[Senate Hearing 107-713]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-713
 
                SMITH, CARUSO, AND McSLARROW NOMINATIONS
=======================================================================


                                HEARINGS

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                                 on the

NOMINATION OF MICHAEL SMITH TO BE ASSISTANT SECRETARY OF FOSSIL ENERGY, 
  DEPARTMENT OF ENERGY; GUY F. CARUSO TO BE THE ADMINISTRATOR OF THE 
  ENERGY INFORMATION ADMINISTRATION; AND KYLE McSLARROW TO BE DEPUTY 
                          SECRETARY OF ENERGY

                               __________

                            OCTOBER 25, 2001

                              MAY 8, 2002

                              JUNE 4, 2002


                       Printed for the use of the

               Committee on Energy and Natural Resources









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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










                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearings:
    October 25, 2001 (Michael Smith).............................     1
    May 8, 2002 (Guy F. Caruso)..................................     7
    June 4, 2002 (Kyle McSlarrow)................................    13

                               STATEMENTS
                            October 25, 2001

Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     1
Nickles, Hon. Don, U.S. Senator from Oklahoma....................     1
Smith, Michael, Nominee to be Assistant Secretary for Fossil 
  Energy, Department of Energy...................................     3

                              May 8, 2002

Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     7
Caruso, Guy F., Nominee to be Administrator of the Energy 
  Information Administration, Department of Energy...............     8

                              June 4, 2002

Akaka, Hon. Daniel K., U.S. Senator from Hawaii..................    17
Allen, Hon. George, U.S. Senator from Virginia...................    16
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................    13
Craig, Hon. Larry E., U.S. Senator from Idaho....................    18
Domenici, Hon. Pete V., U.S. Senator from New Mexico.............    14
McSlarrow, Kyle, Nominee to be Deputy Secretary of Energy........    19
Thomas, Hon. Craig, U.S. Senator from Wyoming....................    13
Warner, Hon. John W., U.S. Senator from Virginia.................    15

                                APPENDIX

Responses to additional questions................................    27












                        MICHAEL SMITH NOMINATION

                              ----------                              


                      WEDNESDAY, OCTOBER 25, 2001

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 3:30 p.m. in room 
S-324, The Capitol Building, Hon. Jeff Bingaman, chairman, 
presiding.

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

    The Chairman. The committee will come to order. This 
afternoon's hearing is on President Bush's nomination of 
Michael Smith to be the Assistant Secretary for Fossil Energy. 
Without objection, Mr. Smith's written statement will be 
entered into the record.
    Senator Nickles, welcome to our hearing today. I understand 
that you would like to introduce Mr. Smith. Please go ahead.

          STATEMENT OF HON. DON NICKLES, U.S. SENATOR 
                         FROM OKLAHOMA

    Senator Nickles. Mr. Chairman, I am very pleased to be here 
today to introduce my long-time friend Michael Smith, who has 
been nominated by the President to be the Assistant Secretary 
of Energy for Fossil Energy. I want to thank you, Mr. Chairman, 
for making special arrangements to proceed with this nomination 
hearing despite the problems with access to the Senate complex.
    I have known Mike a very long time, Mr. Chairman, and I can 
honestly say that other than Jimmy Stewart, there has not been 
a nicer and more capable ``Mr. Smith'' who has wanted to come 
to Washington. He has had extensive experience in the energy 
sector and is ideally suited to perform the duties as head of 
the Department's office dealing with oil, gas and coal 
resources.
    You have the details of his background already, but I 
should briefly note that he has been Oklahoma's Secretary of 
Energy since 1995, and served on the State's Energy Resources 
Board before that. Those positions, as well as his many years 
in private law practice, have provided Mike Smith with varied 
and extensive experience in energy matters, both in the United 
States and internationally. He has been Governor Keating's 
advisor on all aspects of State and Federal energy policy, and 
on environmental policy as it affects the energy industry. He 
has been the Governor's representative to the Interstate Oil 
and Gas Compact Commission and to the Southern States Energy 
Board, among other important energy bodies.
    Mike Smith will be confirmed, I am sure. He will be coming 
to Washington at a critical time in terms of our energy policy. 
In the wake of the horrific attacks of September 11 and the 
subsequent anthrax incidents, it is all the more important that 
the United States have access to secure and plentiful energy 
resources. We are already dependent on imports for more than 55 
percent of the oil that we consume, and that figure is 
projected by the Energy Information Administration to keep on 
rising. We need a balanced approach to energy policy that 
includes production as well as conservation. We also need an 
environmentally sensitive policy and sound management of our 
oil, gas, and coal research and development programs. We need 
to have careful attention paid to the future of the Strategic 
Petroleum Reserve. I am sure that this nominee, Mike Smith, 
will provide all that and more. As I told Secretary Abraham 
earlier this year, the leadership of the Department faces 
enormous challenges. Mike will help the Secretary and the 
President to meet them.
    Thank you again, Mr. Chairman, for holding this hearing 
today under difficult circumstances, and I look forward to 
approving Mike's nomination and to working with him in his new 
position at the Department.
    The Chairman. Thank you, Senator Nickles.
    Mr. Smith, the rules of the committee which apply to all 
nominees, require that nominees be sworn in connection with 
their testimony. Would you please stand and raise your right 
hand.
    Do you solemnly swear that the testimony you are about to 
give to the Senate Committee on Energy and Natural Resources 
will be the truth, the whole truth, and nothing but the truth?
    Mr. Smith. I do.
    The Chairman. Please be seated. Before you begin your 
statement, I am going to ask three questions that we address to 
each nominee before the committee. The first is: Will you be 
available to appear before this committee and other 
congressional committees to represent departmental positions 
and to respond to issues of concern to the Congress?
    Mr. Smith. Yes, I will.
    The Chairman. Second question: Are you aware of any 
personal holdings, investments, or interests that could 
constitute a conflict of interest or create the appearance of 
such a conflict should you be confirmed and assume the office 
to which you have been nominated by the President?
    Mr. Smith. There are no conflicts of interest or 
appearances thereof to the best of my knowledge.
    The Chairman. All right. The third question: Are you 
involved or do you have any assets that are held in blind 
trust?
    Mr. Smith. No.
    The Chairman. At this point let me invite you, if you have 
anyone here you would like to introduce who accompanied you, 
we'd be glad to have that occur. Then we would recognize you 
for your opening statement. Go right ahead.
    Mr. Smith. Senator, my wife is here.
    The Chairman. Well, good, we wish her well. Why don't you 
go ahead with any opening statement that you have at this 
point.

