office]
S. Hrg. 107-31
SPENCER ABRAHAM NOMINATION
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
NOMINEE TO BE SECRETARY OF THE DEPARTMENT OF ENERGY
__________
JANUARY 18, 2001
Printed for the use of the
Committee on Energy and Natural Resources
______
U.S. GOVERNMENT PRINTING OFFICE
72-247 DTP WASHINGTON : 2001
_______________________________________________________________________
For sale by the U.S. Government Printing Office
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20402
COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
DANIEL K. AKAKA, Hawaii FRANK H. MURKOWSKI, Alaska
BYRON L. DORGAN, North Dakota PETE V. DOMENICI, New Mexico
BOB GRAHAM, Florida DON NICKLES, Oklahoma
RON WYDEN, Oregon LARRY E. CRAIG, Idaho
TIM JOHNSON, South Dakota BEN NIGHTHORSE CAMPBELL, Colorado
MARY L. LANDRIEU, Louisiana CRAIG THOMAS, Wyoming
EVAN BAYH, Indiana GORDON SMITH, Oregon
BLANCHE L. LINCOLN, Arkansas JIM BUNNING, Kentucky
PETER G. FITZGERALD, Illinois
CONRAD BURNS, Montana
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
Andrew D. Lundquist, Republican Staff Director
David G. Dye, Republican Chief Counsel
James P. Beirne, Republican Deputy Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Abraham, Hon. Spencer, Nominee to be Secretary of the Department
of Energy...................................................... 9
Akaka, Hon. Daniel K., U.S. Senator from Hawaii.................. 2
Bayh, Hon. Evan, U.S. Senator from Indiana....................... 37
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................ 1
Burns, Hon. Conrad, U.S. Senator from Montana.................... 41
Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado........ 29
Cantwell, Hon. Maria, U.S. Senator from Washington............... 47
Craig, Hon. Larry E., U.S. Senator from Idaho.................... 35
Domenici, Hon. Pete V., U.S. Senator from New Mexico............. 23
Dorgan, Hon. Byron L., U.S. Senator from North Dakota............ 20
Feinstein, Hon. Dianne, U.S. Senator from California............. 45
Graham, Hon. Bob, U.S. Senator from Florida...................... 26
Johnson, Hon. Tim, U.S. Senator from South Dakota................ 3
Levin, Hon. Carl, U.S. Senator from Michigan..................... 6
Murkowski, Hon. Frank H., U.S. Senator from Alaska............... 4
Nickles, Hon. Don, U.S. Senator from Oklahoma.................... 43
Schumer, Hon. Charles E., U.S. Senator from New York............. 50
Smith, Hon. Gordon, U.S. Senator from Oregon..................... 40
Stabenow, Hon. Debbie, U.S. Senator from Michigan................ 7
Thomas, Hon. Craig, U.S. Senator from Wyoming.................... 33
Wyden, Hon. Ron, U.S. Senator from Oregon........................ 31
APPENDIXES
Appendix I
Responses to additional questions................................ 63
Appendix II
Additional material submitted for the record..................... 79
SPENCER ABRAHAM NOMINATION
----------
THURSDAY, JANUARY 18, 2001
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 9:06 a.m. in room
SD-106, Dirksen Senate Office Building, Hon. Jeff Bingaman,
chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN,
U.S. SENATOR FROM NEW MEXICO
Chairman Bingaman. The committee will come to order. Under
the Rules of the Senate the standing committees continue from
one Congress to the next and have the power to act until their
successors are appointed. Although the Senate has yet to
appoint new members, we expect, subject to the approval of a
Democratic Conference and the full Senate, that Senators
Feinstein and Schumer and Cantwell will be appointed as
Democratic members of this committee and, if they are able to
attend this morning, we will certainly permit them to ask
questions of the nominee and participate.
Obviously, we extend the same courtesy to any new
Republican members, but I understand that the Republican
Conference has not yet decided on who those members will be. Is
that correct?
Senator Murkowski. That is my general understanding, Mr.
Chairman.
Chairman Bingaman. The committee will consider the
nomination of Spencer Abraham to be the Secretary of Energy
this morning, then we will break for lunch and reconvene at
2:30 this afternoon to consider the nomination of Gale Norton
to be the Secretary of the Interior. I have decided to exercise
the prerogatives that I have as chairman for another day-and-a-
half, Mr. Chairman, to model these hearings after those that we
conducted in this room for Donald Rumsfeld instead of those
that are being conducted for John Ashcroft. By that I mean that
I would intend to give a brief statement myself, call upon
Senator Murkowski, the Ranking Republican member, to give a
statement, then call on the two Senators from Michigan to
introduce the witness, and then call on Senator Abraham, the
nominee, to make his statement, and then we would go after that
to questions by the committee.
In the first round of questions we will have 8 minutes per
questioner instead of 5, so the people can make statements or
ask questions as they see fit.
The purpose of this hearing, as I said, is to consider the
nomination of our former colleague, Spencer Abraham, as the
Secretary of Energy. Several years ago, Senator Abraham urged
that we abolish the Department of Energy. He has since seen the
light. He has come to understand the importance of that
Department, and the importance of it for our energy security,
our national security, our economy, and our scientific and
technological prowess.
I am sure he is also learning the difficult problems facing
the Secretary and how difficult it will be for the Secretary to
solve those problems. Like his predecessors, he will be held
accountable for energy supply and price fluctuations over which
he has very little control. He will be held responsible for the
performance of National Nuclear Security Administration, over
which he has no direct management authority. He will be called
to account for environmental messes that he had no part in
making, and he will be held liable for not having opened the
nuclear waste repository 3 years ago.
Republicans harshly criticized President Clinton's nominees
for this and other posts in the Department of Energy for not
being sufficiently steeped in the intricacies of the energy
area for which they were nominated, and for needing, as it was
referred to, on-the-job training. It would be easy for
Democrats to respond in kind, now that our roles are reversed.
It would be easy but it would not be constructive or fair to
this nominee.
It is time for both parties to put aside their rancor, to
work cooperatively with the new Secretary to try to solve some
of these very serious problems facing the Department. I, for
one, have assured this nominee of my support, and I look
forward to working with him. At this point let me call upon
Senator Murkowski to make any opening statement he would like
to make.
[The prepared statements of Senators Akaka and Johnson
follow:]
Prepared Statement of Hon. Daniel K. Akaka, U.S. Senator From Hawaii
Mr. Chairman, thank you for promptly scheduling this hearing to
confirm our Secretary of Energy. The sooner we confirm Senator Abraham
as the Secretary of Energy, the sooner he can begin work on his new and
challenging assignment.
I am pleased that President-elect Bush has chosen Spencer Abraham
to be the Secretary of Energy. He is aware of the concerns of Americans
regarding rising energy costs. As a Senator from Michigan, Spencer
Abraham has had firsthand experience with the increases in gasoline
prices that occurred last year. I want to tell you that I plan to vote
for your confirmation as the Secretary of Energy. I also commend you
for accepting the task of running the Department of Energy. It is one
of the most challenging jobs in the Federal government.
As a member of this Committee and as a member of the Senate Armed
Services Committee, I look forward to working with you on all aspects
of the operations of the Department.
Senator Abraham, as you know our nation has suffered the impact of
high energy prices for the last two years. Some areas of the country
have suffered more than others. But Hawaii has borne the brunt of
having to pay high energy prices during all of the 1990s. For most of
the 1990s, the average Honolulu gasoline price, based on a weekly
survey, hovered at roughly 25 cents to 50 cents above the national
average.
One of the major challenges facing our nation is to stabilize
energy prices and ensure that Americans enjoy reasonable and affordable
energy prices. We have not had a coherent and comprehensive energy
policy for a long time under both Democratic and Republican
administrations. Additionally, we have not had a commitment to address
our dependence on foreign sources of oil. The absence of an effective
policy and a visible commitment to addressing our energy dependence
have made us captive to OPEC's production decisions and led to other
problems.
The only way to reverse our energy problem is to have a
multifaceted energy strategy and remain committed to that strategy.
This will send a clear message to OPEC and their partners about
America's resolve. If we are to have a comprehensive energy policy that
strengthens our economy and serves the real needs of Americans, then we
need to dismantle our dependence on foreign oil as soon as possible.
The way to improve our energy outlook is to adopt energy
conservation, encourage energy efficiency, and support renewable and
alternative energy programs. Above all, we must develop energy
resources that diversify our energy mix and strengthen our energy
security. This is only one aspect of the problems faced by the
Department. It faces other problems as well. The problems facing the
Department are varied, complicated, and challenging. The Department has
a large and diverse bureaucracy. The process of reinventing and
reorganizing the Department is far from over. Electric utility industry
restructuring poses its own challenges. Nuclear waste is a monumental
problem. The weapons program has its own challenges. Environmental
management at the Department's facilities is a complicated and an
expensive undertaking.
The Department's science and technology programs need direction in
the post Cold War era. The Department has facilities in 35 states,
requiring it to work very closely with state and local agencies. The
responsibilities of the Department extend even to remote islands in the
far reaches of the Pacific Ocean. Our national security and economic
health depend to great extent on what the Department does. In a
nutshell, a series of problems await our new Secretary.
To address these and other issues, a strong hand is needed at the
helm. The Department needs an effective leader who can promote policy
and build a consensus. The President's nominee to be the Secretary of
Energy is such a man. Senator Abraham's record and his experience have
prepared him well for this challenge. I have every confidence that he
will provide leadership in developing and implementing a comprehensive
energy policy. I am also confident that he will address other problems
faced by the Department in a cooperative and bipartisan manner.
Senator Abraham, I look forward to working with you.
______
Prepared Statement of Hon. Tim Johnson, U.S. Senator From South Dakota
Mr. Chairman, the Secretary of Energy is a critical and vital
Cabinet position. We are at a crossroads in our energy policy. Gas and
oil prices are going up, shortages are becoming more prevalent and our
electricity system is becoming more constrained. Meanwhile, demand is
growing more than ever and our economy is affected by the volatility
that is occurring.
At this juncture, it is important for the Secretary of Energy to be
a steward of the direction the nation's energy policy. It is clear that
we must take a measured, balanced approach. Favoring one side too
heavily in this debate could have ramifications that will take us years
to change.
It is also important that we work together to find solutions and
stop assessing blame. In particular, we need to work together to find a
long-term national energy strategy that can lower our dependence on
foreign oil and get us away from the instability with which we are
constantly faced. There is much debate about how to do this and far too
much time has been spent in this committee faulting people rather than
coming up with solutions. I am hopeful that we can be more productive.
As we all know, the rising cost per barrel of crude oil has driven
up the prices of gasoline, propane, diesel and heating oil with
seemingly little relief in sight. These increases have become a
significant obstacle for farmers and ranchers, families, local
governments, and frankly, anyone who has any level of dependence of
fuel for heating, transportation, or other needs. Moreover, natural gas
prices are also going up because of low supplies and lack of
production. In a state like mine where nearly half of the residents
rely on natural gas for heat, this could have serious consequences.
Its clear that consumers are going to experience disruptive price
fluctuations as long as we rely on foreign oil imports for the majority
of our fuel supply. Obviously, no magic bullet exists for either the
short or long-term fuel supply and price situation. But while it is
only one part of a potential solution to our nation's energy situation,
I am committed to elevating the role that alternative fuels, such as
ethanol and biodiesel, play in our nation's energy strategy. The use of
renewable alternative fuels benefits energy security, the environment,
and our overall economy.
And of course, the production and use of renewable alternative
fuels derived from agricultural products directly helps our
agricultural economy. I have supported efforts in the past for greater
use of alternative fuels. I authored legislation that was enacted two
years ago that includes the use of biodiesel that federal fleet
operators can use to meet the EPACT. In my view, this is the type of
approach we should be using to change the demand for fuel--complimented
with increased supply, it could go along way to way towards meeting our
increasing energy needs. While only increasing production and use of
domestically produced renewable fuels will not take care of our energy
security problems, it must be one component of our long-term national
energy strategy.
I am interested to learn how the nominee will address these and
other energy matters. Our well-being and economy is probably more
dependent that we would prefer on energy needs but it is a reality that
we must address. And we must address it in a cooperative way so that we
can meet the needs of the American people.
I look forward to the nominee's testimony.
STATEMENT OF HON. FRANK H. MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you very much, Mr. Chairman, and
let me join you in welcoming your new members to the committee,
and I certainly commend President-elect George W. Bush for
nominating Senator Spence Abraham to serve as Secretary of
Energy. I must admit, Mr. Chairman, this is a little detraction
from my ego to have to hold my breath for a day-and-a-half, but
nevertheless it is good character-building to be readjusted,
but the good news is, it is temporary. But in any event, you
and I have got a close working relationship, and I think it is
fair to say the bipartisan nature of this committee has been
evidenced by the number of bills that we have gotten out in
working with the professional staff in a manner that I think is
traditional with the Committee on Energy and Natural Resources.
Let me remind the nominee that this is not necessarily a
glamorous position. As Senator Bingaman indicated, your
challenges are many, and in many cases they are unique. I think
it is fair to say that we all agree that we have an energy
crisis that is upon us. We can point fingers, but that does not
do the job.
I do not know if you have looked at your gas bill, but I
looked at mine yesterday and it roughly doubled, and Nancy and
I have been gone most of the month, but nevertheless, outside
of an appeal to the gas company, which we would lose on, I
think it is a reality that natural gas is up about four times
what it was a year ago, and 56 million or 50 percent of the
homes in this country depend on natural gas. 98 percent of our
new electric generation is going to be fired from gas, so the
demand is going to be there.
We have seen crude oil prices bouncing around up to $37. We
noted that OPEC has cut production. Obviously they have
discipline within their system, and intend to keep oil prices
relatively high. We have become increasingly dependent on
foreign oil imports. Some of us remember the gas lines around
the block in 1973 and 1974. Others a bit younger do not know
what we are talking about, but at that time we were 37 percent
dependent on imported oil. Today we are 56 percent dependent.
The Department of Energy has indicated that in about 2004 we
will be somewhere around 62 percent. The question is, how much
is enough? When do you adjust for the national security
interests of the country when we have that kind of dependence?
Supply is not keeping pace with demand. We have seen the
California price spikes, power shortages. They finally had the
blackouts. The consumers now are affected. Their bills have
been affected yet, but I think some of us think that California
may really have forgotten where energy comes from. Somebody has
to produce it, and it has to come from some resource.
The problems faced by consumers in California are not the
only energy problems American consumers face. As we look at the
new administration coming in, I think it is fair to say that
from the lessons of the last administration we need a
coordinated effort by the Secretary of Energy involving the
head of the Environmental Protection Agency, the Department of
the Interior, to work for solutions and try and generate a
balance and the legitimate concern over the environment has to
be modified to some extent by the reality that the energy has
to come from some source, and what we have going for us is
better and newer technology, and we can make a smaller
footprint.
We brought an oilfield into Alaska about 15 years ago. It
came in as Endicott, the tenth largest producing field in the
country. The footprint was 56 acres. Now, 15 years later, we
have technology that could reduce that in the ANWR area to
roughly 2,000 acres out of million acres. Now, that is the kind
of consideration that we have to understand and appreciate and
recognize the tradeoff and the balance. As you look at your new
applications, the nuclear issue, where 20 percent of our energy
comes from, it is efficient, clean, but nevertheless the waste
problem is a reality that members of this committee and members
of Congress are going to have to face up to.
Hydro consists of about 8 percent of our electric
generation. We have problems, of course, trying to balance the
needs of the areas with the fish resources, but we are going to
have to make decisions, and the decisions are going to have to
be made on sound science. We simply cannot put off the
decision-making process.
Wind, solar, biomass, there is tremendous potential there.
We spent $6 to $7 billion in the last 5 years mostly in
subsidies, grants. It has been worthwhile, but it still
contributes less than 4 percent of our energy source.
Now, these are a few of the problems you will face as
Secretary of Energy in the coming years, and I might add, I
have not added the issues you will face with regard to
environmental cleanup, the weapons complex. You have got to go
out to Hanford. Believe me, it is a tough set of facts, and it
is challenging to the science as well, the laboratories down in
New Mexico and the contribution they make, but I have great
confidence in your ability to meet the challenges placed before
you as Secretary of Energy and I welcome both you and your
family and feel that you have the qualifications, because in
the time that you have been in the Senator representing your
State of Michigan you have demonstrated a keen understanding of
energy and environmental issues, from technological advances in
automobile technology to the needs of Michigan consumers for
natural gas and heating oil in the winter.
Your vocal support for the funding for the T&GV at the
Department of Energy's Office of Science demonstrate your
commitment to the mission of the Department of Energy to break
through research to yield the next generation of energy
technologies and the public-private partnership needed to get
these technologies to the market.
You have also been one of the Senate's foremost authorities
on high tech issues and the Department of Energy's high tech
research will benefit from your leadership. I encourage you to
try and bring the environmental community to recognize that
with true technology we can make advancements and we can make
footprints smaller, and the opportunity before you,
particularly in the Department of Energy, with the capabilities
in the laboratories and various other aspects, puts you in the
forefront of that effort, so we have high expectations that you
will be able to come forward with some answers and, indeed, a
recognition of the necessity of trying to balance where energy
comes from.
So, Senator Abraham, you are clearly an outstanding
nominee. I fully support your nomination with the chairman. I
look forward to hearing about your vision for the Department of
Energy, and I look forward to working with you as you help to
solve our Nation's energy crisis and provide a secure,
affordable, and clean energy future.
Mr. Chairman, I just have one more comment. I commend you
on being able to do something I have never been able to do, and
that is limit the opening statements of you and I.
Chairman Bingaman. With that, we will go ahead and hear
from our two colleagues from Michigan. First, Senator Levin. We
are glad to have you here before the committee.
STATEMENT OF HON. CARL LEVIN, U.S. SENATOR
FROM MICHIGAN
Senator Levin. Senator Bingaman, first let me congratulate
you on the way this committee has thrived under your
chairmanship. To be able to do what Senator Murkowski just did
indicates a tremendous initiative, leadership on your part.
You know, it is one of the wonders of the political world
that within a few months after Senator Abraham lost an election
to Senator Stabenow, an election in which I supported Senator
Stabenow, that today we are here, Senator Stabenow and I, to
introduce to this committee Senator Abraham to recommend his
confirmation by the U.S. Senate. This is really American
democracy at its ironic best.
One of the most demanding jobs in this Government is that
of the Secretary of Energy, for the reasons which Senators
Bingaman and Murkowski have just enumerated. Energy is the key
to our security, to our economy, and to our comfort. The
importance of it is highlighted by some of the recent problems
that we have had, from high gas prices around the country to
shortages in California of electricity, to the demands for
heating, fuel, fuel oil, to the way in which OPEC manipulates
the world market in oil.
This is a tremendously demanding and tasking job to which
Senator Abraham has been nominated. It needs someone who is
extraordinarily hard-working, and someone who is a quick
learner. Senator Abraham is both. He is known for being both a
quick study and somebody who is extremely hard-working. I just
want to spend a moment on one issue which has not yet been
touched upon. Senator Abraham brings a special expertise with
his knowledge of alternative fuel vehicles and the importance
to those vehicles to our energy security and our energy future.
The auto industry in this country is moving towards alternative
fuel vehicles, which include now hybrids and fuel cells.
Over the next few years, and over the next few decades,
these vehicles will be the secret to greater energy
independence, to fuel efficiency, and to greener automobiles,
or environmentally sound automobiles. These AFV's, as we call
them, these alternative fuel vehicles, are really going to be a
centerpiece of our automotive future and will be a major
contribution to both energy use reduction as well as to
environmental protection.
To achieve this, we are going to need partnerships between
the industry and government. We are going to need incentive for
consumers, and we are going to need a full use of markets, free
markets, in order to achieve their fuller utilization. Spence
Abraham has been involved in all of these, from his involvement
in tax incentives for the use of vehicles, alternative fuel
vehicles, to his involvement in the partnership for a new
generation of vehicles, the PNGV. He has knowledge of the
industry and the direction in which it is moving, which will be
very, very useful in our struggle for both energy and
environmental security.
Spence really needs no introduction to any of us. He is a
friend of all of ours. He has made friends on both sides of the
aisle, which is surely the goal of this body, and of every
member of this body. His wonderful wife, Jane, needs no
introduction to any of us. She is well known. I will leave the
treat of introducing his three children to him, because I know
how important they are in his life and how supportive they and
Jane are of him and of his career.
I am delighted to be here to introduce Spence Abraham and
to recommend his confirmation to this committee.
Chairman Bingaman. Thank you very much, Senator Levin.
Senator Stabenow, we are glad to have you before the
committee.
STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR
FROM MICHIGAN
Senator Stabenow. Good morning. It is wonderful to be here,
Mr. Chairman, the ranking member, soon to be chairman, both of
you. It is a pleasure for me to have one of my first duties in
the U.S. Senate to be here today to present a major Michiganian
to this committee for confirmation as our next Secretary of
Energy.
As you would imagine, we have certainly gotten to know each
other over the last few years. Our previous meetings have been
behind podiums facing each other, and today I am very pleased
and honored to be sitting at the same table representing
Michigan.
Mr. Chairman, Senator Abraham is a devoted family man, as
Senator Levin indicated, and his wonderful wife and children
are here today. He has a long record of service in government
and politics. Our Secretary-designee is no stranger to the
Senate, as we all know, or to Washington, D.C. He has an
impressive work and educational background. He received his
bachelor's degree at my alma mater, Michigan State University,
and we both cheered together the basketball team as they
hopefully go on to their second NCAA men's championship this
year.
After that, he went on to obtain his law degree from a
small university in the East called Harvard. Prior to his
Senate service, Senator Abraham served as Deputy Chief of Staff
to Vice President Dan Quayle, and from 1983 to 1990 he served
as the Republican Party chairman for the State of Michigan.
Mr. Chairman, when Senator Abraham takes his next oath of
office, he will be confronting major energy problems, as we all
know. These are critical issues facing our Nation and Michigan
residents. As Senator Levin has indicated, he brings great
knowledge of the auto industry and the technologies we can
bring to many of these problems and solutions.
One major problem is the volatile price of energy. For
example, Michigan residents still remember the high price
spikes in gasoline during last summer's driving season. I know
that Senator Abraham has witnessed this price shock first-hand.
That is why I am pleased that a son of Michigan will be a
member of the new President Bush Cabinet. I wish him the best
as he addresses complicated, difficult energy issues that will
affect our families in Michigan and across the country. Mr.
Chairman, I am pleased to be here to support the nomination of
Spencer Abraham and hope the committee and the full Senate will
confirm him expeditiously.
Thank you.
Chairman Bingaman. Thank you very much, Senator Stabenow.
We also want to acknowledge and recognize the presence of the
Governor of Michigan, John Engler. Thank you very much for
being here today.
Senator Abraham, before I administer this oath to you,
which we require of all witnesses, let me just ask if you would
like to introduce your family members who might be here today.
Senator Abraham. I would be glad to, Mr. Chairman. I am
joined today by my wife, Jane, and our children, our daughters
Betsy and Julie, and our son, Spencer. We are also joined by
Jane's parents, Bob and Betty Jane Hershey, and by a number of
other friends and family members who have traveled here to
Washington to be with us today. I am very happy they are all
with us, if I could ask them maybe just to stand up.
Chairman Bingaman. Very good. We welcome them.
[Applause.]
Chairman Bingaman. Thank you very much.
The rules of the committee, which apply to all nominees,
require that they be sworn in connection with their testimony.
Would you please rise and raise your right hand, please? Do you
solemnly swear that the testimony you are about to give to the
Senate Committee on Energy and Natural Resources shall be the
truth, the whole truth, and nothing but the truth?
Senator Abraham. I do.
Chairman Bingaman. Go ahead and be seated. Before you begin
your statement, I need to ask three questions that we address
to each nominee before this committee.
First, will you be available to appear before this
committee and other congressional committees to represent
departmental positions and respond to issues of concern to the
Congress?
Senator Abraham. I will.
Chairman Bingaman. Are you aware of any personal holdings,
investments, or interests that could constitute a conflict, or
create the appearance of such a conflict should you be
confirmed and assume the office to which you have been
nominated by the President?
Senator Abraham. Mr. Chairman, my investments, personal
holdings, and other interests have been reviewed by myself and
the appropriate ethics counselors within the Federal
Government. I have also taken appropriate action to avoid any
conflicts of interest. There are no conflicts of interest or
appearances thereof, to my knowledge.
Chairman Bingaman. Senator Abraham, are you involved, or do
you have any assets held in blind trusts?
Senator Abraham. No, I do not.
Chairman Bingaman. With that, we very much welcome you to
the committee. Go right ahead with your statement.
TESTIMONY OF HON. SPENCER ABRAHAM, NOMINEE TO BE SECRETARY OF
THE DEPARTMENT OF ENERGY
Senator Abraham. Mr. Chairman, thank you very much. I
wanted to thank you and Senator Murkowski, as well as the
members of the committee. It is a privilege to appear before
you today as President-elect Bush's nominee to be Secretary of
the Department of Energy, although I have to say, as I listen
to both the chairman and Senator Murkowski describe the
challenges facing the next Secretary, and their suggestions as
to the difficulties of this job, I took it even more seriously
than before.
I am extremely honored that the President-elect has asked
me to serve in this capacity, especially considering the
tremendous importance of the energy and national security
issues facing this country. I want to thank you, Mr. Chairman,
for moving forward so expeditiously with this nomination.
Although they have left, I also want to publicly express my
gratitude to my former colleague, Senator Levin, to Senator
Debby Stabenow for her gracious introductions here today, and I
look forward to working here with them as well as with the
other members of this committee and my former colleagues in the
Senate.
As I look around the room, I do see an awful lot of
friends, people with whom I have worked, the members of this
committee, with genuine expertise on the important and diverse
programs at the Department of Energy. I have enjoyed working
with a number of you on various projects in the last few years,
and I can assure you that, if I am confirmed by the Senate as
the next Secretary of Energy, that I will continue to work
closely with each of you and to draw on your expertise to
address the challenges that lie before this Department and the
country.
Mr. Chairman, I have already introduced my family and, when
I finish my comments, our children will, if they are still
awake, at least, be leaving the hearing room. They heard about
the Ashcroft hearings, I think, so they wanted to go over and
see some real fireworks here today.
But I just also really do want to publicly thank a number
of friends who have come down from Michigan to be with us, and
family members as well. As each of you knows, the missions of
the Department of Energy are vital to this country. The
Department splits a national interest in a variety of contexts
but for particular areas. National security, energy policy,
science and technology, and environmental management. What I
would like to do today is to just briefly discuss the
Department's role in each of these areas and my perspectives on
that.
First, national security. Paramount among the four missions
of the Department is supporting our national security. As all
of you know, more than two-thirds of the Department's funding
comes from defense accounts. One of the most sobering and
important responsibilities that is vested in the Secretary of
Energy is the duty to annually certify to the President that
the U.S. nuclear arsenal is safe, secure, and reliable.
I can assure the members of this committee that nothing
that I will do will be higher on my priority list than the
management of our nuclear stockpile. The Department also plays
a critical role in the challenge of nuclear nonproliferation.
This Nation has an acute interest in accounting for and
preventing the spread of nuclear weapons materials and
expertise. The Department has had many past successes in this
arena, and working with you the Bush administration will
continue those efforts with regard to security at the
Department's national laboratories. I will only say that this,
too, will be a very high priority of mine.
I met with Under Secretary Gordon earlier this week, and I
look forward to working with him to make our national
laboratories secure and to make sure that the Department and
the NNSA (National Nuclear Security Administration) functions
are effectively performed, which means that we must also make
ensure that the highly skilled employees at our facilities are
treated with the dignity and the respect that they deserve.
The second area where the Department supports the national
interest is, of course, in the area of energy policy. Let me
begin today by saying that I am very concerned with recent
developments in California. We appreciate the urgency of the
situation and have been monitoring it. I have had the
opportunity to discus the situation briefly with Secretary
Richardson yesterday, as well as with many members of this
committee over the last few days. While I believe it would be
premature to speculate today as to actions the Bush
administration might or might not take, I want to assure all of
you that we will work with California, with the members of this
Congress, and with other concerned parties, particularly those
in the region, to address this urgent situation.
Certainly the situation at the Northeast heating oil
supplier evidence the importance of the Department's
responsibility to develop a national energy policy. President-
elect Bush and I are deeply committed to developing an energy
policy that includes domestic production of energy in an
environmentally responsible manner, increasing our use of
renewable energy, decreasing our reliance on imported oil, and
developing new technologies that can conserve fossil fuels and
reduce energy-related pollution.
It will take a concerted, cooperative effort from both
sides of the aisle, each end of Pennsylvania Avenue, and from
individuals both inside and outside of government to accomplish
these objectives. The American people deserve our best efforts.
That much is clear from the experience of the past year, a year
in which Americans worried about the price and supply of
gasoline, heating oil, electricity, and natural gas. It was
also a year in which oil imports reached an all-time high, 56
or 57 percent, as was mentioned in Senator Murkowski's opening
statement, compared to just 36 percent in 1973-74, when our
economy was disrupted by the OPEC oil embargo.
