[Senate Hearing 107-461]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-461
 
 FISCAL YEAR 2003 BUDGET REQUESTS FOR THE DEPARTMENT OF THE INTERIOR, 
         THE U.S. FOREST SERVICE, AND THE DEPARTMENT OF ENERGY
=======================================================================



                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

 TO RECEIVE TESTIMONY ON THE FISCAL YEAR 2003 BUDGET REQUESTS FOR THE 
DEPARTMENT OF THE INTERIOR, THE U.S. FOREST SERVICE, AND THE DEPARTMENT 
                               OF ENERGY
                               __________

                           FEBRUARY 12, 2002








                       Printed for the use of the
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               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                   RICHARD C. SHELBY, Alabama
DIANNE FEINSTEIN, California         CONRAD BURNS, Montana
CHARLES E. SCHUMER, New York         JON KYL, Arizona
MARIA CANTWELL, Washington           CHUCK HAGEL, Nebraska
THOMAS R. CARPER, Delaware           GORDON SMITH, Oregon

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               Brian P. Malnak, Republican Staff Director
               James P. Beirne, Republican Chief Counsel
                        Colleen Deegan, Counsel










                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     1
Cantwell, Hon. Maria, U.S. Senator from Washington...............     2
Carnes, Bruce, Chief Financial Officer, Department of Energy.....    27
Griles, J. Steven, Deputy Secretary, Department of the Interior, 
  accompanied by P. Lynn Scarlett, Assistant Secretary for 
  Policy, Management and Budget..................................     7
Murkowski, Hon. Frank H., U.S. Senator from Alaska...............     4
Rey, Mark, Under Secretary for Natural Resources and Environment, 
  Department of Agriculture......................................    22
Scarlett, P. Lynn, Assistant Secretary--Policy, Management and 
  Budget, Department of the Interior.............................    13

                                APPENDIX

Responses to additional questions................................    51














 FISCAL YEAR 2003 BUDGET REQUESTS FOR THE DEPARTMENT OF THE INTERIOR, 
         THE U.S. FOREST SERVICE, AND THE DEPARTMENT OF ENERGY

                              ----------                              


                       TUESDAY, FEBRUARY 12, 2002

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10 a.m., in room 
SD-366, Dirksen Senate Office Building, Hon. Jeff Bingaman, 
chairman, presiding.

           OPENING STATEMENT OF HON. JEFF BINGAMAN, 
                  U.S. SENATOR FROM NEW MEXICO

    The Chairman. Why do we not go ahead with the hearing? I 
believe Senator Murkowski is on his way, and we will start 
since we have a very short time period here. As I understand 
it, we have got three votes scheduled on the Senate floor at 
10:40.
    This morning the committee will review the budget proposals 
of the Energy Department, the Interior Department, as well as 
the Forest Service.
    We have limited time. I am sorry Secretary Abraham and 
Secretary Norton were unable to be here. I understand there are 
also time constraints on some of our witnesses.
    This year the Department of Energy received a 2.9 percent 
increase over last year's appropriated amount, or $21.9 
billion. Defense related programs received a 5.7 percent 
increase, while the civilian programs would be increased less 
than 1 percent, .7 percent.
    So, there is a legitimate question as to what is happening, 
what this indicates for the civilian activities within the 
Department, in particular what is happening to State energy 
grant programs, to energy research and development programs, to 
other programs that invest in future energy supply and 
conservation technologies, and the Department's Office of 
Science, which involves our Nation's investment in future 
engineers and scientists for energy-related fields.
    The Department of the Interior and Forest Service budgets. 
I appreciate that there are always difficult choices to be made 
among competing programs in both of those budgets. I am 
troubled, at almost every possible opportunity, the 
administration proposal involves deep cuts in programs that 
assist communities, assists them in creating sustainable 
futures for themselves. The administration's budget eliminates 
the Forest Service economic action programs. Those are programs 
that have had bipartisan support and are very popular in the 
rural communities in my State.
    The administration also proposes a significant cut in 
funding for the Payment in Lieu of Taxes program, the PILT 
program. This provides badly needed funds to local government 
units, particularly in the West where there are a lot of 
Federal lands, to help offset the loss of tax revenues as a 
result of Federal ownership of those lands.
    Also, I note that the administration has not requested any 
additional funds for the Youth Conservation Corps, which I 
believe is a very valuable program to train young people in 
public land stewardship.
    I am concerned also about the administration's budget in 
the Land and Water Conservation Fund. This is the second 
consecutive year that the administration is proposing to fund 
several programs by using Land and Water Conservation funds. 
The proposals are to use those funds even though the programs 
to be funded are not authorized to receive those funds and even 
though several of those programs are not authorized at all. As 
a result, the administration I believe would leave too little 
money for the important purposes that the Land and Water 
Conservation fund was created for, that is, open space, 
recreation, and Federal land acquisition.
    Based on the early indications again in my State and the 
Southwest, it is very possible that we will have another bad 
fire season. I am somewhat puzzled as to why the Forest Service 
budget proposes to reduce fire preparedness by $39 million from 
last year's level. I hope we can discuss in further detail 
later in the hearing how we can be assured that there will be 
adequate resources to deal with the fire situation we may face 
in much of the West.
    Finally, there are a number of pressing issues related to 
Indian trust fund reform I want to speak to Secretary Griles 
about, and I know he is on top of those issues. I understand 
the Department is working under a court order that has required 
most of its computer systems to be disconnected. In my State 
again, this has caused some substantial impacts on many people 
who depend upon those BIA payments.
    Because of the limited time that we have available, I will 
be submitting many of the questions that I have prepared in 
writing to be answered for the record. As I indicated, we will 
have several votes starting at 10:40.
    Let me call on Senator Murkowski for his opening comments.
    [A prepared statement from Senator Cantwell follows:]
        Prepared Statement of Hon. Maria Cantwell, U.S. Senator 
                            From Washington
    Thank you, Chairman Bingaman, for holding this hearing on the 
President's budget requests for the Departments of Energy, the Interior 
and the Forest Service. The budgets of the Forest Service and 
Department of the Interior pose a number of important questions about 
this Administration's commitment to our nation's rural communities--
particularly those attempting to diversify their traditionally 
resource-based economies--as well as its commitment to environmental 
stewardship.
    However, I'd like to focus most of my opening remarks this morning 
on another topic of critical importance for the residents of Washington 
state: clean-up at the Hanford Nuclear Reservation.
    As many of my colleagues are aware, Hanford stores 54 million 
gallons of dangerous high-level radioactive waste in 177 massive 
underground storage tanks, 149 of which are 30 years past their design 
life, and about 67 of which have leaked at least one million gallons of 
waste into the soil--a mere 7 miles from our region's lifeline, the 
Columbia River.
    The amount of waste at Hanford is greater than on any other 
Department of Energy site. Aside from the materials contained in the 
tanks, officials estimated that when Hanford was an active nuclear 
weapons plant--providing vital support to this nation during World War 
II and the Cold War--about 450 billion gallons of radioactively 
contaminated water was dumped directly into the ground. There are now 
wells located along the Columbia River shoreline that register 
Strontium 90 levels that are 1,600 times the Federal Drinking Water 
Standard.
    These are just a few of the issues we face in my state, home to the 
nation's most toxic nuclear clean-up site. A timely clean-up at Hanford 
is essential to the quality of our state's water and environment, as 
well as our public safety. That is why the TriParty Agreement exists--a 
legally-binding document and consent order that requires DOE to clean 
up Hanford, in compliance with state and federal environmental laws.
    This Administration must understand that to fall behind in Hanford 
clean-up is an unacceptable risk to the people of Washington. This a 
message I have repeatedly sent to Secretary Abraham. During his 
confirmation hearing, the Secretary assured me that he would ``take the 
obligations under the TriParty agreement very seriously,'' and further, 
that he recognizes ``the need to meet commitments that have been 
made.''
    But despite these assurances made in January, when the 
Administration's budget was released last April, funding for Hanford 
clean-up was slashed--falling about $400 million short of what was 
needed to meet the milestones contained in the TriParty Agreement--and 
Secretary Abraham announced he would initiate a top-to-bottom review of 
the Environmental Management program.
    Rejecting these misguided budget cutbacks across the Environmental 
Management program, Congress spoke with a unified voice in restoring 
the funds necessary for the federal government to meet its clean-up 
obligations. In fact, it was a bipartisan effort that involved a number 
of my colleagues on this Committee.
    Now, the top-to-bottom review is complete and we are here today to 
review the President's Fiscal Year 2003 budget request. While the 
Administration boasts that it has fully funded the program, 
commensurate with last year's appropriated level, the fact is that only 
$5.9 billion of the $6.7 billion needed to meet federal obligations is 
guaranteed to the sites that are home to our nation's nuclear waste.
    This leaves Hanford about $262 million short of the funding needed 
to meet obligations contained in the TriParty Agreement. Among those 
programs that the President's budget would cut at Hanford: 
stabilization of 22 leaky, single shell tanks and the transfer of waste 
to safer double-shelled tanks by 2004; the design, construction and 
commissioning of the vitrification plant needed to process the tank 
waste; and the design and installation of a waste retrieval system that 
will move waste from the tanks to the vit plant when it is set to begin 
operation, by 2007.
    As many of my colleagues are aware, the Administration has said 
there may be room to restore funding to these programs--so critical to 
maintain the gathering momentum behind Hanford clean-up. The 
President's budget includes in its request an additional $800 million 
for the purpose of clean-up reform--to initiate ``alternative 
approaches'' to clean up, engaging states in a renegotiation of their 
priorities.
    Make no mistake: I wholeheartedly support the concept of a more 
efficient and cost effective clean-up. DOE's stated purpose--to more 
effectively manage the risk at these sites--makes a good deal of sense. 
After all, Secretary Abraham himself has labeled Hanford clean-up one 
of the EM program's ``urgent challenges.''
    However, this Administration and DOE must realize--first and 
foremost--that forcing us to compete with other sites for the money 
necessary to comply with the TriParty Agreement does not only violate 
the agreement itself, it breaks the federal government's moral contract 
with the people of Washington state to clean up this dangerous waste. 
It is the federal government's obligation to live up to the TriParty 
Agreement, while the people of Washington are not obligated--in fact, 
we refuse--to sacrifice environmental quality in order to ensure that 
we secure the money needed to continue our progress at Hanford in the 
short term.
    In fact, I--along with many in the Washington state delegation and 
TriCities community--are bewildered by budget cuts to programs that 
Hanford managers and state regulators are already working to 
accelerate. For example, the DOE budget says the agency wants to 
accelerate the removal of spent nuclear fuel from the so-called K-
basins near the Columbia River. Many of the preparations for this 
project have just been completed and the removal efforts have recently 
reached full speed. The question, then, is what does DOE want before it 
restores the $62.7 million in funds cut from this program? Certainly, 
we cannot accelerate these activities with less money.
    Mr. Carnes, as you are probably aware, my friend and colleague from 
the State of Washington, Sen. Murray, last week asked OMB Director 
Mitch Daniels about these funding cuts. When pressed, he said that 
Secretary Abraham should explain ``his plan.'' The people of Washington 
and their elected representatives deserve answers.
    We need to know just what projects DOE is targeting and how these 
accelerations will fit within the existing TriParty Agreement. Our 
regulators must be allowed to ensure they will not lessen the 
environmental quality of the cleanup. The people of Washington need to 
know how and when DOE intends to approve these plans, and what criteria 
the agency will use in doing so. And we need to know whether OMB is 
serious in its reported commitment for multiple years' worth of full 
funding if and when DOE reaches agreement with states and regulators on 
speeding up the clean-up process.
    Mr. Carnes, I hope that you are prepared to answer some of these 
questions for us today. But, Chairman Bingaman, I believe this is an 
extremely important area for this Committee to further explore. With 
the issuance of DOE's top-to-bottom review, I believe now is an 
opportune time to hold an oversight hearing on the Environmental 
Management program's new direction. Despite what is certain to be a 
hectic schedule, I hope we can hold such a hearing in the next month or 
two, before the Senate will be forced to make important funding 
decisions during the budget and appropriations processes.
    Again, thank you for holding this important hearing. I look forward 
to hearing the testimony of today's panelists.

      STATEMENT OF HON. FRANK H. MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Good morning, Senator Bingaman.
    The Chairman. Good morning.
    Senator Murkowski. And good morning, ladies and gentlemen. 
I am pleased to see some familiar faces here, a few that I have 
not seen since confirmation, but glad to see them this morning 
because this is where we really get down to the meat of things. 
We are going to start right in with a little reference that 
suggests that while I am pleased to have your budget, I am not 
pleased with your budget.
    We address priorities and many of them are as a consequence 
of what happened on September 11. But I think it is fair to say 
a war is no time to skimp on energy, defense, and resource 
spending--development--that is what funds our economy and keeps 
our Nation free.
    I am pleased to note that both the Interior and Energy 
budget requests recognize the role of a sound energy policy in 
contributing to national security.
    The Department of the Interior is not often thought of as 
an energy agency. However, Interior manages lands, subsurface 
rights, and offshore areas that produce approximately 28 
percent of the Nation's energy. Secretary Norton's budget 
request seeks to implement portions of the national energy 
policy that will expand and diversify our Nation's energy 
supplies.
    And Secretary Abraham in his budget request, when talking 
about the Department's overarching mission of national 
security, notes what I have been saying for some time: a strong 
America requires a secure and reliable source of energy.
    Let me refer to the Department of Energy specifically. The 
budget request is $21.9 billion, an increase of $582 million 
over the last year's spending level. The budget reflects the 
new reality and the new threats that we face. We saw an 
economic threat to our well-being last year in the form of 
constrained energy supplies and higher energy prices. As a 
result, the U.S. economy has been identified as hanging on the 
brink of a recession. We have seen thousands of hard-working 
Americans lose their jobs, and DOE's programs create the new 
energy technologies--fossil, nuclear, renewable, efficiency--
that get Americans back to work and get our economy going 
again. DOE's budget request addresses threats to our 
infrastructure through increased funding for protection.
    I am especially pleased to see a considerable increase in 
funding for nuclear waste programs. It is important to keep 
this program on track and continue the progress we have been 
making. In fact, the President is due to make his 
recommendations on site suitability to the Congress any day 
now. And I am sure we will hear from Senator Reid very soon.
    There are areas of the budget requests, however, that I am 
not so pleased with. For example, I support the new ``Nuclear 
Power 2010'' initiative, the goal of which is to have a new 
plant on line by the year 2010. It is rather exciting. I think 
it is very responsive to the concern we have to develop 
alternatives that are emissions-free.
    However, in looking at the budget, there is no increase in 
Nuclear Energy. In fact, it is a decrease of over $43 million. 
To me this is unacceptable. I cannot understand how you can, on 
the one hand, promote nuclear power and then cut the technology 
funding to the level that you have.
    I am also concerned about cuts to the fossil energy R&D 
programs. Our Nation is going to continue to rely on fossil 
fuels for the next several decades, even as we develop new 
energy resources.
    I am also taking a look at funding in the State of Alaska. 
You might say, well, that is rather selfish in the sense that I 
represent the State and obviously am sensitive to it. But when 
you consider Alaska is the sixth largest producer of energy in 
the United States, all forms of energy, that we are the largest 
producer of crude oil, and out of the $21.9 billion budget 
which you have got, only $2.4 million will go to Alaska. That 
is .01 percent. Yet, I would remind you we produce 20 percent 
of the crude oil produced in the United States.
    Last year in Congress we authorized the creation of a 
Department of Energy office in Alaska to seek new partnerships 
to develop new energy sources. Last year that was funded at $5 
million. The Department has failed to fund this office at this 
time. I am going to put you on notice, Mr. Carnes, that we will 
have some more conversations about this. The State of Alaska 
contributes considerably to the energy security of the Nation, 
and the DOE needs to recognize this in the budget priorities.
    I was just comparing apples and oranges, and they do not 
compare, but in the budget for the State of Alaska, as I have 
indicated, there is about $2.4 million. In the State of New 
Mexico, it is $3.63 billion. Of course, we do not have the 
labs. Nevertheless, I think it is fair to look at the 
comparison of dollars, your considerable expenditures to 
maintain the contribution those labs make. I am not being 
negative in any manner for them. I am just suggesting that for 
a State that produces as much energy and has the potential of 
producing as much energy as we have, I think the numbers are 
way out of whack.
    According to the EIA statistics, as I indicated, Alaska is 
the sixth largest energy producing State in the Nation, just 
behind Texas. I also would note that we produce more energy per 
capita than virtually all the other States. So, we are going to 
have time, Mr. Carnes, as I indicated, to discuss this.
    I will go to the Department of the Interior very briefly. I 
believe the Department of the Interior's budget request is a 
relatively well-balanced approach to conservation of our 
Federal lands and responsible management of our natural 
resources. The Interior budget highlights responsible 
development of energy resources on Federal lands, thus 
contributing to reducing our dependence on foreign sources of 
energy.
    I am pleased to see the increase of $3 million to be used 
to accelerate leasing, exploration, and development on the 
North Slope.
    I would also note that there is a revenue estimate in your 
budget of revenues from the proposed lease sale of ANWR at 
about $1.2 billion. I think that estimate is a little under 
what I would suggest would be a reality. Also, I believe that 
that estimate is from a single sale, and I doubt very much it 
would be limited to a single sale. So, I think you could 
anticipate substantially more on multiple sales.
    This increase can be used to speed up exploration and 
development in both the Naval Petroleum Reserve-Alaska and, as 
I indicated, ANWR. Development in both these areas is critical 
because they are America's best prospect for increasing 
domestic oil production in the North American continent.
    Now, while BLM's budget was increased for energy related 
activities, I was not happy to see that the budget reduced 
Payment in Lieu of Taxes by $45 million. We seem to have the 
budget reducing PILT, and we put it back in, and this year is 
no exception. PILT is important for local governments 
throughout the West as the Federal Government's appetite for 
Federal land continues to increase.
    In this budget alone, BLM is asking for more than $40 
million for land purchases to add to its land base. I have a 
hard time with that. I do not know why BLM could not acquire 
the land through trades rather than authorization and 
appropriation. It would seem to me we have got a pretty heavy 
load of land already, and further land, if it is necessary, 
could be acquired by trades rather than an outright 
appropriation.
    I am also concerned about why the Department continues to 
fund CALFED in the absence of reauthorization. I know how 
strongly the California delegation feels about this program, 
and I am not here to criticize the program. What we have not 
done is done an authorization for it. So, I see that $15 
million is provided this year. As I recall from last year, the 
conference committee recommended no funding in fiscal year 
2002. The Clinton administration would not fund this program. 
There was no authorization. So, there is some shifting of 
monies going on to accommodate what is really an unauthorized 
program. I would prefer to see proper authorization rather than 
this sleight of hand that we keep coming up with.
    As for the National Park Service, I am pleased to see that 
you will continue to address the maintenance backlog of our 
National Park System, something the Bush administration 
committed to last year.
    I have also been concerned about wildfire threats to our 
Federal land and certainly was worried about the forest fires 
last spring and summer. Therefore, I was glad to see the 
administration has continued its commitment to fire 
suppression.
    Additionally, I was pleased to see funds in the budget for 
the construction of fire barracks and so forth in the West.
    The Forest Service budget request. I commend the 
administration for making a clear effort to control costs and 
coming to us with what is essentially a flat budget for the 
Forest Service. There are, however, a few items that cause me 
some concern with respect again to Alaska. The most startling 
is that there is the proposal to allow parties to purchase 
timber sales with no requirement that the sales be harvested. 
Perhaps the Honorable Mark Rey can enlighten me on that a 
little bit.
    Over the past 6 to 8 years, the Forest Service's failure to 
offer a sufficient volume of economic timber sales to 
purchasers in the Tongass has resulted in a virtual closing of 
the timber industry and the loss of more than 3,000 jobs. Even 
with congressional support, the Forest Service only offered 68 
million board feet out of a target of 190 million board feet 
last year.
    In the context of the current budget, I would hope the 
present administration is taking steps to correct this 
deficiency and get the timber sales program back on its feet 
before it is too late for the remaining sawmills that are left 
in Alaska, which are about four. I think it is correct to point 
out that in New York they cut more timber for firewood than we 
cut commercially in the State of Alaska.
    Mr. Chairman.
    The Chairman. Thank you.
    Why do we not go ahead with the witnesses. If you will each 
take no more than 6 minutes and just give us the main points 
that you think we need to be aware of, starting with Deputy 
Secretary Steven Griles with the Department of the Interior. I 
gather you are accompanied by Lynn Scarlett, who is the 
Assistant Secretary for Policy, Management and Budget. So, 
please go right ahead, Steve.

       STATEMENT OF J. STEVEN GRILES, DEPUTY SECRETARY, 
 DEPARTMENT OF THE INTERIOR, ACCOMPANIED BY P. LYNN SCARLETT, 
     ASSISTANT SECRETARY FOR POLICY, MANAGEMENT AND BUDGET

