[Senate Hearing 109-295]
[From the U.S. Government Publishing Office]




                                                 S. Hrg. 109-295, Pt. 5

                                                        Senate Hearings

                                 Before the Committee on Appropriations

_______________________________________________________________________


                                                      Energy and Water,

                                                   and Related Agencies

                                                         Appropriations

                                                            Fiscal Year
                                                                   2007

                                         109th CONGRESS, SECOND SESSION

                                                              H.R. 5427

PART 5
        DEPARTMENT OF DEFENSE--CIVIL
        DEPARTMENT OF ENERGY
        DEPARTMENT OF THE INTERIOR
        NONDEPARTMENTAL WITNESSES


   Energy and Water, and Related Agencies Appropriations, 2007 (H.R. 
                             5427)--Part 5

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                                                 S. Hrg. 109-295, Pt. 5
 
 ENERGY AND WATER, AND RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 
                                  2007

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

                                HEARINGS

                                before a

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                                   on

                               H.R. 5427

 AN ACT MAKING APPROPRIATIONS FOR ENERGY AND WATER DEVELOPMENT FOR THE 
     FISCAL YEAR ENDING SEPTEMBER 30, 2007, AND FOR OTHER PURPOSES

                               __________

                                 PART 5
                      Department of Defense--Civil
                          Department of Energy
                       Department of the Interior
                       Nondepartmental Witnesses

                               __________

         Printed for the use of the Committee on Appropriations


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html

                               __________
                      COMMITTEE ON APPROPRIATIONS

                  THAD COCHRAN, Mississippi, Chairman
TED STEVENS, Alaska                  ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania          DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico         PATRICK J. LEAHY, Vermont
CHRISTOPHER S. BOND, Missouri        TOM HARKIN, Iowa
MITCH McCONNELL, Kentucky            BARBARA A. MIKULSKI, Maryland
CONRAD BURNS, Montana                HARRY REID, Nevada
RICHARD C. SHELBY, Alabama           HERB KOHL, Wisconsin
JUDD GREGG, New Hampshire            PATTY MURRAY, Washington
ROBERT F. BENNETT, Utah              BYRON L. DORGAN, North Dakota
LARRY CRAIG, Idaho                   DIANNE FEINSTEIN, California
KAY BAILEY HUTCHISON, Texas          RICHARD J. DURBIN, Illinois
MIKE DeWINE, Ohio                    TIM JOHNSON, South Dakota
SAM BROWNBACK, Kansas                MARY L. LANDRIEU, Louisiana
WAYNE ALLARD, Colorado
                    J. Keith Kennedy, Staff Director
                  Clayton Heil, Deputy Staff Director
              Terrence E. Sauvain, Minority Staff Director
                                 ------                                

         Subcommittee on Energy and Water, and Related Agencies

                 PETE V. DOMENICI, New Mexico, Chairman
THAD COCHRAN, Mississippi            HARRY REID, Nevada
MITCH McCONNELL, Kentucky            ROBERT C. BYRD, West Virginia
ROBERT F. BENNETT, Utah              PATTY MURRAY, Washington
CONRAD BURNS, Montana                BYRON L. DORGAN, North Dakota
LARRY CRAIG, Idaho                   DIANNE FEINSTEIN, California
CHRISTOPHER S. BOND, Missouri        TIM JOHNSON, South Dakota
KAY BAILEY HUTCHISON, Texas          MARY L. LANDRIEU, Louisiana
WAYNE ALLARD, Colorado               DANIEL K. INOUYE, Hawaii

                           Professional Staff

                             Scott O'Malia
                             Roger Cockrell
                             Emily Brunini
                        Drew Willison (Minority)
                   Nancy Olkewicz (Minority)

                         Administrative Support


                           C O N T E N T S

                              ----------                              

                        Thursday, March 2, 2006

                                                                   Page
Department of Energy.............................................     1

                        Tuesday, March 28, 2006

Department of the Interior: Bureau of Reclamation................    45

                        Thursday, March 30, 2006

Department of Energy.............................................    89
    Office of Science............................................   117

                        Wednesday, April 5, 2006

Department of Defense--Civil: Department of the Army: Corps of 
  Engineers--Civil...............................................   191

                        Thursday, April 6, 2006

Department of Energy: National Nuclear Security Administration...   241

                       Nondepartmental Witnesses

Department of Defense--Civil: Department of the Army: Corps of 
  Engineers--Civil...............................................   297
Department of the Interior: Bureau of Reclamation................   359
Department of Energy.............................................   394


 ENERGY AND WATER, AND RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 
                                  2007

                              ----------                              


                        THURSDAY, MARCH 2, 2006

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:33 p.m., in room SD-124, Dirksen 
Senate Office Building, Hon. Pete V. Domenici (chairman) 
presiding.
    Present: Senators Domenici, Craig, Allard, and Murray.

                          DEPARTMENT OF ENERGY

STATEMENT OF HON. CLAY SELL, DEPUTY SECRETARY


             opening statement of senator pete v. domenici


    Senator Domenici. The hearing will please come to order.
    Senator Reid has indicated that I should start. He may or 
may not be able to come, but we're going to proceed.
    Good morning to you, Mr. Secretary.
    First of all, as many of you may know, Clay is returning to 
this subcommittee, where he served as clerk for 4 years. I'm 
not sure that he wanted me to brag or comment about that, but 
it's a reality, so we might as well say it. I'm very pleased to 
have you here today, and to have you where you are. I'm sure 
you're going to do an excellent job in this very difficult 
arena. And I compliment you on the subject matter that you're 
going to present to us today.
    This one of many of the President's new programs to break 
America's dependence on foreign oil and build America's 
competitive edge. And DOE is the focal point for these 
initiatives.
    Good afternoon, Senator Craig.
    First, I commend the Secretary and the Deputy Secretary for 
setting forth a comprehensive global nuclear strategy that 
promotes nuclear nonproliferation, and the goals of that, and 
helps to resolve our nuclear waste issues at the same time.
    In the 1970's, the United States decided to abandon its 
leadership on nuclear recycling and let the rest of the world 
pass us by. With the creation of this new global nuclear energy 
program, we're going to get back into the ball game.
    Now, it's not so easy to play catch-up from such a far long 
distance behind. It means you've got a lot of hard work. It 
means you've got to have a big vision. It means you've got to 
be willing to put up some resources. And then you've got to 
decide that what you're trying to do is really worth it, that 
it has the potential for solving some big, big problems in the 
future.
    So, based on the current projections, global energy demand 
is expected to double by the year 2050. We must act now to 
ensure that we have a reliable energy source, without 
increasing air pollution and without increasing greenhouse 
gases.
    Passage of the Energy bill last year created a new future 
for nuclear power in this country, and it's interesting to note 
that the rest of the world is aware of the same thing we are 
aware of. We finally changed our policy, the rest of the world 
has finally decided to change their modus operandi, and they 
are also moving rather quickly into nuclear power reactors as 
source of energy for their countries. And that's China and many 
others, Larry, as we know.
    In the year 2006 Energy Outlook, the Energy Information 
Agency has included in its estimates, believe it or not, a 
growth in nuclear power as part of the domestic energy picture. 
Now, that's a simple statement to make. And for many, it 
doesn't mean much. But when the Energy Information Agency looks 
out there and assesses what's going on, they usually come up 
with some pretty objective findings. And they have made a 
decision, a determination that nuclear power is going to come 
onboard in the United States by way of nuclear power plants. 
With the GNEP, we began to close the cycle on nuclear waste in 
ways that prevent proliferation and reduce both the volume and 
the toxicity of waste. By recycling of spent nuclear fuel, we 
can reuse the uranium, which is 96 percent of the spent fuel. 
We can separate the most toxic radioactive material to be 
burned in advanced burner reactors.
    By reusing the fuel and burning the transuranic material, 
we can reduce the amount of waste that would be placed in a 
Yucca Mountain by 100 times. In other words, a Yucca Mountain 
will hold the waste from 100 times as much nuclear power as it 
will today, putting the spent fuel rods in, as we would put 
them in under current law and current policy.
    So, I am pleased that President has focused on the 
importance of solving the energy needs. I don't want to lose 
sight of the importance of implementing the Energy Policy Act, 
which contains many important incentives that will support the 
deployment of clean coal technology, advanced nuclear power 
plants, biomass, and other renewable projects.
    Mr. Secretary, it's my pleasure to welcome you back, and 
then, after yielding to Senator Craig, I'd ask you to summarize 
your statement, and it'll be made a part of the record.
    Senator Craig.


                  STATEMENT OF SENATOR LARRY E. CRAIG


    Senator Craig. Well, Mr. Chairman, thank you very much. 
Clay, welcome before the committee.
    I'm sitting here listening to you, Mr. Chairman, and 
saying, gee whiz, a year ago, this time, we didn't know if we 
were going to get an Energy bill. There were no incentives for 
new nuclear plants, no risk insurance, no tax credits, no loan 
guarantees. A year ago, there were no real plans for any new 
nuclear plants to be built in the United States. A lot of need, 
a lot of concern. The utility industry was looking, in the out 
years, to baseload, wanting to do nuclear. But today we believe 
there are 19 new reactors on the drawing boards of America's 
industries.
    So, it is a phenomenal transition, Mr. Chairman, from where 
we were to where we are. And how we keep that going is going to 
be awfully important, not only for the future of our country, 
but literally for the future of the world. The President, with 
his India nuclear deal of 14 reactors, just in the last 24 
hours, is a big deal. It's an important deal as it relates to 
proliferation and our ability to get our collective, and the 
world's collective, arms around spent fuels and all of that 
type of thing. And I applaud you, Clay, for the work you've 
done on GNEP, or the Global Nuclear Energy Partnership. It is a 
very important component in where we head as a world into 
resolving the waste stream issue and a concern that may exist 
still by some, as there is legitimacy to it, of proliferation.
    As you know, I and others have worked awfully close on--and 
with you--on a new-generation concept beyond GNEP. And we 
actually legislated it into the policy. And these are policies 
that fit well together, and should be looked at in that 
context, I would hope. And I say that, because clearly the 
technology is there, not only for nuclear, but the President's 
initiative. His bold step, very early on in the administration, 
to link hydrogen to the ability of the nuclear industry, led 
me, this past week, to go downtown to NEI R&D summit and 
challenge them, and say, ``Why don't you get outside this big 
new box you're in. It's an exciting box, building new reactors, 
building new baseload, bringing in the efficiencies of clean, 
non-emitting energy. At the same time, you're still thinking of 
it in the context of nuclear generation alone. Maybe we ought 
to think beyond that, to not only nuclear generation, but 
hydrogen production, not unlike what the folks in the coal 
industry are doing with Future Gen.'' And so, it's not that I 
coin a phrase, but I said, ``Why don't we talk about Freedom 
Gen? Why don't we get this country up off its knees and start 
running?'' You know, I was one of those--and Pete and I--the 
problem we've got in this committee is that we think we know so 
much about energy--and we, collectively, do, thanks to people 
like you, who used to be with us, and other great staff 
people--and when somebody says, ``You know, this Nation could 
be energy independent,'' we all step back and say, ``Whoa, 
whoa, whoa. I don't think we could ever get there.''
    I think how exciting it is for this President--and we 
almost got him there in the State of the Union--to challenge 
this country to get well beyond where it ever thought it could 
go. It's those kinds of challenges that really have made this 
country great. It is not impossible, from an electric 
standpoint, with coal new technology, nuclear new technology, 
to be independent there, that's for sure, and then to start 
adding other components to it. The Energy bill that we passed 
in July, that was signed in August, does just that. And because 
many of us were concerned about where we went with other world 
initiatives out there that related to climate change, we 
challenged this President. You all met the challenge. He went 
out and started talking about an Asia-Pacific initiative that 
makes an awful lot of sense and fits into the GNEP concept 
beautifully well.
    So, there are an awful lot of exciting things happening out 
there. And I think this committee is--has done what oftentimes 
in Congress we really don't get done, we've actually created, 
thanks to your leadership, Mr. Chairman, a significant and 
powerful new national policy that is now moving and driving. 
And we need to strengthen it where we can. We need to add new 
to it where we will. Your leadership at the Department of 
Energy with this Secretary will help us a great deal.
    So, I'm anxious to hear your presentation as it relates to 
the Global Nuclear Energy Partnership. And then let's see how 
we can blend it with other initiatives underway to see if there 
is an economy of scale and a value that can be created by all 
of these things converging together into our budgets and into 
the technology and capability of America's mindset.
    Thank you, Mr. Chairman.
    Senator Domenici. Thank you, Senator.
    Senator Allard, first of all, let me say I'm very pleased 
that you're with us. You're not brand new; I didn't mean that. 
But, you know, we haven't had you around very long. And you're 
going to find this is a very fun subcommittee with lots of work 
to do. And some of the things that you've been working on are 
here, and you'll have a lot more opportunity to work on them, 
because you'll fund them here. So, if you'd like to make a few 
opening remarks, we'll let you----
    Senator Allard. Well, I'd love to, Mr. Chairman.
    Senator Domenici. If you'll make them as brief as you can, 
because of the 3 o'clock vote?
    Senator Allard. Oh, I'll do that, Mr. Chairman.


                   STATEMENT OF SENATOR WAYNE ALLARD


    Senator Allard. First of all, I'm absolutely thrilled to be 
a part of this committee, and was glad I had the opportunity to 
serve on it, because you've been such a leader on meeting our 
energy needs in this country, and I want to join you in that 
effort.
    You know, there's no doubt in my mind that we need to have 
an ample source of energy--to meet the security needs of this 
country, primarily, but also just to meet consumer needs, and 
for us to be competitive throughout the world.


                           PREPARED STATEMENT


    I have a couple of pages here of comments. I'm just going 
to ask that they be inserted into the record, in addition to 
what I've just stated.
    And I look forward to working with you, Secretary Sell, 
because I do want to give my colleagues an opportunity to say a 
few remarks, also.
    Thank you, Mr. Chairman.
    [The statement follows:]

               Prepared Statement of Senator Wayne Allard

    Mr. Chairman, I am very pleased to be a member of this committee, 
and I thank you for holding this very important hearing today. I think 
that nuclear energy is one of the most promising energy sources before 
us. It promises large supplies of clean energy. I have long said that 
America must diversify its energy sources, and the option of using 
nuclear simply must be on the table.
    Many people have been critical of the United States for not signing 
on to the Kyoto Protocol. Now, several years later when those countries 
that did join are being required to meet their first targets, many are 
not able to do so. France is one of the few countries meeting its 
target, and they are doing so largely because they are heavily reliant 
on nuclear energy.
    When we stopped reprocessing in the 1970's, England, France and 
Japan kept moving forward. They are now operating successful 
reprocessing facilities. Several years ago I visited sites in France 
and England where they are currently reprocessing spent nuclear fuel. 
The process is safe and efficient, and something that we should have 
been doing in this country years ago.
    There is a large up-front investment that has to be made in order 
to reprocess spent fuel. But I would like to use an analogy that some 
people may find easier to understand. To build a house in an energy 
efficient manner is more expensive to build one to regular standards. 
You have to spend more on higher quality insulation, solar panels cost 
money, more efficient appliances cost a little more. But you save a lot 
of money down the road when you pay less in utility charges. Similarly, 
while the investment for a reprocessing facility is high, because 96 
percent of the fuel can be reused, much less must be expended on 
storage down the road, and much less ``new'' fuel must be acquired.
    I look forward to working with my colleagues and the administration 
on this very important issue.

    Senator Domenici. Before I call on Senator Murray, let me 
say to the Senators that are here, I understand we have two 
votes at 3 o'clock. And the Energy Committee, which is the two 
of us, we have a 3:30 meeting.
    Senator Allard, is there any--by any chance, could you use 
part of your afternoon to wrap up these hearings, if we have 
to?
    Senator Allard. I believe I can, but let me check my 
schedule, please, and I'll get back to you in just a minute.
    Senator Domenici. Senator Murray, would you like to make a 
few opening remarks?

                   STATEMENT OF SENATOR PATTY MURRAY

    Senator Murray. I would, Mr. Chairman, thank you.
    And I understand the time limitations, but I did want to 
say, Secretary Sell, first, thank you, and good afternoon. It's 
good to see you back on the Hill.
    I do have significant reservations, I have to say, about 
the Department's GNEP proposal. Energy security in our Nation 
is a top priority for me, like everyone, and we have to do more 
to wean ourselves off foreign imports of energy sources and 
replace them with some secure domestic sources. But I strongly 
question whether GNEP is the answer. I'm not opposed to nuclear 
energy. All sources of energy have to be explored and utilized 
if we're to find the best mix for the United States to achieve 
energy independence. But that requires taking a very hard look 
at possible sources, and considering several factors, including 
availability, technical feasibility, environmental impact, and 
the economics of developing that new resource. And we also have 
to look for solutions to our energy problems now in using those 
criteria. That's why I think this proposal falls short.
    From what I can tell, it has not gone through the necessary 
peer review, it's without strong economic cost analysis, and it 
does nothing to address our energy needs in the near-or mid-
term.
    But before we go further, I have to point out that this 
proposal seems to gloss over the difficulty this country has in 
managing our nuclear waste. And I want to revisit quickly 
another proposal on cleanup offered by DOE. Accelerated cleanup 
was sold as a plan to focus on one contaminated site, and once 
that site was cleaned up and closed, the funds would then be 
redirected to other sites to accelerate cleanup. The good news, 
of course, is Rocky Flats was closed this year. But the bad 
news is, is the EM budget request is cut by $762 million in 
2007. DOE broke that deal with the sites, the States, and the 
Congress. And rather than addressing the nuclear waste legacy, 
DOE has shifted focus to other areas and left our communities 
holding the bag.
    I'm particularly disturbed by comments made by Under 
Secretary Garman, when he spoke to the Energy Facility 
Contractors Group last month. He called for us to get honest 
about the cleanup projects left around the country. The context 
of those comments is, the cleanup agreements between the 
Government and the States. The Government is failing to meet 
milestones. Funding is being cut back. And DOE officials are 
telling our States to get honest. DOE signed these agreements 
and should not be looking to break them.
    It's another example of the mixed messages that DOE sends 
on its cleanup responsibilities. Last year, I had to fight very 
hard for funding for the vit plant on the Hanford site. I was 
told by Secretary Bodman, and by you, that DOE stood behind the 
project. I found that hard to believe, when the only DOE funds 
offered up for rescission was the $100 million from the vit 
plant.
    In the President's 2007 budget proposal, there is $690 
million for the vit plant, and I'm relieved. The budget request 
is finally where it should be. But the funds for the tank farm 
activities are down by $52 million, which includes a zeroing 
out of bulk vit plant. That was proposed by the administration 
as a way to get the tank waste treated faster, and now the 
request is zero.
    So, let's get honest. DOE has a poor record when it comes 
to managing nuclear waste. GNEP will add the waste inventory, 
while doing nothing in the near term to help achieve energy 
independence. Today there is no place to permanently store 
spent nuclear fuel. The request for GNEP is $250 million, while 
the request for EM funds is down. It's striking to me that DOE 
has proposed a project that would create the same kind of waste 
that we are struggling to retrieve and treat at the Hanford 
Tank Farm. I have many concerns, and I'm eager to hear your 
presentation and to address them during the appropriations 
cycle.
    Thank you, Mr. Chairman.

               PREPARED STATEMENT OF SENATOR THAD COCHRAN

    Senator Domenici. Thank you very much. Senator Cochran has 
submitted a statement which we will also include for the 
record.
    [The statement follows:]

               Prepared Statement of Senator Thad Cochran

    Mr. Chairman, I am pleased to join you in welcoming Deputy 
Secretary Sell to the subcommittee, and I look forward to his testimony 
about the fiscal year 2007 Budget Proposal for the Global Nuclear 
Energy Partnership.
    Secretary Sell, welcome back to the subcommittee where you worked 
as clerk for 4 years. Your service on this important subcommittee gives 
you a solid background to execute our national global nuclear strategy. 
I am pleased that the Department of Energy is working on a long term 
strategy to address the nuclear needs of our Nation, from the execution 
of our nuclear security to the deployment of new nuclear power plants. 
There is a great need for nuclear power in this country, and as we look 
to the future, there is going to be an increased need for energy 
production. Nuclear must be a significant part of that production.
    My State is home to the Grand Gulf nuclear power facility in Port 
Gibson, Mississippi. In addition, we are a leading site to host a new 
commercial nuclear power plant, which will not only provide jobs and 
stimulate economic development, but could also provide future rate 
relief to my State's electricity customers. The support of this new 
facility would relieve the burden of high cost natural gas currently 
used to generate electricity.
    Lastly, in order to support the exiting fleet of nuclear power 
plants, as well as support the building of new nuclear facilities, we 
must recognize the nuclear spent fuel situation. Customers have been 
contributing to the nuclear waste fund for many years and have seen 
little benefit from their investment. Utilities have been in litigation 
with the government spending millions of dollars in legal fees over the 
issues surrounding spent fuel. I hope that we will work to address 
these problems so that this country can build a clean and reliable 
fleet of new nuclear plants.
    We will continue to discuss the details of this program over the 
next few months. I look forward to working with you and my colleagues 
on the Appropriations Committee to analyze this new initiative and make 
the best decisions for fiscal year 2007. Thank you for your good 
assistance in our efforts to make wise decisions.

    Senator Domenici. Mr. Secretary, please proceed.
    Mr. Sell. Thank you very much, Mr.--
    Senator Domenici. Don't worry about that.

                      STATEMENT OF HON. CLAY SELL

    Mr. Sell. Well, I don't want to lose my audience too 
quickly.
    Mr. Chairman, Ranking Member Reid, Senator Craig, Senator 
Allard, Senator Murray, it is truly an honor and a great 
pleasure for me to have this opportunity to come back before 
this subcommittee to discuss the administration's proposed 
Global Nuclear Energy Partnership, or what we call GNEP.
    Thank you for allowing my written statement to go into the 
record, and I would like to make some summary comments. And I 
will try to do that in 5 or 7 minutes.
    In many respects, I believe it is appropriate that the 
first public hearing on GNEP occur here before this 
subcommittee. From Chairman Domenici's 1997 Harvard speech 
calling for a broad reconsideration of nuclear policy and 
reprocessing, to this committee's role in funding plutonium 
disposition, to this committee's role in funding a great 
breadth of nonproliferation initiatives, to the creation of the 
Advanced Fuel Cycle Initiative under the chairmanship of then-
Chairman Reid in 2002, this committee, along with your 
counterparts in the House, has always provided great bipartisan 
leadership on nuclear matters within our government. So, it is 
a pleasure to be here today to discuss GNEP.
    I would like to tell you today why we are proposing GNEP. 
I'd like to elaborate on what it exactly is and how we propose, 
with the support of this subcommittee, to get started.
    The President has stated a policy goal of promoting a great 
expansion of nuclear power here in the United States and around 
the world. The reasons for this are obvious. As the chairman 
said, the Department of Energy projects that total world energy 
demand will increase--will double by 2050. And looking only at 
electricity, projections indicate an increase of over 75 
percent in the next 20 years--75 percent increase in 
electricity demand over the next 20 years.
    Nuclear power----
    Senator Domenici. Now, that's worldwide.
    Mr. Sell. That's worldwide.
    Senator Domenici. Worldwide.
    Mr. Sell. Nuclear power is the only mature technology of 
significant potential to provide large amounts of completely 
emissions-free baseload power to meet this need. It will result 
in significant benefits for clean development around the globe, 
reduced world greenhouse gas intensities, pollution abatement, 
and the security that comes from greater energy diversity.
    But nuclear power, with all of its potential for mankind, 
carries with it two significant challenges. The first: What do 
we do with the nuclear waste? And the second one: How can we 
prevent the proliferation of fuel-cycle technologies that lead 
to weaponization?
    GNEP seeks to address and minimize these two challenges by 
developing technologies to recycle the spent fuel in a 
proliferation-resistant manner and support a reordering of the 
global nuclear enterprise to encourage the leasing of fuel from 
what we'll call ``fuel-cycle states'' in a way that presents 
strong commercial incentives against new states building their 
own enrichment and reprocessing capabilities.
    Regarding our own policy on spent nuclear fuel, the United 
States stopped the old form of reprocessing in the 1970's, 
principally because it could be used to produce plutonium. But 
the rest of the major nuclear economies, in France, in Great 
Britain, in Russia, in Japan, and in others, continued on 
without us. The world today has a buildup of nearly 250 metric 
tons of separated civilian plutonium. It has vast amounts of 
spent fuel. And we risk the continued spread of fuel-cycle 
technologies.
    If we look only for a moment at the United States, we are 
on the verge of a U.S. nuclear renaissance. In many respects, 
due to the provisions enacted in the Energy Policy Act of 2005, 
new plants will be built. But if we want many more built--and 
we need them--I believe the United States must rethink the 
wisdom of our once-through spent-fuel policy. We must move to 
recycling.
    This administration remains confident that Yucca Mountain 
is the best location for the United States--for a permanent 
geologic repository. And getting that facility licensed and 
opened remains a top priority. Whether we recycle or not, we 
must have Yucca Mountain. But the capacity of Yucca Mountain, 
as currently configured, will be oversubscribed by 2010. If 
nuclear power remains only at 20 percent for the balance of 
this century, we will have to build the equivalent of nine 
Yucca Mountains to contain once-through spent fuel.
    The administration believes----
    Senator Domenici. Would you make that statement again?
    Mr. Sell. If we continue to have nuclear generation at 20 
percent for the balance of this century, because of our once-
through spent-fuel policy, we will have to build the equivalent 
of nine Yucca Mountains.
    The administration believes that the wiser course is to 
recycle the used fuel coming out of the reactors, reducing its 
quantity and its radiotoxicity so that only one Yucca Mountain 
will be required for the balance of this century.
    So, what exactly is, then, GNEP? GNEP really is----
    Senator Domenici. Can I interrupt you?
    Mr. Sell. Yes, sir.
    Senator Domenici. And that one Yucca Mountain, under that 
scenario, would not be filled with the kind of waste we plan on 
putting in it now, right?
    Mr. Sell. It would be filled--we still have a significant 
amount of Defense waste, in Senator Murray's home State, in 
Senator Craig's home State, that will go to Yucca Mountain. And 
there----
    Senator Domenici. I'm speaking of the domestic side.
    Mr. Sell. And on the commercial spent fuel, we believe that 
up to 90 percent of commercial spent fuel could be recycled 
before going to Yucca Mountain.
    Senator Domenici. Which means it would be a different spent 
fuel.
    Mr. Sell. It would be--it would be in a condition with a 
very low--with a peak dose occurring in year one thousand 
versus year one million. It would be in a more stable glass 
form. And it's the radiotoxicity of the waste which really 
drives capacity size. And by reducing the radiotoxicity, you 
could fill Yucca Mountain with this glacious stable waste. And 
that would--we think, would be enough for this century.
    Senator Domenici. Excuse me for interrupting. Thank you.
    Mr. Sell. GNEP is really about identifying the policies, 
developing the technologies, and building the international 
regimes that would manage and promote such a growth in nuclear 
generation in a way that enhances our waste management and 
nonproliferation objectives.
    The program and its full detail is laid out in my prepared 
statement. But I would like to focus on a few of the key 
engineering and development efforts that are key to GNEP's 
success.
    First, the Department of Energy seeks to greatly accelerate 
its work in the demonstration of advanced recycling. This 
effort builds on the Advanced Fuel Cycle Initiative initiated 
by this--or by Congress, and specifically this committee, 
several years ago. We have developed, in the laboratory, 
recycling technology that does not separate plutonium like the 
current reprocessing technologies that are used around the 
globe. Rather, it keeps the actinides together, including 
plutonium, so that they can be made into fuel to be consumed in 
fast reactors that will also produce electricity. By not 
separating plutonium and building in the most advanced 
safeguard technologies, recycling can be done in a way that 
greatly reduces proliferation concerns.
    Another key objective of GNEP would be to demonstrate, at 
engineering scale, an advanced burner reactor that can be used 
to consume plutonium and other actinides, extract the energy 
potential out of recycled fuel, reducing the radiotoxicity of 
the waste in repeating cycles so that the waste that comes out 
of the reactor requires dramatically less geologic repository 
space.
    These technologies come together in the reliable fuel 
services framework. GNEP will build and strengthen a reliable 
international fuel services consortium under which fuel 
supplier nations would choose to operate both nuclear power 
plants and fuel production and handling facilities while 
providing reliable fuel services to user nations that choose to 
only operate nuclear power plants. This international 
consortium is a critical component of the nonproliferation 
benefits of the GNEP initiative.
    The notion is as indicated on the first chart over here--in 
exchange for assured fuel supply, on attractive commercial 
terms, user nations that are interested in bringing the 
benefits of nuclear power to their economies would suspend any 
investments in enrichment and recycling. Under the Non-
Proliferation Treaty, they have a right to do that. They have a 
sovereign right. And what we are trying to provide is 
attractive commercial incentives that would discourage them 
from acting on those rights.
    There are two other key elements of GNEP, from a technology 
development standpoint. We would hope to work in partnership 
with other nations to develop small proliferation-resistant, 
perhaps modular or factory-built reactors that are appropriate 
for the grids of the developing world. And, in fact, many of 
the technologies, Senator Craig, being developed as part of the 
next-generation nuclear plant are appropriate--particularly the 
gas reactor technology--are appropriate candidates for these 
types of small-scale reactors.
    And, in all cases, we will work to develop and incorporate 
in the most advanced safeguards technologies and ensure and 
emphasize best practices for handling of nuclear materials 
worldwide.
    So, how do we hope to begin? In fiscal year 2006 and 2007, 
the Department proposes to concentrate its efforts on 
technology development to support a 2008 decision on whether to 
proceed with these demonstrations. In general terms, our $250 
million request for 2007 funding is to initiate work on 
separations and advanced fuels technology development, 
transmutation engineering, systems analyses, and planning 
functions to support the demonstration of a UREX+ recycling 
plant and to support, over a 10-year period, the demonstration 
of an advanced burner reactor.
    In conclusion, we need to pursue all energy technologies to 
address the anticipated growth in demand for energy. But, 
clearly, the growth of nuclear energy is vitally important for 
the United States and for the world.
    Our country can choose to continue down the current path, 
or we can lead the transformation to a new, safer, and more 
secure approach to nuclear energy, an approach that brings the 
benefits of nuclear energy to the world while reducing 
vulnerabilities from proliferation and from nuclear waste. We 
believe that we are in a stronger position to shape the future 
if we are part of it and if we are leading it. And, in many 
respects as it relates to the fuel cycle, the United States has 
yielded our leadership position over the last 30 years. We 
think we need to reclaim it.
    Challenges remain in demonstrating the GNEP technologies. 
But without GNEP, there will be more plutonium throughout the 
world for generations to come. There will be more spent fuel. 
There will be greater proliferation risk. There will be more 
greenhouse gases emitted into the environment, and less energy 
here at home and abroad. The Global Nuclear Energy Partnership 
is not a silver bullet, but it is part of a broad strategy, 
that, when combined with advancements in renewables, clean 
coal, and other technology developments, can, and will, make a 
difference in the security, environmental, and energy 
challenges that we face.

                           PREPARED STATEMENT

    I ask, and I seek, the committee's support of this 
initiative. I look forward to your questions. And I look 
forward to working with you as the year progresses.
    I'm pleased to take any questions you have.
    [The statement follows:]

                  Prepared Statement of Hon. Clay Sell

    Mr. Chairman, Senator Reid, and members of the subcommittee, it is 
a pleasure to be here today to discuss the Department of Energy's 
fiscal year 2007 budget request of $250 million, to begin investments 
in the Global Nuclear Energy Partnership (GNEP). This new initiative, 
which is part of President Bush's Advanced Energy Initiative, is based 
on a simple principle: that energy and security can go hand in hand.
    It is a comprehensive strategy that would lay the foundation for 
expanded use of nuclear energy in the United States and the world by 
demonstrating and deploying new technologies that recycle nuclear fuel, 
significantly reduce waste, and address proliferation concerns. GNEP 
seeks to encourage the future leasing of fuel from fuel cycle states in 
a way that allows new states to enjoy the benefits of abundant sources 
of clean, safe nuclear energy in exchange for their commitment to forgo 
enrichment and reprocessing activities, to help alleviate proliferation 
concerns.
    The Department of Energy recently estimated that the global demand 
for energy may increase as much as 50 percent by 2025, with more than 
half of that growth coming from the world's emerging economies. 
Specifically, regarding electricity, the growth is projected to be 
particularly steep, increasing over 75 percent over the next two 
decades. To begin addressing that challenge today, the President has 
stated a policy goal that includes world-wide expansion of nuclear 
power.
    The reasons for this are clear. Nuclear power is a mature 
technology of significant potential to provide large amounts of 
emissions free base load power. Benefits from nuclear power include the 
abatement of greenhouse gas emissions, air pollution, and energy 
diversity. Other nations have reached a similar conclusion. With 24 new 
nuclear plants under construction world wide and additional plants 
planned or under consideration, it is important that nuclear energy 
expand in a way that supports safety, security, and the environment.
    All of these factors point to the need for a widespread expansion 
in the use of nuclear energy. To encourage and support such an 
expansion, the Department is advocating a new approach to the fuel 
cycle which we believe will significantly enhance our management of 
used nuclear fuel. This approach should allow us to make more efficient 
use of our uranium resources. Based on technological advancements that 
would be made through GNEP, the volume and radiotoxicity of waste 
requiring permanent disposal will be greatly reduced, delaying the need 
for an additional repository through the end of the century.
    To meet the goals of GNEP, the Department has developed a broad 
implementation strategy comprised of seven elements.
    First, we must sustain and expand the use of nuclear power in the 
United States. Action is needed to ensure that there are successor 
plants to those that supply nearly 20 percent of our electricity. 
Efficiency gains to existing reactors over the past decade have added 
the equivalent of 25 additional reactors to the grid, but such gains 
are approaching a limit. We must build on advances made by the 
President and Congress to stimulate new nuclear plant construction.
    In 2002, the administration announced the Nuclear Power 2010 
program, a cost-shared initiative with industry aimed at demonstrating 
the streamlined regulations for siting and constructing new nuclear 
plants. Much progress has been made since this program was first 
announced and today the Department is sponsoring two demonstrations 
aimed at submitting and obtaining approval of the first combined 
Construction and Operating License (COL) applications.
    DOE is currently working with two consortia of nuclear generating 
companies and vendors to prepare and submit these COL applications to 
the NRC by 2007 and 2008, respectively. This, together with the 
incentives enacted through the Energy Policy Act of 2005 (EPACT 2005) 
will enable generating companies to proceed with new nuclear plant 
projects.
    The Department is responsible for implementing the Standby Support 
for Certain Nuclear Plant Delays provisions of EPACT, which is a form 
of Federal risk insurance to encourage investment in advanced nuclear 
power facilities by providing coverage for certain costs resulting from 
certain regulatory or litigation delays. Additionally, EPACT 2005 
contains provisions for production tax credits for advanced nuclear 
facilities, and a loan guarantee program for low-emission energy 
production technologies, such as nuclear power plants. We are confident 
we will see new plants under construction within the next 10 years.
    Second, we must address the issue of nuclear waste. A geologic 
repository is a necessity under all fuel management scenarios, and the 
2007 budget request provides $544.5 million to maintain steady progress 
toward opening the Yucca Mountain repository.
    Under GNEP, commercial spent nuclear fuel would be recycled so that 
transuranic elements would be consumed, not disposed of as waste. 
Residual waste fission products would be reconfigured for disposal at a 
geologic repository. In addition, direct disposal will be the only 
option for a small portion of older commercial spent fuel and certain 
specialized fuels for which separations processes have not been 
developed.
    GNEP would provide three improvements to spent fuel disposal at a 
repository by significantly reducing the volume of nuclear waste, 
enhancing thermal management by reducing the waste form heat load, and 
reducing the amount of long-lived radionuclides requiring disposal 
eliminating the need for an additional repository through the end of 
the century.
    Third, we propose to demonstrate recycling technology that would 
enhance the proliferation-resistance of the fuel cycle compared to 
existing reprocessing technologies called Plutonium-Uranium Extraction 
or PUREX. To accomplish this, the Department would accelerate through 
the Office of Nuclear Energy, Science and Technology's Advanced Fuel 
Cycle Initiative (AFCI), the development, demonstration, and deployment 
of new technologies to recycle spent fuel--these are technologies that 
would not result in separated plutonium--a key proliferation concern 
presented by current generation reprocessing technologies. Moreover, 
this technology would only be deployed in partnership with other fuel 
supplier nations.
    The AFCI program legislated by the Congress has over the years 
identified promising advanced nuclear technology options that are 
sufficiently developed to allow for a demonstration program to proceed. 
Acting now will enable us to help shape the global fuel cycle and 
prepare to accommodate growth in emission-free nuclear power.
    In support of this effort, the United States would propose to work 
with international partners to conduct an engineering-scale 
demonstration of advanced recycling technologies (e.g., a process 
called Uranium Extraction Plus or UREX+), that would separate the 
usable components in used commercial fuel from its waste components, 
without separating pure plutonium.
    Fourth, the United States would develop and demonstrate Advanced 
Burner Reactors (or ABRs). These ``fast neutron'' reactors would be 
designed to consume transuranic elements in used fuel from nuclear 
power plants, avoiding the need to accommodate this radioactive, 
radiotoxic, and heat-producing material in a geologic repository for 
hundreds of thousands of years while it decays. The Department would 
also propose a new facility that could potentially serve the fuel 
testing needs of the Nation for the next 50 years, and be used to 
develop and test the fuels for the advanced burner reactor made from 
the transuranic product from the UREX+ process.
    Fifth, GNEP would build and strengthen a reliable international 
fuel services consortium of nations with advanced nuclear technologies 
to enable developing nations to acquire nuclear energy while minimizing 
nuclear risk. Under a cradle-to-grave fuel leasing approach, fuel 
supplier nations would provide fresh fuel to conventional nuclear power 
plants, including small scale reactors, located in user nations that 
agree to refrain from enrichment and reprocessing.
    Used fuel would then be returned to the fuel supplier nations and 
recycled using a process that does not result in separated plutonium. 
The recycled fuel would then be used in an ABR in fuel supplier 
nations. Arrangements would be available to assure secure supply to 
user nations. Such an approach would allow user nations to receive the 
benefit of having a reliable supply of reactor fuel without having to 
make the significant infrastructure investments required for enriching, 
recycling and disposal facilities.
    This approach builds on and goes beyond current International 
Atomic Energy Agency (IAEA) obligations--user nations would consent to 
refrain from enrichment and reprocessing for an agreed period, based on 
economic interest. States choosing to stay outside the GNEP framework 
and develop their own fuel cycle facilities would receive increased 
scrutiny. We recognize that there are responsible states that have 
partial fuel cycles, that do not fit the basic conceptual model, but 
whose interests can be accommodated in the GNEP framework.
    Sixth, the United States would work with the international 
community to pursue development and deployment of small-scale reactors 
designed to be cost-effective, inherently secure and well-suited to 
conditions in developing nations. The United States would also 
encourage developing and deploying a small scale reactor that utilizes 
the same nuclear fuel for the lifetime of the reactor, eliminating the 
need for fuel replacement. As world population increases by 3 billion 
people by 2050, energy demands and world cities will expand, making it 
all the more important to provide the option of meeting some of that 
increased energy demand without increased greenhouse gas emissions or 
pollution.
    Finally, under GNEP, an international safeguards program is an 
integral part of the global expansion of nuclear energy and the 
development of future fuel cycle technologies with enhanced 
proliferation-resistance. In order for the IAEA to effectively and 
efficiently monitor and verify nuclear materials, the United States 
would propose to design advanced safeguards approaches directly into 
the planning and building of new, advanced nuclear facilities and 
small-scale reactors. Over the next year, we will work with other 
elements of the Department to establish GNEP, paying special attention 
to developing advanced safeguards and developing the parameters for 
international cooperation. We will also continue to work closely with 
IAEA and our international partners to ensure that civilian nuclear 
facilities are used only for peaceful purposes.
    The Department has proposed $250 million in the fiscal year 2007 
budget as an initial step of a plan to accelerate the development of 
technology as part of GNEP. With these funds, the Department would 
focus its AFCI research and development on preparing for an 
engineering-scale demonstration of the most promising recycling 
technologies, such as the UREX+ separations technology, advanced burner 
reactors and an advanced fuel cycle facility, used to fabricate and 
test the fuels for advanced burner reactors.
    This request represents the Department's best assessment of the 
GNEP program technical development priorities and sequencing toward 
demonstration facilities. The fiscal year 2007 request shows that 
significant growth in funding over the fiscal year 2007 request is 
necessary for the planning of the three integrated demonstration 
facilities.
    In fiscal year 2006, mission need would be established for these 
facilities and the Department would begin work on an Environmental 
Impact Statement for the three facilities, which would continue through 
fiscal year 2007. In parallel with this, in both fiscal year 2006 and 
fiscal year 2007, the Department would continue research and 
development to refine the UREX+ technology, begin work on a conceptual 
design report, acquisition strategy, functions and operating 
requirements and other analyses leading to the development of baseline 
costs and schedules for the UREX+ demonstration, the advanced burner 
reactor, and the advanced fuel cycle facility by the end of 2007.
    The Department would propose to invest $25 million on the advanced 
burner reactor technology in fiscal year 2007, to complete pre-
conceptual design and complete a series of extensive studies to 
establish cost and schedule baselines and determine the scope, safety, 
and health risks associated with fuel design, siting and acquisition 
options. Last month, the United States signed a systems arrangement 
agreement with France's atomic energy commission and the Japan Atomic 
Energy Agency to cooperate on the development of sodium fast reactors. 
It is anticipated that this agreement will establish the foundation for 
further collaborations on fast reactors with these countries, and 
others that are expected to join the agreement in the future, in 
support of GNEP.
    The Department's goal is to continue research, development and 
experiments on the key technologies, complete technical and economic 
feasibility studies and develop a more detailed costs and schedules for 
these demonstration facilities to inform decisions by early 2008 on 
whether to proceed to the next phase, building these demonstration 
facilities. Appropriate pilot scale research and development for the 
demonstration projects would proceed to develop an improved planning 
basis for these facilities.
    More accurate estimates of the demonstration phase will be 
available as the conceptual design phase is completed. As noted 
earlier, the Department has already started to engage other countries 
and we will be looking for a sizeable portion of GNEP costs to be 
shared by our partners and industry starting in fiscal year 2008.
    In summary, nuclear energy by itself is not a silver bullet for 
energy supply, in the world or for the United States and we need all 
technologies to address the anticipated growth in demand for energy. 
Regardless of the steps the United States takes, nuclear energy is 
expected to continue to expand around the globe.
    We can continue down the same path that we have been on for the 
last 30 years or we can lead a transformation to a new, safer, and more 
secure approach to nuclear energy, an approach that brings the benefits 
of nuclear energy to the world while reducing vulnerabilities from 
proliferation and nuclear waste. We are in a much stronger position to 
shape the nuclear future if we are part of it and hence, GNEP. GNEP is 
a program that that looks at the energy challenges of today and 
tomorrow and envisions a safer and more secure future, encouraging 
cooperation between nations to permit peaceful expansion of nuclear 
technology while helping to address the challenges of energy supply, 
proliferation, and global climate change.
    Thank you. This concludes my formal statement. I would be pleased 
to answer any questions you may have at this time.

                    RECYCLING SPENT FUEL TECHNOLOGY

    Senator Domenici. Thank you very much, Mr. Secretary. 
That's a very succinct and understandable presentation.
    We're going to have to learn to use some words that I'm 
going to start with today and see if I can get them fixed in my 
own mind.
    Europe recycles or reprocesses now, do they not?
    Mr. Sell. That's correct.
    Senator Domenici. And they use a rather well known process 
called PUREX?
    Mr. Sell. They do.
    Senator Domenici. Tell me--or let me ask. That process--
we're going to go one step further, or one step better--if this 
program is adopted and carried out, because the PUREX process 
does not--separates out plutonium in a liquid form as it 
proceeds through its process. Is that correct?
    Mr. Sell. Yes, that is correct.
    Senator Domenici. Therefore, it is--go ahead and get some 
water--therefore, it has some proliferation problems that are 
pretty obvious, is that not correct?
    Mr. Sell. That's correct.
    Senator Domenici. Now, the President, in his proposal, has 
chosen to go to a next-technology, which is UREX+. And I think 
you've stated to us the difference, but let me just put it in 
the context of the difference between what's going in the world 
now and what we would be doing. In our process, as the--as it 
proceeded, what would come out when you run the spent fuel 
through would not be pure plutonium, it would never separate 
out. It would come out in a compound attached, and never be 
liquid and never be separate. Is that correct?
    Mr. Sell. That's correct.
    Senator Domenici. And then, that--what you get as a result 
of that is reused--is that correct?--and reburned, so that you 
make more energy and use up the energy that we were going to 
throw away when we were going to lock it up in Yucca Mountain?
    Mr. Sell. The product streams out of the UREX+ process 
produce uranium, they produce an actinide stream, which is 
plutonium bound with the other actinides, and then a fission 
product stream. The fission product stream would be disposed 
of. The actinides would be made into fuel that would be burned 
in the advanced burner reactor. And the uranium could be either 
re-enriched for use in a lightwater reactor, or it could be 
disposed of as low-level waste.
    Senator Domenici. Now, where are these processes, at this 
point? And what will the $250-plus-million that you're asking 
for from this committee be used for?
    Mr. Sell. The UREX+ technology has been demonstrated at a 
laboratory scale.
    Senator Domenici. Where?
    Mr. Sell. At Argonne National Lab.
    Senator Domenici. Right.
    Mr. Sell. And it is our intent--and we think it is 
important--to move to demonstrate that technology on an 
engineering scale. It is our hope, and it is our expectation, 
that--in order for an approach like GNEP to work, that these 
technologies need to be commercialized. But there is 
significant engineering and development work that needs to be 
done. And so, a great majority of the amount of money that we 
are requesting for fiscal year 2007 would be used to support 
the design work, the environmental work, and other development 
work that needs to be done to support a decision to construct a 
demonstration facility in 2008.
    And if I can go back, you mentioned PUREX. You know, PUREX 
was actually developed here in the United States----
    Senator Domenici. Correct.
    Mr. Sell [continuing]. As part of our weapons program, so 
that we could produce plutonium for use in nuclear weapons. And 
it was--we used it here in the United States on the commercial 
side, and it was in the mid-1970's that we decided, for 
proliferation reasons--and I think perhaps correctly, we 
decided that we should stop doing that. And we hoped, when we 
made that decision--when President Carter made that decision in 
1977, that the rest of the world would follow. But they did 
not. And the rest of the world has deployed PUREX on a 
commercial scale, resulting in 250 metric tons of plutonium 
that is now in commerce around the world today. And that 
presents, in our judgment, a significant generational 
proliferation concern. And we want to develop technologies that 
will stop the production of plutonium, and also technologies 
that can be used to burn down plutonium stockpiles, plutonium 
inventories, over the coming decades.
    Senator Domenici. Thank you for that explanation. That--I 
failed to mention, that is our technology. We did do it. We did 
use it. I mean, it was commercialized.
    I'm going to yield now to Senator Craig. And the vote's not 
yet up, incidentally.
    Senator Craig. Mr. Chairman, let me go for a few moments. 
But my guess is that we probably ought to get out of here in 5, 
hadn't we, if we're going to----
    Senator Domenici. Go to our meeting?
    Senator Craig [continuing]. Catch that vote?
    Senator Domenici. Yes. Is it up now, the vote?
    Senator Craig. The vote is on now.
    Senator Domenici. I'm very sorry. I didn't see it.
    Senator Craig. Yeah, the vote is----
    Senator Domenici. I guess we should.
    Senator Craig [continuing]. The vote is on now.
    Senator Domenici. Senator, why don't you proceed, and 
then--Senator Allard, do you want to go vote and come back?
    Senator Allard. Yeah, that's what my plan would be.
    Senator Domenici. Please do that.
    Senator Allard. We have two votes on, Mr. Chairman.
    Senator Domenici. All right. We'll just remind the 
Secretary to wait just a while, while we have two votes. He's 
going to come back and complete the meeting. I'm going to wait 
until the last minute here.

                DEPARTMENT'S GNEP TECHNOLOGY OBJECTIVES

    Senator Craig. Okay.
    Mr. Secretary, in GNEP, the initial phase that you're 
talking about, the engineering scale demonstration phase, 
proliferation-resistant spent-fuel processing, how long--you 
said construction by 2008. When do you think that plays out? 
And we're looking at a price tag for totality of that of 
upwards of----
    Mr. Sell. The--just for the UREX+ demonstration facility, 
we would anticipate--even though it would be sized somewhere 
probably in the 10 to 25 metric-ton-per-year size, so 
relatively small--but, on order, we would expect that 
facility--our best estimates on the costs would be between $700 
million and $1.5 billion. And we would hope to begin 
construction in 2008, and have construction complete 3 to 4 
years thereafter, to go into operations.
    Senator Craig. And then the next phase is what, the 
advanced fuel cycle?
    Mr. Sell. The next phase would be the--within 10 years, we 
would like to build a demonstration advanced burner reactor.
    Senator Craig. Burner reactor.
    Mr. Sell. There are a number of potential technologies that 
could be used for that. And we want to do a substantial amount 
of work in conjunction with our international partners, in 
determining the appropriate technology. But we would hope to 
build and--to construct and operate that within 10 years.
    The key R&D challenge--the biggest R&D challenge--we've 
done UREX+ in the lab. We've built, certainly, fast reactors 
that can be modified for a burner role. The biggest challenge 
is in developing and qualifying an actinide-based fuel. And so, 
that will require significant laboratory work to develop that 
fuel.
    As you know, today we are doing small-scale actinide fuel 
tests, in partnership with France, in their fast reactor, as 
well as in partnership with Japan. But that's going to require 
a significant amount of development work over the next 5 to 10 
years.
    Senator Craig. Then in this whole concept, the exportable 
modular reactor is the last phase--is that where the effort to 
contain--to offer up, but contain----
    Mr. Sell. Under Secretary Bob Joseph and I, we went to a 
number of capitals in the United Kingdom, France--we saw Dr. El 
Baradei in Vienna--Moscow, Beijing, and Tokyo, to talk about 
this idea. And the ideas were well received, and the objectives 
of GNEP were well received. But there was a tremendous amount 
of interest in not just those countries, but other counties--
South Korea and others, Canada perhaps--joining together with 
us in developing advanced reactors for deployment in the 
developing world.
    And so, that is something that we would seek to move, in 
parallel with these other technology development efforts. And 
it is something that we would hope to have significant 
international participation in, as well.
    Senator Craig. Okay. I suspect, Mr. Chairman, that we ought 
to----
    Senator Domenici. Could I just follow up on your very last 
one, and you wait on it?
    Senator Craig. Yes.
    Senator Domenici. The one thing that I keep hearing--and I 
want to stress it a little bit, in context of Larry's last 
question--we talk about the internationalization of this issue 
and the partnership. And I hope that as you talk about the 
costs for these various demonstrations and moving from a small 
one to the next level, that you are talking about the 
possibility, or even the probability, that we can get our 
partnership countries to come into that ball game, too, of 
helping develop those kinds of experimental projects. Because 
they will be costly. I'm not sitting up here saying I'm against 
things of this type because they're costly. I'm excited that 
America might be a considering a major new program of this 
type. This is what we used to be about; but we've gotten so 
fearful, we won't do anything like this. So, I'm on board. But 
it seems to me the benefits are not going to be just to us, 
right?
    Mr. Sell. That's correct. There is--when we think about it 
in the international context, I mean, on the first order, as I 
said earlier, we've--in some ways, we have yielded our 
leadership role in the fuel cycle. The French, the British, the 
Japanese, and the Russians have gone on without us for 30 
years. And they have significant capabilities--in some cases, 
that are better than ours.
    Senator Domenici. Right.
    Mr. Sell. And so, we are seeking to work in partnership 
with them to accelerate, to take advantage of the advances we 
have each made to accelerate the development, the 
demonstration, and the deployment of these technologies as 
quickly as possible. So, they bring talent and expertise to the 
table.
    But one of the other things that has been quite encouraging 
is that they also seek full partnership, which means in-kind 
contributions, and, we would expect, significant financial 
contributions. That is--we really seek to pursue these 
technologies in partnership. And that is, in addition to the 
benefits that I've laid out, we think it also has other 
significant benefits, in that it will allow us to accelerate, 
working in partnership with these other countries, the phase-
out of the current PUREX technologies that are used around the 
world today, and the phase-in of more advanced proliferation-
resistant recycling technologies.
    Senator Domenici. That's why I asked. It would seem to me 
that the benefits are for them, too.
    Mr. Sell. Indeed.
    Senator Domenici. Because the benefit to the world is that 
we would--we might all be engaged in the most nonproliferation-
active formulation of machinery, rather than what we've got 
now. And they ought to be beneficiaries, and we ought to help 
pay for it.
    Mr. Sell. Mr. Chairman, we really believe that, through 
these technological advancements, we can make it commercially 
attractive to recover the economic value of spent fuel. And 
once we can do that, then that allows a international fuel 
leasing regime to work.
    Senator Domenici. I'm going to just close by saying: When 
we talk about the dollar numbers, we have never talked about 
how much value added there is going to be in this process. That 
might be the subject matter of maybe your doing some research 
and submitting to us: If this works, what is all that extra 
energy that we're going to have for sale? What is its value 
going to be? Because it's going to be somewhere, isn't it?
    Mr. Sell. There will be a tremendous value of the 
electricity produced, and a tremendous savings by avoiding the 
cost of building nine Yucca Mountains over the course of the 
century. And, quite frankly, the engineering and the packaging 
required to dispose of hot spent fuel is much greater than 
that, that would be required to dispose of the more stable 
glacious waste form.
    Senator Domenici. We'd get a whole lot more fuel to burn.
    Mr. Sell. That's correct.
    Senator Domenici. That's got a value added that this 
process is going to yield, right?
    Mr. Sell. That's correct. And right now----
    Senator Domenici. That would be very, very large. Huge 
amount.
    Mr. Sell. It's a significant amount. And right now spent 
fuel that is headed towards Yucca Mountain still has over 90 
percent of its energy value. And by developing recycling 
technologies, we think we can recover a great portion of that 
energy value and produce electricity with it.
    Senator Domenici. We're going to be in recess. The 
Secretary's going to wait. Probably going to finish at 4 
o'clock, or a little after 4 o'clock, if that's all right with 
you. But I won't be coming back, Mr. Secretary. But the Senator 
from Colorado will preside.
    Thank you very much.
    Mr. Sell. Thank you.
    Senator Allard [presiding]. I'll call the committee to 
order. And, just for the record, I'm Senator Allard that's now 
presiding, at the request of the chairman, Senator Domenici. 
And I'd like to, again, welcome you, Mr. Secretary.
    We were starting into the question part of the committee. I 
left early to go down and vote, and have now returned to wrap 
up our deliberations here on the committee.

         GLOBAL NUCLEAR ENERGY PARTNERSHIP PROLIFERATION RISKS

    I've had an opportunity to go and tour facilities in 
France, as well as in England, and what they do to reprocess 
nuclear fuel, which you indicated in your own remarks is--that 
it is technology that we had here in the United States, and 
then they adopted that technology. And, frankly, I am excited 
about the prospects of moving to UREX+ instead of PUREX. They 
use the PUREX technology. Am I correct on that?
    Mr. Sell. That's correct.
    Senator Allard. And so, I'm excited about the UREX+ policy. 
And it's my understanding, also, I just want to make sure 
that's on the record--is that it does take away the 
proliferation risks completely if we process that, or is there 
still some proliferation risk?
    Mr. Sell. I think, from a public policy standpoint, Senator 
Allard, we must always be mindful of the proliferation risk 
anytime we are dealing with nuclear materials and nuclear 
technologies. And so, I would be reluctant to suggest that any 
technology removes all risk, but we----
    Senator Allard. But this lessens the risk, then, is that--
--
    Mr. Sell. But the----
    Senator Allard [continuing]. The plan?
    Mr. Sell [continuing]. UREX+ technology prevents--it 
increases, substantially, the proliferation resistance of the 
material, to a point where this Government should be quite 
comfortable. And we would also build in the most sophisticated 
safeguards technologies into the UREX+ plant. So, not only do 
we have a much more proliferation-resistant stream of material 
coming out, but it would have the most advanced safeguards, and 
all of these plants would only be built, under our conception, 
in existing fuel-cycle states. So, we think this offers 
substantial nonproliferation benefits.
    And there are two other nonproliferation benefits. By 
developing and deploying advanced burner reactors, and 
developing and deploying UREX+, we can begin to slow the 
accumulation worldwide of inventories of separated civilian 
plutonium, and we can build the capability that allows us to 
burn down and dispose of that plutonium. And then, thirdly, we 
can develop, we believe, an international regime, or we would 
seek to develop an international regime, that would discourage 
the investment and construction of enrichment and recycling 
facilities in countries that do not have them today.
    Senator Allard. Now----
    Mr. Sell. So, the----
    Senator Allard. Go ahead.
    Mr. Sell [continuing]. So, in sum, we think there are--from 
a systems standpoint, there are substantial nonproliferation 
benefits, and substantial nonproliferation enhancements, that 
would flow from the GNEP proposal.
    Senator Allard. And I understand that right now, under 
UREX+ technology, we are working with two other countries. And 
that's France and Japan. Is that correct?
    Mr. Sell. We have, through existing relationships that the 
United States has, we have been conducting tests and 
experiments and development work through funding provided by 
this committee. And we would seek to broaden the work to also 
include Russia, the United Kingdom, if they choose, Japan, and 
China. Those are the nations where well in excess--or around 70 
percent of the world's nuclear reactors exist. Those are the 
nuclear economies of a sufficient scale to justify significant 
investments in advanced fuel-cycle technologies, and we would 
look to work with those countries in developing these 
technologies on an accelerated timescale.

             INTERNATIONAL INTEREST IN ENRICHMENT SERVICES

    Senator Allard. Now, Iran is on everybody's mind, because 
they've decided to build and operate a uranium enrichment 
plant, in direct violation, actually, of the Nuclear 
Proliferation Treaty. And with this capability, they could not 
only produce fuel for civilian purposes, but also weapons 
activity, as well. And you have a plan that calls for a uranium 
fuel leasing plan that would provide fuel to countries 
interested in developing a civilian nuclear program.
    Do you believe that other countries--we've already kind 
of--sounds like you've already begun to kind of form a 
coalition, but do you believe that these countries would be 
willing to contract for enrichment services instead of 
developing their own domestic capabilities?
    Mr. Sell. We do, Senator Allard. And this is occurring now, 
on a smaller scale, around the globe. Many countries with 
significant nuclear power investments, like South Korea, have 
not made their own investments in enrichment and recycling. And 
the hope is--I mean, really, from a--from a world energy supply 
standpoint, and if we really want to address environmental 
concerns, pollution concerns with nuclear power, the world's 
going to need a significant expansion of nuclear power. And 
that's going to occur in many countries.
    And we think a system could work, where states that have 
already made, or have economies that would justify significant 
investments in enrichment and reprocessing technologies, that 
we could lease fuel. So, a country like the United States could 
lease fuel to a country. And that fuel would then--would be 
burned in a reactor, but then taken back to be recycled and 
disposed of in the fuel-cycle country. We think that can be 
offered on attractive--we would propose that we could offer 
that on attractive commercial terms. So, there's a real 
incentive for a country, who is only interested in bringing the 
benefits of nuclear power to their economy, of leasing the 
fuel. And only those countries that are really seeking to--we 
would suggest that countries that chose not to go the more 
economic route, and, instead, choose to make investments in 
their own enrichment or recycling--or reprocessing capability, 
it would suggest that perhaps they have other motivations.
    Senator Allard. And so, that's basically your plan. You're 
going to try and incentivize them with some economic 
alternatives. You hope that they'll not be able to refuse, 
because we would then have the original reprocessing plants 
constructed here. We'd do that them for them at a reasonable 
price, so that they'll use our facilities.
    Mr. Sell. And it wouldn't just be here. It would also be in 
France or Japan or China or elsewhere. And it's--that diversity 
of suppliers to potential consumer nations would also give them 
the security, which I think countries would seek, in having a 
diversity of enrichment services suppliers.
    Senator Allard. And have you gotten any firm commitments 
from any of the countries willing to come on with this program 
at this point? Or are you aware of real strong support for it? 
I'll put it that way.
    Mr. Sell. When--a few weeks ago, I, with Under Secretary 
Bob Joseph from the State Department, traveled to London and to 
Paris, to Moscow, Beijing, Tokyo, and we also stopped to see 
Dr. El Baradei at the International Atomic Energy Agency, in 
Vienna. And we laid out our ideas and sought their 
consultation. And there was broad agreement on the objectives 
that the world needed a dramatic increase in nuclear power, 
that we should work together to develop advanced recycling 
technologies that did not separate plutonium, that we should do 
this in international partnership, and that we should work to 
facilitate an international regime of fuel leasing so that we 
could discourage the proliferation of enrichment and 
reprocessing technologies.
    There was broad agreement on all of those issues, and a 
great interest expressed by those governments in continuing to 
discuss with us how we could further the partnership.

     NATIONAL NUCLEAR SECURITY ADMINISTRATION AND STATE DEPARTMENT 
                         PARTICIPATION IN GNEP

    Senator Allard. Now, the GNEP program is a very 
comprehensive research and development program that includes 
work on advanced reactor technology, fuel recycling, waste 
reduction, and global nuclear fuel services, small reactors, 
and enhanced nuclear safeguards. And when we look at the 
budget, it seems to focus on large-scale engineering 
demonstrations of fuel recycling capability, with minimal 
involvement outside the Office of Nuclear Energy. And it's 
unclear, at least to me, from this budget, when the Department 
will undertake research, reliable fuel services, small-scale 
reactors, the enhanced nuclear safeguards, and basic research 
and development that could address a number of concerns related 
to our national security, particularly in the earlier phases of 
the program.
    My question is: Why has the Department elected to minimize 
the direct and immediate engagement of the NNSA and the 
Department of State at the onset of GNEP?
    Mr. Sell. With the greatest level of respect, Senator 
Allard, I have to disagree with the premise of your question. 
The National Nuclear Security Administration has been heavily 
involved, as has the State Department, as have other elements 
of the interagency policy formulating bureaus within the 
administration.
    So, they have been involved. I think we have their--I know 
for a fact we have their strong support in moving forward on 
this.
    There is an emphasis, in our budget request for 2007, on 
moving forward on the first key demonstration facility, which 
is the demonstration of the UREX+. That has been demonstrated 
at a laboratory scale. We think it is important, as quickly as 
possible, to demonstrate it on an engineering scale. And so, 
that does receive a significant portion of our--of the $250 
million budget request for fiscal year 2007.

                MIXED OXIDE (MOX) PROGRAM COST INCREASE

    Senator Allard. I'd like to move on to the MOX Program. 
When I was chairman of the Strategic Subcommittee on Armed 
Services, we had some discussion with the MOX Program, where we 
have the recycling facilities at Savannah, Georgia. And, you 
know, it's--like was mentioned earlier, it's basically American 
technology that's been modified some, perhaps, by both the 
French and the Germans. But it's basically--was originally 
American technology.
    I'm concerned about some reported overruns on the efforts 
down there. The IG did a report that said that cost increases 
may amount to $3.5 billion, where we were planning on $1 
billion in the budget. Can you address that?
    It seems to me we need to have somebody riding herd a 
little closer over the operation down there, and I'm wondering 
if perhaps maybe you could give us some insight on what's 
happening with the MOX facility in Savannah, Georgia.
    Mr. Sell. Several years ago, after our country had made the 
agreement with the Russians to dispose of plutonium, we did 
make a decision to build facilities, MOX fuel fabrication 
facilities, as well as other processing facilities, at the 
Savannah River site. And, early on, it was suggested, at the 
time, that the cost of those facilities would be, in total, 
of--I may not have the numbers exactly right, but, on rough 
order, $2 billion.
    That was not a very good number, obviously. And it is old. 
Commodity prices have increased significantly since that 
estimate was made. There was a failure by the Department and 
its contractor team to fully appreciate the costs that would be 
required to build that French MOX technology here in the United 
States. And there were other problems with the estimate. The 
Department is working to correct those.
    I take seriously your counsel to keep a tighter rein on 
activities down there. But the plutonium disposition program 
remains an important U.S. objective, and we intend to move 
forward and accomplish that in as economically feasible a way 
as possible.
    Senator Allard. Well, I do--I think that is very important. 
And, you know, you indicated cost of commodities was one of the 
factors. What other factors did we have that might have added 
to the cost of it?
    And the rest of this question is: Did we have incentive-
driven--did we have incentive-driven contracts with the 
contractor down there?
    Mr. Sell. We--if I may, I would like to give a more 
complete answer on exactly what--the contract provisions that 
we have. I believe, as a general statement, that the contract 
does have significant incentives in it for contractor 
performance, but I would like to answer--give you a more 
complete answer on the record, if I may.

                    U.S. MIXED OXIDE FACILITY COSTS

    Senator Allard. Yeah, that would be fine.
    Mr. Sell. The other elements of the cost growth--and I--you 
know, part of it was commodity--the increased price of 
commodities. Part of it was simply that the $2 billion number 
was a 2000-year number, not a 2005 number. And there was also a 
failure, quite frankly, of the Department and our contractors 
to fully appreciate how costly it would be to build the French 
technology plant here in the United States. We made assumptions 
that we shouldn't have made, and those are costing us now.
    Senator Allard. What specific assumptions--how did you--I 
mean, where were you wrong in your assumptions? I'm going to 
press you a little bit here.
    Mr. Sell. I will--I can't--you know, unfortunately, I'm not 
prepared, today--or I don't have my mind today, Senator Allard, 
the exact things that we missed on this, but----
    Senator Allard. Maybe you could get a memo to the committee 
on that, and we'll----
    Mr. Sell [continuing]. But we will----
    Senator Allard. Yeah.
    Mr. Sell [continuing]. Follow up, in written detail, on 
that issue, if I may do that.
    [The information follows:]

                    U.S. Mixed Oxide Facility Costs

    The total project cost estimate for the U.S. MOX facility as 
reflected in the fiscal year 2007 budget request is $3.6 billion. 
However, the cost estimate and schedule will be formally validated 
prior to the start of construction as part of the Department's project 
management process, and reported to Congress. The reasons for the cost 
increase are: the 2\1/2\ year delay in the negotiation of the liability 
agreement with Russia resulting in the extension of the MOX 
construction schedule, further extension of the construction schedule 
to conform to the expectation of level funding in the outyears, 
unanticipated complexities in adapting French MOX technology to use 
weapon-grade plutonium, increases in the cost of construction materials 
since the original estimate was made, and the incorporation of more 
stringent regulatory and security requirements into the design of the 
facility. With regard to incentive driven contracts, DOE is negotiating 
multi-tiered performance incentives for the construction and operations 
phases of the MOX Project, which will contain a fee structure to 
control cost growth and schedule slippage.

    Senator Allard. Yeah. We'd appreciate that so that we fully 
understand the issues down there.
    And I'm one that would like to see these things carried in 
a timely manner, because I think when you start running into 
delay problems and accelerated costs, you tend to lose support 
within the Congress. And this is an important program, and I 
hate to lose that support. I----
    Mr. Sell. The----
    Senator Allard. Go ahead.
    Mr. Sell. The delays--you know, even though this--the 
agreement was made to do this many years. It has taken a number 
of years, and--to get the appropriate agreements in place with 
the Russians. And when Secretary Bodman got to the Department, 
about a year ago, and realized that we still did not have the 
agreements that we'd been trying to get with the Russians that 
would allow this project to move forward, he and Secretary Rice 
engaged the Russians, and we were able to make significant 
progress on resolving issues as to liability which had 
prevented--which had really left this project in a stall for 
several years. So, we feel like we have finally made progress 
on that. The Department broke ground, finally, on the facility 
last fall. And we look forward to moving forward with it. But 
it, unfortunately, will be at a higher cost.

                          TRANSPORTATION FUELS

    Senator Allard. Let me move on to our transportation fuels. 
I think we're all quite aware that the transportation sector is 
a huge consumer of energy in this country. And there's some 
concern about the high-temperature reactors that are effective 
in producing hydrogen for transportation. And where are we in 
the efforts by the Department to produce these kind of reactors 
that will allow for the production of hydrogen? Or is it just 
assuming that we're not far along on nuclear hydrogen research 
to--at this point in time, to be funding it? You have dropped--
reduced your 2006 funding levels, and that's what's prompting 
this question.
    Mr. Sell. It is our judgment at the Department that over 
the long term the President's Hydrogen Fuel Initiative that he 
laid out in the--in his State of the Union of 3 years ago, 
offers significant promise for getting our transportation 
sector off of the internal combustion engine and onto 
electricity-based fuel cells. And we are--we have a broad 
program to develop those technologies, the storage 
technologies, the fuel-cell technologies, the automotive 
technologies, as well as the question of: How will we produce 
all of this hydrogen?
    Today, the only economical way to produce hydrogen, or the 
principal economic way of producing it, is through reforming 
natural gas. But we think, in the future, as hydrogen demands 
increase significantly, we can produce it with coal, and we can 
also--and other technologies--and we think hydrogen will be--I 
mean, nuclear hydrogen will be a--nuclear power plants will be 
a significant technology producing hydrogen.
    It is our judgment, I believe--and I will leave my 
statement to be revised by the technical experts--that the most 
promising nuclear technology for producing hydrogen is very 
high-temperature gas reactor. And a technology such as that, I 
believe, was authorized in the Energy Policy Act of 2005. It's 
referred to as the next-generation nuclear plant. And we have 
requested $23 million as part of our fiscal year 2007 budget to 
continue developing that reactor so that it can be 
demonstrated--built and demonstrated on a timescale consistent 
with that called for by the Energy Policy Act.
    We think that technology can still be developed, and is 
moving along consistently with other portions of the Hydrogen 
Fuel Initiative.
    Senator Allard. Well, why was there a reduction in your 
funding level for 2006?
    Mr. Sell. If I may, I--that's another question I'll need 
to----
    Senator Allard. Okay.
    Mr. Sell [continuing]. Take for the record.
    Senator Allard. Very good.
    [The information follows:]

                          Transportation Fuels

    With an appropriation of $40 million in fiscal year 2006 and a 
$23.4 million budget request in fiscal year 2007, the Department has 
the level of funding needed to continue the progress necessary to 
inform a decision in 2011 on whether to proceed with construction of 
the NGNP. With these funds, the Department will continue the graphite 
particle fuels development effort, which is the critical path work for 
determining the feasibility of the technology for efficient electricity 
and hydrogen production. Sample fuel irradiation testing would begin in 
fiscal year 2007 as well as preparation for post-irradiation 
examination of the fuel.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Allard. I don't have any other questions. I have 
another committee meeting I've got to get to. And so, I'm going 
to request that the record remain open until close of business 
Friday for member statements and questions. And I also hope the 
Department will respond to these questions that are left open 
in a timely manner. Most committees I've been a part of have 
asked a response within 10 days. Is that about the time period 
that--if you can get your responses back to us within 10 days, 
we'd appreciate it----
    Mr. Sell. We will do so.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

            Questions Submitted by Senator Pete V. Domenici

    GLOBAL NUCLEAR ENERGY PARTNERSHIP (GNEP) PROLIFERATION CONTROLS

    Question. The cornerstone of the GNEP is the development of a 
proliferation resistant fuel recycling plan that will reduce the amount 
of spent fuel that must be disposed of and recycle the uranium used in 
existing reactors.
    Please explain to the committee what advantages this proposal has 
over existing fuel recycling programs and what steps the Department is 
taking to guard against the proliferation of separated plutonium.
    Answer. Under study for the past 5 years, the Department believes 
that the Uranium Extraction Plus (UREX+) technology is the best known 
and proven. It provides for the group separation of transuranic 
elements (which include plutonium) contained in spent nuclear fuel and, 
therefore, would not result in a separated pure plutonium stream as is 
the case with current reprocessing technology. To impede diversion of 
material, this technology would use state-of-the-art safeguards 
approaches and advanced instrumentation to account for all the material 
used in the process. Incorporated early in the design, the combination 
of safeguards and the separation process ensures that material could 
not be easily diverted without being identified. Finally, an integrated 
set of fuel cycle facilities which include UREX+ would have the 
capability to manufacture fast reactor fuel and use an advanced burner 
reactor for permanent destruction of civilian inventories of pure 
plutonium. By demonstrating and deploying new technologies to recycle 
nuclear fuel, we would minimize waste, and improve our ability to keep 
nuclear technologies and materials out of the hands of terrorists.

                         GNEP--BUDGET SPECIFICS

    Question. The GNEP program builds on the existing Advanced Fuel 
Cycle Initiative and provides $250 million in funding to initiate the 
research and development and to demonstrate the UREX Plus process, an 
advanced burner reactor, and an advanced fuel facility. This effort 
will not be easy and will require the support of our best scientific 
minds at all our national labs. However, this budget is not specific as 
to what activities will be funded and where this research will occur.
    When will we know more about the specifics of the program?
    Answer. The Spent Nuclear Fuel Recycling Program Plan is being 
provided to Congress by the end of May 2006 in response to fiscal year 
2006 EWD Conference Report language and will provide additional 
specifics on the GNEP program. The report focuses on the plans for 
demonstration of the advanced recycling technologies on a scale 
sufficient to evaluate commercialization of the technologies.
    Question. Will you be developing an R&D roadmap and develop a 
division of labor among the labs?
    Answer. The Department has conducted an extensive amount of R&D 
under the Advanced Fuel Cycle Initiative program over the last several 
years to bring advanced technologies for enhancing the efficiency of 
the fuel cycle to a state of readiness for the engineering-scale 
demonstration. As previously discussed, the Department is currently 
preparing the Spent Nuclear Fuel Recycling Program Plan that will 
provide additional information. While Idaho National Laboratory is the 
lead laboratory for the GNEP Technology Demonstration Program, the 
participation by and capabilities of all of DOE's national laboratories 
are critical to the program's success. Nine national laboratories--
Idaho, Argonne, Brookhaven, Lawrence Livermore, Los Alamos, Oak Ridge, 
Pacific Northwest, Savannah River and Sandia--have provided input into 
the Department's development of and vision for GNEP. These nine 
national laboratories are also currently involved in the preparation of 
work scope and funding requirements.
    Question. I understand you will use funding provided in fiscal year 
2006 to begin work on an Environmental Impact Statement for each of the 
three main facilities--where will they be located?
    Answer. The Department has made no decisions with respect to 
locations for the engineering scale demonstrations of the advanced 
recycling technologies. The Department's fiscal year 2006 appropriation 
provided funding to initiate an Environmental Impact Statement (EIS) on 
recycling spent nuclear fuel. In March 2006, the Department initiated 
the National Environmental Policy Act (NEPA) activities with the 
issuance of an Advance Notice of Intent to prepare an EIS. The NEPA 
analyses will inform a decision in fiscal year 2008 as to where the 
integrated recycling demonstration facilities would be located.
    Question. How much will the GNEP program cost to implement and over 
what period of time?
    Answer. A preliminary, order-of-magnitude cost estimate for the 
GNEP initiative ranges from $20 billion to $40 billion. This includes 
the cost of Nuclear Power 2010 and Yucca Mountain over the next 10 
years as well as the cost of demonstrating integrated recycling 
technologies. Previously reported estimates for the cost of bringing 
the three technology demonstration facilities to initial operation 
range from $3 billion to $6 billion over the next 10 years. In 2008, 
the Department will have more refined estimates of the cost and 
schedule to complete the full 20-year demonstration effort. One of the 
primary purposes of the engineering scale technology demonstrations is 
to produce reliable estimates of the total life cycle cost of GNEP.

                        UREX+ RECYCLING PROCESS

    Question. I traveled to France in December and received an update 
on the French spent nuclear fuel recycling program that is built on the 
U.S. developed ``PUREX'' process. The French separate Uranium which 
forms 95 percent of the volume of spent fuel. They also separate 
Plutonium which they recycle in a Mixed Oxide fuel that produces 
additional energy in their fleet of existing Light Water Reactors. I 
understand that although the volume of waste has been significantly 
reduced, the heat load would continue to drive the loading of a final 
repository. The Global Nuclear Energy Partnership initiative proposes 
additional research and development of a ``Uranium Extraction plus 
(UREX+)'' process to address the limitations of the PUREX process.
    How would the UREX+ process address the limitations and provide a 
cost-effective, proliferation resistant alternative?
    Answer. The transuranic product from the UREX+ process is more 
proliferation resistant than the product from current separations 
plants because there is no separated pure plutonium stream. The 
transuranic product provides a significantly higher radiation field 
than purified plutonium, and the TRU mixture is less attractive for 
diversion than pure plutonium.
    A modern commercial UREX+ and fuel fabrication capability would be 
equipped with state-of-the-art monitoring and accountability systems 
specifically designed to prevent unauthorized access and diversion of 
materials. One of the advantages of an engineering scale demonstration 
of the UREX+ technology is the ability to demonstrate these monitoring 
and accountability systems.
    Question. What are the milestones and costs associates with this 
research and development? What are the critical decision points?
    Answer. The milestones and costs for various research and 
demonstration steps, including spent fuel separations process, are 
currently being developed. The Department's current efforts are aimed 
at conducting the applied research, engineering, and environmental 
studies that would be needed to inform a decision in 2008 on whether to 
proceed with detailed design and construction of the engineering scale 
demonstration facilities. The Department has set a goal of facility 
start-up between 2011 and 2015. A more detailed baseline cost and 
schedule are being developed as the project moves forward.

                       UREX CONSTRUCTION OPTIONS

    Question. We notice that most of the UREX facility dollars in 2006 
and 2007 ($200 million) will be spent on ``conceptual'' designs, EIS 
studies, procurement orders, and other ``paperwork'' similar to that 
involved with constructing large-scale integrated nuclear facilities.
    Are there any ``medium'' scale options available that could employ 
existing processing lab capabilities that could be utilized to free up 
funds for the other critical elements of the program? If not, how do 
you assure that the EIS process does not have to be repeated over and 
over for each component of the emerging fuel cycle?
    Answer. The Department is looking at conducting additional 
laboratory research at increased throughput quantities in fiscal year 
2007 in parallel with the conceptual design activities for the 
engineering-scale facility.
    The EIS process will consider all reasonable alternative 
technologies and locations for three key elements of the GNEP 
Technology Demonstration Program: (1) demonstration of advanced spent 
fuel separations processes; (2) demonstration of a conversion of 
transuranics; and (3) demonstration of an advanced fuel cycle facility 
and advanced fuel fabrication.

                 IRAN--PURSUIT OF A COMPLETE FUEL CYCLE

    Question. Iran has decided to build and operate a uranium 
enrichment plant in direct violation of Nuclear Non-Proliferation 
Treaty. Obviously, with this capability Iran could not only produce 
fuel for civilian purposes, but weapons activity as well. Your plan 
calls for a uranium fuel-leasing plan that would provide fuel to 
countries interested in developing a civilian nuclear program.
    Do you believe countries would be willing to contract for 
enrichment services instead of developing their own domestic 
capability? How has this plan been received by other countries?
    Answer. Today there are countries that rely on contracted 
enrichment services rather than developing their own domestic 
capability. Long-term contracts and enrichment facilities in over a 
half dozen countries provide alternative sources of supply. The United 
States itself contracts over half of its annual fuel services from 
Russia through the U.S./Russia HEU Purchase Agreement.
    We recognize that some countries will be mindful of supply security 
under the GNEP approach. The United States has already committed 17 
metric tons of HEU that will be blended down to LEU and used to 
establish a fuel reserve to back-up supply assurances. Russia has 
indicated support for such an approach. We are approaching other 
countries to establish interim supply arrangements to increase the 
confidence that critical energy supply would not be subject to near-
term political tensions.
    Question. What is the Department's plan to bring our international 
allies on board with the Global Nuclear Energy Partnership (GNEP)?
    Answer. The United States has been meeting with potential 
international partners to discuss both policy and technical aspects of 
GNEP. We will continue our diplomatic and technical outreach with a 
broader group of prospective partners.
    Question. What international commitments has the department 
obtained regarding GNEP?
    Answer. The United States completed initial consultations with fuel 
cycle countries and the International Atomic Energy Agency on the key 
objectives of GNEP. From a technical perspective, France, Japan and 
Russia have expressed strong interest in cooperative R&D.

                         GNEP--NONPROLIFERATION

    Question. The GNEP program is a comprehensive R&D program that 
includes work on advanced reactor technology, fuel recycling, waste 
reduction, a global nuclear fuel service, small reactors, and enhanced 
nuclear safeguards. However, the budget request focuses on large-scale 
engineering demonstrations of fuel recycling capability, with minimal 
involvement outside the Office of Nuclear Energy. It is unclear from 
this budget when the Department will undertake research reliable fuel 
services, small scale reactors, enhanced nuclear safeguards and basic 
R&D that could address a number of concerns related to our national 
security in the early phases of the program.
    Why has the Department elected to minimize the direct and immediate 
engagement of the NNSA and the Department of State at the onset of 
GNEP?
    Answer. Senator, as the principal official within the Department 
with responsibilities for advancing GNEP, I know that all appropriate 
elements of the Department were fully engaged during GNEP planning. In 
particular, Ambassador Brooks and the National Nuclear Security 
Administration (NNSA) staff played an integral role in the development 
of GNEP, in participation of addressing non-proliferation and the 
development of an advanced generation of safeguards technologies. This 
role will continue in the future.
    The Department of State has also been engaged from the beginning of 
GNEP planning and involved in all aspects of developing our 
international partnership. As you may be aware, prior to the 
President's announcement of the Advanced Energy Initiative and GNEP, 
Under Secretary of State Robert Joseph and I led a delegation to 
several foreign capitals to present GNEP. This is but one example of 
our close cooperation with the Department of State in both the 
development of GNEP and corresponding diplomatic strategy. I can assure 
you that the Departments of Energy and State continue to be engaged in 
coordination of our activities to advance GNEP.

                        ADVANCED BURNER REACTORS

    Question. The United States and the world have past experience with 
fast reactors that have led to questions about cost of operations and 
the potential proliferation threat. What will be the focus of advanced 
burner reactors and how will it address past concerns?
    Answer. The focus of the advanced burner test reactor will be to 
demonstrate the capability of destroying transuranic elements (which 
include plutonium) with repeated recycle. The advanced burner test 
reactor will incorporate the very latest in safety and security 
features.

                              MOX PROGRAM

    Question. Mr. Secretary, I am very concerned about the MOX program. 
This nonproliferation initiative uses the existing French recycling 
technology to fabricate nuclear fuel using a mixture of weapons grade 
plutonium (5 percent) and uranium (95 percent) to be burned in a 
civilian reactor. This program, when fully realized will destroy 68 
tons of plutonium in the U.S. and Russian stockpiles. Can you please 
update the committee on the status of this program and the status of 
the liability agreement with Russia?
    Answer. The Department of Energy has made significant progress in 
implementing the plutonium disposition program in the past year. The 
United States and Russia successfully completed negotiations of a 
liability protocol for the plutonium disposition program last summer. 
The protocol is currently under final review within the Russian 
Government. Senior officials from the Russian Ministry of Foreign 
Affairs and the Russian Atomic Energy Agency have assured us that there 
are no substantive issues with the agreed language and that it will be 
signed in the near future. In addition, the Department received 
authorization to begin construction of the MOX facility from the 
Nuclear Regulatory Commission, began irradiation of MOX fuel lead 
assemblies in a nuclear reactor, and began site preparation work at the 
Savannah River Site. Current plans call for construction of the U.S. 
MOX facility to start in 2006. To support this effort, the Department 
has been working on validating the U.S. MOX project cost and schedule 
baseline as part of our project management process and will have a 
validated baseline in place by the end of this year consistent with the 
requirements in the Defense Authorization Act for Fiscal Year 2006.

                       RISK INSURANCE--EPACT 2005

    Question. The Energy Policy Act (EPACT) of 2005 authorized the 
Department to establish a risk insurance program that would compensate 
utilities if the Nuclear Regulatory Commission fails to comply with 
specific schedules or reviews or if litigation delays full operations. 
The Department has provided just $2 million to support the 
establishment of the program regulations.
    What is the timing of standby support program? When will the 
regulations be finalized and the program become operational?
    Answer. The Department is developing a rule for implementing the 
standby support or Federal risk insurance provisions of EPACT. The 
rulemaking is scheduled to be completed by August 2006 in accordance 
with the requirements of EPACT. The Department issued the interim final 
rule on May 8, 2006.

                    GLOBAL RISK LIABILITY PROTECTION

    Question. Part of the GNEP plan is a global nuclear solution and 
international collaboration on new advanced reactors. The 
administration has negotiated the Convention on Supplemental 
Compensation for Nuclear Damages in 1997 and submitted it to the Senate 
in 2002. This program is an international liability standard similar to 
Price Anderson. The Senate Foreign Relations Committee held hearings in 
2005, but no action has been taken. I am told that most U.S. nuclear 
companies are very reluctant to embark upon foreign work without such a 
liability agreement in place.
    Has the administration considered the impact that a lack of an 
international regime on nuclear liability will have on their 
international nuclear initiatives, such as GNEP?
    Answer. Nuclear liability comes up as an issue in connection with 
almost every nuclear project outside the United States--whether it is a 
commercial project in which a U.S. nuclear supplier wants to 
participate or a DOE activity undertaken by a contractor. The United 
States has sought since the early 1990's to address these concerns in a 
comprehensive manner through the establishment of a global nuclear 
liability regime that includes the United States. These efforts 
culminated in the adoption of the Convention on Supplementary 
Compensation for Nuclear Damage (CSC) in 1997 at a Diplomatic 
Conference under the auspices of the International Atomic Energy Agency 
(IAEA). The United States was the chief proponent of the CSC since it 
is designed to address U.S. concerns over nuclear liability in a manner 
that will not require the United States to make any substantive change 
in our domestic nuclear liability law (the Price-Anderson Act). 
Bringing the CSC into effect will establish a well-defined legal 
framework for dealing with nuclear liability issues in a manner that 
facilitates participation by U.S. firms in nuclear projects (including 
those associated with GNEP) and, in the unlikely event of a nuclear 
incident, provides for assured, prompt and meaningful compensation with 
a minimum of litigation.
    The administration strongly supports ratification of the CSC by the 
United States and other countries as soon as possible. The 
administration has submitted the CSC to the Senate for advice and 
consent and has indicated that favorable action early this year is a 
high priority. The administration also has been working with the IAEA 
to promote ratification of the CSC by other countries. In particular, 
the Department represents the United States on INLEX, the IAEA's group 
of nuclear experts, whose mission includes promoting broad adherence to 
the CSC. In addition, the Department participated last November in an 
IAEA forum in Australia to promote ratification of the UCS by Pacific 
Island and Asian countries and will participate in a similar forum for 
Latin American countries later this year.

                         UNIVERSITY R&D PROGRAM

    Question. This budget proposes to eliminate the funding for 
University programs to support nuclear education and encourage students 
to focus on nuclear related disciplines which have civilian and defense 
capabilities. You might be interested to know that the Nuclear 
Regulatory Commission, following authorization of EPACT, did include 
funding in its budget to develop an academic capability needed to 
perform oversight responsibilities.
    Why do you believe there is a policy disconnect between the NRC and 
the DOE when it comes to supporting nuclear education?
    Answer. We do not believe there is a policy disconnect between NRC 
and DOE. The NRC's support to universities is for the purpose of 
attracting engineering students to the NRC for employment 
opportunities. The DOE objective was to address the issue of declining 
student enrollments in, and closure of, university programs during the 
1980's and 1990's. Over the last few years, there has been a 
significant increase in student enrollments in nuclear engineering 
programs, achieving the Department's goal of enrollments of 1,500 
students. During the same time, the number of nuclear engineering 
programs in the United States has increased as well. We believe that a 
strong nuclear engineering education infrastructure is in place and 
that the efforts of the universities and industry as well as continued 
demand for nuclear engineers will sustain enrollments and nuclear 
engineering programs.
    While the Department of Energy has not requested specific funding 
for the University Reactor Infrastructure and Education Support 
Program, we will continue to fund research at nuclear engineering 
schools through our directed research programs and awarded through the 
Nuclear Energy Research Initiative. In May 2006, the Department 
anticipates issuing a solicitation to universities requesting proposals 
for participation in the Office of Nuclear Energy's research and 
development. In addition, we anticipate continuing fellowships to 
graduate students pursuing advanced degrees in transmutation and other 
highly specialized fields associated with the fuel cycle.

                 NUCLEAR POWER FOR TRANSPORTATION FUELS

    Question. GNEP is focused on enabling nuclear power for electricity 
generation. However the transportation sector is the largest consumer 
of energy in the country. With GNEP's emphasis on fuel recycling and 
fast-neutron burner reactor development, I am concerned support for 
high temperature reactors that are effective in producing hydrogen for 
transportation will be overlooked or forgotten entirely. For example 
funding for nuclear hydrogen research has been reduced from fiscal year 
2006 levels.
    How do we ensure that we don't abandon the research needed to 
produce transportation fuels with nuclear energy and support a balanced 
approach to solving our dependence on foreign oil?
    Answer. The Department has not abandoned research needed to produce 
transportation fuels with nuclear energy. Authorized by the Energy 
Policy Act of 2005, the Next Generation Nuclear Plant program is on 
track to meet the 2011 date to select a technology best suited to apply 
heat and/or electricity to produce hydrogen at a cost competitive with 
other transportation fuels.

                            GNEP REGULATION

    Question. I understand the DOE plans to ``self-regulate'' the 
facilities that will be developed to conduct research and development. 
Ultimately a commercial-scale facility will be developed, assuming the 
research is proven, and the NRC will need to perform the ultimate 
licensing of such a facility.
    As you may know, the NRC has not requested any funding to support 
the GNEP program--has an agreement been reached with the NRC that 
defines their involvement?
    Answer. DOE would conduct the GNEP technology demonstration program 
under authority granted by the Atomic Energy Act. However, DOE would 
propose to engage the Nuclear Regulatory Commission (NRC) throughout 
the technology demonstration phase to ensure that the technologies are 
licensable by NRC when they are deployed commercially.

                         YUCCA MOUNTAIN OPTIONS

    Question. Because of the large volume of spent nuclear fuel already 
produced and the large infrastructure of treatment facilities and 
burner reactors needed to deal with it, the GNEP program will take 
several decades to have any impact on our high level waste problem. 
There are a variety of opinions on Yucca arguing for delay in licensing 
Yucca Mountain, even though a repository for high level waste will be 
needed with or without GNEP. Others say that Yucca Mountain is needed 
right away for Navy fuels and to dispose of high level waste now stored 
at many DOE facilities from our cold war weapons program. Still others 
say that GNEP may fail and so the United States must actively pursue 
Yucca Mountain for spent nuclear fuel to ensure that we do not 
foreclose that disposal option.
    What is your view on this and the approach we should take with 
Yucca Mountain?
    Answer. The country needs Yucca Mountain under any fuel cycle 
scenario and this administration is committed to the successful 
licensing and operation of the site. Even with a fully successful GNEP 
development and implementation, the residues from the recycling process 
will still need geologic disposal. In addition, approximately 13,000 
metric tons of Department of Energy (DOE) vitrified high-level waste 
and DOE spent nuclear fuel could not be recycled and still requires a 
repository. Moreover, the applicability of GNEP technologies for 
commercial spent fuel over 15 years old is still uncertain. The 
government has the obligation to take and dispose of the Nation's 
waste, and our mission is to provide permanent geologic disposal under 
the Nuclear Waste Policy Act of 1982. We need to start fulfilling that 
responsibility now with respect to the 50,000 metric tons of commercial 
spent fuel already generated and the additional 2,000 metric tons being 
generated annually.
    While the potential waste minimization benefits of GNEP on Yucca 
Mountain would be profoundly positive, any changes to the operation of 
the Yucca Mountain repository would occur only after GNEP technologies 
have been adequately demonstrated. Today, there will be no changes in 
the license application under development and we will proceed with our 
current plan for the existing waste inventory as well as the waste 
being generated.

                          LEGISLATIVE REFORMS

    Question. The administration is preparing a package of legislative 
reforms modifying the authorization for Yucca Mountain. Among the many 
modifications, the proposal seeks to stage the emplacement of spent 
fuel to allow it to cool.
    How will this strategy impact long-term storage and how will it be 
coordinated with the GNEP recycling efforts?
    Answer. Repository designs have consistently included aging 
capability needed to allow the spent fuel received from the utility 
sites to cool until it is suitable for permanent underground disposal. 
These aging facilities are an integral part of our disposal operations. 
Although GNEP offers the promise for a more efficient fuel cycle in the 
future because it generates a lower volume of waste, there are no 
current plans to store existing spent fuel for the possibility of 
recycling it in the future.
    Question. Can you please explain why the Department has decided to 
make these modifications to the Yucca Mountain project now and what 
impact this will have on schedule and budget estimates?
    Answer. Since the Department had always intended to have spent fuel 
aging capability deployed at the repository, the availability of early 
spent fuel aging facilities would not impact current repository 
planning. Cost and schedule development is currently underway for the 
clean-canistered approach to repository waste receipt announced last 
October, and will be available later this year.

                            WASTE CONUNDRUM

    Question. As you are probably aware the construction of 19 new 
reactor projects are under discussion and this will add to the existing 
large volume of waste waiting final disposal. By 2010, the amount of 
spent fuel stored at reactor sites across the country will exceed the 
statutory limit of 70,000 tons of spent fuel that can be placed in 
Yucca Mountain. If the NRC agrees to extend the license of all existing 
reactors this will generate up to 120,000 tons of spent fuel, which is 
the ``technical'' capacity of the mountain. This doesn't begin to 
address spent fuel generated from new reactors.
    If we do not address the large growing volume of spent fuel through 
a waste reduction strategy proposed through GNEP, how will we deal with 
all the spent fuel?
    Answer. If the volume reduction benefits of GNEP are not realized, 
it will be necessary for the Department to develop additional 
repositories to deal with all the spent fuel that is expected to be 
generated by the current fleet of reactors as well as the additional 
new reactors currently being considered. Removing the statutory limit 
of 70,000 metric tons currently imposed on disposal at Yucca Mountain 
will temporarily delay the need for the next repository. The 
combination of waste minimization and removing the 70,000 metric ton 
limit could delay the need for another repository until the next 
century.

                            INTERIM STORAGE

    Question. Some have proposed that we move our spent fuel to a 
central interim location, or locations, until it can be processed in a 
recycle facility. Others fear that once moved, the fuel will remain 
there forever, especially if recycling proves to be technically 
impossible or commercially unviable.
    What assurances could be provided to a host community for temporary 
storage that it won't be stuck with the fuel from a hundred reactors 
forever?
    Answer. The Department has made no decisions regarding the timing 
for receiving spent fuel for recycling, or the locations at a recycling 
site where the spent fuel would be recycled. It is anticipated that the 
approach to receiving spent fuel will be examined as part of the 
project definition and conceptual design phase that will occur over the 
next 2 years.
    Question. In the fiscal year 2006 Conference Report Congress 
directed the Department to develop an interim storage plan and provide 
grant funding to communities interested in locating such a facility in 
their area. There are communities in my State that are very eager to 
work with the Department and to initiate the siting process. When will 
the Department complete its plan for the interim storage facilities and 
when do you expect to release the funds to interested communities? What 
direction will you give these communities on the expenditure of these 
funds?
    Answer. The fiscal year 2006 Conference Report directed the 
Department to address the development of an integrated spent fuel 
recycling facilities. The Department received over 30 responses from 
public and private sector interests in response to a Request for 
Expressions of Interest issued in March 2006 for hosting advanced 
recycling facility demonstrations. The Department expects to issue a 
Request for Proposals later this spring and award contracts this year 
to conduct site evaluation studies. The Department has initiated an 
Environmental Impact Statement for the GNEP Technology Demonstration 
Program that will consider locations for siting the integrated 
recycling demonstration facilities. The results of the site evaluation 
studies will help inform the evaluation of potential locations. At this 
time, the GNEP Technology Demonstration Program does not contemplate a 
dedicated interim storage facility for spent fuel.

                    GNEP--ENGINEERING DEMONSTRATION

    Question. GNEP is focused on a near-term visible demonstration of 
the closed fuel cycle and has chosen the Engineering Scale 
Demonstration (ESD) at the Savannah River Site in South Carolina (SRS). 
However, before the Department proceeds with the construction of the 
UREX+ demonstration to recycle fuel it is important that the Department 
is able to confirm that the fuel itself can be manufactured and 
qualified in a reactor.
    Before the Department undertakes a complicated construction 
project, are you absolutely confident that this technology will deliver 
a product that can be used and safely disposed in a fast reactor?
    Answer. No decision has been made regarding the location or 
locations for the GNEP technology demonstration projects. Technical 
challenges do exist in the areas of the separation of spent nuclear 
fuel, manufacture of new fuel from recycled products, and the 
destruction of the long-lived radioactive materials in a nuclear 
reactor. These challenges will be addressed both through continued 
applied research and the new demonstration facilities.
    Question. Without a fast reactor available in this country, how 
will you test and qualify the fuel to determine whether or not you have 
a viable product?
    Answer. The transmutation fuels could be tested and qualified in 
existing fast reactor facilities which are available internationally in 
Japan, France, and Russia.

                         DOE--COLLABORATIVE R&D

    Question. Traditionally, the Department hasn't always been 
successful in fostering cooperative research among the offices within 
the Department. There are relevant projects across the different 
repository, nuclear energy, science, and non-proliferation programs 
that can be integrated to take advantage of complimentary assets and 
related developments. For example, the NNSA has started constructing 
new MOX fuel production and fabrication facilities.
    How will these parallel efforts be used to accelerate the GNEP 
program?
    Answer. The Office of Nuclear Energy is the lead office for 
managing the GNEP program. In this capacity, NE will work with all of 
the relevant program offices, including the Office of Civilian 
Radioactive Waste Management, which has primary responsibility for the 
geologic repository; the Office of Science, which will be involved in 
simulation, research and development; and the National Nuclear Security 
Administration, which will serve a key role in developing advanced 
safeguards for the advanced recycle facilities. The Department will 
seek to ensure that the lessons learned for the NNSA MOX program are 
appropriately applied to the GNEP program.

                          RELIABLE FUEL SUPPLY

    Question. GNEP has proposed that the United States and several 
other countries should join together to supply nuclear reactors and 
fuel to the rest of the world. Late last year, the Secretary committed 
to down blend 17.4 tons of highly enriched uranium to establish the 
initial supply of available fuel. The budget documents are unclear as 
to how the cost of down blending the fuel will be paid and the 
timetable and terms of this activity. In addition, it is unclear if the 
Department has the authority to undertake this activity. Can you please 
provide for us a budget and schedule for the down blending activities 
and identify the existing authorities the Department will use to down 
blend this material in order to establish a Reliable Fuel Supply.
    Answer. The HEU is to be down blended at a commercial facility in 
the United States that will be selected through a competitive 
procurement. The current schedule is to issue a request for proposals 
in April 2006, award a contract this summer, and begin shipments of HEU 
to the winning bidder by the end of the fiscal year. Shipments will 
continue through fiscal year 2008. Down blending of the HEU at the 
commercial facility is to be completed by the end of 2009.
    Funding is needed to recast metal at Y-12 National Security Complex 
into a form suitable for shipment to the down blending contractor, 
package the HEU for shipment to the contractor, and develop and procure 
new shipping casks. The funding estimate for this work is approximately 
$9 million in fiscal year 2006, $15 million in fiscal year 2007, and $8 
million in fiscal year 2008. However, the Department of Energy proposes 
that the cost of down blending, including chemical processing to remove 
non-uranium constituents and procurement in the market of natural 
uranium blend stock, be paid for by allowing the contractor to retain a 
fraction of the resulting LEU. It is estimated that it will take 
approximately 70 MT of LEU ($130 million at current prices), leaving 
approximately 220 MT available for the Reliable Fuel Supply.
    The Secretary has authority under the Atomic Energy Act of 1954 
(AEA) and the USEC Privatization Act to enter into barter transactions 
with regard to uranium. Under section 3(d) of the AEA, the Secretary is 
to effectuate programs that encourage the ``widespread participation in 
the development and utilization of atomic energy for peaceful 
purposes.'' Under section 54 of the AEA the Secretary is authorized to 
export special nuclear material, including enriched uranium, under the 
terms of an agreement for cooperation arranged pursuant to section 123 
of the Atomic Energy Act, consistent with the requirements of section 
3112 of the USEC Privatization Act. Under section 55 of the AEA the 
Secretary is ``authorized, to the extent [he] deems necessary to 
effectuate the provisions of this Act'' to purchase or otherwise 
acquire special nuclear material. Section 3112(d) of the USEC 
Privatization Act authorizes the Secretary to ``sell natural and low-
enriched enriched uranium (including low-enriched uranium derived from 
highly enriched uranium) from the Department of Energy's stockpile'' 
where determinations are made that the material is not necessary for 
national security needs and that the sale will not have an adverse 
material impact on the domestic uranium market, and where the price 
paid is not less than the fair market value of the material. The HEU in 
question was declared excess to national security in 1994. The 
Secretary signed a determination that this activity would not have an 
adverse material impact on the domestic uranium industries on November 
4, 2005.
                                 ______
                                 
              Questions Submitted by Senator Thad Cochran

                CONSTRUCTION OF NEW NUCLEAR POWER PLANTS

    Question. Congress has consistently supported the administration's 
efforts to promote the use of safe and clean nuclear energy. In last 
year's appropriations bill, this committee provided even more funding 
than was requested by the Department. Also last year, the Senate, under 
the leadership of Chairman Domenici, passed landmark energy 
legislation, including a provision requested by the administration to 
provide additional incentives, including risk insurance, for new 
commercial nuclear power plants. My State is a leading site to host a 
new commercial nuclear power plant, which will not only provide jobs 
and stimulate economic development, but also could provide future rate 
relief to my State's electricity consumers, by relieving some of the 
burden of high cost natural gas currently used to generate electricity.
    Within the context of the proposed Global Nuclear Energy 
Partnership, does the administration remain strongly committed to 
fostering the development of new commercial nuclear power plants in the 
United States?
    Answer. The administration is and remains strongly committed to the 
development, licensing, and deployment of new nuclear power plants in 
the United States. GNEP will build on the recent advances made by the 
President and Congress to stimulate new nuclear plant construction in 
the United States. This will be accomplished by demonstrating the 
success of the streamlined regulations for siting, constructing, and 
operating new nuclear plants through the Nuclear Power 2010 program, 
and by implementing incentives enacted by the Energy Policy Act of 2005 
(EPACT 2005). The Nuclear Power 2010 program is a high priority at the 
Department of Energy for the near-term deployment of new nuclear power 
plants. This key program is the joint industry and government 
collaborative effort to address the barriers to deployment of new 
nuclear power plants in the near-term.

                           NUCLEAR POWER 2010

    Question. Why does the budget propose to reduce funding for Nuclear 
Power 2010 program, which is the principal DOE program to support the 
deployment of new commercial nuclear power plants on a fast track?
    Answer. The proposed budget for the Nuclear Power 2010 program was 
reduced due to the projected uncosted fiscal year program carryover 
into fiscal year 2006 and fiscal year 2007. Uncosted carryover can be 
attributed to the delay in initiation of the two New Nuclear Plant 
Licensing Demonstration projects with NuStart Energy Development LLC 
and Dominion Energy, the slower than expected ramp-up by one reactor 
vendor and an additional $10 million fiscal year 2006 appropriations 
over the budget request.
    Although we are optimistic that the industry will be able to move 
work forward and accelerate project spending; we believe that with 
these uncosted balances the work that needs to be done to keep these 
projects on schedule will be able to be accomplished.
    Question. Isn't this posture inconsistent with the plans and the 
significant budget increase requested for GNEP?
    Answer. The reduced fiscal year 2007 budget request for the Nuclear 
Power 2010 program is consistent with the originally planned work scope 
taking into consideration prior year carryover. The overall goals and 
outcomes of the Nuclear Power 2010 program will support the overall 
GNEP plan.
    Question. If this committee decided to restore the proposed funding 
cutback for the NP2010 program, would this not enable the Department to 
work with industry nuclear power plants?
    Answer. The President's budget request for the Nuclear Power 2010 
program will support the project activities as originally planned 
considering the program carryover expected at the end of fiscal year 
2006.

                             YUCCA MOUNTAIN

    Question. Yucca Mountain is critical and the Global Nuclear Energy 
Partnership program must always keep Yucca Mountain as a critical 
component. Please elaborate on your testimony on the ways we need to 
move forward with the licensing and construction of the Yucca Mountain 
repository regardless of GNEP.
    Answer. The administration is committed to the development of Yucca 
Mountain with or without the Global Nuclear Energy Partnership (GNEP). 
Under any fuel cycle scenario, there will be a need for Yucca Mountain 
for the permanent disposal of waste.
    The Department needs to move forward with the licensing and 
construction of Yucca Mountain that embodies the Secretary's direction 
for safer, simpler, and more reliable operations. We need to ensure 
that the license application process is based on sound science and that 
we demonstrate through our actions that we have met the quality 
assurance requirements of a nuclear licensee. In that regard, the 
Department is conducting additional work for the submittal of the 
license application to address the amended draft Environmental 
Protection Agency Radiation Protection Standards to extend the period 
of compliance from 10,000 to 1 million years as well as accommodate 
clean-canistered approach to spent fuel handling operations. 
Additionally, the Department is working with the Nuclear Regulatory 
Commission (NRC), industry and the utilities to develop the 
specifications for a canister that can be added to the license 
application materials.
    In order for the Department to receive a license from the NRC, it 
must demonstrate that it can operate under nuclear standards and 
requirements. This involves the establishment of a culture of 
credibility and integrity that earns respect regarding how it operates. 
We will also be investing significant time and resources in developing 
this culture.
                                 ______
                                 
               Questions Submitted by Senator Harry Reid

                               ECONOMICS

    Question. DOE repeatedly has stated that it is premature to develop 
a cost estimate for the GNEP program. But the National Academy of 
Sciences presented cost estimates in 1996 based on several different 
fuel cycles, including one based on actinide-burning fast reactors, and 
DOE developed a very detailed cost estimate for the Accelerator 
Transmutation of Waste program in 1999. If DOE believes that these 
estimates are no longer appropriate, why can't it show exactly why that 
is the case?
    Answer. In 1996, the National Academy of Sciences (NAS) published a 
study entitled ``Nuclear Waste: Technologies for Separations and 
Transmutation.'' This study was technically very complete, and 
incorporated most technical knowledge available at the time. Cost 
studies used data available in the early 1990's, in particular for the 
cost of construction and operation of large separations plants, and 
focused mostly on data from then recently-built reprocessing plants in 
Europe. Data available in 2006 is significantly different due to two 
factors: first, operational experience developed within the French 
program since that report was written indicates several ways to very 
significantly reduce the cost of reprocessing; secondly, data available 
from research performed under the auspices of the Advanced Fuel Cycle 
Initiative point to new technologies that will significantly reduce the 
footprint--and therefore the cost--of reprocessing facilities.
    Furthermore, the NAS report was developed at a time when the 
prospect for nuclear energy growth was low, and when cheap oil was 
plentiful. Under these conditions, its cost analysis ignored several 
benefits of implementing separations and transmutation strategy, namely 
the possibility of avoiding additional repositories beyond Yucca 
Mountain, and the global peace dividend associated with a stable, 
proliferation resistant global nuclear enterprise.
    The Department of Energy (DOE) study on the cost of implementing an 
Accelerator Driven Transmutation of Waste infrastructure, published in 
1999, indicated very high costs associated with using an accelerator 
approach, which has since been abandoned in the United States, and has 
been seriously scaled back in Europe and in Japan. Both France and 
Japan are now proposing long term approaches similar to the technical 
approach proposed by the Global Nuclear Energy Partnership (GNEP) 
initiative.
    A full lifecycle economic analysis for the technologies proposed 
within the GNEP program is underway.
    Question. Given a flat budget overall for DOE, what related 
programs are you giving up to pursue this program?
    Answer. In fiscal year 2006, Congress appropriated $79.2 million 
(which includes the across-the-board rescissions) for the Advanced Fuel 
Cycle Initiative (AFCI). The Department is requesting $170.8 million in 
new funding to accelerate efforts to develop and demonstrate the 
advanced recycling technologies. The funding request is part of a 
broader prioritization of DOE program activities affecting not just 
AFCI but other programs within the Department.
    Question. What are the estimate costs according to the GEN IV 
program for the design of fast neutron reactors?
    Answer. The Generation IV program does not have a specific cost 
estimate for the design of fast reactors. These costs will be estimated 
over the next 2 years as the Department prepares the conceptual design 
of the advanced burner reactor and works to develop a baseline schedule 
and cost for demonstration of the technology. Under the Advanced Fuel 
Cycle Initiative, the Department would propose to invest $25 million on 
the advanced burner reactor technology in fiscal year 2007. However, as 
with the design of any complicated system, more definitive estimates 
will be developed as the design details are developed.
    In February 2006, the United States signed a Generation IV systems 
arrangement agreement with the Commissariat a L'Energie Atomique of 
France and the Japan Atomic Energy Agency to cooperate on the 
development of sodium fast reactors. It is anticipated that this 
agreement will establish the foundation for further collaborations on 
fast reactors with these countries, and others that are expected to 
join the agreement in the future, in support of GNEP.
    Question. How many existing reactors in the United States could use 
MOX fuel? How many would require costly retrofits?
    Answer. About 25 percent of the current light water reactors in the 
United States could use MOX fuel, while another 50 percent would 
require retrofits. The Global Nuclear Energy Partnership initiative 
does not propose to use MOX fuel; but would propose to develop a more 
advanced and proliferation resistant fuel.
    Question. How much of the $250 million requested for fiscal year 
2007 is new money, and how much is re-categorized spending?
    Answer. The Global Nuclear Energy Partnership is a new initiative 
that proposes to accelerate work underway within the Department's 
Advanced Fuel Cycle Initiative (AFCI) to develop more advanced 
proliferation resistant spent fuel recycling technology. In fiscal year 
2006, Congress appropriated $79.2 million (which includes the across 
the board rescissions) for AFCI. In fiscal year 2007, the Department 
has requested $170.8 million in new funding to accelerate development 
and demonstration of the advanced recycling technologies that are part 
of GNEP.
    Question. What are your key technical hurdles to implementing a 
system of reprocessing? How confident are you that you can develop 
reasonable cost estimates for overcoming these hurdles (given the 
Department's poor track record on costing out large, complicated 
projects)?
    Answer. The major technical challenges are in the areas of the 
separation of spent nuclear fuel and the manufacture of new fuel from 
recycled products. Both of these challenges will be addressed through 
continued applied research and technology development. The Department 
will conduct engineering design and environmental studies over the next 
2 years that will support the preparation of baseline costs and 
schedules for the demonstration of the separations of spent nuclear 
fuel, burning of the transuranics, and the development of a fast burner 
test reactor. We are confident that the work and efforts will provide 
the required information to support these baselines.

                INTEGRATED INTERIM STORAGE/REPROCESSING

    Question. In DOE's budget request for the GNEP program, the 
following statement is made under the heading of ``Detailed 
Justification'' for ``Systems Analysis'':

    ``In fiscal year 2006, the Department will focus its systems 
analysis efforts on evaluating the integrated fuel cycle system it has 
chosen to demonstrate at engineering scale. It will develop a plan for 
integrating a spent fuel recycle capability with interim storage of 
commercial spent nuclear fuel and complete an assessment of the 
proliferation resistance of certain aqueous separations technologies. 
This `Spent Fuel Recycling Plan' will be submitted to Congress as 
requested in the fiscal year 2006 Appropriations language.''

    Can DOE explain what is meant by ``interim storage'' in this 
context?
    Answer. Interim storage refers to the range of possibilities of 
storage of spent fuel from the time it is discharged from a reactor 
until it is separated. The Department has made no decisions regarding 
the timing for receiving and storing spent fuel that would be 
incidental to recycling or the locations for the spent fuel recycling 
demonstration facilities. It is anticipated that the approach to 
receiving and storing spent fuel incidental to recycling will be 
examined as part of the project definition and conceptual design phase 
that will occur over the next 2 years.
    Question. What sites are under consideration for such interim 
storage?
    Answer. The Department is not presently considering sites to be 
used solely for interim storage as part of a recycle strategy. Future 
site evaluation studies will identify the sites to be considered for 
recycling demonstration facilities and will consider the extent to 
which such sites have the capability to provide storage related to the 
recycling process.
    Question. What criteria will you use for identifying potential 
sites?
    Answer. The Department has not yet developed criteria that would be 
used to identify potential sites for spent fuel recycling demonstration 
facilities.
    Question. Are foreign sites under consideration?
    Answer. We do not anticipate using foreign sites to store U.S. 
spent fuel.
    Question. What analysis will be made about the costs of interim 
storage on-site as compared with interim storage at Yucca Mountain as 
compared with pool or dry-cask storage at potential reprocessing sites?
    Answer. The Department has not conducted analyses comparing costs 
of interim storage onsite to storage that is incidental to 
demonstration of advanced recycling technologies. The Department does 
not view process storage in connection with the GNEP Technology 
Demonstration Program as a means of fulfilling its existing 
responsibility to take and dispose of the spent fuel currently being 
stored at reactor sites.

                       SPENT FUEL RECYCLING PLAN

    Question. What offices will lead on the production of this report 
in the DOE and what other offices within DOE or what agencies will be 
involved?
    Answer. The spent fuel recycling plan will be developed by the 
Office of Nuclear Energy (NE). NE has the lead in developing and 
managing the Global Nuclear Energy Partnership initiative. NE is 
assisted by the Office of Civilian Radioactive Waste Management, which 
has primary responsibility for the geologic repository; the Office of 
Science, which is involved in simulation and basic research; and the 
National Nuclear Security Administration, which serves a key role in 
advancing non-proliferation, developing advanced safeguards for the 
recycling demonstration facilities, and in developing the fuel services 
component of GNEP.
    Question. Will a ``threat assessment'' be a part of this plan?
    Answer. The plan will identify what assessments must be done to 
enable recycling of spent fuel. Those assessments will cover safety, 
environmental, proliferation resistance, and physical protection of 
radioactive materials in accordance with laws, regulations, and DOE 
Orders.
    Question. What opportunities for public involvement will be there 
in the drafting of this plan?
    Answer. The Department anticipates delivering the spent fuel 
recycling plan to Congress by May 31, 2006. There will be extensive 
opportunities for public involvement in conjunction with the National 
Environmental Policy Act (NEPA) analyses of alternatives for facilities 
envisioned as part of the GNEP Technology Demonstration Program.
    Question. In what ways will the DOE produce this report in order to 
ensure compliance with NEPA?
    Answer. The Department remains committed to meeting the letter and 
the spirit of NEPA and will conduct a thorough review of the 
environmental impacts of appropriate alternatives. On March 22, 2006, 
the Department issued an Advance Notice of Intent (NOI) announcing its 
intent to prepare an Environmental Impact Statement for the GNEP 
Technology Demonstration Program. The Report to Congress is separate 
from this NEPA review and sets forth DOE's present vision for the GNEP 
Technology Demonstration Program.
    Question. How will this assessment affect the continued 
preparations for opening Yucca Mountain?
    Answer. The spent fuel recycling plan will articulate the 
Department's plan to demonstrate an integrated fuel cycle at a scale 
appropriate to determine the feasibility of full scale operations. The 
development and implementation of this plan does not affect the 
Department's continued preparation for licensing, construction and 
operation of Yucca Mountain. A geologic repository is a necessity under 
all fuel cycle scenarios, and the Department's budget request of $544 
million relating to Yucca Mountain will allow us to make steady 
progress on Yucca Mountain. The administration is committed to begin 
operations at Yucca Mountain repository as soon as possible so that we 
can begin to fulfill our obligation to dispose of the approximate 
55,000 metric tons of spent fuel already generated and the approximate 
2,000 metric tons being generated annually. We have no plans to delay 
disposal of this spent fuel until full scale recycling facilities are 
available.
    Question. To what extent will this report assess the economic 
implications of future fuel cycle activities?
    Answer. The Spent Nuclear Fuel (SNF) Recycling Program Plan 
addresses the near-term costs of the GNEP Technology Demonstration 
Program. The report, which is being provided to Congress in response to 
fiscal year 2006 Energy and Water Development (EWD) Conference Report 
language, does not assess the economic implications of the future fuel 
cycle activities or technologies. The report focuses on the 
demonstration of the advanced recycling technologies on a scale 
sufficient to evaluate potential commercialization of the technologies. 
System analyses are part of this plan as we go forward and will assess 
the full economic implications of advanced spent nuclear fuel 
recycling.

                                 WASTE

    Question. How much and what kind of waste would be produced by 
reprocessing? By transmutation?
    Answer. The volume and quantities of waste from reprocessing and 
transmutation are not known in detail today, since they will depend not 
only on process design considerations but also on the results of tests 
performed with the GNEP demonstration facilities. For example, no one 
has operated a fast burner reactor with transuranic fuel and the 
technical results from engineering-scale treatment of that spent fuel 
for further recycle will be available for the first time in 
approximately 15 years. In the meantime, laboratory scale tests will be 
performed using irradiated specimens from foreign fast test reactors 
(PHENIX in France and JOYO in Japan). Regardless of the processes 
finally chosen, there will be no high level liquid waste products.
    From the UREX+ separations plant, approximately 94 percent of the 
products will be highly purified uranium which will probably be stored 
for use as fuel in future fast power reactors. If it is judged to be 
surplus, it would be classified as a low level waste and disposed of by 
shallow burial. Approximately 25 percent by weight of the spent fuel 
going to a UREX+ plant is fuel cladding and end pieces. It will be 
compressed and disposed of as high level waste. A small amount of the 
cladding will be used to form an alloy with the fission product 
technetium for disposal in the same metal waste container.
    The fission product iodine will be collected from the dissolver 
off-gas, placed in a stable waste form and placed in the repository. 
Cesium and strontium will be separated, converted to an alumino-
silicate waste form and stored for approximately 200 years, by which 
time it will be a low level waste and disposed of by shallow burial. 
The remaining fission product, constituting approximately 5 percent of 
the spent fuel, will be mixed with borosilicate glass (with up to 50 
percent of the final glass logs being fission products) and disposed of 
at Yucca Mountain.
    The transuranics in the spent fuel, constituting approximately 1.1 
percent by weight, will be blended with fresh make-up uranium and 
converted to fuel for the fast test reactor. Recycle through fast 
burner reactors will result in a small quantity of fission product and 
process losses being removed from the processing system each cycle. The 
material will be formed into an inert waste form for disposal. The 
total quantities will be a very small fraction of the quantity of spent 
fuel entering the UREX+ processing plant (which under the current once-
through fuel cycle, would go directly to Yucca Mountain). Thus the 
overall quantities and heat loads of the final waste will be reduced 
greatly, allowing the technical capacity of the Yucca Mountain to be 
substantially increased.
    Question. Does DOE envision inviting other countries that we don't 
want to reprocess to ship their spent fuel to the United States? Could 
DOE provide a list of the countries whose spent fuel we would be 
accepting and reprocessing?
    Answer. We do not envision accepting spent fuel pursuant to the 
GNEP vision until there is sufficient advanced recycling capability 
available in the United States. At that time, we would have to consider 
the conditions under which the United States would reprocess another 
country's spent fuel. To meet nonproliferation objectives, the United 
States currently receives U.S.-origin Highly Enriched Uranium spent 
nuclear fuel from foreign research reactors. Additionally, the United 
States has from time-to-time received spent fuel from another country 
to achieve nonproliferation and other Departmental missions.

                        PAST REPROCESSING RECORD

    Question. Given that the United States has built three commercial 
reprocessing plants and none of them have worked, would there not be a 
danger that the reprocessing site would be turned into an interim 
storage site? (Indeed, that is exactly what happened to the 
reprocessing plant that GE built but never operated in Illinois.)
    Answer. Recycling of commercial spent fuel in the United States was 
ended in 1977 by Presidential order. Commercial reprocessing had been 
carried out from 1966 to 1972 at West Valley, New York, at which time 
the plant was shut down for modifications based on increased Nuclear 
Regulatory Commission (NRC) safety requirements. The combination of the 
Presidential Order and modification costs resulted in a decision to end 
the plant's operations. Two other commercial reprocessing plants 
(Morris, Illinois and Barnwell, South Carolina) were built but never 
operated with radioactive materials. Decreasing costs of low-enriched 
uranium have discouraged private investments in spent fuel 
reprocessing, particularly since the Federal Government assumed full 
responsibility for spent fuel management with the passage of the 
Nuclear Waste Policy Act in 1982 (as amended in 1987).
    The Department intends to carry out the GNEP initiative in an 
orderly manner over several decades with the goal of having in place an 
immensely more efficient fuel cycle in the future. The first phase is 
the demonstration of technical feasibility over the next decade. If the 
technologies are shown to be technically feasible, then the Department 
will seek to promote their deployment in a manner that is commercially 
viable.
    The Nuclear Waste Policy Act constrains the extent to which the 
Department can undertake interim storage and the administration's 
recently proposed amendment to the Nuclear Waste Policy Act did not 
include provisions related to interim storage of commercial spent fuel. 
However, we understand there are some members of Congress who are 
interested in pursuing interim storage as a temporary means of managing 
spent fuel while Yucca Mountain and recycling technology are being 
developed. Regardless, two conditions must be met. We must continue to 
ensure that Yucca Mountain is available regardless of fuel cycle 
scenario and regardless of the way the Department proposes to manage 
spent fuel, pending its disposal.

                     FAST REACTOR RECORD AND SAFETY

    Question. What are the safety risks of sodium-cooled reactor as 
opposed to a thermal water cooled reactor? Please describe the 
incidents that have occurred related to sodium cooled reactors.
    Answer. Both technologies are extremely safe. This conclusion is 
based on decades of operating experience with light water reactors and 
from large-scale demonstrations of sodium-cooled reactors in several 
countries. With respect to sodium-cooled reactors, these include:
  --More than 30 years experience with the French 560 MWt Phenix fast 
        reactor;
  --30 years experience in the United States with the EBR-II fast 
        reactor;
  --30 years experience with Japan's 100 MWt Joyo fast reactor;
  --30 years experience with Russia's 1000 MWt BN 350 reactor;
  --25 years experience with Russia's 1470 MWt BN 600 reactor;
  --13 years experience in the United States with the 400 MWt Fast Flux 
        Test Facility; and
  --13 years experience with France's 2900 MWt Superphenix reactor.
    Phenix and EBR-II have had issues involving such things as minor 
sodium leaks, but there have been no nuclear-related accidents at 
either of them.
    In addition, the passively safe design features that have been 
demonstrated in sodium-cooled reactors will provide an added layer of 
safety to Advanced Burner Reactors (ABRs). ABRs will undergo a safety 
review and certification process to assure safe operation.

                         PROLIFERATION CONCERNS

    Question. Would it be possible, and if so, how hard would it be, 
for a country or terrorist group to extract pure plutonium from the 
proposed transuranic radionuclide mix (for example, in a glove box)? 
Could a process such as pyroprocessing be adjusted to provide more pure 
plutonium?
    Answer. A country and a terrorist group represent two very 
different proliferation threats. In the case of a state actor, it has 
long been understood that radiation barriers provide no significant 
protection against chemical separation. Significant radiation barriers 
may provide protection against theft by sub-state actors depending upon 
the dedication of the sub-state group and the strength of the radiation 
field.
    From a state, or sub-state perspective, significant shielded glove 
box facilities and supporting equipment would be required to separate a 
weapon-significant quantity of plutonium from the UREX+ product. These 
facilities are commonly co-located with or adjacent to hot cell 
capabilities since typical small laboratory-scale radiochemical 
operations usually involve a variety of different radiation fields and 
contamination hazards. A PUREX facility is designed to produce and 
isolate plutonium in a readily usable form; a UREX+ facility is not. 
Further processing of the product of a UREX+ facility would require 
access to shielded radiochemical facilities and technical expertise to 
separate the plutonium into a more readily usable form. A sub-state 
actor would have to secure both long term access to these facilities 
and the radiochemical expertise required to perform the operations. 
Obviously, the state actor risks are higher in either case, since the 
resources of a state actor are significant in comparison with non-state 
adversaries. This is why IAEA safeguards are required on all non weapon 
state nuclear materials and facilities--including laboratory scale 
facilities. Reengineering a UREX+ facility could be detected by IAEA 
safeguards that are designed to detect such process modifications.
    Pyroprocessing, by design, is not capable of making clean 
separations of plutonium. It is also a much more difficult technology 
to master than basic aqueous processes since it involves specialized 
high temperature molten salt and dry box hot cell facilities. As such, 
it is expected that proliferators will use simpler, less costly and 
proven aqueous technology, such as PUREX, to separate plutonium.
    Question. It is vital to ensure that plutonium already separated by 
reprocessing is adequately secured against terrorist theft. What more 
should the U.S. Government be doing to ensure that nuclear stockpiles 
around the world are secure and accounted for and cannot fall into 
terrorist hands?
    Answer. I share your concern that separated plutonium and other 
nuclear weapons usable materials currently available in civil nuclear 
programs around the world could fall into the hands of terrorists. For 
this reason, as part of NNSA's Global Threat Reduction Initiation 
(GTRI), NNSA has been working on an accelerated basis to ensure that 
highly enriched uranium and separated plutonium currently used in 
civilian applications around the world are subject to effective 
physical protection. Furthermore, GTRI is developing a path forward for 
recovering and dispositioning these nuclear weapons-usable materials to 
high security sites within the United States or within another GTRI 
partner country with excellent nonproliferation and nuclear security 
credentials. To that end, NNSA currently is negotiating with several 
countries that possess these vulnerable, high-risk materials to develop 
a plan for recovery and disposition that will reduce or eliminate the 
risk of theft or diversion of these so-called ``gap materials'' that 
pose a security concern to the United States and the international 
community.
    Question. Dr. Finck of Argonne National Laboratories stated in his 
presentation before the Advanced Fuel Cycle Initiative's Semi-Annual 
Review Meeting in August of 2003, ``Expect that proposed dual tier fuel 
cycle cannot be made intrinsically proliferation resistant.'' Why is 
UREX+ not considered proliferation-resistant? What are the issues here?
    Answer. Dr. Finck's statement refers to ``intrinsic'' proliferation 
resistance. Intrinsic resistance is understood to mean the 
proliferation resistance of a system in the absence of any 
institutional, legal, or technical verification measures. The term 
``proliferation resistance'' should not be confused with being 
``proliferation-proof.'' A system that is truly intrinsically 
proliferation proof would not require safeguards.
    UREX+ is an aqueous separation method, and therefore it is possible 
to reengineer facilities and systems to separate plutonium. However, 
IAEA safeguards and other legal and institutional measures are 
significant ``extrinsic'' proliferation resistant features and would 
provide for the timely detection of tampering and re-engineering.
    We do not anticipate technical characteristics alone make the UREX+ 
process immune to exploitation by would-be proliferators. That is why 
we are proposing as part of our GNEP proposal to consider future 
recycling only in a limited number of fuel cycle states that already 
possess reprocessing technology.

                         INTERNATIONAL CONCERNS

    Question. Secretary Bodman, in a speech he gave on November 7, 
2005, at the 2005 Carnegie International Nonproliferation Conference, 
said: ``It is important to note that in addressing reprocessing--or 
recycling--technologies for dealing with spent fuel, we are guided by 
one overarching goal: to seek a global norm of no separated 
plutonium.'' and, ``Regardless of whether one believes reprocessing has 
worked well in those nations where it is practiced, I think everyone 
would agree that the stores of plutonium that have built up as a 
consequence of conventional reprocessing technologies pose a growing 
proliferation risk that requires vigilant attention.'' Given these 
statements, is it correct to say that the United States will not 
support the reprocessing of U.S. origin and controlled spent fuel in 
any of the foreign reprocessing plants, other than those already in 
place, such as with Japan? Should the U.S. reconsider that agreement? 
Given these statements, can you explain why the French plutonium 
company AREVA has reportedly stated that it hopes to sign new 
reprocessing contracts covering U.S. spent fuel?
    Answer. We have made no decisions regarding reprocessing of U.S.-
origin spent fuel in foreign reprocessing plants. It is an issue that 
needs to be examined in more depth as we establish partner nations 
under the GNEP vision.
    Question. Secretary Bodman has expressed doubt in the U.S. being 
able to afford to fulfill the GNEP vision by itself. Yet, for the near 
term the U.S. DOE strategy is to go it alone. What will be the schedule 
and pathway for intellectually and financially engaging international 
partners?
    Answer. Earlier this year, the Deputy Secretary of Energy and Under 
Secretary of State consulted government officials in a number of 
countries including the United Kingdom, France, Russia, Japan and 
China, each of whom have large investments in the commercial fuel 
cycle. These discussions focused on the objectives of the Global 
Nuclear Energy Partnership initiative and there was general agreement 
on the objectives. Since then, we have continued diplomatic and 
technical outreach to these and other nations which would be 
prospective partners. The U.S. strategy is to work with international 
partners in developing these technologies. For example, in January the 
United States, France and Japan signed an agreement to guide the 
cooperation on the research and development of sodium cooled fast 
reactors, a reactor concept that is under consideration for the 
Advanced Burner Reactor.

                  NEXT GENERATION NUCLEAR PLANT (NGNP)

    Question. With the new focus and funding drain due to GNEP, can the 
United States still afford to pursue a GEN IV plant that targets both 
electricity and hydrogen production?
    Answer. The Department is committed to pursuing the research and 
development necessary to inform a decision in 2011 on deployment of the 
Gen IV technology. The Department has requested $23 million in fiscal 
year 2007 to keep the program on pace to support a fiscal year 2011 
decision. Research underway includes development of coated particle 
fuel, qualification of high temperature materials for use in the 
reactor system, and development of analytical codes and methods to be 
used in assessing system performance. In addition, the very high 
temperature reactor technologies being investigated as the Next 
Generation Nuclear Plant could be among the concepts considered for 
deployment as small scale reactors under GNEP.

                                 TIMING

    Question. To date, UREX+ has been tested only on the gram scale, 
using technologies different than those that would be used for full-
scale operation and separating a somewhat different set of materials 
than is now proposed--yet it is now proposed to use it for processing 
the 63,000 tons of commercial spent fuel slated for disposal in a 
geological repository, and perhaps more. Wouldn't it be wiser to wait 
until the technology has been further developed before proceeding to an 
expensive engineering-scale demonstration, and before choosing between 
this technology and other proposed separations technologies?
    Answer. The separations technologies that the Department proposes 
testing have been studied for over 5 years and have been demonstrated 
at the laboratory scale in kilograms quantities. The Department 
believes that the UREX+ separations process is the best known and 
proven today. Only through proceeding with engineering scale 
demonstrations of the separations, fuels and reactor technologies will 
we learn the practicality and economics of deploying industrial scale 
facilities. Only by beginning these demonstrations now will we discover 
means to reduce their costs and deployment times. And only by beginning 
them now can we realistically expect them to be ready by the time they 
are needed in the future for commercial scale deployment.
    Question. Why should we choose between potential reprocessing 
technologies in the next few years, rather than allowing whatever 
technologies appear to be promising to continue to develop? Are we in 
danger of choosing a technology because it can be made available 
sooner, forgoing technologies that may be more promising but may take 
longer to develop?
    Answer. It is crucial that we start today to accelerate and 
demonstrate a more proliferation resistant fuel cycle--a fuel cycle for 
the future that can provide the benefits of nuclear energy to the world 
while effectively addressing civilian inventories of plutonium and 
reducing the quantity and toxicity of nuclear waste requiring a 
geologic repository.
    Over the last 5 years, the Department has pursued development of 
various flow sheets for a more proliferation resistant separations 
technology. The Uranium Extraction Plus or UREX+ has been successfully 
demonstrated at the ``laboratory scale''.

        REPROCESSING IN EUROPE (TRADITIONAL PUREX REPROCESSING)

    Question. The concept of ``recycling'' conveys the notion that 
countries such as France and the United Kingdom re-use the plutonium as 
they go, but actually MOX fuel is not made and used immediately. (Nor 
is the high-level liquid waste generated from reprocessing immediately 
vitrified; rather, it is stored in stainless steel tanks to cool.) More 
than 200 metric tons of commercial plutonium worldwide are separated 
and have not been used as MOX and the surplus is building up each year. 
Many reactors need costly modifications to use MOX and some reactors 
cannot be modified. There are about 80 metric tons of surplus plutonium 
at La Hague in France and similar amounts at Sellafield in the United 
Kingdom and about 40 metric tons in Chelyabinsk, Russia. The United 
Kingdom has no reactors that can use plutonium fuel and no operating 
MOX factory. How can the United Kingdom effort be described as a 
recycling program when the United Kingdom has amassed about 80 metric 
tons of civil weapons-usable plutonium and has no plan to use this 
material? (For Pu amounts reported to the IAEA--see INFCIRC 549, on 
IAEA web site). Why do we expect that the proposed program will be more 
successful in avoiding a buildup of the material separated by 
reprocessing?
    Answer. The GNEP vision would pursue different approaches to avoid 
buildup of pure plutonium separated by reprocessing. Plutonium would 
not be separated by itself; rather, plutonium would remain mixed with 
other transuranic elements. The Advanced Burner Reactors would more 
quickly consume these transuranic elements (including plutonium) than 
the reactors that use plutonium-MOX. Finally, the United States would 
pursue a phased approach that would bring the transuranic products from 
UREX+ in equilibrium with the fuel needs for the demonstration of the 
advanced burner reactor.
    Question. How much transuranic waste has been created by 
reprocessing in France and the United Kingdom, and how does it compare 
with the original spent fuel volume? Are the French planning to dispose 
of what they call ``intermediate waste'', including transuranic waste, 
generated from reprocessing (separate from the vitrified high level 
waste) in a deep geologic repository? How much of this waste will they 
have from reprocessing compared with the volume of spent fuel?
    Answer. France and the United Kingdom do not have a geologic 
repository program and are developing long-term disposal plans that 
would address many different wastes, including vitrified waste. The 
structure of waste regulations in both countries differs from the 
United States and the volumes of waste generated would not be directly 
comparable.
    Question. France uses plutonium fuel (MOX) in 20 out of 58 
reactors, but the stockpile of civil plutonium continues to increase 
with no end in sight. How can this growing stockpile be presented as 
``recycling''? MOX fuel produces less than 10 percent of France's 
nuclear electricity, but an official French report indicates that it 
imposes about $1 billion per year in added electricity costs. Why does 
Electricite de France (EDF), the state-owned utility forced to use MOX 
fuel, place a negative value on plutonium they must take from the 
reprocessing company (Cogema)? Isn't the French reprocessing company 
almost wholly owned by the government (about 85 percent as of 2004)?
    Answer. There are significant differences between the French 
approach to recycling and the approach being explored by the United 
States. The French MOX-recycling program is based on plutonium-only 
separation using PUREX and is aimed at obtaining modest energy recovery 
from that plutonium. The French program does not aim to maximize use of 
a geologic repository nor address repository costs in its current 
economics.
     GNEP has a broad range of objectives, including decreasing 
inventories of weapons-usable material (whether in used fuel or already 
separated), avoiding separation of pure plutonium, incorporation of 
newest safeguard design techniques, and making more efficient use of 
the U.S. geologic repository at Yucca Mountain. While the French 
program focuses on plutonium, the GNEP addresses proposed technologies 
relating to plutonium, americium, curium, and neptunium, thereby 
increasing waste management benefits. Recycle and consumption of 
plutonium, americium and neptunium decrease the geologic heat load and 
long-term potential doses. Recovery of uranium, at the purity level 
equal to low-level waste, reduces the volume of the waste. If the GNEP 
technologies are successful, the residual waste would be put into a 
form that is more resistant to long-term leaching than once-through 
used fuel, further reducing the technical requirements for geologic 
repository design.
    Question. The United Kingdom's THORP reprocessing plant, which 
reprocesses foreign light water reactor fuel, had a major accident 
which was discovered last year after several months (a leak of nuclear 
material onto the floor of one cell, due to a broken process pipe). The 
accident has resulted in the facility being shut down indefinitely, 
with the possibility that it might not start back up. The operators of 
this plant have asked the United Kingdom government to permanently 
close the plant, which has never been profitable. What is the risk of 
similar accidents and safety record in the United States if we pursue 
reprocessing?
    Answer. The overall safety record of fuel cycle operations in the 
United States is excellent, and is the model that should be followed in 
evaluation of fuel cycle issues. The safety of U.S. operations 
routinely exceeds established industrial standards of the countries in 
which they are deployed. The lessons learned from the leak at THORP, as 
well as all other off-normal events, have been closely studied and are 
well understood. The facilities under the GNEP initiative would be 
subject to rigorous safety analyses and regulatory oversight.

                           ENVIRONMENTAL/NEPA

    Question. What NEPA related requirements will have to be met in the 
course of developing GNEP in the next year/years to come?
    Answer. On March 22, 2006, the Department issued an Advance Notice 
of Intent (NOI) for the GNEP Technology Demonstration Program. Over the 
next 2 years, the Department plans to develop an Environmental Impact 
Statement to assess the potential environmental impacts associated with 
the GNEP Technology Demonstration Program. At an appropriate point in 
the future, DOE will prepare a Programmatic Environmental Impact 
Statement to inform the ultimate decision of whether to proceed with 
potential future actions to encourage the commercial-scale deployment 
of proliferation-resistant GNEP Technology Demonstration Program 
technologies.

                           PUBLIC DISCLOSURE

    Question. What was the nature of the briefings on GNEP given to and 
responses from the countries which have been briefed on this program? 
What companies were briefed as part of those briefings? And which U.S. 
companies have been briefed?
    Answer. Briefings by the U.S. Government on GNEP have proceeded 
with a variety of countries. Prior to the February 6, 2006 public 
announcement of GNEP, the administration consulted with officials from 
the United Kingdom, France, Russia, Japan, China and the International 
Atomic Energy Agency (IAEA), and the GNEP vision was well received in 
each case. These were government-to-government meetings. Part of the 
consultation with the officials from France included a meeting with 
representatives from Areva. Further technical discussions on areas for 
technology partnership are ongoing.
    Shortly after the February 6, 2006 announcement of GNEP, a cable 
was sent to all diplomatic posts providing information on GNEP. 
Government delegations from Canada, the Republic of South Korea, and 
Indonesia were briefed at their request. In addition, many science 
counselors from embassies that expressed interest in learning more 
about GNEP from Europe, Asia, Latin America and Africa were briefed in 
Washington. In March 2006, the IAEA Board of Governors was briefed, 
including representatives from nearly 40 countries. The response to the 
briefings reflected interest.
    Since the announcement of GNEP, the Department has provided 
briefings on GNEP to the U.S. nuclear industry through the Nuclear 
Energy Institute, and the National Association of Regulatory Utility 
Commissioners. The Department has held discussions with a number of 
U.S. utilities and nuclear suppliers that might have an interest in 
GNEP. The GNEP vision also has been discussed with representatives of 
foreign government-owned nuclear companies or their American affiliates 
at conferences or meetings on related matters (e.g., Generation IV).
    Question. Former Secretary of Energy Spencer Abraham has been named 
Chairman of Areva, Inc. in the United States. As the French company 
Areva strongly supports the development of reprocessing and favors 
reprocessing U.S. spent fuel in France, do any conflict of interest 
laws apply, and has Secretary Abraham lobbied the Department of Energy 
on this issue?
    Answer. Former Secretary Spencer Abraham terminated his Federal 
service on January 31, 2005. He continues to be subject to the post-
employment restrictions of 18 U.S.C. 207(a). That section prohibits, in 
part, a former employee from knowingly making, with the intent to 
influence, any communication to or appearance before any employee of 
any department, agency, or court of the United States on behalf of any 
other person in connection with a particular matter involving a 
specific party, in which the former employee participated personally 
and substantially as an employee of the government. That section also 
prohibits, a former employee from knowingly making such communications 
or appearances when the former employee knows or reasonably should know 
that the particular matter involving a specific party was actually 
pending under his official responsibility within a period of 1 year 
before the termination of his Federal service. Former Secretary Abraham 
is no longer subject to a number of other post-employment restrictions 
that ended 1 year after his Federal service terminated.
    To the best of my knowledge, former Secretary Abraham has not 
lobbied the Department on behalf of Areva, Inc.

                          SUBCOMMITTEE RECESS

    Senator Allard [continuing]. So we can move forward with 
our deliberations.
    And, without any more questions, I now declare the 
subcommittee in recess.
    [Whereupon, at 4:05 p.m., Tuesday, March 2, 2006, the 
subcom- 
mittee was recessed, to reconvene subject to the call of the 
Chair.]


 ENERGY AND WATER, AND RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 
                                  2007

                              ----------                              


                        TUESDAY, MARCH 28, 2006

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:01 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Pete V. Domenici (chairman) 
presiding.
    Present: Senators Domenici, Craig, Allard, Johnson, and 
Inouye.

                       DEPARTMENT OF THE INTERIOR

                         Bureau of Reclamation

STATEMENTS OF:
        MARK LIMBAUGH, ASSISTANT SECRETARY FOR WATER AND SCIENCE, 
            DEPARTMENT OF THE INTERIOR
        JOHN W. KEYS III, COMMISSIONER, BUREAU OF RECLAMATION

                 STATEMENT OF SENATOR PETE V. DOMENICI

    Senator Domenici. Good morning. Today the subcommittee is 
going to take testimony on the fiscal year 2007 budget request 
for the Bureau. Our panel will consist of the witnesses from 
the Department of the Interior and the Bureau of Reclamation. 
Testifying for them will be Mark Limbaugh, Assistant Secretary 
for Water and Science; and John W. Keys, III, Commissioner of 
Reclamation. Commissioner, it is great to have you before us. 
We understand that after this series of hearings over time that 
this may be your last. You will be missed. It has been a good 
stay. We hope you have enjoyed it. Things have been tough at 
the Bureau, but we are in transition.
    Thank you for appearing. I understand that the Bureau is 
considering that your effective retirement time would be next 
month. Is that correct?
    Mr. Keys. Mr. Domenici, that is correct.
    Senator Domenici. So certainly this is your last appearance 
here. Again, thank you for your many years of service to the 
Federal Government. Second, I want to wish you a very long and 
happy retirement.
    Now to the business at hand. The fiscal year 2007 budget 
request for the Bureau totals $971.6 million, a decrease of 
nearly $50 million from 2006, at least the enacted level of 
2006, which was $1.0208 billion, a 9.5 percent decrease. That 
is a pretty steep decrease. This is partially offset by 
discretionary receipts of $33.8 million from the Central Valley 
Project Restoration Fund and an $88 million rescission of 
unobligated balances for At Risk Desert Terminal Lakes.
    Highlights for the budget include, as we see it: $14.5 
million for Water 2025, a $9 million increase for fiscal year 
2006 level increase in that project. This initiative seeks to 
make water more available in reclamation States through 
enhanced conservation. Clearly, the money does not match up 
with the size of the problem, but in this tight budget year I 
do not know where it does.
    Fifty-seven million dollars, another item, is a $2 million 
increase from 2006 for the Animas-LaPlata. Funding will be 
primarily provided for the continued construction of the Ridges 
Basin Dam and Durango pumping plant. If I am wrong on any of 
these, I would hope you would take note and note it in your 
comments to us. However, it is my understanding that an 
additional $12 million is needed to maintain that schedule and 
we will work on that with you.
    Thirty-eight-point-six million dollars for CALFED. That is 
a $2 million increase from 2006. The funds will be used for 
environmental water account, storage feasibility studies, 
conveyance studies, and some other items.
    One hundred twenty million dollars for operating, managing, 
and improving California Central Valley Project. This is a $9 
million increase over 2006.
    And $69 million for 2007--that is a $7.6 million, 11 
percent, increase--for ensuring the safety of reclamation dams.
    Eight-point-five million for 2007, $7.5 million decrease 
from the 2006 program level, for science and technology 
programs.
    And $39 million for 2007, the same amount as the enacted 
level, for site security. The 2007 budget includes funding for 
guards and surveillance of facilities, anti-terrorism upgrades, 
law enforcement functions.
    Ten million dollars for water recycling and reuse projects. 
This is a $15 million decrease from 2006.
    I anticipate that this tight budget will cause us some real 
problems and I appreciate the fact that you have put together a 
budget that is reasonably balanced as you see it, and we will 
have our views to see whether we agree with that as we complete 
our work.
    Senator Reid is not here, but I understand if he has a 
statement we will introduce it in the record, and it is with 
his concurrence that we proceed without a minority member 
today.
    Senator Craig, very active in this committee, I yield to 
you for whatever time you would like.

                    STATEMENT OF SENATOR LARRY CRAIG

    Senator Craig. Well, thank you very much, Mr. Chairman.
    I am sure that the Secretary and the Commissioner come 
before us with the Bureau of Reclamation budget facing a 3.5 
percent decrease from 2006 levels in what I would suggest, 
although it may not be articulated by them, to be a frustrating 
budget. I think all of us recognize, and certainly this 
committee does and you do, Mr. Chairman, the aging 
infrastructure that we are dealing with and the need to 
obviously, to deliver water and its importance, and in the West 
now more so than ever.
    Before I go on, let me also recognize, as you have, that 
Commissioner Keys is leaving us. John, I must tell you how 
proud I have been of the service you have provided to us, to 
our Government, to the West for a good number of years. John 
and I go back a long ways. When he was serving in Idaho we 
worked very closely together, and that relationship continued. 
The Commissioner has been instrumental in developing the needed 
Water 2025 program. He is returning to the West and he will 
find a West just in the short time that he has been here that 
is growing dramatically, a West that is populating at an 
unprecedented rate, a West that is populating in the most arid 
parts of our country.
    The three fastest growing States in the West right now are 
Arizona, Nevada, and my State of Idaho, Mark's State of Idaho. 
We live in the high desert great basin region of the country. 
For us to not be focusing with the intensity of resource that I 
think we need for water and water development is going to catch 
up with us. We are going to have to start running faster than 
we are running today to resolve some of those problems that are 
needed.
    Right now, a classical thing is happening in Idaho. The 
Idaho legislature is battling it out over how to re-look at old 
first in line, first in time water rights, and should they be 
used in slightly different ways, for enhanced storage, enhanced 
water into the system. That is an interesting battle that is 
going on at the legislative level right now. But I think, Mr. 
Chairman, it is prelude to the reality of some of our problems 
that we are facing in a country; in a region of the country 
that obviously does not get all the water it needs. That battle 
will continue.
    The Bureau is going to play a role in it. They must play a 
role in it. Your bill, the Rural Water Supply Act, Mr. 
Chairman, I hope we can see that through the House this year. I 
think it is going to begin to focus us in ways that we need to 
focus with some resource that is going to be awfully important.
    Lastly, Mr. Chairman, I have to say this because, thanks to 
the Secretary and the Commissioner, I did something over the 
recess that I have been wanting to do for years. I spent a day 
at Hoover Dam and went top to bottom, in a structure that still 
is operating as effectively, if not more so, than it was 
designed to do in the 1930's when it was built. I could go on 
and on, but the one thing behind it that was interesting is 
that the impoundment, the lake, the reservoir, was just a 
little over 50 percent full.
    There is a very real reality to the water system there and 
the supply of the river that is so important to that portion of 
the West and the absence of water at this moment. I thought it 
was fairly dramatic. The reality is that Colorado just ain't 
producing water. You have got to get busy.
    Senator Allard. Yes, we are trying to.
    Senator Craig. All right, okay. And probably keep more of 
it.
    Anyway, thank you very much, Mr. Chairman. We are glad to 
have you before us, both Mr. Secretary and Commissioner. Again, 
John, we hope you the very best in your retirement.
    Mr. Keys. Thank you very much.
    Senator Domenici. Colorado had some late snow.
    Senator Craig. Yes, they did.
    Senator Allard. And down around the New Mexico border.
    Senator Craig. And they are getting it again.
    Senator Domenici. Is it in the right place? Is it coming 
down some more?
    Senator Allard. Yes.
    Senator Domenici. It is too late, but that is good.
    Senator, do you have anything you would like to offer?

                    STATEMENT OF SENATOR TIM JOHNSON

    Senator Johnson. Just very briefly.
    Mr. Secretary, I want to welcome Secretary Limbaugh here as 
well as Mr. Keys. Commissioner Keys, I too want to join in 
thanking you for your extraordinary service over these many 
years. We have worked very closely with you on our BOR water 
projects in particular in South Dakota and I wish you well and 
the people of South Dakota wish you well in whatever next may 
come your way in terms of your next endeavors.
    I do want to express my concern that once again the BOR 
budget for the Great Plains Region is simply inadequate, given 
the ongoing projects that we have out there. It is my 
understanding that the recommendation is $168 million for Water 
and Related Resources. That is a $14.4 million decrease from 
2006. It is my understanding that about $68.7 million is 
budgeted for ongoing rural water projects. That includes the 
municipal, rural, and industrial, MRI account. That includes 
the Mni Wiconi and the Lewis and Clark Rural Water Systems in 
South Dakota.
    Very frankly, the Mni Wiconi and Lewis and Clark Water 
Systems in South Dakota alone could consume the entire budget 
for ongoing water projects. Each of them could use well over 
$30 million in the coming fiscal year for construction. What I 
fear happening is that these projects are being stretched out 
to such a great degree that not only does it delay getting 
water in the case of the Mni Wiconi to some of the poorest of 
the poor, three Indian tribes, but the overall cost of these 
projects is becoming immense, which may make it almost 
unworkable for some of the component rural water systems.
    Like buying anything else, the more we can pay up front the 
less it will cost down the road. So I am very worried that we 
continue to come in with budget recommendations that are 
excessively low and are going to make these water projects as 
well as others around the country far more costly to the 
taxpayers than would otherwise be the case.
    Now, I appreciate that the President campaigned on lower 
taxes and smaller government, so no one should be surprised 
that there is an inadequate budget for public works projects 
such as these. Nonetheless, these projects are key 
infrastructure improvements that will result in economic growth 
and prosperity and public health throughout large regions of 
the country, and I think that it is a classic case of being 
penny-wise and pound-foolish to nickel-and-dime and underfund 
these key water projects.
    The BOR has done a great job of managing these projects, of 
building these projects. So my criticism is not with the BOR. 
The criticism is with the overall level of funding that OMB has 
allocated in the recommendations and, frankly, our budget 
resolution does not do as well as I would like either, despite 
great efforts on the part of our chairman and others to make 
sure that we try to get a reasonable allocation.
    So I want to share those concerns with you, but most of 
all, Commissioner Keys, to thank you for working very closely 
with my staff and with South Dakotans over the years. We have 
some of the most extraordinary and largest scale drinking 
projects in the world in that State, and your willingness to 
work with us on those projects is a big reason why we have come 
as far as we have. Thank you.
    Senator Domenici. Thank you very much, Senator.
    Senator Allard.

                   STATEMENT OF SENATOR WAYNE ALLARD

    Senator Allard. Well, Mr. Chairman, I would just like to 
make my full statement a part of the record and join you and 
the other members of the committee in expressing to 
Commissioner Keys our appreciation for his service. I 
understand that you have not decided what you are going to be 
doing next, but I wish you well in whatever endeavors you may 
decide to do, even if you are just going to retire and take 
life easy, which I cannot imagine somebody like you is going to 
end up doing. But I do wish you well with the other members of 
the committee.
    Also, I just want to highlight a problem that I see 
emerging and that is maintenance of our facilities we already 
have out there. I know that other members have similar problems 
in their States that we do, that concern about certain projects 
that have some maintenance requirements that we think we really 
need to deal with and we need to rehabilitate many of those 
projects.
    Colorado has 18 Bureau projects there. We have utilized the 
Department a lot historically, and these projects I think have 
become especially prominent in the last several years in 
Colorado, in fact the entire West, because of the terrible 
drought that you have out here on your chart. It has been 
shifting around both in the northern and southern parts of the 
West.

                           PREPARED STATEMENT

    Many federally owned Bureau of Reclamation projects are 
currently at or past their life expectancy and in severe need 
of rehabilitation. The Bureau has maintained that 
rehabilitation is the same as operations and maintenance, which 
in many cases was turned over to local operating agencies. So I 
just say that it seems to me that we need to be looking at 
these things more seriously. So I will have some questions for 
you in that regard, and I do not understand why you do not take 
a greater interest in rehabilitation of these projects, because 
we are not going to be building new ones and we need to make 
sure that the ones that we have out there are up to par with 
changing standards and up there to operate at maximum 
efficiency, because I do not see us getting a lot of new 
projects out there.
    Thank you, Mr. Chairman.
    [The statement follows:]

               Prepared Statement of Senator Wayne Allard

    Mr. Chairman, thank you for holding this hearing. Those of us in 
the West are well aware of the important work that the Bureau of 
Reclamation has done over the years. In Colorado there are 18 Bureau 
projects. These projects are vital in supplying water to many people in 
rural areas of the State. The value of these projects has been 
especially prominent during the last 4 to 5 years, as Colorado--and the 
entire West--has experienced terrible drought.
    I would like to mention a growing problem with Bureau projects 
throughout the West, which I will follow-up on during the question 
portion of this hearing. Many federally-owned Bureau of Reclamation 
projects are currently at, or past, their life expectancy and in severe 
need of rehabilitation. While the cost of rehabilitation is generally 
one-half to one-third of the cost of replacing a project this is more 
than many communities can afford. The Bureau has maintained that 
rehabilitation is the same as operations and maintenance, which in many 
cases was turned over to local operating agencies long ago.
    It seems to me, however, that these two things are not the same. No 
matter how many oil changes or tune-ups you give a car, it will 
eventually no longer be serviceable. The same can be said of these 
projects. Local entities have worked diligently over the years to care 
for, and make repairs to, these projects. But eventually they reach the 
end of their operational life, and more extensive help is needed. I 
cannot understand why the Bureau continues to maintain that they have 
no responsibility to assist local communities in the rehabilitation of 
federally-built, federally-owned projects.
    Before I close I would like to thank Commissioner Keyes for his 
service. Mr. Keyes, I understand that you have announced your 
resignation, and will be leaving the Bureau April 15. We wish you all 
the best in whatever you choose to do next.

    Senator Domenici. Before we proceed, I think we should let 
this record, hearing record, reflect that we commence these 
hearings at a rather historic time, because under the Energy 
Policy Act we have totally modernized the licensing process for 
water projects in the United States and diversions, thanks to 
the extraordinary leadership of Larry Craig, and we have 
something that is workable. It is going to be a difficult, 
long, arduous implementation process, without any question. 
Perhaps we will have an oversight hearing when you think it is 
right.
    Senator Craig. I think we should do that.
    Senator Domenici. Sorry I did not have that on, but I think 
you understood most of what I said.
    Incidentally, speaking to my staffer out there, I would 
prefer if you would come up here and sit by me.
    Now, having said that, we are going to proceed, 
Commissioner, with you and then with Mark in that order. Or do 
you want to go in the reverse order? Mr. Secretary, do you want 
to go first?
    Mr. Limbaugh. Yes, please, Mr. Chairman.
    Senator Domenici. Let us do that. You are on.

                       STATEMENT OF MARK LIMBAUGH

    Mr. Limbaugh. Thank you, Mr. Chairman and members of the 
committee. Good morning. I am pleased to be here today to 
introduce the 2007 budget for the Bureau of Reclamation and the 
Central Utah Project. I would ask that my entire statement be 
made part of the record.
    Senator Domenici. It will be.
    Mr. Limbaugh. Thank you, Mr. Chairman.
    Joining me today is Reclamation Commissioner John Keys and 
CUPCA Program Director Reed Murray. Also with us is John 
Trezise, Budget Director for the Department of the Interior; 
and Bob Wolf, Reclamation Budget Director.

  HIGHLIGHTS OF THE FISCAL YEAR 2007 BUDGET REQUEST FOR THE BUREAU OF 
                              RECLAMATION

    Before turning to the Commissioner, I would like to 
highlight a few details of the Reclamation request for the 
subcommittee. Recently, the National Academy of Sciences 
completed a study on the Bureau of Reclamation's construction 
and infrastructure programs. This study looked into the future 
of the agency and provided some insight on how Reclamation can 
improve its construction and infrastructure management 
functions, as well as address some contemporary problems in 
dealing with water supply and infrastructure challenges in the 
future.
    I want to assure this subcommittee, Mr. Chairman, that I am 
personally committed to ensuring that Reclamation addresses the 
findings and recommendations of this study in order to improve 
the effectiveness and efficiency of the management of 
infrastructure and construction processes. I brought copies of 
``Managing for Excellence,'' Reclamation's action plan in 
addressing the study's findings, for the subcommittee to 
review, and I look forward to working with all of you in this 
effort.

                    WATER SUPPLY CRISES IN THE WEST

    Chronic water supply problems in the western States served 
by the Bureau of Reclamation will continue to be a challenge. 
Demand for water in many basins of the West, as many of you 
have noted this morning, exceeds available supply even in 
normal years. Recurrent droughts compound this problem. For 
example, the Southwest is in the sixth year of a severe 
drought. Projections for this year suggest very low water 
supplies that could negatively impact farmers, urban residents, 
Native Americans, and fish and wildlife alike.
    When combined with the fact that the West is home to some 
of the fastest growing communities in the Nation, these 
realities guarantee that water supply crises will become more 
frequent if we do not act now. Our Water 2025 program has 
sparked a movement to change the way we think about and value 
water supplies in the West. The challenge grants under Water 
2025 have provided the means for many western water managers to 
implement innovative measures for conserving and managing water 
more effectively to meet unmet needs. Through the challenge 
grant component of Water 2025, Reclamation has awarded 68 
challenge grants in 16 western States, collectively, 
representing $60 million in water management improvements, $44 
million of which came from private sources. In other words, 
non-Federal interests have invested approximately $3 for every 
$1 the Federal Government has invested.
    Also, looking for the next generation of desalination 
technologies through targeted research and development will be 
key to finding new cost-effective water supplies in many areas 
of the West in the future.
    Continuing the Water 2025 program into the future will 
encourage solutions to prevent conflict and crises over water, 
the real barriers to progress in the West. Speaking of 
problems, our water supply crises that we have seen recently in 
the Middle Rio Grande and the Klamath River Basins are the sort 
of crises we hope to avoid through Water 2025.
    In the 2007 budget, the Bureau of Reclamation continues to 
address the Klamath Basin with continued emphasis on working 
across the landscape cooperatively to address water needs of 
stakeholders and endangered species. In the Middle Rio Grande 
Project, the Reclamation request now totals almost $24 million 
for fiscal year 2007. Of this amount, almost $11 million is to 
address the status of endangered species, including the Rio 
Grande silvery minnow and the Southwest willow flycatcher, 
through the collaborative program.
    In addition to Reclamation funding, Interior is working 
closely with other Federal agencies and non-Federal partners to 
improve the status of endangered species while also protecting 
existing and future uses of water in the basin. In fact, on 
April 11 and 12, Reclamation will host the first annual 
collaborative program symposium in Albuquerque to more 
effectively coordinate efforts to address endangered species 
needs in the basins.
    Finally, the Middle Rio Grande Water Conservancy District 
is just one of the many entities Reclamation has worked with 
through the Water 2025 program to help stretch water supplies 
in a very dry area of the West.

                           PREPARED STATEMENT

    In conclusion, I would now like to turn to Commissioner 
John Keys to provide more details on the Reclamation budget. 
After his statement, he and I would be pleased to answer 
questions, and Reed Murray from the Central Utah Project Office 
is also available for questions as well.
    Mr. Chairman, thank you.
    [The statement follows:]

                  Prepared Statement of Mark Limbaugh

    Good morning. I am pleased to be here today on behalf of the 
Secretary to discuss the fiscal year 2007 budget for the Department of 
the Interior. I appreciate the opportunity to highlight our priorities 
and key goals.
    The Department's broad, multi-faceted mission and geographically 
dispersed services and programs uniquely contribute to the fabric of 
America by maintaining and improving the Nation's natural and cultural 
resources, economic vitality, and community well being. Interior's 
70,000 employees and 200,000 volunteers live and work in the 
communities, large and small, that they serve. They deliver programs 
through partnerships and cooperative relationships that engage and 
invite citizens, groups, and businesses to participate.
    The challenges of our diverse responsibilities are many, but they 
are made more manageable through an integrated approach that defines 
common mission goals for all bureaus and offices. The Department's 
integrated strategic plan is key to this approach. The plan defines 
four mission categories, which include resource protection, resource 
use, recreation, and serving communities. Capabilities in partnerships, 
management, and science are at the foundation of the plan and weave 
throughout the four mission goals.
    Although the details of the respective missions of Interior's 
bureaus and offices differ, the central focus is the same. A focus on 
excellent performance requires mission clarity, good metrics, and 
management excellence. Management excellence requires a focused 
approach to maintain and enhance program results, making wise 
management choices, routinely examining the effectiveness and 
efficiency of programs, finding effective means to coordinate and 
leverage resources, and the continuous introduction and evaluation of 
process and technology improvements.
    The 2007 budget reflects the Department's commitment to these 
management strategies and management excellence.

                            BUDGET OVERVIEW

    The 2007 budget request for current appropriations is $10.5 
billion. Permanent funding that becomes available as a result of 
existing legislation without further action by the Congress will 
provide an additional $5.6 billion, for a total 2007 Interior budget of 
$16.1 billion.
    The 2007 current appropriations request is a decrease of $392.2 
million or 3.6 percent below the 2006 funding level. If emergency 
hurricane supplemental funding is not counted, the 2007 request is a 
decrease of $321.9 million or 2.9 percent below the 2006 level.
    The request for the Bureau of Reclamation and the Central Utah 
Project, funded in the Energy and Water Development Appropriations Act, 
is $923.7 million. This request includes a net programmatic reduction 
of $43.1 million, or 4.1 percent, from the 2006 funding level. It also 
includes the proposed cancellation of $88.0 million in prior year 
balances of appropriations for the Desert Terminal Lakes program.
    The 2007 Central Utah Project budget is $40.2 million, an increase 
of $6.1 million above the 2006 enacted level. The increase will 
maintain progress towards timely completion of the project. This 
funding level, if maintained in the out years, will allow the project 
to be completed by 2021.

                            2005 HURRICANES

    In addition to the funds requested in the budget, on February 16, 
2006, the President sent the Congress a supplemental funding request 
for hurricane recovery. The supplemental includes $216 million for 
Interior agencies. Funding will be used to conduct clean-up and debris 
removal and repairs and reconstruction of facilities at park units, 
refuges, and USGS science facilities. These actions will allow us to 
open roads and trails to the public, repair visitor centers and 
exhibits, and reconstruct water control structures to host migratory 
bird populations and other wildlife. The supplemental also includes 
funding for MMS to complete restoration of its operations in New 
Orleans.

                  DEPARTMENTAL PROGRAMMATIC HIGHLIGHTS

    The 2007 budget maintains and improves performance across the 
Department's strategic goals to achieve healthy lands and water, 
thriving communities and dynamic economies throughout the Nation. Key 
goals for 2007 include:
  --Enhancing America's energy supplies through responsible energy 
        development and continued implementation of the Energy Policy 
        Act;
  --Building on successful partnerships across the country and 
        expanding opportunities for conservation that leverage Federal 
        investments;
  --Continuing to advance trust reform;
  --Coordinating existing efforts under a unified program that focuses 
        on high-priority historic and cultural protection under the 
        Preserve America umbrella;
  --Preventing crises and conflicts over water in the West through 
        Water 2025;
  --Continuing to reduce risks to communities and the environment from 
        wildland fires; and
  --Providing scientific information to advance knowledge of our 
        surroundings.
    Before turning this over to Commissioner John Keyes for a detailed 
discussion of our water programs in the Bureau of Reclamation, I want 
to highlight several aspects of the Interior Department budget.

                               EVERGLADES

    I want to commend the subcommittee for its continued support of 
Everglades restoration efforts. The Department is both a steward, with 
specific mandates from Congress, and a partner, working with other 
agencies to restore and protect the South Florida ecosystem. The 
Department's highest priority in this effort is the completion of the 
Modified Water Deliveries project. Completion of this project is 
critical for the preservation and restoration of the resources at 
Everglades National Park. Furthermore, improved flows of water to the 
park will lay a strong foundation for future environmental benefits to 
be realized for the Everglades under the Comprehensive Everglades 
Restoration Plan.
    The funding for the Modified Water project provided in 2006 with 
the strong support of the subcommittee will complete the 8.5 Square 
Mile Area component of the project. Funding requested for 2007 in the 
budget of the National Park Service and the Corps of Engineers will 
begin work on modification of the Tamiami Trail. As the subcommittee is 
aware, the recently approved Revised General Reevaluation Report for 
the Tamiami Trail calls for a 2-mile bridge to the west and 1-mile 
bridge to the east. This approach will provide the necessary conveyance 
of water south from the Water Conservation Area 3B into the Northwest 
Shark River Slough section of the Everglades National Park.

              WATER 2025--PREVENTING CRISES AND CONFLICTS

    The 2007 budget includes an increase of $9.5 million for Water 
2025, for a total funding level of $14.5 million. I am pleased to 
report that the administration has submitted legislation for the 
authorization necessary to accomplish the goals of this program.
    The overarching goal of Water 2025 is to meet the challenge of 
preventing crises and conflicts over water in the West. Water 2025 will 
achieve this by increasing the certainty and flexibility of water 
supplies, diversifying water supplies, and preventing crises through 
added environmental benefits in many watersheds, rivers, and streams.
    Competitive 50/50 Challenge Grant Program.--The Challenge Grant 
program will remain an integral part of Water 2025 in 2007. In fiscal 
year 2004 and again in fiscal year 2005, the response to the program 
was overwhelming, with Reclamation receiving over 100 proposals for 
Challenge Grants each year. To date, Reclamation has awarded funding 
for 68 Challenge Grants in 16 States, including 62 projects by 
irrigation and water districts and 6 more by western States. The funded 
projects involve innovative approaches to improving water management 
through water marketing, water conservation, and modernizing water 
delivery systems. Collectively, these projects represent almost $60 
million in improvements in the West, including a non-Federal 
contribution of $44 million and the Federal Government contribution of 
$15 million. In other words, for every $1 the Federal Government has 
invested, there has been about $2.90 non-Federal investment.
    The projects selected for award through the Challenge Grant program 
in fiscal year 2004 and fiscal year 2005 include:
  --23 projects that, collectively, will convert 74 miles of dirt 
        canals to pipeline;
  --44 projects to install water measurement devices, SCADA systems and 
        automate water delivery systems; and
  --11 projects that include water marketing plans.
    Based on estimates in the project proposals, the 68 funded projects 
could save up to 285,000 acre-feet per year, collectively, once fully 
implemented. An acre-foot of water is enough to supply a family of four 
for up to a year.
    The overwhelming response to the Challenge Grant Program 
underscores the significance of Water 2025 to Western water users and 
proves the success of the Challenge Grant concept. The response to the 
Challenge Grant Program also demonstrates a widespread eagerness to 
improve the way water is managed across the West and to address local 
needs.
    Examples of some of the funded Challenge Grant projects include:
    Arizona.--The Gila Gravity Main Canal Board, in partnership with 
the City of Yuma and NAD Bank, will make canal system improvements to 
conserve water, restore canal capacity and improve operation 
efficiency. Resulting water savings are estimated at up to 45,000 acre-
feet (af) of water per year. The conserved water will be available for 
other Colorado River users. The total project cost is $2,207,775 with a 
Water 2025 contribution of $284,000.
    California.--The Calleguas Municipal Water District in Thousand 
Oaks will install automated monitoring devices to 23 water distributors 
to allow implementation of new rate structures encouraging more 
efficient water use, conservation of water, and better management of 
local groundwater supplies. This project will reduce demand on the 
Metropolitan Water District and the Colorado River and will save an 
estimated 5,500 acre-feet per year. The total project cost is 
$3,095,000, with a Water 2025 contribution of $300,000.
    Idaho.--The Preston Whitney Reservoir Company will replace 23,333 
feet of open canal with PVC pipe and modify the works structure at 
Lamont Reservoir. The project is estimated to save 1,800 acre-feet of 
water per year. The total project cost is $877,153, including the Water 
2025 contribution of $300,000.
    Montana.--The Paradise Valley Irrigation District will replace 
9,000 feet of leaky canal with a pressure pipeline system that will 
conserve 1,000 acre-feet of water per year. It will be one of the first 
pressurized systems in the area and a significant improvement over the 
old system. This project will conserve water for the District by 
eliminating seepage in the canal and improve operation and control in 
the main canal. Efficiency levels will reach nearly 100 percent with 
the new pipeline system, compared to the current efficiency rate of 40 
to 45 percent. Irrigation seasons will be extended during drought years 
by making more use of the water that is available. The total project 
cost is $524,215, with a Water 2025 contribution of $262,107.
    New Mexico.--The State of New Mexico will rehabilitate a USGS 
streamflow gage on the Pecos River to provide more accurate high 
streamflow measurements. The gage will help better measure water under 
high flow conditions. Accurate measurement of water delivered to Texas 
under the Pecos River Compact is critical to the State. The total 
project will cost $146,660 with a Water 2025 contribution of $59,480.
    Oregon.--The Central Oregon Irrigation District in Bend Oregon will 
collaborate with numerous partners--seven irrigation districts, six 
cities, three tribes, and the Deschutes Resource Conservancy--to 
address long-term basin water needs by establishing a pilot water bank. 
This project has a long-term potential savings of up to 326,522 acre-
feet a year. The project demonstrates collective partnering of basin 
interests and addresses many institutional constraints. The total cost 
of the project is $588,750, with a Water 2025 contribution of $233,750.
    Texas.--The District will purchase and install 225 on-farm delivery 
site meters for more precise water measurement and efficient water 
delivery. The saved water--3,464 acre-feet per year--will enable 
continued farming during droughts and increase the length of the 
irrigation season. On-farm metering will help the District achieve its 
goal of 100 percent volumetric pricing of water delivered to its users. 
The total cost of the project is $602,500, with a Water 2025 
contribution of $300,000.
    Utah.--The Sevier River Water Users Association in Utah will expand 
and enhance their real-time monitoring and control system to better 
manage water deliveries. The project is estimated to save up to 22,500 
acre-feet of water.
    Water System Optimization Reviews.--The fiscal, legal, and 
political hurdles to the development of significant new supplies make 
it imperative that existing water supply infrastructure be fully 
utilized within the framework of existing treaties, interstate 
compacts, water rights, and contracts. Reclamation will work with 
willing States, irrigation and water districts, and other local 
entities to assess the potential for water management improvements in a 
given basin or district. Potential actions identified in these reviews 
may form the basis for future Water 2025 cooperative grant proposals.
    Improved Water Purification Technology.--We can make better use of 
existing water supplies that may have limited use due to high salt or 
mineral contents, or which may be otherwise unsuitable for consumptive 
use. Lowering the cost of desalination is one of the key tools to 
managing scarce water resources because of the potential it offers to 
expand usable water supplies. A portion of the funding requested will 
be used to award competitive, cost-shared research and development 
cooperative agreements that focus on inland brackish ground waters, 
energy efficiencies, and management of concentrates.
    A majority of the funding requested for this component will support 
operations and research and development conducted at the Tularosa Basin 
National Desalination Research Facility, which is proposed to be re-
named the Brackish Groundwater National Desalination Research Facility 
and scheduled to be operational in 2007. The budget request includes 
funds for start-up operations, including hiring an external 
organization to operate the facility under Reclamation direction and 
starting initial research and development.

                          KLAMATH RIVER BASIN

    The Klamath River Basin demonstrates our ability to work across the 
landscape cooperatively to accomplish our goals. The 2007 budget 
includes $63.4 million for Klamath Basin restoration activities. This 
is an increase of $7.8 million and, with funds available in 2006, will 
be used to restore streams and wetlands in the upstream and downstream 
reaches of the Klamath River and its tributaries.
    The Reclamation budget request of $32.2 million provides funding 
for studies and initiatives related to improving water supplies to meet 
the competing demands of agricultural, tribal, wildlife refuge, and 
environmental needs in the Klamath River Basin.
  --The request includes an increase of $2.4 million for investigations 
        to increase water storage/conserve water, an increase of 132 
        percent from 2006, for a total funding level of $4.2 million.
  --The request includes an increase of $982,000, for total funding of 
        $8.7 million to address ESA requirements including fish 
        screens, passage, and ladders.
  --The balance of the funding increase is spread across various 
        components of the Klamath Project, primarily water quality 
        studies and operations and maintenance.
    In 2007, through its Partners for Fish and Wildlife program, FWS 
will begin a new $2.0 million Lower Klamath Basin initiative. Funding 
will be used to provide fish passage on tributaries; fencing for 
riparian areas along streams; assessment and monitoring of disease, 
particularly in juvenile fish; and restoration of stream channels from 
former mining excavations. The 2007 budget also includes $3.5 million 
to acquire and restore agricultural lands adjacent to Upper Klamath 
Lake to provide quality habitat for larval and juvenile suckers and a 
host of native waterbirds, improve water quality for the lake and 
downstream anadromous fish, and increase water storage in the lake.

                 ADDRESSING OTHER DEPARTMENTAL CHANGES

    For the record, I would like to call the attention of the 
subcommittee to proposals requested in the President's Budget for 
programs funding in the Interior, Environment and Related Agencies 
Appropriations Act. The budget continues to emphasize our operating 
programs, including those for the National Park Service, leveraging of 
Federal resources through cooperative conservation; continued progress 
on Indian Trust reform; and increasing access to renewable and non-
renewable energy sources, while enhancing environmental monitoring and 
protection. Some details of our energy proposals follow.

                           ENERGY DEVELOPMENT

    The Department's energy programs play a critical role in providing 
access to domestic oil, gas, and other energy resources. To enhance 
domestic production, the 2007 budget proposes a $43.2 million 
initiative to implement the Energy Policy Act of 2005 and continue 
progress on the President's National Energy Policy. In total, the 
budget includes $467.5 million for the Department's energy programs.
    APD Processing.--In 2003, the Department released an Energy Policy 
and Conservation Act mandated report identifying five basins in 
Montana, Wyoming, Utah, Colorado, and New Mexico as containing the 
largest onshore reserves of natural gas in the country and the second 
largest resource base after the Outer Continental Shelf. These onshore 
basins contain an estimated 139 trillion cubic feet of natural gas, 
enough to heat 55 million homes for almost 30 years. These resources 
offer the best opportunity to augment domestic energy supplies in the 
short-term.
    Before any leasing for oil and gas production can occur on the 
public lands in these areas, BLM must have a land-use plan in place. 
Beginning in 2001, with the support of Congress, BLM initiated the 
largest effort in its history to revise or amend all of 162 resource 
management plans. Within areas designated in plans as appropriate for 
mineral development, BLM has made a concerted effort to help bring 
additional oil and gas supplies to market. In 2002, 2.1 Tcf were 
produced from Federal, non-Indian lands. In 2003 and 2004, 2.2 Tcf and 
3.1 Tcf, respectively, were produced from these lands.
    The BLM is experiencing a steady increase in the demand for 
drilling permits. In 2000, BLM received 3,977 applications for permits 
to drill. In 2005, BLM received 8,351 APDs. The bureau estimates that 
the number it will receive in 2006 will exceed 9,000, more than double 
the number processed 5 years ago. To address this demand, BLM has taken 
steps to ensure that drilling permit applications are processed 
promptly, while at the same time ensuring that environmental 
protections are fully addressed. These measures, along with increased 
funding, have allowed BLM to make significant progress in acting on 
permit applications. In 2005, BLM processed 7,736 applications, nearly 
4,000 more than it was able to process in 2000.
    Section 365 of the Energy Policy Act established a pilot program at 
seven BLM field offices that currently handle 70 percent of the 
drilling permit application workload. The pilot program is testing new 
management strategies designed to further improve the efficiency of 
processing permit applications. The Energy Policy Act provides enhanced 
funding for the pilot offices from oil and gas rental receipts. With 
more efficient processes and authorities and funding provided through 
Section 365, BLM currently anticipates processing 10,160 permits in 
2006.
    The efforts of BLM have achieved significant results. Almost 4,700 
new onshore wells were started in 2005. This level of activity is 56 
percent higher than in 2002.
    For 2007, the budget proposes an increase of $9.2 million to focus 
on the oil and gas workload in BLM's non-pilot offices, which are also 
experiencing a sharp and sustained demand for APDs. This increase will 
provide $4.3 million for drilling permit processing and $2.8 million 
for inspection and enforcement activities. It will also provide $2.1 
million for energy monitoring activities. The budget also includes 
$471,000 for FWS to increase consultation work with the non-pilot 
offices.
    The budget assumes continuation through 2007 of the enhanced 
funding for pilot offices from oil and gas receipts to facilitate a 
smooth transition to funding from drilling permit processing fees, 
effective September 30, 2007. Legislation to be proposed by the 
administration will allow a rulemaking to phase in full-cost recovery 
for APDs, beginning with a fee amount that will generate an estimated 
$20 million in 2008, fully replacing the amount provided by the Energy 
Policy Act.
    Alaska North Slope.--The most promising area for significant long-
term oil discoveries and dramatic gains in domestic production in the 
United States is the Alaska North Slope. The U.S. Geological Survey 
estimates a 95 percent probability that at least 5.7 billion barrels of 
technically recoverable undiscovered oil are in the ANWR coastal plain 
and 5 percent probability of at least 16 billion barrels. They estimate 
the mean or expected value is 10.36 billion barrels of technically 
recoverable undiscovered oil. At $55 a barrel, more than 90 percent of 
the assessed technically recoverable resource estimate is thought to be 
economically viable. At peak production, ANWR could produce about 1 
billion barrels of oil a day, about 20 percent of our domestic daily 
production and more oil than any other State, including Texas and 
Louisiana.
    The 2007 budget assumes the Congress will enact legislation in 2006 
to open ANWR to energy exploration and development with a first lease 
sale held in 2008 and a second in 2010. The budget estimates that these 
two lease sales will generate a combined $8.0 billion bonus revenues, 
including $7.0 billion from the 2008 lease sale.
    The 2007 budget includes an increase of $12.4 million for BLM 
energy management activities on the Alaska North Slope. The additional 
funds will support the required environmental analyses and other 
preparatory work in advance of a first ANWR lease sale in 2008. The 
requested increase will also support BLM's leasing, inspection, and 
monitoring program in the National Petroleum Reserve-Alaska and BLM's 
participation in the North Slope Science Initiative authorized by the 
Energy Policy Act. In addition, a significant share of the $12.4 
million increase will be used by BLM to respond to the environmental 
threat posed by abandoned legacy wells and related infrastructure on 
the North Slope.
    Outer Continental Shelf Development.--Deepwater areas of the Gulf 
of Mexico currently account for 17 percent of domestic oil and 6 
percent of domestic gas production. However, over the next decade, oil 
production in the Gulf is expected to increase by 43 percent and 
natural gas by 13 percent. The increase will come from deepwater and 
greater depths below the ocean floor. The 2007 budget includes an 
increase of $2.1 million for OCS development, to allow MMS to keep pace 
with the surge in exploration and development in the deepwater areas of 
the Gulf and $1.5 million for OCS environmental impact statements on 
future lease sales.
    New Innovations in Energy Development.--The 2007 budget includes an 
increase of $6.5 million for MMS's new responsibilities under the 
Energy Policy Act for offshore renewable energy development. MMS will 
establish a comprehensive program for regulatory oversight of new and 
innovative renewable energy projects on the OCS, including four 
alternative energy projects for which permit applications were 
previously under review by the U.S. Army Corps of Engineers.
    Oil shale resources represent an abundant energy source that could 
contribute significantly to the Nation's domestic energy supply. Oil 
shale underlying a total area of 16,000 square miles in Colorado, Utah, 
and Wyoming represents the largest known concentration of oil shale in 
the world. This area may contain in place the equivalent of 1.2 to 2 
trillion barrels of oil. The budget proposes a $3.3 million increase, 
for a total program of $4.3 million, to enable BLM to accelerate 
implementation of an oil shale development program leading to a 
commercial leasing program by the end of 2008, in compliance with 
section 369 of the Energy Policy Act. This request is accompanied by 
$500,000 budgeted for USGS to determine the size, quality, and quantity 
of oil shale deposits in the United States.
    Gas hydrates, found in some of the world's most remote regions such 
as the Arctic and deepwater oceans, could dramatically alter the global 
balance of world energy supply. The estimated volume of natural gas 
occurring in hydrate form is immense, possibly exceeding the combined 
value of all other fossil fuels.
    The 2007 budget includes a $1.9 million package of increases for 
gas hydrate research and development by MMS, BLM, and USGS. This will 
fund a coordinated effort in the Gulf of Mexico and the North Slope of 
Alaska to accelerate research, resource modeling, assessment, and 
characterization of hydrates as a commercially viable source of energy.

                               CONCLUSION

    The budget plays a key role in advancing our vision of healthy 
lands, thriving communities, and dynamic economies. Behind these 
numbers lie people, places, and partnerships. Our goals become reality 
through the energy and creativity efforts of our employees, volunteers, 
and partners. They provide the foundation for achieving the goals 
highlighted in our 2007 budget. This concludes my overview of the 2007 
budget proposal for the Department of the Interior and my written 
statement. I will be happy to answer any questions that you may have.

    Senator Domenici. We thank you. Who was it you wanted me to 
call on next?
    Mr. Limbaugh. Commissioner Keys.
    Senator Domenici. Mr. Commissioner, you have the floor.

                 SUMMARY STATEMENT OF JOHN W. KEYS III

    Mr. Keys. Thank you, Mr. Chairman and members of the 
committee. It is my absolute pleasure to be here with you today 
to talk about our budget request for fiscal year 2007. As he 
said, with me is Bob Wolf, our Director of Program and Budget, 
who helps me keep up with the numbers.
    Let me say, before I go ahead, that it is a pleasure to 
work with you and your committee staff. They have been good 
friends over the years and your staff people have been just 
outstanding to work with, and we do appreciate that very much.
    I have submitted a full statement and I would appreciate it 
being made part of the record.
    Senator Domenici. It will be.
    Mr. Keys. Mr. Chairman, before I get into----
    Senator Domenici. Does that mean our staff has not given 
you enough static?
    Mr. Keys. No, sir, Mr. Chairman, that is not what it means. 
It means that we work together very well.
    Senator Domenici. I see, okay. Static notwithstanding?
    Mr. Keys. That is correct.
    Senator Domenici. Okay.

                   NATIONAL ACADEMY OF SCIENCES STUDY

    Mr. Keys. Mr. Chairman, before I get into the 2007 budget 
request, let me expand on some of the material that Mark talked 
about with the National Academy of Sciences study. In 2005, the 
Academy conducted a study to help Reclamation determine the 
appropriate organizational, management, and resource 
configurations needed to meet its construction and 
infrastructure management responsibilities associated with 
fulfilling our mission. This is the report that they produced 
from that effort.
    We have produced an action plan to address the 
recommendations of this report, and we are pleased to share it 
with Congress and our stakeholders. We have provided you with 
copies so that you can see what we are trying to do. As we 
formulate actions to respond to the recommendations of the 
Academy, we will keep you informed to solicit your input and 
input from our customers and stakeholders. We have teams 
working on all of these issues. They will receive all of the 
time and attention that they need from my office on down. We 
appreciate the critical thinking that the Academies have given 
us and the information in the report. We fully intend to use it 
to improve Reclamation and the way we do business in the 21st 
century.

     FISCAL YEAR 2007 BUDGET REQUEST FOR THE BUREAU OF RECLAMATION

    Mr. Chairman, the overall 2007 budget request for 
Reclamation is $971.6 million in current authority. The numbers 
that you used in your opening remarks are correct. Our 2007 
budget request continues the President's commitment to a more 
citizen-centered government and supports Reclamation's mission 
of delivering water and generating power. Some highlights from 
that proposal:

           HIGHLIGHTS OF THE FISCAL YEAR 2007 BUDGET REQUEST

    The Water 2025 program asks for $14.5 million, and I have 
provided an update on the Water 2025 program. Mark provided 
some statistics from the program. We think it is an excellent 
program that has a lot of potential to help us address problems 
in the near and mid-term future.
    We have submitted a bill to Congress for permanent 
authorization of that program. This past year, we worked with 
our customers and stakeholders to put that bill together, and 
it has been submitted to Congress.
    On the Klamath project, we are asking for $24.8 million. 
The 2007 funding request would continue the on-the-ground 
initiatives to meet multiple obligations, including providing 
water for irrigation and wildlife refuges, avoiding jeopardy to 
endangered and threatened species, and meeting tribal trust 
obligations.
    Mr. Chairman, I might add that there was a court ruling on 
the Klamath project that directed Reclamation to attain the 
phase 3 flows on the Klamath River. I am happy to tell you that 
we have enough water in the Klamath Basin to meet those phase 3 
flows in the river and to deliver irrigation water this year. 
We would have a problem if we get into a back-to-back bad water 
year situation. The court ruling was made, and we think we can 
meet the obligations on the Klamath River.
    Senator Domenici. So that is good news for the Senators 
involved there.
    Mr. Keys. Yes, sir, it is.
    I would add that the good water year helps because in some 
places, we have in excess of 200 percent of normal 
precipitation in the area.
    On the Middle Rio Grande, we are asking for $23.7 million. 
That request would continue funding in support of the 
endangered species collaborative program and for acquiring 
supplemental water, doing the channel maintenance, and pursuing 
government-to-government consultations with Pueblos and tribes 
in the basin. The funding would also continue efforts to 
support the protection of and contribute to the recovery of the 
Rio Grande silvery minnow and the Southwest willow flycatcher.
    On the Animas-La Plata Project, we are asking for $57.4 
million. The 2007 request would continue funding construction 
of the project's major features, Ridges Basin Dam and the 
Durango pumping plant. It would also allow us to begin 
construction of the Ridges Basin Inlet Conduit and keep the 
project on schedule.
    On site security, we are requesting $39.6 million. The 2007 
request would ensure the safety and security of the public, 
Reclamation's employees, and the key facilities on Reclamation 
projects. The fiscal year 2007 request assumes annual costs 
associated with guard and patrol activities would be treated as 
project costs subject to reimbursability. Costs of program 
management, studies, and hardening of facilities would remain 
non-reimburseable.
    For the Safety of Dams program, we are asking for $69 
million. The 2007 request would provide for risk management 
activities throughout Reclamation's inventory of 361 dams and 
dikes. The request would also provide pre-construction and 
construction activities for up to 21 dams identified through 
the program.
    Our Rural Water program asks for $68.7 million. This 
request would support completion of ongoing rural projects and 
includes funding for municipal, rural and industrial systems 
for the Garrison Diversion Unit, the Mni Wiconi Project, Fort 
Peck-Dry Prairie Project, and the Lewis and Clark Project.
    For the CALFED-Bay Delta program, we are asking for $38.6 
million. Funds are requested to continue implementation of 
priority activities included in the CALFED-Bay Delta 
Authorization Act. Specifically, funds would be used for the 
environmental water account, storage feasibility studies, 
conveyance feasibility studies, science, implementation of 
projects to improve Delta water quality, ecosystem restoration, 
and planning and management activities.

                           PREPARED STATEMENT

    Mr. Chairman, the 2007 budget request demonstrates 
Reclamation's commitment to meeting the water and power needs 
of the West in a fiscally responsible manner. Reclamation is 
committed to working with its customers, States, tribes, and 
other stakeholders to find ways to balance and provide for the 
mix of water resource needs in 2007 and beyond.
    Thank you again for the continued support from the 
committee, and we would be happy to answer what questions you 
might have.
    [The statement follows:]

                 Prepared Statement of John W. Keys III

    Thank you, Mr. Chairman, and members of the subcommittee for the 
opportunity to appear in support of the President's fiscal year 2007 
budget request for the Bureau of Reclamation. With me today is Bob 
Wolf, Director of Program and Budget.
    Our fiscal year 2007 request has been designed to support 
Reclamation's efforts to deliver water and generate hydropower, 
consistent with applicable State and Federal law, in an environmentally 
responsible and cost-efficient manner.
    The funding proposed is for key projects that are important to the 
Department and in line with administration objectives. The budget 
request also supports Reclamation's participation in efforts to meet 
emerging water supply needs, to address water shortage issues in the 
West, to promote water conservation and improved water management, and 
to take actions to mitigate adverse environmental impacts of projects.
    The fiscal year 2007 request for Reclamation totals $971.6 million 
in gross budget authority and is partially offset by discretionary 
receipts in the Central Valley Project Restoration Fund ($33.8 million) 
and rescission of unobligated balances for At Risk Desert Terminal 
Lakes ($88 million). The total program, after offsets to current 
authority and the inclusion of permanent authority is $849.8 million.

                      WATER AND RELATED RESOURCES

    The fiscal year 2007 request for Water and Related Resources is 
$883.4 million. More specifically, the request for Water and Related 
Resources includes a total of $456.5 million for water and energy, 
land, and fish and wildlife resource management activities (which 
provides for construction, management of Reclamation lands, and actions 
to address the impacts of Reclamation projects on fish and wildlife), 
and $376.9 million for facility operations, maintenance, and 
rehabilitation activities.
    Providing adequate funding for facility operations, maintenance, 
and rehabilitation continues to be one of Reclamation's highest 
priorities. Reclamation continues to work closely with water users and 
other stakeholders to ensure that available funds are used effectively. 
These funds are used to allow the timely and effective delivery of 
project benefits; ensure the reliability and operational readiness of 
Reclamation's dams, reservoirs, power plants, and distribution systems; 
and identify, plan, and implement dam safety corrective actions and 
site security improvements.
    Highlights of the fiscal year 2007 request for water and related 
resources include:
    Water 2025 ($14.5 million).--Water 2025 is a high priority for the 
Secretary of the Interior and will focus Reclamation's financial and 
technical resources on areas in the West where conflict over water 
either currently exists or is likely to occur in the coming years.
    The overarching goal of Water 2025 is to meet the challenge of 
preventing crises and conflict over water in the West. Water 2025 will 
attain this goal by increasing certainty and flexibility in water 
supplies, diversifying water supplies, and reducing conflict through 
the use of market-based approaches and enhancing environmental benefits 
in many watershed, rivers and streams consistent with State and Federal 
laws.
    With $14.5 million, Water 2025 will continue to be a multifaceted 
program with projects that embody the overarching goal of preventing 
crises and conflict over water in the West. Leveraging limited Federal 
dollars through the Challenge Grant Program will continue to be a major 
component of Water 2025. The Challenge Grant Program will focus on 
projects that improve water management through conservation, 
efficiency, and water markets, as well as collaborative solutions to 
meet the needs of the future. Beginning in fiscal year 2007, a system 
optimization review component has been added to ensure existing water 
management systems are operated to maximize water deliveries. 
Modernization of existing systems will occur within the framework of 
existing treaties, interstate compacts, water rights, and contracts. 
Water 2025 will also continue to fund research for water purification, 
including research on desalination.
    The Department transmitted the administration's proposed permanent 
authorizing language to Congress on March 7, 2006.
    I would like to share with the committee several highlights of the 
Reclamation budget:
    Klamath Project in Oregon and California ($24.8 million).--The 
fiscal year 2007 request will continue and increase funding for studies 
and initiatives related to improving water supplies to meet the 
competing demands of agricultural, tribal, wildlife refuge, and 
environmental needs in the Klamath River basin. Key areas of focus 
include increasing surface and groundwater supplies, continuing a water 
bank, making improvements in fish passage and habitat, taking actions 
to improve water quality, and continuing coordination of Reclamation's 
conservation implementation program.
    Lower Colorado River Operations Program ($17.0 million).--The 
fiscal year 2007 request will provide funds for the work necessary to 
carry out the Secretary's responsibilities as water master of the lower 
Colorado River. The fiscal year 2007 request funds measures under the 
multi-species conservation program to provide long term Endangered 
Species Act compliance for lower Colorado River operations for both 
Federal and non-Federal purposes.
    Middle Rio Grande ($23.7 million).--The fiscal year 2007 request 
will continue to address endangered species issues and support of the 
Endangered Species Collaborative Program. In addition, the request will 
continue funding for acquiring supplemental water, channel maintenance, 
and pursuing government-to-government consultations with Pueblos and 
Tribes. Finally, the funding will continue efforts that support the 
protection and contribute to the recovery of the Rio Grande silvery 
minnow and southwestern willow flycatcher.
    Animas-La Plata in Colorado and New Mexico ($57.4 million).--The 
fiscal year 2007 request includes $57.4 million to continue 
construction of the project's major features, Ridges Basin Dam and 
Durango Pumping Plant. While work on these two features began in fiscal 
year 2003, maintaining funding at the level we have identified is 
necessary to complete construction of these features in a timely 
fashion. This level of funding will also permit the start of 
construction on the Ridges Basin Inlet Conduit, which is necessary to 
avoid substantial Project delays. Funding will be primarily directed to 
these three features while other key features are held for future 
implementation.
    Columbia/Snake River Salmon Recovery in Idaho, Oregon, Montana, and 
Washington ($17.3 million).--The fiscal year 2007 request will address 
the requirements in the biological opinions issued in December 2000 by 
the Fish & Wildlife Service and in November 2004 by the National Marine 
Fisheries Service. The 2004 biological opinion has been remanded to 
NOAA Fisheries and a new biological opinion is due in October 2006. 
During the remand, the 2004 biological opinion remains in place as 
Reclamation continues to implement actions identified in the 2004 
updated proposed action. These requirements include significantly 
increased regional coordination efforts; actions to modify the daily, 
weekly, and seasonal operation of Reclamation dams; acquisition of 
water for flow augmentation; tributary habitat activities in selected 
subbasins to offset hydrosystem impacts; and significantly increased 
research, monitoring, and evaluation.
    Site Security ($39.6 million).--An appropriation in the amount of 
$39.6 million is requested for site security to ensure the safety and 
security of the public, Reclamation's employees and key facilities. 
This funding includes $15.4 million for physical security upgrades and 
$24.2 million to continue all aspects of Reclamation-wide security 
efforts, including law enforcement, risk and threat analysis, 
implementing security measures, undertaking security-related studies, 
and maintaining guards and patrols on the ground.
    The fiscal year 2007 budget request assumes annual costs associated 
with guard and patrol activities will be treated as project O&M costs 
subject to reimbursability based on project cost allocations. These 
costs in fiscal year 2007 are estimated at $20.9 million of which $18.9 
million will be reimbursed; the actual amount may differ from this 
estimate based on actual operations costs. Of the funding to be 
reimbursed, $11.6 million will be in direct up-front funding from power 
customers, while $7.3 million in appropriated funds will be reimbursed 
by irrigation users, M&I water users, and other customers in the year 
in which they were incurred through Reclamation's O&M allocation 
process. Reclamation will continue to treat facility fortification, 
studies, and anti-terrorism management-related expenditures as non-
reimbursable.
    Safety of Dams ($69.0 million).--Assuring the safety and 
reliability of Reclamation dams is one of the Bureau's highest 
priorities. The Dam Safety Program is critical to effectively manage 
risks to the downstream public, property, project, and natural 
resources. The fiscal year 2007 request will provide for risk 
management activities throughout Reclamation's inventory of 361 dams 
and dikes, which would likely cause loss of life if they were to fail. 
The request includes preconstruction activities for modifications 
planned for the future. In fiscal year 2007, there will be two large-
scale ongoing corrective action projects plus four new awards.
    Rural Water ($68.7 million).--This request supports the completion 
of ongoing rural water projects. This includes funding for Municipal, 
Rural, and Industrial (MR&I) systems for the Pick Sloan-Missouri Basin 
Program--Garrison Diversion Unit (North Dakota), the Mni Wiconi Project 
(South Dakota), the Fort Peck Reservation/Dry Prairie Project 
(Montana), and the Lewis and Clark Project (South Dakota, Iowa, and 
Minnesota). The ``Rural Water Act of 2005'' (S. 895) was passed by the 
Senate in November 2005, and should address many of the problems 
identified by the Program Assessment Rating Tool (PART) evaluation of 
this program. The legislation directs the Secretary of the Interior to 
carry out a rural water supply program in reclamation States to: (1) 
investigate and identify opportunities to ensure safe and adequate 
rural water supply projects for municipal and industrial use in small 
communities and rural areas; and (2) plan the design and construction, 
through the conduct of appraisal investigations and feasibility 
studies, of such projects. This measure will bring more uniformity, 
direction, and prioritization for rural water projects. The legislation 
is awaiting action by the House.
    Science and Technology (S&T) ($8.5 million).--The fiscal year 2007 
request includes funding for the development of new solutions and 
technologies which respond to Reclamation's mission-related needs. We 
feel our S&T work is important and will contribute to the innovative 
management, development, and protection of water and related resources. 
Of the amount requested, about $1 million is planned for internal 
desalination Research & Development (R&D) conducted by Reclamation. 
Additionally, water purification funds requested through the Water 2025 
program will be managed by the S&T program.

                       POLICY AND ADMINISTRATION

    The $58.1 million request is an increase of approximately $800,000 
from the fiscal year 2006 enacted level of $57.3 million. The 
additional funding in the fiscal year 2007 request includes funding for 
labor cost increases due to cost of living raises and inflationary 
costs for non-pay activities. Funding requested will be used to: (1) 
develop, evaluate, and direct implementation of Reclamation-wide 
policy, rules, and regulations, including actions under the Government 
Performance and Results Act, and implement the President's Management 
Agenda; and (2) manage and perform functions that are not properly 
chargeable to specific projects or program activities covered by 
separate funding authority.

                CENTRAL VALLEY PROJECT RESTORATION FUND

    This fund was established by the Central Valley Project Improvement 
Act, Title XXXIV of Public Law 102-575, October 30, 1992. The request 
of $41.5 million is expected to be offset by discretionary receipts 
totaling $33.8 million, which is the maximum amount that can be 
collected from project beneficiaries under provisions of Section 
3407(d) of the Act. The discretionary receipts are adjusted on an 
annual basis to maintain payments totaling $30.0 million (October 1992 
price levels) on a 3-year rolling average basis. The net amount 
requested for fiscal year 2007, after the offset, is the same as fiscal 
year 2006. These funds will be used for habitat restoration, 
improvement and acquisition, and other fish and wildlife restoration 
activities in the Central Valley Project area of California.

                     CALIFORNIA BAY-DELTA (CALFED)

    Title I of Public Law 108-361, titled the Calfed Bay-Delta 
Authorization Act, was signed by the President on October 25, 2004. The 
Act authorized $389 million in Federal appropriations over the period 
of fiscal year 2005 through fiscal year 2010. For fiscal year 2007, 
$38.6 million is requested to enable Reclamation to advance its 
commitments under the CALFED Record of Decision and with a focus 
towards implementation of priority activities included in the Calfed 
Bay-Delta Authorization Act that will contribute to resolving water 
resource conflicts in the CALFED solution area. Funds will specifically 
be used for the environmental water account, feasibility studies of 
projects to increase surface storage and improve water conveyance in 
the Delta, conduct critical science activities, implementation of 
projects to improve Delta water quality, ecosystem enhancements, and 
program planning and management activities.

                     PRESIDENT'S MANAGEMENT AGENDA

    Reclamation continues to make progress in all areas of the 
President's Management Agenda. Efforts toward advancing management 
excellence in the fiscal year 2007 budget include: (1) improvements in 
performance based budgeting, (2) program evaluations utilizing the 
Program Assessment Rating Tool (PART), and (3) management studies to 
improve organizational, management, and resource configurations.
    Performance Based Budgeting.--Reclamation's budget is supported by 
a performance-oriented framework that aligns to its mission and key 
outcome goals to: (1) Deliver Water Consistent with Applicable State 
and Federal Law, in an Environmentally Responsible and Cost-Efficient 
Manner, and (2) Deliver Power Consistent with Applicable State and 
Federal Law, in an Environmentally Responsible and Cost-Efficient 
Manner. Reclamation's work in Resource Protection and Recreation are 
also reflected in its outcome goals. The framework includes both long-
term and annual performance goals that link to the Department of the 
Interior (DOI) Strategic Plan.
    As part of Reclamation's budget process, funding requests for all 
projects and bureauwide programs are linked to the DOI Strategic Plan, 
further demonstrating their budget and performance ties. Activity Based 
Cost Management (ABCM) output data is also refined and analyzed to 
support Reclamation's efforts to produce cost information that, along 
with performance data, is used to enhance budget decision-making. ABCM 
data analysis will play an even greater role in formulating the fiscal 
year 2008 budget.
    Program Assessment Rating Tool (PART).--Reclamation's performance 
budget also includes performance goals used in the assessment of 
program performance. For the fiscal year 2007 budget, Reclamation's 
Safety of Dams, Site Security and Water Management/Supply--Operations 
and Maintenance programs were evaluated using the PART process. The 
safety of dams program was rated effective. For this program, the 
administration has identified the need to establish performance data 
and track performance. The program has a strong track record, and 
refined performance measures will help us better track how well we are 
addressing dam safety issues. The site security program was rated 
moderately effective, with improvements needed in budget and 
performance integration. The program has been dramatically re-designed 
since 9/11/2001, and is making progress towards meeting our short-term 
and long-term goals of improving security at Reclamation facilities. 
The PART also rated the water management/supply operations and 
maintenance as adequate. Improvement plans for this program include 
developing a comprehensive strategy to operate and maintain Reclamation 
facilities.
    Management Studies.--The National Academies of Science, National 
Research Council has completed its study to assist Reclamation in 
determining the appropriate organizational, management, and resource 
configurations to meet its construction and related infrastructure 
management responsibilities associated with fulfilling Reclamation's 
core mission of delivering water and power for the 21st century. An 
action plan that addresses the findings and recommendations in the 
study has been approved by the Secretary of the Interior. The action 
plan has been published on Reclamation's website and provided to the 
committee.

                   BUDGET AND PERFORMANCE INTEGRATION

    In line with the Department's initiative, Reclamation continues to 
advance its efforts for improving budget and performance integration. 
To do so, Reclamation's senior leadership participates in quarterly 
reviews to focus on projections of whether or not our published annual 
performance targets will be met by the end of the fiscal year. When it 
is determined that accomplishment of a performance target may be in 
question, Reclamation identifies corrective actions to be taken.
    Both Reclamation's budget and performance documents incorporate 
references to its outcome-oriented goals and measures as identified in 
the PART and the information that is used in the quarterly reviews with 
senior leadership. Reclamation completion of baseline data for several 
new measures will enable it, over time, to develop and analyze 
historical trends that may be used to better support its budget 
requests and the goals included in its operating plan.

                  FISCAL YEAR 2007 PLANNED ACTIVITIES

    Reclamation's fiscal year 2007 priority goals are directly related 
to continually fulfilling our progress in water and power contracts 
while balancing a range of competing water demands. Reclamation will 
continue to deliver water consistent with applicable State and Federal 
law, in an environmentally responsible and cost-efficient manner. 
Reclamation will strive to deliver 28.4 million acre-feet of water to 
meet contractual obligations while addressing other resource needs (for 
example, recreation, fish and wildlife habitat, environmental 
enhancement, and Native American trust responsibilities). Reclamation 
will work to maintain our dams and associated facilities in fair to 
good condition to ensure the reliable delivery of water. Reclamation 
will strive to meet or beat the industry forced outage average to 
ensure reliable delivery of power. Reclamation will reduce salinity by 
preventing an additional 21,000 tons of salt from entering the water 
ways.
    Moreover, the fiscal year 2007 budget request demonstrates 
Reclamation's commitment in meeting the water and power needs of the 
West in a fiscally responsible manner. This budget continues 
Reclamation's emphasis on delivering and managing those valuable public 
resources. Reclamation is committed to working with its customers, 
States, Tribes, and other stakeholders to find ways to balance and 
provide for the mix of water resource needs in 2007 and beyond.

                               CONCLUSION

    Mr. Chairman, please allow me to express my sincere appreciation 
for the continued support that this committee has provided Reclamation. 
This completes my statement. I would be happy to answer any questions 
that you may have at this time.

    Senator Domenici. Thank you very much.
    I note that Senator Inouye arrived. Every other Senator had 
an opportunity to make a comment, Senator. If you would like to 
make one, you are welcome.
    Senator Inouye. Mr. Chairman, I thank you very much. I came 
by to thank the Commissioner for his service to our country and 
to our people. Thank you very much.
    Mr. Keys. Thank you.
    Senator Inouye. I wish the very best, sir.
    Senator Domenici. Thank you very much, Senator Inouye.
    Is any Senator on an urgent time frame, any more urgent 
than I?
    Okay, I will ask a few questions and then--did you want 
further testimony or are we finished with the executive branch?
    All right. Commissioner and Secretary, obviously you must 
know that I am very concerned about the drought in the West, in 
particular in New Mexico and the Southwest. The information 
that I have seen shows that the current snow pack is less than 
anything ever seen by current measurement system that was 
installed in 1980 in the Sangre de Cristo Mountains. It is 
possible that there will be no runoff from the Sangre de 
Cristo, which feeds the Santa Fe, the Pecos, the Canadian 
Rivers.
    The most recent information that I have seen shows Pecos 
runoff estimated at 4 percent, Rio Grande 26, Zuni will get 1 
percent of the normal runoff of Blue Water Lake. These are 
absolutely grim statistics. It is not like I am putting these 
to you expecting that you have solutions or that you are the 
cause. Neither. It is just a terrible statement of reality.
    What is your assessment of the drought situation in the 
West and where do you anticipate the greatest impacts this 
year? Is there any assistance that the Bureau might offer to 
mitigate these impacts? What would drought contingency planning 
entail, and what triggers Reclamation to pay for water hauling 
versus drilling emergency wells? I put that all in one package, 
but I think that you understand what I am talking about. Could 
you start, please, and answer them?
    Mr. Keys. Mr. Chairman, the weather situation in the West 
is reversed from what it was last year. Last year, we had a wet 
Southwest and a dry northern tier. This year, we have a good 
wet northern tier and the conditions in the Southwest, the 
southern plains and the southern Rockies, are extremely poor.
    Your characterization of the Middle Rio Grande and the 
Pecos is what the forecasts are showing. Certainly, we are 
trying to see how much water we have in storage. In the Rio 
Grande Basin, we are about 30 percent full in the storage 
space, and we are trying to see how long that water will last.
    We are also purchasing water to be sure that we have enough 
for the silvery minnow in the Middle Rio Grande, and we have 
the water for the prior and paramount rights for the Pueblos 
set aside.
    So with that said, what can we do to help? Title I of 
Public Law 102-250 expired last year. The Title I program 
allowed us, with proper appropriations, to do some temporary 
work on the ground. The only permanent facilities that could be 
done was the construction of wells, but it helped folks get 
through. A good example would be hauling water to some of the 
reservations.
    Title I ran out, and we would certainly welcome the 
opportunity to work with you and your committee to get that 
renewed.
    The Title II program gives us the ability to plan with the 
States and other entities to deal with the drought and to put 
plans together to find other water. We would certainly look 
forward to working with you on reauthorization of the Title I, 
and then, if we get the requests from States, to help them put 
drought contingency plans together.
    Senator Domenici. We are working with you now on trying to 
put that in the supplemental appropriation.
    Mr. Keys. Great. Thank you very much.
    Senator Domenici. Do you know anything about that, Mr. 
Secretary?
    Mr. Limbaugh. Mr. Chairman, no. I do know a little bit 
about the drought and, being a former watermaster and manager 
of a river in Idaho, it always pays to get ahead of these 
things before they happen. The work that we have done with the 
Middle Rio Grande Conservancy District to enhance their ability 
to manage water more effectively and efficiently will help them 
in managing this horrible drought that they are about to 
experience. So we do believe, Senator, that having both 
proactive and reactive parts of this are extremely important.
    Senator Domenici. Well, I have two more and I will be as 
quick as I can.
    Last week, I was made aware of a serious water situation in 
the Ruidoso and Ruidoso Downs, New Mexico, area. The city 
council recently voted to initiate phase 4 water restrictions, 
the most severe they have ever had. The Downs has been under 
water rationing since 2002. Its Reclamation is aware of the 
water situation. We are wondering if there is any immediate 
help that Reclamation can offer these two communities? Do you 
know about them and is there any?
    Mr. Keys. Mr. Chairman, we were made aware of this 
situation about the same time you were last week. We do not 
have any projects in the area now, but our folks are working 
with your staff and the local folks to see if there is some 
help that we could make available to them.
    Senator Domenici. It is my understanding that some of the 
provisions of the Reclamation State Emergency Relief Act have 
expired, and you indicated that. Assuming that we address this 
legislative issue, do you have any idea how much funding you 
would anticipate that Reclamation could utilize based on known 
and anticipated drought problems? We need that soon and I 
assume we are working on it together. Is that a fair 
assessment?
    Mr. Keys. Mr. Chairman, it is. Title I is the one that we 
need to be reauthorized. Should it be reauthorized, we could 
use around $4 million to help address problems out there. In 
our proposal--Title II is still authorized, and we have about 
$476,000 in our proposal for Title II, planning for the future 
drought.
    Senator Domenici. I am going to hold on a question on 
advanced water treatment technologies, desalinization, and just 
see how we are doing in your opinion. You have got an 
initiative. We just wonder whether it is of the kind and 
stature and structure that we should count on for the future.
    With that, I yield now to--Senator, are you ready on your 
side?
    Senator Allard. My side is ready. I have no questions.
    Senator Domenici. Senator Craig, then Senator Allard.
    Senator Craig. Thank you very much, Mr. Chairman. Mr. 
Chairman, when Commissioner Keys was nominated I asked him that 
on his watch a Klamath Basin situation should never occur again 
and he assured me that to the best of his ability that would 
not happen, and it has not happened. But most importantly, I 
think 2025 has come out of some of those realities as to how we 
manage an overallocated resource in light of the demands being 
put on it, whether it is for endangered species or just simply 
expanded use, and how we get there.
    I guess, Commissioner, my question of you and the Secretary 
both would be: When we look at a report of this character and 
the idea of officially authorizing an approach like this, how 
do you see it laying out over a period of a decade and the 
kinds of resources that would be required of the budget, if you 
will, to accomplish what is outlined in this kind of effort?
    Have you looked at it from a decade overview as to where it 
takes us and what we gain from it and how much it will cost?
    Mr. Limbaugh. Mr. Chairman and Senator Craig, we have been 
amazed at the interest in the challenge grant program, with 
each year bringing over $100 million in projects requesting 
Federal matching funds. We cannot begin to get to all of them. 
So the needs are out there.
    The other thing we see that is progressive about this Water 
2025 approach, is that it targets areas of the West where we 
can predict conflict and crises. We can predict problems, and 
try to get ahead of them before they become the next Klamath 
Basin, where we would have a problem with converging demands 
causing a huge disruption in water supplies to someone.
    A decade of Water 2025 at any level of funding would be 
extremely helpful in these areas. We cannot say how much, once 
we get to the point of having the program up and running, how 
much more, how many more projects would be flushed out, how 
many solutions would be found that would need the seed money 
that 2025 and the challenge grant program provides. But we 
believe that getting ahead of these problems will produce even 
more solutions in other areas of the West that currently may 
not realize that they have problems.
    Having that program in place, having a proactive look, 
managing for the future and providing the seed money, 
especially in tight budget times where we have limited funding, 
we believe is a very dynamic way to deal with the problems that 
maybe we cannot even predict at this point. But we can predict 
some problems now that we can effectively deal with.
    Mr. Keys. Mr. Craig, I think there are two things to add to 
what Mark said. One is that the Water 2025 program gives us the 
ability to work with water user groups to provide water through 
conservation to the new needs created by exploding populations, 
new industry, new endangered species needs, and at the same 
time, protect the basic water right of the irrigation folks who 
have the water right to start with.
    The Water 2025 program gives them the mechanism to make 
that water available. It also lets us work with conservation 
and gives us time to see where there may have to be another 
infrastructure built. In other words, whether it is a dam, 
reservoir, desalination plant, or a recycling facility, there 
is a need for more infrastructure. Water 2025 gives us the time 
to take care of the immediate needs and plan for those future 
requirements.
    Senator Craig. Well, I think the challenge grant and the 
approach you are using is an exciting one and it fits in a way 
that I think some of us who look at the traditional funding 
approaches of the Bureau of Reclamation may not have 
understood, and that we are dealing with a highly developed 
region of the country today, not one that needs to be 
developed, not one that needs the water before it can develop. 
The world is significantly different in the Bureau regions 
where you have always been and been active. And there is money 
out there now and the opportunity to cost-share and/or to grant 
and/or to guarantee, all of those kinds of tools allow private 
sector money to be employed at a much higher level, I think.
    I think your overview of that is valid, because what I am 
hearing out there--it is just like I think we got a chunk of 
money for recharge into the aquifer and yet the irrigation 
districts and all of that are very willing to pony up and 
participate when we have those kinds of grants.
    So I think when we look at our budget challenges here we 
can leverage a public resource from this level in a much more 
expanded way through that kind of an approach. I thank you for 
that. It makes a lot of sense.

                  DAM SAFETY AND AGING INFRASTRUCTURES

    I am concerned about, obviously, dam safety and 
infrastructure aging. I mentioned that in my opening comments. 
I also understand the reality of budgets this year. Mr. 
Chairman, the good news in my region of the country versus 
yours is we are probably having almost one of the wettest 
winters on record. The flip-flop that the Commissioner and the 
Secretary have talked about has occurred. It has flipped out of 
Idaho and the Inter-Mountain West and landed in the Southwest. 
We are in a weather pattern out there right now, though, that 
seems to be taking moisture across the whole region at a fairly 
heavy rate. It is certainly going to enhance what we already 
have and it may help you some.
    But in all of our basins that are overallocated, and I 
suspect every one is now, excess water--it is interesting. 
Idaho is going through an interesting situation at this moment. 
We are dumping water. We are spilling at a rate that, a lot of 
Idahoans are stepping back and looking at that and saying: You 
know, we ought not be doing that; we ought to be spilling that 
throughout the season, if you will, for enhanced water quality 
and downstream water quality, than seeing it all go out, if you 
will, at this moment--which speaks to something you mentioned 
in passing as a combination of a lot of ideas, Commissioner, 
and that is increased storage. The West is going to have to 
deal with that at some time in the future, at our continued 
rate of growth. We can conserve, yes. We can spread, yes. We 
can use less, yes. But in reality you cannot populate at the 
rate that we are populating out there without trying to figure 
out how to expand a resource and add to it.
    Thank you all very much.
    Senator Domenici. We look forward to your first proposal at 
that time.
    Senator Craig. It will come.
    Senator Domenici. All right.
    The Senator from Colorado.
    Senator Allard. Mr. Chairman, thank you.
    I want to follow up a little bit on my opening comments. I 
just want to pose this question to the Bureau. Why does the 
agency not believe that they should play a role in the 
rehabilitation of federally built and federally owned projects?
    Mr. Keys. Mr. Chairman, Mr. Allard, we work very closely 
with the irrigation districts. We work with them on annual 
reviews of their maintenance and their operation. We actually 
work with them on any deficiencies that are there. I would tell 
you that there are no critical deficiencies that are left 
untreated. In other words, there is no backlog of critical 
maintenance.
    There are some things that should be taken care of, and we 
work with districts to help them manage their reserve funds to 
take care of those. Original contracts that all of those 
districts signed called for operation, maintenance, and 
replacement, and we work with the districts.
    It is true that we do not have some of the old programs 
that we used to have such as the rehabilitation and betterment 
program, the small loan program, or the drainage and minor 
construction program. They were good programs, but they are not 
available any more. Certainly, we work to minimize the need for 
large expenditures, but sometimes it takes that. We try to find 
the money.
    The bill that Mr. Craig talked about, the Rural Water bill, 
had a loan guarantee provision. Mark and I are working with the 
administration to have an administration bill that would 
accommodate that. Certainly, it is a way to help some of those 
districts address some of those problems.
    Senator Allard. Now, based on just what you said, 
apparently you had a different approach than today, when you 
said you had a rehabilitation program. I suppose when you had 
that rehabilitation program you did not consider rehabilitation 
as being the same thing as operation and maintenance, and now 
my understanding is that within the Department you consider 
rehabilitation as the operation and maintenance.
    Why did that change happen? Maybe could you elaborate on 
that a little further for me, please?
    Mr. Keys. Mr. Allard, in the old days when we had the 
rehabilitation and betterment program, the districts were still 
responsible for rehabilitation. When there was a need, they 
went to Congress to get a bill passed to provide the money for 
rehabilitation and betterment. However, they were still 
responsible, so they entered into repayment contracts.
    Senator Allard. I see.
    Now, if a project is willing and able to do rehabilitation 
work, but simply needs funding, does the Bureau object to being 
a pass-through agency for that funding?
    Mr. Keys. Mr. Allard, I am not sure what you mean by 
``pass-through.'' The loan guarantee program that we have 
proposed would let us co-sign the loan and use the facility 
that is owned by the Federal Government as collateral. They 
would benefit from a low-interest loan that could be made 
available through the Department of Agriculture, so we would 
back it up with the district.
    Senator Allard. I am going to change over now to a problem 
area that I have in the State of Colorado, Leadville. It was 
the source of a lot of silver mining there and there is a lot 
of just natural lead in the soil, and as a consequence of that 
the drainage there from that particular part of our State has 
been classified as a Superfund site. I have a letter here from 
the State of Colorado trying to get the Environmental 
Protection Agency and the Bureau of Reclamation to work 
together, as well as the Colorado Department of Public Health. 
According to this letter, basically you agree with the effort 
to try and work together as a group. The only thing is that you 
need to obtain some authorizing language in order for you to 
carry on your functions.
    I would hope that maybe your office can work with us and 
see if we can come up with some authorizing language that would 
allow for that to move forward and get that whole thing off 
dead center right now.
    Mr. Keys. Mr. Allard, we would be more than happy to do 
that. We have been working closely with the State and EPA on 
the Leadville Mine drainage problem, and certainly, we would 
work with you to develop the right legislation.
    Senator Allard. Our constituents in Colorado expressed a 
great deal of concern regarding the threat to Colorado's 
municipal water supplies, particularly the western slope 
reservoirs, due to a huge amount of fire danger from bark 
beetle-killed trees nearby. We have got some parts of the bark 
beetle where it just literally is wiping out entire forests. 
The Colorado River drainage, a lot of it comes out of those 
areas, some of it out of the North Platte.
    My question to you is does the Bureau have a position on 
the threat to municipal water in Colorado? And more 
importantly, do you see the need for protective or other 
measures to reduce such threats?
    Mr. Keys. Mr. Allard, we work very hard to protect the 
watersheds above our reservoirs from development. When there is 
fire damage, we work with the Forest Service or BLM to do 
rehabilitation work, so we do not get the big influx of 
sediment that takes up the storage space.
    We and the National Academy have just launched a review of 
some forest management practices, and that could be part of the 
study. Otherwise, we take it on a case-by-case basis and work 
with the local Forest Service and BLM.
    Senator Allard. That bark beetle problem in our State, it 
has really been--I have been up to Alaska and seen whole 
watersheds wiped out. We are facing the same thing. It is not 
as obvious because the trees have not turned rust yet, rust-
colored, but it is coming, and it is all over the West. 
Whatever you can do to help us address those issues and get 
these things moving and giving some thought about the impact of 
the bark beetle I think would be much appreciated. I know that 
Senator Craig has some of those issues also in Idaho, and 
probably in New Mexico.
    Senator Craig. If the Senator would yield, when you go 
through these severe drought cycles and you stress trees in the 
way they have been stressed in the West, what follows is a 
beetle epidemic, and we are now into that cycle. We may be back 
into a wet cycle on the Rocky Mountain front and even in Idaho, 
but that does not mean the beetles will stop.
    So we have these huge watersheds that are now dead and we 
are trying to get in them to clean them, revitalize them, by 
thinning. And of course we are being--we are head on head, if 
you will, with many of our environmental community groups. But 
what then follows a dead forest is a fire, and you are going to 
get total watershed wipeout, and then you have got major water 
quality problems of the kind you are talking about.
    Senator Allard. Soil erosion, the whole works comes with 
that, silt problems.
    Mr. Keys. Mr. Allard, Mr. Craig, our Department has been 
one of the champions for the Healthy Forests Initiative, and 
certainly, the bark beetle is a big part of that focus. We have 
worked very closely with the Forest Service and with the Bureau 
of Land Management. Yes, we have several million acres that we 
manage also. Certainly, the Healthy Forests Initiative is 
trying to deal with the bark beetle problem.
    Senator Allard. I have just one more question, Mr. 
Chairman, if I might.
    A little over a year ago, the Bureau did a cost look-back 
study on the Arkansas Valley Conduit. That is a pipeline that 
runs out of the Pueblo Reservoir and goes down towards Kansas. 
However, to date the study has not been released. Can you tell 
me what the holdup is and when we can expect to see that study?
    Mr. Keys. Mr. Chairman, Mr. Allard, we are still working on 
the cost estimate for that study. As you know, cost estimates 
these days are almost a pariah in our construction programs, 
and that is not just unique to Reclamation. We anticipate 
having that done this summer.
    Senator Allard. Thank you very much.
    Thank you, Mr. Chairman.

             DESALINATION AND WATER TREATMENT TECHNOLOGIES

    Senator Domenici. Thank you, Senator.
    Well, I am going to close on a little bit of a downer note 
for you, on the desalinization and advanced water treatment 
technologies. I think you know that because of my position as 
subcommittee chairman of the Energy and Water Appropriations 
Subcommittee I have tried very hard to pursue with vigor 
desalinization and also arsenic cleanup. But the Bureau manages 
a diverse water treatment research program funded through five 
budget items, including Reclamation research and development 
budget, Water 2025, the Yuma Desalting Plant, and by the end of 
2006 the Tularosa Basin facility will be complete.
    These programs have the potential to expand the Nation's 
water supplies and contribute to solving numerous current 
Reclamation challenges, including providing water for rural 
communities, reducing the concentration of salt and selenium in 
irrigation return flows, and improving endangered species 
habitat, and providing increased supplies for all water users, 
as we see it in terms of the potential application of the 
technologies that are being developed.
    This huge benefit is dramatically undermined by what I see 
as a lack of coherent strategy, with clear goals for Interior-
sponsored activities, integration of the multiple programs with 
Reclamation, and cooperation with other agencies, including the 
USGS, Department of Energy, and the Office of Naval Research--
kind of a freak to the mix, but it turns out it has a lot of 
assets and it has a genuine and sustained interest in the basin 
that we are working on by coincidence. We have pushed them 
there and they are working at it with a lot of money.
    Over 8 months ago, I asked the Bureau to develop and 
present a coherent strategy for water treatment research and 
development. I have not yet received that strategy. Does a 
strategy for the desalinization and related research exist and 
what is it?
    Mr. Limbaugh. Mr. Chairman, I will take a whack at that. 
Currently, we are working on several fronts to provide you a 
coherent strategy. First of all, we are working with OMB to 
refine the strategy that we have proposed, that would help 
coordinate those efforts and set priorities. We do have the 
multifaceted approach and basically the highlight would be the 
research and development grants through the 2025 program 
looking at the next generation of technologies.
    But also, the Tularosa facility, which will be complete in 
2007, the first part of 2007, in the fiscal year 2006 budget 
year, is----
    Senator Domenici. When will it be complete?
    Mr. Limbaugh. January 2007.
    Senator Domenici. January 2007?
    Mr. Limbaugh. Yes, with the funds that we have in the 2006 
budget.
    Senator Domenici. Turnkey, ready to go, open?
    Mr. Limbaugh. Yes, sir.
    We also have in the 2007 request the operations and 
maintenance for that facility. So we are looking at finding a 
partner for that facility and working on a business plan that 
will be a sustainable use of that facility within the research 
and development component.
    We also have worked with the National Academy of Sciences 
and have initiated a study, a follow-on to the road map that 
will look at Reclamation's programs and also others to find the 
coordinated strategy that will be blessed by the National 
Academy, that will hopefully be the long-term look at how 
desalination can work, what the role of the Federal Government 
will be in most efficiently managing and looking towards the 
future with that technology.
    We do believe that the new technology, the new generation 
of desalination, is important to the West and it is very 
important to many regions of the West, and specifically in 
using not only ocean desalination but brackish ground water, on 
a more cost effective basis than what it is now.
    John, do you have anything?

                 TULAROSA AND HURRICANE RELIEF EFFORTS

    Mr. Keys. Mr. Domenici, let me give you a real success 
story on Tularosa. Last August 29, when Katrina was bearing 
down on Louisiana----
    Senator Domenici. I understand.
    Mr. Keys. We got the call from the Corps of Engineers 
saying: ``How can you help us?'' The hurricane hit on Monday. 
Monday afternoon, we got the request from the Corps to help out 
with water supply in the area. Wednesday afternoon, we had a 
lowboy from Las Cruces arrive at Tularosa. They put two of the 
desal units that we were testing at the facility on the truck. 
Friday afternoon, they hit the ground in Biloxi. Saturday 
morning they were producing 200,000 gallons a day of water. 
That is enough to serve about 50,000 people.
    They also did that at the regional medical center there. 
When Rita came through, they took it down to the air base. 
After Rita passed through, they came back, set it up again, and 
it operated for about 2 months, 24/7, and produced water for 
about 50,000 people. When it was done, they put it on the truck 
and took it back to Tularosa.
    Right after that happened, we had requests from the 
National Rural Water Association on how they may purchase four 
of those units, station them around the United States, so that 
the next time we have an emergency like that they are ready to 
go. This is a real success story from some of the work at 
Tularosa.
    Senator Domenici. That is a very good example of carrying 
out this project. But that is not the whole story. The question 
is do we have in place what experts would tell us is a center 
that can pursue vigorously all phases or multiple phases and 
aspects of the problems still remaining with desalinization? 
Maybe we are not on the right track. Maybe it is too little of 
a facility. Maybe it is--who is going to tell us?
    Is the Academy going to tell us, in your opinion? Are the 
national laboratories going to tell us? I do not believe you 
have the expertise to tell us that. You are managers, in a 
sense; is that correct?
    Mr. Limbaugh. Mr. Chairman, that is correct, and that is 
why we have tried to go with the Academy study and we are 
trying to include the partners that we have worked with in 
looking for a managing entity for the Tularosa facility in New 
Mexico. We think that the strategy of having the National 
Academy of Sciences review the Federal and private sector roles 
for the future, would give us the needed impetus to implement 
the road map and look to the future in a much more sound, 
sustainable manner.
    Senator Domenici. I might say to my friend, the word 
``Tularosa'' keeps coming up and one might wonder what is that 
all about. Well, actually there is a rather large underground 
sea of salty water and that basin is called the Tularosa Basin.
    Senator Allard. I see, because I was thinking----
    Senator Domenici. There is a little town called Tularosa, 
but it is just a small little village.
    Senator Allard. Mr. Chairman, I was also thinking that if 
this is surface water desalinization, I think certainly--and 
this will not fit in, I guess, now that I know where you are 
going. But one concern is that we have dynamics happening on 
the surface that adds to salinated water supply. We have 
plants, for example the tamarisk, which is salt cedar, which 
adds--not only do they drink a lot of water, but they cause the 
river to become more saline, and as a result of that I think it 
contributes a lot to salination. This probably would not be 
covered by that study, but certainly I think--I was going to 
bring that up after your discussion in regard to this question. 
But now that I more thoroughly understand where you are 
driving, Mr. Chairman, we will bring that up at another time.
    Senator Domenici. So now we are going to have to get from 
you this solid and final recommendation as to what that 
facility--how much did we invest in the facility that we keep 
alluding to?
    Mr. Keys. Mr. Chairman, about $16 million.
    Senator Domenici. One-six?
    Mr. Keys. Yes.
    Senator Domenici. It is supposed to be a place where you 
can come and do your research, is that not correct?
    Mr. Keys. Yes, it is.
    Senator Domenici. As I recall, a permanent facility. You 
make arrangements, bring your best technology, and test it out 
there?
    Mr. Keys. Exactly.
    Senator Domenici. So the whole question is how important is 
that to the pursuing of a program.
    Mr. Keys. We think that it is very important. We are 
working with other agencies that want to test there. This 
summer, there will be a request for proposals for a contract to 
manage a plant, do a business plan, and attract folks.
    Senator Domenici. I think one of the most important long-
term things you are doing is to determine whether you are going 
to be an active, vibrant player in desalinization. We will be 
having hearings concerning reorganizing the Bureau. Does 
desalinization fit with Reclamation's mission? Or is that 
something that should be elsewhere?
    I do not know. We did what we could do. It is obvious we 
have truncated it on there because of our interest, and a very 
good interest, I think, without any question.
    I also want to close by just complimenting you and many on 
what has happened with the minnow in the Rio Grande. We start a 
year with a much different situation than we have ever had 
before, in that the play now between the stakeholders is no 
longer what it was before. The effort now is to create a 
completely different kind of habitat for bringing the fish 
through the water, in a sense, rather than letting the water 
flow, flow, flow, flow, and get lost as it is taken downstream 
to the fish.
    You would have been amazed, Commissioner. The latest effort 
was the Interstate Streams Commission, a very powerful entity, 
made a commitment to this. They came up with a very large piece 
of equipment that they put in this very dry river, and what 
they did is they, with full environmental approval in advance, 
they moved it slowly upstream and provided pits, if you could 
imagine, deep pits, so that as they moved up 4 or 5 miles they 
made water holes, so as to speak, for the minnow. An 
experiment, a test run.
    They then put minnows that we have raised, which nobody has 
complained about, planted them. That has been their 
contribution to what others have done by creating inlets, where 
you just actually create an inlet on the side of the place, of 
the river, and you plant these fish there and they live in 
these inlets. They cannot get out too easily and so they stay 
and propagate and have water where there is water, instead of 
going 70 miles down to Soccoro, where you have been to see that 
little dry hole.
    So all that together, you know, shows how difficult and how 
much hard work people will do. We have really tried. We hope 
this drought does not make all that for naught. We have alluded 
to it. It could.