Every day, our economy grows more dependent on energy. Just
look at the Internet, which accounts for nearly 10 percent of
U.S. electricity demand. As the Internet doubles in size every
100 days, and e-commerce expands every day, the associated
electricity consumption has and will continue to rise sharply.
Clearly, our continued economic prosperity is directly linked
to ensuring adequate supplies of reasonably priced energy.
Just let me take an additional moment to put this in
perspective. Over the last decade, oil consumption has
increased by more than 14 percent, while domestic oil
production has declined by more than 18 percent. These trends
have increased our dependence on imported oil, as I have said,
to the 56 or 57 percentile, which is our highest level ever. We
now import more than 11 million barrels of oil each day, and
the Department of Energy estimates that imports will increase
to perhaps as high as 15 million per day by the year 2010.
Natural gas prices have more than doubled over the last
year in many areas of the country, and in some places are much
higher. All this will drive up the price of goods through
increased production and transportation costs. The Department
of Energy is the principal Federal agency charged with
responsibility for development of a national energy policy.
However, development of such a national policy requires
coordination with other Federal agencies and departments, and
working with Congress, and I look forward to doing both in the
days ahead.
The third area where the Department supports the national
interest is through research in science and technology. For the
past 6 years, I have worked with a number of you and others of
our colleagues on a variety of science and technology programs
that I believe can improve our economic competitiveness. I
cannot stress enough my desire to continue to move this Nation
forward in this area. The science and technology programs at
the Department have been widely praised, and justly so.
The laboratories have improved the ability of the
Department to perform its national security, its environmental
management, as well as its energy policy missions. The
laboratories are also, of course, supporting the activities and
missions of other Federal agencies, but they are much more than
that. I think we would all agree they are national treasures. I
believe the national laboratories can serve the country in many
other capacities, and I look forward to exploring the full
potential for partnerships with industry and with the academic
community.
The final area where the Department supports the national
interests is in the area of environmental stewardship. As you
all know, the Department has the unenviable responsibility for
implementing the world's largest cleanup program. In this
respect, the Department has an exceptionally difficult
challenge in terms of both cleaning up as well as managing the
waste generated during more than 50 years of nuclear weapons
production.
These problems were not created overnight, and certainly we
are not going to dispense with them quickly or easily, but I
think we can do a better job of accelerating cleanup and
closure of those sites that are surplus to DOE's needs. I
pledge to work with Congress and the States to find ways to
move the DOE's cleanup program forward.
With respect to the nuclear waste program, I share
President-elect Bush's commitment to ensuring that sound
science governs the program. I share the frustration of the
members of this committee with the lack of progress in this
area. My commitment is to make progress on the nuclear waste
program while ensuring that sound science governs decisions on
site recommendation.
Before I close, I would just like to move to a topic that
was alluded to by the chairman in his remarks, and is, I am
sure, on the minds of a few folks in this room. As you all
know, I think, as a member of the Senate I supported
legislation that would have shifted the various and important
and vital functions of this Department to other departments and
agencies or to the private sector. Widely held concerns about
the Department's management structure and operational success,
combined with the relatively stable nature of our energy
markets, led me to support this legislation in the past. A
number of developments have occurred that either significantly
address these concerns or have put them in a new light.
Just to mention a few, I think quite clearly the changing
energy situation, as well as the enactment of a National
Nuclear Security Administration Act last year which
restructured the Department to improve agency management have
significantly altered the equation, and I can assure the
committee that I no longer support this legislation and its
various components, such as the privatization of the Federal
Power Marketing Administrations.
Mr. Chairman, in closing, let me just say again how
extremely honored I am that President-elect Bush has chosen me
for this position. The missions of the Department are vital to
our national interest. If confirmed, I will work with the
members of this committee and others in Congress to carry out
these missions to the very best of my abilities, and in the
best interest of the American people.
Thank you very much.
[The prepared statement of Senator Abraham follows:]
Prepared Statement of Hon. Spencer Abraham, Nominee to be Secretary,
Department of Energy
Mr. Chairman, Senator Murkowski and Members of the Committee, it is
a privilege to appear before you today as President-elect Bush's
nominee to be Secretary of the Department of Energy. I am extremely
honored that the President-elect asked me to serve in this capacity,
especially considering the tremendous importance of the energy and
national security issues facing the country.
I want to thank you, Mr. Chairman, for moving forward expeditiously
with my nomination.
As I look around this room I see many former colleagues and
friends. The members of this Committee have genuine expertise on the
important and diverse programs at the Department of Energy. If
confirmed by the Senate as the next Secretary of Energy, I pledge to
work closely with each of you, and draw on your expertise, to address
the challenges that lie before the Department and the country.
As each of you know, the missions of the Department of Energy are
diverse, complex and vital to our country. The Department of Energy
supports the national interest in four critical areas--national
security, energy policy, science and technology and environmental
management. I would like to briefly discuss the Department's role in
each one of these areas.
national security
Paramount among the four missions of the Department is supporting
our national security. As you know, more than two-thirds of the
Department's funding comes from defense accounts. One of the most
sobering and important responsibilities vested in the Secretary of
Energy is the duty to certify to the President each year that the U.S.
nuclear arsenal is safe, secure and reliable and I can assure the
members of this Committee that nothing I do will be higher on my
priority list than the management of our nuclear stockpile.
The Department also plays a critical role in addressing the
challenge of nuclear nonproliferation. This nation has an acute
interest in accounting for and preventing the spread of nuclear weapons
materials and expertise. The Department has had many past successes in
this arena and--working with you--the Bush Administration will continue
those efforts.
With regard to security at the Department's national laboratories,
I will only say that this too will be a very high priority of mine. I
met with Under Secretary Gordon earlier this week and look forward to
working with him to make our national laboratories secure and to make
sure that the Department and NNSA functions are effectively performed.
Which means that we must also ensure that the highly skilled and
patriotic employees at our facilities--who, by the way, create the
nuclear secrets we all agree must be protected--are treated with the
dignity and respect that they deserve.
energy policy
The second area where the Department supports the national interest
is in the area of energy policy. Certainly recent developments in
California's electricity markets and the Northeast's heating oil supply
evidence the importance of the Department's responsibility to develop a
national energy policy.
President-elect Bush and I are deeply committed to developing an
energy policy that includes increasing domestic production of energy in
an environmentally responsible manner, increasing our use of renewable
energy, decreasing our reliance on imported oil and developing new
technologies that conserve fossil fuels and reduce energy-related
pollution.
It will take a concerted, cooperative effort--from both sides of
the aisle, each end of Pennsylvania Avenue and from individuals both
inside and outside government--to accomplish these objectives. The
American people deserve our best efforts. That much is clear from the
experience of the past year--a year in which Americans worried about
the price and supply of gasoline, heating oil, electricity and natural
gas. It was also a year in which U.S. oil imports reached an all-time
high--57 percent compared to 36 percent in 1973-74 when our economy was
disrupted by the OPEC oil embargo.
Every day our economy grows more dependent on energy. Just look at
the Internet, which accounts for nearly 10 percent of U.S. electricity
demand. As the Internet doubles in size every hundred days and e-
commerce expands every day, associated electricity consumption has and
will continue to rise sharply.
Clearly, our continued economic prosperity is directly linked to
assuring adequate supplies of reasonably priced energy. Let me take a
moment to put this in perspective.
Over the last decade oil consumption has increased by more than 14
percent while domestic oil production has declined by more than 18
percent. These trends have increased our dependence on imported oil to
57 percent--our highest level ever. We now import more than 11 million
barrels of oil each day--and DOE estimates that imports will increase
to 15 million per day by 2010.
Natural gas prices have more than doubled, over the last year in
most areas of the country and in some places are much higher.
All of this will drive up the price of goods through increased
production and transportation costs.
The Department of Energy is the principal Federal agency charged
with responsibility for the development of a national energy policy.
However, development of a national energy policy requires coordination
with other Federal agencies and working with Congress.
science and technology
The third area where the Department supports the national interest
is through research in science and technology. For the past six years,
I have worked with a number of you and others of our colleagues on a
variety of science and technology programs that can improve our
economic competitiveness. I cannot stress enough my desire to continue
to move this nation forward in this area.
The science and technology programs at the Department have been
widely praised and with good reason. The laboratories improve the
ability of the Department to perform its national security,
environmental management and energy policy missions.
The laboratories also support the activities and missions of other
Federal agencies. But, they are much more than that--they are national
treasures. I believe the national laboratories can serve the country in
many other capacities and look forward to exploring the full potential
for partnerships with industry and academia.
environmental management
The final area where the Department supports the national interest
is in the area of environmental stewardship. As you all know, the
Department has the unenviable distinction of implementing the world's
largest cleanup program.
In this respect, the Department has an exceptionally difficult
challenge in cleaning up and managing the wastes generated during more
than 50 years of nuclear weapons production. These problems were not
created overnight and certainly we are not going to dispense with them
quickly or easily. But we can do a better job of accelerating cleanup
and closure of those sites that are surplus to DOE's needs. I pledge to
work with Congress and the States to find ways to move the DOE cleanup
program forward.
With respect to the nuclear waste program, I share President-elect
Bush's commitment to ensuring that sound science governs this program.
I share the frustration of members of this Committee with the lack of
progress in this area. My commitment is to make progress on the nuclear
waste program while ensuring sound science governs decisions on site
recommendation.
doe reorganization
Before I close, I would like to move to a topic that I suspect is
on more than a few minds in this room. As the members of this Committee
know, I supported legislation that would have shifted the various
important and vital functions of the Department of Energy to other
departments and agencies or the private sector.
While widely-held concerns about the Department's management
structure and operational success, combined with the relatively stable
nature of our energy markets, led me to support this legislation in the
past, a number of new developments have occurred that either
significantly addressed these concerns or put them in a new light.
Indeed, the changing energy situation and enactment of the National
Nuclear Security Administration Act last year, which restructured the
Department to improve agency management, have significantly altered the
equation. I assure the Committee that I no longer support this
legislation and its various components, such as privatization of the
Federal power marketing administrations.
closing
In closing, let me say again that I am extremely honored that
President-elect Bush has chosen me for this position. The missions of
the Department are vital to our national interests. If confirmed, I
will work with the members of this Committee and others in Congress to
carry out these missions to the best of my abilities and in the best
interests of the American people.
Thank you.
Chairman Bingaman. Thank you very much. I will go ahead
with my first round of questions and then call upon Senator
Murkowski for his.
Thank you for addressing the issue about the importance of
maintaining the Department of Energy, and I will not ask you
again about that since you have already addressed it.
On the issue of science and technology support at the
Department of Energy, the science and technology programs, in
my view at least, have not been funded at a level that is
commensurate with their importance in the Department.
Particularly, I refer to difference between the science budgets
for the Department of Energy compared to budgets for other
science-focused agencies such as the National Science
Foundation and the National Institutes of Health.
They, in my view, have had a much better record of
maintaining commitments and resources for science and
technology than the Department of Energy has, so the obvious
question from that is whether you will support robust budgets
for science and technology at the Department of Energy that
would be comparable to the treatment that we give to these
other science agencies.
Senator Abraham. Senator, one of the roles which I took a
part in during my tenure in the Senate was to work on some of
these science research priorities. I am kind of very proud--I
actually just played an active role in trying to focus more
resources on some of the areas that you have mentioned, NIH
(National Institutes of Health) in particular.
I think one of the challenges for us is to make an adequate
investment in basic research as a Nation. I intend to be a
strong proponent of that, recognizing two things, that I will
need to be effective for support here in the Congress, but also
I think an appreciation that all the roles of this Department,
particularly as it relates to environmental management and
nuclear security as well as the science and technology function
are very important priorities, and so my commitment is to
continue the work I did in the Senate of trying to be an
advocate for increased investment in science and technology,
but I am probably also going to be an advocate for doing the
things we need to do to address some of the other challenges.
We can say that others are of lower priority, but they
certainly remain important to this Nation's interests. I was
able during my time in the Senate to work with a number of
colleagues on this committee to try to increase those
investments with Senator Domenici in my role on the Budget
Committee and others in other contexts, and I look forward to
continuing that function as an advocate for the Department.
Chairman Bingaman. Thank you. A major issue that you are
probably already aware of, but you will certainly become very
aware of at our national defense labs now is the imposition of
management requirements that has occurred in the last year or
so. Particularly I am thinking about the polygraph examination
requirements that have been imposed. There is a perception in
the laboratories among many of the scientists and engineers
there that much of that requirement for polygraph examinations
is not based on any scientific grounding. I worked with
Secretary Richardson to set up a review by the National Academy
of Sciences of the science underlying the Department of
Energy's current use of polygraphs.
If the National Academy of Sciences finds deficiencies in
the Department of Energy's program of using polygraphs, would
you work to correct those deficiencies so that those polygraphs
would only be used where their use could be justified
scientifically?
Senator Abraham. Well, before I address that directly, I
would just say that one of the things I was informed of shortly
after my designation was that, should I be confirmed, one of
the things that will happen is that I will be subjected to a
polygraph, and that puts this in maybe a clearer focus for me
as I look at the issue that you have raised here today, because
I think this proposal, which affects a lot of people in this
Department, is one that I will be hearing a lot about and
experiencing on a personal level.
Clearly, we will look at any results that come about as a
result of the study that is being undertaken. I think what we
also want to do is to look at a broader set of considerations
which I suspect we might talk a little bit more about before we
are done here today. Clearly, the American people expect us to
conduct business in the national security arena with the
highest degree of protection of our secrets, of our security.
I am deeply committed to making sure that that is
fulfilled, recognizing, however, that there is a need to make
sure that we retain and attract the body of people at the
laboratories who can perform all the various functions of those
laboratories in the most effective way possible. I have talked
briefly about this issue already with General Gordon, and we
intend to continue to focus on it as well in the context of his
role as he addresses the broad issues that the NNSA will be
overseeing, but certainly we will look at the results of that
study when it is available.
Chairman Bingaman. One issue that you alluded to and that
is going to be very much on your agenda for consideration and
action when you take office will be the problem with electric
utility restructuring in California and what that has led to.
Secretary Richardson has taken several actions to try to assist
the situation in California, to try to head off the shortage
that is obviously there. What additional actions, if any, could
you advise us of today that you would take? If you were in a
position to give us any additional information, that would be
very useful.
Senator Abraham. Mr. Chairman, as I said in my statement, I
think it would be premature today for me to speculate about
actions that might be taken once this administration takes
office. I say that for two reasons, first, because we have not
injected ourselves--I haven't, and I don't believe others
have--in the negotiations and the discussions that have gone on
with various parties involved from the government of the State
of California to the various providers.
I believe those kinds of discussions certainly would
commence after the administration is in office, and also
because I do believe that, with the ongoing discussions and
actions that are taking place in California right now in the
legislature as well as on various private channels, that any
speculation, if misinterpreted or in some other way perceived
by parties to those discussions as either advantaging or
disadvantaging them, could disrupt what I think is a very
important set of meetings and deliberations going on.
I am not trying to put this off for long, but I do think
that it is very critical that the legislative actions that are
in the process of being conducted, and the negotiations that
are part of that, move ahead unimpeded by speculation on
litigation today, but I do want to assure this committee, and I
know a number of members are from either--including Senator
Feinstein, who is on the committee, either from California or
from the region, who are very concerned about it, and this
administration is very concerned as well, and we view this as a
matter of urgent priority and will treat it as such.
Chairman Bingaman. I firmly believe that ensuring the
reliability of our interstate transmission grid needs to be a
top priority. Last year, the Senate passed the reliability bill
that came out of this committee. Unfortunately, it died in the
House of Representatives. Late last year, the Department of
Energy issued a notice of inquiry on initiating a rulemaking to
impose mandatory reliability standards. Do you have some views
you could express today about whether you would proceed with
that rulemaking on mandatory reliability standards if Congress
does not act in this area?
Senator Abraham. Well, in the broadly defined area of
electricity, I think that the administration, and I know that
during the campaign President-elect Bush indicated a desire to
address these issues. We have not put together yet, nor do I
think it would be possible in the short period of time that we
have had since the election results were determined, to begin
to develop that program, but I know that one of the issues that
would certainly be part of that, of any restructuring effort
that we would propose, would be issues that relate to
reliability, ones that we addressed in the last Congress.
I think what I would want to do is work both with members
of the Congress as well as examine where the Department is at
this point in terms of putting forward some type of rulemaking
before I would reach a conclusion as to which course of action
made the most sense, but certainly that would be a priority
that we will focus on.
Chairman Bingaman. My final question relates to these power
marketing administrations. I believe that you referred to that
in your opening statement. The Western Area Power
Administration provides Federal electric power to a number of
rural utilities in my State. This low-cost power is critical to
keeping rates down in the rural parts of the country. Do you
foresee the need to make any changes in the operations or terms
of sale of the Federal PMA's?
Senator Abraham. I am well aware of the composition of this
committee and the interest on this set of issues. In fact, I
believe Senator Smith may have called me before any other
person with my designation was made public to make sure I was
fully apprised of these issues, and other Senators, Senator
Wyden and others, were soon to follow.
I do not have, nor is the plan of the administration to
make any changes in the issue of rate structure or with respect
to the continuing responsibilities of the Department of Energy
to house those administrations within the Department in terms
of any kind of privatization discussions, as I mentioned in my
statement.
Chairman Bingaman. Thank you very much.
Senator Murkowski.
Senator Murkowski. Thank you very much, Senator Bingaman.
I thought your answer on California was appropriate
relative to the fact that you have not been confirmed, the
administration has not taken over, and clearly there are a lot
of discussions going on in California. There have been for some
time. But after the 20th, there are going to be great
expectations that somehow you are going to solve this dilemma.
I think it is unfair to characterize the California effort as
true deregulation. Any time you structure an effort in a free
market and then put in price controls you have disrupted that,
and as a consequence the process was flawed from the beginning.
We are under a great deal of pressure on this committee to
address the issue of deregulation, and the merits associated
with it relative to lower cost to consumers, but I personally
think that the experiment in California is not representative
of true deregulation, and it has to some extent muddied the
water, and clearly compromised the credibility of the effort.
Other States are doing quite well, Pennsylvania as an example,
and others that I could mention, but in any event, my concern
and questions to you relative to this are, you had better have
some answers after the 20th, because there is expectations that
it is going to be the partial responsibility of government.
Now, we have seen government bail out companies before.
Chrysler, the Mexican debt, testabonos. As a consequence, the
parallel of what we are going to do to the largest utilities in
the country, BG&E and Southern California Edison, that have
missed their payments because they have been put in an
impossible situation, where they have a cap on retail--or,
excuse me, a cap on retail and no cap on wholesale and as a
consequence they can't stay in business and do anything about
that.
Now, FERC has a responsibility as a Federal agency. They
could potentially put a cap on wholesale, but that would be
contrary to stimulating competition, but I would encourage you
to recognize that before there is going to be meaningful
corrections the California consumer has to feel the hit, and
that has not occurred yet. They have felt an inconvenience
associated with the recent brownouts, but the immediate burden
has to fall on California. It has to fall on the Governor, the
California State legislature, and the California utility
commissions to basically restructure the process and fix the
problem.
Now, I do not expect an answer to that, but I think it is
fair to say that everybody is going to be pointing fingers at
everybody else. This was not a problem caused by the previous
administration. This was a problem that was quite predictable,
was ignored. The reality of where energy comes from, and to
think that a State like California with, I think it has the
sixth largest economy, if you will, in the world, could
continue to prosper and continue to use energy and not be
concerned with where it is going to come from, as long as it
did not come from within the State of California, and as they
begin to purchase outside they seemed to think it would never
end and, of course, prosperity hit other States and we have
seen the results.
So as a consequence I would encourage you to keep the
pressure on those that are responsible for it and not
necessarily encourage Uncle Sam to step forward and bail out a
situation that is going to take some internal correcting within
the individual State.
A question, though, and that is what this is all about,
that moves us over to Yucca Mountain, where this committee has
spent an extraordinary amount of time and effort relative to
the obligation that we feel we have in addressing the
disposition of high-level waste associated with our commercial
reactors, and the realization that the nuclear industry
contributes about 20 percent of the power generated in this
country.
1998 was the due date for the Federal Government to take
the waste in kind. Ratepayers have paid in excess of $11
million. Now, it did not go into escrow. It went into the
general fund. I do not know what Pete Domenici did with that.
Senator Domenici. Just dumped it in the Treasury.
Senator Murkowski. Well, anyway, somebody would have to
appropriate it if we are going to meet our obligations. Coming
up are a couple of dates that are going to be significant. One
is a site determination sometime this summer or early this
spring. I am not just sure when it is, but one of, I guess, the
concerns I have is, this has to be one of your highest
priorities to deal with the spent nuclear fuel waste. I assume
you will consult with this committee.
Senator Abraham. Of course.
Senator Murkowski. And I assume you are aware of the
reality that nobody wants this waste. We have seen the members
of this committee laying down their political lives to ensure
that it did not come, as an example, to the State of Nevada. It
is a highly politicized issue. If you throw it up in the air,
it is going to come down somewhere.
Nobody wants it, but the realization is that the estimated
current litigation costs associated with the nuclear industry's
countersuits against the Federal Government is somewhere in the
area of $40 to $60 billion, and that is as a consequence of the
Government failure to honor the terms of the contract that it
entered into to take that waste in 1998. Some people seem to
dismiss the significance to the taxpayer of this liability.
I wonder if you have any comments relative to this dilemma
that everybody else has simply put off for reasons of
expediency, preferring not to accept the responsibility on
their watch, and little heed the obligation of what it means to
the taxpayer of this country.
Senator Abraham. I would first note that when I was a
member of the Senate I did support legislation that was
produced by this committee, because in my State we have nuclear
power generators who have waste issues that are very acute
issues to the State of Michigan, and I take seriously the
responsibility of this Department to fulfill the commitments
that were made to the various companies, and to ratepayers
across America.
There was a process. I hope and expect to see that process
move forward in a timely way, but it has to move forward. The
President-elect I think made it very clear during the campaign
that he was committed to making sound science decisions, i.e.,
the underlying basis for any site's determination.
As the committee knows, there are a number of additional
steps that go beyond a site determination. There is obviously
opportunities for public comment. There is a role for the State
which the site's determination produces to have an opportunity
to veto, if they wish, that decision. There is an opportunity
for Congress to override that veto. There is a role for the
Nuclear Regulatory Commission to play in a very public sense.
I think the key is that the process be followed, that it be
based on sound science, and that it be followed in a timely
manner.
Senator Murkowski. Thank you. I just have time for one more
question. You certainly responded adequately. This is
coordinating administration energy policy, because the
Department of Energy doesn't control Federal lands which
contain energy resources. DOE does not control air quality
standards that often impact energy supply and price. The
Department of Energy does not have the responsibility for
fiscal policies that are going to be necessary to stimulate
various resource development, technological development.
How do you propose to coordinate the reality that you are
going to have to have cooperation from the Environmental
Protection Agency, the Department of the Interior, various
other organizations, to obtain an objective of relief for the
crisis that we are in?
Senator Abraham. Senator, you are absolutely correct that
the challenge facing us with regard to developing and
implementing effective energy policies is an interdepartmental
interagency problem that is not solely the responsibility of
the Department of Energy or any other single unit of
Government.
I have spoken already with the President-elect about this.
In fact, it was one of the issues we discussed at the time we
met to discuss my possible selection, and I know that he is
committed to trying to bring together the various departments
and agencies of the Government, and you mentioned a number of
them, but arguably others even would be included beyond the
list that you put forward to try to come back to you and to
work with you, with the Congress and beyond, to try to identify
the kinds of components and action steps that need to be taken.
As we move forward on an executive branch level I certainly
would anticipate seeking the counsel and participation in some
form or other of the Congress, but also of others beyond
Washington, and beyond the Government of the United States.
There are a lot of people who have some expertise to
participate here, but at the end of the day it clearly will
require a set of policy options that span a variety of agencies
and we will try to bring that together in some kind of policy
development format.
Senator Murkowski. Thank you, Mr. Chairman.
Chairman Bingaman. Senator Dorgan.
STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR
FROM NORTH DAKOTA
Senator Dorgan. Mr. Chairman, thank you very much. I would
like to just make a couple of comments, since we did not make
opening statements, and then ask a couple of questions. First
of all, Senator Abraham, it is my intention to support your
nomination. You are going to inherit some of the most difficult
policy problems we now face in this country. Yesterday's
announcement of rolling blackouts in our Nation's largest
State, dramatic price spikes in natural gas prices, they are
just some of the symptoms of a very serious energy problem.
You indicated in your statement that we are too dependent
on foreign sources of energy. That is certainly correct. The
solution is, in my judgment, a balanced, coordinated,
thoughtful set of policies that blend the need to find and
produce more energy here, with the need for more and more
conservation. When I say more energy, I also mean more
renewable energy.
Now, you and I have visited in my office about a range of
policies. We are going to agree and disagree from time to time,
but my sense is that these creaky institutions of democracy are
largely lubricated by the good will of men and women who aspire
to public service and want to do the right thing, and I count
you among that group, and that is why I support your
nomination.
I do want to ask you about a number of issues. First, you
indicate that you no longer support privatization of the
Federal Power Marketing Administrations. Let me agree with my
colleague from New Mexico of the importance of these PMAs, the
Power Marketing Administrations. In addition to no longer
supporting it, could we hope or, could we expect, that you no
longer oppose those few discordant voices who from time to time
suggest that they be sold?
Senator Abraham. Yes, you can.
Senator Dorgan. Let me ask about restructuring briefly, and
thank you for that answer. I would not agree with my colleague
from Alaska on a couple of points but agree with him on the
large point with respect to California. It seems to me that if
you go to the road of complete restructuring and take the caps
off wholesale and also the caps off resale, what is going to
happen at the retail level with no caps is, you are going to
find ultimately very little support for any kind of
restructuring once you get some problems in the retail market,
so that is why they kept the caps on retail.
But it is clear to me that this is going to substantially
diminish the appetite of some to want to rush headlong into
restructuring. Do you feel that we ought to move forward
aggressively? Do you feel we ought to move forward cautiously?
Give me again, if you could rephrase your answer on
restructuring, how you generally feel?
Senator Abraham. Well, as I said, Senator Dorgan, and I
want to thank you for your comments relative to my nomination,
I think during the campaign the President-elect made it clear
that he believes that some electricity restructuring needed to
be addressed, and we are not prepared today, and I can't give
you a time line as to when this administration either would
come forward with its own legislation or work with legislation
that might be offered, and I know there are a number of members
of this committee who at times have offered various forms of
restructuring legislation.
Part of certainly any effort we will undertake is to
examine what is obviously a set of laboratories that are in
place in the various States today. Senator Murkowski mentioned
the experiences in Pennsylvania which seem to be, at least to
this point, quite different than experiences in California.
I mean, I think there's fairly widespread agreement that
the California approach is a failure, not working as currently
structured, and I think we would want to take into account any
and all of that information as we might develop something, so I
don't expect that we would have a restructuring recommendation
or piece of legislation quickly to present to the committee or
to the Congress, because I think we need to go through that
investigation on the executive branch side and to hear from
members of Congress.
I would say that as I talk to members of this committee
it's definitely an issue that a number of people have very
different views on, and we will want to try to sample opinion
from all.
Senator Dorgan. So you are not a missionary on this issue?
Senator Abraham. Well, you know, I think that as part of a
comprehensive energy policy we have to consider how we make
affordable and adequate supplies of electricity available, but
there's a lot of issues that are part of that debate, in
addition to restructuring.
Senator Dorgan. Some of us feel very strongly about
renewable energy sources. Some say, well, gosh, it contributes
almost nothing, less than 5 percent. Some of us feel very
strongly that the potential in wind energy and biomass and
others is very important. Will you be an advocate for those
kinds of issues at the Department of Energy, and will you be
supportive of, for example, production tax credit extensions
for wind energy?
Senator Abraham. I will continue to support the
Department's commitment in that area. I think I supported
legislation in the last Congress, if I remember, that would
have extended the tax credits, and I think we ought to look at
other kinds of incentives that might be made available in one
or more of the various areas of renewable energy, including
biomass, solar, and geothermal energy as well, to see what
other kinds of ingredients might be useful. I think the
challenge we have is to overcome what is perceived by many and
has been mentioned by many here today is our inability thus far
to really move in this direction in terms of supplying a
significant portion of the energy that this country uses, but I
think we've got to really have a balanced approach, and I think
renewable energy is an important part of that kind of balanced
approach.
Senator Dorgan. And do you feel the same way about clean
coal technology?
Senator Abraham. Absolutely, and I would mention that the
President-elect during the campaign has made strong statements
of support for a substantial increase in clean coal technology
research.
Senator Dorgan. I would ask you about two other areas,
Senator Abraham. One deals with fuel efficiency, but first let
me ask about global warming. Some say clearly the evidence
exists that there is some global warming. Others say, this is
not settled science, and still others say, that's nuts, we
don't have any idea what is happening to our Earth, or our
world at this point.