    Mr. Griles. Mr. Chairman, thank you. This is my first time 
since I was confirmed by the Senate, and I want to say to you 
it is a pleasure to be with you.
    Let me just say from a personal viewpoint, I want to thank 
your committee staff director for the majority and the minority 
and the counsel for the majority and the minority for getting 
the rest of our people confirmed. We finally have everybody 
confirmed. Most have been sworn in. We still have one who will 
be sworn in next week. So, thank you for getting those people 
down to us.
    Before we move into the details of the budget, Mr. 
Chairman, let me just offer a few personal observations.
    The Department of the Interior has a huge impact on the 
lives of Americans. We manage one out of every five acres of 
land in this country. These lands include some of the most 
beautiful and pristine places on earth. We are entrusted with 
some of the most patriotic symbols of our nationhood, including 
the Statue of Liberty and Independence Hall. We provide 
approximately one-third of the Nation's domestic energy. We 
supply water that has made the arid West bloom. We serve 
visitors from around the world and take delight in finding 
recreation through nearly one-half billion visits to our lands 
every year.
    We have more than 200,000 volunteers that assist us. The 
volunteer work force outnumbers our own employees almost three 
to one.
    We collected last year $11 billion in revenues from the 
lands and waters we manage, and that is more than $1 million 
more than was appropriated by Congress.
    We also shared $1 billion with the States, our partners, in 
the onshore petroleum leasing program.
    When the President directed we build our budget, it was 
based on several principles, and I would like to just mention 
those briefly to you. First, a new environmentalism through 
cooperative conservation partnerships. Second, improved 
management of Indian trust assets. Mr. Chairman, I want to come 
back specifically to that in a second. Third, improved 
management of public lands and waters. Fourth, advanced 
development of domestic energy. Fifth, improved classrooms and 
classroom performance of Indian students. And, finally, overall 
management for excellence through citizen governance.
    Since September 11, Interior's employees have responded to 
the call for increased diligence and preparation in view of the 
changed world we face in the wake of those events. We put 
security measures in place in our most important national 
assets, our people, and our visitors. We have increased Park 
Police patrols in Washington and in New York and upgraded Park 
Police security equipment. We have increased guard services and 
protection for other important national assets such as the 
Statue of Liberty and the Liberty Bell. We have instituted 
around-the-clock security at key Bureau of Reclamation 
facilities, including the Hoover, Glen Canyon, Shasta, and 
Grand Cooley Dams.
    Our budget request is $10.3 billion in current 
appropriations. There is an additional $270 million for 
government-wide accounting adjustments for retirement and 
health benefits.
    But let me just talk for a second, Mr. Chairman, regarding 
the particular question you asked about trust. This is an area 
that the Secretary and I have spent a great deal of time on 
since I joined Interior in July. In the trust asset programs at 
the Department of the Interior, we have over 11 million acres 
held in trust for individual Indians and nearly 45 million 
acres held in trust for tribal governments. These lands produce 
income from about 100,000 active leases. We have currently 
about 225,000 open individual accounts and 1,400 tribal 
accounts.
    We have a difficult and I will tell you a very complex 
challenge in front of us. These trust assets, going back to the 
1870's, were divided up into allotments for individual Indians 
in the 1870's, in 80-acre allotments. Many of these allotments 
today, Mr. Chairman, are owned in percentages that go out to 34 
and 36 decimal points. When the Pentium 2 processor came out, 
sir, it only went to 24 decimal points, I have been told. The 
Department of the Interior is trying to manage lands that have 
such a small interest. It is very difficult to manage that, and 
we need your help. We need this committee's involvement, as 
well as the Committee on Indian Affairs, in how we move 
forward.
    As to the computer system that is shut down, about 40 
percent of the computers in the Department of the Interior are 
up and running. But I am happy to tell you today, Mr. Chairman, 
that last night I signed a letter to the Senate and House 
appropriators informing them that we were going to take 
estimated amounts of receipts to begin to pay the individual 
Indians a percentage of the monies that we know are in their 
individual accounts. Because the court has not allowed us to 
turn on the Minerals Management Service accounting system, we 
cannot know exactly how much each individual Indian is owed. 
So, we are going to use an estimate based on the previous 3 
months, and we are going to make payments to them.
    We cannot continue to allow the individual Indians not to 
get monies. There are bankruptcies that are occurring. They are 
not getting proper care, and it is important that we find a 
solution. I am proud to say that Neal McCaleb, the Assistant 
Secretary, has struggled very hard to find a solution, and 
Friday night he came up with this idea, and we implemented it 
yesterday. The checks should be flowing in the next couple of 
days to those individual Indians accounts.
    The other area which is very important to Interior, as 
Senator Murkowski said, is energy. The Secretary and I have 
spent much time advancing the President's energy plan. Interior 
manages all the production from Federal lands, onshore and 
offshore. ANWR, of course, is a centerpiece of the President's 
policy, the coastal plan of the Arctic National Wildlife 
Refuge, in terms of opening up oil and gas development. Only a 
small fraction of the 19 million acres of the refuge would be 
opened, and then with restrictions that no more than 2,000 
surface acres can be covered by production and support 
facilities. In 1998, USGS estimated that there were over 10.4 
billion barrels of recoverable oil there.
    The other aspect of our energy plan is renewables. Last 
November, we hosted with DOE a conference on renewables, an 
opportunity, we called it, to expand renewable energy on public 
lands. We brought together more than 200 individuals and 
government officials, renewable energy companies, and 
environmental leaders, to try to find a better way to focus on 
increasing wind, solar, and geothermal energy from our public 
lands. Interior currently produces 40 percent of the geothermal 
energy in this country from public lands.
    In closing, let me just comment on one other issue that has 
continued to be an issue with us at Interior, and that is 
Klamath. We have faced a difficult situation this past year in 
the Klamath Basin. For the first time ever, the Department was 
forced to make no water available from Upper Klamath Lake to 
supply the farmers of the Klamath Project. This action 
shattered the lives of many of the farming community of the 
Klamath Basin.
    Recently, the National Academy of Sciences released a draft 
report that concludes that there was no scientific foundation 
for maintaining higher water levels in the Upper Klamath Lake 
for the endangered sucker fish or for higher minimum flows in 
the Klamath River for the coho salmon.
    Secretary Norton has directed the U.S. Fish and Wildlife 
Service Director and the Bureau of Reclamation Commissioner to 
evaluate these findings and report back to her by close of 
business on Friday to what we should do concerning how to deal 
with these issues that now are before us based on the National 
Academy of Sciences report.
    The Federal Government cannot make decisions like those 
made this past year with regard to the Klamath Basin, decisions 
that affect the lives of so many good Americans, without a good 
scientific basis for those decisions. It is important that we 
have the best science. We must use the best science, and that 
is what we are striving for in the future at Interior.
    Mr. Chairman, I would turn it over to Lynn Scarlett who is 
here.
    [The prepared statement of Mr. Griles follows:]
       Prepared Statement of J. Steven Griles, Deputy Secretary, 
                       Department of the Interior
    I am pleased to be here today with Lynn Scarlett, the Department's 
Assistant Secretary for Policy, Management and Budget, to talk about 
the fiscal year 2003 budget for the Department of the Interior.
    The President's proposed $10.6 billion funding for the Department 
of the Interior in fiscal year 2003 reflects his commitment to 
restoring natural areas, rebuilding parks and refuges, improving 
American Indian education and trust reform, and unleashing a citizen-
centered, incentive-driven conservation ethic. The proposal is the 
largest Interior budget ever presented by a President. The budget 
includes $663 million for National Park Service maintenance, to meet 
the President's commitment to reduce the NPS maintenance backlog, and a 
$56.5 million increase for the operation and maintenance of the 
National Wildlife Refuge System. It also includes increases totaling 
$83.6 million for trust reform activities in the Office of the Special 
Trustee and the Bureau of Indian Affairs.
    Our proposed FY 2003 budget doubles BLM's renewable energy budget. 
It also includes a $10.2 million increase for BLM energy-related 
activities, including Alaska North Slope oil and gas development 
outside of the Arctic National Wildlife Refuge (ANWR), to expedite the 
permitting and rights-of-way processes, increase the number of oil and 
gas lease sales, work to remove unnecessary barriers to both renewable 
and non-renewable energy production, and increase environmental 
inspections.
    We are proud of this budget, and believe it represents a balanced 
approach to conservation and providing the energy needs of the nation. 
Overall, the President's 2003 budget increases spending for 
conservation activities in the Department. There are several exciting 
new conservation programs in this year's budget that Lynn Scarlett will 
touch on in her testimony today.
    Since being confirmed last July, I have served the Secretary as her 
Chief Operating Officer at Interior. In that capacity, I have been 
involved with a number of pressing issues facing the Department that I 
would like to share with you today. Both the Secretary and I have spent 
more time over the last six months on the challenges related to the 
management of Indian trust assets than on any other issue before the 
Department. Secretary Norton is unable to appear before you today 
because she is preparing to appear in court tomorrow in the ongoing 
Cobell v. Norton litigation.
    Last week, Secretary Norton testified before the House Resources 
Committee on this very complex and difficult issue. Trust asset 
management involves approximately 11 million acres held in trust or in 
restricted status for individual Indians and nearly 45 million acres 
held in trust for Tribes, a combined area the size of Maine, 
Massachusetts, Vermont, New Hampshire, Connecticut, Rhode Island, 
Delaware, Maryland, and the District of Columbia. This land produces 
income from more than 100,000 active leases for 350,000 individual 
Indian owners and 315 Tribal owners. Leasing and sales revenues of 
approximately $300 million per year are distributed to more than 
225,000 open Individual Indian Money (IIM) accounts and revenue of 
approximately $800 million per year is distributed to the 1,400 Tribal 
accounts.
    Secretary Norton laid out in her testimony the most pressing 
problems now facing us in this area. They are the lack of integration 
and centralization of trust management, the lack of a good strategic 
plan for remedying problems in trust management, the changing standard 
of trust management, the problem of fractionated heirship of individual 
Indian trust land, and our computer problems, both those related to 
software we had hoped would assist us in keeping track of trust 
activities, and our general Departmental information technology 
security issues related to Indian trust data. As you know, most of the 
Department's computer systems have been disconnected from the Internet 
because of Indian trust data security concerns. These are difficult 
issues. We have made strides over the past year in a number of areas, 
but there remains much to be done. Indian trust asset management now 
consumes much of the time and attention of the senior management team 
at Interior.
    Assistant Secretary Scarlett's testimony points out that, under 
Secretary Norton's leadership, another goal very important to the 
Department right now is advancing the President's energy policy. I have 
also been spending a good part of my time on that issue. The need for a 
national energy policy becomes clear when you look at the numbers. 
According to the Energy Information Agency, over the next 20 years, 
U.S. natural gas consumption is projected to grow by more than 50 
percent, while production, if it grows at the rate of the last 10 
years, will grow by only 14 percent. Similarly, over the next 20 years, 
U.S. oil consumption is projected to grow by over 6 million barrels per 
day, while production, if it follows the pattern of the last 10 years, 
is expected to decline by 1.5 million barrels per day. U.S. energy 
production is not keeping up with our growing consumption, creating a 
rapidly increasing gap between domestic supply and demand.
    As this Committee well knows, energy reserves contained in the 
lands and offshore areas managed by the Department of the Interior are 
an important source of potential energy production. The Department of 
the Interior manages energy production on all Federal lands, both 
onshore and the Outer Continental Shelf (OCS). These Federal lands 
provide nearly 30 percent of annual national energy production. 
Estimates suggest that these lands contain approximately 68 percent of 
all undiscovered U.S. oil resources and 74 percent of undiscovered 
natural gas resources. The Department also owns and operates hydropower 
facilities in the 17 western states. These facilities produce about 16 
percent of all the hydropower in the United States.
    The President's policy calls for increasing domestic energy 
production, seeks to improve the aging energy infrastructure network by 
creating a new high tech energy delivery network, and promotes energy 
conservation. It is important to point out that more than 50 percent of 
the President's plan focuses on energy efficiency, encouraging the 
development of fuel efficient vehicles and encouraging consumer 
conservation. The President's policy proposes new tax incentives to 
help increase the contribution that alternative and renewable energy 
can make to our nation's energy supply.
    The President directed the Secretary of the Interior to work with 
Congress on legislation authorizing the leasing of oil and gas in that 
portion of the Arctic National Wildlife Refuge (ANWR) defined as the 
Coastal Plain in section 1002 of the Alaska National Interests Lands 
Conservation Act. The President's Policy emphasizes that Congress 
should require the use of the best available technology and require 
that energy production activities have no significant adverse impact to 
the environment in the ANWR 1002 area.
    It is important to remember that the President is proposing to open 
a small fraction of the 19 million acres in ANWR for oil exploration. 
This is a fact that often gets overlooked. In addition, the House-
passed energy bill includes a requirement that no more than 2,000 
surface acres of the Coastal Plain of ANWR may be covered by production 
and support activities. To put this in context, the Bureau of Land 
Management has granted rights-of-way for wind farms on almost 3,200 
acres of public land outside of Palm Springs, California. The 
Administration believes that oil and gas development can successfully 
coexist with wildlife in Alaska's Arctic region.
    As most of you know by now, ANWR is located in the northeast corner 
of Alaska. The Refuge is about the size of South Carolina; however, the 
portion of the Refuge known as the 1002 Area is only about 6 percent of 
the total Refuge. The 1002 Area was excluded from wilderness 
designation and Congress specified that it be studied further through a 
comprehensive inventory of its fish and wildlife resources, and the 
potential for oil and gas production. Estimates of substantial 
resources in the 1002 Area based on nearby drilling results and seismic 
data have made it one of the most promising prospects for oil and 
natural gas in the United States.
    In 1998, a USGS assessment of petroleum resources of the entire 
1002 Area estimated the mean value of expected volume of technically 
recoverable oil beneath the 1002 area to be 10.4 billion barrels, with 
a 95 percent chance of 5.7 billion barrels and a 5 percent chance of 
16.0 billion barrels. For comparison, the U.S. currently consumes about 
7 billion barrels per year. Of this, the U.S. imports about 4 billion 
barrels and produces about 3 billion barrels. Congressional action 
would also open up Native-owned lands.
    The Refuge provides a variety of arctic habitats supporting fish 
and wildlife species. The wildlife most associated with the 1002 Area 
is the Porcupine caribou herd, named after its wintering grounds along 
the Porcupine River of northwest Canada. Currently numbering nearly 
130,000 caribou, the herd migrates each year across the Brooks Range to 
arrive in early summer on the North Slope's coastal plain in the 1002 
Area and eastward into Canada.
    Our support for enactment of authority to lease oil and gas 
resources in ANWR is a prime example of the Department's dual 
commitment to energy development and environmental conservation. The 
House-passed energy bill includes ANWR provisions that contain the most 
stringent environmental protection provisions ever placed on a domestic 
oil and gas program. We recognize that the ecological resources of the 
Refuge are unique and precious, and that we must respect and conserve 
this wealth for future generations of Americans. Because of advances in 
technology and in our enhanced understanding of the ecology, we believe 
we can develop ANWR's resources with very little long-term effect on 
its environment.
    Secretary Norton and I have been actively carrying out many other 
parts of the President's energy policy. On November 28, 2001, Secretary 
Norton and the Department of Energy co-hosted a conference entitled 
``Opportunities to Expand Renewable Energy on Public Lands.'' The 
conference was a work session that brought together approximately 200 
government officials, renewable energy industry and environmental 
leaders, and other citizens to focus on the best ways to increase wind, 
solar and geothermal production on public lands.
    The Secretary made the following statement to the conference 
attendees:

          Our shared mission is both simple and noble. We must explore 
        ways to better capture the sun's light, the sky's winds, the 
        land's bounty, and the earth's heat to provide energy security 
        for America's families. Today we seek the best ideas for 
        reducing delays and bottlenecks in producing renewable energy. 
        This is part of the Interior Department's commitment to 
        consult, cooperate and communicate-all in the service of 
        conservation.

    Interior produces approximately 40 percent of the nation's 
geothermal energy. Interior also uses renewable energy at Interior 
facilities. Interior has more than 600 solar-powered facilities, 40 
solar hot water systems, 30 wind turbines, 15 geothermal heating and 
cooling systems, and 6 wind farms. Each year the department uses 
200,000 gallons of biofuels in vehicle and marine fleets and has 1,200 
alternative fuel vehicles.
    We have other pressing issues before us that I know are of great 
concern to this Committee. Last April, for the first time ever, the 
Department announced that no water would be available from Upper 
Klamath Lake to supply the farmers of the Klamath Project. This was due 
to many factors, including an extreme drought, the requirements of the 
Endangered Species Act, and the rights of Tribes and other water users 
to the scarce water resources in the region. Reclamation's Klamath 
Project serves approximately 1,400 farms totaling some 210,000 acres. 
Farmers there grow a large variety of crops including barley, oats, 
wheat, potatoes, sugar beets and forage. According to Bureau of 
Reclamation data for the year 2000, approximately 110,000 acres were 
planted in forage; 57,000 acres in cereal crops (including barley, 
oats, and wheat); 16,000 acres in vegetables (including potatoes); 
7,000 acres in miscellaneous field crops (including sugar beets); 298 
acres in seed crops; and 227 acres in nursery crops.
    This action taken by the Department greatly affected the lives of 
many in the farming community of the Klamath Basin. Late last July, the 
Department did release about 70,000 to 75,000 acre feet of water Upper 
Klamath Lake to assist farmers in the Klamath Basin Project in 
desperate need. We took this action to provide farmers water for their 
livestock, to provide some critical recharge for some wells, and 
perhaps save pastures, alfalfa and hay, or even row crops that had lost 
their well water supply. The Department was able to release that water 
because the Bureau of Reclamation determined that Upper Klamath Lake 
was at a higher level than projected.
    We have continually stated that we are committed to working with 
all interested parties in order to find solutions that avoid a repeat 
of this situation this year and in the future. Recently, the National 
Academy of Sciences released a draft scientific evaluation of the 
biological opinions on endangered and threatened fishes in the Klamath 
River Basin. The draft report concludes that there is no substantial 
scientific foundation at this time for maintaining higher water levels 
in Upper Klamath Lake for the endangered sucker populations or higher 
minimum flows in the Klamath River main stem for the threatened coho 
population. The draft report also found no substantial scientific 
evidence to support changes in the operating practices that have 
produced the levels in Upper Klamath Lake and the main-stem flows over 
the past 10 years.
    On February 3, Secretary Norton directed the Directors of the U.S. 
Fish and Wildlife Service and the Bureau of Reclamation to evaluate the 
NAS findings and to report back to her by the end of this week. I am 
sure all of you would agree that the Federal government should not make 
decisions of this magnitude, that affect the lives of so many 
Americans, without a good sound scientific basis for those decisions. 
Not only do we risk needlessly hurting our fellow citizens, but we 
erode the confidence of the populace in general in our future decisions 
and actions.
    I'd like to close with emphasizing to you again the commitment the 
Department has to working with you and with your constituents on the 
local issues of concern involving the Department of the Interior that 
face them every day. Budget initiatives like our Cooperative 
Conservation Initiative will fund on-the-ground stewardship projects 
across the Nation and stimulate innovative approaches to conservation. 
Our budget includes the Landowner Incentive programs that provide 
financial assistance to States and Tribes so that They can work with 
private landowners to facilitate private wildlife conservation efforts. 
Our Private Stewardship grants program directly assists landowners and 
groups engaged in voluntary conservation efforts for the benefit of 
federally listed, proposed, candidate, or other imperiled species.
    We remain aware of the fact that the decisions we make at Interior 
can have dramatic impacts on American families, and we are determined 
to do whatever we can to take those impacts into consideration as we 
carry out our responsibilities under the law.
    Thank you for giving me this opportunity to appear before the 
Committee today. Assistant Secretary Scarlett's testimony provides a 
more in-depth view of the Department's FY 2003 budget.

    The Chairman. Ms. Scarlett, did you have a statement?
    Ms. Scarlett. I have a brief comment to supplement Steve's.
    The Chairman. Go right ahead.

  STATEMENT OF P. LYNN SCARLETT, ASSISTANT SECRETARY--POLICY, 
       MANAGEMENT AND BUDGET, DEPARTMENT OF THE INTERIOR

    Ms. Scarlett. Thank you. Mr. Chairman, Senator Murkowski, 
members of the committee, I am delighted to join Steve here 
today and highlight a few of our budget elements.
    I would like, in particular, to talk a little bit about our 
conservation initiatives that Steve touched upon. As Steve 
noted, our budget request increases spending for conservation 
activities, providing new opportunities, in particular, for 
partnerships in conservation.
    Of particular note, is our Cooperative Conservation 
Initiative, which reflects the President's framework for a new 
environmentalism. The Cooperative Conservation Initiative will 
fund on-the-ground stewardship projects across the Nation and 
we believe stimulate cooperative approaches to conservation. It 
will leverage Federal funding and work in partnership with 
States, tribes, local communities, and individual citizens in 
ways that we think are consistent with the Land and Water 
Conservation Fund. The Department proposes $100 million to 
promote these partnerships in conservation.
    Our budget also continues two presidential initiatives 
begun last year, the Landowner Incentive program and Private 
Stewardship program. These programs also promote working with 
partners on conservation issues. We appreciated your support 
last year for these programs. The budget includes $60 million 
for these two programs, a $10 million increase.
    The budget continues strong funding to meet the President's 
commitment to clean up the maintenance backlog in parks. Our 
park budget includes $633 million for this effort. In 2003, the 
Park Service will also improve facility management capability 
and accountability so that we engage in facilities maintenance 
in the most efficient way.
    To improve our natural resource management in parks, our 
budget includes an increase of $18 million for the Natural 
Resource Challenge.
    I would also like to mention our endeavors in the wildlife 
refuges. In 1903 you may know that President Teddy Roosevelt 
established the first national wildlife refuge at Pelican 
Island, Florida. This means that the 100th anniversary of those 
wildlife refuges will occur next year. Our budget, therefore, 
commemorates this 100th anniversary event by requesting a $56.5 
million increase for the refuge system. This is an 18 percent 
boost in spending and represents the largest dollar increase 
ever requested in the history of the national wildlife refuge 
system.
    Recognizing that another committee has jurisdiction over 
Indian Affairs, I would like to, nonetheless, highlight the 
budget request that focuses on educational needs of American 
Indians and Alaska Natives. Our budget continues a high level 
of funding for Indian school repair and replacement and 
includes an increase of $19 million for school operations.
    Though I have described a number of initiatives contained 
in this budget, our overall budget level is essentially the 
same as the current year's funding. Consequently, we have had 
to make a number of very difficult program choices and 
tradeoffs as we have prepared the budget for your 
consideration. We are working diligently to improve the 
quality, effectiveness, and efficiency of our services so that 
we can deliver better services with those same dollars.
    I look forward to working with you and discussing the 
budget and thank you for the opportunity to be here today.
    [The prepared statement of Ms. Scarlett follows:]
 Prepared Statement of P. Lynn Scarlett, Assistant Secretary--Policy, 
           Management and Budget, Department of the Interior
    I am pleased to be here today before the Committee on Energy and 
Natural Resources to present the fiscal year 2003 budget for the 
Department of the Interior. I appreciate the opportunity to highlight a 
number of important initiatives and to answer questions that you might 
have.
    Before I move onto the details of the budget request, I'd like to 
offer some observations as to the breadth of the Department's 
responsibilities and the impact of our programs on the lives of 
Americans.

   We manage more than one of every five acres of land in this 
        Nation. These lands include some of the most beautiful and 
        pristine places on earth. We are entrusted with some of the 
        most patriotic symbols of our Nationhood, including the Statue 
        of Liberty in New York and Independence Hall, the home of the 
        Liberty Bell in Philadelphia, Pennsylvania.
   We provide approximately one-third of the Nation's domestic 
        energy. We supply the water that has made the arid West bloom, 
        providing water to over 31 million people.
   We serve visitors from around the world who take delight and 
        find recreation through nearly half-a-billion visits to our 
        lands each year.
   Over 200,000 volunteers assist us, a volunteer workforce 
        that outnumbers our own employees by nearly three to one.
   In the most recently completed fiscal year, we collected $11 
        billion in revenue from the lands and waters we manage. This is 
        $1 billion more than we had appropriated to us. We also shared 
        $1 billion of that with the States, our partners in the onshore 
        petroleum-leasing program.

    With Secretary Norton's leadership we are putting these 
responsibilities in balance and we commit to:

   build a new environmentalism through cooperative 
        conservation partnerships;
   improve our management of public lands and waters;
   advance the President's National energy policy;
   improve the lives of Native Americans; and
   manage for excellence through citizen-centered governance.