 TESTIMONY OF MICHAEL SMITH, NOMINEE TO BE ASSISTANT SECRETARY 
            FOR FOSSIL ENERGY, DEPARTMENT OF ENERGY

    Mr. Smith. All right. Mr. Chairman and members of the 
committee: I am honored to appear before you today as President 
Bush's nominee for the position of Assistant Secretary for 
Fossil Energy at the Department of Energy. If confirmed, I very 
much look forward to joining the fine team already in place at 
DOE under Secretary Abraham's capable leadership. I also look 
forward to working closely with you and your colleagues to 
shape and administer our developing national energy policy as 
it relates to the exploration, production, transportation and 
use of America's oil, natural gas and coal resources.
    On June 25 of this year, I had the honor and privilege of 
welcoming Secretary Abraham to my hometown, Oklahoma City, to 
witness first-hand an operation that is very common throughout 
America's energy-producing states. An Oklahoma City-based 
independent oil and gas exploration company was in the process 
of drilling a gas well next to the parking lot of its office 
building. The location already contained two producing oil 
wells and, thanks to modern technology, was being drilled to a 
vertical depth of several thousand feet, then making a hard 
angle turn toward a target zone three-quarters of a mile east 
under a very popular fish restaurant. This is the norm in my 
home town.
    Technology, much of which has been developed by the office 
of Fossil Energy at DOE, has advanced the safety record of 
hydrocarbon production to a state unthinkable even a few years 
ago. Indeed, the Oklahoma City Field, which has produced almost 
one billion barrels of oil since the 1920's, has producing oil 
and gas wells in shopping center parking lots, residential 
backyards, between the runways at the airport, right outside 
the window of the Governor's office at our State Capitol, and 
at countless other locations throughout the city.
    I was born and raised in the middle of the Oklahoma City 
Field and attended the only high school in the Nation with a 
producing oil well in the middle of the front sidewalk.
    As a young lawyer, I started my professional life 
representing roughnecks, roustabouts, oilfield service 
companies and drilling contractors. I represented small- to 
medium-sized independent oil and gas exploration firms, and, 
later, larger operators. I was co-owner of a small, independent 
company (less than 10 employees) drilling and operating oil and 
gas wells in central and western Oklahoma.
    In the 1970's, I joined our State trade association, the 
Oklahoma Independent Petroleum Association, and was elected to 
its Board of Directors. I served as secretary, treasurer and 
vice president of the organization, and was elected its 
president in 1994. I served on the Oklahoma Energy Resources 
Board, a State agency, providing environmental cleanup and 
public education voluntarily funded by our State's producers 
and royalty owners.
    In January 1995, Oklahoma Governor Frank Keating honored me 
by appointing me to serve as Secretary of Energy in his 
Cabinet. As Oklahoma Secretary of Energy, I have had the 
privilege to serve my State as its official representative to 
the Interstate Oil and Gas Compact Commission, the Interstate 
Mining Compact Commission, the Southern States Energy Board and 
the Governors' Ethanol Coalition. I was further honored to 
serve IOGCC as its second vice chairman in 1998, and its vice 
chairman in 1999.
    Oklahoma's coal industry predates the discovery of oil and 
natural gas in our State. I have had the opportunity to work 
with an agency in my Cabinet area, the Oklahoma Department of 
Mines, on State-Federal issues involving the Office of Surface 
Mining; the expanded use of coal resources within Oklahoma 
various environmental and coal committees on the Interstate 
Mining Compact Commission; and have most recently served as 
chairman of the Coal and Advanced Power Systems Committee of 
the Southern States Energy Board.
    Both my private and public sector experience have permitted 
me the pleasure throughout the years of working with various 
officials within the Office of Fossil Energy at DOE. I have 
found them to be very helpful and professional to the States 
and the energy industry as they sought to accomplish their 
mission to enhance America's economic and energy security by 
managing and performing energy-related research; partnering 
with industry to advance clean and efficient fossil energy 
technology; transferring such technology to the industry; and, 
developing information and policy options to ensure adequate 
supplies of affordable and clean energy.
    The September 11 attack on America underscores the need to 
develop a sound national energy policy that will ensure both 
our economic and military security. The Office of Fossil 
Energy, working in partnership with our nation's energy 
producers, must and will play a key role in ensuring our energy 
freedom.
    I am very grateful to President Bush and Secretary Abraham 
for expressing confidence in me to serve as Assistant Secretary 
for Fossil Energy. If confirmed, I pledge my full dedication to 
serve our Nation.
    Mr. Chairman, thank you and the committee for your 
consideration.
    [The prepared statement of Mr. Smith follows:]
Prepared Statement of Michael Smith, Nominee to be Assistant Secretary 
                 of Fossil Energy, Department of Energy
    Mr. Chairman, I am honored to appear before you today as President 
Bush's nominee for the position of Assistant Secretary for Fossil 
Energy, Department of Energy.
    If confirmed, I very much look forward to joining the fine team 
already in place at DOE under Secretary Abraham's capable leadership. I 
also look forward to working closely with you and your colleagues to 
shape and administer our developing national energy policy as it 
relates to the exploration, production, transportation and use of 
America's oil, natural gas and coal resources.
    On June 25 of this year, I had the honor and privilege of welcoming 
Secretary Abraham to my hometown, Oklahoma City, to witness first-hand 
an operation that is very common throughout America's energy-producing 
states. An Oklahoma City-based independent oil and gas exploration 
company was in the process of drilling a gas well next to the parking 
lot of its office building. The location already contained two 
producing oil wells and, thanks to modern technology, was being drilled 
to a vertical depth of several thousand feet, then making a hard angle 
turn toward a target zone three-quarters of a mile east under a very 
popular fish restaurant. This is the norm in my hometown.
    Technology, much of which has been developed by the Office of 
Fossil Energy at DOE, has advanced the safety record of hydrocarbon 
production to a state unthinkable even a few years ago. Indeed, the 
Oklahoma City Field, which has produced almost one billion barrels of 
oil since the 1920s, has producing oil and gas wells in shopping center 
parking lots, residential backyards, between the runways at the 
airport, right outside the window of the Governor's office at our State 
Capitol, and at countless other locations throughout the city.
    I was born and raised in the middle of the Oklahoma City Field and 
attended the only high school in the nation with a producing oil well 
in the middle of the front sidewalk.
    As a young lawyer, I started my professional life representing 
roughnecks, roustabouts, oilfield service companies and drilling 
contractors. I represented small- to medium-sized independent oil and 
gas exploration firms, and, later, larger operators. I was co-owner of 
a small, independent company (less than 10 employees) drilling and 
operating oil and gas wells in Central and Western Oklahoma.
    In the late 1970s, I joined our state trade association, the 
Oklahoma Independent Petroleum Association, and was elected to its 
Board of Directors. I served as Secretary, Treasurer and Vice President 
of the organization, and was elected its President in 1994. I served on 
the Oklahoma Energy Resources Board, a state agency, providing 
environmental cleanup and public education voluntarily funded by our 
state's producers and royalty owners.
    In January 1995, Oklahoma Governor Frank Keating honored me by 
appointing me to serve as Secretary of Energy in his Cabinet. As 
Oklahoma Secretary of Energy, I have had the privilege to serve my 
state as its official representative to the Interstate Oil and Gas 
Compact Commission, the Interstate Mining Compact Commission, the 
Southern States Energy Board and the Governors' Ethanol Coalition. I 
was further honored to serve IOGCC as its Second Vice Chairman in 1998, 
and its Vice Chairman in 1999.
    Oklahoma's coal industry predates the discovery of oil and natural 
gas in our state. I have had the opportunity to work with an agency in 
my Cabinet area, the Oklahoma Department of Mines, on state/federal 
issues involving the Office of Surface Mining; the expanded use of coal 
resources within Oklahoma; various environmental and coal committees of 
the Interstate Mining Compact Commission; and have most recently served 
as Chairman of the Coal and Advanced Power Systems Committee of the 
Southern States Energy Board.
    Both my private and public sector experience have permitted me the 
pleasure throughout the years of working with various officials within 
the Office of Fossil Energy at DOE. I have found them to be very 
helpful and professional to the states and the energy industry as they 
sought to accomplish their mission to enhance America's economic and 
energy security by managing and performing energy-related research; 
partnering with industry to advance clean and efficient fossil energy 
technology; transferring such technology to the industry; and, 
developing information and policy options to ensure adequate supplies 
of affordable and clean energy.
    The September 11 attack on America underscores the need to develop 
a sound national energy policy that will ensure both our economic and 
military security. The Office of Fossil Energy, working in partnership 
with our nation's energy producers, must and will play a key role in 
ensuring our energy freedom.
    I am very grateful to President Bush and Secretary Abraham for 
expressing confidence in me to serve as Assistant Secretary for Fossil 
Energy. If confirmed, I pledge my full dedication to serve our nation.
    Mr. Chairman, thank you and the Committee for your consideration.

    The Chairman. Thank you very much for that statement. We 
will advise members that the record will remain open for one 
week to file with the committee staff any additional questions 
they would like the nominee to respond to for the record, and 
the committee will stand in adjournment.
    [Whereupon, at 4 p.m., the hearing was adjourned.]

    [Subsequent to the hearing, the following letter was 
received for the record:]

                                  American Gas Association,
                                Washington, DC, September 17, 2001.
Hon. Jeff Bingaman,
U.S. Senate, Washington, DC.
    Dear Senator Bingaman: I am writing in support of the White House's 
nomination of Michael Smith to be assistant secretary for fossil energy 
at the Department of Energy. Mr. Smith has a long history of 
involvement with the fossil energy industry and is currently secretary 
of energy for the State of Oklahoma.
    As secretary of energy and a cabinet officer for Governor Frank 
Keating of Oklahoma, he has been deeply involved with many of the 
issues that concern the Office of Fossil Energy at DOE. In addition, 
Mr. Smith holds a law degree from Oklahoma University specializing in 
oil and natural gas law. He has an extensive background in the oil and 
natural gas industry, and was a former president of the Oklahoma 
Independent Petroleum Association.
    On behalf of the American Gas Association (AGA), which represents 
185 local natural gas utilities that serve nearly 63 million households 
and businesses in all 50 states, AGA urges you to vote to confirm 
Michael Smith to be the assistant secretary for fossil energy. He will 
make an outstanding contribution to national energy policy as part of 
the Department of Energy's team.
    Thank you for your consideration.
            Sincerely,
                                           David N. Parker,
                                                 President and CEO.









                        GUY F. CARUSO NOMINATION

                              ----------                              


                         WEDNESDAY, MAY 8, 2002

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:30 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. This morning we have a hearing on the 
nomination by President Bush to put Guy Caruso in as the 
Administrator of the Energy Information Administration at the 
Department of Energy. The Administrator is responsible for 
providing the Department of Energy and Congress and the public 
with reliable, high quality, and policy-neutral statistical 
information about energy supplies and demand and prices.
    Mr. Caruso has been studying energy markets for 36 years at 
the CIA, at the Department of Energy, at the International 
Energy Agency, and most recently at the Center for Strategic 
and International Studies. We are very pleased to consider his 
nomination this morning.
    I am informed Senator Murkowski is delayed but will 
probably put a statement in the record.
    The rules of the committee that apply to all nominees 
require that the nominees be sworn in connection with their 
testimony. Could you please stand and let me administer this 
oath to you?
    Do you solemnly swear that the testimony you are about to 
give to the Senate Committee on Energy and Natural Resources 
shall be the truth, the whole truth, and nothing but the truth?
    Mr. Caruso. I do.
    The Chairman. Please be seated.
    Before you begin your statement, let me ask the three 
questions that we ask of each nominee before the committee. 
First, will you be available to appear before this committee 
and other Congressional committees to represent departmental 
positions and respond to issues of concern to the Congress?
    Mr. Caruso. I will.
    The Chairman. Second, are you aware of any personal 
holdings, investments, or interests that could constitute a 
conflict of interest or create the appearance of such a 
conflict, should you be confirmed and assume the office to 
which you have been nominated by the President?
    Mr. Caruso. My investments, personal holdings, and other 
interests have been reviewed both by myself and the appropriate 
ethics counselors within the Federal Government. I have taken 
appropriate action to avoid any conflicts of interest. There 
are no conflicts of interest or appearances thereof to my 
knowledge.
    The Chairman. All right.
    Finally, are you involved in or do you have any assets that 
are held in a blind trust?
    Mr. Caruso. No.
    The Chairman. At this point, if you have any family members 
that you wish to introduce, we would be glad to have you do 
that.
    Mr. Caruso. I am pleased to introduce my wife Donna and 
daughter Lisa who are with me this morning, Senator.
    The Chairman. Well, we appreciate their being here very 
much. You are welcome at the hearing.
    Why don't you go ahead with your opening statement, and 
then I will just have a couple of general questions.

