[Senate Hearing 108-448]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-448

 PROPOSED FISCAL YEAR 2005 BUDGET REQUEST FOR THE DEPARTMENT OF ENERGY

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

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

     TO CONSIDER THE PRESIDENT'S PROPOSED FISCAL YEAR 2005 BUDGET 
                      FOR THE DEPARTMENT OF ENERGY

                               __________

                           FEBRUARY 10, 2004


                       Printed for the use of the
               Committee on Energy and Natural Resources


                                 ______

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                 PETE V. DOMENICI, New Mexico, Chairman
DON NICKLES, Oklahoma                JEFF BINGAMAN, New Mexico
LARRY E. CRAIG, Idaho                DANIEL K. AKAKA, Hawaii
BEN NIGHTHORSE CAMPBELL, Colorado    BYRON L. DORGAN, North Dakota
CRAIG THOMAS, Wyoming                BOB GRAHAM, Florida
LAMAR ALEXANDER, Tennessee           RON WYDEN, Oregon
LISA MURKOWSKI, Alaska               TIM JOHNSON, South Dakota
JAMES M. TALENT, Missouri            MARY L. LANDRIEU, Louisiana
CONRAD BURNS, Montana                EVAN BAYH, Indiana
GORDON SMITH, Oregon                 DIANNE FEINSTEIN, California
JIM BUNNING, Kentucky                CHARLES E. SCHUMER, New York
JON KYL, Arizona                     MARIA CANTWELL, Washington

                       Alex Flint, Staff Director
                   Judith K. Pensabene, Chief Counsel
               Robert M. Simon, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
                 Pete Lyons, Professional Staff Member


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Akaka, Hon. Daniel K., U.S. Senator from Hawaii..................     6
Alexander, Hon. Lamar, U.S. Senator from Tennessee...............     7
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     1
Domenici, Hon. Pete V., U.S. Senator from New Mexico.............     1
Dorgan, Hon. Byron, U.S. Senator from North Dakota...............     4
McSlarrow, Kyle E., Deputy Secretary, Department of Energy.......     9
Murkowski, Hon. Lisa, U.S. Senator from Alaska...................     8
Smith, Hon. Gordon, U.S. Senator from Oregon.....................     4
Thomas, Hon. Craig, U.S. Senator from Wyoming....................     3

                                APPENDIX

Responses to additional questions................................    39

 
 PROPOSED FISCAL YEAR 2005 BUDGET REQUEST FOR THE DEPARTMENT OF ENERGY

                              ----------                              


                       TUESDAY, FEBRUARY 10, 2004

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.

    The committee met, pursuant to notice, at 10:08 a.m., in 
room SD-366, Dirksen Senate Office Building, Hon. Pete V. 
Domenici, chairman, presiding.

          OPENING STATEMENT OF HON. PETE V. DOMENICI, 
                  U.S. SENATOR FROM NEW MEXICO

    The Chairman. The hearing will please come to order.
    There are a lot of Senators who want to participate. I do 
not know how long each one wants, but I am going to give it a 
trial run anyway, assuming that everybody will be reasonably 
fair knowing that there are many Senators. I am going to let 
Senator Bingaman start since we are late and he has been 
waiting.
    Senator Bingaman.

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

    Senator Bingaman. Thank you very much, Mr. Chairman, for 
having the hearing.
    I welcome the Deputy Secretary, Kyle McSlarrow. I know he 
has a very busy schedule and we appreciate him spending time 
with us.
    The Department budget, as I understand it--and this is all 
to be clarified, I am sure, by Secretary McSlarrow, but the 
budget is proposed overall to increase 1.2 percent. I am 
concerned about some of the priorities reflected in that 
budget, though. As I understand it, the Office of Science, 
which is the premier funding source for the physical sciences, 
is slated for a decline of 2 percent.
    I see an unfortunate trend in basic research across the 
executive branch. When you take out the funding for NIH, the 
basic research budget of the Federal Government is decreasing 
by 2.5 percent, as I understand the proposal of the 
administration. This is obviously our investment in the future 
and it is important in maintaining our competitive position in 
the world.
    The administration is aggressively pursuing hydrogen 
research, but the hydrogen economy's growth is at the expense 
of other energy R&D programs, as I see the budget, particularly 
DOE's conservation research with most of the energy-intensive 
industries. This program which has been designated the 
Industries of the Future program is scheduled for a 37 percent 
decline from the 2004 level. If you compare the 2005 proposed 
budget to the 2003 budget, it is a 60 percent decline. This 
Industries of the Future program is to develop partnerships 
between industry and Government, to enable the steel industry, 
the glass industry, paper, chemicals to be energy efficient and 
competitive in order to retain manufacturing jobs in this 
country. As I understand it, there is a major, major lack of 
focus on that by the administration.
    Because of OMB's cap on discretionary spending, the 
Department is proposing to take off budget $749 million from 
the nuclear waste fund. This is money that nuclear utilities 
paid in to help license Yucca Mountain, and I think we need to 
inquire about that as well.
    The overall management issue in the Department I think is 
one we need to ask a few questions about. OMB has their program 
assessment rating, and they have given the Environmental 
Management program a score of 26 out of 100. That is obviously 
a cause for concern. The Office of Science got a similar rating 
of 82 to 93 percent, which is extremely impressive, but they 
are the ones scheduled for the cut in budget. So there are 
various issues there I think that need to be addressed.
    I am concerned about the holding back of funds in the 
environmental management effort for our State. As I understand 
it, the Department has held back $69.5 million, or 33 percent, 
of the cleanup budget for fiscal years 2003 and 2004 because of 
the failure to reach an enforceable agreement with New Mexico 
on some of these issues, and there is an additional $47 million 
scheduled to be withheld in this budget until that agreement is 
reached.
    Let me mention one other issue that I would like to ask Mr. 
McSlarrow about and that is the whole issue of processing 
claims by the atomic workers in the DOE. This is an issue that 
I continue to hear great concern about.
    One example. We have a State representative, Ray Ruiz, in 
New Mexico who was diagnosed with mesothelioma sarcoma, which 
is an illness that you contract from working with asbestos. He 
contracted the disease as an iron worker at Los Alamos. He has 
been in touch with me about his frustration about the slowness 
of the review of workers compensation claims. He has followed 
these hearings. I think we need to find a way to get these 
claims processed. Clearly that has not been happening. I hope 
we will find some way to solve that problem, and when we get to 
the questions, I will ask Mr. McSlarrow about that.
    Thank you again, Mr. Chairman.
    The Chairman. Thank you very much, Senator Bingaman.
    Let me first say good morning to you, Mr. Deputy Secretary. 
I would welcome you here and thank you for the job you do with 
reference to the Department. You have worked diligently. It is 
a very hard Department to manage and I do not know what they 
would do without you.
    I am pleased to be joined by the ranking member, Senator 
Bingaman.
    The Department of Energy has a significant presence in our 
State, New Mexico, and we will both have questions either 
orally or in writing with reference to the impact of this 
budget, Mr. Deputy Secretary.
    As we start this hearing, I would like to congratulate the 
Department on their ranking as first among all cabinet agencies 
in a recent review of the implementation of the President's 
Management Agenda. That is an impressive achievement and a 
major turnaround for the Department.
    The President requested $24.3 billion for the Department 
which represents a $1 billion, or 4.5 percent, increase. While 
this appears to be good news, in a budget that is significantly 
constrained for non-defense, non-homeland security spending, a 
closer look reveals that $749 million, Senator Bingaman, of 
that increase is associated with the reclassification of 
mandatory fees associated with Yucca Mountain, a high-level 
nuclear waste repository, to discretionary spending. That does 
not sound like much to anybody, but it is a very, very 
important thing as we attempt to find the money for what we 
think we need. This is a dramatically different story from the 
DOE budget that is first portrayed.
    I realize in wartime budgets domestic agencies and programs 
have to prioritize within overall budget limitations. Energy 
programs under the Office of Science, Fossil Energy, et cetera 
are all concerns, as indicated by the ranking member, of his 
and mine, and I would venture every member of the committee. 
Perhaps if we do not talk about them all today, you will get 
the questions in writing.
    We keep hearing from outside evaluators that the DOE 
laboratories have to be the best research institutions in the 
world, and they probably are. But they are not going to stay 
that way if we continue to underfund science at the 
laboratories and fund only the defense work at high dollars.
    So having said that, I am going to yield, starting on this 
side with the first Senator who was here. Senator Campbell.
    Senator Campbell. I have no opening statement, Mr. 
Chairman.
    The Chairman. All right.
    The Senator from Wyoming, would you like to ask some 
questions?

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

    Senator Thomas. Thank you, Mr. Chairman.
    Well, I am anxious to hear more about the budget, of 
course.
    The Chairman. Strike that. I did not mean ask questions. 
Would you have some observations?
    Senator Thomas. That is what we are here for.
    I guess as I look at this overall sheet, I find the State 
that probably has more potential for energy production than any 
other State with a substantial reduction in the budget. I find 
that sort of interesting. Particularly when we are talking 
about hydrogen and FutureGen and so on. We are the largest 
producer of coal by any means. So I want to talk a little bit 
about that later and some of these things.
    It is kind of interesting to see this State by State sheet 
and be the State that is the biggest producer of energy and 
find that our involvement here--and much of it is with WAPA and 
other kinds of government programs--is down substantially from 
where it has been in the last 2 years. So I am hopeful that you 
will give me some insight into that and maybe we can talk a 
little bit about what the purpose of this budget is.
    Thank you.
    The Chairman. Senator Dorgan.

         STATEMENT OF HON. BYRON DORGAN, U.S. SENATOR 
                       FROM NORTH DAKOTA

    Senator Dorgan. Mr. Chairman, thank you very much.
    There is much, of course, to consider in these budget 
requests, and my colleagues have mentioned several issues of 
concern. Let me mention two.
    One is the purchase power issue with respect to the PMA's. 
I thought we had solved that problem. We had a little problem 
in the previous administration on this. But the budget 
recommendation here is just fundamentally wrong and would 
injure, in my judgment, the PMA's, and I hope that we can 
resolve that. I do not know that I will be here to ask Mr. 
McSlarrow questions, but we need to get that fixed. The 
recommendation I think is wrong-headed.
    Mr. Chairman, the other issue that is of great concern to 
me, among many, is the clean coal power initiative. That is cut 
from $170 million to $50 million, but it is combined with 
FutureGen, so it makes it look like there are not the deep cuts 
that do exist really. The President, when he campaigned, said 
his goal was $2 billion over 10 years for clean coal 
technology. We are going to continue to use coal, and the 
research, it seems to me, to be able to use that coal in a way 
that is not destructive to our environment, is critically 
important. I do not understand, given the President's 
statements, beginning when he campaigned for this job, of his 
support for clean coal initiatives, why we would have a very 
substantial cut in that request because I think that is not in 
our interest, not in our energy interest and certainly not in 
our environmental interest.
    So those are two areas that I will ask about, Mr. Chairman, 
if I have the opportunity today, and there are many other areas 
that we need to talk about dealing with renewable energy 
especially.
    The Chairman. Thank you very much.
    Who is next on our side?
    Senator Smith.

         STATEMENT OF HON. GORDON SMITH, U.S. SENATOR 
                          FROM OREGON

    Senator Smith. Thank you, Mr. Chairman. Kyle, welcome to 
the committee. It is nice to see you.
    I note two things in the budget proposal of concern to me 
and I just want to raise them with you. The first has to do 
with the Bonneville Power Administration and the second has to 
do with the cleanup at the Hanford site in Washington State.
    You probably are aware that the Northwest continues to 
suffer real volatility and the effects from the power problems 
there over the last few years. Our area of the country has been 
hurt economically, perhaps disproportionately, because of that. 
We currently suffer the highest unemployment rate in America.
    But the specific concern I have is that the proposal of 
possible legislation to treat long-term lease-purchase 
transactions as debt would count them against BPA's statutory 
debt limit. I believe that would have severe negative 
implications for needed infrastructure investments and would 
certainly draw my opposition if that were a part of this 
budget.
    Finally, I do not think we need to hamper our recovery 
because the Pacific Northwest will recover economically, and we 
need to have better transmission capabilities. So any limits on 
that would hamper, I think, third party financing that needs to 
occur, and that would not occur if this happens.
    As to Hanford in Washington State, we are down-river from 
that and we are very concerned that there is a proposal to cut 
funding for cleanup at the site. Even of greater concern is the 
proposal to reclassify residual tank waste, remaining after 
certain cleanup operations at Hanford, Idaho, and Savannah 
River, as waste incidental to reprocessing rather than high-
level waste. My concern is that anything less than full cleanup 
of the Hanford site and dealing with all of this fully is going 
to be unacceptable in an area that's very concerned about the 
continued nuclear waste in that area.
    So with that I will put my entire statement in the record, 
Mr. Chairman, if I may, and abbreviate those comments.
    [The prepared statement of Senator Smith follows:]
   Prepared Statement of Hon. Gordon Smith, U.S. Senator From Oregon
    Mr. Chairman, I appreciate your willingness to schedule this 
hearing today on the Department of Energy's budget request for fiscal 
year 2005. I would also like to thank Deputy Secretary McSlarrow for 
appearing before the Committee today.
    While we all recognize that these are times in which the Congress 
must exercise fiscal constraint, there are a number of policy issues in 
this budget that are of deep concern to me and to my constituents. The 
two main concerns which I would like to focus on today deal with the 
Bonneville Power Administration, and with the clean-up of nuclear waste 
at the Hanford site in Washington.
    The Pacific Northwest continues to struggle economically, although 
there have been some encouraging economic indicators in recent months. 
We also continue to bear huge costs resulting from the volatile West 
Coast electricity market of late 2000 and 2001.
    Most ratepayers in the Pacific Northwest have seen their power 
rates go up by at least 40 percent. BPA raised its rates again last 
October, and is scheduled to impose two more rate increases between now 
and October 2004. Meanwhile, our energy intensive industries are 
shuttered, and Oregon continues to have one of the highest unemployment 
rates in the country.
    I realize that BPA has tried, unsuccessfully, to negotiate a 
settlement to outstanding litigation. That settlement, had it been 
agreed to by all parties, would have reduced rates for BPA's customers 
this year. I would urge all of the parties to that litigation to try 
again to find some resolution to the issues that will provide rate 
relief to the ratepayers of the Northwest. Within the Department's 
budget proposal is discussion of possible legislation that would treat 
certain long-term lease-purchase transactions as debt, and would count 
them against BPA's statutory debt limit. I must tell you, Mr. 
Secretary, that this proposal would have severe negative implications 
for needed infrastructure investment, particularly in transmission, in 
the Pacific Northwest. Before you spend time developing and vetting 
such a proposal with BPA's stakeholders, I must inform you that--based 
on my current understanding of this concept--I would have to oppose 
such legislation.
    Our region will recover economically. When it does, the Pacific 
Northwest will once again have a shortage of electricity generation. We 
do not need to hamper our recovery by restricting needed third-party 
financing of infrastructure.
    Turning now to the Hanford site, I am troubled by a proposed cut in 
funding for the office of river protection, and for security at the 
site. Of greater concern, however, is a proposal to reclassify residual 
tank wastes, remaining after certain clean-up operations at Hanford, 
Idaho, and Savannah River, as ``waste incidental to reprocessing,'' 
rather than as High Level Waste. This is on top of the Department's 
announcement that it will not to build a second vitrification plant to 
handle tank waste at the Hanford site, but will use ``supplemental 
technologies'' to treat almost two-thirds of the tank waste.
    Let me make it clear to the Department that anything less than the 
full clean-up of the Hanford site is unacceptable to the Pacific 
Northwest. The Hanford site is only miles from the Columbia River, the 
greatest since natural resource in our entire region. The Department 
cannot expect that those of us who represent the Pacific Northwest will 
allow the Department to lower the bar for clean-up, and leave our 
region with untreated waste stored at the Hanford site for 10,000 
years.
    Mr. Chairman, this issue is vitally important to Oregon. I would 
like to work with you, my Northwest colleagues and the Department 
during this session--before the fiscal year 2005 budget is enacted--to 
get this clean-up program back on a track that is acceptable to the 
region.
    Again, thank you, Mr. Chairman, for convening this oversight 
hearing. I look forward to hearing from Deputy Secretary McSlarrow, and 
I will have questions for the Department.

    The Chairman. Thank you very much.
    Senator Akaka.

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

    Senator Akaka. Thank you very much, Mr. Chairman. I want to 
thank you for holding this hearing so promptly.
    I also want to add my welcome to Deputy Secretary 
McSlarrow. It is nice to see you again.
    Mr. Chairman, I would like to submit my remarks for the 
record, and I have a few questions later for Mr. McSlarrow.
    [The prepared statement of Senator Akaka follows:]
  Prepared Statement of Hon. Daniel K. Akaka, U.S. Senator From Hawaii
    The budgets of federal agencies, and especially those funded in the 
discretionary part of the budget, are very important. The federal 
budget is a template by which priorities are drawn. This year, all the 
programs for agencies in the discretionary part of the budget will 
receive only one-sixth of the President's $2.4 trillion budget. 
Essentially, the agencies are level-funded, and will not be able to 
keep up with inflation or cost-of-living.
    The budget of the Department of Energy is particularly significant. 
The availability of secure, reasonably-priced energy for the American 
people is a critical need. Long-term solutions to our energy problems 
require strong investments in science and research and development, 
firmly based in American ingenuity and technology, in order to solve 
our energy problems. Our investment in and commitment to the science 
and technology behind alternative and clean sources for energy security 
in the future must be greater than ever. Unfortunately, again this 
year, a strong commitment is not evident from the budget request.
    As you know, I have been a strong supporter of the DOE science and 
energy programs. I am disturbed that the FY 2005 request for the 
important programs in Energy Efficiency and Renewable Energy, Energy 
Conservation, and Fossil Energy are all level or less than what was 
requested for FY 2004. The notable bright spots are increases for 
Hydrogen technology in Energy Production and Vehicle Technologies in 
the Energy Conservation account.
    I have long monitored and supported Gas Hydrates Research. Gas 
hydrates represent a vast potential source of clean energy and warrant 
a serious research and development effort. The Administration's request 
has scaled back enacted levels consistently since FY 2002. These 
cutbacks continue to hinder progress significantly, with minimal 
associated savings. The nation's capabilities in science and technology 
would not have been realized without the investments made in the past. 
The country needs increased investment in basic research and resource 
assessment if we are to maintain our leadership in energy sciences and 
technology. The budget decreases in the Administration's proposal for 
the Natural Gas Technologies program will not help us improve our 
capabilities.
    I am pleased to see funding increases for the Hydrogen program. 
However, these increases are lower than what I, and many on this 
Committee and in the Senate, would consider to be adequate. There are 
many unanswered questions about the production and storage of hydrogen. 
These questions need to be answered prior to undertaking a 
comprehensive initiative to produce consumer goods such as automobiles, 
rather than a public good such as electricity. However, I am pleased to 
see that with respect to energy supply, there is an increase of $2.7 
million for research to lower the cost of renewable production of 
hydrogen. This is an important priority for my State. It is more 
important than the need to produce hydrogen-fueled cars, but it 
receives only secondary attention compared to fuel cells for cars and 
the infrastructure to support them.
    The National Academy of Sciences, in their pre-publication report 
on The Hydrogen Economy, recommends investing in ``targeted fundamental 
and exploratory research on hydrogen production by photobiological, 
photochemical, and thin-film solar processes.'' The production of 
hydrogen from renewables, whether for transportation or for stationary 
sources, is a quest for energy sources for the people of the U.S. We 
must provide adequate funds for these critical Hydrogen R&D programs. I 
am optimistic that a robust Hydrogen program can make positive and 
long-lasting adjustments for quality of life of people across the 
nation, whether or not we drive cars with hydrogen fuel cells.

    The Chairman. Thank you very much.
    The Senator from Tennessee.

        STATEMENT OF HON. LAMAR ALEXANDER, U.S. SENATOR 
                         FROM TENNESSEE

    Senator Alexander. Thank you very much, Mr. Chairman.
    Mr. Secretary, thank you for coming. Thank you for your 
hard work and your attention to these very important issues.
    There are three areas that I would like to concentrate on 
in my questions.
    One, I salute the President's priorities in his budget on 
focusing on defense and homeland security and then education, 
but I would note that half our new jobs, according to the 
National Academy of Sciences, since World War II were created 
by the physical sciences, and as we think about how to compete 
in the world marketplace, we need those new investments in 
technology.
    I would congratulate the Secretary for his excellent 20-
year plan, his path to the future, on science and technology, 
and I would hope, as Senator Bingaman mentioned a little 
earlier, that as we move along, we could begin to fund that 
plan. We have done a great job in doubling funding for NIH and 
increasing funding for the health sciences and life sciences, 
but we need to put a new focus on making the same kind of 
investment in the physical sciences. Within our tight budget, I 
hope that has a strong priority, and the administration I 
believe would find in this committee and in the Congress wide 
bipartisan support for such a budget priority. That would be 
the full funding of the 20-year plan that the Secretary so well 
outlined. That is the first thing.
    The second thing is that last year the Office of Science 
received an additional $30 million above the President's 
request to start the development of a leadership class 
computational facility. That is consistent with the 
recommendations made by the High End Computing Revitalization 
Task Force. I hope to hear from you as we get into questions 
and answers as to what plans the DOE has to accomplish this. I 
especially hope that we focus that money on a single effort as 
much as possible to be a world leader and do not just spread it 
out and make mediocre progress. So that is the second area.
    The final area that I hope to explore has to do with 
infrastructure. In States, we have capital budgets, and I 
remember, when I was Governor, almost the most unglamorous part 
of the budget was to try to maintain things, but if you did not 
maintain infrastructure right along, you paid a big price 
later.
    The Federal budget has a strange procedure of including 
those infrastructure payments in the operating budget. I am 
worried that the DOE Office of Science request is down, 
according to my figures, from $54 million to $29 million for 
scientific laboratories infrastructure. I hope that while it is 
not a sexy, spectacular part of any budget, that we can keep 
the infrastructure spending to support the science and 
technology investment.
    Those are the three areas I hope to explore in questions. 
Thank you for being here.
    The Chairman. Thank you, Senator.
    Senator Murkowski.

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you, Mr. Chairman, and thank you, 
Mr. Secretary, for your willingness to join us this morning.
    I am going to, during the question period, focus on two 
very specific areas, specifically the Arctic energy research at 
the University of Alaska and why we are not seeing a little 
more assistance there and then also the Department's processing 
of those claims under the Energy Employees Occupational Illness 
Compensation Program Act. As you know, we had a hearing in 
November and we were able to explore a little bit of what was 
happening with the processing of those claims by the 
Department. Specifically my concern was those claims coming out 
of Amchitka and some of the problems that we have with that. If 
I am not able to get all of my questions to you, I will 
certainly submit them in writing.
    I did have an opportunity, as we were sitting here, to just 
briefly go through your statement that you will give, and I am 
always looking for recognition of the fact that Alaska is truly 
the energy bank or certainly a major energy bank for the rest 
of the country when we think about domestic supply and 
production. I am a little bit disappointed, I guess, to note 
that the only mention of energy production in your narrative 
here is as it relates to foreign imports, and specifically a 
reference to the conference that was held in December on LNG, 
bringing together all of the world's major gas-producing 
countries to discuss increasing U.S. access to gas imports.
    I have stated previously and I will continue to caution 
that this country not go in the direction of increased imports 
for our natural gas, as we have with oil where we are now 
currently 57 or 58 percent dependent on foreign sources of oil. 
We should not adopt or accept as a policy that we would do that 
with our natural gas, when we have yet huge opportunities, vast 
reserves up north--we have got 35 trillion cubic feet that we 
are trying to get down to you with the pipeline. We would 
certainly like to think that we would have the support for that 
domestic production.
    I look forward to your comments. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Now, Senator Bingaman, do you have anything further? Shall 
we proceed?
    Senator Bingaman. Yes.
    The Chairman. Mr. Deputy Secretary, would you proceed? Your 
statement will be made a part of the record. Keep it as brief 
as you can.

STATEMENT OF KYLE E. McSLARROW, DEPUTY SECRETARY, DEPARTMENT OF 
                             ENERGY

    Mr. McSlarrow. Thank you, Mr. Chairman. I will.
    I am pleased to appear before you today to discuss the 
President's fiscal year 2005 budget request for the Department 
of Energy.
    This budget request builds on a number of successes we have 
achieved over the past 3 years. We have implemented changes 
that have fundamentally reformed DOE's environmental management 
program. At the beginning of this administration, the time 
table 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 taxpayers as much as $50 
billion, and perhaps even more.
    Two years ago, the administration made the decision to move 
forward with the Yucca Mountain project. Thanks to the efforts 
of this committee, the Yucca Mountain project is authorized and 
on schedule to accept waste in 2010.
    We are pursuing new technologies to meet future energy and 
environmental challenges. 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, promises to ensure that this country's 250-
year coal reserves can be used without concern about 
environmental impact.
    In our national security programs, we have accelerated the 
material protection programs and expanded the scope of our work 
to ensure that dangerous materials do not fall into the hands 
of terrorists. We have increased our cooperation with Russia's 
Strategic Rocket Forces.
    We have also taken measures to modernize the defense 
complex. 3 years ago, it was clear to us that we needed to make 
significant investments to restore those facilities to working 
condition and we are doing so with a very substantial capital 
investment program underway to make these repairs and 
improvements.
    While we are rebuilding and modernizing the defense 
complex, we are also restoring its capabilities. The ability to 
manufacture plutonium pits for nuclear weapons is just one 
example. We produced the first certifiable pit last year and 
are on a path forward now to have a new, fully certified pit 
ready to enter the stockpile by fiscal year 2007.
    The fiscal year 2005 budget proposal we are submitting to 
Congress seeks to continue and build on those successes.
    In the energy budget, the Office of Energy Efficiency and 
Renewable Energy is at the forefront of implementing the 
President's hydrogen fuel initiative. Hydrogen holds tremendous 
promise to help meet our Nation's future energy challenges, and 
we are requesting $227 million for hydrogen activities.
    The budget also includes $291 million to fulfill the 
President's commitment to increase funding for the 
Weatherization Assistance program by $1.4 billion over 10 
years.
    We request $447 million for the President's Coal Research 
initiative to dramatically improve the efficiency and 
environmental protections being developed for coal-burning 
power production.
    The budget request for the Department's nuclear energy 
programs is $410 million.
    And we request $91 million, a $10 million increase over the 
2004 level, to modernize an expand our national electricity 
transmission grid.
    Our $3.4 billion request for science-related programs and 
activities supports work in areas like nanoscience, fusion, 
advanced scientific computing, microbial genomes that hold 
enormous promise for scientific discoveries over the next 
decade.
    Our commitment to the environment includes taking action to 
address the environmental legacy of past work. It also means 
doing right by former weapons employees who may have become ill 
as a result of their work at nuclear facilities. We are seeking 
over $7.4 billion for the Environmental Management program, 
which is the most funding ever requested for this program. We 
are seeking $43 million to accelerate the processing of claims 
for former workers who may have become ill as a result of their 
work, and with this budget request, we are making good on 
implementing a 3-year program to completely eliminate the 
backlog of applications by the end of 2006.
    As was mentioned by several members, one of the most 
significant and longstanding commitments addressed in this 
budget is funding to establish a permanent repository at Yucca 
Mountain. In order to remain on schedule to begin operation in 
2010, the budget requests $880 million for Yucca Mountain 
repository activities, $303 million above the fiscal year 2004 
enacted level.
    This budget request reflects the accomplishments of the 
last 3 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 the world's 
top engineers and scientists. It is a privilege to work 
alongside them. It is an honor to serve a President who has 
provided this vision of what this Department can and will 
accomplish in 2005.
    Thank you, Mr. Chairman. I will conclude my statement at 
that point and be pleased to answer questions.
    [The prepared statement of Mr. McSlarrow follows:]

      Prepared Statement of Kyle E. McSlarrow, Deputy Secretary, 
                          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, nearly a 4 percent increase over last year's 
submission and 27 percent higher than when we took office.
    This FY 2005 budget request builds on a number of successes we have 
achieved over the past three years. Secretary Abraham and I are 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. We are grateful for the support and guidance the 
Members of this Committee have provided the Department.
    The Office of Management and Budget recently announced that DOE has 
made the most progress among cabinet-level agencies in the 
implementation of the President's Management Agenda. OMB issued a 
scorecard that evaluates agency performance in the areas of human 
capital, competitive sourcing, financial management, e-government, and 
budget/performance integration. OMB recognized the Department as the 
cabinet-level agency ``leading the pack with regard to management 
improvement.'' One hallmark of that leadership centers on defining the 
mission of the Department. From our first days in office we stressed 
that the overriding umbrella under which the operation of this 
Department takes place is a mission of national security.
    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 made the decision to move forward with the 
Yucca Mountain project. Thanks to the efforts of this Committee, the 
Yucca Mountain project is authorized and 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 part 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.
    Knowing of this Committee's strong interest in the Department's 
national security programs, I would like to mention the great progress 
we have made with Russia on nonproliferation. We have accelerated the 
material protection programs and expanded the scope of our work to 
ensure that dangerous materials don't fall into the hands of 
terrorists. We have increased our cooperation with Russia's Strategic 
Rocket Forces by initiating warhead security work at three new sites.
    We have extended our International Nuclear and Radiological 
Cleanout programs to states that were once part of the Soviet Union and 
its empire. Working with them, with Russia, and with the International 
Atomic Energy Agency, we have been able to secure radiological 
materials in these countries.
    Moreover, we have begun a MegaPorts program to detect the 
trafficking of nuclear or radioactive materials in the world's busiest 
seaports. Eventually we hope to have detection equipment in key 
locations all over the planet.
    We have also taken measures to modernize our defense complex. Three 
years ago, our complex was in a seriously deteriorated condition. Many 
of our buildings and facilities were in such disrepair that our ability 
to carry out our defense responsibilities appeared jeopardized. It was 
clear to us that we needed to make significant investments to restore 
those facilities to working condition. And we are doing so, with a very 
substantial capital investment program under way to make these repairs 
and improvements.
    While we are rebuilding and modernizing the defense complex, we are 
also restoring its capabilities. Some of the capabilities within our 
weapons complex have either been allowed to deteriorate or simply have 
been lost. The ability to manufacture plutonium pits for nuclear 
weapons is one example. We produced the first certifiable pit last 
year, and are on a path forward now to have a new, fully certified pit 
ready to enter the stockpile by FY 2007. This will complete the first 
step for the United States to restore the capability that other nuclear 
weapons states already have.
    In the same vein we are enhancing our nuclear test readiness. The 
weapons in the nuclear stockpile are of various ages and conditions. 
Today we are confident they will function as our nuclear deterrent if 
they are needed. But as these weapons age in an era in which we have a 
moratorium on testing, it is up to our laboratories to do the 
phenomenally complicated job of determining through science and 
technology whether or not the weapons will work effectively.
    We believe we can do that. But if some day in the future it were 
determined that we had uncertainty, it would take us a minimum of three 
years to conduct a test to determine whether or not the stockpile was 
reliable. That is too long. We are in the process of reducing that 
timeframe by half so that this Department can protect America's 
national security by being able to conduct such a test in a timely 
fashion.
    Beyond the things we have done within the complex, we have 
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. 
The Carbon Sequestration Leadership Forum in June brought together 13 
countries to begin working on ways to sequester greenhouse gas 
emissions from fossil fuels.
    And 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. Toward that goal, 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.
    And, finally, we have made a lot of progress on safety and shoring 
up the security of this 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, and it is 
best reflected in the improved safety record in our laboratories.
    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.
    The FY 2005 budget proposal we are submitting to Congress seeks to 
continue and build on these 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, in FY2005 the Department is 
requesting $2.7 billion for energy resource programs. 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.
    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. Hydrogen holds tremendous promise to help 
meet our Nation's future energy challenges. The Department is 
requesting $227 million for hydrogen activities. That figure includes 
$173 million in the Energy Efficiency and Renewable Energy program, $9 
million in the Nuclear Energy program, $16 million in the Fossil Energy 
program, and $29 million in the Science 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 represents a $64 million (or 28 percent) increase over 
FY 2004 funding, and 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.
    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, a $5 million increase above the FY 2004 level. 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 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, a $10 million or 12.5 percent increase 
above the FY 2004 level, 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.