                     ADDITIONAL COMMITTEE QUESTIONS

    All right. I have remaining questions on CALFED, Title XVI, 
and Animas-La Plata. They will be submitted. Answer them in due 
course and we will see.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

                  Questions Submitted to Mark Limbaugh
            Questions Submitted by Senator Pete V. Domenici

                                DROUGHT

    Question. Secretary Limbaugh, Commissioner Keys, I am extremely 
concerned about drought in the west and particularly in New Mexico and 
the southwest.
    The information that I have seen shows that the current snowpack is 
less than anything ever seen by the current measurement system that was 
installed in 1980 in the Jemez and Sangre De Cristo Mountains.
    It is possible that there will be no runoff from the Sangre De 
Cristo which feeds the Santa Fe, Pecos, and Canadian Rivers. The most 
recent information that I have seen shows the Pecos runoff estimated at 
4 percent, Rio Grande 26 percent, and the Zuni will get 1 percent of 
normal runoff in Bluewater Lake.
    These are grim statistics. Unless we get unusual rainfall, the 
situation will be more critical next year. What is your assessment of 
the drought situation in the West?
    Answer. We share your concerns. The hydrologic conditions of the 
major basins of the Western United States can be characterized by 
contrast. The northern basins--such as those in the Pacific Northwest, 
northern Rockies, northern Great Plains, northern California, northern 
Nevada and northern Colorado are projecting snowpack and spring runoff 
levels at well above normal. Furthermore, due to significant storms 
over the past several weeks, Nebraska and Kansas have seen significant 
improvements in their hydrologic conditions.
    In contrast, despite significant rain and snow over the past week 
in New Mexico, southern Colorado, Oklahoma and Texas, the Southwest, 
Southern Plains and Southern Rockies have had below-normal levels of 
precipitation this winter and all these areas potentially face serious 
drought conditions this spring and summer.
    Question. Where do you anticipate the greatest drought impacts for 
this year?
    Answer. We expect the most significant impacts in New Mexico, 
Texas, Oklahoma, and Arizona.
    Question. What assistance can the Bureau offer to mitigate drought 
impacts?
    Answer. If reauthorized, Title I of Public Law 102-250, the 
Reclamation States Emergency Drought Relief Act of 1991, as amended, 
could provide authority for construction, management, and conservation 
measures to alleviate the adverse impacts of drought, including the 
mitigation of fish and wildlife impacts. Additionally, Title I could 
provide for emergency response and allow Reclamation the flexibility to 
operate its project facilities in a manner that would allow the most 
efficient use of limited water supplies.
    Question. What would drought contingency planning entail?
    Answer. Drought contingency planning is a plan for the future that 
details what activities an entity would engage in for the prevention or 
mitigation of drought impacts. The plan would identify opportunities to 
conserve, augment and make more efficient use of water supplies.
    Question. What triggers Reclamation to pay for water hauling versus 
drilling emergency wells?
    Answer. Section 101 of Title I of Public Law 102-250, the 
Reclamation States Emergency Drought Relief Act of 1991, as amended, 
provides that the only permanent facilities for drought mitigation are 
the drilling of wells. All other actions must be temporary in nature. 
Water hauling would be considered a temporary action allowable under 
Title I. One action is not preferred over the other. Decisions on which 
cause of action to take are based on local water conditions, costs, and 
timeliness among other factors. Should Title I of Public Law 102-250, 
the Reclamation States Emergency Drought Relief Act of 1991, as 
amended, be reauthorized, both activities could be carried out.
    Question. Last week, I was made aware of the serious water 
situation in Ruidoso and Ruidoso Downs, NM. The Ruidoso City Council 
has recently voted to initiate Phase IV water restrictions (the most 
severe). Ruidoso Downs has been under water rationing since 2002. Is 
Reclamation aware of the water situation and is there any immediate 
help that Reclamation can offer these two communities?
    Answer. Our understanding from discussion with the State of New 
Mexico is that the Village of Ruidoso could benefit from either repair 
of certain existing non-operational wells or drilling of additional 
wells. Should Title I of Public Law 102-250, the Reclamation States 
Emergency Drought Relief Act of 1991, as amended, be reauthorized, 
Reclamation would be capable of working with the Village of Ruidoso and 
the State of New Mexico to assist in either effort.
    Question. Does your budget request contain any funding for drought 
assistance in fiscal year 2007?
    Answer. The fiscal year 2007 budget request includes $475,000 for 
drought activities.
    Question. It is my understanding that some of the provisions of the 
Reclamation States Emergency Relief Act have expired. Assuming that we 
address the legislative issues, how much funding would you anticipate 
that Reclamation could utilize based on known and anticipated drought 
conditions for the remainder of fiscal year 2006 and what would be the 
needs for fiscal year 2007?
    Answer. We could effectively use approximately $7.5 million in 
fiscal year 2006. The funds requested for fiscal year 2007 in the 
amount of $475,000 would be sufficient, under present drought 
circumstances.
    Question. How will the drought affect in-stream flow requirements 
for endangered species?
    Answer. The drought will not modify the in-stream flow 
requirements, in that there is no exception for extreme drought 
conditions in meeting endangered species requirements. We will need to 
meet the flow requirements specified for a dry year. Because of drought 
conditions, more water will need to be released from storage to meet 
those requirements.
    Question. What will Reclamation's role be in these issues?
    Answer. Only Title I of Public Law 102-250, the Reclamation States 
Emergency Drought Relief Act of 1991, as amended, which expired on 
September 30, 2005, contains provisions to acquire water on a 
nonreimbursable basis as well as the drilling of new wells or 
rehabilitating existing wells. Reclamation must undertake the 
activities or contract for services.
                                 ______
                                 
             Questions Submitted by Senator Byron L. Dorgan

                               WATER 2025

    Question. The President's budget proposes $14.5 million for the 
Water 2025 initiative, an increase of $9.6 million over fiscal year 
2006 enacted. The administration developed Water 2025 to meet the 
challenge of preventing crises and conflicts over water in the West by 
increasing the certainty and flexibility of water supplies, 
diversifying water supplies and preventing crisis among users. The 
funding supports a competitive 50-50 challenge grants and the water 
system optimization reviews.
    While I support the general concept of the initiative--preventing 
crises and conflicts over water--I feel the best way to prevent future 
problems is to adequately fund projects, like Garrison Diversion, that 
are aimed at addressing emerging water needs of our country.
    In some ways, I think that the Water 2025 initiative is simply a 
way for the administration to fund its pet projects versus providing 
adequate funding for projects that have been vetted and approved by 
Congress and passed into law. In an August 2005 press release, the 
Department of Interior announced $1 million in Water 2025 grants for 
projects in Idaho, Kansas, Texas, Arizona, Montana and New Mexico. I 
could recommend several North Dakota projects that could have used that 
funding.
    Did any of the $9.6 million increase for the Water 2025 initiative 
come from funds that were previously used to fund projects in North 
Dakota?
    Answer. No, funding for water projects in North Dakota has not been 
decreased as a result of funding requests for the Water 2025 Program.
    The development of rural water projects and the Water 2025 Program 
are both important. While completion of the Garrison Diversion will 
serve an important local need, the Water 2025 Program allows 
Reclamation to focus resources on geographical problem areas throughout 
the 17 Western States. With a tightening Federal budget, Water 2025 has 
proven that leveraging Federal dollars with our partners can provide 
on-the-ground improvements in water management infrastructure that can 
help prevent water crises where it is most likely to occur.
    To date, Reclamation has awarded funding for 68 Challenge Grants in 
16 States, including 62 projects by irrigation and water districts and 
6 more by Western States. Collectively, the 68 projects represent 
almost $60 million in improvements, including a non-Federal 
contribution of $44 million and the Federal Government contribution of 
$15 million. In other words, for every dollar the Federal Government 
has invested, there has been about a $2.90 non-Federal investment.
    Estimates in the project proposals indicate that the 68 projects 
could save up to 285,000 acre feet of water per year, collectively, 
once fully implemented. An acre foot of water is enough to supply a 
family of four for up to a year.
    It is important to clarify that Water 2025 does not provide an 
opportunity for the administration to fund projects that it favors over 
projects that have been approved by the Congress. On the contrary, all 
Water 2025 Challenge Grant funding is allocated through a highly 
competitive and impartial process. Proposals are ranked by a panel of 
technical experts based on an established set of criteria that 
prioritizes projects resulting in real on-the-ground benefits, in terms 
of water conserved, better managed, or marketed, within 24 months from 
the date of award. Under this approach, only the very best projects are 
selected for funding, based on their technical merits.
    The $1 million awarded to six States in August 2005 was part of the 
Water 2025 Challenge Grant Program for Western States. Any State agency 
with water management authority, located in the 17 Western States--
including North Dakota--is eligible to compete for the $1 million. None 
of the $1 million was awarded to North Dakota because nobody from North 
Dakota submitted any proposals for consideration in the Challenge Grant 
Program. We look forward to working with the delegation to increase 
awareness of this program among North Dakota water interests, so that 
they can avail themselves of this competitive program.
    Question. Isn't the first approach to resolving future conflicts 
and water problems to provide the funding in the first place for 
projects, like Garrison Diversion, that are aimed at doing exactly 
that?
    Answer. Rural water projects such as those associated with the 
Garrison project account for much of the new project construction 
within Reclamation. The development of rural water supplies and the 
implementation of the Water 2025 Program are both tools that are 
necessary to prevent crises and conflict over water in the West--and 
both are Departmental priorities. The Department has worked closely 
with the Senate Energy and Natural Resources Committee, on a bi-
partisan basis, to develop legislation to establish a formal rural 
water supply program in the Bureau of Reclamation (S. 895). This will 
enable Reclamation, in cooperation with States and rural communities, 
to better plan for and prioritize rural water supply projects. In 
recent years, we have worked closely with the State of North Dakota to 
implement the Dakota Water Resources Act. Despite the tight budget 
climate that we face, Reclamation has dedicated a significant amount of 
funding to this and other rural water supply projects indicating that 
completion of projects to meet the water supply needs of rural 
communities continues to be a priority.
    Reclamation is responsible for delivering water and power 
throughout the 17 Western States, with a limited amount of Federal 
funding. Therefore, geographically broad-based efforts that leverage 
limited Federal dollars--such as the Water 2025 Program--are also 
essential to preventing conflicts and crises over water throughout the 
West.
    Through the Water 2025 Challenge Grant Program, Federal funding is 
leveraged through cost-shared grants that are awarded on a competitive 
basis to eligible applicants in any of the 17 Western States--including 
North Dakota. Those eligible include irrigation and water districts, 
Western States, tribal water authorities, and other local entities with 
water delivery authority. The grants support projects that improve 
water conservation and efficiency through the modernization of existing 
water delivery facilities, and projects that involve water marketing. 
These types of projects are essential to meet competing demands for 
water, even in areas where new storage projects have been approved.
                                 ______
                                 
                Questions Submitted to John W. Keys III
            Questions Submitted by Senator Pete V. Domenici

    Question. Are there other appropriate means for Reclamation to 
address drought conditions?
    Answer. Public Law 102-250, the Reclamation States Emergency 
Drought Relief Act of 1991, as amended, is not the only program 
Reclamation uses in addressing drought issues. Title I of the Act, used 
for responding to emergency needs, expired on September 30, 2005. The 
Water Conservation Field Service Program and the Water 2025 Initiative 
are examples of programs that are designed to prevent crisis and 
conflict over water in the West through advanced preparation and water 
management improvements. The Drought Act is a complimentary program to 
Water 2025. Proactive tools like this are critical because water 
shortages based on an imbalance between supply and demand, even in non-
drought years, should catch nobody by surprise--they are inevitable. 
Even though we don't know when and where water supply disruptions will 
hit, we know they will happen. Short-term response actions are highly 
visible and important, but allocating our resources to longer-term, 
proactive, preventive efforts, such as through creating local drought 
management plans or the type of targeted actions envisioned by the 
Water 2025 program, will ultimately have more of an impact to 
alleviating the effects of droughts than short-term, last-minute fixes.

         DESALINATION AND ADVANCED WATER TREATMENT TECHNOLOGIES

    Question. The U.S. Bureau of Reclamation manages a diverse water 
treatment research program funded through 5 budget items including 
Reclamation's Research and Development Budget, Water 2025 and the Yuma 
Desalting Plant.
    By the end of fiscal year 2006, the Tularosa Desalination Facility 
will be complete. These programs have the potential to expand the 
Nation's water supplies and contribute to solving numerous current 
Reclamation challenges including providing water for rural communities, 
reducing concentration of salt and selenium in irrigation return flows, 
improving endangered species habitat and providing increased supplies 
for all water uses in the United States.
    This huge potential benefit is dramatically undermined by the 
seeming lack of a coherent strategy with clear goals for the Interior 
sponsored activities, integration of the multiple programs within 
Reclamation and cooperation with other agencies including the United 
States Geological Survey, the Department of Energy, the Office of Naval 
Research, etc.
    Answer. We are developing a strategy which we feel addresses the 
concerns you have raised. It is undergoing the administration's review 
and upon completion, we will share the strategy with the Congress.
    Question. Does a strategy for desalination and related research 
exist?
    Answer. Yes, Reclamation has a draft strategy for advanced water 
treatment technologies.
    Question. What is the strategy?
    Answer. We are working within the administration to finalize 
development of our proposed strategy and would be glad to fully brief 
your office on it when it is complete.
    Question. Can/will Reclamation participate in multi-agency 
activities to coordinate research funded through Federal, State and 
private investment?
    Answer. Yes, we are currently coordinating our research efforts 
with the Interagency Consortium, Water Reuse Association and 
Desalination Task Force, among others. We have asked the National 
Academies to become engaged with us and provide further definition on 
roles of the Federal, State, and private sector research investments. 
Furthermore, Reclamation's Science and Technology program, which 
coordinates all of Reclamation's research and development activities, 
has a strong track record of coordinating with other research bodies to 
ensure prioritization of research, and to avoid redundancy.
    Our participation with the Office of Naval Research in the 
development of the Emergency Unit for Water Purification (EUWP) and 
testing at the Tularosa facility allowed us to successfully deploy the 
EUWP after hurricane Katrina to the Biloxi Regional Medical Center. We 
provided highly purified water to the hospital and later treated water 
from the city's municipal system until the city's system was certified 
safe by the State.
    Question. Can you assure me that the Tularosa facility will be 
completed this fiscal year within the budget provided by Congress for 
fiscal year 2006?
    Answer. Yes, the Tularosa facility is scheduled to be completed in 
January of 2007 utilizing the fiscal year 2006 appropriations in 
accordance with the administration's fiscal year 2007 budget request.
    Question. It has always been my intention that the Tularosa 
Desalination Test Facility be operated by a university in the southern 
New Mexico region and be positioned as the Nation's premier location 
for inland desalination and concentrate disposal research and 
development. The Bureau of Reclamation promised me a detailed strategy 
document by February of this year in which this role would be well 
articulated. I have yet to receive that document and feel that the 
Bureau is remiss in fulfilling their promise. Does this strategy 
document now exist and does it anticipate this appropriate role for 
Tularosa by the end of calendar year 2006?
    Answer. The mission of the Tularosa Desalination Test Facility is 
to be the intellectual powerhouse that attracts outstanding researchers 
to work on developing cost effective, efficient desalination 
technologies that can be applied to brackish and impaired ground 
waters--resulting in new supplies of usable water for municipal, 
agricultural, industrial, and environmental purposes.
    We have developed a Business Plan for the Tularosa facility and are 
working to finalize it. We plan to meet with your office when it is 
complete.
    Question. Additionally, the administration's budget appears to be 
inadequate to provide funding to operate and underwrite research at the 
facility in fiscal year 2007. How do you intend to undertake the 
research program outlined to my office with the current inadequate 
resources?
    Answer. We believe that adequate budget for start-up, operation, 
maintenance, and research has been requested in the fiscal year 2007 
President's budget within the Water 2025 program. The request will 
cover operation, maintenance, and will provide funding for research at 
the facility and elsewhere.
    Question. It appears that USBR does not intend to undertake its 
role as the Nation's central research organization in desalination and 
reuse research given the current budget proposal. Has the Department of 
Interior decided to abandon this core competency?
    Answer. The Department is committed to maintaining Reclamation's 
advanced water treatment research efforts with emphasis in resolving 
inland advanced water treatment issues and cost reduction through 
applied research, while ensuring that our research efforts are 
undertaken strategically, in the context of overall research and 
development needs in the water area.
    Our fiscal year 2007 budget requests of $5,235,000 for advanced 
water treatment research, is to continue the pursuance of expanding 
useable water supplies. The request is divided among the internal and 
external Research and Development programs as follows: Desalination and 
Water Purification Research program (external), $25,000; Title XVI 
(external), $750,000; Water 2025 (external), $2,700,000; Colorado River 
Basin Salinity Control program, Title I (internal), $760,000; and the 
Science and Technology program (internal), $1,000,000.
    Question. When will Reclamation be prepared to issue the call for 
proposals for the management contract for the Tularosa Desalination 
Facility?
    Answer. We expect to be in a position to issue the Request for 
Proposals for the management contract of the facility by late summer 
2006. Reclamation will have a managing entity on board in ample time 
for the opening of the facility.

                 TITLE XVI WATER RECLAMATION AND REUSE

    Question. The budget request seeks $10.1 million for Title XVI 
projects. In light of the current backlog of needs, how was this 
request determined to be adequate and appropriate?
    Answer. The President's request of $10.1 million for fiscal year 
2007 is about $100,000 less than the amount requested for fiscal year 
2006 for Title XVI. As in fiscal year 2006, the fiscal year 2007 budget 
request includes those eight construction projects that were included 
in the President's request in prior years. We continue to be aware that 
the desire for Title XVI funding is significant. However, Reclamation 
has many demands placed upon it, and we must balance all of our 
priorities within the funding limits we are working with.
    Question. The Bureau was directed to review and report on those 
recycling projects deemed to be feasible under CALFED. To date, there 
has been no report provided to Congress. What is the status of this 
review and why has it not been forwarded to Congress?
    Answer. Reclamation has completed its review of all reports and 
other documentation submitted by project proponents in response to our 
request for information for the report directed by Public Law 108-361; 
we transmitted the report to Congress on April 28, 2006. Of the 
submittals for projects that have not been authorized, 14 (7 each 
associated with SCCWRRS and BARWRP) were nearly complete, but lacked 
elements such as NEPA compliance. While these projects have the 
potential to meet requirements included in Reclamation's 1998 Title XVI 
Guidelines, we do not know how they would rank in priority if the Title 
XVI program were reformed as proposed in our February 28, 2006, 
testimony to the Senate Subcommittee on Water and Power. The remainder 
lacked many required elements. All project proponents have been 
notified of Reclamation's findings.
    Question. What was the Bureau's request for Title XVI program 
funding that was transmitted to OMB as part of the budget formulation 
process?
    Answer. The administration's budget request for Title XVI funding 
in fiscal year 2007 was $10.2 million.
    Question. How were projects selected for funding?
    Answer. For continuity purposes, Reclamation elected to request 
funds for the same projects that were included in the President's 
budget request in fiscal year 2006.
    Question. Were the funding levels for each project determined to be 
adequate?
    Answer. The funding level for each project was determined based on 
the amounts requested in prior years and the construction schedule of 
the project sponsors. We feel these levels are adequate given the many 
competing demands which are worthy of funding by Reclamation.
    Question. The Title XVI program was established as a way to 
increase water supplies in the West by recovery of water that otherwise 
would have been wasted. Reclamation has never been a big proponent of 
this program. Yet it seems to be a natural fit with Reclamation's role 
of providing water and power to the West. How does Reclamation believe 
this program could be modified so that OMB and Reclamation would be 
willing to significantly increase budget resources for this program?
    Answer. Reclamation discussed potential modifications to the Title 
XVI program before the Senate Subcommittee on Water and Power on 
February 28, 2006. Reclamation provided a drafting service to Congress 
that would accomplish many of these issues, and the administration is 
developing its own legislation for Title XVI reform that will be 
transmitted to Congress soon. Reclamation believes these proposed 
changes will make the program more competitive, better define project 
eligibility, and more effectively help reduce future conflicts and 
crises over water supplies in the West. Ultimately, our intent is to 
administer this program in conjunction with the Water 2025 program, to 
target resources to the areas of most critical need to proactively 
avert water conflicts by diversifying water supplies.

                            ANIMAS-LA PLATA

    Question. Costs on the Animas-La Plata project increased rather 
dramatically after it was authorized. Will we be able to construct this 
project within the cost ceiling that we provided?
    Answer. Current legislation authorizes the appropriation of such 
funds as are necessary to complete construction of the project 
facilities through 2012. Even though there is no legislated cost 
ceiling, we do have a construction cost estimate. The current base 
construction cost estimate of $500 million, indexed to October 2006 
price levels, is $552 million. With the understanding that features not 
yet awarded will continue to be indexed, Reclamation believes the 
indexed base estimate is adequate to complete the Project, provided it 
is funded at sufficient levels to match construction capability and no 
unforeseen conditions are encountered.
    Question. In the fiscal year 2006 Energy and Water Act we extended 
the timeframe for completion of this project to 2012. Does the funding 
request for this project allow you to meet this schedule?
    Answer. Yes. The fiscal year 2007 budget request is $57.4 million. 
This request will continue construction of two of the Project's major 
features, Ridges Basin Dam and the Durango Pumping Plant and begin 
construction of a third major feature, Ridges Basin Inlet Conduit. The 
Project schedule was recently revised to reflect the funding level for 
fiscal year 2006 and the President's request for fiscal year 2007. 
Assuming funding levels in the out years at the fiscal year 2007 
request level, construction of the Project could be completed by 2012, 
with Project closeout in fiscal year 2013.
                                 ______
                                 
              Questions Submitted by Senator Wayne Allard

                          REPAYMENT CONTRACTS

    Question. Historically, the Reclamation Program does not flow from 
a single organic Federal statute. There have been various acts since 
the 1902 Reclamation Act which have shaped the program. Since 1939, 
every project has been individually authorized with its own terms and 
conditions. Given geographical and geological uniqueness, and varied 
construction dates, we find it difficult to believe all, or any, Bureau 
of Reclamation projects are identical. Therefore we ask: Are all 
repayment contracts identical?
    Answer. No. All repayment contracts are not identical. Contracts 
are a mix of standardized and nonstandardized articles.
    Reclamation has contracting authority under general Reclamation 
law, project-specific authorizations, and even contract- or contractor-
specific authorizations. Variations among these authorities lead to 
variations among repayment contracts. For example, the Reclamation 
Project Act of 1939 allows a maximum repayment period of 40 years 
(Public Law 76-260) (general Reclamation law); the Colorado River 
Storage Project Act allows a 50-year repayment period (Public Law 84-
485); the Central Valley Project Improvement Act specifies a 25-year 
repayment period for irrigation repayment contracts (Public Law 102-
575, Title XXXIV, section 3404(c)) without affecting repayment periods 
for municipal and industrial contracts (project-specific 
authorization); and the Congress specified a 60-year repayment period 
for the Yuma Mesa Irrigation and Drainage District (Public Law 84-394) 
(contractor-specific authorization).
    Numerous other provisions can vary among repayment contracts, 
including the permissible uses of project water, water delivery 
schedules, where water can be used, and who is responsible for 
operating and maintaining facilities. Even among contracts made 
pursuant to the same authority, circumstances may lead to some 
variation, within whatever range the applicable law allows.
    In the early 1960's, Reclamation recognized that there are some 
provisions standard to all contracts. These ``standard contract 
articles'' generally result from requirements of executive orders, 
rulemaking processes, or other laws mandating they appear in contracts.
    Question. Are all projects under the same authorization?
    Answer. All projects are not under the same authorization. While 
many prior to 1939 were under the general authorization provided in the 
Reclamation Act of June 17, 1902, Congress did, in some instances (for 
example the Boulder Canyon Project Act of 1928 (Public Law 70-642) and 
the Central Valley Project, California, and Colorado River Project, 
Texas (1937) (Public Law 75-392)) provide specific project 
authorization. Since 1939, Congress has provided more individual 
project authorizations to construct projects. However, pursuant to the 
Flood Control Act of 1944 (Public Law 78-534), Congress directed that 
project authorizations be approved by an act of Congress.
    Question. Is it the opinion of the Bureau of Reclamation that all 
repayment contracts include ``replacement'' even when it is not stated 
in the contracts?
    Answer. Reclamation contractors are required to pay for their 
appropriate share of operation and maintenance costs (O&M) (Public Law 
63-170, Public Law 69-284, Public Law 76-280, Public Law 97-293). O&M 
costs are generally the costs necessary to operate a constructed 
project and make repairs and replacements necessary to maintain the 
project in sound operating condition during the life of the project. 
One of the standard articles for all contracts is the ``emergency 
reserve fund'' article. This article resulted from the demonstration 
that nearly every district, on occasion, requires funds to meet major 
unforeseen costs of operation and maintenance and repairs and 
replacement of the project works. While the article may be standard, 
the requirements for the fund amount are not. Guidance for the 
establishment of the amount of the reserve fund is found in Reclamation 
policy, which recognizes that not all projects are the same and, 
therefore, the amount of the reserve fund is established accordingly.

                             SAFETY OF DAMS

    Question. The Safety of Dams program provides guidelines and 
financing for dam inspections. Therefore, are pertinent structures 
other than the dam itself given the same importance as the dam? If not, 
why not?
    Answer. The Safety of Dams Program identifies (inspects) and 
evaluates issues and implements modifications to dams, if warranted, to 
reduce risks to the public. Dam inspections are part of a comprehensive 
risk management approach to limiting life safety risks downstream of 
dams owned by Reclamation.
    Many other structures that are part of the Reclamation water 
resource infrastructure do not pose the same life safety risks, even 
though they may be critical features for assuring the delivery of 
project benefits. These structures are evaluated as part of 
Reclamation's Review of Operation and Maintenance (RO&M) Program. The 
RO&M program provides an excellent program for assuring the continued 
operation of Reclamation facilities. The Safety of Dam program 
addressing the potential life safety consequences associated with the 
failure of high- and significant-hazard dams requires a higher standard 
of risk management to assure the safety of persons living downstream of 
those facilities.

                        JACKSON GULCH RESERVOIR

    Question. Jackson Gulch Reservoir, an off-river reservoir, depends 
on a canal system as relevant to the reservoir as the dam. Without the 
canal, the dam would be useless and unnecessary. The Animas-La Plata 
project will also be dependent on a water carriage delivery system. 
What do we need to do to make Bureau of Reclamation realize the 
importance; and/or how can we begin a ``Safety of Connecting 
Structures'' program in order to preserve these systems?
    Answer. Reclamation understands the importance of the canal systems 
and other features that are associated with its dams. These facilities 
are inspected by Reclamation professionals on a regular frequency under 
the Review of Operation and Maintenance Program which was established 
in Reclamation in 1948. Observed structural or operational deficiencies 
are noted and recommendations are categorized based on significance and 
tracked until accomplished. Reclamation retains ownership of these 
facilities, yet the operation, maintenance and replacement of many 
facilities have been transferred to water user entities.
    In the case of Jackson Gulch Reservoir, a feature of the Mancos 
Project, the Mancos Water Conservancy District is responsible for 
operation and maintenance, including repair, of all project facilities, 
as specified in their contract. Repair or replacement of the canal 
system is the responsibility of the District. The long-term viability 
of all Reclamation facilities, especially for transferred works, is 
critically dependant on the local project sponsors meeting their 
obligations to perform required Operations and Maintenance activities.

                       OPERATIONS AND MAINTENANCE

    Question. What is the Bureau of Reclamation's official definition 
of (a) ``operations and maintenance'' and (b) ``operations, maintenance 
and replacement''?
    Answer. Within the context of managing Reclamation's water and 
power infrastructure, the operation and maintenance of project works 
involves a wide range of activities. These operations and maintenance 
activities encompass those actions necessary to achieve continued 
integrity and operational reliability in delivering authorized project 
benefits.
    Additionally, as stated in Reclamation's ``Report to the Congress, 
Annual Costs of Bureau of Reclamation Project Operation and Maintenance 
for Fiscal Years 1993-97'', dated September, 1998, ``the most visible 
maintenance tasks are the major repairs and rehabilitations, equipment 
and facility replacements, and facilities additions that are 
accomplished at every project over time.'' As such, the ``maintenance'' 
term includes ``replacements'' and, therefore, the definitions for both 
(a) and (b) as stated in your question are considered to be synonymous. 
Similarly, for contract administration purposes within Reclamation, 
replacements have always been included as part of maintenance 
responsibilities and costs.

                    BUREAU OF RECLAMATION'S MISSION

    Question. What does the Bureau of Reclamation believe is their (a) 
current mission or purpose, and (b) their future mission or purpose?
    Answer. The current and future mission of the Bureau of Reclamation 
is to manage, develop, and protect water and related resources in an 
environmentally and economically sound manner in the interest of the 
American public. The role of Reclamation is vitally important at this 
critical time, and in the future in the West. As the West experiences 
rapid double digit growth in many areas, the role of Reclamation in 
managing the critical infrastructure in a manner that balances the 
needs of agriculture, municipal and industrial, power users, 
recreation, fish and wildlife and endangered species is essential. In 
the Lower Colorado River Basin for example, the Secretary of the 
Interior is the water master. In that capacity, the Secretary is 
required to balance the needs of the Seven Basin States while 
maintaining the river. This includes river operations, facility O&M, 
water service contracting and repayment, decree accounting, and 
oversight of hydropower activities. Additionally, in Idaho, in the 
Columbia Basin, we are trying to meet the objectives of our projects 
and at the same time recognize the water rights and to enforce or 
actually coordinate and work with the compacts that have been done in 
the basin.

                             REHABILITATION

    Question. Bill language gives evidence to the fact that as recently 
as the 1990's, Reclamation did support rehabilitation. (a) When did 
that change and why? (b) Does the Bureau of Reclamation see 
rehabilitation as currently outside of or futuristically not a part of 
their mission?
    Answer. We believe you may be referring to funding of the 
Rehabilitation and Betterment Program, which was authorized in a 1949 
Act, and amended/supplemented in 1950, 1971, and 1975. Under the 
program, Reclamation water users were able to obtain no-interest loans 
to rehabilitate and improve the Reclamation-owned irrigation facilities 
they operated and maintained. Although still authorized, loan funding 
of that program was discontinued in the mid-1990's (driven by limited 
appropriations at that time) and water users were expected to use their 
own resources or to seek private financing. Private lenders are often 
unwilling to lend to the water users, however, because project 
facilities can not be used as collateral; the United States holds title 
to the facilities.
    As Reclamation's infrastructure continues to age, there will likely 
be a need for increased maintenance and major rehabilitations. 
Reclamation recognizes the importance of a preventive maintenance 
philosophy and the need for ongoing condition assessments of our 
facilities to identify and remediate deficiencies at an early stage. 
Through these efforts and applying effective technology and research in 
these maintenance activities, the service lives of these facilities can 
be lengthened and the need for major rehabilitation efforts delayed 
and/or reduced. Reclamation will continue to work cooperatively with 
water users in addressing these rehabilitation issues. Ultimately, 
local water users are responsible for the operation and maintenance of 
certain facilities (i.e., facilities transferred for operation and 
maintenance responsibility).
    Question. Are the benefits derived from large projects perceived as 
more important than those of small projects and therefore worth 
funding?
    Answer. No. Each project, large or small, has its own merits and 
issues.
    Question. There is potential that projects will be forced to return 
O&M to Reclamation when they cannot fund replacement due to failure. 
What does Reclamation intend to do when projects begin to fail? And 
when this potential situation becomes reality?
    Answer. Return of O&M to Reclamation is a possibility. At this 
point in time, we cannot predict what will occur other than Reclamation 
would examine the causes of failure, the potential consequences to the 
project sponsors and other factors such as the environment, and the 
economic merits of reinvesting in the project. We believe that the loan 
guarantee program as discussed above will reduce the likelihood of O&M 
being returned to Reclamation.

                          REPAYMENT CONTRACTS

    Question. Our repayment contract states that we, the project 
operating entity, are entrusted to and expected to protect the Federal 
interest, i.e. the Mancos Project. Why are we trying to convince the 
Bureau of Reclamation to support our efforts?
    Answer. Reclamation supports the efforts of managing entities to 
protect the Federal investment. In the case of the Mancos Project, the 
existing O&M contract specifies that the Mancos District is responsible 
for the operations and maintenance, including repair, of all project 
facilities.
    Question. Why does Reclamation fear we are trying to ``take away'' 
from their budget? We should both be working toward the same goal.
    Answer. Reclamation consistently supports and is committed to its 
projects as authorized by public law in accordance with legal 
contracts. For example, on the Mancos Project in Colorado, the contract 
between Reclamation and the Mancos Water Conservancy District states 
that the District will be responsible for operation, maintenance and 
rehabilitation of the project facilities rather than Reclamation.
    Question. Very recently it was announced that Reclamation had saved 
several million dollars on a project and were able to lower their 
budget. Was it possible for them to re-route the savings and begin to 
address the rehabilitation problems surfacing? If so, why didn't they?
    Answer. Unless the specific project in the question is named it 
would difficult to comment on how any project savings may have been 
used elsewhere or when the savings would have been realized. 
Reclamation is constrained in how it spends appropriated funds by 
public law and legal agreements. Transferring or reprogramming funds 
between projects is also subject to Congressional guidelines.
                                 ______
                                 
             Questions Submitted by Senator Byron L. Dorgan

                          OVERALL BOR FUNDING

    Question. The administration has written that ``water is the 
lifeblood of the American West and the foundation of its economy.'' Yet 
when the President released his budget earlier this year, he proposed a 
nearly $140 million budget cut for the arm of the government 
responsible for the supply and management of much of that water in the 
West, the Bureau of Reclamation. How will the Bureau of Reclamation 
address the growing water needs of the Western part of this country 
with even less resources than the previous year?
    Answer. We believe the funding level is sufficient to address 
Reclamation's responsibilities related to the growing and changing 
water needs of the West. Through collaboration and partnerships, we 
believe we can stretch limited Federal dollars further. For example, 
part of the funding in fiscal year 2007, is for the Water 2025 program 
that continues to focus on preventing crises and conflicts in the West, 
particularly in the problem areas identified on the Potential Water 
Supply Crises by 2025 illustration, May 5, 2003. The $14.5 million 
request will fund three program components: Challenge grants, water 
system optimization reviews, and research to improve water purification 
technology.
    The $14.5 million includes a request of $9.7 million to continue 
the success of the Water 2025 Challenge Grant Program. The requested 
amount will help bring the funding more in line with the demand and 
with the critical need for projects that will stretch water resources.
    In just 2 years since the inception of the Challenge Grant Program, 
Reclamation has funded 68 Challenge Grants to irrigation and water 
districts and western States, to address western water conflicts before 
a crisis occurs. Grants have been awarded in 16 out of 17 western 
States, potentially saving up to 285,000 acre-feet of water, once the 
projects are fully implemented. An acre-foot of water is enough to 
supply a family of four for a year.
    The $14.5 million requested also includes $2.1 million for water 
system optimization reviews, a new component of Water 2025 to be 
introduced in fiscal year 2007. Funding for system optimization reviews 
will be awarded through a competitive process, much like the Challenge 
Grants. Through water system optimization reviews, Reclamation will 
work with willing irrigation and water districts and western States to 
identify options for maximizing efficiency and improving water 
management.
    Finally, $2.7 million of the Water 2025 funding will be used to 
continue to fund research to improve and decrease the cost of water 
purification technology, including desalination. Water 2025 funding 
will be applied to competitive cost-shared grants for pilot, 
demonstration, and research projects to improve and test water 
purification technology.
    Water 2025 represents one example where Reclamation is leveraging 
its budget to resolve water issues in the West through collaboration 
and partnerships during a time of limited Federal dollars.

                              RURAL WATER

    Question. As you know, my top priority within the Bureau of 
Reclamation's budget is adequate funding for the Garrison project. A 
total of 155,000 acres of Ft. Berthold Indian Reservation land was 
taken for building the second-largest earth filled dam in America, the 
Garrison Dam. The water divided the Reservation down the middle. The 
Federal Government owes this tribe and others in North Dakota for its 
sacrifice for the Nation.
    But this administration's budget once again fails to live up to 
that promise by recommending only $24.21 million for Garrison 
Diversion, a $3.1 million cut over the fiscal year 2006 level of 
$27.311 million. The President's request does not provide the necessary 
funding for the municipal, rural and industrial (MR&I) projects in the 
State. The Dakota Water Resource Act of 2000 authorized $200 million 
for the State MR&I program and $200 million for the Indian MR&I 
program. The President's fiscal year 2007 budget only provides $6 
million for MR&I projects: $3 million for State MR&I and $3 million for 
Indian MR&I. The North Dakota Water Commission has identified a need of 
$36 million for MR&I projects in fiscal year 2007.
    The President's budget proposal woefully funds Garrison Diversion. 
Why is the Federal Government turning its back on its commitments to 
the residents of my State?
    Answer. The administration is not turning its back on the residents 
of North Dakota. The fiscal year 2007 President's budget request 
continues progress on the Garrison Diversion Unit while maintaining 
existing infrastructure and other on-going construction projects 
throughout the agency, during a time of limited Federal dollars.
    Question. As you know, the BOR released its Draft Environmental 
Impact Statement for the Red River Water Supply Project on December 30, 
2005. This draft listed 8 potential alternatives and the BOR had a 60-
day comment period, which was extended until the end of March.
    I want to thank the BOR for holding all the meetings around North 
Dakota to discuss the different alternatives contained within the draft 
plan. The State of North Dakota has identified their preferred 
alternative and it seems like the most feasible and cost effective plan 
put forward.
    This plan would use a combination of the Red River, other ND in-
basin sources, and Missouri River water. The principal feature of this 
option would be a pipeline from the McClusky Canal to Lake Ashtabula 
that would release treated MO River water into the Sheyeene River. The 
pipe would be sized so peak day demands could be met by Lake Ashtabula 
releases. The option would include a biota treatment plant at the 
McClusky Canal and a pipeline to serve industrial water demands in 
southeastern ND. The biota treatment process would use various 
disinfection technologies.
    Unlike the other alternatives, this plan would ``only'' cost $500 
million. I say ``only'' because the other alternatives range from $600 
million to $2.5 billion.
    What, if anything, did the Bureau learn from all the meetings 
around North Dakota regarding this plan?
    Answer. The proposed alternatives would use water sources in North 
Dakota and Minnesota. Public hearings were held in North Dakota and 
Minnesota to gather input on all eight (No Action and seven action) 
alternatives evaluated in the draft EIS.
    The formal input received at these hearings can be categorized as 
follows: (1) support for the project; (2) support for the State's 
preferred alternative; (3) opposition to the project; (4) opposition to 
the State's preferred alternative; (5) opposition to interbasin water 
transfer; (6) concerns with transfer of non-native biota from 
interbasin water transfers; (7) concern that the identified need for 
water is too large; (8) concern that the Red River Valley residents 
live within their means (more water conservation, more drought 
contingency, more use of in-basin water sources); (9) concern expressed 
by Three Affiliated Tribes and Standing Rock Sioux Tribes that other 
features of GDU, specifically Indian MR&I, be completed before funding 
construction of any Red River Valley Water Supply feature(s); (10) 
concern expressed by tribes that diversion would negatively impact 
their water rights.
    Question. Are you finished taking comments on this? If not, how 
long has the comment period been extended?
    Answer. No, the comment period has been extended. The additional 
time will permit Reclamation and the State of North Dakota the 
opportunity to work cooperatively with the Environmental Protection 
Agency (EPA) to address and resolve issues raised by EPA.
    Question. Is it still your intention to publish the final EIS in 
December of this year?
    Answer. Yes. Reclamation plans to distribute the final EIS by 
December 31, 2006.
    Question. From a preliminary standpoint, is the Bureau looking at 
any one alternative in particular?
    Answer. No. We are going to evaluate all comments and data before 
identifying a preferred alternative.
    Question. Is the State's alternative the most likely at this point 
and if so is the administration already engaging the Canadian 
government on potential concerns regarding the Boundary Waters Treaty 
Act? I know it may be premature, but I do not want the project held up 
based on unsubstantiated allegations regarding biota transfers.
    Answer. Until all comments have been received and evaluated it is 
premature to assess any one of the alternatives as ``most likely.'' 
Canada has participated in technical discussions on the Red River 
Valley Water Supply project but has not been engaged formally at this 
time. Reclamation has briefed the State Department on the issues 
associated with treaty compliance.
    Question. And to that point, has the Canadian Government submitted 
any comments on the proposals? More specifically, has the Canadian 
Government indicated any alternative to what the BOR has proposed?
    Answer. Although Canada was invited to participate on the Red River 
Valley Water Supply Needs and Options studies they declined to be a 
formal member of the team. Manitoba and Environment Canada participated 
as observers but did provide technical comments during the study 
process and on the draft Needs and Options report. Both Manitoba and 
Environment Canada are expected to comment on the draft EIS. At this 
time, Canada has not proposed any new alternatives. Their comments to 
date have made it clear that they oppose any interbasin water transfer, 
are concerned about potential transfer of non-native biota associated 
with a transfer of Missouri River water, and would like a reference to 
the International Joint Commission.
                                 ______
                                 
            Questions Submitted by Senator Dianne Feinstein

                  FUNDING FOR FRIANT--NRDC SETTLEMENT

    Question. The Department of the Interior is a party to the 
negotiations to settle the long standing litigation over the San 
Joaquin River. I'm aware that settlement discussions are confidential 
and have not been completed, but I understand that the Justice 
Department has told the Court that the Department expects negotiations 
to be substantially completed by mid-April.
    If the Justice Department is correct in its assessment and the 
parties' settlement is approved by the Court, can we assume that you 
will begin your San Joaquin River restoration activities as soon as 
possible, including in fiscal year 2007, and if so, how would the 
Bureau fund such activities? A Settlement wasn't anticipated when the 
Bureau drafted its fiscal year 2007 budget request, so the request 
doesn't include funding for fiscal year 2007 restoration actions.
    Answer. As you know, settlement discussions are continuing. If a 
settlement is eventually reached and if it is approved by the Court, 
Reclamation could be able to begin initial activities associated with 
the restoration activities outlined in the settlement using a portion 
of the Central Valley Project Improvement Act (CVPIA) Restoration Fund 
which has been identified in the 2007 budget request for use on San 
Joaquin River activities.
    Question. What source of existing revenues (i.e. the Judgment Fund, 
CVPIA Restoration Funds, the Friant Surcharge, Cal Fed, or other Energy 
and Water appropriations) can be applied to this effort in fiscal year 
2007?
    Answer. There are a number of possible sources of funding. This is 
a matter under consideration in the confidential settlement 
discussions.
    Question. As you know, Congressman Radanovich, Governor 
Schwarzenegger and I have all urged the Bureau to reach a settlement of 
this case. Now that the parties appear close to reaching an agreement, 
will implementation of a San Joaquin River settlement be a future 
funding priority for the Bureau?
    Answer. The Department appreciates the effort that all of the 
parties to the litigation have committed to the settlement 
negotiations, and we remain hopeful that a settlement will ultimately 
be reached. Establishing funding priorities in any given year will, of 
course, require discussions with the Office of Management and Budget, 
as well as subsequent acts of Congress.

                         CALFED STORAGE STUDIES

    Question. I strongly believe that with a growing population, global 
warming, and other challenges, California greatly needs new water 
supply. I understand that your current schedule is to finish the last 
of the four CALFED storage feasibility studies, for the Upper San 
Joaquin storage project, in July 2009.
    Is there anything that I can do to get this study finished faster? 
If there is any potential delay in getting the approval of other State 
or Federal agencies, will you let me know right away so I can try to 
get the process moving?
    Answer. We have been reviewing our schedules and believe that there 
may be opportunities to expedite the investigation such that all four 
studies including the Upper San Joaquin storage investigation could be 
completed by the end of 2008. These opportunities are dependent on the 
results of on-going technical studies as well as the level of 
cooperation we receive from our State partners and other State and 
Federal CALFED agencies and stakeholders. Based on our current schedule 
of tasks to complete the investigations, additional funding above the 
budget request is not required at this time to support expediting the 
schedule. We hasten to add that completion of these studies does not 
mean that the projects will be ready to begin construction; these are 
merely documents that will aid the Federal Government in determining 
whether these proposed projects are feasible and how they fit into 
broader nationwide priorities for investment.

                      ENVIRONMENTAL WATER ACCOUNT

    Question. The administration asked for $10 million for the 
environmental water account in its fiscal year 2007 CALFED funding 
request. How critical is this environmental water account funding for 
avoiding or minimizing harm to the Delta smelt and other pelagic fish 
while delivering water to farmers and cities to the South?
    Answer. The Environmental Water Account (EWA), authorized in the 
2004 CALFED Bay-Delta Authorization Act, is a pilot water management 
program, and is integral to making balanced progress in implementing 
the CALFED program. It is designed to help protect and increase 
survival, and aid in the recovery of at-risk native fish species of the 
Bay-Delta, including the Delta Smelt, by strategically implementing 
pumping curtailments at the Central Valley Project's Tracy Pumping 
Plant and the State Water Project's Banks Pumping Plant. Whether the 
actions of the EWA do contribute to the recovery of at-risk native fish 
populations is a question that remains unanswered.
    Given the current situation regarding the decline of pelagic fish 
populations and ongoing investigations into the reasons for this 
decline, the EWA agencies, as well as many other concerned entities, 
have made this matter a high priority. A multi-year science effort was 
initiated in 2005 by the agencies involved in the Interagency 
Ecological Program to determine the causes of the Pelagic Organism 
Decline (POD) in the Delta. Part of this effort includes identifying 
the role, if any, that water project operations in the Delta might have 
had in the POD.
    Additionally, the CALFED Science Program has already initiated the 
development of fish population models for the Delta that will increase 
our understanding of how certain actions in the Delta affect fish 
populations. The results of these efforts will likely increase our 
understanding of how effective the EWA program has been in helping 
Delta fish populations. Because of the current situation in the Delta, 
it is critical to have adequate fiscal year 2007 funding for the pilot 
phase of the EWA to help ensure sufficient water assets are acquired 
for fish protection and water supply reliability purposes.

            LOWER TUSCAN AQUIFER WATER SUPPLY INVESTIGATION

    Question. I have a strong interest in the Bureau of Reclamation 
supporting locally-led efforts to investigate the Lower Tuscan 
groundwater formation, which Congress funded with $2 million in the 
fiscal year 2006 Energy and Water Development Appropriations bill. 
Preliminary study results suggest the Lower Tuscan may hold as much as 
30 million acre-feet of water.
    While the potential water supply benefits of the Lower Tuscan 
formation appear to be substantial--with early California Department of 
Water Resources estimates forecasting as much as several hundred 
thousand acre-feet in new water available for agricultural, 
environmental, and municipal uses--additional technical work must be 
completed to determine how this resource can best meet regional and 
statewide water supply needs.
    Commissioner Keys, I want to thank you for your support for this 
critically important initiative. I understand that the Bureau is 
working on a cooperative agreement with Glenn-Colusa Irrigation 
District to move forward on this project.
    Can you update the committee on the Bureau's progress in moving 
forward on the Lower Tuscan work?
    Answer. Reclamation is currently working with Sacramento Valley 
water interests, in particular with Glenn-Colusa Irrigation District 
(GCID), to develop a cooperative agreement that will include studies 
and investigations of the possibility of integrating the Lower Tuscan 
Formation into Sacramento Valley surface water supplies. This agreement 
will be a counterpart to the agreement between GCID and the Department 
of Water Resources for Proposition 50 funding for these same 
activities.
    I would also point out that new groundwater supplies, while 
potentially representing a short-term expansion of water supply, and 
offering potential for conjunctive use (groundwater storage of surface 
waters), must be carefully managed to avoid groundwater mining. New 
groundwater supplies need to be part of a long-term, sustainable 
strategy for water use, and should not be used as a one-time windfall.
    Question. When do you anticipate finalizing the cooperative 
agreement?
    Answer. We expect to receive a completed proposal from GCID no 
later than June 14, 2006, and to enter into a Cooperative Agreement 
with GCID prior to the end of fiscal year 2006.

                  CALFED WATER USE EFFICIENCY PROJECTS

    Question. I understand that the Bureau is now accepting grant 
applications from agricultural and urban water districts for $2.4 
million from Congress's fiscal year 2006 appropriation for CALFED water 
use efficiency projects. Can you tell me about the types of projects 
you expect to fund, and how much water they could save to be used for 
other purposes?
    Answer. Funding is available for agriculture and urban projects. 
Applicants for the CALFED Water Use Efficiency Grants Program must be 
local public agencies involved with water management (cities, counties, 
joint power authorities, or other political subdivisions of California) 
or incorporated mutual water companies.
    To be eligible for financial assistance, a proposed activity must 
have a defined relationship to CALFED objectives. These objectives 
include: improving and increasing habitats, improving ecological 
functions for ecosystem quality, providing good water quality, and 
reducing the mismatch between the Bay-Delta water supply and its 
current and projected uses.
    Proposals that will be considered for funding are agricultural 
projects including canal lining, spill and tailwater recovery systems, 
automated canal structures, and evaluation of improved water 
efficiency, and urban projects that satisfy the implementation of the 
urban Best Management Practices, such as, residential plumbing 
retrofits, Commercial Industrial and Institutional water conservation 
efforts (water used primarily by hotels, restaurants, commercial/office 
buildings, manufacturers, and public service facilities), large 
landscape conservation, metering, and system audits.

                 WATER RECYCLING PROJECTS AND TITLE XVI

    Question. In 1999, California water districts submitted the San 
Francisco Bay Area Regional Water Recycling Program feasibility study 
to the Bureau of Reclamation. This regional plan consisted of 19 
projects that if constructed would produce 125,000 acre feet of 
recycled water by 2010. In 2001, California water districts submitted 
the Southern California Comprehensive Water Reclamation and Reuse 
feasibility study to the Bureau. If constructed, the 34 projects in 
this regional plan would generate 451,000 acre feet of recycled water. 
The Bureau has been reviewing these studies for the past 7 and 5 years, 
respectively. Is this the typical time it takes to review Title XVI 
feasibility studies?
    Answer. The Bay Area Regional Water Recycling Program (BARWRP) 
study was submitted to Reclamation in 1999 by the local water agencies. 
The Southern California Comprehensive Water Reclamation and Reuse Study 
(SCCWRRS) was completed by Reclamation, in cooperation with local water 
agencies, in 2001. The reports documenting these studies were submitted 
to Congress, which completed Reclamation's responsibility under 
Sections 1610 and 1606 (respectively) of Title XVI, Public Law 102-575. 
These studies were regional and programmatic in nature and were not 
intended to determine the feasibility of individual projects; 
therefore, Reclamation has not been reviewing these studies or specific 
projects identified in either of these reports to determine their 
feasibility during the past 7 and 5 years, respectively.
    However, Public Law 108-361 required Reclamation to determine 
whether subsequent reports and other documentation submitted by 
individual project proponents met the requirements of the 1998 Title 
XVI Guidelines for determining project feasibility, and this review has 
now been completed and provided to Congress.
    Question. Is it true the Bureau has not yet completed its review 
process?
    Answer. Reclamation has completed its review of the reports and 
other documentation submitted by project proponents in response to our 
request for information for the report directed by Public Law 108-361. 
The report was transmitted April 28, 2006.
    Question. When can both Congress and the projects sponsors expect 
to receive the Bureau's completed review?
    Answer. The report was transmitted April 28, 2006.

                          SUBCOMMITTEE RECESS

    Senator Domenici. Anyway, with that sad tale, we are in 
recess.
    [Whereupon, at 11:10 a.m., Tuesday, March 28, the subcom- 
mittee was recessed, to reconvene subject to the call of the 
Chair.]

 
 ENERGY AND WATER, AND RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 
                                  2007

                              ----------                              


                        THURSDAY, MARCH 30, 2006

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:13 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Pete V. Domenici (chairman) 
presiding.
    Present: Senators Domenici, Bond, Allard, Reid, and Murray.

                          DEPARTMENT OF ENERGY

STATEMENT OF DAVID K. GARMAN, UNDER SECRETARY OF ENERGY 
            FOR ENERGY, SCIENCE AND ENVIRONMENT
ACCOMPANIED BY:
        JAMES RISPOLI, ASSISTANT SECRETARY OF ENERGY FOR ENVIRONMENTAL 
            MANAGEMENT
        JEFFREY JARRETT, ASSISTANT SECRETARY FOR FOSSIL ENERGY

             OPENING STATEMENT OF SENATOR PETE V. DOMENICI

    Senator Domenici. The hearing will please come to order. 
Now, this is a very lengthy hearing. We are going to try to do 
it all. I do not know if we can finish it in the time allotted. 
If we do not, we will hold it over to this afternoon and try to 
finish it for whomever can come. The witnesses that are not 
finished this morning, please understand, get on your 
telephones and advise people you might have to be here this 
afternoon.
    I have a very lengthy statement. There is no other way for 
me to do it. But I am going to yield to the distinguished 
ranking minority leader for his opening remarks. Then I will 
have mine and then if either Senator would like. I would like 
them to keep them brief and to the point.
    Senator Reid, thank you for coming.

                    STATEMENT OF SENATOR HARRY REID

    Senator Reid. Mr. Chairman, thank you very much. I 
appreciate your courtesy. I know everyone is busy and I feel 
that I should not step out of line, but I appreciate your 
allowing me to do so.
    Secretary Garman, Dr. Orbach, I am delighted to see the 
proposed increases for the Office of Science Research Programs. 
As a supporter of balanced energy policy, I believe that your 
office has an absolutely critical role to play in delivering 
discoveries and scientific tools that transform our 
understanding of energy and matter in areas as diverse and 
fundamental as biological and environmental research to nuclear 
power and even fusion.
    I am also pleased to see the proposed increases for energy 
sciences, computing, nuclear physics, fusion energy, including 
the $41 million increase for the International Thermonuclear 
Experimental Reactor project, known as ITER.
    Dr. Garman, I am similarly pleased to see the increases for 
the proposed Advanced Energy Initiative. I laud the value of 
research and development to promote American energy security 
and a corresponding decrease in our dependence on foreign 
resources. I also believe that the proposed initiatives in 
biofuels, hydrogen, and solar research can all play a 
significant role in our future energy security.
    I am, though, disappointed by your decision to zero out the 
geothermal energy program. I am really somewhat mystified. I 
see nothing in the budget request to defend this action of 
yours, so I assume you are hard-pressed to come up with an 
answer. Geothermal is really something that needs to be used. 
It is there, it is at our fingertips, and some have referred to 
Nevada as the Saudi Arabia of geothermal energy.
    I have a series of questions and a separate statement for 
the record on this issue and I ask consent that I can submit 
these to you.
    Senator Domenici. Without objection.
    Senator Reid. Though you should be assured I will continue 
to press for geothermal energy in next year's budget, this 
year's budget, fiscal year 2007.
    I hope you will also take some time to discuss why you did 
not avail yourself of the fiscal flexibility offered in last 
year's conference report concerning Congressionally directed 
activities. I am very eager to understand what led you to the 
conclusion that laying off National Renewable Energy Lab 
employees, if only for a week, made sense, given the broad 
authority you had to avoid such an outcome. It embarrassed the 
President and it embarrassed all of us.
    This subcommittee needs to be in a position to support the 
President's competitiveness and energy initiatives. However, 
unless this committee receives a higher budget allocation some 
very difficult choices will have to be made between proposed 
increases in nuclear and renewable energy programs, while 
programs such as fossil energy are severely shortchanged. For 
every huge plus-up of new ideas by the President, you have cut 
huge congressional priorities. Congress is going to have to 
restore your indefensible, I believe indefensible, cuts to the 
weatherization program, clean coal power initiative, and 
geothermal energy programs, just to name a couple.
    The most likely sources of these funds in a flat budget 
environment are big initiatives that are seeing huge funding 
pushes and it is hard for us to comprehend that. For example, 
Yucca Mountain. The Department has requested $544 million. This 
represents an increase over the $495 million of last year of 
$50 million. I am convinced that the proposed Yucca Mountain 
nuclear waste dump will never be built. We know it is mired in 
scientific, safety, and technical problems. When this bill was 
passed 20 years ago, there was reason for doing it. It has not 
worked well.
    In 1987 Congress, as we know, took additional action. It 
was based on political expediency and it has not worked well. 
DOE has been studying this site for 20 years. The studies are 
incomplete and do not provide a basis for evaluating whether 
Yucca Mountain is a safe site for storing nuclear waste or that 
we can transport it across America's highways and railways to 
our communities, past our schools and hospitals and through 
major metropolitan areas. Transportation of nuclear wastes 
around the country and to Yucca poses hazards to public health, 
economic and national security, and environmental safety from 
accidents and terrorist acts, issues that did not exist in 
1982, issues though which, with the changing environment, DOE 
has refused to address.
    Moving about 80,000 tons of waste to Yucca would involve at 
least 55,000 truckloads, maybe as many as 10,000 rail 
shipments, through counties which include 250 million people--
Sacramento, Buffalo, Denver, Chicago, the District of Columbia.
    Before his election, President Bush wrote, I quote: ``I 
believe sound science and politics must prevail in the 
designation of any high-level nuclear waste repository. As 
President, I would not sign legislation that would send nuclear 
waste to any proposed site unless it has been deemed 
scientifically safe.'' Again, President Bush let politics and 
unsound science prevail.
    A few of the scientific problems that we have seen even in 
the last year-and-a-half include: a court decision throwing out 
EPA's radiation protection standards as they were not strong 
enough to protect the public from radiation exposure and failed 
to follow the recommendations of the National Academy of 
Sciences. Next, EPA published in 2005 its revised standards for 
the proposed site, which most scientists believe are 
inadequate, do not meet the law's requirements, and do not 
protect public health and safety. In fact, EPA is proposing the 
least protective health radiation standard in the whole world.
    Numerous scientific and quality assurance problems with 
transportation have also been brought to our attention, 
problems dealing with transportation, corrosion of casks, 
effectiveness of materials, causing DOE to suspend work on the 
surface facilities and to issue a stop-work order on the 
containers.
    Also, DOE revealed that documents and models about water 
infiltration at Yucca Mountain had been falsified. People lied 
about it. They whitewashed the problem, but they cannot 
whitewash the DOE Inspector General's report that DOE continues 
to ignore falsification of technical and scientific data on the 
project. This is not the governor of Nevada or some State 
legislature, but it is the Inspector General of the Department 
of Energy that says this, that the DOE continues to ignore 
falsification of technical and scientific data.
    In numerous media reports, the administration has confirmed 
that it is preparing a legislative package that will remove 
health, safety and legal requirements, a clear admission, I 
suggest, that the project is a public health and safety and 
scientific failure.
    It should be clear to anyone that the proposed Yucca 
Mountain project is not going to move. It will never open. Yet 
we must safely store spent nuclear fuel. It is time to look at 
other alternatives. Fortunately, the technology to realize a 
viable, safe, and secure alternative is readily available and 
can be fully implemented within a decade. That technology is 
on-site dry cask storage. As we speak, dry casks are being 
safely used at 34 sites throughout our country. Even NEI 
projects 83 of the 100 active reactors will have dry cask 
storage by 2050.
    Senator Ensign and I have a bill that would safely store 
nuclear waste while we look for a scientifically based 
solution, the Spent Fuel On-Site Storage and Security Act. Our 
bill requires commercial nuclear utilities to secure waste in 
licensed on-site dry cask storage facilities. There is no 
justification for endangering the public--I pushed it down with 
my card. Thanks, Mr. Chairman.
    There is no justification for endangering the public by 
rushing headlong toward a repository that is fraught with 
scientific, technical, and geological problems when it can be 
stored safely and securely in dry casks. The bill guarantees 
all Americans that our Nation's nuclear waste will be stored in 
the safest way possible. So it is time we proceed to address 
the problem, the safe storage of spent nuclear fuel, and stop 
pouring hundreds of millions of dollars every year down the 
drain.

               PREPARED STATEMENTS OF SENATOR HARRY REID

    Since the Yucca project I believe is a failure, I will 
continue to oppose it. I want to, Mr. Chairman, spread on the 
record how, even though we have butted heads on this issue for 
many, many years, it has all been in the sense of policy 
differences. You have been a gentleman to work with and I 
appreciate that, extending today to allowing me to go first, 
and I apologize to my colleagues for taking as long as I have 
with the statement.
    [The statements follow:]

                Prepared Statement of Senator Harry Reid

    Mr. Chairman, I appreciate you holding this combined hearing today 
to discuss the fiscal year 2007 budget request for a large number of 
Department of Energy programs, including the Office of Science, the 
Energy Efficiency and Renewable Energy programs, the Office of 
Electricity, the Fossil Energy program, the nuclear energy program, the 
Office of Legacy Management, the Office of Environment, Safety and 
Health, the Environmental Management program and, of course, the Yucca 
Mountain program.
    I am pleased to welcome Mr. Dave Garman, the Under Secretary for 
Energy, Science, and the Environment, and Dr. Raymond Orbach, the 
Director of the Office of Science.
    I am going to submit several longer statements for the record 
regarding the Energy Supply Program and Office of Science generally, 
and the geothermal energy program specifically.
    However, while I am here today, I would like to offer several brief 
observations about the overall budget request for these programs and 
then a much longer discussion about the on-going government failure and 
embarrassment that is the Yucca Mountain Program.
    Mr. Chairman, I will try to be brief.
    Dr. Orbach, I am delighted to see the proposed increases for the 
Office of Science research programs. As a supporter of a balanced 
energy policy, I believe that your office has an absolutely critical 
role to play in delivering discoveries and scientific tools that 
transform our understanding of energy and matter in areas as diverse 
and fundamental as biological and environmental research to nuclear 
power and fusion.
    I am pleased to see the proposed increases for basic energy 
sciences, computing, nuclear physics, and fusion energy including the 
$41 million increase for the International Thermonuclear Experimental 
Reactor project (ITER).
    I was prepared to ask you some very specific questions about job 
impacts based on enactment of this budget request to make sure we avoid 
any problems similar to what we faced this year, but given the massive 
increases I think I can forgo that line of questioning.
    Mr. Garman, I am similarly pleased to see the increases for the 
proposed Advanced Energy Initiative. As you are aware, I laud the value 
of research and development to promote American energy security and a 
corresponding decrease in our dependence on foreign resources. Further 
I believe that the proposed initiatives in Biofuels, Hydrogen, and 
Solar research can all play a significant role in our future energy 
security.
    I am, however, mystified by your decision to zero our the 
geothermal energy program. I see little effort in the budget request to 
even bother to try to defend this action, so I assume you were hard-
pressed to dream one up. I have a very long series of questions and a 
separate statement for the record on this issue. However, it is safe to 
say that there will be a geothermal energy program in fiscal year 2007.
    I hope you will also take some time to discuss why you did not 
avail yourself of the fiscal flexibility offered you in the fiscal year 
2006 Conference Report concerning Congressionally-directed activities. 
I am very eager to understand what led you to the conclusion that 
laying off National Renewable Energy Lab employees, if only for a week, 
made sense given the broad authority you had to avoid such an outcome.
    Finally, this subcommittee wants to be in a position to support the 
President's Competitiveness and Energy Initiatives. However unless this 
committee receives a higher budget allocation, some very difficult 
choices will have to be made between proposed increases in Nuclear and 
Renewable Energy programs while program such as Fossil Energy are 
severely shortchanged.
    For every huge plus-up of shiny new ideas by the President, you 
have cut huge Congressional priorities. Congress is going to have to 
restore your indefensible cuts to the Weatherization Program, the Clean 
Coal Power Initiative, and the geothermal energy program, just to name 
a few. The most likely sources of these funds, in a flat budget 
environment, are big initiatives that are seeing huge funding pushes.
    As for Yucca Mountain . . . . 
    The Department has requested $544 million for fiscal year 2007 for 
the nuclear waste repository program. This represents an increase over 
the current year appropriated amount of $495 million by approximately 
$50 million.
    I am convinced that the proposed Yucca Mountain nuclear waste dump 
will never be built because the project is mired in scientific, safety 
and technical problems.
    In 1982, Congress passed the Nuclear Waste Policy Act, which called 
for disposal of nuclear waste in a deep geological repository that 
would remain stable for thousands of years and directed DOE to pick the 
most suitable site based on the natural, geologic features of the site.
    In 1987, Congress took action based on political expediency and 
limited DOE's studies to Yucca Mountain, despite the fact that the 
criteria in the Act would disqualify the Yucca Mountain site.
    DOE has been studying the site for 20 years. The studies are 
incomplete and do not provide a basis for evaluating whether Yucca 
Mountain is a safe site for storing nuclear waste or that it can be 
transported safely across America's highways and railways and through 
our communities, past our schools and hospitals and through major 
metropolitan areas.
    Transportation of nuclear waste around the country and to Yucca 
poses hazards to public health, economic and national security and 
environmental safety from accidents and terrorist attacks, issues which 
DOE has not addressed.
    Moving 77,000 tons of waste to Yucca would involve about 53,000 
truck shipments or 10,000 rail shipments over 24 years, through 
counties in which nearly 250 million people live, including Sacramento, 
Buffalo, Denver, Chicago, Washington DC, and Las Vegas.
    Before his election, President Bush wrote, ``I believe sound 
science, not politics, must prevail in the designation of any high-
level nuclear waste repository. As President, I would not sign 
legislation what would send nuclear waste to any proposed site unless 
it's been deemed scientifically safe.''
    Now President Bush is letting politics and unsound science prevail 
at Yucca Mountain.
    A few of the scientific problems that we have seen the last year 
and a half include:
  --In 2004, the Court threw out EPA's first radiation protection 
        standards for Yucca because they were not strong enough to 
        protect the public from radiation exposure and failed to follow 
        the recommendations of the National Academy of Sciences.
  --In 2005, EPA published its revised standards for the proposed Yucca 
        Mountain high-level waste dump, which are wholly inadequate, do 
        not meet the law's requirements and do not protect public 
        health and safety. In fact, EPA is proposing the least 
        protective public health radiation standard in the world.
  --Numerous scientific and quality assurance problems with 
        transportation plans, corrosion of casks, the effectiveness of 
        materials, etc., causing DOE suspend work on the surface 
        facilities and NRC to issue a stop work order on the 
        containers.
  --In addition, DOE revealed that documents and models about water 
        infiltration at Yucca Mountain had been falsified. They 
        whitewashed this problem, but cannot whitewash the DOE 
        Inspector General's report that DOE continues to ignore 
        falsification of technical and scientific data on the project.
    In numerous media reports, the administration has confirmed that it 
is preparing a legislative package that will remove health, safety and 
legal requirements, a clear admission that the project is a public 
health, safety and scientific failure.
    It should be clear to anyone that the proposed Yucca Mountain 
project is not going anywhere. Yucca Mountain will never open.
    Yet, we must safely store spent nuclear fuel.
    It is time to look at other nuclear waste alternatives. 
Fortunately, the technology to realize a viable, safe and secure 
alternative is readily available and can be fully implemented within a 
decade if we act now. That technology is on-site dry cask storage.
    Dry casks are being safely used at 34 sites throughout the country. 
NEI projects 83 of the 103 active reactors will have dry storage by 
2050.
    Senator Ensign and I have a bill that would safely store nuclear 
waste while we look for a scientifically-based, safe solution--The 
Spent Fuel On-Site Storage and Security Act of 2006, S. 2099. Our bill 
requires commercial nuclear utilities to secure waste in licensed, on-
site dry cask storage facilities.
    There is absolutely no justification for endangering the public by 
rushing headlong towards a repository that is fraught with scientific, 
technical and geological problems when it can be stored safely and 
securely in dry casks. Our bill guarantees all Americans that our 
Nation's nuclear waste will be stored in the safest way possible.
    It is time we addressed to problem at hand--the safe storage of 
spent nuclear fuel--and stopped pouring taxpayers' money down the drain 
on a project that could endanger all of our citizens.
    The Yucca Mountain project is a failure. I vow to continue to fight 
this project.
    Thank you, Mr. Chairman. As always, I look forward to working on 
these issues with you and your staff.
                                 ______
                                 
              Supplemental Statement of Senator Harry Reid

       REGARDING THE TERMINATION OF THE GEOTHERMAL ENERGY PROGRAM

    We need to put America on the path to energy independence with 
policies that promote advanced energy technologies. Energy is 
critically important to America's future and our national security. 
That's why I joined as a leader in the Democrats' plan to make America 
energy independent by 2020.
    Our plan builds on a fundamental commitment to support expanded 
renewable energy development. The development of renewable energy will 
bolster our national security, protect our environment, and create jobs 
in Nevada, while also providing a steady, reliable supply of energy for 
consumers.
    Nevada has many features that make it an ideal location to develop 
renewable energy sources. In fact, our State has been a leader in this 
area for many years. Nevada is particularly rich in geothermal energy, 
which could meet one-third of our State's energy needs. I worked with 
then-Energy Secretary Bill Richardson to launch the Geopowering the 
West initiative in 2000 to help develop Nevada's tremendous geothermal 
potential. This project funds public/private partnerships to develop 
geothermal power in Nevada, California, New Mexico, and Utah, with the 
ultimate goal of providing 10 percent of the electricity needs of the 
Western States from geothermal sources by the year 2020.
    One of the great advantages of renewable energy is that these 
technologies work in harmony with the environment and do not leave a 
legacy of dangerous waste products that future generations will have to 
figure out how to deal with. One of the best legacies we can leave to 
our children is a clean environment and a history of preservation of 
our natural beauty and wilderness. We always will need clean water to 
drink and safe air to breathe. While we have made much progress over 
the last 30 years, it is critical that we maintain our strong 
commitment to safeguarding our Nation's natural heritage and protecting 
our environment.
    Our Nation's leadership must put us on a path that protects the 
environment and builds a new, sustainable economy. Both the environment 
and the economy are crucial to our Nation. Without a strong economy, it 
is impossible to protect our environment adequately. Without a healthy 
environment, our economy cannot thrive. The best technologies to 
address both our energy and economic needs are energy efficiency and 
renewable energy, and I believe that most of my colleagues in the 
Senate would agree with that assertion.
    For a moment, I thought I might hear the administration agreeing 
with us. The proposed fiscal year 2007 Budget of the Department of 
Energy began with fanfare that gave that impression. In its press 
release on February 6, DOE said: `` . . . the Department of Energy 
(DOE) requests $23.6 billion, a $124 million increase over the fiscal 
year 2006 request. The fiscal year 2007 budget request makes bold 
investments to improve America's energy security while protecting our 
environment, puts policies in place that foster continued economic 
growth, spurs scientific innovation and discovery, and addresses the 
threat of nuclear proliferation.''
    But getting past the fanfare, the reality of the proposed fiscal 
year 2007 budget is far different. The administration's budget goes in 
the opposite direction, cutting efforts to develop clean, renewable 
energy and promoting technological choices that will make our nuclear 
proliferation a greater threat and expanding our nuclear waste legacy 
to future generations.

                PROVIDING RELIABLE, CLEAN ELECTRIC POWER

    One of the challenges we face is meeting the growing demand for 
electric power, particularly in the West. The Western Governors 
Association has estimated that over 50,000 MW of new electric power 
generation will be needed to meet growing demand in the next decade. 
How we meet these needs will have profound consequences for Nevada, the 
West and the Nation.
    DOE's proposed budget seems to make some clear and rather abrupt 
choices regarding future power production options. The DOE Budget 
documents asserts: ``Few technologies provide clean, reliable, baseload 
electricity--only nuclear power'' (DOE fiscal year 2007 Budget 
presentation Power Point, page 6).
    It is true that few technologies can provide electricity that is 
clean, reliable, and baseload--many technologies suffer from problems 
with intermittent generation and offer only peaking support. But, the 
Department's budget inexplicably increases funding for these 
intermittent technologies while completely gutting the most promising 
renewable technology that can provide reliable baseload power--
geothermal energy.
    The Department's own Geothermal Program Strategic Plan stresses 
these values of geothermal energy. It states:

    ``The Earth houses a vast energy supply in the form of geothermal 
resources. These resources are equivalent to 30,000 years of energy for 
the United States at current rates of consumption. However, only about 
2,600 MWe of geothermal power is installed today. Geothermal has not 
reached its full potential as a clean, secure energy alternative 
because of concerns or issues with resources, technology, commitment by 
industry, and public policies. These concerns affect the economic 
competitiveness of geothermal energy.
    ``The U.S. Department of Energy's Geothermal Technologies Program 
seeks to make geothermal energy the Nation's environmentally preferred 
baseload energy alternative. The Program's mission is to work in 
partnership with U.S. industry to establish geothermal energy as an 
economically competitive contributor to the Nation's energy supply.''

    But, the geothermal strategic plan indicated that the program could 
not reach its goals until at least 2040 because of its limited funding. 
It went on to say that ``Doubling the Program's budget'' would 
accelerate achieving the program goals and they could ``be attained by 
2020, resulting in an overall budget savings of $100 million.''
    Sounds like doubling the geothermal research program would be a 
good investment!
    If the Department's researchers felt they could bring tens of 
thousands of megawatts of reliable, baseload geothermal power on-line 
by 2020 with a doubling of the budget, you would think that 
recommendation would receive top priority. But it obviously didn't. 
Instead, the Department of Energy budget has proposed to zero-out the 
geothermal program. It has chosen to undermine progress in a technology 
that can effectively compete with nuclear power or fossil fuels to 
provide reliable electric power.
    Why? What rationale could possible support such a decision? Well, 
Secretary Bodman explained to the Senate Energy Committee: ``While the 
budget proposes increases for Biomass, Solar and Hydrogen research, the 
Geothermal Program will be closed out in fiscal year 2007 using prior 
year funds. The 2005 Energy Policy Act amended the Geothermal Steam Act 
of 1970 in ways that should spur development of geothermal resources 
without the need for subsidized Federal research to further reduce 
costs.''
    So is DOE blaming Congress! We simply went too far in the Energy 
Policy Act supporting geothermal energy, and now it doesn't need DOE 
support?
    But, let's compare these choices for a moment. DOE proposes $0 for 
geothermal energy, but it has asked for $632.7 million for nuclear 
energy activities. I guess EPAct didn't take care of nuclear power as 
well. But, that doesn't seem to be the case. Here for the record is how 
the Senate Energy Committee views the highlights of EPAct's provisions 
supporting nuclear energy and geothermal energy:

``Highlights of the Energy Bill--Senate Energy Committee
            ``Nuclear Power
    ``Nuclear energy is the world's largest source of emission-free 
energy. Nuclear powerplants produce no controlled air pollutants, such 
as sulfur and particulates, or greenhouse gases. The use of nuclear 
energy in place of other energy sources helps to keep the air clean, 
preserve the Earth's climate, avoid ground-level ozone formation and 
prevent acid rain.
    ``The bill has several provisions to ensure that nuclear energy 
remains a major component of the Nation's energy supply. Nuclear power 
currently provides 20 percent of America's electricity. It is our 
cheapest form of electricity, second only to hydropower. It one of our 
safest, most reliable and cleanest energies.
    ``The energy bill offers a 1.8 cent per kilowatt hour production 
tax credit for electricity produced by new nuclear power. This applies 
only to the first half dozen advanced nuclear powerplants.
    ``It offers federal loan guarantees for innovative technologies--
including new advanced nuclear reactors--that will diversify and 
increase energy supply while protecting the environment. These 
guarantees are available only for new technologies that provide clean 
energy and protect the environment. Those seeking guarantees pay into 
the U.S. Treasury a sum equal to the financial risk assessed by the 
CBO, thus not costing taxpayers a dime.
    ``Establishes standby support framework through the DOE for new 
nuclear plant construction against regulatory or judicial delays for 
six reactors. This standby support would cover the delay before plant 
is put into operation.
    ``Extends Price Anderson liability protection is extended through 
2025 for both NRC licensees and DOE contractors.
    ``Creates a stand-by support program to ensure that consumers do 
not have to pay higher electricity bills because of unforeseen delays 
in the construction of new nuclear powerplants due to bureaucratic red 
tape or litigation. The program insures the utilities for the cost of 
these delays.
    ``Provides for the export of high enriched uranium to Canada, 
Belgium, France, Germany or the Netherlands for the sole purpose of 
producing diagnostic and life saving medical isotopes until a low 
enriched uranium alternative is commercially viable and available.
    ``Requires the DOE to propose a permanent disposal facility to 
Congress for Greater Than Class C waste within one-year of enactment.
    ``Strengthens security of nuclear facilities, including improved 
federal oversight of plant security and the expansion of federal 
statutes for sabotage of nuclear facilities.''
            ``Geothermal
    ``Geothermal energy is an abundant energy in various parts of the 
country that is under-utilized. Geothermal energy is clean, renewable 
and, in countries like Iceland, is a primary source of energy.
    ``The energy bill creates a competitive geothermal leasing program 
that allows the private sector--not just government geologists--to 
identify geothermal areas for leasing. The program is intended to bring 
geothermal energy to the market sooner.
    ``The bill also includes incentives to counties to encourage 
geothermal development by allowing them to keep a percentage of the 
royalties from that development.''

    Well, at least according to the Senate Energy Committee EPAct seems 
to have done a lot more for nuclear power than geothermal energy. Given 
the Secretary's statement justifying terminating the geothermal 
research program, perhaps he should take another look at whether the 
Department needs to continue its nuclear power programs. Or, for that 
matter, perhaps other programs as well.
    Questions: Department officials have also claimed that the fiscal 
year 2007 budget does not reflect the directions it was given in EPAct 
because their budget was formulated before the new law was passed. Yet, 
apparently the Department can move fast enough to terminate the 
geothermal research program based on EPAct. Can the Department explain 
how EPAct figured into its fiscal year 2007 budget deliberations and 
provide any studies or other documents that assesses in a comparative 
fashion the provisions of EPAct and the Department's research programs? 
When does the Department intend to implement the new initiatives in 
EPAct--including new initiatives that direct increased funding for 
renewable energy research, including geothermal energy?
            contradictions to other studies and assessments
    The decision to close out the geothermal research program also 
appears to contradict the recommendations of the last external review 
of the Department of Energy's renewable programs, the 2000 report of 
the National Research Council entitled Renewable Power Pathways. That 
National Research Council's examination of the geothermal program 
states in clear terms the importance of the program, and the 
recommendation that it continue to be funded: ``In light of the 
significant advantages of geothermal energy as a resource for power 
generation, it may be undervalued in DOE's renewable energy 
portfolio.''
    But, the Department of Energy seems not to agree with this 
assessment. In other budget documents the Department presents another 
rationale for closing out this program. Basically, it sees geothermal 
energy as a ``regional resource'' with limited applicability. (see 
``http://www1.eere.energy.gov/ba/pdfs/fiscal year 
2007_budget_brief.pdf.)
    Somehow this represents a change in views at the Department of 
Energy. The Department's 2003 Strategic plan included geothermal energy 
research as part of its efforts to ``Improve energy security by 
developing technologies that foster a diverse supply of reliable, 
affordable, and environmentally sound energy . . .''. Geothermal power 
was part of DOE's ``long-term vision of a zero-emission future in which 
the nation does not rely on imported energy.''
    Obviously, something has changed. Somehow, the geothermal resource 
has shrunk in the past 3 years! Quite an amazing phenomenon, which 
probably deserves some explanation. Today, geothermal resources are 
used in 25 States for power and direct use purposes (not including heat 
pumps) and advanced technology has the potential to bring geothermal 
power in use across the country.
    The Department used to consider the future potential of geothermal 
energy to be quite significant. Today, we produce about 2,800 Megawatts 
of power from geothermal resources, and the power potential alone was 
estimated to be many times that amount. The DOE Geothermal Strategic 
Plan used to say:

    ``The U.S. Geological Survey estimated that already-identified 
hydrothermal reservoirs hotter than 150 C have a potential generating 
capacity of about 22,000 MWe and could produce electricity for 30 
years.\1\ Additional undiscovered hydrothermal systems were estimated 
to have a capacity of 72,000-127,000 MWe. At depths accessible with 
current drilling technology virtually the entire country possesses 
usable geothermal resources (Figure 1). The best areas are in the 
western United States where bodies of magma rise closest to the 
surface.''

    The Department's strategic plan included a very interesting map 
that showed the potential of heat in the earth to contribute to our 
energy needs. As the map shows, DOE used to view the technical 
potential of geothermal energy to span the entire country from Maine to 
California.


    Questions: Does the Department agree with the National Research 
Council that the US geothermal resource base holds significant 
potential to contribute to national energy needs? What actions did the 
Department take to implement the recommendations made by the National 
Research Council in 2000? Has the Department had further communications 
with the NRC about its assessment and any follow-up by the Department? 
Please provide any documents supporting these actions and 
communications?
  --How does DOE view the potential of geothermal resources? What has 
        happened in the past three years to apparently change the 
        Department's views of the geothermal resource base and its 
        potential?
  --What resources does the Department now consider economic: 
        hydrothermal, hot dry rock, geopressured, magmatic, others?
  --The Department had indicated that there were many technological 
        challenges to achieving production from the vast geothermal 
        resource base. Does the Department now consider these 
        challenges are solved or does the Department have new 
        information that indicates its prior assessments of geothermal 
        resources are incorrect?

                             OMB RATIONALE

    The Office of Management and Budget, with whom I presume the 
Department coordinates its budget, seems to offer some additional 
rationales for terminating the geothermal research program. They are 
just about as interesting as those presented by the Department itself. 
There appear to be three main assertions by OMB:
  --(1) geothermal technology is ``mature'' and doesn't really need 
        more R&D,
  --(2) the change in leasing royalty structure from 50/50 to 50/25/25 
        will make a substantial difference, so research isn't needed,
  --(3) the forthcoming resource assessment by USGS will solve the 
        industry's exploration problems.
  --(4) with new tax incentives, geothermal power does not need 
        research support.
    With only a very small fraction of the ``hydrothermal'' resource 
base not in use, it seems self-evident to me that most of the vast 
geothermal resource base is not economically useable with today's 
technology.
    Questions: How did the Department determine that geothermal 
technology was mature and did they apply this same test to all other 
technologies in the Department's portfolio?
  --Would the Department provide to the Committee any studies it has 
        done of technological maturity and a chart showing the 
        comparable maturity of all of the technologies it proposes to 
        fund and not to fund?
  --How did the Department decide that nuclear energy, which provides 
        20 percent of the electricity in the United States, was somehow 
        not mature while at the same time deciding that geothermal 
        energy, which provides 0.5 percent of the electricity in the 
        United States, was mature?

                            ROYALTY CHANGES

    Regarding the changes in EPAct to Federal royalties, let me say 
that I support those changes since they will provide needed support for 
counties in the West to provide the infrastructure needed for energy 
development that benefits the entire Nation, and these funds will help 
mitigate for the socioeconomic impacts of new development on the local 
community.
    But, it is far from obvious to me how splitting the Federal share 
of the royalties with the local government is going to make a lot of 
difference to the climate for geothermal development. It is even less 
clear how doing so is going to help us with our needs for new 
exploration/characterization/resource-management technology. This is 
really an ``apples and oranges'' argument. If I have a broken furnace, 
it's nice if you buy me a new sofa--but it won't keep my house warm.
    Also, the budget also proposes to repeal this provision of EPAct 
anyway! Perhaps the Department could clarify this situation. I'm almost 
afraid to ask.

                        USGS RESOURCE ASSESSMENT

    The next rationale--that the USGS national resource assessment will 
solve the industry's exploration needs--seems to beg questions about 
what it is that the USGS really plans to do and how much funding they 
will have to do anything. Does the Department of Energy presume that 
the USGS national resource assessment will discover new resources or 
develop new exploration technology?
    It's been my understanding that USGS will not engage in any 
significant new exploration activity. What they will do is 
``assessment'' by examining existing field data (much of which was 
available clear back in the 1970's when Circular 790 was written) and 
re-interpret it in light of more modern concepts about how geothermal 
systems are likely to behave, and in light of field data that has been 
acquired by industry since that time. The purpose is to come up with a 
more realistic appraisal of how much identified geothermal potential 
there really is, and where it is located.
    However, I understand that this will be a study involving little or 
no new field work, no exploration drilling, and no exploration 
technology development or verification. The essential fact is that the 
USGS assessment, while important and potentially useful for planning 
purposes (i.e., the WGA study and policy pronouncements by 
organizations like EIA), is not likely to discover any genuinely NEW 
resources.
    Questions: Does the Department of Energy presume that the USGS 
national resource assessment will discover new resources or develop new 
exploration technology?
  --Please explain and detail any new exploration or technology 
        development anticipated to be undertaken by the USGS in the 
        conduct of its new national resource assessment? Please discuss 
        the support, to date, from DOE for these efforts and the plans, 
        if any, for continued support by DOE for this effort?
  --My understanding from the industry is that a critical need is 
        better exploration technology, and that this is an area where 
        technological breakthroughs could be made. What information 
        does the Department have to support its assertion that private 
        industry will develop this technology in the next few years 
        without government research support?

                             TAX INCENTIVES

    Another interesting conclusion that OMB has come to is that with 
the new tax incentive offered geothermal power, there is no need for 
more research funding. The new tax incentive is the addition of 
geothermal technology to the list of those eligible for the Production 
Tax Credit. Notably, wind and biomass have been eligible for the 
production tax credit since 1992, but neither of those programs is 
proposed for termination. Also, the current production tax provision 
expires in 2 years.
    I have several questions about this rationale.
    Questions: Does the Administration now support having new 
geothermal facilities eligible for the full production tax credit? When 
did the Administration make this policy change, and where was it 
communicated?
  --Does the Administration now support making the production tax 
        credit permanent? Why wasn't this reflected in the 
        Administration's fiscal year 2007 budget?
  --What information, analysis, or other information does the 
        Department have that supports its assertion that this tax 
        credit substitutes for the need for federal research support? 
        How has the Department applied this measure across the 
        technologies within its research portfolio, and would the 
        Department provide a chart comparing the tax treatment provided 
        by law for the technologies in its research portfolio?

                     INTERNATIONAL COMPETITIVENESS

    Finally, I would ask about the impact of the proposed research cuts 
on the international competitiveness of the geothermal industry. It's 
my impression that the U.S. industry has been a world leader in 
geothermal technology, helping develop billions of dollars of projects 
around the world.
    In fact, in addition to calling for an expanded geothermal research 
program, the National Research Council's Renewable Power Pathways 
report stresses how the United States is the world leader in geothermal 
technology and that the direction DOE takes with its research program 
has real consequences for this situation. Their NRC report states: 
``the United States has taken the lead in successful commercial 
demonstrations of geothermal energy for generating electricity and heat 
at several sites and is the current technology leader in the world 
among very active competitors in Europe and Japan.'' They go on to warn 
``U.S. leadership may be short-lived because the U.S. R&D program is 
now much smaller than those of overseas competitors.''
    Questions: Is it a fair assumption that with total elimination of 
the DOE research program, U.S. leadership in geothermal technology will 
be lost in a fairly short period of time?
  --Isn't this contradictory to the emphasis that the Administration is 
        placing upon science and technology as underpinnings for our 
        economy and our future?

                               CONCLUSION

    Geothermal energy is an important resource for the Nation. We have 
only begun to tap this vast resource. We should not be cutting back on 
geothermal or other renewable resources efforts. We instead should be 
expanding our effort to use this resource in all of its forms more 
effectively. That means making the Federal production tax credit 
permanent for geothermal and other renewable technologies, expanding 
our resource assessment efforts by USGS and supporting State agencies 
and university research centers, and increasing funding for geothermal 
research and outreach by the Federal Government.

    Senator Domenici. Thank you very much, Senator.
    We will proceed now. Let me ask, does any other Senator 
want to make a brief statement before I make mine on your side? 
A brief one or a long one?
    Senator Murray. A brief one.
    Senator Bond. I have a long one.
    Senator Domenici. You will wait for your turn?
    Senator Bond. I will wait for my turn.
    Senator Domenici. Okay. I do not even remember what your 
issue is here today. You have got a couple of them.
    Senator Bond. Coal.
    Senator Domenici. Coal.
    Senator Bond. Coal.
    Senator Domenici. The lack of funding for coal in the 
budget, is that it?
    Senator Bond. You guessed it. Boy, you just blew my whole 
story.

                 STATEMENT OF SENATOR PETE V. DOMENICI

    Senator Domenici. All right. Let me start once again and 
back up for a minute, thanking the Senator for his comments. It 
is true we do try to work together on this issue. I do not 
purport here today for the press--I am not going to answer the 
points that have been raised by the distinguished Senator. 
Obviously we have some very serious disagreements. We have some 
ideas that seem to be merging in terms of where things are 
going.
    Having said that, I want to thank Dr. Ray Orbach and 
Secretary Garman for being here today. Dr. Orbach is the 
current Director of the Office of Science and the President's 
nominee for the newly created position of Under Secretary of 
Science. Dr. Orbach, it is just a matter of things clearing 
here and then you will receive your new title. So I hope you 
are acting like you are an Under Secretary.
    Dr. Orbach. No.
    Senator Domenici. You are not? Well, we will let the world 
know that as far as this committee is concerned you are, and 
the Senate is going to do that pretty soon.
    Secretary Garman, we are delighted that you have had time 
now to really get your feet wet in this office. It is a tough 
one. You have got a big, big agenda, everything from energy 
efficiency, renewables, the Office of Nuclear Energy, Office of 
Electricity Delivery and Reliability, Office of Fossil and R&D 
and Environment Management Activities.
    It is nice to see you again, and we welcome you to the 
committee. We hope you are enjoying the work, but we hope you 
understand that you have a terribly difficult job put on your 
shoulders, and you are going to have to tell us today that you 
are pushing hard for some of the very tough things that have to 
be done.
    In the State of the Union the President announced an 
American Competitive Initiative and Advanced Energy Initiative. 
These initiatives recognized that the Department's long-term 
investment in physical sciences and energy R&D were of utmost 
importance. I am also pleased to see an increasing level of 
cooperation between the Office of Science and Energy Research 
and Development in their efforts to solve our energy needs. I 
believe the bioenergy and hydroenergy initiatives are a good 
example of this cooperative investment. I hope it continues. I 
think its synergism will yield big results.
    The American Competitive Initiative commits $5.9 billion in 
2007 and more than $137 billion over 10 years to programs that 
help America retain its leading edge in science, math, and 
technology. The ACI, as it is called by the President, will 
increase investments in research and development, education, 
tax incentives to encourage innovation within this Department 
of Energy that you now try to manage under the able direction 
of the Secretary.
    This translates to $505 million increase from 2006 levels 
to a $4.1 billion 2007 level for the Office of Science. I 
assume, Dr. Orbach, that you relish and look forward to such an 
increase. Is that correct?
    Dr. Orbach. Yes, sir.
    Senator Domenici. I saw you smile, so I thought you might 
just as well talk.
    The President also announced an Advanced Energy Initiative, 
which aims to reduce America's dependence on imported energy 
sources and commits $2.1 billion to meet the goal, an increase 
of $381 million.
    The President recognizes that research and innovation are 
America's best answer to the voracious global appetite of 
carbon fuels, which my friend Senator Bond is here to talk 
about, obviously. Thanks to the work of the Department, our 
Nation will be able to produce more energy from nuclear power, 
wind, sun, and our own field crops in the coming years. These 
are not little actions, but rather, combined, could be gigantic 
steps toward America's minimizing its dependence upon foreign 
carbons, foreign sources of crude oil, to run our machine, our 
transportation and economic machine.
    I commend the President for his efforts to make tough 
choices with the funds available. However, I am concerned about 
several programs and they are big; they are important and they 
are vital to our energy independence and they did not receive 
sufficient funding. Specifically, I am concerned about the 
shortfall in funding for the nuclear R&D funding, the clean 
coal power initiative, and the several provisions within the 
EPAct that will support development of new alternative energy 
technology demonstrations. Clearly, we put them in in the 
Energy Act. The President has not funded them to the extent 
that many of us thought he should.
    The Office of Nuclear Energy--there are shortfalls in the 
Nuclear Power 2010, Next Generation nuclear programs, that will 
inhibit our ability to fully realize a revival in this nuclear 
power agenda. NP 2010 program is critical to demonstrating its 
first of a kind combined construction-operating license process 
with the Nuclear Regulatory Commission. This cost is shared, is 
a shared activity, which the Department is not living up to, 
will not be able to, as to its share of the deal. The nuclear 
powerplant Next Generation received $23 million, down $16 
million. That is a rather sharp cut.
    This budget process proposes to cut clean coal power 
initiative from $49.5 million this year to $5 million for 2007, 
almost you could say doing away with it. Ninety-five percent 
equals 100 percent, I imagine, in a program like this.
    The United States has a 250-year supply of coal. Protecting 
the technology to burn coal at a minimal impact is critical to 
the economic and global competitiveness of this great Nation. I 
question the wisdom of this and hope you can explain it. There 
may be a short-term explanation or there may be a catch-up 
explanation. We need that.
    Another area of concern under the Energy Policy Act is that 
this legislation provides incentives. I direct this at you 
again, Mr. Under Secretary. These incentives are in the form of 
loan guarantees. You are aware of that. You helped us write it. 
You know how important we thought they were going to be in all 
of the clean energy technologies, including clean coal, 
biomass, and new nuclear powerplants.
    America's business stands ready, as we understand it, to 
develop new and innovative sources of energy under this 
program. But progress is either stalled or not moving rapidly 
enough to provide the guidelines or the process for 
applications for loans. It does no good for someone to have a 
new project, and we developed a no-cost-to-Government loan 
program, and not have them available. We need to know today 
when they are going to be available.
    So, Secretary Garman, this is one you are going to have to 
work with us today and you are going to have to continue until 
it is done. If you need some help from us, we are here. We will 
also speak of weatherization. You know there is a problem 
there. That is out in the open. I do not need to raise it here 
myself.
    I am deeply concerned about the $762 million cut to the 
environmental management program. That brings the distinguished 
Senator from the State of Washington here today. It also has 
one that hits at my heart too this time, so we may be on the 
same path. We may be trying to succeed together. I do not know. 
But $762 million cut in that program? I recognize that we have 
completed Rocky Flats, right, a very good sign. You can hold up 
a flag and say for the first time, I think partly because 
Colorado was a great host State and worked collaboratively, we 
have a very big solution.
    But that does not mean that a $762 million reduction in the 
remaining programs can be sustained. I am concerned about the 
current status of the waste treatment facility in Washington. I 
do not have the answers, but clearly we have to stay on this 
until it becomes a success like Rocky Flats maybe. Most of us 
will be gone by then, but let us say that we ought to at least 
wish for that day.
    I am aware the cost estimates exceed $11 billion and I hope 
you can explain the Department's strategy for addressing this 
skyrocketing cost. I also must tell you that I am vitally 
interested to know how the Department intends to fulfill its 
commitment--and you must listen carefully to this--under a 
consent agreement with the State of New Mexico for cleanup at 
Los Alamos. Funding for this project has been cut by $50 
million. Now, I do not know how we do that. I mean, we have 
done it in the past. We just ignore a court decree. But it 
happens to be in the chairman's State. That does not look too 
good, does it, I do not think. But anyway, we are going to work 
on it, right?
    Let me say in closing about Yucca Mountain, I am concerned 
about the slow progress for the completion of the facility. I 
understand that the license application will not be ready until 
2008. That is just getting the application ready. That does not 
mean anything has happened. I am aware that the administration 
is working on new legislation which authorizes a different 
approach to the repository. I have told them repeatedly that I 
will introduce it in their behalf so as to push it with some 
degree of vigor. That does not mean I will support it 
wholeheartedly. But we must see what it is.
    Dr. Orbach, Secretary Garman, you have an important job in 
front of you, delivering on the President's promise of an 
American Competitive Initiative. You are aware that you are not 
the whole initiative. You are team players. I know you both 
have statements on all of this. You can expect questions on 
many of it, so do not try to cover them all. I would like you 
to try to summarize in 10 minutes if you can do that, and then 
right now I will include your full statement in the record.
    We will start with you, Mr. Secretary. No, we will not. We 
will start with Senators. Okay, we are going to go with you, 
Senator.

                   STATEMENT OF SENATOR PATTY MURRAY

    Senator Murray. Thank you, Mr. Chairman, and good morning 
to both Under Secretary Garman and Dr. Orbach. I know we have a 
lot of ground to cover, so I will keep my statement brief.
    I just wanted to say that I am a long-time advocate of 
increased funding for the Office of Science and I am pleased to 
see the administration has requested $4.1 billion, a 14 percent 
increase over fiscal year 2006. That is good news. For the 
United States to continue to be a leader in the sciences, we 
have to make the decision to invest in our own future.
    I was also relieved to see a request of $690 million for 
the waste treatment plant. This construction project is the 
cornerstone to cleaning up Hanford and we have to get it back 
on track. However, this budget has some gaps, including the $52 
million reduction of funds for the tank farm activities. 
Secretary Bodman described the radioactive wastes on that site 
as among the most dangerous chemicals known to man. That was 
waste that was created during World War II and the cold war and 
Washington State has fulfilled its national duty during those 
times, and now the Federal Government has a responsibility to 
fulfill its national duty to clean up that site. It is about 
protecting the health and the welfare of the region and the 
people who live there.
    Under Secretary Garman, I read your written testimony last 
night and I just wanted you to know I take issue with your 
statement where you say, ``It surprises many to learn that we 
spend more each year to clean up Hanford, roughly $1.8 billion, 
than we do annually on our entire portfolio of applied energy 
research and development, which is approximately $1.5 billion. 
To put it bluntly, this is a budget that begins to put the 
energy back in the Department of Energy.''
    Well, Mr. Garman, it sounds to me like you are suggesting 
that our efforts to clean up the polluted sites in the Nation 
are coming at the cost of Federal energy R&D, and it is sort of 
a slap in the face to the people of Washington State to imply 
that their need for clean air and clean water and cleanup of 
this critical site and their contribution to winning a war is 
detracting from the investments in the Federal R&D portfolio.
    I want to remind you this Nation has a moral and a legal 
obligation to clean up Hanford site, and if there is a belief 
that the Federal investment in applied energy R&D has been 
lacking in recent years it is because the administration has 
made that choice every year with its budget proposals. We have 
to fulfill our obligations to clean up and we need to invest in 
R&D. One does not preclude the other.
    So I just wanted to make that clear and I do have a number 
of questions I will be asking when we get to that round.
    Senator Bond [presiding]. Senator Allard.

                   STATEMENT OF SENATOR WAYNE ALLARD

    Senator Allard. Thank you, Mr. Chairman, for holding this 
hearing today. As you know, I am co-chairman of the Senate 
Renewable Energy and Energy Efficiency Caucus and represent the 
State which the National Renewable Energy Laboratory calls 
home. As a scientist myself, I have always been a strong 
supporter of research funding in all areas.
    For these reasons I have a special interest in today's 
hearing. Today more attention is being focused on clean energy 
and energy efficiency technologies. This is a time when the 
development of alternative energy sources is becoming more 
important than ever. We must continue to provide incentives for 
the implementation of renewable technologies and for the 
infrastructure necessary to support these renewable sources.
    These technologies are a necessary step in balancing our 
domestic energy portfolio, increasing our Nation's energy 
security, and advancing our country's technological excellence. 
Renewable energy is a very important way that we can begin to 
reduce the demand for oil and thereby help to make our country 
more secure. There are great opportunities for solar, wind, 
geothermal, biomass, fuel cells, and hydro to make significant 
contributions. Research and the input of both Government and 
industry entities is very important to allowing these 
opportunities to live up to their potential.
    The National Renewable Energy Laboratory in Colorado can 
and does make an incredible contribution to the development of 
these resources. Technologies being developed at NREL, whether 
providing alternative fuels and power or making our homes and 
vehicles more energy efficiency, are vital to our Nation's 
energy progress.
    But what is really unique about NREL is that their focus is 
for moving research and scientific discovery to the market. 
That means that the money that we spend on science is being 
designed in a practical way to help Americans and American 
consumers. I think that is very unique about the National 
Renewable Energy Laboratory that we have in Colorado.
    Recently, due to an abundance of earmarks, NREL was faced 
with dramatic funding cutbacks that resulted in lost jobs. The 
Department did everything it could to mitigate the job losses, 
but we still lost 32 positions. Thankfully, DOE was able to 
find an additional $5 million and these jobs were restored. I 
would like to thank you, Mr. Garman, who is here today, 
Secretary Bodman and everyone at DOE and NREL for working to 
make that situation right. I hope to work with DOE and my 
colleagues on this subcommittee to see that a situation like 
this does not happen again.
    I was also very disappointed to learn that much of the 
money being saved by the accelerated cleanup of Rocky Flats has 
not been given to other DOE cleanup sites for accelerated 
cleanup. As I understand the DOE's fiscal budget 2007 request, 
the environmental management account has been reduced by over 
$740 million from the amount appropriated in fiscal year 2006. 
It has always been my understanding that the money saved by 
accelerating Rocky Flats would be used for the cleanup of other 
sites. We were spending over $500 million at Rocky Flats alone. 
This was one of the reasons Senator Domenici and others were 
willing to support accelerated cleanup of Rocky Flats.

               PREPARED STATEMENT OF SENATOR WAYNE ALLARD

    I look forward to working with the committee to ensure that 
R&D in all fields of energy technology are funded in a manner 
that is responsible, but sufficient to ensure that the 
development and implementation of new technologies continues.
    Thank you, Mr. Chairman.
    [The statement follows:]

               Prepared Statement of Senator Wayne Allard

    Mr. Chairman, thank you for holding this hearing today. As you 
know, I am co-chairman of the Senate Renewable Energy & Energy 
Efficiency Caucus and represent the State which the National Renewable 
Energy Laboratory calls home. And, as a scientist myself, I have always 
been a strong supporter of research funding in all areas. For these 
reasons, I have a special interest in today's hearing.
    Today more attention is being focused on clean energy and energy 
efficient technologies. This is a time when the development of 
alternative energy sources is becoming more important than ever. We 
must continue to provide incentives for the implementation of renewable 
technologies, and for the infrastructure necessary to support these 
renewable sources. These technologies are a necessary step in balancing 
our domestic energy portfolio, increasing our Nation's energy security 
and advancing our country's technological excellence.
    Renewable energy is a very important way that we can begin to 
reduce the demand for oil and, thereby, help to make our country more 
secure. There are great opportunities for solar, wind, geothermal, 
biomass, fuel cells and hydro to make significant contributions. 
Research and the input of both government and industry entities is very 
important to allowing these opportunities to live up to their 
potential.
    The National Renewable Energy Laboratory in Colorado can, and does, 
make an incredible contribution to the development of these resources. 
Technologies being developed at NREL--whether providing alternative 
fuels and power, or making our homes and vehicles more energy 
efficient--are vital to our Nation's energy progress.
    Recently, due to an abundance of earmarks, NREL was faced with 
dramatic funding cutbacks that resulted in lost jobs. The Department 
did everything it could to mitigate the job losses, but we still lost 
32 positions. Thankfully DOE was able to find an additional $5 million 
and these jobs were restored. I'd like to thank Mr. Garman, who is here 
today, Secretary Bodman, and everyone at DOE and NREL for working to 
make that situation right. I hope to work with DOE and my colleagues on 
this subcommittee to see that a situation like this does not happen 
again.
    I was very disappointed learn that much of the money being saved by 
the accelerated clean-up of Rocky Flats has not been given to other DOE 
clean-up sites for accelerated clean-up. As I understand the DOE's 
fiscal year 2007 budget request, the Environmental Management account 
has been reduced by over $740 million from the amount appropriated for 
fiscal year 2006. It has always been my understanding that the money 
saved by accelerating Rocky Flats would be used for the clean-up of 
other sites. We were spending over $500 million at Rocky Flats alone. 
This was one of the reasons Senator Domenici and others were willing to 
support accelerated clean-up at Rocky Flats.
    I look forward to working with the committee to ensure that R&D in 
all fields of energy technology are funded in a manner that is 
responsible, but sufficient to ensure that the development and 
implementation of new technologies continues.

    Senator Domenici [presiding]. Thank you very much, Senator, 
and you are to be commended on the work you did with reference 
to Rocky Flats, truly an example of great cooperation.
    Senator Allard. Well, Mr. Chairman, as you know, this would 
not have happened without your cooperation and the other sites 
around the country. It was because of everybody working 
together. The idea was that when we got this cleaned up that 
money was going to be available for other sites to accelerate 
their cleanup, to do things that are actually going to lead to 
cleanup like we experienced at Rocky Flats. So thank you.
    Senator Domenici. Now, Senator Bond.

                STATEMENT OF SENATOR CHRISTOPHER S. BOND

    Senator Bond. Thank you very much, Mr. Chairman. I 
appreciate the opportunity to comment. As you have already so 
well stated, Mr. Chairman, our Nation's energy problems are as 
serious as ever. Over the past year we have experienced record 
prices for crude oil, natural gas, gasoline, and diesel fuel, 
at least in part due to the devastation of Hurricane Katrina. 
But it has pointed out how fragile our energy supply is.
    Again, as the chairman has noted, the simple fact of the 
matter is that our Nation's energy supplies are not keeping up 
with demand. We are importing more oil and natural gas than 
ever and we are doing very little to develop our own domestic 
sources of energy. There are solutions to the problems. In 
addition to strong conservation measures, we need to increase 
our domestic supplies of energy in oil, in gas, and nuclear 
power, and we must also develop alternative and renewable 
sources of energy.
    But I am particularly focused on the use of coal and the 
development of new and cleaner coal-based technologies to 
provide us with the alternative resource to meet our Nation's 
growing energy needs. Coal already provides more than half our 
Nation's electricity and it is the largest single source of 
overall domestic energy production at more than 31 percent of 
the total.
    Coal, as we all know, can be converted through proven, 
existing, modern technology into clean zero-sulfur synthetic 
oil and oil products at roughly $35 a barrel, compared to the 
current $65-or-so price per barrel of oil. Coal liquefaction or 
coal-to-liquid refineries can be located anywhere that coal is 
produced. This proven technology can produce clean 
transportation fuels using domestic coal, thereby expanding our 
supply of transportation fuels while decreasing our dependence 
on foreign sources of energy. This includes gasoline, diesel, 
and other liquid fuels.
    We are looking forward to the report from the Coal Council 
that I believe will put us on the path to independence from 
overseas import of oil and gas by 2025.
    Now, the great thing about coal-refined diesel fuel is it 
will be low in sulfur. It will come out cleaner, enable 
refiners to meet the clean air requirements, and help the 
public lead healthier lives.
    Now, a lot of us were really encouraged to hear the 
President highlight the importance of increasing this 
investment in clean coal technologies and zero emission coal-
fired plants in his State of the Union Address in January. High 
hopes. The President's Clean Coal Power Initiative represents 
an important first step in the development of clean coal 
technologies. Nevertheless, that euphoria was met with the 
stunning news when we saw that the 2007 budget request for coal 
research initiatives and the Clean Coal Power Initiative. As 
you know, title IV of the Energy Policy Act of 2005 authorizes 
$200 million for the Clean Coal Power Initiative in 2007, but 
the President's budget request comes out at only $5 million for 
this important program, over a $44 million cut.
    I hope that someone here can tell OMB about the President's 
Clean Coal Power Initiative. It would be very helpful if the 
right hand knew what the left hand was doing. The CCPI is a 
cooperative, cost-shared program between the Government and 
industry to demonstrate emergency technologies in coal-based 
power generation, to accelerate commercialization. Technologies 
are selected with the goal of accelerating development and 
deployment of coal technologies that will meet environmental 
standards in a cost effective manner.
    The prior years' appropriations have enabled the Department 
of Energy to conduct two clean coal demonstration programs 
during the past 6 fiscal years, but the $5 million proposed by 
OMB for this program will not even allow the DOE and industry 
to conduct a demonstration project every other year. Our 
researchers may develop clean coal technologies in the lab, but 
unless they can demonstrate these technologies we will not see 
the progress.
    I believe the Clean Coal Power Initiative should be funded 
at at least $150 million to conduct another clean coal 
demonstration project in the near future. With over 250 years 
worth of recoverable coal reserves in the United States, coal 
is without question our Nation's most abundant resource. It is 
estimated that these coal reserves are equivalent to roughly 
800 billion barrels of oil, making the United States the Saudi 
Arabia of coal. Those of us in the heartland who take pride now 
that through ethanol and soy diesel we are beginning to make a 
contribution to our energy needs, see the potential that the 
coal that we have throughout the Nation, not only the Midwest, 
but in Alaska and all over, can be realized, making us energy 
producers rather than just energy consumers.
    In light of the growing global demand for oil and gas, our 
Nation's increased dependence on foreign sources of energy, and 
our abundant supply of domestic coal, I think it is imperative 
we promote and adequately fund clean coal technologies to meet 
the Nation's urgent needs for reliable and affordable sources 
of energy.
    The coal research initiative and the clean coal power 
initiative administered by DOE are vital to the future use of 
our Nation's most abundant fossil fuel resources and they must 
be adequately funded. The budget that we were presented just 
does not do that.
    I will leave a question for the record that will come as no 
surprise, I am sure. Mr. Garman, you may want to address it in 
your remarks, but my question would be: In light of the small 
amount of the funding for the program, is the administration 
truly serious about promoting clean coal technologies in its 
effort to reduce dependence on foreign oil and promoting energy 
independence?
    Thank you, Mr. Chairman, my colleagues, and I thank you, 
gentlemen.

               PREPARED STATEMENT OF SENATOR THAD COCHRAN

    Senator Domenici. Thank you, Senator. Senator Cochran has 
also submitted a statement which will be included for the 
record.
    [The statement follows:]

               Prepared Statement of Senator Thad Cochran

    Mr. Chairman, I appreciate your holding this hearing to review 
budgets of the Department of Energy's Office of Science, Office of 
Nuclear Energy, Office of Fossil Energy, Office of Environmental 
Management as well as many other important accounts with the Department 
of Energy. I want to join you in thanking the witnesses for being here 
to provide testimony and answer questions.
    I am pleased that the Department is continuing to look for 
alternate and renewable sources of energy to correct the trend toward 
unnecessary reliance on foreign sources of oil and gas. My State 
continues to conduct research to develop cleaner and more efficient 
sources of energy. After Hurricane Katrina, fuel costs rose as much as 
$3 per gallon and finding diesel to transport necessities or to run the 
electrical generators used to cool poultry production facilities became 
a challenge. Our biodiesel suppliers provided this needed fuel which 
proved not only to be a cleaner fuel, but a fuel that is a substitute 
for foreign oil.
    Mr. Chairman, I look forward to working with you this year on these 
important accounts as well as the new American Competitiveness 
Initiative and the Advanced Energy Initiative.

                      STATEMENT OF DAVID K. GARMAN

    Senator Domenici. Now we will proceed. Under Secretary 
Garman, please let us hear from you at this point.
    Mr. Garman. Well, it is clear from the opening statements 
from the Senators that I am going to be on a bit of the hot 
seat this morning and it does not pay me to belabor that any 
with a long statement. So I will be extremely brief. I would 
just like to take 4 minutes to stress just a few key points.
    If you ask me to distill this entire DOE budget, with all 
its puts and takes, into a single theme or concept, it would be 
that we are emphasizing science, research and development in 
pursuit of transformational energy technologies. This budget 
significantly increases our investments in clean energy 
research and the fundamental science to support that research. 
We have proposed some significant increases in areas such as: 
applied solar energy research, up 78 percent; applied biomass 
research, up 65 percent; applied hydrogen research, up 42 
percent; and applied nuclear energy research, up 56 percent.
    We have also proposed, as you have noted, a significant 
increase in basic energy sciences under the Direction of Dr. 
Orbach, recognizing that we must strengthen the connections 
between our basic and applied energy work. We are determined to 
make the activities in basic sciences more relevant and more 
strongly linked to the applied energy programs working to 
advance practical energy technologies, such as solar, nuclear, 
hydrogen, and biomass.
    Because these increases have been sought within an overall 
departmental budget that is level funded, we have had to 
propose some reductions in some otherwise worthy programs--low 
income weatherization comes to mind--because we felt it was 
important to articulate priorities and make those tough calls 
mindful of the practical limitations on discretionary spending 
that you as appropriators face.
    As you all know, the Department of Energy could more 
accurately be referred to as the Department of Nuclear Weapons, 
Radioactive Cleanup, Science, and Energy, in that order, if the 
Department's name were to more accurately capture its 
activities and the priority placed on them as reflected by our 
levels of spending on those activities.
    I do not mean, Senator Murray, and I hope you do not take 
my statement as you did--we did not intend or I do not intend 
to say that we are going to somehow shirk our environmental 
obligations. We take on those obligations. We know those 
obligations are ours. In saying that we spend less on applied 
energy research at the Department than we do on things such as 
the cleanup of Hanford, I am not suggesting that we should 
spend less on the cleanup at Hanford. I am suggesting rather we 
should be spending more on applied energy research, and that 
was the point of the statement and I hope you do not 
misconstrue. I did want to make that clear.
    This is a budget that does begin to put energy back in the 
Department of Energy, not just in the applied energy programs 
but in the science programs managed by Dr. Orbach that can 
contribute totally new thinking and new approaches in meeting 
our energy challenges. And at a time when this Nation is as 
concerned as it is about energy security and clamoring for new 
energy solutions, we should strive to do nothing short of that.

                           PREPARED STATEMENT

    With that, Mr. Chairman, I can either go into some of the 
things that were raised or just prepare to take the questions 
and interact. I am aware of the time constraints of the 
committee and I want to be respectful of that time.
    [The statement follows:]

                 Prepared Statement of David K. Garman

    Mr. Chairman and members of the committee, thank you for this 
opportunity to appear to discuss the President's fiscal year 2007 
budget request for the Department of Energy (DOE). This testimony will 
focus on the budget requests for the Office of Energy Efficiency and 
Renewable Energy, the Office of Electricity, the Office of Nuclear 
Energy, the Office of Fossil Energy, the Office of Environmental 
Management, and the Office of Civilian Radioactive Waste Management. 
But let me first provide some context.
    This budget recognizes that science-driven technology is at the 
heart of the Department of Energy's missions, and that our national 
laboratories and facilities, together with universities and research 
activities in the private sector, must be better leveraged to enhance 
America's national security, economic security, and energy security.
    Therefore, we have proposed to significantly increase our 
investment in science, in keeping with the American Competitiveness 
Initiative.
    We have also proposed to significantly increase investments in 
clean energy research in areas such as solar, biomass, hydrogen, wind, 
and nuclear, in keeping with the Advanced Energy Initiative.
    Notably, we have proposed these increases within a flat 
Departmental budget. Since any realistic pursuit of new or enhanced 
initiatives must be mindful of practical limitations on discretionary 
spending, we have prioritized our mission activities, which resulted in 
proposed reductions in areas such as low-income weatherization--not 
because we regard these as unworthy activities--but because we know 
that you are as mindful of the constraints on discretionary spending as 
we are.
    As Secretary Bodman has observed, the Department of Energy could 
more accurately be referred to as the Department of Nuclear Weapons, 
Radioactive Cleanup, Science and Energy--in that order--if the 
Department's name were to more accurately capture its activities and 
the priority placed on them as reflected by our investments. It 
surprises many to learn that we spend more each year to cleanup 
Hanford, roughly $1.8 billion dollars, than we do annually on our 
entire portfolio of applied energy Research and Development (R&D), 
which is approximately $1.5 billion dollars. To put it bluntly, this is 
a budget that begins to put the ``energy'' back in the Department of 
Energy. Not just in the applied energy programs, but in the science 
programs that can contribute new thinking and new approaches in meeting 
our energy challenges. We are determined to make the activities in 
basic sciences more relevant and more strongly linked to the applied 
energy programs working to advance practical energy technologies in 
areas such as solar, nuclear, hydrogen and biomass. At a time when this 
Nation is concerned about energy security and clamoring for new clean 
energy solutions, we should strive to do nothing short of that.
    With respect to the applied energy technologies, the President's 
Advanced Energy Initiative provides a 22 percent increase for research 
that can help reduce America's dependence on foreign oil and advance 
clean energy technologies. The fiscal year 2007 budget proposes $149.7 
million for Biomass and Biorefinery Systems Research and Development 
(R&D) program to support the new Biofuels Initiative to develop cost 
competitive ethanol from cellulosic materials (agricultural wastes, 
forest residues, and bioenergy crops) by 2012. In addition, the budget 
request continues to pursue the vision of reducing America's dependence 
on foreign oil, reducing air pollution, and reducing greenhouse gas 
emissions through the development of new technologies, including 
hydrogen. The fiscal year 2007 budget requests a total of $289.5 
million (including $1.4 million requested by the Department of 
Transportation) to support implementation of the President's Hydrogen 
Fuel Initiative. The fiscal year 2007 budget also provides a 27 percent 
increase for advanced battery technologies that can improve the 
efficiency of conventional hybrid electric vehicles (HEV) and help make 
``plug-in'' HEVs commercially viable.
    To help develop clean, affordable electricity, the fiscal year 2007 
budget includes $148.4 million for a new Solar America Initiative to 
develop cost competitive solar photovoltaic technology by 2015. The 
fiscal year 2007 also advances the administration's commitment to the 
FutureGen project, which will establish the capability and feasibility 
of co-producing electricity and hydrogen from coal with near-zero 
atmospheric emissions of pollutants and greenhouse gasses.
    Any serious effort to stabilize greenhouse gasses in the atmosphere 
while providing the increasing amounts of energy for economic 
development and growth requires the expanded use of nuclear energy. 
This will inevitably require us to address the spent fuel and 
proliferation challenges that confront the expanded, global use of 
nuclear energy. Therefore, the Department's fiscal year 2007 budget 
features $250 million to begin investments in the Global Nuclear Energy 
Partnership (GNEP), a comprehensive approach to enable an expansion of 
nuclear power in the United States and around the world, to promote 
non-proliferation goals; and to help resolve nuclear waste disposal 
issues. GNEP is a complex, challenging undertaking that will take many 
years to realize, which is why the Department proposes to begin 
research now.
    As a complement to the GNEP strategy, the Department will continue 
to pursue a permanent geologic storage site for nuclear waste at Yucca 
Mountain, and the fiscal year 2007 budget includes $544.5 million to 
support this goal. Based on technological advancements that would be 
made through GNEP, the volume and radiotoxicity of waste requiring 
permanent disposal at Yucca Mountain will be greatly reduced, delaying 
the need for an additional repository indefinitely.
    GNEP builds upon the successes of programs initiated under 
President Bush's leadership to encourage the construction of new 
nuclear powerplants here in the United States. The fiscal year 2007 
budget includes $632.7 million for nuclear energy programs, a $97.0 
million increase above the fiscal year 2006 appropriation. In addition 
to the $250 million for GNEP within the Advanced Fuel Cycle Initiative, 
Generation IV (Gen IV) research and development ($31.4 million) will 
improve the efficiency, sustainability, and proliferation resistance of 
advanced nuclear systems, and Nuclear Power 2010 ($54.0 million) will 
lead the way, in a cost-sharing manner, for industry to order new, 
advanced light-water reactors by the end of this decade. In addition, 
ongoing implementation of the Energy Policy Act of 2005 (EPACT) will 
establish Federal insurance to protect sponsors of the first new 
nuclear powerplants against the financial impact of certain delays 
during construction or in gaining approval for operation that are 
beyond the sponsors' control.
    The Department of Energy's budget request remains mindful of our 
legacy obligations. To meet our environmental cleanup commitments 
arising from nuclear activities during the Manhattan Project and the 
Cold War, the budget submission requests $5.8 billion to clean up 
legacy nuclear waste sites. DOE has accelerated cleanup at the legacy 
nuclear waste sites and recently announced completion of cleanup at 
Rocky Flats, a former nuclear weapons plant located outside of Denver, 
Colorado. In 2006, DOE will also complete environmental cleanup of the 
Fernald and Columbus sites in Ohio, and several other sites as well.
    To provide better context for programmatic decisions, the 
Department expanded the development of 5-year budget plans. We still 
have work ahead of us to make this planning more rigorous and 
meaningful, but we have made the start.
    And at the behest of Secretary Bodman, we are working to institute 
straight-forward operating principles which set the tone for further 
improving the management of the Department. These principles are:
  --Accept no compromises in safety and security;
  --Act with a sense of purposeful urgency;
  --Work together, treating people with dignity and respect;
  --Make the tough choices;
  --Keep our commitments;
  --Manage risk through informed decisions.

            ADVANCING AMERICA'S ECONOMIC AND ENERGY SECURITY

    Turning now to some of the specific proposals in the fiscal year 
2007 budget, the request of $1.2 billion for energy efficiency and 
renewable energy activities reallocates resources to emphasize 
technologies with the potential for reducing our growing reliance on 
oil imports and for producing clean electricity with reduced emissions. 
It includes two new Presidential initiatives; Biofuels and Solar 
America. The fiscal year 2007 budget proposes $149.7 million for the 
Biofuels Initiative to develop by 2012 affordable, domestically 
produced bio-based transportation fuels, such as ethanol, from 
cellulosic feedstocks (such as agricultural wastes, forest residues, 
and bioenergy crops), and encourage the development of biorefineries. 
Biomass has the promise to deliver a plentiful domestic energy resource 
with economic benefits to the agricultural sector, and to directly 
displace oil use. The Solar America Initiative accelerates the 
development of solar photovoltaics, a technology that converts energy 
from the sun into electricity. Further development can help this 
emissions-free technology achieve efficiencies to make it cost-
competitive with other electricity generation sources by 2015. The 
fiscal year 2007 budget provides $148.4 million for the Solar Energy 
Program that comprises the initiative.
    In addition to funding increases for biomass and solar energy, the 
Energy Efficiency and Renewable Energy budget request includes $195.8 
million to support continued research and development in hydrogen and 
fuel cell technology which holds the promise of an ultra-clean and 
secure energy option for America's energy future. The increase of $40.2 
million above the fiscal year 2006 appropriation accelerates activities 
geared to further improve the development of hydrogen production and 
storage technologies, and evaluate the use of hydrogen as an emissions-
free transportation fuel source. The President's Hydrogen Fuel 
Initiative is funded at $289.5 million and includes $195.8 million for 
DOE's Energy Efficiency and Renewable Energy program, $23.6 million for 
DOE's Fossil Energy program, $18.7 million for DOE's Nuclear Energy 
program, $50.0 million for DOE's Science program, and $1.4 million for 
the Department of Transportation.
    While the budget proposes increases for Biomass, Solar and Hydrogen 
research, the Geothermal Program will be closed out in fiscal year 2007 
using prior year funds. The 2005 Energy Policy Act amended the 
Geothermal Steam Act of 1970 in ways that should spur development of 
geothermal resources without the need for subsidized Federal research 
to further reduce costs.
    Nuclear power, which generates 20 percent of the electricity in the 
United States, contributes to a cleaner, more diverse energy portfolio. 
In fiscal year 2007 a total of $632.7 million is requested for nuclear 
energy activities. Within the total, $250 million will support the 
Global Nuclear Energy Partnership (GNEP). GNEP is a comprehensive 
strategy to enable an expansion of nuclear power in the United States 
and around the world, to promote nuclear nonproliferation goals; and to 
help resolve nuclear waste disposal issues.
    GNEP will build upon the administration's commitment to develop 
nuclear energy technology and systems, and enhance the work of the 
United States and our international partners to strengthen 
nonproliferation efforts. GNEP will accelerate efforts to:
  --Enable the expansion of emissions-free nuclear power domestically 
        and abroad;
  --Reduce the risk of proliferation; and
  --Utilize new technologies to recover more energy from nuclear fuel 
        and dramatically reduce the volume of nuclear waste.
    Through GNEP, the United States will work with key international 
partners to develop new recycling technologies that do not result in 
separated plutonium, a traditional proliferation risk. Recycled fuel 
would then be processed through advanced burner reactors to extract 
more energy, reduce waste and actually consume plutonium, dramatically 
reducing proliferation risks. As part of GNEP, the United States and 
other nations with advanced nuclear technologies would ensure 
developing nations a reliable supply of nuclear fuel in exchange for 
their commitment to forgo enrichment and reprocessing facilities of 
their own, also alleviating a traditional proliferation concern.
    GNEP will also help resolve America's nuclear waste disposal 
challenges. By recycling spent nuclear fuel, the heat load and volume 
of waste requiring permanent geologic disposal would be significantly 
reduced, delaying the need for an additional repository indefinitely.
    The administration continues its commitment to open and license 
Yucca Mountain as the Nation's permanent geologic repository for spent 
nuclear fuel, a key complement to the GNEP strategy. Managing and 
disposing of commercial spent nuclear fuel in a safe and 
environmentally sound manner is the mission of DOE's Office of Civilian 
Radioactive Waste Management (RW).
    To support the near-term domestic expansion of nuclear energy, the 
fiscal year 2007 budget seeks $54.0 million for the Nuclear Power 2010 
program to support continued industry cost-shared efforts to reduce the 
barriers to the deployment of new nuclear powerplants. The technology 
focus of the Nuclear Power 2010 program is on Generation III+ advanced 
light water reactor designs, which offer advancements in safety and 
economics over the Generation III designs. If successful, this 7-year, 
$1.1 billion project (50 percent to be cost-shared by industry) could 
result in a new nuclear powerplant order by 2009 and a new nuclear 
powerplant constructed by the private sector and in operation by 2014.
    Funding of $1.8 million is provided in fiscal year 2007 to 
implement a new program authorized in the recently enacted Energy 
Policy Act of 2005. The program will allow DOE to offer risk insurance 
to protect sponsors of the first new nuclear powerplants against the 
financial impact of certain delays during construction or in gaining 
approval for operation that are beyond the sponsors' control. This 
program would cover 100 percent of the covered cost of delay, up to 
$500 million for the first two new reactors and 50 percent of the 
covered cost of delay, up to $250 million each, for up to four 
additional reactors. This risk insurance offers project sponsors 
additional certainty and incentive to provide for the construction of a 
new nuclear powerplant by 2014.
    The fiscal year 2007 budget request includes $31.4 million to 
continue to develop Next-generation nuclear energy systems known as 
Generation IV (GenIV). These technologies will offer the promise of a 
safe, economical, and proliferation resistant source of clean, 
reliable, sustainable nuclear power with the potential to generate 
hydrogen for use as a fuel. Resources in fiscal year 2007 for GenIV 
will be primarily focused on long-term research and development of the 
Very-High Temperature Reactor.
    The University Reactor Infrastructure and Educational Assistance 
program was designed to address declining enrollment levels among U.S. 
nuclear engineering programs. Since the late 1990's, enrollment levels 
in nuclear education programs have tripled. In fact, enrollment levels 
for 2005 have reached upwards of 1,500 students, the program's target 
level for the year 2015. In addition, the number of universities 
offering nuclear-related programs also has increased. These trends 
reflect renewed interest in nuclear power. Students will continue to be 
drawn into this course of study, and universities, along with nuclear 
industry societies and utilities, will continue to invest in university 
research reactors, students, and faculty members. Consequently, Federal 
assistance is no longer necessary, and the 2007 budget proposes 
termination of this program. The termination is also supported by the 
fact that the program was unable to demonstrate results from its 
activities when reviewed using the Program Assessment Rating Tool 
(PART), supporting the decision to spend taxpayer dollars on other 
priorities. Funding for providing fresh reactor fuel to universities is 
included in the Research Reactor Infrastructure program, housed within 
Radiological Facilities Management.
    Recognizing the abundance of coal as a domestic energy resource, 
the Department remains committed to research and development to promote 
its clean and efficient use. U.S. coal accounts for 25 percent of the 
world's coal reserves. For the last 3 years, the Department has been 
working to launch a public-private partnership, FutureGen, to develop a 
coal-based facility that will produce electricity and hydrogen with 
essentially zero atmospheric emissions. This budget includes $54 
million in fiscal year 2007 and proposes an advance appropriation of 
$203 million for the program in fiscal year 2008. Funding for FutureGen 
will be derived from rescinding $203 million in balances no longer 
needed to complete active projects in the Clean Coal Technology 
program. Better utilization of these fund balances to support FutureGen 
will generate real benefits for America's energy security and 
environmental quality.
    The budget request for fiscal year 2007 includes $4.6 million to 
support Alaska Natural Gas Pipeline activities authorized by Congress 
in late 2004. Within the total amount of $4.6 million, $2.3 million 
will be used to support an Office of the Federal Coordinator and the 
remaining $2.3 million will support the Loan Guarantee portion of the 
program. Once constructed, this pipeline will be capable of delivering 
enough gas to meet about 10 percent of the U.S. daily natural gas 
needs.
    The budget request proposes to terminate the oil and gas research 
and development programs, which have sufficient market incentives for 
private industry support, to other energy priorities.
    The Energy Policy Act of 2005 established a new mandatory oil and 
gas research and development (R&D) program, called the Ultra-Deep and 
Unconventional Natural Gas and Other Petroleum Research program, that 
is to be funded from Federal revenues from oil and gas leases beginning 
in fiscal year 2007. These R&D activities are more appropriate for the 
private-sector oil and gas industry to perform. Therefore, this budget 
proposes to repeal the program through a future legislative proposal, 
although we will faithfully execute current law until such time that 
Congress acts affirmatively on that legislative proposal.
    The fiscal year 2007 budget includes $124.9 million for a refocused 
portfolio of energy reliability and assurance activities in the Office 
of Electricity Delivery and Energy Reliability. This will support 
research and development in areas such as high temperature 
superconductivity, and simulation work needed to enhance the 
reliability and effectiveness of the Nation's power supply. This office 
also operates the Department's energy emergency response capability and 
led DOE's support effort during and after the Gulf Coast hurricanes.

                      ENSURING A CLEAN ENVIRONMENT

    To deliver on the Department's environmental cleanup commitments 
following 50 years of nuclear research and production from the Cold 
War, in 2002 the Environmental Management program underwent a major 
transformation that would enable the Department to perform its cleanup 
activities faster than previously estimated. Working in partnership 
with the public, States and regulators, the Environmental Management 
(EM) program has made significant progress in the last 4 years to shift 
away from risk management toward risk reduction. By the end of fiscal 
year 2006, the cleanup of a total of 86 DOE nuclear legacy sites will 
be complete. This includes the recently announced completion of Rocky 
Flats and the anticipated fiscal year 2006 completion of Fernald and 
Columbus sites in Ohio. While encouraged by the results demonstrated 
thus far, the program continues to stay focused on the mission and is 
working aggressively to enhance and refine project management 
approaches while addressing the regulatory and legal challenges 
associated with this complex environmental cleanup program.
    In fiscal year 2007, the budget includes $5.8 billion to continue 
environmental cleanup with a focus on site completion, with eight sites 
or areas to be completed in the 2007 to 2009 timeframe. This budget 
request is reduced from the fiscal year 2006 budget request of $6.5 
billion primarily reflecting cleanup completion at some sites in fiscal 
year 2006 and the subsequent transfer of post-closure work activities. 
As cleanup work is completed over the next 5 years at sites without a 
continuing mission, EM will transfer long-term surveillance and 
monitoring activities and management of pension and benefit programs to 
the Office of Legacy Management. For those with continuing missions, 
these activities will be transferred to the cognizant program office.
    The $5.8 billion budget request remains focused on EM's mission of 
reducing risk by cleaning up sites--consequently also reducing 
environmental liability--and will support the following key activities:
  --Stabilizing radioactive tank waste in preparation for disposition 
        (about 30 percent of the fiscal year 2007 request for EM);
  --Dispositioning transuranic and low-level wastes (about 15 percent 
        of the request for EM);
  --Storing and safeguarding nuclear materials (about 15 percent of the 
        request for EM);
  --Decontaminating and decommissioning excess facilities (about 20 
        percent of the request for EM); and
  --Remediating major areas of our large sites (Hanford, Savannah River 
        Site, Idaho National Laboratory, and Oak Ridge Reservation) 
        (about 10 percent of the request for EM).
    One of the significant cleanup challenges is the management and 
treatment of high-level radioactive liquid waste at the Hanford Waste 
Treatment and Immobilization Plant (WTP). In fiscal year 2007, $690 
million is proposed for the WTP project. The plant is a critical 
component of the program's plans to clean up 53 million gallons of 
radioactive waste currently stored in 177 aging underground storage 
tanks.
    By June 2006, the U.S. Army Corps of Engineers is expected to 
complete an independent cost validation, deploying more than 25 
professionals experienced in cost estimating, design, construction, and 
commissioning. The Department plans to utilize the results from several 
reviews to validate cost and schedule for this project.
    The Department, while responsible for the cleanup and disposal of 
high-level radioactive waste generated from the Cold War, is also 
responsible for managing and disposing of commercial spent nuclear fuel 
in a safe and environmentally sound manner. The latter responsibility 
is the mission of DOE's Office of Civilian Radioactive Waste Management 
(RW).
    The Nation's commercial and defense high-level radioactive waste 
and spent nuclear fuel will be safely isolated in a geologic repository 
to minimize risk to human health and the environment. The fiscal year 
2007 budget requests $544.5 million to establish a geologic repository 
at Yucca Mountain, Nevada. This administration is strongly committed to 
establishing Yucca Mountain as the Nation's first permanent repository 
for high-level waste and spent nuclear fuel. Licensing and developing a 
repository for the disposal of these materials will help set the stage 
for an expansion of nuclear power through the President's GNEP 
initiative, which could help to diversify our energy supply and support 
our economic future. Permanent geological disposal at Yucca Mountain 
offers the safest, most environmentally sound solution for dealing with 
this challenge.
    To further advance the administration's commitment to the 
establishment of Yucca Mountain, the Department intends to submit to 
Congress legislation to address land withdrawal, funding and other 
issues that are important to the program's success.
    As the Environmental Management program completes cleanup of sites 
throughout the DOE complex, management of post closure activities at 
these sites will transfer to the Office of Legacy Management (LM). In 
fiscal year 2007, $201.0 million is proposed to provide long-term 
surveillance and maintenance, long-term response actions, oversight and 
payment of pensions and benefits for former contractor retirees, and 
records management activities at closure sites transferred to LM. The 
majority of funding ($122.4 million) is associated with the transfer of 
post closure responsibilities and funding of three major sites from EM 
to LM in fiscal year 2007. These sites are: Rocky Flats, $90.8 million; 
Fernald, $26.5 million; and a group of sites known as the Nevada off 
sites, $5.1 million. The cumulative effect of these three transfers 
results in a 150 percent increase in the Legacy Management budget 
matched by a corresponding decrease in the Environmental Management 
budget.

            IMPROVING MANAGEMENT AT THE DEPARTMENT OF ENERGY

    Underpinning and supporting all of the programs above, the 
Department of Energy has continued to make strides in meeting President 
Bush's challenge to become more efficient, more effective, more 
results-oriented, and more accountable for performance. Over the past 4 
years, the President's Management Agenda (PMA) has been the framework 
for organizing the Department's management reform efforts.
    To better manage human capital, the Department implemented a 
performance management system to link employee achievement at all 
levels with mission accomplishment. In fiscal year 2006, DOE will 
publish, communicate and implement a revised 5-year Human Capital 
Management Strategic Plan as well as a formal leadership succession 
plan.
    In fiscal year 2006 and fiscal year 2007, DOE will expand the 
availability of financial data in support of decision-making by 
continuing to implement the Integrated Management Navigation (I-MANAGE) 
system, specifically in the areas of budget and procurement through the 
Integrated Data Warehouse (IDW). The Department continues to apply 
Earned Value Management principles to each of its major information 
technology investments. In addition, DOE is partnering with other 
government agencies to develop a standardized and integrated human 
resources information system, and to develop a consolidated grants 
management system.
    The Department continued its effort to institutionalize multi-year 
planning and strengthen the link between program performance and 
resource allocation decisions. The Program Assessment Rating Tool 
(PART) continues to be used to promote improved program performance. 
For programs that have not formally been reviewed by OMB, the PART 
process has been used for internal self-assessment.
    A number of important milestones were reached in Real Property 
Management including the approval of the Asset Management Plan (AMP) by 
the Deputy Secretary. The AMP outlines an overall framework for the 
strategic management of the Department's $77 billion portfolio of Real 
Property Assets. Additionally, the 20,000 real property records in the 
Facilities Information Management System, the Department's repository 
of real property information, were populated and updated as required by 
the Federal Real Property Council for support of the Federal Real 
Property Profile. This information will be used to support real 
property management decisions department-wide.
    As these examples indicate, the Department of Energy is using the 
PMA to address its many management challenges. The Department is 
working to become more streamlined, more efficient, and more results-
oriented in fiscal year 2007 and beyond.

                               CONCLUSION

    Energy is central to our economic and national security. Indeed, 
energy helps drive the global economy and has a significant impact on 
our quality of life and the health of our people and our environment. 
The fiscal year 2007 budget request balances the need to address short-
term challenges while planning for long-term actions. The request 
reflects our belief that basic science research should remain strong if 
we are to remain competitive with our global partners. The request 
contains bold new initiatives in nuclear, biomass, and solar energy. It 
continues the President's strong commitment to clean coal, hydrogen, 
and fusion. The request honors our commitment to deal with civilian 
nuclear waste, as well as legacy waste from the Cold War, and to 
further our already successful nonproliferation programs in order to 
help ensure a safer world for generations to come.
    This completes our testimony, and we would be pleased to respond to 
your questions today or in the future.

    Senator Domenici. I think you should just right now off the 
top of your head start answering some of the things we raised. 
Take another 5 minutes.

                             COAL RESEARCH

    Mr. Garman. All right. Let me first talk about coal, 
Senator Bond. We are proud of the fact that in this 
administration from the fiscal year 2002 budget to the present 
budget we have spent $2.2 billion on coal research, and we 
think that is very important. The President had made a promise 
that he would spend--he would request $2 billion over 10 years 
and it did not take him 10 years to fulfill that promise. He 
fulfilled it in 6, and we are proud of that.
    It is true that there is a dramatic decrease proposed in 
one aspect of that coal research, the Clean Coal Power 
Initiative, which is a demonstration program, and, as you have 
noted, it has gone from about $49 million to $5 million. The 
other part of the story is that there is in the neighborhood of 
$500 million in unobligated funds sitting in that account, some 
of those funds dating back from the 1990's.
    OMB and our own folks looked at that account balance and 
asked ourselves the question, are all of those moneys going 
toward good programmatic activities? Do we need to request more 
authority now? Might it be possible to take some of those 
funds, get them into a new solicitation, so that we can 
continue this work?
    We do take the point. We think it is very important to have 
a demonstration program to test drive these technologies before 
Wall Street will fund them. We do think that is important. One 
of the things that Assistant Secretary Jared is looking at, who 
is sitting behind me now, is looking at what of those funds 
might be freed up and made available if they are not being 
productively used and quickly used now. We want to improve that 
program. We want to get the money moving more quickly and get 
those dollars in the game.

                            LOAN GUARANTEES

    On the issue of loan guarantees, Mr. Chairman, which is 
something that you raised. The Secretary, who has something of 
a background in financial management, is personally involved in 
this with us and he is counseling that we take a cautious 
approach. As you know, the Department of Energy's track record 
in loan guarantees is mixed at best. We have made loan 
guarantees on geothermal programs in the past. Four of them 
failed. We have made three loan guarantees on synthetic fuels. 
One of them has been successful after default. We have made 
three loan guarantees in alcohol fuels programs. One of them, 
again after a default, is paying back against that.
    Senator Domenici. How old are these programs?
    Mr. Garman. They are old.
    Senator Domenici. You bet.
    Mr. Garman. They are quite old.
    So we are batting 2 out of 6--I am sorry, 6 out of 14. So 
we have zeroed in on the loan guarantee provisions, 
specifically in title XVII of the Energy Policy Act and other 
places, as being incredible new tools at our disposal that we 
do want to employ.
    I want to disavow you of this notion that somehow we are 
stalled. We have created a Loan Guarantee Office, and this is 
an office that is very important. It is an office that will 
conduct the process, qualify lenders, manage proposal reviews, 
monitor the portfolio of the Department. We are working to seek 
expertise. There is a lot of expertise that you need, financial 
expertise, credit risk expertise, commercial viability 
assessment expertise, that we may or may not have inside the 
Department. So we are getting that expertise, acquiring it from 
outside where possible, contracting it if necessary.
    We hope to be in a position to accept the first loan 
guarantee pre-applications for that universe of people who are 
self-payers under the provisions of the bill some time this 
summer, with a view that we might be in a position to make a 
contingent offer later this year. Now, I want to be clear. This 
is not a promise on our part. This is our internal goal. This 
is what we are hoping to achieve in the timeframe. Frankly, the 
Secretary is skeptical that we can pull it off that quickly, 
but his expectation is that we move as expeditiously as 
possible and, as you know, Secretary Bodman, is not a man that 
we relish letting down.
    Senator Domenici. We are going to move to the soon-to-be 
Secretary.
    Mr. Garman. So those are two of the issues.
    Senator Domenici. But I do want to make a point----
    Mr. Garman. Yes, sir.
    Senator Domenici [continuing]. Because I do not think the 
testimony should be taken of these prior efforts as being 
efforts that are synonymous with the proposals contained 
within, for loan guarantees, in the new Policy Act. The new 
Policy Act provides for a completely different kind of loan 
guarantee, as you well know.
    Mr. Garman. Yes, sir.
    Senator Domenici. That loan guarantee is at zero cost to 
the government because the applicant pays for the costs. There 
is a significant cleansing mechanism for whether it is a good 
project or not because of that, and it will be a different kind 
of proposal.
    What I am hearing you say is you are not slowing up on 
putting together all the apparatus, the structure needed. That 
is moving ahead as quickly as you can?
    Mr. Garman. Correct. For instance, we are trying to use 
guidelines, as opposed to regulations, because a regulatory 
process would take another 18 months or longer, and that is 
something that we are working with the Office of Management and 
Budget to understand how we can move ahead in that realm.
    Senator Domenici. We are now going to ask Dr. Orbach to 
give his testimony. You can do it however you would like. Your 
statement is in the record at this point without objection. 
Proceed.

                           Office of Science

STATEMENT OF RAYMOND L. ORBACH, Ph.D., DIRECTOR
    Dr. Orbach. Thank you, Mr. Chairman, members of the 
committee. I appreciate the opportunity to testify today and I 
appreciate the support that this committee has provided for 
science and its relationship to our Nation's energy security 
and economic competitiveness.
    The fiscal year 2007 President's request, as you have 
noted, includes a $505 million increase in the Department of 
Energy science program, and the President has announced his 
commitment to double the funding for basic research in the 
physical sciences over the next 10 years. We are going to use 
the increase in funding this year, with roughly half going to 
operations of our large-scale facilities and the other half to 
research, to competitively based research proposals from the 
entire community, to restore the balance between our facilities 
and our operations and our basic research program.
    The instruments that we are building we believe will give 
the United States an order of magnitude dominance over all 
other facilities in the areas that we approach. We will be a 
full partner in ITER, contained in this budget. We will be 
placing on the floor three high-end computational structures 
for a variety of physical problems, the fastest in the non-
defense world.
    We will be continuing with construction of the world's 
first free electron X-ray laser. This machine will provide ten 
orders of magnitude dominance over any other hard X-ray source 
in the world today. More than that, its timing will enable us 
to observe the change in the electron clouds as chemical 
reactions take place and to determine the structure of 
individual macromolecules.
    The Spallation Neutron Source will turn on in June of this 
year, a $1.4 billion project which is on time and on budget, 
and gives us an order of magnitude dominance for neutron 
scattering, pulse neutron scattering, in the world.
    Four of our five nanocenters will start operations with the 
2007 budget. These nanocenters will be unmatched anywhere in 
the world and will give our scientists and engineers 
opportunities to construct at the atomic level and understand 
the properties of the materials as they are being grown.
    We will be contributing $60 million to R&D for the 
International Linear Collider, which we hope will restore 
American dominance in high-energy physics in the next decade. 
We will be increasing the power of the CEBAF, the Continuous 
Electron Beam Accelerator Facility, at Thomas Jefferson to 12 
GEV, which will enable us to see the structure of individual 
quarks and gluons in the nucleus.
    We will be contributing to the optimum operations of RHIC 
at Brookhaven to study the properties of the universe very 
close to its creation. Finally, we will be finishing our R&D 
and investing in project engineering design for the NSLS-2, 
which is the first of the fourth generation light sources. This 
will be an X-ray microscope capable of operating at one 
nanometer in size, which would be of the order of three atomic 
diameters. There is no other instrument like it in the world. 
In addition, it will have an energy resolution that will give 
us not only the structure but also the dynamics of these new 
materials as they are created.
    I have gone through this to give you a sense of the impact 
that this augmentation in the Office of Science budget will 
have. We are fully aware that this request takes place in a 
period of budgetary stringency. We are indebted to the 
President for his foresight in recognizing the vital importance 
of America's continued leadership in the physical sciences to 
our Nation's global competitive position and our quest for 
greater energy security.
    We are committed to upholding our part of the bargain by 
delivering truly transformational science and technologies, 
breakthrough advances that will provide new pathways to energy 
security and ensure America's continued global economic 
leadership in the years ahead.

                           PREPARED STATEMENT

    Mr. Chairman, I am pleased to discuss this budget with you 
today. I thank you and the committee for the opportunity to 
appear and for your support over the years for the science 
program. Thank you.
    [The statement follows:]

              Prepared Statement of Dr. Raymond L. Orbach

    Mr. Chairman and members of the subcommittee, thank you for the 
opportunity to testify today on the Office of Science's fiscal year 
2007 budget request. I appreciate your strong support for basic 
research in the physical sciences, Mr. Chairman, and your understanding 
of the importance of this research to our Nation's energy security and 
economic competitiveness. I also want to thank the members of the 
subcommittee for their support. This budget represents a strong 
commitment on the part of the President to ensure continued U.S. 
leadership in the basic sciences. I believe this budget will enable the 
Office of Science to strengthen U.S. scientific leadership and carry 
out its mission to deliver the revolutionary discoveries and scientific 
tools that transform our understanding of energy and matter and advance 
our national, economic and energy security.
    The Office of Science requests $4,101,710,000 for the fiscal year 
2007 Science appropriation, an increase of $505,319,000 over the fiscal 
year 2006 appropriation. As part of the President's American 
Competitiveness Initiative, the fiscal year 2007 budget represents the 
beginning of the President's commitment to double, over 10 years, the 
sum of the research investment at the Office of Science, the National 
Science Foundation, and the Department of Commerce's National Institute 
of Standards and Technology. This commitment will help ensure that the 
United States remains the world leader in critical areas of basic 
scientific research; maintains an order of magnitude dominance for 
large-scale scientific facilities and instrumentation in the key fields 
of science and technology that will drive the 21st century economy; 
pursues the transformational technologies necessary for greater energy 
security and independence for our Nation; and nurtures and develops a 
world-class scientific and engineering workforce.
    The Office of Science is the lead Federal supporter for basic 
research in the physical sciences in the United States, and the steward 
for fields such as systems biology for energy and the environment, 
materials science, high energy physics, nuclear physics, heavy element 
chemistry, plasma physics, magnetic fusion, and catalysis. It also 
supports unique and vital components of U.S. research in climate change 
and geophysics. Researchers funded through the Office of Science are 
working on some of the most pressing scientific challenges of our age 
including: (1) Harnessing the power of microbial communities for: 
energy production from renewable sources, carbon sequestration, and 
environmental remediation; (2) Expanding the frontiers of 
nanotechnology to develop materials with unprecedented properties for 
widespread potential scientific, energy, and industrial applications; 
(3) Pursuing the breakthroughs in materials science, nanotechnology, 
biotechnology, and other fields needed to make solar energy more cost-
effective; (4) Demonstrating the scientific and technological 
feasibility of creating and controlling a sustained burning plasma to 
generate energy, as the next step toward making fusion power a 
commercial reality; (5) Using advanced computation, simulation, and 
modeling to understand and predict the behavior of complex systems, 
beyond the reach of our most powerful experimental probes, with 
transformational impact on a broad range of scientific and 
technological undertakings; (6) Understanding the origin of the 
universe and nature of dark matter and dark energy; and (7) Resolving 
key uncertainties and expanding the scientific foundation needed to 
understand, predict, and assess the potential effects of atmospheric 
carbon on climate and the environment.
    U.S. preeminence in science, technology, and innovation will depend 
on the continued availability of the most advanced scientific research 
facilities for our researchers. The Office of Science builds and 
operates the world's most powerful array of scientific facilities and 
instruments, including advanced synchrotron light sources, the new 
Spallation Neutron Source, state-of-the-art Nanoscale Science Research 
Centers, genome sequencing facilities, supercomputers and high-speed 
networks, climate and environmental monitoring capabilities, and 
particle accelerators for high energy and nuclear physics. We are in 
the process of developing an X-ray free electron laser light source 
that can image single large macromolecules and measure in real-time 
changes in the chemical bond as chemical and biological reactions take 
place. Our premier tools of science at the 10 national laboratories 
managed by the Office of Science are used by over 19,000 researchers 
and students from universities, other Federal agencies, and private 
industry every year, and have enabled U.S. researchers to make some of 
the most important scientific discoveries of the past 70 years.
    Office of Science leadership in basic research in the physical 
sciences, and stewardship of large research facilities, is directly 
linked to its role in training America's scientists, engineers, and 
teachers. Through the funding of a diverse portfolio of research at 
more than 300 colleges and universities nationwide, we provide direct 
support and access to research facilities for thousands of university 
students and researchers in the physical and biological sciences and 
mathematics. Facilities at the national laboratories provide unique 
opportunities for researchers and their students from across the 
country to pursue questions at the intersection of physics, chemistry, 
biology, computing, and materials science. The Office of Science also 
sponsors undergraduate student internships and fellowships for science 
and mathematics K-12 teachers for research experience and training at 
the national laboratories.
    The fiscal year 2007 budget request will allow the Office of 
Science to increase support for high-priority DOE mission-driven 
scientific research as well as support new initiatives; maintain 
optimum operations at our scientific user facilities; keep major 
facility construction projects on schedule and within budget; and 
treble educational, research, and training opportunities for the next 
generation of scientists, engineers, and teachers. The budget will also 
allow us to expand our contribution to basic research in support of the 
President's Hydrogen Fuel Initiative and the President's new Advanced 
Energy Initiative. Roughly half of our budget goes to construction and 
operations of the large scientific facilities, and the other half is 
approximately equally split between research at the DOE laboratories 
and research at universities. This budget will support the research of 
approximately 24,200 faculty, students, and postdoctoral researchers 
throughout the Nation, an increase of 2,600 from fiscal year 2006.
    The following programs are supported in the fiscal year 2007 budget 
request: Basic Energy Sciences, Advanced Scientific Computing Research, 
Biological and Environmental Research, Fusion Energy Sciences, High 
Energy Physics, Nuclear Physics, Science Laboratories Infrastructure, 
Science Program Direction, Workforce Development for Teachers and 
Scientists, and Safeguards and Security.

                    OFFICE OF SCIENCE FISCAL YEAR 2007 PRESIDENT'S REQUEST SUMMARY BY PROGRAM
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                    Fiscal Year     Fiscal Year
                                                                       2005            2006         Fiscal Year
                                                                   Appropriation   Appropriation   2007 Request
----------------------------------------------------------------------------------------------------------------
Science:
    Basic Energy Sciences.......................................       1,083,616       1,134,557       1,420,980
    Advanced Scientific Computing Research......................         226,180         234,684         318,654
    Biological and Environmental Research:
        Base program............................................         487,474         451,131         510,263
        Congressionally directed projects.......................          79,123         128,700  ..............
                                                                 -----------------------------------------------
          Total, Biological and Environmental Research..........         566,597         579,831         510,263
                                                                 ===============================================
    High Energy Physics.........................................         722,906         716,694         775,099
    Nuclear Physics.............................................         394,549         367,034         454,060
    Fusion Energy Sciences......................................         266,947         287,644         318,950
    Science Laboratories Infrastructure.........................          37,498          41,684          50,888
    Workforce Development for Teachers and Scientists...........           7,599           7,120          10,952
    Science Program Direction...................................         154,031         159,118         170,877
    Safeguards and Security.....................................          67,168          68,025          70,987
    Small Business Innovation Research/Small Business Technology         113,621  ..............  ..............
     Transfer...................................................
                                                                 -----------------------------------------------
        Subtotal, Science.......................................       3,640,712       3,596,391       4,101,710
    Less use of prior year balances.............................          -5,062  ..............  ..............
                                                                 -----------------------------------------------
      Total, Science............................................       3,635,650       3,596,391       4,101,710
----------------------------------------------------------------------------------------------------------------

                  fiscal year 2007 science priorities
    In his State of the Union Message on January 31, 2006, President 
George W. Bush stated,

    ``To keep America competitive, one commitment is necessary above 
all: We must continue to lead the world in human talent and creativity. 
Our greatest advantage in the world has always been our educated, 
hardworking, ambitious people--and we're going to keep that edge. 
Tonight I announce an American Competitiveness Initiative, to encourage 
innovation throughout our economy, and to give our Nation's children a 
firm grounding in math and science.
    ``First, I propose to double the Federal commitment to the most 
critical basic research programs in the physical sciences over the next 
10 years. This funding will support the work of America's most creative 
minds as they explore promising areas such as nanotechnology, 
supercomputing, and alternative energy sources.''

    I believe the American Competitiveness Initiative and this 
commitment by the President present an historic opportunity for science 
in our country and continued U.S. global competitiveness. Through the 
fiscal year 2007 budget, the Office of Science will build on our record 
of results with new investments to maintain U.S. world-leadership 
status in the physical sciences, keep U.S. research and development at 
the forefront of global science, and increase America's talent pool in 
science, technology, engineering, and mathematics.
    Determining science and technology priorities across the Office of 
Science programs is an ongoing process, both in times of budget 
stringency and budget increases. Several factors are considered in our 
prioritization, including scientific opportunities identified by our 
scientific advisory committees and the overall scientific community; 
DOE mission needs; and administration and Departmental priorities. In 
fiscal year 2007, we will support the priorities in scientific 
research, facility operations, and construction and laboratory 
infrastructure established in the past few years and outlined in the 
Office of Science Strategic Plan and 20-year Facilities Outlook, in 
addition to Presidential and Departmental initiatives.
    The President's Hydrogen Fuel Initiative and the new Advanced 
Energy Initiative will be supported through our contributions to basic 
research in hydrogen, fusion, solar energy to transportation fuels, 
chemical separation and materials for advanced nuclear energy systems, 
and production of ethanol from cellulose. We will also continue strong 
support for other administration priorities such as nanotechnology, 
advanced scientific computation, and climate change science and 
technology.
    The Office of Science will actively lead and support the U.S. 
contributions to ITER, the international project to build and operate 
the first fusion science facility capable of producing a sustained, 
burning plasma to generate energy on a massive scale without 
environmental insult.
    Full operations at four of the DOE Nanoscale Science Research 
Centers (NSRCs) and completion of construction and start-up operations 
for the fifth NSRC will be supported in fiscal year 2007. These 
facilities are the Nation's premier nanoscience user centers, providing 
resources unmatched anywhere in the world for the synthesis, 
fabrication, and analysis of nanoparticles and nanomaterials.
    We will fully fund the programs in advanced scientific computing 
including support for: increasing capacity to 100-150 teraflops 
(trillions of operations per second) for high-performance production 
computing at the National Energy Research Scientific Computing Center 
(NERSC); 250 teraflop capability for modeling and simulation of 
scientific problems in combustion, fusion, and complex chemical 
reactions at Oak Ridge National Laboratory's Leadership Computing 
Facility; and installation of a 100 teraflop peak capacity IBM Blue 
Gene P system at Argonne National Laboratory's Leadership Computing 
Facility to extend architectural diversity in leadership computing and 
address challenges in catalysis, protein/DNA complexes, and materials 
sciences related to next-generation design of nuclear reactors.
    The Office of Science designs, constructs, and operates facilities 
and instruments that give U.S. scientists an ``order of magnitude'' 
lead over foreign competition in key scientific fields. For example, 
increasing the computing capacity at NERSC and the Leadership Computing 
Facilities will give the United States computational capabilities for 
open scientific research that are at least 10 times greater than 
available anywhere else. The Linac Coherent Light Source (LCLS) at the 
Stanford Linear Accelerator Center, when it comes on line in 2009, will 
produce X-rays 10 billion times, or 10 orders of magnitude more intense 
than any existing X-ray source in the world, and allow structural 
studies on individual nanoscale particles and single biomolecules. The 
Spallation Neutron Source (SNS), the world's forefront neutron 
scattering facility, will increase the number of neutrons available for 
cutting-edge research by a factor of 10 over any existing Spallation 
neutron source in the world when operations begin this year. We will be 
supporting the first full year of SNS operations in fiscal year 2007 as 
well as the fabrication of four to five instruments that are part of 
the initial suite of instruments for the target station.
    In fiscal year 2007, we will begin R&D and project engineering and 
design for the next generation of synchrotron light sources. The 
National Synchrotron Light Source-II (NSLS-II) will deliver orders of 
magnitude improvement in spatial resolution, providing the world's 
finest capabilities for X-ray imaging and enabling the study of 
material properties and functions, particularly at the nanoscale, at a 
level of detail and precision never before possible. Its energy 
resolution will explore dynamical properties of matter as no other 
light source has ever accomplished.
    Our research programs in nuclear physics continue to receive strong 
support. We will continue optimum operations at the Relativistic Heavy 
Ion Collider (RHIC), and support additional instrumentation projects 
for RHIC for studying the properties of hot, dense nuclear matter, 
providing insight into the early universe. We will also support 
increased operations at the Continuous Electron Beam Accelerator 
Facility (CEBAF) and project engineering and design for doubling the 
energy of the existing beam at CEBAF to 12 gigaelectron volts. It will 
image directly individual quarks and gluons in the nucleus, something 
never before accomplished.
    In addition to supporting core experimental and theoretical high-
energy physics research, we will double the resources for R&D for the 
proposed high-energy, high luminosity electron-positron International 
Linear Collider. And we will maintain strong support for U.S. 
participation in the research program at the Large Hadron Collider, 
scheduled to begin operations in 2007.
    The Office of Science will expand the Genomics: GTL program--a 
program that builds on the advances in genome sequencing, molecular 
science, and computation, to understand and ultimately harness the 
functions of microbes to address DOE's mission needs.
    We will also continue to support the development of leaders in the 
science and mathematics education community through a tripling of the 
number of K-12 teachers participating in the Laboratory Science Teacher 
Professional Development program, focusing on middle school teachers 
and students. This immersion program, working with master teachers and 
laboratory mentor scientists, builds content knowledge, research 
skills, and a lasting connection to the scientific community, leading 
to more effective teaching that inspires students in science and 
mathematics.

                        SCIENCE ACCOMPLISHMENTS

    Over the past 50 years, the Office of Science has blended cutting-
edge research and innovative problem solving to keep the United States 
at the forefront of scientific discovery. American taxpayers have 
received great value for their investment in basic research sponsored 
by the Office of Science that has led to significant technological 
innovations, new intellectual capital, enhanced economic 
competitiveness, and improved quality of life. The following are some 
of the past year's highlights:
    Promoting the Contributions of Physics to Our Quality of Life--2005 
World Year of Physics.--The Office of Science, in coordination with 
researchers at universities nationwide and the DOE national 
laboratories, celebrated the 2005 World Year of Physics through a year-
long program of activities and materials highlighting how physics 
enables advances in science and contributes to the quality of life. In 
celebration of the centennial of Albert Einstein's ``miracle year'', 
1905, when he published four papers that laid the foundations of much 
of physics as we know it today, the Office of Science co-sponsored a 
new PBS NOVA program, ``Einstein's Big Idea'', and its associated 
educational materials. The program aired on PBS stations nationwide in 
October 2005. Library guides about the program were distributed to all 
16,000 libraries nationwide, and teacher's guides were sent nationwide 
to 15,000 high school physics teachers, 3,700 middle school physics 
teachers, and 400 middle school science chairs. Several of the national 
laboratories held special lectures, symposia, and education events for 
local middle school and high school students and the surrounding 
communities. A DOE/Office of Science website was created to educate the 
public about the significance of Einstein's revolutionary work, 
describe the role of physics in various science and technology fields, 
publicize events, and highlight the work of DOE-sponsored physicists. 
The ``DOE Physicists at Work'' website continues to profile the work of 
young physicists conducting research in the universities and national 
laboratories funded by the Office of Science. Several activities 
coordinated by the American Physical Society were also co-sponsored by 
the Office of Science including Physics Quest, an outreach event held 
on the grounds of the Institute for Advanced Studies in Princeton, NJ, 
that took over 100,000 middle school students through a series of 
experiments on a hunt to finding Einstein's ``missing treasure'', and 
Physics on the Road, a project that supported the materials and 
equipment for teams from colleges and universities to perform physics 
demonstrations at schools and public venues.
    Nobel Prize in Chemistry.--The 2005 Nobel prize in chemistry was 
awarded to Robert H. Grubbs (CalTech), Richard R. Schrock (MIT), and 
Yves Chauvin (French Petroleum Institute) for the development of the 
``metathesis method'' in organic synthesis. This method of selectively 
stripping out certain atoms in a compound and replacing them with atoms 
that were previously part of another compound employs novel catalysts 
to simplify the process of custom-building molecules with specialized 
properties. Metathesis has led to industrial and pharmaceutical methods 
that are more efficient, produce fewer by-products, and are more 
environmentally friendly. The work of the laureates has major 
significance in the production of fuels, synthetic fibers, plastics, 
and pharmaceuticals. The Office of Science has supported Dr. Schrock's 
work in catalytic chemistry at the Massachusetts Institute of 
Technology since 1979 and supported Dr. Grubbs' work in homogeneous 
catalysis at Caltech from 1979 through 1988.
    Discoveries and Capabilities at the Frontier of Nanoscale 
Science.--In 2005, the world's first hard X-ray nanoprobe beamline was 
activated at the Advanced Photon Source (Argonne). The X-ray microscope 
nanoprobe will provide spatial resolution of 30 nanometers or better, 
making it a valuable tool for studying nanomaterials as the new Center 
for Nanoscale Materials begins operations in 2006 at Argonne National 
Laboratory. Researchers at the Stanford Synchrotron Radiation 
Laboratory have developed new methods for studying the structure of 
nanomaterials through a combined use of X-ray scattering and absorption 
measurement techniques that has led to significant advances in 
understanding the structures of nanomaterials and routine 
characterization of bacterial nano-minerals. Scientific discoveries at 
the nanoscale in 2005 include the following: ultrathin films, six atoms 
thick, that retained ferroelectric properties needed for next 
generation nanoscale devices such as electronics and sensors; ultrafast 
laser techniques observed the fastest reversible phase transition 
between nanocrystal structures ever recorded with the transition of 
vanadium oxide crystals switching from a semiconducting to metallic 
phase material; the fabrication of novel semiconductor nanocrystal 
polymer solar cells that demonstrated surprisingly high efficiencies; 
and the development of the world's smallest synthetic nanomotor--a 300 
nanometer gold rotor on a carbon nanotube shaft--demonstrating advances 
in the miniaturization of electromagnetic devices.
    Delivering Forefront Computational and Networking Capabilities for 
Science.--Several computational sciences and networking advances made 
in 2005 enable more effective use of leadership-scale computing 
resources and management of the growing data volumes from the 
scientific user facilities: computer science researchers have 
significantly enhanced the performance of simulation models for fusion, 
atmospheric science, and quantum chemistry applications and continue to 
improve programming models that optimize complex scientific 
applications run on computers with hundreds to thousands of processors; 
researchers at Argonne National Laboratory have produced a new modeling 
and solution paradigm for the design of efficient electricity markets; 
the Energy Sciences Network completed the first metropolitan area 
network connecting six DOE sites in the San Francisco Bay Area with 
dual connectivity at 20 gigabits per second, 10 to 50 times the 
previous bandwidth at each site, also improving reliability and 
lowering costs; and the UltraScienceNet Testbed completed deployment in 
August 2005 of its 20 gigabit per second reconfigurable optical network 
testbed designed to test advanced optical network technologies such as 
advanced data transfer networking technologies designed to meet the 
increasing demand for bandwidth and the needs of next-generation 
scientific instruments.
    Advances in Biotechnology for Energy and the Environment.--Progress 
towards understanding how living organisms interact with and respond to 
their environment, and how those processes involved can be utilized, 
was gained through the following accomplishments: researchers applied 
both genomic and proteomic approaches to characterize a naturally 
occurring microbial community for the first time at a remediation site, 
producing insights into potential biotechnology strategies for 
remediation of toxic materials; advanced genomic sequencing 
technologies applied to samples taken from the Sargasso Sea led to the 
discovery of over a million new genes that had never been seen before, 
identifying the potential of environmental genomics for discovering new 
microbe functionalities that can be harnessed for energy or 
environmental applications; researchers have developed the ability to 
insert fiber-optic probes into living cells to watch cellular processes 
unfold in real time; and a new clearinghouse was established that 
contains approximately 300 draft or completed genome sequences of 
microbes, associated information about the gene, protein functions, and 
biochemical pathways, and browsing tools to help researchers sort 
through and analyze genomic data.
    Accomplishments in Theory, Simulation, and Experiments Energize 
Fusion Research Towards ITER.--With progress on the international 
agreement to build ITER, investigations on the theory, simulation, and 
experimentation related to burning plasma and ITER related issues 
increased in 2005. The results of some of those studies include the 
following: researchers achieved ITER level plasma pressure at the 
Alcator C-Mod facility, a world record absolute pressure for magnetic 
confinement experiments; separate experiments on DIII-D indicated 
higher plasma pressures can be obtained without a penalty to energy 
confinement, suggesting that ITER could achieve higher fusion power 
output than originally conceived; multi-teraflop performance was 
achieved on a leading plasma micro-turbulence simulation code, 
demonstrating the ability of the code to effectively utilize increased 
computational capabilities and accelerate the pace of discoveries in 
this area of fusion plasma research; and high-performance reduced-
activation steels tested under fusion-relevant conditions demonstrated 
superior performance under intense neutron radiation compared to 
conventional steels, making these materials lead candidates for 
structural components of ITER.

                   PROGRAM OBJECTIVES AND PERFORMANCE

    The path from basic research to industrial competitiveness is not 
always obvious. History has taught us that seeking answers to 
fundamental questions results in a diverse array of practical 
applications as well as some remarkable revolutionary advances. Working 
with the scientific community, the Office of Science invests in the 
most promising research and sets definite and challenging long-term 
scientific goals with meaningful annual targets. The intent and impact 
of our performance goals may not always be clear to those outside the 
research community. Therefore the Office of Science has created a 
website (www.sc.doe.gov/measures) to better communicate what we are 
measuring and why it is important. This website also tracks progress 
toward management improvements and describes a wide array of program 
accomplishments.

                              ORGANIZATION

    The OneSC Project was initiated to streamline the Office of Science 
structure and improve operations across the Office of Science complex 
in keeping with the principles of the President's Management Agenda to 
manage government programs more efficiently and effectively. The Office 
of Science has been officially reorganized under the OneSC structure 
(Figure 2). Phase 1 of the reorganization was effective March 20, 2005. 
Phase 2 of OneSC involves human capital and organizational needs 
analyses and reengineering of SC business and management operations and 
processes. The Office of Science business practices and processes will 
be optimized to remove unnecessary work and support enhanced 
stewardship and oversight of the Office of Science laboratories. 
Attrition, retraining, reassignments, and workforce management 
incentives will be utilized to manage changes in staffing levels or 
skill mix needs resulting from Phase 2 activities. No downgrades, 
involuntary geographical transfers, separations, or reductions-in-force 
are planned or expected.


                            SCIENCE PROGRAMS

Basic Energy Sciences
            Fiscal Year 2006 Appropriation--$1,134.6 Million; Fiscal 
                    Year 2007 Request--$1,421.0 Million
    Basic research supported by the Basic Energy Sciences (BES) program 
touches virtually every aspect of energy resources, production, 
conversion, efficiency, and waste mitigation. Research in materials 
sciences and engineering leads to the development of materials that 
improve the efficiency, economy, environmental acceptability, and 
safety of energy generation, conversion, transmission, and use. 
Research in chemistry leads to the development of advances such as 
efficient combustion systems with reduced emissions of pollutants; new 
solar photo conversion processes; improved catalysts for the production 
of fuels and chemicals; and better separations and analytical methods 
for applications in energy processes, environmental remediation, and 
waste management. Research in geosciences contributes to the solution 
of problems in multiple DOE mission areas, including reactive fluid 
flow studies to understand contaminant remediation and seismic imaging 
for reservoir definition. Research in the molecular and biochemical 
nature of photosynthesis aids the development of solar photo energy 
conversion and biomass conversion. In fiscal year 2007, the Office of 
Science will support expanded efforts in basic research related to 
transformational energy technologies. Within BES, there are increases 
to ongoing basic research for effective solar energy utilization, for 
the hydrogen economy, and for work underpinning advanced nuclear energy 
power. BES also asks researchers to reach far beyond today's problems 
in order to provide the basis for long-term solutions to what is 
probably society's greatest challenge--a secure, abundant, and clean 
energy supply. To that end, the fiscal year 2007 budget request would 
also increase research for grand challenge science questions and for 
new technique development in complex systems or emergent behavior, 
ultrafast science, mid-scale instrumentation, and chemical imaging.
    BES also provides the Nation's researchers with world-class 
research facilities, including reactor- and accelerator-based neutron 
sources, light sources soon to include the X-ray free electron laser, 
nanoscale science research centers, and electron beam micro-
characterization centers. These facilities provide outstanding 
capabilities for imaging and characterizing materials of all kinds from 
metals, alloys, and ceramics to fragile biological samples. The next 
steps in the characterization and the ultimate control of materials 
properties and chemical reactivity are to improve spatial resolution of 
imaging techniques; to enable a wide variety of samples, sample sizes, 
and sample environments to be used in imaging experiments; and to make 
measurements on very short time scales, comparable to the time of a 
chemical reaction or the formation of a chemical bond. With these 
tools, we will be able to understand how the composition of materials 
affects their properties, to watch proteins fold, to see chemical 
reactions, and to understand and observe the nature of the chemical 
bond. For fiscal year 2007, BES scientific user facilities will be 
scheduled to operate at an optimal number of hours.
    Construction of the Spallation Neutron Source (SNS) will be 
completed during the 3rd quarter of fiscal year 2006 and will join the 
suite of BES scientific user facilities. In fiscal year 2007, BES will 
support continued fabrication and commissioning of SNS instruments, 
funded both as part of the SNS project and from other sources including 
non-DOE sources, and will increase power to full levels. A new Major 
Item of Equipment is funded in fiscal year 2007 that will allow the 
fabrication of approximately four to five additional instruments for 
the SNS, thus nearly completing the initial suite of 24 instruments 
that can be accommodated in the high-power target station.
    Four Nanoscale Science Research Centers will be fully operational 
in fiscal year 2007: the Center for Nanophase Materials Sciences at Oak 
Ridge National Laboratory, the Molecular Foundry at Lawrence Berkeley 
National Laboratory, the Center for Nanoscale Materials at Argonne 
National Laboratory, and the Center for Integrated Nanotechnologies at 
Sandia National Laboratories and Los Alamos National Laboratory. A 
fifth Center, the Center for Functional Nanomaterials at Brookhaven 
National Laboratory, will receive final year construction funding. In 
fiscal year 2007, there are significant shifts in the nanoscale science 
and engineering research activities contributing to the BES investments 
in research at the nanoscale and a substantial overall increase in 
funding. Overall, the total investment for these Nanoscale Science 
Research Centers decreases by about 10 percent owing to the planned 
decrease in construction funding. Funding for research at the nanoscale 
increases very significantly owing to increases in funding for 
activities related to the hydrogen economy, solar energy conversion, 
and advanced nuclear energy.
    The Linac Coherent Light Source (LCLS) at the Stanford Linear 
Accelerator Center (SLAC) will continue Project Engineering Design 
(PED) and construction at the planned levels. The purpose of the LCLS 
Project is to provide laser-like radiation in the X-ray region of the 
spectrum that is 10 billion times greater in peak power and peak 
brightness than any existing coherent X-ray light source and that has 
pulse lengths measured in femtoseconds--the timescale of electronic and 
atomic motions. The LCLS will the first facility in the world for such 
groundbreaking research in the physical and life sciences. Support is 
also provided for PED and R&D for the National Synchrotron Light 
Source-II (NSLS-II), which will be a new synchrotron light source, 
highly optimized to deliver ultra-high brightness and flux and 
exceptional beam stability. This would enable the study of material 
properties and functions with a spatial resolution of 1 nanometer (nm), 
an energy resolution of 0.1 millielectron volt (meV), and the ultra-
high sensitivity required to perform spectroscopy on a single atom. 
NSLS-II will be transformational in opening new regimes of scientific 
discovery and investigation. The ability to probe materials with 1 nm 
or better spatial resolution and to analyze their dynamics with 0.1 meV 
energy resolution will be truly revolutionary.
    The Scientific Discovery through Advanced Computing (SciDAC) 
program is a set of coordinated investments across all Office of 
Science mission areas with the goal of achieving breakthrough 
scientific advances via computer simulation that were impossible using 
theoretical or laboratory studies alone. The SciDAC program in BES 
consists of two major activities: (1) characterizing chemically 
reacting flows as exemplified by combustion and (2) achieving 
scalability in the first-principles calculation of molecular 
properties, including chemical reaction rates.
Advanced Scientific Computing Research
            Fiscal Year 2006 Appropriation--$234.7 Million; Fiscal Year 
                    2007 Request--$318.6 Million
    The Advanced Scientific Computing Research (ASCR) program is 
expanding the capability of world-class scientific research capacity 
through advances in mathematics, high performance computing and 
advanced networks, and through the application of computers capable of 
many trillions of operations per second (terascale computers) to 
advanced scientific applications. Computer-based simulation enables us 
to understand and predict the behavior of complex systems that are 
beyond the reach of our most powerful experimental probes or our most 
sophisticated theories. Computational modeling has greatly advanced our 
understanding of fundamental processes of Nature, such as fluid flow 
and turbulence or molecular structure and reactivity. Soon, through 
modeling and simulation, we will be able to explore the interior of 
stars to understand how the chemical elements were created and learn 
how protein machines work inside living cells to enable the design of 
microbes that address critical energy or waste cleanup needs. We could 
also design novel catalysts and high-efficiency engines that expand our 
economy, lower pollution, and reduce our dependence on foreign oil. 
Computational science is increasingly important to progress at the 
frontiers of almost every scientific discipline and to our most 
challenging feats of engineering. The science of the future demands 
that we advance beyond our current computational abilities.
    For the past two decades SC, and the worldwide scientific 
community, have been harvesting their success in building and 
developing the Internet. This has enabled roughly a doubling in 
bandwidth every 2 years with no increase in cost. However, the demands 
of today's facilities, which generate millions of gigabytes per year of 
data, now outstrip the capabilities of the Internet design and the 
algorithms, software tools, libraries, and environments needed to 
accelerate scientific discovery through modeling and simulation are 
beyond the realm of commercial interest. However, the evolution of the 
telecom market, including the availability of direct access to optical 
fiber at attractive prices and the availability of flexible dense wave 
division multiplexing (DWDM) products gives SC the possibility of 
exploiting these technologies to provide scientific data where it is 
needed at speeds commensurate with the new data volumes. However, to 
take advantage of this opportunity significant research is needed to 
integrate these capabilities, make them available to scientists, and 
build the infrastructure which can provide cybersecurity in this 
environment.
    The Mathematical, Information, and Computational Sciences (MICS) 
effort supports the core research of the ASCR program. To establish and 
maintain networking, modeling and simulation leadership in scientific 
areas that are important to DOE's mission, the MICS subprogram employs 
a broad, but integrated, research strategy. The MICS subprogram's basic 
research portfolio in applied mathematics and computer science provides 
the foundation for enabling research activities, which include efforts 
to advance networking and to develop software tools, libraries, and 
environments. Results from enabling research supported by the MICS 
subprogram are used by computational scientists supported by other SC 
and DOE programs. This link to other DOE programs provides a tangible 
assessment of the value of the MICS subprogram for advancing scientific 
discovery and technology development through simulations. In addition 
to its research activities, the MICS subprogram plans, develops, and 
operates supercomputer and network facilities that are available--24 
hours a day, 365 days a year--to researchers working on problems 
relevant to DOE's scientific missions. In fiscal year 2007, the Energy 
Science Network (ESnet) will deliver a backbone network with two to 
four times the capability of today's network, to support the science 
mission of the Department. In addition, the National Energy Research 
Scientific Computing Center (NERSC) will be upgraded in fiscal year 
2006 to add a NERSC-5 machine with 100-150 teraflops of peak computing 
capacity early in fiscal year 2007. The NERSC computational resources 
are integrated by a common high performance file storage system that 
enables users to easily use all machines. Therefore the new machine 
will significantly reduce the current oversubscription at NERSC which 
serves nearly 2,000 scientists annually.
    The Oak Ridge National Laboratory (ORNL) Leadership Computing 
Facility (LCF), selected under the Leadership Computing Competition in 
fiscal year 2004, will be enhanced to deliver 250 teraflops of peak 
capability in fiscal year 2007 for scientific applications. In 
addition, further diversity with the LCF resources will be realized 
with an acquisition by Argonne National Laboratory (ANL) of a high 
performance IBM Blue Gene P with low-electrical power requirements and 
a peak capability of up to 100 teraflops. The expansion of the 
Leadership Computing Facility to include the Blue Gene computer at ANL 
was an important element of the joint ORNL, ANL, and PNNL proposal 
selected in 2004 to enable solutions for scientific problems beyond 
what would be attainable through a continued simple extrapolation of 
current computational capabilities. The capability provided in fiscal 
year 2007 will accelerate scientific understanding in many areas of 
science important to DOE including materials science, biology, and 
advanced designs of nuclear reactors.
    The research focus of ASCR SciDAC activities includes Integrated 
Software Infrastructure Centers (ISICs). ISICs are partnerships between 
DOE national laboratories and universities focused on research, 
development, and deployment of software to accelerate the development 
of SciDAC application codes. Progress to date includes significant 
improvements in performance modeling and analysis capabilities that 
have led to doubling the performance on 64 processors of the Community 
Atmosphere Model component of the SciDAC climate modeling activity. In 
fiscal year 2006, ASCR is recompeting its SciDAC portfolio, with the 
exception of activities in partnership with the Office of Fusion Energy 
that were initiated in fiscal year 2005. In addition, in fiscal year 
2007 ASCR will continue the competitively selected SciDAC institutes 
which can become centers of excellence in high end computational 
science in areas that are critical to DOE missions.
    Advancing high performance computing and computation is a highly 
coordinated interagency effort. ASCR has extensive partnerships with 
other Federal agencies and the National Nuclear Security Administration 
(NNSA). The activities funded by the MICS subprogram are coordinated 
with other Federal efforts through the NITR&D subcommittee of the 
National Science and Technology Council and its Technology Committee. 
The subcommittee coordinates planning, budgeting, and assessment 
activities of the multiagency NITR&D enterprise. DOE has been an active 
participant in these coordination groups and committees since their 
inception. The MICS subprogram will continue to coordinate its 
activities through these mechanisms and will lead the development of 
new coordinating mechanisms as needs arise. The DOE program solves 
mission critical problems in scientific computing. In addition, results 
from the DOE program benefit the Nation's information technology basic 
research effort. The fiscal year 2007 program positions DOE to make 
additional contributions to this effort.
Biological and Environmental Research
            Fiscal Year 2006 Appropriation--$451.1 Million\1\; Fiscal 
                    Year 2007 Request--$510.3 Million
---------------------------------------------------------------------------
    \1\ Does not include $128.7 Million in Congressionally-directed 
projects.
---------------------------------------------------------------------------
    Biological and Environmental Research (BER) supports basic research 
with broad impacts on our health, our environment, and our energy 
future. Biotechnology solutions are possible for DOE energy and 
environmental challenges by understanding complex biological systems 
and developing computational tools to model and predict their behavior. 
An ability to predict long-range and regional climate enables effective 
planning for future needs in energy, agriculture, and land and water 
use. Understanding the global carbon cycle and the associated role and 
capabilities of microbes and plants can lead to solutions for reducing 
carbon dioxide concentrations in the atmosphere. Understanding the 
complex role of biology, geochemistry, and hydrology beneath the 
Earth's surface will lead to improved decision making and solutions for 
contaminated DOE weapons sites. Both normal and abnormal health--from 
normal human development to cancer to brain function--can be understood 
and improved using radiotracers, advanced imaging instruments, and 
novel biomedical devices. Understanding the biological effects of low 
doses of radiation can lead to the development of science-based health 
risk policy to better protect workers and citizens.
    The fiscal year 2007 budget includes funds for the continued 
expansion of the Genomics: GTL program--a program at the forefront of 
the biological revolution. This program employs a systems approach to 
biology at the interface of the biological, physical, and computational 
sciences to address DOE's mission needs. This research will continue to 
more fully characterize the inventory of multi-protein molecular 
machines found in selected DOE-relevant microbes and higher organisms. 
It will determine the diverse biochemical capabilities of microbes and 
microbial communities, especially as they relate to potential 
biological solutions to DOE needs, found in populations of microbes 
isolated from DOE-relevant sites. Within the Genomics: GTL program, BER 
will develop the understanding needed to advance biotechnology-based 
strategies for biofuel production, focusing on biohydrogen and 
bioethanol.
    Ethanol produced from corn starch is currently the most widely 
consumed biofuel in the United States. The production of cellulosic 
ethanol from biomass has the potential to reduce current oil demand by 
one-third without reducing the food supply or damaging the environment. 
Currently, a biochemical conversion of biomass to ethanol involves 
three basic steps: (1) breakdown of raw biomass using heat and 
chemicals, (2) use of enzymes to breakdown plant cell wall materials 
into simple sugars, and (3) conversion of the sugars into ethanol using 
microbes. The long-term goal is to integrate the bioprocessing into a 
single step. Accomplishing this requires the development of genetically 
modified, multifunctional microbes or a stable mixed culture of 
microbes capable of carrying out all biologically mediated 
transformations needed for the complete conversion of biomass to 
ethanol. Research will be supported on a variety of enzymes and 
microbes that contribute (individually and together) to the conversion 
of cellulose to ethanol; analysis of enzymes to understand how they 
interact with and breakdown cellulose; a determination of the factors, 
such as temperature and different combinations of sugars, that 
influence biomass degradation or ethanol production; strategies for 
producing and maintaining stable mixed cultures of microbes; and 
improved capabilities for genetically engineering microbes that produce 
bioethanol. This research will lead to increased understanding of 
microbe-based production of cellulosic ethanol, increased production 
efficiencies, and reduced costs that will make cellulosic ethanol a 
cost competitive alternative to gasoline in the coming decades.
    Under certain conditions, green algae and a type of bacteria known 
as cyanobacteria can use energy from the sun to split water and 
generate hydrogen. This process, known as biophotolysis, has the 
potential to produce hydrogen on the scale necessary for meeting future 
energy demand. It also uses water as a source of hydrogen--a clean, 
renewable, carbon-free (i.e., non-fossil fuel based), substrate 
available in virtually inexhaustible quantities and is potentially the 
most efficient conversion of solar energy to hydrogen. Theoretically, 
the maximum energetic efficiency for direct biophotolysis is 40 percent 
compared with a maximum of about 1 percent for hydrogen production from 
biomass (Critical Reviews in Microbiology 31, 19-31, 2005). Research 
will include investigations on a range of hydrogen-producing enzymes 
and organisms, understanding how hydrogenase (the enzyme that cleaves 
water to produce hydrogen) work, the inhibition of hydrogenase activity 
by oxygen, and genetic regulatory and biochemical processes that 
influence hydrogen production. This new knowledge will be used to 
engineer microbes to use in hydrogen bioreactors or enzyme-catalysts to 
use in bioinspired nanostructures for hydrogen production.
    In 2003, the administration launched the Climate Change Research 
Initiative (CCRI) to focus research on areas where substantial progress 
in understanding and predicting climate change, including its causes 
and consequences, is possible over the next 5 years. In fiscal year 
2007, BER will contribute to the CCRI from four programs: Terrestrial 
Carbon Processes, Climate Change Prediction, ARM, and Integrated 
Assessment. Activities will be focused on (1) helping to resolve the 
North American carbon sink question (i.e., the magnitude and location 
of the North American carbon sink); (2) deployment and operation of a 
mobile ARM Cloud and Radiation Testbed facility to provide data on the 
effects of clouds and aerosols on the atmospheric radiation budget in 
regions and locations of opportunity where data is lacking or sparse; 
(3) using advanced climate models to simulate potential effects of 
natural and human-induced climate forcing on global and regional 
climate and the potential effects on climate of alternative options for 
mitigating increases in human forcing of climate; and (4) developing 
and evaluating assessment tools needed to study costs and benefits of 
potential strategies for reducing net carbon dioxide emissions.
    In fiscal year 2007, BER SciDAC-enabled activities will allow 
climate scientists to gain unprecedented insights into potential 
effects of energy production and use on the global climate system. BER 
will also add a SciDAC component to GTL and Environmental Remediation 
research. GTL SciDAC will initiate new research to develop mathematical 
and computational tools needed for complex biological system modeling 
and for analysis of complex data sets, such as mass spectrometry data. 
Environmental Remediation SciDAC will provide an opportunity for 
subsurface and computational scientists to develop and improve methods 
of simulating subsurface reactive transport processes on ``leadership 
class'' computers.
    Research emphasis within BER's Environmental Remediation Sciences 
subprogram will be focused on issues of subsurface cleanup such as 
defining and understanding the processes that control contaminant fate 
and transport in the environment and providing opportunities for use, 
or manipulation of natural processes to alter contaminant mobility. The 
resulting knowledge and technology will assist DOE's environmental 
clean-up and stewardship missions. Funding for experimental equipment 
recapitalization at the William R. Wiley Environmental Molecular 
Sciences Laboratory (EMSL) at Pacific Northwest National Laboratory 
(PNNL) will be increased in fiscal year 2007.
    BER will also continue in fiscal year 2007 to support fundamental 
research in genomics, medical applications and measurement science, and 
the health effects of low dose radiation. Resources are developed and 
made widely available for determining protein structures at DOE 
synchrotrons, for high-throughput genetic studies using mice, and for 
DOE-relevant high-throughput genomic DNA sequencing. Building on DOE 
capabilities in physics, chemistry, engineering, biology and 
computation, BER supports fundamental imaging research, maintains core 
infrastructure for imaging research, and develops new technologies to 
improve the diagnosis and treatment of psycho-neurological diseases and 
cancer and to improve the function of patients with neurological 
disabilities such as blindness.
High Energy Physics
            Fiscal Year 2006 Appropriation--$716.7 Million; Fiscal Year 
                    2007 Request--$775.1 Million
    The High Energy Physics (HEP) program provides over 90 percent of 
the Federal support for the Nation's high energy physics research. This 
research advances our understanding of how the universe works at its 
most basic level, from the elementary constituents of matter to the 
recently discovered but still mysterious dark energy and dark matter 
that so dominate our universe. Our research aims to solve one of 
Nature's deepest paradoxes: why does the universe appear to be made of 
matter but not antimatter? How can the laws of the atom and those of 
cosmological gravity resolve themselves to Einstein's long-sought 
unified theory of matter and force? HEP provides research facilities 
and advances our knowledge, not only in high energy physics, but 
increasingly in other fields, including particle astrophysics and 
cosmology. Research advances in one field often have a strong impact on 
research directions in another. Technology that was developed in 
response to the demands of high energy physics research has also become 
indispensable to other fields of science and has found wide 
applications in industry and medicine, often in ways that could not 
have been predicted when the technology was first developed. Examples 
include medical imaging, radiation therapy for cancer using particle 
beams, ion implantation of layers in semiconductors, materials research 
with electron microscopy, and the World Wide Web. The accelerator 
technologies of high-power X-ray light sources, from synchrotron 
radiation facilities to the new coherent light sources, are all derived 
from high energy physics accelerator technology.
    The U.S. HEP program in fiscal year 2007 will continue to lead the 
world with forefront user facilities at the Fermi National Accelerator 
Laboratory (Fermilab) and SLAC that help answer the key scientific 
questions outlined above, but these facilities are scheduled to 
complete their scientific missions by the end of the decade. Thus, the 
longer-term HEP program supported by this request begins to develop new 
world-leading facilities in targeted areas (for example, neutrino 
physics) that will establish a U.S. leadership role in these areas in 
the next decade. Further, HEP has prioritized current R&D efforts to 
select those which will provide the most compelling science 
opportunities in the coming decade within the available resources. For 
these reasons, the highest priority R&D effort is the development of 
the proposed International Linear Collider (ILC), and this request 
significantly advances the ILC R&D program. In making these decisions 
HEP has carefully considered the recommendations of the High Energy 
Physics Advisory Panel (HEPAP) and planning studies produced by the 
U.S. scientific community, including the National Academy of Sciences.
    R&D in support of the ILC is doubled relative to fiscal year 2006 
to support a U.S. leadership role in a comprehensive, coordinated 
international R&D program, and to provide a basis for U.S. industry to 
compete successfully for major subsystem contracts. The long-term goal 
of this effort is to support a decision on a construction start of an 
international electron-positron linear collider around the end of the 
decade. In fiscal year 2005 an international collaboration called the 
Global Design Effort (GDE) was organized to coordinate the R&D and 
design of a linear collider.
    To provide a nearer-term future HEP program, and to preserve future 
research options, R&D for accelerator and detector technologies, 
particularly in the growing area of neutrino physics, will continue at 
an increased level relative to fiscal year 2006. With Tevatron 
improvements completed, much of the accelerator development effort at 
Fermilab in fiscal year 2007 will focus on the neutrino program to 
study the universe's most prolific particle. The Neutrinos at the Main 
Injector (NuMI) beam allows studies of the fundamental physics of 
neutrino masses and mixings using the proton source section of the 
Tevatron complex. NuMI has begun operations and will eventually put 
much higher demands on that set of accelerators. A program of enhanced 
maintenance, operational improvements, and equipment upgrades is being 
developed to meet these higher demands, while continuing to run the 
Tevatron. Engineering design will begin on a new detector optimized to 
detect electron neutrinos, the Electron Neutrino Appearance (EnA) 
Detector, which will utilize the NuMI beam. Participation will begin in 
a reactor-based neutrino experiment. Meanwhile, R&D will continue for a 
high-intensity neutrino super beam facility and a double beta decay 
experiment. These efforts are part of a coordinated neutrino program 
developed from an American Physical Society study and a joint HEPAP/
Nuclear Sciences Advisory Committee (NSAC) subpanel review.
    In order to exploit the unique opportunity to expand the boundaries 
of our understanding of the matter-antimatter asymmetry in the 
universe, a high priority is given to continued operations and 
infrastructure support for the B-factory at SLAC. Upgrades to the 
accelerator and detector are currently scheduled for completion in 
2006, and our baseline plan is to have B-factory operations conclude in 
fiscal year 2008. We are also engaging with our advisory panels and 
international collaborating partners on the precise timetable for 
completion of B-Factory operations and follow-on data analyses.
    As the Large Hadron Collider (LHC) accelerator nears its turn-on 
date in 2007, U.S. activities related to fabrication of detector 
components will be completed and new activities related to 
commissioning and pre-operations of these detectors, along with 
software and computing activities needed to analyze the data, will 
ramp-up significantly. A scientifically vigorous role for U.S. research 
groups in the LHC physics program will continue to be a high priority 
of the HEP program.
    In order to explore the nature of dark energy, support for R&D on 
competitively-selected dark energy space-based mission concepts, 
including the Super Nova/Acceleration Probe (SNAP), will be 
significantly increased in fiscal year 2007. SNAP will be a mission 
concept proposed for a potential interagency sponsored experiment with 
NASA, the Joint Dark Energy Mission (JDEM). This joint mission will 
provide important new information about the nature of dark energy that 
will in turn lead to a better understanding of the birth, evolution, 
and ultimate fate of the universe. In fiscal year 2007, R&D will also 
be supported for ground facilities (in cooperation with NSF) and/or a 
variety of space-based facilities which could provide independent and 
complementary measurements of the nature of dark energy. Advice from 
the scientific community will be solicited to aid in selecting the 
particular concepts to be developed.
    In fiscal year 2005, the HEP program completed the original SciDAC 
programs in the areas of accelerator modeling and design, theoretical 
physics, astrophysics, and applying grid technology. Each of these 
projects has made significant strides in forging new and diverse 
collaborations (both among different disciplines of physics and between 
physicists and computational scientists) that have enabled the 
development and use of new and improved software for large-scale 
simulations. To build on these successes, the HEP program will re-
compete its SciDAC portfolio in fiscal year 2006 to obtain significant 
new insights through computational science into challenging problems 
that have the greatest impact in HEP mission areas.
Nuclear Physics
            Fiscal Year 2006 Appropriation--$367.0 Million; Fiscal Year 
                    2007 Request--$454.1 Million
    The Nuclear Physics (NP) program is the major sponsor of 
fundamental nuclear physics research in the Nation, providing about 90 
percent of Federal support. NP builds and operates world-leading 
scientific facilities and state-of-the-art instrumentation to study the 
evolution and structure of nuclear matter, from the smallest building 
blocks, quarks and gluons, to the stable elements in the Universe 
created by stars. Key aspects to these studies are understanding how 
the quarks and gluons combine to form the nucleons (proton and 
neutron), what are the properties and behavior of nuclear matter under 
extreme conditions of temperature and pressure, and what are the 
properties and reaction rates for atomic nuclei up to their limits of 
stability. Results and insight from these studies are relevant to 
understanding how the universe evolved in its earliest moments, how the 
chemical elements were formed, and how the properties of one of 
Nature's basic constituents, the neutrino, influences astrophysics 
phenomena such as supernovae. Nuclear physics also has had great impact 
on human life. Knowledge and techniques developed in pursuit of 
fundamental nuclear physics research are extensively utilized in our 
society today. The understanding of nuclear spin enabled the 
development of magnetic resonance imaging for medical use. Radioactive 
isotopes produced by accelerators and reactors are used for medical 
imaging, cancer therapy, and biochemical studies. Advances in cutting-
edge instrumentation developed for nuclear physics experiments have 
relevance to technological needs in combating terrorism. The highly 
trained scientific and technical personnel in fundamental nuclear 
physics that are a product of the program are a valuable human resource 
for many applied fields.
    The fiscal year 2007 budget request increases support for 
operations and research by 21 percent compared to fiscal year 2006. At 
this funding level, overall operations of the four National User 
Facilities and research efforts at universities and laboratories are 
supported at near optimal levels. This will allow researchers to make 
effective progress towards the program's scientific goals and 
milestones. In fiscal year 2007 modest funding is provided for generic 
exotic beam R&D directed towards development of capabilities for 
forefront nuclear structure and astrophysics studies and to understand 
the origin of the elements from iron to uranium.
    When the Universe was a millionth of a second old, nuclear matter 
is believed to have existed in its most extreme energy density form 
called the quark-gluon plasma. Experiments at the Relativistic Heavy 
Ion Collider's (RHIC) at Brookhaven National Laboratory (BNL) are 
searching to find and characterize this new state. These efforts will 
continue in fiscal year 2007, with increased support. NP, together with 
the National Aeronautics and Space Administration (NASA), begins 
construction of a new Electron Beam Ion Source (EBIS) to provide RHIC 
with more cost-effective, reliable, and versatile operations. Research 
and development activities, including the development of an innovative 
electron beam cooling system for RHIC, are expected to demonstrate the 
feasibility of increasing the luminosity or collision rate of the 
circulating beams by a factor of 10. In addition to RHIC efforts, the 
High Energy Density Physics activities include NP contributions to 
enhance the heavy ion triggering and measurement capabilities of LHC 
experiments under construction and the accompanying research program at 
universities and laboratories. Experiments at the LHC would permit 
measurements of the earliest highest energy density stage in the 
formation and development of matter at different conditions than those 
created at RHIC. The interplay of the different research programs at 
the LHC and the ongoing RHIC program will allow a detailed tomography 
of the hot, dense matter as it evolves from the ``perfect fluid'' (a 
fluid with zero viscosity) discovered at RHIC.
    Operations of the Continuous Electron Beam Accelerator Facility 
(CEBAF) at Thomas Jefferson National Accelerator Facility (TJNAF) in 
fiscal year 2007 will continue to advance our knowledge of the internal 
structure of protons and neutrons, particularly a unique property 
called ``confinement'' that binds together their fundamental 
constituents, particles called quarks and gluons. By providing 
precision experimental information concerning the quarks and gluons 
that form the protons and neutrons, the approximately 1,000 
experimental researchers that use CEBAF, together with researchers in 
nuclear theory, seek to provide a quantitative description of nuclear 
matter in terms of the fundamental theory of the strong interaction, 
Quantum ChromoDynamics. In fiscal year 2007, the accelerator provides 
beams simultaneously to all three experimental halls and Project 
Engineering Design (PED) activities begin on the 12 GeV CEBAF Upgrade. 
This cost-effective upgrade would allow for a test of a proposed 
mechanism of ``quark confinement''--one of the compelling unanswered 
puzzles of physics.
    Efforts at the Argonne Tandem Linear Accelerator System (ATLAS) at 
ANL and the Holifield Radioactive Ion Beam Facility (HRIBF) at ORNL 
will be supported in fiscal year 2007 to focus on investigating new 
regions of nuclear structure, studying interactions in nuclear matter 
like those occurring in neutron stars, and determining the reactions 
that created the nuclei of the chemical elements inside stars and 
supernovae. The GRETINA gamma-ray tracking array, currently under 
fabrication, will revolutionize gamma ray detection technology and 
offers dramatically improved capabilities to study the structure of 
nuclei at ATLAS, HRIBF, and elsewhere. The Fundamental Neutron Physics 
Beamline (FNPB) under fabrication at the SNS will provide a world-class 
capability to study the neutron decay properties, leading to a refined 
characterization of the weak force. Investments are made to initiate 
the fabrication of a neutron Electric Dipole Moment experiment, to be 
sited at the FNPB, in the search for new physics beyond the Standard 
Model.
    The Nuclear Physics program funds SciDAC programs in the areas of 
theoretical physics (National Computational Infrastructure for Lattice 
Gauge Theory), astrophysics (Shedding New Light on Exploding Stars: 
TeraScale Simulations of Neutrino-Driven Supernovae and their 
Nucleosynthesis), and grid technology (Particle Physics Data Grid 
Collaborative Pilot). In fiscal year 2006 proposal applications will be 
evaluated for new or renewal SciDAC grants.
    The Low Energy subprogram and the Theory subprogram, through their 
activities at the Nuclear Data Center, will support increased basic 
research efforts relevant to advanced nuclear fuel cycle issues. These 
subprograms will support nuclear data efforts and selected experiments 
that will lead to improvements in nuclear reaction cross-sections 
needed to calculate with reduced uncertainties the transmutation 
behavior for proposed advanced fuel cycles.
Fusion Energy Sciences
            Fiscal Year 2006 Appropriation--$287.7 Million; Fiscal Year 
                    2007 Request--$318.9 Million
    The Fusion Energy Sciences (FES) program advances the theoretical 
and experimental understanding of plasma and fusion science, including 
a close collaboration with international partners in identifying and 
exploring plasma and fusion physics issues through specialized 
facilities. The FES program supports research in: plasma science; 
magnetically confined plasmas; advances in tokamak design; innovative 
confinement options; nonneutral plasma physics and High Energy Density 
Physics (HEDP); and cutting edge technologies. FES also leads U.S. 
participation in ITER, an experiment to study and demonstrate the 
sustained burning of fusion fuel. This international collaboration will 
provide an unparalleled scientific research opportunity with a goal of 
demonstrating the scientific and technical feasibility of fusion power. 
Fusion is the energy source that powers the sun and stars. Fusion power 
could play a key role in U.S. long-term energy plans and independence 
because it offers the potential for plentiful, safe and environmentally 
benign energy.
    The site selection for the international ITER Project, Cadarache, 
France, in the European Union, was a major six-party decision on June 
28, 2005, at a Ministerial-level meeting in Moscow, Russia. 
Negotiations continued throughout the Fall of 2005, which led to the 
ITER parties (a) approving and welcoming the designated Director 
General Nominee chosen to lead the ITER organization, (b) approving and 
welcoming India into the ITER negotiations as a full non-host ITER 
party, and (c) completing the text of the draft ITER Agreement. In 
accordance with the Energy Policy Act of 2005, and as determined during 
the Fall 2005 ITER negotiations, the ITER Agreement directly addresses 
the following EPAct requirements:
  --(i) clearly defines the U.S. financial contribution to construction 
        and operations (as well as deactivation and decommissioning), 
        as well as any other project costs associated with the project,
  --(ii) ensures that the share of high-technology components of ITER 
        that are manufactured in the United States is at least 
        proportionate to the U.S. financial contribution to ITER,
  --(iii) ensures, by virtue of the in-kind contribution procurement 
        approach, that the United States will not be financially 
        responsible for cost overruns in components manufactured by 
        other ITER parties,
  --(iv) guarantees the United States full access to all data generated 
        by ITER,
  --(v) enables U.S. researchers to propose and carry out an equitable 
        share of experiments on ITER,
  --(vi) provides the United States with a role in all collective 
        decision-making related to ITER, and
  --(vii) describes and defines the process for discontinuing and 
        decommissioning ITER and the U.S. role in that process.
    The U.S. Contributions to ITER project is being managed by the U.S. 
ITER Project Office (USIPO), established as a Princeton Plasma Physics 
Laboratory (PPPL)/Oak Ridge National Laboratory (ORNL) partnership. The 
fiscal year 2007 request for the U.S. Contributions to ITER Major Item 
of Equipment (MIE) project maintains the overall Total Project Cost 
funding cap of $1,122,000,000. The U.S. effort will be consistent with 
the other ITER parties in the pace of starting the long lead 
procurements, in providing increased numbers of personnel to the ITER 
Organization, and in providing cash for common expenses. The profile is 
preliminary until the baseline scope, cost, and schedule for the MIE 
project are established, and the Director General Nominee and ITER 
Organization have achieved a standard mode of operation.
    In support of ITER and U.S. Contributions to ITER, FES is placing 
increased emphasis on its national burning plasma program--a critical 
underpinning to the fusion science in ITER. FES plans to enhance 
burning plasma research efforts across the U.S. domestic fusion 
program, including: ITER R&D support both in physics and technology and 
exploring new modes of improved or extended ITER performance; 
developing safe and environmentally attractive technologies necessary 
for ITER; exploring fusion simulation efforts that examine the complex 
behavior of burning plasmas in tokamaks; carrying out experiments on 
our national FES facilities with diagnostics and plasma control that 
can be extrapolated to ITER; and integrating all that is learned into a 
forward-looking approach to future fusion applications.
    The Energy Policy Act of 2005 Sec. 972(c)(5)(C) requires the 
Secretary of Energy to provide ``a report describing how United States 
participation in the ITER will be funded without reducing funding for 
other programs in the Office of Science (including other fusion 
programs) . . . ''. The Department's fiscal year 2007 budget provides 
for healthy increases for all programs within the Office of Science and 
supports the ITER request of $60,000,000 almost entirely from new funds 
in the Fusion Energy Sciences (FES) budget request.
    The Director of the Office of Science has stated that the FES 
program in the Office of Science will reasonably bear at least some of 
the cost of building ITER from within its budget and that ITER will not 
unduly harm funding of other Office of Science research programs. The 
Department expects that the $1.122 billion ITER funding profile could 
have some effect on the overall allocation of funds, both within the 
FES program and within the Office of Science, in future budgets. This 
has been and will continue to be the standard practice for funding 
large, capital-intensive projects within DOE. Nevertheless, as 
demonstrated by this fiscal year 2007 request, the Office of Science 
can fund ITER while maintaining healthy funding for other research 
programs.
    The research and facility operations funding for the three major 
facilities will increase from the fiscal year 2006 level. Operations at 
the largest facility, DIII-D, will increase from 7 weeks in fiscal year 
2006 to 12 weeks in fiscal year 2007, while operations at C-Mod at MIT 
and NSTX at PPPL will each increase by 1 week over fiscal year 2006, to 
15 and 12 weeks respectively. A new baseline was established in July 
2005 for the National Compact Stellarator Experiment (NCSX), a joint 
PPPL/ORNL advanced stellarator experiment being built at PPPL. It 
results in a 14-month delay in the schedule with completion in July 
2009 and a new TEC of $92,401,000. The fiscal year 2007 request 
supports the new baseline. Funding for the FES SciDAC program will 
increase in fiscal year 2007 to continue development of tools that 
facilitate international fusion collaborations and initiate development 
of an integrated software environment that can accommodate the wide 
range of space and time scales and the multiple phenomena that are 
encountered in simulations of fusion systems. Within SciDAC, the Fusion 
Simulation Project is a major initiative involving plasma physicists, 
applied mathematicians, and computer scientists to create a 
comprehensive set of models of fusion systems, combined with the 
algorithms required to implement the models and the computational 
infrastructure to enable them to work together.
    Other changes include redirections in fusion theory, High Energy 
Density Physics, research in heavy ion beam science, plasma technology 
and materials research, and experimental plasma research. 
Congressionally-directed, non-defense research at the Atlas pulsed 
power facility is discontinued in fiscal year 2007.
Science Laboratories Infrastructure
            Fiscal Year 2006 Appropriation--$41.7 Million; Fiscal Year 
                    2007 Request--$50.9 Million
    The mission of the Science Laboratories Infrastructure (SLI) 
program is to enable the conduct of DOE research missions at the Office 
of Science laboratories by funding line item construction projects to 
maintain the general purpose infrastructure and the clean up for reuse 
or removal of excess facilities. The program also supports Office of 
Science landlord responsibilities for the 24,000-acre Oak Ridge 
Reservation and provides Payments in Lieu of Taxes (PILT) to local 
communities around ANL-East, BNL, and ORNL.
    In fiscal year 2007, SLI will initiate funding for four 
construction projects: the Seismic Safety Upgrade of Buildings, Phase 
I, at the Lawrence Berkeley National Laboratory (LBNL); the 
Modernization of Building 4500N, Wing 4, Phase I, at ORNL; the Building 
Electrical Services Upgrade, Phase II, at the ANL; and Renovate Science 
Lab, Phase I, at BNL. Funding for the PNNL Physical Sciences Facility 
is requested in the National Nuclear Security Administration's (NNSA's) 
Nuclear Non-Proliferation R&D program for fiscal year 2007. This 
project is cofunded by the Office of Science, NNSA, and the Department 
of Homeland Security. The demolition of the Bevatron at LBNL is funded 
at $14.0 million.
Workforce Development for Teachers and Scientists
            Fiscal Year 2006 Appropriation--$7.1 Million; Fiscal Year 
                    2007 Request--$10.9 Million
    The mission of the Workforce Development for Teachers and 
Scientists (WDTS) program is to provide a continuum of educational 
opportunities to the Nation's students and teachers of science, 
technology, engineering, and mathematics (STEM).
    The Laboratory Science Teacher Professional Development (LSTPD) 
program increases to expand participation from 108 teachers in fiscal 
year 2006 to 300 in fiscal year 2007. The Faculty Sabbatical activity 
was initiated in fiscal year 2005 for faculty from Minority Serving 
Institutions (MSI) and reduced in fiscal year 2006 due to feedback from 
MSI faculty who expressed their inability to participate in sabbatical 
programs and a preference for shorter fellowship-type opportunities. 
Fiscal year 2007 participation will be reduced to two faculty members. 
The Science Undergraduate Laboratory Internship (SULI) programs will be 
increased to add approximately 55 students. The Albert Einstein 
Distinguished Educator Fellowship and the National and Middle School 
Science Bowls will all continue.
Science Program Direction
            Fiscal Year 2006 Appropriation--$159.1 Million; Fiscal Year 
                    2007 Request--$170.9 Million
    Science Program Direction (SCPD) enables a skilled, highly 
motivated Federal workforce to manage the Office of Science's basic and 
applied research portfolio, programs, projects, and facilities in 
support of new and improved energy, environmental, and health 
technologies. SCPD consists of two subprograms: Program Direction and 
Field Operations.
    The Program Direction subprogram is the single funding source for 
the Office of Science Federal staff in headquarters responsible for 
managing, directing, administering, and supporting the broad spectrum 
of Office of Science disciplines. This subprogram includes planning and 
analysis activities, providing the capabilities needed to plan, 
evaluate, and communicate the scientific excellence, relevance, and 
performance of the Office of Science basic research programs. 
Additionally, Program Direction includes funding for the Office of 
Scientific and Technical Information. The Field Operations subprogram 
is the funding source for the Federal workforce in the Field 
responsible for management and administrative functions performed 
within the Chicago and Oak Ridge Operations Offices, and site offices 
supporting the Office of Science laboratories and facilities.
    In fiscal year 2007, Program Direction funding increases by 7.4 
percent. Most of the increase will support an additional 25 FTEs for 
program management positions, to address recent committee of visitor 
recommendations and to manage the increase in the research activities 
in the fiscal year 2007 budget. The increase also supports a 2.2 
percent pay raise; an increased cap for SES basic pay; other pay-
related costs such as the government's contributions for employee 
health insurance and Federal Employees' Retirement System (FERS); 
escalation of non-pay categories, such as travel, training, and 
contracts; and increased e-Gov assessments and other fixed operating 
requirements across the Office of Science complex. Finally, the 
increase will cover requirements not requested in previous budget 
requests, including travel expenses of Office of Science Advisory 
Committee members and requirements related to Appendix A of OMB 
Circular A-123, Management's Responsibility for Internal Control.
Safeguards and Security
            Fiscal Year 2006 Appropriation--$68.0 Million; Fiscal Year 
                    2007 Request--$71.0 Million
    The Safeguards and Security (S&S) program ensures appropriate 
levels of protection against unauthorized access, theft, diversion, 
loss of custody, or destruction of DOE assets and hostile acts that may 
cause adverse impacts on fundamental science, national security or the 
health and safety of DOE and contractor employees, the public or the 
environment. The Office of Science's Integrated Safeguards and Security 
Management strategy encompasses a tailored approach to safeguards and 
security. As such, each site has a specific protection program that is 
analyzed and defined in its individual Security Plan. This approach 
allows each site to design varying degrees of protection commensurate 
with the risks and consequences described in their site-specific threat 
scenarios.
    The fiscal year 2007 budget will ensure adequate security posture 
for Office of Science facilities by protecting fundamental science, 
national security, and the health and safety of DOE and contractor 
employees, the public and the environment. Fiscal year 2007 includes 
funding necessary to protect people and property at the 2003 Design 
Basis Threat (DBT) level. In fiscal year 2007, an increase in funding 
for the Cyber Security program element is being requested to begin to 
address the promulgation of new National Institute of Standards and 
Technology (NIST) requirements which are required by the Federal 
Information Security Management Act (FISMA) to improve the Federal and 
an Office of Science laboratory cyber security posture.

                               CONCLUSION

    I want to thank you, Mr. Chairman, for providing this opportunity 
to discuss the Office of Science research programs and our 
contributions to the Nation's scientific enterprise. On behalf of DOE, 
I am pleased to present this fiscal year 2007 budget request for the 
Office of Science.
    This concludes my testimony. I would be pleased to answer any 
questions you might have.

    Senator Domenici. First I want to commend you for your 
approach to enhancing this office and trying to get it on the 
path that is declared by the President and those who pursue it 
with vigor, doubling the office. We have all wanted it to move 
in the direction you are talking about. Let us hope you can 
keep it going that way. That has tremendous, tremendous 
consequences for our children and our country's future and 
nobody quite figures that when you use all these words, but 
believe it. That is what it is. It is developing the capacity 
to make sure that the brains of our young people of the future 
are able to be truly fully developed in competition with the 
world. That is what we are talking about.
    Now, having said that, you heard some concerns. Does any 
one or two things pop out that you would like to answer right 
now, or would you like to move on?
    Dr. Orbach. I think I would prefer to move on and respond 
to questions.
    Senator Domenici. All right, we are going to start 
questioning, and we are going to start with the Senator from 
Colorado.

                  NATIONAL RENEWABLE ENERGY LABORATORY

    Senator Allard. Thank you, Mr. Chairman.
    I want to start out with the National Renewable Energy 
Laboratory in Colorado. As you know, you are aware of its 
importance and I know that you are also aware of the 
difficulties we have had there. I guess the question that comes 
to mind is, do you believe that the Department of Energy has 
all the tools it needs to see that a situation like that never 
occurs again?
    Mr. Garman. No, sir I do not. I have begun to explore with 
the subcommittee staff a new tool that might help us in the 
future have greater flexibility. This tool involves being able 
to get at some old program dollars that are nonperforming or 
underperforming and get them in the game so that we can have 
more flexibility to prevent that sort of thing from happening 
again. The subcommittee staff has been very accommodating in 
listening to our ideas and we think we can come up with----
    Senator Allard. I appreciate your efforts in that regard. 
What portion of your budget is disbursed based on earmarks and 
what portion is given under grants?
    Mr. Garman. It varies by program. In the Office of Energy 
Efficiency and Renewable Energy, which has received a 
significant amount of attention, the biomass program is 
earmarked or subjected to congressionally directed spending of 
57 percent of the total program dollars, geothermal 16 percent, 
solar 17 percent, wind 33 percent, freedom car and vehicle 
technologies 11 percent. Those are the major earmarked 
programs.
    Senator Allard. What was the last one?
    Mr. Garman. Freedom car and vehicle technologies.
    Senator Allard. I see. What was the percentage on that?
    Mr. Garman. 11 percent.
    I do not want to be misconstrued. Some of the 
congressionally directed projects are very good projects and 
let me say that out front. We have some projects, excellent 
work, excellent R&D outputs, and the only negative thing that 
anyone in the program could say about it is that it was not 
competitively awarded.
    But we do subject these programs to merit review after the 
fact and we evaluate them and we try to get the very best R&D 
outputs that we can out of them. So I do not want this to be 
misconstrued--they have presented us with some challenges, but 
they also have presented us with some opportunities.
    Senator Allard. Well, I thank you for your willingness to 
try and work with the committee and work with our office.
    Senator Domenici. What is an earmark? How did he--did he 
define an ``earmark'' there?
    Mr. Garman. No, sir.
    Senator Domenici. Could we do that, Senator? Would that be 
all right, if I asked him what that means?
    Senator Allard. Yes, go ahead.
    Mr. Garman. Our definition of an earmark is, in its 
simplest form, when the recipient of the funding is designated.
    Senator Domenici. Is designated by the law?
    Mr. Garman. In the report language, the report language 
will specify projects, and our consultations with the 
subcommittee staff will designate the recipient in many cases.
    Senator Allard. Thank you for following up on that, Mr. 
Chairman.

                       ROCKY FLATS MINERAL RIGHTS

    Let me also go on to Rocky Flats. Last year Congress passed 
legislation at my behest that authorized the Secretary of 
Energy to purchase some mineral rights at Rocky Flats. This 
authority was provided just for 1 year and I understand that 
minimal progress has been made so far. What is the Department 
of Energy's plan for purchasing the essential mineral water 
rights there at Rocky Flats and when do you expect this 
transaction to be completed?
    Mr. Garman. I am going to have to take that question for 
the record, Senator, and get back to you on that quickly, if I 
can.
    [The information follows:]

                         Rocky Flats Litigation

    I have not personally been involved with this case, but I am 
informed that the Department's lawyers' oversight of it has been quite 
proactive. They advise that there is no evidence that properties in the 
vicinity of Rocky Flats suffered extensive damage. Just last year the 
Agency for Toxic Substances and Disease Registry (ATSDR) issued a 
report concluding that the ``studies and sampling data generated by 
numerous parties, including the U.S. Environmental Protection Agency 
(EPA), the Colorado Department of Public Health and Environment 
(CDPHE), the U.S. Department of Energy (DOE) and its contractors and 
local community groups, universities and private researchers . . . 
paint a consistent picture of the public health implications of 
environmental contamination'' near Rocky Flats, and that picture is 
that ``past, current and future exposures are below levels associated 
with adverse health effects.'' In fact, ATSDR reported that ``estimated 
total exposures to radiation from the soil . . . are 3,000 times lower 
than the average exposures to ionizing radiation experienced by United 
States residents.''

    Senator Allard. I would appreciate it if you would. This is 
something that is really important to get that wrapped up. We 
want to transfer that over to the Department of the Interior to 
be managed as a refuge. That cannot happen until we get this 
issue resolved. So it is important, I think, that we get this 
taken care of. I have received some information regarding that 
perhaps maybe it was not progressing along as it should and if 
it is not I would like to know why and what the hold-up is on 
that. So the sooner you get back to us, I would appreciate it 
very much.
    Mr. Garman. Yes, sir.
    Senator Allard. With regard to--it looks like my time has 
expired, Mr. Chairman.
    Senator Domenici. Thank you very much.
    Senator Murray.

                             PNNL 300 AREA

    Senator Murray. Thank you, Mr. Chairman.
    Dr. Orbach, as you know, when we talk about Hanford cleanup 
the plant and tank farms are the first thing that comes to 
everybody's mind, but there is a lot of work to be done across 
the complex and progress is being made. The river corridor 
cleanup, which includes the 300 Area, is moving forward better 
than expected right now, but there is an obstacle out there. As 
you well know, the PNNL has a lot of capabilities. It is housed 
in that 300 Area and it has to exit those facilities and 
relocate.
    The Capability Replacement Laboratory project has been 
devised to meet that need and the goal of that project is to 
keep both the cleanup at the Hanford site and the PNNL work on 
track. In December of last year, the CD-1 for this project 
which outlined a schedule for the PNNL exit was approved. But 
it now appears that this schedule is going to cause a delay in 
the river corridor cleanup. Are you familiar with that issue?
    Dr. Orbach. Yes, I am, Senator. I believe that the 2015 
date is still on track and that we can meet that commitment. 
The change has been a consequence of the complexity of the 
facilities required to receive the workers who are in the 300 
Area. But we now have a robust plan with both the----
    Senator Murray. You do understand it is going to be a cause 
of delay now without additional funding?
    Dr. Orbach. The funding is actually on track. There has 
been a delay, that is correct. But the target date still 
remains.
    Senator Murray. Well, within the 2007 budget request all of 
the funding is contained in the NNSA budget. Can you explain 
why there are no Office of Science funds that are requested?
    Dr. Orbach. Yes. It is simply a question of phasing. The 
Office of Science funding in terms of our responsibility will 
show up in the fiscal year 2008 budget and it is just a 
question of when--which agency puts its funding in. But as I 
say, we have a phased structure for both the Office of Science, 
NNSA, and also DHS to create the facilities that will be 
required to move people from the 300 Area.
    Senator Murray. So there is no delay due to the PNNL exit 
schedule?
    Dr. Orbach. There is no delay with regard to the river 
corridor commitment. There is a--we have extended the closing 
of the 300 Area so that we can----
    Senator Murray. To accommodate that.

                         WASTE TREATMENT PLANT

    Dr. Orbach. To accommodate a proper facility, yes.
    Senator Murray. Well, I want to keep working with you on 
this because it obviously has a big impact on our State, and I 
appreciate the work we have done on that.
    Mr. Chairman, I see that Assistant Secretary Rispoli is in 
the office and I wanted to ask him a question, with your 
permission, about the EM budget regarding the vit plant and if 
he could just tell us where we are on that and give us a quick 
update on how we are going to address the new cost and schedule 
while he is here, if you would not mind.
    Senator Domenici. I have no objection, unless you all do.
    All right. If there is none, let us--state your name and 
glad to have you here.
    Mr. Rispoli. Thank you, Mr. Chairman. Mr. Chairman, members 
of the subcommittee, I am Jim Rispoli, the Assistant Secretary 
for Environmental Management.
    Senator, I would be happy to take your question.
    Senator Murray. Thank you. I just wondered if you could 
give us while you are here a quick update of where we are on 
the vit plant. We all know there is a long road ahead of us. I 
appreciate the better communications we are having this year. 
But if you could just give the committee a quick update on 
where we are on this, how we are going to address the technical 
issues, and where we stand on the new cost and schedule 
baseline.
    Mr. Rispoli. I would be happy to. As you all know, the 
budget that was submitted as part of the President's budget did 
not yet incorporate any of the new cost estimates that are 
being worked, but subsequent to the budget being delivered, in 
fact within just the several weeks afterward, we began 
delivering reports to the appropriate committees and 
subcommittees in the Congress as well as to the delegation of 
Washington State.
    We have now got approximate costs that have not been 
validated by the Corps of Engineers, which is doing that effort 
for us. So quickly where we are: The estimates that we have to 
date are in the range of $10 to $11 billion. That does not 
necessarily include risk that is not within the control of the 
contractor or the Department. That is called programmatic risk 
and that is addressed in some of the reports that we have 
delivered. But we are in that range.
    Meanwhile, the Army Corps of Engineers is reviewing a 
technical estimate for the project cost and schedule that 
amounts to, I am told, 87 looseleaf volumes of information. 
They will be complete with the evaluation of the whole estimate 
late this summer, in time for us to communicate that to the 
Congress.
    But the figures that I gave you are the range that we are 
talking about. We have worked very vigorously to address the 
issues. They are broken into three categories. One of them is 
project management types of issues and we have taken strong 
action based upon several of the reports that we have received 
and provided to you and the subcommittee and the committees. We 
have taken vigorous action to improve our project management 
both at the site and at the headquarters by addition of key 
qualified personnel. For example, we have certified--the 
project manager there has been certified by an independent 
board last December as qualified to be in charge of that 
project. We have added people in the project management area at 
both headquarters and the field, including contracts type of 
people.
    The technical issues, as you know, are very complex, and we 
did deliver a report to this subcommittee and other committees 
and your delegation. We have identified through bringing in a 
team of best and brightest from all segments of the industry, 
not just Bechtel but their competitors, academia, other areas, 
and have identified the technical issues. The team, the 
technical team, believes all of these can be solved, but the 
good point is that we have them on the table now so that we can 
solve them now and do not have to confront them downstream as 
new surprises at that point.
    So we consider this to be a major accomplishment that we 
have brought in this team of very accomplished people to look 
at the technical issues.
    Senator Murray. I really appreciate that and I appreciate 
your staying in touch with us and communicating on this. 
Obviously it is going to have an impact. But my concern is now 
the vit plant is going to be delayed, but the cleanup of the 
tanks is still a really pressing issue, and how are we going to 
pay for that when there is no funding for supplemental 
treatment in the budget?
    Mr. Rispoli. Yes, I understand the question. The question 
is that we have been evaluating a supplemental treatment that 
is called bulk vitrification. I have visited the site several 
times to see the mockup of how that process would work. Our 
intent is that this summer--I should mention that I have spoken 
with executives at both CH2M Hill, which is the prime 
contractor, as well as to corporate officers of AMEC, which is 
the subcontractor that is doing that.
    Our objective is to get a cost and schedule estimate--we 
call it a baseline--this summer that we can then independently 
validate. We do not know----
    Senator Murray. Including the treatment?
    Mr. Rispoli. Including that--this is for the supplemental 
treatment.
    We do not know at this point what the spending profile 
would be because we do not yet have the cost and schedule 
estimate in our hands to then be able to independently review.
    Senator Murray. But you expect to have that for us by the 
end of the summer so we can know what this committee 
appropriations bill will need----
    Mr. Rispoli. We expect to have that information from the 
AMEC subcontractor through the prime contractor by the end of 
the summer, so that we can then independently evaluate it and 
determine the best path forward. In the mean time, however, the 
funds that we have got right now are being used to develop that 
cost and schedule estimate.
    As I have stated before for the record, we need 
supplemental technology. As you know, the vitrification plant 
on the low activity waste side is not designed to handle 100 
percent of the low activity waste. So we need the supplemental 
technology. We believe this is the viable approach to do it. We 
just need the cost and schedule estimates that reflect the 
solution. They have technology issues as well that are being 
solved, and once we have that and validate it we will be able 
to communicate that to the Congress to come up with a path 
forward for that.
    Senator Murray. Well, I am concerned that we appear to have 
a gap in funding and I want to pursue that. Mr. Chairman, I 
know my time is up, but I would like to continue to have a 
conversation with you about this, because this really is a 
critical issue for all of us.
    Mr. Rispoli. Yes, Senator, I understand your point.
    Senator Murray. Thank you.
    Mr. Rispoli. Thank you.

                      COAL RESEARCH AND FUTUREGEN

    Senator Domenici. Well, let me just say to all of you--and 
I guess this is a tribute to the top of the Department--I 
really am convinced that you are all trying to get this job 
done, and I am very impressed and enthused that we will get 
there, in spite of budget problems.
    Let me take an issue that I want to try to understand. 
Could we bring Mr. Jarrett to sit by you, Mr. Under Secretary, 
and let me talk about coal, wherever he could fit there. Now, 
let me address the issue of coal in terms of what we are trying 
to do. We have a very serious problem in the transportation 
area of the United States, of using too much fuel that comes 
from overseas that are derivatives of oil. We have this big 
commodity over here in the United States called coal, which 
obviously scientifically is not too far afield from oil. They 
are very similar.
    There are two things we have been trying to do. No. 1, we 
have been trying to clean up the coal as we burn it, and we all 
call that clean coal technology. No. 2, we have been trying to 
convert it to fuel, to liquid, so it can be used for fuel. The 
Nazis did a little bit of that to save them at the end of the 
war, right. You know that.
    Mr. Jarrett. Yes.
    Senator Domenici. It was not very terrific, good, but they 
did do some. We know how to do it. We have not moved very 
dramatically.
    The last one has to do with global warming. We are working 
on the issue of how do you get carbon out of the coal as you 
burn it, as you convert it. There are different technologies, 
but we have been throwing around the word ``sequester'' or get 
the carbon out.
    Now, whoever can best explain to me on the record here for 
5 minutes, what is going on in terms of these three areas? 
Could you start with the last one first, the one of 
sequestration, sometimes referred to as America's FutureGen 
project or program, or an effort to develop an IGCC facility? 
Now, where are we with reference to this in terms of the money 
we have and the program you have put before us as you have 
attempted to assimilate this?
    I understand you are new, but you understand well, and I 
compliment you and congratulate you for taking the job, Mr. 
Jarrett.
    Do you want to do that? Do you want to let him do that?
    Mr. Garman. Sure.
    Senator Domenici. All right.

                          CARBON SEQUESTRATION

    Mr. Jarrett. There are a lot of questions in there, but I 
will start with the issue of carbon sequestration. As you know 
from conversations you and I have had previously, I am a strong 
believer that we need to advance our clean coal technology 
programs in this country because it is cheap, it is domestic, 
and it is plentiful. We can produce power from coal today and 
we do. Fifty-two percent of our electricity today comes from 
coal. We believe that coal will maintain or actually grow its 
market share in the decades to come, based on all of the 
projections.
    The obstacle that we have with developing our coal 
resources are environmental, and I will say up front that today 
we have the technology to utilize our coal and take care of the 
environment. What we cannot do is do it at an affordable cost. 
So all of our clean coal technology programs are aimed at 
learning how to develop and utilize that vast resource that we 
have in this country in an affordable way.
    Many of the problems have been resolved. Many of the 
environmental problems are well on the way to being resolved. 
But I think the Holy Grail for the coal program is to figure 
out the ways to eliminate carbon gas emissions from the 
combustion of coal in an affordable way. We are working on a 
couple of technology paths forward to do that. We are looking 
at more efficient ways to remove carbon gases in the existing 
fleet of pulverized coal powerplants that we have in this 
country.
    Senator Domenici. I understand. Now just let me interrupt. 
Between you and the Secretary, just tell the committee. Our 
objective is to use Government to the extent we can to move 
this technology forward. We are not a sole player. The private 
sector wants to do this, too, right?
    Mr. Jarrett. That is absolutely correct.
    Senator Domenici. And it would be a great big victory for 
them. They have got a giant future use for coal and they are in 
business, and they have told climate change people, we have 
made a breakthrough, right?
    Mr. Jarrett. Yes.
    Senator Domenici. Now, what are we in this budget--how much 
money do we have directed at this effort between the two of 
you? And are we doing the right thing, and did you cut the 
program or did you move money around, and are we still moving 
ahead with FutureGen or whatever? Please tell me. A lot of 
people come to our offices, his and mine, telling us they have 
got a solution to this and you all just will not listen to 
them. They have been in there to see you and they have got this 
idea.
    What is our role in all this? You have got my gist here. 
Just talk at me for 5 minutes. What are we doing about all 
this?
    Mr. Garman. There are some common threads in here that we 
are looking to exploit. First of all, it has become clear that 
gasification of coal is a pathway that leads us to both 
liquefaction, that can give us liquid fuels, it can lead us to 
opportunities to sequester carbon dioxide, it can lead us to 
opportunities to make a cleaner-burning conventional coal plant 
through IGCC technology.
    So gasification technology is something the Department has 
worked on for a long time and there are commercial gasifiers 
available today, just as there are commercial liquefaction 
plants available today. The South Africans have been making 
liquid fuels from coal. Syntroleum, an outfit that is working 
today, has technology to do that.
    The real issue is there are some technology risks, but 
there are financial risks. These are more expensive. As I think 
Senator Bond was commenting, there are ways to make diesel fuel 
from coal today if you can finance something on the order of a 
$6 billion plant for a 150,000 barrel-a-day capacity.
    Getting financing for that is very tough in this market. If 
Wall Street was convinced that oil was going to stay high, then 
it might be easier. But it is a $35 or $40 per barrel threshold 
most likely in getting that kind of financing. So in that 
respect the loan guarantee authority could play an important 
role in getting these technologies, which we think will work 
and that they are proven, into the marketplace so we can get 
some experience.
    There are companies, AEP among them, who is committed to 
building integrated combined cycle coal plants, gasifying the 
coal. There are companies, BP among them, who are looking at 
gasifying petroleum coke and sequestering the carbon dioxide in 
an enhanced oil recovery activity. These are all good things 
that are going on out there.
    We think through a combination--FutureGen is really in my 
mind the project that tries to package these technologies 
together and demonstrate them as packaged technology in a way 
that has not been done before. Thus it is very important to us 
and we want to continue that work.
    We also need to get the Office of Science more involved 
with us in the carbon sequestration aspect. They are going to 
do it and they are excited about the prospect, because we have 
to be able to convince the public that when we capture and 
sequester carbon dioxide in a saline aquifer or in an unminable 
coal seam or in an old oil and gas field that it is going to 
stay there, that it is not going to come out 10 or 50 or 100 
years in the future.
    Senator Domenici. We understand.
    Mr. Garman. That is a scientifically rigorous process that, 
frankly, we need Dr. Orbach and his folks' help with.
    So what I am trying to do is to paint a picture that we 
think, through partnerships with the private sector, 
partnerships with the Office of Science, we think that we are 
building a program that can demonstrate these technologies and 
validate the costs and get them ready for the private sector to 
take up.
    The decision as to whether the private sector is going to 
do that in large part is dependent on their guesstimates of 
what you are going to do with respect to carbon.
    Senator Domenici. They are going to make a marketplace 
decision.
    Mr. Garman. That is right. If they think carbon is going to 
cost $30 a ton, they will go in one direction. If they think 
carbon emissions are going to be free, they will go in another, 
in my view.
    Senator Domenici. Mr. Jarrett, any further comments?
    Mr. Jarrett. No.
    Senator Domenici. Okay, good.
    Senator Allard. Mr. Chairman, could I ask a question on 
that?
    Senator Domenici. Yes.
    Senator Allard. If we have carbon left over, these 
synthetic carbons, is that a potential use for that carbon? 
These are very lightweight, very tough materials.
    Mr. Garman. Yes.
    Senator Allard. Is that a place for the carbon?
    Mr. Garman. Yes. Yes, it is. We do not necessarily have to 
take the carbon dioxide and put it in the ground. We can--it is 
potentially possible to take this carbon from that stream and 
use it to make carbon fiber, to lightweight vehicles and what-
not.
    There are also interesting opportunities--and this is again 
part of why I am so excited about getting the Office of Science 
involved in this. There are things that we are not looking at 
that have great potential. An interesting example is there are 
folks in Arizona that are fooling around with the notion of 
taking a carbon dioxide stream directly from a coal plant, 
pumping it into brine water in the desert in between large 
panels of glass, growing algae, which flourishes in the brine 
water, exposed to all this carbon dioxide, and taking that 
algae twice a day, harvesting it twice a day because it grows 
so quickly, and turning that into ethanol, which is an 
interesting and novel approach.
    This is something that other folks are looking at. Now that 
we are in essence getting the Office of Science more integrated 
with us, which is long overdue and a great credit to Dr. 
Orbach, these are the sorts of things that we hope we are able 
to get involved in.
    Senator Domenici. But all this is not tomorrow. People are 
asking if we are going to get this done, are we going to get 
somebody to propose to build a $6 billion IGCC plant within the 
next year, do we have a program in place that might facilitate 
somebody doing that.
    Mr. Garman. That was a coal liquefaction plant. The IGCC 
plant could come in below that.
    Senator Domenici. Well, tell me which one would be first?
    Mr. Jarrett. Well, Senator, the IGCC plants are being 
proposed----
    Senator Domenici. Pilots.
    Mr. Jarrett [continuing]. Today as we speak. But the coal 
liquefaction plants, there are proposals or ideas that come to 
me from across the country in the 2 months that I have been 
there, and they all have a common problem. We have the 
technology to produce, to go coal-to-liquids, to produce ultra-
clean jet fuel and diesel fuels and other petroleum products 
out there. But the stumbling block for all of them is 
financing, and whether it is a $6 billion plant or--I think the 
first several will be much more modest than that.
    But the problem with all of them is the uncertainty about 
what is going to happen with world oil prices, because we know 
that right now--we know we can produce fuel from coal at the 
low $40 per barrel equivalent for a first- or second-of-a-kind 
plant, and that by the time we get to a fourth- or fifth-of-a-
kind plant we will have that technology worked so that we can 
produce fuel at about $35 a barrel.
    But the concern is when you make that kind of a substantial 
capital investment and then world oil prices were to drop to 
some number below that. Then you have threatened the financial 
viability of that plant.
    Senator Domenici. Can you get straight one last question in 
my mind, then I am off this issue. I am sorry it took so long. 
Which is going to come first in these plants that we are going 
to build? Which commercial consortia or company is going to get 
the first one and what is it going to be? Coal liquefaction for 
diesel fuel, is that what it is going to be, diesel and related 
products?
    Mr. Jarrett. I believe that coal-to-liquids and commercial 
deployment of IGCC plants for producing electricity will happen 
simultaneous. We know that there are IGCC commercial plants on 
the drawing boards today.
    Senator Domenici. And we have within the Department now the 
facilities to be helpful if the loan guarantee works? That is 
one instrumentality to help with the financing. And secondly 
the issue of base price, a bottom line price. If the United 
States were to adopt a statute establishing a bottom line for 
the price of crude oil at $35 right now and said that is going 
to be it, or $40, and said we are going to take care of any 
price that varies from that, that would shake this industry up, 
would it not?
    Mr. Jarrett. My personal view is that would shake the coal-
to-liquids industry up in a hurry. But we are having 
conversations with that industry and asking them the very 
questions that you are asking right now. That is really as a 
follow-up to the meeting you and I had not too long ago to talk 
about those questions.
    Mr. Garman. My personal view is that IGCC plants will come 
first, simply because there are folks that know that if they 
propose to build a pulverized coal plant they will be sued, and 
they are just looking at IGCC as a cleaner--they will not 
capture and sequester carbon dioxide, but it will be a cleaner 
burning plant that is more efficient than a pulverized coal 
plant.
    The interesting thing is that there is a lot of--and I want 
to make this point. There is a lot of DOE past technology work 
in this area. These gasifiers--this is a success story for the 
Department and it is technology that this Department has been 
involved in and you have been involved in promoting for 
decades. And finally we are at the threshold of seeing these 
technologies coming----
    Senator Domenici. But is it the right thing to happen now?
    Mr. Garman. I believe it is. I believe it is time for our 
technologies to enter the market.
    Senator Domenici. Tell me which one it is going to be, 
again?
    Mr. Garman. I think it is going to be integrated gasified 
combined cycle coal plants that will come into the market.
    Senator Domenici. What are they going to do with the 
carbon?
    Mr. Garman. These first ones will not capture carbon 
dioxide. They will simply gasify the coal for burning in a 
turbine and generating electricity. These first plants will not 
capture carbon dioxide, but they are more efficient than 
pulverized coal plants.
    Senator Domenici. Are these not a little more expensive?
    Mr. Garman. Yes, sir, they are, and that is why they have 
not been built. Compared to a pulverized coal plant, they are 
more expensive.

