[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                      ENERGY AND WATER DEVELOPMENT
                        APPROPRIATIONS FOR 2009

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS
                             SECOND SESSION
                                ________
              SUBCOMMITTEE ON ENERGY AND WATER DEVELOPMENT
                  PETER J. VISCLOSKY, Indiana, Chairman
 CHET EDWARDS, Texas                DAVID HOBSON, Ohio
 ED PASTOR, Arizona                 ZACH WAMP, Tennessee
 MARION BERRY, Arkansas             JO ANN EMERSON, Missouri
 CHAKA FATTAH, Pennsylvania         MICHAEL K. SIMPSON, Idaho
 STEVE ISRAEL, New York             DENNIS R. REHBERG, Montana
 TIM RYAN, Ohio                     KEN CALVERT, California   
 JOSE E. SERRANO, New York          
 JOHN W. OLVER, Massachusetts       
                                    

 NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full 
Committee, and Mr. Lewis, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
             Dixon Butler, Terry Tyborowski, Taunja Berquam,
             Robert Sherman, and Lori Maes, Staff Assistants

                                ________

                                 PART 7
                          DEPARTMENT OF ENERGY
                                                                   Page
 Overview Hearing--Vehicle Technology and Gas Prices..............    1
 Bureau of Reclamation............................................   97

                                   S

                                ________

         Printed for the use of the Committee on Appropriations
      PART 7--ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR 2009
                                                                      ?

                                                                      ?

                      ENERGY AND WATER DEVELOPMENT

                        APPROPRIATIONS FOR 2009

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS
                             SECOND SESSION
                                ________
              SUBCOMMITTEE ON ENERGY AND WATER DEVELOPMENT
                  PETER J. VISCLOSKY, Indiana, Chairman
 CHET EDWARDS, Texas                DAVID HOBSON, Ohio
 ED PASTOR, Arizona                 ZACH WAMP, Tennessee
 MARION BERRY, Arkansas             JO ANN EMERSON, Missouri
 CHAKA FATTAH, Pennsylvania         MICHAEL K. SIMPSON, Idaho
 STEVE ISRAEL, New York             DENNIS R. REHBERG, Montana
 TIM RYAN, Ohio                     KEN CALVERT, California   
 JOSE E. SERRANO, New York          
 JOHN W. OLVER, Massachusetts       

 NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full 
Committee, and Mr. Lewis, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
             Dixon Butler, Terry Tyborowski, Taunja Berquam,
             Robert Sherman, and Lori Maes, Staff Assistants

                                ________

                                 PART 7
                          DEPARTMENT OF ENERGY
                                                                   Page
 Overview Hearing--Vehicle Technology and Gas Prices..............    1
 Bureau of Reclamation............................................   97

                                   S

                                ________

         Printed for the use of the Committee on Appropriations
                                ________
                     U.S. GOVERNMENT PRINTING OFFICE
 44-138                     WASHINGTON : 2008

                                  COMMITTEE ON APPROPRIATIONS

                   DAVID R. OBEY, Wisconsin, Chairman

 JOHN P. MURTHA, Pennsylvania       JERRY LEWIS, California
 NORMAN D. DICKS, Washington        C. W. BILL YOUNG, Florida
 ALAN B. MOLLOHAN, West Virginia    RALPH REGULA, Ohio
 MARCY KAPTUR, Ohio                 HAROLD ROGERS, Kentucky
 PETER J. VISCLOSKY, Indiana        FRANK R. WOLF, Virginia
 NITA M. LOWEY, New York            JAMES T. WALSH, New York
 JOSE E. SERRANO, New York          DAVID L. HOBSON, Ohio
 ROSA L. DeLAURO, Connecticut       JOE KNOLLENBERG, Michigan
 JAMES P. MORAN, Virginia           JACK KINGSTON, Georgia
 JOHN W. OLVER, Massachusetts       RODNEY P. FRELINGHUYSEN, New Jersey
 ED PASTOR, Arizona                 TODD TIAHRT, Kansas
 DAVID E. PRICE, North Carolina     ZACH WAMP, Tennessee
 CHET EDWARDS, Texas                TOM LATHAM, Iowa
 ROBERT E. ``BUD'' CRAMER, Jr.,     ROBERT B. ADERHOLT, Alabama
Alabama                             JO ANN EMERSON, Missouri
 PATRICK J. KENNEDY, Rhode Island   KAY GRANGER, Texas
 MAURICE D. HINCHEY, New York       JOHN E. PETERSON, Pennsylvania
 LUCILLE ROYBAL-ALLARD, California  VIRGIL H. GOODE, Jr., Virginia
 SAM FARR, California               RAY LaHOOD, Illinois
 JESSE L. JACKSON, Jr., Illinois    DAVE WELDON, Florida
 CAROLYN C. KILPATRICK, Michigan    MICHAEL K. SIMPSON, Idaho
 ALLEN BOYD, Florida                JOHN ABNEY CULBERSON, Texas
 CHAKA FATTAH, Pennsylvania         MARK STEVEN KIRK, Illinois
 STEVEN R. ROTHMAN, New Jersey      ANDER CRENSHAW, Florida
 SANFORD D. BISHOP, Jr., Georgia    DENNIS R. REHBERG, Montana
 MARION BERRY, Arkansas             JOHN R. CARTER, Texas
 BARBARA LEE, California            RODNEY ALEXANDER, Louisiana
 TOM UDALL, New Mexico              KEN CALVERT, California
 ADAM SCHIFF, California            JO BONNER, Alabama                 
 MICHAEL HONDA, California          
 BETTY McCOLLUM, Minnesota          
 STEVE ISRAEL, New York             
 TIM RYAN, Ohio                     
 C.A. ``DUTCH'' RUPPERSBERGER,      
Maryland                            
 BEN CHANDLER, Kentucky             
 DEBBIE WASSERMAN SCHULTZ, Florida  
 CIRO RODRIGUEZ, Texas              

                  Rob Nabors, Clerk and Staff Director

                                  (ii)


 ENERGY AND WATER DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR 
                                  2009

                              ----------                              

                                       Thursday, February 14, 2008.

          OVERVIEW HEARING--VEHICLE TECHNOLOGY AND GAS PRICES

                               WITNESSES

DAVID L. GREENE, CORPORATE FELLOW, OAK RIDGE NATIONAL LABORATORY, 
    CENTER FOR TRANSPORTATION ANALYSIS
BOB DINNEEN, PRESIDENT AND CEO, RENEWABLE FUELS ASSOCIATION
MARY BETH STANEK, DIRECTOR OF ENVIRONMENT AND ENERGY POLICY AND 
    COMMERCIALIZATION, GENERAL MOTORS CORPORATION
DON HILLEBRAND, DIRECTOR OF CENTER FOR TRANSPORTATION RESEARCH, ARGONNE 
    NATIONAL LABORATORY
LYNDA L. ZIEGLER, SENIOR VICE PRESIDENT OF CUSTOMER SERVICE, SOUTHERN 
    CALIFORNIA EDISON
TOM STRICKER, DIRECTOR, TECHNICAL AND REGULATORY AFFAIRS, TOYOTA MOTOR 
    NORTH AMERICA

                 Chairman Visclosky's Opening Statement

    Mr. Visclosky. Bringing the hearing to order. Sorry about 
our tardy beginning, but there was at least a chance we were 
going to have a new vote, and we are not. So we should have at 
least an hour uninterrupted.
    Before I do begin my opening statement, I want to welcome 
back home Mr. Rehberg to the subcommittee. And, Mr. Calvert, 
welcome to the subcommittee. I think you are going to enjoy it, 
and we will appreciate having your contribution as we proceed.
    As we begin today's hearings, I, first of all, do want to 
thank Terry Tyborowski for all of her extraordinary effort. I 
think all of you have had some extended dealings and 
conversations with Terry for being the lead staff in today's 
hearing. Time was short, our needs great, and all of us do 
expect a very informative and productive hearing.
    The Subcommittee on Energy and Water Development meets 
today to hear testimony on an energy issue, one that is 
impacting the wallets of every American, the rising price of 
gasoline. In January 2003, the average retail price of a gallon 
of gasoline in the United States was $1.50, roughly equal to 
the real inflation-adjusted price during much of the preceding 
half century. Since then, the price of gasoline has risen 
sharply. It was last below $2 in February 2005, and for much of 
2007, prices topped $3 a gallon. Dr. Greene, one of our 
witnesses today, includes in his testimony that households 
today are now spending $3,000 instead of $1,500 per year on 
fuel, a significant hit to the consumer's pocketbook.
    The 100 percent increase in real U.S. Gasoline price since 
2003 and a growing consciousness of global warming of 
CO2 emissions has important implications for 
government policies that would reduce gasoline consumption. 
While there is no magic bullet in the government to immediately 
drop the price of gasoline, ongoing Federal research in vehicle 
technologies is starting to have a payoff through market 
introduction of automobiles utilizing technologies that will 
displace some portion of gasoline for power. Higher prices for 
gasoline have increased the market demand for vehicles that 
utilize biofuels and battery storage technology.
    The purpose of the hearing is to explore what the best 
options are for reducing oil consumption and decreasing 
CO2 emissions. What are the tradeoffs between these 
goals? If we are successful, can the technology involved drive 
down price, or can we expect the cost of a mile traveled in our 
private vehicle to continue to rise?
    Before introducing the panel, I would recognize my good 
friend, Ranking Member Mr. Hobson, for his opening remarks.

                     Mr. Hobson's Opening Statement

    Mr. Hobson. Thank you, Mr. Chairman. And I will try to keep 
my comments short today. As I drove in this morning, I put some 
gasoline in my car. It was $2.95 in Alexandria, so I became 
acutely aware of the hearing today.
    I wanted to thank the witnesses today for accommodating the 
schedule change for today's hearing. As you know, we just 
attended a memorial service in the Capitol for our dear friend 
Tom Lantos. He was a good friend of all of us. I have traveled 
with Tom and his wife Annette, and I hope you understand the 
need to make that change.
    I really want to commend the Chairman for holding this 
hearing before we start our series of hearings on the agency 
budget request for fiscal year 2009. We all hear from the 
constituents about the pain they feel at the gas pump, and 
unfortunately we have to tell them that the energy and water 
appropriations bill has very little, if any, impact on gas 
prices, at least in the near term.
    The Department of Energy is primarily a research agency, 
and what we are talking about today are the new vehicle 
technologies that are on the horizon. I hope the horizon is 
closer than I think it is. Those alternative technologies may 
not drive down the cost of gasoline, but they are going to 
provide customers with more transportation choices and may 
ultimately reduce the cost that consumers have to pay for 
transportation.
    This hearing will also give us a useful perspective on what 
private industry is already doing pursuing--for vehicle 
technologies to know whether or not an additional Federal 
investment is necessary.
    Another thing I wanted to mention to you, that is not in my 
prepared remarks, is my wife was taking a golf lesson this week 
from a guy, a Brit. He said something that I had never heard 
before and I was astounded by. You know, the European prices 
are a lot higher than ours, but he said that the automobiles--
the same foreign automobile that might be bought here--has a 
higher gas mileage rating in Europe than in the United States. 
I don't know whether that is because we make manufacturers and 
dealers put extra things on them. I don't want to single out 
any model. Well, I will. I guess I will have to today. A BMW. 
Let us say a 325 or whatever BMW, or the one that my staffer 
has, which is more expensive than mine. Something is wrong. But 
that same car in Europe will get a better gas mileage economy 
than it will here. I don't understand how that can happen.
    So I am going to stop there, but I did want to thank the 
Chairman for doing this, and welcome all the Members to the 
committee. This is one of the finest committees to be on in 
this Congress whether in the Majority or the Minority. I liked 
it better in the Majority, but this is still a committee that 
is very bipartisan and will do its work in harmony.
    Mr. Chairman, I yield back.
    Mr. Visclosky. Mr. Hobson, thank you very much.
    And I would like now to introduce our panel. First, Dr. 
David L. Greene is a corporate fellow at Oak Ridge National 
Laboratory, the Center for Transportation Analysis, and will 
provide an overview of gasoline prices and CO2 
emissions and the impact that technologies such as biofuels and 
electric-powered vehicles can have in displacing gasoline.
    Mr. Bob Dinneen is president and CEO of the Renewable Fuels 
Association and will discuss the displacement of gasoline 
through the use of biofuels and the impact to gasoline prices 
and CO2 emissions.
    Our car manufacturers typically have not been involved in 
fuel supply, yet General Motors has recently announced the 
purchase of a company specializing in cellulosic ethanol 
production. Dr. Mary Beth Stanek, Director, Environment and 
Energy Policy and Commercialization for General Motors, will 
discuss this recent acquisition, GM's vision for flex-fueled 
vehicles and other efforts to boost the availability of E85.
    Advocates for plug-in hybrid vehicles claim that 100 miles 
per gallon would be reasonable; however, current nickel-metal 
hydride batteries for conventional hybrids are not optimal for 
this application. Dr. Don Hillebrand, who appears to be a very 
fine gentleman, however, had a telling omission on his resume 
that was submitted to the committee. I noted that he was from 
Detroit, Michigan, but he failed to put the universities he 
attended, perhaps knowing that I went to Notre Dame. But I 
would for the record note that Dr. Hillebrand is a Michigan 
grad, among others. He is Director--and, of course, Mr. Hobson 
is an Ohio State grad, and we will leave it at that--the 
Director for the Center for Transportation Research at Argonne 
National Laboratory and will present the status of battery 
vehicle technology, what the limitations are, the outlook for 
the future for plug-in hybrid vehicles, and the impact plug-in 
hybrid electric vehicles can have on gas prices and 
CO2 emissions.
    A key component to the success of plug-in hybrid technology 
for vehicles is the role utilities play in providing the power. 
Lynda L. Ziegler, Senior Vice President, Customer Service, for 
Southern California Edison, will present the efforts Southern 
California Edison is making to encourage the use of plug-in 
hybrids and other efforts in the transportation sector to 
reduce CO2 emissions.
    The most popular hybrid vehicle on the road today is the 
Toyota Prius, and Toyota has announced it will build a plug-in 
hybrid in 2010. Mr. Tom Stricker, director of technical and 
regulatory affairs for Toyota Motors North America, will 
discuss Toyota's strategy for hybrid vehicles and the battery 
technology necessary to carry the vision forward.
    If we could begin--and I would ask for a summary of your 
remarks. Your full written testimony will be entered into the 
record. If we could proceed in the order of introduction, that 
would be terrific. Dr. Greene.