What's your impression? Some say no matter how you feel you
ought to take a series of no-regrets policies in anticipation
if there is settled science at some point. If there is global
warming, you ought to have done something.
Senator Abraham. I think regardless of the differing
opinions of scientists and experts and so on on the broad
issue, that we have a challenge as a Nation and an opportunity
in the sense that the new technologies that are, you know, in
so many ways affecting our lives, some of which I've had a
minor role, in my previous career in the Senate, in helping to
expand to try to make sure among the kinds of priorities we set
for the research we're doing and the technology development
that's going on is to try to address the issue that relate to
CO2 production and ways to try to address that, as
well as to see how we can conserve in a fashion that reduces
rather than expands these kinds of emissions.
And I hope we can look for new solutions. I think during
the campaign the President-elect stressed that as one of his
priorities, to find ways to use technologies to find new
solutions so that we're not locked in to simply, you know, a
single-minded debate about what the scientists think on the one
hand or, on the other hand, a situation in which our debate is
almost exclusively whether or not we can work with the less-
developed countries to come up with a more balanced approach to
dealing with this problem.
Senator Dorgan. I would like to follow up on that, but
because of the time I will send you a question to answer on
that.
One final very short question. You come from Michigan. It
is a great State, produces a lot of America's automobiles. We
have had aggressive debates here in Congress about the issue of
fuel efficiency and standards. Improving fuel efficiency by 3
miles per gallon in this country would save 1 million barrels
of oil per day. In my State, we are all concerned about pickup
trucks and various things. I understand all of those issues.
Having said that, the question, I guess, for an Energy
Secretary is, will fuel efficiency play a role in energy
conservation and in trying to address our energy needs? Should
it play a role, and how will it play a role in your
administration?
Senator Abraham. I suspect that if you had asked either
Senators Levin or Stabenow their views on this they would have
been remarkably similar to mine as a Senator from Michigan. As
a Secretary of Energy, certainly we are going to look at all
these issues.
What I would say is, I thought we made some very positive
progress last year when the Senate deliberated this issue and
came up with what I thought was a very good proposal to
examine. I believe it was the National Academy of Sciences
examination and study of the issue of what was an appropriate
fuel efficiency CAFE standard, but to take into account, in
addition to simply the question of miles per gallon, some of
the other issues that have bothered Americans coast-to-coast on
this issue, the safety of vehicles that are, in fact, brought
into line with lower standards, and the impact on the economy.
The other thing I would note in closing on that topic is
just, as Senator Levin mentioned, we're seeing the auto
companies actually moving faster than I suspect any kind of
Department of Transportation regulations would move with the
projected date of perhaps as early as the year 2003 of having
the first of these hybrid models that Senator Levin alluded to
in his statement, so I think we're seeing the market drive this
probably faster than Government ever possibly will.
Senator Dorgan. Mr. Chairman, thank you, and let me wish
Senator Abraham well.
Chairman Bingaman. Senator Domenici.
STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR
FROM NEW MEXICO
Senator Domenici. Thank you very much, Mr. Chairman. It is
a pleasure to be with you, Spence, and I am harkening back in
my mind to some pleasant days when we were privileged to go off
to Europe ahead of the euro market to learn about what was
going on over there as they decided to have their own currency.
I do not think you are going to have time for that for a
little while, because I think you have taken on a job, and I am
sure voluntarily, that is probably as onerous as any in
American history. Anyone that is not telling you that the
greatest Nation on Earth has a severe energy crisis is not
telling you the truth.
We have been playing around the edges of this crisis, doing
little or nothing about it, no aspirations on any one, we just
have not done much about it, and now it finally comes to a head
in the sixth largest economy in the world, which happens to be
California, and I would suggest, not for you, but I hope
Californians will, in terms of how people up here feel about
California, I think it is an immediate crisis, and I think you
are going to be confronted with addressing some of those soon.
But I also believe California has to decide what they want
to do about energy. I believe they have been part of the
decisionmakers of that State have been part of getting them
into this problem, and I do not mean just deregulation. I think
they have had a we-don't-want-any-power-plants-in-our-State
attitude for far too long and frankly there is an attitude that
we do not need any more electricity, maybe we can fix this up
some other way.
I want to suggest to you, without an answer required, that
yes, we have got to help them, but yes, they ought to decide
what they are going to do also. No comment required.
Senator, let me suggest something to you now and ask you
what you think about it. The United States has so much coal
that we are considered to be the Saudi Arabia of coal. We have
had the highest technology base in terms of nuclear power and
new nuclear technology that the world has ever seen. We have 21
to 22 percent of our energy in nuclear power now, and very new
technology moves us in directions of totally different kinds of
powerplants, but we have a fringe in America that is scared to
death to even mention it.
We have natural gas in the Department of the Interior,
where the lands are tied up, that we have now been told contain
200 trillion acre feet of natural gas. For your perusal, we use
20 a year. They are on Federal land which we cannot drill for
natural gas. Part of it is in my State. We have ten times the
current annual use of natural gas locked up, and yet what
happens in America? Every new powerplant built, Mr. Secretary,
of recent origin, five or six have been built to use natural
gas. No coal, no nuclear, just this beautiful fuel called
natural gas.
We do not have enough natural gas for that, and we do not
have enough infrastructure to deliver it, so we have become a
natural gas-dependent country. Now, I ask you, Mr. Secretary,
in light of all the diversity possible, does that frighten you,
as the Secretary of Energy, as you look at America's future?
Senator Abraham. As I mentioned, I believe in my response
to Senator Murkowski, I think that we cannot allow ourselves to
move any further away from a balanced approach with respect to
the sources of energy that we use. That's, I think, the
strongest argument among many for the kind of interagency
program of developing a comprehensive strategy that includes a
focus on all the various possible sources on the one side,
conservation issues and investments in research toward
development of renewable energy sources, to the provision of
more fossil fuel-generated energy sources as well.
If we allow ourselves to essentially put off-limits one
after another of the sources--and I think we can all see, you
know, how some of this has come about. I mean, we have had what
seemed to be an abundant supply of energy in recent years, and
so it perhaps moved us away from a focus on the future. I think
that any comprehensive policy we develop can't just look at
America today, or even America in a couple of years. I mean, we
really have to put together a set of proposals that has a far
longer focus to it, and I think we've got to include in that
each of the sources you mention.
Senator Domenici. Mr. Secretary, since my time is going to
go out, let me give you a couple more observations. First,
yesterday I sent a letter to the President-elect. I would like
to give it to you today so you can read it.
I believe it is time for the President to suggest that we
cannot put the whole burden on you because you do not have the
power to make the decisions, but the other Departments of
Government should all be tasked, be it the Department that we
call Environmental Protection, Interior, and others. They
should be tasked with reviewing each of their policies and each
of their decisions in terms of, how does that affect the energy
supply of this Nation, not necessarily making energy decisions,
but look at them in that light. Would you suggest some approach
for trying to make sure we are not making contrary decisions
with reference to our energy supply?
Senator Abraham. Right. Well, I would, and I think I have
made that point. I will look forward to seeing your letter, and
I would support that kind of interagency participation. This is
by no means something that only one Department has the ability
to affect exclusively.
Senator Domenici. I want to suggest that--Senator Bingaman
raised an issue. In confirming a Secretary of Energy he raised
an issue of lie detector tests at the national laboratory, and
it is very interesting that in your opening remarks you
addressed the morale of those great scientists and those who
support them at the national laboratories, and I think there
are 10 that are energy labs, three of which are nuclear
deterrent laboratories, but it is interesting that we are
talking about that in an Energy Secretary, because you have
jurisdiction over that.
I want to put on the record that I believe you should start
immediately trying to find out why we should be doing between
10 and 20,000, which I think is what the statute which came out
of the House and the conference report requires. I think it is
borderline ludicrous to have that many lie detector tests in
these three laboratories.
I think we have got to find out how they work and put them
to work, but by saying we are doing 80 times more than we did 6
years ago we are secure I believe is rather ludicrous, and I
would hope that you would attend to that as quickly as you can.
Senator Abraham. As you said, I have talked already with
General Gordon about this issue, and asked him to bring me up
to speed as quickly as possible on the status of his analysis,
and your point, and the one that I made also about the morale
and the need for us to have the kind of environment that
attracts the talented people and retains the people, that allow
us to have the skilled force of workers there that we need, is
paramount.
Obviously, we all want to make sure at the same time that
we do not in any way back away from a standard that protects
the secrets that those very scientists have been responsible
for creating.
Senator Domenici. Now, Mr. Secretary, my last question has
to do with the creation by the Congress of the NNSA, the
National Nuclear Security Administration, which is now headed
by retired General John Gordon. If you have not, I am sure you
and your staff will have an opportunity to read that statute.
It was heavily debated in conference and was significantly
manicured, but it does create a semiautonomous agency within
your Department, you are still ultimately in control, but it
creates that Department to manage and see that the nuclear
weapons part of your jurisdiction is no longer dysfunctional
and managed from so many sources it cannot get its work done,
as recently outlined by the General Accounting Office when they
reviewed it.
Is it fair to say from your opening statement that you will
attempt to abide by that law and to work with General Gordon or
his successor to create that kind of an entity contemplated by
that statute I referred to?
Senator Abraham. I voted for the legislation, as you know,
and therefore obviously approved of the thrust of it and,
indeed, have talked to Senator Rudman and others who have done
extensive analysis from the President's Foreign Intelligence
Advisory Board's perspective and others on this subject.
General Gordon and I look forward to working with him to
make sure, to do the part that the Secretary must perform to
make sure that the job he's performing is done well, but I
also, as you mentioned, recognize that the ultimately
responsibility still rests in this agency with the Secretary,
and my goal is to make it possible for the work of the NNSA to
be done as well as possible. I look forward to working with him
to achieve that objective.
Senator Domenici. I thank you, Mr. Chairman.
Chairman Bingaman. Thank you.
Senator Graham.
STATEMENT OF HON. BOB GRAHAM, U.S. SENATOR
FROM FLORIDA
Senator Graham. Thank you, Mr. Chairman. I would like to
start with the same statement that my colleague, Senator Dorgan
did. I look forward to voting in support of Spencer Abraham to
be Secretary of the Department of Energy. I have known him to
be a man of intellect, high values, and an ability to absorb
complex information rapidly. I believe that he will provide
wise leadership in an area where we need all the wisdom that we
can get at this present time.
As we discussed in the office, I believe that it would be
very beneficial if the Department were to try to establish some
national energy goals and to put as many numbers behind those
goals as possible. For instance, the last number I had is that
we were using somewhere in the range of 17 to 18 million
barrels of petroleum per day.
Those numbers may be somewhat out of date by now, but what
should be our national policy in terms of the total amount of
petroleum that we used, and then what should be our national
goal over time in terms of the allocation between domestic
production and foreign imports. That will then get to a set of
subsidiary questions such as how much of a reserve and resource
should we maintain in our domestic production?
Should we try to maintain a 50-year reserve of petroleum in
the United States, which will tend to restrict our current
ability to draw down our domestic resources, or are we prepared
to live with a smaller cushion of safety? What would be your
receptivity to the idea of setting some national goals with the
numbers behind them which then drive the resolution of the
difficult tradeoffs that are going to be involved?
Senator Abraham. Well, first of all, Senator Graham, I just
want to thank you for your kind remarks and support. As you
know from our conversation just the other day, and I might add
a number of other members raised similar interests, I guess a
similar level of interest in trying to get a kind of current
status of the challenges before us, and have raised, and I
alluded to it a minute ago, the interest in not having just a
comprehensive energy policy for 2001, or 2001 through 2005, but
a much longer term kind of approach, and I think it makes every
bit of sense.
To the extent that we can quantify some of these
projections, I think everybody ought to begin with that
framework, because we try to talk about policy changes, whether
it's on the conservation side or the production side or any
other aspect of this we really do need to know either what the
current demand level is going to be, and what the projected
supply levels are going to be, category by category, so I would
say that some type of an initial analysis is particularly
important before we talk about policies that might reach that
level of fulfillment.
Senator Graham. There are some issues which would be
affected by that analysis that are coming fairly quickly before
Congress. On the issue of energy conservation, one of the
principal sets of incentives to achieve conservation has been
the tax code. Various tax credits, deductions and other
specialized provisions that were designed to encourage
everything from biomass to solar energy to more conservation-
oriented appliances have ended up in the tax code.
Yesterday before the Finance Committee the nominee for the
Secretary of the Treasury, Mr. O'Neil, indicated that within
the next 60 days he anticipated the administration would
present to the Congress a large, in the range of $1\1/2\
trillion, proposed tax cut. At that scale, that is probably
going to be the major tax recommendation for the foreseeable
future. Have you, or would you review that in terms of what
that tax cut would provide in terms of incentives for energy
conservation which in turn might be part of your overall energy
strategy?
Senator Abraham. We will, and I think I mentioned in an
earlier answer that I believe in the last Congress I supported
proposals that would at least extend the current tax code's
special treatment of certain types of investments.
I think that without elaborating too much, as we look ahead
towards the development of a comprehensive policy, certainly we
know that there are in a variety of the areas of possible
sources of production or conservation, or renewable
development, situations in which adjustments in the tax code
could make an impact. Whether, and to the extent to which those
will be part of this initial proposal of the administration I
can't say today, but I think it will be certainly on the table
for this Department to work to include.
Senator Graham. My point is, I think there should be a
certain sense of urgency on that, because if we are going to
have an energy policy that will be balanced as between
increasing supply and reducing demand, one of the key levers in
the reduction of demand is going to be through the tax code. It
looks like many of the decisions as to what will be offered for
reductions in tax measures will be made early rather than
later, so I would suggest that an early assignment for the
Department would be preparing to influence what will be in the
program and then explain it once it is proposed.
Senator Abraham. The point is well-taken. I agree.
Senator Graham. On the supply side, an issue that I know
Senator Domenici and many other members of this committee have
been interested in, as have I, has been the use of nuclear
energy in meeting our electrical generation needs. My State is
fairly typical of the Nation. Not too long ago we had about 20
percent of our total electric generation from nuclear energy.
Today, that is dropping down close to 15 percent and appears to
be headed down further.
This is a complex issue, which involves matters of disposal
of waste, but it also involves regulatory policy. How do you
reinvigorate the industry to seriously look at nuclear? How do
you get the financial institutions to be willing to undertake
the investment? What do you see as the role of the Department
of Energy? Should there be a role? Is it an appropriate policy
to try to reinvigorate our nuclear power option and, if so,
what are some of the things you might consider doing?
Senator Abraham. Well, I think that any kind of balanced
comprehensive policy has to take into account the possible role
and the broadening or focused role of nuclear power as a source
of generation. My own view is that again, and there are a
number of agencies that have various responsibilities here, and
I think that we, as I keep saying, have to do this on a multi-
departmental level.
What I would say is that I think we all know that there has
not been a new nuclear power facility started in this country
in a very long period of time. I think maybe it's back to the
1970's. But we also have existing facilities that may be headed
towards a point where they may not be allowed to continue. They
may need to be reauthorized.
I know one of the challenges, for instance, is the
purchasing by entities who often have greater expertise in the
safe and efficient operation of nuclear facilities from current
owners who do not, and it seems to me we have to look at that
part of the puzzle. How could we keep facilities already in
place, functioning well into the future? I think all of those
are issues the Department ought to be examining as we conduct
this analysis in terms of the development of a long-range plan,
or strategy.
Senator Bingaman. Thank you very much. We will have one
other set of questions here from Senator Campbell, and then we
will take a 10-minute break.
Senator Campbell.
STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL,
U.S. SENATOR FROM COLORADO
Senator Campbell. Thank you, Mr. Chairman. One of the
benefits, I guess, of sitting this far away from the center of
power, where the chairman sits, is that most of the questions
have already been asked, or in your statement you have already
talked a good deal about the things I was interested in, but I
appreciate the comments of my colleagues, particularly Senator
Dorgan and Senator Bingaman.
There is no question you are stepping into a quagmire of
problems, and I just have to tell you, Spence, I really admire
you for taking on that job. I think that California, which
tends to lead the rest of the Nation in a lot of things good
and a lot of things bad as it washes across the country, is
just the tip of the iceberg of what we are going to be facing,
and I know it is easy just to sort of point fingers, you know,
that deregulation was the problem, or it is those greedy power
producers, they are the problem, or whatever, but I think we
all recognize that Nation-wide we have got a growing population
and diminishing power production, maybe not diminishing, but it
certainly is not keeping up with the amount of power we need.
One of my colleagues mentioned the Internet takes 10
percent of our power uses now, and who knows what things have
not even been invented yet that will need power in the next 10
years, but clearly the present administration, by locking up a
lot of our resources, or preventing us from developing them,
has been part of the problem.
I noticed with interest this morning that seven more large
tracts of land were locked up under the Antiquities Act that
will be off the screen now for any kind of future development,
and I know, too, that there is a national defense component.
I read with interest a couple of days ago that Iraq is
already rearming, and doing it with the money that we are
paying them, since we are now importing more oil from Iraq than
we did before the war. I mean, there is something wrong with
that picture. Americans lose their lives over there in the sand
of the Middle East, and just a decade later we are dependent on
them, instead of them dependent on us. There is something wrong
with our policy that needs a major fix, and I know that you are
just going to be up to your ears in it, so I just want to tell
you how much I admire you for doing that.
But one of my colleagues did mention interagency
cooperation, and coming from public lands States, many of us
have a little different view on perhaps the sale of the PMA's
where rural electrification is so important, or the use of
public lands for drilling and coal-mining, things of that
nature, but clearly a lot of the things that you will have to
deal with in looking for energy sources so that we can get less
dependent is going to have to be done in cooperation with the
Interior Department and perhaps a number of others, too, and I
just want to commend you.
I do not have a lot of questions to ask you, but I know, as
you do, that we haven't built a refinery in this country, a new
refinery for oil, in 30 years. I do not know how many years ago
it has been since we built any kind of a nuclear facility, a
good number of them, I guess, and I know that this last
administration that is now leaving advocated tearing down some
of our dams, which are suppliers of much of our electrical
power.
I do not know how anybody in their right mind could not
look at all those and recognize that we are in deep trouble,
and we are going to get more and more dependent on foreign
power all the time, but Senator Dorgan mentioned, too,
something about conservation. I think that is important, and
alternative fuels are important, too.
Living out West, coal bed methane, natural gas, oil shale,
things of that nature are just sort of coming on line. The
price has not been right, but as we get more and more expensive
oil, I am sure they will be, but certainly automobile
manufacturers and those manufacturers of apparatuses that use
energy can do better, too. We now have Caterpillar and Cummins
in Detroit and a number of our manufacturers that basically got
their start in your State who have engines developed now that
develop 600 horsepower and pull 80,000 pounds and still get 6
miles to the gallon. I do not get that much in my pickup.
I will not mention the name of my pickup, because I do not
want to hurt their sales, but I am getting rid of that thing.
One of the reasons is, I know there are more efficient engines
out there, and I know that we can do a lot more on efficient
engines that still use hydrocarbon power. We are not ever going
to get to the position where we can use solar, or wind, or
something like that to drive our ship fleet or our bombers or
heavy trucks. It is just not going to happen, and we need the
kind of power that comes from hydrocarbons, which has basically
been cut off from our use.
But I just wanted to make just one comment to you. It will
not be really in your purview, but you probably know that
something like one-third of our whole trade deficit now is
related to oil. It is really a downward spiral, and it is going
to continue as long as we are related more and more to foreign
oil.
But there is one form of land in this country that has huge
resources of coal, of coal bed methane, of natural gas, of oil,
too, and that is Indian lands, and they have not had the
opportunity to develop that, to provide jobs for their own
people, but it seemed to me that if you do some work with the
Department of the Interior you are going to find an opportunity
in which a lot of the resources in America that have not been
locked up will be able to be developed for the good of the
Nation, and certainly the good of the people that live on those
lands, by providing jobs and an income to those tribes, so I
would hope you would keep that in your mind as you take your
position.
I also just want to wish you good luck in your tenure.
Thank you, Mr. Chairman.
Chairman Bingaman. Thank you very much. We will take a 10-
minute break and then continue with the questions.
[Recess.]
Chairman Bingaman. Let us go ahead and reconvene. I wanted
to advise all members that it would be the intention of the
chair to have a vote on the Abraham nomination when we come
back into session at 2:30 this afternoon before we proceed to
the hearing on Gale Norton's nomination, so we will advise all
offices of that so that if there is objection we can consider
that, but otherwise if there is no objection we will do that.
Senator Wyden, you are next.
STATEMENT OF HON. RON WYDEN, U.S. SENATOR
FROM OREGON
Senator Wyden. Thank you, Mr. Chairman. Mr. Chairman and
colleagues, I have worked closely with Senator Abraham on a
wide variety of technology issues in particular, including the
Internet tax freedom bill and the Digital Signatures Act. I
think all of us understand that Senator Abraham is smart, he is
fair, and he is a good listener.
I have been kidding him that I was pleased that his proven
legislative expertise did not extend to his bill to sell off
Bonneville Power. As he knows, that would just clobber our
agency, and in conversations Senator Abraham has assured
Senator Smith and I that he will not support selling off
Bonneville. He will not support these precipitous schemes to go
to marketplace rates, and he will continue to support the
preference clause that is so important to Bonneville customers
and small businesses.
The one area, Senator Abraham, that we did not discuss but
that is of importance to our region are these emergency orders
that the Department keeps issuing to require our region to sell
power to California. Now, California energy officials publicly
thanked the Northwest back in December for those sales that
they said prevented rolling blackouts in their region, so
Oregon and the Northwest is clearly being a good neighbor.
My question to you is, will you take another look at these
emergency orders and, in doing so, I hope you will agree with
me that you will not continue to renew them when they put
Northwest ratepayers at risk, or they lack guarantees that
Oregon and the Northwest will be repaid.
Senator Abraham. Senator, as I said in my statement, I
think it's certainly premature today to speculate about policy
actions which will be taken, although certainly soon, but what
I have indicated to you, to Senator Feinstein when we met, and
to others who have had concerns about this, is that the
administration will look at all of these issues in a broad
regional context, as well as in the context of the immediate
and urgent problems in California, and obviously the concerns
which you and others from the Northwest have expressed to us
about where energy supplies to your States and the region will
be at a later point this year, perhaps, are part of a broader
set of considerations that have to be taken into account as all
of this plays out, but it is certainly something we're
concerned about, and something that we regard as a matter of
great urgency.
Senator Wyden. Understand that these emergency orders
continue to be renewed, and the people of my State have been
more than good neighbors, but I hope you will also look to the
proposition that we should not be forced to ship power by
emergency order when we do not have any. That is the concern
that Oregonians have today.
The second area I wanted to explore with you deals with
environmental protection. As you know, there have been a number
of environmental groups that have been concerned about various
votes in the Senate. Someone said to me, you should not vote
for your friend Spence Abraham because of his environmental
record. What is your orientation with respect to assuring that
the country produces more energy without compromising the
environmental protection and the treasures that we all
appreciate?
Senator Abraham. Well, obviously, Senator, as you know, we
look ahead to a real challenge in terms of the demand for
energy that not only exists today, that produces some of the
challenges we confront even immediately before us, but to the
increase in demand that I think we all, at least to date, can
project for the future, so as we move forward we have to
analyze not only what we can do on the production side, but
what we can do on the conservation side, what we can do on the
renewable energy side of the equation, all of which, obviously,
contribute I think towards environmental sensitivity.
I think this administration, and I know the President-elect
during the campaign made it very clear that whatever policies
he would be advocating with respect to increases in production
would be advocated in a way that was environmentally sensitive.
What I think we also, though, have to recognize is that
there are a lot of other agencies that are part of this
decision-making process. Some of the issues that certainly
would be related to environmental protection are not going to
be within the scope of the work that the Department of Energy
does, and I suspect that other hearings with Governor Whitman
and probably later with Gale Norton here will also be part of
that decisionmaking process, too, but certainly this
Secretary's focus will be on trying to properly balance the
sensitivity to environmental safety on the one hand, as well as
the need to address the production and supply needs.
And to just take it one step further, a major part of the
responsibility of this Department, as you are well aware, is
environmental management, is the cleanup of sites that have
been over the last 50 years or so, as part of our weapons
process and so on, have posed very serious threats, and I have
talked to a number of members of this committee about how
important it is to me, and I know to them, that we move forward
and try to begin to gain some ground on the cleanup of those
sites. That is a very important commitment as well.
Senator Wyden. I understand your reluctance to go into
specifics today, but I hope that early on in your tenure you
will send a powerful message that it is possible to produce
more energy in this country without compromising environmental
policy. The American people are looking for that message, and I
think it is important that you send it early on, and it is one
that I feel very strongly about.
The third area that I want to examine is a regional one,
that is, the question of Hanford. There are not the funds right
now for the cleanup of Hanford, which, of course, adjoins our
lifeblood, the Columbia River, and the Upper Pacific Northwest.
There are a lot of folks in our region who believe the area is
being turned into a sacrifice zone.
Now, the current administration considered the proposed
restart of the fast flux test facility for a variety of
different missions, took 5 years, spent $100 million of
taxpayers' money, looked at every conceivable use of this
facility, and said that the expected missions could be handled
by other Department of Energy facilities.
I hope that you will not resume this scavenger hunt for
some kind of mission to restart this facility. Do you have any
thoughts on that this morning?
Senator Abraham. My understanding is that Secretary
Richardson may have already have completed the process of the
signing of the RFP, I believe, on that issue. I recognize there
are other focuses here of other perspectives, but I really
think, in the absence of any demonstration of inappropriateness
in the reaching of the conclusions that have been reached, that
that would be the extent of that effort.
Senator Wyden. Do I have time for one additional question?
Is my time up?
Chairman Bingaman. You have 10 seconds.
Senator Wyden. This one really starts a brawl in the
committee, because the chairman and I have a difference of
opinion on it.
The Oregonian, our State-wide newspaper, found evidence
that BP Amoco has manipulated the West Coast gas market through
export sales to Asia. As you know, there had been a lifting of
the export ban of the sales of Alaskan oil. I would ask only
that you take a look at this issue that you consult with
Northwest members, the chairman, of course, and others, because
we have the dubious honor of paying the highest gasoline prices
in the country, and the paper in our State put e-mail and other
documents from BP Amoco on the front page of the paper saying
that this is part of a plan to manipulate West Coast markets.
I do not want to cause a brawl in this committee, but I
would ask that you look at that evidence.
Senator Abraham. I would be happy to do so.
Senator Wyden. Thank you, Mr. Chairman.
Chairman Bingaman. Senator Thomas.
STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR
FROM WYOMING
Senator Thomas. Thank you, Mr. Chairman. First, let me
welcome Spence Abraham. I am certainly delighted that you are
going to take this job, and I know you will do very well. As
has already been said, by the time we get here, almost
everything has been said, but that never deters us from saying
it again, so I guess basically I just have some things I would
like to emphasize with respect to what I think are important.
One is the coordination among agencies. We have talked
about that. I think Interior, Energy, EPA, even the White
House, Environmental Quality Council, those kinds of things,
all have a very important impact on this thing. I would like to
suggest to you that there ought to be organized soon some kind
of an almost summit meeting where the heads of those agencies
are brought together to visit a little bit with producers as
well as consumers, and I think we are faced with two things, it
seems to me, both of which you have talked about.
One is a longer-term policy which, frankly, we have not
had. It is very important, but it isn't a short-term answer.
And then we have to do some things more on the short term, and
I think we need to do that.
Nuclear waste has also been mentioned. Certainly we are not
going to move forward with nuclear power as a supplemental or
alternative until we do something about the waste, or else
begin to use it as they do in Europe, in some sort of
recycling, but we have spent billions of dollars on waste
facilities that are not now being used very fully, and we need
to do that.
Hydro energy, we have talked about that. The idea of
removing dams certainly is not consistent with the problems we
have now.
Obviously, access to public land, particularly those of us
in the West, where 50 percent of Wyoming belongs to the Federal
Government, and even more in most of the Western States. then I
am not suggesting we open up all the wilderness or the parks
and so on, but we do have a lot of multiple use lands that
ought to be made more readily available, it seems to me.
Interesting, I think this week you have had the Secretary,
the current Secretary overseas dealing with OPEC, which is an
appropriate thing to do, but it does not seem to me that the
Department of Energy has a lot of leverage, and I mentioned
this to General Powell yesterday. It would seem to me in those
countries where we have done a great deal for them, when we are
dealing with them about the production of OPEC, that energy
ought to be joined by the State Department, it ought to be
joined by DOD and some others, so that we have a little
leverage in terms of what we are doing there.
I am also interested, of course, in your nuclear weapons
activities. We have, I think very important offensive
missiles--offense, not offensive, that are very important as
well as the missile defense, and I hope you do that.