                          GASIFIER TECHNOLOGY

    Senator Allard. That brings up, Mr. Chairman, a 
quantitative question I wanted to ask you. How much natural gas 
can be brought on line with a lot of these technologies? Is 
there research and testing? Do you have any idea?
    Mr. Garman. I would have to take that one for the record to 
give you a good authoritative answer.
    [The information follows:]

                          Gasifier Technology

    The National Coal Council examined that question and in their March 
2006 report to the Secretary: ``Coal: America's Energy Future.'' One of 
their key findings was that using coal to produce natural gas could 
provide an alternative to at least 15 percent of America's annual 
natural gas consumption by 2025, or the equivalent of 4 trillion cubic 
feet (Tcf) per year. They projected that this additional supply would 
use an additional 340 million tons of coal per year. This amount of gas 
is roughly equal to Energy Information Administration's (EIA's) 
projection of liquefied natural gas imports in 2025.
    Currently, the Great Plains Gasification plant in Beulah, ND 
produces 148 million standard cubic feet per day (54 billion standard 
cubic annually) of substitute natural gas (SNG) from North Dakota 
lignite. This plant, which came on line in 1984, uses older fixed-bed 
gasification technology. The SNG produced in the plant is added into 
the existing natural gas pipeline network to heat thousands of homes 
and businesses in the United States. It should be noted that carbon 
dioxide generated in the process is sent via a 330 km pipeline to 
Saskatchewan, where it is used for enhanced oil recovery--the Weyburn 
project. This is one of the Carbon Sequestration Leadership Forum 
projects which DOE has been sponsoring along with other international 
participants. This carbon dioxide remains sequestered in the oil field, 
and therefore this plant provides an early preview of the kind of 
advanced near zero-emission coal technology we are developing in the 
DOE coal program.
    The technology to produce SNG is commercially available today. The 
DOE research and development program in coal gasification is focused on 
the development of advanced technology to reduce cost, improve 
efficiency, and enhance reliability when used in future near zero-
emission coal plants. These developments are also expected to provide 
significant benefits for plant configurations that produce SNG alone or 
in conjunction with other products such as electricity.

    Senator Allard. Okay.
    Senator Domenici. Senator, I took a lot of time. Do you 
want to take a little more time?

                     ROCKY FLATS LITIGATION CLAIMS

    Senator Allard. Just one more question. That was one of 
them, and this fits in here very naturally. This has to do 
again with Rocky Flats. The former weapons contractors, Dow and 
Rockwell, and the property owners nearby have been engaged in a 
protracted legal discussion about whether these property owners 
will be compensated for damage caused by the environmental 
contamination at Rocky Flats.
    Last February a jury awarded the property owners, in my 
view an incredible amount of money, over $550 million in 
damages. I understand the contractors are now appealing the 
decision. It seems to me that the only people who are really 
benefiting from this are the attorneys. They have already 
collected more than $100 million in legal fees.
    Because Dow and Rockwell now are going to be indemnified by 
the Federal Government, I guess the real losers are going to be 
the American taxpayers. To what extent are you involved with 
this case and do you have any evidence of extensive damage from 
the operation?
    Mr. Garman. Because this is a matter in active litigation, 
I would--and I apologize for doing this--but I would like to 
take that for the record. I am not a lawyer and it is dangerous 
for me to comment on issues in active litigation.
    [The information follows:]

                       Rocky Flats Mineral Rights

    The Department of Energy (DOE), in partnership with the U.S. Fish 
and Wildlife Service (USFWS) and Natural Resources Trustees (Trustees), 
has established and is currently executing a plan for purchasing the 
essential mineral rights at Rocky Flats.
    The acquisition strategy for the mineral rights will be conducted 
in two phases. First, the Trust for Public Lands (TPL), a nonprofit 
group specializing in real estate acquisitions for Federal Government 
entities, will purchase the mineral rights from willing owners at fair 
market value, and will perform any appraisal updates required. In the 
second phase, these rights will be purchased by the DOE, with the funds 
provided in the Energy and Water Development Appropriations Act for 
fiscal year 2006.
    At this time, TPL, DOE, and USFWS are finalizing a letter of 
agreement, stipulating the process for contacting willing sellers and 
ascertaining fair market values.
    DOE and the USFWS fully expect to accomplish the acquisition of 
mineral rights well within the timeline mandated by Congress, and in 
harmony with the local stakeholder community.

    Senator Allard. Well, give us some thoughts, if you would, 
in response, to the extent that you think you can.
    Mr. Garman. Yes, sir.
    Senator Allard. I understand your point on this.
    Thank you, Mr. Chairman.

                   LOS ALAMOS NEUTRON SCIENCE CENTER

    Senator Domenici. Thank you very much.
    Dr. Orbach, it is not well known that the Office of Science 
funds a considerable amount of research at some of the NNSA 
laboratories, which is the defense nuclear-related 
laboratories. The Office of Science supports around $70 million 
worth of research at Los Alamos, including work at the Neutron 
Science Center, called LANSCE. That is one of the most powerful 
linear accelerators in the world. Albeit quite old, it is still 
one of the most powerful.
    As you know, NNSA, the principal sponsor of LANSCE, is 
considering a major accelerator refurbishment project to secure 
lifetime extension of the facility. If NNSA goes forward with 
this project, would the Office of Science continue to support 
science research at LANSCE?
    Dr. Orbach. Mr. Chairman, yes. The Lujhan Center, which is 
our pulsed neutron center feeding off of LANSCE, has been a 
very successful exercise in the last few years and we have 
every intention of continuing that support. It will be a very 
helpful adjunct to the SNS.

                      ALTERNATE SOURCES OF ENERGY

    Senator Domenici. The President has made curing our 
Nation's addiction to oil as a top priority. In fact, the 
President's statement about that was one of the most exciting 
things that he said, and also setting a goal for reduction in 
the amount of oil that we might have to import. That has caused 
everybody around here to want to double that goal. I am kind of 
beset by Senators wanting a new law that will do more than that 
and we are wondering about how we are going to do that.
    But one of the--I am aware of the fact that the Department 
has provided $40 million to support nuclear energy research and 
that the Energy Policy Act authorized $49 million to be used by 
the Office of Science to support what is called integrated 
bioenergy R&D with regard to cellulosic biomass. What promising 
technologies are on the horizon that will enable us to turn 
corn stalks and wood waste into ethanol, and what other types 
of research in your office support the reduction of our use of 
fossil fuels?
    Dr. Orbach. We have a broad portfolio which ranges from 
alternate sources of energy through ITER, for example, also 
through efficiencies, lighter materials and so on, that we 
think will increase efficiencies and reduce consumption of 
energy. But to be very direct, we also believe that our 
programs that involve genomics, genomics GTL, will address the 
bioenergy opportunities directly. We have a commitment to 
expand and create new research centers for bioenergy that will 
be focused on cellulosic ethanol.
    In addition, we have every reason to believe that we can 
mimic nature's structures in photosynthesis to go from solar to 
fuels, as well of course as photovoltaics. So we are examining 
a wide variety of really transformational approaches to 
reducing our dependency on oil.

                     INTERNATIONAL LINEAR COLLIDER

    Senator Domenici. I have a number of questions about the 
genome program, the genome project that you have got going, but 
I think I am going to submit them. They require a very long 
introduction to the question and I do not want to take that 
much time.
    But I want to move to a rather interesting subject matter, 
at least between you and me. Perhaps nobody else in the world 
cares. It relates to the International Linear Collider. This 
year the--no, I am not going to do that one either. I am going 
to give you that one to answer, okay.
    I am going to talk with you a little about the Linear No 
Threshold Standard. Have you got that, Linear No Threshold 
Standard. Last year we discussed this Linear No Threshold Model 
research that the Department was assembling. I understand that 
there is a French study that was published last year that 
challenged the validity of the Linear No Threshold model that 
we were putting together. The effect--all of this has to do 
with the effect of low dose radiation, and the French study 
urged a total reevaluation of this model.
    Am I correct so far?
    Dr. Orbach. Yes, you are, sir.
    Senator Domenici. As it applied to low doses of ionized 
radiation, below 10 rems. Now, first let us stop for a minute. 
Regardless of whether there is any big application to this 
subject or not, what does ``10 rems'' mean?
    Dr. Orbach. It is a measure of the effect on biological 
material of radiation, either alpha or gamma radiation, and the 
energy deposited in the material itself. The energy deposited 
is measured in terms of rads. It is in ergs per gram. Then that 
is converted to rems to take account of the fact that the 
different kinds of radiation have different effects on the 
biological material.
    Ten rems is our maximum for what we call low dose 
radiation.
    Senator Domenici. So if we are trying to say you can use 
something that is dispensing with radiological material that is 
going to let that get out, we have a standard that says it is 
safe if it is 10 or under; is that what you are saying?
    Dr. Orbach. No, our standards are actually much lower than 
that.
    Senator Domenici. Okay, tell me about it?
    Dr. Orbach. The epidemiology research that we have seen 
does not show significant or any cancerous effects for 
radiation of 10 rems or less. But the actual amounts of 
radiation that are used as our standards are orders of 
magnitude lower than that value.
    Senator Domenici. But it is an attempt at quantifying?
    Dr. Orbach. Yes. Our program is completely consistent with 
the French observations and we are now, I believe, at a point 
where we can work with the EPA to begin to reassess the 
radiation risks that low dose radiation might involve.
    Senator Domenici. We jumped ahead here. I was trying to get 
here on the record how various people in their daily lives are 
exposed. So I get in an airplane tonight in New York and I fly 
all the way across the continent to Los Angeles. I am exposed 
to radiation, right?
    Dr. Orbach. That is correct.
    Senator Domenici. And it is different than the radiation 
that I am going to be exposed to if I stand on the ground here, 
certainly at sea level. And I fly all the way across and I get 
exposed to radiation, but nobody thinks there is anything wrong 
with that, right?
    Dr. Orbach. That is correct.
    Senator Domenici. How much am I exposed to when I fly?
    Dr. Orbach. My memory is about 10 millirems. That is--the 
round trip I took from New York to London, is of the order of 
10 millirems, which would be a hundredth of a rem or a 
thousandth of the 10 rems.
    Senator Domenici. Okay. And you did it round trip, it is 
double?
    Dr. Orbach. Yes.
    Senator Domenici. Now, let us proceed. The reevaluation of 
this model that I had gotten to and then we got sidetracked, 
the model applies to low doses. This is significant for a 
variety of reasons. But the most significant is that we base 
all our standards and regulations on levels far below 10 rems; 
correct statement?
    Dr. Orbach. That is correct.
    Senator Domenici. In fact, we set our cleanup levels which 
we just referred to over here for Colorado's cleanup, we set 
those standards for cleanup levels at levels below 10 and some 
cleanup levels are under 20 millirems, which you have just 
described how much smaller that is, far below the natural 
background of between 200 and 400 millirems.
    Dr. Orbach. That is correct.
    Senator Domenici. Is this study consistent with the data 
that the Department has collected under the Linear No Threshold 
Standard, and are we confident that the conclusion will change 
current regulations based on science if it is flawed?
    Dr. Orbach. We are convinced that the Linear No Threshold 
Model is incorrect at the low dosages of 10 rems or less. We 
are convinced that the scientific data has accumulated, 
certainly in recent years, to require a reevaluation of the 
risk of low dose and especially low dose rate radiation, and we 
are convinced that the epidemiology at 10 rems or less needs to 
be investigated to determine whether there is any evidence of 
cancerous consequences.
    Senator Domenici. How much resistance are you getting and 
from whom for this rather dramatic statement that you are 
making here?
    Dr. Orbach. Well, first of all, we do our own research, 
thanks to the support of this committee and the appropriations 
over the last 5 years. So our peer-reviewed research projects 
that are done by researchers all over our country have been 
accumulating, especially in recent years, to enable me to make 
this statement.
    But then last spring a remarkable set of documents emerged 
from the French Academies of Science. The French Academy of 
Science and the French Institute--the French Academy of 
Nuclear--sorry--of Medical Research published a joint statement 
which was consistent with our own research findings and in fact 
made categorical remarks that the Linear No Threshold Model is 
not based on evidence that exists in the literature today at 
low dosage.
    Senator Domenici. We might one day have a half day hearing 
on what this means, what it could mean.
    Dr. Orbach. I would be pleased to put such a hearing 
together.
    Senator Domenici. If this is applied, the reduction in the 
cost to society could be in the hundreds of billions of dollars 
over time because we are wasting money protecting ourselves 
from what we are now told needs no protection. Am I reading it 
right?
    Dr. Orbach. I would agree. I would agree with that 
conclusion.

                      HYDROGEN POWERED FUEL CELLS

    Senator Domenici. Mr. Secretary, one of the major elements 
of the bill that we passed, title VIII, was a road map that 
included revised funding and milestones for the development of 
hydrogen and fuel cells under the freedom car and the fuel 
partnership. Can you locate that in your mind or in your 
recollection, material there? The provision as a result of 
extensive collaboration between hydrogen and fuel stakeholders 
and policymakers, in which the research and development needs 
of the DOE and the industries that were participating were 
extensively evaluated. I think you might have even been a party 
to that.
    Section 8 reflects Congress' determined will that we wanted 
the President's 2010 and 2015 goals for hydrogen-powered fuel 
cells. Can you discuss how the statutory directives of EPAct 
2005 figured in the 2007 budget and can you tell us how DOE 
plans to meet these goals?
    Mr. Garman. The statutory requirements in the Energy Policy 
Act comport very, very closely, almost precisely, with our road 
mapping plan and our long-term and short-term program plans. We 
have fallen behind in some areas. Our overall goal is still on 
track. Our goal is to be able to put industry in a position to 
make a commercialization decision with the technical barriers 
solved by 2015.
    Because of some shortfalls in appropriations and 
congressionally directed spending, we have let some aspects 
slip. Last year I think we got about 60 percent of our 
request----
    Senator Domenici. I have to excuse myself. I have a phone 
call here. There is nobody else here, so do not talk.
    It looks like that was a most opportunistic moment in time. 
Others had to leave also. Now we are going to take just 5 more 
minutes and give you about 100 questions to answer.
    Mr. Garman. Okay. I will keep the answers very brief then.
    Senator Domenici. Okay. Finish that answer.
    Mr. Garman. We have had some programs and some projects 
slip, but not to the extent that we are moving away from our 
2015 goal.
    Senator Domenici. You mentioned in that statement that part 
of that problem was because of budget shortfalls. I would 
assume that there are some technological problems along with 
it, or is it all money?
    Mr. Garman. Well, there are some technical challenges that 
confront us in achieving the full-blown hydrogen vision, and I 
will just illustrate one and it is another illustration of how 
we think the Office of Science can be helpful. One of the most 
challenging aspects of the program is carrying enough hydrogen 
on board a fuel cell vehicle to give that vehicle the kind of 
range that a consumer expects, 300, 350 miles.
    Today, with current technology the fuel cell vehicles that 
we have on the road go about 150 miles. That will not fly with 
the consumer. So we are looking at a variety of different 
technologies, perhaps involving metal hydrides, carbon 
nanotubes, a variety of different materials and structures that 
could hold a lot more hydrogen in a manner that is closer to 
ambient temperatures and pressures, so that you do not have to 
use high pressure tanks and some of the other things that, 
frankly, might be of concern to a consumer.
    Just last week in SLAC, I was able to see some work that 
was being done there to look at how to stack more hydrogen in 
the carbon nanostructures so that, instead of going to a 
conventional fueling station the way we do today, you just 
might pick up a canister of hydrogen-impregnated carbon at Wal-
Mart and stick that in your car and that would be your fuel.
    So there are all kinds of novel ideas and approaches that 
we are looking at. Our partners, such as General Motors and 
Ballard and others, have been doing some very good work. This 
money is being well leveraged in my view with private sector 
dollars in achieving these goals.

                   YUCCA MOUNTAIN LICENSE APPLICATION

    Senator Domenici. The last question has to do with the 
Yucca Mountain license application. Secretary Bodman testified 
that the Department anticipates providing a new schedule for 
license application and repository operations by early summer. 
The budget justification material indicates among the tasks to 
be accomplished in the 2007 budget is defending the license 
application before the NRC.
    My question is twofold. Does the budget request assume that 
a license application will occur in 2007 and, if not, would the 
request need to be adjusted? And second, what is the 
Department's current estimate for the cost of the rail line to 
Yucca Mountain?
    Mr. Garman. We do not expect to be in a position to submit 
a license to the NRC in fiscal year 2007, and we will submit 
some materials. Of course, obviously when our schedule later 
this summer is there we will try to lay it out for you as 
clearly as we can.
    The cost of the rail line is highly variable based on the 
final routing and of course the cost of steel, which lately is 
accelerating. But it could be a $2 billion railroad.
    Senator Domenici. Two billion dollars?
    Mr. Garman. Yes, sir, it could.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Domenici. If it could, it probably will. If it 
could, it probably will be more.
    In any event, I am sorry we cannot go on. We have many more 
questions. Your testimony will be reviewed and we will have 
some questions on how we might adjust some dollars to 
accomplish some of the things you could not do. I want to close 
by commending you once again, you and all of the staff that is 
here with you, for your hard work, and thanks for your patience 
today.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

            Questions Submitted by Senator Pete V. Domenici

                        GENOMES TO LIFE PROGRAM

    Question. Dr. Orbach, as you know, genomics research has been a top 
priority of mine for some time. I am very proud that the Department of 
Energy took the lead in mapping the human genome. This knowledge 
provides us the opportunity to understand many biological questions. I 
am very supportive of the Genomes to Life program, although I am 
frustrated with the slow pace of deployment of the four facilities. I 
believe 20 years is too long to wait to integrate the four planned 
facilities.
    I understand the National Research Council has reviewed the 
Department's current plan and they have made several recommendations to 
accelerate the implementation of genomics research within the 
Department. The National Academies has suggested the Department 
consider integrating the capabilities of each of the four facilities 
into one facility to address one or two Department core missions such 
as bio-energy or carbon sequestration. I believe this report has made 
good recommendations that will save the Department time and money and 
allow research to begin immediately.
    Dr. Orbach, what do you think of these recommendations? Do you 
believe the Department will realize the same scientific benefit by 
integrating the four facilities into one?
    Answer. The National Academies report was an excellent report. Its 
recommendations played a key role, along with the announcement of the 
President's Advanced Energy Initiative, in our recent decision to 
recast plans for the GTL facilities. The Department believes that the 
new facilities plan for vertically integrated centers focused on bio-
energy research, based partly on recommendations from the NRC panel, 
should indeed be able to accomplish the GTL program's objectives more 
rapidly and at reduced cost.
    Question. The Department has already issued a Request for Proposals 
on the first of four buildings. In light of this report, will you 
cancel the RFP and reissue an RFP based on these recommendations?
    Answer. On March 28, 2006, the Office of Science cancelled its 
Funding Opportunity Announcement (FOA) for a planned GTL Facility for 
the Production and Characterization of Proteins and Molecular Tags, 
issued in early January. The Office of Science plans to issue a new 
solicitation in the coming months for one or more centers for bio-
energy research. Centers focused on systems biology research into 
carbon sequestration and bioremediation are also being considered for 
future years.
    Question. The Academies recommended the Department pursue one or 
two core missions and support research into bio-energy, environmental 
cleanup and carbon sequestration. What grand challenge do you believe 
is the highest research priority?
    Answer. In response to the President's Advanced Energy Initiative's 
mandate for a strong focus on bio-energy, with an emphasis on producing 
research results that will help reduce the Nation's dependence on 
fossil fuel, GTL's energy mission is the highest research priority.

                   LOS ALAMOS NEUTRON SCIENCE CENTER

    Question. Dr. Orbach, It is not well known that the Office of 
Science funds a considerable amount of research at some of the NNSA 
laboratories. The Office of Science supports around $70 million worth 
of research at Los Alamos, including work at the Los Alamos Neutron 
Science Center, (LANSCE), one of the most powerful linear accelerators 
in the world.
    As you know, the NNSA, the principal sponsor of LANSCE is 
considering a major accelerator refurbishment project to secure a 
significant lifetime extension of the facility.
    If NNSA goes forward with this project, would the Office of Science 
continue to support scientific research at LANSCE?
    Answer. The Office of Science would likely continue to support 
merit-based scientific research at LANSCE, particularly at the Manuel 
Lujan Jr. Neutron Scattering Center.

                      SCIENCE AND ENERGY RESEARCH

    Question. Dr. Orbach, the President has made curing our Nation's 
addition to oil a top priority. I am aware of the fact that the 
Department has provided $40 million to support nuclear energy research. 
Also the Energy Policy Act authorized $49 million to be used by the 
Office of Science to support integrated bio-energy R&D.
    With regard to cellulosic biomass, what promising technologies are 
on the horizon that will enable us to turn cornstalks and wood waste 
into ethanol?
    Answer. We believe that our efforts in the GTL program to harness 
the powers of the microbial world hold the key to making the production 
of cellulosic ethanol cost-effective on a large scale. Advances in GTL 
genomics and systems biology approaches offer potential for improving 
the enzyme systems that deconstruct plant cell walls and increasing the 
yield of ethanol-producing microorganisms. In addition, systems biology 
potentially provides powerful tools for enhancing the productivity of 
biomass crops by optimizing them for industrial processing.
    Question. What other type of research is your office supporting to 
reduce our usage of fossil fuels?
    Answer. In energy supply, the Office of Science is funding fusion 
energy research, which holds the promise of an economic, 
environmentally benign energy source. We are also funding research in 
solar to fuels in which we will try to mimic photosynthetic processes 
in plants. To reduce energy consumption, we fund combustion research to 
improve combustion efficiency; research to create lightweight, high-
strength materials that improve efficiency; research into materials for 
transportation, storage and use of hydrogen; and high-performance 
computers that reduce the time-to-market for new, efficient engine 
designs (virtual prototypes) and can lead to airframe and vehicle 
designs that improve aerodynamics.

                      LINEAR-NO-THRESHOLD STANDARD

    Question. Dr. Orbach, last year we discussed the liner-no-threshold 
model research the Department is assembling. I understand a French 
study was published last year that challenged the validity of the 
Liner-No-Threshold model in assessing the effect of low dose radiation 
and urged the re-evaluation of this model as it applies to low doses of 
ionizing radiation below 10 rem. This is significant for a variety of 
reasons, but the most significant is that we base all of our standards 
and regulations on levels far below 10 rem. In fact we set our cleanup 
levels at under 20 millirems--far below the natural background of 
between 200-400 millirems.
    Is this study consistent with the data the Department has collected 
on the Linear-No-Threshold standard?
    Answer. Yes, the French Report is consistent with much of the data 
coming from the DOE Low Dose Program. The new data does not support a 
linear extrapolation to low doses for cancer risk.
    Question. If you are confident of these conclusions how will this 
change current regulations that are based on a flawed scientific model?
    Answer. Our understanding of the biological responses to low dose 
radiation exposure has increased dramatically. The new data directly 
challenge major underlying assumptions originally employed when the 
task of estimating human health risk for low dose exposures was first 
attempted, primarily using A-bomb survival data. I believe that the 
scientific community will rethink risk estimation in light of the newer 
more biologically rigorous assumptions. At the same time, more 
attention will be paid to more relevant epidemiological studies of low 
chronic exposures that mostly show no excess cancers. In the end, EPA 
and other regulatory agencies which have the lead on setting 
regulations will use these new scientific data provided by DOE's Office 
of Science and others.

                       JOINT DARK ENERGY MISSION

    Question. Dr. Orbach, you have consistently argued to sustain our 
scientific leadership in areas where we can and should be the world 
leaders. Unfortunately, I fear we are about to lose our leadership in 
an area where the United States has assembled the best scientific minds 
and maintain the most capable space program. I am referring to the 
joint DOE/NASA Joint Dark Energy Mission which is supported by the 
Office of High Energy Physics and ranked as No. 3 on the 20-year 
Scientific Technology Roadmap. This project will investigate the 
universe to understand the most fundamental questions about energy, 
space and time. In order to fully realize its scientific value we must 
launch a space-based telescope.
    Unfortunately, insufficient funding for this program puts in 
jeopardy the program and is likely to result in other countries picking 
off the assembled scientific and engineering talent.
    Despite the fact that this project was ranked No. 3 in the 
Department's 20-year plan, this project seems to have lost favor within 
the Department and NASA. Why is that? Why isn't the Department fighting 
to maintain this world-class scientific capability?
    Answer. The Joint Dark Energy Mission (JDEM) remains a high 
priority in the Office of Science. In fact, funding for competitively-
awarded dark energy R&D goes up over three-fold in the fiscal year 2007 
President's request. We continue to have discussions with NASA on how 
best to move forward on an interagency basis on JDEM. In February 2005, 
two interagency Federal advisory committees of DOE, NASA, and the 
National Science Foundation established a Dark Energy Task Force as a 
joint subcommittee to advise the agencies on the future of dark energy 
research on the ground and in space. The final task force report should 
be released in May 2006 and we expect that our path forward on dark 
energy studies broadly, and JDEM in particular, could be significantly 
impacted by the recommendations of this distinguished panel.
    Question. How will the Department support the JDEM program as well 
as other large projects, including the work on neutrino detection and 
the Large Hadron Collider?
    Answer. We believe the SC budget request will adequately support 
the JDEM mission as well as other large projects, including the work on 
neutrino detection and the Large Hadron Collider (LHC). As you may 
know, the just-released National Academies report on the future of 
particle physics in the United States, ``Revealing the Hidden Nature of 
Space and Time: Charting the Course for Elementary Particle Physics'', 
recommends that our highest priority should be supporting our LHC 
research program, followed by R&D on the proposed International Linear 
Collider, and then research including dark energy and neutrinos.
    Question. NASA has indicated that a re-plan of the Beyond Einstein 
program, which supports the JDEM program, will be conducted in fiscal 
year 2008-2009 to determine mission need. This would effectively kill 
any opportunity for a space launch for a telescope to support this 
research. Do you agree with this assessment?
    Answer. We had discussions with NASA on this, and we understand 
NASA will have a competition between the Constellation X-Ray 
Observatory (Con-X), Laser Interferometer Space Antenna (LISA), and 
JDEM missions to decide which one could start about 2010. Thus, we 
believe there is still the opportunity for a joint DOE-NASA JDEM 
mission.
    Question. Why isn't NASA supportive of this mission? Has this 
changed the Department's view of this project?
    Answer. We understand that JDEM remains an important part of the 
NASA Beyond-Einstein program but they are limited by funding to only 
moving one of the three missions (Con-X, LISA and JDEM) forward. DOE 
and NASA both are currently supporting mission concept studies. DOE's 
view of JDEM has not changed, and we support the JDEM mission.
    Question. If NASA isn't supportive of this mission why isn't this 
reflected in the budget justification?
    Answer. NASA is supportive of the mission and will be doing a 
competition between Con-X, LISA and JDEM in the 2008-2009 timeframe to 
decide which of the three will go forward about 2010. Both NASA and DOE 
are currently funding mission concept studies.
    Question. How much would it cost for the Department to take over 
this project and fund the space launch without financial support from 
NASA?
    Answer. An extremely crude early cost estimate for the full JDEM 
mission and launch is somewhere in the range of $600 million to well 
over $1 billion, but we would need to carry out a thorough mission 
concept competition and scientific and technical reviews before 
proceeding to a more mature cost estimate. We also expect that the 
soon-to-be-released dark energy task force report (mentioned above) 
could necessitate a re-evaluation of the optimal path forward including 
the appropriate scope and scale of JDEM.

                     INTERNATIONAL LINEAR COLLIDER

    Question. This year, the Large Hadron Collider located in CERN will 
come on-line supporting high energy physics research. In fiscal year 
2007, the DOE will fulfill its funding obligation of $450 million of 
the $6 billion project.
    The budget request includes a request of $60 million, an increase 
of $30 million to support the United States R&D effort to build the 
next generation collider to replace the LHC, which will initiate 
operations this year. The budget justification also supports 
construction studies and siting studies. I understand cost estimates 
for this next generation machine begin at $7 billion.
    Why is the United States rushing to support the next generation 
machine, before the existing state-of-the-art facility has begun 
operations? When does the Department hope to break ground on this new 
machine and where?
    Answer. The International Linear Collider (ILC) and the LHC are 
synergistic from a scientific standpoint. Simply put, the LHC can 
discover that new phenomena exist and the ILC will tell us what they 
are and what they mean. It will likely take another 5 years of R&D 
before we are technically ready to proceed with construction of the 
ILC, should the decision be made in the affirmative on a domestic and 
international basis. The current phase of the ILC is an internationally 
planned and coordinated program of R&D that should result in technical 
demonstrations of all major system components over the next several 
years. Our domestic decision process for the construction phase rests 
primarily on this R&D, the technical cost estimate from the Global 
Design Effort, and on compelling scientific results from the early LHC 
program. The next phase for the ILC would then be a thorough 
multilateral international decision process, ultimately including a 
competitive site-selection process, allocation of roles and 
responsibilities, and so on. It is therefore premature for the 
Department to hazard a guess on when the project could break ground. 
Our current position is that Fermilab would likely be the optimal site 
within the United States.
    Question. How much does the Department expect the International 
Linear Collider to cost and what are the cost share arrangements with 
other countries? Is there a cost the Department believes is too much 
for this facility?
    Answer. We await the Global Design Effort, under Professor Barry 
Barish, to report a credible cost estimate early next calendar year. 
Based on the ITER fusion project, it would be reasonable to expect that 
the host State would shoulder 50 percent of the cost.
    Question. Does the Department intend to compete the siting of this 
new facility among U.S. institutions?
    Answer. Our current position is that Fermilab would likely be the 
optimal site within the United States. The management and operation 
contract for Fermilab will continue to be open for prudent and 
necessary competition.
    Question. Where does this facility rank in the Department's 20-year 
plan?
    Answer. ILC ranks No. 1 in the mid-term epoch.

                    OFFICE OF SCIENCE--20-YEAR PLAN

    Question. Dr. Orbach, in November 2003, the Department put forward 
a 20-year plan entitled ``Facilities for the Future of Science, a 
Twenty-Year Outlook'' This report identified the facilities and mission 
that the Department wanted to pursue in near-, mid- and long-term. The 
selections were reviewed and prioritized by an Office of Science 
Advisory Committee. One argument for this facility was that it would 
establish priorities with clear goals that would help with balancing 
budget priorities and adhere to scientific priorities. One of the 
facilities identified in the plan was the Rare Isotope Accelerator, 
listed as the third priority and a near-term goal. This project 
apparently has been bumped another 5 years into the mid-term.
    Is this project an exception and will the Department continue to 
follow the 20-year plan implemented just a little over 2 years ago?
    Answer. Achieving an optimal balance among the many competing 
priorities for science funding is a formidable challenge. We devote 
substantial effort to achieving this task. Our 2003 publication 
``Facilities for the Future of Science, A Twenty-Year Outlook'' marked 
the first time, to my knowledge, that any government agency either here 
or abroad publicly issued such a long-range planning document on major 
scientific facilities. The Facilities publication culminated many 
months of careful deliberation that consolidated a list of 53 
prospective facilities into a list of 28. The Facilities document 
prioritized the 28 on the basis of ``Importance to Science'', grouped 
into three ``epochs'' on the basis of ``Readiness for Construction.'' 
These epochs are Near-Term, Mid-Term, and Far-Term, spanning the 20 
years. Priorities should be thought of as internal to the respective 
epoch. Comparison of priorities between epochs would be incorrect.
    The purpose of this construction was to recognize that technologies 
change, and that the determination of which epoch a particular facility 
fell into might well change with time. The introduction to the document 
states, in fact: ``We know, however, that science changes. Discoveries 
will alter the course of research and so the facilities needed in the 
future. For this reason, the `Facilities for the Future of Science: A 
Twenty-Year Outlook' should be assessed periodically in light of the 
evolving state of science and technology.''
    Thus, overall, the facilities identified and the priorities set in 
the facilities outlook remain valid. Our prioritization among epochs, 
however, has changed because we could not predict precisely how quickly 
various technologies would develop.
    Question. Have any of the other projects changed in their position 
on the list? If so, why?
    Answer. Yes, the elimination of BTeV last year because it was 
determined that it could not be completed in time to provide meaningful 
results before the Large Hadron Collider starts taking data. And the 
top priority within the Far-Term epoch, the National Synchrotron Light 
Source Upgrade (NSLS II), was placed in that epoch because, at the time 
the facilities outlook was written, it was thought that the technology 
would not be ready for construction for some years. But the technology 
developed more quickly than anticipated, and NSLS II should now be 
regarded as in the Near-Term epoch.

                    TECHNOLOGY TRANSFER COORDINATOR

    Question. The Energy Policy Act of 2005 created the position of a 
Technology Transfer Coordinator. The Coordinator is meant to focus the 
Department's efforts to transition energy technologies developed at the 
National Laboratories into the marketplace. The Act also establishes an 
Energy Technology Commercialization Fund, using a 0.9 percent set-aside 
of funds used for applied energy research and development. I understand 
the Department has not yet acted to comply with these requirements.
    Has the Department determined which Under Secretary will have 
responsibility for enacting these provisions?
    Answer. The Department is studying this provision of EPAct and will 
report back to you when a determination is made.
    Question. Since the Office of Science oversees a larger number of 
National Laboratories than any other office within the Department, 
should the Technology Transfer Coordinator report to the Under 
Secretary of Science?
    Answer. Once the Department has concluded its assessment of the 
EPAct provisions, the Secretary will make a determination whether the 
Technology Transfer Coordinator will report to the Under Secretary for 
Science.
    Question. The provision creating the Energy Technology 
Commercialization Fund applies to the current fiscal year. Will the 
Department be able to account for the use of the funds set-aside for 
the fund for fiscal year 2006?
    Answer. The Department is still assessing this provision and will 
respond once the assessment is complete.
    Question. The same section of the Act requires the Department to 
submit a technology transfer execution plan. What is the status of the 
Department's efforts to develop this plan?
    Answer. The Department is still working on the technology transfer 
execution plan.

                   INDEPENDENTLY FINANCED FACILITIES

    Question. Dr. Orbach, I understand that DOE is trying to address 
aging infrastructure crucial for science at DOE and NNSA laboratories 
through alternative financing such as the use of private third-party 
financing without the upfront cost to the Federal Government.
    What are the DOE plans for supporting and promoting third-party 
financing, and what are the obstacles faced when initiating projects 
such as the Science Complex at Los Alamos National Laboratory?
    Answer. The Department's approach to alternative financing is to 
consider it in the acquisition strategy phase of proposed new shorter-
term projects. The acquisition strategy is developed after the mission 
need is approved. If alternative financing is recommended, then a 
business case must be provided that supports this recommendation. 
General-purpose type facilities with credible private-sector uses 
(e.g., office buildings) are usually best-suited for alternative 
financing.
    Each opportunity is unique and the Department reviews each 
opportunity individually based on its merits. It is not appropriate for 
me to address opportunities that may be under consideration at Los 
Alamos because the facility is under the stewardship of the National 
Nuclear Security Administration.

                        RARE ISOTOPE ACCELERATOR

    Question. The Nuclear Science Advisory Committee was charged in 
2003 to compare the capabilities of the proposed Rare Isotope 
Accelerator (RIA) and the planned GSI facility in Germany. The 
committee concluded that RIA and the GSI were designed for different 
purposes and that each would serve large and distinct user communities.
    Does the Department accept the committee's conclusion that RIA and 
the GSI are not duplicative? If not, what is the reason for 
disagreement with the NSAC assessment?
    Answer. The NSAC assessment found that RIA's rare isotope research 
capabilities were more extensive than those of GSI. The Department 
accepts these findings.

                       INDIA'S INCLUSION IN ITER

    Question. At the December negotiations to complete the 
international agreement on ITER, the delegations welcomed India as a 
full party. With this development, I understand that the parties to 
ITER now constitute over half of the world's population.
    How will the inclusion of India as a full partner in ITER alter 
U.S. financial commitments to the project?
    Answer. The joining of India has not reduced the overall 
contributions of the other parties, but within those contributions it 
has enabled each of the Parties to provide an appropriate funding 
contingency to cover unanticipated costs of the ITER Organization, the 
legal entity responsible for oversight of the construction, assembly, 
operation, and deactivation of the facility.
    Question. How will the inclusion of India as a full partner in ITER 
alter U.S. prospects for the development of new technologies likely 
result in valuable intellectual property?
    Answer. In order for India to be a full partner, the allocation of 
in-kind hardware contributions was renegotiated among the ITER parties. 
The European Union, China, Japan, Korea, Russia, and the United States 
adjusted their high- and lower-tech contributions so that India's 
allocation would also be such a mix. The United States will still be 
providing significant amounts of high-tech hardware with the potential 
to develop valuable intellectual property.

         EXPERIMENTAL PROGRAM TO STIMULATE COMPETITIVE RESEARCH

    Question. The Experimental Program to Stimulate Competitive 
Research (EPSCoR) supports basic research in States that have 
historically received relatively less Federal research funding, in 
particular for University research. EPSCoR funding has been flat in 
recent years, at about $8 million. Under the President's American 
Competitiveness Initiative, Office of Science funding will double over 
the next decade.
    Do you anticipate that EPSCoR funding will remain a constant 
fraction of the overall Office of Science budget, as the total budget 
increases?
    Answer. Yes, EPSCoR funding will at a minimum remain a constant 
fraction of SC budget.

                STANDBY SUPPORT FOR NUCLEAR POWER PLANTS

    Question. The Energy Policy Act of 2005, Section 638 authorized the 
Department to implement ``risk assurance'' as a protection against 
regulatory delays and litigation. This provision provides a $500 
million guarantee for the first two plants.
    How does the Department intend to implement this provision?
    Answer. Consistent with EPAct, the Department is developing a 
rulemaking to provide the procedures and process for implementation of 
the standby support provisions in Section 638, otherwise referred to as 
Federal risk insurance. The Department is on target to meet the 
deadlines established in the legislation and to issue the interim final 
rule by May 6, 2006. The rulemaking is expected be final by the 
legislative deadline of August 2006.
    Question. EPAct authorized the use of both grant funding and loan 
guarantees, both requiring an appropriation. When will the Department 
budget funds to support this activity?
    Answer. The Department is currently evaluating the timing and 
appropriate funding from both grant funding and loan guarantees under 
EPAct.

                           NUCLEAR POWER R&D

    Question. The President has made nuclear power a top priority in 
this budget providing $250 million toward the GNEP program, which 
largely funds advanced fuel cycle activities. This large funding 
commitment seems to contrast with reductions in the Nuclear Power 2010, 
which seeks to support the deployment of new, safer reactors. It also 
runs counter to funding increases for the Nuclear Regulatory 
Commission, which is preparing to review license applications developed 
under the NP2010 program.
    Will the Department be able to fully support all the proposed 
combined operating license applications with this level of funding?
    Answer. Yes. The Nuclear Power 2010 program remains a top 
Departmental priority. The requested level of funding will fully 
support the originally planned proposed combined operating license 
application work scope for fiscal year 2007. The requested funding is 
based on the scope of the work negotiated with the industry in fiscal 
year 2005, when the New Plant Licensing Demonstration projects were 
initiated. The award of the cooperative agreements was later than 
expected, and there has been a slower-than-expected ramp-up of 
activities. As a result, the NP2010 program costs have lagged behind 
our obligated funding resulting in carry over from fiscal year 2005 
into this fiscal year. With the unexpected additional appropriations in 
fiscal year 2006, the NP2010 program anticipates carryover into fiscal 
year 2007 that combined with the budget request will support the 
originally-planned work scope.

                IMPLEMENTATION OF THE ENERGY POLICY ACT

    Question. Mr. Garman, EPAct provided a broad authority to the 
Department to support R&D, but also sought to support the deployment 
and technology validation of specific alternative energy such as 
biomass, clean coal technology, and solar, as well as others. 
Unfortunately, there are a number of demonstration activities, 
including Title 15, ``Ethanol and Motor Fuels'' that didn't receive any 
funding even though Congress authorized over $800 million for grants 
and other cost sharing arrangements to encourage the commercialization 
of biomass conversion technology.
    Can you please explain how and when the Department intends to 
support the Biomass-to-Ethanol programs in Title 15?
    Answer. Our biomass program currently supports the goals of Title 
15 through investments in advanced technologies that will augment 
biofuels production at existing corn wet and dry mills. The program 
also fosters the development of the next generation biorefinery for the 
production of fuels, power, and commodity chemicals from a wide variety 
of feedstocks including the conventional grain crops as well as 
perennial grasses and wood and forest residues.
    As noted in the Statement of Administration Policy (SAP) submitted 
to energy bill conferees on July 17, 2005, ``The House and Senate 
versions of H.R. 6 also include authorization levels that in many cases 
significantly exceed the President's Budget. These authorizations set 
unrealistic targets and expectations for future program-funding 
decisions.'' House and Senate SAPs contained similar language.
    The Department prioritized activities, including those authorized 
under EPAct, that would most contribute to the goal of reducing 
America's growing dependence on foreign oil. The 2007 budget reflects 
the Department's priorities.
    Question. Section 942 also provided production incentives for 
cellulosic biofuels. This activity hasn't been funded either. Can you 
update me on the status of this provision and if the Department will 
provide any funding in the near future? Also, is the Department 
preparing regulations to support this program?
    Answer. Section 942 authorizes the Secretary to use a reverse 
auction to deliver the first billion gallons in annual cellulosic 
biofuels production by 2015. The use of this authorization is timed to 
the first year that 100 million gallons of cellulosic biofuels are 
produced in the United States or in August of 2008. We are reviewing 
the requirements for this program and determining what regulations will 
be required and the schedule for such requirements.

                      CLEAN COAL POWER INITIATIVE

    Question. The budget provides just $5 million toward the Clean Coal 
Power Initiative, down $45 million from the current year levels. This 
program supports the deployment of clean coal technology including 
Integrated Gasification Combine Cycle (IGCC) facilities, which have the 
potential to significantly reduce greenhouse gas emissions. 
Historically, the Department wouldn't go forward with a technology 
solicitation without having secured at least $200 million. At this 
point, there is roughly $50 million available for fiscal year 2006.
    What is the rationale for cutting clean coal research at this 
point?
    Answer. The fiscal year 2007 funding request of $5 million will be 
combined with that from prior appropriations and will go towards the 
accumulation of funds for a future CCPI solicitation. In addition, if 
other clean coal projects do not go forward, then any additional 
funding that becomes available will also be applied towards a future 
CCPI solicitation. Ongoing CCPI projects, FutureGen, and various tax 
incentives including those authorized in the Energy Policy Act of 2005 
continue to provide incentives for demonstration and deployment of 
clean coal technologies with the potential to significantly reduce 
greenhouse gas emissions.
    The budget reduces the addition of new funds to CCPI, so that the 
program can take steps to improve the use of funds already provided for 
projects. As identified in the Program Assessment Rating Tool (PART) 
review, delays in CCPI ongoing projects and selected projects still in 
negotiation have contributed to high unobligated balances, currently 
over $500 million. This is partially a result of lengthy negotiations 
due to the complexity of the projects and statutory requirements to 
provide full funding to projects. In addition, extended negotiations 
over contract terms, private sector difficulty securing adequate 
financing for their cost share, private sector difficulty obtaining 
permits, and other issues have led to significant unobligated balances 
tied to projects or independent components of projects that were 
selected several years ago and have not begun construction.
    Although some degree of unobligated balances are expected, and in 
fact necessary, for forward funded, large scale, long duration, 
demonstration projects, the program also sees unobligated balances tied 
up in projects that are not moving forward to achieve CCPI's goals 
expeditiously and are delaying the benefit of funds appropriated for 
CPPI. The program is working to reduce the time between selection and 
award for projects that are being negotiated for initiation, and the 
time for those projects already awarded but requiring negotiated 
agreements to go to the next budget phase for which funding will be 
obligated. The goal of these improvements in the CCPI process is to 
ensure that projects progress to commencement of construction in a 
timely manner and strengthen the Department's ability to withdraw 
funding from stalled projects. If a project does not go forward or 
continue to the next budget phase, the available funds will be put 
towards a future CCPI solicitation. The program is also working to 
develop processes to ensure consistency of project selection with the 
R&D Investment Criteria and improve contract and project management 
controls to achieve the desired results.
    Question. When do you envision the next technology solicitation?
    Answer. The fiscal year 2007 request for the Clean Coal Power 
Initiative (CCPI) of $5 million, along with funds from the prior 
appropriations, will make available approximately $80 million that 
could go towards the accumulation of funds for a future CCPI 
solicitation. In addition, if other clean coal projects do not go 
forward, then any additional prior year clean coal funding that becomes 
available will also be applied towards the funding for a future CCPI 
solicitation. The decision of when to issue a CCPI solicitation will be 
made in the context of annual budget formulation and will be influenced 
by steps the program is currently taking to improve the use of funds 
already provided for projects and availability of prior year funds from 
projects that may not go forward.
    Question. The Secretary has previously testified that there is a 
large amount of uncommitted funds within this account--can you please 
provide more specific details of this funding and if any of those funds 
can be rescinded?
    Answer. By uncommitted funds the reference is to the fact that the 
funds have not yet been obligated for some of the competitively 
selected projects. When funds are obligated, they are committed to a 
particular contract. However, there is a commitment to fund those 
selected projects that currently are in negotiations to either be 
awarded for start-up or to continue to the next budget phase. 
Obligations of funds to the projects are done on a budget phase basis 
after the project has been negotiated and awarded. As such there is a 
funding commitment, but not a contractual funding obligation, tied to 
the projects.
    Lengthy negotiations due to the complexity of the projects, 
statutory requirements to provide full funding to projects, and long 
lead time acquisition of components have resulted in approximately $480 
million in unobligated balances for projects in CCPI and its 
predecessor programs (Power Plant Improvement Initiative and Clean Coal 
Technology Demonstration Program) that were awarded in the last 2 years 
and have not yet started and projects that were awarded up to 3 years 
ago and are currently making progress towards construction or are under 
construction. In addition, extended negotiations over contract terms, 
private sector difficulty securing adequate financing for their cost-
share, private sector difficulty obtaining permits, and other issues 
have led to approximately $195 million in unobligated balances for 
projects or independent components of projects that were awarded 3, 4, 
and 13 years ago, and have not yet started. If for some reason, a 
project does not go forward, the funding would be made available for a 
future CCPI solicitation.

                                  GNEP

    Question. Secretary Garman, as I have stated previously, I am very 
encouraged by the Department's new energy initiatives, especially the 
Global Nuclear Energy Partnership (GNEP). This is an ambitious program 
that will have significant impacts on the energy security of the 
Nation. Over the years the DOE has invested in nuclear research that 
can have a direct impact on new nuclear fuels and solve the problem of 
large volumes of nuclear waste that could contribute to the 
proliferation of nuclear weapons.
    I am anxious to see the next level of detail from the Department on 
how the funds will be spent in fiscal year 2007, in particular what 
roles will be assigned to what national laboratories.
    Can you tell me how DOE and GNEP will tap into the expertise 
resident in the NNSA laboratories and when this committee should expect 
to see the details of the work distribution?
    Answer. While Idaho National Laboratory currently is the lead 
laboratory for the advanced Fuel Cycle Initiative, the participation by 
and capabilities of all of DOE's national laboratories will be critical 
to the success of GNEP. The seven national laboratories--Argonne, Los 
Alamos, Lawrence Livermore, Sandia, Oak Ridge, Pacific Northwest, and 
Idaho--have provided input into the Department's development of and 
vision for GNEP. These seven national laboratories are also currently 
involved in the preparation of more detailed work scope and funding 
requirements. The details of the work distribution would be available 
to the committee after careful consideration and approval by DOE. NNSA, 
and its laboratories, are integral to the GNEP effort and are engaged 
specifically in the areas of advanced safeguards and non-proliferation.

                          FOSSIL ENERGY BUDGET

    Question. In your budget justification, the Department supports the 
FutureGen program to build a cost-effective near-zero atmospheric 
emissions from coal with the assumption that ``the successful and 
timely achievement of the Fossil Energy R&D objectives'' and the 
availability of technologies for are integrated into FutureGen. 
However, the budget has proposed to nearly eliminate funding under the 
Clean Coal Power Initiative--the driver for technology development.
    How can the Department hope to build a state-of-the-art facility 
using yet to be developed technology when you won't commit the 
resources to develop such technologies?
    Answer. The fiscal year 2007 budget request represents the 
necessary funding to develop the technologies arising from our coal 
research program for FutureGen and near-zero emission coal technologies 
in general. We believe that the funding level is sufficient to advance 
these technologies to the level of maturity and acceptable risk for 
integrated testing in FutureGen. The Clean Coal Power Initiative (CCPI) 
funding is focused on more mature technologies that are ready for 
demonstration prior to commercial deployment. The CCPI, however, does 
reduce the risk of the longer range commercial deployment of future 
near-zero emission plants based on FutureGen technology by reducing 
risks in technologies and operations that would have been demonstrated 
in CCPI such as Integrated Gasification Combined Cycle.

         CLEAN COAL POWER INITIATIVE--USE OF CARRYOVER BALANCES

    Question. The DOE 5-year budget justification claims that the 
Department will provide out-year funding for Clean Coal Power 
Initiative (CCPI) demonstration of advanced coal technologies, 
``contingent upon improvement of use of funds already provided for 
projects.''
    What exactly does the Department expect in terms of ``improvement 
of use of funds'' that will support future appropriations to the 
Department's leading coal R&D program?
    Answer. The program is working to reduce the time between project 
selection and award as well as the negotiating time for ongoing 
projects to proceed to the next budget phase, ensure that projects 
progress to commencement of construction in a timely manner, strengthen 
the Department's ability to withdraw funding from stalled projects, 
ensure project selection consistency with the R&D Investment Criteria, 
and improve contract and project management controls to achieve the 
desired results.
    Question. If the Department is dissatisfied with the performance of 
the existing competitively-awarded clean coal projects, what do you 
intend to do to improve performance of the projects?
    Answer. As identified in the Program Assessment Rating Tool (PART) 
review, project delays in CCPI have resulted in high unobligated 
balances, currently over $500 million. This is partially a result of 
lengthy negotiations due to the complexity of the projects, and 
statutory requirements to have available full funding for these 
projects. In addition, extended negotiations over contract terms, 
private sector difficulty securing adequate financing for their cost 
share, private sector difficulty obtaining permits, and other issues 
have contributed to the unobligated balances situation for projects or 
independent components of projects that were selected several years ago 
and have not begun construction.
    The issue is two-fold. First, these are complex project agreements 
to negotiate and frequently require the industrial participant to 
obtain items such as power purchase agreements that the participant 
must separately negotiate before coming to closure on the cooperative 
agreement with the Department. Secondarily, the projects that have been 
awarded are commercial demonstrations and therefore are also 
susceptible post-award to changes in market conditions which could 
result in loss of power purchase agreements or technology development 
risks, which in turn lead to delays.
    The Department is aiming to improve the process and minimize the 
disruptions and delays due to changing market conditions by better 
anticipating possible market impacts and addressing them earlier in the 
negotiation process. The Department is also developing contract 
provisions and other process improvements that strengthen the 
Department's ability to withdraw funding from stalled projects. Project 
selection will be improved by ensuring consistency of the selection 
process with the R&D Investment Criteria.
    If for some reason a Clean Coal Power Initiative (CCPI) project 
that was competitively awarded does not progress satisfactorily to the 
next phase because of either not meeting the milestones, or incurs 
inordinate delays, then the Department will to the extent possible 
assist the project participant in overcoming hurdles to move a project 
forward. If these obstacles cannot be resolved, the Department will 
pursue a mutual agreement or exercise other contractual provisions to 
terminate the project, and make the remaining funds available for a 
future CCPI solicitation.
    The Department is also working to improve contract management 
processes in response to GAO and DOE Inspector General reports 
identifying weaknesses.
    Question. Does the Department have any plans to re-compete any of 
the existing awards? If so, which one?
    Answer. The Department does not plan to re-compete any of the 
existing awards. In the case when a project is terminated, the 
available funds will go towards a future CCPI solicitation.

                                HYDROGEN

    Question. Secretary Garman, I have been pleased to see the 
significant developments made at our national labs in the area of 
hydrogen fuel cells. Los Alamos National Laboratory in particular has 
been a leader in this area. The Department has developed an excellent 
roadmap leading to the introduction of hydrogen fuel cells.
    In your view are you receiving adequate resources to move to the 
next level in your roadmap?
    Answer. Yes, the administration's funding request is sufficient to 
keep the hydrogen program on track to develop the critical technologies 
that will enable industry to make a commercialization decision in 2015 
on hydrogen fuel cell vehicles and the infrastructure to refuel them.

                     NEXT GENERATION NUCLEAR PLANT

    Question. Despite the significant support for the GNEP program, I 
question whether or not the Department is as serious about the Next 
Generation Nuclear Plant that will also support the President Nuclear 
Hydrogen Initiative.
    When does the Department intend to begin construction on the Next 
Generation Nuclear Plant?
    Answer. The Department is committed to meeting the Energy Policy 
Act requirements for the Next Generation Nuclear Plant. A wide spectrum 
of R&D activities is underway focusing on development of nuclear fuels, 
metallic and graphite materials capable of high-temperature service, 
and analytical methods to be used in assessing reactor system safety 
and performance. The R&D program will inform a decision by 2011 to 
proceed with the design competition for the NGNP as mandated by EPAct. 
The design competition is expected to take 2 years. A decision to 
construct would be expected to follow completion of final design 
activities. The Department is working with the Nuclear Regulatory 
Commission on a licensing strategy for the NGNP.
    Question. Without this plant, how will the Department validate the 
Nuclear Hydrogen Initiative, much less develop hydrogen from non-fossil 
sources such as natural gas?
    Answer. The Department is currently developing two systems of 
hydrogen production (thermochemical cycles and high-temperature 
electrolysis) using nuclear energy. Prototype testing of these 
processes are planned using non-nuclear heat sources. The results from 
the prototype tests will be used to guide the design of the 
engineering-scale facility to be coupled with the NGNP. While the NGNP 
would be capable of driving either of these systems, research is being 
conducted to lower the process heat requirements to reduce the 
technical risks associated with the very high operating temperatures of 
the NGNP.

                             URANIUM SUPPLY

    Question. Congress and the Bush Administration are encouraging the 
development of additional nuclear powerplants. Other nations are also 
aggressively pursuing the construction of new nuclear reactors. This is 
going to require more uranium to fuel our current and new reactors.
    Has DOE done any analysis on the availability of uranium inside the 
United States for nuclear power reactors over the next decade?
    Answer. The Department has analyzed a number of commercially-
available reports on the quantity and quality of domestic uranium 
reserves and resources that could be developed over the next decade. We 
would be happy to provide you with a briefing if you would like.

                           BARTER OF URANIUM

    Question. This subcommittee in the fiscal year 2006 Energy and 
Water Appropriations conference report directed DOE to follow 
government procurement procedures in any sales or bartering of DOE 
uranium inventories.
    Does DOE believe it is required to follow this directive?
    Answer. The Department has fully complied with the Section 314 of 
the fiscal year 2006 Energy and Water Development Appropriations Act 
including the provision that ``applicable'' procurement laws and 
regulations be followed. Because a sale, transfer or barter is not 
considered a ``procurement,'' provisions of the Competition in 
Contracting Act and the Federal Procurement Regulations are not 
applicable. Nevertheless, DOE documented its justification for the 
initial transfer of uranium to USEC for competitive sale as if those 
provisions applied. This transfer of a small amount of uranium to USEC 
(200 metric tons) was necessary to secure funding for USEC's 
continuation of the uranium remediation activities with no disruption. 
DOE recently conducted a competitive sale for 200 metric tons.
    Question. What has DOE done to follow this directive?
    Answer. The Department issued a Request for Proposals which closed 
this month for the Department's sale of 200 metric tons.

                   AMERICAN CENTRIFUGE PROGRAM--USEC

    Question. The Department has transferred the technology for the 
American Centrifuge Program to USEC, Inc. to commercialize. As part of 
the June 2002 agreement between DOE and USEC, there are a number of 
milestones that USEC is required to meet this summer and fall. There is 
concern since USEC's NRC license application appears to be delayed.
    Have you been briefed on the technology development program and do 
you believe that this technology is workable and is commercially viable 
at full scale?
    Answer. The Department is monitoring USEC's activities toward 
meeting its obligations under the June 2002 Agreement with DOE. We 
receive regular reports on the status of USEC's research and 
development program. The technology was proven in the government's 
program in the 1980's. The Department believes that the market will 
decide if American Centrifuge Program is commercially viable.
    Question. Are there any specific technical concerns you may have 
regarding the deployment of this technology? Are you confident that 
this project is well managed and following appropriate scientific 
practices to validate this technology?
    Answer. DOE is not in a position to assess the USEC practices since 
this is a not a government-directed program.

                           URANIUM INVENTORY

    Question. Given the increased national interest in nuclear power, 
the key role that fuel supply policy will play going forward and the 
increased interest by this subcommittee in DOE uranium inventory 
management, this seems to me to be the wrong time to remove these 
issues from DOE HQ and place them in a group whose experience is 
primarily in selling assets.
    I would feel much better knowing that these crucial functions, if 
they are to be transferred from the Office of Nuclear Energy, be 
transferred to your office, Mr. Under Secretary.
    Will you give this serious consideration and report back on the 
decision to the subcommittee?
    Answer. No decision has been made on transferring the functions. 
That said, these functions currently report to my office through the 
Office of Nuclear Energy. Should the Department conclude that it is 
more effective to transfer the functions, they likely would remain 
within my purview. I will keep the subcommittee apprized as we consider 
this issue.

                             URANIUM MINING

    Question. Domestic producers of uranium recently wrote Secretary 
Bodman and urged the DOE to maintain its uranium inventories for a 
possible shortfall between supply and consumption that they believe 
will grow annually over the next decade.
    Did the Department meet with the domestic producers to address 
their concerns?
    Answer. Prior to receiving their letter, the Office of Nuclear 
Energy staff met with the Uranium Producers of America. We believed 
that we addressed their concerns. More recently, Assistant Secretary 
Dennis Spurgeon met with several uranium companies this month to 
discuss their concerns.
    Question. What was DOE's response to this issue?
    Answer. The Department closely monitors activities in the nuclear 
fuel market for any potential major disruption of fuel supply to our 
Nation's commercial nuclear power reactors and has a designated uranium 
inventory to ensure the reliability of deliveries under the Highly 
Enriched Uranium Purchase Agreement with the Russian Federation.
    As part of a March 1999 Agreement concerning the transfer of source 
material to the Russian Federation, DOE agreed to maintain a stock for 
10 years of no less than 22,000 metric tons of natural uranium 
equivalent. The Agreement states that ``the stock may be reduced, 
through the withdrawal of uranium, in order to ensure the reliability 
of deliveries under the Commercial Agreement.'' DOE continues to 
maintain this stock.
    Question. Has DOE made any effort to encourage new domestic uranium 
production?
    Answer. We believe that market forces (the current price as of 
April 10 is $41.00/lb.) will stimulate new domestic production.

                              WIND ENERGY

    Question. In the fiscal year 2006 Energy and Water Conference 
Report, the Department was instructed to shift responsibility for the 
integration of renewable technology to the Office of Electricity 
Delivery and Energy Reliability. However, your budget provides nearly 
$8 million in funding for program staff to interface with FERC, 
regional transmission organizations, independent system operators and 
State regulators.
    Do you believe that the wind program staff is better able to 
perform this function than the staff of the Electricity Delivery and 
Reliability Office? If so, why have we bothered to establish the Office 
of Electricity Delivery and Reliability?
    Answer. Senior staff from the Office of Energy Efficiency and 
Renewable Energy (EERE) and the Office of Electricity Delivery and 
Energy Reliability (OE), met May 16, 2006 to examine coordination 
between offices, and the appropriate roles and responsibilities between 
them. Our two offices have jointly decided to establish a formal 
working partnership for coordinating the work on wind and electricity 
systems integration.
    Of the requested $8 million in fiscal year 2007, the majority of 
funds will be used to characterize wind, turbine operations, plant 
behavior and interconnection electronics, with $3.97 million devoted to 
Systems Integration. Of the Systems Integration total, $500,000 is 
planned for interfacing with FERC, regional transmission organizations, 
independent system operators and State regulators of which OE will 
serve as the lead DOE organization.
    Question. Has the Department committed funds within the wind energy 
program to support integration activities in fiscal year 2006--is the 
Electricity and Reliability Office involved?
    Answer. Yes, the Department has committed $2.4 million in fiscal 
year 2006 for system integration activities in the Wind Technology 
Program and program staff interacts on an ongoing basis with colleagues 
in the Office of Electricity Delivery and Energy Reliability (OE). Wind 
Program management recently discussed with OE the wind program vision 
for improved grid availability, as well as the role of expected wind 
development in the National Interest Electric Transmission Corridor 
Study under Section 1221 of EPAct. EERE continues to closely coordinate 
all its electricity-related actions with OE.

                        SOLAR AMERICA INITIATIVE

    Question. The President has proposed the Solar America Initiative 
to achieve market competitiveness of solar electricity by 2015 instead 
of 2020. This program appears to shift from a demonstration approach to 
that of a technology development program with industry.
    Which technologies will the Department focus on and which have the 
greatest opportunities to meet the 2015 goal?
    Answer. To meet its 2015 goals, the Solar America Initiative (SAI) 
will support R&D and manufacturing improvements through industry-led 
partnerships to reduce the cost of solar electric systems and optimize 
system performance. The R&D work will be complemented by a technology 
acceptance effort to help overcome the non-R&D barriers to 
commercialization of solar electric systems. SAI focuses work on both 
photovoltaics such as thin-film and multi-junction photovoltaics, but 
also supports concentrating solar power (CSP) technologies such as 
dishes and parabolic collectors.
    Question. What technology developments have occurred that led the 
Department to believe that it could make solar energy cost competitive 
5 years ahead of schedule?
    Answer. The Department believes that the cost competitiveness of 
solar energy can be accelerated by focusing on the transfer of 
demonstrated high-efficiency cells from the laboratory, to large scale 
industrial production through public-private collaboration with 
industry-led ``Technology Pathway Partnerships''. We also believe that 
our increased funding request will accelerate the pace at which we will 
achieve results that can lower costs.

                        HYDROGEN COMPETITIVENESS

    Question. The President established the Hydrogen Fuel Initiative to 
develop a hydrogen economy. One goal was to cut the production and 
delivery cost of hydrogen in half by 2010.
    How successful has the Department been in achieving this goal?
    Answer. Significant progress has been made in reducing the cost of 
hydrogen. For example, the cost of distributed hydrogen production from 
natural gas has fallen from $5.00/gallon of gasoline equivalent (gge) 
in 2003 to a current cost of about $3.10/gge. This cost is estimated 
using an economic model developed by the National Renewable Energy 
Laboratory and industry partners. Additionally, an independent panel 
has been commissioned to verify that our 2005 target of $3.00/gge has 
been met.
    These analysis activities use the Energy Information Administration 
(EIA) High A price projections for natural gas, which are typically 
less than today's market price. Therefore, the Department will continue 
to evaluate the effect of natural gas price volatility on the viability 
of this hydrogen pathway to compete with conventional fuels such as 
gasoline.
    Question. What about achieving the stated goals for reducing the 
cost of renewable production (distributed) sources?
    Answer. The Department believes that renewable hydrogen production 
pathways are critical to the long-term success of the President's 
Hydrogen Fuel Initiative to reduce our dependence on foreign oil and to 
reduce greenhouse gas and criteria emissions. Multiple renewable 
hydrogen production pathways are being pursued, including biomass 
gasification/reforming, renewable fuel reforming, photoelectrochemical, 
photobiological, solar high-temperature thermochemical, and water 
electrolysis using renewable electricity resources.
    Because appropriations have fallen short of request levels and 
Congressionally-directed projects consumed a significant portion of the 
budget in fiscal year 2005 and fiscal year 2006, the Department had to 
prioritize funding for its proposed projects. The Department chose to 
focus on distributed natural gas technologies that would most likely 
help to achieve the 2015 technology readiness milestone. Funding for 
hydrogen production projects on electrolysis and distributed reforming 
of renewable liquids was reduced, while funding for other longer-term 
renewable technologies was eliminated (total funding of renewable 
hydrogen production was reduced from a planned level of approximately 
$24 million to $13.1 million). Therefore, progress on the cost 
reduction of many renewable hydrogen production technologies has been 
limited. For example, cost of hydrogen from renewable bio-liquids in 
2003 was $6.70/gallon of gasoline equivalent and has not fallen 
appreciably toward our 2015 target of $2.50/gallon of gasoline 
equivalent. The President's fiscal year 2007 budget request includes 
funding for renewable hydrogen projects.

                         HYDROGEN MANUFACTURING

    Question. For the first time in the past 2 years the Department has 
provided funding for manufacturing R&D within the hydrogen account.
    What type of R&D is being proposed? Who will perform this activity?
    Answer. On January 24, 2006, Secretary Bodman released a ``Roadmap 
on Manufacturing R&D for the Hydrogen Economy'' for public comment. 
This roadmap, developed with interagency and industry input, identifies 
future high-priority manufacturing needs (automated/agile processing, 
high speed forming/molding, joining technology, non-destructive 
inspection techniques, etc.) in polymer electrolyte membrane fuel 
cells, high pressure composite storage tanks, and fuel reformers and 
electrolyzers for producing hydrogen.
    Based on further industry comments, due April 24, 2006, the 
Department will update the roadmap and establish priorities for an 
upcoming solicitation. The organizations performing the new 
manufacturing research will be competitively selected. Teams could 
include industry, national laboratories, and university partners.

                     HYDROGEN AND FUEL CELL PROGRAM

    Question. One of the major elements of the bill (Title 8) was a 
roadmap that included revised funding and milestones for development of 
hydrogen and fuel cells under the FreedomCAR and Fuel Partnership. The 
provisions are the result of extensive collaboration between the 
hydrogen and fuel stakeholders and policy makers in which the research 
and development needs of DOE and the participating industries were 
extensively re-evaluated. Title VIII reflects what Congress determined 
will be needed to meet the President's 2010 and 2015 goals for hydrogen 
powered fuel cell vehicles.
    Can you discuss how the statutory directives of EPAct 2005 figured 
in the fiscal year 2007 budget request? Can you tell me how DOE plans 
to meet the law's goals?
    Answer. The President's fiscal year 2007 budget request of $289.5 
million for the Hydrogen Fuel Initiative is consistent with Title VIII 
of the Energy Policy Act of 2005.
    In particular, the Department's multi-year planning drove the 
budget request which fully supports the statutory timeline and goals 
related to vehicles and infrastructure stipulated in Section 805. We 
plan to meet these goals through research partnerships with industry 
technology developers, national labs, and universities. The majority of 
funding will remain focused on research to help achieve cost and 
performance targets, in accordance with the administration's R&D 
investment criteria. Limited learning demonstrations covering multiple 
applications will be used to refocus research and to periodically 
validate progress.

                                BIOMASS

    Question. The Department has requested a significant increase in 
the Biomass program, including substantial increases in funding for 
thermochemical platform R&D and biochemical platform R&D.
    Which of these technologies has the greatest potential to reduce 
the costs of biomass production?
    Answer. It's difficult to answer this question with any degree of 
certainty at this time. There are a wide variety of feedstocks that can 
be converted to ethanol, and different feedstocks are available in 
different regions of the country. Ultimately, the most economic 
conversion technology--the biochemical (fermentation) or the 
thermochemical (gasification and pyrolysis)--may depend on the 
feedstock used.

                      STRATEGIC PETROLEUM RESERVES

    Question. The fiscal year 2007 budget doesn't request any 
additional funding to make repairs to the Strategic Petroleum Reserve 
after a direct hit by Hurricane Katrina.
    Is it fair to say that the SPR handled oil supply shortages in the 
Gulf region using already allocated funds?
    Answer. The SPR had sufficient funds to repair the minor damage 
that was caused by Hurricane Katrina. The damage included roofing, 
fencing and damaged trailers. The total cost of repairs was less than 
$1 million and was covered by our fiscal year 2006 appropriation.

                  HURRICANE KATRINA DISASTER RECOVERY

    Question. In the wake of Hurricane Katrina, you have created a 
program within Building Technologies called, ``Disaster Recovery and 
Building Reconstruction.''
    Could you please expand upon this program and specify how it will 
help in the rebuilding of the Gulf Coast?
    Answer. In November 2005, the Department launched its Disaster 
Recovery and Building Reconstruction web site (www.eere.energy.gov/
buildings), providing building resources, lessons learned from past 
disasters, and a calendar of workshops and training sessions being 
conducted throughout the Gulf region. This is not a new program as 
such, but rather a compilation of our existing efforts and partnerships 
applicable to rebuilding the Gulf region. We also continue to work with 
State energy offices, universities, and businesses in the affected 
States to encourage a broad regional exchange of information and best 
practices on energy efficient building technologies.

                             KATRINA--EPACT

    Question. The tragedy of Hurricane Katrina presents a unique 
situation in which thousands of buildings and homes need rebuilding. In 
addition the Energy Policy Act provided the Department with additional 
authorities to establish in the Energy Policy Act. Sections 126 and 140 
both authorize the Department to establish programs to facilitate 
energy efficiency and the integration on renewable energy technology. 
Obviously, the Gulf Coast region provides a great opportunity for the 
Department to develop these pilot programs.
    Has the Department taken any steps to help the disaster recovery by 
promoting or encouraging the use of energy efficient building 
materials?
    Answer. Yes, the Department is actively working with universities, 
extension services, builders, and building materials suppliers to 
encourage the use of energy efficient practices and energy efficient 
building materials. For example, the Department is partnering with The 
Home Depot, the Department of Housing and Urban Development, and State 
energy offices on a series of weekend training sessions on how to 
repair storm-damaged homes using energy efficient products and 
practices. Training sessions were held in New Orleans, Louisiana on 
January 22-23, Biloxi, Mississippi on January 28-29, and in Mobile, 
Alabama on February 4. These events attracted over 2,000 attendees. We 
are working closely with The Home Depot and other retailers to design a 
series of on-going events in the spring and summer to prepare for the 
upcoming hurricane season.

                         WEATHERIZATION PROGRAM

    Question. The Department has proposed cuts to cut the 
Weatherization Assistance Program by $77 million. This will impact 
33,000 families who will pay an estimated $200 million in heating and 
cooling assistance if they don't receive this aid.
    At a time when home energy bills are very high and there are a 
large number of people in the Gulf States who will be struggling to pay 
their bills this year, why did you decide to cut money from these 
grants?
    Answer. From 2002 through 2006, the administration requested a 
total of $1.359 billion for the Weatherization Program, nearly doubling 
the baseline funding assumptions (using 2001 appropriations). 
Unfortunately, Congressional appropriations from 2002 through 2006 fell 
short of the administration's requests by a cumulative total of $208 
million. Nevertheless, increased appropriations driven by the 
President's 2002 through 2006 budgets led to energy and cost savings 
for hundreds of thousands of the neediest low-income families.
    The administration made very difficult choices in developing the 
fiscal year 2007 budget. Reducing America's growing dependence on 
foreign oil and changing how we power our homes and businesses are 
among the Department's highest priorities, as outlined in the 
President's Advanced Energy Initiative.
    The Department's benefits models indicate that the Weatherization 
Program does not provide significant energy benefits compared to the 
potential benefits of other programs where we are increasing our 
investments.
    We note that financial aid for helping low-income families pay 
their energy bill is provided by the Department of Health and Human 
Service's Low Income Home Energy Assistance Program (LIHEAP).

             PHOTOVOLTAIC ENERGY COMMERCIALIZATION PROGRAM

    Question. The Energy Policy Act of 2005 created the ``Photovoltaic 
Energy Commercialization Program,'' which aims to establish 
photovoltaic solar electric systems for electric production in public 
buildings. The request for photovoltaic energy systems is up more than 
50 percent from fiscal year 2006.
    Is this effort to increase the use of solar power in public 
buildings included in the President's Solar America Initiative? In what 
other ways is the Solar America Initiative planning to use the 
requested $65 million plus up from fiscal year 2006?
    Answer. The ``Photovoltaic Energy Commercialization Program'' 
contained in Section 204 of the Energy Policy Act of 2005 is not part 
of the President's Solar America Initiative (SAI). Section 204 
authorizes the Administrator of the General Services Administration 
(GSA) to establish a photovoltaic (PV) commercialization program. The 
Department is willing to provide technical assistance to GSA, should 
GSA decide to implement such a program.
    The additional funding that the Department of Energy is requesting 
in fiscal year 2007 for the Solar America Initiative is to achieve the 
goal of cost-competitive (currently estimated at 5 to 10 cents per 
kilowatt-hour) solar power by 2015. The majority of requested SAI funds 
will be used to support a competitive solicitation for industry-led R&D 
to reduce costs along multiple photovoltaic technologies, some of which 
may be down-selected in future years. Ultimately, we aim to have 
partners demonstrate the ability to produce fully-integrated cost-
competitive photovoltaic systems optimized for U.S. markets by 2015. In 
addition, the Department is also planning to issue a second, smaller 
competitive solicitation in the area of solar technology acceptance 
that may include funding for technology assistance to promote the 
commercialization of photovoltaic systems in public buildings. The 
Department is in the process of developing its strategy for this 
technology acceptance solicitation, and will seek public feedback 
shortly to help inform the structure and content of the solicitation.

                   OFF-SHORE WIND ENERGY DEVELOPMENT

    Question. As part of the Energy Policy Act, Congress streamlined 
the permitting process and jurisdictional confusion regarding the 
permitting of offshore renewable energy projects, which have been a 
barrier to development. Several offshore wind projects have been 
announced, but none of the projects have been developed. In addition 
the Department has announced that it will support an offshore wind 
demonstration.
    What is the status of the regulatory reform process and are you 
confident that this will result in an efficient and streamlined 
permitting process?
    Answer. The Energy Policy Act of 2005 outlined a path to develop 
new regulations to manage the approval process for offshore wind and 
other renewable energy projects on the Outer Continental Shelf (OCS) 
and assigned the Department of the Interior's Minerals Management 
Service (MMS) as the lead agency. There are no interim policies or 
guidelines; however, MMS issued an Advanced Notice of Proposed 
Rulemaking to solicit comments from stakeholders in developing the 
language for the new regulations. The Department of Energy's Office of 
Wind and Hydropower Technologies Program will continue providing 
technical and other assistance to MMS under a soon-to-be-finalized 
Memorandum of Agreement related to offshore wind energy issues.
    Question. How many wind projects have been announced or are under 
consideration? How many megawatts of fossil energy will these projects 
displace and by when?
    Answer. Several offshore wind projects have been announced, 
although only two have taken formal steps required to begin the 
regulatory review process required for sites in Federal waters. The two 
commercial projects include the Cape Wind Project (420 megawatts), and 
the Long Island Power Authority/FPL Energy project (143 megawatts). The 
wind generated power from these projects would likely displace oil and 
natural gas-fired peaking powerplants.
    Question. How many megawatts of energy could the United States 
expect to produce from offshore wind?
    Answer. Preliminary estimates conducted at the National Renewable 
Energy Laboratory (NREL) indicate that more than 1,000 gigawatts of 
offshore wind energy potential exist in the United States between 5 and 
50 nautical miles off the coastlines, including the Great Lakes, with 
approximately 810 gigawatts over waters that are 30 m and deeper 
(Future of Offshore Wind Energy in the United States, June 2004; 
www.nrel.gov/docs/fy04osti/36313.pdf). Realizing even a fraction of 
this presents major economic, technical, and social challenges.

                      AMERICAN CENTRIFUGE PROJECT

    Question. As you know, the Department of Energy signed in 2002 a 
lease agreement with the United States Enrichment Corporation (USEC) 
for centrifuge technology. Currently, USEC is planning on constructing 
the American Centrifuge Plant (ACP) based upon a former DOE design that 
was never fully proven. History tells us that DOE spent more than two 
decades and $3 billion on centrifuge technology.
    What compensation did the Federal Government receive for this 
technology transfer?
    Answer. To obtain access to the restricted data related to the gas 
centrifuge enrichment process, identified at 10 C.F.R. 725.31 Appendix 
A as category C-24 isotope separation. USEC was required by regulation 
to pay, and did pay, $25,000. USEC also is fully funding development 
activities under the Cooperative Research and Development Agreement 
(CRADA) with the Oak Ridge National Laboratory. Finally, the Department 
is currently negotiating, but has not yet executed, a technology 
licensing agreement with USEC that addresses royalty payments for 
USEC's commercialization of DOE centrifuge technology.
    Question. Is the Federal Government liable should the technology 
prove unworkable?
    Answer. No.
    Question. Does DOE currently have departmental personnel working on 
this project?
    Answer. Since USEC's CRADA is with ORNL, there are some laboratory 
personnel working on the project. USEC pays 100 percent of the costs 
under the CRADA. Some DOE employees provide the required regulatory 
oversight.
    Question. At what stage in machine development is USEC?
    Answer. Because USEC is a private company and the technology 
development program is privately funded, its detailed development 
information is considered business proprietary to USEC and may be 
subject to protections under the Trade Secrets Act. Under this Act, DOE 
is obliged to take measures to protect such business proprietary 
information from public disclosure. In response to the committee's 
request for business proprietary information in its oversight capacity, 
the Department will provide the information requested in the 
Department's possession under separate cover in a secure fashion in 
accordance with applicable law and the Department's procedures.
    Question. Are individual prototype machines still being tested as 
reported in November 2005? What is the DOE's level of participation?
    Answer. As noted previously, this information is business 
proprietary to USEC. As a result, a response will be provided under 
separate cover. DOE provides regulatory oversight to ensure that 
industrial safety and environmental requirements are met.
    Question. What does prototype machine testing by USEC actually mean 
and involve? What is the DOE's level of participation?
    Answer. As noted previously this information is business 
proprietary to USEC. As a result, a response will be provided under 
separate cover. DOE is involved in a regulatory capacity to ensure that 
industrial safety and environmental requirements are met.
    Question. Is there any chance that the reliability and performance 
data will not be ready for the DOE October Milestone?
    Answer. The Department is not in a position to respond to this 
question.
    Question. Will the October data include economic performance data? 
If not, when will such data be available?
    Answer. The Department is not in a position to respond to this 
question.
    Question. Will economic data be proven for financing commitments to 
be obtained by January 2007 for the 1 million SWU plant?
    Answer. The Department is not in a position to respond to this 
question.
    Question. If ``cast-iron'' economic data is not available by 
January 2007, how can construction begin to meet the DOE June 2007 
Milestone?
    Answer. The June 2007 construction milestone is tied to a licensing 
decision by the Nuclear Regulatory Commission which is required before 
USEC can begin construction. The economic data requirement is an for 
USEC to resolve.
    Question. Is there a ``fall-back'' strategy in the event that the 
ACP cannot be developed as a commercially viable economic option in 
accord with the DOE June 2002 Agreement?
    Answer. The Department is not currently evaluating alternatives to 
the APC option.
    Question. Are real and proven alternative production technology 
options being investigated, other than continued and indefinite 
operation of the Paducah Gaseous Diffusion Plant?
    Answer. The Department is closely following developments in the 
domestic enrichment marketplace including the proposed LES centrifuge 
plant plans in New Mexico. We believe that market forces will work to 
provide sufficient domestic capacity to meet U.S. utility requirements.

               RECLASSIFYING WASTE AT HANFORD, WASHINGTON

    Question. Mr. Rispoli, the Congress reclassified certain waste as 
being ``incidental to reprocessing'' and as a result, this would allow 
the Department to leave a small amount of material in the tanks that 
would be filled with grout to permanently immobilize any remaining 
waste. This is the standard being applied to cleanup at Idaho and 
Savannah River. I am told that applying this same authority to the 
Hanford tank farm has the potential to save between $10-$15 billion.
    If this authority was extended to Hanford, can you estimate the 
budgetary impact would be for this project? How much time could be 
saved?
    Answer. The Department of Energy (DOE) committed during the debate 
on section 3116 of the National Defense Authorization bill that we 
would not work unilaterally to add another State to the 
reclassification authorization. That being said, DOE has not completed 
an analysis to determine how much time or money could be saved should 
this authority be extended to Washington State.
    Question. Does the Department believe this standard should be 
applied to the Hanford tank farm cleanup?
    Answer. The Department of Energy (DOE) has discussed with State of 
Washington officials on several occasions the benefits it perceives 
that application of section 3116 would offer to the citizens of the 
State of Washington. These benefits include a provision for the U.S. 
Nuclear Regulatory Commission's consultation and monitoring, and the 
certainty concerning the process to be used in making determinations. 
However, the DOE committed during the debate on section 3116 of the 
National Defense Authorization bill that we would not work unilaterally 
to add another State to the reclassification authorization. That being 
said, DOE has not completed an analysis to determine how much time or 
money could be saved should this authority be extended to the State of 
Washington.

                 HANFORD CLEANUP--FAVORITE AMONG EQUALS

    Question. The Environmental Cleanup budget is down by over $762 
million. Funding for cleanup at virtually every site in the complex is 
down. Los Alamos has been reduced by over $50 million; Idaho is down 
$20 million; Savannah River is down by $94 million. In contrast, 
funding for Hanford is up, despite the fact that we still don't have a 
clear idea how much the Waste Treatment Facility will cost.
    We do know that Bechtel, the current contractor, estimates it will 
cost over $11 billion. This is up from the original cost estimate of 
$4.3 billion in 2000.
    In the 2006 budget request, the Department predicted with 80 
percent certainty that the cost of the project would be $5.8 billion 
and be completed by 2011. This is incredible to me that in 1 year the 
cost of the project could go from $5.8 billion to $11 billion.
    It appears that everything that could go wrong with this project 
has gone wrong. There has been tremendous technical risk, poor 
engineering and design management, and regulatory uncertainty as a 
result of the Defense Nuclear Facilities Safety Board.
    Mr. Garman, when will you have a better sense of the final cost 
estimate for the Waste Treatment Project?
    Answer. In December 2005, the Department of Energy directed the 
Waste Treatment and Immobilization Plant (WTP) prime contractor, 
Bechtel National Inc., to deliver an updated Estimate-At-Completion 
(EAC) to reflect available funding for fiscal year 2006 and impacts of 
the results of the independent technical and cost reviews by May 31, 
2006.
    DOE has engaged the U.S. Army Corps of Engineers to perform an 
independent expert review of the EAC and to validate the EAC. The USACE 
has retained a number of recognized industry experts working with its 
own senior staff to perform this review. The USACE's report is 
scheduled to be completed by late summer 2006. Once the EAC is 
validated by the USACE, DOE would then validate and approve the 
baseline for the WTP project.
    Question. What can and will be been done to get control of this 
project and to reverse the cost increases?
    Answer. I think it is important to note that all prior planned 
designs for the Waste Treatment and Immobilization Plant (WTP) were 
based on a plant capable of treating and immobilizing only one-fourth 
of the high-level waste at the Hanford site. The current plant is sized 
to treat and immobilize 100 percent of the high-level waste, thus 
eliminating the need for a second, very sizeable and costly plant that 
the Department of Energy's (DOE's) prior plan had envisioned. In 
addition, since this project first got underway in the late 1990's, 
major advancements in technology have been recognized that will improve 
WTP performance. These advancements include: development of an ion 
exchange material to more effectively and less expensively remove 
radioactive cesium from tank waste liquids; improvement of throughput 
capacities for the furnaces used to vitrify the radioactive waste; and 
enhanced blending ability of pumps to maintain a consistent waste mix. 
We anticipate that benefits from these improvements will avoid the 
necessity of building a second plant for high-level waste, improve 
turnaround time, reduce personnel exposure, reduce performance risk and 
operating cost, and reduce the total number of canisters produced, 
thereby decreasing the volume of material ultimately sent to a 
repository for permanent disposal.
    On June 23, 2005, the Secretary of Energy made key decisions to 
address the WTP project scope, cost, schedule, contract, and management 
issues. The management actions included direction to: (1) conduct an 
After Action Review to assess the causes of the project cost, schedule, 
scope and project management issues, (2) assemble a new DOE 
Headquarters senior level management team, (3) submit the 
qualifications for a Federal Project Director to the DOE Project 
Management Certification Board, (4) provide weekly progress reports to 
the Principal Deputy Assistant Secretary for Environmental Management, 
(5) conduct quarterly progress reviews with the Secretary, and (6) 
develop an execution plan and master schedule for all of the major 
activities associated with the path forward for the project.
    The Secretary indicated to Bechtel Corporation that it must 
demonstrate its commitment and project management capabilities to this 
critical project by accomplishing the following:
  --Address the current technical issues, increasing the confidence in 
        design, contain costs, and develop a viable schedule.
  --Obtain the ``best and brightest'' from other major firms to 
        critically assess the current technical approach, evaluate 
        risks, review the cost/schedule, and develop recommendations to 
        promptly and dramatically improve project performance.
  --Provide the ``best and brightest'' site project management team 
        (executives, engineers and technicians) for the duration of the 
        project.
  --Develop and submit to DOE a complete and credible Estimate-At-
        Completion.
    Based on the actions directed by the Secretary of Energy and the 
reviews implemented by independent industry experts, there is now a 
strong project management framework in-place, a clear understanding of 
the technical issues surrounding the project, and a path forward for 
establishing a credible project cost and schedule baseline.
    Question. What guarantee can you provide that Federal managers will 
do their job to control costs and demand the best from their 
contractors?
    Answer. To improve project oversight the Department of Energy (DOE) 
has implemented the following key actions: establishment of a DOE 
Headquarters senior level oversight team, which is engaged in all 
aspects of the Waste Treatment and Immobilization Plant (WTP) project; 
recruitment by DOE of experienced personnel proficient in contracting, 
procurement, contract law, and project management; Federal 
certification of the WTP Project Director who is directed to strictly 
comply with the requirements of DOE Order 413.3, Program and Project 
Management for the Acquisition of Capital Assets; the requirement that 
the WTP contractor implement an Earned Value Management System, a 
proven, industry-standard performance monitoring tool, that fully 
complies with American National Standards Institute (ANSI) 748-A-1998; 
a structured weekly and monthly reporting system, plus a Quarterly 
Performance review conducted by the Assistant Secretary for 
Environmental Management; and delivery of regular project status 
updates to senior DOE management.
    The DOE continues to proactively upgrade its project management 
capabilities at the WTP and strengthen the framework needed to ensure 
effective planning and long-term execution in all areas of this large, 
complex environmental remediation project.
    Question. Do you believe you have the proper contract in place and 
what incentives are included in the contract to encourage cost 
reduction?
    Answer. Yes, I believe the Department of Energy (DOE) has the 
proper contract in place at the Waste Treatment and Immobilization 
Plant. DOE has initiated actions to increase and strengthen Federal 
oversight of this contract. These actions include putting in place a 
coordinated and aggressive infrastructure of reviews and validations of 
project costs, schedules, technical design, seismic criteria, overall 
project management and controls. In parallel, DOE is considering 
various changes to the incentives structure for an impending contract 
modification to challenge the contractor to deliver a quality plant 
that meets the mission need and schedule expectations while achieving 
cost effectiveness. We hope to complete the contract modification early 
in fiscal year 2007.
    Question. What impact have the recommendations by Defense Nuclear 
Facility Safety Board had on the cost estimate and cost schedule?
    Answer. The Defense Nuclear Facilities Safety Board (DNFSB) has 
been actively involved in reviewing the adequacy of the seismic 
criteria used in the design of the Waste Treatment and Immobilization 
Plant (WTP). Based on all the reviews, DOE estimates that the impact of 
revising the seismic criteria, including the associated verification 
activities, for the WTP has resulted in an estimated overall project 
cost increase in the range of 10-15 percent with a resulting increase 
of approximately 20 percent to the overall project completion schedule.
    DOE has engaged the U.S. Army Corps of Engineers (USACE) to perform 
an independent expert review of the Estimate-At-Completion (EAC) and to 
validate the EAC. This review includes an evaluation of those costs 
attributable to the inclusion of revised seismic criteria. The USACE's 
report is scheduled to be completed by late summer 2006.

                        LOS ALAMOS NATIONAL LAB

    Question. The budget reduces soil and water cleanup activities at 
Los Alamos National Lab by $70 million. It has been 2 years since the 
Department negotiated and signed the 2005 Consent Order with the State 
of New Mexico on a fence-to-fence cleanup strategy to fully remediate 
the site by 2015.
    The budget justification claims that despite the Department has yet 
to complete its validation of the site baseline in cost estimate. I 
find it remarkable that the Department, which has been onsite for more 
than five decades, doesn't have an accurate picture of the cleanup 
responsibilities or cost estimate.
    The Consent Order requires that the LANL site be cleaned up by 
2015. How will a $70 million reduction in soil and water remediation 
activities impact this cleanup date?
    Answer. The Department of Energy (DOE) has had significant 
performance issues for several years with the previous contractor's 
environmental work at the Los Alamos National Laboratory (LANL). 
Additionally, LANL has not yet been able to provide an integrated cost 
and schedule baseline that DOE is able to validate.
    Senior officials within DOE have asked for the involvement of 
senior executives of the parent companies of the new contractor in 
delivering efficiencies and a cost and schedule baseline able to 
withstand scrutiny and that can be validated by DOE. To that end, we 
believe that the new contract will address these performance issues, 
offer new opportunities to continue significant cleanup and risk 
reduction, and enable progress towards a new baseline. We assure you 
that we remain committed to the Los Alamos Compliance Order on Consent 
(March 2005) with the State of New Mexico and its environmental 
milestones.
    Question. What specific cleanup activities will the Department 
forego as a result of the $70 million cut?
    Answer. The Department of Energy is continuing a broad base of 
remediation activities. We are evaluating soil and water remediation 
activities including characterization, protection of groundwater 
resources, and remediation for opportunities for better performance 
under the new contract. We believe that the new contract will address 
past performance issues, offer us new opportunities to continue 
significant cleanup and risk reduction, and deliver progress towards a 
new baseline. Until we have a cost and schedule baseline from the new 
contractor that is independently validated we are not able to determine 
what work, if any, will not be accomplished. However, we remain 
committed to the Los Alamos Compliance Order on Consent.
    Question. What expectations does the Department have for the new 
contractor, Los Alamos National Security LLC, to find cost savings to 
offset the funding reduction in soil and water remediation?
    Answer. Senior officials within the Department of Energy (DOE) have 
asked for the involvement of senior executives of the parent companies 
of the new contractor in delivering efficiencies and a cost and 
schedule baseline that is able to withstand scrutiny and that can be 
validated by the DOE. To that end, we believe that the new contract 
will address the Los Alamos National Laboratory's (LANL) performance 
issues, offer new opportunities to continue significant cleanup and 
risk reduction, and deliver progress toward a new baseline. We remain 
committed to the Los Alamos Compliance Order on Consent.
    Question. As a result of short-changing cleanup at Los Alamos as 
specified in the 2005 Consent Order, how much do you believe will the 
Department incur in the way of fees?
    Answer. The Department of Energy (DOE) has had performance issues 
for several years with the previous contractor's environmental work at 
the Los Alamos National Laboratory (LANL). Additionally, the LANL has 
not yet been able to provide an integrated cost and schedule baseline 
that the DOE is able to validate.
    We believe that the new contract will address these performance 
issues, offer new opportunities to continue significant cleanup and 
risk reduction, and deliver progress toward a new baseline. We remain 
committed to the Los Alamos Compliance Order on Consent and as such do 
not anticipate any fines.

                WASTE TREATMENT PLAN SEISMIC REGULATION

    Question. It seems odd to me that the Department didn't have a 
clear picture of the seismic risk before they turned the first spade of 
dirt at the Waste Treatment Plant.
    Why is the Department only now coming to terms with the changes in 
seismic standards?
    Answer. The initial seismic design for the Hanford Waste Treatment 
and Immobilization Plant (WTP) was based on an extensive probabilistic 
seismic hazard analysis conducted in 1996 by Geomatrix Consultants, 
Inc. In 1999, the Department of Energy (DOE) approved this design basis 
following reviews by British Nuclear Fuels, Inc., and seismologists 
from the U.S. Army Corps of Engineers and the Lawrence Livermore 
National Laboratory.
    DOE used the best information available starting in 1997 regarding 
the seismic hazard, namely the 1996 DOE Probabilistic Seismic Hazard 
Analysis. However, seismic information has continually evolved as 
seismic prediction methodologies have improved. This scientific 
progress led to the 2004 increases in seismic ground motion that 
provided a greater allowance for unknown soil and rock properties 
underneath the WTP site than were considered necessary in 1996. No new 
information regarding the likelihood of earthquakes or their strength 
contributed to this change. Rather, the change was due to the 
possibility that soil and rock underneath the WTP might attenuate 
earthquake movement less than was assumed in the 1996 work.
    Question. Can you quantify the cost increases attributed to the 
change in seismic standards raised by the Defense Nuclear Facilities 
Safety Board?
    Answer. Based on all the reviews, the Department of Energy (DOE) 
estimates that the impact of revising the seismic criteria, including 
the associated verification activities, for the Waste Treatment and 
Immobilization Plant has resulted in an estimated overall project cost 
in the range of 10-15 percent of the Estimate-At-Completion (EAC) with 
a resulting increase of approximately 20 percent to the overall project 
completion schedule.
    The DOE has engaged the U.S. Army Corps of Engineers (USACE) to 
perform an independent expert review of the EAC and to validate the 
EAC. This review includes an evaluation of those costs attributable to 
the inclusion of revised seismic criteria. The USACE's report is 
scheduled to be completed by late summer 2006.
    Question. What other facilities in Washington might be designed to 
the same seismic standard at the Waste Treatment Plant?
    Answer. Presently, there are no planned facilities in the State of 
Washington, including Department of Energy (DOE) facilities that are 
designed to the current DOE seismic standards. These standards would 
only apply to new nuclear facilities having the potential for 
significant onsite consequences.

                SAVANNAH RIVER SITE--SEISMIC REGULATIONS

    Question. I understand that new seismic standards have forced the 
Department to reevaluate the design standard of the Salt Waste 
Processing Facility at Savannah River Site. This halt in progress will 
increase project costs and delay the start of this project by 2 years.
    Why did this happen?
    Answer. The Department of Energy (DOE) has established design and 
performance standards associated with Natural Phenomena Hazards 
(including seismic) in DOE Guide 420.1-2, ``Guide for the Mitigation of 
Natural Phenomena Hazards for DOE Nuclear Facilities and Non-Nuclear 
Facilities'', and DOE Standard 1021-93, ``Natural Phenomenon Hazards 
Performance Categorization Guidelines for Structures, Systems and 
Components'', that are tailored to the hazards associated with our 
nuclear facilities. Performance Category 3 (PC-3), representing the 
most stringent earthquake design requirements, is invoked where the 
highest hazards exist in these types of facilities.
    In accordance with the DOE Directives, early in the design of 
facilities, the performance categorization is determined and the 
analysis is refined as the safety documentation matures. The Salt Waste 
Processing Facility (SWPF) preliminary safety analysis and the original 
facility design were based on a lower performance category 
determination. However, while addressing issues raised by the Defense 
Nuclear Facilities Safety Board the Department determined that the PC-3 
design requirements would provide greater assurance that confinement of 
radioactive materials was adequate given the range of hazards.

                 ACCELERATED CLEANUP--CHANGE IN COURSE

    Question. Last month Secretary Bodman testified that he would not 
be bound by the commitments by his predecessors regarding funding for 
Environmental Cleanup. By and large, the funding profile contained in 
the DOE's 5-year funding plan shows a decline in funding for most of 
the cleanup activities.
    Are we to assume that the Department will reduce funding for 
environmental cleanup activities, and if so, where and to what end?
    Answer. As part of the administration's Accelerated Cleanup 
Initiative, beginning in fiscal year 2003, increased funding was 
provided to accelerate cleanup and address urgent risks sooner than had 
been planned. Fiscal year 2005 was the peak year of funding for this 
initiative. We remain committed to completing the Environmental 
Management (EM) mission in a manner that protects the environment and 
public, and is safe for workers, while being fiscally responsible. The 
Department of Energy will continue to focus on risk reduction and 
cleanup completion while maintaining balance with other departmental 
and national priorities.
    Question. How will out-year funding reductions impact the schedule 
for the cleanup at all of the cleanup sites?
    Answer. The funding levels that had been developed in the 5-Year 
Plan to support the accelerated site closure strategy were based, in 
part, on overly optimistic assumptions. The Department of Energy (DOE) 
is currently updating these assumptions to reflect changes that have 
taken place in regulatory and statutory requirements, to incorporate 
lessons learned based on actual program performance, and to incorporate 
technological and acquisition strategies that have matured, with the 
goal of meeting the DOE's long-term environmental commitments. When 
these assumptions are fully updated, we will be in a position to assess 
potential impacts.

                 HANFORD CLEANUP--FAVORITE AMONG EQUALS

    Question. The Environmental Cleanup budget is down by over $762 
million. Funding for cleanup at virtually every site in the complex is 
down. Los Alamos has been reduced by over $50 million; Idaho is down 
$20 million; Savannah River is down by $94 million. In contrast, 
funding for Hanford is up, despite the fact that we still don't have a 
clear idea how much the Waste Treatment Facility will cost.
    Bechtel, the current contractor, estimates the project will cost 
over $11 billion. This is up from the original cost estimate of $4.3 
billion in 2001.
    In the 2006 budget request, the Department predicted with 80 
percent certainty that the cost of the project would be $5.8 billion 
and be completed by 2011. This is incredible to me that in 1 year the 
cost of the project could go from $5.8 billion to $11 billion.
    It appears that everything that could go wrong with this project 
has gone wrong. There has been tremendous technical risk, poor 
engineering and design management, and regulatory uncertainty as a 
result of the Defense Nuclear Facilities Safety Board.
    Mr. Garman, when will you have a better sense of the final cost 
estimate for the Waste Treatment Project?
    Answer. In December 2005, the Department of Energy directed the 
Waste Treatment and Immobilization Plant (WTP) prime contractor, 
Bechtel National Inc., to deliver an updated Estimate-At-Completion 
(EAC) to reflect available funding for fiscal year 2006 and impacts of 
the results of the independent technical and cost reviews by May 31, 
2006.
    DOE has engaged the U.S. Army Corps of Engineers to perform an 
independent expert review of the EAC and to validate the EAC. The USACE 
has retained a number of recognized industry experts working with its 
own senior staff to perform this review. The USACE's report is 
scheduled to be completed by late summer 2006. Once the EAC is 
validated by the USACE, DOE would then validate and approve the 
baseline for the WTP project.
    Question. What can and will be been done to get control of this 
project and to reverse the cost increases?
    Answer. I think it is important to note that all prior planned 
designs for the Waste Treatment and Immobilization Plant (WTP) were 
based on a plant capable of treating and immobilizing only one-fourth 
of the high-level waste at the Hanford site. The current plant is sized 
to treat and immobilize 100 percent of the high-level waste, thus 
eliminating the need for a second, very sizeable and costly plant that 
the Department of Energy's (DOE's) prior plan had envisioned. In 
addition, since this project first got underway in the late 1990's, 
major advancements in technology have been recognized that will improve 
WTP performance. These advancements include: development of an ion 
exchange material to more effectively and less expensively remove 
radioactive cesium from tank waste liquids; improvement of throughput 
capacities for the furnaces used to vitrify the radioactive waste; and 
enhanced blending ability of pumps to maintain a consistent waste mix. 
We anticipate that benefits from these improvements will avoid the 
necessity of building a second plant for high-level waste, improve 
turnaround time, reduce personnel exposure, reduce performance risk and 
operating cost, and reduce the total number of canisters produced, 
thereby decreasing the volume of material ultimately sent to a 
repository for permanent disposal.
    On June 23, 2005, the Secretary of Energy made key decisions to 
address the WTP project scope, cost, schedule, contract, and management 
issues. The management actions included direction to: (1) conduct an 
After Action Review to assess the causes of the project cost, schedule, 
scope and project management issues, (2) assemble a new DOE 
Headquarters senior level management team, (3) submit the 
qualifications for a Federal Project Director to the DOE Project 
Management Certification Board, (4) provide weekly progress reports to 
the Principal Deputy Assistant Secretary for Environmental Management, 
(5) conduct quarterly progress reviews with the Secretary, and (6) 
develop an execution plan and master schedule for all of the major 
activities associated with the path forward for the project.
    The Secretary indicated to Bechtel Corporation that it must 
demonstrate its commitment and project management capabilities to this 
critical project by accomplishing the following:
  --Address the current technical issues, increasing the confidence in 
        design, contain costs, and develop a viable schedule.
  --Obtain the ``best and brightest'' from other major firms to 
        critically assess the current technical approach, evaluate 
        risks, review the cost/schedule, and develop recommendations to 
        promptly and dramatically improve project performance.
  --Provide the ``best and brightest'' site project management team 
        (executives, engineers and technicians) for the duration of the 
        project.
  --Develop and submit to DOE a complete and credible Estimate-At-
        Completion.
    Based on the actions directed by the Secretary of Energy and the 
reviews implemented by independent industry experts, there is now a 
strong project management framework in place, a clear understanding of 
the technical issues surrounding the project, and a path forward for 
establishing a credible project cost and schedule baseline.
    Question. What guarantee can you provide that Federal managers will 
do their job to control costs and demand the best from their 
contractors?
    Answer. To improve project oversight the Department of Energy (DOE) 
has implemented the following key actions: establishment of a DOE 
Headquarters senior level oversight team, which is engaged in all 
aspects of the Waste Treatment and Immobilization Plant (WTP) project; 
recruitment by DOE of experienced personnel proficient in contracting, 
procurement, contract law, and project management; Federal 
certification of the WTP Project Director who is directed to strictly 
comply with the requirements of DOE Order 413.3, Program and Project 
Management for the Acquisition of Capital Assets; the requirement that 
the WTP contractor implement an Earned Value Management System, a 
proven, industry-standard performance monitoring tool, that fully 
complies with American National Standards Institute (ANSI) 748-A-1998; 
a structured weekly and monthly reporting system, plus a Quarterly 
Performance review conducted by the Assistant Secretary for 
Environmental Management; and delivery of regular project status 
updates to senior DOE management.
    The DOE continues to proactively upgrade its project management 
capabilities at the WTP and strengthen the framework needed to ensure 
effective planning and long-term execution in all areas of this large, 
complex environmental remediation project.
    Question. Do you believe you have the proper contract in place and 
what incentives are included in the contract to encourage cost 
reduction?
    Answer. Yes, I believe the Department of Energy (DOE) has the 
proper contract in place at the Waste Treatment and Immobilization 
Plant. DOE has initiated actions to increase and strengthen Federal 
oversight of this contract. These actions include putting in place a 
coordinated and aggressive infrastructure of reviews and validations of 
project costs, schedules, technical design, seismic criteria, overall 
project management and controls. In parallel, DOE is considering 
various changes to the incentives structure for an impending contract 
modification to challenge the contractor to deliver a quality plant 
that meets the mission need and schedule expectations while achieving 
cost effectiveness. We hope to complete the contract modification early 
in fiscal year 2007.
    Question. What impact have the recommendations by Defense Nuclear 
Facility Safety Board had on the cost estimate and cost schedule?
    Answer. The Defense Nuclear Facilities Safety Board (DNFSB) has 
been actively involved in reviewing the adequacy of the seismic 
criteria used in the design of the Waste Treatment and Immobilization 
Plant (WTP). Based on all the reviews, DOE estimates that the impact of 
revising the seismic criteria, including the associated verification 
activities, for the WTP has resulted in an estimated overall project 
cost increase in the range of 10-15 percent with a resulting increase 
of approximately 20 percent to the overall project completion schedule.
    DOE has engaged the U.S. Army Corps of Engineers (USACE) to perform 
an independent expert review of the Estimate-At-Completion (EAC) and to 
validate the EAC. This review includes an evaluation of those costs 
attributable to the inclusion of revised seismic criteria. The USACE's 
report is scheduled to be completed by late summer 2006.

                        LOS ALAMOS NATIONAL LAB

    Question. The budget reduces soil and water cleanup activities at 
Los Alamos National Lab by $70 million. It has been 2 years since the 
Department negotiated and signed the 2005 Consent Order with the State 
of New Mexico on a cleanup strategy to fully remediate the site by 
2015.
    The budget justification claims that the Department has yet to 
complete its validation of the site baseline in cost estimate. I find 
it remarkable that the Department, which has been onsite for more than 
five decades, doesn't have an accurate picture of the cleanup 
responsibilities or cost estimate.
    The Consent Order requires that the LANL site be cleaned up by 
2015. How will a $70 million reduction in soil and water remediation 
activities impact this cleanup date?
    Answer. The Department of Energy (DOE) has had significant 
performance issues for several years with the previous contractor's 
environmental work at the Los Alamos National Laboratory (LANL). 
Additionally, LANL has not yet been able to provide an integrated cost 
and schedule baseline that DOE is able to validate.
    Senior officials within DOE have asked for the involvement of 
senior executives of the parent companies of the new contractor in 
delivering efficiencies and a cost and schedule baseline able to 
withstand scrutiny and that can be validated by DOE. To that end, we 
believe that the new contract will address these performance issues, 
offer new opportunities to continue significant cleanup and risk 
reduction, and enable progress towards a new baseline. We assure you 
that we remain committed to the Los Alamos Compliance Order on Consent 
(March 2005) with the State of New Mexico and its environmental 
milestones.
    Question. What specific cleanup activities will the Department 
forego as a result of the $70 million cut?
    Answer. The Department of Energy is continuing a broad base of 
remediation activities. We are evaluating soil and water remediation 
activities including characterization, protection of groundwater 
resources, and remediation for opportunities for better performance 
under the new contract. We believe that the new contract will address 
past performance issues, offer us new opportunities to continue 
significant cleanup and risk reduction, and deliver progress towards a 
new baseline. Until we have a cost and schedule baseline from the new 
contractor that is independently validated we are not able to determine 
what work, if any, will not be accomplished. However, we remain 
committed to the Los Alamos Compliance Order on Consent.
    Question. What expectations does the Department have for the new 
contractor, Los Alamos National Security LLC, to find cost savings to 
offset the funding reduction in soil and water remediation?
    Answer. Senior officials within the Department of Energy (DOE) have 
asked for the involvement of senior executives of the parent companies 
of the new contractor in delivering efficiencies and a cost and 
schedule baseline that is able to withstand scrutiny and that can be 
validated by the DOE. To that end, we believe that the new contract 
will address the Los Alamos National Laboratory's (LANL) performance 
issues, offer new opportunities to continue significant cleanup and 
risk reduction, and deliver progress toward a new baseline. We remain 
committed to the Los Alamos Compliance Order on Consent.

            CONSOLIDATION OF NUCLEAR MATERIAL IN THE COMPLEX

    Question. The Secretary has wisely assembled a team to consider 
various options to reduce the amount of special nuclear material in the 
complex that must receive high level security.
    By locating unnecessary nuclear material in a central secure area, 
it can reduce the security costs dramatically. By permanently disposing 
of this material we can eliminate security costs entirely.
    I understand that Charlie Anderson with Environmental Management 
has been chosen to lead this team of DOE and NNSA officials.
    What is the status of this evaluation and when will the Department 
propose a waste consolidation and disposal plan to Congress for its 
consideration?
    Answer. We currently expect that the strategic plan will be 
completed within a year.
    Question. What are the greatest challenges the Department is facing 
in consolidating this material?
    Answer. The greatest challenge facing the Department of Energy 
regarding the consolidation of special nuclear materials is to ensure 
that our departmental consolidation efforts are consistent with 
individual program needs while maximizing security and cost savings and 
minimizing the number of consolidation moves.
    Consolidation of nuclear materials also requires, among other 
things, adequate storage space and availability at the receiving site, 
compliance with applicable laws, appropriate National Environmental 
Policy Act analyses, and sufficient transportation resources. Community 
support is also critical, particularly in the State and around the site 
where the materials would be received.
    Question. Are their any legislative or regulatory impediments that 
currently prevent the Department from moving forward?
    Answer. Although there may be legislative or regulatory 
requirements that would need to be met before the Department of Energy 
may move forward with its consolidation activities, none of these 
ultimately would prevent us from moving forward when met. For example, 
there may be National Environmental Policy Act requirements to be met 
for some activities. Other requirements may also apply, for example, in 
the case of the shipment of surplus weapons-usable plutonium to the 
Savannah River Site previously destined for the now-cancelled Plutonium 
and Immobilization Plant, there are requirements under section 3155 of 
the National Defense Authorization Act for Fiscal Year 2002 (Public Law 
107-107) for the submission of a plan to Congress identifying a 
disposition path for such plutonium prior to shipment.

               RECLASSIFYING WASTE AT HANFORD, WASHINGTON

    Question. Mr. Garman, the Congress reclassified certain waste as 
being ``incidental to reprocessing'' and as a result, this would allow 
the Department to leave a small amount of material in the tanks that 
would be filled with grout to permanently immobilize any remaining 
waste. This is the standard being applied to cleanup at Idaho and 
Savannah River. I am told that applying this same authority to the 
Hanford tank farm has the potential to save $10 to $15 billion.
    If this authority was extended to Hanford, can you estimate what 
the budgetary impact would be for this project? How much time could be 
saved?
    Answer. The Department of Energy (DOE) committed during the debate 
on section 3116 of the National Defense Authorization bill that we 
would not work unilaterally to add another State to the 
reclassification authorization. That being said, DOE has not completed 
an analysis to determine how much time or money could be saved should 
this authority be extended to Washington State.
    Question. Does the Department believe this standard should be 
applied to the Hanford tank farm cleanup?
    Answer. The Department of Energy (DOE) has discussed with State of 
Washington officials on several occasions the benefits it perceives 
that application of section 3116 would offer to the citizens of the 
State of Washington. These benefits include a provision for the U.S. 
Nuclear Regulatory Commission's consultation and monitoring, and the 
certainty concerning the process to be used in making determinations. 
However, the DOE committed during the debate on section 3116 of the 
National Defense Authorization bill that we would not work unilaterally 
to add another State to the reclassification authorization. That being 
said, DOE has not completed an analysis to determine how much time or 
money could be saved should this authority be extended to the State of 
Washington.

                WASTE TREATMENT PLAN SEISMIC REGULATION

    Question. It seems odd to me that the Department didn't have a 
clear picture of the seismic risk before they turned the first spade of 
dirt at the Waste Treatment Plant.
    Why is the Department only now coming to terms with the changes in 
seismic standards?
    Answer. The initial seismic design for the Hanford Waste Treatment 
and Immobilization Plant (WTP) was based on an extensive probabilistic 
seismic hazard analysis conducted in 1996 by Geomatrix Consultants, 
Inc. In 1999, the Department of Energy (DOE) approved this design basis 
following reviews by British Nuclear Fuels, Inc., and seismologists 
from the U.S. Army Corps of Engineers and the Lawrence Livermore 
National Laboratory.
    DOE used the best information available starting in 1997 regarding 
the seismic hazard, namely the 1996 DOE Probabilistic Seismic Hazard 
Analysis. However, seismic information has continually evolved as 
seismic prediction methodologies have improved. This scientific 
progress led to the 2004 increases in seismic ground motion that 
provided a greater allowance for unknown soil and rock properties 
underneath the WTP site than were considered necessary in 1996. No new 
information regarding the likelihood of earthquakes or their strength 
contributed to this change. Rather, the change was due to the 
possibility that soil and rock underneath the WTP might attenuate 
earthquake movement less than was assumed in the 1996 work.
    Question. Can you quantify the cost increases attributed to the 
change in seismic standards raised by the Defense Nuclear Facilities 
Safety Board?
    Answer. Based on all the reviews, the Department of Energy (DOE) 
estimates that the impact of revising the seismic criteria, including 
the associated verification activities, for the Waste Treatment and 
Immobilization Plant has resulted in an estimated overall project cost 
in the range of 10-15 percent of the Estimate-At-Completion (EAC) with 
a resulting increase of approximately 20 percent to the overall project 
completion schedule.
    The DOE has engaged the U.S. Army Corps of Engineers (USACE) to 
perform an independent expert review of the EAC and to validate the 
EAC. This review includes an evaluation of those costs attributable to 
the inclusion of revised seismic criteria. The USACE's report is 
scheduled to be completed by late summer 2006.
    Question. What other facilities in Washington might be designed to 
the same seismic standard as the Waste Treatment Plant?
    Answer. Presently, there are no planned facilities in the State of 
Washington, including Department of Energy (DOE) facilities that are 
designed to the current DOE seismic standards. These standards would 
only apply to new nuclear facilities having the potential for 
significant onsite consequences.

                SAVANNAH RIVER SITE--SEISMIC REGULATIONS

    Question. I understand that new seismic standards have forced the 
Department to reevaluate the design standard of the Salt Waste 
Processing Facility at Savannah River Site. This halt in progress will 
increase project costs and delay the start of this project by 2 years.
    Why did this happen?
    Answer. The Department of Energy (DOE) has established design and 
performance standards associated with Natural Phenomena Hazards 
(including seismic) in DOE Guide 420.1-2, Guide for the Mitigation of 
Natural Phenomena Hazards for DOE Nuclear Facilities and Non-Nuclear 
Facilities, and DOE Standard 1021-93, Natural Phenomenon Hazards 
Performance Categorization Guidelines for Structures, Systems and 
Components, that are tailored to the hazards associated with our 
nuclear facilities. Performance Category 3 (PC-3), representing the 
most stringent earthquake design requirements, is invoked where the 
highest hazards exist in these types of facilities.
    In accordance with the DOE Directives, early in the design of 
facilities, the performance categorization is determined and the 
analysis is refined as the safety documentation matures. The Salt Waste 
Processing Facility (SWPF) preliminary safety analysis and the original 
facility design were based on a lower performance category 
determination. However, while addressing issues raised by the Defense 
Nuclear Facilities Safety Board the Department determined that the PC-3 
design requirements would provide greater assurance that confinement of 
radioactive materials was adequate given the range of hazards.

                 ACCELERATED CLEANUP--CHANGE IN COURSE

    Question. Last month Secretary Bodman testified that he would not 
be bound by the commitments by his predecessors regarding funding for 
Environmental Cleanup. By and large, the funding profile contained in 
the DOE's 5-year funding plan shows a decline in funding for most of 
the cleanup activities.
    Are we to assume that the Department will reduce funding for 
environmental cleanup activities, and if so, where and to what end?
    Answer. As part of the administration's Accelerated Cleanup 
Initiative, beginning in fiscal year 2003, increased funding was 
provided to accelerate cleanup and address urgent risks sooner than had 
been planned. Fiscal year 2005 was the peak year of funding for this 
initiative. We remain committed to completing the Environmental 
Management (EM) mission in a manner that protects the environment and 
public, and is safe for workers, while being fiscally responsible. The 
Department of Energy will continue to focus on risk reduction and 
cleanup completion while maintaining balance with other Departmental 
and national priorities.
    Question. How will out-year funding reductions impact the schedule 
for the cleanup at all of the cleanup sites?
    Answer. The funding levels that had been developed in the 5-Year 
Plan to support the accelerated site closure strategy were based, in 
part, on overly optimistic assumptions. The Department of Energy (DOE) 
is currently updating these assumptions to reflect changes that have 
taken place in regulatory and statutory requirements, to incorporate 
lessons learned based on actual program performance, and to incorporate 
technological and acquisition strategies that have matured, with the 
goal of meeting the DOE's long-term environmental commitments. When 
these assumptions are fully updated, we will be in a position to assess 
potential impacts.

                     WERC/DOE COOPERATIVE AGREEMENT

    Question. The Department has failed to live up to its commitment to 
provide funding under the cooperative agreement with WERC. Why is this?
    Answer. As directed by the Conference Report (109-275) accompanying 
the fiscal year 2006 Energy and Water Development Appropriations Act 
(Public Law 109-103), the Department of Energy provided the American 
Water Works and the Waste Education Research Consortium (WERC) with 
$7,000,000 for advanced concept desalination and arsenic treatment 
research. WERC received $749,790 of these funds. WERC will also receive 
the prior year uncosted carryover of $5,500,000.

                         CLEANUP DELAYS AT K-25

    Question. I understand the completion date for the ETTP have been 
delayed from fiscal year 2008 until mid-fiscal year 2009.
    Why is this and what impact will this have on the cost of the 
project?
    Answer. The current contract calls for physical completion of the 
East Tennessee Technology Park by September 30, 2008. The Department of 
Energy is currently reviewing performance against the baseline for this 
project to determine the cost and schedule impacts associated with 
numerous factors including, but not limited to, the complexity of the 
work, safety concerns, unexpected issues, and increased cleanup 
requirements.
    Question. Do you need additional funding in fiscal year 2007?
    Answer. No additional funding in fiscal year 2007 is needed. The 
Department of Energy is currently reviewing the baseline for this 
project to determine the cost and schedule impacts, which would provide 
the basis for any future budget requests.

             GAO REPORT ON TOTAL ENVIRONMENTAL LIABILITIES

    Question. The GAO reported that the Department's total estimated 
cleanup responsibilities could exceed the $180 billion, by as much as 
$25 billion.
    GAO found that cost significant increase can be attributed to 
delays in opening up Yucca Mountain and the Department's ability to 
dispose of high level waste.
    Do you agree with the assessment by GAO? Please explain.
    Answer. Several assumptions made as part of the Department of 
Energy's (DOE) Accelerated Cleanup initiative were overly optimistic 
and have not materialized. In addition, we have identified legacy 
cleanup requirements at several sites that have not been included in 
prior Office of Environmental Management (EM) work scope, and some key 
projects have experienced performance issues. As a result, the life-
cycle cost of the cleanup program could increase by $25 billion, as 
indicated in the Government Accountability Office's report. DOE has 
established and implemented a more stringent, highly monitored project 
management program that is making every effort to identify and address 
unexpected developments in project design, construction, schedule and 
scope as they emerge.
    In addition, the $180 billion estimate included approximately $15 
billion for high-level waste and spent nuclear fuel disposal at the 
Yucca Mountain geological repository which was planned to begin 
receiving shipments from EM in 2010. The DOE estimates that a 5-year 
delay in opening the Yucca Mountain geological repository could 
potentially increase costs by as much $1 billion to EM's total cost for 
managing waste. The actual amount of this increase would depend on a 
number of factors, including when EM completes the cleanup of various 
sites and had the waste at those sites ready for shipment, the need to 
build additional storage buildings, and added operating costs.

                         YUCCA MOUNTAIN FUNDING

    Question. The 5-year funding profile provided to Congress shows 
essentially flat funding for this program over this period. In years 
past, the out-year funding levels were shown to sharply increase during 
the time period of license application, work on-site preparation, and 
rail route preparation activities--ordering the steel for the rails 
alone will be a very costly venture.
    Will that level of funding be sufficient to defend a license 
application and undertake other activities necessary to prepare for 
construction and operation of the repository?
    Answer. The 5-Year Plan DOE submitted to Congress contains two 
scenarios. The scenario using a formula-based approach for out-years in 
the fiscal year 2007 budget would not allow the Yucca Mountain program 
to accelerate pre-licensing construction activities. The above-target 
scenario moves the program forward as quickly as possible.
    While there is a flat funding case as you described, the Office of 
Civilian Radioactive Waste Management also developed ``above target'' 
estimates of $661 million in fiscal year 2008, $963 million in fiscal 
year 2009, $1.07 billion in fiscal year 2010, and $975 million in 
fiscal year 2011. The above-target scenario is more consistent with 
planned construction activities needed to timely develop the 
repository. The administration is committed to developing Yucca 
Mountain as a geologic repository. We have made no policy decisions on 
out-year funding for Yucca Mountain, but I can assure you we will 
continue to support expeditious development of the repository.
    Question. If not, do you expect that the out-year budgets will need 
to be adjusted once a new program schedule is established?
    Answer. The amounts in the 5-Year Plan for the out-year budget 
reflect steady progress toward the receipt of a construction 
authorization for a repository at Yucca Mountain in the near term. 
However, in order to reach the goal of an operating geologic repository 
at Yucca Mountain in a timely manner, significant budget increases for 
the program will be required for construction and operations of both 
the repository and the rail line in Nevada. The administration has 
supported legislation calling for funding reform for the program in the 
form of reclassifying mandatory Nuclear Waste Fund receipts as 
discretionary offsetting collections, in an amount equal to 
appropriations from the Fund for authorized waste disposal activities. 
This will address a technical budgetary problem that has acted as a 
disincentive to adequate funding.
    The Department's legislative proposal, the ``Nuclear Fuel 
Management and Disposal Act'' was submitted to Congress after the date 
of this hearing on April 6, 2006, and contains a provision to implement 
this funding reform.

                      YUCCA MOUNTAIN REQUIREMENTS

    Question. Administration witnesses have consistently testified that 
it is important to move forward with the Yucca Mountain project 
regardless of the outcome of the Global Nuclear Energy Partnership 
(GNEP). One of the reasons relates to defense waste.
    How much defense waste is currently planned for permanent 
disposition at Yucca Mountain?
    Answer. The Department currently has approximately 2,500 metric 
tons of defense spent fuel and 10,500 metric tons of defense high-level 
radioactive waste. Because of the 70,000 metric tons statutory limit, 
the Department currently plans to dispose of only 7,000 metric tons of 
defense spent fuel and high-level radioactive waste at Yucca Mountain.
    Question. Under the current schedule when will this waste be ready 
for shipment to Yucca?
    Answer. Each Department of Energy site that manages spent fuel or 
high-level waste destined for disposal in the repository will need to 
place the waste into disposable canisters and load them into NRC 
certified casks. For most sites, this has not yet occurred. These 
canisters are designed to be transported in NRC certified casks to the 
repository and be disposed in waste packages at Yucca Mountain. 
Currently, Savannah River has waste that has been vitrified; Hanford 
and Idaho have not yet vitrified their waste. Readiness to ship spent 
nuclear fuel and high-level waste from each site is dependent on site 
plans and schedules for high-level waste treatment, spent nuclear fuel 
disposition and packaging activities, and the construction of cask 
loading facilities. Current plans developed by the Office of 
Environmental Management for each site are summarized in the table 
below.

------------------------------------------------------------------------
                                              Date of         Date of
                                           Capability to   Capability to
                  SITE                       Ship HLW        Ship SNF
                                             Canisters       Canisters
------------------------------------------------------------------------
Savannah River..........................            2012            2015
Hanford Site............................            2020            2018
Idaho National Lab......................            2022            2015
------------------------------------------------------------------------

    Question. If Yucca were not available how would this waste be 
handled?
    Answer. If a repository were not built, the waste would continue to 
be stored at the current sites.

                     YUCCA MOUNTAIN PROGRAM STATUS

    Question. In the past year, a decision was made to redirect the 
approach taken to fuel handling at the repository to a ``clean'' 
approach utilizing a single canister for transportation, aging and 
disposal (TAD) package.
    Please explain this new approach and its rationale.
    Answer. We believe that the clean-canistered approach to receiving 
commercial spent fuel will allow us to greatly simplify the licensing, 
construction, and operation of the facilities at Yucca Mountain. With a 
clean-canistered approach personnel will be handling primarily 
canistered waste, not individual fuel assemblies as previously planned. 
These canisters will provide another contamination barrier between the 
worker and the waste. For example, when routine maintenance is required 
in the canistered operating facilities, workers will not have to deal 
with radiological contamination as they would with individual fuel 
assembly handling operations.
    The canistered approach will simplify the licensing and 
construction of the repository, while easing complexities of Yucca 
Mountain's post-construction operations. The new approach envisions 
spent fuel being delivered to Yucca Mountain primarily in transport, 
aging, and disposal (TAD) canisters which are then placed in a waste 
package for emplacement. Handling of bare fuel will be limited and will 
be accommodated by much smaller facilities. Switching to a primarily 
clean facility plan will improve safety and operations and dramatically 
improve the overall performance of Yucca Mountain operations.
    Question. What impact has this redirection had on preparing the 
license application?
    Answer. To incorporate the new clean-canistered approach, we have 
reviewed the existing designs for the repository surface facilities, 
and have initiated efforts to redesign these facilities to incorporate 
the benefits that result from the clean-canistered approach. We believe 
that the redesigned surface facilities will be smaller, less costly, 
and simpler to design, license, construct and operate. As a result, the 
Department believes any additional time spent incorporating the clean-
canistered approach will be offset by reductions in the time required 
to license and construct the repository facilities.
    Question. Have you analyzed the impact that this redirection could 
have on the timing and cost of license review, program construction and 
operations?
    Answer. As part of the critical decision process in the Department, 
the program is required to provide a revised cost and schedule for the 
program that incorporates the canister approach. That process is 
expected to be completed and the revised cost and schedule provided to 
the Secretary this summer.

                    INTERIM STORAGE AND REPROCESSING

    Question. The Energy and Water Conference report for fiscal year 
2006 provided the Department with funding to support the siting 
selection process of interim storage and reprocessing facilities. 
Communities would be provided $5 million to support a site development 
plan and licensing strategy.
    What is the status of this program? When will the Department 
provide the funding support to these communities, and under what terms?
    Answer. DOE issued a request for Expressions of Interest (EOI) in 
the Federal Register on March 17, 2006, announcing its intention to 
initiate a competition to conduct site evaluations to aid in selecting 
one or more sites suitable for development of integrated recycling 
facilities. The EOI sought information to assist in the preparation of 
a solicitation for proposals to prepare site evaluation reports. A 
total of 43 responses were received to the EOI.
    The solicitation, planned for spring 2006, will be open to domestic 
sources, public and private, and will encourage teaming and community 
involvement. Proposals will be evaluated for 90 days, followed by the 
selection of those proposals for which funding will be provided to 
prepare a site evaluation report. Each of the resulting site evaluation 
reports will be reviewed for potential inclusion as an alternative in 
the EIS analysis for the GNEP Technology Demonstration Program (TDP). 
DOE currently intends to solicit proposals only for non-DOE sites, 
given that information relating to the identification of DOE sites for 
potential inclusion as alternatives in the GNEP-TDP EIS is already 
available to the Department. The potential sites will be evaluated, in 
connection with the EIS process, and DOE currently anticipates that it 
will make site location decisions in the summer 2008 following 
completion of the EIS.
    To evaluate the potential environmental impacts at candidate sites 
for the demonstration facilities, DOE has taken steps to initiate the 
preparation of an EIS for the GNEP-TDP. This process began with a March 
22, 2006 Advance Notice of Intent (ANOI) which requested comments from 
interested parties on the scope of the EIS, reasonable alternatives, 
and other relevant information. Comments received will be used to 
develop the Notice of Intent (NOI) and to assist DOE in completing the 
EIS. The Draft EIS is scheduled to be completed by late spring, 2007 
and the Final EIS by late spring, 2008. A Record of Decision (ROD) is 
expected to be issued in summer 2008.

                  YUCCA MOUNTAIN--LICENSE APPLICATION

    Question. Secretary Bodman testified that the Department 
anticipates providing a new schedule for license application and 
repository operations by early summer. The budget justification 
materials indicate that among the tasks to be accomplished in fiscal 
year 2007 is defending a license application to the NRC.
    Does the budget request assume that a license application will 
occur in fiscal year 2007, and if not, would the request need to be 
adjusted?
    Answer. No. The fiscal year 2007 budget request does not assume the 
license application will be submitted in fiscal year 2007 and 
accordingly does not need to be adjusted. The license defense 
activities in fiscal year 2007 relate to preparation of the license 
application, and include identifying and preparing information in an 
acceptable format to submit to the Nuclear Regulatory Commission (NRC) 
electronic hearing docket, which is an electronic information system 
that will receive, distribute, store and retrieve docket materials for 
licensing and proceedings. It also includes identification of expert 
witnesses and preparation of information that may be needed to respond 
to contentions raised by other parties to the licensing proceedings. 
Prior to submitting the license application, the Department plans to 
have in place procedures and processes to respond to NRC's requests for 
additional information once the license application is submitted. 
Recognizing that the NRC staff is only planning an 18-month review 
period prior to the hearings, the Department needs to be able to 
respond to Requests for Additional Information rapidly and 
comprehensively. A thorough legal and regulatory review process, 
combined with timely interactions with the NRC during the pre-
application period, will help the program develop a license application 
that the NRC can docket, review and adjudicate in the 3-year period 
required by the Nuclear Waste Policy Act.
    Question. What is the Department's current estimate for the cost of 
the rail line to Yucca Mountain?
    Answer. The current estimate is approximately $2 billion for the 
life cycle cost of the rail line to Yucca Mountain. The estimate is 
specific to the Caliente rail corridor and includes the cost of 
facilities related to rail operations. These facilities include sidings 
and basic maintenance capability where the Nevada rail line connects to 
existing mainline track, maintenance-of-way facilities along the track 
and an end-of-line facility proximate to the repository. The Department 
believes the cost of constructing rail access to the repository along 
the Caliente corridor is still viable based on these considerations, 
but is reviewing its ability to reduce the costs.

                  YUCCA MOUNTAIN REPOSITORY OPERATIONS

    Question. Some degree of aging of fuel at the site before 
emplacement in the repository has always been assumed.
    What is your current thinking on fuel aging at Yucca and how might 
it be accomplished?
    Answer. Currently, our plans for spent fuel aging at Yucca Mountain 
include several large above-ground aging pads. With the program's 
change to the clean-canistered approach for transport, aging and 
disposal (TAD) of spent fuel, it is expected that TAD-based storage 
systems will be used for most of the required spent fuel aging. We 
currently expect the license application will provide for aging 
capacity in the range of 20,000 to 40,000 metric tons.
    Question. Could the duration of fuel aging be influenced by 
developments with GNEP?
    Answer. Repository designs have consistently included aging 
capability needed to allow the spent fuel received from the utility 
sites to cool until it is suitable for permanent underground disposal. 
These aging facilities are an integral part of our disposal operations. 
Although Global Nuclear Energy Partnership (GNEP) offers the promise of 
development of recycling technologies over the next several decades, 
there are no current plans to store existing spent fuel inventories for 
possible recycling in the future. If commercial GNEP technologies are 
proven feasible and eventually developed, repository operations may 
need to be adjusted, as appropriate, to incorporate the benefits for 
future inventories of spent fuel that GNEP processing might provide.

                        YUCCA MOUNTAIN CAPACITY

    Question. Yucca Mountain currently has a legislated capacity limit 
of 70,000 metric tons as set forth by the Nuclear Waste Policy Act.
    Based on technical factors alone, what is the physical capacity of 
Yucca to accommodate spent fuel?
    Answer. The environmental impact statement for the Yucca Mountain 
repository in its cumulative impacts section evaluated the disposal of 
approximately 120,000 metric tons of spent nuclear fuel and high-level 
waste. However, the actual physical capacity of Yucca Mountain is 
exceeds that amount. The Department believes the physical capacity of 
Yucca Mountain is at least adequate to dispose of the commercial and 
DOE spent fuel and high-level waste that currently exists, and could 
provide for the disposal of all the spent nuclear fuel from the 
existing suite of nuclear plants with life extensions.
                                 ______
                                 
              Questions Submitted by Senator Thad Cochran

    Question. Mr. Chairman, I appreciate your holding this hearing to 
review budgets of the Department of Energy's Office of Science, Office 
of Nuclear Energy, Office of Fossil Energy, Office of Environmental 
Management as well as many other important accounts with the Department 
of Energy. I want to join you in thanking the witnesses for being here 
to provide testimony and answer questions.
    I am pleased that the Department is continuing to look for 
alternate and renewable sources of energy to correct the trend toward 
unnecessary reliance on foreign sources of oil and gas. My State 
continues to conduct research to develop cleaner and more efficient 
sources of energy. After Hurricane Katrina, fuel costs rose as much as 
$3 per gallon and finding diesel to transport necessities or to run the 
electrical generators used to cool poultry production facilities became 
a challenge. Our biodiesel suppliers provided this needed fuel which 
proved not only to be a cleaner fuel, but a fuel that is a substitute 
for foreign oil.
    Mr. Chairman, I look forward to working with you this year on these 
important accounts as well as the new American Competitiveness 
Initiative and the Advanced Energy Initiative.
    It is important to implement a regional approach to biomass 
research because of the diversity of sources in the United States. 
Biomass sources and techniques in Mississippi are much different than 
the biomass opportunities available in the Midwest.
    How do you perceive the Department's role in facilitating a 
regional approach to research and development?
    Answer. The Department has requested funding in fiscal year 2007 to 
implement the concept of regional feedstock development partnerships. 
We agree that the opportunities for biomass feedstocks development are 
best approached regionally, because differences in soils, rainfall, 
climate, agricultural land-use patterns, and established markets exist 
at a regional level. Partnerships are needed because of the complexity 
of feedstock issues that include basic and applied science to develop 
the feedstock resources, infrastructure feedstock needs for 
biorefineries including reliability, availability, and cost; and 
sustainability issues as they pertain to resource development. 
Partnership efforts will bring Federal funding together with the 
biofuels production industry with the grower community and university 
researchers to better define the actual resource on a regional and 
local basis.

                             LOAN GUARANTEE

    Question. One of the important loan guarantee programs authorized 
under the Energy Policy Act of 2005 would encourage the 
commercialization of projects which reduce air pollutants as well as 
employ improved technologies in many areas such as renewable energy 
systems, carbon capture, and advanced fossil energy technology. I 
understand that the Department has not asked for funding for the loan 
guarantee program or demonstration project authorized under Title 17.
    What is the Department's view of this program and why was funding 
not requested this year?
    Answer. The Department of Energy (DOE) is working to meet the 
Secretary's previously-stated goal of accepting the first preliminary 
applications for ``self-pay'' loan guarantees under Title XVII before 
the end of fiscal year 2006. We are proceeding, but we are doing so 
with no small measure of caution and prudence. The Department has 
established a small loan guarantee office under the Department's Chief 
Financial Officer. In implementing the program, we will follow the 
Federal Credit Reform Act of 1990 (FCRA) and Office of Management and 
Budget (OMB) guidelines, and we will emulate ``best practices'' of 
other Federal agencies. Toward that end, we are drafting program 
policies and procedures, establishing a credit review board, and are 
planning to employ outside experts.
    Title XVII authorizes DOE to issue loan guarantees for projects 
that avoid, sequester, or reduce air pollutants and/or anthropogenic 
emissions of greenhouse gases, and ``employ new or significantly 
improved technologies as compared to commercial technologies in service 
in the United States at the time the guarantee is issued.'' Section 
1703(b) lists some specific categories of projects that are eligible 
for these loan guarantees. Title XVII allows for project developers to 
pay the subsidy cost of loan guarantees issued by DOE. While this 
``self-pay'' mechanism may reduce the need for appropriations, it is 
possible that the ultimate cost to the taxpayer could be significantly 
higher than the cost of the subsidy cost estimate. To minimize this 
possibility, DOE's evaluations of applications will entail rigorous 
analysis and careful negotiation of terms and conditions.
    FCRA contains a requirement that prevents us from issuing a loan 
guarantee until we have authorization to do so in an appropriations 
bill. We do not believe we have authority to proceed with an award 
absent having the necessary explicit authorization in an appropriations 
bill.
    Question. What type of interest from researchers and the public has 
the Department received regarding this newly authorized program?
    Answer. The loan guarantee provisions in the Energy Policy Act of 
2005 are generating a great deal of interest. The Department regularly 
receives questions about every aspect of the loan guarantee program 
from prospective project sponsors and other constituencies. The topics 
of these questions range from the application and transaction closing 
processes to the criteria for eligible projects.
    Question. Has the Department received applications, from whom, and 
for what projects? If not, when will the DOE be accepting applications 
for ``self-pay'' loan guarantees, and how long does DOE anticipate it 
will take to process an application?
    Answer. Although the Department has received many inquiries about 
loan guarantees, DOE has not received any applications for loan 
guarantees.
    The Department of Energy (DOE) is working to meet the Secretary's 
previously stated goal of accepting the first preliminary applications 
for ``self-pay'' loan guarantees under Title XVII before the end of 
fiscal year 2006. We are proceeding, but we are doing so with no small 
measure of caution and prudence. The Department has established a small 
loan guarantee office under the Department's Chief Financial Officer. 
In implementing the program, we will follow the Federal Credit Reform 
Act of 1990 (FCRA) and Office of Management and Budget (OMB) 
guidelines, and we will emulate ``best practices'' of other Federal 
agencies. Toward that end, we are drafting program policies and 
procedures, establishing a credit review board, and are planning to 
employ outside experts.
    Title XVII authorizes DOE to issue loan guarantees for projects 
that avoid, sequester, or reduce air pollutants and/or anthropogenic 
emissions of greenhouse gases, and ``employ new or significantly 
improved technologies as compared to commercial technologies in service 
in the United States at the time the guarantee is issued.'' Section 
1703(b) lists some specific categories of projects that are eligible 
for these loan guarantees. Title XVII allows for project developers to 
pay the subsidy cost of loan guarantees issued by DOE. While this 
``self-pay'' mechanism may reduce the need for appropriations, it is 
possible that the ultimate cost to the taxpayer could be significantly 
higher than the cost of the subsidy cost estimate. To minimize this 
possibility, DOE's evaluations of applications will entail rigorous 
analysis and careful negotiation of terms and conditions.
    FCRA contains a requirement that prevents us from issuing a loan 
guarantee until we have authorization to do so in an appropriations 
bill. We do not believe we have authority to proceed with an award 
absent having the necessary explicit authorization in an appropriations 
bill.
    Question. In working with Fischer-Tropsch technologies, does the 
Department have suggestions on how to provide government assistance to 
those companies who are interested in commercializing this technology?
    Answer. The Department of Energy (DOE) completed its successful 
RD&D program on coal-to-liquids including related Fischer-Tropsch (FT) 
technologies several years ago. The Energy Policy Act of 2005 (EPAct 
2005) authorizes new DOE and other assistance (e.g., investment tax 
credits) to early commercial projects that employ FT technologies, 
including loan guarantees under Title XVII.
    The Department is working to meet the Secretary's previously-stated 
goal of accepting the first preliminary applications for ``self-pay'' 
loan guarantees under Title XVII before the end of fiscal year 2006. We 
are proceeding, but we are doing so with no small measure of caution 
and prudence. The Department has established a small loan guarantee 
office under the Department's Chief Financial Officer. In implementing 
the program, we will follow the Federal Credit Reform Act of 1990 
(FCRA) and Office of Management and Budget (OMB) guidelines, and we 
will emulate ``best practices'' of other Federal agencies. Toward that 
end, we are drafting program policies and procedures, establishing a 
credit review board, and are planning to employ outside experts.
    Title XVII authorizes DOE to issue loan guarantees for projects 
that avoid, sequester, or reduce air pollutants and/or anthropogenic 
emissions of greenhouse gases, and ``employ new or significantly 
improved technologies as compared to commercial technologies in service 
in the United States at the time the guarantee is issued.'' Section 
1703(b) lists some specific categories of projects that are eligible 
for these loan guarantees. Title XVII allows for project developers to 
pay the subsidy cost of loan guarantees issued by DOE. While this 
``self-pay'' mechanism may reduce the need for appropriations, it is 
possible that the ultimate cost to the taxpayer could be significantly 
higher than the cost of the subsidy cost estimate. To minimize this 
possibility, DOE's evaluations of applications will entail rigorous 
analysis and careful negotiation of terms and conditions.
    FCRA contains a requirement that prevents us from issuing a loan 
guarantee until we have authorization to do so in an appropriations 
bill. We do not believe we have authority to proceed with an award 
absent having the necessary explicit authorization in an appropriations 
bill.

                            VEHICLE PROGRAMS

    Question. The fiscal year 2007 budget request for Energy Supply and 
Conservation Accounts supports development of a number of new energy 
technologies, including programs that fund basic and applied research, 
development, demonstration, and technical assistance. These efforts 
promote the deployment of new technologies needed to support both 
Hybrid Electric and Fuel Cell vehicle development under the FreedomCAR 
program. Lightweight materials, electronic power control, electric 
drive motors, and advanced energy storage devices are specifically 
identified in the fiscal year 2007 budget as areas where Federal R&D 
investment seeks to achieve technology breakthroughs.
    Is it fair to state that the United States has fallen behind its 
global competitors in the race to develop the next generation of Hybrid 
Electric Vehicles (HEV) to meet projected consumer demand? How far 
behind is the United States in developing next generation HEVs that 
will ensure our competitiveness in this market?
    Answer. No, we do not believe that the United States is lagging 
behind any country from a next-generation perspective. The fiscal year 
2007 presidential request reallocated vehicle funding program resources 
to increase focus on plug-in hybrid electric vehicle research. Our 
technological goals are ambitious, and progress to date is good. We 
have seen pre-competitive advances in the reduction in the cost of the 
next generation of batteries, as well as improvements in the cost and 
performance of other essential components of HEVs. Other indicators of 
progress include advances in the nickel metal hydride battery developed 
through DOE-sponsored R&D. Work is underway to develop the high energy 
batteries for plug-in HEVs, expected to keep the United States dominant 
in this key area.
    There is also a need to reduce the cost of HEV technology to 
increase consumer acceptance. A recent poll indicated that over 50 
percent of the American public desires HEVs, but believes they are too 
costly (based on a telephone poll of 1,001 adults conducted March 10-12 
and released April 10 by CNN/USA Today/Gallup). The FreedomCAR 2010 
technology targets aim to resolve the issue of cost barriers. This goal 
is shared by industry; for example, Toyota recently announced an effort 
to reduce their HEV component costs by two-thirds in the same time 
frame.
    Question. Electronic power control is one of the activities for 
which R&D investment has been targeted under the FreedomCAR program. 
Has the program identified and documented the technical approaches that 
have the most potential to provide radical improvements or 
``breakthroughs'' in electronic power control for next generation HEVs? 
If so, what are the potential breakthrough technologies?
    Answer. We have identified and documented the technical approaches 
for the next generation of hybrid electric vehicles (HEVs), and feel 
the potential breakthrough technologies for high-temperature operation 
include wide bandgap materials, advanced packaging, and high-
temperature capacitors. Silicon Carbide (SiC) is the only wide bandgap 
material currently available to produce useable power devices. Ongoing 
research and development efforts are focused on these technologies. In 
fiscal year 2007 we anticipate funding efforts to build an all SiC 
inverter and a high-temperature DC/DC converter. A new solicitation is 
also planned in fiscal year 2007 to seek other alternative, high-
temperature technologies.
    Question. Which of these potential breakthrough technologies in 
electronic power controls have the greatest potential to accelerate 
U.S. efforts to develop the next generation HEVs?
    Answer. The FreedomCAR and Fuel Partnership's Electrical and 
Electronics Technical Team has identified the cost, weight, and volume 
targets and reliability requirements to help make HEVs a cost-
competitive choice for consumers. Meeting these targets would require 
improvements over current technologies to reduce weight and volume by a 
factor of two and cost by a factor of four. Power electronics capable 
of operating at ambient temperatures of 200 C would likely require 
silicon carbide (SiC) devices, and high-temperature packaging to enable 
high-temperature operation. These technologies are the highest priority 
research need for the next generation HEVs. The fiscal year 2007 budget 
supports continued research to address these challenges.
    Question. Would the successful development of air-cooled vehicle-
class power electronics at a vastly accelerated pace provide the kind 
of ``breakthrough'' that would allow the United States to catch up with 
our global competitors? If so, what are the most promising and highest 
priority technologies for air-cooled vehicle-class power electronics to 
which additional investment should be targeted?
    Answer. Air-cooled power electronics offer the potential to meet 
the targets and requirements for size, weight, cost, volume, and 
reliability to make hybrid electric vehicles (HEVs) an economic choice 
for large numbers of consumers. Simply accelerating the pace of power 
electronics development is not the only technology breakthrough 
required to successfully market this technology. Automakers have yet to 
demonstrate air-cooled HEV technologies for high-power traction drives 
in consumer vehicles. Success in this area would allow an automobile 
manufacturer to leap-frog current HEV vehicles.
    The most promising and highest priority technologies in sequential 
order are air-cooled inverters, high-temperature DC/DC converters, and 
the functional integration of inverters and converters to allow sharing 
of components. The fiscal year 2007 budget request will fund research 
and development efforts to build an all-silicon carbide (SiC) inverter 
and a high-temperature converter. Research and development of the 
functional integration of a high-temperature inverter/converter is 
planned for fiscal year 2007.
    Question. Has Wide Bandgap Silicone Carbide technology been 
identified as a potential breakthrough technology for air-cooled 
vehicle-class power electronics? If so, what would its successful 
insertion into the air-cooled vehicle-class power electronics program 
mean for the United States in the global competition?
    Answer. Yes, wide bandgap technology, such as silicon carbide 
(SiC), is one of several enabling technologies required to achieve a 
breakthrough in air-cooled power electronics for hybrid electric 
vehicles (HEVs), plug-in hybrid vehicles, and fuel cell vehicles. 
Current HEV technologies exceed the weight and volume targets by a 
factor of two, and exceed the cost target by a factor of four. Success 
with SiC technology alone, however, will not guarantee successful 
development of cost effective air-cooled devices. An air-cooled 
inverter offers the potential to reduce the size and weight of an 
inverter by 75 percent when compared to the current HEV technology. It 
also offers the potential for the inverter to meet the FreedomCAR cost 
target, with greatly improved reliability.
    Question. What are your internal estimates of the potential, in 
terms of accelerating the schedule, if this technology were 
successfully demonstrated as an R&D breakthrough in the air-cooled 
vehicle-class power electronics? Would 3 to 5 years be a reasonable 
estimate? Does the current budget for ``electronic power control'' R&D 
provide sufficient funding to evaluate the potential breakthrough 
technologies, such as Wide Bandgap Silicone Carbide, that may provide 
the greatest potential for restoring U.S. leadership in the development 
of next generation HEVs?
    Answer. The current budget for power electronics research and 
development provides sufficient funding to evaluate, research, and 
develop the technologies necessary for the next generation of hybrid 
electric vehicles (HEVs), including those required for high-temperature 
operation such as silicon carbide (SiC). The potential to accelerate 
the schedule and produce technology solutions in a 3- to 5-year period 
exists due to the combined government and industry efforts to advance 
SiC and other high-temperature components and devices required for next 
generation HEVs. There is increasing interest among firms that produce 
and use SiC devices in power electronics, and it is highly likely that 
the development schedule could be accelerated by appropriate teaming of 
suppliers, national laboratories, universities, and U.S. automakers. 
The DOE FreedomCAR and Fuel Partnership solicitation planned for late 
fiscal year 2006 is intended to stimulate the formation of such teams.
    Question. Given the growing consumer acceptance for HEVs and the 
global competition in the HEV marketplace, has the FreedomCAR program 
assessed what it will mean to the United States, if we fail to regain 
our leadership in the critical R&D needed for the next generation of 
HEVs? Is there a concern that it will leave North American automotive 
manufacturing uncompetitive in price and technology?
    Answer. Achievement of the 2010 FreedomCAR goals and the program's 
subsequent R&D will help assure that our domestic industry partners can 
successfully compete in both the United States and the world markets. 
One central objective of our 2010 goals is reducing the cost of HEV 
components so that the vehicle manufacturing cost allows them to be 
offered at prices competitive with standard vehicles.
    Question. Please provide estimates of the additional Federal R&D 
investment that would be required to insert the highest priority 
potential breakthrough technologies for Advanced Power.
    Answer. The Department's fiscal year 2007 budget request provides 
adequate funding to support research and development of hybrid electric 
and fuel cell propulsion technologies under the FreedomCAR and Fuel 
Partnership Program. It has been appropriately apportioned to address 
the technology challenges associated with the development of next 
generation hybrid electric vehicles (HEVs) with wide consumer 
acceptance.
                                 ______
                                 
           Question Submitted by Senator Christopher S. Bond

    Question. Mr. Garman, in response to my question to you regarding 
the administration's cuts to the Clean Coal Power Initiative (CCPI), 
you indicated that the Department of Energy had $500 million in un-
obligated funds available. Where, specifically, in the Department of 
Energy are these un-obligated funds? What account? And, once 
identified, will the administration ask that these funds be re-
programmed to the CCPI and other commitments in the President's 
Advanced Coal Research Initiative?
    Answer. The un-obligated funds are in the CCPI and the original 
Clean Coal Technology Demonstration accounts and represent funds that 
have been formally committed to projects competitively selected under 
CCPI (and the predecessor programs, namely the Clean Coal Technology 
Demonstration and the Power Plant Improvement Initiative programs) that 
are either in negotiations for awards or projects that have been 
awarded but have not yet been completed. The structure of CCPI projects 
is such that some amount of un-obligated funds remains on projects 
until they enter their final budget phase. The Department is working to 
withdraw funds from projects in the CCPI and Clean Coal Technology 
accounts that are not going forward. The Department is also working to 
change CCPI contract provisions and other processes to strengthen its 
ability in the future to withdraw funds from stalled projects. If a 
project does not go forward and the Department withdraws funds, then 
the available funds will be put towards a future CCPI solicitation.
                                 ______
                                 
              Questions Submitted by Senator Wayne Allard

    Question. Last year Congress passed legislation, at my request that 
authorized the Secretary of Energy to purchase essential mineral rights 
at Rocky Flats. This authority was provided for 1 year. I understand 
that minimal progress has been made so far.
    What is the Department of Energy's plan for purchasing the 
essential mineral right at Rocky Flats? When do you expect this 
transaction to be completed?
    Answer. The Department of Energy (DOE), in partnership with the 
U.S. Fish and Wildlife Service (USFWS) and Natural Resources Trustees 
(Trustees), has established and is currently executing a plan for 
purchasing the essential mineral rights at Rocky Flats.
    The acquisition strategy for the mineral rights will be conducted 
in two phases. First, the Trust for Public Lands (TPL), a nonprofit 
group specializing in real estate acquisitions for Federal Government 
entities, will purchase the mineral rights from willing owners at fair 
market value, and will perform any appraisal updates required. In the 
second phase, these rights will be purchased by the DOE, with the funds 
provided in the Energy and Water Development Appropriations Act for 
Fiscal Year 2006.
    At this time, TPL, DOE, and USFWS are finalizing a letter of 
agreement, stipulating the process for contacting willing sellers and 
ascertaining fair market values.
    DOE and the USFWS fully expect to accomplish the acquisition of 
mineral rights well within the timeline mandated by Congress, and in 
harmony with the local stakeholder community.
    Question. With regard to Environmental Management funding, why 
didn't the Department of Energy take the money it saved at Rocky Flats 
and use it to accelerate clean-up at other sites?
    Answer. Prior to fiscal year 2001, the Department of Energy's (DOE) 
Environmental Management funding strategy was that as sites such as 
Rocky Flats completed cleanup, and their funding requirements 
decreased, those savings would be made available to other sites. 
However, beginning in fiscal year 2003, as part of the administration's 
Accelerated Cleanup Initiative, increased funding was provided to 
accelerate cleanup at most sites, rather than waiting until cleanup at 
sites such as Rocky Flats was completed. This allowed the DOE to 
address its urgent risks sooner and to accelerate cleanup.
    Question. To what extent is DOE using contract mechanisms similar 
to those used at Rocky Flats to incentivize the contractor to achieve 
greater performance? What can we do to further encourage the 
accelerated clean-up of other sites?
    Answer. The contract mechanisms used at Rocky Flats were part of a 
successful three-pronged management strategy. The first element used 
contract devices designed to provide incentives to the contractor to 
complete site closure within targeted costs and schedules. Second, it 
included application of innovative technologies and development of 
regulatory agreements that focused on end states. Third, it involved 
extensive stakeholder participation. The Department of Energy (DOE) 
currently is using the same elements employed at Rocky Flats for the 
Mound, Fernald, Columbus, and Oak Ridge projects.
    The DOE is using its lessons learned from the Rocky Flats project 
to accelerate cleanup efforts at its other sites. It is transferring 
Rocky Flats personnel to support closure at other sites and is 
providing lessons-learned seminars to managers at other sites. The DOE 
also developed and is widely disseminating lessons-learned documents 
and a digital video disk explaining its cleanup and closure successes. 
The DOE continues to examine its cleanup work at each of the 
Environmental Management sites to identify areas where an accelerated 
approach is feasible.
    The former Rocky Flats weapons contractors (Dow and Rockwell) and 
the property owners near Rocky Flats have been engaged in a protracted 
legal battle over whether these property owners should be compensated 
for the damage caused by the environmental contamination at Rocky 
Flats. Last February, a jury awarded the property owners an incredible 
sum of over $550 million in damages. I understand the contractors are 
now appealing this decision. It seems to me that only people who are 
benefiting from this battle are the lawyers who so far have taken $100 
million in legal fees. And, because Dow and Rockwell are indemnified by 
the Federal Government, the real losers are the American taxpayers.
    Question. To what extent is DOE trying to settle this case? Is 
there any evidence that suggests that these properties suffered 
extensive contamination?
    Answer. An appeal has not yet been filed in this case because a 
judgment has not yet been entered. One reason for that is that the 
jury's verdict needs to be adjusted by the court to eliminate 
duplicative damages and punitive damages that are in excess of what 
Colorado law allows. When a judgment is entered, it should be for 
substantially less than the $550 million figure that has been reported. 
It is also not the case that the legal fees that have so far been 
incurred in this litigation amount to $100 million. That said, this 
litigation has clearly already been very costly for the American 
taxpayers, and if an adverse judgment were to be upheld on appeal the 
taxpayers will be, as your question says, the ``real losers.'' Prior to 
the trial in this case we were advised that the plaintiffs would be 
willing to consider settling their claims for approximately $100 
million. We believed then that a settlement anywhere near that amount 
could not be justified and, notwithstanding the jury's verdict, that 
remains our view. In part, this is because there is no evidence that 
properties in the vicinity of Rocky Flats suffered extensive 
contamination. Just last year the Agency for Toxic Substances and 
Disease Registry (ATSDR) issued a report concluding that the ``studies 
and sampling data generated by numerous parties, including the U.S. 
Environmental Protection Agency (EPA), the Colorado Department of 
Public Health and Environment (CDPHE), the U.S. Department of Energy 
(DOE) and its contractors and local community groups, universities and 
private researchers . . . paint a consistent picture of the public 
health implications of environmental contamination'' near Rocky Flats, 
and that picture is that ``past, current and future exposures are below 
levels associated with adverse health effects.'' In fact, ATSDR 
reported that ``estimated total exposures to radiation from the soil . 
. . are 3,000 times lower than the average exposures to ionizing 
radiation experienced by United States residents.''
                                 ______
                                 
             Questions Submitted by Senator Mitch McConnell

    Question. In fiscal year 2005, this committee generously approved 
my request to increase funding for cleanup at the Paducah Gaseous 
Diffusion Plant to accelerate the disposal of legacy waste and 
decommissioning activities at the site. Can you update the committee on 
how those funds have been used and what progress has been made in 
accelerating these projects?
    Answer. The following progress has been realized to date at the 
Paducah Gaseous Diffusion Plant:
Legacy Waste Disposal Acceleration
    The Department of Energy (DOE) disposed of more than 1,900 drums 
(over 1,000,000 pounds) of stored uranium by-products in fiscal year 
2006, accelerating this action by more than 2 years.
    DOE accelerated by 3 years the disposal of more than 24,000 cubic 
feet of low-level radioactive waste which is stored outside.
Decontamination and Decommissioning (D&D) Acceleration
    The C-410-A Hydrogen Holder Tank has been completely removed, 8 
years ahead of the original schedule.
    The characterization and disposal of waste located in three DOE 
Material Storage Areas (DMSA) is ahead of the original schedule and is 
expected to be completed in fiscal year 2006. More than 80 percent of 
the targeted waste has been processed and the outside DMSA has been 
completely emptied.
    The C-603 Nitrogen Facility removal is complete with the exception 
of a small amount of residual waste. This project was accelerated by 
approximately 5 years.
    The C-402 Lime House removal is on schedule for completion in 
fiscal year 2006, 2 years early. A streamlined regulatory approval 
process was implemented in cooperation with the State and Federal 
regulators.
    A project to remove the C-405 Incinerator is undergoing final 
regulatory approval with actual decontamination and decommissioning 
(D&D) scheduled to begin in late fiscal year 2006 and be completed in 
fiscal year 2007. This schedule is an acceleration of approximately 3 
years.
    DOE is also working to get final approval from the regulators to 
remove the C-746-A West-End Smelter. The D&D should begin in early 
fiscal year 2007 and will be complete in fiscal year 2007, 2 years 
ahead of schedule.
    I remain concerned by the continuing delays in the construction of 
the Depleted Uranium Hexafluoride (DUF6) conversion facility 
at the Paducah Gaseous Diffusion Plant. Congress has twice enacted 
legislation I authored to make sure this project moves forward in a 
safe and expeditious manner. This committee has met or exceeded funding 
requests for this project in each fiscal year. Yet in its fiscal year 
2007 budget justification, DOE again pushes the construction completion 
date back to November of 2007 and to start operations in the spring of 
2008.
    Question. What are the reasons for the delays? What assurances can 
the Department offer this committee that it will be able to meet this 
deadline? Given that one of the deadlines DOE has met on this project 
was the statutory deadline to begin construction by July 31, 2004, does 
Congress need to legislate a mandatory date for start of operations?
    Answer. On September 30, 2005, the Deputy Secretary approved the 
Project Performance Baseline and Start of Construction for the depleted 
uranium hexafluoride (DUF6) project with commencement of 
operations projected for April 2008. Previous schedules were based on 
conceptual and preliminary designs that had not been validated by the 
Department of Energy (DOE), unlike the current approved schedule which 
is based upon the final conversion facility design. The need to adjust 
the original schedule reflects the considerable uncertainty associated 
with large construction projects during early design stages. DOE has 
high confidence in the new schedule now that the design is complete. 
The schedule includes 4 months of schedule extension necessary to 
incorporate design and fabrication activities to achieve greater 
assurance of safety for chemical operations during natural phenomena 
events, such as earthquakes or high wind events. The schedule also 
includes 5 months of contingency to account for unexpected events, to 
give DOE the confidence in our commitment to this approved baseline. 
Schedule contingency was not included in previous schedules.
    Since approval of the Project Baseline in September 2005, we have 
seen continuous progress at the site, including construction of the 
conversion buildings and steady progress on the warehouse/maintenance 
and administration buildings. The major construction is more than 35 
percent complete. Equipment procurement contracts for about 75 percent 
of the major equipment have been awarded, totaling more than $70 
million. In addition, approximately $60 million in subcontracts for 
construction and fabrication have been awarded to date. We are 
committed to our schedule, and to commence operations in a manner that 
is safe and protective of the community.
    Question. Like many members of the Paducah community, I am 
concerned about the economic impact of the plant possibly ceasing 
enrichment operations in 2010. In its fiscal year 2007 budget 
justification. DOE notes that portions of the Paducah site ``will be 
used to promote the development of private-sector enterprises in ways 
that are consistent with and complementary to current site missions''. 
Given that the Paducah has a skilled workforce and an acceptance of 
nuclear operations not found in other parts of the country, has the 
Department identified what those sorts of ``private-sector 
enterprises'' might be?
    Answer. The Department of Energy (DOE) is not conducting re-
industrialization activities at the Paducah site. The availability of 
this large cleaned-up industrial site is expected to be promoted as an 
attractive resource by the community in its long-term industrial 
development after DOE has completed cleanup. DOE anticipates that its 
final cleanup activities will support future community private sector 
development initiatives.

                          SUBCOMMITTEE RECESS

    Mr. Garman. Thank you, Mr. Chairman.
    Senator Domenici. We stand in recess.
    [Whereupon, at 12:03 p.m., Thursday, March 30, the subcom- 
mittee was recessed, to reconvene subject to the call of the 
Chair.]

 
 ENERGY AND WATER, AND RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 
                                  2007

                              ----------                              


                        WEDNESDAY, APRIL 5, 2006

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:40 p.m., in room SD-124, Dirksen 
Senate Office Building, Hon. Pete V. Domenici (chairman) 
presiding.
    Present: Senators Domenici, Craig, Bond, Allard, Murray, 
Dorgan, and Landrieu.

                      DEPARTMENT OF DEFENSE--CIVIL

                         DEPARTMENT OF THE ARMY

                       Corps of Engineers--Civil

STATEMENT OF JOHN PAUL WOODLEY, JR., ASSISTANT 
            SECRETARY OF THE ARMY (CIVIL WORKS)

             OPENING STATEMENT OF SENATOR PETE V. DOMENICI

    Senator Domenici. The hearing will please come to order. 
Because of schedule problems, we are going to let some Senators 
speak out of order. Senator Bond would like to make an opening 
statement at this point. I yield to you, Senator.

                STATEMENT OF SENATOR CHRISTOPHER S. BOND

    Senator Bond. Mr. Chairman, I thank you very much for your 
kind courtesies.
    Mr. Woodley, we have had long discussions about the need 
for locks on the Mississippi and Illinois Rivers, and one of 
these days I hope we will have an authorization coming out of 
our Environment and Public Works Committee which will allow 
this committee to do the vitally important work it should do in 
funding our vitally needed Nation's infrastructure.
    I have here in my hand an article from the Wall Street 
Journal which I would share with you and those with whom you 
discuss. It's called ``As Utilities Seek More Coal, Railroads 
Struggle to Deliver.'' It reports that their shipping fees are 
going up a reported 20 to 50 percent. The Department of 
Transportation predicts that commercial shipping volume over 
the next 20 years will increase by 70 percent. Most people, at 
least outside Washington, recognize the bulk commercial freight 
cannot be emailed, so transportation capacity is an issue that 
will demand leadership, and the sooner the better.
    Last month Secretary Johans of the Department of 
Agriculture, Deputy Connor, and Chief Economist Dr. Keith 
Collins testified before the Appropriations Committee. Mr. 
Woodley, if you and your team are not routinely in touch with 
Collins I would be very disappointed. Dr. Collins has been 
Chief Economist or in that office serving at least four or five 
presidents.
    He testified again that any 50-year study is highly 
speculative, noting that even the 10-year forecasts USDA does 
are speculative and that 10 years is heroic enough. However, he 
is clear that they do not see stalled or dwindling or flat 
export activity through the gulf. In fact, he said they see a 
substantial increase, in testimony previously he said 40 to 45 
percent in corn alone, and he sees a good long-term market for 
grains and oilseeds in the world and he noted that having 
efficient infrastructure will help make that possible.
    As we all know, the demand for goods, agricultural goods, 
one item transported on the rivers, depends upon 
transportation. In good years ag exports exceed imports by $30 
billion, bringing great economic boost to the breadbasket of 
America as well as helping our balance of payments.
    Secretary Johans agreed firmly that the existing lock 
system, built 70 years ago, has proved an important and wise 
investment and that should be obvious even to the fiercest 
opponents of commercial shipping.
    Mr. Woodley, with help of able staff I want to introduce 
you to Major Charles L. Hall, Rock Island Engineer from 1927 to 
1930. He advised President Hoover and Congress in 1929 that the 
proposed system, the one which currently exists on the 
Mississippi River, was not economically feasible and argued 
that ``limited barge traffic did not indicate that a viable 
barge industry would develop.'' Fortunately, President Hoover 
and the Congress ignored the advice and President Hoover said 
modernization would ``put the rivers back as great arteries as 
commerce after a half century of paralysis.''
    Now, with 80 million tons moved annually and two-thirds of 
our exported grain moving through that system, it is clear that 
the Congress and President Hoover were wise to ignore the 
expert advice of Major Hall. I suspect and fear that the Major 
may have a grandchild working dutifully somewhere, maybe at the 
Office of Management and Budget.
    So I ask that you let history help inform your future 
decisions and that you consider that we must not only try to 
predict the future, but shape the future. In some cases, 
opinions of experts deserve to be very strongly considered just 
before they are very thoroughly rejected. I believe that some 
80 members of the Senate believe that we should pass a Water 
Resources Development Act which will enable my good friend the 
outstanding chairman to act appropriately in this subcommittee.
    I thank you, Mr. Chairman, for your comments.
    Senator Domenici. Well, I thank you for your comments, and 
I just want to ask you, since you are one of the proponents, 
and quite properly and appropriately, of the WRDA bill, what is 
your--in 2 minutes, what is holding it up?
    Senator Bond. Initially there were objections from the 
Office of Management and Budget. We had an opportunity to go 
above their heads to policymakers who have a broader 
perspective and they agreed that the Office of Management and 
Budget would not threaten a veto. Currently there are, as I 
said, 80 signatures on a letter to the Republican and 
Democratic leaders saying that we need to move the bill. There 
are still holds in the Senate from people who want us to go 
back to the horse and buggy days and rely on overcrowded 
railroads and tremendously crowded highways to ship not only 
grain for the export market, but the tremendous amount of 
commercial commodities.
    Senator Domenici. Those are Senators?
    Senator Bond. Those are Senators.
    Senator Domenici. We do not know who they are at this point 
and you cannot get them released. We are stuck.
    Senator Bond. We intend to do everything we can and ask the 
leaders to call for a vote if the holds are not relieved and 
not pay attention to the holds, and we hope that the Office of 
Management and Budget will not follow Major Hall and have a 
last minute reconversion to their opposition.
    Senator Domenici. All right.
    Senator Bond. Thank you, sir.
    Senator Domenici. Having said that, the Democrats are 
present. When I opened they were not. I apologize for that. It 
was only 3 minutes, Senator, and then you came.
    I am not going to have any opening statements. I think we 
are going to run out of time. Any opening statements desired on 
your side? I knew Senator Bond had to say something or else we 
would have a----
    Senator Dorgan. Did he talk about the Missouri River 
management? If so, I will have an opening statement.
    Senator Domenici. No.
    Senator Dorgan. If not, I will not.
    Senator Domenici. No. But I knew if I did not----
    Senator Bond. I will be sure and cc you.
    Senator Domenici. I knew if I did not let him speak the way 
he wanted to we would have problems.
    How about over here?

                   STATEMENT OF SENATOR WAYNE ALLARD

    Senator Allard. Mr. Chairman, I have a very brief 
statement.
    Senator Domenici. Let us do it.
    Senator Allard. Mr. Chairman, first of all I want to thank 
you for holding the hearing. The Corps of Engineers does a 
great deal for the country, as well as for Colorado, but I must 
express my disappointment with the fact that funding to 
complete the Fountain Creek watershed study was not included in 
the President's proposed budget again this year. The study was 
originally contracted at $2.9 million with a 50 percent 
Federal, 50 percent local funding split. The locals have long 
ago put in over $1.4 million, but the Federal Government has 
not lived up to its side of the bargain.
    In what should be the final year of the study, it mystifies 
me why the Corps did not place enough value on the study to 
include it in the budget request. But I will have questions on 
that later on, Mr. Chairman. Thank you for your tolerance.
    Senator Domenici. Thank you very much.
    On the Democrats' side, Senator Mary Landrieu.

             PREPARED STATEMENT OF SENATOR MARY L. LANDRIEU

    Senator Landrieu. Mr. Chairman, I have a statement for the 
record, but I do want to say that I will come back after the 
vote. I have a series of questions that really do need answers 
today based on the situation that we are facing in the gulf 
coast and some charts I want to share with you, Mr. Chairman, 
and the committee about the backlog of current projects.
    [The statement follows:]

             Prepared Statement of Senator Mary L. Landrieu

    Mr. Chairman, thank you for calling this hearing to review the 
President's budget for the Army Corps of Engineers.
    Before I comment on any specific budget matters, I wish to express 
my appreciation for being a member of this subcommittee. Its 
jurisdiction over both energy and water are matters of monumental 
concern to my State of Louisiana, the Gulf Coast, and our Nation. Now 
is a critical time for action on these issues.
    Because of these monumental issues and because of the relationships 
with you and Senator Reid that we have built, I sincerely look forward 
to working with both of you. I appreciate the time that each of you 
have taken over the years to join me in Louisiana to see the Nation's 
worst coastal erosion as well as successful projects such as the SELA 
flood control project.
    For many years, Congress has received the administration's request 
for funding for the Civil Works program of the Army Corps of Engineers 
and has increased this request. In recent years, Congress has 
appropriated approximately 10 percent to 15 percent more funding. Once 
again, the administration has requested less funding for fiscal year 
2007 for the Corps than was provided by Congress for the current fiscal 
year.
    Simply stated, the administration's fiscal year 2007 budget request 
for the Corps puts the Nation at risk, and we cannot be complacent. 
Hurricanes Katrina and Rita shred that curtain of complacency and gave 
the Nation a look at the inadequate infrastructure as it relates to 
water management and flood protection. We must act.
    Underfunding infrastructure puts our Nation at risk. Hurricanes 
Katrina and Rita exposed this risk. These storms were not the real 
culprits. Instead, the real culprit was the failure to fund a levee 
system that would have protected us against hurricanes such as these.
    This failure caused the deaths of more than 1,000 people in 
Louisiana alone. More than 215,000 homes were destroyed with thousands 
more damaged. Countless businesses, churches, and schools were wiped 
out. The cost of recovering from this levee failure will be hundreds of 
billions of dollars. The cost will be far more than it would have cost 
to build the infrastructure that would have prevented this catastrophic 
loss.
    The impact of the administration's inadequate Corps funding 
requests are also felt throughout the Nation on vital projects causing 
a delay in their completion and resulting benefits. Many of these 
projects are physically located in Louisiana but greatly impact the 
entire Nation.
    For example, numerous hurricane protection and flood control 
projects in Louisiana are intended to protect millions of Americans 
living in coastal Louisiana. These projects are also intended to 
protect energy infrastructure that supplies oil and gas throughout the 
Nation.
    The existing backlog of authorized projects combined with the WRDA 
authorizations currently under consideration amount to more than $50 
billion. Yet, the administration asks for only $1.5 billion for 
construction in fiscal year 2007. At this pace, it will take at least 
35 years to construct the backlog of projects assuming no inflation and 
no new projects are added during that time.
    Hurricanes Katrina and Rita showed that we have not provided enough 
funding for levees and pumps. The current cost of recovering from the 
destruction caused by these storms shows that it is more expensive to 
pay for re-building than for prevention.
    Another component of protecting Louisiana and the Nation is the 
coastal restoration effort to save America's Wetland.
    The Louisiana Coastal Area comprises one of the Nation's largest 
expanses of coastal wetlands. As an environmental treasure, it supports 
a diverse collection of migratory birds, fish, and other species. As a 
productive natural asset, the Louisiana Coastal Area supports an 
extensive energy infrastructure network responsible for an estimated 20 
percent of our Nation's energy and provides over 20 percent of the 
seafood consumed in the United States. Additionally, offshore oil and 
gas production off of Louisiana's coast is one of the U.S. Treasury's 
largest revenue sources. This production contributes approximately $6 
billion a year to the Federal Government, and this amount is rising.
    Despite these significant national contributions made by the 
Louisiana Coastal Area and its resulting standing as America's Wetland, 
it accounts for 90 percent of the Nation's total coastal marsh loss. 
This destruction puts all of its national benefits at risks. 
Accordingly, the Corps along with the State of Louisiana has been 
engaged in the development of a comprehensive coastal restoration plan. 
Hopefully, implementation of this plan will begin soon, and this 
Congress will provide the Corps with the funding necessary to do the 
job. I will continue to work with all of you toward achieving this 
vital goal.
    Another example of a project physically located in Louisiana having 
national implications is the Inner Harbor Navigation Canal (IHNC) lock 
project. This project at the Port of New Orleans was wrongly zeroed out 
in the President's budget. Congress first authorized the replacement of 
this lock in 1956! It is a project of national significance that 
impacts trade in over 25 States on a daily basis. In fact, over 16 
million tons of cargo move through this lock each year. Additionally, 
its completion directly relates to closing the Mississippi River Gulf 
Outlet which has destroyed more than 27,000 acres of wetland and 
thereby eliminated a hurricane buffer to metro New Orleans.
    In closing, Hurricanes Katrina and Rita show us that we must invest 
more in our infrastructure. We either heed their warning or peril.
    Finally, Mr. Chairman, I thank you for your continued leadership on 
the Nation's water issues. I look forward to the testimony of our 
witnesses and the opportunity to question them when appropriate.

    Senator Domenici. Senator Craig.

               PREPARED STATEMENT OF SENATOR LARRY CRAIG

    Senator Craig. Mr. Chairman, I will ask unanimous consent 
that my full statement be a part of the record, but I want to 
recognize when a job well done is well done and completed, and 
I want to thank the Corps for their completing of the channel 
improvement project on the Snake River between Idaho and 
Washington. Critical importance to the aid of transportation in 
that region. I want to thank you for the work done.
    Thank you, Mr. Chairman.
    Senator Domenici. Your statement is made a part of the 
record.
    [The statement follows:]
               Prepared Statement by Senator Larry Craig
    First, I want to take a moment and thank all of those in the U.S. 
Army Corps of Engineers who have served their country in Iraq. I also 
want to commend those who served their fellow Americans in the wake of 
devastating hurricanes. It has been a trying year for many, and I 
appreciate the support you have provided those in need.
    I also want to thank the Army Corps of Engineers for all the work 
they have done in many of our rural communities to get drinking and 
wastewater infrastructure updated. In my State, rural water 
infrastructure is an increasing need, with many rural communities 
struggling with funding and expertise to fulfill their responsibility 
of providing safe and reliable drinking water. As infrastructure 
continues to age and water quality standards rise, an agency like the 
Corps becomes more and more vital, and I hope to continue working with 
the Corps to see our water infrastructure meets the appropriate 
standards.
    Additionally, I want to thank the Corps for completing the channel 
improvement project on the Snake River between Idaho and Washington. 
This project has aided farmers by providing a safe, efficient means of 
shipping to meet demands, not only for our country, but also other 
countries as well. As gas prices continue to rise and roads become 
increasingly crowded, barges will serve as a critical and efficient 
means of transporting commodities, and I will continue working with the 
Corps on similar projects.
    I have a couple of concerns, one of which is the change in the 
Corps' budgeting practices. In the past, the Corps enjoyed considerable 
flexibility and were able to reprogram funds fairly easily, but with 
the changes, that will no longer be the case. At the appropriate time, 
I'll have a question about that issue.
    I look forward to hearing your testimony.

    Senator Domenici. Senator.

                   STATEMENT OF SENATOR PATTY MURRAY

    Senator Murray. Yes, Mr. Chairman. I just wanted to welcome 
Secretary Woodley and General Strock. Thank you for your 
testifying today. I think what happened in the last few months 
in Senator Landrieu's State and elsewhere really showed all of 
us how important the work is you do and how important it is 
that we maintain that.
    I want to compliment you for the three district offices 
that operate in my State. We have a really varied landscape 
when it comes to Corps projects. We have got hydroelectric, 
flood control, navigation, irrigation, and the Army Corps work 
is really essential to our economy and to our ability to 
maintain the critical infrastructure in our community. We have 
the Portland District that is maintaining the Columbia River 
dredging and the jetties, repairs to the jetties, critical for 
safety. The Seattle District is working on some really complex 
flooding issues and the Walla-Walla District is providing some 
really important engineering expertise for us for the waste 
treatment plant out of Hanford.
    So I want to compliment you on that work, but I just want 
to say I have another hearing, but I want to say publicly I am 
deeply concerned about the investment to our infrastructure, to 
the Corps. We have got to do better than what we have been 
presented, because we have to continue, as I think the Senator 
from Louisiana well knows, to maintain the critical 
infrastructure we have and to make the important investments in 
our Nation's future. So I will join with all of you in working 
towards that direction.
    Thank you, Mr. Chairman.
    Senator Domenici. Very well. Thank you.
    Well, I have a long analytical statement that, it would not 
help here. The atmosphere has been so nice that it would make 
things look very, very bad. Just suffice it to say that I think 
the way you handled the budgeting is a mess, and I do not think 
that you can expect us to do it the way you recommended.
    You are short of money and we know that. The President did 
not fund--did not put in as much as we need. But the way you 
went around, went about trying to make the money work in my 
opinion has made matters worse. So do not look for us, for it 
coming out the way you recommended. It is going to come out, 
but with no damage, we hope.
    My statement and Senator Cochran's statement will be made 
part of the record.
    [The statements follow:]

             Prepared Statement of Senator Pete V. Domenici

    Good afternoon--the hearing will come to order.
    Today, the subcommittee will take testimony on the fiscal year 2007 
budget request for the U.S. Army Corps of Engineers.
    Our panel will consist of witnesses from the U.S. Army Corps of 
Engineers.
    Testifying for them will be: John Paul Woodley, Principle Deputy, 
Assistant Secretary of the Army for Civil Works, and Lieutenant General 
Carl A. Strock, Chief of Engineers for the U.S. Army Corps of 
Engineers.
    Mr. Woodley, General Strock, thank you for appearing before us 
today.
    The President's budget for the Corps of Engineers proposes $4.73 
billion, which is $596 million below the fiscal year 2006 enacted of 
$5.33 billion after rescission.

                      PERFORMANCE-BASED BUDGETING

    The Corps' budget was again prepared using performance-based 
budgeting. I have several concerns with developing the budget in this 
manner. This method seems to concentrate budget development at OMB 
rather than at the District level where it belongs.
    Again for fiscal year 2007, the Remaining Benefits to Remaining 
Costs Ratio is the primary criteria for prioritizing funding decisions. 
There does seem to be more of an effort to ensure obvious national 
priorities were not overlooked, but no attempt to capture traditional 
items of importance to Congress.
    For example, no attention has been given to workforce distribution 
in project selection. Congress has repeatedly demonstrated a desire for 
a geographically diverse Corps of Engineers organization. In order to 
maintain that distribution, a suite of projects needs to be selected to 
maintain the workforce at a stable level. The budget request does not 
consider this factor.

                          PROJECT SUSPENSIONS

    The administration has budgeted $41.4 million to suspend/terminate 
10 construction projects that have been budgeted in the past in order 
to redirect resources to complete high-priority projects. However the 
532 projects and studies that were included in the fiscal year 2006 
Energy and Water Act are not addressed by the fiscal year 2007 Budget 
Request. It is as if termination of these items are either free or 
Congress's problem. I believe when the President signs an appropriation 
bill, all of those studies and projects become the joint property of 
the administration and Congress. Treating Congressional priorities 
differently will lead to consequences.

                 MAJOR ISSUES BY APPROPRIATION ACCOUNT

    The General Investigations account is a disaster. Of the $94 
million requested, only $16.7 million is provided for ongoing study 
efforts nationwide. This compares to $102 million in the current fiscal 
year.
    The budget request shifts projects totaling $342 million from the 
Construction, General account to the Operations and Maintenance, 
General account. Beach renourishment due to navigation impacts, 
Endangered Species Act (ESA) compliance, beneficial use of dredged 
material and major rehabilitations are the categories of the items 
shifted.
    A large portion of the shifted funds is Endangered Species Act 
compliance items. An example is Columbia River Fish Mitigation. In 
fiscal year 2006 this was an $85 million CG line item. In fiscal year 
2007, it is distributed across eight O&M projects for the Columbia 
River. There is no easy way to determine how much funding is for these 
mitigation activities and how much is for O&M. It is all considered 
O&M.
    The other category of funding shifted to O&M is for major 
rehabilitations of locks and dams. Gentlemen, I have been around long 
enough to remember when these projects were funded in the O&M account. 
We moved them to the Construction, General Account and allowed half the 
costs to come from the Inland Waterway Trust Fund because they were not 
being sufficiently budgeted in O&M. Now, because of the backlog in the 
CG account, you are proposing to move them back to O&M. Why not try 
budgeting sufficient funding for them rather than playing three-card 
monte?
    There were a couple of increases proposed in your budget for fiscal 
year 2007.
    The budget proposes $173 million for the Regulatory Program versus 
$158 million enacted after rescission, a 9.5 percent increase. This 
account has increased from $117 million since fiscal year 2000, by far 
the largest percentage growth in any Corps account over the same 
period, yet complaints about permits seem to be on the rise. I have 
been made aware several issues in New Mexico over the last 3 months. 
General Strock, you and I will need to have further discussions about 
this at another time.
    The General Expenses account traditionally funds the Corps 
Headquarters and Division offices is proposed at $164 million, a 7.9 
percent increase. However, this includes $6 million for the Office of 
the Assistant Secretary of the Army. When you compare the fiscal year 
2006 enacted General Expenses of $152 million to the fiscal year 2007 
proposal of $158 million, it is only a 3.9 percent increase.
    Secretary Woodley, I understand that this $2 million increase in 
your budget over the fiscal year 2006 enacted of $4 million is to cover 
joint costs previously covered by the Department of the Army.
    As you are aware, this office was funded in a separate account in 
the fiscal year 2005 and 2006 Energy and Water Acts. Prior to fiscal 
year 2005, your office was funded in the Defense Army OMA account. I 
think we should look at moving funding for your office back to the 
Defense Army OMA account due to your other duties as Assistant 
Secretary in addition to the Corps Civil Works Program.
    You should know that I will oppose the regionalization of the O&M 
budget for fiscal year 2007. This method of displaying O&M effectively 
disguises the underfunding of O&M projects and allows the Corps the 
ability to freely move funds around. It appears that you invented a 
whole new way to aggregate and appropriate O&M just so you could get 
around the Congress's fiscal year 2006 reprogramming guidance.
    The fact that you went to this much trouble in this budget proposal 
demonstrates our need to seriously reexamine reprogramming guidance as 
we prepare the fiscal year 2007 bill.
    Finally, we will need to revisit contracting and reprogramming 
issues for fiscal year 2007. It is clear to me, that the language 
agreed to in fiscal year 2006 is not improving the management of the 
Civil Works program. If anything, it appears to be hindering getting 
work accomplished.
    Secretary Woodley, General Strock, your full statements will be 
made a part of the record. I would ask that you summarize your 
statements.
                                 ______
                                 
               Prepared Statement of Senator Thad Cochran

    Mr. Chairman, I thank you for holding this hearing and thank the 
witnesses for their willingness to appear today before the Energy and 
Water Subcommittee.
    While I understand that this hearing is being held to consider the 
President's budget request for fiscal year 2007, I must mention at the 
outset the good work of the Corps of Engineers in my home State of 
Mississippi in the wake of Hurricane Katrina. I know there have been 
some concerns over the speed with which the Corps has had debris 
removed and the number of out-of-State companies that are leading the 
debris removal effort.
    The Vicksburg District has been thoughtful in their proposal to use 
Mississippi contractors for smaller, more manageable contracts. The 
Government Accountability Office recently agreed that set-aside 
contracts are allowed in Mississippi, and this action will result in 
local people leading local debris removal contracts. I think this is 
good for recovery and good for Mississippi victims as well as 
businesses in our State. Thank you for this assistance.
    I understand that the Corps of Engineers continues to use a 
performance based budgeting formula, which has led to the proposal to 
terminate 10 projects this year. Last year you proposed to terminate 35 
projects. This means that important projects that were previously 
budgeted for by the Corps are, under this budget submission, not going 
to move forward.
    Another area of concern is the language that was included in the 
fiscal year 2006 Energy and Water Appropriations bill regarding the 
Corps of Engineers' use of the continuing contract clause and their 
reprogramming guidelines. My constituents in Mississippi are already 
feeling the negative impacts of this language, and it is my 
understanding that the Corps will likely carry over large amounts of 
the historic funding levels provided in the current year's 
appropriations bill.
    I appreciate the efforts of the Corps of Engineers but worry about 
inadequate funding of important missions under your jurisdiction. The 
Corps is charged with improving safety and security for our Nation's 
citizens, and I hope that this committee will provide the resources 
necessary complete these missions.

                  STATEMENT OF JOHN PAUL WOODLEY, JR.

    Senator Domenici. Having said that, we are ready for you to 
speak. I gather that you want to do it in the normal order; is 
that correct, where you want the Honorable Paul Woodley to 
speak first and then the General? Is that what we want to do?
    General Strock. Yes.
    Senator Domenici. All right. Mr. Secretary, make your 
statement brief. It will be made part of the record.
    General, we look forward to hearing from you next. Make 
your statement long. It will be made a part of the record also.
    Mr. Woodley, please proceed.
    Mr. Woodley. Thank you, Mr. Chairman. I appreciate the 
opportunity to testify today and ask that the full statement be 
put in the record.
    Our 2007 budget includes about $4.7 billion----
    Senator Domenici. Pull the mike up a little. Thank you very 
much.
    Mr. Woodley [continuing]. A 5 percent increase from last 
year. We provided a 5-year budget plan along with the other 
budget justification materials, including three potential 5-
year funding scenarios for planning purposes and analytical 
purposes.
    The budget includes an increase of about $280 million for 
construction projects compared to the fiscal year 2006 budget. 
The funding is allocated according to guidelines that emphasize 
economic returns, reduction of risk to human life, and 
ecosystem restoration benefits.
    Mr. Chairman, the budget provides $173 million to the 
Corps' regulatory program to protect wetlands and other waters 
of the United States. This represents a $15 million increase 
compared to fiscal year 2006 appropriations and a 20 percent 
increase in budgeted funding for the regulatory program over 
the last 3 years. The funding will be used to reduce permit 
processing times, improve aquatic resource protection through 
monitoring and compliance activities, and advance watershed 
approaches to permitting.
    The budget also reassigns about $340 million of work at 
existing projects from the construction account to the 
operation and maintenance account. This reassignment improves 
accountability and oversight, reflects the full cost of 
operation and maintenance, and supports an integrated funding 
strategy for existing projects.
    The operation and maintenance budget has been revamped and 
is presented by major river basin and mission areas. This lays 
the groundwork for improved management of appropriated funds 
and more strategic formulation of future budgets.
    The budget includes increased funding for preparedness, 
response and recovery activities related to flood and coastal 
storm emergencies. The budget does not include funding for 
recovery from last year's hurricanes since supplemental 
appropriations are being sought to provide that funding.

                           PREPARED STATEMENT

    In summary, Mr. Chairman, the budget and the 5-year plan 
incorporate performance budgeting principles, allocate funding 
to activities with the highest returns, and advance important 
national objectives.
    Thank you very much.
    [The statement follows:]

              Prepared Statement of John Paul Woodley, Jr.

    Mr. Chairman and distinguished members of the subcommittee, thank 
you for the opportunity to testify before the subcommittee, and to 
present the President's budget for the Civil Works program of the Army 
Corps of Engineers for fiscal year 2007.

          OVERVIEW OF FISCAL YEAR 2007 ARMY CIVIL WORKS BUDGET

    The fiscal year 2007 budget for Army Civil Works provides funding 
for development and restoration of the Nation's water and related 
resources within the three main Civil Works program areas, namely, 
commercial navigation, flood and coastal storm damage reduction, and 
aquatic ecosystem restoration. The budget also supports hydropower, 
recreation, environmental stewardship, and water supply services at 
existing water resources projects owned or operated by the Corps of 
Engineers. Finally, the budget provides for protection of the Nation's 
regulated waters and wetlands; cleanup of sites contaminated as a 
result of the Nation's early efforts to develop atomic weapons; and 
preparedness, response, and recovery activities related to flood and 
coastal storm emergencies.
    The budget does not fund work that should be the responsibility of 
non-Federal interests or other Federal agencies, such as wastewater 
treatment, irrigation water supply, and municipal and industrial water 
supply treatment and distribution.
    The fiscal year 2007 budget includes new discretionary funding of 
$4.733 billion, the highest civil works budget transmitted to Congress 
by any President. The estimate for fiscal year 2007 outlays is $5.846 
billion. Enclosure 1 displays the current estimate for the distribution 
of new discretionary funding among eight appropriation accounts, eight 
program areas, plus executive direction and management, and five 
sources including the general fund of the Treasury and trust funds. 
Enclosure 2 is a crosscut between appropriation accounts and program 
areas.
    A 5-year budget development plan (FYDP) is being provided, as 
called for in the fiscal year 2006 Energy and Water Development 
Appropriations Act Conference Report. The FYDP includes three scenarios 
or projections--one based on the President's proposed fiscal year 2007 
budget, one above that level, and one below that level. The projections 
are formula driven. They do not represent budget decisions or budget 
policy beyond fiscal year 2007 but they can provide perspective on the 
Army Civil Works program and budget.

                 EMERGENCY SUPPLEMENTAL APPROPRIATIONS

    To date, the Corps has received $3.3 billion in emergency 
supplemental appropriations to address the impacts of the 2005 
hurricane season. In addition, on February 16 of this year the 
President transmitted to Congress his request for $1.46 billion in 
additional emergency supplemental appropriations to strengthen and 
improve hurricane and storm protection in the greater New Orleans 
metropolitan area.

                      PERFORMANCE-BASED BUDGETING

    The fiscal year 2007 budget builds upon lessons learned from the 
2005 hurricane season, one of which is the importance of setting 
spending priorities to meet water resources needs that are the most 
compelling from a national perspective.
    One of my priorities for the Army Civil Works program is to develop 
the Civil Works budget and manage the program based on objective 
performance measures. The fiscal year 2007 budget reflects significant 
progress toward this goal, by focusing funding those activities that 
are expected to provide the highest net returns to the Nation.
    The fiscal year 2007 budget also supports performance-based 
budgeting by funding ongoing efforts to develop better risk-based 
facility condition indices and asset management systems. These 
analytical tools will improve our ability in the future to develop 
long-term asset management strategies and establish priorities for the 
operation, maintenance and management of Civil Works assets. Our goal 
is to begin using these improved analytical tools within 2 years.
    The focus on Civil Works program performance has a number of 
foundations. First, the Civil Works Strategic Plan, which was updated 
in 2004, provides goals, objectives, and performance measures that are 
specific to program areas as well as some that are crosscutting. 
Second, each program area is assessed using the Program Assessment 
Rating Tool (PART). Both the Civil Works Strategic Plan and the PART-
based program evaluations are works in progress and will continue to be 
updated.
    The Environmental Stewardship sub-program and the Formerly Utilized 
Sites Remedial Action Program were assessed in the most recent 
assessment period (2005). Based upon the findings of these program 
assessments, the Corps is taking follow-up actions to address 
identified problems. Summaries of all completed civil works program 
assessments can be found on the administration's new website, 
www.ExpectMore.gov.
    Budget decisions link to performance in a number of ways. First, 
alternative funding levels relate to alternative performance targets, 
or levels of outputs and outcomes, as measured by the program area 
metrics. Second, related metrics and decision guidelines (see 
``Construction,'' below) are used to rank work within each account or 
within each program area.

                    CIVIL WORKS PROGRAM IMPROVEMENTS

    The fiscal year 2007 Civil Works budget proposes five program 
improvements, as discussed below.
Funding Activities in the Operation and Maintenance Account
    In addition to introducing the concept of watershed and system 
budgeting for operation and maintenance, described in detail below, the 
budget proposes to fund four types of operation and maintenance-related 
activities in the Operation and Maintenance account, rather than in the 
Construction account as has been the case in the recent past. It is 
appropriate to assign responsibility for these activities to the 
Operation and Maintenance program, both because of the nature of the 
work and because of its integral connection to operation and 
maintenance. This reassignment improves accountability and oversight, 
reflects the full cost of operation and maintenance, and supports an 
integrated funding strategy for existing projects. Total fiscal year 
2007 funding for the activities being reassigned to the Operation and 
Maintenance program is about $340 million. The four types of activities 
are described in greater detail below.
    First, the Operation and Maintenance account would fund activities 
to comply with Biological Opinions at existing projects pursuant to the 
Endangered Species Act. These activities facilitate the Corps 
continuing to operate its existing multi-purpose projects, principally 
in the Columbia and Missouri River Basins. The compliance costs would 
be allocated among the project purposes of the operating projects.
    Second, the account would fund rehabilitation of existing projects. 
Rehabilitation work would compete for funding on a level playing field 
with other operation and maintenance activities. The O&M program would 
consider each potential investment and develop recommendations based on 
a long-term strategy for maintaining the existing infrastructure. Fifty 
percent of the costs of rehabilitations for inland waterway projects 
would be derived from the Inland Waterways Trust Fund, just as was the 
case when they were funded in the Construction account.
    Third, the account would fund the construction of facilities, 
projects or features that use maintenance dredging material. These 
include beneficial uses of dredged material for island and marsh 
creation, shore protection, and other environmental purposes pursuant 
to the Section 204/207/933 Continuing Authority Program and specific 
authorizations (such as for the Poplar Island, Maryland, project). 
These also include dredged material disposal facilities for material 
from maintenance dredging (including Indiana Harbor, Indiana, which had 
been line-item budgeted in the Construction account). Funding for the 
dredged material disposal facilities would be derived from the Harbor 
Maintenance Trust Fund, just as was the case when they were funded in 
the Construction account.
    Fourth and finally, funding in the account would be used to replace 
sand lost from shores due to the operation of Federal navigation 
projects (navigation mitigation). This activity would be carried out 
pursuant to specific authorizations for shore protection projects that 
involve navigation mitigation, and pursuant to the Section 111 
Continuing Authority Program. The budget proposes that funding for 
navigation mitigation be derived from the Harbor Maintenance Trust 
Fund. The estimated amount for fiscal year 2007 that would be derived 
from the trust fund for this purpose is $27 million.
    Accompanying the budget is proposed appropriations language that 
would clarify that these activities are to be funded in the Operation 
and Maintenance account. For example, the budget proposal includes a 
provision, which the Congress adopted in the fiscal year 2005 Energy 
and Water Development Appropriations Act, indicating that among the 
purposes for which funding is provided is ``for the benefit of 
federally listed species to address the effects of civil works projects 
owned or operated by the Corps''. The budget language also provides 
that funding for ``eligible operations and maintenance'' is to be 
derived from the Harbor Maintenance Trust Fund. Consistent with section 
201 of the Water Resources Development Act of 1996, eligible operations 
and maintenance activities include not only harbor dredging but also 
the dredged material disposal facilities and navigation mitigation 
discussed above.
Watershed and System Budgeting for Operation and Maintenance
    Although the concept of watershed and system budgeting and program 
execution for operation and maintenance (O&M) was adopted too late in 
the budget cycle to be fully implemented in formulating the fiscal year 
2007 budget, the O&M budget is presented on a watershed/system basis 
and, if Congress concurs on the benefit of planning and carrying out 
the O&M program in accordance with system-wide priorities, then during 
fiscal year 2007 the O&M program would be managed by watershed and 
business program, rather than primarily project-by-project.
    Proposed fiscal year 2007 funding is consolidated according to 
Civil Works program areas, such as commercial navigation and flood and 
storm damage reduction, for each of the 21 major river basins in the 
United States, as established by the U.S. Geological Survey. The 
specific projects that would receive funding in each basin also are 
identified by name. For future fiscal years, the budget not only will 
be presented by basin or system, but also will be developed in the 
first place based on basins and systems. Should operation and 
maintenance work be funded in the manner presented, managers in the 
field would be better able to adapt to uncertainties and changed 
conditions throughout the fiscal year, consistent with budget and 
appropriations decisions.
Repayment of the Judgment Fund
    We are proposing that funds that (1) were appropriated in fiscal 
year 2006 or a prior year, (2) are not needed for the purpose for which 
they were appropriated, and (3) are carried over unobligated to fiscal 
year 2007 be reprogrammed to begin to repay the Department of the 
Treasury's Judgment Fund. The repayments would be for judgments against 
the United States that were paid by the Fund on Civil Works projects. 
Currently over $150 million is owed to the Judgment Fund for Civil 
Works projects.
Expenses Account
    The Expenses account funds the management and executive direction 
expenses of the Army Corps of Engineers, both at its Headquarters and 
Major Subordinate Divisions, as well as support organizations such as 
the Humphreys Engineer Center Support Activity, the Institute for Water 
Resources, and the Finance Center. In addition, the fiscal year 2007 
budget proposes that, beginning in fiscal year 2007, the Office of the 
Assistant Secretary of the Army for Civil Works--including some 
indirect and overhead costs not previously allocated to this office--be 
funded in an expanded Expenses account, rather than in its own separate 
account or as part of the account funding the other Army Secretariat 
offices.
Reprogramming and Contracting
    The budget proposes reauthorization of sections 101, 106, and 108 
of the Energy and Water Development Appropriations Act, 2006, with 
certain changes. These sections established rules in law for fiscal 
year 2006 on reprogramming and continuing contracts. I would like to 
emphasize the programmatic need for one of these changes, namely, that 
we would no longer require each partially funded contract for operation 
and maintenance to be a continuing contract, so that the Corps would 
have the flexibility to use other contracting tools in the O&M program, 
such as base-plus-options contracts.

                           STUDIES AND DESIGN

    The fiscal year 2007 budget concentrates funding on the 55 most 
promising studies and preconstruction engineering and design (PED) 
activities. For the navigation and flood and storm damage reduction 
studies, performance was assessed based primarily on likely economic 
benefits and costs. For PED activities for such projects, the estimated 
ratio of remaining benefits to remaining costs is known, and PED 
activities were funded for projects with ratios of 4.0 to 1 or greater 
at a 7 percent discount rate. For aquatic ecosystem restoration studies 
and PED activities, performance was assessed based on the likelihood of 
projects that would meet the criteria in the construction guidelines.
    The budget provides $94 million for the Investigations account and 
$1 million for investigations within the Mississippi River and 
Tributaries account. Among the $95 million total, $25 million is for 
the Louisiana Coastal Area study of coastal wetlands restoration; $20 
million is for a national inventory of flood and storm damage reduction 
projects; $13 million is for other project-specific studies including a 
new study needed to support continued land acquisition to further 
reduce the risk of flood damage in the Atchafalaya Basin; $4 million is 
for project-specific PED; $15 million is for research and development; 
and $18 million is for other coordination, data collection, and study 
activities.
    One of my priorities is to improve analytical tools to support 
water resource planning and decision-making. The budget supports this 
with robust funding for the Navigation Economic Technologies research 
program and for the development of benefit evaluation methods for 
aquatic ecosystem restoration.

                              CONSTRUCTION

    In recent years, many more construction projects have been 
authorized, initiated, and continued than can be constructed 
efficiently at any one time. This has led to the postponement of 
benefits from the most worthy projects, which has significantly reduced 
overall program performance. To remedy this situation and to achieve 
greater value to the Nation from the Civil Works construction program, 
the budget focuses significant funding on the projects that yield the 
greatest return to the Nation, based upon objective performance 
criteria.
    The budget again proposes performance guidelines to allocate funds 
among construction projects, including significant refinements to the 
performance guidelines proposed in 2006. The most significant of these 
changes is the addition of a non-economic performance criterion 
covering flood and storm damage reduction projects that address a 
significant risk to human safety.
    Under the guidelines, the budget allocates funds among construction 
projects based primarily on the remaining economic benefits of projects 
relative to their remaining costs, their contributions to reducing 
life-threatening inundation hazards, and the extent to which they cost-
effectively contribute to the restoration of nationally or regionally 
significant aquatic ecosystems where the ecosystems have become 
degraded as a result of Civil Works projects or to a restoration effort 
for which the Corps is otherwise uniquely well suited. The 2007 
performance guidelines are at Enclosure 3.
    The funded construction projects include 6 considered to be 
national priorities; 14 projects in their final year of construction 
(including 1 dam safety project); 10 other dam safety, seepage, and 
static instability correction projects; 1 high priority newly funded 
project (Washington, DC and vicinity, which will reduce the risk of 
flood damage to the museums on the National Mall, the Franklin Delano 
Roosevelt Memorial, and the World War II Memorial and eliminate the 
temporary closures at 23rd Street and Constitution Avenue, NW, and 2nd 
and P Streets, SW in downtown Washington, DC); and 60 other ongoing 
projects. Ninety-one projects are funded altogether.
    After adjusting for the work reassigned to the Operation and 
Maintenance account, the budget provides an increase in construction 
funding of about $280 million compared to the fiscal year 2006 budget. 
This robust funding level enables work on most of the 91 projects, as 
well as on the ongoing projects reassigned from the construction 
program to the operation and maintenance program, to proceed at between 
80 percent and 100 percent of the maximum rate that the Corps can 
efficiently spend funds in fiscal year 2007.
    For low priority projects that are scheduled to have a construction 
contract underway at the beginning of fiscal year 2007, the budget 
provides funding either to complete each ongoing contract, or to 
terminate it and pay the Federal share of settled claims, whichever is 
estimated to be less costly. The budget includes $50 million for this 
purpose, $42 million in the Construction account and $8 million in the 
Mississippi River and Tributaries account.

                       CIVIL WORKS PROGRAM AREAS

    The Army Civil Works program includes eight program areas, plus 
oversight/executive direction and management. The eight program areas 
are commercial navigation, flood and coastal storm damage reduction, 
aquatic ecosystem restoration, recreation, hydropower, water supply, 
emergency management, and the regulatory program. Budget proposals for 
the eight program areas are discussed below.
Emergency Management and Flood and Coastal Storm Damage Reduction
    The budget for Emergency Management and Flood and Coastal Storm 
Damage Reduction reflects a sharpened focus on flood and hurricane 
preparedness and damage reduction.
    The budget provides $20 million in the Investigations account for a 
national inventory and database of flood and storm damage reduction 
projects, and for developing and testing methods to assess the 
structural and operational integrity and the associated risks of such 
projects. This effort will dovetail with the Corps' ongoing risk 
assessment for its portfolio of dams.
    The budget provides $81 million in the Flood Control and Coastal 
Emergencies account for planning, preparedness, and response to flood 
and storm emergencies, and for rehabilitation of damaged flood and 
storm damage reduction projects. This is an increase of $11 million 
over the fiscal year 2006 budget. Our experience during the 2005 
hurricane season underscores the need for securing funds in advance for 
such purposes, and we urge the Congress to include this funding in the 
annual Energy and Water Development Appropriations Act.
    The budget continues to support Federal participation in the 
initial phase of authorized beach nourishment projects for storm damage 
reduction and ecosystem restoration purposes. The budget continues the 
policy of funding Federal involvement in long-term, follow-on periodic 
renourishment only to the extent that the operation and maintenance of 
Federal navigation projects is the reason for the sand loss on 
shorelines.
Commercial Navigation
    The amount budgeted for the construction and rehabilitation of 
inland waterway projects, $394 million, is the highest amount ever 
included in a Civil Works budget. This funding will help ensure the 
continued efficiency and reliability of our principal inland waterways. 
Work will begin on rehabilitation of Lock and Dam 27, Illinois and 
Missouri, and Markland Lock and Dam, Indiana and Kentucky. The budget 
focuses operation and maintenance funding for the inland waterways on 
those segments that support high volumes of commercial traffic, 
including the Mississippi, Ohio, and Illinois waterways.
    The budget gives priority to the operation and maintenance of 
harbors with high volumes of commercial traffic. The budget also funds 
harbors that support significant commercial fishing, subsistence, 
public transportation, harbor of refuge, national security, or safety 
benefits.
    As discussed earlier, the budget provides funding under the 
operation and maintenance program for authorized beach renourishment 
work to the extent needed to replace sand lost due to Federal 
navigation operation and maintenance. This work is now part of the 
commercial navigation program area.
Aquatic Ecosystem Restoration
    The budget includes $164 million for the Corps contribution to the 
Everglades restoration effort. Of this amount, $35 million is for the 
Corps to continue to participate financially in the Modified Water 
Deliveries project, along with the National Park Service. Within this 
amount, the budget also includes funds to initiate additional work on 
the Kissimmee River, continue the pilot aquifer storage and recovery 
projects program, continue other planning and design work on the 
Comprehensive Everglades Restoration Plan, and examine flows in the 
vicinity of Lake Okeechobee.
    The budget provides $27 million for the Upper Mississippi 
Restoration Program, including $3 million for a study needed to 
establish priorities for the next 10 years for this nationally 
significant effort. To address the continuing loss of wetlands along 
the Louisiana coast, the budget provides $20 million to continue 
planning and design for the Louisiana Coastal Area aquatic ecosystem 
restoration program and $5 million for the science program supporting 
this effort.
    As discussed above, the budget proposes that measures at operating 
projects to comply with Biological Opinions pursuant to the Endangered 
Species Act be funded from the Operation and Maintenance account and 
allocated among project purposes.
Regulatory Program
    The President's budget provides $173 million to the Corps 
Regulatory Program to protect wetlands and other waters of the United 
States. This represents a $15 million increase compared to fiscal year 
2006 appropriations, which would result in a total increase of 20 
percent in funding over the last 3 years. One of my priorities for the 
Civil Works program is to improve the effectiveness of aquatic resource 
protection and the efficiency of permit reviews and decision-making. 
The added funds will be used to improve permit processing times, 
increase aquatic resource protection, and advance watershed-based 
approaches.
    Investing in the Regulatory Program is a win-win proposition. The 
added funds will enable most public and private development to proceed 
with minimal delays, while ensuring that the environment is protected 
consistent with the Nation's water quality laws.
Recreation
    The fiscal year 2007 budget proposes a recreation modernization 
initiative for Civil Works recreation facilities, based on a promising 
model now used by other major Federal recreation providers such as the 
National Park Service and the Forest Service. The administration has 
proposed legislation for the Corps to use additional fees and other 
revenues to upgrade and modernize recreation facilities at the sites 
where this money is collected.
    Specifically, the legislation includes authority for the Corps to 
charge entrance fees and other types of user fees where appropriate, 
and to cooperate with non-Federal park authorities and districts. The 
Corps would use collections above a $37 million per year baseline to 
provide facility modernizations and upgrades.
Hydropower
    The budget provides funding for hydropower operation and 
maintenance costs, as well as funding for ongoing replacements at three 
hydropower projects. Unlike the budgets of recent years, the budget 
does not propose that Federal power marketing administrations directly 
fund the costs of hydropower operation and maintenance.
Environmental Stewardship
    Corps of Engineers-administered lands and waters cover 11 million 
acres. That is equal in size to the area of the States of Vermont and 
New Hampshire. The budget proposes a total of $89 million for 
environmental stewardship for these resources. Funded activities 
include shoreline management, protection of natural resources, 
continuation of mitigation activities, and protection of cultural and 
historic resources.
Oversight and Executive Direction and Management
    The fiscal year 2007 budget provides $164 million for the Expenses 
account. This account funds executive direction and management 
activities of the Corps headquarters, the Corps division offices, and 
related support organizations that pertain to Civil Works.
    In addition, $6 million of the funding for the Expenses account is 
for the Office of the Assistant Secretary of the Army (Civil Works). 
This amount is needed to cover not only the Assistant Secretariat share 
of costs that are usually allocated among offices in the Headquarters, 
Department of Army, but also the appropriate share of centrally managed 
and ordinarily non-allocated costs. The inclusion of funding for these 
purposes is in accordance with the direction in the fiscal year 2006 
Conference Report.
    The Budget proposes to finance audits through the Revolving Fund. 
The costs would be allocated among and then charged back to the 
benefiting accounts as a normal cost of doing business.

                     PRESIDENT'S MANAGEMENT AGENDA

    The Army Civil Works program is pursuing five government-wide 
management initiatives, as are other Federal agencies. These are 
competitive sourcing, strategic management of human capital, financial 
management, e-government, and budget-performance integration. The Army 
Civil Works program also is participating in the initiative for real 
property asset management.
    The Office of Management and Budget scores the status of each 
agency in implementing each initiative. Like most agencies, the Army 
Civil Works program started out with ``red'' stoplight scores across 
the board. On four initiatives--all but competitive sourcing and human 
capital--Civil Works status is still red. We are working to improve our 
progress and status and welcome your support of our efforts.

                               CONCLUSION

    At $4.733 billion, the fiscal year 2007 Army Civil Works budget is 
the highest Civil Works budget in history.
    The budget reflects progress in performance-based budgeting, as 
called for in the President's management agenda. In developing this 
budget, we made explicit choices based on performance. The emphasis on 
the completion of high-performing construction projects, preparedness 
for and mitigation of flood and hurricane hazards, and improved 
execution of the Regulatory Program, for example, reflect a 
performance-based approach.
    The Army Civil Works budget for fiscal year 2007 will enable the 
Civil Works program to move ahead with more resources to pursue 
investments that will yield good returns for the Nation in the future. 
The budget represents the wise use of funding to advance worthy, 
mission-based objectives. I am proud to present it.
    Thank you, Mr. Chairman and members of the subcommittee, for this 
opportunity to testify on the President's fiscal year 2007 budget for 
the Civil Works program of the Army Corps of Engineers.

  ENCLOSURE 1.--DEPARTMENT OF THE ARMY CORPS OF ENGINEERS--CIVIL WORKS
                    BUDGET SUMMARY, FISCAL YEAR 2007
------------------------------------------------------------------------
                                                              Amount
------------------------------------------------------------------------
Requested New Appropriations by Account:
    Investigations.....................................     $94,000,000
    Construction.......................................   1,555,000,000
    Operation and Maintenance..........................   2,258,000,000
    Regulatory Program.................................     173,000,000
    Flood Control, Mississippi River and Tributaries...     278,000,000
    Expenses...........................................     164,000,000
    Flood Control and Coastal Emergencies..............      81,000,000
    Formerly Utilized Sites Remedial Action Program....     130,000,000
                                                        ----------------
      TOTAL............................................   4,733,000,000
                                                        ================
Requested New Appropriations by Program Area:
    Commercial Navigation..............................   1,926,000,000
    Flood and Coastal Storm Damage Reduction...........   1,291,000,000
    Environment........................................     539,000,000
        (Aquatic Ecosystem Restoration)................    (320,000,000)
        (FUSRAP).......................................    (130,000,000)
        (Natural Resources)............................     (89,000,000)
    Hydropower.........................................     285,000,000
    Recreation.........................................     267,000,000
    Water Supply.......................................       2,000,000
    Emergency Management...............................      86,000,000
        (Flood Control and Coastal Emergencies)........     (81,000,000)
        (National Emergency Preparedness)..............      (5,000,000)
    Regulatory Program.................................     173,000,000
    Executive Direction and Management.................     164,000,000
                                                        ----------------
      TOTAL............................................   4,733,000,000
                                                        ================
Sources of New Appropriations:
    General Fund.......................................   3,791,000,000
    Harbor Maintenance Trust Fund......................     707,000,000
    Inland Waterways Trust Fund........................     197,000,000
    Special Recreation User Fees.......................      37,000,000
    Disposal Facilities User Fees......................       1,000,000
                                                        ----------------
      TOTAL............................................   4,733,000,000
                                                        ================
Additional New Resources:
    Rivers and Harbors Contributed Funds...............     445,000,000
    Coastal Wetlands Restoration Trust Fund............      75,000,000
    Permanent Appropriations...........................      18,000,000
                                                        ----------------
      TOTAL............................................     538,000,000
                                                        ================
      Total New Program Funding........................   5,271,000,000
------------------------------------------------------------------------


   ENCLOSURE 2.--DEPARTMENT OF THE ARMY--CORPS OF ENGINEERS--CIVIL WORKS BUDGET, FISCAL YEAR 2007--CROSSCUT BETWEEN APPROPRIATION ACCOUNTS AND PROGRAM
                                                                          AREAS
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Aq.
                                        Navigation   Flood/  Recreation    Eco.     Env.   FUS-RAP   Hydro-   Water    Emerg.    Reg.     ED&M     TOT
                                                     Storm                 Rest   Stewrd.            Power    Supply   Mgmt.    Prog.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Investigations........................         23        34  ..........       37  .......  .......  .......  .......  .......  .......  .......       94
Construction..........................        596       653  ..........      278  .......  .......       28  .......  .......  .......  .......    1,555
Operation/Maint.......................      1,270       387        253   .......       84  .......      257        2        5  .......  .......    2,258
MR&T--I...............................  ..........        1  ..........  .......  .......  .......  .......  .......  .......  .......  .......        1
MR&T--C...............................         14       111  ..........        5  .......  .......  .......  .......  .......  .......  .......      130
MR&T--M...............................         23       105         14   .......        5  .......  .......  .......  .......  .......  .......      147
FUSRAP................................  ..........  .......  ..........  .......  .......      130  .......  .......  .......  .......  .......      130
FC&CE.................................  ..........  .......  ..........  .......  .......  .......  .......  .......       81  .......  .......       81
Regulatory............................  ..........  .......  ..........  .......  .......  .......  .......  .......  .......      173  .......      173
Expenses..............................  ..........  .......  ..........  .......  .......  .......  .......  .......  .......  .......      164      164
                                       -----------------------------------------------------------------------------------------------------------------
      TOTAL...........................      1,926     1,291        267       320       89      130      285        2       86      173      164    4,733
--------------------------------------------------------------------------------------------------------------------------------------------------------

 ENCLOSURE 3.--DEPARTMENT OF THE ARMY--CORPS OF ENGINEERS--CIVIL WORKS 
 BUDGET, FISCAL YEAR 2007--PERFORMANCE BUDGETING GUIDELINES FOR CIVIL 
                           WORKS CONSTRUCTION

    The budget for the construction account allocates funds based on 
the following seven performance-based guidelines, which improve the 
overall performance of the construction program by redirecting funds to 
high-performing projects and limiting new construction starts.
    1. Project rankings within mission areas.--All ongoing, 
specifically authorized construction projects, including projects 
funded in the Mississippi River and Tributaries account, will be 
assigned based upon their primary purpose to one of the main mission 
areas of the Corps (flood and storm damage reduction; commercial 
navigation; aquatic ecosystem restorations) or to hydropower. Projects, 
except for aquatic ecosystem restoration projects, will be ranked by 
their remaining benefits divided by their remaining costs (RBRC), 
calculated at a 7 percent real discount rate. Aquatic ecosystem 
restoration projects will be ranked by the extent to which they cost 
effectively contribute to the restoration of a nationally or regionally 
significant aquatic ecosystem that has become degraded as a result of a 
Civil Works project, or to a restoration effort for which the Corps is 
otherwise uniquely well-suited (e.g., because the solution requires 
complex alternations to the hydrology and hydraulics of a river 
system).
    2. Project completions.--Each project with an RBRC of 3.0 or 
greater that can be completed in the budget year with a final increment 
of funding will receive the balance of funding needed to complete 
construction and related administrative activities. Likewise, each 
aquatic ecosystem restoration project that cost-effectively contributes 
to the restoration of a nationally or regionally significant aquatic 
ecosystem that has become degraded as a result of a civil works 
project, or to a restoration effort for which the Corps is otherwise 
uniquely well-suited, and that can be completed in the budget year with 
a final increment of funding will receive the balance of funding needed 
to complete construction and related administrative activities.
    3. Projects with very high economic and environmental returns.--The 
projects with the highest RBRCs (or that are the most cost-effective in 
contributing to the restoration of a nationally or regionally 
significant aquatic ecosystem that has become degraded as a result of a 
Corps project, for aquatic ecosystem restoration) will receive not less 
than 80 percent of the maximum level of funding that the Corps can 
spend efficiently in each fiscal year.
    4. Projects with a low priority.--All ongoing flood and storm 
damage reduction, commercial navigation, and hydropower constructions 
projects that have RBRCs below 3.0, except for flood and storm damage 
reduction projects that are funded in the budget to address significant 
risk to human safety, will be considered for deferral. All ongoing 
aquatic ecosystem restoration projects that do not cost-effectively 
contribute to the restoration of a nationally or regionally significant 
aquatic ecosystem restoration that has become degraded as a result of a 
Civil Works project, and do not cost-effectively address a problem for 
which the Corps is otherwise uniquely well-suited, and are less than 50 
percent complete will be considered for deferral. Where a project 
considered for deferral was previously budgeted, the budget will 
include funding to cover the cost of terminating or completing each 
ongoing contract, whichever is less. Budget year and future year 
savings from project suspensions (after covering the cost of 
terminating or completing ongoing contracts) will be used to accelerate 
the projects with the highest net economic and environmental returns.
    5. New starts and resumptions.--The budget will provide funds to 
start up new construction projects, and to resume work on ongoing 
construction projects on which the Corps has not performed any physical 
work under a construction contract during the past 3 consecutive fiscal 
years, only if the project would be ranked in the top 20 percent of the 
ongoing construction projects in its mission area that year.
    The term ``physical work under a construction contract'' does not 
include activities related to project planning, engineering and design, 
relocation, or the acquisition of lands, easements, or rights-of-way. 
For non-structural flood damage reduction projects, construction begins 
in the first fiscal year in which the Corps acquires lands, easements, 
or rights-of-way primarily to relocate structures, or performs physical 
work under a construction contract for non-structural project-related 
measures. For aquatic ecosystem restoration projects, construction 
begins in the first fiscal year in which the Corps acquires lands, 
easements, or rights-of-way primarily to facilitate the restoration of 
degraded aquatic ecosystems including wetlands, riparian areas, and 
adjacent floodplains, or performs physical work under a constructions 
contract to modify existing project facilities primarily to restore the 
aquatic ecosystem. For all other water resources projects, construction 
begins in the first fiscal year in which the Corps performs physical 
work under a construction contract.
    6. Other cases.--All other ongoing construction projects will 
receive not more than the amount needed to meet earnings permitted 
under ongoing multi-year contracts and related costs, except for flood 
and storm damage reduction projects that are funded in the budget to 
address significant risk to human safety, which will receive at least 
the funding needed to pay contractor earnings and related costs.
    Dam safety assurance, seepage control, and static instability 
correction projects that are funded in the budget for construction will 
receive the maximum level of funding that the Corps can spend 
efficiently in each fiscal year.
    Projects that are funded in the budget for construction will 
receive the amount needed to ensure that they comply with treaties and 
with biological opinions pursuant to the Endangered Species Act, and 
meet authorized mitigation requirements.
    7. Ten percent rule.--Up to a total of 10 percent of the funding 
available for construction may be allocated to ongoing construction 
projects regardless of the guidelines above. However, this may not be 
used to start up or resume any project.
    The budget proposes that the administration and the Congress apply 
these guidelines to the Corps construction account and to the 
construction activities in the Mississippi River and Tributaries 
account.

    Senator Domenici. Thank you very much.
    General.

STATEMENT OF LIEUTENANT GENERAL CARL A. STROCK, CHIEF 
            OF ENGINEERS
    General Strock. Mr. Chairman and members of the committee: 
I am honored to be testifying before you today with the 
Honorable John Paul Woodley on the President's fiscal year 2007 
budget for the Army civil works program. If I may, I would like 
to briefly summarize the key points of my testimony and include 
my complete statement for the record.
    Senator Domenici. Please do and that will be done.
    General Strock. Good, sir.
    This budget is a performance-based budget that reflects the 
realities of the national budget, supporting the Nation's 
recent natural disasters and the global war on terror. This 
budget focuses construction on funding of 63 projects that will 
provide the highest returns on the Nation's investment, 
including 11 dam safety projects. Funds will be used for 
critical water resources infrastructure that improves the 
quality of our citizens' lives and provides a foundation for 
national economic growth and development.
    The budget incorporates performance-based metrics for 
continued efficient operation of the Nation's waterborne 
navigation, flood control, and other water resource management 
infrastructure, fair regulation of wetlands, and restoration of 
important environmental resources.
    There are six national priority construction projects 
funded in the construction program. They are: the New York-New 
Jersey Harbor Deepening Project; the Oakland River--the Oakland 
Harbor Deepening Project; construction of Olmstead Locks and 
Dam in Illinois and Kentucky; the Florida Everglades and South 
Florida Ecosystem; the Side Channels of the Upper Mississippi 
River System; and Sims Bayou in Houston, Texas; and two others, 
the Missouri River Restoration and the Columbia River 
Restoration, both funded in the operations and maintenance 
account.
    This budget also provides the quality of recreation 
services through stronger partnerships and modernization. The 
budget provides approximately $65.3 million to complete 14 
projects, including one dam safety project, in 2007. As part of 
a comprehensive strategy to reduce the construction backlog, 
the fiscal year 2007 budget funds projects that provide the 
highest returns and are consistent with current policies. In 
all, 91 projects are funded so that we can provide benefits to 
the Nation sooner.
    The fiscal year 2007 budget includes $2.258 billion for the 
operations and maintenance program and I can assure you that I 
will continue to do all that I can to make these programs as 
cost effective and efficient as possible.
    Domestically, more than 8,000 volunteers from around the 
Nation have deployed to help citizens and communities on the 
gulf coast in the aftermath of Hurricanes Katrina, Rita, and 
Wilma. Even now, more than 6 months after Hurricane Katrina, 
2,000 USACE volunteers continue to execute our FEMA-assigned 
disaster recovery missions along the gulf coast and to 
accomplish the critical restoration work of the New Orleans 
Area Levee System.
    Internationally, the U.S. Army Corps of Engineers remains 
committed to the monumental task of helping to rebuild the 
infrastructure and economies of Iraq and Afghanistan, and more 
than 1,700 USACE volunteers have deployed to Iraq since 2003. 
They continue to make progress toward this Nation's goals of 
restoring the security and quality of life for all Iraqis and 
Afghans as they pursue democracy and freedom.
    The Corps' Gulf Regional Division has overseen the 
initiation of 3,000 reconstruction projects and the completion 
of more than 2,100. These projects make a difference in the 
everyday lives of the Iraqi people and are visible signs of 
progress.
    The water resources management infrastructure has improved 
the quality of our citizens' lives in support of the economic 
growth and development of this country. Our systems of 
navigation, flood, and storm damage reduction projects and 
efforts to restore aquatic ecosystems contribute to our 
national welfare.

                           PREPARED STATEMENT

    In closing, the Corps is committed to selflessly serving 
the Nation and I truly appreciate your continued support in 
this end. Thank you, Mr. Chairman and members of the committee. 
This concludes my statement.
    [The statement follows:]

        Prepared Statement of Lieutenant General Carl A. Strock

    Mr. Chairman and distinguished members of the subcommittee, I am 
honored to be testifying before your subcommittee today, along with the 
Assistant Secretary of the Army (Civil Works), the Honorable John Paul 
Woodley, Jr., on the President's fiscal year 2007 budget for the United 
States Army Corps of Engineers' Civil Works Program.
    My statement covers the following 3 topics:
  --Summary of fiscal year 2007 Program Budget,
  --Civil Works Backlog,
  --Value of the Civil Works Program to the Nation's Economy, and to 
        the Nation's Defense.

               SUMMARY OF FISCAL YEAR 2007 PROGRAM BUDGET

Introduction
    The fiscal year 2007 Civil Works Budget is a performance-based 
budget, which reflects a focus on the projects and activities that 
provide the highest net economic and environmental returns on the 
Nation's investment or address significant risk to human safety. The 
Civil Works Program, including the Direct and Reimbursed programs, is 
expected to involve total spending (Federal plus non-Federal) of $7.3 
billion to $8.3 billion. The exact amount will depend on assignments 
received from the Federal Emergency Management Agency (FEMA) for 
hurricane disaster relief and from the Department of Homeland Security 
for border protection facilities.
    Direct Program funding totals $5.271 billion, consisting of 
discretionary funding of $4.733 billion and mandatory funding of $538 
million. The Reimbursed Program funding is projected to involve an 
additional $2 billion to $3 billion.
Direct Program
    The budget reflects the administration's commitment to continued 
sound development and management of the Nation's water and related land 
resources. It incorporates performance-based metrics for the 
construction program, funds the continued operation of commercial 
navigation and other water resource infrastructure, provides a needed 
increase in funding for the regulation of the impacts of development on 
the Nation's wetlands, and supports restoration of nationally and 
regionally significant aquatic ecosystems, with emphasis on the Florida 
Everglades, the Upper Mississippi River, and the coastal wetlands of 
Louisiana. It also improves the quality of recreation services through 
stronger partnerships and modernization.
    The budget emphasizes the construction and completion of water 
resources projects that will provide a high return on the Nation's 
investment in the Corps' primary mission areas. There are 91 projects, 
including 6 national priority projects; 14 projects in their final year 
of completion (including 1 dam safety project); 10 other dam safety 
assurance, seepage control, and static instability correction projects; 
1 high priority newly funded project (Washington, DC and vicinity, 
which will reduce the risk of flood damage to the museums on the 
National Mall, the Franklin Delano Roosevelt Memorial, and the World 
War II Memorial and eliminate the temporary closures at 23rd Street and 
Constitution Avenue, NW, and 2nd and P Streets, SW in downtown 
Washington, DC); and 60 other ongoing projects. The focus of this 
budget is on providing the highest net economic and environmental 
returns on the Nation's investment and addressing significant risk to 
human safety.
Reimbursed Program
    Through the Interagency and Intergovernmental Services Program we 
help non-DOD Federal agencies, State, local, and tribal governments, 
and other countries with timely, cost-effective implementation of their 
programs, while maintaining and enhancing capabilities for execution of 
our Civil and Military Program missions. These customers rely on our 
extensive capabilities, experience, and successful track record. The 
work is principally technical oversight and management of engineering, 
environmental, and construction contracts performed by private sector 
firms, and is fully funded by the customers.
    Currently, we provide reimbursable support for about 60 other 
Federal agencies and several State and local governments. Total 
reimbursement for such work in fiscal year 2007 is projected to be $2.0 
billion to $3.0 billion. The exact amount will depend on assignments 
received from the Federal Emergency Management Agency (FEMA) for 
hurricane disaster relief and from the Department of Homeland Security 
for border protection facilities.

                          CIVIL WORKS BACKLOG

    The budget addresses the construction backlog primarily by 
proposing that the administration and the Congress use objective 
performance measures to establish priorities among projects including 
potential new starts, and through a change in Corps contracting 
practices to increase control over future costs. The measures proposed 
include the ratio of remaining benefits to remaining costs for projects 
with economic outputs; the extent to which the project cost-effectively 
contributes to the restoration of a nationally or regionally 
significant aquatic ecosystem that has become degraded as a result of a 
Civil Works project or to an aquatic ecosystem restoration effort for 
which the Corps is otherwise uniquely well-suited; and giving priority 
to dam safety assurance, seepage control, static instability 
correction, and projects that address significant risk to human safety. 
With the exception of up to 10 percent of the available funds that 
could be allocated to any project under construction regardless of 
performance, resources are allocated based on Corps estimates to 
achieve the highest net economic and environmental returns and to 
address significant risk to human safety. Over time, this approach 
would significantly improve the benefits to the Nation from the Civil 
Works construction program.
    We believe that narrowing the focus of our effort to fund and 
complete a smaller, more beneficial set of projects will improve 
overall program performance and bring higher net benefits per dollar to 
the Nation sooner. That is why the budget proposes only one new, high 
priority construction start and accelerates completion of the highest-
return projects.
Maintenance Program
    The facilities owned and operated by, or on behalf of, the Civil 
Works Program are aging. As stewards of this infrastructure, we are 
working to ensure that it continues to provide an appropriate level of 
service to the Nation. Sustaining such service poses a technical 
challenge in some cases, and proper operation and maintenance also is 
becoming more expensive as this infrastructure ages.
    The operation and maintenance program supports the operation, 
maintenance and security of existing commercial navigation, flood and 
storm damage reduction, and aquatic ecosystem restoration works owned 
and operated by, or on behalf of, the Corps of Engineers, including 
administrative buildings and laboratories. Funds are also included for 
national priority efforts in the Columbia River Basin and Missouri 
River Basin to support the continued operation of Corps of Engineers 
multi-purpose projects by meeting the requirements of the Endangered 
Species Act. Other work to be accomplished includes dredging, repair, 
and operation of structures and other facilities, as authorized in the 
various River and Harbor, Flood Control, and Water Resources 
Development Acts. Related activities include aquatic plant control, 
monitoring of completed coastal projects, and removal of sunken 
vessels.
    The Operation and Maintenance program for the fiscal year 2007 
budget consists of $2.258 billion in the operation and maintenance 
account and $147 million under the Mississippi River and Tributaries 
program. To improve accountability and oversight, reflect the full cost 
of operating and maintaining existing projects, and support an 
integrated investment strategy, the fiscal year 2007 Civil Works budget 
transfers several activities to the O&M program from the construction 
program. This budget also organized operation and maintenance 
activities by river basin and by mission area to set the stage for 
improved management of Civil Works assets and more systematic budget 
development in future years. Furthermore, we are searching for ways to 
reduce costs and thereby accomplish more with available resources.
    The fiscal year 2007 budget also supports performance-based 
budgeting for the operation and maintenance program by funding ongoing 
efforts to develop better risk-based facility condition indices and 
asset management systems. These analytical tools will improve our 
ability in the future to develop long-term asset management strategies 
and establish priorities for the operation, maintenance and management 
of Civil Works assets. Our goal is to begin using these improved 
analytical tools within 2 years.
  value of the civil works program to the nation's economy and defense
    We are privileged to be part of an organization that directly 
supports the President's priorities of winning the global war on 
terror, securing the homeland and contributing to the economy.
The National Welfare
    The way in which we manage our water resources can improve the 
quality of our citizens' lives. It has affected where and how people 
live and influenced the development of this country. The country today 
seeks economic development as well as the protection of environmental 
values.
    Domestically, more than 8,000 USACE volunteers from around the 
Nation have deployed to help citizens and communities along the Gulf 
Coast in the aftermath of Hurricanes Katrina, Rita, and Wilma. Even 
now, more than 6 months after Hurricane Katrina, 2,000 USACE volunteers 
continue to execute our FEMA-assigned disaster recovery missions along 
the Gulf Coast, and to work on rebuilding the New Orleans-area levee 
system.
    As to Hurricane recovery--the Corps of Engineers is repairing 
significant damages to reaches of federally constructed levees, 
floodwalls and other features, repairing damaged pumping stations that 
were constructed or modified as a part of the Southeast Louisiana Urban 
Flood Control project, and repairing non-Federal levees and pump 
stations. Along the three outfall canals, we are installing interim 
closure structures and temporary pumps until a more permanent solution 
can be implemented. We have also initiated analyses that will explore 
options to improve protection along the Louisiana and Mississippi 
Coasts.
    Mr. Chairman, we continue to work with you, this subcommittee, and 
other members of Congress on the authorization and funding proposed by 
the administration for modifications that will strengthen the existing 
hurricane protection system for New Orleans.
Research and Development
    Civil Works Program research and development provides the Nation 
with innovative engineering products, some of which can have 
applications in both civil and military infrastructure spheres. By 
creating products that improve the efficiency and competitiveness of 
the Nation's engineering and construction industry and providing more 
cost-effective ways to operate and maintain infrastructure, Civil Works 
Program research and development contributes to the national economy.
The National Defense
    Internationally, the U.S. Army Corps of Engineers remains committed 
to the monumental task of helping to rebuild the infrastructures and 
economies of Iraq and Afghanistan. Corps' Civilians and Soldiers 
continue to make progress toward this Nation's goals of restoring the 
security and quality of life for all Iraqis and Afghanis as they pursue 
democracy and freedom.
    More than 1,700 USACE volunteers have deployed to Iraq since 2003. 
The Corps' Gulf Region Division has overseen the initiation of nearly 
3,000 reconstruction projects and the completion of more than 2,100. 
These projects make a difference in the every day lives of the Iraqi 
people, and are visible signs of progress.
    In Afghanistan, the Corps is spearheading construction projects for 
the Afghan national army and national police, supporting USAID, and 
executing important public infrastructure and humanitarian projects.