                     Mr. Greene's Opening Statement

    Mr. Greene. Thank you. Good afternoon, Mr. Chairman, and 
distinguished committee members, and our guests.
    As you pointed out, since January 2003, the price of 
gasoline in the United States has doubled, and the principal 
driving force behind increasing gasoline prices has been the 
price of petroleum on world oil markets. The cost of the oil in 
a gallon of gasoline increased from 65 cents in 1998 to $2 
today. The average American household is now spending $3,000 
instead of $1,500 per year on fuel; $900 of that is a transfer 
of wealth from American consumers to oil-exporting countries. I 
estimate that in 2007 alone the economic costs of oil 
dependence to the U.S. exceeded $350 billion, and that 
cumulative costs over the past 5 years have exceeded $1 
trillion.
    Following the oil price shocks of 1973-1974 and 1979-1980, 
the combination of worldwide market responses to high oil 
prices, strong policy actions like fuel economy standards, and 
technological advances in energy efficiency and energy supply 
brought down oil and gasoline prices. From 1977 levels, U.S. 
net imports of petroleum were cut in half by 1985.
    Unfortunately after oil prices collapsed in 1986, we 
stopped trying to control our oil dependence. With petroleum 
cheap and plentiful, it was easy to convince ourselves that the 
problem had been solved once and for all, or that there had 
never really been a problem.
    Now, several things are different today. The most important 
difference is the urgency of addressing climate change. 
Stabilizing atmospheric concentrations of greenhouse gases at 
levels that may avoid dangerous climate change will require 
deep, economywide reductions in greenhouse gas emissions on the 
order of 60 to 80 percent by 2050.
    Today our oil dependence problem is even more about 
transportation than it was three decades ago. Since 1973, 
transportation petroleum use has increased by more than 50 
percent, while nontransportation oil use has decreased by more 
than 40 percent. Today oil markets are less sensitive to price 
increases than they were in the 1970s. The doubling of fuel 
prices we have just experienced had only half as much of an 
impact on vehicle travel as the doubling that occurred during 
oil crises of the 1970s and 1980s.
    Today it appears to be much more difficult for oil 
producers outside of OPEC to increase the supply of oil. The 
peaking of U.S. crude oil production in 1970, up to which point 
we were the world's largest producer of crude oil, was a key 
enabler of the ensuing oil price shocks. The International 
Energy Agency and ExxonMobil Corporation have both projected 
that world oil production outside of OPEC will reach a plateau 
around 2010.
    The need for more energy-efficient technology is also 
greater today. Proven, cost-efficient fuel economy technology 
for conventional gasoline vehicles allows only a 40 to 50 
percent increase in miles per gallon by 2020--this is reflected 
in the Energy Independence and Security Act--as opposed to the 
almost 100 percent increase required of new passenger cars in 
the Energy Policy and Conservation Act of 1975.
    Advanced technologies will be needed to continue improving 
vehicle fuel economy. Researchers at MIT's Sloan Automotive 
Laboratory estimate that fuel economy increases of 80 to 85 
percent for internal combustion engine vehicles may be 
obtainable with advanced technologies by 2030, and that future 
hybrid vehicles could obtain almost three times the miles per 
gallon of today's conventional vehicles. But even that will not 
be enough.
    If you can see the graphs here, this is an analysis I have 
done of the impact of fuel economy improvements on greenhouse 
gas emissions. That is the red line, fuel and greenhouse gas 
emissions. This is a base case that does not include the fuel 
economy improvements of the EISA Act.
    The next one shows that with those increases to 35 miles 
per gallon in 2020, we can almost hold fuel consumption and 
greenhouse gas emissions constant through 2025, but then they 
begin to increase afterwards. If we were able to double light-
duty vehicle fuel economy by 2030, as the MIT studies suggest 
may be possible, we can hold those greenhouse gas emissions and 
fuel use constant through 2050. Then going beyond that and 
tripling fuel economy by 2050 only achieves a 15 percent 
reduction from current levels. So to reduce carbon emissions by 
60 to 80 percent by 2050 will require alternative low-carbon 
sources of energy for transportation vehicles.
    Biofuels can make an important contribution. It has become 
clear, however, that without breakthroughs in methods of 
producing biofuels, the levels of production envisioned by 
current policy will have serious impacts on food prices and may 
even increase net greenhouse gas emissions. However, this is 
not the time to give up on our biofuels goals; rather, this is 
the time to apply our best science and best policy analysis to 
ensure that we can use our biomass resources efficiently and 
with maximum environmental benefit.
    Avoiding dangerous climate change will ultimately require 
integrating electricity and/or hydrogen into the transportation 
sector's energy mix in combination with policies to decarbonize 
electricity generation and hydrogen production.
    This graph shows another MIT study showing the total 
emissions, life cycle emissions here, tank-to-wheel and, in the 
blue, well-to-tank--that is the upstream emissions--for a 
conventional baseline vehicle; increasing efficiency of 
conventional vehicles, internal combustion engine vehicles and 
advanced hybrid electric vehicles with almost three times the 
fuel economy; and then plug-in hybrid electric vehicles. And 
you can see, as the all-electric range of these vehicles 
increases, most of the emissions become upstream emissions.
    Now, this study assumed that electricity in 2030 would be 
produced in much the same way it is today, but with any kind of 
carbon-constraining policy, the emissions in 2030 will, in 
fact, be much lower, half or so of what they are today.
    The energy challenges we face today appear to be greater 
than those of the 1970s. Today our solutions to the problem of 
oil dependence must also put us on a path to avoid dangerous 
climate change. Then we achieved a temporary solution; today 
the challenge of climate protection requires a sustainable 
solution. The same tools are available, market forces, 
government policies, science and technology, but today the 
challenge is greater.
    Thank you very much.
    [The information follows:]

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                    Mr. Dinneen's Opening Statement

    Mr. Dinneen. Thank you, Mr. Chairman. Thank you for the 
invitation to be here, Congressman Hobson and members of the 
committee. I do appreciate on behalf of the U.S. ethanol 
industry, the fastest-growing renewable industry in the world, 
for the opportunity to come and talk to you about the growth of 
our industry and how it can have a tremendously positive impact 
in adding alternative fuel supplies and reducing consumer costs 
of gasoline.
    The ethanol industry, as many people know, is indeed 
growing extremely rapidly. We have 140 biorefineries in 
operation across the country today. This is not just your 
grandfather's ethanol industry anymore. It is not just about 
Iowa. We have got ethanol plants virtually from coast to coast 
and border to border, and we are growing.
    Mr. Chairman, you know we have got six plants in operation 
today in Indiana. There are another five that are under 
construction.
    Congressman Hobson, there is one plant in Ohio in operation 
today, three under construction. We have got a plant in 
operation in Tennessee and another one under construction. 
There are five in Missouri.
    Mr. Simpson, there is one ethanol plant in operation in 
Idaho today, and the next generation of ethanol production from 
cellulose is likely to start in Ohio where a company, Iogen, is 
looking to build a facility.
    Mr. Calvert, we have got four plants in California and 
three under construction.
    Mr. Rehberg, you know, there are none in Montana today, but 
we are trying, and we will get there soon, I am sure.
    On the other side of the dais, let us see, there is indeed 
a plant, surprisingly, in Arizona that is in operation today.
    Mr. Berry, there is a great deal of biodiesel production in 
Arkansas; nothing on ethanol yet, but it is coming.
    There is indeed an ethanol plant in operation in New York 
today, and another one that is going to be opening up very 
soon.
    Mr. Olver, I am sorry. I can tell you, though, that the 
ethanol industry's trade association head is from 
Massachusetts, if that gives you any consolation. And there are 
a number of companies in Massachusetts that are on the cutting 
edge, providing technology for the next generation of ethanol 
production. So Massachusetts will indeed help to lead the way 
there as well.
    The point is our industry is growing, and growing rapidly 
and evolving. There are 60 plants that are currently under 
construction. There is not a company that I represent that 
doesn't have a very aggressive cellulose-to-ethanol research 
program underway, because, as Dr. Greene just noted, the 
ethanol industry is going to grow, but there are limitations to 
how much ethanol we can get from grain. Most people believe 
that that is about 15 billion gallons. And indeed the energy 
bill that passed in December essentially caps ethanol 
production from grain at that 15 billion gallons.
    The energy bill that passed, however, requires some 36 
billion gallons of ethanol to be produced by 2022. Some would 
question whether or not that can be done. It can't be done by 
grain; it has to be done by cellulose. That is why there are so 
many Massachusetts companies that are looking at cracking the 
code so that we can indeed produce ethanol from cellulose 
materials, whether it is woody biomass from upstate New York or 
municipal solid waste in California. There is a company in Los 
Angeles that is looking to build ethanol production capacity at 
a landfill right outside of Los Angeles.
    So the industry is evolving and evolving quite rapidly. The 
potential benefits are enormous. Already our industry is 
responsible for 238,000 jobs. At a time when the rest of the 
economy is not as robust, the economy in agriculture, the 
economy in our industry is doing terrific. We have added $47 
billion to GDP last year. We have replaced some 228 million 
barrels of oil. That is significant. That is money that is 
staying here at home and not being shipped overseas to 
countries that do not have our best interest at heart.
    From a climate change perspective, just the ethanol that 
was produced last year reduced greenhouse gas emissions some 10 
million tons, the equivalent of taking 1.2 million vehicles 
completely off the road. This year we will produce more than 9 
billion gallons of ethanol, the equivalent of taking, from a 
greenhouse gas emissions standpoint, almost 2 million vehicles 
off the road. It is the single most important strategy that we 
have today of addressing the challenge of climate change. And 
as the industry evolves, and as we begin to produce ethanol 
from cellulosic materials, those benefits are just going to get 
even better.
    I can't tell you whether or not enzymatic conversion of 
woody biomass is going to ultimately be more efficient than 
gasification of municipal solid waste. I can't tell you whether 
or not the feedstock of choice for cellulose will be 
switchgrass or wood chips or something else. But I can 
absolutely assure you that there will be cellulosic ethanol 
production in this country sooner than conventional wisdom 
believes now is possible.
    The signals that this Congress sent to our industry, to the 
marketplace, to the finance industry have been very clear. We 
are going to be investing. We are going to be commercializing 
cellulosic ethanol very, very soon. The markets are also 
evolving. Today ethanol is largely a blend component in 
gasoline. All of you, virtually all of you, are driving on 10 
percent ethanol blends. All of the gasoline blended in the 
Washington metropolitan area is 10 percent ethanol. You may not 
know it because there aren't big signs that say so, but it is 
there. Ethanol today is blended in 50 percent of the Nation's 
fuel.
    But I drove over here today in a beautiful General Motors 
Avalanche that is fueled by E85. I was able to fill that 
vehicle up with E85 last week at an E85 refueling station 
across from the Pentagon. That infrastructure is developing. 
E85 will ultimately be a very important component of the U.S. 
motor fuel market. There are only 1,400 E85 refueling stations 
today out of 170,000 gasoline stations across the country. We 
need to grow that infrastructure, and we are doing so.
    As the market grows with the commitment that GM and others 
have made to flexible-fueled vehicles that can burn that fuel, 
there are only 6\1/2\ million FFVs on the road today, but they 
committed that 50 percent of their production will be flexible 
fuels by 2012. With that kind of a marketplace, the product 
will follow, and the opportunities to continue to grow this 
market to be a more ubiquitous component of the motor fuel 
market in this country will grow as well, and I look forward to 
working with this committee to make sure that that happens.
    Thank you.
    [The information follows:]

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    Mr. Hobson. Right on time.