TESTIMONY OF GUY F. CARUSO, NOMINEE TO BE ADMINISTRATOR OF THE 
    ENERGY INFORMATION ADMINISTRATION, DEPARTMENT OF ENERGY

    Mr. Caruso. Thank you. Mr. Chairman and members of the 
committee, it is an honor and a privilege to appear before you 
today as President Bush's nominee to be Administrator of the 
Energy Information Administration. I truly appreciate the 
confidence shown in me by the President and Secretary Abraham 
to nominate me to this important post.
    My academic studies and work experience have prepared me, I 
believe, well for this responsibility. My undergraduate 
education at the University of Connecticut and then graduate 
school at the University of Connecticut and the Kennedy School 
of Government had concentrations in energy industry analysis, 
energy policy, and national security, which I believe are quite 
relevant to EIA's work. And the same is true of my 36 years of 
work experience, mostly in the U.S. Government but also at the 
CSIS and the U.S. Energy Association.
    Throughout my government career and since leaving 
government, I have relied on EIA and trusted their data and 
analysis and believe it to be a highly trustworthy and credible 
organization. Therefore, I am pleased to have this opportunity, 
if confirmed, to lead that organization.
    As you pointed out, the mission of providing accurate and 
timely data is vital to the policymaking not only of this body, 
but at all levels of government, industry, and the consumers' 
choices themselves. Trust and credibility is essential to EIA's 
mission, and this was recognized in the act that established 
EIA in 1977 by Congress. They recognized a need for an 
independent EIA to avoid any pressures that might threaten its 
objectivity. I fully support the independence of EIA and would 
work and pledge to protect that, if confirmed.
    Of course, since 1977, much has changed in the energy 
industry and energy markets and the role of government. Most 
recent examples are the deregulation and the restructuring of 
the natural gas and electricity sectors, which of course has a 
profound impact on the work EIA does and will do.
    During this critical time of change in the industry, I 
would like to place emphasis, if confirmed, at the EIA to work 
in three particular areas which deserve emphasis: improved data 
quality, particularly that in natural gas and electricity 
sectors; and also clearer communication of the assumptions and 
analytical underpinnings in all the analytical work that is 
done and released at the EIA. And finally, the educational 
aspect can be enhanced. I think despite energy's vital 
importance, there is a lot to be done in terms of educating the 
American public on key energy issues, and I would work very 
hard to do that at EIA.
    Mr. Chairman and other members of the committee, these are 
important challenges and I look forward to leading this 
distinguished organization in trying to meet these goals, and 
if confirmed, I will work very closely with you and other 
members of the committee on these and other issues. Thank you 
very much.
    [The prepared statement of Mr. Caruso follows:]
Prepared Statement of Guy F. Caruso, Nominee To Be Administrator of the 
        Energy Information Administration, Department of Energy
    Mr. Chairman, members of the Committee, it is an honor and a 
privilege to appear before you today as President Bush's nominee to be 
Administrator of the Energy Information Administration (EIA). I truly 
appreciate the confidence shown in me by President Bush and Secretary 
Abraham in nominating me to lead this important organization.
    My academic studies and work experience have prepared me well for 
this responsibility. My undergraduate education was obtained at the 
University of Connecticut (BS, 1964). I received Masters' degrees from 
the University of Connecticut (MA, 1966) and Harvard University (MPA, 
1975). During both graduate studies, much of my course concentration 
was related to the energy industry and energy markets.
    The same is true of my 36 years of work experience. I have devoted 
myself to studying, analyzing and writing about the energy industries 
and markets.
    During 32-years as a career U.S. government employee, I have been 
privileged to serve in a number of senior management positions closely 
associated with energy markets, energy security and energy policy. At 
the Department of Energy, I served as Director, Oil and Natural Gas 
Policy, as Director, Energy Emergency Policy, and as Director, Oil 
Market Analysis. I was twice posted to the International Energy Agency 
(IEA) in Paris, France. From 1993-1998, I served as the IEA director 
responsible for developing energy cooperative programs with non-OECD 
countries, including Russia, China and the Middle East. In a previous 
assignment, I was responsible for analyzing world oil markets and oil 
industry developments. Additionally, I served from 1969-1974 as the 
principal Middle East oil analyst at the Central Intelligence Agency 
(CIA).
    After leaving the U.S. Government in 1998, I joined the Center for 
Strategic and International Studies (CSIS) to direct a study on ``The 
Geopolitics of Energy into the 21st Century.'' It was an honor to work 
with Senators Murkowski and Lieberman, who co-chaired that study. I 
currently serve as CSIS's senior associate in the Energy and National 
Security Program. During 2000-2002, I also directed two studies for the 
United States Energy Association (USEA). ``Toward a National Energy 
Strategy'' was published in February 2001 and a follow up study on 
energy security will be published in Spring/Summer 2002.
    Throughout my career in government, I have frequently relied on and 
trusted--EIA data, analyses and publications. Moreover, I have had the 
good fortune of working closely with many of the highly skilled, 
motivated and dedicated people at EIA. I sincerely look forward to 
working with them again in a leadership role, if confirmed.
    EIA's mission of providing accurate and timely data is vital to the 
policymaking process in government at all levels and in the decision-
making process in industry and among consumers. The trust and 
credibility of EIA information is essential to the fulfillment of that 
mission assigned to EIA when established by Congress in 1977. Congress 
also recognized the need for an independent EIA to avoid any pressures 
that might threaten its objectivity. I fully support the independence 
of EIA and would work to protect it, if confirmed.
    Since 1977, much has changed in energy industries and energy 
markets, including the role of government in the energy sector. These 
changes have had (and will continue to have) a profound effect on the 
work of EIA. For example, the changes that have occurred in the 
deregulation and re-structuring of the natural gas and electricity 
sectors present significant challenges for EIA in the collection, 
analysis and dissemination of accurate and timely information. The need 
for improved energy data transparency that is widely available has 
never been more important as we continue to debate new energy policies 
and as consumers desire to make informed choices.
    EIA has moved quickly to utilize electronic dissemination for its 
data and publications and has received widespread recognition for its 
outstanding Web site. Through its Web site, EIA is making an important 
contribution to energy data transparency in the United States and 
globally.
    EIA has a number of benchmark publications that provide energy 
supply/demand projections in the short and long term. These 
publications are highly influential in depicting key energy trends and 
are widely used by leaders and decision makers in government and 
industry.
    During this critical time of changing circumstances in the US 
energy industry, there is a renewed emphasis on energy security; and 
continuing the need for increased transparency of energy information, 
which is a major role of EIA, is more important than ever. There are 
three areas, which deserve particular attention (1) improved data 
quality, (2) communicating the analytical underpinnings of the 
assumptions used for analysis, and (3) education.
    Data quality is at the heart of maintaining the integrity and 
credibility of EIA publications and analytical work. EIA projections 
are highly dependent upon the data used in the mathematical models such 
as the National Energy Modeling System (NEMS). Model results are also 
highly dependent on the assumptions chosen. Comprehensive dissemination 
of the analytical underpinnings of those assumptions would contribute 
to the usefulness and credibility of the projections. Despite the 
centrality of energy to our nation's economic and environmental health, 
energy issues are not well understood by the American public. EIA can 
play an important role in communicating energy information and 
increasing public understanding through education at all levels.
    These are important challenges for the Energy Information 
Administration (EIA) and I look forward to leading this distinguished 
organization to meet these goals. If confirmed, I will work closely 
with the Committee on these and other matters.

    The Chairman. Well, thank you very much.
    Let me just ask a couple of general questions. Obviously, 
there is a lot in the news today and yesterday and this week 
about the alleged manipulation of prices in energy markets. 
There is going to be a substantial demand and an appropriate 
demand I think for action by FERC and by the Department of 
Energy generally to come to grips with this.
    FERC has set up a new office for market monitoring, as I 
understand it, and I am hoping that the EIA under your 
leadership can work with FERC to ensure that the best possible 
job is done in coordinating and improving the quality of the 
information available in those markets, so that we do not 
continue to have genuine concern expressed about whether or not 
these markets are venues for manipulation, as they appear to 
have been.
    I do not know if you have had a chance to look at that or 
talk to anyone at FERC about it, or that may be something you 
are going to be doing in the future.
    Mr. Caruso. Yes, I agree completely that the important 
aspect of looking into the issue of manipulation of markets is 
an area where close cooperation between EIA and FERC, for 
example, is warranted. One of the first calls I had, after the 
announcement of my nomination, was from Chairman Wood. He 
pledged to have a close cooperation. And I would look to the 
new office of market analysis in FERC to be a close 
cooperation. We certainly, as you know, monitor markets very 
closely and will be making this data as transparent and as 
readily available as possible as we look into this particular 
issue and other issues as well.
    The Chairman. One other agency that obviously you will need 
to be coordinating with closely is EPA. They do forecasts. EIA 
does forecasts. I guess the concern is we need, to the extent 
possible, to have similar assumptions or agreed-upon 
assumptions for the forecasting that is done. That does not 
seem to have been the case in a lot of circumstances. I do not 
know if that is an issue you have focused on or one that you 
have thought about talking to EPA about, but it seems to me 
that Congress is sometimes substantially confused about which 
forecast to believe. And anything you could advise on that 
subject I would appreciate, too.
    Mr. Caruso. I agree completely that the assumptions are the 
key to the outcome of any analysis whether it be working with 
another government agency like EPA or even internally within 
the Department on service reports that are requested. I think 
the most important thing is to make it very transparent what 
the assumptions are, and when there are disagreements, as we 
all know there will be, to run scenarios or cases which reflect 
different assumptions, and therefore the outcomes can be very 
clearly seen depending on which assumptions are used.
    The other aspect of this particular issue is having the 
access to independent experts who can come in and look and give 
an objective view. EIA, I know, has used that in the past, and 
I would, I think, intend to use that even more.
    The Chairman. All right. Well, we thank you very much for 
appearing this morning.
    We have a letter here dated May 6 supporting your 
nomination signed by Alan Knight who is president of Chapter 
213 of the National Treasury Employees Union, and we will 
include this in the record.
    [The letter of Mr. Knight follows:]

             The National Treasury Employees Union,
                                               Chapter 213,
                                       Washington, DC, May 6, 2002.
Hon. Jeff Bingaman,
Chairman, Energy and National Resources Committee, U.S. Senate, 
        Washington, DC.
    Dear Chairman Bingaman: The officers and members of Chapter 213 of 
the National Treasury Employees Union, Department of Energy, are asking 
for your help to confirm, as soon as possible, the appointment of Mr. 
Guy Caruso as the Administrator of the Energy Information 
Administration (EIA). EIA is the Nation's independent storehouse of 
energy statistics and forecasts.
    EIA has been without leadership since the departure of 
Administrator Hakes in late 2000. Unfortunately, since then, EIA 
employees are increasingly finding themselves victims of a culture of 
harassment, discrimination, and maltreatment as a result of temporary 
leadership by mid-level managers who are taking advantage of this lack 
of leadership to cast EIA into an autocratic and oppressive workplace. 
EIA employees are being charged with serious offenses and publicly 
humiliated by being removed from the workplace without due process.
    Without leadership for this amount of time, employee morale at EIA 
has suffered. EIA needs a firm hand in charge to reverse this 
disturbing trend and put the organization back on track. Mr. Caruso is 
that type of leader. I knew Mr. Caruso when he previously worked at 
DOE, and one of my Vice Presidents worked directly for him. I can 
attest to his integrity and managerial ability. We hope that you will 
use your considerable influence to quickly move along the confirmation 
of a new EIA Administrator as soon as possible. Thank you for your 
assistance in this matter.
            Sincerely,
                                            Alan E. Knight,
                                                         President.