So you mentioned, I apparently missed it, I think, doing
some research on clean coal. I would like to suggest that you
expand that a little bit to also enrichment. You buy a ton of
coal in Wyoming for $4\1/2\, and by the time it gets to Dallas
it costs $25. We can change that by increasing the enrichment,
get more Btu's than that. You could do some of that. What is
your reaction to experimentation with that?
Senator Abraham. I would say that I am not that familiar
with the process. I know that with regard to the basic clean
coal technology programs that we had, the work that is done in
the labs in Pittsburgh and Morgantown and so on, that the
President-elect has expressed a strong commitment to increase
over $2 billion over the next 10 years for those kinds of
programs, what the mixture would be in terms of the kind of
research we really are not yet prepared to make recommendations
about, but would take into consideration that as perhaps part
of the type of research that would be done. I would be
interested in getting more information from the Senate on that.
Senator Thomas. I think that would be great. Actually,
there has been research going on for some time, and it has not
been as effective, I think, as it might be. We have a specific
issue with my friend from Idaho where we have had the treatment
project in INEL, which is a waste disposal pilot plant in which
incineration was the original idea, and of course those of us
that are downwind, whether it is Yellowstone Park or Wyoming,
have been concerned about that.
The Secretary has set up a study group. They have come up
with some recommendations, and I want to urge you to continue
to pursue the alternatives to incineration in that plant. I
think it is very important to us.
Again, congratulations. We look forward to working with
you, and I think we can make some progress by working together.
Thank you, Mr. Chairman.
Chairman Bingaman. Thank you. Since we have no other
already approved members of the committee on the Democratic
side, I will go to Senator Craig.
Senator Feinstein. Jeff.
Chairman Bingaman. Yes. Let me call on Senator Feinstein.
Did you have a question about the procedure?
Senator Feinstein. No. I am sorry, I thought you said there
were no other members.
Chairman Bingaman. No, no. You and Senator Cantwell and
Senator Schumar I am going to call on after the members who
have already been approved since you have not yet been approved
by our conference.
Senator Feinstein. I see. Thank you.
Chairman Bingaman. Go ahead, Senator Craig.
STATEMENT OF HON. LARRY E. CRAIG, U.S. SENATOR
FROM IDAHO
Senator Craig. Mr. Chairman, I am not sure that I want to
be in the situation of being recognized first, before the two
new additions to our committee, since both of them are ladies.
However, I have worked with Senator Feinstein in the past and I
know that if I do not get the first word in, I will never get
the last. She is most effective. I welcome both of you to the
committee.
Senator Feinstein. Thank you.
Senator Craig. The great thing about having you before the
committee is I can say, Spence, welcome. It is not often that
we have the opportunity to be able to know those who will
become key players in a new administration on a personal and a
friendship basis prior to them assuming that responsibility.
Most of us on this committee have had that opportunity with
you, Spence. I can say that I am excited and looking forward to
you becoming our new Secretary of Energy.
I am sure all of the members this morning have laid out the
daunting task before you. I just came from the Agriculture
Committee where we were visiting with Ann Veneman, soon to be
your colleague in the Cabinet as Secretary of Agriculture. Even
there, as we talked about agriculture and its problems and the
need for leadership, energy emerged.
The cost of the production of fertilizer has tripled in the
last 6 months. Natural gas, as you know, is a large component
in the production of fertilizer. Many of the fertilizer plants
simply do not believe they can produce fertilizer for the
coming year at a cost that the American farmer can afford.
I do not think any average consumer even has begun to
understand the ripple effect of high energy costs in this
nation. Many of us on this committee knew that. We watched for
the last 8 years as average increase in production of energy in
this country went up less than 1\1/2\ percent. And average
production or consumption went up over 2.5 percent. We knew
that at some time in the future those lines would cross and we
would be in crisis.
Those lines crossed about 8 to 10 months ago. We are now in
crisis. If we do not articulate and implement a new energy
policy for this country in the near future, then the situation
in California will be occurring nationwide.
I say this not for the benefit of my colleague from
California, but the political correctness that has been going
on in California for the last decade over energy production
produced the blackouts of yesterday. They are not a producing
State. They are a consuming State. But tragically enough, we
have become a consuming nation, not a producing nation. You
know that. That is going to be a huge responsibility for you
and an obligation.
While just in another building, John Ashcroft is getting
all the attention this morning, as he did yesterday and the day
before, my guess is that in the long-term, yours is by far the
greater task. Because what you will do in the next year with
our new president to articulate an energy policy and to begin
to implement it in cooperation with Congress is going to have
immediate, short-term and long-term impact on every citizen in
this country. Whether it is the cost of that which they consume
or their lifestyle itself needing to be altered, simply because
there is no longer the abundance of energy available, people
will feel the impact of this crisis. Energy has driven the
great economy of this country all of our lifetime and will
certainly be a key factor in the future.
We look forward to working with you in that task. We know
that it has to be done. We will not be able to conserve our way
out of this one. We will need to produce our way out of this
one.
At the same time, conservation is important. I would hope
that the budget that you present to Congress will not have any
less money in it for technology; the kind of new technology of
which you are so well aware. You introduced me to some exciting
new technology when I was in your State in the last year
looking at that marvelous new fuel cell concept that is being
produced there in the laboratories of some of our auto
manufacturers. That technology has to go forward.
At the same time, it is downstream. We know what we have
got to produce in the short-term to get our country back on
track.
I have communicated this urgency to the President-elect. I
am very willing to say that the current situation is the
Clinton energy crisis. I believe that because I know that they
have not been a producing administration. They have been a
conserving administration. They have wanted to sit back and
wait for new technologies to come. If we do not articulate a
policy, if you do not help develop that and lead us in that,
then this crisis will be short-term for Mr. Clinton and long-
term for Mr. Bush. I say that as a dedicated conservative
Republican. At the same time, I recognize the importance of it
getting done and that will require all of us working very
closely together.
You gave me the courtesy of coming to visit yesterday and
we talked about the needs of my State. We also discussed the
marvelous national laboratories that I have in my State and the
resource that they are to the Nation. We discussed the kind of
experimental, research and engineering development work that
goes on there. Idaho's national laboratories are also DOE's
lead laboratories for environmental research, environmental
stewardship programs and nuclear energy technology. I am very
excited that you are becoming our new Secretary of Energy. I am
excited about the opportunity to watch your leadership and to
work with you in the development of these new policies for our
country now and for the future.
So, welcome to the committee and let me recognize you as
soon to be our new Secretary of Energy. Thank you, Spence.
Senator Abraham. Thank you, Senator.
Chairman Bingaman. Senator Bayh.
STATEMENT OF HON. EVAN BAYH, U.S. SENATOR
FROM INDIANA
Senator Bayh. Thank you, Mr. Chairman. It is good to be
with you again today. And Senator Abraham, I would just like to
say that it is good to know that there is life after the U.S.
Senate. You are looking very well here today.
I would also like to compliment you on your stamina. You
were good enough to call me on the phone shortly after your
nomination. You then came to see me. And now you are good
enough to endure our comments here today. It reminds me in some
ways of the medieval justice system where they had the trial by
ordeal. So this is a testimony to your dedication to public
service. And I know I speak for all of us when I say that I
also apologize for having to step out. I enjoyed seeing your
beautiful family. How old are your twins again, Spence?
Senator Abraham. Seven.
Senator Bayh. Seven. Well, as you know, I have got twin
boys who are 5 years and 2 months old. And I kind of wondered
how long your girls were going to last there in the front row.
If I had brought my boys to something like this, they would
have been at the witness stand there in no time flat.
Senator Abraham. Well, we had sort of arranged in the event
that the questioning turned particular hostile to send our 4\1/
2\-year-old son loose on the committee. And so he had been
practicing his various techniques last night for disruptive
behavior. But we decided at the last minute that might not go
down too well.
Senator Bayh. Well, you never know. Having experienced that
times two----
Senator Abraham. The threat still exists. He remains on the
floor. So he is somewhere in the building.
Senator Bayh. All right. We will bear that in mind as the
proceedings continue on. And finally, I know your friend and
colleague, the Governor of Michigan, has been recognized
previously. John, it is good to see you again. I enjoyed our
service together. And I could not help but remark, as I think
you and I were commenting on yesterday, you have twins. And I
have twins. And the Englers have triplets. There must be
something in the Midwestern water that produces these results.
Senator Abraham. The Department of Energy will study that
issue as well.
Senator Bayh. I will look forward to the results. Just
briefly, we have talked about these issues previously. As you
know, as I think Senator Craig was just mentioning, and several
of our colleagues have talked about the importance of energy
independence for our country.
And I have had a chance to share my thoughts with you about
the great reserves of coal that we have, not only in the Ohio
River Valley Basin, but elsewhere across our country, and the
importance of continuing to invest in technology and research
so that we can utilize those resources that we have in
abundance in a way that is environmentally safe and sound. And
I would encourage the efforts that you have pledged to
undertake in the Department.
I know you expressed your support for this. I know the
President-elect has also indicated his support for clean coal
technology. I think it has to be one of the fundamental pillars
of a long-term strategy for energy independence in our country.
It should be a win/win strategy, a domestic energy source that
is reliable and affordable. With the new technology coming on
line, we should also be able to find ways to make it safe for
the environment. So I just take an opportunity here on the
public record to reiterate my support for that initiative.
Secondly, as we have previously discussed--I know Senator
Feinstein will probably have some additional comments about
this. Perhaps some of my colleagues will as well. I shared with
you my own conviction that in the long run, we need to harness
market forces in the electricity market in ways that will
provide a safe, secure, and affordable source of electricity
without relying on the traditional monopolies that have
dominated that part of our energy system.
One of the beauties, as our mutual friend Governor Engler
would tell you, one of the beauties of the Federal system is we
allow different States to experiment with different solutions
to the problems that face our citizens. And then those of us at
the national level can use the benefit of that experience to
see what works and what does not work.
Unfortunately, there appear to be some things that have
gone seriously awry in California. But I hope that does not
mean that we give up on the prospect of having a more open
market for energy and that we can look for ways that, as I
said, harness market forces, while still absolutely assuring
people of a reliable and affordable supply of energy.
That is a balance that needs to be struck and I am sure
that we will be analyzing the results from the West Coast and
elsewhere as we try to seek, ultimately, the right answer. But
I would encourage you to at least analyze that situation and
glean the answers that can be taken from it to inform our
future policymaking.
Just a couple of other quick points. I know that we all
share--particularly you and I, several of the rest of us from
automotive producing States--your two colleagues who introduced
you to the committee emphasized this--a strong commitment to
the next generation of automobiles to ensure that they get the
better fuel mileage and also they have lower emissions. And I
would encourage your dedication in that regard.
It is an important domestic industry as you know. We employ
a lot of people. And we need to try to invest in this
technology to ensure that we get the economic benefits of this
industry while still doing right by the environment and the
long-term energy concerns of the country.
So I know I am preaching to the choir here when I mentioned
this, but, again, I just want to reiterate that for the public
record.
Finally, Spence, I did have one question for you. I do not
want to bring this out of the blue. It was submitted by, or
recommended to me, by a member of your congressional
delegation. He asked that I get the benefits of your thoughts.
It must be an issue you have had to address before because it
comes from Michigan. About any thoughts that you might have
about the advisability or appropriateness of drilling for oil
and gas in the Great Lakes Basin. Apparently, this is something
that is on the mind of some folks up there. And if you have any
thoughts along those lines. Obviously, the Great Lakes are a
vitally important natural resource. I personally was not aware
that there was a great interest in drilling, but apparently at
least one member of Congress believes there is.
Senator Abraham. Yes, I am not aware that there is either,
Senator. I certainly have the support of that and do not bring
that perspective to this job. And as I said to several of the
members during the comments, our goal here is to try to work
together to identify the new sources of energy or ways to
enhance the current sources we have in an environmentally
sensitive and balanced way.
And obviously, the fresh water supply the Great Lakes
provides for our Nation is so vital, I do not think that we
would ever lose sight of that set of factors as we would
consider--or factors like them in other areas of production and
sources. Clearly, we have to weigh all these considerations.
At the same time, as I mentioned, we need a balanced
approach. And as you and I talked this week, trying to make
sure that we do have balance is pivotal to the success. The
dependence somebody mentioned earlier, the increasing
dependence on natural gas cannot be allowed to continue because
that will not work for long. And we really need to look at this
in a more balanced way, but also an environmentally sensitive
one as well.
Senator Bayh. Thank you, Spence. Apparently, there was a
gas leak in one town out there that raised this concern, and
with the possibility of some slant drilling and things of that
nature apparently are issues on some people's minds.
You know as well as I do that the Great Lakes are a vitally
important part of our ecosystem and a great national treasure.
So I think you are right. Any activity of this kind there needs
to be done in an appropriate and sensitive way to ensure both
the continued greatness of the Great Lakes while ensuring that
people do not have any undue health concerns.
Having said all that, I look forward to supporting you. And
I look forward to working with you. And I appreciated the hand
in friendship you extended the other day. And on behalf of all
of us on this side of the aisle, let me just say we want to
work with you, when we can, to try to get policy right in our
country. I wish you the very best of success.
Senator Abraham. Thank you. And I look forward to working
with you as well.
Chairman Bingaman. Senator Smith.
STATEMENT OF HON. GORDON SMITH, U.S. SENATOR
FROM OREGON
Senator Smith. Thank you, Mr. Chairman. Spence, I also take
delight in calling you by your first name and so appreciate the
opportunity and the great challenge that you have.
I have heard my colleagues state the dilemma facing you in
different ways. And to state it differently, I have
reconstructed a couplet that I heard as a boy for this
occasion.
Just because--I am speaking of Oregonians now. Just because
we love our fish, our birds and our trees should not mean that
we must sit in the dark and freeze.
So that is your challenge, Spence. We want a good, clean
environment. But we want our lights on at night and the heat on
in the winter. And I must say I am very concerned for my State.
I have been--I have felt I have been something of a voice in
the wilderness for a long time now saying that food does not
come from Safeway. We do not create energy by hitting a light
switch. Gasoline does not come from a filling station.
All these natural resource industries have been under
assault for 8 years. Now, the challenge you have is to meet the
new environmental ethic of our country. But somehow reconnect
the reality dots for the American people as to what we must do
to help them to continue to prosper as a people.
Now, why am I concerned about Oregon? We are California's
neighbor. We care about our neighbors and we want them to be
well and to be healthy. And we want them to be warm in the
winter, especially cool in the summer. But frankly, I think my
State is being set up--and I include Washington State--to be an
energy farm for California.
Now, why do I say that? Recently, the California Public
Utilities Commission voted to increase rates temporarily from 9
to 15 percent. However, yesterday after we met, I received
three calls from different industries in Oregon complaining to
me that they are just being put on notice that their rates will
go up between 30 and 40 percent because of what is happening in
California.
I have to tell you whatever hope they might have had for a
profit this year is gone with those rates. Now, that effects
directly the value of those businesses, their ability to pay
taxes, the ability to keep schools open for their children, the
ability to have a family wage job.
I wonder, Spence, if you agree with me that Governor Bush
was incredibly prescient when he said in the Northwest that it
is the height of irresponsibility to tear out hydroelectric
power in the middle of a looming energy crisis. Do you agree
with that?
Senator Abraham. I support the Governor's position. And I
think he has made that very clear on a number of occasions.
Senator Smith. Yes, he did. And I appreciate his courage in
saying that. A lot of people did not realize how far sighted he
was when he said that.
But right now my State is in the cross hairs. And for those
who love the environment--and I count myself as one of those--
the policy of our government has been to store up water to
produce some power in the winter--and we ship a lot of it to
California, but we do it in a way that protects salmon.
Our reservoirs are at historic lows right now. And so our
ability to help is frankly much impaired. But we need to run
these assets. These are assets that were established by
Franklin Roosevelt in the 1930's when only 30 percent of my
State even had electricity. And we are being beguiled into
believing that we can have it all, but we do not need to
produce it. We can just import it. I say to every American, we
have never been in greater jeopardy to foreign sources of oil
that are hostile to the interests of this country.
Somehow, Spence, you have got to keep our lights on and you
have got to produce. And you have got to protect the birds, the
trees, and our fish as well.
It is a tall, tall order. But I hope that reality can be
returned soon.
Spence, I also want to invite you to Oregon. I think we
need to talk about how to run our hydroelectric system, how to
create more power and frankly I would like to distance myself
from the comments of my governor who said recently that the
problem is not that California is not doing enough. People
outside the region do not appreciate what California is doing.
I think they are doing something now.
But you know what? This problem has been in creation for a
decade now. And I can cite you chapter and verse in utilities
that have been shutdown, dams removed, proposals for energy
production said we do not need them. And here is a headline
from the Daily Astorian on an article. It says ``Cash Starved
California Utilities See No Help in Governor's Plan''.
And I just am asking, Spence, to be fair to this neighbor
of California. Because my citizens cannot afford this. It is
going to take a neighborly approach. But it must be fair. And
what is going on right now is not fair. It is not fair to every
other Western State.
And so I plead for fairness. And I plead for a more
balanced approach. And somehow, I hope you and the Governor,
President-elect Bush, will use your bully pulpit to reconnect
the reality dots for the American people as to how we make it
all run. I think I had a question, Mr. Chairman, but it got
lost in my statement.
Chairman Bingaman. All right. Well, we will let you submit
it for the record.
Senator Burns.
STATEMENT OF HON. CONRAD BURNS, U.S. SENATOR
FROM MONTANA
Senator Burns. Thank you very much, Mr. Chairman. Spence, I
want to associate myself with my colleagues on this committee
about your dedication to community service and national service
and your family values. That is all you have got written down
here. Do you want me to say anything else?
[Laughter]
Senator Abraham. I have to say that the second page was
even more impressive than the first.
[Laughter]
Senator Burns. We have some people nodding off out there
and I kind of wanted to wake them up. I think Senator Smith hit
upon a point that the situation that we find ourselves in today
just did not start at the first of this year. I have two of my
largest employers shutting down because of energy in Montana. I
am sort of like the movie Apollo 13, ``Houston, we've got a
problem.'' That Houston is you.
And also, we are looking at a situation where--I tell you
when you get to a certain age, New Year's Eve is not what it
used to be when you were younger. My wife has grown to the
stage where we rented a movie and stayed at home and watched a
movie. And we watched a movie called ``The Perfect Storm''. And
there is a lot of lessons to be learned there, but we are in
the middle of what one could call a perfect storm.
I represent a constituency that is oil producing people.
That should be good for us because oil prices are high. We also
produce a lot of natural gas. Gas prices have increased some
four times from just a year ago. I am in a State that produces
coal which effects energy prices in Minnesota and Michigan and
a lot of States we ship our compliant low sulfur coal.
But at every turn in the last 10 years because we are also
a public lands State and the policy for public lands is that
they have been withdrawn from any kind of exploration or
management.
We say that impacts us and it does. But basically, we see
now that it is impacting all of America. But some of these
policies that were supported, now when they hit the switch to
turn the lights on, the lights are not going on. Bad policy.
In the mix of things, there has to be conservation. In
1976, when we had the shortage of oil and we had the lines and
we were asked to conserve, we Americans did react. And we did
conserve. And we can. And it should be part of the mix. But
also, on our power mix are fuel cells, alternative fuels,
ethanol, coal bed methane, to make those fuel cells, has to be
in the mix.
It would take a person much smarter than I am to see how
they complement and work with each other, but we must have
somebody or someone or something that could figure out exactly
how that is. And then to dream a little bit and to tell America
or at least give us a vision where do we want to be energy-wise
in ten years, 20 years and 30 years down the road instead of
just taking a band-aid and fixing it tomorrow.
My farmers cannot afford the fuel prices that diesel is
going to cost this summer, not on $2.50 wheat. They also cannot
afford their fertilizer with natural gas as high as it is four
times higher.
So it is going to effect our food prices. Is food going to
cost more at the grocery store? I doubt it. But the raw product
will cost more and that impacts the income in my State.
Somebody is going to have to make some hard choices. We
have been willing to make some of those hard choices in the
last 10 years, but nobody else has. And I am like Senator
Smith. We have been sort of a voice in the wilderness saying
there has to be a different kind of an approach.
So with PMAs and when you represent a State now I realize
that Senator Smith has got Portland in his district. I do not
have any really large city. I have got a lot of dirt between
light bulbs. And all of those folks out there are just like any
other American. They have a right to the same sources of energy
to power their economy as the rest of America does. And I am
going to make sure that it is there as best I can.
Well, I appreciate your coming in. We went over the
questions. We locked it up today. Also, I would suggest to this
administration to set up an interagency, someplace where you
can bring all agencies together and say if we do this, how does
it effect agriculture? If we do this, how does it effect
agriculture? If we do this in agriculture, how does this effect
transportation?
And, you know, we are going to ride horses in the parade on
Saturday. And when we mentioned horses, I will never forget
this. The man who is in charge of the parade, he said, well,
can't you cowboys walk? We do not especially want horses in
this parade. And I said, you do not know cowboys. That is the
reason they make pick ups and horses. We do not walk anywhere.
Well, I will tell you what. We may spend more time on that
horseback than we are in them pickups. But I would hope not
because those pickups are very important to the State of
Michigan. And I would not want to put the Governor here in any
embarrassing position.
But I look forward to working with you. And also on clean
coal technology. And I serve on the Interior Appropriations.
And we are going to make sure that you have got research
dollars so that that can move forward. And I think the great
future with your automobiles in the next generation is fuel
cell development. And we just happen to have the resources it
is going to take to build those fuel cells. And we want to talk
to you about that also.
So, thank you for coming today. And thank you, Mr.
Chairman, for your kindness.
Chairman Bingaman. Thank you.
Senator Nickles.
STATEMENT OF HON. DON NICKLES, U.S. SENATOR
FROM OKLAHOMA
Senator Nickles. Mr. Chairman, thank you very much. And
welcome to my friend and colleague. Senator Abraham, I am
delighted that you are here. I am delighted that President Bush
selected you for this position. It is a pleasure to see a
friend, Governor Engler, as well before you and supporting you.
But you are taking on an enormous task. And you are taking on a
task that is close to crisis. And you are up to that task. But
it is going to take a lot of work. And it is going to take
Democrats and Republicans working together to work with you and
this administration to get some positive accomplishments to
help meet these challenges confronting you.
You mentioned in your statement that we are now importing
57 percent of our oil. We are very vulnerable to foreign
supplies. In 1973 and 1979 when we had curtailments and
brownouts and shortages that Senator Feinstein is experiencing
today in California, that was the last time we had significant
curtailments is in 1973 and 1979. That means that factories
were shut down, schools were closed, homes did not get power in
those years, 1973 and 1979.
What we do about it is important. Congress at that time did
a lot of things. In 1979 and 1980, they passed a lot of
legislation. Most of it did not do any good. As a matter of
fact, most of it was harmful. Most of it was counter
productive. But Congress wanted to do something. And I feel
maybe a sense that we are in the process now. We want to do
something. I want to do something. But let us make sure it is
positive.
If you look back in history, if you look at the five major
energy acts that were passed as a result of the shortage, the
crisis in 1979, Congress passed the synthetic fuels
corporation. We abolished it later. It wasted a lot of money.
We passed the Natural Gas Policy Act. It had some good things
and some good things and some bad things, but it continued and
extended price controls on natural gas. We finally decontrolled
natural gas and it has worked. And it resulted in lower prices
I might mention for consumers.
Congress also passed the Fuel Use Act and said you cannot
burn natural gas in powerplants and industrial facilities. We
finally repealed the substance part of that. Congress passed
the windfall profits tax. We finally repealed that. We taxed
basically domestic production, did not tax imports. So we gave
imports an advantage over domestic production. We finally
repealed that. Also, there was an Energy Allocation Act which
allowed politicians to distribute energy which was really
absurd and we repealed that.
So the major energy acts that were passed in the Carter
administration basically to respond to the energy crisis in the
1970's were serious mistakes. We need to make sure that we move
forward and do not make serious mistakes, but do things to help
alleviate the problem.
If you are importing 57 percent today, Mr. Secretary and
Mr. Secretary to be in a couple of days, that figure is quite
likely to be 66 percent in 10 years. That means we are very
vulnerable. And that means if hostilities become more hostile
in the Middle East, we could really have a problem. And if
California thinks they are alone, our entire country could
experience shortfalls, brownouts, curtailments.
And so we need to be very leery of that, aware of it, and
try and take some efforts to alleviate it. And that includes
energy from a lot of sources. That means increasing supply and
not just in Anwar. It means nuclear power. It means producing,
increasing production. It means conservation. It means a
balanced approach. And as you said, a balanced approach and
environmentally sensitive and sound management.
So, you have an enormous challenge. I look forward to
working with you. You have proven yourself to be a very
outstanding legislator I think in the Senate and I think you
will be an outstanding Secretary of Energy. And we look forward
to working with you in the next several years. My complement to
you for taking on this enormous task.
Chairman Bingaman. Senator Cantwell. Senator Cantwell is
gone.
Senator Feinstein.
STATEMENT OF HON. DIANNE FEINSTEIN, U.S. SENATOR
FROM CALIFORNIA
Senator Feinstein. Thanks very much, Mr. Chairman. I am
very pleased to be a member of this committee. I asked for it
largely because of two things. One was obviously what has
happening in California right now with respect to energy. And
the other is my concern over the nuclear labs. And I am very
pleased I have had an opportunity to share both of these
concerns with Mr. Abraham. I do intend to support your
nomination.
I do not have a lot of questions to ask you today. I
understand you come into this new. You are right in the middle
of the thicket. And it is going to be a very hard time. And I
want you to know anything I can do to make it easier, I would
be happy to do that.
I do want to spend my time this morning saying what I think
is happening, particularly in California. And I know it is very
easy for some to say, oh. California is hoisted on their own
petard. They enacted a bill in 1996 that was deeply flawed. Let
them sit and work it out. That is a very dangerous philosophy.
Let me tell you what I think has happened. The bill was
very flawed. The reason it was very flawed, the main reason, is
because it required California to buy 95 percent of its power
on the day ahead or spot market.
Now, that would have been fine if there was an abundance of
power. The point is there was a shortage of power. And whereas,
California will have 20,000 new megawatts on line by 2004 but
it is just not possible to get on line sufficient new power by
the summer.
Additionally, a good deal of the power is actually
contracted out of the State. Five to ten thousand megawatts,
for example, normally would be going up to the Pacific
Northwest. That changes when you go into an energy emergency.
This morning, California starts the day with a deficit of
62 percent of its power need if you can believe that. The
blackouts that are going to go on today will effect all non-
essential services. Now, that is deceptive. Non-essential
services are hospitals under 250 beds. There are retirement
centers. There are schools. There are street lights. There are
ATMs. There are businesses. For 62 percent of the State, that
is an enormous impact.
Additionally, California's two blue chip utilities, PG&E
and Southern California Edison, are very close to bankruptcy.
Now, why? Because on this spot market, they had to buy power.
They could not pass through the cost of that power in excess of
$64 a megawatt hour. And spot power was selling anywhere from
$4,300 to $1,400 to even $3,000 at one point. You have to buy
power at $3,000 a megawatt hour. And you can only pass it
through at $64. That put the utilities in the position that we
are in today of occurring for the past 6 months tens of
millions of dollars of debt each day. That debt has run up to a
net of $8 billion. Their bonds are today junk status. They are
very close to going to chapter VII, not XI, but VII bankruptcy.
Which means they then go out of that business.
Now, there are those in California that would say, oh, let
that happen. I am not one of them. The worst possible thing in
my view is to have these two blue chip utilities--first of all,
we have got hundreds of thousands of retirees that depend on
those stock dividends. Secondly, subcontractors that depend.
And tens of thousands of employees that depend.
These utilities go into bankruptcy. That will have a strong
ripple effect through the remainder of the California economy,
the Western economy, the national economy, and, yes, the
international economy. It is that big.
Now, the State is kind of in a way--the market is so
broken, not only do you not have the supply, but the rates are
also fixed. So unlike, for example, where Arizona where
consumer rates flow free, California has restricted rates. So
you cannot pass those costs on. And you have a robust consumer
market whose consumers say we cannot pay any more. We do not
want to pay any more. Very badly broken market.
Now, the bilateral contracts offer a solution. If you can
negotiate them long-term at rates that are practical, these
negotiations have been going on now for a month and a half
under an Administrative Law Judge. The generators will not
budge. And the State has not budged.
Consequently, you have got a gridlock. My appeal today is
on both sides. Please, you have got to work out a practical
long-term contract. There are not other alternatives.
Secondly, the State has to move in my view to securitize
the debt of the utilities. In other words, give them an
opportunity to gain back the credit. They cannot do that unless
they can show a way that they can make their forward purchases
and pay for them. And also, the banks will not loan to them
unless they can show a way that they can make up this $8
billion of back debt.
The State could securitize this. Any rate increase that is
necessary could be spread long-term, say for 15 years, on the
individual rate payers. But you have got to bite the bullet to
do this. And there has been I think a broad reluctance to bite
that bullet.
