[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



         FY 2005 BUDGET PRIORITIES FOR THE DEPARTMENT OF ENERGY

=======================================================================

                                HEARING

                               before the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 1, 2004

                               __________

                           Serial No. 108-80

                               __________

       Printed for the use of the Committee on Energy and Commerce


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
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                    COMMITTEE ON ENERGY AND COMMERCE

                      JOE BARTON, Texas, Chairman

W.J. ``BILLY'' TAUZIN, Louisiana     JOHN D. DINGELL, Michigan
RALPH M. HALL, Texas                   Ranking Member
MICHAEL BILIRAKIS, Florida           HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio                EDOLPHUS TOWNS, New York
JAMES C. GREENWOOD, Pennsylvania     FRANK PALLONE, Jr., New Jersey
CHRISTOPHER COX, California          SHERROD BROWN, Ohio
NATHAN DEAL, Georgia                 BART GORDON, Tennessee
RICHARD BURR, North Carolina         PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
CHARLIE NORWOOD, Georgia             ANNA G. ESHOO, California
BARBARA CUBIN, Wyoming               BART STUPAK, Michigan
JOHN SHIMKUS, Illinois               ELIOT L. ENGEL, New York
HEATHER WILSON, New Mexico           ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona             GENE GREEN, Texas
CHARLES W. ``CHIP'' PICKERING,       KAREN McCARTHY, Missouri
Mississippi, Vice Chairman           TED STRICKLAND, Ohio
VITO FOSSELLA, New York              DIANA DeGETTE, Colorado
STEVE BUYER, Indiana                 LOIS CAPPS, California
GEORGE RADANOVICH, California        MICHAEL F. DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire       CHRISTOPHER JOHN, Louisiana
JOSEPH R. PITTS, Pennsylvania        TOM ALLEN, Maine
MARY BONO, California                JIM DAVIS, Florida
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
LEE TERRY, Nebraska                  HILDA L. SOLIS, California
MIKE FERGUSON, New Jersey            CHARLES A. GONZALEZ, Texas
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho
JOHN SULLIVAN, Oklahoma

                      Bud Albright, Staff Director

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                  (ii)






                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Abraham, Hon. Spencer, Secretary, U.S. Department of Energy..    15
Additional material submitted for the record:
    Abraham, Hon. Spencer, Secretary, U.S. Department of Energy, 
      response for the record....................................    68

                                 (iii)

  

 
         FY 2005 BUDGET PRIORITIES FOR THE DEPARTMENT OF ENERGY

                              ----------                              


                        THURSDAY, APRIL 1, 2004

                          House of Representatives,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:30 a.m., in 
room 2123, Rayburn House Office Building, Hon. Joe Barton 
(chairman) presiding.
    Members present: Representatives Barton, Hall, Upton, 
Stearns, Gillmor, Whitfield, Norwood, Shimkus, Wilson, Shadegg, 
Buyer, Radanovich, Bass, Walden, Terry, Ferguson, Rogers, Issa, 
Otter, Sullivan, Dingell, Markey, Boucher, Brown, Eshoo, 
Stupak, Engel, Wynn, Green, McCarthy, Strickland, Capps, Doyle, 
Allen, Davis, Schakowsky, and Solis.
    Staff present: Mark Menezes, majority counsel; Bob Meyers, 
majority counsel; Jason Bentley, majority counsel; Bob Rainey, 
fellow; Peter Kielty, legislative clerk; Bruce Harris, minority 
counsel; and Sue Sheridan, minority counsel.
    Chairman Barton. The committee will come to order.
    Today we're here to hear from the Secretary of Energy on 
the Department of Energy's pending budget request and any other 
issues that he wishes to put before us.
    The Chair would recognize Mr. Dingell for a unanimous 
consent request.
    Mr. Dingell. Good morning, Mr. Chairman.
    I have a unanimous consent which you and I have discussed. 
It have discussed it with the members of the minority.
    It is as follows, and I ask unanimous consent to this 
effect: For the purposes of this meeting alone that members be 
limited in their opening statements to 1 minute; that 
subsequently each of them will receive the appropriate amount 
of time under rules, i.e., 5 minutes for questions or such 
further comments as may be appropriate.
    That is the unanimous consent request subject to just a 
couple of things I want to say.
    One, we would expect if this time does not make it possible 
to receive the full testimony of the Secretary or the 
opportunity of all members on both sides to ask questions and 
so forth, that we would expect that the Secretary would come 
back. And second of all, to have a clear understanding that 
this does not change or amend the rules of the committee. It is 
simply a unanimous consent request for this day's business 
only.
    Chairman Barton. Observing the right to object.
    Mr. Dingell. I certainly yield to my----
    Chairman Barton. And I will not object, but I want to let 
all the members of the committee know that I take my duties as 
chairman of this committee, you know, absolutely seriously. And 
it is not my intent nor will I unilaterally violate any of the 
rules.
    I was led to believe until last week that we actually had a 
rule that said all members of the committee had a right to give 
a specified opening statement. It turns out that at least in 
the opinion of the Parliamentarian and the majority counsel 
that it is not a right, it is a tradition. I want to maintain 
the traditions also. But on rare occasions when we have Cabinet 
secretaries or other special situations that have limited time, 
I will work with Mr. Dingell to determine the best way to 
maximize everybody's opportunity to have some input.
    So as long as everybody understands that accepting this 
unanimous consent request does not set a precedent and does not 
acknowledge a subordination of the chairman's rights of 
recognition, I will not object. And we will get this worked 
out. We are going to get with the Parliamentarian, with both 
majority and minority counsel and make sure we understand what 
the rules are, what the rights are. And those will be honored 
scrupulously.
    So with that, is there an objection to the gentleman from 
Michigan's unanimous consent request? Hearing none, so ordered.
    The Chair would recognize himself for 1 minute.
    Mr. Secretary, we are glad to have you here today. This is 
an important hearing. As you know, energy is in the news today. 
This committee and the House of Representatives passed a 
comprehensive energy bill. The committee passed the original 
bill last spring. We passed the Conference Report right before 
Christmas, and yet today the other body has yet to see fit to 
move that bill.
    Energy prices are at, or near, all time highs. 
Consequently, we need to focus on our energy policy. We also 
need to focus on your Department's budget.
    I want to commend you on what you have done in the 
management of the Department of Energy. You are one of the few 
Cabinet Secretaries that has taken managing the Department to 
heart, and the Office of Management and Budget has given your 
leadership at the Department very high marks for what you have 
done.
    So I look forward to hearing from you. And, obviously, we 
look forward to having a full discussion in the question and 
answer period.
    [The prepared statement of Hon. Joe Barton follows:]

 Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy 
                              and Commerce

    The hearing will come to order. One of the first decisions I made 
upon becoming Chairman of the Committee was to exercise our 
Constitutional duty to review the budget requests of cabinet 
departments within our jurisdiction. Thus far, the full Committee has 
heard from Secretaries Thompson and Evans and today we've invited 
Secretary Abraham of the Department of Energy to address DOE's budget 
for FY 2005.
    We have heard from the Secretary and his office on several critical 
items this Congress: of course on the energy bill, but also the August 
blackout, Yucca Mountain, and a number of oversight matters. But the 
Energy Department also performs a wide range of services for our 
country, from modernizing our nuclear weapons stockpile to the 
development of energy efficiency technology and renewable energy. I 
think it important to recognize your accomplishments, Mr. Secretary; I 
understand OMB has announced that your Department has made the most 
progress in fulfilling the President's Management Agenda by creating 
cost-saving synergies to enhance performance while meeting the 
Department's missions. Considering the challenges facing your 
Department, that is quite a feat and you and your staff should be 
complimented.
    Today, Mr. Secretary, you bring us the largest DOE budget in 
history and we look forward to hearing from you as to why that's the 
case.

    Chairman Barton. With that, I would recognize the gentleman 
from Michigan for 1 minute.
    Mr. Dingell. Mr. Chairman, I thank you.
    Welcome, Mr. Secretary.
    Mr. Chairman, I hope that this hearing--first of all, I 
commend you for the hearing.
    Second, I hope that the hearing will focus very carefully 
and that the Secretary will assist us on a number of questions. 
One, the question of enacting electric reliability legislation 
and, with the administration's support, that being done 
separately.
    Two, the need of the administration to job own OPEC and 
OPEC members and whether that has in fact been done because I 
believe that is extremely important.
    I also hope that we will address seriously the problem of 
reform of Yucca Mountain funding where monies belonging to the 
public are being dissipated improperly by the Congress and by 
the Budget Committee and the Appropriations Committee.
    I also would like to see us address this morning problems 
associated with accelerated clean-up at defense waste sites and 
other similar facilities. Also facility security and worker 
safety. These are important matters which need to be address 
and I hope we an explore today.
    Thank you, Mr. Chairman.
    Chairman Barton. Thank you.
    Without objection, all members' written statement will be 
made a part of the record.
    The Chair is now going to recognize any members who seeks 
recognition to give a 1-minute opening statement.
    The Chair would recognize the distinguished subcommittee 
chairman of the Energy and Air Quality Subcommittee, Mr. Hall 
of Texas.
    Mr. Hall. Mr. Chairman, I have no opening statement.
    Chairman Barton. The Chair would then recognize Mr. Markey 
for an opening statement. Okay. Mr. Markey passes.
    The Chair would then recognize Congresswoman Wilson for an 
opening statement.
    Ms. Wilson. I will pass, Mr. Chairman.
    Chairman Barton. Okay. The Chair would recognize Mr. Brown 
of Ohio for an opening statement.
    Mr. Brown. Thank you, Mr. Chairman. I will limit to 1 
minute as you request.
    America's energy future is taking shape, Mr. Secretary, in 
Ohio a national leader in fuel cell technology research. That 
is why I strongly support your FutureGen proposal to build a 
coal fueled emissions free fuel cell power plant. I look 
forward to working with you to make FutureGen a reality.
    I also support the President's proposal to increase funding 
for EnergyStar. We should be doing more by providing Federal 
rebates to consumers who choose EnergyStar labeled products.
    But though high natural gas prices are hurting 
manufacturers, the President proposes to cut funding for 
programs that help manufacturers save money by saving energy. 
That is a mistake we in Congress must correct. We know what has 
happened in your part of the country, my part of the country; 
Michigan, Ohio, the entire Great Lakes area with loss of 
manufacturing jobs. The President seems to be missing the boat 
on this part of dealing with that problem and other areas also 
in manufacturing.
    The Energy Information Administration projecting record 
gasoline demand and low gas inventories, the Energy Department 
must act to protect consumers. I urge you to meet this spring 
with oil company executives to make certain that inventories 
are sufficient to protect consumers from the price effects of 
unanticipated supply disruption.
    Mr. Secretary, I am glad you are here. Thank you.
    Chairman Barton. Does the gentleman from Arizona wish to 
make an opening statement?
    Mr. Shadegg. I do, Mr. Chairman.
    Chairman Barton. The gentleman is recognized for 1 minute.
    Mr. Shadegg. Mr. Secretary, I want to thank you for being 
here today and for presenting yourself for questioning by our 
committee.
    I want to compliment you on the efforts of you and the 
administration to address the energy issues facing our Nation.
    In May 2000 the administration released a comprehensive 
national energy policy which made over 100 separate 
recommendations to address all aspects of the energy equation.
    In the summer of 2001 you worked with the committee and the 
House to pass H.R. 4, the Energy Policy Act of 2001 with a wide 
range of issues proposing to boost energy oil product, gas and 
electricity and implement energy conservation programs and 
efficiency programs.
    Last spring you worked with us again to pass even more 
legislation, more comprehensive legislation the Energy Bill 
H.R. 6.
    We appreciate your efforts to address these issues.
    I know there will be questions today about the Strategic 
Petroleum Reserve, and I am anxious to get into that 
discussion.
    But I want to compliment this administration. Obviously, a 
lot of things that you have put on the table have not yet 
become law or have been defeated as a result of the 
deliberations of the U.S. Congress, and those things have had 
consequences. Now that we face extremely high oil prices and--
--
    Chairman Barton. The gentleman's time has expired.
    Mr. Shadegg. [continuing] I share my colleagues' concern 
that we work to try to hold down gasoline prices as we go 
forward.
    I thank you for being here.
    Chairman Barton. The gentleman from Massachusetts now 
recognized for 1 minute opening statement.
    Mr. Markey. President Bush gets quite a bit of advice about 
how to deal with OPEC oil cartel. Here is a plan I really wish 
that he had taken to heart prior to yesterday's announcement. 
``What I think the President ought to do is he ought to get on 
the phone with the OPEC cartel and say we expect you to open 
your spigots. One reason why the price is so high is because 
the price of crude oil has been driven up. OPEC has gotten its 
supply act together and it is driving up the price like it did 
in the past. And the President of the United States must job 
own OPEC members to lower the price.'' Great advice. Who 
offered it? It was candidate George W. Bush back in January 
2000 to Bill Clinton. Unfortunately, President George W. Bush 
does not seem to have listened. Instead of getting OPEC to turn 
on the spigot, President Bush has failed to prevent OPEC from 
turning off the spigot that powers the American economy.
    The Bush Administration's failed energy policies are 
already forcing consumers to pay a Bush gas tax of $24 billion 
a year that could rise to $32 billion by the summer unless 
President Bush gets OPEC to start producing more oil instead of 
reducing by a million barrels of oil at a point where the 
economy of the world is in trouble.
    Chairman Barton. I thank the gentleman from Massachusetts.
    Does the gentleman from New Hampshire wish to make an 
opening statement?
    Mr. Bass. Yes, Mr. Chairman.
    Chairman Barton. The gentleman is recognized.
    Mr. Bass. The comments of my friend from Massachusetts 
notwithstanding, Mr. Secretary energy should not be about 
Republicans versus Democrats in an election year. It should not 
be about liberals versus conservatives, and it is not. Energy 
policy is about developing a unified bipartisan strategy that 
involves foreign policy and the balanced development of energy 
resources that meet the needs which are unique and interesting 
of all regions of the country.
    And I am looking forward to working with you and this 
committee if we do not have an energy bill in the near future 
to develop a plan that will be of interest to regions such as 
the northeast.
    And I yield back.
    Chairman Barton. The gentleman from Michigan wish to make 
an opening statement?
    Mr. Stupak. Yes, Mr. Chairman.
    Chairman Barton. The gentleman is recognized.
    Mr. Stupak. Mr. Chairman.
    Mr. Secretary, I recently read a Florida paper which 
suggested creating a renewable energy trust fund using revenue 
derived from an energy postage stamp similar to the breast 
cancer research stamp. The special stamp would cost more than a 
regular postage stamp with the extra revenue awarded to 
universities for the research and development of clean, 
renewable energy sources such as hybrid cars and alternative 
fuels, the goal being energy independence by 2014. This is 
similar to what the government asked of Americans during World 
War II. The government asked them to buy war bonds, grow 
victory gardens. Now we should ask them to buy energy stamps to 
help free us from foreign oil, which again is linked to our 
national security.
    And with that, I would yield back. I will be interested in 
hearing your comments.
    Chairman Barton. We thank the gentleman.
    Does the gentleman from New Jersey wish to make an opening 
statement?
    Mr. Ferguson. I do, Mr. Chairman.
    Chairman Barton. The gentleman is recognized.
    Mr. Ferguson. Thank you, Mr. Secretary for being here.
    I was listening to my friend from Massachusetts talk about 
the failed energy policies of the Bush Administration. It has 
got to be April Fool's Day, because many of the important 
energy policies of the Bush Administration have never been put 
into law because of those in the Congress, those in this 
committee, those on the House floor and in particular our 
friends in the Senate who have sought to stymie the energy 
policies of this administration from being put into law.
    Clearly, this administration and Secretary Abraham and 
others have worked like dogs for 3 years to try and implement 
an energy policy which was lacking for 8 years under the 
previous administration. It seems to me that many of the energy 
problems and the situations that we are facing today could have 
been helped had we put an energy policy in place 1 or 2 or 3 
years ago. It is my hope that we will continue to work today 
with the Secretary and our friends in the Senate to implement 
an energy policy which this administration had put forward 3 
years ago, more than 3 years ago.
    Thank you, Mr. Chairman.
    Chairman Barton. Does the gentleman from New York wish to 
make an opening statement?
    Mr. Engel. Yes, thank you, Mr. Chairman.
    I believe that the administration must do everything in its 
power pure and simple to bring down the prices of gasoline. I 
think it is quite disingenuous to suggest that if the energy 
bill had passed in the Senate, somehow that would have effected 
the prices of gasoline.
    I know the energy bill would reward polluters and do a lot 
of other things, but I do not really see it bringing down the 
prices of gasoline. And that is the No. 1 priority for the 
American people.
    A few days ago OPEC announced it will cut production. Our 
supposed allies in the Middle East are once again squeezing the 
American consumers. If that does not prove the point that we 
must find innovative ways to become an energy independent 
Nation, I do not know what will.
    It has been a quarter of a century since we increased CAFE 
standards. In that time we have seen a revolution in medical 
technology, telephone and wireless equipment and the creation 
of a little thing called the Internet. We have some very bright 
engineers. So I find it absolutely impossible to believe that 
the automotive engineers have not been able to improve engine 
efficiency.
    I think that we have to have high better insulating 
materials for walls and windows, a much more aggressive effort 
to deploy super conductors in the market. And the energy policy 
of this country, we also need to think a lot about 
conservation.
    Chairman Barton. The gentleman----
    Mr. Engel. And finally I want to say----
    Chairman Barton. The gentleman's time is expiring.
    Mr. Engel. [continuing] that the Federal Government should 
not--I urge the Federal Government to put a temporary hold on 
purchasing more oil for the Strategic Petroleum Reserve, and I 
join my colleague from Virginia and dozens of other members who 
said that.
    Thank you, Mr. Chairman.
    Chairman Barton. I thank the gentleman from New York.
    Does the gentleman from Michigan wish to make an opening 
statement?
    Does the gentlelady from California wish to make an opening 
statement, Ms. Eshoo?
    Ms. Eshoo. Thank you.
    And good morning, Mr. Chairman and Mr. Secretary. Welcome.
    I am very glad that you are here to discuss the 
administration's budget request. But of course this is an 
opportune time to talk just a little bit in our opening 
statements about national energy policy.
    What I want to direct my comments very quickly at, and 
other members have done this as well, is the issue of gasoline 
prices and what is happening at the pump. They are high all 
over the country. I am a Californian. Last weekend, just maybe 
three blocks from my home, $2.25 a gallon for regular. $2.25 a 
gallon for regular.
    So this is hitting people hard. And I do think that there 
are some things that we can do, both short term and long term.
    Everyone in California including our new Governor, the 
entire California delegation, bipartisan California 
congressional delegation and even EPA scientists know that the 
waiver to improve air quality in our State would certainly help 
to lower costs. We need to act on that waiver, and we need your 
assistance in doing that.
    I carried legislation with a former member from this 
committee from Southern California----
    Chairman Barton. Okay. The gentlelady's time is expiring.
    Ms. Eshoo. And I hope, Mr. Secretary, that you will take a 
very close look at the letter that we have sent to you. It is 
not to cure the entire problem, but it certainly will go a long 
way.
    Thank you.
    Chairman Barton. The gentlelady's time has expired.
    The gentleman from California, Mr. Issa, is recognized for 
1 minute.
    Mr. Issa. Mr. Secretary, I would echo parts of my colleague 
from California's comments that it is important that California 
be allowed to formulate less expensive clean fuels as soon as 
possible. I would note that that is in the Energy Bill, and 
hopefully we will soon see that waiver brought about.
    But what I am going to be very concerned to get a feel for 
is with the Federal Government buying 160,000 barrels a day for 
the Strategic Petroleum Reserve and past experience of 
unloading 30 million barrels in order to try to reduce prices 
and finding that it only reduced prices by about .01 cent a 
gallon; whether or not this is really going to make a material 
difference in what we all admit is a refining capacity problem 
leading to higher prices. And, hopefully, you can deal with 
that and then in the remaining seconds that we all have, help 
us understand the impending natural gas shortage.
    Thank you. I yield back.
    Chairman Barton. The gentleman from Texas, Mr. Green, is 
recognized for 1 minute.
    Mr. Green. Thank you, Mr. Chairman.
    And as we know, energy prices are having a major impact on 
our economy today, not only our constituents at the pump, but 
particularly in the economy of the Gulf Coast where I represent 
where natural gas prices are threatening the chemical 
manufacturers to use natural gas as a fed stock, plus the price 
of just heating our homes and cooling our homes.
    The Washington Post on March 17 ran a front page business 
section article with headline ``Chemical Industry in a Crises: 
Natural Gas Prices Are Up, Factories Are Closing And Jobs Are 
Vanishing.'' My concern is we are going to see the same thing 
happen to the chemical industry that happened in a lot of our 
other basic industries.
    The article cited an industry executive saying we have the 
highest natural gas prices in the world and U.S. businesses 
have lost $50 billion in business to foreign competition. The 
industry has lost over 100,000 jobs not just in Texas, but 
Ohio, New Jersey, West Virginia and other manufacturing states.
    I support H.R. 6, the comprehensive energy package, and I 
would hope the Senate would find the votes to pass it. It is 
not as good as I would like for energy production, but it is 
the best we could do.
    An example of the bill, I would hope that the admin-
istration's----
    Chairman Barton. The gentleman's time has expired.
    Mr. Green. [continuing] decision to hold off on exploration 
in the eastern Gulf of Mexico.
    Thank you, Mr. Chairman.
    Chairman Barton. I thank the gentleman from Texas.
    Does Mr. Otter wish to make an opening statement.
    The gentlelady from Missouri?
    The gentleman from Oklahoma wish to make an opening 
statement?
    Mr. Sullivan. Thank you, Mr. Chairman.
    And thank you, Secretary for being here today and 
testifying before us. And I look forward to hearing your 2005 
energy priorities.
    Yesterday, OPEC announced its decision to cut oil 
production by 1 million barrels a day. And this just highlights 
the need for a comprehensive energy policy that we have heard 
from many people today.
    Over 50 percent of our energy comes from foreign sources, 
and a large percentage of that comes from areas that we have 
carpet bombed recently. I think it's asinine that we rely on 
that much.
    We need an energy policy, one that spurs domestic 
production and increases our refining capacity. They are 
running at almost full capacity.
    As you know, Mr. Secretary, we have not built a refinery in 
nearly 30 years. This is an important issue to Oklahoma as 
100,000 people are employed by the energy industry. It is 
especially important to my independent producers and royalty 
owners. I think that all Americans are now realizing the 
importance of this industry with the increasing prices at the 
pump. I look forward to hearing your testimony and, again, 
thank you for being here today.
    Chairman Barton. The gentlelady from California, Ms. Capps, 
wish to make an opening statement?
    Ms. Capps. Yes, Mr. Chairman.
    Chairman Barton. The gentlelady is recognized.
    Ms. Capps. Mr. Secretary, I believe the administration is 
dead wrong to call for passage of H.R. 6 to address our energy 
problems. It would not help. According to the Energy Department 
this policy would actually increase gas prices. Gas prices need 
to come down, not go up and here are a few ways to make that 
happen.
    First, the President should grant California the 2 percent 
oxygenate waiver as Governor Schwarzenegger and the bipartisan 
California delegation have been asking. According to the 
Petroleum Industry Research Foundation unnecessary RFG 
standards add up to 20 cents a gallon.
    Second, we should stop adding to the Strategic Petroleum 
Reserve when oil prices are so high. We should buy oil for the 
SPR when prices are low, not when they are sky high.
    And finally, the administration should press OPEC to raise 
output and lower prices. Back in 2000 then Governor Bush called 
for more administration jawboning of OPEC countries to bring 
down oil prices. Today he needs to follow his own advice.
    I yield back.
    [The prepared statement of Hon. Lois Capps follows:]
  Prepared Statement of Hon. Lois Capps, a Representative in Congress 
                      from the State of California
    Thank you, Mr. Chairman.
    With gas prices at record levels and rising, the economy still 
struggling, and a summer of potential electricity blackouts possible, 
energy issues remain at the forefront of our agenda.
    I am disappointed that Congress didn't pass responsible energy 
legislation in the last session.
    I am not, however, disappointed the energy bill that came out of 
the House did NOT become law.
    H.R. 6 did just about everything but promote a responsible national 
energy policy.
    The bill was loaded down with billions in subsidies for the oil, 
gas, coal and nuclear industries.
    It would have weakened key environmental laws, restricted states' 
ability to protect their coasts, and given immunity to producers of the 
known groundwater contaminant and gasoline additive MTBE.
    And the bill would have had virtually no impact in several key 
areas like reducing global climate change or keeping gas prices 
affordable.
    Indeed, the Energy Information Agency noted that HR 6 would have 
virtually no effect on gasoline prices.
    We should pass the noncontroversial parts of the bill--like Mr 
Dingell's electricity reliability standards--and stop holding them 
hostage to the more loathesome provisions.
    As for the skyrocketing gas prices, I have a few suggestions . . .
    First, the President should grant California the waiver from the 2% 
oxygenate standard. According to the Petroleum Industry Research 
Foundation, without a waiver California's gas prices will be as much as 
20 cents a gallon higher.
    Gov. Schwarzenegger, former Gov. Davis and virtually the entire 
bipartisan California delegation has been asking for this waiver for 
the last 5 years.
    Just yesterday, Reps. Waxman, Eshoo, Solis, Lofgren and I renewed 
this request to the President.
    Second, we should stop adding to the Strategic Petroleum Reserve 
when oil prices are so high. Not only would that send a signal to OPEC 
that we will take steps to combat the cartel's illegal manipulation of 
oil prices--it would be good for taxpayers as well. We should be buying 
oil for the SPRO when prices are low . . . not when they are sky high.
    Finally, the Administration should press OPEC to raise output and 
lower prices. Yesterday's New York Times notes that the ``United States 
is placing `very little' pressure on Saudi Arabia and other OPEC 
countries to keep production up.//
    Diplomacy is often best conducted behind closed doors, but OPEC 
decision to cut production by a million barrels illustrate another 
failure of the Administration.
    And we clearly have to take some steps for the long term, the most 
important being one this Committee unwisely shot down--raising the 
automobile fuel efficiency standards.
    The National Academy of Sciences has concluded a significant 
improvement in the miles-per-gallon performance of cars and trucks over 
the next ten years is possible.
    Higher efficiency standards would result in real fuel savings, 
benefitting consumers and the economy, reducing our dependence on 
foreign oil, and enhancing the competitiveness of our auto industry.
    I yield back the balance of my time.

    Chairman Barton. I thank the gentlelady.
    Mr. Whitfield wish to make an opening statement? Okay.
    The gentleman from Pennsylvania wish to make an opening 
statement?
    Mr. Doyle. Yes. Thank you, Mr. Chairman.
    Mr. Secretary, welcome.
    As you know, Mr. Secretary, I voted for the Energy Bill in 
this committee and on the House floor, but I have to tell you I 
am very concerned with the state of DOE's budget because it 
seems we are in the process of decimating a lot of our core R&D 
programs at the Department. And I just think government has to 
play a role in encouraging the development of technologies that 
have a public benefit but are too risky for the private sector 
to take on alone. But it seems like we are making significant 
cuts in places that should be priorities like distributed 
generation, fossil energy and other core R&D programs.
    We hear a lot about the price of gasoline here. I will tell 
you, forget about sending a man to Mars. Let us put our energy 
and money and resources into this hydrogen fuel cell project, 
not robbing Peter to pay Paul or we are taking from other parts 
of the budget. Put some real money into the program, make that 
our mission to Mars and we can tell OPEC to eat their oil. That 
is what we should be doing in this country and be doing it 
right away.
    Thank you, Mr. Chairman.
    [The prepared statement of Hon. Mike Doyle follows:]

  Prepared Statement of Hon. Mike Doyle, a Representative in Congress 
                     from the State of Pennsylvania

    I want to thank Chairman Barton for calling this hearing, I look 
forward to hearing from Secretary Abraham today and thank him for being 
here.
    I'm very concerned with the state of the DoE budget as it seems to 
me that they are in the process of decimating our core R & D programs 
at the department. I believe that the government must play a role in 
encouraging the development of technologies that have a public benefit 
but are too risky for the private sector to take on alone. Yet we are 
making significant cuts in places that should be priorities like 
distributed generation, fossil energy, and other core R & D programs.
    This short-sighted approach is the exact opposite of the direction 
we should be moving in. Rather then declaring that we want to make a 
manned expedition to Mars a national priority, President Bush and 
Secretary Abraham should be declaring that our national priority will 
be to strive for energy independence in this country. Imagine how our 
foreign policy would be positively effected if we didn't have to rely 
so heavily on foreign oil. Imagine how our gas prices would benefit if 
we weren't captive to OPEC. Imagine how our environment would benefit 
if we expanded the diversification of our energy portfolio and 
developed the ways to make our native energy supply sustainable.
    We have great advantages in this country in that we have a 
fantastic base of natural resources that many countries don't, but we 
also have a great advantage in that we have the intellectual capacity 
to do achieve so much more if we would simply make a commitment to 
achieving energy independence. Then we would devote the resources 
necessary to achieve this admirable goal.
    Unfortunately the DoE budget once again proves that this is far 
from what we are doing. By decimating our support for distributed 
generation--by slashing our fossil energy and core R & D programs--we 
are actually doing the opposite. I'm sure the Secretary would cite the 
FutureGen program as an example of how the administration is trying to 
be forward thinking but that argument is simply not borne out by the 
facts.
    More and more people I talk to seem to think FutureGen is little 
more then a short term political strategy and has not been clearly 
thought thru. There is no new money being put into this program. All 
that's happening is they are simply robbing Peter to pay Paul as the 
Future Gen program sucks up already allocated monies that would be 
better spent as part of the core R & D programs.
    So believe me I'm frustrated as I see these shell games being 
played. I'm frustrated that the Bush administration is decimating 
important R & D programs and not establishing realistic and attainable 
goals for our energy future. I truly hope we can find some ways to 
address these priorities in the future.

    Chairman Barton. I doubt it would taste very good.
    The gentleman from Georgia wish to make an opening 
statement?
    Mr. Norwood. Thank you very much, Mr. Chairman.
    No, other than to welcome the Secretary. We are delighted 
you are here. Thank you for that.
    And thank you for having the hearing.
    Chairman Barton. Okay. The gentleman from Maine wish to 
make an opening statement?
    Mr. Allen. Yes. Thank you, Mr. Chairman.
    Mr. Secretary, we are glad you are here.
    Gas prices are rising, demand is up here and around the 
globe. The New York Times reports recently that Saudi Arabia 
may not have reserves that will be large enough to deal with 
the projected global demand in the future, yet this 
administration seems to want to drill its way out of this 
problem. But we have only 3 percent of the known oil reserves, 
and we consume 25 percent of the world's fossil fuels.
    I believe this administration needs to turn its attention 
to significant efforts to reduce consumption of fossil fuels to 
emphasize renewables. And with respect to the budget that you 
are about to present us, I really ask you to look again at the 
robust nuclear earth penetrator, $485 million through fiscal 
year 2009 that will do nothing either for our national security 
or for our energy situation.
    Thank you.
    Chairman Barton. Does the gentleman from California, Mr. 
Radanovich wish to make an opening statement?
    Mr. Radanovich. Just briefly, Mr. Chairman.
    Chairman Barton. You will be recognized.
    Mr. Radanovich. I want to welcome to the Secretary to the 
hearing. I am looking forward to your testimony. And while we 
are talking about California, I would request the 
administration's help on getting a new refinery in California 
so we are not always subject to a small supply of the boutique 
fuels that are required there. So any help that you can be on 
getting another refinery in California to solve this problem, 
would be just wonderful.
    Thank you very much.
    [The prepared statement of Hon. George Radanovich follows:]

   Prepared Statement of Hon. George Radanovich, a Representative in 
                 Congress from the State of California

    Thank you, Chairman Barton for having this hearing. I want to 
welcome you again Mr. Secretary. I look forward to your testimony.
    Unfortunately, energy is becoming all too scarce and all too 
expensive. We are paying record prices for gasoline. In my home state 
of California, those prices may well go much higher as we enter the 
summer driving season and face the temporary halt in production to 
change over to the array of summer blends mandated by Environmental 
Protection Agency.
    There are 24 different blends of unleaded gasoline required by law 
for different states and different times of the year, and if there is a 
shortage of gasoline in one area, gasoline can't be interchanged easily 
between various parts of the country. Also, nearly half of all American 
refineries have been shut down in the last 30 years and no new 
facilities have been built due to confusing environmental standards. 
This means we must import more refined petroleum products, such as 
gasoline and diesel fuel, sending those refining jobs overseas and 
causing prices to increase.
    The comprehensive energy bill now before Congress makes a 
commitment to alternative energy production and would launch numerous 
initiatives to provide abundant, affordable energy in America. In my 
district For example, the fuel cell project in Yosemite National park 
could progress at a much faster pace providing a cleaner environment. 
It would also reauthorize important programs like the Energy Savings 
Performance Contracts (ESPC) that has saved millions of taxpayer 
dollars in wasted energy costs, provided substantial environmental 
benefits such as reductions in greenhouse gas emissions, and created 
thousands of local jobs at energy efficiency project sites across the 
country.
    It has been a dozen years since we passed a comprehensive energy 
bill. It is time Republicans and Democrats pull together--not apart--
and pass a comprehensive energy bill that will lower gasoline prices 
and protect Americans and their jobs. Done right, we can produce 
hundreds of thousands of new jobs. It's time to work together in our 
common interests to lower gas prices.
    Thank you very much for this opportunity to speak. Mr. Secretary, I 
look forward to your testimony and I look forward to your help in 
solving some of the national energy problems.