                                SCIENCE

    Every one of the programs and activities requested in this budget 
depends heavily upon advanced research and development. The work we do 
could not be possible were it not for the scientific and engineering 
capability available in the Department's national laboratories and at 
universities across the Nation. Our $3.4 billion request for science-
related programs and activities supports work in areas like 
nanoscience, fusion, advanced scientific computing, and microbial 
genomes that hold enormous promise for scientific discoveries over the 
next decade. Combined with the significant science expenditures 
included in the nonproliferation and weapons budgets, this amount makes 
the Department of Energy the largest federal supporter of the physical 
sciences, and will help enable us to maintain America's position as the 
world leader in scientific research and development.
    Nanoscience--the study of particles at the atomic and molecular 
level--has nearly unlimited potential. From the life sciences, to 
building materials that repair themselves, to giving us the tools to 
boost the potential of solar power, this new science will be a powerful 
force for solving a host of challenges. For FY 2005, the Department 
requests $211 million, an increase of approximately $8 million over FY 
2004, to continue revolutionary nanoscience research.
    The Department's budget also continues the pursuit of scientific 
understanding of matter and energy. The FY 2005 budget includes $80.5 
million for construction and $33.1 million for operation of the 
Spallation Neutron Source; and $50 million for design and procurement 
activities for the Linac Coherent Light Source, which will truly give 
us a new window on nature. Both facilities are expected to 
significantly advance the understanding of materials that will benefit 
applied R&D across a wide range of disciplines.
    Another important investment this budget continues is the pursuit 
of fusion energy power. When the President announced that the U.S. 
would join in the International Thermonuclear Experimental Reactor 
(ITER) project, he noted that ``the results of ITER will advance the 
effort to produce clean, safe, renewable, and commercially available 
fusion energy by the middle of this century.'' In order to support the 
President's commitment, funding for ITER-related activities is up $30 
million from last year.
    The FY 2005 budget includes $204 million for Advanced Scientific 
Computing Research to further U.S. leadership in high performance 
supercomputing, networking and software development. The request 
includes $38 million for the Next Generation Computer Architecture to 
acquire additional advanced computing capability for existing users, 
and for longer-term research and development on new architectures for 
scientific computers.
    The request for our Genomes to Life program is $67.5 million, an 
increase of $4 million over last year. This program will attempt to use 
genetic techniques to harness microbes to consume pollution, create 
hydrogen, and absorb carbon dioxide.
    New in FY 2005 is the addition of targeted basic research 
activities within the President's Hydrogen Fuel Initiative, a $29 
million program within Basic Energy Sciences to advance the fundamental 
understanding of the properties of hydrogen and fuel cells. This work 
will complement the applied investigation underway elsewhere in the 
Department on hydrogen production, storage, and infrastructure 
development.

                              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. That means 
cleaning up the contamination caused by the production of nuclear 
weapons. It also means doing right by former weapons employees who may 
have become ill as a result of their work at nuclear facilities. And we 
must act to ensure 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 though 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, a $426 million increase when compared 
to this fiscal year. 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.
    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 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.
    The FY 2005 budget includes $43 million within the Environment, 
Safety and Health program to accelerate the processing of claims for 
former workers who may have become ill as a result of their work at 
U.S. weapons 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 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, $303 million above the FY 2004 enacted 
level. 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.

                               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 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.

    The Chairman. Thank you very much, Mr. Deputy Secretary.
    The committee is going to set a date of March 11 in order 
to hear the outcome of the electricity blackout report. Do you 
agree that DOE should testify before this committee when the 
Federal blackout report is released on March 11?
    Mr. McSlarrow. I do. I believe we have already committed to 
having someone come up here.
    The Chairman. I am just going to tick through several 
issues, if you can answer.
    Nuclear energy. In light of the administration's stated 
support, can you help me understand why the administration 
proposed significant cuts in nuclear energy R&D? It looks to me 
like it cuts the Nuclear Energy Technologies program by 48 
percent from $20 million to $10 million and it cuts the Advance 
Fuel Cycle initiative by 31 percent. Granted, these are not 
giant programs. We put them in the budget ourselves over the 
years, as you know. So we did not use the administration to get 
them started, but when they come along and cut them, that is an 
effective reduction in the program. Do you have a quick 
explanation for that?
    Mr. McSlarrow. I do. First is I think it is a robust 
nuclear energy budget, and the reason is because we actually 
have three phases in terms of nuclear energy. First is what you 
have been doing with the energy bill in terms of jump-starting 
nuclear energy. A lot of the nuclear energy technologies budget 
that you were talking about that was reduced was guided toward 
nuclear power 2010, how to get a new plant on line. We have an 
early site permitting process that is going on and we have a 
solicitation that we are waiting for feedback from the 
industry. There is a lot of uncertainty, as you well know, but 
right now we did not feel like we had enough information and 
enough indication from the industry on whether or not we could 
go forward with NP 2010 in a more aggressive way.
    Instead, what we have tried to do is focus on the advanced 
technologies, Generation IV reactors, nuclear hydrogen, 
including the Generation IV work that is included within the 
advanced fuel cycle initiative line item. All of that has been 
increased and so it is just a matter of, in a constrained 
budget, where do we place our bets in terms of investing in the 
future, and instead of investing on the technologies of today, 
we decided to go for the higher-payoff, higher-risk 
technologies of the future.
    The Chairman. Quickly on fusion science and the budget for 
ITER. I have no objection to what is going into that program. I 
was here for the last great debate on let us do ITER or let us 
not do it. The Japanese were anxious and so was another 
country. But I do get kind of concerned when we look like we 
are going after this gigantic program in a sort of half-baked 
manner. We put in a few bucks and we take them out of other 
programs. I do not think that is a real commitment to ITER. Are 
we really committed to it or not?
    Mr. McSlarrow. We are. The budget does not reflect what is 
going to happen in the future. The out-year funding will be 
different, and it is for this reason. What is happening right 
now is, after the design period of the last couple of years, we 
are going through a site selection process. So in this year and 
the next year, it is just getting started. In 2006, 
construction begins. What we are doing right now is we are 
taking the fusion money that we requested for ITER, together 
with the kind of fusion money that would actually support ITER 
activities, and we're are spending I think about $38 million as 
well we have requested for 2005, which is all we need in 2005, 
but it will definitely increase in the out-years.
    The Chairman. We will see.
    My last question has to do with something that is of great 
concern to Senator Bingaman. He raised the issue in his opening 
remarks and has spoken to it in our home State. It has to do 
with the Energy Employees Occupational Illness Compensation 
program. He talked about a constituent in New Mexico with a 
long-delayed adjudicative process following his illness.
    I am concerned where workers are injured by work in the 
past. Weapons program workers should be appropriately 
compensated. We know that the current legislation is 
fundamentally broken and it needs improvement. I am working 
with my colleagues to decide how best to proceed with this 
program which could involve another hearing or the 
consideration of alternative legislation.
    When would the Department be ready to discuss alternative 
legislative options or ways to improve the performance of this 
program?
    Mr. McSlarrow. Well, I think we are already beginning those 
discussions, so we are prepared to engage. As the budget 
indicates, we would like to discuss what kinds of reforms would 
make this a better program. And with the chairman's indulgence, 
since several members have mentioned it, I will take a couple 
of minutes to talk about where we are.
    The Chairman. Okay.
    Mr. McSlarrow. I know you had a hearing with Under 
Secretary Card in December. This is a program where everybody, 
Congress, the administration, DOE, everybody vastly 
underestimated the scope of the program. There was a lively 
debate about whether or not you would have a direct benefits 
program or whether or not you would end up with what we have 
today, which is a fairly complicated system that hinges on a 
State workers compensation program.
    Part B, which went to the Department of Labor, is a 
relatively simple program. If you are in the pool, they write a 
check.
    Part D, which is what we have, is not that kind of program, 
and it has three basic challenges. The first one--as Under 
Secretary Card testified in December, we did not do a good job 
of anticipating. It was just the sheer scope, the need for 
resources. Under the Secretary's leadership, we requested a 
transfer of approximately $10 million in fiscal year 2003. We 
have requested another $33 million transfer this year, and we 
are now requesting $43 million for this program next year. All 
of that is just to put resources necessary to actually help the 
applicants process their files. So that is the first bottleneck 
and I feel like we are on the path right now. If we can get the 
funding that we have requested, that is, the transfers and the 
budget request in 2005, we are on a path to work off that 
backlog by the end of 2006.
    The second bottleneck is the physicians panel. Applicants 
are only beginning now to arrive at that point. The physicians 
panel was by statute constrained in ways that with you we 
probably want to discuss changing. One of the ways is the fact 
that the doctors are only paid $68 an hour. We are not able to 
recruit the people who are willing to spend the time to do this 
work. We want to vastly and aggressively expand the number of 
available physicians. We probably want to reduce the number of 
physicians on each panel. By rule, you have to have three 
physicians on a panel. You could probably, if you had the right 
qualifications, do this with one person on each panel. So there 
are a variety of means which we can take to just speed up the 
entire system, which has been obviously a major complaint and 
well-founded in my judgment.
    The final issue is this issue of willing payor. Now, in one 
sense, willing payor was the purpose of the statute. That is, 
Congress in this debate--and I know Senator Bingaman was in the 
middle of it then--decided not to do a direct benefits package, 
and instead they set up this hoops process to the workers 
compensation boards throughout the States. Congress did not 
tell DOE that we had to issue ``do not contest'' orders to our 
contractors to force them, in essence, not to contest the 
claim. But Secretary Abraham decided we would do that by rule. 
Congress did not tell us that we had to reimburse contractors 
who had a compensation claim by an employee, but Secretary 
Abraham in his rule decided, because the statute allowed us to, 
that we would do that.
    At the end of the day, we are not a party to those 
adversary proceedings, and there is an open question as to how 
many contractors there are out there with whom we have no 
contractual relationship where we are not able to issue a ``do 
not contest'' order or we are not able to order reimbursement.
    That is a very live issue. It is one that we would welcome 
discussing. We have some ideas perhaps, with the National 
Academy of Sciences looking into it, but it is one of those 
things that, even though we have not really gotten to that 
point yet, it is right around the corner. So we think that 
there are things that Congress and the Department can do right 
away. That is a larger issue that needs more discussion.
    The Chairman. I am going to yield to you now, Senator.
    I want to tell you now so there will not be any 
misunderstanding, Mr. Secretary, I do not know how to solve the 
problem. I cannot sit up here and tick it out and say this is 
what we should do. But I want you to know that short of 
somebody taking the jurisdiction away from this committee, 
which we will resist--I will resist--we are going to pursue 
this with vigor as to delay, why we cannot move more rapidly, 
are there some definitions we ought to change. You have 
suggested some today. But it does not make sense to build 
people's enthusiasm up and then have a program like this.
    Mr. McSlarrow. We agree.
    The Chairman. Thank you.
    Senator Bingaman.
    Senator Bingaman. Thank you very much, Mr. Chairman.
    Let me just follow up on this one issue. I am concerned 
somewhat about your statement that we are going to work off the 
backlog by the end of 2006. That is a pretty long time frame in 
the minds of most people and particularly a lot of these people 
who are quite ill. I do not know that that is adequate.
    I am also concerned that we not get into a mind set that 
Congress has got to come together and change the law before you 
folks can fix this program. I do not doubt that there are 
things that should be changed in the law, but it seems to me 
there are also a great many things that can be done 
administratively to speed this up, and I hope that that happens 
very quickly regardless of how effectively we pursue a change 
in the law. I want us to do both, but I do not want one to wait 
on the other. I just wanted to make that point.
    Mr. McSlarrow. Well, I agree with that.
    Members of this committee rightly complained about the pace 
of the applications processing last year, and one of the things 
we said and the Secretary made a commitment to this committee 
about was that if we got more resources, we could move it along 
a lot faster, and whereas it might have been 10 or 20 a week in 
mid-2003, the moment we got the reprogramming, suddenly we 
jumped up to 100 a week and we have stayed consistently at 
about 120 a week ever since. If we get more money, we believe 
we can increase that even more.
    But at some point it is implausible that we will have every 
physician that we need, even if we just went to one physician 
per panel, and at some point it is probably implausible that 
you can just simply move the work faster and just get it done 
in 1 year. If somebody can show that to us--and we have people 
looking at that right now--then the Secretary's commitment is 
we are going to do everything we can to move this as fast as 
possible. Our judgment right now is that 3 years--that is, by 
the end of 2006--and all this assumes, of course, we make some 
changes to the physicians panel, we do the administrative 
activities that you were just talking about, and we get the 
necessary funding. But even that is an incredibly aggressive 
schedule. So in spirit, we are right with you. We need to 
operate on parallel tracks. We will do everything we can to fix 
this.
    Senator Bingaman. Well, I think the chairman is right that 
we need to have more engagement on this and figure out what 
Congress needs to do and what the Department needs to do to get 
this problem on track.
    We had a hearing last year also on polygraphs, and it was 
my impression at the end of that hearing that there was going 
to be a rescoping of the polygraph program as it applied to DOE 
employees and contractors. That was one of the things that came 
out of that hearing, or at least I was led to believe would 
happen. What has happened on that?
    Mr. McSlarrow. We are proceeding on that path. It is our 
intention to put out a new proposed rule. The rule has already 
gone through DOE review and is currently at OMB under review. 
So I cannot put a date on it, but I hope very soon we will be 
able to go out publicly.
    Senator Bingaman. Okay.
    You have in your budget a new proposal to fund an Office of 
Future Liabilities, and the budget document states that this is 
an office that will manage environmental liabilities that are 
not assigned to the Office of Environmental Management. Then 
there is another sentence that says, these needs are expected 
to grow substantially due to the backlog of environmental 
liabilities at active DOE sites.
    Could you explain? I always thought that the Office of 
Environmental Management was to be doing all of this type of 
work. Why are we setting up a separate office here and how are 
we distinguishing what goes into which office?
    Mr. McSlarrow. When we came into office and conducted our 
top to bottom review of the environmental management program, 
we concluded two things. One, they were trying to do too much 
and too little at the same time. We were convinced--and this 
committee supported these efforts--that the only way we could 
deal with the massive legacy cleanups, which are about $7 
billion a year now, was to have Environmental Management 
focused on the mission of cleanup, not distracted by other 
liability issues or long-term stewardship. Get the job done. 
And I would say just in the short time--that is, really the 2 
years since the program went into effect--that we have had 
major, major successes. In some ways it may be the best legacy 
of what we have done in the last 3 years.
    But part of that--and it is a philosophical management 
choice I guess--is our view is that missions need to be defined 
and very clear cut and that if you get too many missions for an 
organization, it just fails. It flounders. So what we tried to 
do was to separate out EM and make it clear that they are 
responsible for cleaning up the legacy of the Cold War. The 
Appropriations Committee supported last year--Congress did--the 
establishment of the Legacy Management Office which would be, 
once EM finishes a cleanup, the office responsible for the 
long-term stewardship and monitoring of a site, plus issues 
like pension benefits for former employees. So we established 
that office for that.
    Now the issue is how do we avoid getting into exactly the 
same trap we got into when we had to create EM in the first 
place. That is, who is doing the thinking about all of the 
facilities and sites that may, over the next 30 years, need to 
be decontaminated and decommissioned? It could be EM. Our 
judgment is it should be someone else who is taking the broad 
view, is not distracted by the current obligations of cleanup. 
That is what the Office of Future Liabilities would be. And it 
would probably be the case, as EM phases down and Future 
Liabilities phases up, that some of the very same people and 
talents and experiences would shift to a new organization.
    But right now what is critical to us is--and when the 
Secretary is asked this question--that we just have not done 
enough thinking about these liabilities and we do not want to 
be back here in 10 years saying we just discovered another 
massive liability.
    Senator Bingaman. Well, I think thinking about the future 
liabilities is obviously very useful. I am just questioning 
whether setting up a new office to do that is a better way to 
proceed than just changing the planning process within EM 
itself. But we will have plenty of opportunity to get back to 
that.
    I do not know what the time situation is. Am I out of time? 
Do I have time for another question?
    Senator Thomas [presiding]. I think you are out of time.
    Senator Bingaman. All right.
    [Laughter.]
    Senator Thomas. Since you asked.
    Senator Campbell.
    Senator Campbell. Thank you, Mr. Chairman.
    I am reading page 7 and 8, Mr. Secretary, and I am a little 
bit confused, and please enlighten me a little bit on this. The 
Department is requesting in paragraph 2, $880 million for the 
Yucca Mountain repository activity, $303 million above fiscal 
year 2004. And as I understand it, reading on, it is going to 
be for licensing and construction and development of a 
transportation system.
    First, what transportation system is that? Is that 
something within the Yucca Mountain area or something 
nationwide we are doing?
    Mr. McSlarrow. It is several things. One is the planning 
necessary for transportation of the spent nuclear fuel once the 
repository opens.
    The second is actually building a rail system in the State 
of Nevada. We announced I think in December, our preferred rail 
corridor in Nevada. There are rail lines that come, obviously, 
into Nevada. We want to avoid the city of Las Vegas, which 
means that if we decide to select rail and that particular rail 
corridor we are going to have to build a fairly lengthy spur to 
meet up with some existing rail line.
    Senator Campbell. The spur would be up further north of Las 
Vegas apparently?
    Mr. McSlarrow. Right.
    Senator Campbell. Also on page 8, the Department proposes 
that $749 million in fees collected from utilities for the 
purposes of a nuclear waste fund be used to offset the fiscal 
year 2005 non-defense appropriation in support of design and 
other Yucca Mountain activities. That $749 million that you 
want to use to offset that, what is it used for now? Does any 
of that go towards Superfund cleanups or something of that 
nature?
    Mr. McSlarrow. I think it goes into the general revenue. So 
it is just available for general purposes.
    Senator Campbell. So it would not deteriorate our ability 
to keep up with our Superfund cleanup.
    Mr. McSlarrow. No.
    Senator Campbell. Maybe one other question. On natural gas, 
we are all pretty well aware of the spikes that have occurred 
the last few years in natural gas. It is my understanding--I 
think most of us--that it will be about a 10-year wait before 
the Alaska natural gas pipeline comes on line, and yet every 
winter we have got these spikes and people complaining that 
natural gas is costing too much and there is not enough of it. 
Is there some short-term proposal to try and alleviate that 
problem between now and the time the Alaskan pipeline comes on 
line?
    Mr. McSlarrow. Well, there are a couple of things and all 
of them are hard. As Senator Murkowski pointed out earlier, we 
have got substantial reserves in this country, but we placed a 
lot of it off limits. We have so restricted the lands that 
people just cannot actually get to it economically or at all in 
some cases.
    One of the things the Department of the Interior is doing 
is trying to take the initiative by being creative in terms of 
royalty relief--for example, Secretary Norton just recently 
announced a proposal to encourage the deep drilling in the 
shallow waters in the gulf and the like. So those are probably, 
in terms of just production in the short term, the kinds of 
things we would have to focus on.
    The mid-term to long-term is going to be an increase in 
LNG, probably not a significant increase because it will take 
time and we will have to see how the LNG facilities are 
actually sited. And that is going to be challenging in and of 
itself.
    But until we get to the point of where we have a 
combination of more LNG and the Alaska pipeline bringing Alaska 
gas here, we are going to go through a period of time where 
production in the States is declining. The Secretary 
commissioned the National Petroleum Council 2 years ago to 
produce a report, which they did last year, and that is 
essentially what they reported, that we have topped out. We 
import about 15 percent of our gas from Canada and they are 
faced with declining production as well.
    So at some point we are going to have to obtain it and we 
are probably going to have to obtain it from multiple areas. It 
is not just going to be one source that is the panacea.
    Senator Campbell. Several American corporations are in the 
process of trying to outfit tankers to bring in liquified 
natural gas to some of our major ports and then re-gassify it 
and put it into the existing grid, which I guess is good in one 
respect from a short-term standpoint, maybe bad in another 
because it gets us more and more dependent on foreign energy.
    Has that been something that the Department has also been 
involved in or looked at?
    Mr. McSlarrow. We have. If you take the Energy Information 
Administration's forecast for how the gas market is going to 
look in 25 years, the interesting thing is that they forecast 
that we are going to have a substantial, probably 8-fold 
increase, in imports of liquified natural gas by 2025. And that 
is on the assumption that we actually have the Alaska pipeline. 
If we did not have the pipeline, who knows what position we 
would be in.
    There is obviously a concern in getting to the same 
position that we are already in in terms of crude oil that we 
are completely dependent. Today we are 55 percent dependent. We 
are projected to go to 70 percent dependence on foreign oil in 
20 years. I do not think anybody wants to see that happen with 
gas. So we are going to have to help ourselves domestically.
    But as I say, the EIA forecast suggests that even if we did 
that, we are going to probably have to have more LNG 
facilities, and there are significant issues that the 
Department and FERC, for example, are engaged in to make sure 
that we can site those facilities in the United States because 
we are going to need them.
    Senator Campbell. Thanks. Thank you, Mr. Chairman.
    Senator Thomas. I think we are going here by the time of 
arrival.
    Senator Dorgan.
    Senator Dorgan. Mr. McSlarrow, thank you for being with us.
    Let me ask you about the purchase power issue for PMA's. 
Can you describe to me why you want to zero that out?
    Mr. McSlarrow. With purchase power wheeling, basically the 
philosophy is that there is no reason for the Federal entity to 
front-end the financing of wheeling across the PMA system. That 
is something that the customers can do themselves. At least in 
our reviews, we have seen nothing to suggest that that would 
not be the case.
    Senator Dorgan. I do not understand that answer. You have 
seen nothing to suggest that that will not be the case? The 
purchase power program is a program in which we in the 
appropriations provide funding for purchase power above that 
which the PMA's would normally generate themselves through 
hydropower and so on. We went through this with the previous 
administration. We had a fight with them about the purchase 
power issue. I guess I do not quite understand your answer. Can 
you explain it to me in a different way?
    Mr. McSlarrow. I will try. In our analysis of whether or 
not people needed us to essentially finance the transactions 
across the system to wheel power, we have seen nothing to 
suggest that customers are unable to do that on their own. So 
what is in essence a Federal loan we thought is unnecessary. I 
do not know if that makes it any clearer.
    Senator Dorgan. So will this cost the customers more?
    Mr. McSlarrow. I do not know if costs customers more, but 
it gives our PMA's additional flexibility. I do not know that 
the rates are any different.
    Senator Dorgan. How does eliminating the funding for 
purchase power give the PMA's more flexibility? It seems to me 
it gives them less funding.
    Mr. McSlarrow. No, because in a sense they are fronting the 
money for wheeling power across the system. So it is going the 
other direction.
    Senator Dorgan. You know what? I am not sure either of us 
know what we are talking about here.
    [Laughter.]
    Mr. McSlarrow. We may not be communicating here. I think 
that is right. Should I take a crack in the record?
    [The information follows:]

                               BACKGROUND

Purchase Power
    The Southeastern Power Administration (Southeastern), Southwestern 
Power Administration (Southwestern), and Western Area Power 
Administration (Western), collectively called the Power Marketing 
Administrations (PMAs), market energy produced at Federal dams to local 
utilities in their region under long-term electric service contracts. 
These contracts obligate each PMA to provide a level of energy to 
customers.
    However, the amount of energy generated at Federal hydroelectric 
plants is not fixed. The amount of energy generated depends on changing 
water conditions, unscheduled and scheduled outages variable dam 
release rates in response to flood control, navigation, fish and 
wildlife, public safety and recreation needs, and the effect of 
drought. Hence, there are times each year when the PMAs need to 
purchase power to supplement the hydropower produced at the dams in 
order to meet their obligations under their respective electric service 
contracts.
    Additionally, Southeastern and Western purchase power to operate 
pump-back units, which pump water from a lower reservoir into a higher 
reservoir during off-peak periods, so the water can pass back through 
the turbines during on-peak periods. Since the power for the pump-back 
units is generally purchased at night, it is more economic to purchase 
power on the market than it is to use the more valuable PMA peaking 
resources to power the pump-back units.
    If the PMAs are not able to guarantee delivery of a certain amount 
of power, they would only be able to market non-firm power, which is a 
less valuable product. The ability to purchase power enables the PMAs 
to sell a more valuable product and to assure repayment of the Federal 
investment.

Wheeling
    Using the transmission facilities of one electric utility to 
transmit power owned by another electric utility is termed 
``wheeling.'' Wheeling is needed to move Federal power to certain PMA 
customers that are not directly connected to Federal transmission 
facilities. In particular, Southeastern, which does not own any 
transmission lines, buys the right to use the transmission systems of 
other electric utilities in the area. The price paid for wheeling 
services fluctuates due to market prices for access to transmission 
lines, which have risen substantially over the past two years.