                               CONCLUSION

    The Corps of Engineers is committed to staying at the leading edge 
in service to the Nation. In support of that, we are working with 
others to transform our Civil Works Program. We're committed to change 
that leads to open, transparent modernization, and a performance-based 
Civil Works Program.
    Thank you, Mr. Chairman and members of the committee. This 
concludes my statement.

    Senator Domenici. Thank you very much.
    Now, I want to make a little announcement which I think we 
all know up here, but let us make sure you know out there. The 
Majority Leader has indicated to us Republicans that at 3:15 he 
would like all Republicans present on the floor of the Senate. 
He is going to address the issue that is before the Senate. And 
we will try to be there. That is not mandatory for you all.
    Senator Dorgan. Is it advisable?
    Senator Domenici. It is whatever you will do.
    What I would suggest, if you have no desire to go down and 
be part of that, I am willing to say you proceed if you be 
careful and do things right, and I am sure you will.
    Now, we are going to--with your permission, I think we are 
going to use the time between now and 3:15 without yielding to 
you all and then give it to you. Everything will turn off. When 
we give it over to you, it will turn off 15 minutes after you 
take over. It will turn off, everything. So you will have 15 
minutes also. I am kidding you.
    The two Senators on this side, you want to split a little 
time and leave me a little at the end?
    Senator Allard. I do not think I will take too long. I just 
have two or three important questions.
    Senator Domenici. Proceed, Senator.
    Senator Allard. I want to get back to this Fountain Creek 
Watershed Study in Colorado. How much has been expended by the 
Federal Government to conduct that study to date?
    General Strock. Sir, we have spent $65,000 through fiscal 
year 2003.
    Senator Allard. Not anywhere near a match of 50 percent of 
what local governments have spent, is that correct?
    General Strock. Yes, sir.
    Senator Allard. Please share with me how you set priorities 
for the budget and why the funding for the Fountain Creek Study 
wasn't included this time around?
    Mr. Woodley. Senator, in general the priorities within the 
general investigations account were set in accordance with the 
same priorities that are used with respect to the construction 
account, on the concept that the one would lead into the other. 
But this year our general investigations allocation was very 
severely constrained because it was largely devoted to two very 
large efforts that we are undertaking, one with respect to the 
Louisiana Coastal Area Restoration Study and the other is in a 
$20 million request for a nationwide study and inventory of 
flood control structures, and in particular levees. So that put 
enormous constraints and very, very many very worthy studies 
were not able to be included in this year's budget request.
    Senator Allard. Is that the same problem we are running 
into with the tamarisk removals? There are tamarisk removal 
projects I think all over the West. It is a water-drinking 
tree.
    Mr. Woodley. Yes, sir, I am very familiar with salt cedar.
    Senator Allard. And you do not have any plans to conduct 
any more of those removal projects in the West?
    Mr. Woodley. I would have to get back to you on that. I 
will tell you that I would advocate for that. That is a very 
important--and indeed, the chairman and I have visited the 
Bosque in his home State, in which a great part of our effort 
that is ongoing along that watershed at Albuquerque is to 
remove the tamarisk salt cedar. It is something we are finding 
all over our properties and I think I would advocate for a 
concerted national effort to rid our areas of that.
    Senator Allard. I think that is going along the Rio Grande 
in New Mexico. We have got the Rio Grande in Colorado and we 
also have the Arkansas and Colorado Rivers. So I am 
particularly interested in your responding as far as the 
Colorado projects in the West. I would like to get that 
information when you get a chance.
    Mr. Woodley. Absolutely, yes, sir. I will get back to you 
on that.
    Senator Allard. Very good.
    Then I will stop right there, Mr. Chairman, so you and the 
other members can----
    General Strock. Senator, if I could quickly amend my answer 
to you. The $65,000 I cited was through 2003, but since that 
time, in 2004 and 2005, we have had a total of $937,000 against 
the project.
    Senator Allard. Nine hundred thirty-seven thousand dollars?
    General Strock. And in 2006 $125,000, for a total of 
$1,032,000, which is matched by the State, and that is where we 
are now.
    Senator Allard. Yes, okay. I appreciate that. Thank you.
    Senator Domenici. General, I am going to talk about Katrina 
a little bit. I am sure that the distinguished Senator from 
Louisiana is going to follow up on a lot of this, but I want to 
go through as much as I can, and what I do not get through I am 
going to submit to you to answer.
    First of all, General, can you give us a quick status 
update on the current rebuilding efforts?
    General Strock. Yes, sir. Currently our main target is by 
June 1 of this year to have the entire system restored and 
repaired to where it was when Katrina hit, and we are on target 
to do that, sir.
    Senator Domenici. I have been told that the United States 
Geological Survey says that the storm surge from Hurricane 
Katrina is the greatest recorded storm surge to ever hit the 
United States. Can you confirm this was in fact a large 
hurricane that struck, contrary to what may have been said? And 
is that, is what I have just said, true?
    General Strock. Sir, I cannot personally confirm that. I 
have heard that cited, but I have not heard that directly from 
the USGS. But I do understand that is the case. I know that it 
was such a large system and storm surge, that it destroyed most 
of the gauges that would tell us what actually occurred.
    Senator Domenici. So do you think the USGS can confirm this 
or do you think they cannot, what I have just said?
    General Strock. I am sure they can, yes, sir. I have 
absolute confidence in the USGS, yes, sir.
    Senator Domenici. If we want that we should get it from 
them?
    General Strock. Yes, sir.
    Senator Domenici. Along with everyone else, I have read 
articles from various experts about the levee failures in New 
Orleans. Most of those experts have indicated that the Corps 
was aware of potential problems with the levees as designed and 
constructed. Further, there has been considerable comment that 
the levees should have withstood the effects of Katrina.
    General, I need to know from you, what is the Corps' 
response? Is there any fire to go with all this smoke or is 
this speculation from self-described experts without access to 
real concrete data?
    General Strock. Sir, that is a tough one to answer. I think 
that if you look at the history of these projects, the Lake 
Pontchartrain study, which is the one, the project which 
actually failed during the event, was authorized in 1965, so 
there have been literally generations of people involved in 
this. To say that at some point in this there may have been 
some concerns expressed about adequacy of designs and so forth, 
I really do not know.
    I can tell you that as an institution we were not aware of 
any particularly hazardous situations. Each time we are 
confronted with that, we do look into that and ensure that we 
did not have previous knowledge of any potential 
vulnerabilities in the system.
    Senator Domenici. Can you give us for the record a brief 
overview of the findings from the inter-agency performance 
evaluation team to date?
    General Strock. Yes, sir. For the record or here, sir? 
Here. Sir, I would be happy to expand in the record, but I can 
tell you that we have gotten to the point now where the IPET 
has reached some conclusions about the performance of the 
system. Specifically, in the 17th Street Canal area we have now 
concluded that we did have a problem with the design of the 
structures there, something we had hoped would not be the case, 
but now must confront that as a reality.
    That finding is being reviewed by the American Society of 
Civil Engineers and we expect their response to that soon. So 
that is one of the most significant findings to date.
    Other findings that the IPET has arrived at have to do with 
the storm surge in the Mississippi River gulf outlet, ``MRGO,'' 
and the conclusion on that is that it does contribute to some 
degree in storm surge on the inner harbor, but to a very small 
degree. Point-two of a foot is being attributed to MRGO and I 
think that is an important aspect to consider in the future.
    But sir, the most dramatic conclusion is that, yes, we had 
a design problem and that there may be other elements in the 
system designed along that way that need to be addressed.
    Senator Domenici. As I understand the current situation 
concerning the levee rebuilding, funding provided through 
enacted supplemental appropriations will complete the levee 
system as currently authorized. This includes rebuilding levees 
to the authorized levels, that is to the authorized level of 
protection, I should say, as well as repairing non-Federal 
levees and pump stations. This system was not completed before 
Katrina; is that correct?
    General Strock. Sir, the system was not completed before 
Katrina. There are several projects involved in this, about six 
in all. Our estimate is that we have sufficient funding to 
complete those systems by September 1, 2007, and with the third 
supplemental to provide some enhancements like those you 
discussed.
    I must caveat somewhat, though, sir, because the IPET 
results call into question the flood walls that we are using, 
we may have to replace some of the flood wall sections. 
Replacement of flood walls is not currently in our current 
estimates, with some small exceptions in the inner harbor area. 
So there may be an additional requirement to rebuild flood 
walls as we get into this. But generally speaking, we feel like 
we have sufficient funding.
    Senator Domenici. I am not going to have time to go through 
this very difficult and bothersome issue of the $6 billion 
authorization that has been alluded to by Director Powell and 
what should be done with it. Suffice it to say that I will 
submit to you three, four questions regarding that whole 
situation. Would you answer them as soon as you can?
    General Strock. Yes, sir.
    Senator Domenici. Then I have a number of questions on 
continuing contracts and reprogramming, which were very 
difficult for us to handle in this budget. We had a very hard 
time as we tried to put it together. I will submit those to you 
and you can answer them as soon as possible.
    General Strock. Yes, sir.
    Senator Domenici. Now, having done that, I am going to 
yield the gavel to you, Senator, and you do it as you see fit 
between the two of you, and we may return and we may not. But 
would you close it if we do not?
    Senator Dorgan. Senator Landrieu, what did you want to say?
    Senator Landrieu. Before Senator Domenici leaves, I just 
wanted to thank him for his focus on this Katrina-gulf coast 
issue. He has really been focused, as has his staff, with 
trying to come up with solutions as well as suggestions. So 
thank you, Senator, and I will have some others to follow up.
    Senator Domenici. I did not mean to be critical. The 
General understands. These questions I am asking have to come 
out and we have to decide how to fix this, and it is very 
difficult to explain to the public and we need your help in 
explaining it. The authorized level and all this business, it 
does not mean much to people, but it is very, very much the 
order of the day for us on where we spend, why we spend, what 
we did not spend. So we need to work together on it.
    General and Mr. Secretary, thank you. Thanks for your help 
in New Mexico, too. I skipped over that. Particularly, I thank 
you for the Acequias funding. Since you funded it, I am not 
going to ask you whether you can say it or not. Normally I try 
to find out if you can pronounce it, but if you can put the 
money in I do not care whether you can pronounce it or not.
    Thank you very much.
    General Strock. Thank you, sir.
    Senator Dorgan. Senator Domenici, thank you very much, and 
we will ask our questions and then adjourn the hearing, after 
we have done some legislative business.
    Senator Landrieu. You do it, we will fix it.
    Senator Dorgan [presiding]. At any rate, we appreciate the 
courtesy of Senator Domenici.
    Let me ask a couple of questions, and state first that at 
the moment the Red River is running north. It is flooding, well 
above flood stage at Wapaton, crested now, we believe, 
yesterday in Fargo. It is now being steered through the city of 
Grand Forks.
    This budget requests the final $12 million for the flood 
control project in Grand Forks. We appreciate that. We have 
spent a lot of money on flood control projects up and down the 
Red River. That is I think a success story for the Corps of 
Engineers and we appreciate very much the work the Corps has 
done and believe that this is the last contingent of money that 
is required to complete the Grand Forks flood control project. 
So I want to say, especially in areas where we have seen really 
excellent work by the Corps, that we appreciate that, because 
we are experiencing this flood. I think it is the third highest 
in history, these crests, not so far from the 1997 crest in 
which the entire city of Grand Forks was evacuated. It is a 
pretty aggressive flooding.
    Let me ask General Strock and Secretary Woodley about a 
parochial issue, but nonetheless an important one, the Fort 
Stevenson Marina Project at Fort Stevenson in North Dakota. The 
Corps of Engineers built a marina at Fort Stevenson and in half 
of the years you have not been able to see the water from the 
marina, so it has been unusable. I have been up there many 
times.
    We finally created a circumstance where the Corps said they 
will move over--it is about 1 mile--and do a deeper water 
marina. It is not something that would break the bank, but the 
Corps made a commitment to do that. They were going to 
reprogram funds to do it. Now I think there is a question of 
whether the Corps is prepared and willing to proceed.
    Can you tell me what the current thinking of the Corps is 
and what your commitment is?
    General Strock. Sir, what I do have on that is that we 
estimate that it is about an $11 million requirement to 
accomplish the movement of the marina. And yes, water is down, 
as it is throughout the northern reservoirs. And I would 
assume, since we have identified the cost associated, we feel 
like we can do it. But we simply do not have the money to do 
that now.
    Senator Dorgan. When Mr. Rob Vining was making the 
commitment on behalf of Corps, he talked about using 
reprogrammed funds.
    General Strock. Yes, sir.
    Senator Dorgan. It actually was $5 million. Back then the 
cost was around $5 million or $6 million to do this. I do not 
know how the Corps has gotten this to an $11 million project. 
But the problem is these folks have a marina that's unusable. 
It is the Corps' marina. The regulation of the water--instead 
of retaining water in the upper reservoirs, we have been 
flushing it out so that my friend from Missouri can run his 
barges down south. So folks who want to use a marina at Fort 
Stevenson do not have a marina to use, and moving a very short 
distance would give them a deep water marina and it would not 
cost a great deal. The Corps of Engineers actually built the 
first one. We have not been able to use it every other year.
    So it seems to me the Corps has a responsibility to provide 
the money to move this.
    General Strock. Sir, I can certainly provide you a better 
informed answer for the record on why the cost has shifted. If 
we are relying on reprogramming, I think you understand the 
limits on reprogramming right now that have been placed on the 
Corps, and it is very difficult to find both sources and then 
get approval of moving money. That may be a factor in not being 
able to move ahead on this.
    Sir, we certainly recognize the challenges of the drought. 
It has been going on for many, many years and we are trying to 
operate the system in accordance with the master manual, which 
has been recently revised and approved. And we do know that it 
does cause problems for everyone in the system, not just the 
upriver States but the downriver as well.
    Senator Dorgan. Well, General, I am going to submit a list 
of questions about this. But I do think the Corps has a 
responsibility at Fort Stevenson and I do not know how you meet 
it. We have a presidential budget now that cuts $0.5 billion. I 
know you are getting some emergency funding, but in terms of 
regular funding a cut of $0.5 billion when you have unmet 
needs, you have commitments that have been made that are not 
now apparently going to be kept, that is a pretty 
unsatisfactory response to tell to the folks up in the northern 
part of the reservoir.
    The upstream benefits of tourism, recreation, fishing are 
ten times the size of the downstream benefits of barging, and 
yet we continue to see that water rush out of those gates 
headed downstream.
    You and I have more to talk about, I think, as well as the 
Secretary, about how we meet the responsibility to the people 
who have been told by the Corps that the Corps would move that 
Fort Stevens marina.
    General, let me talk about a subject that you are not going 
to want to talk about at all. But I have tried to do this by 
submitting questions last year. I have tried to do this by 
letter to you, and I have never gotten a satisfactory answer. 
That is the Bunnatine Greenhouse issue and the Rio contracts.
    I have as a result of magazine reports of what has happened 
at the Corps of Engineers, I have held policy committee 
hearings. Ms. Greenhouse has testified. She has been demoted, 
perhaps for that testimony or perhaps for other reasons, but 
she has been demoted. And she has said that--let me read her 
quote--``I can unequivocally state that the abuse related to 
the contracts awarded to KBR, a subsidiary of Halliburton, 
represents the most blatant, improper contract abuse I have 
witnessed during the course of my professional career.''
    It takes a lot of guts for somebody to say that. She was 
given excellent recommendations all along the way during her 
career, a remarkable public servant. People outside of your 
agency who know about contractors tell me that she is a first-
rate contract official in the Corps of Engineers. And for this 
candor she has lost her job, been demoted.
    I know there are legal issues in the Pentagon. You probably 
cannot respond to the legal issues, but you could respond at 
least by letter to me, and you could respond to the questions 
that I propounded last year during the hearing about what is 
going on here.
    I assume that you will probably want to say that she is 
wrong, there are no contracting abuses. I assume also that the 
inspector general is looking into all of this. What has been 
appearing in the popular literature, magazines and others, 
about this situation is deeply troubling to me--the RIO 
contract, the LOGCAP contracting, substantial evidence of 
abuse, waste, and even fraud in sole source no-bid contracts in 
Iraq.
    I have tried, both in letters and in submitted questions, 
to get candid responses from you and have been unsuccessful. 
Can you tell me why?
    General Strock. Sir, first of all I need to make sure that 
we have responded in a timely way to your questions, and I will 
have to go back and look at those responses. There are limits 
to what we can talk about in this and one of the most important 
aspects of this entire thing--and this may sound somewhat 
contradictory to the situation you just laid out--is that we 
have an obligation to respect the rights of the individuals and 
privacy of the individuals here. So my ability to talk about 
specific reasons for actions we took is very, very limited.
    Therefore I must simply say that we have a process that is 
very important to us. We followed the appropriate process in 
disposition of Ms. Greenhouse's case. And I think that has been 
reviewed on multiple times. She has been----
    Senator Dorgan. If Ms. Greenhouse would waive those 
provisions, if she would waive that and allow you to say 
whatever you wish, would you be willing to do that?
    General Strock. If that is possible, sir, and it was done 
in the right kind of way and I was cleared to do that, yes, 
sir, absolutely. I would be happy to do that. But it is all 
about protecting her privacy.
    Sir, in terms of the allegations, I can talk about those a 
bit. I was personally involved in many of those decisions and 
can look you right in the eye and say that we followed the 
rules that were in existence at the time to make all those 
calls. The Government Accountability Office has reviewed the 
award of those contracts and has found that they were done in a 
proper fashion. The Army Inspector General has also conducted 
an investigation. The DOD Inspector General has also conducted 
investigations. And to date we have not had any indication that 
things were not done properly in the award of those contracts.
    There have been many questions about the actual delivery of 
products and services under those contracts and in most cases I 
think the Government has shown to have acted in a reasonable 
and appropriate manner in adjudicating claims paid and all that 
sort of thing.
    So this entire thing has been looked at in many, many ways 
and many times and so far the results are that we did things in 
the proper way.
    Senator Dorgan. Well, General, I also have looked at some 
of them and had whistleblowers come and testify and it 
contradicts that answer. Food service, water quality. I will 
give you an example. I do not know whether you had these, the 
water quality contracts, on the bases. Was that yours?
    General Strock. Sir, I did not. This particular contractor 
has a number of contracts. One of them is the LOGCAP contract, 
which is managed by the Army Materiel Command, which provides 
for sustainment on military bases. Our contracts had to do with 
the reconstruction of the oil industry, so the food and water 
issues that you cite were not part of our contracts.
    Senator Dorgan. Yours were the RIO contracts?
    General Strock. Yes, sir, ours was RIO.
    Senator Dorgan. I just observe on the LOGCAP contracts that 
both the Department of Defense and Halliburton have been 
dishonest publicly about that. We now have internal documents 
from Halliburton that show that the responses by DOD and 
Halliburton were not honest.
    General Strock. And I cannot speak to that, sir.
    Senator Dorgan. My understanding from the inspector general 
on the issues surrounding the allegations Ms. Greenhouse made 
is that there has been a referral to the Department of Justice 
for a criminal investigation. Is that not accurate?
    General Strock. Sir, I do not know that. I know that there 
are a number of proceedings related to her case that are going 
on right now and I am involved in some of those. But I do not 
know if they have risen to the level of the Department of 
Justice.
    Senator Dorgan. I believe the inspector general has told us 
that in a letter.
    My point is not to badger you about this, except that there 
are questions that demand answers. The American people demand 
answers.
    General Strock. Yes, sir.
    Senator Dorgan. We are spending an enormous amount of money 
on these projects, contracts, the RIO contracts, LOGCAP 
projects, feeding troops, providing water to troops, equipment 
to troops, oil. The fact is there is a substantial amount of 
evidence there has been dramatic waste and abuse and in my 
judgment fraud. The Custer Battles issue comes to mind. I am 
not going to lay all this on your shoulders, but I am telling 
you it makes me sick when you take a look at what is going on 
and the waste of money, and nobody seems to care very much.
    All I am asking is that, with respect to those issues under 
your jurisdiction, that you respond fully to the questions we 
are asking. And if you cannot answer, I will ask Ms. Greenhouse 
if she will provide a waiver so that you can give us all the 
information.
    I know that you are going to leave this room and mutter 
things that I probably should not say out loud under your 
breath, because this is not what you want to hear at this 
hearing.
    General Strock. Sir, not at all. If I might, not at all. I 
share the same concerns you do. We have to treat people in the 
right ways, and I think we have done that. So no, sir, I am not 
going to mutter anything on the way out of the room.
    Senator Dorgan. One other question. The person that has 
been noticed in at least one publication to replace Ms. 
Greenhouse it appears to me has no contracting experience.
    General Strock. Sir, her replacement is Ms. Sandra Riley, 
who has come to us after about 40 years of Government 
experience. She did serve as a head of contracting agency, 
which is the same level of responsibility that I have within 
the Corps of Engineers, and she managed all the affairs for the 
Department of the Army and the Pentagon related to that.
    It is true that she is not an acquisition certified 
professional under the Defense Acquisition Improvement Work 
Force Act. But she has been given a waiver for some of the 
criteria and she has gone to school and is currently being 
brought up to speed on what it is she needs to know as a 
contracting official.
    She is really coming to us as a change agent, sir, which 
she has a reputation for in the Army, and she brings us 
leadership. It is part of the Army's intent that, like our 
general officers that can serve in many capacities, our senior 
civilians are expected to be true corporate leaders as well and 
do not necessarily need the specific experience and credentials 
of the particular area of the government that they are working, 
that they have oversight for.
    Senator Dorgan. General, with due respect, that seems 
illogical to me, to have to bring her up to speed with respect 
to knowledge. My colleague here from Louisiana has just 
experienced FEMA's failures. Seven of the top eleven positions 
in FEMA were staffed by cronies, I am sure who had good 
management experience, but did not know a thing about emergency 
response. So you put cronies in positions for emergency 
response, they did not know how to respond to an emergency.
    I am just making a point that Ms. Greenhouse, fairly or 
unfairly--I guess ultimately the facts will judge this--lost 
her job, was demoted, for speaking out about what she perceived 
to be abuses. She regularly had excellent recommendations, 
excellent performance evaluations, year after year, but has now 
been demoted and replaced by someone who has no experience or 
no substantial knowledge in contracting. That just seems 
unbelievable to me.
    General Strock. Yes, sir, I would not characterize her as 
having no experience, no substantial knowledge, but she is not 
certified as an acquisition professional at this point, that is 
true.
    Senator Dorgan. Well, we have more to exchange on that and 
I will do that by letter, General Strock. I hope and expect we 
want the same thing, that we want accountability and we want 
facts to speak for themselves.
    Let me close then on a positive note so that I can tell you 
again, we have--we are a semi-arid State. North Dakota would 
hold ten Massachusetts in land mass. We are a big, big State, 
and 642,000 people spread out. We have got a big Missouri River 
running in one part of it and we have got a Red River running 
north.
    We have a lot of water issues. We have got a flood in 
Devil's Lake that came and stayed, and it is a huge problem. We 
have got the need to move water from western North Dakota to 
replenish the Red River in times when it does not have enough 
water. At the moment it is busting out of its banks and 
flooding in three large communities.
    So having watched the Corps of Engineers in 1997 in action, 
I can tell you that the performance of the Corps to do well is 
critical to our surviving during floods and surviving during 
droughts. I have not talked at great length about the 
management of the Missouri River today, but that also is a 
significant part of our angst.
    But you have men and women working for the Corps of 
Engineers that work day and night at times when we are in 
crisis, and I hope you and the Secretary will communicate to 
them our appreciation for that. I know they are doing that now 
up and down the entire Red River valley and we want you to tell 
them thank you on behalf of a grateful citizenry.
    General Strock. Sir, thank you very much.
    Senator Dorgan. Senator Landrieu.
    Senator Landrieu [presiding]. Thank you, Senator Dorgan.
    Mr. Secretary and General Strock and others, I want to 
begin by acknowledging that you have been down to Louisiana, 
Mississippi, and the gulf coast many times since Katrina and 
Rita and the multiple levee breaks that ensued, and you have 
sent extra support and been attentive to our requests. So I say 
that just to acknowledge that in my view you personally have 
done what you can.
    But my questions will be about the constraints that you are 
operating under, which I think are very serious and actually in 
fact put the Nation at risk. I want to start with you, 
Secretary Woodley, if I could. Could you just for the record 
before this Appropriations Committee that has the task of 
funding critical civil works projects for energy and water for 
the country say again clearly for the record what we are going 
to be able to fund this year and what we are not, based on what 
is the backlog of authorizations? And if you do not have that, 
I think General Strock or others might.
    What is our current backlog of authorized critical projects 
that is not going to get funded based on the budget that you 
have submitted?
    Mr. Woodley. Senator, I want to preface what I say, I think 
I understand what you mean by the backlog. It is a term, it is 
a sort of a pejorative term for these, that I try to avoid 
because I regard those projects not as being projects in some 
kind of backlog, but rather it being opportunities that exist 
for investment on the part of the Nation in water resource 
development.
    Senator Landrieu. That is fine. Then what are the 
opportunities that we are not funding?
    Mr. Woodley. I believe that we have something in excess of 
400 different projects across the country that are eligible for 
Corps funding, and of those I believe that about 90 to 100 are 
actually receiving funding in the President's request.
    Senator Landrieu. With the number about $44 billion be 
about accurate, $44 billion, opportunities that are not funded?
    Mr. Woodley. That might--well, of course that would not be 
in any given year. That would be the total build-out for the 
entire amount.
    Senator Landrieu. That is correct.
    Mr. Woodley. But I cannot confirm the number, but it would 
not surprise me.
    Senator Landrieu. Well, let me then try. I am going to say 
a number and if you disagree with me for the record then you 
can get back in writing. But basically our records reflect, my 
records reflect, that we have about $44 billion in--let us use 
your word--opportunity to protect Americans from flooding, to 
promote navigation and economic development, and to protect 
wetlands, coastal restoration, et al., as described in the 
charge.
    And the way that I look at it and many Members of Congress 
is we are about $42 billion short, because in this budget we 
have approximately $1.5 billion for new construction, then x 
few billion for operations and maintenance.
    But I want to focus on, because all the hearings are, as 
you testified, we have 5 percent more money than last year. 
Since the last year number is irrelevant to the people that I 
represent, 1,200 of whom who have lost their lives because it 
was too low, 5 percent more does not have any relevance to me 
or to the people I represent or to the gulf coast. So I am 
going to try to focus us on what the real pending crisis is. 
That is that this budget is so far short of where this Nation 
needs to be in investments in civil works it is almost in my 
view not worth discussing.
    For the record, I want to be clear that there is 44--before 
we pass the next WRDA bill, which 88 of us have signed on to 
get passed, which will add how much, $10 billion to $13 billion 
in new authorized projects which everyone is clamoring for, we 
have $44 billion worth of projects that do not have a penny 
allocated to them in this budget.
    Now, that is the first point. The second point I want to 
make is I want to show you a little chart of why this is of 
significance for the country. I am going to provide this to the 
members. This is a chart that I got from the National Civil 
Works--American Civil Works Society. You can see it goes back 
to 1929. This is 2004, I guess. This is where the levees broke 
in New Orleans, the bottom of this long, dangerous, 
nonsensical, irrational, irresponsible, funding level. This is 
where they broke.
    You can see what happened in the early part of the century, 
and even just going back as recently as--this is a percentage 
of GDP. This is the investment gap in America today just on 
civil works. But it is not just civil works; it is all water 
projects, all flood control projects in the country. And this 
is a disgrace. This budget is a disgrace because of that.
    The paragraph that introduces this budget I would like to 
read, is an insult to me and the people that I represent: ``The 
fiscal year 2007 civil works budget is a performance-based 
budget which reflects a focus on the projects and activities 
that provide the highest net economic and environmental returns 
on the Nation's investment or address significant risk to human 
safety.'' That is an insult to the people I represent because 
it is a lie, because it does not.
    Now let me ask you this question. When the Corps conducts a 
feasibility study on hurricane protection projects, does the 
current law direct you or indicate to you that you have to 
conduct that feasibility study for life and property, or is it 
just for property? Do you take human life into your 
calculations, technically? Do you do, General Strock? To 
General Strock or really to the engineers. Go ahead.
    General Strock. Not per se, ma'am. We do not take that in 
as a factor. We use sort of a surrogate for that, which is we 
do consider economic development, and typically where there is 
economic development there are people. So the main driver is 
economics and tradeoffs there.
    Senator Landrieu. I just want to call to the attention of 
this committee that that is something that we are going to have 
to take a look at, because this comment about human life, human 
safety, is a stretch based on the fact that it is just 
extrapolated from economic data. So some of us are looking very 
closely at asking for human life to be a calculation in these 
studies because it may have a direct impact then on whether 
some of this gets built or not.
    But that is why I take issue with this, because it is not 
included right now--I know that for a fact--in your 
assumptions.
    General Strock. Ma'am, if I could just modify a bit. That 
is not our traditional method of valuing human life and human 
lives exposed, but this year we do have a criteria in the 
budget that for a given likelihood of an occurrence for a 
certain amount of flows, for the density of populations, we do 
consider projects as high-risk projects. It has to do with 
warning time, people in the flood plain, potential depth of 
flooding and velocities.
    So this year in looking at high risk projects that should 
be supported, we have taken that into account.
    Senator Landrieu. Well, I appreciate you taking that, that 
extra step, because in the current laws, which we are going to 
recommend be changed, that has not been in the past 
calculations. And besides these numbers being low, that is also 
a critical component, with populations moving closer and closer 
to water, whether they be coasts or along great rivers or 
lakes, et cetera. It becomes a real serious issue that makes 
these numbers that are pretty devastating even worse.
    Let me ask for some clarification on the $6 billion, and 
whoever can answer this the best. Last week our administration 
received what I consider a bombshell of an additional $6 
billion that is needed to meet the current authorization levels 
or the current safety levels or the certification, if you could 
explain which of those it is. How did you arrive at that figure 
and do you think it is accurate for southeast Louisiana? And I 
do not know who wants to take that. Maybe General Strock. You 
conducted the--
    Mr. Woodley. Actually, Senator, that figure had to do with 
the question that was raised to the Corps at the local level, 
at the district, on making assumptions with respect to the base 
flood elevation that may eventually be determined by the FEMA 
for the new flood maps. The question there was, can you give us 
a rough order of magnitude, a very-swiftly-arrived-at estimate 
of what the outside cost to raise those levees by a certain 
amount might be.
    We have--the only thing I can tell you is that we answered 
that question. Those figures have been--are being refined even 
now, so I would not----
    Senator Landrieu. So you are saying, you are saying that 
FEMA requested that information of you?
    Mr. Woodley. Yes, ma'am.
    Senator Landrieu. FEMA requested that information. How long 
did they give you to--when did they request it? And when you 
said you hurriedly put it together, did you put it together, 
General, in 2 weeks or 3 weeks or 5 weeks?
    Mr. Woodley. I would say perhaps even less than that. I am 
not exactly sure of the precise chronology, but it was a very 
swift question. It was based on, as far as I understand the 
estimate----
    Senator Landrieu. Did you take more than 48 hours to put it 
together? General, try to testify. How long did it take you to 
put that together----
    General Strock. Yes, ma'am. If I could just back up a bit 
and talk----
    Senator Landrieu [continuing]. And is it accurate?
    General Strock [continuing]. About the process here. Mr. 
Woodley cited the base flood elevations, which determine the 
100-year flood plain that is identified by FEMA. We participate 
and support FEMA with hydrologic studies to determine just what 
that flood plain should look like. So we are a supporting 
agency to FEMA in making that determination.
    We all recognize that after a storm of the magnitude of 
Katrina that it would impact the base flood elevations that 
would be applied post-Katrina, because Katrina is such a 
massive storm that it really influenced the record which is 
used to determine that.
    It was about the November time frame, I think, when we 
concluded what those base flood elevations should be, and in 
fact we have issued those advisory notices in all the counties 
and parishes along the coasts that were impacted except for the 
four in the New Orleans area. We did not at that time go 
forward because the initial feeling was that it was such a high 
elevation that it would make a dramatic impact. So what we 
asked is that we should delay the issue of those base flood 
elevations until we had time to really do some more refined 
analysis, and then also to consider the impacts.
    In the process, we determined that, given the base flood 
elevations that we arrived at, we could not certify most of the 
levee system around New Orleans to a 100-year level. It was not 
an important question on the gulf coast in Mississippi because 
there are no levees to certify. It is what it is. But when you 
are behind a levee, if you can certify the levee to a 100-year 
it essentially takes out the people and infrastructure behind 
that levee, it takes them out of the flood plain.
    So our ability to certify levees was then an important 
question. As we did that analysis, we determined that in most 
cases we could not certify the levees to 100-year protection 
levels, which essentially puts everybody in the flood plain and 
they act like the levee is not even there. So it has tremendous 
implications.
    As a result of that, we were asked what it would cost to 
raise the existing projects to 100-year level, and the number 
that Chairman Powell put out last week was a preliminary 
estimate which we are continuing to refine. I think that you 
will see at such point as a decision has been made on this that 
you will see that estimate should come down somewhat.
    Senator Landrieu. Okay, I accept that and I know that this 
number can be refined. We are actually hoping that it is 
refined. It is hard to get any money around here, let alone $6 
billion, so we are hoping it can be refined.
    But I just want to press this for just a minute. You said 
1-in-a-100-year flood. Would that roughly equate to category 2, 
3, 4, or 5 roughly? I know they do not match up, but if you had 
to chart it what would it be?
    General Strock. I cannot answer that. I am not sure there 
is a direct correlation between the flood plain and the 
categorization of storms. What that tells you is that in that 
area that there is a 1 percent chance in a given year that you 
will see a storm of that magnitude.
    Senator Landrieu. What do we have now in the other parts of 
the city? Is that the same 1 percent in 100 years?
    General Strock. Ma'am, about--well, first of all, I think 
70 or 80 percent of the city is already in the flood plain. 
This just adds more to that.
    Senator Landrieu. That is not what I am asking, what is in 
the flood plain. I am trying to ask--I am trying to establish, 
so I can compare apples to apples--the $6 billion which you 
have recommended, which will be refined, let us just say it is 
refined to $4.5 billion. That number, whatever it ends up 
being, is going to build category 2, 3, 4, or 5 levees around 
the areas that you have proposed, just roughly? There is no way 
for you to say whether they are 2's, 3's, 4's, or 5's?
    General Strock. I truly cannot answer that. I think that we 
are wrong in trying to describe these systems in terms of the 
category of storms they can protect against. That has been one 
of the challenges throughout, that we simply do not build the 
category system for hurricanes----
    Senator Landrieu. It may not be the accurate way, but I can 
tell you one of the things that I am going to press very hard 
as a Senator is to have some way. It does not have to be a 
category 1 through 5. It does not have to be 100 to 10,000. But 
I have to have some way to explain to people that the levees 
are going to be either 1 foot, 4 feet, 5 feet, or protect them 
from x.
    So I suggest if you do not like the way we are doing it, 
General, we have to come up with a way that is clear to people, 
that is transparent, that everybody understands, like this is a 
$1 bill, you know what a $1 bill is; this is a $10 bill, this 
is a $100 bill. We cannot give you a $100 bill; we are giving 
you a $1 bill. People are clear.
    We need that, so it does not matter to me. So I am going to 
leave that there, but I have to come back to this question. But 
let me try, without having the benefit of any levels or any 
storms, just say, ask you this way. Whenever we get this dollar 
amount, if we do not get this dollar--let me just put it this 
way. If we do not get this dollar amount that will be refined, 
what happens to those areas in four parishes? They either have 
to build up to about what height or what? You said--you did not 
release the heights. I am not asking you to. But the general 
height, is it 13 feet or 20 feet or 25 feet?
    General Strock. I would have to get back with you, ma'am. 
It varies by where you are in the city.
    Senator Landrieu. Could you give just a range of those four 
parishes that you looked at? I know you have it in your data. 
You had to have it.
    General Strock. Early on, I think in the November time 
frame, it was about 17 feet, something like that. The challenge 
here, ma'am, is that if the levees are not certified to a 100-
year level then FEMA acts as if they are not there at all. The 
fact is there are levees providing protection and you are not 
going to be fully inundated because there are levees there.
    What we are trying to do to articulate the level of risk is 
to show levels of inundation in a Katrina-like event that would 
occur on June 1, 2006 when we complete our current work, what 
we would see on September 1, 2007, and then, if we certify it 
at 100-year and we build the levees to that, what people could 
expect in different parts of the area in terms of depth of the 
water.
    That is how I think is the best way to articulate the risk 
associated with this.
    Senator Landrieu. Well, that may make sense to you, 
General, but we are struggling with trying to make that sense 
to 3 million people that live in south Louisiana and just need 
to know whether the hurricane levees are going to be at a 
category 3, 4, or 5 or some equivalent of that and whether it 
will work or not.
    But I am going to leave the testimony at: you are refining 
the number, it is a real need for these four parishes, and you 
have not requested it in the budget.
    General Strock. That is correct.
    Senator Landrieu. Secretary, can I ask you, does the 
President have any intention of requesting this or what do you 
think the status of that is?
    Mr. Woodley. I believe that that is a decision that has not 
yet been made by the President.
    Senator Landrieu. So we still can remain hopeful that 
perhaps it might be forthcoming. I will just remain hopeful 
today.
    Mr. Woodley. Yes, ma'am.
    Senator Landrieu. Is there anything that you--I just wanted 
to--I have 100 questions I could ask, but I wanted to try to 
hone in on the $6 billion, on the study, and on the general 
lack of funding, which I will conclude by saying that because 
of that chart I would suggest that Katrina and Rita have, I 
hope, ripped away the curtain of complacency, that we have had 
a false sense of security in this country about the investments 
that we are making. They are not adequate, and if we do not 
find a whole other paradigm we just cannot not only protect the 
people along the gulf coast, but we are investing so little of 
our gross national product in what I would think are essential, 
essential civil works projects, for not just trade and commerce 
but for humans, safety of human life. And the safety and 
protection of billions of dollars of investments that we have 
made all along the coast and all along the great river systems 
and all along the great lakes systems of America are at great 
risk, because this line is about off the chart. You cannot get 
much lower than where it is. You literally cannot go any lower 
on the chart. You would be off the page, down to zero. Would 
you hold it up again?
    There is nowhere down to go. And it represents less than, I 
think, one-tenth of what we spent in 1929 or 1930 and one-sixth 
of what we spent in the 1970's.
    This is what our delegation, just in conclusion, has been 
looking at, this precipitous falloff, and thinking we have a 
coast that has to be saved, wetlands that are washing away at 
an alarming rate, levee systems that are underfunded and 
underdesigned, and systems that have to give added money.
    So we have got to change this, and we have recommended for 
us a solution is getting revenue, offshore oil and gas revenue, 
to start investing in the gulf. We have even recommended 
sharing that with the other States to help them. Of course we 
have been rebuked. We cannot do that. So now we are down to 
just trying to find for Louisiana, Mississippi, Alabama, and 
Texas a new source of funding to help get these civil works, 
essential civil works projects, up.
    Because I said, this is where the levees broke. It is just 
a matter of time until they break again some other place 
because we are not investing nearly the money that we need to. 
In all fairness to this administration that I have been very 
critical of, this did not start with the current 
administration. It has been going on quite a long time.
    But I would say one final thing. The reason I am remaining 
somewhat critical is in these years we did not always have 
surpluses, but when we had surpluses we chose to do something 
else with them, and funding of civil works was not one of them.
    So we have a lot of work to do on this budget. Senator 
Domenici has been very, very kind to let us go on. But the $6 
billion issue has to get resolved. The way we define levee 
protection, you pick a way, tell us what to do so people 
understand it. Then the overall budget number for this budget 
is something we are going to have to work on.
    Do you want to add anything before we conclude?
    General Strock. Ma'am, the only thing I would add is, one 
of the ways that we can get at the business of articulating 
risk is using the money that you gave us in the third 
supplemental to create a national levee inventory and database, 
and this budget also requests additional funds for that. That 
would allow us to capture all the levees in this country from 
private through Federal and then to build a model that would 
allow us to articulate risk and reliability associated with 
those, and that will really frame the problem and the potential 
for investment and help us set priorities. So I think that is a 
wonderful step that needs to be done.
    Senator Landrieu. I thank you, General, for raising that. I 
wanted to get a status report. I would just ask you to submit 
it in writing, not to take any more time. But I am glad we were 
able to get that study in for the Nation, because then you are 
given an opportunity to present to the Congress the real needs, 
and then it is up to Congress to decide and this 
administration, are we just going to not fulfill our 
responsibilities, pretend like it is not a real risk, hope we 
do not get any more hurricanes, pray no river goes over its 
boundaries?
    I mean, this truly is a Nation at risk right here at home. 
And I know we have risk around the world and I am cognizant of 
what we are doing in Iraq, but I hope that the study--and you 
should be finished with that when? I think it was June?
    General Strock. There is a preliminary----
    Senator Landrieu. A preliminary in June.
    General Strock. August.
    Senator Landrieu. In August. Preliminary in June and then a 
final in August. That will help us. That will be very helpful 
to the country.
    Our situation is more urgent, as you know, because 
hurricane season starts in 2 months. But we will continue to 
work on it.
    General Strock. Where the New Orleans levees are concerned, 
we are doing a study now for those areas that were not 
obviously impacted to make sure that they are still 
structurally intact, and that will be done certainly in June.
    The preliminary report on the levee inventory will be in 
August, not the final report.
    Senator Landrieu. Anything else, Mr. Secretary?
    Mr. Woodley. Thank you, Senator. It has been a real 
privilege to work with you and the rest of the Louisiana 
delegation on these important response issues and we appreciate 
your continued support for the agency and assure you that we 
take your views very, very seriously.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Landrieu. Well, I appreciate that. You have worked 
very closely with our delegation. But this is just not--this 
current system does not work. It does not work, did not work 
for us, does not work for anyone. We have got to have some 
serious change.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

            Questions Submitted by Senator Pete V. Domenici

                    REGULATORY ISSUES IN NEW MEXICO

    Question. General Strock, I have had Colonel Wang in my office a 
couple of times this year concerning a couple of permitting issues with 
the city of Albuquerque. One of these concerned the Montano Bridge, 
which has since been resolved, the other was the Paseo Del Norte road 
extension.
    The Paseo project involves crossing an arroyo and the issue had to 
do with the permitting required. I am simplifying the chain of events 
here for brevity. The city originally planned to cross the arroyo with 
a culvert. The permitting requirements became so onerous for the 
culvert, particularly with Corps' discretionary decisions concerning 
historic preservation consultation, that the city has committed to me 
that they will build a bridge instead. A bridge will be considerably 
more expensive. I have not heard any status on this project lately.
    General Strock, do you know the current status of this project?
    General Strock. The Albuquerque district is processing the Paseo 
Del Norte as a Nationwide Permit 14 and 43 for a culvert crossing of 
Piedras Marcadas arroyo. The district made a finding of no adverse 
effect to historic properties. The Advisory Council on Historic 
Preservation (ACHP) objected to the district's determination. As 
required by the National Historic Preservation Act, the district is 
reevaluation their initial finding of no adverse effect and will 
provide their decision to the Advisory Council on Historic Preservation 
in accordance with the requirements of regulations 800.5(c)(3)(ii) and 
800.5(c)(3)(B) in the Code of Federal Regulations, Title 33, Appendix 
C. This completes the Corps responsibilities under section 106 of the 
Historic Preservation Act.
    Question. Can you comment on the Corps discretionary roles in the 
permitting process, particularly in the area of historic preservation?
    General Strock. Compliance with Section 106 is required for all 
Federal undertakings which include issuance of Federal Permits in 
jurisdictional waters of the United States. The Corps of Engineers uses 
nationwide general permits and individual permits to authorize 
activities in compliance with the applicable laws and regulations. The 
Corps of Engineers must ensure activities comply with the National 
Historic Preservation Act regardless of the type of undertaking. The 
Corps has responsibility for determining the appropriate scope of 
analysis and the effect of the undertaking, in this case the activity 
in waters of the United States, on historic properties, including the 
direct and indirect effects of these activities. The Corps must also 
afford the State Historic Preservation Office (SHPO) and the ACHP an 
opportunity to comment on its determination of effect. The Corps must 
document how it considered the opinion of the ACHP and SHPO in its 
administrative record for the permit decision. Once this is 
accomplished the Section 106 process is complete.
    Question. Also in New Mexico, there is a railroad project called 
Abo Canyon. This canyon, which is about 4.5 miles long, has only a 
single track through it and, as a result, is a major railway 
constriction from the west coast to the Midwest and beyond.
    To maintain efficient transit of goods, it's essential that a 
second track be constructed through the canyon. I'm told that, before 
the railroad can construct a second track parallel to the existing one, 
they have to have a permit from the Corps because a grand total of 0.1 
acre of wetlands might be impacted.
    Now, General, these so-called wetlands are normally very dry--this 
being New Mexico--but I do understand why the Corps would have to be 
involved, given its Clean Water Act responsibilities. However, I don't 
understand why the Corps is requiring an archaeological investigation 
of the entire canyon, rim-to-rim, just because of this one-tenth of an 
acre of dry wetlands.
    Can you explain why the Corps has required this, and why it isn't 
over-reaching on the part of the Corps in defining its jurisdiction?
    General Strock. The Corps of Engineers is evaluating the second 
rail track for the Burlington Northern Santa Fe (BNSF) Railroad project 
in accordance with its regulations under the individual permit 
procedures because the project will impact a total of more than 0.5 
acre of waters of the United States at 24 separate locations along the 
proposed 4.5 mile alignment. The permit process has been delayed by 
historic property issues.
    Most of the landowners affected by the proposed track have 
cooperated with and sold their land to BNSF. The property owners of 
Dripping Springs Ranch have not sold their land and oppose the project. 
BNSF initiated the condemnation process for this parcel; however, the 
process is currently in abeyance pending a final decision on the 404 
permit. Thus far, Dripping Springs Ranch has not allowed BNSF to 
complete a required survey for cultural properties on their property. 
This is not an insignificant survey as BNSF has already identified over 
100 historic sites along the proposed alignment. The Corps and BNSF are 
meeting with the property owners to resolve this issue.
    Due to potential impacts to at least 17 of the 125 sites already 
identified, the Corps has determined that the proposed activity will 
have an adverse effect on historic properties and has sent a letter to 
the New Mexico State Historic Preservation Officer (NM SHPO) in 
accordance with the National Historic Preservation Act. The Corps will 
work with the consulting parties (BNSF, NM SHPO, Bureau of Land 
Management (BLM), the owners of Dripping Springs Ranch) to develop an 
MOA to mitigate for the adverse effects to historic properties in 
accordance with the regulations and law. BLM is involved in this 
process as BNSF must acquire a small piece of land from BLM to complete 
the project.
    The district expects to conclude permit evaluation, including the 
MOA to address adverse effects on historic properties, in August 2006.

                                DROUGHT

    Question. As you may be aware, we are facing significant drought 
issues in the Southwest and particularly New Mexico this year. I wanted 
to let you know that I am seeking $5 million in the current 
Supplemental for the Corps to provide drought assistance.
    Obviously this still has to be conferenced with the House before it 
becomes law, but can you describe some of the drought assistance 
measures that the Corps can provide under the Stafford Act?
    General Strock. The Corps is the Department of Defense Agent for 
Emergency Function 3 (public works and engineering) under the National 
Response Plan which is implemented pursuant to the Stafford Act. During 
a disaster, the Corps will do what is asked by Federal Emergency 
Management Agency under the Stafford Act pursuant to the National 
Response Plan.
    Question. Are there any other programs within the Corps that would 
allow you to respond to drought?
    General Strock. There are several ways the Corps can help during 
droughts independent of the Stafford Act. These authorities are 
summarized below.
  --Emergency Provisions of Clean Water.--Public Law 84-99, as amended. 
        Water can be provided to a community that is confronted with a 
        source of contaminated water.
  --Emergency Well Construction.--Public Law 84-99, as amended. 
        Authorizes the construction of wells or the transport of water.
  --Planning Assistance to States.--Public Law 93-251, as amended. 
        States may obtain Corps water resources planning expertise on 
        50/50 cost shared studies to develop plans related to the 
        overall State water plan. This plan must be developed prior to 
        any water shortage in order to be effective.
  --Drought Contingency Plans for Corps Reservoirs.--Provides for 
        release of water from Corps reservoirs during drought. Not in 
        law, but is part of the operation of Corps reservoirs.
  --Drought Contingency Water.--Section 6 of the 1944 FCA. When 
        available, the Corps can sell surplus water to a State or 
        political subdivision, which agrees to act as a wholesaler.
  --Reallocation of Storage.--Public Law 85-500. This permits the 
        reallocation of storage from an existing purpose to M&I water 
        supply. This plan must also be developed prior to any water 
        shortage in order to be effective.
  --Interim Use of M&I for Irrigation.--Section 931, Public Law 99-662. 
        This program is limited in that it is only applicable to 
        certain projects.

                                KATRINA

    Question. Hurricane Katrina was a terrible blow to this Nation. The 
costs in terms of human suffering are incalculable, and the costs of 
response and recovery have been staggering to the Nation's treasury.
    General Strock, can you give us a quick status update of the 
current rebuilding efforts?
    General Strock. Task Force Guardian has awarded all of the 59 
separate construction contracts identified as being needed to restore 
hurricane protection to southeast Louisiana. As of April 5, 2006, a 
total of 20 of the 59 construction contracts have been completed. 
Repairs to the Mississippi River levees (105 miles) have been completed 
and all vessels (155) have been removed from the levees and floodwalls. 
Of the 59 contracts, 54 (91 percent) were awarded to local businesses, 
36 were awarded to small businesses, 15 were awarded to 8(a) firms, and 
7 were awarded to HubZone firms. The total estimated cost of the 
repairs is $800 million.
    Question. General Strock, I have been told that the United States 
Geological Survey says that the storm surge from Hurricane Katrina, is 
the greatest recorded storm surge to ever hit the United States. Can 
you confirm this? This was, in fact a large hurricane that struck, 
contrary to what may have been said. Is that true?
    General Strock. To our knowledge, the statement made by the USGS is 
correct. The highest ``storm-tide'' (surge plus astronomical tide 
component) other than Katrina of which we are aware of was generated by 
Hurricane Camille, 1969. Camille's ``storm-tide'' is given by the 
National Oceanic and Atmospheric Administration's National Hurricane 
Center as 24.6 feet at Pass Christian, Mississippi. Dr. Andrew Garcia, 
of the Corps' Coastal and Hydraulics Laboratory, recalls others reports 
of around 27 to 28 feet attributed to Camille, but Katrina's ``storm-
tide'' at Waveland, Mississippi was right at or exceeded even these 
undocumented Camille values.
    Question. Along with everyone else, I have read numerous articles, 
from various ``experts'' about the levee failures in New Orleans. Most 
of these ``experts'' have indicated that the Corps was aware of 
potential problems with the levees as designed and constructed. Further 
there has been considerable comment that these levees should have 
withstood the effects of Katrina. General Strock, I need to know from 
you what is the Corps' response? Is there any fire to go with all of 
this smoke? Or is this speculation from self-described experts without 
access to all relevant data?
    General Strock. The Federal storm damage reduction system is 
composed of multiple Federal projects, authorized and constructed over 
many years. Some features had not yet been completed at the time of the 
storm. Others were built by the local sponsors and incorporated into 
the system under specific authorization language enacted by the 
Congress for this purpose. The Corps was aware that some areas of the 
levees were no longer at design grade due to subsidence or settling. We 
now suspect that design deficiencies may also have played a role in the 
failure of some I-walls. On a larger scale, the design of the built 
system was significantly different from the design that the Corps 
initially identified for the Lake Pontchartrain waterfront. To what 
degree the Corps was aware of these or other problems, or of the 
potential for such problems, prior to Katrina is a matter currently 
being assessed. I can assure you, however, that the way in which the 
Corps recommends projects and deals with any known, suspected, or 
anticipated problems is a matter that I consider critical to our 
future.
    Question. General Strock, can you give us a brief overview of the 
findings from the Interagency Performance Evaluation Team to date?
    General Strock. The Interagency Performance Evaluation Team, or 
IPET, is an outstanding group of experts from government, industry, and 
academia that are literally working around the clock to complete an in-
depth analysis of the performance of the Hurricane Protection System. 
IPET is looking at how the system was designed and constructed, the 
forces it experienced during Katrina, how the system performed, and 
what mechanisms caused the catastrophic breaching. IPET has done 
everything from putting boots on the ground to collect data and 
eyewitness accounts to pushing the modeling envelope with supercomputer 
model runs of Katrina's storm surge.
    The IPET draft final report is scheduled for release on June 1. I 
expect both the consequence and risk analyses in that report will be 
invaluable tools to evaluate additional hurricane protection measures 
in the near term and for future higher levels of protection.
    But IPET has already made great contributions from its findings to 
date.
    IPET determined the failure mechanisms for structures that breached 
prior to reaching their design levels, such as the 17th Street and 
London Avenue Canals. This knowledge of ``how and why'' is being used 
to assess the integrity of all other similar sections of floodwalls in 
the system. These results also helped in the development of specific 
strategies to strengthen I-wall sections that are outside the outfall 
canals, including stability berms, relief wells, deeper sheet piles and 
limiting wall cutoff heights to significantly increase the stability of 
these structures.
    IPET determined why levee sections failed because of overtopping 
and scour, such as those along the Inner Harbor Navigation Canal. This 
information has fueled repairs that include substituting T-walls for I-
walls to increase resistance to scour from overtopping and resistance 
to failure from lateral forces, such as surge and waves.
    IPET found levee sections that were overwhelmed by surge and waves 
with damages that related to the levee elevations and the strength of 
the levee materials. IPET lessons learned are being used to select the 
types of materials used in the levee reconstruction and the height of 
their construction in areas such as St. Bernard Parish.
    IPET also found sections of floodwalls and levees that performed 
very well during Katrina, such as the Orleans Outfall Canal. IPET is 
providing these equally important lessons learned to the repair and 
reconstruction efforts.
    Every lesson learned that IPET has provided has received immediate 
attention in the repair efforts. In some cases, repair design 
activities were halted and changed to take advantage of IPET knowledge. 
IPET work also helped validate significant temporary measures, such as 
the temporary gates and pumping capabilities at the Lake Pontchartrain 
end of the outfall canals.
    IPET input is also being used in design guidance for enhanced 
protection projects to ensure the New Orleans area protection system is 
better and stronger than before. We feel strongly that the IPET 
contributions will help us achieve this goal.
    Question. As I understand the current situation concerning levee 
rebuilding situation, funding provided through enacted supplemental 
appropriations will complete the levee system as currently authorized. 
This includes rebuilding levees to the authorized levels of protection 
as well as repairing non-Federal levees and pump stations. This system 
was not completed before Katrina. Is that correct?
    General Strock. That is correct, although cost increases are 
possible. Funding was provided in the enacted supplemental 
appropriations to repair the system to pre-Katrina conditions, to 
accelerate completion of the system and to rebuild those parts of the 
system that were below design height due to subsidence. Funding was 
also provided to repair non-Federal levees and pump stations. The money 
provided was based on the best information available at the time and it 
is possible that the cost for some of this work may increase. For 
example, at the time of the third supplemental, the IPET findings 
concerning floodwall stability were not known. Further, long-term 
subsidence will require that additional levee lifts be constructed for 
some of the levees in the protection system. These lifts must be 
constructed on average every 4-5 years until the subsurface soils 
stabilize. Funds provided through the supplemental appropriations do 
not cover these costs.
    The system was not completed before Hurricane Katrina.
    Question. Further, the President's latest supplemental takes the 
first steps to improve this system beyond the project originally 
authorized by authorizing and appropriating funding to remove many of 
the now obvious weaknesses in the system. This includes closing off the 
interior drainage canals and providing navigable closures on the 
Industrial Canal and the Gulf Intracoastal Waterway, raising and 
hardening interior pumping stations and armoring levees where 
appropriate. These seem to be a reasonably measured approach to 
improving the system, based on current information. Are you aware of 
additional work that we should be considering as a part of this 
supplemental?
    General Strock. The President's supplemental provided appropriate 
funding for these measures to improve the New Orleans hurricane 
systems. Additional work has been considered but we are not prepared to 
recommend these projects for funding at this time. Three of these 
include a more costly plan ($190 million) to deal with the interior 
canals that, if proven to be technically feasible, may be a more 
reliable method of providing interior drainage; a plan to incorporate 
into the system non-Federal levees on the East Bank in Plaquemines 
Parish ($94 million); and a plan to repair some non-Federal levees in 
western areas.
    Question. Director Powell has recently indicated to the Congress 
that it could cost as much as $6 billion just to restore the levees in 
the New Orleans metro area to provide 100-year level of protection. Why 
has the 100-year level of protection changed so drastically? What is 
your confidence level in the cost estimates that compose this $6 
billion figure?
    General Strock. Restoring 100-year certification is now a much 
different task than simply restoring the current levees, primarily 
because of the new storm data and new abilities to better predict storm 
impacts. Quite simply, the 100-year storm is now calculated to be a 
much larger storm than envisioned in the past. Also, we now realize 
that in some areas the generated storm surge, even from a smaller 
storm, can be significantly larger than was indicated by models in the 
past. Because of this new data, our task is not a matter of simply 
restoring or rebuilding the current levees. Based on analysis of an 
extended historical period of storm data including the Katrina and Rita 
events and utilization of more refined modeling technology now 
available, which considers such factors as losses in wetlands and 
natural lines of defense that may limit attack during major storms, 
land subsidence and other coastal area changes, the currently 
authorized grade of levees would not be high enough to prevent 
overtopping during occurrence of the revised 100-year frequency storm 
surge. In many places the levees will have to be significantly higher 
and stronger than they were before Katrina in order to provide 
protection from the newly calculated 100-year hurricane.
    The $6 billion figure for the cost to complete the system to 
provide 100-year level of protection was a preliminary rough order of 
magnitude estimate at a point of time, and further analysis is needed.
    Question. We have requested the Corps to undertake studies for 
improving protection to the New Orleans area to ``Category 5''. The 
interim report for this study is due in June 2006. Where would 100-year 
level of protection fall in improving levees to this new ``Category 5'' 
level? Is it possible that work undertaken to get to this 100-year 
standard would be incompatible with the ``Category 5'' level?
    General Strock. The revised 100-year level of levee protection for 
the New Orleans area would be at a lower grade than the grade required 
to protect the area from a major Category 5 storm using a single line 
of levee protection along the existing alignment. However, the 100-year 
levees along the basic ``footprint'' of the existing levee system 
currently being repaired would function as a ``useable increment'' in a 
system of hurricane protection that utilizes multiple or redundant 
lines of protection.
    Question. How does coastal restoration rank as a means of providing 
immediate hurricane protection? Long range hurricane protection?
    General Strock. The lessons of Hurricane Katrina show the dangers 
of depending upon a single line of levee defenses. The presence of 
coastal features, such as wetlands, cheniers, swamp forests, and 
barrier islands, prevent inland hurricane protection structures from 
being directly exposed to open gulf conditions during storms. Hurricane 
protection systems having direct exposure to the Gulf have greater 
potential for performance problems during storms, and will also likely 
have higher construction, operations, and maintenance life cycle costs. 
Protecting existing coastal features that provide this buffering 
function to current hurricane protection systems has short-term 
benefit, insuring against decreased system performance reliability and 
increased systems operations and maintenance costs over the project 
life cycle. Restoring coastal features is a long-term measure that 
should increase reliability of the existing and future hurricane 
protection systems that may be installed, as well as likely minimize 
their construction, operations, and maintenance costs over a life 
cycle.
    Question. What do you see as the next steps in rebuilding the New 
Orleans levees?
    Mr. Woodley. By June 1, we will be restoring the level of 
protection to pre-Katrina conditions. We have already begun the work to 
accelerate construction on some of the uncompleted features of the 
system and to rebuild subsided levees to design height and repair non-
Federal levees and pump stations. The next steps are providing a better 
and stronger system, ensuring that floodwalls are reliable, building 
the system high enough to provide 100-year protection, and evaluating 
even higher levels of protection.
    Question. As a result of Katrina, what have you learned about how 
flood control and hurricane protection projects should be evaluated? 
That is, how should we go about considering the possibility of serious 
risks to human life as opposed to evaluating projects strictly on the 
basis of economic losses prevented?
    Mr. Woodley. Based on the lessons learned from Katrina, we need to 
take a hard look at our policies for establishing levels of protection. 
When risk to life is possible during events exceeding given levels of 
protection, this loss of life risk must be addressed as a part of the 
decision process on level of protection, along with the economics, that 
is, net benefits of each level of protection. Formulation 
considerations include minimizing catastrophic potential in areas where 
large populations are at risk or evacuations are not easily 
accomplished when emergencies occur. These technical considerations are 
currently imposed only for design of high hazard dams, and similar 
considerations need to be evaluated for high hazard levee and flood 
protection systems. For instance, we are using risk and reliability 
analysis concepts in the evaluation of alternatives for the South 
Louisiana Hurricane Protection report. It should be noted that 
selection of a plan that includes life safety considerations is 
permitted under the Principles and Guidelines for water resources 
planning, in that the agency head may recommend a plan that does not 
maximize net national economic development benefits.
    As an interim measure, the fiscal year 2007 budget proposes funding 
for already authorized projects that provide significant reductions in 
life risks. I expect that future budgets also will address life risk 
considerations.

                 CONTINUING CONTRACTS AND REPROGRAMMING

    Question. In the fiscal year 2006 E&WD appropriations act, the 
Congress made significant changes in how funds are to be spent, which 
will result in similarly significant changes in how the Corps manages 
its program.
    General Strock, has the Corps assessed the impact of these changes 
on program execution and, if so, what are they?
    General Strock. The guidelines for reprogramming and the use of 
continuing contracts as set forth in the fiscal year 2006 E&WD 
appropriations act and accompanying conference report have brought 
about many significant changes in how we manage our Civil Works 
Program. We no longer emphasize expenditures as a measure of success. 
The volume of reprogrammings is significantly reduced. Reprogrammings 
that exceed the dollar and percentage thresholds established in the 
fiscal year 2006 act now require more coordination. We anticipate an 
increase of carry-over funds in the short-term as we realign our 
budgeting, planning, and execution practices.
    Question. For many years, the Corps carried a fairly significant 
amount of its available construction funds unobligated from one year 
into the next. This unobligated carryover afforded the Corps 
flexibility in meeting unforecasted needs and was a practice generally 
supported by this committee.
    Several years ago however, it became apparent to us that this 
practice must be changed and, at the urging of this committee, the 
Corps increased its execution performance and eliminated the carryover.
    With the new program management practices required by the fiscal 
year 2006 E&WD act, will this carryover reappear? If so, how much will 
it be, approximately, by the end of the year? After next year, assuming 
a constant appropriation level?
    General Strock. As stated earlier, execution performance will no 
longer be measured simply by the percentage of funds obligated or 
expended and an increase in carried-over funds is expected. Our 
estimate of unobligated funds to be carried over at the end of fiscal 
year 2006, according to the execution schedules developed after the 
appropriation of fiscal year 2006 Energy and Water funds, is as 
follows. Dollars in are in thousands. Funds provided in supplemental 
appropriations as of April 5, 2006 are included and account for the 
majority of the total unobligated carryover.

------------------------------------------------------------------------
                                           Unobligated Carryover $1,000
              Appropriation              -------------------------------
                                                E&W        Supplemental
------------------------------------------------------------------------
Investigations..........................         $49,495          $2,311
Construction............................         345,702           7,406
O&M.....................................         164,345          10,384
MR&T....................................          92,618          46,889
FCCE....................................  ..............         800,000
Expenses................................  ..............  ..............
Regulatory..............................              16  ..............
FUSRAP..................................             974  ..............
------------------------------------------------------------------------

    Since the fiscal year 2006 appropriations were not enacted until 
last November, adjustments had to be made in the scheduling of funds 
during the Continuing Resolution. In addition, in fiscal year 2006 we 
received substantial hurricane-related supplemental appropriations. 
Therefore, the amount carried over from fiscal year 2006 may not be a 
good indicator of what to expect at the end of the following year.
    Question. What changes to the requirements contained in the fiscal 
year 2006 act would you recommend to assist you in better use of the 
funds appropriated to the program?
    Mr. Woodley. The fiscal year 2006 Energy and Water Appropriations 
Act includes language that has enabled the Corps to limit the use of 
continuing contracts and thereby increase the use of other kinds of 
contracts (such as fully-funded contracts and base bid-plus-options 
contracts) for projects authorized for construction. The fiscal year 
2007 budget proposed to amend this language for fiscal year 2007 to 
enable the Corps to limit the use of continuing contracts and thereby 
expand the use of other kinds of contracting instruments for operation 
and maintenance activities as well.
    Question. If these changes remain unchanged for several years, will 
you be able to award and carry out as many construction contracts as 
you have under the previous rules? Can you estimate or characterize the 
differences for us?
    General Strock. The fiscal year 2006 Energy and Water 
Appropriations Act has enabled the Corps to expand the use of 
contracting instruments other than continuing contracts in its 
construction program. The Corps recently issued guidance to ensure that 
the construction program is using continuing contracts only where they 
are the most appropriate contracting instrument. The fiscal year 2006 
act did not, however, include a further reform proposed in the fiscal 
year 2006 budget, which would have provided the Corps with the kind of 
multi-year contracting authority used by other Federal agencies. In the 
absence of such authority, efforts to reduce reliance on continuing 
contracts could affect the number of awarded contracts during a 
transition period of up to a few years.
    Question. The Corps has been awarding so-called continuing 
contracts for many years . . . since 1922, I'm told. This is where you 
award a contract that will take more than a year to execute and where 
you depend on appropriations in future years to fund the contract 
earnings expected in those future years.
    General Strock, what is the Corps' experience with that type of 
contract? That is, have they presented great challenges or otherwise 
not served the Nation well in the years you've been using them?
    General Strock. Continuing contracts, like the multi-year contracts 
used by other Federal agencies, enable the Corps to incrementally fund 
work on any water resources project (studies, design, construction, or 
operation and maintenance) that the Congress has not fully funded up 
front. However, unlike the multi-year contracting authority of other 
Federal agencies, the continuing contract authority of the Corps has 
few constraints and allows the Corps to legally bind the Federal 
Government to pay future costs in advance of appropriations. The use of 
our continuing contract authority has resulted over the years in a 
large number of long-term contracts with high out-year funding 
commitments to one provider, and limited the ability of the Executive 
Branch and the Congress to set priorities in the civil works program. 
Obviously, there are other challenges as well, particularly when the 
contractor's earning rate is greater than anticipated and significant 
reprogramming from other projects is required.
    Question. How do you plan to manage your contracting in light of 
the guidance on continuing contracts contained in the fiscal year 2006 
act? That is, will you award fewer contracts? If so, how many fewer 
contracts in the current fiscal year would you expect to award than if 
you didn't have this guidance?
    General Strock. Generally, the Corps is issuing a continuing 
contract in the construction program only when other contracting 
options such as fully-funded contracts, incremental contracts, or other 
contracts are not appropriate, and only with reasonable assurance that 
the continuing contract will be funded in the out years. In the short-
term, fewer contracts are being awarded. However, I cannot make a 
numerical projection of the difference. In the long-term, we would 
expect the number of contracts to be as much or more than in previous 
years, assuming the same overall funding level.
    Question. What is the long-term impact on the number of projects 
you will have underway at any given point in time? That is, will you 
then be able to have fewer projects underway at any given time?
    General Strock. Because we are waiting for sufficient funds to 
fully fund some contracts, there will be a deferral of these contracts 
in the short-term. In the long-term, at any given out-year funding 
level, the number of projects underway at a given time would be the 
same.

                          CONTINUING CONTRACTS

    Question. How many continuing contracts has the Corps awarded in 
fiscal year 2006 since fiscal year 2006 Energy and Water Development 
Appropriations Act was passed?
    General Strock. There have been a total of 12 continuing contracts 
awarded as of the end of the second quarter of fiscal year 2006.
    Question. How many continuing contracts have you disapproved and 
why?
    Mr. Woodley. There are three continuing contracts that have been 
disapproved and/or sent back for reevaluation, because either the 
proposal did not satisfy the criteria laid out in the Corps fiscal year 
2006 program execution guidance, or the analysis of whether another 
contracting mechanism would be efficient and effective in the 
circumstances was inconclusive.
    Question. What are your criteria for determining to award a 
continuing contract?
    Mr. Woodley. The Corps uses several criteria. In accordance with 
the fiscal year 2006 Program Management EC, several questions must be 
answered during evaluation. These questions include whether the amounts 
available and that have been identified for reprogramming in fiscal 
year 2006 are sufficient to fully fund the contract, and, if the amount 
available in fiscal year 2006 is not sufficient to fully fund the 
contract, whether the scope and schedule of the contract are 
appropriate for the features of the project to be constructed. If the 
amount available is insufficient and the scope and schedule are 
appropriate, then different contracting vehicles are explored and 
analyzed. If other relevant contracting options are not appropriate, 
and delay of the contract to fiscal year 2007 or later would result in 
significant consequences, a continuing contract may be recommended. My 
office also assesses whether future appropriations to support the 
contract are likely, based on recent funding history, the fiscal year 
2007 President's budget, and the House, Senate, and Conference Reports 
when available.
    Question. Have the directions in the fiscal year 2006 Energy and 
Water Development Appropriations Act caused any difficulties for the 
Corps?
    General Strock. The new guidelines have encouraged improved 
discipline in the system, but they also have introduced some delays in 
part by requiring elevation to the Washington level of day-to-day 
operational decisions that previously were made in the district 
offices.
    With respect to reprogramming, we face the challenge of 
transitioning our budgeting and execution practices to an environment 
with limited reprogramming, including the challenge of funding 
previously incurred payback commitments and the challenge of addressing 
pressing or emergency situations and situations with strong business 
cases.
    With respect to contracting, the limited use of continuing 
contracts will result in the delay of some contracts during a 
transition period until funding and contracting decisions are aligned.
    All told, these changes have not caused significant difficulties. 
Carryover will increase in the short-term. These changes have also 
provided an opportunity to look for ways to improve the overall 
performance of the civil works program.

                             REPROGRAMMING

    Question. How many reprogrammings have been approved within the 
Corps authority?
    General Strock. Such reprogrammings are an ongoing process 
throughout the fiscal year and tend to become more frequent as the year 
goes on. However, the following snapshot at the end of the second 
quarter should give a reasonable estimate as to the rate of 
reprogrammings within the appropriation accounts:
  --Investigations--6 gainers, 2 sources;
  --Construction--13 gainers, 14 sources;
  --O&M--7 gainers, 5 sources;
  --MR&T--7 gainers, 5 sources.
    Question. How many reprogrammings that require prior notification 
to Congress have been proposed and how many have been approved?
    General Strock. As of the date of the hearing, the Army recently 
has submitted ten requests for reprogramming to OMB. OMB has cleared 
two of them already and is reviewing the others.
    Question. To what do you attribute the failure to approve proposed 
reprogrammings in a timely manner?
    General Strock. Few reprogrammings are proposed due to the 
difficulty in finding suitable sources. One type of suitable source 
would be one for which the funds are excess to the total needs of the 
source project due to savings, such as from a low bid or changed site 
conditions; however, such situations are relatively rare. In the past, 
another fairly reliable source was slipped earnings due to delayed 
awards; but the expectation was that the revoked funds would be 
restored when needed. The guidance in the fiscal year 2006 conference 
report that there be no expectation of such payback commitments has 
nearly eliminated sources with slippages.
    Question. Have the directions regarding reprogramming in the fiscal 
year 2006 Energy and Water Development Appropriations Act caused any 
difficulties for the Corps and do you have any recommendations as to 
how the directions in the fiscal year 2006 Appropriations bill might be 
improved?
    General Strock. The new guidelines have encouraged improved 
discipline in the program. We face the challenge of transitioning our 
budgeting and execution practices to an environment with limited 
reprogramming, including the challenge of funding previously incurred 
payback commitments and the challenge of addressing pressing or 
emergency situations and situations with strong business cases.
    The administration's proposals for fiscal year 2007 are reflected 
in proposed bill language in the Budget Appendix. We would like to move 
toward a system that retains the benefits of this discipline, but that 
returns day-to-day operational decisions to the district level, perhaps 
in combination with periodic reporting to the Appropriations Committees 
on actions taken the prior quarter, to give them the opportunity to 
assess whether the committee's guidance and the Corps' own policies 
have been followed.
                                 ______
                                 
              Questions Submitted by Senator Arlen Specter

                        HOPPER DREDGE MCFARLAND

    Question. Significant and timely maintenance, repair and 
replacement of systems and equipment in the amount of $25 million have 
been accomplished onboard the McFarland in the past 10 years. These 
include:
  --Complete replacement of riveted seams (both port and starboard 
        sides) resulting in all welded steel hull with estimated hull 
        life extension of an additional 25 years;
  --Phased renewal of all 12 hopper door frames;
  --Phased overhaul of all 12 hopper door operating gear;
  --Replacement of Steering Gear Control System;
  --New propeller shafts;
  --Complete replacement of propulsion control system from pneumatic 
        system control to electronic controls; and
  --Phased overhaul of all engines and generator.
    In its November 2005 report to Congress regarding the future 
operation and configuration of the Federal hopper dredge fleet, the 
Corps states that an additional $20 million in major overhaul and 
repair activities must be expended to keep the Hopper Dredge McFarland 
operational.
    It is my understanding that a one-time expenditure of this 
magnitude would be required only if the decision were made to 
transition the McFarland to ready reserve status, and that the 
McFarland can continue to work without this $20 million overhaul.
    On what grounds was the assertion made that the McFarland requires 
$20 million in overhaul and repair work?
    General Strock. The $20 million overhaul and repair would be needed 
in either case, whether the McFarland were to be placed in ready 
reserve or if it were to work a full schedule.
    Question. What specific repairs in the amount of $20 million are 
needed to keep the McFarland operational?
    General Strock. The current engine room, with 11 engines, is not 
the optimal configuration, nor the safest means of powering the 
McFarland. The majority of the repair costs would be used to repower 
the dredge with modern low emission engines, reduce the number of 
engines, and substantially improve the efficiency of operating the 
McFarland. The current manner of controlling the drag arms on the 
dredge is also not the optimal manner in which to perform this 
operational activity on the McFarland. Costs were included in the 
estimate to reconfigure the dual drag tender stations into a modern 
central drag tender station, thus reducing the crew requirements and 
improving the operational efficiency of the dredge. Additional items 
include removal of all asbestos on the dredge for the safety of the 
crew and other improvements.
    Question. Port stakeholders were not invited to be members of the 
Industry/Corps Hopper Dredge Management Group (ICHDMG), formed by the 
Corps and Dredging Contractors of America. The port and waterway 
stakeholders, and the customers they serve, are the ultimate end users 
of the any federally contracted dredging contracts.
    Failure to adequately respond to emergency dredging requirements, 
and the increasing cost of dredging, ultimately affects the 
competitiveness of the Nation's ports and waterways transportation 
system.
    General Strock. The ICHDMG was formed in response to Section 237 of 
WRDA 96. The purpose of the ICHDMG is to maximize the effectiveness and 
efficiency of our Nation's hopper dredging resources, to enhance the 
viability and competitiveness of our ports and waterways by maintaining 
communication between the Corps and the hopper dredging industry and to 
ensure procedures are in place and sufficient hopper dredges are 
available to respond to urgent and emergency dredging while meeting 
needed routine dredging requirements. The ICHDMG is a working group 
that is focused on identifying hopper dredging problems and crafting 
solutions, sharing information, diffusing potential problems, and 
coordinating schedules on a national basis. In the past some of the 
shipping stakeholders and ports have participated in ICHDMG meetings. 
In addition, the Corps district offices work directly with the many 
ports throughout the Nation to ensure that these important stakeholders 
are fully engaged in all aspects of the Corps dredging program that 
affects their interests.
    Question. Should port stakeholders be included in the ICHDMG to 
ensure their participation in the decision-making process regarding 
Federal hopper dredging?
    General Strock. Any interested port stakeholders would be most 
welcome to participate in ICHDMG.
                                 ______
                                 
               Question Submitted by Senator Mark Dayton

                  POWDER RIVER BASIN EXPANSION PROJECT

    Question. What steps is the Army Corps of Engineers taking to 
ensure that a complete and thorough review is conducted prior to 
issuing permits under Sec. 404 of the Clean Water Act and Sec. 10 of 
the Rivers and Harbors Act for the proposed construction of the Powder 
River Basin Expansion Project, also known as the Dakota, Minnesota & 
Eastern (DM&E) Railroad project?
    General Strock. The Omaha District began coordination (pre-
application meeting) with the Dakota, Minnesota and Eastern (DM&E) 
Railroad relative to the Powder River Basin Expansion Project in 
November 6, 1997. The Omaha District participated as a cooperating 
agency under the National Environmental Policy Act (NEPA) with the 
Surface Transportation Board (STB) in the formulation of an 
Environmental Impact Statement to ensure that requirements of Section 
404 of the Clean Water Act were addressed concurrently with the STB's 
review process.
    The Omaha District received two Section 404 permit applications for 
the Wyoming and South Dakota portions September 15, 2000. A Section 10 
permit application was submitted to the U.S. Coast Guard for a bridge 
replacement on the Missouri River at approximately the same time since 
that agency is responsible for that action.
    The STB rendered a decision to authorize the project under its 
program responsibilities January 28, 2002 which was the subject of 
litigation (Mid States Coalition for Progress v. STB). The 8th Circuit 
Court of Appeals remanded the decision and required that additional 
study and analysis be completed in four specific areas of the EIS. A 
supplemental EIS was formulated, which the Omaha District participated 
in as a cooperating agency. The supplemental EIS was released January 
6, 2006. The STB issued a new decision authorizing the project and is 
the subject of current litigation (Mayo Foundation v. United States of 
America and STB) in the 8th Circuit Court of Appeals.
    The Omaha District has ensured that the information formulated in 
the EIS addresses our information and data needs. Omaha has also 
continued coordination with DM&E on the permit applications in an 
attempt to address outstanding information needs that were identified 
since December 4, 2001. Action on these applications since 2002 was 
minimal due to DM&E's focus on litigation and addressing direction from 
the court. A meeting with Omaha District staff in Cheyenne, Wyoming, is 
scheduled to address outstanding information needs and administrative 
processes to allow final permit decisions to be rendered.

                          SUBCOMMITTEE RECESS

    Senator Landrieu. Thank you so much and the hearing is 
recessed.
    [Whereupon, at 3:53 p.m., Wednesday, April 5, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]

 
 ENERGY AND WATER, AND RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 
                                  2007

                              ----------                              


                        THURSDAY, APRIL 6, 2006

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:07 p.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Pete V. Domenici (chairman) 
presiding.
    Present: Senators Domenici and Allard.

                          DEPARTMENT OF ENERGY

                National Nuclear Security Administration

STATEMENT OF HON. LINTON F. BROOKS, UNDER SECRETARY FOR 
            NUCLEAR SECURITY, AND ADMINISTRATOR, 
            NATIONAL NUCLEAR SECURITY ADMINISTRATION
ACCOMPANIED BY:
        JERRY PAUL, PRINCIPAL DEPUTY ADMINISTRATOR, NUCLEAR 
            NONPROLIFERATION ACTIVITIES
        ADMIRAL KIRKLAND DONALD, DEPUTY ADMINISTRATOR FOR NAVAL 
            REACTORS
        THOMAS D'AGOSTINO, DEPUTY ADMINISTRATOR FOR DEFENSE PROGRAMS

                 STATEMENT OF SENATOR PETE V. DOMENICI

    Senator Domenici. The hearing will please come to order. 
Today the subcommittee is going to hear testimony on the fiscal 
year 2007 budget request for the National Nuclear Security 
Administration. I would like to thank Ambassador Brooks for 
joining us here today and providing his testimony. The 
Ambassador is joined by Jerry Paul, the Principal Deputy 
Administrator for Nuclear Nonproliferation Activities--is that 
correct?--and Tom D'Agostino, Deputy Administrator for Defense 
Programs; and Admiral Kirkland Donald, Deputy Administrator for 
Naval Reactors. I appreciate everyone's participation and thank 
you for coming.
    Ambassador Brooks will provide the testimony and his three 
deputies will be available to answer questions. I understand 
that is our format.
    The President's request for NNSA for 2007 is $9.3 billion, 
up $211 million from last year's enacted level. Weapons 
programs. The funding for the weapons programs is $6.4 billion, 
up about $38 million. In large measure, this budget supports 
the necessary investments in lab infrastructure. However, I am 
concerned with the declining trend in science-based stockpile 
stewardship activities, such as science, engineering, and 
inertial confinement fusion.
    I could not be more disappointed in what the Department has 
proposed for inertial confinement fusion budget. The Department 
continues to put all their resources behind the NIF project at 
the expense of all the other stockpile activities. Funding for 
NIF research is up over $50 million while the other high energy 
density research has been cut by $115 million. The NIF-at-all-
costs attitude is now undermining balancing the weapons 
stewardship research activities. Declining budgets for non-NIF-
related science has put weapons physics research on Z and Omega 
clearly at risk.
    Mr. Ambassador, I believe this strategy is not the right 
one and we are going to work hard to correct it here in the 
Senate energy and water bill and we hope the product that we 
finish with will meet your satisfaction. It will be different 
than that which you submitted to us.
    On Monday, Tom D'Agostino briefed me, and I thank him for 
that, on NNSA's plan to implement the nuclear complex of the 
future. The Department has developed a plan to consolidate 
operations in fewer locations, which should reduce security 
costs and reduce the overall number of facilities that NNSA 
must maintain out in the future, perhaps to 2030. In addition, 
it supports the Reliable Replacement Warhead program and begins 
to catch up on the dismantlement of weapons no longer in the 
stockpile. That is good.
    What I believe is missing from the plan is a decrease in 
the overall number of weapons systems in the NNSA that they are 
going to be expected to maintain. Under the plan the NNSA will 
continue to support the same eight systems plus the new RRW 
through 2030 if I understand it correctly. It seems to me that 
you have traded off facilities, science, and people in exchange 
for the same number of systems and responsibilities. I am not 
sure that I got that figured right, but it looks like it, and I 
am not sure that makes the best sense overall.
    Why does this plan not contemplate reduction in existing 
systems, perhaps the elimination of one of them? Many experts 
wonder why we continue to maintain the W80. Maybe it is time to 
revisit the need for the life extension of that weapon. We will 
see.
    Nuclear nonproliferation is the next issue, and the budget 
continues to receive strong support from the President. That is 
good news. Funding for the nuclear nonproliferation activities 
are up $111 million, for a total of $1.73 billion. Funding for 
MOX, the global threat reduction initiative, and the MPC&A all 
received increases. I think that is good news.
    One notable exception is the funding cut for the nuclear 
detection R&D program. This activity supports research that 
gives our national security teams the technical advantage over 
terrorist countries that attempt to conceal their nuclear 
programs. We will ask about that, why that should have been 
reduced or eliminated.
    In 1998 I worked very hard with a few others to provide 
$200 million to encourage the Russians to come to the 
negotiating table on plutonium disposition, 1998. The funding 
was in good faith and the offer to the Russians to demonstrate 
our sincerity and seriousness about nonproliferation. The 
Department of Energy and State, the Department of State, have 
secured $800 million from G-8 partners to construct the Russian 
MOX plant, a real achievement.
    However, I understand the Russians have raised the stakes 
and are now demanding that the G-7 pay for the plant 
operations. I think we are correct in that. You have to talk 
about that, Mr. Ambassador. It is a matter of high, high 
importance. Unless we allow them to use the plutonium for their 
fast breeder reactor program, they insist that we are going to 
have to pay for plant operations. Now, I am concerned that 
these fact reactors could be turned into breeder reactors and 
will create additional plutonium, the very substance we are 
trying to eliminate.
    We also continue to wait for the final approval of the 
Russians--that is, their full governmental, governance-making--
on the liability deal negotiated last July. I feel that the 
opponents of MOX will use these delays as an excuse to cut 
funding for this project. The Russian delaying tactics have 
created a liability for the U.S. program in my opinion.
    I believe we should de-link the construction projects and 
allow the U.S. efforts to go forward to create a disposal 
pathway for our weapons-grade plutonium. We must live up to our 
commitments of reducing our stockpile even if the Russians will 
not or if for some reason they think they must continue to 
delay this matter, as I have described it, or for other 
reasons.
    In the mean time, we should continue to talk and try to 
work things out with the Russians, try to get an agreement 
prior to or during the G-8 meeting. That is up to our two great 
countries and that will take place this summer. But until we 
have final agreement that will guarantee the destruction of the 
34 tons of Russian weapons-grade plutonium, the United States 
should not fund the Russian construction project and we must 
not provide any further design on the MOX plant for the 
Russians in my opinion.
    My last observation has to do, Mr. Ambassador, with the 
cost of operations of LANL. In 2 months, Los Alamos National 
Security LLC will take over the M&O contract at Los Alamos from 
the University of California, which has operated the facility 
for 60 years. I am concerned about the increased costs of the 
new contract negotiated by NNSA. I am not saying I am concerned 
in the sense that this should not have happened, but I am 
concerned that the new contract provides significant increases 
in the fee, from roughly $8 million to $80 million, and it will 
require the lab to pay the gross receipts tax to the State of 
New Mexico of about $75 million. I think that is the estimate.
    I suspect that there are operations--several other 
increases that add to the bottom line operations because of the 
new contract. I do not know that. Unfortunately, the Los Alamos 
lab budget does not reflect any increases to accommodate these 
added charges. All of these costs will come out of R&D, 
science, and operational accounts, putting further strain on an 
already tight budget.
    I hope to get some answers from you, Mr. Ambassador, as to 
how these costs will be offset without having a negative impact 
on lab operations. I know the answer is going to be there will 
be savings made here and there and elsewhere. That may be the 
case, but clearly that is not going to go on forever, and we 
are going to have some assurance that in the future we have got 
to make this up in ways other than to continue to assume it 
will come out of savings.
    I will close now by saying how I remain impressed with the 
success of the naval reactor program. I save it for last 
because it is best and because it does not take very long to 
explain it, to just say that the Navy needs nuclear propulsion 
plants that are capable of responding to the challenges that we 
face and we believe this program accomplishes these goals. The 
5-year plan includes a small but a steady increase in the naval 
reactors, which will prove beneficial in the coming months.
    Now, I will ask if there are any others who want to make 
opening remarks. If there are any opening remarks that are 
needed to be put in the record, we will provide for that now 
without objection.
    Now, having completed that, we will move to the witness. 
Mr. Ambassador, sorry I took so long, but I think you know how 
I feel on a few of these subjects now. So you may proceed as 
you see fit.

                   STATEMENT OF HON. LINTON F. BROOKS

    Ambassador Brooks. Thank you, sir. I have submitted a 
statement which I would like received for the record.
    The President's budget supports three main missions: safe, 
secure, and reliable stockpile; reducing the nonproliferation 
threat; and providing reliable and safe nuclear propulsion 
systems for the Navy. Most of our programs are similar to 
previous years, are familiar to the committee, and are 
described in my written statement, so I want to limit my 
opening remarks to drawing your attention to a couple of 
points.
    First, as you noted, sir, although the stockpile remains 
safe and reliable today, we must ensure reliability and safety 
over the long term and this means transforming the stockpile 
and the supporting infrastructure. Our approach to doing so 
depends heavily on the concept of a Reliable Replacement 
Warhead, taking advantage of our decision to relax cold war 
design constraints. We believe we will be able then to design 
replacement components that are easier to manufacture, safer, 
use environmentally more benign material, and increase 
performance margins.
    I share your concern about the number of weapons systems. 
The Department of Defense and we are working together closely. 
The question is not: ``Will we still be maintaining eight 
systems in 2030?'' The answer is almost certainly no. The 
question is: ``How far along do we have to go in this new 
effort before the military can have confidence that it can 
eliminate a weapons system?'' Our assumption for the long-term 
future demands, frankly, that there would be reductions in the 
life extension programs. Otherwise the resources for 
modernizing the complex are going to be very difficult to find.
    We have completed, as you know and as you have been 
briefed, an intensive effort to sustain and establish our 
vision for the future, and I am quite pleased with it. Our 
challenge has been to find a path that is both affordable and 
feasible, and lets us continue to support the near-term 
stockpile.
    I want to make two other points about the weapons program. 
Last year the Congress reduced life extension programs and 
those reductions challenge our ability to meet DOD 
requirements. I am especially concerned with the reduction to 
the W76 submarine-launched ballistic missile warhead and, 
assuming that it is retained, the W80 cruise missile warhead.
    Also last year, the Congress significantly reduced funds 
for the facilities and infrastructure recapitalization program. 
That has made it impossible to meet the congressionally-
mandated date of 2011 to terminate this program and the 
administration has submitted legislation to extend the effort 2 
years. I hope that the Congress this year will support the 
President's request in both those areas.
    Turning to nonproliferation, I would like to highlight 
three areas. First, we are on track to meet the various 
commitments agreed to between President Bush and President 
Putin at Bratislava in 2008. We will complete security upgrades 
in Russia by that date.
    Second, we are requesting a significant funding increase to 
permanently shut down the three remaining weapons-grade 
plutonium production reactors in Russia and we are also 
proposing a significant increase for the global threat 
reduction initiative, which secures both fissionable and 
radioactive material.
    Finally, as you noted, under the plutonium disposition 
program we expect to begin construction of the MOX fuel 
fabrication facility this fall, and approval of the entire 
administration request is in my judgment crucial because we 
will be seeking the peak funding construction year in 2007.
    I would also like to turn to two points that you made in 
your opening statement and respond briefly to them and then we 
can respond further in questions. With respect to 
nonproliferation research and development, our request this 
year is almost identical to our request last year. Last year 
the Congress increased funding. We did not take that as 
intended to be direction to alter our long-term base, and so it 
is not a question of cutting that program. It is a question of 
assuming that that was a one-time increase.
    Secondly, with regard to Los Alamos, I share your concern 
that we make sure that the American taxpayers and the program 
are not put at risk by the change we have made at Los Alamos. 
Over the next 7 years we could potentially spend almost half a 
billion dollars in fees at Los Alamos and I intend to get 
something for it.
    First, 70 percent of that fee will be performance-based and 
we will not spend it unless the performance warrants it. 
Performance very much includes efficiencies and improvements 
that will free up resources. As you know, when the lab director 
decided to shut the facility down, you can argue about the 
bookkeeping, but we probably spent several hundred million 
dollars. If we can guarantee that never happens again, we will 
in fact have more money to go into the program.
    I am also pleased that the new contractor has proposed a 
decreasing fee that starts at $70 million a year and drops in 
the seventh year to a maximum of $54 million. That is still a 
lot of money, but it is an indication that they believe that 
their task will be greatest in the early years.
    Finally, as you noted, the naval reactors effort, which has 
always been a model for performance efficiency, is the final 
segment of our budget. Our request supports our No. 1 priority 
of ensuring safety and reliability of 104 operating Navy 
nuclear propulsion plants and it also continues research on 
advanced technology.

                           PREPARED STATEMENT

    Mr. Chairman, our budget request continues to transform the 
stockpile, continues to transform the infrastructure, continues 
to reduce the global danger from proliferation, and continues 
to enhance Navy force projection capabilities, and I urge the 
committee to support it.
    With that, sir, I am ready for your questions.
    [The statement follows:]

              Prepared Statement of Hon. Linton F. Brooks

    Thank you for the opportunity to discuss the President's fiscal 
year 2007 Budget Request for the National Nuclear Security 
Administration (NNSA). This is my fourth appearance before this 
committee as the Under Secretary for Nuclear Security, and I want to 
thank all of the members for their strong support for our important 
national security responsibilities.

                                OVERVIEW

    In the sixth year of this administration, with the strong support 
of Congress, NNSA has achieved a level of stability that is required 
for accomplishing our long-term missions. Our fundamental 
responsibilities for the United States include three national security 
missions:
  --assure the safety and reliability of the U.S. nuclear weapons 
        stockpile while at the same time transforming that stockpile 
        and the infrastructure that supports it;
  --reduce the threat posed by nuclear proliferation; and
  --provide reliable and safe nuclear reactor propulsion systems for 
        the U.S. Navy.
    The budget request for $9.3 billion, an increase of $211 million, 
supports these NNSA missions.
Weapons Activities
    The NNSA is committed to ensuring the long-term reliability, safety 
and security of the Nation's nuclear deterrent. Stockpile Stewardship 
is working; the stockpile remains safe and reliable. This assessment is 
based not on nuclear tests, but on cutting-edge scientific and 
engineering experiments and analysis, including extensive laboratory 
and flight tests of warhead components and subsystems. Each year, we 
are gaining a more complete understanding of the complex physical 
processes underlying the performance of our aging nuclear stockpile. 
However, as we continue to draw down the stockpile to the levels 
established in the Treaty of Moscow--between 1,700 and 2,200 
operationally deployed strategic nuclear weapons--we must consider the 
long-term implications of successive warhead refurbishments for the 
weapons remaining in the stockpile. Successive refurbishments will take 
us further from the tested configurations and it is becoming more 
difficult and costly to certify warhead remanufacture despite the 
extraordinary success of the Stockpile Stewardship Program.
    If we were starting to build the stockpile from scratch today we 
would take a much different approach than we took during the Cold War. 
Most of today's warheads were designed to maximize explosive yield with 
minimum size and weight so that many warheads could be carried on a 
single delivery vehicle. As a result, weapons designers designed closer 
to the so-called ``cliffs'' in performance. If we were designing the 
stockpile today, we would manage risk differently, trading size and 
weight for increased performance margins and ease of manufacture and 
maintenance.
    Second, the legacy stockpile was not designed for longevity. During 
the Cold War we introduced new weapons routinely, turning over most of 
the stockpile every 15-20 years. Today, our weapons are aging and now 
are being rebuilt in life extension programs that are both difficult 
and costly. Rebuilding nuclear weapons will never be cheap, but Cold 
War decisions to use certain hazardous materials mean that, in today's 
health and safety culture, warheads are much more costly to 
remanufacture.
    Furthermore, we continue to evolve our deterrent posture from its 
Cold War origins to one that requires far fewer weapons. Decisions the 
President announced in 2004 will result, by 2012, in the smallest total 
stockpile since the Eisenhower Administration. Even with these 
unprecedented reductions, however, the stockpile--especially the 
components we keep in reserve--is probably too large.
    Finally, with regard to physical security, we must consider new 
technology to ensure these weapons can never be used by those who wish 
to harm us. During the Cold War the main security threat to our nuclear 
forces was from espionage. Today, that threat remains, but to it has 
been added a post-9/11 threat of well-armed and competent terrorist 
suicide teams seeking to gain access to a warhead or to special nuclear 
materials in order to cause a nuclear detonation in place. This change 
has dramatically increased security costs. If we were designing the 
stockpile today, we would apply new technologies and approaches to 
warhead design as a means to reduce physical security costs.
    Fortunately, we know how to address all of these problems.
    The administration's Nuclear Posture Review (NPR), completed in 
December 2001, called for a transition from a threat-based nuclear 
deterrent with large numbers of deployed and reserve weapons to a 
deterrent based on capabilities, with a smaller nuclear weapons 
stockpile and greater reliance on the capability and responsiveness of 
the Department of Defense (DOD) and NNSA infrastructure to respond to 
threats. Success in realizing this vision for transformation will 
enable us to achieve over the long term a smaller stockpile, one that 
is safer and more secure, one that offers a reduced likelihood that we 
will ever again need to conduct an underground nuclear test, and one 
that enables a much more responsive nuclear weapons infrastructure. 
Most importantly, this effort can go far to ensure a credible deterrent 
for the 21st century that will reduce the likelihood we will ever have 
to employ our nuclear capabilities in defense of the Nation--through 
demonstration of responsiveness in design and production, demonstration 
of confidence in our abilities, cleanup of portions of the Cold War 
legacy and demonstration of America's will to maintain nuclear 
preeminence. We have worked closely with the DOD to identify initial 
steps on the path to a responsive nuclear infrastructure.
    What do we mean by ``responsive nuclear weapons infrastructure?'' 
By ``responsive'' we refer to the resilience of the nuclear enterprise 
to unanticipated events or emerging threats, and the ability to 
anticipate innovations by an adversary and to counter them before our 
deterrent is degraded. Unanticipated events could include complete 
failure of a deployed warhead type or the need to respond to new and 
emerging geopolitical threats. The elements of a responsive 
infrastructure include the people, the science and technology base, and 
the facilities and equipment to support a right-sized nuclear weapons 
enterprise. But more than that, it involves a transformation in 
engineering and production practices that will enable us to respond 
rapidly and flexibly to emerging needs. Specifically, a responsive 
infrastructure must provide capabilities, on appropriate timescales and 
in support of DOD requirements, to:
  --Dismantle warheads;
  --Ensure warheads are available to augment the operationally deployed 
        force;
  --Identify, understand, and fix stockpile problems;
  --Design, develop, certify, and begin production of refurbished or 
        replacement warheads;
  --Maintain capability to design, develop, and begin production of new 
        or adapted warheads, if required;
  --Produce required quantities of warheads; and
  --Sustain underground nuclear test readiness.
    As we and the DOD take the first steps down this path, we clearly 
recognize that the ``enabler'' for transformation is our concept for 
the Reliable Replacement Warhead (RRW). The RRW would relax Cold War 
design constraints that maximized yield to weight ratios and thereby 
allow us to design replacement components that are easier to 
manufacture, are safer and more secure, eliminate environmentally 
dangerous materials, and increase design margins, thus ensuring long-
term confidence in reliability and a correspondingly reduced chance we 
will ever need to resort to nuclear testing.
    The combination of the RRW and a responsive infrastructure--each 
enabled by the other--may be genuinely transformational. The reduced 
stockpile the President approved in 2004 still retains a significant 
non-deployed nuclear stockpile as a hedge against technical problems or 
geopolitical changes. Once we demonstrate that we can produce warheads 
on a timescale in which geopolitical threats could emerge, we would no 
longer need to retain extra warheads to hedge against unexpected 
geopolitical changes.
    In addition to the mission of continuously maintaining the safety, 
security, reliability and operational readiness of the Nation's nuclear 
deterrent, establishing the capabilities to achieve and sustain this 
transformation is a central focus of our activities. Transformation 
will, of course, take time. We are starting now with improving business 
and operating practices, both in the Federal workforce and across the 
nuclear weapons complex, and through restoring and modernizing key 
production capabilities. Full infrastructure changes, however, will 
take a couple of decades. But I believe by 2030 we can achieve a 
responsive infrastructure that will provide capabilities, if required, 
to produce weapons with different or modified military capabilities. As 
important, through the RRW program we will revitalize our weapons 
design community to meet the challenge of being able to adapt an 
existing weapon within 18 months and design, develop, and begin 
production of a new design within 3-4 years of a decision to enter 
engineering development--goals that were established in 2004.
    As part of the transformation process we are also actively 
reviewing the recommendations of the Secretary of Energy Advisory Board 
Nuclear Weapons Complex Infrastructure Task Force to prepare a 
comprehensive plan for transforming the nuclear weapons complex. Many 
of the recommendations are consistent with initiatives that NNSA was 
already considering or is implementing (design of a Reliable 
Replacement Warhead, consolidation of Special Nuclear Materials, 
accelerating dismantlement of retired weapons, managing the evolving 
complex to enhance responsiveness and sustainability, and establishing 
an Office of Transformation). The analysis of this report and its 
recommendations is underway and should be completed and presented to 
the Congress by this spring.
    Transformation presents some significant near term challenges, one 
of which is pit production. The NNSA considers an appropriate pit 
production capacity to be essential to its long-term evolution to a 
more responsive nuclear weapons infrastructure. We are disappointed, 
therefore, that Congress declined to fund planning for a modern pit 
production facility in fiscal year 2006. As a result, we did not seek 
funding for this facility in fiscal year 2007; although we remain 
convinced that increased pit production capacity is essential to our 
long-term evolution to a more responsive nuclear weapons 
infrastructure. In coming months, we will work with Congress to 
identify an agreed approach to fund long-term pit production capacity. 
In the meantime, we plan to increase the Los Alamos National Laboratory 
pit manufacturing capacity to 30-40 pits per year by the end of fiscal 
year 2012 in order to support the Reliable Replacement Warhead. This 
production rate, however, will be insufficient to meet our assessed 
long-term pit production needs.
    Another challenge of transformation is maintaining the balance 
between Life Extension Programs (LEP) for the current stockpile and 
development of the RRW and new infrastructure. The warhead LEP is key 
to our meeting the Department of Defense's (DOD) mission needs today 
and during transformation. These programs deserve special attention and 
I am concerned that fiscal year 2006 Congressional reductions for two 
warhead LEPs have challenged our ability to meet our deterrence needs. 
A reduction in the W76 LEP request significantly increased the risk to 
achieving a first production unit by the end of fiscal year 2007. 
Reductions to the W80 LEP request have delayed deployment of first 
production units and delayed the introduction of important use control 
features to strengthen security. We hope that this committee renews its 
support for these critical LEPs.
    Another significant near term challenge is ensuring the security of 
our people, our nuclear weapons, our weapons-usable materials, our 
information, and our infrastructure from harm, theft or compromise. The 
job has become more difficult and costly as a result of two factors: 
the increased post-9/11 threat to nuclear warheads and associated 
fissile materials coupled with the primacy of ``denying access'' to 
these key assets--a much more rigorous security standard than 
``containment'' of the asset. We will meet the requirements of the 2003 
Design Basis Threat (DBT) by the end of this fiscal year. We expect to 
be compliant with the 2005 DBT revisions at the two most sensitive 
locations, the Secure Transportation Asset and the Pantex Weapons Plant 
by the end of fiscal year 2008 as required by Departmental policy.
    The world in 2030 will not be more predictable than it is today, 
but this vision of our future nuclear weapons posture is enabled by 
what we have learned from 10 years of experience with science-based 
Stockpile Stewardship, from planning for and carrying out life 
extension programs for our legacy stockpile, and from coming to grips 
with national security needs of the 21st century as laid out in the 
NPR. A world of a successful responsive infrastructure isn't the only 
plausible future of course. But it is one we should strive for. It 
offers the best hope of achieving the President's vision of the 
smallest stockpile consistent with our Nation's security. That's why we 
are embracing this vision of stockpile and infrastructure 
transformation. We should not underestimate the challenge of 
transforming the enterprise, but it is clearly the right path for us to 
take.
Defense Nuclear Nonproliferation
    Let me now turn to our nuclear nonproliferation and threat 
reduction programs. Acquisition of nuclear weapons, WMD capabilities, 
technologies, and expertise by rogue states or terrorists poses a grave 
threat to the United States and international security. The pursuit of 
nuclear weapons by terrorists and states of concern makes it clear that 
our threat detection programs are urgently required must be successful 
and must proceed on an accelerated basis. The NNSA budget request 
addresses this urgency and demonstrates the President's commitment to 
prevent, contain, and roll back the proliferation of nuclear weapons-
usable materials, technology, and expertise.
    Our programs are structured around a comprehensive and multi-
layered approach to threat reduction and nuclear nonproliferation. We 
work with more than 70 countries to secure dangerous nuclear and 
radioactive materials, halt the production of fissile material, detect 
the illegal trafficking or diversion of nuclear material, and 
ultimately dispose of surplus weapons-usable materials. We also work 
with multilateral institutions including the International Atomic 
Energy Agency and the Nuclear Suppliers Group to strengthen nuclear 
safeguards and improve the nuclear export control regulatory 
infrastructure in other countries. This multi-layered approach is 
intended to identify and address potential vulnerabilities within the 
international nonproliferation regime, reduce the incentive for 
terrorists and rogue states to obtain WMD, and limit terrorists' access 
to deadly weapons and materials.
    A significant amount of our work falls at the intersection of 
nonproliferation and peaceful use of nuclear materials. The United 
States is setting an example by making a firm commitment to reducing 
its nuclear arsenal and recycling substantial quantities of weapons-
usable highly enriched uranium for peaceful, civilian, energy-
generating purposes. In 1994, the United States declared 174 tons of 
highly enriched uranium (HEU) to be in excess of our national security 
needs. The great bulk of that material is now in the process of being 
down blended for use in civilian nuclear power reactors. Last year, we 
announced that 17.4 MT of this material will be down blended and set 
aside to establish a fuel bank in support of our efforts to develop an 
international reliable fuel supply mechanism, an issue I will return to 
later in my statement.
    In addition, in May of 2004, President Bush announced plans to 
reduce our Nation's nuclear weapons stockpile by nearly half, to its 
smallest size since the Eisenhower Administration. This decision 
enables us to begin to dispose of a significant amount of weapons-grade 
nuclear material. Last year, the administration committed to remove an 
additional 200 metric tons of HEU--enough material for approximately 
8,000 nuclear warheads--from any further use as fissile material in 
U.S. nuclear weapons This represents the largest amount of special 
nuclear material ever removed from the stockpile in the history of the 
U.S. nuclear weapons program. The bulk of this material will be 
retained for use in propulsion systems for our Nation's nuclear navy--a 
step that will allow us to postpone the need to construct a new uranium 
high-enrichment facility for at least 50 years. Twenty metric tons of 
this HEU will be down blended to LEU for use in civilian nuclear power 
reactors or research reactors.
    We are also working with the Russian Federation to eliminate 34 
metric tons of weapons-usable plutonium in each country that will be 
converted into MOX fuel and burned in nuclear power reactors. We 
believe we have now resolved the impasse over liability that has long 
delayed the plutonium disposition program and the construction of the 
MOX plant at our Savannah River site.
    Much of our work focuses on emerging issues such as detecting 
clandestine nuclear supply networks, monitoring efforts by more 
countries to acquire nuclear weapons, and preventing the spread of 
nuclear fuel cycle technology. We have taken a number of steps to shut 
down illicit supply networks and keep nuclear materials out of the 
hands of terrorists as reflected in U.S. leadership in support of the 
Proliferation Security Initiative, Security Council Resolution 1540, 
criminalizing proliferation, and in strengthening international export 
control regimes.
    We have worked to expand our programs designed to stop nuclear 
smuggling and nuclear terrorism by cooperatively developing and 
employing radiological and nuclear detection equipment at key border 
crossings, airports, and major seaports, or ``megaports,'' worldwide. 
NNSA also assists and trains customs officials at home and abroad to 
detect the illicit trafficking of nuclear and radiological materials, 
as well as dual-use commodities that might be useful in weapons of mass 
destruction programs. We are also expanding our efforts to secure and 
transform global inventories of weapons-usable materials. Our programs 
include the Global Threat Reduction Initiative to reduce and secure 
fissile and radioactive material worldwide; our International Material 
Protection and Cooperation program, also known as ``MPC&A'', which has 
accelerated efforts to improve the security of weapons usable material 
in Russia and elsewhere; and our efforts to complete the conversion of 
research reactors throughout the world to the use of low enriched 
uranium within the next decade. There are also two complementary 
programs that address the repatriation of fresh and spent HEU material 
from Russian-supplied research reactors and U.S.-origin material from 
research reactors around the world.
    Cooperation with Russia on nonproliferation is nothing new for the 
United States, but this cooperation has been heightened following the 
rise of global terrorism and the events of September 11, 2001. The 
Joint Statement on Nuclear Security Cooperation issued by Presidents 
Bush and Putin at their Bratislava meeting last year is but one example 
of the significant progress we have made over the last 5 years. This 
joint statement has helped expedite our cooperative work with Russia. 
For example, as a result of the Bush-Putin Bratislava joint statement, 
we were able to make the return of fresh and spent HEU fuel from U.S.- 
and Russian-design research reactors in third countries a top priority, 
as well as a plan for joint work to develop low-enriched uranium fuel 
for use in these reactors. As a result, we were able complete the 
conversion of a Russian-supplied research reactor located in the Czech 
Republic to low-enriched fuel and to airlift a significant amount of 
HEU from the Czech Technical University reactor located near Prague for 
safe and secure storage in Russia. We have also made significant 
progress on the other Bratislava joint statement items, and we expect 
this cooperation and success will continue.
    Beyond the threat of nuclear terrorism, illicit networks engaging 
in nuclear trade, and additional states seeking nuclear weapons 
capability, the nonproliferation community also faces another 
significant challenge--revitalizing nuclear energy throughout the globe 
in a manner that also advances our nonproliferation interests. We have 
the opportunity to reshape our collective approach to ensure that 
nonproliferation is the cornerstone of the next evolution of civilian 
nuclear power and fuel cycle technology. The challenge before us is to 
make sure we design--from the very beginning--technologies and 
political arrangements that limit the spread of sensitive fuel cycle 
capabilities and ensure that rogue states do not use a civilian nuclear 
power as cover for a covert nuclear weapons program.
    Last month, the administration announced the Global Nuclear Energy 
Partnership, or GNEP, as part of President Bush's Advanced Energy 
Initiative. GNEP is a comprehensive strategy to enable an expansion of 
nuclear power in the United States and around the world, to promote 
nuclear nonproliferation goals; and to help resolve nuclear waste 
disposal issues. Fundamental to GNEP is a new approach to fuel cycle 
technology. Under this proposed new approach, countries with secure, 
advanced nuclear fuel cycle capabilities would offer commercially 
competitive and reliable access to nuclear fuel services--fresh fuel 
and recovery of used fuel--to other countries in exchange for their 
commitment to forgo the development of enrichment and recycling 
technology.
    Over the next year, we will work with other elements of the 
Department to establish GNEP, paying special attention to developing 
advanced safeguards and developing the parameters for international 
cooperation. Since the signing of the Nuclear Non-Proliferation Treaty, 
the world has sought to prevent the proliferation of nuclear weapons 
while expanding the benefits of nuclear technology. I believe that GNEP 
takes us closer to that goal. By allowing us to move beyond abstract 
discussions to tangible actions that will benefit directly those who 
join us in this partnership. GNEP will offer us the opportunity to take 
the international lead in making nonproliferation an integral part of 
our global nuclear safety and security culture.
Naval Reactors
    Also contributing to the Department's national security mission is 
the Department's Naval Reactors Program, whose mission is to provide 
the U.S. Navy with safe, militarily effective nuclear propulsion plants 
and ensure their continued safe, reliable and long-lived operation. 
Nuclear propulsion enhances our warship capabilities by providing the 
ability to sprint where needed and arrive on station; ready to conduct 
sustained combat operations when America's interests are threatened. 
Nuclear propulsion plays a vital role in ensuring the Navy's forward 
presence and its ability to project power anywhere in the world.
    The Naval Reactors Program has a broad mandate, maintaining 
responsibility for nuclear propulsion from cradle to grave. Over 40 
percent of the Navy's major combatants are nuclear-powered, including 
aircraft carriers, attack submarines, and strategic submarines, which 
provide the Nation's most survivable deterrent.

               FISCAL YEAR 2007 BUDGET REQUEST BY PROGRAM

    The President's fiscal year 2007 budget request totals $9.3 
billion, an increase of $211 million or 2.3 percent. We are managing 
our program activities within a disciplined 5-year budget and planning 
envelope. We are doing it successfully enough to be able to address the 
administration's high priority initiatives to reduce global nuclear 
danger in Defense Nuclear Nonproliferation, and provide for needed 
funding increases in some of our programs within an overall modest 
growth rate.
Weapons Activities
    The fiscal year 2007 budget request for the programs funded within 
the Weapons Activities appropriation is $6.41 billion, less than a 1 
percent increase over fiscal year 2006. This request supports the 
requirements of the Stockpile Stewardship Program consistent with the 
administration's Nuclear Posture Review (NPR) and the revised stockpile 
plan submitted to the Congress in June 2004. Our request places a high 
priority on accomplishing the near-term workload and supporting 
technologies for the stockpile along with the long-term science and 
technology investments to ensure the design and production capability 
and capacity to support ongoing missions. This request also supports 
the facilities and infrastructure that must be responsive to new or 
emerging threats.
    Directed Stockpile Work (DSW) is an area of special emphasis this 
year with a fiscal year 2007 request of $1.41 billion, a 3 percent 
increase over fiscal year 2006. In fiscal year 2007, we will be 
accelerating efforts for dismantlement of retired warheads and 
consolidation of special nuclear materials across the nuclear weapons 
complex. Both of these efforts will contribute to increasing the 
overall security at NNSA sites. DSW also supports routine maintenance 
and repair of the stockpile; refurbishes warheads through the Life 
Extension Programs; and, maintains the capability to design, 
manufacture, and certify new warheads, for the foreseeable future. DSW 
also supports managing the strategy, driving the change, and performing 
the crosscutting initiatives required to achieve responsiveness 
objectives envisioned in the NPR. Our focus remains on the stockpile, 
to ensure that the nuclear warheads and bombs in the U.S. nuclear 
weapons stockpile are safe, secure, and reliable.
    Progress in other parts of the Stockpile Stewardship Program 
continues. The fiscal year 2007 request for the six Campaigns is $1.94 
billion, a 9 percent decrease from fiscal year 2006. The Campaigns 
focus on scientific and technical efforts and capabilities essential 
for assessment, certification, maintenance, and life extension of the 
stockpile and have allowed NNSA to move to ``science-based'' 
stewardship. These campaigns are evidence of NNSA excellence and 
innovation in science, engineering and computing that, though focused 
on the nuclear weapons mission, have much broader application.
    Specifically, $425 million for the Science and Engineering 
Campaigns provides the basic scientific understanding and the 
technologies required to support the workload and the completion of new 
scientific and experimental facilities. We will continue to maintain 
the ability to conduct underground nuclear tests at the Nevada Test 
Site if required, but let me be clear, nothing at this time indicates 
the need for resumption for underground testing for the foreseeable 
future.
    The Readiness Campaign, with a request of $206 million, develops 
and delivers design-to-manufacture capabilities to meet the evolving 
and urgent needs of the stockpile and supports the transformation of 
the nuclear weapons complex into an agile and more responsive 
enterprise.
    The request of $618 million for the Advanced Simulation and 
Computing Campaign supports the schedule to enhance the computational 
tools and technologies necessary to support the continued assessment 
and certification of the refurbished weapons, aging weapons components, 
and a Reliable Replacement Warhead program without underground nuclear 
tests. As we enhance these tools to link the historical test base of 
more than 1,000 nuclear tests to computer simulations, we can continue 
to assess whether the stockpile is safe, secure, reliable, and performs 
as required.
    The $451 million request for the Inertial Confinement Fusion 
Ignition and High Yield Campaign is focused on the execution of the 
first ignition experiment at the National Ignition Facility (NIF) in 
2010 and provides facilities and capabilities for high-energy-density 
physics experiments in support of the Stockpile Stewardship Program. To 
achieve the ignition milestone, $255 million will support construction 
of NIF and the NIF Demonstration Program and $168 million will support 
the National Ignition Campaign. The ability of NIF to assess the 
thermonuclear burn regime in nuclear weapons via ignition experiments 
is of particular importance. NIF will be the only facility capable of 
probing in the laboratory the extreme conditions of density and 
temperature found in exploding nuclear weapons.
    The Pit Manufacturing and Certification Campaign request of $238 
million continues work to manufacture and certify the W88 pit in 2007 
and to address issues associated with manufacturing future pit types 
including the Reliable Replacement Warhead and increasing pit 
production capacity at Los Alamos National Laboratory.
            Readiness in Technical Base and Facilities (RTBF) and 
                    Facilities and Infrastructure Recapitalization 
                    Program (FIRP)
    In fiscal year 2007 we are requesting $1.98 billion for the 
maintenance and operation of existing facilities, remediation and 
disposition of excess facilities, and construction of new facilities. 
This is of critical importance to enable NNSA to move toward a more 
supportable and responsive infrastructure.
    Of this amount, $1.69 billion is requested for Readiness in 
Technical Base and Facilities (RTBF), an increase of 3 percent from 
fiscal year 2006, with $1.4 billion in Operations and Maintenance and 
$281 million for RTBF Construction. RTBF operates and maintains current 
facilities, and ensure the long-term vitality of the NNSA complex 
through a multi-year program of infrastructure construction.
    This request also includes $291 million for the Facilities and 
Infrastructure Recapitalization Program (FIRP), a separate and distinct 
program that is complementary to the ongoing RTBF efforts. The FIRP 
mission is to restore, rebuild and revitalize the physical 
infrastructure of the nuclear weapons complex. FIRP works in 
partnership with RTBF to assure that facilities and infrastructure are 
restored to an appropriate condition to support the mission, and to 
institutionalize responsible and accountable facility management 
practices. FIRP activities include reducing deferred maintenance, 
recapitalizing the infrastructure, and reducing the maintenance base by 
eliminating excess real property. The FIRP Recapitalization projects 
are key to restoring the facilities that house the people, equipment, 
and material necessary to the Stockpile Stewardship Program, the 
primary NNSA mission. FIRP Facility Disposition activities reduce 
Environment, Safety and Health (ES&H) and safeguards and security 
liabilities, address footprint reduction of the complex, and reduce 
long-term costs and risks. The primary objective of FIRP Infrastructure 
Planning is to ensure that projects are adequately planned in advance 
of project start.
    Last year the Congress significantly reduced funds for the FIRP 
program. This reduction, coming on reductions in planned levels 
dictated by fiscal constraints, means that the original (and 
Congressionally mandated) goal of eliminating the maintenance backlog 
and terminating the FIRP program by 2011 is no longer attainable. This 
matter may require legislation extending the FIRP program to 2013. We 
remain committed to the concept of FIRP as a temporary, ``get well'' 
program and to the long term, sustained funding of maintenance within 
the RTBF program.
            Secure Transportation Asset
    In fiscal year 2007, the budget requests $209 million for Secure 
Transportation Asset (STA), a minor decrease from fiscal year 2006 
levels, for meeting the Department's transportation requirements for 
nuclear weapons, components, and special nuclear materials shipments. 
The workload requirements for this program will escalate significantly 
in the future to support the dismantlement and maintenance schedule for 
the nuclear weapons stockpile and the Secretarial initiative to 
consolidate the storage of nuclear material. The challenge to increase 
secure transport capacity is coupled with and impacted by increasingly 
complex national security concerns. To support the escalating workload 
while maintaining the safety and security of shipments, STA is 
increasing the cumulative number of Safeguard Transporters in operation 
by three per year, with a target total of 51 in fiscal year 2011.
            Environmental Projects and Operations
    We are requesting $17.2 million for Environmental Projects and 
Operations. The $17.2 million request is for a new function, Long Term 
Response Actions/Long-Term Stewardship, which covers continuing 
environmental stewardship at NNSA sites after the completion of 
Environmental Management activities. This new program at each site 
begins when EM cleanup activities are completed, and will continue for 
several years. Activities comprise routine inspections of landfill 
covers/caps, and maintenance of pump and treatment systems, and 
starting in fiscal year 2007, will be performed at three NNSA sites: 
Lawrence Livermore National Laboratory, Kansas City Plant, and Sandia 
national laboratories.
    The fiscal year 2007-2011 Budget Request does not include the 
transfer of legacy environmental management activities at NNSA sites 
that was proposed in the fiscal year 2006 Budget Request. However, the 
responsibility for newly generated waste at the Lawrence Livermore 
National Laboratory and the Y-12 National Security Complex was 
transferred to the NNSA in fiscal year 2006, and is managed in the 
Readiness in Technical Base and Facilities GPRA unit.
            Nuclear Weapons Incident Response
    The fiscal year 2007 request for Nuclear Weapons Incident Response 
is $135 million, an increase of 15 percent over fiscal year 2006. The 
NNSA Emergency Operations remains the U.S. Government's primary 
capability for radiological and nuclear emergency response in support 
of Homeland Security. The program is continuing efforts to enhance 
Emergency Response capabilities, and the budget request supports all 
assets as planned, with emphasis on recruitment and training of 
personnel called into action during emergency situations. The fiscal 
year 2007 increase is primarily associated with the research and 
development efforts of the Render Safe Research and Development 
program. This budget realigns this research and development funding to 
Emergency Response where the program is managed.
            Safeguards and Security
    The fiscal year 2007 request for Safeguards and Security is $754 
million. This budget supports two security-related activities. The 
budget request proposes that the physical security portion of NNSA's 
Safeguards and Security GPRA Unit be renamed ``Defense Nuclear 
Security'', consistent with the responsible NNSA organization. This 
program is responding to a revision in threat guidance affecting 
physical security at all NNSA sites. Meeting the Design Basis Threat 
will require further upgrades to equipment, personnel and facilities, 
and NNSA is committed to completing these activities. The Cyber 
Security program activities, managed by the NNSA Chief Information 
Officer, comprise the rest of this account, and the fiscal year 2007 
request is essentially level with the fiscal year 2006 funding level. 
The Request includes funding for the DOE Diskless Conversion 
initiative. Meeting the post-9/11 security requirements has required a 
significant long-term investment, reflecting DOE's continuing 
commitment to meet these requirements.
Defense Nuclear Nonproliferation
    The Defense Nuclear Nonproliferation program goal is to detect, 
prevent, and reverse the proliferation of Weapons of Mass Destruction 
(WMD) while mitigating nuclear risk worldwide. Our programs address the 
danger that hostile nations or terrorist groups may acquire weapons of 
mass destruction or weapons-usable material, dual-use production or 
technology, or WMD capabilities. Our primary focus in this regard is 
securing or disposing of vulnerable stockpiles of weapon-usable 
materials, technology, and expertise in Russia and other countries of 
concern. The administration's request of $1.73 billion to support NNSA 
activities to reduce the global weapons of mass destruction 
proliferation threat represents almost a 7 percent increase over the 
budget for comparable fiscal year 2006 activities.
    The administration's fiscal year 2007 Fissile Material Disposition 
budget request is $638 million, an increase of $169 million over fiscal 
year 2006. This increase reflects the progress in implementing the 
plutonium disposition program in the past year. Of this amount, $551 
million will be allocated toward disposing of surplus U.S. and Russian 
plutonium and $87 million will be allocated toward the disposition of 
surplus U.S. highly enriched uranium. The plutonium disposition 
program, the Department's largest nonproliferation program, plans to 
dispose of 68 metric tons (MT) of surplus Russian and U.S. weapons-
grade plutonium by fabricating it into mixed oxide (MOX) fuel for use 
in civilian nuclear power-generating reactors. The United States and 
Russia successfully completed negotiations of a liability protocol for 
the program, and senior Russian government officials have assured the 
United States that this protocol will be signed in the near future. DOE 
has also been working to validate the U.S. MOX project cost and 
schedule baseline as part of our project management process, and we 
will have a validated baseline in place before construction begins. DOE 
received authorization to begin construction of the MOX facility from 
the Nuclear Regulatory Commission, began site preparation work for the 
MOX facility at the Savannah River Site, and implemented a number of 
improvements to strengthen the management of the MOX project. Current 
plans call for construction of the U.S. MOX facility to start in 2006, 
with operations to start in 2015. The administration's budget request 
is essential for continuing this work in fiscal year 2007, which will 
be a peak construction year. Now that the liability issue is nearing 
resolution, high-level U.S.-Russian discussions are taking place to 
confirm the technical and financial details for the Russian 
construction program.
    The administration's fiscal year 2007 budget request of $107 
million for the Global Threat Reduction Initiative (GTRI) is a 10 
percent increase over fiscal year 2006 and supports the urgency carried 
in ambitious completion dates and objectives set by the program. GTRI 
represents the Department's latest effort to identify, secure, recover, 
and/or facilitate the disposition of the vulnerable nuclear and 
radioactive materials worldwide that pose a threat to the United States 
and the international community. Since the creation of GTRI, we have 
enjoyed a number of successes. Under our radiological threat reduction 
program, we have completed security upgrades at more than 340 
facilities around the world. As a result of the Bush-Putin Bratislava 
joint statement on enhanced nuclear security cooperation, we have 
established a prioritized schedule for the repatriation of U.S.-origin 
and Russian-origin research reactor nuclear fuel located in third 
countries. As part of our nuclear materials threat reduction efforts 
under GTRI, three successful shipments in fiscal year 2005 to 
repatriate Russian-origin fresh highly enriched uranium (HEU) from the 
Czech Republic (two shipments) and Latvia.
    In accordance with the President's Bratislava commitment, we have 
also begun working with the Russian Federation to repatriate Russian-
origin spent fuel. We have also conducted several successful shipments 
to repatriate U.S.-origin spent nuclear fuel from Japan, the 
Netherlands, Sweden, Greece, and Austria. We have converted three 
research reactors in the Netherlands, Libya, and the Czech Republic 
from the use of HEU to the use of low-enriched uranium (LEU) fuel so 
far in 2006, and we have completed physical security upgrades at three 
priority sites housing dangerous materials in Ukraine, Kazakhstan, and 
Uzbekistan.
    The International Material Protection and Cooperation fiscal year 
2007 budget request of $413 million is a 2 percent decrease from fiscal 
year 2006. For more than a decade, the United States has worked 
cooperatively with the Russian Federation and other former Soviet 
republics to secure nuclear weapons and weapons material that may be at 
risk of theft or diversion. As part of the Bush-Putin Bratislava joint 
statement, we agreed to accelerate security upgrades at Russian sites 
holding weapons-usable materials and warheads. The Bratislava joint 
statement also provided for a comprehensive joint action plan for 
cooperation on security upgrades of Russian nuclear facilities at 
Rosatom and Ministry of Defense sites. In addition, this statement 
called for enhanced cooperation in the areas of nuclear regulatory 
development, sustainability, secure transportation, MPC&A expertise 
training, and protective force equipment. A number of major milestones 
for this cooperative program are on the horizon, and the fiscal year 
2007 budget ensures that sufficient funding will be available to meet 
these milestones. Security upgrades for Russian Rosatom facilities will 
be completed by the end of 2008--2 years ahead of schedule. By the end 
of 2008 we will also complete cooperative upgrades at the nuclear 
warhead storage sites of the Russian Strategic Rocket Forces and the 
Russian Ministry of Defense sites. By the end of fiscal year 2007, we 
will have provided security upgrades at more than 80 percent of all the 
nuclear sites in Russia at which we now plan cooperative work.
    The administration's budget request will enable us to expand and 
accelerate the deployment of radiation detection systems at key transit 
points within Russia and accelerate installation of such equipment in 
five other priority countries to prevent attempts to smuggle nuclear or 
radiological materials across land borders. Through our Megaports 
initiative, we plan to deploy radiation detection capabilities at three 
additional major seaports in fiscal year 2007 to pre-screen cargo 
containers destined for the United States for nuclear and radiological 
materials, thereby increasing the number of completed ports to 13.
    The fiscal year 2007 budget request of $207 million for the 
Elimination of Weapons Grade Plutonium Production (EWGPP) is an 
increase of 18 percent from fiscal year 2006. The EWGPP program is 
working toward complete the permanent shut down of the three remaining 
weapons grade plutonium production reactors in Russia at Seversk and 
Zheleznogorsk. Every week, these reactors currently produce enough 
fissile material for several nuclear weapons. The overall EWGPP plan is 
to shutdown these reactors permanently and replace the heat and 
electricity these reactors supply to local communities with energy 
generated by fossil fuel plants by December 2008 in Seversk and 
December 2010 in Zheleznogorsk. The reactors will shut down immediately 
when the fossil plants are completed. The first validated estimate of 
total program cost--$1.2 billion--was determined in January 2004. After 
extensive negotiations with Russia, we achieved $200 million in cost 
savings. Also, under the authority to accept international funding as 
provided in the Ronald W. Reagan Defense Authorization Act for fiscal 
year 2005, we have received pledges of $30 million from six Global 
Partnership participants. Construction of the fossil fuel plant at 
Seversk started in late 2004, and the start of construction of the 
fossil fuel plant at Zheleznogorsk was recently approved. The increased 
funding as part of the fiscal year 2007 budget request allows for both 
construction projects to remain on schedule and thereby hold the line 
on cost.
    The fiscal year 2007 budget requests $269 million for 
Nonproliferation and Verification Research and Development. This effort 
includes a number of programs that make unique contributions to 
national security by researching the technological advancements 
necessary to detect and prevent the illicit diversion of nuclear 
materials. The Proliferation Detection program advances basic and 
applied technologies for the nonproliferation community with dual-use 
benefit to national counter-proliferation and counter-terrorism 
missions. Specifically, this program develops the tools, technologies, 
techniques, and expertise for the identification, location, and 
analysis of the facilities, materials, and processes of undeclared and 
proliferant WMD programs. The Proliferation Detection program conducts 
fundamental research in fields such as radiation detection, providing 
support to the Department of Homeland Security (DHS) and the 
Intelligence Community. The Nuclear Explosion Monitoring program builds 
the Nation's operational sensors that monitor from space the entire 
planet to detect and report surface, atmospheric, or space nuclear 
detonations. This program also produces and updates the regional 
geophysical data sets enabling operation of the Nation's ground-based 
seismic monitoring networks to detect and report underground 
detonations.
    The fiscal year 2007 budget request for Nonproliferation and 
International Security is $127 million. This figure cannot be directly 
compared to fiscal year 2006 because of a budget structure change that 
has realigned the Global Initiatives for Proliferation Prevention and 
HEU Transparency programs to this GPRA unit. Through this program the 
Department provides technical and policy expertise in support of U.S. 
efforts to strengthen international nonproliferation institutions and 
arrangements, fosters implementation of nonproliferation requirements 
through engagement with foreign partners, and helps develop the 
mechanisms necessary for transparent and verifiable nuclear reductions 
worldwide. This budget request addresses our need to tackle key policy 
challenges including efforts to strengthen the IAEA safeguards system, 
attempts to block and reverse proliferation in Iran and North Korea, 
attention to augmenting U.S. cooperation with China, India, and Russia, 
and our plan to build-up the nonproliferation component of the Global 
Nuclear Energy Partnership.
Naval Reactors
    The Naval Reactors fiscal year 2007 budget request of $795 million 
is an increase of $13.5 million from fiscal year 2006. The Program's 
development work ensures that nuclear propulsion technology provides 
options for maintaining and upgrading current capabilities, as well as 
for meeting future threats to U.S. security.
    The majority of funding supports the Program's No. 1 priority of 
ensuring the safety and reliability of the 104 operating naval nuclear 
propulsion plants. This work involves continual testing, analysis, and 
monitoring of plant and core performance, which becomes more critical 
as the reactor plants age. The nature of this business demands a 
careful, measured approach to developing and verifying nuclear 
technology; designing needed components, systems, and processes; and 
implementing them in existing and future plant designs. Most of this 
work is accomplished at Naval Reactors' DOE laboratories. These 
laboratories have made significant advancements in extending core 
lifetime, developing robust materials and components, and creating an 
array of predictive capabilities.
    Long-term Program goals have been to increase core energy, to 
achieve life-of-the-ship cores, and to eliminate the need to refuel 
nuclear powered ships. Efforts associated with this objective have 
resulted in planned core lives that are sufficient for the 30-plus year 
submarine (based on past usage rates) and an extended core life planned 
for CVN 21 (the next generation aircraft carrier). The need for nuclear 
propulsion will only increase over time as the uncertainty of 
conventional fuel cost and availability grows.
    Naval Reactors' Operations and Maintenance budget request is 
categorized into six areas: Reactor Technology and Analysis; Plant 
Technology; Materials Development and Verification; Evaluation and 
Servicing; Advanced Test Reactor (ATR) Operations and Test Support; and 
Facility Operations.
    The $212 million requested for Reactor Technology and Analysis will 
support continued work on the design for the new reactor plant for the 
next generation of aircraft carriers, CVN-21. These efforts also 
support the design of the Transformational Technology Core (TTC), a new 
high-energy core that is a direct outgrowth of the Program's advanced 
reactor technology and materials development and verification work.
    Reactor Technology and Analysis also develops and improves the 
analysis tools, which can be used to safely extend service life beyond 
our previous experience base. The increasing average age of our Navy's 
existing reactor plants, along with future extended service lives, a 
higher pace of operation and reduced maintenance periods, place a 
greater emphasis on our work in thermal-hydraulics, structural 
mechanics, fluid mechanics, and vibration analysis. These factors, 
along with longer-life cores, mean that for years to come, these 
reactors will be operating beyond our previously proven experience 
base.
    The $131 million requested for Plant Technology provides funding to 
develop, test, and analyze components and systems that transfer, 
convert, control, and measure reactor power in a ship's power plant. 
Reactor plant performance, reliability, and safety are maintained 
through a full understanding of component performance and system 
condition over the life of each ship. Naval Reactors is developing 
components to address known limitations and to improve reliability of 
instrumentation and power distribution equipment to replace aging, 
technologically obsolete equipment. Additional technology development 
in the areas of chemistry, energy conversion, instrumentation and 
control, plant arrangement, and component design will continue to 
support the Navy's operational requirements.
    The $118 million requested for Materials Development and 
Verification funds material analyses and testing to provide the high-
performance materials necessary to ensure that naval nuclear propulsion 
plants meet Navy goals for extended warship operation and greater power 
capability. More explicitly, materials in the reactor core and reactor 
plant must perform safely and reliably for the extended life of the 
ship.
    The $179 million requested for Evaluation and Servicing sustains 
the operation, maintenance, and servicing of Naval Reactors' operating 
prototype reactor plants. Reactor core and reactor plant materials, 
components, and systems in these plants provide important research and 
development data and experience under actual operating conditions. 
These data aid in predicting and subsequently preventing problems that 
could develop in Fleet reactors. With proper maintenance, upgrades, and 
servicing, the two prototype plants will continue to meet testing needs 
for at least the next decade.
    Evaluation and Servicing funds also support the implementation of a 
dry spent fuel storage production line that will put naval spent fuel 
currently stored in water pits at the Idaho Nuclear Technology and 
Engineering Center and at the Expended Core Facility (ECF) on the Naval 
Reactors facility in Idaho into dry storage. Additionally, these funds 
support ongoing decontamination and decommissioning of inactive nuclear 
facilities at all Naval Reactors sites to address their ``cradle to 
grave'' stewardship responsibility for these legacies, and minimize the 
potential for any environmental releases.
    The $64.6 million requested for Advanced Test Reactor Operations 
and Test Support sustains the ongoing activities of the INL ATR 
facility, owned and operated by the Office of Nuclear Energy (NE), 
Science, and Technology.
    In addition to the budget request for the important technical work 
discussed above, program direction and facilities funding is required 
for continued support of the Program's operations and infrastructure. 
The $57 million requested for facilities operations will maintain and 
modernize the Program's facilities, including the Bettis and Knolls 
laboratories as well as ECF and Kesselring Site Operations (KSO), 
through capital equipment purchases and general plant projects. The 
$2.8 million requested for construction funds will be used to complete 
construction of a materials development facility and to support the 
design of a materials research technology complex. Finally, the $31.2 
million requested for program direction will support Naval Reactors' 
DOE personnel at Headquarters and the Program's field offices, 
including salaries, benefits, travel, and other expenses.
Office of the Administrator
    The fiscal year 2007 budget request of $387 million, and increase 
of 14.2 percent over the fiscal year 2006 appropriation. NNSA completed 
the reengineering of its Federal workforce last year and has begun to 
recruit to fill critical skill gaps in safety, security, facilities, 
and business positions, in addition to the Future Leaders Intern 
program initiated in fiscal year 2005. The fiscal year 2007 request 
increases to provide additional personnel and support for mission 
growth in the Defense Nuclear Nonproliferation area, as well as in 
safety and security functions. The remainder of the increase reflects 
functional transfers to NNSA of 18 people from other Departmental 
elements, and fact of life changes including pay adjustments, increased 
space and occupancy charges, and cost of living increases in pay and 
benefits. We plan to support a slightly higher workforce level than in 
previous years, reflecting support for mission growth areas and skill 
gap closures.
            Historically Black Colleges and Universities Support
    A research and education partnership program with the Historically 
Black Colleges and Universities (HBCU) and the Massie Chairs of 
Excellence was initiated by the Congress in the Office of the 
Administrator appropriation in fiscal year 2005 and fiscal year 2006. 
NNSA has established an effective program to target national security 
research opportunities for these institutions to increase their 
participation in national security-related research and to train and 
recruit HBCU graduates for employment within NNSA. The NNSA's goal is a 
stable $10 million effort annually. The majority of the efforts 
directly support program activities, and it is expected that programs 
funded by the Weapons Activities, Defense Nuclear Nonproliferation and 
Naval Reactors appropriations will fund research with the HBCUs in 
areas including engineering, radiochemistry, material and computational 
sciences and sensor development. A targeted effort in education and 
curriculum development, and support for the Massie Chairs, will also be 
continued.

                           MANAGEMENT ISSUES

    NNSA has fully embraced the President's Management Agenda through 
the completion of the NNSA re-engineering initiative by creating a more 
robust and effective NNSA organization. Additionally, NNSA's success 
has been recognized with consistently ``Green'' ratings from the DOE, 
including Budget and Performance Integration. NNSA's Planning, 
Programming, Budgeting and Evaluation (PPBE) process was implemented 
simultaneously with the standup of the new NNSA organization, and is 
now the established management construct that integrates management, 
financial data and performance information in a multi-year context.
    The PPBE process is in its fifth year of implementation, and 
provides a fully integrated, multi-year perspective. The linkages 
within NNSA mirror the Headquarters and field organization structures, 
and are supported by management processes, contracting, funds control 
and accounting documentation. The cascade and linkages are quite 
evident in our updated NNSA Strategic Plan, issued last November.
    We take very seriously the responsibility to manage the resources 
of the American people effectively and I am glad that our management 
efforts are achieving such results.
    Finally, to provide more effective supervision of high-hazard 
nuclear operations, I have established a Chief, Defense Nuclear Safety 
position and appointed an experienced safety professional to the 
position. I believe this will help us balance the need for consistent 
standards with my stress on the authority and responsibility of the 
local Site Managers.

                               CONCLUSION

    In conclusion, I am confident that we are headed in the right 
direction. Our budget request will support continuing our progress in 
protecting and certifying our nuclear deterrent, transforming our 
stockpile and infrastructure, reducing the global danger from 
proliferation and weapons of mass destruction, and enhancing the force 
projection capabilities of the U.S. nuclear Navy. It will enable us to 
continue to maintain the safety and security of our people, 
information, materials, and infrastructure. Above all, it will meet the 
national security needs of the United States of in the 21st century.
    Mr. Chairman, this concludes my statement. A statistical appendix 
follows that contains the budget figures supporting our request. My 
colleagues and I would be pleased to answer any questions on the 
justification for the requested budget.

  NATIONAL NUCLEAR SECURITY ADMINISTRATION: APPROPRIATION AND PROGRAM 
         SUMMARY TABLES, OUT-YEAR APPROPRIATION SUMMARY TABLES
                     FISCAL YEAR 2007 BUDGET TABLES

                   NATIONAL NUCLEAR SECURITY ADMINISTRATION APPROPRIATION AND PROGRAM SUMMARY
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                          Fiscal Year    Fiscal Year    Fiscal Year   Fiscal Year
                                         2005 Current   2006 Original      2006       2006 Current   Fiscal Year
                                        Appropriations  Appropriation   Adjustments  Appropriation  2007 Request
----------------------------------------------------------------------------------------------------------------
National Nuclear Security
 Administration (NNSA):
    Office of the Administrator.......          363.4           341.9          -3.4          338.5         386.6
    Weapons Activities (after S&S WFO         6,625.5         6,433.9         -64.3        6,369.6       6,407.9
     offset)..........................
    Defense Nuclear Nonproliferation..        1,508.0         1,631.2         -16.3        1,614.8       1,726.2
    Naval Reactors....................          801.4           789.5          -7.9          781.6         795.1
                                       -------------------------------------------------------------------------
      Total, NNSA.....................        9,298.3         9,196.5         -92.0        9,104.5       9,315.8
----------------------------------------------------------------------------------------------------------------
Note.--The fiscal year 2006 column includes an across-the-board rescission of 1 percent in accordance with the
  Department of Defense Appropriations Act, 2006, Public Law 109-148.

    The NNSA budget justification contains information for 5 years as 
required by Sec. 3253 of Public Law 106-065. This section, entitled 
Future-Years Nuclear Security Program (FYNSP), requires the 
Administrator to submit to Congress each year the estimated 
expenditures necessary to support the programs, projects and activities 
of the NNSA for a 5-year fiscal period, in a level of detail comparable 
to that contained in the budget.

                OUT-YEAR APPROPRIATION SUMMARY NNSA FUTURE-YEARS NUCLEAR SECURITY PROGRAM (FYNSP)
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                        Fiscal      Fiscal      Fiscal      Fiscal      Fiscal
                                                       Year 2007   Year 2008   Year 2009   Year 2010   Year 2011
----------------------------------------------------------------------------------------------------------------
NNSA:
    Office of the Administrator.....................         387         394         402         410         418
    Weapons Activities (after S&S offset)...........       6,408       6,536       6,667       6,800       6,936
    Defense Nuclear Nonproliferation................       1,726       1,761       1,796       1,832       1,869
    Naval Reactors..................................         795         811         827         844         861
                                                     -----------------------------------------------------------
      Total, NNSA...................................       9,316       9,502       9,692       9,886      10,084
----------------------------------------------------------------------------------------------------------------


                                WEAPONS ACTIVITIES FUNDING PROFILE BY SUBPROGRAM
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                          Fiscal Year    Fiscal Year    Fiscal Year   Fiscal Year
                                          2005 Current  2006 Original      2006       2006 Current   Fiscal Year
                                         Appropriation  Appropriation   Adjustments  Appropriation  2007 Request
----------------------------------------------------------------------------------------------------------------
Weapons Activities:
    Directed Stockpile Work............      1,351,206      1,386,189       -13,862      1,372,327     1,410,268
    Science Campaign...................        277,253        279,464        -2,794        276,670       263,762
    Engineering Campaign...............        258,767        250,411        -2,504        247,907       160,919
    Inertial Confinement Fusion                536,756        549,073        -5,491        543,582       451,191
     Ignition and High Yield Campaign..
    Advanced Simulation and Computing          698,196        605,830        -6,058        599,772       617,955
     Campaign..........................
    Pit Manufacturing and Certification        263,570        241,074        -2,411        238,663       237,598
     Campaign..........................
    Readiness Campaign.................        265,472        218,755        -2,188        216,567       205,965
    Readiness in Technical Base and          1,657,712      1,647,885        -3,130      1,644,755     1,685,772
     Facilities........................
    Secure Transportation Asset........        199,709        212,100        -2,121        209,979       209,264
    Nuclear Weapons Incident Response..         98,427        118,796        -1,188        117,608       135,354
    Facilities and Infrastructure              313,722        150,873        -1,508        149,365       291,218
     Recapitalization Program..........
    Environmental Projects and           .............  .............  ............  .............        17,211
     Operations........................
    Safeguards and Security............        751,929        805,486        -7,735        797,751       754,412
                                        ------------------------------------------------------------------------
      Subtotal, Weapons Activities.....      6,672,719      6,465,936       -50,990      6,414,946     6,440,889
Use of Prior Year Balances.............        -16,372  .............       -13,349        -13,349  ............
Security Charge for Reimbursable Work..        -30,000        -32,000  ............        -32,000       -33,000
Transfer to the Office of the                   -3,205  .............  ............  .............  ............
 Administrator for Pajarito............
Undistributed Budget Authority \1\.....          2,400  .............  ............  .............  ............
                                        ------------------------------------------------------------------------
      Total, Weapons Activities........      6,625,542      6,433,936       -64,339      6,369,597     6,407,889
----------------------------------------------------------------------------------------------------------------
\1\ Results from application of the 0.8 percent across-the-board rescission against the gross Weapons Activities
  appropriation prior to receipt of the $300,000,000 which was derived by transfer from the Department of
  Defense in accordance with Public Law 108-447.

Note.--The fiscal year 2006 adjustments column includes an across-the-board rescission of 1 percent in
  accordance with the Department of Defense Appropriations Act, 2006, Public Law 109-148. It also reflects the
  approval of the following reprogrammings for Readiness in Technical Base and Facilities using prior year
  funding--Savannah River General Plant Projects and Project 03-D-102, National Security Sciences Building.
Public Law Authorization.--Public Law 109-163, National Defense Authorization Act, fiscal year 2006; Public Law
  109-103, Energy and Water Development Appropriations Act, 2006.


                                     OUT-YEAR FUNDING PROFILE BY SUBPROGRAM
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                                    Fiscal Year     Fiscal Year     Fiscal Year     Fiscal Year
                                                       2008            2009            2010            2011
----------------------------------------------------------------------------------------------------------------
Weapons Activities:
    Directed Stockpile Work.....................       1,381,893       1,431,364       1,462,287       1,494,962
    Science Campaign............................         282,223         281,344         274,296         268,441
    Engineering Campaign........................         169,012         152,114         149,639         147,584
    Inertial Confinement Fusion Ignition and             426,035         415,222         414,823         400,013
     High Yield Campaign........................
    Advanced Simulation and Computing  Campaign.         632,095         621,943         607,746         593,761
    Pit Manufacturing and Certification                  249,588         252,174         260,096         255,832
     Campaign...................................
    Readiness Campaign..........................         202,636         198,090         192,401         187,659
    Readiness in Technical Base and Facilities..       1,767,586       1,833,813       1,907,510       2,008,941
    Secure Transportation Asset.................         225,057         237,344         244,212         247,580
    Nuclear Weapons Incident Response...........         137,766         140,019         142,332         144,701
    Facilities and Infrastructure                        310,369         339,257         368,054         396,996
     Recapitalization Program...................
    Environmental Projects and Operations.......          17,518          17,805          18,099          18,400
    Safeguards and Security.....................         768,269         781,279         794,608         808,235
                                                 ---------------------------------------------------------------
      Subtotal, Weapons Activities..............       6,570,047       6,701,768       6,836,103       6,973,105
Security Charge for Reimbursable Work...........         -34,000         -35,000         -36,000         -37,000
                                                 ---------------------------------------------------------------
      Total, Weapons Activities.................       6,536,047       6,666,768       6,800,103       6,936,105
----------------------------------------------------------------------------------------------------------------


                                          MAJOR OUT-YEAR CONSIDERATIONS
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                                    Fiscal Year     Fiscal Year     Fiscal Year     Fiscal Year
                                                       2008            2009            2010            2011
----------------------------------------------------------------------------------------------------------------
Weapons Activities..............................       6,570,047       6,701,768       6,836,103       6,973,105
----------------------------------------------------------------------------------------------------------------


                         DEFENSE NUCLEAR NONPROLIFERATION FUNDING PROFILE BY SUBPROGRAM
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                   Fiscal Year     Fiscal Year     Fiscal Year      Fiscal Year
                                  2005 Current    2006 Original        2006        2006 Current     Fiscal Year
                                  Appropriation   Appropriation  Adjustments \1\   Appropriation   2007 Request
----------------------------------------------------------------------------------------------------------------
Defense Nuclear
 Nonproliferation and
 Verification:
    Nonproliferation Research           219,836         322,000           -3,220         318,780         268,887
     and Development...........
    Nonproliferation and                143,764          75,000             -750          74,250         127,411
     International Security....
    International Nuclear               403,451         427,000           -4,270         422,730         413,182
     Materials Protection and
     Cooperation...............
    Global Initiatives for               40,675          40,000             -400          39,600  ..............
     Proliferation Prevention..
    HEU Transparency                     20,784          19,483             -195          19,288  ..............
     Implementation \1\........
    Elimination of Weapons-              67,331         176,185           -1,762         174,423         206,654
     Grade Plutonium Production
    Fissile Materials                   619,060         473,508           -4,735         468,773         637,956
     Disposition...............
    Offsite Recovery Project...           7,540  ..............  ...............  ..............  ..............
    Global Threat Reduction      ..............          97,975             -980          96,995         106,818
     Initiative................
                                --------------------------------------------------------------------------------
      Subtotal, Defense Nuclear       1,522,441       1,631,151          -16,312       1,614,839       1,760,908
       Nonproliferation........
Use of Prior Year Balances.....         -14,475  ..............  ...............  ..............         -34,695
                                --------------------------------------------------------------------------------
      Total, Defense Nuclear          1,507,966       1,631,151          -16,312       1,614,839       1,726,213
       Nonproliferation........
----------------------------------------------------------------------------------------------------------------
\1\ This budget request includes an across-the-board rescission of 1 percent for fiscal year 2006 in accordance
  with the Department of Defense Appropriations Act 2006, Public Law 109-148.

Note.--The fiscal year 2006 column includes an across-the-board rescission of 1 percent in accordance with the
  Department of Defense Appropriations Act, 2006, Public Law 109-148.
Public Law Authorization.--Public Law 108-148, The Consolidated Appropriations Act, 2006.


                                     OUT-YEAR FUNDING PROFILE BY SUBPROGRAM
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                                    Fiscal Year     Fiscal Year     Fiscal Year     Fiscal Year
                                                       2008            2009            2010            2011
----------------------------------------------------------------------------------------------------------------
Defense Nuclear Nonproliferation:
    Nonproliferation and Verification Research           279,439         293,924         311,551         324,034
     and Development............................
    Nonproliferation and International Security.         132,458         134,706         138,835         146,990
    International Nuclear Materials Protection           403,351         444,405         530,723         542,859
     and Cooperation............................
    Elimination of Weapons Grade Plutonium               182,017         139,363          24,949  ..............
     Production.................................
    Fissile Materials Disposition...............         642,853         654,469         710,178         737,976
    Global Threat Reduction Initiative..........         120,619         129,085         115,635         116,649
                                                 ---------------------------------------------------------------
      Total, Defense Nuclear Nonproliferation...       1,760,737       1,795,952       1,831,871       1,868,508
----------------------------------------------------------------------------------------------------------------


                                          MAJOR OUT-YEAR CONSIDERATIONS
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                                    Fiscal Year     Fiscal Year     Fiscal Year     Fiscal Year
                                                       2008            2009            2010            2011
----------------------------------------------------------------------------------------------------------------
Defense Nuclear Nonproliferation................       1,760,737       1,795,952       1,831,871       1,868,508
----------------------------------------------------------------------------------------------------------------

    NNSA describes major out-year considerations at each GPRA-Unit 
level within this appropriation.

                                  NAVAL REACTORS FUNDING PROFILE BY SUBPROGRAM
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                    Fiscal Year     Fiscal Year     Fiscal Year     Fiscal Year
                                   2005 Current    2006 Original       2006        2006 Current     Fiscal Year
                                   Appropriation   Appropriation    Adjustments    Appropriation   2007 Request
----------------------------------------------------------------------------------------------------------------
Naval Reactors Development
 (NRD):
    Operations and Main-                 765,041         728,800          -7,288         721,512         761,176
     tenance....................
    Program Direction...........          29,264          30,300            -303          29,997          31,185
    Construction \1\............           7,132          30,400            -304          30,096           2,772
                                 -------------------------------------------------------------------------------
      Subtotal, Naval Reactors           801,437         789,500          -7,895         781,605         795,133
       Development..............
Use of Prior Year Balances......  ..............  ..............  ..............  ..............  ..............
                                 -------------------------------------------------------------------------------
      Total, Naval Reactors.....         801,437         789,500          -7,895         781,605         795,133
----------------------------------------------------------------------------------------------------------------
\1\ In the Conference report to Public Law 109-103, Congress directed that NR transfer $13.5 million to DOE-NE
  to support the Advanced Test Reactor (ATR) Life Extension Program (LEP). However, the report included the
  $13.5 million specified for ATR under the Construction Heading Vice Operations and Maintenance. The additional
  $13.5 million has been transferred to NE to support the LEP (NR total transfer to NE for ATR in fiscal year
  2006 was $70.8 million). Actual NR Construction requirements in fiscal year 2006 are $16.9 million.

Note.--The fiscal year 2006 column includes an across-the-board rescission of 1 percent in accordance with the
  Department of Defense Appropriations Act, 2006, Public Law 109-148.
Public Law Authorization.--Public Law 83-703, ``Atomic Energy Act of 1954''; Executive Order 12344 (42 U.S.C.
  7158), ``Naval Nuclear Propulsion Program''; Public Law 107-107, ``National Defense Authorization Act of
  2002'', Title 32, ``National Nuclear Security Administration''; Public Law 108-375, National Defense
  Authorization Act, Fiscal Year 2005; Public Law 108-447, The Consolidated Appropriations Act, 2005; Public Law
  109-163, National Defense Authorization Act, 2006.


                                            OUT-YEAR FUNDING SCHEDULE
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                                    Fiscal Year     Fiscal Year     Fiscal Year     Fiscal Year
                                                       2008            2009            2010            2011
----------------------------------------------------------------------------------------------------------------
Naval Reactors..................................         811,036         827,257         843,802         860,678
----------------------------------------------------------------------------------------------------------------


                                          MAJOR OUT-YEAR CONSIDERATIONS
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                                    Fiscal Year     Fiscal Year     Fiscal Year     Fiscal Year
                                                       2008            2009            2010            2011
----------------------------------------------------------------------------------------------------------------
Naval Reactors:
    Operations and Maintenance..................         765,186         777,407         780,702         804,078
    Program Direction...........................          32,700          33,900          35,100          35,900
    Construction................................          13,150          15,950          28,000          20,700
                                                 ---------------------------------------------------------------
      Total, Naval Reactors.....................         811,036         827,257         843,802         860,678
----------------------------------------------------------------------------------------------------------------

    NNSA describes major out-year considerations at each GPRA-Unit 
level within this appropriation.

                         PLUTONIUM DISPOSITION

    Senator Domenici. Thank you very much.
    Could we talk first about MOX?
    Ambassador Brooks. Yes, sir.
    Senator Domenici. First, I am surprised by the lack of 
detail in your statement regarding MOX. Your statement makes no 
mention of the fact that the Department is rebaselining the 
entire program and that cost estimates have increased to over 
$3 billion. It makes no mention of the steps the Department is 
taking to respond to the DOE IG report, which found that we 
lack sufficient contractor oversight, which has contributed to 
the increased costs.
    It also fails to mention that the Russians have made it 
clear that they will no longer pay for the operations of MOX if 
they are limited to using the fuel in light water reactors, in 
the same manner as the United States. Apparently the Russians 
have made a unilateral decision that their only interest is in 
fast reactors.
    Finally, I am becoming increasingly frustrated that the 
Russians continue to stall the final approval of the liability 
agreement. I believe the Russians are now the biggest liability 
facing the program and we should sever the link between the 
construction projects.
    So I have questions since your statement fails to mention 
any of these issues. Could you update the committee on them and 
what are you doing to improve the contract oversight and to 
rein in the contractor?
    Ambassador Brooks. Certainly, sir. Let me start with the 
Russian program first. Every Russian official at every level 
continues to assure us that the holdup in giving final approval 
to the liability agreement is entirely procedural. I share your 
frustration. I will note, however, that the Russian bureaucracy 
is legendary for taking a long time to do even simple things. 
So the information we have as recently as 2 weeks ago is an 
assurance from very senior Russians that there is no issue.
    Second, the Russians have made it clear that they will 
dispose of plutonium in light water reactors as we had 
envisioned if the entire cost is borne by the international 
community. The Russians have interpreted the 2000 agreement as 
suggesting that. I believe the United States does not interpret 
it that way. In any event, the State Department and the 
Russians and I believe that we are unlikely to raise all of the 
operating money from the international community. Therefore, to 
preserve our options to go in both directions we are working 
with the Russians on disposing of some fuel in an existing fast 
reactor called the BN-600.
    The BN-600 was envisioned in 2000 as one method for 
disposition and it is not a new idea. It is new that it is seen 
as the primary approach. Part of this effort would be to remove 
the blanket that makes it a breeder and to do that in a way 
that is verifiable to the United States.
    I share your view that it would be lunacy to use surplus 
plutonium in order to make more plutonium and I do not believe 
the Russians have any interest in that and we would certainly 
not agree to it.
    That would then allow a potential path forward. The BN-600 
cannot eliminate all the 34 tons of MOX in any reasonable time. 
It would simply prove the technology and allow a Russian-
planned reactor called the BN-800, not yet built, to be a path 
for disposition.
    We intend to work with the Russians to continue to ensure 
that they live up to their end of the agreement. At the same 
time, I no longer believe that holding up U.S. construction is 
in our interest. I believe that because of the need to meet our 
own obligations and the relationship between a credible 
disposition path and material consolidation, that construction 
should go forward in South Carolina.
    With regard to the Government Accountability Office and the 
cost increase, there are three reasons for the cost increase. 
One reason is that the initial figures we gave the Congress in 
2002 were in constant 2001 dollars and we are now looking at 
out-year dollars.
    The second reason is that the initial figures we gave the 
Congress were based on an erroneous, as it turns out, belief 
that we would have an optimal funding profile and that has not 
proved feasible. As a result, our strategy now is to fund at a 
constant rate. So it is probable that the 2008 request will be 
very similar to the 2007 request. That is more efficient from 
the standpoint of orderly budgeting. It is less efficient from 
the standpoint of construction, so there is an increase.
    Then, as you correctly noted, we have had some management 
problems. Some of them have been caused by the protracted 
delay. Some of them have been caused by reductions, 
understandable reductions, based on the Russian delay. We are 
renegotiating the contract with DCS, the contractor. We decided 
to renegotiate rather than to recompete because I believe it is 
important to get on with it. We will have a 100 percent 
incentive fee. We will have stronger accountability and we will 
have new contractor management, and I believe that these steps 
will in fact give us greater assurance. I do not want to 
overpromise, Mr. Chairman. The Department's record on large-
scale construction projects is not one of the things to be 
hugely proud of. But I believe that we are now on top of this 
and that we will be able to go forward in a responsible manner.
    Senator Domenici. Maybe this is not a question for you, but 
let us just talk about this anyway. Why are we doing these 
things we are doing for the Russians? We started this program, 
these programs--the first of the kind was Nunn-Lugar. It took 
3, 4, 5 years for it to get operating. It is about 20 years 
old. At that point we had lots of potential proliferation 
around and the Russians had no money and things were really 
going to hell in a handbag.
    It was hard at first for Americans to get the idea that we 
ought to give them help, but we did, and we got into this in a 
big way. We got three major programs that we call 
nonproliferation in the world and almost all of the money goes 
to something that is Russian, including the safeguard program. 
That is still going in, is it not, where we make sure things 
are guarded properly?
    Ambassador Brooks. Yes, sir. Yes, sir.
    Senator Domenici. That is American money to safeguard 
things over there.
    Ambassador Brooks. Yes, sir.
    Senator Domenici. The reason I say I do not know if it is 
for you to answer, but why do we still do these things for 
Russia? Why do they not do it themselves?
    Ambassador Brooks. Well, increasingly they are, sir, and I 
agree.
    Senator Domenici. Wait a minute. You agree with what?
    Ambassador Brooks. I agree with what I take to be your 
view, that it is increasing for them to bear the burden of 
doing their own efforts.
    We support improving security in Russian nuclear material 
for the same reason we did when you and others started it, 
because we believe that it is the way you protect the United 
States.
    Senator Domenici. Absolutely.
    Ambassador Brooks. The best way to keep nuclear material 
out of the hands of those who would do us harm is at the 
source.
    At the same time, we are coming to the end of that phase 
and President Bush and President Putin have explicitly stated 
at Bratislava they want to see us move from assistance to 
partnership. We are going to finish our work in improving 
Russian security in 2008. In fact, the Russians have already 
picked up a substantial--some of the sites that when I sat 
before you last year I expected we would be doing, the Russians 
are now going to be doing.
    We are shifting our effort to much more of a collaborative 
understanding of sharing best practices, of working on how we 
make sure that they sustain this effort. So I think that, 
although perhaps less rapidly than you might like, we are 
moving away from sending money there.
    Senator Domenici. Well, I appreciate your answer, and I 
have not been back to Russia since we started this a long time 
ago. It was all different people and a completely different 
government, so I do not know how they feel or what they think 
about this dialogue here today.
    But this whole business of MOX and plutonium disposition 
and the 34 tons that we made a deal on, made an agreement on, 
it is incredible to me that they are ready to pay for all of 
this. It has taken us so long to get something done that it 
would appear to me this is in their benefit as much as ours or 
more. And we are having so much trouble getting it done.
    That is why I am pleased to hear you say that we ought to--
you did not use my language of ``de-link'' because that is too 
strong a word, but you indicated we should proceed----
    Ambassador Brooks. Yes, sir.
    Senator Domenici [continuing]. If I heard you right.
    Ambassador Brooks. Yes, sir, you did hear it right.
    Senator Domenici. You can rest assured that in the 
appropriations process to the extent that we can have anything 
to do with that, that is what we are going to say. It is a long 
way, we've been waiting long enough. America has a rare chance 
to make a breakthrough with MOX that we waited 25 years to do 
and should have done, and we just as well get on with it.
    I think the State that has agreed it has some empathy, 
deserves some empathy, too. They cannot sit around forever and 
wait either. Maybe others do not understand that, but we do. It 
is a tough program.
    Ambassador Brooks. Thank you, sir.
    Senator Domenici. So we understand each other on MOX, and 
on plutonium disposition what I have described is what we are 
going to do, and you can decide as the legislation moves 
through what the administration's position is going to be.
    Ambassador Brooks. Yes, sir.

                       NATIONAL IGNITION FACILITY

    Senator Domenici. All right. The NIF budget. Does the 
fiscal year 2007 budget support the administration's goal of 
ignition by 2010?
    Ambassador Brooks. Yes, sir, it does.
    Senator Domenici. Do you agree with the JASON's report on 
the NIF ignition plan, that it was fair and an accurate 
estimate of the NIF program?
    Ambassador Brooks. It was, and what it said was that they 
agree that we will be able to conduct the ignition experiment 
in 2010. They are less confident whether the first experiment 
will work, and we share this view. This is something that has 
never been done before. But we were pleased to see the JASON's 
report support the basic notion that the program is on track to 
conduct an ignition experiment in 2010. We intend to keep it on 
track.
    Senator Domenici. Well, they say that--the JASON report, 
which you believe to be an accurate report, stated that 2010 
ignition was ``unrealistic.'' If this top-caliber review 
believes this goal is unrealistic, then why should we support a 
budget request that makes deep cuts in all these other programs 
to support this program that says it is unrealistic to expect 
the 2010 ignition?
    Ambassador Brooks. Respectfully sir, what they said was 
that it was realistic to assume that we could meet our goal to 
conduct the experiment in 2010, that it was not clear--if you 
say they used the word ``unrealistic,'' I accept that; I do not 
remember it when I read the report--that it was not clear 
whether the first experiment would succeed.
    I will say it is unrealistic to assume that the first time 
you try anything that has never been done before that you can 
guarantee it is going to work. I do not want to suggest that I 
am promising the committee that we will achieve ignition on the 
first try. I believe that we will conduct an experiment in 
2010. I believe we have a chance that it will work. But they 
call it research because we have not done it yet.
    So I do think that the decisions we have made are sound, 
although I think that we will try to start shifting some 
resources as we get through this peak period in the NIF, I 
think we will try to shift some resources back to using some of 
the other tools in inertial confinement fusion. For example, 
the Z refurbishment project will be complete in fiscal 2007, 
and I think that we did in fact reduce the amount of money that 
went into some of the other valuable areas like Z and Omega.
    Senator Domenici. Well, the people at NIF know where this 
Senator stands and I stand by watching and waiting and hoping 
that it works. It is one of the biggest gambles I have ever 
voted for and, looking back on it, while I take great pride in 
saying I really love big science, that is one I would like to 
go back and see whether my arms would fit around it again. I am 
not quite sure they would.
    But, having said that, I see another Senator here and I 
have lots of questions, but he does not have as many as me, nor 
as much time. Would you have questions at this point?

                   STATEMENT OF SENATOR WAYNE ALLARD

    Senator Allard. Well, I do, Mr. Chairman, and thank you. 
Thank you for holding this hearing today. I do have a full 
statement I would like to make a part of the record if I might.
    Senator Domenici. It will be made a part of the record.
    [The statement follows:]

               Prepared Statement of Senator Wayne Allard

    Thank you Mr. Chairman for the opportunity to attend this hearing 
today.
    Ambassador Brooks, it is a pleasure to see you again. I enjoyed our 
meeting a couple of weeks and appreciate your taking the time to stop 
by. I want you to know that I support you and the rest of Department. I 
look forward to working with you this year.
    Mr. Chairman, I believe the Bush Administration has received far 
too little credit for its efforts to reduce proliferation and reduce 
the threat of a nuclear conflict. Many folks still have not recognized 
that the Treaty on Strategic Offensive Reductions (Moscow Treaty) will 
reduce the size of the U.S. stockpile to a level that has not been seen 
in 50 years. Indeed, we are pulling weapons out of the stockpile so 
fast that the Department of Energy had to double its fiscal year 2007 
budget request for dismantlement of nuclear weapons.
    And, the administration hasn't stopped there. Under your 
leadership, Ambassador Brooks, we are moving forward with the reliable 
replacement warhead program, which could further reduce the number of 
weapons in our stockpile. I think those who oppose this program have 
not really looked at it closely.
    Their opposition to the RRW program does not make sense when the 
only alternative is the costly refurbishment process. Their opposition 
certainly does not make sense if, as promised, this program results in 
significantly greater reductions in our stockpile.
    I firmly believe that nuclear weapons remain a critical element of 
our national security and are a significant deterrent to potential 
adversaries. The threat has not gone away and is unlikely to do so in 
the distant future. I think we can be much smarter and much more 
efficient in how we approach the stockpile without losing the 
effectiveness that we require. Programs like the reliable replacement 
warhead are a right step in this direction.
    Thank you Mr. Chairman for the opportunity to speak today. I look 
forward to the Ambassador Brook's testimony.

                 CHANGES IN THE NUCLEAR WEAPONS COMPLEX

    Senator Allard. I have a news release here where Mr. 
D'Agostino prepared a statement, I guess yesterday to the 
House, laying out the future of the nuclear weapons complex. I 
am wondering if maybe you might go into--as you know, I am 
interested in that.
    Ambassador Brooks. Yes, sir.
    Senator Allard. And I wonder if you might go into a little 
more detail than what I am seeing here.
    Ambassador Brooks. Certainly, sir.
    Senator Domenici. I see he is here. Whoever wants to do it.
    Ambassador Brooks. Well, let me.
    Senator Allard. Okay. Well, we can have--whatever, just so 
I get an answer.
    Ambassador Brooks. Let me try.
    Senator Domenici. Sure.
    Ambassador Brooks. We have pretty much all the knowledge we 
have got in this room, so we can tell you where we are going.
    We have for the last couple of years been looking at the 
question of the complex of the future. We had an external look 
done by the Secretary of Energy Advisory Board, and we received 
the report late last year. That external look recommended 
moving very quickly to a single site for everything that 
involves uranium and plutonium at a location yet to be 
determined and it made a number of other recommendations, many 
of which we have adopted.
    Our approach to the future of the complex has a number of 
parts. First, we intend to continue to emphasize the 
development of the Reliable Replacement Warhead because if we 
can simplify the ability to maintain and improve warheads then 
any complex can be made more efficient. So we see that as good 
in itself, but also as an enabler for the improved complex.
    Second, we believe that one of our weaknesses today which 
we do not need to wait for the future is that the complex does 
not function in an integrated manner. Deputy Administrator 
D'Agostino has already put out guidance to make our incentive 
package for each of the sites based in part on the ability of 
the whole complex to meet its requirements.
    Third, we think that we should dramatically reduce the 
number of places where we do plutonium and uranium work, both 
for efficiency, but in order to reduce the cost of security. 
For uranium, we believe that the investments we are making and 
have planned at Y-12 make it the long-term uranium, highly 
enriched uranium center for the United States. We are building 
a facility called the Highly Enriched Uranium Materials 
Facility, which will be the storage facility, the Fort Knox of 
uranium, if you wish, and we will be working with the Congress 
in coming years to build a facility next to it where all the 
uranium processing work is done.
    Putting these two facilities next to each other will do two 
things. It will dramatically reduce the number of buildings 
that actually have material in it and it will dramatically 
shrink the area that we have to guard and protect.
    With regard to plutonium, we believe that we should 
consolidate by the early 2020's essentially all plutonium work, 
both in making pits and in doing research on plutonium, at a 
single facility. Until that facility exists, the capability at 
Los Alamos will provide the interim capability.
    We believe that the long-term future of the weapons labs--
and we do not know where that plutonium facility should go, but 
our general view is it should go at an existing site that uses 
category I and category II material. We do not think it is 
particularly worth the physical and political cost of moving 
plutonium to places where it has never been.
    As a result, we intend to over time eliminate having 
special nuclear material at the three weapons laboratories. 
Sandia, which has the Sandia Pulse Reactor, has the primary 
material. We will finish the last series of experiments on that 
reactor later this year and we will be in a position to make 
Sandia special nuclear material-free.
    We expect to begin moving material out of Livermore in 
2008. I would like to be a little fuzzy right now about where 
we are going to put it, but we are going to begin moving it and 
intend to have Livermore free of special nuclear material by 
2012. One precursor to that is obviously we want both Los 
Alamos and Livermore to continue to have intellectual 
involvement in plutonium metallurgy, which is so crucial to the 
stockpile, and we are going to have to work arrangements so 
that can be done from a single consolidated site.
    Ultimately, if Los Alamos does not become the site of the 
new plutonium center, we would much later move out of Los 
Alamos. We intend to create a new non-nuclear production 
facility by 2012. Our facility in Kansas City is one of our 
best-run and best-managed facilities, but it is still operated 
as a government-owned, contractor-operated facility. It still 
has 3 million square feet of floor space and the United States 
does not need that, and we intend to move toward a different 
kind of facility. We still believe that there are things that 
need to be made under direct contract to us, that not all non-
nuclear components can you simply go out and procure. But we 
want to move to more commercial procurement where that is 
appropriate.
    We intend to make it clear to the Congress and the American 
people and the world that this is not the start of some new 
arms race, by accelerating the rate at which we dismantle 
weapons. Between 2006 and 2007, we will have a 50 percent 
increase in dismantlement and we are still looking at what we 
can do in the out-years.
    Finally, we intend to look with regard primarily to the 
laboratory complex. We believe that we should retain the three 
existing laboratories. We believe that we should work more 
diligently than we have to look at the one of a kind facilities 
as user facilities that truly support the entire complex. We 
also think that over time the more complex high explosive 
experiments should be centralized in Nevada.
    Then finally we have recently, inspired, to be candid, by 
some outside looks, we have concluded that any kind of 
complex--we have gotten too risk-averse. We have emphasized 
fourth decimal point analyses of safety over the expense of 
getting things done. So we are in the process of a series of 
internal looks to make sure that, whatever the complex of the 
future is, it will be operated more efficiently.
    So that is the broad approach. There are a number of things 
in this budget that will contribute to that approach, but we 
will obviously be working with the Congress in the coming 
years, most particularly as we start the process of making site 
selection for this consolidated plutonium center.

                           NUCLEAR MATERIALS

    Senator Allard. You are thinking the disposal site would be 
at Yucca Mountain in Nevada?
    Ambassador Brooks. I am assuming that at the moment. The 
complex makes--we make two assumptions. One is that, with 
regard to plutonium disposition, that it will leave the weapons 
system, if you will, through Savannah River. In terms of high-
level disposal, that is not our formal responsibility, but we 
are obviously assuming that Yucca is where--for example, I 
believe that almost certainly we will continue to decide we 
have too much plutonium and I believe that we will turn more 
and more of it into MOX fuel and that will go in commercial 
reactors, and the output of that is just like the output of any 
other commercial reactor. And at the moment Yucca is where that 
is slated to go.
    Senator Allard. Yes.
    Ambassador Brooks. But there is relatively little that goes 
directly from the weapons program into Yucca.
    Senator Allard. You are passing it through the MOX 
facility----
    Ambassador Brooks. Yes, sir.
    Senator Allard [continuing]. Which right now we have at 
Savannah River.
    Ambassador Brooks. Yes, sir.
    Senator Allard. And that is also used to reprocess spent 
nuclear rods.
    Ambassador Brooks. Well, the MOX facility does not at the 
moment.
    Senator Allard. It does not?
    Ambassador Brooks. No, sir.
    Senator Allard. Okay, but it has the capability to do that?
    Ambassador Brooks. No, sir.
    Senator Allard. We would have to build another facility to 
do that?
    Ambassador Brooks. Yes. The Department--I want to 
distinguish between things for which I have responsibility.
    Senator Allard. Okay.
    Ambassador Brooks. The Department as part of the global 
nuclear energy initiative will be recommending, has 
recommended, that we move to the construction of some 
demonstration facilities for both reprocessing and for an 
advanced burner reactor. We do not have sites located for that 
and they are not in the NNSA area of responsibility.
    Senator Allard. And those sites would be the MOX Plus, is 
that correct?
    Ambassador Brooks. I think that it is probably a better way 
to think of them as really sort of separate issues. The time 
scales are different. The principle is different. We looked at 
whether or not we should somehow combine all of this in one 
galactic program and decided we should not.
    Senator Allard. So, moving on then, if we should get in--we 
are going to have more nuclear power plants. If we are going to 
decide to reprocess those rods, you are thinking of a separate 
facility altogether.
    Ambassador Brooks. Yes, sir.
    Senator Allard. And in that process you will use--if I say 
the ``Plus MOX,'' you know what I'm talking about.
    Ambassador Brooks. Yes, sir.
    Senator Allard. I do not know what your official technology 
is there. But it is an enhanced reprocessing.
    Ambassador Brooks. Yes, sir. The vision that we have now--
when I say ``we'' I do not mean NNSA; I mean the administration 
generally--for the future of nuclear power has a number of 
components, but it is based on the belief that we should not 
plan to put once-through fuel in a geologic repository because 
(a) you are going to use up all the space available, and (b) 
you are in fact putting a lot of energy content there; and 
finally, you are putting a huge amount of stuff with very long 
half-lives, which means that you have to analyze for periods 
that are probably beyond our capability.
    So the idea is that we would take the fuel that comes out 
of traditional light water reactors, we would reprocess that 
through a new approach not previously used, that will give us a 
trans-uranic fuel, if you will, a fuel that is plutonium plus 
other trans-uranic isotopes, and that that fuel will go into 
fast reactors.
    What this will do for you is--there is still sooner or 
later going to be stuff that is going to go in a geologic 
repository. But the volume will be reduced substantially and 
the peak dose period will be reduced substantially and you will 
get more of the energy content out of the fuel.
    If you do that, then what you have to do is guard against 
any question that you are harming our traditional 
nonproliferation approach, which is one of the reasons the 
United States has been skeptical of reprocessing in the past. 
Our approach is to reprocess in a way that is different from 
traditional reprocessing and that makes the fuel less 
interesting--I do not want to say uninteresting, but less 
interesting from a proliferation perspective--but then also to 
create a global regime of essentially fuel leasing. That is not 
exactly the term we use, but where only a limited number of 
States would do this reprocessing and those are States with 
traditional strong safeguards.
    So what we think all this will do is it will allow us to 
meet the future energy needs through nonpolluting nuclear 
power, it will allow us to do that in a way that does not 
require small countries to bear all the burden of disposal, 
because large countries would send them fuel and then take it 
back for reprocessing, and that would not put us in the 
situation where we are now, where, depending on your 
projections of future nuclear power, we need nine more Yucca 
Mountains this century, which I think most of us believe are 
not likely to be easy to find.
    Senator Allard. Thank you, Mr. Chairman. His response took 
longer than I anticipated.
    Ambassador Brooks. My apologies.
    Senator Allard. I figured you would be interested in it, so 
I did not try and cut his response short. Thank you.
    Senator Domenici. It is all right. I was interested.
    Senator Allard. I figured you would share some interest 
there.
    Senator Domenici. I already knew about it, but I was 
interested.
    Senator Allard. I hope I did not duplicate a previous 
question you asked.
    Senator Domenici. No, no.
    I think the new word that we are all trying to use is 
``recycling''.
    Senator Allard. Yes, recycle.
    Senator Domenici. Instead of ``reprocessing''.
    Senator Allard. That is correct.
    Ambassador Brooks. Yes, sir.
    Senator Allard. It is an enhanced recycling process.
    Senator Domenici. Yes, it is recycling. And the process we 
are going to use has not been used before in full-scale. That 
is why this process is pretty risky, because it is going to 
take a long time. Everything sounded so nice, but you see, that 
means you are going to have Yucca sitting over here waiting for 
this new recycled fuel. It has got to wait over there, circling 
the globe, for about 30 years, it looks to me, 20, 30 years.
    I do not quite know how we are going to get legislation 
passed to do that.
    Senator Allard. Are we not in the courts on that right now, 
Mr. Chairman?
    Senator Domenici. Yes. But we have got to pass something 
soon deciding what happens to the Yucca property.
    Senator Allard. I see.
    Senator Domenici. The real estate, the railroads, and the 
physical site. And in doing that, we have got to kind of 
decide, kind of say what we are going to use it for, so Harry 
Reid will know. If nothing else, we have got to tell him. Right 
now we are telling him, it looks like we are telling the world 
we are going to put spent fuel rods in there.
    You just heard him say we are not going to do that. He said 
it round-about. But everybody is saying we are not going to do 
that. So we have got a facility that we are moving in that 
direction and we are not going to use it for that. We have got 
to change the law and say what is it we are going to use it 
for.
    And we have got one hang-up. There is a law that says we 
have got to put military waste in that facility, and we do not 
quite understand how that fits. I do not know, the Ambassador 
may have negotiated that arrangement. Maybe he knows. That is a 
big one. But if that was not in the way, we could make Yucca 
sit over there for 30 years and wait for this new recycled 
material.
    You understand, this new recycled material is a fantastic 
achievement, human achievement, if it works. Just remember this 
number: you reduce the quantity a hundred-fold. So if you are 
going to put a spent fuel rod in and it was going to take 100 
cubic feet and you do this recycling, it is going to be one 
cubic foot of material. That is pretty interesting, is it not?
    Senator Allard. It is, and I have seen part of that 
process.
    Senator Domenici. The process, what you have got left over 
is very easy to handle because it does not have the half-life 
that he spoke of generally.
    Senator Allard. With the enhanced process. I think that is 
wonderful.
    Senator Domenici. Right, terrific. Well, that is the 
President's GNEP program. That is what we are going to try to 
do. We do have some money in here; we are going to start it.
    Senator Allard. Good.
    Senator Domenici. Two hundred forty million dollars, $250 
million. But that is such a little down payment. Japan is 
interested, India is interested. Maybe we can start it and turn 
into an international program. They might be willing to help us 
pay for it.
    I am willing to give it a shot if I could figure out how 
Yucca fits in the middle of this.
    Senator Allard. Well, I am with you, Mr. Chairman.

                     LOS ALAMOS NATIONAL LABORATORY

    Senator Domenici. We will work on it.
    Let me talk down to these things that are important to 
people in New Mexico: the pension program over there at LANL. I 
sent you a letter urging you to oppose the University of 
California's efforts to separate the LANL pension from the 
broader university retirement system. I got your letter, in 
which you indicated you did not have enough information. Has 
anything changed since you wrote me the letter that might 
affect the LANL retirees?
    Ambassador Brooks. I continue to be absolutely committed, 
as I told you before, to making sure they are treated fairly. I 
continue to have nothing from the university other than what I 
have heard in the press. I am told that a letter will arrive 
shortly explaining what the university proposes. I have not 
seen it yet as of this morning. So I know nothing more than I 
knew when I signed the letter.

                   GLOBAL NUCLEAR ENERGY PARTNERSHIP

    Senator Domenici. I have one question on GNEP. Mr. Paul, 
can you please tell me what the NNSA role is in the Global 
Nuclear Energy Partnership and what NNSA's budget provided for 
2007 to 2011? Can you do that or, Mr. Ambassador, you do it, 
whichever?
    Ambassador Brooks. Mr. Paul is up here.
    Mr. Paul. Thank you for the question, Mr. Chairman. We just 
recently as of last week reached an understanding with the 
Office of NE, the Nuclear Energy Office, about the areas where 
NNSA would play in Global Nuclear Energy Partnership. They are, 
in broad categories: the development of the advanced safeguards 
and security technologies that are a key element to GNEP. They 
are the establishment of the reliable fuel services bank, that 
independent central bank, the 17.4 metric tons designated HEU 
to be blended down to LEU to allow recipient States to access 
that energy, in return for not developing a fuel cycle 
indigenously. And thirdly, providing the primary support for 
establishing the ``G'' and the ``P'' part of ``GNEP,'' the 
global partnership portion, that is putting together the 
supplier group partnership that you eloquently alluded to, 
France, Japan, Russia, China, United Kingdom, ourselves, with 
strong involvement by the IAEA, and potentially others, as well 
as the recipient State partnership, those countries that would 
forswear developing an in-house capability.
    Those are the three primary areas where the NNSA and 
largely NA-20, the nonproliferation shop, would play a lead 
role. The most significant area where we anticipate a budget 
impact would be in developing the safeguards technologies. We 
do not have a specific request in the 2007 budget for that 
because it is an extension of the current safeguard technology 
advancement work that we are doing, for example, at the Rekasho 
site in Japan. But we anticipate in the near future having a 
budget request tailored to those three areas, Mr. Chairman.
    Senator Domenici. I had two other questions with reference 
to GNEP and that pertain to you, Mr. Paul. I am going to submit 
them. You can answer them for the record.
    Mr. Paul. Thank you, sir.
    Senator Domenici. You have got 10 days, whatever it takes. 
We have some further questions that we will submit in writing, 
Mr. Ambassador.
    Senator, do you have any further question, either now or 
that you want to submit?

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Allard. I may have a couple of questions to submit 
later on, Mr. Chairman.
    Senator Domenici. All right. The record will be open for a 
couple of days for you to submit them.
    Senator Allard. That would be good, thank you. I will 
review with my staff.
    Senator Domenici. All right. If there are no further 
questions, we stand recessed, and we thank you for your 
testimony.
    Oh, I have one last thing, Mr. Ambassador. I make it as an 
observation and I should have done it in my opening remarks and 
I apologize. You still have a lot of contracts for big 
construction projects and big pieces of equipment and big 
things. You are still a big stuff guy. NIF is a big project, 
getting it finished. I want to make sure that you know that, 
even though we did not go through project by project, that we 
are asking you clearly to make sure that somebody is watching 
and being careful that those programs are being managed 
properly.
    We do not want overmanagement. That is, we do not want 10 
people managing the same thing. But we do not want to get 
caught with big errors that should have been found out months 
and months earlier dropped on our head at the last minute on 
any of these programs and projects. We have been told that that 
is not going to happen any more, and I would just like your 
thoughts on the subject. I know we have got new management in 
one laboratory and you have got a lot of other things going, 
but could you address that issue, please?
    Ambassador Brooks. And we also have new management at the 
Nevada Test Site, that started its transition today or 
yesterday and will be taking over this summer.
    The Secretary has made it very clear that he expects us to 
do a much better job at making promises that we can keep and 
then keeping our promises, and he regards stating that we are 
going to build something for a fixed amount of money in a fixed 
time as a promise. So he has made it very clear that he expects 
us to improve the Department's historic performance.
    Our performance right now is pretty good on those things 
that we have done before and pretty bad on these large, one-of-
a-kind projects. But we are gradually improving. We are 
absolutely committed to doing what you just told me to do, sir.
    Senator Domenici. Well, let us hope that that is the case. 
We do not have a lot of latitude in these budgets any more. We 
cannot have another NIF with a $200 million, $300 million, $400 
million disparity. We cannot pay for them. That is all there is 
to it. So I hope we are not going to destroy some laboratory 
because somebody makes a mistake.
    Ambassador Brooks. I have no intention of doing that, sir.
    [The following questions were not asked at the hearing, but 
were submitted to the agency for response subsequent to the 
hearing:]

            Questions Submitted by Senator Pete V. Domenici

             NATIONAL IGNITION FACILITY--COSTS AND FUNDING

    Question. Do we understand the costs of each of the three 
facilities (NIF, Z, and Omega)? Specifically: What is the relative cost 
of full-energy experiments on each facility?
    Answer. The current cost for a full energy shot at the Omega laser 
system is $10,000 per shot which includes operational costs of people 
and material, (including optics replacements) to operate the laser and 
full cost of laser and experimental diagnostics. Following completion 
of the OMEGA Extended Performance (EP) Project, the cost per shot for 
both OMEGA and OMEGA EP full energy operations will be approximately 
$25,000.
    In steady state operations, the equivalent facility cost at NIF 
will be approximately $550,000 per full energy shot.
    For the refurbished Z (ZR), the equivalent cost is approximately 
$100,000 per full energy shot.
    Question. Do we understand the costs of each of the three 
facilities (NIF, Z, and Omega)? Specifically: What will be the annual 
costs for activities at each facility in 2011--specifically what are 
the budgets from RTBF, Campaigns, DSW, and other activities such as DOE 
Office of Science and WFO at NIF, Z and Omega?
    Answer. In 2011, the annual facility costs for the National 
Ignition Facility (NIF), OMEGA and ZR will be approximately $150 
million, $25 million and $30 million respectively.
    In the fiscal year 2007 budget submission, 2011 facility and 
operations costs for OMEGA and NIF all appear in the Inertial 
Confinement Fusion Ignition and High Yield Campaign. The operations 
costs for ZR are in the Readiness in Technical Base and Facilities 
budget line.
    Program costs for the design and execution of experiments at these 
facilities are borne by Campaigns, Directed Stockpile Work, etc. 
Campaigns (other than the Inertial Confinement Fusion Ignition and High 
Yield Campaign) do not pay for facility or operations costs.
    Question. Although the NNSA is investing significant resources in 
understanding and mitigating the issue of optics damage on NIF, we 
understand that the present estimated cost of replacement optics on NIF 
is $900,000 for each full energy shot. We also understand that the 
operational costs of NIF have increased from the original estimate of 
$60 million per year to the present estimate of $150 million in fiscal 
year 2010.
    How do you measure the benefits realized from the costs at each 
facility--both benefits to the overall high-energy density physics 
program and the NW program?
    Answer. The annual operational cost estimate for the National 
Ignition Facility (NIF) has remained essentially constant in as-spent 
dollars since the new project baseline was established in fiscal year 
2001. There have been (and will continue to be) refinements in the 
estimates based on experience in operating the facility and changing 
economic conditions. Optics refurbishment costs are modeled using 
observations from the NIF Early Light campaign and off-line laboratory 
data and are consistent with the annual operational cost estimate to 
meet the 2010 and 2011 goals and steady state operations.
    The cost estimate for replacement/refurbishment of NIF optics is 
$30 million per year during steady state operations. This covers the 
full spectrum of energies planned for the experimental campaigns and 
corresponds to a per-shot optics refurbishment cost ranging from 
approximately $40,000 to $400,000.
    The benefits of NIF, OMEGA, and Z are measured by the degree to 
which they meet Stockpile Stewardship Program requirements. Experiments 
at these three facilities support weapon assessment and certification 
and are required to meet level 1 and 2 milestones contained in National 
Nuclear Security Administration (NNSA) implementation plans. As 
discussed in the 2001 NNSA High Energy Density Physics Study Report, 
each facility has unique capabilities and is a component of the 
integrated NNSA high energy density physics program. As an example, 
experiments conducted in fiscal year 2003 through fiscal year 2005 at 
OMEGA were essential in validation of a new Advanced Simulation and 
Computing (ASC) weapon secondary performance simulation code. 
Validation of this code was a major ASC milestone completed in December 
2005. Z has executed important experiments in materials science, 
nuclear weapon effects, and will shortly execute materials science 
experiments with special nuclear materials. NIF will examine issues 
related to thermonuclear burn in nuclear weapons and other important 
uncertainties that can only be addressed via access to the extreme 
conditions of matter NIF provides. NIF experiments in the thermonuclear 
burn area will address ``the most important outstanding issue in weapon 
physics,'' as stated by the Defense Science Board in the summer of 
2004. NIF ignition will also provide a critical integrated test of 
NNSA's simulation code and design capability.
    Question. What steps have been taken at each facility to minimize 
experimental costs and optimize scientific return? Has consideration 
been given to conducting staging experiments on smaller facilities in 
order to obtain optimal return from the high-cost experiments on NIF?
    Answer. Sandia National Laboratories (SNL) has effectively 
implemented a ``six sigma'' process which has been used to increase 
efficiency and reduce costs at Z and other Sandia facilities. The 
National Ignition Facility (NIF) Project has engaged external 
industrial participants and reviewers to carefully examine processes 
for installation of laser components and other ``mass-production'' like 
tasks required to complete the NIF Project. This has been important to 
the NIF Project achieving its cost, scope and schedule targets and will 
also enable efficient operations once the project is complete. The 
University of Rochester utilizes a rigorous process to extract the 
maximum number of OMEGA experiments in a given timeframe. Experimental 
scheduling and facility configuration are managed so as to allow the 
maximum amount of experimental shots per week.
    OMEGA and Z/ZR use a peer review process to judge experiments 
proposed for each facility. OMEGA and Z/ZR each have ``facility 
directors'' who are charged by NNSA with providing an experimental 
program that meets NNSA requirements and best satisfies the needs of 
Stockpile Stewardship. Evaluation of the performance of Z/ZR and its 
contribution to stockpile stewardship are a component of the NNSA 
annual evaluation of SNL. Similar processes will be in place for NIF 
following Project completion.
    The Inertial Confinement Fusion Campaign has always employed a 
staging strategy so as to allow effective use of all facilities. For 
the case of NIF, all National Ignition Campaign participants are 
engaged in developing integrated plans for optimally utilizing National 
Nuclear Security Administration facilities (OMEGA, Z/ZR and Trident) in 
support of the ignition goal. Integrated Experimental Teams with 
representation from all sites communicate regularly to develop and 
review plans for performing specific experiments at OMEGA, Z/ZR and 
Trident. As an example, hundreds of shots per year will be executed at 
OMEGA in support of the NIF indirect drive program between now and 
fiscal year 2010. When NIF is in full operation, a portion of OMEGA 
time will continue to be devoted to staging of experiments for NIF.
    Question. Given the high cost of experiments on NIF, does the NNSA 
plan to have users other than the ICF program pay full cost recovery to 
utilize NIF?
    Answer. The cost of National Ignition Facility (NIF) operations for 
Defense Programs and other Department of Energy users will be paid for 
directly by the National Nuclear Security Administration (NNSA). This 
is the same model used for OMEGA, Z/ZR, and other major NNSA 
facilities. NNSA also intends to pay the operational costs for the 
small fraction of NIF devoted to university use, in the same manner 
that operational costs for university use of OMEGA are covered.
    Operational costs for users external to NNSA and the Department of 
Energy will be paid for by the users. A few such experiments are under 
discussion but none are currently planned or funded.

                   NATIONAL IGNITION FACILITY BUDGET

    Question. Does the fiscal year 2007 budget support the 
administration's goal of ignition by 2010?
    Answer. Yes, the National Ignition Facility Project and the 
National Ignition Campaign are presently on schedule and within budget. 
The President's budget supports ignition experiments commencing in 
2010.
    Question. Do you agree that the JASON report on the NIF ignition 
plan was a fair and accurate estimate of the NIF program?
    Answer. The National Nuclear Security Administration (NNSA) agrees 
that the JASON report provides a valuable analysis of the ignition 
campaign including many useful recommendations. NNSA has already begun 
to implement many of these suggestions.
    NNSA does not, however, agree with all of the details of the 
report. In particular, we do not believe that there was adequate 
recognition of the role the advanced target design has played. In the 
last few years, advanced design has increased the margin for the first 
experiments making ignition possible for laser energies of one mega 
joule.
    Question. The JASON report, which you believe to be an accurate 
report, stated that ignition by 2010 was ``unrealistic.'' If this top-
caliber scientific review believes this goal to be ``unrealistic'', 
then why should we support a budget request that makes deep cuts to 
non-NIF sciences, such as Z, and makes reductions in the Science and 
Engineering Accounts to support a goal that is ``unrealistic''?
    Answer. It is important to recognize the context in which the JASON 
used the term ``unrealistic.'' To quote their report, ``While it is not 
impossible that everything will work `just so' in the very first 
ignition attempts, it is unrealistic to expect that to happen. However, 
that first campaign will be followed by two others in 2011, and each 
experiment will move the program toward the goal of achieving fusion 
ignition.'' In using the word ``unrealistic'' JASON is describing their 
assessment of the likely outcome of the first few shots (i.e., ``very 
first ignition attempts'') as opposed to the overall probably of 
success of the ignition campaign.
    The JASON report gave the following overall assessment of the plan 
for the pursuit of ignition: ``The Program has identified a series of 
tests of the key physical processes and diagnostic instruments that 
provides a reasonable roadmap for progress toward ignition after the 
initial attempts.'' The JASON report also states: ``First attempts to 
achieve ignition on NIF are likely to take place in 2010--this is an 
important and valuable goal that has strongly focused the efforts of 
the NIF Program.''
    In summary, JASON believes that while the initial attempts at 
ignition will not succeed, execution of the first ignition experiment 
promptly in 2010 will benefit the program, and the overall plan to 
achieve ignition is reasonable.
    Question. Your budget increases NIF experimentation, Demonstration 
and Ignition budgets by over $50 million. At the same time funding for 
non-NIF related science is down by $115 million. Funding for Z is cut 
by $30 million. I was also disappointed to learn that you have moved 
the entire Z machine budget to the Readiness and Technical Base and 
Facilities Account and removing it entirely from the inertial 
Confinement and High Yield Science Campaign.
    I believe the NIF-at-all-cost-attitude of your organization is 
short-sighted and irresponsible. Please explain why you ignored 
congressional direction to establish a balanced program for the ICF 
campaign?
    Answer. Of the $115 million quoted, at least $60 million represents 
congressional add-on activities which, while technically valuable, 
could not continue to be supported in the fiscal year 2007 budget 
request due to higher priorities and budget constraints. The $30 
million figure quoted for reduction at Z does not include Readiness in 
Technical Base and Facilities funds intended for Z operations. 
Accounting for this, places the reduction at about $14 million.
    The construction of the National Ignition Facility (NIF) and the 
execution of ignition experiments is a major commitment for the 
National Nuclear Security Administration (NNSA) and the Department of 
Energy. As stated in the 2001 High Energy Density Physics Study Report, 
however, a viable program at OMEGA, Z/ZR, and NIF is also needed to 
support Stockpile Stewardship. NNSA has maintained an adequate program 
at these three major facilities since the inception of NIF; however, 
budget constraints make this impossible in fiscal year 2007. The fiscal 
year 2007 budget request for the Inertial Confinement Fusion and High 
Yield Campaign is $85 million less in total than the fiscal year 2007 
Inertial Confinement Fusion and High Yield Campaign Future Years 
Nuclear Security Program budget shown in the fiscal year 2005 NNSA 
budget request.
    NNSA has chosen to reduce experimental availability at Z/ZR in 
fiscal year 2007 in order to maintain the schedule of the National 
Ignition Campaign as defined in the plan submitted to Congress in June 
2005. This reflects the importance of NIF and the ignition program. As 
the Z machine will be down for refurbishment in fiscal year 2007, the 
reduction to Z operations will impact the facility for only the latter 
portion of the year. NNSA intends to operate Z at the level required to 
support Stockpile Stewardship Program goals in fiscal year 2008. 
Experiments not conducted at Z/ZR in fiscal year 2007 will be 
rescheduled to fiscal year 2008 or later years with minimal long-term 
impact to Stockpile Stewardship.
    Question. Why is it no longer in the best interest of the NNSA to 
support a balanced program that will complement scientific research at 
all three institutions?
    Answer. The National Nuclear Security Administration (NNSA) 
believes it is important to support a balanced program in high energy 
density physics consistent with program priorities and the budget. As 
stated in the 2001 High Energy Density Physics Study Report, the 
National Ignition Facility (NIF), OMEGA, and Z provide complementary 
capabilities and are essential to the success of the Inertial 
Confinement Fusion Program and stockpile stewardship.
    NNSA has chosen to reduce experimental availability at Z/ZR in 
fiscal year 2007 in order to maintain the schedule of the National 
Ignition Campaign as defined in the plan submitted to Congress in June 
2005. This reflects the importance of NIF and the ignition program. As 
the Z machine will be down for refurbishment in fiscal year 2007, the 
reduction to Z operations will impact the facility for only the latter 
portion of the year. NNSA intends to operate Z at the level required to 
support Stockpile Stewardship Program goals in fiscal year 2008. 
Experiments not conducted at Z/ZR in fiscal year 2007 will be 
rescheduled to fiscal year 2008 or later years with minimal long-term 
impact to Stockpile Stewardship.
    The fiscal year 2007 budget request supports a solid program of 
experiments at OMEGA in support of the National Ignition Campaign. Non-
ignition weapon physics experiments have been realigned due to budget 
constraints. Experimental scope changes are being planned so stockpile 
program risks are minimized.

                         COMPLEX OF THE FUTURE

    Question. On Monday, Tom D'Agostino briefed me on the Nuclear 
Complex of the Future. The Department has developed a plan to 
consolidate its operations in fewer locations, which should reduce 
security costs and reduce the overall number of facilities the NNSA 
must maintain by 2030.
    In addition it supports the Reliable Replacement Warhead program 
and begins to catch up on the dismantlement of weapons no longer in the 
stockpile.
    What I believe is missing from this complex of the future is the 
decrease in the overall number of weapons. If we don't decrease the 
number of weapons, the complex will still need to support the same 
eight systems plus the RRW.
    It seems to me that you have traded off facilities, science and 
people but kept the same number of weapons and workload unchanged.
    Why doesn't this plan contain a proposal to support fewer weapons 
systems? What actions does the DOD need to see before it will release 
one of the aging weapons systems?
    Answer. Our Complex 2030 planning scenario is based on a smaller 
stockpile to meet the President's vision for the lowest number of 
warheads consistent with the Nation's security. However, pending a 
change in requirements from the Department of Defense (DOD), the 
National Nuclear Security Administration (NNSA) must support the 
current Nuclear Weapon Stockpile Memorandum signed by the President and 
the Joint DOD-NNSA Requirements Planning Documents as approved by the 
Nuclear Weapons Council.
    Ongoing discussions with the DOD indicate that progress on Reliable 
Replacement Warhead concepts and on actions to achieve a responsive 
nuclear weapons complex infrastructure as described in the 2001 Nuclear 
Posture Review would be major factors in changing existing DOD plans. 
In addition, NNSA must demonstrate that we can follow through on 
existing commitments as we transform the stockpile and its supporting 
infrastructure.
    Question. Has the DOE discussed with the DOD the benefits of 
reducing the diversity of weapon systems?
    Answer. The National Nuclear Security Administration (NNSA) has 
shared with the Department of Defense (DOD) the costs and benefits 
associated with maintaining specific warheads. As expected, the costs 
of maintaining a number of warhead types significantly exceeds the unit 
costs of maintaining specific quantities of any particular type of 
warhead. The DOD appreciates the assurance gained by avoiding single-
mode failures enabled by having diversity in the stockpile. Cost-
benefit analyses weighing the more quantitative costs of maintaining a 
number of warhead types compared to the harder-to-quantify benefits of 
warhead diversity are continuously made and figure heavily into 
discussions regarding the future stockpile.
    Question. Why don't you eliminate or delay the W-80 Life Extension 
Program?
    Answer. The Department of Defense (DOD) and the National Nuclear 
Security Administration (NNSA) are working in partnership to define the 
stockpile of the future. The 2030 stockpile that we envision would be 
smaller with a majority of warheads based on Reliable Replacement 
Warhead (RRW) concepts as well as a limited number legacy warheads that 
have been refurbished in life extension programs (LEPs). Thus we must 
support some number of legacy warheads, and their associated LEPs, even 
as we seek to evolve to a stockpile consisting primarily of RRW 
designs. In recent discussions, the DOD is working now to define plans 
for the future of nuclear cruise missiles. Pending a final decision 
from the DOD, the NNSA remains committed to supporting the plans 
contained in the current Nuclear Weapon Stockpile Memorandum signed by 
the President and the Joint DOD-NNSA Requirements Planning Documents as 
approved by the Nuclear Weapons Council.

                DEFENSE NUCLEAR FACILITIES SAFETY BOARD

    Question. The Defense Nuclear Facilities Safety Board has raised 
``safety basis'' issues over the past several years that have 
significantly impacted the throughput at Pantex. Deputy Secretary Sell 
has commented on the need for NNSA to retain risk-related decision-
making authority while assessing DNFSB recommendations.
    What actions has the NNSA taken to assure safety in its operations 
at Pantex while addressing the significant backlog in surveillance and 
dismantlement?
    Answer. For each nuclear weapon system, the National Nuclear 
Security Administration (NNSA) conducts an extensive hazard analysis 
and corresponding hazard mitigation process to assure safety of 
operations. This process is known as Seamless Safety for the 21st 
Century, SS-21. However, since the end of the Cold War, this process 
has become more and more risk averse. The zero-risk approach results in 
over-conservatism, which similarly impacts the ability to accomplish 
work at the Pantex Plant. Therefore, the NNSA is transitioning to a 
risk-informed decision approach that allows us to manage risk more 
effectively in ensuring safe and secure operations at Pantex and other 
facilities. The NNSA has several ongoing initiatives related to nuclear 
explosive operations that will incorporate this revised approach. These 
initiatives include the elimination of specific threats such as thermal 
and electro-static discharge via facility upgrades and modifications, 
the allowance of a more qualitative hazard analysis approach as opposed 
to the existing practice of over-conservative quantitative probability 
estimates, and the revision and clarification of existing rules and 
standards to reduce the possibility of misinterpretation and to confirm 
their added benefit to safety. These initiatives are ongoing and 
increased ability to perform work and reduction in backlogs should be 
realized starting in late fiscal year 2006.
    Question. How do the budget priorities reflect these decisions and 
what are examples of specific steps to increase throughput?
    Answer. The budget priorities reflect risk-related decision making 
in the fiscal year 2007 budgets and beyond. The dismantlement budget 
has been increasing since 2005 and the National Nuclear Security 
Administration (NNSA) is ensuring that all Stockpile Systems activities 
supporting the accomplishment of surveillance work at the Pantex Plant 
are funded. The corresponding Seamless Safety for the 21st Century (SS-
21) hazard analysis activities have top funding priority so that weapon 
operations are upgraded to new safety criteria.
    In early February 2006, the NNSA developed an extensive plan that 
contains several activities to increase throughput. The activities 
include steps to authorize specific multi-unit operations in Pantex 
facilities, additional facility configurations to prevent postulated 
accident scenarios, a review of existing Nuclear Explosive Safety 
practices and standards, additional hazard analysis process 
efficiencies, and a streamlining of the existing stockpile evaluation 
program.
    Regarding Defense Nuclear Facilities Safety Board recommendations, 
the NNSA expects that in early fiscal year 2007, the only open 
recommendation related to nuclear explosive operations at the Pantex 
Plant, Recommendation 98-2, ``Accelerating Safety Management 
Improvements at the Pantex Plant'', will be closed.
    Question. What actions has the NNSA taken to assure the ``safety 
basis'' process is fixed?
    Answer. Over the past 19 months, the National Nuclear Security 
Administration (NNSA) has initiated several activities to install risk-
informed decision-making throughout the nuclear weapons complex. These 
activities include an effort to identify and remove inefficiencies in 
our hazard analysis process, streamlining of the process itself, and 
better documentation and communication with the national laboratories 
and the Pantex Plant. Specifically, in early fiscal year 2005, the NNSA 
revised the process steps and interfaces between the national 
laboratories and the Pantex Plant for addressing identified hazard 
scenarios for nuclear weapons operations. This process revision is 
currently being implemented for the W76 and W80 Seamless Safety for the 
21st Century programs. The NNSA is also in the process of updating the 
standard approach for conducting hazard analyses.
    Question. How will the increase in W76 dismantlement and subsequent 
Life Extension Program rebuild affect throughput?
    Answer. For the W76, there is sufficient throughput planned at 
Pantex for both the dismantlement and Life Extension Program within the 
existing safety authorization basis. We are also examining increased 
throughput at Pantex by seeking improved means to mange risk in 
ensuring safe and secure operations at that facility.

                                  GNEP

    Question. Mr. Paul, can you please tell me what the NNSA's role is 
in the Global Nuclear Energy Partnership and what the NNSA budget 
provide for fiscal year 2007-fiscal year 2011?
    Answer. NNSA plays a key role in GNEP--to reduce the threat of 
nuclear proliferation through the enhancement of international regimes 
that advance nonproliferation goals and the deployment of safeguard 
technologies and systems. These missions are currently addressed by 
ongoing programs within our Office of Defense Nuclear Nonproliferation 
(NA-20). As such, initial support to GNEP is part of the base funding 
for this Office and additional funds for fiscal year 2007 were not 
requested. NNSA expects that future budget requests will be necessary 
but must be tied to the level of engagement by the international 
community in advancing GNEP concepts and initiatives such as the 
reliable fuel services, developing and deploying advanced safeguards, 
and collaboration on small-scale reactor development.

                   GLOBAL NUCLEAR ENERGY PARTNERSHIP

    Question. How does the NNSA nuclear weapons program contribute to 
our non-proliferation objectives?
    Answer. Having a safe, secure and reliable nuclear weapons 
stockpile is one element of our national security posture that 
contributes to the defense policy goals of dissuasion and assurance. As 
stated in the 2006 Quadrennial Defense Review, maintaining a robust 
nuclear deterrent helps the United States to ``shape the choices of 
countries at strategic crossroads.'' Potential adversaries are 
dissuaded from developing their own weapons of mass destruction 
programs because the United States nuclear forces are so powerful that 
trying to compete militarily is beyond the means of all but a few, 
already nuclear-weapons-capable countries. Our allies, such as Japan 
and the Republic of Korea, are assured of our willingness to come to 
their defense with our nuclear weapons if necessary, so they do not 
feel the need to develop their own nuclear weapons programs. 
Additionally, knowledge gained from research and development in our 
nuclear weapons program assists our intelligence community in 
developing key intelligence indicators of proliferant activity, 
enabling early intervention by all elements of national power--
diplomatic, economic, and military--to be engaged in efficient and 
effective nonproliferation activities.
    The nuclear weapons program also sets a high standard for material 
accountability, nuclear weapons safety and security, and identification 
and transfer of highly enriched uranium, that is excess to national 
security needs, for downblending. Finally, the weapon program 
organizations provide expert analysis and support to agencies that have 
a lead responsibility for special nuclear material detection, 
improvised nuclear device detection and defeat, and nuclear accident 
incident response.

                       NNSA MANAGEMENT OVERSIGHT

    Question. Over the last 5 years, we have had several events within 
the Complex that have caused this committee great concern. They 
include: (1) Multi-billion dollar cost growth and delay of the NIF at 
LLNL; (2) Pantex production plant that has come to an effective 
standstill, without producing one refurbished device in almost a year; 
(3) The LANL shut down; (4) Mixed Oxide Facility--the estimated cost 
has risen from roughly $1 billion to an estimated $3.5 billion; (5) A 
major error in the construction of a multi $100 million uranium storage 
facility at Y-12 that halts construction and jeopardizes the secure 
storage of enriched uranium.
    I am interested to know why you believe the NNSA has had such 
difficulty in delivering these projects on time and on budget. What 
actions is NNSA taking to prevent such occurrences in the future?
    Answer. There have been problems with specific projects and our 
analysis has led to both project specific remedies and overall process 
improvements within the National Nuclear Security Administration 
(NNSA). Although the specifics of the cited examples vary widely, they 
share three attributes--each developed over a long period of time; each 
involved the actions and decisions of many levels of management; and 
each involved significant stakeholder issues.
    My senior management and I intend to prevent such occurrences in 
on-going and future projects. Each of us, in dealing with subordinates 
and with each other, will avoid or substantially reduce the potential 
risk of problems of this type arising in the future by holding up all 
actions and decisions to five screening criteria:
  --Does the change improve line accountability?
  --Does the change cause people to be more or less risk adverse?
  --Does the change reduce micromanagement?
  --Does the change comply with Headquarters/site office Feds set what 
        must be done and contractors determine how it is done?
  --Is the change cost effective?
    The first criterion--line accountability--is the unifying thread 
for all five. This is a continuous, real time accountability, not an 
``after-the-fact'' surrogate accountability accompanied with 
punishment. It is imperative that all members of NNSA's dual lines of 
accountability--programmatic accountability for setting goals and 
operational accountability for conducting work--acknowledge openly all 
factors affecting their actions, the unfolding of the consequences of 
their actions over time; and the probable end result of those actions. 
That acknowledgement, shared up and down the chain of authority, will 
create a real-time accountability whereby each person will hold 
themselves and their subordinates accountable for the performance of 
their programs and their sites.
    This is not a simple task. NNSA's dual lines of accountability 
operate within a gauntlet of external players who could impose 
decisions sharply focused on narrow segments of large interacting 
systems. There is an ever-present temptation for line management to 
adopt these narrow solutions solely to avoid risks inherent in doing 
otherwise. More subtly, well-intended line management can usurp the 
authority of subordinates through overly prescriptive goals and 
policies. This real-time accountability will hold each individual 
accountable for inappropriate avoidance of risks, for micromanagement, 
and for making proactive, real-time course corrections when we realize 
operations are heading other than toward the intended goal. These five 
questions seem simple on their face, however if used aggressively, 
daily, and purposefully from my level out to the factory floor they 
will shape the performance of NNSA and support cost-effective success 
across the complex.

                   SPECIAL NUCLEAR MATERIAL SECURITY

    Question. Doesn't it make sense to consolidate the SNM to the 
minimum number of locations? Why don't you immediately take those 
actions to relocate the SNM to LANL, Pantex or Nevada?
    Answer. We strongly agree with the principle of consolidating 
special nuclear material (SNM) to a fewer number of locations. We 
started consolidating Category I/II SNM to fewer sites, and to fewer 
locations within sites. We will improve the long-term security posture 
at our national laboratories by phasing out operations involving Cat I/
II quantities of SNM. This includes eliminating the need for a Cat I/II 
SNM security posture at Sandia National Laboratories in New Mexico by 
2008. Our plan is to remove all Cat I/II SNM from Lawrence Livermore 
National Laboratory by the end of 2014. By 2022, all research and 
development (R&D)/production activities involving Cat I/II SNM would 
cease in facilities operated by Los Alamos National Laboratory. As that 
is accomplished, these labs could transition to a common defense 
industry site security posture with reduced security costs. The 
consolidated plutonium center, once operational, would host all R&D, 
surveillance, and manufacturing operations involving Cat I/II 
quantities of plutonium. The Uranium Processing Facility at the Y-12 
National Security Complex would consolidate existing highly enriched 
uranium contained in legacy weapons, dismantle legacy warhead 
secondaries, support associated R&D, and provide a long-term capacity 
for new secondary production. As a result, Y-12 would reduce its 
production and SNM storage footprint by about 90 percent, leading to 
significantly reduced costs for physical security at that site.
    Question. What are your plans to control security costs without 
consolidating SNM to a minimum number of locations? What number is 
that, and why is that the minimum number? Does not the consolidation of 
SNM also save substantially in the STA costs of the department as well? 
If not, why not?
    Answer. We strongly agree with the principle of consolidating 
special nuclear material (SNM) to a fewer number of locations to 
control security costs. However, we do not propose to consolidate at a 
single location. Instead, we propose to consolidate to centers of 
excellence with Category I/II quantities of SNM for: (1) uranium; (2) 
plutonium; (3) weapon assembly/disassembly involving high explosives; 
and, (4) large-scale testing. We will improve the security posture and 
reduce costs at our national laboratories by phasing out operations 
involving Category I/II quantities of SNM. Thus, there will be four or 
fewer sites in the long-term with SNM requiring costly security.
    In the long-term, consolidation of SNM will save secure 
transportation asset (STA) costs for the Department as well. However, 
moving material to de-inventory a site does increase the number of 
shipments and resulting costs in the near term.

                           ``Z'' 5-YEAR PLAN

    Question. The NNSA's fiscal year 2007 congressional budget request 
for the Inertial Confinement Fusion Ignition and High Yield Campaign 
eliminates technical alternatives and near-term stockpile support 
within the National HEDP program by redistributing resources from 
fiscal year 2007 to fiscal year 2010 in order to focus on performing 
the first ignition experimental campaign on NIF in fiscal year 2010.
    What is the administration's plan to restore balance within the 
national program and utilize the complementary strengths and 
capabilities of Z, Omega and NIF to ensure the short-term as well as 
the long-term health our nuclear deterrence?
    Answer. The National Nuclear Security Administration (NNSA) budget 
request for fiscal year 2007 is highly constrained. NNSA has chosen to 
reduce experimental availability at Z/ZR in fiscal year 2007 in order 
to maintain the schedule of the National Ignition Campaign as defined 
in the plan submitted to Congress in June 2005. This reflects the 
importance of the National Ignition Facility (NIF) and the ignition 
program. As the Z machine will be down for refurbishment in fiscal year 
2007, the reduction to Z operations will impact the facility for only 
the latter portion of the year. NNSA intends to operate Z at the level 
required to support Stockpile Stewardship Program goals in fiscal year 
2008. Experiments not conducted at Z/ZR in fiscal year 2007 will be 
rescheduled to fiscal year 2008 or later years with minimal long-term 
impact to stockpile stewardship.
    The fiscal year 2007 budget request supports the level of 
experiments at the OMEGA laser facility required to support the 
National Ignition Campaign. Support for non-ignition weapon physics 
experiments has been realigned due to budget constraints. Experimental 
scope changes are being planned so stockpile program risks are 
minimized.

               BALANCED NATIONAL PROGRAM--NIF AT ALL COST

    Question. Clearly the NNSA has decided against a balanced program 
for High Energy Density Physics program. NIF funding is up and every 
competing technology is down or removed from the program entirely.
    Given the series of successes in high energy density physics with 
pulsed power technologies and the planned completion in fiscal year 
2007 of NNSA's 5-year investment of ($165 million) in the Z 
refurbishment project, doesn't it make sense to increase, not decrease 
the funding for this facility in order to optimally utilize its 
anticipated world record X-ray energy output and other enhanced 
capabilities?
    Answer. The fiscal year 2007 National Nuclear Security 
Administration (NNSA) budget is highly constrained. NNSA has chosen to 
reduce experimental availability at Z/ZR in fiscal year 2007 in order 
to maintain the schedule of the National Ignition Campaign as defined 
in the plan submitted to Congress in June 2005. This reflects the 
importance of the National Ignition Facility (NIF) and the ignition 
program. As the Z machine will be down for refurbishment in fiscal year 
2007, the reduction to Z operations will impact the facility for only 
the latter portion of the year.
    As stated in the 2001 High Energy Density Physics Study Report, 
NIF, OMEGA, and Z are essential to the success of Stockpile 
Stewardship. NNSA agrees that the sensible path is to use the 
refurbished Z and its enhanced capabilities in support of Stockpile 
Stewardship. Accordingly, NNSA intends to operate Z at the level 
required to support Stockpile Stewardship program goals in fiscal year 
2008. Experiments not conducted at Z/ZR in fiscal year 2007 will be 
rescheduled to fiscal year 2008 or later years with minimal long-term 
impact to Stockpile Stewardship.
    NNSA has carefully reexamined the needs of the Stockpile 
Stewardship Program and concluded that near-term program needs for 
fiscal year 2008 and beyond can be met with approximately a single 
shift of operations at Z/ZR. This is the historical level at which NNSA 
has funded the operations of Z. While an additional shift of operation 
would allow greater exploitation of the significant scientific 
opportunities at Z/ZR, tough choices have been made within the current 
constrained budget environment.
    Question. From a risk management perspective, is it a sound 
strategy to put our resources disproportionately on the NIF technology 
and the associated approach to ignition, eliminating balance in the 
National ICF Program?
    Answer. Since the inception of the Inertial Confinement Fusion 
(ICF) program, the National Nuclear Security Administration (NNSA) has 
supported numerous technologies and alternative approaches to 
demonstrating inertial fusion ignition. Review committee reports from 
the National Academy of Sciences and other groups have urged the NNSA 
to focus on the demonstration of ignition using high power solid state 
lasers (the National Ignition Facility (NIF) and OMEGA), as this was 
the lowest risk and most expeditious path to success. NNSA agrees with 
this conclusion and has focused on the solid-state laser path to 
ignition since the mid 1990's.
    It is a sound strategy to maintain an appropriate level of 
technical diversity and risk mitigation within the program. The NIF 
ignition program itself includes two major approaches to ignition, 
namely indirect drive and direct drive. Within each of these programs a 
wide variety of target and laser configurations is available for 
ignition attempts; this provides further risk mitigation.
    Pulsed power offers an important alternate approach for the longer 
term, but no current analyses indicate that it could produce ignition 
conditions similar to NIF with the scale of the ZR machine. A goal of 
the NNSA ICF Campaign is to use Z/ZR to define the physics requirements 
for pulsed power ignition by 2015. Assuming pulsed power fusion turns 
out to be feasible, a robust ignition capability based on Z-pinch 
technology would thus require a new machine and would not be available 
for many years. The funding issues associated with Z operations in 
fiscal year 2007 are primarily a 1-year problem and should not disrupt 
NNSA's overall fusion strategy.
    In summary, NNSA's strategy is to demonstrate ignition in the near 
term with high power lasers and assess the feasibility of Z-pinches as 
a possible future fusion capability.
    Question. If the Z-pinch high-yield approach is the approach to 
risk mitigation--in the event that NIF fails--are we adequately funding 
the Z-pinch approach, and, more broadly are we performing the necessary 
assessment of the required next generation pulsed-power technology?
    Answer. The Z-pinch program is not the only approach to risk 
mitigation within the Inertial Confinement Fusion Program. The National 
Ignition Facility ignition campaign includes two major alternatives, 
indirect and direct drive. In addition, within each of these 
alternatives there is a wide range of target and laser configurations 
available. As discussed by JASON and other review committees in the 
past, this provides substantial risk mitigation.
    The assessment of pulsed power fusion is also an important 
component of the National Nuclear Security Administration's (NNSA) 
long-term plans for fusion. There is a specific NNSA program goal to 
define the physics requirements for pulsed power ignition by 2015. The 
reduction of shots available at Z/ZR in the latter portion of fiscal 
year 2007 is a short-term issue that will not unduly impact this 
overall strategy.
    Question. What strengths does each facility (OMEGA, Z and NIF) 
bring to the national high energy density physics program?
    Answer. As stated in the 2001 High Energy Density Physics Study 
Report, lasers and the Z pulsed power machine are complementary; each 
provides unique capabilities for the Stockpile Stewardship Program. 
Lasers (because of their high energy density) provide access to extreme 
conditions of temperature and pressure unattainable at Z/ZR. Z, on the 
other hand, provides a cost effective access to large-scale experiments 
because of its high total X-ray energy output.
    The OMEGA laser supports both indirect (X-ray) and direct drive 
experiments. OMEGA also possesses a very large suite of diagnostics. 
OMEGA's high shot rate and precision diagnostics provide an important 
capability for experiments where large amounts of data are required. 
OMEGA is an essential component of the National Ignition Campaign and 
will also serve as the major near term laser experimental capability 
for non-ignition weapon physics experiments. The OMEGA Extended 
Performance laser will provide a valuable capability for diagnostic and 
other measurements at OMEGA.
    The National Ignition Facility (NIF), with its much larger total 
energy and power, will be able to reach the extreme temperatures and 
densities required in many weapons experiments. NIF can produce energy 
densities approximately 20 times greater than those achievable at OMEGA 
or Z/ZR. It is also the only venue for producing thermonuclear 
ignition--a key Stockpile Stewardship Program requirement.
    Z/ZR is ideally suited for experiments where large X-ray energies, 
lower energy densities, and longer experimental durations are required. 
Z is also well suited to conduct certain materials property 
experiments; a particularly important example is material properties 
experiments with special nuclear materials, which are planned for the 
near future. The Z-Beamlet laser provides a powerful capability for 
diagnosis of Z/ZR experiments.
    Question. Why is funding for direct drive ICF included in the 
national program to perform the first X-ray driven ignition campaign in 
fiscal year 2010?
    Answer. Given the current status of Inertial Confinement Fusion 
technology, direct drive is the most important risk mitigation or 
backup to the indirect drive experiments in 2010. A specific effort is 
underway for developing direct drive and some preliminary experiments 
will be possible in the 2011-2012 timeframe. The National Ignition 
Campaign plan includes a decision point for these experiments in fiscal 
year 2009.
    The University of Rochester is a major partner in the National 
Ignition Campaign and is responsible for a major piece of the National 
Ignition Facility (NIF) indirect drive ignition program. The University 
of Rochester also continues to make excellent progress in inertial 
fusion research. As an example, University of Rochester scientists 
recently executed the first ever OMEGA cryogenic direct drive implosion 
experiment in which unwanted surface roughness in the solid deuterium-
tritium region was removed via use of the heat-generated from the beta 
decay of tritium. This so-called ``beta layering'' technique will also 
be used at NIF. The experience gained from cryogenic experiments at the 
University of Rochester will be important to timely implementation of 
cryogenics at NIF.
    Question. What fraction of the budget is being identified to 
address new technologies and scientific breakthroughs?
    Answer. Excluding construction, the National Nuclear Security 
Administration estimates that approximately $20 million per year 
(averaged over the current 5-year Future Years Nuclear Security Program 
period) within the Inertial Confinement Fusion and High Yield Campaign 
fiscal year 2007 budget submission is devoted to new technologies in 
addition to the mainstream National Ignition Facility indirect and 
direct drive ignition programs. This includes $11 million per year 
devoted to pulsed power fusion. The remainder of the $20 million is 
devoted to short pulse laser-matter research (including petawatt laser 
work) at the national laboratories and the University of Rochester 
Laboratory for Laser Energetics as well as university activities. 
Pulsed power fusion activities are aimed at evaluating the physics 
feasibility and technical requirements of this concept by 2015.
    The achievement of ignition is itself a major scientific 
breakthrough. Many significant breakthroughs in laser technology, 
plasma physics, and other fields will make this achievement possible.

          SECRETARY OF ENERGY ADVISORY BOARD RELATED QUESTIONS

    Question. The DOE received the draft of the SEAB nuclear weapons 
complex infrastructure task force (NWCITF) report in mid-July 2005 and 
the official SEAB report on October 4, 2005.
    What is the DOE's specific position on the 5 recommendations made 
in the report?
    Answer. Our positions on the 5 recommendations made in the report 
are set out in the following table.

------------------------------------------------------------------------
                                              National Nuclear Security
      SEAB Task Force Recommendations        Administration Complex 2030
                                                   Recommendations
------------------------------------------------------------------------
Design Reliable Replacement Warhead (RRW)   Same.
 immediately.
Accelerate dismantlements.................  Same.
Establish Office of Transformation........  Same.
Establish Consolidated Nuclear Production   Establish distributed
 Center (CNPC) by 2015.                      production centers of
                                             excellence with a
                                             consolidated plutonium
                                             center at an existing Cat I/
                                             II SNM site by early
                                             2020's.
Consolidate all Category I/II special       Consolidate Cat I/II SNM to
 nuclear material (Cat I/II SNM) to CNPC     fewer sites and fewer
 long-term.                                  locations with sites;
                                             remove Cat I/II SNM from
                                             laboratories.
------------------------------------------------------------------------

    Question. If the SNM manufacturing and weapons storage were 
underground in tunnels mines, would that not significantly reduce the 
physical security costs for the complex?
    Answer. Special nuclear materials (SNM) can be adequately protected 
in either above-ground or underground facilities. SNM manufacturing and 
weapons storage underground in tunnels or mines does offer 
opportunities to reduce the physical security costs for the complex. 
However, the cost of construction, operations, and maintenance for 
underground facilities can be greater than structures on the surface. 
In the end, we must balance total costs, operational efficiencies, and 
long-term mission compatibility. We intend to begin a National 
Environmental Policy Act (NEPA) process to evaluate the impact of 
reasonable alternatives. In parallel with this NEPA process, we plan to 
complete independent business case assessments of the alternatives.

                    NATIONAL IGNITION FACILITY PLANS

    Question. In November 2005, DOE issued a Record of Decision in the 
Site-wide Environmental Impact Statement on Livermore Lab Operations 
that gave the ``green light'' to construction of a large neutron 
spectrometer for NIF. The neutron spectrometer does not appear to be 
reflected in the budget.
    What will its ultimate construction costs be? What is its 
construction schedule and what is its purpose?
    Answer. The Department of Energy (DOE) ``Site-wide Environmental 
Impact Statement for Continued Operations of Lawrence Livermore 
National Laboratory and Supplemental Stockpile Stewardship and 
Management Programmatic Environmental Impact Statement'' evaluated the 
environmental impacts of the proposed construction of a large neutron 
spectrometer for the National Ignition Facility. The Environmental 
Impact Statement and its Record of Decision do not represent a DOE 
programmatic decision to proceed with this spectrometer. Alternate 
approaches have been identified for neutron spectroscopy that do not 
require the construction of the large neutron spectrometer.
    Question. In the same November 2005 Record of Decision, DOE 
determined it would conduct experiments with plutonium, highly enriched 
uranium, thorium 232, lithium hydride and other fissionable materials 
and in NIF. I see no mention of this change in the budget request.
    When will the experiments with plutonium begin and when will the 
experiments with the other new materials begin?
    Answer. The Department of Energy ``Site-wide Environmental Impact 
Statement for Continued Operations of Lawrence Livermore National 
Laboratory and Supplemental Stockpile Stewardship and Management 
Programmatic Environmental Impact Statement'' evaluated the 
environmental impacts of the proposed use of plutonium, other fissile 
materials, fissionable materials, and lithium hydride in experiments at 
the National Ignition Facility. The Record of Decision provides 
appropriate National Environmental Policy Act analysis should the 
National Nuclear Security Administration decide at a later date whether 
to perform experiments with some or all of these materials. There is a 
proposal under consideration to conduct experiments with milligram 
quantities of specially prepared plutonium. In addition, non-ignition 
experiments with lithium hydride have also been proposed. If there were 
a programmatic decision to conduct these experiments, they would begin 
around 2012. None of these experiments requires modification of the 
chamber and do not represent any additional cost beyond the planned 
experimental budget for 2012.
    Question. The Final Site-wide Environmental Impact Statement on 
Livermore Lab Operations mentioned that the NIF design would need to be 
modified to accommodate the plutonium experiments, in particular.
    When will these modifications begin and when will they be complete?
    Answer. The Department of Energy (DOE) ``Site-wide Environmental 
Impact Statement for Continued Operations of Lawrence Livermore 
National Laboratory and Supplemental Stockpile Stewardship and 
Management Programmatic Environmental Impact Statement'' evaluated the 
environmental impacts of the proposed use of plutonium, and other new 
materials (e.g., highly enriched uranium, thorium-232, lithium hydride 
and other fissionable materials). The Environmental Impact Statement 
and its Record of Decision do not represent a DOE programmatic decision 
to proceed with these experiments. There is a proposal to begin 
experiments with small quantities of specially prepared plutonium in 
fiscal year 2012. In addition, non-ignition experiments with lithium 
hydride have also been proposed. If there were a programmatic decision 
to conduct these experiments, they would begin around 2012. None of 
these experiments requires modification of the chamber and do not 
represent any additional cost beyond the planned experimental budget 
for 2012.
    Question. What is the approximate cost of modifying NIF to conduct 
these experiments?
    Answer. The Department of Energy (DOE) ``Site-wide Environmental 
Impact Statement for Continued Operations of Lawrence Livermore 
National Laboratory and Supplemental Stockpile Stewardship and 
Management Programmatic Environmental Impact Statement'' evaluated the 
environmental impacts of the proposed uses of plutonium, and other new 
materials (e.g., highly enriched uranium, thorium-232, lithium hydride 
and other fissionable materials). The Environmental Impact Statement 
and its Record of Decision do not represent a DOE programmatic decision 
to proceed with these experiments. There is a proposal to begin 
experiments with small quantities of specially prepared plutonium in 
fiscal year 2012. Planned contamination control measures for other 
National Ignition Facility materials (e.g., beryllium, depleted 
uranium, activated metal particulate, and tritium) will be adequate to 
manage the use of specially prepared plutonium. In addition, non-
ignition experiments with lithium hydride have also been proposed. If 
there were a programmatic decision to conduct these experiments, they 
would begin around 2012. None of these experiments requires 
modification of the chamber and do not represent any additional cost 
beyond the planned experimental budget for 2012.
    Question. What will conducting experiments with plutonium add to 
the NIF operating costs and what impacts will the other radioactive 
material have on NIF costs? Are these included in the budget? If so, 
where--what about in fiscal year 2008-2011?
    Answer. For the proposed experiments with specially prepared 
plutonium, no special modifications to the National Ignition Facility 
(NIF) chamber would be needed. Planned contamination control measures 
for use of other NIF materials (e.g., beryllium, depleted uranium, 
activated metal particulate, and tritium) will be adequate to manage 
the use of specially prepared plutonium. There are no additional 
operating costs to conduct these experiments.
    The Department of Energy ``Site-wide Environmental Impact Statement 
for Continued Operations of Lawrence Livermore National Laboratory and 
Supplemental Stockpile Stewardship and Management Programmatic 
Environmental Impact Statement'' evaluated the environmental impacts of 
the proposed use of plutonium, other fissile materials, fissionable 
materials, and lithium hydride in experiments at NIF. The Record of 
Decision provides appropriate National Environmental Policy Act 
analysis should the National Nuclear Security Administration decide at 
a later date whether to perform experiments with some or all of these 
materials. There is a proposal under consideration to conduct 
experiments with milligram quantities of specially prepared plutonium. 
In addition, non-ignition experiments with lithium hydride have also 
been proposed. If there were a programmatic decision to conduct these 
experiments, they would begin around 2012. None of these experiments 
requires modification of the chamber and do not represent any 
additional cost beyond the planned experimental budget for 2012.
 defense nuclear facilities safety board active confinement ventilation
    Question. I understand the DNFSB is pushing the Department to 
deploy active confinement ventilation systems for all Hazard Category 2 
and 3 facilities.
    I understand by applying this technology, at all DOE/NNSA 
facilities would be extremely expensive. Does the Department have a 
cost estimate for such retrofits?
    Answer. The Department of Energy (DOE) has developed a set of 
Evaluation Guidelines (February 2006) to review the efficacy of 
existing ventilation systems for applicable facilities across the 
Complex (some of which are active and some passive) to assess their 
performance attributes subsequent to hypothetical accident conditions. 
DOE intends to apply these Evaluation Guidelines in the near future. 
From the evaluations attendant to the Defense Nuclear Facilities Safety 
Board recommendation, DOE would be able to determine what, if any, 
modifications to ventilation systems might be required and what their 
costs would be. These data are not currently available.
    Question. Has this request by the DNFSB adversely impacted any 
current projects?
    Answer. No modifications to any facility have yet been made 
pursuant to the Defense Nuclear Facilities Safety Board recommendation 
concerning active confinement and no facility has been significantly 
impacted by the recommendation.
    Question. Is this active ventilation systems fool-proof?
    Answer. No, active ventilation systems are not fool-proof. The 
utility of an active system depends upon its active components, such as 
fans, and the passive components, like filters, working properly in the 
applicable conditions.