    Chairman Barton. Does the gentleman from Florida wish to 
make an opening statement?
    The gentleman from Nebraska wish to make an opening 
statement?
    The gentlelady from Illinois wish to make an opening 
statement?
    Ms. Schakowsky. Thank you, Mr. Chairman.
    I completely agree that we need a comprehensive energy 
policy, but not one in which the centerpiece is drilling in the 
Arctic wilderness, more resources for big oil and little for 
21st century solutions for clean energy.
    Yesterday OPEC decided to cut production by 4 percent, a 
move that would increase gas prices here in the United States. 
And according to the President's Press Secretary, ``The 
President has still not called OPEC leaders about the issue.'' 
Unfortunately, in the short term we still need to deal with 
foreign oil, and it seems to me that the President ala the 
quote that Mr. Markey made, needs to do some job owning, needs 
to be talking to OPEC and not just waiting for that call to be 
made.
    In Chicago gas prices at many places are above $2 a gallon. 
We are heading into the summer driving seasons. These 
exorbitant prices are putting a squeeze, not only on my 
constituents but our entire economy and we need to do something 
about it now.
    Chairman Barton. We thank the gentlelady.
    Does the gentlelady from California, Ms. Solis----
    Ms. Solis. Thank you, Mr. Chairman.
    And welcome, Secretary Abraham to our committee.
    First, I would just like to issue that we are concerned 
very much about gasoline prices in California. In fact, in my 
District where I live unemployment rates are 7.8 percent. They 
have been like that for 3 years. Gasoline prices are at $2.36 
for regular. So we have been going through this pinch for a 
long time.
    And my question is what is your administration doing, your 
agency, to help us bring down those costs for our consumers? 
Are we looking at conservation? Are we looking at renewable 
energy as well?
    Last week, also, we had a very, very warm week in 
California where we were also hit with a shortage of 
electricity. So we had somewhat our first blackout that we have 
not experienced since 2003, May 2003. So I would also like to 
ask you about what electricity reform is ongoing now for the 
State of California to provide us with relief. Because as you 
know, that will hurt business and our consumers in our 
District. So I would just ask you those two questions and hope 
that you will respond.
    Thank you.
    Chairman Barton. I thank the gentlelady.
    The distinguished chairman of the Telecommunications 
Subcommittee Mr. Upton is recognized.
    Mr. Upton. Well, thank you, Mr. Chairman. I have a full 
statement for the record.
    I would just welcome Mr. Secretary from our home State of 
Michigan.
    A couple of things I would like you to focus on. One is 
Yucca Mountain status, the nuclear waste storage facility 
there. Boutique fuels, obviously this is an important thing as 
we look at rising gas prices in the midwest.
    The refinery fire that I understand that they had in Texas 
as well.
    Hydrogen fuel, as my colleague from Pennsylvania raised 
that as the co-Chair of the Auto Caucus with Dale Kildy from 
Michigan. Hydrogen fuel cell technology is very important as we 
look to lessen our reliance on foreign energy. And I look 
forward to your testimony and the ability to engage in a number 
of questions.
    I yield back.
    [The prepared statement of Hon. Fred Upton follows:]

  Prepared Statement of Hon. Fred Upton, a Representative in Congress 
                       from the State of Michigan

    Mr. Chairman, I commend your having this hearing today. I think it 
is very important that this committee exercise its oversight over the 
Department of Energy and its budgetary priorities.
    My personal budgetary priority over at the Department of Energy is 
getting the Yucca Mountain Nuclear Waste Storage Facility in place so 
that we have a permanent, monitored and guarded storage place for our 
nation's nuclear waste. I will admit to having a district interest in 
this in that I have two nuclear power plants within 40 miles of each 
other right on Lake Michigan. I have long thought that it is important 
to get this waste away from environmentally sensitive areas when its 
useful life for power production is spent and I have worked very hard 
to get this site in place. Post September 11, this is more than just an 
environmental issue. It is a national security issue and it could now 
be an issue of life and death. The opponents of Yucca say we haven't 
had enough study; we haven't spent enough money. We have spent nearly 
$15 billion in taxpayer dollars and decades in time getting this site 
ready.
    I hope that Secretary Abraham will give us an update on the status 
of this important site. I know that hailing from the Great State of 
Michigan, he understands this issue as well as I do and I know it has 
been a priority for this administration. I would like to know what the 
plan is for the Yucca Mountain site in this budget year.
    I am also interested in funds that are programmed for work in 
nanotechnology research and development. In a time when our nation is 
losing some of the traditional manufacturing jobs, new developments in 
nanotechnology offer some hope of the next industry to emerge. I know 
that the Department of Energy has been interested in pursuing this 
science, and I would like to hear where they are on that issue.
    Finally, and this is not necessarily a budget question, but I am 
very concerned about the rising costs of fuel--both home heating and 
gasoline. I am interested in knowing what, if anything is included in 
the budget proposal to address this critical issue for my constituents.
    Thank you Mr. Chairman and Mr. Secretary, I look forward to hearing 
today's testimony.

    Chairman Barton. Mr. Strickland of Ohio is recognized for 1 
minute.
    Mr. Strickland. Thank you, Mr. Chairman. I will be brief.
    Mr. Secretary, in case I do not get to ask this question 
later, I just want to let you know that I am concerned and I 
believe my friend from Kentucky, Mr. Whitfield is concerned as 
well, about the Department's lack of benefits continuity for 
the workers at the Portsmith and Paducah sites under the most 
recent cleanup ARFP. In the past, regardless of party, DOE has 
provided equitable treatment of the workforce at DOE nuclear 
sites.
    For example, when USEC was privatized, it was required to 
assume that pre-privatization collective bargaining agreements 
in place with the workforce under Lockheed Martin.
    Mr. Secretary, I hope to ask you later why the Department 
seems to be stripping workers at Pickton and Paducah of the 
right to pension continuity and existing collective bargaining 
agreement.
    And I welcome you, sir. I am glad you are here. Thank you 
for coming.
    Chairman Barton. Is there any other member seeking 
recognition to give an opening statement? Seeing none, all 
members written statements will be made a part of the record.
    [Additional statement submitted for the record follows:]

Prepared Statement of Hon. Mary Bono, a Representative in Congress from 
                        the State of California

    Mr. Chairman: While I understand that the subject of today's 
hearing will center on the Department of Energy's budget priorities for 
FY 2005, I would like to direct my comments more towards the ongoing 
issue of high gasoline prices.
    Californians are hurting. We are paying more at the pump than any 
other state. While I understand that issues like the oxygenate waiver 
and state regulations add to the burden, it still seems as if our costs 
are still higher than the national average.
    Yesterday, the Organization of Petroleum Exporting Countries (OPEC) 
agreed to cut production by 4 percent. I certainly appreciate your 
statement of disappointment and am pleased that the Administration is 
working on this issue with all due diligence. Still, I fear what this 
cut in production can further do to exacerbate the situation.
    Another concern of mine has to do with refining capacity, 
specifically in California. Although over the last three weeks, the 
average pump price in California has fallen 3.3 cents a gallon, we are 
going into a sixth straight week of more than $2 a gallon at the pump. 
Limited refining capacity is certainly a factor in this and I would 
appreciate hearing your comments on this matter.
    Another fact we must face is that we also need to do more at home 
on developing and opting for alternative fueled vehicles. Americans 
love their SUVs and gasoline powered cars, so we also need to be 
working on reducing our dependence on foreign oil by moving towards 
other fuel supplies. The President has certainly made an effort to lead 
the way with his FreedomCAR proposal and I look forward to working with 
the Administration on this and any other efforts related to this cause.
    As far as budget priorities are concerned, I would like to 
encourage the Department to support the Renewable Energy Production 
Incentive. This is an initiative that not only needs to be 
reauthorized, a provision of which is in the stalled energy bill, but 
also needs adequate funding to make it a viable program.
    Thank you Mr. Chairman. I look forward to hearing Secretary 
Abraham's testimony.

    Chairman Barton. And we would now recognize the 
distinguished Secretary of Energy for such time as he may 
consume.
    I see, Mr. Secretary, that you have the distinguished 
Deputy Secretary behind you and the Under Secretary and the 
head of EIA. So we have all of the brain trust from the 
Department of Energy. Not that you will need it, but it is good 
that they are all here, too.
    So we welcome you, and recognize you to give us your 
thoughts on our energy policy.

 STATEMENT OF HON. SPENCER ABRAHAM, SECRETARY, U.S. DEPARTMENT 
                           OF ENERGY

    Mr. Abraham. Mr. Chairman, first of all, thank you for 
having us here today.
    Congressman Dingell, it is good to be back with both of you 
and the committee.
    I would begin, Mr. Chairman, by offering our 
congratulations to you in your position as chairman. And also 
to express collectively on behalf of all of us at the 
Department our best wishes to Congressman Tauzin as he 
recovers. We enjoyed very much working with him in this 
committee over the last several years, and look forward to do 
the same with you as well.
    Obviously, today I am here to discuss our budget for the 
Department for 2005. I have a very long statement, and in the 
interest of time would prefer to just have that submitted for 
the record and just make----
    Chairman Barton. Without objection.
    Mr. Abraham. [continuing] a short comment or two on some of 
the highlights.
    At $24.3 billion, this year's budget is the largest in the 
history of the Department. I think it reflects the confidence 
that the President has in the work which we are doing, as well 
as the importance of the missions of this Department. It builds 
on a number of successes which we have achieved over the past 3 
years.
    And I want to just make a point here to all of you that a 
number of you have facilities in your Districts, how proud we 
are of the work that the Department's men and women have done 
on behalf of the American people in addressing national energy 
and economic security challenges.
    After 3 years on this job I can surely say that the people 
who work at this Department are very dedicated and very 
effective in the work they do. I am very proud to be part of 
that workforce. And I think a testament to the dedication and 
the hard work which they have done is the recent announcement 
that you alluded to, Mr. Chairman, by the Office of Management 
and Budget that the Department of Energy ranked first among 
Cabinet level agencies and the implementation of the 
President's management agenda. Those scorecard evaluates all of 
the departments in such areas as financial management and human 
capital, e-government and a variety of others. And it 
recognized our Department as leading the pack. So, obviously, 
we are all proud of that. But, again, it would not happen but 
for the people who are on the front lines.
    As I said, my written statement goes into a lot of details 
about our budget request. I just would like to spend a minute 
or 2 discussing some of the highlights of the work which is 
reflected in that budget.
    First, I would just say that this budget request fully 
funds the Department's security and safeguards effort. A top 
priority is making sure that our complex is safely and securely 
operated. And this budget fully addresses the requirements 
which have been identified in the revised design-basis threat, 
the post-September 11 analysis of potential threats against 
which we must protect our sites and our materials across the 
country.
    Obviously, the world changed on 9/11 and a number of 
actions we have taken at the Department since then reflect that 
basic fact. For instance, we have increased the budget for 
security and safeguards by about 35 percent since 2002. We have 
made some significant managerial changes in the leadership of 
the security forces at our facilities. And we have a current 
high level review of security procedures being conducted by 
some of the Nation's top military and civilian experts.
    We are also taking steps, significant ones, toward 
modernizing and rebuilding our defense weapons complex which 
was in very bad shape just a few years ago. We have launched a 
large scale capital improvement program to rebuild decaying 
infrastructure and at the same time we are working to restore 
defense capabilities.
    For instance, we are on schedule to have a new fully 
certified plutonium pit enter the stockpile for the first time 
by fiscal year 2007. First time in many years.
    In addition, we are continuing our major investments in 
projects designed to maintain the reliability of the stockpile 
through our stockpile stewardship efforts.
    The budget request also supports our efforts to develop 
cutting edge technologies to address the Nation's energy 
challenges. Our energy efficiency and renewable energy budget 
request in particular seeks more money and nominal dollars than 
Congress provided either last year or any prior year for the 
past two decades. It includes investment for research and 
development to improve energy efficiency and reliability in 
buildings, transportation and industry as well as to reduce the 
cost of renewable energy technologies like wind, solar, 
geothermal and biomass.
    The EERE budget request also supports our hydrogen efforts, 
and we are strongly pursuing 21st century hydrogen fuel cell 
technologies to try to transform the way Americans drive and to 
reduce our nation's growing dependence on foreign sources of 
energy. President Bush unveiled this program, as you will 
recall, in last year's State of the Union. Since that 
announcement we have engaged partners in the energy and 
automotive industries as well as State and local governments. 
And we have moved forward with critical hydrogen fuel cell 
research and development.
    Probably the most important new development at this stage 
is that we have brought together all of the major countries 
interested in hydrogen to work in a formal partnership on 
hydrogen issues to stretch our research dollars. And we are 
hoping to establish workable codes and standards on an 
international basis through this collaboration on pre-
competitive research and development. Without question, this we 
believe will tremendously accelerate the coming of the hydrogen 
revolution by many years.
    In the meantime, we are committed to developing cleaner 
more efficient use of fossil fuels through projects such as our 
clean coal technologies program and the FutureGen program.
    FutureGen as was commented by at least one of the members 
earlier, is a 10-year $1 billion program designed to create the 
world's first zero emission fossil fuel plant. I little more 
than 12 months we have made some great progress on this project 
and we expect continued progress in fiscal year 2005. When it 
is operational, this will be the cleanest fossil fuel fired 
power plant in the world.
    We are also exploring clean coal and advanced carbon 
sequestration technologies both as a part of FutureGen and 
beyond. Carbon sequestration is not a glamorous topic, 
necessarily, but in my opinion it is an extremely important 
area for us to focus on. And the demonstrated potential of 
carbon sequestration has convinced us to fully pursue its 
promise.
    Another top Presidential initiative is weatherization. The 
National Energy Policy which we released in 2001 pledged to 
increase funding for weatherization by $1.4 billion over 10 
years in order to weatherize a total of 1.2 million low income 
homes. That is more than twice as many homes as would have been 
weatherized before we made that commitment. And this year's 
budget request keeps us on track to, at least in our 
submissions, fulfill that commitment.
    The budget also requests the highest funding level in the 
history of our Department for our environmental management 
programs consistent with our effort to try to accelerate the 
cleanup of contamination at cold war era nuclear weaponsites. 
At the beginning of the administration, as I think the 
committee knows the time table for this cleanup at all the 
sites, it was basically except for those that were already on 
an accelerated program launched in the previous administration 
of the three sites that were rapidly moving toward completion, 
in all the rest of the complex the goal was 70 years. We felt 
that it was unfair for the communities in these other parts of 
the country to have to wait until the grandchildren or great 
grandchildren of people who lived there today before the full 
completion of these projects. And so we are working hard to, 
and consistent with safety issues, accelerate the completion of 
these sites to reduce that timeframe by we hope 35 years.
    And, incidentally, because of the reduction in the 
maintenance and security costs that would accompany that, we 
can actually reduce some of the bill along the way.
    I would also like to just say a few words about our 
nonproliferation efforts with Russia and more broadly. We have 
worked very closely with our counterparts in the Russian 
Federation and have been successfully accelerating and 
expanding the work we do there to secure dangerous nuclear 
materials. We have enjoyed a number of successes. And by the 
end of fiscal year 2005 our material and protection program 
will have secured 41 of 64 nuclear warhead sites and will have 
secreted 37 percent of some 600 metric tons of weapons useable 
nuclear material in the former Soviet Union.
    Meanwhile, we are working with the Russian government on 
shutting down the last remaining plutonium production plants, 
plutonium power plants and replacing their electricity 
production with coal burning power plants. This will end the 
annual of 1.2 metric tons of weapons grade plutonium, a 
nonproliferation triumph, I think.
    Finally, our Department also of course contains the Energy 
Information Administration. And their work continues to equip 
Congress and our Department with the accurate information which 
we use to work on a number of our programs. We are requesting a 
5-percent increase for EIA in 2005, which will provide the 
Federal employee pay raise and maintain the other ongoing data 
analysis activities there so they can continue their 
outstanding work.
    Mr. Chairman, I really could go on a great length for a 
budget of this size and because the scope of this committee 
covers so much of the budget. But in the interest of time, I 
would yield at this point and, obviously, look forward to 
answering the committee's questions.
    [The prepared statement of Hon. Spencer Abraham follows:]

Prepared Statement of Hon. Spencer Abraham, Secretary, U.S. Department 
                               of Energy

    Good Morning Mr. Chairman and Members of the Committee. I am 
pleased to appear before you today to discuss the President's FY 2005 
budget request for the Department of Energy. At $24.3 billion in gross 
budget authority, the FY 2005 budget request is the largest in the 
history of the Department.
    This budget request builds on a number of successes we have had 
over the past three years. I am very proud of what we have accomplished 
in terms of fulfilling the President's management vision for this 
Department and also what we have achieved for the national, energy, and 
economic security of the American people.
    The Office of Management and Budget (OMB) recently announced that 
DOE has made the most progress among cabinet-level agencies in the 
implementation of the President's Management Agenda. OMB recognized the 
Department as the cabinet-level agency ``leading the pack with regard 
to management improvement.''
    In addition to the progress we have made on management and mission 
definition, we have made great progress in a number of our program 
areas. We have implemented changes that have fundamentally reformed 
DOE's Environmental Management program. Complex-wide, we have taken an 
approach to accelerated cleanup that says we will not allow the legacy 
of the work done in the weapons complex to be part of a community's 
burden for future generations. At the beginning of this Administration, 
the timetable for completing cleanup at all sites was 70 years. Today, 
we have implemented reforms to accelerate completion of the cleanup 
program by 35 years, saving American taxpayers as much as $50 billion 
and perhaps even more.
    Another area where we have made tremendous progress is ensuring 
that nuclear power remains part of the Nation's fuel mix. Two years 
ago, the Administration and Congress made the decision to move forward 
with the Yucca Mountain project, a permanent nuclear waste repository 
in Nevada. The Yucca Mountain project is on schedule to accept waste in 
2010. There is still much work to be done--at the site, at the Nuclear 
Regulatory Commission, and throughout the country--but at the end of 
the day America will finally have a long-promised, safe repository for 
nuclear waste.
    The Yucca Mountain project goes hand-in-hand with other steps we 
have taken to ensure nuclear energy plays an important role in our 
future energy mix. Our scientists are pursuing an advanced fuel cycle 
to significantly improve fuel performance, energy utilization, and 
proliferation resistance for nuclear reactors. We are also working 
internationally to develop the next generation of nuclear technologies 
to take us to the next level in terms of efficiency, reliability, and 
security.
    In addition to advanced nuclear research, we are pursuing other new 
technologies to meet future energy and environmental challenges. These 
are transformative technologies that will change the way we think about 
how we use and produce energy. We are pursuing a path toward a 
``hydrogen economy''--with affordable zero emission fuel cell vehicles, 
abundant production sources, and safe storage and transportation of 
hydrogen. We are developing carbon sequestration which, when used in 
conjunction with advanced power production technologies, promises to 
ensure that this country's 250-year coal reserves can be used without 
concern about environmental impact.
    We have also aggressively pursued international cooperation in 
order to advance our initiatives. In a variety of areas, especially 
those that relate to climate change, we have been able to create 
partnerships with other countries to develop the Department's cutting-
edge science and technology.
    Last November, the International Partnership for the Hydrogen 
Economy brought together 15 countries and the European Union to work 
together on fuel cells and other energy technologies for the future. In 
June, the Carbon Sequestration Leadership Forum brought 13 countries 
together to begin working on ways to sequester greenhouse gas emissions 
from fossil fuels.
    We have expanded international partnerships on the energy 
production side as well. We have developed much stronger relationships 
with countries like Russia and others in the Caspian region, in Africa, 
and in South America that have the potential to be major suppliers of 
gas and oil for the 21st century. As important as it is to have a 
diverse mix of fuel, it is equally important to have a diverse set of 
sources from which we acquire that fuel. In December we hosted a 
conference on liquefied natural gas, or LNG, bringing together all of 
the world's major gas-producing countries to discuss increasing U.S. 
access to gas imports. It was an extremely successful conference, one 
that will help produce the fuels we need in the 21st Century.
    Finally, we have made a lot of progress on safety and shoring up 
the security of the Department's complex. Much of our Department's work 
is of a highly skilled nature and deals with dangerous materials. Many 
of our facilities are located near populated communities. Given these 
facts, it is clear that safety has to be of paramount concern for 
everyone at DOE. We have done a good job of driving that message home.
    The same goes for security. Our Departmental mission is national 
security. We cannot be said to be fulfilling that mission with any 
confidence unless we can guarantee security at our facilities. We are 
attempting to do that. We have increased the security budget by about 
35 percent since FY 2002. We have made significant managerial changes 
in the security leadership at our facilities. We have revised and are 
implementing the Design Basis Threat, which is the post-September 11th 
analysis of potential threats against which we must protect DOE sites 
and materials across the country. And we have a high-level review of 
security procedures being conducted by some of the Nation's top 
military and civilian experts.
    Our FY 2005 budget proposal seeks to continue and build on our 
successes. It includes unprecedented funding increases to hasten the 
cleanup of the Cold War environmental legacy, to construct a permanent 
nuclear waste repository at Yucca Mountain, to deliver on essential 
nuclear-related defense requirements, to provide for energy security by 
exploring the promise of hydrogen and fusion, and to promote basic 
science research to ensure America's technological preeminence well 
into the future.

                                 ENERGY

    Turning to the energy budget, the Department is requesting $2.7 
billion for energy resource programs in FY 2005. An important element 
of all our energy programs is making current forms of energy use more 
secure, more efficient, and more environmentally benign. At the same 
time, we are preparing long-term energy solutions that will eventually 
make questions of supply and environmental effects obsolete. The 
Administration's energy portfolio takes a long-term focus through 
investments in hydrogen use and production, electricity reliability, 
and advanced coal and nuclear energy power technologies. Investments in 
these pivotal areas honor a commitment to strengthen the Nation's 
energy security for the near-term and for generations to come.
    Hydrogen holds tremendous promise to help meet our Nation's future 
energy challenges. In FY 2005, the Department's Office of Energy 
Efficiency and Renewable Energy is at the forefront of implementing the 
President's Hydrogen Fuel Initiative. The Department is requesting $227 
million for hydrogen activities. That figure includes $173 million in 
the Energy Efficiency and Renewable Energy program, $29 million in the 
Science program, $16 million in the Fossil Energy program, and $9 
million in the Nuclear Energy program.
    The budget includes an investment of $544 million for R&D to 
improve energy efficiency and reliability in buildings, transportation, 
and industry, and $375 million for R&D to reduce the cost of renewable 
energy technologies such as wind, solar, geothermal, and biomass, as 
well as to promote deployment of renewable technologies. The Energy 
Efficiency and Renewable Energy budget also includes $291 million to 
fulfill the President's commitment to increase funding for the 
Weatherization Assistance Program by $1.4 billion over ten years. The 
FY 2005 request would weatherize 119,000 homes in calendar year 2005.
    This budget invests $447 million for the President's Coal Research 
Initiative to dramatically improve the efficiency and environmental 
protections being developed for coal burning power production. Of that 
figure, $287 million will go to the President's Clean Coal Power 
Initiative, including the ambitious FutureGen program. The Department 
launched FutureGen in FY 2004. This cost-shared, $1 billion project 
will create the world's first near zero-emissions fossil fuel plant. 
When operational, FutureGen will be the cleanest fossil fuel-fired 
power plant in the world.
    Continuing on the discussion of fossil energy, the Strategic 
Petroleum Reserve and Northeast Home Heating Oil Reserve are key 
elements of our nation's energy security. Both serve as resource 
options for the President to use to protect U.S. citizens from 
disruptions in commercial energy supplies.
    The President has directed DOE to fill the Strategic Petroleum 
Reserve (SPR) to its full 700 million barrel capacity. The mechanism 
for doing this--a cooperative effort with the Minerals Management 
Service to exchange royalty oil from federal leases in the Gulf of 
Mexico--is working well. We have been able to accelerate fill from an 
average of 60,000 barrels per day at the start of the President's 
initiative to a rate of 130,000 barrels per day.
    Because of the President's ``royalty in kind'' initiative, we have 
achieved the Reserve's highest inventory level ever, now at 650 million 
barrels. Our goal remains to have a full inventory of 700 million 
barrels by the end of calendar year 2005.
    The FY 2005 budget for the SPR is $172.1 million, all of which is 
now in our facilities development and operations account. We do not 
require additional funds in the oil acquisition account because charges 
for transporting ``royalty in kind'' oil to the SPR are now the 
responsibility of the oil supplier.
    We are requesting $5 million for the Northeast Home Heating Oil 
Reserve, the same level as last year. The two-million-barrel reserve 
remains ready to respond to a Presidential order should there be a 
severe fuel oil supply disruption in the Northeast. A key element of 
this readiness is a new online computerized ``auction'' system that we 
implemented to expedite the bidding process. Installing and testing the 
electronic system (including tests with prospective commercial bidders) 
have also been major elements of the Fossil Energy program's role in 
implementing the ``e-government'' initiatives of the President's 
Management Agenda.
    Nuclear energy remains a critical component of the Nation's energy 
portfolio and a significant part of America's energy future. The budget 
request for the Department's nuclear energy programs in FY 2005 is $410 
million. These programs work to address essential requirements to 
develop advanced nuclear power technologies for deployment. The FY 2005 
nuclear energy budget request also reflects the establishment of the 
Idaho National Laboratory. This new laboratory will serve as the 
Nation's primary center for strategic nuclear energy research, 
development, demonstration, and education. It will lead the 
Department's investigation of a new type of nuclear power plant that is 
proliferation-resistant and melt-down proof--the next generation 
nuclear power plant. It is our objective that the Idaho National 
Laboratory becomes the world's premier nuclear energy technology center 
within a decade.
    The widespread blackout of August 2003, affecting an area with 50 
million people across eight states and one Canadian province, was a 
strong reminder that our Nation's electricity grid has vulnerabilities 
and weaknesses which need to be addressed. Energy reliability is 
imperative. To this end, DOE requests $91 million to modernize and 
expand our national electricity transmission grid. Included within this 
request is $5.5 million for the new Gridworks program and $5 million 
for the Gridwise program. These initiatives will improve electricity 
reliability by bringing innovation in information technology and 
transmission hardware into operational electric systems. The budget 
request for Other Defense Activities includes $10.6 million for Energy 
Security and Assurance activities to complement the efforts undertaken 
by the Office of Electric Transmission and Distribution and the 
activities of the Department of Homeland Security.

                              ENVIRONMENT

    All of our scientific research is designed in part to meet our 
Nation's environmental challenges. In that regard, DOE's work on 
hydrogen, clean-coal technology, or next generation nuclear technology 
comes as readily to mind as our renewable energy research. This 
commitment to the environment includes taking action to address the 
environmental legacy of our past work, particularly building the 
nuclear weapons complex that helped win the Cold War. We need to 
cleanup the contamination caused by the production of nuclear weapons 
and. We also need to do right by former weapons employees who may have 
become ill as a result of their work at nuclear facilities. And we must 
act to ensuring our Nation is equipped to safely handle future high-
level nuclear waste generated by the use of conventional nuclear power 
as well as the continued production of nuclear weapons.
    DOE is prepared for these responsibilities through our 
Environmental Management program, and the work at Yucca Mountain. Our 
FY 2005 budget requests $8.6 billion to meet our various environmental-
related objectives. Within that, we are seeking over $7.4 billion for 
the Environmental Management program. This is the most funding ever 
requested for this program. This budget reflects the peak year of DOE's 
investment strategy for accelerated cleanup. The budget also includes a 
$350 million proposal to reserve funds pending the satisfactory outcome 
of uncertainties associated with a recent court ruling dealing with our 
authority to classify certain lower-activity waste from reprocessing 
(Waste Incidental to Reprocessing) under the Atomic Energy Act of 1954.
    To better focus Environmental Management funds on actual cleanup 
activities, the FY 2005 budget includes several program shifts from 
environmental management to other programs within the Department. The 
Department's accelerated cleanup strategy has led to the creation of 
two new organizations outside of Environmental Management--the Office 
of Legacy Management and the planned Office of Future Liabilities. 
Transferring responsibilities to these new offices enables the 
Environmental Management program to complete its current cleanup scope, 
and allows other Departmental programs to focus on their primary 
missions.
    The budget includes $66 million for the Office of Legacy Management 
to manage post-environmental-cleanup activities. This organization 
demonstrates the Department's long-term commitment to manage 
requirements relevant to closure sites beyond the completion of 
remediation.
    The budget also includes $8 million for the Office of Future 
Liabilities to address various cleanup activities at sites with 
continuing missions. The FY 2005 budget provides funds to pay for and 
manage environmental liabilities for sites not currently assigned 
within the Department. This is a planning office to address various 
future cleanup activities at sites with continuing missions. The FY 
2005 budget provides funds to plan for environmental liabilities not 
currently assigned within the Department.
    The FY 2005 budget includes $43 million within the Environment, 
Safety and Health program to accelerate the processing of applications 
by employees of DOE contractors who may have become ill as a result of 
their work at DOE facilities. This is a matter of doing what's right 
and taking care of those whose labors helped secure our safety. With 
this budget request, we are making good on implementing a three-year 
program to completely eliminate the backlog of applications at DOE by 
the end of 2006.
    One of the most significant and long-standing commitments addressed 
in this budget is funding to establish a permanent nuclear waste 
repository at Yucca Mountain. In order to remain on schedule to begin 
operation in 2010, the FY 2005 budget requests $880 million for Yucca 
Mountain repository activities. This is key to ensuring the future use 
of nuclear power in this Nation. It is also key to helping us complete 
the cleanup of our weapons facilities and to consolidate high-level 
nuclear waste in one safe, secure location. This request enables us to 
finalize the license application for construction of the permanent 
repository, as well as other activities associated with construction 
and with developing a transportation system to Yucca. We plan to submit 
a license application to the Nuclear Regulatory Commission by December 
2004.
    The Yucca Mountain project is moving toward a second phase, one 
which will require a significant financial commitment to accomplish. 
The FY 2005 budget request includes a legislative proposal to 
reclassify currently mandatory receipts to the Nuclear Waste Fund as 
discretionary, to offset the amount appropriated for geologic 
repository activities. In FY 2005, the Department proposes that $749 
million in fees collected from utilities for the purposes of the 
Nuclear Waste Fund be used to offset FY 2005 non-defense appropriations 
in support of design and other Yucca Mountain activities. This proposal 
will help ensure that the Department will have the financial resources 
needed to accomplish an undertaking of this scope.
    Throughout the entire budget request is funding for one of our 
highest priorities, safeguarding and securing DOE's sites and 
facilities. The FY 2005 budget includes $1.38 billion for all DOE 
safeguards and security programs to address additional requirements 
identified as a result of the revised Design Basis Threat.
    Within the total amount requested for safeguards and security 
activities, approximately $707 million will support activities to 
safeguard nuclear weapons facilities. About $265 million will support 
activities that protect the Cold War nuclear waste material being 
cleaned up at our environmental cleanup sites.
    In addition, we are committing approximately $73 million to support 
the continued safeguards and security activities at our scientific 
laboratories and facilities. We are requesting $255 million to support 
the development of DOE-wide security policies as well as to provide 
physical security for DOE Headquarters. The FY 2005 budget request also 
includes $58 million to support safeguards and security activities at 
the new Idaho National Laboratory for nuclear energy R&D. Moreover, $25 
million will fund the Department's cyber security activities 
administered by the Department's Chief Information Officer, while an 
additional $109 million within the amounts mentioned above will fund 
DOE-wide cyber security measures.

