[Senate Hearing 109-410]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-410
 
      FISCAL YEAR 2007 BUDGET REQUEST FOR THE DEPARTMENT OF ENERGY

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

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                                   TO

 CONSIDER THE PRESIDENT'S PROPOSED BUDGET FOR FISCAL YEAR 2007 FOR THE 
                          DEPARTMENT OF ENERGY

                               __________

                            FEBRUARY 9, 2006


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



                                 ______

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                 PETE V. DOMENICI, New Mexico, Chairman
LARRY E. CRAIG, Idaho                JEFF BINGAMAN, New Mexico
CRAIG THOMAS, Wyoming                DANIEL K. AKAKA, Hawaii
LAMAR ALEXANDER, Tennessee           BYRON L. DORGAN, North Dakota
LISA MURKOWSKI, Alaska               RON WYDEN, Oregon
RICHARD M. BURR, North Carolina,     TIM JOHNSON, South Dakota
MEL MARTINEZ, Florida                MARY L. LANDRIEU, Louisiana
JAMES M. TALENT, Missouri            DIANNE FEINSTEIN, California
CONRAD BURNS, Montana                MARIA CANTWELL, Washington
GEORGE ALLEN, Virginia               KEN SALAZAR, Colorado
GORDON SMITH, Oregon                 ROBERT MENENDEZ, New Jersey
JIM BUNNING, Kentucky

                      Bruce Evans, Staff Director
                   Judith K. Pensabene, Chief Counsel
                  Bob Simon, Democratic Staff Director
                  Sam Fowler, Democratic Chief Counsel
              Elizabeth Abrams, Professional Staff Member
                   Deborah Estes, Democratic Counsel
         Jennifer Michael, Democratic Professional Staff Member


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Akaka, Hon. Daniel K., U.S. Senator from Hawaii..................     3
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     6
Bodman, Samuel, Secretary, Department of Energy..................     8
Bunning, Hon. Jim, U.S. Senator from Kentucky....................     3
Craig, Hon. Larry E., U.S. Senator from Idaho....................    21
Domenici, Hon. Pete V., U.S. Senator from New Mexico.............     1
Menendez, Hon. Robert, U.S. Senator from New Jersey..............     4
Smith, Hon. Gordon, U.S. Senator from Oregon.....................     5

                               APPENDIXES
                               Appendix I

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

                              Appendix II

Additional material submitted for the record.....................   103


      FISCAL YEAR 2007 BUDGET REQUEST FOR THE DEPARTMENT OF ENERGY

                              ----------                              


                       THURSDAY, FEBRUARY 9, 2006

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:34 a.m. in room 
SD-366, Dirksen Senate Office Building, Hon. Pete V. Domenici, 
chairman, presiding.

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

    The Chairman. The hearing will please come to order. Good 
morning, Mr. Secretary. Good morning, Senators. Let us proceed. 
I want to remind everyone the Secretary has been very generous 
in coming up here extremely early in this process. He is 
appearing here first because we wanted him to. But he has a 
very tough schedule, so 11:45--that is why we started earlier--
is when he has to leave. We will do our very best. If it is 
urgent, we will call him back another time.
    What we will do is Senator Bingaman and I will have some 
opening remarks. We will proceed, and he wants 10 to 15 minutes 
and we will put his whole statement in and then we will proceed 
one and one.
    First of all, we are glad that you are here, not just to 
discuss the President's budget--that is the avowed purpose--but 
obviously there will be other questions asked because Senators 
are very interested in what is going on with the bill we passed 
last year and things like that.
    Senator Bingaman, it is good to be with you again to get 
this started. I hope we have a good year working together. I 
would like to tell the Senators and those in the media that are 
interested we have introduced the Domenici-Bingaman-Dorgan-
Coleman-Talent bill. It will take a substantial portion of 
Leasehold 181, 100 miles from the coast of Florida. It will say 
that we are making it available for lease soon. That is because 
of the tremendous positive impact it would have on the natural 
gas prices.
    Now, having said that, I commend you for choosing the most 
exciting and challenging time to be in this administration with 
reference to the energy situation of our country. Last week at 
the core of the President's State of the Union Address was 
several comprehensive new programs to break America's 
dependence on foreign oil, and build America's competitive 
edge. We in this committee are very pleased that much of that 
was relegated to the Department of Energy. We hope you are 
excited about that and we think you are the right person to 
implement it. It will not be easy.
    Second, I want to commend the President for his 
comprehensive global nuclear strategy that promotes nuclear 
nonproliferation goals while helping to resolve the nuclear 
waste issues that remain. In the 1970's the United States 
decided to abandon its leadership on the nuclear recycling and 
let the rest of the world pass us by. With the creation of the 
global nuclear energy program--and we look forward to the 
details in the bill that you are going to send us soon, I hope, 
but what we know of it--we look forward, at least this Senator 
does, to getting back into the game that we abandoned, as I 
said, in my opinion in a very, very inappropriate--at a very 
inappropriate time for America's future.
    Since the passage of the energy bill, we should now tell 
you, all of you, that there are 19 new reactors that are 
currently being planned. We understand from the Nuclear 
Regulatory Commission that that is the case. I think that means 
we did a good job in a bill on that particular issue. When you 
pass a bill and you see within 6 to 7 months the change, it 
means that we put something together that is pretty viable.
    I am just going to move quickly. Recycling technologies 
that are discussed under GNEP are exciting. They are very long 
term, they are very controversial, but we look forward to 
working with you and hopefully we will have others helping with 
that very, very big project.
    I am particularly impressed that this administration is 
doubling the funding in the next decade for the Office of 
Science. I think it should become a powerful office because 
science in the Department is powerful.
    Finally but not least, the President has announced an 
Advanced Energy Initiative which aims to reduce our dependence 
on imported sources and commits $2.1 billion to meet that goal. 
That is an increase of $381 million. Some will say that is not 
enough. We ought to hear about that today. We are going to have 
to find money somewhere if we are going to do more.
    The President has recognized that innovation and research 
are very important. We are very pleased that we were able to 
join him in the White House, Senator Bingaman and I, with 
Senator Alexander, in trying to talk him into this. I think he 
was already somewhat impressed with the area, but he did come 
forth with a large portion of the Augustine report, which is a 
very heralded competitiveness study for America, and we are 
hopeful that we are going to be able to implement it rapidly 
here in the U.S. Congress.
    I mentioned Leasehold 181. It is separate from everything 
else, but I must say there is no other piece of American 
property, land, that could better help us with the natural gas 
problem that is beating our consumers to death and starving our 
energy of their most needed fuel.
    Clean Coal Power Initiative, that has been reduced and we 
need an explanation of why. I think you have one. It has gone 
from $49 million to about $5 million.
    The Energy Policy Act provided incentives--and I will close 
with this one, Mr. Secretary. When we were putting this energy 
bill together, people were saying, let us draw a national--let 
us draw a bill that will get us to independence, and what do we 
want to do in these various areas to get us there. We set 
specific goals and specific programs, but we settled on a 
package of incentives for loan guarantees that could either be 
appropriated--that is, the portion of the cost--or could be 
done in a new manner where the borrower paid the risk, the risk 
dollars. That means that would not cost the budget anything.
    We need that initiative started. It requires a lot of 
action on your part. If you have it started, it means that 
various projects that are moving ahead, be it solar, coal, 
ethanol, can be funded under loan guarantees. We hope today you 
will indicate to us that you are fully aware of that and that 
you choose to do what the Congress said and move ahead with it.
    Thank you very much. Senators, I hope I did not take too 
much time. Now I yield to Senator Bingaman.
    [The prepared statements of Senators Akaka, Bunning, 
Menendez and Smith follow:]

  Prepared Statement of Hon. Daniel K. Akaka, U.S. Senator From Hawaii

    Mr. Chairman, thank you for calling this timely hearing on the 
Department of Energy's FY 2007 budget. It's good to see you again, 
Secretary Bodman.
    I am pleased to see an increase in hydrogen research and 
development--$53 million over last fiscal year--and for a new 
initiative for biomass and biofuels. I would like to have more details 
on the proposal for the Bio-Fuels Initiative and a ``biorefinery'' 
because I want to be sure that this proposal includes the potential for 
all types of cellulosic material, including sugar cane, pineapple, and 
other types of tropical biomass.
    As you know, I have been a strong supporter of the Department's 
science and renewable energy programs; and I am pleased to see 
substantial increases in both these programs. The Solar America 
Initiative is promising, with $83 million more than FY 2006 spending 
levels. I hope it will lead to even greater use of solar power in 
Hawaii, which already has the greatest penetration of solar technology 
of any state in the nation.
    Now let me state my concerns: The overall budget request for the 
Department of Energy for FY 2007 is virtually level-funded and amounts 
to an exercise in moving money around, so that the budget

   does not represent real increases in the investment in 
        energy technologies, hydrogen or biomass; and,
   will result in decreases in other sound investments such as 
        Weatherization and Geothermal programs.

    In addition, I am also concerned about the elimination of Natural 
Gas Technologies programs. The Energy Policy Act of 2005 contains 
legislation that authorizes an expanded Gas Hydrates program, and I 
cannot understand why the Department of Energy continues to request no 
funding--zero!--for this program. Gas Hydrates represent a vast, 
potential source of clean energy and warrant an intensified research 
and development effort. Yet this year, in addition to zero funding, the 
Administration has decided to terminate this program.
    I also notice that the Department did not request funding for the 
Hawaii Energy Study for FY 2007. This is a study, required by EPACT, 
that would be enormously useful for Hawaii, the most oil-dependent 
state in the nation. It is an inexpensive initiative to use scientific 
data and the assistance of the Department of Energy to help us 
determine the optimal route to reducing oil dependence--in essence, a 
model for the nation that will pay for itself many times over. I look 
forward to working with you on this and other initiatives.
    Thank you, Mr. Chairman. I have some questions that I will ask 
during the question and answer period.
                                 ______
                                 
   Prepared Statement of Hon. Jim Bunning, U.S. Senator From Kentucky

    Thank you, Mr. Chairman.
    I think The Department of Energy Budget for fiscal year 2007 will 
be one of the most important in quite a while.
    Not only do we have to address the pressing issues of high prices 
and energy security, but also we must ensure that the landmark energy 
bill we passed this past summer is given a chance to succeed. And that 
begins with the budget process.
    I would like to say that I am very disappointed with the funding 
level for coal research and development. I believe that coal is 
America's answer to the difficult questions we are asking about high 
prices and energy independence. Now is the time to increase funding and 
prepare new technologies so we can bum coal cleaner and more 
efficiently.
    Another area important to me is the legacy of nuclear research in 
the DOE. while the DOE has made commitments to the cleanup and to the 
workers of the Paducah Gaseous Diffusion Plant, I notice that funding 
levels are again being cut. i do not know how we can hope to have an 
accelerated cleanup of Paducah if these numbers don't start moving in 
the right direction.
    I am hopeful that as we address coal technology and our 
overdependence on foreign oil, we can tackle important issues such as 
the development of ANWR, exploration of oil shale and tar sands and the 
promotion of biodiesel fuels. I look forward to hearing Secretary 
Bodman's plans for the future at DOE.
    Thank you, Mr. Chairman.
                                 ______
                                 
              Prepared Statement of Hon. Robert Menendez, 
                      U.S. Senator From New Jersey

    Thank you very much, Mr. Chairman, and Ranking Member Bingaman, 
it's an honor to be on this committee, and I'm looking forward to a 
very productive year here. I'd also like to thank the Secretary for 
being here to discuss the details of the department's budget, a budget 
that is going to have a major impact on the future of our nation and my 
home state of New Jersey. I was pleased to hear the President talk last 
week about trying to end our addiction to oil, reduce our dependence on 
foreign imports, and devote. additional resources to research into 
renewable energy and alternative fuels. However, I was not pleased when 
I saw the President's budget this Monday, because it appeared that his 
request did not match his rhetoric.
    Instead of a new age Manhattan Project to break our dependence on 
foreign oil, we got baby steps such as a 22 percent increase in the 
renewable energy research budget. And while this is a worthwhile step, 
it still pales in comparison to the tax breaks for oil and gas 
exploration that were in last year's energy bill; a bill which 
recommended a much larger increase in the renewable energy research 
budget. The president touted an increase in the biofuels research and 
development budget from $90 million to $150 million, but the Energy 
Policy Act authorized $200 million for that research in FY07. 
Furthermore, funding for research into geothermal energy and 
hydropower, two promising clean energy alternatives, was completely 
eliminated.
    America needs a comprehensive energy strategy; a strategy that 
advances technologies to make energy safer, cleaner, and less 
expensive, while taking real steps to increase national conservation. 
Both the President and the Secretary have recently talked about the 
importance of conservation and energy efficiency, but the budget 
contains big cuts for energy efficiency programs and research. In a 
time of record high energy prices, when we're trying to break our 
addiction to oil, this simply makes no sense.
    One of the most shocking cuts in the budget is in the 
Weatherization program, which is losing 30% of its funding, meaning 
30,000 fewer households would see the benefits of this program next 
year. This program has been tremendously successful, providing over 5 
million families with sorely needed long-term energy assistance. While 
I'm a huge supporter of the Low-Income Home Energy Assistance Program 
(LIHEAP), that program simply allows families to cover their rapidly 
increasing home energy costs. Weatherization actually lowers energy 
costs, decreasing the need for LIHEAP assistance and making homes more 
energy efficient. LIHEAP is an essential stop-gap measure. 
Weatherization is a crucial long-term one. It provides over three 
dollars in benefits for every dollar spent, and saves us an estimated 
15 million barrels of oil each year. I simply can not understand how 
the administration could talk about the need to conserve energy and 
break our dependence on foreign oil, yet propose a huge cut to this 
essential program.
    The whole energy efficiency budget is actually quite disappointing. 
Vital programs like Energy Star, Clean Cities, and Vehicle Technologies 
are all seeing big cuts. The Federal Energy Management Program, which 
should set the example for the country by making the federal government 
more energy efficient, also gets a 12% cut. Quite simply, this budget 
is sending the wrong message to the American people.
    Another item in the budget that concerns me is the $250 million for 
the Global Nuclear Energy Partnership, which would overturn three 
decades of United States policy about reprocessing of spent nuclear 
fuel. There are serious proliferation risks that go with this course of 
action, and the relatively limited detail that we have seen so far on 
this initiative does not fill me with confidence. In addition, a 1996 
study by the National Academy of Sciences found it could take centuries 
to substantially reduce the amount of high-level waste that needs to be 
stored at a long-term repository. The last thing we need is another 
``Star Wars'' style, pie-in-the-sky initiative that takes decades and 
costs tens of billions of dollars without actually delivering what was 
promised. While failures and mistakes in ballistic missile defense are 
embarrassing, failures and mistakes in a global nuclear reprocessing 
initiative could be catastrophic.
    I agree with much of what the President said in his State of the 
Union last week. I believe we need to find alternative sources of 
energy and reduce our dependence on foreign oil. I just don't believe 
that this budget is a credible step towards getting us there.
                                 ______
                                 
   Prepared Statement of Hon. Gordon Smith, U.S. Senator From Oregon

    Mr. Chairman, I appreciate your convening this hearing on the 
Department of Energy's fiscal year 2007 budget request. I also want to 
welcome Secretary Bodman here today.
    Unfortunately, the members from the Pacific Northwest are once 
again confronting the latest proposal from the Office of Management and 
Budget that would raise electricity rates in the Pacific Northwest. 
This plan, which mandates that a portion of BPA's secondary revenues 
would be used to prepay debt, is nothing more than a rate increase in 
disguise.
    I strongly oppose this proposal, which is bad public policy for 
numerous reasons. Northwest residents are still paying for the West 
Coast energy crisis of 2000-2001. BPA's rates today are already 46 
percent higher than they were five years ago, as a result of huge price 
spikes during the crisis. While the economy of the Northwest has 
rebounded from the recession of 2000-2001, Oregon's unemployment rate 
remains above the national average. Even with these regional economic 
challenges, BPA has made its Treasury payments, and has actually 
prepaid over $1.4 billion in debt over the last five years.
    I have been working with my colleagues for several years now to 
reduce BPA's operating costs, and to bring rate relief to its 
customers. This proposal would negate all of those efforts to bring 
down retail rates and retain energy-intensive industries in the 
Northwest.
    OMB claims it can make the change administratively, but it is 
clearly inconsistent with congressional directives for the treatment of 
revenues and the rate setting requirements in BPA's governing statutes. 
Under the Transmission System Act of 1974, the BPA Administrator is to 
set rates at the lowest possible level consistent with sound business 
principles, and are to be set taking into consideration all revenues in 
order to repay bonds issued by the federal Treasury when they come due.
    Earmarking a portion of BPA's revenues sets a bad precedent, and 
fails to take into consideration ongoing uncertainties surrounding 
river operations for fish, the appropriate level of carry-over 
reserves, or BPA's ability to meet its scheduled Treasury payments. 
This year, the proposal is for revenues from surplus sales over $500 
million. What's to keep that number from being lowered in future 
budgets?
    As a self-financing agency, BPA must be able to consider all its 
revenues when setting rates and establishing its Treasury repayment 
probability. It must also have the flexibility to respond to operating 
mandates and market conditions over time. I am concerned about the 
impact of this proposal on BPA's reserves. During the energy crisis, 
BPA used over $600 million in reserves to buy power to meet its 
contractual obligations.
    Finally, from a nationwide perspective, it is my view that the 
Administration should be attempting to lower electricity and other 
energy costs across the nation, not to raise them. As U.S. companies 
struggle to compete in a global economy, they are already hampered by 
rising electricity prices and natural gas prices that are the highest 
in the industrialized world.
    This proposal sends a terrible message to energy-intensive 
industries. In essence, the federal government would rather wring more 
money out of ratepayers for deficit reduction than pursue lower energy 
rates that would help keep U.S. businesses competitive.
    This is not a theoretical problem. Last October, this committee 
received testimony that of the 120 large-scale chemical plants being 
constructed in the world, only one was being built in the United States 
because of the high price of natural gas. At that time, natural gas 
prices in the U.S. were 20 times higher than they were in Saudi Arabia.
    Secretary Bodman, you need to know that I will join with my 
colleagues from the Northwest to do what is necessary to prevent this 
ill-conceived proposal from being implemented.
    Mr. Chairman, I also have concerns with other portions of the 
Energy Department's budget, such as the zeroing out of funds for 
geothermal research. I will have additional questions for the record on 
this and other items in the Department's budget.

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

    Senator Bingaman. Thank you very much.
    Mr. Secretary, welcome and congratulations to you for the 
hard work you are putting in to try to move the country ahead 
in a lot of different areas. I thought I would focus on the 
budget as I understand it, and perhaps my understanding is 
erroneous in some respects. If it is, please tell me.
    The budget that the Department of Energy has for this year 
is essentially flat compared to last year, and if you look at 
it in terms of the budgetary environment that we are in, that 
is not bad news. That is in some ways good news. But, if you 
look at it in terms of what we intended to get started with 
last year's energy bill, I do not think it is good news. It 
seems to me that a flat budget is not adequate to do the things 
that we promised to do in last year's Energy Policy Act, which 
I know you strongly supported.
    The President declared when he signed that act back in 
August out in our State, Senator Domenici's State and mine, 
quote, ``This bill launches an energy strategy for the 21st 
century.'' He also observed that: ``Prior to the bill's 
enactment, for more than a decade America had gone without a 
national energy policy.''
    So obviously the question is, where is the funding to 
implement the new energy policy? I think there are some levels 
where there are some programs and some items in your budget 
that you are to be commended for, the President is, where 
clearly there are new resources. Let me mention some of those.
    The Office of Science budget, Senator Domenici referred to 
that and I agree entirely. That is a step forward, the 
increased funding there. A substantial increase of a half 
billion dollars in energy science, 14 percent, that is very 
encouraging. Funding levels for solar energy and wind energy, 
biomass energy, those are also up and I commend you for those.
    But there are other important programs that are being cut 
in the budget and in some cases those are areas that the 
President singled out in the past as being worthy of increased 
funding. Let me give you three examples. One example is the 
President gave special attention to energy efficiency. He said, 
quote: ``This bill makes an unprecedented commitment to energy 
conservation and efficiency.'' An unprecedented commitment. The 
bill sets higher efficiency standards for Federal buildings, 
for household products, directs the Department of 
Transportation to study the potential for sensible improvements 
in fuel efficiency standards for cars and trucks and SUVs, and 
authorizes new funding for research into cutting edge 
technologies.
    Yet, as I see this budget, as I understand it, those 
authorizations for cutting edge energy efficiency technologies 
are in fact proposed for cuts. The funding for energy 
efficiency in Federal buildings is proposed for significant 
cuts.
    Another example is when the President signed the bill he 
favorably singled out some of the oil and gas programs that 
were authorized in there. He said: ``The bill authorizes 
research into the prospects of unlocking vast amounts of energy 
now trapped in shale and tar sands.'' I believe last October 
you announced funding for 13 R&D projects aimed at tapping 
unconventional sources of natural gas, and that is funding that 
goes primarily to universities, national laboratories, 
independent oil and gas producers. When you announced those 
projects you said: ``The projects we are focusing on 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.''
    But those programs, as I understand your budget, are being 
zeroed out. This is at a time when I think we all agree that we 
need new technologies to boost domestic supplies of natural gas 
and oil.
    The third example I would mention and then I will move on, 
is that the Department has proposed a 32 percent cut in low 
income weatherization programs, and this is of course at a time 
when home energy bills are at historic highs. The Energy Policy 
Act authorized $600 million for weatherization in 2007. The 
administration is requesting $164 million.
    I asked my staff earlier this week if they would put 
together sort of a crosswalk between what was authorized in 
last year's bill and what is in budget request the President 
has submitted. We are going to have that available and give 
that to you. If you could have some of your budget experts look 
and see whether we are accurate in those comparisons, that 
would be useful, I think, as we put together our committee 
views and estimates to the Budget Committee. I hope that we can 
persuade the Budget Committee to make an additional allowance 
for implementation of the Energy Policy Act if in fact I am 
correct that we have not provided the resources that are 
necessary to fully implement that act.
    I look forward to working with Chairman Domenici, and with 
other colleagues, Democrat and Republican, to see if we can get 
more funds appropriated to implement the provisions of that 
act. I think the items I mentioned and many others that are 
dealt with in your budget, they are high priorities for members 
of this committee, both Democrat and Republican, areas such as 
energy efficiency, oil and natural gas, clean coal. I think 
those are areas where, as I understand the budget, the 
administration has not requested levels of funding that would 
allow the act to be implemented properly. So I hope that that 
can be corrected as we go through the budgetary process and the 
appropriations process.
    Thank you very much for having the hearing, Mr. Chairman.
    The Chairman. Thank you, Senator Bingaman.
    Now we are going to proceed. Mr. Secretary, your statement 
is made a part of the record as of now and you can proceed, 
please.

          STATEMENT OF HON. SAMUEL BODMAN, SECRETARY, 
                      DEPARTMENT OF ENERGY

    Secretary Bodman. Thank you, Senator. Good morning, Mr. 
Chairman. Good morning, Senator Bingaman. I would just say at 
the outset, Senator Bingaman, that we will be happy to look at 
whatever information you provide for us and give you the 
feedback that you request.
    I am very pleased to be here to talk about the budget, as 
we believe that this is quite an exciting time in this 
Department and we are very enthused, I am very enthused, about 
the prospects in the number of areas that have already been 
talked about.
    As you heard the President in his State of the Union 
Address, he announced several new energy priorities, including 
two key presidential initiatives that will be very crucial to 
the future work of this Department. These new priorities, as 
well as our other important missions, are spelled out in detail 
in my written testimony. If I may, I will take this opportunity 
to give you a few highlights, at least from my standpoint, of 
our $23.5 billion budget request.
    The 2007 budget request includes a $505 million increase in 
our science programs, which is part of the President's 
competitiveness initiative. That is a 14 percent increase. It 
is a big number and it is something that I think will have 
long-term implications, not just to energy but to our economy 
generally.
    In order to ensure that our country remains at the 
forefront of an increasingly competitive world, our Department 
will be pursuing what we have come to call transformational 
technologies, new technologies in cutting edge scientific 
fields that will be the crucial area of science in the 21st 
century, areas like nanotechnology, materials science, 
biotechnology, as well as high-speed computing.
    The President also announced an Advanced Energy Initiative 
to increase spending on clean energy sources that will 
transform our transportation sector, indeed the whole economy, 
and reduce our dependence on imported fossil fuels. 
Specifically, the 2007 budget request proposes $149 million for 
biomass and biofuels programs and a like amount, $148 million, 
for solar energy to support the Solar America program. In 
addition, the budget requests a total of $288 million to 
support implementation of the President's hydrogen fuel 
initiative.
    As a part of the President's Advanced Energy Initiative, 
the Department's 2007 budget also features $250 million to 
begin investments in the Global Nuclear Energy Partnership that 
the chairman has already alluded to. This is a groundbreaking, 
new, and what we hope will be an international effort to help 
meet the world's rapidly growing electricity needs with safe, 
emissions-free nuclear power, while enhancing our ability to 
keep nuclear technology and material out of the hands of those 
who seek to use it for non-peaceful purposes.
    As a complement to the GNEP strategy, the Department will 
continue to pursue a permanent geological storage site for 
nuclear wastes at Yucca Mountain and the budget, the 2007 
budget, includes $544 million to support that goal.
    For NNSA the budget proposes a total of $9.3 billion for 
2007, a $211 million increase that is largely devoted to 
nonproliferation. $111 million of that increase is in the 
Defense Nuclear Nonproliferation Program and will accelerate 
efforts to secure nuclear materials in the Soviet Union and 
advance an aggressive global nonproliferation agenda.
    Finally, the budget request also focuses on other key 
priorities. To meet our environmental commitments, the budget 
submission requests $5.8 billion to clean up legacy nuclear 
waste sites. We recently announced the completion of cleanup at 
Rocky Flats, a former nuclear weapons plant located outside of 
Denver. In 2006, DOE will complete environmental cleanup of the 
Fernault and Columbus sites in Ohio and the Sandia National 
Laboratory in New Mexico, as well as several other smaller 
sites.
    Mr. Chairman, there are many other productive and promising 
initiatives under way at the Department, and I will stop my 
comments here and look forward to answering your questions. 
Thank you.
    [The prepared statement of Secretary Bodman follows:]

    Prepared Statement of Hon. Samuel W. Bodman, Secretary of Energy

    Good morning, Mr. Chairman and Members of the Committee. I am 
pleased to appear before you today to discuss the President's Fiscal 
Year (FY) 2007 budget request for the Department of Energy (DOE).
    Over the last five years America has faced and overcome many 
challenges. From the U.S./Canada Power Blackout of August 2003, to the 
devastation caused by hurricanes Katrina and Rita, now more than ever, 
American families understand the key relationship between our Nation's 
energy security and America's economic security.
    It is with this in mind that the Department of Energy's budget for 
FY 2007 was crafted. The $23.5 billion budget request seeks to address 
America's short-term energy needs while positioning us for the future. 
The 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 helps address the threat of nuclear proliferation.
    Most notably, this budget request contains:

   A Landmark Investment in Scientific Research--The FY 2007 
        budget includes a $505 million increase in DOE's Science 
        programs, which is part of a commitment to double funding for 
        certain high-leverage science agencies over the next ten years. 
        The American Competitiveness Initiative recognizes that 
        scientific discovery and understanding help drive economic 
        strength and security. Developing revolutionary, science-driven 
        technology is at the heart of the Department of Energy's 
        mission. The increase proposed for the Department's Science 
        programs reflects the significant contribution DOE and its 
        world-class research facilities make to the Nation.
   Strategic Investments to Reduce America's Dependence on 
        Foreign Oil and Develop Clean 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 FY 
        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 a hydrogen 
        economy. The FY 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 FY 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 electricity, the FY 2007 Budget funds 
        diverse technology R&D programs. The FY 2007 Budget includes 
        $148.4 million for a new Solar America Initiative to develop 
        cost competitive solar photovoltaic technology by 2015. The FY 
        2007 Budget also provides $60.0 million for U.S. participation 
        in ITER, an international experimental reactor program that has 
        the potential for putting us on a pathway to tap nuclear fusion 
        as an enormous source of plentiful, environmentally safe 
        energy. The FY 2007 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.
   Strategic Investments to Enable Nuclear Energy Expansion in 
        a Cleaner, Safer Manner--The Department's FY 2007 budget 
        features $250 million to begin investments in the Global 
        Nuclear Energy Partnership (GNEP). GNEP is a comprehensive 
        strategy to enable an expansion of nuclear power in the U.S. 
        and around the world, to promote non-proliferation goals; and 
        to help resolve nuclear waste disposal issues.
          The Energy Information Administration (EIA) projects that 
        over the next 25 years, demand for electricity in the United 
        States alone will grow by over 40 percent. Nuclear power is an 
        abundant, safe, reliable and emissions-free way to help meet 
        this growing demand for energy throughout the world. As part of 
        the GNEP strategy, the United States will work with key 
        international partners to develop and demonstrate new 
        proliferation resistant technologies to recycle spent nuclear 
        fuel to reduce waste. To help bring safe, clean nuclear power 
        to countries around the world, the international GNEP partners 
        will also develop a fuel services program to supply developing 
        nations with reliable access to nuclear fuel in exchange for 
        their commitment to forgo developing enrichment and recycling 
        technologies.
          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 FY 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 power plants here in the U.S. The FY 2007 budget 
        includes $632.7 million for nuclear energy programs, a $97.0 
        million increase above the FY 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 power plants against the 
        financial impact of certain delays during construction or in 
        gaining approval for operation that are beyond the sponsors' 
        control.
   Strengthening America's National Security Commitments--In 
        the area of national security, the budget proposes a total of 
        $9.3 billion in FY 2007, a $211.3 million increase from the FY 
        2006 appropriation. At $6.4 billion, Weapons Activities remain 
        essentially level with the FY 2006 appropriations to continue 
        the transformation of the Nation's nuclear deterrent and 
        supporting infrastructure to be more responsive to the threats 
        of the 21st Century. The majority of the increase, $111.4 
        million, is in Defense Nuclear Nonproliferation programs to 
        accelerate efforts to secure nuclear material in the former 
        Soviet Union and advance an aggressive global nuclear 
        nonproliferation agenda.

    The Department of Energy's budget request also focuses on other key 
priorities. 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, the Sandia National Laboratory in New Mexico, 
and several other sites.
    To continue to provide budgetary rigor and provide a public 
planning context for programmatic decisions, the Department expanded 
the development of five-year budget plans, including detailed five-year 
plans for the Department's major programs. This multi-year planning 
effort assures that the FY 2007 budget decisions are based on a sound 
corporate approach to allocating scarce financial resources to our most 
compelling priorities.
    Reflected throughout the FY 2007 budget are the integration of 
performance measures and the incorporation of sound business practices 
in the Department's operation consistent with the President's 
Management Agenda. We also have established 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

             promoting science and technological innovation
    As the millennium unfolds, we stand on the threshold of scientific 
revolutions in biotechnology and nanotechnology, in materials science, 
in fusion energy and high-intensity light sources, and in high-speed 
computing, to touch on only a few important fields. The nations that 
lead these scientific revolutions will likely dominate the global hi-
tech economy for the foreseeable future. We are on the verge of major 
new discoveries about the nature of our universe, solutions to some of 
the deepest mysteries of the cosmos and the fundamental understanding 
of matter--insights that will transform the way we think about 
ourselves and our world.
    The President's American Competitiveness Initiative will encourage 
American innovation and bolster our ability to compete in the global 
economy through increased federal investment in critical areas of 
research, especially in the physical sciences and engineering. This 
initiative will generate scientific and technological advances for 
decades to come and will help ensure that future generations have an 
even brighter future.
    Twenty-first century science requires sophisticated scientific 
facilities. In many fields, private industry has neither the resources 
nor the near-term incentive to make significant investments on the 
scale required for basic scientific research to yield important 
discoveries. Indeed, in recent years, corporate research has declined. 
That is why the Department's Office of Science, which is responsible 
for ten world-class U.S. national laboratories and is the primary 
builder and operator of scientific facilities in the United States, 
plays such a critical role. Investment in these facilities is much more 
than bricks and mortar; it is an investment in discovery and in the 
future of our Nation. The Office of Science is also educating and 
training our next generation of scientists and engineers. Roughly half 
of the researchers at Office of Science-run facilities are university 
faculty or graduate or postdoctoral students (who work side by side 
with scientists and researchers employed directly by the labs), and 
about a third of Office of Science research funds go to institutions of 
higher learning. In addition, the NNSA operates three world-class 
national laboratories which greatly advances the frontiers of science 
in connection with their national security mission and which have many 
interactions with universities.
    I am pleased to inform the Committee that the Department is already 
achieving meaningful scientific results with our latest high-end 
supercomputing systems, including Blue Gene L and Purple at Lawrence 
Livermore National Laboratory and our Red Storm supercomputer at Sandia 
National Laboratory. Within a month of coming online, weapons designers 
at Lawrence Livermore and Los Alamos, working jointly, have discovered 
key physics that is important to weapons design that could not have 
been identified using less capable computers. This discovery is 
critically important to predicting the behavior of weapons, and, as a 
result, our ability to be responsive to national needs. Because of the 
interrelationships among the Department's science-based programs, these 
new, remarkably powerful computers are already having a major, positive 
effect on science in several of our laboratories.
    The President's FY 2007 budget request of $4.1 billion for the 
Office of Science will move us forward on several scientific fronts 
designed to produce discoveries that will strengthen our national 
competitiveness. Final international negotiations are close to being 
completed with our international partners in ITER, the fusion 
experimental reactor designed to demonstrate the scientific and 
technological feasibility of fusion energy. Capable of producing a 
sustained, burning fusion fuel, ITER will be the penultimate experiment 
before commercialization of fusion as a plentiful, environmentally 
friendly source of energy. A request of $60.0 million in FY 2007 
provides funding for the second year of the ITER project. The return on 
investment will expand across international borders and has the promise 
of tremendous economic opportunity and development.
    The FY 2007 budget also includes $105.9 million to enable us to 
continue construction of the Linac Coherent Light Source (LCLS), the 
world's first x-ray free electron laser. The LCLS will allow us to 
watch matter in action, one molecule at a time, and witness chemical 
reactions at the microscopic level in real time. The structural 
knowledge obtained with x-rays holds the key to understanding the 
properties of matter such as mechanical strength, magnetism, transport 
of electrical currents and light, energy storage, and catalysis. 
Likewise, in biology much of what we know about structure and function 
on a molecular level comes from x-ray studies. Such knowledge forms the 
basis for the development of new materials and molecules and the 
enhancement of their properties, which in turn will advance technology, 
fuel our economy, and improve our quality of life. In addition, the FY 
2007 Budget seeks $19.2 million in FY 2007 for the first full year of 
operations of each of four facilities for nanoscience research and 
$19.4 million to continue with construction of a fifth.
    The FY 2007 budget provides $171.4 million for the Spallation 
Neutron Source (SNS), which enters its first full year of operation as 
the world's foremost facility for neutron scattering.
    The FY 2007 budget request also includes $135.3 million for the 
Genomes: GTL research, which will help us understand how nature's own 
microbial communities can be harnessed to remove carbon from the 
atmosphere, generate hydrogen for fuel, and turn cellulose into 
ethanol.
    Within the $4.1 billion FY 2007 budget request for Science, $143.3 
million is provided to support near full operation of the Relativistic 
Heavy Ion Collider (RHIC), which gives us a lens into the early 
universe, and $80.0 million is allocated to allow near full operation 
of the Continuous Electron Beam Accelerator Facility (CEBAF), which 
will give new insight on the quark-structure of matter. Early studies 
of nuclear and particle physics provided the foundation for 
technologies that have changed our daily lives, giving us televisions, 
transistors, medical imaging devices, and computers, and has enormous 
potential to lead to unexpected discoveries. The Large Hadron Collider 
(LHC) at CERN, scheduled to be completed in 2007, will open a new 
chapter in illuminating the structure of matter, space and time. At 
this new energy frontier, qualitatively new phenomena of nature should 
emerge. There are many possibilities--supersymmetry, extra space 
dimensions, or unexpected new symmetries of nature--but finding out 
which, if any, are true can only be settled by experiment. In FY 2007, 
$56.8 million is requested to support U.S. participation in the LHC 
research program. The new results anticipated at the LHC can be 
significantly advanced by discoveries at a potential next generation 
International Linear Collider (ILC) which would break new ground in our 
understanding of nature. In FY 2007, the ILC funds for research and 
development are doubled with a funding request of $60.0 million.
    The budget also includes $318.7 million to solidify America's 
leadership in the economically vital field of high-speed computing, a 
tool increasingly integral not only to advanced scientific research, 
but also to industry. The budget will provide the pathway toward a 
point when computers will be so powerful that researchers will be able 
to attack a wide range of previously impossible scientific problems 
through modeling and simulation, enabling the U.S. to maintain 
leadership in this strategic area. Additionally, from development of 
the suite of scientific software and applications for the petascale 
computers, U.S. industry will be able to accelerate innovation, saving 
billions in development costs and giving our economy untold competitive 
advantages.
    We are, in short, on the verge of a revolution across multiple 
sciences as profound as any humanity has witnessed--one that will 
transform our vision of nature and, ultimately, our industry and 
economy.

            ADVANCING AMERICA'S ECONOMIC AND ENERGY SECURITY

    The Energy Policy Act of 2005, signed by President Bush on August 
8, 2005, serves as a roadmap to help lead the United States to a secure 
energy future. The FY 2007 budget request of $2.6 billion to support 
energy programs fulfills President Bush's pledge to promote a strong, 
secure economy and expand our Nation's energy supply by developing a 
diverse, dependable energy portfolio for the future.
    The President has proposed the Advanced Energy Initiative to help 
reduce America's dependence on foreign sources of oil and accelerate 
development of clean energy technologies through targeted increases in 
federal investment.
    The FY 2007 budget 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 FY 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 in a 
highly efficient manner. Further development can help this emissions-
free technology achieve efficiencies to make it cost-competitive with 
other electricity generation sources by 2015. The FY 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 FY 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 FY 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 FY 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 U.S. 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 U.S. 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 
FY 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 power plants. 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 seven-
year, $1.1 billion project (50% to be cost-shared by industry) could 
result in a new nuclear power plant order by 2009 and a new nuclear 
power plant constructed by the private sector and in operation by 2014.
    Funding of $1.8 million is provided in FY 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 power plants 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 power plant by 2014.
    The FY 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 FY 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 1990s, 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 twenty five percent 
of the world's coal reserves. For the last three 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 FY 2007 and proposes an advance appropriation 
of $203 million for the program in FY 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 FY 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 ten 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 FY 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.
    The FY 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.
    The Department of Energy's Power Marketing Administrations (PMAs), 
consisting of the Southeastern (SEPA), Southwestern (SWPA), Western 
Area (WAPA) and Bonneville Power Administrations (BPA), play an 
important role in meeting energy demands and fueling our economy. The 
electricity generated at Federal hydroelectric facilities and sold by 
the PMAs represents four percent of the Nation's electricity supply. In 
FY 2007, $229 million is requested for SEPA, SWPA, and WAPA to continue 
their activities.
    The budget includes a proposal that sets the interest rate for 
certain new obligations incurred by SEPA, SWPA and WAPA paid to the 
Treasury for power related investments at the rate Government 
corporations borrow in the market. This rate is similar to the interest 
rate current law sets for BPA borrowing from the U.S. Treasury. 
However, this change applies only to investments whose interest rates 
are not set by law. These three PMA obligations due to Treasury 
currently outstanding will continue to retain existing interest rates. 
This is expected to result in a rate increase of less than 1 percent 
paid by some PMA customers. This change is expected to increase total 
receipts to the U.S. Treasury, beginning in FY 2007, by approximately 
$2-3 million annually.
    BPA, unlike the other three PMAs, is ``self financed'' by the 
ratepayers of the Pacific Northwest and receives no annual 
appropriation from Congress. BPA funds the expense portion of its 
budget and repays amounts it has borrowed from the Treasury as well as 
certain Federal investments with revenues from electric power and 
transmission rates.
    The President's FY 2007 Budget provides, consistent with sound 
business practices required under the Federal Columbia River 
Transmission Act of 1974, that BPA will use any net secondary revenues 
it earns above $500 million annually to make early payments on its 
federal bond debt to the U.S. Treasury. Due to high energy prices, 
these net secondary revenues could be significantly higher than 
historical levels, especially in the next three years. The budget 
reflects $924 million from FY 2007-2016 from these higher-than-
historical net secondary revenues. Absent implementation of the Budget 
proposal, BPA could run out of borrowing authority from the U.S. 
Treasury, and therefore limiting BPA's ability to invest in energy 
infrastructure, as early as 2011.
    BPA will promptly commence an expedited rate case to implement the 
policy provided in the President's budget. As BPA announced today in 
the Federal Register, BPA will be holding pre-rate case workshops 
starting in March to address technical issues relating to the expedited 
rate case. The 90-day expedited rate proceeding will begin in July 
2006. DOE and BPA look forward to hearing from stakeholders and to 
implementing the policy in the upcoming rate proceeding. As Secretary 
of Energy, I will ensure BPA implements sound business practices.
    In addition, the FY 2007 budget provides that Energy Northwest will 
refinance a portion of its debt in calendar years 2006 and 2007. During 
FY 2006 and FY 2007, these deficit reduction proposals should allow 
$1.3 billion in additional U.S. Treasury borrowing authority to become 
available to BPA.

                 ADVANCING AMERICA'S NATIONAL SECURITY

    The National Nuclear Security Administration (NNSA) continues 
significant efforts to meet Administration and Secretarial priorities 
by conducting fundamental and applied scientific research and 
development, and applying that science to promote national security. 
The FY 2007 budget proposes $9.3 billion to meet defense-related 
objectives. The budget request maintains commitments to the nuclear 
deterrence requirements of the Administration's Nuclear Posture Review 
(NPR) and continues to fund an aggressive strategy to mitigate the 
threat of weapons of mass destruction. Key investments include:

   Transforming the nuclear weapons stockpile and 
        infrastructure while meeting Department of Defense 
        requirements;
   Conducting innovative programs in the former Soviet Union 
        and other countries to address nonproliferation priorities;
   Supporting naval nuclear propulsion requirements for the 
        nuclear Navy;
   Providing nuclear emergency response assets in support of 
        homeland security.