                     Ms. Stanek's Opening Statement

    Ms. Stanek. Good afternoon, Mr. Chairman and committee 
members. It is great to be here today.
    As mentioned, I am involved in public policy, but also in 
R&D. Today I will focus on E85, and I am also going to talk 
about our other technologies just a little bit, our plug-in 
hybrid electrics and our fuel cell vehicles.
    Mr. Hobson. Are you going to talk about a hybrid Tahoe?
    Ms. Stanek. We do. We have a two-mode hybrid, and I will be 
glad to talk----
    Mr. Hobson. I read the advertisement. You don't advertise 
how much it gets. You say it is 25 percent better, and I read 
the whole ad trying to figure it out.
    Mr. Emerson. On TV it said it was the same----
    Mr. Hobson. They don't use a number. It is very 
interesting.
    Ms. Stanek. You know, I think one of the reasons why is in 
advertising if you put a hard number in, you know, people's 
driving habits actually alter from that number. So you have to 
be careful from the personal user experience. But really you 
see a 40 percent in the city fuel economy and know that within 
that class of vehicle, it is the highest-rated fuel economy 
vehicle. So it is a combined average originally, before the 
hybridization, of 21. So you would add 40 percent savings to 
that. And on the highway, where you also get hybrid savings, it 
is a different type of motor that is driving that. It is about 
20 percent. So you would add 20 percent to--I wouldn't say 20, 
but about 19 MPG. But again, if you drive hard, if you are 
carrying a heavy load, it is very different for you if you are 
on and off the brake. But that is why you are going to see it 
in advertising in terms of percentages as opposed to actual 
numbers.
    I will say that the EPA Web site has very good, reliable 
figures, although it is not easy to nest through Web Sites to 
find it, but they are posted and reliable.
    Mr. Hobson. I just looked at the----
    Ms. Stanek. Well, I will go through this a little bit, and 
I really want to emphasize our partnership with Coskata. This 
has been a wonderful cooperation between General Motors and 
this biotech firm in Warrenville, Illinois. And just to 
highlight a little bit why we looked into this firm, we have 
been working with biomass groups all over the world, and this 
firm has the ability to take waste materials, old tires, 
plastics, landfill items and biomass, convert it very 
efficiently using a very efficient process. We are getting 7.7 
times the energy out, getting CO2 reductions up to 
about 84 percent at a production cost of what we anticipate to 
be about $1 a gallon. So you can see why this is very 
interesting for us.
    In addition, I will talk a little bit about the readiness. 
The important thing is we learned a little bit more about 
enzymatic processes. There is more science, more work ahead. 
The Coskata process can start immediately. And, in fact, they 
just announced a partnership with ICM, which is the largest 
biorefinery builder.
    So before we launch into all that, in the automotive 
industry, this is a great time for us. There are a number of 
opportunities and a number of challenges. We are addressing 
these with all of our advanced technologies. The important 
thing is that we have to develop alternative sources of energy 
and propulsion. We have this chance right now to mitigate many 
of the issues surrounding energy availability, and we hope we 
can continue to do this with the cooperation of business and 
government.
    The first thing we have to do, and we are continuing to do, 
is really improving the internal combustion engine. You 
mentioned the Cobalt. That vehicle is a very affordable vehicle 
for about $10,000. It gets 34 miles per gallon. Now, this is 
important because General Motors is a full-line auto 
manufacturer. We provide vehicles to everyone. We have to 
ensure that we continue to have entry-level buyers being able 
to buy our new products. These are very emission-efficient and 
very energy-efficient. We can still work on that through 
aerodynamics, more nanotechnologies, better use of materials, 
lighter-weight materials. So we are still focused in that area. 
It is still a very rich area to get fuel economy from.
    In addition, we are working on hybrids. We do have eight 
hybrids right now that are all being launched. We are going to 
double that to 16 in the next year or two. So in terms of 
General Motors' portfolio, we have very good fuel efficient 
vehicles at an entry-level price, we are moving into hybrids 
and now we are also very, very active in E85 and flex-fuel 
technology. No secret here, our leadership worked in Brazil 
early on, saw the benefits of alcohol fuels, began to steer the 
ship down there more towards the flex-fuel technology; 95 
percent of our product portfolio in Brazil now is flex-fuel. 
Those learnings were brought back to Detroit, and we are 
beginning to assess the entire portfolio to make them flex-
fuel, and that is a global opportunity for us. As Bob 
mentioned, there are 6.5 million flex-fuel vehicles in the 
U.S.; 2.5, actually approaching 3 million, are General Motors 
vehicles.
    So again, we are expanding, and we are committing our 
product line to grow even more. Just last week in Chicago at 
the auto show, we announced our first four-cylinder flex-fuel 
vehicle. I think this has been something everybody has been 
waiting for not only on the larger engines, but on the smaller 
engines.
    Again, we feel E85 is important because you can address a 
number of things at once. You can address the energy issue, the 
CO2 issues, and you can certainly help with smog-
forming emissions and help support job growth. So we think it 
attacks everything at once. We think it has a great opportunity 
to really address our energy issues in this country.
    Now, as Bob mentioned, we have announced that we would 
begin to convert 50 percent of our portfolio to flex-fuel, but 
we also need the infrastructure to grow. We realized we 
couldn't make such statements unless we were doing something 
about that as well. My team and many others at General Motors 
have been working with many of you and others around the 
country to get E85 stations in States. Today we have over 300 
stations that are in place, because we partnered with ethanol 
producers, with Governors, with agency heads, with Federal 
funding, with clean-city coordinators, and we haven't lost one 
station, which is important. That means the fuel is selling 
well. The retailers are holding. You know, they are not backing 
out of the business. So if we can do that from a little small-
operations team to get that created, we believe that it needs 
to now grow to a national level.
    I would submit to you that it would be important, as you 
are considering different things, proposing more of a national 
target of stations. It is very, very easy to understand where 
these stations should go. It is certainly based on where fuel 
is consumed in population. We have done a lot of studies on 
that. And we absolutely have our flex-fuel vehicles, all the 
automakers, really following the same lines. So if you know 
where people live and where they consume fuel, it is pretty 
clear that you can put in these stations that will be 
successful.
    A little case in point. We opened a station in Miami, 
clearly out of the Corn Belt, very far away from where the fuel 
was produced. The fuel was selling very competitively. We 
reached out to our flex-fuel owners within 5 miles of that 
station. We had 5,000 flex-fuel owners. We said, by the way, 
you have a flex-fuel product, and you now have fuel in your 
market. They literally were running out of fuel in days, and it 
made a lot of news, and it also led to the development of 25 
new stations that will be going into the greater Miami area.
    So one of the goals we have been doing at GM is to seed 
these important markets, to ensure this expansion happens. And 
just to restate, we do not think it is difficult. We think it 
is very, very achievable.
    Continuing on just a little bit. I want to talk about 
Coskata. As I mentioned, the metrics are fantastic. Coskata is 
in Warrenville, Illinois. They have taken existing technology, 
and they have combined it with their microbes, which are 
patented microbes. And essentially the simplest way to think of 
this is they take the waste and they gasify it. The gas becomes 
hydrogen and carbon monoxide. Their microbes eat the gas, and 
they just gorge on it. In some of the technologies, the 
microbes are very sensitive, they don't live long, they get 
ill. But they have really made them hearty. So they are 
consuming the gas. And what is the byproduct? They actually 
sweat ethanol in water. So these microbes take in the gas, they 
consume it and sweat ethanol in water.
    They then take that product and they put it through what 
they call membrane technology. It is used in dialysis right 
now. It is very mature. It is a very known process. And the 
membrane technology allows the separation of water and ethanol 
in a very, very energy-efficient method. Instead of having 
large spinning techniques and energy-demanding separation, it 
can be done very affordably. In fact, 50 percent less energy is 
consumed in the Coskata process in separating the fuel. The 
important thing, too, which I haven't mentioned up to point, is 
their process creates water. It means that their per-gallon use 
of water for every gallon of ethanol is under a gallon. If this 
proves to be true in a large-scale plant, this will be the most 
efficient use of water that we know of.
    Again, we believe they are ready to start now. The reason 
why they are ready to start now is because the gasification 
step and the membrane technology step have been known for some 
time. They have been known, and they have been used in other 
processes in other industries. And now that they have their 
microbes healthy, hearty and patented, they are ready to go and 
connect all the dots.
    They announced that they will be putting up a demonstration 
plant. They haven't announced the site, but it will be 
relatively soon when they do announce. They are going to be 
producing 40,000 gallons of ethanol using this process. We will 
be the recipients of the first 40,000 gallons. We will take the 
ethanol back to our proving grounds and use our vehicles with 
that fuel out at Milford.
    From that we will continue to partner with them all over 
the country and encourage in each and every State biorefineries 
that adopt this process. We think it is energy-efficient. We 
think it is a great local adaptation, and it is a great use of 
science and regular matured commercialization techniques.
    Another thing we continue to do--I won't spend too much 
time--but we continue to promote E85 and our products. Our 
products are going from 11 to 15 this year, as I mentioned, one 
being a four-cylinder. It is really important that we include 
the consumer in these discussions. Up until now they have a 
notion of biofuels. They don't know if they are using them, 
where they are. So the more we can do locally to let people 
know that they have some choice in their markets, that they 
have vibrant competition, it will help get education up.
    So we had an E85 fall tour and an ``85 days of summer'' 
where we went out and engaged consumers, retailers. We went to 
editorial boards. We went to football games. And it worked very 
successfully. In those markets fuel sales are up. And, in fact, 
in one market where we did a lot of postcarding and did a lot 
of media, sales of E85 went up 30 percent, and they have 
remained up 30 percent in those markets.
    When people say it doesn't work, it does work, but it does 
take this coordinated effort. And we can never forget the 
communication of the marketing element because that is how 
consumers are made aware of this process.
    So in conclusion, I think there are a few things that we 
can work together on. I think we still need a strong and 
sustained push from Congress and the administration to support 
biofuel production, sustainable biofuel production, and next-
generation cellulosic ethanol.
    In addition to supporting these efforts, we must include 
infrastructure, not just R&D. As I mentioned, we need a larger 
national goal. Probably it would be reasonable to be 6 percent 
of all stations or greater. That is where diesel started, and 
we have seen the diesel industry do very, very well. Biofuel 
infrastructure should be significantly expanded.
    We need the national goals as I mentioned, and we need a 
market response that is encouraging the use of these fuels and 
talking to the benefits.
    We should consider incentives for the manufacturer of 
biofuel-capable vehicles and increase support for broadbrand 
infrastructure conversion as well.
    The government should continue to purchase vehicles that 
are flex-fuel. Government fleets actually do help this process. 
When they purchase the vehicles, whether they be E85-capable 
vehicles or hybrids or hydrogen, it does help grow the market 
because we are able to work on putting in fuel and 
infrastructure around those large fleets.
    Now, before I close, I wanted to talk about the other 
technologies. Right now we have 100 GMX vehicles. They are 
called GMX 101. They are actually Equinox vehicles that are 
being put in the hands of consumers right now. They are 
hydrogen vehicles. They are a demo fleet. They are not for 
sale. But we have hydrogen stations going up in California, New 
York and in D.C. And again, these folks will be able to 
experience hydrogen vehicles today.
    In addition, we talked a little bit about our efforts with 
the two-mode and a little bit with some of our battery 
technology, but how we are very, very active in Detroit working 
on the Volt technology. This is a pure battery-operated vehicle 
with a range extender.
    So I thank you for your time and listening to our story, 
and I hope you have more questions after we hear from everyone. 
Thank you.
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                   Mr. Hillebrand's Opening Statement

    Mr. Hillebrand. Thanks for the chance to come here, 
Chairman, the committee, to talk about battery technology. It 
is a real honor for me.
    In the last 25 months, there has been a dramatic 
development in automotive and vehicle technology in North 
America. That has been the development of hybrid technology and 
the rapid introduction of plug-in hybrid technology programs 
with most of the Nation's automakers. It has accrued for a 
variety of reasons; probably foremost is the growing dependence 
on imported oil and the cost of fuel. But it is also related to 
our clean air standards, what they do to diesels; improved 
battery chemistries; small businesses which are really kind of 
picking up the challenge; and the fact that the government has 
been funding a lot of this research for quite a long time.
    The reasons for this sudden interest for plug-ins are many. 
It is clear we are in the midst of a revolution that is 
probably comparable to what happened about 100 years ago when 
the automobile was first developed at the start of the last 
century. The first modern hybrid vehicles were developed 
through U.S. Government research programs in the start of the 
1990s. There was no commercialization because fuel prices were 
low, so there wasn't a whole lot of demand. Battery technology 
was not very well developed, and the power electronics were not 
very sophisticated. So it made the vehicles expensive and 
inefficient.
    But in the late 1990s, Toyota produced the first successful 
hybrid using the new nickel-metal hydride batteries, and Toyota 
currently manufactures the hybrid vehicles in Japan and exports 
those to North America. The hybrid vehicle market is about 
500,000 vehicles in 2007 worldwide, but that is less than 1 
percent of the total vehicle market. Its share, though, is 
projected to grow 30 percent over the next 4 years, and it 
could reach as many as 2 million vehicles in 2015.
    The growth is dramatic in automotive terms and the 
competition between the manufacturers is intense. Toyota 
produces more than 80 percent of the hybrids that are sold 
right now, but that is not likely to change soon. Ford and GM 
have both produced viable hybrids, but the production of these 
is slowly ramping up because of limitations in materials and 
the high costs. The GM two-mode hybrid, which we have been 
talking about today, is probably arguably the most advanced in 
the world right now, but the Toyota system is more mature, and 
it is more available. It is available in more models. Ford 
has----
    Mr. Hobson. Excuse me. Is the Toyota different than the 
Honda system?
    Mr. Hillebrand. Yes. The Honda system is a very mild----
    Mr. Hobson. You mentioned Honda, and Honda is in Ohio. So I 
thought----
    Mr. Hillebrand. Yes. There is a slight difference. Ford has 
a hybrid system similar to Toyota's, but they publicly stated 
that they are severely hampered by a lack of access to advanced 
battery technology and to high battery costs.
    The potential for hybrid technology to reduce fuel usage is 
very high. Hybrids can improve fuel economy around 25 percent. 
And testing at this point indicates that plug-in hybrids can 
improve fuel economy substantially more. The fuel economy of a 
plug-in hybrid prototype, as we have measured it at our lab at 
Argonne, has exceeded 100 miles per gallon. That is without 
being optimized.
    Now, this number sounds a bit sensational. And I am 
hesitant to use fuel economy when I am talking about plug-in 
hybrids because the concept of fuel economy doesn't really 
apply when you are talking about plug-ins. But we have to give 
it some sort of a metric. Suffice it to say that plug-in hybrid 
potential is very high, and right now we have programs in place 
to actually determine how to properly compare plug-in hybrid 
fuel economy with existing conventional fuel economy so that we 
have a good back-to-back measurement.
    In all cases, whether it is hybrids or plug-ins, batteries 
are the key enabling technology. Lithium-ion battery 
chemistries are the leading candidate for solving automotive 
battery issues. The U.S. is dominant in the development of 
battery materials and chemistries, and although many of the 
fundamental breakthroughs in battery technology have occurred 
in the U.S., they have been subsequently licensed and 
commercialized overseas.
    The DOE battery research program has sponsored small 
businesses, it has pushed applied development of promising 
battery chemistries to a very high level. But the U.S. is 
behind the rest of the world in the adoption of battery-
manufacturing capability. Many small American companies are 
planning to build their factories in China right now. The 
nickel-metal hydride automotive technology was initially 
developed in the U.S. It has been commercialized by Panasonic 
and Sanyo, and it is mainly manufactured in Japan and Korea and 
is sold on the Toyota hybrids.
    Several countries have advanced battery research 
capability. Japan--I was at a conference there about a year ago 
in Tokyo, and it was a very eye-opening experience. They 
recognize advanced battery technology as the key driving force 
behind competitiveness. And the actual quote I heard at that 
conference through the translator box was that battery 
technology manufacturing capability is a matter of national 
survival. Strong statement. The Japanese Government is very 
supportive in funding research programs. They have committed to 
a 20-year research program, about 50 million a year in U.S. 
dollars.
    China is the planned location for many new American 
manufacturing facilities. Their battery-manufacturing methods 
are labor-intensive and are not really refined at this point. 
But China will develop capability quickly, and they will keep 
low costs. That is why most American companies are attracted to 
that location.
    Korea has low-cost and aggressive companies, makes a lot of 
batteries, but they are more of a follower than a leader in 
chemistries.
    And last month, 2 months ago, Germany announced the German 
Battery Alliance. They see the importance of getting battery-
manufacturing capability on shore. They have the intent to 
develop a homegrown capability to increase the energy and 
performance of lithium-ion batteries. They are funding it at 
the tune of $600 million, and it is mainly funded--it is 
coshared, but it is mainly funded by Federal Ministry of 
Education and Research.
    Now, the U.S. is supreme in battery materials and chemistry 
development. It also leads start-up activities and innovation. 
But the major problem is that we don't have manufacturing or 
prototyping capability. Battery manufacturing and know-how and 
capability are developed over time. They require huge capital 
investments. Toyota invested a lot of this money in the past. 
It has developed this capability, and it can produce batteries. 
Estimates of costs vary, but studies indicate that Toyota 
probably pays one-third less for its batteries than do the 
American-owned companies.
    Beyond manufacturing, the two biggest concerns with the 
lithium-ion technology are safety and cost. Now, safety is a 
concern, but looking at it from an engineer's perspective, most 
of those problems are solvable, meaning the limiting factor for 
plug-in hybrid introduction is likely to be cost.
    The estimates for the battery pack for a plug-in hybrid, 
look at it being between 3,000 and $12,000 per car per pack. At 
these levels, the major hurdle to introducing the plug-in 
hybrid technology is that the projected fuel dollar savings are 
considerably lower than the cost of the battery. In other 
words, there is no payback on the technology right now.
    Now, to get a payback, you either need to lower the battery 
cost, or you need a bigger difference between gasoline and 
electricity price. Battery costs can be lowered by looking at 
funding materials, research in batteries. You can do tax 
policies, R&D tax credits. You could look at incentives. There 
are ways to do it, because from the automaker's point of view, 
with batteries not really ready for commercial introduction, 
the business risk of introducing a plug-in hybrid is really 
tremendous, especially because automotive battery warranties 
have to be for the life of the vehicle. So the automaker takes 
all the risk, and it decides and commits to making these, it 
could commit to really losing an awful lot of money.
    Specific-focus North American battery-manufacturing 
incentives could spur further progress. A SEMATECH-type program 
focused on battery manufacturing in North America might be a 
big help to help jump-start a homegrown battery industry.
    The government should continue to support the hybrids the 
way they have. That has been very helpful with respect to 
pushing them into the market, and maybe we should look into 
expanding those into plug-in hybrids as well. Government 
funding for advanced vehicles should also better reflect a 
likelihood of success, which might be an important thing now 
that we have higher fuel prices. A sustained effort to develop 
a domestic battery-manufacturing capability will also be very 
important because ultimately we haven't accomplished much if we 
have transferred our dependence on imported oil for an 
addiction to foreign batteries.
    Thank you.
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                    Ms. Ziegler's Opening Statement