                           ENERGY INFORMATION

    The Department through the Energy Information Administration (EIA) 
is being increasingly called upon to provide timely energy information 
and analysis on ongoing and topical energy issues to assist the 
Administration and Congress in deliberations regarding national and 
international energy policy, markets and investments. To that end, we 
are requesting $85 million. The FY 2005 funding will provide for the 
Federal employee pay raise and maintain the other on-going data and 
analysis activities, allowing EIA to continue disseminating accurate 
and reliable energy information and analyses to inform energy policy-
makers.
    EIA's base program includes the maintenance of a comprehensive 
energy database, the maintenance of modeling systems for both near and 
mid-term energy market analysis and forecasting, and the dissemination 
of energy data and analyses to a wide variety of customers in the 
public and private sectors through the National Energy Information 
Center.
    EIA continues to aggressively expand the availability of electronic 
information and upgrade energy data dissemination, particularly on the 
EIA website. The increased use of electronic technology for energy data 
dissemination has led to an explosive growth in the number of its data 
customers and the breadth of their interests, as well as an increase in 
the depth of the information distributed. Since establishing a FY 1997 
goal to increase the number of users of its website by 20 percent 
annually, EIA has either met or exceeded this commitment in each of the 
succeeding years. In FY 2003, EIA accomplished a 23-percent increase as 
compared to FY 2002, delivering more than 2,600 gigabytes of data.

                               CONCLUSION

    The Department's FY 2005 request reflects the accomplishments of 
the last three years, the successes, and the many changes. This request 
charts a focused course of investment for the Nation's future--one 
guided by a cohesive mission and targeted performance metrics. Making 
all of this work are the extremely talented men and women of the 
Department of Energy which include some of the world's top engineers 
and scientists. It is a privilege to work alongside them on a common 
mission. It is an honor to serve a President who has provided this 
vision of what this Department can--and will--accomplish in FY 2005 and 
beyond.
    Thank you. This concludes my formal statement. I would be pleased 
to answer any questions you may have at this time.