Purchase Power and Wheeling Program
    When combined, these energy products are termed, ``purchase power 
and wheeling'' or ``PPW.'' All purchase power and wheeling expenses are 
generally recovered in the year they are incurred through rates the 
PMAs charge their customers--there is no net impact on the U.S. 
Treasury. The PMAs do not purchase or wheel power beyond what is 
necessary to meet their contractual commitments.
    The use of proprietary receipts from the sale of power is one means 
for the PMAs to acquire needed power and wheeling. In this mechanism, 
the PMAs are allowed to use a portion of their receipts (which normally 
flows into the U.S. Treasury) to fund their purchase power and wheeling 
activities. Other financing mechanisms are also available, such as net 
billing, bill crediting, and customer reimbursements (advances) by the 
PMAs to enable them to make power and transmission purchases. Non-
Federal reimbursable funds, or customer advances, provide cash which is 
available to the PMA for financing purchase power and wheeling services 
in advance of PMA requirements.
    Federal reimbursable authority, provided in the Economy Act, allows 
the PMAs to perform firming and transmission services for other Federal 
agencies using the other agencies' appropriations or funding sources. 
Net billing is a funding mechanism that can be used when a customer 
both buys power from, and sells power to, a PMA in the same billing 
period. In instances when the PMA owes the customer less than the 
customer owes the PMA, the PMA issues a bill to the customer that nets 
the two amounts against each other. In effect, the customer's funds are 
used to pay for the amount the PMA owes the customer.
    Bill crediting is a funding mechanism where one or more PMA 
customers sends its payment to a PMA supplier who has agreed to credit 
the PMA for the payment as if the funds had come directly from the PMA. 
The PMA credits the customer's bill as if the payment had been made 
directly to the PMA. The Administration's decision to eliminate the use 
of PMA receipts to fund purchase power and wheeling for the PMAs should 
not hurt the PMAs' ability to meet their contractual commitments to 
provide electricity as long as the PMAs' customers are willing and able 
to advance funds to the PMAs for purchase power and wheeling.
    The Administration believes that electric industry restructuring 
and the resulting competition make it appropriate for PMA customers to 
acquire these services themselves. The private sector routinely 
provides these services and is fully capable of doing so.
    1. Why is the Administration proposing to zero out purchase power 
and wheeling?
    Although the use of power receipts to fund purchase power and 
wheeling activities is budget neutral, the Administration desires to 
reduce Federal funding for the acquisition of firming energy and 
wheeling services to fulfill PMA contractual requirements for the 
delivery of Federal power.
    The Administration believes that the function of purchasing power 
from third-party suppliers and of arranging for transmission services 
(i.e., wheeling) over non-federal transmission lines are services that 
can and should be performed by parties other than the Federal 
Government. The PMAs' customers should have the responsibility of 
funding purchase power and wheeling.
    The Administration believes that electric industry restructuring 
and the resulting competition make it appropriate for PMA customers to 
acquire these services themselves. The private sector routinely 
provides these services and is fully capable of doing so.
    2. Are the PMA customers able to provide purchase power and 
wheeling on their own?
    The PMAs market energy under long-term electric service contracts 
that obligate each PMA to provide a specified level of energy to their 
customers, regardless of water conditions. This requires the PMAs' to 
purchase power to provide a more ``firm'' product and assure repayment 
of the Federal investment. The PMAs' larger customers are generally 
able to purchase power and wheeling services on their own. However, 
small municipal electric departments may need to add staff to make 
purchase power and wheeling arrangements and incur other transaction 
costs to enable them to carry out this responsibility.
    In addition, it is possible that transmission service for some of 
Southeastern's customers may not be easily obtainable. The allocation 
of Federal power received by many of Southeastern's customers is less 
than one megawatt. Today most, if not all, transmission providers will 
not provide transmission capacity for less than a whole megawatt. 
Southeastern's customers may have to form their own organizations in 
order to aggregate their various allocations from Southeastern.
    3. If the customers provide their own purchase power and wheeling, 
will it cost them more?
    The use of proprietary, or ``customer,'' receipts is the most cost-
effective means for the PMAs to acquire needed energy and wheeling. If 
the PMAs' authority to use proprietary receipts for purchase power and 
wheeling is eliminated, the PMAs historically have been provided 
authority by precedent and in the annual appropriation process to net 
bill, bill credit, and use customer reimbursements (advances) to make 
power and transmission purchases. In addition, the PMAs each have 
access to ``Continuing Funds'' in the U.S. Treasury that can be used, 
if certain conditions are met, to purchase power if needed to meet 
Federal contractual commitments.
    The customers generally prefer to have the PMAs use receipts to 
fund purchase power and wheeling activities, rather than have the PMAs 
use customer advances, because: (1) the use of customer advances is 
more administratively burdensome; (2) it is not standard utility 
practice; (3) it exposes the purchase power and wheeling program to 
risks from late, erroneous, or disputed advances; (4) it potentially 
restricts the PMAs abilities to buy purchase power and wheeling at the 
lowest price; and (5) it may result in increased rates to the PMAs' 
customers.
    In addition, a reduction in the PMAs' authority to use proprietary 
receipts for the acquisition of purchase power and wheeling services 
may limit the PMAs' ability to purchase at the lowest market price. 
This could result in increased costs to the PMAs, which would increase 
rates to customers. The Administration will work with Congress to 
attempt to minimize any rate impacts this change may have.
    As long as Congress continues to provide these authorities, the 
PMAs will use these authorities for purchase power and wheeling to meet 
their contractual requirements as long as the customers are able and 
willing to provide these methods of alternative financing.
    4. How does eliminating the funding for purchase power and wheeling 
give the PMA's more flexibility?
    The PMAs have authority to net bill, bill credit, and use customer 
reimbursements (advances) to make power and transmission purchases. 
Bill crediting and cash advances are not standard financing methods 
within the electric industry. However, they do provide a backup funding 
method for the PMAs to meet their contractual obligations to deliver a 
certain amount of energy to their customers. In addition, the PMAs each 
have access to ``Continuing Funds'' in the U.S. Treasury that can be 
used to purchase power under certain conditions. The PMAs will use 
these other authorities to meet their contractual commitments for power 
delivery.

    Senator Dorgan. Let us do this. Let us exchange some paper 
and we will have an opportunity to go at this some more. 
Obviously, I am a big supporter of the PMA's. We have some 
people in town that want to get rid of the PMA's which I think 
would be a huge mistake. But we have had these battles on 
purchase power previously and have resolved them.
    Let me ask just a brief question about clean coal 
technology and the Clean Coal Power initiative. Give me your 
assessment of where the administration is with that issue in 
terms of funding.
    Mr. McSlarrow. The bottom line is the President made a 
commitment to $2 billion over 10 years for clean coal, and our 
budget and the out-years that we projected will support that 
amply. If you looked at the 5 years prior to the Bush 
administration, clean coal averaged about $160 million in 
requests and about $180 million in appropriation. Even if you 
were generous with the rate of inflation, you are talking, over 
a 10-year period, of a $1.6 billion to $1.8 billion program. If 
you take everything that we have requested, the budget that we 
have before you now and the out-years that we have in our 
budget, we will have requested $3.8 billion.
    This is the most aggressive pro-coal budget that this 
country has ever seen, and the fact that we are putting a lot 
of money into FutureGen does not suggest that we are cutting 
other programs. It is all designed to support how do you take 
coal in this country and make it so that the environmental 
challenges are not just completely a bar to its use. That is 
what FutureGen is designed to do. It is a prototype. It takes 
in all of the R&D that is being spent on clean coal and 
reroutes it into a prototype demonstration plan. But at some 
point, we have to prove all this. Right now we have a lot of 
basic R&D. We are trying to move it to the applications.
    Senator Dorgan. Mr. McSlarrow, while I support FutureGen 
and think it will provide value to our country, I do not think 
lumping it all together with clean coal technology programs 
that we have had is in our interest. What I would like to do is 
I will follow this up with the Secretary. I think he will be 
testifying on the appropriations side before my subcommittee.
    But the way I look at this, I think that you are actually 
far short of where I would expect you to be, given what the 
President supported and pledged with respect to clean coal 
technology initiatives. And that is a very important issue. 
Clean coal technology for many of our States is the advance by 
which I think we will be able to continue to use coal as a 
resource without endangering or injuring our environment. This 
is a very, very important issue for those of us who come from 
coal States.
    I want to get into greater depth with the Department at a 
future hearing. Perhaps we could also, between now and then, I 
think in the next week or two, exchange some paper on this 
general area of coal research. There is a difference between 
all coal research and the clean coal technology initiative. So 
I want to exchange some paper with you on that.
    Again, while there is a lot to discuss, this the first 
blush and first look at what you are proposing. I appreciate 
your coming up and testifying today. We will have a lot more 
discussions I am sure, before this is over.
    Thank you.
    Senator Thomas. Thank you.
    Senator Smith.
    Senator Smith. Thank you, Mr. Chairman.
    Mr. Secretary, again welcome.
    I listened with amazement, as we are in a political year, 
that sometimes we do not think the administration is spending 
enough on this or that. I know that these concerns are well 
meaning because the Federal Government is becoming sort of the 
answer to everybody's prayer on almost every issue. The truth 
is there is almost no program in the Federal Government we are 
not spending a lot more on than ever before in the history of 
this country. So when we speak of not doing enough, one of the 
concerns I hope you have is that we are not spending it so 
quickly that we are wasting money and that you will use some 
care in that regard.
    I know, as part of the energy and water appropriations bill 
that you are developing, and the Department is going to submit 
a report on the Bonneville Power Administration (BPA), and I 
would simply ask that you let me know how that is coming along 
because that again is one of those other areas that is going to 
require more investment. I hope the investments are carefully 
made.
    Kyle, I note also that the Department has announced that it 
will not build a second vitrification plant at Hanford. A 
concern that I have is that apparently the single one that is 
being constructed will treat 53 million gallons of nuclear 
waste at the site. Apparently it cannot do it all, and it will 
leave some 60 percent or more untreated there. I suppose I am 
interested in some of your alternatives to vitrification that 
you may be pursuing, how effective they may be, and how safe 
they will be because obviously this is a real concern to the 
entire Northwest.
    Mr. McSlarrow. We share the concern and you and I obviously 
have had a number of discussions about the importance of 
getting the cleanup done at Hanford.
    I will say this. We are not going to do anything that is 
not in compliance with the agreements that we have made with 
State of Washington. Obviously, the budgets--not that money is 
everything, but it is a lot--speak for themselves in terms of 
what we requested and Congress has given us over the last 
couple of years.
    There are a number of issues that we need to explore beyond 
the first vitrification plant, which is actually going quite 
well right now, in terms of how we deal with these other 
wastes, including I think very promising alternative 
technologies for addressing it.
    The final point I would make is that we do have the 
situation that I think you had mentioned earlier on what we 
call waste incidental to reprocessing, or WIR. Other people 
just call it high-level waste. This is the situation again 
where we and the State regulators in Washington, Idaho, and 
South Carolina were working cooperatively together. Again, we 
are not going to do anything that is not in compliance with 
what the State regulators want to do. But out of left field 
comes a lawsuit in Idaho District Court that essentially says 
the way we are doing it is not in compliance with the Nuclear 
Waste Policy Act.
    Suddenly, we want to spend the money. Of course, the States 
want us to spend money there, and I think it is about $64 
million that is at issue at Hanford. But we are in the 
situation that unless we can get a legislative resolution or 
court decision on this issue, we are not able to spend money 
that we have already planned on spending. So to me the most 
dangerous thing that is going on in terms of cleanup at Hanford 
is the fact that the environmentalists, the very people who 
profess to be pro-environment are keeping us from doing the 
cleanup that we need to do, and we want to get on with it.
    The good news is we are working with Governor Locke and the 
other two States to try to resolve this.
    Senator Smith. Is it your belief you are going to win that 
lawsuit?
    Mr. McSlarrow. Well, if I said it was the Idaho District 
Court and we are going to end up in the Ninth Circuit, would 
that tell you anything?
    Senator Smith. Good luck.
    On another issue, again nuclear waste is going to be 
transported in large amounts to Yucca Mountain by 2010. Can you 
give us any update on transportation planning? Because a lot of 
waste shipments will go through the State of Oregon.
    Mr. McSlarrow. Well, the strategic plan was issued in 
November and I would be glad to have folks come by and brief 
your staff on that. As I mentioned earlier, we did designate a 
corridor preference also in December, and I think we are going 
to have a record of decision on that very soon.
    The next thing that we have to do is an environmental 
impact statement on the rail alignment. That is how do you 
match up the site to the rest of the rail networks.
    But we have to do what we can now to ensure that in 
parallel we are doing the transportation system in a way that 
we do not slow down opening the repository for waste receipt in 
2010. That is the good news.
    The bad news is we cannot jump too far ahead in terms of 
talking about selection of routes until we have continued 
through the licensing process. We are planning on applying for 
the license in December of this year. So we are doing 
everything we can now to keep from slowing up, but there are 
still some additional steps that would take place I think 
starting next year after the license application.
    [The information follows:]

    In the Notice of Preferred Nevada Rail Corridor, the Department had 
announced the Caliente rail corridor as its preferred transportation 
route in the State of Nevada for shipments of spent nuclear fuel and 
high-level radioactive waste to a geologic repository at Yucca 
Mountain. To date, the Department's Office of Civilian Radioactive 
Waste Management has not received comments from anyone representing the 
State of Oregon regarding this notice.
    Oregon has been an active participant of the Western Interstate 
Energy Board for approximately the past 20 years, working with the 
Department on the program established by the Nuclear Waste Policy Act. 
This Board serves as the technical arm of the Western Governors' 
Association and has been assigned responsibility to work on issues 
related to nuclear waste transportation. The Department's 
transportation corridor preference was discussed with the Western 
Interstate Energy Board and Oregon's representative on the High Level 
Waste Committee of the Board in a meeting held on January 30, 2004.
    The Department is committed to the development of a safe and secure 
transportation system that will protect public health, safety, and the 
environment. We intend to conduct an open and collaborative planning 
process as we move forward in this process.

    Senator Smith. Thank you.
    Has the State of Oregon, to your knowledge, commented on 
the corridor routes?
    Mr. McSlarrow. Not that I know of, but I will find out and 
get back to you.
    Senator Smith. If you can let me know, I'd appreciate it.
    Thank you, Mr. Chairman.
    Senator Thomas. Senator Akaka.
    Senator Akaka. Thank you very much, Mr. Chairman.
    Mr. McSlarrow, as you know, I have a strong interest in 
hydrogen programs. Hawaii and all islands in the Pacific share 
a common need to decrease our dependence on imported energy 
sources. I am pleased to see an overall increase of $13 million 
for hydrogen technology research and development and for the 
emphasis on renewables in the Production and Delivery account. 
However, I have concerns and questions as to where the increase 
is allocated.
    As I said, I am pleased to see the increase in hydrogen 
production from $14.9 million from fiscal year 2004 to fiscal 
year 2005 in the Hydrogen Technology initiative. The budget 
document states that the majority of funding will focus on 
renewables.
    So my question to you is what percentage of the funding 
will be allocated to renewables?
    Mr. McSlarrow. Well, I will give you a precise answer for 
the record on that, but let me just give you the off-the-top 
picture.
    For the hydrogen initiative, we have requested $227 
million. If you add to that the vehicle technologies, the 
Freedom Car program, you are talking a total for the hydrogen 
and Freedom Car programs about $319 million. So this is a huge 
investment.
    If you take fuel cells out, the energy efficiency and 
renewable energy budget for the hydrogen program is $95 million 
and compare that $95 million with the amount we asked for 
hydrogen and fossil, which is $16 million, the amount we asked 
for nuclear energy, which is $9 million, and the amount we 
asked for basic research in science, which is $29 million, so 
when you look at just that aggregate number--and as I said, I 
will get you a more precise number--a huge portion of this 
hydrogen budget is in the energy efficiency and renewable 
energy section.
    Senator Akaka. I will look forward to that information from 
you later.
    [The information follows:]

    The total government request in FY 2005 for the President's 
Hydrogen Fuel Initiative is $227.8 million. Of this, $50.3 million 
supports research and development of hydrogen production technologies. 
More funding is requested to convert renewable feedstocks to hydrogen 
than any other single energy source. The FY 2005 hydrogen production 
research includes:

   $19 million for renewable production of hydrogen
   $16 million for coal-based hydrogen
   $9 million for nuclear-based hydrogen
   $6.3 million for distributed natural gas-based hydrogen

    Thus, renewables account for 38% of the Department's overall 
hydrogen production budget of $50.3 million.

    Do you foresee that this increase will be enough to make 
hydrogen production costs from renewables competitive with 
nonrenewable production--such as natural gas or coal--over the 
next 5 years? So my question to you is, do you foresee that 
this increase will be enough to make hydrogen production 
competitive with nonrenewable production over the next 5 years?
    Mr. McSlarrow. Five years sounds aggressive to me. I think 
the issue with renewable energy production of hydrogen is 
really twofold. First is what are the processes just to make 
hydrogen from renewable energy, but there is not in my mind a 
substantial--there may be some--but there is not a substantial 
cost difference of the actual production of hydrogen. I think 
the larger issue is the same issue we always confront with 
renewable energy and electricity production for renewable 
energy. We are doing great. The cost per kilowatt hour has come 
down for wind and solar and geothermal, but we are still not to 
the point, even with the renewable production tax credit, that 
it is competitive. But the trend at least is going in the right 
direction. I think if we can get to that point, then I think 
the issue of how you produce hydrogen is a much easier 
question. But as I say, I think 5 years--and I will have our 
people contact your office with a more precise answer, but I 
think that is probably too optimistic.
    [The information follows:]

    One of the Department's strategies for energy security is to 
utilize diverse, domestic resources to produce hydrogen. Based on the 
cost of gasoline today and normalized on a per mile basis, hydrogen 
from any source must be approximately $2.00 per gallon gasoline 
equivalent to be competitive with conventional technology. The 
Department is focused on achieving cost and performance targets that 
will enable industry to make a commercialization decision for hydrogen 
fuel cell vehicles in 2015.
    The FY 2005 request of $19 million for renewable hydrogen 
production keeps us on track to meet our 2010 goal of $2.90 per gallon 
gasoline equivalent (delivered, untaxed) for wind-based hydrogen 
production using water electrolysis. Natural gas is currently a cheaper 
feedstock, and we have a 2010 hydrogen production cost target of $1.50 
per gallon gasoline equivalent (delivered, untaxed). Although 
renewables may not be competitive with natural gas over the next five 
years, the Department's plan reflects the high priority placed on 
renewable production of hydrogen with the goal of approaching $2.25 per 
gallon gasoline equivalent by 2015. Coal is potentially a very cheap 
source of hydrogen; however, it will not be available in the near term 
because carbon capture and sequestration will need to be resolved.

    Senator Akaka. I am also pleased that the budget includes 
$5.6 million for the National Nuclear Security Administration's 
Off-site Source Recovery Project. This will certainly help 
collect unwanted radioactive materials and prevent them from 
being used as radiological dispersal devices.
    I am also pleased that there is $3 million budgeted within 
the Office of Future Liabilities to begin an environmental 
impact statement for a facility to permanently dispose of these 
sources.
    While this is a good first step, I remain concerned about 
the progress being made in this area. This disposal facility is 
necessary to close the loop on the life cycle of these sources, 
once they are collected, and should continue to be a priority 
for the DOE.
    My question is, how will the transfer of the off-site 
source recovery project to the National Nuclear Security 
Administration affect the Department's ability to develop a 
permanent, safe, and secure disposal facility for these 
sources?
    Mr. McSlarrow. As you point out, NNSA now has the 
responsibility for this program, and the reason they do is, as 
you know, most of the sources that have been recovered are 
stored at Los Alamos and they have significant experience in 
recovering these kinds of sources, not just in the United 
States but obviously in our international proliferation 
programs. We anticipate that we will collect about 1,500 
sources next year, bringing the total to about 10,000.
    But as you point out, one of the reasons--and I probably 
should have used this with Senator Bingaman--that we need an 
Office of Future Liabilities is to think about the kinds of 
disposal pathways that people had not thought about to date. 
And the ``Greater-Than-Class-C'' wastes contained in these 
kinds of sealed sources do not have an obvious disposal 
pathway. So it is one of the obligations we are placing in that 
office to begin the environmental work to try to figure out 
what that pathway is because the storage at Los Alamos is not 
intended to be permanent and we need to do this on a permanent 
basis, as you said.
    Senator Akaka. Thank you very much, Mr. Chairman.
    Senator Thomas. Thank you.
    I guess I am next here. Kyle, we have been working on an 
energy policy for a good long time to lay out those things that 
we have felt are most important, such as fossil fuels and 
transmission, coal generation of electricity, coal being our 
largest fossil fuel resource, hydrogen to be able to transfer 
that differently, talking about the environment, reinjection 
and sequestration of CO2, and these kinds of things 
in addition to urging domestic production. So these are the 
things that we have talked about that I hope are reflected in 
the budget, and I think maybe they are.
    You indicate in your budget book that we rely 85 percent on 
fossil fuels for the energy we consume. Yet, at the same time, 
the fossil energy program is slated for a 9.4 percent budget 
reduction. How do you justify that?
    Mr. McSlarrow. Well, there are a couple of things about 
this. First, the starting place is we are in a constrained 
environment. The President, as you pointed out correctly, is 
focusing on homeland security and defense.
    Now, if you take away the obligations that we have for 
environmental management, the obligations that we have for 
Yucca Mountain, the fact that the NNSA budget, $9 billion, is 
clearly a part of that defense budget, that means all the rest 
of a constrained budget is visited on science, fossil energy, 
EERE, and nuclear energy.
    In fossil energy, there are a couple of programs, for 
example, the oil and natural gas. I realize this does not 
accord with what you read about in the papers about the Bush 
administration in oil and gas, but they simply did not perform 
measured against the other programs. And this is 2 years in a 
row. And so we have reduced funding for those programs.
    As I say, we have really emphasized coal. We are trying to 
meet the President's commitment, and assuming we get the 
request for 2005 for coal, we will be on a path to have 
provided $2 billion in clean coal over 10 years.
    We feel like we are doing what needs to be done for fossil 
energy, but we are also trying to change the program from one 
that was focused on the near term to one that is focused on the 
long term.
    The really bright spot in this program to my mind is 
FutureGen. We are talking about a $1 billion prototype, 275 
megawatts, something that produces hydrogen, sequesters carbon, 
gassifies coal, employs the most advanced sophisticated 
technology to get rid of mercury and SO2 and 
NOX. This is the future for the coal industry.
    And I think there is a judgment that whereas coal has 
significant environmental challenges that an R&D budget can 
really help, when it comes to oil and gas, it is not clear to 
us, in a way that it would be with the Department of the 
Interior where they can actually produce oil and gas, what we 
can do beyond the kind of basic R&D, the applied R&D to 
actually help with oil and gas development. So we are trying to 
do that. We feel like the budget is a fair way of balancing 
that.
    Senator Thomas. I am glad the Rocky Mountain Oil Testing 
Center, which last year you did not fund in your budget but did 
finally--and that is there. They are doing sequestration. They 
are doing other kinds of things.
    Mr. McSlarrow. They are doing enhanced oil injection with 
the CO2, and it is a good project and they are doing 
a good job.
    Senator Thomas. Well, that is good.
    The cooperative research and development is a joint project 
with WRI in Wyoming and North Dakota. That was reduced 
substantially, more than in half. Are you familiar with that 
program?
    Mr. McSlarrow. My recollection--and I may be wrong, and I 
probably should just not say anything, but my recollection was 
it was an earmark.
    Senator Thomas. Say something nice, if you can.
    [Laughter.]
    Mr. McSlarrow. I think I will just say nothing and get you 
an answer for the record, thinking nice thoughts.
    Senator Thomas. Well, that will be fine. In any event, we 
do need to work on this.
    [The information follows:]

    The University of North Dakota Energy and Environmental Research 
Center (UNDEERC) has contributed greatly to the Department's coal 
program:

   In addition to the cooperative R&D program in Fossil Energy 
        ($1.5 million requested in FY 2005) UNDEERC has competed for 
        and won contracts in other areas of Fossil Energy.
   It has played an integral role in the development of the 
        ``advanced transport gasifier.'' This gasifier has potential 
        for being lower in cost, higher in efficiency, and more readily 
        adaptable to a wide range of feedstocks than today's commercial 
        technologies. UNDEERC has evaluated the performance of the 
        transport gasifier over a wide range of coals (bituminous, sub-
        bituminous, and lignite) and process conditions. These data are 
        providing critical guidance for the operation of the larger-
        scale transport gasifier at DOE's Power Systems Development 
        Facility in Wilsonville, AL.
   UNDEERC also supported the U.S./Australia Climate Action 
        Partnership by evaluating the performance of two Australian 
        lignites in the transport gasifier.
   To further demonstrate the flexibility of the gasifier, 
        tests are being conducted to assess the co-feeding of coal with 
        biomass as a potential way to reduce CO2 emissions 
        from power generation. In addition, technologies for the 
        measurement and capture of mercury in the product gas from the 
        gasifier are being developed for operation at moderate process 
        temperatures (300-700 F) commensurate with the operation of the 
        transport gasifier and some commercial gasifiers as well.
   The accomplishments from UNDEERC have, and will continue to 
        have, significant impact on the development of advanced 
        gasification technology that could potentially be the 
        cornerstone of the FutureGen project.

    The Western Research Institute (WRI) in Laramie, Wyoming has also 
contributed greatly to the Department's programs. As shown by the areas 
of expertise listed below, WRI has been working with the private sector 
to develop technologies that will lead to power systems capable of 
sequestering carbon, as envisioned by the FutureGen project.
    WRI has capabilities to test hydrogen separation membranes and 
other components, and it has significant experience with catalysis, 
petroleum product refining, CO2 sequestration and other 
environmental issues associated with advanced power generation. WRI 
engages in important research, development, demonstration and 
commercialization of technologies related to energy, environment, and 
transportation materials:

    You talked about FutureGen. Do you have any idea what the 
timing is on that and where it will be? We are, of course, very 
hopeful that it could be in Wyoming where the greatest supply 
of future coal might be.
    Mr. McSlarrow. A site has not been selected for FutureGen. 
The process we are going through now is essentially soliciting 
ideas from what I would expect to be consortia of really 
different players who all have an interest in coal, 
electricity, and hydrogen as to how they might go about doing 
the project themselves. So to some extent, we have outlined a 
vision, but we are going to be looking for information from 
industry to help us define that mission.
    I think we are talking really 10 to 15 years to see this 
project through full fruition, although the kinds of work that 
we are going to be doing, the kind of R&D is stuff that can 
spin off all along the way. So it is not just something that 
pops out at the end of that process. It is a way of really 
supporting the kind of R&D that we are doing today.
    Senator Thomas. One of the real challenges, of course, is, 
as I said, our greatest supply of fossil fuel is coal and yet 
we have not had a coal plant for electricity developed in the 
last 10 years. So we need to do some things and transmission to 
the market, of course, has to be a very real part of that. And 
I know, Kyle, that you understand that.
    Senator Alexander.
    Senator Alexander. Thank you, Mr. Chairman.
    Mr. Deputy Secretary, thank you for coming again.
    I am a big fan of the Secretary's 20-year facility plan. I 
think creating a path to the future for investment in science 
and technology is step number one, and I am glad that you have 
done that. It is ambitious. It is in line with our Nation's 
needs, and it reminds us that a lot of our ability to create 
new jobs and compete in the world marketplace depends upon 
these investments.
    I would like to focus on one of the priorities in that 
plan. I believe the number two priority in the 20-year plan was 
supercomputing. Congress last year appropriated an additional 
$30 million above the President's request to start the 
development of a leadership class computational facility. It 
would just start it, but it is consistent with the 
recommendations made by the High End Computing Revitalization 
Task Force. That is money you have got.
    My first comment about it is that I want to encourage you 
in your decision-making to spend all of it that you can in a 
single direction rather than spread it out over a lot of 
different places. Japan is the leader in supercomputing. This 
is money that will be competed among the laboratories. All the 
different laboratories, as I understand it, could be involved. 
But what specifically I would like to see is that of the $30 
million, at least $25 million of it be competed so that we can 
take a first step toward leading the world in supercomputing.
    My second comment on the same line would be, do you have 
any plans in terms of additional appropriations in support of 
that priority in your 20-year plan?
    Mr. McSlarrow. Based on what I just heard, I think we are 
completely in agreement here. Out of that $30 million that we 
got for this year, about $5 million, as I understand, is going 
to Berkeley.
    Senator Alexander. That is the way I understand it.
    Mr. McSlarrow. I think $5 million is going to actually buy 
a couple more cabinets for the Cray facility at Oak Ridge, both 
of which are designed to support the work we do in the 
leadership class computational facility, which I guess is 
another way of just saying the best in the world.
    Senator Alexander. Right.
    Mr. McSlarrow. $20 million is going to go out to be 
competed, and my understanding is it will not be spread out. It 
is to be competed for one leadership class facility and our 
budget for 2005 includes I think about $38 million to continue 
that drive toward such a leadership class facility.
    Senator Alexander. I think the difference between what I 
was thinking and what you said may be $5 million. What I am 
encouraging--and I would just ask you to review this when you 
go back--is it may be possible for you to compete as much as 
$25 million instead of $20 million out of your existing funds, 
and if you do, we may get even more bang for the bucks that you 
have got. So I would ask that you take a look at that.
    Mr. McSlarrow. I will have a look at it.
    Senator Alexander. The second issue is infrastructure for 
the labs. There are 10 labs. The way we read the budget, the 
amount of money for infrastructure is $29 million. That is not 
very much money to spread over 10 labs. Last year it was $54 
million. Would you have any comment on that?
    Mr. McSlarrow. I do. Actually, if I might, let me just make 
a larger point about the science budget. There have been 
several times statements that we are cutting this budget, and I 
think we just need to understand something.
    In 2004, we had $140 million of earmarks. I have been on 
the other side working for Senators. I understand how this 
goes. But this was a significant number of earmarks. In 
addition, from 2004 to 2005, we have about $75 million of a 
decrease that was planned. It is just construction activities 
like the Spallatian Neutron Source. They are declining.
    So the truth is while it is not a huge boost, in terms of 
spending on programs in the science budget, the budget is going 
up. I might add that the good news for this program is in 2000, 
the budget for science was about $2.8 billion, and we have been 
$600 million above that last year and in the request for next 
year. So I know you and the Secretary absolutely share this 
vision of what science can do. I would just say that it is easy 
to read the tables, but there is actually more to the story 
than meets the eye.
    On the laboratories infrastructure, two points. First, I 
have personally been a bear on deferred maintenance of our 
facilities, both on the defense side and on the energy side. 
You do not necessarily see it in this line item, but I think 
Dr. Orbach and Under Secretary Card are doing a fantastic job 
of rebuilding the infrastructure for these labs.
    On the specific line item that you are talking about, I 
would just note a couple things. It said that it was about a 
$25 million decrease to $29 million, which is what you 
mentioned. But this year in 2004, about $10 million was given 
to the labs to work on NRC and OSHA compliance. Well, they 
spent the money. It was a one-time tranche of money, so we have 
not requested that again.
    In addition, we decided, in 2003, that work that was 
supposed to be done for infrastructure at the Pacific Northwest 
lab would not be done because we were actually going to 
dismantle those facilities. We spent that money instead on work 
at Brookhaven and at Thomas Jefferson Accelerator Facility, and 
so we do not have to request that in 2005. The net result of 
that is that there is a very slight decrease in that line item. 
But again, as I point out, the larger issue is really deferred 
maintenance, and that is not all captured by that one line 
item.
    Senator Alexander. Thank you for the explanation, and I 
encourage you to continue to be a bear on the deferred 
maintenance. It never makes headlines except when it is 
deferred too long and then it is hard to catch up.
    Thank you very much for your testimony.
    Senator Thomas. Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    I appreciate your comments on the supply issue as it 
relates to natural gas in response to Senator Campbell. I think 
we all recognize that we do need to look to the diversification 
of sources, and we would like to certainly do all we can 
domestically to ensure for that energy security. We have had 
some good news in Alaska in the past month with some 
applications, as they relate to our natural gas pipeline. We 
are looking forward to the administration's support to make 
this pipeline a reality in the very near future. We recognize 
it takes a while to build it, but we need to get the gas here 
as soon as possible.
    I also want to make a side note with regard to LNG, that we 
are also looking at that as an option to bring LNG down through 
the State, put it in tankers and bring it across to the west 
coast to provide for Americans on that side. So we have got a 
lot going on.
    I mentioned in my opening remarks my concern that the 
budget does not reflect any funding for the Arctic Energy 
Office. This is a program that is administered through the 
University of Alaska with a mission to conduct Arctic energy 
research in the categories of fossil energy and remote 
electrical power and generation.
    They have been doing some great work. We have got some 
projects going on right now. The Tundra Travel Model project is 
really helping to expand the number of days that we can 
actually be involved in drilling on the North Slope using this 
technology.
    Another project that they are working on is the amount of 
free water which can safely be removed from the tundra ponds 
for ice road and ice pad construction so that again we can 
truly do the work that we need to do up there without harming 
the environment. They are great projects and they certainly 
address the ability to work up there on the North Slope. These 
are projects that are vital to continue if we want to continue 
exploration and drilling up there.
    We have also got a membrane separation technology for 
possible use in the gas handling plant. These are great things 
going on. So to see the funding pulled out from underneath them 
causes a little degree of anxiety.
    You had indicated earlier that you want to certainly 
encourage R&D in the production and development end of things, 
and I would like to know if we will be getting any support for 
the Arctic Energy Office there in UAF.
    Mr. McSlarrow. Well, today, Senator, I am probably not 
going to be able to answer fully your question about the office 
specifically. My understanding is we are planning on doing R&D 
in Alaska, and I think what we owe you is an explanation as to 
how that relates to the decision in the budget to zero out that 
line item. But I am not able to go beyond that point right now.
    But I certainly appreciate your leadership on all these 
issues. You and I have discussed obviously the Alaska pipeline 
many times, and I would be glad to commit to working with you 
to explore what plans we have for those kinds of activities in 
the State.
    Senator Murkowski. Good. Maybe what we can do is set up a 
separate meeting. But in the meantime, I have got some 
additional questions that I will forward to you as they relate 
to rural power generation in Alaska.
    I want to ask real briefly about the Energy Employees 
Occupational Illness Compensation program. We had a little bit 
of an exchange earlier. The area that causes me some particular 
concern is the willing payor issue, and it was asked why we 
bring people down this path of believing that there will be 
some compensation at the end and then, in fact, there is no 
willing payor in the Amchitka situation. A little bit of truth 
in advertising along the way here.
    Senator Grassley and I submitted a series of inquiries to 
the Department on implementation of subpart D in December. I 
guess it was December 22. I understand we are still waiting for 
those responses.
    But again, understanding what the Department intends to do 
with the willing payor issue--you indicated that you had some 
ideas out there. Can you elaborate at all on the direction that 
you might be taking?
    Mr. McSlarrow. Yes. Let me try to be a little clearer on 
willing payor. I described really three problems.
    One we own. How do we process these things faster? We think 
we have got a plan to do that now with the funding.
    The second is the physicians panel. That would be a mixture 
of legislative changes and our own administrative changes.
    The third issue is the willing payor. I am not certain that 
there's anything we can do about it, and it goes back to this 
conversation I was having with Senator Bingaman. Congress had a 
lively debate. On one side there were people who just wanted 
this to be a direct benefits program modeled after the Federal 
program. Others did not want to have the Government on the hook 
for a liability at all. And they met somewhere in the middle 
with something that relied on the State workers compensation 
program. As I say, by definition, just the statute that was 
passed, it was a willing payor problem in that sense, but that 
was the choice that Congress made.
    What Secretary Abraham did was at least make it more likely 
that people could get to the compensation board, as I said 
earlier, by putting in the rule that we will issue do not 
contest orders, by saying we will reimburse it, which makes it 
more likely you will not have a willing payor problem, and we 
are certainly willing to look at whether or not there are other 
things administratively that would help that. But at the end of 
the day, my conclusion, after having now reviewed this record, 
is that there was a fundamental choice made and it is not one 
administratively that we are going to be able to solve by 
ourselves.
    Senator Murkowski. I guess I would just throw out that if 
we are not able to solve that, then the Mrs. Carlsons of the 
world that are going through this system with an expectation at 
the end need to be brought in early on that there is an issue. 
You may go through this process and there may be nothing for 
you at the end. In fairness to the victims and the victims' 
families, I think we need to give them that heads-up on the 
issue.
    Mr. McSlarrow. I agree.
    Senator Murkowski. Thank you, Mr. Chairman.
    Senator Thomas. Thank you.
    Thank you, Mr. Secretary. You and Secretary Abraham are 
doing a great job in a tough area, and we will be working on 
this with you as time goes by because this is one of the most 
important issues, of course, for Americans and for our jobs.
    The record will be open for questions until the close of 
business tomorrow.
    We are adjourned. Thank you.
    [Whereupon, at 11:36 a.m., the hearing was adjourned.]