    Ms. Ziegler. Thank you, Chairman Visclosky and Ranking 
Member Hobson. My name is Lynda Ziegler, and I am the senior 
vice president of customer services at Southern California 
Edison. I very much appreciate the opportunity to lend Edison's 
support today to your important efforts promoting sustainable 
alternative transportation technologies for this country.
    My company has been committed to leading the way in 
responsible electricity generation for many years now. Today 17 
percent of the energy that we provide our customers comes from 
renewable generation. We purchase on behalf of our customers 
one-sixth of this Nation's wind-generated energy and 90 percent 
of the solar. Over the last 5 years, our nationally recognized 
energy-efficiency programs have delivered enough energy savings 
to power 500,000 homes.
    And finally, we are very proud of our 20 years of electric 
transportation leadership. Today we operate the Nation's 
largest fleet of electric vehicles that have traveled over 15 
million miles on electric fuel. Our Electric Vehicle Technical 
Center, unique in the utility industry, evaluates all forms of 
electrodrive technology. We have ongoing evaluation and 
demonstration programs supporting airport and seaport 
electrification, truck stop electrification, battery electric 
vehicles, plug-in hybrid electric vehicles and fuel-cell 
electric vehicles.
    A good example of our leadership, we just recently 
announced a Ford-FCE partnership to develop and deliver PHEV 
and grid solutions to help accelerate commercialization of PHEV 
so that breakthrough improvements in fuel economy and energy 
security can be realized. The partnership will demonstrate 20 
plug-in hybrid electric vehicles, examine new business models, 
research customer needs, and work on development of open 
architecture standards and specifications.
    We believe that with continued engineering advances and 
appropriate public policy support, the widespread use of plug-
in transportation technologies will become one of this Nation's 
most effective strategies to address energy security, reduce 
greenhouse gas emissions and reduce air pollutants. In fact, a 
recent study by the Electric Power Research Institute and the 
Natural Resources Defense Council found that widespread 
adoption of plug-in hybrids versus today's gasoline hybrids 
could reduce annual emissions of greenhouse gas by more than 
450 million metric tons by 2050, the equivalent of removing 82 
million passenger cars off the road. These reductions are 
obviously a long way off, but it provides us all the more 
incentive to begin today.
    Enhanced use of electric transportation has other important 
benefits as well. A recent DOE study estimated there was enough 
excess capacity in the U.S. Electricity grid to fuel a little 
over 70 percent of all the light-duty cars and trucks on the 
road today without building a single new power plant.
    Using electricity to fuel transportation will also reduce 
our dependence on foreign oil. The study I just mentioned found 
that PHEVs by 2050 could reduce petroleum consumption by 3 to 4 
million barrels of oil per day.
    And finally, electricity cost is also cost-effective at 
about 25 to 50 percent the cost of a gallon of gasoline 
equivalent. And of all of the popular fuels today, from ethanol 
and biodiesel to hydrogen, electricity is the only one with a 
national infrastructure already in place.
    So if we have this alternative fuel, what products and 
technologies can use it today and in the future? In the near 
term, we are seeing rapid development and deployment of port 
electrification, truck stop electrification, next-generation 
electric forklifts, and battery electric and plug-hybrid light 
and medium and heavy-duty vehicles.
    Based on a number of major manufacturer announcements, we 
should be seeing plug-in vehicles and technology on our 
driveways and roads within the next 5 years; however, there are 
still significant challenges yet to be solved on the road to 
electrifying our transportation. I am primarily referring to 
the energy storage battery. Today there is impressive progress 
being made on the lithium battery; however, we still have not 
achieved a reliable, safe, durable and cost-effective advanced 
battery for automotive applications. In addition, as we heard 
from Dr. Hillebrand, there are no domestic battery material 
suppliers or domestic battery production capacity in place 
today.
    The new energy bill authorizes a broad range of incentives 
and policy initiatives designed to encourage near-term and 
long-term solutions and address some of the challenges I have 
mentioned here. Specifically it authorizes 95 million in new 
grant deployment programs for qualified electric transportation 
projects, section 131, part 6, such as electric forklifts, 
shoreside electrification of ships, electric airport ground 
support, and truck stop electrification. In addition, H.R. 6 
authorized a 90-million-per-year plug-in electric vehicle 
demonstration program and several programs encouraging 
manufacturing, sections 132 through 136, which are not 
currently in the administration's budget. H.R. 6 also 
authorizes six programs on battery RD&D at $295 million a year. 
But unfortunately, the administration's budget in fiscal year 
2009 remains at just 50 million, about the same as the previous 
years. We respectfully ask that appropriations ramp up to the 
fully authorized levels as soon as possible in all of these 
critical areas.
    Mr. Chairman and members of the committee, we stand 
committed to partnering with Congress, manufacturers, battery 
suppliers, utility and industry stakeholders to help realize 
the full potential of electrifying this Nation's transportation 
future. The first and critical step is to appropriate adequate 
and sustained funding of the near and midterm programs 
identified in H.R. 6 and to find the right balance between 
programs with near-term and long-term benefits.
    Thank you for this opportunity.
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    Mr. Visclosky. Mr. Stricker.

                    Mr. Stricker's Opening Statement

    Mr. Stricker. Rearranging the cookies up here.
    Good afternoon, Mr. Chairman and members of the committee. 
I thank you for inviting me here today to speak about Toyota's 
perspective on hybrid vehicles and our strategy.
    Working and living in the Washington, D.C., area, as I 
guess most of us do, we are all well aware, too aware I would 
say, of the number of vehicles that are out on the road today. 
There are about 850 million vehicles globally right now, and we 
are adding as an industry about 20 million vehicles a year to 
the car park.
    As a result, we are faced with three key challenges. One is 
the need to reduce greenhouse gas emissions; two, the need to 
reduce emissions that lead to local air pollution; and three is 
the need to reduce dependence on petroleum.
    All auto companies, and you heard from GM today as well, 
are working on a variety of solutions to solve these 
challenges, but as much as we like to pick winners and losers, 
there is not going to be just one solution. The conventional 
gasoline and diesel vehicles, biofuels, hydrogen, hybrids are 
all going to play a role in the future vehicle makeup.
    At the committee's request, I am going to focus my remarks 
primarily on hybrids and what Toyota is doing. And I would like 
to start by making two key points up front. One, build it, and 
they will come only works for Kevin Costner in the Field of 
Dreams. We have to be able to sell vehicles to customers, and 
not just 500 customers, not 5,000 customers, and not even 
50,000 customers. We have to have widespread mass-market 
adoption of advanced technologies in order for there to be a 
substantial impact on either petroleum or on CO2.
    The second key point, and I even have to emphasize this 
within Toyota sometimes, is that hybrid is not a technology 
that necessarily competes with other technologies. Hybrid is a 
system that can be applied to any power train and utilizing 
virtually any fuel. It is a system of battery, electric 
propulsion, regenerative braking, capture of energy. And we can 
apply these kinds of technologies to any kind of fuel and 
engine system, not just what you see today in terms of a 
gasoline hybrid vehicle.
    The most apparent benefits of hybrids certainly are 
increased fuel economy and low emissions. What is often 
overlooked is the flexibility to tailor the system to achieve 
different goals, both performance and fuel economy or a 
combination of both. For example, Prius maximizes fuel economy 
while achieving a class average acceleration performance. On 
the other hand, the Lexus LS600-H provides V-12 performance out 
of a V-8 hybrid engine with class-leading fuel economy. And as 
more hybrids enter the market, and as the market evolves, you 
are likely to see some different trade-offs between these two 
attributes over time.
    Currently Toyota offers six hybrid models for sale in the 
U.S., and I would point out that we do actually manufacture the 
Camry hybrid in the U.S. in our Georgetown, Kentucky, plant. 
Today we sold nearly 750,000 hybrids in the U.S. alone, and 
globally we sold about 1.25 million. We estimate that these 
vehicles have saved about 3.3 million metric tons of 
CO2.
    Our goal is to sell a million vehicles a year globally 
within the next decade, with a longer-term vision of having a 
hybrid offering in each market segment where we compete. Our 
development goal is to reduce the power--sorry--to increase the 
power and capability of the hybrid system while at the same 
time reducing its size and cost.
    This progress that we have made can be seen in the history 
of the Prius. With each new vehicle generation, we have 
increased the fuel economy, we have improved the 0-to-60 
acceleration time, we have lowered the tailpipe emissions, and 
we actually made the vehicle larger. We have been able to do 
this largely by reducing the weight and size of the electrical 
components and steadily improving the battery technology. Our 
next goal is to reduce the cost of the hybrid system by another 
50 percent by early next decade.
    During the past year, any time I mention I work for Toyota 
on environmental issues, people want to ask me about plug-in 
hybrids. We believe the plug-ins are appealing technology for 
reducing petroleum, and, depending on how the electricity is 
produced, may also reduce greenhouse gas emissions. You have 
seen some data already, but I will present a little bit.
    In the U.S., using the average U.S. grid mix, a plug-in 
Prius would actually achieve about the same CO2 
reduction as a conventional Prius nonplug-in. In China, where 
they have substantially higher coal use, a plug-in Prius would 
actually emit more CO2 on a well-to-wheel basis than 
a conventional Prius. In France, where it is 80 percent 
nuclear, it is a much different story. There is substantial 
CO2 benefits that can be achieved there. So this 
clearly speaks to the need for clean electricity production or 
other kind of technology to mitigate CO2, such as 
carbon capture and sequestration.
    On the vehicle side, as you heard, the key challenges of 
battery technology, we are extremely active in this area. The 
majority of the current plug-in conversions that you hear about 
use deep charging and discharging cycles to improve the all-
electric range. But battery life is adversely impacted by large 
swings in the battery's state of charge. The primary reason we 
have been able to offer the long warranties we do on our 
current Prius battery is that the battery management system 
restricts the state of charge to a narrowly defined window in 
order to ensure the durability. It is clear, and you have heard 
today, that lightweight, higher-energy-density lithium-ion 
batteries will undoubtedly be needed if we want to increase the 
all-electric operating range of hybrids.
    While we are actively developing lithium-ion batteries, we 
are also concurrently placing plug-in hybrid vehicles in test 
programs in order to gain real-world feedback on what the 
customers want and need.
    We began road testing plug-in hybrids in the U.S., Europe 
and Japan in the fall of last year. First-generation prototypes 
are equipped with nickel-metal hydride batteries, two of the 
current Prius packs, we call them double nickels, which allows 
us to use a proven technology that is reliable and durable. In 
2010, this was mentioned, I think, by the Chairman at the 
beginning of the hearing, we will expand this demonstration 
phase by delivering a significant fleet of plug-in hybrids to a 
variety of global fleet customers, including many here in the 
U.S. These plug-ins will be powered by Toyota's first-
generation lithium-ion batteries.
    Looking to the future, some have characterized hybrid as an 
interim approach, a bridge to future technologies like fuel 
cells. But we see hybrids not as an interim step, but actually 
as an integral step to the future of fuel cells. In the case of 
our fuel-cell hybrid vehicle, which is a Highlander, the main 
difference between it and our hybrid Highlander is that you 
take out the gasoline combustion engine, and you replace it 
with a fuel-cell stack. All of the other battery, motor, power 
electronics, control systems, software is largely transferable 
to the fuel-cell vehicle.
    So we think that all of the investments that we are making 
in that technology will not be for naught when it comes to a 
future that might have fuel cells. While more work is needed, 
one of the key challenges that we see is hydrogen supply and 
distribution and infrastructure. At this point, the vehicle 
development seems to be advancing a little bit faster than 
investments and infrastructure.
    So in conclusion, the energy and environmental challenges 
that we face are going to require an array of solutions. Many 
of these alternatives face challenges in one form or another 
that must be overcome in order to provide consumers with 
vehicles that meet their needs and that they are actually going 
to be willing to buy. We believe hybrid is a key technology. It 
can provide significant benefits while maintaining key 
attributes that customers demand, and it can be applied to a 
wide variety of technologies.
    Thank you once again, and I look forward to any questions 
you have.
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    Mr. Visclosky. I want to thank the panel. Mr. Hobson and I 
will defer our questions for the moment. I will recognize Mr. 
Pastor, and then we will alternate. There may be a vote or 
series of votes. What we'll try to do on the dais here is split 
our time, having some Members go right away and others--so we 
can be as efficient as possible. So kind of like being in 
school, as I think all of you appreciate.
    Mr. Pastor.
    Mr. Pastor. Thank you, Mr. Chairman. And I welcome the 
panel members and thank you for your testimony.