    Chairman Barton. Thank you, Mr. Secretary.
    The Chair is now going to recognize himself for the first 5 
minute question round.
    I believe you were in the U.S. Senate in 1995, is that not 
correct?
    Mr. Abraham. Yes.
    Chairman Barton. Okay. And do you recollect who the 
President of the United States was in that year?
    Mr. Abraham. Yes.
    Chairman Barton. Who was it?
    Mr. Abraham. You are asking tough ones here, Mr. Chairman. 
I did not prepare for these. President Clinton.
    Chairman Barton. President Clinton. And we do something 
each year, or try to, called budget reconciliation. In 1995 
when President Clinton was the President in budget 
reconciliation, both Houses of Congress passed a Budget 
Reconciliation Bill that included drilling in ANWR. Do you 
recollect what President Clinton did to that bill?
    Mr. Abraham. I believe it was vetoed.
    Chairman Barton. He vetoed it.
    Now, what if he had not had vetoed it and what if we had 
drilled in ANWR, and what if they really have found that there 
is 1 million to 2 million barrels of oil per day that could be 
coming to the lower 48, do you think that would mean we would 
have higher gasoline prices or lower gasoline prices?
    Mr. Abraham. Well, obviously, had that process began in 
1995, there would be development there. The estimates that we 
have are that there would be at this point substantial 
production, somewhere ranging up as high a million barrels a 
day, perhaps more. Obviously, that would have a huge impact on 
our domestic energy supply at this point.
    Chairman Barton. So, I mean, there is a case that had 
President Clinton accepted the will of the Congress in the mid-
'90's, it's arguable that we would be paying much less, 
although energy prices would still be high, gasoline prices 
would still be high, but we certainly would not be paying the 
prices that we are paying today for gasoline.
    If we were to pass an ANWR drilling program and send it to 
President Bush, what would your recommendation be to him. Would 
you recommend that he veto it?
    Mr. Abraham. Well, Mr. Chairman, I think you know that the 
President included ANWR in the energy plan which was produced 
in 2001 and, obviously, still support that provision.
    Chairman Barton. And I think you know, Mr. Secretary, that 
the House passed ANWR and the other body refused to accept the 
wisdom of the House. And so that the pending bill that is in 
the Senate now, the Conference Report on Energy, the 
Comprehensive Energy Bill, does not have an ANWR provision in 
it.
    Mr. Abraham. Right.
    Chairman Barton. With regards to that bill, I know you are 
very well aware that the House of Representatives passed a 
Comprehensive Energy Bill last spring. The Senate passed an 
energy bill in late summer. We went to conference with the 
other body. The Conference Report came out, the House has 
passed the Conference Report, the Senate still has not passed 
the Conference Report.
    Do you think the pending Conference Report on Comprehensive 
Energy Bill would help our Nation's energy security or hurt it?
    Mr. Abraham. Well, obviously, Mr. Chairman we would like to 
see Congress pass a Comprehensive Energy Bill. We look forward 
to working with you and with other members of this committee 
and your counterparts to try to get that done this year. I 
can't stress enough how important I think that is to address 
some of the issues that have been raised today.
    We have spent--I have spent and many members of this 
committee a lot of time over the last several years to try to 
get this done. You know, every time it seems I come here there 
is some different energy challenge. The last time I was here, 
it was right after that blackout. We talked then about the need 
to address provisions that would help us to deal with 
electricity reliability. Today members want us to address 
America's dependence on foreign old. We need a comprehensive 
bill that include provisions to handle all of these different 
challenges. And we need that legislation.
    Chairman Barton. Mr. Secretary, I know that you also want a 
clean environment and you have talked about the President's 
hydrogen initiative. I would assume that you support the clean 
coal technology program in the Comprehensive Energy Bill which 
would for the first time allow the Federal Government to help 
retrofit some of the older coal fired power plants with the 
latest available control technology so that we keep those jobs 
in the United States and keep that energy being produced in the 
United States. I would assume that you would support that part 
of the bill?
    Mr. Abraham. We do. And, you know, a number of folks in 
their comments earlier mentioned the challenge we have with 
regard to natural gas prices and some of the other issues that 
were raised. We need a diverse mix of fuels. Coal has to be a 
key part of our long term electricity production.
    The challenge we have with coal is not having coal. We have 
got plenty of coal. It is making sure that we can use it and 
use it as safety as possible. And the clean coal programs that 
we have launched and that the Congress has been working on are 
important, imperative really in my view, to keeping the coal 
component of our electricity product in intact.
    Chairman Barton. And my time has expired, but my final 
comment, I know that you support strongly the bill that we just 
introduced to free up the Nuclear Waste Fund so that we can use 
it to construct the repository at Yucca Mountain.
    Mr. Abraham. Right.
    Chairman Barton. We have introduced that bill here in the 
House on a bipartisan basis. And we would encourage you and the 
President to support that.
    Mr. Abraham. We support it strongly, and look forward to 
working with you to secure not only its passage in the House, 
but its passage in the Senate.
    Chairman Barton. Thank you, Mr. Secretary.
    And I do want to commend you for being willing to come 
before the committee. Of all the Cabinet Secretaries, you have 
been the most willing to come. We had several that have never 
been before the committee until recently, but you have and we 
appreciate that.
    Mr. Abraham. Thank you, Mr. Chairman.
    Chairman Barton. The Chair would recognize the 
distinguished gentleman from Michigan, Mr. Dingell for 5 
minutes for questions.
    Mr. Dingell. Mr. Chairman, I thank you.
    I will be submitting some letters to the Secretary asking 
questions about certain matters down there. And I would ask 
unanimous consent that those be inserted in the record at the 
appropriate place.
    Chairman Barton. Without objection, so ordered.
    Mr. Dingell. Mr. Secretary, am I correct in understanding 
that you and your staff have been directly involved in the U.S. 
Canada Task Force looking into the blackout last August and 
that the task force November 2003 interim report found that a 
number of NERC's voluntary reliability rules were violated and 
that these violations contributed significantly to the extent 
of the blackout?
    Mr. Abraham. Yes. That was the conclusion of our interim 
report. And we are nearing the finishing of the final report. 
And we have not departed from that conclusion.
    Mr. Dingell. Thank you, Mr. Secretary.
    Now, with regard to legislation. Do you believe that the 
Congress should enact legislation making NERC's rules mandatory 
and enforceable?
    Mr. Abraham. I believe they should, yes.
    Mr. Dingell. Do you believe that if we fail to do so, we 
have put the country at significant risk of additional 
blackouts?
    Mr. Abraham. I know that you strongly share this view that 
this is very important to do. We think that this, like some of 
these other provisions, needs to be done and needs to be part 
of a comprehensive bill.
    Mr. Dingell. Now, Mr. Wood the Chairman of the Federal 
Energy Regulatory Commission said he would support reliability 
legislation to stand alone in the event a comprehensive bill 
failed to pass. Do you join him in that position?
    Mr. Abraham. You know, Congressman, I have been advocating 
a comprehensive bill for a long time.
    Mr. Abraham. I know we do.
    Mr. Dingell. And I want to address what we are going to do 
about the different parts of this. So would you support this 
standing alone if we cannot get a comprehensive bill?
    Mr. Abraham. My view remains what it has been when we have 
talked in the past.
    Mr. Dingell. All right. So you are saying no?
    Mr. Abraham. I believe that if we indicate that we are 
ready to----
    Mr. Dingell. Mr. Secretary, with all respect, I have a 
limited amount of time.
    Mr. Abraham. I know.
    Mr. Dingell. And I must respect it.
    I understand that the administration's legislative proposal 
on Yucca Mountain funding applies only to future ratepayer 
contributions to the Nuclear Waste Fund. And I am concerned 
about hijacking of past payments into the fund by the Budget 
Committee. I would note that the legislation must also assure 
that the $14 billion balance in the fund is used to support the 
Yucca Mountain program. If Congress settled for anything less, 
it would be explicitly and implicitly writing off ratepayers' 
past contribution.
    Now, Mr. Secretary, one: Do you agree with that? And two, 
does the administration support legislation ensuring that all 
ratepayer contributions to the Nuclear Waste Fund, past and 
present, are appropriated for their intended purpose?
    Mr. Abraham. Congressman, at this point we have focused on 
the revenues that are going to be coming in the future because 
we feel that that is the first step in this process.
    Mr. Dingell. And so you are writing off prior 
contributions----
    Mr. Abraham. No, not writing off.
    Mr. Dingell. [continuing] that have been rated by OMB and 
the Budget Committee and the Appropriations----
    Mr. Abraham. Not writing them off. Because, as you know, we 
are being sued in----
    Mr. Dingell. Well, you are being sued and you have to 
protect those funds or else they are going to be dissipated by 
a Congress willing to spend those monies for other purposes.
    Mr. Abraham. Well, I could not agree more. And we felt the 
first step in this process should be to amend the provisions so 
that the funds in the future----
    Mr. Dingell. You would not oppose, though, going to get all 
of those monies, would you?
    Mr. Abraham. Well, we need to secure them at some point. 
And we have not developed----
    Mr. Dingell. And I would assume the sooner the better, 
because I would note that the full $14 billion in the Waste 
Fund to Yucca Mountain, if we put that all in the project could 
then be funded for 10 additional years without any additional 
ratepayer contributions and you would probably get rid of the 
lawsuit that you mentioned. Is that not true, Mr. Secretary?
    Mr. Abraham. Well, I do not know if we would get rid of the 
lawsuits, but certainly moving forward and demonstrating that 
we are going to finish the project----
    Mr. Dingell. Do you disagree with the statement that I 
made?
    Mr. Abraham. Well, I am not----
    Mr. Dingell. Yes or no.
    Mr. Abraham. I do not know that I disagree with it. I would 
be happy to answer in greater detail for the record----
    Mr. Dingell. All right. I would, but if you disagree with 
me----
    Mr. Abraham. [continuing] but I certainly----
    Mr. Dingell. [continuing] Mr. Secretary, now please tell 
me.
    Now, I note yesterday the White House said it was 
disappointed by OPEC agreeing to cut back on their production. 
Has the President or the President not begun a process of 
jawboning the OPEC countries with regard to product and opening 
the spigot instead of closing it down and increasing prices? 
Has the White House done anything about that?
    Mr. Abraham. Congressman, the statement that the President 
issued yesterday also indicated that the administration has 
been stressing to big producers that high energy prices are 
unacceptable.
    Mr. Dingell. Has the President called any of the OPEC 
countries to tell them to open up the spigot or not?
    Mr. Abraham. Conversations between the President and other 
members of the administration----
    Mr. Dingell. I am not asking about his communications to 
you. I am asking about his communications to the OPEC 
countries. Has he job owned the OPEC countries to produce more 
oil or not?
    Mr. Abraham. The President and members of the 
administration have had contact. The President and members of 
the administration regularly discuss issues with countries who 
are part of OPEC.
    Mr. Dingell. No, no, no. Have you told OPEC to open the 
spigots or not?
    Mr. Abraham. I indicated in the statement that the 
President released yesterday that we have stressed to big 
producers that high energy prices are unacceptable.
    Mr. Dingell. And I am pleased that he is distressed. What 
has he done?
    Mr. Abraham. Well, that is among the issues which have been 
conveyed.
    Mr. Dingell. Mr. Secretary----
    Chairman Barton. The gentleman's----
    Mr. Dingell. [continuing] your responses are superb and 
very senatorial, and I want to thank you for your visit here 
today.
    Mr. Abraham. Well, you know, I grew up in Michigan and had 
some excellent guidance from the entire delegation, members 
from both sides who are here today.
    Chairman Barton. The distinguished former chairman's 
questions were excellent and well put, as well.
    The distinguished chairman of the Energy and Air Quality 
Subcommittee is recognized for 5 minutes.
    Mr. Hall. Thank you, Mr. Chairman.
    Mr. Secretary, while gasoline prices sore and people are 
complaining and very concerned and most of these questions that 
you will be asked will be probably evolving around that, all 
that time there's an energy bill that languishes over there in 
the other body that we are waiting for some relief from them, 
relief for youngsters who may have to go fight a war if we do 
not solve the energy problems, waiting for answers that allow 
us to drill in the ultra-deep areas. And I think you are 
familiar with the ultra-deep provisions of that bill.
    Are you also familiar with the fact that we have passed the 
ultra-deep last session, passed the negotiation stage and it 
has been accepted as we have this time, but we still don't have 
an energy bill? And what are we, two votes ahead away from it? 
That is reportedly----
    Mr. Abraham. The bill that is the Conference Report----
    Mr. Hall. And it is a watered down bill that they are 
looking at over there now.
    I think your office has recently analyzed the potential 
impacts of that provision in H.R. 6. For the record, it is the 
Ultra-Deep Water and Unconventional Natural Gas Supply Research 
and Development Program. And the conclusion of the analyze was 
that the program would result in substantial increases in 
natural gas and oil production. And our calculations indicate 
that the increased Federal royalties that will result from the 
supply increases contemplated by DOE analysis would pay for the 
program over a 10-year period, substantially pay for it. And as 
you know, DOE's Office of Fossil Energy conducts gas and oil 
supply research. For example, the Fossil Energy Office was 
instrumental in providing up front research funding and 
direction for coal bed methane, which now accounts for about 9 
percent of our domestic natural gas production.
    So my question is could you comment further on the value of 
DOE's research and development to increased gas and oil 
supplies with the effect of the ultra-deep provision being in 
the law?
    Mr. Abraham. Well, I think those efforts are very positive. 
We face as you know, Congressman, a huge natural gas demand 
increase that as far as we look out into the future will 
continue. We have on one hand in recent years, obviously, posed 
a lot of regulations on industries and so that that has made 
natural gas a growing part of our energy mix, many would say 
the fuel of choice. Even as we have constrained our ability to 
produce as much as we want, and frankly a lot of the best areas 
have already been well tapped here in America. Just to give the 
committee some perspective, there was a time when we produced 
all the natural gas we needed here in America for America. In 
recent years, Canada has become an increasing supplier. We have 
actually had to import.
    And just to give the committee an issue that we are working 
on that we will be working on, I am sure, together; the 
National Petroleum Council at my request in March 2002 did a 
long term natural gas survey concluded in the finish of their 
report last September that in the year 2025 we would only be 
able to supply--and this is with some optimistic assumptions 
such that an Alaska pipeline would come into play, we would 
only be able to supply about 75 percent of our natural gas 
demand here in North America. And that we would be, obviously, 
in need of greater imports.
    And so we are working on these issues. Looking at liquid 
natural gas and other possible ways to make up that different. 
But also it is important that we keep the fuel supply diverse 
by making sure that coal and other electricity sources, the 
renewable energy sources will be tapped.
    Mr. Hall. Well, I thank you.
    And, as you know, the EIA analysis of this provision in 
H.R. 6 forecasts substantial increases in supply from an R&D of 
approximately, I think, $50 million per year. And the program 
in H.R. Conference Report that is there now as it is written 
now, however, is about $150 million a year program. Is it fair 
to assume that a larger research program would result in even a 
greater supply response than that identified in DOE's analysis?
    Mr. Abraham. It is possible.
    Mr. Hall. But that is highly likely, is it not?
    Mr. Abraham. It is possible. Obviously, you know in all of 
these research areas we try to identify that research that we 
think will not be performed in the private sector that has the 
best yields for us. And we hope that our programs will be so 
successful.
    Mr. Hall. Yes. I like ``likely'' better than I like 
``possible.''
    Secretary Abraham. All right. Likely.
    Chairman Barton. The gentleman's time has expired.
    Mr. Hall. I thank you, Mr. Secretary.
    Chairman Barton. The distinguished ranking member of the 
subcommittee, Mr. Boucher is recognized for 5 minute.
    Mr. Boucher. Well, thank you very much, Mr. Chairman.
    And Secretary Abraham, I would like to join with the 
chairman and other members in welcoming you here today. And 
thank you for the time you are taking with us.
    I am also very concerned about how natural gas prices and 
the effect of these prices on residential consumers of natural 
gas, approximately one-half of the homes in America are heated 
with natural gas, upon industrial users of natural gas, upon 
farmers and others who are gas dependent in our economy.
    Mr. Greenspan visited this committee during the summer of 
last year in order to express his concern about the affect of 
extraordinarily high natural gas prices on the economic 
recovery and he laid before this committee a challenge to try 
to find some alternatives to either increase natural gas supply 
or to divert natural gas users to other fuels.
    I am particularly concerned about high natural gas prices 
and the effect on electric utilities, notwithstanding the fact 
that natural gas prices reached a peak of $7 per million BTUs 
earlier this year, a record high I think. Your Energy 
Information Administration is still predicting that of the 
approximately 1600 new electricity generating plants that will 
be constructed around the country during the coming 20 years, 
at least 80 percent of those are going to be fueled with 
natural gas, further increasing demand and obviously holding 
the potential for dramatic additional increase in price to the 
disadvantage of everybody else who uses gas.
    And so my question to you is what can we do in order to 
encourage electric utilities in particular to rely on another 
fuel? And coal is the obvious alternative. We have 250 years of 
future supply in the country. Coal is consumed at approximately 
one-half the price of natural gas and it is the obvious thing 
for this Nation to do. Saying it is fairly easy, achieving that 
objective is somewhat more difficult.
    So my question to you this morning is use this opportunity, 
if you would, to tell us how we can go about go about 
encouraging electric utilities to use more coal and to rely to 
a lesser degree upon natural gas?
    Mr. Abraham. Well, I would like to rejoin my earlier 
comments about clean coal technology and really put that in 
perspective.
    You make an excellent point in terms of the coal reserves 
that we enjoy in this country. The question is can we use them 
and use them in a way that is safer.
    The rest of the world has many of the same challenges. 
China and India and other countries with huge coal reserves are 
going to use their coal. We are going to use our coal. Can we 
do it better and safer?
    And one of the reasons that the President made a decision 
which was in our energy plan to increase clean coal technology 
by $2 billion over 10 years to dramatically increase that share 
was to try to address these challenges, both in terms of the 
way we would be able to make existing types of coal generation 
safer, but also to develop technologies of the future.
    I mentioned the FutureGen program and Congressman Brown 
mentioned it as well. We see this as an extremely important 
project. It is a huge approximately $1 billion 10-12 year 
program that is designed to do three things. One is through a 
coal gasification process to produce electricity. Second, to 
fully separate and sequester the pollutants including carbon so 
that there are no omissions so it truly is a cleaned fired 
operation. And as a byproduct, produce hydrogen that can be 
then used in fuel cells, we hope then to power motor vehicles 
or stationary power sources.
    And we think if we can perfect these technologies over the 
next decade, in a cost competitive fashion, that we can then 
provide the coal industry with the kind of long term approach 
that would make the use of coal continue to be a very important 
component. As you know, it is 50 percent of production today.
    Mr. Boucher. We have in the Energy Bill, H.R. 6, in the 
Conference Agreement approximately $3 billion in tax credits 
both investment tax credits and production tax credits that 
would be directed toward electric utilities that utilize a new 
generation of clean coal technology. And this provision is 
designed to encourage electric utilities both to retrofit 
existing plants, but more importantly to build new coal fired 
facilities and be able to do so in a way that is truly 
affordable to them. Can I expect the strong support of the 
administration for that provision?
    Mr. Abraham. Congressman, I think as we have indicated in a 
number of different letters to Congress that we are very--we 
have been concerned from the beginning about the size of the 
tax component of an energy bill. In our energy plan we 
identified a series of tax provisions approximately $8 billion 
of provisions, primarily in the area of renewable energy and 
energy efficiency that we felt were the appropriate number of 
provisions. That remains our position today. We are concerned 
about the total cost, and we tried to identify what we thought 
were the right priorities.
    We believe that the work we are doing on clean coal 
technology is the right way to help business and to encourage 
the development of coal, and that has been our priority.
    Chairman Barton. The gentleman's has expired.
    Before I recognize Mr. Upton, if the facts are, Mr. 
Secretary, that just extending existing tax provisions in the 
tax code, over $8 billion does the President support letting 
existing tax incentives expire?
    Mr. Abraham. You know, Mr. Chairman, we have tried to give 
Congress on numerous occasions a sense of the size of the tax 
package that we think is preferable. And, obviously, we have 
spent a lot of time looking at the kinds of tax issue that 
could be used to be part of our energy plan, identify the ones 
we thought were the best. We recognize Congress plays a role in 
this process, too, and that the ones that we think are the best 
may not be the ones that emerge in a bill. But we are concerned 
about the total of cost of energy legislation and----
    Chairman Barton. Well, we are willing, as you know, to work 
with the President and yourself and the Treasury Secretary on 
the tax provisions. But we do not want to be put in a position 
of supporting the President on new tax provisions for hydrogen 
and others at the expense of letting existing tax provisions 
expire. And some of the oil and gas provisions, the coal 
provisions, even some of the wind, renewable, those are 
existing provisions.
    Mr. Abraham. Right.
    Chairman Barton. And over a 10-year period, you know, we 
have put a number out there, the current bill and the 
Conference Report is scored at $30 billion, the President's 
recommend is at $8 billion. But that is a 10-year score. So $30 
billion over 10 years is $3 billion a year. Eight billion 
dollars over 10 years is over $800,000 billion. And I would 
just encourage you if we can get the other body to act 
responsibly, which is always a hope, that we have a meeting of 
the minds on the cost because we do want to get a bill.
    Mr. Abraham. Well, obviously as you know, Mr. Chairman, we 
appreciate that Congress plays a part in this, too. We have 
identified our energy plan and what we think would be 
sufficient and, you know, the process will certainly be one 
that we work with you on.
    Chairman Barton. Thank you, sir.
    Mr. Upton is recognized for 5 minutes.
    Mr. Upton. Thank you, Mr. Chairman.
    And, Mr. Secretary, we do need a Comprehensive Energy Bill. 
I share your frustration. I think that there will be hell to 
pay if we do not get a Comprehensive Energy Bill out of the 
Senate before too long it passes. Allegedly, they do have the 
votes to pass the bill, they just do not have the 60 votes to 
break the filibuster. As I look back at Dingell's question, 
reliability standards are very important. It was an important 
element of the Energy Bill and, frankly, the blackout that we 
experienced in much of the midwest and northeast last year was 
the spark to get this bill going. And I wish that the 
reliability standards had been a little bit stronger, maybe 
quite a bit stronger, but at least we made a step in the right 
direction.
    For those that talk ANWR, ANWR is part of this bill. We had 
the votes in both the House and the Senate to include it, but 
it was taken out to make it more bipartisan and to make sure 
that we actually get the bill out, particularly when we had the 
conditions that were imposed as part of that settlement.
    I look at boutique fuels as the summer is coming to have 20 
to 25 different perhaps boutique fuels all impacted the supply 
line and the cost of getting those fuels to folks, particularly 
in the midwest, it only raises the prices. It does not lower 
them.
    I look at the incentives for hydrogen fuel and the things 
that we have in this legislation.
    And other alternative fuels. I am a big supporter with many 
of my colleagues on ethanol, which I happen to believe is a 
win/win/win. I mean not only taking down the reliance on 
foreign fuels, but it helps our farmers and obviously helps 
with the clean air debate as well.
    Natural gas prices. I have got some consumers in my 
District where their natural gas prices went up five figures 
from 1 year to the next. And, again, in that legislation by 
building a new pipeline coming down from Alaska, the natural 
gas prices are probably five times more volatile than gasoline 
prices.
    And like it or not, I happen to believe that the failure to 
pass a Comprehensive Energy Bill shows the rest of the world 
that we cannot get our own house in order. And how is that we 
can job own effectively with folks on the other side of the 
pond when we cannot get our house in order? And I think a 
Comprehensive Energy Bill would help us as we try to get the 
other OPEC nations on board and trying to increase their 
production and try to help the worldwide economy and not just 
here.
    But I have a couple of questions before my time expires. 
What is your estimate as to what the gas prices will be on the 
three next--well, we are close to Easter, but Memorial Day, 
Fourth of July and Labor Day? Where do you see the gasoline 
prices at the pump nationwide taking us under the current 
conditions?
    Mr. Abraham. The most recent Energy Information 
Administration's analyses for the summer period, and that right 
now is projecting a $1.74 average nationwide.
    Mr. Upton. $1.74. So you actually predict that it is going 
to go down?
    Mr. Abraham. Well, that is over a period. We do not do it 
sort week-to-week, so I cannot give you that analyses.
    Mr. Upton. In my own----
    Mr. Abraham. I am giving you for the summer.
    Mr. Upton. --Fred Upton estimate throughout my parts of my 
District, it is already about a $1.80. So you think it is going 
to actually come down a little bit?
    Mr. Abraham. You know, our Department has----
    Mr. Upton. I am a good shopper.
    Mr. Abraham. Congressman, I only have the data that the way 
it is collected by the EIA. That is their most recent short 
term energy forecast for us.
    Mr. Upton. When was the last refinery built in this 
country, oil and gas refinery built in this country?
    Mr. Abraham. It was built in, I believe, the early 1970's.
    Mr. Upton. Now, I know that there was fire this last week 
in Texas, as I recall. Do you have any estimate in terms of how 
long that refinery is going to be out of business?
    Mr. Abraham. I do not. I would be happy to submit for the 
record whatever we can learn about that. Maybe someone here who 
has some--I guess I am told by told that it actually is up and 
operational again.
    Mr. Upton. Okay. What is your estimate in terms of what our 
natural gas prices are going--have there been any forecasts in 
terms of where we are going to be this next fall?
    Mr. Abraham. I am not sure if I have got it right here, but 
I think it is going to remain in a range $5.00 or higher.
    Mr. Upton. Okay. Thank you very much.
    Yield back my time.
    Chairman Barton. Thank you, the gentleman from Michigan.
    The gentleman from Massachusetts is recognized for 5 
minutes.
    Mr. Markey. Thank you.
    Welcome, Mr. Secretary.
    Today is April Fool's Day. OPEC is making a fool of the 
United States. We have 130,000 young men and women over in that 
region, and yet those OPEC ministers are meeting and have 
decreased by 1 million barrels the amount of oil they are 
giving us. That is oil they were producing yesterday, but today 
they are saying they are not going to produce for the United 
States economy.
    We have an economic security crises in our country. We have 
lost 2.5 million jobs over the last 4 years and OPEC is only 
now going to increase dramatically the pressure on our economy, 
even as we are trying to sacrifice with young American men and 
women's lives for the security of that region.
    My question to you, Mr. Secretary, is how many of the OPEC 
leaders has President Bush personally called to ask them to 
turn on the spigots of oil rather than turning off the spigots 
of oil as they are doing today?
    Mr. Abraham. The President and others of us are on an 
ongoing basis in contact with not just OPEC countries, but 
other oil producing countries.
    Mr. Markey. Who has the President called personally?
    Mr. Abraham. We do not comment on the specifics of our 
conversations.
    Mr. Markey. Has the President personally called the leaders 
of any of the OPEC nations and asked them to not cut back on 
the production of oil?
    Mr. Abraham. As the President indicated in his statement 
yesterday, we have been stressing--he has been stressing to big 
producers that high energy costs are unacceptable.
    Mr. Markey. Has he talked to the leaders of any of the OPEC 
nations personally and asked them not to run off spigots of 
oil?
    Mr. Abraham. He has been in touch on an ongoing basis with 
the leaders of the countries in OPEC, among the messages and 
some of these discussions obviously involve other issues as 
well----
    Mr. Markey. As he asked the head--has he asked the leader 
of Saudi Arabia not to turn off the spigots of oil production 
because it would hurt the American economy?
    Mr. Abraham. I am not going to comment on the specifics of 
his discussions. I will just simply indicate what he indicated 
in his statement yesterday.
    Mr. Markey. Do you know if he called the head of Saudi 
Arabia and asked him not to----
    Mr. Abraham. I know that he has had conversations with all 
of the leaders of OPEC. And in context--well, at least most of 
the leaders, some of the leaders of OPEC as, you know, are from 
countries like Iran and Libya with whom we really do not have 
much dialog. But I know he has been in contact with them on a 
variety of issues. And yesterday's statement I think speaks for 
itself.
    Mr. Markey. Well, you know, the American consumer is being 
tipped upside down by OPEC with money being shaken out of their 
pockets everyday at the gas pump. And it is going to have a 
profound impact on the American economy. So I think the 
American public has a right to know whether or not jawbone 
these leaders.
    Which of the OPEC leaders, Mr. Secretary, have you 
personally asked not to turn off the spigots of oil?
    Mr. Abraham. I have been in contact on a regular basis with 
the leaders of most of the OPEC countries on these issues.
    Mr. Markey. Did you talk to the leader of Saudi Arabia 
and----
    Mr. Abraham. No, I did not.
    Mr. Markey. You did not?
    Mr. Abraham. Not to the leader. No, I did not.
    Mr. Markey. Who in your administration has talked to the 
leader of Saudi Arabia and asked him not to turn off the 
spigots of oil to the United States?
    Mr. Abraham. Conversations with the leaders of Saudi Arabia 
have taken place, Congressman. We do not comment on the 
specific discussions, and I certainly am not going to comment 
on what other Cabinet members might or might not have had 
discussions with the Crown Prince. But I can assure you that 
the message has been sent very clearly, which was released 
yesterday.
    And I just might say, you know, we are focusing on OPEC, 
and that is an issue which, as we indicated yesterday, we are 
very disappointed with the decision they made yesterday and, 
obviously, are evaluating what we might--as we do after 
everyone of their decisions when----
    Mr. Markey. Mr. Secretary, OPEC is price gouging the 
American public. This is oil they were producing yesterday and 
now they are not producing it, even as we see stories of young 
Americans who are being killed on a daily basis in the Middle 
East.
    Mr. Abraham. Well, Congressman, I would just----
    Mr. Markey. I mean, it is absolutely morally wrong for OPEC 
to take advantage of the United States as we are providing our 
young men and women, an American treasure, from our taxpayers 
to protect that region that they then put a double tax on the 
American economy by cutting back on the oil that they have been 
producing over the last year in order to further extract this 
incredible price out of the American people.
    Mr. Abraham. Congressman, let me just say a couple of 
things. First of all, what matters in this arena is not just 
what people say but what they do. Right now the OPEC quota is 
stated to be 24.5 million barrels a day, the production is over 
25 million barrels a day.
    Yesterday after this decision was announced, the price of 
oil actually went down, not up. And a lot of the analyses that 
was in the trade journals today talked about the fact that 
there were was deep questions about whether any production 
reduction was----
    Mr. Markey. Mr. Secretary, you should deploy the Strategic 
Petroleum Reserve. The President of the United States should 
deploy Strategic Petroleum Reserve. This is our economic 
security. They are threatening the economic security of our 
country. They are putting a dagger at the heart of our capacity 
to create a new jobs by imposing this huge new oil tax on our 
people, and the President must jawbone OPEC to get that tax off 
the backs of the American public.
    Chairman Barton. The gentleman's time has expired.
    The chair would ask unanimous consent before recognizing 
Mr. Whitfield to put into the record the actual production 
record of OPEC for the last 9\1/2\ years. Is there objection? 
Hearing none, so ordered.
    The Chair would indicate, and we will make copies of this 
available to all members, that since January 1995 OPEC's 
production has fluctuated from a little under 25 million 
barrels a day to a little over 29 million barrels a day. As of 
mid-January it was at 27 million barrels a day.
    I support Mr. Markey's suggestion that we do everything 
possible to maximize OPEC production, but we should have what 
the record actually is on their production.
    Mr. Wynn. Mr. Chairman?
    Chairman Barton. The gentleman from Maryland seeks 
recognition.
    Mr. Wynn. Regarding that exhibit, the Secretary just 
suggested that actual production exceeds reported production. 
And I wanted to inquire as to whether that report that you are 
about to enter is consistent with the Secretary's statement 
that production is higher than reported or if in fact it is as 
reported, which would indicate that we can expect lower 
production starting today?
    Chairman Barton. This report, this chart, and we will get a 
copy of the chart, and it is it from the Energy Information 
Administration, has the actual quota or it has the regular--it 
has the official quota and then I think it has the actual 
production. We will get the specific answer to that. And it is 
general knowledge that OPEC produces above their stated quotas. 
But we will get you that specific information.
    Mr. Wynn. Thank you, Mr. Chairman.
    Chairman Barton. Yes. And all members, there have been a 
number of suggestions and obviously we are going to honor 
these, all members will have the opportunity to provide written 
questions to our witness today.
    The gentleman from Kentucky is recognized for 5 minutes.
    Mr. Whitfield. Mr. Chairman, thank you.
    And, Mr. Secretary, thank you for joining us this morning 
and listening to our concerns.
    I wanted to reiterate the comments made by my colleague Mr. 
Boucher and emphasize once again the importance of coal. It is 
our most abundant resource. It is our most economical resource 
and it can go a long way in helping alleviate some of our 
energy challenges. And we do hope that the Senate would take 
action because, as has already been indicated, we do have the 
production tax credit and the investment tax credit for clean 
coal technology in that bill.
    But I would also like to express a concern. I know your 
fossil research and development budget for 2005 it appears that 
you are requesting $447 million, but it is my understanding 
that $237 million of that is being taken away from the 
FutureGen initiative which started out as a $1 billion project 
over 10 years and the industry was going to put in $200 million 
initially, and now we have ten coal companies willing to put in 
$250 million. The government was going to initially put in $800 
million; that's down to about $500 million now. And now we are 
taking money from FutureGen and moving it over to the fossil 
R&D budget instead of asking for new monies.
    And it seems to me with coal potentially playing such a 
vital role, that it is sort of getting the shortchanged here. I 
recognize that you have a limited budget, but I wanted to make 
that comment.
    Mr. Abraham. Well, if I just would say, I mean FutureGen is 
coal, it is all about coal.
    Mr. Whitfield. Right.
    Mr. Abraham. And so, you know, we have added that to our 
clean coal technology program. It is not a decreasing of other 
things, it is a new component of it which we think will 
ultimately serve this Nation's coal production capabilities 
very well.
    Mr. Whitfield. But I had the impression that you were 
taking money away from FutureGen and it is the reverse? Okay.
    Mr. Abraham. Well, let just quickly go over for you. You 
know, the FutureGen program we have costed out at about $950 
million.
    Mr. Whitfield. Right.
    Mr. Abraham. The Federal Government will be providing $500 
million in basic technology research and another $120 million 
in carbon sequestration work that will be done accompanying the 
program for about $620 million total.
    The private sector, as you indicated, will contribute about 
$250 million. And we expect already based on the success we 
have had working with international partners on carbon 
sequestration and clean coal, that there will be an interest 
and contributions from the international community that will be 
the final component.
    Mr. Whitfield. And you are hopeful that that will work out?
    Mr. Abraham. I believe it will. We had the first meeting of 
the Carbon Sequestration Forum last year. We brought, 
literally, 14 major coal producing countries to the United 
States. They have joined with us in a joint carbon 
sequestration set of research efforts. And we think that there 
is a lot of interest in what we are doing on FutureGen.
    Mr. Whitfield. And I want to thank also, Mr. McSlarrow and 
Mr. Card because they are working with us on these RFPs for the 
new cleanup and infrastructure contractors at Portsmouth and 
Paducah. But Mr. Strickland referenced this earlier, 
representing Paducah and Portsmouth, we feel like that the 
employees there are being treated differently to their 
detriment on the pension and retiree health benefits, and also 
the requirement for community reinvestment. They are being 
totally treated different in terms of the RFP at the Mound 
facility.
    And from my knowledge, that has never been done before. So 
I am anxious to continue working with Mr. McSlarrow and Mr. 
Card, and hopefully we can correct that issue.
    Mr. Abraham. I know, and Congressman Strickland mentioned 
in his opening statement his concern, which we are aware of. 
And others who share these communities have expressed it. We 
are hopeful that we can work together with all of you, as well 
as obviously the folks on the ground. I know that several 
proposed ideas have been now presented to us. We are trying to 
work our way through that. And as you noted, the Deputy 
Secretary has taken on this issue directly so that we have in 
our own office high level focus on it.
    Mr. Whitfield. Thank you.
    Mr. Hall [presiding]. All right. Gentleman's time expired.
    The Chair recognizes the gentlelady from California, Ms. 
Eshoo for 5 minutes.
    Ms. Eshoo. Thank you, Mr. Chairman.
    Again, Mr. Secretary, welcome. It is nice to see you.
    Just a couple of observations. I am just glancing at the 
chart that was placed in the record, and what I'm struck with 
is that regardless of the production level, we are very 
dependent upon it. And I think that is really what the 
operational factor is in discussing national energy policy 
today or anytime any Secretary of Energy comes to appear before 
the committee.
    Certainly our people are feeling the real punch at the pump 
right now. But my constituents continually ask and press on the 
following issue: What are we doing to prepare ourselves in this 
century to be less dependent? I do not share conspiracy 
theories about going to war singularly for oil, but we would 
not be there if they had fields of broccoli, most frankly. And 
so I think today's discussion really has to center upon what we 
can do so that our country, the United States of America, is 
less dependent on this. This is not a pretty picture and it was 
uncomfortable I think for everyone to hear hard cold facts as 
Mr. Markey pressed very hard on this. But again, this chart I 
think the real story to this chart is that whether it is up, 
down or sideways in terms of what OPEC produces and what their 
levels, is that we high level of dependence.
    Another observation. The administration's energy bill is 
stuck over in the other body on a bipartisan basis. this is not 
one party that is holding it up. I mean, as you know, your 
party has the majority. I know that they have different rules 
over there, but there is bipartisan opposition to the bill. And 
it has been said, and I believe that it is so, that if the 
administration dropped the MTBE Liability Safe Harbor Provision 
that other parts of the bill could move.
    So you can tell where I am going. Would you support a bill 
without an MTBE provision?
    And I also want to get on the record that the Energy 
Information Administration has estimated that the Energy Bill 
cold add as much as 8 cents to the cost of each gallon of 
gasoline and that the Energy Bill will not have an effect on 
our dependence relative to imported oil. So besides an Energy 
Bill that has a price tag, obviously, $23 billion to the 
American people and which adds $140 billion to consumers' 
bills, what is the administration offering to help solve our 
energy problems in the short term and in the long term? It is a 
big question, but I think that is the question that is on the 
minds of the American people. And I do not think they look at 
these issues, Mr. Secretary, as whether it is a Republican 
Energy Bill or a Democratic Energy Bill. They know that we 
cannot be about yesterday. We have the capacity in terms of 
technology and moving toward those kinds of things that are 
going to take us away from fossil fuels.
    What is the administration's short term given where the 
bill is stuck so that there really is not any national energy 
policy and long term? What are you willing to change to make 
things work, especially with this new layer of what OPEC is 
doing to us and the barrel of the gun, so to speak, 
economically that we are looking down?
    Mr. Abraham. Congresswomen, thank you for the question.
    Mr. Chairman, I note there is only about 40 seconds left, 
but this is going to take a little more than that if I might to 
answer.
    Mr. Hall. The Chair recognizes you for a full answer. It 
was a good long question.
    Mr. Abraham. Right. It was a good long question.
    Let me just talk about the process going back to day one 
and where I see our future challenges and how we are trying to 
address them.
    When we took office, the one thing that was abundantly 
clear--and look, I was a member of the Senate when we did not 
develop an energy plan and we did that on a bipartisan basis. 
The previous administration did not develop an energy plan. We 
did not have one.
    President Bush in his first week asked us to put together a 
series of recommendations for his consideration. In May 2001 we 
put forth 105 recommendations, many of which we have already 
been implementing through the executive branch on a variety of 
levels. It was designed to look not just at the short term, but 
the midterm, the long term. Some of those components could not 
be done by Executive action only, which is why we have been 
pressing for the passage of an energy bill.
    And I know there is disagreements on some of these 
components. We all, you know, have our philosophies. And I, 
obviously, would make the case for the inclusion of things in 
that bill that are not even in it and were referenced earlier, 
including the production of oil in Alaska as we see what our 
dependence has become. But we have been moving forward to 
implement that plan.
    Now, one of the issues you raised how do we get out of this 
dependence, and we need to do that. You are absolutely right. 
Today we import 54 percent of our oil. Back during the oil 
embargo in 1973 it was 33 or 36 percent. But in 20 years it is 
going to be nearly 70 percent. How do we address that?
    We concluded, therefore, the energy plan and actions that 
we would take needed to be focused on the exact same issue you 
raised; the technology options to this country. At the top of 
the list we concluded was the development of motor vehicle 
fueling systems that did not require oil, which is how the 
hydrogen program really was launched. And we are fully 
committed to that program as are a lot of members of this 
committee on both sides of the aisle and the same is true in 
the Senate. We need to pass an Energy Bill in part so that we 
can get the authorization to fully implement the hydrogen 
program.
    It is going to take time. It is a complicated process to 
reduce the cost of hydrogen production and fuel cell technology 
so that the vehicles we would develop could be competitive. 
People will not buy a hydrogen vehicle if it costs a lot more. 
They will not buy it if they can't be guaranteed they can drive 
home after they have left home. We have to have a fueling 
infrastructure. It is going to take time.
    We made a decision after the professional career folks in 
our Department worked very, very hard that over the first 5 
years this program would need about $1.7 billion in investment. 
We are working hard to secure that funding. We need to focus it 
on a roadmap we have developed. And I am very pleased, as I 
said in my statement, that we have been able to bring for the 
first time the automotive and the energy industries together to 
chart that progress so that we are working in parallel.
    Part of the problem we have had, people have been talking 
about hydrogen for a long time. The problem has been that on 
the one side people have said well we will build the car when 
they have the fueling system. And on the other side they had 
said we will build the fueling system when you have the car. 
And so we are making good progress, because now we have people 
working on a parallel track and we have got an international 
partnership that is working on it as well.
    And in my personal opinion, more than anything else, that 
is the way we break this dependence. Because you can produce 
hydrogen here at home from renewable sources, from coal, from 
as I said earlier, from nuclear energy; from a variety of 
possible sources. And we are letting research go on in all of 
those areas. We are very optimistic that we can transition to a 
hydrogen economy by 2020 so that we in fact are in a situation 
where the market of motor vehicles are going to be hydrogen 
driven.
    But there are a lot of other components of this energy plan 
that have been implemented as well. One of the first things we 
focused on was our efforts to try to help work around the world 
in places other than the traditional sources of oil production, 
to increase production.
    Back then Russia was producing about 6 million barrels--I 
am going too long? Could I answer for the record, maybe, a 
little bit more, Mr. Chairman, to elaborate because there 
really is a lot that I think we are doing here.
    Mr. Hall. Go ahead and finish. Finish in another minute, 
and 30 seconds is already gone.
    Mr. Abraham. Well, I began to talk about the international 
efforts. They are producing I think a lot of success in places 
in the world that had not traditionally produced or were not 
producing as much. We are working closely with our counter 
parts in West Africa, in the Caspian region in Russia so that 
in fact in the interim there is a more diverse world 
marketplace.
    And let me just say one statistic for the record. A lot of 
focus today on OPEC. OPEC produces about 26 million barrels a 
day. The total world production per day is 82 million barrels 
of oil. OPEC is one-third; not 50, not 70, not 90 percent. It 
is one-third. And our goal is to work very hard to increase the 
share from other parts of the world. But we also need to 
recognize that demand is growing, too, and that is one of the 
real challenges. It is growing here. Our economy is 
strengthening, that means more demand. But in China, in Asia as 
you know, there is a lot of competitors.
    And so I would love to answer more for the record. I will 
rest. Thank you, Mr. Chairman.
    Mr. Hall. Thank you.
    The Chair recognizes the gentleman from Georgia, Mr. 
Norwood for 5 minutes or so.
    Mr. Norwood. Well, Mr. Chairman, you have to admit, that 
was a senatorial answer if I have ever heard one.
    Mr. Secretary, I have a couple of questions that I would 
like to pose to you and then when I get those out, perhaps turn 
it over to you to answer.
    Now, on February 3 of this year a group of southern 
Governors, including Governor Purdue of Georgia, sent the 
President and you a letter expressing concern over the nature 
and pace of certain recent initiatives at the Federal Energy 
Regulatory Commission that have the potential to greatly 
increase the cost to electric consumers in Georgia, and indeed 
through the southeast. And with unanimous consent, I would like 
to offer that letter for the record, Mr. Chairman.
    As you aware, Chairman Wood is pursuing these initiatives 
even though Congress is currently still considering the 
administration's proposed Energy Bill that places significant 
limitations on the Commission's authority in this particular 
area. I am quite puzzled, frankly, by the fact that Chairman 
Wood who is certainly a member of this administration and as 
recently as last year has expressed his full support for the 
carefully crafted provisions in the electricity title, he is 
proceeding today as if all those provisions never existed and 
were never supported by this administration.
    Mr. Secretary, I know that you have stated publicly that 
you support voluntary regional organizations and you and other 
senior Administrative officials were very, very helpful in 
crafting the provision in the Energy Bill that delays the so 
called standard market design rulemaking at FERC. While I know 
that FERC is an independent agency within the Department, I 
believe that given your overall responsibility to ensure a 
sound energy policy in this country, you can and should remain 
involved in helping FERC as it deals with individual cases 
before it to balance the relevant policy imperatives. This 
cooperative relationship with regards to policymaking between 
FERC and DOE certainly has been practiced in other 
administrations, both Republican and Democratic. And I'd like 
in a second for you to comment briefly on that, and perhaps 
longer in writing.
    Second, I would appreciate it if you would take a minute 
and explain to this committee why it is important that the 
plutonium pit facility come into being? You have noted in your 
remarks that hopefully by 2007. But I think it would be useful 
for us to understand what the point and purpose of that pit 
facility is. Then we have anything left, I have a gasoline 
question or two.
    Mr. Abraham. Well, I will make sure to talk long again.
    Well, first, with regard to our views, we have indicated 
that we favor regional transmission organizations but on a 
voluntary basis. We think that these are going to be much more 
successful if that is the method by which it comes about 
because we need to respect the differences between regions.
    I would just say, and I will be happy to expand on this for 
the record, that we do work with Chairman Wood in discussions 
on these issues. Obviously, passage of an Energy Bill would 
address this issue most directly and clearly, for a variety of 
reasons, is a preferable course.
    With regard to plutonium pit production, I would just say 
to the committee very simply this: We as a country stopped 
producing plutonium pits, the primary trigger on our nuclear 
warhead some time ago. All of the other nuclear weapons 
countries continue to have this capability. The United States 
is the only one which does not. We have no plans to build new 
nuclear weapons.
    The arsenal, the stockpile however is getting older and 
there is some issues about how long the existing stockpile 
warheads will remain reliable. So at some point the components 
have to be refurbished or replaced. So if we want to maintain 
the stockpile, it is essential that we ultimately have the 
capacity to produce on a larger scale basis the plutonium pit. 
And, you know, this is a case of simply restoring capabilities, 
not of expanding capabilities, but to make sure that our 
nuclear deterrent remains fully effective. And, obviously, if 
we ever reached a point where that were not the case, it would 
imperil national securities. So we believe it is a very 
critical investment, and we intend certainly to continue moving 
forward with it.
    Mr. Norwood. Well, it is a national security problem. And 
that is something I think we need to keep saying.
    Mr. Hall. The gentleman's time has expired.
    The Chair recognizes Mr. Stupak from Michigan, 5 minutes.
    Mr. Stupak. Thank you.
    You know, the chairman started off questioning about what 
happened back in 1995. I do not mean to go back and rehash old 
history, but I just find it sort of ironic that back in 1995 
many Republicans, in fact when you were in the Senate, actually 
called for elimination of the Department of Energy. So if that 
would have gone forward, would we not have a more disjointed 
energy policy than what we have right now if we did not even 
have a Department of Energy?
    Mr. Abraham. Well, as you well know, I was a co-sponsor of 
that legislation and have been repeatedly asked by Members of 
Congress in every committee hearing I think I have ever 
attended, and this may be the first time in this one. When I 
learned the error of my ways, you know, I certainly would 
subscribe to the theory that the Department's functions are 
very important, and part of it is because Congress did 
reorganize the Department later in that decade in an effort 
that I supported and I think has made it a much more 
successfully functioning agency since.
    Mr. Stupak. I know a lot of it was said back then that 
there was a lot of contracting out, especially under nuclear 
waste cleanup. And that still remains today, right?
    Mr. Abraham. Right.
    Mr. Stupak. Is that an efficient way of doing it, do you 
believe or----
    Mr. Abraham. Yes. The size of these projects are, in our 
judgment and I think by the previous administration as well, 
are going to be effectively addressed if a large contractor 
familiar with this kind of work, to the extent you can be, is 
in charge.
    Mr. Stupak. Okay. And is it going fairly--in your 
estimation is the nuclear cleanup going well?
    Mr. Abraham. Well, I indicated earlier one of the things 
that bothered me when I took the job was that I learned that in 
three of our sites, two in Ohio one in Colorado----
    Mr. Stupak. Right.
    Mr. Abraham. [continuing] we were on an accelerated path to 
correct the communities and the others weren't. And I think we 
are making progress, although you know we cannot shorten them 
as much as we have the first three. But that we are making 
progress to reduce risk instead of just manage it. And that it 
is an important transition.
    Mr. Stupak. And you are satisfied with the contract 
completion on these and the performance of the contractors?
    Mr. Abraham. Mostly. But believe me, each contract is 
kept--you know, we watch these closely and we do have issues 
where we have to find new contractors, and that will continue.
    Mr. Stupak. Yes. We spent a lot of time on oversight 
investigation on that issue, that is why I asked.
    Mr. Abraham. Yes. That remains a challenge.
    Mr. Stupak. Let me ask you this question, I hear a lot 
about this when I am back home doing my town hall meetings as I 
will be in the next 2 weeks: Back in November President Bush 
ordered the filling of the SPR to its capacity of roughly 700 
million barrels of oil principally through the royalty and kind 
acquisition of crude from Federal off shore leases. Deliveries 
are scheduled through October 2004. On March 11 in its debate 
on this budget resolution, the Senate called for a suspension 
of those deliveries and a sale instead of 53 million barrels of 
the royalty in kind oil to be used for deficient reduction and 
increased homeland security funding. And this is at odds with 
the President's order, which he is requiring that they continue 
to be filled.
    In the past, Presidents have released oil from SPR to try 
to stabilized gas prices, and as we see them coming back on the 
rise again many people are asking why are we not doing it. And 
the things I am hearing back home is, ``Well, we do not want to 
do it because it is good for the President and his buddies to 
keep the oil and gas prices high.'' There is other concerns 
that we do not do it because homeland security, our security at 
our oil supplies and gasoline supplies around the country is 
not as successful or not as secure as we would like them to be. 
Or third, the President is planning some kind of a conflict 
after the election, war whatever you want to call, and we are 
hoarding all of our oil and gas.
    What of the three are correct? What would you advise me to 
tell the folks back in Michigan, since you know them as well as 
I do?
    Mr. Abraham. It's answer No. 4, none of the above.
    Mr. Stupak. None of the above. But what is the answer? Why 
do we not release the SPR?
    Mr. Abraham. I would love to answer that question. And let 
me just say that none of the options that you mentioned are 
correct. Frankly, if we wanted to help oil companies, we would 
let them sell the oil at the prices that they could sell it for 
today, they would make a lot more money.
    Mr. Stupak. But are you not taking oil and gas out of the 
supply line?
    Mr. Abraham. Let me talk about first the rationale and then 
what the impact would be if we ceased filling.
    Mr. Stupak. Sure.
    Mr. Abraham. Because I think this is important for us all 
to discuss.
    After 9/11 the President made a decision, and let me say on 
a bipartisan basis there was a strong support for it; that we 
should take the reserve which has a capacity of 700 million 
barrels and fill it. We only had about 540 million barrels. And 
so the President decided we should do it.
    He also said let us do this in a way that has the least 
disruptive impact on the oil market. And we concluded the best 
way to do it was to take the oil which has to be given to the 
government----
    Mr. Stupak. The royalties?
    Mr. Abraham. The royalties. Take that royalty oil and use 
it on a very gradual basis; on such a slow basis in fact that 
it is going to take about 3 years for that 150 million barrel 
fill to occur. We knew that if we did it very transparently, 
very slowly and very predictably that it would have a minimum 
impact in terms of price. And I will get to that in a minute.
    But what we also realized was that this country faces many 
threats in the world, and that our national security is very 
much at risk if we had no fallback position. If we did not fill 
this reserve, in our judgment, to its full capacity we would be 
taking a risk that if something happened, if the supply of oil 
were disrupted I do not think any of us on either side of the 
aisle would be able to explain very easily to constituents who 
were at either at that point waiting in gasoline lines or 
paying huge, huge amounts of money for black market gas or 
something of that sort. And we think it is important.
    We do not know what might happen in the major oil supplying 
parts of the world, but we need in an era of terror, in the 
wake of 9/11, to fill this reserve. And that is why we are 
doing it, for national security reasons.
    But we also had the Energy Information Administration do an 
analysis of what the impact on price is. And here's the thing I 
just want to emphasize. Everyday in this world we produce 82 
million barrels of oil. We are filling the reserve at about 
120,000 barrels a day, a tiny percentage.
    The EIA analyzed this very vigorously and concluded that 
the impact if we ceased to fill it would be about as high as 2 
cents and perhaps less than .01 per gallon. And we feel that in 
the interest of national security that that is a tradeoff that 
is worth having. And that is why we are doing it and why we do 
not think the impact is as some has suggested.
    Mr. Stupak. So it would go back to a security issue then?
    Mr. Hall. The gentleman's time has expired.
    Mr. Abraham. Yes, it is totally to maintain a reserve if a 
disruption, a significant disruption in supply occurred in the 
world America will have a 700 million barrel reserve to fall 
back on in the event that something happens somewhere to 
disrupt. And we have obviously seen that happen.
    Mr. Hall. The gentleman's time has expired.
    I might pass on to you, you are giving information. Let me 
give you just a little information about how to answer that 
question about doing away with the Department of Energy.
    Several years ago a group of us Texans went west trying to 
nominate Lyndon Johnson instead of Jack Kennedy. And Mr. 
Rayburn gave us an answer that Kennedy was absolutely too young 
to be President. Three months later after Kennedy was 
nominated, Mr. Rayburn was making a speech for him and was 
asked about that. And he said ``Do not be stupid. He is 90 days 
older now.''
    All right. The Chair recognizes Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman.
    And I know that we have been sitting through this. I just 
want to make sure that the Secretary knows that there are 
obviously some folks who believe in the standard market design 
and the Energy Bill and making sure that we have an expanded 
transmission grid that can move power across our country. And 
so in regards to my friend from Georgia, those of us who think 
that the FERC has to move in a manner.
    The Strategic Petroleum Reserve, I was not going to talk on 
that, but being a Reservist active in the military that is to 
run our war machines. And a perfect example of what is going on 
now. We are totally over reliant on imported oil. What happens 
if the importation stops? How do we--without an Energy Bill and 
with our marginal oil wells running dry with no access to 
Federal lands, without ANWR where in the world are we going to 
get the fuel to run the Abrams tanks, the Bradley fighting 
vehicles and our fighters? And so that is why we cannot use the 
SPR for market manipulation. We have to use it for the 
strategic aspects of the defense of this country.
    And know Chairman Barton, we have been over this numerous 
times and everybody wants to dip into it. But it is there for 
national security----
    Mr. Stupak. Would you yield on that point?
    Mr. Shimkus. No. Because I only 5 minutes so I want to keep 
moving.
    Mr. Stupak. Just quickly. If it is for the war machine, as 
we all think, is there another war that we are fighting----
    Chairman Barton. The gentleman from Illinois has the time.
    Mr. Shimkus. Thank you.
    It was reported that there was cheering in the OPEC board 
room when the Senate killed ANWR and Clinton also vetoed it in 
1995. Killing ANWR should be viewed as a 1 billion barrel per 
day additional crude oil to the United States.
    High prices are a simple result of supply and demand. If 
you want to stop the cheering in the OPEC board rooms, do you 
not think, Mr. Secretary, that we would: (1) Want to open up 
our country to exploration in ANWR and do you not think we 
really want to pass an energy bill?
    Mr. Abraham. Yes, I do. Congressman Upton actually said it 
very well a few minutes ago when he talked about the 
consequence of us not taking actions. And the signal that I 
think is sent when that happens is a strong signal. I think it 
is interpreted that we are not willing to do things that we 
have to do to be more on the right track in terms of energy. 
And whether it is the ANWR or it is the comprehensive bill 
itself, I think it gives other people a sense that we are not 
going to prepare ourselves.
    And so, obviously, for a variety of reasons that deal with 
the substance of that bill, I think it needs to be passed. And, 
obviously, this bill does not include ANWR, but we have made 
that case many, many times. People, some discount how important 
it is. But, again, as Chairman Barton I think indicated, we are 
talking about a million barrels a day potentially after it is 
up and fully developed. We are talking about today OPEC 
reducing production, if they actually do it, of a million 
barrels a day as something we find undesirable. We are talking 
about ANWR, that is a million barrels a day as well.
    Mr. Stupak. Thank you, Mr. Secretary.
    And the last thing I want to mention is, and we have talked 
numerous times and I want to do it also publicly, we have met 
with the Assistant Secretary for Fossil Mr. Maddox. FutureGen 
is a huge provision. It sends all the right schedules based 
upon the debate we just were talking about; getting clean 
burning fuels and being able to have our own supply of energy 
resources.
    So with that, there is going to be really a handful of 
States that are really going to be competitive. I would like 
your assurances that we are going to make a real scientific 
geological research on really working with the consortium on 
deciding of FutureGen.
    Mr. Abraham. Well, we will. And, obviously, the consortium 
will play a pretty key role in the citing issue as well, as you 
know. I mean, this is the way the process works. As I said, 
there is no really more exciting in my judgment clean coal 
project than that one, and we are looking forward to moving it 
ahead.
    Mr. Stupak. Thank you.
    I yield back, Mr. Chairman.
    Chairman Barton. Thank the gentleman.
    The gentleman from Texas, Mr. Green is recognized.
    Mr. Green. Thank you, Mr. Chairman.
    And, again, thank you for your patience, Mr. Secretary. And 
let me just say on my side of the aisle, I find it amazing that 
we are blaming OPEC for lowering their allowable, but yet we 
are buying back leases in California. Even in the Great Lakes, 
Canada produces natural gas but we do not produce it on the 
U.S. waters. We cannot even build windmills in Massachusetts 
and add on the eastern Gulf of Mexico that has some very 
productive area that we are taking off the shelf.
    So all these people complaining about OPEC maybe ought to 
look in our back yard and see how we can deal with it in our 
domestic product. That is typical from a Texas, I admit. And 
let me bring something else up that you may hear unusual from a 
Texan, is the high natural gas prices.
    For years we loved them. But in all honesty, we have a 
problem in our country because our success with natural gas. It 
is cleaner burning, not only for heating our homes and cooling 
our homes, but also with the prices for the chemical industry. 
And our major problem in the chemical manufacturing base is our 
consumers--and also our consumers gas furnaces.
    Our energy legislation would help, but frankly I wanted the 
Energy Bill to do much more for domestic production.
    Let me ask about the one idea is the drilling technologies. 
And we had some things in the Energy Bill to help us not put as 
many holes in the ground and yet find as much product. And yet 
I see the administration in their request for funding for DOE 
cut oil and gas programs overall by 10 percent in the 2005 
budget, and particularly important the petroleum exploration 
and the production of research program was cut by about 84 
percent in the administration's proposal.
    I want to see what we can again because, again, I believe 
we ought to--if you want to fight OPEC, then let us produce 
energy locally instead of having it be imported, rather it be 
oil now or natural gas in the future.
    Mr. Abraham. Well, first of all, I share your view. There 
is different opinion on a lot of these issues. And I am not 
here today to try to persuade people on another side of some of 
these debates that they are wrong. That debate will continue 
and we will have that at another time. But when you do, there 
are a lot of factors out there. And when you constrain your 
ability to produce at home, whether it is gas or oil, it 
obviously has an impact. When you have a set of rules and 
regulations in place that have effectively discouraged the 
development of a new refinery in this country for 30 years, 
that impacts on price, it impacts on our ability to--especially 
when we have so many different fuel types. And that is a 
factor, too.
    I think your points are very well taken.
    I will just comment on the oil and gas budget, if I could. 
One of the things which does take place within the 
administration is an annual evaluation of the effectiveness of 
the various research and develop programs within each 
department.
    For 2 years in a row the R&D program for oil and gas has 
received an ineffective evaluation by Department of Management 
and Budget. And let me say that there are--we have a variety of 
grades, including adequate and--although we have superior, but 
this is the one area really in my Department that just has not 
received those grades, of any minimal level of effectiveness.
    I am not sure I say that totally share that view, but that 
is the grade that they have received. So we are in the process 
of trying to retool and get these programs into a category 
where they would be easier for us to come to Congress and the 
American people and say that we want more support. Because it 
is kind of hard. I feel uncomfortable asking for budget for 
programs that receive those ratings that is higher than I did 
last year. It just would be hard, in my judgment, to make a 
case for that.
    Mr. Green. Well, Mr. Secretary, I am almost out. I have 1 
minute left.
    And I agree, but I want to make sure because we spend a lot 
on research in our country. And even though I want a program to 
be effective, but I also want to make sure we continue to do 
that research so we can get more bang out of our buck. And 
Department of Energy has a purpose for that, but for the 
research and again with the decreasing supply.
    Mr. Abraham. I agree.
    Mr. Green. Let in my last 40 seconds talk about the filling 
of the SPR. I have concern about that. One, with the higher 
price we are paying for filling the SPR. My goal for many years 
was to try and use the SPR when the oil was $10 a barrel and so 
we could take care of some our producers who are very low end 
producers, our shipper wells, to keep them in business because 
they were shut in those wells at $10 a barrel. And, granted, it 
is created for national security. But on the other hand, we 
need to--hopefully we would fill it when the prices are low and 
then use it when the prices are high.
    Mr. Abraham. Well, I appreciate it. I know others in this 
committee share that view.
    Just to clarify, Mr. Chairman, for the record that this 
reserve is a national security reserve to make it possible if 
there is a disruption in supply to this country to give the 
people in America access to oil. It is not to fuel a war 
machine. It is not to fight a war. It is to protect the 
American consumers.
    And, again, if we lived in a world that was trouble free, 
it would certainly be the right thing to do to weigh--and in 
fact, the Department has in the pre-9/11 period been very, I 
think, effective at trying to buy at the right times. But the 
President, and we all have made a decision, that the national 
security requirements of having this filled dictated moving 
ahead.
    We did cease deliveries for a while last year when there 
was a disruption when Venezuela had their strike. But we do 
believe having the reserve filled is critical at a timeframe 
that we have set.
    And I would also note I think in the Energy Bill Congress 
passed that the Congress established a 1 billion rather than 
700 million barrel capacity as an authorization. And that may, 
obviously, if an Energy Bill passes be something for us to 
consider at that point.
    Chairman Barton. The gentleman's time has expired.
    Before I recognize the gentlelady from New Mexico, I want 
to make the Secretary perfectly understand that as chairman of 
this committee I do not support using the Strategic Petroleum 
Reserve to manipulate prices. That it is not its purpose. I 
totally support the President and your position that it is a 
Strategic Petroleum Reserve. And under the law we do not have 
severe supply disruption that effects the national security 
interest of the United States of America so we should not be 
releasing oil from the Reserve.
    I have been consistent in that policy. I was consistent in 
berating the Clinton Administration when they did release some 
of the oil, a small amount, I think 8 million barrels in the 
year 2000.
    I think you are hearing from a majority on both sides of 
the aisle today, though, that the practice of continuing to 
fill the Reserve with royalty and kind, while certainly you are 
not buying it, you are only accepting oil, that oil could be 
sold and those proceeds go to the general revenue, or for what 
other purpose the President and the Congress would agree. That 
would have a moderating, albeit perhaps minimum moderating 
influence on prices.
    So the debate is not about taking oil from the Reserve. The 
debate is about whether we should continue to fill it as has 
been pointed out repeatedly. Mr. Green just said when prices 
are low, buy and fill it up. When prices are high, take the 
royalty as cash and if nothing else, reduce the deficit.
    But we support the President's decision not to.
    Mr. Abraham. Well, again, the value of reducing the deficit 
is not one we discount or find of low priority. But in a world 
where we are virtually all the time these days, we see evidence 
of terror, we see concerns about stability in oil producing 
parts of the world. It is our view that the national security 
priorities here outweigh the revenue gaining opportunities at 
this time.
    Chairman Barton. I understand.
    Mr. Abraham. And I know others have different views. But 
all I can say is this: If something did happen and that reserve 
is not filled, and we need it, I think all of us are going to 
feel that we should have done it. And that is our goal.
    Chairman Barton. And we have the authorization to expand 
the Reserve to 1 billion barrels because of Mr. Green and Mr. 
Barton and Mr. Hall and I think everybody on this committee on 
both sides of the aisle. So we are totally with you on that.
    Ms. Wilson?
    Ms. Wilson. Thank you, Mr. Chairman. Like others on this 
committee, I support a balanced long term energy plan for this 
country that reduces our reliance on foreign supply and that 
increases conservation and protects the land that we love.
    I do find occasionally this morning that I felt like I was 
not in the United States, but in wonderland. Because you, Mr. 
Secretary, were being criticized for not jawboning your 
counterparts half way around the world, I do not think that 
begging is a substitute for an energy policy. And my colleague 
from Massachusetts would not even have to make a long distance 
call to jawbone some of his colleagues in the U.S. Senate so 
that we would not have to go hat in hand to OPEC to provide for 
our energy needs. It is amazing to me that we have 27 United 
States Senators writing to the President of the United States 
who oppose an energy policy and are holding it up with a 
filibuster saying you have to do more to have OPEC turn on the 
spigot. Well, let us change our policies so that we do not have 
to be over a barrel with OPEC.
    I wanted to ask you, Mr. Secretary, some questions about 
natural gas in this country. As you know, 10 percent of the 
natural gas used in American comes from the State of New 
Mexico. And I was talking to a head of an exploration company 
recently. He made a comment that was probably sadly true. He 
has exploration all over the United States, but also overseas. 
And he said that when they assess political risk for 
explorations the top area of political risk is actually on 
United States Federal lands. They would much rather explore 
overseas because there is lower political risk even in 
countries that we would all think are largely unstable.
    This has a huge impact on our economy and on jobs 
potentially moving overseas to be closer to sources of natural 
gas to make fertilizer or packing materials, or glass or 
textiles or chemicals or pharmacueticals. I worry very much 
about the cost of natural gas being driven up by lack of access 
to Federal lands.
    I wanted to ask you what are you doing, both yourself and 
with your colleagues on the Cabinet, to ease access to Federal 
lands and what do we as a Congress need to do to make sure that 
we have adequate supplies of natural gas? All of us are 
encouraging natural gas use, but not easing access to the 
supplies.
    Mr. Abraham. Well, first of all, you have identified one of 
the challenges. And I referenced it before when I said that we 
have with regard to natural gas simultaneously regulated 
ourselves in the direction of greater demand and at the same 
time, we have through everything through land use planning 
issues, roadless areas, BLM wilderness issues, Endangered 
Species Act; a variety of things that have had an impact on 
where we can produce. And these are debates tha are probably 
going to continue here on the Hill for a long time, but we 
ought to be cognizant of the implications. And that is why we 
are trying to diversify the sources of energy, even as we are 
also trying to make it possible for more natural gas production 
here.
    One of the things we have been working on is to try to 
expedite the permitting process. That is not in our Department, 
obviously. It is over in Interior, and I know that they have 
been making progress in terms of trying to make the permit 
process as comprehensive as it is supposed to be, but conducted 
in a timeframe that allows for people to make the decision in 
terms of moving forward and investing in these kinds of 
project. So that is, I know, a priority of theirs. I am sure 
they have other things that they are engaged in in this area, 
and maybe for the record I will seek some input from them to 
address this as well.
    Ms. Wilson. Thank you.
    The other question I had concerned your budget and the 
advanced fuel cycle initiative. Of course, this is the 
initiative that looks at nuclear fuel cycles, both intermediate 
and long-term, that will reduce the amount of storage we need 
for spent fuel, as well as helping to reduce the potential for 
proliferation. And you reduced it pretty significantly in your 
budget and I wondered why?
    Mr. Abraham. Well, it does not reflect a lack of interest 
in this area. We did, however, because in putting this budget 
together we had a lot of tough choices to make, put more focus 
on the generation 4 nuclear reactor program, because we thought 
that that had at this time an area where we needed to increase 
our funding, to try to move in the direction of working with 
our international partners on the development of what we see as 
the next step in terms of nuclear energy in this country.
    One of the things that we are interested in is developing a 
new fourth generation design for reactors that would be melt 
down proof and safer and more proliferation resistent. And so 
we sort of shifted some monies in that direction from some 
other programs.
    We think that the advance fuel cycle program is important. 
We will continue to advocate it, and that is why we launched it 
in the first place but that is really the choice that we made.
    Ms. Wilson. Thank you, Mr. Chairman.
    Chairman Barton. Thank you. The gentlelady's time has 
expired.
    The gentlelady from Missouri, Ms. McCarthy is recognized.
    Ms. McCarthy. Thank you very much, Mr. Chairman Mr. 
Secretary, I wanted to acknowledge your statement concerning 
your pride in DOE employees working in facilities around the 
country. And thank you for visiting my DOE Kansas City plant 
run by Honeywell. I share your pride in the 2800 hard working 
men and women in the plant and the good work that they do for 
the country.
    Mr. Secretary, the Kyoto Protocol was negotiated by more 
than 160 nations in December 1997, and I was there as part of a 
bipartisan congressional delegation.
    I wondered, I've been closely involved in this issue since 
my time in the Missouri legislature, and I could not help but 
notice that there is little mention of global warming issues in 
your testimony or your budget. The request of 1.2 percent 
increase in efficiency in renewables and 1.2 percent increase 
in funding for science and technology does not suggest any 
priority for homeland security matters, if nothing else, making 
us more energy independent. So I wondered if you would share 
with us what the administration and you, what steps you are 
taking in order to wean us from the traditional fuels on which 
we rely internationally and more on our indigenous resources 
that will give us some homeland security for the future?
    Mr. Abraham. Well, let me talk generally about our view on 
these issues that relate to green gas emissions and how we have 
tried to address them.
    First and foremost, as you know, the President established 
a very robust objective in terms of carbon intensity reduction 
over the next 10 years starting in 2002 for the goal of 
reducing our carbon intensity--or increasing the intensity, 
improving the carbon intensity by 18 percent. That is a very 
ambitious goal.
    Ms. McCarthy. Is that part of the 1.2 percent increase in 
efficiency in renewables in the budget or----
    Mr. Abraham. No, no, no. That is the amount of carbon 
produced by each----
    Ms. McCarthy. I know that, but I am looking at a budget. I 
am wondering where in the budget that falls? Is it in the 
science and technology 1.2 percent----
    Mr. Abraham. Well, that is the standard. How we achieve it 
is included in a variety of things in the budget. Let me talk 
about them.
    Ms. McCarthy. Thank you, sir. Appreciate that.
    Mr. Abraham. The hydrogen research program, which I talked 
about at great length earlier, is designed to try to transition 
us from the use of internal combustion engines as the operating 
system for motor vehicles to----
    Ms. McCarthy. Yes. And, Mr. Secretary, there is some 
concern in the scientific community about how much energy it 
takes to produce the hydrogen relief. And so that is a concern.
    Mr. Abraham. The well to wheels differential in terms of 
greenhouse gas omissions is about a 60 percent increase if we 
used as a feed stock, natural gas. We intend to use other feed 
stocks as well. And the efficiency is a 50 percent well to 
wheels improvement in efficiency. And that is if we use natural 
gas.
    If you look at our budget, the largest share of our 
hydrogen production budget for research as to what would be the 
best sources, actually using renewable energy----
    Ms. McCarthy. Other countries seem to have done the 
research for us in many of these areas on renewables. So I 
guess I will go back to my question: The request is a mere 1.2 
percent increase for efficiency in renewables and a mere 1.2 
percent increase for science and technology. You are requesting 
a 12.5 percent increase in funding to modernize privately owned 
and operated electricity delivery systems for more reliability. 
I am not arguing that point. The grid does need modernization, 
but it is privately owned. I just wonder if you would speak 
to----
    Mr. Abraham. Not all privately owned, but----
    Ms. McCarthy. I wonder if you would speak to how we can 
become more secure as a Nation on indigenous energies.
    Mr. Abraham. In this budget from the standpoint of climate 
issues we are proposing over the next 5 years a $1.7 billion 
investment in hydrogen. We are investing $2 billion over 10 
years in clean coal technology. We are investing $900 million 
plus or from the government side $620 million in the FutureGen 
program. All of which are designed to address these 
environmental and climate issues.
    The cumulative package of climate science work in the 
Department of Commerce, in our Department and climate related 
R&D over just the next 5 years dwarfs what the rest of the 
world is doing combined.
    And one of the things I can tell you I am very excited 
about is we have put together two international consortia: one 
on carbon sequestration, one on hydrogen where all the 
countries that you have referenced, those who are interested 
and many of whom who are Kyoto signatories are joining us to 
stretch this research effort any further.
    But I tell you what, I am very proud whenever we have these 
meetings because when I talk about what the United States 
research investment in GHG related technology is, everybody 
else says ``Gee, I wish we were doing that much.''
    In my judgment, the progress is going to be--there are only 
two ways we are going to address effectively the issue of 
greenhouse gas emissions. We are either going to develop these 
technologies or we are going to see economics slump because the 
only choice you have got is to do less in your country or find 
a way to do what we want to do to build our economies in a way 
that does not emit these----
    Ms. McCarthy. I know we are running out of time, Mr. 
Secretary.
    I really appreciate your response and hope you will also 
consider carbon trading in that package in the future.
    And, Mr. Chairman, I yield back.
    Chairman Barton. Thank you. Thank the gentlelady from 
Missouri.
    The gentleman from Arizona, Mr. Shadegg, the distinguished 
Majority Whip is recognized for 5 minutes.
    Mr Shadegg. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for being here. As I said in my 
opening statement, I appreciate your comprehensive energy 
policy, but because of the comments of some of my colleagues 
from Michigan and several other States focusing on the gasoline 
issue that confronts us right now, I would like to focus my 
question on the question of gasoline prices and gasoline 
supply.
    In the Arizona Republic, my home paper, an interesting 
letter appeared yesterday. We have a gasoline price problem in 
Arizona right now. Gasoline prices in my District are about 
$1.95 a gallon. I drive two cars that take too much gas. But I 
thought this point was well taken. He wrote that in the fall of 
1985 gasoline cost $1.19 a gallon. According to the American 
Institute for Economic Research costs of living calculator, a 
$1.19 in 1985 is equal to $2.05 in 2004. Basically his point is 
we may be unhappy with the gasoline prices right now, and I 
certainly am, but that in point of fact it has not gone up as 
much as under an inflation analysis as it should have.
    Have you looked at that issue and is that your consensus?
    Mr. Abraham. Sure. And a large part of it is tax, as you 
know. Notwithstanding that on a inflation adjusted basis 
gasoline prices have done quite well compared to other 
commodities, including especially liquid commodities. We are 
concerned about these prices, as you are, which is why we are 
trying to look at short, mid and long term efforts. That is why 
we are working on an international basis to try to expand the 
trading opportunities we have to bring oil products here. Why 
we are looking in the mid term on things like ANWR. Why we are 
looking in the longer term on hydrogen. Because we want to get 
ourselves out of a situation which the dependence and the 
prices are, in fact, in any way spiking in fashion that hurts 
American taxpayers.
    Mr Shadegg. I want to turn next to this issue of the 
Strategic Petroleum Reserve. My colleague, the chairman of the 
committee, discusses articulately when you ought to be buying. 
But you have been beaten up today for the fact that you are 
buying and that the implication politically, at least, is that 
you ought not to be buying, you ought to be selling.
    My information says that the Clinton Administration in 2000 
sold 8 million barrels out of the Reserve to deal with a price 
issue. Do you happen to know how much that effected price?
    Mr. Abraham. Well, I think it depended. In the immediate 
wake of that, I think it was a total of 30 million either 
traded or sold. The immediate reaction was a drop of several 
dollars----
    Mr. Shadegg. No. My understanding is the overall price was 
.01 per gallon.
    Mr. Abraham. Well, I am not sure. I would have to check the 
data. But it corrected fairly quickly to a smaller amount.
    But there is no question. I mean, if you took oil from the 
Reserve and released it, if your goal is price--is to 
manipulate price, you can do it to some extent. But that is not 
what the Reserve is for. And as I have tried to emphasize 
today, Mr. Chairman, we believe in the era against the 
challenges we have internationally that the supply of oil to 
this country might be disrupted at some point. And if it was, 
we need to have the maximum ability to respond.
    Mr. Shadegg. Well, I would simply like to point out that 
you can only effect it by one penny a gallon, that seems to me 
to be a pretty insignificant amount to tradeoff for strategic.
    Mr. Abraham. Right.
    Mr. Shadegg. I have got some other questions I want to get 
to before I run out of time.
    It seems to me that you mentioned to it and my constituents 
are not very cognizant of it, but you mentioned the effect of 
increased demand by China on the oil produced in this world. I 
guess I would like to have you address that issue, and then I 
want to ask one more question if I might.
    Mr. Abraham. Right. There are a lot of factors that effect 
the price of gasoline and oil. I mean, we have talked today a 
lot about OPEC, obviously. But the demand in the world is going 
up. U.S. economy has been stronger, so just to put this in 
perspective, worldwide production today is 3 million barrels 
more per day than it was a year ago.
    One of the fundamental disagreement we have I think with 
OPEC is that we see demand continuing to escalate and at a 
higher level then at least they have publicly indicated they 
view it to be. And China and Asia are a major part of that 
increase. It is not just in the United States. Their economy 
and really their society is evolving into one in which more and 
more motor vehicles and other uses of oil are occurring. And 
that is not going to change. So I think it will continue----
    Mr. Shadegg. One of my colleagues, Mr. Markey said that he 
viewed OPEC as tipping upside down the American consumer and 
shaking us, and I think extorting money from us was the essence 
of his comment. It seems to me that many people are focused on 
ANWR as the place where we are not producing oil now. But it 
seems to me an argument can be made that many other policies of 
the United States where we preclude production in many other 
places; my colleague from New Mexico just talked about Federal 
lands. I guess I would like you to cite for me some of the 
places where we could be producing but we are simply not, both 
oil and natural gas.
    Mr. Abraham. Right. Well, obviously, there is restrictions 
on exploration off shore, as you know, that mostly effects gas, 
a little bit of oil. There are a lot of other things that go 
into this equation.
    You know that three major States effected an MTBE ban that 
went into effect in January of this year, and that has 
obviously had an impact on price.
    The complicated questions that relate to the rules and 
regulations for refinery expansion has kept I think a great 
deal of refinery capacity from being developed. The investments 
there have been held up. We have attempted to address it by 
clarifying these new source review rules, as you know. And that 
is hung up in court for maybe a long time, I do not know. But 
all of this combines.
    And I realize, as I have said repeatedly, there is a lot of 
debate on these issues but every one of these is a part of the 
challenge. And if you are constraining either the refining 
ability, the production off shore, the production in ANWR; all 
of these things on one side of the equation while your economy 
and Nation grow, regardless of what is going on anywhere else 
in the world, it puts a strain on the market.
    And today inventories, just to compare, for oil and 
gasoline, commercial inventories, are 16 million barrels higher 
that they were a year ago. And yet because of demand increases, 
the market is tighter. And we have to recognize that is a 
positive thing that we have a growing economy. But we have to 
meet these challenges. In the mid and long term, I think there 
are ways like I have described, hydrogen for example, that we 
think will be the alternative. But that does not, obviously, 
mean we have that available for tomorrow.
    Chairman Barton. The gentleman's time has expired.
    Mr. Shadegg. Thank you.
    Chairman Barton. The gentlelady from California, Ms. Capps 
recognized.
    Ms. Capps. Thank you, Mr. Chairman.
    Secretary Abraham, I would like to continue this 
conversation about gasoline prices, if we may.
    On Tuesday, White House spokesman Scott McClellan talked 
about the President's Energy Bill which is pending before 
Congress, and he said ``We would not be in this situation right 
now if Congress had acted on what the President had proposed 3 
years ago.''
    For those of us who have worked on the Energy Bill, this is 
a baffling statement, and I want to ask you if you believe that 
gasoline prices would be lower if Congress had passed the 
Republican Energy Bill?
    Mr. Abraham. Well, his plan, the President's plan which you 
referred to which included a variety of components I think 
would have clearly made a different. And let me just--you know, 
there is the renewable fuels provision, the hydrogen 
provisions----
    Ms. Capps. By now we would be seeing lower----
    Mr. Abraham. I am just talking about the components that 
will make a comment here.
    Ms. Capps. Yes.
    Mr. Abraham. And then I want to culminate with one, the 
boutique fuels provisions that are in the bill I think are 
important. An ANWR, obviously, we have talked about. But as I 
said earlier, and Congressman Upton said it better than me, 
there really is I think a question of what the message is if 
you do not do these things. And the message we have sent, 
whether it was on the decisions that related to ANWR the 1990's 
or that related to the Energy Bill now, is a message that has I 
think directly impacted other countries' decisions in terms of 
what they have done. And I think it has had an impact on 
gasoline prices.
    Ms. Capps. Well, let me just follow up by saying that the 
Department of Energy's Information Administration has published 
an analysis of the Energy Bill in February of this year, and I 
am sure you are aware of some of the findings. They found that 
this Republican Energy Bill would increase gasoline prices, not 
reduce them. In fact, California's prices would increase an 
additional 8 cents per gallon if this plan had been adopted. 
And I wonder if you have information that would suggest that 
this is incorrect?
    Mr. Abraham. The problems California confronts and is 
challenged by we have talked about a little bit already. You 
have unique constraints there that, you know----
    Ms. Capps. But this report was about the Nation's gasoline 
prices.
    Mr. Abraham. As I have said, I believe if we had shown our 
seriousness of purpose in moving ahead and beginning to put our 
energy security on a track to be addressed, if we had done that 
in the right timeframe particularly if we had done it as early 
as the 1995 veto on ANWR, but even since 2001 that you would 
have an impact----
    Ms. Capps. Do you think I could an answer to the question 
do--you think this is incorrect?
    Mr. Abraham. I do not think that that is the only thing 
that would matter because I believe the broader question of the 
message that we have sent has had a negative impact in terms of 
other decisions that affect the price.
    Ms. Capps. But you are not disputing this?
    Mr. Abraham. I do not dispute the EIA analyses of anything.
    Ms. Capps. Okay. All right.
    Mr. Abraham. They are our agency that we look to, and I 
have quoted them here today.
    Ms. Capps. All right. I know you have.
    If I could continue again about one thing I brought up in 
my opening remarks, and that is the suggestion about ways to 
reduce gasoline prices, and one that I would like to ask you to 
consider since I am a representative from California. Since the 
beginning of this year the U.S. EPA has provided relief to both 
New Hampshire and Arizona from the Clean Air Act oxygenate 
requirements. This is an important step that provides these 
States with flexibility that could reduce gasoline costs for 
their consumers. However, the Environmental Protection Agency 
has not yet granted California's request for similar relief. 
And I have a letter from Governor Schwarzenegger which he has 
written to EPA asking for approval of this request, a 
bipartisan delegation has also requested it.
    This is what he said: ``Simply put, the Clean Air Act 
oxygen mandate slows environmental improvement, raises costs 
and is no longer required to ensure substantial and sustained 
ethanol use in California.''
    So my question to you with the last minute that I have is 
to obtain your assurance that you will bring this up with the 
President. California motorists, my constituents, are suffering 
due to the administration's neglect in this matter, and that 
could change today if you would take this issue to the 
President and urge him to focus on it and help California.
    Mr. Abraham. Well, let me say I am aware. I had occasion to 
be in California in February and I was immediately confronted 
with----
    Ms. Capps. Highest gas prices in the Nation.
    Mr. Abraham. And that was before other prices in other 
regions had gone up, and I know obviously what that means.
    I would be glad if you would make a copy of the letter 
available.
    Ms. Capps. Be happy to do it.
    Mr. Abraham. Or whatever additional issues you would like 
me to convey on, I will be happy to do that. It is my 
understanding that EPA is seriously looking at this request, 
and I would be happy to go to the White House but also to EPA 
to pass along these concerns and discuss them with them.
    Ms. Capps. Thank you very much.
    Mr. Abraham. Thank you.
    Ms. Capps. I yield back.
    Chairman Barton. We thank the gentlelady from California.
    The gentleman from California, Mr. Radanovich is 
recognized.
    Mr. Radanovich. Thank you, Mr. Chairman. Appreciate the 
yielding of time.
    And again, Mr. Secretary, welcome to the committee on the 
hearing.
    And I want applaud the suggestion from my colleague from 
California on the 2 percent oxygenate waiver. I think that is 
important from California, but also do need to stress that in 
California, you know, because we want to keep our environment 
clean we have a special fuel that changes three times out of 
the year, a boutique fuel without the ability to produce things 
because we have not had a refinery in California for the last 
25 years to produce the fuels. They are in short supply. And 
that is why I was out there a week ago and paid $2.39 a gallon 
for gas in my part of the State. So, you know, while we do need 
help from the administration, I do need to stress that 
California needs to increase not only its storage capacity, but 
its refining capacity in order to accommodate these boutique 
fuels at an economic price.
    But if I may, Mr. Secretary, I would like to talk about two 
other things. One very briefly would be the issue of biomass, 
especially in the central valley part of the United States 
where there is the potential for the development of fuels from 
this product.
    I am a little bit disappointed that the administration 
requests about $13 million less for biomass and biorefinery 
systems are indeed an issue. Can you explain the decrease?
    Mr. Abraham. Sure. Yes, in comparison to our request last 
year, it is actually an increase. One of the things that 
happened in the context of the biomass budget during the 
appropriations process was that substantial number of earmarked 
projects were included. And I am not going to make an editorial 
comment one way or another on earmarks. But those are not 
typically what we would put into our funding request to 
Congress. If you eliminate the earmarks, what you will see is a 
very substantial increase in terms of the budget we are 
proposing from the unearmarked appropriation from last time 
around.
    We view biomass research as a very important part of our 
renewable energy portfolio which we are working on. And 
certainly intend to fight hard to keep that budget as strong as 
we can.
    Mr. Radanovich. Okay. Thank you for that answer. Because, 
as you know, that the U.S. has required about 5 billion gallons 
extra of ethanol use over the next 8 years and in our system in 
California with storage and delivery mechanisms that's not 
available, so we do need alternate fuel research and funding to 
create the alternate fuels.
    If I may, though, too bring up one another issue and that 
is maybe you can tell me a bit about your opinion on the energy 
savings performance contract program and how it works? Because 
I know that this is supported by the administration as an 
energy saving enterprise and through the cost cutting efforts 
of the Senate we are having a problem.
    Mr. Abraham. Well it is a program which we think is a very 
valuable part of our Department, and I think it is a very 
positive program. We endorse it.
    The problem, as you probably know, is that the CBO as 
scored this a substantial scoring and, obviously, in the effort 
to try to get energy legislation moving ahead there is concern 
about its inclusion because it suddenly puts a pretty big price 
tag.
    OMB does not score this. And so there is a disagreement 
between those two agencies. But the fact that it has not been 
reauthorized is of concern to us because we think it is a 
program which we should have in the future. And I look forward 
to working, assuming an Energy Bill begins to move ahead here, 
to look to people to see if there is any way we can address it.
    Mr. Radanovich. Okay. The issue is not being able to 
account into the budget the saving aspects of this program, 
like the cost savings of it, is that not right?
    Mr. Abraham. Well, I think what my understanding is, yes, 
that is basically the issue is that there is now a scored cost 
for it which there had not been previously.
    Mr. Radanovich. Yes. Does the administration believe that 
this program saves taxpayers dollars and provides savings?
    Mr. Abraham. Yes, and I have expressed that in a number of 
hearings because I think it has wide support both in our 
administration and here on both sides of the aisle.
    Mr. Radanovich. Right. All right. Thank you, Mr. Secretary.
    Chairman Barton. The gentleman yield back the balance of 
his time.
    We are going to recognize the gentleman from Maine, Mr. 
Allen for 5 minutes.
    Mr. Allen. Thank you, Mr. Chairman.
    And, Mr. Secretary, thank you for being with us today.
    One of the reasons given for the rise in gasoline prices 
recently is that we have too many fuel blends in too many 
places.
    Back in the 107th Congress we saw a reasonable proposal 
with three key aspects to address this problem: (1) repeal the 
2 percent oxygenate requirement; (2) increase the use of 
ethanol, and; (3) ban MTBE nationwide.
    Now, this Congress has taken a different approach. We 
removed the MTBE ban, we added a direct subsidy to MTBE 
manufacturers and we added a liability waiver for MTBE. And 
since, by all accounts, these additions are a part, a large 
part of the problem in moving the Energy Bill forward, and with 
that I would just call your attention to New England.
    In New England every single Senator, Republican and 
Democrat, voted against the Energy Bill. Twenty of 22 Members 
of Congress from New England voted against the Energy Bill.
    So the question, Mr. Secretary, is light of all this does 
this administration support removing this poison pill MTBE, 
these provisions, from the legislation in order to improve its 
chances of passage?
    Mr. Abraham. We have not endorsed that provision. We have 
not taken a position on it. I recognize there are two 
different--I mean, when we are trying to get a bill through 
there are a lot of issues. We do not always take a position on 
every one. We have not taken one on that either in the energy 
plan or in the statements of administration position in part 
because we recognize we are going to have to try to work with 
both sides to work this out. We realize it is obviously been a 
significant part of the challenge to getting an energy bill 
passed.
    That said, we obviously do endorse the renewable fuels 
provisions that do in fact phaseout MTBE in the legislation.
    Mr. Allen. Thank you.
    Let me turn to a different subject. I worry sometimes about 
obsessions. Obsessions with missile defense or Iraq or tax cuts 
that seem to be to those who hold them, they make contrary 
information difficult to accept.
    Let me talk about the robust nuclear earth penetrator. I do 
not know that anyone else has brought this up. But in your 
fiscal 2005 budget you have dramatically increased the amount 
of money running out through 2009, $485 million over those 
years. And the budget documents show this program moving into 
what are called 6.3 activities which are development, 
engineering, completed warhead design in fiscal 2008 and so 
called 6.4 activities production, engineering, design adopted 
for production, manufacturer system created. And those are the 
shorthand in 2009.
    Mr. Abraham. Right.
    Mr. Allen. And a March 8 CRS report concluded that ``The 
fiscal year 2005 request document seems to cast serious doubt 
on assertions that RNEP is only a study.''
    Now can we ask North Korea and other countries not to 
develop nuclear weapons when we are developing a new nuclear 
weapon ourselves, it certainly looks like that's what we are 
doing, and when there is I would argue a very unlikely this is 
weapon that would ever used in the actual world? I understand a 
case can be made for one or two instances in which you might 
want to have it. But it is hard to imagine any President using 
a tactical nuclear weapon of this kind in the future. So why 
half a billion dollars to a program that is not likely to be 
used in the future?
    Mr. Abraham. Well, let me just start back with the nuclear 
posture view which Congress requested us to conduct. We 
conducted that and identified looking out what was thought were 
in the 21st century, the sorts of threats that would be 
confronted by the United States and what we thought needed to 
be done to address it. It called for a very significant number 
of changes in terms of the nuclear strategy as well as 
conventional weapon strategy, as well as other areas in the 
process.
    One of the things which emerged from that inquiry and was 
part of the nuclear posture review was the concern about hard 
deeply buried targets as a possible issue in terms of our need 
for capabilities to address in the 21st century. And what 
happened was this: The conclusion was that there might be a 
variety of ways to address this. And so research is being 
conducted both in our Department as well as in the Defense 
Department, some on this approach, the use of a nuclear weapons 
and some on conventional weapons.
    Mr. Allen. Mr. Secretary, my time is up. But would you 
agree this goes beyond merely studying the problem?
    Mr. Abraham. No. No, I would not. Let me tell you what we 
are doing. We are still doing the study. We were underfunded so 
the study is going to be--unless we are fully funded this year, 
we will not even finish the study in the timeframe we had.
    We are required, however, to produce in our budgets on 
these defense programs out year funding and we concluded that 
it was appropriate so that there would be no misunderstandings 
or accusations later that we were suppressing information to 
indicate what the costs would be if a decision was made to go 
to a 6.3 timeframe or the 6.3 level activity, engineering 
activity. That cannot happen unless Congress approves it, No. 
1.
    No. 2, we have not even finished the study to determine 
whether or not the modification of either the 61 or the 83 
would be appropriate as an effective device or the appropriate 
device. All of that will take place. There will be no movement 
to fund anything in the engineering phase without the 
appropriate action being taken that Congress has set up. But we 
are going to and wish to at least do the study to determine 
whether or not this is appropriate.
    And in terms of--all I would just say is that that is our 
job and we also feel it is our job under the law to produce the 
out year numbers in the event a decision by Congress were made 
to go forward so that that information would be done.
    Chairman Barton. Okay. The gentleman's time has expired.
    The gentleman from Indiana, Mr. Buyer is recognized for 5 
minutes.
    Mr. Buyer. Thank you.
    Mr. Secretary, No. 1, I concur with your nuclear posture 
review.
    No. 2, the development of our weapons systems are based on 
the threats, not only presently but that for which we depict 
over the horizon. When our enemies go deep with their 
manufacturing and the storage capacities of chemicals and 
biologicals and we know where they are, it is foolish for us 
not to figure out to access them and to destroy them. That is 
foolish. Not only for the protection of our country, but that 
of our allies.
    We know who those countries are, in particular Libya for 
example. No one should be surprised that Mr. Qaddafi, not only 
having watched what occurred in the Middle East and for the 
fact that this administration has taken the position to develop 
such a tactical nuclear device to go after these weapon systems 
is a wake up call to Qaddafi.
    So No. 1, anyone that wants further information with regard 
to the threats across the horizon, should contact their CIA and 
get the briefing.
    No. 2, I am going to ask this of you and I want you to 
think about it, and then I am going to tell you personal 
observation and experience. I would like for you to reflect, 
Mr. Secretary, on what your one, two, three is. When you look 
back and say all right what have been the positive 
contributions of the Department of Energy since you have held 
this position, I want to know what your one, two three is?
    Now I want to relay to you a personal observation and 
experience. My observation is is that as a country coming out 
of the 1973 oil embargo, that was our wake up call. I think 
President Carter did very well in his efforts to create the 
department for which you supervise. The country got away from 
the blueprint that Mr. Carter tried to steer for a country.
    During the post-Gulf War era our country being very 
narcissistic, which is part of our downside of our character, 
did not care about the recession in the Gulf States. In order 
to pay for infrastructure to run their own countries, they were 
chasing production all the way to $9 a barrel. You see, we did 
not care about that in our country. We got away from 
conservation. We went for the biggest, baddest unmanageable 
automobile to go down the road ad did not care about their 
plight.
    Now for a personal experience. With regard to the issue of 
job owning. As a subcommittee chairman of the Armed Services 
Committee, I was tasked to then meet with OPEC. The former 
chairman, who is a University of Michigan graduate is who I met 
with. This is what happened.
    I met with the gentleman to deliver a message in 1998, but 
this was the first time now that the Middle East States were 
able to get a hold of their economies. So what did they do? 
They decreased production. We had a huge spike in gasoline 
prices. The same furry that you hear today is what occurred in 
1998. So I go and meet with them. And I said here's the 
message. The United States provided for the peace and security 
of this region of the world. If you want to bring back an 
equilibrium price for oil, we would be more than happy to bring 
you to balance, but let us do this over time incrementally.
    Do you know what he said to me? He said to me this, I am 
going to paraphrase, but this is very close: He said 
Congressman, I could take every oil tanker in the world and 
send them to your shores, but you neither have the refinery 
capacity nor the storage capacity, nor the pipelines to get it 
to where you need. Nor do you do exploration and drilling 
domestically to care for your own country.
    Now, I assume you, Mr. Secretary, I did not like that 
message coming from OPEC. But what he was saying was look in 
the mirror.
    So your message to us that you want to engage and work with 
Congress for a national energy policy, I applaud your 
leadership. Because as a super power we need a broad based and 
balanced portfolio with regard to our sources. And so I want to 
compliment you.
    Now let me turn and please tell me what are your top three 
successes as Secretary.
    Mr. Abraham. At the risk of having a variety of assistant 
secretaries unhappy because I will have neglected something in 
their area, let me do this in two categories.
    On one side of our building our defense programs, I think 
we have accomplished two very important things. On the one 
hand, we have begun to rebuild both the infrastructure as well 
as restore the capabilities of our defense programs. We are 
making significant progress so that we can once again provide 
for the reliability, safety and security of our nuclear 
stockpile. And that meant refurbishing buildings that were 
breaking, it meant restoring capabilities that have been part 
of a lot of debates here on Capitol Hill ranging from the one 
we just had about RNEP to other important capabilities that we 
are looking at.
    In addition on the defense side of the building I mentioned 
in my earlier comments, we have made, I think, quite important 
progress in terms of accelerating and expanding our nuclear 
nonproliferation programs with Russia and have expanded that 
beyond Russia, the former Soviet Union states as well as the 
rest of the international community especially as it relates to 
radiological devices.
    On the other side of the building the energy science, 
environmental side, I am very pleased with the progress we have 
made on the technology R&D. I have mentioned today at great 
length the hydrogen program and the FutureGen program and 
others that I think are going to be transformational 
technologies, changing the way we produce and use energy in the 
21st century. And I am pleased that we are making good progress 
to take our program for cleaning up these weaponsites from one 
that is 70 years in duration to one that will be shorter so 
that the communities involved will have their nuclear waste 
remediation program done in the lifetime of people there today 
so those communities can move on in a positive fashion.
    So I think those are the ones that come to mind. Others I 
will remember and submit for the record----
    Chairman Barton. Thank you.
    The gentleman's time has expired.
    The gentleman from New York, Mr. Engel recognized for 5 
minutes.
    Mr. Engel. Thank you, Mr. Chairman.
    And welcome, Mr. Secretary. Usually having served in the 
Senate you can appreciate this. Usually when witnesses come 
they have to endure 3 minutes of opening statements from 
everyone and we cut it down by two-thirds for you.
    Mr. Abraham. I appreciate it very much.
    Mr. Engel. It is really good. I knew you would.
    Obviously, everyone's frustration is the fact that gasoline 
prices are going up sky high. OPEC made a decision to cut the 
production and all the newspapers and radio stations are all 
reporting that that means gas prices are going to go up even 
more. There is really anger out there on the streets. I am not 
telling you something, obviously, that you do not already know. 
But it is frustrating that we seem to be accepting this and not 
fighting back harder.
    I heard that the President was going to appeal to Kuwait 
and the UAE to see if we can reverse it. You know, we have 
other countries there such as Saudi Arabia which purports to be 
a great ally of the United States, but I think just sticks to 
us every chance it gets.
    We were told that one of the benefits of the invasion into 
Iraq would be that ultimately we would have more oil flowing. 
Iraq is far, far away from anything like that.
    I joined by colleague, as I mentioned in my opening 
statement, Mr. Goodlatte of dozens of other House members in 
both parties sending the White House a letter urging that the 
government put a temporary hold on the purchase of more oil for 
the Strategic Petroleum Reserve, and that has not been done.
    All these things sort of come together where perhaps in 
itself would not effect oil prices, but put together perhaps we 
could at least get the feeling that we are fighting back and we 
are pushing this back.
    I would like your comments on anything I said. And I want 
to just also add that I have an article here which I would like 
to ask the chairman for unanimous consent to put into the 
record.
    Chairman Barton. Without objection.
    Mr. Engel. Which says crude oil plunges on Senate Strategic 
Petroleum Reserve vote. And it says that New York crude oil 
futures fell after the U.S. Senate voted to sell oil intended 
for the Nation's Strategic Petroleum Reserve making more crude 
available to the Nation's refiners.
    Is that not their way that we could help to push down the 
price by using the Strategic Petroleum Reserve?
    Mr. Abraham. Well, let me say this, first of all I do not 
mean to be flip, but prices of oil actually fell yesterday 
after the OPEC announcement. And this marketplace is one I do 
not pretend to understand fully, but I know lots of different 
factors come into play.
    I will talk about the Reserve again. I mentioned it a few 
minutes ago, but I think it is important to reiterate where we 
are coming from here. Because this is a very legitimate 
question.
    We made a decision after 9/11 that the Reserve should be 
filled to its full capacity, and I was immediately in the wake 
of 9/11, I was hearing from people on both sides of the aisle, 
both political parties, lots of different--people strongly 
urging us to do that. And when we made the decision, the 
President directed me to fill this Reserve and he said figure 
out a way to do this that has the most minimal impact on the 
price of oil. We could have gone out and begun buying, 
literally buying oil and filling the Reserve as has sometimes 
been done. We did not do that. Instead, we decided to use--to 
transfer the oil that is owed us as part of the royalty 
payments that people pay for using Federal lands or offshore 
areas and slowly filling it at a rate 120 thousand barrels a 
day. It is going to take 3 years to put the 150 million barrels 
into the Reserve.
    Our Energy Information Administration has done a very 
detailed analysis of the impact on price. And they say if we 
were to cease the fill, if we were to defer the fill, it would 
have as much as 1 or even 2 cents per gallon impact maximum. 
And just to put that in perspective, when we did defer filling, 
that was pretty much the impact.
    But the question that we consistently have to address is is 
the national security value of doing this sufficiently 
important for us to keep doing it. And we have answered that 
yes, because in our judgment if there were a significant supply 
disruption in the world, if suddenly something happened 
somewhere, the American people do not need to be put in a 
position where we are not fully prepared to deal with it. And 
the best we can be is to have the full Reserve in place.
    And so that is the argument that we have made. And I think 
the national security issues here outweigh everything else, 
given the fact that the EIA estimate on price is that it would 
be, as I said, 1 to 2 cents maximum.
    Chairman Barton. The gentleman's----
    Mr. Engel. Mr. Chairman, I know my time is running out. But 
I just would like to commend the Secretary. If I could just 
have 10 seconds more for sponsoring the American Jewish 
Congress U.S. Department of Energy Conference on Energy and 
Dependence for Democracies that took place in Jerusalem, Israel 
last August. I think expanded cooperation with Israel on 
development of new energy technologies could provide 
substantial benefits to our own energy sector. So I wanted to 
throw that in.
    Thank you, Mr. Chairman.
    Mr. Abraham. And thank you. We thought that was a valuable 
conference.
    Chairman Barton. We thank you.
    Mr. Secretary, I am going to have to leave to give a 
speech. And I am going to turn the gavel over to Mr. Hall. But 
I want you to provide for the record any analysis that your 
Department has about the effect of the MTBE ban in the States 
that have implemented that ban on prices of gasoline in those 
States. You have mentioned in response to questions higher 
costs for gasoline in New York, Connecticut and California 
which possibly could be partly because of the ban of MTBE in 
those States.
    So, if you could provide that for the record, I would 
appreciate that.
    [The following was received for the record:]