                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

                              Department of Energy,
               Congressional and Intergovernmental Affairs,
                                    Washington, DC, April 30, 2004.
Hon. Pete V. Domenici,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Chairman Domenici: On April 5, 2004, we sent you the edited 
transcript of the February 10, 2004, testimony given by Kyle E. 
McSlarrow, Deputy Secretary, regarding the President's FY 2005 budget 
request for programs of the Department of Energy.
    Enclosed are five inserts requested by Senators Dorgan, Smith, 
Akaka and Thomas for the hearing record.
    Enclosed also are the answers to 55 questions that were submitted 
by you and Senators Craig, Alexander, Murkowski, Bunning, Bingaman, 
Akaka, and Feinstein. The remaining answer to Part I of question 24 is 
being prepared, and will be forwarded to you as soon as possible.
    If we can be of further assistance, please have your staff contact 
our Congressional Hearing Coordinator, Lillian Owen, at (202) 586-2031.
            Sincerely,
                                          Rick A. Dearborn,
                                               Assistant Secretary.
[Enclosures]
              Responses to Questions From Senator Domenici
    Question 1. What are the consequences on commercial development and 
global competition if the budget request for High Temperature 
Superconductivity projects is not met?
    Answer. Without an adequate budget, we risk losing the world 
leadership role that we hold today in High Temperature 
Superconductivity (HTS). International HTS competition is significant 
because the stakes are high. Investment in HTS can result in growth in 
U.S. manufacturing of the next generation of transmission cables, 
transformers, generators, motors and other equipment--and can provide 
an important new capability to increase the efficiency, capacity and 
reliability of our electric system.
    Question 2. This Committee will set a hearing on the date of March 
11 in order to hear the outcome of the Blackout Report. Do you agree 
that DOE should testify before the Senate Energy Committee when the 
Final Blackout Report is released on March 11?
    Answer. On February 24, 2004, DOE testified before the Senate 
Energy and Natural Resources Committee concerning the reliability of 
the grid, including discussion of the August 14, 2003, blackout. Once 
the final Blackout Report is released, which we hope will occur in late 
March, DOE will work with the Committee if a new hearing is scheduled.

                         YUCCA MOUNTAIN PROJECT

    Question 3. The budget request for Yucca Mountain increased from 
$577 million in FY'04 to $880 million in FY'05. In addition, the 
President proposed a new manner for financing this project by 
reclassifying $749 million of the mandatory fees paid by utilities for 
waste disposal as discretionary funds.
    Legislative change to enact this proposed chance. The request 
assumes that Congress will, in fact, move to enact their request.
    Please explain why the Department has decided on this course of 
action, why the revenue from this change is assumed up front, and what 
the practical implications will be if Congress does or does not enact 
this change. In this latter case, if the change is not enacted, how 
does the Department plan to make up for the lost revenue?
    Answer. Starting in FY 2005, the project will require a substantial 
increase in funding as it moves forward on an extremely tight schedule 
for licensing, designing and constructing a repository, and providing 
the needed transportation infrastructure. Historical funding patterns 
fall far short of the increased funding the Program will need. We have 
reached the point where action is must be taken now to provide the 
necessary resources.
    The Administration's proposal would allow the revenues from the 
nuclear utility fees to be used in the way that was intended when the 
Nuclear Waste Policy Act was passed: to develop a repository for 
disposal of high-level radioactive waste and spent nuclear fuel. 
Specifically, under the Administration's proposal, the amount of 
receipts from annual fees would be credited as offsetting collections 
in an amount equal to the appropriation for the Yucca Mountain 
repository. The amount credited as offsetting collections would still 
be subject to approval in an appropriations act, but could be 
appropriated without reducing the discretionary funding that would be 
available for other Federal programs. Reclassifying the fees will 
ensure that money collected to pay for Yucca Mountain is spent on Yucca 
Mountain. If the President's Budget had simply included additional 
money for Yucca Mountain, it could not have been assured that the 
dollars would have been spent on Yucca Mountain and not used for some 
other purpose, as they have been in past years.
    By using the fees that electricity consumers pay into the Nuclear 
Waste Fund to offset appropriations, the proposed legislation would 
both assure consumers that their fees are being used for their intended 
purpose and enable Congress to meet the challenge of financing the 
repository's construction. This is a technical change that reasserts a 
key principle established in the Nuclear Waste Policy Act, a principle 
with longstanding bipartisan support--that those who receive the 
benefit of nuclear-generated electricity pay for waste disposal. The 
federal government, in exchange for fee payments, will implement a 
permanent solution for management of the waste. The federal government 
is contractually required to perform the service for which the disposal 
fees are paid.
    If sufficient appropriations from the Nuclear Waste Fund are not 
available, the Nation will not have an operational repository in 2010. 
Delays could mean additional costs of nearly a billion dollars per year 
for commercial utilities and federal defense nuclear waste sites to 
continue to provide temporary storage. The country will be forced to 
spend billions of dollars, without solving the problem. Nuclear waste 
will remain at sites near communities and water supplies throughout the 
country, and we will not have finished the job of cleaning up the Cold 
War legacy at defense sites.
    The Administration has proposed what we believe is a workable 
solution to the problem. We recognize there may be other workable 
solutions, and are open to working with the Congress on other solutions 
it may wish to propose.

                          PORTSMOUTH FACILITY

    Congress has been funding two de-conversion facilities to treat the 
tails from uranium enrichment which now reside at Portsmouth, Ohio; 
Paducah, Kentucky; and other locations. With Federal funding, these 
would of course be national facilities, available to treat tails as 
needed to address national issues.
    Before we proceed with further funding of the Ohio facility, I need 
the Department to clarify recent suggestions by Governor Taft of Ohio 
that the Portsmouth facility might be unable to accept tails from 
outside this state.
    Question 4. Will the Department please verify with Governor Taft 
that he understands that the Ohio de-conversion facility, if built with 
Federal funds, will be available to treat tails originating anywhere in 
the nation?
    Answer. The mission of the two conversion facilities that the 
Department is designing, one in Ohio and one in Kentucky, is to provide 
for the conversion of the legacy from the Department's enrichment 
program of approximately 700,000 metric tons of DOE depleted uranium 
hexafluoride (DUF6) to a more stable chemical form suitable 
for beneficial use or disposal, as appropriate.
    The Governor of Ohio's Office has been informed that these Federal 
conversion plants may be used by the Department to convert its 
DUF6 currently stored at other DOE sites. No decision has 
been made by the Department whether these facilities will, at some 
point in the future, be made available for the disposition of 
commercially generated DUF6. However, in the event a 
decision is made to make these facilities available to the commercial 
industry, the Department believes that all domestic commercial uranium 
enrichment plant operators should have equal access without regard to 
the state in which they reside.

                   FUTURE EM PROGRAM AND PERFORMANCE

    The EM program has seen many changes lately. Just to name a few, 
the Department has re-organized the EM management, created a new Office 
of Legacy Management, created a new Office of Future Liabilities, and 
shifted responsibility for several programs between Offices. I'd 
appreciate your discussion of the overall vision guiding these changes.
    Question 5. What do you foresee for the Department's future EM 
program and performance?
    Answer. The changes we have made over the last several years have 
been designed to focus EM on its original core mission--the cleanup of 
the environmental legacy that resulted from several decades of nuclear 
weapons production and research. As such, programs and activities that 
are not part of this core mission have been transferred to other 
programs where we believe they can be performed more effectively. For 
example, long-term stewardship of sites where cleanup has been 
completed involves different issues and requires different skills and 
management strategies compared to active cleanup work. For this reason, 
the Office of Legacy Management was created to focus on long-term 
stewardship. We also believe that for effective management efficiency 
and control it is important that EM be focused on a defined, finite 
work scope. However, the Department also recognizes that there may be 
environmental liabilities beyond those identified in the EM work scope. 
The Office of Future Liabilities will plan for how the Department 
should handle environmental liabilities beyond those identified in the 
EM work scope. In addition, responsibility for on-going waste 
management activities is being transferred to the generator programs. 
DOE is doing so to promote incentives for cost efficiency and waste 
minimization by the waste generators.
    Having streamlined and focused EM on its core mission, we are 
making great progress toward our cleanup goals and are confident that 
EM is well poised to complete its cleanup mission by 2035 at the 
latest. I believe, however, that we will be able to accelerate the 
completion date of the EM program even more.
    Question 6. I need help understanding the Administration's 
rationale for cuts in Nuclear Energy R&D Programs.
    Strong statements by the Administration, including support in the 
National Energy Policy, recognized the vital role that nuclear energy 
must play in our future energy mix. Working together, we've created 
some strong nuclear energy programs, programs that did not exist back 
in 1997 when Senator Craig and I wrote to Secretary Pena expressing our 
concern for the Department's neglect of nuclear energy.
    Despite strong statements of support for nuclear energy, the Budget 
proposal zeroes the Nuclear Energy Research Initiative and the Nuclear 
Energy Plant Optimization Program.
    It cuts the Nuclear Energy Technologies Program by 48 percent from 
$20 to $10 million, and it cuts the Advanced Fuel Cycle Initiative by 
31%.
    In light of the Administration's stated support for nuclear energy, 
can you help me understand why the Administration proposed these cuts?
    Answer. The President's budget request increases the funding for 
the Department's nuclear energy program by 1.2% to about $410 million 
for FY 2005. This budget allows the Department's priority efforts in 
programs such as Generation IV and the Nuclear Hydrogen Initiative to 
proceed vigorously. The Department's request more than doubles the FY 
2004 request for each of these programs.
    Two of the Department's nuclear R&D programs have ended with the FY 
2005 budget.

   We request no funding for the Nuclear Energy Research 
        Initiative (NERD for FY 2005, but the activity will continue as 
        an annual competitive research grants program for university 
        researchers that is tied to mainline programs such as 
        Generation IV and Nuclear Hydrogen Initiative.
   The Nuclear Energy Plant Optimization program has 
        accomplished the most important mission it was designed for: 
        encouraging longer-range technology development by the private 
        sector.

    We are requesting less for two other programs:

    The Advanced Fuel Cycle Initiative requires less funding in FY 2005 
because the Department has decided against the rapid deployment of 
commercial-scale UREX+ technology. Instead, we are focusing on longer-
term, higher-payoff research at laboratory scale in next-generation 
fuel cycle technologies including advanced aqueous and pyroprocessing 
spent fuel treatment, advanced transmutation and Generation IV fuels, 
and detailed systems analysis and modeling. Further, given the tight 
budget environment, we did not request funds to continue some of the 
useful, but still not essential programs that were contained in various 
earmarks in FY 2004.

   The Nuclear Power 2010 program seeks to achieve near-term 
        deployment of new power plants in the United States through 
        cost-shared demonstration of untested regulatory processes 
        affecting the siting, construction and operation of new nuclear 
        power plants, cost-shared development of advanced reactor 
        technologies, and implementation of appropriate strategies to 
        enhance the business case for building new nuclear power 
        plants. In FY 2005, the budget request focuses primarily on 
        regulatory tasks including the demonstration of the Early Site 
        Permit (ESP) and combined Construction and Operating License 
        (COL) processes to reduce licensing uncertainties and minimize 
        the attendant financial risks to the licensee. The request will 
        enable the continuation of ongoing licensing demonstration and 
        related analysis projects. Future requirements for the program 
        will be reviewed as Congress completes work on comprehensive 
        energy legislation and the Department assesses the responses 
        and requirements associated with its recent solicitation 
        related to New Plant Licensing Demonstration Projects.

    Question 7. I'm also concerned that several laboratories seem to be 
slated for sharp cuts in their contributions to nuclear energy 
programs. I appreciate the Department's interest in focusing Nuclear 
Energy research at Idaho, but I also recall many statements by the 
Administration in the past that the capabilities of all labs would 
continue to contribute.
    In the proposed Budget, for example, funding for R&D funding is cut 
by 35 percent at Los Alamos, by 28 percent at Sandia, and by 18 percent 
at Oak Ridge. In contrast, Idaho's R&D funding is level. Further, Idaho 
is slated for a 40 percent increase in infrastructure support.
    Is it still the Department's intent to assure that the critical 
capabilities of several laboratories continue to be part of a growing 
nuclear energy program?
    Answer. Yes, the Department intends to do everything it can to 
retain the critical capabilities of all its nuclear energy laboratories 
in carrying out the research required to support the growth of nuclear 
energy in the United States. Even in the tight budget environment the 
Department faces next year, the nuclear energy program will receive a 
$4.8 million budget increase.
    Question 8. In Appropriations for the current year, the Department 
is directed to begin research, development, and design work for a 
project in Idaho involving an advanced reactor with hydrogen co-
generation. Just two weeks ago, in a January 28, 2004, letter to 
Senator Craig and me, the Secretary stated that design competition for 
this reactor would begin this fiscal year.
    Is this competition on schedule for this year and are there 
adequate resources requested in this budget for next year to support 
competitive selection and progress on a final design?
    Answer. In FY 2004, the Department's Generation IV Nuclear Energy 
Systems Initiative continues to emphasize research and development on 
the Next Generation Nuclear Plant and continues collaborative research 
on the Lead-Cooled Fast Reactor, the Gas-Cooled Fast Reactor, and the 
Supercritical Water-Cooled Reactor. These systems were chosen as the 
best match for the future needs of the United States. Beginning in FY 
200, the Department puts special emphasis on the NGNP, working towards 
the potential early deployment of the NGNP as a demonstration of a 
promising Generation IV reactor technology. The Department has not at 
this time made a decision to proceed with such a demonstration plant. 
The budget request for FY 2005 for the NGNP is $19.3 million. 
Approximately $5 million of the $19.3 million request for FY 2005 is 
slated for NGNP design activities to define future research and 
development requirements, with the balance being applied to critical 
fuel and materials research.

                           LOS ALAMOS SCHOOLS

    Question 9. Is this competition on schedule for this year and are 
there adequate resources requested in this budget for next year to 
support competitive selection and progression a final design?
    Funding of $8 million for the annual contract with the Los Alamos 
Schools is authorized through fiscal year 2005. In addition, the Armed 
Services Committee requested a report from the Department to assess 
paths forward for funding of these Schools. This funding has been 
provided for many years to assure an educational system which supports 
recruitment and retention of Los Alamos National Laboratory staff.
    To date, no report has been provided to Congress by the Department, 
and the FY05 budget zeroed funding for the Los Alamos Schools.
    Answer. I understand and appreciate the importance that a high 
quality education system provides for the recruitment and retention of 
quality scientists and engineers at Los Alamos National Laboratory. The 
Administration however doesn't feel that the President's budget for 
stockpile stewardship activities is the proper funding vehicle for this 
activity. NNSA recently submitted a report to the Congress on Los 
Alamos schools and funding options that could take the place of the 
annual authorization and appropriations approach.* Option 1 would rely 
on the State of New Mexico and the citizens of Los Alamos County to 
ensure that adequate funding is available for the schools. Option 2 
would reestablish a charitable foundation funded by annual 
appropriations for a limited period of time so that Los Alamos Schools 
would receive approximately $8M annually from the endowment. Finally, 
Option 3, would allow the M&O contractor for LANL to support the school 
system by modifying the provisions in Appendix N of the contract. 
Currently under Appendix N, Los Alamos provides a few million dollars 
to the school systems in the vicinity of Los Alamos County.
---------------------------------------------------------------------------
    * The report has been retained in committee files.
---------------------------------------------------------------------------
                         OVERALL SCIENCE BUDGET

    Question 10. Last year in this budget briefing, I expressed great 
concern over years of flat funding for the Office of Science. This 
year, I can't even make that statement, since the proposed budget 
reflects a 2 percent drop.
    In Appropriations for this year, the Senate expressed its concern 
that

          ``Shrinking investment in physical sciences and engineering 
        poses serious risks to DOE's ability to perform . . . It also 
        threatens the Nation's science and technology enterprise.''

    The Secretary just announced a 20 year initiative for new DOE 
science facilities. I'm concerned that this budget, added to the 
history of past years, doesn't prepare the Department for this 
initiative and can't adequately support the initiative.
    Do you share my concern that the DOE Science budget, given its 
immense impact on the health of science in the nation, is not living up 
to our needs? When do you foresee reversal of this trend?
    Answer. Compared with the FY 2004 appropriation, the request for 
the Office of Science reflects a decrease of $68,451,000, or 2.0%. 
However, the FY 2004 appropriation contains $140,762,000 of 
Congressionally-directed projects--projects which are not continued in 
the FY 2005 request. The request is an increase of $72,311,000 or 2.2% 
over FY 2004 when these projects are excluded from the FY 2004 base. We 
believe this request continues to reflect the Department's strong 
support for the Office of Science programs given the tight fiscal 
environment in which the Nation currently finds itself.

                           COMMITMENT TO ITER

    Question 11. Last year I said that the Administration was making an 
insignificant commitment to the ITER (International Thermonuclear 
Experimental Reactor) program in light of their stated intent to 
support at least 10 percent, or about $500 million, of this 
international program.
    Last year, the ITER Budget request for $8 million forced the Office 
of Science to take it out of existing programs. This year, the 
commitment is $38 million and again the funds are just taken from 
existing programs.
    I have no objection to participation in ITER, but only if the 
Administration is serious about the commitment. I do not regard flat 
Science and Fusion Energy budgets as demonstrating serious commitment.
    Answer. Assuming that the negotiations succeed, significant 
budgetary commitments for construction are not scheduled to begin until 
FY 2006. Until that time, the U.S. has funded, and proposes in FY 2005 
to fund, ITER preparatory activities that reorient domestic fusion 
experimental, theoretical and enabling technology research more toward 
the needs of ITER. The vast majority of this research is performed by 
existing fusion scientists and engineers. In other words, these 
researchers are not doing less work, they are doing different work. 
Only a very small amount, on the order of $1,000,000, of the 
preparatory activities is for industrial preparations at this time.
    This committee recently held a hearing to understand the 
Department's commitment to resolution of the immense backlog of cases 
pending under the DOE's part of the Energy Employees Occupational 
Illness Compensation Program. I note that your budget request includes 
a commitment to work through the backlog in three years.
    I am concerned that workers who were injured by work in past 
weapons programs should be appropriately compensated. We know that the 
current legislation is fundamentally broken, and needs improvements.
    I am working with my colleagues to decide how best to proceed with 
this program, which could involve another hearing or consideration of 
alternative legislation.
    Question 12. When would the Department be ready to discuss 
alternative legislative options to improve the program?
    Answer. The Secretary transmitted a legislative proposal on March 
29, 2004 to eliminate the pay cap for physicians serving on EEOICPA 
Part D Physician Panels, expand the hiring authority of the physicians, 
and allow Part D applications to move forward to a Physicians Panel 
even if a State agreement is not yet in place. In addition, the 
Administration is currently working on an additional legislative 
proposal to clarify the definition of a DOE facility for purposes of 
the EEOICPA programs. The Department is available at your convenience 
to discuss legislation pending in Congress that affects the Part D 
program.
    Question 13. Mr. Secretary, the President's budget provides $227.8 
million in total funding for the Hydrogen Fuel Initiative in four 
separate DOE programs including the Offices of Energy Efficiency and 
Renewable Energy, Science, Fossil Energy and Nuclear Energy and the 
Department of Transportation.
    Can you explain how these funds are allocated and assure the 
Committee that the accounts don't duplicate work being done in any of 
the other DOE accounts or offices.

                                                 FUNDING SUMMARY
                                               [Dollars in 000's]
----------------------------------------------------------------------------------------------------------------
                                                                   FY 2003                  FY 2004
                       Program/Activity                             comp.      FY 2004       comp.      FY 2005
                                                                   approp.     request      approp.     request
----------------------------------------------------------------------------------------------------------------
EERE Energy Supply (Hydrogen).................................     38,113        87,982     81,991        95,325
----------------------------------------------------------------------------------------------------------------
EERE Conservation (Fuel Cells)................................     53,906        77,500     65,187        77,500
----------------------------------------------------------------------------------------------------------------
Fossil Energy.................................................      2,280        11,555      4,889        16,000
----------------------------------------------------------------------------------------------------------------
Nuclear Energy................................................      2,000         4,000      6,377         9,000
----------------------------------------------------------------------------------------------------------------
Office of Science.............................................          0             0          0        29,183
----------------------------------------------------------------------------------------------------------------
Department of Energy, Total...................................     96,299       181,037    158,444       227,008
----------------------------------------------------------------------------------------------------------------
Department of Transportation..................................          0           674        555           832
----------------------------------------------------------------------------------------------------------------
Hydrogen Fuel Initiative, Total...............................     96,299       181,711    158,999       227,840
----------------------------------------------------------------------------------------------------------------

    Answer. Please reference the above chart.
    The Department has formed a cross-cutting team with representatives 
from each of the four DOE offices involved in the President's Hydrogen 
Fuel Initiative (Office of Energy Efficiency and Renewable Energy; 
Office of Nuclear Energy, Science and Technology; Office of Science; 
and Office of Fossil Energy) to ensure there is no duplication of work. 
This team has jointly developed a ``Hydrogen Posture Plan'' which 
integrates the hydrogen activities of the Department. This plan, 
developed with the Office of Management and Budget (OMB), was used in 
formulating the President's FY 2004 and FY 2005 budget requests.
    In addition, an interagency plan was developed with the Department 
of Transportation, National Institute of Standards and Technology, and 
Environmental Protection Agency to ensure that codes and standards 
activities are coordinated and to avoid duplication. This plan was also 
developed under OMB's guidance.

                          CARBON SEQUESTRATION

    Question 14. The President's Coal Research Initiative contains 
funds ($49 million) for research on carbon sequestration. Can you 
elaborate on the types of technologies that are to be examined? Can you 
also provide information on the potential cost of implementing these 
technologies, and their expected impact on carbon emission reductions?
    Answer.

Technologies
    The carbon sequestration program is developing cost-effective, 
environmentally sound technology options for coal and other carbon-
based fuels that could ultimately lead to stabilization of greenhouse 
gas concentrations in the atmosphere. The Program is divided into 
several key areas: Capture; Sequestration; Measurement, Monitoring & 
Verification (MMV); Non-CO2 Greenhouse Gas Mitigation and 
Regional Partnerships. For the capture area, the primary goal of this 
research is to develop technology options that dramatically lower the 
cost of eliminating CO2 from flue gas and other streams by 
use of either pre- or post-combustion processes. This research is in 
its early stages and is exploring a wide range of approaches, including 
membranes, improved CO2 sorbents, advanced combustor 
concepts, advanced scrubbing, formation of CO2 hydrates, and 
economic assessments. For the sequestration area, technologies are 
being developed for geologic sequestration for cost optimization, 
monitoring, modeling, and capacity estimation. Numerous field studies 
are underway to determine the degree to which CO2 can be 
injected and remain safely and permanently sequestered in geologic 
formations while concurrently assuring no adverse long-term ecological 
impacts. Terrestrial sequestration technologies are being developed to 
enhance uptake and storage of CO2 in soils and vegetation. 
Field tests are underway to maximize productivity of infertile soils 
and change current mine reclamation perceptions and practices to make 
uncompacted soil and forest establishment the preferred choice for 
restoring mined lands. In the MMV area, fundamental and applied studies 
are developing instrumentation and protocols that can track the fate of 
sequestered CO2 and provide the necessary scientific tools 
to ensure permanent storage. Non-CO2 greenhouse gas 
technologies are under development that will reduce fugitive methane 
emissions from landfills and coal mines. Lastly, seven regional carbon 
sequestration partnerships have been established throughout the United 
States to develop the infrastructure for widespread deployment of 
greenhouse gas mitigation technologies should they be deemed necessary.