    Weapons Activities: The United States continues a fundamental shift 
in national security strategy to address the realities of the 21st 
century. The Administration's NPR addresses a national security 
environment in which threats may evolve more quickly and be less 
predictable and more variable than in the past. The NPR recognizes the 
need to transition from a threat-based nuclear deterrent with large 
numbers of deployed and reserve weapons, to a deterrent consisting of a 
smaller nuclear weapons stockpile with greater reliance on the 
capability and responsiveness of the Department of Defense (DOD) and 
NNSA infrastructure to respond to threats. The NNSA infrastructure must 
be able to meet new requirements in a timely and agile manner while 
also becoming more sustainable and affordable. As part of the goal of a 
responsive infrastructure, efforts are underway to both modernize and 
consolidate the facilities and infrastructure needed for ongoing 
stockpile stewardship from the current Cold War configuration. The 
Department is reviewing recommendations from the recent Secretary of 
Energy Advisory Board (SEAB) study of the nuclear weapons complex and 
is formulating a strategic plan for achieving a responsive 
infrastructure that includes consideration of those recommendations. We 
intend to communicate the elements of that plan to Congress this 
spring.
    The FY 2007 budget request of $6.4 billion for Weapons Activities 
strongly supports implementation of the responsive infrastructure and 
the ongoing program of work that forms the backbone of the nuclear 
weapons deterrent as well as a robust safeguards and security program. 
This includes all programs to meet the immediate needs of the 
stockpile, stockpile surveillance, annual assessment, and life 
extension programs. NNSA uses world-class science resources along with 
industry and academia in the areas of computation, simulation, 
experiments, materials science and analysis of highly complex weapons 
physics information. NNSA will continue to move ahead with the Reliable 
Replacement Warhead (RRW) program to establish the path forward for 
stockpile transformation. Success of the RRW program will, in turn, 
enable transformation to a more responsive infrastructure. The 
campaigns are focused on long-term vitality in science and engineering 
and on R&D supporting future DOD requirements, and include support of 
the first ignition experiment at the National Ignition Facility in 
2010. These 11 campaigns also represent a core investment in science 
and technology within DOE whose reach is felt beyond the national 
security arena. In addition, NNSA is implementing a responsive 
infrastructure of people, science and technology base, and facilities 
and equipment needed to support a right-sized nuclear weapons 
infrastructure.
    Defense Nuclear Nonproliferation: Preventing weapons of mass 
destruction from falling into the hands of terrorists is one of this 
Administration's top national security priorities. The FY 2007 request 
of $1.7 billion strongly supports the international programs that are 
denying terrorists the nuclear materials, technology and expertise 
needed to develop or otherwise acquire nuclear weapons. The FY 2007 
budget request for Defense Nuclear Nonproliferation increases by 6.9 
percent the amount appropriated in FY 2006. NNSA continues 
unprecedented efforts to protect the U.S. and our allies from threat, 
including $261 million for cutting-edge nonproliferation research and 
development for improved technologies to detect and monitor nuclear 
proliferation and nuclear explosions worldwide. There are also major 
efforts focused on potential threats abroad. The budget request 
includes $207 million to help complete the shut down of three Russian 
nuclear reactors still producing 1.2 metric tons of plutonium per year 
and replace them with conventional fossil fuel power plants. Also, this 
budget requests $290 million for construction of the U.S. Mixed Oxide 
Fuel Fabrication Plant at DOE's Savannah River Site in South Carolina. 
This facility will dispose of 34 metric tons of U.S. surplus plutonium.
    A key breakthrough in nonproliferation efforts was recently 
achieved with the agreement at the Bratislava meeting in 2005 to allow 
the United States to help Russia improve security at a number of 
military warhead sites. Coupled with the continuing material protection 
and recovery programs, Megaports and Second Line of Defense, and the 
successful completion of negotiations on a liability protection 
protocol allowing the U.S. and Russia to move ahead on disposition of 
surplus plutonium, NNSA is making significant strides to reduce the 
threat from proliferation of warheads and weapons-usable nuclear 
materials.
    Naval Reactors: NNSA continues to support the United States Navy's 
nuclear propulsion systems. The FY 2007 request is an increase of 1.7 
percent over the FY 2006 appropriation level. This increase allows the 
Naval Reactors program to develop new technologies, methods, and 
materials to support reactor plant design for the next generation 
reactors for submarines and aircraft carriers, and continue stewardship 
and remediation for their facilities and sites to maintain outstanding 
environmental performance.
    Safeguards and Security: The Defense Nuclear Security program is 
responding to a revision in threat guidance affecting physical security 
at all NNSA sites. Meeting the new Design Basis Threat will require 
further upgrades to equipment, personnel and facilities. NNSA is 
committed to completing these upgrades. The FY 2007 budget request for 
Cyber Security program activities, protecting information and IT 
infrastructure, is essentially level with the FY 2006 funding level. 
The FY 2007 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.

                      ENSURING A CLEAN ENVIRONMENT

    Just as important as advances in national security, energy 
independence, and scientific discovery are the Department's programs 
that protect human health and the environment by cleaning up Cold War 
legacy waste and improving management of spent nuclear fuel through the 
establishment of the national permanent nuclear waste repository at 
Yucca Mountain, Nevada. Like many of the Department's major programs, 
the environmental cleanup program and the nuclear waste repository 
activities have undergone management and programmatic reforms to 
further improve operations and implement effective and efficient 
practices.
    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 four years to 
shift away from risk management toward risk reduction. By the end of FY 
2006, the cleanup of a total of eighty-six DOE nuclear legacy sites 
will be complete. This includes the recently announced completion of 
Rocky Flats and the anticipated FY 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 FY 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 FY 2006 budget request of $6.5 billion 
primarily reflecting cleanup completion at some sites in FY 2006 and 
the subsequent transfer of post-closure work activities. As cleanup 
work is completed over the next five 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 FY 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 FY 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 FY 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 
FY 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 FY 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 FOR RESULTS IN OUR LIFETIME

    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 
four 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 FY 2006, DOE will publish, 
communicate and implement a revised five-year Human Capital Management 
Strategic Plan as well as a formal leadership succession plan. The 
Department completed six competitive sourcing studies and has three 
others underway. The completed studies encompass over 1,300 Federal and 
1,000 contractor positions with $532.6 million in expected savings. 
During FY 2007, DOE anticipates studying approximately 100 to 300 
positions.
    In FY 2006 and FY 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 FY 2007.

                               CONCLUSION

    The Administration recognizes that 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 FY 2007 budget request 
balances the need to address short-term challenges while planning for 
long-term actions. The request evidences the fact that our basic 
science research must 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.

    The Chairman. Thank you very much, Mr. Secretary.
    I am going to proceed as I normally have and yield to 
Senator Bingaman first. But I want to welcome a new Senator. 
Senator Menendez, we are glad to have you. Your predecessor was 
on this committee. We are glad to have you. I think you will 
find that this is a very exciting committee. A short year, so 
there is not going to be as much as last year, but I think you 
will find it interesting. We are very glad to have you. You 
will also find it to be very bipartisan.
    Senator Bingaman.
    Senator Bingaman. Thank you very much.
    Mr. Secretary, let me just ask about some specifics that 
concern me, one on efficiency. In the Energy Policy Act we 
authorized $25 million for a new program designed to help 
States adopt the latest building energy codes and to increase 
compliance with energy codes. There was strong support for this 
from various States. They welcomed this assistance. We use 40 
percent of our energy in buildings at the current time in this 
country, so it is an important initiative in trying to help 
save electricity and natural gas and heating oil.
    The budget that you have submitted does not include 
anything for this new program. In fact, as I read it you 
eliminate the Department's current $4.4 million building code 
training program. Could you explain why there is no resource 
for that?
    Secretary Bodman. Yes, sir. And you will hear me say this, 
I think, in answer to many questions. This budget does have 
substantial increases, as I have already mentioned, in science, 
in nuclear, in solar energy, biomass, and in other areas. Yet 
the budget itself is basically flat with last year, and that 
means the money had to come from somewhere. We had to make some 
very tough choices and decisions.
    If this were a world where I could make unilateral 
decisions, we would probably have a much larger budget. But 
that is not how the system works.
    I guess the other comment I would make, I would guess that 
your chart showing the levels of authorization and the way the 
budget matches up to it is probably pretty accurate. We will 
check on all that and make sure we give you the feedback, as I 
said before. But because something is authorized does not 
necessarily mean, as you well know, that it gets appropriated, 
and there is not a requirement that the Executive Branch 
request an appropriation.
    So we have not matched up. We have tried to focus the 
spending and particularly the increases in areas that we feel 
we have a particular ability to really influence in a major 
way, to transform the technology and transform society in and 
around these commitments. That is the best I can tell you, sir.
    Senator Bingaman. Thank you. Let me ask about your Global 
Nuclear Energy Partnership, and I do not claim any expertise 
about that at this point, but I am trying to understand it. 
What is the total life cycle cost of this GNEP? That is the 
acronym for it these days, right, the GNEP?
    Secretary Bodman. Yes, sir, that is accurate.
    Senator Bingaman. Including the design and the construction 
and the operation and decommissioning of a reprocessing plant 
and a fleet of fast reactors? Do you know that figure?
    Secretary Bodman. I can tell you what I do know, sir.
    Senator Bingaman. Okay.
    Secretary Bodman. This is a program that recognizes the 
fact that spent nuclear fuel still contains the vast majority 
of the energy that you started with when you use low enriched 
uranium, which is what is used on commercial energy reactors. 
The problem is it is transformed chemically. A lot of it is in 
plutonium and it is in other actonides, other chemical 
materials that are in there.
    Yucca Mountain has been designed to accommodate that 
material, which is very toxic because it contains these highly 
radioactive materials. The goal of GNEP is to first recover 
those materials from the spent fuel that can be used to 
generate energy in a new type of reactor, a so-called fast 
reactor, but to do it in a way that does not promote 
proliferation. So that you would recover plutonium mixed with 
other actonide materials that are not useful in making a bomb.
    It has been demonstrated at Argonne Labs that it works at a 
bench level. So GNEP is intended to produce a large-scale, 
engineering-scale pilot plant, if you will, to demonstrate 
that.
    Second, we need to devise a so-called fast reactor and to 
build a reactor that will burn the recovered plutonium and 
actonides and produce additional energy. That is the second 
general piece of this.
    We have $250 million in the 2007 budget that is intended to 
get us started on the engineering design of the scale-up so 
that we can start constructing this equipment. When you look at 
what the time scale is and the cost, you have very wide error 
bands on it. The number that you are looking for in my judgment 
is tens of billions of dollars. It is going to be $20 to $40 
billion, something like that.
    Senator Bingaman. The National Academy had a study in 1996 
that put the figure at $62 billion.
    Secretary Bodman. Well, that is conceivable. That seems 
high to me, based on what I now know. We have looked at what 
this--and I have not looked at that study. But it is going to 
be very expensive and it is going to take a long time. I can 
say that.
    So the idea is to do enough work so that we can narrow the 
error bands, and we can say with greater certainty what the 
cost will be. So that is what the goal is over the next 2 to 3 
years, to be able to do enough work that we can narrow the 
error bands and put the President in a position to make a, if 
you will, a go or no-go decision as to whether this is 
something that makes sense.
    We believe it does on the surface of it. I believe, sir, 
that we are going to find a lot of response, positive response, 
from the international community, from Britain, from France. We 
have visited with the people at the IAEA in Vienna. We have 
talked to the Russians, we have talked to the Chinese, we have 
talked to the Japanese, and there seems to be a lot of 
interest. If that is the case, hopefully we can do it faster 
and less expensively when we look at it from the U.S.'s 
standpoint. That is the general idea.
    Senator Bingaman. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Craig.