    Mr. Caruso. Thank you very much.
    The Chairman. At this point, let me just advise staff that 
members will have until 5 o'clock this evening to file with the 
committee staff any additional questions they have or want the 
nominee to answer for the record.
    With that done, we will conclude the hearing, and thank you 
very much. We hope to act on your nomination soon.
    Mr. Caruso. Thank you very much.
    The Chairman. Thank you very much. The hearing is 
adjourned.
    [Whereupon, at 9:43 a.m., the hearing was adjourned.]










                       KYLE McSLARROW NOMINATION

                              ----------                              


                         TUESDAY, JUNE 4, 2002

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:45 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. This morning's hearing is on President Bush's 
nomination of Kyle McSlarrow to be the Deputy Secretary of 
Energy. Kyle is already known to many members of this committee 
from his past service as deputy chief of staff and also as 
chief counsel to both Majority Leader Dole and Majority Leader 
Lott, and as chief of staff to the Republican Conference 
secretary several years ago.
    For the past year and a half he has been the chief of staff 
at the Department of Energy so, unlike most nominees who come 
before this committee, he has already had direct experience 
with many of the challenges that he will face if confirmed to 
the job for which the President has nominated him. We are very 
pleased to consider his nomination this morning.
    Let me see if Senator Thomas has any opening comment he 
wishes to make.

         STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR 
                          FROM WYOMING

    Senator Thomas. Thank you, Mr. Chairman, and I thank you 
for holding this hearing. Certainly, moving forward on Energy 
personnel and to get the assistance there and so on for the 
Secretary is very important, and I cannot think of anyone more 
qualified and with a better background to do that than the 
gentleman this morning, so I just am pleased that he is here, 
and I am pleased that you are having the hearing.
    Thank you.
    The Chairman. Well, thank you very much. I am informed that 
Senator Murkowski is not able to be here this morning. I have a 
statement that I will include in the record from Senator 
Domenici in support of Kyle McSlarrow's nomination.
    [The prepared statement of Senator Domenici follows:]
       Prepared Statement of Hon. Pete V. Domenici, U.S. Senator 
                            From New Mexico
    Mr. Chairman, I thank you for holding this hearing for Kyle 
McSlarrow, who is nominated to be the Deputy Secretary of Energy.
    Since this hearing is scheduled on the same day as the primary 
elections in New Mexico, it's impossible for me to be here to welcome 
him to the Committee.
    Nevertheless, I want the record to show that I stand ready to 
support Mr. McSlarrow for this new challenge. Many of his past 
experiences should be most useful in preparing for this new assignment, 
especially his time as Chief of Staff to the Secretary.
    The Department of Energy has one of the most diverse and demanding 
missions of any department. Responsibilities range from leading edge 
research in many scientific disciplines, to evaluation and development 
of promising energy options, to national security and cleanup of legacy 
environmental issues from past weapons efforts.
    The current War on Terrorism is placing immense demands on the 
Department's national security efforts. In addition to requiring new 
technologies to safeguard American interests, it provides increased 
emphasis to the importance of the Department's nonproliferation 
programs. And since the nation depends on our nuclear stockpile as the 
final guarantor of our freedoms, the Department's responsibilities in 
that vital area are extremely critical.
    Kyle McSlarrow brings a good background to the Deputy Secretary 
position. He will provide important assistance to the Secretary. I look 
forward to his confirmation.

    The Chairman. Let me at this point--the rules of the 
committee that apply to all nominees require that they be sworn 
in connection with their testimony. If you would please stand 
and raise your right hand, let me administer the oath. Do you 
solemnly swear that the testimony you are about to give to the 
Senator Committee on Energy and Natural Resources shall be the 
truth, the whole truth, and nothing but the truth?
    Mr. McSlarrow. I do.
    The Chairman. Would you please be seated, and before you 
begin your statement, I will ask three questions that we 
address to each nominee before the committee. First, will you 
be available to appear before this committee and other 
congressional committees to represent departmental positions 
and respond to issues of concern to the Congress?
    Mr. McSlarrow. I will.
    The Chairman. Second, are you aware of any personal 
holdings, investments, or interests that could constitute a 
conflict of interest or create the appearance of such a 
conflict should you be confirmed and assume the office to which 
you have been nominated by the President?
    Mr. McSlarrow. Mr. Chairman, my investments, personal 
holdings, and other interests have been reviewed both by myself 
and the appropriate ethics counselors within the Federal 
Government. I have taken the appropriate action to avoid any 
conflicts of interest, and there are no conflicts of interest 
or appearances thereof, to my knowledge.
    The Chairman. And the third question we ask of all nominees 
is, are you involved or do you have any assets that are held in 
a blind trust?
    Mr. McSlarrow. No.
    The Chairman. I see that our colleague, Senator Warner, has 
arrived and wishes to make a statement and we are very honored 
to have him, and please go right ahead.

        STATEMENT OF HON. JOHN W. WARNER, U.S. SENATOR 
                         FROM VIRGINIA

    Senator Warner. Thank you, Mr. Chairman. I congratulate you 
on your punctuality in starting hearings. You are a member on 
our Committee on Armed Services, and I guess you are trying to 
send us a little message that we do not do the like.
    The Chairman. I was going to say, I learned that from you 
when you were chairing that committee.
    Senator Warner. Thank you, my dear friend. I value our 
long, long friendship and association here in the Senate, and 
also with my colleague Mr. Thomas, this is a very special 
pleasure for me to introduce this really outstanding public 
servant, a man whom I have known, together with his lovely 
wife, for many years.
    I am also pleased to recognize that his wife has made a 
substantial contribution to this moment where he appears before 
the Senate for confirmation. He is not only a Virginian, 
indeed, but a close professional associate of mine for many 
years, 20, in fact, the number of years.
    Kyle attended Cornell University and received his law 
degree from the University of Virginia. I first met him when he 
was a captain in the U.S. Army serving my former colleague, 
Jack Marsh. Secretary Marsh was Secretary of the Army. Jack 
Marsh and I attended Washington and Lee University in Virginia 
as I emerged from the Navy in World War II and he emerged from 
the Army, and I have the highest confidence in his judgment.
    He had two responsibilities with Secretary Marsh. One was 
to help the Secretary fashion an effective environmental 
cleanup program. The other was to serve on the team that 
negotiated research and development agreements on major weapons 
systems with our NATO allies. Thus, from his earliest 
professional life he has been extensively involved in the same 
kind of issues and challenges that confront the Department of 
Energy today.
    Kyle also brings an unparalleled grounding in and 
understanding of the policy and legislative processes that 
shape our Nation's future. After his military service, Kyle 
practiced environmental and energy law at the Virginia firm of 
Hunton & Williams, one of the largest and most outstanding law 
firms in the Commonwealth of Virginia, a principal competitor 
of my good friend George Allen here, who was in the other firm. 
He could tell you more about Hunton & Williams. He then served 
as deputy chief of staff and chief counsel to both Senator Dole 
and Senator Lott, and subsequently as chief of staff to the 
late Senator Paul Coverdell.
    On that note, I am pleased to share with you that Kyle and 
Alison have a 6-week addition to their family, a baby boy whom 
they named Paul Douglas, after Senator Coverdell.
    Currently, of course, Kyle is serving as Secretary 
Abraham's chief of staff. We all know the enormous challenges 
that face the Secretary of Energy, and I believe without any 
equivocation or hesitation whatsoever that President Bush and 
Secretary Abraham have already made a real difference both in 
terms of management and the provision of excellence for the 
future of that Department, but there is no question that the 
Department requires a chief operations officer who can act as 
Secretary Abraham's right-hand man as soon as possible.
    In every post in public and private life, Kyle McSlarrow 
has demonstrated the kind of leadership abilities that make him 
the ideal choice for this position. In serving as the chief 
operating officer of the Department of Energy, I am confident 
that Kyle McSlarrow will discharge his duties in a manner that 
reflects great credit on the administration and, indeed, with 
distinction as a public servant for our Nation.
    It is an honor for me to introduce him this morning, 
together with my distinguished colleague, Senator Allen.
    The Chairman. Thank you very much for your statement in 
support of the nominee, and let me at this point defer to 
Senator Allen for any statement he has.

         STATEMENT OF HON. GEORGE ALLEN, U.S. SENATOR 
                         FROM VIRGINIA

    Senator Allen. Thank you, Mr. Chairman. Good morning to 
you, Mr. Chairman, members of the committee. It is a pleasure 
to be with the senior Senator from Virginia, Senator Warner, 
and I will try not to go over the same detailed laudatory 
remarks, although my remarks will be laudatory in a different 
manner.
    It is my pleasure and privilege of presenting and 
introducing to this committee Kyle McSlarrow, a great 
Virginian, a fine Virginian, to serve as Deputy Secretary of 
Energy for President Bush and Secretary Abraham. I have known 
and worked with Lyle McSlarrow for many, many years, well over, 
I guess, now, 13 years or so, and I believe he is an excellent 
choice of President Bush to serve him and to serve Secretary 
Abraham in this capacity.
    In all the various and varied endeavors that I was able to 
work and observe Kyle McSlarrow, I always thought that he 
exemplified the highest standard of public service. Number one, 
honesty. Always honest and straightforward, he brought the 
highest standards in public service, in that he showed in each 
of these different endeavors an ability to lead and act fairly. 
He would not just sit there and cogitate endlessly. He'd get 
all the facts, assess the situation and then act, but act in a 
fair way, and he showed a willingness to approach difficult 
issues very thoughtfully.
    These are the traits that will be very much in need in a 
position that serves as the chief operating officer for a 
department with a $20-billion budget and a host of challenging, 
often controversial issues before it.
    Kyle received his law degree from the University of 
Virginia, which is very good, I think, seeing how I went there 
too, Mr. Jefferson's university. Kyle has been involved, and 
you can see from his resume, in public service, whether in the 
military, and both at the State and Federal levels. In addition 
to his professional service, Kyle has always been willing to 
volunteer to work for his community and his State.
    When I was elected Governor in 1993, for example, Kyle took 
a month's leave of absence from his law firm--I assume that was 
Hunton & Williams in those days--it is a wonderful law firm--
that would allow him to take a month off to help in my 
transition. The transition time is very, very important for a 
Governor's office, the Governor in Virginia, since you get one 
4-year term and you want to hit the ground running, in fact, 
galloping before you get inaugurated, and Kyle was very 
instrumental in getting our organization together and very, 
very helpful later.
    I was pleased to recommend him to then Majority Leader Bob 
Dole to serve on his staff, and Kyle subsequently served 
Senators Dole, Lott, and Coverdell with distinction.
    The best decision he ever made in his life, or the luckiest 
thing, was his wife, Alison, agreeing to marry him, and they 
are a wonderful team. I am glad they have another addition to 
their family.
    But Mr. Chairman, I have no doubt, and members of the 
committee, that Kyle will continue a record of achievement and 
success, and I strongly give him my highest recommendation to 
this committee, and I thank you so much.
    The Chairman. Well, thank you very much for that statement, 
and let me now defer to Senator Akaka and see if he has any 
statement here that he would like to make before we allow the 
nominee to say a few things.