             RELIABLE REPLACEMENT WARHEAD--AGENT FOR CHANGE

    Question. The NNSA fiscal year 2007 budget request continues to 
support the current Life Extension Programs while the Reliable 
Replacement Warhead (RRW) studies are completed. The RRW program has 
the potential to serve as a means to transform the stockpile.
    Please explain the timeframe for integration of the RRW program 
into the Overall plan for Life Extension.
    Answer. Two design teams that are being led by our nuclear weapons 
laboratories--one from Los Alamos National Laboratory and one from 
Lawrence Livermore National Laboratory, both supported by the 
production agencies and Sandia National Laboratories--are engaged in a 
Reliable Replacement Warhead (RRW) design competition that will be 
completed later this year (November 2006). Upon favorable completion of 
the current study, we will work with the Department of Defense (DOD) to 
establish an RRW strategy as the ``enabler'' for stockpile 
transformation. This will include establishing an RRW-based stockpile 
plan before the end of 2007. The plan would also define the number of 
legacy warheads of specific types that are processed through life-
extension programs. If RRW concepts are feasible and benefits 
consistent with expectations, we will seek authorization to proceed to 
engineering development and production consistent with a Nuclear Weapon 
Stockpile Memorandum signed by the President and the Joint DOD-National 
Nuclear Security Administration Requirements Planning Documents as 
approved by the Nuclear Weapons Council.

                             NNSA VACANCIES

    Question. I have continued to observe the number of ``vacant'' and 
``acting'' positions within the NNSA and the apparent difficulty in 
attracting suitable candidates.
    What is the plan to address this shortfall in staffing and 
leadership for these critical programs?
    Answer. NNSA did have a number of ``vacant'' positions, but has 
closed that gap considerably. In fact, NNSA's critical positions are 
over 98 percent filled. Consequently, NNSA does not now have a serious 
staffing shortfall in leadership or most other critical positions. NNSA 
has an aggressive approach and comprehensive programs of recruitment 
and retention to ensure that we do not encounter critical staffing and 
leadership shortfalls in the future. NNSA has occasional difficulty in 
filling positions in highly select circumstances, such as at remote 
locations like Los Alamos, New Mexico, or when seeking highly selective 
technical skills such as facility safety representatives, contracting 
officers, and computer scientists. Overall, NNSA is not experiencing 
difficulty in attracting and retaining highly qualified candidates to 
fill critical skills and mission-essential positions.
    With respect to a number of ``acting'' positions, NNSA is moving as 
quickly as possible to recruit the best possible talent to fill these 
key executive positions. For example, NNSA just selected the new 
Associate Deputy Administrator for Fissile Materials Disposition, and 
is now close to filling several other ``acting'' executive positions at 
Headquarters.
    We have made major innovations and improvements in NNSA's human 
capital management programs the past 3 years. These innovations cover 
the Administrator's statutory excepted service technical hiring 
authority and a complementary pay-for-performance system; an NNSA-wide 
performance management and recognition system; a merit promotion plan; 
and various programs of monetary incentives relating to recruitment and 
retention, including a student loan repayment program. Last year, we 
developed and instituted a Future Leaders Program to hire and develop 
entry-level technical, project management, and business talent. The 
first class of 30 interns proved to be a success beyond our most 
optimistic expectations, and we have just completed recruitment of a 
second class of 30 talented interns. Just recently, we inaugurated an 
enterprise-wide workforce analysis and planning process to inventory 
our current skills profile and to better identify near- and long-term 
staffing trends and skill needs.
    With respect to addressing our selective and occasional staffing 
difficulties, we have streamlined our hiring processes, making greater 
use of automation, devising better marketing strategies and recruiting 
tools, and encouraging greater managerial involvement in candidate 
evaluation and selection. We are making maximum use of government-wide 
recruitment incentives, and exploring the use of OPM's competitive 
examination innovations, such as category-ranking procedures. 
Meanwhile, NNSA's excepted service employment and pay-for-performance 
system has allowed us to successfully compete with the private sector 
for many top technical workers, though not in every instance to be 
sure, as implied by your next question. And as NNSA has made full use 
of the Administrator's existing excepted service hiring and pay 
authorities, we are now considering alternative ways to build on and 
augment our previous successes.
    Question. How is the NNSA tapping into the skills at the national 
laboratories to address shortfalls?
    Answer. NNSA avails itself of the outstanding technical talent in 
our national laboratories in three primary ways, through IPA 
assignments, M&O contractor details, and consultant appointments. The 
IPA and M&O detail mechanisms are used to retain the services of 
current laboratory employees, and these mechanisms are used frequently 
to retain the services of top laboratory talent. For example, about 60 
laboratory employees are currently on M&O details to NNSA, the number 
of laboratory employees on detail to NNSA usually fluctuating between 
60 and 85 employees from month to month. There are four laboratory 
employees currently on IPAs to NNSA. Additionally, NNSA occasionally 
retains the services of retired laboratory employees through consultant 
appointments.
    Senior laboratory employees command salaries that generally exceed 
Federal pay levels, which tends to negate NNSA's ability to recruit 
laboratory employees to fill permanent Federal positions. On the other 
hand, use of the Administrator's excepted service hiring and pay 
authorities has recently bolstered NNSA's ability to attract top 
technical talent, not only from the laboratories, but also from 
industry and the universities.
    Question. Are Alternative Personnel Systems that provide incentives 
for specialized skills through performance-based pay being considered 
for potential implementation?
    Answer. There is no question that an agency's staffing and 
recruitment effectiveness can be improved through various appointment 
and pay features of an alternative personnel system. Toward that end, 
NNSA designed, developed, and implemented an alternative excepted 
service personnel system to implement the hiring and pay authorities 
granted to the Administrator by the NNSA Act. We have used the 
Administrator's entire statutory allocation of 300 scientific and 
engineering positions. In addition, we have made extensive use of large 
segments of the Department's two excepted service authorities and will 
continue to use the remaining Departmental excepted service 
authorities. We will also assess the need for potential additional 
authorities and develop detailed plans for consideration of the 
Congress in the appropriate out-year budget submissions.
    Question. Can you comment on the success of this new governance 
model and any lessons that you've learned in implementation?
    Answer. NNSA view is that this ``model'' contract has provided new 
tools that have been and will continue to be beneficial to both the 
Government and the contractor. We are performing oversight with fewer 
Federal employees and NNSA has seen improvement in Sandia's performance 
as a result of this new governance model.
    In the last 2 years, Sandia has developed and implemented a 
Contractor Assurance System throughout the laboratory including a 
corporate self-assessment program, corrective action and tracking 
program, corporate issues tracking program, benchmarking processes, and 
performance metrics for key laboratory operations. When combined these 
processes and systems allow both Sandia and NNSA to have greater 
insight into operational and program performance enabling them to be 
able to identify and correct problems at lower levels before they 
become systemic.
    We have also seen improvement in Sandia's capitalization on private 
sector experience. Sandia has now formalized a process to ensure that 
lessons learned are implemented. Sandia has sought and achieved 
certification against industry standards. An example is their ISO 9001 
procurement system certification. Sandia is currently in the process of 
seeking ISO 9001 certification of their Contractor Assurance System, 
which they call the Integrated Laboratory Management System. Sandia 
also completed a benchmarking study of their G&A by Hackett.
    The model contract has increased contractor accountability. The 
model contract features of Fixed Fee for the stockpile work, tied to 
the Award Term Incentive, and Incentive Fee are useful to the 
Government. We have learned that the award term (which Sandia did not 
earn for fiscal year 2005) is an extremely powerful tool to focus a 
contractor's attention. The model contract drives communication, 
efficiencies, and accountability better than the previous contract 
utilizing a fixed fee structure. We have noted increased involvement by 
the parent entity, Lockheed Martin and the Sandia Corporation's Board 
of Directors. The Board is very active with committees on CAS/ILMS or 
governance and Security and Safety which Sandia VPs report to 
routinely. The model is that once ILMS/CAS is up and running this form 
of governance will be relied on to change oversight.
    Finally, through this contract, NNSA has been able to realize cost 
savings which have been applied to Laboratory operations. Examples of 
completed projects include:
  --enhancing classified network ($2 million);
  --cleaning up beryllium contamination ($2 million);
  --Implementation of a new JTA development process with a projected 
        reduction of cycle time of 50 percent (6 years to 3 years); 
        and,
  --W80 Neutron Tube Development Welding Cell value stream mapping that 
        realized 96 percent reduction in cycle time.
    We have learned some valuable lessons in our first 2 years. The 
first is that it has been hard to redefine the contractor and 
Government relationship. Both sides had grown accustomed to having the 
Government telling the contractor not only the ``what'' but the ``how'' 
with old habits being difficult to change. Secondly, redefining the way 
in which the Government operates has not been easy for either party. 
When NNSA was established we eliminated the Operations Offices and 
redefined the roles and responsibilities of the Site Office and 
Headquarters. This change has been difficult but we are gaining 
momentum and there is evidence that we are being more thoughtful in our 
interactions and direction of the contractors. This new structure has 
also allowed the Site Offices to focus on improving operations at our 
facilities to include security and safety. Over the last 3 years at 
Sandia this has resulted in significant improvement in security 
operations and smaller improvements have been achieved in the safety 
arena. The NNSA Leadership Coalition, consisting of senior mangers from 
Headquarters, the Service Center, and Site Offices are working together 
and are speaking with one voice. This has resulted in NNSA providing 
more clear and concise direction.

                        LANL--NEW CONTRACT COSTS

    Question. Mr. D'Agostino, you were the selection officer for the 
Los Alamos contract award. You selected the Los Alamos National 
Security, LLC--a partnership between Bechtel, University of California, 
BWTX and Washington Group. These are all very well-qualified groups. 
However, this contract is much more expensive than the previous 
contract and I suspect you were attempting to attract the best talent 
with a much higher fee.
    This contract also requires the Lab to pay Gross Receipts Tax to 
the State ($75 million). I suspect there are several other cost 
increases that add to the bottom-line operations of the lab. 
Unfortunately, the budget doesn't reflect an increase to accommodate 
these added costs. All of these costs will come out of R&D budgets and 
lab operations that we appropriate.
    Do you know how much more it will cost to operate the new contract? 
What impact will this have on the programs?
    Answer. Under the new contract, NNSA could pay Los Alamos National 
Security, LLC (LANS) significantly more fee than it pays the University 
of California to manage the laboratory if LANS lives up to the 
performance incentives and contractor assurance initiatives LANS 
proposed in its winning proposal. In the first year, the difference 
could be in the neighborhood of $66 million and varies somewhat over 
the base term of the contract because LANS proposed a lesser fee in the 
out-years than in the first few years.
    LANS and the New Mexico Department of Revenue and Taxation have not 
finalized LANS payment schedule and procedures and, therefore, it is 
not possible to respond precisely with respect to the New Mexico Gross 
Receipts Tax. It will not be on the order of $75 million more than at 
present because the major for-profit subcontractors already pay gross 
receipts tax and your $75 million figure does not take that into 
account.
    In addition, there will be additional set-up expenditures to 
establish and maintain the pension plans and benefits arrangement for 
LANS, a private entity; they are, therefore, different than the system 
expenses associated with the pension and benefits provided by the 
University of California.
    NNSA expects minimal impact on program performance because of the 
factors enumerated in response to the next question.
    Question. Where will the new contractor find the funding to offset 
the increased costs without negatively impacting the program?
    Answer. Based on the LANS proposal, its multi-year strategy for 
continuous improvement and its plan for parent organization oversight 
and assistance, NNSA is confident that LANS will offset much of the new 
expense through savings realized through better, more disciplined and 
more streamlined operations. For example, through footprint reduction 
LANS is expected to reduce operation and maintenance costs. Through its 
integrated project teams, LANS is expected to reduce the cost of 
operating facilities. By improving procurement and financial management 
overall, LANS is expected to realize significant savings both in the 
actual business operation and in the program supported by that business 
operation.
    NNSA anticipates ``locking in'' the promises of better and more 
cost-effective performance through the objectives and measures in the 
annual performance evaluation plan against which LANS must perform to 
earn a significant portion of its fee.
    Question. Do you have sense as to which programs might be impacted? 
Will this impact jobs?
    Answer. NNSA does not know at present on which (if any) programs 
there may be an impact as a result of the changeover to LANS. We remain 
hopeful that there will be little to no impact on the deliverables NNSA 
needs within its mission requirements.
    There could be some impact on jobs, the extent of which is not 
certain at this time. This is because some current employees may choose 
to retire and not seek employment with LANS, may retire and will not be 
re-hired by LANS or may resign and seek employment elsewhere. NNSA does 
not expect this number to be significant given the ``substantially 
equivalent'' benefits and compensation offers NNSA directed to be 
placed in the transition.
    NNSA also believes that, over time, LANS' transformation of the 
laboratory could change the nature of some jobs currently performed at 
the laboratory as it develops science and programs to address the 
National Security needs of the future. It is not certain whether, or in 
which direction, it may affect the number of jobs at the laboratory as 
NNSA insists on a forward-looking and dynamic Los Alamos National Lab.
    Question. How much does the NNSA invest in developing technology 
that can be used as early warning detection, or as a security 
deterrent?
    Answer. In addition to the technologies that are deployed at each 
site with operational funds, the National Nuclear Security 
Administration spends $8.0 million per year on a program dedicated to 
security technology deployment. These technologies cover the entire 
range of security requirements, from early warning and detection to 
armor-piercing ammunition, and from new communications systems to 
Classified Removable Electronic Media accounting systems.
    Question. How effective has the NNSA been in the deployment of this 
technology and what can be done from a technology standpoint to reverse 
the growing trend line in security costs?
    Answer. The National Nuclear Security Administration is effective 
at deploying innovative security technologies. The trend line in 
security costs will be held down as much as possible with these 
technologies. But the return on investment is generally not immediately 
evident--it takes several years for a new technology to start reducing 
operational costs. In addition, the Design Basis Threat policy may 
continue to drive the overall trend line upwards, in spite of the 
savings from technology deployments.
    Question. Why have these processes taken so long? Do you lack 
confidence in the incumbent--who has been the subject of numerous 
critical reports by the IG?
    Answer. Proposals are currently being reviewed by the Source 
Evaluation Board to select a suitable candidate for the security 
contracts at Y-12 and the Nevada Test Site. Currently, the Y-12 
proposal is being reviewed by the Source Evaluation Board. The Nevada 
Test Site proposal has been sent back to the Source Evaluation Board 
for further analysis. The Federal Acquisition Regulation parts 3.104-3 
``Statutory and related prohibitions, restrictions, and requirements,'' 
and 3.104-4 ``Disclosure, protection, and marking of contractor bid or 
proposal information and source selection information,'' does not allow 
the Department to provide any specific information in relation to the 
selection of these contracts.
    Question. Is there insufficient competition? Are you uncertain of 
the security mission at these sites?
    Answer. Proposals are currently being reviewed by the Source 
Evaluation Board to select a suitable candidate for the security 
contracts at Y-12 and the Nevada Test Site. The Federal Acquisition 
Regulation parts 3.104-3 ``Statutory and related prohibitions, 
restrictions, and requirements,'' and 3.104-4 ``Disclosure, protection, 
and marking of contractor bid or proposal information and source 
selection information,'' does not allow the Department to provide any 
specific information in relation to the selection of these contracts.
    Question. Will you update me on measures taken to improve security 
performance at the site?
    Answer. The security posture at the Nevada Test Site has undergone 
a complete transformation. We have brought on board a highly qualified 
Federal security manager and nuclear security professionals to oversee 
the build-up of physical security measures at the site. The physical 
security and protective force upgrades being deployed are extensive and 
strong. Over the past year we have increased the size, training, and 
equipment of the protective force. These improvements include the 
procurement of additional armored vehicles and improved firepower in 
the form of heavy machine guns, grenade launchers, and armor piercing 
ammunition. To enhance our adversary detection capabilities we are 
installing state-of-the-art electronic surveillance and video 
assessment systems. A major element of our upgrade plan involves the 
fielding of a Special Response Team (SRT) capability whose training and 
equipment rival those of a major city SWAT team. The combined effect of 
these upgrades is significant, making the site one of the most heavily 
defended locations in the Nation. We will continue to closely monitor 
these upgrades and the performance of the protective forces at the 
Nevada Test Site.
    Question. Why should the public have confidence that change has 
occurred, given Admiral Mies' finding that DOE/NNSA's ability to ``to 
evaluate findings, assess underlying root causes, analyze alternative 
courses of action, formulate appropriate corrective action, gain 
approval, and effectively implement change'' is ``weak to non-
existent''?
    Answer. In the year-and-a-half since the Deputy Secretary referred 
to ``recent significant physical security performance problems at 
Nevada Test Site . . .'' significant progress has been made. To confirm 
this progress, the Administrator for the National Nuclear Security 
Administration requested the Department of Energy, Office of 
Independent Oversight, conduct a follow-up to its 2004 inspection. That 
follow-up was completed in September 2005, and the Office of 
Independent Oversight reported that ``performance has noticeably 
improved.'' Specifically, ``significant improvements over the past year 
include positive management initiatives, appropriate skills and 
training, robust protection at the Device Assembly Facility, and 
effective protection of classified matter.''
    Question. How much is the complex proposing to spend on physical 
security in 2007?
    Answer. The fiscal year 2007 Defense Nuclear Security budget is 
$665.7 million. Of this amount, $491.6 million is for ``physical 
security'' programs.
    Question. Is this security cost driven by the number of sites in 
the complex, or the number of facilities within each site, or the 
amount of SNM at each site?
    Answer. All three factors contribute to the level of security 
costs. At sites such as Pantex and Y-12 the size of the special nuclear 
material holdings and the geographic spread of the storage and 
processing facilities drives up the cost of security, as protective 
forces are needed to control large areas of the site. At the remaining 
National Nuclear Security Administration sites, we have been able to 
effect on-site consolidation that has significantly reduced the cost of 
protecting special nuclear material, the best example of this is the 
removal of Category I/II special nuclear material from Los Alamos 
National Lab's TA-18.
    Question. What are the annual security costs at Kansas City, LLNL, 
LANL, at Sandia Livermore and Sandia Albuquerque, at Savannah River, 
and at Y-12?
    Answer. Fiscal year 2007 Defense Nuclear Security allocations by 
site are:

                        [In millions of dollars]
------------------------------------------------------------------------
                                                              Amount
------------------------------------------------------------------------
Kansas City.............................................            11.3
Lawrence Livermore......................................            83.9
Los Alamos..............................................           113.7
Sandia..................................................            70.9
Savannah River..........................................            11.5
Y-12....................................................           132.1
------------------------------------------------------------------------

    Question. Would the security costs at any given site go down if 
they did not have SNM at that site?
    Answer. While each site is unique, the security costs for 
protecting special nuclear material ranges between 50 percent to 70 
percent of the site security budget. The National Nuclear Security 
Administration is aggressively pursuing further consolidation of 
special nuclear material, both as a means for reducing security costs, 
but also to reduce the overall risks posed by this material.

                  RUSSIAN HIGHLY ENRICHED URANIUM DEAL

    Question. If the Russian Suspension Agreement is modified or 
allowed to expire resulting in significantly increased amounts of 
Russian low enriched uranium entering the U.S. market:
  --1. It is expected to have a serious impact on the financing for the 
        $1.4 billion privately funded LES National Enrichment Facility 
        by creating a significant negative market impact from the 
        flooding of the United States with low enriched uranium;
  --2. The financial community will likely raise serious concerns 
        regarding the long-term viability of the LES project if they 
        feel the market would be impacted by the expiration of the 
        Russian Suspension Agreement;
  --3. A similar negative impact is expected on USEC's ability to build 
        and operate the American Centrifuge Facility; and
  --4. It could prevent the nuclear industry from having a domestic 
        source of enriched uranium if the LES and USEC facilities are 
        not built because of this negative market impact.
    Please provide the committee with the position of the NNSA on the 
impact the modification or expiration of the Russian Suspension 
Agreement resulting in the significant increase of Russian low enriched 
uranium entering the U.S. market will likely have on the ability to 
build and operate the new LES and USEC facilities and the impact on the 
future U.S. domestic enrichment industry of large amounts of Russian 
low enriched uranium entering the U.S. market.
    Answer. DOE/NNSA supports the deployment of advanced centrifuge 
uranium enrichment facilities in the United States--as was emphasized 
in a DOE letter of July 25, 2002, to the Nuclear Regulatory 
Commission--and believes that such facilities are needed for both 
energy security and national security purposes. The letter further 
stated that, ``The Department firmly believes that there is sufficient 
domestic demand to support multiple domestic enrichers and that 
competition is important to maintain a healthy industry.'' I am aware 
of no circumstance that has changed or diminished that statement and I 
believe it is as appropriate today as it was in 2002.
    Let me assure you that I share your concern on the fragility of the 
current U.S. uranium enrichment infrastructure, and the need to 
modernize and expand U.S. uranium enrichment capabilities. I recognize 
that the decisions by USEC to build the American Centrifuge Facility 
and by LES to build the National Enrichment Facility were based on 
market projections that included continuation of the Russian Suspension 
Agreement. It is clear that terminating or drastically modifying the 
Suspension Agreement at this critical time could undermine these 
ongoing plans to establish a modern, efficient and competitive uranium 
enrichment industry in the United States.
    Although NNSA is not a party of record in the Department of 
Commerce's Sunset Review of the Suspension Agreement, NNSA has made 
clear its support for continuing the Suspension Agreement in the 
Interagency. NNSA fully supports Commerce's Preliminary Results of the 
Sunset Review of the Suspension Agreement reported in the Federal 
Register on Monday, April 3, 2006, which find that revocation of the 
Suspension Agreement would likely lead to a recurrence of dumping.
    I would like to express my concern for the 1993 Highly Enriched 
Uranium Purchase Agreement (the HEU Agreement), which is eliminating 
500 metric tons of excess Russian HEU from dismantled Russian nuclear 
weapons by downblending it for use as fuel for U.S. power reactors. The 
Suspension Agreement has been the legal basis by which Russian low 
enriched uranium has entered the U.S. market duty free. Unilateral 
Russian termination of the Suspension Agreement would automatically 
trigger 115 percent antidumping duties on the HEU Agreement imports 
from Russia, immediately threatening the economic viability of the HEU 
Agreement, which supplies half of the nuclear fuel for U.S. power 
reactors. An interagency review is underway to address this concern; 
any proposed modification of the Suspension Agreement would require 
careful review.

                             STATUS OF MOX

    Question. I am surprised by the lack of detail in your statement 
regarding MOX. Your statement makes no mention of the fact that the 
Department is rebaselining the entire program and cost estimates have 
increased to over $3 billion. It makes no mention of the steps the 
Department is taking to respond to the DOE IG Report, which found the 
Department lacks sufficient contractor oversight, which has contributed 
to the increased costs.
    It also fails to mention that the Russians have made it clear that 
they will no longer pay for the operations of the MOX facility if they 
are limited to using the fuel in light water reactors, in the same 
manner as United States. Apparently the Russians have made unilateral 
decision that their only interest is in fast reactors.
    Finally, I am becoming increasingly frustrated that the Russians 
continue to stall the final approval of the liability agreement. I 
believe the Russians are now the biggest liability facing the program 
and we should sever the link between the construction projects.
    Since your statement fails to mention any of these issues can you 
please update the committee? What are you doing to improve the contract 
oversight and reign in the contractor?
    Answer. I share your frustration over the fact that the Russian 
Government has not yet signed the protocol covering liability 
protection for the plutonium disposition program. Despite continued 
delays, we have been assured repeatedly by officials from the Russian 
Ministry of Foreign Affairs and the Russian Atomic Energy Agency that 
there are no substantive problems with the language that was agreed to 
in July 2005, but rather it is a question of the protocol undergoing a 
complete Russian interagency review that has been moving more slowly 
than expected. We continue to believe that the protocol will be signed 
shortly.
    The Russian Government has repeatedly stated that it remains 
committed to the 2000 U.S.-Russian Plutonium Management and Disposition 
Agreement, which obligates both countries to dispose of their plutonium 
by using it as mixed oxide (MOX) fuel in nuclear reactors. The 
agreement states that any nuclear reactor agreed to by both parties may 
be used for disposition. While Russian Government officials recently 
reaffirmed its willingness to proceed with plutonium disposition in 
light water reactors if the international community would provide full 
funding for the program, they also expressed their desire to explore 
the use of advanced reactors. In this regard, they agreed to begin 
early disposition of limited quantities of plutonium in Russia's 
existing fast reactor well before the United States could begin 
disposition of its plutonium, demonstrating their commitment to dispose 
of their surplus plutonium.
    As a result, we are moving forward with construction of the U.S. 
MOX facility at the Savannah River Site this year. To prepare for this 
effort, we have already taken a number of steps to improve the 
management of the MOX facility project. These include incorporating 
performance incentives in future contract negotiations, improving 
monthly project reports, controlling contractor spending, and reviewing 
contractor performance. Now that the planned date for the start of 
construction of the MOX facility has been set, the project cost and 
schedule baseline is currently undergoing an independent review and 
validation prior to the start of construction. This will enable us to 
track project performance against the baseline and minimize the 
possibility of future cost overruns. Plans are also underway to hire a 
qualified MOX Federal Project Director and to streamline the 
organizational structure of the project.

                          RADIOACTIVE SOURCES

    Question. What is NNSA doing to ensure that both domestic and 
foreign radioactive materials are not used in a malicious manner 
against the United States?
    Answer. NNSA's Office of Global Radiological Threat Reduction works 
in both the United States and overseas to secure, consolidate and/or 
remove high powered (i.e., suitable for use in an effective 
radiological dispersal device (RDD)) and vulnerable radioactive 
materials.
    The U.S. Radiological Threat Reduction (USRTR) program, also known 
as the Off-Site Source Recovery Program, has recovered over 12,000 
excess and unwanted sources in the United States, containing over 
160,000 curies of radioactivity. In addition, the USRTR program is 
beginning a Source Security Program, which provides security 
assessments of facilities, as well as training for users of high-risk 
sources.
    The International Radiological Threat Reduction (IRTR) program 
works in over 40 countries with international and regional 
organizations to secure radioactive materials, transfer detection 
equipment, train regulators and police, and support international 
conferences and training for foreign government officials on best 
practices for security of radiological sources.
    Question. Your agency, DHS, NRC and other agencies are involved to 
some extent in the security of high-risk radioactive materials that 
could be used for RDDs. Should there be one lead agency which takes 
overall coordinating responsibility for ensuring that radioactive 
materials are not used maliciously?
    Answer. On December 13, 2003, the President issued Homeland 
Security Presidential Directive 7. Item 29 of this directive states 
that the Secretary of Homeland Security will continue to work with the 
Nuclear Regulatory Commission and, as appropriate, the Department of 
Energy, to ensure the necessary protection of nuclear (including 
radiological) materials in medical, industrial, and academic settings 
and facilities that fabricate nuclear fuel and the transportation, 
storage, and disposal of nuclear materials and waste.
    Question. What has been NNSA's budget allocation for both domestic 
and international programs for the past 3 years to address the RDD 
issues? Do you feel that NNSA has adequate, dedicated resources to 
address these issues?
    Answer.

----------------------------------------------------------------------------------------------------------------
                                                                    Fiscal Year     Fiscal Year     Fiscal Year
          Global Radiological Threat Reduction Program                 2004            2005            2006
----------------------------------------------------------------------------------------------------------------
International RTR...............................................         $27,000         $24,800         $24,078
U.S. RTR........................................................           5,400           7,540          12,750
----------------------------------------------------------------------------------------------------------------

    Funding over the past 3 years has permitted the Office of Global 
Radiological Threat Reduction to accelerate recoveries of orphaned 
sources in the United States and expand our international program 
beyond Russia and the Former Soviet Republics.
    Question. What measures has NNSA taken to mitigate the consequences 
of an RDD attack and to respond to such an attack if one should occur?
    Answer. The core focus areas of the Office of Global Radiological 
Threat Reduction are: (1) improving radioactive material security at 
the ``first line of defense'', i.e., the facilities where sources 
currently reside, beyond our borders; and (2) recovering disused 
sources in the United States, so as to mitigate RDD use in an attack. 
Additionally, the program works in concert with NRC and DHS 
domestically to address security of in-use sources.
    Question. What is the relative priority you would assign to taking 
measures to ensure that an RDD attack does not occur against the United 
States?
    Answer. Reducing the threat of a radiological dispersal device 
attack is a high priority for NNSA, DOE, and the Bush administration. 
This administration has done more than any other to secure radiological 
materials against their possible use by terrorists in a radiological 
dispersal device (RDD or ``dirty bomb''). The 2003 International 
Conference on Security of Radioactive Sources highlighted the need for 
radioactive source security and DOE/NNSA's Office of Global 
Radiological Threat Reduction is a response to that need. However, the 
threat posed by weapons-useable nuclear materials in an improvised 
nuclear device is considered a higher priority than the RDD threat 
because of the dramatically greater consequences associated with a 
nuclear explosion. This does not negate the severity of the RDD threat, 
which remains a high priority for DOE/NNSA.
    Question. Given the severe social, economic and psychological 
consequences of an RDD and the greater likelihood for an RDD attack to 
occur over an attack with a nuclear explosive, what can be done to 
accelerate NNSA's efforts to protect against an RDD attack?
    Answer. The Office of Global Radiological Threat Reduction has 
qualified and dedicated Federal and national laboratory resources 
working both overseas and in the United States to address the RDD 
threat. We have established and are exercising our interagency and 
international liaisons to share best practices and the ``security 
perspective'' domestically and internationally. Current and out-year 
funding will support commitments made in over 40 established project 
countries and the United States.
    Question. In light of the mass evacuation, property damage and 
severe economic burden resulting from Hurricanes Rita and Katrina, how 
would you compare such natural disasters to an RDD attack?
    Answer. Comparing the effects of a natural disaster and those of an 
RDD attack is difficult. Just as it is difficult to predict the damage 
resulting from a natural disaster, it is equally difficult to predict 
the relative strength and dispersal patterns of an RDD attack. Some 
types of damage are likely to be similar: displaced populations, 
economic losses, environmental damage, social panic and possible 
societal breakdown. Damage from an RDD attack, however, could adversely 
impact one additional element--denial of property. Denial of property 
would last until an area could be decontaminated, potentially a 
technically and financially demanding task. Additionally, the health 
effects of an RDD attack could include substantial increases in long-
term cancer rates. Finally, the psychological impact and widespread 
fear resulting from a radiation attack can is difficult to estimate.
    Question. How do other countries perceive the consequences of an 
RDD? Should we be building more effective partnerships with these 
countries such that they take an active role to ensure that an RDD 
attack does not occur?
    Answer. The threat posed by the use of a radiological dispersal 
devise (RDD) has only recently come to the attention of the 
international community. The international community, led by the United 
States, our G-8 partners, and international organizations such as the 
IAEA, has convened three international conferences to address the 
safety and security of radioactive materials around the world. 
Fostering and maintaining partnerships with other countries is 
essential due to the widespread use of radiological materials in 
applications ranging from agriculture to oil exploration. The 
International Radiological Threat Reduction (IRTR) program has 
developed Regional Radiological Security Partnerships in Southeast Asia 
(in sponsorship with Australia) and South America and is fostering 
burgeoning relationships in Africa to address the security of 
radioactive materials in those regions.
    Question. What can be done to get other countries to allocate their 
resources to address the RDD problem?
    Answer. Recent international conferences have highlighted the issue 
of the security of radioactive materials and are key to convincing 
other countries to allocate resources to address the RDD threat. 
Additionally, the International Radiological Threat Reduction (IRTR) 
program has developed Regional Radiological Security Partnerships to 
address the security of radioactive materials worldwide. A notable 
success has been our Regional Radiological Security Partnerships that 
was developed in Southeast Asia in sponsorship with Australia. This 
partnership supports NNSA and IAEA objectives to improve the security 
of high-risk radioactive materials. Australia has committed monetary 
resources for this cooperative threat reduction effort. Furthermore, as 
an integral part of our bilateral cooperative projects, the IRTR 
program addresses sustainability of the security systems it provides 
and works with countries to ensure that security costs are integrated 
into operating budgets.
    Question. What is NNSA doing to enlist support from other 
international organizations, such as the IAEA and Europol, to address 
the RDD problem?
    Answer. Although NNSA has no interactions with Europol, we have 
developed strong cooperative relationships with both the IAEA and the 
International Criminal Police Organization (Interpol) to address the 
RDD problem.
    NNSA's International Radiological Threat Reduction (IRTR) program 
has been engaged in cooperative projects to prevent radiological 
terrorism with Interpol since 2003. This cooperation includes assisting 
Interpol to develop analytical reports that characterize the nature of 
thefts and diversions of radioactive materials, and equipping and 
training front line police officers to enable them to detect and 
mitigate radiological security threats. This training allows these 
officers to remain competent in the use of this equipment over an 
extended period of time.
    The IRTR program cooperates extremely well with the IAEA ranging 
from multinational conferences to in-country support on topics ranging 
from regulatory support to physical protection. The Office of Global 
Radiological Threat Reduction continues to provide the IAEA's Nuclear 
Security Fund significant donor support through extra-budgetary 
contributions. To date, GRTR has contributed approximately $11 million 
for our joint activities.
    Question. I am aware that NNSA has worked in over 40 countries to 
help ensure that their high-risk radioactive sources are secure. What 
is being done to ensure that these security measures will remain in use 
and effective for a period well beyond the length of the assistance 
that NNSA is providing?
    Answer. It is critical to ensure the continued operation and 
maintenance of security systems and procedures after the work of the 
Office of Global Radiological Threat Reduction is complete. One major 
aspect of our project planning and execution overseas is developing a 
sustainable physical protection system and incorporating security into 
host country practices and foreign facility operational budgets. 
Designing an effective and sustainable security system requires working 
directly with national regulators and site personnel to make sure they 
understand and evaluate the full gamut of operational considerations 
that result from the installation of a physical security system.

              LABORATORY DIRECTED RESEARCH AND DEVELOPMENT

    Question. What does the budget propose in for the LDRD account?
    Answer. Although LDRD levels are not proposed specifically in the 
annual budget requests, the NNSA supports continuing funding for the 
LDRD programs at its National Laboratories.
    In accordance with guidance in the Conference Report to accompany 
the Energy and Water Development Appropriations Act, 2006, (H. Rept. 
No. 109-275 (2005)), and departmental policy, NNSA required its 
Laboratories to modify cost accounting procedures and apply overhead 
charges to the LDRD program. Implementing these changes while 
sustaining the historical funding levels for LDRD requires a funding 
rate of up to 8 percent. Our objective is to sustain the funding that 
is applied directly to scientific and technical work so the changes 
described above should not decrease the effective level of research 
conducted under the LDRD program or increase the cost of DOE programs 
or work for non-DOE customers.
    The NNSA continues to believe the recommendations of the Packard 
Commission and Galvin Commission that a robust LDRD program is 
essential to the scientific and technical vitality of the National 
Laboratories and their long-term contributions to national security.

              LABORATORY DIRECTED RESEARCH AND DEVELOPMENT

    Question. Does the budget contemplate any reforms to this program?
    Answer. The NNSA and the National Laboratories have implemented the 
changes required to apply all Laboratory overhead charges to the LDRD 
program in fiscal year 2006. There is no specific initiative under way 
that would result in further changes to the LDRD program to be 
implemented in the near future. The NNSA and its National Laboratories 
regularly review the LDRD program, how it operates, and the science and 
technology it produces, to improve the program and its value to the 
Nation. If this process identifies beneficial reforms within the 
current constraints for the LDRD program, then the NNSA would work with 
the Laboratories to implement them.

                         CONCLUSION OF HEARINGS

    Senator Domenici. We stand recessed until the Chair calls 
another meeting.
    [Whereupon, at 3:08 p.m., Thursday, April 6, the hearings 
were concluded, and the subcommittee was recessed, to reconvene 
subject to the call of the Chair.]

 
 ENERGY AND WATER, AND RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 
                                  2007

                              ----------                              

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.

                       NONDEPARTMENTAL WITNESSES

    [Clerk's note.--At the direction of the subcommittee 
chairman, the following statements received by the subcommittee 
are made part of the hearing record on the Fiscal Year 2007 
Energy and Water Development Appropriations Act.]

                      DEPARTMENT OF DEFENSE--CIVIL

                         Department of the Army

                           Corps of Engineers

 Prepared Statement of the Clark County Regional Flood Control District
    The United States Army Corps of Engineers Tropicana and Flamingo 
Washes Flood Control Project, Las Vegas, Nevada.--$15,000,000, 
Construction appropriations, which includes appropriations for work 
performed pursuant to Section 211 of the Water Resources Development 
Act of 1996.
    Presented herewith is testimony in support of $15,000,000 for the 
construction appropriation necessary for the U.S. Army Corps of 
Engineers to continue the Tropicana and Flamingo Washes flood control 
project in Clark County, Nevada, which includes up to $9,000,000 to 
reimburse the non-Federal sponsors, Clark County and the Clark County 
Regional Flood Control District, for work performed in advance of the 
Federal project pursuant to Section 211 of the Water Resources 
Development Act (WRDA) of 1996. The President's fiscal year 2007 Civil 
Works budget request to Congress identifies $12,400,000 for this 
project. It is imperative that we receive the requested Federal funding 
to protect residents of the rapidly growing Las Vegas Valley in 
Southern Nevada from devastating floods.
    The Las Vegas Valley continues to experience unprecedented growth. 
In the past 20+ years, people have moved into our area from all parts 
of the Nation to seek employment, provide necessary services, retire in 
the Sunbelt, and become part of this dynamic community. Approximately 
6,000 people relocate to the Las Vegas Valley every month of the year. 
Currently the population exceeds 1.8 million. The latest statistics 
show that more than 25,000 residential units are built annually. Once 
all of these factors are combined, the result is that the Las Vegas 
Valley continues to be one of the fastest-growing metropolitan areas in 
the Nation.
    The Federal project being constructed by the Corps of Engineers 
(Corps) is designed to collect flood flows from a 174-square mile 
contributing drainage area. The Corps' project includes three debris 
basins, five detention basins, 28 miles of primary channels, and a 
network of lateral collector channels. The debris basins collect flood 
flows from undeveloped Federal lands at the headwaters of the alluvial 
fans and trap large bedload debris before it enters the channels and 
causes erosion damage. The detention basins greatly reduce the 
magnitude of the flood flows so that the flows can be safely released 
and conveyed through the urbanized area at non-damaging rates. A 
primary system of channels collects outflows from the debris and 
detention basins and conveys these floodwaters through our urban area. 
Lateral collector channels, which are funded locally, collect runoff 
from smaller developed watersheds and deliver it to the primary 
channels. Since flood flow over the alluvial fans, which ring the Las 
Vegas Valley, is so unpredictable in terms of the direction it will 
take during any given flood, all of the components of the Corps' plan 
are critical.
    Torrential rains deluged the Las Vegas Valley the morning of July 
8, 1999, causing widespread drainage problems and major damages to 
public and private properties. Some of the greatest rainfall depths 
occurred over the southwest portions of the Las Vegas Valley resulting 
in significant flows in the Tropicana and Flamingo Washes. The runoff 
from this intense rainfall caused widespread street flooding and record 
high flows in normally dry washes and flood control facilities. The 
news media reported two deaths during this flood event, one of which 
was a drowning in the Flamingo Wash. Damages to public property caused 
by this storm were estimated at $20,500,000. The President declared 
Clark County a Federal disaster area on July 19, 1999, recognizing the 
severity of damages to public and private properties. Significant 
damages could have been avoided if the Corps' Tropicana and Flamingo 
Washes Project had been fully implemented. However, those features of 
the Corps' project that were completed did help to mitigate damages.
    On August 19, 2003 another flash flood hit the Las Vegas Valley and 
damaged hundreds of homes and businesses. Storms of this magnitude only 
reinforce the need to expeditiously build all flood control projects in 
the Las Vegas Valley.
    In the winter of 2004-2005, the area experienced heavier than 
normal rainfall amounts. That winter brought twice the area's average 
annual rainfall causing flooding in along the Virgin and Muddy Rivers 
in Clark County, Nevada. Several areas in the Las Vegas Valley also 
experienced drainage problems. The flood control features built as part 
of the Tropicana and Flamingo Washes Project helped to protect vast 
areas of our community.
    The Feasibility Report for this project was completed in October 
1991, and Congressional authorization was included in the WRDA of 1992. 
The first Federal appropriation to initiate construction of the project 
became available through the Energy and Water Resources Development 
Appropriations Bill signed into law by the President in October 1993. 
The Project Cooperation Agreement (PCA) was fully executed in February 
1995. Federal appropriations to date have totaled $269,345,000 
(allocations $226.7 million), allowing continued project construction. 
The total cost of the flood control portion of the project is currently 
estimated at $336,342,000, higher than originally anticipated primarily 
due to the delay in Federal appropriations which has resulted in 
increases in real estate and construction costs.
    The local community had constructed certain elements of the Corps' 
plan prior to the execution of the PCA. These project elements required 
modifications in order to fit into the Corps' plan and fulfill the need 
for a ``total fan approach'' to the flooding problems in the Las Vegas 
Valley. The work performed by the non-Federal sponsors, construction of 
Red Rock Detention Basin and Flamingo Detention Basin, has been 
accounted for in Section 104 credits and totals $9,906,000.
    We have already realized some benefits from construction of flood 
control features on the Federal project. We have removed 18.1 square 
miles of flood zones from Federal Emergency Management Agency's (FEMA) 
Flood Insurance Rate Maps. This was accomplished through the completion 
of the Red Rock Detention Basin Modifications, the Blue Diamond 
Detention Basin, and the F-1 and F-2 Debris Basins and Outfall 
Channels. We anticipate removal of an additional 0.7 square miles of 
flood zones as a result of recently completed portions of the Federal 
project and even more removed when the entire project is complete.
    Both the Clark County Regional Flood Control District and Clark 
County are looking forward to the completion of construction of this 
flood control project in fiscal year 2007.
    The non-Federal sponsors are requesting $15,000,000 for both the 
continued construction and reimbursement to the local sponsors of this 
project. Funding at this level will allow the Corps of Engineers to 
complete the construction of the last project feature, the F-4 Debris 
Basin and Channel.
    In order to provide the required flood protection in a timely 
fashion, the non-Federal sponsors are implementing certain features in 
advance of the Federal Government pursuant to Section 211 of WRDA 1996. 
An amendment to the PCA was fully executed on December 17, 1999, that 
formalizes the provisions of Section 211 of WRDA 1996. Section 211(f) 
of WRDA 1996 recognized the Tropicana and Flamingo Washes project as 
one of eight projects in the Nation to demonstrate the potential 
advantages and effectiveness of non-Federal implementation of Federal 
flood control projects. The work funded by the non-Federal sponsors and 
completed is substantial and includes features that were designed by 
the non-Federal sponsors and constructed by either the Federal 
Government or the non-Federal sponsors. To date, $13.5 million has been 
reimbursed.
    The non-Federal sponsors are requesting up to $9 million of the $15 
million for reimbursement under Section 211. This amount is requested 
in light of the language contained in the fiscal year 2000 Energy and 
Water Development Bill, Senate Report 106-58, which states in part, 
``The Committee expects . . . every effort to even out reimbursement 
payments to lessen future budgetary impacts.'' The non-Federal 
sponsors' contributions to the project are for the primary purpose of 
providing flood protection as quickly as possible.
    In summary, the Tropicana and Flamingo Washes project is an 
important public safety project designed to provide flood protection 
for one of the fastest growing urban areas in the Nation. We ask that 
the committee provide the Secretary of the Army with $15 million, in 
fiscal year 2007, in order to facilitate the completion of construction 
of this critical flood control project and use up to $9 million of the 
$15 million to reimburse the non-Federal sponsors the Federal 
proportionate share of the work completed by the sponsors in advance of 
the Federal Government.
    The committee is aware that flood control measures are a necessary 
investment required to prevent loss of life and damages to people's 
homes and businesses. Flood control is a wise investment that will pay 
for itself by preserving life and property and reducing the probability 
of repeatedly asking the Federal Government for disaster assistance. 
Therefore, when balancing the Federal budget, we believe a thorough 
analysis will show that there is substantial future Federal savings in 
disaster assistance that supports sufficient appropriations through the 
Civil Works Budget.
                                 ______
                                 
            Prepared Statement of the Ventura Port District

    The Ventura Port District respectfully requests that the Congress 
increase the administration's request from $1,700,000 to $3,370,000 for 
inclusion in the fiscal year 2007 Energy and Water Development 
Appropriations Bill for the U.S. Army Corps of Engineers maintenance 
dredging of the Ventura Harbor Federal channel and sand traps.

                               BACKGROUND

    Ventura Harbor, homeport to 1,500 vessels, is located along the 
Southern California coastline in the City of San Buenaventura, 
approximately 60 miles northwest of the City of Los Angeles. The harbor 
opened in 1963. Annual dredging of the harbor entrance area is 
necessary in order to assure a navigationally adequate channel. In 
1968, the 90th Congress made the harbor a Federal project and committed 
the U.S. Army Corps of Engineers to the maintenance of the entrance 
structures and the dredging of the entrance channel and sand traps 
(Public Law 90-483, section 101).
    The harbor presently generates more than $50 million in gross 
receipts annually. That, of course, translates into thousands of both 
direct and indirect jobs. A significant portion of those jobs are 
associated with the commercial fishing industry which landed over 25 
million pounds of seafood in 2005 (the harbor is consistently amongst 
the top ten commercial fishing ports in the United States), and with 
vessels serving the offshore oil industry. Additionally, the 
headquarters for the Channel Islands National Park is located within 
the harbor, and the commercial vessels transporting the nearly 100,000 
visitors per year to and from the Park islands offshore, operate out of 
the harbor. All of the operations of the harbor, particularly those 
related to commercial fishing, the support boats for the oil industry, 
and the visitor transport vessels for the Channel Islands National Park 
are highly dependent upon a navigationally adequate entrance to the 
harbor.

                    OPERATIONS AND MAINTENANCE NEEDS

Maintenance Dredging
    It is estimated that $3,370,000 will be required to perform the 
maintenance dredging of the harbor's entrance channel and sand traps 
during fiscal year 2007. Because of reduced funding in fiscal year 2006 
more than 350,000 cubic yards of material was not removed by the Corps 
of Engineers contractor during the current dredging effort and thus the 
request is absolutely essential to the continued operation of the 
harbor in fiscal year 2007.
                                 ______
                                 
  Prepared Statement of the Arkansas River Basin Interstate Committee

    Mr. Chairman and members of this distinguished committee, my name 
is Lew Meibergen. I am Chairman of the Board of Johnston Enterprises 
headquartered in Enid, Oklahoma. It is my honor to serve as Chairman of 
the Arkansas River Basin Interstate Committee, members of which are 
appointed by the governors of the great States of Arkansas, Colorado, 
Kansas, Missouri, and Oklahoma.
    In these times of war on terrorism, homeland defense and needed 
economic recovery, our thanks go to each of you, your staff members and 
the Congress. Your efforts to protect our Nation's infrastructure and 
stimulate economic growth in a time of budget constraints are both 
needed and appreciated.
    Our Nation's growing dependence on others for energy, and the need 
to protect and improve our environment, make your efforts especially 
important. Greater use and development of one of our Nation's most 
important transportation modes--our navigable inland waterways--will 
help remedy these problems. At the same time, these fuel-efficient and 
cost-effective waterways keep us competitive in international markets. 
In this regard, we must maintain our inland waterway transportation 
system. We ask that the Congress restore adequate funding to the Corps 
of Engineers budget--$6.7 billion in fiscal year 2007--to keep the 
Nation's navigation system from further deterioration. If this 
catastrophic problem is not addressed immediately, we are in real 
danger of losing the use of this most important transportation mode.
    As Chairman of the Interstate Committee, I present this summary 
testimony as a compilation of the most important projects from each of 
the member States. Each of the States unanimously supports these 
projects without reservation. I request that the copies of each State's 
individual statement be made a part of the record, along with this 
testimony.
Equus Beds Aquifer--Kansas
    Equus Beds Aquifer Storage and Recovery Project.--Continuation of a 
City of Wichita, Groundwater Management District No. 2 and State of 
Kansas project to construct storage and recovery facilities for a major 
groundwater resource supplying water to more than 20 percent of Kansas 
municipal, industrial and irrigation users. The project will capture 
and recharge in excess of 100 million gallons per day and will also 
reduce on-going degradation of the existing groundwater by minimizing 
migration of saline water. Federal authorization of the project through 
House Bill 1327 introduce last year or through similar legislation this 
year. Construction Phase One is scheduled for completion in 2007. 
Continued Federal funding is requested for fiscal year 2007 consistent 
with this legislation which will authorize funding for 25 percent of 
the project cost up to a maximum of $30 million during the construction 
phases.
Arkansas River Navigation Improvements
    Mr. Chairman, Public Law 108-137 authorized a 12-foot channel on 
the McClellan-Kerr Arkansas River Navigation System. The Corps is now 
obligated to operate and maintain the system as a 12-foot channel. Over 
90 percent of the system currently is adequate for a 12-foot channel. 
Deepening the remainder of the channel to 12 feet will allow carriers 
to place 43 percent more cargo on each barge, which will reduce the 
amount of fuel consumed and emissions released. Other environmental 
benefits include the creation of new aquatic habitat through new dike 
construction and the construction of least tern islands through 
beneficial use of dredged material.
    Therefore, we request $40 million to construct dike structures to 
scour out the channel, and dredge necessary areas for improving the 
depth of the channel. This investment will increase the cost 
competitiveness of this low-cost, environment-friendly transportation 
mode and help us combat the loss of industry and jobs to overseas.
Tow Haulage Equipment--Oklahoma
    We request funding of $5.0 million to initiate the installation of 
tow haulage equipment on the locks located along the Arkansas River 
portion of the McClellan-Kerr Arkansas River Navigation System. Total 
cost for these three locks is $5 million. This project will involve 
installation of tow haulage equipment on W.D. Mayo Lock and Dam No. 14, 
Robert S. Kerr Lock and Dam No. 15, and Webbers Falls Lock and Dam No. 
16, on the Oklahoma portion of the waterway. The tow haulage equipment 
is needed to make transportation of barges more efficient and 
economical by allowing less time for tows to pass through the various 
locks.
    The testimony we present reveals our firm belief that our inland 
waterways and the Corps of Engineers' efforts are especially important 
to our Nation in this time of trial. Transportation infrastructure like 
the inland waterways need to be operated and maintained for the benefit 
of the populace. Without adequate annual budgets, this is impossible.
    Mr. Chairman, members of this committee, we respectfully request 
that you and members of your staff review and respond in a positive way 
to the attached individual statements from each of our States which set 
forth specific requests pertaining to those States.
    We sincerely appreciate your consideration and assistance.

                                ARKANSAS
      PREPARED STATEMENT OF PAUL LATTURE II, CHAIRMAN FOR ARKANSAS

    Mr. Chairman and members of the committee, thank you for the 
opportunity to present testimony to this most important committee. I 
serve as Executive Director for the Little Rock Port Authority and as 
Arkansas Chairman for the Interstate Committee. Other committee members 
representing Arkansas, in whose behalf this statement is made, are: Mr. 
Scott McGeorge, President, Pine Bluff Sand and Gravel Company, Pine 
Bluff; Mr. N.M. ``Buck'' Shell, CEO, Five Rivers Distribution in Van 
Buren and Fort Smith; Mr. Jack Long, General Manager, Logistic 
Services, Inc., Port of Little Rock; and Mr. Jeff Pipkin, President & 
CEO of the Russellville Area Chamber of Commerce and Director of the 
Arkansas Valley Alliance for Economic Development.
    We call to your attention four projects on the McClellan-Kerr 
Arkansas River Navigation System (the ``System'') that are especially 
important to navigation and the economy of this multi-State area: 
Arkansas River 12-Foot Channel, Little Rock Port, Backlog of Channel 
and Structure Maintenance, and the Arkansas-White Rivers Cut-Off Study.
Arkansas River's 12-Foot Channel
    Mr. Chairman, Public Law 108-137 authorized a 12-foot channel on 
the McClellan-Kerr Arkansas River Navigation System. The Corps is now 
obligated to operate and maintain the system as a 12-foot channel. Over 
90 percent of the system currently is adequate for a 12-foot channel. 
Deepening the remainder of the channel to 12 feet will allow carriers 
to place 43 percent more cargo on each barge which will reduce the 
amount of fuel consumed and emissions released. Other environmental 
benefits include the creation of new aquatic habitat through new dike 
construction and the construction of least tern islands through 
beneficial use of dredged material.
    Therefore, we request $40,000,000 to continue the work towards 
achieving the 12-foot navigation channel as noted in Public Law 108-
137. Corps of Engineers capability levels on this project are currently 
$20,000,000 in both the Tulsa and Little Rock Districts. The goal of 
completing this project in 4 years at the capability levels of the 
Corps will increase the cost competitiveness of this low cost-
environment friendly transportation method and help us combat the loss 
of industry and jobs to overseas.
Little Rock Port
    We recognize the significant reduction in new work and understand 
the need to combat the Global War on Terrorism. We also recognize the 
need to look for economic advantages where the needs of the government 
cross with the good of public entities to serve both needs. We believe 
a prime example of this effort would be to utilize Section 107 of the 
River and Harbors Act of 1960 (Public Law 86-645) in the Continuing 
Authorities Program which would allow the disposal of dredge disposal 
material to be utilized by the Little Rock Port for beneficial fill 
material.
    Therefore, $7.6 million is requested for this project. This project 
will compliment the goal of Homeland Security by providing a safe, mid-
America environment for shipping while complimenting other Federal 
investments, including the 12-foot channel project by providing 
completion of a major economic development engine.
Backlog of Channel Structure Maintenance
    We request $10 million Operation and Maintenance Budget which is 
urgently needed for critical repairs to damaged and deteriorated dikes 
and revetments to maintain channel alignment and provide original 
channel configuration while reducing the need for dredging.
    More than a decade of neglect to our navigation structures while 
funding the construction of Montgomery Point Lock & Dam has created a 
critical backlog of channel structure work that threatens the viability 
of the McClellan-Kerr Arkansas River Navigation System.
Arkansas-White Rivers Cutoff Study
    A cutoff is developing between the Arkansas and White Rivers which, 
if not corrected, could have dramatic adverse effects on the navigation 
system as well as significant bottomland hardwoods and pristine 
environment that provides unique wildlife habitat in southeast 
Arkansas.
    Unless corrected, it is inevitable that a major cutoff will occur 
negatively impacting navigation on the river, significantly increasing 
siltation and dredging requirements and, at worst, cutting off the 
lower end of the Navigation System from the Mississippi River.
    We request, for the benefit of the entire system, $300,000 to 
protect the Navigation System from incurring significant increases in 
dredging, hazardous navigation conditions, and to preclude a 
devastating loss of habitat in bottom land hardwoods in the Big Island 
region between the Arkansas River, the White River and the Mississippi 
River. This pristine habitat is being threatened from the meandering of 
these rivers while also adversely impacting the Navigation System. The 
funds are greatly needed to complete the study and do the required 
environmental documentation.
    In addition to these three vital requests, we urge you to continue 
to support funding for the construction, and operation and maintenance 
of the McClellan-Kerr Arkansas River Navigation System which provides 
low-cost and dependable transportation for farm products, construction 
aggregates, raw materials and finished products important to our 
Nation's economic recovery.
    It is also most important that you continue construction authority 
of the McClellan-Kerr Project until remaining channel stabilization 
problems identified by the Little Rock District Corps of Engineers have 
been resolved. The Corps needs to develop a permanent solution to the 
threat of cutoffs developing in the lower reaches of the navigation 
system and to use environmentally sustainable methods under the 
existing construction authority.
    Mr. Chairman, we appreciate the work of this essential committee 
and thank you for your efforts that contribute so much to the social 
and economic well-being of the United States of America.
    We fully endorse the statement presented to you today by the 
Chairman of the Arkansas River Basin Interstate Committee and urge you 
to favorably consider these requests that are so important to the 
economic recovery of our region and Nation.

                                 KANSAS
      PREPARED STATEMENT OF GERALD H. HOLMAN, CHAIRMAN FOR KANSAS

    Mr. Chairman and members of the committee, I am Gerald H. Holman, 
Senior Vice President of the Wichita Area Chamber of Commerce, Wichita, 
Kansas and Chairman of the Kansas Interstate Committee for the Arkansas 
Basin Development Association (ABDA).
    The Kansas ABDA representatives join with our colleagues from the 
other Arkansas River Basin States to form the multi-State Arkansas 
Basin Development Association. We fully endorse the summary statement 
presented to you by the Chairman of the Arkansas River Basin Interstate 
Committee.
    Public Law 108-137 authorized a 12-foot channel on the McClellan-
Kerr Arkansas River Navigation System. The Corps is now obligated to 
operate and maintain the system as a 12-foot channel. Over 90 percent 
of the system currently is adequate for a 12-foot channel. Deepening 
the remainder of the channel to 12 feet will allow carriers to place 43 
percent more cargo on barges, which will reduce the amount of fuel 
consumed and emissions released. Funds in the amount of $7.0 million 
were allocated in fiscal year 2005 with $1.5 million used to complete 
the Feasibility Study and Environmental Impact Statement with the other 
$5.5 million used on engineering, design, and construction activities. 
In conjunction with the deepening project the Corps is preparing a 
Basin Wide Master Plan that will include an integrated major 
maintenance construction and operational maintenance prioritized list 
for investment opportunities. Other environmental benefits include the 
creation of new aquatic habitat through new dike construction and the 
construction of Least Tern islands through beneficial use of dredged 
material.
    Therefore, we request $40 million to maintain the authorized depth 
by constructing dike structures to minimize dredging and dredging only 
necessary areas. This investment will increase the cost competitiveness 
of this low cost, environment-friendly transportation method and help 
us combat the loss of industry and jobs to overseas.
    The critical water resources projects in the Kansas portion of the 
Arkansas River Basin are identified below. The projects are 
environmental and conservation in nature and all have regional and/or 
multi-State impact. We are grateful for your past commitment to these 
projects.
    We ask for your continued support for this important Bureau of 
Reclamation project on behalf of the Wichita/South Central Kansas area:
    Equus Beds Aquifer Storage and Recovery Project.--This is the 
continuation of a Bureau of Reclamation project jointly endorsed by the 
City of Wichita, Groundwater Management District No. 2 and the State of 
Kansas. This model technology has proven the feasibility of recharging 
a major groundwater aquifer supplying water to nearly 600,000 
irrigation, municipal and industrial users. The demonstration project 
has successfully recharged more than 1 billion gallons of water from 
the Little Arkansas River. The project is essential to help protect the 
aquifer from on-going degradation caused by the migration of saline 
water.
    The Equus Beds are vital to the surrounding agricultural economy. 
Also, environmental protection of the aquifer, which this strategic 
project provides, has increasing importance to ensure quality water for 
the future since south central Kansas will rely to an even greater 
extent on the Equus Beds aquifer for water resources.
    The south-central Kansas economy including the Wichita MSA 
represents:
  --More than 20 percent of the State's employment.
  --More than one-third of the State's manufacturing employment and 
        payroll.
  --At least 20 percent of the State personal income.
    The quality of life and economic future for more than 20 percent of 
the State's population and economy is dependent upon the availability 
of reliable, high quality water resources from the Equus Beds.
    The State of Kansas supports the project as the needed cornerstone 
for the area agricultural economy and for the economy of the Wichita 
metropolitan area. The Chief Engineer of Kansas has authorized full-
scale construction.
    The aquifer storage and recovery project is a vital component of 
Wichita's comprehensive and integrated water supply strategy. The full 
scale design concept for the aquifer storage and recovery project calls 
for a multi-year construction program. Phase One is estimated to cost 
approximately $25 million and is scheduled for completion in 2007. The 
total project involving the capture and recharge of more than 100 
million gallons of water per day is estimated to cost $130 million over 
10 years. This is substantially less costly, both environmentally and 
economically, when compared with reservoir construction or other 
alternatives.
    We are grateful for your previous cost share funding during the 
demonstration phase, as a compliment to funds provided by the City of 
Wichita. As we enter the construction phase, we request continued 
Congressional support in two ways:
  --House Bill 1327 was passed by the House of Representatives last 
        year. The Senate passed a very similar bill, Senate Bill 1025. 
        This legislation, or similar legislation, would authorize the 
        project and also provide cost share funding up to 25 percent of 
        the project cost to a maximum of $30 million. We request your 
        support of this legislation authorizing the Aquifer Storage and 
        Recovery Project as a Federal project and directing the Bureau 
        of Reclamation to participate in its final design and 
        construction to completion.
  --Through continued cost share funding of the full-scale Aquifer 
        Storage and Recovery Project within the limits of House Bill 
        1327 or similar legislation for fiscal year 2007.
    The Arkansas River Basin is a treasure that must be protected for 
future generations. However, we are experiencing decline in water 
quality due to sediment and nutrient loading. The quality of the water 
in the Arkansas River and its tributaries, including the numerous 
reservoirs in the system, is a reflection of its watershed and land use 
practices. It is imperative that the subbasins within the system are 
studied using the watershed approach and that protective remedies are 
identified and implemented to reverse the continuing decline in water 
quality. We recommend adding the following high priority watershed 
studies to the fiscal year 2007 budget:
  --Walnut River (El Dorado Lake) Watershed Feasibility Study.--A 
        reconnaissance study was conducted in July 2000 by the USACE, 
        Tulsa District, which identified ecosystem restoration as a 
        primary concern in the Walnut Basin. The Kansas Water Office 
        entered into an agreement with the USACE to begin a Walnut 
        River Basin Ecosystem Restoration Feasibility Study for the 
        entire basin.
      Following the initial phase of the feasibility study, it was 
        decided that focusing the study to a smaller geographic area 
        would make more efficient use of existing local, State, and 
        Federal resources. The project was re-scoped to focus study 
        efforts on protection and restoration of El Dorado Lake and its 
        contributing watershed.
      Public water supply storage in El Dorado Lake is owned by the 
        City of El Dorado and represents an important future regional 
        water supply source for the Walnut Basin. The reservoir and its 
        watershed have been designated by the Kansas Department of 
        Health and Environment as high priority for Total Maximum Daily 
        Load (TMDL) implementation for eutrophication (nutrients) and 
        siltation. Fecal coliform bacteria is another high priority 
        TMDL pollutant. Because of the importance of protecting both 
        water quality and quantity in El Dorado Lake, and to more 
        effectively target limited resources, KWO has partnered with 
        the City of El Dorado to address long-term protection and 
        restoration needs for the reservoir and its watershed, in 
        cooperation with other local, State and Federal agencies.
      Study efforts include addressing identified opportunities to 
        reduce sedimentation in El Dorado Lake and meet the watershed 
        total daily maximum load (TMDL) issues of sediment and 
        eutrophication for the purpose of preserving existing water 
        supply storage, restoring riparian and aquatic habitat in the 
        lake and watershed.
      The fiscal year 2006 budget for this project in the amount of 
        $200,000 is for continuation of the feasibility study. We 
        support the President's proposed fiscal year 2007 budget which 
        includes $80,000 for completion of the feasibility study in 
        September 2007.
  --Grand (Neosho) Basin Reconnaissance Study.--A need exists for a 
        basin-wide water resource planning effort in the Grand-Neosho 
        River basin, apart from the issues associated with Grand Lake, 
        Oklahoma. A Federal interest has been determined from the 
        reconnaissance study as a result from a Congressional add in 
        fiscal year 2003 and another add was appropriated in fiscal 
        year 2004. The Reconnaissance Report has been approved. 
        Feasibility Cost Share Agreements will be executed in 2006. The 
        study would support management efforts by Kansas and Oklahoma 
        agencies to address watershed and reservoir restoration issues 
        in the Grand Lake Watershed. Local interest exists for 
        ecosystem restoration projects and flood damage reduction 
        projects. We request funding in the amount of $450,000 in 
        fiscal year 2007.
    Grand Lake Feasibility Study.--A need exists to evaluate solutions 
to upstream flooding problems associated with the adequacy of existing 
real estate easements necessary for flood control operations of Grand 
Lake, Oklahoma. A study authorized by the Water Resources Development 
Act of 1996 was completed in September of 1998 and determined that if 
the project were constructed based on current criteria, additional 
easements would be required. Section 449 of the WRDA of 2000 directed 
the Secretary to evaluate backwater effects specifically due to flood 
control operations on land around Grand Lake and authorizes a 
feasibility study at full Federal cost if the Secretary determines that 
Federal actions have been a significant cause of the backwater effects. 
The Tulsa District is preparing a letter report which will be submitted 
to the ASA(CW) for a determination on proceeding with a full federally 
financed feasibility study. If the ASA(CW) determines that Federal 
actions have been a significant cause of the flooding, feasibility 
study activities would be initiated at full Federal expense. Since 
Grand Lake is an integral component of a system flood control operation 
consisting of 11 principal reservoir projects in the Arkansas River 
basin, changes in the operations of the project or other upstream 
changes could have a significant impact on flood control, hydropower 
and navigation operations in the Grand (Neosho) River system and on the 
Arkansas River Basin system, as well. A feasibility study is necessary 
to determine the most cost-effective comprehensive solution to the real 
estate inadequacies. We urge you to provide $500,000 to fund 
feasibility studies for this important project in fiscal year 2007 and 
to direct the Corps of Engineers to execute the study at full Federal 
expense. This project has been a Congressional add for the past 4 
years, but there are no funds in the fiscal year 2007 President's 
budget request to continue this project.
    Continuing Authorities Programs.--We support funding of needed 
programs including the Small Flood Control Projects Program (Section 
205 of the 1948 Flood Control Act, as amended), Aquatic Ecosystem 
Restoration (Section 206 of the 1996 Water Resources Development Act, 
as amended), Ecosystem Restoration (Section 1135 of the 1986 Water 
Resources Development Act, as amended) as well as the Emergency 
Streambank Stabilization Program (Section 14 of the 1946 Flood Control 
Act, as amended). Smaller communities in Kansas (Iola, Liberal, 
McPherson, Augusta, Parsons, Altoona, Kinsley, Newton, Arkansas City, 
Coffeyville and Medicine Lodge) have previously requested assistance 
from the Corps of Engineers under the Section 205 and Section 14 
programs. The City of Wichita also requests funding through these 
programs to address flooding problems. We urge you to support an 
increase of these programs to the $65 million programmatic limit for 
the Small Flood Control Projects Program, $35 million for Aquatic 
Ecosystem Restoration, $35 million for the Ecosystem Restoration 
Program and $25 million for the Emergency Streambank Stabilization 
Program.
    The Planning Assistance to States Program under section 22 of the 
Water Resources Development Act of 1974, as amended, provides Federal 
funding to assist the States in water resource planning. The State of 
Kansas is grateful for previous funding under this program which has 
assisted small Kansas communities in cost sharing needed resource 
planning as called for in the Kansas State Water Plan. We request 
continued funding of this program at the $10 million programmatic limit 
which will allow the State of Kansas to receive the $500,000 limit.
    Finally, we are very grateful that both the Corps of Engineers and 
Bureau of Reclamation have the expertise needed for the development and 
protection of water resources infrastructure. It is essential to have 
the integrity and continuity these agencies provide on major public 
projects. Your continued support of these vital agencies, including 
funding, will be appreciated. Our infrastructure must be maintained and 
where needed, enhanced for the future.
    Mr. Chairman and members of these committees, thank you very much 
for the dedicated manner in which you have dealt with the Water 
Resources Programs and for allowing us to present our funding requests.

                                OKLAHOMA
   PREPARED STATEMENT OF JAMES M. HEWGLEY, JR., CHAIRMAN FOR OKLAHOMA

    Mr. Chairman and members of the committee, I am James M. Hewgley, 
Jr., Oklahoma Chairman of the Arkansas River Basin Interstate 
Committee, from Tulsa, Oklahoma.
    It is my privilege to present this statement on behalf of the 
Oklahoma members of our committee in support of adequate funding for 
water resource development projects in our area of the Arkansas River 
Basin. Other members of the committee are: Mr. Ted Coombes, Tulsa; Mr. 
A. Earnest Gilder, Muskogee; Mr. Terry McDonald, Tulsa; and Mr. Lew 
Meibergen, Enid, who also serves as Chairman of the combined Arkansas 
River Basin Interstate Committee.
    The committee is encouraged about water resource developmental 
opportunities in the Arkansas River Basin for not only navigation, but 
also hydropower, flood control, recreation, water supply, and 
environmental stewardship. However, we are concerned that existing and 
proposed funding levels will not support the needs.
    Mr. Chairman, Public Law 108-137 authorized a 12-foot channel on 
the McClellan-Kerr Arkansas River Navigation System. The Corps is now 
obligated to operate and maintain the system as a 12-foot channel. Over 
90 percent of the system currently is adequate for a 12-foot channel. 
Deepening the remainder of the channel to 12 feet will allow carriers 
to place 43 percent more cargo on barges, which will reduce the amount 
of fuel consumed and emissions released. Funds in the amount of $7.0 
million were allocated in fiscal year 2005 with $1.5 million used to 
complete the Feasibility Study and Environmental Impact Statement with 
the other $5.5 million used on engineering, design, and construction 
activities. In conjunction with the deepening project the Corps is 
preparing a Basin Wide Master Plan that will include an integrated 
major maintenance construction and operational maintenance prioritized 
list for investment opportunities. Other environmental benefits include 
the creation of new aquatic habitat through new dike construction and 
the construction of Least Tern islands through beneficial use of 
dredged material.
    Therefore, we request $40 million to maintain the authorized depth 
by constructing dike structures to minimize dredging and dredging only 
necessary areas. This investment will increase the cost competitiveness 
of this low-cost, environment-friendly transportation method and help 
us combat the loss of industry and jobs to overseas.
    Tow Haulage Equipment--Oklahoma.--We request funding of $5.0 
million to initiate the installation of tow haulage equipment on the 
locks located along the Arkansas River portion of the McClellan-Kerr 
Arkansas River Navigation System.
    The Power Plant at Webbers Falls Lock and Dam on the Arkansas River 
has suffered from greatly reduced reliability due to turbine design 
problems. One of the three turbines at the project has suffered major 
damage and will remain unavailable for generation until it can be 
rebuilt. Because this is a run-of-the-river facility with no storage, 
energy spilled due to off-line units is energy that is lost forever. A 
feasibility study recommending major rehabilitation of this unit has 
been approved by the office of the Chief of Engineers.
    Similar problems have been experienced at Ozark-Jeta Taylor Lock 
and Dam on the Arkansas River in Arkansas. Congress approved a new 
start and funding to begin the major rehabilitation of the Ozark 
powerhouse in fiscal year 2003. Congress approved the administration's 
fiscal year 2005 budget request of $5 million in Construction General 
funding to continue this major rehabilitation. By combining the turbine 
replacements into a single contract, the Little Rock District awarded a 
contract in May 2005 to replace the turbines with a more reliable 
design. This contract also includes three options to provide newly 
designed turbines for the Webbers Falls project as well, if additional 
funding is forthcoming as recommended by the Corps' Hydropower Design 
Center. The Corps has saved $5 million over the life of the project. 
Unfortunately, no funding for these projects was included in the 
administration's fiscal year 2006 and 2007 budget requests, and the 
conference report on the fiscal year 2006 Energy and Water Development 
Appropriations bill also excluded funding for them.
    The wholesale power customers are providing essential funding for 
the turbine replacement contract in fiscal year 2006 under terms of a 
Memorandum of Agreement (MOA) between the Corps, the customers and 
Southwestern Power Administration. However, the MOA is not a viable 
vehicle for long-term funding of the contract.
    The committee recommends that Congress appropriate $19.5 million to 
start the Webbers Falls major rehab in early in fiscal year 2007.
    Arkansas-White Rivers Cutoff Study is to determine a solution to 
prevent the developing cutoff from joining the Arkansas and White 
Rivers near the confluence of the McClellan-Kerr Arkansas River 
Navigation System and the Mississippi Rivers. If not corrected, this 
occurrence could have a dramatic adverse effect on the navigation 
system. Unless corrected, this will effectively drain the water from 
the navigation system and halt the movement of commerce on the system.
    Therefore we request an appropriation of $300,000 to protect the 
navigation system from closure.
    There has been over $5.5 billion invested in the construction and 
development of the McClellan-Kerr Arkansas River Navigation System by 
the Federal Government ($1.3 billion) and the public and private sector 
($4.2 billion+), resulting in the creation of over 50,000 jobs in this 
partnered project.
    Maintenance of the Navigation System.--In preparation for the 
deepening of the navigation system from 9 feet to 12 feet, there is a 
backlog of maintenance items that has been deferred due to insufficient 
budgets to allow proper maintenance. These maintenance items are 
required even to support navigation at the 9 foot depth in order to not 
jeopardize the reliability of the system. Therefore, we request 
additional funding in the amount of $1,549,000--plus the amount from 
Little Rock, over and above normal funding, for deferred channel 
maintenance. These funds would be used for such things as repair of 
bank stabilization work, needed advance maintenance dredging, and other 
repairs needed on the system's components that have deteriorated over 
the past 3 decades.
    In addition to the system-wide needed maintenance items mentioned 
above, the budget for the Corps of Engineers for the past several years 
has been insufficient to allow proper maintenance of the McClellan-Kerr 
Arkansas River Navigation System-Oklahoma portion. As a result, the 
backlog of maintenance items has continued to increase. If these 
important maintenance issues are not addressed soon, the reliability of 
the system will be jeopardized. The portion of the system in Oklahoma 
alone is responsible for returning $2.6 billion in annual benefits to 
the regional economy. The fiscal year 2006 O&M President's budget for 
Tulsa District was $8.2 million less (over 11 percent) than the fiscal 
year 2005 appropriation, which will result in no funding being 
available for critical infrastructure maintenance in fiscal year 2006. 
The fiscal year 2007 O&M President's budget is currently proposed at 
$72.4 million which is presently $10 million more than the fiscal year 
2006 budget. This $10 million increase is offset by higher energy, 
labor, and construction costs. We therefore request that $2.1 million 
be added to the budget to accomplish critical infrastructure 
maintenance items on the Oklahoma portion of the system as follows:
  --McClellan-Kerr.--$600,000 to repair plate seals for the weirs;
  --Robert S. Kerr.--$1,500,000 to repair erosion and construct 
        emergency mooring wood dolphins.
    Additional O&M funds are also requested for other high priority, 
non-navigation, water resource needs including $600,000 for tainter 
gate repair at Kaw Lake; $1,200,000 to repair sluice gates and liners 
at Keystone Lake; $1,500,000 for tainter gate repair at Fort Gibson 
Lake; and $400,000 for tainter gate hoist equipment replacement at 
Tenkiller Ferry Lake.
    Miami, Oklahoma and Vicinity Feasibility Study.--We request funding 
of $350,000 to move into the feasibility stage for the vicinity in 
Ottawa County including and surrounding Miami, Oklahoma in the Grand 
(Neosho) Basin. Water resource planning-related concerns include 
chronic flooding, ecosystem impairment, poor water quality, subsidence, 
chat piles, mine shafts, health effects, and Native American issues. 
The State of Oklahoma's desire is to address the watershed issues in a 
holistic fashion and restore the watershed to acceptable levels. Study 
alternatives could include structural and non-structural flood damage 
measures, creation of riverine corridors for habitat and flood storage, 
development of wetlands to improve aquatic habitat and other measures 
to enhance the quality and availability of habitat and reduce flood 
damages.
    Oologah Lake Watershed Feasibility Study.--We request funding of 
$500,000, which is $500,000 more than the President's budget request, 
for ongoing feasibility studies at Oologah Lake and in the upstream 
watershed. The lake is an important water supply source for the city of 
Tulsa and protection of the lake and maintaining and enhancing the 
quality of the water is important for the economic development of the 
city. Recent concerns have been expressed by the City of Tulsa and 
others regarding potential water quality issues that impact water 
users, as well as important aquatic and terrestrial habitat. Concerns 
are related to sediment loading and turbidity, oilfield-related 
contaminants and nutrient loading.
    Grand (Neosho) Basin Reconnaissance Study.--We request funding in 
the amount of $450,000 to conduct a feasibility study of the water 
resource problems in the Grand (Neosho) Basin in Oklahoma and Kansas. 
There is a need for a basin-wide water resource planning effort in the 
Grand-Neosho River basin, apart from the issues associated with Grand 
Lake, Oklahoma. The reconnaissance report has been approved and 
indicated that there is a Federal interest in this project and the 
feasibility will focus on the evaluation of institutional measures 
which could assist communities, landowners, and other interests in 
northeastern Oklahoma and southeastern Kansas in the development of 
non-structural measures to reduce flood damages in the basin. 
Feasibility Cost Share Agreements will be executed in 2006 but the 
fiscal year 2007 President's budget did not provide funding to continue 
into the feasibility stage.
    Spavinaw Creek Watershed Study.--Spavinaw Creek and its downstream 
impoundments, Eucha and Spavinaw Lakes, are severely impacted by 
nutrient loading and excessive algae growth as a result of agricultural 
practices located in Arkansas and Oklahoma. Degradation of water 
quality has led to taste and odor problems, increased treatment costs, 
and a decreased recreational and aesthetic value of the lakes. 
Together, Spavinaw and Eucha Lakes provide 47 percent of the water 
supply for the Tulsa metropolitan area. The Metropolitan Utility 
Authority entered into the feasibility cost-share agreement in June 
2004. We request funds in the amount of $210,000 to continue this 
study.
    Grand Lake Feasibility Study.--A need exists to evaluate solutions 
to upstream flooding problems associated with the adequacy of existing 
real estate easements necessary for flood control operations of Grand 
Lake, Oklahoma. A feasibility study is necessary to determine the most 
cost-effective comprehensive solution to the real estate inadequacies. 
We urge you to provide $500,000 to fund feasibility studies for this 
important project in fiscal year 2007 and to direct the Corps of 
Engineers to execute the study at full Federal expense. This project 
has been a Congressional add for the past 4 years, but there are no 
funds in the fiscal year 2007 President's budget request to continue 
this project.
    Section 205.--Although the Small Flood Control Projects Program 
addresses flood problems which generally impact smaller communities and 
rural areas and would appear to benefit only those communities, the 
impact of those projects on economic development crosses county, 
regional and sometimes State boundaries. There is limited funding 
available for these projects and we urge this program be increased to 
an annual limit of $65 million.
    We also request your support of the Planning Assistance to States 
Program (Section 22 of the 1974 Water Resources Development Act) which 
authorizes the Corps of Engineers to use its technical expertise in 
water and related land resource management to help States and Indian 
tribes solve their water resource problems. The Water Resources 
Development Act of 1996 increased the annual program limit from $6 
million to $10 million and we urge this program be fully funded to the 
programmatic limit of $10 million. We urge that you support the State 
of Oklahoma in requesting their full allocation of $500,000 for the 
Planning Assistance to States program for several important projects 
awaiting execution including the cities of Tulsa, Bristow, and 
Bartlesville and for State Water Planning efforts.
    In addition, we request your support of the Section 107 Navigation 
Program and ask that you provide $100,000 for the initiation of studies 
for a port in Wagoner County, Oklahoma. A Wagoner County Port could 
greatly benefit the region and utilize the authorized deepening of the 
McClellan-Kerr Arkansas River Navigation system to benefit the Nation.
    We strongly urge the Appropriations Committee to raise the Corps of 
Engineers' budget to $6.7 billion to help get delayed construction 
projects back on schedule and to reduce the deferred maintenance 
backlog which is out of control. This will help the Corps of Engineers 
meet the obligations of the Federal Government to people of this great 
country.
    Mr. Chairman, we appreciate this opportunity to present our view on 
these subjects.
                                 ______
                                 
          Prepared Statement of the City of Flagstaff, Arizona

    Chairman Domenici, Ranking Member Reid, and distinguished members 
of the subcommittee, thank you for allowing me to testify on behalf of 
the City of Flagstaff, Arizona in support of $22.6 million in the Army 
Corps of Engineers budget for the Rio de Flag flood control project in 
fiscal year 2007. I believe this project is critically important to the 
city, to northern Arizona, and, ultimately, to the Nation.
    As you may know, Mr. Chairman, with this subcommittee's help over 
the last 2 fiscal years, Rio de Flag received nearly $10 million to 
continue construction on this important project. We are extremely 
grateful that the subcommittee boosted this project well above the 
president's request both years, and we would appreciate your continued 
support for this project in fiscal year 2007.
    Like many other projects under the Army Corps' jurisdiction, Rio de 
Flag received no funding in the president's fiscal year 2007 budget, 
although the Corps has expressed $22.6 million as optimal funding to 
continue construction on the project. We are hopeful that the 
subcommittee will fund the Rio de Flag project at $22.6 million when 
drafting its bill in order to keep the project on an optimal schedule.
    Flooding along the Rio de Flag dates back as far as 1888. The Army 
Corps has identified a Federal interest in solving this long-standing 
flooding problem through the Rio de Flag, Flagstaff, Arizona 
Feasibility Report and Environmental Impact Study (EIS). The 
recommended plan contained in this feasibility report was developed 
based on the following opportunities: (1) flood control and flood 
damage reduction; (2) environmental mitigation and enhancement; (3) 
water resource management; (4) public recreation; and (5) redevelopment 
opportunities. This plan will result in benefits to not only the local 
community, but to the region and the Nation.
    The feasibility study by the Corps of Engineers has revealed that a 
500-year flood could cause serious economic hardship to the city. In 
fact, a devastating 500-year flood could damage or destroy 
approximately 1,500 structures valued at more than $400 million. 
Similarly, a 100-year flood would cause an estimated $100 million in 
damages. In the event of a catastrophic flood, over half of Flagstaff's 
population of more than 60,000 would be directly impacted or affected.
    In addition, a wide range of residential, commercial, downtown 
business and tourism, and industrial properties are at risk. Damages 
could also occur to numerous historic structures and historic Route 66. 
The Burlington Northern & Santa Fe Railway (BNSF), one of the primary 
east-west corridors for rail freight, could be destroyed, as well as 
U.S. Interstate 40, one of the country's most important east-west 
interstate links. Additionally, a significant portion of Northern 
Arizona University (NAU) could incur catastrophic physical damages, 
disruptions, and closings. Public infrastructure (e.g., streets, 
bridges, water, and sewer facilities), and franchised utilities (e.g., 
power and telecommunications) could be affected or destroyed. 
Transportation disruptions could make large areas of the city 
inaccessible for days.
    Mr. Chairman, the intense wildfires that have devastated the West 
during the last several years have only exacerbated the flood potential 
and hazard in Flagstaff. An intense wildfire near Flagstaff could strip 
the soil of ground cover and vegetation, which could, in turn, increase 
runoff and pose an even greater threat of a catastrophic flood.
    In short, a large flood could cripple Flagstaff for years. This is 
why the city believes it is so important to ensure that this project 
remains on schedule and that the Corps is able to maximize its optimal 
funding of $22.6 million in fiscal year 2007 for construction of this 
flood control project.
    In the city's discussions with the Corps, both the central office 
in Washington and its Los Angeles District Office also believe that the 
Rio de Flag project is of the utmost importance and both offices 
believe the project should be placed high on the subcommittee's 
priority list. We are hopeful that the subcommittee will consider this 
advice and also place the project high on its priority list and fully 
fund the project at $22.6 million for fiscal year 2007.
    As you may know, project construction and implementation of Rio de 
Flag was authorized in the Water Resources Development Act (WRDA) of 
2000. The total project cost is estimated to be $54,100,000 in and 
above the reconnaissance study or the feasibility study. The Non-
Federal share is currently $24,000,000 and the Federal share is 
currently $30,000,000. Final project costs must be adjusted based on 
Value Engineering and final design features. It is important to note 
the City of Flagstaff has already committed more than $10,500,000 to 
this project, and an additional $2,000,000 in excess of its cost share 
agreement. This clearly demonstrates the city's commitment to 
completing this important project. Through this investment in the 
project, the city has entered into the Project Cooperation Agreement 
(PCA) with the Department of the Army.
    The City of Flagstaff, as the non-Federal sponsor, is responsible 
for all costs related to required Lands, Easements, Rights-of-Way, 
Relocations, and Disposals (LERRD's). The city has already secured the 
necessary property rights to begin construction in 2004. Implementation 
of the city's Downtown and Southside Redevelopment Initiatives 
($100,000,000 in private funds) are entirely dependent on the success 
of the Rio de Flag project. The Rio de Flag project will also provide a 
critical missing bike/pedestrian connection under Route 66 and the BNSF 
Railroad to replace the existing hazardous at grade crossings.
    Both design and construction are divided into two phases. Phase I 
construction commenced in 2004. Phase II of the project commenced last 
year.
    Mr. Chairman, the Rio de Flag project is exactly the kind of 
project that was envisioned when the Corps was created because it will 
avert catastrophic floods, it will save lives and property, and it will 
promote economic growth. In short, this project is a win-win for the 
Federal Government, the city, and the surrounding communities.
    Furthermore, the amount of money invested in this project by the 
Federal Government--approximately $30 million--will be saved 
exponentially in costs to the Federal Government in the case of a large 
and catastrophic flood, which could be more than $395 million. It will 
also promote economic growth and redevelopment along areas that are 
currently underserved because of the flood potential.
    In conclusion, the Rio de Flag project should be considered a high 
priority for this subcommittee, and I encourage you to support full 
funding of $22.6 million for this project in the fiscal year 2007 
Energy and Water Development Appropriations bill. Thank you in advance 
for your consideration.
                                 ______
                                 
  Prepared Statement of the Tennessee-Tombigbee Waterway Development 
                               Authority

    Mr. Chairman, we are pleased to once again submit to you for your 
consideration the Authority's requests for fiscal year 2007 
appropriations for waterway projects of importance to our region, 
including the Tennessee-Tombigbee Waterway. This is the 47th 
consecutive year that the waterway compact has presented its funding 
requests to the Congress.
    The Tennessee-Tombigbee Waterway Development Authority is a 
federally authorized interstate compact. Its member States are Alabama, 
Kentucky, Mississippi, and Tennessee. Governor Haley Barbour of 
Mississippi is chairman of the development authority.
    As we have reported to you in the past, the Authority is most 
concerned that ports and waterways as well as the rest of the Nation's 
aging infrastructure are woefully under-funded commensurate with needs. 
While this Nation continues to underinvest in its infrastructure, China 
will spend $242 billion on rail service and intermodal connections with 
its seaports, alone, by 2020. China is projected to surpass the United 
States as the world's dominant economic power by 2050, largely 
supported by these kinds of improvements.
    While it is encouraging that the proposed 2007 budget request for 
the Corps of Engineers is the largest in memory by an administration, 
it is still nearly $600 million less than that approved by the Congress 
for this year. We are especially concerned that enough funds are not 
being provided to adequately operate and maintain our ports and 
waterways. Although the Tennessee-Tombigbee is a relatively new 
waterway compared to other systems, it has already accumulated a $12 
million backlog of indefinitely deferred maintenance and repairs due to 
under funding in prior years assuming the proposed budget is approved. 
The President's budget is nearly $4 million less than that needed to 
adequately fund the Tenn-Tom as described below.

                                          TENNESSEE-TOMBIGBEE WATERWAY
                                             [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                                    Authority's
                                                                    Fiscal Year    Proposed 2007       2007
                                                                    2006 Level        Budget      Recommendation
----------------------------------------------------------------------------------------------------------------
O&M.............................................................            24.0            20.6            24.5
Wildlife Mitigation.............................................             2.0             1.5             2.0
----------------------------------------------------------------------------------------------------------------

    Recognizing the budgetary constraints the Congress faces, we are 
recommending only level funding for the Tenn-Tom in 2007. If approved, 
the requested $24.5 million will adequately maintain the waterway and 
allow it to generate its expected benefits. This level of funding will 
also decrease the O&M backlog by nearly $4 million.
    The $3.9 million recommended increase above the President's budget 
would be used for dredging and to provide more upland disposal capacity 
to accommodate the increased dredging needs. Also, additional funds 
will help eradicate a growing problem with aquatic weeds that have in 
the past been so prevalent to stop the operation of one of the 
waterway's locks. This is the No. 1 complaint from the public 
concerning the waterway.
    The recommended $2 million for the Wildlife Mitigation Project will 
also provide level funding for the reimbursement of expenses incurred 
by the States of Alabama and Mississippi to manage some 126,000 acres 
of Federal wildlife habitat that is part of the project.
    The Tenn-Tom has now been in operation 21 years. There have not 
been any improvements made since its completion. The waterway has 
helped attract over $6 billion of new and expanded industrial 
development to the waterway corridor. Nearly $1 billion of new 
investments were announced in 2005, alone, that will generate about 1 
million tons of additional commerce for the project. The Authority is 
requesting that $5 million be appropriated to enable the Corps of 
Engineers to install cells near Columbus, MS, for mooring and fleeting 
of the growing number of barges operating on the waterway. The cells 
are also needed for mooring tows during high water when it is not safe 
to transit the Bevill Lock and Dam located downstream. The Tenn-Tom is 
the only major waterway where the Corps has not built these kinds of 
facilities to provide safer and more efficient navigation.

                                                  KENTUCKY LOCK
                                             [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                                    Authority's
                                                                    Fiscal Year    2007 Proposed       2007
                                                                    2006 Level        Budget      Recommendation
----------------------------------------------------------------------------------------------------------------
Lock Construction...............................................            23.0  ..............            55.0
----------------------------------------------------------------------------------------------------------------

    Construction of a new lock at Kentucky Dam on the Tennessee River 
is our highest priority of all the waterway improvements now being 
undertaken by the Corps. The Tennessee-Cumberland system transports 
nearly 60 million tons of commerce each year with nearly 40 million 
tons traversing Kentucky Lock. The nearly 60-year-old existing lock 
cannot accommodate such a large volume of traffic and is one of the 
most inefficient bottlenecks on the entire waterway system. Delays to 
transit the lock extend as long as 7 hours, costing shippers as much as 
$70 million in unnecessary transportation expense each year.
    Although construction has been underway for 6 years and nearly $200 
million have been invested so far, the Office of Management and Budget 
has again instituted a budget policy not to fund any Corps project that 
has less than a 3-to-1 remaining benefits-to-remaining-cost ratio. The 
Congress resoundingly rejected that arbitrary standard last year and we 
strongly recommend it do the same for 2007. The project has a 2.7-to-1 
B/C ratio, well above the 1-to-1 ratio the Congress has traditionally 
adopted to determine a project's eligibility for Federal funding.
    Fifty-five million dollars is requested to continue construction of 
this important project on a reasonable and efficient schedule.

                                                CHICKAMAUGA LOCK
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                                    Authority's
                                                                    Fiscal Year    Proposed 2007       2007
                                                                    2006 Level        Budget      Recommendation
----------------------------------------------------------------------------------------------------------------
Lock Construction...............................................            10.0           27.0            27.0
Lock Repairs....................................................             2.4            1.25            1.25
----------------------------------------------------------------------------------------------------------------

    We support the President's budget for this important project and 
recommend those funds shown above be approved. Twenty-seven million 
dollars will permit the Corps to make reasonable progress in 
constructing a new lock to replace the 60-year-old lock that is too 
small to serve existing commercial traffic. It also has some serious 
structural problems. These funds are critical to help preclude a 
potentially serious safety problem with the old lock.

                                                 TENNESSEE RIVER
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                                    Authority's
                                                                    Fiscal Year    Proposed 2007       2007
                                                                    2006 Level        Budget      Recommendation
----------------------------------------------------------------------------------------------------------------
O&M.............................................................            18.5            19.3            22.5
----------------------------------------------------------------------------------------------------------------

    We recommend that $22.5 million be appropriated for the operation 
and maintenance of the Tennessee River, one of the busiest waterways in 
the Nation. Like most of the Nation's waterways, many of the locks and 
dams on the Tennessee have outlived their 50-year economic life and 
need extensive repairs to prolong the project's physical life. This 
aggressive maintenance requires increased funding.
    In closing, we are very concerned about a new budget policy adopted 
by the Corps and the administration to aggregate O&M funds by region 
instead by individual projects as typically presented in the 
appropriations bills. As a non-Federal sponsor of one of the Corps' 
largest projects, it would be difficult, if not impossible, to fulfill 
our responsibilities for ensuring the waterway is adequately funded 
each year. Your committee, the project's congressional supporters and 
the Authority would have no assurance of its level of funding, either 
being proposed by the administration or what is finally allocated after 
enactment of the appropriations bill. The current procedure has always 
worked for the benefit of all parties, so why fix something that is not 
broken?
    Mr. Chairman, we greatly appreciate the leadership and support you 
have given to developing the Nation's water resources. We especially 
thank you for your continued support of the Tenn-Tom Waterway and its 
funding needs. We respectfully ask for your careful consideration and 
approval of the above requests for the Tenn-Tom Waterway and other 
projects of such great importance to our region.
                                 ______
                                 
  Prepared Statement of the Upper Mississippi River Basin Association 
                                (UMRBA)

                        [In millions of dollars]
------------------------------------------------------------------------
                                            President's        UMRBA
                                              Request     Recommendation
------------------------------------------------------------------------
Construction General:
    Upper Miss. River Restoration                   26.8           33.52
     Program (aka EMP)..................
    Lock and Dam 3 (Major                 ..............            4.30
     Rehabilitation) \1\................
    Lock and Dam 11 (Major                         20.32           27.75
     Rehabilitation) \1\................
    Lock and Dam 19 (Major                          5.44            5.60
     Rehabilitation) \1\................
    Lock and Dam 24 (Major                          3.90            3.90
     Rehabilitation) \1\................
    Locks 27 (Major Rehabilitation) \1\.            3.40            5.20
    Upper Mississippi and Illinois        ..............           16.20
     Rivers Navigation and Ecosystem
     Sustainability Program (if
     construction is authorized)........
Operation and Maintenance:
    O&M of the Upper Mississippi and              174.36          263.44
     Illinois Rivers Navigation System
     \2\................................
General Investigations:
    Upper Mississippi and Illinois        ..............           24.00
     Rivers Navigation and Ecosystem
     Sustainability Program (PED).......
------------------------------------------------------------------------
\1\ Funding for major rehabilitation projects would be shifted to the
  O&M account under the President's budget proposal. Major
  rehabilitation would still be cost-shared 50 percent from the Inland
  Waterways Trust Fund.
\2\ The administration has modified the structure of the O&M account in
  its fiscal year 2007 budget. Rather than budgeting for individual
  projects, the O&M request is organized by region and by business line
  within region. The UMRBA is addressing its testimony to that portion
  of the Region 7 navigation business line that is attributable to O&M
  of the Upper Mississippi and Illinois Rivers navigation system. Thus,
  we have disaggregated numbers from the President's budget.

    The Upper Mississippi River Basin Association (UMRBA) is the 
organization created in 1981 by the Governors of Illinois, Iowa, 
Minnesota, Missouri, and Wisconsin to serve as a forum for coordinating 
river-related State programs and policies and for collaborating with 
Federal agencies on regional issues. As such, the UMRBA works closely 
with the Corps of Engineers on a variety of programs. Of particular 
interest to the basin States are the following:

                      CORPS CONTRACTING PRACTICES

    In its fiscal year 2006 energy and water appropriations measure, 
Congress included language generally barring the Corps from using 
continuing contracts. While the States understand Congress' need to 
retain appropriate control and oversight, this new provision, in 
combination with restrictions on reprogramming, significantly reduces 
the Corps' flexibility and efficiency in implementing ongoing programs, 
such as operation and maintenance, the River Restoration Program, and 
the proposed Navigation and Ecosystem Sustainability Program. By 
breaking work into smaller contracts, the Corps' planning and 
administration costs increase, as do costs associated with repeated 
mobilization/demobilization, purchasing in smaller quantities, etc. The 
impacts of these increased costs in this very tight fiscal environment 
are particularly deleterious. The UMRBA encourages Congress to develop 
an approach to Corps contracting that ensures appropriate controls and 
accountability while also permitting the Corps to execute its work 
efficiently and effectively.

         UPPER MISSISSIPPI AND ILLINOIS RIVERS NAVIGATION STUDY

    It has been more than a year since the Corps completed its 14-year 
Upper Mississippi and Illinois Rivers Navigation Study, issuing the 
final feasibility report in September 2004 and the Chief's Report in 
December 2004. While Congress has not yet authorized the recommended 
integrated plan for navigation improvements and ecosystem restoration, 
it has provided preconstruction engineering and design (PED) funding to 
ensure that the necessary planning and design work can proceed, in 
anticipation of construction authorization. Congress appropriated $13.5 
million for PED in fiscal year 2005 and $10.0 million in fiscal year 
2006. A similar bridging strategy will be necessary in fiscal year 2007 
if authorization is still pending.
    PED.--The UMRBA supports $24 million for PED in fiscal year 2007, 
despite the fact that the administration has once again not included 
PED in its budget request. Many of the large scale projects, such as 
new locks or fish passage at dams, require 3 years or more of PED 
before they can move to construction. It is thus critical that PED work 
continue without pause and be sustained over time. In fiscal year 2005 
and 2006, PED funding has been directed to both navigation improvements 
and ecosystem restoration projects. Continuing this dual purpose 
approach in fiscal year 2007 would require that $16.1 million be 
directed to navigation measures (including mooring facilities, economic 
modeling and evaluations, switchboats, and lock design at 3 sites), 
$5.9 million to ecosystem restoration plan formulation and evaluation, 
and $2.0 million for program management.
    Construction.--If the integrated navigation and ecosystem 
restoration program is authorized for construction this year, 
construction could be initiated on some projects in fiscal year 2007. 
In that event, UMRBA would recommend construction funding of $16.2 
million. This funding would support mooring facilities at 7 sites, 
switchboats at 2 sites, and 8 ecosystem restoration projects.

         UPPER MISSISSIPPI RIVER RESTORATION PROGRAM (AKA EMP)

    For the past 19 years, the Upper Mississippi River Restoration 
Program, commonly known as the Environmental Management Program (EMP), 
has been the premier program for restoring the river's habitat and 
monitoring the river's ecological health. As such, the EMP is key to 
achieving Congress' vision of the Upper Mississippi as a ``nationally 
significant ecosystem and a nationally significant commercial 
navigation system.'' Congress reaffirmed its support for this program 
in the 1999 Water Resources Development Act by reauthorizing the EMP as 
a continuing authority and increasing the annual authorized 
appropriation to $33.5 million. As the EMP embarks upon its 20th 
anniversary year, the UMRBA is pleased that the administration has 
identified the EMP as one of ``six construction projects considered to 
be national priorities.'' Even with this emphasis, however, the 
administration has requested only $26.8 million for the EMP in fiscal 
year 2007. This would continue the trend of the past 9 years, in which 
the annual EMP appropriation has fallen short of the authorized funding 
level. The UMRBA strongly urges Congress to appropriate full funding of 
$33.52 million for the EMP in fiscal year 2007.
    The administration's proposed $26.8 million budget would support 
planning and design work on eight habitat restoration projects and 
construction work on an additional 13 projects. In addition, the fiscal 
year 2006 request would support modest expansion of targeted research 
and data management efforts under the Long Term Resource Monitoring 
Program (LTRMP), which has suffered substantially from the funding 
shortfalls in recent years. However, to realize its full promise, the 
EMP requires funding at the full authorized amount of $33.52 million. 
This would support design work on three additional projects and 
construction on one additional project. It would also permit 
accelerated work on several other projects, thereby increasing overall 
program efficiency. Finally, funding at the full capability level would 
support LTRMP research on adaptive management, fish and water quality 
data analysis, and key modeling efforts. Therefore, the UMRBA urges 
Congress to fund the EMP at its full authorized amount of $33.52 
million.
    UMRBA is particularly concerned about an apparent directive from 
OMB that $3 million of fiscal year 2007 EMP funding be devoted to 
development of a ``10-year aquatic ecosystem restoration plan.'' Such a 
plan is unnecessary and would duplicate plans that the Corps just 
completed as part of the Navigation Study. Given the backlog of EMP 
habitat restoration projects awaiting construction, and the vast number 
of unmet needs under the LTRMP, it would be misguided to divert 
construction funds from this important work to develop a plan that is 
largely duplicative. Congress should direct the Corps to use EMP funds 
exclusively for construction of habitat restoration projects and long 
term monitoring, as authorized in the 1999 Water Resources Development 
Act.
    UMRBA recognizes that one of the biggest challenges facing future 
restoration efforts on the Upper Mississippi River (UMR) will be 
integrating the work that is currently done under EMP with the new 
ecosystem/navigation authority being proposed. Congress is currently 
considering authorization of a new dual-purpose authority for the 
Corps, as recommended in the navigation feasibility study. For now, 
however, the EMP remains the single most effective and long-standing 
UMR ecosystem restoration program. Moreover, the EMP's monitoring 
element is entirely unique and would not be replicated in the proposed 
new authority. Therefore, fully funding the EMP is as important today 
as it has ever been. The EMP must not languish as questions related to 
future program streamlining and coordination are being addressed.

              MAJOR REHABILITATION OF LOCKS AND DAMS (L&D)

    Most of the locks and dams on the Upper Mississippi River System 
are over 60 years old and many are in serious need of repair and 
rehabilitation. For the past 20 years, the Corps has been undertaking 
major rehabilitation of individual facilities throughout the navigation 
system in an effort to extend their useful life. This work is critical 
to ensuring navigation reliability and safety.
    The UMRBA supports the President's fiscal year 2007 budget request 
for major rehabilitation work at L&D 24 ($3.9 million) and supports 
increasing the President's request for rehabilitation work at L&D 11 
($27.75 million), L&D 19 ($5.6 million), and Locks 27 ($5.2 million). 
L&D 11, located near Dubuque, Iowa, is nearly 70 years old. The major 
rehabilitation project currently underway includes new bulkheads, 
extensive miter gate rehabilitation, lock chamber and guidewall 
repairs, and electrical system upgrades. The increase of $7.4 million 
above the President's request for L&D 11 is needed to fully fund the 
Stage II contract. Rehabilitation needs are especially urgent at L&D 
19, where temporary use of the only available spare lock gates risks 
closure of the river north of Keokuk, Iowa, if those gates fail. The 
increase of $156,000 above the President's request for L&D 19, combined 
with anticipated fiscal year 2006 carryover, is required to fully fund 
the Stage I upper gate major rehabilitation. L&D 24, located near 
Clarksville, Missouri, is more than three-fourths through its $87 
million rehabilitation. Fiscal year 2007 funding will support work on 
dam tainter gate anchorages, dam bulkheads, and a bulkhead pickup beam. 
Lock 27 is located at a critical juncture on the inland waterways 
system, downstream of the Illinois and Missouri Rivers on the Chain of 
Rocks Canal in the St. Louis area. Major rehabilitation needs on this 
more than 50-year-old structure are extensive, including replacement of 
lock dates, lift gate machinery, and culvert valves. Fiscal year 2007 
would mark the first year of major rehabilitation at the structure. The 
increase of $1.8 million above the President's request would fund a 
range of design and construction work on lock lighting, culvert valves, 
sill anchors, and lock wall tie downs.
    The UMRBA also supports funding for a major rehabilitation project 
that is not included in the President's request: L&D 3 at $4.3 million. 
Navigation safety and embankment failure have been a concern for over 
20 years at L&D 3, and river pilots agree that this is the most 
dangerous stretch of the Upper Mississippi to navigate. Should there be 
an accident, the adjacent embankments, which have been severely 
weakened by age and past accidents, could be breached. In this event, 
commercial navigation would be curtailed and two large power plants 
would be forced to shut down. The $4.3 million in funding would be used 
to complete planning and fully fund the first phase of construction.

    OPERATION AND MAINTENANCE (O&M) OF THE UPPER MISSISSIPPI RIVER 
                           NAVIGATION SYSTEM

    The Corps is responsible for operating and maintaining the Upper 
Mississippi River System for navigation. This includes channel 
maintenance dredging, placement and repair of channel training 
structures, water level regulation, and routine care and operation of 
29 locks and dams on the Mississippi River and 7 locks and dams on the 
Illinois River. The fiscal year 2007 budget request totals 
approximately $174.36 million for O&M of this river system. These funds 
are critical to the Corps' ability to maintain a safe and reliable 
commercial navigation system, while protecting and enhancing the 
river's environmental values.
    Unfortunately, the President's fiscal year 2007 budget represents a 
further widening of the gap between the amount requested and the amount 
required for adequate operation and maintenance of the navigation 
system. In fiscal year 2006, the gap between the President's request 
and the Corps' capability was $52.14 million. In fiscal year 2007, this 
shortfall has increased to $89.08 million. For segments of the Upper 
Mississippi System, this would mean multiple years during which 
resources have not supported even baseline operation and maintenance, 
resulting in an increasing backlog and a growing risk of failures and 
service interruptions. The impacts of these funding shortfalls will be 
amplified if Congress extends its fiscal year 2006 prohibition on 
continuing contracts. Responses to these continued fiscal pressures may 
include reductions in lock operating hours and cancellations of ongoing 
contracts. Funding beyond the President's request is needed to restore 
basic service levels, coordinate major maintenance with major 
rehabilitation at L&D 11 and 19, and purchase stop logs to ensure the 
Corps' ability to dewater lock chambers for emergency repairs.
    The UMRBA supports increased funding for O&M of the Upper 
Mississippi and Illinois River System to meet routine operation and 
maintenance needs, and to address the growing unfunded maintenance 
backlog. The Upper Mississippi River System is simply too valuable to 
invite disaster through chronic underfunding of basic O&M. For fiscal 
year 2007, O&M funding totaling $263.44 million is needed on the Upper 
Mississippi River System to address ongoing needs and critical backlog 
items.
                                 ______
                                 
      Prepared Statement of the City of Santa Barbara, California

    As your distinguished subcommittee writes the fiscal year 2007 
Energy and Water Resources Appropriations Bill, I would like to bring a 
very important Corps of Engineers' project to your attention. The City 
of Santa Barbara requests $2,020,000 from the Army Corps of Engineers' 
(ACOE) Operation and Maintenance (O&M) Account in fiscal year 2007 
Energy and Water Development Appropriations Bill for essential annual 
maintenance dredging of Santa Barbara Harbor's Federal Navigational 
Channel.

                         PROJECT JUSTIFICATION

    In 1970 Congress authorized (Public Law 91-611, Sec. 114) full 
funding for ACOE maintenance dredging for the Harbor's Federal Channel 
to reduce storm damage, shoaling and navigational hazards. Today more 
than ever, the Harbor continues to serve and support our National 
interests. The Harbor is home port for the 87 foot U.S. Coast Guard 
Cutter Blackfin and NOAA R/V Shearwater serving Channel Islands 
National Marine Sanctuary (CINMS). Blackfin's Harbor location is 
crucial to its mission of patrolling waters all the way to Morro Bay 
(100 miles north) and is critical to ocean safety and rescue, together 
with emerging Homeland Security Defense System (USCG) requirements 
along the California coastline. Santa Barbara Harbor also provides a 
staging area, facilities and resources required for oil spill 
prevention and response, and is a designated harbor of safe refuge.
    Every winter, approximately 400,000 cubic yards of sand piles up at 
Santa Barbara Harbor. Santa Barbara Harbor impedes the transport of 
sand downcoast resulting in shoaling of the Federal Channel and 
potential coastal erosion at several coastal communities. The Corps of 
Engineers conducted comprehensive studies of the Harbor in the 1950's 
and determined that annual dredging of the Harbor was necessary to 
maintain navigability and nourish downcoast beaches preventing erosion. 
It is essential to dredge at a minimum 250,000 cubic meters (c.m.) of 
sand from the Federal Channel every year to maintain year round 
navigability into and out of the Harbor.
    A recap of the last several years demonstrates the continuing trend 
of reduced dredge funding, which could impact Harbor operations and 
eventually accumulated sand could close the channel during winter 
storms.
  --Fiscal Year 2005.--Harbor inadvertently left out of President's 
        Budget Submittal (approximately $1.8 million was eventually 
        restored and reprogrammed).
  --Fiscal Year 2006.--President's Budget Submittal included $1.408 
        million (Congressional actions reduced dredge funding to $1.267 
        million).
  --Fiscal Year 2007.--President's Budget Submittal includes $1.2 
        million (Corps of Engineers indicates funding obligations of 
        approximately $2 million).
    On average, the Harbor has received approximately $1.8 million 
annually to undertake and complete maintenance dredging of the Harbor 
Federal Navigational Channel.

                            FUNDING REQUEST

    The President's fiscal year 2007 budget recommendation includes 
$1,200,000 for operations and maintenance dredging for Santa Barbara 
Harbor. I respectfully request that the U.S. House of Representatives, 
through your subcommittee, increase that level of funding to $2,020,000 
for fiscal year 2007 Corps of Engineers' Maintenance and Operation 
Account for dredging of the Harbor.
    Thank you for the opportunity to submit this statement.
                                 ______
                                 
  Prepared Statement of the Riverside County Flood Control and Water 
                         Conservation District

       FISCAL YEAR 2007 WATER RESOURCES DEVELOPMENT APPROPRIATIONS
------------------------------------------------------------------------
                         PROJECT                              REQUEST
------------------------------------------------------------------------
MURRIETA CREEK FLOOD CONTROL PROJECT: Construction           $11,500,000
 General................................................
HEACOCK AND CACTUS CHANNELS: Section 205--Design and           6,200,000
 Construction...........................................
NORCO BLUFFS BANK STABILIZATION PROJECT: Construction          1,000,000
 General................................................
SAN JACINTO & UPPER SANTA MARGARITA RIVER WATERSHEDS             532,000
 SPECIAL AREA MANAGEMENT PLAN (SAMP): General
 Investigations.........................................
SANTA ANA RIVER--MAINSTEM: Construction General.........      71,300,000
------------------------------------------------------------------------

MURRIETA CREEK FLOOD CONTROL, ENVIRONMENTAL RESTORATION AND RECREATION 
                                PROJECT

    Murrieta Creek poses a severe flood threat to the cities of 
Murrieta and Temecula. Over $12 million in damages was experienced in 
the two cities as a result of Murrieta Creek flooding in 1993. The 1997 
Energy and Water Appropriations Act dedicated $100,000 to conduct a 
Reconnaissance Study of watershed management in the Santa Margarita 
Watershed ``including flood control, environmental restoration, 
stormwater retention, water conservation and supply, and related 
purposes''. The study effort was initiated in April 1997 and completed 
the following December. The Reconnaissance Study identified a Federal 
interest in flood control on the Murrieta sub-basin, and recommended 
moving forward with a detailed Feasibility Study. This was completed in 
September 2000 and recommended the implementation of Alternative 6, the 
Locally Preferred Plan (LPP) for flood control, environmental 
restoration and recreation. The LPP was endorsed by the Cities of 
Temecula and Murrieta and by the community as a whole. H.R. 5483, the 
Energy and Water Appropriations Act of 2000, included specific language 
authorizing the Corps to construct ``the locally preferred plan for 
flood control, environmental restoration and recreation described as 
Alternative 6, based on the Murrieta Creek Feasibility Report and 
Environmental Impact Statement dated September 2000''.
    The Murrieta Creek Flood Control, Environmental Restoration and 
Recreation Project is being designed and will be constructed in four 
distinct phases. Phases 1 and 2 include channel improvements through 
the city of Temecula. Phase 3 involves the construction of a 250-acre 
detention basin, including a 160-acre environmental restoration site 
and over 50 acres of recreational facilities. Phase 4 of the project 
will include channel improvements through the city of Murrieta. 
Equestrian, bicycle and hiking trails as well as a continuous vegetated 
habitat corridor for wildlife are components of the entire 7-mile-long 
project.
    The Omnibus Appropriations Bill for fiscal year 2003 provided $1 
million for a new construction start for this critical public safety 
project. Construction activities on Phase 1 of the project commenced in 
the Fall of 2003. The appropriations for fiscal year 2004 and 
additional funds allocated through re-programming allowed the Corps to 
continue construction on Phase 1, which was completed in December 2004. 
Phase 2 traverses Old Town Temecula, one of the hardest hit areas 
during the flooding of 1993. The Corps anticipates having a Phase 2 
construction contract ready to award in the Winter of 2007. The 
District, therefore, respectfully requests the committee's support of 
an $11.5 million appropriation in fiscal year 2007 to allow the Corps 
to complete the Design Documentation Report, complete plans and 
specifications on Phase 2, and initiate construction on Phase 2 of the 
long awaited Murrieta Creek Flood Control, Environmental Restoration 
and Recreation Project.

 HEACOCK AND CACTUS CHANNELS PROTECTION OF MARCH AIR RESERVE BASE AND 
                         ADJACENT NEIGHBORHOODS

    Heacock and Cactus Channels are undersized, earthen channels that 
border the eastern and northern boundary of the March Air Reserve Base. 
Substantial vegetation becomes established within both channels and 
impedes the conveyance of tributary storm flows to an existing outlet 
located downstream. Storm flows overtop the Cactus Channel and traverse 
the March Air Reserve Base causing major disruption of the Base's 
operation, including the fueling of airplanes and transport of troops 
and supplies. The inadequate size of the Heacock Channel also causes 
storm drains from adjacent neighborhoods within the city of Moreno 
Valley to back up, flooding local residential areas and impeding access 
to these areas by residents as well as emergency services. The record 
rainfall of 2004/2005 also caused extensive erosion along Heacock 
Avenue jeopardizing existing utilities within the road right of way and 
cutting off access to approximately 700 residences.
    Under Section 205 of the Continuing Authorities Program (CAP), the 
Corps received $100,000 in fiscal year 2005 and completed an Initial 
Appraisal Report which determined the feasibility of proceeding with a 
project to provide flood protection to this sensitive area. With the 
$546,000 received in fiscal year 2006 the Corps completed a Project 
Management Plan, executed a Feasibility Cost Sharing Agreement and will 
complete the Detailed Project Report by Fall 2006. The Corps expects to 
initiate plans and specification during the Fall 2006 and be ready to 
award a contract for construction by Spring 2007, providing the needed 
funding is allocated during this fiscal year.
    The District requests support from the committee for a fiscal year 
2007 appropriation of $6,200,000 under Section 205 to complete the 
design and specifications and begin construction of the critically 
needed project.

                NORCO BLUFFS BANK STABILIZATION PROJECT

    The Norco Bluffs Bank Stabilization project consists of a soil 
cement toe protection structure constructed to the 100-year flood level 
at the base of the bluff, and a stable earthen buttress fill 
constructed to the top of the bluff along the Santa Ana River, in the 
city of Norco. The bluff stabilization work extends easterly from the 
Interstate 15 bridge to near Center Avenue. The estimated total cost of 
the project was approximately $14 million. The Corps received a total 
of $7.2 million in construction funds in the fiscal year 1998, fiscal 
year 1999 and fiscal year 2000 Federal budgets for the project. Since 
the available Federal funding fell short of that necessary to construct 
the entire project at once, the Corps decided to break it into two 
phases. Phase 1, which was completed in May 2000, includes a soil 
cement toe protection structure along the entire length of the project, 
as well as construction of approximately 1,300 feet of buttress fill in 
the most critical reach of the bluffs between Valley View and Corona 
Avenues. The Phase 2 contract involved the construction of the balance 
of the buttress fill. Construction of most of Phase 2 was completed in 
December 2003, with the exception of hydroseeding the slopes, which was 
differed until the appropriate season to ensure successful 
establishment. Unfortunately, the record rainfall of the 2004/2005 
season caused damages to the project that need to be repaired in order 
to complete the project and turn it over.
    The District requests support from the committee for a fiscal year 
2007 appropriation of $1,000,000 to complete the repairs, hydroseed the 
slopes and turn the project over to the District.

   SAN JACINTO & UPPER SANTA MARGARITA RIVER WATERSHEDS SPECIAL AREA 
                            MANAGEMENT PLAN

    The County of Riverside recognizes the interdependence between the 
region's future transportation, habitat, open space and land-use/
housing needs. Increased developmental pressure in the region has 
challenged local, State, and Federal agencies to respond to this 
unprecedented growth. In 1999, work was initiated on Riverside County's 
Integrated Project (RCIP) to determine how to best address this growth. 
In 2003 the County adopted a new General Plan and Multi-Species Habitat 
Conservation Plan (MSHCP) to address regional conservation and 
development plans that protect entire communities of native plants and 
animals, while streamlining the process for compatible economic 
development in other areas.
    The Corps began development of a Special Area Management Plan 
(SAMP) for both the San Jacinto and Upper Santa Margarita Watersheds in 
2001. This comprehensive planning effort will be used to assist 
Federal, State and local agencies with their decision making and 
permitting authority to protect, restore and enhance aquatic resources, 
while accommodating various types of development activities. The final 
product of the SAMP will be the establishment of an abbreviated or 
expedited regulatory permitting process by the Corps under Section 404 
of the Clean Water Act. This process will increase regulatory 
efficiency and promote predictability to the regulated public. The plan 
will also build on the protection of high value resource areas, as 
envisioned in the MSHCP.
    The District requests support from the committee for a fiscal year 
2007 appropriation of $532,000 to complete the work on the Nation's 
largest SAMP for the San Jacinto and Upper Santa Margarita Watersheds.

                       SANTA ANA RIVER--MAINSTEM

    The Water Resources Development Act of 1986 (Public Law 99-662) 
authorized the Santa Ana River--All River project that includes 
improvements and various mitigation features as set forth in the Chief 
of Engineers' Report to the Secretary of the Army. The Boards of 
Supervisors of Orange, Riverside and San Bernardino Counties continue 
to support this critical project as stated in past resolutions to 
Congress.
    For fiscal year 2007, an appropriation of $71.3 million is 
necessary to provide funding for the following activities:
  --$23 million to initiate construction activities on several features 
        within ``Reach 9'' of the Santa Ana River immediately 
        downstream of Prado Dam. This segment of the Santa Ana River 
        project is the last to receive flood protection improvements. 
        The streambed existing today in a relatively natural state 
        would receive only localized levee and slope revetment 
        treatment to protect existing development along its southerly 
        bank. The funding will also be used for landscape enhancement 
        of the river banks.
  --$13.3 million to fund required mitigation, complete tunnel repairs 
        and conduct a water quality study of the Seven Oaks Dam 
        project.
  --$35 million to continue with the construction of improvements to 
        Prado Dam's outlet works and embankment, and construction of 
        dikes to protect the properties within the Prado Dam basin.
    The District respectfully requests that the committee support an 
overall $71,300,000 appropriation of Federal funding for fiscal year 
2007 for the Santa Ana River Mainstem Project.
                                 ______
                                 
 Prepared Statement of the Board of Levee Commissioners for the Yazoo-
                           Mississippi Delta

    On behalf of its citizens in 10 counties in the Mississippi Delta, 
the Yazoo-Mississippi Delta Levee Board joins with the other local 
flood control operations within the Mississippi Valley Flood Control 
Association, in requesting full U.S. Army Corps of Engineers capacity 
funding of $510 million for the Mississippi River and Tributaries 
Project (MR&T).
    The Corps of Engineers projects that its engineering, construction 
and maintenance capabilities in fiscal 2007 amount to $510 million, but 
the administration's budget for this critical and highly cost-effective 
project for the Nation's heartland is only $278 million. We urge 
Congress, as it has before, to fully fund this vitally needed flood 
control project which has performed at a benefit-to-cost-ratio of an 
astounding 24-to-1 over the course of its history.
    In addition to its flood control benefits, the MR&T also provides 
almost $1 billion in navigation savings on the Mississippi River each 
year. Conceived and designed as a multi-component system to convey 
floodwaters that pass through the lower Mississippi Valley to the Gulf 
of Mexico, its components drain 41 percent of the continental United 
States. It simply must be completed.
    A line-item-by-line-item breakdown of the MR&T's proposed 2007 
works and cost estimates, along with suggested administration funding 
and Corps capabilities is attached and follows. We urge Congress to 
inspect this detailed project analysis and are confident that, as the 
branch of government most directly responsible to the people, it will 
reach favorable funding decisions.
    For our part in this very important process, we will focus our 
testimony on several aspects of one greater issue which we know to be 
of primary concern and importance to the citizens of our levee 
district.
    The Upper Yazoo Project (UYP), for which my board is proud to serve 
as local sponsor, represents a perfect model for what a flood control 
project should be, anywhere in the country. It is a perfect example of 
how critically-needed work can progress smoothly and without 
controversy or public upheaval.
    Designed to restore the Yazoo/Coldwater/Tallahatchie river system 
to its flow capacity and eliminate damaging interbasin transfer, the 
UYP has already provided flood protection to Greenwood, and upon its 
completion, would also protect the additional areas of Marks, Lambert, 
Moorhead, Mississippi Delta Community College, Tutwiler, Glendora, 
Sumner and Webb.
    The project is two-thirds complete. It needs only adequate funding 
to bring long-needed relief to thousands of people and their 
properties. Yet the proposed Federal budget for this public policy 
initiative contains not a dime. Not a cent. Such is an enormous 
injustice.
    We urge the Congress to fully fund in 2007 the Upper Yazoo Project 
at the Corps' capability of $22.5 million. The facts make the best case 
for the Upper Yazoo Project.
    The remaining stage--the final one-third--of the UYP is its most 
critical. The remaining channels to be cleared convey the waters from 
three-fourths of Mississippi's flood control reservoirs and 74 percent 
of all the water from the State's hill section. Those reservoirs have 
now exceeded their originally-projected lifespans and we cannot 
continue to expose them to needless stress, which they are almost 
annually, when existing stream capacities won't always allow timely 
release of their waters.
    The very successful Mississippi Delta Headwater Project (formerly 
DEC) has been very helpful in attempting to control the waters which 
flow from the hills to the Delta. We ask that it be funded to the Corps 
capability of $25 million, but again, the success of that project only 
makes sense within the context of the UYP.
    It is also critically important to note that for the UYP to 
proceed, it must be fully funded in the 2007 budget. With the 
longstanding practice of continuing construction contracts for Corps of 
Engineers' projects now eliminated, this project has come to a 
standstill simply for lack of funds.
    This badly-needed work has already been delayed from 8 to 10 months 
this year because its Corps line item has run out of money and under 
the new rules, it will continue to be delayed in 2007 as well, unless 
Congress fully funds it at the prescribed $22.5 million level.
    We implore the Congress not to make the same sort of mistake, the 
effects of which we have so tragically seen in the wake of Hurricane 
Katrina. Let not the question be asked: Why wasn't something done when 
they knew about the danger?
    Because of the stealthy nature of flooding in the unique area that 
is the Mississippi Delta, dangerously high water levels can appear 
literally overnight. We know these waterways must be restored to their 
capacities. We know that lives and property are threatened in the 
absence of that. We know we need to do this and we know the only issue 
is money.
    Should a mother, or God forbid her child, fall victim to the 
present dangers which are only amplified through procrastination, this 
year, then the all-too-easy anthem of ``wait until next year,'' will 
ring very hollow indeed.

  MISSISSIPPI VALLEY FLOOD CONTROL ASSOCIATION--FISCAL YEAR 2007 CIVIL
WORKS REQUESTED BUDGET--MISSISSIPPI RIVER AND TRIBUTARIES APPROPRIATIONS
------------------------------------------------------------------------
                                            PRESIDENT'S
            PROJECT AND STATE                 BUDGET       MVFCA REQUEST
------------------------------------------------------------------------
SURVEYS, CONTINUATION OF PLANNING AND
 ENGINEERING & ADVANCE ENGINEERING &
 DESIGN:
    Memphis Harbor, TN..................  ..............  ..............
    Germantown, TN......................  ..............  ..............
    Lower Steele Bayou..................  ..............        $100,000
    Homochitto River....................  ..............         100,000
    Memphis Metro Storm Water             ..............         152,000
     Management, TN.....................
    Bayou Meto, AR......................  ..............       1,553,000
    Southeast Arkansas..................  ..............         800,000
    Coldwater Basin Below Arkabutla             $300,000         495,000
     Lake, MS...........................
    Quiver River, MS....................  ..............         100,000
    Spring Bayou, LA....................  ..............         500,000
    Point Coupee to St. Mary Parish, LA.  ..............         100,000
    Atchafalaya Basin Floodway Land              100,000         300,000
     Study, LA..........................
    Alexandria, LA to the Gulf of Mexico         200,000         200,000
    Morganza, LA to the Gulf of Mexico..  ..............       4,000,000
    Donaldsonville, LA to the Gulf of     ..............          75,000
     Mexico.............................
    Tensas River, LA....................  ..............  ..............
    Donaldsonville Port Development, LA.  ..............         500,000
    Collection & Study of Basic Data....         400,000         735,000
                                         -------------------------------
      SUBTOTALS--SURVEYS................       1,000,000       4,157,000
ADVANCED ENGINEERING & DESIGN...........  ..............       5,553,000
                                         -------------------------------
      TOTAL GENERAL INVESTIGATIONS......       1,000,000       9,710,000
                                         ===============================
CONSTRUCTION:
    St. John's Bayou--New Madrid               2,500,000      15,000,000
     Floodway, MO.......................
    Eight Mile Creek, AR................  ..............  ..............
    Helena & Vicinity, AR...............  ..............  ..............
    Grand Prairie Region, AR............  ..............      33,000,000
    Bayou Meto, AR......................  ..............      11,847,000
    West Tennessee Tributaries..........  ..............         500,000
    Nonconnah Creek, TN.................  ..............         500,000
    Wolf River, Memphis, TN.............  ..............       1,500,000
    Augusta to Clarendon Levee, Lower     ..............         500,000
     White River........................
    St. Francis Basin, MO & AR..........  ..............      11,840,000
    Yazoo Basin, MS.....................  ..............      73,275,000
    Atchafalaya Basin, LA...............      27,600,000      30,000,000
    Atchafalaya Basin Floodway, LA......       4,840,000      10,809,000
    MS Delta Region, LA.................       3,212,000       3,933,000
    Channel Improvements, IL, KY, MO,         43,092,000      47,392,000
     AR, TN, MS & LA....................
    Mississippi River Levees, IL, KY,         40,756,000     118,800,000
     MO, AR, TN, MS & LA................
                                         -------------------------------
      SUBTOTAL--CONSTRUCTION............     122,000,000     358,896,000
      SUBTOTAL--MAINTENANCE.............     147,000,000     226,327,000
SUSPENSION FUND.........................       8,000,000  ..............
                                         -------------------------------
      SUBTOTAL--MISSISSIPPI RIVER &          278,000,000     594,933,000
       TRIBUTARIES......................
LESS REDUCTION FOR SAVINGS & SLIPPAGES..  ..............      84,933,000
                                         -------------------------------
      GRAND TOTAL--MISSISSIPPI RIVER &       278,000,000     510,000,000
       TRIBUTARIES......................
------------------------------------------------------------------------


  MISSISSIPPI VALLEY FLOOD CONTROL ASSOCIATION--FISCAL YEAR 2007 CIVIL
    WORKS REQUESTED BUDGET--MISSISSIPPI RIVER AND TRIBUTARIES PROJECT
                               MAINTENANCE
------------------------------------------------------------------------
                                            PRESIDENT'S
                 PROJECT                      BUDGET       MVFCA REQUEST
------------------------------------------------------------------------
Wappapello Lake, MO.....................      $4,768,000      $7,734,000
Mississippi River Levees................       6,400,000       9,000,000
Mississippi River Channel Maintenance...      60,280,000      66,600,000
Memphis Harbor, TN......................       1,013,000       1,942,000
Pidgeon Industrial Harbor, TN...........  ..............         250,000
Helena Harbor, AR.......................          63,000         402,000
Greenville Harbor, MS...................          30,000         437,000
Vicksburg Harbor, MS....................          71,000         385,000
St. Francis River & Tribs, AR...........       6,300,000      15,250,000
White River Backwater, AR...............       1,200,000       1,500,000
North Bank, Arkansas River, AR..........         560,000         560,000
South Bank, Arkansas River, AR..........         310,000         310,000
Boeuf & Tensas Rivers, LA...............       2,600,000       4,157,000
Red River Backwater, LA.................       3,350,000       6,650,000
Yazoo Basin, Sardis Lake, MS............       7,199,000      12,425,000
Yazoo Basin, Arkabutla Lake, MS.........       6,170,000       9,251,000
Yazoo Basin, Enid Lake, MS..............       5,397,000      12,532,000
Yazoo Basin, Grenada Lake, MS...........       5,690,000      10,949,000
Yazoo Basin, Greenwood, MS..............         620,000       1,020,000
Yazoo Basin, Yazoo City, MS.............         770,000         770,000
Yazoo Basin, Main Stem, MS..............       1,072,000       1,929,000
Yazoo Basin, Tributaries, MS............         830,000         830,000
Yazoo Basin, Whittington Aux Channel, MS         430,000         430,000
Yazoo Basin, Big Sunflower, MS..........         209,000       2,209,000
Yazoo Basin, Yazoo Backwater, MS........         468,000         734,000
Lower Red River, South Bank, LA.........          66,000          66,000
Bonnet Carre, LA........................       2,702,000       5,252,000
Old River, LA...........................       9,747,000      17,840,000
Atchafalaya Basin, LA...................      12,532,000      27,500,000
Atchafalaya Basin Floodway, LA..........       2,605,000       3,059,000
Baton Rouge Harbor Devil's Swamp, LA....          17,000         715,000
Mississippi Delta Region, LA............         241,000         349,000
Bayou Cocodrie & Tribs, LA..............          56,000          56,000
Inspection of Completed Works...........       1,850,000       1,850,000
Mapping.................................       1,384,000       1,384,000
                                         -------------------------------
      TOTAL MR&T MAINTENANCE............     147,000,000     226,327,000
------------------------------------------------------------------------

                                 ______
                                 
             Prepared Statement of the USA Rice Federation

    This is to convey the rice industry's request for fiscal year 2007 
funding for selected programs under the jurisdiction of your respective 
subcommittees. The USA Rice Federation appreciates your assistance in 
making this letter a part of the hearing record.
    The USA Rice Federation is the national advocate for all segments 
of the rice industry, conducting activities to influence government 
programs, developing and initiating programs to increase worldwide 
demand for U.S. rice, and providing other services to increase 
profitability for all industry segments. USA Rice members are active in 
all major rice producing States: Arkansas, California, Florida, 
Louisiana, Mississippi, Missouri, and Texas. The USA Rice Producers' 
Group, the USA Rice Council, the USA Rice Millers' Association, and the 
USA Rice Merchants' Association are members of the USA Rice Federation.
    USA Rice understands the budget constraints the committee faces 
when developing the fiscal year 2006 appropriations bill. We appreciate 
your past support for initiatives that are critical to the rice 
industry and look forward to working with you to meet the continued 
water and related needs of the rice industry in the future.
    The Mississippi River Valley alluvial aquifer is the primary source 
of irrigation water for one of the major rice-producing areas in the 
United States. Groundwater is being withdrawn at such a rate that the 
aquifer is in danger of being permanently damaged. Irrigation wells are 
failing. Loss of rice production in this area would result in severe 
economic and social repercussions to the local, State, and national 
economies.
    Rice producers continue to seek new sources of irrigation for their 
crops. In many rice-growing regions the aquifers used by rice farmers 
are the same aquifers used by local metropolitan populations. Some of 
these vital aquifers are at risk. Water levels are dropping fast due to 
deficit rainfall and expanding use from industrial, agricultural, and 
metropolitan users. Rice producers are working to build new sources of 
irrigation. The programs listed below are cost-share programs to help 
rice producers ensure there will be a plentiful water supply for their 
rice crops and their neighbors in the city. By using surface water from 
man-made reservoirs, rivers or bayous to irrigate rice crops, these 
precious aquifers can be saved for future generations. These water 
projects also provide invaluable wildlife habitat.
    To address these critical water needs the USA Rice Federation 
supports the following:
    White River Irrigation Demonstration Project.--Full funding to 
continue construction on this important Demonstration Project. This 
project is located in the major rice-growing region of East Arkansas 
and will help provide the critical water resources necessary for rice 
production, which plays such a vital role in the economy of Arkansas.
    Bayou Meto Basin.--Continued construction funding for this project 
located in East Central Arkansas in Lonoke, Pulaski, Prairie, 
Jefferson, and Arkansas counties.
    Boeuf Tensas Project.--Continued funding for work on this water 
project located in portions of Jefferson, Lincoln, Desha, and Chicot 
counties in Arkansas, as well as portions of Northeast Louisiana.
    For California, a very critical wetland wildlife habitat 
enhancement program was authorized by Section 3406(b)22 of the Central 
Valley Project Improvement Act. Unfortunately, the funds were sunset in 
2002. When fully funded, this program provided funding for the winter 
flooding of 35,000 to 40,000 acres of important rice wetland habitat in 
the Pacific Flyway of California. These acres are not only critical to 
the health of the Flyway for migrating waterfowl, but are also 
designated as Shorebird Habitat of International Significance by the 
Western Hemisphere Shorebird Reserve Network. USA Rice supports 
continuation of the winter flooding incentives program provided by 
Section 3402(b)22 of the Central Valley Project Improvement Act and 
requests restored funding for this important effort.
    The rice industry also supports continued funding for the 
Mississippi River and Tributaries Project, and within that, the St. 
Francis Basin Project which provides flood control and drainage from 
Cape Girardeau, Missouri to Helena, Arkansas. We also support the St. 
John's Bayou Project in Missouri and urge that funding be maintained 
for this project.
    Please feel free to contact us if you would like further 
information about the programs we have referenced. Additional 
background information is available for all of the programs listed, 
however, we understand the volume of requests the committee receives 
and have restricted our comments accordingly.
    Thank you for your consideration of our recommendations.
                                 ______
                                 
          Prepared Statement of the City of San Marcos, Texas

    Mr. Chairman and members of the subcommittee, on behalf of the City 
of San Marcos, Texas, I am pleased to submit this statement in support 
of our request for an earmark of $439,000 for a U.S. Army Corps of 
Engineers Section 206 Ecosystem Restoration Project for the San Marcos 
River in the fiscal year 2007 bill.
    The City of San Marcos seeks this allocation for the development of 
the Detailed Project Report/Integrated Environmental Assessment (DPR/
EA) as the next step toward completing a $4,540,000 project with 
Federal and local match to restore degraded aquatic and terrestrial 
habitat in the upper San Marcos River.
    San Marcos is located in south central Texas in Hays County, 
approximately 30 miles southwest of Austin, Texas. The proposed 
restoration area is located within the city limits of San Marcos along 
and within the San Marcos River and its headwaters. The study area 
consists of an approximate 1.0-mile stretch of the San Marcos River and 
associated riparian corridor. The ecosystem restoration project will 
restore and enhance degraded aquatic and terrestrial habitat along and 
within the San Marcos River.
    The spring-fed San Marcos River offers one of rarest aquatic 
ecosystems found in the United States. The headwaters of the river 
originate from underground springs from the Edwards Aquifer, producing 
millions of gallons of crystal clear, constant temperature water daily. 
The river creates a unique ecosystem supporting five threatened or 
endangered species that live in the San Marcos River (San Marcos 
salamander, fountain darter, Texas wild rice, San Marcos gambusia, and 
Comal Springs riffle beetle).
    The San Marcos River has attracted humans to its banks for more 
than 12,000 years, making San Marcos one of the oldest continuously-
inhabited places in the United States. The City of San Marcos has 
strived for the past 40 years to protect the river by establishing 
parks along its banks and restricting intense development.
    Still, the constant use of the popular river over many decades has 
impacted the riparian and aquatic habitat of the river, requiring 
restoration of this valuable waterway. The San Marcos River and 
associated tributaries have experienced aquatic ecosystem degradation 
due to a variety of human factors. Impoundment of water upstream, in 
its tributaries, and within the study area has altered the normal flow 
regime of the San Marcos River. The native aquatic plant communities 
within the San Marcos River have been diminished by invasive exotic and 
generalist plant species.
    Increased nutrient and sediment loads from overland surface flow, 
tributary runoff, non-point sources and storm water drainage have 
reduced water quality and in-stream habitat values within the river. 
The majority of the bottomland plant community within the study area is 
highly disturbed and fragmented due primarily to urban encroachment, 
installation of hardpan surfaces, recreational disturbance and invasion 
of non-native plant species.
    This degradation has resulted in the loss of high-quality in-stream 
and riparian habitat for plant and wildlife species within the study 
area. The proposed restoration plan will help restore aquatic and 
terrestrial habitat that has degraded due to human activity, including 
critical habitat for the federally-listed species.
    The City of San Marcos applied for U.S. Army Corps of Engineers 
Section 206 Aquatic Restoration Grant funds in 2002 to turn around the 
trend toward degradation in our river corridor. A Preliminary 
Restoration Plan (PRP) was developed by the U.S. Army Corps of 
Engineers and submitted in March 2003. The PRP was approved and moved 
forward to the next phase, the development of a Detailed Project Report 
(DPR).
    However, at this stage, Federal funding for this program was 
reduced, placing the City of San Marcos PRP on the back burner. Funding 
this project is essential to restore integrity to the San Marcos River, 
the central point of our community for tourism, recreation, and quality 
of life.
    This project will directly benefit the environment by increasing 
biodiversity, carrying capacity, stability and productivity of native 
plant and wildlife species endemic to the area. Additional benefits 
include improvement of existing recreational opportunities, enhancement 
of water quality, and improvement of natural aesthetics.
    Specifically, the project will restore and sustain approximately 
22.0 acres of riparian woodland habitat, 6.0 acre of tall grass prairie 
habitat, 4.0 acres of emergent wetland habitat and 16.0 acres of 
aquatic habitat within a highly urbanized area. The total project cost 
is estimated at $4,540,000, which will be cost-shared 65 percent 
Federal Government and 35 percent City of San Marcos. The Federal share 
is $2,951,000 with a local match of $1,589,000.
    The only COE Section 206 projects that will now receive funding are 
those that have Congressional support.
    Therefore, we ask you to approve a special appropriation earmark 
for $439,000 for the San Marcos River Section 206 Project to fund the 
restoration. Thank you for your consideration of this project.
                                 ______
                                 
              Prepared Statement of The Nature Conservancy

    Mr. Chairman and members of the subcommittee, I appreciate this 
opportunity to present The Nature Conservancy's recommendations for the 
Army Corps of Engineers' fiscal 2007 appropriations. We understand and 
appreciate that the subcommittee's ability to fund programs within its 
jurisdiction is limited by the tight budget situation but appreciate 
your consideration of these important programs. My name is Jimmie 
Powell and I am the Director of Government Relations at the 
Conservancy.
    The Nature Conservancy is an international, nonprofit organization 
dedicated to the conservation of biological diversity. Our mission is 
to preserve the plants, animals and natural communities that represent 
the diversity of life on Earth by protecting the lands and waters they 
need to survive. Our on-the-ground conservation work is carried out in 
all 50 States and in 27 foreign countries and is supported by 
approximately 1 million individual members. We have helped conserve 
nearly 15 million acres of land in the United States and Canada and 
more than 102 million acres with local partner organizations globally.
    The Conservancy owns and manages approximately 1,400 preserves 
throughout the United States--the largest private system of nature 
sanctuaries in the world. We recognize, however, that our mission 
cannot be achieved by core protected areas alone. Therefore, our 
projects increasingly seek to accommodate compatible human uses, and 
especially in the developing world, to address sustained human well-
being.
    The Conservancy has several concerns with policies required in the 
fiscal 2006 Energy and Water Appropriations bill and recommends some 
revisions to those provisions. As the largest non-Federal sponsor of 
ecosystem restoration projects (in numbers of projects, not total cost) 
these limitations have had a significant impact on our partnership with 
the Corps. The Conservancy urges the subcommittee to lift the ban on 
``new starts''/project advancement, and to revise the restrictions on 
re-programming of funds. The ban on ``new starts''/project advancement 
has halted a number of our restoration projects which are widely 
supported by local communities and important to local biodiversity. The 
Conservancy also urges the subcommittee to revise the limitations on 
re-programming. Several Conservancy projects, which had conference 
report language indicating Congressional funding intent, had funds re-
programmed and now the Corps cannot reprogram the funds back to those 
projects.
    The Conservancy urges the subcommittee to support the following 
appropriation levels in the fiscal 2007 Energy and Water Development 
Appropriation bill:
Construction General Priorities
    Section 1135: Project Modification for the Improvement of the 
Environment.--The Section 1135 Program authorizes the Army Corps of 
Engineers (Corps) to restore areas damaged by existing Corps projects. 
This program permits modification of existing dams and flood control 
projects to increase habitat for fish and wildlife without interrupting 
a project's original purpose. This program continues to be in extremely 
high demand with needs far greater than the $30 million appropriated in 
fiscal 2006. This financial shortfall has stopped many important 
projects. The Conservancy is the non-Federal cost share partner on six 
ecologically significant Section 1135 restoration projects. These 
projects include Spunky Bottoms, a floodplain restoration/reconnection 
project on the Illinois River, which we seek $150,000 in fiscal 2007; 
and Chain Bridge Flats, DC/MD/VA, a floodplain restoration on the 
Potomac River which requires $210,000 in fiscal year 2007. In order to 
further reduce the funding backlog, the Conservancy strongly encourages 
a repeat of $30.0 million for the Section 1135 program in fiscal 2007, 
an increase over the President's $15.0 million request.
    Section 206: Aquatic Ecosystem Restoration.--Section 206 is a newer 
Corps program that authorizes restoration of aquatic habitat regardless 
of past activities. This is another popular restoration program with 
demand far exceeding the $30 million appropriated for fiscal year 2006. 
The Conservancy is the non-Federal cost-share partner on 11 Section 206 
projects. These projects restore important fish and wildlife habitats. 
Ecologically significant projects for which the Conservancy is the non-
Federal sponsor include: Mad Island, TX, a coastal restoration project 
that needs $1.475 million to continue construction; and Camp Creek, OR, 
a headwaters stream restoration project that needs $575,000 to continue 
the feasibility study. In order to further reduce the funding backlog, 
the Conservancy strongly encourages a repeat of $30 million for the 
Section 1135 program in fiscal 2007 an increase over the President's 
$19.9 million request.
    Upper Mississippi River System Environmental Management Program.--
The Environmental Management Program (EMP) is an important Corps 
program that constructs habitat restoration projects and conducts long-
term resource monitoring of the Upper Mississippi and Illinois Rivers. 
The EMP operates as a unique Federal-State partnership affecting five 
States (Illinois, Iowa, Minnesota, Missouri, and Wisconsin). The EMP 
was reauthorized in WRDA 1999 with an increased authorization in the 
amount of $33.2 million. The Conservancy supports full funding of $33.2 
million for fiscal year 2007, an increase over the President's $27.0 
million request.
    Estuary Habitat Restoration Program.--The Estuary Habitat 
Restoration Program was established with the intent to restore 1 
million acres of estuary habitat by 2010. This multi-agency program 
will promote projects that result in healthy ecosystems that support 
wildlife, fish and shellfish, improve surface and groundwater quality 
and quantity, provide flood control; and provide outdoor recreation 
opportunity. The Conservancy supports the President's $5.0 million 
request for fiscal year 2007.
    South Florida Everglades Ecosystem Restoration Program.--The 
Everglades are home to a profusion of bird species, with 347 species 
recorded within Everglades National Park alone. The ecosystem provides 
breeding habitat for roseate spoonbills, snail kite, southern bald 
eagle, Cape sable seaside sparrow, wood stork, white ibis, glossy ibis 
and 11 species of egrets and herons. Beginning 60 years ago, the Corps 
began building projects for human benefit that shunted water away from 
the Everglades. Many factors, including these flood control projects 
and agricultural and urban development, have contributed to the 
reduction and degradation of the wetlands ecosystem. Restoration of 
this globally significant region is a priority for the Conservancy. The 
Conservancy requests $207 million in the South Florida Everglades 
Ecosystem Restoration Program in fiscal year 2007. This program 
includes the following suite of restoration programs:
  --Modified Water Deliveries to Everglades National Park ($35 
        million).--This project balances fresh water crossing Tamiami 
        Trail and entering the park. Completing this project is a 
        pressing concern to restore habitat and stave off the danger of 
        an estuarine collapse in Florida Bay.
  --Critical Projects Construction ($15 million).--This special program 
        is made up of nine projects that are critical to the future of 
        the entire ecosystem's restoration. Fiscal year 2007 projects 
        will include completion of construction on the Lake Okeechobee 
        Water Retention Areas and Ten Mile Creek projects and 
        continuing construction on the Seminole Big Cypress project.
  --Kissimmee River Restoration Construction ($50 million).--This 
        project involves restoring water-level fluctuations and 
        seasonal discharges from Lakes Kissimmee, Cypress and 
        Hatchineha in the upper basin. This project features 22 miles 
        of canal backfilling and structure removal along with land 
        acquisition of over 100,000 acres.
  --Comprehensive Everglades Restoration Plan (CERP) Project 
        Construction ($20 million).--Components of this plan include 
        aquifer storage and recovery; construction of surface water 
        storage reservoirs; construction of storm water treatment 
        areas; seepage management; removal of 240 miles of barriers to 
        sheet flow; and reuse of wastewater at two regional plants.
  --Central and Southern Florida Project to include the C111, CERP, and 
        STA 1 East projects ($87 million).--This program includes the 
        Upper St. Johns, Manatee Protection, C-51 and STA-1E, C-111, 
        Miami Canal Study and 10 initial projects of the CERP. Recent 
        progress includes initial construction of manatee pass gates, 
        with all gates expected to be completed this year; completed 
        construction on the C-51 and transfer of operations to the 
        South Florida Water Management District; and continuing design 
        for the next phase of buffer construction for the C-111 
        project.
General Investigation Priorities
    Savannah Basin Comprehensive Water Resources Study.--The Savannah 
Basin Comprehensive Water Resources Study will enable the Corps and 
other partners to gain a better understanding of the influence of 
hydrologic processes such as timing, duration, frequency, magnitude, 
and rate of change of river flows on the river's ecology. The Nature 
Conservancy, under a cooperative agreement funded by the Corps and its 
cost share partners, Georgia and South Carolina, developed a set of 
ecosystem flow recommendations for the Savannah River Basin. A test 
release of the new flow recommendation was conducted March 15-18, 2004 
and again in fall 2005. The Conservancy supports $250,000 in fiscal 
year 2007. This study is not included in the President's budget.
    Willamette River Floodplain Study.--This project will contribute to 
the long-term restoration of floodplain habitat in the Willamette River 
Basin, an important step toward the recovery of several threatened fish 
species listed under the Endangered Species Act. The restoration 
efforts associated with the Willamette River Floodplain Restoration 
Study, including increasing floodplain connectivity and replanting 
riparian forests, will contribute to the Corps' ability to reduce river 
temperatures and meet their obligations under the Clean Water Act. This 
project also leverages a unique national partnership between the Corps 
and the Conservancy, the Sustainable Rivers Project, to improve dam 
management in order to protect the ecological health of rivers and 
surrounding natural areas while continuing to provide services such as 
flood control and power generation. The Conservancy supports $436,000 
in fiscal year 2007. This study is not included in the President's 
budget.
Operations and Maintenance Priorities
    Missouri River Fish and Wildlife Recovery.--The Missouri River has 
an extensive and diverse array of aquatic and terrestrial systems that 
have had a dominant influence on the basin's biological diversity. A 
predictable yet dynamic interaction of aquatic and terrestrial 
ecological processes support more than 500 species of mussels, fish, 
amphibians, reptiles, birds and mammals. The Corps has completed 30 
projects along the river in the lower four States (Iowa, Kansas, 
Missouri and Nebraska) resulting in over 40,000 acres of restored 
aquatic and floodplain habitat. The Missouri River Fish and Wildlife 
Recovery Program will not only enhance these restoration efforts, but 
complement protection and restoration efforts by the Bureau of Indian 
Affairs, Bureau of Land Management, Bureau of Reclamation, Department 
of Defense, U.S. Forest Service, U.S. Fish and Wildlife Service, 
National Park Service and the Natural Resources Conservation Service in 
the entire river basin. Three species dependent on the Missouri River 
are federally-listed as endangered or threatened, two are candidates 
for Federal listing, and at least eight are species of special concern 
to State or Federal fish and wildlife management agencies. The 
Conservancy supports an appropriation in the amount of $85.0 million in 
fiscal year 2007.
    Thank you for the opportunity to present The Nature Conservancy's 
comments on the Energy and Water Appropriations bill. We recognize that 
you receive many worthy requests for funding each year and appreciate 
your consideration of these requests and the generous support you have 
shown for these and other conservation programs in the past. If you 
have any further questions, please do not hesitate to contact me.
                                 ______
                                 
      Prepared Statement of the Ouachita River Valley Association

    Mr. Chairman and distinguished members of the committee, thank you 
for the opportunity to present this testimony. The Ouachita-Black 
Navigation Project is the backbone of much of the economy of our region 
supporting employment, municipal water supplies, recreation, wildlife 
habitat and conservation of the endangered Sparta Aquifer. The Project 
was authorized by the River and Harbor Act of 1950 and modified by the 
River and Harbor Act of 1960. The 337-mile Ouachita-Black Navigation 
System is the only commercially navigable waterway serving the 11 
Parishes and Counties in northeast Louisiana and Southeast Arkansas.
    As a nonprofit organization, the Ouachita River Valley Association 
has worked with private enterprise and governments at the Federal, 
State, and local levels for more than 100 years to encourage 
investments in projects that are economically sound, socially justified 
and enhance the general welfare of the people in the Ouachita River 
basin in Arkansas, Louisiana, and the Nation.
    Mr. Chairman, we are grateful for the $13.9 million appropriated in 
fiscal year 2006 that is permitting significant lock maintenance to be 
performed for the first time in several years. This work is crucial 
since all project benefits depend upon the adequacy of the four small 
locks and dams (84 feet by 600 feet) that have been in place for up to 
30 years without adequate maintenance.
    The lack of investment in routine maintenance on Ouachita-Black 
Navigation Project is symptomatic of infrastructure problems throughout 
the country as was tragically demonstrated during the hurricanes of 
2005 which passed on both sides of the Ouachita Basin.
    We submit our funding request in three major categories for your 
consideration. The first and foremost need is that of Operations and 
Maintenance, General (O&M) funding; second is the need for funding for 
stabilization of eroding banks that are endangering existing public and 
private infrastructure; and the third is funding for a study to 
identify and document the contributions of this waterway to the Nation 
and the region it serves in Louisiana and Arkansas.

                   OPERATION AND MAINTENANCE, GENERAL

    Historical funding shortfalls for Operations and Maintenance (O&M) 
are seriously threatening the reliability and dependability of the 
Ouachita-Black Navigation System. The waterway is an important 
industrial/agricultural economic generator, vital transportation 
artery, irreplaceable source for municipal, industrial and agricultural 
water supplies, a vast recreational asset and natural resource 
preservation project serving this region and the Nation. These many 
benefits depend upon safe and reliable operation of four locks and dams 
and periodic channel maintenance work. Programmed maintenance has been 
demonstrated to be and is intuitively more economical than breakdown 
maintenance. Economic losses from service failures brought about by 
long-term system closures are magnified by unscheduled and more costly 
``break down'' repairs.
    An ominous concern specific to the Ouachita-Black System is the 
inability to dewater the locks to inspect critical lock components and 
to repair them in a timely manner without long and costly outages. 
Absent the stoplog slots, a failure of the lock miter gates and other 
underwater components as a result of deterioration or a marine accident 
will require months or years to repair as compared to weeks with a 
working stoplog system. Jonesville Lock was modified with stoplog slots 
in fiscal year 2004 to provide this capability. However, funding 
provided in fiscal year 2005 was insufficient to continue this work at 
the three upstream structures. Work is continuing this year at Columbia 
Lock and Dam and with the requested funding for fiscal year 2007 work 
can continue upstream to Felsenthal Lock and Dam. We strongly urge and 
recommend that the highest priority be given to continuation of the 
stoplog slot installation program followed closely with inspection and 
repair of the critical components that have not been maintained for 30 
years.
  --Request is made for $14.0 million for routine operations, 
        continuation of the stoplog slot modification program, repair 
        of critical components, initiation of preventive maintenance 
        work, and channel maintenance dredging. This amount is well 
        below the $17.25 million identified as the capability of the 
        Corps of Engineers to perform in fiscal year 2007.

                CONSTRUCTION GENERAL, BANK STABILIZATION

    The Ouachita River continues to erode the most vulnerable banks 
with annually rising and falling river stages. The rate and degree of 
this attack has increased and is now endangering critical public 
infrastructure such as levees and State highways. Levees have been 
``set back'' at several locations in the past year and bank caving is 
occurring on the shoulders of Louisiana State Highways 8 and 124. The 
most severe threat from this erosion is to the levees protecting the 
cities of Columbia and Monroe. Studies conducted by the Tensas Basin 
Levee District indicate damages from a failed levee at flood stage 
would result in damages up to $2 billion with extensive residential and 
business flooding, and rupture of transportation features such as the 
municipal airport and Interstate Highway 20.
    Protection of infrastructure such as levees, roads and bridges, 
ports, as well as historical sites is best and most economically 
provided by judicious hardening or stabilizing the banks of the river. 
A Corps of Engineers Status Report identified numerous caving sites the 
length of the river to Remmel Dam and prioritized them for protection. 
In absence of project authorization, appropriation action is requested. 
Prevention of damages is more economical than repair and replacement.
  --Request is made for $5.0 million for bank protection at the highest 
        priority sites. Proposed Bill and Report language are attached.
        general investigations, post-construction benefit study
    Investment in our Nation's resources should be an integral part of 
our national defense strategy and receive this level of consideration 
in the national budget. Water resource infrastructure is the backbone 
of production in the Nation and our means to competitiveness in the 
global economy. Development and redevelopment of these resources 
utilizing Federal funds should be thoroughly evaluated and justified on 
the basis of sound investments. This requires study and evaluation 
periodically to ensure the maximum return on the public investment.
    Difficulty in providing acceptable evidence of waterway benefits 
frequently casts unwarranted doubt on the advisability of funding 
specific water resource projects. Efforts to abandon significant 
portions of the national waterway infrastructure based on narrowly 
defined, short-term measures of value or outdated uses based on 30-
year-old data will almost always result in unintended consequences. 
Such is the case with the argument that ``low use waterways or 
tributaries should be abandoned'' budget-wise for the main-stem 
waterways. Analysis of Waterborne Commerce Statistics Center data by 
Institute for Water Resources and TVA reveals that 68 percent of cargo 
tonnage and 56 percent of waterway ton-miles are generated on tributary 
streams. The consequence of this action would be a decrease in benefits 
of the main-stem waterways while increasing the cost of the Nation's 
transportation. The ancillary benefits such as water supply, recreation 
and conservation generated in connection with navigation projects are 
perhaps even greater than transportation benefits and should be 
determined in greater detail through basin specific studies. Such a 
study is needed for the Ouachita-Black Navigation Project and the 
basin.
  --Funds in the amount of $250,000 are requested to conduct a post-
        construction benefit evaluation of the Ouachita-Black 
        Navigation System to provide a basis for future levels of 
        investments.

                               SUMMATION

    Mr. Chairman we appreciate the opportunity to bring these issues to 
the attention of the committee and to add our voice to those working to 
strengthen our Nation through wise investment in our natural resources 
from which springs our wealth. Investments by the Federal Government in 
the Ouachita-Black Navigation System have and are continuing to make a 
significant difference in the lives of the people residing in the 
valley while contributing to the Nation at-large. For this we are 
grateful. We urge the Congress through its power of the budget to 
continue maintaining through very modest investments this important 
component of the national waterway infrastructure. Proposed Bill and 
Report Language are enclosed for bank stabilization work.

                             BILL LANGUAGE

Ouachita and Black Rivers Bank Stabilization, Arkansas and Louisiana
    ``Provided further, That using the funds appropriated herein, the 
Secretary of the Army, acting through the Chief of Engineers, is 
authorized and directed to design and construct bank stabilization 
measures, at Federal expense with local sponsors providing necessary 
lands, easements, and rights of way, along the Ouachita and Black 
Rivers, Arkansas and Louisiana, between mile 0 on the Black River, 
Louisiana, to mile 460 on the Ouachita River, Arkansas at the outlet of 
Remmel Dam, such measures to be constructed as the Secretary determines 
necessary to maintain navigation, for flood damage prevention, for 
control of erosion and for historic preservation.''

                            REPORT LANGUAGE

Ouachita and Black Rivers Bank Stabilization, Arkansas and Louisiana
    ``The Committee is aware of the severe bank caving and erosion 
occurring along the Ouachita and Black Rivers, Arkansas and Louisiana, 
between mile 0 on the Black River, Louisiana, to mile 460 on the 
Ouachita River, Arkansas at the outlet of Remmel Dam and has included 
bill language directing the Corps of Engineers to use funds provided, 
to design and construct bank stabilization measures, at Federal expense 
with local sponsors providing necessary lands, easements, and rights of 
way, along the Ouachita and Black Rivers, Arkansas and Louisiana, as 
the Secretary determines necessary to maintain navigation, for flood 
damage prevention, for control of erosion, and for historical 
preservation.''
                                 ______
                                 
         Prepared Statement of the Red River Valley Association

    Mr. Chairman and members of the committee, I am Wayne Dowd, and 
pleased to represent the Red River Valley Association as its President. 
Our organization was founded in 1925 with the express purpose of 
uniting the Citizens of Arkansas, Louisiana, Oklahoma and Texas to 
develop the land and water resources of the Red River Basin, Enclosure 
1.
    The Resolutions contained herein were adopted by the Association 
during its 81st Annual Meeting in Bossier City, Louisiana, on February 
24, 2006, and represent the combined concerns of the citizens of the 
Red River Basin area as they pertain to the goals of the Association, 
Enclosure 2.
    The President's budget included $4.733 billion for the civil works 
programs. Even though it is the largest budget provided by any 
administration it is $596 million less than what was appropriated in 
fiscal year 2006, $5.329 billion (11.2 percent reduction). The problem 
is also how the funds are distributed. A few projects received their 
full ``Corps Capability'' to the detriment of many projects that 
received no funding. The $4.733 billion level does not come close to 
the real needs of our Nation. A more realistic funding level to meet 
the requirements for continuing the existing needs of the civil works 
program is $6.5 billion in fiscal year 2007. The traditional civil 
works programs remain at the low, unacceptable level as in past years. 
These projects are the backbone to our Nation's infrastructure for 
waterways, flood control, water supply and ecosystem restoration. We 
remind you that civil works projects are a true ``jobs program'' in 
that up to 85 percent of project funding is contracted to the private 
sector, 100 percent of the construction, as well as much of the 
architect and engineering work. Not only do these projects provide 
jobs, but provide economic development opportunities for our 
communities to grow and prosper, creating permanent jobs.
    There are several policy changes proposed by the administration 
that we have concerns with.
    Major rehabilitation projects were moved from the CG account to O&M 
account. When you take out these major rehab projects the O&M proposed 
budget is actually $53 million less than fiscal year 2006. They have 
``disguised'' an actual reduction in O&M project funding.
    They also propose to continue using the Inland Waterway Trust Fund 
(ITWF) to fund 50 percent of the major rehab projects that were moved 
to O&M. The IWTF was authorized for CG projects, not O&M. If this is 
allowed, it will then be easy to recommend that all O&M funding be 
taken from the IWTF and this can never be allowed to happen.
    The proposed reduction in GI from $162 million enacted last year, 
to $94 million, proposed this year, is of concern. When you stop 
funding studies you assume the economy will stop growing, since you are 
preparing less projects for the future. Nobody is a proponent for a 
weak economy. There is also the danger of the Corps losing their 
planning expertise.
    Another proposal allocates O&M funding by region and eliminates 
funding by individual project. We do not accept this concept since you 
will lose ownership and identity of each project; therefore, losing 
grass root support. If this was done, due to reprogramming constraints, 
then reprogramming should be addressed. Major reprogramming issues are 
with CG projects, not with O&M projects.
    We want to express our concern for ``fully funded'' contracts. It 
is possible that the Corps will have a carryover that exceeds $1 
billion. Our fear is that this will be viewed as the Corps unable to 
execute their budget and be allocated less in following years. Another 
serious consequence is that it neglects the workload distribution of 
Corps Districts. Are we prepared to consolidate and close down 
Districts that do not have a workload to support their current work 
force?
    The Corps of Engineers should not be micromanaged and should have 
less restrictive reprogramming authority. They need to be able to 
manage their budget and projects in a way that best serves the needs of 
the Nation.
    In the past we have worked hard to ``add'' funding to the Energy 
and Water Bill for the Water projects. We want to bring to your 
attention that in fiscal year 1998 the Water projects received 
approximately 20 percent of the total bill. Over the last 8 years the 
Water portion has steadily decreased to only 16.6 percent of the total 
bill in fiscal year 2005 and increased slightly to 17.4 percent in 
fiscal year 2006. The Nation's Energy program is very important, but we 
believe the Water program is too. We ask that the subcommittee on 
Energy and Water and the full Appropriations Committee support bringing 
the Water ``share'' of the bill back to the 20 percent level it once 
was.
    The inland waterway tributary rivers continue to face scrutiny on 
what determines a successful waterway. This has an impact on the 
operations and maintenance funding a waterway receives. Using criteria 
that only considers tons, actually moved on the waterway, neglects the 
main benefit that justified the original waterway project, 
transportation cost savings. Currently there is no criteria used to 
consider ``water compelled rates'' (competition with rail). We know 
that there are industries not using our waterway because rail rates 
were reduced, to match the waterborne rates, the same year our waterway 
became operational. If the operation of our waterway were terminated 
the rail rates would increase. Many industries have experienced great 
``national'' transportation savings without using the waterway, which 
is why the project was authorized.
    The main problem is that there is no ``post-project'' evaluation 
for navigation projects. We support the development of such an 
evaluation and volunteer the J. Bennett Johnston Waterway and our 
efforts to develop one. Such an evaluation could be made once every 5 
years to insure the waterway continues to meet the determined criteria. 
We also believe any evaluation adopted must have input from and be 
validated by the administration, Congress and industry. Too much money 
has been expended to use an evaluation that is unfair and disregards 
the true benefits realized from these waterway projects.
    I would now like to comment on some of our specific requests for 
the future economic well-being of the citizens residing in the four-
State Red River Basin regions.
    Navigation.--The J. Bennett Johnston Waterway is living up to the 
expectations of the benefits projected. We are extremely proud of our 
public ports, municipalities and State agencies that have created this 
success. This upward ``trend'' in usage will continue as new industries 
commence operations. At the Port of Shreveport-Bossier ``Steelscape'' 
will be operational in April 2006 processing steel, eventually 
employing 250 people and moving 500,000 tons per year on the Waterway. 
A major power company, CLECO, is investing $1 billion in its Rodemacher 
Plant near Boyce, Louisiana, on the lower Red River and is expected to 
move over 3 million tons of Coal and ``petroleum coke'' by 2009. 
Groundbreaking is set this year for an Edison-Chouest facility, a 
shipbuilder of offshore support vessels, at the Port of Shreveport-
Bossier. These three projects are a reality and there are many more 
customers considering using our Waterway.
    You are reminded that the Waterway is not complete, 6 percent 
remains to be constructed, $121 million. We appreciate Congress's 
appropriation level in fiscal year 2006 of $13 million, however, the 
President's fiscal year 2007 budget drastically cuts that to $1.5 
million, which is unacceptable. There is a capability for $18.5 million 
of work, but we realistically request $13 million to keep the project 
moving toward completion.
    Now that the J. Bennett Johnston Waterway is reliable year round we 
must address efficiency. Presently a 9-foot draft is authorized for the 
J. Bennett Johnston Waterway. All waterways below Cairo, Illinois are 
authorized at 12-foot, to include the Mississippi River, Atchafalaya 
River, Arkansas River and Gulf Intracoastal Waterway. A 12-foot channel 
would allow an additional one-third capacity, per barge, which will 
greatly increase the efficiency of our Waterway and further reduce 
transportation rates. This one action would have the greatest, positive 
impact to reduce rates and increase competition, bringing more 
industries to use waterborne transportation. We request a 1-year 
reconnaissance study be funded to evaluate this proposal, at a cost of 
$100,000. Fact: Approximately 95 percent is already at 12-foot year 
round.
    The feasibility study to continue navigation from Shreveport-
Bossier City, Louisiana, into the State of Arkansas will be completed 
in calendar year 2006. There is great optimism that the study will 
recommend a favorable project; however, the administration must 
consider the benefit analysis by modern day criteria, not by 25-year-
old standards. Benefit analysis is by administration policy and they 
can consider benefits that impact society today. This region of SW 
Arkansas and NE Texas continues to suffer major unemployment and this 
navigation project, although not the total solution, will help 
revitalize the economy. We request funding of $400,000 to initiate 
planning, engineering and design, PED.
    Bank Stabilization.--One of the most important, continuing 
programs, on the Red River is bank stabilization in Arkansas and North 
Louisiana. We must stop the loss of valuable farmland that erodes down 
the river and interferes with the navigation channel. In addition to 
the loss of farmland is the threat to public utilities such as roads, 
electric power lines and bridges; as well as increased dredging cost in 
the navigable waterway in Louisiana.
    These bank stabilization projects are compatible with subsequent 
navigation into Arkansas and we urge that they be continued in those 
locations designated by the Corps of Engineers to be the areas of 
highest priority. We appreciated the Congressional funding in fiscal 
year 2006 and request you fund this project at a level of $10 million 
in fiscal year 2007.
    Flood Control.--The recent events in New Orleans have demonstrated 
what will happen when we ignore our levee systems. We know the Arkansas 
Red River Levees do not meet Federal standards, which is why we have 
the authorized project, Red River Below Denison Dam, TX, AR & LA. Now 
is the time to bring these levees up to standards, before a major flood 
event, which will occur.
    We continue to consider flood control a major objective and request 
you continue funding the levee rehabilitation projects ongoing in 
Arkansas. Five of eleven levee sections have been completed and brought 
to Federal standards. Appropriations of $10 million will construct two 
more levee sections in Lafayette County, AR.
    The levees in Louisiana have been incorporated into the Federal 
system; however, they do not meet current safety standards. These 
levees do not have a gravel surface roadway, threatening their 
integrity during times of flooding. It is essential for personnel to 
traverse the levees during a flood to inspect them for problems. 
Without the gravel surface the vehicles will cause rutting, which can 
create conditions for the levees to fail. A gravel surface will insure 
inspection personnel can check the levees during the saturated 
conditions of a flood. Funding has been appropriated in the past and 
approximately 50 miles of levees in the Natchitoches Levee District 
will be completed this year. We request $2 million to continue this 
important project in other Louisiana Parishes.
    Water Quality.--Nearly 3,500 tons of natural salts, primarily 
sodium chloride, enter the upper reaches of the Red River each day, 
rendering downstream waters unusable for most purposes. The Truscott 
Brine Lake project, which is located on the South Fork of the Wichita 
River in King and Knox Counties, Texas became operational in 1987. An 
independent panel of experts found that the project not only continues 
to perform beyond design expectations in providing cleaner water, but 
also has an exceptionally favorable benefit-to-cost ratio.
    The Assistant Secretary of the Army (Civil Works), in October 1998, 
agreed to support a re-evaluation of the Wichita River Basin tributary 
of the project. The re-evaluation report was completed and the Director 
of Civil Works signed the Environmental Record of Decision. The plan 
was found to be economically justified. This year the ASA (CW) directed 
that construction would not proceed until a local sponsor was found to 
assume 100 percent of the O&M for the project. We strongly disagree 
with this position, since the current local sponsor signed a 
cooperation agreement that did not include responsibility for O&M, no 
project documents require this and the project truly benefits four 
States. This makes it unreasonable to place the O&M burden on one local 
sponsor. Since 1987 the Federal Government has funded over $1.5 million 
per year for O&M on the existing features of the project. We support 
language that directs 100 percent of the O&M and construction 
responsibility be federally funded. Completion of this project will 
reclaim Lake Kemp as a usable water source for the City of Wichita 
Falls, Sheppard AFB and the region.
    This project will provide improved water quality throughout the 
four States of the Red River providing the opportunity to use surface 
water and reduce dependency on ground water. We request appropriations 
of $2,500,000 to continue the Wichita River features in Texas.
    Over the past year there has been a renewed interest by the Lugart-
Altus Irrigation District to evaluate construction of Area VI, of the 
Chloride Control Project, in Oklahoma. They have obtained the support 
of many State and Federal legislators, as well as a letter from the 
Oklahoma Governor in support of a re-evaluation report. We request an 
appropriation of $1,625,000 to continue with this effort.
    Water Supply.--Lake Kemp, just west of Wichita Falls, TX, is a 
major water supply for the needs of this region. Due to siltation the 
available storage of water has been impacted. A $750,000 reallocation 
study is needed to determine water distribution needs and raising the 
conservation pool. $375,000 is needed in fiscal year 2007. Since 
$207,000 is required for the base annual O&M of Lake Kemp, a Total O&M 
of $582,000 is requested for fiscal year 2007.
    Operation & Maintenance.--Full O&M capability levels are not only 
important for our Waterway project but for all our Corps projects and 
flood control lakes. The backlog of critical maintenance only becomes 
worse and more expensive with time. We urge you to appropriate funding 
to address this serious issue at the expressed full Corps capability.
    We are sincerely grateful to you for the past support you have 
provided our projects. We hope that we can count on you again to fund 
our needs and complete the projects started that will help us diversify 
our economy and create the jobs so badly needed by our citizens. We 
have included a summary of our requests for easy reference, Enclosure 
2.
    Thank you for the opportunity to present this testimony and project 
details of the Red River Valley Association on behalf of the 
industries, organizations, municipalities and citizens we represent 
throughout the four-State Red River Valley region. The Civil Works 
program directly relates to national security by investing in economic 
infrastructure. If waterways are closed companies will not relocate to 
other parts of the country--they will move overseas. If we do not 
invest now there will be a negative impact on our ability to compete in 
the world market threatening our national security.

                              ENCLOSURE 1
                      RED RIVER VALLEY ASSOCIATION

    The Red River Valley Association is a voluntary group of citizens 
bonded together to advance the economic development and future well-
being of the citizens of the four-State Red River Basin area in 
Arkansas, Louisiana, Oklahoma and Texas.
    For the past 81 years, the Association has done notable work in the 
support and advancement of programs to develop the land and water 
resources of the Valley to the beneficial use of all the people. To 
this end, the Red River Valley Association offers its full support and 
assistance to the various Port Authorities, Chambers of Commerce, Levee 
and Drainage Districts, Industry, Municipalities and other local 
governing entities in developing the area along the Red River.
    The Resolutions contained herein were adopted by the Association 
during its 81st Annual Meeting in Bossier City, Louisiana on February 
24, 2006, and represent the combined concerns of the citizens of the 
Red River Basin area as they pertain to the goals of the Association, 
specifically:
  --Economic and Community Development;
  --Environmental Restoration;
  --Flood Control;
  --Bank Stabilization;
  --A Clean Water Supply for Municipal, Industrial and Agricultural 
        Uses;
  --Hydroelectric Power Generation;
  --Recreation; and,
  --Navigation.
    The Red River Valley Association is aware of the constraints on the 
Federal budget, and has kept those constraints in mind as these 
Resolutions were adopted. Therefore, and because of the far-reaching 
regional and national benefits addressed by the various projects 
covered in the Resolutions, we urge the members of Congress to review 
the materials contained herein and give serious consideration to 
funding the projects at the levels requested.

                              ENCLOSURE 2

                    RED RIVER VALLEY ASSOCIATION FISCAL YEAR 2007 APPROPRIATIONS--CIVIL WORKS
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                            Fiscal Year   RRVA 2007    President
                                            2006 Approp    Request    2007 Budget    Local Sponsor Requirements
----------------------------------------------------------------------------------------------------------------
Studies (GI):
    Continue Navigation into SW Arkansas:           150          400  ...........  (ARRC)
     Feasibility Study.
    Red River Waterway, LA--12 foot         ...........          100  ...........  N/A
     Channel, Recon  Study.
    Bossier Parish, LA....................           75          258  ...........  Bossier Levee
    Cross Lake, LA Water Supply Supplement           99          252  ...........  (Shreveport)
    Mangum Lake, OK.......................  ...........           59  ...........  .............................
    Southeast Oklahoma Water Resource                40          300  ...........  (OWRB)
     Study: Feasibility.
    Washita River Basin, OK, Watershed               50          195  ...........  (?)
     Rehab: Recon Study.
    SW Arkansas Ecosystem Restoration:              100          400  ...........  (L)
     Recon Study.
    Mountain Fork River Watershed, OK &     ...........  ...........  ...........  (?)
     AR, Recon Study.
    Red River Above Denison Dam, TX & OK:   ...........          100  ...........  (L)
     Recon Study.
    Red River Waterway, Index, AR to        ...........  ...........  ...........  (?)
     Denison Dam, Recon.
    Wichita River Basin Study, TX.........  ...........          100  ...........  .............................
Construction General (CG):
    Red River Waterway:
        J. Bennett Johnston Waterway, LA..       13,000       18,500        1,500  .............................
        Index to Denison Reach, Bendway     ...........  ...........  ...........  (?)
         Weir Demo Project (Note: Need
         language for full federally
         funded project).
    Chloride Control Project:
        Wichita River, TX.................        1,125        2,500  ...........  .............................
        Area VI, OK.......................          375        1,625  ...........  .............................
    Red River Below Denison Dam...........        3,000       10,000  ...........  .............................
        Levee Rehabilitation, AR..........  ...........  ...........  ...........  .............................
        Bowie County Levee, TX............  ...........  ...........  ...........  .............................
        Upgrade Levees, LA................  ...........  ...........  ...........  .............................
        Rehabilitate Levee Structures, LA.  ...........  ...........  ...........  .............................
    Red River Emergency Bank Protection...        3,200       10,000  ...........  .............................
    Big Cypress Valley Watershed, TX:               530          500  ...........  .............................
     Section 1135.
    McKinney Bayou, AR, PED...............  ...........  ...........  ...........  .............................
    Little River County/Ogden Levee, AR,    ...........          200  ...........  100 (ASWC)
     PED.
    Millwood, Grassy Lake, AR: Section              100          125  ...........  (?)
     1135.
Operation and Maintenance (O&M):
    J. Bennett Johnston Waterway, LA......       11,804       21,000       10,542  .............................
    Lake Kemp, TX Reallocation Study......  ...........          582  ...........  .............................
    Lake O' the Pines Dam, TX.............  ...........          250  ...........  .............................
Mississippi River & Tributaries (MR&T):
    Old River Lock:
        Old River Lock Structure..........        9,690       10,000        9,747  .............................
        Old River Lock Oxbow Dredging.....  ...........          600  ...........  .............................
----------------------------------------------------------------------------------------------------------------
Note.--Local Sponsor Column--Sponsor indicated in ( ); (?) indicates No Sponsor Identified and need one to
  continue. (L) indicates Sponsor not required now, but need one for feasibility; Blank--No Sponsor required.

                                 ______
                                 
       Prepared Statement of the Calaveras County Water District

------------------------------------------------------------------------
                         Project                             Requests
------------------------------------------------------------------------
COSGROVE CREEK FLOOD CONTROL PROJECT (Construction              $100,000
 General)...............................................
NEW HOGAN LAKE REOPERATION STUDY (General                        200,000
 Investigations)........................................
------------------------------------------------------------------------

                    CALAVERAS COUNTY WATER DISTRICT

    Calaveras County (County) is located in the central Sierra Nevada 
foothills about 25 miles east of the Sacramento-San Joaquin Delta 
(Delta). Ground elevations within the County increase from 200 feet 
above mean sea level near the northwest part of the County to 8,170 
feet near Alpine County. It is a predominately rural county with a 
relatively sparse but rapidly developing population and limited 
agricultural and industrial development. Calaveras County is located 
within the watersheds of the Mokelumne, Calaveras, and Stanislaus 
Rivers.
    All three of these rivers flow west, running through San Joaquin 
County into the Delta. Most of the County is underlain by the igneous 
and metamorphic rocks of the Sierra Nevada. Alluvial deposits of the 
Central Valley, which overlie the westward plunging Sierra Nevada, are 
present along an 80-square-mile area located along the western edge of 
the county and are part of the Eastern San Joaquin Groundwater Basin 
(ESJCGB).
    In the fall of 1946, the Calaveras County Water District (CCWD) was 
organized under the laws of the State of California as a public agency 
for the purpose of developing and administering the water resources in 
Calaveras County. Therefore, CCWD is a California Special District and 
is governed by the California Constitution and the California 
Government and Water Codes. CCWD is not a part of, or under the control 
of, the County of Calaveras. CCWD was formed to preserve and develop 
water resources and to provide water and wastewater service to the 
citizens of Calaveras County.
    Under State law, CCWD, through its board of directors, has general 
powers over the use of water within its boundaries. These powers 
include, but are not limited to: the right of eminent domain, authority 
to acquire, control, distribute, store, spread, sink, treat, purify, 
reclaim, process and salvage any water for beneficial use, to provide 
sewer service, to sell treated or untreated water, to acquire or 
construct hydroelectric facilities and sell the power and energy 
produced to public agencies or public utilities engaged in the 
distribution of power, to contract with the United States, other 
political subdivisions, public utilities, or other persons, and subject 
to the California State Constitution, levy taxes and improvements.

                  COSGROVE CREEK FLOOD CONTROL PROJECT

    The Cosgrove Creek Flood Control Project will address flooding that 
occurs along the lower reaches of the creek, as well as flooding that 
occurs on Spring Creek. Flooding in these areas impacts over 400 people 
and 100 structures located in the 100-year floodplain. Within the 
context of the flood control effort, the project will also address 
options for the beneficial use of peak flows and address other local 
concerns such as the need for recreational opportunities in the area.
    The Calaveras County Water District respectfully requests $100,000 
for this project in fiscal year 2007 from the Corps of Engineers 
Construction General account.

                    NEW HOGAN LAKE REOPERATION STUDY

    Funding for this project is needed to continue the study effort by 
the U.S. Army Corps of Engineers to examine other project purposes 
including water uses efficiency, ecosystem restoration and recreation. 
The New Hogan Lake Reoperation Study continues the study effort 
initiated under Section 205 for reoperation of the New Hogan Reservoir 
and for the Corps to look at other project purposes including water use 
efficiency, ecosystem restoration and recreation.
    The Calaveras County Water District respectfully requests $200,000 
from the Corps of Engineers General Investigations Account to continue 
this study effort.
                                 ______
                                 
        Prepared Statement of the City of St. Helena, California

------------------------------------------------------------------------
                         Project                             Requests
------------------------------------------------------------------------
ST. HELENA COMPREHENSIVE FLOOD CONTROL PROJECT (General         $450,000
 Investigations)........................................
UPPER YORK CREEK DAM REMOVAL AND RESTORATION PROJECT           1,600,000
 (Section 206 Aquatic Ecosystem Restoration Program)....
ST. HELENA NAPA RIVER RESTORATION PROJECT (Section 206           350,000
 Aquatic Ecosystem Restoration Program).................
------------------------------------------------------------------------

                           CITY OF ST. HELENA

    The City of St. Helena is located in the center of the wine growing 
Napa Valley, 65 miles north of San Francisco. The area was settled in 
1834 as part of General Vallejo's land grant. The City of St. Helena 
was incorporated as a city on March 24, 1876 and reincorporated on May 
14, 1889.
    The City of St. Helena is a General Law City and operates under the 
Council-City Manager form of government. St. Helena is a full service 
city and encompasses an area of 4 square miles. The City Council is the 
governing body and has the power to make and enforce all laws and set 
policy related to municipal affairs. The official population of the 
City of St. Helena as of January 1, 2003 is 6,041. Because of its size 
and its rural nature, St. Helena has serious infrastructure, as well 
as, flood protection and environmental needs that far exceed its 
financial capabilities.
    The city from its inception has served as a rural agricultural 
center. Over the years, with the growth and development of the wine 
industry, the city has become an important business and banking center 
for the wine industry. The city also receives many tourists as a result 
of the wine industry. While, the main goal of the city is to maintain a 
small-town atmosphere and to provide quality services to its citizens, 
this is becoming increasingly difficult. Regulatory, administrative and 
resource requirements placed on the city through the listing of 
threatened and endangered species under the Endangered Species Act on 
the Napa River, as well as significant Clean Water Act requirements 
require the city with a small population base to face significant 
financial costs.
    The Napa River flows along the east boundary of the City of St. 
Helena in northern Napa County. The overall Napa River Watershed 
historically supported a dense riparian forest and significant wetland 
habitat. Over the last 200 years, approximately 6,500 acres of valley 
floor wetlands have been filled in and 45,700 acres of overall 
watershed have been converted to urban and agricultural uses. This 
degradation of natural habitats has had a significant effect on water 
quality, vegetation and wildlife, and aquatic resources within the Napa 
River Watershed.
    Surface water quality of the Napa River is dependent upon time of 
year, runoff from York and Sulphur Creeks, and urban area discharges. 
During the winter months when stream flow is high, pollutants are 
diluted; however, sedimentation and turbidity is high as well. During 
the summer months when stream flow is low, pollutants are concentrated 
and oxygen levels are low, thereby decreasing water quality. 
Agricultural runoff adds pesticides, fertilizer residue, and sometimes 
sediment. Discharges from urban areas can include contaminated 
stormwater runoff and treated city wastewater. The Napa River has been 
placed on the Clean Water Act 303(d) list and TMDL Priority Schedule 
due to unacceptable levels of bacteria, sedimentation, and nutrients. 
It is against this backdrop that the City of St. Helena faces its 
biggest challenges.

             ST. HELENA COMPREHENSIVE FLOOD CONTROL PROJECT

    The project site is on the City of St. Helena in Napa County, 
California (County), along the Napa River and adjacent areas. Within 
and adjacent to this reach of the River, the city proposes various 
flood control components, ranging from widening the floodplain and 
constructing new floodwalls and levee, to relocating homes. An 
additional component includes flood protection at the Wastewater 
Treatment Plant (WWTP) south of the city.
    With this project, the City of St. Helena seeks to develop and 
implement a plan that will reduce damage resulting from Napa River 
flooding in a manner that is economically feasible, acceptable from a 
public policy standpoint, and environmentally sensitive. In particular, 
the city wishes to reduce flooding in a manner that will result in 
overall improvement to the health of the ecosystem in the project 
reach.
    The project will re-connect the Napa River to its historic 
floodplain, thereby reducing water surface elevations through the area 
by several feet, avoiding large flood control structures and 
canalization, and would provide 100-year flood protection to the area. 
It will also restore habitat of the natural floodplain terraces, 
including riparian and aquatic habitat. Within and adjacent to this 
reach of the River, the city proposes various flood control components, 
ranging from widening the floodplain and constructing new floodwalls 
and levee, to relocating homes. The St. Helena Comprehensive Project 
will also restore native plant and tree communities through re-
vegetation efforts.
    The City of St. Helena respectfully requests the committee's 
support for $450,000 under the Corps of Engineers General 
Investigations Account.

          UPPER YORK CREEK DAM REMOVAL AND RESTORATION PROJECT

    The Upper York Creek Watershed originates at the western side of 
the Napa Valley watershed and the creek flows through a narrow canyon 
before joining the Napa River at a 225-foot elevation.
    This project will improve fish passage and ecological stream 
function for the York Creek, a key Napa River Tributary. The project 
will open an additional 2 miles of steelhead habitat upstream from the 
current dam location by removing an earthen dam and accumulated 
sediment necessary to restore fish passage to provide unimpeded 
upstream adult and downstream juvenile fish passage.
    Revegetation, as part of the project, will restore a self-
sustaining native plant community that will help exclude non-native 
invasive species.
    The City of St. Helena respectfully requests the committee's 
support for $1,600,000 under the Corps of Engineers Section 206 Aquatic 
Ecosystem Restoration Program to design and initiate construction under 
a design build contract in fiscal year 2007.

               ST. HELENA NAPA RIVER RESTORATION PROJECT

    The Napa River and its riparian corridor are considered Critical 
Habitat for Steelhead and Salmon recovery. The Steelhead is one of six 
Federally-listed threatened and endangered species within the Napa 
River and its adjoining tributaries which requires attention. Current 
conditions are such that natural habitats and geomorphic processes of 
the Napa River are highly confined with sediment transport and 
geomorphic work occurring in a limited area of the streambed and 
channel banks. Napa River's habitat for the steelhead is limited in its 
ability to provide prime spawning habitat. Limitations include 
urbanization removing significant amounts of shading and cover 
vegetation within and adjacent to the river; and a detrimental lack of 
pool habitat.
    In an effort to address these Federal environmental issues, the St. 
Helena Napa River Restoration Project, a Section 06 Aquatic Ecosystem 
Restoration Project, was identified in the Napa Valley Watershed 
Management Feasibility Study of April 2001 as a specific opportunity 
for restoration.
    This project will develop riparian planting regimes to maximize 
habitat values for species, in particular, steelhead, California 
Freshwater Shrimp and young salmon.
    This project will address the lack of shading and cover vegetation 
along the river which has impaired the river's ability to serve as a 
critical habitat for many different species of fish and wildlife. It is 
necessary to ensure and improve the viability of Federal and State 
listed species by providing rearing, resident and migratory habitat in 
the project's 3-mile stream corridor. The project will also work to 
improve area habitat to benefit the migration of steelhead to high 
value fisheries habitat in upper watershed channel reaches.
    The City of St. Helena respectfully requests $350,000 in fiscal 
year 2007 funding from the Corps of Engineers Section 206 Aquatic 
Ecosystem Restoration Program to complete the feasibility study. This 
study will recommend actions not only for maximizing habitat for 
species by removing obstacles and hard bank stabilization, but to 
implement improvements to in-stream habitat such as woody debris, 
boulders and establishment of pools.
                                 ______
                                 
     Prepared Statement of the California State Coastal Conservancy

                                SUMMARY

    The following testimony is in support of the California State 
Coastal Conservancy's fiscal year 2007 Energy and Water Development 
Appropriations request. The Conservancy respectfully requests needed 
funding for the following critical projects: $11.7 million for the 
Hamilton Bel-Marin Keys Wetland Restoration Project, Army Corps of 
Engineers, Construction General; $2 million for the South San Francisco 
Bay Shoreline Study, Army Corps of Engineers, General Investigations; 
$550,000 for the Napa River Salt Marsh Restoration Project, Army Corps 
of Engineers, General Investigations; $18 million for the Upper Newport 
Bay Ecosystem Restoration Project, Army Corps of Engineers, 
Construction General and $100,000 for the Redwood Creek Restoration 
Project, Army Corps of Engineers, General Investigations.

                         CONSERVANCY BACKGROUND

    The California Coastal Conservancy, established in 1976, is a State 
agency that uses entrepreneurial techniques to purchase, protect, 
restore, and enhance coastal resources, and to provide access to the 
shore. We work in partnership with local governments, other public 
agencies, nonprofit organizations, and private landowners.
    To date, the Conservancy has undertaken more than 950 projects 
along the 1,100 mile California coastline and around San Francisco Bay. 
Through such projects, the Conservancy: protects and improves coastal 
wetlands, streams, and watersheds; works with local communities to 
revitalize urban waterfronts; assists local communities in solving 
complex land-use problems and protects agricultural lands and supports 
coastal agriculture to list a few of our activities.
    Since its establishment in 1976, the Coastal Conservancy has: 
helped build more than 300 access ways and trails, thus opening more 
than 80 miles of coastal and bay lands for public use; assisted in the 
completion of over 100 urban waterfront projects; joined in partnership 
endeavors with more than 100 local land trusts and other nonprofit 
groups, making local community involvement an integral part of the 
Coastal Conservancy's work and completed projects in every coastal 
county and all nine San Francisco Bay Area counties. In addition, we 
currently have over 300 active projects that are benefiting the 
citizens of California.

          HAMILTON BEL-MARIN KEYS WETLAND RESTORATION PROJECT

    In fiscal year 2007 the California Coastal Conservancy is seeking 
$11.7 million, consistent with Corps of Engineers' capability, for the 
continued construction of this project.
    This project is of critical importance as it will provide nearly 
700 acres of restored tidal and seasonal wetlands at a former Army 
base, in Marin County, California and provide much needed habitat for 
several threatened and endangered species; as well as, shorebirds and 
waterfowl migrating along the Pacific Flyway. In addition, this project 
beneficially uses dredged material from the San Francisco Bay which 
provides for increased navigation and maritime commerce for the Bay 
Area, a much needed economic stimulus for the region.
    The first phase of construction, which started last year, is taking 
place on the former Army Airfield. Miles of levees are currently under 
construction, after which the main runway and taxiways will be buried 
under millions of cubic yards of clean dredged sediment. Subsequently, 
the easterly levee will be breached allowing tidal waters to once again 
flood the site. Later in the project, the Corps will work on the 
adjacent Antenna field and Bel Marin Keys V property (subject to WRDA 
approval) resulting in a total project area of nearly 2,500 acres. This 
phased approach will be used to complete the design and construction 
tasks in conjunction with the availability of land and dredged 
material.

                SOUTH SAN FRANCISCO BAY SHORELINE STUDY

    The Conservancy is seeking $2,000,000 in funding in order to 
continue the Feasibility Study for this project. The study was 
initiated in fiscal year 2005 and has been ongoing, receiving $600,000 
in funds in fiscal year 2006.
    This project is of national significance as it will create the 
largest restored wetland on the west coast of the United States and 
will provide extensive habitat for federally endangered species and 
migratory waterfowl. In addition, the project is also critical to the 
region as it will provide tidal and fluvial flood protection for the 
South San Francisco Bay Area protecting approximately 42,800 acres, 
7,400 homes and businesses, and significant urban infrastructure, to 
include major highways, hospitals and airport facilities.
    In order to continue to advance this important study it is 
imperative that local interests and the Federal Government work 
together to ensure a reliable funding stream for the project. In 
accordance, substantial cost-sharing has already begun among the land 
management agencies. The U.S. Fish and Wildlife Service contributed $8 
million toward the $100 million acquisition of the salt ponds. The 
State of California provided $72 million and the Hewlett Foundation, 
Packard Foundation, Moore Foundation, and Goldman Fund provided $20 
million. The foundations are providing an additional $15 million for 
restoration planning and $9 million for land management. The State of 
California is providing $8 million for planning and $6 million for land 
management.

                         NAPA RIVER SALT MARSH

    For fiscal year 2007, we are seeking $550,000 in Federal funds in 
order to complete Preconstruction Engineering and Design (PED) for this 
project which will allow construction to commence as soon as the 
project is authorized by Congress. Last year, $125,000 was appropriated 
to the Corps of Engineers for PED activities.
    The funds requested would allow the Corps of Engineers to complete 
design of the Napa River Salt Marsh Project. Upon authorization of the 
project in WRDA, the Corps will be able to construct the project. 
Construction of the project will provide extensive benefits to the 
region, to include: providing extensive wetland habitat in San 
Francisco Bay; the beneficial use for recycled water in the North Bay; 
improve open space and recreational opportunities; and resolve urgent 
issues associated with deterioration of the site's levee, water control 
structures, and water quality.
    The 10,000 acre Napa River Salt Marsh was purchased by the State of 
California from Cargill in 1994 and is managed by the California 
Department of Fish and Game. The State Coastal Conservancy has been the 
non-Federal sponsor working with the Corps on the Feasibility Study. 
The Corps' Feasibility Study was completed and the Chief's Report was 
signed in December of 2004. Preconstruction Engineering and Design is 
currently taking place with construction commencing once the project is 
authorized in WRDA.

                UPPER NEWPORT BAY ECOSYSTEM RESTORATION

    In fiscal year 2007, we are seeking $18 million in funding to 
complete construction and avoid cost increases and project delays.
    Upper Newport Bay, one of the largest remaining tidal wetlands in 
Southern California, provides significant habitat for numerous 
federally endangered species, migratory waterfowl and shorebirds along 
the Pacific Flyway, and anadromous fish and other aquatic species. To 
ensure the long-term viability of this diverse salt marsh ecosystem as 
well as the stability of the region's ecosystem, the Army Corps of 
Engineers and the County of Orange developed the Upper Newport Bay 
Ecological Restoration Project, which was authorized in the Water 
Resources Development Act of 2000.
    The project will address the habitat conversion resulting from 
sedimentation in the upper bay, increase the quantity and quality of 
wetlands habitat, improve water quality by reducing sediment inflows 
and algal blooms and preserve both Federal and local navigational 
channels, which if unaddressed will require costly maintenance 
dredging.
    A construction contract was awarded in September 2005 and 
construction is underway. The available funds (Federal and non-Federal) 
will be expended by late summer 2006. The funding request of $18 
million for fiscal year 2007 will complete construction of this project 
and avoid cost increases from re-mobilizing equipment and inflation.

                   REDWOOD CREEK RESTORATION PROJECT

    For fiscal year 2007, we are seeking $100,000 to initiate a 
reconnaissance study of the flood control project.
    The Redwood Creek Federal Flood Control Project was originally 
completed by the Corps of Engineers in 1968, however since the 
completion of the project very few resources have been dedicated to its 
management and maintenance and as a result the project is now in need 
of overdue maintenance to key infrastructure. Despite this fact, 
ecological concerns make project restoration to design standards 
prohibitively expensive and legally infeasible.
    The $100,000 in requested funding will facilitate a reconnaissance 
study of the flood control project in order to allow the Army Corps of 
Engineers to compile and analyze all prior hydrologic and ecological 
research done on the project area. In addition, the study will bring 
together local, State, and Federal stakeholders to understand the best 
opportunities available for enhancement of the flood control and 
natural areas in the lower river and estuary of Redwood Creek.
    The project will provide numerous local and national benefits. For 
example, the estuary's proximity to the Redwood National and State 
Parks provides an excellent opportunity to enhance Federal park 
resources while improving flood control for the community of Orick 
while provide substantial rearing habitat for numerous federally 
endangered species.
                                 ______
                                 
 Prepared Statement of the Metropolitan Water Reclamation District of 
                            Greater Chicago

    On behalf of the Metropolitan Water Reclamation District of Greater 
Chicago (District), I want to thank the subcommittee for this 
opportunity to present our priority for fiscal year 2007 and, at the 
same time, express our appreciation for your support of the District's 
projects in the years past. The District is the local sponsor for the 
Corps of Engineers priority projects of the Chicagoland Underflow Plan: 
the O'Hare, McCook and Thornton Reservoirs. We are requesting the 
subcommittee's full support for McCook and Thornton Reservoirs, as the 
O'Hare Reservoir has been completed. Specifically, we request the 
subcommittee to support the President's fiscal year 2007 budget request 
of $45,000,000 from the Army Corps of Engineers Construction, General 
account in the fiscal year 2007 Energy and Water appropriations bill. 
The following text outlines these projects and the need for the 
requested funding.

                     THE CHICAGOLAND UNDERFLOW PLAN

    The Chicagoland Underflow Plan (CUP) consists of three reservoirs: 
the O'Hare, McCook and Thornton Reservoirs. These reservoirs are a part 
of the Tunnel and Reservoir Plan (TARP). The O' Hare Reservoir Project 
was fully authorized for construction in the Water Resources 
Development Act of 1986 (Public Law 99-662) and completed by the Corps 
in fiscal year 1999. This reservoir is connected to the existing O'Hare 
segment of the TARP. Adopted in 1972, TARP was the result of a multi-
agency effort, which included officials of the State of Illinois, 
County of Cook, City of Chicago, and the District.
    TARP was designed to address the overwhelming water pollution and 
flooding problems of the Chicagoland combined sewer areas. These 
problems stem from the fact that the capacity of the area's waterways 
has been overburdened over the years and has become woefully inadequate 
in both hydraulic and assimilative capacities. These waterways are no 
longer able to carry away the combined sewer overflow (CSO) discharges 
nor are they able to assimilate the pollution associated with these 
discharges. Severe basement flooding and polluted waterways (including 
Lake Michigan, which is the source of drinking water for millions of 
people) is the inevitable result. We point with pride to the fact that 
TARP was found to be the most cost-effective and socially and 
environmentally acceptable way for reducing these flooding and water 
pollution problems. Experience to date has reinforced such findings 
with respect to economics and efficiency.
    The TARP plan calls for the construction of the new ``underground 
rivers'' beneath the area's waterways, connected to large CSO storage 
reservoirs. The ``underground rivers'' are tunnels up to 35 feet in 
diameter and 350 feet below the surface. All 109.4 miles of the tunnels 
have just recently been completed. The tunnels capture the majority of 
the pollution load by capturing all of the small storms and the first 
flush of the large storms.
    The completed O'Hare CUP Reservoir provides 350 million gallons of 
storage. This Reservoir has a service area of 11.2 square miles and 
provides flood relief to 21,535 homes in Arlington Heights, Des Plaines 
and Mount Prospect. The Thornton and McCook Reservoirs are currently 
under construction, but until and unless they are completed, 
significant areas will remain unprotected. Without these reservoirs as 
outlets, the local drainage has nowhere to go when large storms hit the 
area.
    Since its inception, TARP has not only abated flooding and 
pollution in the Chicagoland area, but has helped to preserve the 
integrity of Lake Michigan. In the years prior to TARP, a major storm 
in the area would cause local sewers and interceptors to surcharge 
resulting in CSO spills into the Chicagoland waterways and during major 
storms into Lake Michigan, the source of drinking water for the region. 
Since these waterways have a limited capacity, major storms have caused 
them to reach dangerously high levels resulting in massive sewer 
backups into basements and causing multi-million dollar damage to 
property.
    Since implementation of TARP, 823 billion gallons of CSOs have been 
captured by TARP, that otherwise would have reached waterways. Area 
waterways are once again abundant with many species of aquatic life and 
the riverfront has been reclaimed as a natural resource for recreation 
and development. Closure of Lake Michigan beaches due to pollution has 
become a rarity. After the completion of both phases of TARP, 99 
percent of the CSO pollution will be eliminated. The elimination of 
CSOs will reduce the quantity of discretionary dilution water needed to 
keep the area waterways fresh. This water can be used instead for 
increasing the drinking water allocation for communities in Cook, Lake, 
Will and DuPage counties that are now on a waiting list to receive such 
water. Already, these counties have received millions of gallons of 
additional Lake Michigan water per day, partially as a result of the 
reduction in the District's discretionary diversion since 1980. 
Additional allotments of Lake Michigan water will be made to these 
communities, as more water becomes available from reduced discretionary 
diversion.
    With new allocations of lake water, many communities that 
previously did not get lake water are in the process of building, or 
have already built, water mains to accommodate their new source of 
drinking water. The new source of drinking water will be a substitute 
for the poorer quality well water previously used by these communities. 
Partly due to TARP, it is estimated by IDOT that between 1981 and 2020, 
283 million gallons per day of Lake Michigan water would be added to 
domestic consumption. This translates into approximately 2 million 
additional people that would be able to enjoy Lake Michigan water. This 
new source of water supply will not only benefit its immediate 
receivers but will also result in an economic stimulus to the entire 
Chicagoland area by providing a reliable source of good quality water 
supply.

                   THE MCCOOK AND THORNTON RESERVOIRS

    The McCook and Thornton Reservoirs of the Chicagoland Underflow 
Plan (CUP) were fully authorized for construction in the Water 
Resources Development Act of 1988 (Public Law 100-676). These CUP 
reservoirs, as previously discussed, are a part of TARP, a flood 
protection plan that is designed to reduce basement flooding due to 
combined sewer back-ups and inadequate hydraulic capacity of the urban 
waterways.
    These reservoirs will provide annual benefits of $115 million. The 
total expected annual benefits of these projects are approximately 
twice as much as their total annual costs. The District, as the local 
sponsor, has acquired the land necessary for these projects, and will 
meet its cost sharing obligations under Public Law 99-662.
    These projects are a very sound investment with a high rate of 
return. The remaining benefit/cost ratio for these two reservoirs 
together is 3.0. They will enhance the quality of life, safety and the 
peace of mind of the residents of this region. The State of Illinois 
has endorsed these projects and has urged their implementation. In 
professional circles, these projects are hailed for their 
farsightedness, innovation, and benefits.
    Based on two successive Presidentially-declared flood disasters in 
our area in 1986 and again in 1987, and severe flooding in the last 
several years, we believe the probability of this type of flood 
emergency occurring before implementation of the critical flood 
prevention measure is quite high. As the public agency for the greater 
Chicagoland area responsible for water pollution control, and as our 
past sponsorship for flood control projects, we have an obligation to 
protect the health and safety of our citizens. We are asking your 
support in helping us achieve this necessary and important goal of 
construction completion.
    We have been very pleased that over the years the subcommittee has 
seen fit to include critical levels of funds for these important 
projects. We were delighted to see the $27,500,000 in construction 
funds for the McCook and Thornton Reservoirs included in the Energy and 
Water Appropriations bill for fiscal year 2006. However, it is 
important that we receive a total of $45,000,000 in construction funds 
in fiscal year 2007 to maintain the commitment and finish these 
projects. This funding is critical in order to construct the McCook 
Reservoir Stage 1 Grout Curtain, Stage 2 Slurry Wall, and Stage 1 Rock 
Wall Stabilization Contracts and to continue the engineering design of 
other McCook and Thornton Reservoir projects. The community has waited 
long enough for protection and we need these funds now to move the 
project in construction. We respectfully request your consideration of 
our request.

                                SUMMARY

    To emphasize the area's plight, I would like to relate a flooding 
event that occurred when just under 4 inches of rain fell on the 
greater Chicagoland area. Due to the frozen ground, almost all of the 
rainfall entered our combined sewers, causing sewerage back-ups 
throughout the area. When the existing TARP tunnels filled with 
approximately 1.2 billion gallons of sewage and runoff, the only 
remaining outlets for the sewers were our waterways. Between 9:00 p.m. 
and 3:00 a.m., the Chicago and Calumet Rivers rose 6 feet. For the 
first time since 1981 we had to open the locks at all three of the 
waterway control points; these include Wilmette, downtown Chicago, and 
Calumet. Approximately 4.2 billion gallons of combined sewage and 
stormwater had to be released directly into Lake Michigan.
    Given our large regional jurisdiction and the severity and 
regularity of flooding in our area, the Corps was compelled to develop 
a plan that would complete the uniqueness of TARP and be large enough 
to accommodate the area we serve. With a combined sewer area of 375 
square miles, consisting of the city of Chicago and 51 contiguous 
suburbs, there are 1,443,000 structures within our jurisdiction, which 
are subject to flooding at any given time. The annual damages sustained 
exceed $150 million. With the TARP CUP Reservoirs in place, these 
damages could be eliminated. We must consider the safety and peace of 
mind of the 2 million people who are affected as well as the disaster 
relief funds that will be saved when these projects are in place. As 
the public agency in the greater Chicagoland area responsible for water 
pollution control, and as the regional sponsor for flood control, we 
have an obligation to protect the health and safety of our citizens. We 
are asking your support in helping us achieve this necessary and 
important goal. It is absolutely critical that the Corps' work, which 
has been proceeding for a number of years, now proceeds on schedule 
through construction.
    Therefore, we urgently request that a total of $45,000,000 in 
construction funds be made available in the fiscal year 2007 Energy and 
Water Development Appropriations Act to continue construction of the 
McCook and Thornton Reservoir Projects.
    Again, we thank the subcommittee for its support of this important 
project over the years, and we thank you in advance for your 
consideration of our request this year.
                                 ______
                                 
     Prepared Statement of the Napa County Flood Control and Water 
                         Conservation District

------------------------------------------------------------------------
                         Project                             Requests
------------------------------------------------------------------------
NAPA RIVER FLOOD CONTROL PROJECT (Construction, General)     $31,000,000
NAPA RIVER DREDGING PROJECT (Operation and Maintenance,        3,172,800
 General)...............................................
------------------------------------------------------------------------

    On behalf of the Napa County Flood Control and Water Conservation 
District (District), I want to thank the subcommittee for this 
opportunity to present our priorities for fiscal year 2007 and, at the 
same time, express our appreciation for your support of the District's 
projects in the years past. The District is the local sponsor for the 
Corps of Engineers award-winning Napa River Flood Control project and 
we are requesting the subcommittee's full support of this project to 
ensure that it stays on schedule. Specifically, we request the 
subcommittee to support our request of $31,000,000 from the Army Corps 
of Engineers Construction, General account for the Napa River Flood 
Control Project. We are also seeking $3,172,800 for the maintenance 
dredging of the Napa River from the Army Corps of Engineers (Operation 
and Maintenance, General account). The following text outlines these 
projects and the need for the requested funding.

                    NAPA RIVER FLOOD CONTROL PROJECT

Background
    In the last 50 years, 19 floods have struck the Valley region, 
exacting a heavy toll in loss of life and property.
    Cleanup and claims processing continues today from the most recent 
disaster, a massive flood that began in the overnight hours of December 
30, 2005. This most recent event is estimated to have caused some $70 
million in damage within the City of Napa--with the vast majority of 
that damage in areas that will be protected by the project that is 
currently under construction.
    The flood in 1986 killed three people and caused more than $100 
million in damage in 1986 dollars. Damages throughout Napa County 
totaled about $85 million from the January and March 1995 floods. The 
floods resulted in 27 businesses and 843 residences damaged 
countrywide. Almost all of the damages from the 1986, 1995, and 1997 
floods were within the project area.
    Congress had authorized a flood control project in 1965, but due to 
expense, lack of public consensus on the design and concern about 
environment impacts, a project had never been realized. In mid-1995, 
Federal and State resource agencies reviewed the plan and gave notice 
to the Corps that this plan had significant regulatory hurdles to face.
    The project is located in the city and county of Napa, California. 
The population in the city of Napa, approximately, 67,000 in 1994, is 
expected to exceed 77,000 this year. Excluding public facilities, the 
present value of damageable property within the project flood plain is 
well over $500 million. The Napa River Basin, comprising 426 square 
miles, ranging from tidal marshes to mountainous terrain, is subject to 
severe winter storms and frequent flooding. In the lower reaches of the 
river, flood conditions are aggravated by local runoff. Floods in the 
Napa area have occurred in 1955, 1958, 1963, 1965, 1986 (flood of 
record), 1995, 1997 and 2005. In 1998, the river rose just above flood 
stage on three occasions, but subsided before major property damage 
occurred. In December of 2002, flooding occurred from the Napa Creek at 
the transition to the Napa River, resulting in damage to numerous 
residents and several businesses.
Approved Plan--Project Overview
    In an effort to identify a meaningful and successful plan, a new 
approach emerged that looked at flood control from a broader, more 
comprehensive perspective. Citizens for Napa River Flood Management was 
formed, bringing together a diverse group of local engineers, 
architects, aquatic ecologists, business and agricultural leasers, 
environmentalists, government officials, homeowners and renters and 
numerous community organizations.
    Through a series of public meetings and intensive debate over every 
aspect of Napa's flooding problems, the Citizens for Napa River Flood 
Management crafted a flood management plan offering a range of benefits 
for the entire Napa region. The Corps of Engineers served as a partner 
and a resource for the group, helping to evaluate their approach to 
flood management. The final plan produced by the Citizens for Napa 
River Flood Management was successfully evaluated through the research, 
experience and state-of-the-art simulation tools developed by the Corps 
and numerous international experts in the field of hydrology and other 
related disciplines. The success of this collaboration serves as a 
model for the Nation.
    Acknowledging the river's natural state, the project utilizes a set 
of living river strategies that minimize the disruption and alteration 
of the river habitat, and maximizes the opportunities for environmental 
restoration and enhancement throughout the watershed.
    The Corps has developed the revised plan, which provides 100-year 
protection, with the assistance of the community and its consultants 
into the Supplemental General Design Memorandum (SGDM) and its 
accompanying draft Environmental Impact Statement/Environmental Impact 
Report (SEIS/EIR). Construction of the project began 2 years ago. The 
coalition plan now memorialized in the Corps final documents includes 
the following engineered components: lowering of old dikes, marsh plain 
and flood plain terraces, oxbow dry bypass, Napa Creek flood plain 
terrace, upstream and downstream dry culverts along Napa Creek, new 
dikes, levees and flood walls, bank stabilization, pump stations and 
detention facilities, and bridge replacements. The benefits of the plan 
include reducing or elimination of loss of life, property damage, 
cleanup costs, community disruption due to unemployment and lost 
business revenue, and the need for flood insurance. In fact, the 
project has created an economic renaissance in Napa with new 
investment, schools and housing coming into a livable community on a 
living river. As a key feature, the plan will improve water quality, 
create urban wetlands and enhance wildlife habitats.
    The plan will protect over 7,000 people and over 3,000 residential/
commercial units from the 100-year flood event on the Napa River and 
its main tributary, the Napa Creek, and the project has a positive 
benefit-to-cost ratio under the Corps calculation. One billion dollars 
in damages will be saved over the useful life of the project. The Napa 
County Flood Control District is meeting its local cost-sharing 
responsibilities for the project. A countywide sales tax, along with a 
number of other funding options, was approved 4 years ago by a two-
thirds majority of the county's voters for the local share. Napa is 
California's highest repetitive loss community. This plan is 
demonstrative of the disaster-resistant community initiative, as well, 
as the sustainable development initiatives of FEMA and EPA.

                      NAPA RIVER DREDGING PROJECT

    The Napa River navigation project was authorized by the Rivers and 
Harbors Acts of 1888, 1935, and 1946.
    The Napa River is a shallow draft navigation channel which serves 
light commercial and recreational traffic. The project is normally 
dredged by the Corps of Engineers on a 6-year cycle, with the most 
recent dredging being completed in 1998. This dredging is 2 years 
overdue and is causing not only impediment to commercial activity but 
posing major obstacles for construction of the project from the river. 
Maintenance dredging is required to restore depths required for 
existing traffic and in anticipation of the additional boat traffic 
resulting from replacement of Maxwell Bridge. The Napa County Flood 
Control and Water Conservation District is responsible for providing a 
suitable disposal site for the dredged material.
                                 ______
                                 
           Prepared Statement of the City of Arlington, Texas

    Mr. Chairman and members of the subcommittee, on behalf of the City 
of Arlington, Texas, I am pleased to submit this statement for the 
record in support of our request for funding in the amount of $7.8 
million in the fiscal year 2007 Appropriation Bill for Energy and Water 
Development to support the city's continued efforts to reduce flood 
damage, improve public safety, reduce erosion and sedimentation, and 
enhance wildlife habitat and passive recreation within the Johnson 
Creek corridor through Arlington, Texas.

                       PROJECT EXECUTIVE SUMMARY

    Johnson Creek, a tributary of the Trinity River, has been the topic 
of extensive study by the Corps of Engineers (Corps) and the City of 
Arlington, Texas (city) since the early 1980's due to a history of 
flooding, extensive erosion and sedimentation, recreational challenges 
and opportunities, and important wildlife habitat.
    In 1990, the Corps proposed to address flooding by planning and 
allocating funds to channelize and line with concrete substantial 
stretches of Johnson Creek. The city rejected this plan on the grounds 
that it provided flood relief at the expense of recreational 
opportunities, wildlife habitat and economic development. The city 
adopted in 1997 a more holistic alternative called the Johnson Creek 
Corridor Plan that received wide community support but was not 
fundable. In 1999, the Corps prepared an Interim Feasibility Report and 
Integrated Environmental Assessment for Johnson Creek in Arlington. The 
document recommended a National Economic Development (NED) Plan for 
flood damage reduction that also addressed the city's desires for 
enhanced wildlife habitat and recreation in the Johnson Creek corridor. 
In 2000, the city adopted the Corps' 1999 plan to purchase homes within 
the floodplain of Johnson Creek, create linear parks with trails, and 
acquire and restore open space for wildlife habitat and recreation.
    In 2004, subsequent to the city's contract with the Corps, the city 
entered into a partnership with the Dallas Cowboys to build a new 
football stadium adjacent to the Texas Rangers' venue and land 
purchased and restored as part of the 1999 plan. In 2005, the Corps' 
1999 plan was amended to remove approximately 90 acres of city-owned 
land north of Union Pacific Railroad tracks.
    During ecological investigations associated with design and master 
plan development of the football stadium, a number of critical issues 
arose that the 1999 plan (as amended in 2005) only partially addressed. 
The city realized that a holistic, watershed approach, in conjunction 
with maximizing the use of on-site best management practices (BMPs), 
would be required to truly address flooding, water quality, and 
wildlife habitat/recreation issues at Johnson Creek. The challenge was 
that deviations from 1999 plan, which largely has been implemented, 
require explicit authorization from Congress.
    In March 2006, the city prepared a watershed conservation plan 
entitled Johnson Creek: A Vision of Conservation that modifies the 
1999/2005 authorized plan. The modified plan allows the city to: (1) 
implement and modify, if necessary, unfinished components of the 1999/
2005 plan; (2) design and construct new bank stabilization, flood 
control, recreation, and habitat restoration projects on public lands 
and easements along Johnson Creek; (3) acquire and/or receive 
reimbursement for an additional 90 acres of environmental lands within 
Trinity River and/or Rush/Village Creek floodplain; and (4) obtain 
reimbursement for new acquisitions, if desired, and for the use of city 
parks for funded Federal projects.
    Total project cost to implement the modified plan is estimated at 
$79,997,666, including contingency. This includes $30,000,000 in sunk 
costs for completed Johnson Creek projects.

                          PROJECT DESCRIPTION

    The modified plan is divided into a minimum of two phases as 
summarized below:
    Phase 1 includes property between the Union Pacific railroad tracks 
between Division Street and Abram Street to the northerly Rangers' 
Pond. Phase 1 was selected for a variety of reasons as follow: (1) 
There is adequate open space for regional flood control; (2) the 
riparian corridor has high potential for restoration to improve 
wildlife habitat, water quality, and recreational opportunities; (3) 
the property is owned by the city; (4) a significant portion of 
existing environmental stresses, particularly erosion and 
sedimentation, occur within this area; (4) the city has identified this 
area as an entertainment district; and (5) this area includes the 
future Dallas Cowboys stadium, the existing Texas Rangers stadium, and 
a future Arlington, Texas town center. These developers have all agreed 
to provide matching money for the city to improve the green space 
within this corridor for environmental benefits listed above. Phase 1 
work will provide the catalyst and inspiration for future work 
throughout the remainder of the watershed.
    Phase 1 work is all new work and includes constructing a major 
flood control detention basin between the Union Pacific railroad tracks 
and Division Street; constructing a detention/sedimentation basin just 
west of the Stone Gate Mobile Park; restoring the south Rangers' pond 
to a stream; bank stabilization and creek restoration; modifying the 
north Rangers' ponds to maximize detention; installing two pedestrian 
bridges across Johnson Creek; providing trails and other passive 
recreational amenities; and enhancing remaining green space for 
wildlife habitat.
    Phase 2 includes the Johnson Creek corridor between Union Pacific 
railroad tracks and Vandergriff Park, and 90 acres of environmental 
land within Trinity River and/or Rush/Village Creek floodplain. Within 
the Johnson Creek corridor, Phase 2 work will occur within three main 
areas. At Vandergriff and Meadowbrook Parks, proposed activities 
include creating a detention/sedimentation basin; restoring eroded 
creek banks and creek restoration; enhancing passive recreational 
opportunities using trails and other amenities; and enhancing wildlife 
habitat. The third area includes the restoration of two tributaries of 
Johnson Creek on either side of the main stem, between Sanford Street 
and Randol Mill Road. Possible acquisition of three homes between 
Collins Street and Park Row Avenue may also occur as part of Phase 2.
    The city has long recognized that the ecological health of Johnson 
Creek and its contributing watershed are inextricably tied to the 
quality of life of its residents. In this light, the city hopes to 
develop a stronger link between its residents and its natural 
surroundings by restoring the creek, and, in doing so, revitalizing the 
community. Immediate local benefits include flood damage protection, 
habitat restoration, improved water quality and public health, 
increased access to Johnson Creek for passive recreation, elevated 
community pride, and economic redevelopment. The project complements 
larger, regional efforts to improve water quality and maximize the 
function of floodplain communities in the Trinity River watershed. 
Nearly all local benefits also contribute to statewide water quality, 
stormwater management, flood control, and environmental planning 
efforts by the North Central Texas Council of Government, U.S. 
Environmental Protection Agency, U.S. Fish and Wildlife Service, Corps 
of Engineers, Texas Parks and Wildlife, and Texas Commission on 
Environmental Quality.

                             FUNDING NEEDS

    The modified plan, which includes completed components of the 1999/
2005 plan and new Johnson Creek projects as described above, has a 
total estimated cost of $79,997,666, of which 35 percent will be 
provided by the city.
    For fiscal year 2007, the City of Arlington, Texas is seeking $7.8 
million from the U.S. Army Corps of Engineers Programs account through 
your Energy and Water Development Appropriations Subcommittee.
    Thank you for your consideration of our request.
                                 ______
                                 
      Prepared Statement of the Santa Clara Valley Water District

 UPPER PENITENCIA CREEK FLOOD PROTECTION PROJECT--SANTA CLARA COUNTY, 
                               CALIFORNIA

                                SUMMARY

    This statement urges the committee's support a fiscal year 2007 
administration budget request of $319,000 to complete the feasibility 
study for the Upper Penitencia Creek Flood Protection Project.

                          STATEMENT OF SUPPORT

    Background.--The Upper Penitencia Creek Watershed is located in 
northeast Santa Clara County, California, near the southern end of the 
San Francisco Bay. In the last 2 decades, the creek has flooded in 
1980, 1982, 1983, 1986, 1995, and 1998. The January 1995 flood damaged 
a commercial nursery, a condominium complex, and a business park. The 
February 1998 flood also damaged many homes, businesses, and surface 
streets.
    The proposed project on Upper Penitencia Creek, from the Coyote 
Creek confluence to Dorel Drive, will protect portions of the cities of 
San Jose and Milpitas. The floodplain is completely urbanized; 
undeveloped land is limited to a few scattered agricultural parcels and 
a corridor along Upper Penitencia Creek. Based on an August 2004 U.S. 
Army Corps of Engineers' (Corps) Economics Analysis, over 5,000 homes 
and businesses in the cities of San Jose and Milpitas are located in 
the 1 percent or 100-year flood area. Flood damages were estimated at 
$455 million. Benefit-to-cost ratios for the nine project alternatives 
range from 2:1 to 3.1:1.
    Study Synopsis.--Under authority of the Watershed Protection and 
Flood Prevention Act (Public Law 83-566), the Natural Resources 
Conservation Service (formerly the Soil Conservation Service) completed 
an economic feasibility study (watershed plan) for constructing flood 
damage reduction facilities on Upper Penitencia Creek. Following the 
1990 U.S. Department of Agriculture Farm Bill, the Natural Resources 
Conservation Service watershed plan stalled due to the very high ratio 
of potential urban development flood damage compared to agricultural 
damage in the project area.
    In January 1993, the Santa Clara Valley Water District (District) 
requested the Corps proceed with a reconnaissance study in the 1994 
fiscal year while the Natural Resources Conservation Service plan was 
on hold. Funds were appropriated by Congress for fiscal year 1995 and 
the Corps started the reconnaissance study in October 1994. The 
reconnaissance report was completed in July 1995, with the 
recommendation to proceed with the feasibility study phase. The 
feasibility study, initiated in February 1998, is currently scheduled 
for completion in 2007.
    Advance Construction.--To accelerate project implementation, the 
District submitted a Section 104 application to the Corps for approval 
to construct a portion of the project. The application was approved in 
December 2000. The advance construction is for a 2,600-foot-long 
section of bypass channel between Coyote Creek and King Road. However, 
due to funding constraints at the District and concerns raised by 
regulatory agencies, the design was stopped and turned over to the 
Corps to complete.
    Fiscal Year 2006 Funding.--$628,000 was appropriated in fiscal year 
2006 for the Upper Penitencia Creek Flood Protection Project for 
project investigation.
    Fiscal Year 2006 Funding Recommendation.--It is requested that the 
congressional committee support the administration's fiscal year 2007 
budget request of $319,000 for the Upper Penitencia Creek Flood 
Protection Project to continue the Feasibility Study.

COYOTE/BERRYESSA CREEK PROJECT, BERRYESSA CREEK PROJECT ELEMENT--SANTA 
                        CLARA COUNTY, CALIFORNIA

                                SUMMARY

    This statement urges the committee's support for a fiscal year 2007 
appropriation add-on of $2 million to complete with the General 
Reevaluation Report and update of environmental documents for the 
Berryessa Creek Flood Protection Project element of the Coyote/
Berryessa Creek Project.

                          STATEMENT OF SUPPORT

    Background.--The Berryessa Creek Watershed is located in northeast 
Santa Clara County, California, near the southern end of the San 
Francisco Bay. A major tributary of Coyote Creek, Berryessa Creek 
drains 22 square miles in the City of Milpitas and a portion of San 
Jose.
    On average, Berryessa Creek floods once every 4 years. The most 
recent flood in 1998 resulted in significant damage to homes and 
automobiles. The proposed project on Berryessa Creek, from Calaveras 
Boulevard to upstream of Old Piedmont Road, will protect portions of 
the Cities of San Jose and Milpitas. The flood plain is largely 
urbanized with a mix of residential and commercial development. Based 
on the U.S. Army Corps of Engineers (Corps) 2005 report, a 1 percent or 
100-year flood could potentially result in damages exceeding $179 
million. Benefit-to-cost ratios for the six project alternatives being 
evaluated range from 2:1 to 7.3:1.
    Study Synopsis.--In January 1981, the Santa Clara Valley Water 
District (District) applied for Federal assistance for flood protection 
projects under Section 205 of the 1948 Flood Control Act. The Water 
Resources Development Act of 1990 authorized construction on the 
Berryessa Creek Flood Protection Project as part of a combined Coyote/
Berryessa Creek Project to protect portions of the Cities of Milpitas 
and San Jose.
    The Coyote Creek element of the project was completed in 1996. The 
Berryessa Creek Project element proposed in the Corps' 1987 feasibility 
report consisted primarily of a trapezoidal concrete lining. This was 
not acceptable to the local community. The Corps and the District are 
currently preparing a General Reevaluation Report which involves 
reformulating a project which is more acceptable to the local community 
and more environmentally sensitive. Project features will include 
setback levees and floodwalls to preserve sensitive areas (minimizing 
the use of concrete), appropriate aquatic and riparian habitat 
restoration and fish passage, and sediment control structures to limit 
turbidity and protect water quality. The project will also accommodate 
the City of Milpitas' adopted trail master plan. Estimated total costs 
of the General Reevaluation Report work are $5 million, and should be 
completed in the spring of 2007.
    Fiscal Year 2006 Funding.--$375,000 was appropriated in fiscal year 
2006 for the Coyote/Berryessa Creek Flood Protection Project to 
continue the General Reevaluation Report and environmental documents 
update.
    Fiscal Year 2007 Funding Recommendation.--Based on the continuing 
threat of significant flood damage from Berryessa Creek and the need to 
continue with the General Reevaluation Report, it is requested that the 
congressional committee support an appropriation add-on of $2 million 
for the Berryessa Creek Flood Protection Project element of the Coyote/
Berryessa Creek Project.

     UPPER GUADALUPE RIVER PROJECT--SANTA CLARA COUNTY, CALIFORNIA

                                SUMMARY

    This statement urges the committee's support for a fiscal year 2007 
appropriation add-on of $8.5 million to complete final design and 
continue construction for the Upper Guadalupe River Flood Protection 
Project.

                          STATEMENT OF SUPPORT

    Background.--The Guadalupe River is one of two major waterways 
flowing through a highly urbanized area of Santa Clara County, 
California, the heart of Silicon Valley. Historically, the river has 
flooded the central district and southern areas of San Jose. According 
to U.S. Army Corps of Engineers (Corps) 1998 feasibility study, severe 
flooding would result from a 100-year flooding event and potentially 
cause $280 million in damages.
    The probability of a large flood occurring before implementation of 
flood prevention measures is high. The upper Guadalupe River overflowed 
in March 1982, January 1983, February 1986, January 1995, March 1995, 
and February 1998, causing damage to several residences and businesses 
in the Alma Avenue and Willow Street areas. The 1995 floods in January 
and March, as well as in February 1998, closed Highway 87 and the 
parallel light-rail line, a major commute artery.
    Project Synopsis.--In 1971, the Santa Clara Valley Water District 
(District) requested the Corps reactivate an earlier study of Guadalupe 
River. From 1971 to 1980, the Corps established the economic 
feasibility and Federal interest in the Guadalupe River only between 
Interstate 880 and Interstate 280. Following the 1982 and 1983 floods, 
the District requested that the Corps reopen its study of the upper 
Guadalupe River upstream of Interstate 280. The Corps completed a 
reconnaissance study in November 1989, which established an 
economically justifiable solution for flood protection in this reach. 
The report recommended proceeding to the feasibility study phase, which 
began in 1990. In January 1997, the Corps determined that the National 
Economic Development (NED) Plan would be a 2 percent or 50-year level 
of flood protection rather than the 1 percent or 100-year level. The 
Corps feasibility study determined the cost of the locally-preferred 
100-year plan is $153 million and the Corps NED 50-year plan is $98 
million. The District requested that the costs of providing 50-year and 
100-year flood protection be analyzed during the preconstruction 
engineering design phase. The Corps is now proceeding with the 
preconstruction engineering design phase and has refined the NED Plan 
to address the District's comments and Endangered Species Act issues 
and has reevaluated the locally-preferred plan for full Federal cost-
sharing. The findings were submitted to Corps Headquarters for approval 
in March 2004 in a Limited Reevaluation Report on the Proposed Project 
Modifications. This report contains an evaluation of the revised NED 
Plan project and the Locally-preferred Plan project, which costs $165 
million with a benefit-to-cost ratio of 1:1.42 and $212 million with a 
benefit-to-cost ratio of 1:1.24, respectively. The Report was approved 
by the Corps in October 2005. The report recommended full cost-sharing 
on the Locally-preferred Plan project. Current efforts are underway to 
reauthorize the project at its current project cost in the Water 
Resources Development Act of 2005 currently being considered by 
Congress.
    Fiscal Year 2006 Funding.--$3.5 million was authorized in fiscal 
year 2006 for the Upper Guadalupe River Project to continue final 
design and initiate construction.
    Fiscal Year 2007 Funding Recommendation.--It is requested that the 
congressional committee support an appropriation add-on of $8.5 million 
in fiscal year 2007 to complete final design and continue construction 
on the Upper Guadalupe River Flood Protection Project.

   THOMPSON CREEK RESTORATION PROJECT--SANTA CLARA COUNTY, CALIFORNIA

                                SUMMARY

    This statement urges the committee to support a fiscal year 2007 
earmark of $400,000 within the Section 206 Aquatic Ecosystem 
Restoration Program to continue the Thompson Creek Restoration Project.

                          STATEMENT OF SUPPORT

    Background.--Thompson Creek, a tributary of Coyote Creek, flows 
through the City of San Jose, California. Historically, the creek was a 
naturally-meandering stream and a component of the Coyote Creek 
watershed. The watershed had extensive riparian and oak woodland 
habitat along numerous tributary stream corridors and upland savanna. 
Currently, these habitat types are restricted to thin sparse pockets in 
the Thompson Creek restoration project area.
    Significant urban development over the last 20 years has modified 
the runoff characteristics of the stream resulting in significant 
degradation of the riparian habitat and stream channel. The existing 
habitats along Thompson Creek, riparian forest stands, are threatened 
by a bank destabilization and lowering of the water table. Recent large 
storm events (1995, 1997, and 1998) and the subsequent wet years in 
conjunction with rapid development in the upper watershed have resulted 
in a succession of high runoff events leading to rapid erosion.
    The upstream project limits start at Aborn Road and the downstream 
project limit is Quimby Road where Thompson Creek has been modified as 
a flood protection project. The project distance is approximately 1 
mile.
    Status.--In February 2000, the Santa Clara Valley Water District 
(District) initiated discussions with U.S. Army Corps of Engineers 
(Corps) for a study under the Corps' Section 206 Aquatic Ecosystem 
Restoration Program. Based on the project merits, the Corps completed a 
Preliminary Restoration Plan (PRP) and subsequent Project Management 
Plan (PMP). After approval of the PRP the Detailed Project Report (DPR) 
was initiated. The DPR will provide the information necessary to 
develop plans and specifications for the construction of the 
restoration project.
Project Timeline
    Request Federal assistance under Sec. 206 Aquatic Ecosystem 
Restoration Program--Feb 2002;
    Complete Preliminary Restoration Plan--Jan 2004;
    Initiate Detailed Project Report (Feasibility Study)--Jan 2005;
    Final Detailed Project Report to South Pacific Division of Corps--
Dec 2007;
    Initiate Plans and Specifications--Jan 2008;
    Project Cooperation Agreement signed--Nov 2008;
    Complete Plans and Specifications--Dec 2008;
    Advertise Construction Contract--Jan 2009;
    Award Construction Contract--Mar 2009;
    Construction Start--Apr 2009;
    Complete Physical Construction--Mar 2010.
    Fiscal Year 2006 Funding.--No funding was received for the project 
in the fiscal year 2006.
    Fiscal Year 2007 Funding Recommendation.--It is requested that the 
congressional committee support an earmark of $400,000 within the 
fiscal year 2007 Section 206 Aquatic Ecosystem Restoration Program.

SOUTH SAN FRANCISCO BAY SHORELINE STUDY--SANTA CLARA COUNTY, CALIFORNIA

                                SUMMARY

    This statement urges the committee's support for a fiscal year 2007 
appropriation add-on of $2 million to continue a Feasibility Study to 
evaluate integrated flood protection and environmental restoration for 
the South San Francisco Bay Shoreline.

                          STATEMENT OF SUPPORT

    Background.--Congressional passage of the Water Resources 
Development Act of 1976, originally authorized the San Francisco Bay 
Shoreline Study, and Santa Clara Valley Water District (District) was 
one of the project sponsors. In 1990, the U.S. Army Corps of Engineers 
(Corps) concluded that levee failure potential was low because the 
existing non-Federal, non-engineered levees, which were routinely 
maintained by Leslie Salt Company (subsequently Cargill Salt) to 
protect their industrial interests, had historically withstood 
overtopping without failure. As a result, the project was suspended 
until adequate economic benefits could be demonstrated.
    Since the project's suspension in 1990, many changes have occurred 
in the South Bay. The State and Federal acquisition of approximately 
15,000 acres of South Bay salt ponds was completed in early March 2003. 
The proposed restoration of these ponds to tidal marsh will 
significantly alter the hydrologic regime and levee maintenance 
activities, which were assumed to be constant in the Corps' 1990 study. 
In addition to the proposed restoration project, considerable 
development has occurred in the project area. Many major corporations 
are now located within Silicon Valley's Golden Triangle, lying within 
and adjacent to the tidal flood zone. Damages from a 1 percent high 
tide are anticipated to far exceed the $34.5 million estimated in 1981, 
disrupting business operations, infrastructure, and residences. Also, 
historical land subsidence of up to 6 feet near Alviso, as well as the 
structural uncertainty of existing salt pond levees, increases the 
potential for tidal flooding in Santa Clara County.
    In July 2002, Congress authorized a review of the Final 1992 Letter 
Report for the San Francisco Bay Shoreline Study. The final fiscal year 
2004 appropriation for the Corps included funding for a new start 
Reconnaissance Study.
    Project Synopsis.--At present, large areas of Santa Clara, Alameda 
and San Mateo Counties would be impacted by flooding during a 1 percent 
high tide. The proposed restoration of the South San Francisco Bay salt 
ponds will result in the largest restored wetland on the West Coast of 
the United States, and also significantly alter the hydrologic regime 
adjacent to South Bay urban areas. The success of the proposed 
restoration is therefore dependent upon adequate tidal flood 
protection, and so this project provides an opportunity for multi-
objective watershed planning in partnership with the California Coastal 
Conservancy, the lead agency on the restoration project. Project 
objectives include: restoration and enhancement of a diverse array of 
habitats, especially several special status species; tidal flood 
protection; and provision of wildlife-oriented public access. A Corps 
Reconnaissance Study was completed in September 2004 and the 
Feasibility Study was initiated in September 2005.
    Fiscal Year 2006 Funding.--$600,000 was appropriated in fiscal year 
2006 to continue the Feasibility Study.
    Fiscal Year 2007 Funding Request.--It is requested that the 
congressional committee support an appropriation add-on of $2 million 
to continue the Feasibility Study to evaluate integrated flood 
protection and environmental restoration.

SAN FRANCISQUITO CREEK FLOOD DAMAGE REDUCTION AND ECOSYSTEM RESTORATION 
                PROJECT--SANTA CLARA COUNTY, CALIFORNIA

                                SUMMARY

    This statement urges the committee's support a fiscal year 2007 
appropriation add-on of $450,000 to continue a Feasibility Study of the 
San Francisquito Creek Watershed.