    Secretary Norton has established an approach to citizen-centered 
government at the Department that is organized around her Four C's: 
conservation through consultation, cooperation, and communication. 
Empowerment of citizens to bring about this approach is the touchstone 
of all that we do on the land, and this approach is reflected in the 
budget that we present to you today.
    As we began the process last June to build this budget, we were 
guided by President Bush's vision of a shared approach to conservation, 
and his commitments to restore our national parks, improve both the 
classrooms and the classroom performance of Indian students; and meet 
our environmental responsibilities in a manner that best reflects the 
innovative nature of our nation.
    Our budget priorities were reshaped by the events of September 
11th. Interior's employees have responded to the call to increase our 
vigilance and our preparedness for the changed world we face.
    The Secretary is committed to managing well the resources entrusted 
to us in this budget. We are working diligently to improve the quality, 
effectiveness, and efficiency of the services we deliver and to enhance 
the accountability and transparency of the work we do with the 
resources of the American people. We have developed a plan for citizen-
centered governance that builds on the President's management agenda, 
and our plan has been well received by both the Office of Management 
and Budget and the President's Management Council. It will ensure that 
we bring innovation, competitiveness, and accountability to all that we 
do.
                            budget overview
    The Department of the Interior's 2003 budget request is $10.6 
billion in current appropriations, including $270.5 million for a 
government-wide legislative proposal to shift to agencies the full cost 
of the CSRS pension system and the Federal employee health benefits 
program for current employees. Permanent funding that becomes available 
as a result of existing legislation without further action by the 
Congress will provide an additional $2.6 billion, for a total 2003 
Department budget of $13.2 billion.
    Excluding the pension and health benefits legislative proposal, the 
2003 current appropriations request is $10.3 billion, a net decrease of 
$12.7 million from the amounts provided in the 2002 Interior and 
Related Agencies and Energy and Water Development Appropriations Acts.
    For 2003, programs funded in the Interior and Related Agencies 
Appropriations Act are increased by $20.5 million over the 2002 Act. 
The 2003 request is $320.6 million above the 2002 President's budget 
request. Programs funded in the Energy and Water Development 
Appropriations Act in 2003 are decreased by $33.1 million below the 
2002 Act. The 2003 request is $61.4 million above the 2002 President's 
budget request.
    The 2003 budget proposal maintains a robust funding level compared 
to historic levels for the Department. The proposal is over 21 percent 
higher than the 2000 appropriation level of $8.6 billion.
    The budget request proposes funding increases for priority programs 
and initiatives, while discontinuing or reducing funding for lower 
priority projects funded in 2002. In addition, the 2003 budget reflects 
the Department's commitment to operate programs more effectively and 
efficiently, by proposing to absorb $57.4 million in uncontrollable 
fixed cost increases and a $20.6 million reduction in travel and 
transportation costs.
                  cooperative conservation initiative
    If there is one item in this budget that deserves special 
attention, it is our Cooperative Conservation Initiative. It fully 
reflects the President's framework for a ``new environmentalism.'' The 
Cooperative Conservation Initiative will fund on-the-ground stewardship 
projects across the Nation and stimulate innovative approaches to 
conservation. It will allow us to leverage Federal funding and to work 
in partnership with States, local governments, Tribes, and private 
citizens to give all stakeholders a greater role in how to protect the 
Nation's great natural resources. It is a collaborative approach to tap 
the ingenuity, imagination, and innovative spirit of our people. It is 
an approach that is landscape-based, citizen-centered, and incentive-
driven. In short, it is a new way of meeting our environmental 
responsibilities in partnership with our fellow Americans. The 
Department proposes $100.0 million to promote partnerships in 
conservation.
    The program will fund restoration, protection, and enhancement of 
natural areas through established programs and new pilot programs that 
feature creative approaches to conservation. These projects will be in 
keeping with the President's commitment to a shared responsibility for 
conservation. One-half of the initiative, $50.0 million, will be 
managed through the Land and Water Conservation Fund State Assistance 
program and will benefit State lands as well as adjacent lands. The 
balance of the initiative will be used for cost shared projects funded 
in the operating accounts of the Bureau of Land Management, Fish and 
Wildlife Service, and the National Park Service and will benefit 
Federal and adjacent lands. Benefits to State and Federal lands will 
complement the private lands conservation activities conducted with 
private stewardship funding.
                         landowner partnerships
    The budget for the Fish and Wildlife Service also promotes working 
with partners on conservation issues by proposing to continue two 
Presidential initiatives, the Landowner Incentive and Private 
Stewardship programs. The budget request includes $50.0 million, an 
increase of $10.0 million over the 2002 level for grants to States for 
landowner incentives that protect and restore habitats on private lands 
that benefit species at risk. A model for this program is the 
Shortgrass/Black-tailed Prairie Dog Habitat incentive program, a new 
program piloted in Colorado in 2002. This program will provide 
financial assistance to landowners in four soil conservation districts 
to protect black-tailed prairie dogs, their habitat, and associated 
shortgrass prairie.
    The budget includes $10.0 million for the Private Stewardship 
grants program to directly assist landowners and groups engaged in 
voluntary conservation efforts for the benefit of federally listed, 
proposed, or candidate species. Technical and financial assistance to 
landowners will help them avoid harming imperiled species while 
improving habitat for native species.
                        other conservation tools
    The 2003 budget proposes $194.6 million for three other 
conservation programs managed by the Fish and Wildlife Service, 
including: $91.0 million for the Cooperative Endangered Species 
Conservation Fund; $43.6 million for the North American Wetlands 
Conservation Fund; and $60.0 million for State and Tribal Wildlife 
grants. These programs that we propose to fund through the Land and 
Water Conservation Fund in 2003 magnify the benefits of Federal funding 
with matching efforts for conservation.
    In 2003, State Assistance and Federal land acquisition programs 
funded through the Land and Water Conservation Fund build upon the 
President's vision of cooperative conservation. The budget includes 
$200.0 million for the State Assistance program, an increase of $56.0 
million over the 2002 level. A portion of this, $50.0 million, will be 
used for the Cooperative Conservation Initiative to fund competitively 
awarded grants. The balance of $150.0 million will fund grants to 
States for approved conservation and outdoor recreation plans, 
allocated based on a national formula established by law.
    An additional $204.1 million is requested for Federal land 
acquisition programs, including $44.7 million for the Bureau of Land 
Management, $70.4 million for the Fish and Wildlife Service, $86.1 
million for the National Park Service, and $3.0 million for acquisition 
of lands in support of the Shivwits Indian Water Settlement Act of 
1999. The request emphasizes the use of innovative alternatives to fee 
title purchase, such as conservation easements and land exchanges to 
make the most efficient use of this funding, promote cooperative 
alliances, and leave lands on State tax roles. In the Upper Snake/South 
Fork Snake River project in Idaho, the Bureau of Land Management is 
working with eight cooperators including Ducks Unlimited, The Nature 
Conservancy, and the Shoshone-Bannock Tribe to protect river corridors 
and habitat that supports bald eagles and cutthroat trout through 
conservation easements.
    Together with the Forest Service's budget request, the 2003 budget 
will provide $909.2 million for the Land and Water Conservation Fund 
programs, or $911.1 million including the adjustment for pension and 
employee health benefits that is proposed.
                 managing the park maintenance backlog
    President Bush pledged to address the backlog of maintenance and 
repair in the national park system. Secretary Norton shares the 
President's commitment to maintaining park facilities to safeguard the 
visiting public and park employees, to preserve park resources for 
future generations, and to improve visitors' experiences. The 2003 
budget includes $663.0 million for facility maintenance and 
construction, including required planning and compliance work. Within 
this total there is an increase of $25.0 million for cyclic maintenance 
to ensure that routine maintenance work is completed in a timely 
manner. The budget proposes an increase in facility repair and 
rehabilitation of $17.6 million, which will focus on moving the 
National Park Service toward performance-based management of its 
facilities.
    Within the increase for repair and rehabilitation, $8.4 million 
will address the deferred maintenance and critical resource protection 
backlog. This increase will have resource protection benefits. In 2002, 
approximately one-fifth of the repair and rehabilitation program was 
devoted to resource protection. A comparable amount will be dedicated 
to this effort in 2003.
    In addition to the request for annual appropriations, a significant 
amount of recreational demonstration fee receipts will be devoted to 
deferred maintenance projects. This program is now authorized through 
2004. The 2003 budget proposes that the program be permanently 
authorized. This program allows Federal land managers to retain 
receipts to meet management goals and is an important tool in improving 
the quality of programs such as facility maintenance and visitor 
services. The Department expects to receive $146.1 million through the 
program in 2003. The Administration expects to propose authorizing 
language shortly and asks that the Committee take action on the 
proposal this year.
                       natural resource challenge
    There are 385 National Park units that protect and preserve unique 
and important natural resources. The Natural Resource Challenge--a 
Presidential and Secretarial priority program, fosters the protection 
of these natural resources. An increase of $18.0 million is requested 
for the fourth year of the NPS Natural Resource Challenge. This program 
will continue to strengthen natural resource management throughout the 
park system by protecting native species and habitats; monitoring the 
health of natural resources within the parks; eradicating exotic 
species; and sharing information about natural resources with the 
public.
    Collaborative efforts with the U.S. Geological Survey and 
universities assist the parks in the assessment of natural resources 
and help to identify and alleviate potential threats to resources. Much 
of this increase, $9.0 million will be accomplished through a 
partnership with the U.S. Geological Survey.
                               everglades
    A recently signed agreement between President Bush and Governor 
Bush of Florida ensures that water will be available for the natural 
system in the Everglades, restoring the natural ecological systems. The 
2003 budget proposes a total of $96.0 million, including $8.9 million 
that will support Department-wide efforts to implement the 
Comprehensive Everglades Restoration Plan. The Department will continue 
to work cooperatively with the Army Corps of Engineers to complete the 
modified water delivery project at Everglades National Park. The budget 
includes $13.3 million for the project, a reduction of $21.9 million 
from the 2002 levels, as a result of progress made toward completion of 
the project.
    An additional $20.0 million, an increase of $5.0 million over the 
2002 level, is requested to fund matching grants to the State of 
Florida that will be used to purchase important properties within the 
Everglades system. Reflecting the Secretary's efforts to better 
integrate science into land management, the budget proposes to 
consolidate funding for Everglades science in the U.S. Geological 
Survey. The 2003 Survey budget includes an increase of $4.0 million for 
the Critical Ecosystem Studies Initiative (CESI), funds that were 
previously appropriated to the National Park Service, for planning, 
monitoring, assessing, and providing ongoing science support essential 
to the adaptive management of the Everglades restoration project.
         preparing for the national wildlife refuge centennial
    In 1903, President Teddy Roosevelt established the first National 
Wildlife Refuge at Pelican Island, Florida. Today Pelican Island 
National Wildlife Refuge is part of a 538-unit system that spans 95 
million acres. This is a unique and diverse network of lands and water 
that provide habitat for migratory birds and other wildlife, sanctuary 
for endangered species, and nursery areas for fish. Refuges also 
provide opportunities for wildlife viewing, hunting, fishing, and 
environmental education for 39 million visitors a year.
    Our budget commemorates the 100th anniversary of the refuge system 
by requesting a $56.5 million increase for the national wildlife refuge 
system. This 18 percent increase in spending represents the largest 
dollar increase ever requested in the history of the National Wildlife 
Refuge system. Overall refuge operations funding will increase by $25.8 
million. A $30.7 million increase for maintenance will address critical 
health, safety, and resource protection needs, as well as fund high 
priority activities that enhance visitor experiences. This historically 
high level of funding for operation and maintenance of the national 
wildlife refuge system includes $5.0 million for the Cooperative 
Conservation Initiative.
                    endangered species conservation
    The 2003 budget continues a partnership approach to endangered 
species conservation, including funding for grant programs that assist 
State and local communities in their conservation efforts to benefit 
federally listed, proposed, candidate, and other imperiled species. The 
budget includes $91.0 million for the Cooperative Endangered Species 
Conservation Fund to assist States in acquiring lands essential for the 
recovery of species and to support development and implementation of 
habitat conservation plans. The budget proposed for Fish and Wildlife 
Service endangered species operations includes increases of $5.9 
million for conservation of candidate and listed species and to assist 
in meeting demands for inter-agency consultation, technical assistance, 
and assistance with habitat conservation planning.
                    harnessing our natural resources
    The Department's programs are key to addressing important energy 
supply issues and fostering a dynamic economy, while preserving and 
enhancing environmental quality. Energy projects on federally managed 
lands and offshore areas supply approximately one-third of the Nation's 
energy production. In support of the President's National Energy 
Policy, the budget includes increases of $28.6 million for energy 
related activities in four bureaus. Increases in the Bureau of Land 
Management and Minerals Management Service will allow these agencies to 
eliminate delays and be more responsive to increasing demands for 
energy while increasing environmental oversight. In addition, funds 
will support investments in management systems that will allow these 
bureaus and stakeholders to more efficiently conduct business and 
improve compliance oversight.
    The budget proposes an increase of $10.2 million for Bureau of Land 
Management energy-related activities, including $1.6 million to expand 
rights-of-way processing, $1.0 million to conduct a study of oil and 
gas resources on public lands, $1.5 million to provide oversight of oil 
and gas operations, and $1.0 million to expedite permitting and 
increase responsiveness to stakeholders needs for post-lease actions. 
The increase for rights-of-way will allow the Bureau to process 6,900 
cases in 2003, an increase of 900 or 15 percent over the 2002 level.
    The President and the Secretary are committed to increasing 
domestic energy supplies, including oil and gas on Federal lands from a 
variety of sources in an environmentally acceptable manner. including 
oil and gas on Federal lands. The energy resources of the northeast 
corner and the rest of Alaska's North Slope are national assets that 
can contribute to the Nation's energy security. The 2003 budget 
includes an increase of $3.0 million for activities on the North Slope. 
The increase will support planning for 2004 sales in the National 
Petroleum Reserve-Alaska and the Arctic National Wildlife Refuge. 
Congressional authorization will be required for a lease sale to be 
conducted in the Arctic Refuge. The budget assumes a lease sale in 2004 
that will generate $2.4 billion in anticipated bonus bids. Of this 
amount, the Federal government's $1.2 billion share will be dedicated 
to research and development projects on solar power, wind energy, 
biomass power and fuels, geothermal energy, and other alternative 
energy technologies.
    In November 2001, Secretary Norton and Secretary of Energy Spencer 
Abraham convened a renewable energy conference. This conference served 
as a catalyst for the Department's renewable energy programs. The 2003 
budget more than doubles funding for renewable energy programs in the 
Bureau of Land Management. To expand opportunities for geothermal, 
hydropower, and wind energy production, the Bureau is requesting an 
increase of $750,000.
    Increases totaling $2.7 million are requested by the U.S. 
Geological Survey, including $500,000 to produce updated information on 
available geothermal resources. The Bureau of Indian Affairs is 
requesting an increase of $1.7 million in its budget for energy 
programs to work in partnership with Indian organizations and Tribes.
                           land use planning
    The 2003 budget proposes an increase of $14.0 million for Bureau of 
Land Management land use planning. The land use planning process is the 
Bureau's primary tool for consensus building by involving the public in 
development of land management plans. This increase will allow the 
Bureau to accelerate development of 37 plans and initiate development 
of 12 plans. Land use plans guide land use and resource management 
decisions, and allow for public involvement in developing program goals 
for recreation, habitat conservation, energy and mineral extraction, 
livestock grazing, timber harvest, fire management, and community 
rights-of-way access.
    The budget for the Minerals Management Service proposes a program 
increase of $5.0 million in order to meet increased workload brought 
about by the demand for Gulf of Mexico outer continental shelf program 
services. These additional funds will ensure that leasing and 
regulatory programs in the Gulf of Mexico keep pace with public demand 
for energy, industry requests for processing permits, and the need to 
review plans and conduct inspections. The 2003 budget includes an 
increase of $8.7 million to design and implement innovative business 
processes and advances in electronic technology and provide web-based, 
paperless transactions in the offshore program. The Bureau will also 
invest $6.0 million to develop management systems that support taking 
Federal royalties on oil production in-kind, rather than in-value.
    The U.S. Geological Survey's budget includes an increase of $1.2 
million to conduct estimates of undiscovered oil and natural gas 
resources on Federal lands in the continental United States, as 
required by the Energy Act of 2000. An additional $1.0 million is 
requested to produce digital base maps in Alaska focused on potential 
lease areas of the National Petroleum Reserve--Alaska, and $500,000 is 
requested to update the national geothermal resource assessment last 
published in 1979.
                        wildland fire management
    A joint Interior, U.S. Forest Service National Fire Plan guides 
collaborative efforts to improve the effectiveness of the wildland fire 
program to better protect communities and the environment from wildfire 
devastation. The plan is guiding joint efforts to control fires when 
they are small, manage large-scale fires, reduce hazardous fuel loads, 
rehabilitate burned areas, and assist rural fire departments to protect 
their communities.
    In 2001, the Department made significant progress in implementing 
the plan's recommendations and established an unprecedented level of 
cooperation with the Forest Service. The Department conducted an 
aggressive hiring program to staff essential firefighting positions; 
purchased necessary equipment; contracted aircraft; and repaired fire 
facilities. Additional funding was allocated to the agencies and 
awarded to rural and volunteer fire departments. Hazardous fuels 
treatment projects were selected and conducted, including projects 
treating approximately 164,000 acres in the wildland-urban interface.
    In 2002, the Department and the Forest Service are working closely 
on a number of collaborative efforts including: the development of 
joint workload and performance measures to determine progress in 
meeting wildland fire management goals; an independent review of 
wildfire suppression costs and strategies; development of an 
implementation plan for the 10-Year Comprehensive Strategy; and other 
activities.
    The budget continues robust funding for the Department's Wildland 
Fire Management program, requesting $675.5 million for fire readiness 
and response, wildland firefighting, assistance to rural communities, 
and a comprehensive program to reduce fuels in the wildland urban 
interface. This budget carries forward the initiatives begun in 2001 
and continued in 2002 to reduce the buildup of hazardous fuels, 
especially in the wildland-urban interface, and fully funds suppression 
based on the ten-year average.
                         bureau of reclamation
    The Bureau of Reclamation is the largest supplier and manager of 
water in the 17 western States, delivering water to one of every five 
western framers and irrigating 10 million acres that produce 60 percent 
of the vegetables grown in the United States. The Bureau is also the 
largest producer of hydroelectric power in the West, providing 
electricity to 14 million people. The 2003 budget includes $81.0 
million for the Safety of Dams program, an increase of $11.0 million to 
continue modification work on dams and ensure the safety of the public 
downstream while providing continued water and power benefits. The 2003 
budget includes $33.0 million for the second year of the Animas-LaPlata 
project, an increase of $17.0 million over the 2002 level. The budget 
also includes a request of $15.0 million for the California Bay-Delta 
restoration project.
                           homeland security
    In the wake of the events of September 11, we responded with 
assistance to the rescue and recovery efforts. We also put in place 
security measures to protect our most important national assets, our 
visitors, and our employees. We increased park police patrols in 
Washington, D.C., and New York and upgraded park policy security 
equipment; increased guard service and protection for important 
national icons such as the Liberty Bell and St. Louis Arch; and 
instituted around-the-clock security at key Reclamation facilities such 
as Hoover, Glen Canyon, Shasta, and Grand Coulee Dams. The 2003 budget 
request includes $88.8 million to continue enhanced security measures 
at approximately the same level funded in 2002. Our 2003 request 
includes detail on these security measures, including $23.7 million for 
the Park Service to begin construction of enhanced security systems at 
the Washington Monument and the Lincoln and Jefferson Memorials.
                       office of insular affairs
    The Office of Insular Affairs assists Territories and Freely 
Associated States by providing financial and technical assistance. The 
2003 budget proposal for Insular Affairs continues to provide mandatory 
funding to Guam and the CNMI for impact of Compact assistance. A total 
of $4.6 million in mandatory Covenant grant funding will be allocated 
to Guam and $840,000 will be provided to CNMI for this purpose in 2003. 
An increase of $750,000 is requested to provide enhanced oversight of 
Compact of Free Association financial assistance. Renewed financial 
assistance for two of the three Freely Associated States is currently 
being negotiated; improved oversight and accountability are key goals.
                             trust programs
    Recognizing that another committee has jurisdiction over Indian 
Affairs, I'd like to highlight two aspects of the budget request that 
focus on the needs of American Indians and Alaska Natives: trust 
programs and education. Managing Indian trust funds and trust resources 
is a solemn obligation of the Federal government, and one of the 
Department's greatest challenges. Since taking office in January 2001, 
Secretary Norton has moved on several fronts to help improve Indian 
trust management. In July 2001, the Secretary established the Office of 
Historical Trust Accounting to provide focused efforts to produce a 
historical accounting for individual Indian allottees. In November 
2001, the Secretary announced the outline of a proposal to reorganize 
and consolidate Indian trust management functions into a separate 
organization. The goal of the proposal is to improve management of 
trust assets by creating clear lines of authority for trust reform and 
trust operations. The Department is engaged in consultation with Tribes 
and individuals on the reorganization proposal. We will continue 
discussions with Congress concerning the results of the ongoing 
consultation and the proposed reorganization.
    Our budget request contains a major boost in spending for Indian 
trust reform and trust related programs, a nearly $84 million increase, 
the largest increase in the history of trust reform. These additional 
funds are necessary to address the long overdue changes that the 
Secretary is committed to making in the Indian trust program.
    The $48.8 million increase requested for the Office of the Special 
Trustee is a 44 percent increase above the 2002 level. The Special 
Trustee allocates funds to the Bureau of Indian Affairs for trust 
reform efforts they carry out, to the Office of Hearings and Appeals 
for adjudication of probates involving ownership of Indian lands, and 
to the Office of Historical Trust Accounting. The 2003 request will 
allow continuation of trust operations improvements already 
implemented, such as the trust fund accounting system, allow the Bureau 
and Office of Hearings and Appeals to make progress on reducing probate 
backlogs, improve risk management activities and oversight of trust and 
trust-related activities, and undertake other trust reform initiatives.
    The Special Trustee's budget includes $8.0 million for the Indian 
Land Consolidation program. This program prevents further fractionation 
of Indian trust allotments by consolidating highly fractionated 
interests through purchase from willing sellers. The decreased 
fractionation aids trust reform by decreasing the number of trust asset 
management transactions, decreasing the number of interests subject to 
probate, and returning land to the control of the Tribes.
    The budget for the Bureau of Indian Affairs includes $34.8 million 
in increases to improve its performance of trust services programs. 
This includes $20.3 million in trust services and natural resource 
programs and $14.5 million for other areas including tribal courts, 
social services and information resources management.
                            indian education
    The Secretary is committed to the President's promise to improve 
education in America and ``leave no child behind.'' The Bureau of 
Indian Affairs has a special, historic responsibility for educating 
Indian children. The Bureau manages 185 elementary and secondary 
schools in Indian Country that provide educational services to 48,000 
students. Many schools are located in isolated, remote, rural 
communities, posing challenges and requiring greater operational costs 
than those typically facing public school districts.
    The President's education plan promotes flexibility and local 
control of schools. The Department's 2003 budget request encourages 
Tribes to assume management of their schools or enter into private 
partnerships to manage the schools. This privatization effort is the 
centerpiece of the Administration's initiative to improve the 
performance of the lowest-performing schools. The request includes $8.0 
million to address costs inherent in the out-sourcing of schools, such 
as administrative cost grants and displacement of teachers. An 
additional $2.0 million for student transportation and $1.9 million for 
facilities will be available to improve operational problems that might 
be a disincentive for Tribes wishing to assume school management. The 
2003 budget also includes a $5.8 million increase for teacher pay.
    In his State of the Union Address, the President underscored the 
importance of early childhood development programs. The budget includes 
an increase of $3.0 million to expand the successful early childhood 
education program, Family and Child Education program. This increase 
will allow the Bureau to expand the program to over one-quarter of the 
146 schools that serve elementary students. This program promotes 
greater involvement by parents in the early, critical stages of their 
children's education, and results in improved adult literacy, and 
improved parenting skills that help improve children's readiness for 
school.
    The 2003 budget for education construction continues the 
President's initiative to repair and replace unsafe schools. Funding in 
2003 is maintained at the 2002 level, $292.7 million, which will fund 
six replacement school projects and address repair and rehabilitation 
projects in the backlog. The goal is to fulfill the President's promise 
to eliminate the school repair and maintenance backlog in 2006.
                    uncontrollable and travel costs
    The Department's budget includes $86.9 million in fixed cost 
increases; an additional $57.4 million in fixed costs will be absorbed 
by focusing resources on the highest priorities as well as increased 
administrative and program efficiencies. The budget also assumes 
Department-wide savings of $20.6 million in travel and transportation 
costs, in anticipation of reduced expenses in 2003 due to increased 
teleconferencing, greater use of central meeting locations, and 
reductions in employee relocations.
                         management excellence
    The Secretary's management strategy is an integral component of the 
2003 budget, implementing the President's five government-wide 
initiatives for strategic management of human capital, competitive 
sourcing, improved financial performance, expanded electronic 
government, and budget and performance integration. The Department is 
undertaking efforts that will improve citizen service through 
achievable results in 2003, including the following examples:

   The Department is developing comprehensive workforce plans 
        to guide staffing, training, and succession management and to 
        better manage a workforce that is facing a loss of experience. 
        Workforce plans will help to assure that positions are staffed 
        with appropriate skills and that programs are in place for 
        employee retention and reward.
   To improve service delivery and effective use of resources, 
        the Department is reviewing the potential to restructure 
        process-oriented aspects of human resources operations, 
        information technology support, and acquisition management and 
        contract management.
   Interior will meet 2002 and 2003 targets to review 
        commercial activities performed by Federal employees, for a 
        determination as to whether activities should be performed in-
        house or by the private sector, as required by the Federal 
        Activities Inventory Reform Act.
   Interior is developing a new strategic plan for 2003 that 
        will be released in spring 2002. In order to improve the 
        linkage of budget and performance results, the Department is 
        using the Bureau of Land Management's activity based costing 
        system as a benchmark for the development of comparable systems 
        in other bureaus. Through activity based costing, managers can 
        better understand program costs and citizens can get answers to 
        questions such as, ``How much does it cost to run a visitor's 
        center.''
   The Bureau of Land Management will improve citizen service 
        by expanding ``Service First,'' working with the U.S. Forest 
        Service to provide efficient, streamlined interagency 
        cooperation in public lands management. The Department is also 
        exploring opportunities for expanding this program to include 
        other Interior agencies.
   The National Park Service will continue management reforms 
        to assess resource and facility conditions, measure performance 
        in improving conditions, and target funds at top priority 
        needs.
                               conclusion
    In conclusion, the 2003 budget provides strong support for 
Interior's programs and for the approximately 70,000 employees that 
carry out our mission. Further, it provides expanded opportunities to 
partner with others and supports the President's vision of a shared 
approach to conservation and the Secretary's Four C's.
    I recently visited the John Heinz National Wildlife Refuge in 
Pennsylvania with the Secretary. There we observed first-hand the power 
of partnerships. Dating back to the 1950's, the citizens of 
Philadelphia have been the driving force behind establishment and 
expansion of the refuge, creation of an environmental education center, 
and restoration of wildlife and habitats. This community turned out to 
welcome us and celebrate their excitement at the results we have 
achieved with our partnership efforts. In the midst of some of 
Philadelphia's most developed areas, we witnessed the ability of local 
citizens to bring about real change. Our Cooperative Conservation 
Initiative will use government resources to remove barriers to citizen 
participation and give citizens a greater role in conservation. In 
addition, the Department will reap the benefits of the collaborative 
process and the innovation and creativity of the States, Tribes, local 
communities, and citizens that partner with us.
    This concludes my overview of the 2003 budget proposal for the 
Department of the Interior and my written statement. I will be happy to 
answer any questions that you may have.

    The Chairman. Thank you very much.
    Let me go ahead with testimony from Mark Rey, who is the 
Under Secretary of Agriculture for Natural Resources and 
Environment in the Department of Agriculture, a very familiar 
face around this committee. We are glad to have you here as a 
witness. Go right ahead.