        STATEMENT OF HON. DANIEL K. AKAKA, U.S. SENATOR 
                          FROM HAWAII

    Senator Akaka. Thank you very much, Mr. Chairman. I want to 
thank Senator Warner and Senator Allen for their statements in 
support. Mr. Chairman, thank you very much for scheduling this 
hearing to consider the nomination of Mr. Kyle McSlarrow as 
Deputy Secretary of Energy. Mr. McSlarrow, besides welcoming 
you, I also want to welcome your family as well. I am sure--I'm 
assuming this is your family here.
    Mr. McSlarrow. I have two representatives here today, not 
everybody in this room.
    Senator Akaka. Well, I am glad they are here with you.
    Energy issues affect every American in a profound way. The 
Department of Energy faces a host of continuing challenges, 
nuclear waste disposal, environmental cleanup, management of 
weapons and nuclear material, the need to identify clean and 
safe sources of energy for the future, and energy 
infrastructure security. To address these matters, the 
Department needs strong leadership. The Deputy Secretary will 
actively participate in and in many cases be accountable for 
developing policies, building consensus, and properly 
implementing decisions.
    President Bush's nominee for the Deputy Secretary of Energy 
is the right person for this difficult job. Mr. McSlarrow's 
experience as chief of staff, chief counsel for former Senator 
Majority Leaders Bob Dole and Trent Lott and chief of staff for 
the late Senator Paul Coverdell provides you with the necessary 
background and skills to be an effective and successful Deputy 
Secretary for the Department of Energy.
    I am saying all of this because I have met Mr. McSlarrow, 
and we discussed issues affecting the Department. I am 
impressed with his understanding of the challenges facing the 
Department. Mr. McSlarrow and I spoke in my office about energy 
problems in my State. We need to develop suitable policy 
options to address the consistently high energy prices in 
Hawaii. The Senate-passed energy bill includes a provision 
directing the Department of Energy to conduct a detailed study 
of various issues affecting Hawaii's energy picture, and to 
report to Congress its findings and recommendations. I am 
hopeful that Congress will pass a comprehensive energy bill 
soon and we can get on with the business of addressing 
America's energy problems.
    Mr. Chairman, the President has made the right choice in 
nominating Mr. McSlarrow to be the next Deputy Secretary of 
Energy, and I would ask that we expedite consideration of this 
important nomination. Mr. McSlarrow has my support.
    Thank you very much.
    The Chairman. Thank you very much. I see Senator Craig is 
here and perhaps wishes to make a statement himself, so let me 
also defer to him.

        STATEMENT OF HON. LARRY E. CRAIG, U.S. SENATOR 
                           FROM IDAHO

    Senator Craig. I will be brief, Mr. Chairman, but I did 
want to make it here to speak in behalf of Kyle McSlarrow. I 
have had the privilege of knowing Kyle a good number of years 
in a variety of past iterations, all of them positive, and of 
course, over the last good number of months I have worked with 
him, as he worked as chief of staff of Secretary Abraham, and 
that has been an important relationship.
    I say this, Mr. Chairman, because, like you, the State of 
New Mexico, the State of Idaho has a very important 
relationship to the Department of Energy. The INEEL, one of our 
Nation's premier laboratories, is in my State, and Kyle 
McSlarrow and the Secretary have worked very closely with us 
over the last good number of months to resolve some of the 
problems, and also to chart a future for that laboratory.
    The one problem that we have moved toward a resolution with 
our State is what I call the Pit, Pit 9, and of course that is 
an effort to exhume buried waste that has been in the ground 
for a good number of years and to try to identify it and begin 
to move it not only to your State, to the WIPP facility at 
Carlsbad, but also, if it has other than transuranic waste in 
it, to identify it and handle it appropriately. That effort is 
well on its way now toward a conclusion, having frustrated all 
of us at this committee level and at the Department for a good 
number of years, because it was an effort in another 
administration and with the support of this committee, Mr. 
Chairman, to resolve issues at our laboratories in a different 
structural way than we had earlier used them and approached 
them. And it did not work well, and we are back toward a second 
go-round at doing that.
    As all of our laboratories have faced a new future post 
Cold War, we have all worked to try to identify roles for these 
laboratories, because we believe on this committee, Kyle, and 
we also believe, I think, at the Department that they can play 
key roles in our Nation's future. Whether it is the kind of 
experimentation, scientific work that the private sector cannot 
to because returns do not come quickly enough to justify those 
efforts, or whether it is simply the sheer policy 
responsibility of our laboratories in areas that we have not 
granted, or have never chosen to turn to the private sector 
for, they play an important role.
    I sense the Secretary and you appreciate that and 
understand it. Your performance of the last good number of 
months would demonstrate that to us, and I am pleased to be 
here in support of Kyle McSlarrow, Mr. Chairman, this morning 
as Deputy Secretary of Energy in the Bush administration.
    Thank you.
    The Chairman. Well, thank you very much. Kyle, if you would 
like to introduce family members at this point, that is the 
next item on the agenda.
    Mr. McSlarrow. Thank you, Mr. Chairman. First, I would like 
to introduce my mother, Nancy McSlarrow.
    The Chairman. Glad to have you here.
    Mr. McSlarrow. And my wife, Alison, who all of you know.
    The Chairman. We are always glad to see Alison.
    Mr. McSlarrow. My eldest could not make it. We decided not 
to inflict our 2-year-old and 6-week-old boys on this 
committee.
    The Chairman. We appreciate your mother and wife coming 
very much. Why don't you go ahead with any opening statements 
you have.

          TESTIMONY OF KYLE McSLARROW, NOMINEE TO BE 
                   DEPUTY SECRETARY OF ENERGY

    Mr. McSlarrow. Mr. Chairman, in the interests of time, with 
your permission I will very briefly summarize my statement and 
submit it in full for the record.
    The Chairman. We will include it in the record.
    Mr. McSlarrow. Mr. Chairman, I am honored to appear before 
you today as President Bush's nominee for Deputy Secretary of 
Energy. I am grateful for the opportunity to continue to serve 
President Bush and Secretary Abraham, and to work with the 
members of this committee.
    As you and other members undoubtedly know, my wife, Alison, 
and I met and married while serving as Senate staffers, and so 
today is a special day for us. Throughout my professional life, 
I have been fortunate to have had a number of opportunities 
that allowed me both to serve the American people and to focus 
on issues and challenges that I care deeply about.
    For the last year and a half, while serving as Secretary 
Abraham's chief of staff, I have had the opportunity to see 
firsthand the challenges faced by the Department of Energy, but 
more important, I believe that President Bush and Secretary 
Abraham have provided the leadership and vision to surmount 
those challenges. If confirmed, I can think of nothing more 
rewarding than being able to work with Secretary Abraham and 
the management team now in place to ensure that this vision 
becomes a reality.
    If confirmed, my primary role would be to serve as the 
Chief Operating Officer of the Department, but I view this as 
more than simply making the trains run on time, though that is 
important, too. The Department has the right people and the 
right talents, but we have to ensure success. That requires 
that we make clear what success means, provide the tools to get 
there, and hold the managers and ourselves accountable for the 
results.
    Part of this depends on implementing the President's 
management agenda, part of this depends on implementing and 
supporting Secretary Abraham's emphasis on a philosophy of line 
management, and part of this depends on working closely with 
the members of this committee and Congress to ensure that we 
provide you the information that you need to carry out your 
responsibilities and to ensure that we understand and execute 
effectively the legislated policy of the land. If confirmed, I 
am committed to doing just that.
    Mr. Chairman, that concludes my statement. I would be 
pleased to answer any questions you have.
    [The prepared statement of Mr. McSlarrow follows:]
        Prepared Statement of Kyle E. McSlarrow, Nominee To Be 
                       Deputy Secretary of Energy
    Mr. Chairman and members of this Committee, I am honored to appear 
before you today as President Bush's nominee for Deputy Secretary of 
Energy. I am grateful for the opportunity to continue to serve 
President Bush and Secretary Abraham and to work with the members of 
this Committee.
    Mr. Chairman, I would like to introduce my wife, Alison. As some of 
the members of this Committee know, we met and married while we both 
served as Senate staffers. It is thus a special honor for us to be here 
today.
    Throughout my professional life, I have been fortunate to have had 
a number of opportunities that allowed me both to serve the American 
people and to focus on issues and challenges that I cared deeply about. 
As a Captain in the Army, I had the opportunity to serve then Secretary 
of the Army Jack Marsh by confronting the enormous challenges posed by 
the environmental cleanup of defense installations. I subsequently 
practiced law in the environmental and energy field. Later, of course, 
I was honored to work for Senator Dole, Senator Lott and Senator 
Coverdell, and with many of you on almost every issue that came to the 
floor of the Senate. And, currently, I serve as Secretary Abraham's 
Chief of Staff.
    In this capacity, and for the last year and a half, I have had the 
opportunity to see first hand the challenges faced by the Department of 
Energy. But more important, I believe that President Bush and Secretary 
Abraham have provided the leadership and vision to surmount those 
challenges.
    If confirmed, I can think of nothing more rewarding than being able 
to work with Secretary Abraham and the management team now in place to 
ensure that this vision becomes a reality.
    The missions of the Department, though varied, are critical to our 
national security. Whether it is our world class science, a commitment 
to clean up the legacy of the Cold War, the promotion of America's 
energy security, or our continuing missions to protect our nation, we 
have a responsibility to ensure that we manage these missions and 
assets in ways the reflect credit on the Administration and the Federal 
government.
    If confirmed, my primary role would be to serve as the Chief 
Operation Officer of the Department. I view this as more than simply 
making the ``trains run on time,'' though that is important too. We 
have the right people and the right talents. But we have to ensure 
success. That requires that we make clear what ``success'' means, 
provide the tools to get there, and hold managers and ourselves 
accountable for the results.
    Part of this depends on implementing the President's Management 
Initiatives. Part of this depends on implementing and supporting 
Secretary Abraham's emphasis on a philosophy of line management. And 
part of this depends on working closely with the members of this 
Committee and Congress to ensure that we provide you the information 
you need to carry out your responsibilities and to ensure that we 
understand and execute effectively the legislated policy of the land.
    If confirmed, I am committed to doing just that.
    Mr. Chairman, this concludes my statement. I would be pleased to 
answer any questions you may have, either today or subsequently.