                          STATEMENT OF SUPPORT

    Background.--The San Francisquito Creek watershed comprises 45 
square miles and 70 miles of creek system. The creek mainstem flows 
through five cities and two counties, from Searsville Lake, belonging 
to Stanford University, to the San Francisco Bay at the boundary of 
East Palo Alto and Palo Alto. Here it forms the boundary between Santa 
Clara and San Mateo counties, California and separates the cities of 
Palo Alto from East Palo Alto and Menlo Park. The upper watershed 
tributaries are within the boundaries of Portola Valley and Woodside 
townships. The creek flows through residential and commercial 
properties, a biological preserve, and Stanford University campus. It 
interfaces with regional and State transportation systems by flowing 
under two freeways and the regional commuter rail system. San 
Francisquito Creek is one of the last natural continuous riparian 
corridors on the San Francisco Peninsula and home to one of the last 
remaining viable steelhead trout runs. The riparian habitat and urban 
setting offer unique opportunities for a multi-objective flood 
protection and ecosystem restoration project.
    Flooding History.--The creek's mainstem has a flooding frequency of 
approximately once in 11 years. It is estimated that over $155 million 
in damages could occur in Santa Clara and San Mateo counties from a 1 
percent flood, affecting 4,850 home and businesses. Significant areas 
of Palo Alto flooded in December 1955, inundating about 1,200 acres of 
commercial and residential property and about 70 acres of agricultural 
land. April 1958 storms caused a levee failure downstream of Highway 
101, flooding Palo Alto Airport, the city landfill, and the golf course 
up to 4 feet deep. Overflow in 1982 caused extensive damage to private 
and public property. The flood of record occurred on February 3, 1998, 
when overflow from numerous locations caused severe, record 
consequences with more than $28 million in damages. More than 1,100 
homes were flooded in Palo Alto, 500 people were evacuated in East Palo 
Alto, and the major commute and transportation artery, Highway 101, was 
closed.
    Status.--Active citizenry are anxious to avoid a repeat of February 
1998 flood. Numerous watershed-based studies have been conducted by the 
Corps, the Santa Clara Valley Water District, Stanford University, and 
the San Mateo County Flood Control District. Grassroots, consensus-
based organization, called the San Francisquito Watershed Council, has 
united stakeholders including local and State agencies, citizens, flood 
victims, developers, and environmental activists for over 10 years. The 
San Francisquito Creek Joint Powers Authority was formed in 1999 to 
coordinate creek activities with five member agencies and two associate 
members. The Authority Board has agreed to be the local sponsor for a 
Corps project and received congressional authorization for a Corps 
reconnaissance study in May 2002. The Reconnaissance Study was 
completed in March 2005 and the Feasibility Study was initiated in 
November 2005.
    Fiscal Year 2006 Funding.--$225,000 was appropriated to San 
Francisquito Creek in fiscal year 2006 to initiate a Feasibility Study.
    Fiscal Year 2007 Funding Recommendation.--It is requested the 
congressional committee support an appropriation add-on of $450,000 to 
continue the Feasibility Study.

          LLAGAS CREEK PROJECT--SANTA CLARA COUNTY, CALIFORNIA

                                SUMMARY

    This statement urges the committee's support for a fiscal year 2007 
appropriation add-on of $618,000 for planning, design, and 
environmental updates for the Llagas Creek Flood Protection Project.

                          STATEMENT OF SUPPORT

    Background.--The Llagas Creek Watershed is located in southern 
Santa Clara County, California, serving the communities of Gilroy, 
Morgan Hill and San Martin. Historically, Llagas Creek has flooded in 
1937, 1955, 1958, 1962, 1963, 1969, 1982, 1986, 1996, 1997, 1998, and 
2002. The 1997, 1998, and 2002 floods damaged many homes, businesses, 
and a recreational vehicle park located in areas of Morgan Hill and San 
Martin. These are areas where flood protection is proposed. Overall, 
the proposed project will protect the floodplain from a 1 percent flood 
affecting more than 1,100 residential buildings, 500 commercial 
buildings, and 1,300 acres of agricultural land.
    Project Synopsis.--Under authority of the Watershed Protection and 
Flood Prevention Act (Public Law 83-566), the Natural Resources 
Conservation Service completed an economic feasibility study in 1982 
for constructing flood damage reduction facilities on Llagas Creek. The 
Natural Resources Conservation Service completed construction of the 
last segment of the channel for Lower Llagas Creek in 1994, providing 
protection to the project area in Gilroy. The U.S. Army Corps of 
Engineers (Corps) is currently updating the 1982 environmental 
assessment work and the engineering design for the project areas in 
Morgan Hill and San Martin. The engineering design is being updated to 
protect and improve creek water quality and to preserve and enhance the 
creek's habitat, fish, and wildlife while satisfying current 
environmental and regulatory requirement. Significant issues include 
the presence of additional endangered species including red-legged frog 
and steelhead, listing of the area as probable critical habitat for 
steelhead, and more extensive riparian habitat than were considered in 
1982. Project economics are currently being updated as directed by 
Corps Headquarters to determine continued project economic viability.
    Until 1996, the Llagas Creek Project was funded through the 
traditional Public Law 83-566 Federal project funding agreement with 
the Natural Resources Conservation Service paying for channel 
improvements and the District paying local costs including utility 
relocation, bridge construction, and right of way acquisition. Due to 
the steady decrease in annual appropriations for the Public Law 83-566 
construction program since 1990, the Llagas Creek Project had not 
received adequate funding from to complete the Public Law 83-566 
project. To remedy this situation, the District worked with 
congressional representatives to transfer the construction authority 
from the Department of Agriculture to the Corps under the Water 
Resources Development Act of 1999 (Section 501). Since the transfer of 
responsibility to the Corps, the District has been working the Corps to 
complete the project. Efforts are underway to reauthorize the project 
at its current project cost in the Water Resources Development Act of 
2005 currently being considered by Congress.
    Fiscal Year 2006 Funding.--$450,000 was appropriated in fiscal year 
2006 for the Llagas Creek Flood Protection Project for planning and 
design.
    Fiscal Year 2007 Funding Recommendation.--Based upon the high risk 
of flood damage from Llagas Creek, it is requested that the 
congressional committee support an appropriation add-on of $618,000 in 
fiscal year 2007 for planning, design, and environmental updates for 
the Llagas Creek Project.

        GUADALUPE RIVER PROJECT--SANTA CLARA COUNTY, CALIFORNIA

                                SUMMARY

    This statement urges the committee's support for a fiscal year 2007 
administration budget request of $5 million and an appropriation add-on 
of $2.5 million, for a total of $7.5 million to continue construction 
of the final phase of the Guadalupe River Flood Protection Project.

                          STATEMENT OF SUPPORT

    Background.--The Guadalupe River is a major waterway flowing 
through a highly developed area of San Jose, in Santa Clara County, 
California. A major flood would damage homes and businesses in the 
heart of Silicon Valley. Historically, the river has flooded downtown 
San Jose and the community of Alviso. According to the U.S. Army Corps 
of Engineers (Corps) 2000 Final General Reevaluation & Environmental 
Report for Proposed Project Modifications, estimated damages from a 1 
percent flood in the urban center of San Jose are over $576 million. 
The Guadalupe River overflowed in February 1986, January 1995, and 
March 1995, damaging homes and businesses in the St. John and Pleasant 
Street areas of downtown San Jose. In March 1995, heavy rains resulted 
in breakouts along the river that flooded approximately 300 homes and 
business.
    Project Synopsis.--In 1971, the local community requested that the 
Corps reactivate its earlier study. Since 1972, substantial technical 
and financial assistance have been provided by the local community 
through the Santa Clara Valley Water District in an effort to 
accelerate the project's completion. To date, more than $85.8 million 
in local funds have been spent on planning, design, land purchases, and 
construction in the Corps' project reach.
    The Guadalupe River Project received authorization for construction 
under the Water Resources Development Act of 1986; the General Design 
Memorandum was completed in 1992, the local cooperative agreement was 
executed in March 1992, the General Design Memorandum was revised in 
1993, construction of the first phase of the project was completed in 
August 1994, construction of the second phase was completed in August 
1996. Project construction was temporarily halted due to environmental 
concerns.
    To achieve a successful, long-term resolution to the issues of 
flood protection, environmental mitigation, avoidance of environmental 
effects, and project monitoring and maintenance costs, a multi-agency 
``Guadalupe Flood Control Project Collaborative'' was created in 1997. 
A key outcome of the collaborative process was the signing of the 
Dispute Resolution Memorandum in 1998, which modified the project to 
resolve major mitigation issues and allowed the project to proceed. 
Energy and Water Development Appropriations Act of 2002 was signed into 
law on November 12, 2001. This authorized the modified Guadalupe River 
Project at a total cost of $226.8 million. Subsequent to the 
authorization, the project cost has been raised to $251 million. 
Construction of the last phase of flood protection was completed 
December 2004 and a completion celebration held in January 2005. The 
remaining construction consists of railroad bridge replacements and 
mitigation plantings. The overall construction of the project including 
the river park and the recreation elements is scheduled for completion 
in 2006.
    Fiscal Year 2006 Funding.--$5.6 million was authorized in fiscal 
year 2006 to continue Guadalupe River Project construction.
    Fiscal Year 2007 Funding Recommendation.--It is requested that the 
congressional committee support an appropriation add-on of $2.5 
million, in addition to the $5 million in the administration's fiscal 
year 2007 budget request, for a total of $7.5 million to continue 
construction of the final phase of the Guadalupe River Flood Protection 
Project.

      COYOTE CREEK WATERSHED STUDY--SANTA CLARA COUNTY, CALIFORNIA

                                SUMMARY

    This statement urges the committee's support for a fiscal year 2007 
appropriation add-on of $100,000 to initiate a Reconnaissance Study of 
the Coyote Creek Watershed.

                          STATEMENT OF SUPPORT

    Background.--Coyote Creek drains Santa Clara County's largest 
watershed, an area of more than 320 square miles encompassing most of 
the eastern foothills, the City of Milpitas, and portions of the cities 
of San Jose and Morgan Hill. It flows northward from Anderson Reservoir 
through more than 40 miles of rural and heavily urbanized areas and 
empties into south San Francisco Bay.
    Prior to construction of Coyote and Anderson Reservoirs, flooding 
occurred in 1903, 1906, 1909, 1911, 1917, 1922, 1923, 1926, 1927, 1930 
and 1931. Since 1950, the operation of the reservoirs has reduced the 
magnitude of flooding, although flooding is still a threat and did 
cause damages in 1982, 1983, 1986, 1995, and 1997. Significant areas of 
older homes in downtown San Jose and some major transportation 
corridors remain susceptible to extensive flooding. The federally-
supported lower Coyote Creek Project (San Francisco Bay to Montague 
Expressway), which was completed in 1996, protected homes and 
businesses from storms which generated record runoff in the northern 
parts of San Jose and Milpitas.
    The proposed Reconnaissance Study would evaluate the reaches 
upstream of the completed Federal flood protection works on lower 
Coyote Creek.
    Objective of Study.--The objectives of the Reconnaissance Study are 
to investigate flood damages within the Coyote Creek Watershed; to 
identify potential alternatives for alleviating those damages which 
also minimize impacts on fishery and wildlife resources, provide 
opportunities for ecosystem restoration, provide for recreational 
opportunities; and to determine whether there is a Federal interest to 
proceed into the Feasibility Study Phase.
    Study Authorization.--In May 2002, the House of Representatives 
Committee on Transportation and Infrastructure passed a resolution 
directing the Corps to ``. . . review the report of the Chief of 
Engineers on Coyote and Berryessa Creeks . . . and other pertinent 
reports, to determine whether modifications of the recommendations 
contained therein are advisable in the interest of flood damage 
reduction, environmental restoration and protection, water conservation 
and supply, recreation, and other allied purposes . . .''.
    Fiscal Year 2006 Administration Budget Request and Funding.--The 
Coyote Watershed Study was one of only three ``new start'' studies 
proposed for funding nationwide in the administration fiscal year 2006 
budget request. Congress did not include funding for the study in the 
final fiscal year 2006 appropriations bill.
    Fiscal Year 2007 Funding Recommendation.--It is requested that the 
congressional committee support an appropriation add-on of $100,000 to 
initiate a multi-purpose Reconnaissance Study within the Coyote Creek 
Watershed.
                                 ______
                                 
     Prepared Statement of the City of Los Angeles Board of Harbor 
                 Commissioners and Port of Los Angeles

    Mr. Chairman and members of the subcommittee, thank you for the 
opportunity to submit testimony in support of full funding of the 
Channel Deepening Project at the Port of Los Angeles/Los Angeles 
Harbor; the largest container seaport in the United States and eighth 
largest in the world. Our testimony speaks in support of a fiscal year 
2007 appropriation of $12 million for the Federal share of continued 
construction of the Channel Deepening Project. Proposed funding for the 
Channel Deepening Project was not included in the President's fiscal 
year 2007 budget because the enabling legislation enacted subsequent to 
completion of the budget document. The Army Corps of Engineers has 
acknowledged its capability to fully obligate a $12 million 
appropriation for the project.
    The Port of Los Angeles is America's busiest seaport with record 
volumes of cargo moving through the 7,500-acre harbor. Its strong 
performance is attributed to a solid U.S. economy and the recovering 
Asian economies with a renewed manufacturing demand for American 
exports. The Port itself is a major reason for the remarkable cargo 
volumes. Its world-class facilities and infrastructure maximize the 
``one-stop shopping'' concept of cargo transportation and delivery 
favored by most shipping lines. Ocean carriers can send the majority of 
their West Coast-bound cargo to Los Angeles with full confidence in the 
Port's modern cargo terminals and efficient train/truck intermodal 
network. The Channel Deepening Project is a critical Federal navigation 
improvement project, and is the underpinning of shipping line 
confidence in the Port of Los Angeles.
    In the fiscal year 2006 Energy and Water Development Appropriations 
Act, Congress authorized an increase in the total project cost to $222 
million from $194 million, representing a Federal share of $72,000,000 
and a local share of $150,000,000, in accordance with the Army Corps of 
Engineers' revision. This revision accounts for credits for in-kind 
services provided by the Port and other required project modifications, 
including adjustments to the disposal costs for the dredged material, 
adjustments for construction contract changes, and project 
administration costs. The cost-share amounts for the Channel Deepening 
Project is currently under review, as well as a Supplemental EIS/EIR 
that will evaluate and determine the best alternative for increased 
disposal capacity. Upon completion of both reviews, the new cost-
sharing amounts and the additional costs for disposal at the 
recommended site(s) will be established. The need for a Supplemental 
EIS/EIR has moved project completion to fiscal year 2007.

                        PORT NAVIGATION DEMANDS

    The evolving international shipping industry prompted a 
collaborative effort by the Port of Los Angeles and the Corps of 
Engineers to implement the Channel Deepening Project in the early 
1980's. With this project, the Port will deepen its main Federal 
channel and tributary channels by 8 feet, from -45 to -53 feet Mean 
Lower Low Water (MLLW), to accommodate the industry's shift to larger 
container vessels. The first of these deeper-draft ships began calling 
at the Port of Los Angeles in August of 2004, carrying 8,000 20-foot 
equivalent units of containers (TEUs) and drafting at -50 feet. 
Currently, carriers have on order more than 155 of these larger vessels 
that range in size from 7,500 to 10,000 TEUs. These vessels will be 
delivered at a steady pace over the next 3 years, which means that 
ports unable to accommodate the bigger ships could be left out of the 
surge in trade.
    In addition to greater navigability for these larger ships, 
deepening the Main Channel improves safety and security, shipping 
efficiencies and provides beneficial use of dredged material to create 
new land for future terminal development. Dredging for the project 
began in early 2003 with construction scheduled for completion in 2006. 
Currently, nearly 45 percent of containerized cargo entering the United 
States goes/travels through the San Pedro Bay port complex. The Port of 
Los Angeles, alone, handled a record 7.5 million TEUs in calendar year 
2005, representing continued growth for any American seaport.
    As we have testified before, cargo throughput for the San Pedro 
Bay--the Port of Los Angeles in particular--has a tremendous impact on 
the United States economy. We at the Port of Los Angeles cannot over-
emphasize this fact. The ability of the Port to meet the spiraling 
demands of the steady growth in international trade is dependent upon 
the speedy construction of sufficiently deep navigation channels to 
accommodate the new containerships. These new ships provide greater 
efficiencies in cargo transportation, carrying one-third more cargo 
than most of the current fleet, and making more product inventory of 
imported goods available to American consumers at lower prices. In 
addition, exports from the United States have become more competitive 
in foreign markets. However, for American seaports to keep up, they 
must immediately make the necessary infrastructure improvements that 
will enable them to participate in this rapidly changing global trading 
arena.
    Mr. Chairman, these state-of-the-art container ships represent the 
new competitive requirements for international container shipping 
efficiencies in the 21st Century, as evidenced by the increased volume 
of international commerce. As such, we strongly urge Congress to 
appropriate the $12 million for fiscal year 2007 that will enable the 
Corps of Engineers to continue construction of the Channel Deepening 
Project, on schedule, through the project's anticipated completion in 
2008.

                           ECONOMIC BENEFITS

    The Channel Deepening Project is clearly a commercial navigation 
project of national economic significance and one that will yield 
exponential economic and environmental returns to the United States 
annually. The national economic benefits are evidenced by the creation 
of more than 1 million permanent well-paying jobs across the United 
States; more than $1 billion in wages and salaries, as well as local, 
State and Federal sales and income tax revenues deposited into the 
Federal treasury. As an aside, the 7.5 million TEUs handled by the Port 
of Los Angeles in 2005 had a commercial value of more than $400 billion 
in container cargo, with significant tax revenues accruing to the 
Federal Government. Similarly, according to the U.S. Customs Service, 
users of the Port pay approximately $12 million a day in Customs 
Duties. The Los Angeles Customs District leads the Nation in total 
duties collected for maritime activities, collecting more than $6 
billion in 2005 alone. The return on the Federal investment at the Port 
of Los Angeles is real and quantifiable, and we expect it to continue 
to surpass the cost-benefit ratio--as determined by the Corps of 
Engineers' project Feasibility Study--many times over.
    In closing, Federal investment in the Channel Deepening Project 
will ensure that the Port of Los Angeles, the Nation's busiest 
container seaport, remains at the forefront of the new international 
trade network well into this century. The Channel Deepening Project 
marks the second phase of the 2020 Infrastructure Development Plan that 
began with the Pier 400 Deep-Draft Navigation and Landfill Project. The 
Port of Los Angeles is moving forward with the 2020 Plan designed to 
meet the extraordinary infrastructure demands placed on it in the face 
of the continued high volume of international trade. Mr. Chairman, the 
Port of Los Angeles respectfully urges your subcommittee to appropriate 
$12 million in fiscal year 2007 to support the U.S. Army Corps of 
Engineers' continued construction of the Channel Deepening project on 
behalf of the Port of Los Angeles.
    Thank you, Mr. Chairman, for the opportunity to submit this 
testimony for continued congressional support of the Channel Deepening 
Project at the Port of Los Angeles. The Port has long valued the 
support of your subcommittee and its appreciation of the role of the 
Port of Los Angeles in contributing to this country's economic 
strength, and the port industry's importance to the economic vitality 
of the United States.
                                 ______
                                 
                 Prepared Statement of American Rivers

    American Rivers, on behalf of more than 500 national, regional and 
local organizations representing more than 5 million constituents 
concerned with river conservation,\1\ urges the committee to provide 
$2,399,145,000 for the following programs in the Energy and Water 
Development Appropriations bill for fiscal year 2007, including 
programs run by the U.S. Army Corps of Engineers, the Department of 
Energy and Department of Interior agencies. I request that this 
testimony be included in the official record.
---------------------------------------------------------------------------
    \1\ These groups and individuals have endorsed the Citizen's Agenda 
for Rivers which includes the ``River Budget'' for fiscal year 2007, a 
report of national funding priorities for local river conservation. For 
more information on the Citizen's Agenda for Rivers go to 
www.healthyrivers.org.
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                      U.S. ARMY CORPS OF ENGINEERS

    Project Modification for Improvement of the Environment.--The 
Project Modification for Improvement of the Environment program 
(Section 1135) allows the U.S. Army Corps of Engineers (Corps) to 
restore river systems degraded by existing Corps projects. Under 
Section 1135, the Corps can modify existing dams and flood control 
projects to increase habitat for fish and wildlife, and restore areas 
affected by Corps projects. Non-Federal interests must provide for 25 
percent of project costs, and modifications must not interfere with a 
project's original purpose. American Rivers urges the committee to 
appropriate $25 million for the Project Modification for Improvement of 
the Environment program in fiscal year 2007.
    Aquatic Ecosystem Restoration.--Section 206, the Aquatic Ecosystem 
Restoration program, allows the Corps to undertake small-scale projects 
to restore aquatic habitat, even in areas not directly harmed by past 
Corps projects. Projects carried out under this program must improve 
the quality of the environment, be in the public interest, and be cost-
effective. American Rivers urges the committee to appropriate $25 
million for the Aquatic Ecosystem Restoration program in fiscal year 
2007.
    Penobscot River Restoration Project.--The Penobscot River 
Restoration Project is an unprecedented approach to river restoration 
that will reconfigure hydropower facilities and maintain energy 
production while opening up more than 500 miles of habitat to 10 native 
species of anadromous fish, improve water quality, boost wildlife and 
create new opportunities in communities along New England's second 
largest river. The two lowermost Penobscot dams, Veazie and Great 
Works, will be removed and a state-of-the-art fish bypass will be 
installed at Howland Dam. American Rivers urges the committee to 
appropriate $300,000 for a reconnaissance and feasibility study on the 
Penobscot River Restoration Project for in fiscal year 2007.
    Missouri River Fish and Wildlife Recovery Project: IA, NE, KS & 
MO.--The Missouri River Fish and Wildlife Recovery Project is the 
primary habitat restoration program for the lower Missouri River 
between Sioux City and St. Louis. Congress established it in 1986 to 
primarily help reverse the long-term impact on habitat due to the 
federally sponsored channelization and stabilization projects of the 
Pick-Sloan era. Supporting the Missouri River Fish and Wildlife 
Recovery Project will help reverse the decline of river wildlife by 
restoring historic chutes, side channels, wetlands, backwaters, and 
other habitat that fish and wildlife need survive. American Rivers 
urges the committee to appropriate $82.8 million for the Missouri River 
Fish and Wildlife Recovery Project in fiscal year 2007.
    Upper Mississippi Environmental Management Program.--The Upper 
Mississippi River Environmental Management Program (EMP), the primary 
habitat restoration and monitoring program on the Upper Mississippi, 
has a goal of restoring more than 97,000 acres of habitat; the Army 
Corps reports that EMP has restored or created 28,000 acres of habitat 
to date. American Rivers urges the committee to appropriate $33.5 
million for the Upper Mississippi River Environmental Management 
Program in fiscal year 2007.
    Lower Mississippi River Resource Assessment.--The Lower Mississippi 
River Resource Assessment (LMRRA) was authorized by Congress in the 
Water Resources Development Act of 2000. Conducting the Lower 
Mississippi River Resource Assessment is the first step in 
consolidating into one region-wide assessment all information about the 
current status of aquatic habitat in the 954-mile-long Lower 
Mississippi River, specific habitat development/enhancement 
opportunities to restore the river ecosystem, and recreational needs. 
American Rivers urges the committee to appropriate $1.75 million for 
the Lower Mississippi River Resource Assessment project in fiscal year 
2007.
    Flood Hazard Mitigation and Riverine Restoration (Challenge 21).--
Challenge 21, a flood damage reduction program authorized in 1999, is 
designed to help support non-structural flood control solutions. 
Challenge 21 allows the Corps to relocate vulnerable homes and 
businesses in smaller communities, restore floodplain wetlands, 
increase opportunities for riverside recreation, and improve quality of 
life in riverside communities. Challenge 21 also authorizes the Corps 
to work with other Federal agencies to help local governments reduce 
flood damages and conserve, restore, and manage riverine and floodplain 
resources. American Rivers urges the committee to appropriate $50 
million for the Flood Hazard Mitigation and Riverine Restoration 
Program in fiscal year 2007.
    Lower Columbia River Ecosystem Restoration, OR & WA.--Coastal 
estuaries in the Pacific Northwest play a vital role in supporting 
healthy stocks of wild salmon and steelhead trout and other species and 
improving the quality of life of countless communities. The Northwest 
Coastal Estuary Program is designed to restore more than 16,000 acres 
of critical fish and wildlife habitat, augment existing monitoring 
efforts, and help citizens protect and manage resources by bringing 
together local governments, State and Federal agencies, environmental 
groups, ports, and citizens. American Rivers urges the committee to 
appropriate $3 million for the Lower Columbia River Ecosystem 
Restoration project in fiscal year 2007.
    The Estuary Restoration Act of 2000.--The Estuary Restoration Act 
of 2000 created the Estuary Habitat Restoration Council to develop a 
strategy for coordinating and prioritizing estuary restoration while 
enhancing estuary monitoring, data sharing, and research capabilities. 
If fully funded at its authorized level, the Act would restore 1 
million acres of estuary habitat by 2010. American Rivers urges the 
committee to appropriate $27.5 million for the Estuary Restoration Act 
of 2000 in fiscal year 2007.
    Individual River Restoration Projects.--Over the past 100 years, 
the United States has led the world in dam building for a variety of 
uses, including hydropower, irrigation, flood control and water 
storage. While they can provide benefits to society, numerous dams have 
outlived their intended purpose and no longer make sense. Many are old, 
unsafe, and represent a threat to their river ecosystems. Several 
individual dam removal projects will restore natural river functions, 
restore access to migratory fish habitat, and provide economic benefits 
to neighboring communities. American Rivers urges the committee to 
appropriate to the Corps the following for individual river restoration 
projects in fiscal year 2007: (i) $5 million for the removal of the 
Matilija Dam on the Ventura River in southern California; (ii) $595,000 
for the feasibility study on the removal of Rindge Dam on Malibu Creek, 
CA; and:
  --Kissimmee River Restoration.--Upon completion of the Kissimmee 
        River restoration project in 2011, over 40 square miles of 
        river and floodplain ecosystem will be restored, including 
        returning 43 miles of meandering river to its original course 
        and re-creating 27,000 of the 35,000 acres of wetlands that 
        were lost to past flood control efforts. The estimated $494.8 
        million restoration project is being jointly implemented and 
        equally cost-shared by the South Florida Water Management 
        District and the Army Corps of Engineers. American Rivers urges 
        the committee to appropriate $20 million for the Kissimmee 
        River Restoration in fiscal year 2007.
  --Everglades Ecosystem Restoration Projects.--The 18,000-square-mile 
        Everglades ecosystem of central and southern Florida is one of 
        the world's most diverse and productive wetlands, but is also 
        one of the Nation's most imperiled natural wetland ecosystems. 
        Since 1900, more than half of the ecosystem has been drained 
        and lost to urban and agricultural development, and the 
        remaining marshes are criss-crossed by 1,400 miles of canals 
        that alter natural water flows: (i) American Rivers urges the 
        committee to appropriate $15 million for the Everglades and 
        South Florida Ecosystem Restoration Program in fiscal year 
        2007; (ii) American Rivers urges the committee to appropriate 
        $100 million for the Comprehensive Everglades Restoration 
        Program in fiscal year 2007.

                     DEPARTMENT OF ENERGY PROGRAMS

    Federal Energy Regulatory Commission in Hydropower Licensing.--The 
Federal Energy Regulatory Commission (FERC) is responsible for issuing 
licenses and permits that govern the operation and construction of non-
Federal hydropower dams. Congress authorizes the amount of money FERC 
may spend in a given year, but that money is collected entirely from 
licensees through annual fees and not from tax dollars. Thus, an 
increase in FERC's authorized hydropower budget will be passed onto the 
dam owners and will not impact taxpayers or the deficit. American 
Rivers urges the committee to appropriate $57.7 million for FERC 
hydropower relicensing in fiscal year 2007.
    Energy Conservation and Energy Efficiency & Renewable Energy 
Resources.--Many different types of energy production, including 
hydropower dams and fossil fuels, affect our rivers. As we advance in 
energy-efficient technology and the use of renewable energy sources, we 
can reduce demand and soften the impacts of energy production on 
rivers. Congress should take steps to eliminate our dependency on 
fossil fuels by supporting enhanced appropriations for DOE's energy 
supply and energy conservation programs. American Rivers urges the 
committee to appropriate $1.2 billion and $700 million, respectively 
for DOE Energy Conservation program and the Energy Efficiency & 
Renewable Energy Resources program in fiscal year 2007.

             DEPARTMENT OF INTERIOR--BUREAU OF RECLAMATION

    Savage Rapids Dam Removal and Pump Replacement (Rogue River, OR).--
The Savage Rapids Dam, built in 1921, is the single largest killer of 
salmon on the Rogue River, including coho salmon, which are listed as 
threatened under the Federal Endangered Species Act. Removing Savage 
Rapids dam will provide an enormous boost to the Rogue River's 
imperiled salmon and steelhead populations. American Rivers urges the 
committee to appropriate $13 million Savage Rapids Dam Removal and Pump 
Replacement in fiscal year 2007.
    National Irrigation Water Quality Program (Departmental Irrigation 
Drainage Program).--The National Irrigation Water Quality Program 
(NIWQP) was created in 1985 in response to a waterfowl die off caused 
by polluted irrigation discharges. The program focuses on the effects 
of irrigation on rivers, lakes, and the wildlife that use them. NIWQIP 
focuses on irrigation systems that discharge water from Federal lands, 
addressing the impacts that any chemicals associated with agricultural 
practices (including DDT, arsenic, selenium, and mercury) may have on 
fish and wildlife. American Rivers urges the committee to appropriate 
$3 million for the National Irrigation Water Quality Program in fiscal 
year 2007.
    Yakima River Basin Enhancement Project.--The Yakima River Basin is 
home to Washington's largest Native American tribe and contains one of 
the largest Bureau of Reclamation (Bur. Rec.) projects in the west. The 
various Bur. Rec. projects in the basin have depleted and polluted 
river flows, and water rights conflicts in this basin are legendary. 
This program aims to restore the river and make better use of the 
existing water supplies. American Rivers urges the committee to 
appropriate $14 million for the Yakima River Enhancement Project in 
fiscal year 2007.
    Deschutes Resources Conservancy.--The Deschutes Resources 
Conservancy (DRC) is focused on restoring streamflow and improving 
water quality in the Deschutes Basin of Central Oregon. The DRC acts as 
a catalyst, bringing together all groups working to restore the 
Deschutes through its restoration grants program, enterprise programs 
creating markets for environmental services, and community development 
work aimed at developing a shared vision for basinwide restoration 
smoothing the endangered species recovery process. American Rivers 
urges the committee to appropriate $2 million for the Deschutes 
Resources Conservancy in fiscal year 2007.

                  CALIFORNIA-FEDERAL BAY DELTA PROGRAM

    The California-Federal Bay Delta Program (CalFed) is a partnership 
between Federal and California agencies to provide a balanced, 
collaborative approach to the water resource demands on the San 
Francisco Bay and San Pablo Bay watersheds. The Ecosystem Restoration 
and Watershed program within CalFed works to restore and improve 
wildlife habitat through out the watershed, improve fish passage, 
integrate flood control and ecosystem restoration, and implement 
specific watershed restoration projects in conjunction with watershed 
plans. American Rivers urges the committee to appropriate $15 million 
from the Bureau of Reclamation and $5 million from the U.S. Army Corps 
of Engineers for the CalFed Ecosystem Restoration and Watershed Program 
in fiscal year 2007.
                                 ______
                                 
             Prepared Statement of Granite Falls, Minnesota

    Chairman Domenici and members of the Appropriations subcommittee, I 
appreciate the opportunity to submit this testimony on behalf of the 
City Council and the citizens of Granite Falls, Minnesota. We are 
requesting $2 million in Federal funds for the development of the 
Detailed Design Report (DDR) plans and specifications, and the initial 
construction of critical preventative measures to protect the city from 
future flooding of the Minnesota River. These funds must be earmarked 
under Section 205, through the U.S. Army Corps of Engineers flood 
protection work.
    This request is based on the ``Supplement to the Locally Preferred 
Plan for Flood Damage Reduction, January, 2002'' prepared on behalf of 
FEMA, the city, and information from the U.S. Army Corps of Engineers, 
Section 205 study not yet completed. The project has now been 
authorized in the Water Resources Development Act of 2005 for $12 
million ($8 million Federal funds) in HR 2864, Sec. 3078 as a Section 
205 project, in accordance with the Water Resources Development Act of 
1986 (100 Stat. 4184) as may be required.
    The geological features of the terrain discourages the construction 
of diversion channels due to the granite subsurface of the soil. Most 
of the homes and businesses have been relocated using FEMA, State and 
local resources. The existing uncertified and inadequate levee system 
must be improved to provide adequate protection for the communities, 
critical pumping stations installed, and the Municipal Water Plant 
adjacent to the Minnesota River will require relocation.

                       THE CITY OF GRANITE FALLS

    The City of Granite Falls is a community of slightly more than 
3,000 citizens, is located in West Central Minnesota about 122 miles 
west of St. Paul.
    The Minnesota River runs through the northern and eastern portions 
of the city, and is directly adjacent to the downtown area. The 
majority of the city's residential and commercial properties are 
located on the west bank of the Minnesota River in Yellow Medicine 
County.
    Low-lying residential areas on the north end of the city, 
structures in the commercial business district along the river, and 
residences located next to the secondary river channels in the 
southwest part of the city are especially vulnerable to flooding.

                            RECENT DISASTERS

    While the river represents a valuable resource to the community, it 
has taken a severe toll on residents and businesses during spring 
floods. The 1997 floods that devastated much of Western Minnesota and 
North Dakota did not spare Granite Falls. The Flood drove many from 
their homes and their downtown businesses, and resulted in millions of 
dollars in damages. Virtually every downtown business was flooded. More 
than $850,000 was spent by the city, and another $175,000 by the Corps 
of Engineers to fight the flood.
    Hundreds of volunteers from Granite Falls area and the State 
prevented further devastation as the Minnesota River reached a peak 
discharge of 53,000 cubic feet per second, more than 3 million cubic 
feet of floodwater per minute. The rushing water was within inches of 
the top of the temporary dike as volunteers continued to stack sand 
bags. If the water had topped the dike, literally dozens of the workers 
lives would have been severely endangered. Total costs and damages 
exceeded $5 million.
    In July of 2000, the city was hit by an F-4 tornado. An F-5 tornado 
is the top of the scale. One person was killed, 14 badly injured, and 
325 homes were either totally destroyed or severely damaged. The 
tornado caused more than $26 million in damages in the community.
    The following year, 2001, the city was again hit by another record 
flood event. Though not as severe as the 1997 flooding, damage was 
reduced significantly by careful city planning and preparation with 
Federal and State governmental units. Even so, the costs to fight the 
flood exceeded $500,000 for the city and the Corps of Engineers, and 
much of the downtown commercial area was evacuated.
    Other significant floods have occurred in 1951, 1952, 1965, 1969, 
and 1994. While floods have cost the community millions of dollars in 
extensive property damage and economic hardship, the primary concern is 
the significant risk to the hundreds of volunteers whose work is 
required building levees during flood events to protect the homes and 
business.
    The preparation for fighting disaster costs has reached nearly $4 
million in the past 4 years. That amounts to thousands of dollars to 
every property owner in the city. Total flood damages and costs were 
more than $30 million from 1997 through 2001.
    Granite Falls has received financial support from FEMA, the Corps 
of Engineers, the State of Minnesota, in addition to local funds, to 
clean up after the disasters and to repair damages. Funds have been 
received to repair streets, housing rehabilitation and construction, 
economic development, and special services. All the help has been 
directed toward restoration after the floods and tornado event, but no 
funds have been made available to protect the city and its citizens 
from future flooding.

                  CORPS OF ENGINEERS SECTION 205 STUDY

    Following the 1997 flood, the Corps of Engineers initiated a 
Section 205 study in May, 1998, to evaluate the extent of the flooding 
problem in Granite Falls, and to explore possible remedies. The study 
is essentially complete, but has not been released to date. The major 
problems of cost and funding level addressed in the 205 study have been 
resolved in the project authorization in HR 2864.

                           STUDIES CONDUCTED

    The city, through a FEMA project grant under the direction of the 
Minnesota Department of Natural Resources MN/DNR, conducted a study of 
the flood problems confronting Granite Falls. The overall objective of 
the study was to evaluate hazards for the Granite Falls area, and to 
develop preliminary evaluation and prioritization for those hazards.
    The Report states, ``Because of the tremendous impacts of flooding 
on the Granite Falls community, and the relative frequency of flooding 
events, the report begins with an all hazard evaluation, but then 
focuses on flood hazards, and presents mitigation options and 
preliminary costs for implementing those options.''
    The Report evaluated each area of the community, determined the 
risk factors, and suggested options available to protect the area 
against flooding. In the conclusion of the Report, it was recommended 
the most economical solution to provide the necessary protection was 
buy out many of the properties and move them to a location outside the 
flood plain. This work is currently in progress.
    The elevation of other areas would have to be raised, pump stations 
would need to be installed, some levees constructed, and the sanitary 
lift station and the water plant would need to be relocated. It is 
estimated the cost of this work would be approximately $12 million.
    The Supplement to the Locally Preferred Plan (SLPP) provides a 
level of flood protection for flood events up to the 500-year event. 
The 1998 Corps of Engineers 205 study indicates the 500-year level of 
protection is about the same as the 100-year flood plus 3 feet of 
freeboard. This level of protection is necessary as the result of a 
reevaluation by FEMA indicated that the current level of protection for 
Granite Falls was violated in both the 1997 and the 2001 flood events.
    The SLPP identifies seven areas severely impacted by flooding, 
suggests the remedial action needed, and the cost of such work. 
Relocation costs are not included in this report. The city believes 
that with the financial assistance received from FEMA and the State of 
Minnesota to relocate many of the structures in low-lying areas, the 
remaining project needs are appropriately addressed under flood 
protection programs administered by the Corps of Engineers.
    The Locally Preferred Plan includes the removal of about 41 
structures in the lower areas of the city, including several in the 
commercial district. FEMA has provided the funds for 25 structure 
moves, leaving only 15 additional structures to be moved as a part of 
the project.

                         APPROPRIATION REQUEST

    The city requests $2 million from the committee for the purpose of 
the development of the Detailed Design Report, preparation of plans and 
specifications, and the placement of pumps stations at two of three 
critical locations in the city. These pump stations will provide some 
immediate flood relief during an emergency, but are also needed 
permanently as a part of the total project.
    Thank you for your consideration of this request. And may I also 
take this opportunity to express our appreciation to the St. Paul 
District Office of the Army Corps of Engineers for their help and 
assistance during the crisis we have experienced in recent years. We 
will be happy to respond to any questions you may have regarding the 
needs of the city, and the flood protection project.
                                 ______
                                 
        Prepared Statement of the City of Stillwater, Minnesota

    Chairman Domenici and members of the Energy and Water Development 
Subcommittee, I thank you for the opportunity to submit this testimony 
requesting the $2 million needed to begin construction on Stage 3 of 
the Stillwater, Minnesota flood control project. In 2001, the city 
experienced its seventeenth flood since 1937, immediately after the 
Corps completed construction work on Lock and Dam No. 3, 20 miles South 
of the convergence of the Mississippi River and the St. Croix River. 
This construction on the Mississippi River raised the water level at 
Stillwater by 8-10 feet.
    The first two stages of the project have been completed, and 
Congress appropriated $2 million in the fiscal year 2002 appropriations 
bill to begin construction on the critical Stage 3 of the project. When 
the Corps did not make the funds available for Stage 3 flood wall 
construction, Congress enacted Sec. 124 in the Consolidated 
Appropriations Act of 2004, which states,

    ``Sec. 124. The Secretary of the Army, acting through the Chief of 
Engineers, is directed to use previously appropriated funds to proceed 
with design and initiate construction to complete the Stillwater, 
Minnesota Levee and flood control project.''

    The Corps was not able to locate the $2 million during fiscal year 
2004, stating the funds had been redirected to another project(s). The 
city had obtained the necessary property from the Burlington Northern 
Santa Fe Railroad at a cost of $1 million on which a portion of the 
floodwall will be constructed. Local funds were used to purchase this 
property.
    In 2005, Minnesota Representatives Jim Oberstar, and Mark Kennedy, 
and Senators Norm Coleman and Mark Dayton contacted the Corps of 
Engineers regarding the Corps lack of response to the language in the 
fiscal year 2004 appropriations bill. These contacts resulted in a 
meeting in a Stillwater City Hall that included members of Congress and 
their staff, city officials, Brig. General Robert Crear, Commander of 
the Mississippi Valley Division, and the leadership from the St. Paul, 
MN Corps of Engineers District Office.
    General Crear promised that the funds would be made available 
immediately to begin work on the DDR, design, plans and specifications, 
and the relocation of utilities for Stage 3 flood protection for the 
city. The Corps has begun such work as promised. While not moving as 
fast as the city would like, they plan to let bids and begin 
construction early in 2007. Most of the appropriated funds have been 
used by the Corps during 2005 and 2006, and additional construction 
funding will be necessary during fiscal year 2007. The Corps states 
they are awaiting approval from the House and Senate Appropriation 
Committees to transfer additional funds back to the Stillwater project.
    The $2 million in Federal funds requested this year, plus State and 
local funds will make substantial headway toward the completion of the 
project. It is projected that the project construction will require 2 
years to complete.

                    PROJECT DELAY COSTLY TO THE CITY

    The delay in the completion of the flood control has proven costly 
to the city. A number of local projects have been held back, waiting 
for the completion of the floodwall. The Lowell Park development, which 
parallels the St. Croix River, and is adjacent to the floodwall 
location, cannot be completed until the floodwall is constructed. The 
city received to grants to assist in this effort, one for $250,000, and 
one for $75,000. Both grants were aborted when the city was unable to 
move forward on the park improvement grants.
    There has also been a delay in the inflow and infiltration (I&I) 
improvements to the trunk storm sewer line that is located 
approximately where the floodwall will be constructed. Currently, the 
amount of I&I flowing into the trunk sewer line that flows to the water 
treatment plant is costing the city more than $10,000 each month, 
paying for the treatment of river water. The 7-year delay in the 
completion of the project has cost the city $840,000.
    Other projects delayed include the expansion of Lowell Park to the 
north of the levee system, delayed construction of a pedestrian pathway 
connecting north Main Street, Lowell Park, the St. Croix River, and 
downtown Stillwater. Approximately 1.5 million people visited the park 
and the river area last year, yet we cannot build permanent bathroom 
facilities until the floodwall in completed. More than 1,100 new 
citizens will be moving into apartments and condominiums currently 
under construction in downtown Stillwater. The Mayor and City Council 
Members had hoped the newcomers would not be greeted with major 
construction of the floodwall.

                            PROJECT OVERVIEW

    The project is divided into three stages. Stage 1 included the 
repair and reconstruction of the existing retaining wall that extends 
1,000 feet from Nelson Street on the South to the gazebo on the North 
end of the levee wall system. Stage 2 consists of the extension of the 
levee wall about 900 feet from the gazebo North around Mulberry Point.
    The completion of Stage 2 was delayed by floods of 1997, costing 
the city and the Federal Government nearly $500,000. After the waters 
subsided, it was discovered that the soil beneath the planned levee 
extension was very unstable, requiring a revision of plans, and the 
addition of another stage in the construction process.
    The floodwaters of the St. Croix River did not recede until August 
of 1997. The construction area remained under water preventing 
construction work to proceed as scheduled. Lowell Park, which extends 
the full length of the levee wall system, several structures, and the 
emergency roadway which is used to provide emergency medical assistance 
for those using the recreational St. Croix River, and as a water source 
for local fire departments, were all either under water or 
inaccessible.
    Phase I, the repair and reconstruction of the original levee wall, 
was completed in the summer of 1998. Work on Stage 1 was completed in 
late summer of 1997, and additional soil borings were taken for Stage 
2. The soil was found to be very unstable, and unable to support the 
levee system designed for Stage 2 of the project.
    The construction of Stage 2 required remedial action, and was 
designated as Stage 2S. A contract was awarded for Phase 2S in 
November, 1998, and was completed in 1999. Phase 2 was begun in the 
late Fall of 1999, and the major construction work was completed at the 
end of the year 2000. The Design Memorandum schedule called for the 
construction of Stage 3 in fiscal year 2002, and to be completed in 
fiscal year 2003, according to the Corps schedule.
     Stage 3 expands the flood protection system by constructing a berm 
or a 3-foot floodwall, and driving sheet piling below the surface to 
reduce seepage and to provide a base for the wall. The floodwall will 
be constructed about 125 feet inland from the riverbank. Stages 1 and 2 
were critical to the protection of the fragile waterfront, and also, to 
prevent minor flooding on the North end of the riverfront.
    Stage 3 is the component that provides the flood protection for the 
city. The rising elevation of the terrain, the floodwall, and minimal 
emergency measures are designed to provide the city with up to 100-year 
flood protection.
    The Mayor, City Council Members, and Engineering staff all 
understand that Stage 3 of the flood control project is essential for 
the protection of life and property of the citizens, that the Stage 3 
flood wall is a critical phase of the project, and that the project 
must be completed at the earliest possible date. The Corps acknowledged 
the necessity for all three stages of the project when the Design 
Memorandum included plans for all three stages.
    The U.S. Congress directed the Secretary of the Army acting through 
the Chief of Engineers to proceed with the design and construction to 
complete the Stillwater Levee and Flood Control Project under Section 
124 of the Omnibus Appropriations Act for fiscal year 2004. The city 
and the State of Minnesota have allocated matching funds for this work. 
The State has appropriated half of the non-Federal matching funds 
needed to complete Stage 3 of the project, as well as for Stages 1 and 
2. The city has provided the remainder of the required matching funds, 
consequently, only the Federal share is missing to complete the 
project.

         THE IMPACT OF LOCK AND DAM NO. 3 ON FLOODS STILLWATER

    The Lock and Dam No. 3 was constructed in 1937-38 on the 
Mississippi River at Red Wing, Minnesota. The Lock and Dam construction 
raised the level of the St. Croix at Stillwater by 8 to 10 feet. It has 
made the City of Stillwater vulnerable during periods of high water and 
flooding of the St. Croix since that time. Records prove that the lock 
and dam construction, raising the water levels of both the Mississippi 
and the St. Croix River, has markedly increased the incidence of 
flooding at Stillwater. The culpability of the Corps is clearly 
evident.
    The Mississippi and the St. Croix Rivers merge about 14 miles south 
of Stillwater. When constructing the Lock and Dam at Red Wing in 1938, 
the Federal officials recognized that detaining the flow of the 
Mississippi would back up the water in the St. Croix at Stillwater. A 
1,000-foot levee wall system was constructed at Stillwater by the WPA 
under the supervision of the Corps to protect the fragile waterfront.

                          LEGISLATIVE HISTORY

    The Stillwater Flood Control and Retaining Wall project first was 
authorized in section 363 of the Water Resources Development Act (WRDA) 
of 1992. An allocation of $2.4 million was made in the Energy and Water 
Development Appropriations Act of 1994.
    A committee report described the project in three parts--to repair, 
extend, and expand the levee wall system on the St. Croix River at 
Stillwater, Minnesota. ``To repair'' (Stage 1) the original existing 
levee wall system constructed in 1936. ``To extend'' (Stage 2) the 
original wall by approximately 900 feet to prevent the annual flooding 
that occurs at that location, and ``To expand'' (Stage 3) the system by 
constructing the flood wall approximately 125 feet inland from the 
levee wall system to protect the downtown and residential section in 
the flood plain.
    In 1995, the Design Memorandum confirmed the cost estimate for the 
project was much too low, and the project was reauthorized for $11.6 
million by Congress in the 1996 WRDA legislation. In 2001, the Corps 
estimated the Federal cost at $9.86 million, the non-Federal cost at 
$3.29 million, and the total cost of the project to be $13.15 million.

                                SUMMARY

    The Mayor and Council for the City of Stillwater, Washington County 
Officials, the Governor and Minnesota State Legislature, and bipartisan 
support of Minnesota Representatives and Senators in Congress, all 
recognize the significant importance of completing this project by 
constructing the Stage 3 flood wall on the St. Croix River at 
Stillwater. The Members are committed to accomplishing this work as 
soon as possible. It is critical to the protection of property, the 
preservation of our history, the respect of historic Indian sites, and 
the safety of our citizens and their homes and business.
    We respectfully urge the Energy and Water Development Subcommittee 
for Appropriations to allocate the $2 million needed to begin 
construction of the Stage 3 flood wall in the fiscal year 2007 
Appropriations Bill. If you have questions or would like additional 
information regarding this project, please call on us.
                                 ______
                                 
       Prepared Statement of the Western Coalition of Arid States

    FISCAL YEAR 2007 CIVIL WORKS PROGRAM OF THE U.S. ARMY CORPS OF 
                            ENGINEERS BUDGET

    The Western Coalition of Arid States (WESTCAS) is submitting this 
testimony regarding the President's fiscal year 2007 budget request for 
the U.S. Army Corps of Engineers.
    WESTCAS is a coalition of Western towns and municipalities, water 
and wastewater agencies, irrigation districts, Native American nations, 
companies with water and wastewater concerns and professionals in the 
fields of engineering, the environmental sciences, and natural 
resources law and policy. WESTCAS was formed in 1992 by Western water 
and wastewater agencies concerned with the quality and management of 
water resources in the Arid West. A grass roots organization, WESTCAS 
is dedicated to encouraging the development of water programs and 
regulations which assure adequate supplies of high quality water for 
those living in the arid regions while protecting the environment.
    The United States Army Corps of Engineering is the world's largest 
public engineering, design, and construction management agency. Its 
mission includes:
  --Protecting the country's hundreds of rivers, lakes, wetlands, and 
        thousands of miles of coastal shoreline;
  --Environmental restoration and stewardship;
  --Maintaining direct control of 609 dams, 257 navigational locks and 
        75 Hydroelectric facilities which generate 24 percent of the 
        Nation's hydropower;
  --Providing engineering expertise and emergency management abilities 
        for homeland security; and
  --Building much of the infrastructure the Army and Air Force uses to 
        train, house, and deploy our troops.
    The fiscal year 2007 budget for the Civil Works Program of the U.S. 
Army Corps of Engineers emphasizes three critical Corps activities. 
First, it funds the construction and completion of water resources 
projects that will provide a high rate of return on the Nation's 
investment in the Corps' primary mission areas of commercial 
navigation, flood and storm damage reduction, and aquatic ecosystem 
restoration.
    Second, it increases funding for the Corps' regulatory program to 
help protect and preserve the Nation's precious waters and wetlands. 
Third, it reflects the administration's proactive support for the 
Corps' critical emergency preparedness and response mission by funding 
the mission in the regular budget process, and not through emergency 
transfers or supplemental funding. These goals are all extremely 
important to the arid southwest and general membership of the Western 
Coalition of Arid States (WESTCAS).
    The fiscal year 2007 budget transmitted to Congress consists of 
$5.271 billion in Direct Program funding which includes $4.733 billion 
in discretionary funding and $538 million in mandatory funding for the 
Civil Works program of the U.S. Army Corps of Engineers. The Civil 
Works program of the U.S. Army Corps of Engineers will be augmented by 
additional Reimbursed Program funding in the range of $2 billion to $3 
billion.
    As shown below, over 80 percent of the Civil Works program of the 
U.S. Army Corps of Engineers will be appropriated as Operation and 
Maintenance and General Construction.

------------------------------------------------------------------------
                                            Fiscal Year
         Appropriation Accounts                2007        Percentage of
                                            (millions)         Total
------------------------------------------------------------------------
Operation & Maintenance.................          $2,258            47.7
Construction............................           1,555            32.9
Flood Control, Mississippi River........             278             5.9
Regulatory Program......................             173             3.7
General Expenses........................             164             3.5
Formerly Utilized Remedial Action                    130             2.7
 Program................................
General Investigations..................              94             2.0
Flood Control & Coastal Emergencies.....              81             1.7
                                         -------------------------------
      Total.............................           4,733           100.0
------------------------------------------------------------------------

    The following table illustrates that additional funding will be 
appropriated to Operation & Maintenance and Flood Control and Coastal 
Emergencies, while reducing the funding appropriation for General 
Construction. The reduced funding in the Construction appropriation 
account will result in fewer projects in the Civil Works backlog being 
completed. This is a significant issue that should be corrected.

----------------------------------------------------------------------------------------------------------------
                                                                                          Percentage
                                                                    Fiscal      Fiscal     of Total   Percentage
                     Appropriation Accounts                        Year 2006   Year 2007    Budget      Change
                                                                  (Millions)  (Millions)    Fiscal    From Prior
                                                                                           Year 2007     Year
----------------------------------------------------------------------------------------------------------------
Operation & Maintenance.........................................      $1,979      $2,258        47.7        14.1
Construction....................................................       1,637       1,555        32.9        -5.0
Flood Control, Mississippi River................................         270         278         5.9         3.0
Regulatory Program..............................................         160         173         3.7         8.1
General Expenses................................................         162         164         3.5         1.2
Formerly Utilized Remedial Action Program.......................         140         130         2.7        -7.1
General Investigations..........................................          95          94         2.0        -1.1
Flood Control & Coastal Emergencies.............................          70          81         1.7        15.7
                                                                 -----------------------------------------------
      Total.....................................................       4,513       4,733       100.0         4.9
----------------------------------------------------------------------------------------------------------------

    The fiscal year 2007 Civil Works budget is a performance-based 
budget, which reflects a focus on the projects and activities that 
provide the highest net economic and environmental returns on the 
Nation's investment. However, the proposed budget is less than the 
actual U.S. Army Corps of Engineers budget in fiscal year 2001. One 
must ask whether our priorities are properly in focus.
    The impacts caused by Hurricane Katrina could have been 
significantly reduced with enhanced flood control projects in place to 
protect the region. The Association Press has recently reported that 
the estimates of Hurricane Katrina's staggering toll on the Treasury 
are highly imprecise, costs are certain to climb to $200 billion in the 
coming weeks. The final accounting could approach the more than $300 
billion spent in 4 years to fight in Afghanistan and Iraq. It would 
seem prudent to invest in construction of facilities to protect the 
Nation rather than expend hundreds of billions of dollars after a major 
natural disaster.
    Therefore, a priority should be placed on appropriating funds for 
construction activities focusing on flood control and shoreline 
protective measures in the U.S. Army Corps of Engineers budget for 
fiscal year 2007. The construction projects identified in the proposed 
budget for flood control enhancements in the arid southwest such as the 
American River Watershed and Santa Ana Mainstem projects in California, 
the Alamogordo project in New Mexico, and the Brays Bayou project in 
Texas all should be funded.
    Thank you for considering our request.
                                 ______
                                 

                       DEPARTMENT OF THE INTERIOR

                         Bureau of Reclamation

               Letter From the Wyoming Water Association
                                       Cheyenne, WY, March 6, 2006.
The Honorable Pete V. Domenici, Chairman,
The Honorable Harry Reid, Ranking Member,
Energy and Water Development Subcommittee, Committee on Appropriations, 
        United States Senate, 127 Dirksen Senate Office Building, 
        Washington, DC 20510.
    Dear Chairman Domenici and Senator Reid: On behalf of the members 
of the Wyoming Water Association, I am writing to request your support 
for an appropriation in fiscal year 2007 of $4,594,000 to the Bureau of 
Reclamation within the budget line item entitled ``Endangered Species 
Recovery Implementation Program'' for the Upper Colorado Region. 
Consistent with the requests made by our other Upper Colorado and San 
Juan Recovery. Programs' partners, the funding designation the Wyoming 
Water Association seeks is as follows: $3,104,000 for construction 
activities for the Upper Colorado River Endangered Fish Recovery 
Program; $1,090,000 for the San Juan River Basin Recovery 
Implementation Program and $400,000 for activities to avoid jeopardy. 
The President's recommended budget for fiscal year 2007 has included 
this line-item amount.
    Founded in 1933, the Wyoming Water Association (WWA) is a Wyoming 
non-profit corporation and voluntary organization of private citizens, 
elected officials, and representatives of business, government 
agencies, industry and water user groups and districts. The 
Association's objective is to promote the development, conservation, 
and utilization of the water resources of Wyoming for the benefit of 
Wyoming people. The WWA provides the only State-wide uniform voice 
representing all types of water users within the State of Wyoming and 
encourages citizen participation in decisions relating to multi-purpose 
water development, management and use.
    The Wyoming Water Association is a participant in the Upper 
Colorado River Endangered Fish Recovery Program. That program, and its 
sister program within the San Juan River Basin, are ongoing 
partnerships among the States of Colorado, New Mexico, Utah and 
Wyoming, Indian tribes, Federal agencies and water, power and 
environmental interests. The programs' objectives are to recover 
endangered fish species while water use and development proceeds in 
compliance with the Endangered Species Act. These recovery programs 
have become national models for collaboratively working to recover 
endangered species while addressing water needs to support growing 
western communities in the Upper Colorado River Basin region of the 
Intermountain West. Since 1988, these programs have facilitated ESA 
Section 7 consultation (without litigation) for over 1,000 Federal, 
tribal, State and privately managed water projects depleting 
approximately 2.9 million acre-feet of water per year.
    The requested fiscal year 2007 appropriation will allow the Upper 
Colorado River Endangered Fish Program to proceed with construction of 
additional fish passage structures on the Green and Colorado Rivers to 
provide access to historic habitat upstream of existing diversion dams. 
The requested funding for the San Juan River Recovery Program will be 
used for contracts for construction and cooperative agreements with the 
State of New Mexico to provide and protect instream flows, fish 
ladders, flooded bottom land restoration, propagation facilities, 
stocking efforts, nonnative and sportfish management activities. These 
programs' substantial non-Federal cost-sharing funding demonstrates the 
strong commitment and effective partnerships embodied in both of these 
successful programs. The requested Federal appropriations are 
critically important to these efforts moving forward.
    The past support and assistance of your subcommittee has greatly 
facilitated the success of these multi-State, multi-agency programs. On 
behalf of the members of the Wyoming Water Association, I thank you for 
that support and request the subcommittee's assistance for fiscal year 
2007 funding to ensure the Bureau of Reclamation's continuing financial 
participation in these vitally important programs.
            Sincerely yours,
                                           John W. Shields,
                                               Executive Secretary.
                                 ______
                                 
  Prepared Statement of the Colorado River Water Conservation District

    Chairman Domenici and Senator Reid, we are requesting your support 
for an appropriation in fiscal year 2007 of $4,594,000 to the Bureau of 
Reclamation within the budget line item entitled ``Endangered Species 
Recovery Implementation Program'' for the Upper Colorado Region. The 
President's recommended budget for fiscal year 2007 includes this line-
item amount. The funding designation we seek is as follows: $3,104,000 
for construction activities for the Upper Colorado River Endangered 
Fish Recovery Program; $1,090,000 for the San Juan River Basin Recovery 
Implementation Program and $400,000 activities to avoid jeopardy.
    These highly successful, cooperative programs are ongoing 
partnerships among the States of New Mexico, Colorado, Utah and 
Wyoming, Indian tribes, Federal agencies, and water, power and 
environmental interests.
    The past support and assistance of your subcommittee has greatly 
facilitated the success of these programs. We thank you for that 
support and request the subcommittee's assistance for fiscal year 2007 
funding to ensure the Bureau of Reclamation's continuing financial 
participation in these vitally important programs.
                                 ______
                                 
          Prepared Statement of the San Juan Water Commission

    Chairman Domenici, the San Juan Water Commission is requesting your 
support for an appropriation in fiscal year 2007 of $4,594,000 to the 
Bureau of Reclamation within the budget line item entitled ``Endangered 
Species Recovery Implementation Program'' for the Upper Colorado 
Region. The President's recommended budget for fiscal year 2007 
includes this line-item amount. The funding designation we seek is as 
follows: $3,104,000 for construction activities for the Upper Colorado 
River Endangered Fish Recovery Program; $1,090,000 for the San Juan 
River Basin Recovery Implementation Program and $400,000 for activities 
to avoid jeopardy.
    These highly successful, cooperative programs are ongoing 
partnerships among the States of New Mexico, Colorado, Utah and 
Wyoming, Indian tribes, Federal agencies, and water, power and 
environmental interests.
    The past support and assistance of your subcommittee has greatly 
facilitated the success of these multi-State, multi-agency programs. We 
thank you for that support and request the subcommittee's assistance 
for fiscal year 2007 funding to ensure the Bureau of Reclamation's 
continuing financial participation in these vitally important programs.
                                 ______
                                 
           Prepared Statement of the Four Corners Power Plant

    Chairman Domenici & Senator Reid, we are requesting your support 
for an appropriation in fiscal year 2007 of $4,594,000 to the Bureau of 
Reclamation within the budget line item entitled ``Endangered Species 
Recovery Implementation Program'' for the Upper Colorado Region. The 
President's recommended budget for fiscal year 2007 includes this line-
item amount. The funding designation we seek is as follows: $3,104,000 
for construction activities for the Upper Colorado River Endangered 
Fish Recovery Program; $1,090,000 for the San Juan River Basin Recovery 
Implementation Program and $400,000 activities to avoid jeopardy.
    These highly successful, cooperative programs are ongoing 
partnerships among the States of New Mexico, Colorado, Utah and 
Wyoming, Indian tribes, Federal agencies, and water, power and 
environmental interests.
    The past support and assistance of your subcommittee has greatly 
facilitated the success of these programs. We thank you for that 
support and request the subcommittee's assistance for fiscal year 2007 
funding to ensure the Bureau of Reclamation's continuing financial 
participation in these vitally important programs.
                                 ______
                                 
   Prepared Statement of the Upper Gunnison River Water Conservancy 
                                District

    Chairman Domenici and Senator Reid, we are requesting your support 
for an appropriation in fiscal year 2007 of $4,594,000 to the Bureau of 
Reclamation within the budget line item entitled ``Endangered Species 
Recovery Implementation Program'' for the Upper Colorado Region. The 
President's recommended budget for fiscal year 2007 includes this line-
item amount. The funding designation we seek is as follows: $3,104,000 
for construction activities for the Upper Colorado River Endangered 
Fish Recovery Program; $1,090,000 for the San Juan River Basin Recovery 
Implementation Program and $400,000 activities to avoid jeopardy.
    These highly successful, cooperative programs are ongoing 
partnerships among the States of New Mexico, Colorado, Utah and 
Wyoming, Indian tribes, Federal agencies, and water, power and 
environmental interests.
    The past support and assistance of your subcommittee has greatly 
facilitated the success of these programs. We thank you for that 
support and request the subcommittee's assistance for fiscal year 2007 
funding to ensure the Bureau of Reclamation's continuing financial 
participation in these vitally important programs.
                                 ______
                                 
           Prepared Statement of the Colorado Water Congress

    Chairman Domenici and Senator Reid, we are requesting your support 
for an appropriation in fiscal year 2007 of $4,594,000 to the Bureau of 
Reclamation within the budget line item entitled ``Endangered Species 
Recovery Implementation Program'' for the Upper Colorado Region. The 
President's recommended budget for fiscal year 2007 includes this line-
item amount. The funding designation we seek is as follows: $3,104,000 
for construction activities for the Upper Colorado River Endangered 
Fish Recovery Program; $1,090,000 for the San Juan River Basin Recovery 
Implementation Program and $400,000 activities to avoid jeopardy.
    These highly successful, cooperative programs are ongoing 
partnerships among the States of New Mexico, Colorado, Utah and 
Wyoming, Indian tribes, Federal agencies, and water, power and 
environmental interests.
    The past support and assistance of your subcommittee has greatly 
facilitated the success of these programs. We thank you for that 
support and request the subcommittee's assistance for fiscal year 2007 
funding to ensure the Bureau of Reclamation's continuing financial 
participation in these vitally important programs.
                                 ______
                                 
     Prepared Statement of the Public Service Company of New Mexico

    Chairman Domenici and Senator Reid, we are requesting your support 
for an appropriation in fiscal year 2007 of $4,594,000 to the Bureau of 
Reclamation within the budget line item entitled ``Endangered Species 
Recovery Implementation Program'' for the Upper Colorado Region. The 
President's recommended budget for fiscal year 2007 includes this line-
item amount. The funding designation we seek is as follows: $3,104,000 
for construction activities for the Upper Colorado River Endangered 
Fish Recovery Program; $1,090,000 for the San Juan River Basin Recovery 
Implementation Program and $400,000 activities to avoid jeopardy.
    These highly successful, cooperative programs are ongoing 
partnerships among the States of New Mexico, Colorado, Utah and 
Wyoming, Indian tribes, Federal agencies, and water, power and 
environmental interests.
    The past support and assistance of your subcommittee has greatly 
facilitated the success of these programs. We thank you for that 
support and request the subcommittee's assistance for fiscal year 2007 
funding to ensure the Bureau of Reclamation's continuing financial 
participation in these vitally important programs.
                                 ______
                                 
 Prepared Statement of the Central Arizona Water Conservation District

    The Central Arizona Water Conservation District (CAWCD) is pleased 
to present written testimony regarding the fiscal year 2007 proposed 
budget for the Bureau of Reclamation (Reclamation).
    CAWCD is a political subdivision of the State of Arizona, governed 
by an elected 15-member board of directors. CAWCD was created in 1971 
for the purpose of contracting with the United States to repay the 
reimbursable construction costs of the Central Arizona Project (CAP) 
authorized by the Colorado River Basin Project Act of 1968. CAWCD 
subsequently assumed the responsibility for operating and maintaining 
the Project. CAWCD has and continues to meet its repayment 
responsibility. In addition to a $175 million upfront contribution from 
CAWCD, Reclamation has been paid $655 million since repayment began in 
January 1994.

                         BUREAU OF RECLAMATION

    CAWCD generally supports Reclamation's budget request. However, we 
believe that some of the priorities are misplaced. Reclamation has 
begun a scoping process to develop new guidelines for managing the 
Colorado River system and to adopt Lower Basin shortage sharing 
guidelines. The Seven Basin States sent a letter to the Secretary of 
the Interior, dated February 3, 2006, that strongly supports 
Reclamation's process and encourages Reclamation to take several 
actions to preserve, enhance and more efficiently manage the Colorado 
River water supply. Reclamation's Lower Colorado River Operations 
budget request has funds identified to complete the scoping process, 
but does not have sufficient funds for structures and programs to 
improve operational efficiency or augment supplies.
    We would urge the committee to reorder priorities in this budget to 
focus meaningfully on important strategies for the Lower Colorado 
River.

                LOWER COLORADO RIVER WATER CONSERVATION

    Specifically, we are concerned about the lack of concrete focus on 
preserving storage capacity in Lake Mead by undertaking activities that 
would augment water availability and improve system operational 
efficiency.
    Congress is well aware of the huge impacts that a multi-year 
drought has imposed on this region, and of the significant drawdown of 
stored water in the river's reservoirs that has resulted from this 
drought. A significant amount of water has been released over these 
years from Hoover Dam that could have been retained if effective 
downstream strategies had been implemented.
    The construction of an off stream regulatory storage reservoir near 
Drop 2 of the All-American Canal has been identified as capable of 
saving over 60,000 acre-feet per year. The Colorado River Front Work 
and Levee System budget request only has funds to complete designs, 
specifications, and environmental compliance activities. Were 
Reclamation serious about aggressively pursuing these strategies, its 
request for these items would be in excess of $40 million, not the $2.5 
million requested. In order to ensure that this critical reservoir is 
constructed, the Seven Basin States have approved a program to make 
contributed funds available from Southern Nevada Water Authority (SNWA) 
to construct the reservoir. SNWA is prepared to contribute $84 million 
over 2 years (the full estimated cost). Reclamation should be prepared 
with plans, administrative procedures and personnel to accept the money 
and initiate construction in fiscal year 2007.

                          YUMA DESALTING PLANT

    Reclamation's budget justification concerning the Yuma Desalting 
Plant (YDP) continues to be disingenuous. Reclamation continues to say 
that the plant is in ``ready reserve'' status, but quickly states it 
would take 4 years and $26 million to have the YDP fully operational. 
The October 26, 2006, report to Congress and the budget request for a 
pilot program to pay U.S. water delivery contractors to forebear use of 
water indicate the Reclamation preference for a forbearance program as 
opposed to salvaging the saline water by operating the YDP. A long-term 
program relying primarily on forbearance in the United States is not 
acceptable to CAWCD or any of the Lower Basin States. Decisions need to 
be made and resources need to be applied to bring the YDP into actual 
operation. Every year the YDP remains idle results in the loss of 
enough water to supply the annual water needs of half a million people. 
We urge the committee to direct Reclamation to make the Yuma Desalting 
Plant operational at one-third capacity and initiate regular operations 
no later than September 30, 2008.

                      COLORADO RIVER AUGMENTATION

    CAWCD would like to call the committee's attention to the 
provisions of Sections 201, 202 and 203 of Title 1 of the Colorado 
River Basin Project Act of 1968 (Public Law 90-537). These provisions 
call for studies and actions to augment the supply of water available 
for distribution within the Colorado River Basin. These provisions 
specifically make satisfaction of the obligations of the 1944 Treaty 
with Mexico a national obligation and anticipate that that obligation 
will be met through augmentation of the Colorado River supply. The 
Seven Basin States have initiated a program, led and funded primarily 
by the Southern Nevada Water Authority, to review previous augmentation 
studies and evaluate new concepts. We intend to develop recommended 
augmentation programs to be undertaken by local, State, and Federal 
organizations. At the very least, Reclamation needs to commit 
sufficient funds to support these studies in fiscal year 2007. CAWCD 
suggests that at least $200,000 be committed from Reclamation's overall 
appropriations for such activities as General Planning, Research and 
Development, or Water 2025. CAWCD urges the committee to direct 
Reclamation to take action and provide funding to fulfill the 
commitment Congress made 37 years ago to augment the water supply in 
the Colorado River Basin.

                    CAP INDIAN DISTRIBUTION SYSTEMS

    We support Reclamation's request for $18,918,000 in funding for CAP 
Indian Distribution Systems. A key element of the negotiated settlement 
embodied in the Arizona Water Settlements Act is continued Indian 
distribution system funding through 2009.

                           TUCSON RELIABILITY

    We note that Reclamation has reduced its funding request for 
``Tucson Reliability'' to a much lower level of $200,000. We have 
testified before and we reiterate here that Reclamation is obligated to 
confer with CAWCD before proceeding with any reliability projects that 
would increase the CAWCD repayment obligation. That said, we believe 
the $200,000 requested will be sufficient for Reclamation's planned 
activities in fiscal year 2007.

                LOWER COLORADO RIVER OPERATIONS PROGRAM

    In its fiscal year 2007 budget request, Reclamation includes 
$9,603,000 in its Lower Colorado River Operations Program for the Lower 
Colorado River Multi-Species Conservation Program (MSCP).
    The MSCP is a cost-shared program among Federal and non-Federal 
interests to develop a long-term plan to conserve endangered species 
and their habitat along the Lower Colorado River from Lake Mead to 
Mexico. CAWCD is one of the cost-sharing partners. Development of this 
program will provide habitat for threatened and endangered species and, 
at the same time, allow current water and power operations to continue. 
CAWCD supports Reclamation's budget request for the Lower Colorado 
River Operations Program. This funding level is necessary to support 
the MSCP effort as well as environmental measures necessary to fully 
implement the interim surplus criteria for the Lower Colorado River. 
These are critical programs upon which Lower Colorado River water and 
power users depend.

    INCREASED SECURITY COSTS FOR RECLAMATION HYDRO POWER FACILITIES

    We continue to oppose the funding of post-9/11 increased security 
costs for Reclamation facilities through hydropower rates. The 
increased costs are being incurred for national security reasons, not 
project maintenance or operation. Details of these costs must be kept 
secret and cannot be disclosed like other data in Power Marketing 
Administration rate cases, raising serious due process issues. Other 
project beneficiaries are not and, in some cases, cannot be charged a 
fair share of these costs. Congress should make these increased 
national security costs nonreimbursable.

                               CONCLUSION

    We have worked for over 3 decades with the Congress and all the 
succeeding administrations to make the Central Arizona Project a 
reality as envisioned by Congress in the 1968 Act and to ensure its 
major contribution to the economic welfare of the State of Arizona. 
Improving the ability of the Lower Colorado River system to conserve 
and store precious Colorado River water supplies is central to our 
mission and, we believe, a core directive of the 1968 Act. The lengthy 
drought on the Colorado River has proven the correctness of that focus 
and the wisdom of Congress in passing the 1968 Act. It is time to 
aggressively move forward to accomplish the additional tasks that have 
been identified. We look forward to working with the Congress, the 
Bureau of Reclamation and the other Federal agencies and the Basin 
States to get this work done.
                                 ______
                                 
                   Prepared Statement of Denver Water

    Chairman Domenici and Senator Reid, we are requesting your support 
for an appropriation in fiscal year 2007 of $4,594,000 to the Bureau of 
Reclamation within the budget line item entitled ``Endangered Species 
Recovery Implementation Program'' for the Upper Colorado Region. The 
President's recommended budget for fiscal year 2007 includes this line-
item amount. The funding designation we seek is as follows: $3,104,000 
for construction activities for the Upper Colorado River Endangered 
Fish Recovery Program; $1,090,000 for the San Juan River Basin Recovery 
Implementation Program and $400,000 activities to avoid jeopardy.
    These highly successful, cooperative programs are ongoing 
partnerships among the States of New Mexico, Colorado, Utah and 
Wyoming, Indian tribes, Federal agencies, and water, power and 
environmental interests.
    The past support and assistance of your subcommittee has greatly 
facilitated the success of these programs. We thank you for that 
support and request the subcommittee's assistance for fiscal year 2007 
funding to ensure the Bureau of Reclamation's continuing financial 
participation in these vitally important programs.
                                 ______
                                 
      Letter From the Northern Colorado Water Conservancy District
                                       Berthoud, CO, March 7, 2006.
The Honorable Pete V. Domenici, Chairman,
The Honorable Harry Reid, Ranking Member,
Energy and Water Development Subcommittee, Committee on Appropriations, 
        United States Senate, 127 Dirksen Senate Office Building, 
        Washington, DC 20510.
    Dear Chairman Domenici and Senator Reid: On behalf of the Northern 
Colorado Water Conservancy District, I am writing to request your 
support for an appropriation in fiscal year 2007 of $4,594,000 to the 
U.S. Bureau of Reclamation (Reclamation) within the budget line item 
entitled ``Endangered Species Recovery Implementation Program'' for the 
Upper Colorado Region. The President's recommended budget for fiscal 
year 2007 includes this line-item amount. The funding designation we 
seek is as follows: $3,104,000 for construction activities for the 
Upper Colorado River Endangered Fish Recovery Program; $1,090,000 for 
the San Juan River Basin Recovery Implementation Program; and $400,000 
for activities to avoid jeopardy.
    These highly successful, cooperative programs are ongoing 
partnerships among the States of New Mexico, Colorado, Utah and 
Wyoming, Indian tribes, Federal agencies, and water, power and 
environmental interests.
    The past support and assistance of your subcommittee has greatly 
facilitated the success of these programs. I thank you for your support 
and request the subcommittee's assistance for fiscal year 2007 funding 
to ensure Reclamation's continuing financial participation in these 
vitally important programs.
            Sincerely,
                                         Eric W. Wilkinson,
                                                   General Manager.
                                 ______
                                 
         Prepared Statement of the Pueblo Board of Water Works

    Chairman Domenici and Senator Reid, we are requesting your support 
for an appropriation in fiscal year 2007 of $4,594,000 to the Bureau of 
Reclamation within the budget line item entitled ``Endangered Species 
Recovery Implementation Program'' for the Upper Colorado Region. The 
President's recommended budget for fiscal year 2007 includes this line-
item amount. The funding designation we seek is as follows: $3,104,000 
for construction activities for the Upper Colorado River Endangered 
Fish Recovery Program; $1,090,000 for the San Juan River Basin Recovery 
Implementation Program and $400,000 activities to avoid jeopardy.
    These highly successful, cooperative programs are ongoing 
partnerships among the States of New Mexico, Colorado, Utah and 
Wyoming, Indian tribes, Federal agencies, and water, power and 
environmental interests.
    The past support and assistance of your subcommittee has greatly 
facilitated the success of these programs. We thank you for that 
support and request the subcommittee's assistance for fiscal year 2007 
funding to ensure the Bureau of Reclamation's continuing financial 
participation in these vitally important programs.
                                 ______
                                 
    Prepared Statement of the Tri-County Water Conservancy District

    Chairman Domenici and Senator Reid, we are requesting your support 
for an appropriation in fiscal year 2007 of $4,594,000 to the Bureau of 
Reclamation within the budget line item entitled ``Endangered Species 
Recovery Implementation Program'' for the Upper Colorado Region. The 
President's recommended budget for fiscal year 2007 includes this line-
item amount. The funding designation we seek is as follows: $3,104,000 
for construction activities for the Upper Colorado River Endangered 
Fish Recovery Program; $1,090,000 for the San Juan River Basin Recovery 
Implementation Program; and $400,000 activities to avoid jeopardy.
    These highly successful, cooperative programs are ongoing 
partnerships among the States of New Mexico, Colorado, Utah and 
Wyoming, Indian tribes, Federal agencies, and water, power and 
environmental interests.
    The past support and assistance of your subcommittee has greatly 
facilitated the success of these programs. We thank you for that 
support and request the subcommittee's assistance for fiscal year 2007 
funding to ensure the Bureau of Reclamation's continuing financial 
participation in these vitally important programs.
                                 ______
                                 
   Prepared Statement of the Central Utah Water Conservancy District

    Chairman Domenici and Senator Reid, we are requesting your support 
for an appropriation in fiscal year 2007 of $4,594,000 to the Bureau of 
Reclamation within the budget line item entitled ``Endangered Species 
Recovery Implementation Program'' for the Upper Colorado Region. The 
President's recommended budget for fiscal year 2007 includes this line-
item amount. The funding designation we seek is as follows: $3,104,000 
for construction activities for the Upper Colorado River Endangered 
Fish Recovery Program; $1,090,000 for the San Juan River Basin Recovery 
Implementation Program; and $400,000 activities to avoid jeopardy.
    These highly successful, cooperative programs are ongoing 
partnerships among the States of New Mexico, Colorado, Utah and 
Wyoming, Indian tribes, Federal agencies, and water, power and 
environmental interests.
    The past support and assistance of your subcommittee has greatly 
facilitated the success of these programs. We thank you for that 
support and request the subcommittee's assistance for fiscal year 2007 
funding to ensure the Bureau of Reclamation's continuing financial 
participation in these vitally important programs.
                                 ______
                                 
   Prepared Statement of the Southwestern Water Conservation District

    Chairman Domenici and Senator Reid, the Southwestern Water 
Conservation District was established by the Colorado General Assembly 
in 1941 to conserve and protect the water of the San Juan and Dolores 
Rivers and their tributaries in nine counties in Southwest Colorado. 
Therefore, we are requesting your support for an appropriation in 
fiscal year 2007 of $4,594,000 to the Bureau of Reclamation within the 
budget line item entitled ``Endangered Species Recovery Implementation 
Program'' for the Upper Colorado Region. The President's recommended 
budget for fiscal year 2007 includes this line-item amount. The funding 
designations we are seeking are as follows: $3,104,000 for construction 
activities for the Upper Colorado River Endangered Fish Recovery 
Program; $1,090,000 for the San Juan River Basin Recovery 
Implementation Program; and $400,000 for activities to avoid jeopardy 
to the endangered fish.
    These highly successful, cooperative programs are ongoing 
partnerships among the States of New Mexico, Colorado, Utah and 
Wyoming, Indian tribes, Federal agencies, and water, power and 
environmental interests.
    The past support and assistance of your subcommittee has greatly 
facilitated the success of these multi-State, multi-agency programs. We 
thank you for that support and request the subcommittee's assistance 
for fiscal year 2007 funding to ensure the Bureau of Reclamation's 
continuing financial participation in these vitally important programs.
                                 ______
                                 
               Prepared Statement of the State of Wyoming

    Chairman Domenici and Senator Reid, I am writing to request your 
support and assistance in insuring continued funding for the Upper 
Colorado River Endangered Fish Recovery Program and the San Juan River 
Basin Recovery Implementation Program. These two successful ongoing 
cooperative partnership programs involve the States of Colorado, New 
Mexico, Utah and Wyoming, Indian tribes, Federal agencies and water, 
power and environmental interests. Wyoming and the other participating 
States request your support for an appropriation in the President's 
recommended budget for fiscal year 2007 of $4,594,000 to the Bureau of 
Reclamation within the budget line item entitled ``Endangered Species 
Recovery Implementation Program'' for the Upper Colorado Region. The 
funding designation we seek is as follows: $3,104,000 for construction 
activities for the Upper Colorado River Endangered Fish Recovery 
Program; $1,090,000 for the San Juan River Basin Recovery 
Implementation Program and $400,000 for activities to avoid jeopardy.
    These recovery programs have become national models for 
collaboratively working to recover endangered species while meeting 
water use and water development demands in compliance with the 
Endangered Species Act, State law, and interstate compacts in the Upper 
Colorado River Basin region of the Intermountain West. Since 1988, 
these programs have facilitated ESA Section 7 consultation (without 
litigation) for over 1,000 Federal, tribal, State and privately managed 
water projects depleting approximately 2.9 million acre-feet of water 
per year.
    The requested fiscal year 2007 appropriation will allow the Upper 
Colorado River Endangered Fish Program to proceed with construction of 
additional fish passage structures on the Colorado River to provide 
access to historic habitat upstream of existing diversion dams, a fish 
screen on a major diversion on the Green River to avoid entrainment of 
endangered fish, and construction of the Elkhead Project to provide low 
flow augmentation water on the Yampa River. The requested funding for 
the San Juan River Recovery Program will be used for construction of a 
fish screen and fish passage in critical habitat on the San Juan River.
    These activities are funded pursuant to Public Law 106-392, as 
amended, which authorized the Federal Government to provide cost 
sharing for these two ongoing recovery programs' remaining capital 
construction projects. Raising and stocking of the endangered fish 
produced at program hatchery facilities, restoring floodplain habitat 
and fish passage, regulating and supplying instream habitat flows, 
installing fish screens in canal systems and controlling nonnative fish 
populations are key components of the programs' ongoing capital 
construction projects. Substantial non-Federal cost-sharing funding 
exceeding 50 percent for capital construction activities demonstrates 
the strong commitment and effective partnerships embodied in both of 
these successful programs.
    The requested Federal appropriations are critically important to 
continuation of these efforts. The past support and assistance of your 
subcommittee has greatly facilitated the success of these multi-State, 
multi-agency programs. Wyoming thanks you for that support and requests 
the subcommittee's assistance for fiscal year 2007 funding to ensure 
the Bureau of Reclamation's continuing financial participation in these 
vitally important programs.
                                 ______
                                 
   Prepared Statement of the Perkins County Rural Water System, Inc.

    Perkins County Rural Water System, Inc. respectfully submits this 
written testimony to the Appropriations Subcommittee on Energy and 
Water Development for appropriations of $6.0 million for fiscal year 
2007. This project was authorized under Public Law 106-136.
    Perkins County Rural Water System, (PCRWS) gained the approval of 
the Office of Management and Budget and the Bureau of Reclamation to 
proceed with construction in 2004. We have been appropriated to date 
$11.71 million. The administration has zeroed out our funding for 2007. 
To stay on course with our project, it is very important that we get a 
write-in on the Senate's Appropriations Committee for $6.0 million. 
Cost share for the System is 75 percent Federal, 10 percent State, and 
15 percent local match. The State of South Dakota has legislated to 
loan PCRWS the local share for 40 years at 3 percent interest to keep 
costs down to the consumer.
    Breakdown for the project for 2007 is as follows:

                               2007 BUDGET
------------------------------------------------------------------------
                                                              Amount
------------------------------------------------------------------------
INCOME:
    BUREAU OF RECLAMATION...............................      $6,000,000
    STATE OF SOUTH DAKOTA...............................       1,500,000
    MISC................................................         350,000
                                                         ---------------
      TOTAL.............................................       7,850,000
                                                         ===============
EXPENSE:
    FINISH PIPE FOR 2006................................         450,000
    NORTH DAKOTA STATE WATER COMMISSION.................       1,320,000
    RESERVOIR...........................................         800,000
    SHADEHILL AREA......................................       1,300,000
    PRAIRIE CITY AREA...................................         925,000
    BISON RURAL.........................................         925,000
    BOOSTER PUMP STATION................................         200,000
    ENGINEERING.........................................         350,000
    CONSTRUCTION MISC...................................       1,580,000
                                                         ---------------
      TOTAL.............................................       7,850,000
------------------------------------------------------------------------

    PCRWS will need $6.0 million for each of the next 3 years to 
complete our project on schedule. This consists of 550 miles of various 
size pipe ranging from 1.5 inches to 8 inches, one booster pump station 
capable of moving 800 gallon per minute, a 1.0 million storage tank and 
telemetry to operate the whole system from one localized location.
    The quality of water in northwest South Dakota is the main concern 
for the health and well being of the people. Although the water 
typically meets primary standards established by the USEPA, most of the 
dissolved solids are exceedingly high by the State of South Dakota 
standards. Water quality and quantity in Perkins County, South Dakota 
has been a plague for the county over many years. Droughts, both long 
and short term, are a fact of life for the people in this area. Being 
able to obtain quality water during these periods and having a back up 
system for other times would make life a lot easier for those rural 
areas. Due to the isolation from major water supplies, this may be our 
only chance to obtain water at an affordable cost.
    On behalf of the Board of Directors of PCRWS and the people of 
Perkins County, South Dakota, thank you for you for allowing us to 
enter this testimony in subcommittee's report.
                                 ______
                                 
    Prepared Statement of the Grand Valley Water Users' Association

    Chairman Domenici and Senator Reid, we are requesting your support 
for an appropriation in fiscal year 2007 of $4,594,000 to the Bureau of 
Reclamation within the budget line item entitled ``Endangered Species 
Recovery Implementation Program'' for the Upper Colorado Region. The 
President's recommended budget for fiscal year 2007 includes this line-
item amount. The funding designation we seek is as follows: $3,104,000 
for construction activities for the Upper Colorado River Endangered 
Fish Recovery Program; $1,090,000 for the San Juan River Basin Recovery 
Implementation Program; and $400,000 activities to avoid jeopardy.
    These highly successful, cooperative programs are ongoing 
partnerships among the States of New Mexico, Colorado, Utah and 
Wyoming, Indian tribes, Federal agencies and water, power and 
environmental interests.
    The past support and assistance of your subcommittee has greatly 
facilitated the success of these programs. We thank you for that 
support and request the subcommittee's assistance for fiscal year 2007 
funding to ensure the Bureau of Reclamation's continuing financial 
participation in these vitally important programs.
                                 ______
                                 
 Prepared Statement of the Colorado River Basin Salinity Control Forum

    Colorado River Basin Salinity Control Forum's Recommendation:
  --1. Title II Program (Basinwide Program) Authorized in 1995 (Public 
        Law 104-20)--$17,500,000.
  --2. Colorado River Water Quality Improvement Program--Administration 
        Request.
  --3. Paradox Valley Unit and Grand Valley Unit--Administration 
        Request.
    This testimony is in support of funding for the Title II Colorado 
River Basin Salinity Control Program. The Congress has designated the 
Department of the Interior, Bureau of Reclamation (Reclamation), to be 
the lead agency for salinity control in the Colorado River Basin. This 
role and the authorized program were refined and confirmed by the 
Congress when Public Law 104-20 was enacted. A total of $17,500,000 is 
requested for fiscal year 2007 to implement the needed and authorized 
program. Failure to appropriate these funds will result in significant 
economic damage in the United States and Mexico.
    In recent years, the President's requests have dropped to below $10 
million. In the judgment of the Colorado River Basin Salinity Control 
Forum (Forum), this amount is inappropriately low. Water quality 
commitments to downstream United States and Mexican water users must be 
honored while the Basin States continue to develop their Colorado River 
Compact-apportioned waters. Concentrations of salts in the river cause 
about $330 million in quantified damage in the United States with 
significantly greater unquantified damages. Damages occur from:
  --a reduction in the yield of salt sensitive crops and increased 
        water use for leaching in the agricultural sector,
  --a reduction in the useful life of galvanized water pipe systems, 
        water heaters, faucets, garbage disposals, clothes washers, and 
        dishwashers, and increased use of bottled water and water 
        softeners in the household sector,
  --an increase in the use of water for cooling, and the cost of water 
        softening, and a decrease in equipment service life in the 
        commercial sector,
  --an increase in the use of water and the cost of water treatment, 
        and an increase in sewer fees in the industrial sector,
  --a decrease in the life of treatment facilities and pipelines in the 
        utility sector,
  --difficulty in meeting wastewater discharge requirements to comply 
        with National Pollutant Discharge Elimination System permit 
        terms and conditions, and an increase in desalination and brine 
        disposal costs due to accumulation of salts in groundwater 
        basins,
  --increased use of imported water for leaching and the cost of 
        desalination and brine disposal for recycled water.
    For every 30 mg/l increase in salinity concentrations, there is $75 
million in additional damages in the United States. The Forum, 
therefore, believes implementation of the program needs to be 
accelerated to a level beyond that requested by the President.
    The program authorized by the Congress in 1995 has proven to be 
very successful and very cost effective. Proposals from the public and 
private sector to implement salinity control strategies have far 
exceeded the available funding and Reclamation has a backlog of 
proposals. Reclamation continues to select the best and most cost-
effective proposals. Funds are available for the Colorado River Basin 
States' cost sharing for the level of Federal funding requested by the 
Forum. Water quality improvements accomplished under Title II of the 
Colorado River Basin Salinity Control Act also benefit the quality of 
water delivered to Mexico. Although the United States has always met 
the commitments of the International Boundary & Water Commission's 
(Commission) Minute No. 242 to Mexico with respect to water quality, 
the United States Section of the Commission is currently addressing 
Mexico's request for better water quality at the International 
Boundary.
    Some of the most cost-effective salinity control opportunities 
occur when Reclamation can improve irrigation delivery systems at the 
same time that the U.S. Department of Agriculture's (USDA) program is 
working with landowners (irrigators) to improve the on-farm irrigation 
systems. Through the USDA Environmental Quality Incentives Program, 
adequate on-farm funds appear to be available and adequate Reclamation 
funds are needed to maximize the effectiveness of the effort. These 
salinity control efforts have secondary water conservation benefits at 
the point of use and downstream at the point of reuse.

                                OVERVIEW

    In 2000, the Congress reviewed the program as authorized in 1995. 
Following hearings, and with administration support, the Congress 
passed legislation that increased the ceiling authorized for this 
program by $100 million. Reclamation has received cost-effective 
proposals to move the program ahead and the Basin States have funds 
available to cost-share up-front.
    The Colorado River Basin Salinity Control Program was originally 
authorized by the Congress in 1974. The Title I portion of the Colorado 
River Basin Salinity Control Act responded to commitments that the 
United States made, through Minute No. 242, to Mexico concerning the 
quality of water being delivered to Mexico below Imperial Dam. Title II 
of the Act established a program to respond to salinity control needs 
of Colorado River water users in the United States and to comply with 
the mandates of the then newly legislated Clean Water Act. Initially, 
the Secretary of the Interior and Reclamation were given the lead 
Federal role by the Congress. This testimony is in support of adequate 
funding for the Title II program.
    After a decade of investigative and implementation efforts, the 
Basin States concluded that the Salinity Control Act needed to be 
amended. The Congress revised the Act in 1984. That revision, while 
leaving implementation of the salinity control policy with the 
Secretary of the Interior, also gave new salinity control 
responsibilities to the USDA and to the Bureau of Land Management 
(BLM). The Congress has charged the administration with implementing 
the most cost-effective program practicable (measured in dollars per 
ton of salt removed). The Basin States are strongly supportive of that 
concept as the Basin States cost share 30 percent of Federal 
expenditures up-front for the salinity control program, in addition to 
proceeding to implement salinity control activities for which they are 
responsible in the Colorado River Basin.
    The Forum is composed of gubernatorial appointees from Arizona, 
California, Colorado, Nevada, New Mexico, Utah and Wyoming. The Forum 
has become the seven-State coordinating body for interfacing with 
Federal agencies and the Congress to support the implementation of the 
program necessary to control the salinity of the river system. In close 
cooperation with the Environmental Protection Agency (EPA) and pursuant 
to requirements of the Clean Water Act, every 3 years the Forum 
prepares a formal report analyzing the salinity of the Colorado River, 
anticipated future salinity, and the program elements necessary to keep 
the salinities at or below the concentrations in the river system in 
1972 at Imperial Dam, and below Parker and Hoover Dams.
    In setting water quality standards for the Colorado River system, 
the salinity concentrations at these three locations have been 
identified as the numeric criteria. The plan necessary for controlling 
salinity and reducing downstream damages has been captioned the ``Plan 
of Implementation.'' The 2005 Review of water quality standards 
includes an updated Plan of Implementation. The level of appropriation 
requested in this testimony is in keeping with the agreed upon plan. If 
adequate funds are not appropriated, significant damages from the 
higher salt concentrations in the water will be more widespread in the 
United States and Mexico.

                             JUSTIFICATION

    The $17,500,000 requested by the Forum on behalf of the seven 
Colorado River Basin States is the level of funding necessary to 
proceed with Reclamation's portion of the Plan of Implementation. In 
July of 1995, the Congress amended the Colorado River Basin Salinity 
Control Act. The amended Act gives Reclamation new latitude and 
flexibility in seeking the most cost-effective salinity control 
opportunities, and it provides for utilization of proposals from 
project proponents, as well as more involvement from the private as 
well as the public sector. The result is that salt loading is being 
prevented at costs often less than half the cost under the previous 
program. The Congress recommitted its support for the revised program 
when it enacted Public Law 106-459. The Basin States' cost sharing up-
front adds 43 cents for every Federal dollar appropriated. The 
federally chartered Colorado River Basin Salinity Control Advisory 
Council, created by the Congress in the Salinity Control Act, has met 
and formally supports the requested level of funding. The Basin States 
urge the Energy and Water Development Subcommittee to support the 
funding as set forth in this testimony.

                     ADDITIONAL SUPPORT OF FUNDING

    In addition to the funding identified above for the implementation 
of the most recently authorized program, the Forum urges the Congress 
to appropriate funds requested by the administration to continue to 
maintain and operate salinity control facilities as they are completed 
and placed into long-term operation. Reclamation has completed the 
Paradox Valley unit which involves the collection of brines in the 
Paradox Valley of Colorado and the injection of those brines into a 
deep aquifer through an injection well. The continued operation of this 
project and the Grand Valley Unit will be funded primarily through the 
Facility Operations activity.
    The Forum also supports funding to allow for continued general 
investigation of the Salinity Control Program as requested by the 
administration for the Colorado River Water Quality Improvement 
Program. It is important that Reclamation have planning staff in place, 
properly funded, so that the progress of the program can be analyzed, 
coordination between various Federal and State agencies can be 
accomplished, and future projects and opportunities to control salinity 
can be properly planned to maintain the water quality standards for 
salinity so that the Basin States can continue to develop their 
Colorado River Compact-apportioned waters.
                                 ______
                                 
            Prepared Statement of Colorado Springs Utilities

    We are requesting your support for an appropriation in fiscal year 
2007 of $4,594,000 to the Bureau of Reclamation within the budget line 
item entitled ``Endangered Species Recovery Implementation Program'' 
for the Upper Colorado Region. The President's recommended budget for 
fiscal year 2007 includes this line-item amount. The funding 
designation we seek is as follows: $3,104,000 for construction 
activities for the Upper Colorado River Endangered Fish Recovery 
Program; $1,090,000 for the San Juan River Basin Recovery 
Implementation Program; and $400,000 activities to avoid jeopardy.
    These highly successful, cooperative programs are ongoing 
partnerships among the States of New Mexico, Colorado, Utah and 
Wyoming, Indian tribes, Federal agencies, and water, power and 
environmental interests.
    The past support and assistance of your subcommittee has greatly 
facilitated the success of these programs. We thank you for that 
support and request the subcommittee's assistance for fiscal year 2007 
funding to ensure the Bureau of Reclamation's continuing financial 
participation in these vitally important programs.
                                 ______
                                 
       Letter From the State Engineer's Office, State of Wyoming
                                      Cheyenne, WY, March 16, 2006.
The Honorable Pete V. Domenici, Chairman,
The Honorable Harry Reid, Ranking Member,
Energy and Water Development Subcommittee, Committee on Appropriations, 
        United States Senate, 127 Dirksen Senate Office Building, 
        Washington, DC 20510.
    Dear Chairman Domenici and Senator Reid: This letter is sent in 
support of fiscal year 2007 funding for the Bureau of Reclamation's 
Colorado River Basin Salinity Control Project--Title II Program. 
Congress has designated the Department of the Interior, Bureau of 
Reclamation (Reclamation), to be the lead agency for salinity control 
in the Colorado River Basin. A total of $17,500,000 is requested for 
fiscal year 2007 Reclamation activities to implement authorized 
Colorado River Basin salinity control program programs. Failure to 
appropriate these funds will directly result in significant economic 
damages being accrued by United States and Mexican water users.
    In addition to the funding identified above for the implementation 
of the most recently authorized program, the State of Wyoming urges the 
Congress to appropriate funds requested by the administration to 
continue to maintain and operate salinity control facilities as they 
are completed and placed into long-term operation. Reclamation has 
completed the Paradox Valley unit which involves the collection of 
brines in the Paradox Valley of Colorado and the injection of those 
brines into a deep aquifer through an injection well. The continued 
operation of this project and the Grand Valley Unit will be funded 
primarily through the Facility Operations activity.
    The State of Wyoming also supports funding to allow for continued 
general investigation of the Salinity Control Program as requested by 
the administration for the Colorado River Water Quality Improvement 
Program. It is important that Reclamation have planning staff in place, 
properly funded, so that the progress of the program can be analyzed, 
coordination between various Federal and State agencies can be 
accomplished, and future projects and opportunities to control salinity 
can be properly planned to maintain the water quality standards for 
salinity so that the Basin States can continue to develop their 
Compact-apportioned waters of the Colorado River.
    The Colorado River provides municipal and industrial water for 27 
million people and irrigation water to nearly 4 million acres of land 
in the United States. The River is also the water source for some 2.3 
million people and 500,000 acres in Mexico. Limitations on users' 
abilities to make the greatest use of this critically important water 
supply due to the River's high concentration of total dissolved solids 
(hereafter referred to as the salinity of the water) are a major 
concern in both the United States and Mexico. Salinity in water 
supplies affects agricultural, municipal, and industrial water users. 
While economic detriments and damages in Mexico are unquantified, the 
Bureau of Reclamation presently estimates salinity-related damages in 
the United States amount to $330 million per year. The River's high 
salt content is in almost equal part due to naturally occurring 
geologic features that include subsurface salt formations and 
discharging saline springs; and the resultant concentrating effects of 
our users man's storage, use and reuse of the waters of the River 
system. Over-application of irrigation water by agriculture is a large 
contributor of salt to the Colorado River as irrigation water moves 
below the crop root zone, seeps through saline soils and then returns 
to the river system.
    The Environmental Protection Agency's interpretation of the 1972 
amendments to the Clean Water Act required the seven Basin States to 
adopt water quality standards for salinity levels in the Colorado 
River. In light of the EPA's regulation to require water quality 
standards for salinity in the Basin, the Governors of Arizona, 
California, Colorado, Nevada, New Mexico, Utah and Wyoming created the 
Colorado River Basin Salinity Control Forum as an interstate 
coordination mechanism in 1973. To address these international and 
regionally important salinity problems, the Congress enacted the 
Colorado River Basin Salinity Control Act of 1974. Title I addressed 
the United States' obligations to Mexico to control the River's 
salinity to ensure the United States' water deliveries to Mexico are 
within the specified salinity concentration range. Title II of the Act 
authorized control measures upstream of Imperial Dam and directed the 
Secretary of the Interior to construct several salinity control 
projects, most of which are located in Colorado, Utah, and Wyoming.
    Title II of the Act was again amended in 1995 and 2000 to direct 
the Bureau of Reclamation to conduct a basin-wide salinity control 
program. This program awards grants to non-Federal entities, on a 
competitive-bid basis, which initiate and carry out salinity control 
projects. The basin-wide program has demonstrated significantly 
improved cost-effectiveness, as computed on $1 per ton of salt basis, 
as compared to the prior Reclamation-initiated projects. The Forum was 
heavily involved in the development of the 1974 Act and its subsequent 
amendments, and continues to actively oversee the Federal agencies' 
salinity control program efforts.
    During the past 32 years, the seven-State Colorado River Basin 
Salinity Control Forum has actively assisted the Federal agencies, 
including the Bureau of Reclamation, in implementing this unique and 
important program. At its October 2006 meeting, the Forum recommended 
that the Bureau of Reclamation seek to have appropriated and should 
expend for Colorado River Basin salinity control the sum of $17,500,000 
in fiscal year 2007. We strongly believe the combined efforts of the 
salinity control efforts of the Bureau of Reclamation, Department of 
Agriculture and the Bureau of Land Management constitute one of the 
most successful Federal/State cooperative non-point source pollution 
control programs in the United States.
    The State of Wyoming greatly appreciates the subcommittee's support 
of the Colorado River Salinity Control Program in past years. We 
strongly believe this important basin-wide water quality improvement 
program merits continued funding and support by your subcommittee. 
Thank you in advance for inclusion of this letter in the formal hearing 
record concerning fiscal year 2007 appropriations.
            With best regards,
                                        Patrick T. Tyrrell,
                                            Wyoming State Engineer.
                                 ______
                                 
       Letter From the Duchesne County Water Conservancy District
                                      Roosevelt, UT, March 9, 2006.
The Honorable Pete Domenici,
Subcommittee on Energy and Water Development, Senate Appropriations 
        Committee, United States Senate, 127 Dirksen Senate Office 
        Building, Washington, DC 20510.
    Dear Mr. Domenici: We are writing this letter to request your 
support for continued funding for the Colorado River Salinity Control 
Title II Program. This program has greatly assisted in removal of many 
tons of salt from the Colorado River, but there is still a great deal 
of work to be completed that will require an adequate level of funding. 
The seven Colorado River Basin States, as well as Mexico, have greatly 
benefitted from this important program. For many years high 
concentrations of salt in the Colorado River had severely damaged 
agricultural production in the West as well as resulting in poor 
quality water being delivered to Mexico.
    Great strides have been made in improving water quality in the 
Colorado River since the inception of this program but we strongly feel 
that there is still a great deal to be done. We understand that the 
Colorado River Basin Salinity Control Forum is requesting $17,500,000 
in funds be appropriated for this program for fiscal year 2007 and we 
would like to add our full support to that funding level request. We 
would also like to express support for the continued funding of the 
Natural Resource Conservation Service program, the Environmental 
Quality Incentive Program (EQIP) which works closely with the Salinity 
Program. It is very important that adequate funding levels be 
maintained for it also.
    We request the subcommittee's assistance to ensure that the 
Colorado River Salinity Control Title II program and EQIP program are 
provided with continued adequate funding.
            Sincerely,
                                             Randy Crozier,
                                                   General Manager.
                                 ______
                                 
   Prepared Statement of the Metropolitan Water District of Southern 
                               California

    The Metropolitan Water District of Southern California is writing 
in support of the following Federal programs, in priority order, under 
the Bureau of Reclamation and Department of Energy's budgets that we 
believe are deserving of your subcommittee's support during the fiscal 
year 2007 budget process: (1) California Bay-Delta Restoration, $38.61 
million; (2) South Delta Temporary Barriers, $2.0 million; (3) Atlas 
Mill Tailings Removal in Moab, Utah, $22.865 million; (4) Water 
Conservation Field Services Program, $0.7 million; (5) Lower Colorado 
River Investigations Program, Brine Management Study, $0.1 million; (6) 
Colorado River Front Work and Levee System, Water Management Reservoir 
Near the All American Canal Subactivity, $47.541 million; (7) Yuma Area 
Projects, Excavating Sediments Behind Laguna Dam, $4.654 million; (8) 
Colorado River Basin Salinity Control--Title II Basinwide Program; 
$17.5 million.
    The Metropolitan Water District of Southern California is a public 
agency that was created in 1928 to meet the supplemental water demands 
of people living in what is now portions of a six-county region of 
southern California. Today, the region served by Metropolitan includes 
approximately 18 million people living on the coastal plain between 
Ventura and the international boundary with Mexico.
    Included in our region are more than 300 cities and unincorporated 
areas in the counties of Los Angeles, Orange, San Diego, Riverside, San 
Bernardino, and Ventura. We provide over half of the water used in our 
5,200-square-mile service area and help our members to develop local 
supplies through increased water conservation, recycling, storage and 
other resource-management programs. Metropolitan's imported water 
supplies come from the Colorado River via our Colorado River Aqueduct 
and from northern California via the State Water Project's California 
Aqueduct.
    We are sensitive to the magnitude of these program requests during 
tight budget times. We are also committed to supporting these Federal 
programs as they are critical to meeting the challenges of water 
resources management and source water quality protection throughout 
California. These programs help to ensure long-term water security and 
meet the water quality requirements necessary to provide our member 
agencies with a safe, reliable water supply. We strongly urge your 
support for these funding requests.

                    CALIFORNIA BAY-DELTA RESTORATION

    Metropolitan recommends your support of the President's fiscal year 
2007 budget request of $38.61 million in new funding from the Bureau of 
Reclamation (Reclamation) for funding the Federal share of the CALFED 
Bay-Delta program to supplement the State's cost share. The Bay-Delta 
system is critical to the State's economy and provides potable water to 
two-thirds of California homes. Included in this budget are $10,890,000 
for the Environmental Water Account; $11,385,000 to continue storage 
activities related to the Shasta Enlargement Study, Sites Reservoir, 
Upper San Joaquin Reservoir, and Los Vaqueros enlargement, and other 
study and planning activities; $5,198,000 for conveyance activities; 
$2,970,000 for science based studies; $2,970,000 for activities that 
will help meet water quality standards; $1,980,000 for ecosystem 
restoration; and $2,970,000 for planning and management activities. 
Metropolitan also supports an emphasis on funding for Delta Emergency 
Response actions, critical levee repairs, and CALFED habitat 
conservation planning activities.

                     SOUTH DELTA TEMPORARY BARRIERS

    Metropolitan strongly recommends that $2.0 million be added to 
Reclamation's budget to fund the South Delta Temporary Barriers. The 
Temporary Barriers project would protect water quality in the southern 
Sacramento-San Joaquin Delta from salt water that normally intrudes 
into the Delta. As flow control structures, these structures would use 
normal tidal action to trap fresh water behind the structures to 
improve water quality and circulation in the South Delta, and to 
provide for use of this fresh water by local agricultural agencies. 
These Federal funds will leverage up to $6 million dollars in State 
funding.

                      ATLAS MINE TAILINGS CLEANUP

    In cooperation with the Utah State Department of Environmental 
Quality, the Metropolitan Water District supports the President's 
budget request of $22.865 million in fiscal year 2007 for DOE for the 
purposes of moving forward with the clean-up of uranium mine tailings 
at the Atlas Site in Moab, Utah.

               WATER CONSERVATION FIELD SERVICES PROGRAM

    Metropolitan is requesting a $0.7 million augmentation of 
Reclamation's budget for the Water Conservation Field Services Program. 
This program encourages conservation of scarce water resources by 
providing assistance to State, agricultural, and urban water districts 
through training, technology transfer, technical guidance, and other 
related activities. The requested funding would be above Reclamation's 
current budget for the following programs and includes: $400,000 for 
the California Friendly program for water conservation to improve water 
efficiency in new construction and municipal landscapes; $100,000 for 
industrial water efficiency surveys to survey opportunities to conserve 
water in industrial water use; and $200,000 for weather based 
irrigation controller and market research activities to pilot 
innovative ways to speed distribution and acceptance of these landscape 
efficiency devices.

  LOWER COLORADO RIVER INVESTIGATIONS PROGRAM, BRINE MANAGEMENT STUDY

    Metropolitan is requesting an additional $0.1 million for the Lower 
Colorado River Investigations Program Brine Management Study in 
Reclamation's budget. This study continues Reclamation's work toward 
addressing brine concentrates. This additional money request would 
allow Reclamation to gather additional data with its partners, create a 
regional issue sensitivity analysis, and finalize and prioritize 
alternative solutions that manage brine concentrates in an economic and 
environmentally acceptable manner. The results of the study would also 
provide benefits for future seawater and brackish desalination 
projects.

               COLORADO RIVER FRONT WORK AND LEVEE SYSTEM

Water Management Reservoir Near the All-American Canal Subactivity
    Reclamation has completed a multi-phased study quantifying the need 
and options for regulatory storage to improve Colorado River management 
downstream of Lake Mead. Reclamation has concluded that locating up to 
a 10,000 acre-foot capacity water management reservoir in Imperial 
County near Drop 2 of the All-American Canal would be of great benefit 
to the Colorado River Basin States. Benefits include conservation of 
reservoir system storage, improving river regulation and water delivery 
scheduling, providing opportunities for water conservation, 
facilitating storage and conjunctive use programs, and setting the 
stage for new cooperative water supply and water quality management 
endeavors with Mexico.
    Colorado River Front Work and Levee System Project funding of 
$47.541 million is needed in fiscal year 2007 in order to obtain 
permits, acquire land, clear and prepare the site, procure materials 
for construction, and for construction.
    In recommending the Energy and Water Development appropriations 
bill provisions for fiscal year 2006, the conference committee 
submitted House Report 109-275 in which the conferees strongly 
recommended that Reclamation proceed aggressively with this work and to 
reflect the urgency of completing this project in future budget 
requests. The conferees noted that this project would provide needed 
improvements in river control and management, all of which are Federal 
responsibilities. The President's fiscal year 2007 request does not 
include funding needed for reservoir construction. Construction of the 
Drop 2 Reservoir is a high priority of the Seven Basin States. On 
February 3, 2006 the Basin States provided recommendations to the 
Secretary of the Interior on future operations of the Colorado River 
System. The States recommendations included creative opportunities to 
conserve water and improve system efficiencies, including the potential 
for non-Federal funding of certain efficiency improvement projects in 
exchange for benefits to the funding entity. Drop 2 Reservoir may 
provide an opportunity for such a partnership. We request that adequate 
Federal funds be provided in fiscal year 2007, that in concert with any 
non-Federal funding, will allow for the timely completion of the Drop 2 
Reservoir.

                           YUMA AREA PROJECTS

Excavating Sediments Behind Laguna Dam
    While work on a reservoir near the All-American Canal proceeds, 
there is an immediate need to restore limited Colorado River regulatory 
storage capacity downstream of Parker Dam. This can be partly 
accomplished by excavating sediments that have accumulated behind 
Laguna Dam since its completion in 1909. Reclamation funding of $4.654 
million is needed in fiscal year 2007 to complete environmental 
compliance and procurement and begin dredging behind Laguna Dam.
    This subactivity under the Yuma Area Projects, Facilities 
Maintenance and Rehabilitation Activity would restore 1,100 acre-feet 
of storage behind Laguna Dam. Not only would this enhance the ability 
to regulate flows arriving at Imperial Dam, it would capture and re-
regulate the water periodically released for the proper operation of 
Imperial Dam, benefiting both the Colorado River Basin States and 
Mexico.
    The President's fiscal year 2007 request for the sediment control 
subactivity is $1.154 million for completion of all necessary 
environmental documentation and engineering design. Metropolitan 
requests that Reclamation's funding for sediment control be augmented 
so as to provide a total of $4.654 million to ensure funds are 
available for the work to excavate sediments from behind Laguna Dam 
immediately upon completion of the environmental documentation.
    The construction of a new regulating reservoir, and dredging 
sediments behind an existing dam will critically improve water delivery 
efficiencies and prevent the loss of over 100,000 and up to 300,000 
acre-feet per year from Colorado River reservoir storage.

        COLORADO RIVER BASIN SALINITY CONTROL PROGRAM--TITLE II

    We ask for your support for additional Federal funding for 
Reclamation's Colorado River Basin Salinity Control Program (Salinity 
Control Program)--Title II. We request that Congress appropriate $17.5 
million for implementation of the Title II--Basinwide Program, an 
increase of $8.59 million from the President's request of $8.91 
million, to ensure water quality protection for this important source 
of water supply to Arizona, California, and Nevada through construction 
of off-farm measures to control Colorado River salinity. Concentrations 
of salts in the river cause hundreds of millions of dollars in damage 
in the United States.
    We look forward to working with your office to further advance 
sound water management activities in California. Please contact me if I 
can answer any questions or provide additional information.
                                 ______
                                 
   Prepared Statement of the New Mexico Interstate Stream Commission

                                SUMMARY

    This statement is submitted in support of fiscal year 2007 
appropriations for the Colorado River Basin salinity control program of 
the Department of the Interior's Bureau of Reclamation. Congress 
designated the Bureau of Reclamation to be the lead agency for salinity 
control in the Colorado River Basin by the Colorado River Basin 
Salinity Control Act of 1974, and reconfirmed the Bureau of 
Reclamation's role by passage of Public Law 104-20. A total of $17.5 
million is requested for fiscal year 2007 to implement the authorized 
Colorado River salinity control program of the Bureau of Reclamation. 
The President's appropriation request of $10 million is inadequate 
because studies have shown that the implementation of the salinity 
control program has fallen behind the pace needed to control damages 
from salinity. An appropriation of $17.5 million for Reclamation's 
salinity control program is necessary to protect water quality 
standards for salinity and to prevent unnecessary levels of economic 
damage from increased salinity levels in water delivered to the Lower 
Basin States of the Colorado River. In addition, funding for operation 
and maintenance of existing projects and sufficient general 
investigation funding is required to identify new salinity control 
opportunities.

                               STATEMENT

    The water quality standards for salinity of the Colorado River must 
be protected while the Basin States continue to develop their compact 
apportioned waters of the river. The salinity standards for the 
Colorado River have been adopted by the seven Basin States and approved 
by EPA. While currently the standards have not been exceeded, salinity 
control projects must be brought on-line in a timely and cost-effective 
manner to prevent future effects that could cause the numeric criteria 
to be exceeded, and would result in unnecessary damages from higher 
levels of salinity in the water delivered to Lower Basin States of the 
Colorado River.
    The Colorado River Basin Salinity Control Act was authorized by 
Congress and signed into law in 1974. The seven Colorado River Basin 
States, in response to the Clean Water Act of 1972, formed the Colorado 
River Basin Salinity Control Forum, a body comprised of gubernatorial 
representatives from the seven States. The Forum was created to provide 
for interstate cooperation in response to the Clean Water Act and to 
provide the States with information necessary to comply with Sections 
303(a) and (b) of the Act. The Forum has become the primary means for 
the Basin States to coordinate with Federal agencies and Congress to 
support the implementation of the salinity control program for the 
Colorado River Basin.
    Bureau of Reclamation studies show that damages from the Colorado 
River to United States water users are about $330,000,000 per year. 
Damages are estimated at $75,000,000 per year for every additional 
increase of 30 milligrams per liter in salinity of the Colorado River. 
Control of salinity is necessary for the States of the Colorado River 
Basin, including New Mexico, to continue to develop their compact-
apportioned waters of the Colorado River.
    Timely appropriations for the funding of the salinity control 
program are essential to comply with the water quality standards for 
salinity, prevent unnecessary economic damages in the United States, 
and protect the quality of the water that the United States is 
obligated to deliver to Mexico. The Basin States and Federal agencies 
agree that increases in the salinity of the Colorado River will result 
in significant increases in damages to water users in the Lower 
Colorado River Basin. An appropriation of only the amount specified in 
the President's budget request is inadequate to protect the quality of 
water in the Colorado River and prevent unnecessary salinity damages in 
the States of the Lower Colorado River Basin. Although the United 
States has always met the water quality standard for salinity of water 
delivered to Mexico under Minute No. 242 of the International Boundary 
and Water Commission, the United States through the U.S. Section of 
IBWC is currently addressing a request by Mexico for better quality 
water. Thus, continued strong support and adequate funding of the 
salinity control program is required to control salinity-related 
damages in the United States and Mexico.
    Congress amended the Colorado River Basin Salinity Control Act in 
July 1995 (Public Law 104-20). The salinity control program authorized 
by Congress by the amendment has proven to be very cost-effective, and 
the Basin States are standing ready with up-front cost sharing. 
Proposals from public and private sector entities in response to the 
Bureau of Reclamation's advertisement have far exceeded available 
funding. Basin States cost sharing funds are available for the $17.5 
million appropriation request for fiscal year 2007. The Basin States 
cost sharing adds 43 cents for each Federal dollar appropriated.
    Public Law 106-459 gave the Bureau of Reclamation additional 
spending authority for the salinity control program. With the 
additional authority in place and significant cost sharing available 
from the Basin States, it is essential that the salinity control 
program be funded at the level requested by the Forum and Basin States 
to protect the water quality of the Colorado River. Some of the most 
cost-effective salinity control opportunities occur when Reclamation 
improves irrigation delivery systems concurrently with on-farm 
irrigation improvements undertaken by the U.S. Department of 
Agriculture's Environmental Quality Incentives Program (EQIP). The 
Basin States cost-share funding is available for both parts, on-farm 
and off-farm, and EQIP funding appears to be adequate to accomplish 
needed on-farm work. Adequate funding for Reclamation off-farm work is 
needed to maintain timely implementation and effectiveness of salinity 
control measures.
    Maintenance and operation of the Bureau of Reclamation's salinity 
control projects and general investigations to identify new cost-
effective salinity control projects are necessary for the continued 
success of the salinity control program. Investigation of new 
opportunities for salinity control are critical while the Basin States 
continue to develop and use their compact-apportioned waters of the 
Colorado River. The water quality standards for salinity and the United 
States water quality requirements pursuant to treaty obligations with 
Mexico are dependent on timely implementation of salinity control 
projects, adequate funding to maintain and operate existing projects, 
and sufficient general investigation funding to determine new cost-
effective opportunities for salinity control.
    Continued funding primarily through Reclamation's Facility 
Operation activity to support maintenance and operation the Paradox 
Valley Unit and the Grand Valley Unit is critically needed. General 
Investigation funding through Reclamation's Colorado River Water 
Quality Improvement Program has been lacking in the recent past, and 
needs to be restored to a level that supports the need for 
identification and study of new salinity control opportunities to 
maintain the levels of salinity control to meet water quality standards 
and control economic damages in the Lower Colorado River Basin.
    I urge the Congress to appropriate $17.5 million to the Bureau of 
Reclamation for the Colorado River Basin salinity control program, 
adequate funding for operation and maintenance of existing projects and 
adequate funding for general investigations to identify new salinity 
control opportunities. Also, I fully support testimony by the Forum's 
Executive Director, Jack Barnett, in request of this appropriation, and 
the recommendation of an appropriation of the same amount by the 
federally chartered Colorado River Basin Salinity Control Advisory 
Council.
                                 ______
                                 
     Prepared Statement of the Colorado River Commission of Nevada

    As a Nevada representative of the Colorado River Basin Salinity 
Control Forum, the Colorado River Commission of Nevada (CRC) supports 
funding the fiscal year 2007 budget request for $17,500,000 for the 
Bureau of Reclamation's Colorado River Basin Salinity Control Program. 
The CRC urges the Congress to appropriate funds requested by the 
administration to continue to maintain and operate salinity control 
facilities as they are completed and placed into long-term operations. 
Reclamation has completed the Paradox Valley unit which involves the 
collection of brines in the Paradox Valley of Colorado and the 
injection of those brines into a deep aquifer through an injection 
well. The continued operation of this project and the Grand Valley Unit 
will be funded primarily through the Facility Operations activity. The 
CRC also supports funding to allow for continued general investigation 
of the Salinity Control Program as requested by the administration for 
the Colorado River Water Quality Improvement Program.
    Salinity remains one of the major problems in the Colorado River. 
Congress has recognized the need to confront this problem with its 
passage of Public Law 93-320 and Public Law 98-569. Your support of the 
Forum's current funding recommendations in support of the Colorado 
River Basin Salinity Control Program is essential to move the program 
forward so that the congressionally directed salinity objectives 
embodied in Public Law 93-320 and Public Law 98-569 are achieved.
                                 ______
                                 
         Prepared Statement of the Red River Valley Association

                         BUREAU OF RECLAMATION

    Mr. Chairman and members of the committee, I am Wayne Dowd, and 
pleased to represent the Red River Valley Association as its President. 
Our organization was founded in 1925 with the express purpose of 
uniting the citizens of Arkansas, Louisiana, Oklahoma and Texas to 
develop the land and water resources of the Red River Basin.
    The Resolutions contained herein were adopted by the Association 
during its 80th Annual Meeting in Bossier City, Louisiana on February 
24, 2005, and represent the combined concerns of the citizens of the 
Red River Basin Area as they pertain to the goals of the Association.
    Our ``western rivers'' played a very important part in the 
development and economic success of the States west of the Mississippi 
River. An agency responsible for the development of those water 
resources has been the Bureau of Reclamation. In our four-State region 
they have been most active in Oklahoma.
    I would like to comment on three specific requests for the future 
economic well-being of the citizens residing in the Red River Valley 
region in Oklahoma. We support the following studies and request that 
the Bureau of Reclamation be funded at their full fiscal year 2007 
capability.
    North Fork of the Red River, OK, Investigation Study.--The W.C. 
Austin (Altus Lake and Dam) Project in southwestern Oklahoma, is 
authorized to provide water for irrigation to approximately 48,000 
acres of privately owned land in southwestern Oklahoma; control 
flooding on the North Fork of the Red River and augment municipal water 
supply for the City of Altus. Secondary benefits include fish and 
wildlife conservation and recreation opportunities. Project features 
include Altus Dam, four canals, a 221-mile lateral distribution system 
and 26 miles of drains. The Lugert-Altus Irrigation District (LAID) is 
responsible for operation and maintenance of the project.
    Water demand in the District and region is growing which, in turn, 
is reducing future water availability and economic development 
opportunities. This proposed investigation would: (1) develop a 
hydrologic model of the NFRR watershed; and (2) evaluate opportunities 
for augmenting water availability in the project region.
    We support a comprehensive evaluation of water resources in the 
North Fork of the Red River in Oklahoma. We sincerely appreciate your 
support in past appropriations.
    An allocation of $300,000 is requested for the fiscal year 2007 
appropriations.
    Arbuckle-Simpson Aquifer Study.--The Arbuckle-Simpson Aquifer has 
been designated a sole source aquifer by EPA and a large number of 
Oklahomans depend on its protection for their health and economic 
future. This is an important source of water supply for: the citizens 
of Ada, Sulphur, Mill Creek and Roff; the Chickasaw National 
Recreational Area; Chickasaw and Choctaw Tribal members; and many 
farmers and ranchers owning land overlying the basin. Contributions 
from the aquifer also provide the perennial flow for many streams and 
natural springs in the area. The Arbuckle-Simpson Aquifer underlines 
approximately 500 square miles of south-central Oklahoma.
    During recent years, a number of issues have emerged which have 
caused concerns about the utilization and continued health of the 
aquifer. These concerns include issues over water use, exportation of 
water out of the area, impacts of groundwater development on the flows 
in the significant springs and rivers, and competition for water and 
water quality.
    In order to assure the future well-being of the aquifer we support 
a 5-year study to include detailed assessments of: the formation's 
hydrogeology, water quality and vulnerability; groundwater-surface 
water interactions; land use changes and related impacts; Tribal-State 
water rights; and overall management of the resources. We appreciate 
your support of this study by funding the last 3 years of the study.
    We request $1,500,000 be appropriated for fiscal year 2007 and 
support that the study be cost shared, 90 percent Federal and 10 
percent State/Local funds.
    Fort Cobb, Washita Basin Project, Water Supply Augmentation 
Appraisal Study.--Fort Cobb Reservoir is located at river mile 7.4 on 
Pond (Cobb) Creek, a tributary of the Washita River, in the Red River 
Basin in Caddo County, about 14 miles northwest of Anadarko. The 
project is authorized for flood control, municipal water supply, fish 
and wildlife and recreation. Construction of the project, by the Bureau 
of Reclamation, began in February of 1958 and was completed in March of 
1959. The project is designed to provide about 11.9 MGD of water 
supply.
    Over the past several years, the Fort Cobb Master Conservancy 
District has begun to experience difficulty in delivering sufficient 
water through their aqueduct to meet the peak demands of the service 
population. Although the total demand has not yet exceeded the amount 
contracted to the member cities and other user entities, there is an 
urgent need to evaluate opportunities for augmentation of the project 
supply to ensure the ability to meet the future needs of the member 
communities. The appraisal study would evaluate both surface and ground 
water resources in the area and look at alternatives to augment 
available water supply from the project.
    The RRVA requests the appropriation of $100,000 in the Bureau of 
Reclamation's fiscal year 2007 budget to conduct an appraisal study of 
water supply augmentation options at the Fort Cobb Reservoir, Washita 
Basin Project.
    The Red River Valley Association understands these are difficult 
times with our Nation's budget, so we appreciate your support for these 
studies in the past. We feel they are extremely important to the 
welfare of the citizens in Oklahoma and request that you again support 
these studies in fiscal year 2007.
    We are always available to provide additional information and 
answer whatever questions you may have.

                              ENCLOSURE 1
                      RED RIVER VALLEY ASSOCIATION

    The Red River Valley Association is a voluntary group of citizens 
bonded together to advance the economic development and future well 
being of the citizens of the four-State Red River Basin area in 
Arkansas, Louisiana, Oklahoma and Texas.
    For the past 80 years, the Association has done notable work in the 
support and advancement of programs to develop the land and water 
resources of the Valley to the beneficial use of all the people. To 
this end, the Red River Valley Association offers its full support and 
assistance to the various agricultural organizations and other local 
governmental entities in developing the area along the Red River.
    The Resolutions contained herein were adopted by the Association 
during its 801st Annual Meeting in Bossier City, Louisiana on February 
24, 2006, and represent the combined concerns of the citizens of the 
Red River Basin Area as they pertain to the goals of the Association, 
specifically:
  --Economic and Community Development;
  --Environmental Restoration;
  --Flood Control;
  --Bank Stabilization;
  --A Clean Water Supply for Municipal, Industrial and Agricultural 
        Uses;
  --Recreation; and,
  --Navigation.
    The Red River Valley Association is aware of the constraints on the 
Federal budget, and has kept those restraints in mind as these 
Resolutions were adopted. Therefore, and because of the far-reaching 
regional and national benefits addressed by the various projects 
covered in these Resolutions, we urge the members of Congress to review 
the material contained herein and give serious consideration to funding 
these initiatives at the levels requested.
                                 ______
                                 
      Prepared Statement of the Santa Clara Valley Water District

        CALFED BAY-DELTA PROGRAM--SANTA CLARA COUNTY, CALIFORNIA
                                SUMMARY

    This statement urges the committee's support for a fiscal year 2007 
administration budget request of $38.6 million and an appropriation 
add-on of $61.4 million, for a total of $100 million for California 
Bay-Delta Restoration.

                          STATEMENT OF SUPPORT

    Background.--In an average year, half of Santa Clara County's water 
supply is imported from the San Francisco Bay/Sacramento-San Joaquin 
Delta estuary (Bay-Delta) watersheds through three water projects: the 
State Water Project, the Federal Central Valley Project, and San 
Francisco's Hetch Hetchy Project. In conjunction with locally-developed 
water, this water supply supports more than 1.7 million residents in 
Santa Clara County and the most important high-tech center in the 
world. In average-to-wet years, there is enough water to meet the 
county's long-term needs. In dry years, however, the county could face 
a water supply shortage of as much as 100,000 acre-feet per year, or 
roughly 20 percent of the expected demand. In addition to shortages due 
to hydrologic variations, the county's imported supplies have been 
reduced due to regulatory restrictions placed on the operation of the 
State and Federal water projects.
    There are also water quality problems associated with using Bay-
Delta water as a drinking water supply. Organic materials and 
pollutants discharged into the Delta, together with salt water mixing 
in from San Francisco Bay, have the potential to create disinfection by 
products that are carcinogenic and pose reproductive health concerns.
    Santa Clara County's imported supplies are also vulnerable to 
extended outages due to catastrophic failures such as major earthquakes 
and flooding.
    Project Synopsis.--The CALFED Bay-Delta Program is an 
unprecedented, cooperative effort among Federal, State, and local 
agencies to restore the Bay-Delta. With input from urban, agricultural, 
environmental, fishing, and business interests, and the general public, 
CALFED has developed a comprehensive, long-term plan to address 
ecosystem and water management issues in the Bay-Delta.
    Restoring the Bay-Delta ecosystem is important not only because of 
its significance as an environmental resource, but also because failing 
to do so will stall efforts to improve water supply reliability and 
water quality for millions of Californians and the State's trillion-
dollar economy and job base.
    The passage of H.R. 2828 in 2004 reauthorized Federal participation 
in the CALFED Bay-Delta Program and provided $389 million in new and 
expanded funding authority for selected projects, including the San 
Luis Reservoir Low Point Improvement Project. The San Luis Project is 
one of six new projects, studies or water management actions authorized 
to receive a share of up to $184 million under the conveyance section 
of the bill. It is critical that Federal funding be provided to 
implement the actions authorized in the bill in the coming years.
    Fiscal Year 2006 Funding.--$37 million was appropriated for CALFED 
activities in fiscal year 2006.
    Fiscal Year 2007 Funding Recommendation.--It is requested that the 
committee support an appropriation add-on of $61.4 million, in addition 
to the $38.6 million in the administration's fiscal year 2007 budget 
request, for a total of $100 million for California Bay-Delta 
Restoration.

  SAN JOSE AREA WATER RECLAMATION AND REUSE PROGRAM (SOUTH BAY WATER 
           RECYCLING PROGRAM)--SANTA CLARA COUNTY, CALIFORNIA
                                SUMMARY

    This statement urges the committee's support for a fiscal year 2007 
administration budget request of $495,000 and an appropriation add-on 
of $3.61 million, for a total of $4.1 million to fund the program's 
work.

                          STATEMENT OF SUPPORT

    Background.--The San Jose Area Water Reclamation and Reuse Program, 
also known as the South Bay Water Recycling Program, will allow the 
City of San Jose and its tributary agencies of the San Jose/Santa Clara 
Water Pollution Control Plant to protect endangered species habitat, 
meet receiving water quality standards, supplement Santa Clara County 
water supplies, and comply with a mandate from the U.S. Environmental 
Protection Agency and the California Water Resources Control Board to 
reduce wastewater discharges into San Francisco Bay.
    The Santa Clara Valley Water District (District) collaborated with 
the City of San Jose to build the first phase of the recycled water 
system by providing financial support and technical assistance, as well 
as coordination with local water retailers. The design, construction, 
construction administration, and inspection of the program's 
transmission pipeline and Milpitas 1A Pipeline was performed by the 
District under contract to the City of San Jose.
    Status.--The City of San Jose is the program sponsor for Phase 1, 
consisting of almost 60 miles of transmission and distribution 
pipelines, pump stations, and reservoirs. Completed at a cost of $140 
million, Phase 1 began partial operation in October 1997. Summertime 
2004 deliveries averaged 10.6 million gallons per day of recycled 
water. The system now serves over 517 active customers and delivers 
approximately 7,200 acre-feet of recycled water per year.
    Phase 2 is now underway. In June 2001, San Jose approved an $82.5 
million expansion of the program. The expansion includes additional 
pipeline extensions into the cities of Santa Clara and Milpitas, a 
major pipeline extension into Coyote Valley in south San Jose, and 
reliability improvements of added reservoirs and pump stations. The 
District and the City of San Jose executed an agreement in February 
2002 to cost-share on the pipeline into Coyote Valley and discuss a 
long-term partnership agreement on the entire system. Phase 2's near-
term objective is to increase deliveries by the year 2010 to 15,000 
acre-feet per year.
    Funding.--In 1992, Public Law 102-575 authorized the Bureau of 
Reclamation to work with the City of San Jose and the District to plan, 
design, and build demonstration and permanent facilities for reclaiming 
and reusing water in the San Jose metropolitan service area. The City 
of San Jose reached an agreement with the Bureau of Reclamation to 
cover 25 percent of Phase 1's costs, or approximately $35 million; 
however, Federal appropriations have not reached the authorized amount. 
To date, the program has received $26.62 million of the $35 million 
authorization.
    Fiscal Year 2006 Funding.--$422,000 was appropriated in fiscal year 
2006.
    Fiscal Year 2007 Funding Recommendation.--It is requested that the 
congressional committee support an appropriation add-on of $3.61 
million, in addition to the $495,000 in the administration's fiscal 
year 2007 budget request, for a total of $4.1 million to fund the 
program's work.

 SAN LUIS RESERVOIR LOW POINT IMPROVEMENT PROJECT--SANTA CLARA COUNTY, 
                               CALIFORNIA
                                SUMMARY

    This statement urges the committee's support for a fiscal year 2007 
administration budget request of $1.485 million and an appropriation 
add-on of $5.515 million, for a total of $8 million, to complete the 
Feasibility Study. This request is included in the $100 million CALFED 
Bay-Delta Program appropriation request.

                          STATEMENT OF SUPPORT

    Background.--San Luis Reservoir is one of the largest reservoirs in 
California, and is the largest ``off-stream'' water storage facility in 
the world. The Reservoir has a water storage capacity of more than 2 
million acre-feet and is a key component of the water supply system 
serving the Federal Central Valley Project (CVP) and California's State 
Water Project. San Luis is used for seasonal storage of Sacramento-San 
Joaquin delta water that is delivered to the reservoir via the 
California Aqueduct and Delta-Mendota Canal. The San Luis Reservoir is 
jointly owned and operated by the U.S. Bureau of Reclamation and the 
California Department of Water Resources.
    The San Luis Reservoir provides the sole source of CVP water supply 
for the San Felipe Division contractors--Santa Clara Valley Water 
District (District), San Benito County Water District and, in the 
future, Pajaro Valley Water Management Agency. When water levels in San 
Luis Reservoir are drawn down in the spring and summer, high water 
temperatures result in algae blooms at the reservoir's water surface. 
This condition degrades water quality, making the water difficult or 
impractical to treat and can preclude deliveries of water from San Luis 
Reservoir to San Felipe Division contractors. In order to avoid the 
``low point'' problem, the reservoir has been operated to maintain 
water levels above the critical low elevation--the ``low point''--
resulting in approximately 200,000 acre-feet of undelivered water to 
south of the Delta State and Federal water users.
    Project Goals and Status.--The goal of the project is to increase 
the operational flexibility of storage in San Luis Reservoir and ensure 
a high quality, reliable water supply for San Felipe Division 
contractors. The specific project objectives are to: (1) Increase the 
operational flexibility of San Luis Reservoir by increasing the 
effective storage; (2) Ensure that San Felipe Division contractors are 
able to manage their annual Central Valley Project contract allocation 
to meet their water supply and water quality commitments; (3) Provide 
opportunities for project-related environmental improvements; and (4) 
Provide opportunities for other project-related improvements.
    Preliminary studies by the District have identified six potential 
alternatives to solve the problem. More funding is needed to fully 
explore these alternatives.
    The passage of H.R. 2828 in 2004 reauthorized Federal participation 
in the CALFED Bay-Delta Program. The San Luis Reservoir Low Point 
Improvement Project was one of six new projects, studies or water 
management actions authorized in the bill to receive a share of up to 
$184 million authorized under the conveyance section of the bill.
    Fiscal Year 2006 Funding.--$2 million was appropriated in the 
fiscal year 2006 CALFED appropriation.
    Fiscal Year 2007 Funding Recommendation.--It is requested that the 
congressional committee support an appropriation add-on of $5.515 
million, in addition to the $1.485 million in the administration's 
fiscal year 2007 budget request, for a total of $8 million for the San 
Luis Reservoir Low Point Improvement Project. The San Luis request is 
included in the $100 million CALFED Bay-Delta appropriation request.

     Prepared Statement of the Colorado River Energy Distributors 
                              Association

    The Colorado River Energy Distributors Association (CREDA) 
appreciates this opportunity to submit its views on recommendations in 
the President's fiscal year 2007 budget proposal that affect specific 
programs of the Bureau of Reclamation (Bureau) and the Western Area 
Power Administration (Western) in the Energy and Water Development Act 
of 2007. Our testimony will address two issues:
  --Our request for the inclusion of language to fund additional, post 
        9/11 security measures at multi-purpose Federal dams from non-
        reimbursable appropriations; and
  --Our opposition to the proposal to change interest rate calculations 
        of the Federal Power Marketing Administrations.
    CREDA is a non-profit, regional organization representing 155 
consumer-owned, non-profit municipal and rural electric cooperatives, 
political subdivisions, irrigation and electrical districts and tribal 
utility authorities that purchase hydropower resources from the 
Colorado River Storage Project (CRSP). CRSP is a multi-purpose Federal 
project that provides flood control, water storage for irrigation, 
municipal and industrial purposes; recreation and environmental 
mitigation, in addition to the generation of electricity. CREDA was 
established in 1978 and serves as the ``voice'' of CRSP contractor 
members in dealing with resource availability and affordability issues. 
CREDA represents its members in dealing with the Bureau--as the owner 
and operator of the CRSP--and with Western--as the marketing agency for 
CRSP hydropower.
    CREDA members serve over 4 million electric consumers in six 
western States: Arizona, Colorado, Nevada, New Mexico, Utah and 
Wyoming. CREDA's member utilities purchase more than 85 percent of the 
power produced by the CRSP.
     costs of increased security at federal multi-purpose projects
    Following the attacks of September 11, 2001, the Bureau of 
Reclamation (Bureau) embarked upon an aggressive program to enhance the 
security of Federal dams to protect the facilities against terrorist 
attacks. Based on historical precedent dating to World War II, the 
Bureau determined in 2002 that the costs of increased security measures 
should remain a non-reimbursable obligation of the Federal Government.
    For fiscal year 2003, the Bureau received $28.4 million in Energy 
and Water Development Appropriations Act (Public Law 108-7) and an 
additional $25 million in supplemental appropriations. The Bureau also 
received $28.5 million for increased security costs in the Energy and 
Water Development Appropriations Act of 2004 (Public Law 108-137).
    Due to budget constraints, the President's fiscal year 2005 budget 
directed the Bureau to recover $12 million from entities that benefit 
from the multi-purpose projects. Of that amount, power customers were 
asked to pay an estimated 94 percent. Federal power customers objected, 
citing legislative precedent and the fact that the additional security 
measures are intended to protect all features of the Federal multi-
purpose projects, not just the power features, from attack and 
destruction. In fact, in the event of a catastrophic failure of these 
projects, the power function could most likely be the purpose least 
impacted.
    Further, power users noted that Bureau's decision to allocate a 
majority of the reimbursable costs to power users was not based on any 
objective or risk analysis of the benefits of the security upgrades.
    Congress has spoken annually regarding treatment of these costs. In 
report language accompanying the Energy and Water Development 
Appropriations Act of 2005 (Public Law 108-447), Congress recognized 
the dramatic increase in security needs and corresponding costs at 
Reclamation facilities following the September 11, 2001 attacks on our 
country. Congress also recognized that the Reclamation security posture 
``will not likely approach pre-September 11, 2001 levels for many 
years, if ever.'' The conference committee then underscored its concern 
for the reimbursability of security costs by including the following 
directive to the Bureau:

``Reclamation shall provide a report to the conference no later than 
May 1, 2005, with a breakout of planned reimbursable and non-
reimbursable security costs by project, by region. The conference 
directs the Commissioner [of Reclamation] not to begin the 
reimbursement process until the Congress provides direct instruction to 
do so.''

    The May 2005 Report indicated the desire of the Bureau to collect 
the costs of guards and patrols from project beneficiaries (primarily 
power) based on the existing project cost allocations for operation and 
maintenance. In the CRSP, this would require about 95 percent of the 
costs to be borne by the power customers.
    In the Energy and Water Development Appropriations Act of 2006 (HR 
2419, November 7, 2005), Congress directed that $10 million of the 
estimated $18 million for guards and patrols be provided by 
reimbursable funding. Further, Congress directed that a report to 
Congress be provided with further detail in 60 days.

``. . . the Bureau of Reclamation is expected to receive approximately 
$10,000,000 in reimbursements for additional security guards and 
patrols, which are considered project O&M costs. The conferees agree, 
however, that all project beneficiaries that benefit from an enhanced 
security posture at the Bureau's facilities should pay a share of the 
security costs. Accordingly, the Bureau is directed to provide to the 
House and Senate Committees on Appropriations, not later than 60 days 
after the enactment of this Act, a delineation of planned reimbursable 
security costs by project prorated by all project purposes.''

    The report (issued in March 2006) is similar to the previous (May 
2005) report, except that it also includes ``facility fortification 
upgrades'' as a reimbursable cost. Previously the USBR had assured its 
stakeholders that only the costs of guards and patrols would be 
reimbursable. This additional obligation in essence makes EVERYTHING 
reimbursable at some point.
    CREDA believes that the historic rationale established in the 1942 
and 1943 Interior Department Appropriation Acts for treating costs of 
increased security at multi-purpose Federal projects as non-
reimbursable obligations of the Federal Government is still valid. We 
urge Congress to add language to the Energy and Water Development 
Appropriations Act of 2007 to clarify that all costs of increased 
security at dams owned and operated by the Bureau of Reclamation be 
non-reimbursable.

         POWER MARKETING ADMINISTRATION INTEREST RATE PROPOSAL

    The administration's fiscal year 2007 budget includes a 
recommendation that would raise electricity rates by changing the 
interest rate charged by the Southeastern Power Administration (SEPA), 
the Southwestern Power Administration (SWPA), and the Western Area 
Power Administration (WAPA) on all new investments in projects whose 
interest rates are not set by law. Specifically, the Department of 
Energy's (DOE) budget calls for the these three Power Marketing 
Administrations (PMAs) to set their interest rates at the level that 
government corporations pay to borrow funds from the Federal 
Government. To implement this proposal, (DOE) will amend the regulation 
that governs how the PMAs establish their rates and will do so 
administratively, without any consultation with or action from 
Congress.
    The administration's budget proposes to increase the interest rate 
charged on all new investments in these hydroelectric facilities to a 
level that is charged government corporations--the rate that reflects 
the interest cost for the Federal Government to provide loans to 
government corporations. SEPA, SWPA and WAPA are neither government 
corporations nor do they borrow funds from the U.S. Treasury. All rates 
are set to recover the dollars appropriated by Congress for the 
investment in the hydroelectric facilities and to cover the cost to 
operate these projects. If implemented, this proposal could increase 
rates considerably for customers served by most of the Power Marketing 
Administrations.
    This proposal creates a serious precedent and should be rejected, 
because:
  --The process for implementing the proposal can be done without 
        congressional involvement or approval;
  --The proposal would arbitrarily raise revenue from electric 
        customers for deficit reduction; and
  --The proposal reverses decades of rate making precedent and accepted 
        cost recovery practices by administrative fiat.
    We urge the subcommittee to reject this proposal.
                                 ______
                                 
 Prepared Statement of the Fort Peck Assiniboine and Sioux Tribes and 
                     Dry Prairie Rural Water System

    The Fort Peck Assiniboine and Sioux Tribes and Dry Prairie Rural 
Water respectfully request fiscal year 2007 appropriations in the 
amount of $29,797,000 for the Bureau of Reclamation from the 
subcommittee on Energy and Water Development. Funds will be used to 
construct critical elements of the Fort Peck Reservation Rural Water 
System, Montana, (Public Law 106-382, October 27, 2000). The amount 
requested is based on need to build critical project elements and is 
well within capability to spend the requested funds as set out below:

  FISCAL YEAR 2007 WORK PLAN--FORT PECK RESERVATION RURAL WATER SYSTEM
                          (PUBLIC LAW 106-382)
------------------------------------------------------------------------
                                                              Amount
------------------------------------------------------------------------
Fort Peck Tribes:
    Work Plan (100 Percent Federal).....................     $15,626,000
    Water Treatment Plant Pipelines:
        Poplar to Big Muddy.............................       5,021,000
        Poplar to Wolf Point............................       3,296,000
    FP OM Buildings.....................................         654,000
                                                         ---------------
      TOTAL.............................................      24,597,000
                                                         ===============
Dry Prairie:
    Work Plan (Branch Pipelines): A, Bainville and Other
     Branch Lines:
        Federal.........................................       5,246,000
        State and Local.................................       1,259,000
                                                         ---------------
      TOTAL.............................................       6,505,000
                                                         ===============
Federal.................................................      29,843,000
State and Local.........................................       1,259,000
                                                         ---------------
      Total.............................................      31,102,000
------------------------------------------------------------------------

    The sponsor Tribes and Dry Prairie greatly appreciate the previous 
appropriations from the subcommittee that have permitted building the 
Missouri River intake, the critical water source, and the first phase 
of the Culbertson to Medicine Lake Pipeline Project.
    The request is less than the average annual appropriations needed 
to complete the project in fiscal year 2012 ($34,446,000), as provided 
by the authorizing legislation, but is within our capability to use:

------------------------------------------------------------------------
                                                            Fiscal Year
                                                               2007
------------------------------------------------------------------------
Total Federal Funds Authorized (October 2005 Dollars)...    $247,267,000
Federal Funds Expended Through Fiscal Year 2006.........     $40,590,000
Percent Complete........................................           16.42
Amount Remaining........................................    $206,677,000
Average Annual Required for Fiscal Year 2012 Finish          $34,446,000
 (Public Law 106-382)...................................
Fiscal Year 2006 Amount Requested.......................     $29,797,000
Years to Complete.......................................               6
------------------------------------------------------------------------

    Note that cost indexing from last year due to inflation increased 
the cost of the project from $235 million to $247 million, an increase 
of $12 million. Increases in the level of appropriations are needed to 
outpace inflation.

                          PROPOSED ACTIVITIES

    Public Law 106-382 (October 27, 2000) authorized this project, 
which includes all of the Fort Peck Indian Reservation in Montana and 
the Dry Prairie portion of the project outside the Reservation.
Fort Peck Indian Reservation
    On the Fort Peck Indian Reservation the Tribes have used 
appropriations from previous years to construct the Missouri River raw 
water intake, a critical feature of the regional water project. The raw 
water pump station has also been constructed, and the raw water 
pipeline between the Missouri River and the water treatment plant has 
been constructed to within 2 miles of the water treatment plant. The 
sludge lagoons at the water treatment plant are currently under 
construction. All projects have bid under the engineer's estimate. The 
critical Missouri River water treatment plant will begin construction 
in spring 2006 and will use $12.600 million of funds on hand. At a cost 
of $31.0 million the project (contract and non-contract costs) will be 
constructed over a 3-year period. Fiscal year 2007 funds of $15.573 
million are needed to honor the construction contract. The remaining 
funds would be requested in fiscal year 2008.
    The request for fiscal year 2007 also provides for construction of 
pipelines from the water treatment plant toward the communities of 
Poplar (Poplar to Big Muddy) and Wolf Point (Poplar to Wolf Point). 
These are the principal core pipelines that extend east and west of the 
water treatment plant to serve the Fort Peck Indian Reservation and to 
connect to Dry Prairie facilities on the east and west boundaries of 
the Reservation. The funds for the pipeline projects are $5.025 and 
$3.299 million, respectively. The Tribes will also use $654,000 for an 
administration, operation and maintenance building. The Bureau of 
Reclamation can confirm that the use of funds proposed for fiscal year 
2007 is well within the project's capability.
    The pipeline project from the water treatment plant to Poplar will 
provide a source of water for a section of the Fort Peck Indian 
Reservation contaminated by oil drilling operations and the subject of 
EPA orders to the responsible oil company. There is urgency in 
completing the pipeline to Poplar before the advancing plume of 
contamination reaches existing community wells. The oil company will 
provide the distribution system necessary to mitigate the problems and 
the Assiniboine and Sioux Rural Water System will provide the 
interconnecting pipeline without duplicating any facilities identified 
in the Final Engineering Report.
Dry Prairie
    Dry Prairie has used previous appropriations to construct core 
pipelines and a booster pump station from the community of Culbertson 
to serve the communities of Froid and Medicine Lake. This project 
represents a significant portion of the main core pipeline for the 
eastern half of the Dry Prairie Project. Pipelines were sized to serve 
the area north of the Missouri River, south of the Canadian border and 
between the Fort Peck Indian Reservation and the North Dakota border 
(see general location map attached).
    The project relies on interim water supplies. The regional water 
treatment plant will provide finished water when pipelines are 
constructed to the interconnection point for Dry Prairie at the Big 
Muddy River. The project between Culbertson, Froid and Medicine Lake is 
in full operation and serves the last two mentioned communities and a 
small number of rural users.
    The completed system provides Dry Prairie with capability to build 
branch pipelines and connect rural areas in the south half of the east 
half of the Dry Prairie Project. Bainville and Dane Valley residents 
can be served with the existing system capacity that is now constructed 
and in operation. Fiscal year 2006 funds are being used to construct 
part of the distribution to this area.
    The request for fiscal year 2007 funds of $5,246,000, supplemented 
by a non-Federal cost share of $1,259,000, will be used to finish 
branch pipelines connecting with the Culbertson-Froid-Medicine Lake 
core pipeline. Additional funds will be available to build other branch 
lines in other areas of the project and continue bringing high quality 
water to rural users in need. The Bureau of Reclamation can confirm the 
capability to construct these pipelines based on the current status of 
design.

                        ADMINISTRATION'S SUPPORT

    The Tribes and Dry Prairie worked extremely well and closely with 
the Bureau of Reclamation prior to and following the authorization of 
this project in fiscal year 2000. The Bureau of Reclamation has heavily 
reviewed and commented on the Final Engineering Report, and all 
comments were incorporated into the report and agreement was reached on 
final presentation. OMB reviewed the Final Engineering Report prior to 
its submission to Congress in the final step of the approval process. 
The Commissioner, Regional and Area Offices of the Bureau of 
Reclamation have been consistently in full agreement with the need, 
scope, total costs, and the ability to pay analysis that supported the 
Federal and non-Federal cost shares. There have been no areas of 
disagreement or controversy in the formulation of the project.
    The Bureau of Reclamation collaborated with the Tribes and Dry 
Prairie to conduct and complete value engineering investigations of the 
Final Engineering Report (planning), the Culbertson to Medicine Lake 
pipeline (design), the Poplar to Big Muddy River pipeline (design), the 
Missouri River intake (design) and on the regional water treatment 
plant (design). Each of these considerable efforts has been directed at 
ways to save construction and future operation, maintenance and 
replacement costs as planning and design proceeded. Agreement with 
Reclamation has been reached in all value engineering sessions on steps 
to take to save Federal and non-Federal costs in the project.
    The Bureau of Reclamation conducted independent review of the final 
plans and specifications for the Missouri River raw water intake, the 
regional water treatment plant and the Culbertson to Medicine Lake 
Project. The agency participated heavily during the construction phases 
of those projects and concurred in all aspects of construction from 
bidding through the completion of construction. (The regional water 
treatment plant has not yet been constructed).
    Cooperative agreements have been developed and executed from the 
beginning phases to date between the Bureau of Reclamation and the 
Tribes and between Bureau of Reclamation and Dry Prairie. Those 
cooperative agreements carefully set out goals, standards and 
responsibilities of the parties for planning, design and construction. 
All plans and specifications are subject to levels of review by the 
Bureau of Reclamation pursuant to the cooperative agreements. The 
sponsors do not have the power to undertake activities that are not 
subject to oversight and approval by the Bureau of Reclamation. Each 
year the Tribes and Dry Prairie, in accordance with the cooperative 
agreements, develop a work plan setting out the planning, design and 
construction activities and the allocation of funding to be utilized on 
each project feature.
    Clearly, the Fort Peck Reservation Rural Water System is well 
supported by the Bureau of Reclamation. Congress authorized the project 
with a plan formulated in full cooperation and collaboration with the 
Bureau of Reclamation, and major project features are under 
construction with considerable oversight by the Agency.

                         LOCAL PROJECT SUPPORT

    The Fort Peck Tribes have supported the project since 1992 when 
they conceived it and sought means of improving the quality of life in 
the region. The planning was a logical step after successful completion 
of an historic water rights compact with the State of Montana. This 
compact was the national ``ice breaker'' that increased the level of 
confidence by other Tribes in Indian water right settlement 
initiatives. The Tribes did not seek financial compensation for the 
settlement of their water rights but expected development of meaningful 
water projects as now authorized.
    The 1999 Montana Legislature approved a funding mechanism from its 
Treasure State Endowment Program to finance the non-Federal share of 
project planning and construction. Demonstrating support of Montana for 
the project, there were only three votes against the statutory funding 
mechanism in both the full House and Senate. The 2001 through 2005 
Montana Legislatures have provided all authorizations and 
appropriations necessary for the non-Federal cost share.
    Dry Prairie support is demonstrated by a financial commitment of 
all 14 communities within the service area to participate in the 
project. Rural support is strong, with about 70 percent of area farms 
and ranches intending to participate as evidenced by their intent fees 
of $100 per household.

                   NEED FOR WATER QUALITY IMPROVEMENT

    The Fort Peck Indian Reservation was previously designated as an 
``Enterprise Community'', underscoring the level of poverty and need 
for economic development in the region. The success of economic 
development within the Reservation will be significantly enhanced by 
the availability of higher quality, safe and more ample municipal, 
rural and industrial water supplies that this regional project will 
bring to the Reservation, made more necessary by an extended drought in 
the region. Outside the Fort Peck Indian Reservation, the Dry Prairie 
area has income levels that are higher than within the Reservation but 
lower than the State average.
    The feature of this project that makes it more cost-effective than 
similar projects is its proximity to the Missouri River. The southern 
boundary of the Fort Peck Indian Reservation is formed by the Missouri 
River for a distance of more than 60 miles. Many of the towns in this 
regional project are located 2 to 3 miles from the river, including 
Nashua, Frazer, Oswego, Wolf Point, Poplar, Brockton, Culbertson, and 
Bainville. As shown on the enclosed project map, a transmission system 
outside the Fort Peck Indian Reservation will deliver water 30 to 40 
miles north of the Missouri River. Therefore, the distances from the 
Missouri River to all points in the main transmission system are 
shorter than in other projects of this nature in the Northern Plains.
                                 ______
                                 
           Prepared Statement of the Three Affiliated Tribes

    Our lands were flooded in the early 1950's, over 50 long years ago, 
with the construction of the Garrison Dam. That dam took from us over 
156,000 acres of our best and most fertile land. We lost forever the 
river bottomlands where our Tribal membership and our Tribal ancestors 
lived and prospered. In the late 1940's, the Three Affiliated Tribes 
would have been looking to construct two or three Rural Water Projects 
on Fort Berthold. With the construction of the dam and a physical 
barrier of Lake Sakakawea, we are now required to construct six or 
seven water treatment plants as well as Rural Water Distribution 
Projects to meet the needs of our Reservation. Our land is 
geographically and physically split into six separate and distinct 
areas. Many of our Tribal members still do not have access to safe and 
abundant drinking water.
    Under the Dakota Water Resources Act of 2000 (Public Law 106-554), 
Congress has charged the Secretary of the Interior with the 
responsibility to ``construct, operate, and maintain'' the Fort 
Berthold Rural Water Supply System. The Three Affiliated Tribes depends 
on funding appropriated for the purposes under this act to develop 
water supply systems on the Fort Berthold Reservation. Funding for 
tribal water construction projects has always been disproportionately 
lower than funding for other projects in the Garrison Diversion Unit. 
Over the last 30 years, Congress has appropriated well over $600 
million for the Garrison Diversion Unit and less than $30 million of 
these funds have been expended on all Indian MR&I projects combined.
    To address the Fort Berthold Reservation's water supply problems, 
the Tribes have undertaken the construction of the Fort Berthold Rural 
Water Supply System. The Fort Berthold Rural Water Supply System 
currently consists of four separate water treatment facilities and 
distribution systems with a total of 750,000 linear feet of water mains 
and the capacity to store 1,000,000 gallons of potable water. The Fort 
Berthold Rural Water Supply System currently serves 586 households and 
last year added 30 new households to the system.
    With the passage of the Dakota Water Resources Act of 2000, we have 
begun a process of reevaluation of our critical water needs and an 
analysis of actions and infrastructure we need to address those needs. 
Currently we have plans for numerous water supply and water 
distribution projects that will, when constructed in total, provide a 
safe and dependable supply of water to the Fort Berthold Indian 
Reservation. Our plan, when completed, will provide such benefits to 
all residents of the Reservation, both rural and residential residents, 
and both Indian and non-Indian alike.
    We have carefully considered the opportunities now made available 
to us. Our infrastructure projects are purposely fragmented and 
designed so that we may adapt and accommodate both small and large 
appropriation amounts and so that we can also proceed with multiple 
projects in any given year. Preliminary estimates of the costs of our 
identified projects indicate a need for over $95 million. The DWRA has 
an indexing clause, which reflects the inflation percentage of 
construction cost on MR&I Water Projects. The amount of indexing for 
Fort Berthold's component has exceeded the $34 million that is 
projected, at the end of 2008. To date, we have only received $3.805 
million in funding for these water projects. The Tribes have borrowed 
another $2.5 million towards construction of its water supply projects. 
When completed in full we anticipate installation of nearly 1,000 miles 
of pipeline, the construction of nine separate rural water reservoirs 
and tanks, and a system capacity for service to over 1,500 rural 
households. The work will also include an upgrade of our four existing 
water treatment plants and Tribal participation in the water 
infrastructure development of the various communities of the 
Reservation.
    Those projects identified in our six specific segments include the 
following:
    Four Bears Segment.--We have already installed approximately 17 
miles of pipeline and an elevated storage tank at a cost of over $2 
million. There is a need to expand the water treatment plant in this 
segment as this plant is nearing its 200 gallon-per-minute capacity. 
The total costs to resolve the water needs of this segment, and to 
assist our McKenzie County neighbors with their critical water needs, 
are estimated to be approximately $7 million.
    North Segment.--We have joined the City of New Town in their 
efforts in the construction of a new water treatment plant. Our 
commitment to New Town in this effort is costing approximately $2.5 
million. That plant has the capacity to provide water to all users of 
the segment, including growth within this segment, for the next 40 
years. Subsequent projects needed within this area include the 
construction of a rural water system which will utilize the New Town 
treatment plant. The total costs to resolve the water needs of this 
segment are estimated to be approximately $22 million. With the 
possibility of completing the negotiation with the City of New Town, 
additional appropriations will be needed to bring this water source 
into the FBRW. If sufficient water production can't be produced by the 
city, a separate water treatment plant may be needed to provide potable 
water to the North and Northeast Segment's Rural Water Lines. An 
additional $350,000 of O&M funding will be necessary to accommodate the 
new component to the FBRW System.
    Northeast Segment.--There is an immediate need for the installation 
of approximately 36 miles of pipeline and the construction of a ground 
level storage tank. The cost for this project is estimated at $2.79 
million. Subsequent projects needed within this segment will allow for 
a continuation of the water line to other rural areas of the segment 
and will allow us to furnish water to our neighbors of adjacent 
Mountrail County and the North Central Rural Water Consortium to our 
Reservation. The total costs to resolve the water needs of this 
segment, and to assist our Mountrail County neighbors with their 
critical water needs, are estimated to be $15 million.
    West Segment.--We have already replaced an existing treatment plant 
intake line. This project cost approximately $1.07 million. Subsequent 
projects needed within this segment will allow for a construction of a 
rural water system and an expansion of the existing water treatment 
plant. The water needs of this segment, and to assist our McKenzie 
County neighbors, will be addressed with this expansion. The total 
costs to resolve the water needs of this segment are estimated to be 
$23 million.
    South Segment.--There is an immediate need for the replacement an 
existing intake line, expansion of the existing water treatment plant 
and a water storage reservoir. The anticipated cost is approximately 
$3.3 million. Subsequent projects needed within this segment include 
the construction of a rural water system and further expansion of the 
existing water treatment plant. The total costs to resolve the water 
needs of this segment are estimated to be $12 million.
    East Segment.--There is an immediate need for the installation of 
approximately 48 miles of pipeline. This first effort in this segment 
is anticipated to cost approximately $1.92 million. Subsequent projects 
needed within this area will allow a continuation of the water line to 
other rural areas of the segment, and for a water treatment plant 
expansion. The total costs to resolve the water needs of this segment 
are estimated to be $16.59 million.
    As you can see, the total funding needed to accommodate the water 
supply system needs of the Three Affiliated Tribes is in excess of $95 
million.
    Over the next several years, major construction expenses for the 
Fort Berthold Rural Water Supply System are expected to peak. A minimum 
of $12.165 million is needed in fiscal year 2007 to enable the Tribes 
to construct the next productive stage of the project. The Tribes also 
require Operation, Maintenance and Replacement (``OM&R'') funding for 
calendar year 2007 of at least $2.5 million. As our water supply 
systems expand, our operation and maintenance costs increase. We ask 
that appropriations for these rising OM&R be increased in future years 
to cover these increasing costs. The Bureau of Reclamation is our 
funding agency, but they are restricted from requesting sufficient 
appropriations or budgeting sufficient amounts to cover the increasing 
cost of operating and maintaining a water system of our design. 
Currently another governmental agency (OMB) sets target budgeting 
amounts that USBR must maintain and this doesn't address the amount of 
appropriation actually needed. Congress needs to get the Office of 
Management and Budget to make adjustments and to meet the TRUST 
RESPONSIBILITY OF THE U.S. GOVERNMENT.
    Also, the Fort Berthold Rural Water Program currently provides 
indirect costs to the Three Affiliated Tribes through its Construction 
and OM&R program funds. The Bureau of Reclamation has PL638 
capabilities with Indian Tribes. However, unlike the Bureau of Indian 
Affairs, Reclamation does not have an indirect cost pool which may be 
utilized by Tribes. The current indirect cost funds are taken from the 
direct OM&R line items, which hinders the program. In order to 
alleviate this, an indirect cost pool should be implemented for USBR 
for its contracts with Tribes.
    Monies which may be provided for our immediate needs only allow us 
to start the infrastructure development process in each segment. We 
need to establish a process of continued funding in subsequent years to 
complete the facilities of each segment in a timely fashion. If we 
proceed at the present funding rate, it will take us years to complete 
our projects and construction costs will undoubtedly increase beyond 
increases in funding. After enduring a wait of 50 years to even begin 
this process, it is not reasonable to continue to delay the needs 
addressed by the Act by continuing to fund these projects at 
unreasonable levels.
    We request a favorable review of our request for $12.165 million 
which will allow a start of construction of the immediately needed 
facilities within each segment. We believe that, given adequate funding 
levels in the $15 million to $20 million per year range, we could 
substantially complete all infrastructure projects within the six 
Reservation segments in a 4- to 6-year time frame.
                                 ______
                                 
    Prepared Statement of the Oglala Sioux Rural Water Supply System

          MNI WICONI PROJECT (PUBLIC LAW 100-516, AS AMENDED)
              FISCAL YEAR 2007 CONSTRUCTION BUDGET REQUEST

    The Mni Wiconi Project beneficiaries (as listed below) respectfully 
request appropriations of $43.032 million for construction as shown 
below:

------------------------------------------------------------------------
                                                              Amount
------------------------------------------------------------------------
Oglala Sioux Rural Water Supply System:
    Core................................................      $1,492,000
    Pine Ridge (Distribution)...........................      21,405,000
West River/Lyman-Jones Rural Water System...............      10,534,000
Rosebud Rural Water System..............................       9,601,000
                                                         ---------------
      Total.............................................      43,032,000
------------------------------------------------------------------------

and $9.256 million for operation, maintenance and replacement.
    Note that the Lower Brule project will complete construction in 
fiscal year 2006 and that no funds are requested for fiscal year 2007.
    The project sponsors were provided by the 107th Congress (Public 
Law 107-367) with authority to finish in fiscal year 2008. Three years 
are needed to conclude our project at the rate requested with 
completion in fiscal year 2009 (see table below). Completion of the 
project is achievable in fiscal year 2009 if funded at the rate 
requested.

------------------------------------------------------------------------
                                                              Amount
------------------------------------------------------------------------
Total Federal Funding (Oct 2005 Dollars)................    $439,927,980
Estimated Federal Spent Through Fiscal Year 2006........    $310,832,465
Percent Spent Through Fiscal Year 2006..................           70.66
Amount Remaining........................................    $129,095,515
Completion Fiscal Year (Statutory Fiscal Year 2008;                2,009
 Public Law 107-367)....................................
Years to Complete.......................................               3
Average Annual Required for Finish......................     $43,032,000
------------------------------------------------------------------------

    The administration's fiscal year 2007 budget is $22.914 for 
construction and $9.256 for OMR. The project is now over 70 percent 
complete and can be completed in the next 3 years, but the fiscal year 
2007 construction budget is highly inadequate and significantly less 
than the $31 million for construction available to the project before 
the PART exercise on rural water projects in 2003. The project sponsors 
strongly urge that the subcommittee appropriate funds to complete the 
Mni Wiconi Project over the next 3 years. The needs and merits of this 
project are considerable as described in section 2. The testimony is 
supplemented by sections 3 through 8.

                      UNIQUE NEEDS OF THIS PROJECT

    This project covers much of the area of western South Dakota that 
is the Great Sioux Reservation established by the Treaty of 1868. Since 
the separation of the Reservation in 1889 into smaller more isolated 
reservations, including Pine Ridge, Rosebud and Lower Brule, relations 
between the Indian population and the non-Indian settlers on Great 
Sioux Reservation lands have been improving in successive generations. 
The Mni Wiconi Project is perhaps the most significant opportunity in 
more than a century to bring the diverse cultures of the two societies 
together for a common good. Much progress has been made due to the good 
faith and genuine efforts of both the Indian and non-Indian sponsors. 
The project is an historic basis for renewed hope and dignity among the 
Indian people. It is a basis for substantive improvement in 
relationships.
    Each year our testimony addresses the fact that the project 
beneficiaries, particularly the three Indian Reservations, have the 
lowest income levels in the Nation. The health risks to our people from 
drinking unsafe water are compounded by reductions in health programs. 
We respectfully submit that our project is unique and that no other 
project in the Nation has greater human needs. Poverty in our service 
areas is consistently deeper than elsewhere in the Nation. Health 
effects of water borne diseases are consistently more prevalent than 
elsewhere in the Nation, due in part to: (1) lack of adequate water in 
the home; and, (2) poor water quality where water is available. Higher 
incidences of impetigo, gastroenteritis, shigellosis, scabies and 
hepatitis-A are well documented on the Indian reservations of the Mni 
Wiconi Project area. Progress has been made in the reducing the 
occurrence of these diseases.
    At the beginning of the third millennium one cannot find a region 
in our Nation in which social and economic conditions are as 
deplorable. These circumstances are summarized in Table 1.\1\ Mni 
Wiconi builds the dignity of many, not only through improvement of 
drinking water, but also through direct employment and increased 
earnings during planning, construction, operation and maintenance and 
from economic enterprises supplied with project water. We urge the 
subcommittee to address the need for creating jobs and improving the 
quality of life on the Pine Ridge, Lower Brule and Rosebud Indian 
reservations of the project area.
---------------------------------------------------------------------------
    \1\ Table 1 was based on census data that understates population 
and poverty on the reservations and overstates income when compared 
with Interior sources. The purpose of Table 1 is to compare statistics 
from a single source between decades, namely the United States Census, 
but use of the data does not imply acceptance of census statistics by 
the Tribes.

                          TABLE 1.--PROFILE OF SELECTED ECONOMIC CHARACTERISTICS: 2000
----------------------------------------------------------------------------------------------------------------
                                                                          Income
                                                          Change  ----------------------  Families
       Indian Reservation/State              2000       From 1990     Per       Median     Below    Unemployment
                                          Population    (Percent)    Capita   Household   Poverty     (Percent)
                                                                   (Dollars)  (Dollars)  (Percent)
----------------------------------------------------------------------------------------------------------------
Pine Ridge Indian Reservation.........          15,521      27.07      6,143     20,569       46.3         16.9
Rosebud Indian Reservation............          10,469       7.97      7,279     19,046       45.9         20.1
Lower Brule Indian Reservation........           1,353      20.48      7,020     21,146       45.3         28.1
State of South Dakota.................         754,844       8.45     17,562     35,282        9.3          3.0
Nation................................     281,421,906      13.15     21,587     41,994        9.2          3.7
----------------------------------------------------------------------------------------------------------------

    Employment and earnings among the Indian people of the project area 
are expected to positively impact the high costs of health-care borne 
by the United States and the Tribes. Our data suggest clear 
relationships between income levels and Federal costs for heart 
disease, cancer and diabetes. During the life of the Mni Wiconi 
Project, mortality rates among the Indian people in the project area 
for the three diseases mentioned will cost the United States and the 
Tribes more than $1 billion beyond the level incurred for these 
diseases among comparable populations in the non-Indian community 
within the project area. While this project alone will not raise income 
levels to a point where the excessive rates of heart disease, cancer 
and diabetes are significantly diminished, the employment and earnings 
stemming from the project will, nevertheless, reduce mortality rates 
and costs of these diseases. Please note that between 1990 and 2000 per 
capita income on Pine Ridge increased from $3,591 to $6,143, and median 
household income increased from $11,260 to $20,569, due in large part 
to this project, albeit not sufficient to bring a larger percentage of 
families out of poverty (Table 1).
    Financial support for the Indian membership has already been 
subjected to drastic cuts in funding programs through the Indian Health 
Service and the Bureau of Indian Affairs. This project is a source of 
strong hope that helps off-set the loss of employment and income in 
other programs and provide for an improvement in health and welfare. 
Tribal leaders have seen that Welfare Reform legislation and other 
budget cuts nationwide have created a crisis for tribal government 
because tribal members have moved back to the reservations in order to 
survive.
    The Mni Wiconi Project Act provides that the United States will 
work with us:

    ``. . . the United States has a trust responsibility to ensure that 
adequate and safe water supplies are available to meet the economic, 
environmental, water supply and public health needs of the Pine Ridge, 
Rosebud and Lower Brule Indian Reservations . . . ''

    Indian support for this project has not come easily because the 
historical experience of broken commitments to the Indian people by the 
Federal Government is difficult to overcome. The argument was that 
there is no reason to trust and that the Sioux Tribes are being used to 
build the non-Indian segments of the project and the Indian segments 
would linger to completion. These arguments have been overcome by 
better planning, an amended authorization and hard fought agreements 
among the parties. The subcommittee is respectfully requested to take 
the steps necessary to complete the critical elements of the project 
proposed for fiscal year 2007.

                         SUPPLEMENTAL TESTIMONY
 OSRWSS CORE PIPELINE REACHES PINE RIDGE INDIAN RESERVATION IN FISCAL 
                               YEAR 2006

    The Pine Ridge Indian Reservation and parts of West River/Lyman-
Jones remain without points of interconnection to the OSRWSS core. The 
fiscal year 2006 funding level will complete the OSRWSS Kadoka to White 
River pipeline to the northeast corner of the Pine Ridge Indian 
Reservation where, in combination with the western part of West River/
Lyman-Jones, the remaining 50 percent of the design population resides.
    OSRWSS will use $1,492,000 in fiscal year 2007 funds to begin 
construction of the pipeline link between the OSRWSS North core and 
South core. When completed, this essential pipeline will permit the 
delivery of water to the Pine Ridge Indian Reservation and parts of 
West River/Lyman Jones by alternative pipeline routes and will finalize 
the strategy in the Final Engineering Report to provide reliability in 
the delivery of a safe and adequate water supply.
    Oglala Sioux Tribe supports the funding request of West River/Lyman 
Jones for fiscal year 2007, which focuses on building the OSRWSS North 
Core westerly toward Hayes through the West River/Lyman Jones service 
area. The intent is to complete the OSRWSS North Core and all other 
OSRWSS core facilities in fiscal year 2008. West River/Lyman Jones is 
acting as the Tribe's contractor on the OSRWSS North Core.
    Nearly half of the Mni Wiconi design population is located on the 
Pine Ridge Indian Reservation. The fiscal year 2006 work plan and the 
fiscal year 2007 funding request will make major advances in the 
completion of the OSRWSS core. Fiscal year 2008 will be the final year 
to complete the core facilities. Earlier stages of the OSRWSS core 
facilities have served the Lower Brule Indian Reservation, Rosebud 
Indian Reservation and eastern regions of West River/Lyman Jones.
    Funding for OSRWSS core and distribution facilities is necessary to 
address health needs and bring economic development to the Pine Ridge 
Indian Reservation, designated as one of five national rural 
empowerment zones in the late 1990's. The designation serves to 
underscore the level of need. Economic development is largely dependent 
on the timely completion of a water system, which depends on 
appropriations for this project.
    Finally, the subcommittee is respectfully requested to take notice 
of the fact that fiscal year 2007 will significantly advance 
construction of facilities that continue our progress toward the end of 
the project. The subcommittee's past support has brought the project to 
the point that the end can be seen in fiscal year 2009.
    The following sections describe the construction activity in each 
of the rural water systems.

          OGLALA SIOUX RURAL WATER SUPPLY SYSTEM--DISTRIBUTION

    With the conclusion of projects completed 5 years ago (2002), the 
Oglala Sioux Tribe finished all facilities that could be supported from 
local groundwater. The Tribe, representing nearly 50 percent of the 
project population will rely on the OSRWSS core to convey Missouri 
River water to and throughout the Reservation as a primary water source 
to complement the groundwater source. Much pipeline has been 
constructed, primarily between Kyle, Porcupine, Manderson and Red Shirt 
and between Pine Ridge Village and the communities of Oglala and Slim 
Buttes.
    Of critical importance to the Oglala Sioux Tribe is the 
continuation of the main transmission system from the northeast corner 
(Highway 73/44 junction) of the Reservation to Kyle in the central part 
of the Reservation. This transmission line construction has been 
stalled due to decline in the appropriation levels for Mni Wiconi after 
fiscal year 2003. The transmission line is needed to interconnect the 
OSRWSS core system with the distribution system described in the 
previous section. Groundwater sources with high arsenic and 
radionuclides need replacement at the earliest possible time to reduce 
exposure of the population relying on those sources. With completion of 
the transmission pipeline to Kyle, Missouri River water can be 
delivered to the existing OSRWSS distribution system constructed 
between 1994 and 2002. The most populous portions of the Reservation 
can then be served by the Missouri River water treatment plant for the 
first time.
    This critical segment of the project can be completed to the 
halfway point in fiscal year 2007. It will require funds in fiscal year 
2007 and fiscal year 2008 to complete. The component is urgently needed 
for the OSRWSS core system to be utilized on the Pine Ridge Indian 
Reservation and to provide a safe and adequate replacement supply for 
contaminated groundwater sources.

        WEST RIVER/LYMAN-JONES RURAL WATER SYSTEM--DISTRIBUTION

    The requested appropriation is part of a 3-year effort directed to 
serving WR/LJ members between the Mni Wiconi water treatment plant at 
Ft. Pierre and the City of Philip, a distance of approximately 70 
pipeline miles. Funds received in fiscal year 2007 will be used for 
construction of the North Core pipeline and distribution lines to 
service areas adjacent to the core pipeline.
    The North Core pipeline serves as the primary water source for half 
of the WR/LJ membership, most of which is now served by water sources 
that do not meet SDWA standards or by interim sources of very limited 
capacity and reliability. The North Core pipeline additionally provides 
a limited capacity alternate source to the South Core pipeline serving 
the Oglala Sioux Tribe.
    Distribution pipelines in the Four Corners to Philip Junction 
service area meets the domestic and livestock needs of the rural area 
and the municipal needs of the Town of Midland. Recent membership 
surveys from that area indicate that most of the residents haul their 
domestic water and half of the ranchers also haul water for their 
livestock. This area is in desperate need of a reliable supply of 
quality water.

            ROSEBUD RURAL WATER SYSTEM (SICANGU MNI WICONI)

    As in past years, Rosebud's work plan focuses on bringing high 
quality water to more people and improving critical infrastructure on 
the Rosebud Reservation. The Tribe accomplishes this through the wise 
use of project funds and working with other agencies and entities to 
obtain the maximum value from available funds.
    The East Todd project provides quality water to an area of Todd 
County that is suffering from increasing nitrate concentrations in the 
limited groundwater available in the area. This project was initiated 
in 2006 and will be completed in 2007. This project includes more miles 
of pipeline than any other in the Rosebud system and by bidding it as 
one project the unit costs for pipelines are reduced.
    The Old Rosebud Improvements are being designed in 2006 and will be 
constructed in 2007. This project focuses on the replacement of older 
corroded metallic pipelines and undersized pipelines. The replacement 
pipelines will be able to meet critical demands in the center of 
government for the Rosebud Sioux Tribe. The timing of construction of 
this project is being coordinated with the Bureau of Indian Affairs. 
The Bureau of Indian Affairs is funding the replacement of the older 
paved streets in the community and construction of pipelines will 
coincide with street construction. This cooperative approach reduces 
the cost of pipeline construction because the cost of pavement 
demolition and replacement is eliminated as a Mni Wiconi Project cost. 
The cooperative approach also protects the investment in the streets 
and pipes because the new pavement will not have to be disturbed for 
the replacement or repair of the water mains.
    The Todd County Reservoirs project provides additional storage for 
the Todd County portion of the Sicangu Mni Wiconi. Two similar 
reservoirs are being combined into one bidding package as a means of 
reducing the cost of the work. The eastern reservoir provides storage 
for the East Todd project area and the other will replace the corroded 
steel reservoir that supplies the town of Mission. The replacement of 
the Mission reservoir is integral to the Mission Area Improvements.
    The Mission Area Improvements address all facets of this older 
municipal system that was transferred to the United States in trust for 
the Tribe in 2002. The improvements address the deficiencies identified 
in the transfer agreement and other aspects of the system. For example, 
one of the low-yielding wells will be replaced and chlorination and 
storage will be provided at the wellfield rather than 7 miles further 
north near the town of Mission. This will provide treated water to the 
residents along the pipeline route. The pipeline route is adjacent to 
U.S. Highway 83 and is in one of the more rapidly growing areas on the 
reservation.
    The Two Strike North project fills in the gap north of Two Strike 
and south of Rosebud where there is currently no service. Because of 
proximity to two of the larger reservation communities, this is also a 
rapidly expanding area.
    The Service Lines and Connections project is an ongoing effort to 
provide existing and new homes with high-quality water from the Sicangu 
Mni Wiconi. It also provides for livestock water connections as well. 
This work is done by tribal crews and provides direct employment 
benefits as well as quality water to reservation residents. In addition 
to the construction work, the tribal crew is now utilizing global 
positioning system (GPS) equipment in the layout of the facilities and 
preparation of the record drawings. This skill can be used by both the 
individual tribal members and the Tribe as a whole in other endeavors 
after the construction of Mni Wiconi is completed. This is just one 
more example of the Tribe obtaining additional value from Mni Wiconi 
Project funds.

              LOWER BRULE RURAL WATER SYSTEM--DISTRIBUTION

    The Lower Brule Rural Water System (LBRWS) has gained the support 
of the other sponsors to complete its share of the project with funds 
appropriated in the fiscal year 2006 budget. The vast majority of the 
funds necessary to complete the LBRWS were provided in the fiscal year 
2005 budget. LBRWS will only be receiving $440,000 from the fiscal year 
2006 budget to fully complete its system. The result of completing the 
funding for the LBRWS is a savings of $1.5 million to the project as a 
whole.
    With the funds received in fiscal year 2006, LBRWS will complete 
the replacement of some water lines that were installed previous to 
this project and that have become undersized.
    The LBRWS would like to take this opportunity to thank the other 
sponsors for their cooperation and support in completing the funding of 
the LBRWS in this manner and Congress, especially the South Dakota 
delegation past and present, for their continued support of this truly 
needed project. It should be noted, however, that this will not end 
LBRWS's involvement in the project. LBRWS will continue to work with 
and support the other sponsors in seeing the entire project come to 
fruition.

             OPERATION, MAINTENANCE AND REPLACEMENT BUDGET

    The sponsors have and will continue to work with Reclamation to 
ensure that their budgets are adequate to properly operate, maintain 
and replace (OMR) respective portions of the overall system. The 
sponsors will also continue to manage OMR expenses in a manner ensuring 
that the limited funds can best be balanced between construction and 
OMR.
    The project has been treating and delivering more water over the 
last 3 years from the OSRWSS Water Treatment Plant near Fort Pierre. 
Completion of significant core and distribution pipelines has resulted 
in more deliveries to more communities and rural users. The need for 
sufficient funds to properly operate and maintain the functioning 
system throughout the project has grown as the project has now reached 
71 percent completion. The OMR budget must continue to be adequate to 
keep pace with the system that is placed in operation.
    The Mni Wiconi Project tribal beneficiaries (as listed below) 
respectfully request appropriations for OMR fiscal year 2006 in the 
amount of $9,256,000 as requested in the fiscal year 2007 budget:

------------------------------------------------------------------------
                                                              Amount
------------------------------------------------------------------------
Oglala Sioux Rural Water Supply System:
    Water Treatment Plant and Core Pipeline.............      $2,073,000
    Pine Ridge Distribution.............................       2,400,000
Rosebud Rural Water System..............................       2,200,000
Lower Brule Rural Water System..........................       1,400,000
Reclamation Oversight...................................       1,183,000
                                                         ---------------
      Total.............................................       9,256,000
------------------------------------------------------------------------

    Be assured that water conservation is an integral part of the OMR 
of the project. Water conservation not only provides immediate savings 
from reduced water use and the need for extra production, it also 
extends the useful life and capacity of the system.
                                 ______
                                 
       Prepared Statement of the Western Coalition of Arid States

  FISCAL YEAR 2007 BUREAU OF RECLAMATION & DEPARTMENT OF ENERGY BUDGET

    The Western Coalition of Arid States (WESTCAS) is writing in 
support of the following multi-State Federal programs, in priority 
order, under the Bureau of Reclamation and Department of Energy's 
budgets that we believe are deserving of your subcommittee's support 
during the fiscal year 2007 budget process:
  --Colorado River Front Work and Levee System, Water Management 
        Reservoir Near the All American Canal Subactivity--$37.4 
        million;
  --Yuma Area Projects, Excavating Sediments Behind Laguna Dam--$3.5 
        million;
  --Water Reclamation/Reuse Title XVI--$30 million;
  --Water 2025--$14.5 million;
  --Science and Technology--$8.5 million;
  --Atlas Mill Tailings Removal in Moab, Utah--$22.8 million.
    WESTCAS is a coalition of Western towns and municipalities, water 
and wastewater agencies, irrigation districts, Native American nations, 
companies with water and wastewater concerns and professionals in the 
fields of engineering, the environmental sciences, and natural 
resources law and policy. WESTCAS was formed in 1992 by Western water 
and wastewater agencies concerned with the quality and management of 
water resources in the Arid West. A grass roots organization, WESTCAS 
is dedicated to encouraging the development of water programs and 
regulations which assure adequate supplies of high quality water for 
those living in the arid regions while protecting the environment.

               COLORADO RIVER FRONT WORK AND LEVEE SYSTEM

Water Management Reservoir near the All-American Canal Subactivity
    Reclamation is completing a multi-phased study quantifying the need 
and options for regulatory storage to improve Colorado River management 
downstream of Lake Mead.
    Reclamation has concluded that locating up to a 10,000 acre-foot 
capacity water management reservoir near the All-American Canal near 
Drop 2, 15 miles east of the Imperial Valley would significantly 
improve the flexibility of the Lower Colorado System. The reservoir's 
location would be of great benefit to the Colorado River Basin States. 
Benefits that include:
  --conservation of reservoir system storage;
  --improving river regulation and water delivery scheduling;
  --providing opportunities for water conservation;
  --storage and conjunctive use programs;
  --and setting the stage for new cooperative water supply and water 
        quality management endeavors with Mexico.
    Reclamation funding of $37.4 million is needed in fiscal year 2007 
in order to obtain permits, acquire land, clear and prepare the site, 
design the reservoir and its inlet and outlet canals, and procure 
materials for construction.
    This is one of four distinct subactivities to be undertaken in 2007 
under the Water and Energy Management and Development Activity of the 
Colorado River Front Work and Levee System Project.
    The President's fiscal year 2007 request for this activity is $5.5 
million. WESTCAS requests that Reclamation's funding for the Water 
Management Reservoir near the All American Canal subactivity are 
augmented so as to provide $37.4 million for this work to progress 
sufficiently.
Yuma Area Projects, Excavating Sediments Behind Laguna Dam
    While work on a reservoir near the All-American Canal proceeds, 
there is an immediate need to restore limited Colorado River regulatory 
storage capacity downstream of Parker Dam. This can be partly 
accomplished by excavating sediments that have accumulated behind 
Laguna Dam since its completion in 1909. Reclamation funding of $3.5 
million is needed in fiscal year 2007 to complete environmental 
compliance and procurement and begin dredging behind Laguna Dam.
    This subactivity under the Yuma Area Projects, Facilities 
Maintenance and Rehabilitation activity would restore 1,100 acre-feet 
of storage behind Laguna Dam. Not only would this enhance the ability 
to regulate flows arriving at Imperial Dam, it would capture and re-
regulate the water periodically released for the proper operation of 
Imperial Dam, benefiting both the Colorado River Basin States and 
Mexico.
    WESTCAS requests that Reclamation's funding for sediment control be 
augmented so as to provide $3.5 million for the work to excavate 
sediments from behind Laguna Dam.
    The construction of a new regulating reservoir, and dredging 
sediments behind an existing dam will critically improve water delivery 
efficiencies and prevent the loss of up to 200,000 acre-feet per year 
from Colorado River reservoir storage.

                   WATER RECLAMATION/REUSE TITLE XVI

    Projects funded under Title XVI of the Reclamation Projects 
Authorization and Adjustment Act of 1992 (Public Law 102-575) and the 
Reclamation Recycling and Water Conservation Act of 1996 (Public Law 
104-266) will greatly enhance the Arid West's water supply reliability 
and the environment through effective water recycling and recovery of 
contaminated groundwater. Funding in the fiscal year 2007 budget for 
previously unfunded projects, as well as the continued support for 
previously funded projects, is essential to realizing regional water 
supply reliability. The Bureau of Reclamation's budget request for 
research into the technologies and science of water recycling is 
another vital step toward making water reuse a viable alternative for 
communities faced with limited water supplies. WESTCAS urges your full 
support for increasing the Title XVI funding to $30 million.

                               WATER 2025

    Implementation of Water 2025 includes water system optimization 
reviews that will assess the potential for water management 
improvements, financial assistance for irrigation and water districts 
in creating water markets and facilitating more efficient use of 
existing water supplies through water conservation, efficiency, and 
marketing projects. WESTCAS recommends your support of a Reclamation 
fiscal year 2007 budget that includes $14.5 million in funding for the 
Water 2025 Program.

                         SCIENCE AND TECHNOLOGY

    As the ``Voice of Water Quality in the Arid West,'' WESTCAS 
advocates wise use of water resources by promoting scientifically-sound 
laws, regulations, funding, and policies that protect public health and 
the environment in the arid West. WESTCAS is dedicated to the use of 
sound science in the promulgation of rules and regulations, and 
supports funding for water quality research, in particular. The Science 
and Technology Program uses funds for the development of new solutions 
and technologies that respond to the Bureau's mission-related needs in 
this area. WESTCAS strongly recommends your support of a Reclamation 
fiscal year 2007 budget that includes $8,500,000 in funding for the 
Science and Technology Program.

                      ATLAS MINE TAILINGS CLEANUP

    In cooperation with the Utah State Environmental Quality 
Department, WESTCAS supports the President's budget request of $22.8 
million in fiscal year 2007 for the purposes of moving forward with the 
clean-up of uranium mine tailings at the Atlas Site in Moab, Utah. 
WESTCAS supports the Governor of Utah's position that these mine 
tailings must be removed from their dangerously close proximity to the 
Colorado River and advocates removal as the only acceptable solution to 
this issue.
    Thank you for considering our request.
                                 ______
                                 

                          DEPARTMENT OF ENERGY

Prepared Statement of the Bureau of Economic Geology, The University of 
                            Texas at Austin

    This testimony addresses: (1) the fiscal year 2007 Energy and Water 
Development Appropriations bill regarding funding for oil and natural 
gas R&D and (2) the Domestic Energy Production through Offshore 
Exploration and Equitable Treatment of State Holdings Act of 2006 
(proposed by Representative Jindal as H.R. 4761).
    The bottom line: Eliminating Federal investment in oil and gas R&D 
and mining programs is destroying the ability of U.S. universities to 
train science and engineering students in energy- and mining-related 
fields and significantly damaging independent oil and natural gas 
producers, who are responsible for 90 percent of the wells drilled in 
the United States. Contrary to a few decades ago, today, in terms of 
U.S. oil and natural gas R&D investment, the major international oil 
companies play a very limited role, do not benefit greatly from Federal 
oil and gas R&D, and should therefore have limited-to-no voice in U.S. 
R&D policy. The Office of Management and Budget does not appear to 
understand these realities. The slow erosion of the already paltry oil 
and gas R&D budget creates an instability that is destructive to the 
program, and ultimately harmful to the energy future of the United 
States. Congress must act to halt the annual OMB proposal to eliminate 
Federal oil and gas R&D.
    Budget cuts to the U.S. Department of Energy's Fossil Energy 
Research and Development program have severely limited the amount of 
research being conducted to promote a smooth transition to a natural 
gas, cleaner energy economy. To get to tomorrow's energy future, we 
must meet today's energy demand. Ironically, that means greater 
investment in oil, natural gas, and coal, which make up more than 85 
percent of U.S. energy consumption, with oil and natural gas 
representing 60 percent, so that the bridge to the future is stable.
    There is an overwhelming consensus that oil and natural gas will 
continue to dominate the Nation's energy mix for decades to come. No 
matter how attractive the potential of alternative energy sources may 
appear today, none is seen as a viable alternative to meet the broad 
needs of American consumers before the midpoint of the century. Fossil 
fuels, led by oil and gas, will continue to account for the vast bulk 
of U.S. energy consumption for the near future.
    DOE's latest forecast projects a 35 percent increase in U.S. energy 
demand to 2025. Fossil energy's share of that demand is expected to be 
stable or even increase slightly. Oil and natural gas are predicted to 
gain market share in that time, and DOE just ratcheted up its forecast 
for oil and gas prices in that period.
    The gap between domestic conventional oil supply and demand will 
persist. In 2025, net imports of crude oil and refined products are 
forecast to reach 68 percent of U.S. petroleum consumption. Natural gas 
is following the same trend, with natural gas imports forecast to rise 
to 30 percent, up from 16 percent. In addition, America's trade deficit 
is at a record high, largely owing to soaring oil imports.
    The easy (conventional) oil and gas are largely discovered. The 
future demand must be met by more complex and unconventional resources. 
Only research can bring the advances needed in technology to achieve 
the increased efficiency that makes yesterday's untapped resources 
economical to produce today. Yet, despite ever-increasing demands on 
energy supply, both domestically and globally, the number of trained 
scientists and engineers specializing in energy-related fields 
continues to decline. This is not true of our friends in the Far East, 
where enrollments in science and engineering programs continue to 
increase, and dwarf those in the United States.
    Besides the crisis of diminishing research and development (R&D) 
capability and a declining workforce to address growing energy and 
talent needs, coastal States disproportionately and inequitably bear 
the cost of maintaining an infrastructure to develop energy resources 
without replenishment of funds.
    H.R. 4761 would provide incentive for coastal States to strengthen 
educational programs that will train the next generation of scientists 
and engineers entrusted with our national energy production needs. At 
the same time, it will promote environmental accountability and 
restoration at the State level, where the benefits are greatest--right 
in the States' own ``backyard.'' Renewed investment in energy R&D will 
stimulate a response to the call to discover more economically 
efficient means to supply our Nation's energy needs, both now and in 
the future.
    The revenues returned to the States involved in oil shale and tar 
sands production through H.R. 4761 would promote the development of the 
infrastructure needed to realize this significant component of our 
unconventional natural gas resources. The United States has the 
opportunity to tap into this major resource that has not yet been 
globally exploited. Potential resources include such ``exotic'' sources 
as very deep gas (15,000 to 30,000 feet), natural gas below salt 
formations, natural gas disseminated in saltwater brines, and methane 
hydrates.
    The United States has less than a tenth of Saudi Arabia's 240 
billion barrels of estimated proved oil reserves, but it holds the bulk 
of the world's oil shale resource--at more than 2 trillion barrels--and 
its tar sands resource is pegged at more than 76 billion barrels.
    Natural gas resources traditionally thought of as 
``unconventional'' now account for the fastest growing segment of our 
natural gas supply: coalbed natural gas (CBNG), low-permeability 
(``tight'') formations, and deep gas. In addition, the U.S. Geological 
Survey has estimated that deposits of methane hydrates probably hold 
200,000 trillion cubic feet (Tcf) of natural gas in place within the 
U.S. Exclusive Economic Zone alone. Admittedly, this estimate is poorly 
constrained, but even if it were two orders of magnitude too high, it 
would still represent nearly a 100-year U.S. supply. Although economic 
recoverability of these vast deepwater accumulations has not yet been 
demonstrated, technical recoverability has been established through 
Arctic field tests. As with shale gas, coalbed methane, and tight gas, 
economic production of methane hydrates is perhaps only a matter of 
significant investment and new talent.
    The key to realizing the potential of these resources is 
technological innovation. Despite today's high oil and gas prices, 
America's private sector, largely composed of smaller to mid-sized 
independent producers, is ill equipped to undertake the R&D needed to 
yield such innovations. The oil price collapses of the early 1980's and 
late 1990's decimated the research departments of the major U.S. oil 
companies. Small, independent producers (average company size: 12 
employees) drill almost 90 percent of the wells in the United States 
and produce 60 percent of the Nation's natural gas and 40 percent of 
its oil. Yet these small companies have virtually no R&D capabilities.
    The Federal Government has an important role to play in spurring 
the advanced technologies needed to recover domestic resources. 
Developing these new technologies for domestic use will entail risky, 
long-term R&D that the private sector has not undertaken on its own.
    The Federal Government has already made a huge impact on U.S. oil 
and gas technology. Game-changing technology initiatives--such as 
carbon dioxide enhanced oil recovery (CO2 EOR, which also 
provides an opportunity for CO2 sequestration), CBNG, and 
tight gas--have emerged from DOE-sponsored oil and gas research 
programs. New technology paradigms, such as the Microhole and Deep Trek 
initiatives, are on the brink of commercialization and widespread 
acceptance by America's oil and gas industry.
    At the same time, DOE's Oil and Natural Gas Environmental Solutions 
program offers an opportunity to access and recover, in an 
environmentally responsible manner, the 320 Tcf of gas and 22.2 billion 
barrels of oil that underlie Federal lands. Here, DOE serves a critical 
role as the ``honest broker'' in reconciling the Nation's conflicting 
but equally important energy and environmental needs.
    The costs of not investing in America's energy future are great. 
Lack of Federal support of oil and natural gas R&D could have several 
negative effects:
  --Compromise ongoing efforts to ensure the sustainability and 
        reliability of the Nation's energy infrastructure.
  --Contribute to the trends of ever-rising energy imports and 
        persistently high oil and gas prices.
  --Cost the U.S. Treasury hundreds of billions of dollars in foregone 
        royalties, lease payments, taxes, and related economic ripple 
        effects.
    Another problem vital to national security is maintaining an 
adequate supply of mineral resources and trained professionals to find 
and develop these resources. In a recent article investigating the 
shortage of mining engineers, Peter Knights found that the supply of 
mining engineers from five countries that have a strong mining 
presence, the United States among them, decreased 25 percent from 2000 
to 2002. Moreover, when commodity prices are high and demand peaks, 
competition for this scare talent likewise peaks. During down cycles, 
graduates tend to move to other industry sectors, further exacerbating 
the problem. Knights found further that while university mining 
programs in the United States are being cut, enrollments in existing 
programs are declining.
    A study of active, dormant, and recently closed programs related to 
economic geology in U.S. higher education institutions shows 7 programs 
closed within the last 5 years, leaving only 39 active institutions and 
22 ``dormant'' institutions. Even many of the active institutions were 
found to lack funding to focus research on areas related to mineral 
resources. If programs at top-ranked schools like Stanford and Harvard 
are closing, and ``active'' programs are compromised by funding 
shortages, how will the United States populate a trained workforce to 
meet future needs?
    A task force formed in 2004 by the Society for Mining, Metallurgy, 
and Exploration (SME)--an international professional society of more 
than 11,500 members from the minerals industry in nearly 100 
countries--has focused attention on the critical issue of the shortage 
of mining engineers. Preliminary findings are that U.S. enrollment in 
mining engineering programs may need to be tripled to meet expected 
demand. Retiring faculty are creating another gap in the supply of 
trained professionals. SME estimates that as much as $20 million per 
year of additional funds will be needed to sustain educational programs 
to meet the U.S. demand for mining engineers.
    Funds from H.R. 4761 channeled into a Federal Energy and Mineral 
Resources Professional Development Fund would help sustain mining and 
petroleum schools and encourage growth of this important field.
    The American Geological Institute (AGI), which has tracked 
enrollments in the geosciences since 1952, in its 2001 Report on the 
Status of U.S. Academic Geoscience Departments (http://www.agiweb.org/
career/rsad2001.pdf) showed a 66.8 percent decline in geoscience 
enrollments from 1983 to 2000. AGI attributed the peak enrollment 
levels from 1965 to 1983 to growth in the petroleum sector.
    But funding in support of research declined in all categories--
private foundations, State, industry, other, and Federal--from 1999 to 
2001. During that same period, AGI found the percentages of funding 
support also changed. More than 70 percent of funding came from Federal 
sources, which declined in total dollar amounts by more than 50 percent 
in that short time. That is, greater dependence on Federal funds 
accompanied drastically reduced research budget support. As in the 
mining industry, AGI also found an aging workforce in the geosciences 
that is not being replenished by new talent to meet anticipated needs.
    Clearly, it is in the best interests of the United States for its 
institutions of higher education to have support and incentive to grow 
their programs to train geoscience and engineering professionals to 
sustain the supply of energy and mineral resources necessary to 
maintain a healthy U.S. economy.
    Terminating the DOE's natural gas and oil research programs could 
deal a crippling blow to America's energy future. Today marks an 
unprecedented opportunity to reverse that trend. America has massive 
untapped hydrocarbon resources, whose ultimate combined energy 
potential outstrips that of any other country. And we are on the cusp 
of the technological innovations needed to realize that untapped 
potential.
    America is the birthplace of the oil and gas industry and has long 
been the leader in oil and gas technology. But it also has the world's 
most mature oil and gas industry--and it still needs a technology 
pipeline not only to sustain it but also to let it fulfill its 
potential and thus deliver all the benefits that the Nation can receive 
from that effort. It also needs a commitment to supporting a trained 
workforce to achieve national energy, environmental, and mineral 
extraction goals. Without Federal funding to spur technology 
innovations and attract new professionals to the industry, America will 
relinquish its leadership role--a trend that would be difficult to 
reverse.
                                 ______
                                 
                Prepared Statement of Anthony R. Kovscek

    I write in regard to budget requests and appropriations for Oil and 
Natural Gas Technology within the Department of Energy. Specifically, I 
assert that zeroing out and shutting down DOE's oil and gas research 
and development efforts at this time is both short-sighted and not in 
the national interest. At the very least, I believe that you should 
maintain spending at fiscal year 2006 levels: $32.7 million for natural 
gas R&D and $31.7 million for oil R&D. Given the high prices of 
gasoline at the pump and natural gas at the residential meter, it is in 
the national interest to increase funding for Oil and Natural Gas 
Technology as well as increase funding for the development of other 
energy resources such as geothermal.
    Full, consistent, steady funding of energy R&D efforts and 
especially for oil and natural gas production is essential to meet the 
energy challenge of the future. This research effort needs to continue 
in conjunction with the DOE laboratories, universities, and the private 
sector. Continuing effort is critical in the areas of unconventional 
resources that include: heavy oil, oil shale, fractured low 
permeability reservoirs, tight-gas sands, coalbed methane, and methane 
hydrates.
    You may ask what will be lost without Federal funding? The answer 
has many different facets. First, the government and the public, loses 
entirely its ability to have research conducted in the above 
unconventional resources that are becoming increasingly important on 
the national and international stage. The Nation loses its voice to 
determine research directions and influence outcomes. Second, we lose 
energy-critical programs. For example:
  --microhole technology to drill smaller diameter wells into deep 
        resources;
  --demonstration programs that reduce risk to early adopters and prove 
        environmental conformance;
  --research across the spectrum of oil and gas exploration and 
        production technologies;
  --advanced recovery concepts that allow the conversion of oil and gas 
        resources into producible reserves;
  --programs that benefit independent producers who do not have in-
        house research and technology development efforts nor access to 
        such efforts;
  --the Petroleum Technology Transfer Council that provides critical 
        technology transfer services.
    I have been told that oil and natural gas technology programs 
within DOE have been rated as ``ineffective'' and that this is a major 
piece of evidence cited for zeroing out these programs. I find this 
rating to be counter to what I hear from the energy industry. Let me 
cite three representative success stories that counter directly the 
above rating:
  --DOE Fossil Energy through Oil and Natural Gas Technology programs 
        has supported various institutions to study aspects of 
        ``interfacial phenomena'' related to petroleum recovery. Three 
        institutions that come to mind that received such support are 
        the Petroleum Recovery Research Center in New Mexico, the 
        University of Wyoming, and Lawrence Berkeley National 
        Laboratory. While much of this work was quite fundamental, one 
        conclusion reached is that the composition of fluids injected 
        into oil reservoirs can have a marked effect on oil recovery. 
        While not receiving extensive public fanfare, this work has 
        been followed for a number of years by industry and is now the 
        subject of extensive reservoir conditions testing in company 
        laboratories and field pilot tests. Results look very promising 
        and major capital investment in desalinization plants on the 
        Alaska North Slope are being planned. The process now referred 
        to within the industry as LoSal flooding has the potential to 
        increase oil production by more than 1 billion barrels on the 
        North Slope alone. Once proven successful, I predict that many 
        independents will pick up this technology.
  --There are extensive ``diatomaceous'' or ``diatomite'' reservoirs in 
        California that are very tight, fractured, and consequently 
        difficult to produce. These are so-called unconventional 
        resources as discussed above. Cumulatively, these reservoirs 
        hold from 12 to 18 billion barrels of oil. This is a size that 
        is on-par with the initial estimates for the oil in place at 
        Prudhoe Bay, Alaska. Again, DOE Fossil Energy through Oil and 
        Natural Gas Technology programs supported research that looked 
        into various aspects of production from these diatomaceous 
        reservoirs. Three institutions that come to mind are Lawrence 
        Berkeley National Laboratory, Los Alamos National Laboratory, 
        and Stanford University. They studied well stimulation methods, 
        ground subsidence, and advanced recovery techniques for 
        diatomite. While specific production figures per company are 
        difficult to come by, it is well known that Aera Energy 
        produces oil from the South Belridge Diatomite Reservoir, 
        Chevron produces oil from the Lost Hills and Cymric Diatomite 
        Reservoirs, and Berry Petroleum produces from the Midway Sunset 
        Diatomite Reservoir. This names only a few that I could 
        identify easily. The California Division of Oil, Gas, and 
        Geothermal Resources confirms December 2005 production of about 
        63,760 bbl/day from diatomite reservoirs at South Belridge, 
        32,600 bbl/day from diatomite reservoirs at Lost Hills, and 
        23,000 bbl/day from diatomite/siliceous shale intervals at 
        Cymric. A more careful accounting surely would increase the 
        total production attributed to California diatomite.
  --The last area is enhanced oil recovery and I will cite specifically 
        investment in R&D efforts aimed at thermal recovery that date 
        to the late 1970's and continue through the present. This is 
        mainly pointed at heavy-oil production. These are oils that are 
        very thick and viscous at reservoir temperature and, hence, do 
        not flow well under primary or water injection conditions. The 
        resource base of heavy oil within the United States is 
        significant and in the neighborhood of 200 billion barrels of 
        oil. At current consumption rates, this resource represents 
        about 45 years of total oil supply for the United States. Many 
        institutions have participated in research to unlock these 
        resources using the thermal technologies of steam injection, 
        hot water flooding, and in situ combustion. These institutions 
        include the University of Southern California, Stanford 
        University, and Lawrence Berkeley National Laboratory, among 
        others. According to the Oil and Gas Journal's biennial survey, 
        production from these technologies averaged 345,000 bbl/day in 
        2004.
    These figures alone make the case that the small investment made by 
the DOE through Oil and Gas Technology R&D have paid out. Stories such 
as those above convince me that funding needs to be maintained and 
actually increased to ensure adequate production of important domestic 
resources.
                                 ______
                                 
                   Prepared Statement of Cummins Inc.

    Cummins Inc. is pleased to provide the following statement for the 
record regarding the Department of Energy's fiscal year 2007 budget for 
Energy Efficiency and Renewable Energy; Electricity Delivery and Energy 
Reliability; and Fossil Energy programs. Cummins Inc., headquartered in 
Columbus, Indiana, is a corporation of complementary business units 
that design, manufacture, distribute and service engines and related 
technologies, including fuel systems, controls, air handling, 
filtration, emission solutions and electrical power generation systems. 
The funding requests outlined below are critically important to 
Cummins' research and development efforts, and would also represent a 
sound Federal investment towards a cleaner environment and improved 
energy efficiency for our Nation. We request that the committee fund 
the programs as identified below.

                 ENERGY EFFICIENCY AND RENEWABLE ENERGY

Office of FreedomCAR and Vehicle Technologies/Vehicle Technologies
    Advanced Combustion Engine R&D--Heavy Truck Engine.--This program 
is critical to the success of engine manufacturers achieving energy 
efficiency enhancements while meeting EPA's near zero 2010 emissions 
regulations. Heavy truck engines consume nearly 25 percent of all 
surface transportation fuels used in the United States. Technologies 
required to achieve EPA 2007 & 2010 emissions (90 percent reduction in 
2007 and near zero emissions in 2010) are likely to decrease fuel 
efficiency. This program supports R&D to increase on-highway engine 
fuel efficiency while meeting future emissions regulations. The 
objective of this program is to demonstrate 50 percent engine system 
efficiency, an increase from an efficiency baseline of approximately 40 
percent. To date, 45 percent engine efficiency has been demonstrated at 
2007 emissions levels. Research is ongoing on advanced combustion 
technologies--homogeneous charge, low temperature and mixed mode 
combustion--which are capable of near zero levels of NOx and PM engine 
out emissions. However, additional research is needed to develop low 
temperature combustion recipes for all engine conditions and provide 
overall engine control and power capabilities for market acceptance. 
Planned research areas include simulation/modeling techniques, improved 
fuel injection systems, technology validation on single cylinder 
engines and controls development. Other major categories of work 
involve vehicle system integration, sulfur management and robust 
particulate filters. Cummins urges that $20 million be appropriated for 
this program in fiscal year 2007.
    Advanced Combustion Engine R&D--Waste Heat Recovery.--This DOE 
program supports broader energy efficiency improvement and emissions 
goals for diesel engines by developing technologies for waste heat 
recovery and engine boosting. Nearly 60 percent of fuel energy is lost 
in diesel engines through wasted heat in exhaust, lubricants or 
coolants. This program is focused on identifying and developing 
innovative energy recovery technologies, such as thermoelectric, turbo-
compounding and Rankine cycle technologies. Cummins has evaluated a 
Rankine cycle concept which recovers waste heat from charge air and EGR 
gas streams, and converts it into electricity. This electrical energy 
is expected to supplement engine power output. Planned activities in 
fiscal year 2007 include subsystem design, development and testing in a 
laboratory, and system integration in a vehicle. The funding increase 
will adequately fund recent DOE industry R&D funding awards in this 
area. Cummins urges that $5.6 million be appropriated for this program 
in fiscal year 2007.
    Advanced Combustion Engine R&D--Combustion and Emission Control 
R&D.--This program is critically important to the heavy-duty diesel 
engine company efforts to meet stringent emissions requirements in the 
future through better understanding of combustion technologies and 
properties. The research focus for this program is to develop advanced 
combustion regimes (HCCI & LTC) for light duty & heavy duty engine 
applications. A funding split under the program between the 21st 
Century Truck Partnership (21CTP) and the FreedomCAR partnership is 
recommended as follows: 21CTP--$7.0 million (an increase of $3.32 
million); FreedomCAR Partnership--$17.9 million. The 21CTP increase is 
recommended to support CRADA activities at the Department of Energy's 
national laboratories for broad research and development of advanced 
combustion systems to improved engine-out emissions and fuel 
efficiency. The increase will allow DOE to adequately support recent 
industry awards for High Efficiency Clean Combustion research funded 
under this initiative. Cummins urges that $24.9 million be appropriated 
for this program in fiscal year 2007. A funding split under the program 
between the 21 Century Truck Partnership (21CTP) and the FreedomCAR 
Partnership is recommended as follows: 21CTP--$7.0 million and 
FreedomCAR--$17.9 million.
    Advanced Combustion Engine R&D--Off-Highway Heavy Vehicle Engine 
R&D.--The off-highway engine program supports R&D efforts to minimize 
fuel economy penalties while meeting EPA Tier IV emissions requirements 
starting in 2008. Without major technological efforts, emission recipes 
will cause a significant increase in fuel use. While some technologies 
developed for on-road engines can be applied to off-road engines, 
manufacturers face unique off-road challenges, including the lack of 
cooling air flow to the engines, severe conditions of dust, debris, a 
wide range of altitude, temperature and vibrations. Off-road engines 
are applied to hundreds of different types of equipment in a wide range 
of industries, such as agriculture, construction and mining. The 
restricted space for accessories and engine components significantly 
limits emission compliance strategies. These unique requirements 
necessitate the development of new technologies to meet the demand of 
off-highway equipment. Progress has been made in developing combustion 
models to achieve in-cylinder emissions solutions. These have mitigated 
the fuel economy penalty for Tier III emissions engine designs. 
Continued funding of this initiative in 2007 is critical to achieving 
lower fuel consumption, system robustness and lower cost for Tier IV 
architectures. Cummins urges that $3.5 million be appropriated for this 
program in fiscal year 2007.
    Advanced Combustion Engines--Health Impacts.--The objective of this 
program is to expand the knowledge base relating to the heath 
implications of emissions technologies being developed to meet energy 
efficiency goals. The Advanced Collaborative Emissions Study (ACES) is 
funded under this program. ACES is a cooperative effort between 
government (DOE, EPA) and industry (EMA, MECA, API) to assess health 
effects of emissions from 2007 compliant heavy-duty engines. The ACES 
program will include emissions characterization, chronic exposure 
animal bioassays, and identification of any unanticipated emissions or 
health effects from new engine technologies. Continuous monitoring of 
air toxics and source apportionment techniques are also proposed. 
Cummins urges that $2.5 million be appropriated for this program in 
fiscal year 2007.
Office of FreedomCAR and Vehicle Technologies/Fuels Technologies
    Non-Petroleum Based Fuels & Lubes: Heavy and Medium Duty Truck 
Programs (Natural Gas Vehicle).--This program funds development efforts 
for biomass and synthetic fuels as blending agents and natural gas 
engines for medium and heavy trucks. The increase is requested to 
develop efficient techniques to remove water from biodiesel and No. 2 
diesel fuel blends and complete ongoing natural gas engine development 
activities. Biodiesel fuel blends are becoming acceptable in the market 
place. Current fuel filters are less effective for separating 
emulsified water in such blends and are likely to cause problems in the 
field. Next generation natural gas combustion technologies can meet 
2010 emissions, with simpler and more durable systems, and reduce fuel 
efficiency losses compared to diesel engines. Natural gas engines are 
practical in urban applications including school and city buses, and 
could significantly reduce exhaust emissions. Natural gas combustion, 
storage and infrastructure development also offers a bridge to the 
hydrogen economy. Cummins urges that $8 million be appropriated for 
this program in fiscal year 2007.
    Advanced Petroleum Based Fuels (APBF).--This important program 
supports the study of fuel properties that can enable engines to 
operate in the most efficient mode while meeting future emission 
standards. This activity is cross-cutting with the Advanced Combustion 
Engine program. The modeling and experimentation activities under this 
effort will include expertise and shared resources between DOE, engine 
manufacturers and energy companies. Engine companies are required to 
prove emissions compliance for over 435,000 miles of useful engine 
life. The goal of this program is also to study the impacts of fuel and 
lube oil sulfur content on durability and reliability of particulate 
aftertreatment systems. Cummins urges that $4.5 million be appropriated 
for this program in fiscal year 2007.
Office of FreedomCAR and Vehicle Technologies/Materials Technologies
    Propulsion Materials Technology--Heavy Vehicle Propulsion Materials 
Program.--This program supports research and development of next 
generation materials to enable diesel engine efficiency improvement, 
improved reliability and reduced aftertreatment system costs. 
Traditional engine materials may not be adequate for the next 
generation of advanced combustion concepts, such as Homogeneous Charge 
Compression Ignition (HCCI). High injection fuel systems are needed to 
support these technologies. Smaller clearances in the fuel system 
require new capabilities to remove submicron particles from the fuel. 
Aftertreatment NOx reduction technologies are not fully developed and 
particulate filters will be implemented in a large scale for the first 
time in 2007. These efforts may require further technology 
enhancements--lighter weight and higher strength materials are needed 
to obtain lighter, more robust and higher cylinder pressure engine 
systems for improvements in fuel consumption. Increased funding will 
support studies on a range of advanced materials technologies, 
including lightweight high strength engine components, composites, 
catalysts and soot oxidation, filtration media modeling and nano-fiber 
filter technologies. Cummins urges that $5.9 million be appropriated 
for this program in fiscal year 2007.
Office of Hydrogen Technologies/Hydrogen Technologies
    Transportation Fuel Cell Systems.--The program supports R&D and 
system integration of energy efficient auxiliary power unit 
technologies for mobile or off-road applications. The goal of this 
effort is to demonstrate a SOFC-based auxiliary power unit (APU) for 
Class 7/8 on-highway diesel trucks. Reduction of idling fuel 
consumption is widely recognized as an important element in reducing 
exhaust emissions from heavy trucks. It would also reduce our overall 
dependence on foreign oil. It is estimated that a reduction of up to 
800 million gallons of diesel fuel is possible if SOFC systems can 
provide the hotel loads of truck fleets. In 2005, Cummins Power 
Generation and our partner, International Truck and Engine Company, 
conducted analysis and design work to accurately define the 
requirements for such an APU, and believe the goal is achievable. R&D 
work planned for 2007 includes the demonstration of a practical SOFC 
prototype, integrated on a typical truck platform. Cummins urges that 
the DOE request of $7.5 million be appropriated for this program in 
fiscal year 2007.

              ELECTRICITY DELIVERY AND ENERGY RELIABILITY

Research and Development/Distributed Energy
    Distributed Generation Technology Development--Advanced 
Reciprocating Engine Systems (ARES).--The goals of this multi-year 
program are to develop high efficiency, low emissions and cost 
effective technologies for stationary natural gas systems between 500 
to 6,500 kW by the year 2010. Natural gas-fueled reciprocating engine 
power plants are preferred for reliability, low operating costs and 
point of use power generation. Traditional natural gas engines are 
approximately 32 to 37 percent efficient and have not kept pace with 
the fuel efficiency of their diesel counterparts. Technologies 
sponsored by the ARES program have demonstrated 44 percent engine 
efficiency, higher power densities and an expected reduction in life 
cycle costs and CO2 emissions. Improved combustion, air 
handling and controls developments have been successfully implemented 
in a field test engine and genset for evaluation at a customer site. 
Further technical challenges include combustion development for system 
efficiency, NOx reductions, advanced sensors and controls, hardware 
durability and lower life cycle costs. The development of point of use 
energy production supports national energy security needs, improved 
protection of critical infrastructure for homeland security concerns, 
and less dependence on the national electrical grid system. Cummins 
urges that $12 million be appropriated for this program in fiscal year 
2007.

                             FOSSIL ENERGY

Office of Fossil Energy/Coal and Other Power Systems/Distributed 
        Generation Systems
    Fuel Cells--Innovative Concepts--Solid State Energy Conversion 
Alliance (SECA).--The goal of the Solid State Energy Conversion 
Alliance (SECA) project is to develop a commercially viable 3 to 10 kW 
solid oxide fuel cell (SOFC) module for RV, commercial mobile, and 
telecommunications markets. The modular nature of SOFCs makes them 
adaptable to a wide variety of stationery and mobile applications. 
SOFCs can play a key role in securing the Nation's energy future by 
providing efficient, environmentally sound electrical energy from 
fossil fuels or hydrogen. Progress on Phase 1 of the program has been 
positive, including low cost ``balance of plant'' and essential control 
systems for achieving the cost targets. An advanced SOFC stack 
technology is planned. This is a 10-year program that combines the 
efforts of the DOE national laboratories, private industry, 
universities, and other research organizations. Federal funding is 
critical to support research needed to keep this technology moving from 
the laboratory to commercial viability. Cummins urges that the DOE 
request of $75 million be appropriated for this program in fiscal year 
2007.
    Thank you for this opportunity to present our views on these 
programs which we believe are of great importance to the U.S. economy 
through viable transportation and power generation.
                                 ______
                                 
    Prepared Statement of the Federation of American Societies for 
                          Experimental Biology

    The Federation of American Societies for Experimental Biology 
(FASEB) is a coalition of 22 independent scientific societies who 
together represent more than 84,000 biomedical research scientists. The 
mission of FASEB is to enhance the ability of biomedical and life 
scientists to improve, through their research, the health, well-being 
and productivity of all people. As your committee begins deliberations 
on appropriations for agencies under its jurisdiction, FASEB would like 
to offer its views on funding for the Department of Energy's Office of 
Science. In keeping with the ``Energy Policy Act of 2005,'' FASEB 
recommends an appropriation of $4.15 billion for the Department of 
Energy's Office of Science in fiscal year 2007.
    The DOE's Office of Science supports research programs that enable 
the scientific discoveries and technological innovations that 
strengthen the U.S. economy and protect our citizens. Its research 
programs have led to discoveries of fundamental importance to the 
economy of the United States and to the improvement of the health of 
its citizens.
    DOE is the single largest supporter of basic research in the 
physical sciences in the United States, providing more than 40 percent 
of the total funding for this area of vital national importance. DOE 
funds fundamental research programs in basic energy sciences, 
biological and environmental sciences, and computational science. The 
Office of Science is the Federal Government's largest single funding 
source for materials and chemical sciences. It supports unique and 
vital programs for U.S. research in climate change, geophysics, 
genomics, life sciences, and science education. This backing enables 
DOE to accomplish its missions in energy security, national security, 
and environmental restoration.
    Each year the national laboratories are used by over 19,000 
researchers from universities, other government agencies, and private 
industry. The emphasis on interdisciplinary research at these state-of-
the-art facilities gives DOE a unique role, allowing it to support and 
extend basic research sponsored by other Federal agencies. Since its 
inception in 1977, 42 DOE funded scientists have won Nobel Prizes in 
Chemistry, Physics, Physiology or Medicine. DOE plays a fundamental 
role at the interface of different sciences and many research 
activities funded by non-DOE agencies could not take place in the 
absence of the highly specialized research infrastructure built and 
managed by DOE. Sustained support for the research programs of DOE is 
vital to the welfare of the citizens of the United States and to the 
scientific enterprise.

           DOE BASIC RESEARCH ENHANCES HEALTH AND WELL-BEING

    Research conducted at DOE facilities has led to the development of 
products and technologies that have improved the quality of American 
life and given researchers better insight into perplexing health 
questions. The following examples of DOE research accomplishments have 
been selected from a list of more than 100 major success stories that 
can be found on DOE's web site: (http://www.science.doe.gov/sub/
accomplishments/Decades_Discovery/decades.htm).
Human Genome Research
    Genome scientists are beginning to unravel the deeper meaning of 
the genetic code through the help of DOE funded research. Scientists at 
Oak Ridge National Laboratory have combined advanced computer 
technology with their knowledge of biology to develop a software 
program called GRAIL (Gene Recognition Analysis Internet Link). GRAIL 
emulates the human learning process as it searches large areas of human 
DNA sequence to define the physical structures of genes and is 
currently being used in more than 1,000 biotechnology companies and 
laboratories to track down genes that play central roles in human 
diseases.
Lyme Disease
    Lyme disease, a bacterial infection transmitted to humans through a 
tick bite, causes nerve damage, arthritis, and fever. Researchers at 
Brookhaven National Laboratory used intense X-rays at the National 
Synchrotron Light Source to solve the three-dimensional structure of a 
key surface protein from the bacterium that causes Lyme disease. This 
discovery has already led to the development of a rapid and highly 
accurate diagnostic test for the disease. Ongoing research at 
Brookhaven has the potential to further improve vaccines. DOE 
synchrotron facilities are essential tools in a high percentage of 
studies of the molecular structures of biological macromolecules.
X-Ray Microscopy Becomes a National Research Resource
    X-rays have shorter wavelengths and higher energy than visible 
light. These properties enable scientists to use X-rays to image 
features in cells that are too small to be seen using optical 
microscopy and other types of imaging. The DOE National Research 
resource for X-ray microscopy enables biologists to study sub-cellular 
structures in bacteria as well as human cells, enhancing our 
understanding of basic molecular and cellular processes and how they 
relate to damage or repair to DNA, disease development, and protein 
interactions.
World's Largest Nuclear Magnetic Resonance Spectrometer
    The world's largest, highest performance nuclear magnetic resonance 
(NMR) spectrometer is now operational at the William R. Wiley 
Environmental Molecular Sciences Laboratory. The 900-MHz NMR 
spectrometer allows scientists to conduct projects of large size or 
complexity that require the additional resolution and sensitivity that 
a 900 MHz field can provide. The very high magnetic field of this 
spectrometer makes it possible for scientists to determine the 3-
dimensional structures of biological macromolecules with high 
resolution.
New DOE Design for Artificial Retina
    The development of a pliable, biocompatible 60 electrode artificial 
retina containing advanced microelectronics has undergone successful in 
vitro and acute safety testing in animals. Long-term testing of the 
device in animals under the conditions that it will be used in human 
patients is ongoing. A Cooperative Research and Development Agreement 
created by DOE's artificial retina program with the Second Sight 
Corporation of California will facilitate the translation of DOE-
supported advanced technology into devices that will satisfy FDA 
testing requirements for use in blind patients.
DOE Allocates Massive Supercomputer Resources to Drive Advances in 
        Combustion, Astrophysics and Protein Structure Research
    DOE has allocated 6.5 million hours of supercomputing time to three 
scientific research projects aimed at increasing our understanding of 
ways to reduce pollution, to gain greater insight into how stars and 
solar systems form, and advance our knowledge about how proteins 
express genetic information. As one of the Nation's leading agencies 
for advancing scientific research, the Energy Department is proud to be 
able to award these major allocations for studying complex scientific 
problems that can transform our energy future and boost scientific 
research. The researchers will use their awards to compute on the IBM 
supercomputer at DOE's National Energy Research Scientific Computing 
(NERSC) Center in Berkeley, Calif. NERSC is the DOE Office of Science's 
flagship facility for unclassified supercomputing. The three awards 
amount to 15 percent of NERSC's annual computing resources.

        ADVANCING SOLUTIONS TO ENERGY AND ENVIRONMENTAL CONCERNS

    Research funded by DOE is advancing solutions to current 
environmental problems, including the cleaning of toxic waste and 
reduction of harmful fuel emissions. Research into alternative fuels 
will help conserve energy, reduce the need for petroleum, and provide 
environmentally sustainable solutions to our energy needs. DOE research 
programs will lead to more cost efficient energy products with fewer 
harmful effects on our environment and reduced dependence on foreign 
oil. The following examples highlight contributions of research 
supported by DOE.
DOE Publishes Roadmap for New Biological Research for Energy and 
        Environmental Needs
    The DOE Genomics: Genomes to Life (GTL) Roadmap outlines a plan to 
explore the unseen world of microbes--starting with information encoded 
in their DNA sequences--to produce the new science needed for achieving 
cleaner and more secure energy resources, remediating toxic wastes and 
understanding the natural roles microbes play in the global climate. 
The 2005 GTL Roadmap builds on and expands the GTL research program 
begun in 2002. Scientific and technological progress achieved during 
the Human Genome Project, initiated by DOE in 1986, and the Microbial 
Genome Program, begun in 1994, provided the foundation for establishing 
the GTL program.
Mobilizing Microbes to Manage Waste
    Recently, DOE-funded scientists have determined the DNA sequence of 
the genome of an organism that may be used to clean environmental 
contaminants. Geobacter sulfurreducens, a microbe commonly found in 
contaminated subsurface environments, can remove radionuclides and 
metals, including uranium, from groundwater. Researchers have found 
that the enrichment of groundwater samples with Geobacter 
sulfurreducens decreased uranium concentrations below the prescribed 
treatment level in some wells. Because this organism can be cultivated 
by adding simple carbon sources such as acetate to the groundwater, it 
may offer an inexpensive and simple way to remove environmental 
contaminants that pose a threat to humans.
Creating Renewable Energy Sources
    The majority of U.S. energy is currently derived from fossil fuels. 
However, because fossil fuel reserves are finite and their continued 
use contributes to global warming by emitting substantial 
CO2, it is essential to develop more sustainable energy 
sources. Biomass, or plant-derived, energy offers an appealing 
alternative to fossil fuels. Plant products are renewable and they have 
the potential to substantially reduce atmospheric CO2 
accumulation. By combining experimental biology with advanced 
computing, DOE's Genomes to Life program seeks to employ microbes to 
increase the production of biomass feed stocks, thereby reducing 
reliance on fossil fuels, decreasing CO2 emission, and 
curbing global warming.
Reducing Our Dependence on Foreign Oil
    DOE research is making it possible to create economically valuable 
products by modifying plants and microbes. By transferring genes from 
certain bacteria to plants, researchers at Michigan State University 
were able to create plants that synthesized biodegradable plastics. 
These plant products have the potential to replace plastics that are 
now derived from petroleum. DOE-funded researchers have also 
streamlined the process of converting cellulose to ethanol and made it 
possible to alter bacterial DNA to modify their production of ethanol 
and promote ethanol production in bacteria that do not normally create 
it. This work has important implications for meeting our Nation's 
energy needs and reducing U.S. reliance on foreign oil.
Increasing Fuel Efficiency
    The recent rise in fuel prices underscores the importance of 
creating more fuel-efficient motor vehicles. Scientists in DOE's 
Materials Sciences and Engineering subprogram, a research program 
dedicated to finding economically feasible ways to increase materials 
performance, have contributed to boosting the fuel economy of 
automobiles. They have developed stronger, lighter weight materials 
that could increase vehicle efficiency by reducing vehicle weight; 
their study of alloys and ceramics has led to the creation of materials 
that retain their strength at high temperatures. These materials could 
potentially be used to increase the efficiency of the combustion 
engine.