    To date, 18 States have passed legislation to ban the use of methyl 
tertiary butyl ether (MTBE) in gasoline.\1\ California, New York, and 
Connecticut are most affected by the MTBE ban because of the amount of 
reformulated gasoline (RFG) used in those States that would need to 
substitute other gasoline blending components or additives for the 
MTBE. The Energy Information Administration (EIA) provided an analysis 
on the California gasoline price in 2003,\2\ which included an 
assessment of the MTBE ban and other factors contributing to the 2003 
gasoline price hikes in California. EIA also prepared a study last fall 
on the preparation for meeting the MTBE bans in New York and 
Connecticut.\3\ Neither study projected the price impacts on gasoline 
solely from the MTBE bans in those States because of the complexity of 
many other related issues. EIA's monthly updates of the Short-Term 
Energy Outlook (STEO) \4\ indicated that the high gasoline prices 
nationwide since last winter have been mainly the result of a 
combination of 1) high world oil prices, 2) historically low gasoline 
inventories, 3) strong gasoline demand due to a recovering economy, and 
4) more stringent low sulfur requirements for gasoline. At the national 
level, EIA provided in a recent study the price impacts of the proposed 
nationwide MTBE ban in the Conference Energy Bill (CEB) \5\ The study 
estimated that the net impact of a nationwide MTBE ban in 2015 would 
increase the average price by 1.8 cents per gallon for all gasoline and 
5.4 cents per gallon for the RFG, on top of the current 18-State MTBE 
bans. In addition, the termination of the ethanol tax credit in 2011 
would also add another 1.2 cents per gallon for all gasoline and 2.7 
cents per gallon for the RFG by 2015.
---------------------------------------------------------------------------
    \1\ California, Colorado, Connecticut, Illinois, Indiana, Iowa, 
Kansas, Kentucky, Maine, Michigan, Minnesota, Missouri, Nebraska, New 
York, Ohio, South Dakota, Washington, and Wisconsin.
    \2\ EIA, 2003 California Gasoline Price Study--Final Report, 
November 2003. http://www.eia.doe.gov/pub/oil_gas/petroleum/
analysis_publications/caprice/caprice.pdf
    \3\ EIA, Preparation for Meeting New York and Connecticut MTBE 
Bans, October 2003. http://www.eia.doe-gov/pub/oil_gas/petroleum/
analysis_publications/mtbebans/mtbebans.pdf
    \4\ EIA, Short-Term Energy Outlook--April 2004. http://
www.eia.doe.gov/steo
    \5\ EIA, Summary Impacts of Modeled Provisions of the 2003 
Conference Energy Bill, February 2004. http://www.eia.doe.gov/oiaf/
servicerpt/pceb/pdf/sroiaf(2004)02.pdf