Costs & Benefits
    The President's Global Climate Change Initiative (GCCI) has the 
goal of significantly reducing the greenhouse gas intensity of the 
United States economy over the next 10 years, while sustaining the 
economic growth needed to finance investment in new, clean energy 
technologies. The GCCI calls for increased research and development 
investments to provide an improved basis for sound future decisions, 
for increased emphasis on carbon sequestration, and for reductions in 
non-CO2 greenhouse gas emissions such as methane. The GCCI 
also calls for a progress review relative to the goals of the 
initiative in 2012, at which time decisions about additional 
implementation measures will be made. The GCCI has defined a metric 
goal of an 18% reduction in greenhouse gas intensity over the next ten 
years. The Sequestration Program will show substantial contributions 
toward meeting greenhouse gas intensity reduction goals of the Global 
Climate Change Initiative (GCCI) and provide a portfolio of 
``commercially ready'' technologies to support the decision making 
process for future action in 2012, as mandated by GCCI.
    Developments within the Sequestration Program will be key to 
reducing greenhouse gas emissions. Benefits derived from the 
Sequestration Program assume that a sustained investment in 
sequestration R&D will continually drive down the cost of sequestration 
and create an infrastructure for wide scale deployment of greenhouse 
gas mitigation technologies. Technology developments are assumed to 
occur with adequate R&D funding such that by the 2012 timeframe, carbon 
sequestration technologies will be available that result in less than a 
10% increase in cost of energy services for direct capture technologies 
and less that $10/ton carbon sequestered for indirect capture 
technologies. Current capture and sequestration technology options 
result in at least a 30% increase for new plants and a 70% increase for 
retrofit plants.
    A reduced emissions scenario consistent with the GCCI and the 
Administration's National Climate Change Technology Initiative (NCCTI) 
calls for slowing of emission growth in the near term and stabilization 
of emissions toward mid-century, if warranted by technology 
developments. Using results from an FE/NETL analysis, the Sequestration 
Program has estimated the contribution that various options will make 
toward meeting the future Greenhouse Gas (GHG) emissions reduction 
needs. Sequestration technologies have the potential to account for 
more than 30 MMTCE (Million Metric Tons of Carbon Equivalents) GHG 
reduction in 2012 or about a 30% direct contribution to President's 
GCCI goals. GHG emissions stabilization is highly unlikely without 
substantial contributions technologies.
    Question 15. Energy from biomass seems to be very promising yet the 
President's budget reduces funding for biomass and biorefinery systems 
R&D by almost $14 million.
    Can you explain the Department's rationale for decreasing the 
budget request in this area? Similarly, the request reduces the amount 
for solar and wind energy research. Again, solar and wind energy 
technology hold great promise for the U.S., the Southwest especially, 
why is the Department decreasing emphasis on solar and wind energy?

                                                FUNDING SCHEDULE
                                               [Dollars in 000's]
----------------------------------------------------------------------------------------------------------------
                                                                      FY 2004      FY 2004 comp.      FY 2005
                        Program/activity                              request         approp.         request
----------------------------------------------------------------------------------------------------------------
Biomass.........................................................      69,750          86,471          72,596
----------------------------------------------------------------------------------------------------------------
Solar Energy....................................................      79,693          83,393          80,333
----------------------------------------------------------------------------------------------------------------
Wind Energy.....................................................      41,600          41,310          41,600
----------------------------------------------------------------------------------------------------------------

    Answer. First and foremost, our funding request level is guided by 
factors such as program performance, alignment with the 
Administration's R&D investment criteria (including potential 
benefits), resources needed to meet program goals, relative priority, 
and other factors. While a useful input, last year's funding level is 
not determinative. Nevertheless, the table above provides a good 
perspective on funding levels. Funding for the Wind Energy Technology 
Program is not decreasing; the FY 2005 request is higher than the FY 
2004 appropriation and the same as the Department's FY 2004 request 
level.
    In the Solar Energy Technology Program, the decrease from the FY 
2004 appropriation is due to our request for Concentrating Solar Power 
(CSP), a non-photovoltaic technology that ``concentrates'' solar rays 
to heat fluid for steam production and power generation. Last year we 
requested zero funding for CSP, and this year we are requesting $2 
million to maintain facilities and undertake a more thorough 
investigation of the proper course for our R&D.
    The reduction in the Biomass Program reflects the lack of requested 
funding in FY 2005 for congressionally-directed activities that were 
included within the FY 2004 appropriation. In fact, when compared to 
the unencumbered FY 2004 enacted figure, our FY 2005 request provides a 
significant increase for biomass activities. The termination of 
Congressional earmarks will not affect our R&D plan or the ability to 
achieve our R&D goals.
    Question 16. The President's funding request for Industrial 
Technologies is decreased by $35 million. The Budget Highlights states 
that ``New projects will be selected that are unlikely to be undertaken 
without federal support that significantly reduce energy intensity and 
that are in alignment with the Administration's R&D investment 
criteria.''
    Would you please provide the Committee with some examples of the 
projects that The Department believes will be funded?
    Answer. In FY 2005, the Department will focus on high-impact R&D 
Grand Challenges for next generation manufacturing and energy systems 
technologies that are in line with the Administration's R&D investment 
criteria. These Grand Challenges typically require high-risk investment 
for high-return gains to achieve much greater energy efficiencies than 
current processes. Grand Challenges examples include:

   cokeless ironmaking (steel industry);
   an alternative reduction technology to produce aluminum with 
        less energy and emissions (aluminum industry);
   advanced melting technology (glass and metal casting 
        industry); and
   distillation technologies (chemical industry).

    Question 17. The President's budget assumes that the Southeastern 
Power Administration (``SEPA''), the Southwestern Power Administration 
(``SWPA''), and the Western Area Power Administration (``WAPA'') will 
complete the phase out of federal power receipt financing of purchase 
power and wheeling activities that began in FY 2001.
    However, every year since FY 2001, the Appropriations Committee has 
adjusted the funding to ensure that the PMAs' purchase power and 
wheeling activities are appropriately funded.
    Question 17-1. Isn't it true that this funding is budget neutral 
from a scoring perspective, which is simply a reflection of the reality 
that the amounts appropriated in the budget are returned to the 
Treasury in the same year?
    Answer. Yes, when looking at the total Federal budget (both 
discretionary and mandatory), PMA purchase power and wheeling 
activities are budget neutral. This is because the funds appropriated 
to the PMAs for purchase power and wheeling will generally be recovered 
through power rates and resulting revenues deposited into the U.S. 
Treasury in the same year.
    Question 17-2. Has anyone within the Administration studied the 
impact of completely eliminating purchased power and wheeling funds for 
the PMAs and whether such a decision would reduce revenues for the 
Treasury?
    Answer. I am not aware of any formal study undertaken by the 
Administration. However, the General Accounting Office conducted a 
study in 1990 to review the level of market activity for purchase power 
and wheeling services occurring across the east coast. The findings 
indicated the purchase and wheeling products were available in some 
locations, they were reliable and satisfactorily marketed. Today, the 
PMAs purchase power and energy to meet their contractual obligations to 
their customers. Some customers are able to contract for these services 
on their own if they choose to, or rely on the PMAs to provide these 
services for them. Customers currently reimburse the PMAs for these 
services. Eliminating Federal appropriations (costs for purchase power 
and wheeling activities) correspondingly reduces receipts to the U.S. 
Treasury by the same amount. However, if purchase power and wheeling 
activities are funded through the use of receipts, eliminating such 
funding would have no impact on Treasury receipts.
    Question 17-3. If funding is not provided this year, how will the 
PMAs meet their purchase power and wheeling activities--particularly 
SEPA which has no transmission capability?
    Answer. The PMAs are authorized to market excess power made 
available at Corps and Bureau of Reclamation projects not required for 
project use. Since their inception, the three PMAs--the Southeastern 
Power Administration, Southwestern Power Administration and Western 
Area Power Administration--have purchased power to even out (``firm 
up'') the PMAs' fluctuating hydropower resource, or to provide power 
for Federal pump-storage generating units. The latter is used by some 
of the PMAs to pump water at off-peak times which enables them to 
generate more power during peak-use times. In addition, the PMAs buy 
transmission services (wheeling) from other utilities in order to 
integrate the hydro resources to make them more dependable and to move 
Federal power and purchased power to PMA customer loads not serviced by 
Federally owned transmission lines.
    The PMAs have determined to market a certain number of megawatt-
hours of energy each year and guarantee such delivery by contract. 
Given variable reservoir and river conditions, the PMAs may need to 
purchase power to ``blend'' with the Federally-produced hydropower. 
This results in more firm energy that is available to meet contract 
commitments than might otherwise be available.
    The PMAs have historically financed purchase power and wheeling 
services through a combination of appropriations and ``alternative'' 
financing, such as net billing, bill crediting and customer 
reimbursements (advances). PPW expenses are included in the rates the 
PMAs charge for their power, and there is no net cost to the Federal 
Government.
    The termination of Federal funding for PPW by the PMAs will not 
harm the PMAs' ability to meet their power delivery contracts with 
customers. The PMAs have authority to use alternative financing 
mechanisms to make power and transmission purchases. Bill crediting and 
cash advances, although not standard electric industry financing 
methods, provide a backup funding source for the PMAs to continue PPW 
activities. In addition, the PMAs each have access to ``Continuing 
Funds'' in the U.S. Treasury to purchase power under certain 
conditions. The PMAs would, if necessary, use these other authorities 
to meet their contractual commitments for power delivery.
    Question 17-4. Without sufficient funding for purchase power and 
wheeling activities, will the power rates of the PMAs' customers 
significantly increase?
    Answer. If the PMA customers agree to use alternative financing 
methods, and if sufficient net billing, bill crediting and reimbursable 
authority is provided to the PMAs to support their purchase power and 
wheeling programs to meet their contractual requirements, there would 
be no impact on PMA or customer power rates.
    The PMAs are authorized to market power made available at Corps and 
Bureau of Reclamation projects not required for project use. The PMAs 
have determined to market a certain number of megawatt-hours of energy 
each year and guarantee such delivery by contract. Given variable 
reservoir and river conditions, the PMAs may need to purchase power to 
meet their contractual commitments to customers. If sufficient funding 
for purchase power and wheeling was not available, the PMAs would rely 
on the alternative funding mechanisms noted above and customer lines 
credit or advances to purchase power to address variable reservoir and 
river conditions, to produce a more reliable product and to assure the 
repayment of the Federal investment.
    Smaller customers of the PMAs may need to increase their power 
rates due to higher transaction costs incurred to obtain the same level 
and quality of service currently received from their PMA, but this may 
be partially offset by a reduction in PMA rates reflecting a decrease 
in purchase power costs incurred by the PMAs. For example, a small 
municipal electric department might need to add staff and incur other 
transaction costs to make purchase power and wheeling arrangements 
previously performed by the PMA. Other added costs may be incurred with 
the unbundling of ancillary service charges. If small customers are 
able to form associations (such as joint action agencies) to take over 
the PMAs' function, they could potentially continue to benefit from 
economies of scale, with little or no impact on their rates. It is also 
possible PMA customers will begin buying power for themselves and 
therefore will not need to rely on the PMAs for that service.
    Question 17-5. The President's budget proposal notes that PMAs may 
use alternative financing mechanisms, such as net billing, bill 
crediting, and reimbursable authority to assist customers. Please 
explain these alternatives and whether or not such alternatives would 
provide a sufficient safeguard for PMA customers.
    Answer. In addition to customers entering the market to buy power 
on their own, the PMAs make use of several methods of alternative non-
appropriated financing in order to fund purchase power and wheeling 
program requirements necessary to meet the terms of their existing 
long-term power marketing contracts. These methods include non-Federal 
customer advances, Federal reimbursable financing, net billing, and 
bill crediting.
    Non-Federal customer advances provide cash to the PMA for financing 
purchase power and wheeling requirements. Western's authority is 
derived from the Interior Department Appropriations Act of 1928, and 
Southwestern's authority is derived from the Energy and Water 
Development Appropriations Act, 2004. Southeastern does not have 
permanent authority to use customer advances for its programs; however, 
the FY 2005 budget includes language authorizing the use of $32.7 
million in customer advances for purchase power and wheeling 
expenditures. This provides for meeting individualized needs of 
specific customers; however, it does not necessarily provide for the 
most efficient aggregation of customer resources needed to ensure 
overall low-cost operations. Further, receiving advance funding from 
some customers is not a standard business practice and may be a heavy 
burden for some customers.
    Federal reimbursable authority, provided in the Economy Act, allows 
the PMAs to perform firming and transmission services for other Federal 
agencies using the other agencies' appropriations or funding sources.
    Net billing is a funding mechanism that can be used when a customer 
both buys and sells power to a PMA in the same billing period. In 
instances when the PMA owes the customer less than the customer owes 
the PMA, the PMA issues a bill to the customer that nets the two 
amounts against each other. In effect, the customer's funds are used to 
pay for the amount the PMA owes the customer. The use of this funding 
mechanism is constrained by receipts available within the particular 
billing period and the ability of customers to provide the needed 
resource. The use of this method does not provide for high level 
aggregation of requirements.
    Bill crediting is a funding mechanism where one or more PMA 
customers sends its payment to a PMA supplier who has agreed to credit 
the PMA for the payment as if the funds had come directly from the PMA. 
The PMA credits the customer's bill as if the payment had been made 
directly to the PMA. This non-standard business method is constrained 
by revenues available within the particular billing period. It also 
requires the participation of suppliers who must perform special 
handling to ensure payments are recorded properly. This approach has 
not been favored by PMA customers and suppliers. In today's ever 
changing electrical utility industry, which exposes such purchases to 
modifications, such as transmission curtailments, differences between 
what the PMA needs (which can change on a moment's notice due to daily 
changes in the availability of Federal hydroelectric resources to 
accommodate competing uses) and what the customer purchases can cause 
conflict and potential litigation between the customer and the PMA.
    It is the Administration's intent to encourage the three PMAs' 
customers to shop for their own power and transmission services. 
Industry restructuring and resulting competition now make it attractive 
for many PMA customers to enter the marketplace. For customers that are 
unable or unwilling to conduct these activities on their own, the 
alternative financing mechanisms previously discussed, subject to 
adequate apportionment, provide safeguards to ensure continued power 
delivery.
    Question 18. The President's budget again proposes to directly fund 
the Army Corps of Engineers' hydropower operations and maintenance 
activities using federal power receipts for SEPA, SWPA, and WAPA.
    Last year, the Energy and Water [Development] Appropriations 
Subcommittee attempted to carry this proposal. However, the 
Subcommittee was prevented from enacting the proposal because the CBO 
score for such [a] change--about $1.3 billion--was cost prohibitive. We 
tried again on the Energy bill but the scoring problems persisted.
    Question 18-1. If the Administration wants to provide funding for 
the Corps by allowing the use of PMA receipts, isn't the Administration 
sending mixed signals to Congress by simultaneously eliminating 
purchased power and wheeling funds for the PMAs?
    Answer. The operation and maintenance of Army Corps of Engineer 
hydro power plants is clearly a Federal function, and should be funded 
in a timely manner that minimizes unscheduled ``downtime'' and results 
in greater power production and reliability. We believe the best way to 
ensure steady funding for this activity is by using receipts from the 
sale of power to directly fund the power plants' O&M. A similar 
arrangement has worked well for Corps plants whose power is marketed by 
the Bonneville Power Administration.
    In contrast, given variable reservoir and river conditions, the 
PMAs purchase power to ``blend'' with the Federally-produced 
hydropower. This results in more firm energy that is available to meet 
contract commitments than might otherwise be available. The purchase 
power and wheeling activities of the PMAs are a standard function of an 
electric utility with hydro generation. The PMAs purchase power to 
``firm up'' Federal hydropower and market a certain number of hours of 
peaking energy each year and guarantee such delivery by contract. In 
this era of emerging competition in the electric power industry, it is 
the Administration's belief that it is possible for the customers of 
the three PMAs to arrange for their own power purchases and wheeling 
arrangements without using Federal funds.
    Question 18-2. Is CBO scoring this proposal accurately?
    Answer. We have not seen a formal report from CBO on the scoring of 
this proposal. Since the Office of Management and Budget, working with 
CBO, has reclassified the receipts associated with Corps hydropower O&M 
from mandatory to discretionary, we believe that enactment of this 
proposal will be neutral from a budget scoring perspective.
    Question 18-3. What steps will the Administration take to ensure 
that the power customers can provide some input and that the Corps will 
not reprogram the funds provided under this proposed change in law?
    Answer. The customers, Corps and PMAs have formed stakeholder 
groups to develop a memorandum of agreement (MOA) that clearly defines 
the operation and maintenance activities to be completed under direct 
funding authority. The MOA will establish a framework to govern the 
respective responsibilities of the parties regarding funding 
maintenance, rehabilitation, or modernization activities on a system-
by-system basis.
    Question 19. The Renewable Energy Production Incentive (REPI) was 
created in the Energy Policy Act of 1992 to help communities served by 
municipal electric utilities and rural electric cooperatives (combined 
representing 25 percent of the industry) invest in renewable energy 
projects.
    The Administration's budget includes recommendations to extend and 
expand the availability of tax incentives for wind, biomass and 
landfill gas facilities. REPI represents the recognition that these 
not-for-profit electric utilities cannot utilize such tax credits for 
renewable energy that are made available to private utilities and 
developers.
    If the goal is to increase the use of renewable energy in this 
country, then not-for-profit electric utilities need the same type of 
federal incentives that Congress typically provides to for-profit 
utilities. What is the current backlog of projects awaiting funding 
through the Renewable Energy Production Incentive (REPI) program?
    Answer. The backlog of unpaid awards from the Renewable Energy 
Production Incentive program is $55.7 million. A two-tier system was 
established to allocate available funds in years when the demand for 
payments exceeded funding. To date, REPI incentive payments for Tier 1-
based technologies have been fully paid. These are technologies that 
have comparable tax credits, such as wind and solar. The backlog in 
payments consists solely of Tier 2-based technologies (open loop 
biomass, landfill gas) that would not qualify for a tax credit if 
privately owned.

        NONPROLIFERATION AND NATIONAL SECURITY INSTITUTE (NNSI)

    The Budget request for the NNSI located in Albuquerque was reduced 
from $12 million to $8 million--a 32 percent cut. Recently, nearly 40 
individuals who worked at this security training facility were laid off 
and there was only a small decrease in funding from FY 03 to FY 04.
    The budget justification states that this facility ``is a DOE 
leader in the development of standardized state-of-the-art security 
training.'' The facility also provides training assistance to the 
Department of Homeland Security and the Department of State for our 
embassies.
    This facility is an important element in protecting nuclear 
material as well as U.S. personnel around the world.
    Question 20. What will be the impact of this budget reduction on 
staffing as a result of this 32 percent cut and can you ensure that 
this budget will provide sufficient funding to maintain the current 
level of security and training?
    Answer. We expect no additional impact to staffing over and above 
the recent layoff of contractor employees, which was the result of a 
contractor management decision to resolve overspending issues. In FY 
2005, we will restructure the Department's security training program to 
provide needed capacity for essential security courses. We will 
continue to conduct basic security police officer training courses at 
NNSI on a demand basis, as sites also adapt and transfer portions of 
training to meet their site-unique requirements on premises. In FY 
2005, the NNSI will curtail its distance learning program using 
traditional learning methods in lieu of live interactive broadcasts. We 
will consolidate other courses in safeguards, information management 
systems, materials accountability, and security management for greater 
efficiency. An overall strategy will be introduced at NNSI whereby core 
capabilities are maintained as more courses are offered to Department 
offices on a reimbursable basis.
    Question 21. The budget proposes the creation of a new office to 
[b]e called the Office of Future Liabilities and have the 
responsibility to manage cleanup not assigned to the Office of 
Environmental Management. I am not clear as to why we are creating 
another office charged with cleaning up DOE sites. It is my 
understanding that [the] cleanup cost for the new office could amount 
to $15 to $20 billion, which of course will require a substantial staff 
and budget to manage these efforts.
    Why is the Department asking Congress to create and fund another 
office within the Department to address DOE cleanup? What is the 
estimated lifespan of this new office and what do you believe will be 
the total estimated cost to address the cleanup needs assigned to this 
new office?
    Answer. The main focus of the Office of Environmental Management 
(EM) is the legacy cleanup at DOE sites where the primary mission has 
been completed and the site is being closed. With the support of 
Congress, the Department has successfully implemented an accelerated 
cleanup strategy at these sites. The accelerated cleanup strategy is 
delivering near-term and measurable results to accelerate cleanup, 
reduce risk, and complete cleanup at EM sites.
    However, there are long-term cleanup activities that will be 
required at Department sites with continuing missions in science, 
energy, and defense that EM is not now undertaking, and long-term waste 
treatment and disposal activities at these sites once the EM mission is 
complete. There are unknown future liabilities that need to be 
identified.
    To effectively address these long-term cleanup requirements, the 
Department has proposed a new Office of Future Liabilities (FL). FL 
will work with the line DOE science, energy, and defense organizations 
to develop an approach to aggregate requirements, develop integrated 
plans and budgets, and manage programs. FL is proposed as a small 
organization with $8 million and 4 Full Time Equivalent (FTE) staff to 
develop the baseline for cleanup and waste management activities not 
currently part of the EM inventory. A rough-order-of-magnitude estimate 
for science, energy, and defense environmental liabilities at sites 
with continuing missions is $35 billion: $3 billion during the current 
budget planning period from FY 2005 to FY 2009; $8 billion during the 
period from FY 2010 to FY 2025, and $35 billion beyond FY 2025. The 
estimate of includes environmental activities not yet assigned to a DOE 
organization for action. FL will work to define the baseline for these 
activities and the options for organizational assignment, including the 
possible expansion of FL's mission to do these activities.

               Responses to Questions From Senator Craig

    Question 22. In fiscal year 2004, Congress provided DOE with $15 
million in nuclear energy funding to initiate a procurement for two 
competing reactor designs--one of which would ultimately be 
demonstrated in Idaho for the cogeneration of electricity and hydrogen.
    What is the status of DOE's initiation of this procurement in the 
current fiscal year?
    Answer. In FY 2004, the Department's Generation IV Nuclear Energy 
Systems Initiative continues to emphasize research and development on 
the Next Generation Nuclear Plant and continues collaborative research 
on the Lead-Cooled Fast Reactor, the Gas-Cooled Fast Reactor, and the 
Supercritical Water-Cooled Reactor. These systems were chosen as the 
best match for the future needs of the United States. Beginning in FY 
2005, the Department puts special emphasis on the NGNP, working towards 
the potential early deployment of the NGNP as a demonstration of a 
promising Generation IV reactor technology. The Department has not at 
this time made a decision to proceed with such a demonstration plant. 
The budget request for FY 2005 for the NGNP is $19.3 million. 
Approximately $5 million of the $19.3 million request for FY 2005 is 
slated for NGNP design activities to define future research and 
development requirements, with the balance being applied to critical 
fuel and materials research.
    Question. Why has DOE requested no funds to continue this reactor 
design and development in FY 2005?
    Answer. DOE's FY 2005 budget request includes $19.3 million for 
research and development activities related to the Next Generation 
Nuclear Plant within the budget for the Generation IV Nuclear Energy 
Systems Initiative. Of this $19.3 million, approximately $5 million 
will be spent on design to define future research and development 
requirements with the balance spent on critical fuel and materials 
research and development.
    Question. Is it the position of DOE that because DOE has requested 
no funds for the reactor in FY 2005, that DOE may divert the $15 
million it has this fiscal year for other purposes within the Office of 
Nuclear Energy?
    Answer. DOE's FY 2005 budget request includes $19.3 million for the 
Next Generation Nuclear Plant within the budget for the Generation IV 
Nuclear Energy Systems Initiative. In FY 2004, the Generation IV 
Nuclear Energy Systems Initiative continues to emphasize research and 
development on the Next Generation Nuclear Plant and continues 
collaborative research on the Lead-Cooled Fast Reactor, the Gas-Cooled 
Fast Reactor, and the Supercritical Water-Cooled Reactor. No NGNP 
funding is being diverted to any other program. DOE is committed to the 
Next Generation Nuclear Plant project; it is the highest priority 
nuclear energy R&D project in the Office of Nuclear Energy.
    Question. Please provide a detailed breakdown of the planned uses 
of the $15 million in FY 2004 and a schedule for INEEL to initiate the 
procurement.
    Answer. In FY 2004 NGNP funding has been allocated as follows:

                  NGNP Fuel Development $6.1 million
                  NGNP Reactor and Plant Design $7.6 million
                  NGNP Materials and Turbine Development $0.7 million
                  SBIR and Budget Rescission $0.6 million

                         YUCCA MOUNTAIN PROJECT

    Question 23. In the fiscal year 2005 budget, DOE proposes that the 
Office of Civilian Radioactive Waste Management will assume 
responsibility for the transportation of research reactor spent nuclear 
fuel as well as the management and operation of two DOE-owned spent 
nuclear fuel storage installations--one of which is at the Idaho 
National Engineering and Environmental Laboratory. These 
responsibilities are being transferred from the Environmental 
Management program.

QUESTIONS:

    1) Does DOE plan to continue, in future fiscal years, to shift more 
spent nuclear fuel and high level waste storage functions from 
Environmental Management to Civilian Radioactive Waste Management?
    Answer. Over the next several fiscal years, the Office, of 
Environmental Management plans to realign functions that do not support 
its legacy waste cleanup mission to other Offices within the 
Department. Those functions that involve the management of non-legacy 
spent fuel and high-level waste, and possibly some other functions, may 
be realigned to the Office of Civilian Radioactive Waste Management. 
This realignment is consistent with final disposition of spent nuclear 
fuel and high-level radioactive waste in a geologic repository at Yucca 
Mountain. At this time, no decisions have been made regarding 
additional out-year realignments of spent nuclear fuel and high-level 
waste storage functions.
    1) Where in the Nuclear Waste Policy Act does DOE find 
authorization for the Office of Civilian Radioactive Waste Management 
to be in the business of managing DOE spent fuel on DOE sites?
    Answer. The Nuclear Waste Policy Act (NWPA) established the Office 
of Civilian Radioactive Waste Management (OCRWM) and assigned certain 
functions to OCRWM. Consistent with the DOE Organization Act, the 
Secretary may assign other functions to the Director of OCRWM in 
addition to those authorized by the NWPAnswer. The Atomic Energy Act is 
the source of the Department's authority to manage spent fuel at DOE 
sites.
    In order to implement the proposed realignments, OCRWM has proposed 
funding through two separate budgetary accounts--Other Defense 
Activities and Energy Supply R&D. A separate organizational structure 
will be established to manage the realigned activities. This will 
ensure that OCRWM's primary objective--development of a geologic 
repository at Yucca Mountain and a transportation system to ship spent 
fuel and high level waste--will be separate from the realigned 
activities. The funding for these new activities will not use monies 
from the Nuclear Waste Fund or Defense Nuclear Waste Disposal 
appropriations.
    1) Is the funding transferred from EM to RW in fiscal year 2005 
fully adequate for the spent fuel storage responsibility being 
transferred?
    Answer. The FY 2005 funding requested for all realigned activities 
is based on funding requests in prior years for the same activities 
from the Office of Environmental Management. The table below provides a 
breakout of Fiscal Year 2005 funding proposed for spent nuclear fuel 
storage facility responsibilities being realigned.
    1) How does the amount requested for these spent fuel storage 
activities in FY 2005 compare to the funding provided for the same 
activities in both fiscal years 2004 and 2003?
    Answer. The FY 2005 funding request is based on similar requests in 
prior years for the same activities. The table below provides a 
breakout of Fiscal Year 2003 and 2004 funding for spent nuclear fuel 
storage facility responsibilities requested by the Office of 
Environmental Management.

TABLE OF FUNDING REQUESTS BY FISCAL YEAR  FOR CERTAIN STORAGE FACILITIES
------------------------------------------------------------------------
                                        FY 2003     FY 2004     FY 2005
          Storage Facility            (millions)  (millions)  (millions)
------------------------------------------------------------------------
Ft. St. Vrain and Three Mile Island      4.762       4.861       5.023
 Independent Spent Fuel
 StorageInstallations...............
------------------------------------------------------------------------
Idaho Nuclear Technology and             7.637       7.797       8.055
 Engineering Center-666.............
------------------------------------------------------------------------

                      DISTRACTION FROM EM MISSION

    Question 24(2). How is the management, handling and storage of 
spent nuclear fuel on DOE Sites a distraction from the EM mission?
    Answer. The Office of Environmental Management (EM) is focused on 
accelerated risk reduction and cleanup at each of the EM sites. 
Currently, EM's mission includes activities related to the safe, 
interim storage of spent nuclear fuel at three major facilities--
Hanford, Idaho and Savannah River--pending the availability of 
permanent disposal at a geologic repository. EM's risk reduction 
mission includes the retrieval and packaging of spent nuclear fuel 
located in degrading K-Basin wet storage pools at Hanford. It also 
includes the consolidation of certain spent fuel inventories at 
Hanford, Idaho and Savannah River to support the accelerated cleanup of 
those facilities and sites.
    However, the continued maintenance of spent fuel and storage 
facilities where the inventory is in a safe condition, awaiting the 
availability of the repository, is not consistent with the EM's core 
mission of accelerated risk reduction and cleanup. These activities are 
being strategically transferred in response to the Top-To-Bottom 
Review, which found that EM was suffering from a lack of focus. These 
responsibilities are better suited with the Civilian Radioactive Waste 
Management program (RW), the office responsible for the licensing, 
design and construction of the repository. As such, RW will ultimately 
be responsible for the final management of all spent nuclear fuel 
within the Department.

                      FY 2005 AS PEAK FUNDING YEAR

    Question 24(3). Given that DOE has not yet begun processing high-
level waste at either Idaho or Hanford into its final form for 
disposal--nor constructed the processing plants to do so, how can FY 
2005 be the peak funding year?
    Answer. For the past several years, the Administration has 
requested and received significantly more funding for the EM program to 
accelerate cleanup and reduce risk. The strategy is to invest these 
additional resources to accelerate cleanup and complete work sooner, 
resulting in cost savings in the longer term. This strategy is working; 
work is being accelerated. Cleanup projects are being completed years 
ahead of what was once thought possible. As a result, the cleanup 
program has been accelerated by 35 years and life-cycle cleanup costs 
reduced by at least $50 billion. Because of this acceleration and 
reduction in life-cycle costs, we now expect that FY 2005 will be the 
``peak'' year of EM funding and that future funding requests will begin 
to decrease. Our audited life-cycle projection, based on our 
accelerated cleanup strategies, indicates that the remaining EM scope 
can be accomplished at annual funding levels that are lower than FY 
2005.