    The Chairman. Well, thank you very much. Let me start.
    As you know, we spent a good deal of the spring around here 
trying to pass an energy bill and actually got one passed, and 
since then we have been anxious to get a conference going. Do 
you have any insights as to how we can get the House to 
appointee their conferees so we could move ahead on this? Is 
that something you could get done as the Deputy Secretary?
    Mr. McSlarrow. Well, I'm certainly not just willing but 
very interested in doing so, although I should note that I am a 
Senate guy, not a House guy, and they probably know that, but I 
think, based upon our conversations, there is a willingness to 
get going on the House side, so we will be pleased to work with 
them on that.
    The Chairman. There are a lot of items in the energy plan 
that the President and Vice President Cheney's task force 
issued this last year on energy, that a lot of those items, I 
think by far the majority of the items recommended there, were 
to be implemented administratively rather than legislatively. I 
do not want to take all morning here, but is there any way you 
could give us some kind of overview of how progress is going on 
the implementation of some of those administrative initiatives 
that were called for in that plan?
    Mr. McSlarrow. I would be pleased to, and first let me say 
that, as you well know, if taken together the House and Senate 
bills actually encompass 21 out of the 22 legislative 
recommendations that the President made last year, and so 
obviously it is a tribute in large part to your leadership, Mr. 
Chairman, and the members of this committee to get the work 
done on the Senate side.
    Outside of that, as you mentioned, there are a number, I 
think approximately 85 recommendations, as we count them, in 
the national energy plan that are administrative, require some 
form of executive activity. Since we just passed the 
anniversary of the release of that plan, we did a status check 
and were fairly brutal about defining whether or not we had 
actually succeeded in implementing something, or whether we 
were well on our way or failing, and that analysis showed that 
roughly half had been completed on the administrative side, 
half were well on their way to progress, and there were a few 
where actually a lot more work needed to be done, at least for 
the Department of Energy.
    Of course, these are recommendations that apply to a lot of 
Departments, so there is a goodly amount for the State 
Department, Department of the Interior, EPA and, of course, the 
Department of Energy. In the Department of Energy's case, the 
responsibilities really fell into a couple of distinct arenas. 
One were some of the things that had to do with the electricity 
crisis of last year. Obviously, that is something the Bush 
administration confronted right from the very first day.
    One of those recommendations was that the Secretary of 
Energy immediately address so-called path 15 problem in 
California, where there was a transmission constraint on 
getting power from the south of California to the north. 
Everybody recognized that there is this bottleneck but nothing 
had actually been done about it, and so the Secretary of 
Energy, at the President's direction, initiated a discussion by 
the Western Area Power Administration with private sector 
entities and PG&E to put together a consortium.
    About $300 million was required of private sector money. We 
funded it to the tune, I think, of a couple of million dollars 
to get it going, to ensure that we could build the kind of 
transmission that would be required to shift that power from 
south to north, and in fact we have made a lot of success, and 
I would anticipate that after the environmental studies are 
done we should start construction very soon.
    Another recommendation that flowed from the national energy 
plan was a requirement on the Secretary to produce a national 
transmission grid study which actually was released several 
weeks ago, and that grid study, which is voluminous--and I will 
not go into a lot of detail right now--showed a couple of 
things that were pertinent to this committee's work and to our 
responsibilities at the Department.
    Number one, out of a $250 billion electricity wholesale 
market, the move toward competitive wholesale markets, our 
analyses showed, were saving consumers annually about $13 
billion, and number two, if we did not do something to upgrade 
the transmission infrastructure, starting now, we were going to 
put those savings at risk because of the transmission 
bottlenecks that were going to grow in severity and frequency, 
and then we listed a number of recommendations in that grid 
study that we are currently taking a look at, as you know, Mr. 
Chairman, working with your staff in the context of the bill to 
pass the Senate and then, obviously, the conference.
    The other set of administrative items really went to the 
issue of diversity of supply of energy, abroad and 
domestically, and that is--the theory, if you will, behind the 
national energy plan was that we had to avoid a situation where 
we put all our eggs in one basket. We needed renewable energy, 
fossil energy, nuclear energy, we needed energy that was 
domestically produced, we needed more sources of foreign 
energy, whether it was oil or natural gas, and so what flowed 
from that premise was a variety of instructions to the 
Secretary of Energy, in most cases working with the Department 
of State and the Department of Commerce, to initiate 
discussions with potential suppliers and partners around the 
world, one of which, obviously, is Russia. That is one reason 
we were able to have an announcement of a growing and closer 
relationship with Russia on energy that was announced when 
President Bush went to Moscow.
    Another was our hosting of the G-8 energy ministers which 
took place in Detroit, which Secretary Abraham co-hosted with 
his Canadian counterpart, and another and very important one, 
especially to the President, was initiating the North American 
Energy Working Group, which is the energy ministers of the 
United States, Mexico, and Canada. We started that last year. I 
think we have had three meetings. We are making a lot of 
progress in terms of trying to think about the North American 
continent in a way that reflects what is increasingly becoming 
a reality, which is one seamless market.
    I will stop there, although I would be pleased to answer 
any more questions you have.
    The Chairman. Thank you very much.
    Senator Thomas.
    Senator Thomas. Yes, sir. Very briefly, I got the 
impression in the introduction you are from Virginia.
    [Laughter.]
    Mr. McSlarrow. Yes, sir.
    Senator Thomas. You know, one of the things that seems to 
be difficult, and of course when we do these sort of studies 
and so on, the environment has to be very much a part of it, 
but it does not seem like there is much of a coordination among 
the agencies, whether it be Interior, whether it be Energy, 
seeking to get permits for methane gas or whatever.
    You go through this whole thing, and then after it is over, 
EPA comes out with something that is entirely conflicting. It 
just seems to me like there ought to be a way to coordinate it 
so that all of these issues kind of take place at the same 
time. Do you have any feeling about that?
    Mr. McSlarrow. Well, one of the--and this actually goes to 
the chairman's question as well. One of the administrative 
recommendations that, in fact, was implemented was an executive 
order issued by the President setting up, essentially a task 
force, multi-agency, chaired by the Chairman of the Council on 
Environmental Quality, to ensure that we could not only 
streamline the various permitting projects across the board, a 
whole range of issues on the energy side, but also to ensure 
that we vet and get out these kinds of discussions in the first 
instance.
    And I am well aware that there are other cases of issues 
that have preceded this administration that are still in play 
where that might not have happened in a way that everybody 
would have liked, but I think that task force is designed to 
avoid exactly that problem.
    Senator Thomas. Good, and that is the Environmental Quality 
Council?
    Mr. McSlarrow. Yes, sir.
    Senator Thomas. Obviously, we have been having some 
hearings in this committee recently on Yucca Mountain, on the 
siting, which I think went very well. People are concerned 
about the transportation aspect of it, and I assume that the 
Department will be prepared to ensure that that can be done 
safely.
    Mr. McSlarrow. There is no question that we feel 
collectively as the Federal Government we have that 
responsibility and, in fact, we do it now, and I think one of 
the points the Secretary made before this committee is that we 
have had over 2,700 shipments of spent nuclear fuel already in 
this country, and obviously a lot going more recently, Mr. 
Chairman, to the WIPP facility in New Mexico.
    All of those shipments have been done safely, with no harm 
to humans and the environment, and it did not happen by 
accident. There is a very complex overlay of requirements and 
regulatory standards that have to be met in those 
circumstances, and we intend to meet, and I know the Nuclear 
Regulatory Commission intends us to meet the highest standards 
possible.
    Senator Thomas. We are getting information from ads on the 
television now in Wyoming that there will be a load every 10 
minutes going through, which I do not think is backed up by the 
facts, so I am glad that you are working at that, and I am 
pleased that you are undertaking this task. Thank you, sir.
    The Chairman. Thank you.
    Senator Akaka.
    Senator Akaka. Thank you very much, Mr. Chairman.
    Mr. McSlarrow, we had a good discussion when we met in my 
office. We discussed many things. One of the challenges that I 
pointed out that Hawaii has, of course, is in regard to heavy 
oil dependency, and 98 percent of the energy in Hawaii comes 
from crude oil, and therefore I have been looking for a way of 
trying to find out what this dependency is all about, and also 
I would like to have some assistance with an objective and 
thorough study of Hawaii's needs, and energy future, and my 
only question to you this morning is, can you provide 
assurances that the Hawaii energy study called for in the 
Senate bill will receive the attention of senior managers of 
the Department?
    Mr. McSlarrow. Yes, I can provide you that assurance, and 
should I be confirmed I will take a hard look at it myself.
    Senator Akaka. Thank you very much, Mr. Chairman.
    The Chairman. Thank you.
    Senator Craig.
    Senator Craig. Thank you, Mr. Chairman.
    Kyle, you mentioned a moment ago in your comments to the 
chairman and to--I guess it was to the chairman, the overview 
of your national energy policy and some comments and 
engagements that the President recently got involved in in his 
summit with the Russian president. They endorsed at that time 
the need for research into advanced nuclear fuel cycles. In my 
view, however we have got a problem. A DOE funding request is, 
I do not believe, adequate to fund this work in any meaningful 
way.
    As a matter of fact, the proposal, or the proposed funding 
level for fiscal 2003 would result in a substantial layoff at 
the Argonne National Laboratory both in Illinois and in Idaho, 
and they are the premier laboratories of the advanced fuel 
cycle. If confirmed, what will you do to close the gap? And to 
obviously make these comparatives, some reality of where we go 
and how they fit with the administration's energy priorities?
    Mr. McSlarrow. The whole topic of advanced nuclear fuel 
cycles I think is one that is going to become increasingly the 
focus of attention, money, and optimism. Part of the reason, as 
you say, for the budget is that the issue is whether you are 
talking about reprocessing or transmutation or recycling of 
some sort, and the whole future of nuclear power has been bound 
up in the past by a look at some technologies, particularly 
accelerator-driven technologies, that have proven to be 
unrealistic in terms of cost.
    More recently, as you know, the Nuclear Energy Research 
Advisory Committee to the Department that Dr. Burton Richter 
heads up has come out with a report where he has urged us to 
take a harder look at reactor-based technologies to address 
these advanced fuel cycles, so that is on the one hand a 
transition that we are right in the middle of and so, thus, 
just now formulating what the future budget requirements would 
be.
    And then on the other, as you pointed out, there is 
increasing interest, and we have been directed to explore by 
the two presidents what, how we might collaborate with Russia 
on proliferation-resistant advanced fuel cycle technologies.
    I think the entire subject will look very different a year 
from now than it does today.
    Senator Craig. Well, I am very willing to help you cause it 
to appear and to look, and in reality to become different. I 
think with the great revelations of the EPA as we speak, that 
somehow the world is going to change sea levels here in short 
order, that building a fuel system and an energy system to 
advance the percentages of nuclear for the world is at least 
more positive.
    A last question, Mr. Chairman, and Kyle, what do you think 
DOE should be doing along with and in concert with the Office 
of Homeland Security to protect the critical energy 
infrastructure that we might now not be doing? I know there are 
a variety of projects underway, but somehow a great revelation 
over the recess that all of our nuclear facilities were less 
than secure--although I did happen to notice they were not a 
target of choice, but certainly a problem from a public 
perspective and, in reality, I think something that the public 
probably wants a clearer response to, or a sense of security by 
that response as it relates to our nuclear facilities security.
    Mr. McSlarrow. Well, we really have two major 
responsibilities when it comes to homeland security. First and 
foremost, we have to secure our own complex. This is the 
Department that designs and produces the weapons, stores them, 
often, and refurbishes them, in addition to a variety of other 
tasks, obviously, nuclear waste, spent nuclear fuel and the 
like, across not just the weapons complex but other labs as 
well. So we have to make sure we have the safeguards and 
security in place that do that, and I believe we have.
    Second, as the Department of Energy, there is a 
relationship, as you hinted, with homeland security that deals 
with the entire issue of critical infrastructure, in particular 
the energy infrastructure, and there I think--and obviously the 
INEEL site is an ideal site, in many ways, to take a hard look 
at how we might study and analyze and then improve, 
particularly the electricity grid infrastructure but also other 
types of infrastructure requirements against terrorism, natural 
disaster, what have you, and so we take both those 
responsibilities very seriously. If confirmed, I will as well.
    Senator Craig. Well, I thank you for mentioning the INEEL. 
Mr. Chairman, uniquely enough it is a closed system in a sense 
from an electrical transmission sense, that the experts that 
look at it say, ah, this is rather ideal to be used as a 
prototype for infrastructure security systems and testing and 
all of that.
    Lastly, Mr. Chairman, just before the recess I was at a 
leadership meeting with Speaker Hastert and he indicated that 
there would probably be an appointment of conferees to the 
energy conference sometime immediately following the recess. I 
was one who clearly encouraged him to do that, but in reality, 
Mr. Chairman, we are hoping for a long, hot summer. We would 
like gas prices to go over $2 a gallon so the public would 
begin to realize the vulnerability of supply. It might give us 
another shot at ANWR.
    And then I was in California recently and I had to opine 
that if they go through another cycle of brownouts and 
blackouts it would probably advance the cause of a national 
energy policy that was more production and development-oriented 
along with a certain taste of conservation and all of that, so 
I hate to say this, but a good, long hot summer would be very 
beneficial to the development of a, I think, more productive 
national energy policy than what might likely come out of the 
conference, so I am hoping.
    Thank you, Mr. Chairman.
    The Chairman. Well, thank you, and I am glad the Senator 
feels that there is no political risk in hoping for a long, hot 
summer. In my State, I am hoping for a cool summer.
    Senator Craig. You are hot and dry and burning up right 
now.
    The Chairman. We need some rain in our State, and maybe a 
hot summer would cause us to revisit the CAFE standard issue as 
well.
    [Laughter.]
    The Chairman. Members will have until 5 p.m. this evening 
to file any additional questions they might have with the 
nominee for him to answer for the record, and we will plan to 
consider Mr. McSlarrow's nomination at the business meeting 
tomorrow, so thank you very much for coming. We appreciate it.
    Mr. McSlarrow. Thank you, Mr. Chairman.
    [Whereupon, at 10:25 a.m., the hearing was adjourned.]
                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