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

    Senator Craig. Mr. Chairman, thank you very much. I 
appreciate bringing GNEP into reality. I certainly believe it 
is a worthy initiative and very important that we work with our 
world around us in addressing waste and proliferation issues. I 
support it.
    At the same time, I think there is a reality check that we 
all have to deal with in it and, Mr. Secretary, I think you 
appropriately stated it. But I do believe it ought to be 
effectively combined with our next generation nuclear plants 
and that there is a synergy that works when you bring these 
kinds of talents together. I think that is going to be 
increasingly important, even to the point of talking 
integration and relationships and modularizing and doing all of 
those things that are very possible to do with the new 
technologies that you are looking at investing.
    Of course, I know you had to move money around and I am not 
at all happy at this moment that NGNP got 23 instead of the 40 
that we think is necessary to keep the project moving in the 
direction that it does. We will work with you on that to see if 
we cannot move those numbers around a little bit. I think it is 
tremendously important because what we do not want to fall 
through the crack and what is being talked about, of course, is 
the hydrogen side of the initiative that somehow gets missed in 
all of this new excitement about new technology.
    I think what our country wants is to become energy 
independent. I know that there is a little push-back on how you 
define ``energy independence.'' Why do we not challenge our 
country to do just that and put the science and technology 
behind it? Americans understand those kinds of challenges. We 
have met it in the past and we can meet it once again in the 
future.
    But to suggest that 50 years out we are still going to be 
sending hundreds of billions of dollars abroad for the sake of 
our energy appetite does not make a lot of sense if that could 
be spent here in the kinds of technologies and new approaches 
we are talking about.
    So I think Americans become increasingly excited when you 
challenge them. They become increasingly frustrated when the 
price at the pump goes up or the price of their space heating 
goes up and there seems to be no alternative to that happening. 
So that is a reasonable challenge that I think we need to talk 
about.
    Yes, you moved some money around and I am concerned about 
the hydro and geothermal technology. We are battling a very 
difficult time out in the Pacific Northwest as it relates to 
fish and hydro systems and all of that. Advanced hydroturbine 
design can increase fish passage by 98 percent and still 
maintain the productivity of that phenomenally valuable hydro 
system in the Pacific Northwest, and I think that is 
tremendously important.
    The integration that we are talking about as it relates to 
cellulose ethanol technology, I think Americans get that and 
understand it. We are on the threshold of being able to do 
that, Mr. Secretary, and I would hope that the focus is 
appropriate there, and in that focus, coming off from the 
energy bill of last year, please expedite the implementation of 
the loan programs and the guarantees that are out there that 
will drive that technology to the market, instead of just 
talking about it.
    I think that is part of the frustration I am going to have 
and this committee will have as we examine the work we have 
done that we think was effective and responsible and the new 
work to come and the fact that what we have done does not get 
to the marketplace in the timely fashion that it ought to. It 
is obvious we cannot do everything, but I think Americans 
understand and are anxious.
    A comment and then a question of you. I spoke of the hydro 
systems of the Pacific Northwest and our pride in them and the 
challenges they have. In this budget there is a suggestion, a 
proposal, that forces the Bonneville Power Administration to 
move its excess revenues, so defined, above $500 million into 
the Treasury. The one thing I have learned about Washington in 
the years I have been here: Very few people in this city 
understand and appreciate the interrelated systems of the 
Northwest as it relates to hydro and Bonneville. There are 
short water years, there are long water years. There are fish 
demands. There are all types of things.
    Because we are able to sell surplus integrated into the 
system, we can spread the cost. It has allowed us to remain 
reasonably competitive in the world and it has kept a very 
robust hydro system that allows also the kind of growth that is 
necessary as it relates to transmission and all of that.
    I would suggest that what is now in the budget is a 
reflection of this city's lack of understanding, if not sheer 
ignorance, of that system. So here would be my question to you, 
Mr. Secretary. Why do you not work with us in the Pacific 
Northwest? Why do you not set down with us collectively and the 
systems of the Pacific Northwest and the Bonneville Power 
Administration and the States related and the power council 
that was created out there as an oversight process, and see if 
we cannot address some of what you have proposed without 
damaging or strangling that very productive system.
    Is it possible that you could do that? I think if you did 
that and we developed a cooperative plan for the region, it 
would make a lot more sense than what is just being proposed 
out of this budget and OMB's attitude. A question to you.
    Secretary Bodman. Of course, we would be happy to work with 
you--I know there are other Senators from the region who have 
not yet spoken, but will, I am sure, on this matter. We 
certainly would be pleased to sit down and discuss the matter 
with you.
    I can say to you, if I could go back, you touched on a 
number of points. One of them is near and dear to my heart and 
that is the question of the speed with which we get things 
done, and let me go on the record, sir, as telling you that I 
have--when I took this job a year ago, I too was very concerned 
about how fast we were getting things done, and I have 
explained and challenged the program leaders in the Department 
that I would like to get something done in my lifetime. I am 67 
years old. You can figure out what the tables are, but the 
number I have is 20 years in my mind. So anything beyond 20 
years I do not really care a lot about, and so we are focusing 
on trying to get things done in a fashion and in a time scale 
that is prompt. So you will see that in where we are choosing 
to put our money and how we are putting our money.
    But back to the Bonneville--and I should also mention the 
question on the loan guarantees. That has a very high priority 
in my mind, also addressing to the chairman. I meet often with 
our general counsel who is overseeing this, including, sir, 
yesterday late in the day as I got a chance to review with him 
where that is. I would be happy to speak to that at some other 
time if you would like that done. But I assure you that it has 
a very high priority within the Department.
    On Bonneville, this is simply a proposal that I think is 
reasonable and it is responsible. That is what I think. That 
may be very different than what you all think and we would be 
very happy to meet with you and to discuss the matter and work 
through hopefully a model that would satisfy all the parties.
    Senator Craig. Thank you, Mr. Secretary.
    The Chairman. Without using my time, I just wanted to tell 
you, Mr. Secretary, the problem of frustration on Bonneville 
and that whole series in the budget of saving money by shifting 
some of the costs back to the payers is that every year every 
president puts this in, and every year every Congress says no. 
Now, that is government. But we get charged for it. You 
understand, your budget gets charged for it, which means we 
have a very difficult time putting the package together because 
we start in the hole. We start with whatever hundreds of 
millions you plan to save does not get saved, and so we have 
got to make it up first before we start paying for the programs 
you ask for.
    So I tell you that only because you have to argue with OMB 
and that might be a nice argument one of these times. Of course 
they will not listen, but--anyway, end of statement.
    Secretary Bodman. Thank you, Mr. Chairman.
    The Chairman. We are going to go to the next Senator, 
Senator Cantwell.
    Senator Cantwell. Thank you, Mr. Chairman. Welcome, 
Secretary Bodman. To follow up on that, last year when we had 
this discussion with my colleagues, Senator Wyden noted there 
had been such an outrage by Northwest members over this, that 
our colleague Senator Gregg basically said he was not going to 
put any change in BPA rates into the budget. And roughly about 
that same time you came before the committee.
    Senator Wyden asked if the administration was not going to 
try to do an end run on this proposal. By that, I think Senator 
Wyden was saying doing something that did not require 
legislative changes.
    My question is, because you said you did not want to do a 
legislative end run--I think you said: ``I am just an engineer, 
speaking from my vantage point. I do not believe I or anybody 
at the Department has the flexibility of doing an end run.''
    So I am asking you if the administration plans to try to do 
this by Administrative Procedure Act and whether you are 
agreeing with that proposal.
    Secretary Bodman. First of all, last year, Senator, I made 
that commitment and we did not do that. We attempted--I tried 
to make the case of a legislative change that was required by 
the need to make a change, if you will, in the rate schedule. 
That is what was called for at that time. Congress in its 
wisdom declined to do that and that was that. So we did not 
attempt to make--if you will, to do an end run.
    This is a different matter in my view. This is this year. 
That was last year, and this is a proposal that would in a very 
good year--that is to say, when Bonneville is able to sell 
power in excess of a half a million dollars net to the 
administration--to use those funds in excess of that, to pay 
down debt. It seems to me that is a standard. That is something 
that would be done in the private sector if one was a banker. 
In effect, this government is the banker for the Bonneville 
Power Authority. It provides the funds for it, and that when 
you have very good times that is the time that you pay down 
your debt.
    So that is where my attitude is on it.
    Senator Cantwell. I am sure I could very easily launch into 
a speech about how the Northwest will not tolerate any kind of 
shifting of payment away from what has been part of the mix in 
reducing rates in the Northwest. But I am asking you 
specifically, is the administration going to proceed with the 
Federal Register notice and try to change this, which is 70 
years of practice and policy in Federal law, change it by an 
Administrative Procedures Act? Is that the intent of the 
administration?
    Secretary Bodman. That is the intent of the administration, 
Senator. I have just committed to Senator Craig to sit and talk 
and listen to each of you, as well as the BPA staff themselves, 
before we would do anything. So we will do that.
    Senator Cantwell. You mean before a Federal Register 
notice?
    Secretary Bodman. Before anything is done, whatever it is.
    Senator Cantwell. But it is the administration's intent to 
move forward that way, without any legislative process?
    Secretary Bodman. That is the proposal. That is the 
proposal, yes, ma'am.
    Senator Cantwell. As my colleagues here will continue to 
articulate, I am not going to spend my few minutes here talking 
about the absurdity of this--because every year we go through 
this. I liked the way that I think an editorial in one of the 
newspapers in the Northwest described this: It does not matter 
how you dress up this pig or what kind of lipstick you put on 
it this year; it is still something that is not going to fly in 
the Northwest. And we will continue to fight it.
    I wanted to ask about the President's State of the Union 
Address and his comments about reducing Middle East oil by 75 
percent over the next 20 to 25 years. The next day you, I 
think, were quoted in a press roundup briefing as saying that 
it was just an example. So I am asking, was the President wrong 
in what he stated? I am trying to understand where the 
administration is on this goal?
    Secretary Bodman. The President was not wrong. Neither was 
what I said the next day inconsistent with what the President 
said. First of all, this is a research program and, assuming 
that we are successful in the research program, we will have a 
dramatic increase in the replacement of oil that is imported 
into this country from domestically produced liquids. That is 
the goal.
    I mean, I think that falls into the same category that 
Senator Craig mentioned. Was the President laying out a goal 
that he is committed to?
    Senator Cantwell. I know my time is up. I just wanted to 
get a yes or no answer. So then does the administration support 
a national goal of reducing petroleum consumption by 4.49 
million barrels by 2025? That is what it would take.
    Secretary Bodman. Yes.
    Senator Cantwell. So he supports that?
    Secretary Bodman. Who is ``he''?
    Senator Cantwell. The President. The administration 
supports----
    Secretary Bodman. Oh, yes, yes. That is what he said.
    Senator Cantwell. It was just an example or he supports 
that goal?
    Secretary Bodman. He supports that goal.
    Senator Cantwell. So he will support legislation that says 
let us reduce this by 4.49 million barrels by 2025; the 
administration will send up a response saying, yes, we support 
that legislation?
    Secretary Bodman. I cannot say--I did not say that. I did 
not say that. I said that that is the goal and that was the 
President's goal that was articulated. Further, the President 
proposed a research program and an investment particularly in 
the biomass area, biorefining area, that we believe will get us 
there. So the two are linked. That is the goal and the 
investment that is being made. Our folks have worked on that 
and believe that it is possible. As I said before, there are no 
guarantees on this because we do not know, but we believe that 
it is possible that we will get there and that it is a 
responsible goal to lay out.
    Senator Cantwell. In that sense, a responsible goal, if it 
was in legislation, would be an idea if it was just a goal.
    Secretary Bodman. It depends on what the legislation is, 
Senator.
    Senator Cantwell. But just that concept, that concept of a 
goal.
    Secretary Bodman. I do not know--I do not understand. The 
President laid out a goal. We laid out a program that we 
believe will get us there. If you want me to commit here in a 
public forum that we will support legislation consistent with 
that goal, I cannot do that. I do not know what the legislation 
is and the means by which one would get there. And you cannot 
legislate that----
    Senator Cantwell. I know, Mr. Chairman, and we could 
probably go around and around on this. But I think my point is 
that we would like to see the goal in legislation. Previously, 
the administration has not supported a goal without the details 
of committing to one technology or another. But we will 
continue this discussion, I am sure.
    So thank you, Mr. Chairman, for your indulgence.
    Secretary Bodman. Thank you.
    The Chairman. Senator, look. We could set a goal, pass it 
here today, saying we are going to be independent of crude oil 
by 50 years from now. How do we get there? That is nothing. 
That is a statement. You want to pass that? Put it on the 
floor. You want to get whatever you said, a resolution that 
will do that? It sounds neat.
    Somebody has to decide, what are you going to try to do? So 
you suggest that kind of resolution, we will debate it. We are 
going to have a series of hearings, incidentally, and bring you 
and anybody who thinks they have a plan for energy 
independence. We are going to ask them to come here and tell us 
how. We are going to have 2 days, bring the best in America and 
sit them out here and say, how do you get to independence, and 
let us let them tell us.
    Senator Thomas.
    Senator Thomas. Thank you, Mr. Chairman. I hope we do not 
hear everyone who has an idea.
    In any event, thank you very much.
    The Chairman. We are going to have to select the best.
    Senator Thomas. Oh, I see, okay. Got you.
    Mr. Secretary, glad you are here. I think we have followed 
quite a bit here. Our energy plan and our Energy Act that we 
did pass outlined a map for the future and hopefully we can 
implement that, and that is what we are doing, of course, by 
modernizing the structure and investing in supplies and so on.
    But I think one of the real issues that we do have to talk 
about is we have to balance time. There are things we can do 
that are out in the future and that is research, and that will 
take hopefully before your 20-year time expires. But there are 
other things we have to do right away. I mean, we have an 
immediate need with respect to the cost with respect to that.
    So I guess that is really what I would like to talk about, 
and I have several areas that I would like to mention to you. 
Bio and solar and all those things are great, but if we are 
talking about doing something in the next year or 2, why, we 
have some opportunities I think now. For example, you mentioned 
the R&D funding and I am a little bit at a loss why the 
administration objects to this program when 85 percent of the 
benefits are for small independent producers.
    Now, we sometimes say, oh, we have got all this profit 
there, the guys can do their own research. 60 percent of the 
production is small independents that are not in a position to 
do that. So we need to focus on significant resources to 
develop technologies to do that, and this budget does not 
continue the R&D on the short term and I wish you would comment 
on that, please.
    Secretary Bodman. Yes, sir. A similar response as I gave, I 
think, to a similar question last year. At these high prices, 
it is the position of this administration that there is plenty 
of incentive for people to drill wells and produce oil and gas. 
It is as simple as that.
    Tough choices had to be made. Look, I understand and I have 
dealt with some of the independents that you referred to and 
have great respect for them and for the people that are 
involved in that industry. We had to make tough choices in 
doing what we did.
    Senator Thomas. I understand.
    Secretary Bodman. So it is an industry that is benefiting 
from current very high prices. It is a mature industry----
    Senator Thomas. Well, I remind you again that the 
independents do a lot of this, and the independents are not in 
a position to do these kinds of things. If you are talking 
about fairly short-term return on oil shale, for example, and 
the new deeper wells and those kinds of things, why, we have 
some opportunities in my State where we are doing research, and 
we have been doing research. And now this budget tends to cut 
it.
    Let me tell you that another one that is immediate is, our 
greatest fossil resource is coal. The most useful thing that we 
have for variable uses is gas. So we have some real 
opportunities to make some conversion. We have some private 
people in the industry ready to do some of those things, but 
they need some financial assistance. So I am not talking about 
FutureGen. I am talking about doing something in the next 2 or 
3 years to convert coal to gas. Yet not much support for that 
in this budget.
    Secretary Bodman. That one, sir, I think it is fair to say 
has suffered from a backlog of--a lot of money, I think a half 
a billion dollars, has been put out into that program over the 
last several years, and the money has simply not been spent in 
many cases. So when we went through the analysis and looked at 
the budgetary implications and looked at the fact that we had 
budgeted, we had asked for appropriations, we had received 
appropriations, we had spent the cash, and the various winners 
of these projects have not been able to spend the money 
effectively, that is what caused the reduction, that we would 
pause a year and work on getting the backlog worked out and get 
progress, either progress made or make a determination that 
some of these things were not going to work and get the money 
back so that we could put it elsewhere. So that is the reason.
    Senator Thomas. Well, there are plants pending, actually--
--
    Secretary Bodman. That is the background for it.
    Senator Thomas [continuing]. In our State that are ready to 
go on the thing, and I think you need to take another look at 
it.
    Another one of course is simply the clean coal 
technologies, which have been struck out in this bill. Clean 
coal technologies, we talk constantly about the need for coal. 
We talk constantly about global warming and so on, and here is 
one of the things we need to do. I notice in the energy bill 
that it is zeroed out.
    Secretary Bodman. That is what I was referring to, sir, in 
terms of the backlog that has been there. It is in the clean 
coal area.
    Senator Thomas. Clean coal and conversion to gas are two 
different things.
    Secretary Bodman. I understand that, I understand that. I 
was in error and so I apologize for that. The conversion to 
gas, going back to the question that you had asked before, is 
simply a priority. We cannot do everything and so this is what 
the process produced as a balance between where we think the 
real impact can be from this Department. I cannot say anything 
more than that.
    Senator Thomas. Well, I am going to continue to work on it. 
I just urge that we try and balance this long-term work, which 
is very important, with 5 years from now, which is very 
important. We get all mixed up in this technology of stuff that 
is going to happen 20 years from now. We better think a little 
bit more about how we are going to provide our resources 2 
years from now.
    So thank you, Mr. Secretary.
    Secretary Bodman. I take your point, sir.
    The Chairman. Thank you very much, Senator.
    Now we are going to go to Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman.
    Mr. Secretary, reducing dependence on foreign oil to me is 
about promoting national security. Because I cannot see 
anything in your budget proposal that reduces the dependence 
any time soon, I consider your proposal the equivalent of 
putting up a white flag of surrender on a national security 
priority. Let me just ask you specifically about what you would 
do to get people into cleaner trucks and vehicles any time 
soon? Senator Domenici knows I offered a proposal in the 
conference to bump up CAFE standards just one mile a gallon, 
just one mile a gallon for each of the next 5 years. Now, that 
is not your Department, but you tell me about your Department. 
What are you actually doing to get people into cleaner trucks 
and cleaner cars in the next couple of years?
    Secretary Bodman. Senator, you and I hold a different view 
on the value of what it is we are doing. I can tell you that 
specifically there is a provision for new clean diesel fuels 
that will be made available and diesel-driven vehicles, diesel-
powered vehicles, are also being made available, that will 
allow our consumers to buy vehicles that will increase gasoline 
mileage 10-plus miles per gallon and produce very clean and 
much more efficient----
    Senator Wyden. Mr. Secretary, that and others are research 
programs. You have got a number of research programs----
    Secretary Bodman. Excuse me, sir. This is not a research 
program. This is something that is happening today. The 
vehicles are being manufactured today and provision is being 
made as we speak for getting the clean diesel fuel distributed 
throughout the country. It is not a research program.
    Senator Wyden. I will just tell you, I have looked at the 
budget, Mr. Chairman. It is a shell game. You have got research 
down the road, but in areas that would make a difference, for 
example the vehicle technology program, those are not seeing 
any real focus. It is a shell game. You have got a little more 
for research, but things that will make a difference and get 
cleaner trucks and cleaner cars out any time soon are not 
there. There is no there there, and that is why I say we are 
not getting the reductions in dependence on foreign oil. As you 
know, the Energy Information Administration has said 
essentially the same thing that I am saying.
    Now, with respect to Bonneville, I think Senator Craig and 
Senator Cantwell were very diplomatic. I consider this 
government loan-sharking. I mean, essentially if you cause 
somebody to pay more in fees just because they make more money, 
that is in my view loan-sharking. So what I am going to do--and 
I appreciate the fact that we are now going to have some 
discussions and all the rest. But I am going to do everything I 
can to get into the appropriations process a requirement that 
restricts the use of any funds to implement this proposal.
    In my view, I consider this a clear administrative end run. 
This is exactly what we went over last year. What you are 
saying is that was just a commitment for then. Frankly, if you 
had told me that, Mr. Secretary, I would have tried to block 
your appointment on the floor of the U.S. Senate. I thought 
that that was something that was going to be a longer term 
commitment rather than just for the year. So I do consider it 
an administrative end run. I am going to do everything I can as 
one Senator working with colleagues to put in appropriations 
language that bars the use of any money for that 
implementation, because I think it is exactly what you said you 
would not do.
    Secretary Bodman. You and I disagree, sir.
    Senator Wyden. Thank you, Mr. Chairman.
    The Chairman. You spoke of other Senators being diplomatic. 
I would just tell you, a diplomat you are not.
    [Laughter.]
    Senator Wyden. We have strong views in our part of the 
world when somebody tries to slip us some economic poison.
    The Chairman. One time I was over in Central America with 
Kissinger and another group of people, and I had a particular 
complaint against a former Catholic priest who had converted 
and begged us for money, and we gave him money, us Catholics. 
We were in a room and I decided that I would break the 
tradition, Kissinger is the only one supposed to speak. I 
spoke. I gave this guy unadulterated you know what.
    On the way out Kissinger said: ``A Senator you are. A 
diplomat you are not.''
    [Laughter.]
    The Chairman. I was just mentioning that. It might fit here 
today.
    Who is next? The Senator from Alaska.
    Senator Murkowski. Thank you, Mr. Chairman. I will try to 
be diplomatic this morning. It is nice to hear the 
conversation, the talk about energy independence, how we are 
going to get there. I might remind all of my colleagues that we 
had an opportunity to focus on the domestic production side 
just about a month ago with the ANWR vote. We do not have that 
in front of us.
    I thank the Secretary for being here this morning. I thank 
you for your efforts to make sure that in the President's 
budget the ANWR revenue figures are included in there and 
included at an increased level reflecting the higher price of 
oil.
    I also want to thank you for including in this budget the 
funding, full funding for the natural gas pipeline project that 
we are trying to get moving forward. You have got funding in 
there for the Office of Pipeline Coordinator and the funding to 
start the implementation of that loan guarantee when this 
project moves forward. So I want to diplomatically thank you 
for the things that are very, very important to the success of 
that project.
    Now, we cannot have you sitting in front of us without 
being critical of some of the aspects of the budget, so we must 
move to that side of it. The defunding, if you will, of the oil 
and gas research programs--and this was mentioned by Senator 
Thomas. In reading the background that you have and listening 
to your testimony this morning, you basically say that because 
of the high price of oil and gas these can stand on their own.
    But I might remind you of some of the incredible 
opportunities that we have with gas hydrates. This is an area 
where it is only going to be through our research that we are 
going to be successful in developing incredibly huge reserves 
of gas, not only in Alaska but around the country. This is 
something that Senator Akaka and I have worked on together with 
our legislation last year. We have got to have that emphasis. 
This is not going to be something that the gas companies on 
their own are going to be moving forward with. The incentives 
have got to be in place there.
    So I need to know that you understand the importance of 
this and that you are willing to work with us in this area of 
gas research as it relates to the gas hydrates, and would hope 
for a positive comment from you on that.
    Secretary Bodman. I recognize the importance of the issue. 
I recognize the importance of it technically and I recognize 
the importance of it to your State. All I can tell you is that 
I am happy to talk about any subject with you at any time, but 
what I cannot do is to commit to changing what the President 
has proposed in terms of the budget. If this is a position that 
the Congress chooses to make a change in and the President 
chooses to sign it, then I will do my very best to make it 
become a reality.
    But in terms of my changing here in this forum what has 
just been proposed by the President, I cannot do that.
    Senator Murkowski. We will look forward to the 
conversations, not only on the opportunities for gas hydrates, 
but again to go back to the point that has been made by others, 
in an effort to get us to that goal of energy independence, the 
effort to get us to the President's goal of reduction on 
foreign sources by a full 75 percent, we have got to provide 
for the incentives in these other areas.
    Geothermal funding has been zeroed out. The Ocean energies, 
opportunities there have been funded. The hydro, as Senator 
Craig has mentioned. We have put great emphasis in this budget 
on the American Competitiveness Initiative, something that I 
fully support. What we are doing here is we are saying, okay, 
we are going to train the scientists, the engineers, we are 
going to make sure that we have got the best and the brightest. 
But we get these wonderfully educated people and they get out 
there and they have got no support for these brilliant projects 
that they are ready to move forward on.
    So it has got to be something that is a cooperative effort. 
We have got to have the brain power, the intelligence and the 
projects. But we have also got to be willing to commit to some 
of these areas that might be construed as a little more 
radical. I do not think geothermal is radical. I do not think 
ocean energy is radical. I do not think gas hydrates is 
radical. This is the direction that we have got to go, and I 
say that coming from an oil and gas producing State.
    So I want to work with you on these technologies that I 
think are going to be what moves this country forward.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator.
    Now we are going to go to Senator Akaka. He just came back, 
but everybody should know he was here before. That is why you 
are next.
    Senator Akaka. Thank you. Thank you very much, Mr. 
Chairman.
    Mr. Secretary, it is good to have you here this morning. 
Mr. Secretary, my question is on the details of the proposed 
increase for the biomass and biorefinery initiative, I must say 
a welcome increase of $59 million for alternative and renewable 
sources of energy, and I look upon that as a good start.
    My question is, will the biofuels initiative include 
cellulosic biomass, such as bagas from sugar, sugar cane, 
pineapple, or other crops which grow in tropical regions in 
Hawaii, Florida, and Puerto Rico, and parts of the Gulf? Will 
these be included?
    Secretary Bodman. Sir, specifically these increased funds 
will enable us to broaden the feedstocks--that is how I think 
of these materials--to the process. Prior to that, with the 
funding level that we had before this year, in 2006, we were 
only able to do the work on what is called corn stover, which 
is the material that is left over after you grow the corn and 
you remove the corn kernels from the cob. So it is the cob, it 
is the stalk, it is the leaves. That is corn stover.
    With this increased funding, we will be able to investigate 
and develop approaches for all of these materials you just 
mentioned, as well as other materials, switchgrass for example.
    Senator Akaka. Biorefineries, do you anticipate one or more 
demonstrations? My question really is do you see an opportunity 
to locate a biorefinery in Hawaii?
    Secretary Bodman. We have not gotten to the question of 
where we would locate biorefineries. I think it is fair to say, 
sir, that we first have to make a determination at a pilot 
scale--and this work will be done out at the National Renewable 
Energy Laboratory, NREL, out in Colorado. Assuming that we are 
successful in developing the processes, developing the microbes 
that could be used to undertake this reaction, we would then be 
in a position to work with the private sector and those 
companies that--because we do not build biorefineries, or at 
least it is unlikely that we will. We could provide some loan 
guarantees, I think, along the lines the chairman has expressed 
interest in, for such equipment and processes.
    In that case, we would be working with an entrepreneur or a 
corporation that would take the lead in it and we would provide 
some financial support. So it would really be a question of 
where they wish to put it and what I do not want to do is make 
a commitment to you that I cannot honor.
    Senator Akaka. Well, I look forward to working with you on 
this initiative.
    Secretary Bodman. Likewise, sir.
    Senator Akaka. According to a recent report from your 
agency, Mr. Secretary, the Offsite Source Recovery Program has 
made significant progress in clearing the nationwide backlog of 
greater than class C low-level radioactive sealed sources that 
pose a threat to pubic health and safety or security. I want to 
thank you for your effort and commend your staff for their hard 
work in this.
    The same report, however, indicates that the Environment 
Management Office has yet to designate a permanent disposal 
site. So my question is, can you update me on the status of 
these efforts and provide me with a time line for the 
establishment of a permanent facility? You may do that in 
writing if you wish or with your comments here.
    Secretary Bodman. Well, I will ask to do it in writing. 
What I know about the situation, sir, is essentially what you 
just said. We have made good progress in identifying sources of 
nuclear materials that are isolated, they are orphans, if you 
will, and to go get them and to retrieve them. The retrieval is 
done, but then where do we put them? We have some choices now 
and eventually we would like to be able to make a 
determination, and we are now working our way through the 
environmental processes, the impact statements, and looking at 
a number of different sites.
    But I would be happy to get you something more specific in 
writing, sir.
    Senator Akaka. Thank you so much.
    Mr. Chairman, my time has expired.
    The Chairman. Thank you.
    Senator Martinez.
    Senator Martinez. Thank you very much, Mr. Chairman. I 
appreciate your hearing this morning.
    Mr. Secretary, welcome. Having come to the Congress with a 
budget as a Cabinet member before, I have got to assure you, it 
is a lot more fun on this side of the table than it is where 
you are today.
    I want to pursue this issue of biofuels as well. The State 
of Florida, of course, is a big sugar producer. We are vitally 
interested in the role that Florida can play in assisting in 
lessening our dependence on foreign oil. I really applaud and 
welcome the President's remarks in the State of the Union along 
these lines. I, having traveled again to Brazil recently, I 
continue to be fascinated by the progress that they have made 
in the area of ethanol production and lessening their 
dependence on oil.
    I want to just ask you your thoughts on how we can assist 
the President's goal of lessening our dependence with an 
aggressive utilization of biofuels and the role that--pursuing 
the question that the distinguished Senator from Hawaii asked, 
how can we get this going? How do we pursue? By the way, my 
concern is also on the distribution system for ethanol. There 
have got to be gas pumps that have it and cars have got to be 
made that are flex-fuel cars, all of which I think can happen. 
I just wanted to ask your assessment of where we are on that 
and how we can get this to happen in a short time frame.
    Secretary Bodman. I think you will find the President is 
going to be quite outspoken and vigorous in providing 
leadership on this front, certainly for ethanol. The use of 
sugar cane, sugar cane and the recovery of ethanol from sugar, 
is one of the least expensive ways to produce ethanol. I think 
you are aware of that.
    Senator Martinez. Right.
    Secretary Bodman. And so that process technology exists and 
is in use, in full use in ethanol--or in Brazil, among other 
places, right now. I think the question is how much sugar can 
we produce and where and that sort of thing. I think also we 
are looking at the use of less expensive feedstocks, the bagas 
that Senator Akaka mentioned, the switchgrass, the corn stover, 
the materials that, if you will, are byproducts of 
manufacturing a foodstuff, or it is just, in the case of 
switchgrass, it is a weed, if you will. It is something that 
has not been--we have not found a use for, but appears to be a 
potential good source.
    The money that has been requested and that we hope is 
appropriated will be directed to developing a process for these 
less expensive fuels. In terms of using the process for sugar 
cane, that exists. That is there and I do not think there is 
any role that we can particularly play. Perhaps loan guarantees 
or some such thing along that line to stimulate it would be an 
appropriate approach. But in terms of the process development, 
understanding the chemistry, that is already done.
    Senator Martinez. Right, I know that is there. But I think 
the cost of producing it and bringing it to market, I think 
there is a role for the Department to play in--frankly, I do 
not know that there is a commitment from oil companies to start 
putting an ethanol pump or increasing the mix of the ethanol 
into their fuel or whatever. So I think it is going to take 
some role from the Department to encourage production with 
guaranteed market access and so forth, because I do not think 
otherwise it will happen. Plus there may be also a need for 
there to be encouragement and governmental assistance in terms 
of driving down the cost of producing it, at least in initial 
phases.
    Secretary Bodman. That is what the intention is of this 
effort, namely driving the cost down so that we can produce 
ethanol at a cost that is superior to that which we have from 
gasoline.
    The other issue is how do we modify the automobiles. 
Automobiles have to be modified in order to accept ethanol 
blends.
    Senator Martinez. Right.
    Secretary Bodman. It is not a very expensive process. It is 
$100 a car and that price seems to be declining with time. So I 
think you will find this year I think it is General Motors is 
going to manufacture and make available half a million vehicles 
and Ford I think a quarter of a million.
    Senator Martinez. Ford and GM are making these vehicles in 
Brazil.
    Secretary Bodman. I understand.
    Senator Martinez. For the Brazilian consumption.
    Secretary Bodman. But they are also going to be made 
available here.
    Senator Martinez. And again, the technology is there. There 
is nothing to invent there.
    One other question. I know that we have had a tremendous 
spike in gas prices. The State of Florida forecasts, the energy 
office, that there will be a 30 percent increase, along with a 
30 percent expected increase in bills over the next several 
years. And I believe we have had an overreliance on natural gas 
for power generation. Would you agree with that? And if so, how 
do you see the role of the Department in moving away from such 
an overreliance on one fuel source, which has in fact had the 
effect of increasing the price for other users of gas? And 
would you also agree that it is a terribly inefficient way to 
generate power?
    Secretary Bodman. I would agree with everything you have 
just said, Senator. It is a very--using natural gas to generate 
energy--I have used this analogy in public before; I guess it 
is all right to say here--is like washing your dishes in good 
scotch. It is not a good use of the material and from a 
chemical standpoint it is terrible.
    So more and more power generation is done using natural gas 
because it is clean and it does not produce greenhouse gases in 
nearly the degree that oil or coal does.
    Senator Martinez. And it was very inexpensive.
    Secretary Bodman. And it was very inexpensive. And what has 
happened is that we have seen a huge shift in price. We now 
have some of the most expensive natural gas in the world in 
this country, in part because we have not yet been successful 
in getting Senator Murkowski's natural gas pipeline built, but 
we are working on that. And in part we do not avail ourselves 
of liquified natural gas.
    So both of those--the LNG has been dealt with in the energy 
bill and we are seeing a lot more interest in importing 
liquified natural gas. So I think it is a matter of we better 
find ways to increase the supply. If Secretary Norton were here 
from the Interior Department, she would tell you that she is 
working very hard on increasing supply from various Federal 
lands that are available that can be drilled, and so they are 
working on accelerating the processing of applications and so 
forth. So that one is a matter of getting the supply up and at 
the same time providing electricity through other means, which 
should be nuclear, nuclear or clean coal, one of the two.
    Senator Martinez. Clean coal and nuclear.
    Secretary Bodman. Yes, sir.
    Senator Martinez. I think I am going to quit while I am 
ahead, Mr. Chairman. I see you lining up for me.
    The Chairman. We are going to quit because you used too 
much time, not because you were ahead.
    Anyways, we are going to have our new Senator next. Thank 
you.
    Senator Menendez. Thank you, Mr. Chairman. Let me thank you 
for your warm welcome to the committee and I look forward to 
working with you and Senator Bingaman and all of our colleagues 
on mutual goals. I appreciate the Secretary being here on a 
budget that is incredibly important to the Nation and to my 
home State of New Jersey.
    Mr. Secretary, I was pleased to hear the President speak 
last week of ending our addiction to oil, reducing our 
dependence on foreign imports, and devoting additional 
resources to research into renewable energies and alternative 
fuels. It is one of the moments I stood up and applauded.
    But I was not pleased when I saw the President's budget 
this Monday, because it appeared to me that the request does 
not match the rhetoric. Instead of a new age-type Manhattan 
Project to break our dependence on foreign oil, we got baby 
steps such as a 22 percent increase in the renewable energy 
research budget. That is a worthwhile step, do not 
misunderstand me, but it pales in comparison to the past energy 
bill, which gave a great bulk of the Nation's collective 
resources to traditional energy sources. So I am somewhat 
disappointed in that.
    I clearly believe that the country needs a comprehensive 
energy strategy, one that advances technologies to make energy 
safer, cleaner, and less expensive, and taking real steps, real 
steps, to increase national conservation. I again appreciate 
hearing both the President and yourself talk about the 
importance of conservation and energy efficiency. But the 
budget contains big cuts for energy efficiency programs and 
research. It seems to me at a time of record high energy 
prices, when we are trying to break the very addiction the 
President talked about in his speech, it does not make sense.
    One of them particularly I want to ask you about is the 
weatherization program. I hope you could answer a few questions 
for me just to make sure I have got this right. How many homes 
has DOE weatherized through our weatherization program?
    Secretary Bodman. I will try to find out, sir.
    Senator Menendez. I have got some numbers here. Maybe if I 
throw them out you might agree or disagree with them. I have 
got a little over 5 million homes. Does that sound about right?
    Secretary Bodman. That sounds high.
    Secretary Bodman. Senator, the numbers are: in 2005 we 
helped weatherize 92,000 homes. In 2006 the number is 97,000. 
And, consistent with the 2007 request, it is 64,000.
    Senator Menendez. Well, I was referring to since the 
beginning of the lifetime of the program. I have information 
that it is over 5 million homes. And how much in savings do we 
get on average?
    Secretary Bodman. I do not have the numbers offhand. I can 
tell you that the cost--it is not a particularly good rate of 
return.
    Senator Menendez. Well, let me read to you what the Oak 
Ridge National Lab said. They said that weatherization programs 
reduce annual energy bills an average of $235 per household.
    Secretary Bodman. Right.
    Senator Menendez. They said over the life of the 
improvements the total benefit-cost ratio is $3.71 to the 
dollar spent by the Federal Government. That is not a good rate 
of return?
    Secretary Bodman. Not over the 25 years, sir, I do not 
think that you would find that it is. I mean, I think that is 
what it is--it is an 8 percent rate of return, something.
    Senator Menendez. Well, let me ask you this. It saved 15 
million barrels of oil a year. Is that not a good rate of 
return?
    Secretary Bodman. The amount of oil that has been saved is 
a question that one would have to investigate in terms of--if 
you have converted the amount of energy that has been saved 
into barrels of oil--and fortunately, that is not how we are 
heating our homes.
    Senator Menendez. Well, if you look at last year's budget 
under the weatherization program, it was listed as supporting a 
compassionate society.
    Secretary Bodman. Yes, I think that is fair.
    Senator Menendez. Does this year's budget indicate then, 
with the significant cut that this has received, that we are no 
longer supporting a compassionate society?
    Secretary Bodman. This is a matter, sir, of trying to make 
judgments on the availability of funds that I have access to. I 
personally made this decision as it came across my desk and it 
was strictly--it was strictly knowing how much money I had to 
spend and where I had to put the funds. This was one that, as 
painful as it is--it is not a question, you see, at least in my 
view and I am sure you would agree with this, it is not a 
question of what the rate of return is. It is a question of 
people are cold in the winter, and no amount of money is going 
to pay for that.
    The Department has a program and we have done our very best 
to fund this amount that is proposed in the program, but no 
more. I do not know what more to say other than that.
    Senator Menendez. Let me just close, Mr. Secretary, by 
saying that the people in New Jersey--and I think this is 
replicated across the landscape of the Nation--who are the 
recipients of this are the people who are on the lowest levels 
of economic opportunity for our society. In my home State the 
overwhelming number of people who use this weatherization 
program are the elderly, they are poorer families with 
children, they are the disabled. They are the least capable of 
meeting the energy needs and they will be colder if we do not 
have the type of robust weatherization program that we should 
have.
    So I hope that as we move forward we can look towards 
trying to work to reconsider these cuts.
    Thank you, Mr. Secretary.
    The Chairman. Thank you very much, Senator.
    Let us see. We are going to go back to our side here. 
Senator Burr, you are next.
    Senator Burr. Thank you, Mr. Chairman.
    Welcome, Mr. Secretary. Mr. Secretary, I would like to 
thank you for being the first one in the administration to tell 
us what the definition of ``switchgrass'' was. I may be the 
only one up here that did not know and I have been curious, and 
I would have looked it up today if you had not told us.
    Secretary Bodman. The question is what is switchgrass?
    Senator Burr. You shared with us what the definition was. 
It gives me great hope that collard greens might now be part of 
the mix for ethanol because we have got a lot of that in North 
Carolina.
    I want to congratulate the administration for what I think 
is leadership at a very tough time as it relates to energy 
policy. There is no initiative that you could come out with 
that every member could not find one or two pieces that maybe 
do not suit them, but on balance I think that you have 
displayed the leadership that we need to move forward, become 
more domestically dependent, and we need to accelerate our 
advances.
    Which brings me to R&D. I want to encourage the agency to 
make sure that the R&D money that we devote in this budget and 
I think Congress will ultimately devote challenges the private 
sector and not just Federal agencies on innovation, that it 
truly is seed money at the academic institutions around this 
country that really can help stimulate that math and science 
effort that we are attempting to stimulate on the education 
side.
    One troubled area for me in the budget is the call for a 10 
percent increase to the budget for the permanent storage site 
at Yucca Mountain. I think at a time where I know this chairman 
has raised the flag on whether we should begin to look at other 
options other than permanent storage, I would suggest it is the 
wrong time to talk about an increase to the permanent storage 
site. I think we need to continue the advances on the 
transportable canisters and some of the other things that 
clearly are in the best interest. But this might be a period in 
time where we look at level or possibly even reductions since I 
happen to be one who believes that that site will not in my 
lifetime be used as permanent storage and hopefully the 
technology will provide us an option other than storage there.
    My question today deals with the act that we passed last 
year in August, which included a 1.8 cent per kilowatt for the 
first 600--excuse me--6,000 megawatt production tax credit for 
nuclear. The Department of Treasury is responsible for actually 
producing the rules and the regs for the program that we 
established. Will you work with the Treasury Department, will 
the Energy Department work with the Treasury Department, to 
make sure that that program is structured correctly and timely 
to make those new nuclear plants a reality?
    Secretary Bodman. Yes. We are doing it. We have been doing 
it. Our folks are the primary advisers to the Treasury as they 
are working their way through the provisions and we are doing 
our best to stimulate a rapid response from the Treasury.
    The Chairman. Senator, what was your question?
    Senator Burr. My question dealt, with the Energy Department 
work to push the Treasury to make the--to write the regs in the 
right way and to do it in a timely fashion to implement the 1.8 
cent per kilowatt tax credit for nuclear plant construction.
    The Chairman. Okay, thank you.
    Senator Burr. I happen to have two plants, two companies, 
that are considering nuclear. I think, Mr. Secretary, you know 
that until those rules and regulations are written they cannot 
move forward. Nuclear construction is a lengthy process. It is 
something that we need today, but it is going to be tomorrow 
before we can do it and a delay in the regs, a delay in the 
rules, means a delay in construction.
    Secretary Bodman. I am reminded of that often, sir, and I 
do my best to remind our legal staff of the same.
    Senator Burr. Thank you.
    Thank you, Mr. Chairman. I would yield to you the balance 
of that time.
    The Chairman. Thank you.
    Senator Talent.
    Senator Talent. Thank you, Mr. Chairman.
    Senator Burr, I think I define ``switchgrass'' as the place 
where your golf ball ends up when you hit your usual slice off 
the tee. It is in the switchgrass.
    [Laughter.]
    Senator Burr. Not after the Rules Committee gets through 
with us.
    [Laughter.]
    Senator Talent. Thank you, Mr. Chairman.
    I appreciate your being here, Mr. Secretary. I want to 
associate myself with the remarks that have been made, I think 
by Mr. Thomas in particular, about coal. Sometimes we tend to 
miss the obvious for the more exotic. Coal continues to be the 
default fuel, as you know, particularly for the production of 
electricity. As we develop the various clean coal technologies, 
it really holds promise, not just for the direct production of 
energy, but also coal gasification. I am concerned also about 
some of the budget proposals regarding coal. I just want to 
register that with you.
    I want to associate myself with your remarks on renewables 
and just say to folks that we are in a renewable world. I agree 
with what the President is wanting to do. With the energy bill 
last year, we moved into a renewable world and people need to 
get ready, because in the next couple years most of the 
consumers, the driving consumers in this country, are going to 
be at least having an option of an ethanol blend, E10, and 
many, many millions of people are going to have a practical 
option of E85.
    We just doubled the number of stations in Missouri pumping 
E85. That means today, given the normal price of ethanol, that 
is about $1.75 a gallon, so we are there. I think as people 
become more and more familiar with it they are going to want to 
go further, and I would just encourage you to move in that 
area.
    A couple of things in terms of questions and maybe I will 
just note them for you. The budget proposes to cut the Office 
of Electricity Delivery and Energy Reliability by $37 million. 
Now, would you tell me the impact that this may have on 
identifying electric transmission corridors and getting the 
transmission built? I thought that was a key point of the 
energy bill. That seems to me an awful big budget cut, given 
the job that that agency is going to have to do.
    Secretary Bodman. I can answer that, if I may.
    Senator Talent. Yes, and then, okay, then I will ask the 
second one. Go ahead.
    Secretary Bodman. It will have no impact on it. That is a 
very high priority matter. We have merged two offices together 
and managed to produce a more efficient operation. That is the 
largest part of the operation. We have also completed some 
projects that we were involved with before, and those are the 
two reasons for it. I expect them to be quite vigorous in the 
siting of new transmission corridors and also working with the 
tribes in the West. I know that there are issues related there 
and they are also fully on top of that.
    Senator Talent. Okay. So you feel confident then that this 
agency can carry out this responsibility at the lower dollar 
level? You have looked at it personally?
    Secretary Bodman. Yes, I have, and I do.
    Senator Talent. Also, I cannot resist, since you discussed 
natural gas, I think with Senator Martinez, and I certainly 
agree on the need for LNG, I cannot resist asking your opinion 
about opening up Lease 181. I know it is not your decision. It 
is a different part of the Cabinet. But you are talking about 5 
trillion cubic feet of natural gas. The pipeline is already 
there. We could be recovering that within, what, 1 or 2 years. 
I cannot think of a better signal now to send to this hard-
pressed market. I wanted to know if you want to offer an 
opinion about that subject.
    I will just say that the inability in some quarters to 
recognize the connection between price and supply--I do not 
know, with great respect to people, how to respond when people 
do not--act like there is no connection between supply and 
price. Certainly other things affect price. Obviously we have a 
supply issue with natural gas. We have to have more natural 
gas. This is the quickest way to get more on line.
    Would you want to offer an opinion?
    Secretary Bodman. Well, the Interior Department yesterday 
proposed an expansion of access to the offshore Outer 
Continental Shelf and starting to move into the eastern Gulf of 
Mexico. Having looked at the figures that they believe are 
there, that will at least directionally move us in the proper 
direction.
    Also, obviously the State of Virginia has also offered up 
that they have an interest in it. So we are starting to see 
more States I think participating and I find that a healthy and 
positive development.
    Senator Talent. Well, and I know that there are local 
concerns. Missouri is a long way from the Gulf of Mexico, so it 
is easy for me to say that those concerns should not prevail in 
this instance. But I really think that we ought to be able to 
satisfy them.
    I just hope that you, with your portfolio, will do 
everything you can within the administration to find a way to 
get this done. I am a huge advocate for alternative sources of 
energy and renewables. I was one of the leaders on this 
committee. But this is just to me such an obvious thing to do 
and obviously so good for the economy, and it would send the 
right signal. I hope you will keep working this issue, Mr. 
Secretary.
    Secretary Bodman. You may be certain of that, sir.
    Senator Talent. Thank you, Mr. Chairman.
    The Chairman. Senator Talent, might I say on that issue of 
Leasehold 181, I want to thank you for being the original co-
sponsor of the legislation that was introduced yesterday. You 
did not state that, but I want to state it.
    Senator Talent. I thought the conversation that I just had 
with the Secretary might interest you, Mr. Chairman, and I sure 
thank you for your leadership and your work on this. I know how 
strongly you feel about this.
    The Chairman. I know everybody gets all excited about what 
we are going to do to adjoining States, but, just so we get it 
right, the closest that leasehold is to anything in Florida is 
100 miles, and it also excludes anything that the military said 
they might need. Still, Mr. Secretary, what is left will 
produce 5 trillion cubic feet, 10 million houses for 6 years, 
one-fourth the entire use of American natural gas per year, 
that leasehold. Not so difficult to say we should do it; 
politically very difficult nonetheless.
    Let us go to Senator Smith, I believe; is that correct? Or 
who was here next? I am very sorry. Do we have it right, Barr, 
Talent, Smith, Alexander.
    Senator Smith.
    Senator Smith. Thank you, Mr. Chairman.
    Mr Secretary, welcome. It is good to have you here. I know 
I will be repetitive with my Northwest colleagues. First of 
all, let me say that you are not the first administration to 
propose these kinds of things. Ever since I have been a member 
of this committee, now nearly 10 years--President Clinton 
proposed these kinds of things and now President Bush is. It 
seems to be an easy target at OMB to start a budget cycle with 
these kinds of proposals.
    What it misses, though, is a whole lot of history and a lot 
of water that has gone under the dam, the dams of the Pacific 
Northwest. We are still paying for these Federal assets, our 
ratepayers are, and our economies are frankly built on 
hydropower. They are tremendous national assets and the region 
of the Pacific Northwest is inseparably connected to them.
    The proposal the administration has included this year, 
while somewhat different than last year's, nevertheless puts us 
in a position where we simply have to oppose. It is a fact that 
since the energy crisis on the west coast our rates have gone 
up 46 percent and they remain that. Notwithstanding that, in 
the interim we have worked very hard on environmental things to 
mitigate environmental consequences to fish and to find savings 
in BPA that can lower these tremendous price spikes in energy.
    Your proposal simply would undo all of that. We are not in 
arrears. We are meeting our commitments economically and 
environmentally. And this throws a real wrench in the works.
    I understand the need to put forward a budget that looks 
fiscally responsible and all of that, but we have to oppose.
    I think if the administration's position is that it can do 
this administratively I simply have to say that that is 
inconsistent with statute. Under the Transmission Systems Act 
of 1974, the BPA Administrator is to set rates at the lowest 
possible level consistent with sound business principles and 
they are to be set taking into consideration all revenues in 
order to repay bonds issued by the Federal treasury as they 
come due.
    Earmarking a portion of BPA's revenue sets, I believe, a 
terrible precedent and fails to take into consideration the 
ongoing uncertainty surrounding river operations for fish, the 
appropriate level of carryover reserves so we can stay current, 
or BPA's ability to meet its scheduled Treasury payments.
    I just reiterate this because I want you to know why we 
will so vehemently and unitedly oppose this. We have to. 
Unemployment rate in my State is falling, but it is still 
nearly double the national unemployment rate. We cannot take 
any more. And energy is at the heart of any economy. If 
somebody does not produce power, others do not have jobs. It is 
just that simple.
    Whether it was wise or not to be set up in this fashion in 
the beginning, historians and economists can debate that. But 
it was set up in this fashion, and too much has been built up 
around that, that it is our duty now as Northwestern Senators 
to protect. It is just that simple.
    So I guess I am asking you, are you going to pursue this 
administratively and do you think you can win this legally when 
the inevitable court challenges occur?
    Secretary Bodman. I do not know. I mean, I do not know that 
we--the President proposed it, therefore we will do our best to 
cause this to happen. If there are legal impediments, if it is 
illegal, I have not asked that question personally. So I do not 
know the legality of it and whether this would survive the 
inevitable court challenges, as you described it. So I simply 
do not know the answer to that question.
    Senator Smith. Well, I would hope that it would not be done 
administratively. Let us work with you. But please, will this 
administration, as I begged the previous administration, 
understand there is a lot of history here. There is a lot of 
people that can be hurt by the proposals that I have seen every 
year that I have been a member of this committee.
    Thank you, Secretary.
    Secretary Bodman. Thank you, sir.
    The Chairman. Senator, prior to your questions the 
Secretary has committed here publicly to meet with all of you 
from that area who are interested to discuss the issue in 
detail. I assume by then the issue will be better briefed and 
can be proposed and perhaps the Secretary will be in a better 
position to respond to the very precise question of why do they 
think it is legal.
    Let me suggest, it has been suggested that this would be 
done administratively heretofore and it never got there. So I 
am not sure that we have to do something, if that is the will 
of the Congress. But if there is a majority, we will find a 
way. I am not saying there is a majority. On this committee we 
cannot report the President's proposal. They know that. There 
is not enough votes here for that.
    Some of you stay on this committee forever.
    Senator Smith. There is a reason, Mr. Chairman.
    The Chairman. I understand. You stay here because of this 
issue. You have a lot of issues, but anyway, nice to have you 
on board.
    Senator Smith. Thank you, sir.
    The Chairman. Senator Alexander, we have imposed on the 
Secretary to remain with us until 11:45. Is that correct, or 
did you want to leave before then?
    Secretary Bodman. No. I am here, sir, at your pleasure.
    The Chairman. We are going to get through on time. I have 
not asked any questions. Could I proceed and then you and then 
if Senator Cantwell wants another round we will try that.
    Mr. Secretary, I am going to first, because I yielded my 
time, although I have put in my two cents here and there. There 
are a lot of people that are asking what did our Energy Policy 
Act do. I already told everybody that the planned nuclear power 
plants, that is consortia or individuals that are at the 
Nuclear Regulatory Commission saying we have a site, we are 
planning, has reached 19 as of today. Now, that is from zero to 
19.
    You have one thing left to do to get ready and that is to 
draw the guidelines for the insurance in the event of 
regulatory delay. It is terrific that we have done this. I want 
to tell you, I have been to France, where all have been 
assembled from around the world, and even though we are not 
going to compete in numbers of new plants even if we succeed 
with somebody like China--they have seen the light; they are 
already on a line to maybe have 20 and theirs may be bigger 
than 1,000 megawatts. We are sort of saying one. That is like 
the model, maybe a little smaller even. So that is one big 
item.
    But people say, why so much emphasis on nuclear? Well, not 
so much. It is just that we better get going. But you know, 
this bill is going to increase wind energy during the period of 
the credits that we put in that bill such that wind is going to 
produce 14,000 megawatts by 2007. Now, remember I just said a 
1,000 megawatt nuclear power plant. That is 14 of them. That is 
a lot. We have not built 14,000 megawatt plants combined--even 
if you add them all up, it would take quite a few years to do 
that.
    Two days ago, as a result of this bill, a strange-sounding 
law called PUHCA, Public Utilities something or other----
    Secretary Bodman. Public Utility Holding Company Act.
    The Chairman. Right. It expired, Senator Alexander, a quiet 
death after years of effort, 2 days ago finally. What does it 
mean? It probably means more than scores of billions of dollars 
will be invested in electrical power generation and the like, 
pretty good business.
    Ethanol, the President proceeds well beyond this, and you 
are going to see to it that the research gets us there. But 
just what we did has now caused 24 new ethanol plants to be 
under construction, Senator, 24. Now, each one will employ 50 
people. We do not know how many millions it costs to build 
them. But when we are finished with just that, that will be 2 
billion gallons of ethanol that will go into the Nation's fuel 
supply--not peanuts; ethanol. You are going to dramatically 
increase it with cellu--help me with the word.
    Secretary Bodman. Cellulosic.
    The Chairman [continuing]. Cellulosic-biomass. We hope it 
works. We are going to Brazil to see what they are doing. 
However, they use sugar. We would never use sugar, but that is 
their product. It is cheap. That is great.
    Let me just give you two more, a couple more, and ask about 
one. There has been a very major American program on a national 
network about Canada and its tar sands. It is rather 
remarkable. A year and a half ago, if you would have looked at 
Canada and said, what are their oil reserves, you would have 
had a small amount. I am not going to remember the number. But 
a little time passed, and God did not change the Earth, but all 
of a sudden the reserves quadrupled or quintupled, let us just 
use an example maybe, from 2 to 20.
    One would say, what happened? Well, what happened was they 
made tar sands marketable, right. Under today's prices, the oil 
evaluators said all of this tar sands may be oil. Now, that is 
fantastic. They are selling us a lot. Environmental problems 
are being solved.
    But now, for us in America, Mr. Secretary, up there in 
three States plus a little bit in Virginia or West Virginia 
sits oil shale. Now, oil shale is not tar sands because it is 
not liquid, but it has locked up in solid oil. We changed 
something in our bill, the Energy Policy Act, that is 
dramatically exciting the community, investing community, in 
oil shale. I think you know that. About 19 applicants for 
leaseholds are now interested. Shell--not shale, but Shell 
Oil--has a new technology and they have decided to invest a 
huge amount of money.
    Now, Mr. Secretary, I know the President did not include 
this in his potential diminution, that is his lowering, of our 
use of foreign crude oil. But I want to suggest if the 
breakthrough occurs here and Colorado and Utah and Wyoming can 
be satisfied, we could take one giant step, as Canada did, and 
send the world a message that would be incredible. So you are 
doing something there, I understand; is that correct? You have 
got people researching it, you have got some grants out; is 
that correct?
    Secretary Bodman. Yes, we do, yes.
    The Chairman. What is your own opinion? I know it is a 
market-driven thing, but you know all about this. Could this be 
done?
    Secretary Bodman. The people who know the most about oil 
shale in my experience are the people at Royal Dutch Shell.
    The Chairman. Yes.
    Secretary Bodman. And I know you have visited with those 
people. They have been by to see me as well. They are very 
enthusiastic about this new technology, which involves 
basically boiling it out of the ground. You heat it up and you 
drive it up, you drive it to the surface using thermal energy. 
Their estimates of costs that they gave me were very 
impressive. They did caution that it was still a research 
program and so forth.
    I guess I was a skeptic before and I am less of one now, I 
guess I would say to you. Oil shale, as you know, has been 
around for many years. It is a very tough process involving the 
physical removal. It used to involve the physical removal of 
the shale and then the boiling it and extracting the oil and so 
forth. This seems to me to be more reasonable and more 
potentially interesting. So I guess I would say I am less 
skeptical than I was.
    The Chairman. More skeptical?
    Secretary Bodman. No, I am less skeptical than I was 
before.
    The Chairman. You know, you could not say guardedly 
optimistic? That is too much?
    Secretary Bodman. I could say guardedly optimistic, sure.
    The Chairman. Anyway, let me say so the record will 
reflect, a long time ago we looked at this and we said, cannot 
be done. But remember, a long time ago oil was $10 a barrel.
    Secretary Bodman. Yes, sir.
    The Chairman. In fact, when we first looked at it, it was 
not even ten. So you know, we wasted money investigating that 
because everybody knew you could not do that. When it got to 
$30 people got interested. Shell, British Shell, got interested 
before $30. But they are really interested when it gets to $40, 
$50 a barrel.
    The only issue is when will it come down, if ever. If you 
are going to invest $15 billion, you do not want to invest it 
at $60 a barrel and wake up one day and it is down to $30.
    The oil-producing countries are very worried about America 
doing this, right?
    Secretary Bodman. They are worried about it. But the Shell 
people indicated that the cost that they were estimating for 
producing oil from oil shale was of such a magnitude that I 
think they are quite interested at these prices, even at $40 a 
barrel for oil.
    The Chairman. What I mean is when we looked at it years ago 
in the Carter administration the producers in the world were 
thought to be watching, because if we got there it had a very 
big impact on how much of theirs we would need, right?
    Secretary Bodman. Yes, sir.
    The Chairman. And that is still the case. If this broke 
through it would be a huge thing.
    Closing up this issue, what this company is doing is 
eliminating the issue of surface damage. They are not going to 
have to unload the ground and pile it up. They are going to 
boil it underground and the oil will be--the shale will be 
turned into oil underground, and then you will--like you have a 
Coca-Cola and you put a straw in. You will sip it out at 
different levels. So I am excited about that and I hope you 
are.
    I want to clear the record and I am sorry the new Senator 
from New Jersey is not here. I do not want to clear the record, 
but just state an add-on to his weatherization discussion. The 
budget will still provide 64,000 weatherization this year.
    Secretary Bodman. Yes, sir, that is what I stated to him.
    The Chairman. So it is not like there is none. It is less. 
And we will state to you that some of us agree with him, with 
Senator Menendez--I do not know how many--that we should up it, 
and we will just have to see whether we can find the money.
    Maybe you could help us for the record. If you have an 
analysis of how well this weatherization is being done and how 
effective it is, it would be good to have a statement. I am 
aware in its early stages how it was handled. It has been 
perfected in terms of the delivery of the product. In its early 
stages it was not very good. The workmanship was not there.
    Secretary Bodman. It is much better. Now, one of the 
problems has been getting the installers identified and 
motivated in each State, in each locality. That has been a 
challenge. I think that part has been overcome. One of the 
problems gets to be if you would like to have, which we thought 
about frankly when we were facing this winter, would it make 
sense to increase on short notice the amount of weatherization 
that was done, and it was deemed very difficult to get the 
crews ready and to get the system--the system works pretty 
well, but it is not very flexible. Maybe that is the easiest 
way to put it, in terms of adding additional resources.
    The Chairman. Thank you, Mr. Secretary. I am sorry that I 
took so much of your time with my comments.
    Senator Alexander.
    Senator Alexander. Thank you, Mr. Chairman. I am glad you 
took the time. I was sitting here trying to recover from the 
visual image of the 50,000 giant wind machines we would need to 
produce 14,000 megawatts of wind and wondering in whose State 
they were going to go.
    But I have two quick comments and two questions. The 
questions are about loan guarantees in the Energy Policy Act 
that we enacted earlier and about distinguished scientists. My 
comments are, No. 1, I want to congratulate you and the 
President for the American Competitiveness Initiative. The 
President is the Nation's agenda-setter. Only he can set the 
agenda. We can talk, he sets the agenda. For him to put that up 
front, keeping our brain power advantage, is vitally important 
to our country's future.
    I am glad to see that he has adopted a number of the 
proposals of the National Academy of Sciences that so many of 
you in the administration have worked with us on, and we will 
be having more hearings on those and other ideas. And even in 
the budget, while we would like to get all 20 of their 
recommendations adopted and full funding for all 20, the 
administration's recommendations are a good start.
    When we talk about energy, I know you believe this, but I 
think it is worth saying that this is the foundation for energy 
independence, that if we want to use coal we have got to figure 
out a way to recapture carbon. If we want to use nuclear power, 
we have got to deal with reprocessing and what to do with the 
waste. If we want to use less oil, we have got to figure out 
advanced batteries or we have got to deal with hydrogen. So our 
edge in science and technology is tremendous and I compliment 
the President for that.
    No. 2, I was delighted with the nuclear, the Global Nuclear 
Energy Partnership, and that you are conceptualizing that, and 
particularly that you are beginning to address the issue of 
what we do with the spent fuel. We need to have a serious 
discussion of the pros and cons of reprocessing. It can reduce 
the amount of waste by 90 percent. Even more important, it can 
reduce the heat by more than that and make it possible for us 
to deal with it.
    If we are really serious about global warming, we are going 
to have to have nuclear power. There is no other way to do it, 
no other technology that will do it for us. We can do more in 
conservation. But nuclear power is all we have got in this 
generation to produce carbon-free energy, and I compliment you 
for that.
    Now, my questions are: one, I would like--and I will ask 
them both and let you comment. One is, several Senators have 
talked about adding to our work with the academies and the 
legislation that will come from that on the PACE Act, that now 
has 31 Democrats and 31 Republican Senators sponsoring it, the 
competitiveness legislation. A provision to have 100 
distinguished scientists, academy-level scientists with joint 
appointments at research universities and national 
laboratories. We have had 20 of those for 20 years at Oak Ridge 
and the University of Tennessee and it has been a brilliant 
success. While I do not need your reaction on that today, I 
hope you will think about that and be prepared to give us a 
reaction about that.
    More importantly----
    Secretary Bodman. If I could just understand, Senator, this 
is 100 distinguished scientists that would have joint 
appointments in the laboratory as well as in a university; is 
that correct?
    Senator Alexander. That is correct, sir. And we have had 
them for 20 years at the University of Tennessee and Oak Ridge, 
with the State and the university paying half the cost and the 
feds paying the other half. It has been very successful, and if 
it has been, why not do it other places. That is the first.
    But the question I would like to hear your comments on 
today has to do with the loan guarantee programs that were in 
the Energy Act that we passed the middle of last year. This was 
Senator Domenici's brain child. It was his most important idea. 
It provided a way for you as Secretary to look across 
innovative technologies and give them the financial push they 
needed to get started without costing the taxpayer a cent, 
because under the formula you evaluate the risk and then 
whoever applied for the loan guarantee would have to put up 
that much cost, in effect, to guarantee it.
    It could be used for coal gasification. It could be used 
for advanced nuclear. It could be used for whatever you thought 
was the most innovative technology.
    I would like to know the status of that, whether it is hung 
up in OMB, what your view of it is, and how soon we will be 
using it to help us move on a path toward energy independence.
    Secretary Bodman. First, my view is that it is potentially 
a very important program. The two highest priority items that 
have come out of the energy bill that we are focusing on with 
maximum effort are the insurance program for nuclear reactors 
and these loan guarantees because they are so important.
    We have an excellent general counsel. I am very proud of 
him and pleased with him. He has done a great job. His name is 
David Hill. I visited with him yesterday about this matter.
    If I may just also address the answer to Senator Domenici 
because he raised this prior to your arrival, sir, and I never 
really got a chance to answer it. We have visited extensively 
with other government agencies that offer loan guarantees. We 
have a little different issue here because this is not a 
student loan, for example, where sort of one is a copy of the 
one before. These are all new technologies and they require 
separate analysis. So one of the issues, frankly, that is on my 
mind is, how are we going to do this work? This is over and 
beyond, let us assume we get the loan guarantee thing done and 
so just the management of it will be I think a formidable 
undertaking.
    Having said that, the loan guarantee itself, if we go 
through the full development of a Federal rule and go through 
the issuance of an interim rule and so forth, we are going to 
be well into 2007 before we get this done. David's approach, 
our approach, is to work with guidelines and to develop a so-
called guideline program in which we can do something short of 
a Federal rule and maybe get--and therefore we could jump-start 
this and get it going, and then in parallel move to development 
of a rule.
    We are hopeful, I am hopeful, that using the guideline 
approach we will have this done and operating this summer. So 
it is going to take--even that will take a while. But suffice 
it to say we have got excellent people working on it and they 
have this as a very high priority.
    Senator Alexander. Thank you, Mr. Secretary.
    The Chairman. Thank you, Lamar. Thank you, Senator 
Alexander. I did not ask it that specifically and neither did 
he respond. He told me they were busy at it.
    Senator Cantwell has been anxiously waiting for a second 
round. Senator Cantwell has been waiting and I am going to 
yield to her right now.
    Senator Cantwell. Thank you, Mr. Chairman.
    Secretary Bodman, you and I have discussed the situation 
about tank waste at Hanford. Putting aside whether the 
Department of Energy meets the milestone or does not meet the 
milestone, because we keep going round and round about that, 
but put that aside for a second. We obviously have aging 
single-shell tanks and they are 7 to 10 miles from the Columbia 
River.
    Now, we know that, from various reports, that seven of 
those tanks have leaks, an estimated million gallons of 
contaminants into the soil of the Pacific Northwest. We know 
that the Army Corps of Engineers has been critical of DOE for 
the slow process, calling it imperative, because of seismic 
issues, to address the issue of already leaking tanks and what 
could happen in a seismic event.
    Secretary Bodman. This is with respect to the vit plant, 
the construction of the vit plant?
    Senator Cantwell. No. A Corps of Engineers----
    Secretary Bodman. You mean the effect of the seismic on the 
tanks themselves?
    Senator Cantwell. On the tanks themselves.
    Secretary Bodman. I see, okay.
    Senator Cantwell. It is imperative that something be done, 
now, because of the instability of those single-shelled tanks. 
GAO has also said that, in general, these leaks of waste from 
the pipelines have one million gallons containing about one 
million curies of radioactivity, and then go on to say that 
those contaminants are of concern because contamination--not 
just the mobility of it in the ground water, is a potential 
health risk to humans, to fish, from the carcinogens.
    So we are getting a very clear picture about the growing 
threat. Yet we see an administrative budget that cuts $52 
million from the tank waste cleanup program at a time when we 
are heading towards this September 6 milestone, a milestone the 
inspector general has already said will be missed because of--
what did they call it--unrealistic costs, schedules, and 
assumptions by DOE.
    So why would we cut this budget? Why, given what the Army 
Corps of Engineers has said, would the Department propose 
further cuts to the single-tank cleanup that we ought to be 
accelerating?
    Secretary Bodman. All of the water, the fluid that is in 
the single-hull tanks, has been removed. What remains in the 
single-hull tanks is a sludge. These are solid materials with a 
modest amount of liquid with it. The reason that we have 
reduced the budget and the rate at which we will deal with the 
removal of that material is that I need to have the vit plant 
operating as a place to put and process the material when it 
comes out of there.
    We monitor those tanks for any additional leakage, anything 
that would indicate any instability, and we find none. So there 
is a monitoring process that is ongoing, and in terms of the 
management of the single-hull tanks I believe that they are 
stable and that the delay which is reflected in the budget, 
that it is caused by the fact that I have brought the 
construction activity at the vit plant to a halt until we get a 
better, much better, fix on costs and schedule and what needs 
to be done than we currently have. That is what is now ongoing.
    Senator Cantwell. So when the Army Corps of Engineers says 
that ``It is imperative the project be accelerated and empty 
tanks as soon as possible. Tanks and their contents represent 
immediate risk in a seismic event,'' you disagree with that?
    Secretary Bodman. Yes.
    Senator Cantwell. So you disagree with the ability to 
remove the remaining material from the C-tank farms into, say, 
a double-hull, I mean a double-shell, tank?
    Secretary Bodman. I do not have a double-hull tank that is 
available.
    Senator Cantwell. Is there not an analysis that is about to 
be completed by the Department that shows that these newer 
tanks could withstand and do have capacity?
    Secretary Bodman. Say that again, Senator? I did not 
understand.
    Senator Cantwell. Does the Department have an analysis that 
is about to be published?
    Secretary Bodman. If we do, I do not know about it.
    Senator Cantwell. Well, I would like to follow up with both 
that analysis of moving material, and an answer in writing of 
an analysis of moving that material from the single-shelled 
tanks to double-shelled tanks.
    Secretary Bodman. I would be happy to do that.
    Senator Cantwell. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. I think we are close to being finished. I 
would want to offer you one opportunity, Mr. Secretary. 
Anything that has gone by that either you did not get to answer 
as well as you would like or that came up that you might want 
to amplify before we let you go at this point?
    Secretary Bodman. Obviously, each Senator has issues that 
are on his or her mind and I have done my best to try to deal 
with those. I would just emphasize the importance, that I hope 
all the members of the committee understand the importance of 
this increase in the science funding. In dealing with a number 
of these issues, we have had to make tough decisions, but it 
has been made with a focus on trying to rectify the leadership 
position of this country in science, which I believe this 
budget puts us in a position of starting to do. I just would 
say that, sir.
    The Chairman. Mr. Secretary, I want to make one last 
observation, but first, process-wise, any additional questions 
that need to be submitted should be submitted as soon as 
possible. In fact, if the staff can work at it we ought to have 
them in by 5 o'clock tonight. If you cannot, let us say 
tomorrow night.
    I want to wrap up with the issue of the Global Nuclear 
Energy Partnership. You said a while ago that we were producing 
a great deal of our electricity from natural gas. You could not 
have been--you were not here when we decided whether we would 
do that or not. We had a law that said we could not. We decided 
that we had so much natural gas we ought to let it happen. 
Never did we think we would not do anything else.
    Secretary Bodman. It seemed like a good idea at the time, I 
am sure.
    The Chairman. Yes. Now, had we had this Global Nuclear 
Energy Initiative in place, thus eliminating the very big 
concern about finishing the cycle, who do we do with the spent 
fuel rods, we would have built nuclear power plants. That would 
have displaced the need for natural gas. We would not be in 
this position.
    But the ghost there in waiting on your Global Nuclear 
Energy Partnership is plutonium. Everyone should know that one 
of the reasons you have chosen this program and the technology 
is that the scientists say it is a way to produce recycling 
without separating out plutonium, which means those who oppose 
it on a proliferation basis end up having to look at the final 
product, which has--there is no ability to use it for bombs 
because it is not plutonium; it is another compound. That is a 
very interesting thing that our great scientists did, a great 
achievement.
    We are pursuing that and we do not know when we get to that 
piece, but it is being worked on already, right?
    Secretary Bodman. That is correct, sir.
    The Chairman. If that happens, then everybody should know 
another thing that is terribly important. You said it, but let 
us say it again. We produce all this nuclear power. France 
produces 70-some percent of their entire electrical power from 
nuclear. Japan has quite a bit and they are adding. China has 
seen the light and they are going to add. But when we do it the 
way we are doing it in America, the finished product, the fuel 
rods, still have within them 97 percent of the energy from the 
uranium that we put in. Just think of that.
    We would hardly think of doing that with any other energy 
source. If you put coal in and you say only 3 percent of it 
burns, right, and you take 97 percent and you throw it away? So 
it is a good thing it is not a lot of uranium.
    But this process, since it goes round and round right at 
the end, eventually you use the energy from that 97 percent 
that you would throw away. Is that correct?
    Secretary Bodman. That is correct.
    The Chairman. Second, Yucca Mountain is very worried about 
what you are going to put in there, right? We are now intending 
to put those spent fuel rods, with all that tied-up energy, 97 
percent, right? If this works, the end product is 100 times 
less, one poundversus 100 pounds of waste, and the 
radioactivity longevity, how long it lasts, is reduced from 
hundreds of thousands of years to a manageable level. Is that 
correct?
    Secretary Bodman. Yes. If I could just correct one thing, I 
am not sure--I do not know what the exact number is. I do not 
think it is that big of a reduction in the physical quantity of 
the waste.
    The Chairman. Okay, but it is big?
    Secretary Bodman. Well, it is a reduction in the physical 
quantity. But the big thing is it changes the toxicity by three 
orders of magnitude. It goes from roughly a million years to a 
thousand years, the half-life. So it is a thousand years, even 
though that is of course a long time, but it is more 
manageable.
    The Chairman. We would not be having any trouble, big 
problems, if the residual was 1,000 years.
    Secretary Bodman. That is correct.
    The Chairman. We would have that solved. It does not have 
to be at Yucca. We would already have done it.
    Secretary Bodman. That is right.
    The Chairman. On the other hand, I think the residual, 
reduction in quantity, is very big and we ought to get that for 
the record.
    Secretary Bodman. Well, we will work on that.
    The Chairman. That would be a good thing to have.
    I had one other thing I wanted you to put in the record, 
but it escapes me right now. Your time has run out. Thank you, 
Mr. Secretary.
    We stand in recess.
    [Whereupon, at 11:48 a.m., the hearing was adjourned.]