Now, last night the Governor issued this statement at
10:15. I had a long conference call with the four principle
generators in California, the CEOs of those companies, Duke,
Southern, Reliant and Dynergy, with the four legislative
leaders in a bipartisan effort.
Those generators were prepared to pull down the utilities
into bankruptcy tomorrow--that is today--at 12:01 p.m. They
have agreed, if legislation passes tomorrow, they will not do
that. They will provide us the power necessary to keep the
lights on.
I very much hope that is happening today. Because we are
going to lose life and lose business. And this is the tip of
the iceberg. Now, I am one that believes that the State has to
move. The State legislators have to move. They have got to
amend that flawed bill. They have got to do it. They have got
to allow the utilities to generate their own power, not divest
of the power. I believe they are willing to do this. They have
to permit full cost based contracts bilaterally, negotiate it.
That will enable this situation to be stabilized.
It is also my belief that FERC has not acted. FERC has
found the rates, the rates I spoke of, $800, $1,400, $3,000, on
the spot market, to be both unjust and unreasonable. But FERC
has not carried out the second part of its responsibility which
is then to set those rates.
I sincerely believe that there is a Federal responsibility
here through FERC. If FERC is going to sit by and allow this
entire Western States to self-destruct, because that will
happen, rather than carry out their mandate and set power
rates, when rates they find are unjust and unreasonable, it is
a disastrous situation for this Nation.
This is why I will introduce legislation that will give
this Secretary--he may not want it--the right to set these
rates. If they are found to be unjust and unreasonable. And
they will be cost based. So that there can be a pass through, a
margin for profit, a margin to recover costs, and will permit
any Governor of these 11 States to opt out. If the Governor
does not believe there is a need for this, that governor will
be able to opt out.
Now, what will this do? To be temporary, it should only be
until the State is able to bring some additional power sources
online. There is no quick fix. We are going to live with this
for the next year and a half or two years. And it is
extraordinarily complicated.
So what my appeal is today to this new Secretary is please
look at all of these elements. Please understand no one thing
is going to solve it. We must put additional generating
facilities online on a fast track and do everything we can.
I just got the note. I did not mean to get going here. My
time has expired. But I do want to say that I am prepared to do
whatever I can to help you, Spencer. This is a very difficult
situation. Anybody who thinks this is just going to stay with
California, as Senator Nickles said, is dead wrong.
So what I want to say to Oregon and Washington and the
other States is I want to work with you. I want to see us get
ourselves out of this solution in a way that is fair to every
State in the Union. Because it is going to eventually effect a
number of them. Thank you very much, Mr. Chairman.
Chairman Bingaman. Senator Cantwell.
STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR
FROM WASHINGTON
Senator Cantwell. Thank you, Mr. Chairman. And, Senator
Abraham, congratulations on your nomination to this post. It is
a great honor for me to serve on this committee as a new
member. I think that out of the last 50 years, probably at
least 45 of them there has been a member from Washington State.
Because these energy issues are so important to the Pacific
Northwest, not only the Bonneville Power Administration--and I
appreciate your comments earlier about the Power Market
Administration and your support of them--as well as Hanford and
nuclear waste issues.
If I could on a few issues, some of my colleagues have
already covered, and that is the particular concern of
Secretary Richardson's order requiring suppliers to sell to
California. And I hear my colleagues comments about working
together as a region and we want to do that. But I want to
reiterate Congressman Wyden's statements about the great
concern that we have about the financial security and the
consequences that it places on the Northwest when those kind of
emergency orders are put in place.
And so I want to reiterate my strong concern for those
types of solutions that put our industries and consumers at-
risk within the Northwest.
And I do not know if you have any further comments on that.
Senator Abraham. I think as I said at the outset of my
opening statement, Senator, that as we assume office as an
administration and should I be confirmed, when we are looking
at these issues, we will be looking at them both with the goal
of--I mean, we understand the urgency--and I stress that--as
well as the concern of the incoming administration. And it is
not a minimal concern. It is a very strong one.
And our goal is to not just see us solve these problems in
the short-run, albeit the short-run is very pivotal, but also
on a long-run basis. And any kind of short or long-term
solutions, as I said in my statement, need by necessity to
include a regional, not just a State-by-State kind of analysis.
We certainly will want to have the counsel of members
throughout the region recognizing the interdependence here of
energy sources.
Senator Cantwell. Given that, what would your thoughts be
on a west-wide price cap as a short-term?
Senator Abraham. As I said already, I think it is premature
for us today to--for me at least today to speculate about what
we might offer in terms of policy options, recognizing we will
be in a position to act in a few days.
But there are two reasons for that. No. 1, a number of
discussions have been going on between the current
administration and the various parties as well as legislators
and so on. We have not engaged in those discussions. I have not
heard from those various participants and feel that is an
important prerequisite to making any kind of judgment as to the
kinds of policies we might follow.
And I do not want to--if I say, well, maybe we are open to
that idea or maybe we are not, it will send signals that I
think are premature to send. We just have not looked at this at
all from the standpoint of having those discussions. And I want
to have that opportunity.
I also want to make sure that--and Senator Feinstein
touched on even today very important decisions may be made in
the legislature in California that effect not just California,
but the whole region. I think it would be premature to start
talking about the next set of policies when we really do need
action as soon as possible. I share the point that Senator
Feinstein made about the need for action to be taken today if
possible by those who can.
Senator Cantwell. I appreciated your comments in your
statement about the connection between the new economy
businesses and their access to a reliable and stable source of
energy. The Northwest has a long built in economy based on
those stable and reliable sources. And, yes, now it is leading
the way in a new economy that is very much interdependent on
those issues as well.
We have long had the Pacific Northwest Preference Access to
Federal Power from the Bonneville Power Administration. And
obviously, we have suffered some of the adverse environmental
impacts of that.
Can you tell me of your commitment to retain the benefits
of BPA, particularly the exclusivity for Pacific Northwest?
Senator Abraham. I do support that continuation. I would
just add, your point about the new economy is a really
important one for us as we move forward in the development of
policy to take into account. I think a lot of the premises on
which existing energy policy has been developed was in the
context of an economy that we no longer are in. And as we move
forward with the development of a comprehensive set of
recommendations and policy, we really do have to re-analyze the
kinds of energy needs we will have in light of the transition
that is going on across this country.
I mentioned in my statement the direct connection between
Internet usage and electricity consumption. And that is just
one example of many. We obviously have heard and seen the
comments made by leaders in the high tech industries about the
needs they have for certain types of energy sources if they are
going to be able to be producing the kinds of products that
they make in terms of the component parts to new technology
products.
And so I think as we move ahead with this we will be
looking to members of this committee--particularly ones who
come from that industry to talk about and share with us some of
that insight. Because I think it really is a pretty central
part of the initial analysis we have to conduct.
Senator Cantwell. Turning to another subject, Hanford
cleanup. And obviously, hoping to get a commitment today about
the priority within the Department of that as a major priority.
As well as we have had a tri-party agreement to set milestones
that need to be met. And I guess I am looking for a commitment
there to work with our State and to live up to the obligations
of that agreement and the milestones that are set.
Senator Abraham. We recognize--I do at least--the need to
meet commitments that have been made. I think we all need to
work together. And we have several members of the Budget
Committee who are part of this committee to make sure that we
have the resources to do so.
The environmental management budget of the Department of
Energy is right now pegged at something in the vicinity I think
of about $6.75 billion a year which is around 34 percent of the
total departmental budget. The projections that I have seen for
long-range cleanup commitment to address all of our sites are
in the vicinity of $2 to $3 hundred billion over a number of
decades.
But I think we have to within that long range projection
identify urgent challenges of which I would put Hanford on the
list as well as areas where we can move fairly quickly
hopefully to bring closure to sites that are in the position of
being cleaned up. Rocky Flats being an example there.
So we want to work with you to address that. As I think
many observers are aware, the Hanford site has something in the
vicinity of 177 underground tanks of which some 65 to 70 are
leaking. That is an unacceptable situation that will take a
long time to address, but which needs to be addressed as a
priority. And I am looking forward to working with you to make
sure that we fund it at a level that allows that to happen.
One of the problems I know that the Department has had is
that the budget that is in place today, while addressing a lot
of the maintenance concerns, is now allowing situations to
worsen and has not allowed us to make as much progress as we
need to actually clean up the sites. The overhead and the
security issues by themselves have consumed too much of that
budget. We need to get beyond not just that level, but to
actual site closures.
Senator Cantwell. I appreciate that. I know that my time is
up. I just think that the deal that they are looking for in
2001, the total cleanup was about $1.2 billion. And then
additional resources obviously for the cleanup efforts of the
Hanford Columbia River short. Plus, the vitrification, the
waste classification that is coming online. That facility is
looking for a separate item as well. So obviously, a huge
budget item within your budget. So I look forward to working
with you.
Senator Abraham. Thank you.
Chairman Bingaman. Senator Schumer.
STATEMENT OF HON. CHARLES E. SCHUMER, U.S. SENATOR
FROM NEW YORK
Senator Schumer. Well, thank you very much, Mr. Chairman.
And I am delighted to be here for the first time as a member of
this committee. I want to thank you for your hospitality as
well as the ranking member.
Chairman Bingaman. Before any of you three arrived--I think
Maria was here, but I did indicate that we welcome all three
new members on the Democratic side. And if we have new members
on the Republican side, we will equally, heartfelt welcome
them. So go right ahead.
Senator Schumer. Well, thank you, Mr. Chairman. And I just
apologize to the membership and to Senator Abraham for not
being able to be here the whole time. As you know, we have
whole lots of hearings, including the one in Judiciary. So I
apologize for that.
I am also excited to be the first New Yorker on this
committee since the late 1970's when Daniel Patrick Moynihan
was on this committee. And I guess the only North Easterner on
this committee since Senator Jeffords left a few years back.
And I want to welcome Senator Abraham to this confirmation
hearing. We have known each other quite well. We worked
together on the Judiciary Committee. Spencer, you are a man of
integrity. You have dealt with both sides very, very fairly.
You went out of your way to be helpful to me in a number of
instances on the immigration subcommittee when you were the
chair. And you are an extremely intelligent dedicated kind of
person, the kind of person the founding fathers would have
wanted to go into government. So I am glad that you are not
leaving government, but rather moving on--I guess I cannot say
to greater heights, but to lateral heights with us here.
Senator Abraham. I only would hope that all the members
will remember how well they thought of me today as we move
ahead.
Senator Schumer. I have a feeling, Spence, that will be the
case.
Senator Abraham. I hope.
Senator Schumer. And I think that you will be an excellent
Secretary. And I have every intention of supporting your
nomination.
Let me say a couple of things and just ask for your
judgment. One of the reasons I sought to be on this committee
is I do believe we have an impending energy crisis. I have seen
it in my State of New York. Last summer for the first time in a
long while, we struggled with brownouts. They were small and
controllable, but they are a real problem.
And the situation is very, very simple. And I am sure it
has been touched on by many of the people who spoke before me
this morning, many of my colleagues. That supply is basically
flat and demand will go up.
And one of the things I worry about is if our economy sort
of cools down a little bit, we will forget about this. The
long-range prognosis is that the world economy will grow. I
read somewhere that China alone is expected to have 170 million
new cars, cars that nobody drives right now, as their economy
grows over the next 15 years.
That is just something to think about. As the rest of the
world and as I think our economy continues to grow, we are
going to have this problem. And one of the problems we faced is
we had it so good for so long that there was not a national
focus on energy policy and we are going to need it.
I guess my second observation is it seems there is
something of a deadlock in Washington where mainly--this is not
exclusive on either side, but one side of the aisle focuses on
supply. One side of the aisle focuses on demand. And we do not
get much done.
I look forward to working with you. There is not a better
place for a 50/50 Senate than the Energy Committee. Because it
means that both sides have to be put together. And it seems to
me that that is a policy that makes sense to. That when demand
increases and supply is flat, we have to do things to both to
try to limit the demand increase without limiting economic
growth and increase supply.
And I for one am willing to work with you on both sides of
that equation, not just on one. And I think you are the perfect
guy to help put it all together because you have had such good
relationships with Senators on both sides of the aisle.
So I do not want to ask a whole lot of questions having not
been here. The questions I will ask probably have been asked
already by my colleagues.
But I would just like your comments on that general
proposition. Then I will yield back my time, Mr. Chairman.
Senator Abraham. Senator, I agree wholeheartedly, as I
indicated in my opening statement, the need for us to develop a
comprehensive energy strategy that is balanced, that focuses on
both the supply and demand side.
But I think we--you know, one of the thoughts that went
through my mind as you were commenting, as I was looking at you
and Senator Cantwell, is that in the area of technology and the
new economy, one of the challenges we are going to have I think
is going to be to address the demand side in light of new
technologies that are being developed that are extraordinarily
attractive to the people of our country. And I think, again, I
mentioned and used as a statistic in my earlier opening
statement that the ten percent of the electricity used in this
country now appears to be linked to just the use of the
Internet.
How we address the demand on that particular and singular
challenge seems to me to be a pretty difficult, to say the
least, problem. Because I look at just my own friendship
circle, my family, and all people that all of us certainly know
whose use of Internet will be very difficult to curb or to
reduce.
So it will be tough and it will call upon all of us to be
optimists I think probably is the best word as we move ahead. I
think there are two ways we can look at this situation, as a
challenge to America. We can look at it in a very pessimistic
way in a sense that we cannot address these challenges they are
so onerous. I do not believe that to be the case at all. I am
very optimistic we can make some progress. I look forward to
working with you as we have talked.
Senator Schumer. Well, thank you. And I would just make the
comment technology works both ways.
Senator Abraham. Right.
Senator Schumer. One in terms of the demand, the new use of
the Internet and everyone has a computer and a fax machine. But
it also has tremendous potential. You know, New York State,
where General Electric has had its labs, we have a lot of
electricity oriented new companies, particularly in the Albany
area, because of the GE labs in Mistyuna.
And two companies that are very interesting and have
potential, one is really on the verge of being able to create
economical fuel cells which produce electricity in your home.
You know, it is a very simple little chemical equation.
They take the oxygen. You have a little pot of water or
container of water. I am sure I am not doing justice to this in
its full scientific flourish, but they take apart the oxygen
and hydrogen atoms, put them back together, take them apart,
put them back together, and generate energy as a result of that
and use a small amount of natural gas to do it. And you do not
need all the transmission and everything else.
And it costs about $20 a month for the supply of natural
gas to do it. Much cheaper to the consumer. Of course, the
machine itself is so expensive right now that it does not quite
work. But every year the cost goes down and it is something
that we might want to look at and encourage.
Then they have another company over there in Latham, a
suburb of Albany, where they are developing the ability using
super conductivity to send eight times the amount of power
through existing transmission lines that they can do right now.
And that presents tremendous potential for areas like New York,
particularly downstate New York City and Long Island, where one
of our problems is even if you build a new powerplant upstate,
they do not have the transmission capacity to get it downstate.
So there are a whole lot of things, exciting things,
optimistic things as I think you accurately put it, that we can
look at and work towards together. If we have a little bit of
will and a little bit of compromise, I think we can lick this
crisis before it occurs. Thank you, Mr. Chairman. And thank
you, Mr. Secretary.
Chairman Bingaman. Thank you, very much. Let me just advise
all members that if you wish to submit additional questions for
the record, they can be filed with the committee staff anytime
before 5 o'clock tomorrow, Friday. We will now have another
round of questions here and these will be limited to 5 minutes
per member.
Let me start with a couple of questions and then go to
Senator Murkowski. One issue that is very much in your
jurisdiction relates to the non-proliferation programs in the
Department of Energy. Former Senator Baker, our Majority Leader
here for many years, and Lloyd Cutler chaired a task force that
has looked into this issue and made some recommendations.
I do not know if you have had a chance to look at their
report. A major recommendation to the new Congress and the new
President says the President in consultation with Congress and
in cooperation with the Russian federation should quickly
formulate a strategic plan to secure and/or neutralize in the
next 8 to 10 years all nuclear weapons usable material located
in Russia and to prevent the outflow from Russia of scientific
expertise that could be used for nuclear or other weapons of
mass destruction.
I would ask if you have seen that recommendation, if you
have any position on the recommendation, and if you intend to
follow it.
Senator Abraham. Senator, I have not read the entire
report, but I am certainly familiar with it and with the basic
recommendations it makes. And they are obviously consistent
with some of the work that has been done and continues to be
done at the Department of Energy.
As you know, in the context of non-proliferation, we have
worked on a number of fronts, primarily with respect to Russia.
We have programs that are designed to provide support for the
actual security of existing or past facilities to protect the
material that is there.
We have programs that are designed to address the issues of
the technicians and scientists, also alluded to in the comments
you made that are part of the report to try to--to the degree
we can--prevent the talent from somehow becoming available to
those who would use weapons of mass destruction
inappropriately, the rogue nations and other questionable
acquirers of such talent.
I know that there have been concerns expressed about the
effectiveness of that particular program. It is one of my
priorities to become more familiar with.
We have the ongoing program designed to purchase highly
enriched uranium from the Russian sources with a pretty
substantial commitment in terms of the magnitude of what we
might purchase. I think we have already purchased 110 or so
tons of highly enriched uranium which has in effect made that
industry in America more or less recede.
And we, of course, are in and have negotiated with Russia
with respect to weapons grade plutonium conversion. We have not
gotten to the point where although we have kind of agreed upon
numbers and I know we have moved forward with respect to the
design of facilities that might be used for such conversion and
resources for that to be done on the Russian side do not exist
at this point. And I know that we are looking to others to
perhaps help in that process.
So that is a kind of long about way of saying that this is
a high priority. Each of these categories will be. Whether
every component of the report is one that I would recommend to
the President or to the inclusion in our budget, I would have
to defer until I have analyzed every part of the report.
I have talked or actually did not have a chance to meet
with, but I know that Senator Baker wanted to have a discussion
at some point. As soon I am confirmed, I will talk with Lloyd
Cutler and him to examine these. And, of course, General
Gordon's role in this is very important as well. He and I have
briefly discussed this as an extraordinarily important part of
the national security issues we face.
Chairman Bingaman. We passed a law in the 103rd Congress
prohibiting research and development of low yield nuclear
weapons. Can you assure the committee that under your
leadership the Department of Energy will abide by that
provision of law?
Senator Abraham. That was prior to my arrival here. So I
will not try to comment beyond indicating it would be my
intention to fulfill the commitments that are statutorily
required of the department and if that is a statutory
commitment, then certainly it would be my duty to fulfill it.
Chairman Bingaman. Thank you, very much.
Senator Murkowski.
Senator Murkowski. I will try and be brief. Senator Wyden
brought up an interesting point that I think deserves
examination by your Department. And that covers the issue of
the alleged West Coast price adjustments on oil from my State
of Alaska that would be exported. And I would like the record
to reflect that there has been no oil exported from Alaska
since roughly April of this year. Excuse me, of last year.
As a consequence, there seems to be a little necessity to
bring some background into the Alaska oil historical picture.
Alaska when it came online produced about two billion barrels a
day. That production is down to roughly one million barrels. At
that particular time, the West Coast refineries could not
accommodate the excess oil. There was surplus oil.
From a business point of view, all Alaskan oil has to move
in U.S. flag vessels. It cannot move in a foreign carrier. So
the cost of transportation is higher than it would be if you
moved it in a foreign carrier. The Jones Act requires a
carriage of U.S. products and passengers in U.S. flag vessels.
There is no exception to that.
So as a consequence, a significant maritime fleet was built
up. Most of that fleet was raised for shipyard use in the
Portland shipyard that was built by public funds from Portland
as I think a pretty good investment.
But since my time is limited, I do want to advise you that
the production has dropped to a million barrels a day. The
surplus that was formerly excess to the West Coast, moved for a
while through the Panama Canal. Then a pipeline was built
across the isthmus of Panama and the excess oil was moved into
the Atlantic and then in the Gulf Coast refineries.
But as the markets for production increased from Venezuela,
from Mexico and so forth, they were able to supply the
refineries in the Gulf Coast.
But the point is the Alaska oil production declined as
Prudhoe Bay production declined. It is currently about a
million barrels a day.
Now, as a consequence, we formally had a law that
prohibited the export of Alaskan oil. It was Alaska specific,
did not require California or any other State, but just Alaska.
Congress in 1995, passed, and the President signed, legislation
lifting the ban on exports of Alaska and the north slope crude
oil.
As a result of that legislation, we brought in GAO as a
watchdog. And they reviewed the impacts and found the
following. And these are quotes. One, ``lifting the ban raised
the relative price of ANS and comparable California oils
between 98 cents and $1.30''. That was crude oil only. That is
not gasoline.
Secondly, ``West Coast consumers appear to have been
unaffected by lifting the ban because the price of important
petroleum products they use has not increased''.
Finally, third, ``Future oil production should be higher
because higher crude oil prices have given producers an
incentive to produce more oil''.
Now, that is what they found. Additionally, in the statute,
it provided the President with the authority to revoke or
modify ANS exports based on recommendation from the Secretary
of Commerce and Energy--which of course would be you--if the
President determines they are responsible for supply shortages
or oil price increases.
So as a consequence, I assume you will uphold the law
regarding the ANS export issue. Unless the law has changed.
Senator Abraham. I will.
Senator Murkowski. Now, the FTC, currently with my support
and Senator Wyden's, is investigating gasoline prices on the
West Coast. And I think that is an appropriate thing to do.
I would remind my colleagues--and this is their business
within their own States--that Oregon has no refineries. That is
a rather dangerous situation. In my own mind, it is somewhat
similar to California who has decided that they do not want to
produce power. They would rather get it from outside. But that
is the business of the State of Oregon.
All products shipped come from some other area outside the
State of Oregon. And Oregon's gasoline taxes are some of the
highest in the Nation, about 42.4 cents a gallon.
Now, as we look at this issue, again I would advise you
that there is currently no oil exported Alaska oil. Nor in my
opinion is there a likelihood of it. Because we do not have a
surplus anymore. And we are consuming and using more.
I want to use the balance of my time, however, to request
that you folks take a look at the role of public power vis-a-
vis investor owned power. Because you are going to get into it.
And this committee has been into it for a long time.
And I am not degrading the role of the PMAs, but we should
remind ourselves that power marketing, which Bonneville is one,
was paid for by all the taxpayers of this country, designed to
serve a region. And it certainly served the Pacific Northwest.
It has given them an aluminum industry. It has given them very
bountiful agriculture and various other things which are
meritorious. And as a consequence, when we try in Alaska to tie
our 1,000 miles of coastline with some kind of an inter-tie, we
need Federal help, taxpayers from all the States.
So I do not begrudge that. But I think you are going to
have to look at various aspects that have developed. Because
there has been times when Bonneville had surplus power. As a
consequence, they have negotiated contracts, take or pay
contracts. As a consequence, we have seen some of the aluminum
industry quit producing aluminum and sell electricity. It is a
good business. They can make money at it.
We have seen a situation with new energy ventures in Los
Angeles where you should look into the circumstances because it
appears that there was a negotiated deal made for surplus power
to be wielded from Bonneville down to Los Angeles and resold.
Who is entitled to that profit? Is it Bonneville? Or is it
individuals in an office somewhere simply making a buck? I do
not begrudge them that, but we need to have some clarification
on these side deals if we have no access to what the prices
were, what the terms of the contract were. And this is a quasi-
government activity. The activities associated with a PMA.
We have situations where we know the Seattle power, the
municipal power and light company, does a great job in Seattle.
Buys power from Bonneville because they can get it cheaper than
they produce it. And they wield it down to Southern California
and sell it to the Nordstrom stores under contract. Nothing
wrong with that, but it displaces investor owned.
As we look at the situation in the Northwest where the
shortage is becoming more apparent, even in Washington and
Oregon, let alone California, we ought to take a look at the
appropriate role of these PMAs. And I am sure my friend from
Oregon, both of them, would support this. Because there are
some inconsistencies. And I happen to believe that charity
begins at home, whether it be Oregon, Washington, Alaska,
California or New Mexico. But there are just too many
unanswered questions out there at a time when our friend says
the reservoirs are at an all time low. And when summer comes,
look out. Because you are not going to be able to meet your own
current demand.
So I just leave you with that rather profound elongated and
muddy statement relative to realities associated with your new
responsibility. Thank you, Chairman Bingaman.
Chairman Bingaman. Thank you, very much.
Senator Wyden.
Senator Wyden. Thank you, Mr. Chairman. As I said to the
nominee, this question of Alaskan oil exports has never been a
subject for the faint hearted. And that you have gotten a sense
of that.
Look, the chairman is absolutely right in saying there are
no exports taking place today. The problem is we wanted to put
in place a permanent ban to ensure that in effect the Federal
Government's position with BP Amoco was not just we will trust
them. And so that is why we are asking for a re-examination.
Chairman Bingaman. I assume you are talking about all
exports of oil outside the United States.
Senator Wyden. I was just getting to that point, Mr.
Chairman. Because I think that one area where there may be some
common ground--and we ought to explore it. And the chairman and
I were just visiting about it--is the question of perhaps given
this dependence that our country has on foreign oil, 60 percent
or thereabouts, there ought to be a complete ban on the export
of domestically produced oil given the national security
ramifications.
Mr. Secretary, what would be your reaction to something
like that? And understand, the chairman and I have just visited
about this informally. This is going to take a considerable
amount of research and analysis. But what would you think about
that conceptually?
Senator Abraham. It will take a considerable amount of
research and analysis I think is my reaction. I think that as
we develop--as we try to accomplish what virtually every member
of this committee, either today or in the private meetings I
had leading up today, has said to me we need both a balanced,
but a comprehensive policy that analyzes very source,
determines how we get there.
And I think that as we examine sources, we have to examine
them, not just from the standpoint of how to produce more in
terms of permit processes or of tax laws, but also in terms of
how market forces would apply. And I mean no disrespect to the
position of either the Senator from Oregon or the people, the
Oregonians' position or anybody else. I would want to analyze
the market impact. Because it certainly sounds like at least
the study that Senator Murkowski alluded to had found perhaps
that there were some effects that were not necessarily
anticipated when you think of this in a kind of abstract sense.
But at least my first blush reaction is that I would need to
certainly find out a lot more about the issue before I would
hazard a judgment in terms of whether or not it is----
Senator Wyden. I understand that. Know that this GAO report
that was cited was done before the Oregonian put the e-mail on
the front page of the paper attesting to BP Amoco's desire to
deliberately stick it to the West Coast consumer by discounting
sales to Asia knowing they could more than make up for it with
higher prices on the West Coast.
I would like us to work on some approaches that find common
ground. And I think one of the areas we ought to take a look at
and examine is the question of saying that when you produce oil
in this country, it stays in this country. I hope that we can
look at it.
One other issue that I would like to raise with you and
that is this question of transporting gasoline products from
the Gulf of Mexico to the West Coast. Our understanding is that
it costs between 7 and 8 cents per gallon. As you can
understand, a big part of the concern in the West that we are
paying the highest prices in the country, 10 to 20 cents higher
than the national average, so transportation costs, while not
the entire driving force behind these increases, is certainly
significant.
Would you look into the question of whether there are
legal, logistical or other kinds of constraints to figuring out
a way to get the gas by tanker or pipeline to the West and
provide some relief to our region?
Senator Abraham. I would. This is an area of some interest
to me because we confronted gasoline prices back in the Midwest
last summer that I am sure many of you not only observed, but
probably recall me preaching about on the Senate floor at the
time. In fact, suggesting we should temporary suspend gas taxes
to abate the problem to some extent temporarily.
And what we discovered, at least what I discovered, in that
period, was that there were a number of factors that we really
had not even recognized that compounded this problem that were
logistical in nature to a certain extent, that were regulatory
in nature to a certain extent.
Probably the biggest problem was actually a rupture in a
pipeline that was supplying the southern part of Michigan. And
so that on top of other factors, including OPEC's decision to
reduce production that took place shortly before the prices
spiked were the big parts of it that kind of got my interest in
this area peaked. And so it would be something that I would
like to see us examine, not exclusively with respect to the
West Coast challenge.
Senator Wyden. Mr. Chairman, my time is up, but I look
forward to supporting Spence Abraham this afternoon. I think
there will be strong bipartisan support in the committee and it
is very much deserved. And I thank you.
Chairman Bingaman. Thank you, very much. I know Senator
Domenici indicated right now that he would be right back and
does have another question or two. While he is on his way, did
you have an additional question? I can ask you one just so we
are not cooling our heels. You are familiar with the nuclear
cities initiative that the Department of Energy has engaged in
with Russia to accomplish work there.
Much of the success of that is a result of the efforts of
the Department of Energy employees working with officials in
these secret cities, former secret cities, on non-weapons
research and commercialization activities.
There have been some difficulties, however, in arranging
for Department of Energy employees to meet with those
officials, not problems with the Russians, but problems with
our own Department of State. I do not know if you are familiar
with any of that, but I have discussed it with others in the
administration and the incoming administration as well.
I would just ask that once you are in the position of
Secretary of Energy if you would look at that issue and see if
you could not come to a better agreement with the Department of
State. So that they would be more cooperative in allowing
Department of Energy officials to go to Russia and do this
work.