                                 ALGAE

    I would only tell Mr. Dinneen that in Arizona, in 
cooperation with MIT, we think that the biofuel that is going 
to be probably the most rewarding is algae. We are currently in 
the deserts of Arizona working with a gas-powered company, APS, 
taking the algae--the carbon dioxide, growing the tanks of 
algae, and then taking the algae out and using it as biofuel. 
So we think there is a great honeymoon with corn, another 
strawgrass and whatever, but we think that algae is going to be 
the one we are going to do.
    Mr. Dinneen. Just quickly. There are synergies there as 
well. We produce CO2. And, in fact, there are some 
ethanol companies that are looking at using the CO2 
from our production process to make algae for biodiesel 
production. So it is a brave new world we are all entering. 
Thank you.

                          LITHIUM-ION BATTERY

    Mr. Pastor. It is interesting because when we started with 
Dr. Hillebrand, Lynda Ziegler and Mr. Stricker, we either talk 
about the lithium-ion battery, if we make it sturdier, it 
produces double the power and energy of nickel and--that 
development is very important for the development of the 
hybrid. But Mr. Stricker says it is only an integral step 
because it is going to be where once you get to the hydrogen 
fuel cell, we will probably be storing the power. And all three 
of you say that one of the problems is that even though the 
chemistry is in this country and--the materials are in this 
country, that the lack of manufacturing processes are keeping 
us from going forward.
    And we are investing as a policy--the subcommittee is 
investing a lot of money in the hydrogen fuel cell. I think the 
President himself several years ago said that is where the 
money was going to go.
    But yet, if we don't solve the problem of storage--so what 
do you recommend to this subcommittee in terms of the lithium 
ion battery development and possibly to more R&D and eventually 
into the manufacturing?
    Because your comment was, we may become less dependent on 
foreign oil but we will become dependent on foreign countries 
in terms of the manufacturer of batteries. So the three of you, 
if you would like to comment--what do we need to do in terms of 
DOE involving ourselves in the lithium ion batteries, either 
R&D or production?
    Mr. Hillebrand. Very good points that you are making.
    You talked a little bit about hydrogen research versus the 
battery research, kind of the balance between those two things. 
That is sort of a policy question in that it is longer term 
versus the shorter-term issue. The plug-in hybrid and the 
lithium ion technology are very short-term solutions in that we 
can see application very quickly. Within the next couple of 
years, we will probably see products out there, although the 
companies are a little nervous, whereas hydrogen is definitely 
more of a long-term sort of solution. And the trade-off between 
those, obviously that is a question of national interest.
    Mr. Pastor. But to the point that I was getting at, the 
short term and the long term require a battery storage capacity 
that maybe the lithium ion battery has, but yet we are not able 
to solve that problem, and yet it is a problem we need to 
solve.

                         BATTERY MANUFACTURING

    Mr. Hillebrand. We do--I mean, we see chemistries. There 
are a lot of different chemistries on the table right now that 
solve portions of the problem, with respect to transportation, 
but no single chemistry does it all. We have 150 cycle. We do 
ones that will produce enough power, ones that are safe. But 
there is no chemistry that does them all. So they do need to 
continue to push forward material and chemistry research to 
come up with that, the one that will answer all those 
questions. So that is one piece of it.
    Battery manufacturing, once again, as I said, manufacturing 
follows where there are products. And part of the reason there 
is no manufacturing capacity in North America is no American 
company right now wants to lay down a big order right now for a 
lot of these batteries. If they could do that or if they felt 
comfortable doing that, that would pull the industry more 
onshore to North America. But, at this point, nobody is at the 
point where they are ready to make that decision. So it stays 
in Japan and Korea, where they are making consumer electronics, 
which is really what caused that industry to go there in the 
first place.
    So it is a combination. You have to keep pushing the 
chemistry forward, and then you have to encourage one of the 
automakers to make a big order to help bring the chemistry 
manufacturing capability to North America.
    Mr. Stricker. I would just add to that. Toyota has a joint 
venture with Panasonic--PEVE is the company name--and that is 
where we manufacture our battery, nickel metal hydride 
batteries. We have announced that we are exploring how we would 
expand that production to include a line for lithium ion 
batteries for the future.
    And Dr. Hillebrand is correct. Basically, the manufacturing 
follows where the demand is. And when we first launched the 
hybrids as a company, we launched them in Japan. It made sense 
that manufacturing would start in Japan. And that was not an 
easy start-up, by the way. You know, there was a little back-
and-forth about whether there was going to be enough demand for 
the vehicles to make the investment in the production of the 
batteries, or a large investment in the production, as opposed 
to hand-building, you know, a couple hundred a month, for 
example.
    But we obviously now are at a point, at least for Toyota, 
where we are reaching some volume numbers. We have been able to 
meet that demand for battery production out of our current 
investment with Panasonic.
    Who knows what the future holds in terms of if the hybrid 
market continues to grow? We certainly hope it will. If hybrid 
production moves to the U.S., whether through Toyota or through 
one of the other manufacturers, then that would signal the 
demand that may compel an investment in manufacturing in the 
U.S.
    Mr. Pastor. Can I ask one more question?
    Ms. Ziegler. Could I add something to that?
    Mr. Pastor. Sure.
    Ms. Ziegler. I think from a public policy perspective, you 
can help bridge the gap. We are talking about the economics for 
the manufacturers. And Government policy and supporting R&D, 
providing loan guarantees for start-up companies that are going 
to do battery, I think is very critical.
    And I would also echo what Dr. Hillebrand said, in terms of 
short term and long term. Because, short term, the plug-in 
hybrid technology--and we talk about infrastructure, we talk 
about adding stations for ethanol. The electric infrastructure 
is there today, and it doesn't require anything other than a 
plug to plug in. So I think for short term, the plug-in 
hybrids, technology being available, being able to deploy 
shortly, while we continue to work on the fuel cells for the 
longer term.

                           CHEMISTRY RESEARCH

    Mr. Pastor. It is my opinion that what you are telling me 
is that it is worth the effort to have public monies invested 
in the R&D, in the chemistry, so that we can find as best we 
can the chemistry that will give us the ability to improve the 
plug-in hybrid because it will minimize the surges, it will 
have a longer life, and it will be able to drive a longer 
distance. And so, I guess the--and what?
    Mr. Hillebrand. And cheaper.
    Mr. Pastor. And it would minimize the carbon dioxide 
emissions, et cetera.
    So maybe I should frame the question, do you feel that 
through Department of Energy and other efforts, are we 
investing enough money into the R&D of the development of the 
chemistry to improve the lithium ion or whatever other element 
ion you want to include?
    It is a short-term solution and a long-term solution, 
because eventually if we developed the hydrogen fuel cell where 
it is effective, you are going to have to store the power. And 
so I am still trying to find the answers for that.
    Mr. Hillebrand. My answer would be self-serving about 
chemistry, because our lab does chemistry research. But I 
don't. So I won't answer that portion of it.
    But I am still seeing--there is a massive move in battery 
chemistry in technology right now. I have been doing this for 
about 25 years. Unlike anything I have ever seen in the years 
that I have been on, we are actually, year by year, almost 
month by month, seeing the technology shift smaller, more 
powerful, cheaper, better. And that, in itself, it is 
impressive to see that. So you are actually getting a return on 
what you are putting in. So I think it is worth putting more 
in.
    Disclaimer, though: I mean, our lab does this type of 
research at the same time. But I would rather have them talk a 
little bit more about the chemistries. But if you poured into 
the start-up companies, like A123 or--I can't think of any of 
the companies right now, but there is some very interesting 
work on their part, as well. And encouragement on their part 
would also be very valuable.
    Mr. Stricker. I am actually not a battery chemistry expert, 
but, I guess, two points.
    One, on the chemistry/science side, if you will, I mean, 
obviously, I can't speak to how many dollars DOE ought to spend 
or ought to be funded. But that is clearly a Government role, 
to assist with that kind of basic R&D.
    There is also--and Dr. Hillebrand may be more familiar--the 
next-generation battery technologies beyond lithium ion, even, 
that are probably worth a look as well.
    And the manufacturing side, at least from Toyota's 
perspective, what we think would probably compel manufacturing 
investment, as we see it, would be consumer incentives to spur 
demand. We wouldn't see necessarily basing an investment 
decision in manufacturing on the existence of a manufacturing 
incentive, for example, that is not a business plan. You know, 
you can't have a long-term strategy that you are going to get 
Government money so you go ahead and invest in manufacturing. 
You need a customer demand.
    So, in terms of that kind of money, we think, you know, the 
consumer-side incentives might make a little bit more sense.
    Mr. Pastor. Thank you very much.
    Mrs. Emerson.
    Mrs. Emerson. Thank you, Chairman.
    Mr. Dinneen, I want to ask you something. You mentioned in 
your long testimony here--I found it kind of piqued my 
interest, about your E-20 utilization study. And after finding 
those kinds of positive results, what do you think the next 
step is? Do you all have further projects, pilot projects, 
planned that might broaden the scope of that a bit? Or where 
are you going from here?
    Mr. Dinneen. Well, certainly, more work needs to be done. 
The analysis that we have already done with the State of 
Minnesota to evaluate the efficacy of using a higher-level 
blend of ethanol in existing fleets, it was a scoping study. 
And we did look at materials compatibility, we looked at 
drivability, and we looked at emissions.
    There is a lot more work that needs to be done, 
particularly with respect to durability and potentially some 
small engines. The Department of Energy is doing some of that 
work. We are working with DOE and we are working with other 
stakeholders to identify what additional research needs to be 
done to answer the questions whether or not a higher-level 
blend would indeed be appropriate for use in today's automotive 
fleet. There are some legitimate questions out there as to 
whether or not higher-level blends would be appropriate, but I 
think we are answering those.
    We have not seen any show-stoppers thus far. But, again, I 
would stress that our analysis was a scoping study to identify 
whether or not there were really big issues out there. We hoped 
to work with General Motors and Ford and Toyota and others to 
determine whether or not some level higher than 10 percent 
would be useful. The reason this is important is because while 
E85 is a market that is growing and growing rapidly, our 
industry is growing probably faster than the E85 infrastructure 
is coming online. And we will very soon be at the point where 
we will saturate the existing blend market for gasoline. And in 
order to maximize the amount of ethanol that is used in U.S. 
motor fuels, having some flexibility to increase that blend 
level would be helpful.
    It needs to be done with all stakeholders agreeing to the 
science. EPA, ultimately, would have to approve a waiver from 
Clean Air Act levels. That is really the next step that you 
asked about. We would have to assemble all of the tests that 
had been done, go to the agency and file for a 211(f) waiver 
from existing limitations on the blend level. That will likely 
occur, and we hope that it occurs with the support of other 
stakeholders.
    Mrs. Emerson. How long would that take just to get through 
the EPA process?
    Mr. Dinneen. EPA is required, under the act it just passed, 
the energy bill that just passed, to respond to a waiver 
request within 270 days.
    Mrs. Emerson. Okay. It is not a short period of time. But 
all right, I appreciate that. Thanks. It is just another 
interesting piece of this very complex and multifaceted puzzle 
that we have to deal with.
    Dr. Greene, let me ask you, in your testimony you really do 
mention several new and emerging technologies to not only help 
reduce our dependence on foreign oil but also our 
CO2 emissions.
    You may not want to answer this, but I would like you to 
try. Is there a most promising technology that could become a 
reality for the United States? In other words, what do you 
believe might be the most promising technology?
    Mr. Greene. Well, this depends on the time frame. If you 
are looking for the next few years, then I think energy 
efficiency, followed by biofuels. If you are looking for 
further out than that, then I think plug-in hybrids provide 
that. If we can get the cost of the batteries down mainly and 
solve some of the technical problems associated with deep 
discharges.

                        CO2 EMISSIONS

    Mrs. Emerson. CO2.
    Mr. Greene. I think we should not worry about 
CO2 emissions upstream from electric vehicles and 
electricity use in transportation, because if we have a 
meaningful climate policy, then the quickest sector to 
decarbonize will be the electric utilities. There are any 
number of studies that indicate that is the case, including 
several by the Energy Information Administration.
    I think, in the longer run, we may find that hydrogen 
vehicles are preferable. The biggest issue there is, I think, 
the storage onboard the vehicle, followed by developing the 
infrastructure. I think we will find that if we have a 
compelling fuel cell vehicle, that building the infrastructure 
is not anywhere near as hard as we seem to think it is.
    Our analyses for the Department of Energy indicate that if 
you have a compelling fuel cell vehicle, that is, one that is 
as cheap or cheaper than an internal combustion engine vehicle, 
that the cost of making a transition is on the order of tens of 
billions of dollars, which sounds like a lot of money, but for 
the whole U.S. transportation system it is not much at all.
    Mrs. Emerson. Okay. I appreciate it. Thank you very much. I 
just got told I have 3 minutes to go vote, so I will yield back 
for the moment anyway.
    Mr. Pastor. Probably the Chairman and other members are on 
their way back, so we are going to go head out and vote. So if 
you could just eat your cookies and enjoy.
    [Recess.]
    Mr. Visclosky [presiding]. We will reconvene the hearing.
    And if it is okay with Mrs. Emerson, I will recognize the 
gentleman from New York.
    Mr. Israel. Thank you very much, Mr. Chairman.