                               APPENDIXES

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

                              Department of Energy,
               Congressional and Intergovernmental Affairs,
                                      Washington, DC, May 30, 2006.
Hon. Pete V. Domenici,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: On February 9, 2006, Samuel W. Bodman, 
Secretary, testified regarding the President's FY 2007 budget request 
for the Department of Energy. Enclosed are the answers to 164 questions 
that were submitted by you, Senators Wyden, Akaka, Alexander, Bingaman, 
Bunning, Cantwell, Craig, Landrieu, Menendez, Murkowski, Salazar, 
Smith, Feinstein, and Johnson to complete the hearing record. If we can 
be of further assistance, please have your staff contact our 
Congressional Hearing Coordinator, Lillian Owen, at (202) 586-2031.
            Sincerely,
                                             Jill L. Sigal,
                                               Assistant Secretary.
[Enclosure.]
               Responses to Questions From Senator Wyden
    Question 1. The Energy Department budget calls for eliminating 
mandatory funding for the Ultra-deepwater unconventional natural gas 
and petroleum R&D program. (Fiscal Year 2007 Budget of the U.S. 
Government, page 99) This week, I introduced a bill that would repeal 
this program, as the Administration's budget proposes. The bill is S. 
2251. Do you support repealing the provisions of the Energy Bill that 
created the new $50 million per year Ultra-deepwater oil and gas R&D 
program as my bill calls for?
    Answer. Yes, I support the Administration's budget proposal to 
cancel the program through a legislative proposal.
    Question 2. Oregon State University's engineering department has 
been a leader in the development of safe nuclear reactors. DOE's FY 
2007 budget includes an overall increase in nuclear energy, science and 
technology funding, yet cuts several of the sub-program accounts in 
this area. Shouldn't safer nuclear reactors be one of the programs that 
receive increased funding in this year's nuclear energy budget? If not, 
why not?
    Answer. Safer nuclear reactors remain an important part of the 
Office of Nuclear Energy, Science and Technology's (NE) budget request. 
During fiscal year (FY) 2007, the Department of Energy (DOE) will 
continue to develop safer, more efficient Generation IV reactors. 
Research required for these new power plants will be open to 
universities, like Oregon State, as well as national laboratories and 
industry. Also, in FY 2007, work will commence on the initial stages of 
converting the Oregon State reactor from highly enriched uranium to 
low-enriched fuel. Within DOE, both the National Nuclear Security 
Administration and NE will collaborate on conversion of the Oregon 
State Reactor to low-enriched uranium with the conversion expected to 
be completed in FY 2008.
               Responses to Questions From Senator Akaka

               SUGAR CANE ETHANOL LOAN GUARANTEE PROGRAM

    Question 1. In the Energy Policy Act of 2005, there are a number of 
loan guarantee programs in Title XVII as well as Title XV.
    I understand that the Department of Energy is working on guidelines 
for these loan guarantees and I am pleased to hear this. We need these 
loan guarantees. They are critical incentives for the private sector 
and will help with the financing to get new technologies up and 
running. What can you tell me about the progress on the guidelines for 
the Sugar Ethanol Loan Guarantee program, which is in Title XV Ethanol 
and Motor Fuels? When do you anticipate that businesses will be able to 
use it to secure financing? What do you estimate will be the 
administrative costs for the loan guarantee programs in the Energy 
Policy Act?
    Answer. The Department is assessing procedures needed to comply 
with the provisions of the Federal Credit Reform Act and OMB Circular 
A-129 to implement the loan guarantee provisions of Title XVII of 
EPACT. The Department's Chief Financial Officer is heading up our 
efforts. The Department has not developed a specific time frame for 
completing these activities. The FY 2007 Budget provides no funds to 
implement loan guarantee provisions.

                              GAS HYDRATES

    Question 2. Over the past few decades, deepwater expeditions to 
continental shelves confirmed extensive deposits of naturally occurring 
hydrates. Senator Murkowski and I sponsored the reauthorization of the 
methane hydrates program. I understand that the Fiscal Year 2007 Budget 
proposes to cancel the program. I am concerned by this development, as 
I believe that researching hydrates is important for both energy and 
climate purposes.
    Given the President's expressed commitment to reducing our 
dependence on foreign oil, the enacted reauthorization of the program, 
the expected long-term decrease in the supply of natural gas, and the 
Department of the Interior's proposed increase in its methane hydrates 
program, can you explain the rationale for cutting this program?
    Answer. The decision to terminate the gas hydrates program reflects 
a strategic assessment of the program compared to other DOE programs. 
This is in line with our commitment to deliver results for the American 
taxpayer. The 2007 Budget's proposals to expand access to oil and gas 
resources, streamline permitting processes, and make the R&D investment 
tax credit permanent are preferred ways to increase domestic production 
of oil and gas than federally funded R&D. Several other government 
agencies, specifically Minerals Management Service (MMS), U.S. 
Geological Survey (USGS), National Oceanic and Atmospheric 
Administration (NOAA), National Science Foundation (NSF), and Naval 
Research Laboratory (NRL), support gas hydrate-related research that is 
relevant to their missions, focusing on resource characterization and 
basic research, rather than exploration and production. Some private 
sector companies are also investigating this potential resource.

                   GLOBAL NUCLEAR ENERGY PARTNERSHIP

    Question 3. On July 12, 2005, Richard D. Lester, Professor of 
Nuclear Engineering at MIT and founding Director of the MIT Industrial 
Performance Center testified before the House Subcommittee on Science 
regarding the viability of Nuclear fuel reprocessing. According to Dr. 
Lester, while it is important to continue research on advanced fuel 
research technologies, even in the best case these technologies are not 
likely to be available for large-scale deployment for at least two to 
three decades. Moreover, there is no guarantee that the desired 
performance objectives could be achieved on any timescale. Given these 
findings, I am concerned about the expenditure of $250 million on the 
Department of Energy's Global Nuclear Energy Partnership.
    Could you respond to the issues of technology development raised by 
Dr. Lester?
    Answer. The Global Nuclear Energy Partnership (GNEP) proposes to 
perform the research, development, and demonstrations to enable large-
scale deployment in two decades, consistent in spirit with Professor 
Lester's overall statement. The earliest full-scale reprocessing plant 
would not operate until approximately 2025. Between now and then, GNEP 
proposes a progression of steps, building on past nuclear technologies 
and promising results at the laboratory scale. Instrumental in this 
progression are the Advanced Simulation Laboratory (ASL), Engineered 
Scale UREX+ Demonstration (ESD) plant, Advanced Burner Test Reactor 
(ABTR), and the Advanced Fuel Cycle Facility (AFCF). Tentative dates 
for initial operation of these facilities would span the next decade. 
Successful results would enable deployments a decade later.
    The technologies that the Department proposes testing are the best 
available today. Particularly in the area of separations technologies, 
we have found excellent results at laboratory scale. No technologies on 
the horizon are so promising as to warrant delay in testing today's 
best at engineering scale. Research, as Professor Lester proposes, will 
and must continue. Indeed, the ASL, AFCF, and ABTR will be vital 
research tools to enable the research that Professor Lester desires. 
Only through proceeding with the demonstrations of the separations, 
fuels and reactor technologies will we inform the practical 
considerations of implementing the full Global Nuclear Energy 
Partnership program. 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 decades from now.

             Responses to Questions From Senator Alexander

    Question 1. When I was Governor of Tennessee, we established at Oak 
Ridge National Laboratory and at the University of Tennessee a program 
of about 20 distinguished scientists that held a joint appointment 
between those two institutions. The scientists were top-notch 
individuals who were given state-of-the-art laboratory facilities and 
produced excellent research. Are you familiar with this program, and if 
so, would you concur with that assessment.
    Answer. The Office of Science is aware of the Distinguished 
Scientist (DS) program between the University of Tennessee (UT) and Oak 
Ridge National Laboratory (ORNL). This program started in the early 
1980s and remains the cornerstone of the Science Alliance, a state-
funded center of excellence at UT devoted to building partnerships with 
ORNL.
    A Memorandum of Understanding was written between UT and ORNL, and 
the first two DS's were hired in the summer of 1984. The program peaked 
at 12 DS appointments and has declined because of retirements. We agree 
that the partnership has produced excellent research in such areas as 
experimental condensed matter physics, neutron science, polymers and 
fuel cells, condensed matter theory leading to nanophase research in 
materials sciences, computer science, and nuclear engineering.
    Similar programs exist at other national laboratories at different 
levels.
    Question 2. In the PACE-Energy Act, which has been referred to the 
Energy Committee, we propose establishing up to 100 of these joint 
appointments nationally at National labs and universities. The 
Department (through the National Lab) would provide $1 million annually 
and the university/state would provide a matching amount of at least $1 
million annually. What is your reaction to this proposal? How could it 
be structured so as to be most effective?
    Answer. Under the Distinguished Scientist model used by the 
University of Tennessee and the Oak Ridge National Laboratory, the two 
institutions first negotiated and signed a Memorandum of Understanding 
(MOU). This MOU established that UT and ORNL would provide equal 
payment of the salary, benefits, and support for the Distinguished 
Scientists. The U.S.ience Alliance (an outreach arm of UT) funds the UT 
half of each package, and a specific program division at ORNL, which is 
generally supported by the Office of Science, funds the other half of 
each package. This model is currently being used for an expansion of 
the program in Tennessee.
    The Distinguished Scientist program at ORNL is one effective model. 
Similar programs exist at other national laboratories, but each is 
organized slightly differently. These laboratories may well wish to 
compare the UT-ORNL model against their own efforts.

              Responses to Questions From Senator Bingaman

                          EFFICIENCY PROGRAMS

    Question 1. Reductions in Weatherization and Assistance Grants to 
States--Mr. Secretary--I am at a loss to understand why this budget 
requests a 32% cut in the low income Weatherization Program at a time 
when home energy bills are at historically high levels. This is even 
more puzzling given the higher priority the President has placed on 
this program--beginning with his campaign pledge to nearly double 
funding for the program. The Energy Policy Act of 2005 authorizes $600 
million for Weatherization in FY07--yet the Administration is 
requesting only $164 million.
    Can you explain the rationale for these cuts in light of the 
policies?
    Answer. From 2002 through 2006, the Administration requested a 
cumulative 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 low-income 
families.
    The Administration made very difficult choices in developing the FY 
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.
    Question 2. There is strong support in Congress for aggressive 
energy efficiency programs as a cost-effective antidote to high energy 
prices. The Energy Policy Act authorizes several new efficiency 
programs and enhancements to existing programs. As far as I have been 
able to determine you have not included funding for these programs in 
your 2007 budget.
    To take just one example--the Energy Policy Act authorizes $25 
million for a new program designed to help states adopt the latest 
building energy codes and to increase compliance with codes. We use 40% 
of our energy in buildings--so this effort to improve building codes is 
essential to saving electricity, natural gas and heating oil. Your 
budget does not include this new program and in fact would eliminate 
the Department's current $4.4 million building codes training program. 
Why?
    Answer. The Department's FY 2007 budget request includes an 
increase of $13.8 million for the State Energy Program to support the 
Energy Policy Act as appropriate and as they determine their own 
priorities. States can choose to use funding from the State Energy 
Program formula grants to support programs that increase building code 
compliance. The Department believes that the States have developed 
sufficient expertise and capability to upgrade, implement and enforce 
their building energy codes and has requested no specific funding for 
increasing and verifying compliance with State Energy codes in FY 2007.

                      EXISTING EFFICIENCY PROGRAMS

    Question 1. The Energy Policy Acts sets aggressive new energy 
savings targets for the federal government and places a number of 
related responsibilities on DOE to work with other federal agencies. 
These include establishing criteria for excluding buildings form the 
savings targets, developing guidelines for the use of advanced meters 
in federal buildings, guidelines for the procurement of energy 
efficient products and the development of an efficiency standard for 
electric motors. Given this increased workload, why has the funding for 
the Federal Energy Management Program been reduced? Will the Department 
meet the deadlines in Section 102, 103 and 104 of the 2005 Energy 
Policy Act?
    Answer. The Energy Efficiency and Renewable Energy budget request 
for the Federal Energy Management Program shows a decrease of $2.1 
million in FY 2007 due to streamlining the Program's management, 
training and communication efforts. We expect to be able to achieve 
more with less.
    DOE met the deadlines for establishing criteria for excluding 
buildings from the energy savings targets and developing guidelines for 
the use of advanced meters in federal buildings under Sections 102 and 
103 of the 2005 Energy Policy Act.
    DOE has not met the deadline for guidelines for the procurement of 
energy-efficient products and the development of an efficiency standard 
for electric motors under Section 104. The guidelines were delayed 
because the statutory provisions require formal rulemaking proceedings 
and public comment periods. DOE plans to have the standards issued by 
this summer.
    Question 2. FEMP also has responsibility for the Energy Savings 
Performance Contracting program. According to the Administration, ESPCs 
have been critical to the federal government's past success in meeting 
federal energy savings goals. ESPCs will be essential to the federal 
government's ability to meet the new EPACT targets. This committee 
worked closely with the Department and the Administration-to extend the 
authority for Energy Savings Performance Contracts. However, the 
program has not rebounded as quickly as we had expected. Is the 
Department doing everything it can to restore the ESPC program?
    Answer. The ESPC program has rebounded well after the lapse in 
legal authority. During the third and fourth quarters of FY 2005 and 
the first quarter of FY 2006, the Department of Energy facilitated 
awards on ESPC projects valued at $108 million. The targets for the 
Super ESPC program in the past have been $80 to $120 million annually. 
(We have since changed our metric from private sector dollars invested, 
which agencies must pay back with interest from energy cost savings 
over time, to energy saved. FEMP strives to achieve the best deal for 
the taxpayers while helping agencies meet their energy savings goals.)
    The Department has been actively working to restore, invigorate and 
expedite the ESPC program to previous levels and beyond. Project 
Facilitators will be required for every ESPC project to help federal 
agencies develop, negotiate, and monitor energy savings performance 
contracts to ensure that they are in the best interest of the federal 
government. The Department will provide Alternative Finance Specialists 
in the field; our Energy Saving Expert Teams (ESET) will recommend 
ESPCs, as appropriate, as a way to implement projects; and our 
education and outreach efforts to promote ESPC use will be accelerated, 
including presentations at various Federal executive-level meetings to 
emphasize the importance of ESPCs as a means to achieve EPACT 2005 
energy reduction goals.
    Question 3. Appliance efficiency--At the request of Congress, the 
Department has developed a schedule to issue appliance standards for 
the products that are currently backlogged and to comply with the 
provisions of the Energy Policy Act of 2005. The report was submitted 
on time--which we appreciate. How do you intend to enforce this 
schedule? Do you have adequate budgetary resources to meet the 
schedule?
    Answer. On January 31, DOE submitted to Congress ahead of schedule 
an EPACT-required report detailing the reasons for past delays and the 
Department's plan for expeditiously prescribing new and amended 
standards. The plan that the Department has submitted to Congress 
considers both the backlog and the new requirements detailed in EPACT 
2005. The Department is committed to addressing both the backlog and 
meeting the EPACT statutory requirements. New management processes, 
including review and reporting requirements, have been instituted. 
Productivity improvements in the rulemaking program are taking effect 
and will significantly increase the number of new standards to be 
issued.
    The increased funding request (as shown in the table below) is in 
direct response to the new requirements of EPACT 2005 and will also 
allow the Department to clear the backlog of rulemaking activities 
according to the schedule we have established. In Fiscal Year 2007 the 
program will complete action on rulemakings started in Fiscal Year 2005 
and prior years, and will continue work on the 13 product standards and 
test procedures initiated in Fiscal Year 2006.

                                                 FUNDING SUMMARY
                                             [Dollars in Thousands]
----------------------------------------------------------------------------------------------------------------
                                                             FY 2005       FY 2006
                    Program/Activity                         Approp.       Approp.       FY 2007     Request vs.
                                                             (comp.)       (comp.)       Request       Approp.
----------------------------------------------------------------------------------------------------------------
Equipment Standards and Analysis........................     10,147        10,153        11,925        +1,772
----------------------------------------------------------------------------------------------------------------

                       ENERGY POLICY ACT OF 2005

    Question 1a. I'm told that DOE budget staff says that Energy Policy 
Act of 2005 was enacted ``too late'' to impact the FY2007 budget 
process. This strains credulity--the Department was involved in the 
development of that legislation for four years--and most of the 
provisions did not change significantly throughout that time period.
    Do you intend to amend your budget request to reflect Energy Policy 
Act of 2005 programs this year?
    Answer. The President's Fiscal Year (FY) 2007 budget proposal 
reflects the Administration's spending priorities for FY 2007. Those 
spending priorities took into account the spending opportunities 
presented by the Energy Policy Act.
    Question 1b. I'm told that DOE budget staff says that Energy Policy 
Act of 2005 was enacted ``too late'' to impact the FY2007 budget 
process. This strains credulity--the Department was involved in the 
development of that legislation for four years--and most of the 
provisions did not change significantly throughout that time period.
    I have attached a spread sheet showing what was in the Fiscal Year 
2007 budget request verses the sections of the Energy Policy Act of 
2005, will you please verify our analysis?
    Answer. The Energy Policy Act contains authorizations for a variety 
of initiatives. As the Administration noted in the July 15, 2005, 
letter to the conference committee on H.R. 6, the House and Senate 
versions include authorizations levels that set unrealistic targets and 
expectations for future program-funding decisions. Furthermore, many of 
the activities in the FY 2007 Budget support more than one 
authorization. Therefore a one-to-one correspondence between the Budget 
and authorizations in the Energy Policy Act would necessarily be 
incomplete and a matter of judgment. In formulating the FY 2007 Budget, 
the Administration has proposed funding levels to advance its energy 
policy priorities and objectives and successfully implement EPACT 2005. 
The Administration will continue to plan for efficient implementation 
of EPACT 2005 through budget requests in future years.
    Question 1c. I'm told that DOE budget staff says that Energy Policy 
Act of 2005 was enacted ``too late'' to impact the FY2007 budget 
process. This strains credulity--the Department was involved in the 
development of that legislation for four years--and most of the 
provisions did not change significantly throughout that time period.
    Will you commit to developing an FY08 budget that implements the 
Energy Policy Act of 2005?
    Answer. The Energy Policy Act contained authorizations for a 
variety of initiatives. In formulating the FY 2007 Budget, the 
Administration has proposed funding levels to advance its energy policy 
priorities and objectives and successfully implement EPACT 2005. The 
Administration will continue to plan for efficient implementation of 
EPACT 2005 through budget requests in future years.

                             INDIAN ENERGY

    Question 1. DOE's budget proposes only $3.96 million for `Tribal 
Energy Programs'--slightly below last year's appropriation, but 27% 
below the FY 2005 level. This level of funding is inconsistent with 
Title V of the Energy Policy Act which establishes a DOE Office of 
Indian Energy Policy & programs with enhanced authority to assist 
tribes develop and utilize energy resources. Title V was included in 
the bill primarily for 2 reasons: (a) to make the most of energy 
development opportunities on Indian lands that can benefit the nation 
as a whole; and (b) to fulfill an important federal responsibility by 
addressing the lack of electricity service still existing on many 
Indian reservations. When will DOE get this Office up and running so 
that the tribes have an advocate within the Department seeking to 
fulfill Congressional intent with respect to Title V of EPACT?
    Answer. In order to maintain DOE's commitment to tribal energy, I 
have asked the Under Secretary of Energy, Science and Environment and 
the Assistant Secretary of Congressional and Intergovernmental affairs 
to continue monitoring Tribal issues until a suitable candidate is 
found to serve as Director of the Office of Indian Energy Policy and 
Programs. In addition, to assist us in coordinating our Tribal policies 
between various DOE programs, we have created a Tribal Energy Steering 
Committee comprised of representatives from all major program offices 
to address cross cutting Tribal issues.

                       GLOBAL NUCLEAR PARTNERSHIP

    Question 1. What is the total life-cycle cost of GNEP, including 
the design, construction, operation, and decommissioning of a 
reprocessing plant and fleet of fast reactors? If there is no cost 
estimate available when will the Department have such an estimate for 
Congress?
    Answer. One of the primary purposes of the technology 
demonstrations proposed for FY 2007 and beyond is to produce reliable 
estimates of the total life cycle cost of GNEP. In 2008, the Department 
will have better estimates of the cost and schedule to complete the 
full 20-year demonstration effort, and we will use this information, 
first, to inform a decision on proceeding with the 20-year 
demonstration and, second, to better estimate program life cycle costs.
    Question 2. Will the reprocessing plant and advanced burner 
reactors be owned and paid for by private industry or the government?
    Answer. Currently we anticipate that the demonstration engineering 
scale reprocessing experiment plants and the demonstration Advanced 
Burner Test Reactor will likely be Government-owned. No decisions have 
been made regarding ownership of commercial-scale facilities.
    Question 3. How many times must spent thermal reactor fuel be 
recycled through a fast reactor in order to eliminate all the plutonium 
and other transuranic elements?
    Answer. Each recycling pass consumes some of the plutonium and 
other transuranic elements from the previously used fuel. The fraction 
consumed depends on design details and validation of models and fuels 
by operation of the Advanced Burner Test Reactor (ABTR) and the 
Advanced Fuel Cycle Facility (AFCF). Accordingly, a definitive answer 
would be premature.
    Under the Global Nuclear Energy Partnership, used thermal reactor 
fuel would first be separated to recover the transuranics (TRU) that 
constitute only about 1 percent of the used fuel mass. The TRU would 
then be remotely fabricated into fast reactor fuel (which will contain 
approximately 50/50 TRU and uranium) and irradiated in a fast reactor. 
The TRU would be preferentially fissioned, so approximately one third 
of the initial TRU would be destroyed per recycle. The remaining TRU 
would be recovered by separation, refabricated into fuel along with 
fresh TRU and returned to the fast reactor.
    Repeating this sequence will mean that a quantity of TRU equal to 
the original amount recovered from used thermal reactor fuel will have 
been fissioned in approximately three recycles. Some of the original 
TRU remains in the reactor inventory after those three recycles, but as 
the recycles continue, this inventory gradually becomes negligible 
compared with the TRU consumed.
    Question 4. Do UREX+ and pyroprocessing meet the National Academy 
of Sciences' ``spent fuel standard''?
    Answer. The National Academy of Sciences' ``spent fuel standard'' 
was introduced in 1994 as a criterion for judging the adequacy of 
resistance to theft and proliferation in the context of disposition of 
excess weapons-grade plutonium. It was not designed to assess 
commercial fuel cycles. It was based on the belief that a dominant 
proliferation risk was acquisition of plutonium from used commercial 
nuclear fuel or weapons inventories. Since then, however, the A.Q. Khan 
network secretly distributed uranium enrichment technology to several 
countries, showing that uranium enrichment is a proliferation risk. A 
comprehensive approach to proliferation resistance must therefore 
address uranium enrichment, reprocessing, accumulation of weapons-
usable inventories, etc. The Global Nuclear Energy Partnership provides 
a comprehensive approach.
    The current international nonproliferation approach could be 
improved by reducing the motivation for countries seeking nuclear power 
to develop either uranium enrichment or fuel recycling capabilities. 
Under GNEP, the United States would build and strengthen a reliable 
international fuel services consortium under which ``fuel supplier 
nations'' would operate both nuclear power plants and fuel production 
and handling facilities, providing reliable fuel services to ``user 
nations'' that only operate nuclear power plants. The Director General 
of the International Atomic Energy Agency (IAEA) has supported this 
concept.
    The current fuel cycle in many countries, including the U.S., only 
accumulates used fuel, which does contain weapons-grade material. By 
establishing recycling of used fuel, GNEP would reduce the inventory of 
this material. It would do so with techniques that are more 
proliferation resistant than the PUREX technique because the separated 
transuranics are far more difficult to handle than the pure plutonium 
separated by PUREX and because the new techniques (UREX+ and 
pyroprocessing) will have safeguard and accountability considerations 
factored into the technology design.
    It needs to be emphasized that proliferation resistance associated 
with used fuel recycle is not dependent upon maintaining high radiation 
levels but rather depends upon a collection of safeguards, security and 
accountability mechanisms already developed or being developed for 
future systems to provide the required proliferation resistance and 
physical protection. GNEP has been conceived with minimizing 
proliferation risk as a central theme.
    Question 5. What has been the safety record of fast reactors 
compared to light-water reactors?
    Answer. Both technologies are extremely safe. This is based on 
decades of operating experience with light water reactors and from 
large-scale demonstrations of sodium-cooled reactors in several 
countries. These include:

   More than 30 years experience with the French 560 MWt Phenix 
        fast reactor;
   30 years experience in the United State with 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 of the U.S. 400 MWt Fast Flux Test 
        Facility; and
   13 years experience with France's 2900 MWt Superphenix 
        reactor.

    Phenix and EBR-II have had minor issues involving such things as 
sodium leaks, but there have been no nuclear-related accidents at any 
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 the Advanced Burner Reactors (ABRs). Commercial ABRs will 
undergo a safety review and licensing process to assure safe operation 
for generating power while burning transuranics. The safe burning of 
transuranics in ABRs reduces the need for burial of these long-lived 
radioactive isotopes for tens of thousands of years. The ABR standard 
commercial plant design would be certified by the Nuclear Regulatory 
Commission (NRC). All commercial plants based on this design would be 
licensed by the NRC and operated in accordance with NRC safety 
standards.
    Question 6. Has commercial reprocessing ever been economically 
successful in this country or any other country?
    Answer. The Nuclear Fuels Services plant in West Valley, New York 
operated successfully from 1966 to 1972, when it was shut down for 
safety upgrading and did not restart due to a general ban on 
reprocessing under the Carter Administration. Therefore, there is 
insufficient economic data available in this country. However, both 
France and the U.K. built and operated commercially successful 
separation plants, largely on the basis of contract processing for 
other countries. Both took advantage of economies of scale, having 
plant throughputs much in excess of their national requirements. Japan 
has recently finished its large-scale separation plant.
    Question 7. Where do you plan to bury the waste from spent fuel 
irradiated abroad under your ``cradle-to-grave'' fuel leasing program? 
Yucca Mountain? Which ports do you intend to bring it through?
    Answer. GNEP does not envision storing spent fuel from abroad in a 
geologic repository in the United States. The resultant by-product 
waste from recycling envisioned in the Global Nuclear Energy 
Partnership plan would be the responsibility of the country generating 
the waste and would be returned to the country of origin.
    Question 8. Where will the reprocessing plant be located? Are you 
planning on shipping spent fuel from the existing reactor sites to an 
interim storage facility and then to a reprocessing plant, and shipping 
the waste from the reprocessing plant to Yucca Mountain, or do you plan 
to put the interim storage facility and the reprocessing plant at Yucca 
Mountain?
    Answer. The decision of where the Uranium Extraction-plus (UREX+) 
Engineering Scale Demonstration (ESD) project will be located has not 
been determined. DOE will initiate the appropriate analyses and reviews 
required under the National Environmental Policy Act (NEPA) this fiscal 
year to inform a decision by 2008 as to where the demonstration of 
UREX+ would be located. The Department has made no decisions regarding 
interim storage and the Nuclear Waste Policy Act currently imposes 
certain restrictions on available options. Other alternatives 
identified during public scoping meetings will also be considered. The 
storage and management of the waste and material generated by the UREX+ 
demonstration in each alternative will also be evaluated as part of the 
NEPA process.
    While reprocessing has the potential to make the fuel cycle much 
more efficient by greatly reducing the volume of material that needs 
disposal in a geologic repository, it will not be available to process 
large volumes of spent fuel for at least two decades. The Department 
currently has no plans to store existing spent fuel for possible 
reprocessing in the future. Rather, the Department is committed to 
moving forward with our obligation to take spent fuel and dispose at 
Yucca Mountain once it is licensed and ready for operation.

        LANL CLEANUP--LOSS OF SOIL AND WATER REMEDIATION FUNDING

    Question 1. Mr. Secretary, it is my understanding that the 
Department has proposed reducing the Los Alamos Soil and Groundwater 
Remediation budget, project VL-LANL-0030, by $70 million from $98.4 
million to $28.3 million. I am told this will result in failure to 
comply with the New Mexico consent order for Los Alamos that was 
entered into last year forcing a failure to meet 35 compliance 
milestones and fines up to $16 million.
    Why did the Department reduce remediation funding by 70 percent 
when it will result in fines and bad faith between a carefully 
negotiated agreement?
    Answer. As you know, we have had significant performance issues for 
years with the previous contractor's environmental work at Los Alamos 
National Laboratory. Additionally, Los Alamos has not yet been able to 
provide an integrated cost and schedule baseline that the Department is 
able to validate.
    We believe that the new contract will address these performance 
issues, offer us new opportunities to continue significant cleanup and 
risk reduction, and deliver progress towards a new baseline. To that 
end, senior officials within the Department of Energy have asked for 
the involvement of senior executives of the parent companies of the new 
contractor to deliver efficiencies and a baseline that can withstand 
scrutiny and can be validated by the Department of Energy. 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.

                           PENSION LIABILITY

    Question 1. Mr. Secretary it is my understanding that the 
Department faces up to $11 billions in pension liability for its 
contractors of which $9.2 billion is post retirement commitments such 
as retiree health.
    What policies is the Department putting in place with respect to 
pensions?
    Answer. Consistent with the goal to mitigate cost volatility and 
liability growth in contractor pension plans, the Department is taking 
steps to ensure that as contracts are re-competed, solicitations 
require (unless otherwise required by law) the provision of market-
based pension plans competitive for the industry to new, non-incumbent 
employees hired after the date of contract award. The solicitations 
also provide that incumbent employees will remain in their existing 
pension plan(s) pursuant to plan eligibility requirements and 
applicable law; that is, ``if you're in, you're in.'' Since January 1, 
2005, we have awarded nine contracts containing the requirement that 
DOE facility contractors establish market-based pension plans for all 
new employees hired after contract award. DOE believes this is an 
approach that is fair, reflects current best commercial practices, and 
will enable the Department to continue to attract contractors and 
contractors to attract the best employees.
    Question 2. Mr. Secretary it is my understanding that the 
Department faces up to $11 billions in pension liability for its 
contractors of which $9.2 billion is post retirement commitments such 
as retiree health.
    Does the Department envision reducing retiree health benefits?
    Answer. Consistent with the goal to mitigate cost liability growth 
in contractor medical benefit plans and consistent with and applicable 
legal requirements, the Department is currently assessing its approach 
and exploring options to address the issue of retiree medical coverage 
for contractor retirees. The Department is also taking steps to ensure 
that as contracts are re-competed, solicitations require that incumbent 
employees benefits be comparable to what they have currently and 
market-based benefits be provided to employees hired after the date of 
contract award.
    Question 3. Mr. Secretary, as you know, Senator Domenici and I 
wrote you a letter on January 27 requesting that the Department ask the 
University of California to cease in its proposed actions to separate 
out the Los Alamos pension plan from the overall UC Retirement Plan. 
This only causes more anxiety to a contract process that has from the 
start caused a loss of moral at Los Alamos.
    What actions have you taken in response to this letter?
    Answer. Under Secretary Brooks has written the President of the 
University indicating that our expectation has been that the existing 
population of LANL retirees and employees who elect to leave their 
interest in the UCRP after the transition to management of LANL by LANS 
remain within the UCRP. He also indicated that we were not favorably 
inclined towards UC's proposal, although, if one were submitted to the 
Department, we would have to consider it. He is also sending a letter 
to UC asking that it communicate both its intentions and its plans to 
its employees and state clearly that it has not provided a proposal to 
the Department for its review and approval.

                        PROLIFERATION RESISTANCE

    Question 1. In a speech last year, Secretary Bodman 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.''
    That reasonable goal is built on the premise that separated 
plutonium is a profound proliferation and terrorism risk.
    Yet the additional transuranic elements that the proposed UREX+ 
technology is intending to leave with the separated plutonium do not, 
in fact, greatly reduce the risks associated with the plutonium. The 
neptunium, americium and curium are not radioactive enough to prevent 
theft or diversion, and would work in a nuclear weapon or could be 
separated from it with relative ease, without the need for shielding 
and contact-handling.
    Given that, how can the DOE's proposal meet the Secretary's 
nonproliferation goal?
    Answer. GNEP is fully consistent with the Secretary Bodman's 
statement that with regard to spent fuel recycling we should ``seek a 
global norm of no separated plutonium.'' GNEP aims to change the 
fundamental and institutional nature of the international nuclear fuel 
cycle by limiting the number of states that possess stocks of 
plutonium. In particular, the goal is to enable the global growth of 
peaceful nuclear programs while reducing existing stocks of separated 
plutonium and ending the accumulation of spent fuel around the world. 
Specifically, GNEP proposes that: 1) sensitive processing facilities 
and separated materials would be limited to a small number of advanced 
fuel cycle states with currently existing reprocessing capabilities; 2) 
these fuel cycle states would provide reliable fuel services and supply 
to the larger number of reactor states; and 3) GNEP R&D will focus on 
technologies that do not separate plutonium and will further strengthen 
the nonproliferation elements and international safeguards approaches 
applied to these processes.
    The buildup of separated civil plutonium in the world has not 
stopped over the past three decades. GNEP seeks to address the global 
build up of civil plutonium stocks and looks to move beyond the spent 
fuel standard by defining a path to reduce and eliminate those 
materials.
    U.S. leadership is essential to developing a credible alternative 
to the existing unsustainable once-through cycle we employ, and the 
current PUREX and MOX programs overseas. Over time, implementation of a 
fuel cycle state and reactor state system and a transition away from 
separated plutonium in commerce will meet the Secretary's 
nonproliferation goal.
    Question 2. In a speech last year, Secretary Bodman 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.''
    That reasonable goal is built on the premise that separated 
plutonium is a profound proliferation and terrorism risk.
    Yet the additional transuranic elements that the proposed UREX+ 
technology is intending to leave with the separated plutonium do not, 
in fact, greatly reduce the risks associated with the plutonium. The 
neptunium, americium and curium are not radioactive enough to prevent 
theft or diversion, and would work in a nuclear weapon or could be 
separated from it with relative ease, without the need for shielding 
and contact-handling.
    How does the ``proliferation resistance'' of the proposed plutonium 
mix compare with the self protecting standard of the IAEA?
    Answer. The IAEA standard for self-protection under the Guidelines 
on the Physical Protection of Nuclear Material and Nuclear Facilities 
is based on the requirement for heavy shielding in safely handling 
highly radioactive nuclear materials. Standards such as these play an 
important role in the physical protection planning of all nuclear 
facilities. It was not designed to assess the proliferation resistance 
of commercial fuel cycles.
    Proliferation resistance associated with used fuel recycling is not 
solely dependent upon maintaining high radiation levels but rather 
depends upon a collection of safeguards, security and accountability 
mechanisms already developed or being developed for future systems to 
provide the required proliferation resistance and physical protection. 
GNEP has been conceived with minimizing proliferation risks as a 
central theme.
    Question 3. Given the very high cost of PUREX plants, the long 
experience with PUREX that suggests that only modest future cost 
reductions are likely, and the great similarity of UREX+ to PUREX, what 
factors make the administration believe that UREX+ will be a cost-
effective and safe approach to processing spent fuel? What factors does 
the administration believe make UREX+ preferable to pyroprocessing? 
What factors have led to other separations technologies being 
discarded? How confident can we be that the factors identified, which 
have convinced the administration that UREX+ is preferable today, will 
hold up as the technology is scaled up from grams to tens of thousands 
of tons?
    Answer. While both PUREX and UREX+ technologies are essentially 
chemical separations processes the ``flow sheets'' or detailed 
engineering processes for the two technologies are substantially 
different. For example, PUREX is a ``batch'' process while UREX+ is a 
more efficient ``continuous'' process. The Department selected the 
UREX+ process because of its ability to separate the transuranic 
elements from commercial light water reactor spent fuel, providing an 
added degree of proliferation-resistance over current generation PUREX 
technology. It was also selected because of the high level of purity 
achieved when the technology was demonstrated at the ``bench scale,'' 
that is, when treating on the order of 2-3 pounds of spent fuel. This 
high level of purity is necessary in order for the transuranic product 
to be consumed as recycled fuel in an advanced fast reactor system.
    An engineering scale demonstration of the UREX+ technology is an 
important step before committing substantial funding to deploying an 
industrial scale plant to treat commercial spent fuel. It will enable 
testing full size process equipment and components in a setting where 
extended continuous operations provide important information related to 
component reliability and process performance, including confirming the 
efficiency of recovery of transuranic elements and the achievement of 
adequate purification levels to make the materials reusable as recycled 
fuel. An engineering scale demonstration will demonstrate the safety, 
efficiency and the economics associated with possibly deploying a full 
scale facility in the future to treat commercial spent nuclear fuel.
    In the longer term future, technologies such as pyroprocessing, may 
be more suitable for treating fast reactor fuel and the Department has 
an ongoing research effort aimed at exploring the suitability of this 
technology for these advanced fuels.
    Question 4. The MIT study on the future of nuclear energy reviewed 
reprocessing and waste management technologies in detail, and 
recommended that ``For the next decades, government and industry in the 
U.S. and elsewhere should give priority to the deployment of the once-
through fuel cycle, rather than the development of more expensive 
closed fuel cycle technology involving reprocessing and new advanced 
thermal or fast reactor technologies.'' The study recommended a ``major 
re-ordering of priorities'' of U.S. nuclear R&D programs, to focus 
primarily on improved once-through fuel cycle technologies (without 
reprocessing)--in stark contrast to the major ramp-up in reprocessing 
R&D President Bush is now proposing. Similarly, the bipartisan National 
Commission on Energy Policy recommended against moving forward with 
reprocessing, and focusing instead on dry cask storage and ultimate 
disposal of spent fuel. Why do you think these groups came to exactly 
the opposite conclusion that you have come to, in examining this 
problem?
    Answer. A geologic repository is a necessity under all fuel 
management scenarios and the Administration has proposed $544.5 million 
in FY 2007 to maintain steady progress toward opening the Yucca 
Mountain repository. The Administration also strongly supports 
maintaining and expanding nuclear power as a safe, non-polluting source 
of energy. If nuclear power remains a vital part of the nation's energy 
supply throughout this century, the continued use of the once through 
fuel cycle will require multiple repositories. In addition to its 
ability to reduce international threats of nuclear proliferation, GNEP 
offers the potential to expand Yucca Mountain's capacity to handle the 
country's nuclear waste from current and future reactors especially if 
the existing statutory provisions that limit disposal at Yucca Mountain 
to 70,000 metric tons is repealed. In addition, the waste put in the 
repository after reprocessing would be less toxic. The MIT and National 
Commission on Energy Policy studies failed to recognize these 
advantages of recycling.

                                 WASTE

    Question 1. What total volumes of nuclear waste, and of what types, 
are expected to be produced in the course of reprocessing?
    Answer. The Department does not currently have estimates of waste 
generation from the advanced reprocessing technologies. In general, the 
purpose of the Advanced Fuel Cycle Initiative and the demonstration of 
recycling technologies under GNEP is to minimize waste. Estimates of 
waste generated by reprocessing will be developed as the engineering 
design for the advanced recycling demonstration facilities proceeds.
    Question 2. Would additional low-level waste repositories be 
required if the United States pursues a reprocessing program?
    Answer. The Department cannot say at this point whether or not 
additional low-level waste disposal facilities would be required in 
conjunction with efforts to demonstrate advanced reprocessing 
technologies. Estimates of waste generated by reprocessing will be 
developed as the engineering design for the advanced recycling 
demonstration facilities proceeds. In general, the purpose of the 
Advanced Fuel Cycle Initiative and the demonstration of recycling 
technologies under GNEP is to minimize waste.
    Question 3. France, which has reprocessed its spent fuel, must now 
find a repository for its spent MOX fuel, which is thermally hotter 
than our light water reactor spent fuel and thus more difficult to 
manage. How did reprocessing help France deal with its spent fuel?
    France also built two fast reactors, neither of which worked safely 
or economically. What is the international experience with fast 
reactors? Given that DOE's program assumes building a new generation of 
fast reactors that would transmute the plutonium, what is DOE's 
projected time-frame for developing and building these reactors?
    Answer. The French Mixed Oxide Fuel-recycling program is based on 
plutonium-only separation using the PUREX technology and is aimed at 
modest energy recovery from the plutonium and improved waste 
management. Thermal recycle in France decreases the ratio of fast 
reactors to advanced thermal reactors needed to stabilize and 
ultimately eliminate plutonium and the minor actinides from the high 
level waste. The ultimate waste form in France, glass at present, is 
much more resistant to leaching than the once-through fuel spent fuel, 
thus reducing the technical requirements for repository design. No 
country sees recycling as a way to eliminate the need for a geologic 
repository. Those who do recycle believe it improves repository 
performance.
    The international experience with fast reactors includes:

   More than 30 years of experience with the French 560 MWt 
        Phenix fast reactor
   Thirty years of experience in the United States with the 
        EBR-II fast reactor
   Thirty years with Japan's 100 MWt Joyo fast reactor
   Thirty years with Russia's 1000 MWt BN 350 reactor
   Twenty-five years with Russia's 1470 MWt BN 600 reactor
   Thirteen years of experience with the U.S. 400 Mwt Fast Flux 
        Test Facility
   Thirteen years of experience with France's 2900 Mwt 
        Superphenix reactor

    The Department's plan for demonstration of fast reactor technology 
for consuming transuranics calls for demonstrating the technology in 
the 2014 timeframe with commercial deployment after 2025.
    Question 4. The budget request puts a priority on developing the 
reprocessing technologies, while virtually ignoring the questions on 
fast reactors--the key technology needed to actually reduce the 
radioactivity of the waste. How will reprocessing solve the waste 
problem if we don't have fast reactors? The world already has more than 
100 tons of ``orphan'' separated plutonium. Would it not make sense to 
see first whether fast reactors can be commercialized before creating 
more plutonium?
    Answer. Recycling, fuel, and reactor technologies are mutually 
supporting and need to be developed in a sequence that ensures that the 
necessary parts will be in place at the time they are needed. Three 
major projects need to be developed and demonstrated. to confirm the 
application of advanced recycle technologies for commercial light water 
reactor used fuel cycle. These are: 1) the Engineering Scale 
Demonstration (ESD) of the UREX+ separation process, 2) the Advanced 
Fuel Cycle Facility (AFCF) to develop transmutation fuel for the test 
reactor, and 3) the Advanced Burner Test Reactor (ABTR) to confirm 
transmutation of the highly radioactive material contained in used 
fuel. Successful demonstration of these technologies would represent 
the demonstration of a proliferation-resistant, closed fuel cycle.
    The major technical challenges are in the areas of the separation 
of used nuclear fuel, the manufacture of new fuel from recycled 
products, and the destruction of the long-lived radioactive materials 
in a nuclear reactor. These challenges are key to dealing with the 
waste problem, and will be addressed both through continued research in 
the laboratory and new demonstration facilities. An ESD of the 
separations technology will demonstrate continuous operations of an 
integrated separations process containing a series of solvent 
extraction steps using different solvents to demonstrate safe and 
effective waste and storage forms for materials with high heat 
generation. All scenarios require demonstration of UREX+ to separate 
existing used U.S. nuclear fuel, hence the importance of the ESD; there 
is no reason to delay moving forward with UREX+ for treatment of 
existing light water reactor fuel.
    The AFCF would be pursued to develop remote fuel fabrication 
processes for fast reactor recycle fuel containing significant amounts 
of highly radioactive materials that can be used as fuel in fast 
reactors. An ABTR will be developed to demonstrate effective 
transmutation of the highly radioactive materials separated out from 
used nuclear fuel, and produce electricity at competitive rates. The 
missions for both AFCF and ABTR include examination of several fuel and 
reactor-detail variations.
    Question 5. Which long-lived radionuclides (that have half-lives in 
the thousands to millions of years) will be difficult to deal with by 
``recycling''?
    Answer. Krypton-81, a chemically inert fission product, has a half-
life of 230,000 years. It can be collected from recycling plant gaseous 
effluents by activated charcoal. Cesium-135 has a half-life of 2.3 
million years. A mixture predominantly of Cs-137 and Sr-90, both with 
approximately 30-year half lives, will be separated during recycle and 
placed in an aluminosilicate waste form. Even with the small amount of 
Cs-135 remaining, after several hundred years of safe storage, the 
final Cs/Sr product will be classified as low-level waste and can be 
safely disposed of in existing sites. There are no other long-lived 
radionuclides which cannot be successfully managed through recycling 
and safe disposal. Under GNEP, long-lived transuranics will be 
fissioned in fast spectrum reactors. Fission products along with 
process losses will be incorporated into leach-resistant matrix 
materials (e.g., borosilicate glass) and placed in a repository. Those 
fission products are not significantly different from the fission 
products with uranium dioxide pellets in the current inventory of spent 
nuclear fuel.