Senator Abraham. I know that you have particular knowledge
about and expertise in this area. And I would be more than
receptive to getting your guidance as to whatever impediments
we have on our side and then to carry forth with the new
Secretary and the appropriate officials at State to try to
address it.
Obviously, the nuclear cities issue as I mentioned a few
minutes ago in my comment about non-proliferation challenges is
one that has suffered a certain amount of criticism and
concern. And if we can find ways to address some of those
concerns, if they are impediments that we are creating
ourselves, then it makes sense to me to me that we would want
to try to do that as soon as possible.
Chairman Bingaman. Senator Domenici, go ahead.
Senator Domenici. Thank you, Mr. Chairman. And thanks for
waiting for me. I apologize. I have three questions I am going
to submit for you in writing. At your leisure, you could answer
them.
I would just want to make two closing observations. You
have heard a lot today about the challenges and how tough a job
you have undertaken. I think you know tough jobs make heroes.
Tough jobs are what make people do great things. And frankly, I
think you have one of the most difficult situations right now
in terms of our future growth and prosperity that we have had
in a long, long time. And I hope you succeed. Because if you
do, the country will be much better off.
I want to tell you in the process you will experience some
very exciting and fun things. Because you will attend that the
national laboratories, all ten of them, I am very familiar with
all of them but most familiar with the nuclear ones which do
much civilian work. You will experience some of the most
exciting science that you could imagine coming into your life.
At some of the labs, the next generation of computer chips
are now a working product between a national laboratory that
you will be running and all of the computer chip companies of
the world. And what they say they will soon have for the world
is incredible in terms of computer chip capacity. And you will
be able to mark part of that as having been done by the stars
in science at the Department of Energy. In fact, that one I am
talking about is international. So everybody is going to put
money into get the next computer chip and it is incredibly more
powerful than what we have got and will be ready for the world.
In addition, you have heard a lot about genome. You
remember when I used to talk a lot about it. Believe it or not,
in short order the computer capacity of one of the major
laboratories will be melded with the genome research that is
going on to determine much more quickly the relationship of
chromosomes, which are very complicated, to illness. And that
will be a great big venture that will be announced shortly
between one of the national labs and one of the companies that
does that. That is exciting. If you were Energy Secretary, you
could be present at that. And instead of worrying about all of
this, you could be very excited about doing it.
And my last remarks have to do with something that also is
subject to your control, but Secretaries of Energy have not had
to do a thing about it. And that is the nuclear navy of the
United States. And I want to just tell you something about it
because I think it will help you as you think of nuclear power.
And although a small group of people who tremble when you
talk it and who worry so much about low level radiation they
have stymied everything, anything that has to do with nuclear,
since 1954 when the Nautilus put the first atomic engine in it
was put into the oceans of the world, we have continued to put
them in. We have over 120 right now sailing the seas of the
world with one or more--believe it or not--nuclear reactors
onboard running the boat with the waste that comes from it on
the boat until they dispose of it.
And guess what? They go to every seaport in the world
loaded with these nuclear reactors and nobody worries about
them except one place in Australia which has a non-nuclear
policy, non-nuclear power policy.
So it serves notice that if we are looking for the next
generation of power for Americans, we really ought to look to
the next generation of nuclear power also. You will be told
much about this. And, of course, you will probably be told do
not touch it because of politics.
I say touch it. Let us get a waste disposal policy to start
getting rid of the nuclear waste. France is doing it with
immunity and has 78 percent of their energy is nuclear. Why
could not the country that invented it, that put all the
technology into it, whose Energy Department or its predecessor
actually made them, and whose U.S. Navy sails the seas and
everybody lets them in all the ports because there is nothing
dangerous about them?
I am just hopeful that you will begin to get some positive
reactions to this. Because our Energy Department without a sign
up there that says we are also looking at nuclear energy is not
an energy department of the United States. At least it is not
gifted enough to be called an American energy facility or
department.
I am sorry to give you speeches today, but I guess you know
I feel pretty strongly about this. Because I think we are
making a mistake. Good luck.
Senator Abraham. Thank you.
Senator Domenici. I look forward to voting for you and
working with you. Thank you.
Senator Abraham. Thank you, Senator.
Chairman Bingaman. Thank you, very much. Before we
conclude, I wanted to particularly thank some of the people who
helped prepare for the hearing today. Andrew Lundquist, of
course, from this committee, Paul Longworth with the Armed
Services Committee, Clay Sell from the Appropriations Committee
in particular. Senator Abraham, subject to your assurance that
you will respond to any additional questions we have in writing
some time in the next week, we would go ahead at 2:30 with a
vote here in committee on reporting your nomination.
Senator Abraham. Thank you. I will be happy to respond. And
I might also if I could just have the opportunity to submit for
the record the names of some other individuals who participated
in the efforts on behalf of the preparation team here to make
today's hearing on our side more effective.
Chairman Bingaman. We would be glad to receive that. And
the committee will stand in recess now until 2:30.
Senator Abraham. Thank you, Mr. Chairman.
[The information referred to follows:]
Listed below are the people who helped with the initial
confirmation:
Andrew Lundquist
Paul Longsworth
Joe Kelliher
Clay Sell
Henry Gandy
Francis Norris
Ted Garrish
Kyle McSlarrow
Joe McMonigle
Ceasar Conda
Bill Martin
Kevin Kolevar
Chase Hutto
Majida Dandy
Michael Ivahnenko
[Whereupon, at 12:34 p.m. the hearing was adjourned.]
APPENDIXES
----------
Appendix I
Responses to Additional Questions
----------
The Secretary of Energy,
Washington, DC, January 30, 2001.
Hon. Frank H. Murkowski,
Chairman, Committee on Energy and Natural Resources, U.S. Senate,
Washington, DC.
Dear Mr. Chairman: I want to thank you and Senator Bingaman for the
opportunity to appear before the Committee on Energy and Natural
Resources as Secretary-designate for the Department of Energy.
Enclosed for the record are the answers to the post-hearing
questions submitted to me in writing by members of the Committee.
Please let me know if I can be of any further assistance.
Sincerely,
Spencer Abraham.
[Enclosure]
Response to Question From Senator Murkowski
Question 1. There has been lot a concern about maximizing all of
our sources of energy. Nuclear energy, as you know, provides over 20%
of our nation's electricity. Nuclear energy is safe, reliable, and non-
emitting and produces high volumes of electricity that are an essential
part the nation's base-load generating capability. In the current
energy crisis, there is much talk about new generation nuclear
reactors. Over the past decade, operating gains in the current fleet
have created the equivalent of 23 additional nuclear plants in the U.S.
There is potential in the near term for building new, proliferation and
incident, resistant nuclear plants. The indemnification for our current
fleet and any new commercial plant initiatives is covered under the
Price-Anderson Act that expires on August 1, 2002. Nuclear-related
contracts under the DOE are also covered by this Act. Both the NRC and
DOE have submitted reports that recommend extending the provisions for
an additional 10 years.
As Secretary of Energy, will you support coverage under the Price-
Anderson Act?
Answer. Indemnification of DOE contractors under the Price-Anderson
Act is essential to the achievement of DOE's statutory missions in the
areas of national security, energy policy, science and technology, and
environmental management. I look forward to working closely with
members of both parties and with individuals from inside and outside
government to secure the early renewal of the Price-Anderson Act.
Responses to Questions From Senator Domenici
science at the weapons laboratories
Question 1. Within the Department of Energy are laboratories
primarily funded by the national security side of the Department and
others that are primarily funded by the civilian side. Many of the more
basic research areas of the Department's mission areas are found on the
civilian side of the funding.
I've seen many examples where the national security labs have made
superb contributions to civilian science and vice versa. I think it's
very important that the weapons labs maintain their ability to
contribute to civilian science areas. Their research programs in these
areas frequently assist in recruitment of staff and it's not at all
unusual for a breakthrough on the civilian side to impact key aspects
of our defense missions.
Legislation crafting the National Nuclear Security Administration
took great pains to encourage the continued role of the weapons labs in
civilian science programs, and I believe that General Gordon supports
this approach.
Is this integration of civilian research into the weapons labs, and
vice versa, something that you are comfortable with within the
Department and are you willing to encourage the weapons labs to
maintain their strong multi-program characteristics?
Answer. I am convinced that it is very important for the continued
strength and vitality of the weapons laboratories, the Department's
programs, and the nation's science base that the weapons laboratories
maintain their multi-program status. Both basic science and applied
research benefit by the sharing of staff, equipment, and facilities
between civilian and defense programs. General Gordon has assured me
that the National Nuclear Security Administration will continue to
encourage the weapons laboratories to take advantage of shared research
opportunities that strengthen their ability to perform their primary
national security mission.
nuclear energy
Question 2. Your statement notes many of the serious trends that
have contributed to the current national energy crisis. You noted your
intent to increase the use of renewable energy, decrease our reliance
on imported oil, and develop new technologies that conserve fossil
fuels and reduce energy-related pollution. You did not mention the role
of nuclear energy in your statement.
Nuclear energy, as you know, contributed about 22 percent of our
electricity last year, and did it without emission of pollutants into
the atmosphere.
Nuclear energy is poised for a rebirth, with serious consideration
being given to construction of new plants for the first time in
decades. These may be very different plants than we now have, they may
be much smaller modular plants that are absolutely passively safe. They
may be even safer than our present plants with their superb record of
safety and availability.
For nuclear energy to continue as a viable energy option, their
safety record must continue and the nation must develop approaches to
spent fuel issues. I've personally favored development of interim
storage of spent fuel, which will promptly move fuel away from the
current reactor sites, while we evaluate a range of technologies that
may contribute to long range spent fuel strategies.
Are you interested in working with the Congress to continue nuclear
energy as a clean source of a significant fraction of our electrical
supply?
Answer. Nuclear energy is a vital and essential component of the
U.S. energy mix. The Department of Energy is eager to work closely with
Congress to ensure that nuclear energy remains fully viable as a clean
energy option. U.S. nuclear power plants are the lowest-cost source of
baseload electric energy available on the grid today and we must
maintain this option for now and in the future.
I am aware that in recent years the Department has initiated key
programs in the area of nuclear energy, including the Nuclear Energy
Research Initiative, the Nuclear Energy Plant Optimization programs and
the Generation IV Nuclear Power Systems Initiative. Combined, these
programs address not only the continued and improved operation of
existing nuclear power plants, but also the need to maintain nuclear
power as a viable energy option for the future. These are important
programs, recommended and endorsed by the Nuclear Energy Research
Advisory Committee (NERAC)--an independent panel that is comprised of
the leading nuclear science and technology experts in the United
States.
comparisons of energy sources
Question 3. Every energy source has both risks and benefits. For
some energy sources, like nuclear, some groups focus only on discussion
of risk areas, without discussion of benefits or discussion of
technically sound approaches to addressing risks.
I strongly suggest that the Department should set about a careful
evaluation that compares the full life-cycle costs of all energy
sources. Such a study should include careful treatment of both the
risks and benefits of each source.
In the recent past, we've seen some energy sources treated as
``politically correct,'' while others are treated as ``politically
incorrect.''
Would you favor such an evaluation of our future energy options?
Do you agree that such an evaluation might enable the Department
and the marketplace to decide among competing energy options?
Answer. I agree that every energy source has risks and benefits. I
also agree that there is opposition to continued use of some energy
sources, such as hydropower, coal, and nuclear energy. However, the
reality is these energy sources account for 47 percent of the total
U.S. energy supply. There are advantages to diversifying our energy
supplies, and I believe it would be a mistake to rule out any energy
sources, particularly energy sources that are the mainstays of our
economy. However, I have reservations about conducting the analysis you
propose. First, I have doubts that this analysis would be relied on by
the energy industry. Energy companies make decisions on developing
various energy sources based on their own analysis of risks and
benefits, particularly economic risks and benefits. It is unlikely they
would substitute the Department's conclusions for their own analysis.
Second, as you suggest in your question, in the past the Department has
championed certain energy sources over others. That kind of advocacy
could threaten to skew any analysis of risk and benefits.
public recognition of doe's contributions
Question 4. The Department of Energy operates one of the world's
largest scientific organizations. Some of their contributions rival in
importance to the nation those of agencies who are more of a ``house-
hold'' name--like the National Institutes of Health or the National
Science Foundation.
With few exceptions, the Department of Energy has not emphasized
public understanding of their contributions, from scientific
breakthroughs to new technologies for nuclear power.
Furthermore, when the Department is in the news lately, it has
usually been related to a security issue or poor management of a
project, like the NIF fiasco.
I'm sure that you agree that part of your focus in Departmental
leadership must be directed to avoiding the ``bad'' news, through
better management of all aspects of your enterprise, from management of
construction projects to excellence in security.
But would you also agree that the Department should expand its
efforts to publicize its successes in key areas of technology that
impact national priorities?
Answer. First of all, I wholeheartedly agree with you that the
Department has made significant contributions in the advancement of
science in many areas. The national labs are a national treasure and
they can be proud of the work that they have done. The Public deserves
to know about these scientific achievements to the extent possible and
the Department can, and should, do a better job of publicizing them.
competition with the private sector
Question 5. Several companies have questioned the Department's
sponsorship, through its Office of Scientific and Technical Information
(OSTI), of PubSCIENCE. PubSCIENCE offers U.S. taxpayer-subsidized, free
access to peer-reviewed journal literature. Services providing such
access to peer-reviewed literature have long been available within the
private sector, but, of course, these services cannot compete with a
federally subsidized free service. I've expressed concern about the
PubSCIENCE activities within the DOE, as have several other Senators.
Do you support actions by the government to develop and maintain a
world-wide free public access to journal literature in competition with
private sector services?
Answer. I have not yet had an opportunity to closely review the
specifics of the PubSCIENCE Program. However, as a general matter, I do
not support actions by the government that compete with the private
sector. I have been told that PubSCIENCE works in voluntary partnership
with 41 publishers of peer-reviewed journal literature. Science cannot
thrive without the sharing of information and the cross-fertilization
of research.
The Department is already working with the Software and Information
Industry Association (SIIA), which is a trade association representing
the companies that compile citations and which have expressed concerns
about PubSCIENCE. The Department is also working with other parts of
the Administration on this issue as well since many of the protesting
companies also object to Web-based information dissemination products
from the National Institutes of Health, the U.S. Department of
Agriculture, the Department of Education, the Department of
Transportation, and others. I will continue the Department's work with
the companies in an effort to balance the public's rights, the
Department's needs, and the companies' interests.
Responses to Questions From Senator Craig
environmental management
Question 1. Like other DOE sites with environmental contamination,
clean up at the Idaho National Engineering and Environmental Laboratory
(INEEL) is governed by a legally enforceable settlement agreement
between the DOE, the Navy and the State of Idaho. Continuing to make
progress on meeting the clean up milestones set out in the agreement is
critical to continuing the good will between the lab and the state but
progress in the next few years will require securing a sufficient
budget for DOE's clean-up commitments nationwide.
As Secretary, will you be committed to continued progress in DOE's
environmental management program, and working with Congress, OMB and
the Administration to secure the funds needed?
Answer. Cleaning up the legacy of nuclear weapons research and
production will be one of my priorities. I believe that the Department,
working closely with the Congress, the Administration, regulators, and
stakeholders, can do a better job of accelerating the clean up of
contaminated sites. This is one of the challenges facing the department
and providing adequate funding to achieve these goals will be
essential.
buried waste
Question 2. I have discussed with you the need to deal responsibly
with DOE's buried waste legacy, both in Idaho and at other DOE sites. I
have supported funding for the construction of a Subsurface Geosciences
Laboratory at the INEEL and research into the science of how pollutants
move through underground, subsurface environments. I think DOE could
make a contribution to the contaminated soils problem we face
nationwide by discovering more cost effective solutions for underground
pollution.
You have referred to DOE's laboratories as national treasures. Do
you agree that we should focus the resources of the labs on solving
these kinds of environmental challenges?
Answer. The national laboratories can play a key role in improving
our ability to address the nation's environmental challenges. I support
efforts by the Idaho National Engineering and Environmental Laboratory
and other national laboratories to develop solutions to these
challenges.
advanced nuclear reactor design
Question 3. Americans today are forced to deal with electricity
shortages in California due to insufficient generation capacity,
astonishing increases in natural gas prices, record high gasoline
prices this past summer and now, cutbacks in OPEC oil production. At
the same time, nuclear power is performing economically and safely.
What will you do in the Department to accelerate the development
and deployment program for Generation IV advanced nuclear reactors
which will be cheaper to build and operate and, safer, produce less
waste, and be more proliferation resistant?
Answer. The Department is leading a research and development (R&D)
effort --the Generation IV Nuclear Power Systems Initiative--that has
two distinct tracks. The first is aimed at the near-term deployment
(NTD), by 2010, of nuclear power plants that incorporate technical and
economic improvements over today's operating and advanced light water
reactors. The NTD study is designed to support owners/operators who are
preparing to license and build new nuclear power plants in the near
future. The second track is to make commercially available, in the
longer-term future, a select number of innovative nuclear power plant
designs. When complete, these efforts will result in an
internationally-supported technology roadmap to develop and make
available advanced nuclear energy technologies.
The first fruits of this R&D effort should arrive later this year
when the NTD effort makes its recommendations. The technology roadmap,
which will set the stage for future activity, will be completed by
fiscal year 2003. 1 will examine the results of this roadmap closely
and assure you that the Department will fulfill its responsibilities to
help bring both the near-term and later designs to the market as early
as possible.
yucca mountain
Question 4. Many proponents, as well as opponents, of nuclear power
believe that until the waste issue is resolved, the construction of new
nuclear plants will not occur.
What are your plans for addressing the long-term disposal issue at
Yucca Mountain?
Answer. It should be emphasized that sound science governs the
program. I understand that the Department has been conducting site
evaluation and characterization activities for the past 18 years, under
legislative authority provided by the Nuclear Waste Policy Act of 1982,
as amended in 1987. We are nearing a point where sufficient scientific
and technical information may be available to support a decision on
whether the site is suitable. There are a number of additional
intermediate steps between site recommendation and actual waste
acceptance, including a rigorous safety licensing process with the
Nuclear Regulatory Commission, which must still be met. Again, my
commitment is to make progress on the nuclear waste program while
ensuring that sound science governs each step in the process.
new nuclear energy
Question 5. The total electrical output from U.S. nuclear plants
has risen from 300 billion kwh in 1980 to about 750 billion today, even
though no new plants have been ordered in that time. This, as well as
other dynamics, points to a bright future for the universal use of
nuclear power.
What is your view of the expanded use of nuclear energy in
California and outside of the United States to meet the growing
electricity demands in domestic and foreign markets?
Answer. For the past several years, nuclear power has accounted for
roughly 20% of total electricity generation in the U.S., in spite of
the fact that several plants have recently been retired. The average
capacity factor at U.S. nuclear plants has risen from 56% in 1980 to
86% in 1999--resulting in record levels of generation. Clearly, nuclear
power is a critical component of our energy supply mix.
A sound national energy strategy must reflect a number of diverse
goals, such as ensuring fuel diversity and energy security, and
maintaining adequate, reliable supplies of energy at reasonable costs.
Nuclear power can be an important contributor to these goals. In
selecting what generating plants are built, power producers should be
able to select from a diverse set of technologies in their efforts to
balance cost, efficiency, and risks.
nuclear fuel cycle
Question 6. The role of nuclear power for the nation's energy
security is very clear. Indeed, to me it is clear that expanding our
nuclear generating capacity is essential for the future. I am concerned
however that the value of such an expansion could be undermined by the
loss of the nation's capability to produce and process nuclear fuel for
its own reactors. Indeed, the continued viability of the sole remaining
uranium converter in the U.S. appears to be currently in doubt.
How important do you think it is to maintain our own nuclear fuel
cycle in the U.S.? What do you think DOE should do to maintain the
viability of our fuel cycle in the U.S.? Do you think temporary
assistance to the U.S. uranium mining and conversion industries to
ensure their continued viability may be appropriate?
Answer. I support the objective of maintaining reliable and
competitive domestic uranium conversion and enrichment industries. I
share your concern for the depressed state of these important
industries and understand that over the past year the Department has
worked diligently with Congress and industry to evaluate options that
address the depressed uranium and conversion markets. In this respect,
the Department recently submitted two reports to Congress [``Effect of
U.S./Russia Highly Enriched Uranium Agreement'' and ``Maintenance of
Viable Uranium, Conversion and Enrichment Industries''] that focus on
these very issues.
I plan to review the two reports carefully and the issues
concerning these domestic industries and look forward to continuing to
work with Congress to maintain a viable domestic nuclear fuel industry.
gas reactor research
Question 7. Under the Department of Energy's materials disposition
program, the U.S. is currently funding work to develop the high
temperature gas cooled reactor for the purpose of burning up surplus
Russian weapons plutonium. The Russians are matching part of the U.S.
contribution and the French and Japanese are contemplating substantial
contributions to this program. As you may be aware, this reactor type
brings with it several advantages in the form of increased safety,
efficiency and reduced waste production which may make it a promising
candidate for a next generation power reactor.
What is your position on the need for international collaboration
in advanced rector development and on this reactor development,
specifically?
Answer. International cooperation is needed because the GT-MHR
cannot succeed as a plutonium disposition option, in the time frame
required, without significant financial contributions from
international participants.
fusion research
Question 8. The fusion energy sciences program has received more
high-level, independent reviews over the past 6 years than any other
DOE science or energy program (there have been 5 such reviews). Each
one of these reviews has praised the program for the quality of its
science, the progress that has been made towards the ultimate goal of
fusion energy and has reminded us of the importance of fusion research
for the future. Each of these reports has also pointed out that the
fusion program is, in their view, under-funded.
If you are confirmed, would you work to increase the funding and
support for this program? What do you think the government's role
should be in fusion energy?
Answer. Because of the long-range nature of fusion energy research,
as well as the pivotal role that this program plays in support of
fundamental plasma science in the United States, the government should
continue to support fusion energy research. I will work hard to
maintain the high quality of DOE's scientific research efforts in this
regard, including the Fusion Energy Sciences Program.
Question 9. If confirmed as Secretary of Energy, will you continue
the practice of having the Power Marketing Administrations report
directly to the Deputy Secretary of Energy?
Answer. I have no plans to change it. I understand this reporting
arrangement has worked very well in bringing the PMAs' time-sensitive
concerns to the attention of the highest levels in the Department.
Responses to Questions From Senator Gordon Smith
Question 1. The Bonneville Power Administration, as well as other
Power Marketing Administrations, currently report to the Deputy
Secretary of Energy. Will you commit that Bonneville and the other
PMA's will continue to report to the Deputy Secretary in order to
assure that power marketing issues receive a high level of visibility
in the Bush Administration?
Answer. I have no plans to change it. I understand this reporting
arrangement has worked very well in bringing PMAs' time-sensitive
concerns to the attention of the highest levels in the Department.
Question 2. In my region of the country--the Pacific Northwest--the
Bonneville Power Administration and investor-owned utilities have
worked with the regional stakeholders to develop a regional
transmission organization, or RTO. Movement to a RTO will be a
significant change for my constituents and cannot be done without
considerable input and participation from regional interest. Do you
agree to work with me and my colleagues from the Northwest on this
issue and, in particular, that regional processes and solutions should
be respected and acknowledged?
Answer. Electricity systems around the country differ by region and
state. National policies should recognize these regional differences
and regional stakeholders need to work together to the extent possible
in helping to meet the nation's priorities. I assure you that I will
work with you and your colleagues from the Pacific Northwest on both
national and regional policy objectives affecting your region.
Responses to Questions From Senator Bingaman
stockpile stewardship program--ctbt
Question 1a. Last Fall, the Senate held a few brief hearings on the
Comprehensive Test Ban Treaty and ultimately voted against
ratification. In my view, that action was very detrimental to the
nonproliferation goals we talk so much about here in Congress. As part
of that process, the Senate held a single hearing on the subject of the
Stockpile Stewardship Program--a critical element supporting the CTBT
by assuring us that the nation's nuclear weapons stockpile is safe and
reliable. Laboratory directors have certified the stockpile to be safe
and reliable for four years now.
I was disturbed that many of my colleagues seemed to get the
impression during that hearing that the Stockpile Stewardship Program
is a sort of computer simulation exercise that can't provide the level
of confidence we need to know that our weapons will would work if we
needed to use them.
Are you confident that the current certification process is
sufficient to give the nation full confidence in the safety and
reliability of our nuclear weapons?
Answer. As I stated previously during the hearing, I view
certification of the stockpile as a paramount priority. The stockpile
was recently certified by my predecessor, and I have been assured by
those officials involved that they have the utmost confidence in that
decision. As Secretary, I will review the certification process to
assure that it provides the confidence and reliability that was
intended.
Question 1b. Will you work with the Congress to ensure that
sufficient funding is available to support the Stockpile Stewardship
Program such that we maintain the level of confidence that we need
regarding the stockpile and that any fixes that are needed are
identified and funded?
Answer. I look forward to working with Congress to make sure the
Stockpile Stewardship Program is funded at a level that will ensure its
continued success. The Stockpile Stewardship Program is crucial to
maintaining the necessary level of confidence in the stockpile.
Question 1c. We have a bipartisan working group looking at CTBT
issues in the Senate. Will you work with our group and with the whole
Senate to keep us educated about the elements and performance of the
Stockpile Stewardship Program in order for us to better understand its
effectiveness in support of a Comprehensive Test Ban Treaty?
Answer. I and General Gordon, the Administrator of the National
Nuclear Security Administration, will be pleased to keep your group and
the Senate fully informed on all aspects of the Stockpile Stewardship
program. The program's whole purpose is to ensure the continued safety,
security and reliability of the nation's nuclear deterrent.
funding for the initiatives for proliferation prevention program
Question 2. DOE's Initiatives for Proliferation Prevention (IPP)--
The Initiatives for Proliferation Prevention program began in 1994 with
the goal of bringing U.S. and Russian laboratory scientists and the
private sector together to move technologies from concepts to
sustainable businesses. In the past, there has been concern that IPP
has not achieved the goals underlying the program--that a great deal of
research is being done, but there is little commercial success achieved
thus far. This program--a critical element of our overall
nonproliferation strategy--is beginning to produce significant
commercial successes involving U.S. companies. Many of IPP research
programs have reached R&D maturity but lack the funds and business
expertise to make the transition to commercial success--the goal set
for the program in 1994.
Would you support additional funding to assist the transition of
IPP programs to commercial applications consistent with the law and DOE
administrative regulations?
Answer. I am acutely aware that the Department has a critical role
in addressing the challenge of nuclear nonproliferation. I am advised
that the IPP program has made significant progress in the recent past
in connection with the goal of creating commercially viable
enterprises. In sustaining these important efforts, I will be pleased
to work with you and the cognizant committees.
renewable energy
Question 3. What are your views on the technology advancements that
have been made in renewable energy? Do you believe that renewable
energy can and should play and important role in our nation's energy
mix?
Answer. Twenty years ago renewable energy was generally produced at
a very high cost and in an inefficient manner. Since then, renewable
energy technologies such as wind, solar, biomass, and geothermal have
made remarkable progress. Advances from research and development
conducted by the Department of Energy and its partners have led to
significant improvements--in production costs, system reliability and
in reduced energy production costs.
I know that the role of each technology has to be put in
perspective with regard to the current energy prices and situations.
Clearly, competition and a number of technology advances in the
electric power sector have led to dramatic decreases in the price of
power from new sources of generation. The incredible growth and demand
for additional power across the Nation suggest the need to develop a
wide-ranging portfolio of domestic-based options to meet the different
needs, and match the resources, of the various regions of our country.
Renewable energy technologies--including advanced hydropower and
renewable/fossil hybrid systems--can and should play an important role
in the future of energy in the U.S.
wind power
Question 4. Wind power is the fastest growing source of energy in
the world, with over 17,500 megawatts of installed capacity. U.S.
capacity is just over 2,500 megawatts, which provides nearly 6 billion
kilowatt-hours of electricity annually or enough to power 600,000
homes. Those domestic totals are expected to nearly double in 2001.
Furthermore, the cost of wind is currently 3-5 cents per kilowatt-hour,
comparable to new coal and natural gas facilities. Under your
leadership will the Department of Energy continue to support
initiatives to increase the percentage of electricity derived from
wind?
Answer. President Bush has reaffirmed his commitment to increased
production from conventional and alternative domestic energy sources.
This Administration believes strongly in a balanced approach to meeting
our energy needs. As a rapidly growing source of energy in the world,
as well as one of the quickest to install, I expect wind energy to play
an increasingly important role in domestic power production.
tax credits for renewables
Question 5. Under present law, an income tax credit of 1.5 cents
per kilowatt-hour adjusted for inflation is allowed for the production
of electricity from qualified wind facilities, ``closed-loop'' biomass
facilities, and poultry waste farms. The current credit will expire on
December 31, 2001. An extension of the credit has been included in a
number of legislative proposals, including S. 2557, introduced in the
106th Congress by Senator Murkowski, which you cosponsored. Do you
support an extension of the wind energy Production Tax Credit?