                       IDAHO DETAILED WORK SCOPE

    In response to its loss in court in Idaho over the issue of high-
level waste classification, DOE has proposed a budget that sequesters 
funding for high-level waste in Idaho, Hanford and Savannah River, 
pending Congressional clarification of tank closure requirements in 
statute.
    Question 24(4). In the case of Idaho, the funding sequestered is 
approximately $94 million. Please provide the detailed work scope 
breakdown for this $94 million, including a justification of why each 
piece of individual work scope is being held up by any legal ambiguity.
    Answer. The Idaho work scope being held up by legal ambiguity 
includes activities associated with stabilizing waste residues 
remaining in tanks after as much waste as possible has been removed 
(approximately $2 million) and design, procurement, and supporting 
project work on the Sodium-Bearing Waste Treatment Facility and 
associated operating funds (approximately $92 million). DOE will 
continue to empty the Idaho tanks, through retrieval and cleaning, and 
consolidate removed wastes into the minimum number of tanks. Any work 
on stabilizing any remaining residues into a solid form is deferred. 
DOE's long-standing plans for the disposition of Idaho's sodium-bearing 
tank wastes were to treat them for disposal as transuranic waste at the 
Waste Isolation Pilot Plant (WIPP) in New Mexico. However, the July 
2003 Idaho District Court decision over the issue of high-level waste 
classification voided DOE's criteria for legally determining that the 
sodium-bearing wastes should properly be managed as non-high-level 
waste. Thus, development of the new Sodium-Bearing Waste Treatment 
Facility to prepare the tank waste for disposal as transuranic waste 
does not now seem a prudent use of taxpayer dollars, given the legal 
uncertainty that DOE can actually dispose of the tank waste at WIPP.
    Question 24(5). Is it the position of DOE that it can dictate the 
timing of Congressional action on this matter, and if Congress should 
fail to act within that time frame, that DOE can neglect its 
responsibility to isolate this high-level waste from the environment?
    Answer. No. The U.S. Department of Energy (DOE) takes very 
seriously its responsibility to safely disposition wastes stored in 
underground tanks in Idaho, Hanford and Savannah River. However, DOE 
must comply with court orders resulting from litigation. Accordingly, 
it is DOE's position that we cannot proceed with implementing plans to 
treat tank wastes if the legal basis for those plans is in question. 
Absent legislative modification to the definition of high-level waste, 
DOE is continuing to clarify the matter through the appeals process. 
This approach could take years and make it difficult for DOE to commit 
with confidence to any long-term strategy to managing and disposing of 
the tank waste. The Department must pursue a conservative approach that 
assumes that the lower court decision is upheld. This scenario further 
assumes the ruling is given nation-wide application and stands for the 
proposition that virtually all waste from reprocessing must be sent to 
Yucca Mountain, Nevada, regardless of risk. In the Department's view, 
this will result in substantial delay and additional expense in 
removing and disposing of this waste--delay and expense not driven by 
public health and safety considerations. In fact, such delay could 
create the potential for serious health and safety risks to workers and 
members of the public by leaving the waste in tanks longer and risking 
leaks to groundwater.
    In any event, the Department will take all appropriate means to 
mitigate the risk potential until the issue is resolved.

                           PRICE-ANDERSON ACT

    Question 25. Please provide DOE's views on the impact of the 
failure to renew Price-Anderson Act indemnification--since the 
commercial provisions of that authority have already expired and the 
authority for DOE contractors will expire at the end of this year.
    Won't the lack of Price-Anderson authority negatively impact the 
numerous DOE site contract re-competitions planned for the next several 
years?
    Answer. In 2002, the authority for NRC to extend Price-Anderson 
protection to new commercial nuclear powerplants and for DOE to extend 
such protection to new DOE contractors expired. Congress included 
interim authority in the 2003 Defense Authorization Act. This authority 
expired for commercial nuclear powerplants at the end of 2003 and will 
expire for DOE contractors at the end of this year.
    Without Price-Anderson protection, no new commercial nuclear 
powerplants will be initiated. Likewise, without the authority to 
include Price-Anderson indemnification in its contracts, competition 
for DOE's largest and most important contracts will be detrimentally 
affected. In order to assure any competition, DOE will have to use 
other mechanisms (such as Public Law 85-804) to indemnify its 
contractors or risk discontinuance of important missions.
    These other mechanisms may not be available for all contracts and 
are less effective than Price-Anderson. Price-Anderson is the only 
source of indemnification that Congress designed specifically to assure 
prompt compensation to those who may be damaged by a nuclear incident 
without unnecessarily cumbersome litigation. The absence of Price-
Anderson indemnification in a contract also denies DOE the ability to 
exact civil or criminal penalties for a contractor's failure to comply 
with DOE's nuclear safety regulations.

             Responses to Questions From Senator Alexander

                LEADERSHIP CLASS COMPUTATIONAL FACILITY

    Question 26. The Congress appropriated an additional $30 million in 
funding above the President's request to the Department of Energy's 
Office of Science in FY 2004 to start the development of a leadership 
class computational facility based on recommendations by the High-End 
Computing Revitalization Task Force. I would prefer that we put at 
least $25 million of these funds toward developing a leadership class 
computational facility. I would like an explanation of the plans that 
the Department has for these funds and also an explanation of the 
Department's plans for the funds requested in the President's budget 
for high performance computing.
    Answer. The Department is acting to pursue a leadership class 
computing system for the computational science community, and we 
believe that our current plans for spending these additional 
appropriated funds comports well with the guidance provided by the 
Congress in the FY 2004 Conference Report. We have allocated $5 million 
of the $30 million you reference to the National Energy Research 
Scientific Computing Center (NERSC) in order to provide additional 
near-term resources for today's scientific computing users. In a 
complementary move, we issued a call for proposals to the Office of 
Science laboratories on February 23, 2004 to begin development and 
deployment of a Leadership Class computer for open science. We expect 
responses to this call by April 1, 2004, with an award of the remaining 
$25 million around April 15, 2004.
    In FY 2005, we expect to continue both our enhanced investment at 
NERSC and our investments in a Leadership Class Computer for the 
Nation. These investments will be complemented by critical investments 
in high-end computing research including relevant software and applied 
mathematics areas. All of these investment decisions will be made 
within the context of the work of the High-End Computing Revitalization 
Task Force.
Background

              Office of Science Notice to SC Laboratories

           Leadership-Class Computing Capability for Science

    SUMMARY: The Office of Advanced Scientific Computing Research 
(ASCR) of the Office of Science (SC), U.S. Department of Energy (DOE), 
hereby announces its interest in receiving applications for leadership-
class scientific computing capability in support of both the ASCR and 
the broader SC research programs; as well as other capability-limited 
federally-funded computational science activities. Prospective 
applicants should observe that:
    1) The focus of the proposed effort should be on capability 
computing in support of high-end science--rather than on enhanced 
computing capacity for general science users;
    2) Proposed activities should be designed to support computational 
science applications research areas relevant to the mission of the 
Office of Science, as well as those of other federal agencies;
    3) The proposed activities should include a plan for an active 
dialogue with industry, universities, and other laboratories and 
centers in order to maximize the dissemination of information, promote 
and support technology commercialization, and avoid unnecessary 
duplication of effort;
    4) Multiple year funding is anticipated, but not guaranteed. 
Applicants may request periods of performance ranging up to five years;
    5) Only Office of Science Laboratories are eligible to respond to 
this solicitation.
    6) The proposed effort must be a user facility providing leadership 
class computing capability to scientists and engineers nationwide 
independent of their institutional affiliation or source of funding.
    More specific information on this solicitation is outlined in the 
Supplementary Information section below.
    DATES: The deadline for receipt of formal applications is 4:30 
P.M., E.S.T. Friday, 2 April 2004, in order to be accepted for merit 
review and to permit timely consideration for award in Fiscal Year 
2004. Decisions are expected on or about 15 April 2004.
    ADDRESSES: All applications, referencing this notice, should be 
sent by e-mail to Ms. Jane Hiegel at: [email protected] with 
a copy to Dr. Gary Johnson at: [email protected]. Responses 
to this solicitation should be in either Microsoft Word or Adobe 
Acrobat (.pdf) format.
    SUPPLEMENTARY INFORMATION: DOE's Office of Science, in order to 
accomplish its mission, is faced with the need for computing capability 
that far exceeds what is currently available from commercial sources. 
The Office of Science's needs are documented at the Ultrascale 
Simulation for Science web site: http://www.ultrasim.info/index.html, 
and in the report from the Science Case for Large-scale Simulation 
(ScaLeS) workshop: http://www.dev.pnl.gov/scales/.
    In March of 2003, the High End Computing Revitalization Task Force 
(HECRTF) was formed to address this problem at the inter-agency level 
and additional information may be found at its web site: http://
www.itrd.gov/hecrtf-outreach/index.html.
    This solicitation is part of ASCR's response to the need for 
leadership-class computing for capability-limited science applications. 
ASCR announces its interest in receiving applications to provide 
leadership-class scientific computing capability for scientific areas 
that support the missions of the Office of Science and those of other 
federal agencies.
    Proposals should include a plan for playing an active role in 
maintaining a dialogue with industry, universities, and other 
laboratories and centers in order to maximize the dissemination of 
information, promote and support technology commercialization, and 
avoid unnecessary duplication of effort.
    Proposals must include information on the specific computer 
architecture or architectures to be provided over the life of the 
project as well as a list of the target scientific application areas 
and data that supports the ability of the proposed architectures to 
provide computing capability that enables science that could not be 
accomplished elsewhere in this time frame.
    The funding appropriated for this solicitation covers only a single 
year--FY2004. However it is anticipated--but not guaranteed--that, at a 
minimum, level funding will be available to support activities in the 
years beyond FY2004. The proposed period of performance may be as much 
as five years.
Collaboration
    Applicants are encouraged to collaborate with researchers in other 
institutions and to include cost sharing wherever feasible.
Program Funding
    It is anticipated that up to $25 million will be available in 
Fiscal Year 2004. It is anticipated that one (1) award will be made. 
Multiple-year funding is not guaranteed. Applicants may request periods 
of performance ranging up to five years.
Merit Review
    Applications will be subjected to scientific merit review (peer 
review) and will be evaluated against the following evaluation 
criteria, which are listed in descending order of importance codified 
at 10 CFR 605.10(d):

          1) Scientific and/or Technical Merit of the Project;
          2) Appropriateness of the Proposed Method or Approach;
          3) Competency of Applicant's Personnel and Adequacy of 
        Proposed Resources;
          4) Reasonableness and Appropriateness of the Proposed Budget.

    The evaluation under item 1, Scientific and/or Technical Merit of 
the Project, will also consider the following elements:

          a) The relevance of the proposed target high-end 
        computational science application areas to the missions of the 
        Office of Science and those of other federal agencies.
          b) The focus of the proposed effort on leadership-class 
        capability computing in support of high-end science--rather 
        than on enhanced computing capacity for general science users.
          c) The potential of the proposed project to make a 
        significant impact on the targeted high-end science 
        applications areas.

    The evaluation under item 2, Appropriateness of the Proposed Method 
or Approach, will also consider the following elements:

          a) The quality of the plan for making the proposed 
        leadership-class computer available as a user facility to 
        scientists in the targeted application communities including:

                  a. Supporting services such as archives and 
                visualization;
                  b. Supporting remote access to the computer and the 
                data it generates;
                  c. Planning for outreach to the targeted application 
                user communities;
                  d. Managing user access and user support; and
                  e. Responding to special requirements from targeted 
                application communities.

          b) The extent to which the project incorporates broad 
        community (industry/academia/other federal programs) 
        interaction and outreach.
          c) Quality and clarity of proposed work schedule and 
        deliverables.

    The evaluation under item 3, Competency of Applicant's Personnel 
and Adequacy of Proposed Resources, will also consider the following 
elements:

          a) The availability of appropriate physical facilities, 
        computer network connectivity and system management and 
        operation staff to support operation of a leadership class 
        computer;
          b) Quality of the physical environment for both research 
        activities and computer and networking operations;
          c) Quality of the physical and cyber security plans for the 
        project.

    The evaluation will include program policy factors, such as the 
relevance of the proposed research to the terms of the announcement and 
the agency's programmatic needs. Note: External peer reviewers are 
selected with regard to both their scientific expertise and the absence 
of conflict-of-interest issues. Non-federal reviewers will often be 
used, and submission of an application constitutes agreement that this 
is acceptable to the investigator(s) and the submitting institution.
Submission Information
    The Project Description must be 20 pages or less, exclusive of 
attachments. It must contain an abstract or project summary on a 
separate page with the name of the applicant, mailing address, phone, 
FAX and e-mail listed. The application must include letters of intent 
from collaborators (briefly describing the intended contribution of 
each to the research), and short curriculum vitaes for the applicant 
and any co-PIs. Applicants must disclose all information on their 
current and pending support.
    To provide a consistent format for the submission and review 
responses to this notice, the preparation and submission of the budget 
portion of responses to this notice must follow the format guidelines 
given in the Application Guide for the Office of Science Financial 
Assistance Program, 10 CFR Part 605. Access to SC's Financial 
Assistance Application Guide is possible via the World Wide Web at: 
http://www.science.doe.gov/production/grants/grants.html. The necessary 
budget forms are available at: http://www.science.doe.gov/production/
grants/Forms-E.html.
    DOE is under no obligation to pay for any costs associated with the 
preparation or submission of applications if an award is not made.

                OFFICE OF SCIENCE 20-YEAR FACILITY PLAN

    Question 27. I am also very concerned with the lack of funding for 
the Department's 20-year facility plan for the Office of Science. The 
Department took the first step toward putting our nation back in the 
leadership in science and technology by developing this comprehensive 
plan. Our investments in science are investments in jobs. I would like 
to know how the Department plans to make these facilities a reality 
with essentially a flat budget. I specifically would like to know what 
time line the Department envisions for making the top five priority 
facilities a reality.
    Answer. The 20-year facility plan, which is not a budget document, 
reflects our vision of the future of the Office of Science. 
Affordability of these facilities will depend upon many factors in the 
future, and the list of facilities may change as science priorities 
evolve and mature. In the FY 2005 request, funding is provided for the 
top 5 facility priorities in the plan as follows: ITER $7,000,000; 
Ultrascale Scientific Computing capability $38,212,000; Joint Dark 
Energy mission $7,580,000; Linac Coherent Light Source $54,075,000; and 
Protein Production and Tags $5,000,000. If the multilateral 
negotiations are successful, ITER construction is expected to begin in 
FY 2006. The Ultrascale Scientific Computing Capability is not a 
traditional facility, and some research and development was already 
started in FY 2003. Construction start decisions for the Linac Coherent 
Light Source and the Protein Production and Tags facility will be 
considered as a part of the normal process for preparing the 
President's future budget requests. We consider the above facilities to 
be near-term priorities for the next decade.

        SUPPORT AND MAINTENANCE AT THE TEN SCIENCE LABORATORIES

    Question 28. I am concerned with the Department's budget request 
for science laboratories infrastructure with in the DOE Office of 
Science budget. Although I realize that last year's budget request had 
some one-time expenditures which resulted in a budget request of $54 
million, I am still concerned that the Department is not investing 
enough in infrastructure that is needed to support the new and existing 
user facilities. I would like the Department to elaborate on the 
adequacy of the $29 million request for infrastructure to support the 
ten science laboratories. I would also like the Department to provide 
an explanation of their plan to address deferred maintenance at the ten 
science laboratories.
    Answer. The request is sufficient for the current Office of Science 
(SC) Laboratories Infrastructure (SLI) projects underway. SC's 
infrastructure revitalization needs are real and significant and will 
be addressed in FY 05 by re-balancing existing budgets to increase 
General Plant Project (GPP) funding, increasing maintenance 
investments, and, in some select cases, using alternative funding 
approaches that comport with the budget scoring guidelines of the 
Office of Management and Budget and the Congressional Budget Office.
    The overall reduction of $25,190,000 in the SLI program is driven 
by two components: a $9,941,000 reduction in the SLI Health and Safety 
Improvement (HSI) subprogram and a $15,368,000 reduction in the SLI 
construction subprogram.
    With regard to the HSI subprogram reduction. Congress appropriated 
$9.941,000 in FY 2004 to address the OSHA and NRC identified health and 
safety deficiencies and recommendations for improved health and safety 
practices at SC laboratories. This $9,941,000 is sufficient to address 
the most significant health and safety issues at the laboratories so 
additional funds are not requested in FY 2005. SC will continue to 
study this issue in order to determine if health and safety issues 
remain after these funds are expended.
    With regard to the SLI construction subprogram reduction, the 
$15,368,000 reduction was a hard decision, resulting from our 
prioritization of SC research requirements within our budget.
    The FY 2005 budget was based on our plan to re-direct the FY 2003 
and FY 2004 funds From the canceled Pacific Northwest National 
Laboratory (PNNL) ``Laboratory Systems Upgrade'' project to other on-
going SLI projects. In particular, we had planned to redirect these 
funds to the ``CEBAF Addition'' at Thomas Jefferson National 
Accelerator Facility (TJNAF) and the Brookhaven National Laboratory 
``Research Support Building'' to accelerate their completion. This plan 
was rejected by appropriations committee staff. We therefore plan to 
consider options to use this funding for the development of a project 
or projects that will accommodate the scientific work funded by the 
Office of Science at PNNL.
    While the SLI construction subprogram funding has decreased, GPP 
funding across Office of Science programs has increased $8,215,000. 
This shift reflects the numerous smaller construction needs (i.e., 
those less than $5,000,000) that are of high importance but need not be 
addressed with line item funding.
    In addition, SC has set a goal for maintenance funding of 1.4% of 
replacement plant value (RPV) for conventional facilities in FY 2004 
and, 2.0% of RPV for FY 2005. The change in total maintenance funding 
from FY 2004 to FY 2005 will result in an additional $35,000,000 to 
sustain facilities if we meet this 2.0% goal. Maintenance at SC 
laboratories is funded from laboratory overhead which represents a cost 
to all programs sponsoring work at the laboratory.
    SC sites are developing a number of alternatively financed projects 
including housing, office buildings, and utility system replacements. 
These proposals are not yet fully developed, nor are their selection 
and internal Administration review processes fully developed.
    We have made substantial progress on the backlog of deferred 
maintenance, reducing it from $649,000,000 at the end of FY 2001 to 
$491,000,000 at the end of FY 2003. This downward trend is significant 
and we expect to continue it.
    SC funding for capital renewal and excess facilities disposition 
also helps reduce the deferred maintenance backlog. For example, in 
rehabilitating a building or utility, replacing a building or 
demolishing a structure, numerous deferred maintenance items are also 
eliminated, which helps reduce the deferred maintenance. Such funding 
will continue in FY 2005 though at a somewhat reduced level.
department's plans in helping the oak ridge community achieve financial 

                            SELF SUFFICIENCY

    Question 29. I have a strong interest in the relationship between 
the Department of Energy and the Oak Ridge community in my state. Oak 
Ridge is one of only three Manhattan Project atomic energy communities 
that have a relationship defined statutorily with the federal 
government. In the FY04 energy and water appropriations bill, the 
Congress had urged the Department to work with the city and county 
officials to develop a plan to help the Oak Ridge community achieve 
financial self-sufficiency. I would like an explanation of the 
Department's plans in helping the Oak Ridge community achieve financial 
self-sufficiency.
    Answer. The Department of Energy (DOE) (and its predecessor 
agencies) along with its major contractors, have worked and continue to 
work closely with the city of Oak Ridge and organizations within Oak 
Ridge associated with economic development to assist in their attempt 
to attain self-sufficiency. This assistance has taken many forms, 
including direct and indirect land transfers, financial payments, 
facility and infrastructure transfers, and planning assistance.
    Of the initial 58,575 acres acquired for the Oak Ridge Reservation, 
almost 25,000 acres have been transferred or conveyed to the city of 
Oak Ridge or other entities which support the city for a variety of 
purposes including, schools, housing, industrial park developments, 
recreational parks, utilities and roads. In addition to land transfers, 
DOE has granted many easements, licenses, permits and leases to the 
city of Oak Ridge and to others within the city. These have been for a 
myriad of purposes that have supported community development, including 
the construction of roads and utilities, public greenways, 
telecommunication towers, use of rail facilities, barge facilities and 
buildings in the East Tennessee Technology Park.
    In addition, financial assistance payments and Payment in Lieu of 
Taxes (PILT) payments have been made to the city. The financial 
assistance from 1960 through 1986 totaled $69,403,970. The 1986 payment 
included a $22,254,187 payment that covered financial assistance 
expectations through 1995. PILT payments resumed in FY 1996 and to-
date, the city has been paid $8,113,017.
    One of the keys to supporting the development within the city of 
Oak Ridge has been working closely with the Community Reuse 
Organization of East Tennessee (CROFT). By pursuing transfers of under-
utilized federal assets to the commercial sector through CROFT in the 
form of facilities, land, equipment, and technology, new businesses 
have been created, existing businesses have been able to expand, and 
displaced workers have been given an alternative to leaving the region 
in order to find work.
    In the spring of 2003, title to a 500-acre new greenfield 
industrial park named Horizon Center was transferred to CROFT. This 
high amenity park is perfectly suited to high-tech, high-wage, highly 
rewarding jobs necessary to sustain economic growth in a global 
economy. The first company to locate there, Theragenics, is now in an 
ideal location to draw from the technology resources of the Oak Ridge 
National Lab and the region's trained and experienced labor pool.
    The competitive cost effectiveness of a brownfield setting may be 
more suitable to a company's business strategy. Therefore, DOE is 
making the Heritage Center available. CROFT operates Heritage Center, 
as a second industrial park. Heritage Center, also known as the East 
Tennessee Technology Park, offers extensive utilities and 
transportation infrastructure and is comprised of both facilities and 
land parcels available for commercial development. To date, CROFT has 
leased approximately 80 facilities to approximately 40 separate 
companies. Over the next several years as DOE's Environmental 
Management Program continues its Accelerated Cleanup Plan for Heritage 
Center, additional facilities and land parcels will become available to 
the commercial sector.
    DOE recently transferred 182 acres of DOE lake access land to help 
establish a housing development. The city of Oak Ridge and DOE are also 
working to transfer over 200 acres contiguous to Wisconsin Avenue for 
expansion of a housing development.
    In 2002, with the support of the city, DOE committed to pursue the 
transfer of the Vance Road Facility in Oak Ridge to the Methodist 
Medical Center, which is contiguous to that facility. This transfer 
process will likely begin in CY 2005 when the facility is completely 
vacated and cleaned. This will allow this community based medical 
facility to expand its facilities and services to the community.
    DOE contractors have also been committed to the support of Oak 
Ridge. As an example, UT-Battelle, the contractor for the Oak Ridge 
National Laboratory (ORNL), has provided enhancements to Melton Hill 
Lake which increases its drawing power as a premier competitive rowing 
course used by many colleges. In addition, UT-Battelle is currently 
heavily invested in and committed to planning for a new high school for 
the city of Oak Ridge, including commitment of about $150,000 to assist 
in the planning and design. UT-Battelle is also loaning executives from 
the lab to continue to assist the city in this effort.
    At the same time, ORNL continues to contribute to the economic 
development of the region through its activities to transfer 
technologies to the private sector. As research and development of 
technologies mature to the point where private sector companies can 
successfully manufacture or deploy the technology in a cost-effective 
manner, these companies tend to remain in the Oak Ridge and east 
Tennessee area, furthering the economic development and providing 
careers in science and technology.
    Lastly, the major contractors, including UT-Battelle, BWXT Y-12, 
Oak Ridge Institute for Science and Education, and Wackenhut pay 
various taxes dependent on their individual situation. These range from 
state sales tax, use taxes, business tax, and property tax, etc. These 
taxes total about $2,380,000, and the city of Oak Ridge receives a 
portion of that back from the state.

             Responses to Questions From Senator Murkowski

    Question 30. The Department of Energy (DOE) Budget Highlights 
states that the DOE FY 2005 budget includes $43 million within the 
Environment, Safety and Health program, to accelerate the processing of 
claims required as part of the Energy Employees Occupational Illness 
Compensation Program Act (EEOICPA). The DOE further states that the $43 
million, together with the additional funds provided in FY 2003 and 
funds to be reprogrammed in FY 2004, will enable the DOE to complete 
the processing of the applications currently on file with the DOE in FY 
2005, up to the point of review by a Physician Panel, and completely 
process all of the applications through the Physician Panels in FY 
2006. The Department has implemented reforms that have already improved 
performance from a rate of 30 cases per week in 2003, to over 100 per 
week by the end of the year.
    1) The DOE has spent many millions of dollars over the past several 
years and processed only a tiny fraction of pending EEOICPA Part D 
applications. DOE's budget request states that the Department has 
instituted a series of reforms to improve its claims processing 
performance.

   Specifically what are these reforms?
   Why should the Committee have any confidence that the new 
        claims processing rate will be maintained or improved?

    Answer. The Department has instituted a series of reforms to 
improve its applications processing performance, highlights of which 
include:

   the revision to the Physician Panel Rule issued as an 
        Interim Final Rule on March 17, 2004. The revised rule is 
        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 program. 
        Specifically, we have moved those applications relating to 
        beryllium, silica, and asbestos exposure to the front of the 
        queue, as well as those applications which have already 
        received a positive determination from the Part B program. In 
        addition, we are processing applications from living applicants 
        first because of the availability of medical benefits for 
        living applicants in most State workers compensation systems, 
        and are awaiting dose reconstructions for those remaining 
        applications where dose reconstructions are pending from the 
        Part B program.
   the implementation of 17 of 21 recommendations made by The 
        Hays Companies, a management consulting company, hired to 
        analyze our processes and make recommendations on how to 
        improve the program. The attached chart details those 
        recommendations and DOE's implementation of them. Of the 
        remaining four recommendations, DOE rejected two, because they 
        recommended limiting access to the program as a way to limit 
        the growth in the backlog of applications; and DOE has under 
        consideration two recommendations.
   an aggressive, and multi-agency coordinated set of 
        initiatives to recruit physicians, and
   the creation of a new advisory committee focused on the 
        implementation of Part D process improvements and the 
        development of additional process improvements.

    However, these procedural and policy reforms are only one part of 
an integrated four-part program to achieve the elimination of the 
backlog of cases by the end of 2006. The other elements of the plan 
are:

   Legislative changes: the Secretary submitted legislation to 
        amend the EEOICPA statute on March 29, 2004. The legislation 
        would eliminate the pay cap on physicians and expand hiring 
        authority for them. If enacted, these changes would 
        significantly increase the supply of physicians willing and 
        able to work on Physician Panels, and would greatly expedite 
        processing of applications.
   Budget: an appropriations transfer for FY04 of $33M and a 
        FY05 budget request of $43M. These funds will provide for the 
        contractor support, staff and other resources needed to ramp up 
        the number of determinations from approximately 35 per week 
        today to 300 per week in FY05.

    The Department believes such a plan is very feasible and that the 
Department's analysis is credible in its projections. First, we have 
already achieved three- to six-fold improvements in the application 
processing and Physician Panel determination processes in the last six-
months through the execution of other program changes and resource 
increases. This has demonstrated the Department's ability to quickly 
accelerate its production given adequate resources. Second, most of 
these recommendations were previously suggested or supported by 
Congress, other Federal Agencies, the Department's previous Workers 
Advocacy Advisory Committee, or other outside groups such as workers 
advocacy organizations, labor unions, consultants like the Hays Group, 
and the General Accounting Office. Finally, as the attached letter 
details, the American College of Occupational and Environmental 
Medicine believes our plan will get the Part D program ``back on 
track.''
    2) I understand that DOE is working on a Plan to address the 
unacceptable rate at which DOE has been processing claims and perhaps 
other issues concerning implementation of the EEOICPA.

   What is this Plan?
   What will it include?
   When will it be available to this Committee?

    Answer. The Department's plan to eliminate by the end of 2006 the 
current backlog of Part D applications pending at DOE has been 
submitted to the Committee as well as to your office. The Plan involves 
four components that, together, should enable us to increase Physician 
Panel determinations from 35 per week to 310 per week. The four 
components areas discussed above: performance improvements, the revised 
Physician Panel rule, enactment of the proposed legislation and 
approval of our budget requests. This plan was discussed during Under 
Secretary Robert Card's Senate Energy and Natural Resources testimony 
on March 30, 2004, and also has been presented to the House of 
Representatives and several House and Senate committees.
    3) The DOE FY 2005 budget request includes $43 million to 
accelerate the processing of claims under the EEOICPA. However, there 
is another equally, if not more important part of the EEOICPA 
implementation for citizens of Alaska and many other states. That is 
the willing payor issue. In Alaska, we currently have an unacceptable 
situation. Former workers or survivors of workers have received 
positive Physician Panel determinations. DOE has adopted these 
findings. Yet the workers have not received a penny. Nothing. Worse 
yet, many of these elderly and ill Alaskans are now having to fight 
with insurance companies and endure expensive, time consuming and 
mentally and physically debilitating litigation trying to secure 
compensation under the EEOICPA. I know DOE is aware of this situation. 
Yet the DOE budget is deafeningly silent on this issue.