                                  COST

    Question 1. What are the costs for physical protection and 
safeguards of the plutonium-bearing material separated by the 
reprocessing technologies?
    Answer. The Department is not currently in a position to make a 
determination of the cost of safeguards for the plutonium-bearing 
material separated by reprocessing technologies associated with the 
demonstration program. That determination will be made as the 
Department proceeds with the design of the facilities and the processes 
that would separate the transuranic materials from the spent fuel.
    Question 2. What do you estimate the net per kilowatt hour cost 
increase would be for nuclear electricity if the United States used 
reprocessed plutonium as a fuel instead of uranium?
    Answer. The demonstration of the recycling, reactor and fuels 
technologies is required to answer this question. Crude estimates 
available at this time suggest that the per-kilowatt-hour cost increase 
of nuclear-generated electricity would increase in the range of 10-20 
percent for a completely closed fuel cycle using fast reactors to 
recycle and burn transuranic material from light water reactor spent 
fuel.
    A discussion of this potential cost range is given in the 2002 
Organization for Economic Cooperation and Development/Nuclear Energy 
Agency ``Accelerator-Driven Systems (ADS) and Fast Reactors (FR) in 
Advanced Nuclear Fuel Cycles--A Comparative Study.'' Recent papers, 
such as one presented by Charles Boardman of General Electric (GE) at 
the April 2001 International Conference on Nuclear Engineering (ICONE 
9) indicate GE's belief that fast reactors could be completely 
competitive with light water reactors.

                ADVANCED MINING DIAGNOSTIC TECHNOLOGIES

    Question 1. Can you please comment on the status of the Mining 
Industries of the Future program and in situ diagnostic technologies 
such as those in section 955 of the Energy Policy Act including Radio 
Imaging Methods?
    Answer. No funds were requested for the Mining Industries of the 
Future program in FY 2007. While industry remains a major energy end-
use sector of the Nation's economy, significant gains in energy 
efficiency have already been achieved (output since the 1970's has more 
than doubled for essentially the same energy consumption). Significant 
economic incentives exist for industry to continue on its own to invest 
in new, more efficient technologies. In developing the FY 2007 Budget, 
the Administration prioritized programs that address America's growing 
dependence on oil and could change how we power our homes and 
businesses, as outlined in the President's Advanced Energy Initiative.
    Section 955 of EPAct 2005 does not specifically reference the 
Mining Industries of the Future program. A Department of Energy funded 
technology called Radio Imaging Method System 4 (RIM-IV) developed in 
partnership with Stolar Research Corporation of Raton, New Mexico, was 
recently successfully tested. RIM-W detects geologic anomalies ahead of 
mining which will reduce energy use, costs, and operational problems 
associated with seam mining. This technology received a prestigious R&D 
100 Award and was developed in cooperation with the National Energy 
Technology Laboratory and Sandia National Laboratory. A second ITP-
sponsored project, Crosswell Imaging Technology & Advanced DSR 
Navigation for Horizontal Directional Drilling, also developed in 
partnership with Stolar Research Corporation, will develop and 
demonstrate real-time measurement while drilling (MWD) for guidance and 
navigation of drill strings during horizontal drilling operations. 
These projects are expected to bring this technology closer to 
commercialization.

              Responses to Questions From Senator Bunning

    Question 1. America is blessed with an abundant source of energy: 
Coal. Coal is essential to producing electricity and helping our 
country achieve energy independence. President Bush high lighted this 
importance in his State of the Union last week. Yet the Department of 
Energy Budget before us today proposes nearly $50 million in cuts for 
Coal R&D programs. Can you explain this decrease?
    Answer. We agree that coal is essential to helping our country 
achieve our goal of energy security while addressing the environmental 
concerns over the use of coal. We believe that the President's fiscal 
year 2007 Budget request reflects a commitment to a strategic coal 
research program that will allow us to achieve that goal. We also 
believe it represents a balanced portfolio of critical coal research 
that will allow us to achieve our program goals. The 2007 Budget 
provides $281 million for the Coal Research Initiative, nearly 
completing (total of $1.9 billion requested from 2002-2007) the 
President's $2 billion, ten-year commitment for clean coal R&D four 
years ahead of schedule. The coal budget focuses primarily on 
technologies for near-zero atmospheric emissions plants, which will be 
brought together in the FutureGen prototype plant. The Budget requests 
$322 million for development of these technologies (some of which are 
not counted in the Coal Research Initiative), an increase of $21 
million over the 2006 enacted budget level of $301 million for these 
technologies. The Budget restricts the addition of new funds to the 
Clean Coal Power Initiative, so that the program can take steps to 
improve the use of funds already provided for projects.
    Question 2. You have proposed cutting funding dramatically to the 
Clean Coal Power Initiative. The DOE budget only asks for $5 million 
that is a $45 million decrease from last year's funding level. Given 
the need for this technology, why are you practically zeroing out 
funding?
    Answer. The 2007 Budget provides $281 million for the Coal Research 
Initiative, nearly completing (total of $1.9 billion requested from 
2002-2007) the President's $2 billion, ten-year commitment for clean 
coal R&D four years ahead of schedule. Within the Coal Research 
Initiative, the Department will continue its program in support of the 
Clean Coal Power Initiative (CCPI). 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 its 
Program Assessment Rating Tool (PART) review, CCPI and its predecessor 
demonstration programs have over $500 million in unobligated balances 
committed to selected projects, including money for projects that were 
selected several years ago and have not begun construction. The program 
is working to improve project selection to ensure consistency with the 
R&D Investment Criteria, withdraw funds when projects stall, and to 
improve contract and project management controls to achieve the desired 
results. Ongoing CCPI projects, FutureGen, and various tax incentives 
including those authorized in the Energy Policy Act of 2005 continue to 
provide' incentives for demonstration of clean *coal technologies. The 
fiscal year 2007 request for CCPI of $5 million, along with funds from 
the prior appropriations 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 prior year clean coal funding 
that becomes available will also be applied towards the funding for a 
future CCPI solicitation.
    Question 3. The DOE has argued that there is a $500 million backlog 
of appropriated funds that are not being used. Many of these unused 
balances are just waiting for permitting and environmental review, 
which routinely takes years. By cutting funding now, the DOE could 
delay the next round of project solicitations for years. Is this your 
intent with cutting clean coal power funding?
    Answer. The Department's intent is to continue its support of the 
Clean Coal Power Initiative (CCPI). The fiscal year 2007 request for 
CCPI of $5 million, along with funds from the prior appropriations, 
will go towards the accumulation of funds for a future CCPI 
solicitation. It will not reduce funding for current CCPI projects; 
they are fully funded. 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 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 its Program Assessment Rating Tool (PART) 
review, CCPI and its predecessor demonstration programs have over $500 
million in unobligated balances committed to selected projects, 
including money for projects that were selected several years ago and 
have not begun construction. The program is working to improve project 
selection to ensure consistency with the R&D Investment Criteria, 
withdraw funds when projects stall, and improve contract and project 
management controls to achieve the desired results. Ongoing CCPI 
projects, FutureGen, and various tax incentives including those 
authorized in the Energy Policy Act of 2005 continue to provide 
incentives for demonstration of clean coal technologies.
    Question 4. The cleanup at the Paducah site is supposed to be on an 
accelerated schedule. Last year, Congress appropriated $105 million, 
but this year only $96.5 million was budgeted. How are we supposed to 
be accelerating the cleanup while decreasing the funds each year?
    Answer. In FY 2006, the Paducah site received appropriations above 
the President's request to Congress. This allowed the Department of 
Energy (DOE) to accelerate several projects ahead of its originally 
planned start dates. The FY 2007 budget request is consistent with the 
DOE's previous request and planned activities. The FY 2007 Paducah 
request meets the project baseline requirements, ensures compliance 
with regulatory commitments, and supports the 2019 completion date.
    Question 5. The Administration's budget funds the former worker 
medical screening program at $12.3 million, which is about $4 million 
less than Congress appropriated last year. Why has the Administration 
requested less funding this year? How much has the Administration 
allocated for the Paducah medical screening program?
    Answer. The Department's FY2007 request for $12.4 for the Former 
Worker Medical Surveillance Program (FWP) is essentially level with the 
Department's FY2006 request of $12.5 million for the FWP.
    The Department has allocated up to $400,000 in funding for the 
screening of workers from the Paducah Gaseous Diffusion Plant. The 
exact level of funding would depend on the number of former Paducah 
workers interested in medical screening.
    Question 6. I am pleased that the Department of Energy finally has 
completed its rule on worker health and safety regulation for DOE 
sites. I helped implement this law in 2002 to provide DOE workers with 
similar legally enforceable worker health and safety rules that private 
companies must follow. How does the DOE plan to ensure adequate funding 
and enforcement of this rule?
    Answer. The Department delineated $860,000 in FY 2007 budget 
request to implement and enforce the rule. The funding falls under the 
Energy Supply Budget--Policy, Standards and Guidance and will be 
employed by the Office of Environment, Safety and Health (EH)'s Office 
of Health ($410,000) and under Energy Supply Budget--DOE-Wide ES&H 
Programs ($450,000) In addition to this funding, the FY 2007 budget 
also includes funding in Program Direction for three federal FTEs to 
conduct worker safety and health enforcement.
    The Office of Health will develop an implementation guide and 
conduct implementation workshops at various DOE facilities to ensure 
proper implementation of the rule.
    Question 7. America also has a large resource of oil shale and tar 
sands, both in the east in my state of Kentucky and in the western 
states as well. The technology for recovering oil shale and tar sands 
has improved dramatically in recent years. What plans does DOE have to 
take advantage of this energy source?
    Answer. Recently high oil prices, shrinkage in the world's 
unutilized oil production capacity, and anticipation of global growth 
in oil demand have stimulated private investment in oil shale and tar 
sands technologies. These technologies are not yet proven and it will 
be at least two decades before a commercial industry contributes 
significantly to domestic production. One of the primary factors 
delaying investment in these technologies has been uncertainty over the 
permanence of high oil prices. Nevertheless, given supply and demand 
trends, the private sector will eventually decide when, and how to 
invest in these technologies even with market uncertainty. Whichever 
technology proves to be economic, this development will be a way of 
increasing domestic production and new sources of foreign production in 
stable regions of the world. Section 369 of the Energy Policy Act of 
2005 directs the Department of Energy to take various actions to 
encourage development of these unconventional resources, and we are 
making progress in complying with that goal.

              Responses to Questions From Senator Cantwell

    Question 1. Secretary Bodman, I'm aware that the cost of crude oil 
is driven by the world market and that it's cost is currently 
significantly above historic averages. But I'm not aware of any 
substantive increases in the cost of producing crude oil, the cost of 
refining it into various petroleum products such as gasoline and 
diesel, and the cost of transportation of refined products to markets. 
If the percent difference in the prices isn't pure profit, please 
explain what you think accounts for the difference in the substantially 
lower increase in crude oil when compared to gasoline.
    Answer. Retail prices for petroleum products, such as gasoline and 
diesel fuel, are affected by many factors, of which crude oil prices 
are arguably the most important over the long term, but other 
influences may be even more significant during specific periods. Price 
differentials between crude oil and petroleum products vary 
significantly over time due to a number of influences, the greatest of 
which is seasonality. Even in the absence of changes in the underlying 
cost of crude oil, gasoline prices exhibit a seasonal cycle over the 
course of the year, rising before and during the summer, when demand 
for it is greater, and falling in the winter.
    Additionally, unusual conditions in gasoline markets, especially 
supply interruptions, can significantly affect the differential between 
gasoline and crude oil prices. This was seen following Hurricanes 
Katrina and Rita, which disrupted crude oil production, a large amount 
of domestic refinery capacity, and, for a short period, product 
pipeline operations. The disruption of crude oil production in the Gulf 
of Mexico caused crude oil prices to rise, which also caused gasoline 
prices to rise. But in addition, the refinery and pipeline outages 
caused a reduction in gasoline supplies, thus causing a further 
increase in gasoline prices above and beyond that seen in crude oil 
prices.
    While such a situation can, in fact, result in increased profit 
margins for those suppliers less affected by unusual conditions, the 
prices and differentials are the natural result of the tighter balance 
between supply and demand, and not necessarily indicative of 
intentional price manipulation on the part of suppliers. Also, the 
higher margins serve to attract new supply, such as the increased 
gasoline imports seen after the hurricanes, helping the market to self 
correct.
    Question 2. Secretary Bodman, the recent hurricanes resulted in the 
need to import substantial refined products such as gasoline, diesel 
fuel and aviation fuel to meet U.S. demand. The question has been 
raised as to whether the country should develop a strategic reserve of 
finished petroleum products. Do you think the Federal government, 
either directly or by way of contract with the private sector, ought to 
create a strategic reserve of finished petroleum products? Since these 
products have a limited shelf life, one proposal is to obtain and 
operate a number of refineries and have the products be used by the 
Federal government. Appreciate your comments on this proposal.
    Answer. Since the refinery outages of 2005, many refiners have 
announced plans to add significant capacity to existing U.S. refineries 
(totaling over 1 million barrels per day of additional capacity). This 
is encouraging.
    The Administration understands the need for an increase in domestic 
refining capacity. On April 25th the President announced his four part 
plan to confront high gasoline prices. This plan calls on Congress to 
allow refiners to make minor modifications to their refineries without 
having to endure years of delays in the approval process, and the 
President called on Congress to simplify and speed up the permitting 
process for refinery construction and expansion.
    Regarding establishing a refined Petroleum Reserve, the 
Administration believes that storage of crude oil is the most flexible, 
cost effective option to protect against an array of disruption 
scenarios.
    Question 3. Secretary Bodman, do you support more transparency in 
the oil and natural gas markets, as would be provided in my bill S. 
1735?
    Answer. The Administration supports measures that would increase 
transparency in energy markets so long as it would not facilitate 
collusion. However, we have several concerns about certain provisions 
of S. 1735. In particular, we are concerned that factors such as 
``gross disparity between the price of the crude oil . . . and the 
price at which it was offered for sale'' or ``the amount charged 
grossly exceeds the price'' would not offer operational definitions 
that would enable transparent enforcement of Section 2. We are 
concerned that inappropriate efforts to address price gouging could 
inadvertently induce shortages by masking necessary price signals to 
suppliers and consumers and thereby worsen consumer conditions. In 
addition, we believe that the States and Federal government generally 
have adequate laws to address illegal, anti-competitive practices. 
Finally, we believe that the control of anticompetitive behavior within 
a State better lies within the purview of State governments, rather 
than the Federal Government, and the Administration stands ready to 
provide necessary assistance to help State Attorneys General to 
identify and prosecute those engaged in anticompetitive practices.
    Question 4. Secretary Bodman, how has the last 3 years of 
escalating gasoline prices affected demand by American drivers? Have we 
seen a correlation between a certain level of price increase and less 
demand by American drivers? What is the actual level of reduced demand 
today compared to 3 years ago (please respond in the context of a 
doubling of retail gasoline prices)?
    Answer. During the last three years (2003-2005), regular gasoline 
prices have increased from $1.56 per gallon to $2.27 cents per gallon, 
a 31-percent increase. During that same time, annual average gasoline 
demand grew from 8.93 million barrels per day in 2003 to 9.13 million 
barrels per day in 2005, about a 2 percent increase over the period. In 
2004, the price of gasoline was on average 29 cents per gallon higher 
than in 2003 while motor gasoline demand was 2 percent higher than in 
2003. In 2005, the average price of gasoline rose another 42 cents 
while gasoline demand growth slowed to almost zero (0.2 percent based 
on EIA's latest Short-Term Energy Outlook). Gasoline demand would have 
increased more had prices been lower; the growth in demand reflects the 
effect of the growing U.S. economy, despite the significant price 
increases.
    Gasoline demand tends to respond rather slowly to price increases 
since the stock of automobiles turns over very slowly and consumers are 
faced with limited choices with respect to their driving habits, and 
therefore cannot react very rapidly to sudden changes in price. 
Nevertheless, based on EIA's short-term energy model, about twice the 
amount of cumulative growth in gasoline demand between 2003 and 2005 
(approximately 4 percent instead of just over 2 percent) would have 
been expected (compared to current actual data and estimates) if 
gasoline prices had remained constant over the period.
    Question 5. Secretary Bodman, what are the crude oil extraction 
costs for major oil producing countries, including our own? How does 
that compare with oil derived from shale or coal?
    Answer. Given the absence of total cost data for conventional oil 
production in the United States and the world, and given the accounting 
issues of defining what costs are included and how joint costs are 
allocated among oil fields, one has to rely on indirect indicators of 
the relative cost of conventional oil production among the world's 
petroleum provinces. Generally, there are three metrics for indirectly 
measuring an oil field's production cost, which are presented in the 
following order of relative importance: 1) the size of the field (i.e., 
the original oil in-place), 2) the percentage of original oil in-place 
that has been produced, and 3) the quality of the oil (i.e., its API 
gravity). Because most giant fields that are the target of significant 
exploration activity produce middle gravity oil, our analysis below 
focuses on the first two metrics.
    These two metrics can be applied using two different perspectives. 
One focuses on the relative size and age of conventional oil fields 
operating in the United States relative to the rest of the world. The 
other focuses on the ``frontier'' for finding new giant oil fields,\1\ 
with the understanding that these new fields will generally be the 
lowest cost opportunities for an incremental conventional oil 
production.
---------------------------------------------------------------------------
    \1\ In the petroleum industry, a ``giant'' oil field is defined as 
having 500 million or more barrels of oil that can be produced over the 
life of the field.
---------------------------------------------------------------------------
    From the first perspective, all of the giant U.S. onshore lower-48 
oil fields were found between the late 1800s and 1940. Most of these 
fields have produced most of the recoverable oil in-place, and, in all 
cases, these giant oil fields are now producing oil using tertiary 
production methods (i.e., the injection of steam or carbon dioxide to 
produce oil), which is the most expensive means of producing oil.\2\ In 
contrast, Alaska oil production should be somewhat less expensive to 
produce than onshore lower-48 production because most of the giant 
fields found on the North Slope were discovered in the late 1960s and 
early 1970s, and because they haven't produced as much of the original 
oil in-place (because they have not been in production anywhere near as 
long as the giant onshore lower-48 fields).
---------------------------------------------------------------------------
    \2\ ``Primary'' production refers to oil that is produced without 
injecting water, steam, or carbon dioxide. ``Secondary'' production 
refers to oil produced with the assistance of water injection.
---------------------------------------------------------------------------
    In contrast to the U.S. onshore lower-48, most of the giant fields 
producing overseas were discovered much later so they have not produced 
as much of their original oil in-place, both because of their relative 
age and because of OPEC production constraints. In the Middle East, 
most of the giant oil fields were discovered in the late 1940s through 
the 1970s, and the average giant field size is much larger than the 
giants fields found in the U.S. onshore lower-48. Most of the giant 
Russian oil fields were also discovered in the late 1940s through 1970s 
time frame, but the production costs should be higher than in the 
Middle East both because the average field size is smaller and because 
a larger percentage of the original oil in-place has been produced.
    From the ``frontier'' perspective, exploration companies are 
primarily searching for and finding giant oil fields located in the 
offshore deepwater regions of the Gulf of Mexico, West Africa, Brazil, 
Northwest Australia, and Malaysia/Indonesia. So generally one would 
expect these to be the incremental oil fields with the lowest 
production cost.
    The production costs of most non-conventional liquids are typically 
higher than the production costs from conventional sources. For 
example, the production costs are: $10 to $15 per barrel for ultra-
heavy oil, $10 to $20 per barrel for oil sands, and $25 to $30 per 
barrel for gas-to-liquids. The range of production costs for coal-to-
liquids and shale oil are likely to be higher than those for the other 
non-conventional liquids production costs cited above.
    Because investments in oil shale and coal-to-liquids are capital-
intensive, investors would need to expect a long period of consistently 
high crude oil prices before they could expect to earn a return on 
their investment. A recent study by Mitretek (2003) estimated that a 
flat world oil price of $42 per barrel (2004 dollars) would make 
current coal-to-liquids technology economic. Allowing for the revenues 
associated with cogenerated electricity could lower the required price.
    Based on data obtained from the Federally-funded oil shale 
demonstration plants of the 1970s, capital investment in shale oil 
processing becomes economic with current technologies when world oil 
prices exceed about $70 per barrel (2004 dollars).
    Of course, technological breakthroughs could alter the economics 
and the likelihood of production from non-conventional sources. For 
example, Shell Oil is currently testing an in-situ oil shale process in 
the Rocky Mountains that it hopes will be profitable at about $30 per 
barrel of petroleum liquids. The Shell process, however, is still in 
the experimental stage, so there is considerable uncertainty whether 
this process will prove to be technically and economically feasible.
    Question 6. Secretary Bodman, the President's FY 2007 budget 
eliminates funding for the Geothermal Energy Program. Please explain 
the type and scope of R&D that will not happen due to this decision. 
How many FTEs will this decision impact? Doesn't the program need some 
funding for closeout costs? Please describe the geothermal resources 
and potential in Washington state.
    Answer. In FY 2007, all geothermal program R&D activities will be 
closed out. These include exploration, enhanced geothermal systems, 
drilling, energy conversion, cost-shared exploratory drilling, and 
power plant field verification. DOE plans to reassign all federal 
geothermal personnel to other programs. The geothermal program has 
achieved its key technical objectives. Geothermal is now a mature 
energy technology. The Department has not requested any funds for 
closeout, because it plans to use the program's uncosted and carryover 
funds for closeout.
    The U.S. Geological Survey in Circular 790 states that Washington 
State has an electrical potential of 27 megawatts electrical from 
higher-temperature resources. In addition, the U.S. Geological Survey 
in Circular 892 estimates that Washington State's low-temperature 
resources could provide 450 megawatts thermal of beneficial heat. A map 
of Washington's geothermal resources can be found at http://
geothermal.inel.gov/maps/index.shtml.
    Question 7. Secretary Bodman, the President's FY 2007 budget 
eliminates funding for the Hydropower research program. I understand 
that this is part of a multiyear closeout effort. Please describe the 
history of this program, how much federal funding went to this program 
since its inception, the program's measurable results, and what 
technologies were transferred and/or adopted in our nation's hydropower 
infrastructure. Did any dams in Washington state directly benefit from 
this program?
    Answer. The Department's Hydropower Program was established in 
1977. In the 1970s, the Hydropower Program focused on small hydropower 
technology assessment and strategic planning. In the 1980's, activities 
expanded substantially into a Small Hydropower Loan Program, plus 
resource assessment and analysis of environmental, economic, and policy 
issues facing new hydropower development. After several years of zero 
funding (fiscal years 1988-1990), the Hydropower Program reformed with 
a focus on new technology development to improve the environmental 
performance of hydropower projects. From 1994 to the present, the 
Hydropower Program has been focused largely on Advanced Turbine 
research, but it did expand further into new research topics like wind 
energy and hydropower integration. The total funding since inception 
was approximately $128 million ($49 million of that was in fiscal years 
1979 and 1980 when the Small Hydro Loan Program was operating).
    Under the Small Hydro Loan Program (1978-1985), 20 new projects 
were developed with a total installed capacity of 133 megawatts in 18 
states. More than two dozen guidance manuals, resource assessments, and 
technical analyses were produced in that early phase of the program, 
all related to small-scale hydropower development.
    Since the Hydropower Program was restarted in 1990, the major 
accomplishments and technology transfers were:

   Conceptual designs for four types of advanced hydropower 
        turbines.
   Completed laboratory scale prototype testing of the new 
        design fish-friendly Alden turbine. This design was made 
        available to industry to be considered for a full scale 
        demonstration project.
   Completed two years of full-scale testing of aerating 
        Francis turbines at the Osage Project in Missouri. Results of 
        these tests were made available to industry for consideration 
        in addressing water quality issues at other locations.
   Completed one year of full-scale testing of a second-
        generation Minimum Gap Runner turbine at Wanapum Dam in 
        Washington, with Grant County Public Utility District (PUD) and 
        Voith Siemens. This turbine design is now available to industry 
        and being considered for deployment at other hydropower sites.
   Developed new biological design criteria and new methods to 
        measure environmental performance, applicable to new turbines.
   Completed a full assessment of the undeveloped hydropower 
        resources in the United States, providing industry with the 
        necessary tools to evaluate development of these hydropower 
        resources.
   Produced numerous other research reports on subjects 
        including mitigation effectiveness of fish passage, dissolved 
        oxygen, and instream flow requirements.

    An advanced fish-friendly hydropower turbine resulting from the 
Hydropower Program's advanced turbine research was installed at the 
Wanapum Dam in Washington (Grant County PUD). Testing of this turbine 
was cost shared between the Department and Grant County.
    Under the Small Hydro Loan Program in the 1980's, 8 feasibility 
loans and 3 licensing loans were made to developers in Washington. The 
City of Spokane received funding from the Department to add capacity to 
their existing hydropower plant.
    Question 8. Secretary Bodman, I believe harnessing the ocean's 
abundant thermal and mechanical energy holds considerable long term 
promise as a clean, distributed, and renewable energy resource. In 
fact, since the mid 1990's there has been a worldwide resurgence in 
wave energy, led primarily by small engineering companies who have 
developed and deployed new devices that represent a significant 
improvement over older concepts. Currently, over a 100 technologies 
have been developed that capture the energy of ocean waves, tides, or 
thermal variation. Please explain why DOE does not fund or support any 
research into this promising energy source. Are there any plans to do 
so in the future? Is the U.S. likely to fall behind other countries 
active in wave and thermal energy?
    Answer. The Department is supporting a small amount of R&D with two 
companies, one focusing on ocean current and the other on wave energy 
technology, via the Small Business Innovation Research Program. We are 
also actively collaborating with the Electric Power Research Institute 
and the International Energy Agency to monitor domestic and worldwide 
progress in these technologies to ensure the U.S. government is aware 
of developments pertinent to assessing the appropriate consideration of 
federal investment in ocean energy R&D.
    The Department periodically evaluates its R&D programs to ensure 
that promising energy technologies are supported where appropriate and 
consistent with the Administration's R&D investment criteria. While 
some countries with higher resource potential, relative to their 
overall energy needs, are active in ocean energy R&D, the technology is 
still in its infancy, with a small number of demonstration systems 
operating worldwide.
    Question 9. Secretary Bodman, the President's budget request chose 
to cut EERE's Vehicle Technologies Program by 9 percent, down to $166 
million. Please describe what affect these cuts will have on ongoing 
R&D. What affect these cuts will have on the program's GPRA 
measurements, or in the estimated amount of oil savings attributable to 
this program?
    Answer. Transportation research remains a key factor in our plans 
to decrease the Nation's dependence on foreign oil, and DOE's request 
strongly supports this goal. Although it appears that we are asking for 
less money in the Vehicle Technologies Program, a closer look at the 
details shows that the FY 2006 appropriation contains more than $20 
million in congressionally directed activities that do not support the 
Vehicle Technologies Program's mission and goals. Once an adjustment is 
made for earmarks and program transfers, it becomes clear that DOE's FY 
2007 budget request for goal-directed R&D is level with the FY 2006 
appropriation. Additionally, this year's request realigns some internal 
priorities by placing greater emphasis on those research activities 
with the greatest potential for oil savings, particularly to increase 
funding for the development of lithium-ion batteries and other 
technologies for plug-in hybrid vehicles. Because of the R&D 
realignments, the Vehicle Technologies GPRA and estimated oil savings 
should improve.
    Question 10. Secretary Bodman, the budget request states that new 
technologies ``will reduce the volume of high level waste from spent 
nuclear fuel and reduce the radiotoxicity of spent nuclear fuel.'' In 
March last year, DOE (William Magwood) stated in testimony to the House 
Appropriations Subcommittee on Energy and Water Development that DOE 
has doubts whether the reprocessing technologies under consideration 
can ever be made ``proliferation-resistant and economically viable.'' 
What technologies must be developed to reduce the radiotoxicity in the 
high-level waste? What new discovery has been made or advanced that now 
makes it likely that these technologies will be commercially viable? 
What is DOE's estimated time-line for developing these reprocessing 
technologies?
    Answer. The principal sources of radiotoxicity in used nuclear fuel 
are the transuranic elements in the waste. For example, performance 
assessments of the very long-term releases of radionuclides from Yucca 
Mountain have identified neptunium-237 as the main source of possible 
future exposure. Neptunium along with the other transuranics (mainly 
plutonium) would be consumed in future fast reactors with the 
production of useful energy. The resulting fission products contained 
in a well-designed inert matrix-like glass would be much less hazardous 
in a repository than used fuel.
    Separation and recycle of the transuranic elements plutonium, 
neptunium, and americium reduces radiotoxicity, hypothetical dose from 
waste emplaced in a repository, and the heat load to the repository. 
Separation of uranium reduces the volume of the waste emplaced in a 
repository. The new separation techniques UREX+ (for existing used 
fuel) and pyroprocessing (for candidate fast reactor fuels) are 
designed to ensure recycle of these elements, whereas the 60-year old 
PUREX separation technique only recovers plutonium and uranium. Both 
UREX+ and pyroprocessing are intended to be more economic than PUREX 
(in part by reducing geologic repository requirements, in part by 
learning from past technologies, in part by operating UREX+ in a 
continuous fashion instead of the batch processing of PUREX) and more 
proliferation resistant than PUREX (by making separated material more 
difficult to handle and less weapon-usable than pure plutonium, and by 
incorporating safeguard technologies directly into design). Past 
laboratory-scale results are promising; more detailed and larger scale 
experiments are now warranted.
    The present inventory of commercial used nuclear fuel exceeds 
50,000 metric tons and accumulation of used fuel will probably pass the 
statutory limit of 70,000 metric tons before Yucca Mountain opens. One 
concern associated with an expansion of nuclear energy in the U.S. is 
the possibility of needing many repositories. The potential that used 
fuel recycle could delay for at least a hundred years the need for a 
second repository provides in itself a commercial incentive (since used 
nuclear fuel disposal is paid for by nuclear electricity customers). 
Further, a commercial recycle facility in the U.S. would probably need 
to have an initial capacity of at least 2,500 metric tons per year, for 
which automation and advanced instrumentation could reduce unit costs 
well below those for current reprocessing plants. Finally, the 
increasing world demand for uranium has begun to increase its price, a 
trend expected to continue indefinitely. Commercial viability may be 
possible within several decades, a period during which engineering 
scale testing of the basic components of the U.S. involvement in the 
Global Nuclear Energy Partnership would be carried out.
    DOE has set goals of about 2011 for operation of an engineering 
scale demonstration of UREX+, 2014 for initial operation of a test 
reactor that would operate initially with conventional fuels, and 2016 
for a fuel cycle facility capable of producing the first fuels for use 
in the actinide based test reactor.
    Question 11. Secretary Bodman, France, which has reprocessed its 
spent fuel, must now find a repository for its spent MOX fuel, which is 
thermally hotter than our light water reactor spent fuel and thus more 
difficult to manage. How did reprocessing help France deal with its 
spent fuel? What is the international experience with fast reactors? 
Given that DOE's program assumes building a new generation of fast 
reactors that would transmute the plutonium, what is DOE's time-frame 
for developing and building these reactors?
    Answer. The French Mixed Oxide Fuel-recycling program is based on 
plutonium-only separation using the PUREX technology and is aimed at 
modest energy recovery from the plutonium and improved waste 
management. Thermal recycle in France decreases the ratio of fast 
reactors to advanced thermal reactors needed to stabilize and 
ultimately eliminate plutonium and the minor actinides from the high 
level waste. The ultimate waste form in France, is glass that is much 
more resistant to leaching than the once-through fuel spent fuel, thus 
reducing the technical requirements for repository design. No country 
sees recycle as a way to eliminate the need for a geologic repository. 
Those who do recycle believe it improves repository performance.
    The international experience with fast reactors includes:

   More than 30 years of experience with the French 560 MWt 
        Phenix fast reactor
   Thirty years of experience in the United States with the 
        EBR-II fast reactor
   Thirty years with Japan's 100 MWt Joyo fast reactor
   Thirty years with Russia's 1000 MWt BN 350 reactor
   Twenty-five years with Russia's 1470 MWt BN 600 reactor
   Thirteen years of experience with the U.S. 400 Mwt Fast Flux 
        Test Facility
   Thirteen years of experience with France's 2900 Mwt 
        Superphenix reactor

    The Department's plan for demonstration of fast reactor technology 
for consuming transuranics calls for demonstrating the technology in 
the 2014 timeframe with commercial deployment after 2025.
    Question 12. Secretary Bodman, the budget request puts a priority 
on developing the reprocessing technologies, while virtually ignoring 
the question of fast reactors--the key technology needed to actually 
reduce the radioactivity of the waste. How will reprocessing solve the 
waste problem if we don't have fast reactors? The world already has 
more than 100 tons of ``orphan'' separated plutonium. Would it not make 
sense to see first whether the reactors can be commercialized before 
creating more plutonium?
    Answer. Recycling, fuel, and reactor technologies are mutually 
supporting and need to be developed in a sequence that ensures that the 
necessary parts will be in place at the time they are needed. Three 
major projects need to be developed and demonstrated to confirm the 
application of advanced recycle technologies for commercial light water 
reactor used fuel cycle. These are: 1) the Engineering Scale 
Demonstration (ESD) of the UREX+ separation process, 2) the Advanced 
Fuel Cycle Facility (AFCF) to develop transmutation fuel for the test 
reactor, and 3) the Advanced Burner Test Reactor (ABTR) to confirm 
transmutation of the highly radioactive material contained in used 
fuel. Successful demonstration of these technologies would represent 
the demonstration of a proliferation-resistant, closed fuel cycle.
    The major technical challenges are in the areas of the separation 
of used nuclear fuel, the manufacture of new fuel from recycled 
products, and the destruction of the long-lived radioactive materials 
in a nuclear reactor. These challenges are key to dealing with the 
waste problem, and will be addressed both through continued research in 
the laboratory and new demonstration facilities. An ESD of the 
separations technology will demonstrate continuous operations of an 
integrated separations process containing a series of solvent 
extraction steps using different solvents to demonstrate safe and 
effective waste and storage forms for materials with high heat 
generation. All scenarios require demonstration of UREX+ to separate 
existing used U.S. nuclear fuel, hence the importance of the ESD; there 
is no reason to delay moving forward with UREX+ for treatment of 
existing light water reactor fuel.
    The AFCF would be pursued to develop remote fuel fabrication 
processes for fast reactor recycle fuel containing significant amounts 
of highly radioactive materials that can be used as fuel in fast 
reactors. An ABTR will be developed to demonstrate effective 
transmutation of the highly radioactive materials separated out from 
used nuclear fuel, and produce electricity at competitive rates. The 
missions for both AFCF and ABTR include examination of several fuel and 
reactor-detail variations.

                       REPROCESSING TECHNOLOGIES

    Question 13. Secretary Bodman, you stated that the DOE will 
increase its current request of $250 million for GNEP in FY 2008. How 
much will the DOE request next year and in the next five years? Do you 
believe the U.S. nuclear industry will be willing to pay for these new, 
more expensive reactors?
    Answer. The department is preparing a revised program plan to 
delineate the technology demonstration work scope and funding 
requirements over the next five years. This plan, to be issued in May 
2006, will incorporate recommendations from technical and project 
management experts who have reviewed the detailed technology plan that 
provides the basis for the FY 2007 budget request.
    We would expect U.S. industry to make their decisions based on the 
economics of deploying the new technologies. The GNEP approach 
envisions that current types of nuclear power plants (light water 
reactors) would remain in the majority; new Advanced Burner Reactors 
would be a minority of nuclear power plants. Sufficient ABRs would be 
needed to consume transuranic elements from used fuel. If ABRs were to 
be found more expensive to build and operate than light water reactors, 
the overall economics would need to reflect their consumption of long-
lived transuranics, thereby conserving costly geologic repository 
capacity; each ABR would essentially lessen the need of additional 
geologic repository capability. Another approach could be to put in 
place governmental incentives to ``burn'' long-lived transuranics in 
ABRs.
    Question 14. Secretary Bodman, since the administration has 
requested funding to continue retrievals in the C-Tank Farm in 2007, 
will you acknowledge that the Department will miss the September, 2006 
Tri-Party Agreement milestone (M-45-00B) to complete retrievals from 
all 16 single shell tanks in the C-Tank Farm?
    Answer. While most subparts of Milestone M-45-00B have been or will 
be met by the close of FY 2006, some elements will not be met (i.e., 
completing retrieval of all 16 C-Farm tanks and test of the mobile 
retrieval system). The double-shell (DST) tank system currently has 
limited capacity to receive waste from the single-shell tanks (SSTs), 
and that is anticipated to be the case until treatment can be provided 
by the Waste Treatment and Immobilization Plant (WTP), the construction 
and ultimate start of operations of which is delayed. Consistent with 
Appendix I to the Hanford Federal Facility Agreement and Consent Order, 
the Department of Energy (DOE) will seek to negotiate revised SST 
retrieval milestones with the Washington State Department of Ecology 
that will take into account the reduction of short-term and long-term 
risk to the environment, optimization of feed to the WTP, and 
optimization of DST space utilization.
    Question 15. Secretary Bodman, will the Department please list when 
it will complete the activities included in the (M-45-00B) milestone?
    Answer. Milestone M-45-00B includes many subparts such as retrieval 
technology testing, leak detection system testing, submittal of Tank 
Waste Retrieval Work Plans, and specific tank retrieval actions. 
Virtually all of the subparts of M-45-00B have been completed or will 
be completed by the end of FY 2006, as scheduled, with the exception of 
testing the mobile retrieval system (MRS) and completing the retrieval 
of all 16 tanks in C tank farm. MRS testing will be conducted in FY 
2007. Consistent with Appendix I to the Hanford Federal Facility 
Agreement and Consent Order, the Department of Energy (DOE) will seek 
to negotiate revised single-shell tank (SST) retrieval milestones with 
the Washington State Department of Ecology that will take into account 
the reduction of short-term and long-term risk to the environment, 
optimization of feed to the Waste Treatment and Immobilization Plant 
(WTP), and optimization of double-shell tank (DST) space utilization. 
DOE is scheduled to provide a date for when the WTP will be on-line 
during summer 2006. Once this information is available, it will be used 
to more accurately plan rates of SST retrievals prior to the start of 
WTP operations.
    Question 16. Secretary Bodman, can the Department please list what 
tank activities will be completed with fiscal year 2006 appropriations?
    Answer. Tank Farm planned accomplishments for FY 2006 include the 
following:

   Complete four single-shell tank (SST) waste retrievals;
   Complete the Remote Water Lance Demonstration in SST S-112;
   Complete final design of the Demonstration Bulk Vilification 
        System; project including completion of an External Independent 
        Review;
   Complete two full-scale melt tests using tank waste 
        simulants;
   Complete construction of the Integrated Disposal Facility;
   Complete the Double-Shell Tank System Integrity Assessment 
        Report;
   Complete the upgrade of the AP-106A Central Pump Pit; and,
   Complete the upgrade of the 241-SY-B Valve Pit.

    Question 17. Secretary Bodman, can the Department please list what 
tank activities will be completed, assuming the level of appropriations 
in the administration's fiscal year 2007 request?
    Answer. Tank Farm planned accomplishments for FY 2007 include the 
following:

   Maintain the Hanford Tank Farms in a safe and 
        environmentally compliant condition;
   Continue single-shell tank (SST) waste retrievals at a 
        reduced pace due to the delayed start (2016-2018) of the Waste 
        Treatment and Immobilization Plant operations;
   Continue double-shell tank (DST) sampling to maintain 
        chemistry control;
   Maintain the Integrated Disposal Facility in an operational 
        readiness mode; and,
   Complete one evaporator campaign to provide additional DST 
        capacity for SST retrieved waste.