 STATEMENT OF MARK REY, UNDER SECRETARY FOR NATURAL RESOURCES 
           AND ENVIRONMENT, DEPARTMENT OF AGRICULTURE

    Mr. Rey. Thank you. Chairman Bingaman, Senator Murkowski, 
thank you for the opportunity to discuss the President's fiscal 
year 2003 budget for the Forest Service. I am pleased to be 
here today with Forest Service Associate Chief Sally Collins on 
my left. This being my first appearance before this committee 
since my confirmation, let me say it is a great honor to be 
back. However, I am confident that I will come to find it 
significantly more comfortable when I was on your side of the 
dais.
    Chief Dale Bosworth was unable to be here today. He had a 
prior commitment to represent the Forest Service at the Winter 
Olympics. He wanted me to tell you how greatly he regrets not 
being here. Since he told me that by phone, I was unable to 
determine whether he was smiling.
    [Laughter.]
    Senator Murkowski. I do not know if we will accept that as 
a reasonable excuse or not.
    [Laughter.]
    Senator Murkowski. I mean, you and I are here.
    Mr. Rey. He used the reverse Nuremberg defense. He is going 
to claim that he was bound by his superiors.
    Recognizing that the time of the committee is limited, I 
will summarize and request that my full testimony be entered 
into the record.
    The fiscal year 2003 President's budget request for the 
Forest Service for all appropriations totals $4.9 billion. The 
budget underscores the Forest Service as a science-based 
organization by placing emphasis first on protecting the 
public, employees, property, and resources; second, providing 
benefits to communities; third, improving forest and rangeland 
health; and fourth, meeting the growing demands for goods, 
services, and amenities by the public.
    Chief Bosworth and I intend to focus a great deal of 
attention on reestablishing a bias in favor of accomplishing 
the work of the agency. What is commonly referred to as 
gridlock or analysis paralysis is directly affecting the 
ability of the agency to protect communities from catastrophic 
wildfires, provide the communities with a sustainable flow of 
goods and services, and directly serve the public that uses and 
enjoys the national forests.
    The President's budget and USDA's efforts reflect a 
tangible first step in this direction. The budget includes a 
continuation of stewardship contracting, expedited 
consultations for endangered species reviews, and several 
legislative proposals that I hope we can pursue together.
    The agency will continue to concentrate on the restoration 
of ecosystems to fire-adapted conditions. Our primary focus 
will be on reducing the number of communities at extreme risk 
of loss from wildland fire and increasing the proportion of 
forestland restored to conditions where fire regimes are within 
an historic range.
    The Forest Service and the Department of the Interior are 
in the second year of implementing the National Fire Plan, a 
plan to which this committee contributed a great deal. 
Significant headway was made in fiscal year 2001 to enhance 
tracking and reporting mechanisms to provide accountability as 
accomplishments are made in firefighting, rehabilitation and 
restoration, hazardous fuels reduction, community assistance, 
and research. Together with the Department of the Interior, the 
President's budget requests over $2.1 billion for National Fire 
Plan programs to protect communities from wildland fire and 
restore fire-adapted ecosystems.
    The Forest Service also plays a key role in developing and 
maintaining benefits to communities by providing natural 
resource based opportunities within desired sustainable levels 
for a variety of uses, values, products, and services. To this 
end, the fiscal year 2003 budget provides an increase of $10 
million within the forest stewardship program for a small 
diameter and underutilized wood biomass emphasis to foster 
enhanced management and use of these resources. Funds are also 
included for research on the use of small diameter trees for 
biobased products and bioenergy. Legislation is proposed to 
provide for local preference for procurement across all Forest 
Service programs.
    These are a few of the highlights of the budget, and in 
concluding my testimony, I would be happy to answer any 
questions that you might have. Thank you.
    [The prepared statement of Mr. Rey follows:]
 Prepared Statement of Mark Rey, Under Secretary for Natural Resources 
               and Environment, Department of Agriculture
    Chairman Bingaman, Senator Murkowski, Senator Craig, Senator Wyden, 
and members of the Committee, thank you for the opportunity to discuss 
the President's Fiscal Year 2003 Budget for the Forest Service. I am 
pleased to be here today with Forest Service Associate Chief, Sally 
Collins. This being my first appearance before this Committee since my 
confirmation, let me say that it is a great privilege to be here today. 
Let me add it was significantly more comfortable sitting up there than 
coming down here to answer your questions.
    Chief Dale Bosworth was unable to be here today. He had a prior 
commitment to which he had to adhere, that being to represent the 
Forest Service at the Winter Olympics in Salt Lake City. He wanted me 
to tell you that he greatly regrets not being here today. Since he told 
me that by phone, I was unable to determine if he said that with a 
smile or not.
                                overview
    In my brief testimony today, I would like to discuss how the FY 
2003 President's Budget will allow Forest Service programs to make 
tangible contributions towards sustainable resource management and 
discuss some of the significant issues on which we look forward to 
working with the Committee and the Congress over the next few months.
    The FY 2003 President's Budget request for the Forest Service for 
all appropriations totals almost $4.9 billion. Along with the 
Administration's emphasis on efficiency and streamlining, the budget 
underscores the Forest Service as a science-based organization by 
placing emphasis on: (1) protecting the public, employees, property, 
and resources; (2) providing benefits to communities; (3) improving 
forest and rangeland health; and (4) meeting the growing recreation 
demands for goods, services, and amenities by the public. To ensure 
that the public gets the most value for their tax dollars, the Forest 
Service will become more efficiencient and streamline to increase 
funding at the field level; continue to improve agency accountability; 
and address the issue of ``gridlock'' that is preventing the prompt 
execution of projects on the ground. The Budget includes full funding 
of the Land and Water Conservation Fund (LWCF) and reflects increases 
related to the National Energy Policy, and continues the 
Administration's commitment to the National Fire Plan.
                       public and employee safety
    Before focusing on any specific program areas, I want to emphasize 
that the safety of agency employees and the public is one of the 
highest priorities for the Forest Service. In particular, the agency 
must take all action possible to prevent tragedies such as the 
Thirtymile incident last summer where four firefighters died. The 
Forest Service will ensure that proposed changes in management, 
policies, training, and operations are made to improve safety for the 
public and all employees, especially with respect to firefighter 
safety. The agency must also work to reduce risks to life, property, 
and ecosystems from high-intensity wildland fires within and adjacent 
to communities.
                    gridlock and analysis paralysis
    Chief Bosworth and I intend to focus a great deal of attention on 
reestablishing a bias for accomplishing the work of the agency. What is 
commonly referred to as ``gridlock'' or ``analysis paralysis'' is 
directly affecting the ability of the agency to protect communities 
from catastrophic wildfire, provide communities a sustainable flow of 
forest products, and directly serve the public that uses and enjoys 
national forest lands.
    The President's Budget and USDA's efforts reflect a tangible first 
step in reducing the gridlock associated with much of natural resource 
management today. It includes continuation of stewardship contracting, 
expedited consultations for endangered species, and the legislative 
proposals I will touch on shortly. I renew my offer to work with you to 
find a way to make Forest Service land management decisions in an 
effective, efficient, and timely manner.
         national fire plan--protecting property and resources
    The agency will concentrate on the restoration of ecosystems to 
fire adapted conditions. Rural residents and communities will be 
equipped with a variety of tools to reduce the likelihood of loss from 
wildland fire. The primary focus will be on reducing the number of 
communities at extreme risk of loss from wildland fire and increasing 
the proportion of forestland restored to conditions where fire regimes 
are within a historical range. This effort will be accomplished in 
cooperation with the Department of the Interior (DOI) and other 
partners and concentrate on restoring ecosystems to fire-tolerant 
conditions and protecting communities.
    The Forest Service Preparedness Program, in cooperation with DOI's 
program and those of many State and local fire departments, will 
provide the resources and planning needed to protect communities and 
ecosystems from wildland fire. The Hazardous Fuel Program, in 
conjunction with DOI's program, will collaborate with State and local 
communities to focus treatments in areas of greatest need of community 
protection and ecosystem restoration. The FY 2003 Budget requests $235 
million for the Hazardous Fuels program, and increase in the program of 
about $17 million. Seventy percent of these funds are targeted for the 
wildland-urban interface. Funding for rehabilitation and restoration, 
along with Burned Area Emergency, will protect communities and 
watersheds from post-fire damage, and help burned areas recover from 
fire damage. The Forest Service Research and Development Staff, along 
with the DOI-Forest Service Joint Fire Science Program, are focusing 
efforts on fuels reduction opportunities, including: (1) prioritizing 
areas for treatment; (2) determining impacts of treatments on wildlife, 
fish, and riparian areas; and (3) developing new uses for forest 
undergrowth and small diameter trees. The Budget provides resources to 
State and local communities to establish a truly comprehensive wildland 
fire management policy across all ownership boundaries. It provides the 
resources to increase the firefighting capability and planning of State 
and local fire agencies, and to reduce hazardous fuel on non-Federal 
land. Finally, the fireplain easements program will enable the Forest 
Service to work with States to identify alternatives in areas where 
potential fire suppression expenditures exceed the estimated value of 
private property.
    The USDA Forest Service and the Department of the Interior are in 
the second year of implementing the National Fire Plan. Significant 
headway was made in FY 2001 to enhance tracking and reporting 
mechanisms to provide accountability as accomplishments are made in 
firefighting, rehabilitation and restoration, hazardous fuels 
reduction, community assistance and research.
    Together with the Department of the Interior, the President's 
Budget requests over $2.1 billion for National Fire Plan programs to 
protect communities from wildland fire and restore fire adapted 
ecosystems.
                        benefits to communities
    The Forest Service plays a key role in developing and maintaining 
benefits to communities by providing natural resource-based 
opportunities within desired sustainable levels for a variety of uses, 
values, products, and services. The type of opportunities the agency 
will engage in will be based on local needs and interests while 
remaining consistent with the agency's mission and priorities. This can 
include revitalizing and maintaining local economies through promoting 
partnerships in recreation and tourism; increased and sustainable 
availability of a variety of forest products and increased local 
contracting opportunities in implementing forest management projects; 
reducing risks to communities from severe wildland fires through 
hazardous fuel reduction and fire prevention activities and education; 
and providing a transportation system that facilitates local travel.
    The FY 2003 Budget provides an increase of $10 million within the 
Forest Stewardship program for a small diameter and underutilized wood 
biomass emphasis to foster enhanced management and use of these 
resources on private lands. Funds are also included for research on the 
use of small diameter trees for biobased products and bioenergy.
                      forest and rangeland health
    Keeping watersheds in good condition and restoring them where 
necessary are fundamental to the stewardship of the land and natural 
resources. The agency will focus efforts and move ahead on watershed 
restoration consistent with the agency's national goal to improve and 
protect watershed conditions to provide the water quality and quantity 
necessary to support ecological functions and beneficial water uses.
    Invasive insects, diseases and plants threaten the integrity and 
viability of forest and rangeland ecosystems and cause billions of 
dollars of damage annually from losses due to tree mortality, impaired 
rangeland conditions, and increased susceptibility to high-intensity 
wildland fires. The Forest Service will work to protect the Nation's 
forests and grasslands from invasive insect, pathogen and plant species 
in active partnership with Federal and State agencies, Tribal 
governments, and municipal and nonprofit organizations. The President's 
Budget requests over $83.6 million to do so.
    In each of these areas, research is the key to sustaining our 
forest and rangeland productivity and health while addressing natural 
resource needs.
    The Budget also includes $15 million to transfer to the Fish and 
Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS) 
to help expedite Endangered Species Act (ESA) Section 7 consultation. 
The $15 million is roughly enough to have one FWS or NMFS person per 
forest available to respond to the on-going agency projects. This will 
promote both available personnel to review project proposals under ESA 
Section 7, as well as ensuring increased familiarity and understanding 
on the part of the FWS and NMFS staff as a consequence of their 
continuing involvement with the USDA projects.
                               recreation
    Recreation is the fastest growing use on the national forests and 
grasslands and how most Americans come into contact with the Forest 
Service. The agency's recreation framework is being implemented through 
five primary activities: (1) operating developed sites; (2) managing 
general forest areas; (3) protecting cultural resources and wilderness; 
(4) providing interpretation and education; and (5) administering 
recreation special use authorizations. The agency will focus on a 
measurable improvement in customer satisfaction and an increase in 
documented contributions to community economies, primarily through 
strategic business delivery partnerships. The Budget calls for $264 
million for recreation in FY 2003.
    The Forest Service is operating the Recreation Fee Demonstration 
Program to test the collection, retention, and reinvestment of new 
recreation admission and user fees. Proposed legislation would make 
permanent the current demonstration program and would authorize the 
Forest Service to retain and use recreation fees collected under the 
program.
   funds to the ground--accomplishing the work of the forest service
    President Bush has called for a government that focuses on 
priorities and does them well. The President's Management Agenda 
contains five government-wide and nine agency-specific goals to improve 
federal management and deliver results that matter to the American 
people.
    The Forest Service fully embraces the goals of the President's 
Management Agenda. The agency is committed to increasing available 
funds at the field level, shrinking non-discretionary cost centers at 
all levels of the organization, and reinstituting a firm bias for 
accomplishing the on-the-ground work of the Forest Service. To this 
end, the agency: (1) has established targets for increased contracting 
in key on-the-ground program areas; (2) is finalizing a workforce 
restructuring plan that will reduce and realign headquarters and 
regional personnel to increase resources at field locations; (3) has 
completed an exhaustive review of the headquarters budget; and (4) 
Established FY 2005 targets to reduce indirect expenses by one-half its 
FY 2002 level (to approximately 10% of total). This will increase funds 
available for challenge cost-share from 2% to 4% of the operating 
program. In order to maximize fund availability at the field level, the 
Forest Service has implemented firm funding ceilings for the Washington 
Office, and intends to reduce overall Washington Office funding to no 
more than 7.6 percent of the total agency budget by the end of FY 2003. 
Additionally, firm principles for management of the agency budget have 
been established that eliminate the ``national commitments'' method of 
holding funds off the top for later reallocation.
                             accountability
    The Forest Service recognizes it cannot provide credible natural 
resource management without effective financial and performance 
management. The agency continues its emphasis on improving the quality 
of its financial systems and performance reporting processes. A key 
aspect of improved performance accountability involves providing field 
units with the opportunity to influence the budgets they receive. The 
Forest Service formulated input to the FY 2003 President's Budget using 
a new budget formulation process that provided local units the 
opportunity to develop budget requests at the local level.
    The Forest Service has operated a fully compliant financial system 
for more than two years, and continues to implement actions that 
improve financial accountability. The Department is working closely 
with the Forest Service to promote agency efforts to provide high 
quality accounting information. In addition, the Department of 
Agriculture and the Forest Service continue to move forward in efforts 
to obtain a ``clean audit opinion.'' Essential to this goal are 
effective cash reconciliation and property management programs. The 
Forest Service has improved the agency's accountability by directly 
linking the accuracy of accounting records to reconciliation processes 
and by committing an agency-wide team effort to ensure property records 
are adequate to document the approximately $4 billion inventory of 
assets.
                         legislative proposals
    Several legislative proposals of the Administration will include 
making the Recreation Fee Demonstration Program permanent; revising fee 
schedules for ski resorts; increasing competitive bidding on timber 
sales; and ``charter forests,'' which will take innovative approaches 
to natural resources management. I look forward to working with the 
Committee to develop these proposals on a bi-partisan basis.
                               conclusion
    In conclusion, Mr. Chairman, the President's FY 2003 Budget 
demonstrates the commitment of the Forest Service to accountability 
through results. The Budget includes funding priorities for the 
National Fire Plan and wildland fire management; research as the basis 
of scientifically sound resource decision-making; forest health; land 
acquisition; recreation; and minerals management, especially projects 
related to the National Energy Policy. The President's Management 
Agenda and Forest Service initiatives will examine opportunities for 
restructuring the Forest Service by reducing personnel at the national 
and regional level and redirecting them to the forest level. In 
addition, financial initiatives will focus on reducing indirect costs 
and streamlining accounting practices to reduce expenditures. 
Competitive outsourcing of commercial activities will continue to 
increase.
    This concludes my testimony. I would be happy to answer any 
questions that you may have.

    The Chairman. Thank you very much. I appreciate that 
testimony.
    Let us go right to the Chief Financial Officer of the 
Department of Energy, Mr. Carnes. Why don't you go right ahead. 
Thank you for being here.

STATEMENT OF BRUCE CARNES, CHIEF FINANCIAL OFFICER, DEPARTMENT 
                           OF ENERGY

    Mr. Carnes. Thank you very much, Mr. Chairman, Senator 
Murkowski, members of the committee. I appreciate the 
opportunity to discuss the Energy Department's 2003 budget 
submission.
    Our budget totals $21.9 billion, an increase of nearly $600 
million from last year. And if you discount the effect of the 
fiscal year 2002 supplemental of $370 million, the year-to-year 
increase is nearly $1 billion over 2002, or about 5 percent. 
This is the largest amount ever requested for the Department. 
It is both a bigger budget and a budget that emphasizes 
performance and focused funding priorities.
    Secretary Abraham has made it clear DOE has one mission, 
national security, which includes advancing our Nation's energy 
security. He has directed that programmatic priorities be 
realigned to tie to this overarching mission.
    To ensure program activities adhere to our mission, Deputy 
Secretary Blake is conducting a strategic management review of 
all program activities, including those of the national 
laboratories. Program offices submit their highest priority 
objectives and related performance measures annually to the 
Deputy Secretary. This information is tracked and used to 
identify issues that may impede the achievement of mission 
objectives.
    The Deputy Secretary is also completing benchmarking for 
our science labs to ensure that they operate efficiently and 
evaluate whether current DOE requirements add value and are 
consistent with those of other Federal agencies. This budget 
marks the beginning of this realignment of DOE's program 
activities.
    The budget also begins to integrate performance measurement 
into funding requests. This year, as part of an overall 
government-wide pilot, R&D criteria were set to evaluate 
funding for energy efficiency and renewable energy applied 
research activities. After further refinement, this approach 
will be used to evaluate R&D throughout DOE and the Government.
    The Department is also implementing 5-year planning for all 
of its program activities which will be reflected in our next 
year's submission. With regard to the details of this budget, 
the largest increase is in national security programs. At $8 
billion, the National Nuclear Security Administration program 
request is 5.7 percent over last year's. Funding reflects 
recommendations of the nuclear posture review with regard to 
our stockpile stewardship program and significantly increases 
defense nonproliferation programs in line with the National 
Security Council review.
    The $2.4 billion request for energy programs focuses 
Federal investment on future energy solutions as recommended by 
the President's National Energy Policy, and it targets R&D 
resources where our investment can make a difference.
    The fiscal year 2003 budget emphasizes the next generation 
of energy technologies, particularly hydrogen, high-temperature 
superconductivity, and clean coal. We continue to provide 
benefits through the weatherization assistance program and 
maintain a diversity of energy options that includes bringing 
new nuclear powerplants on-line by 2010.
    At $3.3 billion, the science budget maintains core 
scientific facilities and major construction projects, 
increases operating time for the users of our facilities, and 
targets emerging areas of exploration such as nanotechnology 
and microbial science.
    The $6.7 billion request for environmental management 
reflects a dramatic new way to meet our cleanup objectives 
resulting from Secretary Abraham's top-to-bottom program 
review.
    The civilian nuclear waste management budget supports 
license application activities if the Yucca Mountain site is 
recommended and approved as a long-term nuclear waste 
repository.
    Mr. Chairman, this concludes my summary comments, and I 
would be happy to take any of your questions.
    [The prepared statement of Mr. Carnes follows:]
     Prepared Statement of Bruce Carnes, Chief Financial Officer, 
                          Department of Energy
    Mr. Chairman and Members of the Committee, I am pleased to be here 
today to discuss the FY 2003 budget submission for the Department of 
Energy (DOE). On September 11th our Nation changed as did our national 
security challenges. The Department of Energy's $21.9 billion budget 
responds to that change in our focus as an agency and in the way we do 
business. This budget meets these challenges through investment in our 
national defense and in an important component of that, our Nation's 
energy security.
            refocusing our missions and national priorities
    Shortly after the September 11th attacks, Secretary Abraham, 
speaking to Department of Energy managers, laid out new priorities for 
the agency. These priorities center on our main overarching mission--
national security.
    Secretary Abraham outlined a plan to review DOE's programs to bring 
our national security priorities back into focus. They include:

   certifying the safety and reliability of the nuclear 
        stockpile;
   ensuring that R&D and production plans support the 
        Administration's nuclear strategy;
   resolving the threat of weapons of mass destruction;
   providing safe, efficient and effective nuclear propulsion 
        for the Navy;
   implementing the President's National Energy Policy;
   directing R&D budgets to innovative new ideas while ensuring 
        application of mature technologies;
   exploring new energy sources with dramatic environmental 
        benefits; and
   supporting Homeland Defense through a focus on the threat of 
        weapons of mass destruction posed by terrorist groups or nation 
        states.

    National security concerns clearly drive the programs of the 
National Nuclear Security Administration and Other Defense programs but 
it is also a key component of our energy, science and environmental 
programs. Energy security is national security. Failure to meet 
increasing energy demand with increased energy supplies, and 
vulnerability to disruptions from natural or malevolent causes could 
threaten our Nation's economic prosperity, alter the way we live our 
lives, and threaten our national security. Our science research serves 
national security in an important way--furthering cutting edge 
knowledge to continue U.S. technological strength and offer 
breakthrough solutions that achieve national objectives such as energy 
independence and climate change mitigation.
    As part of the plan outlined by the Secretary, the Department's 
Energy and Science programs will establish their highest research 
priorities to focus on our overarching mission. Energy programs will; 
direct research and development of new ideas that need encouragement; 
ensure greater application of mature energy technologies; and implement 
the President's National Energy Policy to increase domestic production, 
revolutionize our approach to energy efficiency, and identify a wider 
array of energy sources and types.
    In FY 2003, the Department's nearly $2.4 billion request for energy 
programs is driven by the President's National Energy Policy. Since the 
announcement of the policy we have:

   Ensured that our Strategic Petroleum Reserve protection is 
        maintained in support of national energy security--the 
        President directed Secretary Abraham to add 108 million barrels 
        of crude oil to the stockpile. The Department has implemented a 
        royalty-in-kind proposal to fill the reserve to its maximum 
        capacity quickly and without draining appropriated funds;
   Set into motion a $300 million project (non-federal funds) 
        to work with the private sector to upgrade California's Path 15 
        and alleviate California's major electric transmission 
        bottleneck. To accomplish this, Pacific Gas and Electric will 
        work with 6 other parties and the Western Power Administration; 
        and
   Continued the President's ten-year commitment to increase 
        funding for the Weatherization Assistance Program to assist 
        low-income families in reducing the cost for heating and 
        cooling their homes.
   Proposed an increase of $700 million in the Bonneville Power 
        Administration's permanent borrowing authority to make needed 
        investments in transmission and other infrastructure in the 
        Pacific Northwest.

    Science programs will emphasize the most significant national 
priorities--to find new sources of energy, meet the threat of weapons 
of mass destruction, and make an essential contribution to the Nation's 
technological leadership, itself the foundation for national security 
in the 21st Century. The Department is requesting $3.3 billion for 
Science programs in FY 2003. The relevance of our science programs to 
national security was clear in the Department's response to the 
September 11th attacks. Federal authorities used a decontamination 
formulation developed at Sandia National Laboratories to help rid 
Capitol Hill buildings of anthrax. In addition, local officials 
throughout the country were helped by sharing a high-tech mapping 
program with demographic and traffic information designed jointly by 
Los Alamos and Sandia National Laboratories to protect against 
terrorism in U.S. cities by simulating terrorist attacks and assessing 
emergency preparedness.
    The Department's Environmental Management program will implement a 
recently completed top-to-bottom review to better ensure the cleanup of 
the Cold War legacies, and that future defense requirements, the 
security, health, and safety of individual Americans remains protected. 
On the basis of this review, the Department is requesting $6.7 billion 
for the Environmental Management program in FY 2003. This budget will 
have a new $800 million Cleanup Reform account out of which those 
States working with DOE can receive additional funds for alternate 
cleanup strategies that lead to greater risk reduction at their sites. 
Also key to achieving our cleanup objective is the Secretary's recent 
announcement of his intent to recommend the Yucca Mountain site for our 
Nation's permanent geological repository. Such a recommendation will 
bring us one step closer to permanently securing the nuclear materials 
currently stored throughout the country.
    We also discharge our National Security mission as the stewards of 
the Nation's nuclear weapons stockpile. The Department is requesting 
just over $8 billion for the National Nuclear Security Administration 
(NNSA), a $433 million increase over the FY 2002 level, signaling a 
major boost in support for security programs. The Department, through 
the (NNSA), invests in advanced scientific and manufacturing 
capabilities to ensure the long-term capability to assess weapons 
status, extend weapon life, and certify that the stockpile remains 
safe, secure and reliable without nuclear testing. The Department has a 
long and successful history in combating proliferation of weapons of 
mass destruction. Through strong support for nonproliferation programs 
this budget implements recent bilateral agreements with Russia to 
address the proliferation of weapons-grade material and supports the 
innovation needed to ensure homeland security. The budget continues to 
supply safe and reliable nuclear propulsion plants to the U.S. Navy, 
thus helping project U.S. military presence around the world.
                    changing the way we do business
    And more than our mission has changed.
    Secretary Abraham also laid out his vision and expectations of the 
DOE workforce. DOE must become a place where employees of other 
Departments wish they worked, and an agency every Cabinet member wish 
they led. Programs would be managed against measurable performance 
objectives and managers would have clear accountability. Every manager 
was asked:

   to ensure the safety of our employees and the communities 
        surrounding our facilities;
   instill a respect for and adhere to the highest standards of 
        security; and
   build a culture where merit determines hiring and promotion 
        and diversity is viewed as keys to recruiting and retaining the 
        best people.