   What does DOE propose to address the willing payor issue?
   I understand DOE may believe it is doing all it can to 
        address the willing payor issue consistent with the authority 
        DOE has under EEOOICPA. Is this correct?
   If yes, can we expect a legislative proposal from DOE 
        suggesting how EEOICPA can be modified or what new legislation 
        could be enacted to remedy the current willing payor fiasco?
   If not, please explain why DOE does not plan to offer a 
        legislative remedy for a program that DOE acknowledges is not 
        working.
   Will the Plan DOE is working on include a proposal to remedy 
        the willing payor issue?
    Answer. The Department is addressing the ``willing payer'' issue by 
working hard to identify DOE contractors who may be directed not to 
contest workers' compensation claims filed by workers who have received 
positive Part D Physician Panel findings. The Department is not 
proposing legislation that would change the Part D benefit provided by 
current law because: 1) Congress determined after multiple proposals 
and much debate to create the benefit currently provided by the 
statute; and 2) it will be many months before a sufficient number of 
cases will be completed through the States' workers' compensation 
processes in order to provide sufficiently large data sets of results 
to offer somewhat statistically significant results about the benefits 
provided under state workers' compensation systems. The Department 
believes it is fully and fairly carrying out the requirements of the 
law.
    The Department is providing all assistance allowed by law to Part D 
applicants in Alaska. Some of these applicants are calling the program 
management directly to get answers to their questions. The Department 
is happy to provide this type of support as these cases represent some 
of the initial claims entering into a State workers' compensation 
process. And, the Department is providing access to all available 
resources in order to ensure these applicants obtain answers as quickly 
as possible. In addition, the Department is developing a ``post-panel 
determination'' assistance program to help our applicants with the 
filing of their State workers' compensation claims. This program will 
provide applicants with assistance on the rules and procedures for 
filing State workers' compensation claims in their respective States. 
Certain elements of this assistance are already in place, and the 
program will be fully implemented within the next several months.
    4) The FY 2005 DOE budget request notes that DOE plans to request 
reprogramming of some FY 2004 funds to improve implementation of Part D 
of the EEOICPA.

   When will this request be forthcoming?
   Can you now share with us the amount you will ask to 
        reprogram?
   What will these reprogrammed funds be used for?

    Answer. An FY04 appropriations transfer request for $33.3 million 
was submitted to the appropriate committees of Congress on January 30, 
2004. A copy of the appropriations transfer request letter is attached. 
The President's FY05 budget requested $43 million. We do not anticipate 
any additional reprogramming requests of FY04 funds.
    These funds are an integral component to eliminating the backlog by 
the end of CY06 and will be used to ramp up all aspects of DOE's Part D 
operations and to provide additional assistance to workers after they 
receive their determination from the Physician Panels. In the twelve 
months after approval of the appropriations transfer, the funds will be 
used to eliminate the backlog of approximately 9,000 field data 
collection requirements for the applications, develop an additional 
15,000 cases up to the Physician Panels and process an additional 5,000 
cases through the Physician Panels. In the following twelve months the 
Department plans to increase the Physician Panels' determinations rate 
by an additional 300% providing for an additional 15,000 cases through 
the panels. In order to accomplish these goals the Department will need 
an additional 40 case manager and an additional 135 support staff. The 
Department has also requested that NIOSH recruit the equivalent of 25 
full time equivalent (FTE) physicians by September 2004, and 60 by June 
2005. Of note, the Department's plan to eliminate the backlog of 
applications by the end of 2006 is based, in part, on receiving the 
requested FY04 appropriations transfer funds in April 2004.
    5) I understand DOE will be reconstituting the Worker Advocacy 
Advisory Committee. I further understand that before this Committee was 
terminated, it included recognized experts in the workers' compensation 
area and offered some very valuable advice to the DOE.

   When will the new Advisory Committee be up and operating?
   Does DOE plan to staff the Committee with the same 
        individuals who worked on the original Committee, or with 
        people of similar credentials?

    Answer. The Workers Compensation Assistance Advisory Committee is 
in the process of being established. It is not a reconstituted version 
of the previous Workers Advocacy Advisory Committee, but a new 
Committee established for the new purpose of advising the Department 
how best to execute the current Part D program. The previous Committee 
was established to advise the Department on how best to set-up the Part 
D program. It was not terminated, but rather its charter expired, as do 
the charters of all Advisory Committees established under the Federal 
Advisory Committee Act. We expect to hold the first meeting of the new 
Advisory Committee in April 2004. Several members of the former Worker 
Advocacy Advisory Committee have been nominated for this new Committee, 
and their nominations are being actively reviewed now. The Secretary 
will select members with the skills and experience to address current 
operational issues faced by DOE and the Part D program.
    6) I know DOE understands that the Physician Panel review of 
applications can constitute a tremendous bottleneck in the raid 
processing of claims.

   What does DOE propose to do to avoid having the Physician 
        Panel reviews dramatically slow down the claims processing?

    Answer. The regulatory changes that DOE has implemented and the 
legislative changes DOE has proposed are expected to increase the rate 
of Physician Panel determinations sufficient to eliminate by the end of 
2006 the backlog of Part D applications currently pending at DOE, 
provided Congress gives DOE sufficient funds to do so. The regulatory 
changes DOE has already implemented permit a Physician Panel to be 
composed of a single qualified physician. Permitting single-physician 
Panels will immediately double the number of Panels available to review 
completed applications and will also simplify logistics by largely 
eliminating the time expended in coordinating and attending 
conferences, teleconferences, or meetings.
    The proposed legislative changes will remove the current statutory 
cap on the pay of Physician Panel members and expand the hiring 
authority for these physicians, thereby greatly expanding the pool of 
physicians who may want to work on this program. The medical community 
has told us that the current statutory pay cap on physicians is half 
the standard consulting rate. Empirically, this substandard pay has 
resulted in our part-time physicians on average spending only three 
hours per month reviewing cases.

                       DOE'S ARCTIC ENERGY OFFICE

    Question 31-1. Why has DOE chosen not to include the Arctic Energy 
Office in its budget request?
    Answer. At the requested budget level for oil and gas, DOE decided 
it would not identify a specific line for Arctic research. This does 
not preclude funding Arctic projects consistent with program 
priorities. However, any funding for Arctic research would be at a 
significantly lower level than the previous appropriations as a result 
of the overall decrease in funding for oil and gas.

              Responses to Questions From Senator Bunning

                        PADUCAH CLEANUP FUNDING

    Kentucky recently signed onto the DOE's accelerated cleanup plan. 
Part of the purpose of the plan was for Kentucky to receive adequate 
funding to cleanup the site in a more efficient and timely manner. 
Despite this, however, the President's budget request has asked for 
only $92.8 million for cleanup at the Paducah site. There are still a 
lot of areas at the site that require cleanup.
    Question 32. Why did the DOE ask for nearly $30 million less than 
last year's appropriation for cleanup?
    Answer. The decrease in the EM budget request for Paducah cleanup 
funding, funded in the Uranium Enrichment Decontamination and 
Decommissioning Fund, is due to the completion of several cleanup 
projects in FY 2004, including the north/south diversion ditch project, 
the dismantling and removal of all the piping and equipment from 
Sectors 1 and 9 in building C-410, and preparation of Sectors 2 and 3 
for dismantling and piping equipment removal. These completions, in 
combination with modest increases in other projects, reduced our 
requirements for Paducah cleanup in FY 2005 by $27.4 million.
    The FY 2005 funding request fully supports the cleanup commitments 
set forth in the Agreed Order signed with the Kentucky regulators at 
the end of last fiscal year. No impact is expected to our new 
accelerated 2019 completion schedule.
    Question 33. At last year's DOE budget hearing, I asked Secretary 
Abraham why zero Paducah claimants had received compensation under Part 
D of the Energy Employees Occupational Illness Compensation Program 
Act. Today, Paducah still has zero claimants out of now more than 2,200 
claims receiving any compensation for their illnesses due to their work 
with toxic substances at the Paducah DOE site. The DOE has requested 
over $40 million to deal with the backlog of the more than 20,000 
claims it has received nationwide.

   Why should Congress give the DOE more money to fix a problem 
        that the Department has been unable to resolve in the last 
        three and a half years?
   What are the DOE's plans to move the cases through the 
        Physician Panels?

    Answer. After a four month top-to-bottom program review, the 
Department developed a comprehensive and coordinated plan that should 
eliminate the current backlog of Part D applications pending at DOE. 
The Department's operational improvements over the last six months 
demonstrate that this plan is achievable and credible with sufficient 
funding. In the past six months, the Physician Panel determinations 
have increased nine fold and the Department believes that over the next 
twelve months it is well positioned to increase the determinations 
three-fold and an additional three-fold twelve months later. This 
assumes that Congress approves the proposed legislation that the 
Secretary transmitted to Congress on March 29, 2004 and approves the 
FY04 appropriations transfer request submitted to Congress on January 
30, 2004. (Copies of the appropriations transfer request and the 
proposed legislation are attached.) The elements of the plan:

   the revision to the Physician Panel Rule issued as an 
        Interim Final Rule on March 17, 2004. The revised rule is 
        expected to double the productivity of the Physician 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 program. 
        Specifically, we have moved those applications relating to 
        beryllium, silica, and asbestos exposure to the front of the 
        queue, as well as those applications which have already 
        received a positive determination from the Part B program. In 
        addition, we are processing applications from living applicants 
        first because of the availability of medical benefits for 
        living applicants in most State workers compensation systems, 
        and are awaiting dose reconstructions for those remaining 
        applications where dose reconstructions are pending from the 
        Part B program.
   the implementation of 17 of 21 recommendations made by The 
        Hays Companies, a management consulting company, hired to 
        analyze our processes and make recommendations on how to 
        improve the program. The attached chart details those 
        recommendations and DOE's implementation of them. Of the 
        remaining four recommendations, DOE rejected two, because they 
        recommended limiting access to the program as a way to limit 
        the growth in the backlog of applications; and DOE has under 
        consideration two recommendations.
   an aggressive, and multi-agency coordinated set of 
        initiatives to recruit physicians, and
   the creation of a new advisory committee focused on the 
        implementation of Part D process improvements and the 
        development of additional process improvements.
   Legislative changes: the Secretary submitted legislation to 
        amend the EEOICPA statute on March 29, 2004. The legislation 
        would eliminate the pay cap on physicians and expand hiring 
        authority for them. If enacted, these changes would 
        significantly increase the supply of physicians willing and 
        able to work on Physician Panels, and would greatly expedite 
        processing of applications.
   Budget: an appropriations transfer for FY04 of $33M and a 
        FY05 budget request of $43M. These funds will provide for the 
        contractor support, staff and other resources needed to ramp up 
        the number of determinations from approximately 35 per week 
        today to 300 per week in FY05.

    Question 34. The GAO has told me that many of the workers at the 
Paducah plant will not have a willing payor even if their claims are 
determined valid. This problem was identified by your advisory 
committee nearly 2 and a half years ago.

   Does the DOE ever plan to address this issue?
   Will any of the $40 million that DOE is requesting for the 
        Energy Employees Occupational Illness Compensation Program be 
        used to help resolve this issue?

    Answer. The Department is addressing the ``willing payer'' issue by 
working hard to identify DOE contractors who may be directed not to 
contest workers' compensation claims filed by workers who have received 
positive Part D Physician Panel findings. The Department is not at this 
time proposing legislation that would change the Part D benefit 
provided by current law because: 1) Congress determined after multiple 
proposals and much debate to create the benefit currently provided by 
the statute; and 2) it will be many months before a sufficient number 
of cases will be completed through the States' workers' compensation 
processes in order to provide sufficiently large data sets of results 
to offer somewhat statistically significant results about the benefits 
provided under state workers' compensation systems. The Department 
believes it is fully and fairly carrying out the requirements of the 
law.
    The Department is providing all assistance allowed by law to Part D 
applicants. Some of these applicants are calling the program management 
directly to get answers to their questions. The Department is happy to 
provide this type of support as these cases represent some of the 
initial claims entering into a State workers' compensation process. 
And, the Department is providing access to all available resources in 
order to ensure these applicants obtain answers as quickly as possible. 
In addition, the Department is developing a ``post-panel 
determination'' assistance program to help our applicants with the 
filing of their State workers' compensation claims. This program will 
provide applicants with assistance on the rules and procedures for 
filing State workers' compensation claims in their respective States. 
Certain elements of this assistance are already in place and the 
program will be fully implemented within the next several months.
    Question 35. In the Fiscal Year 2003 Defense Authorization Bill, I 
helped add a provision which was intended to strengthen industrial and 
construction safety protections for workers at DOE sites. Recently, the 
DOE proposed regulations for these protections which appear to actually 
weaken safety protections. Can you explain to me why allowing 
contractors to develop their own safety standards and eliminating DOE 
Order 440.1A will increase safety protection for workers.
    Answer. Please see attached letter to Senator Bunning.

                   DUF6 STATUTORY DEADLINE

    The DOE has requested $55.9 million for the DUF6 
facility. Under current law, construction of the DUF6 
facilities at Paducah and Portsmouth is supposed to begin by July 31, 
2004. I have heard concern that this deadline may not be met because 
the DOE may delay issuing a required environmental impact statement or 
making a determination about whether the contractor has an adequate 
percentage of foreign ownership control.
    Question 36. Does the DOE plan to meet the statutory deadline?
    Answer. Yes, groundbreaking at both sites is planned for July 2004.
                  coal research & development funding
    Question 37. Coal plays a vital role for the energy in our country. 
Do you think the DOE funding for coal research and development will 
help bring clean coal technology into the commercial sector quickly?
    Answer. Yes, it will. Clean coal technology is already entering the 
commercial sector. For example, low cost SO2 scrubber 
technology developed in partnership with industry is broadly deployed. 
Low NOX combustors, which were developed with DOE money, 
have been deployed on over 70% of the coal power plants capable of 
using them.
    The Clean Coal Power Initiative (CCPI) is now taking the next 
generation of clean coal technologies currently leaving the laboratory 
stages and demonstrating their commercial feasibility as a final 
stepping stone to their commercial deployment.
                                 ______
                                 
                                   The Secretary of Energy,
                                     Washington, DC, March 5, 2004.
Hon. Jim Bunning,
U.S. Senate, Washington, DC.
    Dear Senator Bunning: Thank you for your February 6, 2004, letter 
providing comments on the Department's notice of proposed rulemaking 
for Title 10 of the Code of Federal Regulations, part 851, ``Worker 
Safety and Health.'' We have added your letter to the public file for 
the worker safety and health rulemaking.
    Protecting the health and safety of workers at DOE sites is a top 
personal priority for me. The incidences of injury and days lost as a 
result of workplace injury have fallen at DOE for the third straight 
year and are now well below the rates experienced in private industry. 
I am pleased that in the legislation instructing us to promulgate this 
legislation, Congress recognized DOE's impressive record by directing 
us to promulgate a worker health and safety rule that ``provides a 
level of protection for workers at [DOE] facilities that is 
substantially equivalent to the level of protection currently provided 
to such workers at such facilities.
    I am determined that the end-product of this rulemaking will be one 
that meets Congress's direction and my own commitment that DOE 
promulgate a rule that builds and improves on the level of protection 
that we currently provide.
    Since publication of the notice of proposed rulemaking on December 
8, 2003 (68 FR 68276), the Department has received significant concerns 
and comments from several parties, including the Defense Nuclear 
Facilities Safety Board (DNFSB). Therefore, I directed that our 
rulemaking be suspended on February 27, 2004 to allow the Department 
time to consult with DNFSB to resolve its concerns and to consider the 
views of other interested stakeholders as appropriate (69 FR 9277). We 
are in the process of engaging in consultation with the DNFSB and 
evaluating all of the comments received to identify the major issues 
and recommendations for further rulemaking actions. Please be assured 
that we have noted and will give appropriate consideration to the 
issues and recommendations discussed in your comment letter.
    I am personally committed to ensuring that any rule we promulgate 
is constant with the principles I have outlined here and will see to it 
that appropriate changes be made to the proposed rule to meet these 
goals.

            Sincerely,
                                                    Spencer Abraham
                                 ______
                                 
    Question 38. The former worker medical screening programs received 
$14.95 million in Fiscal Year 2004. Yet the DOE recently indicated it 
only allocated $9.7 million in FY 04 for this purpose. Please explain 
what happened to the $5.25 million that was appropriated for this 
purpose within the Office of Environment, Safety and Health account, 
and why the total $14.95 million has not been used for its stated 
purpose?
    Answer. The Occupational Medicine/Worker Medical Surveillance 
program was identified at a level of $14.950 million in the Health line 
item in the President's FY 04 budget. EH intends to support the program 
at this level. This program includes both the Former Worker Medical 
Screening Program and the Former Beryllium Worker Medical Screening 
Program.
    The FY 04 funding level was arrived at through extensive discussion 
with the Principal Investigators of each of our studies. Funding 
provided are those funds agreed upon between DOE and the Principal 
Investigators of the site-specific studies across the DOE. The funding 
levels are sufficient, as agreed upon by the Principal Investigator, to 
fully fund their project in FY 04. The site-specific studies will be 
fully funded at $12.574M in FY 04. Of the $12.574M, $1M is 
congressionally directed to support medical screening at the Gaseous 
Diffusion Plants. In addition, $2.161M is included to fund ORISE in 
support of their beryllium lymphocyte proliferation testing and 
analysis, and beryllium surveillance activities, also in support of the 
Worker Medical Surveillance Program.
    The Department is looking to transition the program from these site 
specific activities to a nation-wide program in FY 05 to provide 
medical screening to all former DOE workers, regardless of their 
physical location. This move to a nation-wide program is also 
anticipated to make a greater percentage of funds available for former 
workers medical screening by reducing the overhead charges from the 
existing dozen Principal Investigators. The remaining funds of $2.376M 
($14.950-$12.574) will be used in support of the transition to the 
nation-wide program.
    All the $14.950M will be used in support of the Worker Medical 
Surveillance Programs.

              Responses to Questions From Senator Bingaman

    Question 39. The Department is proposing to create a new office 
called the ``Office of Future Liabilities''. In volume 4, page 187, it 
states that this Office will ``manage environmental liabilities not 
assigned to the Office of Environmental Management.'' The next sentence 
then says ``These needs are expected to grow substantially due to the 
back log of environmental liabilities at active DOE sites.''
    Can you explain (1) approximately how much will this budget grow 
beyond its fiscal year 2005 $8 million?
    Answer. FL is proposed as a small organization with $8 million and 
4 Full Time Equivalent (FTE) staff to develop the baseline for cleanup 
activities not currently part of the EM inventory. The future size of 
the FL organization will be determined through the initial planning 
activities to define the baseline for environmental activities and to 
establish organizational assignments within the Department for carrying 
out these activities.

                   LOS ALAMOS CORRECTIVE ACTION ORDER

    Since November 2002, the Department has been in negotiation with 
the State of New Mexico over its corrective action order for the Los 
Alamos clean up. I understand that for fiscal years 2003 and 2004, when 
the corrective action order was issued, the Department has held back 
$69.5 million of the budgeted amount of $214 million, or roughly 33 
percent.
    Question 40. Can you explain the substantial rationale based on 
change of work scopes why the Department has held back 33 percent of 
the clean up funds and does the Department have similar hold back plans 
for fiscal year 2005?
    Answer. In accordance with Congressional direction, the Department 
has been restricted in fiscal years (FY) 2003 and 2004 from providing 
certain funds for cleanup at sites where the Department has not entered 
into agreement with State regulators consistent with the intent of the 
Department's accelerated cleanup reform initiative. In FY 2003, in 
accordance with Section 315 of H.J. Res. 2 (January 23, 2003), the 
Department was restricted from releasing $26.4 million to Los Alamos. 
For FY 2004, consistent with Report 108-357 (November 7, 2003) 
accompanying the FY 2004 Energy and Water Development Appropriations 
(H.R. 2754), the Department likewise was restricted from releasing 
$26.6 million to Los Alamos. In March 2004, the Department and the 
State of New Mexico reached agreement on all issues associated with a 
Consent Order for cleanup at the laboratory. In the judgment of the 
Assistant Secretary for Environmental Management, the Consent Order is 
consistent with the Department's accelerated cleanup initiative. The 
Consent Order will be made available for public comment prior to 
signature and execution by the Department and the State. As a result, 
the Department released the accelerated cleanup funds.

                       NWPA LEGISLATIVE STRATEGY

    The Department last year proposed to legislatively amend the 
Nuclear Waste Policy Act to reclassify high-level waste left over as 
residue in reprocessing waste storage tanks at Hanford and Idaho.
    Question 41. If the Department were to pursue this legislative 
strategy, do you have an estimate of the additional TRU waste that 
would be bound for the Waste Isolation Pilot Plant?
    Answer. Prior to the Idaho District Court decision, DOE had planned 
to dispose of approximately 2.2 million gallons of tank waste from 
Hanford and Idaho as transuranic (TRU) waste, based on the Department's 
interpretation of the Nuclear Waste Policy Act. The legislative 
clarification that the Department would pursue would not increase the 
estimate of 2.2 million gallons.
    The Department has experienced embarrassing delays over the Energy 
Employees Occupational Illness Compensation Program Act.
    Question 42. Beyond simply increasing the number of physician 
panels, does the Department support developing mechanisms for 
establishing new cohort classes of illnesses, which the Department of 
Labor can act quickly on?
    Answer. The statute and Executive Order 13179 designate HHS as the 
agency responsible for deciding whether to add classes of employees to 
the Special Exposure Cohort (SEC) for the Part B program. HHS is 
currently in the final interagency review process for its Proposed Rule 
for procedures to consider and make these determinations. The only role 
the law provides for DOE in the SEC process is to provide access to 
relevant information on worker exposures to HHS and the Advisory Board 
on Radiation and Worker Health, and DOE stands ready to provide such 
assistance. SEC is not part of the Part D program for which DOE has 
responsibility; it is used only in the Part B process. That is why 
increasing the number of Part D Physician Panels is not related to 
developing mechanisms for adding new classes of employees to the SEC.

                         TRUPACT III CONTAINER

    As you know, the NRC has recently approved regulations for 
licensing new TRUPACT III containers as part of the effort to speed up 
waste shipments to the Waste Isolation Pilot Plant. On page 198, volume 
5, of the fiscal year 2005 budget, the DOE proposes submitting a 
TRUPACT III license to the NRC.
    Question 43. If the DOE were to submit a license for a TRUPACT III 
container to the NRC, would the DOE agree to perform full scale testing 
of a TRUPACT III container and compare it to computer models to ensure 
its safety as was performed similar to the TRUPACT II's?
    Answer. DOE would follow the U.S. Nuclear Regulatory Commission's 
(NRC) requirements for certification of TRUPACT III containers. At this 
time, DOE is not contemplating additional analyses or testing beyond 
what NRC requires.
    Question 44. This year the OMB gave the environmental management 
program a Program Analysis Rating of 26 out of 100, while the Office of 
Science got score ranging from 82-93 percent.
    Given these scores, why then, did the EM program's funding increase 
by 6 percent by $433 million while the Office of Science declined by 2 
percent or $68 million?
    Answer. Environmental Management's (EM) total Program Assessment 
Rating Tool (PART) score for the FY 2005 cycle was 61 out of 100 (rated 
Adequate).
    Since 2001, a top priority for the EM program has been to reform 
and refocus its program to reduce risk and make cleanup more efficient 
and cost effective, EM's budget request for FY 2005 represents the peak 
year of investment in this strategy. The out-year funding profile 
begins to reflect the dramatic cost savings from this approach.
    It should be noted that PART scores are just one of many factors 
that are considered in making resource allocation decisions. PART helps 
managers identify areas for improvement, and is considered along with 
other factors in determining the resources required to meet our 
strategic objectives. The level of resources requested for both the 
Environmental Management program and the Science program are considered 
sufficient to achieve the Department's mission in these areas.

                        FUSION DOMESTIC RESEARCH

    Question 45. The FY04 Energy and Water Appropriations Conference 
Report states, and I quote, that ``The conferees strongly caution the 
Department against submitting any future budget requests for ITER that 
are funded at the expense of domestic research.'' This reflects the 
recommendations of the recent National Academies Burning Plasma Report 
and the DOE'S own Fusion Energy Sciences Advisory Committee. And yet 
the proposed budget makes precisely those cuts. The number of vital run 
weeks at each of the three major magnetic fusion facilities is slashed 
from 18 to 14, and the long-term fusion technology program is zeroed 
out, in part to pay for preparation for ITER construction. If, as part 
of our nation's effort to reduce our dependence on foreign oil support 
for fusion has become a major priority of this administration as it has 
claimed, and if the U.S. is expected to make a serious scientific 
contribution to this new international endeavor, how can these cuts be 
justified?
    Answer. The FY 2005 budget request does not reduce the overall 
level of domestic fusion research to any significant extent as a result 
of ITER preparations. Where appropriate, domestic fusion experimental, 
theoretical and enabling technology research is reoriented more toward 
the needs of ITER. This research is performed by existing fusion 
scientists and engineers. Only a very small amount, on the order of 
$1,000,000 of the ITER preparations, is for industrial preparations at 
this time. This reorientation of fusion research has resulted in some 
shifts in priorities, such as reducing facility operating time and 
focusing technology more on the near term, but overall the domestic 
fusion research is not reduced to any significant extent. This 
reorientation of the fusion program is consistent with the National 
Research Council recommendation to include ITER as part of the fusion 
program due to its significant interfaces with all parts of the 
program.
    Question 46. Is the Administration or the Energy Department 
concerned about the expiration of the ESPC authority? Does the 
Administration or the Energy Department have a plan for meeting the 
Federal government's energy savings goals without this means of 
financing energy efficiency improvements? Do you have a legislative 
strategy for extending the authority for ESPCs?
    Answer. The Administration is very concerned about the expiration 
of ESPC authority, and we hope that the Congress will reauthorize the 
use of ESPCs as soon as possible. Without ESPCs, we do not believe that 
the Federal government will meet its energy efficiency and renewable 
energy goals.
    The Department supports comprehensive energy legislation that 
contains a reauthorization of ESPC authority. In the absence of such 
legislation, we also would support a stand-alone provision for the 
reauthorization of ESPCs.
    Question 47. Please provide copies of the budget request for the 
Marshall Islands Program, Office of Health, including a breakout of 
major program elements for fiscal years FY03 (as funded), FY04 (as 
funded), and FY05 (as requested).
    Answer. The following chart shows the breakout of funding for 
fiscal years FY03 and our anticipated expenditures for FY04. The costs 
in FY04 are less than FY03 because our contractor will be evaluating 
the current data that has been collected over several years and 
generating reports. There will be no need for a trip to the Marshall 
Islands by the contractor in FY04 to collect additional data.
    The Department does not request funding for the Marshall Islands 
Program as a separate line item. It is part of the overall Health line 
for the Office of Environment, Safety and Health. The request for the 
Health budget line in FY05 is $45,222,000.

   UNITED STATES DEPARTMENT OF ENERGY  MARSHALL ISLANDS PROGRAM BUDGET
                           SUMMARY FY2002-2004
                           [Dollars in 000's]
------------------------------------------------------------------------
                                                                FY 2004
                  Program element                    FY 2003   (estimate
                                                     (actual)   to date)
------------------------------------------------------------------------
Medical care--general.............................     $1,025     $  900
------------------------------------------------------------------------
Medical care logistics--general...................        947        900
------------------------------------------------------------------------
Medical care logistics--patient referrals.........        368        300
------------------------------------------------------------------------
    Subtotal, Special Medical Care Activities.....      2,340      2,100
------------------------------------------------------------------------
Radiological monitoring--general..................      2,177      1,600
------------------------------------------------------------------------
Radiological monitoring--plutonium urinalysis.....        323        150
------------------------------------------------------------------------
Radiological monitoring logistics--general........      1,285        550
------------------------------------------------------------------------
    Subtotal, Radiological Monitoring Activities..      3,785      2,300
------------------------------------------------------------------------
Technical support.................................        175          0
------------------------------------------------------------------------
Capital equipment:................................          0          0
------------------------------------------------------------------------
    Total, Marshall Islands Activities............     $6,300     $4,300
------------------------------------------------------------------------

               Responses to Questions From Senator Akaka
    Question 48A. I am pleased to see the increase for hydrogen 
production--$14.9 million from FY 2004 to FY 2005--in the Hydrogen 
Technology Initiative. The budget document states that the majority of 
funding will focus on renewables.
    (1) What percentage of the line item will be allocated to 
renewables?

                           EERIE FUNDING TABLE
                           [Dollars in 000's]
------------------------------------------------------------------------
                                          FY 2004
  Hydrogen technology--EERE    FY 2004     Comp.     FY 2005    $ Change
            0nly               request    approp.    request
------------------------------------------------------------------------
Production and Delivery R&D.     23,000     22,564     25,325     +2,761
------------------------------------------------------------------------
Storage R&D.................     30,000     29,432     30,000       +568
------------------------------------------------------------------------
Infrastructure Validation...     13,160     18,379     15,000     -3,379
------------------------------------------------------------------------
Safety, Codes & Standards,       16,000      5,904     18,000    +12,096
 and Utilization............
------------------------------------------------------------------------
Education and Cross-Cutting       5,822      5,712      7,000     +1,288
 Analysis...................
------------------------------------------------------------------------
    Total, Hydrogen              87,982     81,991     95,325    +13,334
     Technology.............
------------------------------------------------------------------------

    Answer. The requested $13.3 million increase in Hydrogen Technology 
funding from FY 2004 to FY 2005 includes funding for production and 
delivery; storage; infrastructure validation; safety, codes & 
standards, and utilization; and Education and Cross-Cutting Analysis as 
shown in the table below.
    Of the $25.3 million requested in production in EERE, $19 million 
is for renewable hydrogen production and delivery technology and $6.3 
is for distributed natural gas reforming technologies. In addition, 
approximately $25 million in additional funding is being requested from 
other offices within the Department for hydrogen production from coal 
and nuclear energy.
    Question 48B. I am pleased to see the increase for hydrogen 
production--$14.9 million from FY 2004 to FY 2005--in the Hydrogen 
Technology initiative. The budget document states that the majority of 
funding will focus on renewables.
    (2) Do you project that this increase, which is modest, will be 
enough to make hydrogen production costs from renewables competitive 
with non-renewable production, such as from natural gas or coal, over 
the next five years?
    Answer. The FY 2005 request of $19 million for renewable hydrogen 
production keeps us on track to meet our 2010 goal of $3.90 per gallon 
gasoline equivalent (delivered, untaxed). In fact, based on alternative 
renewable technology pathways for hydrogen production, we now believe 
we can achieve a more aggressive target of $2.85 per gallon gasoline 
equivalent by 2010. Even this more aggressive target will probably not 
be competitive with production of hydrogen from natural gas in 2010 in 
most markets, but continued research will lower costs further. The FY 
2005 request for hydrogen production from distributed natural gas is 
$6.3 million and from coal is $16 million. Our strategy for energy 
security is to have multiple pathways for hydrogen production from 
domestic energy resources.
    Question 48C. I am pleased to see the increase for hydrogen 
production--$14.9 million from FY 2004 to FY 2005--in the Hydrogen 
Technology initiative. The budget document states that the majority of 
funding will focus on renewables.
    (3) What is your estimate of the funding necessary to make 
renewable production realistic and affordable for the future?
    Answer. For research and development, the funding needs are 
difficult to estimate and depend on technical advances made by DOE and 
other government agencies, industry, and/or other governments. We will 
focus on making incremental progress toward reducing costs of hydrogen 
production from renewables, and our funding requests each year will 
reflect our estimated needs to achieve our targets.
    Question 48D. One question I have is about the decrease in funding 
for Vehicle Technologies by $21.3 million dollars and the increase in 
funding for the Fuel Cell Technologies program of $12.3 million 
dollars.
    (4) Of the fuel cell increases, can you please explain what 
proportion of those increases support the FreedomCAR Partnership 
objectives? And can you please provide the budget details to my staff.
    Answer.