    Question 18. Secretary Bodman, on page ES-3 of the Army Corps of 
Engineers ``Independent Review of Waste Treatment Plant (WTP) Estimate 
at Completion (EAC) 2005,'' dated May 13, 2005, the report says, ``. . 
. if seismic threats exist, it is imperative the project be accelerated 
to empty tanks as soon as possible (tanks and their contents represent 
the immediate risk in a seismic event) . . .'' In your testimony before 
the committee today, you disagreed with the report's assessment of 
tank-related seismic risk. Can you please explain what scientific basis 
or analysis your disagreement with the report is based on?
    Answer. Robert L. Cloud & Associates, Inc., prepared a report, 
RLCA/P286-02-01-96/001, for the Department of Energy (DOE) on December 
6, 1996, for the ``Evaluation of Hanford High-Level Waste Tank Failure 
Modes for Seismic Loading''. The analysis indicated the single-shell 
tanks and double-shell tanks would withstand seismic loads per the 
DOE's criteria and guidelines for earthquake events.
    Question 19. Secretary Bodman, the State of Washington has informed 
me that a soon to be completed ``Double Shell Tank System Integrity 
Assessment.'' will state that the Double Shell Tank system will meet 
new seismic requirements at the Hanford Site. Are you aware of this 
report and its preliminary findings?
    Answer. Yes. The double-shell tanks (DSTs) were evaluated using the 
updated seismic spectra developed for the Waste Treatment and 
Immobilization Plant. All 28 DSTs were also examined using remote 
ultrasonic tests and visual inspections. The analyses indicate that the 
tanks are fit for continued use and will successfully withstand 
expected seismic events. The findings will be documented in a report 
titled ``DST Integrity Assessment'' that is planned to be issued on 
March 31, 2006.
    Question 20. Secretary Bodman, according to the State of Washington 
current plans include using storage capacity in Hanford's double shell 
tanks to store waste from the C-Tank farm until the waste is vitrified. 
The State of Washington also believes there is enough available storage 
capacity for the C-Farm tank waste in double shell tanks. Can you 
please provide in writing how much capacity is available in the double 
shell tanks and current plans to use that available capacity?
    Answer. The double-shell tank (DST) system has limited capacity to 
receive wastes from the single-shell tanks (SSTs), and that is expected 
to continue to be the case until treatment can be provided by the Waste 
Treatment and Immobilization Plant (WTP). DST capacity numbers 
fluctuate as retrieved SST wastes enter the DSTs and as DST wastes are 
concentrated through evaporator campaigns. The DSTs currently have 
approximately 2.5 million gallons of capacity that could be used to 
receive SST wastes. SST waste retrievals will continue at a sustainable 
rate with the available DST capacity until WTP feed operations 
commence. As a result, DOE will be able to maintain procedures, 
processes, operational proficiency, and corporate knowledge at levels 
required to safely conduct SST retrievals and enable a smooth 
transition to the higher rate of SST waste retrievals that will be 
required when the WTP commences processing waste from the DST system. 
Consistent with Appendix I to the Hanford Federal Facility Agreement 
and Consent Order (commonly referred to as the Tri-Party Agreement), 
DOE will seek to negotiate revised SST retrieval milestones with the 
Washington State Department of Ecology that will take into account the 
reduction of short-term and long-term risk to the environment, 
optimization of feed to the WTP, and optimization of DST space 
utilization. DOE is scheduled to provide a date for when the WTP will 
be on-line during summer 2006. Once this information is available, it 
will be used to more accurately plan rates of SST retrievals prior to 
the start of WTP operations.
    Question 21. Secretary Bodman, are you aware of any studies that 
suggest waste from Hanford has contaminated groundwater, the Columbia 
River, or negatively impacted fish and wildlife populations?
    Answer. I am aware of several studies that show waste from 
historical Hanford operations reached the groundwater under the Hanford 
Site and this groundwater eventually makes its way to the Columbia 
River. The Department of Energy and the Washington State Departments of 
Ecology and Health are concerned and carefully monitor contaminants. 
They have observed no impact to fish and wildlife populations. We 
publish comprehensive results of our environmental monitoring to make 
them publicly available. (The most recent report is ``Hanford Site 
Environmental Report for Calendar Year 2004, PNNL-15222.)
    Question 22. Secretary Bodman, the Department has been testing an 
alternative technology at Hanford, known as ``bulk vitrification'' for 
the last few years. I understand if proven successful through testing, 
bulk vitrification could allow waste to be treated sooner--making more 
space available in double shell tanks. However the administration's 
budget includes the following language in explaining the $52 million 
cut to the tank waste program, ``Decrease is due to the curtailment of 
work on the Bulk Vitrification Demonstration System which includes not 
proceeding to construction and not completing up to 50 waste boxes, and 
further reduction in Single-Shell Tank retrievals.'' Is the Department 
still committed to completing the bulk vitrification testing process? 
If not, please list what other alternative tank waste treatment 
technologies are being considered by DOE?
    Answer. The Department of Energy (DOE) is committed to developing a 
Bulk Vitrification cost and schedule baseline that can be used to 
determine whether full Demonstration Bulk Vitrification System (DBVS) 
Project tests should be conducted. The DBVS Project is currently at 
approximately 70 percent design completion. In FY 2006, the DOE's plan 
is to complete the DBVS design, validate project costs, complete two 
full-scale cold tests at the vendor's Richland, Washington, site, and 
develop a project cost and schedule baseline that will allow the DOE to 
make a decision on the path forward for DBVS. The schedule for moving 
forward with DBVS will be developed as part of the project baseline.
    Possible alternatives to using Bulk Vitrification as a supplemental 
technology for low-activity wastes (LAW) include increasing the 
through-put of the Waste Treatment and Immobilization Plant (WTP) LAW 
vitrification facility currently being constructed using higher 
capacity or additional melters, or using an alternative (non-glass) 
waste form that meets the criteria for on-site disposal.
    Question 23. Secretary Bodman, can the Department please provide an 
accounting of all appropriated funds spent on the Bulk Vitrification 
Pilot Project?
    Answer. Spending by fiscal year on the Demonstration Bulk 
Vitrification System is as follows:

------------------------------------------------------------------------
                                                                 $ in
                                                               millions
------------------------------------------------------------------------
FY 2004.....................................................     19.084
FY 2005.....................................................     38.139
FY 2006 (to date)...........................................      8.411
FY 2006 (balance)...........................................     17.183
------------------------------------------------------------------------

    Question 24. Secretary Bodman, I have been very supportive of the 
GridWise program, in particular the Northwest Demonstration project 
which is just underway in Washington and Oregon. This budget proposal 
zeroes out the GridWise program and according to the budget footnotes, 
moves it into a new account. The Pacific Northwest National Laboratory 
(PNNL) is a national leader in this area of research I want to be 
assured that the Department will continue this program just as PNNL is 
about to gather data and provide solutions to managing the grid systems 
more efficiently during peak times. Can you provide that assurance?
    Answer. DOE has been particularly pleased with the leadership that 
the Pacific Northwest National Laboratory (PNNL) has provided with 
regard to research and development in support of the Electricity 
Delivery and Energy Reliability Office's vision to modernize the 
electric delivery system in this country. I assure you that the 
programmatic changes we've proposed in the FY 2007 budget allows for 
continued support of critical research and development (R&D) needed to 
prove the viability and impact of innovative new technologies and 
systems consistent with the focus of exploring Information Technology 
solutions to improve the overall reliability, efficiency, security, and 
cost of the electric delivery system. Our R&D portfolio is based on 
substantial input from both industry and our national laboratories and 
represents some of the highest priority needs that have been 
identified. We will continue to work with PNNL and industry leaders to 
ensure that these efforts continue to be relevant and an appropriate 
priority for DOE.

               Responses to Questions From Senator Craig

    Question 1. Is the DOE committed to resuming the capability to 
produce PU 238 for space missions?
    Answer. The Department of Energy (DOE) is proceeding with the 
conceptual evaluation of reestablishing a domestic plutonium-238 (Pu-
238) production capability as part of DOE's proposed Pu-238 
Consolidation Project but has not committed to establishing the 
capability. Such a commitment will require a definitive expression of 
need for additional Pu-238 from the Federal agencies that use 
radioisotope power systems and heat sources for national security and 
space exploration missions.
    Question 2. Can you assure me that all DOE laboratories, not just 
the Office of Science Labs, will be utilized as part of the proposed 
increased investment in science and education?
    Answer. While that portion of our budget used to operate research 
facilities (open to both industry and universities) is necessarily 
directed to the laboratories that house those facilities, our research 
funding goes to the best competitively solicited proposals, as 
determined through peer review. All DOE laboratories, as well as 
university and other researchers outside of DOE, are welcome to compete 
for these funds.
    Question 3. When should Congress expect to receive the Nuclear 
Energy Research Advisory Committee (NERAC) report on the Next 
Generation Nuclear Plant?
    Answer. The NERAC approved the report on the Next Generation 
Nuclear Plant at its meeting on February 22, 2006. The Department 
expects that NERAC will submit the final report to the Department 
shortly and the Department expects that the report will be delivered to 
Congress by the April 2006 deadline specified by the Energy Policy Act 
of 2005.
    Question 4. Please provide the information used by DOE to support 
its decision to eliminate funding for geothermal research and 
development.
    Answer. The geothermal program has achieved its key technical 
objectives. Geothermal is now a mature energy technology. New 
geothermal projects in the United States are planned for California, 
Nevada, Idaho, Alaska, Hawaii, Utah, and Arizona. There are 483 
megawatts of new power purchase agreements signed in California, 
Nevada, Idaho and Arizona. Projects under construction, or which have 
both Power Purchase Agreements and are undergoing production drilling, 
amount to 547 megawatts in the seven western states. The Western 
Governors Association geothermal task force recently identified over 
100 sites with an estimated 13,000 MWe of power with near-term 
development potential.
    The highest priority of the geothermal industry has been the 
attainment of the production tax credit, which the passage of the 
Energy Policy Act of 2005 provided. In addition, the Energy Policy Act 
streamlined geothermal leasing and changed the royalty structure to 
provide incentives for local governments to promote geothermal 
development. The Energy Policy Act also mandated that the U.S. 
Geological Survey update maps providing detailed geothermal resource 
data. Together, these statutory changes will spur geothermal 
development without the Department's Geothermal Program.
    Question 5. Please provide the information used by DOE to support 
its decision to zero out hydroelectric research and development--
including R&D for small hydropower facilities and fish-friendly 
technologies
    Answer. The Department has concluded that industry now has the 
ability to improve turbine efficiency while lowering fish mortality 
without further Federal investment. The Department successfully 
completed testing of large fish-friendly hydropower turbines in fiscal 
year 2005, consistent with congressional direction over the past 
several years. For FY 2006, the Department requested $500,000 for 
hydropower research to close out the program.
    With regard to small hydropower, the Department completed an 
assessment of undeveloped U.S. hydropower resources, the technologies 
needed to develop the resources, and the feasibility of developing the 
resources. The Department believes it has provided industry with the 
necessary tools to evaluate development of these hydropower resources, 
and pursue development through the normal hydropower permitting 
process.
    Question 6. Please provide the information used by DOE to support 
its decision to eliminate funding for Nuclear Engineering Education in 
the Office of Nuclear Energy's University Support Program.
    Answer. The decision to eliminate funding for Nuclear Engineering 
Education in FY 2007 is based upon the recognition that undergraduate 
enrollments have rebounded from lows reached in the mid and late-1990s. 
Universities are now in a stronger position to support nuclear 
engineering programs and seek additional assistance that may be 
required from the nuclear industry, which has a large stake in 
maintaining the now-revitalized nuclear engineering education 
infrastructure.
    Question 7. Does DOE plan to implement recommendations by the 
National Research Council in the pending WGA Geothermal Task Force 
Report, and if so, how?
    Answer. DOE has not assessed the recommendations from the still-
draft WGA report, but intends to do so when the report is issued in 
final form.
    Question 8. Has the Department followed through on the request by 
Idaho's Geothermal Program Manager to approve a National Research 
Council review of that program?
    Answer. The Department followed through on the Program Manager's 
request for an NRC review of the program and determined that a more 
focused and technical analysis specifically on Enhanced Geothermal 
Systems (EGS), the program's key technical priority, would be more 
appropriate. EGS has significant potential to increase geothermal 
resources. Therefore, the program is currently supporting an 
independent external technical feasibility study of EGS.

              Responses to Questions From Senator Domenici

                       AMERICA'S COMPETITIVENESS

    Question 1. As I noted earlier, I am very excited about the 
President's initiative to enhance America's competitiveness. I've 
introduced, along with Senator Bingaman, Senator Alexander and numerous 
other co-sponsors, three bills to promote this initiative, one of which 
you will be charged with implementing.

   Please outline for us your plan for implementing this 
        initiative.
   Are you committed to seeking continued funding for these 
        programs?

    Answer. The Administration is assessing the provisions of S. 2197, 
the Protecting America's Competitive Edge through Energy Act of 2006--
also known as the PACE-Energy Act--which you introduced on January 
26th.
    The President's American Competitiveness Initiative (ACI), unveiled 
in his State of the Union message, demonstrates the President's strong 
commitment to continued U.S. competitiveness through a renewed national 
effort in basic scientific research, private sector investment 
incentives, and math and science education. This commitment is 
reinforced in the President's FY 2007 budget which proposes substantial 
increases in these areas. The FY 2007 budget for DOE's Office of 
Science programs, for example, includes a $505 million increase, which 
is the beginning of a ten-year commitment to double the total funding 
for certain high-leverage science agencies.
    The Administration welcomes the opportunity to discuss with 
Congress all aspects of S. 2197 and its companion bills, and to work 
with you to find the best ways to achieve our shared goals of education 
excellence and global economic competitiveness.

            ELECTRICITY/FEDERAL ENERGY REGULATORY COMMISSION

    Question 2. Please comment on one of the key provisions of the 
Electricity Title, Section 1221, Siting of Interstate Electric 
Transmission Facilities. What is the status of the designation of 
National Interest Electric Transmission Corridors?
    Answer. Section 1221 authorizes the Secretary of Energy to 
designate any geographic area experiencing electric energy transmission 
capacity constraints or congestion that adversely affects consumers as 
a National Interest Electric Transmission Corridor (NIETC). Any such 
designations will be based on a study of electric transmission 
congestion and alternatives and recommendations from interested 
parties, including affected states and any appropriate regional entity. 
The Department is conducting a congestion study, which will be 
published in August 2006. On February 2, 2006, the Department published 
a Notice of Inquiry which described its plan for the congestion study, 
sought comments from the public on draft criteria for the designation 
of NIETCs, and invited interested parties to identify areas where they 
think NIETCs are urgently needed. See Considerations for Transmission 
Congestion Study and Designation of National Interest Electric 
Transmission Corridors, 71 Fed. Reg. 5660 (Feb. 2, 2006). The comment 
period for the notice closed March 6, and the Department will host a 
technical conference March 29 to discuss concerns raised in the 
comments. The Department expects to propose and then designate NIETCs 
on an ``as appropriate'' basis based on the results of the congestion 
study and any comments on the notice of inquiry.
    Question 3. There have been several news reports about recent 
exciting transmission investment efforts, such as the Frontier Line 
originating in Wyoming and AEP's plans for new 765-kilovolt 
transmission line stretching from West Virginia to New Jersey. Will 
these efforts be able to take advantage of DOE's authority to designate 
National Interest Transmission Corridors?
    Answer. The Department notes the geographic breadth of these 
proposals and the large amount of new transmission capacity that they 
would add to the systems in their respective regions. We are in the 
process of developing the criteria that we will use to assess the 
suitability of particular geographic areas for designation as National 
Interest Electric Transmission Corridors. We expect to examine these 
proposals in terms of these criteria. If we conclude that designation 
of corridors in such areas is in the national interest and consistent 
with Section 1221, we will issue the designations.

        POWER MARKETING ADMINISTRATIONS--AGENCY INTEREST RATES 
                        FOR SEPA, SWPA AND WAPA

    Question 4. The budget proposes the assign ``agency'' interest 
rates to the PMAs for new obligations. The Administration estimates 
that this proposals will increase revenue to the U.S. Treasury by $2-3 
million annually, beginning in FY 2007.
    The budget submission calls for estimated rate impacts of 1%. What 
assurances do preference customers have that OMB will not make 
administrative adjustments each year that, in the long term, make PMA 
power above market?
    Answer. The budget process is an annual process. No decisions have 
been made about what may or may not be proposed in future budgets. 
Under current law, the PMAs' power rates must be cost-based.

                               HYDROPOWER

    Question 5a. The President's FY 2007 budget proposes to terminate 
the DOE Hydropower Program (^$500,000) and transfer the research, 
development, and demonstration results to industry. DOE's Hydropower 
program is a joint program between DOE and the hydropower industry. The 
program has mainly focused on the Advanced Hydropower Turbine Systems 
(AHTS), which is designed to improve fish passage, increase hydropower 
project efficiency, and result in power output increases.
    It is my understanding that turbine runners developed by this 
program to benefit juvenile salmon survival in the West have shown 
great promise, with a 98% survival rate for juvenile fish passing 
through the Grant County PUD's dam. This program is now in the final 
Stage III phase. Why does DOE want to short-change the maximum results 
of Phase III?
    Answer. The Department has concluded that industry now has the 
ability to improve turbine runner design and address fish survival 
rates without further federal investment. The Department successfully 
completed testing of large fish-friendly hydropower turbines in fiscal 
year 2005, consistent with congressional direction over the past 
several years. For fiscal year 2006, the Department requested $500,000 
for hydropower research to close out the program.
    Phase III of the Advanced Hydropower Turbine System program was to 
build and test, to scale, prototypes of the--most promising hydropower 
turbine models in actual hydropower plants. Two tests were completed, 
including the Grant County Public Utility District Wanapum Dam.
    Question 5b. Does the Department believe this Program has achieved 
useful results? Is industry likely to continue this Program in light 
DOE's withdrawal from it?
    Answer. The Department's Hydropower Program has achieved useful 
results. Two hydropower turbine designs aimed at improving the 
environmental performance of hydropower plants were developed and 
successfully tested, with results available to industry. The Program 
also completed a full assessment of the undeveloped hydropower 
resources in the United States, as an aid to the future development of 
additional renewable resources.
    The Department has concluded that industry now has the ability to 
continue improving turbine efficiency while lowering fish mortality 
without further Federal investment, and will use the advanced turbine 
designs to improve efficiency and environmental performance at existing 
hydropower sites.
    Question 5c. Is DOE currently the only Federal agency engaged in 
researching hydropower's role as a low-cost, renewable, domestic source 
of clean energy?
    Answer. No, other agencies conducting hydropower research include: 
the U.S. Army Corps of Engineers, U.S. Bureau of Reclamation, 
Bonneville Power Administration, Western Area Power Administration, and 
Tennessee Valley Authority.
    Question 5d. The DOE hydropower program supports the important work 
of the national labs in the field of hydropower. What are DOE's plan 
for maintaining this hydropower knowledge base at the laboratories?
    Answer. Archives of all important results from the Hydropower 
Program will be electronically available on the hydropower web site 
hosted by the Idaho National Laboratory.

                   ENERGY POLICY ACT--HYDROPOWER R&D

    Question 6. The Energy Policy Act of 2005 (Title IX, Section 931) 
directs DOE to conduct a research, development, demonstration and 
commercial application program for cost competitive technologies that 
enable the development of new and incremental hydropower capacity.
    Given this Congressional directive, please explain why the 
Administration has proposed to terminate the DOE hydropower program.
    Answer. The Department has concluded that industry now has the 
ability to improve turbine efficiency while lowering fish mortality 
without further federal investment. The Department successfully 
completed testing of large fish-friendly hydropower turbines in fiscal 
year 2005, consistent with congressional direction over the past 
several years.

                      STRATEGIC PETROLEUM RESERVES

    Question 7a. Please comment on the timetable, status, and site 
selection process for meeting the mandate in the Energy Policy Act of 
2005 to expand, as ``expeditiously as practicable'' the SPR capacity 
from 700 million barrels to 1 billion barrels of crude oil.
    Answer. The Energy Policy Act of 2005 requires us to complete a 
process to select sites necessary for the expansion of the SPR to one 
billion barrels by this August. The SPR expansion would be a major 
Federal action, requiring the preparation of an Environmental Impact 
Statement under the National Environmental Policy Act (NEPA), before 
making a decision on site selection.
    The Department issued a Notice of Intent to prepare an 
Environmental Impact Statement for the selection of sites for the 
expansion of the SPR on September 1, 2005. The SPR Office has 
identified the candidate sites and completed public scoping meetings in 
Lake Jackson, TX, Houma, LA, Jackson, MS and Port Gibson, MS. The 
Department is also engaged in the preparation of conceptual designs and 
geotechnical analyses of the candidate sites. All this is required 
prior to site selection.
    The timetable specified for selecting sites for the SPR expansion, 
was within one year from the date of enactment--August 8, 2006. The 
scoping process was extended twice, first as a result of Hurricane 
Katrina and second when the State of Mississippi submitted a new site 
for consideration. This resulted in several weeks of delay in the 
completion of the scoping process as well as the Draft EIS, now 
projected for issuance in mid April. Due to these delays, the 
Department hopes to complete the Final EIS by August 8, 2006, and issue 
the Record of Decision by September 8, 2006.
    Question 7b. The Department's FY 2007 budget request for SPR calls 
for a 5.4% decrease (25% decrease if you include the Katrina drawdown). 
Will the Department be prevented from meeting its existing 
responsibilities as well as its new statutory mandates under these 
restraints?
    Answer. The SPR budget request provides sufficient funding to 
perform its ongoing operations and maintenance activities, and maintain 
its readiness to conduct drawdown operations if required to do so. The 
FY 2007 request reflects a return to normal requirements following one-
time expenses related to the Hurricane Katrina drawdown and 
construction of the oil degasification plant which occurred in prior 
years.
    EPACT 2005 requires that the Secretary of Energy ``shall, as 
expeditiously as practicable, without incurring excessive cost or 
appreciably affecting the price of petroleum products to consumers, 
acquire petroleum in quantities sufficient to fill'' the SPR to the one 
billion barrel authorized capacity. The FY 2007 Request is sufficient 
to comply with responsibilities established under EPACT 2005.
    Question 7c. Have all of the refiners complied with the terms and 
schedule for repaying the loans made from the SPR in the post-Katrina 
period? Can you comment specifically on when you expect all of the 
loans to be completely repaid?
    Answer. We loaned 9.8 million barrels of oil to six companies in 
September and October 2005. A total of 10.3 million barrels, including 
premium barrels, is due in return.
    Four companies completed returns of 3.4 million barrels to the SPR 
on schedule by the end of November 2005. The two remaining companies 
have partially repaid an additional 0.9 million barrels, for a total of 
4.3 million barrels received to date.
    Deliveries of the remaining 6.0 million barrels are underway, with 
original contract terms requiring completion by May 2006. However, 
uncertainty surrounding the availability of commercial terminal 
facilities may cause us to renegotiate the contracts to stretch out 
deliveries into the summer.
    An additional loan of 870,000 barrels was made in January 2006 due 
to a marine channel blockage. Return of the oil, plus premium barrels, 
was completed in February 2006.
    Question 7d. The deadline in section 301 of the Energy Policy Act 
for setting procedures to acquire petroleum for the SPR has passed. 
What is the Department's progress in developing these procedures?
    Answer. Work on the draft proposed acquisition procedures was 
delayed due to the extraordinary demands placed on the SPR program as a 
result of Hurricanes Katrina and Rita and the attendant loans and sales 
of oil. Congress was informed of the delay to the draft proposed 
procedures in December 2005 and of the Department's intention to 
propose the procedures before April 6, 2006.
    Because of the delay in proposing the procedures, we also informed 
Congress that we would not meet the requirement for promulgation by 
February 4, 2006. However, we plan to complete the process of 
publishing the draft procedures in the Federal Register for public 
comment and promulgating the procedures as soon as possible thereafter.
    Question 7e. Please comment on what lessons the Department learned 
in the aftermath of Hurricanes Katrina and Rita with respect to the 
operation and utility of the SPR.
    Answer. The location of the caverns approximately 2000 feet below 
the earth's surface provides a secure storage environment with little 
vulnerability to natural or man-made dangers. The surface facilities 
are designed with the susceptibility of the region to hurricanes in 
mind. All of the critical systems are designed to withstand 150 mile 
per hour winds. Although Hurricane Katrina dealt a glancing blow to our 
storage site near Baton Rouge, that site was prepared to deliver oil 
within 48 hours of the hurricane passing, and most of the 9.8 million 
barrels of loans were delivered from that location. More seriously, 
Hurricane Rita passed very close to our West Hackberry, Louisiana site 
near Lake Charles, Louisiana, completely devastating local towns and 
the homes of our employees. Nevertheless, damage to the site was 
minimal, and as soon as roads were reopened and electricity restored, 
that site delivered the preponderance of the 11 million barrels of oil 
sold in response to Hurricane Katrina.
    The experience of Hurricanes Katrina and Rita reinforces that crude 
oil strategic storage in the Gulf is the most flexible, cost effective 
option to protect against an array of disruption scenarios.
    While the effect of the hurricanes was devastating beyond any 
expectations, the Strategic Petroleum Reserve performed very well. In 
addition, a new appreciation of the importance of commercial power to 
restoring the whole petroleum industry infrastructure after disasters 
of this type, will cause systems to be hardened and backup systems to 
be in place to lessen the effect of any such future event.

                           ENERGY EFFICIENCY

    Question 8. Title I of the Energy Policy Act included numerous 
provisions authorizing the Department to undertake initiatives and 
pilot programs to encourage the adoption of energy-efficient technology 
to reduce our energy consumption. The Department has moved aggressively 
to implement appliance efficiency standards.
    What is the Department's plan to implement the rest of the energy-
efficiency provisions included in the Energy Policy Act?
    Answer. EERE has made great progress in delivering EPACT 
requirements. On October 18, DOE issued a final rule to codify 15 new 
appliance standards prescribed by EPACT 2005. On January 31, DOE 
submitted to Congress ahead of schedule an EPACT-required report 
detailing the reasons for past delays and the Department's plan for 
expeditiously prescribing new and amended standards. Currently, DOE is 
working on another ``en masse'' rulemaking to clarify and codify the 
test procedures specified by EPACT 2005. Many of the other energy-
efficient provisions of EPACT are incorporated into existing programs 
where appropriate.

                 ENERGY SAVINGS PERFORMANCE CONTRACTING

    Question 9a. We would like to get the ESPC program back on track. 
It was reauthorized in the energy bill so that the government could 
continue to use this very successful program. Our main concern is that 
some agencies might be overreacting to the comments the GAO made about 
this program. Overall, GAO praised the ESPC program and offered 
suggestions for improvement, as they would any worthy program. We 
support efforts to improve the program,' and the committee hopes that 
improvements can be made expeditiously. Program administrators need 
support and encouragement to liberally apply this program to capture 
all avoided energy and maintenance costs in their pursuit of best value 
for the Government.
    What is the Department doing to make sure that government agencies 
are using this program by making it more user-friendly, flexible and 
expedient?
    Answer. The Department is: providing expert Energy Savings 
Performance Contract Project Facilitators to federal agencies to ensure 
the process is user friendly and expedient and that the best deal for 
the government is obtained; standardizing templates and report 
requirements for each phase of the contract process, especially for 
measurement and verification; and educating agencies on their roles and 
responsibilities through workshops and web-based training 
opportunities.
    Question 9b. What is the Department doing to do to ensure that the 
energy savings targets in the energy bill are actually met by federal 
agencies?
    Answer. The Department is: issuing policy guidance to the agencies 
on the energy bill goals; supporting agencies in their efforts to 
achieve the goals by providing ESPCs, technical assistance, Energy 
Saving Expert Teams, and technology transfer; and assisting agencies in 
the development of strategic plans for energy management efforts and 
goals. To track performance, the DOE continues to collect agency energy 
data annually and report to the President and Congress on federal 
agency progress. The data forms the basis for federal scorecard 
assessment developed in conjunction with the Office of Management and 
Budget.
    Within the Department of Energy, Deputy Secretary Clay Sell issued 
a ``Performance Requirements for Energy Management'' memorandum on 
February 7, 2006, to establish a new process for more streamlined and 
effective energy management practices. The Department also recently 
implemented several steps to conserve energy. These include lowering 
thermostat settings by three degrees in the winter and increasing them 
by three degrees in the summer, and reducing the duration of operation 
of our heating, ventilation and air conditioning equipment to cut its 
overall energy use.
    Question 9c. What are your plans for engaging those agencies that 
are not currently using ESPC to improve their energy performance?
    Answer. All the major agencies are participating in high-level 
quarterly ESPC Steering Committee meetings and are rehiring and/or 
reassigning staff dedicated to administering ESPC projects.
    To assist the agencies, the Department of Energy will meet 
individually with all agencies to: discuss development of strategic 
energy-management plans that highlight ESPCs as one of many tools to 
help agencies meet energy savings targets; require Project Facilitators 
for every ESPC project; and accelerate education and outreach efforts 
to promote ESPC use.
    Question 9d. What are your plans to measure and reward expanded use 
of this program and the associated accomplishments by all agencies 
including those currently using it?
    Answer. To reward agency energy managers and teams for progress in 
reducing energy use the Department hosts an annual Federal Energy and 
Water Management awards event, and the Office of Management and Budget 
hosts a Presidential Awards program. Some agencies highlight their use 
of ESPCs to help achieve energy goals in their award nominations. 
However, it is important to note that ESPCs are a means to an end 
(energy savings), not an end in and of themselves.

                      CLEAN COAL POWER INITIATIVE

    Question 10. In Title IV of EPAct 2005, Congress created a ``Clean 
Coal Power Initiative'' to stimulate the use of highly efficient clean 
coal technologies. But the Department's budget does not appear to 
contain any of the elements in that program. Can you please explain why 
this is not in the budget request?
    Answer. The 2007 Budget provides $281 million for the Coal Research 
Initiative, nearly completing (total of $1.9 billion requested from 
2002-2007) the President's $2 billion, ten-year commitment for clean 
coal R&D four years ahead of schedule. Within the Coal Research 
Initiative, the Department's intent is to continue to support of the 
Clean Coal Power Initiative (CCPI). 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 its 
Program Assessment Rating Tool (PART) review, CCPI and its predecessor 
demonstration programs have over $500 million in unobligated balances 
committed to selected projects, including money for projects that were 
selected several years ago and have not begun construction. The program 
is working to improve project selection to ensure consistency with the 
R&D Investment Criteria, withdraw funds when projects stall, and 
improve contract and project management controls to achieve the desired 
results. Ongoing CCPI projects, FutureGen, and various tax incentives 
including those authorized in the Energy Policy Act of 2005 continue to 
provide incentives for demonstration of clean coal technologies. The 
fiscal year 2007 request for CCPI of $5 million, along with funds from 
the prior appropriations 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 prior year clean coal funding 
that becomes available will also be applied towards the funding for a 
future CCPI solicitation.

                    ENERGY EFFICIENT BUILDING CODES

    Question 11. The Department's '07 Budget request substantially 
reduces funding for work on residential and commercial energy efficient 
building codes. In last year's budget request the Department placed 
emphasis on the substantial energy savings that might be realized 
through greater residential and commercial building efficiency codes.
    Would you please explain why the Department has shifted away from 
an emphasis on building efficiency?
    Answer. The Department continues to support a robust program of 
research and development, technology validation and market 
transformation in building technologies. The 2007 budget request is $77 
million, about the same as 2006 enacted on a comparable basis. In the 
area of building codes training and technical assistance, the 
Department believes that the States have developed sufficient expertise 
and capability to upgrade, implement and enforce their building energy 
codes and has requested no funding in this area. States can choose to 
use funding from DOE's State Energy Program formula grants to support 
programs that increase building code compliance. The Department's FY 
2007 budget request includes an increase of $13.8 million for the State 
Energy Program.

               SCRUBBING TECHNOLOGY FOR HIGH SULFUR COAL

    Question 12. Section 416 of Title IV of EPACT 2005 directs you to 
use $5 million from appropriated funds to initiate, through the Chicago 
Operations Office, a project to demonstrate the viability of high-
energy electron scrubbing technology on commercial-scale electrical 
generation using high-sulfur coal.
    Can you tell the committee when the Department intends to initiate 
this project?
    Answer. With regards to the high-energy electron scrubbing 
technology project as identified in Section 416 of Title IV in EPACT 
2005, the Department is committed to complying with EPACT. It is 
assessing the process necessary to legally implement this provision.

                       LOCOMOTIVE FUEL EFFICIENCY

    Question 13. The Department's budget proposes $42 million for the 
``21st Century Truck Partnership,'' an initiative to increase the 
efficiency of freight trucks. However, the budget recommends nothing 
for locomotive fuel efficiency--even though railroads carry more 
intercity freight than any other mode, and even though the energy bill 
authorizes $65 million for a locomotive R&D program.
    Why does the budget not request funding for the locomotive fuel 
efficiency program?
    Answer. DOE's request is based on careful consideration of the 
research priorities based on the potential oil savings for each R&D 
activity. Priority has been given to R&D to improve highway 
transportation fuel efficiency because this sector uses 51 percent of 
the oil consumed in the United States (2003). In comparison, rail 
freight accounted for only 1.2 percent of all U.S. oil use or about 10 
percent of the oil used by freight trucks. FY 2006 funding will mark 
the completion of a five-year, over $5.6 million ($11.3 million with 
industry cost share) effort with the domestic locomotive manufacturers, 
General Electric (GE) and Electro-Motive Diesel (EMD). This effort 
meets the EPACT 2005 Section 751 locomotive objectives. GE is already 
advertising improved efficiency locomotives for sale. Materials R&D has 
also completed a six-year, $700,000 effort to reduce rail friction that 
has seen the commercialization of one friction-reducing technology. 
While further research is not warranted because of the low potential 
for additional oil savings, it is expected that continuing R&D on 
advanced internal combustion engines for highway use (commercial trucks 
and passenger vehicles) will be applicable to locomotive engines.

                             YUCCA MOUNTAIN

    Question 14a. The budget requests $544.5 million for the Yucca 
Mountain project this year. The supporting documents states the 
administration intends to submit to Congress a legislative proposal on 
the project.
    When do you anticipate that the administration will submit this 
legislative proposal to the Congress?
    Answer. This legislative proposal is currently under review within 
the Administration, and we hope to submit this proposal to the Congress 
soon.
    Question 14b. The budget requests $544.5 million for the Yucca 
Mountain project this year. The supporting documents states the 
administration intends to submit to Congress a legislative proposal on 
the project.
    How will this legislative proposal facilitate progress on the Yucca 
Mountain project?
    Answer. While the details of this proposal are still under 
consideration, legislation is needed on a number of topics, including 
permanent land withdrawal of the site, which is required before 
construction authorization by the Nuclear Regulatory Commission, and 
funding reform, which will assure the project of receiving adequate 
funding from the Nuclear Waste Fund for its intended purpose.
    Question 15a. Some critics of Yucca Mountain now claim that issues 
related to quality assurance programs undermine the scientific 
viability of the repository.
    Do you remain convinced that the repository can meet current or 
proposed regulatory standards to assure the protection of public health 
and the environment?
    Answer. Yes, Yucca Mountain is a robust site capable of meeting 
regulatory standards and requirements to protect the public, workers, 
and the environment. I am confident that a geologic repository designed 
and constructed by the Department and licensed by the Nuclear 
Regulatory Commission can meet the current or the proposed standards 
for radiological protection.
    Question 15b. Some critics of Yucca Mountain now claim that issues 
related to quality assurance programs undermine the scientific 
viability of the repository.
    Is progress on Yucca Mountain critical not just to meet federal 
obligations under contracts with nuclear utilities, but also to assure 
the long-term disposition of defense nuclear waste as sites such as 
Hanford, Savannah River and the Idaho National Laboratory?
    Answer. Absolutely. Progress on Yucca Mountain is critical to 
providing a disposal solution to the defense nuclear waste at several 
sites around the nation, in addition to spent nuclear fuel from naval 
reactors, and research reactors. Commercial and defense spent nuclear 
fuel and high-level radioactive waste is currently being stored at 122 
sites in 39 states.

               CLEANUP AT LOS ALAMOS NATIONAL LABORATORY

    Question 16. Mr. Secretary, two years ago, the Department of 
Energy, the NNSA and the State of New Mexico agreed to a comprehensive 
cleanup strategy at Los Alamos National Lab. At a minimum, the 
Department must provide $120 million to comply with the cleanup 
obligations in the Consent Order signed by the parties. This budget 
request only provides $90 million, which is not sufficiency to comply 
with the order.
    What is the basis for the funding reduction from $140M provided in 
FY'06 and what impacts will this have on the consent order?
    Answer.

                                                 FUNDING SUMMARY
                                             [Dollars in Thousands]
----------------------------------------------------------------------------------------------------------------
                                                                                                       FY 2007
                                                   FY 2005      FY 2006      FY 2006      FY 2007    Request vs.
               Program/  Activity                  Approp.      Request      Approp.      Request       FY 2006
                                                                                                       Approp.
----------------------------------------------------------------------------------------------------------------
Los Alamos National Laboratory.................     116,2529      142,209      140,792       90,602      ^50,190
----------------------------------------------------------------------------------------------------------------

    As you know, we have had significant performance issues for 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 the Department of 
Energy (DOE) is able to validate.
    We believe that the new contract will address these performance 
issues, offer us new opportunities to continue significant cleanup and 
risk reduction, and deliver progress towards a new baseline. To that 
end, senior officials within the DOE have asked for the involvement of 
senior executives of the parent companies of the new contractor to 
deliver efficiencies and a baseline that can withstand scrutiny and can 
be validated by the DOE. We assure you that we remain committed to the 
Los Alamos Compliance Order on Consent (March 2005) with the State of 
New Mexico.

               TREATMENT OF LANL RETIREE PENSION BENEFITS

    Question 17a. On January 27th, Senator Bingaman and I sent the 
Department a letter urging that you oppose the proposal by the 
University of California Board of Regents to separate the retirement 
assets of the LANL Employees from the University of California 
Retirement Plan. It was our understanding and the understanding of the 
retirees that these benefits would remain unchanged as a result of the 
contract competition.
    Yesterday, Administrator Brooks responded to the UC proposal asking 
for more information from Board of Regents and expressing his 
preference that the retirement benefits would remain within the plan.
    When will the Department make a final decision on the Board's 
request?
    Answer. The University of California (UC) has not submitted a 
proposal to the Department to separate the retirement assets of Los 
Alamos National Laboratory (LANL) employees and retirees from the 
University of California Retirement Plan (UCRP). If such a plan were 
submitted the Department would consider it, but we have communicated 
that it has been our expectation that the individuals who retire from 
LANL prior to the LANS transition, as well as those who elect to leave 
their interest in the UCRP, remain members of the UCRP. We cannot, 
however, indicate when a final decision would be made until a proposal 
has been received.
    All assets in UCRP would be used for the benefit of the plan 
members under the present situation or under a spin off of the LANL 
population, were that to occur.

               TREATMENT OF LANL RETIREE PENSION BENEFITS

    Question 17b. On January 27th, Senator Bingaman and I sent the 
Department a letter urging you to oppose the proposal by the University 
of California Board of Regents to separate the retirement assets of the 
LANL employees from the University of California Retirement Plan. It 
was our understanding and the understanding of the retirees that these 
benefits would remain unchanged as a result of the contract 
competition.
    Yesterday, Administrator Brooks responded to the UC proposal asking 
for more information from Board of Regents and expressing his 
preference that the retirement benefits would remain within the plan.
    Are you aware of any financial benefit to the federal government 
that might be realized under the UC proposal? What about potential 
costs?
    Answer. The University of California (UC) has not submitted a 
proposal to the Department to separate the retirement assets of Los 
Alamos National Laboratory (LANL) employees and retirees from the 
University of California Retirement Plan (UCRP).

                        FREELY ASSOCIATED STATES

    Question 18a. Please provide the committee with a breakdown of the 
Department's Environment, Safety and Health FY07 request for the 
Marshall Islands Program including the health, environment, and 
logistical support elements of that request.
    Answer. In FY2007, the Department is requesting $6.0M for the 
Marshall Islands Program. The request does not include a specific 
breakdown by activity because these costs vary from year-to-year. The 
Department reviewed past costs and estimates the total cost of the two 
atoll medical programs to be $2.5 million including $1.3 million for 
medical logistics. The Department estimates that the total cost of 
environmental monitoring activities to be $3.5 million including $1.75 
million for logistical support.
    Question 18b. What is the capability of and cost for the Department 
to do a survey of Runit Island at Enewetak Atoll in the Marshalls if 
undertaken at the same time as DOE's annual field survey work?
    Answer. The DOE Marshall Islands program supports field science and 
radiological monitoring to assist decision-making on the resettlement 
of the displaced Atoll populations.
    DOE does not have the authority or capability to conduct an 
engineering survey of the containment structure of the dome.
    Question 18c. Can you reassure the committee that the department's 
experts from the ESH/RMI program will be available to work with experts 
from DOE, HHS, and the RMI government on developing options to enhance 
the effectiveness of healthcare in the RMI?
    Answer. Yes. The Department of Energy (DOE) will continue to work 
as part of the interagency group comprised of the State Department, the 
Department of Health and Human Services, the Department of the 
Interior, as well as with Congress, and the government of the Republic 
of the Marshall Islands (RMI) to develop the most effective means of 
delivering medical assistance required under Public Laws 99-239 and 
108-188, the Compact of Free Association between the U.S. and Republic 
of the Marshall Islands.
    DOE's Deputy Assistant Secretary (DAS) for Health recently 
reaffirmed the Department's commitment to continuing interagency 
dialogue to address health care options for the RMI by meeting with 
officials from the State Department and the Department of Health and 
Human Services. In addition, the DAS is meeting with the senior 
Marshallese officials on this topic in April 2006.