                         FUNDING RECOMMENDATION

    The unique, interdisciplinary expertise and unparalleled research 
facilities of the Office of Science merit significantly increased 
funding. With this support, the Office of Science will be able to 
continue to attack major scientific challenges of fundamental 
importance to the security and well-being of our Nation. A significant 
increase in DOE funding is essential to ensure the development of 
necessary collaborations among physical, chemical, engineering, and 
biological scientists and to preserve the vitality of our national 
research enterprise. In keeping with the ``Energy Policy Act of 2005,'' 
FASEB recommends an appropriation of $4.15 billion for the Department 
of Energy's Office of Science in fiscal year 2007.
                                 ______
                                 
         Prepared Statement of the Distributed Energy Coalition

    Distributed Energy Coalition.----The DE Coalition brings together 
the undersigned manufacturers, utilities, propane companies, industry, 
State agencies, and others who firmly believe that the Federal 
Government is an essential partner in the transformation of our 
electric infrastructure to a more secure, flexible, efficient and 
growth-oriented energy resource for the 21st century. Distributed 
Energy is an indispensable element of this transformation, one that 
provides near term solutions with significant positive long-term 
implications. The Coalition believes that DE technologies can 
demonstrate their value and achieve full market readiness and 
recognition only with Federal leadership and support. Industry stands 
ready to invest their portion of the necessary resources in partnership 
with this Federal leadership. Private industry investment already 
exceeds and will ultimately be much greater than this modest request to 
have DOE ``stay the course'' with its current level of research, 
development and demonstration funding, but these programs cannot be 
duplicated by the private sector.
    The Challenge: Following-Through on Distributed Energy.--The 
reliability and security of the Nation's energy infrastructure is 
approaching a crisis situation; our continued prosperity is directly 
linked to secure, reliable, and affordable energy. Fossil fuels are 
increasingly globally traded commodities, facing ever-increasing global 
demand. Electricity supplies are becoming strained in certain areas of 
the country as economic development outpaces expansion. Other regions 
face constraints on the ability to deliver power to where it's needed 
when it's needed. The vulnerabilities of our energy infrastructure were 
highlighted when the Great Lakes and Northeast regions lost power in 
August 2003 and when hurricanes Katrina and Rita struck the Gulf Coast 
in September 2005. And the possibility of terrorist attacks on central 
station power plants and on critical transmission and distribution 
facilities remains a major concern.
    Recognizing that a key element of a sensible response to this 
national crisis is the development and deployment of Distributed Energy 
(DE) systems, Congress included in the Energy Policy Act of 2005 a 
number of provisions authorizing increased Federal focus on distributed 
energy research, development, demonstration and policy support, 
including authorization of $730 million for DE over the next 3 years. 
The President enthusiastically signed EPAct05 into law. Congress and 
the President, with these actions, clearly reaffirmed the critical role 
DE can play in enhancing the efficiency, reliability, security and 
flexibility of the Nation's energy infrastructure through solutions 
applied at the local level.
    What's Needed to Ensure Success.--Despite a very tough budget 
climate, the Federal Government must now align its policy objectives 
with a sustained commitment to invest in the Distributed Energy 
programs that will provide these solutions. At a minimum, Congress must 
act to maintain dedicated funding in the Department of Energy's DE 
program within the Office of Electricity Delivery and Energy 
Reliability at a level consistent with prior years by appropriating $60 
million for fiscal year 2007. The three key focus areas of RD&D need 
are:
  --Alternative Energy Networks and Disaster Response.--Develop long-
        term energy solutions to the Nation's rapidly expanding need 
        for reliable, secure, and efficient energy through the 
        integration of loads and DE sources into local energy networks 
        and microgrids.
  --Advances in DE Technologies and Systems.--Complete the technology 
        development for the diverse array of DE systems that support 
        grid enhancement.
  --Outreach and Technology Transfer at the Local Level.--Ensure 
        maximum impact through technology transfer to local 
        implementers, including those responsible for policies, codes, 
        and standards.
    Benefits of the DE Program.--Distributed Energy includes 
technologies and systems \1\ that, at the point of use, efficiently 
produce electricity, recycle waste heat, and store energy. DE supports 
and supplements the existing power generation and transmission 
infrastructure, and provides critical societal benefits including:
---------------------------------------------------------------------------
    \1\ DE technologies and systems include high efficiency 
reciprocating engines; microturbines; industrial gas turbines; fuel 
cells; thermally activated technologies such as steam turbines, 
absorption chillers and desiccants; advanced storage systems; control 
systems; and integrated systems that incorporate advanced components 
into highly efficient packages for heating, cooling, and useful energy.
---------------------------------------------------------------------------
  --Energy Reliability and Quality.--DE systems can operate in parallel 
        with the grid to provide enhanced power reliability without new 
        transmission or distribution infrastructure. DE technologies 
        deliver the high quality power required of our digital economy.
  --Energy Security.--DE systems can operate independently of the grid 
        to sustain critical services (e.g. healthcare, communications, 
        shelter, public safety) after natural or man-made disasters.
  --Energy Efficiency.--DE systems can recycle waste energy and put it 
        to productive use for heating and cooling, increasing fuel 
        utilization efficiency compared to central power and increasing 
        customer benefit from each cubic foot of natural gas or propane 
        consumed.
  --Environmental Stewardship.--Use of efficient DE technologies 
        decreases emission of criteria pollutants (NOx/CO) and 
        greenhouse gases. DE can use local, renewable fuels (e.g. 
        landfill gas) to provide electrical and thermal energy.
  --Economic Development.--DE directly relieves grid congestion and 
        provides power not only to remote sites but to any constrained 
        area, avoiding investment for new grid wires in cities and 
        beyond the ``end of the line.''
    Energy market forces do not assign full value to recognized but 
externalized DE benefits such as reduced pollution, enhanced energy 
efficiency, improved productivity, and reduced infrastructure costs. In 
fact, today's market provides disincentives for local distributed 
energy systems, technologies, equipment and business models. The above-
described public benefits warrant public support of DE technologies; a 
modest amount of public funding can leverage large amounts of private 
resources by demonstrating value in the market and reducing artificial 
barriers to deployment in industrial, commercial, and residential 
applications.
    America's DE Public/Private Partnership is a Success . . . So 
Far.--The Department of Energy described the goal of the Distributed 
Energy (DE) Program as: ``[b]y 2015, the Distributed Energy Resources 
Program will develop and deploy a diverse array of high efficiency 
integrated distributed generation and thermal energy technologies at 
market competitive prices so that homes, businesses, industry, 
communities, and electricity companies elect to use them.'' DOE's 
leadership of this public/private partnership has brought us through 
the initial stages of component development and system integration. 
However, this is just a beginning. The accomplishments of the DOE/DE 
program to-date include:
  --The initial development phases of advanced prime movers--gas 
        turbines, microturbines, and reciprocating engines--that are 
        more efficient, less polluting, and more affordable.
  --Adaptation of thermal technologies to recycle waste energy to cool, 
        heat, and dehumidify business spaces and industrial processes.
  --First generation packaged DE systems of integrated prime movers and 
        thermal components that are designed to operate safely, 
        reliably, and efficiently without additional onsite 
        engineering.
  --The establishment of eight Regional Application Centers, covering 
        all 50 States, that provide local guidance, tools, and training 
        to successfully apply DE.
    Next Steps for DE to Achieve DOE's 2015 Goals.--DOE must maintain 
its leadership of this public/private partnership in order to achieve 
the goal of a diverse array of DE solutions that enhance the grid in an 
affordable and environmentally-friendly manner. Only with Federal 
leadership and support can DE technologies demonstrate their value and 
achieve full market readiness and recognition. Achieving this goal 
maximizes the public benefits of DE.
    Industry stands ready to invest their portion of the necessary 
resources in partnership with the Office of Electricity Delivery and 
Energy Reliability's leadership to develop advanced technologies, break 
down barriers and realize our common goals. When balancing budgets 
under critical times like these, industry recognizes the need to 
prioritize and focus government support. The DE Coalition represents 
over 1 million workers, holding jobs in every State, seeking to support 
the Nation's electric grid with efficient local energy solutions that 
can withstand hurricanes and ice storms, secure critical needs during 
power disruptions or terrorist attack, and conserve energy supplies by 
efficient generation close to the point of use as well as recycling 
local energy that is otherwise wasted. Our request is simple: stay the 
course and maintain research, development and demonstration funding for 
the Department of Energy's, Office of Electricity Delivery and Energy 
Reliability DE program.
    This is a 10-year program that combines the efforts of the DOE 
national laboratories, private industry, universities, and other 
research organizations.
    The Distributed Energy Coalition urges that $35 million be 
appropriated for the Distributed Energy Technology Research program in 
fiscal year 2007. The Distributed Energy Technology Research program 
improves the energy and environmental performance of distributed 
technologies (turbines, microturbines, engines, desiccants, chillers, 
and heat exchangers) so that the Nation can have more energy choices to 
achieve a more flexible and smarter energy system.
    The Distributed Energy Coalition urges that $25 million be 
appropriated for the System Integration and Cooling, Heating and Power 
(CHP) program in fiscal year 2007. The System Integration and Cooling, 
Heating, Power (CHP) activity develops highly-efficient integrated 
energy systems that can be replicated across end-use sectors which will 
help demonstrate an R&D objective or address a technical barrier. The 
activities integrate power producing prime movers that generate heat 
and utilize it for domestic hot water, steam, and/or thermally 
activated technologies that drive absorption chillers and/or desiccant 
units. These systems will reduce energy costs and emissions by using 
energy resources more efficiently.
    Thank you for this opportunity to present our views on this program 
which we believe is of great importance to the U.S. economy through 
viable on-site power generation solutions.
    The Distributed Energy Coalition companies that support this 
testimony are: ACEEE; Aegis Energy Services, Inc.; Allegiance Energy 
Systems, LLC.; Association of State Energy Research and Technical 
Transfer Institutions (ASERTTI); Atlantic Energy Services; Avalon 
Consulting, Inc.; BroadUSA; Burns & McDonnell; Capstone Turbine Corp.; 
Caterpillar Inc.; Cinergy Solutions; Climate Energy, Inc.; Cummins 
Power Generation; Cummins Power Generation Project Company; DG Power 
Systems, Inc.; Discovery Insights LLC; Elliott Energy Systems; Enercon 
Engineering; Energy and Environmental Analysis, Inc.; Energy Solution 
Center; Energy Spectrum Developers, LLC; Environmental Business 
Association of NY State; EXERGY Partners Corp.; Gas Technology 
Institute; Gas Turbine Association; Greenta.com; Infinia Corporation; 
Ingersoll-Rand; International District Energy Association (IDEA)--
represents nearly 700 company and university members who operate 
district energy systems in 38 of the 50 United States; Maine State 
Energy Program; National City Energy Capital; National Fuel Gas 
Distribution Corporation; National Propane Gas Association--3,500 
companies in all 50 States and 38 affiliated State or regional 
associations, representing every segment of the propane industry; 
Northeast Combined Heat and Power Association; NiSource Energy 
Technologies; North Carolina Solar Center; North East Midwest 
Institute; Northern Power Systems; Pace Energy Project; Power Equipment 
Associates; Primary Energy Ventures; Redwood Power Company, Inc.; 
Rensselaer Polytechnic Institute--Future Energy Systems Center; 
Resource Dynamics Corp.; Sacramento Municipal Utility District; Siemens 
Power Generation, Inc.; Solar Turbines, Inc.; Southern California Gas 
Company; Southwest Gas Company; Spectra Environmental Group Inc. & 
Spectra Engineering, PC; Steven Winter Associates; Sustainable 
Resources Group; Turbosteam Corporation; TVC Systems; United States 
Combined Heat and Power Association; UTC Power (a business unit of 
United Technologies, Inc.); University of Illinois at Chicago; Waukesha 
Engine Division; Woolpert, Inc.
                                 ______
                                 
 Prepared Statement of the State Teachers' Retirement System, State of 
                               California

Summary
    Acting pursuant to Congressional mandate, and in order to maximize 
the revenues for the Federal taxpayer from the sale of the Elk Hills 
Naval Petroleum Reserve by removing the cloud of the State of 
California's claims, the Federal Government reached a settlement with 
the State in advance of the sale. The State waived its rights to the 
Reserve in exchange for fair compensation in installments stretched out 
over an extended period of time.
    Following the settlement, the sale of the Elk Hills Reserve went 
forward without the cloud of the State's claims and produced a winning 
bid of $3.53 billion, far beyond most expectations. Under the terms of 
the Settlement Agreement between the Federal Government and the State, 
the State is to receive a 9 percent share of the sales proceeds as 
compensation for its claims in installments. Each annual installment of 
compensation is subject to a Congressional appropriation. For each of 
the past 7 fiscal years, Congress has appropriated the annual 
installments of Elk Hills compensation for the State as called for 
under the Settlement Agreement.
    The State respectfully requests an appropriation of at least $9.7 
million in the subcommittee's bill for fiscal year 2007, in order to 
meet the Federal Government's obligations to the State under the 
Settlement Agreement. The Elk Hills appropriation has the broad 
bipartisan support of the California House delegation.
Background
    Upon admission to the Union, States beginning with Ohio and those 
westward were granted by Congress certain sections of public land 
located within the State's borders. This was done to compensate these 
States having large amounts of public lands within their borders for 
revenues lost from the inability to tax public lands as well as to 
support public education. Two of the tracts of State school lands 
granted by Congress to California at the time of its admission to the 
Union were located in what later became the Elk Hills Naval Petroleum 
Reserve.
    The State of California applies the revenues from its State school 
lands to assist retired teachers whose pensions have been most 
seriously eroded by inflation. California teachers are ineligible for 
Social Security and often must rely on this State pension as the 
principal source of retirement income. Typically the retirees receiving 
these State school lands revenues are single women more than 75 years 
old whose relatively modest pensions have lost as much as half or more 
of their original value to inflation.
State's Claims Settled, as Congress Had Directed
    In the National Defense Authorization Act for Fiscal Year 1996 
(Public Law 104-106) that mandated the sale of the Elk Hills Reserve to 
private industry, Congress reserved 9 percent of the net sales proceeds 
in an escrow fund to provide compensation to California for its claims 
to the State school lands located in the Reserve.
    In addition, in the Act Congress directed the Secretary of Energy 
on behalf of the Federal Government to ``offer to settle all claims of 
the State of California . . . in order to provide proper compensation 
for the State's claims.'' (Public Law 104-106,  3415). The Secretary 
was required by Congress to ``base the amount of the offered settlement 
payment from the contingent fund on the fair value for the State's 
claims, including the mineral estate, not to exceed the amount reserved 
in the contingent fund.'' (Id.)
    Over the year that followed enactment of the Defense Authorization 
Act mandating the sale of Elk Hills, the Federal Government and the 
State engaged in vigorous and extended negotiations over a possible 
settlement. Finally, on October 10, 1996 a settlement was reached, and 
a written Settlement Agreement was entered into between the United 
States and the State, signed by the Secretary of Energy and the 
Governor of California, under which the State would receive 9 percent 
of the sales proceeds in annual installments over an extended period.
    The Settlement Agreement is fair to both sides, providing proper 
compensation to the State and its teachers for their State school lands 
and enabling the Federal Government to maximize the sales revenues 
realized for the Federal taxpayer by removing the threat of the State's 
claims in advance of the sale.
Federal Revenues Maximized by Removing Cloud of State's Claim in 
        Advance of the Sale
    The State entered into a binding waiver of rights against the 
purchaser in advance of the bidding for Elk Hills by private 
purchasers, thereby removing the cloud over title being offered to the 
purchaser, prohibiting the State from enjoining or otherwise 
interfering with the sale, and removing the purchaser's exposure to 
treble damages for conversion under State law. In addition, the State 
waived equitable claims to revenues from production for periods prior 
to the sale. The Reserve thereafter was sold for a winning bid of $3.53 
billion in cash, a sales price that substantially exceeded earlier 
estimates.
The Money Is There to Pay the State
    The funds necessary to compensate the State have been collected 
from the sales proceeds remitted by the private purchaser of Elk Hills 
and are now being held in the Elk Hills School Lands Fund for the 
express purpose of compensating the State. Taking into account the 1 
percent government-wide rescission in the fiscal year 2006 Defense 
Appropriations Act, the Elk Hills School Lands Fund should have a 
positive balance of at least $18.18 million.
Congress Should Appropriate $9.7 Million for the Fiscal Year 2007 
        Installment of Elk Hills Compensation
    As noted above, the State's 9 percent share of the adjusted Elk 
Hills sales price of $3.53 billion is $317.70 million. To date, 
Congress has appropriated seven installments of $36 million and one 
installment of $48 million that was reduced to $47.52 million by the 1 
percent across-the-board rescission under the fiscal year 2006 Defense 
Appropriations Act, for total appropriations to date of $299.52 million 
of Elk Hills compensation owed to the State. Accordingly, the Elk Hills 
School Lands Fund should have a positive balance of at least $18.18 
million.
     The State recognizes that although the equity finalization process 
to determine the final split of the sales proceeds between the Federal 
Government and ChevronTexaco, as the selling co-owners of the Elk Hills 
field, is in its final stages after some 8 years, the process still has 
not been fully completed. DoE has calculated that under the worst case 
scenario for the Federal Government based on the current status of the 
equity finalization, the State's share would fall by a total of $6.03 
million. The State has agreed to a ``hold-back'' of that amount to 
protect the Federal Government's interest and is not seeking an 
appropriation of that amount for fiscal year 2007. This reduces the 
available balance in the Elk Hills School Lands Fund to $12.15 million.
     The other factor affecting the total amount of the State's 
compensation is its share of the direct expenses that had been incurred 
to conduct the sale of the Elk Hills field back in February 1998. This 
is an issue entirely independent of and unaffected by the resolution of 
the equity finalization split just discussed above. The Settlement 
Agreement provides that the Federal Government shall pay the State ``9 
percent of the proceeds from the sale of the Federal Elk Hills 
Interests that remain after deducting from the sales proceeds the costs 
incurred to conduct such sale.'' This reflects the Congressional 
direction that, ``In exchange for relinquishing its claim, the State 
will receive 7 [9 in the final legislation] percent of the gross sales 
proceeds from the sale of the Reserve that remain after the direct 
expenses of the sale are taken into account.'' (House Rept. No. 104-
131, Defense Authorization Act for Fiscal Year 1996, Public Law 104-
106).
     The State agrees that the $27.13 million incurred for appraisals, 
accounting expenses, reserves report, and brokers' commission are 
appropriate sales expenses. (See Letter of the California Attorney 
General to DoE, dated February 10, 2005 (attached)). Accordingly, the 
State's 9 percent share of these proper sales expenses reduces the 
available balance of the Elk Hills School Lands Fund by $2.44 million 
to $9.7 million.
     Costs of conducting the equity adjustment are properly viewed as 
ongoing costs incurred due to the joint operation of the Elk Hills oil 
field by the Federal Government and ChevronTexaco, since the equity 
adjustment already was required under their joint operating agreement 
and related to pre-sale production revenues. Similarly, costs of 
environmental remediation of the Elk Hills field was a cost 
attributable to the prior operation of the field, which created any 
environmental problems that exist. That such environmental remediation 
relates to the ongoing operation of the oil field is underscored by the 
fact that the Federal Government is currently engaged in the phased 
environmental remediation of a Naval Petroleum Reserve that it is not 
selling--NPR-3 (Teapot Dome), as evidenced by its fiscal year 2006 
budget request. Accordingly, the costs of the equity adjustment and 
environmental remediation are not properly treated as direct costs 
incurred to conduct the sale of the Elk Hills field back in February 
1998 and should not be charged to the State's compensation.

                               CONCLUSION

    Therefore, of the current Elk Hills School Lands Fund balance of 
$18.18 million, taking into account the ``hold-back'' for worst case 
scenario under equity finalization and deducting the appropriate direct 
costs of conducting the sale, the State respectfully requests the 
appropriation of at least $9.7 million for Elk Hills compensation in 
the subcommittee's bill for the fiscal year 2007 installment of 
compensation, in order to meet the Federal Government's obligations to 
the State under the Settlement Agreement.
                                 ______
                                 
      Prepared Statement of the American Society for Microbiology
    The American Society for Microbiology (ASM), the largest single 
life science organization in the world, with more than 43,000 members, 
appreciates the opportunity to provide written testimony on the 
administration's fiscal year 2007 budget proposal for the Department of 
Energy (DOE) science programs. The ASM mission is to enhance 
microbiology, to gain a better understanding of basic life processes, 
and to promote the application of this knowledge to improve health, 
economic, and environmental well-being.
    The DOE supports microbiological research through programs 
involving microbial genomics, climate change, bioremediation, and 
analyses of basic biological processes important in the search for 
alternative energy sources. The ASM commends and supports the 
administration's recommended 14 percent increase for a total of $4.1 
billion for the DOE Office of Science. The DOE Office of Science is one 
of the three priority agencies in the President's American 
Competitiveness Initiative (ACI), which supports a wide range of 
research and development related to scientific innovation.
         strong support is needed for the doe office of science
    Scientific progress and the U.S. economy continue to benefit from 
investments in basic sciences made by the DOE Office of Science. The 
DOE Office of Science, the Nation's primary source of support for 
research in the physical sciences, is also an essential partner in 
several critical areas of biology and environmental science as well as 
in mathematics, computing, and engineering. Furthermore, the Office of 
Science supports a unique system of programs based on large-scale, 
specialized user facilities that bring together teams of scientists 
focused on such challenges as global warming, genomic sequencing, and 
energy research. The Office of Science is also an invaluable partner 
with the National Institutes of Health (NIH) and the National Science 
Foundation (NSF) through its support for several important 
interdisciplinary research efforts. The Office of Science also supports 
peer-reviewed, basic research at universities and colleges across the 
United States in science areas relevant to the DOE. These programs 
contribute to the knowledge base and training of the next generation of 
scientists.
    The Office of Science will play an important role in the American 
Competitiveness Initiative, which seeks to double Federal spending in 
the sciences during the next decade. In particular, the Federal 
Advanced Energy Initiative aims to reduce American dependence on 
imported energy resources. Many of the DOE scientific research programs 
share the goal of producing and conserving energy in environmentally 
responsible ways. These programs include basic research projects in 
microbiology as well as extensive development of biotechnology-based 
systems to produce alternative fuels and chemicals from biomass, to 
recover and improve processes for refining fossil fuels, to remediate 
environmental problems, and to reduce wastes and pollution. Our 
Nation's future competitiveness and innovation capabilities rely 
inclusively on all basic sciences and technologies.
    The administration's proposed budget for fiscal year 2007 requests 
$4.1 billion for the Office of Science. The ASM recommends that 
Congress support the proposed budget of $4.1 billion for the DOE Office 
of Science in the fiscal year 2007 appropriation, an increase of $505 
million over fiscal year 2006.

          BIOLOGICAL AND ENVIRONMENTAL RESEARCH (BER) PROGRAMS

    The proposed budget for the base programs of the Biological and 
Environmental Research (BER) program in fiscal year 2007 is $510 
million, a $59 million increase over fiscal year 2006. For over 50 
years, the BER program has been advancing environmental and biomedical 
knowledge that promotes national security through improved energy 
production, development, and use; international scientific leadership 
that underpins our Nation's technological advances; and research that 
improves the quality of life for all Americans.

                       BER GENOMICS: GTL PROGRAM

    The DOE is the lead Federal agency supporting genomic sequencing of 
non-pathogenic microbes through its Genomics: GTL Program. The sequence 
information being compiled through this program provides knowledge into 
how to design biotechnology-based processes that will function in 
extreme conditions and could potentially address national priorities, 
such as energy and environmental security, bioremediation of waste 
sites, global warming and climate change, and energy production. 
Microbes power global carbon and nitrogen cycles, clean up wastes, and 
transform energy. They are an important source of biotechnology 
products, making the DOE research programs extremely valuable for 
advancing our knowledge of the non-medical microbial world. Knowing the 
complete DNA sequence of a microbe provides important clues about the 
biological capabilities of the organism and is an important step toward 
developing strategies for efficiently detecting, using, or 
reengineering particular microbes to address key national energy and 
environmental issues. The DOE Genomics: GTL genomic sequencing program 
has an important impact on nearly every other activity within BER. ASM 
supports the administration's request of $135 million for the Genomics: 
GTL program in fiscal year 2007, a $50 million increase over fiscal 
year 2006.
    In addition to this program, a substantial portion of the analytic 
capacity within the DOE Joint Genome Institute (JGI) continues to be 
devoted to the sequencing of individual microbial genomes as well as 
the DNA in mixtures from microbial communities dwelling within 
specialized ecological niches. As part of these efforts, the DOE 
continues to analyze complete DNA sequences of genomes in microbes with 
potential uses in energy, waste cleanup, and carbon sequestration.
    About 40 percent of the JGI capacity is dedicated to serving the 
DOE's direct needs, primarily through the Genomics: GTL program, while 
the remaining 60 percent of this capacity serves as a state-of-the-art 
DNA sequencing facility for scientists who submit proposals subject to 
merit review. These sequencing projects will be conducted at no 
additional cost for the wider scientific community and are expected to 
have a substantial impact on the BER Environmental Remediation Sciences 
program, with much of this program focused on using microbes to cleanup 
environmental sites. In addition, the Genomics: GTL program will 
continue to have a major impact on the BER Climate Change Research 
program because of the role microbes play in the global carbon cycle 
and the potential for developing biology-based processes for 
sequestering carbon.
    The ASM supports the administration's request for $62 million to 
continue supporting the Joint Genome Institute program in fiscal year 
2007. The ASM applauds the DOE's leadership in recognizing this 
important need in science and endorses expanding these microbial genome 
sequencing efforts, particularly to learn more about the functions and 
roles of the many microorganisms that resist efforts to be grown in 
culture. This program provides a basis for using genomic information 
more broadly to understand life at the cellular and at even more 
complex levels.

                       ENVIRONMENTAL REMEDIATION

    The overall goal of the DOE Environmental Remediation subprogram 
(ER) is to support research that improves the science underpinning the 
cleanup of the DOE's sites and to support related operations. Because 
traditional cleanup strategies may not work or be cost effective, the 
ER subprogram supports basic research that aims to develop and validate 
technical solutions to these complex remediation problems. The goal is 
to develop innovative new remediation technologies that reduce risks 
and provide savings in costs and time. The ASM supports the 
administration's request for nearly $97.2 million for the Environmental 
Remediation subprogram in fiscal year 2007. The DOE environmental 
remediation programs deserve sustained support.

                        CLIMATE CHANGE RESEARCH

    Although the ASM is pleased to see that the administration is 
continuing to support Climate Change Research in its fiscal year 2007 
budget, the proposed budget of nearly $135 million for this important 
activity is a $6.5 million decrease from fiscal year 2006. The Climate 
Change Research subprogram seeks to apply the latest scientific 
knowledge to the potential effects of greenhouse gas and aerosol 
emissions on the climate and the environment. This program is the DOE's 
contribution to the interagency U.S. Global Change Research Program 
proposed by President Bush in 1989 and codified by Congress in the 
Global Change Research Act of 1990 (Public Law 101-106).
    The Ecological Processes portion of this subprogram is focused on 
understanding and simulating the effects of climate and atmospheric 
changes on ecosystems. Research will also identify potential feedbacks 
from changes in the climate and atmospheric composition. This research 
is critical to better understanding of the changes occurring in 
ecosystems from increasing levels of atmospheric pollutants. This 
program is vital to advance understanding of energy balances between 
the surface of the Earth and the atmosphere and how this will affect 
the planet's climate and ecosystems. The ASM recommends continued 
support for important Climate Change research within the DOE Office of 
Science.

                         BASIC ENERGY SCIENCES

    The administration request for the Office of Basic Energy Sciences 
(BES) for fiscal year 2007 is $1.4 billion, an increase of $28.6 
million over fiscal year 2006. The ASM is concerned with BES's efforts 
to move away from energy biosciences research. This program is a 
principal sponsor of fundamental research for the Nation in the areas 
of materials sciences, chemistry, geosciences, and biosciences as they 
relate to energy. The program supports initiatives in the 
microbiological and plant sciences focused on harvesting and converting 
energy from sunlight into feedstocks such as cellulose and other 
products of photosynthesis, as well as how those chemicals may be 
further converted into energy-rich molecules such as methane, hydrogen, 
and ethanol. Alternative and renewable energy sources are of strategic 
importance to the U.S. energy portfolio, and the DOE is advancing basic 
research in this critical area. Genomic technologies are a tremendous 
new resource for further advancing the DOE's bioenergy goals.

                 NEW TECHNOLOGIES AND UNIQUE FACILITIES

    New technologies and advanced instrumentation derived from the 
DOE's expertise in the physical sciences and engineering have become 
increasingly valuable to biologists. Beam lines at the DOE's facilities 
and other advanced technologies for determining molecular structures of 
cell components are advancing our understanding of cell functions and 
are being applied to new drug design. The DOE advances in areas such as 
high-throughput, low-cost DNA sequencing, mass spectrometry, cell 
imaging, and computational analyses of biological molecules and 
processes are critical to our national biological research enterprise. 
The ASM supports recommended funding of $15 million for infrastructure 
development of research user facilities under BER.
    The DOE has unique field research facilities for conducting 
environmental research that is important for understanding 
biogeochemical cycles and global change, and for restoring 
environmental sites. The DOE's ability to conduct large-scale science 
projects and to draw on physics, mathematics and the computer sciences, 
and engineering is also critical for biological research.

                               CONCLUSION

    The ASM supports the recommended 14 percent increase for a total of 
$4.102 billion for the DOE Office of Science in fiscal year 2007, and 
recommends strong support for the DOE BER programs.
    The ASM appreciates the opportunity to provide written testimony 
and would be pleased to assist the subcommittee as it considers the 
fiscal year 2007 appropriation for the DOE.
                                 ______
                                 
        Prepared Statement of the Gas Machinery Research Council

    Mr. Chairman and members of the subcommittee, we appreciate the 
opportunity to provide testimony in support of the DOE Natural Gas 
Infrastructure Program and the fiscal year 2007 budget. We are 
concerned that no funds were allotted for this program in fiscal year 
2006 and request support of this program in fiscal year 2007 in the 
amount of $25 million.
    The Gas Machinery Research Council (GMRC) provides its member 
companies and the natural gas industry with the benefits of an applied 
research and technology program directed toward improving the 
reliability and cost effectiveness of the design, construction, and 
operation of mechanical and fluid systems. Membership includes 70 
companies involved in all aspects of natural gas compression, including 
all major natural gas pipelines, production companies, packagers, and 
service companies.
    The first generation compression infrastructure in the 1920's and 
1930's consisted of many small slow-speed compressors to move gas from 
producing regions to markets. To provide the necessary expansion of 
these early pipeline systems in the decades after World War II, a 
second generation of larger and higher-speed machines promised a 
significant reduction in installed cost. As these compressors were 
installed, they experienced many reliability and operational problems. 
To address this challenge, in 1952 the pipeline industry formed what is 
now the Gas Machinery Research Council. Through research done at 
Southwest Research Institute (SwRI), an Analog Simulator was developed 
to optimize the design of pulsation filter bottles and predict 
pulsation performance. This design service has been operating 
continuously since 1955, bringing pulsation problems under control.
    In recent years the promise of dramatic cost reductions has driven 
the industry towards even higher-speed, larger horsepower reciprocating 
compression powered by modern gas engines or large electric motors. 
With this new technology came new challenges. The industry now faces a 
technology transition similar to 50 years ago.
    The last generation of slow-speed machines is no longer 
commercially available because they are perceived as unaffordable. 
While affordable, the current generation of high-horsepower, high-speed 
compression requires advancements in technology to meet their full 
potential to address the pipeline industry's compression needs.
    In fiscal year 2005, GMRC began the Advanced Reciprocating 
Compression Technology (ARCT) project under the DOE Natural Gas 
Infrastructure Program. The objective of the ARCT project was to 
develop the next generation of compression technology to enhance the 
efficiency, reliability and integrity of pipeline operations through 
improved compression. The suite of technologies developed during this 
program would provide pipeline operators with improved and affordable 
choices for new compression and products that can be retrofitted to 
existing machines. These retrofits would reduce the amount of fuel 
consumed to move gas from the producer to market and reduce emissions, 
resulting in savings for both the industry and the consumer.
    We are continuing aspects of this program using industry funds, but 
at greatly reduced levels. A resumption of the DOE partnership would 
allow these technologies to be brought to the market place and to the 
benefit of gas consumers far earlier.
    Natural Gas will continue to be a major source of worldwide energy 
as energy usage increases in the future. The majority of this increase 
will be provided by fossil fuels with the natural gas share increasing 
because of its worldwide availability and clean combustion 
characteristics. Currently, the U.S. domestic production of natural gas 
accounts for over 90 percent of our needs, whereas we import 65 percent 
of our oil needs. Maintaining the country's natural gas independence is 
vital to our security and will allow the United States to continue to 
provide world leadership in the development and application of new 
natural gas technologies. A joint industry/government research and 
development program can ensure that the industry infrastructure is in 
place for years to come.
    The 70 member companies of GMRC strongly support the DOE Natural 
Gas Infrastructure Program and urge you to re-establish the program 
funding in fiscal year 2007 in the amount of $25 million. This will 
allow development and implementation of technologies critical to 
infrastructure needs.
    We thank you for your consideration of these funding requests.
                                 ______
                                 
              Prepared Statement of FuelCell Energy, Inc.

    FuelCell Energy appreciates the opportunity to submit this 
statement in support of the Department of Energy's Fossil Energy, Fuels 
and Power Systems, Fuel Cell Program. We urge the subcommittee to 
continue to support this breakthrough program by appropriating $75 
million for development of this highly efficient, clean, and secure 
energy technology.
    DOE's Fossil Energy Fuel Cell Program, through the Solid State 
Energy Conversion Alliance (SECA) fuel cell and fuel cell hybrid 
activity, is developing technology to allow the generation of highly 
efficient, cost-effective, carbon-free electricity from domestic coal 
resources with near-zero atmospheric emissions in central station 
applications. The program directly supports the President's FutureGen 
project through the development of cost-effective, highly efficient, 
power blocks that facilitate sequestration in coal-based systems. The 
technology will also permit grid independent distributed generation 
applications by 2010.
    SECA fuel cell/turbine hybrids operating on coal gas are building 
blocks for zero emissions power, the ultimate goal of the President's 
FutureGen Program. These hybrids are projected to be available at a 
cost of $400/kW, a 10-fold reduction in cost from existing fuel cell 
technology. In addition the technology developed in this program will 
produce electricity at up to 60 percent in coal-based systems, produce 
near-zero emissions, and be compatible with carbon sequestration.
    In all applications SECA fuel cells will be both low-cost, with the 
above-stated goals of $400/kW, as well as highly efficient. Integrated 
with coal gasification, such systems will approach 60 percent 
efficiency compared to the existing coal-based power generation fleet 
average of about 33 percent efficiency. In distributed generation 
applications even higher efficiencies may be reached, and cogeneration 
opportunities can further increase efficiency.
    Along with these attributes fuel cells are one of the cleanest 
technologies available in terms of atmospheric emissions, which 
enhances their attractiveness for urban applications or applications in 
areas of non-attainment for Clean Air Act emissions. They also provide 
24-hour, silent operation.
    Finally, coal-based fuel cell systems will increase energy security 
by using domestic resources. In distributed generation applications 
fuel cells can eliminate transmission and distribution system 
infrastructure concerns and issues by providing generation near the 
point of use and by being able to operate in a grid-independent mode.
    The SECA Program consists of six integrated industrial 
manufacturing teams designing fuel cell or fuel cell/hybrid systems, 
developing the necessary materials, and ultimately responsible for 
deploying the technology. These teams are complemented by two to three 
dozen core technology performers providing generic problem-solving 
research needed to overcome barriers to low-cost, high-performance 
technology as identified by DOE and the manufacturing teams. The core 
technology teams are universities, national laboratories, and other 
research-oriented organizations. Historically the manufacturing teams 
receive 60 percent of the program funding and the core technology 
developers receive 40 percent. This unique structure assures that a 
variety of approaches to solving the problems associated with fuel 
cells will be undertaken in a manner that will increase the chances of 
success for this highly complex technology.
    Three of the six manufacturing teams, including FuelCell Energy, 
have recently been awarded contracts to develop fuel cell/hybrid 
technology for application to large central generation systems 
characterized by FutureGen. The remaining manufacturing teams are 
developing fuel cells for possible use in both these large systems as 
well as in distributed generation applications such as auxiliary power 
units, military power applications and remote or on-site power 
generation.
    The DOE budget request for this program is $63.3 million, a slight 
increase from fiscal year 2006 funding. This level of funding, if 
dedicated to the base SECA program would be about $13 million more than 
amounts available to the base program in fiscal year 2006, but still 
below fiscal year 2005 funding levels. In fiscal year 2006 and 2007 the 
program is entering Phase II of development, which involves larger 
scale development work on the part of manufacturing teams in the 
program and which will require more funding to continue to meet the DOE 
proposed schedule. As part of this greater commitment, manufacturing 
teams entering Phase II are required to provide a minimum of 50 percent 
of the funds needed for the program, which is an increase from the 25 
percent cost-sharing required in Phase I. For these reasons additional 
funding is needed to continue progress apace for this exciting new 
technology.
    We believe that the SECA fuel cell/hybrid program has achieved the 
progress to date as anticipated by the program managers, and will 
continue to display such progress given sufficient funding support by 
DOE and the Congress. Hybrid technology has been successfully 
integrated into the program and an emphasis on use with coal-based 
systems has been established. Industry partners in the program have 
continued and increased cost-sharing support. This technology is 
essential to meeting the efficiency and emissions goals of the 
President's FutureGen program and will also provide low-cost, low-
emissions alternatives for distributed generation applications. 
Therefore, we urge you to support our request for $75 million to 
execute the DOE Fossil Energy, Fuels and Power Systems, Fuel Cell 
Program in fiscal year 2007.
                                 ______
                                 
           Prepared Statement of the Alaska Energy Authority

    The Alaska Energy Authority (AEA), the State of Alaska's lead 
agency for energy planning and development, thanks the subcommittee for 
this opportunity to present written testimony in support of U.S. 
Department of Energy (USDOE) appropriations. AEA works in partnership 
with USDOE, the Denali Commission, and other Federal agencies to 
provide reliable and affordable energy to the citizens of our State. To 
sustain this work, we request the subcommittee:
  --Reinstate USDOE funding and support for the national Regional 
        Biomass Energy Program and the Geothermal Program. These 
        modestly funded programs help us develop valuable, locally-
        funded projects such as:
    --A sawmill waste-fired heating system that saves the City of 
            Craig, Alaska $100,000 per year, and
    --A 400 kW geothermal power plant at Chena Hot Springs, Alaska that 
            saves $270,000 per year in diesel fuel costs;
  --Support USDOE funding for the State Energy Program and the Combined 
        Heat and Power Program. These cost-share programs help us 
        identify efficiency projects such as:
    --A waste heat recovery project that saves Kotzebue, Alaska 
            $150,000 per year, and
    --A lighting upgrade project that saves the Iditarod School 
            District $16,000 per year;
  --Support the USDOE's Arctic Energy Office in Fairbanks. The Arctic 
        Energy Office and its partner, the University of Alaska, play 
        crucial roles in the research, development, and deployment of 
        fossil energy technology in remote areas of Alaska. Recognizing 
        that Alaska also holds substantial renewable energy resources, 
        we request that the subcommittee consider support for the 
        Arctic Energy Office in the area of energy efficiency and 
        renewable energy.
    Again, thank you for the opportunity to present these written 
comments to the subcommittee. Your staff may contact me with questions 
or requests for further information.
                                 ______
                                 
  Prepared Statement of the National Association for State Community 
                           Services Programs

    As Chair of the Board of Directors for the National Association for 
State Community Services Programs (NASCSP), I am pleased to submit 
testimony in support of the Department of Energy's (DOE) Weatherization 
Assistance Program (WAP) and in support of DOE State Energy Programs 
(SEP). We are seeking a fiscal year 2007 appropriations level of $275 
million for the WAP and $74 million for SEP. NASCSP believes these 
funding levels are essential in continuing and improving the 
outstanding results of these State grant programs for our citizens.
    NASCSP is the member organization representing the States on issues 
related to the WAP and the Community Services Block Grant. The State 
offices represented by our organization would like to thank this 
committee for its continued support of the WAP and SEP through the 
years. The $242.6 million in WAP funds provided by the committee in 
2006 is expected to result in:
  --An additional 97,000 homes occupied by low-income families 
        receiving energy efficiency services, thereby reducing the 
        energy use and associated energy bills; and
  --Greenhouse gases and environmental pollutants being significantly 
        reduced due to the decrease in energy use by these newly 
        weatherized homes; and
  --Nearly 20,000 full time, highly skilled, jobs being supported 
        within the service delivery network and in related 
        manufacturing and supplier businesses;
  --Weatherization reduces the need for importing foreign oil by as 
        much as 18 million barrels per year and this number continues 
        rise.
    The WAP is the largest residential energy conservation program in 
the Nation and serves a vital function in helping low-income families 
reduce their energy use. Developed as a pilot project in 1975, the WAP 
was institutionalized in 1979 within DOE and is operated in all 50 
States, the District of Columbia, and on several Native American 
reservations. The WAP funds are used to improve the energy efficiency 
of low-income dwellings using the most advanced technologies and 
testing protocols available in the housing industry. The energy use 
reduction resulting from these efforts helps our country reduce its 
dependency on foreign oil and decreases the cost of energy for families 
in need. With lower energy bills, these families can increase their 
usable income and buy other essentials like food, shelter, clothing, 
medicine, and health care.
    The WAP provides an energy audit for each home to identify the most 
cost-effective measures, which typically include adding insulation, 
reducing air infiltration, servicing the heating and cooling systems, 
and providing health and safety diagnostic services. According to the 
Energy Information Administration's (EIA) Annual Energy Outlook, 2005 
projected first-year energy savings for households weatherized during 
this year are estimated to be $440, reflecting revised assumptions 
about future natural gas prices. For every $1 spent, the WAP returns 
$2.83 in energy and non-energy benefits over the life of the 
weatherized home, based on these same EIA long-term energy prices 
outlook and studies conducted by the Oak Ridge National Laboratory. 
These savings occur for several years into the future. Since the 
program's inception, more than 5.5 million homes have been weatherized 
using Federal, State, utility and other monies.
    As we all know, these are troubling times facing our Nation--war, 
budget deficits, homeland security needs, and a slowed economic 
recovery. These times create added financial burdens for all Americans, 
but especially for those who live at or below the poverty line. Low-
income families have always spent a disproportionate share of their 
income for energy needs than their middle-income counterparts. For 
example, a typical middle class family pays about 5 percent of their 
annual income for energy costs (heat, lights, air conditioning, 
appliances and hot water). Low-income families pay nearly the same 
dollar amount each year for energy but this amount represents a 
significantly higher percentage of their total household income (16 to 
20 percent). In times of energy shortages and escalating energy costs, 
the energy burden for these families can reach 25 to 40 percent or more 
of their available income.
    When energy costs rise, like they have during the 2005-2006 heating 
season, even a nominal increase can have a dramatic negative impact on 
low-income families. The expected increase in this year's energy costs 
may amount to an additional $600 or more for most families. For middle-
income families, this increase will amount to less than one-half of 1 
percent of the total household income. For many low-income families; 
however, this increase will result in a 4 to 5 percent reduction in 
their expendable income and will cause families to go without other 
important essentials like food, medicine, or clothing to meet this 
higher financial demand.
    These families need long-term solutions to help them reduce their 
energy use both now and in the future--resulting in lower energy bills. 
That is the primary mission of the Weatherization Assistance Program--
``To reduce heating and cooling costs for low-income families, 
particularly for the elderly, people with disabilities, and children, 
by improving the energy efficiency of their homes while ensuring their 
health and safety.''
    The Oak Ridge National Laboratory reports entitled State Level 
Evaluations of the Weatherization Program Conducted From 1990-2001 
found that the WAP significantly improved its energy savings results 
during those years. In 1996, the program showed savings of 33.5 percent 
of gas used for space heating--up from 18.3 percent savings in 1989. 
The increase in savings was based in large part on the introduction and 
use of more sophisticated diagnostic tools and audits. Families 
receiving weatherization services can reduce their heating energy use 
by an average of 22 percent, making the cost for heating their homes 
more affordable. The Evaluation report also concluded that the WAP 
possessed a favorable cost-benefit ratio. Simply stated, the Federal 
funds provided to support the program have a 140 percent return on 
investment, or nearly $2.83 in benefits for every $1 invested. Meta-
evaluations in 1999 and 2001 confirmed the high level of energy saving 
potential for the WAP.
    The WAP has always served as a testing ground and provides a 
fertile field for the deployment of research conducted by national 
laboratories. For example, the Oak Ridge National Laboratory developed 
the National Energy Audit (NEAT) for use by local agencies in assessing 
cost effectiveness of service delivery. Oak Ridge is currently 
investigating the cost effectiveness of including certain base load 
measures (water heater replacement, lighting, small motor efficiency, 
refrigerator replacements) into the program and continues to test other 
protocols and material installation techniques to help State and local 
agencies improve their field operations. The Florida Solar Energy 
Center and the State of Hawaii are working on the development of cost 
effective solar hot water heaters. Many of our States have implemented 
refrigerator replacement programs to decrease energy base-load for low-
income families.
    One of the major outcomes of WAP field deployment is that the 
private sector eventually adopts these new technologies. This pattern 
has been established through several advancements including blower 
door-directed air infiltration, duct system testing and sealing, 
furnace efficiency standards, and insulation and ventilation protocols. 
The acceptance of these standards and protocols by the private sector 
is enormously important as builders attempt to construct new properties 
or rehabilitate existing ones using a renewed energy efficiency 
philosophy.
    Of equal importance to the technological and programmatic 
foundation are the WAP contributions in achieving overall national 
energy policies and social strategies. Some examples of how the program 
helps achieve these goals include:
  --Reducing harmful green house gas through reduced CO2 
        emissions by avoiding energy production. Each time a house is 
        weatherized, the reduction in energy needs reduces the 
        environmental impact associated with creating that energy 
        reduction of sulfur dioxide, carbon, and other pollutants 
        spilled into the atmosphere from the burning of fossil fuels 
        like oil, coal, kerosene, wood, gas, and propane.
  --Increasing jobs in communities throughout the country. For every $1 
        million invested in the WAP, more than 40 full-time jobs are 
        created and supported in the States. Another 20 jobs are 
        created in companies who provide goods and services to the 
        program.
  --Investing money into communities through job creation, local 
        purchasing of goods and services, and tax revenues. These 
        investments result in many secondary benefits. These residual 
        benefits, known as ``economic benefit multipliers,'' are 
        applied to local community investment to value the real worth 
        of money used locally. This multiplier is 3.5 to 4 times the 
        actual investment. This means that an investment of $275 
        million in the WAP could yield nearly $1.1 billion in economic 
        benefits to local communities.
  --Reducing consumption of imported fuels by reducing residential 
        energy consumption. Our country currently imports nearly 60 
        percent of its oil from foreign countries. This figure is 
        higher than the import percentage in the 1970's, when the oil 
        embargo threatened our ability to operate as a Nation. The 
        conservation efforts of the WAP network will help reduce our 
        country's dependency on foreign oil, thereby strengthening our 
        country's national security.
    In 2001, the administration earmarked the WAP as a ``Presidential 
Priority'' in its National Energy Policy Plan. President Bush committed 
$1.4 billion to be added to WAP over a 10-year period to help thousands 
of low-income families meet their energy needs while reducing their 
energy burden. Each year since then, the administration has asked for 
higher appropriations levels in their budgets submitted to Congress. In 
response to these higher budget requests, Congress voted to fund the 
WAP in 2006 at $242.5 million--$15 million more than the President's 
request. In a complete reversal of the President's long-standing 
commitment to the program, the administration has significantly reduced 
its 2007 request to $164.2 million, or a 33 percent reduction. We are 
writing to urge your subcommittee to restore funding for the Low Income 
Weatherization Assistance Program to levels no less than $275 million 
for WAP and $74 million for State Energy Programs (SEP) for fiscal year 
2007.
    Weatherization is a clearly proven investment which has helped over 
5.5 million families live in safer, more comfortable living conditions. 
If the President's budget is upheld, 33,000 low-income families will be 
denied critical weatherization services this year. With this funding, 
these families would have saved an average of $440 or more a year on 
energy. This money could have been used for essential needs such as 
food, clothing, and medicine. Instead, these low-income households will 
have to spend more than $200 million from their meager incomes to pay 
for energy that could have been saved if the homes were weatherized in 
2007. At a time when oil and natural gas prices remain high and low-
income families are facing huge increases in their energy costs, it is 
irresponsible for the administration to place added burdens on these 
families by choosing not to help them conserve energy.
    NASCSP is also concerned about the low level of funding provided 
for the State Energy Programs (SEP) in 2006. SEP enjoys a broad 
constituency, supporting State energy efficiency programs that include 
energy generation, fuels diversity, energy use in economic development, 
and promoting more efficient uses of traditional energy resources. SEP 
funding has fallen steadily from a recent high in 1995 of $53 million 
to its fiscal year 2006 level of $36 million. The State energy offices 
are the crucial centers for organizing energy emergency preparedness. 
They have been asked to do much new work in the sensitive area of 
infrastructure security. Taking into consideration this growing burden, 
the increasing difficulty of managing energy resources, together with 
increasing opportunities for States to implement cost-saving measures, 
we are supporting their request of $74 million for fiscal year 2007. 
This level would restore the program's recent funding cuts, enhance 
their ability to address energy emergency preparedness, and allow for 
inflationary impacts since 1995.
    By the evidence provided herein, this committee can be assured that 
the funding invested in WAP and SEP will provide essential services to 
thousands of low-income families, resulting in greater energy savings, 
more economic investments, increased leveraging of other funds, and 
less reliance on high-cost, foreign oil--outcomes that will benefit the 
Nation. NASCSP looks forward to working with committee members in the 
future as we attempt to create energy self-sufficiency for millions of 
American families through these invaluable national programs.
                                 ______
                                 
  Prepared Statement of the UF-DOE High Temperature Electrochemistry 
                     Center, University of Florida

    Chairman and members of the subcommittee, our quality of life, 
standard of living, and national security depend on energy. The limited 
supply of fossil energy, its accelerated consumption, and the 
dependence on its supply from unstable Middle East countries are major 
U.S. economic and security issues. To address these issues we must have 
a strong balanced energy research program, which is based on the best 
use of our indigenous natural resources while minimizing our dependence 
on imported energy forms. Therefore, our testimony is directed to 
programs in the Office of Fossil Energy of the U.S. Department of 
Energy. Specifically we request that the High Temperature 
Electrochemistry Center (HiTEC) be funded at the fiscal year 2006 level 
of $8 million (including $750,000 at the University of Florida), and 
that the Solid State Energy Conversion Alliance (SECA) be funded at $67 
million for a total SECA-HiTEC appropriation within the Office of 
Fossil Energy, Research and Development, Fuels and Power Systems of $75 
million.
    HiTEC.--The High Temperature Electrochemistry Center (HiTEC) is 
part of the Research and Development Program and provides the research 
necessary to develop enabling technologies for advanced power 
generation systems, including the President's FutureGen, Clean Coal, 
and Hydrogen programs. HiTEC not only supports DOE's mission, but 
through the HiTEC Satellite Centers at Montana State University, the 
University of Florida, and other U.S. universities, creates 
concentrated centers of excellence where the fundamental research 
necessary to meet U.S. energy needs are addressed.
    As an example, at the University of Florida we are developing the 
fundamental understanding of ionic transport in, and electrocatalytic 
(electrochemical catalysis) phenomena on the surface of, ion conducting 
materials. From first-principles calculations and molecular dynamic 
simulations of ionic transport and gas-solid interactions to synthesis 
and characterization (structural, electrochemical, and catalytic) of 
novel ion conducting materials and electrocatalysts. The results of 
these investigations will minimize the polarization losses of fuel 
cells and batteries, maximize the hydrogen production from gas 
separation membranes, and enhance the signal and selectivity of exhaust 
sensors. In so doing this research will improve U.S. energy efficiency 
and security.
    A further benefit of this university-based research program is that 
it provides for the education of the next generation of energy 
scientists and engineers necessary to meet the employment needs of this 
growth industry. As such, this university-based energy research program 
is directly aligned with the goals of the President's ``American 
Competitiveness Initiative,'' the pending Senate legislation 
``Protecting America's Competitive Edge Acts,'' and the National 
Academy's ``Gathering Storm'' report.
    Therefore, we recommend continuation of this program at the fiscal 
year 2006 level of $8 million including $750,000 at the HiTEC center at 
the University of Florida.
    SECA.--Solid State Energy Conversion Alliance (SECA) is the DOE 
Fossil fuel cell program. Fuel cells are a critical technology for 
efficient utilization of our natural resources. What distinguishes the 
SECA program from the Office of Energy Efficiency's fuel cell program 
is the fuel flexibility of the type of fuel cell being developed by 
SECA. Not only can these fuel cells contribute to a future Hydrogen 
Economy, but unlike other fuel cells, they can operate using 
conventional fuels (from natural gas to coal derived gasses, to 
gasoline and diesel fuels) as well as renewable biomass based fuels. 
Thus, development and deployment of the SECA fuel cells can improve 
U.S. energy efficiency and security utilizing our current energy 
infrastructure.
    The SECA program is a successful DOE-industry-university 
partnership involving 6 industry teams, 20 universities and 4 national 
labs. This program is achieving its milestones and goals and as such 
will see market entry in the next few years providing near term U.S. 
energy efficiency gains. However, in order to deploy pre-commercial 
prototypes a funding increase for the SECA program in fiscal year 2007 
to $67 million is necessary.
    Thank you for the opportunity to offer testimony on these important 
programs. We appreciate the support of the subcommittee.
                                 ______
                                 
     Prepared Statement of the Coalition of Northeastern Governors

WEATHERIZATION ASSISTANCE PROGRAM, NORTHEAST HOME HEATING OIL RESERVE, 
                  AND REGIONAL BIOMASS ENERGY PROGRAM

    The Coalition of Northeastern Governors (CONEG) is pleased to 
provide this testimony to the Senate Subcommittee on Energy and Water, 
and Related Agencies regarding fiscal year 2007 appropriations for 
Energy Conservation and Renewable Energy programs of the U.S. 
Department of Energy. The Governors recognize the difficult funding 
decisions which confront the subcommittee this year and appreciate the 
subcommittee's support for these programs.
    At a time of record high energy prices and heightened attention to 
the security, reliability and efficiency of the Nation's energy 
systems, these conservation and renewable energy programs have taken on 
an increased significance. Modest Federal investment in these programs 
provides substantial energy, economic and environmental returns to the 
Nation--leveraging additional State and private sector investment and 
contributing to sound energy management. To continue the contribution 
of these programs to cost-effective energy strategies, the CONEG 
Governors request that funding for the State Energy Program be 
increased to $49.5 million, and that funding for the Weatherization 
Assistance Program be provided at a level of at least $250 million in 
fiscal year 2007. The Governors support the President's request that 
funding for the Northeast Home Heating Oil Reserve be provided at a 
level of $4.95 million in fiscal year 2007. The Governors also request 
that the subcommittee provide $7.5 million to continue the National 
Biomass Partnership (previously known as the Regional Biomass Energy 
Program).
    Administered by the 50 States, District of Columbia and 
territories, the Department of Energy's State Energy Program and 
Weatherization Assistance Program are a cost-effective way to achieve 
national energy goals. The National Biomass Partnership helps sustain 
public and private sector investment in biomass technologies and 
contributes to expanded biomass energy development. These programs 
provide valuable opportunities for the States, industry, national 
laboratories and the U.S. Department of Energy to collaborate in moving 
energy efficiency and renewable energy research, technologies, 
practices and information to the public and into the marketplace.
    State Energy Program.--The State Energy Program (SEP) is the major 
State-Federal partnership program addressing energy efficiency and 
conservation in all sectors of the economy. Cost-shared by the States, 
the program allows State energy offices to increase the effectiveness 
of the Federal funds by tailoring the energy activities to address 
particular local energy priorities and opportunities.
    Increased SEP funding in fiscal year 2007 will ensure that States 
can continue their work toward the national energy goal of a balanced, 
reliable and secure energy system. SEP provides the vital funds that 
allow State energy offices to move energy efficiency and renewable 
energy technology into the marketplace, assist both the private and 
public sectors in reducing energy use and costs, and conduct extensive 
public information activities. Increased SEP funding will also ensure 
that States can rely on their State energy offices to continue vital 
emergency preparedness activities.
    The modest Federal funds provided to the SEP are an efficient 
Federal investment, as they are leveraged by non-Federal public and 
private sources. According to a recent study of the SEP done by the Oak 
Ridge National Laboratory at the request of U.S. Department of Energy, 
every dollar in SEP funding results in $7.22 in annual energy cost 
savings and also yields $10.71 in ``leveraged'' funding from the State 
and private sectors. SEP projects have resulted in more than $333 
million in annual energy costs savings.
    Weatherization Assistance Program.--Through a network of 
partnerships with more than 970 local weatherization agencies across 
the country, the Weatherization Assistance Program (WAP) improves the 
energy efficiency of more than 100,000 low-income dwellings a year, 
thereby reducing the heating and cooling bills of the Nation's most 
vulnerable citizens. According to the U.S. Department of Energy, low-
income households spend more than 15 percent of their annual income on 
energy, compared to 3.5 percent for other households. The 
Weatherization Assistance Program strives to reduce this ``energy 
burden'' of low-income residents through such on-going energy saving 
measures as the installation of insulation and energy-efficient 
lighting, and heating and cooling system tune-ups. These measures can 
result in energy savings as high as 30 percent. According to the 
National Association for State Community Service Programs, based on 
current energy prices, the average family saves approximately $400 per 
year after weatherization services are provided.
    The WAP also provides numerous non-energy benefits. Oak Ridge 
National Laboratory has concluded that for every $1 of DOE investment, 
there are non-energy benefits worth $1.88. For instance, the WAP 
generates more than 8,000 jobs nationwide, creating 52 new jobs for 
every $1 million invested. In addition, the decreased energy use 
resulting from weatherization measures also provides environmental 
benefits through decreased carbon dioxide emissions.
    National Biomass Partnership.--Renewable energy plays an 
increasingly vital role in meeting the Nation's goal of reduced 
reliance on imported fossil fuels. Some of the most promising renewable 
technologies use biomass to achieve that goal. The National Biomass 
Partnership (formerly known as the Regional Biomass Energy Program) is 
a primary link among State, private, and Federal biomass activities. It 
is a vital complement to the research and technology work of the 
Department of Energy and its national laboratories, and can assist 
Federal agencies in carrying out the biomass provisions in EPAct 2005 
and the President's Advance Energy Initiative. The activities are 
tailored to the specific resources and opportunities in each region of 
the country, thus providing a critical link in the chain of research, 
resource production and technology commercialization. The Partnership 
has been successful in promoting the adoption of State policies that 
encourage development of biomass resources, increasing public awareness 
of the benefits and uses of bioenergy; leveraging Federal funding and 
State resources, and increasing the intensity of biomass use. In the 
Northeast, the Partnership has been instrumental in stimulating an 
estimated $24 million in public and private investment in bioenergy 
development; offering technical assistance that contributed to new 
bioenergy and biopower development policies in six States; and 
providing educational assistance to increase public and private sector 
awareness of the potential of regional biomass development. As a 
result, the Northeast has seen an increase in development plans for new 
ethanol and biodiesel production facilities and biomass power capacity, 
as well as a growth in demand for ethanol.
    The Partnership is a recognized source of objective and reliable 
information on biomass. It is also a valued resource for States in 
their efforts to expand the use of biodiesel in transportation and 
heating oil and in promoting appropriate use of biomass for expanded 
electric power and combined heat and power applications. These biomass 
applications are important to the Northeast's near term goals of 
increased renewable energy use and voluntary programs to reduce 
greenhouse gases.
    Northeast Home Heating Oil Reserve.--The Nation's heightened 
emphasis on energy security places renewed importance on the Northeast 
Home Heating Oil Reserve. The Northeast, with its reliance upon 
imported fuels for both residential and commercial heating, is 
particularly vulnerable to the effects of supply disruptions and price 
volatility. The Reserve provides an important buffer to ensure that the 
States will have prompt access to immediate supplies in the event of a 
supply emergency.
    In conclusion, we request that the subcommittee provide funding in 
fiscal year 2007 for the State Energy Program at the President's 
requested level of $49.5 million; provide $250 million for the 
Weatherization Assistance Program; provide $7.5 million for the 
National Biomass Partnership; and provide funding at the President's 
requested level of $4.95 million for the Northeast Home Heating Oil 
Reserve. These programs have demonstrated their effectiveness in 
contributing to the Nation's goals of environmentally sound energy 
management and improved economic productivity and energy security.
    We thank the subcommittee for this opportunity to share the views 
of the Coalition of Northeastern Governors, and we stand ready to 
provide you with any additional information on the importance of these 
programs to the Northeast.
                                 ______
                                 
     Prepared Statement of the Biomass Energy Research Association

                                SUMMARY

    This testimony pertains to the fiscal year 2007 appropriations for 
biomass energy research, development, and demonstration (RD&D) 
conducted by the Department of Energy's (DOE) Office of Energy 
Efficiency and Renewable Energy (EERE). This mission-oriented biomass 
RD&D is funded by the Energy and Water Development bill, and is 
performed under the heading of Energy Supply and Conservation, Energy 
Efficiency and Renewable Energy. BERA recommends a total appropriation 
of $150,000,000 in fiscal year 2007 under Biomass and Biorefinery 
Systems R&D (Energy Supply and Energy Conservation), exclusive of 
earmarks. Specific lines items for the DOE biomass RD&D budget are as 
follows:
  --$60,000,000 for Biochemical Conversion Platform Technology 
        (conversion of corn starch, corn stover and fiber, wood, forest 
        residues and perennial crops);
  --$50,000,000 for Thermochemical Conversion Platform Technology 
        (conversion of wood and forest resources to pyrolysis oils and 
        syngas);
  --$25,000,000 for Integrated Biorefinery Technologies; and,
  --$15,000,000 for Utilization of Platform Outputs: Core Technologies 
        for Chemicals.

                               BACKGROUND

    On behalf of BERA's members, we would like to thank you, Mr. 
Chairman, for the opportunity to present the recommendations of BERA's 
Board of Directors for the high-priority programs that we strongly urge 
be continued or started. BERA is a non-profit association based in the 
Washington, DC area. It was founded in 1982 by researchers and private 
organizations conducting biomass research. Our objectives are to 
promote education and research on the economic production of energy and 
fuels from freshly harvested and waste biomass, and to serve as a 
source of information on biomass RD&D policies and programs. BERA does 
not solicit or accept Federal funding for R&D.
    There is a growing realization in our country that we need to 
diversify our energy resources, develop technologies to utilize 
indigenous fuels, and reduce reliance on foreign oil. Economic growth 
is fueling increasing energy demand and placing considerable pressure 
on our already burdened energy supplies and environment. The import of 
oil and other fuels into the United States is growing steadily and 
shows no sign of abating. Industry and consumers both are being faced 
with rapidly rising costs for fossil fuels, which are vital to our 
economy. A diversified energy supply will be critical to meeting the 
energy challenges of the future and maintaining a healthy economy with 
a competitive edge in global markets.
    Biomass is the single renewable resource with the ability to 
replace liquid transportation fuels. It can also be used as a feedstock 
to supplement the production of chemicals, plastics, and other 
materials that are now produced from crude oil. In addition, 
gasification of biomass or biomass-derived pyrolysis oils produces a 
syngas that can be utilized to supplement the natural gas supply and 
electricity from fossil fuels. Viable fuel and chemical products are 
already being produced from biomass, but on a very small scale compared 
to the potential fuel markets. Research should be expanded to realize 
the full potential of biomass as a component of our energy supply.
    The Energy Policy Act of 2005 has created various incentives for 
diversifying our energy supply. The Act provides a good foundation, but 
to be effective it must be supported by research that will enable the 
United States to take advantage of our abundant, domestic, renewable 
resources in a cost-effective way. The recently announced Biofuels 
Initiative provides for additional funding to support the use of 
cellulosic biomass as a feedstock for ethanol, with the potential to 
replace as much as 30 percent of domestic gasoline demand in 2030. We 
support this Initiative and believe it will help to accelerate the 
development and utilization of this important resource.

               BERA RECOMMENDATIONS FOR DOE BIOMASS RD&D

    BERA's recommendations support a balanced program of mission-
oriented RD&D, including projects to develop and demonstrate advanced 
biochemical and thermochemical biomass conversion processes, 
alternative liquid transportation fuels, and co-production of fuels, 
chemicals, and power in integrated biorefineries. BERA's 
recommendations for funding for DOE biomass RD&D are shown in Table 1 
and outlined below. Note that recommended budgets for demonstration 
projects do not include the required 50 percent industry cost-share.
    Fund both biochemical and thermochemical conversion platforms as 
foundations for integrated biorefineries.--The biochemical and 
thermochemical platforms are both important and BERA urges that both be 
funded to accelerate the development and demonstration of large-scale, 
synergistic integrated biorefinery systems. These large-scale systems 
have the most potential to enable biomass to have a major role in 
displacing fossil fuels. BERA urges that biochemical conversion 
research be funded at the DOE request, and that thermochemical 
conversion R&D for biomass gasification, pyrolysis, and synthesis of 
alternate liquid fuels be expanded and given a higher priority.
    Support development/demonstration of integrated biorefineries.--
Activities should address integration of promising biological and 
thermochemical process steps and processes to improve overall process 
efficiency and reduce product cost, taking into consideration siting, 
plant design, financing, permitting, environmental controls, waste 
processing and disposal, and sustained operations; feedstock 
acquisition, transport, storage, and delivery; and storage and delivery 
of products to market. BERA recommends that industrial partners and 
States should be carefully selected to demonstration mission-oriented 
benefits for participation in this cost-shared program.
    Reduce level of earmarks.--The level of earmarks in the last few 
years has resulted in limiting new initiatives and premature reductions 
of scheduled programs by EERE. BERA respectfully asks the subcommittee 
to carefully consider the impacts of all earmarks on EERE's biomass 
energy RD&D. If earmarks are slated for projects that do not contribute 
to DOE's research goals, BERA urges that they be add-ons to the 
baseline funds rather than deductions.

                            TABLE 1.--BIOMASS/BIOREFINERY SYSTEMS R&D (ENERGY SUPPLY)
----------------------------------------------------------------------------------------------------------------
                                                                                    Scale-Up &
             Program Area                  Description of RD&D       Research      Demonstration     All RD&D
----------------------------------------------------------------------------------------------------------------
Biochemical Conversion Platform R&D...  Conversion of corn           $30,000,000     $30,000,000     $60,000,000
                                         starch, stover and
                                         fiber, wood and forest
                                         residues, and perennial
                                         crops.
Thermochemical Conversion Platform R&D  Conversion of wood and        20,000,000      20,000,000      40,000,000
                                         forest residues to
                                         pyrolysis oils or
                                         syngas.
Integration of Biorefinery              Validation of benefits    ..............      15,000,000      15,000,000
 Technologies.                           of integrating
                                         biochemical and
                                         thermochemical
                                         conversion technologies
                                         in integrated
                                         biorefineries.
Utilization of Platform Outputs: Core   Development and co-           15,000,000  ..............      15,000,000
 Technologies for Fuels, Chemicals,      production of fuels,
 and Electricity.                        chemicals and
                                         electricity from
                                         biochemical and
                                         thermochemical platform
                                         output streams.
State and Regional Biomass              Outreach and support for  ..............       5,000,000       5,000,000
 Partnerships.                           regional bioenergy
                                         projects.
                                                                 -----------------------------------------------
      TOTAL...........................  ........................      72,000,000      78,000,000     150,000,000
----------------------------------------------------------------------------------------------------------------

    Build U.S. leadership in biomass science and technology through 
mission-oriented bioenergy research.--BERA recommends that at least 50 
percent of the Federal funds appropriated for biomass research, 
excluding the funds for scale-up projects, are used to sustain a 
national biomass science and technology base via sub-contracts for 
industry and universities. While the national laboratories should 
facilitate coordinating this research, increased support for U.S. 
scientists and engineers in industry, academe, and research institutes 
will encourage commercialization of emerging technologies and serious 
consideration of new ideas. It will also help to build the skilled 
workforce, scientific community, and state-of-the-art research 
platforms needed to support a future domestic bioenergy industry.
    Utilization of platform outputs R&D, core technologies for fuels, 
chemicals and electricity.--In the past EERE has focused on competitive 
selection of R&D projects based on an analytical effort that identified 
the top 12 building block chemicals that can be produced from sugar 
intermediates via biological or chemical conversions. BERA urges that 
this effort focus instead on efficient and economical production of 
liquid fuels and commodity organic chemicals, which have established 
markets, rather than high-value chemicals, which are either new 
products without established markets or specialty chemicals with niche 
markets. Biomass-derived fuels and chemicals, with the ability to co-
produce electricity, will have a greater probability of reducing fossil 
fuels consumption. BERA urges that this effort include continuing 
research on sugar intermediates and be expanded to include direct 
conversion of other intermediates and biomass to fuels and commodity 
organic chemicals.
    State and Regional Partnerships (Formerly Regional Biomass Energy 
Program).--The State & Regional Partnerships (SRP) was created to 
succeed the Regional Biomass Energy Program (RBEP) which functioned as 
a biomass outreach program for 20 years. The SRP serves an important 
function at the State level in promoting the use of biomass fuels. BERA 
strongly urges that the SRP be continued in fiscal year 2007.

                   BIOMASS AND BIOPRODUCTS INITIATIVE

    The goal of the Biomass and Bioproducts Initiative (BBI), created 
through ``The Biomass Research and Development Act of 2000'' and Title 
IX of the Farm Bill, was to triple the use of bioenergy and biobased 
products. Congress has provided annual funding for the BBI since fiscal 
year 2000. BERA strongly urges that the BBI be continued in fiscal year 
2007 at the funding levels recommended by BERA for the cost-shared 
demonstration projects shown in Table 1.
    BERA congratulates DOE and USDA for the cooperation and joint 
coordination of the programs of each department to increase the use of 
biomass for production of affordable fuels, electricity, and products. 
To meet accelerated goals for biofuels, the BBI must be fully 
incorporated into DOE's and USDA's biomass research programs. Large, 
strategically located, energy plantations are ultimately envisaged in 
which waste biomass and harvested biomass production systems are 
integrated with biorefineries and operated as analogs of petroleum 
refineries to afford flexible slates of multiple products from multiple 
feedstocks and to co-produce electricity.
    BERA also recommends that implementation of the BBI should include 
identification of each Federal agency that provides funding related to 
biomass energy development and their programs and expenditures, as is 
done by DOE and USDA. This on-going activity should be expanded to 
include other Federal agencies and organizations (e.g., Environmental 
Protection Agency, Department of Transportation, Department of 
Commerce, National Science Foundation) to help fine-tune the critical 
pathways to program goals, to coordinate R&D efforts, and to maximize 
the return on RD&D investment.
                                 ______
                                 
             Prepared Statement of Florida State University

    Summary of Request.--Electric Power Infrastructure--Security 
Research & Development; Agency.--Energy and Water (Dept. of Energy); 
Program.--Electricity Transmission and Distribution; Fiscal Year 2007 
Request.--$3,500,000. We respectfully request the committee consider 
directing DOE to continue the funding committed to scientists already 
working on DOE-funded projects in the Ocean Carbon Sequestration 
Program administered by the Office of Biological and Environmental 
Research.
    Mr. Chairman, I would like to thank you and the members of the 
subcommittee for this opportunity to present testimony before this 
committee. I would like to begin by strongly endorsing the President's 
fiscal year 2007 budget proposal that focused on substantial increases 
in research funding for the Department of Energy's Office of Science. 
The research funding provided by that Office for the physical sciences 
and engineering is critical to our Nation's future. The approximately 
14 percent increase proposed by the President as part of his American 
Competitiveness Initiative is sorely needed by the research community 
as an investment in our future security. It is our hope that this 
subcommittee could support this effort in your fiscal year 2007 budget 
plan.
    Next, I would like to take a moment to briefly acquaint you with 
Florida State University. Located in Tallahassee, Florida's capitol, 
FSU is a comprehensive Research I university with a rapidly growing 
research base. The University serves as a center for advanced graduate 
and professional studies, exemplary research, and top-quality 
undergraduate programs. Faculty members at FSU maintain a strong 
commitment to quality in teaching, to performance of research and 
creative activities, and have a strong commitment to public service. 
Among the current or former faculty are numerous recipients of national 
and international honors including Nobel laureates, Pulitzer Prize 
winners, and several members of the National Academy of Sciences. Our 
scientists and engineers do excellent research, have strong 
interdisciplinary interests, and often work closely with industrial 
partners in the commercialization of the results of their research. 
Florida State University had over $182 million this past year in 
research awards.
    Florida State University attracts students from every State in the 
Nation and more than 100 foreign countries. The University is committed 
to high admission standards that ensure quality in its student body, 
which currently includes National Merit and National Achievement 
Scholars, as well as students with superior creative talent. We 
consistently rank in the top 25 among U.S. colleges and universities in 
attracting National Merit Scholars to our campus.
    At Florida State University, we are very proud of our successes as 
well as our emerging reputation as one of the Nation's top public 
research universities.
    Mr. Chairman, let me tell you about our primary interests today.
    Recent large-scale failures in the electrical grid systems of North 
America and Europe have made us aware of the critical nature of our 
dependence on the availability of electrical power. A contributing 
factor to these failures was a lack of detailed understanding of the 
system dynamics in response to an initial minor disturbance. Lack of 
investment in power systems grids over the last 20-30 years has eroded 
the redundancy traditionally built into the system by allowing load 
increases without an equivalent growth in the supporting transmission 
network, control sophistication or distributed generation capability. 
Over the same time, the lack of investment in R&D resulted the closure 
of many power engineering educational programs. Authoritative estimates 
suggest that in 2002 only 500 bachelor's degrees in power engineering 
were awarded in the United States.
    The proposed research activities within this System-wide project 
will build on existing expertise at FSU, other universities within 
Florida, and several of Department of Energy's National Laboratories. 
The research will focus specifically on critical issues associated with 
bringing modernization to the U.S. electric grid. Many of the projects 
will have industrial partners, thereby ensuring rapid technology 
transfer from research-to-practice. These activities include:
  --Employing the real time digital simulator capability--present and 
        future--at FSU/CAPS to be able to simulate the real-time 
        behavior of a portion of a regional grid and its 
        interconnections to better understand the areas of 
        vulnerability for major outages and cascading failures. It is 
        envisioned that this will become a national user facility with 
        remote access capability over high-speed connections.
  --Use of the real-time digital simulator through comparisons of 
        concurrent real time modeling and an actual system to assess 
        new technologies, including energy storage, intelligent agent 
        based controls, operating procedures, improved analytical and 
        simulation techniques, and security assessment of SCADA 
        systems.
  --Advanced materials R&D for superconductivity applications in power 
        systems. Some of the areas of research include the 
        characterization of the engineering behavior of superconducting 
        conductors, and development of advanced insulation materials 
        specifically geared for low-temperature environments.
    In a second area of interest, you are probably aware that 
industrial by-products have increased the concentration of carbon 
dioxide in the atmosphere from 290 to 380 parts per meter over time. 
This increase has been implicated in the rise of global temperature 
because carbon dioxide interferes with the re-radiation of solar energy 
back into space. One way to reduce the rate of increase of carbon 
dioxide in the atmosphere is to collect it from industrial sources and 
store it, for example, in the deep ocean (Intergovernmental Panel on 
Climate Change, 2006). The wisdom of this option is unclear because 
little is known about the environmental consequences. The United States 
Department of Energy (DOE) has been funding research to fill this 
knowledge gap. In one case, DOE funded an initial 3-year grant and a 3-
year renewal for a cooperative effort between Louisiana State 
University and Florida State University. This team is assessing the 
sensitivity of deep-sea animals to carbon dioxide-rich seawater; is 
studying the seafloor area that would be exposed to carbon dioxide-rich 
seawater during full-scale ocean storage and to assess the risk 
extinction; and is investigating its effects of carbon dioxide-rich 
seawater on similar species that live in shallow water, which are 
easier and cheaper to study.
    The DOE fiscal year 2007 Congressional Budget Request eliminates 
funding for the Ocean Carbon Sequestration Program administered by the 
Office of Biological and Environmental Research, which supports the 
research. Many of the benefits from DOE's investment in this important 
area of research will be lost if funding is terminated. We respectfully 
request the committee consider directing DOE to continue the funding 
committed to scientists already working on DOE-funded projects in this 
area.
    Mr. Chairman, we believe this research is vitally important to our 
country and would appreciate your support.
                                 ______
                                 
   Prepared Statement of the University Corporation for Atmospheric 
                                Research

    On behalf of the University Corporation for Atmospheric Research 
(UCAR) and the university community involved in weather and climate 
research and related education, training and support activities, I 
submit this written testimony for the record of the Senate Committee on 
Appropriations, Subcommittee on Energy and Water Development.
    UCAR is a 69-university member consortium that manages and operates 
the National Center for Atmospheric Research (NCAR) and additional 
programs that support and extend the country's scientific research and 
education capabilities. In addition to its member research 
universities, UCAR has formal relationships with approximately 100 
additional undergraduate and graduate schools including several 
historically black and minority-serving institutions, and 40 
international universities and laboratories. UCAR's principal support 
is from the National Science Foundation with additional support from 
other Federal agencies including the Department of Energy (DOE).

                         DOE OFFICE OF SCIENCE

    The atmospheric and related sciences community appreciates 
Congress' support for the DOE Office of Science, and enthusiastically 
supports the inclusion of the DOE Office of Science in the American 
Competitiveness Initiative within the President's budget request for 
fiscal year 2007. The needs of the country demand that DOE continue to 
produce a world-class program in science and energy security research. 
The Office of Science manages fundamental research programs in basic 
energy sciences, biological and environmental sciences, and 
computational science, and supports unique and vital parts of U.S. 
research in climate change, geophysics, genomics, life sciences, and 
science education. The prospect of halting the recent slide in research 
funding within DOE and actually doubling the agency's research budget 
holds great promise for DOE's investment in and contribution to our 
Nation's future.
    I urge the subcommittee to fund the DOE Office of Science at the 
level of the President's fiscal year 2007 budget request, or $4.1 
billion, and to enable the agency to apply that entire amount toward 
planned agency research priorities. This level of research funding will 
augment and reinvigorate critical work of researchers throughout the 
Nation.
Biological and Environmental Research (BER)
    Within the Office of Science, the Biological and Environmental 
Research (BER) program develops the knowledge necessary to identify, 
understand, and anticipate the potential health and environmental 
consequences of energy production and use. These are issues that are 
absolutely critical to our country's well-being and security. The 
President's BER request for fiscal year 2007 is $510.3 million, an 
approximate increase of $60.5 million over fiscal year 2006 funding 
when fiscal year 2006 congressionally directed programs are removed. 
While this is a healthy increase, it should be seen in the context of 
past appropriations and the decline of BER funding that has taken place 
over the past several years. The fiscal year 2005 final appropriation 
for BER was $502.0 million with add-ons subtracted. The fiscal year 
2007 request therefore makes up much ground lost recently, but does not 
get BER back to level funding when inflation is factored in.
    Peer-reviewed research programs at universities, national 
laboratories, and private institutions play a critical role in the BER 
program by involving the best researchers the Nation has to offer, and 
by developing the next generation of researchers. Approximately 27 
percent of BER basic research funding supports university-based 
activities directly and 40 percent supports basic research at national 
laboratories. All BER research projects, other than those in the 
``extra projects'' category, undergo regular peer review and 
evaluation. I urge the subcommittee to fund Biological and 
Environmental Research at the level of the fiscal year 2007 budget 
request, or $510.3 million, and to enable BER to apply that entire 
amount toward planned agency research priorities that are peer-reviewed 
and that involve the best researchers to be found within the Nation's 
university research community as well as the DOE labs.
    Climate Change Research.--Within BER, the Climate Change Research 
contributes substantially to the Nation's Climate Change Research 
Initiative (CCRI) goals of understanding and predicting climate change, 
including its causes and consequences. The long-term DOE goal is to 
deliver improved climate data and models for policy makers and to 
substantially reduce differences between observed temperature and model 
simulations at regional scales. This work is critical to the ability of 
policy makers and stakeholders to provide stewardship resulting in a 
healthy planet--and it is particularly important as signs of 
increasingly dramatic change in our climate and environment appear. The 
Climate Change Research Request of $134.9 million is a 4.6 percent 
decrease from the fiscal year 2006 appropriated level at a time when 
the request for BER is up 13.4 percent after congressionally directed 
projects are removed. I urge the subcommittee to fund Climate Change 
Research at an fiscal year 2007 level that is consistent with the 
request for BER stated above, and to enable DOE to apply the entire 
amount toward planned national research priorities.
Advanced Scientific Computing Research (ASCR)
    Within DOE's Office of Science, the Advanced Scientific Computing 
Research program delivers leading edge computational and networking 
capabilities to scientists nationwide enabling advances in computer 
science and the development of specialized software tools that are 
necessary to research the major scientific questions being addressed by 
the Office of Science. Development of this capacity is a key component 
of DOE's strategy to succeed in its science, energy, environmental 
quality, and national security missions.
    ASCR's continued progress is of particular importance to 
atmospheric scientists involved with complex climate model development, 
research that takes enormous amounts of computing power. By their very 
nature, problems dealing with the interaction of the earth's systems 
and global climate change cannot be solved by traditional laboratory 
approaches. The Intergovernmental Panel on Climate Change (IPCC) is 
compiling its Fourth Assessment Report to be completed in 2007, and 
ASCR's contribution to this international document is critical. 
Therefore, it is encouraging to see the increase for ASCR in the 
President's request for fiscal year 2007. I urge the committee to 
support the President's fiscal year 2007 request of $318.6 million for 
DOE Advanced Scientific Computing Research, and to enable DOE to apply 
the entire amount toward planned national priorities.
    Within ASCR, two programs are of particular importance to climate 
change computer modeling work: the National Energy Research Scientific 
Computing Center (NERSC) operated by Lawrence Berkeley National 
Laboratory, and the Energy Sciences Network (ESnet). NERSC is the high 
performance production computing facility for the Office of Science, 
serving thousands of scientists throughout the country at laboratories, 
universities, and other Federal agencies. Computing time is awarded to 
research groups based on peer review of submitted proposals. NERSC 
represents an important element of the administration's American 
Competitiveness Initiative strategy as outlined in the President's 
State of the Union address referencing the doubling of ``the federal 
commitment to the most basic research programs in the physical sciences 
over the next ten years. This funding will support the work of 
America's most creative minds as they explore promising areas such as 
nanotechnology, supercomputing, and alternative energy sources.''
    ESnet enables researchers at laboratories, universities and other 
institutions to communicate with each other using collaborative 
capabilities that are unparalleled. This high-speed network enables 
geographically distributed research teams to collaborate effectively on 
some of the world's most complex problems. Researchers from industry, 
academia and national labs, through this program, share access to 
unique DOE research facilities, support the frequent interactions 
needed to address complex problems, and speed up discovery and 
innovation. The fiscal year 2007 budget request will enable DOE to 
deliver a network with two to four times the capability of today's 
ESnet.
    NERSC and ESnet play complementary roles in advancing the complex 
and challenging science of climate change and other scientific areas of 
extreme importance to the security and quality of life of our citizens. 
I urge the committee to support the President's fiscal year 2007 
requests of $54.79 million for the National Energy Research Scientific 
Computing Center (NERSC), and $22.7 million for the Energy Sciences 
Network (ESnet).
    DOE plays a vital role in sustaining U.S. scientific leadership and 
generating U.S. competitiveness in a time when other countries are 
investing heavily in scientific research and technology. On behalf of 
UCAR and the atmospheric sciences research community, I want to thank 
the subcommittee in advance for your attention to the recommendations 
of our community concerning the fiscal year 2007 budget of the 
Department of Energy. We understand and appreciate that the Nation is 
undergoing significant budget pressures at this time, and support 
absolutely the effort to enhance U.S. security and quality of life 
through the American Competitiveness Initiative, of which the DOE 
Office of Science is a critical component.
                                 ______
                                 
  Prepared Statement of the Association of U.S. Petroleum Engineering 
                            Department Heads

    We are a committee of Department Heads for Petroleum Engineering 
departments in the United States. We are writing to inform the 
committee of the drastic harm that will be done to Petroleum 
Engineering education in the United States unless the appropriation for 
oil and natural gas technologies programs in the fiscal year 2007 
Department of Energy budget is restored to at least its fiscal year 
2006 appropriated level of $64 million. This program provides the 
largest single source of funding for the research and graduate 
education in Departments of Petroleum Engineering and related 
disciplines throughout the United States. It directly benefits the 
Nation in improved recovery from domestic oil and natural gas fields, 
with a particular focus on providing research support for independents, 
who are without their own large research organizations. Beyond that, it 
directly benefits the education of both graduate and undergraduate 
students in Petroleum Engineering, and thereby helps provide the 
technical expertise that will be crucial as oil and natural gas 
supplies become more and more scarce and precious.
    In all estimates made by the Energy Information Administration, oil 
and gas will serve as the major sources of energy to fuel our economy 
for the foreseeable future. Enhancing the domestic production requires 
innovative and advanced technologies to raise the recovery factor from 
the U.S. mature fields to well above 60 percent and to tap 
unconventional oil and gas resources. This is the only way we can buy 
the 50-75 years that it may take to realize economical access to the 
alternatives to oil and gas. Major oil companies, with their main focus 
on their international operations, are gradually pulling out of the 
U.S. oilfields and are not investing sufficiently in the university 
research needed to train the U.S. work force. Scientific training of 
the oil and gas work force is a task best done by the Petroleum 
Engineering departments in this country and requires the continuous 
support of the U.S. DOE.
    One cannot maintain excellence in education at a research 
university without funding for research for faculty to refine their 
skills and for graduate-student education. No other program in the 
Federal Government provides support for the broad range of topics in 
Petroleum Engineering provided by this program. No other discipline in 
the sciences or engineering is expected to fund long-term research 
without help from the Federal Government. The loss of this DOE program 
would cripple Petroleum Engineering education throughout the United 
States.
    The need to support Petroleum Engineering education in the United 
States is severe. The loss of Petroleum Engineering programs in the 
United States has become a critical problem. In 1986 there were more 
than 30 accredited Petroleum Engineering programs in the United States. 
Today the United States is left with only 18. In the mid-1980's, during 
the last oil-price rise, there were over 1,400 graduates per year in 
Petroleum Engineering; today there are only about 375 students 
graduating from Petroleum Engineering programs. The average age of 
petroleum engineers working in the United States is 52; the number of 
students we are graduating from our current programs is not enough to 
replace the retiring engineers, let alone expand the work force. This 
has led to a shortage of petroleum engineers and, hence, fierce 
competition among the oil companies. More important, unlike 1980's, 
when most of the oil companies who could hire other types of engineers 
and train them to be petroleum engineers through internal training 
programs, do not have those training programs. All companies coming on 
campus today prefer to hire petroleum engineers, hence the demand will 
continue to grow. Another key difference from 1980's is that unlike 
most of the oil companies that time, who actively had internal research 
programs, companies today have largely abandoned research activities to 
the universities and service companies. This has further increased the 
need for conducting both fundamental and applied research in Petroleum 
Engineering Departments. We need the support of DOE for fulfilling this 
role.
    Most conventional oil and natural gas reserves have already been 
discovered. We are going to need more expertise and technology to 
explore and exploit the more challenging, unconventional resources that 
still exist, if we are to meet America's future energy needs. If these 
programs so vital to the training of the professionals that provide our 
energy needs are cut, the United States will be even more dependent on 
oil and natural gas supplied from overseas, much of it from unstable 
regions of the world.
    The petroleum and natural gas industries have a multi-billion 
dollar impact on the U.S. economy, and over 400,000 U.S. citizens have 
good-paying jobs because of the petroleum industry. The demands for oil 
and natural gas continue to grow each year, with an expected annual 
increase of at least 2 percent in the foreseeable future. Large amounts 
of oil from mature or unexplored basins in the United States can be 
produced with improved technology that can be developed under the DOE 
oil and gas technologies program.
    We urge you to support this important appropriation that will 
provide the citizens of this great country the needed access to the 
products and services that make the United States the most 
technologically advanced country in the world. We encourage you and 
your fellow Senators on the committee to restore the fiscal year 2007 
appropriation for DOE oil and gas technologies programs to their fiscal 
year 2006 level of $64 million.
            Respectfully,
                                          Dr. Mohan Kelkar,
     The University of Tulsa, on behalf of the Association of U.S. 
                            Petroleum Engineering Department Heads:
                                             Dr. Sam Ameri,
                                           West Virginia University
                                             Dr. Bob Chase,
                                                   Marietta College
                                     Dr. Shari Dunn-Norman,
                                      University of Missouri--Rolla
                                         Dr. Thomas Engler,
                        New Mexico Institute of Mining & Technology
                                         Dr. Iraj Ershaghi,
                                  University of Southern California
                                        Dr. Turgay Ertekin,
                                              Penn State University
                                         Dr. Ali Ghalambor,
                                 University of Louisiana--Lafayette
                                          Dr. Lloyd Heinze,
                                              Texas Tech University
                                        Dr. Steve Holditch,
                                               Texas A&M University
                                          Dr. Roland Horne,
                                                Stanford University
                                          Dr. Mohan Kelkar,
                                            The University of Tulsa
                                     Dr. Santanu Khataniar,
                                    University of Alaska--Fairbanks
                                           Dr. Dean Oliver,
                                             University of Oklahoma
                                        Dr. William Rossen,
                                      University of Texas at Austin
                                           Dr. Steve Sears,
                                         Louisiana State University
                                      Dr. Jalal Torabzadeh,
                            California State University--Long Beach
                                        Dr. Craig Van Kirk,
                                           Colorado School of Mines
                                   Dr. Laurence Weatherley,
                                              University of Kansas.
                                 ______
                                 
 Prepared Statement of the United States Advanced Ceramics Association

    Chairman Domenici, Ranking Member Reid and honorable members of the 
committee, on behalf of the members of the U.S. Advanced Ceramics 
Association (USACA), I would like to thank you for the opportunity to 
submit testimony on the funding for Science Research in the Department 
of Energy's fiscal year 2007 Congressional Budget Request. We would 
like to propose a comprehensive and cost-effective means of defining 
national needs for advanced, high temperature ceramic materials--a 
study during fiscal year 2007 to complete a Technology Investment 
Roadmap for Advanced Ceramics. This would be included under the 
American Competitiveness Initiative. We request $375,000 for an 
independent report to Congress, to be completed by February 15, 2007, 
that would explore and design a competitive, multi-year Federal and 
industry cost-shared program to research, demonstrate and develop 
advanced ceramics. An advisory oversight panel would be formed, and 
USACA would retain an independent contractor to perform the analytical 
work.
    For over 20 years, we have been an association dedicated to 
pursuing the research, development and demonstration of advanced 
ceramic materials in many and varied aerospace, defense and energy 
applications. Our members have plants and facilities in over 45 
Congressional Districts and 20 States.

                                SUMMARY

    My testimony will make the following points that reflect USACA's 
policy priorities:
  --Support for the concepts in the President's American 
        Competitiveness Initiative;
  --Added funding needed for a Technology Investment Roadmap for 
        Advanced Ceramics.
    The U.S. Advanced Ceramics Association (USACA) believes in the 
enduring ability of U.S. technology to create jobs and enhance our 
energy security. We strongly support the President's American 
Competitiveness Initiative announced in the State of the Union address 
and as part of the Department of Energy's fiscal year 2007 Budget 
Request to Congress. As Secretary Samuel Bodman explained, ``We need to 
restore U.S. dominance in the physical sciences . . .'' and ``Materials 
Science'' is an explicit part of this planning.
    We would like to suggest some possible report language for the 
Energy and Water Appropriations bill that: directs the Secretary to 
``initiate a Technology Investment Roadmap for Advanced Ceramics, to be 
completed by February 15, 2007. This study shall explore and design a 
competitive, multiyear cost shared program with industry to research, 
demonstrate and develop advanced ceramic materials.''
    In the past three decades, breakthroughs in advanced ceramics have 
enabled significant new technology capabilities that are now having 
far-reaching impacts on the U.S. economy and defense capability. For 
example, ceramic catalytic converters are responsible for dramatically 
reducing automobile emissions. Long-life bearings are used in a wide 
range of high-performance energy and military applications to improve 
overall system performance and reduce friction, while ceramic armor 
plates are stopping bullets and shrapnel and saving the lives of 
soldiers and police. The technological breakthroughs that have made 
these life-changing innovations possible are the direct result of 
sustained RD&D investment by both industry and government.
    Now, the challenges for advanced ceramics are growing, fueled by 
the need to create alternative energy technologies, more efficient, 
cleaner environmental systems, and higher performance military and 
aerospace systems. The Nation needs more from the industry, but there 
are some critical ceramic technologies that are still left in the early 
stages of product innovation cycles, and promising ideas sit in dark 
closets.

                 WHAT VALUE DO ADVANCED CERAMICS BRING?

    Advanced ceramics are enabling materials and provide added 
performance and value to manufactured products. Ceramics can withstand 
extreme heat, high pressures and corrosive environments. They are 
simultaneously lightweight, strong, and durable. These attributes 
result in more efficient power conversion for many different methods 
and fuels, including hydrogen fuel cells, nuclear power, gas turbines 
and other engines. They also translate into tougher materials that can 
withstand the high temperatures of coal combustion systems, the 
extremes of jet engine turbines, and the force of an enemy bullet or 
roadside bomb.
    There are several key reasons why research, development and 
demonstration of advanced ceramics materials are premium public 
investments, including:
  --Advanced ceramics can increase U.S. industry competitiveness in 
        several key global technology markets. Investments here will 
        reverse the trend toward the movement of U.S. technology 
        offshore to foreign enterprises.
  --Investments will retain and expand U.S. jobs in new product 
        manufacturing.
  --The materials can tolerate the very high temperatures necessary for 
        the most efficient and cleanest energy conversion technologies, 
        whether hydrogen production from abundant domestic coal 
        resources, or advanced nuclear reactors.
  --The direct benefits will help to reduce energy consumption and 
        carbon emissions in markets served over the next 20 years.
  --Investments here would significantly reduce the normal 15-20 year 
        product development and introduction cycle for advanced 
        materials, speeding their use in critical energy and defense 
        applications.
    The Roadmap would have several purposes:
  --examine the history and effectiveness of Federal and industry cost-
        shared investments already made in advanced ceramics research 
        and development;
  --highlight key factors in the success of criteria projects;
  --identify the critical future applications for both civil and 
        military needs;
  --explore new types of partnership arrangements between industry and 
        government, management alternatives and incentives for early 
        market transition and Federal purchase;
  --recommend to the Congress a multiyear, competitive, premium public 
        investment strategy for the research, development, 
        demonstration and deployment of advanced ceramics in critical 
        applications.
    We hope that this proposal warrants your support in the fiscal year 
2007 Federal budget. We thank you for your strong interest in the 
advancement of technology, and its critical role in economic growth and 
national security.
    On behalf of USACA members: Ceramic Tubular Products, LLC; Clariant 
Technologies; COI Ceramics, Inc.; Corning, Inc.; Deere and Co.; Extreme 
Composite Products, Inc.; GE Power Systems Composites, LLC; Goodrich 
Corporation; KiON Defense Technologies; Refractron Technologies 
Corporation; Saint-Gobain High-Performance Materials; Siemens Power 
Generation; Starfire Systems, Inc.; Surmet Corporation; Synterials, 
Inc.; UT-Battelle.
                                 ______
                                 
 Prepared Statement of the American Association of Petroleum Geologists

    To the chair and members of the subcommittee, thank you for this 
opportunity for the American Association of Petroleum Geologists (AAPG) 
to provide its written perspective on the fiscal year 2007 budget for 
oil and natural gas research and development (R&D) programs within the 
subcommittee's jurisdiction.
    The administration's budget submitted earlier this year contains 
significant reductions for the Department of Energy (DOE), Office of 
Fossil Energy, including the elimination of the oil and gas technology 
programs. AAPG requests restoration of funding for DOE Fossil Energy 
oil and natural gas technology programs as a matter of national policy. 
AAPG endorses restoration of DOE's oil and natural gas research program 
funding to at least 2006 levels of $64 million. AAPG also endorses full 
funding for the Energy Policy Act of 2005 initiative titled Ultra-
Deepwater and Unconventional Natural Gas and other Petroleum Resources 
at $100 million. The AAPG firmly supports funding of the methane 
hydrates technology program (reauthorized in the Energy Policy Act of 
2005) at $20 million.
    AAPG, an international geoscience organization, is the world's 
largest professional geological society representing over 30,000 
members. In the United States we have more than 20,000 members, the 
majority of whom are independents or consultants to the domestic 
petroleum industry. The purpose of AAPG is to advance the science of 
geology, foster scientific research, promote technology and advance the 
well-being of its members. Included among its members are numerous 
CEOs, managers, directors, independent/consulting geoscientists, 
educators, researchers, public servants and students. AAPG strives to 
increase public awareness of the crucial role that geosciences, and 
particularly petroleum and coal geology play in energy security and our 
society.
    AAPG applauds the administration's efforts to enhance research in 
areas that diversify the options to supply energy in our economy. AAPG 
supports the continued efforts to develop technologies to conserve 
energy and technologies that will permit the economy to perform more 
efficiently with reduced energy input. However, as a professional 
organization, AAPG's 30,000 members understand that fossil fuels will 
continue to be a mainstay of the U.S. energy economy and the world's 
energy economy for decades to come. Moreover, oil and natural gas will 
provide many of the raw materials that allow us to function in our 
modern world.
    The Association does not support the oversimplified projection of 
the state of the industry as presented by the administration's budget 
submission. The projection does not accurately reflect the needs of the 
smaller companies and individuals who have supported DOE's efforts and 
have benefited from the historical research conducted under DOE's 
programs. They are the community of independent and small producers 
that drill the preponderance of the domestic wells, and produce the 
bulk of the domestic natural gas and crude oil. They are the community 
who reinvest their profits in the search and development of domestic 
resources. They are the community whose production serves the Nation's 
energy needs directly. They are the community for whom the DOE programs 
provide technology benefits that serve the American public, the Nation 
and its security.
    AAPG sees three vital needs that are supported by the DOE oil and 
natural gas R&D programs. First, the effort sustains long-term 
viability for recovery of the Nation's oil and natural gas endowment. 
Maintenance of domestic industry capability is vital to the security 
and well-being of the Nation. Second, publicly-funded research will 
promote and insure technology capabilities that continue to foster U.S. 
technical and economic preeminence in a rapidly changing global 
economy. Third and often understated is the fact that these programs 
contribute substantially to sustaining the institutions that educate, 
train and nurture a capable and efficient workforce for the Nation's 
energy industry.
    The AAPG believe that the justification for publicly-funded 
research remains strong and largely independent of the price at which 
crude oil and natural gas commodities trade in any particular time 
period. The primary recipients of the technology developed with public 
funds are those companies/individuals who have no accessible 
alternative mechanism for aggregating the resources which would foster 
that research. They are the community of independent and small 
producers, who drill 90 percent of the wells, produce 85 percent of the 
domestic natural gas and 60 percent of the domestic crude oil in the 
United States. They represent a large variety of engineers, geologists, 
and investors that are not represented by any single society or 
association. AAPG, with its extensive membership represents only one 
portion of the diverse community of professionals and skilled technical 
trades involved in producing the oil and gas resources that this Nation 
depends on. If anything is true, research is even more important in 
times of high oil prices, so that users of the technology developed 
from the research can translate in continued domestic production.
    Our Nation is the world's largest consumer and net importer of 
energy. According to the Energy Information Administration, during 
2005, the United States consumed 20.66 million barrels of oil per day, 
with as much as 15.2 million barrels supplied by imports of crude and 
products during November 2005. Our national energy and economic 
security depends on a vibrant domestic oil and gas industry. While the 
price of crude oil is established by a global market, the costs of 
exploration, development, and production are influenced strongly by the 
application of discoveries in geosciences and new developments in 
technology. Thus, focused R&D can make a significant contribution to 
sustaining our domestic petroleum industry and to national energy 
security--it is important.
    During the recent past, energy companies as well as most companies 
have worked to reduce operating costs by adopting outsourcing 
approaches. This has caused an unfortunate side effect of outsourcing 
technical preeminence in a large number of areas where the United 
States has been a global science and technology leader. The AAPG 
believes that this phenomenon is increasingly recognized as a national 
security issue. While Legislative and Executive Branch initiatives are 
responding to the broad erosion of science and technology capability, 
focused initiatives like the DOE oil and natural gas R&D programs that 
have and will continue to foster our technology preeminence, should not 
be overlooked or sacrificed. Such programs have been successful in the 
past and should be continued for the Nation's energy well-being.
    Many of the more than 40 national and global geoscience-related 
professional organizations have reported shrinking and aging 
memberships over the past 2 decades. In the energy arena this is 
reflected in fewer and smaller, degree-granting, college and university 
departments and loss of technical training institutions associated with 
the industry. Currently, the demand for trained industry professionals 
and qualified trade specialists has grown in response to growing world-
wide demand for oil, natural gas and coal and yet the fossil fuel 
industry is facing serious shortages in trained and experienced 
employees.
    In effect, and for a number of reasons, the pipeline that has 
supplied this workforce is not working well. Historically, a 
significant portion of DOE's oil and natural gas R&D program has flowed 
to and through these educational and training institutions, where funds 
have supported faculty and attracted student researchers. No other 
Federal program contributes effectively to these needs. AAPG believes 
that funding DOE's oil and natural gas technology is absolutely vital 
to sustaining the supply of trained and experienced individuals in the 
petroleum industry workforce into this century. The lack of qualified 
graduates to replace our graying membership may become a national 
security issue within a decade if not addressed in the near term.
    The Association is aware of and endorses the approach to funding 
research and development outlined in the Energy Policy Act of 2005. It 
makes very good sense to our membership. Focusing DOE emphasis on 
longer-term technology development and on research that the industry 
would not ordinarily undertake within its purview, while providing a 
new focus that shifts other operationally-oriented research into the 
arena where the private sector plays a more important role in guiding 
and conducting research.
    AAPG supports funding for DOE R&D programs on natural gas hydrates; 
advanced recovery technologies; next-generation limited-footprint 
exploration and development technologies; fundamental studies that lead 
to better understanding of reservoir architecture, unconventional 
resources and continuous reservoirs; technology transfer to producers; 
and workforce training and university programs that ensure future 
critical national infrastructure capabilities. These programs 
contribute to the basic understanding of the resource, and pave the way 
for cleaner and lower-impact extraction of the energy resources vital 
to National security.
    Public support for technology transfer is an area that AAPG 
considers to be a viable use of public funds. In a number of areas like 
the Illinois Basin, the primary and sometimes the only source of 
information on new technologies is the Petroleum Technology Transfer 
Council. The efforts of the Council, funded under DOE's technology 
program and heavily fortified by academic participation, are easily 
accessed by smaller producers who lack the time, resources and 
knowledge to independently pursue technological improvements in their 
operations. Accelerating technology uptake is seen as a viable approach 
to more efficient discovery, more complete recovery, and reduction of 
the impact and footprint of oil and natural gas operation.
    Thank you for the opportunity to present this testimony to the 
committee.
                                 ______
                                 
         Prepared Statement of the Society of Nuclear Medicine

    The Society of Nuclear Medicine (SNM) appreciates the opportunity 
to submit written comments for the record regarding funding in fiscal 
year 2007 at the Department of Energy (DOE). SNM is an international 
scientific and professional organization with over 16,000 members 
dedicated to promoting the science, technology, and practical 
application of nuclear medicine.
    In fiscal year 2006, the Federal Government abandoned its 50-year 
commitment to funding vital nuclear medicine research by eliminating 
funding for the Medical Applications and Measurement Science Program at 
DOE and making no accommodation to transition nuclear medicine programs 
to another Federal department. In past years, nuclear researchers have 
used Federal funding within DOE to make major accomplishments 
benefiting millions of patients with heart, cancer, and brain diseases. 
The loss of Federal funding for nuclear research will adversely impact 
future innovation in the field. For that reason, SNM advocates the 
immediate restoration of $37 million in funding for the Medical 
Applications and Measurement Science Program at the DOE. In the long 
term, SNM also believes that a permanent home and specific funding to 
support basic science research in nuclear medicine are essential; and 
SNM is prepared to work with the committee to identify such a home at 
DOE or another agency, such as the National Institutes of Health (NIH).

                       WHAT IS NUCLEAR MEDICINE?

    Nuclear medicine is an established specialty that performs 
noninvasive molecular imaging procedures to diagnose and treat diseases 
and to determine the effectiveness of therapeutic treatments--whether 
surgical, chemical, or radiation. It contributes extensively to the 
management of patients with cancers of the brain, breast, blood, bone, 
bone marrow, liver, lungs, pancreas, thyroid, ovaries, and prostate, 
and serious disorders of the heart, brain, and kidneys, to name a few. 
In fact, recent advances in the diagnosis of Alzheimer's disease can be 
attributed to nuclear medicine imaging procedures.
    Annually, more than 20 million men, women, and children need 
noninvasive molecular/nuclear medicine procedures. These safe, cost-
effective procedures include positron emission tomography (PET) scans 
to diagnose and monitor treatment in cancer, cardiac stress tests to 
analyze heart function, bone scans for orthopedic injuries, and lung 
scans for blood clots. Patients undergo procedures to diagnose liver 
and gall bladder functional abnormalities and to diagnose and treat 
hyperthyroidism and thyroid cancer.

          LACK OF FEDERAL FUNDING THREATENS FUTURE INNOVATIONS

    The mission of the Medical Applications and Measurement Science 
Program at the DOE is to deliver relevant scientific knowledge that 
will lead to innovative diagnostic and treatment technologies for human 
health. The modern era of nuclear medicine is an outgrowth of the 
original charge of the Atomic Energy Commission (AEC) to exploit 
nuclear energy to promote human health. This program supports directed 
nuclear medicine research through radiopharmaceutical development and 
molecular nuclear medicine activities to study uses of radionuclides 
for non-invasive diagnosis and targeted, internal molecular 
radiotherapy.
    Over the years, the DOE Medical Applications and Measurement 
Science Program has generated advances in the field of molecular/
nuclear medicine. For example, DOE funding provided the resources 
necessary for molecular/nuclear medicine professionals to develop PET 
scanners to diagnose and monitor treatment in cancer. PET scans offer 
significant advantages over CT and MRI scans in diagnosing disease and 
are more effective in identifying whether cancer is present or not, if 
it has spread, if it is responding to treatment, and if a person is 
cancer free after treatment. In fact, the DOE has stated that this 
program supports ``research in universities and in the National 
Laboratories, occupies a critical and unique niche in the field of 
radiopharmaceutical research. The NIH relies on our basic research to 
enable them to initiate clinical trials.''
    The majority of the advances in molecular/nuclear medicine have 
been sponsored by the DOE, including:
  --Smaller, More Versatile PET Scanners.--Brookhaven National 
        Laboratory (BNL) has completed a prototype mobile PET scanner, 
        which will record images in the awake animal. The mobile PET 
        will be able to acquire positron-generated images in the 
        absence of anesthesia-induced coma and correct for motion of 
        the animal. The long-term goal is to develop PET 
        instrumentation able to diagnose neuro-psychiatric disorders in 
        children.
  --Highest Resolution PET Scanner Developed.--Scientists at the 
        Lawrence Berkeley National Laboratory (LBNL) have developed the 
        world's most sensitive PET scanner. The instrument is 10 times 
        more sensitive than a conventional PET scanner and became 
        operational in 2005.
  --Imaging Gene Expression in Cancer Cells.--Images of tumors in whole 
        animals that detect the expression of three cancer genes were 
        accomplished for the first time by investigators at Thomas 
        Jefferson University and the University of Massachusetts 
        Medical Center. This advanced imaging technology will lead to 
        the detection of cancer in humans using cancer cell genetic 
        profiling.
  --Modeling Radiation Damage to the Lung.--Treatment of thyroid 
        disease and lymphomas using radioisotopes can cause disabling 
        lung disease. Investigators at Johns Hopkins University have 
        developed a Monte Carlo model that can be used to determine the 
        probability of lung toxicity and be incorporated into a 
        therapeutic regimen. This model will optimize the dose of 
        radioactivity delivered to cancer cells and avoid untoward 
        effects on the lung.
  --New Radiopharmaceuticals With Important Clinical Applications.--The 
        DOE radiopharmaceutical science program has developed a number 
        of innovative radiotracers at the University of California at 
        Irvine for the early diagnosis of neuro-psychiatric illnesses, 
        including Alzheimer's disease, schizophrenia, depression, and 
        anxiety disorders.
  --Rapid Preparation of Radiopharmaceuticals for Clinical Use.--The 
        DOE-sponsored program at the University of Tennessee has 
        developed a new method for preparing radiopharmaceuticals by 
        placing a boron-based salt at the position that will be 
        occupied by the radiohalogen. The method has been used to 
        prepare a variety of cancer-imaging agents.
    With restored DOE funding, essential molecular/nuclear medicine 
research will continue at universities, research institutions, national 
laboratories, and small businesses. Moreover, research with 
radiochemistry, genomic sciences, and structural biology will be able 
to usher in a new era of mapping the human brain and using specific 
radiotracers and instruments, to more precisely diagnose neuro-
psychiatric illnesses and cancer.
    The future of life-saving therapies and cutting-edge research in 
molecular/nuclear medicine and imaging depends on funding for the DOE 
Medical Applications and Measurement Science Program. Therefore, SNM 
recommends that funding for the DOE Medical Applications and 
Measurement Science Program be restored to the fiscal year 2005 funding 
level of $37 million.
    In addition, to gain the full benefits of nuclear medicine, it is 
important to ensure that nuclear medicine researchers have a steady 
supply of radionuclides. One way to accomplish this goal would be to 
create a National Radionuclide Enhancement Production program at the 
DOE that would meet the Nation's medical and homeland security needs.

                               CONCLUSION

    By restoring funding to the Medical Applications and Measurement 
Science Program at the DOE or by making an appropriate provision for 
nuclear research funding within another Federal department, policy 
makers will keep our Nation at the forefront of nuclear medicine 
research and innovation. We thank you for the opportunity to present 
our views on funding for these initiatives at the DOE and would be 
pleased to answer any questions you may have.
                                 ______
                                 
      Prepared Statement of the American Public Power Association

    The American Public Power Association (APPA) is the national 
service organization representing the interests of over 2,000 municipal 
and other State and locally owned utilities throughout the United 
States (all but Hawaii). Collectively, public power utilities deliver 
electricity to one of every seven electric consumers (approximately 43 
million people). We appreciate the opportunity to submit this statement 
outlining our fiscal year 2007 funding priorities within the Energy and 
Water, and Related Agencies Subcommittee's jurisdiction.

             FEDERAL POWER MARKETING ADMINISTRATIONS (PMAS)

    Power Marketing Administration Interest Rate Proposal.--The 
administration's fiscal year 2007 budget includes a recommendation that 
would raise electricity rates by changing the interest rate charged by 
the Southeastern Power Administration (SEPA), the Southwestern Power 
Administration (SWPA), and the Western Area Power Administration (WAPA) 
on all new investments in projects whose interest rates are not set by 
law. Specifically, the Department of Energy's (DOE) budget calls for 
the these three Power Marketing Administrations (PMAs) to set their 
interest rates at the level that government corporations pay to borrow 
funds from the Federal Government. To implement this proposal, DOE will 
amend the regulation that governs how the PMAs establish their rates 
and will do so administratively, without any consultation with or 
action from Congress.
    The administration's budget proposes to increase the interest rate 
charged on all new investments in these hydroelectric facilities to a 
level that is charged government corporations--the rate that reflects 
the interest cost for the Federal Government to provide loans to 
government corporations. SEPA, SWPA and WAPA are neither government 
corporations nor do they borrow funds from the U.S. Treasury. All rates 
are set to recover the dollars appropriated by Congress for the 
investment in the hydroelectric facilities and to cover the cost to 
operate these projects. If implemented, this proposal could increase 
rates considerably for customers served by most of the Power Marketing 
Administrations.
    This proposal creates a serious precedent and should be rejected, 
because: (1) the process for implementing the proposal can be done 
without congressional involvement or approval; (2) the proposal would 
arbitrarily raise revenue from electric customers for deficit 
reduction; and (3) the proposal reverses decades of rate making 
precedent and accepted cost recovery practices by administrative fiat. 
We urge the subcommittee to block the implementation of this proposal.
    Bonneville Power Administration Rate Proposal.--Also included in 
DOE's fiscal year 2007 budget is a proposed administrative action that 
would direct the Bonneville Power Administration (BPA) to use any net 
``secondary market revenues'' in excess of $500 million per year 
towards accelerated Federal debt repayment. Because the change would be 
made through the rulemaking process, congressional approval is not 
needed for the policy to go into effect. The Office of Management and 
Budget (OMB) calculates that this plan would provide a total of $924 
million from fiscal year 2007-2016 from these ``higher-than-historical 
net secondary revenues.'' OMB believes that this measure is needed to 
free up BPA borrowing authority. However, experts in the Northwest have 
calculated that the proposal would result in a 10 percent wholesale 
rate increase that BPA would be forced to pass on to ratepayers. The 
Congressional Budget Office has calculated that the effect of the 
administration's proposal on the U.S. Treasury would be $300 million 
over 10 years beginning in 2008, which means it will have no impact on 
the 2007 fiscal year budget. We urge the subcommittee to block the 
implementation of this proposal.
    Purchase Power and Wheeling.--We urge the subcommittee to authorize 
appropriate levels for use of receipts so that the Western Area Power 
Administration (WAPA), the Southeastern Power Administration (SEPA) and 
the Southwestern Power Administration (SWPA) can continue to purchase 
and wheel electric power to their municipal and rural electric 
cooperative customers. Although appropriations are no longer needed to 
initiate the purchase power and wheeling (PP&W) process, the 
subcommittee continues to establish ceilings on the use of receipts for 
this important function. The PP&W arrangement is effective, has no 
impact on the Federal budget, and is supported by the PMA customers who 
pay the costs. We agree with the administration's budget requests for 
PP&W for fiscal year 2007, which are as follows: $274.9 million for 
Western Area Power Administration (WAPA); $34.4 million for 
Southeastern Power Administration (SEPA); and $3 million for 
Southwestern Power Administration (SWPA).
    Costs of Increased Security at Federal Multi-Purpose Projects.--
Following the attacks of September 11, 2001, the Bureau of Reclamation 
(Bureau) embarked upon an aggressive program to enhance the security of 
Federal dams to protect the facilities against terrorist attacks. Based 
on historical precedent, the Bureau initially determined that the costs 
of increased security measures should remain a non-reimbursable 
obligation of the Federal Government. In fiscal year 2005, however, the 
Bureau reversed its position and asked for some of these costs to be 
reimbursed from power customers. That year, Congress disagreed with the 
Bureau's request that these expenses be reimbursable, but in the Energy 
and Water Development Appropriations Act of 2006 (HR 2419, November 7, 
2005), Congress directed that $10 million of the estimated $18 million 
for guards and patrols be provided by reimbursable funding. The bill 
also directed the Bureau to provide a report to Congress within 60 days 
that would delineate the planned reimbursable security costs by 
project. The report (issued in March 2006) is similar to the previous 
(May 2005) report, except that it also includes ``facility 
fortification upgrades'' as a reimbursable cost. Previously, the Bureau 
had assured its stakeholders that only the costs of guards and patrols 
would be reimbursable. This additional obligation in essence makes 
everything reimbursable at some point. Regardless of the details of the 
Bureau's report, APPA continues to believe in the validity of the 
historic rationale established in the 1942 and 1943 Interior Department 
Appropriation Acts for treating costs of increased security at multi-
purpose Federal projects as non-reimbursable obligations of the Federal 
Government. We therefore urge Congress to add language to the Energy 
and Water Development Appropriations Act of 2007 to clarify that all 
costs of increased security at dams owned and operated by the Bureau be 
non-reimbursable.
    Renewable Energy Production Incentive (REPI) and Renewable Energy 
Programs.--The Department of Energy's REPI program was created in 
1992's Energy Policy Act (EPAct) as a counterpart to the renewable 
energy production tax credits made available to for-profit utilities, 
and was recently reauthorized through 2016 in the Energy Policy Act of 
2005 (EPAct05). EPAct05 authorizes DOE to make direct payments to not-
for-profit public power systems and rural electric cooperatives at the 
rate of 1.5 cents per kWh (1.9 cents when adjusted for inflation) from 
electricity generated from a variety of renewable projects. According 
to DOE sources, in order to fully fund all past and current REPI 
applicants, over $80 million would be needed for fiscal year 2007. 
Despite the demonstrated need, however, DOE has asked for only $4.96 
million for fiscal year 2007, citing budgetary constraints. We greatly 
appreciate the subcommittee's interest in this small but important 
program as evidenced by its support of funding for the program either 
at or above the administration's budget requests in the last few years 
despite the tight budgetary environment. We urge the subcommittee to 
continue its support with an even greater increase.
    Energy Information Administration.--In order to fulfill the Energy 
Information Administration's (EIA) data collection responsibility in 
regard to the electric power industry, it has had to revise and expand 
its data collection to include new participants. EIA now collects 
information from all sectors of the power industry: investor-owned 
utilities, rural electric cooperatives, public power systems and 
Federal utilities, as well as power marketers and non-utility 
generators. Most EIA data forms are filled out by all industry sectors. 
However, the Federal Energy Regulatory Commission (FERC) collects data 
from its jurisdictional utilities (investor-owned utilities) and the 
Department of Agriculture's Rural Utilities Service (RUS) collects 
information from its utility borrowers (rural electric cooperatives). 
EIA does not duplicate electricity data collected by these Federal 
agencies. Thus EIA uses a small number of forms to collect comparable 
information from electric industry sectors not subject to the FERC or 
RUS reporting requirements. EIA-412 is one of these forms. Funding for 
the distribution, collection and analysis of EIA-412 was eliminated by 
EIA in fiscal year 2005, but could be reinstated if EIA chose to 
allocate a portion of its budget to the collection of the EIA-412 data. 
We urge the subcommittee to encourage the EIA to provide funding for 
this form in fiscal year 2007 within the context of its overall 
appropriation. The indefinite elimination of form EIA-412 will leave a 
gap in the electricity industry's data coverage.
    Storage for High-level Nuclear Waste.--We support the 
administration's efforts to finalize the location of a permanent 
storage site at Yucca Mountain, Nevada. The President requested $544.5 
million for fiscal year 2007 for the nuclear waste repository at Yucca 
Mountain is a step in the right direction and we encourage the 
subcommittee to provide funding for the project at or above the 
administration's request.
    Advanced Hydropower Turbine Program.--APPA is disappointed with the 
administration's decision to phase out this important program to 
develop a hydroelectric turbine that will protect fish and other 
aquatic habitats while continuing to allow for the production of 
emissions-free hydroelectric power. We urge the subcommittee to 
consider providing funding for this important initiative.
    Energy Conservation.--APPA appreciates the subcommittee's interest 
in energy conservation and efficiency programs at DOE and we hope that 
the subcommittee will once again allocate a funding level over and 
above the administration's request for fiscal year 2007.
    Weatherization and Intergovernmental Activities.--APPA supports the 
administration's request of $225 million for fiscal year 2007 for 
helping to increase the efficiency of commercial and residential 
buildings, including weatherization assistance, the State and community 
energy conservation programs.
    Clean Coal Power Initiative and FutureGen.--APPA is disappointed 
with the administration's request of only $5 million for fiscal year 
2007 for the Clean Coal Power Initiative. We urge the subcommittee to 
substantially increase the funding for this program to be consistent 
with the President's commitment to fund this program at $2 billion over 
10 years. We also urge the subcommittee to provide $54 million in new 
funding for fiscal year 2007 for the FutureGen program, as opposed to 
drawing from deferred funds from fiscal year 2006 as the administration 
proposes.
    Distributed Generation Fuel Cells.--APPA is disappointed with the 
administration's request of $63.35 million for fiscal year 2007 for 
distributed generation fuel cell research and development, and urges 
the subcommittee to allocate additional funding for this program.
    Hydrogen Fuel Initiative and Vehicle Technologies.--APPA supports 
the administration's efforts to improve the feasibility of making 
available low-cost hydrogen fuel cells, and support its request of 
$289.5 million for hydrogen research and development in fiscal year 
2007. APPA also supports the administration's request for $166 million 
for vehicle technologies that would apply hydrogen fuel cell technology 
to vehicles as well as provide for research for hybrid and electric 
vehicle technologies to facilitate widespread deployment of these 
technologies.
    Navajo Electrification Demonstration Program.--APPA supports full 
funding for the Navajo Electrification Demonstration Program at its $15 
million authorized funding level for fiscal year 2007. The purpose of 
the program is to provide electric power to the estimated 18,000 
occupied structures in the Navajo Nation that lack electric power.
    National Climate Change Technology Initiative.--APPA supports the 
administration's efforts to promote greenhouse gas reductions through 
voluntary programs and investments in new technologies. We are 
therefore disappointed that the administration has only requested $1 
million for fiscal year 2007 for the policy office of the National 
Climate Change Technology Initiative. We encourage the subcommittee to 
consider allocating additional funds for this program.
    Federal Energy Regulatory Commission (FERC).--DOE has requested 
$230.8 million for the overall operations of the Federal Energy 
Regulatory Commission (FERC) for fiscal year 2007. APPA supports this 
request, which is an appropriate increase over fiscal year 2006 given 
FERC's additional responsibilities under EPAct05.
                                 ______
                                 
           Prepared Statement of the Alliance to Save Energy

    The Alliance to Save Energy (the Alliance) is a bipartisan, 
nonprofit coalition of business, government, environmental, and 
consumer leaders committed to promoting energy efficiency worldwide to 
achieve a healthier economy, a cleaner environment, and greater energy 
security. The Alliance, founded in 1977 by Senators Charles Percy and 
Hubert Humphrey, currently enjoys the leadership of Senator Mark Pryor 
as Chairman; Washington Gas Chairman and CEO James DeGraffenreidt, Jr. 
as Co-Chairman; and Representatives Ralph Hall, Zach Wamp and Ed Markey 
and Senators Jeff Bingaman, Susan Collins and Jim Jeffords as its Vice-
Chairs. More than 100 companies and organizations currently support the 
Alliance as Associates. The Alliance recommends increases of $17.9 
million in several existing energy-efficiency deployment programs, $15 
million for newly authorized programs, and increased funding for 
building energy-efficiency research in fiscal year 2007, compared to 
last year's appropriated levels.

                               BACKGROUND

    Rationale for Federal Energy-Efficiency Programs.--We understand 
that budgets are tight, but we have seen that the costs of not 
addressing energy waste are just too high. Gasoline and natural gas 
prices have doubled in the last few years, and electricity prices also 
reached all-time highs. All told, recent energy price increases cost 
American families and businesses over $300 billion last year. These 
high prices have caused plant closings and loss of manufacturing jobs, 
and have made many low-income homeowners unable to pay their heating 
bills. President Bush recognized that our long-term energy security and 
environmental issues due to our wasteful use of fossil fuels are 
equally serious when he called for ending our ``addiction'' to oil. The 
Energy Information Administration projects that without further action 
our fossil fuel use will rise by a third by 2030, and our imports will 
rise by a half.
    Improved energy efficiency is the best near-term strategy to begin 
balancing demand and supply and bring energy prices down, and is a key 
component of a long-term energy strategy. Energy efficiency is the 
Nation's greatest energy resource--we now save more energy each year 
from energy efficiency than we get from any single energy source, 
including oil, natural gas, coal, or nuclear power. The Alliance to 
Save Energy estimates that if we tried to run today's economy without 
the energy-efficiency improvements that have taken place since 1973, we 
would need 43 percent more energy supplies than we use now.
    A Record of Success.--DOE programs play a key role in these savings 
through the research and development (R&D) of new energy-efficiency 
technologies, and by helping these technologies achieve widespread use. 
These programs reduce energy consumption, dependence on foreign oil, 
and energy costs. They also help create jobs in the United States and 
decrease harmful pollution. A 2001 National Research Council report 
found that every $1 invested in 17 DOE energy-efficiency R&D programs 
returned nearly $20 to the U.S. economy in the form of new products, 
new jobs, and energy cost savings to American homes and businesses. 
Environmental benefits were estimated to be of a similar magnitude.
    Budget Authorizations and Studies.--A series of reports and bills 
have supported a major increase in funding for DOE energy-efficiency 
programs. The Energy Policy Act of 2005 (EPAct 2005) authorized $783 
million for energy-efficiency R&D in fiscal year 2007, an additional 
$240 million for distributed energy and other electric R&D, and $820 
million for various deployment programs. This follows calls for 
expanding energy-efficiency research by the National Commission on 
Energy Policy, the President's Committee of Advisors on Science and 
Technology, the Energy Futures Coalition, and the President's National 
Energy Policy.
    Summary of the President's Request.--The President's overall fiscal 
year 2007 budget request for energy-efficiency programs at DOE's Office 
of Energy Efficiency and Renewable Energy is $517 million, down $111 
million (18 percent) from the fiscal year 2006 appropriation, and $78 
million below the administration's fiscal year 2006 request. This large 
cut follows a gradual slide from $694 million appropriated for these 
energy-efficiency programs in fiscal year 2002. Funding for these 
programs is down one-third (34 percent) since 2002 after inflation. In 
addition, the request for electricity R&D programs, many of which focus 
on efficiency, is $96 million, down $41 million (30 percent) from the 
fiscal year 2006 appropriation. After accounting for some program 
transfers, funding for buildings, industry, and vehicles R&D also is 
reduced. But some of the biggest cuts are to deployment programs, 
including weatherization of low-income homes, support for State 
building codes, industrial energy audits, and Federal energy 
management.

                        ALLIANCE RECOMMENDATIONS

    In order to address the critical energy problems facing our Nation, 
the Alliance recommends funding for DOE energy-efficiency programs in 
line with the authorized levels. However, given fiscal realities, we 
have included much smaller specific funding requests below.
    The impact of DOE energy-efficiency programs has been multiplied by 
the combination of research to develop new technologies, voluntary 
deployment and market transformation programs to move them into the 
marketplace, and standards and codes to set a minimum threshold for 
using cost-effective technologies. All three legs are vital. However, 
the Alliance believes that programs that focus on near-term energy-
efficiency deployment are especially critical right now to meeting our 
Nation's natural gas and electricity needs. The administration's 
proposed elimination of the Gateway Deployment function and cuts to 
other key deployment programs are not consistent with achieving our 
national energy policy goals of reducing high energy costs and reducing 
our reliance on imported oil.
    It is important that the program increases in the administration's 
budget and proposed below not be paid for through cuts to other highly-
effective efficiency programs, which also address critical national 
energy needs. While we support the fuel cell and biofuels programs, 
they do not take the place of core programs that can have broader, more 
certain, and more near-term energy savings impacts. In particular, the 
Alliance opposes repeated cuts that now threaten the viability of 
Industrial Technologies research programs and the dramatic proposed 
cuts to the distributed energy R&D program and the Weatherization 
Assistance Program.
Existing Deployment Programs (Office of Energy Efficiency and Renewable 
        Energy)
    Building Codes Training and Assistance (formerly Weatherization and 
Intergovernmental Programs).--While residential and commercial building 
codes are implemented at the State level, the States rely on DOE for 
technical specifications, training, and implementation assistance. We 
estimate that building energy codes could save 7.2 quads of energy by 
2025. The new 2006 IECC model residential code includes measures to 
simplify the code and ease implementation, and thus presents exciting 
opportunities to increase code adoption and compliance. EPAct 2005 
authorized $25 million a year for building codes, including a new 
program to improve compliance. Yet the administration has proposed 
eliminating funding for Building Codes Training and Assistance. The 
Alliance recommends a $4.5 million increase above the fiscal year 2006 
appropriations level, for total funding of $9.0 million.
    Industrial Assessment Centers and Best Practices (Industrial 
Technologies--Crosscutting).--One of the most effective DOE industrial 
programs conducts plant-wide energy assessments, develops diagnostic 
software, conducts training, develops technical references, and 
demonstrates success stories. Oak Ridge National Laboratory reports 
that DOE-ITP's Best Practices outreach saved 82 trillion Btu in 2002, 
worth $492 million. University-based Industrial Assessment Centers 
(IAC) have an immediate impact on the competitive performance of 
hundreds of smaller U.S. factories. The same efforts train industry's 
next generation of innovators. Yet the administration has proposed to 
cut IAC by 30 percent. The Alliance recommends the following increases 
above the fiscal year 2006 appropriations levels:
  --a $2 million increase for Industrial Assessment Centers, for total 
        funding of $8.4 million,
  --a $3 million increase for Best Practices, for total funding of 
        $10.9 million.
    Federal Energy Management Program.--This program has helped cut 
Federal building energy waste by 24 percent from 1985-2001--a reduction 
that now saves Federal taxpayers roughly $1 billion each year in 
reduced energy costs. But funding has steadily decreased for this 
program, even though large savings remain untapped. EPAct 2005, in 
addition to setting aggressive new energy saving targets, requires DOE 
to implement rules, guidelines, and reports on the targets, Federal 
building standards, Federal procurement, and metering. A needed funding 
increase for this program will actually save taxpayer money in lower 
Federal energy bills. The Alliance recommends a $3 million increase 
above the fiscal year 2006 level, for total funding of $20.0 million.
    Equipment Standards and Analysis (Building Technologies).--
Appliance standards have already reduced U.S. electricity use by an 
estimated 2.5 percent (88 billion kWh/year) and reduced peak power 
demand by approximately 21,000 MW, at a minimal Federal cost and with 
major energy bill savings to consumers. But the program is already 
years behind on about 20 standards. EPAct 2005 adds rulemakings on 
three new products, and requires DOE to issue updates on several new 
legislated standards. DOE has issued an ambitious plan to catch up, and 
requested a $1.7 million increase. But more is needed to implement the 
plan. The Alliance recommends a $2.5 million increase over the fiscal 
year 2006 appropriations level for total funding of $12.7 million.
    Energy Star (formerly Weatherization and Intergovernmental 
Programs).--Energy Star is a successful voluntary deployment program at 
EPA and DOE that has made it easy for consumers to find and buy many 
energy-efficient products. In 2004 alone, Energy Star helped Americans 
save enough energy to power 25 million homes and avoid greenhouse gas 
emissions equivalent to those from 20 million cars--all while saving 
$10 billion on their utility bills. Every Federal dollar spent on the 
Energy Star program results in an average savings of more than $75 in 
consumer energy bills and the reduction of about 3.7 tons of carbon 
dioxide emissions. With additional funding, the Energy Star program can 
update its criteria, label additional products, and provide Americans 
with more information on how to save energy. The Alliance recommends a 
$1 million increase over the fiscal year 2006 appropriations level for 
total funding of $6.9 million.
New Deployment Programs Authorized in EPAct 2005
    Energy Efficiency Public Information Initiative (Program 
Support).--The quickest way to reduce energy demand and bring high 
energy prices down is through consumer education. EPAct 2005 (Sec. 134) 
authorizes $90 million per year for a public education program to 
provide consumers the information and encouragement necessary to reduce 
energy use. Such programs have a proven track record of success, as in 
the 2001 ``Flex Your Power'' campaign in California, which 
significantly reduced consumer electricity demand and assisted in 
avoiding further black-outs. DOE has contributed a little to effective 
education campaigns, but much more funding is needed. The Alliance 
recommends at least $10 million for this new program.
    Energy Efficiency Pilot Program (Office of Electricity Delivery and 
Energy Reliability).--State and utility energy-efficiency programs have 
been remarkably successful at reducing electricity demand, strain on 
the grid, and the need for costly new power plants. However, they have 
been starved for funds due to electric restructuring. A few States are 
experimenting with innovative performance-based policies to use the 
efficiency resource. EPAct 2005 (Sec. 140) authorizes $5 million per 
year for a new program to provide funding to several States to assist 
in the design and implementation of energy-efficiency resource programs 
that will lower electricity and natural gas use by at least 0.75 
percent a year. The Alliance recommends $5 million for this new 
program.
Other Key Programs
    Building Technologies R&D.--Energy use by residential and 
commercial buildings accounts for over one-third of the Nation's total 
energy consumption. Of all the DOE energy-efficiency programs, Building 
Technologies continues to yield perhaps the greatest energy savings. 
The 2001 National Research Council study found that just three small 
buildings R&D programs--in electronic ballasts for fluorescent lamps, 
refrigerator compressors, and low-e glass for windows--have already 
achieved cost savings totaling $30 billion, at a total Federal cost of 
about $12 million. Current buildings research programs, such as 
advanced windows and solid state (LED) lighting, are equally promising. 
Yet the administration's proposed budget would reduce overall Building 
Technologies funding by 7 percent. Buildings R&D should be a priority 
for funding increases, especially for Windows and Insulation and 
Materials R&D.
    Energy Information Administration (EIA) Energy Consumption 
Surveys.--EIA's Energy Consumption Surveys provide unique and 
invaluable data to policy makers, congressional staff, researchers, and 
industry. The administration's budget request includes $3.65 million, 
just enough to continue the Residential, Manufacturing, and Commercial 
Buildings Energy Consumption Surveys (RECS, MECS, and CBECS) every 4 
years. The Alliance recommends an increase of $1.9 million, for total 
funding of $5.5 million, in order to reinstate the residential 
transportation survey, last conducted in 1994, and to conduct the 
surveys every 3 years as required by the Energy Policy Act of 1992, 
instead of the current 4-year schedule.

               ALLIANCE TO SAVE ENERGY ENERGY AND WATER APPROPRIATIONS FISCAL YEAR 2007 PRIORITIES
----------------------------------------------------------------------------------------------------------------
                                                                           Fiscal Year
                                                              Fiscal Year      2007       Alliance     Increase
                                                              2006 Approp    Request        Rec.      Over 2006
----------------------------------------------------------------------------------------------------------------
Key existing deployment programs (in order of priority):
    Building Codes Training and Assistance..................          4.5  ...........          9.0         +4.5
    Industrial Assessment Centers and Best Practices
     (Industrial--Crosscutting):
        Industrial Assessment Centers.......................          6.4          4.0          8.4         +2.0
        Best Practices......................................          7.9          8.8         10.9         +3.0
    Federal Energy Management Program.......................         17.0         14.9         20.0         +3.0
    Equipment Standards and Analysis (Buildings)............         10.2         11.9         12.7         +2.5
    Energy Star.............................................          5.9          5.8          6.9         +1.0
New deployment programs authorized in EPAct 2005 (in order
 of priority):
    Public Information Initiative (Program Support).........  ...........  ...........         10.0        +10.0
    Energy Efficiency Pilot Program (Electricity)...........  ...........  ...........          5.0         +5.0
Additional priorities:
    Building Technologies R&D (Buildings)...................         83.4         77.3      ( \1\ )  ...........
    EIA Energy Consumption Surveys..........................          3.6          3.6          5.5         +1.9
----------------------------------------------------------------------------------------------------------------
From testimony of Kateri Callahan, President, Alliance to Save Energy. All figures in millions of dollars. Also
  oppose cuts to Industrial Technologies R&D, Distributed Energy R&D, and Weatherization Assistance Program.
\1\ Increase.

                                 ______
                                 
    Prepared Statement of the National Association of State Energy 
                               Officials
    Mr. Chairman and members of the subcommittee, I am Peter Smith of 
New York and Chair of the National Association of State Energy 
Officials (NASEO). NASEO is submitting this testimony in support of 
funding for a variety of U.S. Department of Energy programs. We are in 
the midst of an energy emergency and the programs described below help 
the American people respond. Specifically, we are testifying in support 
of no less than $74 million for the State Energy Program (SEP). Forty 
members of the Senate have written to this subcommittee supporting $74 
million in SEP funding for fiscal year 2007. The 20 percent cut in SEP 
in the fiscal year 2006 bill is devastating. SEP is the most successful 
program operated by DOE in this area. The administration's proposed 
increase to $50 million is an important first step. SEP is focused on 
direct energy project development, where most of the resources are 
expended. We also support $275 million for the Weatherization 
Assistance Program (WAP). In addition, dramatic successes have been 
achieved through the State Energy Programs Special Projects (SEP 
Special Projects), which should receive at least funding of $15.1 
million, equal to the fiscal year 2006 level. The administration has 
proposed no funds for this program in fiscal year 2007. SEP Special 
Projects has set a standard for State-Federal cooperation and matching 
funds to achieve critical Federal and State energy goals. These 
programs are successful and have a strong record of delivering savings 
to low-income Americans, homeowners, businesses, and industry. We also 
support increases of $1.6 million above the President's budget request 
for the Energy Information Administration (EIA) of $89.8 million for 
EIA's State Heating Oil and Propane Program, and to preserve EIA Forms 
182, 856 and 767. EIA funding is a critical piece of energy emergency 
preparedness and response. NASEO continues to support funding for a 
variety of critical deployment programs, including Building Codes 
Training and Assistance ($5.6 million), Rebuild America ($3.8 million), 
Energy Star ($5.9 million) and Clean Cities ($7.9 million). NASEO 
supports funding for the Office of Electricity Delivery and Energy 
Reliability at least at the fiscal year 2006 request of $161.9 million, 
with specific funding for the Division of Infrastructure Security and 
Energy Restoration of $18 million, which funds critical energy 
assurance activities. We strongly support the R&D function, Operations 
and Analysis and Distributed Energy activities within this office. The 
industries program should be funded at a $74.8 million level, equal to 
the fiscal year 2005 levels, to promote efficiency efforts and to 
maintain U.S. manufacturing jobs, especially in light of the loss of 
millions of these jobs in recent years. Proposed cuts in these programs 
are counter-productive and are detrimental to a balanced national 
energy policy.
    Over the past 4 years, both oil and natural gas prices have been 
rising in response to international events, increased international and 
domestic use and the result of last year's hurricanes, etc. The $3.00/
gallon gasoline prices will be with us for some time. We also expect 
$70 oil to continue for an extended period of time, with an expanded 
crisis situation as summer approaches. The State energy offices are in 
the forefront of energy emergency response, and this will be a 
challenge a year after 20 percent cut in SEP funding. In addition, we 
now have quantifiable evidence of the success of the SEP program which 
demonstrates the unparalleled savings and return on investment to the 
Federal taxpayer of SEP. Every State gets an SEP grant and all States 
and territories support the program.CO2
    In January 2003, Oak Ridge National Laboratory (ORNL) completed a 
study and concluded, ``The impressive savings and emissions reductions 
numbers, ratios of savings to funding, and payback periods . . . 
indicate that the State Energy Program is operating effectively and is 
having a substantial positive impact on the Nation's energy 
situation.'' ORNL has now updated that study and found that $1 in SEP 
funding yields: (1) $7.22 in annual energy cost savings; (2) $10.71 in 
leveraged funding from the States and private sector in 18 types of 
project areas; (3) annual energy savings of 47,593,409 million source 
BTUs; and (4) annual cost savings of $333,623,619. The annual cost-
effective emissions reductions associated with the energy savings are 
equally significant: (1) Carbon--826,049 metric tons; (2) VOCs--135.8 
metric tons; (3) NOx--6,211 metric tons; (4) fine particulate matter 
(PM10)--160 metric tons; (5) SO2--8,491 metric 
tons; and (6) CO--1,000 metric tons.
    State Energy Program Special Projects and Other Deployment 
Programs.--SEP Special Projects provided matching grants to States to 
conduct innovative project development. It has been operated for the 
past 10 years and has produced enormous results in every State in the 
United States. We support funding of at least the fiscal year 2005 
funding level of $15.1 million. The administration has proposed no 
direct funding in fiscal year 2007 for SEP Special Projects. SEP 
Special Projects grants are awarded competitively and thus complement 
the SEP formula grant, with almost all the States submitting winning 
proposals in 2005. These projects have provided successes in virtually 
every congressional district. The other deployment programs, including 
Rebuild America, Building Codes Training and Assistance (which the 
administration proposed to zero out), Clean Cities and Energy Star 
should receive funding of $23.2 million. The administration proposed 
eliminating the Gateway Deployment Program by name, and shifted 
resources to other activities.
    Industrial Energy Program.--A funding increase to a level of $74.8 
million for the Industrial Technologies Program (ITP) is warranted. 
This is a public-private partnership in which industry and the States 
work with the Department of Energy to jointly fund cutting edge 
research in the energy area. The results have been reduced energy 
consumption, reduced environmental impacts and increased competitive 
advantage of manufacturers (which is more than one-third of U.S. energy 
use). The States play a major role working with industry and DOE in the 
program to ensure economic development in our States and to try to 
ensure that domestic jobs are preserved.
    EIA.--Additional funding is required to preserve EIA Forms 182, 856 
and 767. The funding is only $1 million per year. The Domestic Crude 
Oil Report (182) and Foreign Crude Oil Report (856) are not reliably 
available elsewhere, and tracks our importation and distribution of 
oil. As we are facing increased international tensions, there could 
never be a worse time to eliminate these forms. The 767 form tracks 
central station generation emissions, critical to State regulatory 
programs. The State Heating Oil, Natural Gas and Propane Program 
requires $600,000 for adequate sampling.
    Examples of Successful State Energy Program Activities.--The States 
have implemented thousands of projects. Here are a few representative 
examples.
    California.--The California Energy Commission has operated energy 
programs in virtually every sector of the economy. The State has 
upgraded residential and non-residential building codes, developed a 
school energy efficiency financing program, industrial partnerships in 
the food and waste industry, instituted a new replacement program for 
school buses utilizing the newest natural gas, advanced diesel and 
hybrid technologies. The buildings program has reduced consumption by 
enormous amounts over the past few years, through alternative financing 
programs and outreach.
    Hawaii.--The State is considering comprehensive energy legislation 
at the present time. A comprehensive program of energy efficiency for 
commercial and residential buildings has saved $9.3 million annually. 
The State recently moved forward with energy code revisions projected 
to save tens of millions of dollars. The Hawaii ``Green Business 
Program'' saves $175 in water, energy and waste minimization for every 
$1 in SEP funds invested.
    Idaho.--In Idaho the State has rated homes utilizing the Energy 
Star tools and signed-up 77 new builders to participate in the program. 
An aggressive energy efficiency financing program has produced 2,428 
loans, totaling $15.8 million for significant energy savings. The 
agricultural energy program has focused on reducing irrigation costs 
and usage to improve agricultural productivity and costs.
    Kentucky.--The programs supported by SEP have assisted in 
construction of high energy performance K-12 schools, developed $45 
million in energy savings performance contracts, and funded energy 
efficiency and renewable energy projects at universities and local 
governments.
    Missouri.--The energy office in Missouri has been operating a low-
interest energy efficiency loan program for school districts, colleges, 
universities and local governments. Thus far, public entities have 
saved more than $72 million each year, with more than 400 projects. The 
State energy office has also worked with the Public Utility Commission 
and the utilities within the State to get $20 million invested in 
residential and commercial energy efficiency programs. A new revolving 
loan for biodiesel has also been initiated.
    Mississippi.--The State operates an energy investment loan program 
targeted to schools, hospitals and manufacturers. Mississippi has been 
very active in the Energy Star program and has been attempting to 
conduct post-Katrina reconstruction in an energy efficient manner.
    Montana.--The State has issued over $7.5 million in bonds to fund 
60 energy efficiency projects in State buildings. The savings pay for 
themselves very quickly. The State has also upgraded building energy 
codes and instituted 44 projects impacting over 2 million square feet 
of building space, with non-Federal leverage of $11.5 million.
    Nevada.--The State has focused on energy code training and 
technical assistance to ensure that new housing construction is 
conducted in an energy efficient manner, as well as a large expansion 
in renewable energy programs.
    New Mexico.--With new State legislation, the State energy office is 
supporting and expanding renewable energy usage, tax incentives for 
hybrid vehicles, school energy efficiency programs, technical 
assistance to the wind industry and expansion of geothermal resources. 
The State has arranged approximately 40 energy performance contracts 
with annual energy savings in the millions. There has also been an 
expansion in the use of ethanol and biofuels.
    North Dakota.--The State energy office is supporting programs for 
ethanol and biodiesel promotion. The State has also funded energy 
efficiency programs for local builders, schools and for lower income 
households.
    Texas.--The Texas Energy Office's Loan Star program has long 
produced great success by reducing building energy consumption and 
taxpayers' energy costs through efficient operation of public 
buildings. This saved taxpayers more than $172 million through energy 
efficiency projects. Over the next 20 years, Texas estimates that the 
program will save taxpayers $500 million. In another example, the State 
promoted the use of ``sleep'' software for computers, which is now used 
on 105,000 school computers, saving 33 million kWh and reducing energy 
costs by $2 million annually. The State has initiated the Texas 
Emissions Reduction Plan/Texas Energy Partnership in 41 urban counties 
to reduce emissions through cost-effective energy efficiency projects.
    Utah.--SEP funds have been utilized to support solar and wind 
programs, as well as implementation of a stronger energy building code. 
The State has also supported local government energy efficiency.
    Washington.--The State energy agency works with the Northwest 
Energy Efficiency Alliance to target $20 million in funding for energy 
efficiency and renewable energy projects. The State is also closely 
involved in energy emergency preparedness and response. The Resource 
Efficiency Managers Program, supported by SEP, conducts on-site 
training for energy savings. For example, working with Ft. Lewis and 
Puget Sound naval facilities, the program has saved over $2.5 million.
    West Virginia.--The energy office has focused on industrial energy 
savings, including identified savings of $2.4 million in 2005 alone. 
Energy projects in the industrial sector have totaled $29 million 
during the past 9 years. The State has also supported dramatic 
expansion of renewable energy programs and is projecting $3 million in 
school energy cost savings each year through energy efficiency 
programs.
                                 ______
                                 
Prepared Statement of the Mid-West Electric Consumers Association, Inc.

    The Mid-West Electric Consumers Association (``Mid-West'') 
represents hundreds of rural electric cooperatives, public power 
districts and municipally-owned utilities in the nine States of the 
Missouri River Basin, including: Colorado, Iowa, Kansas, Minnesota, 
Montana, Nebraska, North Dakota, South Dakota and Wyoming. This 
testimony supports fiscal year 2007 funding for the Western Area Power 
Administration (``WAPA''): (1) $275 million for purchase power and 
wheeling; and (2) a total of $193,482 million for operations, 
maintenance ($45,734 million) and program direction ($147,748 million), 
utilizing the ``net-zero'' approach. Mid-West opposes: (1) the 
administration's proposal to increase electric rates of the Power 
Marketing Administrations (``PMAs'') by changing the interest rate on 
new Federal power investments; and (2) reallocating certain irrigation 
costs in the Pick-Sloan Missouri Basin Program.

                      PURCHASE POWER AND WHEELING

    Mid-West supports the proposed budget for purchase power and 
wheeling. WAPA and other PMAs are responsible for marketing and 
delivering hydropower generated at Federal dams to eligible consumer-
owned utilities. In light of soaring energy costs and record low 
reservoir levels, funding is required for purchase power and wheeling. 
The administration's budget request of $275 million for purchase power 
and wheeling is minimally adequate. These costs are paid for by Federal 
power customers. The persistent drought in the Missouri River Basin 
means that the 2006 generation estimated by the Corps of Engineers will 
be 61 percent of normal. Present projections could be further reduced 
if the navigation season is shortened.
    The language in the fiscal year 2002-2006 appropriations bills 
should be retained so that the PMAs could continue to utilize customer-
generated receipts to help fund their purchase power and wheeling 
costs. Otherwise, small utilities, such as rural electric cooperatives, 
municipally-owned utilities, Native American tribes, irrigation and 
public power districts, would have to develop their own transmission 
and power firming agreements which would increase costs. The language 
regarding purchase power and wheeling included in the fiscal year 2007 
budget request should be inserted in the fiscal year 2007 Energy and 
Water Appropriations bill. Mid-West supports this language.

              ``NET ZERO'' APPROPRIATIONS FOR FEDERAL PMAS

    The administration's fiscal year 2006 budget proposed a ``net-
zero'' funding approach for the annual cost of the PMAs' operations, 
maintenance and program direction. Unfortunately, this provision was 
not included in the fiscal year 2007 budget request. The ``net-zero'' 
proposal recognizes that certain Federal outlays for a given fiscal 
year will be returned to the Treasury in that same fiscal year. Mid-
West supports this proposal, which is already used to fund other 
Federal energy agencies. The PMAs' budgets cover all the costs of their 
operations. A budget scoring adjustment is required to make this ``net-
zero'' approach truly effective. Receipts collected by WAPA to repay 
program direction and operation and maintenance expenditures should be 
reclassified from ``mandatory'' to ``discretionary.''

                          INTEREST RATE CHANGE

    Historically, the interest charged on Federal power investment has 
been the U.S. Treasury's long term yield rate. Each year, the Treasury 
provides to the PMAs the interest rate to be charged for investments 
made in that year. Those investment costs plus interest are repaid to 
the Treasury through power rates charged to Federal power customers.
    Now, the administration has stated that it intends to change that 
practice and charge the ``agency rate,'' which is the rate charged to 
governmental corporations. The difference between this rate and 
Treasury's long term yield rate is described as ``small,'' averaging 
about 0.4 percent, which would garner about $2-$3 million per year from 
Federal projects where the interest rate is not set by law.
    The PMAs--WAPA, Southeastern, and Southwestern are not government 
corporations. They do not have borrowing authority or other authorities 
available to government corporations. The PMAs are Federal agencies 
within the Department of Energy and are funded annually by 
congressional appropriations.
    The current practice of using Treasury's long-term yield rate has 
worked well for decades. It is wrong to assign an interest rate formula 
for a government corporation to Federal agencies that are not 
government corporations.

                    REALLOCATION OF IRRIGATION COSTS

    The proposed reallocation and acceleration of Pick-Sloan Missouri 
Basin investment is apparently a rehash of a similar proposal in last 
year's budget request. It is hard to tell exactly what is proposed 
since there is no legislative language or even a detailed explanation 
of the proposal.
    The short ``explanations'' that have been offered are inconsistent. 
One section of the budget calls for repayment of vaguely defined 
construction costs--``Power customers will be responsible for repayment 
of all construction from which they benefit.'' (p. 188 Department of 
Interior: Mandatory Proposal Recover Pick-Sloan Project Costs). 
However, Bureau of Reclamation Highlights (BH-36) calls for ``repayment 
of construction and operations costs . . . ''.
    The budget request erroneously states that Pick-Sloan power 
customers have not heretofore been responsible for repaying these 
costs. Pick-Sloan power customers are responsible for repaying all the 
costs of the power investment, joint costs allocated to the power 
function, and a huge portion of investment related to irrigation. These 
repayment obligations have been organized under the ``ultimate 
development'' concept.
    Most simply put, the administration's budget request would destroy 
the ultimate development concept that allocates costs among the various 
project purposes and determines repayment practices.
          corps of engineers ``construction general'' account
    As part of its Operations and Maintenance budget, the Corps of 
Engineers is requesting $85 million for recovery of the pallid sturgeon 
on the Missouri River. In fiscal year 2006 the Corps is spending 
roughly $54 million from its Construction General account. Mid-West 
sees no reason to change the budget classification of these dollars in 
fiscal year 2007. Monies related to pallid sturgeon recovery should be 
transferred to the Corps Construction General account, where they more 
properly belong, and where they have been accounted for in past years.

                               CONCLUSION

    Thank you for the opportunity to provide written testimony to the 
subcommittee on these important issues. We stand ready to respond to 
any questions.
                                 ______
                                 
         Prepared Statement of the Hospital for Special Surgery

    Mr. Chairman, and members of the subcommittee, thank you for the 
opportunity to submit testimony to the hearing record regarding 
Hospital for Special Surgery (HSS) in New York, New York. Since its 
founding over 140 years ago, HSS has been the hospital of choice for 
countless individuals of all ages--from infants to older adults--
suffering from musculoskeletal conditions. Today, HSS is considered the 
premier specialty hospital for orthopedics and rheumatology in the 
United States and abroad.
    As you know, funds to support the establishment of the National 
Center for Musculoskeletal Research at Hospital for Special Surgery 
were included in Energy and Water Appropriations in fiscal year 2001 
and fiscal year 2005. First, I would like to take this opportunity to 
thank the subcommittee for its support and to report on the excellent 
progress that has been made in achieving this goal.
    With a combination of institutional, private, and government 
support, HSS has transformed its research enterprise over the past 6 
years, from the physical plant to the depth and focus of its scientific 
expertise. HSS has conducted the largest recruitment drive in its 
history. Expanded, state-of-the-art laboratories have increased the 
quality and quantity of investigations. Today, 70 percent of HSS' basic 
research activity is federally funded, meeting national benchmarks. Our 
critical mass of expertise is composed of 34 bench scientists and 129 
full-time laboratory fellows, technicians, and support. Of course, the 
most important measure of success is HSS's capacity to improve quality 
of life through treatments derived from a greater understanding of 
disease. This has been fortified by the scientific talent and new 
resources made possible by the Hospital's generous supporters. Today, 
the National Center for Musculoskeletal Research at HSS is an 
internationally recognized leader whose pioneering scientists are 
making significant contributions to understanding diseases like 
arthritis, osteoporosis, and lupus, and advancing progress toward the 
development of better treatments and cures.
    The Hospital's groundbreaking basic, translational, and clinical 
research efforts are unique in that they are informed by its very 
sizeable patient base, which is the largest of any musculoskeletal 
hospital in the world. HSS's surgical techniques, rehabilitation 
practices, orthopedic imaging, anesthesiology and pain management, and 
non-surgical interventions are the ``best practices'' in the field. To 
continue to advance the state-of-the-art, while meeting the needs of 
increasing numbers of patients, HSS is now working to create an 
entirely new platform of patient care for the 21st century. The 
centerpiece of this initiative is the expansion and modernization of 
its clinical facilities to provide the highest level of care to the 
increasing number of patients seeking the expertise of the Hospital's 
extraordinary medical staff. HSS has requested a fiscal year 2007 
appropriation of $4 million to advance this important project.
    The Hospital last expanded in 1996 when facilities meant for polio 
patients and lengthy hospitalizations were redesigned and modernized. 
In the succeeding years, pioneering advances in musculoskeletal 
medicine have taken place, many of them using biosynthetic materials, 
molecular diagnostics, innovative surgical tools and techniques, and 
computer guidance and modeling. Since 1996, HSS has added 65 medical 
staff and numerous specialized centers dedicated to research and 
clinical care in orthopedics, rheumatology, complementary medicine, 
sports medicine, non-surgical interventions, imaging, and pain 
prevention.
    New medical staff have the opportunity to learn from surgeons and 
physicians who have practiced at HSS for decades, embracing a great 
breadth and depth of experience, historical knowledge of the field, and 
insight into patients' needs, expectations, and potential for recovery. 
Building on experience, we have increased our efficiencies and ability 
to help increasing numbers of patients from all over the world. For 
example, the average length of stay for joint replacement has been 
reduced from 6 days (1996) to less than 4.5 days. For patients who 
qualify for minimally invasive surgery, many can leave the hospital 
within 2-3 days. In the future, we feel certain some joint replacement 
surgery will be carried out on an ambulatory basis.
    The major demographic and sociological trends observed worldwide 
are fueling a demand for care at HSS that is unprecedented. There has 
been an extraordinary increase in the over-60 population and their need 
for musculoskeletal medicine; and there is a more active, younger 
population desiring to remain mobile and play sports as they grow 
older. From 1996 to 2005, Special Surgery's annual surgical volume rose 
from 10,700 to 17,500 and its annual outpatient visits rose from 
147,000 to 230,000, a total increase of approximately 60 percent. 
Special Surgery is also a magnet referral center for complex surgeries, 
with growing numbers of patients requiring extensive, high-level care.
    Meeting demand is only part of the equation. Bringing improved 
treatments and interventions to patients is of utmost importance. HSS 
continues to be a leader in advancing clinical treatments that enable 
patients to recuperate more quickly and regain mobility. HSS-led 
innovations on the horizon include:
  --Minimally invasive knee, hip, and shoulder implants for younger 
        patients. ``Baby boomers'' are our fastest growing patient 
        segment.
  --Spinal disc replacement surgery for degenerative disc disease, and 
        spinal stabilization without fusion.
  --Effective treatments for early arthritic patients when there is a 
        ``window of opportunity'' to slow and perhaps halt the 
        progression of disease.
  --Biosynthetic materials that mimic everyday movements to repair 
        sports injuries to ligaments, tendons, meniscus, and cartilage.
  --Biological solutions with minimal side effects to treat and prevent 
        the progress of a wide range of inflammatory conditions.
  --New diagnostics to predict the efficacy of medical treatments.
  --Advanced imaging techniques that can diagnose disease at the pre-
        clinical stage, enabling earlier and more effective treatment.
  --New medications to intervene before nerve injury and remold pain 
        pathways, minimizing post-operative pain.
  --Computer-assisted surgical procedures.
    An expanded clinical facility will enable the countless patients 
who seek our help to have the benefit of these medical innovations.
    Our new clinical facilities and extraordinary volume of patients 
will also provide an unparalleled opportunity to create a robust 
clinical research program. The potential for new knowledge in joint 
replacement is significant, since HSS performs the greatest number of 
hip and knee replacements in the world, more than 4,000 annually. The 
clinical research program will be built on a strong basic research 
foundation, which was strengthened over the past several years with the 
vital support of the Energy and Water Subcommittee.
    In our ``new hospital'' every patient would have an opportunity to 
partner with us as a research patient in the effort to gain a deeper 
understanding of bone and joint disease to perfect treatment for future 
generations. With advanced technology, patients will help create their 
own research records, containing uniform, prospective data on the 
nuances of their treatment and progress. Each specialty service will 
have its own clinical research coordinator, and patients will have 
``real time'' access to information about clinical trials. Clinical 
research analysis, coupled with our knowledge of disease at the basic 
science level--particularly arthritis and inflammatory disease--will 
provide a powerful resource for advancing musculoskeletal health and 
restoring patients' mobility. We are currently recruiting new 
leadership for this program and developing the required infrastructure 
to successfully launch this initiative in our expanded facilities.
    The Hospital's new facilities will be completed by 2009 and 
encompass 201,000 square feet of new construction and 75,000 square 
feet of renovated existing space. On-site patient services will be 
significantly expanded and redesigned for greater efficiency and 
comfort. Highlights include a modernized, expanded ambulatory surgery 
center; enhanced rehabilitation facilities; new imaging, pain 
management, and minor procedures facilities; and an enhanced sports 
medicine rehabilitation center. In addition, the Hospital is 
refurbishing the lobby of the Main Building to better serve patients 
and their families. HSS took a unique approach to the design of this 
project, forming a collaborative team of physicians, nurses, 
architects, and planners to develop an optimum healing environment that 
flows efficiently for both patients and medical staff.
    Mr. Chairman, the objectives of Hospital for Special Surgery's 
Clinical Facilities Expansion and Modernization Project are consistent 
with those historically funded by the Department of Energy in the 
Energy & Water Appropriations Bill. We hope that the subcommittee will 
provide $4 million in fiscal year 2007 toward this capital expansion, 
which will benefit countless patients as they grow older and seek help 
for a range of musculoskeletal conditions. The chances are, no matter 
where patients live, they will be helped by a medical advance pioneered 
at HSS or by an HSS-trained physician. To keep this promise alive, we 
must be able to expand clinically and lead the way, as we have done 
since opening our doors as America's oldest existing orthopedic 
hospital.
                                 ______
                                 
   Prepared Statement of the GE Energy Advanced Technology Operation

    The following testimony is submitted on behalf of GE Energy (GE) 
for the consideration of the committee during its deliberations 
regarding the fiscal year 2007 budget requests for the Department of 
Energy (DOE). GE urges the committee to provide funding to initiate the 
Western IGCC Demonstration Program, as authorized in the Energy Policy 
Act of 2005. Additional resources also are needed for the Advanced 
Turbines program, DOE's major research effort focusing on gas turbines 
for electricity production which also addresses key needs for hydrogen 
turbines. GE further recommends $10 million in additional funding for 
the SECA program to support further advances in fuel cell technologies 
for power production. Investments in these and the other important 
programs discussed below will help to meet the challenges of assuring a 
diverse portfolio of domestic power generation resources for the 
future.

                         FOSSIL ENERGY PROGRAMS

    Western IGCC Demonstration Program.--As the committee is aware, 
there has been a substantial resurgence in interest in coal-fired 
electricity generation. Integrated gasification combined cycle (IGCC) 
is a leading technology for the next generation of coal plants. IGCC 
reduces emissions of sulfur dioxide by 75 percent, nitrogen oxides by 
33 percent, and particulate matter by approximately 50 percent compared 
to a state-of-the-art pulverized coal plant. IGCC also is more cost 
effective at removing mercury and carbon dioxide. Development of 
several large-scale commercial IGCC plants is underway. These ``first-
of'' plants are a critical step towards reaching IGCC's entitlement in 
performance and cost.
    If the full national environmental and energy benefits of IGCC are 
to be achieved, the ability of IGCC technology to efficiently use low 
rank coals, such as those from the Powder River Basin that are 
increasing in importance as a low cost, domestic fuel source, must be 
addressed. Engineering design for the first-of-a-kind plant capable of 
commercial operation on low rank coals is a key requirement. Unlike 
natural gas plants, the first-of-a-kind advanced coal plant for low 
rank coal will require significant preliminary engineering and 
technology integration. Section 413 of the Energy Policy Act of 2005 
authorized the Western Integrated Coal Gasification Demonstration 
Program. This cost-shared program would provide the framework for the 
Federal Government and industry to work together to expand the envelope 
of efficient, low emissions IGCC technology to economically use these 
coals. This important initiative is deserving of the committee's 
consideration.
    IGCC.--GE recommends that the budget for DOE's Advanced IGCC 
program be increased by $12 million in fiscal year 2007 to be used to 
offset the first-of-a-kind project engineering development costs that 
are required to deliver commercial IGCC plants capable of utilizing low 
rank coals. This would relieve launch customers and early adopters of 
being differentially burdened with advancing this technology, and will 
ultimately lead to benefits throughout the industry as this up-front 
development engineering is captured to provide designs for like-plants.
    Clean Coal Power Initiative.--The budget request includes only 
minimal funding for the Clean Coal Power Initiative (CCPI) in fiscal 
year 2007, which will presumably delay future solicitations for the 
program. While GE understands the administration's desire to increase 
the effectiveness of the program, the need for a commercial 
demonstration program for advanced coal power technologies is 
undiminished. Federal investment in clean coal technology has produced 
a profound improvement in coal-based generation technology. The pre-
commercial demonstrations of IGCC technology at TECO Polk and Wabash 
through the predecessor Clean Coal Technology Program proved the 
economic viability of IGCC and served as a catalyst for the industry to 
develop IGCC into commercial power generation offerings.
    While the development of several large-scale commercial IGCC plants 
is underway, preliminary development at the pilot stage already is 
ongoing for the next generation of IGCC technology. GE sees a 
continuing need for the CCPI to serve as the vehicle for the scale-up, 
plant integration, and initial deployment of advanced IGCC 
technologies. The CCPI also would serve as means to support the 
deployment at commercially-relevant scale of technologies that the 
FutureGen initiative is likely to develop. Any failure to continue 
funding for the CCPI program at prior year levels should not be seen as 
a weakening of the commitment to this program.
    Turbines.--GE recommends that funding be increased by $22 million 
to a total of $35 million for the Advanced Turbines program, within the 
Fossil Energy/Coal/Fuels and Power Systems budget line. This program 
represents the Department's primary research effort focusing on gas 
turbines for coal-based electricity production, such as FutureGen, and 
is designed to enable the low-cost implementation of major policy 
initiatives in the areas of climate change, reduced powerplant 
emissions and future generation technologies. Continued turbine 
research and development is needed to address DOE's efficiency and 
emissions goals for power generation from coal, the Nation's most 
abundant domestic energy resource.
    Gas turbine R&D is focused on advanced combustion and high 
temperature turbine technology for syngas/hydrogen fuels that will 
result from IGCC and FutureGen type power plants. The program addresses 
those gas turbine elements where the technology required for the use of 
syngas/hydrogen fuels differs from the requirements for natural gas 
fueled gas turbines. Work in this area is proceeding under DOE-awarded 
cost-share contracts resulting from a March 2005 solicitation entitled 
``Enabling Technologies for High-Hydrogen Fuels.'' Unless the fiscal 
year 2007 budget for the Advanced Turbines program is increased, 
funding will be inadequate for this promising work, and the progress 
and benefits of this research will be delayed accordingly.
    GE has experience with gas turbines operating on fuel blends 
containing hydrogen, and has performed laboratory demonstration tests 
on high hydrogen content fuel. This experience highlighted the need for 
development of advanced combustion technology in order to drive down 
NOX emissions and enable advanced hydrogen generation 
processes. In addition, current strategies for effective integration of 
all major subsystems need to be reviewed and redefined for use with 
hydrogen fuel.
    Continued funding of DOE's program is essential for FutureGen to 
meet its goal of substantial improvement in the cost of carbon capture. 
FutureGen is intended to serve as a demonstration for the technical 
feasibility of achieving nearly carbon-free power with IGCC. FutureGen 
is being structured to serve as a test bed for advanced technology that 
is needed to reduce the performance penalty and improve the economics 
of carbon capture. If it is to meet its goals, the FutureGen program 
will need to draw on advancements resulting from the hydrogen turbine 
program.
    GE recommends the committee's attention to the testimony submitted 
by the Gas Turbine Association relative to the allocation of additional 
funding above the budget submission within the Advanced Turbines 
program budget. In particular, GE encourages the committee to assure 
adequate funding for the University Turbine Systems Research Program.
Solid-Oxide Fuel Cell (SOFC) Development, Solid State Energy Conversion 
        Alliance (SECA) Program
    SOFC utilize an electrochemical process to cleanly convert a range 
of fuels into electricity. A SOFC/gas turbine hybrid system utilizes 
the fuel cell as the primary power generation source. The residual fuel 
and energy from the fuel cell is combusted in a gas turbine to create 
additional power. By combining these two technologies, SOFC/gas turbine 
hybrid systems have the potential to revolutionize fossil-based power 
generation with new standards for efficiency and reduced emissions.
    DOE's SECA program supports the development of high temperature 
SOFC fuel cell technology for stationary power generation. This 
technology offers the potential for a step change improvement in 
efficiency and reduction in emissions for power generation from coal. 
Successful development of large scale (e.g., 500 MW) SOFC-turbine 
hybrid based power plants would provide highly efficient, cost-
effective, near-zero atmospheric emissions in coal-based central power 
generation applications capable of reaching the DOE target for 
efficiencies up to 60 percent. The systems also would be compatible 
with carbon-free concepts as planned for FutureGen.
    GE successfully completed SECA Phase I SOFC system testing in 2005. 
This success contributed to the DOE SECA program's achievement of its 
key 2005 milestones, which is an important indicator that the program 
is making good technical progress. Key technology challenges remain and 
are being addressed as the DOE program proceeds. Continued joint DOE-
industry investment in SOFC-hybrid technology will position U.S. 
industry as leaders in the rapidly growing worldwide ``ultra-clean'' 
energy market, in which other governments, including the Japanese and 
European governments, are investing heavily.
    An increase of $10 million above the administration's budget 
request, for total funding of $73 million, is needed in fiscal year 
2007 to fully fund the SECA program. GE recommends that DOE be given 
the flexibility to apply funding as best needed to meet DOE's and the 
program's goals.

                       RENEWABLE ENERGY PROGRAMS

    Wind Energy.--Sustainable generation of clean energy from wind is 
imperative to realizing the objectives of the President's Advanced 
Energy Initiative, as well as the goals of the Energy Policy Act of 
2005. The milestones established by the Department of Energy to reach 
100 GW of wind energy capacity by 2020 demand a coordinated effort to 
develop favorable long term policy, energy infrastructure, and product 
technology advancement to continue to drive the cost of electricity 
down for both on-shore and off-shore applications. Reaching the DOE 
goals would result in 10 percent of U.S. power generation being 
produced from renewable wind power. The emissions reduction benefit 
would be the equivalent of removing 20 million automobiles from the 
highways.
    DOE's internal Wind R&D programs and cost-share programs with 
industry are instrumental in accelerating technology advancement and 
cost of electricity reduction. Unfortunately, constraints on fiscal 
year 2006 funding caused DOE to slow some programs and cancel others. 
In support of the DOE goals, for fiscal year 2007 these programs need 
to be accelerated, and stopped programs restarted. Consistent with the 
recommendations of the American Wind Energy Association, GE recommends 
that DOE's fiscal year 2007 Wind program funding be increased by $30 
million to a total of $74 million.

         OFFICE OF ELECTRICITY DELIVERY AND ENERGY RELIABILITY

    Microgrids.--GE Global Research is collaborating with the Office of 
Electricity Delivery and Energy Reliability (OE) in a $4 million 
program initiated in 2005 to design and demonstrate an Advanced Energy 
Management System for Microgrids. The DOE's vision of the future 
electric power infrastructure, GRID 2030, identifies microgrids as one 
of three major technical cornerstones for a more reliable and 
congestion-free energy delivery system, and describes distributed 
intelligence and clean power as key technologies needing development. 
GE supports an additional $10 million in funding to support the 
realization of the GRID 2030 vision by bringing microgrid technologies 
to market and also to better leverage into this effort the integration 
of the Department's Distributed Energy Program into the OE 
organization.
    Cross Cutting Technologies--Ceramic Matrix Composites.--Work on 
ceramic matrix composites (CMC) has been an important research 
component of the budget for Distributed Energy Programs. As DOE's 
budget request acknowledges, advanced materials research, such as 
research on composites, is designed to enhance the efficiency and 
environmental performance of gas turbines. CMCs offer greater than 300 
to 500 F capability when compared to metallic materials currently used 
in gas turbine products. A 50 F improvement in materials capability is 
normally considered one generation of materials development. The 
increased temperature capability of CMCs provides potential benefits in 
power output, efficiency, emissions, and part life, depending on the 
component and how it is utilized in power generation equipment. Other 
potential energy-related opportunities for CMCs include aircraft 
engines for commercial and military applications and aerospace 
applications.
    CMCs are a high-risk, high-payoff technology with great promise for 
energy savings. GE Energy is committed to cost-sharing with DOE in a 
multi-year effort to further the development of this critical 
technology. Funding of $2 million is necessary for fiscal year 2007 for 
CMC crosscutting technology material development, through the 
Distributed Energy Technology Research program.
                                 ______
                                 
  Prepared Statement of the Electric Drive Transportation Association

    Last year when Congress was assembling the DOE budget, the cost of 
a barrel of oil was just surpassing $50; today the price hovers above 
$70 and the administration and Congress have declared greater oil 
independence a priority. The committee has the opportunity, in the 
fiscal year 2007 budget, to make substantial inroads in addressing oil 
dependence through aggressive support for electric drive technology 
programs at the Department of Energy.
    The Electric Drive Transportation Association (EDTA) is a multi-
industry trade association whose mission is promotion of electric drive 
technology in all its applications. Our members include a diverse 
representation of vehicle and equipment manufacturers, energy 
providers, component suppliers and end users who recognize the 
potential for reduces petroleum consumption and decreased emissions of 
greenhouse gases and pollutants that electric drive offers. A list of 
our membership is provided with this statement.
    Multiple technologies, including hybrids, battery electric and fuel 
cells, as well as diverse fueling options, will be necessary to meet 
the transportation needs of the Nation efficiently. Advances in these 
technologies are supported in a number of existing programs in the DOE 
Office of Energy Efficiency and Renewable Energy (EERE), including the 
Hydrogen and Fuel Cells Technologies Programs and the Vehicle 
Technologies Programs. Important new programs, authorized in the Energy 
Policy Act of 2005 (EPAct 05), will enable even greater progress in 
reducing the transportation sector's reliance on petroleum.
    Unfortunately, the administration's request does not fully invest 
in the programs that will move the Nation toward its petroleum goals. 
Specifically, the administration's fiscal year 2007 request for 
FreedomCAR and Vehicle Technologies is $166 million--a more than 8 
percent decrease from the fiscal year 2006 appropriation and flat 
funded with the fiscal year 2006 request.
    Regarding the Fuel Cell and Hydrogen Technology Programs, the 
administration request ignores the thoroughly vetted directives of 
EPAct 2005. The $195 million requested for the Hydrogen Technology 
Program is a welcome increase over the current appropriation but does 
not address the funding and programmatic direction of EPAct 2005. We 
are concerned that failure to adequately fund the program may undermine 
the ability to meet program 2015 and 2020 milestones and postpone 
achievement of commercial options for petroleum free transportation.
    The request also omits funding for EPAct 2005 Loan Guarantees for 
Innovative Technologies, which will expand the domestic infrastructure 
for efficient technologies while minimizing the government's financial 
exposure. We urge the committee to provide adequate resources to ensure 
that this program can get underway as expeditiously as possible.
    We support the administration's request for $14 million for 
research and development of plug-in hybrid technologies. It is an 
investment that will assist in proving out this new electric drive 
option. It will also provide support for battery and other technology 
advances that will advance all electric drive options: hybrid, battery 
electric and fuel cells.
    EDTA also encourages appropriate funding for the fleet-based 
programs that support technology developments. In particular, the EPAct 
2005 includes an important modification to the EPAct 92 fleet 
requirements, directing the creation of an alternative compliance 
waiver option for State and alternative energy provider fleets that 
will permit the use of hybrid and other technologies to comply with 
fleet fuel reduction requirements.
    Although the request includes $11 million for Technology 
Introduction subprogram, which is charged with implementing this 
option, none are specifically directed to implementation of the waiver 
option. With multiple, higher profile program responsibilities, we are 
concerned that insufficient resources will be allocated to waiver 
implementation.
    Another important fleet-oriented petroleum reduction program, Clean 
Cities works with voluntary coalitions to build clean and efficient 
local fleets, including schools, airports, and municipal bus fleets. 
The request for this program would cut already limited funding by a 
third, to $4.4 million.
    As the compounding consequences of oil dependence are being made 
acutely clear, we urge the committee to take full advantage of the 
solutions that are possible through the EERE vehicle programs. We 
respectfully request that you fund these programs at the levels 
commensurate with their benefits to the Nation: increased U.S. 
security, a cleaner environment and a stronger economy.
    Thank you for your consideration.
    EDTA Members: A123 Systems; Advanced Transportation Technology 
(ATTI); Air Products & Chemicals; American Honda Motor Company; 
American Public Power (APPA); Austin Energy; Azure Dynamics 
Corporation; Ballard Power Systems; CEREVEH; Chamber of the Americas; 
CITELEC; City of New York; Curtis Instruments; DaimlerChrysler 
Corporation; Edison Electric Institute; eGO Vehicles; Electric Power 
Research Institute (EPRI); Electricite de France; Electrovaya; Energy 
Conversion Devices, Inc./Ovonic; Enova Systems; Fallbrook Technologies; 
General Motors Corporation; Georgetown University; Global Electric 
MotorsCars (GEM); Greater Oslo Public Transport; Hyundai-Kia America 
Tech Center; Independent Energy Efficiency (IEEP); Long Island Power 
Authority; Massachusetts Division of Energy Resources; Maxwell 
Technologies; Methanex, Inc.; Michelin North America; Mid-Del Lewis 
Eubanks (AVTS); National Alternative Fuels Training Consortium (NAFTC); 
National Golf Car Manufacturers Association; New York Power Authority; 
New York State Energy-NYSERDA; Nissan North America; Northeast 
Sustainable Energy Association; Opal-RT; Pacific Gas & Electric (PG&E); 
Raser Technologies; Sacramento Municipal Utility District (SMUD); Saft 
America, Inc.; San Diego State University; Southern California Edison; 
TM4, Inc.; Tokyo Electric Power Company (TEPCO); Toyota; Tri-Met; 
University of California, Davis/ITS; UQM Technologies, Inc.; U.S. 
Department of Energy; Volkswagen; Voltage Vehicles/ZAP.
                                 ______
                                 
     Prepared Statement of the American Society of Plant Biologists

    The American Society of Plant Biologists (ASPB) appreciates this 
opportunity to submit testimony on the fiscal year 2007 budget request 
for the Department of Energy Office of Science. We urge the committee 
to approve the President's proposal in the American Competitiveness 
Initiative, Advanced Energy Initiative and fiscal year 2007 budget 
request for an increase of 14 percent to $4.1 billion for the DOE 
Office of Science. Included with the President's budget request is $255 
million for the Chemical Sciences, Geosciences and Energy Biosciences 
Division. A total of $35.8 million within the division is requested by 
the President for the Energy Biosciences program. We urge you to 
support the President's request for Basic Energy Sciences, the Chemical 
Sciences, Geosciences and Energy Bioscience Division and the Energy 
Biosciences program within the division.
    Basic energy research on plants and microbes supported by the 
Energy Biosciences program contributes to advances in renewable 
resources for fuel and other fossil resource substitutes, clean-up and 
restoration of contaminated environmental sites, and in discovering new 
knowledge leading to home-grown products and chemicals now derived from 
petroleum.
    The Energy Biosciences program supports leading research on plants 
and microbes conducted primarily by university-based scientists 
throughout the country. Grants are awarded through a competitive 
process utilizing rigorous peer-review standards.
    Energy Biosciences grantees include scientists who have received 
recognition from a number of distinguished science institutions and 
organizations, including national and international science societies, 
the National Academy of Sciences, and a Nobel Prize selection 
committee. Basic research on plants and microbes contributes to 
advances that help address the Nation's future demands for 
domestically-produced energy sources, such as energy crops.
    We fully support the President in his State of the Union Address in 
which he called for the Nation to conduct energy research for bio-fuels 
to help break the Nation's addiction to foreign oil. The President 
explained in the State of the Union Address and in subsequent talks in 
Tennessee, Minnesota and Colorado soon after, that research on plant 
cellulose to produce ethanol, on switch grass, wood chips and other 
sources of bio-energy could help transition a significant portion of 
the Nation's transportation sector away from imported gasoline to 
domestically produced bio-fuels.
    Research the committee supported within the Energy Biosciences 
program led to the landmark discovery of how to break down plant 
cellulose into ethanol. We applaud the committee for its support of 
basic research on plants and microbes within the Energy Biosciences 
program and within the Office of Biological and Environmental Research 
to help make possible the President's achievable proposal to make 
domestically produced bio-fuels directly cost competitive with 
gasoline.
    As ASPB President, Michael Thomashow, University Distinguished 
Professor at Michigan State University, a member of the National 
Academy of Sciences, noted, with the development of ``genomic 
sciences'' and sophisticated new instrumentation, we can now probe the 
life of plants at levels that just a few years ago seemed, at best, to 
be wishful thinking. Indeed, given the distance that we have come since 
the plant sciences entered the modern ``molecular genetic era,'' 
ushered in with the advent of plant transformation systems during the 
1980's, the goal of understanding plant processes at a ``systems'' 
level would not appear to be just a trendy pipedream, but a real, 
attainable goal within the not-too-distant future, Thomashow noted.
    How will we use these powerful new approaches and the insights that 
we gain about basic plant biology? The answer is that they will be used 
in many ways and have many applications ranging from the nutritional 
enhancement of food products to the production of bio-fuels and 
feedstocks for the chemical and pharmaceutical industries. One area 
that is particularly exciting is the development of renewable energy 
sources.
    We are all well aware of the geopolitical challenges that are posed 
by our current dependence on non-renewable sources of energy. In 
addition, we are well aware of the negative impacts that using many of 
these energy sources can have on the environment, such as emissions of 
greenhouse gasses attendant with the use of petroleum-based 
transportation fuels. It would be wonderful if we could replace 
petroleum-based transportation fuels with more environmentally friendly 
``bio-fuels'' produced from renewable ``energy crops.'' For some within 
the oil and related industries, the doubt arises whether this is even 
within the realm of possibility. Could the United States, for instance, 
grow and harvest enough ``biomass'' on an annual basis to produce 
enough ethanol and bio-diesel to significantly decrease our dependence 
on petroleum-based transportation fuels without jeopardizing the 
production of food to feed the Nation and to meet export demands?
    This general issue was addressed in a joint study by the U.S. 
Department of Energy and U.S. Department of Agriculture released in 
April 2005. The results were published in a report entitled ``Biomass 
as Feedstock for a Bioenergy and Bioproducts Industry: The Technical 
Feasibility of a Billion-Ton Annual Supply'' (http://
www.eere.energy.gov/biomass/pdfs/final_billionton_vision_report2.pdf). 
In particular, the study committee asked whether the land resources of 
the United States would be capable of producing a sustainable supply of 
biomass sufficient to displace 30 percent or more of our current 
petroleum consumption, a goal that would require the production of 
approximately 1 billion dry tons of biomass feedstock per year. In 
short, the study committee concluded that the answer to this question 
is ``yes''; that annually, U.S. forest and agricultural lands have the 
potential to produce, respectively, over 360 and 990 million dry tons 
of biomass feedstock. Reaching these levels of biomass production, 
however, will require a number of developments including changes in 
production practices and significant increases in crop yields. For 
example, crop land would likely be managed with no-till methods and a 
50 percent increase in the yields of corn, wheat and other small grain 
crops would be required.
    Using biomass feedstocks to provide significant levels of renewable 
energy is an exciting, inspiring vision for the future of America and 
the greater world community. The goal set by John F. Kennedy of putting 
a human being on the moon by the end of the 1960's served as a unifying 
theme that helped nucleate efforts that led to spectacular advances in 
science and technology and, equally importantly, helped attract young 
people to these areas of study. Setting national and international 
goals for producing renewable, environmentally friendly energy sources 
also has the potential to stimulate important advances in science and 
technology and to attract young people to these areas of study. In 
regard specifically to plant scientists, such goals also provide a 
framework for integrating much of plant biology research. Understanding 
plant growth and development at a systems level feeds into increasing 
biomass, as does understanding basic mechanisms of abiotic and biotic 
stress tolerance. Understanding how cell walls are synthesized and 
their composition determined is not only fundamental to our knowledge 
of basic plant biology, but also is a central issue in biomass 
production and conversion. The same can be said of understanding how 
plants synthesize and regulate the production of lipids and oils as 
well as many other plant constituents and processes.
    Plant scientists have a fundamental role to play in developing 
clean, renewable energy sources thanks in large part to the history of 
strong support for the Energy Biosciences program of this committee.
    The rigorous standards consistently followed by the Energy 
Biosciences program in reviewing grant proposals and making awards have 
contributed to the outstanding success of the program. For example, 
research sponsored by the Biosciences program led to new findings on 
the capture of energy from photosynthesis. This research led to the 
presentation to Biosciences-program-grantee Dr. Paul Boyer of the 
shared award of the 1997 Nobel Prize in Chemistry (biochemistry). 
Photosynthesis is an essential energy conversion process upon which all 
life on earth depends. Photosynthesis in plants is nature's way of 
utilizing sunlight to produce chemical energy and to bring carbon 
dioxide into biological organisms. Increased knowledge in this area 
could lead to a better understanding of how to manage carbon dioxide in 
the atmosphere. Further research in this area could also contribute to 
development of alternative energy sources.
    Plants are a major source of renewable and alternative fuels in the 
United States. Greater knowledge of the basic biology of plants will 
lead to further economies in domestic production of renewable fuels.
    ASPB is a non-profit society of nearly 6,000 scientists based 
primarily at universities. ASPB publishes the two most-frequently cited 
plant science journals in the world, Plant Physiology and The Plant 
Cell. We deeply appreciate the continued strong support of the 
committee for innovative research on plants and microbes sponsored by 
the Office of Science, Office of Basic Energy Sciences through its 
Energy Biosciences program and Office of Biological and Environmental 
Research. Please let us know if we could provide any additional 
information.
    Disclosure Statement on Federal Grant Support.--The American 
Society of Plant Biologists (ASPB) received Federal grants from USDA-
CSREES in the amount of $7,000 in each of fiscal years 2005 and 2006 to 
help coordinate the USDA-CSREES Plant and Pest Biology Stakeholders' 
Workshop and print the subsequent workshop report. Many associations 
representing growers of commodity crops; science societies representing 
the research community; and officials administering Federal research 
programs participated.
                                 ______
                                 
        Prepared Statement of the American Geological Institute

    Thank you for this opportunity to provide the American Geological 
Institute's perspective on fiscal year 2007 appropriations for 
geoscience programs within the subcommittee's jurisdiction. The 
President's budget requests significant cuts in the Department of 
Energy (DOE) research programs related to energy resources. In 
particular, the President's request would eliminate the Office of 
Fossil Energy's oil and natural gas technology research programs and 
the Office of Energy Efficiency and Renewable Energy's geothermal 
technology research program. Given the interest of the administration 
and Congress to reduce the Nation's foreign oil dependence and reduce 
gasoline prices, it seems like an inopportune time to eliminate 
programs that could help with these objectives. We hope that Congress 
will restore funding for these programs. AGI applauds the requested 14 
percent increase for the largest supporter of physical science research 
in the United States, DOE's Office of Science, and encourages the 
subcommittee's full support for this increase. We also support the 
President's Advanced Energy Initiative which includes increased funding 
for clean energy research. The request focuses spending on solar, 
biomass/biofuels, hydrogen fuel, FutureGen and nuclear power, however, 
other clean energy alternatives, such as geothermal, could be included 
in appropriations while remaining consistent with national needs and 
objectives.
    AGI is a nonprofit federation of 44 geoscientific and professional 
associations that represent more than 100,000 geologists, 
geophysicists, and other earth scientists. The institute serves as a 
voice for shared interests in our profession, plays a major role in 
strengthening geoscience education, and strives to increase public 
awareness of the vital role that the geosciences play in society's use 
of resources and interaction with the environment.

               DOE FOSSIL ENERGY RESEARCH AND DEVELOPMENT

    AGI urges you to take a critical look at the Department of Energy's 
Fossil Energy Research and Development (R&D), Natural Gas Technology 
R&D and Oil Technology R&D accounts as you prepare to craft the fiscal 
year 2007 Energy and Water and Related Agencies Appropriations bill. 
Over the past 5 years, members of Congress have strongly emphasized the 
need for a responsible, comprehensive energy policy for the country. 
The growing global competition for fossil fuels has led to a repeated 
and concerted request by Congress to ensure the Nation's energy 
independence. The President's proposal that these programs be 
eliminated is short-sighted and will not allow us to achieve energy 
independence.
    The research dollars spent by these programs go largely to 
universities, State geological surveys and research consortia to 
address critical issues like enhanced recovery from known fields and 
unconventional sources that are the future of our natural gas supply. 
This money does not go into corporate coffers, but it helps American 
businesses remain competitive by giving them a technological edge over 
foreign companies. All major advances in oil and gas production can be 
tied to research and technology. AGI strongly encourages the conferees 
to restore these funds and bring these programs back to at least fiscal 
year 2003 levels.
    Today's domestic industry has independent producers at its core. 
With fewer and fewer major producing companies and their concentration 
on adding more expensive reserves from outside of the contiguous United 
States, it is the smaller independent producers developing new 
technologies concentrated on our domestic resources. However, without 
Federal contributions to basic research that drives innovation, small 
producers cannot develop new technologies as fast, or as well, as they 
do today. The program has produced many key successes among the typical 
short-term (1 to 5 years) projects usually chosen by the DOE. And even 
failed projects have proven beneficial, because they've often resulted 
in redirection of effort toward more practical exploration and 
production (E&P) solutions. Ideally, DOE and private sector 
participants share the program's R&D funding on a 50/50 basis, with the 
government contributing actual dollars and the company contributing 
dollars or ``in kind'' products and services. To justify the use of 
public funds, new technology developed from such projects is made 
available to the industry.
    In 2003, at the request of the Interior Appropriations 
Subcommittee, the National Academies released a report entitled Energy 
Research at DOE: ``Was It Worth It? Energy Efficiency and Fossil Energy 
Research 1978 to 2000''. This report found that Fossil Energy R&D was 
beneficial because the industry snapped up the new technologies created 
by the R&D program, developed other technologies that were waiting for 
market forces to bring about conditions favorable to commercializing 
them and otherwise made new discoveries. In real dollars from 1986-2000 
the government invested $4.5 billion into Fossil Energy R&D. During 
that time, realized economic benefits totaled $7.4 billion. This 
program is not only paying for itself, it has brought in $2.9 billion 
in revenue. Why not continue to fund oil and gas R&D so we can attain 
the energy independence we need for stable and continued economic 
growth?
    The Federal investment in energy R&D is particularly important when 
it comes to longer-range research with diversified benefits. In today's 
competitive markets, the private sector focuses dwindling research 
dollars on shorter-term results in highly applied areas such as 
technical services. In this context, DOE's support of fossil energy 
research, where the focus is truly on research, is very significant in 
magnitude and impact compared to that done in the private sector, where 
the focus is mainly on development. Without more emphasis on research, 
we risk losing our technological edge in this global and increasingly 
more expensive commodity.
    As we pursue the goal of reducing America's dependence on unstable 
and expensive foreign sources of oil, we must continue to increase 
recovery efficiency in the development of existing domestic oilfields, 
conserving the remaining in-place resources. Since the 1980's, 80 
percent of new oil reserves in this country have come from additional 
discoveries in old fields, largely based on re-examination of 
previously collected geoscience data. These data will become even more 
important in the future with development of new recovery technologies.
    The research funded by DOE leads to new technologies that improve 
the efficiency and productivity of the domestic energy industry. 
Continued research on fossil energy is critical to America's future and 
should be a key component of any national energy strategy. The societal 
benefits of fossil energy R&D extend to such areas as economic and 
national security, job creation, capital investment, and reduction of 
the trade deficit. The Nation will remain dependent on petroleum as its 
principal transportation fuel for the foreseeable future and natural 
gas is growing in importance. It is critical that domestic production 
not be allowed to prematurely decline at a time when tremendous 
advances are being made in improving the technology with which these 
resources are extracted. The recent spike in oil and natural gas prices 
is a reminder of the need to retain a vibrant domestic industry in the 
face of uncertain sources overseas. Technological advances are 
necessary to maintaining our resource base and ensuring this country's 
future energy security.

                         DOE OFFICE OF SCIENCE

    The DOE Office of Science is the single largest supporter of basic 
research in the physical sciences in the United States, providing more 
than 40 percent of total funding for this vital area of national 
importance. The Office of Science manages fundamental research programs 
in basic energy sciences, biological and environmental sciences, and 
computational science and, under the President's budget request, would 
be grown by 14 percent from about $3.6 billion last year to $4.1 
billion. AGI asks that you support this much needed increase.
    Within the Office of Science, the Basic Energy Sciences (BES) 
program supports fundamental research in focused areas of the natural 
sciences in order to expand the scientific foundations for new and 
improved energy technologies and for understanding and mitigating the 
environmental impacts of energy use. BES also discovers knowledge and 
develops tools to strengthen national security.
    The Basic Energy Sciences (BES) would remain the largest program in 
the office with an increase of 25 percent from $1.134 billion in fiscal 
year 2006 to $1.420 billion in fiscal year 2007 in the President's 
request. Within the BES, Chemical Sciences, Geosciences and Biosciences 
would receive a $47.9 million increase over their fiscal year 2006 
budget. About half of this increase would go toward the President's 
Hydrogen Initiative ($6 million increase) and basic research related to 
energy technologies ($22.4 million increase) and the other half would 
go toward nanoscale science research ($22.2 million increase). Other 
programs would be reduced by $3.2 million to make up the difference 
between these increases and the overall budget.
    AGI strongly supports the requested increases for these programs.
    Thank you for the opportunity to present this testimony to the 
subcommittee.
                                 ______
                                 
          Prepared Statement of the Energy Sciences Coalition

    Chairman Domenici, the Energy Sciences Coalition (ESC) expresses 
its great appreciation for the leadership you have shown as Chairman of 
the Energy and Water Development Appropriations Subcommittee. We 
applaud your vision of how the programs of the Department of Energy's 
Office of Science will lead to research discoveries and technological 
developments benefiting this and future generations.
    The Energy Sciences Coalition is a broadly-based organization 
representing scientists, engineers and mathematicians in universities, 
industry, professional societies and national laboratories. We share 
your belief that the research supported by the Office of Science has 
and will make significant contributions to our Nation's security and 
standard of living.
    ESC strongly and enthusiastically supports the President's fiscal 
year 2007 budget request of $4.1 billion for the Department of Energy's 
Office of Science. This historic level of funding, outlined in the 
President's American Competitiveness Initiative, will allow the DOE to 
move forward with the tremendous scientific opportunities outlined in 
the Office of Science Strategic Plan and in its 20-Year Scientific 
Facilities Plan. It is also consistent with your PACE legislation and 
with the recommendations made by the National Academies' in its report, 
``Rising Above the Gathering Storm.''
    ESC believes that this landmark request is solid and necessary to 
keep United States science and engineering at the forefront of global 
research and development in the physical and biological sciences, 
computing and many other critical scientific fields. It is an 
investment in our future.
    Our Nation benefits not only from the discoveries that will be made 
with this support, but also from the training of America's next 
generation of researchers. Such training will be instrumental in 
maintaining our Nation's technological superiority in the international 
marketplace. The Office of Science also plays an extremely important 
and unique role in the design, construction, and operation of large-
scale user facilities used by researchers supported by the Department 
of Energy, the National Institutes of Health and the National Science 
Foundation, as well as private industry researchers.
    In closing, I again express the Coalition's gratitude for the 
leadership that you and your colleagues have demonstrated in supporting 
the important work of the Office of Science. Please do not hesitate to 
contact me if the Coalition can be of any assistance.

    ATTACHMENT: FISCAL YEAR 2007 ENERGY SCIENCES COALITION FUNDING 
                               STATEMENT

Support the President's Request for $4.1 Billion for the Department of 
        Energy (DOE) Office of Science
    The Energy Sciences Coalition (ESC) strongly and enthusiastically 
supports the President's fiscal year 2007 budget request of $4.1 
billion for the Department of Energy (DOE) Office of Science, a 14.1 
percent increase above the fiscal year 2006 funding level. This 
historic level of funding outlined in the President American 
Competitiveness Act will allow the DOE to move forward with the 
tremendous scientific opportunities outlined in the Office of Science 
Strategic Plan and in its 20-Year Scientific Facilities Plan. It is 
also consistent with bipartisan legislation introduced in Senate (the 
``Protecting America's Competitive Edge'' Act, or PACE legislation) and 
by recommendations made by the National Academies in its report, 
``Rising Above the Gathering Storm''.
    ESC believes that this landmark request is solid and necessary to 
keep United States science and engineering at the forefront of global 
research and development in the physical and biological sciences, 
computing and many other critical scientific fields. It is an 
investment in our future.
    The mission of the Office of Science is to deliver the discoveries 
and scientific tools that transform our understanding of energy and 
matter and advance the national, economic and energy security of the 
United States. The DOE Office of Science is one of the primary sponsors 
of basic research in the United States, leading the Nation in its 
support for the physical sciences and critical to other fields such as 
computing and biology. Strong support for DOE scientific research is 
essential to advancing a broad array of research subjects in order to 
improve our energy, economic and national security and in addressing 
the ancillary issues such as super computing, nanotechnology, 
environmental remediation, climate change, genomics and life sciences.

                    ATTACHMENT: STATEMENT ENDORSEES

Fiscal Year 2007 ESC Funding Statement Endorsements
    Alliance for Science & Technology Research; American Institute for 
Medical and Biological Engineering; American Institute of Physics; 
American Physical Society; American Society for Microbiology; American 
Society of Agronomy; American Society of Plant Biologists; American 
Society of Mechanical Engineers; Association of American Universities; 
Biophysical Society; Crop Science Society of America; Federation of 
Materials Societies; Florida State University; Fusion Power Associates; 
General Atomics; Indiana University; International Society for Optical 
Engineering; Iowa State University; Michigan State University; National 
Association of State and Land-Grant Universities; Ohio State 
University; Oregon State University; Princeton University; Rensselaer 
Polytechnic Institute; Soil Science Society of America; Southeastern 
Universities Research Association; Stanford University; University of 
California; University of Chicago; University of Tennessee; University 
of Wisconsin-Madison.
                                 ______
                                 
 Prepared Statement of the Independent Petroleum Association of America

    Members: The International Association Of Drilling Contractors; The 
International Association of Geophysical Contractors; The National 
Stripper Well Association; The Petroleum Equipment Suppliers 
Association; The Association of Energy Service Companies; Public Lands 
Advocacy; California Independent Petroleum Association; Colorado Oil & 
Gas Association; East Texas Producers & Royalty Owners Association; 
Eastern Kansas Oil & Gas Association; Florida Independent Petroleum 
Association; Illinois Oil & Gas Association; Independent Oil & Gas 
Association of New York; Independent Oil & Gas Association of 
Pennsylvania; Independent Oil & Gas Association of West Virginia; 
Independent Oil Producers Association Tri-State; Independent Petroleum 
Association of Mountain States; Independent Petroleum Association of 
New Mexico; Indiana Oil & Gas Association; Kansas Independent Oil & Gas 
Association; Kentucky Oil & Gas Association; Louisiana Independent Oil 
& Gas Association; Michigan Oil & Gas Association; Mississippi 
Independent Producers & Royalty Association; Montana Oil & Gas 
Association; National Association of Royalty Owners; Nebraska 
Independent Oil & Gas Association; New Mexico Oil & Gas Association; 
New York State Oil Producers Association; Northern Alliance of Energy 
Producers; Ohio Oil & Gas Association; Oklahoma Independent Petroleum 
Association; Oklahoma Commission on Marginally Producing Oil and Gas 
Wells; Panhandle Producers & Royalty Owners Association; Pennsylvania 
Oil & Gas Association; Permian Basin Petroleum Association; Petroleum 
Association of Wyoming; Tennessee Oil & Gas Association; Texas Alliance 
of Energy Producers; Texas Independent Producers and Royalty Owners; 
Virginia Oil & Gas Association; and the Wyoming Independent Producers 
Association.
    These organizations represent petroleum and natural gas producers, 
the segment of the industry that is affected the most when national 
energy policy does not recognize the importance of our own domestic 
resources. Independent producers drill 90 percent of domestic oil and 
natural gas wells, produce approximately 82 percent of domestic natural 
gas, and produce about 68 percent of domestic oil--well above that 
percentage of the oil in the lower 48 States.
    Thank you for the opportunity to provide input on the critical need 
for the Department of Energy's Office of Fossil Fuels Oil and Natural 
Gas Technologies programs. The Independent Petroleum Association of 
America (IPAA), represents over 5,000 producers of domestic oil and 
natural gas. Independents drill 90 percent of the Nation's oil wells 
and produce 82 percent of the Nation's natural gas and 68 percent of 
domestically-produced oil. IPAA urges the subcommittee to maintain 
funding for the Department of Energy's (DOE), Office of Fossil Fuels 
Oil and Natural Gas Technologies programs at $64 million, the 
appropriated level for fiscal year 2006. In addition, IPAA urges the 
subcommittee to fund the non-conventional onshore/ultra-deepwater/small 
producer program and the methane hydrates technology program at the 
authorized levels included in the Energy Policy Act of 2005 ($100 
million and $20 million respectively.)
    IPAA is concerned that the administration's ``zero'' budget request 
for the Department of Energy's oil and natural gas technologies 
programs for fiscal year 2007 will diminish the development of key 
exploration and production technologies designed to improve domestic 
oil and natural gas production.
    This is the second year that the administration has proposed to 
terminate funding for these vitally important programs, 85 percent of 
which historically have focused on exploration and production 
activities associated with independent producers. In most instances, 
these companies do not have access to the in-house technology 
development capabilities of the larger, integrated, multi-national oil 
companies. Therefore, federally funded research and development (R&D) 
should be considered essential to maintain a viable, robust, domestic 
producing sector.
    With respect to both the non-conventional onshore/ultra-deepwater/
small producer program and the methane hydrates program the 
administration included language in its budget request to repeal the 
former, and to provide no funding for the latter, though both are 
authorized in the Energy Policy Act of 2005. IPAA believes that these 
programs will play a crucial role, if we are to reduce our energy 
dependence in the years to come.
    Full, consistent funding for development of all these programs is 
essential to meet the President's objectives to reduce our dependency 
on foreign sources of energy. In the case of the existing oil and gas 
technologies programs, they have provided a variety of functions, 
primarily focusing on domestic exploration and production research and 
development activities, resulting in sustaining and in most instances, 
increasing domestic oil and gas production. Such research and 
development activities, conducted by universities, DOE laboratories and 
the private sector have culminated in the development of exploration 
and production (E&P) technologies, which have resulted in an increase 
in production of product, in a more environmentally sensitive manner, 
with a much smaller environmental footprint.
    In a statement issued on October 17, 2005, in conjunction with 
DOE's announcement of 13 new oil and gas technologies/R&D projects, 
Secretary of Energy Samuel Bodman said, ``This administration continues 
to seek out and develop new energy options to support our growing 
economy.'' He continued, ``The projects we are funding today are an 
investment in our Nation's energy security and economic security, and 
will help us obtain the maximum benefit of our domestic energy 
resources in an environmentally sensitive way.''
    The statement went on to point out that the sources of 
unconventional natural gas that these projects would assist in the 
development of contain an estimated 700 trillion cubic feet (Tcf), 
compared to an industry estimate of 190 Tcf in conventional natural gas 
reserves.
    The statement also attempted to put into context the significance 
of accessing these reserves, noting that ``natural gas accounts for 
nearly one quarter of total domestic supply, a share that will rise 
with future technological advancements such as those being investigated 
by the funded projects.''
    Similarly, development of methane hydrates and non-conventional 
onshore/ultra-deepwater represents tremendous potential for supplying 
America's growing natural gas needs. In the case of methane hydrates, 
the U.S. Geological Survey (USGS) estimates the United States to have 
about 200,000 trillion cubic feet of methane hydrate. Meanwhile, the 
ultra-deep area alone will tap 1,300 trillion cubic feet of technically 
recoverable reserves--enough to meet 60 years of demand at current 
rates of consumption.
    DOE's programs play an essential role in the training and 
development of qualified people for the oil and gas sector, a challenge 
which continues to grow at an alarmingly rapid rate. The DOE oil and 
natural gas programs provide vital support to petroleum engineering 
departments across the country. According to a letter dated April 4, 
2005 from the University of Texas' Department of Petroleum and 
Geosystems Engineering to the Subcommittee on Energy and Water 
Development Appropriations, ``. . . our ability to retain the best 
faculty who are needed to train Petroleum Engineers for the coming 
decades depends entirely on our being able to provide research funding 
to the faculty.'' The letter goes on to say, ``Lacking this 
opportunity, there will not be many viable petroleum engineering 
programs left in the U.S.'' Ironically, this statement is reflective of 
goals that are outlined in the recently introduced Protecting America's 
Competitive Edge Act (PACE), and the President's American 
Competitiveness Initiative.
    IPAA commends the President's laudable goal expressed in his recent 
``State of the Union'' address, in which he laid out a ``game plan'' of 
appreciably reducing our dependency on foreign sources of oil by 2025. 
However, our Nation's economy is currently fossil fuel ``dependent''--
65 percent of domestic energy supply coming from oil and natural gas--
and will continue to be for the foreseeable future. Therefore, the 
Nation finds itself at a time when concern over increasing dependence 
on foreign oil is at an all time high, escalating fuel prices are 
running roughshod over the American consumer in the form of home 
heating bills and gasoline prices, and businesses are relocating and 
taking valuable jobs overseas with them in the pursuit of affordable 
fuel costs. The administration's failure to recognize the importance of 
investing in oil and natural gas R&D to develop critically-needed 
recovery technologies is all the more perplexing. Domestic oil and 
natural gas reserves should be front and center in any balanced 
national energy policy, treated comparably with renewable energy 
sources, coal and nuclear. Yet, the administration would essentially 
eliminate oil and natural gas from DOE's energy portfolio.
    IPAA urges the committee to support full funding for these vital 
programs.
                                 ______
                                 
Prepared Statement of the Center for Advanced Separation Technologies, 
          Virginia Polytechnic Institute and State University

    Chairman Domenici and members of the subcommittee, I represent the 
Center for Advanced Separation Technologies (CAST), which is a 
consortium of seven leading U.S. mining schools. I appreciate the 
opportunity to submit this testimony requesting your committee to add 
$3 million to the 2007 Fossil Energy Research and Development budget, 
U.S. Department of Energy, to support CAST. Research in advanced 
separations is an integral part of the President's Hydrogen from Coal 
Research Fuels Initiative, and is critical for the continued supply of 
energy for economic growth and strategic minerals for national 
security.
    I am joined in this statement by my colleagues from the consortium: 
Ibrahim H. Gundiler, New Mexico Tech; Maurice C. Fuerstenau, University 
of Nevada-Reno; Richard A. Bajura, West Virginia University; Peter H. 
Knudsen, Montana Tech of the University of Montana; Richard J. 
Sweigard, University of Kentucky; and, Jan D. Miller, University of 
Utah.

  FUNDING REQUEST FOR THE CENTER FOR ADVANCED SEPARATION TECHNOLOGIES

    The Center for Advanced Separation Technologies (CAST) is a 
consortium of the seven universities listed above. It was formed in 
2001 to develop advanced technologies that can be used to efficiently 
produce cleaner fuels in an environmentally acceptable manner and to 
study the basic sciences and engineering involved. The new technologies 
developed as a result of CAST research and the highly skilled personnel 
trained during the course of its activities will help the United States 
meet the challenges of energy independence. These missions are 
consistent with President Bush's American Competitiveness Initiative, 
announced in his 2006 State of the Union Address. The President's new 
program includes doubling R&D commitments to basic research, supporting 
universities for world-class education and research opportunities, and 
training a work force with skills that can be used to better compete in 
the 21st century.

                              ORGANIZATION

    The Center for Advanced Separation Technologies (CAST) was formed 
initially between Virginia Tech and West Virginia University with the 
objective of developing advanced solid-solid and solid-liquid 
separation technologies that can help the U.S. coal industry produce 
cleaner solid fuels. In 2002, five other universities listed above 
joined the consortium to develop crosscutting technologies that can 
also be used in the U.S. minerals resources industry. As a result, the 
scope of CAST research was expanded to studies of chemical/biological 
separations and environmental control.
    As a consortium, the Center can take advantage of the diverse 
expertise available in the member universities and address the 
interests of the different geographical regions of the country. Working 
together as a consortium is consistent with the recommendations of a 
recent National Research Council (NRC) report on the U.S. Department of 
Energy's fossil energy research, which states that ``consortia are a 
preferred way of leveraging expertise and technical inputs to the 
mining sector,'' and recommends that DOE should support ``academia, 
which helps to train technical people for the industry.''

                         PROGRESS AND NEXT STEP

    At present, a total of 45 research projects are being carried out 
at the seven CAST member universities. Of these, 12 projects are in 
solid-solid separation, 5 in solid-liquid separation, 12 in chemical/
biological separation, 7 in modeling and control, and 6 in 
environmental control. The project selection was made by an industry 
panel according to the priorities set forth in the CAST Technology 
Roadmap developed in 2002 by industry representatives. Research results 
have been presented at two workshops, the first in Charleston, WV, 
November 19-21, 2003, and the second in Blacksburg, VA, July 26-27, 
2005. Both meetings enjoyed strong participation from industry. The 
third workshop will be held in July 2007 in Blacksburg.
    CAST research has been focused on removing impurities (e.g., ash, 
sulfur, mercury and other toxic elements) from coal. Various solid-
solid and solid-liquid separation technologies are used to remove these 
impurities. In general, the efficiency of separation diminishes sharply 
with decreasing particle size. As a result, coal companies discard coal 
fines to impoundments. In the United States, approximately 70 to 90 
million tons of coal fines are being discarded annually according to a 
National Research Council report. The report was issued as a result of 
a congressional directive to investigate a major failure of a fine coal 
impoundment in Kentucky in October, 2000, which caused 300 million 
gallons of coal sludge to flood an active mine and neighboring creeks 
and rivers. There are more than 713 active water and slurry 
impoundments in the eastern United States, many of which are rated 
``high risk.'' The report suggested a study to identify appropriate 
technologies that can eliminate the need for slurry impoundments.
    CAST has been developing advanced separation technologies that can 
help U.S. coal companies recover fine coal rather than discard it to 
impoundments. One company, Beard Technologies, Inc., is currently 
building a plant designed to recover fine coal from a large impoundment 
in Pineville, WV, using the technologies developed by CAST. The plant 
will be the first to recover practically all of the coal from a waste 
impoundment without the benefit of a tax credit. If the project is 
successful, it is anticipated that many other companies will follow 
suit. The enabling technology used in the Pineville recovery plant is 
the use of chemical additives that can remove moisture from fine coal 
during vacuum filtration. CAST is developing several other dewatering 
technologies, which include hyperbaric centrifuge, hyperbaric 
horizontal belt filter (HHBF), and a flocculant injection system. In a 
recent pilot-scale test conducted with the hyperbaric centrifuge, it 
was possible to reduce the moisture of a fine coal (smaller than 0.15 
mm) to below 10 percent by weight without using chemical additives. The 
technology has been licensed to Decanter Machine Company, Johnson City, 
TN, which plans to construct a prototype unit for onsite testing. 
Development of the HHBF technology is also making progress. 
Construction of a pilot-scale test unit has been completed, and is 
ready for a trial. This new dewatering technology is also designed to 
reduce fine coal moisture to less than 10 percent. The flocculant 
injection system is already in use by many coal companies to minimize 
the loss of fine coal associated with the use of screen-bowl 
centrifuges, which represent the most widely-used conventional 
dewatering technology in the U.S. coal industry. In addition, Arch Coal 
Company is seriously considering installation of a deep-cone thickener, 
as a result of the work conducted at CAST, to obviate the need to build 
a fine coal impoundment.
    Despite the importance of fine coal cleaning, the bulk of the coal 
being cleaned today is coarse coal, most of which is being cleaned of 
impurities using density-based separation methods. Therefore, there is 
an interest in determining separation efficiencies using density 
tracers. Typically, plastic blocks of known densities are added to a 
feed stream, collected manually from product streams, and counted to 
determine the efficiency of separation--a process which is cumbersome 
and entails inaccuracies. Therefore, a new method has been developed in 
which each tracer is tagged with a transponder so that the destination 
of each tracer can be monitored electronically. The new technique has 
been tested successfully in several plants and is ready for commercial 
deployment. Precision Testing Laboratory, Beckley, WV, plans to market 
the new technology. Its use can help coal companies maximize the 
efficiency of cleaning coarse coal.
    Much of the basic scientific principles and technologies involved 
in coal cleaning also apply to processing ores. Therefore, CAST has 
been developing crosscutting technologies that can be used in both coal 
and minerals industries. As an example, a joint Krebs Engineers-CAST 
research resulted in the development of a novel hydrocyclone that can 
efficiently remove clay (slimes) from coal. The same technology can 
also be used in processing many industrial minerals. For instance, 
removal of clay minerals is an a priori requirement in processing the 
potash (KCl) ores in New Mexico. Laboratory experiments showed that 
more efficient desliming can increase potash recovery by 4 to 6 percent 
downstream. Implementation of these new technologies being developed at 
CAST will help the industry remain competitive against foreign 
producers and retain high-paying jobs in the country.
    The United States is the second-largest copper producer in the 
world. However, much of the ores being mined are low grade, which makes 
it difficult for U.S. companies to compete internationally. 
Traditionally, copper is extracted from an ore through a series of 
processes, including grinding, flotation, smelting, and refining, which 
are energy-intensive and hence costly. CAST is currently developing new 
technologies to facilitate the application of alternative leaching/
impurity removal/electrowinning processes that can replace the costlier 
steps of grinding, flotation, smelting, and refining. The alternative 
processes should require substantially lower capital costs and reduce 
energy consumption by 50 percent.
    The mining industry has been extracting gold using cyanide, which 
is toxic. Therefore, CAST has been developing an environmentally benign 
extraction method using alkaline sulfide. Bench-scale continuous tests 
conducted using this new lixiviant showed that the extraction 
efficiency is as good as those obtained using cyanide.
    In addition to the more practical projects described above, CAST 
has also conducted fundamental research. As an example, a mathematical 
model has been developed to describe the flotation process, which is 
the most widely-used and versatile solid-solid separation process used 
in both the coal and minerals industries. The model is based on first 
principles so that it has predictive and diagnostic capabilities. In 
another project, a computational fluid dynamic (CFD) simulation 
technique has been used to design optimal flotation machines. This 
project is co-funded by Dorr-Oliver EIMCO, Utah. In addition, the 
surface forces acting between two microscopic surfaces immersed in 
water have been measured using the atomic force microscope (AFM) and 
the surface force apparatus (SFA). The results show that strong 
attractive forces are present between hydrophobic surfaces, the origin 
of which is not yet known. The newly-discovered surface forces, which 
are referred to as ``hydrophobic force'' play an important role in the 
separation of hydrophobic energy ``minerals'' such as coal, oil, 
bitumen, and kerogen from hydrophilic waste minerals such as clay, 
silica and others.

                     FUNDING REQUEST AND RATIONALE

    The United States is by far the largest mining country in the 
western world, followed by South Africa and Australia. In 2004, the 
U.S. mining industry produced $63.9 billion of raw materials, including 
$19.9 billion of coal and $44 billion of minerals. Australia is a 
smaller mining country but has five centers of excellence in advanced 
separations as applied to coal and minerals processing. Last year, 
Australia established the Mineral Science Research Institute, a 
consortium of four mining schools, with a funding of $22.6 million for 
the initial 5-year period. In the United States, CAST is the only 
federally-funded consortium serving the mining industry. According to a 
congressional testimony by K. Mark Le Vier, President of the Mining and 
Metallurgical Society of America, 50 percent or more of the faculty in 
the U.S. mining schools will retire in the next 5 years. Continued 
funding of the CAST program is critical for producing a trained 
workforce for the industry.
    CAST has been developing a broad range of advanced separation 
technologies. Although it is a relatively new research center, some of 
the projects have yielded technologies that are already in use in 
industry. Many other promising research projects are on-going and 
require continued support. Working as a consortium is an effective way 
of exchanging ideas and utilizing diverse expertise required to solve 
major problems. Continued funding will allow CAST to develop advanced 
technologies that can be used to produce cleaner coal in an 
environmentally acceptable manner. Furthermore, the advanced 
technologies can be used not only to clean up the troublesome waste 
impoundments that have been created in the past but also to eliminate 
the need to create them in the first place.
    For fiscal year 2007, CAST is requesting $3 million to (i) develop 
crosscutting separation technologies, (ii) better understand the basic 
sciences involved, and (iii) produce highly-skilled engineers and 
scientists. Although the aim of the proposed research is to benefit the 
U.S. mining industry, its results should also help the President's 
initiatives to develop a hydrogen economy and to produce biofuels more 
efficiently (e.g., separating ethanol from water without distillation). 
Further, the results can be used to develop technologies for extracting 
kerogen from oil shale, of which the United States has 72 percent (1.2 
trillion barrel equivalent of oil) of the world's reserves. A steady 
supply of fuels and strategic minerals is critical for the continued 
growth of the economy and for national security.
                                 ______
                                 
             Prepared Statement of Fusion Power Associates

    In marking up the fiscal year 2007 budget for the Dept. of Energy, 
NNSA, Inertial Confinement Fusion Program, I strongly urge you to 
provide funds, unrequested by the DOE, for Z-pinch repetitively pulsed 
power program (approximately $15 million) at Sandia National 
Laboratories and for High Average Power Laser efforts (approximately 
$25 million). The Congress has supported the High Average Power Laser 
program for several years. The Z-pinch repetitively pulsed power 
program was funded by Congress in fiscal year 2005 but was not 
specifically funded in fiscal year 2006 and hence was drastically 
reduced this year.
    These programs are needed to capitalize on the successes of the 
NNSA single pulse inertial confinement fusion efforts for weapons 
research so that the technology will be available in a timely manner 
for energy applications.
    Thank you for your consideration.
                                 ______
                                 
  Prepared Statement of the Great Basin Center for Geothermal Energy, 
                       University of Nevada, Reno

    Senate Energy and Water Subcommittee, our need for energy 
independence and indigenous energy sources has never been greater, yet 
the U.S. DOE funding for geothermal energy research appears to be in 
jeopardy in fiscal year 2007. As part of a comprehensive energy plan, 
geothermal energy, among other renewable energy resources, must be 
utilized to help offset fossil fuel uses, diversify the Nation's power 
supply, and provide base load power. Geothermal energy should be one 
component of a well-balanced implementation of the National Energy 
Policy. As the National Research Council concluded (Renewable Power 
Pathways, 2002), given the enormous potential of the geothermal 
resource base, research by the U.S. DOE should be increased, 
particularly into technologies that can reduce risk, reduce costs, or 
expand the accessible geothermal resource base.
    As a personal supporter of geothermal and renewable energy sources, 
and as a long-time researcher in geothermal energy, I urge your support 
of renewable energy sources in the coming budget cycles. We need to 
increase, not decrease, geothermal energy support in the Department of 
Energy. I express my support here for funding DOE's geothermal research 
efforts in fiscal year 2007 and beyond at no less than $30 million. The 
currently funded research at the Great Basin Center for Geothermal 
Energy has found, and continues to find, new geothermal resources in 
the Great Basin and we have developed new technologies to locate, 
characterize and assess these resources with a relatively small 
investment from the DOE geothermal technologies program. These programs 
should be continued, and development of geothermal resources 
accelerated. We should also continue evaluating geothermal energy for 
the production of hydrogen, for which there is currently an actively-
funded research program here at UNR. Continued geothermal research will 
benefit the industry, and a robust geothermal industry will greatly 
contribute to alleviating national security energy concerns.
    Thank you for consideration of this matter.
                                 ______
                                 
                 Prepared Statement of David J. Bardin

    Mr. Chairman and members of the subcommittee, as a private citizen 
who served at DOE during its formation, I urge you to:
  --(A) Restore Office of Fossil Energy funding, that the 
        administration proposed to zero out, for petroleum research and 
        development (including CO2-EOR) and petroleum 
        technology transfer to independent oil producers and others, 
        and
  --(B) add $4 million, half to OFE and half to the Energy Information 
        Administration:
    --(1) to enhance OFE and EIA capabilities to assess domestic oil 
            resources and recovery potentials--especially for 
            production of liquid fuels from ``continuous-type'' 
            formations that are scarcely touched today--and,
    --(2) to stand up a ``Red Team'' (a) to challenge conventional-
            wisdom ``Blue Team'' projections that lower-48 States 
            onshore production will inevitably decline from year to 
            year and (b) to identify in timely fashion critical 
            infrastructure issues that significant growth potentials 
            will likely raise.
    A new crude oil production ``play'' in Montana and North Dakota 
(depicted this month by the Wall Street Journal[1]) illustrates 
compelling reasons for these recommendations.

                BAKKEN FORMATION OF THE WILLISTON BASIN

    Montana's production from the Bakken formation has more than 
doubled each year since discovery of the Elm Coulee Field in 2000, 
averaging 43,000 bbl per day during 2005, and exceeding 50,000 bbl per 
day by year end.[2] This is already the largest onshore discovery in 
the lower-48 States in half a century; it is still growing. ND Bakken 
production is also up. OFE recently released a report[3] noting that 
studies have suggested as much as 150 billion barrels (perhaps more) of 
total resources in place in just the North Dakota portion of the 
Williston Basin's Bakken. The Wall Street Journal reported an 
unpublished estimate of more than 200 billion barrels of recoverable 
oil in place.[4]
    The 13 operators involved in MT's Elm Coulee field are 
independents.[5] None of the oil industry giants is involved in the 
Bakken play; those giant companies concentrate their efforts on multi-
billion-dollar projects overseas, in Canada, or in the deep waters of 
the Gulf of Mexico. Today's MT and ND play, where a well may cost a few 
million dollars, can produce enough to affect an independent's ``bottom 
line''--but not a giant's.

                           RESTORE OFE BUDGET

    Dry holes are virtually unknown in the continuous-type Bakken 
Source System, but profitable production depends on applying 
technologies that will work for this resource. Some of the technologies 
are ready today--if brought to the attention of the operators.
    The Petroleum Technology Transfer Council engages in just that 
valuable work, for the Bakken resources (and others), yet the 
administration unwisely proposes to zero out Federal support for the 
PTTC (which is primarily funded through OFE's budget).[6]
    Moreover, more R&D is still needed to adapt technologies to the 
circumstances of the Bakken--with plenty of trial and error in all 
likelihood. Otherwise 80-98 percent of the oil may remain stranded in 
the rocks.[7] Yet the administration would zero out R&D.
    Congress should make funds available to OFE, at least at last 
year's level, to sustain technology transfer and help solve R&D 
challenges, on a matching basis. Federal funding to support onshore 
innovations is justified, particularly where independents are leading 
the way.
    Ideally, Congress should assure dedicated funding for onshore oil 
and associated gas R&D (as well as non-associated gas funding, such as 
the Gas Research Institute used to provide). Past industry and DOE 
efforts succeeded in showing how to produce more domestic non-
associated gas resources--notably including such continuous-type 
resources as coal bed methane and the Antrim Shale of the Michigan 
Basin; and most recently the Barnett and Bossier Shales.[8] The MT and 
ND Bakken resources invite similar breakthroughs for continuous-type 
crude oil resources.

                      ENHANCE EIA AND OFE BUDGETS

    Congress should also make new funds available to EIA and OFE in 
order to enable DOE to provide critically important information--to the 
investment community as well as independent producers. Restoration of 
EIA capabilities might produce dividends of strategic importance to our 
country over the next half century. A ``Red Team'' of OFE and EIA (and 
possibly others) might help avoid painful surprises--e.g., by exposing 
risks that transportation infrastructures may be inadequate to serve 
increases in production.
    Frankly, EIA projections (in all cases examined) now discourage 
investments--both in production and in transportation facilities--by 
seeming to show that domestic, on-shore, lower-48 production must 
decline steadily over 25 years from close to 3 million barrels a day to 
barely 2 million. Is that necessarily so?[9]
    EIA models for crude oil production rely on extremely cautious 
assessments of technically-recoverable resources by the USGS. In 
contrast, EIA independently (and less cautiously) models non-associated 
natural gas resources and recoverability. Some OFE assessments 
(integral to research program efforts) may also have been modestly more 
progressive than USGS's.
    The estimate of total U.S. technically recoverable crude oil 
resources on which EIA relies (175 billion barrels) includes barely 2 
billion barrels in continuous-type deposits such as the Bakken.[10] 
Contrast Leigh Price's estimate (held back by USGS) of over 200 billion 
barrels of technically recoverable resource in the Bakken continuous-
type deposit alone. The discrepancy begs for frank acknowledgement and 
rigorous investigation.
    It is too many years since DOE prepared its own crude oil resource 
assessment. The Bakken Source System offers a fine opportunity to try 
out a DOE alternative to USGS. The current MT and ND Bakken play has 
already increased domestic oil production at an important time for our 
country and demonstrated that the 1995 USGS estimate (still used by 
DOE) is far too low.[11]
    Congress should direct OFE, working with EIA, to perform a resource 
appraisal of the Bakken Source System of the MT and ND portions of the 
Williston Basin as an example of continuous crude oil resources in a 
self-sourced reservoir. Such reservoirs:
  --represent a large portion of what is left to be found on-shore in 
        the lower-48 States generally and in the Rocky Mountain region 
        particularly;
  --are under-studied; and
  --have a significant potential that may not have been adequately 
        characterized in the past.
    OFE has performed similar appraisals as part of its research 
program. EIA used to perform such appraisals for foreign resources in 
Russia, the Middle East, and other areas.
    A new appraisal of these ND and MT resources here at home could be 
important in and of itself as well as an exciting experiment that may 
be applicable elsewhere in the lower-48 States, especially the Rocky 
Mountain region. I envisage a series of reports:
  --Step one, the easiest, would simply rerun EIA long-term projections 
        substituting an assumed increment of Rocky Mountain technically 
        recoverable Bakken oil resource over and above the USGS 
        assessment.
  --Step two would arrive at an EIA/DOE estimate (or range) weighing 
        various studies suggesting over 150 billion barrels of Bakken 
        oil in place, including Price's 5-year-old estimate of 413 
        billion barrels in place of which half is technically 
        recoverable. This step will want a ``Red Team'' assigned to 
        challenge and debate conventional ``Blue Team'' views within 
        DOE.
  --Step three would consider how EIA's existing models would handle a 
        huge increase in assessed lower-48 resources.
  --Step four would ask whether EIA's existing models deal adequately 
        with issues such as expansion of crude oil pipeline capacity 
        and competition between USA oil production and syn-crude and 
        other crude oils exported by Canada. EIA would do well to 
        enlist expertise of USGS and others on such issues.
  --Step five might lead to modifications of EIA models.
  --Step six could entail OFE assessments of technically recoverable 
        resources using ``next generation'' CO2 and other 
        enhanced oil recovery technologies to more fully recover vast 
        Bakken oil resources.
  --Seventh, and most important, would be DOE leadership to identify, 
        in cooperation with the States of Montana and North Dakota and 
        industry (and our Canadian friends), potential prerequisites 
        for bringing barely tapped resources to market (e.g., 
        increasing availability of geologic and other data, learning 
        lessons from Bakken well histories, deploying advanced 
        production technologies, planning for expanded infrastructure 
        on a timely basis) and to foster effective basin-specific moves 
        to get on with the job.
    Congress should fund restoration of EIA's capacity to monitor and 
inform about technology innovations in the oil and gas production 
industry. Such information could improve EIA's take on recoverability 
of resources for its long-term projections.
    Technology goes to the heart of energy performance. Yet no one can 
really evaluate USGS technology assumptions because USGS won't disclose 
estimates of resources in place. An alternative DOE assessment of the 
Bakken should certainly be transparent as to resources in place, 
thereby challenging people inside and outside the industry to invent 
ways to enhance recovery factors.
    The bottom line goes far beyond assembling information. We want (a) 
to understand more fully the value of our Nation's untapped oil 
resources in the overall public interest in the broadest sense--
including oil resource in the Bakken (very little of which involves 
federally-owned land)--and (b) to anticipate downstream issues, such as 
today's impact of Canadian upgraded syn-crude, diluted bitumens, and 
heavy oils.

                               CONCLUSION

    In the face of energy uncertainty and insecurity, Congress should 
fund and demand more R&D, technology transfer, and information about 
domestic crude oil potentials and challenges because:
  --so much domestic oil remains stranded;
  --supporting R&D and technology transfer can help mobilize those 
        resources;
  --giant oil companies, on whom the administration would rely, don't 
        do enough;
  --too much of our domestic resources are unknown to Congress and the 
        public;
  --we now project undue helplessness to ourselves, our friends, and 
        our enemies.
    Thank you.[12]

                               END NOTES

    [1] ``Second Look: WILDCAT PRODUCER SPARKS OIL BOOM ON MONTANA 
PLAINS: After Majors Pulled Out, Mr. Findley Drilled Anew; Size of Find 
Still Unclear'', WSJ Apr. 5, 2006, p. A1.
    [2] On April 9 the American Association of Petroleum Geologists 
conferred its Outstanding Explorer Award on Richard L. ``Dick'' Findley 
of Billings, MT, in recognition of outstanding achievement in 
exploration for petroleum--citing him as ``an intrepid oil finder, 
accomplished stratigrapher, and entrepreneur for his efforts and 
imagination in discovering the `sleeping' giant Elm Coulee oil field in 
the Bakken Formation, Williston Basin, Richland County, Montana.''
    [3] Advanced Resources International, February 2006, Basin Oriented 
Strategies for CO2 Enhanced Oil Recovery: Williston Basin, 
prepared for the Department of Energy Office of Fossil Energy, part of 
a series on increasing domestic oil production.
    [4] A comprehensive geological report by Leigh C. Price (a USGS 
scientist for 27 years), documented his estimate of 413 billion barrels 
in place and suggested why over half could be recovered. After Price's 
untimely death in August 2000, USGS ``misplaced'' that document, but 
the Energy and Environmental Research Center of the University of North 
Dakota has posted it as a free download at www.undeerc.org, and the 
Petroleum Technology Transfer Council has posted a link among its rich 
collection of Bakken case studies. See www.mines.edu/research/PTTC/
(``Seminal Bakken Paper''). Price, L.C. ``Origins and Characteristics 
of the Basin-Centered Continuous Reservoir Unconventional Oil-Resource 
Base of the Bakken Source System, Williston Basin''.
    [5] Source.--Jim Halvorson, MT Oil & Gas Conservation Board.

                         BAKKEN CRUDE OIL--ANNUAL PRODUCTION--ELM COULEE FIELD [BBL/YR]
----------------------------------------------------------------------------------------------------------------
        Company Name             2000        2001        2002          2003            2004            2005
----------------------------------------------------------------------------------------------------------------
Armstrong Operating, Inc....  ..........      11,281      21,774          22,562          29,748          35,018
Burlington Resources Oil &    ..........  ..........  ..........  ..............         218,066       1,323,852
 Gas Company LP.............
Chaparral Energy, LLC.......  ..........  ..........  ..........  ..............  ..............          96,654
Continental Resources Inc...  ..........  ..........  ..........          90,101         853,228       2,810,965
EOG Resources, Inc..........  ..........  ..........  ..........          73,824         660,040       1,018,896
Headington Oil LP...........  ..........      20,788     145,610       1,293,039       2,554,072       3,675,139
Lyco Energy Corporation.....      21,164     245,715     630,691       1,147,021       2,406,618       4,035,471
Nance Petroleum Corpor-       ..........  ..........  ..........          34,665         241,559         807,487
 ation......................
Petro-Hunt, LLC.............  ..........  ..........  ..........          48,883         308,299         376,506
Slawson Exploration Company   ..........  ..........  ..........  ..............          99,900         815,272
 Inc........................
Staghorn Energy, LLC........  ..........  ..........  ..........  ..............          53,342          20,942
Stone Energy Corporation....  ..........  ..........  ..........  ..............  ..............         214,252
Westport Oil And Gas Co.,     ..........  ..........  ..........  ..............         140,254         483,059
 L.P........................
----------------------------------------------------------------------------------------------------------------

    [6] See www.pttc.org and PTTC's Rocky Mountain regional page, cited 
in note 4, for examples of presentations on Bakken oil geology and 
technology at Rocky Mountain forums. See ``World Oil'' 's March 2006 
issue for important hands-on technology information that the PTTC helps 
to publish and spread. T. Lantz and C.B. Wiley, ``Learning process 
optimizes horizontal drilling and completion techniques'' also posted 
at http://www.pttc.org/case_studies/PTdigest03-06.htm.
    [7] The current play started with one horizontal well (10,000 feet 
deep vertically extending 4,000 feet laterally) completed in Richland 
County, MT, in the year 2000. That well aimed at brittle, dolomite 
rocks adjacent to the more plastic Bakken shale and used a brand-new 
technology to fracture the lateral part of the well (a method of 
stimulation that the operator recently repeated). These 13 operators 
invested successfully, seeking oil in the most prolific part of the 
Bakken Source System (the adjacent brittle rocks) while avoiding the 
shale itself (at which a previous, disappointing horizontal play had 
aimed). With the help of service companies, they apply new technologies 
that are readily transplanted to their wells (notably fracturing a 
lateral well bore). But the next step demands costly trial and error 
experiments to figure out how best to enhance production of different 
parts of the over-pressured Bakken Resource System oil. For example, 
maximum crude oil recovery calls for injecting a fluid, such as carbon 
dioxide, into rocks in order to maintain reservoir pressures and flow 
of the oil. During trial and error, some operators have to give up a 
part of their land holdings, some of their wells, surrendering their 
production today to experiment for the future of everyone in the 
industry--with no certainty of success.
    [8] National Research Council, 2001, Energy Research at DOE: Was It 
Worth It?--Energy Efficiency and Fossil Energy Research 1978 to 2000.
    [9] Cf. McCabe, P.J., 1998, Energy Resources--Cornucopia or Empty 
Barrel? AAPG Bulletin, v. 82, p. 2110-2134, and Caruso, G., 2005, When 
Will World Oil Peak? 10th Annual Asia Oil & Gas Conference, Kuala 
Lumpur, Malaysia.
    [10] U.S. Crude Oil, Natural Gas, and Natural Gas Liquids Reserves 
2004 Annual Report, App. G, p. G-3. This nationwide 2 billion barrels 
of continuous-type resources includes USGS estimate of 150 million 
barrels of undiscovered, technically-recoverable Bakken oil.
    [11] The USGS baseline, released in 1995 for the entire Bakken 
system in MT and ND combined, totaled 150 million barrels of 
undiscovered, technically-recoverable oil for three sub-areas, with 70 
million of those barrels in an ``intermediate'' area that includes the 
current MT Bakken play--which has already produced 30 million of those 
70 million barrels since 2000. Bakken wells are expected to produce for 
25 years or more. Tens or hundreds of billions of barrels of Bakken oil 
may reside in place--making recovery factors (and technology to enhance 
recovery) strategically critical.
    [12] Mr. Bardin is Of Counsel to Arent Fox Kintner Plotkin & Kahn, 
PLLC (as a retired member) where he specialized in public utilities, 
energy and environmental law. Before joining Arent Fox in 1980, he 
served as Deputy Administrator of the Federal Energy Administration 
(1977) and Administrator of the Economic Regulatory Administration in 
the Department of Energy (1977-79).
                                 ______
                                 
          Prepared Statement of the Detroit Diesel Corporation

    Detroit Diesel Corporation (DDC), a DaimlerChrysler Company, 
provides this statement for the record addressing the administration's 
fiscal year 2007 budget request for the Department of Energy's Office 
of FreedomCAR and Vehicle Technologies (OFCVT). Specifically, the 
following line items and recommendations are addressed in this 
statement:
  --Heavy Truck Engine.--$20.0 million funding recommended;
  --Waste Heat Recovery (21CT).--$4.806 million funding recommended;
  --Combustion and Emission Control (21CT).--$7.680 million funding 
        recommended;
  --Advanced Petroleum Based Fuels (21CT).--$4.511 million funding 
        recommended.
    We generally support the administration's budget request for OFCVT, 
but we respectfully urge the committee to consider further enhancements 
to critical key line items that require prompt and immediate attention 
to reduce the U.S. demand for petroleum. These key line items will have 
immediate near-term impact on energy security, will decrease emissions 
of criteria air pollutants and greenhouse gases, and will enable the 
U.S. transportation industry to sustain a strong and competitive 
position in the domestic and world markets. Specific relevant OFCVT R&D 
programs enjoy substantial industry cost share demonstrating a matched 
commitment by the U.S. industry. In order to bring to fruition the 
intended results, these programs require sustained or increased levels 
of funding.
    DDC's world headquarters and its main manufacturing plant are 
located in Detroit, Michigan. DDC employs over 4,000 persons who 
design, manufacture, sell and service engines for the transportation 
and power markets. Our products cater to heavy-duty trucks, coach and 
bus, automobiles, construction, mining, marine, industrial, power 
generation and the military. DDC has operations and manufacturing 
centers in various regions of the United States, along with a network 
of over 100 distributors and 2,700 dealers throughout the United States 
and worldwide. The DDC Series 60 engine has revolutionized the truck 
engine technology, consistently setting new global performance, fuel 
economy and life cycle cost standards. It has been the most popular 
heavy-duty truck engine in the United States for the past 14 years.
    As a founding member of the 21st Century Truck Partnership, DDC 
supports Department of Energy efforts described in Energy Secretary 
Bodman's comments to the SAE Government Industry meeting on May 10, 
2005 that ``through the 21st Century Truck Partnership, and similar 
initiatives, our Department is expanding the use of clean diesel, and 
helping to reduce our dependence on foreign oil, improve energy 
efficiency, and develop new, environmentally friendly fuels to power 
our economy in the 21st century.'' In this regard, our comments will 
focus on the program line items that provide substantial potential 
payback for this important area of national interest.
    We generally support the administration's budget request, while 
respectfully urge the committee to consider further enhancements to the 
following three line items under the proposed fiscal year 2007 Advanced 
Combustion Engine R&D program element: Heavy Truck Engine, Waste Heat 
Recovery, and Combustion and Emission Control, as well as the Advanced 
Petroleum Based Fuels line item under the Fuels Technology program 
element.
    The Heavy Truck Engine has a fiscal year 2007 request of $14.490 
million. The 2010 Federal emissions mandates require an extremely 
aggressive R&D development plan to identify and implement new 
technologies. Recent specific findings suggest that EPA's initial 
estimates have underestimated the negative economic impact of the U.S. 
2004 regulations by an order of magnitude. The 2007/2010 mandates will 
further reduce both NOX and particulate emissions by an 
additional 90 percent from the 2004 levels. The technological 
complexities of meeting highly stringent emissions reduction while 
maintaining and ultimately improving the fuel economy within an 
extremely short time frame is the toughest challenge ever faced by the 
U.S. heavy-duty transportation industry. We believe this provides the 
strongest rationale for significant increases in government support to 
these competitively bid, collaborative, 50/50 cost-shared R&D programs. 
DDC is investigating advanced combustion systems, alternative emissions 
reduction technologies including engine and exhaust aftertreatment 
systems, and smart control strategies within an integrated powertrain. 
We urge the committee to consider increasing the Heavy Truck Engine 
line item by an additional $5.51 million above the fiscal year 2007 
budget request (Total = $20 million) to assert and support the urgency 
of accelerated development of these related high-risk emerging 
technologies.
    The 21CT portion of the Waste Heat Recovery has a fiscal year 2007 
request of $3.806 million. This line item has a potential of making a 
significant contribution to the overall efficiency of the heavy-duty 
diesel engine by utilizing the thermal energy of the exhaust gases 
which is currently lost. DOE's attention to this subject is supported 
by a number of new collaborative R&D contracts in this area. We believe 
that the budget should be reflective of the fuel-saving potential of 
this research, and recommend increasing this line item by $1 million to 
$4.806 million in fiscal year 2007.
    The Combustion and Emission Control activity focuses on the 
development of advanced emission control technologies for clean diesel 
engines for U.S. personal transportation vehicle applications as well 
as a heavy truck component supporting the goals of the 21st Century 
Truck Partnership. For decades to come, clean diesel engines are the 
most relevant solution simultaneously offering significant fuel economy 
savings, reduced exposure to climate change issues and a cleaner 
environment. Initial developments show potential for lower emissions 
meeting the mandated 2007/2010 levels while maintaining the diesel 
engine's inherently superior fuel efficiency. The initial performance 
results are compelling, but many questions remain unanswered regarding 
emerging technologies for aftertreatment and integration of a total 
technically viable system. The administration's $3.680 million request 
for the 21CT portion of this budget line item is significantly lower 
than the historical level of the last few years. We suggest enhancing 
this by an additional $4 million (Total = $7.680 million) to handle the 
urgent technical issues of the relevant emerging technologies.
    The Fuels Technologies is a separate OFCVT program element that 
includes Advanced Petroleum Based Fuels line item request of $3.511 
million for the 21CT portion. It has been demonstrated by the National 
Labs that combustion efficiency of heavy-duty diesel engines can be 
improved via tailoring certain properties of fuels. In fiscal year 
2007, new programs with industry-led teams will attempt to advance this 
research into the next stage of applied R&D. Therefore, we recommend 
enhancing the 21CT portion of this line item by an additional $1 
million (Total = $4.511 million) to enable the investigation of this 
additional path for improved fuel efficiency.
    We take this opportunity to affirm our strong endorsement to the 
proposed Department of Energy's fiscal year 2007 referenced budget 
requests with the stated specific enhancements. The trend-setting 
partnership between the U.S. Government and a key industrial base 
addresses this country's and world's needs in critical areas of 
transportation, energy security, economy and environment. The exemplary 
track record through competitive leveraging of government funding by 
substantial industry cost share and the emerging high potential results 
of these partnerships warrant strong congressional endorsement. This 
affords a unique opportunity for a justifiable and a highly effective 
return on investment of the U.S. taxpayers' money.
                                 ______
                                 
               Prepared Statement of the Southern Company

    Mr. Chairman and members of the committee, Southern Company 
operates the Power Systems Development Facility (PSDF) (http://
psdf.southernco.com) in Wilsonville, AL for the U.S. Department of 
Energy's (DOE's) National Energy Technology Laboratory (NETL) and 
several industrial participants.\1\ The PSDF was conceived as the 
premier advanced coal power generation research and development (R&D) 
facility in the world. It has fulfilled this expectation. I would like 
to thank the Senate for its past support of the PSDF and request the 
committee's continued support. This statement supports the 
administration's budget request for DOE coal R&D which includes $25 
million for work at the PSDF. These funds are necessary to conduct the 
future test program agreed to with DOE (see details below) and to 
support FutureGen--the integrated hydrogen and electric power 
production and carbon sequestration research initiative proposed by 
President Bush. DOE has identified the PSDF as one of the primary test 
centers to support FutureGen through sub-scale component testing. DOE's 
FutureGen Program Plan submitted to Congress on March 4, 2004 described 
the transport gasifier (one of the technologies under development at 
the PSDF) as a promising candidate for inclusion in FutureGen because:
---------------------------------------------------------------------------
    \1\ Current PSDF participants include Southern Company, the 
Electric Power Research Institute (EPRI), KBR, Siemens Power 
Generation, Inc. (Siemens), Peabody Energy, the Burlington Northern 
Santa Fe Railway Company, and the Lignite Energy Council. The Lignite 
Energy Council includes major producers of lignite (who together 
produce approximately 30 million tons of lignite annually); the 
Nation's largest commercial coal gasification project; and investor-
owned utilities and rural electric cooperatives from a multi-State area 
that generate electricity from lignite, serving 2 million people in the 
Upper Midwest region. The Council also has over 250 contractor/supplier 
members who provide products and services to the plants and mines. In 
addition to the Wilsonville plant site major work is planned for the 
PSDF, or components are being developed at the following locations: 
Grand Forks, ND (sub-scale gasifier testing), Houston, TX (gasifier 
development); Orlando, FL (gas turbine low-NOX burner), 
Pittsburgh, PA (filter fabrication), Deland, FL (filter fabrication), 
and Holly Springs, MS (gasifier fabrication).