                             FUNDING SUMMARY
                           [Dollars in 000's]
------------------------------------------------------------------------
                                                     FY 2004
   FreedomCAR & vehicle technologies      FY 2004     comp.     FY 2005
                                          request    approp.    request
------------------------------------------------------------------------
Vehicle Systems........................     14,514     14,335     13,883
------------------------------------------------------------------------
Innovative Concepts....................        500        494        500
------------------------------------------------------------------------
Hybrid and Electric Propulsion.........     49,563     45,002     51,821
------------------------------------------------------------------------
Advanced Combustion R&D................     37,085     54,405     35,936
------------------------------------------------------------------------
Materials Technology...................     39,640     39,744     39,799
------------------------------------------------------------------------
Fuels Technology.......................      6,800     16,494      6,800
------------------------------------------------------------------------
Technology Introduction................      5,900      4,939      6,014
------------------------------------------------------------------------
Technical Program Mgmt. Support........      2,121      2,095      1,903
------------------------------------------------------------------------
Biennial FreedomCAR Peer Review........      1,500        494          0
------------------------------------------------------------------------
    Program Total......................    157,623          2    156,656
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                     FY 2004
       Hydrogen, fuel cells, and          FY 2004     comp.     FY 2005
      infrastructure technologies         request    approp.    request
------------------------------------------------------------------------
Production and Delivery................     23,000     22,564     25,325
------------------------------------------------------------------------
Storage R&D............................     30,000     29,432     30,000
------------------------------------------------------------------------
Infrastructure Validation..............     13,160     18,379     15,000
------------------------------------------------------------------------
Safety, Codes & Standards,and Util.....     16,000      5,904     18,000
------------------------------------------------------------------------
Education and Cross-Cutting Analysis...      5,822      5,712      7,000
------------------------------------------------------------------------
    Total, Hydrogen Technology (EWD)...     87,982     81,991     95,325
------------------------------------------------------------------------
Transportation Systems.................      7,600      7,506      7,600
------------------------------------------------------------------------
Distributed EnergySystems..............      7,500      7,408      7,500
------------------------------------------------------------------------
Stack Component R&D....................     28,000     25,186     30,000
------------------------------------------------------------------------
Fuel Processor R&D.....................     19,000     14,815     13,858
------------------------------------------------------------------------
Technology Validation..................     15,000      9,877     18,000
------------------------------------------------------------------------
Technical Program Mgmt. Support........        400        395        542
------------------------------------------------------------------------
Total, Fuel Cell Technologies               77,500     65,187     77,500
 (Interior)............................
------------------------------------------------------------------------
    Program Total......................    165,482    147,178    172,825
------------------------------------------------------------------------

    The entire increase of $12.3 million from the FY 2004 appropriated 
levels to the FY 2005 request in the Fuel Cell Technologies (Interior) 
directly supports the objectives of the FreedomCAR Partnership. For 
instance, the increase in Stack Component R&D addresses key FreedomCAR 
Partnership fuel cell objectives for decreasing cost and improving 
durability.
    In addition, the increase in Technology Validation directly 
addresses safety issues, vehicle/refueling interfaces, and evaluation 
of fuel cell vehicle performance and durability issues by obtaining 
data under real operating conditions. This data will reveal 
understanding of degradation and failure mechanisms of fuel cell 
vehicles and engines, which will help focus fuel cell research under 
the FreedomCAR Partnership.
    The decrease in Fuel Processing R&D reflects a decrease in outyear 
funding commitments as a result of conducting the FY 2004 Go/No-Go 
decision for on-board fuel processing.

                    NATURAL GAS TECHNOLOGIES PROGRAM

    The Department of Energy is requesting $26 million in the FY 2005 
budget for the Natural Gas Technologies Program. One of the goals of 
the program is long-term production of natural gas from the U.S.'s vast 
deposits of methane hydrates. This little-understood resource could 
also provide more detailed information on greenhouse gases and the 
mechanisms necessary to reduce carbon dioxide. We need to continue and 
increase this commitment to invest in basic research.
    Question 49(1). Given the stated commitment of the Department to 
affordable natural gas, why has the Department's funding request 
decreased? Starting with FY 2003, funds have declined over 43% to the 
proposed FY 2005 budget request. Is the Department not committed to 
innovative research and resource assessment for gas technologies? Does 
the funding request reflect the Department's commitment to the program?
    Answer. Evaluation of this program under the Program Assessment 
Rating Tool (PART) found that it frequently duplicated private sector 
R&D efforts, and lacked a rigorous peer review process. Although the 
PART scores increased from 34% to 48% for oil and 32% to 44% for 
natural gas, PART still rates these programs as ``ineffective.'' The 
reduced funding represents a reordering of the priorities to focus on 
activities like natural gas production from hydrates and LNG safety 
that require a Federal presence to attain the President's energy 
security, Clear Skies and Climate Change goals, or are long term, high 
risk activities. The Administration believes that Oil and Gas R&D are 
important to ensuring the energy security for the Nation.
    The program will continue to fund advanced research for more 
efficient and environmentally sound technologies such as finding 
beneficial uses for water that is produced in association with oil and 
gas, and will ensure that each project will work toward the goals of 
the program. In addition, DOE will perform important research to ensure 
government decision making occurs using the best available science.
    Question 49(2). A key component of the Natural Gas Exploration and 
Production--Sustainable Supply Program is to support the Liquefied 
Natural Gas importation initiative. How does this promote the over-
arching goal of decreasing the nation's dependence on imported energy 
sources?
    Answer. LNG imports will be needed to augment U.S. production, 
which is projected to be unable to fill increased demand.
    U.S. demand for natural gas is increasing and this increase is 
forecast to continue. EIA (AEO 2004) projects that natural gas demand 
will grow by nearly 40% by 2025 C from 22.78 Tcf in 2002 to 31.41 Tcf 
in 2025. However, domestic supplies have been unable to satisfy natural 
gas demand and this ``gap'' is expected to widen. Natural gas imports 
(with Canada supplying the vast majority via pipeline) have made up the 
deficit. By all accounts, increases in Canadian imports are not viable.
    Natural gas imports are needed to augment U.S. production. LNG can 
supplement U.S. supplies in the near term. With respect to natural gas, 
world resources are significant with ``stranded gas'' unable to reach 
potential markets unless using LNG. At the beginning of 2003, known 
world natural gas reserves were 5,500 trillion cubic ft--60 times the 
volume of gas consumed that year.
    According to EIA's Annual Energy Outlook (AEO) 2004, ``Just a few 
years ago, it was believed that natural gas supplies would increase 
relatively easily in response to an increase in wellhead prices because 
of the large domestic resource base. This perception has changed over 
the past few years. While average natural gas wellhead prices since 
2000 have generally been higher than during the 1990s and have led to 
significant increases in drilling, the higher prices have not resulted 
in a significant increase in production. With increasing rates of 
production decline, producers are drilling more and more wells just to 
maintain current levels of production.'' EIA's AEO 2004 further states: 
``LNG imports are expected to constitute an increasing proportion of 
U.S. natural gas supply . . .''. Total net imports are projected to 
supply 21 per cent of total U.S. natural gas consumption in 2010 (5.5 
TCF) and 23 percent in 2005 (7.2 TCF), compared with recent historical 
levels of around 15 percent. Nearly all of the increase in net imports, 
from 3.5 TCF in 2002, is expected to consist of LNG.
    Question 49(3). Are funds being diverted from programs that 
investigate such sources as methane hydrates to the Sustainable Supply 
initiative, and if so, how does this contribute to long-term energy 
independence?
    Answer. No, funds are not being diverted. The Exploration and 
Production program has been integrated into a Sustainable Supply 
program that is focused on creating public benefits by investing in 
research that the gas industry would not take on itself. We are 
focusing on long-term, high-risk research and data analysis that is 
critical to policy makers. Our efforts have potentially high payoffs 
for the public.
    The budget for the methane hydrates program reflects a long time 
horizon and our need to prioritize within the Fossil Energy program to 
address other issues, such as Liquefied Natural Gas (LNG), with a 
shorter time frame for realizing benefit to the taxpayer.
    Question 50. I am pleased that the budget includes $5.6 million 
dollars for the National Nuclear Security Administration's Off-site 
Source Recovery Project, which will help collect unwanted radioactive 
materials and prevent them from being used as radiological dispersal 
devices. I am also pleased that there is $3 million dollars budgeted 
within the Office of Future Liabilities to begin an Environmental 
Impact Statement for a facility to permanently dispose of these 
sources.
    While this is a good first step, I remain concerned about the 
progress being made in this area. This disposal facility is necessary 
to close the loop on the life-cycle of these sources once they are 
collected, and should continue to be a priority for the DOE.

Questions:

    Question 1. How will the transfer of the Off-site Source Recovery 
Project to the National Nuclear Security Administration affect the 
Department's ability to develop a permanent, safe, and secure disposal 
facility for these sources?
    Answer. The transfer of the function for recovering unwanted 
radioactive sources and providing interim safe and secure storage has 
no impact on the function of permanently disposing of these sources. 
The National Nuclear Security Administration can continue to identify 
and recover such sources and put them into secure storage to prevent 
them from being potential used in radiological dispersion devices. Such 
sources will be one waste stream that will be disposed in a facility or 
facilities developed for the disposal of all Greater Than Class C 
(GTCC) low-level radioactive waste, as defined in the Low-Level 
Radioactive Waste Policy Act Amendment. Development of such disposal 
capability must take into account projections for quantity and forms of 
sealed sources but the transfer of responsibility for recovering and 
storing such sources has no impact on developing disposal capabilities.
    Question 2. Is the $3 million dollars budgeted for the 
environmental impact statement for the Greater-Than Class-C waste 
adequate to allow for the exploration of disposal alternatives?
    Answer. Prior year funds have already been obligated to start work 
on the environmental impact statement. The additional $3 million 
requested for FY 2005 will complete all activities associated with the 
environmental impact statement.
    Question 3. Could you elaborate on the Department's plan to proceed 
with the development of a facility to permanently dispose of these 
wastes?
    Answer. The Department's plans for developing capabilities for 
disposing of Greater Than Class C (GTCC) low-level waste are focused on 
the National Environmental Policy Act (NEPA) process. This process sets 
the overall framework for the federal government to make decisions that 
may have an impact on the environment. The Department will prepare an 
environmental impact statement pursuant to NEPA to address disposal of 
GTCC low-level waste. As part of the EIS process the Department will: 
1) develop estimates of the inventory of such wastes including forms of 
the waste and specific radiological and chemical characteristics; 2) 
identify alternatives for providing disposal capability, including 
technologies to be used and sites to be considered; 3) evaluate the 
impacts of these alternatives (including both environmental and socio-
economic impacts); and 4) address environmental and regulatory issues 
in developing GTCC low-level waste disposal capabilities. Upon 
completion of the EIS, the Department will prepare a Record of Decision 
documenting how it intends to develop GTCC low-level waste disposal 
capability. This may include a single facility or a set of facilities.
    The Low-Level Radioactive Waste Policy Act Amendments stipulate 
that the Nuclear Regulatory Commission (NRC) will license facilities 
for disposing of GTCC low-level waste. DOE will need to submit a 
license application to the NRC demonstrating it can safely construct 
and operate such a facility. The NRC will then license the facility(s) 
according to its licensing processes.

             Respomses to Questions From Senator Feinstein

                       REQUEST FOR RNEP RESEARCH

    Question 51.1 Has the Department of Defense requested research to 
be conducted on either the Robust Nuclear Earth Penetrator or other 
earth penetrating nuclear weapon? If there is no requirement from the 
Department of Defense, then why is the Department of Energy conducting 
this research?
    Answer. On January 18, 2002, the Nuclear Weapons Council, composed 
of the National Nuclear Security Administration (NNSA) Administrator, 
the Undersecretary of Defense for Acquisition, Technology, and 
Logistics and the Vice Chairman of the Joint Chiefs of Staff requested 
the Air Force to lead the current joint Department of Defense-NNSA 
feasibility, design definition, and cost study of the Robust Nuclear 
Earth Penetrator.
    The request for RNEP research is consistent with the 
recommendations of the December 2001 Nuclear Posture Review Report and 
the January 2001 Capstone Requirements Document for the Defeat of Hard 
and Deeply Buried Targets.

                  ADVANCED CONCEPT RESEARCH ACTIVITIES

    Question 51.2 Recently, Ambassador Brooks wrote to the Directors of 
the Weapons labs that they are now ``free to explore a range of 
technical options without any concern that some ideas could violate a 
vague and arbitrary limitation'' and encourages design teams ``to take 
advantage of this opportunity.'' Yet Congress is on the record in the 
FY 2004 Energy and Water Appropriations bill expressing its concern 
about advanced concepts work, fenced two-thirds of the advanced 
concepts funding and in the 2004 Defense Authorization bill, places a 
clear limit between research and design and development engineering. 
Given the clear statement of congressional intent I am concerned about 
National Nuclear Administration and Department of Energy intentions. 
Please provide detailed in a classified annex, if necessary, of exactly 
what research activities you plan to undertake and your understanding 
of what limitations are in fact in place.
    Answer. In section 3116 of the FY 2004 National Defense 
Authorization Act, Public Law 108-136, Congress repealed the 1994 
restriction on low yield weapon research and development, giving NNSA 
the opportunity to direct the laboratories to explore concepts in this 
regime. The Act also fully funded the Administration's request for this 
important national security work as did the Senate passed version of 
the Energy and Water Development Appropriations bill. The single 
committee that differed was the House Energy and Water Development 
Appropriations Committee. In the Appropriations Conference, the 
conferees reached the compromise of fencing two thirds of the funds 
pending the receipt of a report that is a product of a Department of 
Defense planning.
    We understand our advanced concepts activities to have the 
following limitations: for all research and development activities 
involving new or modified warheads in phases prior to phase 3 or 6.3, 
we are limited to the funds authorized and appropriated for that 
purpose, which in FY 2004 is $13.5 million of which $7.5 million is for 
the RNEP study, and of the remaining $6 million, $4 million is fenced 
until ninety days after a DOE-DoD stockpile plan is submitted to 
Congress. Any engineering development or later activities involving the 
Robust Nuclear Earth Penetrator or new low yield nuclear warheads must 
be specifically authorized by Congress (PL 108-136, Section 3116, 
paragraph (c) and Section 3117). For any other new or modified weapons 
work in phase 3 or 6.3 or later, with some specific exceptions, we must 
request funds as a separate dedicated line item (PL 107-314, Section 
3143, subparagraph (b)(2)).
    A detailed report of the Advanced Concepts Initiative activities in 
FY 2004 is being prepared for Congress and will be delivered soon.

                        NNSA ADVISORY COMMITTEE

    Question 51.3. Last July, Administrator Brooks announced the 
decision to dissolve the National Nuclear Security Administration 
Advisory Committee. This panel not only provided an advisory role on 
our nuclear weapons programs but also provided transparency to Congress 
and the American people regarding how decisions were being made 
regarding our nuclear stockpile. Why did the Department of Energy 
decide to dissolve this important advisory committee, particularly when 
the Administration is proposing to double and triple funding for 
controversial programs seeking to research and develop new or modified 
nuclear weapons?
    Answer. The committee's charter expired and was not renewed. It had 
always been intended that this would be an experiment. The decision not 
to renew the charter was based on: (1) the contrast between the form of 
advice (long-term, detailed studies) that the Committee appeared to 
prefer and the more ad hoc approach that the NNSA Administrator and his 
senior staff preferred; and (2) the substantial administrative burden 
of supporting the committee. Some former Committee members (including 
its Chair) still provide advice through other mechanisms. In addition 
NNSA gets input from the U.S. Strategic Command Strategic Advisory 
Group, the Defense Sciences Board, the Secretary of Energy Advisory 
Board and the national Academy of Sciences/National Research Council.
    Question 52. As you may know, existing contracts between PG&E and 
Western Area Power Administration expire on January 1, 2005. It is my 
understanding that Western Area Power Administration is looking at 
alternatives that are subject to the Department of Energy's authority. 
Can you detail for me the criteria with which you will make a decision 
regarding Western Area Power Administration's future, particularly 
relating to how it will affect electricity reliability and cost of 
electric power?
    Answer. The criteria used by the Western Area Power Administration 
(Western), as described in its June 24, 2003, Federal Register notice, 
are flexibility, certainty, durability, operating transparency and 
cost-effectiveness.
    Flexibility preserves the ability of Western to join a Federal 
Energy Regulatory Commission-approved and certified regional 
transmission organization in the future and to adapt to ongoing changes 
in the electric utility industry.
    Certainty assures that cost-of-service rates remain stable and 
predictable. Western further defined certainty as having stable rates 
and charges so Western and its customers will be able to continue 
engaging in long-term business planning and to undertake prudent long-
term commitments under a reasonable risk management planning horizon.
    Durability assures operating protocols are well established and 
subject to minimal changes over time. This definition also included 
business processes; major changes in business processes can 
significantly impair the efficiency and ability of individual 
organizations to respond effectively because of the need for increased 
staffing and resources.
    Operating transparency minimizes operating impacts on third 
parties. Western defines this factor as Western's ability to operate 
the Federal system with minimal impacts on third parties.
    Cost-effectiveness minimizes cost shifts and considers the relative 
cost and benefits to Western's customers. Cost-effectiveness also 
includes the concept of ensuring that the overall cost of system 
operation and delivery of Federal power is kept as low as possible 
consistent with sound business principles.
    During the public process, the California Independent System 
Operator and several other commenters expressed a desire to include 
reliability as an additional evaluation category. However, Western 
decided not to include reliability as a separate evaluation criteria 
because, under existing Western Electricity Coordinating Council and 
North American Electric Reliability Council operating criteria, Western 
must assure that, whichever operational alternative is ultimately 
selected does not negatively impact third parties. Consequently, 
Western determined that adopting this criteria would be redundant.
    Question 53A. Can you tell me how the Administration will overcome 
the barriers in its way regarding storing and shipping hydrogen, 
finding renewable sources from which to develop a hydrogen economy; and 
how to make the cost of hydrogen fuel cells equal to regular gasoline?
    Answer. The Department has developed detailed multi-year research 
plans which describe the technical approaches to overcoming the 
barriers to a hydrogen economy. These plans are based on a year-long 
effort among the Department, industry, academia and other groups that 
resulted in a National Hydrogen Energy Roadmap for hydrogen production, 
delivery, storage, conversion, applications, as well as codes and 
standards and education. Our detailed plans include interim milestones 
to track progress and ``go/no-go'' decision points to down-select best 
approaches to overcoming each of the barriers. In May 2003, the 
Department hosted a Basic Energy Sciences Workshop to develop and 
document the basic research needs for the hydrogen economy. This report 
and the Department's multi-year plans are available at 
www.eere.energy.gov.
    Question 53B. Can you tell me why the Administration does not more 
aggressively fund technologies that are available today, such as 
hybrids, to bridge the gap between purely gasoline vehicles and the 
hydrogen economy?

                             FUNDING SUMMARY
                           [Dollars in 000's]
------------------------------------------------------------------------
                                                     FY 2004
   FreedomCAR & vehicle technologies      FY 2004     comp.     FY 2005
                program                   request    approp.    request
------------------------------------------------------------------------
Hybrid and Electric Propulsion.........     49,563     45,002     51,821
------------------------------------------------------------------------

    Answer. The Department does support hybrid-electric vehicles 
through its FreedomCAR and Vehicle Technologies Program. In fact, the 
Department is requesting more than $51 million for hybrid and electric 
propulsion activities in FY 2005, a 15% increase over FY 2004 
appropriation levels. This effort focuses on removing the barriers to 
efficient, cost-effective hybrid vehicles by improving both the 
performance and potential cost of the components that make up a hybrid 
system.
    Improving hybrid technologies (e.g., batteries or capacitors for 
energy storage, power electronics for energy conversion and management, 
and efficient electric traction motors) will assist in the application 
of hybrid technologies across the entire vehicle market, an important 
objective of the FreedomCAR Partnership. Advances in hybrid 
technologies also contribute to bridging the gap to hydrogen fuel cell 
vehicles.
    Finally, the President's National Energy Policy recommended that 
consumer tax credits for hybrid vehicles be passed by the Congress. We 
hope the Congress will soon adopt such a tax credit as part of 
comprehensive energy legislation.

                        PERCHLORATE REMEDIATION

    There are 44 states in which perchlorate use and manufacturing has 
been confirmed. Twenty-five states, including California, have reported 
perchlorate ground and surface water contamination. California obtains 
approximately 30% of its drinking water from groundwater sources. 
Current perchlorate remediation efforts are costly and time consuming.
    Question 54. Has any national laboratory been afforded the 
opportunity and funding to conduct a study to determine cost effective 
processes for perchlorate remediation to address this national problem?
    Answer. The national laboratories have performed scientific 
research on perchlorate. The following is a synopsis of two ongoing 
projects:

   The Oak Ridge National Laboratory has been researching 
        perchlorate treatment and recently developed a new methodology 
        to degrade perchlorate in regenerant solutions using ferrous 
        iron and/or non-toxic organic reducing agents.
   Through the National Nuclear Security Administration Service 
        Center in Albuquerque, Los Alamos National Laboratory and the 
        Pantex Plant have developed a measurement technique for 
        extremely low levels of perchlorate. The technique, liquid 
        chromatography mass spectrometry mass spectrometry (LC/MS/MS) 
        has been demonstrated to reliably measure perchlorate in 
        groundwater in concentrations well under one part per billion.

                             CLIMATE CHANGE

    Question 55. I remain very concerned about this Administration's 
lack of real action against climate change. I believe that we need to 
make emission reductions mandatory now, and that we need to work again 
with the rest of the world to finalize a version of the Kyoto protocol. 
The President, however, has said that the Administration would instead 
focus on research and improving our scientific understanding of climate 
change.
    Given the President's stated commitment to such research, I would 
have expected a significant request for climate change research. 
However, the line item in this budget is only $3 million, and it 
appears that much of this research will focus on researching fossil 
fuel energy sources.
    How do you plan to use this money and how do you explain the 
request for only $3 million in the climate change line item? Does this 
indicate a change in the Administration's position on climate change?
    Answer. The Bush Administration remains committed to a 
comprehensive, innovative program of domestic and international 
initiatives to reduce greenhouse gas emissions. The Administration 
believes that the aims of the United Nations Framework Convention on 
Climate Change (UNFCCC), to which the United States is a party, can be 
accomplished in one of two ways--through short-term regulations like 
those that would be mandated by the Kyoto Protocol, or through the 
development of new, low- or zero-emissions energy technologies that 
will allow us to make larger, long-term reductions in emissions while 
fostering economic growth.
    President Bush has chosen the latter approach. The Bush 
Administration will spend approximately $4 billion during this fiscal 
year on climate change science and technology activities. President 
Bush also supports an additional $4 billion in tax incentives over the 
next five years to spur these clean, renewable energy and energy-
efficient technologies.
    The $3 million line-item referred to in the question is a modest, 
but important part of the President's National Climate Change 
Technology Initiative (NCCTI). It will explore, through competitive 
solicitations of research grant proposals, novel concepts, technologies 
or technical approaches, not elsewhere covered, that could, if 
successful, contribute in significant ways to the reduction, avoidance 
or permanent sequestration of greenhouse gas (GHG) emissions.
    In FY 2005, the Department will spend nearly $2 billion on the 
research and development of low-emitting or non-emitting energy 
technologies and practices that reduce, avoid, or sequester emissions 
of greenhouse gases. For example, the President's FY 2005 Budget 
requested increases of $110 million for U.S. participation in four 
international climate change technology initiatives: the Hydrogen Fuel 
Initiative, Carbon Sequestration, Generation IV Nuclear Systems, and 
the International Thermonuclear Experimental Reactor.
    International cooperation is a key aspect of our technology 
approach, and we are pleased to be partners with the U.K. and/or the 
European Union in four of our most important multilateral efforts to 
address the risk of climate change. The Administration has also 
negotiated climate change agreements with 13 countries or regional 
groups that together account for a significant amount of global 
greenhouse gas emissions.
    As we work on developing these long-term breakthrough energy 
technologies, we are also taking action in the near-term. Two years 
ago, President Bush set an aggressive national goal of reducing 
greenhouse gas intensity 18 percent by 2012. Since then we have 
vigorously pursued that goal many successful Federal programs, 
including: DOE's Climate VISION program, which involves voluntary, 
industry-wide commitments to reduce emissions in 12 energy-intensive 
sectors, and EPA's Climate Leaders, which involves 50 major companies 
that have developed comprehensive climate change strategies with 
corporate-wide emissions reduction goals. The USDA has also modified 
its farm conservation programs to encourage farmers to set aside 
farmland for carbon sequestration.

              ENERGY TECHNOLOGY ENGINEERING CENTER (ETEC)

    The Department of Energy used to develop ballistics missiles at the 
Santa Susana Field Laboratory in Simi Valley, California. Over the 
decades, this site has become highly contaminated with radiation, 
mercury, lead, PCBs, dioxins, and other highly toxic chemicals.
    For those of you who have never been there, the Santa Susana site 
is located on a hillside up above a community, and poses a health risk 
to the people who live in the valley below.
    The Department of Energy is fully aware of this contamination, and 
the threat that it poses. As a matter of fact, in a 1995 agreement, the 
Department of Energy entered into a Joint Policy with the Environmental 
Protection Agency in which it committed to clean its sites--
nationwide--to standards consistent with the EPA's Superfund cleanup 
standards, irrespective of whether the sites were on the National 
Priority List of Superfund sites.
    It now appears that the Department of Energy has decided to renege 
on its promises to the community, to the EPA, and to my office that is 
will provide sufficient cleanup of the site. The Department of Energy 
is even going so far as to refuse to fund the EPA or anyone else to 
conduct a separate, independent survey of the contamination in the 
area.
    I was dismayed to learn that the Department of Energy's final 
cleanup plan does not meet the Federal health and safety standards 
deemed necessary by the EPA. And in fact, your Agency's plan is to 
remove just 2 percent of the nuclear contaminated soil, an action that 
EPA feels is insufficiently protective of human health and the 
environment.
    Question 56(1). Can you explain why the Department of Energy will 
not conduct a full cleanup of the site?
    Answer. DOE is meeting all of its commitments to the U.S. 
Environmental Protection Agency (EPA) and site stakeholders, including 
the State regulator site cleanup requirements. The preferred cleanup 
alternative contained in the Environmental Assessment for the ETEC site 
released on March 31, 2003, is being implemented at the site. Cleanup 
of the site under this alternative is fully protective of human health 
and the environment using the 15 mrem dose exposure per year, a cleanup 
standard which is consistent with the Comprehensive Environmental 
Response, Compensation, and Liability Act (CERCLA) and agreed to with 
the California Department of Health Services. This cleanup standard 
meets the level that EPA has stated is fully protective of human health 
and the environment. Furthermore, in employing this cleanup standard at 
the ETEC site, the residual risk at the site will fall within the 
CERCLA risk range of 10E-4 to 10E-6.

          INDEPENDENT MONITORING OF RADIOACTIVE CONTAMINATION

    Question 56(2). Can you explain why the Department of Energy has 
reneged on its promise to fund an independent monitoring of radioactive 
contamination?
    Answer. We are unaware of a commitment by the U.S. Department of 
Energy to fund an independent radiological survey of the Energy 
Technology Engineering Center (ETEC) site. The Department will be 
conducting a survey when cleanup is complete to verify that the cleanup 
objectives have been met. In March 2003, the U.S. Environmental 
Protection Agency's (EPA) then Acting Administrator, Marianne Horinko, 
and DOE's Assistant Secretary, Jessie Roberson, discussed this matter. 
In a letter dated September 11, 2003, Ms. Roberson stated the overall 
conclusions from these discussions were that DOE will not separately 
fund EPA to conduct a separate radiological survey or an historical 
site assessment (HSA) of the ETEC site. During the discussions, it was 
agreed DOE will conduct a final verification survey of the site that 
will incorporate certain elements from EPA's proposed HSA work scope. 
This survey will be designed and executed in a manner such that it can 
clearly verify that the established cleanup objectives and standards 
for the ETEC site have been met.

                                    

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