    Mr. Abraham. We will be glad to look into it. I mentioned 
just that those things all have happened in this last couple of 
months, and there are many factors in play.
    Chairman Barton. I am going to turn----
    Mr. Shimkus. Mr. Chairman? Mr. Chairman, would you consider 
the benefits of ethanol as keeping prices down in that 
analysis?
    Chairman Barton. You can ask him for that if you wish. And, 
as you know, I support the compromise.
    Mr. Shimkus. We are a great team, Mr. Chairman. Thank you.
    Chairman Barton. So, we do appreciate your appearance 
today. And, again, I want to compliment you that you have--no I 
know there are other people. I am just going to leave. And 
before I go I want to compliment you on your openness and 
accessibility to the committee. It is appreciated.
    Mr. Abraham. Thank you, sir.
    Chairman Barton. I am going to turn the gavel over to Mr. 
Hall.
    I recognize Mr. Ferguson for 5 minutes.
    Mr. Ferguson. Thank you, Mr. Chairman.
    Thank you, Mr. Secretary, for being here and for sitting 
through a lengthy questioning. We appreciate your appearance, 
and certainly appreciate your leadership and the President and 
the administration's leadership on energy issues. It is not 
shocking, I guess, that politics sometimes seeps its way into 
the discussion and debate on these issues. You have been 
involved in politics for longer than I have been, so I am sure 
you understand and know how that works.
    We have heard some suggestions today by some that the 
energy policies of the Bush Administration have been 
unsuccessful. I would, of course, suggest that many of the 
energies polices of the Bush Administration have never made it 
into law. They have never actually had an opportunity to be 
implemented because of opposition by some on this committee, 
others in the House, many of our friends on the other side of 
the Capitol in the Senate, including Senator Kerry whose of 
course making--trying to score political points on these issues 
as well.
    And my friend from New York just said a couple of minutes 
ago that he suggested that you and the Energy Department and 
the administration are not fighting back hard enough against 
some of those who are, perhaps he feels not treating us fairly 
or in terms of defending American consumers and those in this 
country who may be being harmed by high oil prices or energy 
prices or efficiency or whatever else. I would suggest that 
those who are fighting against, maybe those who we have been 
fighting against are in this country.
    There are those in the Congress and those who have worked 
so hard to prevent an Energy Bill from passing, who have worked 
to prevent the energy policies of this administration from 
being implemented. Those are, unfortunately, the folks who end 
up fighting against as we are trying to work for the American 
consumer and others in this country.
    Mr. Secretary, I would just ask you to reflect if you would 
for a couple of minutes on, you know, there is a great deal of 
various recommendations as you know that you put together at 
the President's request back in 2001 that were incorporated in 
the various energy policies and legislative initiatives that 
have passed the Congress, that have passed this House and this 
committee. I am interested in particular in electricity. 
Obviously this began--it is not too long ago that we had 
rolling blackouts in California, we had a major blackout in the 
northeast in my area of the country last year. How our 
electricity infrastructure in this country would benefit from 
the proposals contained within the energy legislation which you 
had supported last year? And second, on of course the oil 
situation that we face now with gas prices.
    Clearly we know that raising gas taxes is not a part of the 
equation of helping to afford gas prices at the pump. We heard 
lots of examples today of high gas prices, some have even 
supported raising gas taxes by .50 a gallon which to me seems 
exactly the wrong direction that we ought to be going in this 
country.
    If you would just reflect for a couple of minutes on how 
simply passing the Energy Bill which has been stymied in the 
Congress, how would it impact these two important areas?
    Mr. Abraham. Well, first let me just say I think that the 
best way to fight back is the term that was last used, is for 
Congress to pass an Energy Bill for us to demonstrate our 
resolve in addressing our energy security challenges. And I 
think, among other things, the world would recognize that we 
are going to do the right things that we need to do.
    I will tell you, there is no question in my mind that 
demonstrating that we are going to build vehicles that run on 
hydrogen will send a pretty strong signal to the rest of world 
including countries that are producers.
    And just to address the two things you mentioned 
specifically. First, we do not support an increase in gasoline 
taxes. The administration I think very clearly does not support 
that proposal.
    I think the provisions, a variety of provisions on 
electricity that are contained in the Energy Bills are 
important.
    Congressman Dingell earlier made an excellent, I think, 
discussion about the reliability provisions. We need to have 
enforceable reliability standards in place so that we can keep 
the folks who are involved in the use of the electricity grid 
operating in a high level of conduct and be able to enforce 
anyone who departs from that. And I do not want to imply a lot 
of people are, but obviously we did have the blackout study.
    We also need to maintain diversity in terms of the 
electricity production side of the equation.
    I mentioned earlier my concerns about natural gas, demand 
going up, price accordingly. We saw today in the papers an 
indication that just alone is beginning to shift attention back 
to coal. We need to diversities of all these fuels to produce 
electricity.
    We also need to recognize that the transmission grid needs 
to work, and not just a reliable fashion but with the most 
modern technology.
    And I am excited about a lot of the provisions in our 
energy budget this year that would address some of these 
issues. We have got some great work going on in our 
transmission and distribution division on super conductivity, 
on provisions that would allow us to engage in research to both 
increase the soft as well as the hardware components efficiency 
and intelligence so that we can modernize the grid.
    Mr. Chairman, thank you.
    Mr. Ferguson. My time is up.
    Thank you, Mr. Secretary, for your leadership.
    Thank you, Mr. Chairman.
    Mr. Hall [presiding]. To Secretary, you can filibuster your 
playing schedule if you want to.
    The Chair is going to recognize the gentleman from Florida 
for 5 minutes or less.
    Mr. Stupak. Or less? All right. Thank you, Mr. Chairman.
    Well, when you come down to almost the last speaker, Mr. 
Secretary, everything has been said. But I notice on the first 
page of your testimony that you are leading the pack with 
management improvement. And I think perhaps you have had an 
opportunity to talk about, but your agency is over $24 billion 
a year from the staff information we have. And while the cost 
of energy is going up, it appears the cost of your Department 
is going up, too. Now, obviously, you can make the argument for 
homeland security and research and could go on and on. But 
there has been some prodigious increases in the Department of 
Energy, and we have seen that. This is a department that we did 
not even have before President Jimmy Carter.
    In looking through the different increases, you are asking 
for a 4.5 percent increase overall, but in the area of 
corporate management you are asking for a 4.6 percent increase. 
In the inspector general area you are asking for a 5.8 percent 
increase.
    I guess what I would like to hear from you is why you need 
such large increases? We had inflation at 1.8 percent. Surely 
with the Department doing over $24 billion a year if you are 
asking for large increases in certain areas, I think it would 
be important that you justify those areas.
    Now, I know in other areas, you have environment, you have 
an 9.5 percent increase. You have also a 12.5 percent in 
electric transmission and distribution. Now, perhaps, that is 
one that we could all agree upon. Maybe the environment, I do 
not know. But with corporate management, I assume this is 
something that could really be more efficient. So I see almost 
a 6 percent--almost 5 percent increase of these. I thought I 
would give you an opportunity to explain it.
    Mr. Abraham. Well, thank you. I am glad to finish on that 
topic.
    Part of it is, I think, just the difference between--you 
know, we have been consistently seeking certain levels and 
Congress topically does not give us what we want in this area, 
but we have resubmitted at approximately the same levels that 
we have been asking for previously. And we fully expect during 
the process of this budget that we will see some adjustment in 
our requests and what Congress wants.
    On the other hand, we also have found that there are some 
of these areas, and inspector general is one and probably one 
of the few Cabinet agencies maybe that does not mind the work. 
In fact works--very much appreciates the work of the inspector 
general. We do not feel we should be underfunding that 
independent analysis that we receive that helped us refine our 
programs better.
    We have also in some instances with regard to corporate 
management been able to consolidate work in the management 
level at the top.
    Mr. Stupak. Well, would that not mean your request would be 
lower if you have consolidated?
    Mr. Abraham. But what I mean is that where we have been 
able to take work that was being spread out across the field 
and reduce the total cost of management by improving the 
quality of the work and the work being done at the Department 
itself.
    Mr. Stupak. Are any of your departments underfunded? In 
other words, are you asking for money that is just the cost of 
living or are they increasing?
    Mr. Abraham. No. I mean, some of our programs, as I was 
castigated about earlier, have been significantly reduced in 
funding from the levels Congress has suggested.
    Mr. Stupak. Okay.
    Mr. Abraham. One that we talked about earlier this morning 
was oil and gas research where because the evaluations of those 
programs was that they were ineffective, we have come in with a 
much lower budget than the previously enacted level.
    But we do have some things. Just to put something in 
perspective, Congressman, in several of the program areas, 
Yucca Mountain being a principal example, are ones where we are 
at the point where we are moving from a lot of research and 
design work to actually beginning the----
    Mr. Stupak. The implementation and that requires more 
money?
    Mr. Abraham. [continuing] full implementation. And the same 
is true in the environmental management area where we have 
programs where we are trying to accelerate. And let me just 
give you a sense of how we are actually going to save money.
    Mr. Stupak. Good.
    Mr. Abraham. Because we believe that in the environmental 
management area when we accelerate the cleanup, when we reduce 
the risk and shorten the timeframe as I hope we will do over 
which we will be cleaning up our various sites, the 
maintenance, security and overhead costs reflect about half of 
the long term cost of these programs. By shortening the 
timeframe of the cleanup by 35 years, we will dramatically 
reduce those out year costs that were associated with simply 
maintaining a site.
    Mr. Stupak. Okay. I am going to just ask, give you just a 
general comment in conclusion. With the Energy Bill sort of in 
limbo in the Senate, has your Department thought about as a 
strategic move what a scaled down energy bill that you would 
consider at all? Are there some components that you and your 
staff--I know you do not want to talk about it because you want 
the Energy Bill.
    Mr. Abraham. No, no.
    Mr. Stupak. And we want the Energy Bill.
    Mr. Abraham. Right.
    Mr. Stupak. And our Chairman spent so many hearings doing 
it. But is it a possibility? You know, it is better to get 
something than nothing. Is there some kind of scaled down----
    Mr. Abraham. Well, I mean we are pretty much on record as 
wishing to see the tax provision scaled down substantially.
    Mr. Stupak. Okay.
    Mr. Abraham. We believe that the energy plan the President 
developed called for about a $7 to $8 billion tax component. So 
the number that is in this bill is much larger than we would 
endorse. That would be the main area, I would think, that we 
would focus on. There may be others as well. But that is one 
where we very publicly have expressed----
    Mr. Stupak. Okay. And my time has expired.
    Thank you, Mr. Chairman.
    Mr. Hall. Mr. Secretary, we thank you.
    In closing, I have a question but I am not going to ask you 
to answer it, but I am going to put it in the record. It is in 
1992 the Congress passed legislation intended to lessen our 
dependence on foreign oil. And as you know, section 502 of that 
legislation established goals that to my knowledge the goals 
are still in effect, but we are no where near meeting the 
goals.
    And based on the information available on the Energy 
Information Administration website I think that for the most 
recent year for which data is available, non-petroleum fuels 
made up less than 3 percent of the total module fuel 
consumption in the country with additives to gasoline 
compromising most of that amount.
    I would like to ask some questions about the value of 
substituting non-petroleum fuels for gasoline and diesel and 
what we can do to get on track toward meeting those goals, and 
whether or not a 30 percent decrease in demand for gasoline to 
fuel light duty motor vehicles increase or decrease 
skyrocketing gasoline prices; that would be part of your answer 
to some of the other questions that have been asked. And one 
way to reduce it is the suggestion that the use of gasoline and 
diesel is through natural gas vehicles. Being from Texas, I 
think natural gas out to be the fuel of the future.
    And you know, Garland, independent school district, has 
used natural gas for their school buses for probably 20 years 
with no problems and a savings of 15 to 18 to 20 percent.
    So those are things. And on the NGV cost, natural gas 
vehicles carry a higher cost because of limited production. And 
if we could get them in use, I think we could see high fuel use 
fleets moving to NGVs.
    So those are some of the questions that we have here. And 
in light of all this, my question is what is the Department 
doing to promote the use of natural gas vehicles in fleets 
around the country and, more importantly, the age old question 
why are you not doing more?
    And with that, I really want to thank you.
    Mr. Shimkus. No, Mr. Chairman. I did not mean to speak, but 
that is why you wait until the last second is to just to make 
sure that the----
    Mr. Hall. I am through.
    Mr. Shimkus. The reason why I mentioned to Chairman Barton 
was that it is our understanding that gasoline price increases 
in areas like New York and Connecticut which are now using 
ethanol blended RFG have been lower than in other even 
conventional gasoline markets. And that is why it really ties 
into what Chairman Hall said and Chairman Barton on this 
analysis. Because in California's debate, if they displace 
their reformulated fuel 6 percent, they are really going to 
have a huge escalation of gasoline prices. And that should be 
part of the data. That is why we need an energy bill.
    And I want to make sure that the ag guys always have a seat 
at the table at the final debate.
    So thank you. Mr. Chairman.
    Mr. Hall. Yes. In closing, we want you to look at the 
budget request for 2005. There is nothing for NGV related R&D. 
We want you to look at that and maybe make some requests. We 
have usually given more than had been requested.
    With that, I really want to thank you on behalf of the 
committee both Democrats and Republicans. You have been very 
resourceful. I have been in and out of here like everybody else 
has, but the time I have been here you have handled your job 
very well. A great member of the Cabinet. Fine Secretary. And a 
good friend. We appreciate you.
    Mr. Abraham. Thank you, Mr. Chairman.
    Mr. Hall. With that, we are adjourned.
    [Whereupon, at 12:38 p.m., the committee was adjourned.]
    [Additional material submitted for the record follows:]

   Response for the Record of Hon. Spencer Abraham, Secretary, U.S. 
                          Department of Energy

                    QUESTION FROM REPRESENTATIVE COX

Elimination of Weapons Grade Plutonium
    Question 1. Mr. Secretary, I have been informed that the Department 
of Energy (DOE) has assumed responsibility from the Department of 
Defense for shutting down three plutonium-producing reactors in Russia. 
As I understand it, Phase I construction contracts for baseline 
development were signed last year with Washington Group International 
and Raytheon Technical Services for the Seversk and Zheleznogorski 
projects, respectively. The project's budget is $500 million, but I 
have been told that early cost estimates still under review are 
expected to be $1 billion. What is your Department considering to keep 
this project on track? Concurrent funding of both projects? 
International funding? Or perhaps increased U.S. government funding? 
Are you talking to both contractors about increasing efficiencies and 
reducing costs, and seeking other financial sources to help finish this 
projects in the timeframe of 2008-2011?
    Answer 1. In December 2002, the Elimination of Weapons Grade 
Plutonium Production (EWGPP) Program reached its first Critical 
Decision (CD-0), Justification of Mission Need. The cost estimate used 
at this point was $466 million (a mid-point of the $370-$550 million 
cost range). This preliminary, unvalidated estimate came with the 
program when it was transferred from the Department of Defense in FY 
2002. The preliminary estimate was based on an unvalidated Russian 
study conducted in 2000/2001 and was never escalated to account for a 
number of external factors such as: It did not include: (1) Russian 
inflation; (2) escalation to construction mid-point; (3) the costs of 
U.S. and Russian integrating contractors; and (4) devaluation of the 
U.S. dollar.
    In December 2003, we completed the first top-to-bottom assessment 
of the program cost and schedule. We are working with the Russians, 
both U.S. contractors, and a team of independent fossil fuel plant 
experts to assess the validity of the top-to-bottom review and to find 
ways to reduce costs. We have made progress on all fronts. The team of 
experts is reviewing the estimates and will issue a report shortly, a 
list of cost-reduction options is being evaluated, and the Government 
of Switzerland will host a conference on international participation in 
the fall.
    The program is reviewing the preliminary Russian designs for the 
planned fossil fuel replacement plants and validating cost estimates 
for the projects. As more of the engineering design work is completed, 
refined overall cost and schedule will be developed for the replacement 
fossil fuel plants. Detailed designs and cost-reduction evaluations 
will be completed by the end of December 2004, at which time firm cost 
estimates will be provided to the Congress.

                   QUESTIONS FROM REPRESENTATIVE HALL

    Question 1. Would a thirty percent decrease in demand for gasoline 
to fuel light duty motor vehicles increase or decrease skyrocketing 
gasoline prices?
    Answer 1. There are three major price components to be considered 
in assessing the impact of a hypothetical 30 percent decrease in 
gasoline demand on gasoline prices: the cost of crude oil, refining 
margins, and gasoline taxes. Timing considerations are also critical, 
as outlined below.
    Were U.S. gasoline demand to instantly fall by 30 percent, or 
roughly 2.7 million barrels per day, there would be significant excess 
refining capacity. Refining margins would be expected to fall, tending 
to lower gasoline prices. Depending on decisions made by major 
petroleum exporting countries regarding their production levels, there 
could also be a reduction in crude oil prices, which would also tend to 
lower gasoline prices. However, state and Federal revenues from 
existing gasoline taxes would also fall by 30 percent, reducing funding 
for highway construction and other activities financed with these 
revenues. Potential adjustments in tax rates to address this shortfall 
would tend to raise gasoline prices.
    Perhaps a more realistic scenario is one in which the 30-percent 
reduction in demand occurred gradually, rather than instantly. In this 
case, refiners and producers would probably be reluctant to make 
investments to meet today's level of demand given the expectation of 
sharp reductions in future demand that would turn any new capacity 
investments into excess capacity. In such a scenario, the immediate 
effect of an expected 30 percent decrease in demand would be to raise, 
rather than reduce, gasoline prices.
    Over time, the transitional effects of a gradual 30-percent 
reduction gasoline demand would come to be dominated by longer-run 
impacts. Given projected growth in gasoline demand, the 30 percent 
reduction translates into 3 to 4 million barrels per day lower gasoline 
demand between 2010 and 2025. Almost all of this reduction would come 
from import reductions. Unless oil-exporting countries adjust their 
production to keep oil product prices steady, world petroleum prices 
would be expected to decline, which would reduce gasoline prices. 
Refining capacity should equilibrate to the new demand conditions, so 
there is no reason to expect the lower demand level to affect the 
refining margin component of prices. Impacts on the tax component of 
prices would depend on policy decisions regarding how to address the 
lower level of tax revenue resulting from the lower level of gasoline 
demand.
    Question 2a. In light of all this, my question is: what is the 
Department doing to promote the use of natural gas vehicles in fleets 
around the country and, more importantly, why isn't it doing more?
    Answer 2a. The Department promotes the use of alternative fuels, 
including natural gas, through its Clean Cities program. Approximately 
80 coalitions are working to accelerate the deployment of various types 
of alternative fuel vehicles and alternative fuel infrastructure. Many 
of these coalitions embrace natural gas as their fuel of choice.
    Because natural gas requires a greater financial and technical 
investment than other fuels to ensure success, a significant portion of 
the Clean Cities resources has been dedicated to this fuel. Each year, 
the Clean Cities program awards roughly half its budget in grants to 
coalition stakeholders through the State Energy Program (SEP) Special 
Project Grants for alternative fuel projects. Approximately 65% of the 
SEP special project money in FY 2002, and 75% in FY 2003, went to 
natural gas projects. In addition, over half of the Clean Cities 
technical assistance projects were designed to solve natural gas 
issues.
    The President and the Department are committed to the development 
of a hydrogen economy. We have chosen to focus available funding on the 
research and development of hydrogen fuel cell vehicles and 
infrastructure. The Department believes that the Nation's 
transportation system of the future will run on clean, safe hydrogen 
fuel and has aligned its resources according to that vision. The level 
of funding requested to promote today's alternative fuels, including 
natural gas, is therefore appropriate relative to our national energy 
priorities, the mission of this Department, and the level of expected 
public benefits, which is an important consideration within the 
Administration's R&D investment criteria.
    Question 3. Mr. Secretary, I believe the replacement fuels program 
I mentioned at the outset is largely a voluntary effort coordinated by 
DOE through its Clean Cities program. If I am not mistaken, I think 
that the grants you just mentioned are provided through that program. 
Yet, as important as it is for this country to lessen its dependence on 
foreign oil, and that can only be accomplished by reducing the use of 
gasoline and diesel in motor vehicles, it seems to me that the amount 
of money you have requested for the Clean Cities program is way too 
little. In fact, hasn't the pattern been over the past few years for 
you to request less and less money for this program and Congress to 
keep adding money back because of its importance.
    Answer 3. The Department's request for the Clean Cities budget has 
been fairly consistent over the past few years. The Clean Cities 
program uses about half its budget to operate its core program, while 
the remaining funding is awarded to coalition stakeholders in the form 
of grants for alternative fuel hardware projects. This is a formula 
that appears to be working. The program receives more State Energy 
Program special project grant applications than any other program and 
continues to receive applications for Clean Cities designation from new 
coalitions. This pattern indicates that we are effectively leveraging 
our resources and devoting the right amount of funding to this 
activity. In addition to requiring significant cost sharing from our 
grant recipients, we are also investigating partnership opportunities 
with the Federal Highway Administration and the Environmental 
Protection Agency to enable us to leverage funding to an even greater 
extent.
    Question 4.
    Another question I have is with respect to the Department's R&D 
efforts with respect to non-petroleum vehicles. We know all about the 
hydrogen vehicle program, but let's talk a little about your efforts 
with respect to natural gas vehicles. According to the Natural Gas 
Vehicle Coalition the NGV industry worked with DOE to identify a multi-
year program of R&D critical to increasing platforms, further improving 
emissions, increasing driving range and so forth. This program 
identified more than 30 million of research needed per year. But, I 
look at your budget request for ``05 and there is nothing for NGV 
related R&D. Last year you requested only about $800,000, and like the 
Clean Cities program, the Congress gave you more than you requested 
because of the importance of this work. I think we're trying to send a 
message here and you're not listening. I do not agree with the 
statement in your budget analysis that there is no further need for NGV 
related research. I do believe that we could find the money that is 
needed with your budget to fund both Clean Cities and NGV related R&D 
at levels consistent with our need to meet the goals I talked about 
earlier in the Energy Policy Act of 1992. Do you agree?
    Answer 4. The Department of Energy has funded research and 
development on natural gas engines, fueling systems, and fueling 
infrastructure technologies since 1989. The goal of these activities 
was to partner with industry to develop pre-commercial technologies 
with realistic market potential. The Department completed all its basic 
component research activities on light-duty natural gas cars in the 
year 2000. We plan to complete our vehicle integration work for medium-
duty natural gas trucks in Fiscal Year 2004.
    Numerous engines and vehicle platforms were developed as part of 
these efforts. Today, several major engine, truck, and bus 
manufacturers offer natural gas powered vehicles as part of their 
commercially-available product lines. Since these vehicles are notably 
some of the cleanest and best performing on the road today, further 
investment by the Department is not likely to advance the state of this 
technology in any significant manner.