              Responses to Questions From Senator Landrieu

                OIL AND NATURAL GAS RESEARCH TERMINATION

    Question 1. Mr. Secretary, according to DOE, 85% of the historic 
oil and natural gas technologies programs' focus has been directed 
toward exploration and production activities undertaken by the 
independent producer. Independents drill 90% of the nation's oil wells 
and produce 85% of its natural gas and 60% of U.S. oil. Typically, 
these companies do not have access to in-house, costly R&D that the 
larger, integrated multi-national companies do. Similarly, much of the 
historic focus of the DOE R&D program has been to extend the 
productivity of existing domestic reservoirs and to improve the 
technologies for developing non-conventional reservoirs. Given that 
independent producers are the primary developers of these resources, 
how does terminating federal R&D square with the President's agenda of 
reducing dependence of foreign sources of oil?
    Answer. Oil and gas are mature industries and both have every 
incentive, particularly at today's prices, to enhance production and 
continue research and development of technologies on their own. There 
is not a need for taxpayers to subsidize oil companies in these 
efforts. The Administration's Research and Development Investment 
Criteria direct programs to avoid duplicating research in areas that 
are receiving funding from the private sector, especially for 
evolutionary advances and incremental improvements.
    Research and development (R&D) in the oil and gas industry is led 
by the service companies, not the majors or the independent producers. 
Independent producers, as well as the majors, purchase innovative 
technologies developed by service companies. Oil and Gas Financial 
Journal, a respected trade publication, reports: ``Major service 
companies . . . are spending between three percent and four percent of 
their revenues on R&D. This is triple or quadruple the rate of the oil 
majors, which spend only 0.5 percent of upstream revenue.'' Private 
control of intellectual property provides a market incentive for the 
private sector to invest in R&D and advance technology.
    While not part of the Fossil Energy budget, The 2007 Budget's 
proposals to expand access to oil and gas resources, streamline 
permitting processes, and make the R&D investment tax credit permanent 
leverage private sector ingenuity and are better ways to increase 
domestic production of oil and gas than federally funded R&D. The 
President's goal of reducing dependence on foreign sources of oil will 
also be addressed by the Advanced Energy Initiative proposed in the 
budget including advancements in cellulosic ethanol, battery 
technology, and hydrogen, among others.
    Question 2. Mr. Secretary, the Energy Policy Act of 2005 authorized 
the expansion of the Strategic Petroleum Reserve from 750 million to 1 
billion barrels of oil. It also directed that the Department develop, 
within one year, a site acquisition plan to accomplish the expansion. 
Could you please update the Committee on the status of the Department's 
progress in carrying out this provision of the act? Does the budget 
request include the funding necessary to complete development of the 
site selection plan and to begin site acquisition?
    Answer. The Energy Policy Act of 2005 requires DOE to complete a 
process to select sites necessary for the expansion of the SPR to one 
billion barrels by this August. The SPR expansion is a major Federal 
action, requiring the preparation of an Environmental Impact Statement 
under the National Environmental Policy Act (NEPA), before making a 
decision on site selection.
    The Department issued a Notice of Intent to prepare an 
Environmental Impact Statement for the selection of sites for the 
expansion of the SPR on September 1, 2005. The SPR Office has 
identified the candidate sites and completed public scoping meetings in 
Lake Jackson, TX, Houma, LA, Jackson, MS and Port Gibson, MS. The 
Department is also engaged in the preparation of conceptual designs and 
geotechnical analyses of the candidate sites. All this is required 
prior to site selection.
    The SPR appropriation for FY 2006 does provide sufficient funding 
to complete the NEPA environmental review and site selection process. 
The process for selecting sites for the SPR will be completed in August 
or September 2006. The 2007 President's Budget doesn't request any 
funds for site acquisition.
    Question 3. DOE's Office of Science is complying with direction 
provided by the Appropriations Committee to establish a National 
Institute for Climatic Change Research (NICCR) center that will focus 
on understanding ``the impacts of global and regional climatic changes 
on riparian and coastal environmental and ecological systems.'' I 
encourage this effort.
    How will you, the Department, and the Office of Science work in the 
future to better understand climatic changes in the coastal regions of 
the U.S., including the wetlands?
    Answer. The DOE Office of Science published a Notice (DE-FG02-
06ER06-08) on January 13, 2006, requesting applications from U.S. 
universities to establish a cooperative agreement with the Office of 
Science to host the new Center for Riparian and Coastal Ecosystems, as 
part of the NICCR. Based on a merit review of the applications received 
by the due date (April 18, 2006), the Office of Science will later this 
year establish a cooperative agreement to host the new NICCR center. 
The Office of Science will then work with the host university to 
develop and publish requests for proposals (RFPs) on an approximately 
annual basis. The requests will be for research related to impacts of 
global and regional climatic variability and change on U.S. coastal and 
wetland ecosystems and the zone or area adjacent to natural waterways, 
including streams, rivers, lakes, and tidal zones. Impacts of sea level 
rise and coastal subsidence on coastal ecosystems will be included. The 
RFPs will solicit proposals for laboratory experiments, field studies, 
and ecological modeling. The proposals received by the center will be 
subjected to scientific merit review on an open, competitive basis.

              Responses to Questions From Senator Menendez

                          TRANSURANIC PRODUCTS

    Question 1. Secretary Bodman agreed at the hearing that the 
transuranic products generated by the new reprocessing technologies 
cannot be used to make a nuclear weapons. Can you provide the committee 
with evidence to support that statement?
    Answer. In responding to Chairman Domenici, I should have clarified 
that the mixture of transuranic materials produced from the UREX+ 
process provides greater proliferation resistance than the separated 
plutonium produced by existing reprocessing facilities. The advantage 
of GNEP over the current nuclear fuel cycle is that it avoids the 
accumulation of separated plutonium and weapons usable materials. If 
requested, I will be pleased to provide the Committee with more 
detailed briefings on the UREX+ plus technology.
    Question 2. The Department of Energy claims that the reprocessing 
technologies it will pursue will not be as proliferation-prone as 
conventional reprocessing because the plutonium would be mixed with 
other transuranic elements, such as neptunium, americium, and curium, 
with the insinuation that these elements are too radioactive to make 
reprocessing by a terrorist group feasible.
    However, recent statements by a scientist in DOE's Advanced Fuel 
Cycle Initiative program seem to indicate these other transuranics are 
not excessively radioactive. He claimed a dose rate of less than 1 rad 
per hour at one meter--100 times less than the accepted standard for 
self-protection of 100 rails per hour at one meter, and a thousand 
times lower than the dose rate from spent fuel fifty years after 
reactor discharge. Can you assess the accuracy of this statement? If it 
is accurate, is it possible that the mixture containing plutonium and 
additional isotopes could be stolen and processed without the need for 
shielding and contact-handling?
    [Source: E.D. Collins, Oak Ridge National Laboratory, ``Closing the 
Fuel Cycle Can Extend the Lifetime of the High-Level-Waste 
Repository,'' American Nuclear Society 2005 Winter Meeting, November 
17, 2005, Washington, D.C., p. 13]
    Answer. No claim has been made that a mixture, of transuranic (TRU) 
elements (neptunium, plutonium, americium and curium) would provide 
inherent protection in the form of penetrating radiation sufficient to 
prevent terrorist access. However, keeping neptunium, americium, and 
curium with the plutonium does increase the level of penetrating 
radiation compared to pure plutonium, making the material more 
proliferation resistant than pure plutonium. The exact dose rate 
depends on the exact composition of used fuel, with some options 
considerably more than 1 rad per hour at one meter. All of these TRU 
composition options would require hot cells and remote manipulation, as 
contrasted with glove boxes used for plutonium-MOX fuel manufacture in 
several countries today.
    The GNEP proposal contains other features also intended to increase 
proliferation resistance. First, commercial preparation of recycle fuel 
would very likely involve an integrated operation by which chemical 
separations would be followed by fuel fabrication at the same site, so 
that separated TRU would not have to be transported. Second, the TRU 
mixture is much less attractive for explosive weapons use than pure 
plutonium. Curium through spontaneous fission provides a strong neutron 
field which would require very sophisticated handling and complex 
weapon design. Americium and curium increase the heat spontaneously 
generated, making handling and weapon fabrication more difficult. 
Third, a modem commercial UREX+/fuel fabrication would be equipped with 
state-of-the-art monitoring and accountability systems specifically 
designed to prevent unauthorized access and misappropriation. Using 
much less sophisticated instrumentation and control, the world's 
existing PUREX plants have operated for decades without any record of 
unlawful diversion.
    The significant proliferation hazard in the future is the spread of 
uranium enrichment technology, the uncontrolled multiplication of PUREX 
separation plants, and the continuing accumulation of weapons-usable 
material in used fuel. GNEP is designed to deter each of these hazards.

             Responses to Questions From Senator Murkowski

    Question 1. I notice the DOE budget calls for an increase of $5 
million to $44 million for wind energy development. Will the Department 
revive a technology development grant program with some of that money? 
While not all members of this committee love wind energy I have 
reviewed new technologies that promise to further cut costs and make 
wind cost effective without the production tax credit subsidy, if only 
there was a source of grant funding to pay for development of larger, 
working demonstration units. Will you consider resurrection of the 
technology grant program this year?
    Answer. Through its Low Wind Speed Technology activity, the 
Department has funded an ongoing series of public/private partnerships 
to support the development of large wind turbine technologies that will 
lower the cost of wind energy, including the development and testing of 
prototype turbines. We expect to offer support for competitively 
awarded, cost-shared partnerships for onshore large wind turbine 
technology development in 2007.
    Question 2. Parochially, I would love to see the Department not 
zero out all funding for the Office of Arctic Energy Research, 
currently based in Fairbanks. I'm not proposing that you keep an Alaska 
office open forever, but in the past five years the office has done 
great work, but clearly not yet scratched the surface on devising 
innovative renewable energy project to provide lower cost power to 
Alaska's 227 rural villages, where diesel-generated power this winter 
is costing up to 71 cents per kilowatt hour to produce (Lime Village). 
Would you work with me to see if some level of funding for innovative 
projects focusing on village needs can continue somewhere in the 
Department's budget?
    Answer. The Office of Arctic Energy Research has received 
Congressionally directed funding through the Office of Fossil Energy's 
Office of Oil and Natural Gas. The FY 2007 Budget proposes to terminate 
that program because at today's oil prices, there is every incentive 
for industry to both produce oil and gas and conduct research to 
enhance production. There is not a need for taxpayers to subsidize oil 
companies in these efforts.
    The Wind Program within the Office of Energy Efficiency and 
Renewable Energy through the National Renewable Energy Laboratory, has 
been working with the Alaska Energy Authority, and Alaskan rural energy 
cooperatives for over ten years exploring wind-diesel hybrid systems 
specifically tailored for Alaskan applications. In addition, our 
efforts to lower the cost of alternative energy resources in general 
should prove beneficial to Alaska's ratepayers. We would be happy to 
discuss these with you and your staff.
    Question 3. While the energy bill called for the Department to 
carry out demonstration projects for injection of carbon dioxide into 
aging oil fields, specifically in the Willston Basin in the west and in 
Cook Inlet in Alaska, with the zeroing out of the Oil Research office 
in the Office of Fossil Fuel, I get the impression that CO2 
research, outside of the narrow area of carbon sequestration from coal 
production, is on the back burner. What are your intentions toward 
funding a wider range of CO2 sequestration projects as part 
of your $281 million coal research initiative?
    Answer. The Sequestration Program has and will continue to pursue 
initiatives in the research of CO2 sequestration in various 
geologic reservoirs such as depleted oil and gas fields, producing oil 
fields to enhance recovery, saline formations, coals seams with 
enhanced coal-bed methane production, and other promising formations. 
Within the Regional Partnership Program, there are twenty-five (25) 
various sequestration injection tests being planned. These tests 
include depleted oil and gas fields, saline reservoirs, stacked saline 
and enhanced oil recovery reservoir tests, and coal seams with enhanced 
coal-bed methane production. In addition to the Regional Partnership 
Program, research and testing are continuing in other sequestration 
field tests including an injection test in a saline formation in Frio, 
Texas, and enhanced oil recovery projects at the Weyburn and Apache 
oilfields in Saskatchewan, Canada that utilize CO2 produced 
at the Great Plains Coal Gasification Plant.
    The results from these field tests will provide improved 
understanding of the factors affecting permanence and capacity in a 
broad range of CO2 storage reservoirs. Along with the 
storage of CO2 at these field tests, research in the 
monitoring, mitigation, and verification of the CO2 will be 
conducted to monitor and verify the amount of CO2 stored and 
in the unlikely event, mitigate any leakage that should occur. In 
conclusion, the Sequestration Program does attempt to investigate the 
various geologic formations such as depleted oil and gas fields, 
producing oil fields to enhance recovery, saline formations, and coals 
seams for the storage of CO2.

              Responses to Questions From Senator Salazar

                  RENEWABLE ENERGY & ENERGY EFFICIENCY

    Question 1. Just two days ago, DOE's National Renewable Energy 
Laboratory (NREL) in Golden, Colorado, announced 32 layoffs due to cuts 
in the FY06 budget--including researchers in solar energy and biomass--
at a time when the President announced his support for greater 
investment in biomass and solar research, among other things that the 
research conducted at NREL supports. Given the importance of the work 
at NREL, in terms of meeting the goals outlined by the President during 
his State of the Union Speech, what will you do to help me protect 
NREL's budget in the future? What changes will you make in your FY08 
budget request to help insulate the lab's funding from appropriations 
earmarks?
    Answer. On February 19, 2006, EERE reallocated $5M of funds to 
enable NREL to rehire all 32 laid-off individuals. NREL has extended 
rehire offers to all impacted individuals for their immediate return to 
work. Laid-off workers who are rehired will repay all severance monies.
    The Conference Report accompanying the FY 2006 Energy and Water 
Appropriations bill gave DOE the flexibility to move funding between 
the sub-accounts within the Energy Supply and Conservation 
Appropriation to fund congressionally directed projects if the total 
amount of those projects exceeded 20% of the sub-account. The 
Department has not exercised this authority as of yet, but certainly 
will consider doing so in the future to avert problems like we 
experienced in the EERE program.
    Question 2. What steps has DOE taken to transfer these employees to 
other DOE labs or to absorb them in other DOE programs?
    Answer. On February 19, 2006, EERE reallocated $5M of funds to 
enable NREL to rehire all 32 laid-off individuals. NREL has extended 
rehire offers to all impacted individuals for their immediate return to 
work. Laid-off workers who are rehired will repay all severance monies.
    Question 3. Given the emphasis on renewable fuels and new energy 
technologies in the President's State of the Union address, why didn't 
the President double or triple the National Renewable Energy 
Laboratory's budget?
    Answer. In his State of the Union address, the President announced 
new solar and biofuels initiatives designed to accelerate the 
contribution of these transformational technologies to the Nation's 
energy portfolio. The President has requested commensurate funding 
increases for the Department's Solar Technology and Biomass programs, 
through which these initiatives will be managed, as well as funding 
increases in its Wind and Hydrogen, Fuel Cells & Infrastructure 
Technologies research and development programs. Together, the Solar, 
Biomass, Wind, and Hydrogen programs form the core of NREL's research 
and development capabilities, collectively accounting for 60% of all 
NREL funding. Depending on appropriations, NREL will likely receive 
increased funding in FY 2007 to support these initiatives. (The 
Department's Preliminary Lab Tables released with the FY 2007 Budget 
are estimates and may need revision.)
    It is important to note each DOE program allocates funding to 
various national labs or to competitive solicitations for industry or 
university researchers in ways to best accomplish program goals. 
Increased funding for a program does not necessarily translate to 
increased funding for each national lab currently receiving funding 
from that program.
    Question 4. Families and farmers and ranchers in my state face 
tough choices this winter with both high gasoline prices and the 
highest natural gas prices in recent memory. Your Energy Information 
Administration reports that reducing natural gas demand by only 2 to 4 
percent through more efficiency and renewables could reduce wholesale 
natural gas prices by 25 percent. Yet the FY07 budget actually reduces 
funding for energy efficiency by 18 percent. Overall, the budget for 
energy efficiency and renewable energy R&D appears to be about level 
with last year. Could you direct us to portions of the budget that 
might help alleviate these high energy costs in my state?
    Answer. As you noted, the Department's total funding request for 
energy efficiency and renewable energy R&D in FY 2007 is approximately 
equal to FY 2006 appropriations. In its FY 2007 request, however, the 
Department has substantially increased research and development funding 
for technologies that promise wholesale transformation of how the 
Nation obtains and uses energy. These technologies include solar, 
biofuels and hydrogen fuel production, storage, and fuel cells. In his 
recent State of the Union address, the President announced new 
initiatives in biofuels and solar power. These research and development 
investments will substantially increase the Nation's and Colorado's 
energy choices and long-term energy security.
    Question 5. Numerous important provisions of Energy Policy Act 2005 
(e.g., promoting energy efficiency and conservation, renewable energy, 
clean coal technologies, other new energy technologies) are not 
reflected in the budget. See the chart prepared by Senator Bingaman's 
staff. Why not? Do we have to wait until the President's FY08 budget 
request to see the administration's support for funding for these 
programs?
    Answer. The Energy Policy Act contains authorizations for a variety 
of initiatives. As the Administration noted in the July 15, 2005, 
letter to the conference committee on H.R. 6, the House and Senate 
versions include authorizations levels that set unrealistic targets and 
expectations for future program-funding decisions. The President's 
Fiscal Year 2007 Budget proposal reflects the Administration's 
programmatic and fiscal priorities. Those priorities took into account 
the spending opportunities presented by the Energy Policy Act.
    Question 6. Can you offer to the committee the rationale for 
zeroing out funding for research and development on geothermal and 
hydropower--both energy sources that have the potential of supplying 
large quantities of clean base-load power?
    Answer. The Geothermal Program has achieved its key technical 
objectives. Geothermal is now a mature energy technology. New 
geothermal projects in the United States are planned for California, 
Nevada, Idaho, Alaska, Hawaii, Utah, and Arizona. There are 483 
megawatts of new power purchase agreements signed in California, 
Nevada, Idaho and Arizona. Projects under construction, or which have 
both Power Purchase Agreements and are undergoing production drilling, 
amount to 547 megawatts in the seven western states. The Western 
Governors Association geothermal task force recently identified over 
100 sites with an estimated 13,000 MW of power with near-term 
development potential.
    The highest priority of the geothermal industry has been the 
attainment of the production tax credit, which the passage of the 
Energy Policy Act of 2005 provided. In addition, the Energy Policy Act 
streamlined geothermal leasing and changed the royalty structure to 
provide incentives for local governments to promote geothermal 
development. The Energy Policy Act also mandated that the U.S. 
Geological Survey update maps providing detailed geothermal resource 
data. Together, these statutory changes will spur geothermal 
development without the Department's Geothermal Program.
    Similarly, we believe that industry now has the ability to achieve 
hydropower efficiency optimization and fish survivability performance 
targets without further Federal investment. In the fiscal year 2006 
Appropriations Conference Report, the conferees recommended $500,000 
for hydropower research, directing the Department to ``complete 
integration studies and close out outstanding contracts in advanced 
hydropower technology.''
    Question 7. A bipartisan group of Senators and Congressman have 
teamed up on legislation called the Vehicle and Fuel Choices for 
American Security Act (S. 2025 in the Senate, H.R. 4409) that provides 
an action plan to save 1 million barrels of oil per day by 2014, 2.5 
million barrels per day in 2017 and 10 million barrels per day by 2026. 
Given the President's stated commitment to reduce America's dependence 
on foreign sources of oil, will the Administration now support this or 
other efforts in Congress to achieve oil savings?
    Answer. The President's Advanced Energy Initiative proposes 
significant new investments and polices in three areas that will 
improve future energy security and reduce future demand for oil by 
increasing our use of ethanol, improving hybrid vehicles, and 
developing hydrogen technology. The 2007 President's Budget includes: 
$31 million in new research funding to support advanced battery 
research, a 27% increase over 2006 levels; $150 million for biomass 
fuels research, a 65% increase; and $289.5 million for hydrogen vehicle 
research.
    Additionally, on April 25th the President called on Congress to 
make all hybrid and clean diesel vehicles sold this year eligible for 
federal tax credits and repeated his call for congress to send him a 
bill this year authorizing Arctic National Wildlife Refuge (ANWR) 
exploration.

                    OIL RENEWABLE/ALTERNATIVE FUELS

    Question 8. What specific aspects of the President's budget request 
will help achieve the President's stated goal of reducing our 
dependence on foreign oil? Mideast oil? Our addiction to oil?
    Answer. The Administration is making every effort to address 
America's short term energy needs while ensuring that we are able to 
meet future energy demands. Reducing America's dependency on imported 
oil has been and will continue to be a priority for this 
Administration. Since 2001, the Administration has spent nearly $10 
billion to develop cleaner, cheaper and more reliable energy sources.
    The Advanced Energy Initiative (AEI) will accelerate investment 
into clean energy technologies in order to transform the way we produce 
and use energy in our homes, business and our transportation sector. To 
achieve these goals, the President has requested $2.1 billion in FY 
2007--a 22 percent budget increase--to develop new technologies and 
alternative sources of energy to help diversify and strengthen our 
nation's energy mix. The AEI is focusing on technologies that we 
believe hold the greatest promise for American taxpayers, including 
solar, biofuels, hydrogen, nuclear, and clean coal technology.
    As part of President Bush's Advanced Energy Initiative, the FY 2007 
budget request for the Hydrogen Fuel Initiative increased by $53 
million over FY 2006 to $289.5 million to accelerate the development of 
hydrogen fuel cells and affordable hydrogen production, storage, and 
infrastructure technologies. Through public-private partnerships, the 
Hydrogen Fuel Initiative and related FreedomCAR programs aim to make it 
practical and cost-effective for Americans to begin to use clean, 
hydrogen fuel cell vehicles by 2020, and to have the infrastructure 
available to support them.
    Question 9. What is the status of the biorefineries loan guarantee 
program authorized by the Energy Policy Act of 2005? Are there 
sufficient funds in the DOE budget to implement this loan guarantee 
program? Did DOE request any funding for deployment of biofuels?
    Answer. The Department is assessing procedures needed to comply 
with the provisions of the Federal Credit Reform Act and OMB Circular 
A-129 to implement the loan guarantee provisions of Title XVII of 
EPACT. The Department's Chief Financial Officer is heading up our 
efforts. The Department has not developed a specific time frame for 
completing these activities. The FY 2007 Budget provides no funds to 
implement loan guarantee provisions.

                        CLEAN COAL TECHNOLOGIES

    Question 10. Background: Coal is the most abundant domestic energy 
source. It provides more than 50% of our nation's electricity needs, 
and America has enough coal to last more than 200 years. In Colorado, 
71% of the electricity we consume is generated with coal. Colorado 
consumed 18.9 million tons of coal in 2004, generating 37.5 million 
megawatts of electricity. Most of this coal is from Colorado, but some 
is from Wyoming.
    In the State of the Union Address, the President announced the 
``Advanced Energy Initiative,'' which he said would provide a 22% 
increase in clean energy research at the Department of Energy. The 
President indicted that, as part of this initiative, his budget would 
call for more investment in zero-emission coal-fired power plants. 
However, a careful review of the President's budget for the coal 
research initiative, which includes the base coal research program, the 
Clean Coal Power Initiative (CCPI) and FutureGen, indicates that there 
is a decrease of $89 million in new funding from last year's enacted 
budget levels. How do you explain the funding decrease for these 
activities when the President has made the development of clean coal 
power technologies a top priority?
    Answer. The 2007 Budget for coal-fueled power generation focuses 
primarily on technologies for near-zero atmospheric emissions plants, 
which will be brought together in FutureGen, a full-scale, fully 
operational prototype plant cost-shared with private sector and 
international partners. The Budget requests $322 million for 
development of these technologies through FutureGen and supporting 
research and development in integrated gasification combined cycle 
(IGCC), hydrogen turbines, carbon sequestration, hydrogen separation, 
fuel cells, and cross-cutting advanced research. This is an increase of 
$21 million over the 2006 enacted budget level of $301 million for 
near-zero atmospheric emissions technology.
    Funding for FutureGen and its supporting R&D is consistent with the 
Administration's R&D Investment Criteria and a priority because these 
technologies are a significant leap beyond the technology of 
conventional ``pulverized coal'' power plants and even IGCC without 
sequestration, and because they focus on long-term, potentially large 
public benefits. As a result, there are insufficient market incentives 
to expeditiously drive this innovation through the private sector 
alone. The Department's coal program also includes the Clean Coal Power 
Initiative (CCPI), which currently supports high efficiency and low 
criteria pollutant emissions goals. Although the last CCPI solicitation 
explicitly identified near-zero emission clean coal technologies, e.g., 
advanced IGCC and advanced coal plants with carbon sequestration, as 
being eligible for bid, none were selected, however we expect to 
request such technologies in a future CCPI solicitation.
    Question 11. Just last year, this Committee successfully worked in 
a bipartisan fashion to pass an energy bill that authorizes $1.8 
billion over nine years for the President's Clean Coal Power 
Initiative. Continued support and funding for the CCPI is needed to 
continue the development of new clean coal technologies and to ensure 
the continued viability of coal as a fuel source. I was therefore 
disappointed to see that the President requested only $5 million for 
this program in FY 2007--a 90% cut from the amount appropriated by 
Congress for FY06 and a tiny fraction of the $200 million authorized in 
the Energy Policy Act of 2005. What is the reason for this dramatic 
cut?
    Answer. The 2007 Budget provides $281 million for the Coal Research 
Initiative, nearly completing (total of $1.9 billion requested from 
2002-2007) the President's $2 billion, ten-year commitment for clean 
coal R&D four years ahead of schedule. Within the Coal Research 
Initiative, the Department's intent is to continue to support of the 
Clean Coal Power Initiative (CCPI). 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 its 
Program Assessment Rating Tool (PART) review, CCPI and its predecessor 
demonstration programs have over $500 million in unobligated balances 
committed to selected projects, including money for projects that were 
selected several years ago and have not begun construction. The program 
is working to improve project selection to ensure consistency with the 
R&D Investment Criteria, withdraw funds when projects stall, and 
improve contract and project management controls to achieve the desired 
results. Ongoing CCPI projects, FutureGen, and various tax incentives 
including those authorized in the Energy Policy Act of 2005 continue to 
provide incentives for demonstration of clean coal technologies. The 
fiscal year 2007 request for CCPI of $5 million, along with funds from 
the prior appropriations 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 prior year clean coal funding 
that becomes available will also be applied towards the funding for a 
future CCPI solicitation.
    Question 12. The CCPI program is essential to insure that the 
cutting edge technologies that are developed in the research program, 
many of which may be capable of novel carbon capture techniques for 
both new generation sources as well as for the existing fleet of coal-
fired power plants, are demonstrated so that these technologies will be 
borne into the commercial market. It is our understanding that for the 
CCPI projects recently awarded in Round 2, the total private industry 
share was $1.5 billion, while the Federal Government share was $297 
million. When and under what circumstances will the DOE seek another 
CCPI solicitation, or does this meager request of $5 million suggest 
that the CCPI program will be completely killed next year?
    Answer. The Department's intent is to continue its program in 
support of the Clean Coal Power Initiative (CCPI). The fiscal year 2007 
request for CCPI of $5 million along with funds from prior 
appropriations 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 prior year clean coal funding that becomes 
available will also be applied towards the funding for a future CCPI 
solicitation.
    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 its Program Assessment Rating Tool (PART) 
review, CCPI and its predecessor demonstration programs have over $500 
million in unobligated balances committed to selected projects, 
including money for projects that were selected several years ago and 
have not begun construction. The program is working to improve project 
selection to ensure consistency with the R&D Investment Criteria, 
withdraw funds when projects stall, and improve contract and project 
management controls to achieve the desired results. Ongoing CCPI 
projects, FutureGen, and various tax incentives including those 
authorized in the Energy Policy Act of 2005 continue to provide 
incentives for demonstration of clean coal technologies.
    Question 13. Do the funding levels in the Department's FY07 budget 
request mean that DOE has picked one path forward--FutureGen--to use 
coal in the future? What about advanced combustion? What about 
developing alternative methods to capture CO2 from the fleet 
of existing coal combustion plants?
    Answer. The Department's budget request proposes a balanced R&D 
program portfolio, which currently emphasizes gasification based 
systems (such as FutureGen) because they show the greatest promise, are 
the farthest along in development, and are a transformational 
technology change consistent with the Administration's Research and 
Development Investment Criteria. The portfolio also includes (1) 
development of advanced combustion technology (such as oxycombustion 
and materials research for ultrasupercritical pulverized coal 
combustion plants), (2) development of CO2 emission capture 
technology for both new and existing combustion based plants, (3) 
development of emission control systems for existing combustion plants, 
(4) development of very innovative concepts such as ``chemical 
looping'' that are applicable to combustion systems, (5) development of 
technologies that are applicable to both combustion and gasification 
based systems such as oxygen membrane technology that will dramatically 
reduce the cost of the oxygen needed for oxycombustion and 
gasification, (6) development of CO2 storage technology 
(which is independent of the CO2 source, combustion or 
gasification), and (7) the CCPI demonstration program under which both 
gasification and combustion technologies can be proposed.
    Question 14. The Energy Policy Act of 2005 authorized loan 
guarantees for an Integrated Gasification Combined Cycle (IGCC) 
demonstration project in the western U.S. What is the status of the 
availability of these loan guarantees?
    Answer. Title XVII of the Energy Policy Act of 2005 authorizes DOE 
to provide loan guarantees for renewable energy systems, advanced 
nuclear facilities, coal gasification, carbon sequestration, 
refineries, energy efficiency, and many other types of projects that 
use improved technologies in commercial projects that enhance energy 
economy and reduce emissions of pollution and greenhouse gases. The 
Department is assessing procedures needed to comply fully with the 
provisions of the Federal Credit Reform Act and OMB Circular A-129. The 
Department's Chief Financial Officer is heading up our efforts in 
consultation with the energy and science program offices, the Office of 
General Counsel, the Office of Policy and International Affairs and 
others. The Department has not developed a specific timetable for 
completing these activities.

                         WEATHERIZATION GRANTS

    Question 15. As you know, the budget for weatherization for low 
income housing has been cut dramatically from the previous year's 
request. Assuming that Congress agrees with this reduced budget, won't 
this reduction merely increase the requests for energy assistance under 
the Low Income Heating and Energy Assistance Program?
    Answer. No. Most Weatherization Assistance Program clients would 
have already applied for and received LIHEAP energy bill assistance 
prior to requesting and receiving WAP assistance.
    Question 16. I have seen figures that suggest that this cut will 
result in 33,000 low-income, elderly and working poor families next 
year being unable to weatherize their homes and save money for 
themselves and energy for the country. Does the DOE have any such 
analysis? Can you provide that analysis?
    Answer. From 2002 through 2006, the Administration requested a 
cumulative 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 FY 
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 proposing to increase 
our investments. The table below sets out Weatherization Program 
funding for fiscal years 2005 through 2007, as well as the estimated 
number of units weatherized in each of those years.

                         [Dollars in Thousands]
------------------------------------------------------------------------
                                                               FY 2007
                                   FY 2005       FY 2006       Request
------------------------------------------------------------------------
WAP Grants....................   $228,160      $242,550      $164,198
Units.........................     92,500        97,300        64,084
------------------------------------------------------------------------

               Responses to Questions From Senator Smith

                      BPA DEBT PREPAYMENT PROPOSAL

    Question 1. In recognition of this new proposal to use secondary 
revenues in excess of $500 million to prepay BPA's Treasury debt, does 
the Administration intend to withdraw its legislative proposal to count 
third-party financing arrangements against BPA's statutory debt 
ceiling?
    Answer. No. The intent of the proposal to have certain non-debt 
transactions count against BPA's statutory borrowing limit is to create 
better financial transparency and management accountability. The 
Administration believes proper budget reporting of Federal debt and 
debt-like transactions is essential to improving the financial 
transparency and performance of the Federal government. The proposed 
legislation would count certain new financing transactions entered into 
after the date the legislation is enacted toward BPA's Treasury 
borrowing limit and would also provide for a $200 million increase to 
that limit.
    Question 2. What price forecast levels for natural gas were used to 
determine BPA's secondary revenues under this proposal?
    Answer. For the estimates of BPA's net secondary revenues developed 
for the 2007 Budget, the Administration relied on electricity broker 
quotes which are an indication of forward electricity prices at a 
specific point in time. Since broker quotes are one measure of the 
price for electricity, and the price of electricity in the western 
United States is generally correlated to the price of natural gas, one 
could infer that the forward price for natural gas was reflected in the 
electricity prices from the broker quotes. At the time the 
Administration's estimates were developed, in early January 2006, the 
calendar year 2007 NYMEX Henry HUB futures contracts were trading 
around $9.75/MMBtu and the calendar year 2008 contracts were trading 
around $9.20/MMBtu.
    Question 3. What would be the impact of the pre-payment proposal on 
BPA's year-end carry-over reserves?
    Answer. Consistent with the President's budget, the increased 
advance amortization payments to Treasury on BPA's bond obligations 
dependent on an equivalent amount of assumed net secondary revenues are 
$168 million in FY 2007, $88 million in FY 2008, $83 million in FY 
2009, and $80 million in FYs 2010-2011. Estimated advance amortization 
payments to Treasury vary from associated net secondary revenues and 
debt optimization amounts due to timing of Treasury payments and other 
factors. All else being equal, BPA year-end reserves would be lower by 
these additional transfers to the U.S. Treasury. Actual transfers could 
differ significantly from these figures due to many variables affecting 
BPA's net secondary revenues including the volatility of secondary 
power markets and the variability of annual streamflows.
    Question 4. What assumptions were made about spill and flow 
augmentation in the coming years in determining BPA's secondary 
revenues?
    Answer. For the estimates developed for the 2007 Budget, the 
Administration used the hydroelectric assumptions in BPA's Initial 
Wholesale Power Rate Proposal. In the Initial Rate Proposal, BPA 
assumed the operation of the system required by the 2004 Biological 
Opinion which includes spring and summer spill but does not reflect the 
additional spill associated with the 2005 or 2006 court orders or any 
additional flow augmentation beyond that in the 2004 Biological 
Opinion.
    Question 5. What is to prevent future Administrations from 
earmarking other portions of BPA's revenues, or from lowering the $500 
million threshold? What impact will this have on BPA's ability to self 
finance its operations?
    Answer. While not providing certainty about possible future 
Administration proposals, the FY 2007 budget recognizes annual net 
secondary revenue over $500 million as extraordinary and provides that 
the net secondary revenue proposal be consistent with the sound 
business practices required under the Federal Columbia River 
Transmission System Act of 1974 and that any advance amortization 
payments be made consistent with statutory priority of payment 
requirements.
    The Administration's proposal is directed at, and should only be 
viewed as precedent for, dealing with this situation of extraordinary 
net secondary revenues. As such, the Administration believes that the 
current proposal is consistent with affording requirements customers' 
power at cost-based rates.
    The Administration believes the net secondary revenue proposal will 
help to provide BPA with needed financial flexibility to meet its 
future energy investment needs, including new transmission capacity, 
and that long-term power and transmission service customers of BPA 
should benefit from the advance amortization payments through lower 
long-term rates than would otherwise be the case. This proposal will be 
more fully assessed in an expedited rate case to implement the policy 
of advance payments on Treasury bonds with net secondary revenues that 
exceed $500 million annually.
    Question 6. Given the U.S. corporations are competing in a global 
economy, and given the U.S. electricity and natural gas costs are much 
higher than in many other industrialized and emerging economies, 
shouldn't the Administration be seeking to lower energy prices in every 
region of the country?
    Answer. The Administration and the Congress have taken several 
important steps to increase U.S. energy supplies and use energy more 
efficiently. We would not agree, however, that comparing the price of 
electricity and natural gas in the U.S. to the prices in other 
countries provides a useful guide to what our energy policies should 
be. For example, Norway has benefited from inexpensive electricity from 
hydropower (the situation, however is changing as Norway must now rely 
on its abundant natural gas supplies to generate electricity). This 
abundance of hydropower has resulted in electricity prices that have 
been much lower in Norway than in other countries. It would be a 
mistake for a country that is not endowed with hydropower or other 
cheap sources of electricity to seek an energy policy to have 
electricity prices to be as low as Norway's. Such a policy would lead 
to misallocation of resources and waste.
    Very often, less developed countries have made such a mistake by 
subsidizing electricity. This causes many problems. It is hard to 
attract private investment in the country's electricity sector because 
it is impossible to make a profit when you have to sell electricity for 
less than it costs to produce. It also leads to wasteful use of 
electricity since the government subsidized-price undervalues the true 
cost of electricity and sends the wrong market signal.
    We should expect substantial variations among countries' 
electricity and natural gas costs. Some of these variations result from 
the abundance of energy resources and the market value of these 
resources. Some of the variations result from the past history of 
investment in natural gas and electricity infrastructure. And some of 
the variations result from implicit or explicit subsidies that often 
exist in state-owned power enterprises.
    The best goal for U.S. energy policy is to achieve clean and secure 
sources of power in a competitive market environment. Trying to mimic 
the electricity costs in other countries would be a poor way to achieve 
this goal.

                  GEOTHERMAL ENERGY TECHNOLOGY PROGRAM

    Question 1. Congress recognizes the need for diversifying our 
energy supply base and the value of promoting an expanding role for 
clean, domestic, and renewable energy systems. Indeed, the Energy 
Policy Act of 2005 (EPAct 2005) includes numerous provisions to support 
their development and deployment. President Bush not only signed that 
bill, but also stated his strong commitment to expanding the use of 
renewables in his State of the Union address.
    Geothermal energy systems represent the only baseload renewable 
energy technology that doesn't depend on rainfall or fuel supplies. 
This makes geothermal a unique technology that provides an excellent 
hedge against uncertain fuel prices. The importance of such a hedge 
against rising and uncertain fuel prices for power generation has 
become particularly evident in the past 5 years with the power crisis 
in California and the very high natural gas prices of the past 2 years.
    EPAct 2005 includes provisions to encourage the development of 
those known geothermal resources that are close to economic and those 
provisions are appropriate for addressing those near term 
opportunities. However, as with all energy sources, the magnitude of 
economic geothermal resources are very dependent on technology as well 
as prices.
    What has been the impact of the geothermal technology program on 
the magnitude of cost-effective geothermal resources (i.e. ``proven 
reserves'' of geothermal energy) in the past?
    Answer. In the past, industry-coupled drilling, sponsored by the 
program, resulted in the private development of six commercial 
geothermal fields. The program pioneered research into binary 
conversion cycles, which today account for over 200 MWe of generation. 
Work by the program to handle the hypersaline brines of the Salton Sea 
geothermal field has resulted in 285 MWe of generation today, while the 
field has an ultimate potential of more than 2,000 MWe. Over ten years 
ago, the program worked with industry to understand the accelerated 
decline of pressure within The Geysers geothermal steam field in 
northern California. That work led to the strategy of injecting 
municipal waste water into the field, allowing steam pressure to be 
maintained while extending the life of this 1,000+ MWe resource.
    Question 2. Will continuation of the geothermal technology 
program's R&D in exploration, characterization, drilling, and systems 
development expand cost-effective hydrothermal resources in the future? 
Can the department provide an estimate of the expansion that is 
possible?
    Answer. The Geothermal Program has achieved its key technical 
objectives. Geothermal is now a mature energy technology. New 
geothermal projects in the United States are planned for California, 
Nevada, Idaho, Alaska, Hawaii, Utah, and Arizona. There are 483 
megawatts of new power purchase agreements signed in California, 
Nevada, Idaho and Arizona. Projects under construction, or which have 
both Power Purchase Agreements and are undergoing production drilling, 
amount to 547 megawatts in the seven western states. The Western 
Governors Association geothermal task force recently identified over 
100 sites with an estimated 13,000 MWe of power with near-term 
development potential. USGS is currently updating geothermal resources 
estimate.
    Question 3. Isn't it the case that, as a dispatchable, baseload 
power source, geothermal offers an excellent complement to wind and 
solar power systems, all of which provide electricity that is 
independent of fossil fuel prices?
    Answer. Yes, as a baseload power source, geothermal complements 
intermittent renewable wind and solar energy production.
    Question 4. The Secretary has expressed ``guarded optimism'' about 
the potential of cost-effective production of oil from oil shale 
deposits in the west using a technology under development by Shell Oil. 
While oil represents a particularly valuable form of energy because of 
our dependence on it for virtually all of our transportation fuels, 
aren't the total geothermal resources, including the non-hydrothermal 
resources, in the continental U.S. at least as vast? Given that, 
shouldn't we continue an R&D program focused on identifying and 
developing a technology to economically tap these ``hot dry rock'' 
resources in the future?
    Answer. In terms of total resource potential, the Nation's 
geothermal and hydrothermal resources are at least as vast as oil shale 
deposits in the west. The geothermal program has achieved its key 
technical objectives for known hydrothermal resources and geothermal is 
now a mature energy technology.
    The Department completed the hot dry rock project 10 years ago at 
Los Alamos, and was successful in addressing technical feasibility. The 
information is available to the public through OSTI, the information 
retrieval service of the Department's Office of Science and Technology 
Information (http://www.osti.gov/geothermal/index.html).

                     NATURAL GAS DISTRIBUTION LINES

    Question 1. Can you explain the Administration's rationale for the 
proposal on p. 127 of the Treasury Department's General Explanations of 
the Administration's Fiscal Year 2007 Revenue Proposals regarding 
repealing the 15-year depreciation for natural gas distribution lines. 
It claims the provisions the Congress enacted last year, which I 
sponsored as free-standing legislation, gives natural gas utilities an 
unwarranted advantage over competitors such as electric utilities. Can 
you explain this in view of Sec. 1308 of the Energy Policy Act of 2005, 
which provides for electric transmission property to be treated as 15-
year property, a provision which I also supported?
    Answer. Lowering the recovery period for electric transmission 
lines from 20 years to 15 years, as was done in the Energy Policy Act 
of 2005, and restoring the 20 year recovery period for gas utility 
distribution lines, as is advocated in the Administration's FY 2007 
budget, is not inconsistent with efficient tax policy. For efficient 
tax policy to occur, tax law depreciation present values should be 
proportional with economic depreciation present values. In other words, 
the time period for depreciation should reflect the average life of the 
asset. The class life is one measure of the expected useful life for 
the asset. For both electric and gas assets, the class lives are broken 
down by transmission and distribution. The class life for both electric 
transmission and distribution assets is 30 years.
    The class life for gas transmission and distribution assets is 
similar (i.e. 22 years and 35 years, respectively). Thus, one might 
conclude that gas and electric transmission assets have similar 
economic lives, while the same is true for gas and electric 
distribution assets.
    If assets have similar economic lives, then their recovery periods 
should also be the same or similar. Under current law (after enactment 
of the Energy Policy Act of 2005), recovery periods for electric 
transmission and distribution assets are 15 years and 20 years, 
respectively. The recovery period for gas transmission lines is the 
same as electric transmission lines (i.e. 1 5 years). For natural gas 
distribution lines placed in service after 2010, the recovery period 
would be the same as electric distribution lines (i.e. 20 years), but a 
shorter recovery period (i.e. 15 years) if placed in service before 
2011. Having a four year period (2007-2010) in which gas distribution 
assets receive a shorter recovery period is not likely to generate 
additional investment, but will likely serve only to distort the timing 
of such investments. Thus, the Administration feels repealing the 15-
year depreciation for natural gas distribution lines is justified to 
achieve efficient tax policy.