      Response of Michael Smith to Question From Senator Bingaman
    Question. The Senate will soon begin a debate on national energy 
policy. We will be called upon to decide whether this nation's energy 
needs are best met by a renewed emphasis on the energy fuels and 
technologies of the past or by placing greater focus on developing new 
fuels and technologies for the 21st century. Senators Dorgan and Graham 
and I raised this question with Deputy Secretary Blake several months 
ago, and I am attaching our letter to him.
    What are your thoughts on this matter? Where would you strike 
balance between fossil fuel production and the promotion of more 
efficient and renewable alternative energy resources and technologies? 
What do you see as your role in this debate, assuming you are 
confirmed?
    Answer. First of all, I would like to reiterate President Bush's 
statement that America must have an energy policy that plans for the 
future, but meets the needs of today. To that end, Senator, I believe 
the Department of Energy is working toward that goal. The DOE budget 
for fiscal year 2001 was $2.3 billion. Of that amount, 51% went 
directly to energy efficiency and renewable energy and 5% was spent on 
oil and natural gas. To me this shows a strong dedication to research 
and promote alternative energy resources. The future of America's 
energy security will depend heavily on a diverse energy supply, 
including conventional as well as alternative energy resources.
    It is also important to note that the Administration outlined a new 
national climate change initiative to identify areas where technology 
can be used to stabilize the concentration of greenhouse gasses in the 
atmosphere. One significant approach is enhancing the efficiency and 
reliability of natural gas. Although natural gas is a fossil fuel, it 
is an incredibly clean and cost-efficient energy supply for America 
while we explore the viability of new and alternative fuels. The final 
report from the National Climate Change Technology Initiative will 
address several of the questions raised in your letter to Deputy 
Secretary Blake.
    Our nation currently relies on traditional energy resources; and 
that demand will continue to increase through the near future. I firmly 
believe that we can explore, produce and utilize our fossil energy 
resources efficiently and in an environmentally responsible fashion. We 
are already aggressively promoting alternative and renewable energy 
resources, while striving to enhance the efficiency of our oil and 
natural gas production. Vision 21 provides for clean and economical 
power generation using clean coal technology as well as alternative 
forms of energy; while our oil and natural gas technology programs are 
dedicated to promoting the development and use of technologies which 
will drill deeper, faster, cheaper and cleaner.
    In closing, I believe that it is entirely possible to promote a 
responsible and economical approach to fossil fuels as well as take an 
active role in the development of alternative and renewable energy 
resources. Some of the greatest strengths of America come from 
competition as well as diversity. I look forward to the opportunity to 
help ensure that America has an energy future that is both competitive 
and diverse.
                                 ______
                                 
      Response of Michael Smith to Question From Senator Cantwell
    Question. The Office of Fossil Energy conducts research and 
development into a number of energy technologies that are critical in 
moving our country toward 21st century energy system that is more 
reliable, competitive, and sustainable. I strongly support continued 
investment in these technologies and believe they are the most 
effective way we can maintain out Nation's energy security, ensure the 
health of our citizens, protect our environment, and maintain our 
economic well-being well into the future.
    That is why I was particularly troubled by the Bush 
Administration's budget request that significantly cut funding towards 
distributed energy systems R&D as compared to FY 2001. As the Assistant 
Secretary for Fossil Energy, would you support similar reductions in 
future budget years? Fortunately, the Interior Conference rejected the 
President's request and actually increased the distributed energy 
budget by 29 percent over the Administration's recommendation. Can you 
please detail how the Office of Fossil Energy under your leadership 
would leverage these additional funds?
    I hope you share my view that carbon sequestration technologies 
hold a high level of promise as a partial solution to the alarming 
accumulation of greenhouse gases in our atmosphere. That is why I was 
pleased that Interior Conference also provided significant increases to 
the sequestration R&D program. Can you please detail how the Office of 
Fossil Energy under your leadership would leverage these additional 
fiends?
    Finally, I understand that some of the research and development 
efforts of the Office of Fossil Energy are similar to those conducted 
by the Department of Energy's Office of Energy Efficiency and Renewable 
Energy and the U.S. Environmental Protection Agency. Could you please 
describe how the Office of Fossil Energy under you direction would work 
cooperatively with these offices to avoid duplicative efforts and 
ensure that the government maximizes its return on the investment?
    Thank you, I look forward to your responses.
    Answer. I agree that the Office of Fossil Energy's research and 
development effort in key energy technologies is critical to advancing 
the country's energy systems towards increased reliability, 
competitiveness and sustainability for the 21st century. It is also 
important that we invest in a balanced portfolio of technologies to 
maintain our energy security and overall well being while protecting 
our environment.
    With regard to investments in R&D for distributed energy systems, I 
can assure you that the Administration and I remain committed to 
supporting a balanced and effective portfolio in Fossil Energy R&D. 
Fossil Energy's distributed energy investment is mainly comprised of 
advanced fuel cells and fuel cell-hybrid systems. I will continue to 
support vigorously a responsible budget for Fossil Energy's distributed 
generation program that is aimed at meeting our target goal within the 
decade. Under my leadership, the Office of Fossil Energy will continue 
to leverage the funding in fuel cells for distributed generation by 
continuing a cost-shared partnership with industry. Specifically within 
the solid state fuel cells effort, this partnership has taken on a form 
of a consortium, namely the Solid State Energy Conversion Alliance 
(SECA) involving industry teams, laboratories and universities that is 
making great strides toward the development of economically competitive 
distributed generation systems.
    I am pleased to see an increased investment in carbon sequestration 
technology as we begin to conduct larger scale experiments to 
investigate the feasibility of various sequestration options. As with 
our other programs, I expect that we will continue to effectively 
leverage funding in the form of private sector cost-sharing in 
sequestration research. The private sector continues to show great 
interest in partnering with us in conducting R&D in this area. In 
addition, we will continue to gain additional leveraging of funds 
through our participating in international research projects and 
coordinating and complementing these research efforts with other 
countries, other agencies, and other offices of DOE.
    Finally, in terms of the Office of Fossil Energy working 
cooperatively with the Office of Energy Efficiency and Renewable Energy 
(SERE) and the U.S. Environmental Protection Agency (EPA), I strongly 
share your view with regard to the need for agencies and offices with 
similar interests to work together not just to avoid duplication, but 
to synergistically maximize intellectual and financial resources to 
achieve common goals in order to maximize the benefit to taxpayers. 
Under my leadership, I would envision building onto and strengthening 
past successful efforts in this area, including having joint workshops, 
planning meetings and regular discussions among program staff. Some 
specific examples of past successes that I would build on include 
working cooperatively with EPA to develop critical emissions databases 
and with EERE to develop a joint Distributed Energy Resources Strategic 
Plan. I am committed to continuing to work towards improving research 
coordination within the Department and with other agencies as well.
                                 ______
                                 