    But the challenge is greater. The Department is also addressing 
long-standing criticisms of DOE management and moving toward the 
Administration's model as set forth in the President's Management 
Agenda. With an emphasis on measurable performance objectives and 
accountability, the Secretary is holding DOE managers responsible for 
making these changes. We have set priorities, disciplined our focus and 
will measure everything we do by reference to our missions and 
priorities.
             implementing the president's management agenda
    The President has called for an active but limited government, one 
that empowers States, cities, and citizens, ensures results through 
accountability, and promotes innovation through competition. The 
Administration has targeted areas for improvement throughout the 
federal government. Our work to fully implement these initiatives will 
continue through FY 2004 and beyond, but we have a path forward and are 
making changes now.
Human Capital
    In order to eliminate unnecessary layers of management, direct 
personnel to high-priority missions, address skill imbalances, and 
achieve a 5-10 percent savings in management expenses through 
comprehensive, creative management reform, DOE will accelerate 
workforce planning and work with the Office of Personnel Management to 
conduct complex-wide organizational surveys to analyze and evaluate DOE 
field and headquarters redundancies, fragmentation and duplication of 
effort.
Competitive Sourcing
    We are initiating formal competitive sourcing reviews under the 
provisions of Office of Management and Budget Circular A-76 on 
approximately 1,000 positions. In addition, line managers are planning 
other reviews that may lead to formal studies. The longer-term goal is 
to conduct reviews on 50 percent of the Department's inventory of 
federal positions that are not inherently governmental.
Improved Financial Management
    We will continue to build on the Department's unqualified audit 
opinion on the consolidated financial statements and work to integrate 
better financial, budget, and program information in order to provide 
costs information related to performance. Key to the success of this 
Initiative is the completion of the Financial Management module of the 
Department's Corporate Management Information System (CMIP).
E-Government
    To make better use of computer information systems to improve 
management, promote efficient use of resources, and make our systems 
provide more people friendly information, the Department will 
strengthen its Information Technology investment portfolio by linking 
investment control processes, using enterprise architecture, and 
improving security policies and capital planning.
Budget and Performance Integration
    We have strengthened the Department's ability to measure 
performance by establishing the Program Analysis and Evaluation Office 
and developing a five-year planning, programming, budgeting and 
evaluation process. Building on the integration of performance metrics 
into our FY 2003 budget submission, we are improving the performance 
measures contained in our FY 2003 budget request and will continue to 
improve performance measures and their integration into the FY 2004 
budget. These improvements will provide clear, quantifiable outcomes to 
support budget requests.
Applied Research and Development (R&D) Investment Criteria
    The President's management initiative on applied R&D calls for 
improved criteria to better focus programs on linkages to Presidential 
priorities, market justification, cost-sharing targets and performance 
outcomes. Our first phase of improvement is reflected in the budget for 
the Fossil Energy, Nuclear Energy and Energy Efficiency and Renewable 
Energy programs. In FY 2004, all applied R&D activities in the 
Department will make use of these improved criteria.
                         reporting on progress
    Management changes at DOE go beyond the objectives of the 
President's Management Agenda. To clarify roles, responsibilities and 
accountability, Secretary Abraham has also revamped the Department's 
management structure.
    In October 2001, two new administrative elements were established 
within the National Nuclear Security Administration (NNSA) to clarify 
lines of authority and accountability--Facilities and Operations for 
oversight of security, environment, safety, health, technical and 
management support for construction projects, and centralized support 
for all field-based activities and Management and Administration to 
manage finance, planning, administration, human resources, procurement, 
and information technology. NNSA is also taking action to streamline 
and clarify the chain of command and simplify the headquarters-field 
management structure.
    The Secretary has strengthened the role of the Under Secretary for 
Energy, Science and Environment and given him direct line management 
responsibilities for Energy Efficiency and Renewable Energy; Science, 
Environmental Management; Civilian Radioactive Waste Management; 
Environment, Safety, and Health; Fossil Energy; Nuclear Energy; and 
Worker and Community Transition.
    We have also launched a number of initiatives to address previously 
identified but long-standing problems in programmatic areas. We have:

   Brought in outside experts to improve and streamline the 
        Department's safety and security while bolstering our own 
        safeguards and security, the Congress provided us with $368.7 
        million in FY 2002 supplemental funding to enhance post 
        September 11th security;
   Engaged in a top-to-bottom review of the entire 
        Environmental Management program, identifying systemic 
        weaknesses and proposing a new way to do business in the 
        program; and
   Completed benchmarking activities for our science 
        laboratories to ensure that they are operating efficiently and 
        whether current DOE requirements add value and are consistent 
        with other federal agencies.

    The Department has made cross-cutting changes to strengthen 
accountability by:

   Modifying the performance evaluation system for the 
        Department's Senior Executives, making them more accountable 
        for ensuring program success. These modifications will flow 
        down to General Schedule employee levels during FY 2002;
   Issuing ``Program and Project Management for the Acquisition 
        of Capital Assets,'' (DOE Order 413.3) a major comprehensive 
        resource to address all aspects of major project and program 
        management and improve accountability for project and capital 
        asset management;
   Implementing the Project Management Career Development 
        Program to enhance employee technical skills as recommended by 
        the National Research Council;
   Expanding the ``Chief Operating Officer's Watch List'' to 
        monitor all significant major construction projects. This 
        useful tool provides high visibility and increased management 
        attention to projects that exhibit early warning signs of 
        trouble. In addition, we are placing much greater emphasis on 
        acquisition planning, incorporating better measurements of 
        performance, conducting earlier independent reviews, ensuring 
        appropriate senior management oversight and providing real-time 
        feedback to influence better outcomes; and
   Initiating a process by which the Department's Program 
        Secretarial Officers submit their highest priority objectives 
        and related performance measures on an annual basis to the 
        Deputy Secretary. This information will be tracked throughout 
        the year and will be used to identify issues that may impede 
        the achievement of these mission objectives.

    We have streamlined and consolidated operations including:

   Consolidating the Office of Assistant Secretary for 
        International Affairs with the Office of Policy to create a new 
        Office of the Assistant Secretary for Policy and International 
        Affairs;
   Strengthening the Office of Independent Oversight and 
        Performance Assurance by adding environment, safety, health and 
        security oversight to its responsibilities, and having that 
        office report directly to the Deputy Secretary;
   Separating the Office of the Chief Information Officer from 
        the Office of Security and Emergency Operations and elevating 
        it to report directly to the Secretary; and,
   Merging the Offices of the Chief Financial Officer and 
        Management and Administration to create the Office of 
        Management, Budget and Evaluation.

    We are also improving our financial management. The newly 
consolidated Office of Management, Budget and Evaluation (OMBE) added a 
new function, Program Analysis and Evaluation, to bring rigorous 
analysis and long-term budgeting of program plans and funding 
proposals. These improvements will benefit the Department.
    OMBE will serve as a linchpin to improve the integration of the 
Department's strategic planning, budgeting and project management 
activities through the creation of a multi-year planning, programming, 
budgeting and evaluation capability. The National Nuclear Security 
Administration Act required the NNSA to submit a Five-Year Nuclear 
Security Program to the Congress in FY 2002. The Department is 
expanding this effort to conduct long-term planning for the entire 
Department of Energy in FY 2004.
    In summary, this budget responds to a changing Nation. We will use 
every resource at our disposal to better support our National Security 
mission, ensure the Nation's energy supply, implement the President's 
initiatives, and realize Secretary Abrahams' vision for the Department. 
Mr. Chairman, this ends my opening statement. I would be pleased to 
respond to your questions.

    The Chairman. Thank you very much.
    Let me advise folks what our plan is here. I will ask a few 
questions, Senator Murkowski will and Senator Cantwell, if time 
permits. Then we will recess. We have got three votes starting 
on the floor. And then as I understand it, Senator Cantwell, 
you wish to return and ask a few additional questions at that 
point. Is that correct?
    Senator Cantwell. Yes.
    The Chairman. We will do that, and I know that, Mr. Griles, 
you need to be at another appointment. If the rest of you could 
return at that point, that would be great.
    Let me start with Mr. Griles and ask you about this letter 
you say you sent last night to the Appropriations Committee. Is 
this a reprogramming request?
    Mr. Griles. It is a letter that indicates we are going to 
take current balances and make the expenditures out of there to 
pay the individual Indians. It is not a reprogramming request 
per se. It is to let the subcommittees know that we are going 
to go forward and use estimates. It is our expectation, 
Senator, once the court allows us to turn on the Minerals 
Management Service computers, that there is more than 
sufficient funds in those individual accounts that we can 
replace that which we are going to use. So, we do not think it 
is going to require a reprogramming of monies. If it is, we 
have told the committees in the letter that we will keep them 
constantly informed as soon as the computers come back on and 
we know what the actual accounts for these are.
    The Chairman. I am just trying to get a clear notion. You 
sent the letters. Are you having to wait for some action by 
these subcommittees, or are you able to go ahead and send the 
checks right away?
    Mr. Griles. We are going to cut the checks as soon as the 
system can.
    The Chairman. So, you are not waiting on anything.
    Mr. Griles. No, sir.
    The Chairman. You are moving to send checks as quickly as 
you can do so.
    Mr. Griles. I have waited long enough for the court to say 
yes to our proposal. They have not. We have to pay these 
individuals, and we are going to take this and use this process 
to pay these individuals, Senator.
    The Chairman. Okay.
    Mr. Carnes, let me ask you about a change that I detect in 
the budgets for all Departments I believe. And certainly I 
think it is reflected in the three Departments that are 
represented here today, and that relates to the costs involved 
with health and benefits for Federal employees.
    Always before, that has been considered a mandatory item in 
funding, and I think the expectation has been that that would 
continue. This year the administration has chosen to list that 
as a discretionary item and to lump it in the budgets so that, 
in fact, every Department's budget is reduced by the amount 
that is attributable to what was otherwise funded elsewhere as 
a mandatory item. Am I understanding this correctly?
    Mr. Carnes. Yes, sir.
    The Chairman. Can you give me the justification? I have 
heard something about how this helps your ability to account 
for these dollars. I do not understand why they cannot be 
accounted for and still be mandatory.
    Mr. Carnes. I probably would need to defer to OMB for the 
details of why this classifies as discretionary versus 
mandatory, if I am right about that. But let me just say that I 
think philosophically what we have done is to line up--in the 
case of Energy, let me just make the point that it is about $70 
million for us. Philosophically what this does is to line up 
the costs of operating our programs with, in fact, the programs 
themselves. This cost has been, in a sense, a cost of doing the 
business of our programs, as everybody else's programs, and has 
been lined up elsewhere previously, I believe in OPM. And now 
it has been distributed out to the agencies.
    The Chairman. So, in the case of the Department of Energy, 
this represents $70 million of additional expense which has 
never previously appeared in your budget.
    Mr. Carnes. That is correct.
    The Chairman. And the figure, I believe, for the Department 
of the Interior is what? $250 million?
    Ms. Scarlett. It is approximately that amount. What this is 
essentially is post-retirement health benefits and other 
pension benefits that have historically been in the OPM, the 
Office of Personnel Management. So, for our purposes, that sum 
that used to be funded out of OPM is now funded in our budget 
and is in fact budget neutral as it relates to total expenses.
    Mr. Carnes. If I could, it was a transfer from the OPM 
account over to each of the Departments.
    The Chairman. But it is more than a transfer from one 
account to another account. It is a transfer from mandatory 
spending to discretionary spending as well, as I understand it. 
Am I right about that?
    Ms. Scarlett. Yes.
    Mr. Carnes. Yes.
    The Chairman. I think that is the kind of an issue that you 
may hear more about as the budget process continues.
    Mr. Rey, let me ask you about the economic action programs. 
You propose in this budget no funds for the economic action 
programs. The funding level in the current year is $35.6 
million. This is a set of programs that Senator Murkowski, 
Senator Wyden, Senator Craig, and I have been strongly 
supporting. What is the justification for zeroing out these 
programs?
    Mr. Rey. In prior years' budgets, assistance to communities 
through the economic action programs came exclusively from the 
State and private forestry account of the Forest Service's 
budget. The strategy in this budget cycle is to integrate 
community assistance throughout the Forest Service budget and 
to make community assistance more integral to the entirety of 
the Forest Service's mission. So, while we have zeroed out the 
economic assistance program, we have increased community 
assistance initiatives in other areas of the Forest Service's 
budget. For instance, in the forest stewardship program, 
technical assistance support was increased by $16.1 million 
with, as I indicated in my testimony, a $10 million increase 
for small diameter materials. We also added $5 million in 
forest research to support biobased products and bioenergy.
    Additionally, the President's management initiatives call 
for significant increases in contracting that will benefit 
local businesses. For instance, 20 percent of our fire 
readiness programs will be contracted as opposed to done 
internally in fiscal year 2003.
    Additionally, the recently enacted payments to States 
legislation will be providing an additional $25 million that 
will be directly available for work as agreed to between local 
resource advisory committees and the Forest Service.
    I think there are some other initiatives as well scattered 
throughout the Forest Service budget. Perhaps the most useful 
use of our time today is for me to summarize all those for you 
in one document. But I think once you look at all of those in 
total, what you find is the $30 million reduction in the 
economic assistance program has been more than offset in 
economic assistance activities integrated in programs 
throughout the Forest Service's budget.
    The Chairman. I note my time is expired. Let me defer to 
Senator Murkowski.
    Senator Murkowski. Thank you very much, Mr. Chairman.
    Mr. Rey, I am curious to know. I believe in your budget 
there is a reference to the Forest Service facility in Sitka 
which was designed primarily to find new commercial utilization 
of the primary forests, spruce, hemlock, cedar, and so forth. 
There are six or seven people over there. Have they been able 
to do anything substantive?
    Mr. Rey. They have done a fair amount with research 
associated with using the species unique to Alaska, old growth, 
tight grain hemlock.
    Senator Murkowski. I mean, is there any commercial 
activity? Have we created any jobs as a consequence?
    Mr. Rey. No. I think they are still at the research stage 
of that. It is going to take another year or so before you see 
some of that operationalized although I think Gateway Forest 
Products, if it continues to be up and running, will benefit 
from some of the research work they have done so far.
    Senator Murkowski. Well, I am just a little impatient with 
them, as you know.
    Mr. Rey. I have come to know that, yes.
    Senator Murkowski. How much time do they need until we find 
out whether the contribution is meaningful? Because we can use 
the money someplace else if they are not going to come up with 
anything.
    Mr. Rey. I think if you ask the folks at Gateway and some 
of the other industry people in Southeast, they will tell you 
they are already getting some benefits from it. I think we will 
see more operational activities.
    Senator Murkowski. I am going to ask them, and I will bet 
you are wrong.
    Mr. Rey. I think you will find they are more enthusiastic. 
At least the last time I was there they were.
    Senator Murkowski. I think I was there----
    Mr. Rey. More recently than me?
    Senator Murkowski. More recently than you.
    Well, my point is in an obvious one. You are trying to cut 
the budget and trying to prioritize. So, let us do it and look 
at these things and find out if they are doing what they are 
supposed to do.
    Mr. Carnes, I am curious to know. You mentioned several 
times a commitment to technology and advanced technology 
relative to energy matters, yet you zeroed out money for DOE's 
Arctic lab. Zeroing out that effort at the University to 
develop new technologies for heavy oil recovery, viscous oil, 
ice dynamics, etc. I mean, this is where the action is and you 
folks zero out this one significant effort because, as you 
know, the energy wealth of North America is coming from the 
Arctic. And we are the only State with Arctic in it and you 
zero out the program.
    Mr. Carnes. Yes, sir. That mark, as well as other marks, in 
our budget and in the budgets of, I suspect, every other 
Department in the Government are characterized by an 
elimination of earmarks, if I have got my projects right here. 
There is nothing that offends us about that particular project 
except the general view that, to the degree that we can, we 
want to have competition for our funds. So, it was simply a 
general matter relating to the earmark issue.
    Senator Murkowski. Okay. Well, it is an explanation but I 
do not consider it an adequate one because, on the one hand, 
you are talking about advancing technology; on the other, the 
one area where you establish it initially, and then the first 
year you cut it out, as opposed to the Sitka arrangement which 
has been going on for a few years and we have not seen anything 
yet. Anyway, we will get back to that.
    Mr. Carnes. Sir, I absolutely understand your point.
    Senator Murkowski. Mr. Griles, it is beyond me. You have 
had two Secretaries of the Interior in a row that have been 
held in contempt of court because of the inability of the BIA 
to manage that trust fund for the tribal groups. At what point 
do you face reality that the BIA is incapable of that function? 
And to have your computers down as a consequence of, I guess, 
the Cobell litigation ordered by the Department of the 
Interior, your whole Department is down because of the concern 
the court has over the adequate protection of the Indian trust 
funds.
    When do you face up to realities and contract that? Trust 
departments do this all the time as a matter of course. They 
put their reputation on the line in their ability to manage the 
trust and disburse appropriately and provide notification and 
so forth. You have gone through two Secretaries of the Interior 
and you are still faced with this dilemma which ties up your 
whole Department.
    Mr. Griles. Well, first, Senator, if I may respond, this 
Secretary has not been held in contempt.
    Senator Murkowski. Well, she has been charged with 
contempt.
    Mr. Griles. There is an allegation by the plaintiffs.
    It is my sincere hope and desire--in my court appearance on 
Wednesday and Thursday of last week, which I spoke to the judge 
at length--that he will not find that a necessary cause of 
action that he believes he needs to take.
    As I said to the chairman, we are dealing with the IIM 
account holders. The individual money account holders of the 
individual allottees, whose interests have, since 1887 in some 
instances, been divided seven times by seven. We have gotten 
down to where some accounts have .00034 of an interest. We need 
a legislative effort to deal with that.
    Senator Murkowski. Have you asked for legislation?
    Mr. Griles. Yes, we have, sir. And we are going to be 
coming back. Legislation has been enacted by Congress and was 
found unconstitutional. So, we have got to come back with a 
better solution.
    But your instincts are right, Senator. This is a very, very 
tough issue. We will be looking at outside sources as well as 
to get advice and help on how best to manage this. Individual 
trust accounts at banks charge fees. We do not charge fees.
    Senator Murkowski. Well, no, but you have costs.
    Mr. Griles. Right.
    Senator Murkowski. What difference does it make? You have 
the authority to contract out.
    Mr. Griles. Correct.
    Senator Murkowski. I do not know how many times you have to 
bounce your head against a wall before you figure out that this 
is not something that the BIA is capable of doing in a 
responsive manner and get on with it and make the decisions. 
There are those that say it deprives the BIA of responsibility, 
but if they are not doing their job and you cannot get a handle 
on it, it would seem appropriate to face up to it.
    My time is up. But I have been on this committee for 20 
some years, and I have heard this continually, the inability of 
the BIA to function in managing those accounts. I do not have a 
beef with anybody. The tribes deserve reasonable accounting. If 
you look for accountability in the BIA, good luck.
    Mr. Griles. Mr. Chairman, if I may respond to the comment. 
The Secretary proposed a reorganization of the Department's 
trust management assets, which would set up a new Assistant 
Secretary position that would have all the trust asset 
management functions under it, separate and apart from the 
Bureau of Indian Affairs. That has been uniformly, I think, 
rejected by most large Indian organizations and a lot of tribal 
governments.
    But we are looking at how to best deal with that issue. We 
have not asked for additional legislation at this time on the 
IIM accounts. We are looking at how best to do that, and we 
will look to work with you in how to do that. To turn it over 
to the banks I think, Senator, would probably take legislation 
also.
    Senator Murkowski. You are not talking about banks. You are 
talking about trust departments that have that capability.
    Mr. Griles. Yes, sir.
    The Chairman. Senator Cantwell.
    Senator Cantwell. Thank you, Chairman Bingaman.
    I would like to focus my comments this morning on the 
cleanup of the Hanford Nuclear Reservation in my questions to 
you, Mr. Carnes. But first, I would like to just recap a few 
things.
    The administration's budget calls for a $262 million cut in 
the Hanford cleanup funding at a time when the amount of 
radioactive waste at Hanford is greater than on any other site 
of the DOE's site list. Today Hanford stores about 54 million 
gallons of dangerous, high-level radioactive waste in 177 
massive underground storage tanks, 149 of which are 30 years 
old, past their designed life, and 67 of which have leaked at 
least 1 million gallons of waste into the soil, a mere 7 miles 
from our region's lifeline, the Columbia River. There are wells 
located along the Columbia River shoreline that register 
strontium 90, which is a chemical, which are 1,600 times the 
Federal drinking water standard.
    The cleanup has always been the main focus and the focus of 
the triparty agreement, which is a legally binding document, a 
consent order that binds DOE to the Hanford cleanup and is in 
compliance with State and Federal environmental laws.
    So, my question this morning is to fall behind in the 
Hanford cleanup is not only a violation of that triparty 
agreement, it is unacceptable to the people of Washington, to 
the region of the Northwest, and to the country.
    Nonetheless, the administration now proposes a 20 percent 
cut of nearly $262 million in the funding for Hanford cleanup. 
As many of my colleagues are aware, the administration has an 
unusual way of looking at how to restore these funds. I can 
tell you I do not think there are people in America or people 
in Congress who want CFO's coming here talking about unique and 
risky ways of doing budgeting and accounting.
    I would like to add to the record, Mr. Chairman, an article 
that appeared in the Tri-City Herald this last Saturday which 
says, ``the concept simultaneously intrigued, spooked, and 
puzzled Hanford Advisory Board members and Hanford regulators. 
That is because Hanford could get lots of extra cleanup money 
or it could find its 2003 budget heavily slashed.''
    [The information referred to follows:]

                              HANFORD NEWS

                  HAB Hears DOE's New Cleanup Approach
    Hanford's federal leaders say they have a long list of projects 
that could speed up under the Department of Energy's new budget-and-
cleanup approach.
    The site is in a good position to grab a major chunk of $800 
million to $1.1 billion that DOE says it will distribute to cleanup 
projects nationwide that show plans to accelerate their work, Keith 
Klein, DOE's Hanford manager, and Harry Boston, manager of DOE's Office 
of River Protection, told the Hanford Advisory Board on Friday.
    ``These (accelerated plans) are things we've already been doing. We 
just have to tie it up, wrap it in a ribbon and present it to the 
powers-that-be back there (in Washington, D.C.),'' Klein said.
    These plans range from finding new ways to deal with some 
radioactive tank wastes to earlier removal of plutonium from the 
Plutonium Finishing Plant.
    DOE officials and HAB members chewed over DOE's new master plan to 
speed nuclear cleanup nationwide along with DOE's new approach to 
paying for that cleanup. DOE unveiled its fiscal 2003 budget request to 
Congress and its new master plan Monday.
    The hazy bottom line: Hanford can get anything from $1.46 billion 
to almost $2 billion in fiscal 2003. The site needs at least $1.765 
billion--maybe more--to meet its legal cleanup obligations in 2003.
    Friday some new details emerged, such as the existence of a 
potential additional $300 million for nationwide 2003 nuclear cleanup.
    But many details remain fuzzy, such as if Hanford's HAMMER training 
complex will be funded at all.
    ``We're about 10 seconds ahead of you'' in learning how DOE's 
Washington, D.C., headquarters plans to implement its new cleanup 
approach, Boston and Klein told the board at separate times.
    DOE's master plan calls for Hanford and other DOE sites to speed up 
their cleanup efforts dramatically. The concept specifically targets 
Hanford's K Basins, PFP and tank farms.
    HAB members like that idea.
    But DOE also will fund cleanup differently, creating an $800 
million to $1.1 billion incentive fund. That money will go to sites 
with accelerated cleanup plans that meet DOE headquarters' approval.
    After DOE approves those plans this year it has the commitment of 
the federal Office of Management and Budget--the president's budget-
writing agency--that those plans will be fully funded through 2008, 
said DOE's cleanup czar, Jessie Roberson, who participated briefly in 
Friday's meeting by phone.
    The concept simultaneously intrigued, spooked and puzzled HAB 
members and Hanford's regulators. That's because Hanford could get lots 
of extra cleanup money, or it could find its 2003 budget heavily 
slashed.
    And no one knows yet when and how DOE's headquarters will judge 
cleanup plans and distribute the incentive money.
    ``I'm intrigued by the carrot of the multi-year commitment (of 
funds). But we don't understand the process and the timing issues,'' 
said HAB member Leon Swenson, representing the public.
    Several HAB members wondered about timing. That's because DOE has 
not said when it will approve the plans and funds. And some DOE 
proposals must jump through complex legal and legislative hoops before 
they can be implemented.
    This is DOE's 2003 budget to Congress.
    DOE wants $6.7 billion for nationwide cleanup in 2003, the same 
amount Congress appropriated for 2002.
    That request is divided in two parts. One is $5.9 billion to be 
divided among DOE's sites in the traditional way. Then there is $800 
million for sites with approved acceleration plans. Klein said DOE will 
ask Congress for an extra $300 million if $800 million is insufficient.
    For Hanford that translates to a minimum $1.46 billion budget--$262 
million less than 2002 and at least $305 million short of meeting the 
site's legal obligations for 2003.
    The Office of River Protection, which manages the site's tank 
farms, will get a minimum $903 million, compared with $1.027 billion 
approved in 2002. Maintaining the tanks safely faces the biggest 
potential cut.
    DOE's Richland office, which supervises everything else at Hanford, 
faces a budget cut from $695 million in 2002 to minimum $557 million in 
2003.
    Next step: Hanford has to apply for some of the $800 million to 
$1.1 billion to do what it wants to do.
    ``We're being held hostage if we don't play the new game. . . . It 
scares me silly,'' said HAB member Paige Knight, representing Oregon's 
Hanford Watch.
    HAB members questioned DOE's approach to fund the removal of 2,300 
tons of spent nuclear fuel from the K Basins.
    DOE's budget request trims the K Basins from $153 million in 2002 
to $90 million in 2003 when the agency also wants to speed up that 
project. Klein said DOE's headquarters wants a firm grasp on the 
project before allocating extra money to it.
    HAB members noted that most of the K Basins' preparations are done 
and that the removal efforts have just reached full speed. 
Consequently, they wondered what DOE wants before it restores the 
trimmed K Basins money.
    The HAB's Hanford workers' representatives also protested the 
HAMMER training complex's budget going from $5.8 million in 2002 to 
zero in 2003. They also fretted about other training being apparent in 
the 2003 budget request. Klein said DOE is looking into how HAMMER and 
other training will be funded.
    Since Hanford, its regulators and public have worked the past 
several months on how to speed up cleanup, Boston and Klein believe 
Hanford will capture a major chunk of the incentive fund. Here are some 
accelerated projects that Klein and Boston hope to pitch to Washington, 
D.C.:

   Finish the PFP's cleanup in 2009 or 2010, instead of 2016, 
        by removing its stabilized plutonium earlier.
   Run Hanford's first waste glassification plants beyond their 
        2018 shutdown dates.
   Study if some low-activity tank wastes can be solidified and 
        neutralized some way other than the more expensive and time-
        consuming glassification.
   Close Tank C-106 and fill it with concrete or sand by 2004, 
        instead of by the current 2014 deadline.