    ``. . . its high throughput relative to size, simplicity, and 
reduced temperature of operation compared with current gasifiers, will 
yield benefits throughout the FutureGen plant . . . Planned 
improvements in the coal feed system, particulate control device, and 
the char cooling and removal system will significantly increase overall 
reliability of the transport gasifier, which would further reduce 
costs. The target is to achieve 95 percent availability rather than the 
75 percent-80 percent availability typical of today's gasifiers.
    ``Because of its simplicity in design and lower temperature of 
operation, the transport gasifier can potentially reduce the capital 
cost of an IGCC plant by up to 20 percent (or from $1,400 to $1,120/kW) 
over those employing today's technologies. In addition, the operations 
and maintenance costs are expected to be lower and availability higher 
because of the lower temperature of operation.''

    A key feature of the PSDF is its ability to test new systems at an 
integrated, semi-commercial scale. Integrated operation allows the 
effects of system interactions, typically missed in un-integrated 
pilot-scale testing, to be understood. The semi-commercial scale allows 
the maintenance, safety, and reliability issues of a technology to be 
investigated at a cost that is far lower than the cost of commercial-
scale testing. Capable of operating at pilot to near-demonstration 
scales, the PSDF is large enough to produce industrial scale data, yet 
small enough to be cost-effective and adaptable to a variety of 
technology research needs.
    As a follow-on to the ongoing development of the transport gasifier 
at the PSDF, Southern Company and the Orlando Utilities Commission 
(OUC) were recently selected by DOE as part of a competitive 
solicitation under the Clean Coal Power Initiative (CCPI) to build an 
advanced 285-megawatt transport gasifer-based coal gasification 
facility at OUC's Stanton Energy Center in central Florida. The 
facility will use state-of-the-art emission controls and will showcase 
the cleanest, most efficient coal-fired power plant technology in the 
world. The transport gasifier offers a simpler, more robust method for 
generating power from coal than other available alternatives. It is 
unique among coal gasification technologies in that it is cost-
effective when handling low rank coals (sub-bituminous and lignite) and 
when using coals with high moisture or high ash content. These coals 
make up half the proven U.S. and worldwide coal reserves.
    Southern Company also supports the goals of the Clean Coal 
Technology Roadmaps developed by DOE, EPRI, and the Coal Utilization 
Research Council (CURC). These Roadmaps identify the technical, 
economic, and environmental performance that advanced clean coal 
technologies can achieve over the next 20 years. Over this time period 
coal-fired power generation efficiency can be increased to over 50 
percent (compared to the current fleet average of 32 percent) while 
producing de minimis emissions and developing cost-effective 
technologies for carbon dioxide (CO2) management. EPRI 
recently used the modern financial technique called ``Real Options'' to 
estimate the value of advanced coal R&D.\2\ The major conclusion of 
this study is that the value to U.S. consumers of further coal R&D for 
the period 2007-2050 is at least $360 billion and could reach $1.38 
trillion. But, for these benefits to be realized the critically 
important R&D program outlined in the Clean Coal Technology Roadmap 
must be conducted.
---------------------------------------------------------------------------
    \2\ 2 EPRI Report No. 1006954, ``Market-Based Valuation of Coal 
Generation and Coal R&D in the U.S. Electric Sector'', May 2002.
---------------------------------------------------------------------------
                                SUMMARY

    The United States has always been a leader in energy research. 
Adequate funding for fossil energy research and development programs 
will provide this country with secure and reliable energy while 
reducing our dependence on foreign energy supplies. Current DOE fossil 
energy research and development programs for coal, if adequately 
funded, will assure that a wide range of electric generation and 
hydrogen production options are available for future needs. Congress 
faces difficult choices when examining near-term effects on the Federal 
budget of funding energy research. However, continued support for 
advanced coal-based energy research is essential to the long-term 
environmental and economic well-being of the United States. Prior DOE 
clean coal technology research has already provided the basis for $100 
billion in consumer benefits at a cost of less than $4 billion. Funding 
the administration's budget request for DOE coal R&D and long-term 
support of the Clean Coal Technology Roadmap can lead to additional 
consumer benefits of between $360 billion and $1.38 trillion.
    One of the key national assets for achieving these benefits is the 
PSDF. The fiscal year 2006 funding for the PSDF needs to be $25 million 
to support construction of new technologies that are critical to the 
goals of the Clean Coal Technology Roadmap and to the success of 
FutureGen. The major accomplishments at the PSDF to date and the future 
test program planned by DOE and the PSDF's industrial participants are 
summarized below.

                          PSDF ACCOMPLISHMENTS

    The PSDF has developed testing and technology transfer 
relationships with over 50 vendors to ensure that test results and 
improvements developed at the PSDF are incorporated into future plants. 
Major subsystems tested and some highlights of the test program at the 
PSDF include:
    Transport Reactor.--The transport reactor has been operated 
successfully on sub-bituminous, bituminous, and lignite coals as a 
pressurized combustor and as a gasifier in both oxygen- and air-blown 
modes and has exceeded its primary purpose of generating gases for 
downstream testing. It is projected to be the lowest capital cost coal-
based power generation option, while providing the lowest cost of 
electricity and excellent environmental performance.
    Advanced Particulate Control.--Two advanced particulate removal 
devices and 28 different filter elements types have been tested to 
clean the product gases, and material property testing is routinely 
conducted to assess their suitability under long-term operation. The 
material requirements have been shared with vendors to aid their filter 
development programs.
    Filter Safe-Guard Device.--To enhance reliability and protect 
downstream components, ``safe-guard'' devices that reliably seal off 
failed filter elements have been successfully developed.
    Coal Feed and Fine Ash Removal Subsystems.--The key to successful 
pressurized gasifier operation is reliable operation of the coal feed 
system and the filter vessel's fine ash removal system. Modifications 
developed at the PSDF and shared with the equipment supplier allow 
current coal feed equipment to perform in a commercially acceptable 
manner. An innovative, continuous process has also been designed and 
successfully tested that reduces capital and maintenance costs and 
improves the reliability of fine ash removal.
    Syngas Cooler.--Syngas cooling is of considerable importance to the 
gasification industry. Devices to inhibit erosion, made from several 
different materials, were tested at the inlet of the gas cooler and one 
ceramic material has been shown to perform well in this application.
    Syngas Cleanup.--A syngas cleanup train was constructed and has 
proven capable of meeting stringent syngas decontamination 
requirements. This module that provides an ultra clean slip stream is 
now available for testing a wide variety of technologies.
    Sensors and Automation.--Several instrumentation vendors have 
worked with the PSDF to develop and test their instruments under 
realistic conditions. Automatic temperature control of the Transport 
Reactor has been successfully implemented.
    Fuel Cell.--Two test campaigns were successfully completed on 0.5 
kW solid oxide fuel cells manufactured by Delphi on syngas from the 
transport gasifier marking the first time that a solid oxide fuel cell 
has been operated on coal-derived syngas.
    Combustion Turbine Burner.--Integrating the existing 3.8 MW 
combustion turbine with a new syngas burner developed by Siemens has 
allowed system automation and controls development.
    Syngas Recycle.--Added a syngas compressor in order to use syngas 
instead of air or N2 for aeration to promote recycle solids 
flow in the Transport Gasifier and produced a higher heating value 
syngas that more closely matched commercial operating conditions.

                        PSDF FUTURE TEST PROGRAM

    Future testing at the PSDF is focused on supporting FutureGen and 
the Technology Roadmaps. These programs aim to eliminate environmental 
issues that present barriers to the continued use of coal including 
major reductions in emissions of SO2, CO2, 
NOX, particulates, and trace elements (including mercury), 
as well as reductions in solid waste and water consumption. The focus 
at the PSDF will remain on supporting commercialization of new coal-
based advanced energy technologies including those initially developed 
elsewhere.
    Plans for FutureGen recognize that some promising technologies will 
not be ready initially for installation in the back-bone plant. 
Therefore, a series of slip-stream installations to test new 
technologies is also visualized. DOE has identified the PSDF as a key 
location for support testing of the new technologies prior to inclusion 
in FutureGen. With adequate funding, work at the PSDF will include:
    Transport Gasifier.--Continue transport gasifier development to 
further optimize performance, explore feedstock flexibility, and 
provide syngas for testing of downstream systems.
    Coarse Ash Handling.--Continue testing of a coarse ash 
depressurization system, with no moving parts, which has been developed 
at the PSDF. Like the fine ash removal system successfully developed 
earlier, this system reduces capital and maintenance cost and improves 
reliability.
    Advanced Syngas Cleanup.--Test new advanced syngas cleanup systems 
for reducing hydrogen sulfide, hydrochloric acid, ammonia, and mercury 
to near-zero levels.
    H2/CO2 Separation Technologies.--Integrate 
and test advanced H2/CO2 separation technologies 
to assess their performance on coal-derived syngas.
    Syngas Cooler.--Test alternative designs that are less complex, 
have lower capital cost, and offer better control of the syngas exit 
temperature.
    New Particulate Control Device Internals.--Evaluate alternative 
filter system internal designs from several vendors.
    Improved Fuel Feed Systems.--Evaluate alternatives to conventional 
lock hopper feed systems that have been identified.
    High-Temperature Heat Exchangers.--Test high-temperature heat 
exchangers as they become available for use in both advanced combustion 
and gasification technologies.
    Fuel Cell.--Install and test a 5 to 10 MW hybrid fuel cell/gas 
turbine module.
    Sensors and Automation.--Evaluate automation enhancements that 
simulate commercial control strategies. Further development at 
gasification operating conditions is planned for measuring coal feed 
rate, temperature, gas analysis, dust at low levels, and hazardous air 
pollutants.
    Water Gas Shift Enhancements.--A variety of water gas shift reactor 
configurations and sizes can be tested at the PSDF. Optimizing the 
operation of shift catalysts when exposed to syngas at the PSDF and 
evaluating their economics will provide valuable input for the 
FutureGen project.
                                 ______
                                 
       Prepared Statement of the American Iron & Steel Institute

    The basis for this testimony is to urge Congress to restore funding 
of the Industrial Technologies Program (ITP) line item for Steel within 
the Energy Efficiency and Renewable Energy section at the Department of 
Energy [DOE] to the original level of $10 million dollars.
    The stated goal of the ITP is to reduce the energy intensity of the 
U.S. industrial sector through coordinated research and development, 
validation, and dissemination of energy-efficiency technologies and 
operating practices. The Department of Energy and domestic steelmakers 
co-fund cutting-edge research that addresses the needs of the Nation 
and our industry. The goal of these projects is to reduce energy 
consumption [thereby diminishing the Nation's dependence on foreign 
sources of oil], lessen environmental impact and increase the 
competitiveness of domestic manufacturers. Furthermore, what makes the 
ITP program so unique and appropriate is that only those projects with 
``dual benefits'' [i.e., a public benefit such as reduced emissions or 
petroleum use, which justifies the DOE investment; and an industry 
benefit such as a more efficient steelmaking process, which justifies 
the industry investment] are initiated. It is important to note that 
Federal funding does not go to steel companies, it is pooled with steel 
industry funds and awarded to qualified universities, national labs, 
and private research organizations through a competitive process.
    Government involvement and increased funding is crucial to the 
continuation of this beneficial research. While it is plausible that 
U.S. steelmakers could conduct similar collaborative research among 
themselves without DOE funding, the ITP program accelerates technology 
development by allowing the industry to make great strides in these 
areas, rather than just steps. Greater energy reduction developments 
are produced sooner, more environmentally-friendly methods realized 
today, and domestic steel companies remain at the cutting edge of the 
global technology race [which assures competitiveness]. Likewise, the 
steel industry co-funding accelerates achievement of the DOE goals.
    In 2003, Congress appropriated $10 million to fund the Steel 
component of ITP. Unfortunately, in recent years the program [and the 
projects it supported] suffered deep budget cuts. This is the case once 
again, as for fiscal year 2007, the administration requested 
approximately $3.5 million.
    The decision to under-fund this program is peculiar, considering 
President Bush--in his State of the Union address--declared that, 
``Keeping America competitive requires affordable energy. America is 
addicted to oil, which is often imported from unstable parts of the 
world. The best way to break this addiction is through technology.'' 
The President went on to say that, ``By applying the talent and 
technology of America, this country can dramatically improve our 
environment, move beyond a petroleum-based economy, and make our 
dependence on Middle Eastern oil a thing of the past.'' ITP, with its 
federally-mandated objectives of reducing dependence on foreign oil, 
lessening environmental impact, and increasing job growth and 
retention, seems to be the type of program that the President and his 
administration is seeking. Therefore, as the ITP produces such an 
outstanding return on the government's and industry's investment, it 
seems appropriate to restore the program to optimal funding.
    An example of one of the major breakthroughs developed through ITP-
Steel [which demonstrates the program's ability to satisfy both its 
public and private objectives] is the advancement of advanced high 
strength steels or AHSS. Ten ITP projects investing $6.3 million of 
Federal and steel industry funding have been focused on AHSS, which 
permit the design of automobiles that are lightweight [thus greatly 
reducing fuel consumption and consequently emissions] but also retain 
all the safety and affordability of basic carbon steel. AHSS are 
rapidly being adopted by automakers. The following benefits are 
calculated using a market penetration of only 7 percent of AHSS-type 
vehicles, a low hurdle given the rapid adoption already evidenced in 
the new Ford 500 and Chrysler Pacifica:

----------------------------------------------------------------------------------------------------------------
                                                                                                   $ Savings Per
                                                                                                   Year at $60/
                     Item                         Savings Per    Savings Per Year/Per Federal $     Barrel (In
                                                     Year                     Spent                 millions of
                                                                                                     dollars)
----------------------------------------------------------------------------------------------------------------
Barrels of oil................................       4,071,429  0.84 barrel.....................          $244.4
CO2 emissions reduction (tons)................       2,100,000  0.50............................         ( \1\ )
----------------------------------------------------------------------------------------------------------------
\1\ N.A.

    The benefits of ITP-Steel--in terms of savings [large quantities of 
oil per Federal dollar spent along with large amounts of CO2 
and other emissions for that same Federal dollar]--are evidence that 
funding cuts to the program were ill-advised and should be reversed.

                                SUMMARY

    The Industrial Technology Program selects projects that have both 
public and private benefits, justifying the investment of both DOE and 
industry, and it conducts research at the most qualified facilities in 
North America with over 80 percent of funding supporting tasks at 
universities, national labs and technology developers, many of which 
are small businesses. The ITP Program is a unique and successful 
program that is not only beneficial to the domestic steel industry; it 
is beneficial to the Nation as we attempt to curtail our dependence on 
foreign sources of energy. Please consider restoring ITP-Steel funding 
to the original level so that its public and private benefits can reach 
even further into our economy.
                                 ______
                                 
             Prepared Statement of the US Fuel Cell Council

    Chairman Domenici, Ranking Member Reid and honorable members of the 
committee, on behalf of the 120 organizations of the US Fuel Cell 
Council (USFCC), I want to thank this subcommittee and its predecessors 
for supporting fuel cell funding over the years. We respectfully ask 
the subcommittee to continue its leadership in this area by funding the 
fuel cell and hydrogen programs at the U.S. Department of Energy at 
$555 million--the level established in the Energy Policy Act of 2005--
for research and development, technology validation, and market 
transition programs at DoE, through the Offices of Energy Efficiency 
and Renewable Energy (EERE), Fossil Energy (FE), Nuclear Energy (NE), 
and the Science (SC).
    This figure represents a $204 million increase over the 
administration request. The urgency of our energy challenge, the 
promise of fuel cells, and the gains achieved to date by our public-
private partnership all justify funding these programs at the level 
authorized by Congress in 2005. The increase we propose represents less 
than 2 days' worth of imported oil, which costs the Nation more than $1 
billion every week.
    Fuel cells are perhaps the ultimate energy generation device. Fuel 
cells rely on chemistry and not combustion; no fuel is burned. As a 
result, fuel cells are efficient, exceptionally clean, quiet, scalable 
and adaptable to virtually every energy need. The fuel for fuel cells 
can come from an amazing range of sources. Thus, fuel cells offer 
energy diversity in the short term and ultimately, true energy 
independence. Congress's support for fuel cell and hydrogen research 
has brought significant gains in fuel cell cost, performance, and 
durability. Fuel cells are a family of technologies; members of the 
family have reached the point of commercialization in some high value 
markets. By one count, more than 14,000 fuel cells are in operation 
worldwide. The pace of development suggests that with additional 
funding, fuel cells can deliver on their extraordinary promise across a 
wide spectrum of applications.
    Congress acknowledged this in 2005 with passage of the Energy 
Policy Act. The legislation prescribed additional investment, and a 
long-term strategy, that include continued research, learning 
demonstrations and technology validation, and market transition to 
support early purchases.
    Congress approved just such a comprehensive program in EPACT05, 
because it recognized that accelerating the commercialization of this 
technology carries extraordinary benefits:
  --Reducing our reliance on Middle East oil while moving towards 
        energy independence;
  --Improving air quality and combating greenhouse gas emissions; and
  --Providing a reliable, efficient, high-quality source of power that 
        decreases dependence on a vulnerable energy infrastructure.
    In the first year of EPACT, Congress authorized $555 million. 
President Bush's request for fuel cell and hydrogen programs falls far 
short by about $204 million.
    The President's budget request for low temperature fuel cell and 
hydrogen programs is in line with his original 5-year, $1.2 billion 
commitment, while the request for high temperature fuel cell programs 
(SECA) is in line with the fiscal year 2006 appropriation. These levels 
do not fully reflect the will of the Congress in research and 
development. Worse, from the perspective of an emerging industry, the 
President and his Department of Energy have chosen not to propose full 
funding of the programs Congress authorized last year in technology 
validation and proposed no funding at all for system purchases. We 
request that Congress correct this error and appropriate funds to the 
level authorized in the Energy Policy Act of 2005.
    Over the past 3 years, shortfalls in fuel cell and hydrogen core 
program funds have slowed and in some cases stopped high-priority 
research and development. Full funding can restore program momentum, 
and give the country some hope that we can break the cycle of energy 
dependence. Competition for energy supply and security of supply are 
both urgent concerns, and the Nation's investment, we believe, ought to 
match that urgency.
    By and large, the programs that have been most deeply affected by 
funding re-allocations are non-automotive fuel cell programs. We 
believe this approach is short-sighted. The path to commercialization 
is a continuum across all applications. Many fuel cell systems share 
similar components; as fuel cells move to the marketplace in 
stationary, portable and micro-applications, they will stimulate cost 
reduction, energize the supply chain, facilitate infrastructure 
development and make consumers aware of the technology, its operation 
and its benefits. All these accomplishments will help us achieve our 
automotive goals on an accelerated timetable.
    Arguably the best way to bring down fuel cell costs is to allow 
State and Federal agencies to join the ranks of other satisfied early 
adopters. The Market Transition program is limited in size and scope; 
but it is a critical path to commercialization. What's more, the Market 
Transition provision by no means forces Federal and State agencies to 
make fuel cell purchases; instead, it simply provides a financial 
mechanism for acquisition where fuel cells fill an agency's need. The 
legislation establishes the market transition program with a first year 
authorization of $20 million.
    Finally, we recognize that this subcommittee has a Constitutional 
obligation to review and modify the budget as you understand the 
Nation's energy development priorities. The fuel cell and hydrogen 
programs are programs of national purpose. They benefit from a 
centrally coordinated effort, openly conducted and competitively bid. 
Indeed, this committee has instructed that it be so. This approach 
assures accountability and reduces duplication and waste. 
Congressionally-directed programs have become an important part of the 
overall investment in fuel cells and hydrogen. Ideally, these 
congressionally-directed projects would be additive to the core DoE 
program, or in a fiscally constrained environment, closely track 
program priorities and development timetables.
    There is growing support for ethanol and other biofuels, and for 
hybrid vehicles as responses to our energy challenge. These programs 
would not, by themselves, solve our problem. They would, however buy us 
time to make the transition to hydrogen. The best news is that they are 
also fully consistent with a hydrogen future and would facilitate the 
transition. But it would be short-sighted to reduce our investment in 
the long-term solution. The public/private partnership in fuel cells is 
working; full funding will continue this progress, and bring closer the 
transition to a secure, environmentally clean, low-carbon energy 
future.
    Thank you for considering our requests.
                                 ______
                                 
        Prepared Statement of the Geothermal Energy Association

    On behalf of the members of the Geothermal Energy Association, we 
urge the subcommittee on Energy and Water Appropriations to support 
restoration of funding in fiscal year 2007 for the U.S. Department of 
Energy's (DOE) Geothermal Energy Research Program. Continued geothermal 
research by the Department of Energy is urgently needed and clearly 
justified.
    The National Research Council's review of the DOE renewable energy 
programs found that the geothermal research program was undervalued 
(Renewable Power Pathways, 2000). According to that report, the 
resource has significant potential to contribute to our Nation's energy 
needs. It states, ``Many analysts believe that a substantial fraction 
of U.S. baseload power could potentially be supplied by a variety of 
geothermal resources.''
    The Geothermal Task Force Report prepared for the Western 
Governors' Association's Clean and Diversified Energy Advisory 
Committee (CEAC) has recently made similar recommendations. The Task 
Force's January, 2006 Report recommends that ``geothermal research by 
the U.S. Department of Energy should be increased, particularly into 
technologies that can reduce risk, reduce costs, or expand the 
accessible resource base.''
    Today, some 25 States use geothermal resources for power or direct 
use purposes, but they are tapping only a small fraction of the 
potential. For example, there is 2,800 MW of geothermal power in use in 
the United States today, but the U.S. Geological Survey (USGS), in its 
Circular 790, estimated a hydrothermal resource base of between 95,000 
and 150,000 MW! Further, this estimate does not include the full range 
of geothermal resources, nor does it assess what could be possible with 
advances in engineered geothermal systems or other technological 
breakthroughs.
    GEA projects that with continued Federal and State support 
geothermal power could expand beyond providing 5 percent of 
California's electric power to providing 6 percent of the entire 
Nation's electric power by 2025. (See Chart 1). We estimate that over 
30,000 MW of geothermal power could be developed in the next 20 years, 
representing an investment in new domestic energy supplies of over $70 
billion. This level of production and new investment in geothermal 
energy would mean 130,000 new full-time jobs and 500,000 person-years 
of construction and manufacturing employment. Yet, at this level of 
geothermal production, we would only be utilizing a small fraction of 
the ultimate geothermal potential.

         CHART 1.--PROJECTED GEOTHERMAL POWER PRODUCTION BY 2025
------------------------------------------------------------------------
                                                            Percent of
                Resource                  Power Capacity     Resource
                                               (MW)          Potential
------------------------------------------------------------------------
Hydrothermal............................          16,825           10-15
Oil Well co-prod........................           6,000              <5
Geopressured............................           1,000              <1
Distributed Gen.........................             500              <1
EGS.....................................           4,000              <1
                                                         ---------------
      Power Subtotal....................          28,325              <1
Direct Use..............................       \1\ 2,400              <5
                                                         ---------------
      Total Geothermal..................          30,725              <1
------------------------------------------------------------------------
\1\ Equivalent.

    The benefits of achieving this would be substantial. This power 
capacity would produce 240,976 GWhrs of electricity annually \1\ and 
add important reliability to the system. This generation is roughly 
equal to 100 percent of the electricity generated in California, Nevada 
and Idaho combined in 2004.
---------------------------------------------------------------------------
    \1\ Power production assumes 95 percent availability, direct use 
equivalent at 50 percent.
---------------------------------------------------------------------------
    Achieving this potential would provide millions of consumers 
reliable, cost-effective power at stable prices. Also, this amount of 
electricity could displace as much as one-third of the natural gas 
currently used in power production, benefiting consumers by relieving 
pressure on spiraling natural gas prices.
    However, while State renewable laws and Federal tax incentives will 
propel the expanded use of geothermal energy, this level of production 
in 2025 will not be achieved without DOE program support. We estimate 
that of the projected 30,000 MW one-half is highly dependent upon 
continued research and technological development supported through 
DOE's program. The loss of DOE's program would be a major setback to 
both the pace and extent to which we can expand our use of this 
important renewable energy resource.
    The Federal Government has made a significant investment in 
developing a laboratory and university research community that is 
leading the world in developing the technologies needed to utilize this 
vast resource. This is not the time to abandon this effort. The 
budget's short-sighted proposal to close out the geothermal research 
program would significantly set-back progress towards national energy 
goals and jeopardize new technology development for decades.
    Therefore, we urge the Energy and Water Appropriations Subcommittee 
to continue supporting DOE's Geothermal Research Program in fiscal year 
2007 and, specifically, to appropriate $32.5 million for the programs 
defined in more detail in this statement.

                    BACKGROUND ON GEOTHERMAL ENERGY

    While only a small fraction of the geothermal resource base is 
utilized today, it already provides significant energy for our Nation. 
The United States, as the world's largest producer of geothermal 
electricity, generates an average of 16 billion kilowatt hours of 
energy per year--more than wind and solar combined. Geothermal power 
provides more than half of all renewable electricity used in 
California, about 9 percent of northern Nevada's electricity, and about 
25 percent of the island of Hawaii's electricity. Farms, spas, 
businesses and schools in over 24 States utilize geothermal resources 
as an energy source.
    The energy, environmental, and economic benefits of geothermal are 
substantial. Geothermal electricity produces 11,500 full-time jobs 
annually, not including the hundreds of jobs created by direct use 
applications. The United States' current geothermal generation is 
equivalent to burning close to 25 million barrels of oil or 6 million 
short tons of coal per year. Geothermal electricity displaces the 
emissions of 16 million tons of carbon dioxide, 78 thousand tons of 
sulfur dioxide, 32 thousand tons of nitrogen oxides, and 17 thousand 
tons of particulate matter every year, compared with production of the 
same amount of electricity from a state-of-the-art coal-fired plants.
    With continued Federal and State support, much more geothermal 
generation is possible. The U.S. Geological Survey (USGS), in its 
Circular 790, reported that the geothermal resource base was vast, 
involving hundreds of thousands of megawatts. But, much of this 
resource is hidden, and we do not have commercially available 
exploration technologies that can effectively identify geothermal 
reservoirs without drilling. But, drilling is expansive and risky, and 
often involves permitting and other obstacles.
    Continued improvements and the development of new technologies to 
identify, develop and produce energy from geothermal resources is 
critical if most of the very large resource base is ever to become 
economically feasible to use. This includes developing the techniques 
necessary for engineering geothermal systems that could some day allow 
so-called hot dry rock power production. Beyond hydrothermal resources, 
there is significant new geothermal production potential from co-
production in oil and gas fields, geopressured gas resources in Texas 
and Louisiana, and distributed power generation. Notably, both oil 
field and geopressured production have significant potential to expand 
U.S. oil and natural gas production. All of these efforts need support 
through DOE's program and are at a critical point in their development.
    Beyond electric power generation, expanding the direct use of 
geothermal resources by businesses, farms, and communities needs to be 
addressed more vigorously in DOE's programmatic efforts. Expanded 
direct use geothermal has widespread application across the Nation, and 
would largely displace fuels used for heating and industrial and 
commercial processes. By displacing fossil fuels, developing the 
technologies and techniques to expand direct use would have a direct, 
positive impact on national security.
    Utility scale power production under the 2025 projection above 
would expand geothermal generation beyond four States today 
(California, Nevada, Utah and Hawaii) to also include Alaska, Wyoming, 
Idaho, Oregon, Washington, Alaska, Arizona, Colorado, New Mexico, Texas 
and Louisiana. In addition, distributed generation and expanded direct 
use of geothermal resources could provide new energy in a larger number 
of States including: Alabama, Arizona, Arkansas, California, Colorado, 
Hawaii, Idaho, Illinois, Kansas, Louisiana, Mississippi, Montana, 
Nebraska, Nevada, North Dakota, New Mexico, Oklahoma, Oregon, South 
Dakota, Texas, Utah, Washington, West Virginia, and Wyoming.

                    FISCAL YEAR 2007 RECOMMENDATION

    We agree with the January 2006 WGA Geothermal Task Force Report. It 
recommends: ``a strong, continuing geothermal research effort at the 
Department of Energy that addresses the full range of technical 
problems encountered in achieving full production from the identified 
and undiscovered resources in the West.'' The report also supports ``. 
. . continuation of advanced technology programs and outreach through 
GeoPowering the West.'' In addition, the report urges DOE to expand its 
program in critical areas ``particularly the identification and 
development of new resources'' and ``support for exploration and 
exploratory drilling.'' Finally, it asks DOE to ``examine whether 
existing Federal loan guarantee authority in law can be used to 
supplement these activities to reduce risk and encourage development of 
new resource areas.'' (http://www.westgov.org/wga/initiatives/cdeac/
geothermal.htm.)
    Consistent with the Energy Policy Act of 2005's recommendation that 
``The Secretary shall conduct a program of research, development, 
demonstration, and commercial application for geothermal energy . . . 
'' for fiscal year 2007 we recommend that Congress appropriate $32.5 
million for DOE's geothermal program. Of this amount:
  --$8.5 million should support work by the Intermountain West 
        Geothermal Consortium (IWGC), which was authorized by the 
        Energy Policy Act of 2005 to support national energy security 
        through research into and development of under-utilized 
        geothermal resources in cooperation with industry. Partner 
        institutions include Boise State University, University of 
        Idaho, Idaho National Laboratories, GeoHeat Center at Oregon 
        Institute of Technology, Desert Research Institute with the 
        Nevada System of Higher Education, and the Energy and 
        Geosciences Institute at the University of Utah.
  --$2 million should support the continuing work of the University of 
        Nevada's Great Basin Center for Geothermal Energy, which is 
        critical to developing the very substantial and untapped 
        resources of the Great Basin. UNR has been doing pioneering 
        work in expanding our knowledge of the Great Basin resource 
        while advancing both science and near-term development 
        possibilities through its work and collaboration with industry.
  --$4 million should support the work of Sandia National Laboratories 
        (SNL) to develop advanced technologies for drilling and related 
        research that will reduce the cost and risk of exploration and 
        new projects. Drilling cheaper, smarter, and with less impact 
        is a critical component of identifying and making expanded use 
        of the geothermal resource economically feasible.
  --$4 million should support cost-shared, exploratory drilling 
        consistent with OMB's cost-sharing guidelines. This program 
        should be coordinated with the USGS to support their efforts to 
        produce a new national geothermal resource assessment. These 
        funds could alternatively be used to support a targeted loan 
        guarantee program as recommended to DOE by Sentech in its March 
        2005 report.
  --$4 million should support local information, outreach, and project 
        development efforts through the State working groups of DOE's 
        GeoPowering the West (GPW) initiative. GPW has active State 
        working groups in Alaska, Arizona, California, Hawaii, Idaho, 
        Oregon, Nevada, New Mexico, Texas, Utah, and Washington, and is 
        working in Colorado, Montana, South Dakota and Wyoming. This 
        award-winning program is recognized as essential to expanding 
        geothermal usage.
  --$10 million should be designated for other activities administered 
        by the Department of Energy, including peer-reviewed, 
        partnered, and cost-shared industry-applied research; and, 
        longer-range research including DOE's Enhanced Geothermal 
        Systems (EGS) research effort designed to develop advanced 
        technology capable of tapping the virtually limitless heat 
        content of the Earth.

                            FUTURE BENEFITS

    For the Nation, the return on the investment in new geothermal 
technology would be substantial. As the WGA Geothermal Task Force 
recently reported, ``With sustained support from the Department of 
Energy, Geothermal power can be a major contributor to the power 
infrastructure and economic well-being of the Western States.''
    The U.S. Department of Energy's Geothermal R&D program benefits the 
entire U.S. economy. Research shows that for every million dollars 
invested in geothermal energy, $2.5 million will return to the United 
States economy. The program's success can turn the thousands of 
megawatts of untapped geothermal potential into a clean, reliable, 
sustainable, indigenous, distributed electricity source; produce 
thousands of new direct-use applications serving communities, farms and 
businesses; and spur other beneficial uses of the natural heat of the 
earth.
    Finally, achieving the level of production possible by 2025 would 
have substantial environmental benefits. Compared to state-of-the-art 
coal plants, this would annually offset 266 million tons of carbon 
dioxide emissions. This is equal to the annual CO2 emissions 
from 41 million automobiles--30 percent of all automobiles in use in 
2003 according to the Department of Transportation. Or, in an 
international perspective, emissions avoided by geothermal generation 
in 2025 would represent more than the combined total CO2 
emissions from Austria, Hungary, Iceland, Ireland, Lithuania, New 
Zealand, Sweden, and Switzerland in 2002.

                          OMB'S JUSTIFICATION

    With a highly selective reading of the Energy Policy Act of 2005 
(EPAct), the Office of Management and Budget appears to justify its 
proposal to terminate the DOE Geothermal Research program on the fact 
that Congress included important provisions in this legislation to 
stimulate new geothermal development. EPAct included important tax 
incentives for new geothermal plants, an extensive revision of the 
Geothermal Steam Act, and directives for an expanded DOE renewable 
research program that specifically includes geothermal energy. OMB 
ignores the devastating impact that terminating the geothermal program 
would have on the potential contribution of this industry to national 
energy needs and its international competitiveness. Further, their 
justifications do not appear to be based upon metrics that are applied 
consistently across technologies, nor do they appear to be based upon 
documented and objective analysis. Quite simply, it's difficult to 
argue with their analysis, when there doesn't appear to be any. Both 
the process and results of their decision making are a mystery.
    Thank you for considering the views of the Geothermal Energy 
Association. Please feel free to contact us if you have any questions 
or need additional information about recommendations made in this 
statement.
                                 ______
                                 
     Prepared Statement of the American Forest & Paper Association

    The Agenda 2020 Technology Alliance, a Special Project of the 
American Forest & Paper Association (AF&PA) welcomes this opportunity 
to thank the committee for its fiscal year 2006 support in providing 
sustained funding to our industry's key public-private partnerships 
within the Office of Energy Efficiency and Renewable Energy (EERE) and 
to urge increased funding to adequately address industry's challenges 
in fiscal year 2007. The Industrial Technologies Program (ITP) and the 
Office of Biomass Programs (OBP) provide vital funding for research, 
development, and demonstration (RD&D) of technologies that dramatically 
reduce the forest products industry's energy intensity and transforms 
our industry into producers of carbon-neutral biofuels--thus addressing 
strategic national needs associated with energy efficiency, energy 
security, diversified energy supply, and environmental performance. We 
strongly recommend funding of $6 million for forest products industry 
in ITP. We support the President's request for $150 million for Biomass 
and Biorefinery Systems R&D in OBP and ask that the committee work to 
ensure eligibility of forest biorefineries in these programs and keep 
the appropriations unencumbered to allow for full funding of 
competitive biorefinery RD&D grants. Furthermore, we recommend that the 
committee restore OBP funding of $10 million for competitive R&D for 
black liquor gasification, a key enabling technology of the forest 
biorefinery.
    The Agenda 2020 Technology Alliance is an industry-led partnership 
with government and academia that holds the promise of reinventing the 
forest products industry through innovation in processes, materials and 
markets. The collaborative, pre-competitive research, development, and 
deployment supported through Agenda 2020 provide the foundation for new 
technology-driven business models that will enable our industry to meet 
competitive challenges, while also contributing solutions to strategic 
national needs. The technology solutions developed through Agenda 2020 
are aligned to provide solutions to the competitive challenges faced by 
the U.S. forest products industry, which accounts for approximately 7 
percent of total U.S. manufacturing output, employs 1.3 million people, 
and ranks among the top 10 manufacturing employers in 42 States with an 
estimated payroll of $60 billion.
    As is the case with many U.S. manufacturing industries, we face 
serious domestic and international challenges. Since 1997, 101 pulp and 
paper mills have closed in the United States, resulting in a loss of 
70,000 jobs, or 32 percent of our workforce. An additional 67,000 jobs 
have been lost in the wood products industry since 1997. New capacity 
growth is now taking place in other countries, where forestry, labor, 
and environmental practices may not be as responsible as those in the 
United States. In addition, globalization, aging process 
infrastructure, few technology breakthroughs, as well as recent 
financial performance and environmental concerns, hinder the ability of 
U.S. companies to make new investments. The volatility of energy 
markets, especially for natural gas, has made our competitive position 
even more precarious and heightened the need to develop new energy 
efficient technology. Each year without new investments, new 
technologies and new revenue streams, we lose ground to our overseas 
competitors.
    Currently, energy is the third-largest manufacturing cost for the 
forest and paper industry at 18 percent for pulp and paper mills--up 
from 12 percent just 3 years ago. For some of our mills, the cost of 
energy is about to eclipse employee compensation.
    Since 1994, the forest products industry has been one of DOE's 
``Industries of the Future,'' partnering with ITP through the Agenda 
2020 Technology Alliance in RD&D that has yielded successful advances 
towards out national energy and environmental goals. Agenda 2020 stands 
as an example of successful industry-government collaboration to 
develop technologies that hold the promise of reinventing industry, 
while providing real solutions for strategic national energy needs. 
Every Federal $1 spent on ITP saves $7.06 in annual energy costs and 
1.3 million in annual source BTUs (2004 estimates). As recently as 
2003, the ITP/Agenda 2020 portfolio included a total shared DOE and 
industry investment of almost $48 million, with nearly 55 percent 
coming from direct project cost shares by industry.
    Today, after 5 years of continuous and substantial cuts, the ITP/
Agenda 2020 budget has been reduced by over 65 percent since fiscal 
year 2002. This undermines our progress in achieving crucial energy 
efficiencies at a time when energy is a major factor in the survival of 
the U.S. forest products industry. Projects re-scoped or cut in fiscal 
year 2005 due to budget shortfalls resulted in a lost energy savings 
potential of 5 trillion BTUs/yr. With substantially less funding in 
fiscal year 2006, we will be unable to pursue projects in key priority 
areas such as advanced water removal and high efficiency pulping, which 
represents a lost savings potential of 100-200 trillion BTUs/yr. A 
further reduction is proposed in fiscal year 2007 ($2.878 million), 
barely sufficient for only one collaborative project and 1 or 2 concept 
studies. By comparison, in the early 2000's, the portfolio included 
nearly 40 collaborative research projects across the country with 
varying sizes and scopes, but with a common goal of developing 
breakthrough technologies and processes that produce dramatic 
improvements in energy efficiency in an environmentally-sound manner.
    This comes at a crucial time when the forest products industry, 
like many energy-intensive industries, is facing unprecedented 
pressures due to the rising costs of energy and seeking solution as 
diverse as fuel switching, finding new energy sources, and developing 
options for reducing energy consumption. Although we are nearly 60 
percent self-sufficient (using biomass), the volatility of natural gas 
prices has translated into an additional cost to the industry of more 
than $2 billion annually--and places us at a significant disadvantage 
compared with our international competitors. Thus we are in greater 
need than ever for the technology-based energy efficiency solutions 
that could be provided through our Agenda 2020 partnership with ITP. 
The AF&PA's recommended ITP funding for forest products research ($6 
million) would help our industry partially recover its capacity to 
develop and deploy vital energy efficiency technologies. Restoring 
Agenda 2020 funding to pre-fiscal year 2005 levels will not only help 
the competitive position of American industry, but will also serve 
national strategic goals for reduced dependence on foreign oil.
    The Integrated Forest Products Biorefinery (IFPB) is a key Agenda 
2020 technology platform and a top technical and economic priority for 
our industry. The objective is to develop and deploy core technologies 
that can be integrated into existing processing infrastructure, which 
would be transformed into geographically distributed production centers 
of renewable ``green'' bioenergy and bioproducts. This can be done 
while co-producing existing product lines, creating higher skilled and 
better paying jobs, strengthening rural communities, and opening new 
domestic and international markets for U.S. forest products companies.
    The IFBP technology has the potential to integrate agricultural 
wastes, agricultural producers, forest landowners, agricultural 
landowners, forest product producers, and the petrochemical industry to 
produce clean renewable bio-fuels to support our local economies and 
the Nation. Widespread application of this technology would not only 
reduce environmental impact of burning fossil fuels, it would also 
increase the viability of agricultural, forest products, and other 
industries that use waste heat. It will create new high paying jobs, 
both direct and indirect, increasing tax revenue. From an energy 
perspective, the IFPB has the benefit of making the forest products 
industry even more energy self-sufficient, serving the DOE strategic 
goal of reduced energy intensity in industry by reducing fossil energy 
consumption. In addition, the IFPB would permit the industry to become 
a producer of renewable, carbon-positive bioenergy and biofuels, 
contributing to DOE strategic goals to dramatically reduce dependence 
on foreign oil and to create new domestic bioindustry.
    AF&PA supports the President's announced $150 million budget 
initiative in fiscal year 2007 for biorefinery research and 
demonstration. This initiative provides much needed funding to advance 
core enabling IFPB technologies, as well as providing major capital 
cost-share for commercial scale biorefinery demonstration. The forest 
products industry is an ideal partner to develop and commercialize 
integrated biorefineries. We have much of the infrastructure and 
expertise--wood harvesting, transportation and storage, manufacturing 
and conversion infrastructure, waste handling and recovery--needed to 
achieve the goals of integrated biorefineries. By and large, they are 
located in rural communities where they can help realize important 
synergies between agricultural and forest-based feedstocks.
    Our industry currently is poised to field several projects to 
advance key IFPB technologies for biofuel production, and even 
demonstrate biorefineries at the commercial scale. In order to achieve 
the promise of IFPB technologies for the industry and for the Nation, 
we need greater stability and availability of funds provided through 
the OBP budget. The trend of increasing OBP earmarks, over 50 percent 
of the fiscal year 2006 appropriation, has contributed to a marked 
reduction in real availability of funds for biorefinery RD&D. We urge 
the committee to preserve and leave unencumbered the proposed $150 
million funding of Biomass and Biorefinery Systems R&D, so that there 
will be sufficient appropriations to fund FOA No. DE-PS36-06GO96016, 
the recently released solicitation for biorefinery demonstration and 
commercialization. We also urge the committee to ensure that forest-
based materials are eligible for this and future biorefinery research 
and demonstration funding. Forest-based materials can sustainably 
produce enough biofuels to displace up to 10 percent of the country's 
petroleum production. They are a vital feedstock for achieving reduced 
dependence on foreign oil and facilitating bioindustries domestically 
and should be included in programs for biomass and biorefinery RD&D.
    A core enabling technology for part of the IFPB is black liquor 
gasification (BLG), which converts the by-product of the chemical 
pulping process into a synthetic gas. The synthetic gas can 
subsequently be burned to directly produce clean, efficient energy, or 
converted to other fuels such as hydrogen, renewable transportation 
fuels, and/or other high value chemicals. If fully developed and 
commercialized, BLG has the potential to produce a net 22 gigawatts of 
power, displacing as much as 100 million barrels of oil per year. This 
translates into displacement of 900 BCF of natural gas consumption for 
power generation by the year 2020, assuming that BLG is placed in 
service by 2010.
    In fiscal year 2006, DOE eliminated funding for BLG and related 
research, despite recent technical progress to bring the technology to 
pre-commercial demonstration. BLG is a core enabling technology for the 
IFPB, and is identified as a priority technology area for biorefineries 
in technology roadmaps created by industry, as well as in research 
plans developed by OBP to accelerate biorefineries and development of 
national bioindustry. Critical research areas identified by OBP 
include: integrated biorefinery support for thermochemical 
biorefineries, products core R&D in chemicals and fuels from syngas; 
thermochemical platform core R&D in BLG and syngas cleanup. AF&PA is 
recommending that $10 million be restored in the OBP budget for 
competitive research in these critical areas and to complete BLG core 
research and projects that were eliminated in recent cuts. This funding 
will provide the groundwork needed for next vital steps leading to 
large-scale demonstration of biofuels and biochemicals production in 
association with the industry's dominant Kraft pulping process.
    We appreciate the committee's interest in ensuring sustained and 
adequate funding for RD&D partnerships and look forward to working with 
you to advance industry and national interests.
                                 ______
                                 
               Prepared Statement of Geo-Energy Partners

                           EXECUTIVE SUMMARY

    Eliminating the DOE geothermal budget will have a serious, negative 
effect on developing America's premier renewable energy resource. The 
DOE/GRED cost-sharing program, in particular, has provided a great 
incentive for small independents to undertake exploration activities 
that otherwise would be beyond their financial reach. If development of 
geothermal resources is to be significantly expanded in the future, 
exploration for yet unproven resources will be required. The DOE/GRED 
cost-sharing program is essential if these exploration activities are 
to continue.

                               BACKGROUND

    During the 1960's and continuing into the early 1980's the U.S. 
geothermal industry flourished, with major petroleum and mining firms 
in addition to numerous independent geothermal companies scouring the 
western United States for geothermal resources. During that period, 
nearly all of the currently existing geothermal electrical production 
was constructed.
    Since then, geothermal exploration has essentially been non-
existent and the geothermal industry is currently dominated by four 
large corporations (Calpine, Ormat, Caithness and CalEnergy). Except 
for CalEnergy's discovery and development of the Coso, California 
geothermal resource in the 1980's, these companies have only purchased 
already-explored/discovered operating facilities, focused on increasing 
the efficiency of their own operating plants or expanded already-proven 
fields. These four companies no longer conduct grass roots exploration. 
However, without exploration, always largely by independents (and 
solely by independents now), not a single one of the currently 
producing geothermal fields in the western United States would have 
come into existence. Exploration and discovery of new geothermal 
resources is solely in the hands of small independent geothermal 
enterprises. Fortunately the ``independents'' are primarily comprised 
of experienced geothermal professionals who have been in the industry 
since the boom days of the 1960's, 1970's and 1980's.
    The U.S. geothermal industry is in desperate need of a new wave of 
exploration and discovery to respond to the current burgeoning demand 
and growing need for secure, domestic renewable energy resources. It is 
a sad fact that not since 1992 has a new geothermal field been brought 
on-line for power production in the United States: Brady's Hot Springs 
in Nevada. Since then all additions to U.S. geothermal capacity has 
been accomplished through incremental expansions in already-developed 
fields. The last new field brought on line in California was Honey Lake 
in 1989; in Utah the last was the Cove Fort geothermal plant in 1985; 
and in Hawaii it was Puna in 1984.
    Geothermal energy is the only true base-load renewable energy 
source and has a decades-long track record of being on-line over 95 
percent of the time using proven, dependable technology. Wind and solar 
are wonderful technologies, however, they only produce power when the 
wind blows or the sun shines. Electrical generation from a geothermal 
plant is 24/7/365.
    The DOE Geothermal Resource Exploration and Definition program 
(``GRED'') has provided funding to encourage exactly the type of 
exploration necessary to promote the discovery of new geothermal 
resources for the next wave of geothermal development. GRED I in 2000, 
GRED II in 2002 and the ongoing GRED III programs have encouraged 
exploration in previously unexplored areas and has already resulted in 
the identification of over 80 MW of new geothermal resources. More GRED 
III drilling will take place this summer at our Emigrant leasehold. The 
Emigrant Slimhole Drilling Project is an 80 percent DOE/20 percent 
Esmeralda Energy Company (``EEC'') cost-shared exploration slimhole. 
EEC is negotiating for a power purchase agreement (``PPA'') for 
Emigrant and recently signed such a PPA with San Diego Gas & Electric 
for our Truckhaven lease applications in Imperial County, California.
    The experienced independents are the only ones in the geothermal 
industry willing and capable of making the next wave of geothermal 
development a reality. However, initial exploration efforts are costly 
and have a high degree of risk. DOE geothermal funding has historically 
been minimal but it remains a critical element in developing untapped 
geothermal resources. Eliminating the DOE geothermal budget, in 
particular the DOE GRED program, will have a serious, negative effect 
on developing America's premier renewable energy resource.
                                 ______
                                 
           Prepared Statement of the American Gas Association

    Mr. Chairman and members of the subcommittee, the American Gas 
Association (AGA) represents 197 natural gas distribution utilities 
that serve more than 56 million homes and businesses in all 50 States. 
We appreciate the opportunity to assist you with consideration of the 
U.S. Department of Energy's (DOE) fiscal year 2007 budget request.
    Natural gas meets one-fourth of U.S. energy needs. Almost all of 
this natural gas is produced in the United States or Canada, making 
natural gas a vital, clean, and domestic form of energy. Local natural 
gas utilities deliver natural gas through more than 1 million miles of 
underground pipelines. The terrorist acts of September 11, 2001 and the 
war with Iraq have made clear the need for continued investment in U.S. 
energy infrastructure, both to facilitate greater reliance on domestic 
energy resources and to ensure reliable delivery. Energy is the 
lifeblood of the U.S. economy, and innovative technologies such as 
distributed energy will help ensure a reliable and efficient supply of 
electricity--even if a central power station or the electric grid were 
to be compromised.
    AGA continues to support DOE research programs such as natural gas 
vehicles and industrial research and development (R&D). AGA wishes, 
however, to outline three top priorities of particular benefit to 
natural gas consumers and the utilities that serve them:
  --The Office of Fossil Energy's Natural Gas Infrastructure Technology 
        research program for which AGA urges Congress to appropriate 
        $15 million.
  --The Office of Fossil Energy's Gas Storage Technology Consortium 
        (GSTC) for which AGA urges Congress to appropriate $2.0 
        million.
  --The Office of Fossil Energy's Natural Gas Exploration, Production 
        and Hydrates research programs.

          OFFICE OF FOSSIL ENERGY: NATURAL GAS INFRASTRUCTURE

    At present the natural gas industry operates more than 1 million 
miles of underground pipe of varying sizes. The industry and DOE 
estimate that $19 billion of investment will be needed over time to 
replace this infrastructure in the ordinary course. Additionally, due 
to projected new natural gas demand (increasing by 40 percent by 2025), 
another $42 billion will be needed in the coming years for expansion of 
the natural gas delivery system.
    AGA strongly supports DOE's natural gas industry Infrastructure and 
Operations program, which was established in fiscal year 2001 with an 
initial appropriation of $4.9 million. The goal of the program goal is 
to make mid- to long-term investments in improving the reliability and 
efficiency of the Nation's natural gas infrastructure. Projects funded 
by DOE include development of more corrosion-resistant material that 
can transport gas at higher pressure, fuel-efficient compressors 
capable of flexible operation, technologies to detect and assess 
corrosion and mechanical damage, improved automated data acquisition, 
system monitoring and control techniques, no-dig technologies, 
innovative excavation and restoration systems, and plastic pipe 
technology. This research has played a critical role in assuring that 
the Nation's energy supply reaches consumers.
    Natural gas industry response to this program has been 
enthusiastic, as evidenced by the submission of more than 100 cost-
sharing proposals by industry partners in the first year alone. These 
early proposals, totaling more than $75 million, exceeded the available 
dollars by a 9-to-1 factor.
    In fiscal year 2005, Congress appropriated $8.47 million for this 
program but eliminated this funding in fiscal year 2006. DOE's natural 
gas infrastructure and operations program is the only Federal program 
focused on mid- to long-term natural gas pipeline research. Without 
this vital research, many technologies needed to increase the 
deliverability and reliability of the existing pipeline network will 
not come to fruition.
    Given the importance of expanding the Nation's natural gas 
infrastructure in anticipation of significantly growing demand for 
natural gas, the American Gas Association requests that Congress 
appropriate $15 million for the DOE's Fossil Energy natural gas 
infrastructure research program in fiscal year 2006.
    The natural gas industry provides substantial cost sharing in 
developing the technologies necessary for this new infrastructure. 
Major and novel system improvements are needed for natural gas to be 
delivered in the volumes that DOE believes will be required in the 
future. These improvements depend on new, highly efficient 
technologies.

             DOE'S GAS STORAGE TECHNOLOGY CONSORTIUM (GSTC)

    The mission of the DOE Gas Storage Technology Consortium is to 
assist in the development, demonstration and commercialization of 
technologies to improve the integrity, flexibility, deliverability, and 
cost-effectiveness of the Nation's underground natural gas/hydrocarbon 
storage facilities. The Consortium is on target to deliver technology 
advancements to industry and has co-funded 18 projects totaling $2.567 
million Federal dollars. Projects can be categorized under two major 
headings: (1) Integrity--which function to improve safety and 
reliability of the underground storage operations; (2) Deliverability 
Enhancement--which focus on identifying ways to increase existing 
storage capacity and deliverability.
    The American Gas Association actively supports the DOE Gas Storage 
Technology Consortium and requests Congress to provide $2.0 million for 
natural gas storage in fiscal year 2007.

 THE OFFICE OF FOSSIL ENERGY'S NATURAL GAS EXPLORATION, PRODUCTION AND 
                           HYDRATES RESEARCH

    Research investment is a key tool for producing more gas from 
marginal wells that would otherwise be shut-in prematurely now and for 
producing more gas in the future from very long-term, high-risk, but 
potentially promising frontier areas such as methane hydrates.
    The DOE Exploration and Production research program is aimed 
directly at small producers working on high-risk deep drilling 
operations and stripper wells and marginal wells in Appalachia. 
Technological advances in these areas are conveyed to small gas 
producers through the Multi-Lab/Industry Partnership and the technology 
transfer program.
    AGA supports continued funding for the DOE Exploration and 
Production research program.

                               CONCLUSION

    Mr. Chairman, AGA is giving great emphasis to developing 
comprehensive programs that enhance economic and national security, 
provide cheaper energy to the end-user, reduce emissions, and improve 
energy efficiency. AGA greatly appreciates your past support and 
consideration of these proposals.
                                 ______
                                 
                  Prepared Statement of Austin Energy

    This testimony supports funding for development and deployment of 
plug-in hybrid vehicles (PHEVs) within the Department of Energy's 
fiscal year 2007 budget request. Specifically, Austin Energy supports: 
(1) $10 million for Section 706 of the Energy Policy Act of 2005 
(``EPACT'')--Joint Flexible Fuel/Hybrid Commercialization Initiative; 
(2) $15 million for Sections 711/911 of EPACT--Hybrid Vehicles for 
system and component development for plug-in hybrid vehicles; and (3) 
$2.5 million for Title 8 of EPACT--Advanced Vehicles for a fuel cell 
vehicle developed with a plug-in hybrid drive platform. Funding of 
$27.5 million within these three areas should be included within the 
Hybrid and Electric Propulsion section of the Vehicle Technologies 
Program of the Energy Efficiency and Renewable Energy budget.
    Austin Energy, the Nation's 10th largest community-owned electric 
utility, serves 360,000 customers within the City of Austin, Travis and 
Williamson Counties, Texas. Austin provides electricity to the capital 
city of Texas through a diverse generation mix of nuclear, coal, 
natural gas and renewable resources. Austin Energy has been nationally 
recognized for its Green Choice renewable electricity program. Austin 
sells more renewable electricity, primarily wind, than any other 
utility in the country.
    Austin Energy has also been a national leader in energy efficiency. 
Austin's Green Building program for both commercial and residential 
buildings has been a national model for use of sustainable building 
technologies.
    As the President remarked in his State of the Union Address, and 
repeated again this week, the United States needs to break its 
addiction to imported supplies of petroleum. The principle use of 
imported petroleum is to produce gasoline to power the transportation 
sector, particularly automobiles. With $3.00 gasoline the American 
public is ready to embrace new technology. Congress and the DOE can 
move forward to help right now. Already popular hybrid vehicles 
demonstrate that there is now a technologically feasible way to power 
automobiles with both an internal combustion and an electric engine. 
The plug-in hybrid vehicle is a modification of current hybrids. Plug-
in hybrids can be charged from the existing electrical grid by plugging 
the car into an ordinary wall socket while the internal combustion 
engine can be a flexible fuel engine that will run on domestically 
produced biofuels.
    PHEVs will run on a dedicated electric charge for a number of miles 
(20-60 depending on the size of the battery pack) then shift to liquid 
fuel.
    PHEVs have the ability to significantly increase mileage over both 
conventional cars and existing hybrids. Instead of the constant 
switching between gasoline and electric power as is done in a hybrid 
today, the PHEV runs on electric power until the batteries are drained, 
only then does the fuel engine engage to power the car. If the driver's 
daily commute is within the electric range (20-60 miles), or if driving 
is within a small geographical area (city delivery trucks), then 
gasoline consumption is minimized thus starting us down the road to 
reduced imports.
    Austin Energy is convinced that PHEVs will be a significant 
contributor to reducing our Nation's reliance on imported oil. Unlike 
other transportation alternatives, PHEVs require neither new fueling 
infrastructure nor driver behavioral changes. The infrastructure for 
PHEVs, standard electric sockets, already exists and Americans have 
already become accustomed to plugging-in Blackberries, cell-phones and 
lap-top computers. In the instance that one forgets or is unable to 
plug-in the car, it will run as usual on gasoline or flexible fuel.
    The funding initiatives recommended by the President in the DOE 
fiscal year 2007 budget submission will speed the day when PHEVs are 
widely available to American citizens. Other DOE programs support plug-
in hybrid technology developed as part of flexible fueling operations 
for cars as well as integrated within the advanced fuel cell vehicle. 
PHEV technology will complement any existing automobile fueling system 
or one envisioned for the future. The DOE budget submission will 
provide for deployment of PHEVs in demonstration activities to allow 
for different commercial applications of the vehicles. PHEV technology 
is adaptable to all vehicle platforms--from large trucks to commuter 
cars.
    Austin Energy supports Congressional appropriations to increase the 
availability of PHEVs and demonstrate its capacity as a solution to our 
``oil addiction.'' Austin Energy is also willing to support the Federal 
effort by overseeing a national grass-roots campaign to demonstrate the 
consumer market for PHEVs.
    Austin Energy's ``Plug-In Partners'' is an initiative to 
demonstrate to the automobile manufacturers that a consumer market 
already exists for PHEVs. Utility rebates and incentives, State, county 
and municipal government endorsements, and citizen petitions are 
evidence of an expanding interest in PHEVs. A key aspect of the Plug-In 
Partners campaign is the ``soft'' fleet orders. Fleet owners, both 
private and governmental, sign a pledge to strongly consider purchasing 
a certain number of PHEVs when available from an original equipment 
manufacturer. While the fleet owner understands that the cars are not 
presently on line, the belief in the concept of a PHEV is sufficient 
for them to make the soft fleet order. This helps demonstrate a market 
to automakers. A number of such orders have been obtained.
    Austin Energy's Plug-In Partners campaign was announced nationally 
on January 24, 2006 at the National Press Club in Washington, DC. 
Senator Orrin Hatch of Utah spoke of the importance of PHEVs to ending 
our reliance on foreign oil. On behalf of Governor Pataki of New York, 
Charles Fox, Deputy Secretary for Energy & Environment offered support 
for the campaign. The Plug-In Partners campaign has been joined by the 
cities of Austin, Baltimore, Boston, Dallas, Denver, Kansas City, Los 
Angeles, Oakland, Philadelphia, Phoenix, Salt Lake, San Francisco and 
Seattle. The New York State Energy & Research Development Authority 
(NYSERDA), American Corn Growers Association, Soybean Producers of 
America, Alliance To Save Energy, American Council on Renewable Energy, 
Energy Future Coalition, Environmental and Energy Study Institute, 
Center for American Progress and Set America Free are among the many 
public interest groups that are members of the coalition. Finally, 
Plug-In Partners have been endorsed by the American Public Power 
Association and many of its members around the country as well as the 
Edison Electric Institute.
    Austin Energy has also committed $1 million for rebates to Austin 
Energy customers who purchase plug-in hybrids when they become 
available.
    The Congress, by funding DOE initiatives to develop and deploy 
PHEVs, will help ensure the success of the Austin Energy Plug-In 
Partner campaign and will be a significant step in lessening American 
dependence on imported oil.
                                 ______
                                 
      Prepared Statement of the Coal Utilization Research Council

    CURC submits this testimony in support of increasing the DOE's 
fossil energy budget by the following: coal R&D $31.8 million; CCPI 
$145.0 million; FutureGen $54.0 million, in new appropriations.
    Technology has facilitated a successful environmental 
transformation of the coal-based power industry, and all of this has 
been accomplished while maintaining the benefits of reliability and 
affordability. Improvements in technology have allowed dramatic 
reductions in emissions while providing consumers with some of the 
lowest cost electricity in the world. Many of these technology 
solutions emerged through an unprecedented collaboration between the 
public and private sectors, commonly cited as the ``Clean Coal 
Technology Program.'' For the past 20 years, this program has included 
two fundamental components:
  --A basic research and development activity that was primarily 
        government funded, and that took new ideas in the use of coal 
        to a ``proof of concept'' level, and
  --A program which has been approximately two-thirds private sector 
        funded, that took these concepts and demonstrated their 
        viability in first-of-a-kind commercial scale facilities, 
        through a program currently labeled the ``Clean Coal Power 
        Initiative'' and formerly referred to as the Clean Coal 
        Technology demonstration program.
    These two programs have created new generations of technologies 
that are cheaper and more effective in addressing the environmental 
concerns that pose barriers to continued or expanded use of coal in the 
United States. The benefits of these programs have been large. For 
example, just one technology--low NOX burners--went from a 
concept in the 1980's to commercial demonstration in the 1990's and is 
now installed on almost all coal-fired power plants in the United 
States. The National Academy of Sciences concluded that nitrogen oxide 
and sulfur dioxide control technology programs had achieved significant 
success: ``The resulting environmental savings translated to more than 
$60 billion in damage and mitigation costs that were avoided''.\1\ The 
General Accounting Office concluded that: ``This [Clean Coal 
Technology] program serves as an example to other cost-share programs 
in demonstrating how the government and private sector can work 
effectively together to develop and demonstrate new technologies.'' \2\
---------------------------------------------------------------------------
    \1\ News Release by the National Academies, accompanying 
publication of NAS report reviewing the DOE research program, July 17, 
2001.
    \2\ Statement of Jim Wells, Director, Natural Resources and 
Environment, GAO, before the Subcommittee on Energy, Committee on 
Science, House of Representatives, June 12, 2001.
---------------------------------------------------------------------------
    The technology development program at the Office of Fossil Energy 
has received broad recognition for its contributions to the Nation, 
including numerous ``Power Plant of the Year'' awards from Power 
magazine, ``Top 100'' awards from R&D magazine, and citations from the 
National Society of Professional Engineers. Power magazine called the 
development of fluidized bed coal combustors ``the commercial success 
story of the last decade in the power generation business.''
    The benefits that will flow to the Nation from the use of coal for 
power production have been projected at over $400 billion in gross 
output in 2010.\3\ Other benefits are less easily quantified but are no 
less real, and include energy security, national security, and a degree 
of freedom for the U.S. Government to make geopolitical policy 
decisions not based, in part, upon the political preferences of oil 
exporting nations. Two hundred years' supply of currently recoverable 
coal (at current rates of consumption) gives the United States a high 
degree of security if we choose to fully exploit this advantage.
---------------------------------------------------------------------------
    \3\ ``The Economic Impact of Coal Utilization in the Continental 
United States'', A. Rose, PhD, Pennsylvania State University, 2002.
---------------------------------------------------------------------------
    The potential for coal to help in meeting the Nation's future 
energy needs is almost unlimited. Coal can continue to provide clean, 
low-cost electricity. Coal can also provide a feedstock for production 
of chemicals and transportation fuels, and helps provide a low cost 
bridge to a hydrogen-based future economy. However, coal faces new 
environmental challenges: mercury control and carbon control. The 
formula that worked for previous environmental challenges--developing 
cost-effective technologies to address emissions control--will work in 
overcoming these new challenges as well. But it will be difficult for 
coal's benefits to reach their potential without a continuing 
partnership between the government and the private sector.
    As discussed below, CURC believes that the administration's fiscal 
year 2007 budget request for research, development and demonstration of 
needed coal technologies is insufficient to allow the Nation to reap 
the benefits that can flow from expanded use of coal to meet our energy 
needs.

                   THE CLEAN COAL TECHNOLOGY ROADMAP

    The CURC and the Electric Power Research Institute (EPRI) in 
consultation with the DOE, have developed a clean coal technology 
roadmap (see CURC website at www.coal.org). The roadmap identifies a 
variety of research, development and demonstration priorities that, if 
pursued, could lead to the successful development of a set of coal-
based technologies that will be cost-effective, highly efficient and 
achieve greater control of air and water emissions compared to 
currently available technology. The roadmap outlines the technology 
steps necessary in order to achieve these goals. In addition, 
recognizing the ongoing concerns regarding global climate change, the 
roadmap includes a technology development program for carbon 
management, defined as the capture and sequestration (long-term 
storage) of carbon dioxide. In the event public policy requires 
CO2 management at some future time, pursuit of the RD&D 
program outlined in the Roadmap will best ensure that cost-effective 
technologies will be under development or already developed. CURC is 
not alone in the belief that these carbon management technologies merit 
continued Federal support. In a report concluded in 2005, the National 
Research Council of the National Academies concluded that prospective 
benefits of the DOE carbon sequestration research program would likely 
total $35 billion, if the Nation decided that carbon mitigation 
measures were necessary.\4\
---------------------------------------------------------------------------
    \4\ ``Prospective Evaluation of Applied Research and Development at 
DOE'', NRC, p. 43, 2005.
---------------------------------------------------------------------------
    Importantly, CURC and EPRI use a ``portfolio'' approach and 
advocate several technology development ``pathways'' that should be 
pursued concurrently to achieve the roadmap goals. As an example, the 
Nation should pursue both gasification and combustion-based technology 
paths.

                    CONCLUSIONS AND RECOMMENDATIONS

    Using the roadmap as a tool to guide our Nation's coal research and 
development (R&D) efforts, CURC has examined the fiscal year 2007 
budget request for coal and submits the following recommendations.
  --The funding proposed for the Clean Coal Power Initiative (CCPI), $5 
        million in fiscal year 2007, is wholly inadequate to meet the 
        needs that this program was created to address. The most 
        critical challenges facing coal use today are near- and longer-
        term environmental constraints, particularly mercury control 
        and the possible requirements to capture and store 
        CO2. The CCPI is needed to ensure the demonstration 
        of advanced mercury control technologies, the demonstration of 
        advanced power cycles that provide significantly greater 
        efficiency in the conversion of coal to useful energy or 
        products (thereby preventing CO2 emissions) and the 
        demonstration of first generation CO2 capture and 
        storage technologies, both for conventional coal systems and 
        advanced combustion and gasification based systems. 
        Oxycombustion, advanced scrubbers and chemical looping are 
        examples of some of the important combustion-related carbon 
        management systems under development.
      With respect to mercury control technologies, thanks to an 
        extremely successful program to develop and field test a number 
        of improved mercury control technologies, we are now in a 
        position to conduct commercial-scale, multi-year demonstrations 
        of those technologies. Time for this activity is critical, as 
        technologies will be needed to comply with the second phase of 
        EPA's mercury emission limits in 2018, and will probably be 
        needed on some new coal-based power plants prior to that date.
      It should be noted that the administration's budget documents 
        justified cuts in the CCPI program by alleging mismanagement by 
        the Department. Frankly, we do not understand this opposition 
        by OMB, particularly when the accomplishments of the 
        demonstration program have been so substantial, and when global 
        accolades for DOE's program successes have been so prevalent. 
        Funds appropriated for the CCPI program have been committed, 
        perhaps not all under contract or spent, but committed to clean 
        coal projects. Complex projects with estimated costs exceeding 
        tens of millions of dollars will require significant periods of 
        time to negotiate; none of this should be surprising. Indeed, 
        one of the largest CCPI awarded projects, the Southern Company 
        Transport Gasifier (IGCC) project with a total estimated cost 
        of more than $550 million and a DOE cost share of $235 million 
        was negotiated in 16 months and the project is underway.
    CURC recommends that the funding for CCPI in fiscal year 2007 be 
        increased to $150 million. Combined with other resources 
        available to the program, this could be sufficient to allow a 
        solicitation for technology proposals in late 2006 or early 
        2007.
  --The roadmap recognizes the benefits to technology development that 
        the FutureGen project can provide and the CURC supports this 
        important R&D program that can serve as a test bed for 
        demonstrating technologies developed out of the DOE's R&D 
        projects. To succeed as originally envisioned, basic R&D 
        activities must continue to provide the technology components 
        needed in FutureGen, like lower cost oxygen production systems, 
        cheaper synthesis gas cleanup, and hydrogen-capable combustion 
        turbines. This world class project will require a long term and 
        substantial financial commitment from the Federal Government. 
        The administration seeks to use ``old'' and previously 
        appropriated funds to support FutureGen in fiscal year 2007. 
        These previously appropriated funds ($54.0 million) along with 
        $203 million in other appropriations also previously 
        appropriated should be set aside for use in later years when 
        the critical and expensive construction stage of the project is 
        undertaken. The $54.0 million requested in fiscal year 2007 
        should be provided as new appropriations.
  --Recognizing that the current fiscal situation is extremely 
        difficult and that many worthy government programs have been 
        reduced, some dramatically, the basic R&D funding levels 
        identified within the CURC/EPRI Roadmap can generally be met 
        within the totals that the Congress enacted and the President 
        signed into law as part of the fiscal year 2006 appropriations 
        bill for energy and water. The Congressional amounts (minus 
        appropriations for ``program direction'') enacted in fiscal 
        year 2006 for the DOE's coal R&D program was $297.1 million. 
        CURC is recommending a total increase of $31.8 million to the 
        amounts requested in the fiscal year 2007 budget. Adoption of 
        these recommended increases would result in a total fiscal year 
        2007 budget of $302.8 million which is slightly above amounts 
        enacted in fiscal year 2006. In those coal R&D programs not 
        recommended for additional funding in fiscal year 2007, CURC 
        emphasizes that funding is adequate and that no funds should be 
        taken from these programs. The specific recommendations are:
    --Advanced Turbines.--This program, funded at $12.8 million in the 
            DOE's fiscal year 2007 request, should be funded at $25.0 
            million. The additional resources are needed to ensure that 
            the development of the hydrogen turbine remains on schedule 
            as well as development of other advanced turbines. In both 
            instances, such turbines are essential if carbon 
            constraints are imposed. It should also be noted that 
            hydrogen turbines are an important component of FutureGen.
    --Innovations for Existing Plants.--Much progress has been made in 
            developing and deploying technologies to reduce emissions 
            from existing coal-fired power plants. However, we need to 
            focus additional attention on mercury emissions control, 
            fresh water consumption, solid waste generation, and 
            overall efficiency improvements at these plants. Efficiency 
            improvements achieved through application of advanced 
            technologies will reduce carbon dioxide emissions as well 
            as other emissions. An additional $6.4 million is 
            recommended for the Innovations for Existing Plants budget 
            line. The additional funds would allow continued and 
            accelerated progress particularly on mercury control 
            technologies.
    --Advanced Research.--This program should receive an additional 
            $8.4 million to support the on-going ultra-supercritical 
            materials consortium as well as DOE support to university 
            coal research programs.
    --Coal-derived Fuels and Liquids.--CURC supports the DOE hydrogen 
            program as coal will be a major fuel source if we 
            transform, in part, to a hydrogen-based economy. However, 
            we believe that the fossil energy fuels and liquids program 
            should also focus on methods to reduce the cost of 
            facilities to manufacture coal to fuels or liquids. A total 
            of $5.0 million in additional funding for this area is 
            recommended. These additional funds should be made 
            available for development of advanced catalysts and 
            processes, reactor design, fuel property modification as 
            well as system and design studies focused upon coal-to-
            liquids plant economics, operability and size of facilities 
            to achieve widespread application of coal-to-liquids 
            conversion technology in all regions of the United States. 
            In addition, we are very concerned that on-going hydrogen 
            studies at DOE are not being fully coordinated with the 
            fossil energy office. Congress should insist that fossil 
            energy be fully consulted and that any outside peer review 
            of hydrogen R&D programs include reviewers designated by 
            the fossil energy office.
    In summary, CURC believes that coal can play a vital role in 
helping America meet its needs for reliable and affordable energy, but 
only if a continuing commitment to technology development allows coal 
to overcome remaining environmental challenges. The fiscal year 2007 
budget request does not reflect such a commitment. Congress must 
restore funding to the CCPI technology demonstration program and also 
ensure that the FutureGen program is adequately and fully funded. In 
addition, modest adjustments to the basic R&D program are appropriate. 
A table summarizing these recommendations by CURC is attached to this 
statement.
                                 ______
                                 
           Prepared Statement of the Nuclear Energy Institute

    On behalf of the nuclear energy industry, thank you for your 
oversight of the Federal Government's used nuclear fuel management 
program and funding for the Department of Energy's (DOE) nuclear 
technology-related programs. My statement for the record addresses 
three key points:
  --Congress should fully fund the Yucca Mountain program to provide 
        secure, environmentally responsible management of used nuclear 
        fuel.--NEI recommends that the program be funded at the 
        President's request of $544.5 million to enable DOE to submit a 
        license application for Yucca Mountain to the Nuclear 
        Regulatory Commission (NRC) next year.
  --The industry urges continued support for DOE's nuclear energy 
        programs at $560 million.--NEI supports higher funding for 
        DOE's Office of Nuclear Energy, Science and Technology to 
        support the new Global Nuclear Energy Partnership and sustain 
        existing programs. To achieve its objectives, DOE must have 
        additional funding for Nuclear Power 2010, Generation IV 
        reactor programs and the Nuclear Hydrogen Initiative. We 
        strongly recommend full restoration of the University 
        Infrastructure and Assistance Program along with continued 
        funding for the Nuclear Energy Research Initiative and 
        initiating the Nuclear Energy Systems Support Program.
  --The NRC's budget request of $777 million should be reviewed for 
        efficiencies.--NEI urges Congress to thoroughly examine the 
        NRC's budget increased budget request to ensure proper resource 
        allocation and to recognize reduced demands due to delays in 
        Yucca Mountain licensing.
    The Nuclear Energy Institute is responsible for developing policy 
for the U.S. nuclear energy industry. NEI's 250 corporate and other 
members represent a broad spectrum of interests, including every U.S. 
utility that operates a nuclear power plant. NEI's membership also 
includes nuclear fuel cycle companies, suppliers, engineering and 
consulting firms, national research laboratories, manufacturers of 
radiopharmaceuticals, universities, labor unions and law firms.
    The nuclear industry generates electricity for one of every five 
U.S. homes and businesses, and is taking steps to develop affordable, 
reliable and clean electricity for the future. Nuclear energy is a 
vital component of a diverse energy portfolio that enhances America's 
energy security and fuels economic growth. We applaud the efforts and 
actions of this committee in recognizing nuclear energy as an important 
part of a diverse, competitive and secure energy policy for generations 
to come.

 INDUSTRY SUPPORTS BUDGET REQUEST OF $544.5 MILLION FOR YUCCA MOUNTAIN

    The nuclear industry appreciates the strong support and leadership 
that the Congress has provided on the Yucca Mountain repository 
program. The Federal Government is already 8 years behind on its 
commitment to start moving used nuclear fuel from temporary storage at 
nuclear power plants across the Nation to a Federal repository. Under 
the most optimistic scenario, it will be several more years before the 
repository is licensed and operating. Since 1983, consumers of 
electricity from nuclear power plants have committed nearly $23 billion 
in fees and interest to cover the costs of this program, and the 
Nuclear Waste Fund balance is more than $20 billion.
    The Federal Government taking title to and moving used fuel away 
from reactor sites, along with quantifiable progress on Yucca Mountain, 
are top priorities for the nuclear industry. Continued progress toward 
a used fuel management solution is important for building new nuclear 
plants that will maintain nuclear energy as a key component of our 
Nation's energy production mix throughout the 21st century.
    DOE recently completed a thorough review of the Yucca Mountain 
program and has outlined needed improvements in the program. The 
agency's recent re-organization and lead laboratory designation are 
steps in that direction. We are encouraged that the department's 
leadership now has the necessary focus to move the program forward. The 
program shift toward a new fuel handling approach has promise to better 
facilitate licensing and operation of the facility.
    The Secretary of Energy recently testified before Congress that the 
agency this summer will provide a schedule for submitting a license 
application for Yucca Mountain to the Nuclear Regulatory Commission, 
and for repository construction and operation. The industry strongly 
believes that it is critical that DOE meet this commitment. In 
particular, it is imperative that a high-quality license application be 
submitted as soon as practicable to demonstrate measurable progress on 
this critical program. There will be ample opportunity going forward 
for additional detail to be provided by DOE.
    In order for this progress to be accomplished, we fully support the 
administration's $544.5 million request for the Office of Civilian 
Radioactive Waste Management. This funding level is necessary for DOE 
to complete a high quality license application and prepare to defend it 
in the NRC licensing process, to improve existing Yucca Mountain site 
infrastructure and develop new infrastructure, and for repository 
facilities design. We also welcome Secretary Bodman's statement that he 
reserves the right to adjust the funding request in light of the 
program schedule plan that will be completed over the next few months.
    The industry also supports legislative action by Congress to 
address regulatory, long-term funding and other issues to allow the 
department to move forward with this project. We look forward to 
working with the committee now that the administration has forwarded 
its legislative recommendations to Congress.
    The nuclear industry has consistently supported, including in 
testimony before this committee, research and development of advanced 
fuel cycle technologies incorporated in the Advanced Fuel Cycle 
Initiative (AFCI). In anticipation of a major expansion of nuclear 
power in the United States and globally, it is appropriate to 
accelerate activities in this program. The renaissance in development 
of nuclear energy requires advanced fuel cycles in the future.
    President Bush has presented a compelling vision for a global 
nuclear renaissance through the Global Nuclear Energy Partnership 
(GNEP). This initiative provides an important framework to address 
challenges for nuclear power development related to fuel supply, long-
term radioactive waste management and proliferation concerns.
    We recognize that the Congress has important questions regarding 
this program. The industry believes that the near term focus for GNEP 
is for DOE to determine, by 2008, how to proceed with demonstration of 
advanced recycling technologies and other technological challenges. 
Consequently, the industry fully supports increased funding for the 
Advanced Fuel Cycle Initiative in fiscal year 2007. However, neither 
AFCI, nor GNEP reduces the immediate near-term imperative for progress 
on Yucca Mountain.

       RESEARCH AND DEVELOPMENT NECESSARY FOR NEW NUCLEAR ENERGY

    The Nation needs new electricity capacity. The Energy Information 
Agency forecasts that demand for electricity will grow by more than 40 
percent over the next 25 years. Simple maintaining nuclear energy as 20 
percent of U.S. electricity supply (its current share) will require 
construction of 50,000 megawatts (40-50 large plants) of new nuclear 
plants by 2030. DOE and the industry are working on cost-shared 
programs that will ready new nuclear energy technology for the 
marketplace midway through the next decade. Within the Nuclear Power 
2010 program, funding should be allocated for demonstrating NRC 
licensing processes for new nuclear plants, including those for early 
site permits and the combined construction and operating license. The 
industry remains fully committed to this initiative and strongly 
recommends increasing funding to $110 million \1\ to meet the schedule 
for completion.
---------------------------------------------------------------------------
    \1\ The $110 million is necessary to sustain progress with the NP 
2010 program, and is exclusive of any projected carry-over of the DOE 
fiscal year 2006 budget that may or may not be available for fiscal 
year 2007.
---------------------------------------------------------------------------
    The industry believes that the government has a limited, early role 
in bringing advanced reactor concepts--Generation IV reactors--to the 
marketplace. NEI urges the committee's support for the development of a 
next-generation nuclear plant at the Idaho National Laboratory, funded 
through the Generation IV Nuclear Energy Systems Initiative program at 
$100 million. The industry also supports the Nuclear Hydrogen 
Initiative at $30 million.
    Although DOE continues to fund the International Nuclear Energy 
Research Initiative (I-NERI), the domestic version of this program 
(NERI) has been superseded by a new initiative that continues the basic 
science of NERI under other DOE nuclear energy programs. The industry 
believes a collaborative basic science program between national 
laboratories, industry and universities like NERI should be continued 
in fiscal year 2007.
    Congress authorized the Nuclear Energy Systems Support program as 
part of the Energy Policy Act of 2005, but DOE proposed no funding for 
the program in fiscal year 2007. The industry supports this new program 
and suggests $15 million to fund an analysis of high performance fuel 
at the Idaho National Laboratory. Future budgets for this program could 
focus on developing technology to predict and measure the effect of 
aging on plant systems and components; and introducing new metals and 
other materials to assure the safety of key systems and components.
    The industry also strongly recommends restoration of DOE's 
University Infrastructure and Assistance Program, which provides for 
vital research and educational programs in nuclear science at the 
Nation's colleges and universities. The global nuclear renaissance will 
demand highly educated and trained professionals in the engineering 
sciences. NEI also encourages the committee to consider supporting a 
new program within the Office of Science that encourages support for 
undergraduate and graduate programs in health physics, radiochemistry 
and other disciplines important to medical, energy and other 
applications of commercial nuclear technology.

               NRC BUDGET AND STAFFING SHOULD BE REVIEWED

    The NRC's proposed fiscal year 2007 budget totals $777 million, an 
increase of $35 million from the fiscal year 2006 budget, and the 
highest ever for this agency. Six years ago, the NRC's budget was $488 
million. This is an appropriate time for Congress to review the budget 
request and resource allocations in light of current demands and the 
other resources available.
    The NRC's fiscal year 2006 budget request of $702 million was 
increased by $41 million by Congress for two purposes. The commission 
was allocated an additional $20 million to fund an investment ``over 2 
years'' to support the preparatory activities and pre-application 
consultations for the expected combined construction and operating 
license applications beginning in fiscal year 2008. The NRC also was 
provided $21 million to be used to conduct ``site specific assessments 
of spent fuel pools at each of the nuclear reactor sites.'' Although 
Congress clearly established a limited period for funding in these two 
categories, the NRC has incorporated these amounts into its budget 
baseline.
    As a result of the significant increases in the NRC's budget, 
licensee fees have increased dramatically. Generic licensee fees for 
each reactor will increase from $3.1 million to more than $3.6 million. 
When other NRC fee increases specific to each reactor are included for 
licensees, NRC fees for power reactors will increase by over 20 percent 
in 1 year.
    The NRC's fiscal year 2007 budget request includes $35.3 million 
for generic homeland security costs. Section 637 of the Energy Policy 
Act of 2005 modified the NRC's user fee to exclude the costs of generic 
homeland security from fees recovered from licensees, except 
reimbursable costs of fingerprinting and background checks and the 
costs of conducting security inspections. The NRC's budget proposal 
includes more than $70 million for homeland security functions. Section 
637 requires that only a portion of the NRC's budget for this function 
be supported by general funds. The industry agrees that certain NRC 
security functions are for the common defense of the Nation and should 
be funded from general funds.
    America's nuclear power plants were the most secure U.S. industrial 
facilities before the Sept. 11, 2001, terrorist attacks, and are even 
more secure today. Over the past 5 years, the nuclear industry has made 
significant improvements in security at nuclear power plants. The NRC 
substantially upgraded its security requirements in 2002 and again in 
2004. The industry has invested more than $1.2 billion in security-
related improvements and has increased its security guard forces from 
around 5,000 to more than 7,000. Security at commercial nuclear 
facilities is unmatched by any other private sector or area of the 
critical infrastructure, and the nuclear industry has been a leader in 
working with the Department of Homeland Security and other Federal and 
State resources on security issues.

               INDUSTRY SUPPORT FOR ADDITIONAL ACTIVITIES

    Nuclear Nonproliferation.--The industry urges the committee to 
support the President's request for the MOX project, which is a vital 
element of U.S. nonproliferation activities. This year is particularly 
crucial to the project because construction is scheduled to begin.
    Low-Dose Radiation Health Effects Research.--The industry supports 
continued funding for the DOE's low-dose radiation research program.
    Nuclear Research Facilities.--The industry is concerned about the 
declining number of nuclear research facilities, and urges the 
committee to fully fund DOE's lead laboratory in Idaho for nuclear 
energy research and development.
    Uranium Facility Decontamination and Decommissioning.--The industry 
fully supports cleanup of the gaseous diffusion plants at Paducah, KY; 
Portsmouth, OH; and Oak Ridge, TN. Commercial nuclear power plants 
contribute more than $150 million each year to the Decontamination and 
Decommissioning Fund for government-managed uranium enrichment plants. 
Other important environmental, safety and/or health activities at these 
facilities should be funded from general revenues.
    International Nuclear Safety Program and Nuclear Energy Agency.--
NEI supports the funding requested for the DOE and NRC international 
nuclear safety programs. They are programs aimed at improving the safe 
commercial use of nuclear energy worldwide.
    Medical Isotopes Infrastructure.--The nuclear industry supports the 
administration's program for the production of medical and research 
isotopes.
                                 ______
                                 
Prepared Statement of the External Advisory Committee to the Department 
 of Petroleum and Geosystems Engineering, University of Texas at Austin

    The External Advisory Committee to the University of Texas at 
Austin Department of Petroleum and Geosystems Engineering is gravely 
concerned that the administration's fiscal year 2007 budget request 
eliminates funding for the Department of Energy's oil and natural gas 
technologies budget. We respectfully urge you to restore funding to at 
least the fiscal year 2006 appropriated level of $64 million.
    Many have tried to label this appropriation as corporate welfare 
for ``big oil.'' Nothing could be further from the truth. DOE's oil and 
natural gas technologies budget ensures that all Americans benefit from 
the technological advances necessary to produce America's ever more 
marginal oil and natural gas reserves.
    This Draconian cut has a severe negative effect on the University 
of Texas' ability to produce quality petroleum engineers that this 
Nation so desperately needs. Department Chairman Bill Rossen informs me 
that more than half of the university's petroleum engineering research 
dollars would be eliminated if the program's budget were to be zeroed 
out. I can attest that the cut's effect on the Nation's other 15 
petroleum engineering schools would be similar.
    The External Advisory Committee that I chair is made up of oil and 
gas leaders throughout the country. We already provide significant 
support to the University of Texas at Austin and other similar research 
institutions. But more help is needed.
    We are advised that the Department of Energy office of fossil 
energy already has in place safeguards to ensure that its research 
dollars are not giveaways or welfare checks to oil and gas companies, 
but rather support critical research and development efforts that are 
not otherwise taking place. We respectfully suggest that Congress could 
mandate the development of similar safeguards as a condition of this 
appropriation.
    Public domain oil and natural gas technology research is a vital 
public policy interest of the United States that merits a Federal 
appropriation. Such research ensures the continued vitality of our 
academic institutions. It provides the technology development needed to 
supply America's energy into the future. It strengthens the American 
economy and our way of life, and it upholds America's energy security.
    Thank you for your support of this critical appropriation request.
                                 ______
                                 
         Prepared Statement of the National Mining Association

                          NMA RECOMMENDATIONS

Department of Energy
    Office of Fossil Energy.--$54 million in new funds for the 
FutureGen Initiative; $257 million in previously appropriated funds 
should be designated for the FutureGen Initiative; $303 million for 
base coal research and development programs; and, $150 million for the 
Clean Coal Power Initiative (CCPI).
U.S. Army Corps of Engineers
    Civil Works Program.--See table below for NMA's list of priority 
projects and recommendations.

                               BACKGROUND

    Office of Fossil Energy.--The NMA strongly supports the $54 million 
in new funds for the FutureGen Initiative; recommends the rescission 
and advance appropriation of the entire $257 million in prior year 
Clean Coal Technology Program funds for FutureGen's use in the out 
years; and recommends at least $303 million be appropriated for base 
coal research and development programs. In addition, the Clean Coal 
Power Initiative (CCPI) should be funded at a level of $150 million; 
the Advanced Turbine program should be funded at $25 million; and the 
Advanced Separation Technologies should receive $3 million.
    The FutureGen Initiative will design and build, in the United 
States, a first-of-a-kind commercial-scale power plant that will 
provide the technological capability to: (1) capture and permanently 
store 90 percent or more of the plant's CO2 emissions; (2) 
power about 150,000 American homes with the clean electricity it 
generates from coal; and, (3) co-produce hydrogen and potentially other 
useful by-products from coal.
    Technological advancements achieved in the base coal research and 
demonstration programs such as gasification, advanced turbines, and 
carbon sequestration, provide the component technologies that will 
ultimately be integrated into the FutureGen project. NMA believes these 
programs should be funded at a level of at least $303 million. Within 
this amount, the advanced turbine program should be funded at $25 
million instead of the requested level of $13 million. The increase in 
funding will ensure the FutureGen project meets intended goals.
    In addition, NMA recommends a $3 million level of funding for the 
Center for Advanced Separation Technology (CAST), which is led by a 
consortium of seven universities with mining research programs. The 
advanced separations program conducts high-risk fundamental research 
which will lead to revolutionary advances in separation processes for 
the coal industry and develop technologies which crosscut the full 
spectrum of mining and minerals industries.

                      U.S. ARMY CORPS OF ENGINEERS

    Civil Works Program.--NMA reviewed the proposed fiscal year 2007 
request for the USACE's Civil Works Program and supports the request 
for additional expenditures from the Inland Waterway Users Fund and the 
strategy to accelerate high-priority projects that provide benefits to 
the Nation. However, NMA is very concerned that the proposed fiscal 
year 2007 budget does not provide sufficient funding to keep critical 
navigation projects on schedule, allow for the start of new projects, 
and address the maintenance backlog for existing navigation projects. 
Therefore, NMA provides the following recommendations:
  --A minimum of $5.5 billion should be appropriated in fiscal year 
        2007 for the Civil Works Program. This level balances the need 
        to address the significant project backlog and the capability 
        of the Corps with our Nation's needs for jobs, economic growth, 
        homeland security and national defense.
  --The effort to develop criteria for budgeting purposes is long 
        overdue. However, NMA is very concerned that the use of 
        performance-based budgeting, and specifically the performance 
        budgeting tool Remaining Benefit/Remaining Cost (RB/RC) ratio, 
        will have significant impacts on project appropriations. The 
        navigation projects span many years and the benefits for many 
        of the projects are not realized until completion. In addition, 
        the lack of sufficient funding levels needed to keep projects 
        on schedule compounds the impact. NMA does not support the 
        administration's proposals for zero funding for the Kentucky 
        River Lock and J.T. Myers Lock and Dam projects that are 
        currently under construction. In the case of the Kentucky lock, 
        more than 25 percent of the total project cost has been spent.
    The fiscal year 2007 appropriations for the Corps' General 
Investigations account should be increased from $95 to $200 million. 
These studies are critical to ascertaining and developing future 
projects.
    The fiscal year 2007 proposed funding in the amount of $2.258 
billion for the Corps' Operations and Maintenance (O&M) functions 
should be increased. More than half of the locks are more than 50 years 
old and in need of significant maintenance. Delaying necessary 
maintenance impacts the ability to move commerce efficiently, 
exacerbates further deterioration and accelerates the need for major 
rehabilitation and possibly at higher costs than necessary. The current 
backlog of critical maintenance for navigation is estimated to be more 
than $600 million. The replacement value of the lock and dam facilities 
in the United States are estimated to be $125 billion. As a Nation, we 
cannot abandon our inland waterway system and we must increase the 
monies spent on O&M.
    Below is a table indicating NMA's Fiscal Year 2007 Priority 
Projects.

                                     NMA FISCAL YEAR 2007 PRIORITY PROJECTS
----------------------------------------------------------------------------------------------------------------
                                                                                                    Fiscal Year
                                                                    Fiscal Year     Fiscal Year   2007 Efficient
                                                                   2006 Enacted   2007 Requested   Funding Level
----------------------------------------------------------------------------------------------------------------
Construction:
    Robert C. Byrd Locks and Dams Ohio River, OH/WV.............        $914,000      $1,800,000      $1,800,000
    Kentucky River Lock Addition, Tennessee River, KY...........      23,000,000  ..............      55,000,000
    Marmet Locks and Dams, Kanawha River, WV....................      73,500,000      50,800,000      50,800,000
    McAlpine Locks and Dams, Ohio River, IN/KY..................      70,000,000      70,000,000      70,000,000
    Locks and Dams 2, 3, 4, Monongahela River, PA...............      50,800,000      62,772,000      62,800,000
    J.T. Myers Locks and Dams, Ohio River, IN/KY................         700,000  ..............       9,000,000
    Olmsted Locks and Dams, Ohio River, IL/KY...................      90,000,000     110,000,000     110,000,000
    Winfield Locks and Dams, Kanawha River, WV..................       2,400,000       4,300,000       4,300,000
    Emsworth Dam, Ohio River, PA................................      15,000,000      17,000,000      17,000,000
Investigations:
    Greenup Locks and Dam, KY and OH............................         225,000  ..............       4,000,000
    Emsworth, Dashields & Montgomery (Upper Ohio River).........       1,275,000  ..............       4,000,000
----------------------------------------------------------------------------------------------------------------

    Regulatory Program.--NMA supports the administration's request of 
$173 million for administering the Corps' Clean Water Act (CWA), 
Section 404 permit program and for implementing the Memorandum of 
Understanding (MOU).
    The Regulatory Branch plays a key role in the U.S. economy since 
the Corps currently authorizes approximately $200 billion of economic 
activity through its regulatory program annually. The ability to plan 
and finance mining operations depends on the ability to obtain Clean 
Water Act Section 404 permits issued by the USACE within a predictable 
timeframe. In addition, NMA recommends that a portion of such 
regulatory program funding be used for implementing the MOU issued on 
February 10, 2005 by the U.S. Army Corps of Engineers, the U.S. Office 
of Surface Mining, the U.S. Environmental Protection Agency, and the 
U.S. Fish and Wildlife Service. This MOU encourages a coordinated 
review and processing of surface coal mining applications requiring CWA 
Section 404 permits.
    The National Mining Association (NMA) represents producers of over 
80 percent of the coal mined in the United States. Coal continues to be 
the most reliable and affordable domestic fuel used to generate over 50 
percent of the Nation's electricity. NMA members also include producers 
of uranium--the basis for 20 percent of U.S. electricity supply. NMA 
represents producers of metals and minerals that are critical to a 
modern economy and our national security. Finally, NMA includes 
manufacturers of processing equipment, mining machinery and supplies, 
transporters, and engineering, consulting, and financial institutions 
serving the mining industry.
                                 ______
                                 
     Prepared Statement of the National Community Action Foundation

    Mr. Chairman, and members of the subcommittee, the National 
Community Action Foundation represents the 760 local Community Action 
Agencies (CAAs) that deliver most of the Weatherization Assistance 
Program investments.
    We are requesting that the subcommittee reject the President's 
request that slashes the program by 33 percent in fiscal year 2007 and 
shuts it down over the next 3 years. We urge you, at the very least, to 
maintain the program at its fiscal year 2006 level. (The program could 
quickly ramp up its work if the subcommittee decides to provide a 
substantial and sustained increase, but we certainly recognize the 
budgetary realities Congress faces for fiscal year 2007.)
    We were astonished that the administration retreated from 5 years 
of advocating for increased Weatherization funding just when oil and 
natural gas prices reached record highs. The 2007 budget request 
reduces Weatherization and other programs but increases subsidies to 
long-term technology development by corporate-academic-government 
research partnerships. We cannot dispute the need for engineering and 
basic research, but we seriously question whether it can only proceed 
if funding can be taken from low-income homes.
    The cut will deny about 26,000 households the lasting and immediate 
bill reductions they expected to receive next year, after being wait-
listed for ``their turn'' for several years. The planned termination of 
the program by 2010 will mean the difference between sickness and 
health and between stability and homelessness for millions of consumers 
now eligible for this important assistance. These sad effects will be 
realized decades before the new energy economy provides any relief. It 
is an unnecessary sacrifice.
    The planned termination of the program means a cadre of thousands 
of skilled workers which is ready now to put the best available tools, 
new techniques and state-of-the art insulating materials and equipment 
in hundreds of thousands of buildings, will be diverted to the 
conventional construction work they perform when not delivering 
Weatherization today. Two decades of Federal investment in training and 
new materials may be lost.
    As you are aware, even the administration has not retreated from 
its conviction that Weatherization operates efficiently and produces 
solid results in energy savings, safer homes and lower bills. In fact, 
the Secretary issued the following statement on April 3, 2006:

    ``Washington, DC.--U.S. Department of Energy (DOE) Secretary Samuel 
W. Bodman today announced $140.3 million in weatherization program 
grants to 31 States and the Navajo Nation to make energy efficiency 
improvements in homes of low-income families; weatherization can reduce 
an average home's energy costs by $358 annually. Total fiscal year 2006 
funding is $243 million and will provide weatherization to 
approximately 96,560 homes. `Weatherizing your home is a valuable way 
to save energy and money,' Secretary Bodman said. `The Department of 
Energy's weatherization program will help nearly 97,000 families make 
their homes more energy efficient.'
    ``For every dollar spent, weatherization returns $1.53 in energy 
savings over the life of the measures. DOE's weatherization program 
performs energy audits to identify the most cost-effective measures for 
each home, which typically includes adding insulation, reducing air 
infiltration, servicing heating and cooling systems, and providing 
health and safety diagnostic services. Other benefits of weatherization 
include increased housing affordability, increased property values, job 
creation, lower owner and renter turnover, and reduced fire risks.''

    There was strong Senate support for the Energy Policy Act when it 
passed not even 1 year ago; it not only preserved, it more than 
doubled, the authorized size of the Weatherization program by 2008. 
That Act signaled to the hundreds of thousands of low-income Americans 
on waiting lists for our energy services that the Congress is not only 
committed to incentives for long-term technological advances that 
transform our infrastructure; it sent the message that Congress intends 
to offer them effective permanent relief by reducing improving their 
dilapidated, wasteful housing as soon as possible.
    Those weatherized in the past can expect their fiscal year 2006 
household energy bills will be $400 to $462 lowers than they would have 
been without the DOE program's investment. These average savings alone 
represent nearly a month's income to many of the elderly participants 
who rely solely on Supplemental Social Security, and are about one-
quarter of the energy bills that will drain the resources of the 
average un-weatherized low-income consumer over the course of this 
fiscal year. The Department of Energy figure of $358 is the multi-year 
average expected based on long-term price forecasts. In years like this 
one, extreme prices mean better protection for that Weatherized. 
Community Action Agencies are fully aware that the $600 million fiscal 
year 2008 authorization is really an indicator of the direction the 
Congress is committed to follow, not a funding level. We urge the 
subcommittee to stay the policy course laid out last summer by, at the 
very least, sustaining the Weatherization program.
    When our Nation first took controls off oil prices, and again when 
Americans were promised that electricity competition would drive the 
price of residential power down, an accompanying policy promise was 
that the poor would be protected from the risk of un-affordable energy. 
The promises have not been honored fully, but the Weatherization 
program, expanded as part of the original ``social bargain'' on energy 
in 1979, has evolved as a small but steady source of investment in 
lasting relief. The poor need Weatherization program investments for 
their houses because they lack the credit card, the savings, or the 
income to buy the home improvements that pay off steadily, year after 
year.
    This year, nearly all American consumers have needed relief from 
energy prices, and millions of homeowners installed more insulation, 
repaired air leakage, and upgraded to more efficient equipment to stay 
warm and to keep their electrical devices running at lower cost. We all 
know conservation is the best and quickest bill reduction strategy, and 
most of us can use our energy more carefully. However, the low-income 
consumers already use less than 80 percent of the home energy that the 
average American uses even though their homes burn about one-third more 
gas or heating oil per sq. ft. because of their age and poor quality. 
There is not as much margin for the poor to cut back before indoor 
temperatures become dangerously low or high in summer.
    Community Action's mission is to change the causes of poverty; 
wasteful and unhealthy housing can indeed be transformed by 
Weatherization, and CAAs consider it one of our most effective 
programs; it makes a lasting change for the family; it produces 
immediate reduction in energy bills, upgrades the building stock, and 
broadens the technical competence of the local building trades.
    We also request that the subcommittee take two further initiatives 
that impose no cost. They are to:
  --Request reporting from DOE that indicates how the Department is 
        fulfilling the many responsibilities it is assigned under the 
        statute following dramatic staffing reductions of the past 3 
        years and the reorganization expected on July 1, 2006, and
  --Consider proposing a role for the skilled Weatherization workforce, 
        when and if you review budgets for other Federal or State 
        programs that bring energy efficient materials and technology 
        to the residential market as a whole or to the task of building 
        affordable housing in the Gulf Coast communities. Weatherizers 
        are ready respond to energy-related consumer needs using other 
        funds, and they can do more. For example, tens of millions of 
        LIHEAP funds are spent to replace broken, dangerous and 
        wasteful furnaces and other equipment. A program to subsidize 
        more Energy Star equipment for low-income housing would soon 
        result in many safer, warmer homes and transform the market for 
        Energy Star equipment.
    Many Weatherization providers are already partners in community 
development projects that are using renewable funds and new efficient 
green construction techniques. Funding comes from private partners, 
State and Federal housing programs and State utility system benefit 
funds. In fact, Weatherization programs are able to win non-Federal 
funds and partners because of their capacity and their strict 
accountability, both products of the DOE program. We estimate our 
network of Weatherizers will have delivered $700 million in energy and 
housing services to the poor by the end of program year 2006, of which 
just over one-third comes from the core DOE program. This means 
Weatherization has the capacity to grow in response to the urgent 
national need to use energy more responsibly. The subcommittee's past 
support has already allowed the program to get more done in this 
program year and Weatherization providers look forward to as much 
responsibility as you can possible assign in the coming fiscal year.
                                 ______
                                 
        Prepared Statement of the National Hydrogen Association

    Chairman Domenici, Ranking Member Reid and honorable members of the 
committee, on behalf of the 100 members of the National Hydrogen 
Association (NHA), I would like to thank you for the opportunity to 
enter into the record testimony on the funding for hydrogen programs in 
the Department of Energy's fiscal year 2007 congressional budget 
request. For over 17 years, we have been an association dedicated to 
pursuing the research, development and demonstration of hydrogen and 
fuel cell technologies, leading to a firm basis for establishing and 
growing a commercial Hydrogen Economy.

                                SUMMARY

    My testimony will make the following points that reflect the NHA's 
policy priorities:
  --Full funding of the Technology Validation Program;
  --Full funding of the hydrogen provisions in the Energy Policy Act of 
        2005 (EPAct 05--Public Law 109-58);
  --Support for other enabling legislation and appropriations.

                     TECHNOLOGY VALIDATION PROGRAM

    The validation program has ambitious and critical goals concerning 
durability, vehicle range, storage, attainable hydrogen fuel cost, data 
reporting, technology evolution, renewable hydrogen feedstock 
generation, codes and standards coordination and public outreach. Teams 
combine the efforts of both vehicle manufacturers and energy companies 
in 5-year partnerships, along with several other research firms, 
universities and National Laboratories. Here is why DoE's validation 
program is so important:
  --The team projects involved in these ``Learning Demonstrations'' 
        include detailed concepts for diverse and flexible approaches 
        to vehicles, supply and infrastructure.
  --Unique, historic partnerships have been formed between fuel, auto, 
        and research firms--critical to reinventing new corporate 
        relationships and making new markets succeed.
  --The operational relationship between system components (hydrogen 
        supply, on-board storage, vehicle, fuel cell, drive train) has 
        to be learned in practice--it cannot be fully evaluated by 
        simulations or bench testing. Successful integration of new 
        components is difficult, and real problems must be solved in a 
        commercial operating environment.
  --Evolution of new technology is greatly assisted by bringing systems 
        out of the lab, punishing them under real conditions, remedying 
        the failures, and sending intractable problems back to the 
        lab--while redesigning new demos. The quest toward 
        commercialization will occur in many iterative steps.
  --If funding were to lag, the Federal Government might become a less 
        reliable partner, key parts of the partnerships could soften, 
        and the scale of U.S. activity could shrink toward marginal 
        ideas. The centroid of hydrogen development may move away from 
        the United States.

                      ENERGY POLICY ACT PROVISIONS

    Although the fiscal year 2007 budget request continues to build on 
the strong foundation of the President's Hydrogen Fuel Initiative--a 5-
year commitment expiring in 2008--EPAct 05 gave the entire hydrogen 
program permanent authority. As a consequence, DoE has much work to do 
to implement the Act.
    We certainly concur with the letters sent to Secretary Bodman and 
President Bush by the House and Senate (respectively) in late 2005 that 
asked for full funding of the hydrogen provisions in EPAct 05, without 
adverse impacts on the other energy efficiency and renewable energy 
programs in DoE. Specifically, the Dec. 21, 2005, bipartisan Senate 
letter highlights how the EPAct 05 makes the Federal Government a more 
reliable partner in building the Hydrogen Economy:

    ``The Secretary's scope of action has been expanded in key areas, 
and the hydrogen and fuel cell program has acquired considerable 
stability by its permanent authorization. Renewed focus on research, 
development, demonstration and state and Federal purchase for early 
market transition will give the Secretary and industry higher quality 
technical options sooner.''

    Further,

    ``Technology validations, the heart of the learning demonstration 
partnerships with industry, need to grow to include fleets of advanced 
vehicles, particularly light duty vehicles, transit buses, agricultural 
industrial and heavy duty vehicles.''

    And,

    ``To achieve the acceleration of our efforts to build a hydrogen 
economy, we specifically recommend that the fiscal year 2007 budget 
request reflect the authorized levels of spending that have been 
approved by Congress in Titles VII and VIII of the Energy Policy Act of 
2005.''

                         DOE HYDROGEN PROGRAMS

    The President's Hydrogen Fuel Initiative continues its strong run, 
with increased funding over fiscal year 2006. The hydrogen programs in 
EPAct 05 built on the success of that initiative, which began in 2004 
and might have ended in fiscal year 2008, but it has some ambitious 
2015 goals that were being actualized by appropriations only 1 year at 
a time. This annual approach would have had a slim chance of realizing 
such long range goals and designs into the program an inherent lack of 
stability, particularly for the critical learning demonstrations.
    As a baseline, the actual Title VII and Title VIIII request for 
hydrogen is $246 million (EERE + Science), or only 47.5 percent of 
EPAct 05's $517.5 million. Additional hydrogen funding is included for 
the nuclear and fossil energy programs. Plus, the authorized activities 
under Title VII Vehicles and Fuels, have not been addressed in program 
planning, let alone in the funding request. Although the Senate Energy 
Committee agreed in October 2005 to forego activities for fiscal year 
2006 under Title VII at DoE's request, DoE agreed that this did not 
apply to fiscal year 2007. Nevertheless, there is much to do under 
sections 782 and 783 that does not require funding, but DoE's 
dedication to the principles contained in the law. These shortfalls 
need explanation.
    Additionally, there are three important studies in Sections 1819, 
1820 and 1825 that deserve to be completed soon by DoE and would help 
inform industry and the Congress--that deal respectively with resolving 
international participation in the hydrogen program, economic 
development and employment aspects of a hydrogen economy, and a long-
term Federal funding roadmap plus the carbon effects from a fully-
realized hydrogen economy. These sections originated with Senators 
Alexander, Dorgan and Levin respectively, had strong industry and 
bipartisan support and were adopted by unanimous consent in the 
Senate's Energy Bill, S. 10, and in the Conference Report for Public 
Law 109-58. We applaud DoE's foresight in issuing a solicitation for 
the Section 1820 study, which is to be completed in late October.
    On a positive note, DoE budget displays show that Technology 
Validation does receive about an 18 percent increase in fiscal year 
2007 over fiscal year 2006 appropriations ($33.6 million vs. $39.6 
million). The favorable increases in the Fossil Energy budget request 
for hydrogen activities are worth noting--but we would especially like 
to see more emphasis on hydrogen production from advanced, safe nuclear 
power. And given the magnitude of our national coal resources, 
FutureGen will simply need more stable funding over a longer time span.

                               CONCLUSION

    We urge the committee to preserve these gains in the appropriations 
process, and add to them to be more consistent with EPAct 05. Continued 
funding growth is designed into EPAct 05 that is intended to accelerate 
the programs' achievements, and create a far larger benefit pool than 
could be realized by R&D alone. After all, the job is to commercialize 
the results of R&D, along with that careful technical exploration.
    We would like to see member requests moderate somewhat, and 
especially be tied more closely to DoE's planning goals for technology 
development. DoE's administration of these member requests also needs 
improvement, so that accommodating them does not mistakenly worsen the 
adverse impact to existing and mortgaged multiyear projects.
    We thank you for the opportunity to submit this testimony. We look 
forward to continuing a fruitful working relationship with the 
committee, its staff, and all our stakeholders in building a successful 
Hydrogen Economy.
                                 ______
                                 
          Prepared Statement of the American Chemical Society

    The American Chemical Society (ACS) would like to thank Chairman 
Peter Domenici and Ranking Member Harry Reid for the opportunity to 
submit testimony for the record on the Energy and Water Appropriations 
bill for fiscal year 2007. For fiscal year 2007, ACS requests the 
Department of Energy Office of Science be fully funded at President 
Bush's request of $4.102 billion.
    ACS is a non-profit scientific and educational organization, 
chartered by Congress, representing more than 159,000 individual 
chemical scientists and engineers. The world's largest scientific 
society, ACS advances the chemical enterprise, increases public 
understanding of chemistry, and brings its expertise to bear on State 
and national matters.
    As Congress and the administration seek to bolster the economy, 
economists agree that investments in basic research boost long-term 
economic growth more than other areas of Federal spending. Numerous 
recent reports cite the growing challenges American faces from global 
competitors, including the National Academies of Science report 
``Rising Above the Gathering Storm''.
    Basic physical science investments foster the new technologies and 
train the scientific workforce which drive the Nation's public health, 
defense, energy security, and environmental progress. Although industry 
funds the bulk of national R&D, the Federal Government provides 60 
percent of basic research funding and, remarkably, 40 percent of 
patents cite Federal research as their source. Yet Federal research in 
the physical sciences and engineering has been cut in half since 1970 
as a percentage of GDP. Fortunately, the President, top Congressional 
leaders, and members of science and industry have all recognized the 
need to boost investment in physical sciences and engineering research. 
This investment has never been more important given its central role in 
advancing the Nation's economic, energy, and homeland security.

                       ACS BUDGET RECOMMENDATIONS

    Current Federal efforts to advance energy efficiency, production, 
and new energy sources while reducing air pollution and other 
environmental impacts will demand increased investment in long-term 
energy research. By supporting people, research, and world-class 
science and engineering facilities, the Department of Energy's Office 
of Science expands the frontiers of science in areas critical to DOE's 
energy, environment, and national security missions.
    The President's budget request represents visionary leadership to 
ensure American competitiveness and innovation by providing the largest 
investment in DOE Office of Science in over two decades. Many in 
Congress have joined with the President in calling for expanded 
investment in basic physical science research. The President's request 
for $4.102 billion is consistent with authorized spending levels in 
Public Law 109-57 and is essential to ensuring the strength of our 
innovation economy.
    Increases in the Office of Science will help reverse the declining 
Federal support for physical science and encourage more students to 
pursue degrees in these fields. The Office of Science is the largest 
Federal supporter of research in the physical sciences, funding almost 
40 percent of research in these fields. The Office of Science fosters 
the new discoveries and technical talent that will continue to be 
essential to advances in coal, hydrogen, biomass, genomics, and many 
other technology areas. Additional funds should be directed to increase 
the number of grants, especially in core energy programs, and to 
improve research facilities. The Office is the primary source of 
Federal support in many research areas essential to our energy security 
and economy, such as catalysis, carbon cycle research, photovoltaics, 
combustion, and advanced computing. Increased investment is also 
important given the declining private support for long-term energy 
research.

                    INCREASE GRANTS IN CORE PROGRAMS

    ACS recommends that increases for the Office of Science be directed 
to advancing core energy research across disciplines, which enables DOE 
to respond rapidly to new challenges. For example, DOE capitalized on 
long-term atmospheric chemistry research, particularly in aerosols, and 
quickly developed a single anthrax-bacterium detector. DOE must 
strengthen its ability to attract scientists and train the next 
generation of scientists and engineers by increasing the number of 
grants in its core programs without reducing their size and duration. 
Current appropriations allow the DOE Office of Science to fund one-
third the proposals as the National Institutes of Health and the 
National Science Foundation. This rate is considerably lower than those 
of other agencies and amounts to lost opportunities for both 
significant discoveries and the education of the next generation of 
scientists and engineers.
    Within the Office of Science, ACS particularly supports the Basic 
Energy Sciences and Biological and Environmental Research programs. As 
the cornerstone of the Office, the Basic Energy Sciences (BES) program 
supports an array of long-term basic research to improve energy 
production and use and reduce the environmental impact of those 
activities. The BES program manages almost all of DOE's scientific 
user-facilities, and provides leading support for nanotechnology and 
advanced computing research--two priority research areas that will have 
important implications for energy efficiency and security. The 
Biological and Environmental Research (BER) program advances 
fundamental understanding in fields such as waste processing, 
bioremediation, and atmospheric chemistry to better understand 
potential long-term health and environmental effects of energy 
production and use and identify opportunities to prevent pollution. 
Progress in these fields is also needed to develop and advance new, 
effective, and efficient processes for the remediation and restoration 
of DOE weapons production sites. ACS supports a strong role for DOE in 
Federal efforts to advance pollution prevention and climate change 
research.

                    DOE AND THE SCIENTIFIC WORKFORCE

    As the largest supporter of research in the physical sciences, DOE 
can greatly affect the training and number of scientists in industry, 
government and academia. Inadequate investment in any research field 
constricts the supply of trained scientists and engineers who apply 
research and develop new technology. For instance, declining support 
for nuclear science and engineering will greatly affect the nuclear 
sector as a majority of today's nuclear scientists and engineers near 
retirement. Another example is the synergistic relationship between the 
need for radiochemists and NIH's ability to conduct clinical trials. 
Advances in diagnosis and treatment in nuclear medicine are dependent 
on the synthesis of highly specific radiopharmaceuticals that target 
biological processes in normal and diseased tissues. The Office of 
Science, through BER supported research, occupies a critical place in 
the field of radiopharmaceutical research. The NIH relies on the Office 
of Science's basic research to enable clinical trials.
    Another way for DOE to help attract students and retain talented 
scientists and engineers is to renew investments in scientific 
infrastructure. The Office of Science operates one of the most 
extensive and remarkable collection of scientific user facilities in 
the world, providing tools for research for more than 18,000 scientists 
funded by DOE, other Federal agencies, and industry. Many facilities 
are in poor condition or have outmoded instrumentation. Additional 
funding would allow for increased operating time, upgrades, 
instrumentation, and technical support. The proposed cuts could result 
in established facilities lying idle, allowing taxpayer investments to 
go unused.
    National laboratories also play an important role in providing 
research and training opportunities to enhance the university 
curriculum. ACS supports the initial plan by DOE to utilize its 
national laboratories to help mentor and train science teachers. 
Students at all levels clearly learn better when their teachers have a 
deep understanding of the subject, and the first-rate multidisciplinary 
research and scientific professionals at the national laboratories 
certainly could be a rich resource for science and math teachers. ACS 
urges stronger coordination among agencies with significant K-12 math 
and science programs in order to maximize the Federal investment in 
this area.
    ACS praises the work of Department of Energy leadership, and 
particularly Office of Science Director Ray Orbach, to establish a 
vision of America's scientific future with the 20-year facilities plan 
and a forward-thinking departmental strategic plan. ACS views these 
documents, along with the Secretary of Energy's Advisory Board report 
``Critical Choices: Science, Energy, and Security'' as key elements of 
America's research and development portfolio. Growth in DOE Science 
funding is essential to realizing the goals in these documents, and ACS 
urges Congress to act to ensure this vision of a technologically 
advanced and safe America comes to fruition.
                                 ______
                                 
Prepared Statement of the National Research Center for Coal and Energy, 
                        West Virginia University

    Chairman Domenici, Ranking Member Reid, and members of the 
subcommittee, coal supplies over half of our Nation's electricity and 
provides a viable alternative to produce transportation fuels, 
chemicals, and gaseous fuels. Previous coal research programs supported 
by Congress resulted in reduced emissions of criteria pollutants and 
increased efficiency in electricity generation at coal-fired central 
stations. Congressional support for energy efficiency programs has led 
to increased efficiency in our energy-intensive industries and in our 
transportation sector. This statement is offered to urge continued 
strong investments in the Nation's fossil fuel and key energy 
efficiency programs. My testimony consists of general recommendations 
to maintain critical levels of funding in major energy programs and 
specific requests for support of projects in selected energy sectors. I 
have also included recommendations regarding the benefits of supporting 
academic research as a part of our national energy programs.

                         FOSSIL ENERGY PROGRAMS

    We require continued investments in finding ways to use our 
indigenous fossil energy resources in an economical and environmentally 
friendly manner. While the administration speaks supportively for 
increased research for fossil fuel programs, I believe critical energy 
programs are under-funded in the fiscal year 2007 budget request.
Coal Programs
    Clean Coal Power Initiative.--The administration has proposed only 
$5 million for the Clean Coal Power Initiative (CCPI) for fiscal year 
2007. Many owner-operators are hesitant to install new clean coal 
technologies unless they have been successfully demonstrated at 
commercial scale. The CCPI program is designed to conduct 
demonstrations in technology areas such as mercury control and advanced 
power cycles, both of which are of great national interest. We must 
also demonstrate coal-to-liquids technologies as part of the Clean Coal 
Power Initiative. Funding should be provided to the CCPI program at 
levels which would allow a solicitation for new proposals in early 2007 
so that we can continue needed work to deploy advanced technologies for 
power generation and alternative fuels production.
    Innovations for Existing Plants.--A robust research program is also 
needed for existing plants. The national installed coal power 
generation capacity of over 300 gigawatts will be in service far into 
the future since their premature replacement cost is expensive. 
Environmental concerns dictate that we make improvements in the 
existing fleet while we await the opportunity to install newer 
technologies when the existing plants are retired. The funding 
recommended by the administration in the budget line for Innovations 
for Existing Plants has been severely reduced for the fiscal year 2007. 
We recommend that an additional $8 million be added to the Innovations 
for Existing Plants line, including full restoration ($2.5 million) of 
the By-Products and Water Management sub-element. This sub-element 
funds critical programs for reducing mercury emissions and finds new 
ways to use the byproducts generated by combustion, both key elements 
in reaching the goal of a zero-emissions coal plant. Water shortages in 
some parts of the Nation are beginning to limit the installation of new 
power plants. We also recommend funding for programs to minimize the 
use of water in power generation and coal conversion applications.
    Coal-to-liquids Research/Fuels Program.--Transforming coal into 
liquids would enable our Nation to reduce our dependence on imported 
petroleum. Polygeneration plants--those plants which produce a suite of 
products beside electricity--will hasten the deployment of advanced 
gasification technologies since co-producing value-added products such 
as hydrogen, liquid transportation fuels, synthetic natural gas, and/or 
chemicals improves the economics of the overall system. We recommend 
the addition of $10 million to the Fuels Program for coal-to-liquids 
research to improve current conversion technologies and to develop new 
conversion processes, for computer-based design studies, and for 
systems modeling. A national program to reinstate our earlier coal-to-
liquids programs is urgently needed to enable our country to maintain 
stable transportation fuel costs. We request that the work initiated in 
fiscal year 2006 to study the development of coal liquefaction 
facilities in China be continued at the level of $0.7 million. This 
program is a minimal investment compared to the $1.4 billion cost of 
the Chinese facility and will provide valuable information relevant to 
the deployment of advanced fuel production technologies in the United 
States.
    Solid Fuels and Feedstocks Research/Fuels Program.--Successful 
deployment of coal conversion technologies depends in part on the 
quality of the feedstock in the input coal stream. Advanced research is 
needed to reduce levels of mercury emitted from pulverized coal 
combustion systems and to remove other pollutants upstream of the 
combustor. Often the preparation process results in discarding a large 
percentage of the coal mined because of the difficulty of dewatering 
and separating the coal fines from refuse material. These discards 
result in environmental pollution, the possibility of a catastrophe due 
to failures of water impoundments that retain the coal fines for 
settling, and increased costs for electricity. We request that the 
current funding for advanced separations research be increased to $3 
million for fiscal year 2007. Another important aspect of the solid 
fuels research program relates to producing value-added products such 
as carbon materials from coal. Lightweight carbon materials produced 
from coal, if used in applications such as the transportation sector to 
reduce vehicle weight, also serve to reduce our dependence on imported 
petroleum. We request that the lightweight composite materials program 
initiated in fiscal year 2006 be continued.
    Focus Area for Computational Energy Science.--The President has 
identified supercomputing as critical to America's national security 
and essential to U.S. competitiveness, both technologically and 
scientifically. The President has called for increased funding to 
enhance this important tool and expand its use across a broad range of 
applications that enhance the U.S. position in the world's scientific 
community. Through modeling, various designs can be evaluated on 
computers at a much lower cost than for actual experimental research. 
The Computational Energy Sciences (CES) program in Fossil Energy 
supports supercomputing research both within the National Energy 
Technology Laboratory and for external researchers who receive grants 
for blocks of time on high-speed resources such as the Pittsburgh 
Supercomputing Center. However, the administration has recommended 
drastic cuts in the CES program for fiscal year 2007. We recommend that 
funding for Computational Energy Sciences be restored to its historic 
level of $5 million, of which $2 million should be allocated to 
continue the program of the SuperComputing Science Consortium (SC 
Squared) which supports high speed computer access for the fossil 
energy research community in academic institutions nationwide.
Oil and Natural Gas Programs
    We are disappointed that the administration has chosen to recommend 
closing out the programs for oil and natural gas research in 
exploration and production. These programs provide important 
contributions to small producers, who can not afford the major expense 
of developing new technologies to recover a dwindling supply of these 
precious reserves. We recommend that Congress restore the oil and 
natural gas programs to at least the fiscal year 2006 levels. We 
request that funding be provided to continue important programs like 
the Petroleum Technology Transfer Council (PTTC), a nationwide program 
implemented through ten regional centers which reach user communities 
in our major oil and gas basins. The PTTC identifies and provides 
upstream technologies and technical assistance to small domestic 
producers. Without the resources available through the PTTC program, 
many small producers would become uncompetitive, further decreasing 
domestic oil and natural gas production.

            ENERGY EFFICIENCY AND RENEWABLE ENERGY PROGRAMS

    The United States is increasingly becoming dependent on imported 
energy. Significant amounts of natural gas and electricity are 
delivered from Canada. Oil is supplied from Canada, Mexico, and other 
regions world-wide, some of which have unstable governments or 
philosophies which differ from our national best interests. The 
following comments are offered regarding programs considered key to 
maintaining our energy security and energy independence.
Industries of the Future
    High energy prices have been a major reason for the loss of 
competitiveness of many of our energy-intensive industries over the 
past several years. Glass, aluminum, steel, chemical, coal and metals 
industries face stiff competition on the global market and are 
increasingly losing ground to international competition. Much of our 
chemical industry has already moved offshore.
    The Industries of the Future (IOF) program provides one avenue for 
increasing the efficiency of production and reducing costs in energy-
intensive industries. However, the administration has reduced its 
recommendations for funding the IOF (specific) program from the enacted 
level of $37 million in fiscal year 2005 to a request of only $17 
million for fiscal year 2007. These reductions severely impact our 
ability to assist energy-intensive industries. We recommend that 
funding be restored to the fiscal year 2005 level. In particular, 
funding for the Mining sector program should be restored to $4 million 
to enable completion of previously-awarded projects and the initiation 
of new research. With our Nation poised to be ever more reliant on coal 
for our energy needs, newer technologies must be developed to mine the 
harder-to-get coal as our resource base is depleted.
Electricity Distribution
    Despite the unpleasant experience of the mid-summer East Coast 
energy blackout several years ago, the electric grid remains fragile 
and in danger of overloading in times of high demand. Improvements to 
the electric grid would ensure operational reliability, reduce costs to 
the general public, and make our industries more competitive. 
Congressional support for continued investments in improving the 
reliability of the electric grid is recommended. Particular emphasis 
should be placed on maintaining and expanding the electricity 
transmission, distribution, and energy assurance R&D at the National 
Energy Technology Laboratory (NETL). We request that the Gridwise 
project on Integrated Control of Next Generation Power Systems 
initiated in fiscal year 2006 be continued at the level of $1 million.
Transportation Research/Office of Vehicle Technologies
    The research conducted under the Vehicle Technologies program will 
lead to the development of more energy-efficient and environmentally-
friendly highway transportation technologies that will reduce the use 
of petroleum. The ability to test the performance of cars and trucks 
under field operating conditions is an essential part of this program. 
West Virginia University's Transportable Emissions Testing Laboratory 
has partnered with the Office of Vehicle Technologies for many years to 
conduct emissions measurement testing programs at locations nationwide. 
We recommend continued congressional support for this partnership and 
request that $2 million of the Vehicle Technologies budget be directed 
to continue the transportable emissions testing laboratory program in 
fiscal year 2007.

        CLOSING COMMENTS ON NEED FOR ACADEMIC RESEARCH PROGRAMS

    Budget constraints for fiscal year 2007 will give rise to difficult 
decisions regarding which programs to fund. Fossil Energy and Energy 
Efficiency programs merit high consideration from the subcommittee 
because of their importance to our national security and our economic 
interests.
    In your deliberations, I urge the subcommittee to give 
consideration to supporting or creating programs directed to academic 
research institutions. During the debate leading to the passage of the 
Energy Policy Act of 2005, several initiatives were introduced to 
support centers of excellence in coal technology, mining technology, 
and power systems technology. Energy research is high on the agenda for 
most, if not all, academic institutions. Current opportunities for 
academic researchers to compete for funding in fossil energy and energy 
efficiency areas are limited in the budget requests. For example, the 
Fossil Energy advanced research program has a budget of only $3 million 
to support coal research nationwide and no comparable programs in oil 
and natural gas. Mining research opportunities will be eliminated if 
the administration budget request for the Industries of the Future 
program is supported by Congress. With the elimination of the U.S. 
Bureau of Mines, there is no standing program for advanced mining 
research.
    Funding to support academic research has many benefits. Advanced 
research ideas are generated from such studies. Of almost equal 
importance is the aspect of maintaining the human capital to conduct 
advanced research in key areas. The dearth of support for mining 
technology research is responsible in part for the smaller number of 
mining engineering departments nationwide. We face a critical shortage 
of mining engineering graduates, an aging cadre of professors, and a 
smaller number of institutions which offer mining programs. Researchers 
skilled in coal geology/petrology and in coal conversion technologies 
such as direct and indirect liquefaction are becoming older and we face 
a potential shortage of such expertise once these individuals retire. 
Once this expertise of human capital is lost, we will be in danger of 
having to import our technologists or possibly redoing older research 
since the corporate body of expertise is lost. Supporting academic 
research also leads to spin-off technologies which support economic 
development and, in the case of energy, can assist the United States in 
staying the leader in promoting advanced technologies to address the 
challenges we face in meeting a global demand for energy.
    I urge Congress to consider the benefits of supporting fundamental 
research at academic institutions as part of our national plan for 
energy and economic security.
    Thank you for considering the recommendations offered in this 
testimony.
                                 ______
                                 
                   Prepared Statement of IBACOS, Inc.

    IBACOS (Integrated Building And Construction Solutions) urges the 
Subcommittee on Energy and Water to provide $23 million for the 
Department of Energy's (DOE) fiscal year 2007 Residential Buildings 
Integration Program (formally Building America). We further urge that 
the following language is included to ensure that the competitively 
selected Building America teams are funded at a percentage comparable 
to their historic funding: ``Of these funds, $15 million shall be 
provided for the research activities of the competitively selected 
Building America research teams and the Building America lead research 
laboratory''.
    IBACOS, through DOE, performs significant research into achieving 
new levels of energy efficiency in our Nation's housing stock.--IBACOS 
began working with the DOE's Building America Program as the founding 
team in 1993. The work of IBACOS and the other Building America teams 
has allowed industry leadership to drive cost-effective solutions that 
increase the baseline energy efficiency of the Nation's housing stock, 
and most recently, to begin to move us towards Zero Energy Homes (homes 
that produce as much energy as they use). Building America partners 
have shown that homes with significantly improved efficiency levels can 
be built at equal or lower purchase prices than conventional homes, 
with much lower energy bills and operating costs. These homes also 
exhibit increased building durability as well as improved occupant 
safety, health, and comfort. The research needed to develop systems and 
strategies to achieve the long-term goal of Zero Energy Homes is not 
simply applying lessons learned; rather, fundamental research is still 
required. This R&D, performed by the Building America teams is truly 
high-risk, high-payoff research. The research required to meet the goal 
of Zero Energy Homes is high-risk for the following reasons:
  --Significant basic research is required to develop and integrate new 
        technologies and systems into homes before they are proven 
        effective enough to be applied in the field.
  --This research is costly and risky and will obsolete several current 
        products, systems and processes, and therefore will not be 
        undertaken by the industry alone.
  --The life cycle of this research is significantly longer than that 
        of comparable industries.
  --The homebuilding industry is extremely fragmented, with 
        homebuilders having little ability to drive research, and a 
        lower-than-average financial commitment to investment.
  --Mechanisms do not currently exist within the homebuilding industry 
        to integrate new technologies and strategies effectively.
    However, the research required to meet the goal of Zero Energy 
Homes is also high-payoff for the following reasons:
  --Once constructed, homes have the longest lifespan of any consumer 
        product, providing the opportunity for a durable long-term 
        reduction in energy use.
  --Effective strategies to reduce energy use will positively impact 
        consumers, as well as the Nation's energy demand.
  --Successful research into integration strategies will allow new, 
        high-risk, market-leading technologies and systems to be 
        adopted more quickly and effectively.
    IBACOS, through DOE, supports the improvement of the residential 
construction industry and provides support and recommendations to 
critical Federal programs.--The Building America Program consists of 
five industry consortia (teams). Along with the four other teams, we 
partner with more than 300 residential builders, developers, designers, 
equipment suppliers, and community planners throughout the United 
States. All Building America partners have a common interest in 
improving the energy efficiency and livability of America's housing 
stock, while minimizing any increase in overall homeownership costs. 
Many of the systems used actually result in a lower cost, while others 
create only marginal increases in first cost and absolute overall 
reductions in annual homeowner cash flow. The five Building America 
teams pursue a collaborative agenda that will ultimately assist all 
homebuilders and benefit the Nations' homebuyers. In addition to 
performing the fundamental research needed to advance the energy 
efficiency of our Nation's housing stock, IBACOS and the Building 
America teams provide recommendations to a broad range of residential 
deployment partners including the EPA's ENERGY STAR Homes Program, 
HUD's Partnership for Advancing Technologies in Housing Program, and 
many industry associations and universities. Furthermore, the Teams are 
perhaps the best resource for DOE to educate the builder community on 
technology and integration breakthroughs. This education has been, in 
part, demonstrated through successful projects, where high-efficiency 
housing is being built and bought, such as Summerset at Frick Park 
(Pittsburgh, PA); Noisette (North Charleston, SC); Civano (Tucson, AZ); 
Pulte Home Sciences in VA; Forest Glen (Carol Stream, IL); Hunters 
Point Shipyard (San Francisco, CA); Stapleton (Denver, CO); Habitat for 
Humanity (GA, CO, TN, FL, MI, TX and throughout the United States); 
Summerfield (San Antonio, TX); Sun City (Las Vegas, NV); Premier 
Gardens (Rancho Cordova, CA) and others throughout the Nation as 
documented on www.buildingamerica.gov. The more than 300 private sector 
partners who work with the teams are experts in home construction, 
building products and supply, architecture, engineering, community 
planning, and mortgage lending. All construction material and labor 
costs for homes and communities constructed by Building America Teams 
are provided by DOE's private sector partners.
    The IBACOS Building America Team is made up of more than 30 leading 
companies from the home building industry, including equipment 
manufacturers, builders, design firms, and other parties interested in 
improving the overall quality, affordability, and efficiency of our 
Nation's homes and communities. Although we are located in Pittsburgh, 
PA, our team members come from across the country. Our building product 
manufacturer, trade association, and non-profit partners include: North 
American Insulation Manufacturers Association (NAIMA) of Washington, 
DC; Dupont of Wilmington, DE; Carrier Corporation of Indianapolis, IN; 
Whirlpool of Benton Harbor, MI; USG Corporation of Chicago, IL; 
Lithonia of Conyers, GA; Georgia Pacific of Atlanta, GA; The Portland 
Cement Association of Skokie, IL; Whirlpool Corporation of Benton 
Harbor, MI; Cardinal Glass Industries of Eden Prarie, MN; Florida Heat 
Pump of Fort Lauderdale, FL; Owens Corning of Toledo, OH; E-Star 
Colorado of Denver, CO; and e-colab of Urbana, IL. Our range of builder 
and developer partners includes Pulte Homes of Bloomfield Hills, MI; 
Tindall Homes of Trenton, NJ; Aspen Homes of Loveland, CO; Hedgewood 
Homes of Atlanta, GA; Pine Mountain Builders of Pine Mountain, GA; 
Summerset Development Partners of Pittsburgh, PA; Noisette Development 
Partners of North Charleston, SC; Forest City Stapleton of Denver, CO; 
Solar Strategies of Philadelphia, PA; Civano Development Partners of 
Tucson, AZ; Washington Homes (a division of K. Hovnanian) of VA; 
Landmark Building and Renovation of Apex, NC; and Bozzuto Homes of 
Greenbelt, MD. Other builder and developer partners are located in CA, 
CO, FL, GA, IN, MA, ME, MN, NC, NJ, NY, NV, PA, and UT. Through these 
and other partners, the Building America Program has had direct 
influence in increasing the efficiency of nearly 30,000 homes to date. 
All of these homes use at least 30 percent less energy than a code-
compliant home, and many exceed 50 percent in savings. All work done in 
these projects is part of the critical path toward achieving Zero 
Energy Homes.
    Through DOE, significant energy-saving results have been achieved 
in residential construction, and encouraging research results on 
systems integration have helped to increase overall energy 
efficiency.--Results of the experience gained by the Building America 
teams have been reflected in both DOE and HUD roadmapping sessions, 
development of research priorities for National Labs, and cooperation 
on programs within DOE. One example is Building America's cooperative 
work with DOE's Windows research program to field test advanced window 
products with builders. Additionally, collaborative research activities 
with the National Labs, including NREL, ORNL, and LBNL results in the 
sharing of knowledge and resources to bridge the gap between Federal 
research programs and the industry. The Building America Program 
improves the affordability of homes by reducing energy use, and 
increasing the useful life of the homes, resulting in better use of 
capital and natural resources. The energy saved by a new home built to 
be 50 percent more efficient than average new construction is the 
equivalent of the energy used by a sports utility vehicle for 1 year. 
Investing in residential construction technology makes economic and 
market sense. By using improved materials and techniques, the Building 
America partners promote wiser use of resources and reduce the amount 
of waste produced in the construction process. Because of the homes' 
improved efficiency, emissions from electrical power will be reduced, 
potentially eliminating 1.4 million tons of carbon from the atmosphere 
over the next 10 years. DOE's residential programs will also save 
consumers more than $500 million each year through reduced energy 
bills. These savings are permanent and significant.
    Building America teams, such as IBACOS, help develop and implement 
widespread innovation in the fragmented residential construction 
industry.--Residential Buildings currently account for over 20 percent 
of the primary energy consumed by the United States. Each year, more 
than 1.5 million new homes are constructed (over $70 million in 
revenue) and over a million are remodeled. Despite its size and impact, 
the industry is exceptionally fragmented. It comprises over 100,000 
builders, many building only a few homes per year, others as many as 
35,000. A multitude of residential product manufacturers, architects, 
trades, and developers further compound the problem of an industry in 
which it is very difficult to implement widespread technological 
innovation. Building America acts as an aggregator for identifying and 
pursuing research needs and consolidating relationships between the 
industry and National Labs.
    There has also been little incentive for builders to improve on 
energy efficiency for a number of reasons. Energy and resource 
efficiency does not necessarily contribute to the bottom line of the 
builder; instead, it benefits the homeowner and the Nation, and because 
builders do not pay the annual energy bills, they have little incentive 
to add to the first cost of their product. Adopting new technologies 
and training staff and trades to properly install new systems and 
products is costly and challenging for builders. Finally, since 
builders are not good at sharing knowledge among competitors, DOE's 
role is critical to expanding the practices beyond the first builders 
in. For these reasons, we are working to create higher performance, 
quality homes at low or no incremental costs, along with associated 
training, management, and technology transfer methodologies. We believe 
that because of this work, energy and resource efficiency, durability, 
and affordability will eventually be commonplace in the home building 
industry. A long-term and consistent commitment must be made to work in 
partnership with the housing industry. DOE's Building America Program 
is a proven industry-driven research approach that can reduce the 
average energy use in new housing by 50 percent by 2015, providing 
significant benefits to homeowners while benefiting the U.S. economy by 
maintaining housing as a major source of jobs and economic growth. 
Without building in significant energy savings now, the Nation risks 
using an extravagant amount of energy in the future. We must invest 
appropriately in technology, systems integration research, and builder 
operational processes needed to upgrade the performance of our housing 
stock, otherwise, we are mortgaging our future.
    Building America is the key element in the DOE's strategy to reduce 
residential energy consumption.--Research, development, and outreach 
activities performed by the competitively-selected industry Teams in 
the Building America Program are the key element in the Department of 
Energy's strategy to reduce energy consumption in residential 
buildings. The Teams' activities focus on increasing the performance of 
new and existing homes that can be implemented on a production basis, 
while meeting consumer and building performance requirements. The Teams 
have been working on improving efficiency in housing since 1992, with 
successes being embodied in ENERGY STAR Home program and adoption by 
many production builders. We are now focused on the more difficult goal 
of creating strategies to achieve Zero Energy Homes. Current DOE-led 
research activities include:
  --Systems integration, technology, and process research to ensure 
        quality and performance;
  --Indoor air quality, safety, health, and durability of housing;
  --Thermal distribution efficiency, mechanical systems efficiencies 
        and appropriate sizing;
  --Incorporation of passive and active solar techniques;
  --Techniques that increase productivity and product quality and 
        reduce material waste;
  --Use of recycled and recyclable materials; and,
  --Building materials improvements and envelope load reduction and 
        durability.

                             RECOMMENDATION

    IBACOS (Integrated Building And Construction Solutions) urges the 
Subcommittee on Energy and Water to provide $23 million for the 
Department of Energy's fiscal year 2006 Residential Buildings 
Integration Program (formally Building America.) We further urge that 
at least 60 percent or $15 million of the appropriated funding be 
directed towards the industry-led core Building America Teams and the 
Building America lead research laboratory to develop cost effective, 
production ready systems in five major climate zones that result in 
houses that produce as much energy as they use on an annual basis. 
Along with the industry cost-share in the program of at least 100 
percent, this program has and will continue to significantly catalyze 
improvements in what has traditionally been a very fragmented industry.
                                 ______
                                 
            Prepared Statement of Sage Electrochromics, Inc.

    SAGE Electrochromics, Inc., located in Faribault, Minnesota, is a 
developer of energy saving electrochromic (EC) window products and is 
working in partnership with the U.S. Department of Energy (DOE) to 
develop advanced tintable window systems. The National energy savings 
potential of high performance electrochromic windows is approximately 
0.9 Quad--equivalent to the energy use of 10,000,000 homes per year.
    We at SAGE urge you to increase the current DOE annual investment 
in the total windows program from $4,900,000 per year to $15,000,000--
Energy and Water appropriations bill for Department of Energy, Energy 
Efficiency and Renewable Energy, Building Technologies Program, 
Windows. Within this program the specific budget for dynamic and super 
insulated windows should be expanded to $4,000,000, up from the 
$500,000 currently being pursued by DOE. This funding will allow the 
Department to reach the goal of zero energy buildings. Activity will 
take place at Lawrence Berkeley National Laboratory and SAGE 
Electrochromics, Inc.

                     DESCRIPTION OF ELECTROCHROMICS

    An electrochromic window (door or skylight) is a solar control 
device that regulates the flow of light and heat with the push of a 
button. The window tint can be varied from fully colored to completely 
clear or anywhere in between. The EC properties are achieved through 
thin metal oxide layers on one of the glass surfaces, otherwise the 
construction is similar to the standard insulating glass unit (IGU) 
used in millions of homes and office buildings.

                 THE UNIQUE BENEFITS OF ELECTROCHROMICS

    Industrial and government partners in the DOE EC program are 
performing cost-shared research and development that will lead to 
significant energy and cost savings by fundamentally changing the 
nature and function of window products for tomorrow's buildings. 
Significant savings in the cooling and lighting loads can be achieved 
while reducing peak electricity demand. Just as important is the 
ability of EC technologies to improve visual and thermal comfort and 
thereby increase worker productivity and the aesthetics of the home or 
office space.
    Traditionally, adding windows to a building envelope has meant 
reducing energy efficiency because the other materials in the structure 
are much more energy efficient. However, with EC technology, windows 
will become multifunctional energy-saving appliances in the home or 
office space and thereby will allow increased use of windows for 
aesthetic reasons.

            ACHIEVING ZERO ENERGY HOMES AND BUILDINGS (ZEB)

    Zero Energy Buildings, a goal set forth by DOE, takes the whole 
building concept to the next level by integrating advanced building 
technologies. ZEB will result in self-sufficient buildings that produce 
as much energy as they use.
    Achieving DOE Energy Efficiency and Renewable Energy's (EERE) goals 
of Zero Energy Homes and Buildings by 2030 will require a new 
generation of high performance windows. An aggressive, expanded RD&D 
program with private and public partnerships has a high probability of 
successfully developing and deploying the technologies, systems, and 
tools needed to achieve ZEB levels of energy performance. Increasing 
the current DOE annual investment from $5,000,000 per year to 
$15,000,000 per year for a 5-year period would kick-start this effort 
and stimulate the much larger private sector investment needed to 
achieve these goals. High performance windows incorporating highly 
insulating properties, switchable glazings, and/or other energy 
efficiency features could save 0.9 Quads/year as part of the ZEB effort 
if the technologies can be fully developed and achieve widespread 
market penetration by 2030. This information is based in part on 
information from DOE's Lawrence Berkeley National Laboratory. The 
energy savings potential is equivalent to the energy use of 10,000,000 
homes per year.

       CREATING A DYNAMIC AND SUPER INSULATED WINDOWS R&D PROGRAM

    Window systems cost American homeowners and building operators 
about $40 billion per year due to the heating and cooling loads they 
impose on our buildings. But windows can become net energy gainers 
rather than losers if buildings are well designed and their energy 
flows can be dynamically controlled.
    The fundamental science and engineering supporting such goals is 
understood. An aggressive 5-year RD&D effort is needed to solve the 
critical technical market barriers, thereby reducing risks, clarifying 
benefits and stimulating enhanced private investment in manufacturing 
and marketing.
    The groundwork for such a program has already been laid. In the 
1980's DOE and the window and glass industry worked together to bring 
low-E to the market, an innovation that according to the NAS study has 
generated $8 billion in benefits for a modest DOE R&D investment 
followed by much larger private investment. In the 1990's DOE and the 
industry successfully promoted the development and widespread use of 
spectrally selective glazings and window rating systems, each 
leveraging large private investments and contributing to additional 
savings. The challenge now for the next decade is to develop the cost-
effective superinsulating and switchable technologies needed to achieve 
ZEB performance targets.

                           POTENTIAL SAVINGS

    As an example of the potential impacts of an enhanced RD&D program 
we consider the energy savings impacts of a highly insulating, 
switchable window in both residential and commercial buildings. These 
are the windows that must be developed and deployed in order to meet 
the EERE goal of creating practical Zero Energy Buildings. The highly 
insulating window has a U value or heat loss rate of 0.1 BTU/hr-F-
sqft, about 65 percent lower than today's Energy Star window. The 
tintable window has the ability to control solar heat gain over a 
dynamic range of 5 to 1--from 0.5 in winter to allow sunlight to offset 
heating, to 0.1 in summer to minimize cooling, or over an even larger 
range of light transmission on cloudy and sunny days to control glare 
and daylight.
    The specific energy savings will depend on the final performance 
values offered and on the market penetration, which in turn will depend 
on cost. An aggressive RD&D program would optimize thermal properties 
and support breakthroughs in materials science that would lower 
production costs, thus expanding market impacts.

                           RESIDENTIAL SECTOR

    In homes, switchable superwindows save energy three ways. In winter 
at night the low heat loss reduces heating loads. During the day the 
switchable coating allows solar heat to enter, reducing heating loads 
further. In summer the switchable coating keeps the sun out on hot days 
and modulates as needed for night view and cloudy days. The details of 
heat transfer vary with the climate region but this versatile, high 
technology package supports the EERE ZEB goal in all U.S. climates.
    Large national energy savings could be obtained over the next 30 
years. In northern climates like Boston and Chicago these window 
technologies alone would virtually eliminate the energy loss from 
windows and reduce overall home energy use by an additional 25 percent 
compared to homes with Energy Star windows, which themselves would use 
20-30 percent less energy than today's typical homes. In southern 
climates such as Phoenix the largest savings come from reductions in 
cooling loads due to the switchable glazings. In these climates the 
improved glazings virtually eliminate the heating load and greatly 
reduce the cooling impacts.
    Widespread deployment after 30 years in homes in both northern and 
southern climates would generate average annual savings of 0.55 Quads 
compared to a building stock, which would otherwise have improved to 
meet the performance levels of Energy Star windows today.

                           COMMERCIAL SECTOR

    In the commercial sector the switchable superwindows provide three 
benefits in virtually all climates: (1) they reduce the net heating 
loads from the windows to very low values or convert the windows to net 
gains; (2) they minimize the cooling loads due to the windows, and (3) 
by carefully modulating daylight, they provide savings of about 50 
percent of the lighting energy in zones with windows or skylights.
    This technology package is versatile and adaptable to fenestration 
designs in virtually all climates and commercial building types. It 
makes it easier for architects to design buildings that provide 
daylight and view without imposing added thermal loads. By modulating 
daylighting and controlling glare, it helps create productive work 
environments that are thermally comfortable and energy efficient, 
lowering electric lighting use in the process by 30-60 percent. 
Widespread deployment after 30 years would generate average annual 
savings of 0.35 Quads compared to buildings with more conventional 
fenestration solutions.

         ADDITIONAL WORK TO BE DONE REQUIRES FURTHER INVESTMENT

    Materials and Processing Research and Development.--Activities must 
focus on continued optimization of the device and the individual thin 
film layers. Improved optical performance is needed to insure user 
satisfaction and broad adoption of this energy-saving technology. 
Advanced materials for better dynamic range will result in maximum 
daylighting for building occupants yet still eliminate glare from 
computer display terminals when direct sunlight impinges on the 
workspace. Nanocomposite materials must be incorporated to achieve a 
more neutral color with enhanced fracture toughness of critical films. 
Low cost materials will be introduced along with rapid processing 
technologies (e.g. total in-line, high throughput vacuum deposition of 
all coatings). Additionally, solar powered EC windows with wireless 
control systems will be developed for ease of installation--especially 
in retrofit applications.
    Large Area Manufacturing Technology/Engineering.--Activities should 
include development of rapid, large area inspection tools to reduce 
defects for higher yields. Also, advanced manufacturing technologies 
such as laser patterning and bar coding will be implemented for 
flexible manufacturing with reduced costs for tooling and product 
changeovers. High volume production of large area EC glazings will 
require the implementation of in-situ diagnostics for real-time 
automatic control of thin film uniformity. Additionally, consensus 
electrochromic window performance requirements must be developed 
together with standards-setting organizations and will entail 
significant testing in the initial stage to establish the technical 
basis for performance requirements.
    Systems Engineering and Application.--The DOE program must include 
extensive field trials of electrochromic windows in buildings. Occupant 
feedback on performance, comfort level and other parameters will be 
solicited and utilized to design ergonomic control algorithms and 
hardware. Multiple window control should also be demonstrated to 
ascertain how to tie the adjacent windows together for solar management 
of the overall space. Long-term testing of switchable window systems 
over the full range of outdoor climatic conditions is required to 
assess product reliability.
    Advanced Window Development.--As we move to Zero Energy Buildings, 
increasing levels of window performance will be required. Work must be 
initiated to produce highly insulated windows in which heat loss is 
reduced by at least a factor of 2 over currently available products. 
These windows will be integrated with EC glazings to produce the high 
R-value dynamic windows needed for ZEB. R&D activities include the 
investigation of gas filled and evacuated window cavities as well as 
improved edge and frame materials. Work will also be carried out to 
support design tools and rating systems to evaluate window efficiency.
                                 ______
                                 
Prepared Statement of the National Coalition for Food and Agricultural 
                                Research

    Dear Mr. Chairman, Ranking Member Reid and members of the 
subcommittee, on behalf of the National Coalition for Food and 
Agricultural Research (National C-FAR), we are pleased to submit 
comments in strong support of enhanced public investment energy 
biosciences research as a critical component of Federal appropriations 
for fiscal year 2006 and beyond.
    National C-FAR urges the subcommittee and committee to approve the 
President's proposal in the American Competitiveness Initiative, 
Advanced Energy Initiative and fiscal year 2007 budget request for an 
increase of 14 percent to $4.1 billion for the DOE Office of Science. 
Included with the President's budget request is $255 million for the 
Chemical Sciences, Geosciences and Energy Biosciences Division. A total 
of $35.8 million within the division is requested by the President for 
the Energy Biosciences program. We urge you to support the President's 
request for Basic Energy Sciences, the Chemical Sciences, Geosciences 
and Energy Bioscience Division and the Energy Biosciences program 
within the division.
    At a time when our Nation's energy security is being seriously 
challenged, this modest increase in a small, but highly effective 
program is a wise investment with potentially momentous benefits to the 
Nation. The Department of Energy's biosciences program is an excellent 
example of where a modest Federal investment can yield tremendous 
societal benefits. Energy costs are escalating, dependence on petroleum 
imports is growing and concerns about greenhouse gases are rising. 
Research, extension and education can enhance agriculture's ability to 
provide new, renewable sources of energy and cleaner burning fuels, 
sequester carbon, and provide other environmental benefits to help 
address these challenges, and indeed generate value-added income for 
agricultural producers and stimulate rural economic development.
    National C-FAR endorses the President's call in his State of the 
Union Address for the Nation to conduct energy research for bio-fuels 
to help break the Nation's addiction to foreign oil. Research on plant 
cellulose to produce biofuels from on crop residues, switch grass, wood 
chips and other sources could build on current production of ethanol 
and biodiesel from crops help transition a significant portion of the 
Nation's economy away from imported petroleum products to domestically 
produced bio-fuels.
    The Energy Biosciences program supports world-leading research on 
plants and microbes conducted primarily by university-based scientists 
throughout the country. Competitive grants are awarded through a peer 
review process based on the highest standards of scientific merit.
    National C-FAR applauds the Energy Biosciences program's active 
involvement in inter-agency cooperation and collaboration. By working 
closely with the U.S. Department of Agriculture, programs in both 
agencies benefit by leveraging funds where missions converge to advance 
vitally important research.
    Basic energy research on plants and microbes supported by the 
Energy Biosciences program contributes to advances in renewable 
resources for fuel and other fossil resource substitutes from American 
agriculture, clean-up and restoration of contaminated environmental 
sites, and discovering new knowledge leading to home-grown products and 
chemicals now derived from petroleum.
    The DOE Office of Science's Office of Biological and Environmental 
Research, through its Genomics GTL Roadmap, is undertaking an 
aggressive systems biology plan to accelerate the scientific discovery 
needed to support the development of practical applications to fulfill 
DOE energy and environmental missions.
    The DOE-BER Plant Feedstock Genomics for Bioenergy program 
conducted jointly with USDA-Cooperative State Research, Education, and 
Extension Service-National Research Initiative supports genomics-based 
research that will lead to the improved use of biomass and plant 
feedstocks for the production of fuels such as ethanol and renewable 
chemical feedstocks.
    National C-FAR commends the committee for its ongoing support of 
basic research on plants and microbes within the Energy Biosciences 
program and within the Office of Biological and Environmental Research. 
Past research sponsored by the Energy Biosciences program led to the 
landmark discovery of how to break down plant cellulose into ethanol. 
Other research sponsored by the Biosciences program led to new findings 
on the capture of energy from photosynthesis. Increased knowledge in 
this area could lead to a better understanding of how to manage carbon 
dioxide in the atmosphere. Further research in this area could also 
contribute to development of alternative energy sources.

                       INTEREST OF NATIONAL C-FAR

    National C-FAR serves as a forum and a unified voice in support of 
sustaining and increasing public investment at the national level in 
food and agricultural research, extension and education. National C-FAR 
is a nonprofit, nonpartisan, consensus-based and customer-led coalition 
established in 2001 that brings food, agriculture, nutrition, 
conservation and natural resource organizations together with the food 
and agriculture research and extension community.\1\
---------------------------------------------------------------------------
    \1\ As part of its mission, National C-FAR seeks to increase 
awareness about the value of food and agricultural research, extension 
and education. For example, National C-FAR is hosting an educational 
series of ``LunchNLearn'' seminars on the hill, featuring leading-
edge researchers on timely topics to help demonstrate the value of 
public investment in food and agricultural research, extension and 
education. More information about National C-FAR and its programs is 
available at http://www.ncfar.org.
---------------------------------------------------------------------------
    National C-FAR is deeply concerned that shortfalls in funding in 
recent years for food and agricultural research, extension and 
education--both through the U.S. Department of Agriculture and through 
relevant programs in other agencies--jeopardize the food and 
agricultural community's continued ability to maintain its leadership 
role and respond to the multiple, demanding challenges that lie ahead. 
Federal funding for food and agricultural research, extension and 
education has been flat for over 20 years, while support for other 
Federal research has increased substantially. Public funding of 
agricultural research in the rest of the world during the same time 
period has reportedly increased at a nearly 30 percent faster pace.
    National C-FAR believes it is imperative to lay the groundwork now 
to respond to the many challenges and promising opportunities ahead 
through Federal policies and programs needed to promote the long-term 
health and vitality of food and agriculture for the benefit of both 
consumers and producers. Stronger public investment in food and 
agricultural research, extension and education is essential in 
producing research outcomes needed to help bring about beneficial and 
timely solutions to multiple challenges.
    As a coalition representing stakeholders in both the research, 
extension and education community and the ``customers'' who need and 
depend upon their outcomes, National C-FAR urges expanded public 
participation in the administration's research, extension and education 
priority setting and funding decision process and stands ready to work 
with the administration and other interested stakeholders in such a 
process.
    National C-FAR appreciates the opportunity to share its views and 
stands ready to work with the chair and members of the subcommittee and 
committee in support of these important funding objectives.
                                 ______
                                 
   Prepared Statement of the Department of Petroleum and Geosystems 
             Engineering, The University of Texas at Austin

    Committee members, your committee is considering the budget for the 
Department of Energy, including the appropriation for the Oil and Gas 
technology program, which has been eliminated in the administration's 
proposed budget. I am writing to describe the impact the loss of this 
program would have on the teaching of Petroleum Engineering in the 
United States.
    My department receives 40 percent of its funding for graduate 
research from this one program. I believe the figure is similar at 
other Departments of Petroleum Engineering in the United States. 
Research funding is critical to graduate education in Petroleum 
Engineering, of course. In the short term it is the means by which 
graduate students attain the level of expertise necessary to advance 
the technology for efficient production of oil and gas. The research 
sponsored by this program is also crucial to undergraduate education. 
Over the long term it provides the means by which junior faculty attain 
tenure and all faculty maintain and sharpen their skills. At a modern 
research university it is simply impossible to maintain an 
undergraduate educational program without a vital graduate research 
program.
    No other Federal program funds research in the broad field of oil 
and gas production. No other branch of science or engineering, 
including those that have substantial private funding (microelectronics 
or pharmaceuticals, for instance), is expected to fund university 
research entirely from private sources.
    The loss of the lead the United States now enjoys in oil and gas 
technology would be a tragedy for the country. U.S. production would 
decrease, U.S. fields would increasingly be exploited by foreign 
companies, and producers in unstable parts of the world would turn to 
other countries for the expertise they need to exploit their own 
resources.
                                 ______
                                 
            Prepared Statement of National Wind Watch, Inc.

                              INTRODUCTION

    National Wind WatchTM, Inc. is a non-profit organization 
dedicated to raising awareness of the risks and related impacts of 
industrial wind energy development on the environment, economy, and 
quality of life. The organization represents local citizen groups and 
individuals seeking to protect their property rights and community 
values, maintain nationally significant scenic resources and protect 
America's wildlife. The organization advocates an intellectually honest 
and scientifically sound assessment of the benefits and costs of 
industrial wind development with the objective of becoming a resource 
of information and assistance for individuals, local groups, and 
decision-makers seeking the facts about industrial wind power. Far too 
often, debates about wind power have over-stated its potential benefits 
and ignored its tremendous costs.

                          SUMMARY OF POSITION

    National Wind Watch does not oppose funding of research and 
development for wind energy, but stresses that any increases in monies 
allocated be correctly focused. Most of any future research and 
development should now be focused on the detrimental impacts and 
mitigation techniques of wind development including, but not limited 
to: actual impacts on property values in areas where wind development 
occurs; actual net impacts on employment; life cycle analysis of 
environmental impacts (positive and negative); grid system stability 
and reliability under increasing penetration of wind, and within lower-
quality wind sites. Given the inherent and perceived conflict of 
interest, National Wind Watch recommends that the National Renewable 
Energy Laboratory NOT hold responsibility for such analysis but only be 
permitted to participate.

                          SUPPORTING COMMENTS

    During the debate leading up to passage of the Energy Bill in 2005 
there was discussion as to whether the United States should adopt a 
Renewable Portfolio Standard or RPS. The Senate passed the RPS as an 
amendment, but the House voted it down. Senator Lamar Alexander 
correctly noted at the time that the RPS was ``all about wind'' citing 
factors that would limit implementation of other renewable sources 
including solar, hydro, and geo-thermal.
    Senator Alexander also noted that, according to testimony before 
the Energy Committee and other sources, in order for the United States 
to achieve the standards in the RPS, it could ``require building more 
than 100,000 of [the] new, massive wind turbines''. Today, there are 
less than 7,000 such wind turbines in the United States. The U.S. 
Treasury Department is on record stating the wind subsidy, if renewed 
each year for the next 5 years, would reimburse wind investors for 25 
percent of the cost of wind production and cost taxpayers $3.7 billion 
over those 5 years.\1\ General Electric Wind, one of the largest 
manufacturers of wind turbines, experienced a 500 percent growth in its 
wind business in 2005 due to the renewal of the wind production tax 
credit in 2004. On a unit production basis, wind is subsidized more 
than 10 times any other energy source, yet contributes least to our 
energy security. Further, as the amount of wind generation increases, 
negative grid stability impacts grow exponentially.
---------------------------------------------------------------------------
    \1\ http://www.windwatch.org/documents/126, Remarks Of Senator 
Alexander--Windmill Legislation Introduction.
---------------------------------------------------------------------------
    National Wind Watch has watched the recent surge in wind 
development throughout New York, Pennsylvania, Virginia, and elsewhere 
in the United States and the impacts of this development on rural 
communities. Town boards and local officials are ill-equipped to 
evaluate the true impacts of these facilities. At the State level, some 
form of RPS has already been put in place in 23 States. This translates 
into additional State pressure on the community to embrace the wind 
plant, quiet opposition, and degenerate the permit process.
    In the face of this development, the September 2005 GAO Report 
titled ``Impacts on Wildlife and Government Responsibilities for 
Regulating Developing and Protecting Wildlife'' stated ``. . . that the 
impact of wind power facilities on wildlife is more studied that other 
comparable infrastructure, such as communication towers, important gaps 
in the research remain. First, relatively few pre-construction 
monitoring studies have been conducted and made publicly available. It 
appears that many wind power facilities and geographic areas in the 
United States have not been studied at all.'' Where they have been 
studied (e.g. Altamont Pass in California) the studies find significant 
work to do to reduce continued and on-going decimation of wildlife, 
including endangered and protected species.
    While requests for additional pre-construction studies may be made, 
the local communities often do not have the money to pay for original 
research at a site. In many cases, the research should not be confined 
to the limited hundreds of yards area where the turbines are located, 
but would involve a regional review to cover secondary impacts related 
to erosion, impacts to water quality, tourism and the economy, and bird 
migration patterns. In the absence of local funding, National Wind 
Watch has found multiple cases where wind companies have agreed to 
conduct such studies, but also assume authority over the parameters of 
the studies and, in so doing, predetermine the outcome.
    Continued installation of wind turbines throughout our rural and 
mountainous landscapes without scientific, impartial review of the 
impacts of this industrialization would have devastating effects of 
some of the most precious ecosystems in the world. After decades of 
government-subsidized research and implementation, it is time for the 
wind industry to no longer be treated as an ``infant industry''. 
Rather, it is time for the industry to start paying for much of its 
way, consistent with the maturation of the technology. Any money now 
should go to research, once and for all, the impacts of these massive 
turbines on our wildlife, open spaces, property values, health and 
safety of residents living in the vicinity of turbines, and the quality 
of rural life.
    National Wind Watch respectfully requests that you deny further 
funding for wind energy research and development, and direct this 
funding to the detrimental impacts and mitigation techniques of wind 
turbines. We also recommend the National Renewable Energy Lab NOT be in 
charge of such analysis but only allowed to participate.
                                 ______
                                 
    Prepared Statement of Southeastern Federal Power Customers, Inc.

    Mr. Chairman and members of the subcommittee, on behalf of the 
Southeastern Federal Power Customers (``SeFPC'' or ``Customers''), I am 
pleased to provide testimony in reference to the administration's 
fiscal year 2007 budget request for the Southeastern Power 
Administration (``SEPA'') and the U.S. Army Corps of Engineers 
(``Corps''). SEPA and the Corps operate the Federal Power Program in 
the Southeast which benefits millions of electric ratepayers throughout 
the States in the South that are served by SEPA Power. I will elaborate 
in my testimony on each of the following items of interest to the 
SeFPC: supporting the administration's request for $34.4 million for 
Purchased Power and Wheeling activities and $5.7 million in program 
direction for SEPA; funding of construction and operations and 
maintenance needs related to Corps projects that provide power marketed 
by SEPA; and lastly our grave concerns regarding the administration's 
proposed Agency Rate Change provision.
    SEPA purchases, transmits, and markets the power generated at 
Federal reservoirs to municipal systems, rural electric cooperatives, 
and other wholesale customers throughout the Southeast. The SeFPC has 
enjoyed a long and successful relationship with SEPA that has greatly 
benefited over 6 million ultimate retail customers that are SeFPC 
members. As the subcommittee is aware SEPA markets the energy and 
capacity that is generated from the Federal reservoir projects in the 
Southeast. The SeFPC represents some 238 rural cooperatives and 
municipally-owned electric systems in the States of Alabama, Georgia, 
Mississippi, Kentucky, North Carolina, South Carolina, Florida, and 
Virginia, which purchase power from SEPA.
    In some cases, SEPA supplies as much as 25 percent of the power and 
10 percent of the energy needs of SeFPC customers.

      SUPPORTING THE ADMINISTRATION'S REQUEST FOR THE SEPA PROGRAM

    The administration's fiscal year 2007 budget proposes to 
appropriate $34.4 million for Purchased Power and Wheeling (``PPW'') 
activities and $5.7 million for program direction. Because the funds 
appropriated for these programs are returned to the Treasury through 
rate payments made by SeFPC members in the same year in which the 
appropriations are spent, these programs have a neutral impact on the 
U.S. Treasury. All of these funds will be returned to the Treasury in 
2007. We thank the subcommittee for following the administration's 
recommended funding levels last year and once again, encourage the 
subcommittee to follow the administration's proposal for SEPA's program 
direction and PPW funding levels this year.

           CORPS PROJECTS PROVIDE THE POWER MARKETED BY SEPA

    The SeFPC membership is dedicated to providing reliable and 
economic power for its consumers. We therefore are concerned with the 
lack of specific information in Operations and Maintenance (``O&M'') 
funding proposed in the President's fiscal year 2007 budget request.
    This year the Corps' fiscal year 2007 Civil Works budget included a 
new layout for Operations and Maintenance funding. Historically, 
project funding was divided by State with specific funding amounts 
given to each project listed; however, this year O&M projects are 
categorized by Water Resource Regions and there are no specific funds 
cited for those projects mentioned. We are deeply concerned with the 
lack of specific information available on the requested O&M funds. As 
it stands now, over half of the hydroelectric generating facilities 
operated and maintained by the SAD in the SEPA Georgia-Alabama-South 
Carolina (``GA-AL-SC'') System are slated to receive ``minimal 
operations and maintenance'' funding within the President's fiscal year 
2007 budget request.
    The Jim Woodruff Lock and Dam project within the Jim Woodruff 
System and the Cordell Hull Dam & Reservoir in the Cumberland System 
are both mentioned as projects needing minimal O&M funding, as well. We 
urge Congress to seek more specific information from the Corps on how 
much they propose to spend on O&M activities at each site. Until we 
know what the specific dollar amounts are and can define the actual 
amount referred to as ``minimal'' by the Corps, we, and members of 
Congress, can not be confident that significant infrastructure failures 
may occur due to insufficient O&M funding.
    The age of many of the hydroelectric generating facilities operated 
and maintained by the Corps in SEPA's service area are nearly 50 years 
old. Major rehabilitations of generating units are critical if projects 
of this age are to continue in service. It is important to note that 
when a generating unit becomes inoperable, SEPA may be forced to pursue 
the purchase of expensive replacement power. This could result in a 
reduction of energy provided to customers, forcing the SeFPC members to 
purchase expensive energy elsewhere. Thus, we are pleased to see the 
Wolf Creek, KY project in the Cumberland System scheduled to receive 
$31 million in construction funds for dam safety purposes within the 
President's fiscal year 2007 budget; however the GA-AL-SC System, as a 
whole, will suffer due to significant decreases in requested 
construction dollars. Within the Kerr-Philpott System of projects, we 
also understand that rehabilitation work on the turbines and generators 
at the Kerr project has been threatened due to a lack of funding. 
However, this has not been a result of SEPA failing to collect 
sufficient funds in the rates. In fact, SEPA has collected over $240 
million in rates for Corps repairs that has not been provided to the 
Corps.

                      AGENCY RATE CHANGE PROVISION

    The SeFPC is concerned about a proposal within the President's 
fiscal year 2007 budget that, if not stopped, would impose 
administratively a higher level interest rate on new investment 
allocated to hydropower production. This proposal would raise rates 
with no apparent benefit to the hydropower customer; it is simply a 
back-door tax on the ultimate consumers of power marketed by SEPA. This 
proposal to increase interest rates to the ``agency rate'' level has 
emerged with virtually no public discussion. Congress should provide 
much more active oversight over the Corps' activities due to the 
magnitude of the proposed change and the precedent that could result 
from it.
    The PMAs are the rate-making agencies charged with marketing 
electricity from Federal hydroelectric facilities operated by the Corps 
and the Bureau of Reclamation (``Bureau''). In the Southeast, when the 
Corps makes an investment in a hydro-electric facility, SEPA must 
recover the cost of that investment in the rates charged to its 
customers. For a half century, the PMAs have set interest rates either 
following explicit instructions from Congress or by charging a rate 
that collects the Federal Government's cost of appropriated dollars.
    Now, the administration's budget seeks to increase the interest 
rate charged on all new investments at projects whose interest rate is 
not set by law. This ``agency rate'' is higher than the current 
interest rate paid by SEPA. This ``agency rate'' reflects the interest 
cost to loan needed funds to government corporations. However, SEPA, 
the Southwestern Power Administration (``SWPA'') and Western Area Power 
Administration (``WAPA'') are not government corporations and do not 
borrow funds from the U.S. Treasury. As I have stated before, their 
rates are set to recover the appropriations established by Congress for 
the investment in the hydro-electric facilities and for costs to 
operate these projects.
    We understand that the administration has suggested that the 
government corporation rate is more appropriate for the PMAs because of 
the risk of default. This argument simply ignores the statutory 
authority under which the PMAs operate and long-standing history of 
repaying the Federal investment in these projects. SEPA must collect 
all of the costs of generating hydropower at Federal facilities in the 
Southeast.
    By law (the Flood Control Act of 1944), SEPA must recover all of 
the costs of producing power. Rate schedules are developed by SEPA 
after a notice and comment period and submitted to the Secretary of the 
Department of Energy for further review and implementation on an 
interim basis. Once the Secretary approves the rates on an interim 
basis, the Federal Energy Regulatory Commission (``FERC'') has the 
responsibility to confirm on a final basis the rate schedule developed 
by SEPA. SEPA, the Secretary of the Department of Energy, and FERC must 
set a rate that by law recovers the Federal taxpayer's investment in 
the Federal Power Program. If an existing rate is insufficient to meet 
repayment obligations, SEPA must file a new rate and include 
appropriate increases to ensure all repayment obligations are met. In 
other words, there is a multi-layered review process and legal 
obligation that ensures that the PMAs will not default on outstanding 
obligations.
    With no real threat to PMA defaults on outstanding debt, the 
subcommittee is left with little substantive reason why the interest 
rate on new investment should be increased. As the proposed change will 
only serve as a revenue enhancement measure and provide no additional 
benefits for PMA customers, the members of the SeFPC wholeheartedly 
encourage members of the Energy and Water Development Subcommittee and 
full Appropriations Committee to stop the administration from 
implementing this budget proposal.
    We appreciate the opportunity to present our views and will gladly 
respond to any inquiries that the subcommittee may have.
                                 ______
                                 
        Prepared Statement of the Cascade Community Partnership

    Ladies and gentlemen of the committee, thank you for the 
opportunity to submit written testimony regarding the U.S. Department 
of Energy's fiscal year 2007 budget as it pertains to geothermal 
research funding.
    I represent a group of citizens in Cascade, Idaho--the Cascade 
Community Partnership, supported by the Valley County Board of County 
Commissioners, the City of Cascade, the Cascade School District and the 
Cascade Medical Center Hospital District--who are working toward a 
fairly lofty goal, but given the current state of petroleum supply, 
demand and cost in the world today, a fairly sensible one, that of 
achieving some level of energy self-sufficiency here in Valley County.
    We, as a group, are somewhat chagrined that, given the current 
world situation regarding oil and energy in general, research funding 
for what is a viable form of alternative energy in the West--
geothermal--would be zeroed out in the U.S. Department of Energy's 
budget for the coming fiscal year. I should add here, that the proposal 
outlined below has very strong support from all of the principals 
involved, and strong bi-partisan support at that.
    We are in the midst of several studies involving Chevron Energy 
Solutions and IdaTherm LLC, an Idaho geothermal energy development 
company, and expect final reports within the next couple of months. We 
will then have additional seismic surveying and geochemical testing to 
conduct in order to further refine the information in those reports. 
However, preliminary indications are that we may have the potential for 
a geothermal resource in Valley County, Idaho, that could generate up 
to 100 megawatts of electricity. While that is a small amount of energy 
in the global picture, it is a project that could inspire other 
communities with similar resources to pursue the same type of 
development. Enough of those pieces could add up to something very, 
very significant, something that could help this Nation wean itself 
from the oil spigot. Beyond energy production, the partnership is also 
finalizing a strategic plan that includes use of geothermal water for a 
heating district, to heat greenhouses and conduct aquaculture, among 
other uses, all of which should benefit our rural economy.
    We have uncovered a number of potential sources of funding for 
capital construction, and for further research to narrow down our 
potential drilling site. But, the big gap in getting any such project 
off the ground is the risky business of drilling an exploratory 
geothermal well. The DOE funding for such activities in the past has 
been a great contributor to geothermal exploration.
    We would urge that you, members of the Senate Subcommittee on 
Energy and Water, find a way to restore some of that funding, 
specifically that relating to the drilling of geothermal exploratory 
wells, which in recent years has amounted to about $4 million every 
budget cycle. But, we would also urge that the funding be restored with 
a new innovative approach.
    Another member of the partnership's steering committee and I 
recently met in Boise, Idaho, with representatives of 
IcelandAmericaEnergy, a Reykavik-based firm that is interested in 
exporting its vast geothermal expertise to other parts of the world. We 
had a very fruitful discussion, perhaps the most important aspect of 
which was the exchange concerning the geothermal exploration fund that 
was established in Iceland in the early 1970's to encourage geothermal 
exploration. It is essentially a revolving loan fund that is tapped to 
provide matching funds for other private/public sources of money for 
exploratory drilling. Comparing the geothermal picture in Iceland with 
that in the Western United States is, to a great extent, a case of 
apples and oranges, but the basic concept of a self-sustaining 
revolving loan fund, with incentives to encourage continued 
exploration, seems valid.
    With restoration of funds for geothermal research, we would 
encourage you to direct that it be used as ``seed money'' to establish 
a self-sustaining revolving loan fund for geothermal exploration. As 
for the administration of the fund, we would suggest the DOE's 
geothermal energy division, or perhaps the Intermountain West 
Geothermal Consortium based at Boise State University, as two 
possibilities. There is certainly the expertise in either program to 
screen applications to make sure that applicants have done their ``due 
diligence,'' the homework and preliminary work necessary to ensure that 
the fund's resources are indeed going toward drilling an exploratory 
hole that has at least a 50/50 chance of success. Should the fund work 
as a number of us believe it can, there will be no need to approach 
Congress in the future with requests for additional funding for 
geothermal exploratory well drilling.
    Attached to this testimony is more detail about the proposed loan 
fund in the form of an ``explainer'' that includes some assumptions 
concerning risk and probabilities-numbers that we're told are valid in 
the geothermal industry in the United States--along with a sample 
spreadsheet about how the fund might operate. A number of much better 
financial minds than mine have examined this and agree that it's an 
approach that has merit.
    We, as a community, thank you for your time and serious 
consideration of this matter. If you have further questions about my 
written testimony or proposal, please don't hesitate to contact us. 
Thank you again for your time and consideration.

                      REVOLVING LOAN FUND PROPOSAL

Assumptions
    That geothermal wells are drilled at a success rate of 50 percent--
some experts in the field believe 60 percent is achievable. In Iceland, 
the rate is 90 percent, but that is in Iceland. It is expected that 
success rate will increase as more is learned about subterranean 
resource.
    That private industry (partners) will be willing to participate in 
the program as a matching partner. Discussions, and an already existing 
track record pertaining to the grant program, indicate that willingness 
may exist.
    That a proven geothermal resource is worth more than just the cost 
of drilling a well.
    That projects proposed for funding under the program would be 
heavily scrutinized--that the science and research leading up to site 
selection has been done, been done well, and then reviewed by 
knowledgeable experts.
Basic Proposal
    Money presently granted by Congress for exploratory geothermal well 
drilling through the United States. Department of Energy--money that 
has, in the past, been granted to geothermal explorers--would be 
converted to a revolving loan fund.
    If successful, the borrower would repay the fund at twice the 
amount that was borrowed.
    If unsuccessful, the loan would be forgiven, and the private 
partner would also be reimbursed out of the loan fund an amount equal 
to 50 percent of that private match. This step is to encourage 
continued geothermal exploration. Because of that feature, the fund 
would actually be paying for 75 percent of the cost of drilling an 
unsuccessful exploratory geothermal well.
    At this point, there is nothing in the pro forma spreadsheet to 
cover costs of administering the program, nor money included there to 
cover the costs of reviewing the data developed by the loan applicant.
    However, in reviewing the spreadsheet, it seems that there should 
be money available for those purposes.
    For the past few years, DOE has been budgeted $4 million each 
funding cycle for exploratory drilling.

----------------------------------------------------------------------------------------------------------------
                                                                        If
               Revolving loan fund                     Loans       unsuccessful,  If successful,   Fund balance
                                                                     cost \1\      repayment \2\
----------------------------------------------------------------------------------------------------------------
Beginning fund balance..........................  ..............  ..............  ..............      $4,000,000
First project...................................        $400,000        $600,000  ..............       3,400,000
Second project..................................         350,000         525,000  ..............       2,875,000
Third project...................................         400,000  ..............        $800,000       3,675,000
Fourth project..................................         300,000         450,000  ..............       3,225,000
Fifth project...................................         500,000  ..............       1,000,000       4,225,000
Sixth project...................................         400,000         600,000  ..............       3,625,000
Seventh project.................................         350,000  ..............         700,000       4,325,000
Eighth project..................................         400,000         600,000  ..............       3,725,000
Ninth project...................................         500,000  ..............       1,000,000       4,725,000
Tenth project...................................         300,000         450,000  ..............       4,275,000
Eleventh project................................         400,000         600,000  ..............       3,675,000
Twelfth project.................................         350,000  ..............         700,000       4,375,000
Thirteenth project..............................         500,000         750,000  ..............       3,625,000
Fourteenth project..............................         400,000  ..............         800,000       4,425,000
Fifthteenth project.............................         350,000         525,000  ..............       3,900,000
Sixteenth project...............................         400,000  ..............         800,000       4,700,000
Seventeenth project.............................         500,000         750,000  ..............       3,950,000
Eighteenth project..............................         400,000         600,000  ..............       3,350,000
Nineteenth project..............................         400,000  ..............         800,000       4,150,000
Twentieth project...............................         500,000  ..............       1,000,000       5,150,000
----------------------------------------------------------------------------------------------------------------
\1\ In unsuccessful ventures, cost to fund is total of loaned amount plus 50 percent of the private sector/local
  match is repaid that investor.
\2\ In successful ventures, the loan is repaid at 200 percent (can be repaid over time at additional interest).

    And on and on . . . 
  --Of course, this simple spreadsheet doesn't factor in costs 
        associated with administration of the fund, nor costs for peer 
        review of data.
  --The above spreadsheet also shows a less than 50 percent success 
        rate, with 9 successes to 11 failures.
  --Depending on timing, it appears the fund could also absorb a few 
        more failures.
                                 ______
                                 
  Prepared Statement of the Interstate Oil and Gas Compact Commission

    Chairman Domenici and members of the subcommittee, thank you for 
the opportunity to submit testimony on the appropriation to the 
Department of Energy's Office of Fossil Energy. My testimony represents 
the views of the governors of 30 member States of the Interstate Oil 
and Gas Compact Commission (IOGCC). These States account for virtually 
all of the onshore domestic production of crude oil and natural gas. As 
stewards of these resources, the States strongly support restoring the 
appropriation to, at the very least, the current budget level for 
research and development (R&D) for oil and natural gas projects 
administered by the Office of Fossil Energy. Taxpayers are very 
supportive of Federal investments in energy security, and there is no 
better investment than in R&D.
    As I prepare this testimony we stand as a country very close to yet 
another ``energy crisis.'' Crude oil prices reached more than $75 a 
barrel--a price level not experienced in our country's history. In 
addition, the prices of heating oil, natural gas and gasoline also 
reached record highs. The U.S. domestic oil and natural gas industry 
today supplies about 40 percent of our Nation's demand for oil. The 
rest is imported--a number which is growing every year--making us more 
and more vulnerable to international crises and foreign economic 
manipulation. Our dependence on others for our energy security has 
never been greater.
    One thing we can count on, however, is that domestic supplies of 
crude oil and natural gas are our best hedge against this vulnerability 
and increasing import dependency. Besides energy security there are a 
myriad of other reasons why domestic production is preferable to 
imports:
  --Our domestic resources are produced under the world's most 
        effective environmental protections, which were established and 
        enforced by the States.
  --Domestic resources create high-quality jobs here at home and 
        provide the energy that powers our standard of living. Few 
        realize that stripper oil wells (wells producing less than 10 
        barrels per day) account for about one-quarter of the lower 48 
        States' onshore domestic oil production and stripper gas wells 
        (wells producing 60 Mcf per day or less) about 10 percent of 
        onshore domestic gas production. This is a critical natural 
        resource.
  --Despite perceptions to the contrary, large qualities of oil and 
        natural gas remain onshore the United States. These resources 
        represent the most stable and secure energy available. These 
        resources may exist in fields that have already been discovered 
        and await a new technology that results in cost-effective 
        recovery. Or they may lie in reservoirs yet undiscovered due 
        only to a lack of technology appropriate for deeper horizons or 
        greater geologic complexity. The bottom line is vast reserves 
        remain untapped. While recovery rates have increased 
        dramatically in the past 50 years and exciting new tools have 
        been developed for exploration, still more can be done to reach 
        the full production potential for reservoirs.
    Many experts believe R&D is the most important factor in maximizing 
the availability and utilization of petroleum resources, especially 
domestic reserves.
    Several years ago, the Task Force on Strategic Energy Research and 
Development noted that, ``There is growing evidence of a brewing `R&D 
crisis' in the United States--the result of cutbacks and refocusing in 
private-sector R&D and reductions in Federal R&D.''
    A more recent report being compiled this month by the IOGCC 
confirms the declining trend in R&D expenditures while the country is 
experiencing a corresponding increase in reliance on imports. Major oil 
companies once poured millions into research and development. Today, 
however, their focus has largely moved overseas and offshore. Eighty-
five percent of the wells in the United States are drilled by 
independent oil and natural gas producers (producing roughly 40 percent 
of the domestic oil and 65 percent of the domestic natural gas). Such 
smaller independents lack both the resources and infrastructure for 
significant R&D.
    The IOGCC report concluded that ``[w]hen private R&D is compared to 
Federal expenditures, the outlook is more bleak. Private spending is 
substantiated . . . but Federal spending remains disproportionately 
small compared to the relative importance of oil and gas to U.S. energy 
requirements.''
    The decline of Federal and private support for oil and gas research 
is well documented. The reasoning for cutting government support seems 
steeped in politics and a failure to understand the importance of 
Federal R&D to our domestic oil and gas industry and our energy 
security. However, this is a new era of uncertainty in our energy 
security that requires a fresh look at spending priorities.
    At present, our own economic recovery continues to be questioned, 
and an energy shortage would certainly slow the comeback. Middle East 
energy supplies are at considerable risk with war and internal conflict 
that remains a constant threat. The recent anti-U.S. rhetoric from 
Venezuela has caused companies to back away from future oil and gas 
investments in this country, creating yet more uncertainties in a major 
country supplying petroleum to the United States.
    If the United States is to maintain its ability to produce its 
domestic supplies of oil and natural gas, Federal expenditures on R&D 
must fill some of the void left by private industry. Federal funding on 
oil and natural gas must increase if the United States is to maintain 
its ability to produce the domestic oil and natural gas resources our 
country so desperately needs. But instead of filling the void and 
expanding Federal expenditure on R&D, the administration's budget for 
fiscal year 2007 eliminates oil and gas research.
    In fact, the proposed budget calls for cutting the petroleum 
technology R&D program at the very moment that our country could 
benefit the most from technology breakthroughs that can be applied to 
our own resources.
    This is still so much promising work the taxpayers of this country 
support: new methods of drilling that reduce impacts to the 
environment; new materials that allow better, faster drilling; new 
chemicals and biological tools that increase production; better uses of 
renewables in the production of fossil fuels; minimizing waste; and 
creating high quality jobs.
    There have been many success stories from the DOE oil and gas 
research program. One recent, striking example of how DOE makes a real 
contribution to advances in environmental protection, energy production 
and innovation comes from a DOE-IOGCC project in California. Under 
DOE's Preferred Upstream Management Practices (PUMP) program, the 
project is proving that unmarketable gas can be used on site to provide 
power to oil wells previously idle. At the same time, the project is 
meeting the strict air quality standards in the Los Angeles area. DOE 
funding for this project was matched 100 percent by other partners, 
which enabled the government to double its R&D investment. Every 
government program investment should be as effective.
    This is but one example of DOE helping provide leadership in 
demonstrating a technology that may have much broader implications for 
operators in 30 other oil- and gas-producing States who now won't have 
to reinvent the well in order to satisfy environmental restrictions and 
the urgent need for domestic energy.
    Through careful regulation, IOGCC member States have helped 
maximize production and minimize wasteful practices that can lead to 
the premature abandonment of reservoirs. States have also developed 
innovative approaches to deal with temporarily idled wells, created 
incentives that maximize production and supported R&D that improve 
recovery rates and lower finding costs.
    Going forward, the IOGCC believes that a balanced and effective 
energy policy must encompass a number of fundamental principles, with 
R&D serving as a centerpiece in each. Other guiding principles include 
conservation of resources both in the producing and consuming sectors, 
encouraging domestic production to create economic growth and 
stability, increasing access to public lands for responsible 
development and prolonging production from wells at economic risk.
    We strongly encourage the subcommittee's support of increased 
funding in oil and gas research as a first step in implementing an 
energy plan that makes sense for our country's future.
                                 ______
                                 
     Prepared Statement of the Solar Energy Industries Association

                              INTRODUCTION

    The Solar Energy Industries Association (SEIA) appreciates this 
opportunity to offer written testimony regarding the solar energy 
research and development programs of the Department of Energy. SEIA is 
the national trade association of solar energy manufacturers, dealers, 
distributors, contractors, installers, architects, consultants, and 
marketers, working work to expand the use of solar technologies in the 
global marketplace.

             SECURITY, PROSPERITY, ENVIRONMENTAL PROTECTION

    We anticipate that the annual global growth rate of the 
photovoltaics market--30-50 percent--will continue to be the norm for 
many years into the future (though near-term silicon supply shortages 
will limit growth for the next year or two.) By 2015, PV will provide 
5-10 GW of electric capacity (enough to power 1-2 million homes); avoid 
10 million metric tons per year of CO2 emissions; and employ 
30,000 new workers. An additional 5-10 GW of concentrating solar power 
has been forecast for the American Southwest by the Western Governor's 
Association and several consultancy reports.
    No other technology can match solar's environmental benefits, 
ability to reduce natural gas demand, high employment intensity, and 
high-tech manufacturing benefits. However, all of these aggressive 
deployment forecasts assume continued progress on the industry's 
technical challenges at a rate at least matching historical norms; and 
the current soaring growth of the industry means the United States must 
make substantial investments if it is to maintain this progress--and 
stay ahead of other nations.

                                THE GOAL

    It now appears possible to have all solar technologies broadly 
competitive on a simple economic basis with their conventional fuel 
competition in the United States before 2015--with steady progress in 
certain high value markets leading up to that date. This target appears 
achievable both for photovoltaic electricity and solar thermal 
displacement of conventional energy (in the retail market) and 
concentrating solar power (in the wholesale market.)

            SURGING GLOBAL INDUSTRY, TENUOUS U.S. LEADERSHIP

    The last few years have been a period of exceptional growth and 
change for all sectors of the industry.
    Since 2001, the global market for photovoltaics has quadrupled in 
size--from just under 400 megawatts of new annual capacity to more than 
1,600 last year--approximately 412 billion worth of new product. 
Meanwhile the United States' global market share, formerly more than 50 
percent, dipped below 10 percent.
    2005 saw the first new construction of utility-scale Concentrating 
Solar Power plants in more than a decade.
    Solar water heating experienced surging growth in the presence of 
unusually high prices for all conventional fuels.
    Across all three technologies, surging demand and increasing 
economies of scale have driven a continuous feedback loop--each solar 
panel or power plant coming off of the line makes the next one cheaper. 
In fact, solar electricity costs on average less than half as much as 
it did in the 1990's--with the recent runup in natural gas prices, this 
is for the first time within striking distance of many retail electric 
rates.
    Wall Street and Silicon Valley have taken notice, as well. 
Investment capital is surging into the industry at an unprecedented 
rate from publicly-traded stocks and venture capital funding; analysts 
estimate more than $1.5 billion of capital went into photovoltaic 
manufacturing expansion last year alone, and currently planned utility 
investments in concentrating solar power run to over $150 million per 
project.

                     CONTINUING INDUSTRY CHALLENGES

    However, there are also severe challenges facing the industry as a 
whole.
    The unprecedented growth of the photovoltaic sector has placed a 
severe strain on global supplies of silicon. (While as late as the 
1990's, the global solar industry subsisted on waste and off-spec 
silicon from the microprocessor industry, it now demands more than half 
of global supply.) This has bottlenecked production and created a 
supply/demand imbalance that threatens the steady progress of cost 
reductions that have driven this industry within the realm of 
conventional ``grid'' electricity pricing. There is a real sector-wide 
need for improved manufacturing processes to relieve this bottleneck 
and continue price stability.
    Responding to soaring conventional energy prices and policies 
enacted by the Energy Policy Act of 2005, Concentrating Solar Power 
manufacturers have effectively restarted this long-dormant industry 
``from scratch.'' They face considerable hurdles in scaling up their 
production by orders of magnitude and presenting investors with proven 
technologies sufficiently advanced to enable rapid deployment.
    Solar water heating continues its history of slow, steady growth in 
the United States. However, the United States still employs this 
technology at less than one-tenth the rate of major European nations, 
and must move aggressively to develop novel lower-cost and more 
integrated systems if this technology is to realize its potential for 
near-term natural gas usage reduction.
    In all cases, there is a continued need for Federal research--not 
to supplant the increasing role of private investment in expansion and 
research and development, but to provide a framework and pathway for 
bringing solar truly into the mainstream of U.S. energy resources, and 
provide broadly-used tools to continue rapid growth. Given the current 
energy situation, and the escalating concern of most Americans 
regarding energy issues, it is no longer acceptable merely to continue 
solar R&D programs at the current level.

              PHOTOVOLTAICS--THE SOLAR AMERICA INITIATIVE

    Accordingly, we strongly support the Solar America Initiative (SAI) 
as laid out in the administration's 2007 budget request. This budget 
proposes a new $139.47 million photovoltaic research program--an 
increase of more than 78 percent over fiscal year 2006. Additionally, 
the SAI represents a substantial shift in how DOE's solar programs 
administer and direct their research.
    Where previous photovoltaics research focused on DOE laboratory 
R&D, with an emphasis on incremental cost reductions and potential 
future breakthroughs, we anticipate that the SAI will bring a more 
rigorously selective and goal-centered philosophy more focused on the 
near-term barriers to the real possibility of large scale solar 
deployment. In keeping with this philosophy, an increased emphasis on 
industry/university/DOE partnerships will leverage Federal funding 
through the increasing availability of private sector capital to the 
industry.

                       CONCENTRATING SOLAR POWER

    The 2007 budget request also continues research into Concentrating 
Solar Power (CSP) devices at $8.9 million, and we are pleased to see 
the restoration of this Congressional priority in the initial request.
    These utility scale, heat-driven solar generators currently provide 
hundreds of megawatts of clean electricity to the southwest, and the 
first new plants in more than a decade are now under construction, 
promising to bring enough electricity on line in the next several years 
for several thousand new homes--all without further straining our 
stressed supplies of conventional fuels. Current contracts extend to 
several hundreds of megawatts of installed capacity.
    In large part, this is only possible due to continued improvements 
in price and performance that have been developed under DOE guidance. 
The initial large-scale commercial deployment of many technologies 
refined in the laboratory will inevitably require initial support from 
many of the researchers that made them possible, and we believe that 
this budget should prove adequate to ensure that this process occurs, 
smoothing the transition to multi-gigawatt commercial deployment over 
the 2006-2015 timeframe.

                       SOLAR HEATING AND LIGHTING

    Unfortunately, the administration request would zero out this 
program item, an omission which we believe is not in line with the 
stated goal of the Solar America Initiative: ``To accelerate widespread 
market acceptance of clean solar energy technologies across all U.S. 
market segments by 2015, reducing our dependence on natural gas and 
increasing our energy resources.''
    This resource is already cost-effective in many cases, and it could 
have truly significant impact on U.S. energy consumption if a serious 
deployment program were undertaken: Fewer than 123,000 residential 
water heaters consume the capacity of one LNG tanker per year, and if 
just 40,000 American households purchased solar water heating systems 
in the next 5 years, it would displace 5 million cubic feet of natural 
gas consumption.
    In the past years, demand for solar thermal has grown 
substantially. However, there remain two principal barriers to the 
mass-market penetration:
  --(1) Cost.--The DOE SH&L program, in partnership with industry, 
        recently achieved a significant breakthrough by developing a 
        new low-cost polymer-based solar water heater with a 50 percent 
        cost reduction. Unfortunately, this cutting-edge technology 
        will not be available for deployment in most areas of the 
        country until DOE and NREL's expertise can be harnessed to 
        resolve cold climate durability and system design issues.
  --(2) Perceived Reliability.--The potential loss of SH&L program 
        funding for the non-profit Solar Rating and Certification 
        Corporation (SRCC), which has certified solar thermal 
        collectors and systems for performance and quality since 1980, 
        will severely diminish the impact of the new Federal tax credit 
        for solar water heaters. SRCC certification is required for 
        solar water heating systems to be eligible for the tax credit, 
        so the loss of funding creates a bottleneck for the industry 
        and consumers alike. It is also possible that de-funding SRCC 
        could open the door for un-rated and un-certified systems to 
        enter a tax credit-stimulated market--a repeat of the quality 
        issues that plagued the industry in the 1970's.
    Accordingly, we request that this program be continued at the $5 
million dollar annual level.

                              CONCLUSIONS

    In an era of highly increased concern regarding the United States' 
energy security, it is time to make a significant commitment to 
research and development of renewable energy sources. The 
administration's proposed budget is a first step in the right direction 
of substantially increased funding, and a more rigorous and results-
driven approach to research, development, and deployment, for these 
extremely promising resources.
                                 ______
                                 
         Prepared Statement of Pratt & Whitney Rocketdyne, Inc.

                           EXECUTIVE SUMMARY

    America faces several complex and interrelated energy challenges. 
Three of the most pressing are: (1) excessive dependence on oil 
imports; (2) escalating energy prices; and (3) increasing greenhouse 
gas emissions. Advanced technologies will be required to solve these 
problems.
    Gasification can address all of these challenges. Gasification 
converts coal, either by itself or blended with biomass and combustible 
wastes, into syngas, a valuable mixture of hydrogen and carbon 
monoxide. Syngas can be used to produce electricity, synthetic liquid 
fuels (such as ultra-clean diesel fuel, gasoline, and ethanol), 
hydrogen, synthetic natural gas, and chemicals.
    These products can all be produced with near-zero emissions, as 
gasification enables efficient sequestration of carbon dioxide. 
Gasification can also increase domestic oil and natural gas production, 
if byproduct carbon dioxide is used for enhanced recovery of oil and 
coal bed methane (natural gas). Synthetic and alternative fuels 
produced via gasification can be carbon-neutral when the feedstock is a 
mixture of coal and biomass, and when the coal-derived carbon dioxide 
is sequestered.
    Recognizing the importance of gasification, the Department of 
Energy (DOE) is working with industry partners to develop a portfolio 
of advanced gasification technologies. Pratt & Whitney Rocketdyne 
(PWR), America's leading rocket engine company, is pleased to 
participate in this cooperative program. We are adapting rocket engine 
technologies to develop a compact gasification system that could 
significantly reduce plant cost and downtime, improve efficiency, and 
economically gasify all ranks of coal.
    Advanced gasification technologies are strategically important to 
America's economic competitiveness and national security. However, 
projected DOE funding is inadequate for timely development of these 
technologies. We therefore respectfully request that the Senate take 
the following actions:
  --Fully fund the President's fiscal year 2007 budget request of $54 
        million under the DOE ``Advanced Integrated Gasification 
        Combined Cycle'' line item.
  --Direct DOE to fund continued development of the PWR compact 
        gasification system with at least $7 million in fiscal year 
        2007. (This project is identified in the President's budget 
        request.)
  --Request DOE to prepare a plan (with proposed budget) to expand 
        development of advanced gasification technologies in fiscal 
        year 2008 and future years.

                               BACKGROUND

    There are currently 116 gasification plants in operation around the 
world. These plants produce electricity, synthetic natural gas, ultra-
clean diesel fuel, hydrogen, fertilizer, chemicals, and many other 
products from abundant, low cost feedstock such as coal, biomass, and 
combustible wastes.
    These plants are important--but they provide less than 1 percent of 
the world's energy. Widespread commercial application of the technology 
has been constrained by economic and technological factors. Existing 
gasification plants suffer from high capital cost, excessive downtime, 
and inability to economically gasify all ranks of coal and other 
available feedstock.
    Significant technological advances are required to realize the full 
potential of gasification. With improved technologies, future 
gasification plants could produce a substantial fraction of America's 
electricity, gaseous fuels, and liquid transportation fuels from 
domestic resources, with near-zero emissions.

                   DOE ADVANCED GASIFICATION PROGRAM

    The Department of Energy and its industry partners are currently 
developing new technologies that could dramatically reduce the cost of 
gasification and improve plant reliability and performance. Congress 
funds this work under the line item ``Advanced Integrated Gasification 
Combined Cycle.''
    Pratt & Whitney Rocketdyne (PWR), a world-leading rocket engine 
company, is pleased to participate in this important work. We built the 
rocket engines that took Americans to the Moon, and brought them safely 
home. Today, PWR makes the liquid rocket engines that power the Space 
Shuttle, Delta and Atlas launch vehicles.
    With DOE support, PWR is developing a compact gasification system 
using low-cost rocket engine technologies to reduce gasifier size, 
capital cost, and downtime, while improving performance, efficiency and 
feedstock flexibility. This is just one of several technologies 
supported by DOE under this line item. The four key projects are:
  --Southern Company and KBR (Kellogg, Brown, and Root) are developing 
        an advanced Transport Gasifier to reduce the cost of 
        gasification.
  --Air Products is developing an ITM (Ion Transport Membrane) air 
        separation system to reduce the cost and improve the efficiency 
        of producing pure oxygen from air.
  --Research Triangle Institute (RTI) is developing an advanced, low-
        cost gas cleanup system, in collaboration with Eastman 
        Chemical.
  --PWR is developing the compact gasification system described above, 
        in collaboration with GTI (Gas Technologies Institute) and EERC 
        (Energy and Environmental Research Institute).
    These are all potential high-payoff technologies. They are also 
complementary. For example, the PWR compact gasification system fully 
utilizes the benefits of Air Product's ITM air separation system and 
RTI's advanced gas cleanup system, while complementing Southern's 
Transport Gasifier by gasifying all ranks of coal.
    These advanced gasification technologies, in combination with 
advanced gas turbines, could reduce the cost of Integrated Gasification 
Combined Cycle (IGCC) power plants from $1,600 per kilowatt today, to 
less than $1,300 per kilowatt, and improve plant efficiency to near 50 
percent. If these goals are achieved, IGCC power plants could save U.S. 
electric power consumers up to $20 billion annually, reduce coal power 
plant emissions over 90 percent, and facilitate efficient carbon 
dioxide sequestration.
    These technologies could also enable cost-competitive production of 
liquid transportation fuels, hydrogen, synthetic natural gas, and 
chemicals--all from abundant domestic fossil fuels (such as coal and 
petroleum coke) which can be blended with renewable resources (such as 
biomass wastes and purpose-grown biomass). Although it is difficult to 
estimate the cost savings achievable from synthetic and alternative 
fuels, the payoff could be huge: (1) reduced oil imports; (2) improved 
national security; (3) reduced air pollution and carbon dioxide 
emissions; (4) less volatile energy prices; and (5) sustainable 
economic growth.
    The advanced gasification technologies funded by DOE feed into 
FutureGen and the Clean Coal Power Initiative (CCPI), and are essential 
to the success of these programs. As an example of this process, the 
Southern Company is currently scaling up its Transport Gasifier from 
pilot scale (at Wilsonville, Alabama) to commercial scale in a CCPI 
project in Orlando, Florida.

                        PWR GASIFICATION SYSTEM

    The PWR compact gasification system uses rapid-mix rocket engine 
technology to achieve the following advantages over conventional 
gasification systems:
  --90 percent reduction in gasifier size;
  --50 percent lower capital cost;
  --3-10 percent higher cold gas efficiency;
  --50-90 percent reduction in downtime;
  --Feedstock flexibility (potential to gasify all ranks of coal, 
        either by themselves or blended with renewable biomass and 
        combustible wastes);
  --Product flexibility (economical production of multiple products, 
        including electricity, hydrogen, liquid fuels, and chemicals);
  --Low-cost hydrogen production and carbon dioxide sequestration.
    With PWR gasification technology, Integrated Gasification Combined 
Cycle (IGCC) power plants will be able to produce electricity for about 
4 cents per kilowatt-hour. Capital costs will be reduced by as much as 
$300 million for a 1,000 megawatt plant. This capital cost reduction, 
combined with improved plant availability, can save $1 billion during 
the first 15 years of operation of such a plant.
    The PWR technology is also well-suited for production of hydrogen 
and sequestration of carbon dioxide, with an expected plant efficiency 
of about 70 percent and cost approximately $2.00 per thousand cubic 
feet. (This is equal to 80 cents per gallon of gasoline equivalent.) 
Low-cost hydrogen can replace natural gas as fuel for existing 
combined-cycle power plants and refineries. The resulting decrease in 
natural gas consumption and carbon dioxide emissions could be 
substantial. This technology can also provide low-cost, near-zero 
emission hydrogen for stationary fuel cells, and power the Hydrogen 
Economy when (and if) practical fuel cell vehicles are developed.
    If the price of oil remains high, and if oil imports and global 
warming continue to be major issues, advanced technologies such as the 
PWR gasifier will be needed to produce affordable carbon-neutral 
synthetic fuels from non-petroleum resources. Combining the PWR 
gasification system with existing Fischer-Tropsch technology enables 
production of ultra-clean synthetic diesel fuel (and other alternative 
fuels) for less than the current price of crude oil.
    Many industries in the United States are struggling with high 
natural gas cost, and are therefore interested in industrial 
gasification to produce syngas and electricity for industrial purposes. 
The compact, low-cost features of the PWR technology makes it well-
suited for industrial gasification, especially when combined with other 
advanced gasification technologies under development on the DOE 
program, such as Air Product's ITM air separation system.
    PWR started development of the compact gasification system in late 
2004, after a competitive procurement sponsored by the DOE. We are 
currently testing components and materials, and constructing a cold 
flow test facility at the Energy and Environmental Research Center 
(EERC) at the University of North Dakota. Testing at this facility will 
begin in late 2006. We have also defined a pilot plant, to be located 
at the Gas Technology Institute (GTI) in Des Plaines, Illinois.

                             FUNDING STATUS

    The President's 2007 budget request includes funds for this project 
(as well as the 2006 budget). The steps necessary to complete 
development of the technology include: (1) constructing and operating 
the pilot plant at GTI; and (2) developing and testing the dry solids 
pump at EERC. The total government cost share for this entire project 
is about $30 million over 5 years, including sunk costs of $4 million. 
This is a cost-shared program, and PWR funds a portion of technology 
development, and all related commercialization activities.
    In January 2006, the DOE conducted a peer review of our proposed 
plan to complete this program. The peer reviewers recommended 
continuation of the project. In parallel, DOE funded an independent 
contractor to evaluate the potential economic advantages of our 
gasification system, and their results confirmed the economic 
advantages of the PWR compact gasification system.
    Nevertheless, in April 2006, DOE informed us that they do not plan 
to fund the pilot plant and dry solids pump, because DOE does not have 
adequate funds to develop a new gasification system. We understand that 
the administration and Congress are under immense pressure to reduce 
the budget deficit, and to fund other important priorities. However, we 
believe that this country can--and should--allocate the resources 
needed to address America's energy problems.

                            RECOMMENDATIONS

    We urge the Senate to provide DOE with adequate resources to 
develop advanced gasification technologies. Specifically, we request 
the Senate to take the following actions:
  --Fully fund the President's fiscal year 2007 budget request of $54 
        million under the DOE ``Advanced Integrated Gasification 
        Combined Cycle'' line item.
  --Direct DOE to fund continued development of the PWR compact 
        gasification system with at least $7 million in fiscal year 
        2007. (This project is identified in the President's budget 
        request.)
  --Request DOE to prepare a plan (with proposed budget) to expand 
        development of advanced gasification technologies in fiscal 
        year 2008 and future years.
    This expanded DOE Gasification Plan should include sufficient 
funding for: (1) timely completion of on-going advanced gasification 
projects; and, (2) new initiatives to enable cost-competitive 
production of synthetic and alternative transportation fuels, as well 
as electricity, with near-zero emissions.

                          SUMMARY OF BENEFITS

    The benefits from widespread deployment of coal and biomass 
gasification are substantial for a broad range of constituents:
  --America will benefit from enhanced energy security.
  --The U.S. economy will benefit from domestically-produced, 
        affordable energy supplies.
  --Coal-producing regions, farm States, and forestry regions will 
        benefit from sustainable, environmentally sound utilization of 
        coal and biomass.
  --Oil producing regions will benefit because carbon dioxide (produced 
        as a byproduct of gasification) can be used for enhanced oil 
        recovery.
  --Refinery regions will benefit as gasification technology enables 
        cost-competitive utilization of refinery wastes and other low-
        cost feedstock.
  --Energy consumers will pay less for electricity, natural gas, and 
        transportation fuels.
  --All people on the planet will benefit from a clean environment and 
        a stable climate.
    These are clear and compelling reasons to develop and deploy 
advanced gasification technologies.
    Thank you for giving us the opportunity to provide this testimony. 
With your leadership, America will transform today's energy challenges 
into tomorrow's opportunities.


 
       LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                              ----------                              
                                                                   Page
Alaska Energy Authority, Prepared Statement of the...............   413
Allard, Senator Wayne, U.S. Senator From Colorado:
    Prepared Statements of..............................4, 50, 105, 267
    Questions Submitted by......................................80, 187
    Statements of..................................4, 49, 104, 193, 267
Alliance to Save Energy, Prepared Statement of the...............   435
American:
    Association of Petroleum Geologists, Prepared Statement of 
      the........................................................   429
    Chemical Society, Prepared Statement of the..................   492
    Forest & Paper Association, Prepared Statement of the........   473
    Gas Association, Prepared Statement of the...................   476
    Geological Institute, Prepared Statement of the..............   450
    Iron & Steel Institute, Prepared Statement of the............   467
    Public Power Association, Prepared Statement of the..........   432
    Rivers, Prepared Statement of................................   351
    Society:
        For Microbiology, Prepared Statement of the..............   408
        Of Plant Biologists, Prepared Statement of the...........   448
Arkansas River Basin Interstate Committee, Prepared Statement of 
  the............................................................   300
Association of U.S. Petroleum Engineering Department Heads, 
  Prepared Statement of the......................................   425
Austin Energy, Prepared Statement of.............................   478

Bardin, David J., Prepared Statement of..........................   459
Biomass Energy Research Association, Prepared Statement of the...   419
Board of Levee Commissioners for the Yazoo-Mississippi Delta, 
  Prepared Statement of the......................................   317
Bond, Senator Christopher S., U.S. Senator From Missouri:
    Question Submitted by........................................   186
    Statements of..............................................106, 191
Brooks, Hon. Linton F., Under Secretary for Nuclear Security, and 
  Administrator, National Nuclear Security Administration, 
  Department of 
  Energy.........................................................   241
    Prepared Statement of........................................   246
    Statement of.................................................   244
Bureau of Economic Geology, The University of Texas at Austin, 
  Prepared Statement of the......................................   394

Calaveras County Water District, Prepared Statement of the.......   331
California State Coastal Conservancy, Prepared Statement of the..   334
Cascade Community Partnership, Prepared Statement of the.........   507
Center for Advanced Separation Technologies, Virginia Polytechnic 
  Institute and State University, Prepared Statement of the......   455
Central:
    Arizona Water Conservation District, Prepared Statement of 
      the........................................................   362
    Utah Water Conservancy District, Prepared Statement of the...   365
City of:
    Arlington, Texas, Prepared Statement of the..................   340
    Flagstaff, Arizona, Prepared Statement of the................   308
    Los Angeles Board of Harbor Commissioners and Port of Los 
      Angeles, Prepared Statement of the.........................   349
    San Marcos, Texas, Prepared Statement of the.................   321
    Santa Barbara, California, Prepared Statement of the.........   314
    St. Helena, California, Prepared Statement of the............   332
    Stillwater, Minnesota, Prepared Statement of the.............   355
Clark County Regional Flood Control District, Prepared Statement 
  of the.........................................................   297
Coal Utilization Research Council, Prepared Statement of the.....   479
Coalition of Northeastern Governors, Prepared Statement of the...   417
Cochran, Senator Thad, U.S. Senator From Mississippi:
    Prepared Statements of..................................6, 108, 198
    Questions Submitted by......................................33, 182
Colorado:
    River:
        Basin Salinity Control Forum, Prepared Statement of the..   368
        Commission of Nevada, Prepared Statement of the..........   376
        Energy Distributors Association, Prepared Statement of 
          the....................................................   380
        Water Conservation District, Prepared Statement of the...   360
    Springs Utilities, Prepared Statement of.....................   370
    Water Congress, Prepared Statement of the....................   361
Craig, Senator Larry, U.S. Senator From Idaho:
    Prepared Statement of........................................   195
    Statements of................................................ 2, 46
Cummins Inc., Prepared Statement of..............................   398

D'Agostino, Thomas, Deputy Administrator for Defense Programs, 
  National Nuclear Security Administration, Department of Energy.   241
Dayton, Senator Mark, U.S. Senator From Minnesota, Question 
  Submitted by...................................................   238
Denver Water, Prepared Statement of..............................   364
Department of Petroleum and Geosystems Engineering, The 
  University of Texas at Austin, Prepared Statement of the.......   503
Detroit Diesel Corporation, Prepared Statement of the............   462
Distributed Energy Coalition, Prepared Statement of the..........   404
Domenici, Senator Pete V., U.S. Senator From New Mexico:
    Opening Statements of....................................1, 89, 191
    Prepared Statement of........................................   197
    Questions Submitted by....................25, 75, 77, 152, 229, 275
    Statements of..........................................45, 100, 241
Donald, Admiral Kirkland, Deputy Administrator for Naval 
  Reactors, National Nuclear Security Administration, Department 
  of Energy......................................................   241
Dorgan, Senator Byron L., U.S. Senator From North Dakota, 
  Questions Submitted by.........................................76, 83
Duchesne County Water Conservancy District, Letter From the......   372

Electric Drive Transportation Association, Prepared Statement of 
  the............................................................   447
Energy Sciences Coalition, Prepared Statement of the.............   452
External Advisory Committee to the Department of Petroleum and 
  Geosystems Engineering, University of Texas at Austin, Prepared 
  Statement of the...............................................   485

Federation of American Societies for Experimental Biology, 
  Prepared Statement of the......................................   401
Feinstein, Senator Dianne, U.S. Senator From California, 
  Questions Submitted by.........................................    86
Florida State University, Prepared Statement of..................   422
Fort Peck Assiniboine and Sioux Tribes and Dry Prairie Rural 
  Water System, Prepared Statement of the........................   382
Four Corners Power Plant, Prepared Statement of the..............   361
FuelCell Energy, Inc., Prepared Statement of.....................   412
Fusion Power Associates, Prepared Statement of...................   458

GE Energy Advanced Technology Operation, Prepared Statement of 
  the............................................................   444
Garman, David K., Under Secretary of Energy for Energy, Science 
  and Environment, Department of Energy..........................    89
    Prepared Statement of........................................   110
    Statement of.................................................   108
Gas Machinery Research Council, Prepared Statement of the........   411
Geo-Energy Partners, Prepared Statement of.......................   475
Geothermal Energy Association, Prepared Statement of the.........   470
Grand Valley Water Users' Association, Prepared Statement of the.   367
Granite Falls, Minnesota, Prepared Statement of..................   353
Great Basin Center for Geothermal Energy, University of Nevada, 
  Reno, Prepared Statement of the................................   458

Hospital for Special Surgery, Prepared Statement of the..........   442

IBACOS, Inc., Prepared Statement of..............................   496
Independent Petroleum Association of America, Prepared Statement 
  of the.........................................................   453
Interstate Oil and Gas Compact Commission, Prepared Statement of 
  the............................................................   509

Jarrett, Jeffrey, Assistant Secretary for Fossil Energy, 
  Department of 
  Energy.........................................................    89
Johnson, Senator Tim, U.S. Senator From South Dakota, Statement 
  of.............................................................    48

Keys, John W., III, Commissioner, Bureau of Reclamation, 
  Department of the Interior.....................................    45
    Prepared Statement of........................................    60
    Summary Statement of.........................................    58
Kovscek, Anthony R., Prepared Statement of.......................   397

Landrieu, Senator Mary L., U.S. Senator From Louisiana, Prepared 
  Statement of...................................................   194
Limbaugh, Mark, Assistant Secretary for Water and Science, 
  Department of the Interior.....................................    45
    Prepared Statement of........................................    52
    Statement of.................................................    50

McConnell, Senator Mitch, U.S. Senator From Kentucky, Questions 
  Submitted by...................................................   188
Metropolitan Water:
    District of Southern California, Prepared Statement of the...   372
    Reclamation District of Greater Chicago, Prepared Statement 
      of the.....................................................   336
Mid-West Electric Consumers Association, Inc., Prepared Statement 
  of the.........................................................   441
Murray, Senator Patty, U.S. Senator From Washington, Statements 
  of........................................................5, 103, 196

Napa County Flood Control and Water Conservation District, 
  Prepared Statement of the......................................   339
National:
    Association:
        For State Community Services Programs, Prepared Statement 
          of 
          the....................................................   414
        Of State Energy Officials, Prepared Statement of the.....   438
    Coalition for Food and Agricultural Research, Prepared 
      Statement of the...........................................   502
    Community Action Foundation, Prepared Statement of the.......   488
    Hydrogen Association, Prepared Statement of the..............   490
    Mining Association, Prepared Statement of the................   486
    Research Center for Coal and Energy, West Virginia 
      University, Prepared Statement of the......................   493
    Wind Watch, Inc., Prepared Statement of......................   504
New Mexico Interstate Stream Commission, Prepared Statement of 
  the............................................................   374
Northern Colorado Water Conservancy District, Letter From the....   364
Nuclear Energy Institute, Prepared Statement of the..............   482

Oglala Sioux Rural Water Supply System, Prepared Statement of the   387
Orbach, Raymond L., Ph.D., Director, Office of Science, 
  Department of Energy:
    Prepared Statement of........................................   119
    Statement of.................................................   117
Ouachita River Valley Association, Prepared Statement of the.....   325

Paul, Jerry, Principal Deputy Administrator, Nuclear 
  Nonproliferation Activities, National Nuclear Security 
  Administration, Department of Energy...........................   241
Perkins County Rural Water System, Inc., Prepared Statement of 
  the............................................................   367
Pratt & Whitney Rocketdyne, Inc., Prepared Statement of..........   513
Public Service Company of New Mexico, Prepared Statement of the..   362
Pueblo Board of Water Works, Prepared Statement of the...........   365

Red River Valley Association, Prepared Statements of the.......327, 376
Reid, Senator Harry, U.S. Senator From Nevada:
    Prepared Statement of........................................    92
    Questions Submitted by.......................................    34
    Statement of.................................................    89
    Supplemental Statement of....................................    94
Rispoli, James, Assistant Secretary of Energy for Environmental 
  Management, Department of Energy...............................    89
Riverside County Flood Control and Water Conservation District, 
  Prepared Statement of the......................................   315

Sage Electrochromics, Inc., Prepared Statement of................   499
San Juan Water Commission, Prepared Statement of the.............   361
Santa Clara Valley Water District, Prepared Statements of the..342, 378
Sell, Hon. Clay, Deputy Secretary, Department of Energy..........     1
    Prepared Statement of........................................    11
    Statement of.................................................     7
Society of Nuclear Medicine, Prepared Statement of the...........   431
Solar Energy Industries Association, Prepared Statement of the...   511
Southeastern Federal Power Customers, Inc., Prepared Statement of   505
Southern Company, Prepared Statement of the......................   464
Southwestern Water Conservation District, Prepared Statement of 
  the............................................................   366
Specter, Senator Arlen, U.S. Senator From Pennsylvania, Questions 
  Submitted by...................................................   237
State:
    Engineer's Office, State of Wyoming, Letter From the.........   370
    Of Wyoming, Prepared Statement of the........................   366
    Teachers' Retirement System, State of California, Prepared 
      Statement of the...........................................   406
Strock, Lieutenant General Carl A., Chief of Engineers, Corps of 
  Engineers--Civil, Department of the Army, Department of 
  Defense--Civil:
    Prepared Statement of........................................   210
    Statement of.................................................   209

Tennessee-Tombigbee Waterway Development Authority, Prepared 
  Statement of the...............................................   309
The Nature Conservancy, Prepared Statement of....................   322
Three Affiliated Tribes, Prepared Statement of the...............   385
Tri-County Water Conservancy District, Prepared Statement of the.   365

UF-DOE High Temperature Electrochemistry Center, University of 
  Florida, Prepared Statement of the.............................   416
US Fuel Cell Council, Prepared Statement of the..................   468
USA Rice Federation, Prepared Statement of the...................   320
United States Advanced Ceramics Association, Prepared Statement 
  of the.........................................................   427
University Corporation for Atmospheric Research, Prepared 
  Statement of 
  the............................................................   423
Upper:
    Gunnison River Water Conservancy District, Prepared Statement 
      of 
      the........................................................   361
    Mississippi River Basin Association (UMRBA), Prepared 
      Statement of the...........................................   311

Ventura Port District, Prepared Statement of the.................   299

Western Coalition of Arid States, Prepared Statements of the...358, 392
Woodley, John Paul, Jr., Assistant Secretary of the Army (Civil 
  Works), Corps of Engineers--Civil, Department of the Army, 
  Department of Defense--Civil...................................   191
    Prepared Statement...........................................   200
    Statement of.................................................   198
Wyoming Water Association, Letter From the.......................   359

 
                             SUBJECT INDEX

                              ----------                              

                      DEPARTMENT OF DEFENSE--CIVIL

                         DEPARTMENT OF THE ARMY

                       Corps of Engineers--Civil

                                                                   Page

Additional Committee Questions...................................   229
Civil Works:
    Backlog......................................................   211
    Program:
        Areas....................................................   203
        Improvements.............................................   201
Construction.....................................................   203
Continuing Contracts.............................................   236
    And Reprogramming............................................   234
Drought..........................................................   231
Emergency Supplemental Appropriations............................   200
Hopper Dredge McFarland..........................................   237
Katrina..........................................................   231
Major Issues by Appropriation Account............................   197
Overview of Fiscal Year 2007 Army Civil Works Budget.............   200
Performance-based Budgeting....................................197, 200
Powder River Basin Expansion Project.............................   238
President's Management Agenda....................................   205
Project Suspensions..............................................   197
Regulatory Issues in New Mexico..................................   229
Reprogramming....................................................   237
Studies and Design...............................................   202
Summary of Fiscal Year 2007 Program Budget.......................   210
Value of the Civil Works Program to the Nation's Economy and 
  Defense........................................................   212

                          DEPARTMENT OF ENERGY

Accelerated Cleanup--Change in Course..........................173, 178
Additional Committee Questions..................................24, 152
Advanced Burner Reactors.........................................    27
Advancing America's Economic and Energy Security.................   111
American Centrifuge:
    Program--USEC................................................   162
    Project......................................................   168
Barter of Uranium................................................   162
Biomass..........................................................   165
Clean Coal Power Initiative......................................   159
    Use of Carryover Balances....................................   160
Cleanup Delays at K-25...........................................   178
Coal Research....................................................   116
Consolidation of Nuclear Material in the Complex.................   176
Construction of New Nuclear Power Plants.........................    33
Contradictions to Other Studies And Assessments..................    97
DOE--Collaborative R&D...........................................    32
Department's GNEP Technology Objectives..........................    16
Economics........................................................    34
Ensuring a Clean Environment.....................................   113
Environmental/NEPA...............................................    42
Experimental Program to Stimulate Competitive Research...........   157
Fast Reactor Record and Safety...................................    38
Fossil Energy Budget.............................................   160
GAO Report on Total Environmental Liabilities....................   179
Genomes to Life Program..........................................   152
Global:
    Nuclear Energy Partnership (GNEP)............................   160
        Budget Specifics.........................................    25
        Engineering Demonstration................................    31
        Nonproliferation.........................................    27
        Proliferation:
            Controls.............................................    25
            Risks................................................    18
        Regulation...............................................    29
    Risk Liability Protection....................................    28
Hanford Cleanup--Favorite Among Equals.........................169, 173
Hurricane Katrina Disaster Recovery..............................   166
Hydrogen.........................................................   161
    And Fuel Cell Program........................................   165
    Competitiveness..............................................   164
    Manufacturing................................................   165
Implementation of the Energy Policy Act..........................   158
Improving Management at the Department of Energy.................   115
Independently Financed Facilities................................   156
India's inclusion in ITER........................................   157
Integrated Interim Storage/Reprocessing..........................    35
Interim Storage..................................................    31
    And Reprocessing.............................................   181
International:
    Competitiveness..............................................   100
    Concerns.....................................................    39
    Interest in Enrichment Services..............................    19
    Linear Collider..............................................   155
Iran--Pursuit of a Complete Fuel Cycle...........................    27
Joint Dark Energy Mission........................................   154
Katrina--EPAct...................................................   166
Legislative Reforms..............................................    30
Linear-No-Threshold Standard.....................................   153
Loan:
    Guarantee....................................................   183
    Guarantees...................................................   116
Los Alamos:
    National Lab...............................................171, 175
    Neutron Science Center.......................................   153
Mixed Oxide (MOX) Program........................................    28
    Cost Increase................................................    21
National Nuclear Security Administration and State Department 
  Participation in GNEP..........................................    21
Next Generation Nuclear Plant (NGNP)............................40, 162
Nuclear Power:
    R&D..........................................................   158
    For Transportation Fuels.....................................    29
    2010.........................................................    33
OMB Rationale....................................................    98
Off-Shore Wind Energy Development................................   167
Office of Science--20-Year Plan..................................   155
Past Reprocessing Record.........................................    37
Photovoltaic Energy Commercialization Program....................   167
Proliferation Concerns...........................................    38
Providing Reliable, Clean Electric Power.........................    95
Public Disclosure................................................    42
Rare Isotope Accelerator.........................................   157
Reclassifying Waste at Hanford, Washington.....................169, 176
Recycling Spent Fuel Technology..................................    14
Regarding the Termination of the Geothermal Energy Program.......    94
Reliable Fuel Supply.............................................    32
Reprocessing in Europe (Traditional Purex Reprocessing)..........    40
Risk Insurance--EPAct 2005.......................................    28
Royalty Changes..................................................    99
Savannah River Site--Seismic Regulations.......................173, 177
Science and Energy Research......................................   153
Solar America Initiative.........................................   164
Spent Fuel Recycling Plan........................................    36
Standby Support for Nuclear Power Plants.........................   157
Strategic Petroleum Reserves.....................................   166
Tax Incentives...................................................    99
Technology Transfer Coordinator..................................   156
Timing...........................................................    40
Transportation Fuels.............................................23, 24
U.S. Mixed Oxide Facility Costs..................................22, 23
UREX Construction Options........................................    26
UREX+ Recycling Process..........................................    26
USGS Resource Assessment.........................................    99
University R&D Program...........................................    29
Uranium:
    Inventory....................................................   163
    Mining.......................................................   163
    Supply.......................................................   162
Vehicle Programs.................................................   184
WERC/DOE Cooperative Agreement...................................   178
Waste............................................................    37
    Conundrum....................................................    30
    Treatment Plan Seismic Regulation..........................172, 177
Weatherization Program...........................................   166
Wind Energy......................................................   163
Yucca Mountain...................................................    33
    Capacity.....................................................   182
    Funding......................................................   179
    License Application..........................................   181
    Options......................................................    30
    Program Status...............................................   180
    Repository Operations........................................   182
    Requirements.................................................   180

                National Nuclear Security Administration

Additional Committee Questions...................................   274
Balanced National Program--NIF at All Cost.......................   282
Changes in the Nuclear Weapons Complex...........................   267
Complex of the Future............................................   278
Defense Nuclear Facilities Safety Board..........................   279
    Active Confinement Ventilation...............................   286
Fiscal Year 2007 Budget:
    Request by Program...........................................   250
    Tables.......................................................   257
Global Nuclear Energy Partnership (GNEP).......................273, 280
Laboratory Directed Research and Development...................295, 296
Los Alamos National Laboratory (LANL)............................   273
    New Contract Costs...........................................   289
Management Issues................................................   257
National Nuclear Security Administration (NNSA):
    Appropriation and Program Summary Tables, Out-year 
      Appropriation Summary Tables...............................   257
    Management Oversight.........................................   280
    Vacancies....................................................   287
National Ignition Facility.......................................   266
    Budget.......................................................   277
    Costs and Funding............................................   275
    Plans........................................................   285
Nuclear Materials................................................   270
Plutonium Disposition............................................   263
Radioactive Sources..............................................   293
Reliable Replacement Warhead--Agent for Change...................   286
Russian Highly Enriched Uranium Deal.............................   291
Secretary of Energy Advisory Board Related Questions.............   284
Special Nuclear Material Security................................   281
Status of MOX....................................................   292
``Z'' 5-Year Plan................................................   282

                           Office of Science

Alternate Sources of Energy......................................   147
Carbon Sequestration.............................................   141
Coal Research and FutureGen......................................   141
Fiscal Year 2007 Science Priorities..............................   121
Gasifier Technology............................................145, 146
Hydrogen Powered Fuel Cells......................................   150
International Linear Collider....................................   148
Los Alamos Neutron Science Center................................   147
National Renewable Energy Laboratory.............................   136
Organization.....................................................   124
PNNL 300 Area....................................................   138
Program Objectives and Performance...............................   124
Rocky Flats:
    Litigation...................................................   137
        Claims...................................................   146
    Mineral Rights.............................................137, 146
Science:
    Accomplishments..............................................   122
    Programs.....................................................   125
Waste Treatment Plant............................................   138
Yucca Mountain License Application...............................   151

                       DEPARTMENT OF THE INTERIOR

                         Bureau of Reclamation

Additional Committee Questions...................................    75
Addressing Other Departmental Changes............................    56
Animas-La Plata..................................................    80
Budget:
    And Performance Integration..................................    64
    Overview.....................................................    53
Bureau of Reclamation's Mission..................................    82
California Bay-Delta (CALFED)....................................    63
    Storage Studies..............................................    86
    Water Use Efficiency Projects................................    87
Central Valley Project Restoration Fund..........................    63
Dam Safety and Aging Infrastructures.............................    68
Departmental Programmatic Highlights.............................    53
Desalination and:
    Advanced Water Treatment Technologies........................    78
    Water Treatment Technologies.................................    71
Drought..........................................................    75
Energy Development...............................................    56
Environmental Water Account......................................    86
Everglades.......................................................    53
Fiscal Year 2007:
    Budget Request for the Bureau of Reclamation.................    59
    Planned Activities...........................................    64
Funding for Friant--NRDC Settlement..............................    86
Highlights of the Fiscal Year 2007 Budget Request................    59
    For the Bureau of Reclamation................................    51
Jackson Gulch Reservoir..........................................    81
Klamath River Basin..............................................    55
Lower Tuscan Aquifer Water Supply Investigation..................    87
National Academy of Sciences Study...............................    58
Operations and Maintenance.......................................    82
Overall BOR Funding..............................................    83
Policy and Administration........................................    62
President's Management Agenda....................................    63
Rehabilitation...................................................    82
Repayment Contracts..............................................80, 83
Rural Water......................................................    84
Safety of Dams...................................................    81
Title XVI Water Reclamation and Reuse............................    79
Tularosa and Hurricane Relief Efforts............................    72
2005 Hurricanes..................................................    53
Water:...........................................................
    And Related Resources........................................    60
    Recycling Projects and Title XVI.............................    88
    Supply Crises in the West....................................    51
    2025.........................................................    76
        Preventing Crises and Conflicts..........................    54

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