             Responses to Questions From Senator Feinstein

                           ENERGY EFFICIENCY

    Question 1a. The President's Budget Requests states ``Given 
America's growing energy needs, we must also make better, more 
efficient use of our most abundant resource, namely coal.''
    Mr. Secretary, as you may know, I have been an avid proponent of 
energy efficiency. We have the technology today to reduce the amount of 
energy we need to power our homes and businesses. In my opinion, one of 
the most successful parts of the energy bill tax were the tax 
incentives offered by Senator Snowe and myself. Those tax incentives 
were supposed to have gone into effect on January 1. Yet the Department 
has still not issued guidance to the Treasury Department to implement 
the tax deductions for commercial buildings.
    The commercial tax incentives have the potential to save 45,000 MW 
after 10 years--equivalent to the current demand in the entire state of 
California. In addition, they have the potential to save businesses 
almost $15 billion per year after 10 years in direct bill savings and 
some $10 billion more in reduced gas prices.
    When will the Department issue the regulations for the commercial 
tax incentives?
    Answer. The Department of the Treasury/IRS is responsible for 
issuing the regulations for the commercial tax incentives. 
Nevertheless, the Department of Energy has been in regular contact with 
the Department of the Treasury, providing advice and technical 
assistance.
    Question 1b. The New Buildings Institute submitted a proposal in 
late August 2005 to help DOE write the implementation regulations. 
Given the fact that the Department still has not issued the 
regulations, did the Department err by not asking for assistance in 
writing the regulations?
    Answer. The Secretary of the Treasury is responsible for writing 
regulations to implement commercial building energy efficiency 
deductions. The Department of Energy has been providing technical 
assistance to the Department of the Treasury and the Internal Revenue 
Service in the development of the regulations. We understand the 
regulations are nearing completion and should be available soon. The 
Department met with representatives of the New Building Institute and 
appreciates their offer to help.
    Question 1c. The President's Budget Request states ``Given 
America's growing energy needs, we must also make better, more 
efficient use of our most abundant resource, namely coal.''
    Mr. Secretary, as you may know, I have been an avid proponent of 
energy efficiency. We have the technology today to reduce the amount of 
energy we need to power our homes and businesses. In my opinion, one of 
the most successful parts of the energy bill tax were the tax 
incentives offered by Senator Snowe and myself. Those tax incentives 
were supposed to have gone into effect on January 1. Yet the Department 
has still not issued guidance to the Treasury Department to implement 
the tax deductions for commercial buildings.
    The commercial tax incentives have the potential to save 45,000 MW 
after 10 years--equivalent to the current demand in the entire State of 
California. In addition, they have the potential to save businesses 
almost $15 billion per year after 10 years in direct bill savings and 
some $10 billion more in reduced gas prices.
    Given the fact that the Department has recognized the importance of 
energy efficiency, will it support an extension of the energy 
efficiency tax credits that were included in the energy bill?
    Answer. The Administration will evaluate its position on introduced 
legislation at the appropriate time.

                           GEOTHERMAL ENERGY

    Question 2. Geothermal energy could provide the West with an 
additional 13, 000 megawatts of baseload energy. According to the 
Western Governors Association, 5,600 megawatts of geothermal energy 
could be commercially developed in the next 10 years. That would be on 
top of the 2,000 megawatts that are already produced in California, 
accounting for approximately 5% of California's energy needs.
    The National Research Council's 2000 report entitled Renewable 
Power Pathways stated that ``Geothermal energy is a widespread but 
underutilized renewable energy resource . . . The current level of R&D 
support for geothermal technologies is not sufficient to develop the 
reservoir engineering science and drilling technologies that would 
bring down development risks and costs . . . Government incentive 
programs are important to the development and deployment of geothermal-
based technologies.''
    Why would the Department of Energy choose to eliminate funding for 
a program given the clear recommendation from the National Research 
Council and the need for additional clean sources of energy?
    Answer. The highest priority of the geothermal industry has been 
the attainment of the production tax credit, which the passage of the 
Energy Policy Act of 2005 provided. In addition, the Energy Policy Act 
streamlined geothermal leasing and changed the royalty structure to 
provide incentives for local governments to promote geothermal 
development. The Energy Policy Act also mandated that the U.S. 
Geological Survey update maps providing detailed geothermal resource 
data. Together, these statutory changes will spur geothermal 
development without the Department's Geothermal Program.
    The Geothermal Program has also achieved its key technical 
objectives. Geothermal is now a mature energy technology. New 
geothermal projects in the United States are planned for California, 
Nevada, Idaho, Alaska, Hawaii, Utah, and Arizona. There are 483 
megawatts of new power purchase agreements signed in California, 
Nevada, Idaho and Arizona. Projects under construction, or which have 
both Power Purchase Agreements and are undergoing production drilling, 
amount to 547 megawatts in the seven western states. The Western 
Governors Association geothermal task force recently identified over 
100 sites with an estimated 13,000 MWe of power with near-term 
development potential.

                             NUCLEAR WASTE

    Question 3a. The United States stopped reprocessing under the Ford 
Administration, and reprocessing was banned under the Carter 
Administration in response to India's nuclear explosive tests in 1974. 
At the time, several other countries, including South Korea and 
Germany, were considering reprocessing, but did not acquire it.
    What are the implications of the U.S. reversing a thirty-year 
policy and now promoting reprocessing in certain countries?
    Answer. GNEP builds upon and goes beyond where previous U.S. policy 
ended by proposing a comprehensive approach to the international fuel 
cycle that includes next-generation recycle and reactor technologies as 
one of its elements. GNEP does not promote spent fuel recycling where 
it has not already occurred on a large commercial scale. Rather, the 
GNEP fuel cycle is predicated on limiting recycling technologies to a 
small number of fuel cycle nations. GNEP also promotes the use of 
advanced safeguards and technologies that will not result in separated 
plutonium, rather than supporting the status quo of existing separation 
technologies that result in stocks of separated plutonium.
    But the broader purpose is to develop an alternative to managing 
the international fuel cycle that is affordable and improves waste 
management, safety and proliferation resistance. Cradle-to-grave fuel 
cycle services would offer an attractive alternative to current fuel 
supply arrangements and help prevent the spread of sensitive fuel cycle 
capabilities. The most sensitive facilities and materials would be 
limited to advanced nations with reliable nonproliferation credentials.
    Question 3b. The United States stopped reprocessing under the Ford 
Administration, and reprocessing was banned under the Carter 
Administration in response to India's nuclear explosive tests in 1974. 
At the time, several other countries, including South Korea and 
Germany, were considering reprocessing, but did not acquire it.
    If the United States made a decision to proceed with reprocessing 
its commercial spent nuclear fuel, what impact would that have on the 
Administration's efforts to limit the spread of reprocessing and 
enrichment technologies around the world, and to convince other 
countries not to pursue this technology themselves?
    Answer. Countries with advanced and robust commercial nuclear 
programs have been using separated plutonium in their civil nuclear 
programs for well over a decade and there is every indication that this 
practice will continue and increase with time. The prior U.S. policy on 
reprocessing has not led to a decline in the use of plutonium in 
commercial fuel in these countries. On the contrary, it can be 
persuasively argued that the long absence of the United States from 
this aspect of the commercial nuclear industry has eroded our ability 
to provide leadership in making nonproliferation a key objective in 
this area.
    Consistent with the President's nonproliferation policy, the 
overall thrust of GNEP is to provide attractive options in the form of 
reliable fuel services, including fuel supply and take back for reactor 
nations that refrain from costly investments in enrichment and 
reprocessing. Returned spent fuel would be recycled and the 
transuranics including plutonium would be ``burnt'' in specially 
designed reactors located in a small group of countries that already 
possess reprocessing and fast reactor technology. Over the long term, 
GNEP aims to phase out separated plutonium from the civil nuclear 
economy.
    Question 3c. The United States stopped reprocessing under the Ford 
Administration, and reprocessing was banned under the Carter 
Administration in response to India's nuclear explosive tests in 1974. 
At the time, several other countries, including South Korea and 
Germany, were considering reprocessing, but did not acquire it.
    Wouldn't this promote a double-standard that will undermine our 
non-proliferation efforts?
    Answer. GNEP does not promote a double standard. GNEP does, 
however, recognize the reality that some states have developed a full 
complement of fuel cycle facilities and others have not. Our approach 
provides an opportunity for the U.S. to both lead and participate in 
the global expansion of safe and clean nuclear energy, while at the 
same time greatly advancing our non-proliferation goals. A global 
expansion of nuclear energy is underway and will happen with or without 
U.S. leadership or participation. GNEP seeks to limit recycle 
technology to the few countries in the global community that already 
have mature nuclear fuel cycles including reprocessing. One of the 
goals of GNEP is to institutionalize a small set of fuel cycle states 
and a much larger set of reactor states and limit the spread of 
enrichment and reprocessing technologies to those countries that 
already possess the technology. The economic and political incentives 
that will be provided to countries that refrain from developing 
enrichment and reprocessing technologies will be substantial. These 
incentives include a solution to the reactor states' spent fuel 
disposal problems, which are significant. GNEP's economic and 
institutional incentives are expected to be sufficiently attractive so 
as to draw significant attention to countries that decline to 
participate.
    Question 3d. The United States stopped reprocessing under the Ford 
Administration, and reprocessing was banned under the Carter 
Administration in response to India's nuclear explosive tests in 1974. 
At the time, several other countries, including South Korea and 
Germany, were considering reprocessing, but did not acquire it.
    What is the target list of countries that must agree to forego 
reprocessing under the Administration's proposal?
    Answer. There is no target list. The Administration believes that 
the economic benefits of such an arrangement between fuel cycle 
supplier nations and reactor nations could be made sufficiently 
compelling that all reactor nations that did not have ulterior motives 
for developing indigenous fuel cycle facilities would willingly 
participate.
    Question 3e. The United States stopped reprocessing under the Ford 
Administration, and reprocessing was banned under the Carter 
Administration in response to India's nuclear explosive tests in 1974. 
At the time, several other countries, including South Korea and 
Germany, were considering reprocessing, but did not acquire it.
    Is there any realistic indication that these countries will 
ultimately agree to forego indigenous reprocessing and allow certain 
other countries to reprocess their spent fuel?
    Answer. The issue of spent fuel management and the back end of the 
fuel cycle continues to be one of the more difficult issues to resolve. 
The required investments for recycle capability and repository 
development are substantial and not justifiable for smaller nuclear 
economies. GNEP proposes to take advantage of this economic fact to 
create compelling incentives to prevent the further spread of 
reprocessing technology, by providing reliable fuel services to resolve 
this issue in exchange for agreement to refrain from developing 
indigenous recycle capability. Allowing for a sustainable expansion of 
peaceful nuclear energy while avoiding the problem of proliferation 
requires reconsideration of how the international fuel cycle operates. 
Under GNEP, the United States and our fuel cycle partners will 
demonstrate technologies that make spent fuel take back feasible on a 
wider scale than is currently the case.

                             OIL DEPENDENCE

    Question 4a. In the State of the Union, the President referred to 
breaking America's oil addiction by reducing the amount of oil we 
import from the Persian Gulf by 75% by 2025. That's a long time away 
from now--and our constituents are stuck with high energy costs today.
    If the Administration is serious about breaking our addiction to 
oil, why is it proposing to slash the Vehicle Technologies Program by 
9%?
    Answer. Transportation research remains a key factor in our plans 
to decrease the Nation's dependence on foreign oil, and DOE's request 
strongly supports this goal. Although it appears that we are asking for 
less money in the Vehicle Technologies Program, a closer look at the 
details shows that the FY 2006 appropriation contains more than $20 
million in congressionally directed activities that do not directly 
support the Vehicle Technologies Program's mission and goals. Once an 
adjustment is made for these earmarks and program transfers, it becomes 
clear that DOE's FY 2007 budget request for goal-directed R&D is level 
with the FY 2006 appropriation. Additionally, this year's request 
realigns some internal priorities by placing greater emphasis on those 
research activities with the greatest potential for oil savings, 
particularly to increase funding for the development of lithium-ion 
batteries and other technologies for plug-in hybrid vehicles.
    Question 4b. In the State of the Union, the President referred to 
breaking America's oil addiction by reducing the amount of oil we 
import from the Persian Gulf by 75% by 2025. That a long time away from 
now--and our constituents are stuck with high energy costs today.
    Has the Administration developed shorter-term goals and milestones 
by which to reach the larger goal in 2025? How are those goals 
reflected in the budget?
    Answer. During the State of the Union address, President Bush 
announced (and the Budget reflects) an ambitious program to accelerate 
our research to make cellulosic ethanol commercially competitive by 
2012, to improve batteries used in hybrid cars and make hydrogen fueled 
vehicles commercially available. If we successfully meet those goals, 
we will significantly reduce the amount of oil that we must import each 
day to meet our transportation needs. The Administration believes the 
best approach to reducing America's reliance on imported oil is to 
develop new technologies that will fundamentally change the needs of 
our transportation sector while maintaining an environment that 
encourages continued economic growth.
    It's worth noting that, with careful consideration of economic 
growth, safety, technological feasibility, and other factors, the 
Administration increased Corporate Average Fuel Economy standards for 
light trucks for Model Years 2005-2007, saving significant amounts of 
petroleum. The Administration recently proposed further increases for 
Model Years 2008-2011 that are expected to save 7.8 billion gallons of 
gas over the lifetime of the vehicles.

                             WEATHERIZATION

    Question 5. In a complete reversal of the Administration's ten-year 
commitment to the Program, contained in the 2000 National Energy 
Policy, the proposed budget calls for a $78 million reduction in 
funding for 2007 for weatherization.
    This unwarranted reduction will force states to deny much needed 
energy efficiency services to approximately 30,000 low-income, elderly 
and working poor families next year. To date, the President has only 
provided approximately 26 percent of what he committed to in 2000.
    Weatherization is a particularly good investment of federal 
dollars. Once weatherization services are provided, the average family 
saves about $440 per year (based on current energy prices). The effect 
of these efficiency services (like insulation, furnace replacement, air 
infiltration reduction, etc.) lasts more than 15 years in most case. 
This means that each family could save more than $6,600 over the life 
of the services installed with a modest average investment of only 
$2,900. The 30,000 families who will be denied this year will have to 
spend an additional $217.8 million to pay for energy that could have 
been saved if the homes were weatherized in 2007. The $78 million 
reduction that is to be reprogrammed for research and development 
cannot claim this kind of return on investment.
    Congress believed that this program deserved additional funding 
which is why the Energy Bill that the President signed into law last 
August authorized $600 million for FY07 for weatherization.
    Why does the administration propose reducing the Weatherization 
Program by more than 30% in 2007 when low-income families are being hit 
by high energy prices?
    Answer. From 2002 through 2006, the Administration requested a 
cumulative 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 FY 
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.

              Responses to Questions From Senator Johnson

    Question 1. The FY 2007 Budget Request provides that the interest 
rate for future debt obligations owed to the Treasury by Southwestern, 
Southeastern, and Western for all power-related investments whose 
interest rates are not specified in law be set at the ``agency rate'' 
governmental corporations borrow from the Treasury, similar to how 
current law sets the interest rates for BPA's borrowing from the 
Treasury.
    What is the purpose of this change?
    Answer. This proposal will bring the interest rates on certain 
Southeastern, Southwestern and Western investments in line with the 
interest rates paid by Bonneville Power Administration and Government 
corporations, and will increase revenue to the U.S. Treasury an average 
of approximately $2.4 million annually from 2007 through 2011.
    Question 2. The Budget Request states that the ``agency rate'' is 
the rate at which governmental corporations borrow from the Treasury. 
What governmental corporations borrow at that rate? How is the agency 
rate calculated?
    Answer. The ``agency rate'' is determined in capital markets. It is 
the rate at which Government corporations (such as Tennessee Valley 
Authority) and Government-sponsored enterprises (such as Fannie Mae, 
Freddie Mac and the Farm Credit System) borrow in the market. The rate 
that Bonneville Power Administration pays to Treasury on its bonds is 
an approximation of this market rate.
    Question 3. The Budget Request states that this rate is ``similar 
to how current law sets the interest rates for BPA's borrowing from the 
Treasury.'' What are the differences between the ``agency rate'' and 
BPA's rates?
    Answer. The ``agency rate'' is the rate at which Government 
corporations and Government-sponsored enterprises borrow in the capital 
market. Bonneville Power Administration issues bonds to Treasury rather 
than in the capital market. By law, the rate on Bonneville's Treasury 
bonds must be ``comparable to the rates prevailing in the market for 
similar bonds issued by Government corporations.'' Therefore, the rate 
Bonneville pays on its bonds is an approximation of this market rate.
    Question 4. Southwestern, Southeastern, and Western are not 
governmental corporations. They don't borrow from the U.S. Treasury as 
BPA does. What is the rationale for imposing this interest rate on 
federal agencies that are markedly different from the examples the 
Administration has cited?
    Answer. Bonneville, Southeastern, Southwestern and Western Area 
Power Administrations all market Federal hydropower and presumably 
Treasury's cost of providing funds for their operations is the same.
    Question 5. How does the Administration intend to implement this 
change?
    Answer. This change will be implemented administratively through a 
public process to amend the interest rate provisions outlined in DOE 
Order RA6120.2, which governs PMA rate setting and repayment. In 
addition, the PMAs will conduct public processes, as needed, to modify 
the power rates for the affected power projects.
                                 ______
                                 
      Responses of Michael Dale to Questions From Senator Bingaman

    Question 1. As I understand it, the Department of Labor certifies 
that there is a shortage of available labor in a given area before H2B 
visas are issued to an employer wishing to work in that area. However, 
the H2B contractors reportedly compete with local contractors for 
Forest Service reforestation projects, which seems to call into 
question the Department's determination that there was a shortage of 
labor. Do you have any insight into how the Department of Labor's 
process for certifying a shortage of available labor falls short? Do 
you have any suggestions on how it can be improved?
    Answer. A large part of this problem stems from the manner in which 
the H2B program is implemented by the Department. In theory, H2B 
workers are available only to employers who have an existing need for 
workers that cannot be filled by qualified domestic workers. Whether 
there are U.S. workers available is supposed to be determined by 
testing the labor market by recruiting employees at prevailing industry 
standards. If an insufficient number of workers respond to the job 
offer, the Secretary certifies the shortfall, in effect authorizing the 
admission of a like number of H2B temporary workers for these jobs.
    In reality this labor market test is a charade. To begin with, 
candid observers of the industry will readily admit that, at the time 
that they apply for labor certification for H2B workers, most 
reforestation contractors don't really know what work they will have 
available or where. They apply for workers to perform contracts they 
hope to obtain. They apply for workers ``on spec'' as a DOL 
administrator once put it. This causes a number of problems. Whatever 
minimal recruitment of U.S. workers takes place prior to the H2B 
application is not a serious effort to find and hire workers, since the 
employer does not yet know when, where, or even if, they will be 
needed.
    Because of the casual manner in which EIA treats the requirement 
that employers try to recruit U.S. workers, the recruitment is seldom 
successful in finding many workers. All that the DOL requires of an H2B 
applicant is to list the work with the Job Service and place an 
advertisement for a few days in a local paper in the community where 
the work will begin. This advertisement will appear months before the 
work is ``available'' so finding anyone to do the work at that point in 
time is not very probable. Since DOL permits forestry contractors to 
string together an ``itinerary'' of different work contracts in 
different locations within a single H2B application, a person who was 
willing and qualified to work, for example, on the Lincoln National 
Forest, might also be required by the employer to commit to work in the 
Bitterroot National Forest in the Northwest. Workers in New Mexico will 
be unlikely to want to travel to Idaho to work, and the advertisement 
for the work will never appear in Idaho. In the late 1990's EIA agreed 
that these itinerary applications could not include work in more than 
two adjacent DOL regions, but this policy is much less meaningful as 
DOL has consolidated its regional offices. The requirement that a 
worker agree to travel far from home makes the jobs much less 
attractive to U.S. workers.
    By contrast, under the H2A agricultural worker regulations, a 
prospective employer will generally be recruiting workers for specific 
farming operations, known well in advance. The employer is required to 
list the jobs not only with the Job Service locally, but in areas of 
labor surplus elsewhere in the United States, as well. Agricultural 
employers must also engage in affirmative recruitment, defined as 
taking those actions normal to employers in the industry who are 
seeking workers. This has been interpreted to include advertisement in 
Spanish language print media and radio, sending recruiters to labor 
supply areas, etc. Then, if qualified U.S. workers show up at the job 
looking for work at any time during the first half of the season, they 
will have preference for work over H2A workers already on the job. This 
creates an incentive for employers to truly to seek out and find 
available U.S. workers, since these workers may apply later and replace 
H2A workers.
    Having been ``unable'' to find U.S. workers through the paltry 
required recruitment process, the forestry contractor then can later 
hire H2B workers to do whatever work the contractor has been successful 
in obtaining, often by bidding with the government's land management 
agencies against other contractors using U.S. workers. At this point, 
no consideration is given to whether the successful bidder will be 
using domestic or H2B employees, even though U.S. workers have a 
theoretical preference for the work. If all of the hoped-for work does 
not materialize, the H2B contractor is not obligated (as is required 
under H2A regulations) to guarantee that at least of promised work will 
be available. The contractor can either simply abandon the workers, or 
contract them to work in unauthorized employment, again in competition 
with domestic workers, but without even the pretext of having sought 
U.S. workers.
    This all happens, in significant degree, because the Department of 
Labor has refused to honor its own commitment to be guided in its 
consideration of H2B applications by the policies promulgated under the 
H2A program, 20 C.F.R.655.3(b). It has never developed regulations 
comparable to those in place in the H2A field, and does little to 
protect either the wages and working conditions of domestic worker or 
the foreign workers, either.
    Several rather straightforward steps could be taken to ameliorate 
this situation.

          1) The Department of Labor could develop standards under H2B 
        that would be roughly comparable to the requirements imposed on 
        H2A employers. Where there are particular differences in 
        forestry, the rules could vary, but the basic protections--paid 
        transportation, free housing, positive recruitment, 3/4 
        guarantee--should be the same.
          2) Since the Migrant and Seasonal Agricultural Worker 
        Protection Act, 29 U.S.C.  1801 et seq., applies to forestry 
        work, and since that act requires that labor recruiters 
        disclose in writing the terms and conditions of employment 
        being offered, at least in theory, the pre-application 
        recruitment of U.S. workers by a contractor applying for H2B 
        certification should be accomplished using a statement fully 
        disclosing contract terms being offered. It should be no great 
        burden then to require that an H2B application for 
        reforestation workers include the disclosure statement used to 
        try to recruit U.S. workers. Since the use of such a disclosure 
        statement would create an enforceable working arrangement with 
        workers who received the disclosure, this would reduce the 
        incentive to apply for H2B workers at a time that the 
        contractor is unsure of whether there is work for them.
          3) The Department of Labor should not allow contractors to 
        link together far-flung job opportunities in an itinerary 
        application, thereby freezing out local workers who are willing 
        to work in their local vicinity, but don't want to travel 
        thousands of miles away from their home. If such applications 
        are permitted, at the very least, local recruitment in each 
        area of employment should be required, not just where the work 
        begins, with U.S. workers being eligible to work on those parts 
        of the contract that are convenient to them in preference over 
        H2B workers.
          4) Forestry agencies should require that contractors disclose 
        at the time of bid whether they intend to apply to import 
        temporary H2B workers to perform the contract. Since U.S. 
        workers are supposed to have preferred access to this work, 
        bidders who are not planning to use H2B workers should be given 
        preference in bid awards over contractors who plan to do the 
        work using H2B workers.
          5) Contract bids should be designed by the forestry agencies, 
        to the extent possible, to create longer term, local job 
        opportunities, rather than short term spot work.

    Question 2. Similarly, the Department of Labor makes a 
determination of the prevailing wage in a given area. However, in many 
instances, that wage reportedly falls short of what is fair or 
adequate. Do you have any insight into how the Department of Labor's 
process for determining a prevailing wage falls short? Do you have any 
suggestions on how it can be improved?
    Answer. Roughly a year or so ago, the Department of Labor 
administratively changed its method of determining prevailing wage for 
H2B applications in ways that we do not fully understand. The new 
methodology, anecdotally, seems to produce a lower prevailing wage 
rate. A group of attorneys who work with H2B issues are currently 
looking at this methodology and will forward insights and 
recommendations that may be developed in this process.
    Question 3. The Forest Service contract clauses issued on January 
4, 2006, require contractors to train their employees in the safe 
operation and use of equipment, but it doesn't appear that there are 
any standards or certifications to ensure that all the workers are 
appropriately trained. Should the agencies develop a uniform training 
and certification program so the Forest Service can verify that 
appropriate training has been provided and so the contractors know what 
is expected of them? I note that the Forest Service already does this 
in the context of wildland fire fighting and that British Columbia 
reportedly has instituted training and certification of its 
reforestation crews.
    Answer. This is very hazardous work, and reports of injuries, 
especially from chain saws, are frequent. I am unfamiliar with the 
British Columbia program, but the training for fire crews, while 
sometimes uneven, clearly has saved lives. Requiring crews to be safety 
certified would also help limit contract awards to less professional 
operations. For these reasons, I tend to favor this suggestion.
    However, the most serious injuries to reforestation workers are 
caused by vehicle accidents. A very simple, less costly, regulatory 
step would be for the Department of Labor, using its regulatory powers 
under the Migrant and Seasonal Agricultural Worker Protection Act, to 
require that vehicles used to transport workers have operational 
seatbelts.
    Finally, I would like to take the liberty to reemphasize the 
importance of some of the other recommendations I made at the hearing. 
Unfortunately, this is not the first time that this issue has been 
looked at by the Congress, and I was struck by how similar the agency 
responses were to prior efforts at reform. I am submitting, by surface 
mail, copies of some of the correspondence and testimony from earlier 
efforts.* It is discouraging to realize how cyclical both the 
recommendations and agency responses have been.
---------------------------------------------------------------------------
    * The correspondence has been retained in committee files.
---------------------------------------------------------------------------
    From this experience, it seems to me three principles for effective 
reform can be extracted: 1) efforts must be interagency, and buck-
passing is an unacceptable response; 2) efforts must be sustained, and 
probably supported by structural mechanism that keep the issue from 
sliding back to the back burner when public intensity dies down, and 3) 
workers must have access to advocacy on their behalf that is able to 
assert their interests independent of other agency imperatives. These 
observations lead to our recommendations that 1) an inter-agency 
working group be created that is charged with working out plans of 
action and regularly reporting back progress to Congress, and 2) that 
H2B workers be made eligible for representation by Legal Services 
Corporation-funded legal services programs.

                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

     Statement of The Independent Petroleum Association of America

    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 85 of the 
nation's natural gas and 60 percent of domestically produced oil. IPAA 
is concerned that the Administration's budget request for the 
Department of Energy's oil and natural gas technologies programs for 
Fiscal Year 2007 (FY2007) will result in the loss of key technology 
developments 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, eighty-five 
percent of which historically has 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) 
is instrumental in maintaining a viable, robust domestic producing 
sector.
    In addition to ``zeroing out'' these R&D programs, the 
Administration has requested zero funding for R&D programs related to 
methane hydrates development and technology development associated with 
the non-conventional onshore/ultra-deepwater/small producer program 
authorized in the Energy Policy Act of 2005.
    Full, consistent funding for development of these programs at DOE 
is essential to meet the President's objectives to reduce on dependence 
foreign sources of energy. In the past, these programs 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, 
Department of Energy 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, with a much smaller environmental footprint, yet in a more 
environmentally sensitive manner. These benefits were well articulated 
by the Department of Energy in its October 17, 2005 statement when it 
funded several key projects:

               DOE Selects Projects for Gas/Oil Research

       GOAL IS TO BOOST RECOVERY OF UNCONVENTIONAL RESOURCES AND 
                     MINIMIZE ENVIRONMENTAL IMPACTS

    WASHINGTON, D.C.--Secretary of Energy Samuel W. Bodman today 
announced that the Department of Energy (DOE) will provide $10.7 
million to fund 13 research and development projects that focus on 
recovering large, unconventional gas and oil resources and improving 
the environmental aspects of drilling for gas and oil. The projects 
have a total value of $16.3 million, including $5.6 million in co-
funding from industry and academic partners.
    ``This Administration continues to seek out and develop new energy 
options to support our growing economy,'' Secretary Bodman said. ``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.''
    Most of the research projects focus on boosting recovery of 
unconventional natural gas, which can be found in coal seams, low-
permeability or ``tight" sandstones, and ultra-deep natural gas 
resources found more than 15,000 feet underground. Combined, those 
sources of unconventional natural gas are estimated to be approximately 
700 trillion cubic feet (Tcf), compared to an industry estimate of 190 
Tcf in conventional natural gas reserves.
    Presently, unconventional 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. Six of the projects will improve the efficiency of 
drilling, appraising, and production of low-permeability formations by 
collecting, analyzing, and publicizing a variety of critical data. This 
will enable operators to generate less waste and extract more gas from 
fewer wells.
    The Energy Department is also researching the difficult 
environments encountered while drilling ultra-deep gas wells--another 
untapped resource for additional natural gas. Three projects will focus 
on ``smart'' drilling systems that will withstand the extreme 
temperatures, pressures, and corrosive conditions of deep reservoirs. 
Two other projects will perfect drilling techniques to lessen 
environmental impact and lower costs.
    The 11 cost-shared projects targeting natural gas supply are 
described below:

   University of Kansas Center for Research Inc. (Lawrence, 
        Kan.) Researchers will evaluate and publish data concerning 
        reservoir and rock formation properties. The data will assist 
        operators in making efficient drilling decisions regarding 
        tight gas sandstones (TGS). This study will analyze five Rocky 
        Mountain basins that represent the biggest part of the total 
        Rocky Mountain TGS resource, which in turn is 70 percent of the 
        Nation's TGS resource base. (DOE share: $411,030; project 
        duration: 24 months)
   New Mexico Institute of Mining and Technology (Socorro, 
        N.M.) Researchers will collect, integrate, and analyze a 
        variety of well and reservoir-rock physics data related to two 
        tight gas reservoirs, the Mesa Verde and Dakota formations in 
        the San Juan Basin. (DOE share: $516,000; 36 months)
   West Virginia University Research Corp. (Morgantown, W.Va.) 
        Researchers will simplify, accelerate, and digitize the data 
        collection process for independent producers interested in 
        developing tight gas reservoirs in the Appalachian Basin. Data 
        will cover five significant areas in the basin (DOE share: 
        $566,729; 36 months)
   Texas A&M University (College Station, Texas) Researchers 
        will develop new methods for creating extensive, conductive 
        hydraulic fractures in unconventional tight gas reservoirs. 
        After assessing a wide range fracture treatments conducted in 
        the field, researchers will develop design models for 
        implementing optimal fracture treatments. (DOE share: $1.2 
        million; 36 months)
   University of Texas (Austin, Texas) Researchers will enhance 
        3-D hydraulic fracture models to help operators design and 
        optimize energized fracture treatments in a systematic way. 
        They will test the enhanced model by designing and executing 
        energized hydraulic fracture treatments in tight gas sands. 
        (DOE share: $985,796; 36 months)
   BC Technologies Ltd. (Laramie, Wyo.) Researchers intend to 
        economically remove impurities from coalbed natural gas (CBNG) 
        produced water to make it suitable for crop irrigation and 
        livestock and wildlife watering. The projects intend to treat 
        CBNG produced water in Wyoming's Greater Green River Basin at 
        the wellhead with an injectable purifier. (DOE share: $585,444; 
        24 months)
   TerraTek Inc. (Salt Lake City, Utah) Researchers intend to 
        slash the cost of deep drilling, defined as drilling from 
        15,000 to 30,000 feet, and improve drilling penetration rates 
        by developing an ultra-deep drilling simulator to test drilling 
        cutters and muds at 30,000 psi and 250 C. The simulator will 
        allow new environmentally benign fluids to be designed and 
        tested. (DOE share: $1.4 million; 18 months)
   Oklahoma State University (Stillwater, Okla.) Researchers 
        will design and build a downhole microcomputer system with 
        peripherals that can operate at 275 C. This will allow 
        operators to take critical downhole measurements and steer the 
        drill bit, reducing the risk of dry holes and well blowouts. 
        (DOE share: $578,391;18 months).
   Dexter Magnetic Technologies Inc. (Rockwall, Texas) 
        Researchers will develop, test, and commercialize a downhole 
        power source capable of operating at temperatures greater than 
        215 C, and will also develop an advanced turbine generator 
        that uses hydraulic power from the drilling fluid as energy to 
        turn a generator. (DOE share: $490,646; 36 months)
   Noble Wellbore Technologies Inc. (Sugar Land, Texas) 
        Researchers will develop a rotary steerable system that costs 
        less than half of current models. Steerable systems, while more 
        expensive than conventional drilling systems, enable the 
        operator to guide the drillbit to preprogrammed targets 
        automatically. This allows higher penetration rates, greater 
        lengths for horizontal-well sections, and easier well 
        completions. (DOE share: $849,670; 24 months)
   Texas A&M University (College Station, Texas) Researchers 
        will incorporate current and emerging technologies into a 
        clean, environmentally-friendly drilling system that can be 
        used to find and produce natural gas in the lower 48 states. 
        The project also includes establishing a joint venture of 
        industry, academic, and government partners to support 
        development of such a zero-impact drilling system. (DOE share: 
        $1.4 million; 36 months)

          Two additional projects will significantly improve 
        CO2 enhanced oil recovery technology in novel ways:

   Mississippi State University (Starkville, Miss.) Researchers 
        intend to improve oil recovery by up to 100 percent by using 
        environmentally friendly nutrients to stimulate the growth of 
        microorganisms so that water and CO2 are diverted to 
        previously unswept reservoir zones. (DOE share: $900,000; 36 
        months)
   Texas A&M University (College Station, Texas) Researchers 
        plan to develop efficient tools and a systematic work flow for 
        improved oil reservoir characterization and modeling. The 
        technology will be demonstrated in a CO2 flood in 
        the Permian Basin of West Texas. (DOE share: $785,846; 36 
        months).

    Similarly, potential development of methane hydrates and non-
conventional onshore/ultra-deepwater represents huge potential for 
supplying America's growing natural gas needs. In the case of methane 
hydrates, the U.S. Geological Survey (USGS) estimates the U.S. to have 
about 200,000 trillion cubic feet of methane hydrate, while the ultra-
deep area alone will tap 1900 trillion cubic feet of technically 
recoverable reserves--enough to meet 60 years of demand at current 
rates of consumption.
    Also of huge importance is the role that DOE's programs play in the 
training and development of qualified people for the oil and gas 
sector, the lack of 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 is 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, along with renewables, 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 vitally 
important programs.
                                 ______
                                 
      Statement of Pete Rose, President, American Association of 
                          Petroleum Geologists

    To the Chair and Members of the Committee: Thank you for this 
opportunity for the American Association of Petroleum Geologists (AAPG) 
to provide its perspective on the fiscal year 2007 budget request for 
oil and gas research and development (R&D) programs within the 
Committee's jurisdiction. The Administration's budget 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 these DOE Fossil Energy oil and 
gas technology programs as a matter of national policy.
    In addition the budget language also proposes to repeal the Ultra-
Deepwater and Unconventional Natural Gas and Other Petroleum Research 
Fund of the recently signed Energy Policy Act of 2005. AAPG is deeply 
concerned about establishing the precedence by efforts to dismantle, 
piecemeal, provisions of that landmark legislation--the first update of 
U.S. energy policy in more than a decade.
    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 members understand that fossil fuels will continue 
to be a mainstay of the world's energy economy and will provide many of 
the raw materials that allow us to function in our modern world.
    AAPG, an international geoscience organization, is the world's 
largest professional geological society representing over 30,000 
members. The purpose of AAPG is to advance the science of geology, 
foster scientific research, promote technology and advance the well-
being of its members. With members in 116 countries, AAPG serves as a 
voice for the shared interests of petroleum geologists and 
geophysicists in our profession worldwide. Included among its members 
are numerous CEOs, managers, directors, independent/consulting 
geoscientists, educators, researchers and students. AAPG strives to 
increase public awareness of the crucial role that geosciences, and 
particularly petroleum geology play in energy security and our society.

               DOE FOSSIL ENERGY RESEARCH AND DEVELOPMENT

    AAPG strongly feels the Department of Energy's (DOE) Fossil Energy 
research and development (R&D) budget funding for Oil Technology R&D 
and Gas Technology R&D in the Office of Fossil Energy and the Ultra-
Deepwater and Unconventional Natural Gas and Other Petroleum Research 
Fund of the recently signed Energy Policy Act of 2005 are vital for a 
viable domestic industry in the near-mid-and long-term.
    Historically, members of Congress have continually emphasized the 
need for a comprehensive energy policy containing a strong R&D 
component. AAPG recognizes the importance of maintaining a strong 
domestic petroleum industry. Our members support and emphasize the need 
for continuing efforts in R&D in order to sustain the standard of 
living U.S. citizens have earned and expect. 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.
    The expanding global economies, including the United States, China 
and India, place increasing demand on available global energy 
production capacity. Now, perhaps more than any time in the history of 
the industry, accelerating technology development and the related 
opportunities for expanding the base of trained geoscientists available 
to the industry is critically important. It is also important to 
recognize the leadership role of the United States in technology 
development and deployment on the global economy. Commercial export of 
those technology innovations provides jobs and business opportunities 
for domestic companies servicing the international oil and gas 
community.
    While our dependence on crude oil and natural gas has changed 
little since the ``energy crisis'' of 1973, public and private funding 
of R&D for these commodities has declined significantly. Many of the 
major companies and some companies in the related service industry, 
that once maintained strong programs in R&D, have disappeared through 
mergers and acquisitions. Others have replaced or retooled some of 
those R&D activities with technical-service functions, primarily in 
support of their international activities. In addition, federal funding 
for R&D programs has declined significantly. While some states, private 
foundations, smaller companies, and independents are continuing to 
support R&D in oil and gas, the amount is woefully inadequate to meet 
the needs of the domestic industry. Thus, absent adequate public 
support for these endeavors, the continuing flow of new discoveries in 
the geosciences and new technological breakthroughs that will be needed 
to continue to support a viable domestic industry in the 21st century 
will not occur.
    Our nation is the world's largest consumer and net importer of 
energy. According to the Energy Information Administration, during the 
first nine months of 2005, the U.S. consumed 20.6 million barrels of 
oil per day, with as much as 12.9 million barrels supplied by imports 
of crude and products. Our national energy and economic security 
depends on a vibrant domestic oil and gas industry. Independent 
producers drill 90 percent of domestic oil and natural gas wells, 
produce approximately 85 percent of domestic natural gas and produce 
about 65 percent of domestic oil. Domestic production creates jobs, 
produces tax revenue, provides royalty income to hundreds of thousands 
of mineral owners, and contributes to economic development in producing 
areas (mostly rural) of the nation.
    Federal funding of R&D increases the potential for incremental 
domestic oil and gas supply, and it is not a subsidy. Almost 85 percent 
of the jointly-funded R&D and technology transfer programs carried out 
by universities, state agencies and independent companies are focused 
on the development of new reserves by domestic independent producers. 
R&D programs, such as those designed for development of unconventional 
tight sandstone and shale reservoirs, develop and demonstrate new and 
innovative technologies. These technologies are used to extend the life 
of existing oil and gas reservoirs as well as to explore and develop 
reserves such as the U.S. supply of unconventional gas, which was 
largely driven by focused federal spending and tax incentive programs. 
As technology evolves, today's unconventional oil and gas reserves are 
tomorrow's conventional reserves. It is more important now than ever 
that the U.S. leverage its investment to find new sources of oil and 
gas-the unconventional reserves of tomorrow.
    Today, revolutionary oil and gas technology is seldom available in 
the market at any price. Irrespective of the price of oil and gas, 
procurement of new technologies will be a continuing challenge for 
domestic U.S. oil and gas producers. Private sector R&D is typically 
conducted by major international companies with a strong focus on 
international projects in super giant offshore fields with limited 
application to domestic onshore production. Most programs jointly 
funded by DOE result in the transfer of technologies to a much wider 
range of problems and thus are more cost effective and useful for 
increasing the supply right here in the U.S.
    Further, federal R&D funds form a crucial element of university 
programs that foster undergraduate and graduate research initiatives 
which replenish the corps of future petroleum geologists, engineers and 
geophysicists. Enrollment in the geosciences departments across the 
U.S. has decreased by 70 percent in the past 20 years, while 
international oilfield education has increased significantly. 
Accordingly, our universities will graduate even fewer technical 
professionals to maintain an already strained national energy sector. 
As the age demographics of trained and experienced petroleum workforce 
continues to edge toward retirement age, DOE's research and development 
programs serve the additional purpose of helping to attract new 
students and employees into this vital industry. More than 60% of AAPG 
members are age 55 or older and increases in graduation of 
professionals from our universities is critical to national security. 
DOE's past R&D programs have helped develop broad advances in many 
oilfield technologies, such as 3-D and 4-D multi-component seismology. 
New completion and production techniques provide the opportunity to 
enhance environmental compliance, thus minimizing industry impact to 
our environment. Many of these technologies were funded under DOE's 
Reservoir Class Program in the 1990's and are now significantly paying 
dividends. DOE's oil and gas R&D programs have enabled producers to 
reduce costs, improve operating efficiency and enhance environmental 
compliance, while increasing ultimate recovery and adding new reserves.
    The full recognition of the vital importance of R&D programs like 
those sponsored by DOE's Office of Fossil Energy is of paramount 
importance to the future of our country and our society. No task before 
our nation is more critical than energy security and this concept is 
not new--it is a traditional ideal of democracy. But it is time that we 
moved toward the fulfillment of this ideal with more vigor and less 
delay. For energy security is both a foundation and unifying force of 
our democratic way of life--it is the mainspring of our economic 
progress. In short, R&D programs are at the same time the most 
profitable investment society can make and the richest return that it 
can confer. Today, more than at any other time in our history, we need 
to develop our oil and gas resources to the fullest. Without federal 
support for R&D programs, this achievement becomes more difficult.
    Thank you for the opportunity to present this testimony to the 
Subcommittee.

                                    

      
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