    Senator Cantwell. So, my question is--and before I get to 
that question, Mr. Chairman, because I know that we have a 
pending vote--I think this overall issue of the DOE top-to-
bottom review and how they are changing their environmental 
management program is certainly a new direction, and I believe 
that we need to have a hearing reviewing that. I know we all 
have a hectic schedule, but I hope that we can hold this 
hearing sometime in the next month or 2 so it will help us 
focus on these important decisions and budget priorities during 
this process.
    So, Mr. Carnes, I guess my question to you in this process 
is--and obviously, Secretary Abraham in his confirmation 
hearing came before this committee and said that DOE will meet 
the commitments that we have made before. I believe that to 
mean the triparty agreement.
    So, do you believe that the DOE can meet the required 
cleanup milestones without guaranteed funding levels?
    Mr. Carnes. Yes, Senator, I do think we can meet those 
requirements. If I could just elaborate for one second.
    There are a couple of areas in our budget that were 
particularly trying as we came to closure on them, and I might 
just mention in passing that the environmental management 
budget was one of those thorny, vexing issues that remained 
open very late in the session. We came to closure on that only 
at the very last moment.
    Let me also add that the new program, which we have 
identified in the budget, identifies $800 million, but that we 
consider to be a down payment. In fact, if that money is over-
subscribed in fiscal year 2003, our plan is that we would seek 
from the Congress additional resources in fiscal year 2003, and 
the Secretary and Director Daniels of OMB have an understanding 
to that effect.
    The third point I would make is that Hanford is a very high 
priority for us, an extremely high priority.
    My fourth point is that our view is that the existing way 
of doing business is, if you will allow me, in a way 
unconscionable public policy because it does not actually 
reduce risk. And it is, in a way, unconscionable fiscal policy 
because it does not save money. We are looking at cleanup 
activities that could take until the lifetimes of our great 
grandchildren. And the Secretary and others in the Department 
feel that we must do whatever we can to hasten the cleanup of 
these sites and achieve real reduction in risk.
    We understand that that means examining. In some cases we 
would have to look at various agreements, and I think probably 
Jessie Roberson, our Assistant Secretary, is the appropriate 
person to discuss the details of the Hanford situation with 
you. But we recognize that that is in some cases a possibility.
    Senator Cantwell. Let me just make sure that I am being 
clear here because we have an agreement.
    Mr. Carnes. Yes, ma'am.
    Senator Cantwell. It is a legally binding agreement.
    Mr. Carnes. Yes, ma'am.
    Senator Cantwell. Now you are asking that we come as a 
State or a site and negotiate with you on the details of 
cleanup. The cleanup has already been detailed. What milestones 
have to be met have been explicit in that agreement. So, now to 
come and say here is less funding than you had last year, but 
we will let you and everybody else go after this pot of money, 
but we are going to negotiate with you what we are going to pay 
out and how we are going to pay it out is not living up to the 
triparty agreement. That is changing the agreement and the 
process, and it is leaving them at risk.
    Now, if you want to guarantee today that you will meet the 
funding level that was requested to meet the triparty 
agreement, as a minimum, and then the State can talk about 
other ways to expedite, then we would be in a different 
discussion. Do you want to make that commitment today?
    Mr. Carnes. Ma'am, I cannot, though I more than understand 
your point and it sort of goes back to the first thing I was 
saying which was this is an issue that was a long time 
settling. I recognize that your State and surrounding areas 
have a big concern here, and we are not indifferent to that, 
and we do want to work with you and officials in Washington to 
move this along as fast as we can to achieve a reasonable 
solution that satisfies your needs as well as ours.
    Senator Cantwell. Well, I would just say again that 
creative accounting at this point in time on something as 
important as Hanford cleanup--again, other administrations have 
come and looked at this big budget and said: How can we do it 
for less and how can we do it in a different time frame? But we 
keep revisiting these same issues. That is how we got to the 
triparty agreement, to make it legally binding. So, now to do 
creative budgeting on top of that obviously has a lot of people 
very anxious and very nervous that this legal document is not 
going to be met and the objectives are going to be changed 
without real review of that document.
    Mr. Carnes. Well, I can understand, if you will allow me, 
concerns about the question of the policy, but I can assure you 
there is no creative accounting or creative budgeting in our 
proposal. But I do recognize that the proposal is a 
controversial one.
    The Chairman. We are at the point where we need to break 
for this vote. We will reconvene after the three votes and 
Senator Cantwell will then preside.
    I thank you all very much. I understand Mr. Griles will not 
be able to stay.
    [Recess.]
    Senator Cantwell [presiding]. The Energy and Natural 
Resources Committee will reconvene for the purposes of hearing 
testimony on the budget request for the Department of the 
Interior, U.S. Forest Service, and the Department of Energy.
    If I could, I would like to go back to Mr. Carnes in 
questioning. Thank you for some of your follow-up comments.
    I have questions then in regards to the program that you 
are talking about, the $800 million reform account. I know you 
think it does not mean risky accounting, but obviously if you 
had full funding of the budget, that to me is the direction 
that we need to go.
    Can you tell me precisely what are the criteria of the 
process and the time line that will determine which sites get 
funded and how the new account will operate?
    Mr. Carnes. Yes, ma'am. Thank you. And let me just make one 
comment about our previous exchange. We will carry out the 
provisions of the law. We will always do that.
    In response to your present question, the criteria for 
access to the funds are being worked out right now by the 
Department under the leadership of Jessie Roberson, our 
Assistant Secretary. They may, in fact, be different for 
different places depending upon what the situations are at 
different places.
    Some have asked, well, why do that this year? Why not do it 
next year? And our answer to that is we would ask for the funds 
this year because we think, if we get agreements, we want to 
move ahead to execute them as fast as we can rather than wait 
another year to do so. Criteria are currently being established 
by the Department.
    Senator Cantwell. So, if you in your statement said that 
you will live up to the triparty agreement, then why not just 
fund the budget for Hanford in full as opposed to putting them 
in a group of people that have to compete and then maybe trying 
to convince them to go for lower standards on the cleanup?
    Mr. Carnes. The reason is that the current plan calls for 
ultimate resolution of the Hanford waste problem by the year 
2070 and the Department believes that after 10 years under the 
triparty agreement, we have learned some things and believe 
that there are opportunities where we can do accelerated 
cleanup and alternative strategies that may be something that 
the State and Federal regulators would be interested in 
pursuing.
    Senator Cantwell. But if you do not have the criteria in 
place, how do you know what the base level is?
    Mr. Carnes. We know what the base level is for the current 
funding profile, for the status quo, with the 2070 closure 
date.
    Senator Cantwell. But I am saying how did you come up with 
$800 million? You said earlier if it took more money for 
Hanford cleanup, you would come up--how would that work?
    Mr. Carnes. The $800 million, if you will allow me, is like 
that. We consider it the opening of the program, an initiation 
of----
    Senator Cantwell. I am sorry. Did you mean a moving target?
    Mr. Carnes. No, ma'am. I mean it is sort of Kentucky 
windage. Feels right. $800 million preserves us at the fiscal 
year 2002 funding level in total for environmental management. 
There is nothing sacred about the $800 million level in and of 
itself. We would, in fact, be pleased, as would the rest of the 
administration, were that level to go up, and the total funding 
for environmental management to be in excess of 6.7, provided 
that it represents a change in the way we do business. So, 
there could be in excess of 6.7 in 2003 if in fact enough 
locations seek to embrace this proposal and accelerate cleanup.
    What it would mean for most locations is more money in the 
short term, in the near term, than they would have otherwise 
gotten under whatever current agreements are in force, and at 
the end of the day, it would mean quicker cleanup. The new 
program's intention is to support additional funding for 
accelerated cleanup which will produce in the long run both the 
elimination of risk and savings to everybody.
    Senator Cantwell. If in this case the Hanford's numbers are 
off by a couple of hundred million dollars, what if everybody's 
numbers are off by that? How would you see that working in the 
budget process?
    Because I can tell you what you are also suggesting is that 
new negotiations take place that would substitute for the 
triparty agreement, and the last thing the people in the State 
of Washington or the Northwest want to hear is that somehow 
people think that the cleanup process can be expedited by 
taking some of these tanks and sealing them up and that will 
take care of our problem and they will not be part of the 
removal process.
    Mr. Carnes. Yes, and we certainly would not pursue a course 
of action that did not have the support of State officials. It 
would be an agreement, if you will. We would not proceed in 
violation of the agreement. We would see, in various cases, 
including Hanford, to revisit certain aspects of that agreement 
to see if we can get a new agreement.
    Senator Cantwell. There are agreements and then there are 
holding people hostage to get their funds by getting them to 
agree to a new process. So, I think what would be wise is if we 
do have a review of this new environmental management approach 
by the agency and have the committee review that and have them 
give testimony on how this process might work. But I think you 
can understand the history of many different administrations 
coming in and trying to look at the cleanup, trying to cut 
funds for it. That is how we got to the triparty agreement.
    Mr. Carnes. Yes, ma'am. I do not think we are under any 
illusions about how hard this is.
    Senator Cantwell. Great.
    I would like to turn to Mr. Rey, if I could, and ask you a 
question about the budget as it relates to the backlog on road 
maintenance. I think we have a backlog of between $5.3 billion 
and $8.4 billion in deferred maintenance on about 386 miles of 
existing roads. It appears that your budget does very little to 
alleviate that backlog. In fact, you have cut I think $10.1 
million, for a total of $50.87 million compared to $60 million 
enacted in 2002 from the deferred maintenance and 
infrastructure improvement program.
    Do you not agree that in the long term it makes more sense 
environmentally and fiscally to start maintaining the roads 
that we have rather than letting them fall into disrepair?
    Mr. Rey. Yes.
    Senator Cantwell. So, why not reflect that in the budget?
    Mr. Rey. I think that there are a couple of pieces to that. 
Our annual operating budget is probably not the place where we 
are going to make major inroads in that large backlog, but I 
think what we are hoping to do later this year and early next 
is to engage the committees of jurisdiction, when Congress 
revisits the ISTEA bill, to see if we can secure some 
additional resources through the ISTEA funding to get a larger 
chunk of that backlog dealt with.
    Senator Cantwell. I think you are proposing $44 million on 
road construction to support the new harvest levels. So, how 
much of that $44 million would be spent on new roads?
    Mr. Rey. Very little of it. I think it is almost 
exclusively maintenance and reconstruction of existing roads.
    Senator Cantwell. So, you could provide the committee with 
an exact number on that?
    Mr. Rey. I will provide you with an exact breakdown. But I 
think we are somewhere in the neighborhood of 90 percent on 
maintenance and reconstruction.
    Senator Cantwell. Mr. Rey, in your testimony you mentioned 
the Thirtymile Fire, I think in your written testimony. As you 
are aware, OSHA just last week issued five citations, three 
serious violations, and two willful violations against the 
Forest Service.
    Since this committee held an oversight hearing on the 
incident in November, my office, Senator Bingaman, and the 
Forest Service have been engaged in ongoing dialogue about what 
we should do to change the culture of complacency that I think 
exists within the Forest Service on this issue.
    It is my understanding, Mr. Rey, that the money for 
firefighter safety and training is contained within the Forest 
Service wildlife preparedness account. However, after one 
adjusts for uncontrollable costs, the President's budget 
actually cuts this funding by $39 million. So, how can we get 
the Forest Service to commit to the safety programs that they 
need when these safety programs within the budget are actually 
being cut?
    Mr. Rey. The overall fire plan program budget is being 
reduced by the amount that you have indicated. A good chunk of 
that reduction will be offset by outsourcing or contracting out 
some of the fire plan work, not specifically related to 
firefighting per se. Our actual commitment to firefighter 
training is increasing, and I can get you a separate breakout 
of that.
    But more broadly, we are committed to making the reforms 
not only indicated in our own internal investigation, but in 
OSHA's investigation as well. We were relieved to some extent 
to see that OSHA's findings were comparable to ours, so that we 
were correctly, we think, diagnosing the problem. We have, as 
you indicated, been engaged in an ongoing dialogue with your 
staff and the Forest Service. I have participated in most of 
those meetings, and we have a commitment from OSHA that they 
will review our performance in a year's time so that we will 
have and you will have an independent audit of the success we 
are making in improving our firefighter safety responsibility.
    Senator Cantwell. You mentioned contracting out. What work 
is being contracted out?
    Mr. Rey. We are going to look toward contracting a lot of 
the fuel reduction activities and some of the support 
activities associated with firefighting, but not the actual 
firefighting force per se. And I can give you a better 
breakdown of that, if you want, as well.
    Senator Cantwell. How long would you predict your audit 
would take?
    Mr. Rey. Our audit of the Thirtymile Fire?
    Senator Cantwell. Yes.
    Mr. Rey. Our audit of what went wrong at the Thirtymile 
Fire is complete. Our action plan is in place and being 
implemented, and I believe we are scheduled to accomplish 
implementation of that action plan over the course of this 
year, with most of the major elements being completed before we 
get into this year's fire season.
    What remains under review is the individual personnel 
review to establish whether there are individual personnel 
issues that we have to address, and I am hopeful that we will 
complete that relatively shortly.
    Senator Cantwell. Well, I still have a great deal of 
skepticism about the change in culture that I think needs to 
happen there. In talking to constituents in the Northwest, 
there is a great deal of concern that maybe the Forest Service 
should suspend some of the activities of these young people 
being engaged and trained in a very short period of time and 
being out on the line for this upcoming fire season until we 
can, in fact, guarantee that the system has been improved. What 
would your thoughts be?
    Mr. Rey. That is something we can look at, but we are not 
hiring any new firefighters this season.* So, everyone who will 
be on the line this year will have had 1 year of experience and 
will have benefitted from the additional training that the 
action plan resulting from the Thirtymile Fire indicates. So, I 
think I would like to review----
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    * We believe Under Secretary Rey misspoke regarding firefighters. 
We suggest that on page 59, beginning on line 7, the passage ``. . . 
but we are not hiring any new firefighters this season'' be stricken as 
well as the passage at line 16 ``. . . we will not be hiring new 
people.'' We suggest inserting the following: ``We will be hiring new 
firefighters and they will be trained and assigned based on their 
experience and capability.''
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    Senator Cantwell. Even if we see an increase in activity?
    Mr. Rey. No. If we see an increase in fire activity in 
season, we will not be hiring new people.* We will be 
contracting with other firefighting authorities to assist in 
the firefighting effort. Those could be Canadians. Some years 
we have used Australian firefighters. In some years, in 2000 
for instance, we have used the National Guard to do some non-
fire line related work so as to free up some of our staff. You 
do not hire new firefighters once you are in the season in 
response to the immediate effects of that particular fire 
season.
    Senator Cantwell. So, what are the specific funding levels 
for safety and training?
    Mr. Rey. I will have to get you that for the record. I do 
not have it broken out in the budget materials with me today.
    Senator Cantwell. But you think it is an increase? You 
think it is status quo? You think it is a decrease?
    Mr. Rey. I think related to the findings of the Thirtymile 
incident, we will be increasing some of our safety and training 
programs.
    Senator Cantwell. Could you talk about the charter forest 
proposal and the administration's intentions?
    Mr. Rey. The charter forest proposal in the President's 
budget is a response and a reaction to a number of suggestions 
that have been put forward to us to look at alternative ways to 
manage individual national forests on an experimental or pilot 
project basis. The originators of those proposals have been as 
diverse a group as Congressman Udall and Congressman McGinnis 
who wrote to us on November 29 when we were completing the 
development of the fiscal year 2003 budget urging us to look at 
some ideas in this area.
    Additionally, we have had proposals from the Center for the 
Rocky Mountain West at the University of Montana, as well as a 
consortium of environmental and other groups, who put together 
a working group called The Forest Options Group, and identified 
five or six different alternative management arrangements for 
individual national forests on a pilot project basis.
    Also, we had a group of people brought together last fall 
under the auspices of Liz Claiborne's foundation in Missoula to 
talk about similar alternative arrangements.
    I guess the unifying theme in all of these proposals is 
that it ought to be possible to take an individual national 
forest or a couple of national forests on a pilot project basis 
and, while maintaining strict compliance with all of the 
Federal environmental laws, look for alternative management 
procedures that get us better on-the-ground results with a 
greater degree of collaboration.
    Hearing all of that from as wide a variety of sources as we 
heard it from inspired us to put forward the idea in this 
budget proposal and see if there is a reciprocal interest on 
the part of Congress to exploring this further. We do not have 
a legislative proposal to put before you, and I am not sure the 
best next step, if there is interest on the part of the 
Congress, is for us to draft such a proposal.
    I suspect instead the next best step might be for the 
committees of jurisdiction, if there is sufficient interest, to 
schedule a hearing to hear from some of the authors of these 
proposals and perhaps some of the opponents of the proposals, 
and then evaluate whether there is a joint willingness to 
proceed.
    If that is the case, if we get that far, then I think the 
next step might be for the administration to sit down and work 
with Congress to draft the parameters of what an acceptable and 
useful pilot project would look like. That is about as far as 
we have gotten to date, and so that is what is envisioned in 
the proposal that we have put before you so far.
    Senator Cantwell. Do you expect to make recommendation for 
changes to the Endangered Species Act?
    Mr. Rey. No, not as part of this proposal.
    Senator Cantwell. Actually, I think I had a follow-up 
question for Mr. Griles that I will just submit to the record 
in regards to the PILT program and the 22 percent decrease in 
the Payment in Lieu of Taxes, unless anybody else wants to 
comment on that.
    Then I have one last question I guess to you, Mr. Carnes, 
about BPA borrowing authority. The $700 million in increased 
borrowing authority falls short of the amount needed to bolster 
security and reliability of the electricity grid over the next 
10 years. So, given that the administration has that as a 
priority in bolstering the security of our critical 
infrastructure, where did the $700 million come from?
    Mr. Carnes. The $700 million figure is a level that will be 
required at this time to finance a number of significant 
transmission system, conservation, and hydropower improvements. 
But I do not think that the administration takes the view that 
that would be the end of BPA borrowing authority. Rather it is 
what we are seeking in this tranche of borrowing authority. We 
have been working closely with BPA to identify the particular 
projects against which the borrowing authority would be 
applied. As we work with them to develop what the specific 
projects against which additional borrowing authority would be 
needed, we will evaluate those and would, at the appropriate 
time, then submit a request for additional borrowing authority.
    Senator Cantwell. You are saying sometime in the next 
several months or?
    Mr. Carnes. The earliest time we would do that would be in 
next year's budget request, for the fiscal year 2004 budget. At 
this point, what we are working with BPA to do is to lay down 
exactly which project is going to cost which amount of money 
and how each of these projects is going to be financed. There 
is still some borrowing authority remaining in the borrowing 
authority they have already received. There is then this 
additional tranche of $700 million, and if the need is there, 
we would come back and ask for some more in the next year in 
2004 or beyond.
    Senator Cantwell. Well, obviously increasing the 
reliability of the Northwest system, I am sure you will hear 
more from----
    Mr. Carnes. And may I just say, Senator, that we are 
committed to increasing the economic health and vitality of the 
Northwest.
    Senator Cantwell. That is all the questions I had, but I am 
sorry, Ms. Scarlett, I did not realize you were here 
representing Interior. Did you want to comment on the PILT 
question?
    Ms. Scarlett. Yes, thank you, Senator. Yes, we are 
proposing $165 million in this budget which you were right to 
note is less than the 2002 budget. At the same time, I should 
note it is substantially greater than historical levels through 
the 1990's which ranged between $101 million and $134 million.
    This was a very tough choice for us. We understand that 
this is extremely important to the Western States, and we are 
trying to do our very best to meet the needs of those States, 
but had to make some very difficult tradeoffs. I should also 
note that the $165 million that we proposed is an increase over 
what we proposed last year, although Congress then in 2002 
increased that still further.
    Senator Cantwell. Obviously, Senator Bingaman already 
mentioned the cuts in the President's budget for economic 
action, but this program particularly impacts a variety of 
counties in our State and leaves them without really much 
assistance to provide support for their communities, schools or 
hospitals.
    Sometimes you get the impression that the administration 
knows that whether it is in Hanford cleanup or these programs, 
that the Congress is counter to their beliefs and will just 
supply the funds. And we are at that budget battle again with a 
variety of these programs. Just as you commented, the Congress 
came in last year and pumped up that support. So, I do not know 
if the administration does not believe that these programs are 
effective and responsible actions in these communities or 
whether they just believe that Congress will come in and 
restore the funds.
    Ms. Scarlett. No. Actually we think these are very 
important programs and in fact understand that there are needs 
in those communities for those monies. When we began the 
process last fall, of course, prior to Congress acting on our 
2002 budget, the numbers that we were putting forward, the $165 
million, was an increase over our previous year request, and in 
fact we thought at that time it might actually be equal to 
whatever Congress would propose. In the meanwhile, of course, 
Congress went even further ahead of us on that, and we ended up 
with our proposal below the 2002 enacted level. But we are 
committed to and I think our request, with the increase that it 
had over 2002, showed a recognition of the importance of this 
program.
    By the way, I should also add in some other areas, we are 
attempting to provide resources to local communities. You had 
mentioned the fire plan, and of course, Interior has a role 
there which we are fully funding, and it includes a rural 
assistance component which we think is very important.
    Senator Cantwell. Well, I thank the panelists for their 
time this morning and being patient with us in between votes. 
We will hold the record open for questions to be submitted to 
you by other members for 1 week, and if you could get back to 
them on those questions, we would appreciate it very much.
    We are adjourned.
    [Whereupon, at 12:27 p.m., the hearing was adjourned.