      Responses of Kyle McSlarrow to Questions From Senator Burns
                          aluminum production
    The Pacific Northwest is home to approximately 40% of the aluminum 
production capacity in the United States. In 2001 the aluminum industry 
in the Pacific Northwest voluntarily negotiated curtailments in the 
production and the use of electrical energy, making large amounts of 
power available to other loads in the region. With the notable 
exceptions of the facility in Montana and, I believe, one in 
Washington, most of the aluminum smelting capacity remains curtailed.
    In Montana and the rest of the region, the aluminum industry is 
important for several reasons: it provides good, solid, family-
oriented, living wage jobs; it is a steady, reliable, system-
stabilizing load for the electrical energy providers in the region and 
it produces a valuable product, aluminum, that earlier administrations 
and your predecessor have noted is important to the national security.
    Question 1. Please explain how the Department of Energy will 
participate in the management of the federal power system in the 
Pacific Northwest to ensure the renewed health and viability of the 
aluminum industry; an important part of our region and my state's 
economy.
    Answer. The Bonneville Power Administration provides power for 
Pacific Northwest Direct Service Industrial (DSI's) customers at cost-
based wholesale electric rates. Under existing DSI power sales 
contracts, power is to be provided to the DSI's through Fiscal Year 
2006. Bonneville feels that it has developed a very constructive 
working relationship with the Columbia Falls Aluminum Company (CFAC) 
and has worked diligently to help that plant, which is located in 
Columbia Falls, Montana, restart idled potlines. In fact, CFAC recently 
thanked Bonneville for its efforts to assist the company's return to 
production.
    Many Northwest aluminum companies, including CFAC, had rights under 
their previous contracts to curtail operations and receive the proceeds 
from remarketed federal power. Bonneville entered into an agreement 
that provides CFAC and a number of other Northwest aluminum companies 
cash payments to relieve Bonneville of the obligation to purchase power 
to serve their loads this year. These payments have allowed CFAC to 
maintain a qualified work force during a period in which operation of 
the plant was not profitable and even restart a portion of its 
production. Bonneville remains committed to a cooperative relationship 
with the region's aluminum industry, a relationship that benefits the 
industry, while avoiding cost shifts to Bonneville's other customers.
                                rto west
    Investor owned utilities in the Pacific Northwest and the 
Bonneville Power Administration are working on a proposal to form an 
Regional Transmission Organization (RTO) called RTO West.
    Question 2. The RTO West Filing Utilities commissioned a study (the 
Tabors Caramanis & Associates Study) in an effort to determine the 
probable benefits and costs of RTO West on ratepayers in the Pacific 
Northwest. The Study shows that the formation of RTO West could expose 
the citizens of Montana to energy cost increases. As you know, one of 
the central purposes behind the formation of RTOs is to increase the 
efficiency of the nation's electric power system and provide consumers 
with lower energy costs. An RTO which will increase the energy costs to 
Montana residents is simply unacceptable. Please provide me with an 
assurance that DOE will work with BPA to design an RTO that will 
provide net benefits to all residents of this region of the country 
including the citizens of Montana. Please also provide me with an 
assurance that DOE will not support the formation of RTO West in the 
absence of clear evidence that it will result in lower energy costs to 
the citizens of Montana.
    Answer. I agree with you that regional transmission organizations 
have the potential to provide positive benefits to consumers. It is 
critical to ensure that potential is realized. My understanding is RTO 
West is being developed to achieve those benefits for consumers, but 
many outstanding issues remain unresolved. I assure you the Department 
has not prejudged whether or not Bonneville should participate in RTO 
West. That will depend on whether Bonneville participation in RTO West 
will benefit its customers in Montana and the rest of the region. 
Ultimately the Department must make a reasoned decision about 
Bonneville's participation in an RTO. I will closely monitor the 
development of RTO West discussions, and welcome your help in resolving 
the many outstanding issues.
              bonneville power administration and rto west
    The Department of Energy (DOE) recently released its National 
Transportation Grid Study (Study). In this Study, DOE stated that it 
will direct the Bonneville Power Administration (BPA) to participate in 
the creation of RTO West and take actions to facilitate BPA joining RTO 
West. DOE has taken this position notwithstanding the findings of both 
the Tabors Caramanis & Associates and the Federal Energy Regulatory 
Commission (FERC) RTO cost/benefit studies. Both of these studies 
reflect a net increase in energy costs for the citizens of Montana. 
Indeed, the FERC Study shows price increases in several other regions 
of the country.
    Question 3. As you know, one of the central purposes behind the 
formation of RTOs is to increase the efficiency of the nation's 
electric power system and provide consumers with lower energy costs. An 
RTO which will increase the energy costs to Montana residents is simply 
unacceptable. Please explain how DOE can support BPA's participation in 
the formation of an RTO which current studies show will increase energy 
costs to residents of Montana. Please provide me with an assurance that 
DOE will withhold its support for the formation of RTO West until 
evidence is provided that it will result in lower energy costs to the 
citizens of Montana.
    Answer. The Department has not prejudged whether or not Bonneville 
should participate in RTO West. While the National Transmission Grid 
Study directed Bonneville to participate in the formation of regional 
transmission organizations, it did not prejudge their ultimate 
participation in RTO West. As I indicated in response to your earlier 
question, Bonneville's participation in RTO West will depend on whether 
Bonneville participation in RTO West will benefit its customers in 
Montana and the rest of the region.
                                 ______
                                 
    Responses of Kyle McSlarrow to Questions From Senator Murkowski
    Question 1. With respect to the Department of Energy's Accelerated 
Cleanup program, which was originally designed to expedite the cleanup 
of the nation's nuclear weapons production facilities, how are you 
making the decisions where to put the accelerated cleanup money and did 
the Department perform a detailed rate of return analysis?
    Answer. The Department of Energy is considering the following 
criteria to evaluate accelerated risk reduction and cleanup proposals:

   Accelerated risk reduction. What are the tangible risk-
        reduction values of this project and does this project fit in 
        with the overall EM accelerated risk reduction strategy?
   Business practices. Are business processes aligned so that 
        the project can succeed?
   Acquisition Strategy. Does/can the contract support/drive 
        the activity?
   Regulatory Agreements. Do the regulatory agreements support 
        the activity?
   What are the significant benefits to the EM program?

    The Department is in the process of preparing Performance 
Management Plans at sites where accelerated cleanup strategies have 
been developed. While we won't be able to determine the specific ``rate 
of return'' on our investment in accelerated cleanup until these 
detailed plans are competed, preliminary indications are that the 
accelerated proposals will result in significant reductions in the 
schedule and life-cycle costs of cleanup.
    Question 2. Based on the Sites (Hanford and Savannah River) that 
pose the highest risk, are you putting the appropriate resources out of 
the Accelerated Cleanup fund in those areas?
    Answer. The Department, the State of Washington Department of 
Ecology and the U.S. Environmental Protection Agency (EPA) signed a 
Letter of Intent on March 5, 2002, that reflects a mutual commitment to 
actively seek alternative cleanup approaches. This approach could 
significantly accelerate the Hanford Site cleanup without sacrificing 
the quality of site cleanup. High risk problems, including retrieval 
and treatment of high level waste and clean out of spent nuclear fuel 
basins, are key among the initiatives targeted in the Letter. The 
Department has estimated that an additional $433 million from the EM 
Cleanup Reform account may be needed for cleanup of the Hanford site.
    The Department, the State of South Carolina, and EPA are actively 
involved in discussions of alternative approaches to focus cleanup 
efforts at the Savannah River Site on reducing the highest risks and 
accelerating the cleanup. When parties reach agreement on an 
accelerated strategy, the Department is committed to seeking the 
additional funding needed to implement the approach.
    Question 3. Based on a finite funding stream for this accelerated 
cleanup program, how can you assign funding to one Site before the 
other Sites have made their proposals?
    Answer. This is not a competition between sites. The 
Administration's budget request of $800 million reflects estimates of 
the funding required to accelerate cleanup as described in DOE's Top to 
Bottom Review in 2001. In addition, as the budget request states, ``If 
the vast majority of sites agree to the reforms we think are necessary, 
it is possible the $800 million may become over-subscribed. In this 
event, the administration is prepared to support additional resources, 
not to exceed $300 million, to complete reforms at the remaining 
sites.'' If Congress approves our request for accelerated cleanup 
reforms, we intend to provide additional funds as appropriate to all 
sites that have developed accelerated cleanup plans that meet the 
criteria described above.

                               


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