                QUESTIONS FROM REPRESENTATIVE WHITFIELD

    Question 1. The Administration has requested $13.1 million for the 
former worker medical screening program, but the designated amount for 
Paducah and the other gaseous diffusion sites is not specified. Can you 
tell me the amount the Department has reserved for the medical 
screening program at the gaseous diffusion plants and if that amount 
covers the cost of the early lung cancer detection program specifically 
established by law for workers at the GDPs?
    Answer 1. Included in the administration's FY ``05 health budget is 
$13.1 million to support the Former Worker Medical Screening Program.

1) The budget allocates $4 million to fund PACE International Union and 
        Queens College to complete the medical screening program for 
        GDP production workers at the 3 GDPs in FY 2005. This amount 
        covers the cost of the early lung cancer detection program.
2) An additional $700,000 is allocated to fund the University of 
        Cincinnati to continue medical screening for GDP construction 
        workers from Portsmouth and Paducah.
    Question 2. In a lead story in yesterday's Louisville Courier 
Journal the headline reads ``Just One Sick Plant Worker Gets Aid.'' The 
story was referencing the status of DOE's implementation of the energy 
worker compensation program for workers who became ill as a result of 
exposure to toxic substances. I know your Department has asked for 
another $33 million to expedite the processing of the 22,000 pending 
claims, and I do support your proposed changes to the program with 
regard to using a one rather than three-doctor review of cases, as well 
as increased compensation for doctors participating in the program. 
However, I still believe that even if the Department can begin to 
process claims in a timely manner, at then end of the day, as many as 
50 percent of exposed workers who the Department has deemed worthy of 
getting state compensation benefits cannot get those benefits because 
of the ``no willing payor'' problem. Would you care to comment on that?
    Answer 2. The Department understands the concerns regarding the so-
called ``willing payer'' issue and is addressing these concerns through 
multiple efforts. However, it should be noted that under the EEOICPA 
Part D program, DOE does not make any determination of whether a worker 
is ``worthy'' of getting State compensation benefits, as your question 
implies. Rather, DOE and its Part D Physician Panels determine whether, 
under standards set forth in DOE's regulations and without regard to 
any particular State's workers compensation program requirements, a 
contractor worker has an illness that arose from exposure to a toxic 
substance at a DOE facility.
    Your question raises three basic issues: one, the relatively few 
EEOICPA Part D applicants who have received State workers compensation 
benefits as a result of the Part D program; two, the number of Part D 
applicants who can reasonably be expected to have a ``willing payer'' 
of State benefits; and three, the ability of a Part D applicant without 
a ``willing payer'' to receive appropriate State workers compensation. 
We understand that, to date, four Part D applicants have received State 
workers compensation awards as a result of the Part D program. In the 
past three months, the Department has issued positive Physician Panel 
findings to over 100 applicants; the panels are producing approximately 
10 positive panel findings per week. As these applicants seek State 
workers compensation and as we increase the number and rate at which we 
process Part D applications, we expect a dramatic increase in State 
workers compensation awards made as a result of the Part D program. The 
Department is aggressively working to identify ``willing payers'' for 
Part D applicants. Of course, applicants without ``willing payers'' are 
not precluded from filing for and receiving State workers compensation 
benefits. These applicants are simply in the same situation as all 
other applicants for State workers compensation who are not part of the 
EEIOCPA Part D program.
    In the cases where DOE is not able to issue a ``do not contest'' 
order and/or is not able to reimburse the contractor, this does not 
necessarily result in an applicant being precluded from receiving State 
workers compensation benefits. In fact, the applicant is simply in a 
standard State workers compensation proceeding, but does not have the 
benefit of a ``willing payer.''
    The Department plans to closely monitor the ``willing payer'' 
situation. It will be many months before a statistically significant 
number of Part D cases will be completed through the States' workers 
compensation processes and before it will be possible to draw reasoned 
conclusions about the ``willing payer'' issue and the benefits provided 
by law. At that time, a preliminary assessment can be done as to both 
the number of Part D applicants without a ``willing payer,'' and the 
impact the lack of a ``willing payer'' has had on applicants who 
received positive Physician Panel determinations.

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Additional Response for the Record of Hon. Spencer Abraham, Secretary, 
                       U.S. Department of Energy

                  QUESTIONS FROM REPRESENTATIVE MARKEY

Contacts with OPEC Oil Ministers
    Question 1. Exactly how many of the OPEC oil ministers did you 
personally contact between the OPEC meeting in Algeria in February and 
the March 31, 2004, OPEC meeting to ``jawbone'' them to reverse 
themselves and increase, not decrease production? Who were they?
    Answer 1. Since taking office, this Administration has maintained 
an ongoing campaign of diplomacy with oil producers. We have 
consistently urged producers to ensure that oil supply is sufficient to 
promote global economic growth. That means ample supply at reasonable 
prices. We do not discuss the specifics of these conversations, but a 
staple of our message to producers has been our admonition to let the 
free market be the referee on issues of supply, demand and price, and 
we have strongly encouraged them to heed the market's signals.

Oil Prices
    Question 2. The April 1, 2004, Wall Street Journal reports that 
OPEC's decision to cut production breaks the cartel's ``years-old 
efforts to maintain price stability and raises the prospect of greater 
volatility for consumers of oil and gasoline.'' The Journal goes on to 
report that:
          ``In 2000, OPEC informally promised to keep oil prices within 
        a band of $22 to $28 for a basket of crude oil varieties. In 
        return, major consuming countries indicated they wouldn't use 
        strategic stockpiles of oil amid a supply crunch before OPEC 
        had a chance to balance markets--But the OPEC basket is at more 
        than $31 a barrel now, and has been consistently above $28 a 
        barrel for the past 83 days.''
    In light of the fact that OPEC appears to have abandoned price 
stability as a goal and instead seems bent on price gouging us, why 
aren't you willing to take off the gloves and turn on the spigot of the 
Strategic Petroleum Reserve to send OPEC a message that if they won't 
stabilize supplies and prices, we will?
    Answer 2. The Energy Policy and Conservation Act, enacted in 1975, 
established the Strategic Petroleum Reserve as a national security 
asset and authorized the Department to sell its oil if the President 
makes a finding that a ``severe energy supply interruption'' exists. 
Despite persistently high prices, no supply disruption has occurred to 
justify such a Presidential finding. The Act envisions that markets 
will balance the supply and demand of oil, and does not contemplate the 
drawdown and sale of oil from the SPR for the sole purpose of affecting 
the market price. If traditional exporters choose not to accommodate 
demand growth at moderate prices, the markets will elicit greater 
efficiency and more production from non-traditional sources, to the 
long-term detriment of the traditional exporters. It is the 
Administration's policy not to tap the Strategic Petroleum Reserve to 
suppress prices as long as supplies are adequate, which they are at 
this time. Furthermore, in these very uncertain times, we believe that 
our Nation's national security will be best served by having a full 
Strategic Petroleum Reserve in order to provide the maximum protection 
for the United States.

Impacts of National Energy Policy on Energy Consumption and Production
    Question 3. According to your Department's own Energy Information 
Administration, passage of the energy bill conference report would have 
a ``negligible'' impact on energy consumption and production and on 
America's reliance on energy imports. At the same time, EIA reports 
that if the Republican energy bill is enacted into law ``By 2015, 
however, the price increases [in gasoline] resulting from the bill 
accelerate, with ``an increase of 3.0 cents per gallon in the average 
gasoline price and 8.1 cents per gallon in the average RFG price, 
relative to the Reference Case.'' Can you please explain why a bill 
that your own Department says is going to increase gas prices by 3 to 8 
cents a gallon is the solution to rising gasoline prices?
    Answer 3. The transportation sector accounts for nearly 30 percent 
of total U.S. energy consumption, and transportation costs have been 
rising, particularly as the economy improves. Although the recent fuel 
price spikes concern the public and the Administration, it is important 
to note that such increases have occurred many times in the past. For 
instance, during 2000, fuel prices rose by 30 to 40 cents a gallon from 
1999 prices.
    With regard to EIA's analysis, the Department believes that the 
gasoline price differential of the energy bill reflected in the EIA 
analyses does not accurately portray what is likely to happen. EIA's 
base case analysis includes MTBE bans for only 17 States, while the 
Department believes that MTBE will essentially be banned for all 
gasoline after these State bans go into effect. Including this one 
assumption in EIA's base case would change the results of the energy 
bill analysis substantially. If one were to also include the likely 
extension of the ethanol tax credit (or some incentive similar in 
effect), one would effectively eliminate the entire gasoline price 
differential between the two cases. Additionally, the EIA analysis does 
not consider regional or local price volatility that may occur during 
transitions from MTBE due to State actions.
    The Administration believes that the passage of comprehensive 
energy legislation, coupled with the implementation of the 
recommendations of the President's National Energy Policy (NEP) by the 
Executive Branch, will provide balanced long-term measures to address 
the domestic energy situation. We are pleased that many NEP 
recommendations requiring Congressional action are included in energy 
legislation currently pending in Congress. For instance, provisions 
promoting greater energy efficiency and increased emphasis on energy 
technologies are included in pending comprehensive energy bills. 
Implementation of such approaches would help make transportation fuels 
more affordable.
    Unfortunately, some NEP recommendations, such as opening a small 
portion of Alaska's coastal plain to environmentally responsible oil 
and gas exploration and development, are not included in pending bills, 
such as the H.R. 6 Conference Report. Hampering our ability to 
responsibly develop America's domestic energy resources will only 
contribute to our continued reliance on insecure foreign sources of 
energy and contribute to price volatility.
    The Administration continues to urge Congress to finish the job of 
passing comprehensive energy legislation, which, together with ongoing 
administrative implementation of NEP recommendations, would improve the 
Nation's energy and economic security.

Nuclear Nonproliferation
    According to the DOE budget documents, the Advanced Fuel Cycle 
Initiative ``develops technologies that would enable the reduction of 
spent fuel volume and the recovery of spent nuclear fuel's valuable 
energy.'' In other words--nuclear reprocessing. On February 11, 2004, 
President Bush announced new measures to counter the spread of weapons 
of mass destruction, stating, ``The world must create a safe, orderly 
system to field civilian nuclear plants without adding to the danger of 
weapons proliferation. The world's leading nuclear exporters should 
ensure that states have reliable access at reasonable cost to fuel for 
civilian reactors, so long as those states renounce enrichment and 
reprocessing. Enrichment and reprocessing are not necessary for nations 
seeking to harness nuclear energy for peaceful purposes.
    Question 1. Don't you think that telling other countries that they 
shouldn't reprocess while requesting $46 million to develop new 
reprocessing technologies is just like preaching temperance from a 
barstool?
    Answer 1. The Department's Advanced Fuel Cycle Initiative (AFCI) is 
conducting research on advanced, proliferation-resistant spent fuel 
treatment technologies that have the potential for extracting the 
valuable energy remaining in spent fuel and reducing the long-term 
burden on future repositories. The AFCI program is working to eliminate 
the proliferation risks associated with traditional nuclear fuel cycle 
approaches by developing alternative technologies that preclude the 
separation of attractive fissile materials. The spent nuclear fuel 
treatment technologies being developed by the AFCI program are also 
focused on the safe separation of specific elements from the spent fuel 
to reduce the volume and heat content of material requiring geologic 
disposal. The AFCI program is also investigating the development of new 
fuels manufactured from selected transuranic elements for use in 
existing commercial reactors and future Generation IV reactors.
    The assumption that AFCI advances reprocessing is incorrect. AFCI 
is designed to reduce proliferation risks associated with traditional 
nuclear fuel cycle approaches, including spent fuel reprocessing, by 
developing alternative technologies that do not involve the separation 
of fissile material in forms usable in a nuclear weapon. AFCI, 
therefore, is entirely consistent with the President's approach, which 
aims to prevent the spread of sensitive nuclear facilities and 
technologies to an ever wider group of states.
    Question 2. While the DOE weapons activities request is 5.4% or 
$335 million higher that the FY2004 appropriation, the nuclear 
nonproliferation budget is only 1.1% or $15 million higher than FY2004. 
Programs to help secure Russian navy nuclear weapons and Russian RADON 
nuclear waste sites, among others, are drastically cut. Does this 
budget mean that the Administration thinks building new U.S. nuclear 
weapons is a higher priority that keeping nuclear weapons out of the 
hands of dangerous regimes?
    Answer 2. The Administration is committed to nonproliferation and 
to ensuring the continued safety, security, and reliability of the 
nation's nuclear deterrent.
    The FY 2005 Request for the Office of Defense Nuclear 
Nonproliferation is $1.35 billion. Although this reflects only a 1% 
increase over FY 2004, funding for these programs has increased by over 
60% since FY 2001. In a constrained budget environment, a 1% increase 
represents the Administration's commitment to our nonproliferation 
programs. In addition, the G-8 Global Partnership Against the Spread of 
Weapons and Materials of Mass Destruction is helping further 
nonproliferation. G-8 nations and the European Commission (EC) are 
engaging in nonproliferation programs with Russia and other former 
Soviet states at the same time that the United States is. To date, 
other G-7 nations and the EC have pledged about $7 billion toward their 
$10 billion goal to match the U.S. pledge of $10 billion. Most 
countries have already designated substantial portions of their pledges 
for specific programs and have launched new activities. Proliferation 
is a global problem and the global community is stepping up to the 
challenge.
    Presently, there are no requirements from the Department of Defense 
for the National Nuclear Security Administration to manufacture any new 
nuclear weapons. In fact, no new nuclear weapons have been produced and 
added to the nation's nuclear weapons stockpile since 1989. Funds from 
the Administration's FY2005 budget request will be used to ensure the 
continued safety, security, and reliability of the nation's nuclear 
deterrent through the stockpile stewardship program and without the 
reliance on underground testing.

Robust Nuclear Earth Penetrator (RNEP)
    Question 3. The budget request includes $485 million for the Robust 
Nuclear Earth Penetrator bunker buster weapon over the next five years. 
This program was originally sold to Congress as a $45 million, 3 year 
study, not a new nuclear weapons development program. Why is DOE now 
projecting it to be more than ten times as expensive and extending to 
the end of the decade if it does not intend to go far beyond a study 
and undertake actual weapons development?
    Answer 3. In accordance with the National Nuclear Security 
Administration Act as currently amended, NNSA submitted a five-year 
program of estimated expenditures and proposed appropriations. Only the 
proposed budget for FY 2005 was a request. Estimated expenditures for 
RNEP for FY 2006 and beyond were to preserve options for the President 
and Congress in case the decisions were made to proceed to engineering 
development and beyond. Proceeding beyond the study stage would be 
wholly contingent on many factors, particularly including Department of 
Defense requirements and Congressional approval. As currently planned, 
the study will be completed in FY 2006. A new appropriation proposal 
will be submitted for FY 2006, including new estimated expenditures for 
FY 2007-2010, to Congress with the FY 2006 President's budget request.

Bunker Buster Program
    Question 4. In May 2003, DOD Secretary Donald Rumsfeld said that 
the bunker buster program ``is a study. It is nothing more and nothing 
less. And it is not pursuing, and it is not developing, it is not 
building, it is not manufacturing, it is not deploying, and it is not 
using.'' Is this your view? If so, why does the DOE budget request 
include a subsystem test and full system test in FY 2005 and a 
completion of 100% of engineering development (Phase 6.3) by FY 2009?
    Answer 4. The only requested activity and the only approved 
activity is the feasibility, design definition, and cost study (Phase 
6.2/2A). In order for NNSA to estimate out year expenditures, as 
directed by Congress in PL 106-65, we must attempt to predict the 
future for a five-year program. One part of that program that would be 
a considerable expense could be development of the RNEP program if the 
Administration proposed and Congress approved moving beyond the study 
stage. We considered it both prudent and responsible to include those 
estimated expenditures in out year projections. Along with those 
estimated expenditures, we are required to describe what we expect to 
accomplish with those funds.

Full System Test
    Question 5. The ``subsystem test'' and ``full system test'' that 
are planned for FY 2005 sound like development, not just research. 
Aren't these tests really ``engineering development'' activities? What 
specifically is NNSA planning to do for bunker busting testing and 
prototyping in FY 2005?
    Answer 5. The subsystem tests and full system tests that are part 
of the feasibility study are sled track tests to assess the feasibility 
of the candidate nuclear explosive packages and associated components 
to withstand carefully controlled deceleration environments. The full 
system test will incorporate mock up nuclear components in a full size 
penetrator body but without a functioning guidance and control kit. 
These tests are a normal part of the feasibility study and are 
necessary research for a complete and meaningful study as requested by 
the Nuclear Weapons Council. Engineering development tests would be 
conducted in more realistic impact conditions with functioning guidance 
and impact controls. There are no plans to build any prototypes or 
conduct any prototype testing during the feasibility, design 
definition, and cost study.

Warheads
    Question 6. According to the DOE budget documents, the full system 
test for FY 2005 is for ``the proposed design''. But I'm told there are 
two warheads being considered for the bunker buster, the B-83 and the 
B-61. Does this singular ``proposed design'' mean that NNSA plans to 
pick one of these two warheads in FY 2005? If so, which one, and on 
which basis?
    Answer 6. There is currently no decision to down select before the 
completion of the feasibility study in FY 2006. The proposed design to 
be tested in FY 2005 is to be based on the B83. A similar test with the 
proposed design for the B61 is planned for early FY 2006.

Question on Fuel Cells
    Question 1. Mr. Secretary, in previous testimony you've said that 
``Distributed power systems, such as fuel cells, also can contribute to 
the overall reliability of electricity supplies in the United States 
and help strengthen the security of our energy infrastructure.'' It is 
my understanding, however, that the DOE budget for FY2004 for 
stationary fuel cells in the Office of Fossil Energy was $44.5 million, 
a reduction of $16.5 million from an enacted level of $61 million. The 
budget request for FY2005 for stationary fuel cells is $23 million, a 
cut of $43 million from the enacted level of $68.6 million. How can you 
``help strengthen the security of our energy infrastructure'' by 
decreasing the Fossil Energy fuel cell program by 66%?
    Answer 1. The reduced funding in the 2005 budget request primarily 
reflects completion of development on near-term fuel cells (molten 
carbonate and tubular solid oxide fuel cells). These fuel cells have 
reached the level of maturity where industry on its own can take the 
final step towards commercialization. Completion of this work results 
in a reduction of $23.6 million from the 2004 enacted level.
    The FY 2005 budget request for fuel cells focuses on providing 
adequate funding for the Solid State Energy Conversion Alliance Program 
(SECA), which is funded at about the same funding level we requested in 
FY 2004, which is a reduction of [$12 million?] from the 2004 enacted 
level.
    Question 2. Why hasn't the Administration lived up to its goal of 
``moving stationary fuel cells fairly quickly'' by increasing the 
funding for stationary fuel cells within the Fossil Energy Program?
    Answer 2. The Administration is committed to its goal of developing 
clean, low-cost, reliable fuel cells that will be available for 
stationary power applications beginning in 2010, and will ultimately 
provide electric power for virtually all markets, through the Solid 
State Energy Conservation Alliance (SECA) Program. Currently, six 
Industrial Teams are aggressively pursuing different promising 
approaches to meet the SECA goal of $400/kW. Additionally, over 40 
research and development projects that support the SECA industry teams 
are in place. Current progress is excellent, and increased funding 
would not significantly accelerate commercial deployment.

Questions regarding Wackenhut Corporation
    You may be aware of the recently reported problems with Wackenhut 
at Oak Ridge National Laboratory (ORNL) revealed by your Inspector 
General (IG) in January, and your IG's March report on modifications to 
the core training curriculum at department sites guarded by Wackenhut. 
I have looked more deeply into these problems and discovered a long 
record of important security lapses at both nuclear power and nuclear 
weapons-related sites:

 Security officers worked to the point of fatigue;
 Training deficiencies;
 Security lapses;
 Failed procedures;
 Retaliation against employees who voice their safety concerns.
    These problems have one thing in common: Wackenhut was the 
contractor. I would be glad to provide you with the full record.
    Question 1. Have these problems been brought to your attention? 
What are you doing to address them? If you are not taking any actions 
to resolve these problems, why not?
    Answer 1. While NNSA is aware that some aspects of the identified 
problems exist at our sites, we are not aware of any which have 
significantly impacted the implementation of our contracts with 
Wackenhut. Our prime contracts with Wackenhut at the Y-12 Plant at Oak 
Ridge and the Nevada Test Site include a semi-annual performance 
evaluation cycle by the respective NNSA Site Offices, and also undergo 
a comprehensive inspection by the Department of Energy Office of 
Independent Oversight and Performance Assurance. The semi-annual 
performance evaluation cycles allow NNSA to focus Wackenhut's attention 
on immediate issues or areas of particular interest. Performance 
elements such as those raised in this question are included in the 
defined performance objectives. Our Y-12 Site Office issued its most 
recent performance evaluation report on its Wackenhut contractor, WSI-
OR, in March 2004. While procedural inadequacies led to misconceptions 
about performance testing, as documented in a DOE/IG report, there was 
no indication of wide-spread or programmatic deficiencies in this area. 
NNSA is also preparing to re-compete its Wackenhut contracts as the 
contracts terminate in the near future, providing an opportunity for 
NNSA to challenge prospective bidders to propose, and be held 
accountable for delivering, improved performance.
    Question 2. Has the Department undertaken or do you plan to 
undertake a review of Wackenhut's track record as a contractor, if not, 
why not?
    Answer 2. The DOE conducts continuous surveillance of contractor 
performance. Contractor performance evaluations are formally made on 
the anniversary date of contract award based upon performance criteria 
established in each contract. The results of the IG investigations have 
been factored into these evaluations for Wackenhut in each of the 
associated contractor performance evaluations. To date, the DOE 
assessment of Wackenhut's performance does not support the barring of 
Wackenhut from bidding on future protective force contracts.
    Question 3. Are you aware that Wackenhut's Danish parent company is 
merging with the British parent company of Argenbright (now called 
Cogniss), which was barred from by the U.S. Government for a 
substantial period of time from doing security work due to its poor 
security and vetting practices? Argenbright provided security at the 
Washington Dulles and Newark International Airports on September 11, 
2001 when terrorist hijackers got past security screeners to board 
planes that crashed into the Pentagon and Western Pennsylvania. Do you 
plan to review the impact of this merger? If not, why not? If this 
merger does take place, will you allow former Argenbright managers to 
have a role in administering security at DOE nuclear sites?
    Answer 3. NNSA is aware of the merger described in this question. 
Let me assure you that NNSA will review all Foreign Ownership, Control 
or Influence (FOCI) documentation to ensure restrictions on foreign 
parent activities, to include visitation to DOE/NNSA sites, are 
modified such that representatives of Argenbright (Cogniss) have been 
adequately isolated from the WSI activities. This will ensure that the 
Wackenhut contractors at our sites will continue to act as independent 
companies with ``proxy boards'' in place to ensure that only the tie to 
the parent corporation is the distribution of revenue.
    Question 4. Alutiq LLC was recently awarded the security contract 
at Idaho National Engineering and Environmental Laboratory. Why was the 
contract for such a sensitive site awarded to a company with limited 
previous experience as a security provider? Is it DOE policy to award 
security contracts for such sensitive sites non-competitively? If not, 
why was this contract awarded non-competitively? Are you aware that 
Wackenhut may be added as a subcontractor to this contract on a non-
competitive basis? Is it DOE policy to allow such subcontracts to be 
awarded non-competitively? If not, then what will you do to ensure that 
Alutiq competes the subcontract?
    Answer 4. No contract has been awarded; however, the U.S. 
Department of Energy is committed to increasing the contracting 
opportunities awarded to small and disadvantaged businesses. The Small 
Business Act specifically allows for qualified small businesses to be 
awarded contracts non-competitively and we believe this to be an 
important element in our overall strategy in increasing business 
opportunities for small businesses in the United States. However, 
contracting for security expertise must be accomplished with great 
care. Thus, while DOE had previously indicated an intention to explore 
a sole source contract in the context of a small business set aside, I 
have discussed this issue with the Idaho delegation and I have directed 
my senior managers to review this matter. I expect to have their 
recommendation on how to proceed in the near future.
    Question 5. Are you aware of three current civil cases filed in 
U.S. District Court for the Eastern District of Tennessee emanating 
from Wackenhut Services' Oak Ridge contract and alleging employment 
discrimination (O'Neal, et al v. Wackenhut Services, et al; Campbell v. 
Wackenhut Services; Sheard, et al v. Lockheed Martin, et al)? Has your 
department conducted an investigation of the allegations raised in 
these cases? If so, what were the results of the investigation? If not, 
why not? Has Wackenhut requested reimbursement for the legal fees and/
or settlement charges incurred in these? If so, for how much, and has 
the Department granted its request?
    Answer 5. DOE is aware of the three named lawsuits filed against 
Wackenhut in Federal District Court for the Eastern District of 
Tennessee. Litigation costs are being reimbursed pursuant to two 
contracts with DOE (one contract with the NNSA Y-12 Site Office and the 
other with the Oak Ridge Operations Office). The two Wackenhut 
contracts are Time & Material contracts governed by the allowable cost 
provisions of the FAR. The Wackenhut legal costs are reimbursed if the 
Contracting Officer agrees that they are reasonable in amount in 
relation to the activities required deal with the proceedings and 
underlying cause of action so long as the costs are not unallowable 
under FAR 31.205-47. Neither the FAR nor the contracts require or 
authorize DOE to ``investigate'' allegations made in complaints. The 
total cost reimbursed to date for the three cases is $57,960.49 under 
the DOE ORO contract and $394,910.76 under the NNSA Y-12 Site Office 
contract.
    Question 6. For the past 5 years, please list all legal disputes or 
administrative complaints brought against Wackenhut related to its work 
as a DOE contractor. For each such case, please list the date, DOE site 
involved, the nature of the case (including the name of the complainant 
and type of complaint), the resolution (where applicable) and date 
thereof, the amount of legal fees and/or settlement charges requested 
by Wackenhut for reimbursement, and the amount of legal fees and/or 
settlement charges reimbursed by DOE.
    Answer 6. Except for Sheard, O'Neal, and Campbell, DOE ORO and NNSA 
YSO are not aware of any legal disputes or administrative complaints 
brought against Wackenhut related to its work as a DOE contractor.

DOE Science
    Question 1. The Science strategic goal budget, including basic 
science research, suffers an overall decrease of 2%, or 2.2% without 
the use of prior year balances. Compared to the 4.4% increase in 
funding for the nuclear weapons budget and the 4.6% increase in the 
Corporate Management budget, it appears that the Department is shifting 
its priorities away from world-class scientific research. Does the 
Department remain committed to U.S. basic science research? If so, why 
do the budget priorities not reflect this commitment?
    Answer 1. All budgets require difficult prioritization decisions to 
meet many competing needs in the Department. The Office of Science 
budget request reflects the Administration's continuing commitment to 
basic research in the Department. When FY 2004 one time 
congressionally-directed projects are set aside, the FY 2005 Office of 
Science budget increases $72,311,000 or 2.2% to ensure its continuing 
leadership in physical science research and its unique research in 
genomics, climate change, and supercomputing.
    Question 2. Under the Basic Science program, funding supporting the 
Climate Change Science Program (CCSP) receives only a 0.6% increase, 
less than the rate of inflation. Does this effective cut in funding 
reflect a pre-conceived belief on the Administration's part that 
Climate Change is not occurring and does not need to be scientifically 
investigated? If not, what is the reason for the cuts?
    Answer 2. The Administration places a high priority on the basic 
science needed to understand climate change. The Department continues 
to be among the top four largest supporters of the Nation's fundamental 
climate change research. Given the overall need for fiscal 
responsibility, difficult choices were made to keep climate change 
research funding level.
    The President's request maintains climate research on track to 
accomplish the long term objective--deliver improved climate data and 
models for policy makers to determine safe levels of greenhouse gases 
for the Earth system and, by 2013, substantially reduce differences 
between observed temperature and model simulations at subcontinental 
scales using several decades of recent data.
    Question 3. Funding for High Energy Physics increases only 0.5%, 
also less than the rate of inflation. Does this effective cut represent 
a weakening of the Department's commitment to fundamental physical 
science research?
    Answer 3. The Administration recognizes that the physical sciences 
underpin advancements in all areas of research and maintains its 
commitment to physical science research. Construction of the 
``Neutrinos at the Main Injector'' project at Fermilab is scheduled to 
be complete in FY 2005, and funding for this project declines, per the 
planned profile, from $12,426,000 to $751,000, freeing up $11,675,000 
for High Energy Physics research and operations of user facilities. 
Thus, non-construction funding in High Energy Physics increases by 2.1% 
over the FY 2004 appropriation, providing strong support for operations 
and improvements at the Tevatron at Fermilab and for our continuing 
commitment to the Large Hadron Collider project.
    Question 4. Advanced Scientific Computing Research funding receives 
a 1.0% increase, still less than the rate of inflation. According to 
industry experts, the fastest supercomputer in the world is currently 
at the Earth Simulator Center in Japan, which is between 2 and 3 times 
the fastest American supercomputer. Does this effective cut in funding 
for advanced computing mean that the Department is comfortable with the 
U.S. not having the premier computing facilities in the world?
    Answer 4. The goal of the Office of Science is leadership in 
computational science, not simply the largest possible computer. We are 
moving aggressively to improve the computational hardware capabilities 
we can provide our scientists. With the solicitation we initiated in 
February and the budget we submitted for FY 2005, we should have world-
class capability in early 2006. However, leadership in computational 
science depends on many factors, including raw hardware performance, 
sophistication of software and algorithms, and the scientific quality 
of the models themselves. For example, our Scientific Discovery through 
Advanced Computing effort has increased the speed of some important 
applications by factors of 3 to 10. The investments in computing 
hardware complement and build on these software investments. 
Nevertheless, it is important to note that these computer investments 
are made to advance science; and scientific progress, not teraflops, is 
the metric with which we should concern ourselves.