                       PLUG-IN-HYBRIDS READINESS

    I would like to ask a question of the representatives from 
General Motors and Toyota.
    Mr. Stricker, I think you had said ``if you build it, they 
will come'' only works for Kevin Costner. My question to you 
and to Ms. Stanek is, if the Federal Government--and let me 
back up, actually.
    I am not sure that regulation will compel the research, 
development and investment and deployment of plug-in hybrids. I 
am not sure that legislation will do it. I am pretty sure that 
purchase orders will do it.
    And so, if the Federal Government were, as a matter of 
policy, to say that as soon as the Secretary of Energy and the 
Secretary of Transportation certify that plug-in hybrids are 
commercially feasible and viable, that the Federal Government 
would swap out 100,000 of the gas-guzzlers in its huge Federal 
auto fleet for 100,000 plug-in hybrids, would that be at all an 
incentive for your company--or your company, Ms. Stanek--to, in 
fact, accelerate their research and development or their own 
investments in those technologies, or would it be completely 
irrelevant to you?
    Mr. Stricker. That is a good question. Thank you.
    One point to keep in mind, particularly as far as lithium 
ion battery technology, from our viewpoint, we are selling 
500,000 hybrids a year right now, 450,000, something like that. 
We are looking to sell a million a year next decade. We are 
looking for batteries, plug-in or no plug-in. Okay? So we are 
going to be putting the effort into looking at next-generation 
batteries with or without plug-in.
    So, you know, the joke I wanted to make was, well, the 
Government can be a fickle customer, because it changes very 
frequently. But that was kind of why I mentioned in my 
testimony not 500, not 5,000, and not 50,000. I don't know what 
kind of numbers you would be talking about if the Federal 
Government wanted to belly up and buy these vehicles.
    Mr. Israel. Has anybody in the industry done an analysis of 
what kind of purchases it would take in order to accelerate the 
research and development and deployment of those vehicles? Dr. 
Stanek?
    Ms. Stanek. I think everyone has researched it. It isn't so 
much a desire. We, too, see the volumetric issues. We are 
certain that even on the commercial side, customers, real 
customers, they would buy 100,000, 200,000, 300,000 of these 
vehicles if we had them ready today. When we announced our 
Volt, that was exactly the kind of stir and amplification we 
wanted. The question comes down to what Dr. Hillebrand says is 
the cost of the battery.
    Our vehicles are on target; things are looking great. I 
also agree that the infrastructure is in place. There is some 
metering we can talk about and different applications, but I 
don't think that is going to be mainstream. But it will be 
interesting. I do agree all those things are working well. But 
if the price point continues to be $10,000 more, even from a 
purchase standpoint, you know, we have a show-stopper.
    Mr. Israel. Okay.
    Ms. Stanek. So I would say focus on the loans--all the 
things necessary to commercialize battery development of the 
country, and then we are half-way home. That is where I see the 
focus. But volumetrically, interest, desire, we are there, 
because we see the end user very excited about it.
    Mr. Israel. Thank you.

         COST FOR LITHIUM ION BATTERY RESEARCH & MANUFACTURING

    Dr. Hillebrand, I want to follow up on a question that I 
think Mr. Pastor was developing. In your testimony, you say a 
sustained effort to develop battery manufacturing capability 
will be important. If the President of the United States called 
you and said, ``I want to develop an Apollo project-magnitude 
effort to research, develop and manufacture lithium ion 
batteries and I need to know how much it is going to cost and 
how much it would take to get there,'' what would the figure 
be?
    Mr. Hillebrand. As an engineer, it is difficult for me to 
come up with an answer for you as to what it really should be. 
I know there is substantial funding for battery research right 
now. We are talking about branching into areas that, at this 
point, we really don't do a lot of work on. I have been talking 
about manufacturing, which is a different type of technology 
and a different type of area than where we are right now. So it 
is a new area, it is a new program.
    You would want to pull together the A123s, JCI, Johnson 
Controls, the U.S.-based battery manufacturers, and pull them 
together to get some coordination of their different 
activities. And I know I was talking about SEMITECH, which I am 
not that familiar with, but I know essentially what the 
approach was on that--pull those groups together, and then you 
would want to look and see the end user, which would probably 
be GM and Toyota and some of those companies, and find out what 
it would be from them that would specifically make them order 
the batteries, and in the volume necessary to make the 
manufacturing happening.
    I am hesitant to put a number on what that is, because it 
is beyond what I have looked into. But, you know, the $50 
million I think that is spent on battery research right now, 
certainly a large proportion of that would be necessary to look 
at battery manufacturing.
    Mr. Israel. $50 million per year?
    Mr. Hillebrand. Per year in the U.S.
    Mr. Israel. In the U.S.
    In two separate meetings, General Electric and General 
Motors both told me that it would take about $500 million a 
year, over 5 years, to get us exactly where we need to be.
    Mr. Hillebrand. I wouldn't think that is that outrageous an 
estimate.
    Mr. Israel. My final question, Mr. Chairman, if I may, is 
to Mr. Dinneen.
    Mr. Visclosky. The gentleman has all the time he wants.
    Mr. Israel. Thank you.
    Mr. Dinneen, I have tried to help designate the Long Island 
Expressway in Long Island as an alternative fuels corridor, and 
spoke to the Governor's office and brought my county executives 
together. And we talked about E85. There are only, I believe, 
four service stations in the entire State of New York where you 
can get E85, and nowhere near Long Island.
    And as I delved into this, I learned that it is not a 
matter of profitability. In fact, my service station owner said 
that they could make a lot of money with the different tax 
incentives and rebates and NYSERDA grants; they could make a 
lot of money. There were two issues that were holding them up 
that I never expected to hear. One was it takes 2 years to get 
different State and county environmental and health permits to 
put an above-ground tank at a gas station that holds E85. The 
second was contracts with oil companies that specifically 
prohibit the service station from selling E85 because it 
competes with the oil that they are selling to the service 
station.
    And I am not sure, you may not have experience with the 
first problem; maybe that is just unique to New York. But I am 
wondering if you can comment on the second issue, where oil 
companies actually write into their contracts, ``You cannot 
sell a competing product with ours.''
    Mr. Dinneen. They deny that, of course. But there was a 
provision included in the energy bill that just passed that 
amends the Petroleum Marketing Practices Act that specifically 
prohibits refiners from engaging in that kind of activity, if 
it ever did. And so I believe that we now have a mechanism to 
assure that that type of thing doesn't happen.
    We ought to be maximizing E85 infrastructure. I can't 
comment on the permitting issue. I could look into it and get 
back, if you would like. But I do believe that we are on the 
threshold of seeing a tremendous expansion of E85 
infrastructure.
    Mr. Israel. Thank you. And just so you know, we have 
brought in all of our local officials, and we have actually 
started an initiative where they are going to streamline the 
permitting process, so that if a service station wants to sell 
E85, they can get their health and environmental permits 
expeditiously.
    Mr. Dinneen. Fabulous.
    Ms. Stanek. May I comment on the New York E85? Do you mind 
if I jump in here? Because we do work on E85 in New York, and 
the NYSERDA has done a wonderful job. By the way, Rochester 
opened an E85 station this week, $2.55 a gallon versus $3.25 
for gasoline. So the price is good right out of the gate.
    In Long Island, you are right, there is more E85 coming 
onboard. Part of the problem is real estate. Most of the 
retailers have limited underground tank storage. They generally 
do blending, so they can't drop a tank underneath. So, in 
addition, some of it is physical.
    Mr. Israel. Thank you, Mr. Chairman. I yield back.
    Mr. Visclosky. I have a number of questions.
    And, again, for either Mr. Israel or Mrs. Emerson, if you 
want to jump in or have questions, please, at any time, just 
get my attention.
    I have a question about Government research and the 
development of technology, because we are spending taxpayers' 
dollars to--as the bells go off again.
    And, Dr. Greene, in your testimony, you mentioned that 
researchers at MIT Sloan Automotive Lab estimated that fuel 
economy increases of 80 to 85 percent for internal combustion 
engines may be obtainable by 2030. Not saying it could, but 
potentially.

                          MILEAGE PERFORMANCE

    We had a witness last year, Mr. John DeCicco from 
Environmental Defense, on transportation technologies. And he 
mentioned that while technology may be the solution, lack of 
technology is not the problem, explaining that if current 
technologies are used in automobiles to enhance performance, as 
opposed to mileage, we are not solving that part of the 
problem.
    Because we have and will continue to spend money on various 
technology developments, what assurance do we have that we are 
going to actually now be applying this to mileage performance? 
If anybody wants to comment.
    From my perspective, at this point, now we are wasting 
people's money just to help auto companies increase their 
performance, as opposed to mileage, if that is what we are 
concerned about.
    Mr. Stricker. Well, we do now have a 35-mile-per-gallon-by-
2020 requirement on the auto industry from the energy bill, 
which is a 40 percent increase in fuel economy over the next 
10, 11 years.
    Mr. Greene. Yes. I think that kind of policy directs the 
auto companies to take technologies that they could otherwise 
use to increase vehicle performance or increase vehicle size 
and weight and, instead, apply it to fuel economy.
    We believe that the market undervalues fuel economy 
improvement for a number of reasons. We know from studies that 
consumers don't act like the model of rational economic actors. 
They don't do calculations on how much fuel saving is worth to 
them and that sort of thing. And we think the reason for it is 
that they are uncertain about the value of fuel savings and 
they are loss-averse. So when someone says, ``Pay some money up 
front to get a more fuel-efficient car, and in the future you 
will get fuel savings,'' they discount the uncertain value of 
the fuel savings.
    So we think there is, in effect, a market failure there. 
And as a result, when technology advances come along in an 
unregulated market, they get applied for increasing the power 
of the vehicles or they get applied to increasing the size and 
weight of vehicles.
    Now, the study by MIT assumes that to get this 80 to 85 
percent improvement in fuel economy, material substitution 
would be used to reduce and design would be used to reduce the 
weight of vehicles by about 20 percent, and that engines would 
be converted to turbocharged direct-injected lean-burn engines; 
that technologies that we don't yet have, like variable 
compression ratio, would be implemented; and that we would have 
a superior lean-NOx catalyst that would allow these 
engines to operate a lot of the time in lean air-fuel mixture 
which improves their fuel economy. So there are some 
technologies that are close but not there yet that are assumed 
in that MIT study.