Answer. President Bush supports expanded production of all energy
supplies--and clearly supported an extension of this production tax
credit. I look forward to supporting this tax proposal and working with
the Congress to assure its enactment.
Responses to Questions From Senator Akaka
energy research
Question 1. The United States is becoming increasingly dependent on
foreign oil, while competition from other nations for the available
energy supplies is increasing. What is needed is increased energy
research and development.
What new approaches do you plan to implement with respect to energy
research and development, and what areas of research will receive
priority attention?
Answer. President Bush and I are deeply committed to developing an
energy policy that includes increasing domestic production of energy in
an environmentally responsible manner, increasing our use of renewable
energy, decreasing our reliance on imported oil, and developing new
technologies that conserve fossil fuels and reduce energy-related
pollution.
The Department of Energy is the principal Federal agency charged
with responsibility for the development of a national energy policy.
However, development of a national energy policy requires coordination
with other Federal agencies and working with Congress. We will need to
work with the agencies on issues such as federal land use, meeting our
environmental responsibilities and how to provide appropriate
incentives for production of our domestic energy resources.
Question 2. I have sponsored laws that promote research and
development for new sources of energy such as hydrogen and methane
hydrates. These sources of energy have the potential to provide
abundant and clean energy for decades. These programs need appropriate
financial and managerial support.
Will you ensure that these R&D programs are provided appropriate
funding and high level managerial support?
Answer. I recognize the potential of hydrogen as an important long-
term energy source and understand that the Department has a plan for
developing the critical technologies for realizing this potential. The
Assistant Secretary for Energy Efficiency and Renewable Energy, and the
Assistant Secretary for Fossil Energy will both continue to see that
the managers of the Hydrogen Program interact with the Hydrogen
Technical Advisory Panel to help realize the potential of these energy
sources.
Question 3. Hydrogen and methanes hydrates are decades away from
becoming major sources of energy. We would need other sources of energy
to help us in transition to utilizing these sources of energy. Natural
gas is a good source of energy for many applications. It is
particularly good for use in the transportation sector.
What plans do you have to encourage the use of clean sources of
energy such as natural gas in the transportation sector?
Answer. Natural gas has made significant progress in recent years
as a transportation fuel. In addition to active research and
development on natural gas vehicle technologies, I am informed that the
Department administers several programs--in partnership with natural
gas vehicle (NGV) manufacturers and fleet stakeholders--to assist with
the deployment of these vehicles and the development of the
infrastructure necessary to support them. Currently all of the U.S.-
based automakers have NGV product lines, as do several foreign
manufacturers. In addition, all of the major transit motor coach
suppliers now offer a natural gas option to their customers.
Despite the progress, many barriers to increased use of NGVs still
exist--such as the higher initial cost of the vehicles and the limited
availability of refueling stations in most areas of the country. To
address these issues we would need to investigate ways to expand the
natural gas refueling infrastructure, to continue to reduce costs
through R&D activities and deployment partnerships, and to ensure that
consumers and fleet users have access to accurate information about
these vehicles. The proper emphasis of these actions, of course, will
depend on the judgments made, with the Congress, in the formation of an
overall energy strategy for the Nation.
Question 4. Certain regions of our country are overly dependent
either on one source of energy or on an imported source of energy. For
instance, the Northeast is overly dependent on heating oil. Hawaii is
overly and dangerously dependent on imported oil. Hawaii's residents
and visitors use oil to meet 90 percent of their energy needs. Hawaii's
dependence on oil poses risks to Hawaii's economy from sudden price
increases or from supply problems. It is imperative that we make all
efforts possible to diversify the energy resource mix.
Will you support initiatives that will allow Hawaii to diversify
its energy mix by introducing other sources such as natural gas?
Answer. As you know, Hawaii has an abundance of renewable energy
resources--geothermal, solar, wind, and biomass--that I believe can
help diversify the state's energy mix and offset its dependence on
costly imported fuels. In particular, Hawaii would benefit from energy
systems that generate power at or near the end-user which eliminates
the need for significant new transmission and distribution systems.
Additionally, there are a number of renewable resources in Hawaii that
can be used to produce hydrogen, an energy source that can be used for
both power and transportation purposes.
The Department of Energy has funded the University of Hawaii to
conduct research on several methods to produce hydrogen: direct
dissociation of water using sunlight; biological methods of hydrogen
production; and the use of gasification technologies to produce both
hydrogen and electricity from biomass. The Department is also
researching hybrid distributed energy systems using a combination of
natural gas and renewables and on combined heating, cooling and power
systems which will use natural gas, syngas and propane resources (used
extensively in Hawaii) much more efficiently than most current
technologies.
mixed plutonium/uranium oxide (moX) shipments
Question 5. Under the terms of the 1988 U.S.-Japan Agreement for
Peaceful Nuclear Cooperation, the United States must approve the
comprehensive transportation plan for transfer of plutonium from U.S.-
supplied nuclear fuel provided by British and French reprocessing
plants to Japan for use in Japanese power plants. The agreement also
requires the application of strict physical protection measures,
including the use of an armed, military-type vessel or alternative
security measures.
In February 1999, the Departments of Energy and State briefed the
Congressional delegations of Hawaii and the Pacific territories on the
shipments of mixed plutonium/uranium oxide (MOX) from Europe
to Japan. At that time, I expressed concern about the review and
consultative process being pursued by the Executive Branch. Despite
these concerns, the U.S. government approved a transportation plan that
did not require a dedicated armed escort vessel, such as the $100
million Japanese Coast Guard ``plutonium escort vessel'' that the
United States approved for a 1992 shipment to Japan. Instead, the
United States approved use of two British freighters, armed with light
cannons and machine guns and armed with civilian guards, in clear
contravention of the intent of the U.S.-Japan agreement.
There is a pending departure this week of the second MOX
shipment to Japan, and many more are anticipated in the future.
Question 5a. Will the Bush Administration undertake a new review of
security and safety arrangements for MOX fuel shipments from
Europe to Japan?
Question 5b. Will the Bush Administration insist upon a dedicated
armed escort vessel?
Question 5c. Will the Bush Administration continue the present
policy of not permitting shipments of plutonium or MOX fuel
to transit the Panama Canal for security/safety reasons?
Answer a-c. I understand the concerns in this regard. The
Department of State is the federal agency which has the responsibility
and the authority to review and make changes to the conditions and
precautions necessary for international shipments of MOX. I
will ensure that your concerns about this issue are brought to the
attention of the State Department.
global warming
Question 6. The effects of major global climate change on the U.S.
and the rest of the world will be devastating. Hawaii, being an island-
state with limited land mass, is extremely sensitive to global climate
changes. Hawaii is a tropical paradise. The worldwide problem of
greenhouse gases threatens its well-being.
The World Meteorological Organization and the United Nations
Environment Program established the Intergovernmental Panel on Climate
Change (IPCC) in 1988. The function of IPCC is to assess available
information on the science, impacts, and crosscutting economic issues
related to climate change, in particular to a possible global warming
induced by human activities. The IPCC completed its first assessment
report in August 1990 which indicated with certainty an increase in the
concentration of greenhouse gases due to the human activity. The report
assisted the governments of many countries in making important policy
decisions, in negotiating, and in the eventual implementation of the UN
Framework Convention on Climate Change which was signed by 166
countries at the UN Conference on Environment and Development at Rio de
Janeiro in 1992. The convention was ratified in December 1993 and took
effect on March 21, 1994. IPCC issued another assessment in 1995. It
also developed another assessment in 2000.
The conclusions of the panel's latest assessment are alarming. One
of its most striking findings is its conclusion that the upper range of
warming over the next century could be even higher than the panel's
1995 estimates. IPCC also reached the consensus that it is likely that
increasing concentrations of anthropogenic greenhouse gases have
contributed substantially to the observed warming over the last 50
years.
Question 6a. Would you support efforts to address the concerns
raised by the conclusions of the panel?
Question 6b. What mandatory measures would you consider as part of
responsible U.S. policy to deal with the problem of global warming?
Question 6c. Would you support legislation that would require
significant mandatory reductions in the emissions of four pollutants
(SOX, NOX, Mercury, and CO2) from
power plants?
Answer a-c. The Department of Energy is currently in the process of
reviewing the IPCC's latest report that was completed January 19, 2001.
As President Bush indicated during his campaign, global climate change
is an important concern that must be addressed. I expect to be involved
in formulating this Administration's policies addressing climate
change. Any effective response must involve the international community
and both developed and developing countries. It must also be cost-
effective, in order to mobilize the private sector in support of the
objective, rather than merely putting the private sector in a
regulatory straight jacket.
environmental management
Question 7a. The cleanup of the legacy of nuclear weapons
production is one of the most technically challenging and expensive
problems facing this country. This problem was created during more than
50 years of nuclear weapons production. The Department has had a
program for the last decade or so with the goal of cleaning up the
contaminated facilities in the weapons complex. You have said that we
can do a better job of accelerating the cleanup of contaminated
facilities. I welcome that statement.
What are the most important environmental cleanup issues that still
remain to be addressed by DOE?
Answer. The Department's cleanup program is one of the most
technically challenging and costly programs in the world. The
environmental legacy of 50 years of nuclear weapons research,
production, and testing, and DOE-funded energy research includes large
volumes of nuclear materials, spent nuclear fuel, radioactive waste,
and hazardous waste. These are challenges that cannot be remediated
overnight. While significant progress has already been made, some of
the most difficult challenges are still ahead. These include:
safely storing, treating, and disposing of the high-level
radioactive waste in tanks and packaging spent nuclear fuel in
pools at the Hanford site in Washington State;
stabilizing nuclear materials, continuing treatment of high-
level radioactive waste and packaging spent nuclear fuel at the
Savannah River Site in South Carolina;
continuing the packaging of spent nuclear fuel and treatment
of high-level radioactive waste at the Idaho site in Idaho;
remediating contaminated ground water at numerous sites
including those in Idaho, Tennessee, South Carolina,
Washington, Kentucky, and New York;
completing the cleanup at sites with near-term closure dates
like Rocky Flats in Colorado and the Fernald and Mound sites in
Ohio; and
developing and applying new technologies to treat types of
waste for which no effective technology currently exists.
Numerous other clean-up challenges also exist and must be
addressed. I will pursue an active program to remediate all sites--big
and small.
Question 7b. How do you plan to ensure long-term stabilization and
safety of highly contaminated DOE sites? What kinds of administrative
structures and funding regimes do you believe will be necessary to
protect the public and the environment for the indefinite future?
Answer. Each DOE site presents unique cleanup challenges. When
assessing these challenges, I believe the Department needs to continue
to work with EPA, State and Tribal governments, local communities, the
Congress, and other stakeholders in selecting cleanup remedies. These
remedies should be consistent with reasonably foreseeable land use
while ensuring the protection of public safety. In some cases, even
after cleanup is completed, unrestricted use of the land may not be
possible because of the nature and extent of the contamination make it
technically or economically infeasible to restore the site to an
unrestricted condition. These sites may also require post-cleanup
management and monitoring (i.e., long-term stewardship) to protect the
environment and public health. The Department should work to identify
opportunities during cleanup to avoid costly long-term stewardship
where possible.
Question 8a. The Department is involved in research and development
of innovative and cost effective environmental technologies. These new
technologies can be used not only in the cleanup of DOE sites, but also
on other sites in our country as well as have potential for use
overseas.
Are these technologies being effectively utilized in the cleanup
process?
Answer. I understand that the Department has made significant
progress over the past several years in deploying new technologies
within its facilities to solve or accelerate cleanup challenges. DOE
currently has over 280 new technologies available for use and has used
these technologies over 500 times in cleanup activities since the
program was established in 1989. 1 will continue to press to use the
best available science and technology to the cleanup challenges facing
the Department and the private sector where possible.
Question 8b. Does the Department have a process in place to ensure
that technologies it develops are being used? If such a process is in
place, is it being widely used?
Answer. I understand that widespread deployment of new technologies
in which DOE invests has been a major focus of the Environmental
Management (EM) program for the past several years. The EM science and
technology program also provides technical assistance in the form of
Deployment Assistance Teams to provide site-specific assistance in
evaluating new technologies to address local environmental problems--as
well as the training or customizing of new technologies to satisfy a
unique site-specific purpose.
Question 8c. Are there any DOE initiatives to enhance our
competitive position with foreign countries with respect to
environmental technologies?
Answer. The primary mission of DOE's environmental science and
technology program is to provide innovative technologies to clean up
the Department's weapons complex more efficiently. However, because the
Department partners with private industry in developing new
technologies, most of these technologies become commercialized and
available to anyone, from U.S. vendors themselves to foreign users. For
instance, the Oxy-Gasoline Torch--a technology sponsored by the DOE
science and technology program with Petrogen International Ltd., in
Richmond, California--is being used in Russia to dismantle buildings
undergoing deactivation and decommissioning.
Responses to Questions From Senator Cantwell
Question 1. In recent weeks, the Secretary of Energy has declared
an emergency in west coast wholesale energy markets and ordered
utilities outside of California to make sales of their surplus power to
California, often without adequate financial security. Consequently,
these utilities outside of California are also placed in financial
trouble. Do you plan to extend Secretary Richardson's order and, if so,
do you plan to make any changes to it?
Answer. On January 23, I issued a two-week extension of emergency
orders requiring certain energy suppliers to provide natural gas and
electricity supplies to California utility companies. Both of the
emergency orders will expire on February 7.
The extension was granted at the request of California Governor
Gray Davis in order to provide sufficient time for California to
complete actions on steps designed to, among other things, restore the
financial health of the utility companies and develop other sufficient
sources of energy to meet their needs.
In granting the extensions, I emphasized that while the federal
government has provided help to the State, only the State of California
can implement the policies necessary to resolve its short term as well
as its long term energy supply challenges--a view shared by the
previous Administration.
Question 2. What are your views on a short-term, west-wide price
cap for electricity and would you support it in one form or another? If
not, what measures would you support to help bring the situation under
control?
Answer. Rising demand and the lack of new generating capacity over
the last 10 years is the primary cause of the current situation in
California. There are, however, a number of market design problems that
have exacerbated the situation. For example, until recently, California
generally prohibited distribution utilities from entering into long-
term contracts or undertaking other sound risk-management practices.
Instead, they were forced to purchase all of their electricity in day-
ahead and real-time spot markets--exposing them to significant price
volatility risk. Most California consumers also pay fixed rates that do
not vary based on the amount of electricity that is available.
Consumers therefore have little financial incentive to conserve
electricity when wholesale prices rise due to tight supplies. As a
result, supply and demand are not balanced in the market.
California needs to correct these and other market design problems
in order for power prices to stabilize and return to reasonable levels.
As a fundamental matter, this problem can only be solved by California.
Question 3. I appreciate your commitment to support the Power
Marketing Administrations (PMA's) as well as your positive response on
supporting the regional preference for the Bonneville Power
Administration. On a related noted, some have proposed that PMA's move
from cost-based rates to market-based rates which would negatively
impact the Northwest economy. Will you oppose proposals that would
alter the cost-based rate structure for Bonneville and other PMA's?
Answer. The Federal government has created a statutory requirement
that the Bonneville Power Administration and the other Power Marketing
Administrations sell power at cost-based rates. As Secretary of Energy,
I will continue to support the cost-based rate structure for the Power
Marketing Administrations.
Question 4. The Bonneville Power Administration, as well as the
other Power Marketing Administrations, currently reports to the Deputy
Secretary of Energy which has worked extremely well for managing
Bonneville and PMA business decisions. Will you commit that Bonneville
and other PMA's will continue to report to the Deputy Secretary in the
Bush Administration?
Answer. I have no plans to change it. I understand this reporting
arrangement has worked very well in bringing PMA's time-sensitive
concerns to the attention of the highest levels in the Department.
Question 5a. The State of Washington, U.S. Environmental Protection
Agency and the Department of Energy are all parties to a comprehensive
clean-up and compliance document called the Tri-Party Agreement. This
document is a legally binding agreement and consent order committing
the Department of Energy to clean up the Hanford Nuclear Site and to
achieve compliance with State and Federal environmental laws. As
Secretary of Energy, will you commit to working with top officials from
the State of Washington to repair the damage to the relationship
between the State and the Department of Energy done by the Department's
failure to live up to its obligations under the Tri-Party Agreement?
Answer. Let me assure you that I take the obligations under the
Tri-Party Agreement very seriously and will work closely with the
Governor of Washington and other top State officials, as well as the
U.S. Environmental Protection Agency, to address the cleanup of the
Hanford Site through the Tri-Party Agreement.
Question 5b. Also, will you direct the staff of the Department's
Environmental Management Program to make the Hanford site a top
priority, as well as provide the Hanford Nuclear Site Office of River
Protection adequate finances and authority to successfully manage the
Hanford tank clean-up project?
Answer. The high level radioactive waste tanks at Hanford pose one
of the most pressing and complex problems facing the environmental
management program. To ensure that cleanup of these tanks proceeds
apace, the Assistant Secretary and the Manager of the Office of River
Protection have been delegated appropriate authority to manage the
project and will have my full support in implementing these
responsibilities.
Question 5c. Lastly, in FY 02, the budget for building the
vitrification plant on schedule will require approximately $1.1
billion. Do you support maintaining our existing legal commitments to
build this vitrification plant on schedule?
Answer. The Department recently signed a contract to design and
construct a vitrification plant for the highly radioactive tank wastes
managed by the Office of River Protection at Hanford. I understand the
contract incorporates key dates for treating the waste and provides the
contractor with significant incentives to perform the work on the
required schedule and with penalties for failure to perform.
Responses to Questions From Senator Thompson
Question 1. The largest construction project in the Department of
Energy's Science budget is the Spallation Neutron Source (SNS), located
at the Oak Ridge National Laboratory in Oak Ridge, Tennessee. This
facility, which will be used by scientists from across the country and
around the world, will restore America's leadership in the field of
neutron science and enhance our global competitiveness. Construction
began in 2000, and the project will be completed in 2006.
Do you support keeping the SNS on its current schedule, including
the budget profile that includes approximately $300 million in fiscal
year 2002?
Answer. Completing the SNS project on time and within its Total
Project Cost will remain one of the Department's top priorities.
Question 2. A number of recent studies have documented serious
infrastructure deficiencies across the Department of Energy's nuclear
weapons complex. The Y-12 plant in Oak Ridge is a critical part of that
weapons complex, but many of its facilities date back to the original
days of the Manhattan Project and are either crumbling or are simply
obsolete.
The Department and the National Nuclear Security Administration,
led by General Gordon, have made an initial commitment to modernizing
the weapons complex, including several significant construction
projects currently planned for Y-12. I strongly believe that these
projects are critical to ensuring that Y-12 and the other weapons
facilities can continue to perform their vital national security
missions in the future.
Will you commit to supporting the modernization of the nuclear
weapons complex, including the production plants, to preserve our
nuclear deterrent and ensure that our stockpile remains safe and
effective?
Answer. Ensuring the safety and reliability of our nuclear weapons
stockpile and preserving this nation's nuclear deterrent is the
paramount mission of the Department.
I am aware that the Department is considering a facilities and
infrastructure recapitalization initiative and I have requested a
detailed briefing on it. I understand that the initiative's purpose is
to reverse the long decline in investment in the deteriorating weapons
production infrastructure. A modernized infrastructure would help
improve overall operational efficiency and help attract and retain the
skilled engineers and production technicians that will be needed to
maintain the nation's nuclear stockpile. I plan to examine options to
modernize the weapons complex and will work with the Congress on ways
to address the problem.
Question 3. As you know, the Environmental Management (EM) program
is the largest program run by the Department of Energy. While
significant progress has been made in cleaning up DOE sites that were
involved in past weapons production activities, serious environmental
challenges remain in a number of states, including Tennessee.
I am concerned that, if the EM program does not receive adequate
funding over the next several years, compliance agreements with state
regulators and the Environmental Protection Agency will be jeopardized
and the long-term costs to the taxpayers will increase.
How important a priority will you make cleanup of the Department's
former weapons sites? Recognizing that you must balance the funding
requirements of all of the important programs that the Department
oversees, will you attempt to ensure that EM activities receive
sufficient funding over the next several years?
Answer. Environmental cleanup will be a priority at the Department
of Energy. I understand the critical importance of addressing the risks
posed by contamination at DOE's sites and meeting our cleanup
commitments to the communities and the states that have supported the
nation's national security efforts. I am committed to meeting the
Department's obligations arising under compliance agreements and
environmental laws. I am prepared to work with the Congress on the
funding issues presented by those problems.
Question 4. Last year, Congress created the Energy Employees
Occupational Illness Compensation Program to compensate Department of
Energy nuclear weapons workers whose health was harmed in the course of
their service to our country.
Pursuant to the legislation that was enacted and a subsequent
Executive Order, this program will be run by several different Cabinet
agencies led by the Department of Labor. However, the Department of
Energy will play a critical role in identifying eligible employees,
providing information about employee exposures, and in assisting
exposed workers not eligible for federal benefits in accessing the
appropriate state workers' compensation system.
Ill workers at DOE sites have been waiting years--and in many cases
decades--for the federal government to step up to the responsibility it
has to help those it has put in harm's way. Will you make every effort
to ensure that the Department of Energy acts as expeditiously as
possible to carry out the responsibilities assigned to it under the
Energy Employees Occupational Illness Compensation Act and the
associated Executive Order?
Answer. The Compensation Program will be administered by the
Department of Labor, the Department of Health and Human Services, and
the Department of Energy. I recognize the importance of ensuring that
DOE carry out its responsibilities under the Program, and have
designated my staff office--the Office of the Assistant Secretary for
Environment, Safety and Health (EH)--as the lead for ensuring that the
Department's obligations under the Energy Employees Occupational
Illness Compensation Program Act, and the associated Executive Order,
are carried out quickly and completely.
Responses to Questions From Senator Johnson
Question 1a. What do you see as the primary reasons behind
skyrocketing energy prices--doubling and even tripling of natural gas
prices--and what package of solutions would you propose to alleviate
the problem?
Answer. Over the last decade oil consumption has increased by more
than 14 percent while domestic oil production has declined by more than
18 percent. These trends have increased our dependence on imported oil
to 57 percent--our highest level ever. We now import more than 11
million barrels of oil each day--and DOE estimates that imports will
increase to 15 million per day by 2010. Natural gas prices have more
than doubled over the last year in most areas of the country and in
some places are much higher. All of this will drive up the price of
goods through increased production and transportation costs.
President Bush and I are deeply committed to developing an energy
policy that includes increasing domestic production of energy in an
environmentally responsible manner, increasing our use of renewable
energy, decreasing our reliance on imported oil, and developing new
technologies that conserve fossil fuels and reduce energy-related
pollution.
The Department of Energy is the principal Federal agency charged
with responsibility for the development of a national energy policy.
However, development of a national energy policy requires coordination
with other Federal agencies and working with Congress. We will need to
work with the agencies on issues such as federal land use, meeting our
environmental responsibilities and how to provide appropriate
incentives for production of our domestic energy resources.
Question 1b. What do you think about decreasing U.S. exposure to
fossil fuel price shocks by increasing fuel diversity with greater
reliance and production from domestic alternative energy resources?
Answer. We can and should continue to encourage the use of
renewable energy, including biomass, solar, geothermal and wind--for
environmental purposes as well as to reduce our demand for foreign oil.
Question 2. Since the cost of oil has a much greater impact on our
transportation system--as opposed to our electric system--would you
support a significantly increased use of alternative fuels, such as
biofuels?
Answer. The Department of Energy (DOE) has supported the
development of alternative fuels, including biofuels. These programs
are vital for implementation of the Biomass Research and Development
Act of 2000, which calls for closer coordination between DOE and the
Department of Agriculture (USDA). Industry, in collaboration with DOE,
USDA, and other agencies, has developed a vision for biobased products
and bioenergy that calls for a tripling of the use of biomass by the
year 2010. DOE is implementing a $100 million FY 2001 research budget
for this purpose, which includes research and development of ethanol
and biodiesel fuels. As I have said previously in regard to the
nation's overall energy policy, we need a balanced approach to meeting
our energy needs that uses renewable alternatives and non-fossil energy
sources. The same kind of approach is needed in the transportation
sector as well.
Question 3. Many farm-belt states are net energy importers, costing
billions of dollars to these already strapped rural economies, and high
energy prices are making the situation even worse. Despite the fact
that several studies have documented tremendous potential for renewable
energy in these states--South Dakota, for instance, is ranked as one of
the highest states for wind energy potential--the region has had
trouble capitalizing on these resources. Do you support federal
initiatives that would lead to significant growth in the industry--
especially in these states where the potential is so great?
Answer. There is an excellent opportunity for renewable energy
technologies to become an important new industry that can strengthen
local and state economies throughout rural America. While each state
will ultimately have the responsibility to assure that its individual
policy, legislative, and regulatory framework supports renewable
energy, the Federal government can and should help introduce new
opportunities in the states by providing leadership and coordination in
overcoming the barriers often faced by renewable technologies. This
past year, DOE co-sponsored wind and biomass energy workshops in
several states throughout the Midwest and Upper Great Plains, including
South Dakota, North Dakota, Nebraska, Montana, and Kansas. In each
instance the response was overwhelming, the information and assistance
we provided was well received, and the workshops have led to a focused
state effort to seriously explore wind and biomass development.
Question 4. Natural gas--among its many uses--is a major cost
component in the production of nitrogen fertilizer. And as you know,
for the last several years natural gas has been touted as the fuel of
the future because it is clean-burning, cost-effective, and relatively
plentiful right here at home. Indeed, natural gas heats around half of
American homes and is used to generate around 16% of our nation's
electricity.
However, since this time last year, spot prices for natural gas
have increased dramatically. This specifically increases the cost of
natural gas to fertilizer manufacturers in the U.S. Nitrogen
fertilizer, particularly anhydrous ammonia, is a critical input to
agricultural producers in South Dakota and the entire country. Much of
the corn, wheat, and cotton grown in this nation depends upon the
application of fertilizer to boost yields which can translate into
increased profit potential. Nonetheless, farmers in South Dakota and
elsewhere are very concerned about the access to affordable nitrogen
fertilizer. As a consequence of higher natural gas costs, fertilizer
producers are decreasing production and even shutting down plants. Some
farmers have remarked to me that their fertilizer costs will increase
between 33-100% from 2000 to 2001. Other farmers cannot even get bids
to purchase fertilizer for the next crop year.
As Energy Secretary, it is very likely you'll need to tackle this
pressing problem immediately. What steps can be taken to ensure farmers
have access to affordable nitrogen fertilizer in the future?
Answer. A Bush Administration priority is to increase domestic
production of oil and natural gas which will help address our needs for
both energy and fertilizer.
APPENDIX II
Additional Material Submitted for the Record
----------
California Association of School Business Officials,
Sacramento, CA, January 2, 2001.
Hon. Frank H. Murkowski,
Chairman, Senate Committee on Energy & Natural Resources, U.S. Senate,
Washington, DC.
Dear Senator Murkowski: On behalf of the California Association of
School Business Officials, I am very pleased to advise you and the
committee of our strong support for the confirmation of Senator Spencer
Abraham as the next United States Secretary of Energy. Senator Abraham
understands the many energy issues that impact public schools across
the nation and has been an enthusiastic supporter of public education.
In California, our aging public schools combined with the most
intensive student population growth in the nation combine to challenge
energy utilization while we are attempting to maximize every dollar for
instructional purposes. In addition, our public schools transport more
people daily than most of the major metropolitan transportation systems
in the state combined. The need for less expensive and cleaner burning
fuels on our school buses demand creative ways to enable districts to
retire old, inefficient buses and reduce the overall expense of student
transportation. Senator Abraham has always understood that public
education policy spans agencies well beyond the Department of
Education.
During his service in the United States Senate, Senator Abraham was
always eager to assist public education on a variety of issues that
impacted schools in California and all across the country. He assisted
us with issues including transportation, energy, health and technology.
He is a strong advocate of public schools and has always been
responsive to the importance of local control.
For these reasons, we enthusiastically urge the committee to
confirm Senator Abraham as the Secretary of Energy. If you have any
questions regarding our support for Senator Abraham's nomination,
please don't hesitate to contact me at 916-447-3783.
Sincerely,
Kevin R. Gordon,
Executtve Director.
______
Information Technology Industry Council,
Washington, DC, January 8, 2001.
Senator Frank Murkowski,
Senate Energy and Natural Resource Committee, Washington, DC.
Senator Murkowski: ITI is the association of leading IT companies.
Our main mission is to promote the understanding of the digital world
and advance policies that enhance the competitiveness of our industry.
I am writing today to add our perspective on Senator Abraham's
nomination to be the next Secretary of Energy. During his tenure in the
Senate and his service on the Judiciary and Commerce Committees,
Senator Abraham has been a leader on technology issues. He was a leader
on a number of fronts including digital signatures legislation, H-1b
Visa legislation and free trade initiatives. In addition, he also
realizes that our industry has become so pervasive in the economy that
every policy arena--including energy--is critical to Americas
continuing leadership in the Information Age.