                  QUESTIONS FROM REPRESENTATIVE GORDON

Medical Screening for Nuclear Workers at the X-10 and Y-12 Facilities
    The Department of Energy has operated a medical screening program 
for current and former workers who are at risk of occupational diseases 
from exposure to toxic substances such as radiation, mercury, and 
solvents at approximately 12 nuclear weapons sites over the past 6 
years. The great thing about this DOE program is that it is helping 
people who were put in harm's way while they worked under 
ultrahazardous conditions building weapons for the nation's arsenal.
    I understand Doe plans to start a medical screening program for the 
production workers at the Y-12 and X-10 facilities in Oak Ridge. I am 
pleased that DOE has taken this long overdue step. Workers at this site 
are particularly at risk from lung cancer due to inhaling so many lung 
carcinogens.
    However, I have an unresolved concern. Mr. Secretary, workers in 
Oak Ridge at the K-25 facility, in Portsmouth, Ohio in the district of 
my friend Representative Ted Strickland, and in Paducah, Kentucky in 
the district of my friend representative Ed Whitfield all have the 
benefit of an enhanced lung screening program that is saving dozens of 
lives by detecting lung cancer at its earliest stages when tumors can 
be removed before they spread. The workers at Y-12 and X-10 will not 
have this life-saving technology made available to them, and this is a 
matter that they have brought to my attention and the attention of 
others in the Tennessee delegation.
    Question 1. Since these workers are at an increased risk of lung 
cancer, based on health studies at these facilities, do you agree that 
it is an important priority to assure that workers at Y-12 and X-10 
have state-of-the-art early lung cancer screening as part of the DOE's 
program?
    Answer 1. As a component of its medical screening program for 
employees of the Gaseous Diffusion Plants, DOE has offered an 
additional pilot effort: the use of the spiral CT scan to check for 
early signs of lung cancer.
    DOE will not be prepared to make a determination on the use of the 
spiral CT scan for Y-12 and X-10 employees until a thorough external 
review has been completed on the costs and benefits of this screening 
tool in the Gaseous Diffusion Plant employees. The PACE International 
Union and Queens College have not yet provided an analysis of CT scan 
findings in this population that could be shared with an expert 
external review group.
    DOE's concerns about the use of the spiral CT scan for this purpose 
are based on the fact that it has not been endorsed by any clinical 
screening standards setting bodies as an appropriate lung cancer 
screening tool. A nation-wide National Institutes of Health study 
designated to answer this question is currently underway.
    Question 2. I understand that DOE has allocated approximately $1.4 
million for FY ``05 for the conventional medical screening programs for 
Y-12 and X-10. I also understand that the added cost of early lung 
cancer screening is approximately $1.8 million. DOE has set aside $13.1 
million in its budget for the medical screening programs. Could you 
commit to allocating an added $1.7 million out of that account to make 
sure these workers are taken care of?
    Answer 2. DOE has allocated approximately $700,000 in the FY ``05 
Health budget for the conventional medical screening programs for Y-12 
and X-10. If a decision were made to proceed with the spiral CT scan 
following review of its use as a screening tool, DOE would take 
appropriate action to ensure that additional resources were made 
available.

                  QUESTIONS FROM REPRESENTATIVE ESHOO

Impacts of National Energy Policy on Energy Production and Dependence
    Question 1. On March 31, 2004, the White House issued a statement 
calling on Congress ``to pass a comprehensive national energy policy 
that will reduce our dependence on foreign sources of energy.'' The 
Department of Energy's Energy Information Administration (EIA) has 
reported that the Administration-backed Energy Policy Act will have 
``negligible'' effect on domestic production and on our dependence on 
imported fuel. EIA has also said that the bill's ethanol mandate could 
add as much as 8 cents to the cost of each gallon of gasoline. Based on 
EIA's analysis, how will passing this bill reduce our dependence on 
imported fuel and reduce consumers' costs?
    Answer 1. The transportation sector accounts for nearly 30 percent 
of total U.S. energy consumption, and transportation costs have been 
rising, particularly as the economy improves. Although the recent fuel 
price spikes concern the public and the Administration, it is important 
to note that such increases have occurred many times in the past. For 
instance, during 2000, fuel prices rose by 30 to 40 cents a gallon from 
1999 prices.
    With regard to EIA's analysis, the Department believes that the 
gasoline price differential of the energy bill reflected in the EIA 
analyses does not accurately portray what is likely to happen. EIA's 
base case analysis includes MTBE bans for only 17 States, while the 
Department believes that MTBE will essentially be banned for all 
gasoline after these State bans go into effect. Including this one 
assumption in EIA's base case would change the results of the energy 
bill analysis substantially. If one were to also include the likely 
extension of the ethanol tax credit (or some incentive similar in 
effect), one would effectively eliminate the entire gasoline price 
differential between the two cases. Additionally, the EIA analysis does 
not consider regional or local price volatility that may occur during 
transitions from MTBE due to State actions.
    The Administration believes that the passage of comprehensive 
energy legislation, coupled with the implementation of the 
recommendations of the President's National Energy Policy (NEP) by the 
Executive Branch, will provide balanced long-term measures to address 
the domestic energy situation. We are pleased that many NEP 
recommendations requiring Congressional action are included in energy 
legislation currently pending in Congress. For instance, provisions 
promoting greater energy efficiency and increased emphasis on energy 
technologies are included in pending comprehensive energy bills. 
Implementation of such approaches would help make transportation fuels 
more affordable.
    Unfortunately, some NEP recommendations, such as opening a small 
portion of Alaska's coastal plain to environmentally responsible oil 
and gas exploration and development, are not included in pending bills, 
such as the H.R. 6 Conference Report. Hampering our ability to 
responsibly develop America's domestic energy resources will only 
contribute to our continued reliance on insecure foreign sources of 
energy and contribute to price volatility.
    The Administration continues to urge Congress to finish the job of 
passing comprehensive energy legislation, which, together with ongoing 
administrative implementation of NEP recommendations, would improve the 
Nation's energy and economic security.

MTBE ``Safe Harbor'' Provision
    Question 2. The main reason that the Conference Report on the 
Energy Policy Act is being filibustered by a bipartisan group of 
Senators is the inclusion of a ``safe harbor'' provision that exempts 
the producers of MTBE from liability. Does the Administration support 
the MTBE ``safe harbor'' provision?
    Answer 2. The Administration has not stated a position on this 
issue. Whether the comprehensive energy bill should contain an MTBE 
``safe harbor'' provision and, if so, what that provision should say 
are issues on which the House and the Senate are going to have to work 
together to reach a compromise. The MTBE liability issue arose during 
Congressional consideration of the comprehensive energy legislation, 
and was not part of the President's National Energy Policy.
Administration Position on SUV Tax Loophole for Small Businesses
    Question 3. The 2003 tax cuts expanded a tax loophole that allows 
businesses to claim a tax deduction for the purchase of SUVs weighing 
more than 6000 pounds. Under the 2003 tax law, the deduction was 
increased from $25,000 to $100,000. The deduction for all other 
passenger vehicles is currently just over $10,000. The Joint Committee 
on Taxation estimates that between 2003 and 2012 the SUV subsidy will 
cost taxpayers $1.26 billion. Does the Administration support retaining 
the subsidy? Would it support treating large SUVs the same way other 
passenger vehicles are treated under the tax code?
    Answer 3. The Administration supports the higher allowable dollar 
limit on expensing of small business investment costs, as enacted in 
the Jobs and Growth Tax Relief Reconciliation Act of 2003. In its FY 
2005 Budget, the Administration proposed making the new small business 
expensing limit permanent in order to encourage small business 
investments and to support tax simplification. The expensing of large 
SUVs under this provision is a consequence of the inapplicability of 
the special limits imposed on depreciation and expensing deductions for 
passenger automobiles. This has been a longstanding issue that predates 
the latest expansion of the small business expensing limit. The 
Administration is willing to work with the Congress to arrive at a 
workable and fair policy in this area.

Office of Science
    Question 4. Investment in basic science at the Department of Energy 
has stagnated and, in fact, declined in the face of inflation over the 
past several years. As a result, the U.S. is at risk of losing its 
leadership role in the areas of physical, biological and environmental 
science. Will the Administration commit itself to substantially 
increasing funding for the Department of Energy Office of Science?
    Answer 4. The Administration recognizes the importance of basic 
science at the Department and in other agencies. The needs of the 
Office of Science have been balanced among many other competing needs 
within the Department. I appreciate your support for these important 
programs, as funding for basic science is one of my personal 
priorities. I outlined an aggressive path to ensure America's continued 
leadership in the physical sciences when I announced the Facilities for 
the Future of Science: A Twenty-Year Outlook last November. As you 
know, however, many meritorious programs are competing for funding in a 
highly constrained budget environment, so I cannot prejudge the end 
result of this process. As budgets are developed, it is up to the 
Administration and the Congress to determine where and how available 
resources will be allocated.

                   QUESTIONS FROM REPRESENTATIVE WYNN

    Question 1. The FY 05 budget contains funding for the hydrogen 
programs to reach key milestones in the hydrogen fuel initiative. What 
sort of funding obstacles could stand in the way of reaching those 
milestones.
    Answer 1. Three funding obstacles could stand in the way of 
reaching key milestones for the hydrogen fuel initiative:

1. Earmarks, especially where the recipient is identified, hurt our 
        ability to competitively award research funding to 
        organizations/persons with the best ideas and capability. 
        Approximately half of the FY 2004 Hydrogen Technology funding 
        in the Energy and Water Development appropriation is for 
        Congressionally-directed projects, which eliminated the 
        Department's ability to fund any new research projects to 
        overcome technical and economic barriers related to hydrogen 
        storage, production, delivery, infrastructure, and safety. 
        Because of these earmarks, funding of three competitive 
        solicitations in hydrogen production and delivery, storage, and 
        infrastructure has been delayed until FY 2005 (subject to 
        congressional appropriations). This slips most of our interim 
        milestones approximately one year, but it is too early in the 
        program to slip the 2015 commercialization decision. However, 
        additional earmarks in the FY 2005 appropriation will cause 
        further milestone delays and potential slippage of the 2015 
        decision.
2. An appropriation significantly below the FY 2005 request of $227 
        million would have the same effect as described above. 
        Additional slips in key milestones will occur and the 2015 
        commercialization decision may be delayed.
3. A Continuing Resolution (CR) would prevent the Department from 
        ramping up research toward key milestones as planned. The 
        Department's FY 2005 request for the Hydrogen Fuel Initiative 
        of $227 million represents an increase of $68 million to expand 
        research and development activities to meet technical targets 
        for the 2015 commercialization decision. A CR at the start of 
        FY 2005 would likely require us to operate at steady-state, 
        i.e. at the FY 2004 appropriation level of $159 million.
    Question 2. Key barriers in the area of hydrogen storage and 
production need to be used crossed before a hydrogen economy is a 
reality. What steps is the Department of Energy taking to ensure that 
colleges and universities train capable engineers and scientists who 
can help us cross those barriers?
    Answer 2. In the very near future, the Office of Energy Efficiency 
and Renewable Energy will announce awards under two high priority 
solicitations for hydrogen technology research and development. 
Approximately 30-40 projects (more than half of the total awarded) will 
be awarded to universities through the ``Grand Challenge'' Solicitation 
for Hydrogen Storage. The Hydrogen Production and Delivery research 
solicitation also included a special category developed specifically 
for universities. Funds awarded under both of these solicitations will 
support graduate student research and post-doctoral research 
fellowships.
    In conjunction with the State Technology Advancement Collaborative, 
DOE has awarded funds to universities to create hydrogen technology 
learning centers. The 2004 projects involve three university 
partnerships--

(1) University of California at Davis, Rochester Institute of 
        Technology, San Diego Miramar College, and the Florida Solar 
        Energy Center;
(2) University of Maryland and Virginia Polytechnic Institute; and
(3) North Carolina A&T State University, University of South Carolina, 
        University of Georgia, and University of Florida.
    Each team is expanding its hydrogen and fuel cell activities and 
developing course materials for their university students, as well as 
creating a ``center'' in which members of the local community, from 
school children to business executives, can learn more about the 
hydrogen vision and fuel cell technology.
    In addition, this year the Department partnered with the National 
Hydrogen Association and ChevronTexaco to hold the first annual 
hydrogen fueling station design contest for universities. Student teams 
developed the technical specifications; conducted safety, economic, and 
environmental analyses; and created an education and marketing plan for 
a hydrogen fueling station. Seventeen teams from the United States and 
Canada submitted entries. The winning teams will be announced at the 
15th Annual Hydrogen Conference and Expo in Los Angeles on April 27. 
The contest engages students from a variety of disciplines--
engineering, architecture, business, and marketing--in the hydrogen 
economy. It also provides opportunities for students to have direct 
contact with the hydrogen industry, as well as for industry to 
experience students' creativity.
    DOE also manages the Graduate Automotive Technology Education 
(GATE) Program for universities. A new solicitation is expected this 
year, with funds to be awarded in fiscal year 2005, to support 
curriculum development and graduate student research. The GATE Program 
supports fellowships and curriculum in a broad range of advanced 
automotive technologies that will reduce the dependence of the Nation's 
personal transportation system on foreign oil and minimize harmful 
vehicle emissions. We anticipate that hydrogen and fuel cells will be a 
major area of interest.
    Question 3. Mr. Secretary, I am quite concerned about the lapse in 
authority for the Energy Savings Performance Contract Program, a 
program that encourages the public and private sectors to work together 
to make federal facilities more energy efficient. The project has not 
been included in the latest version of the Energy bill due to 
Congressional Budget Office's score of the program. It is my 
understanding, however, that the program has no budgetary impact. Does 
the Administration ``score'' this program? Why or why not?
    Answer 3. The Administration strongly supports enactment, as soon 
as possible, of legislation to extend the authority for Federal 
agencies to enter into Energy Savings Performance Contracts (ESPCs). We 
believe the legislation itself extending ESPC authority should be 
considered budget neutral. The energy efficient technologies installed 
with ESPCs are paid for completely by private companies who then recoup 
their investment and profit through the government's energy bill 
savings resulting from the use of these technologies. The Office of 
Management and Budget classifies all budget authority and outlays for 
ESPCs as absorbing discretionary resources.
    Question 4. In Maryland, the average gasoline price is at a record 
high of $1.73 per gallon for regular unleaded. Analysts predict that 
prices will continue to increase over the next several months.
    Last year, I proposed an amendment to the energy bill to boost 
funding [by $5 billion] for hydrogen fuel cells research and 
development and demonstration projects to make hydrogen fuel cells cars 
a reality by 2010. However, the amendment was rejected because my 
friends on the other side of the aisle rejected the amendment at too 
costly. Is the Administration prepared to endorse my plan to wean U.S. 
drivers off gasoline and into an era of hydrogen-powered cars?
    Answer 4. The Department worked with industry, academia, and other 
stakeholders devoting an entire year to developing a hydrogen roadmap--
a realistic plan to overcome the barriers and identify the paths 
forward to a hydrogen economy. The Department studied the problems and 
examined several strategies, including a more aggressive plan with an 
earlier commercialization date. Our analysis showed that the more 
aggressive path would be much more costly, and also more risky, because 
it would not allow adequate time for the necessary research, 
development and demonstration learning cycles.
    Our planning indicates that a 2015 commercialization date, assuming 
our budget requests are fully funded and unencumbered by earmarks, is 
an ambitious but achievable target. If, after early investments and a 
review of our progress, we conclude that it is possible to accelerate 
our efforts--we will. We will seek the funds needed to do so, but only 
after we can ensure that additional resources will be spent 
responsibly, and that we maintain a high probability of success. In the 
interim, promoting hybrid vehicles and other fuel-efficient cars is an 
excellent strategy to reduce U.S. demand for foreign oil, and to 
develop the electric-drive technologies that will eventually also be 
needed for fuel cell vehicles to be successful in the future.

Refining Capacity
    Question 5. Currently, oil refineries are running at about 95 
percent, or near capacity. If there is a disruption in the country's 
refining production, prices are likely to rise significantly. What is 
the Administration doing to increase refining capacity so that we can 
avert price spikes?
    Answer 5. The President's National Energy Policy contains a number 
of recommendations to address refinery capacity, and supply and price 
of transportation fuels for our economy. For example, the 
Administration has proposed and finalized rules to make the New Source 
Review program work more efficiently and effectively. These revisions 
have been challenged in the courts, however, and the effective date for 
some of the revisions has been stayed. We believe that reforming the 
NSR program is important because it will provide greater certainty for 
the investment needed to modernize and improve the efficiency of our 
refining system.
    Price spikes are typically caused by supply disruptions. In the 
case of any supply disruption, the Administration will assess the 
situation and act, as warranted by the situation and consistent with 
DOE's legal authorities, to alleviate any restrictions on supply.

                   QUESTION FROM REPRESENTATIVE GREEN

Deliveries to the Strategic Petroleum Reserve
    Question. Since last summer DOE has nearly tripled the rate at 
which the SPR is filled: from 60,000 barrels per day in June, 2003 to 
170,000 in March 2004. Over this period, oil prices have risen and 
stayed at near record highs.
    Major combat operations in Iraq ceased on May 1st, 2003, before SPR 
shipments dramatically increased, so it would seem that the urgency to 
fill the SPR would have lessened, rather than increased since then.
    Since OPEC's member states are notorious for cheating on their 
production quotas, we should not give them too much credit for being 
able to adjust their production to accommodate SPR shipments.
    Right now we have an immediate problem on our hands of extremely 
high gasoline prices, in large part because of high oil prices. I'm 
also concerned with releasing oil from the SPR to manage price, but I 
think that Administration should reduce deliveries, and put that oil 
into the market to take the pressure off.
    How does the Administration explain DOE's policy of increasing the 
SPR fill rate to 170,000 plus barrels per day when crude prices remain 
at near record highs?
    Is the option of ceasing or significantly reducing deliveries 
totally off the table for this Administration?
    Answer. The SPR is being filled primarily by the transfer of 
royalty oil from Federal offshore leases in the Gulf of Mexico. The 
rate of transfer is determined through agreements reached with the 
Department of the Interior (DOI), which administers Federal offshore 
leases and the collection of royalty payments. After November 2001, 
when the President directed that the SPR be filled to its 700 million 
barrel capacity, the Department of Energy (DOE) and DOI negotiated an 
initial fill rate of 60,000 barrels per day for a period of one year, 
with an eye on increasing the volumes of royalty transfer oil in 
subsequent contract periods as DOI identified additional candidate 
leases to include in the program. The volumes increased to about 
100,000 barrels per day, and then to about 115,000 barrels per day. For 
the period April 1, through September 30, 2004, the rate is expected to 
be about 105,000 barrels per day. The daily figure referred to in the 
question is the actual volume being delivered to the SPR and is a 
combination of new transfers from the Department of the Interior to 
Energy plus shipments that had been deferred during 1999, 2000 and 
2001. As of May 2004, all oil owed to DOE due to previous deferrals 
will have been received, and deliveries will reflect only the current 
contracted volumes of about 105,000 barrels per day.
    Although we are concerned about the Nation's economy, we believe 
that filling the SPR at these rates has only minimal impact on the 
market price of oil, especially when compared with world production of 
80 million barrels of oil per day. We also believe that in a world 
where we continually see acts of terror aimed at disrupting the world's 
oil industry, the national security priorities of filling the SPR take 
precedence. We are filling at a modest rate and in a deliberate and 
transparent manner that serves to maintain stability in markets, 
especially when compared with the speculation which would be created if 
the Department of Energy were entering and exiting the market in 
reaction to changing conditions. It is our intention to continue 
filling the Reserve at a moderate rate until it reaches an inventory of 
700 million barrels in 2005.

                QUESTION FROM REPRESENTATIVE STRICKLAND

    Question. According to press reports and the GAO's testimony in the 
Senate at the end of March, it appears that DOE's performance is 
lagging the Department of Labor (DOL) in implementing the Energy 
Employees Compensation Program. Specifically, DOE has spent 
approximately $74 million on its responsibilities under this 
compensation program and only one claim to date has been paid out of 
23,000 filed. Moreover, DOE has processed fewer than 2% of the claims 
it has received through the physicians' panels who evaluate causation.
    By contrast, the DOL has paid out $800 million in benefits and 
medical care and has processed over 95% of the claims within its area 
of responsibility under a separate title of EEOICPA--Subtitle B dealing 
with radiation-related cancers, beryllium disease and silicosis.
    Last year DOE told this Committee (March 5 hearing) it would speed 
claims processing, in part, by developing site profiles of toxic 
exposure at these nuclear sites and use these generic assessments to 
expedite processing.
    At the March 30, 2004, Senate Energy Committee hearing, it is my 
understanding that the Under Secretary of Energy stated that DOE had 
decided not to perform site profiles for speeding claims processing 
because it does not make sense from a cost-benefit perspective. Thus, 
last year's path forward has been discarded and a new path forward has 
been proposed. In the meantime, paltry progress has been made on the 
DOE's caseload, and the commitments made last year before this 
Committee to move 100 claims per week through the DOE's physicians' 
panels have not been honored. Indeed, DOE has only moved approximately 
400 claims through its doctors' panels in the past 3 + years since the 
law was enacted. And, it still remains that many claims will never be 
paid because DOE lacks a willing payer.
    Given the difficulties faced by the DOE, and the earnest desire of 
many members to transfer this program to DOL so help can be provided to 
sick nuclear workers, please advise why DOE opposes the transfer of 
this entire program to the Labor Department.
    Answer. The Department opposes the transfer to DOL, because the 
problems we have experienced in the Part D program will not be solved 
by moving to it to DOL. DOE must still perform the field data 
collection, which requires the most time and can be the most costly 
part of case development. Further, under the current statutory 
requirements, the most significant bottleneck--the Physician Panel 
process--will not be improved by moving the program to DOL. In fact, 
unless other changes are made to the law, a transfer to DOL would, at a 
minimum, halt case production for several months. A transfer to DOL 
also would not address the issues raised regarding ``willing payer'' as 
these issues are created by the statutory language and the contractual 
relationships between DOE and its contractors.
    While the Department had a slow start, DOE has substantially 
improved its process, and has demonstrated the ability to successfully 
ramp up its processes. Physician Panel determinations have increased 
nine-fold (3 to 28) over the last six months and case processing up to 
the Physician Panels has increased over three-fold (35 to 115).
    The Department has instituted a series of reforms to improve its 
performance, highlights of which include:

 the revisions to DOE's regulations which were issued as an Interim 
        Final Rule on March 17, 2004. The revisions are expected to 
        double the productivity of the Physicians Panel process;
 a reprioritization of work on Part D applications so as to expedite 
        the processing of the greatest number of cases and move to the 
        front of the queue those applicants we believe are most likely 
        to receive the greatest benefit from the Part D program;
 an aggressive, and multi-agency coordinated set of initiatives to 
        recruit physicians;
 proposed legislative changes to amend the EEOICPA statute to 
        eliminate the pay cap on physicians serving on Physician Panels 
        and expand hiring authority for them; and
 Additional budget: Congress approved $23.3 million of the requested 
        $33.3 million appropriations transfer. These funds will provide 
        for additional contractor support, staff and other resources 
        needed to increase the rate of case processing and Panel 
        determinations.
    For several reasons, we believe it is potentially misleading to 
compare the $74 million in appropriations to the number of cases 
processed through the panels to date and the number of cases for which 
the applicants have received monetary compensation through the State 
workers compensation system. First, it is important to understand that 
Part D does not authorize the Department of Energy to directly pay 
claims. Rather, under Part D of the EEOICPA statute, State workers' 
compensation processes determine final compensation and DOE simply 
provides assistance to applicants in that process. Second, since the 
beginning of the program in FY 2001 through March 31, 2004, DOE has 
expended $58.3 million for the program. Besides start up activities 
such as developing Rules, procedures, and electronic databases, the DOE 
program has also:

 Processed over 40,000 employment verifications for DOL's Part B 
        Program;
 Researched and provided to NIOSH over 17,000 radiation exposure 
        records, again for the Part B program;
 Initiated work on over 15,000 Part D applications;
 Prepared for Physician Panel review over 3,500 Part D cases, 
        essentially completing all DOE work for these cases; and
 Totally completed over 2400 Part D cases with final results sent to 
        applicants.
    Finally, with respect to site profiles, at the March 30, 2004, 
Senate Energy and Natural Resources hearing on EEOICPA, the Under 
Secretary stated the rationale for this decision:
        . . . the term site profile is not clearly defined, but for the 
        advocates of that, I would say we have not yet engaged in a 
        site profiling program. Our sites have much information 
        available, historical information, as to what contaminants 
        existed in what buildings. We have not yet found there to be a 
        cost benefit in our opinion of conducting site profiles for the 
        applicants that we're looking at, because it would require 
        diversion of substantial resources from the problem that we've 
        highlighted here [acquiring the resources to eliminate the 
        backlog] into that activity, and we don't want to do that until 
        we're sure that there's going to be some payoff to the workers 
        for doing that.
    As the Under Secretary stated, there is no clear agreement about 
what constitutes a ``site profile'' for the Part D program given the 
extreme breadth of illnesses and potential agents. The Department's 
analysis raises several questions and issues with regards to site 
profiles for Part D. Data is unlikely to exist that would significantly 
improve the site data currently provided to the Physician Panels. 
Significant technical hurdles exist in determining the data required 
for future determinations and packaging this data to be useful in a 
majority of the cases the Physician Panels review. In addition to the 
data and technical hurdles, the latest estimate for the cost is $20 
million or nearly half of the Part D FY05 proposed budget. This cost 
would not only divert resources from providing our applicants with 
determinations but would also lead to a significant delay in 
eliminating the backlog. In general, job-exposure matrices can be 
exceptionally difficult, labor intensive, and expensive, if they are 
scientifically feasible at all.

                  QUESTIONS FROM REPRESENTATIVE DOYLE

    Question 1. As a co-chair of the Distributed Generation Caucus I 
have seen the tremendous advances in technologies ranging from 
stationary fuel cells to hydrogen fuels and other sustainable and 
pollution free advances that we will be able to obtain in the near 
future. In your budget you slash funding for critical base programs 
such as DOE's core R&D programs. Why do you put such focus on unproven 
and undeveloped technologies of the future at a primary cost to the 
continued development of technologies that will not only help us in the 
short term, but will bridge the technological gap to attaining your 
long term goals?
    Answer 1. In the case of distributed generation technologies, our 
FY 2005 request has actually increased over the FY 2004 request. This 
is also true for our total renewable energy portfolio. The Office of 
Energy Efficiency and Renewable Energy (EERE) funds a diverse portfolio 
of research and development (R&D) programs that are designed to address 
the Nation's short-, mid-, and long-term energy needs.
    Our longer-term research focuses on high-risk, high-reward 
activities because of insufficient private investment in these areas. 
The large potential public benefits of these technologies, including 
energy security and economic growth, warrant Federal investment. The 
Department's investment in hydrogen and fuel cell R&D stands out as an 
example of the Federal government's resolve to advance high-risk 
technologies that have the potential to transform our energy and 
transportation infrastructure and provide security, environment and 
health benefits for future generations.

Clean Coal, in relation to FutureGen and R&D cut
    Question 2. Given the administration's often stated goal of using 
clean coal as one of the core pillars that will lead to national energy 
self-sufficiency, I find it hard to believe that central programs to 
develop this resource have been cut by over 42% in your current budget 
with even more funds being diverted to fund the conceptual FutureGen 
program. Can you explain to me the benefit of slashing proven clean 
coal programs, which have made notable strides in recent years, in 
favor of FutureGen, a new, unproven and certainly untested concept?
    Answer 2. The coal research funding request for FY 2005 is a 
balanced approach that is expected to yield the most benefits, both 
near term and long term. DOE's coal research program integrates the 
base research and clean coal power initiative (CCPI) (of which 
FutureGen is a part) on a technology roadmap that leads us to an 
affordable, zero emission coal energy option. The budget request 
provides for critical research and demonstration of such research (when 
sufficiently mature) in the CCPI projects. The Administration's request 
also provides for a second round of CCPI projects aimed at nearerterm 
commercial deployment. At the same time the funding request provides 
for critical supporting research efforts to reduce risks and costs for 
achieving the goals for FutureGen

FutureGen
    Question 3. As I talk to my colleagues, members of industry, and my 
constituents, I have found that one central issue continues to arise in 
regard to FutureGen. Simply put, it is a concept and goal without a 
clear plan that will lead to that goal being achieved. Can you tell me 
when we can expect to see a clear and comprehensive plan for the 
FutureGen program that takes in account not only the future funding 
needs but the specific means by which you hope to achieve its 
technological goals? How will we get to and what is the overall 
projected cost of this concept?
    Answer 3. The FutureGen program plan was submitted to Congress on 
March 4, 2004. This report presents a clear and comprehensive plan for 
the FutureGen program, describing both the funding needs and the 
technical approach to meet the FutureGen objectives. Specific technical 
performance parameters and goals are detailed in the plan. The report 
describes the Department's intended path forward in a joint government-
industry FutureGen partnership, although the details of such a 
partnership and the resultant path forward are subject to negotiation 
with a qualifying industry consortium.
    As detailed in the plan, the overall projected cost for the 
FutureGen project is $950 million. DOE expects to contribute $500 
million directly to the FutureGen project, and $120 million will be 
funded through its Carbon Sequestration research and development 
program. DOE will use its best efforts to achieve or exceed a minimum 
80/20 cost share for the $120 million R&D from partners outside the 
consortium. International contributions to the FutureGen project are 
expected to be $80 million. As stated in the FutureGen report to 
Congress, DOE expects its industrial consortium partners to contribute 
$250 million in cost sharing to fund the FutureGen project.

FutureGen #2
    Question 4. Since it was first proposed, FutureGen has received 
what I would describe as a mixed and skeptical response from the same 
industries who will need to become active partners if the program will 
even have a chance to get off the ground, let alone meet its stated 
goals. What specific actions can we expect to see in the near term, 
other than diverting funds from core R&D programs, which will help the 
program achieve its long-term objectives?
    Answer 4. FutureGen was announced as a Presidential initiative on 
February 27, 2003. Since then, FutureGen has received strong support 
from states, industry, the international community, and several 
environmental groups. In response to DOE's Request for Information in 
April of 2003 on the FutureGen initiative, a consortium representing a 
broad cross section of the coal industry, comprised of companies that 
generate over one-fifth of the coal -based electricity and produce over 
one-third of the coal in the U.S., indicated an interest and 
willingness to partner with the government in this initiative. Congress 
appropriated $9 million for FutureGen in FY 2004. A FutureGen program 
plan was submitted to Congress on March 4, 2004, and presents the 
milestones, schedules and funding requirements to achieve the long-term 
objectives for FutureGen. In FY 2004, DOE plans to start the NEPA 
process, enter into negotiations with the industry consortium, and 
proceed with the development of site selection criteria and process, 
and start preliminary design for FutureGen.

Gas Hydrates
    Question 5. Over the past decade, the US market for natural gas has 
grown tremendously due in large part to policies that Congress and the 
last two administrations have promoted. One aspect of this national 
demand is LNG, liquefied natural gas, whose imports are expected to 
constitute an increasing proportion of our total natural gas supply. 
Furthermore, if we can locate only 1% of gas hydrates we would more 
than double America's intake of natural gas. Can you explain to me why 
the Administration has under-funded a program like gas hydrates whose 
potential is almost endless? And, do you foresee that programs such as 
this one will continue to be under-funded despite the incredible 
potential they could achieve?
    Answer 5. The FY 2005 budget request for hydrates is adequate and 
supports a portfolio of R&D projects consistent with the program's 
goals and the Administration's R&D Investment Criteria. Although the FY 
2005 Hydrates budget request is below the FY 2004 appropriation, the 
requested $6 million is above both the FY 2003 and FY 2004 requested 
levels. . In FY 2004 and FY 2005, the Hydrates program will focus on 
ongoing joint projects in assessing the potential resources in the Gulf 
of Mexico and in Alaska.

                 QUESTION FROM REPRESENTATIVE GONZALEZ

Natural Gas
    Question. In view of the importance of natural gas for providing 
affordable, clean, domestic energy for traditional heating and electric 
power applications, and the most realistic source for hydrogen as we 
move toward a hydrogen economy, why does the department's FY 2005 
budget request reduce the Natural Gas Technologies budget for FY 05 to 
$26 million, $17 million below its $43 million FY 04 appropriation, 
cuts the Gas Hydrates Program by $3.4 million below the FY 04 level of 
$9.4 million, and provides no funding for the Natural Gas 
Infrastructure program ?
    Answer. The Administration's FY 2005 budget request for natural gas 
research is at the same level as the FY 2004 request. In addition, the 
natural gas exploration and production budget request and the gas 
hydrates budget request are above the level in the FY 2004 request. The 
Department believes that this is the appropriate level based on the 
priority placed on addressing the growing demand for clean energy with 
a portfolio of research in Clean Coal, LNG, Clear Skies, renewables, 
conservation and more.
    Additionally, the natural gas program budget reflects the Program 
Assessment Rating Tool (PART) scores, which rated this program as 
ineffective for the past two years, although the scores improved from 
FY 2004 to FY 2005. However, the Department is committed to improving 
performance and is taking active steps to improve project planning and 
measuring effectiveness. We are in the process of an oil and gas 
strategic planning initiative and are working with external groups to 
improve our benefits measures.

                                 
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