                        CO2 REDUCTION

    Mr. Visclosky. Could I ask, biofuels--I appreciate the 
value, as far as reducing dependency on foreign and domestic 
oil. Are we seeing an advantage as far as CO2? Or is 
that a neutral or is that a negative effect, as far as 
CO2?
    Mr. Dinneen, I think you said it is a positive effect, as 
far as reducing CO2.
    Mr. Dinneen. The models that are available today really 
were developed in Oregon, and maybe Dr. Hillebrand would like 
to comment as well.
    But I will tell you that the Greek model, which is sort of 
the default thing everybody turns to today to evaluate 
greenhouse gas benefit, demonstrates that, overall, the ethanol 
industry will receive about a 22 percent reduction in 
greenhouse gases. Now, there are some that are better than 
that, depending on what their fuel source is, if they are 
natural gas or coal. There are some that are not as good as 
that. But, overall, the industry today demonstrates about a 22 
percent reduction per gallon of ethanol.
    Now, you look to the future with cellulosic ethanol as a 
feed stock and, again, with some assumptions about cogeneration 
and other things as the industry will develop. You could have 
as much as a 90 percent reduction in greenhouse gases.
    Mr. Hillebrand. We have done a chunk of that analysis that 
he is referring to. And I just want to confirm what he is 
saying, that when you look at it, you play with your variables. 
You can get to the extreme bad case, which is using old 
assumptions and not doing things the ways that are intelligent, 
and then you don't see a lot of CO2 reduction. 
However, if you do it intelligently, if you are looking at 
modern growing methods and yields and all sorts of things like 
that, then you do come out with substantial CO2 
reduction.
    Mr. Greene. So here is the other opinion.
    Mr. Visclosky. That is why we had----
    Mr. Greene. The GREET model, I think, is one of the 
international standards in this area. And it is a very good 
piece of work.
    Mr. Visclosky. So it does factor in, I assume, the 
CO2 generated in the creation of the fuel too?
    Mr. Greene. Yes.
    Mr. Dinneen. Yes.
    Mr. Greene. What it doesn't try to do, and what the two 
recent articles in Science magazine bring out, is that there 
can be land-use changes induced by using land to grow corn for 
ethanol or soybeans for diesel or whatever. There can be 
induced land-use changes in the U.S. or somewhere else in the 
world. And these induced land-use changes can involve the 
clearing of land, forest land, grassland to make crops. And if 
that happens, then there is a carbon debt, if you will, 
released into the atmosphere from the biomass that was on that 
land and the carbon material in the soil. And that can take 
anywhere from 17 to 90 years to make back by the benefit from 
corn-based ethanol.
    Now, this is a really complicated subject, and maybe you 
want to have a hearing just on this. But Mark Delucchi of UC-
Davis, who has his own model, the Genius model, which is also 
used elsewhere in the world, indicates that there is no net 
benefit from corn-based ethanol, approximately. Alex Farrell at 
UC-Berkeley, who did a survey of GREET model, Genius model and 
other studies, came to the conclusion that there was about a 10 
percent benefit from corn-based ethanol. And these recent 
studies, which take into account--and Delucchi's work takes 
into account induced land-use changes. So he is saying no 
benefit, if you take into account induced land-use change. The 
Science articles are saying it could be twice the greenhouse 
gas emissions of gasoline, if you take into account these 
changes. So there is a wide range of difference of opinion on 
the net benefits of corn-based ethanol if you take into account 
the induced land-use change.
    Mr. Dinneen. And, indeed, as Dr. Greene said, this is a 
very complicated issue. And a lot will depend upon the 
assumptions that go into these various analyses. Everybody is 
trying to wrap their arms around the life-cycle analysis and 
understand what some of these inputs would be. And there will 
be land-use effects, which I think people are trying to 
understand better as well.
    The report that Dr. Greene had just referenced in Science 
was a situational analysis, and it looked, really, at the 
worst-case scenario. And some of the assumptions that they made 
were just not at all reasonable. It assumed, for example, that 
there would be 30 billion gallons of corn-derived ethanol in 
the United States, when the law doesn't allow for that; it 
allows for half of that. It assumes that the land coming into 
production would be in the most environmentally sensitive parts 
of the globe, and that is not a realistic assumption.
    It does, sort of, set the benchmark and demonstrates, yeah, 
you can produce biofuels in a very unsustainable way. But you 
can also produce biofuels in a very sustainable way. And, so 
long as your agricultural processes or constraints are such 
that you are encouraging the most sustainable technologies, as 
I believe the United States does, you are not going to be 
clearing forests in the United States to make way for biofuels. 
And farmers today are more and more engaged in no-till/strip-
till, you know, very environmentally sensitive technologies.
    Mr. Visclosky. And I don't mean to cut you off, but we are 
getting short, and Mrs. Emerson has an Ag meeting too. And it 
is unclear as to what is happening on the floor.
    I don't know, do any of you have to leave? And I am not 
asking to you stay until 9:00. I am just wondering, if this 
sorts itself out in the next 10 minutes.
    Mr. Greene. I have to leave at 3:00.
    Mrs. Emerson. No Members at Ag. So I can just stay here. 
Our side walked out today.
    Mr. Hillebrand. The Science article--I have here about 
three pages of our rebuttal, essentially, to the Science 
article, which will be posted tomorrow--I won't go all the way 
through it--but Delucchi's errors as he was going through and 
doing the analysis.
    So this is something that is going to go back and forth for 
a very long time on land usage and such. But we don't see the 
same results, and I think we have some really good technical 
reasons for not seeing the same results.
    Mr. Visclosky. Not out of disrespect, but Dr. Stanek, 
British Petroleum, BP, University of California-Berkeley, I 
guess Lawrence Berkeley National Lab, University of Illinois, 
are looking at possible--so you don't have to make any change, 
as I understand it, in the infrastructure.
    Do you want to comment on that approach, as well?
    Ms. Stanek. So you are suggesting maybe, like, a butanol 
pathway and different things that can utilize the existing 
infrastructure.
    Mr. Visclosky. I assume that is the gist of your----
    Ms. Stanek. It is one of the pathways they are looking at. 
They are looking at biomass, longer chemical strings that look 
more like petroleum. They are looking at butanol, which is an 
extender. We are very bullish on those, but we just have no 
production quantities of it. So we like the directions as it is 
going.
    We do like the algae discussion. We are actually working 
with a university that is taking crops growing in the desert, 
applying salt water, to grow to fuels. There are a lot of 
approaches. We are for them all.
    But keep in mind, for real, meaningful transportation 
integration and discussion and teamwork, we need billions of 
gallons of fuel. And that is ethanol.
    Mr. Visclosky. Lastly, because we had had a conversation 
before, and Mrs. Emerson and I do have to leave now, is on 
hybrids. Whoever had the best summary of the conversation we 
informally had. Because with the plug-in, as I understand it, 
you are getting additional mileage on the vehicle, but you also 
have a greater CO2 problem, you want to go first?
    Mr. Stricker. Sure. I will try to be quick, to leave my 
colleagues some time.
    Mr. Visclosky. You know what--we are stuck. We have to go.
    Mrs. Emerson. You have to go. I am good.
    Mr. Visclosky. Go ahead. Keep going. You just have to vote 
on this one, and there will be two more maybe.
    Mr. Stricker. We were discussing a couple of items, and I 
am not exactly sure which one the Chairman was referring to. So 
I will weigh in, and my colleagues can also weigh in.
    This was during the break. A point that I was making to the 
Chairman was that, in the future, whatever battery advances are 
made, whether they are made because we are trying to achieve a 
plug-in hybrid or whether they are being made because we are 
trying to just advance battery technology for use in hybrids or 
other vehicles, what needs to be looked at is not the delta in 
fuel savings or CO2 savings between a plug-in hybrid 
and a conventional vehicle but the delta in fuel savings and 
CO2 emissions between a plug-in hybrid and a hybrid. 
Because hybrids are out there, and you can't have a plug-in 
hybrid without a hybrid to start.
    So a consumer will be faced with a choice in the future, 
potentially, if we have plug-ins: Do I want to buy a hybrid 
that will be a very, very good hybrid if there is new battery 
technology, or do I want to make an additional investment for 
some incremental benefit to buy a plug-in hybrid?
    And I think a lot of people don't think about that point. 
They just say, a plug-in hybrid compared to a 25-mile-a-gallon, 
average, mid-sized car and not a plug-in hybrid compared to 
the--the consumer is going to look at the marginal cost and 
marginal benefit between those two technologies.
    Mr. Hillebrand. In terms of numbers, conventional car, it 
costs you $1,000 a year for your gasoline. A hybrid, it would 
be about $300 a year for your gasoline. A plug-in would take 
you to about $150 a year for gasoline.
    So what you are really saying is, your real savings is not 
from $1,000 to $150. You are saving $150 a year. You have to 
pay for your battery and all your equipment out of that $150 a 
year. It takes you a lot of years to pay for a plug-in at only 
that kind of savings, because you are already starting from an 
efficient point.
    Ms. Ziegler. Your comment was from around the 
CO2 emissions. The chart that we saw there reflects 
current electricity generation, which I think we all believe 
and understand will change. And so, if you move to--you know, 
in California, where we have mostly gas, you see a much 
different picture in terms of CO2 emissions. The 
plug-in hybrid is very beneficial.
    So it really depends on the assumptions you make about the 
future generation mix of electricity, in terms of how much 
CO2 benefit you get for plug-in hybrids.
    Mrs. Emerson. Of course, we don't know how long it is going 
to take for us to have all States, for example, adopt the same 
standards as California. And I dare say there are probably some 
States who don't want to, at least right now, because of cost 
and just having to make the transition, I think.
    Mr. Hillebrand. If you are going to deal with climate 
change, you are going to need a Federal policy.
    Mrs. Emerson. I understand.
    Mr. Hillebrand. I just want to re-emphasize that and point 
out that, from oil dependence as well, the plug-in hybrid gives 
you an ability to substitute electricity for oil. So that is 
beneficial also.
    Mrs. Emerson. Are there any other comments on this?
    Ms. Stanek. Again, I just need to throw in for hydrogen. I 
know we talked about it earlier. It is important. We are really 
on the cusp of great things for all the companies. So, in 
addition to this debate on biofuels and plug-ins and hybrids, 
let's not forget that we really do have some strong hydrogen 
programs, with all the OEMs, and infrastructure, for that is 
important as well.
    Mrs. Emerson. Let me ask a follow-up question just on the 
strict hybrid, not a plug-in. And, you know, obviously, hybrid 
vehicles are always a more--or appear to be a more appealing 
economic option as long as gas prices stay high. And this 
country is notoriously bad for, kind of, bouncing around 
because, obviously, as gas prices diminish, then we don't feel 
that same urgency to go out and perhaps purchase a hybrid car.

         CONSUMER INTEREST IN ALTERNATIVE VEHICLE TECHNOLOGIES

    Let me ask you, Mr. Stricker and Dr. Stanek and any others 
who want to jump in, how do we maintain consumer interest in 
alternative vehicle technologies despite the inevitable 
variation in gas prices?
    Mr. Stricker. Great question. A couple of points, I guess.
    First of all, as I said in my testimony, our goal is to 
reduce the cost of our hybrid system by another 50 percent 
moving into the next decade. So that is one hedge against 
variability in fuel prices, is higher volumes mean lower costs; 
technological advancement hopefully means lower costs. And so 
that is one method.
    The other, it is kind of interesting, you know, when you--
people sometimes ask about the economics of hybrids. And, you 
know, it is not a completely straightforward discussion, 
because there are different kinds of vehicles, there are 
different kinds of hybrids, there are different option packages 
that hybrids are sold with at the dealership level, and people 
drive differently. They drive different mileage; they recoup 
costs differently over time. And some of that has to do with 
what is the fuel price.
    What I always tell people is the good thing about hybrids 
is they start--whatever you had to pay up front for them, they 
start paying you back the minute you drive it off the dealer's 
lot. You are saving fuel right then. You know, people go into 
dealerships and they will pay upwards of several thousand 
dollars to get a V-8 engine, so they are making an up-front 
payment, and the minute they drive it off the dealer's lot they 
are losing money compared to if they would have stuck with, 
let's just say, a standard V-6.
    So there is an overall value proposition to any advanced 
technology. Is it clean? Does it save you fuel? Does it make 
you feel good? You know, there are people who--Bob can probably 
speak to it--are interested in ethanol because they think it is 
the right thing to do. It is a domestic resource; it doesn't 
come from the Middle East. So, you know, the value proposition 
for alternative fuel vehicles I think goes beyond just gasoline 
price, I guess is what I am trying to say.
    Mrs. Emerson. I appreciate that.
    Dr. Stanek.
    Ms. Stanek. I do think it is a basket of decisions, and no 
two people have the same basket. So the elements--maybe the 
same priorities--are different.
    So I think, to keep consumers interested, which is really 
your discussion, I think when we see gas prices hovering at $3 
and above, it keeps them interested. There is something about 
that number that drives different decision-making, especially 
to raise the fuel-economy metric to be a more important metric 
than the others. It is absolutely true, we see it over and 
over, that design, price, affordability, all these things are 
much more important cues. Now, I am not saying performance, but 
just the overall appeal of the vehicle and lifestyle needs. I 
mean, there are just certain things. You have a lot of kids, or 
you need it for business. So----
    Mrs. Emerson. Appreciate that.
    Anybody else?
    Mr. Greene. Could I comment on that? This is the reason I 
brought up the history in my discussion, is that, in effect, 
the problem was solved in 1986 when OPEC collapsed and oil 
prices came down. But then when oil prices came down, we said, 
well, we don't need to do anything anymore. So the problem now 
is back.
    And I think this is a very difficult problem to solve. 
Consumers always accepted fuel economy standards as a solution, 
and manufacturers obviously did not. But what I think solves 
the problem of oil dependence in the long run is dealing with 
climate change, because that problem is not going away any time 
soon.
    Mrs. Emerson [presiding]. Mr. Israel.
    Mr. Israel. Thank you.
    We have a fairly fluid situation on the floor right now--
not a fairly fluid--a very fluid situation on the floor right 
now. And the Chairman, I believe, will be returning. So we are 
going to keep the hearing going until he returns.
    I have several questions. There are recent reports that in 
Israel there is a fascinating project developing. It is a 
consortium between Renault and some private investors that will 
give Israelis the capability--they are trying to transform 
their fleet to an all-electric fleet. Now, it is easier to do 
in Israel because you can drive from Jerusalem to Tel Aviv. I 
think it is just maybe 40 miles or so. But that is an example 
of a government that has made a very deep commitment to trying 
to transform the fleet, but it would not have happened without 
the investment community.
    Again, I will go to Dr. Stanek and Mr. Stricker from the 
automotive industry. What should the Federal Government do in 
order to incentivize private capital or more private investment 
in the research of new alternative fuel technologies? Dr. 
Stanek.
    Ms. Stanek. You know, I may be out of step here, but I 
think the R&D on the science aspect is going very well. And 
when I look at biofuels, in particular, there has been about a 
billion dollars that will be placed on advanced biotechnology 
for biofuels.
    So we talked about the battery commercialization. I would 
say all these things apply the same. Matching funds, you know--
and, again, with ceilings, not for eternities, but to encourage 
people to get in the business of, even retailers at fuel 
stations, more aggressive matching funds. Tax credits do work. 
So something that says, for instance, like a green retailer 
program, it could be a combination of biofuels, it could be 
hydrogen, it could be a union working on plug-in 
electrification.

                         GREEN RETAILER PROGRAM

    Mr. Israel. A green retailer program? Elaborate on that, if 
you would.
    Ms. Stanek. A green retailer program essentially sends a 
signal to a retailer, ``You can dispense the fuels as you wish. 
But moving forward, if you would like to actually get a tax 
incentive--maybe it is one, two, three cents off their gasoline 
sales, because the volumetric sales, correct. If you put in the 
following, a biofuel station, if you put in hydrogen, and you 
market--you have to market, you can't have an idle tank or a 
hydrogen dispensing--we will give you one, two, three, four 
cents off for a period of time on your regular volumetric 
sales.''
    So what you are doing is you are causing the infrastructure 
and things to change, but it is not for an eternity. So in 
other words, the State and the Federal Government get their tax 
revenue back from that.
    But it will require tax schemes similar to that and also 
matching funds for more conversion to get the larger investment 
community involved.
    Mr. Israel. Let me ask a related question.
    I am sorry, Mr. Chairman.
    Mr. Visclosky [presiding]. Just because Mr. Olver has not 
had a chance to ask. This will be a series of eight votes.
    Mr. Olver. I will be happy to let my colleague go. I am 
willing to stay here for at least 15 minutes.
    Mr. Visclosky. Well, we have got about nine.
    Mr. Olver. All right. All right. Thank you very much. I 
don't mean to take somebody else's place here.
    Dr. Hillebrand, you were the first person to start 
talking--if I start asking things that have already been 
covered, please tell me, and I will just take a look at the 
testimony.
    You were talking about battery technology and lithium ion, 
particularly lithium ion and nickel hydride. Do you have a 
sense of how many dollars have been spent on research on 
lithium hydride? And conversely, nickel lithium ion? Does it 
involve hydride or not? Some of them do.
    Mr. Hillebrand. Yes. But lithium ion, many different 
chemistries and many different----
    Mr. Olver. On the lithium hydride and nickel, both 
technologies, both governmental money and private money on 
those----
    Mr. Hillebrand. I think the fundamental breakthroughs in 
both of those did come from Government Federal investment, both 
on nickel hydride, which was a combination of Federal funding 
and the ovanics company, Olshinski, up in Michigan.
    Mr. Olver. What is the dollar value of it, roughly? Your 
thinking? I know the wheels are grinding to try to come up to 
something close to that.
    Mr. Hillebrand. Yes. Well, it has been an ongoing over 10 
years, probably 11 years, of investment. It was fairly small 
when it started out. It was probably sub-$10 million, and now 
it is probably in the $40 million to $50 million range.
    Mr. Olver. In either or both cases?
    Mr. Hillebrand. I am sorry. I am looking at the full 
battery development program. And those are partially 
commercialization, partially chemistry development. I am sorry, 
I don't know. I don't know the answer to that.
    Mr. Olver. Okay. Well, if you want to tell me, can you--
there was a time when I was a young person that I was an 
electrochemist, and I am trying to remember from way back then. 
You mentioned that the lithium ion, that key issues were safety 
and cost.
    Mr. Hillebrand. Yes.