    [Subsequent to the hearing, the following was received for 
the record:]
                                   American Lands Alliance,
                                                    Washington, DC.
             President's Budget Threatens National Forests
    The Bush Administration has released its budget blueprint for FY 
2003 which proposes to increase logging and to create a new ``Charter 
Forest'' system by turning over an entire National Forest (or two) over 
to a locally controlled trust, similar to a Resource Advisory Committee 
(RAC), to manage the land instead of the Forest Service ``to reduce 
management bottlenecks and costs.''
    ``The objective of the proposal is to reduce our unit cost in doing 
the things we do across the board,'' said Undersecretary of Agriculture 
Mark Rey. Few details are available about the Charter Forest program at 
this time, but it is being promoted by advocates who support 
privatizing and/or placing a money-making mandate on the public lands.
    The proposal appears to be a modified version of the Forest Options 
Group proposal and legislation introduced in the last Congress (S. 
1274) by Sen. Larry Craig (R-ID) and his former staffer Mark Rey to 
turn over National Forests to the states. Please see the Forest Options 
Group proposal at http://www.ti.org/2cfinal.html for more information 
about Charter Forests.
    Legislation is needed before any lands can be turned over but this 
could come in the form of a rider on the Interior Appropriations bill. 
Conservationists will be working to stop this dangerous proposal.
                   timber sale budget increases again
    The Administration is proposing spending $278.6 million for timber 
sales on the National Forests. This is a huge increase from the $233 
million budgeted for logging only three years ago. The agency is also 
hoping to sell 2 billion board feet of timber this year, a substantial 
increase from the 1.4 billion expected to be sold this year.
    The timber program will continue to be augmented by off-budget 
funds such as the Salvage fund ($79.8 million) and KV Fund, which are 
fueled by timber receipts as well as hazardous fuels and restoration 
funding that is being used for commercial logging instead of brush 
removal in the wildlands interface zone or for true ecological 
restoration. In addition, it is necessary to count the $.5 million for 
salvage, $1 million for the timber sale pipeline (preparing future 
sales), $38 million for road engineering support and $5.8 million in 
direct logging road construction.
    Other timber subsidies include an additional $5 million for 
biobased products and bioenergy research. The Forest Stewardship 
Program is increased $16 million, of which $10 million is for a small-
diameter and underutilized wood biomass cooperating fund and $6 million 
is to be allocated competitively in priority locations identified by 
States within national priority areas identified by the FS. The budget 
does not include funding for the Economic Action Program or the Pacific 
Northwest Assistance Program.
    On a potentially positive note, the budget includes a new $12 
million emerging pest and pathogen fund. The fund would be used to 
respond to new introductions of non-native or invasive pests or 
pathogens.
           another $235 million for hazardous fuels reduction
    The budget includes approximately $1.5 billion in funding for the 
National Fire Plan, a decrease of about $185 million below the 2002 
level. The reduction from 2002 is a result of reducing one-time 
emergency funding that was enacted to meet short-term needs.
    The 2003 budget maintains funding for priority activities to 
increase efforts to fight wildfires, reduce the risk of fire, and 
assist communities including: $235 million for hazardous fuels 
reduction (allows for the treatment of 1.7 million total acres); $627 
million for preparedness; and $443 million for suppression activities 
which provides funding at the 10-year average. It is important to 
remember that as recent as 1990, the hazardous fuels budget was only 
$80 million. The huge increase in this budget has resulted in a shift 
in agency priorities towards expensive mechanical fuel reduction 
treatments.
    The budget also includes $20 million for a pilot Fire Plain 
Easement Program. Under the proposed program, State officials, in 
consultation with the Secretary, would identify areas within and 
adjacent to NFS lands where potential fire suppression expenditures may 
exceed the estimated value of the private land. Within identified 
areas, States or the Secretary may use grant funds to acquire on a 
``willing seller'' basis perpetual easements to permit the 
implementation of fire suppression strategies, including allowing fires 
to burn without suppression activities.
    This program has a potential benefit by allowing for more 
consistent management and a facilitating a let burn policy in back 
country areas by removing ``interface'' conflicts. However, it could 
also become a new $20 million subsidy to industrial landowners who 
would receive an easement from the government which would then take 
responsibility for thinning these private forests. We'll need to 
monitor this program to see how the money is actually spent.
                 making progress on fire policy issues
    In a serious of surprising acknowledgments about issues the 
conservation community has raised about the fire program the 
Administration's budget mentions the need to reduce costs for fire 
suppression, the need to focus on the urban/wildlands interface and the 
need for improved fire planning. The budget states:
    ``Costs for suppression have also risen as the other chart shows. 
In 2001, the Forest Service spent $1,300 per acre in suppressing fires 
on 573,000 acres of forests, an increase in cost per acre of almost 300 
percent over 2000. In comparison, wildfire suppression costs for the 
Department of the Interior (DOI) averaged about $235 per acre, although 
much of DOI's lands are grasslands, which burn less intensely than 
forests. In some western areas, the government pays more in suppressing 
fires than the fair market value of the structures threatened by those 
fires. It would literally be cheaper to let the fires burn and pay 100 
percent of the rebuilding cost.''
    ``The Forest Service is looking at a variety of ways to control the 
costs of fire suppression. For example, the Forest Service will work 
with state and local governments to identify areas to pilot test `fire 
plain easements' as a way to protect lives while ensuring that taxpayer 
funds are used wisely.''
    ``Another way to protect communities and lower fire-fighting costs 
is to reduce the amount of brush and small trees, especially in areas 
adjacent to human populations. The President's Budget funds the Forest 
Service Hazardous Fuels Treatments program at $229 million, with over 
70 percent of funds directed to the wildland-urban interface. This will 
result in the completion of buffers at eight percent of eligible 
vulnerable communities by the end of 2003.''
    ``This budget also emphasizes improvements in fire management 
planning, and will incorporate the results of several ongoing program 
reviews, so that better decisions can be made regarding when and how to 
fight fires, and fire program performance and cost effectiveness.''
    This is a good sign that the agency is feeling pressure from 
Congress on all of these issues. This year conservationists we will 
continue working with the agency on these issues as well as better 
defining the urban wildlands interface zone and prioritizing 
communities at risk.
            legislative proposals in the president's budget
    This year's budget includes a number of legislative proposals that 
may be included in the Interior Appropriations bill, or that may move 
through the regular committees.
Permanent Authority for Recreation Fees
    Proposed legislation would make permanent the current demonstration 
program and would authorize the Forest Service to retain and use 
recreation fees collected under the program which is opposed by the 
conservation community. We expect hearings in both the House and Senate 
to discuss this effort to make the fee demonstration program permanent.
Increased Timber Sale Competition
    Proposed legislation would increase competition for commercial 
timber sales. The legislation would require timber sales, with certain 
limited exceptions, to be sold using the sealed bidding method. The 
legislation would also alter the requirement for harvesting timber, 
allowing recreation or conservation groups to participate in auctions 
of timber harvest rights. If only conservationists could afford to buy 
them all!
                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

                        Department of the Interior,
                                   Office of the Secretary,
                                    Washington, DC, April 22, 2002.
Hon. Frank Murkowski,
Ranking Minority Member, Committee on Energy and Natural Resources, 
        U.S. Senate, Washington, DC.
    Dear Senator Murkowski: Enclosed are responses to questions 
submitted following the February 12, 2002, hearing before the Committee 
on Energy and Natural Resources concerning the Department's Fiscal Year 
2003 budget request.
    Thank you for the opportunity to provide this material to the 
Committee.
            Sincerely,
                                   Jane M. Lyder,
                                           Legislative Counsel,
                                           Office of Congressional and 
                                               Legislative Affairs.
[Enclosure]
              Responses to Questions From Senator Bingaman
    Secretary Norton stated that this budget request is ``the largest 
Interior budget ever presented by a President.'' Unfortunately, the 
Youth Conservation Corps program, operated by the Bureau of Land 
Management, the National Park Service, and the Fish and Wildlife 
Service, does not benefit at all from this large budget. In fact, you 
request no increase for YCC ($7 million total, same as FY 2002). YCC at 
one time was funded $60 million and employed 30,000 young people on our 
public lands each summer.
    Question. Rather than continuing to add new programs to the 
Conservation Spending Category, as you did last year (Private 
Stewardship grants program and the Landowner Incentive Grants), and 
propose to do this year (i.e. the North American Wetlands conservation 
fund and private forest stewardship), why don't you request increases 
for programs that are currently eligible such as YCC?
    Answer. In formulating the FY 2003 President's Budget, the 
Department had to make difficult choices in balancing competing needs 
at a time of fiscal constraint. The Department's proposed allocation of 
funds best meets our assessment of current needs while maintaining the 
current level for the Youth Conservation Corps (YCC.)
    The Department's request for the Youth Conservation Corps is $5 
million, the same as the FY 2002 level. Funding for the YCC has more 
than doubled since FY 1999 when the program totaled $2.0 million.
    The 2003 budget request for YCC will provide almost 1,000 students 
an opportunity to work at over 160 different Interior Department sites. 
Young adults participate in conservation projects such as maintaining 
parks and other public lands, and in return, they are introduced to the 
conservation mission of the Interior Department.
    In addition, the U.S. Forest Service 2003 budget maintains YCC 
funding at the current level of $2.0 million, providing a total YCC 
program of $7.0 million.
    The programs you mention: the Private Stewardship grants program; 
the Landowner Incentive grant program; and the North American Wetlands 
Conservation Fund program all promote important conservation efforts 
that are critical to the mission of the Department of the Interior.
    The $10.0 million requested for the Private Stewardship grants 
program will directly assist individuals and groups engaged in local, 
private, and voluntary conservation efforts for the benefit of 
federally listed, proposed, or candidate species, and other imperiled 
species.
    The Landowner Incentive program will provide $50 million to 
facilitate private wildlife conservation efforts. The program provides 
competitive matching grants for the protection and restoration of 
habitats found on private lands that benefit listed species or species 
at risk.
    The $43.6 million North American Wetlands Conservation Fund program 
provides matching grants to private landowners, States, non-government 
conservation organizations, Tribes, trusts, and corporations for 
acquisition restoration, and enhancement of wetland habitat.
    Question. I understand that EIA will be taking over from the 
private sector (AGA) the function of reporting natural gas storage data 
on a weekly basis. Storage data is a key market indicator in the 
natural gas commodity markets. Does your budget request provide 
additional funding for this responsibility? Are you discontinuing other 
reports to make room for the storage report? I am also concerned about 
improving the quality and availability of electric industry data. What 
does the budget contemplate in this area?
    Answer. Natural Gas Data: The budget for 2003 requests authority to 
use $500,000 in EIA prior year deobligated funds to pay for the FY 2003 
operation of the new weekly gas storage data system, the web-based 
dissemination of the estimates, and the conduct of data quality 
initiatives. No monthly or annual data reports have been discontinued 
to make room for the new weekly storage report.
    Electricity Data: The Energy Information Administration's proposal 
is to use $1.3 million to continue to improve the quality, quantity and 
relevance of its electric power data. To improve the scope of the 
electricity data, the Office of Management and Budget approved EIA's 
new electric power data collection forms during November 2001. These 
new forms will now collect most of the same information from 
nonutilities, as it has previously collected from utilities, as 
nonutility electricity production is a growing part of the total 
electricity picture. To accomplish this, EIA will be collecting more 
financial, environmental, receipts and sales data from nonutilities, 
and EIA will also be collecting more information on existing and new 
transmission lines from both utilities and nonutilities.
    To improve timeliness, as well as data quality, EIA has developed a 
new data collection system to allow for the respondents to enter their 
data directly into EIA's database using the Internet. The system is 
designed to supply the respondents with feedback on the quality and 
accuracy of their data, by providing comparisons of their data to 
industry norms or their prior year's data. Assisting the data providers 
with this ``real-time'' review of their submission will improve the 
quality of the data delivered to EIA while reducing the time and 
resources needed to audit and follow-up on errant submissions. The 
system will also include quality assessment reports that will evaluate 
the data from a higher level of aggregation. Performance statistics are 
also being incorporated to monitor the quality of the data over time.
    EIA is also developing a new design for its data dissemination. EIA 
will make its electric power data available on the Internet through the 
use of easily accessible spreadsheets at a variety of levels (i.e., 
national, State, region, company level).
                           nuclear power 2010
    Question. DOE proposes to establish a new, $38.5 million program 
called Nuclear Power 2010, designed to help the private sector overcome 
technical and regulatory obstacles facing the deployment of new nuclear 
power plants. The Department will cost-share with project teams 
comprised of reactor vendors and power generation companies in a two-
phase program. The first phase is an effort to demonstrate untested 
Nuclear Regulatory Commission licensing processes. The second phase 
will complete the engineering and design work for one advanced light 
water reactor and one advanced gas-cooled reactorin time to allow start 
of plant construction by 2005.
    The Administration proposes to establish a program to help get new 
nuclear power plants built in the U.S. Have U.S. utilities expressed 
significant interest in building these new plants?
    Answer. U.S. utilities and power generating companies are 
demonstrating growing interest in building new nuclear power plants, 
due in part the recognition that nuclear power plants are expected to 
be profitable sources of generation, growing recognition of the clean 
air benefits associated with nuclear energy, and the strong performance 
and record of the Nation's existing nuclear power plants. As you know, 
there has been a strong secondary market for purchase of the nation's 
existing nuclear power plants and each year the Nation's existing 
nuclear plants achieve record performance. Also, the activities of the 
Federal Government regarding nuclear technology and policy and the 
future of nuclear energy in the U.S. and abroad cannot be overstated.
    Exelon Corporation has been looking into development and building 
of new nuclear power plants for several years. Exelon has become a 
partner along with British Nuclear Fuels (BNFL) and Eskom, a South 
African nuclear utility, in a corporation called PBMR Limited that is 
focused on the development and construction of the Pebble Bed Modular 
Reactor (PBMR). Exelon's interest is to build and operate this advanced 
gas reactor in the United States.
    Several other nuclear power companies have been seriously 
evaluating the prospects of new nuclear power plants in the near term. 
Dominion and Entergy have both publicly stated their interest in new 
nuclear power plants as part of their future electricity generation 
strategies. The Department is aware these three utilities have 
evaluated, or are in the process of evaluating, potential nuclear power 
plant sites. Dominion and Exelon are participating in Department 
sponsored cost-shared Early Site Permit scoping studies of both Federal 
and commercial site locations. Utilities are discussing the deployment 
potential of several advanced nuclear power plant concepts with vendors 
such as Westinghouse, General Electric, and General Atomics. Foreign 
interest in the U.S. nuclear generation market is also increasing. 
France's Framatome and Canada's AECL both plan discussions with the 
Nuclear Regulatory Commission (NRC) regarding the Design Certification 
of their advanced designs. Japanese companies have held discussions 
with several nuclear power generating companies regarding the 
construction of a certified advanced reactor design.
    The interest level is high and utilities are participating in these 
activities with considerable enthusiasm. They are working very 
aggressively to determine whether the business case exists to build new 
nuclear power plants in this country by the end of the decade.
                    pension and health care benefits
    Question. Please explain why the proposed change is not explicitly 
called out in the DOE budget request, and why the proposal does not 
endanger federal employee benefits and usurp the authority of Congress.
    Answer. The Fiscal Year 2003 Congressional Budget submission 
includes the increased cost to fully fund accruing pension and 
annuitant health benefits. These amounts are identified in the program 
direction totals for each appropriation. An explanatory footnote was 
also included showing the specific amounts for each year. The 
Administration proposal does not endanger federal employee benefits 
because the increased discretionary amounts are to fund the post-
retirement costs of current employees, not the benefits of current 
retirees, which are funded by mandatory payments from the retirement 
funds. The intent is to fund the total costs of each and every 
employee, including their accruing post-retirement costs, at the time 
that the employment decision is made. The presentation of the full 
costs in the budget will allow the Congress to see a much more accurate 
picture of real costs of programs.
               Responses to Questions From Senator Akaka
    One of the pressing problems facing Hawaii is the identification of 
extensive areas of critical habitat for endangered species by the U.S. 
Fish and Wildlife Service. These actions are currently taking place in 
Hawaii under court order, but nonetheless Hawaii has the highest number 
of endangered species in the U.S. and faces daunting responsibilities 
to protect the species and to work with the public in conservation 
efforts. Our state agencies are faced with overwhelming challenges and 
lack the appropriate funds to address the needs. The FY 2003 budget 
request for the Cooperative Endangered Species fund is reduced by $5.2 
million from last year's appropriation. Additionally, the conservation 
spending category--Title VIII of the FY 2001 Interior Appropriations 
Act, or CARA ``lite''--has also decreased by $441 million from 
authorized levels established by Congress in 2001.
    Question. Given the reduction in funding for the conservation 
categories such as Title VIII and the Cooperative Endangered Species 
Program, how do you see the Administration's proposed Cooperative 
Conservation Initiative (CCI) filling the gap to address needs of 
states like Hawaii with intractable challenges for endangered species 
and nonindigenous species? How will CCI funds be allocated to states, 
and on what basis?
    Answer. The $100 million Cooperative Conservation Initiative (CCI) 
provides mechanisms and incentives for states and Interior Department 
Bureaus to work together to address the conservation challenges faced 
in many regions of the country, and can help address the unique 
conservation challenges in Hawaii.
    The CCI is an approach to conservation that strengthens our 
partnerships with states and local governments and other partners. Of 
the $100 million requested for CCI, half would go to the states through 
the Land and Water Conservation Fund State Grant Program. The other 
half would be divided among our land management agencies, the National 
Park Service ($22 million), the Fish and Wildlife Service ($18 million) 
and the Bureau of Land Management ($10 million).
    Partners are required for CCI funds and may be States, local 
governments, Tribes, non-governmental organizations, private sector 
entities, and/or private individuals. Coalitions of partners are 
encouraged. A minimum of 50 percent match through new cash and/or in-
kind goods and services (not used for match elsewhere currently or 
previously) is required, thereby doubling the effect of the Federal 
funds.
    There are two different aspects of the new Cooperative Conservation 
Initiative in so far as the generation of grant applications is 
concerned. First, applications for the LWCF State Grants portion will 
be nominated through the Governors' LWCF State Liaison Officers while, 
the BLM, FWS, and NPS Directors each will make final decisions on 
competitive applications for funds for the relevant State LWCF and/or 
Federal program under his/her purview. Second, the CCI LWCF State 
Assistance funds would be available through grants, while the Federal 
CCI program funds will be made available through cooperative 
agreements, memoranda of understanding, or contracts.
    Question. I am pleased to see the Administration request of $107 
million in additional funding for the National Park Service, including 
a continued commitment to address the backlog in maintenance and 
facilities, and much-needed increases for park management. I would add 
that I am especially pleased to see the Park Service propose $4 million 
in priority funding for Hawaii Volcanoes National Park in the Land and 
Water Conservation Fund.
    My question has to do with the proposed increases in the Park 
Service's Resource Stewardship programs under Park Management. As you 
know, our national parks are under siege by invasive species, from the 
Great Smoky Mountains to Haleakala. In some parks it is feral pigs 
causing damage, and in other parks it is introduced tree species, such 
as miconia in Hawaii. Miconia is a fast-growing, tall, invasive tree 
species that forms dense, impenetrable stands. It is currently outside 
the boundaries of Haleakala National Park and we need to keep it there. 
Can you explain whether the increases identified to fight exotic 
species under the Natural Resource Challenge account can be used to 
fight exotics if they are outside the boundaries but threatening the 
resources inside the national park? Can demonstration fees be used to 
address the situation? What assurances can you provide that we can get 
some relief from invasives that threaten park resources, both inside 
and outside the boundaries?
    Answer. The National Park Service and the Department of the 
Interior are very concerned about invasive exotic species and very 
cognizant of the fact that controls are ineffective unless neighbors 
work together. Miconia threatening Haleakala National Park is a special 
concern. The National Park Service is an active member of the Maui 
Invasive Species Council that works to control Miconia and other 
invasive species both on and off the park.
    The National Park Service's Native and Exotic Species Management 
Program, part of the Natural Resource Challenge, provides funding 
directly to a number of parks and nine Exotic Plant Management Teams to 
manage exotic species within park boundaries. Haleakala has received 
direct funding and is the host park for the Pacific Islands Exotic 
Plant Management Team. However, our solicitors inform us that current 
National Park Service statutes do not provide the authority to conduct 
these activities outside of park boundaries.
    The President's FY 2003 budget proposes $22 million for the 
Cooperative Conservation Initiative. As proposed, this funding requires 
a one-to-one match of non-Federal funding or in-kind contributions. The 
non-Federal matching funds could be used to fight exotic species 
outside of the parks boundaries. Federal funds will be used in a manner 
consistent with park units' operating authorities. This funding would 
allow increased efforts with the Maui Invasive Species Council and with 
other groups and neighbors working together to control invasive exotic 
species.
    Invasive species are a threat to this country's resources. The more 
we can provide our managers with the flexibility to address these 
resource threats through collaborative efforts with our neighbors the 
better we can protect our resources.
    Question. I took note of the $11.2 million decrease between the FY 
02 budget and the proposed budget for the Office of Insular Affairs for 
FY 03. The Office of Insular Affairs has been consistently underfunded 
in the past few years, given its immense responsibilities in addressing 
the needs of the insular areas and territories.
    The Office of Insular Affairs budget includes a $750,000 increase 
to support additional staffing for oversight of the Compact of Free 
Association financial assistance. The budget documents indicate an 
increase of four full-time employee positions. Can you please clarify 
why four additional employees are going to be necessary for oversight 
of the Compacts?
    Answer. In reviewing the experience of the first period of Compact 
financial assistance, the Office of Insular Affairs believes the 
Compact, as negotiated, moved too far in the direction of local control 
and away from basic standards of accountability and United States 
oversight.This need for greater accountability and oversight has been 
endorsed by the Interagency Group on Freely Associated States in 
reviews conducted by the General Accounting Office and in hearings 
before Congress. Our budget request for additional positions is a 
significant part of the United States response to the demonstrated need 
for greater accountability and oversight of United States funds. Our 
budget request actually envisions eight additional staff positions for 
this function, six of which will be centrally located in Hawaii and two 
in Washington.It will only require four full-time equivalent staff-
years in fiscal year 2003 because we will be in transition and 
recruiting and hiring will be occurring throughout the year. The new 
financial assistance package is expected to more than double OIA's 
total grant funding, for which we currently have eight dedicated staff-
years.
    Question. The FY 03 budget completely eliminates Compact Impact Aid 
funding for the State of Hawaii. FY 02 was the first time that Hawaii 
received funding for compact impact assistance despite the millions of 
dollars that Hawaii has spent to meet the health and education needs of 
compact migrants. Could you explain the justification of eliminating 
Compact Impact Assistance for the State of Hawaii when the health and 
medical costs associated with compact migrants continues to increase.
    Answer. The Department recognizes the impact on social and 
educational programs in Hawaii and other United States insular areas. 
We have worked within our Assistance to Territories account to identify 
impact assistance for Guam and the Northern Mariana Islands. We are now 
working closely with the Department of State, seeking to deal with this 
issue on a broader basis in the context of re-negotiating the Compact 
of Free Association financial assistance package. We hope to address 
Hawaii Compact impact issues in the new financial assistance package. 
Unfortunately, any funding we identify through this process will not be 
available until the new financial assistance package is implemented in 
FY 2004.
    Question. How much does the Department of Energy propose to spend 
on the FreedomCar in fiscal year 2003? Is this an interagency program? 
If so, which other Federal agencies are involved in this venture and 
how will they be involved?
    Answer. The Department of Energy (DOE) FY 2003 budget request for 
FreedomCAR is $150.3 million. This amount includes funding for the 
Energy Efficiency and Renewable Energy's Offices of Transportation 
Technologies and Power Technologies. DOE is the sole Federal agency in 
the FreedomCAR partnership. Other agencies will be involved on a 
consultative basis. For example, the Department of Transportation may 
provide expertise on new infrastructure, requirements, and we expect 
that the Environmental Protection Agency will provide advice concerning 
technologies that are most likely to achieve future emission standards.
               Responses to Questions From Senator Craig
                  cooperative conservation initiative
    I am encouraged that the Interior Department is seeking to explore 
and build on creative natural resource restoration ideas through its 
cooperative conservation initiative. In my view, however, agency 
implementing guidance and selection criteria for an initiative such as 
this become the most important factors in it success or failure. Many 
of our resource industries are at the forefront in crafting solutions 
for restoring disturbed environments.
    Question. Will commercial resource development companies, for 
example, mining companies, be eligible to participate in projects 
funded under this initiative?
    Answer. The Cooperative Conservation Initiative is a cost share 
program that funds restoration, protection, and enhancement of natural 
areas through established programs and new pilot programs that feature 
creative approaches to conservation.
    Not-for-profit subsidiaries of commercial resource development 
companies will be eligible to participate in projects funded under this 
initiative provided the projects further the Federal mission of the 
bureau with which it seeks to partner and meet the criteria of the CCI 
program.
                 environmental management--new approach
    Under the new approach to the Environmental Management Program 
proposed in the DOE budget, if states do not agree to renegotiate their 
clean-up agreements, they will suffer a greatly reduced clean-up budget 
in the coming fiscal year.
    Question. Under such a scenario, how would the DOE decide which of 
its milestones it would meet and which ones it would fail to meet?
    Answer. The overall requested funding level of $6.71 billion is 
approximately the same as the FY 2002 appropriation. The Department 
anticipates the FY 2003 appropriation will enable it to be 
substantially in compliance with its legal agreements and requirements 
in FY 2003.
    We can't do business as usual under any funding scenario. We must 
be focused on more than meeting our legally enforceable milestones, but 
also on addressing our environmental obligations to the communities and 
the American taxpayer. With the additional funding from the EM Cleanup 
Reform account, we will be able to pursue cleanup approaches that will 
produce more real risk reduction, accelerate cleanup, or achieve much 
needed cost and schedule improvements, as well as maintain compliance 
with legal requirements.
    Question. Why should States have confidence in any new agreements 
they sign with DOE, if DOE openly acknowledges it cannot meet the 
agreements in place now?
    Answer. It is not our intention to evade compliance with any 
regulatory agreements. What the Department is trying to do throughout 
the complex is revise its cleanup strategies and internal practices to 
achieve more cleanup and risk reduction.
    These regulatory agreements were always intended to be living 
documents, with processes to enable improvement and revisions as needed 
to reflect actual cleanup experience to achieve our mutual goals. The 
Department anticipates the FY 2003 appropriation, in combination with 
improved agreements with regulators and improvements in program 
performance resulting from implementing the Top-to-Bottom 
recommendations, will enable it to be in compliance with its legal 
agreements and requirements in FY 2003.
    The Department recognizes its obligation to the communities that 
have supported the Department's national security mission over the past 
50 years, and is firmly committed to completing the cleanup of the 
sites that contributed to that mission, and to ensuring the safety of 
the workers and the public while that cleanup is underway.
                        nuclear energy research
    Question. Two years ago, the Idaho National Engineering and 
Environmental Laboratory and Argonne West Lab were named the DOE's Lead 
Laboratories for nuclear reactor design and technology. I am encouraged 
to see the DOE's new initiative entitled Nuclear Power 2010. This new 
initiative has the goal of working with the nuclear power industry to 
address the barriers to the deployment of new nuclear plants.
    Aside from this initiative, however, nuclear energy research--as a 
whole--is down in funding from the current year. How do you explain 
this, given the support expressed for nuclear energy in the 
Administration's National Energy Policy?
    Answer. The Administration is committed to a balanced energy 
portfolio, one that recognizes the benefits of nuclear energy in 
providing reliable, clean, and affordable electricity for the Nation. 
We believe that nuclear energy is key to long term energy security. The 
FY 2003 budget request reflects the need to fund higher priorities 
within the Office of Nuclear Energy, Science and Technology and within 
the Department.
    Despite these reductions, the Department is moving forward with a 
substantial nuclear R&D agenda. Nuclear Power 2010 is the first major 
new nuclear initiative in about a decade. It is aimed at deploying new 
nuclear plants in the United States by the end of the decade. We 
believe this is an ambitious goal but one that is achievable, and that 
there is a role for government in working with industry to remove 
technical and institutional barriers to building new plants. As such, 
we are proposing to work in cost-shared cooperation with industry to 
demonstrate the streamlined but never tested regulatory processes 
required to build and operate new nuclear plants. This year, we 
announced plans to initiate a cost-shared demonstration of the Early 
Site Permit process with nuclear utilities or generating companies over 
the next thirty months and we are proposing additional activities for 
FY 2003 to initiate cost-shared reactor technology development 
activities for one advanced light water reactor and one gas-cooled 
reactor technology.
    The Administration also supports long-term nuclear R&D. The 
Department proposes to increase our investment in Generation IV 
technologies, with $8 million requested in FY 2003. With the support of 
our lead laboratories, Idaho National Engineering and Environmental 
Laboratory and the Argonne National Laboratory, this funding will 
enable us to complete the technology roadmap in early FY 2003. The 
roadmap will identify the six to eight most promising technologies, and 
the Department will begin working in cost-shared cooperation with the 
Generation IV International Forum countries on R&D. Our Nuclear Energy 
Research Initiative (NERD request of S25 million, although less than 
this year's appropriation will enable those projects awarded this year 
and underway from prior years to continue in FY 2003. We strongly 
support the objectives of NERI and hope to see the program grow again 
in the future. The Department also supports the objectives of the 
Nuclear Energy Plant Optimization (NEPO) program and hopes that the 
highest priority projects will continue to be supported by industry.
    Question. Two years ago, the Idaho National Engineering and 
Environmental Laboratory and Argonne West Lab were named the DOE's Lead 
Laboratories for nuclear reactor design and technology. I am encouraged 
to see the DOE's new initiative entitled Nuclear Power 2010. This new 
initiative has the goal of working with the nuclear power industry to 
address the barriers to the deployment of new nuclear plants.
    In your vision of developing automobiles which utilize hydrogen for 
their fuel, how do you envision the amounts of hydrogen necessary for a 
substantial portion of the automobile market will be produced? Does 
nuclear power play a role in this?
    Answer. Hydrogen has the potential to solve two major energy 
challenges that confront America today: reducing dependence on 
petroleum imports and reducing pollution and greenhouse gas emissions. 
Non-emitting energy technologies for the production of hydrogen, 
including nuclear power, must be used to the fullest extent possible if 
we are to meet these two challenges. The amount of hydrogen necessary 
to fuel even a modest portion of U.S. automobile market will far exceed 
the current 3 billion cubic feet of hydrogen needed each day by U.S. 
oil refineries to produce gasoline from ever increasingly heavy crude 
oils. The standard method for hydrogen production today is, by 
``reforming'' natural gas at high temperatures which also results in 
additional greenhouse gases. The steps required to transition the 
Nation to a hydrogen-based energy infrastructure are outlined in the 
Department of Energy's document, ``A National Vision of America's 
Transition to a Hydrogen Economy--To 2030 and Beyond.'' This document 
is based on the results of the National Hydrogen Vision Meeting held in 
November 2001, at which 53 senior executives representing energy 
industries, environmental organizations, and Federal and State 
government agencies met to discuss the future of hydrogen in America's 
energy future.
    As a non-emitting source of energy, commercial nuclear power is a 
very, attractive method for the generation of large quantities of 
hydrogen. The high temperatures attainable in gas-cooled and liquid 
metal-cooled reactors allow higher efficiency thermochemical water-
cracking processes to be employed, increasing the overall efficiency to 
50-60 percent compared to 20-30 percent in traditional processes such 
as electrolysis. These reactor technologies--which are areas of 
significant interest to our lead laboratories--can supply a mix of 
energy products, such as electricity during peak demand and hydrogen 
during periods of lower demand, or offer a dedicated baseload supply of 
hydrogen which may be supplemented by other non-emitting sources such 
as hydropower. As a non-emitting baseload energy source, nuclear is 
uniquely suited to support large scale hydrogen production for use in 
the transportation sector.
         subsurface geosciences--release of current year funds
    In DOE's budget for the current year, Congress provided $4 million 
for Subsurface Geoscience Research at the INEEL. This funding is to go 
to eight universities in the Pacific Northwest and Alaska. Although it 
is now February, these funds still have not been released by DOE 
Headquarters.
    Question. Why have these funds not yet been released and when can 
they be expected to be transferred to the Idaho Operations Office?
    Answer. Funding for the Subsurface Geoscience Research Institute 
has been released to the INEEL. Approximately 81 percent is available 
for obligation through March 31, 2002. An additional 9 percent will be 
released in April with the remainder available in July.
    Question. I am pleased to see that your recommended budget for 2003 
contains at least some increase in funding for the fusion program. As I 
understand it, the scientific knowledge of fusion has increased greatly 
over the past decade and the fusion community is ready to move forward 
with a burning plasma experiment.
    Is it time now to put some more resources into developing the 
technology and materials necessary for fusion energy in order to hasten 
the day when fusion energy can be shown to be practical? How much of 
the fusion program budget is spent on these important areas?
    Answer. At this time, in the U.S. fusion program and other fusion 
programs abroad, the next major step is seen as a burning plasma 
physics experiment. The larger fusion energy research programs in the 
European Union and Japan are explicitly directed toward fusion energy 
development paths and, consequently, are investing greater amounts of 
resources in technology and materials than is the U.S. fusion energy 
sciences program. Scientific results from the U.S. Fusion Energy 
Sciences program have strongly influenced the revised ITER design. Once 
decisions are made on the step toward a burning plasma physics 
experiment, the nature and timing of any additional resources for 
further technology and materials research and development capabilities 
will become clearer than they are today.
    In the FY 2003 Budget Request, 11.1 percent ($28.5 million) of the 
total funding request for Fusion Energy Sciences is for enabling 
technologies research and 3 percent ($7.6 million) is for materials 
research. Given the many priorities in the program, the significant 
fusion technology and fusion materials programs abroad and the related 
technology and materials programs in the U.S., and our collaborative 
involvement in both sets of programs, the Department deems this 
allocation to be sufficient.
             Responses to Questions From Senator Murkowski
    Question. Ms. Scarlett, I note that the Forest Service has proposed 
a $25.6 million increase in the National Fire Plan hazardous fuels 
[reduction program] while the Bureau of Land Management seems to have 
requested a flat budget request for this line item. Why is it that the 
BLM has made that much progress in hazardous fuels reduction?
    Answer. A portion of the Forest Service increase reflects the 
Administration's CSRS/FEHBP legislative proposal to budget for the full 
costs of these programs with each agency's budget. While the Department 
of the Interior has similarly included these costs in its request, the 
Department did not break out this funding amount below the account 
level as USDA did in its request. Therefore, this funding is shown as 
being allocated to the wildland fire management account as a whole, 
rather than to fuels reduction specifically, even though these funds 
will ultimately be used to support the fuels program.
    The additional increase for the Forest Service reflects a somewhat 
differing assessment of needs between the two agencies based on the 
amount and types of hazardous fuels on agency lands and the amount of 
work required to reduce fuel levels on each agency's lands. The funding 
levels in the President's budget are not based upon any assessment that 
one agency has made more progress than the other in terms of fuels 
reduction.
    Question. Mr. Griles, the Department of the Interior has proposed a 
50 percent tax credit on capital gains if a private landowner sells his 
or her land to the Federal Government or a Non-governmental 
Organization.
    How much land do you expect to gain through this program and how 
much capital gains tax credits do you expect to pay out per year?
    Answer. We do not yet have an estimate of how much land will be set 
aside for conservation purposes under the Conservation Tax Credit 
program. We expect, however, that this non-regulatory, market-based 
tool to promote conservation goals will be well received. The 
Conservation Tax Credit program allows a 50 percent capital gains 
exclusion for private landowners who voluntarily sell land or an 
interest in land or water, including easements. The Treasury Department 
estimates that over the next five years the value of these tax credits 
could be $328 million as shown below.
    Revenue estimate of the tax credit program by year as estimated by 
the Department of the Treasury:

                2002    2003    2004    2005    2006    2007    2003-
                2007

            -      -2      -44     -90     -94     -98       -328

    Question. How do you propose to offset the Capital Gains revenues 
lost by the federal government, as a result of this problem?
    Answer. The Administration's total budget proposal for all Federal 
agencies factors in the loss in revenue for this 50 percent tax 
exclusion.
              Responses to Questions From Senator Domenici
                     plutonium disposition program
    Question. Progress on plutonium disposition must be coordinated 
between the United States and Russia. It would not be appropriate for 
the United States to be the only nation with such a disposition 
program, especially when Russia has far more surplus plutonium than the 
United States. I realize that the development of the Russian program 
requires the full cooperation of Russia and represents an interagency 
endeavor for the United States.
    Is the Department adequately funded to fully support the 
development of a cooperative program with Russian to dispose of their 
plutonium?
    Answer. At the present time DOE is adequately funded to support the 
development of a cooperative program with the Russian Federation to 
dispose of surplus Russian plutonium. Current U.S. policy is to seek 
international support for plutonium disposition in Russia. In this 
regard, the United States Congress has appropriated $200 million to 
support Russia's surplus plutonium disposition program, and we have 
indicated that we will seek an additional $200 million for this 
purpose. Britain has announced they will contribute the equivalent of 
over $100 million; France and Japan have announced lesser amounts. All 
three total $200 million.
    The Department of State (working with DOE) has intensified efforts 
and meetings with G-7 counterparts with the goal of additional pledges 
by the G-8 Summit in Canada in late June. This will energize the 
necessary negotiations on completing multilateral financial and 
organizational arrangements.
    At the same time, representatives for the Departments of State and 
Energy have begun a series of meetings with their Russian counterparts 
to discuss ways to achieve increased Russian contributions and develop 
a more cost-effective program.
                          rocky flats closure
    Question. In announcing the MOX decision, the Department 
indicated that plans for disposal of 2 tons of plutonium-bearing wastes 
were not final. There has been widespread suggestions that these 
materials will be diluted to enable removal of international safeguards 
and subsequent removal at WIPP. I've been assured by the Secretary that 
a range of alternative disposition paths will be examined for these 
materials and that they will not be shipped to WIPP.
    Does the Department's budget request contain funds required to 
accomplish this additional study?
    Answer. The Department is considering a range of disposition 
alternatives for this material. One of the alternatives involves added 
processing that might result in the recovery of additional product 
suitable for fabrication into MOX fuel if that turns out to 
be a relatively cost effective path for disposition of this material. 
In that instance up to two metric tons might also be credited toward 
the 34 tons that the United States has agreed to dispose of. The 
Department of Energy has adequate personnel to conduct this examination 
and we anticipate that no additional funds will be required to 
accomplish this study.
  research on alternative management approaches for spent nuclear fuel
    Question. The President's National Energy Policy:
          ``recommends that . . . the United States should reexamine 
        its policies to allow for research, development and deployment 
        of fuel conditioning methods (such as pyroprocessing) that 
        reduce waste streams and enhance proliferation resistance.''
    And also stated:
          ``The United States should also consider technologies, in 
        collaboration with international partners . .  ., to develop 
        reprocessing and fuel treatment technologies that are cleaner, 
        more efficient, less waste-intensive, and more proliferation 
        resistant.''
    Yucca Mountain, even if successfully opened as a repository for 
spent fuel, does not have sufficient capacity to accept the spent fuel 
from even the existing nuclear plants much less any new one. 
Furthermore, it would be extremely difficult to gain approval for new 
repositories for spent fuel.
    Why did the Department choose to deviate so dramatically from the 
President's National Energy policy which supported this research and 
cut roughly $65 million from the ongoing programs?
    Answer. This program activity has evolved significantly over the 
last tuo years. Originally, it was directed to apply high-energy 
accelerators to transmute spent fuel to lower quantity, less toxic 
forms. Consistent with the direction of Congress, we are combining the 
technology activities at the national laboratories and the University 
of Nevada-Las Vegas into a single, integrated program to explore both 
reactor and accelerator technologies associated with spent fuel 
pyroprocessing and transmutation.
    While we are interested in the potential of this research, we also 
recognize that it represents a long-term, potentially expensive 
commitment of the Department's scarce nuclear technology research 
funding.
    An independent expert committee chaired by Dr. Burt Richter 
believes that the next phase of this research could cost over $400 
million over the next five to six years. Before we can commit to such 
an investment, it is important that we be certain that the goals and 
approach of this research be carcfully reviewed and a clear plan 
established.
    Such a plan is now being written with considerable input from Dr. 
Richter's committee and should be provided to Congress by the first of 
May. Unfortunately, this plan could not be completed in time to support 
a more robust funding request during the formulation of the 
Department's FY 2003 budget.
    Once it is complete, however, I am confident that the plan will 
detail a technical approach to this research that we will be able to 
discuss with Congress and use to determine an appropriate path-forward 
for this research.
               los alamos national laboratory foundation
    Question. Section 3136 of the National Defense Authorization Act 
for Fiscal Year 2002, specifically authorized the Secretary to continue 
payments to the Los Alamos National Laboratory Foundation for fiscal 
year 2003. That Foundation enables vital educational enrichment 
programs in the region surrounding the Laboratory in Los Alamos. It 
directly supports the Laboratory's ability to recruit and retain the 
scientific staff who certify our nuclear stockpile and are playing a 
vital role in homeland security and the war against terrorism.
    Please explain the Department's rationale for zeroing this support 
in fiscal year 2003.
    Answer. The Department's original plan for funding the Los Alamos 
National Laboratory Foundation was described in our 1998 report to 
Congress pursuant to section 3167 of the National Defense Authorization 
Act for Fiscal Year 1998 (Public Law 105-85). That plan called for 
providing a total of $25M through fiscal year 2002 with no further 
funding thereafter, as required by the Act. As described in our latest 
report to Congress pursuant to section 3136 of the National Defense 
Authorization Act for Fiscal Year 2002, which will be submitted 
shortly.
                            pit fabrication
    Question. A Department of Energy report last year called for 
``projectizing'' the production of pits for our nations nuclear 
stockpile and called for $245 million in fiscal year 2003 in order to 
achieve a certified pit by 2007. Pit production is perhaps the most 
important and highly visible program in our entire stockpile program. I 
am very concerned that the Department only requested $194 million for 
this effort for the next fiscal year.
    Please explain the rationale for the reduced request for pit 
production?
    Answer. The $242 million for fiscal year 2003 called for in the 
September 2001 pit report to the Congress covers both W88 pit 
manufacturing and certification and includes a contingency of some $53 
million. The Department's request of $194 million for FY 2003 covers 
W88 pit manufacturing and certification as well as pit manufacturing 
technology and Modern Pit Facility activities. The program remains on 
track to deliver a certifiable pit by 2003 and a certified pit by 2007. 
To balance near-term priorities, contingency funding for the W88 pit 
manufacturing and certification project has been eliminated in FY 2003. 
These contingency funds are for risk mitigation activities, if needed. 
Risk contingency funding for the projectized W88 pit activities is 
currently budgeted for fiscal year 2004 and beyond.
               Responses to Questions From Senator Wyden
                        soil washing technology
    The Department of Energy (DOE) is currently working with an 
innovative Soil Washing Technology proposal, which the Deputy Assistant 
Secretary has acknowledged as a significant improvement over other 
systems.
    The technology has been reviewed by qualified people including a 
panel at INEEL (Idaho National Nuclear Engineering Laboratory), a 
Hanford Manager, a panel at Oregon State University's Department of 
Nuclear Engineering, which would save the taxpayer's money.
    The proposal initially received a ``business as usual'' form letter 
response at the same time the Deputy Assistant Secretary for 
Environmental Management (Mr. Gerald Boyd) was stating in a conference 
call that he considered the proposal open and ``on the table.''
    The Deputy Assistant Secretary then directly assigned the project 
to the Director of Technology Development (Mr. Jeff Walker), the same 
person who had been working on the project all along.
    Mr. Walker put the technology through an intensive cost comparison 
on an actual DOE site where other soil washing systems had been 
rejected due to inefficiency and high cost. The study showed that the 
innovative changes made by this new technology would provide a 50% cost 
reduction and reduce the cleanup time from 22 years down to eleven 
years.
    It is my understanding that the DOE concluded the technology would 
work, but that they did not want to spend the money to fund a 
demonstration.
    The original proposal called for a two-year project at a cost of 
$9.6 million dollars with the DOE required 50% contingency adder. 
Suggestions from the DOE reviewers, and in an effort to get the project 
started, a schedule change was discussed with the DOE involving a 
phased approach lasting three years with an initial stage lasting nine 
months at a cost of between $450,000 and $500,000. Subsequent stages 
would be subject to the success of the first stage thereby lessening 
the commitment on the DOE and resting the burden directly on the 
technology.
    It has come to my attention that now, after more than two years 
into the process, the project has been asked to submit another proposal 
under a new broad open solicitation, which is not scheduled to close 
until the end of 2002, and for which, according to the solicitation, 
there aren't any funds available. In other words, they are being asked 
to essentially forget about the last two years and start the process 
over.
    Question. Wouldn't you agree that the DOE ``business as usual'' 
practices do not make it easy for promising new technologies to be 
tested and funded?
    Answer. Our goal has always been to invest properly and prudently 
in the right technology development projects that show promise of 
significantly improving cleanup of the DOE complex and reducing the 
costs to the taxpayer.The value of an innovative technology is the 
potential improvement over the baseline approach for either cost, 
schedule, performance or regulatory acceptance.
    If cleanup technologies have been utilized in the past and have 
demonstrated improvement over the baseline, other sites have 
substituted those innovative technologies for their current approach. 
However, if the contaminated area has different attributes or the 
technology needs some enhancements to demonstrate improvements over the 
baseline, then technology funds are often utilized to develop those 
improvements. These potential ``improvement'' projects are evaluated 
and prioritized with other projects. Based on the funds available, a 
decision is made as to which projects will be funded.
    In the case of soil washing, this technology has been demonstrated 
for certain contaminants at specific sites. The technology is most 
successful where the soil is granular, the contaminants are soluble in 
water, the soil has a fairly high contaminant concentration level, and 
the secondary wastes are minimal. There are very limited areas where 
these conditions exist. In fact, at most sites, it is much more cost 
effective to remove the soil and dispose of it in an acceptable 
disposal cell. For sites with on-site landfills, soil is otherwise 
needed to fill in around debris placed in the disposal cell, which 
further reduces the benefit of soil washing.
    We continue to look for ways to implement promising technologies in 
a more timely fashion. The challenge is finding the applications where 
the technology is an improvement over the baseline and not just the use 
of an innovative technology for its own sake.
    Question. The DOE is on record saying it needs new innovative 
technologies to solve cleanup problems and save money. Here is a 
technology that has been acknowledged and entertained by DOE management 
for over two years, endorsed by nuclear scientists, shown to be cost 
effective while actually cleaning up radioactive waste, and is being 
called for as necessary to achieve the DOE cleanup mission, can now be 
asked to go through yet another year of proposal writing and review? 
Why can't a project that has all of this support and affirmation seem 
to get off the ground?
    Answer. In general, the Department must be satisfied that this 
technology provides an improvement over the current soil washing 
practice already available to DOE. The value of an innovative 
technology is the potential improvement over the baseline approach for 
either cost, schedule, performance or regulatory acceptance. If cleanup 
technologies have been utilized in the past and have demonstrated 
improvement over the baseline, other sites have substituted those 
innovative technologies for the current approach. However, if the 
contaminated area has different attributes or the technology needs some 
enhancements to demonstrate improvements over the baseline, then 
technology funds are often utilized to develop those improvements.
    In the case of soil washing, this technology has been demonstrated 
for certain contaminants at specific sites. The technology is most 
successful where the soil is granular, the contaminants are water 
soluble, the soil has a fairly high contaminant concentration level and 
the secondary wastes are minimal. There are very limited areas where 
these conditions exist. In fact, at most sites, it is much more cost 
effective to remove the soil and dispose of it in an acceptable 
disposal cell. For sites with on-site landfills, soil is otherwise 
needed to fill in around debris placed in the disposal cell, which 
further reduces the benefit of soil washing.
    We continue to look for ways to implement promising technologies in 
a more timely fashion. The challenge is finding the applications where 
the technology is an improvement over the baseline, and not just the 
use of an innovative technology for its own sake.
    The Department has met with the proponent of the soil washing 
process, and has explained the specific, basic data that are necessary 
in order for the technology to be considered for support. So far, the 
information provided is insufficient to demonstrate any significant 
improvement in the cost effectiveness of this technique over other 
baseline methods used at individual DOE sites.

                                    

      
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