Senator Abraham is someone our industry has worked well with in the
past and someone we look forward to continuing to work with during his
service in the Bush Administration.
Sincerely,
Rhett Dawson,
President.
______
USEC,
Bethesda, MD, January 11, 2001.
Hon. Frank Murkowski,
Committee on Energy and Natural Resources, U.S. Senate, Washington, DC.
Dear Senator Murkowski: It is my great pleasure to strongly endorse
the proposed nomination by President-elect Bush of Senator Spencer
Abraham to be Secretary of Energy.
As demonstrated by current events, the United States is faced with
a great need for a comprehensive energy policy. This policy must
address our strategic need for energy security while at the same time
accommodating the needs of the environment and the productivity of our
citizens. The complexity of the required effort mandates the selection
of an individual as Secretary of Energy who can bring to the table the
diversity of interests necessary to achieve this extraordinary, and in
the past, elusive goal. Senator Abraham, with his experience in the
Vice President's office during the previous Bush administration and his
six years in the United States Senate where he held a leadership
position clearly will bring to the office of the Secretary of Energy
the ability to lead this quest for energy security.
As President and CEO of USEC Inc., the Nation's sole producer of
enriched uranium for use as fuel in civilian nuclear power plants, I
strongly endorse the new Administration's emphasis on the relationship
between our national security and our energy security. I am looking
forward to working with Senator Abraham as Secretary of Energy, and I
have every confidence in his ability to serve the American people with
distinction.
Sincerely,
William H. Timbers,
President & Chief Executive Officer.
______
Friends of the Earth,
Washington, DC, January 11, 2001.
Hon. Frank H. Murkowski,
Ranking Member, Senate Committee on Energy and Natural Resources,
Washington, DC.
Dear Senator Murkowski: On behalf of the thousands of members of
Friends of the Earth, I would like to formally express this
organization's opposition to the nomination of former Senator Spencer
Abraham as Secretary of the United States Department of Energy (DOE).
As a United States Senator for the state of Michigan, Spencer Abraham
has a record of defending polluting, resource extractive energy sources
over renewable energy.
Growing bodies of evidence demonstrating the impacts of global
warming and current energy crises throughout the country emphasize the
importance of sound energy conservation strategies. The U.S. is at a
crossroads in terms of its national energy policy: will there be a
substantial move towards sustainable and renewable energy sources, or
will we continue to rely on fossil fuels at the expense of our air,
water, and natural resources? In light of his record, Senator Abraham's
nomination would be a step in the wrong direction.
Senator Abraham's abysmal record on energy issues includes:
Voting to block consideration of an amendment that would
have increased spending on the DOE's Solar and Renewable Energy
program by $62 million, bringing it within range of the
Administration's FY00 budget request (Roll Call Vote No. 171,
June 16, 1999). This policy stance is in direct conflict with
President-elect Bush's own Comprehensive National Energy
Policy, which states that Bush ``understands the promise of
renewable energy and believes strongly in encouraging
alternative fuel sources such as wind, biomass, and solar.''
Voting against a resolution calling for an end to the freeze
on Corporate Average Fuel Economy (CAFE) standards (Roll Call
Vote No. 275, September 15, 1999). Currently, emissions from
U.S. cars and sport utility vehicles (SUVs) contribute 20
percent of U.S. global warming pollution in the form of carbon
dioxide. Improving the vehicle mileage per gallon of cars and
SUVs by raising CAFE standards would reduce the amount of
fossil fuels burned, saving gas and preventing further
pollution.
Consistently siding with the oil industry and voting to open
the Arctic National Wildlife Refuge (ANWR) in Alaska to oil
drilling (most recently: Roll Call Vote No. 058, April 6,
2000). ANWR is a 19 million-acre wildlife refuge of unequaled
beauty and importance to the arctic and subarctic ecosystems of
that region. It is home to hundreds of animal species and
millions of migratory birds. It serves as a polar bear denning
habitat and is the primary calving grounds for the Porcupine
caribou herd, long a cultural treasure for the native Gwich'in
people of Alaska and Canada. To allow oil drilling in this area
when alternative fuel sources exist would be to senselessly
destroy one of our nation's priceless natural treasures.
Protecting the mining industry from efforts to enact
environmental safeguards and bonding requirements for hardrock
mines on public lands (most recently: Roll Call Vote No. 224,
July 20, 2000). In addition, Senator Abraham voted to legalize
unlimited mine waste dumping on public lands by eliminating the
``millsite claim'' provision from the Mining Law of 1872 (Roll
Call Vote No. 223, July 27, 1999).
Defending the coal industry by supporting efforts to exempt
hardrock mining operations from the Clean Water Act and the
Surface Mining Control and Reclamation Act (Roll Call Vote No.
370, November 18, 1999).
One of the three cosponsors of a bill to abolish the
Department of Energy (see: S. 896, the Department of Energy
Abolishment Act in the 106th Congress).
Given Senator Abraham's position on renewable energy and his
unfettered defense of resource extractive industries, ratifying his
nomination as Secretary of United States Department of Energy would be
a grave mistake for the direction of our nation's energy policy.
Friends of the Earth therefore urges you to oppose his nomination.
Sincerely,
Brent Blackweldeer,
President.
______
National Coalition for Advanced Manufacturing,
Washington, DC, January 12, 2001.
Hon. Jeff Bingaman,
U.S. Senate, Hart Office Building, Washington, DC.
Dear Senator Bingaman: As you begin considering Senator Spencer
Abraham's nomination to serve as Secretary of Energy, we can testify to
his strong leadership skills and sound policy judgment from the many
years that we have worked together.
In his recent role as Chairman of the Senate Subcommittee on
Manufacturing and Competitiveness, we worked with the Senator to
explore the close link between the health of the nation's industrial
base and the nation's infrastructure for basic R&D. The national lab
system under the DOE is an integral part of that infrastructure. It is
important that Sen. Abraham and the Bush Administration recognize the
contributions of the laboratories and commit, within the bounds of
DOE's missions, to allowing the laboratories to build on their history
of collaborative relationships with industry, universities, and other
research organizations.
Sen. Abraham's confirmation hearings will begin defining the policy
direction of DOE under the Bush Administration. We encourage you to
acknowledge the important contributions of the basic research at the
national labs to supporting DOE missions and the spinoff benefits of
that research to societal and economic well-being. To that end, please
find attached a NACFAM background paper that may help in preparing
questions for the confirmation hearing. The paper provides concrete
examples of the benefits of lab research spinoffs.
The National Coalition for Advanced Manufacturing (NACFAM) has
spent the last two years analyzing the factors that will sustain U.S.
industrial strength and productivity growth in the years to come. Our
work reveals important roles and responsibilities for the public and
private sector in shaping, positioning, and strengthening the
infrastructure for basic research. Our recommendations in this area are
the product of the Advanced Manufacturing Leadership Forum (AMLF)
process.
As we worked with leading manufacturers and research organizations
to develop the recommendations on R&D policy, it became quite clear
that the laboratories operated by the DOE were critical to the health
and vitality of the nation's basic research infrastructure. It also
became clear that upgraded lab facilities and a robust basic research
portfolio is a magnet for attracting to the national labs some of the
nations brightest scientists and engineers.
Given NACFAM's in-depth research and long experience with lab-
university-industry R&D, we would be pleased to brief you or a
designated representative on these issues. We look forward to working
with you in the years ahead.
Sincerely,
Eric Mittelstadt,
Co-Chair, NACFAM.
Leo Reddy,
President, NACFAM.
Enclosure: Background Paper on Positive Impact of National Lab R&D
Background on Positive Impact of Research Conducted By Department of
Energy National Laboratories
From the industry perspective, the national labs, together with the
nation's universities and industry R&D facilities, represent the
backbone of the America's infrastructure for basic research. The
national laboratories of the Department of Energy provide important
research and technologies to advance a number of diverse missions, the
most notable of which is their contribution to the national security,
In meeting the complex challenges of their missions, the
laboratories have developed competencies across a broad array of basic
research disciplines and as a result guided a number of technological
spinoffs that benefit both society at large and industrial productivity
and quality. A few pertinent examples illustrate these spinoffs that
have a broad societal benefit:
The same encryption technologies that were developed to
safeguard codes for nuclear weapons are now being used to
protect the nation's financial system;
Sensors developed to detect bioweapons are now used to
detect disease by the medical community;
The vast computational resources developed to simulate
nuclear explosions were critical to the speed at which the
Human Genome was mapped;
Laboratory research in chemistry and combustion science
developed to model explosions is now being used to increase
energy efficiency and reduce pollution in industrial processes;
and
The labs knowledge of geosciences is essential to
determining whether the repositories for nuclear waste and
other hazardous materials are safe.
In particular, the DOE's science and technology infrastructure also
plays a major role in safeguarding our economic prosperity, which rests
on a foundation of technology-driven productivity growth. While making
a major contribution to its own mission, especially the modernization
of the nuclear stockpile, DOE's research on basic manufacturing science
and technology enhance industrial strength and productivity. A few
examples that illustrate the broad economic benefit:
Meso-scale devices have the potential to revolutionize the
industrial economy by allowing production at minute scales;
Nanotechnology, which is the control or fabrication of
structures at the molecular or atomic level, allows changes in
the very material composition of structure leading to new
engineered materials.
Work on intelligent machines and automation science will
enable more rapid production, customization of products on a
broad scale, and increased worker safety and environmental
protection.
Advances in the understanding of the interactions of
materials as well as the design of more efficient processes
will improve the efficiency of resource use and decrease wastes
from industrial processes.
The combination of advanced information-technology with
breakthroughs in new materials, sensors, simulation, modeling
and chemistry will speed advances in the efficient production
of biomedical devices and the bioprocessing of new materials.
______
Chamber of Commerce of the
United States of America,
Washington, DC, January 16, 2001.
Hon. Frank Murkowski,
Chairman, Energy and Natural Resources Committee, U.S. Senate,
Washington, DC.
Dear Chairman Murkowski: On behalf of the U.S. Chamber of Commerce,
the world's largest business federation, representing more than three
million businesses and organizations of every size, sector, and region
of the country, I am writing in strong support of the nomination of
Senator Spencer Abraham to serve as the next Secretary of Energy.
Spencer Abraham is a proven legislator that is highly respected for
his extraordinary dedication, tenacity and intelligence. He has worked
in a bipartisan fashion to successfully advance and enact initiatives
to protect public safety, reduce government waste and improve our
nation's economic competitiveness.
One of the biggest threats to our continued economic vitality is
current and proliferating energy supply problems across the nation.
These serious problems urgently demand an effective and comprehensive
national energy strategy. Given his track record, Senator Abraham is
highly capable of leading the Administration's efforts to implement a
national policy that will ensure affordable and secure energy supplies.
Accordingly, the U.S. Chamber urges your Committee to report
favorably the nomination of Senator Spencer Abraham and that this
letter be included in the hearing record. We look forward to our
continued work with you in developing a comprehensive national energy
policy.
Sincerely,
Thomas J. Donohue,
President and Chief Executive Officer.
______
National Community Action Foundation,
Washington, DC, January 17, 2001
Hon. Jeff Bingaman,
Chairman, Senate Committee on Energy and Natural Resources, Washington,
DC.
Dear Mr. Chairman: On behalf of the nation's 1100 Community Action
Agencies (CAAs), the National Community Action Foundation urges your
Committee's approval of the nomination of Senator Spencer Abraham as
Secretary of Energy.
From his work in the Senate, we know that Senator Abraham will
consider all points of view in making policy, and our Michigan network
of local Weatherization Assistance providers has witnessed his concern
for the energy needs of the most disadvantaged Americans.
We are certain we will be able to work productively with Senator
Abraham, and look forward to future opportunities for collaboration
when it addresses the energy challenges facing low-income consumers.
Sincerely,
David Bradley,
Executive Director.
______
Statement of Marcia Baker and John Hoefle, Executive Intelligence
Review
Chairman Bingaman, and Members of the Committee,
Our publication, Executive Intelligence Review, has forewarned for
over two decades, against the kinds of policies that led to today's
acute energy crisis: namely, the policies of dumping nuclear power, of
deregulation, of speculation, and all the consequences of ``casino
economics.'' In recent weeks, emergency energy proposals based on
guidelines by Lyndon LaRouche, EIR Founding Editor, and now newly-
announced Presidential candidate, have been introduced before the
Boston City Council, passed in California Democratic Party County
meetings, and are being debated in state capitals throughout the
country.
Millions of Americans are hit directly by the energy crisis, and
chain-reactions of shut-down are spreading throughout the economy. As
of January, 2001, electricity rate hikes in the range of 10-40% have
been imposed in California, Massachusetts, Washington, and many other
states; these come on top of natural gas, heating oil and propane
prices sky-rocketing. Factory shutdowns, agriculture dislocation, and
threats to vital services (schools, hospitals, water and sanitation)
are now the order of the day.
It is from this crisis perspective--and also based on the larger
context of the unprecedented global financial and economic-breakdown
crises now breaking, that we urge you to reject the nomination of
Spencer Abraham for the position of Energy Secretary. Our testimony
opposing the Abraham nomination, has been prepared to provide the
Senate with summary documentation of the nature of the energy
emergency, and the urgency of facing the larger crisis.
We conclude our testimony with excerpts from Lyndon LaRouche's
statements on energy policy, made on a live international Webcast Jan.
3, in specific response to a question from Detroit News reporter George
Weeks, about former Michigan Sen. Abraham and Bush energy policy. On
that same Webcast, at the time the news broke of Federal Reserve
Chairman Alan Greenspan's Jan. 3 interest rate cut, LaRouche stated,
that President Clinton should immediately take two measures:
First, he should use Presidential powers to create an
emergency fund of credit which would be directed into urgently
needed, major employment projects, like construction of power
plants in California.
Second, he should immediately re-regulate those sections of
the economy, particularly the energy utilities, in order to
prevent a power emergency.
LaRouche put it this way:
``There's only one thing you can do. The system is going to blow.
What do you do? You don't use monetarist methods. Monetarist methods
caused the problem. Yes, you may use credit. You did what Roosevelt did
with Jesse Jones and the Reconstruction Finance Corporation; that's
what you do. You take and earmark--don't lower the interest rates.
Create a special vehicle. Go to the Congress. Get a special fund
authorized by the Presidential powers under the Constitution. Get some
money allocated, real fast, an emergency fund, to get going, as seed
money, to get some major employment projects in construction. . . .
``For example, let's take the case of California. We've got, right
now, one of the major crises of the nation is the situation with the
Edison of Southern California, and the PG&E. Now, there's a shortage of
energy. Well, why not, immediately, through the Federal Government,
create, first of all, two steps: Establish re-regulation, emergency re-
regulation. Do it under Clinton. Don't wait-for Bush. Do it now! I'd
have Clinton do it right now, while he's still President. Re-regulate!
On an emergency basis, under emergency powers of the President. You've
got an emergency, California! A hell of an emergency. Re-regulate--it's
a national emergency. And then get some money in there, we're going to
fix this problem. We're going to get some power generation going in
that area. We're going to ensure a safe and adequate supply of energy,
to industry and to populations throughout the area. That's our
mission.''
In this testimony, we will not take up particulars of Sen.
Abraham's personal record to call for his disqualification, even though
he has several times called for the abolition of the very Department he
has now been nominated to head. The relevant point about the man and
his philosophy, in the case at hand, is that the energy and economic
policies associated with George W. Bush, with which Sen. Abraham is
aligned, are demonstrably at odds with the interests of the nation,
even to the point of providing piracy-rate profits to Bush campaign-
associated Texas energy companies, at the expense of keeping the lights
on. We document this below, in the case of California's electricity and
gas crisis.
Moreover, the Bush ``team'' profiteering goes beyond a conflict-of-
interest scandal--which is historically unprecedented. The danger
presented is that, with the unfolding energy and economic crisis, and
the financial blow-out, if a Cabinet is allowed to be formed of the
disposition represented by Abraham, along with others proposed,
especially John Ashcroft, then conditions are created for the federal
government to be used to impose rule by force under circumstances of
social upheaval. The analogy here is to 1933 ``emergency decree''
policies asserted by Hitler. That is the degree of crisis, and danger
represented by the persons and policies nominated.
The California and nationwide energy crisis, and the global
financial and economic emergency, confront lawmakers with the task of
re-asserting traditional U.S. general welfare policies. In the case of
energy, there must be re-regulation, and infrastructure building.
Spencer Abraham is not the man for that job.
We here provide the essentials for evaluating the immediate tasks
for the head of national energy policy at time of crisis.
In order below:
1. The California and nationwide energy crisis.
2. The scandal of the Bush-associates' energy cartel.
3. The national and international financial and economic
breakdown process.
4. LaRouche proposals: Re-regulate, issue emergency credits
to rebuild
1. California, Nationwide Energy Crises
California and the Northwestern states are now experiencing an
extreme energy supply and price crisis. On Jan. 11, a Stage Three
statewide electricity shortage emergency was put into effect in
California, the second such extremity in six months. Washington and
Oregon are similarly hit. Electricity prices (on the new, deregulated
``wholesale'' market) have hyperinflated from, in the range of $30 per
megawatt hour in 1999, to $1200--even $3000 per megawatt hour, as of
December 2000. Two of the three major distribution utilities in
California, Southern Edison and Pacific Gas & Electric, have racked up
$12 billions in debt only from June to December, 2000, because of the
Weimar-style hyperinflation. They can neither buy electricity nor
natural gas--whose price likewise has hyperinflated, especially in the
Western states. The total debt of these companies is in the range of
$20 billions.
As of Jan. 16--the time of preparation of this testimony--Southern
Edison's parent company stood in default for a $100 million payment to
a creditor; in upcoming days, both utilities face more due dates of
unpayable obligations. In Sacramento, the state legislature was in
emergency session to consider Gov. Gray Davis' proposal for the state
to interpose in the markets in attempt to continue electricity
supplies.
In financial terms, the California and other U.S. utility debt
default is enough to blow-up the U.S. and international financial
system. Under certain ``cross-default'' clauses, the California
utilities debt places up to $20 billions in default. Thus, technically,
California is not at all a ``mere'' state energy crisis, but the
manifestation, in energy, of the general economic breakdown process,
and financial disintegration underway.
Nationwide, variations of the so-called ``California crisis'' are
worsening in all regions, and for all modes of energy--electricity,
natural gas, oil, gasoline, propane, fuel oil. National U.S. utilities
debt is in the range of $400 billions and growing, with other
companies--outside California, and in natural gas as well as
electricity, in stages of arrears.
How did this come about? In brief, the immediate causes were the
lack of expanding energy generation facilities, and de-regulation
policies that resulted in marginalized supplies, and allowed
speculation and hyper-profits. Beginning in the 1970s, generating
capacity per household in the U.S. began to fall year by year. At the
same time, there began changes particular to each mode of energy
(fossil fuels, oil and gas, electricity, etc.) made in the name of
increasing ``markets'' and competition. This was a ruse from the start,
as is now evident. In reality, mergers and acquisitions, along with the
deregulation of various kinds now underway in about 26 states, have led
to increased, centralized private control, shortages and soaring
prices.
The average price of natural gas has soared from under $2.75
per 1,000 cubic feet in 1999, to over $10 in December, 2000. A
small group of newly-merged transmission and gas companies--
directly interconnected with the Bush campaign and proposed
Administration, are raking in huge profits. (Detailed below).
The rise in the per barrel price of oil over Y2000--fueled
by speculation in ``paper oil'' in London and on the New York
Mercantile Exchange, has resulted in severe hardship for
citizens, and economic activity, and huge profits for the
cartelized oil companies. E.g. BP-Amoco made 94% profit Third
Quarter 2000 over 1999.
We are now seeing the chain-reaction effects throughout all sectors
of the economy. Kaiser has placed a surcharge on fabricated metal
products. The electricity hyperinflation in California--origin of 20%
of all U.S. produced dairy products, will create severe national
shortages in supply, and whopping high prices for milk goods. Nitrogen
fertilizer production--dependent on natural gas--is so cut back and
high-priced, that corn-planting will be far-reduced in acreage this
spring (on top of very low winter wheat acreage last fall). Vital
services, such as sewage treatment, hospital operations, and so on are
threatened in many states.
2. The Bush League and the Energy Cartel
The incoming Administration's stated policy is to continue the
deregulation of energy, a policy of economic destruction of which the
chaos in California is just the leading edge. Deregulation is a scam
designed to let financial middlemen--the Enrons, Reliants, Dynegys and
AESs of the world--skim off a large chunk of the billions of dollars
Americans pay for energy every year, and Sen. Abraham has been given
the assignment of protecting this scam. Anyone who would carry out such
an assignment, is morally unfit for public office.
Not only is Texas the center of those energy speculators which
California Gov. Gray Davis has accurately characterized as ``pirates,''
but the circles around the coming--and the former--Bush Administration
are in many ways indistinguishable from these energy privateers.
California was the lead state to de-regulate in 1996, and by 1998 began
the process of forced sell-off of generating capacity to the new
echelon of private ``merchant generators.'' Some 40% of the state's
generating capacity is now in the hands of these firms, posting
fabulous profits. The following are prominent among the nation's energy
profiteers:
Enron, based in Houston, is the leading historical
contributor to the political campaigns of President-Elect
George W. Bush. Enron chairman Kenneth Lay is one of the chief
advisors of Secretary-nominee Abraham. Enron is also one of the
leading forces in ``energy futures''--namely, in transforming
the pricing of electricity from a ``cost of production plus
reasonable profit'' model, to a ``whatever the market will
bear'' speculators' dream.
Reliant Energy, based in Houston, reported that its income
rose 37% in December 2000. Reliant bought five power plants
from Southern California Edison in 1998, and owns 17% of the
40% forced sell-off. On its directors, James A. Baker, III, was
chief of staff and Sec. of State in the Administration of
former President George H.W. Bush. Baker has also been a
consultant to Enron, as have a number of officials of the
former Bush Administration and even former President Bush
himself.
Dynegy, based in Houston, owns California power generation
capacity in partnership with several others, including NRG
Energy, which posted a 221% third quarter income increase.
Others that acquired generating capacity, and are now making killer
profits are: 1) Charlotte-based Duke Energy, whose income rose 74%; 3)
and Arlington, Virginia-based AES, the global energy mega-company whose
third-quarter earnings were 131% higher than the previous quarter.
3. International Economic and Financial System Breakdown
This looting of energy-payments occurs at a point in which the
international economic and financial system is breaking apart, and the
U.S. stands at ground zero of that collapse. The widely touted growth
of the U.S. economy during the Reagan/Bush, Bush and Clinton years has
been a growth in debt, financial claims and casino-like derivatives
bets globally, but centered mainly in U.S. institutions.
Globally, we estimate there are some $400 trillions of financial
claims outstanding, ten times the size of the gross world product,
which itself is a figure bloated by the effects of the financial
bubble. The institution with the highest exposure to this bubble is the
recently merged J.P. Morgan Chase & Co., which by itself has some $23
trillions in derivatives bets, more than twice the U.S. GDP! The
Federal Reserve's recent lowering of interest rates to protect the
troubled Bank of America and its $7 trillion derivatives portfolio is
indicative of the instability such uncontrolled betting creates.
The fate of the U.S. banking system and financial markets is
inextricably intertwined with this bubble; if the bubble pops, the
banks, the markets and Wall Street go with it. The Senate knows it, the
House knows it, the Executive Branch knows it, and the media knows it.
But rather than take the steps repeatedly outlined by Lyndon LaRouche
to put this system through bankruptcy and begin to rebuild the
productive sector of the economy, the policy has been to pump up the
bubble by escalating the looting of the population and the productive
base. The energy deregulation scam is but one aspect of this looting
scheme.
Cannibalization of the population and the productive sector only
works in the short term, however. The more you steal from the
population, and the more you dis-invest in infrastructure,
manufacturing, health care and education, the less able is the economy
to service the enormous debt overhang of the bubble--day by day, the
economy becomes more bankrupt. Eliminating ``useless eaters'' creates
more ``useless eaters,'' and the process feeds upon itself. Eventually
the point is reached--as it has now--where the physical economy itself
begins to break apart.
The California crisis, in which a physical-economic electricity
crisis--combined with savage looting--has-created a financial crisis,
represents just such an event, and serves as a warning to all that the
piper is demanding payment for decades of foolish policies and ideas.
The Establishment knows that its mountain of financial claims can
never be paid, and that a serious crash is coming in one form or
another, and that leads us to an even darker side of deregulation. With
the rampant mergers among energy companies, and the shifting into a
``whatever the market will bear'' pricing scheme, the Establishment is
positioning itself to grab the income streams which remain after the
crash. The rapid consolidation of control in energy, food production
and distribution, telecommunications, strategic minerals, precious
metals, raw materials and other essentials of life, represent
preparations for exerting power after a crash. As the empires have
known for ages, he who controls the necessities of life, controls the
people. This is the policy to which the Bush Administration and its
Energy Department are committed, and this is how civilizations end.
This policy should be stopped now, by the Senate.
4. LaRouche: California Is A Test for Energy Policy
Only the traditional, ``general welfare'' approach to dealing with
the energy crisis will work. The principles are in U.S. standing law,
including the Federal Power Act of 1935, the Public Utility Holding
Company Act of 1935, the Atomic Energy Act of 1946, and other
precedents. What is immediately required is to deal with the two causes
of the worsening crisis: First, to remedy the lack of supplies of
electricity and fuels (including transmission, refining and all such
essential logistics); and secondly, to roll-back the deregulation. Even
well-meaning stop-gap attempts to keep the lights on through tax-payer
subsidies, or rate hikes, only line the pockets of Bush-team
speculators, and hurry the nation down the road to destruction.
Workable proposals must proceed from the economic national-interest
overall.
On Jan. 3, during a live Webcast, newly announced Democratic
Presidential candidate Lyndon LaRouche gave his evaluation of Spencer
Abraham and the Bush energy policy in response to a question from
Detroit News reporter George Weeks.
``Look, talk about energy policy. Two major things are involved
here, first of all. First of all, how many kilowatts are we generating?
What does it take to support a community? What does it take to support
an industry? What about the energy flux-density of our energy sources?
What about reliability, in terms of supply and price? You know, these
kinds of questions have to be faced first. And this is exactly the kind
of thing you're not likely to get from Bush.
``Look, for example, one very--thing that sticks in your craw, when
you look at Bush: What about Rainwater? What about the involvement of
Enron? What about these things which are tied closely to Bush, which
are the cancer destroying the energy system of the United States? I
don't think that a Secretary of Energy under George Bush, be he good or
bad, has any chance of doing a good job at this time.
``My view on the entire Bush Administration, is that members of the
Congress--chiefly Democrats, but also honest Republicans--have to get
together and put a leash on this Bush Administration, to make sure it
knows where to do what on the lawn, and where not to do it. You have to
create a condition under which Bush says, `Okay, I'm the President, but
I have to heed what this angry bunch of constituents is telling me I
better do, or else.' Under those conditions, you might be able to find
a Cabinet appointment in the Bush Administration, which has enough
independence of the Rainwater phenomenon and other things in the Bush
background, to be able to make an honest decision on things like
energy.
``But at present, the way the Administration is now constituted,
the way it's framed up to be, given the situation in the Congress at
this moment--it may improve later, but at this moment--I don't think
the United States has a chance under a Bush Administration. I think
we're looking at a short road to Hell, under George Bush--unless we can
create the condition in the country, where the fact that a weakly-
elected, or quasi-elected President has to recognize that he doesn't
carry much weight with the country as a whole, and the best thing he
can do, is sit back in that office, and pay attention to some orders
and pressures from his constituents--and the orders and pressures
coming from his best advisers, who tell him, ``Mr. President, you
better do this.'' And he says, `Why? I'm the President.' `Well, we call
you President, but you really aren't. You're just the man that signs
the checks, and signs the bills.' ''
[When George Weeks further asked, ``Sir, when you say that we're on
the short road to Hell under George Bush, are you talking energy, or
over-all?'']
``Over-all, everything. Energy's just--Look at the California
situation: What is the Bush policy on what are you going to do about
PG&E and Southern Edison? What's he going to do about it? That's a
test, that's a test on energy policy--right now. We've got a situation
in New England, that's going to be developing on the heating oil
question, that's going to rise up again. We've got all over the country
an energy crisis.
``Well, let's take California. Let's take PG&E and Edison. That is
the market which tells you exactly what the entire Bush Administration
policy is going to be on energy--right than and there. You don't have
to find out in Michigan, you can find our right there.''
As you undoubtedly know, just today PG&E defaulted on $600 million
in debt--and there is no clear policy coming from anywhere to guarantee
the power-generating capacity in this region, which serves over 20
million people. So the question is before you now: will you select an
energy secretary who will re-regulate and provide the energy we need,
or will you hand the system over to the energy pirates wholesale?