                          NICKEL METAL HYDRIDE

    Mr. Olver. What are the key issues in the case of nickel 
hydride?
    Mr. Hillebrand. First and foremost, the cost of nickel, 
which is going up. It has gone up drastically, and it will 
continue to go up. Nickel metal hydride batteries are limited 
in their energy storage capacity.
    Mr. Olver. How many hydrogens per nickel?
    Mr. Hillebrand. I don't know. As to how the connection----
    Mr. Visclosky. He is serious.
    Mr. Hillebrand. I know he is.
    Mr. Olver. You said that you are not one of the chemists at 
an earlier stage. While I was floating in and out, I do 
remember hearing you say that. So you don't know how many 
hydrogens per nickel.
    One of the key limitations in any of these things relates 
to hydrogens, how many hydrogens can you--it is a density--the 
energy density you can get out.
    Mr. Hillebrand. That is right.
    Mr. Olver. And I think in nickel hydride, it is not more 
than two or four. I think there are some materials that have 
been worked on that get to eight or a dozen. And maybe with 
metal ions that are not any heavier than the nickel. So it 
depends.
    And what are the other limitations here? In the case of 
lithium hydride, you say cost and safety. Is there another 
major limitation, or is that it?
    Mr. Hillebrand. No, there are many limitations with the 
lithium--low temperature, performance. It tends to have trouble 
when it is working below temperatures. The comparison directly 
between lithium ion and nickel metal hydride, nickel metal 
hydride has severe temperature limitations, which is why a lot 
of the money in the vehicles actually goes into keeping the 
batteries cool, whereas lithium ion can be--the temperature can 
actually go up another 15 degrees C, which lowers the whole 
system cost quite a bit.
    Mr. Olver. Aren't you substantially limited by the number 
of recharges that you can get out of one of these batteries? To 
be functional in the vehicles, you have to be able to recharge 
them again and again and again. And doesn't it also include the 
rate of the electrochemical reaction that is going on?
    Mr. Hillebrand. You know, I mentioned earlier, some of the 
chemistries address some of the problems within lithium ion. I 
keep going back and forth with the different chemistries. With 
nickel metal hydride, you cannot deep discharge the battery the 
way you can with lithium ion. You work with a state of charge. 
You are very shallow.
    Mr. Olver. Is there a review article that a somewhat 
intelligent layperson could understand on this that you could 
direct me to about battery technologies?
    Mr. Hillebrand. There is a report put out by the AABC, 
Menahem Anderman, that comes out every year, excellent report.
    Mr. Olver. How big a report is it? Does it have a big 
density----
    Mr. Hillebrand. 70 pages long.
    Mr. Olver [continuing]. Or is it 10 or 20 pages?
    Mr. Hillebrand. It is about 70 pages long. And it does walk 
through these chemistries. It is an excellent report, actually. 
It is what I used when I was putting together my presentation 
for this.
    Mr. Stricker. Lots of pictures too.
    Mr. Hillebrand. It is just a very good overview.
    Mr. Olver. Let me just say as a comment from what I heard 
from several different people say from questions and a bit in 
the testimony, it seems to me that it is utterly critical that 
we do not close the door on the chemistries, either on the 
research and development and the different technologies and 
chemistries either in battery technology or in biofuels, 
because, I mean, there are multiple ways of doing it. I have 
heard of others, at least in the case of the battery 
technology, and each of them has its own set of limitations 
that one works on, and sometimes you make breakthroughs.
    In the case of the biofuels, we start out with ethanol 
procedures that have come up that are now moving ethanol from 
corn ethanol to cellulosic. The cellulosic people talk about 
doing things that either are several steps of biological 
degradation to get to your ethanol or you get to your ethanol 
by a mixture of chemical and biological steps, and all the 
efficiency that go on with those become a problem, a possible 
problem.
    And then there are those that think they have an almost 
holy grail of a one step from cellulosic, to which particular 
simple cellulosics you do that with, to suspect it would be 
easiest, say, from algae back to ethanol.
    And then there are the butanol people.
    Mr. Hillebrand. We are doing testing with butanol right 
now. It is a very exciting fuel.
    Mr. Olver. And the biodiesel people. And there are people 
who are out there doing research on taking the biomass and 
doing essentially a breakdown all the way to hydrocarbons and 
CO2 or----
    Mr. Hillebrand. Gas.
    Mr. Olver. Think about that a little bit. And then 
reconstituting--it is hard for me to think that that could 
possibly be energy-efficient in the system. But I suppose the 
energy efficiencies of some of the sequences of other steps in 
other places might be so extensive that it actually becomes 
easier to break them down all the way and then start putting 
them back to whichever ones you want, which has--if you don't--
in the building up again, you don't make them into ethanol with 
oxygen, so the ethanol gets you 65 percent or, say, 67 percent 
as much energy as--and butanol is somewhat more. Then your 
hydrocarbon and the octane range or whatever happens.
    Mr. Hillebrand. One of the most exciting things we are 
working on right now is a project we call the Omnivorous 
Engine. It is essentially a diesel cycle engine that runs on a 
range of different types of fuels. Essentially it sniffs what 
fuels it has and adjusts its engine parameters to run on that 
fuel, so combinations of butanol, diesel, Fischer-Tropsch, 
biodiesel, et cetera. It optimizes itself for all these 
different types of fuels. Because that way, you can have any 
fuel source you want. You combine them all together, and the 
engine optimizes itself for the various combinations--which, 
long term, you don't want a single fuel. You want all sorts of 
different sources and all sorts of different fuels.
    Mr. Olver. That is why I am saying we must not close any of 
the research on any of these technologies, because there are so 
many possibilities. And if we just head one way, we may make a 
terrible dead-end, like dead-ends in evolution that just didn't 
go anywhere and didn't produce anything useful. We think we are 
fairly useful, but it was a fairly complicated process.
    If I may, they were talking, so I will just go on for a 
while--I would love to hear----
    Mr. Visclosky. I am learning.
    Mr. Olver. I would love to hear the debate among you folks, 
particularly among the doctorates who maybe have some better 
understanding of the complexity of the chemistries involved in 
these new papers. I have both of them here in my file. They 
were given to me by a colleague, a very close friend who is a 
professor of chemistry. And quickly, those sort of things reach 
me. Whether I have time to read them and understand them I am 
never quite sure.
    We have gone from an earlier stage when we are talking 
about ethanol from corn, and 4 or 5 years ago there were a 
bunch of papers that ranged over whether it was negative or 
positive there, and the different inputs that were put into the 
energy balance equation were not as complete, and some things 
weren't taken into account. But I think we have finally pretty 
well concluded that they were on the positive side.
    But in those early papers, none of them looked into the 
land-use changes, which are quite extensive. If the land you 
take out in order to make cleared land to grow some other kind 
of biomass that is more easily cropped, then you are going to 
end up with a horrible carbon deficit.
    And even if you use what these papers are suggesting, that 
even as you use old crop land, if you move from crop land, 
presently crop land, and force growing crops onto this less 
useful land--well, anyway, I think the discussion already came 
up between Greene and Hillebrand on this one. Clearly, these 
papers are making--and I think we will have to be answered. 
These are Minnesota and Princeton people, who are probably just 
as good as the Dartmouth and others.
    Mr. Visclosky. And I apologize, gentlemen----
    Mr. Olver. But there will be many more papers coming out on 
the stuff.
    Mr. Visclosky. I do want to thank all of the witnesses. I 
want to thank Mrs. Emerson for coming back and for her 
patience.
    And I assume most of you have testified before 
congressional committees before, and I hope you appreciate that 
it is not lack of interest or attentiveness, and your testimony 
has been read. Your work and your time has been appreciated. 
And as I like to describe it, we know where you live, because 
obviously we have to make funding decisions this year, and we 
would like to make all deliberate haste in moving at the right 
pace in the right direction. And it has set the stage for the 
rest of our work this year, and I want you to know we 
appreciate it very much. Thank you very much.
                                     Wednesday, February 27, 2008. 

                         BUREAU OF RECLAMATION 

                                WITNESS

ROBERT W. JOHNSON, COMMISSIONER, U.S. BUREAU OF RECLAMATION

                 Chairman Visclosky's Opening Statement

    Mr. Visclosky [presiding]. Good morning. I would like to 
bring the hearing to order, and before I give my opening 
statement, just want to sincerely welcome back Mr. Rehberg to 
the committee--it is good to have you back--and also very good 
to have Ken Calvert on the subcommittee as well and the wealth 
of knowledge he brings to the water issues, in particular, that 
we face, as well as a new and fresh perspective with the 
Department of Energy.
    So, Ken, also very good to have you on the subcommittee.
    This morning, we are pleased to have the Honorable Robert 
Johnson, commissioner of the Bureau of Reclamation. We would 
also like to welcome the staff that are with you. I think most 
people understand Mr. Hobson and my loyalties. I will point out 
for Mr. Wolf's benefit that my 17-year-old son just returned 
from his visit to Ann Arbor this past weekend. We do not yet 
know what particular decision he may make but did want to point 
that out for the record, if I could.
    Mr. Wolf. I have four family members with Notre Dame 
connections. [Laughter.]
    Mr. Visclosky. Give them the money. Give them the money. 
[Laughter.]
    Okay. Now we will continue here.
    Future growth in the West will continue to put significant 
pressure on available water and power supplies. The nation will 
face challenges as competition for these scarce resources 
increases and will need to ensure the effective management of 
its infrastructure in the public interest.
    In light of these growing demands, the administration's 
proposal to reduce funding for the Bureau of Reclamation from 
fiscal year 2008 levels represents a failure to address the 
water infrastructure requirements of our nation, a failure to 
invest in America.
    The request for the Bureau of Reclamation totals $926.8 
million, more than $181 million below the fiscal year enacted 
level, notwithstanding the legislative proposal for the new San 
Joaquin River Restoration Fund.
    The request also contains an appropriation for the Central 
Utah Project Completion Account of $42 million.
    In total, the administration seeks approximately $969 
million in discretionary appropriations for the Department of 
Interior from the subcommittee. The request is partially offset 
by $51.3 million in discretionary receipts from the Central 
Valley Project Restoration Fund.
    I would like to ask, Commissioner Johnson, for your 
assistance. The subcommittee may be asked to move quickly and 
mark up our fiscal year 2009 bill sometime in mid-May. In order 
for us to meet this aggressive schedule, I would need your 
assurances that the hearing record and any questions for the 
record and supporting information requested by the subcommittee 
are cleared through your department and the Office of 
Management and Budget not later than 4 weeks from today.
    Members are to submit their questions for the record by 5 
p.m. today, and we will submit all questions to the department 
by close of business today.
    With those opening comments, Mr. Hobson, we would certainly 
turn to you for any opening comments you would like to make.

                     Mr. Hobson's Opening Statement

    Mr. Hobson. Thank you, Mr. Chairman.
    Welcome, gentlemen, and welcome, Ken. Mr. Rehberg is back. 
I am not sure if that is good or not.
    But, anyway, I want to welcome Commissioner Johnson to the 
subcommittee again, and thank you for your work and, Mr. Wolf, 
Murray, for your work also. It is good to see you again.
    With the difficulties that we sometimes face with other 
agencies under our jurisdiction, I usually look forward to our 
hearings with the Bureau of Reclamation. Today, though, I have 
got an issue on my mind that is disturbing to me.
    We recently reviewed the bureau's first 5-year plan, and, 
frankly, that is a step in the right direction that you got 
one, but I am, frankly, disappointed with the lack of quality 
and depth in it. It really doesn't tell us anything more than 
your budget justifications. In fact, your disclaimer, ``The 
out-year numbers represent place holders pending decisions in 
future years,'' makes the point very clearly.
    We intend the 5-year--I think we do--we intend the 5-year 
plans to be much more than placeholders, and I hope, 
Commissioner, that you will be able to share with the committee 
today some progress on out-year planning.
    If the Department of Interior or OMB prevented you from 
putting any useful content in the plan, we could have helped 
you out if you would come to us sooner on this. There has got 
to be a change. The Corps of Engineers has gotten it now, and 
they are going to try to do some planning. But if this 
committee in the future is going to do its job better with you, 
we have got to have better 5-year plans. I think it will help, 
not hinder, what we do in the future.
    So thank you for appearing with the subcommittee today, and 
continue the good work within your agency, but I do have 
problems with the 5-year plan.
    Thank you, Mr. Chairman.
    Mr. Visclosky. Thank you, Mr. Hobson.
    Commissioner, if you care to have an opening statement, and 
your entire statement will certainly be entered into the 
record.

                    Mr. Johnson's Opening Statement

    Mr. Johnson. Thank you, Mr. Chairman, Mr. Hobson and other 
members of the subcommittee. It is a pleasure to be here today 
in support of the president's 2009 budget request for the 
Bureau of Reclamation.
    As you mentioned, Mr. Chairman, I have Bob Wolf, our 
director of program and budget, and also Reed Murray, who is 
the program manager of the Central Utah Protection Completion 
Act should you have questions about that program.
    The overall fiscal year 2009 request for Reclamation totals 
$926.8 million, as you said, Mr. Chairman. This request 
provides funding for priorities of the reclamation program 
consistent with the president's objective of achieving a 
balanced budget by 2012.
    I have submitted written testimony, as you mentioned, which 
presents the detailed summary of our appropriation request.
    For my oral presentation, I would like to talk about three 
areas of activities that comprise the majority of the 
Reclamation budget: First, maintaining our existing federal 
infrastructure; second, our river restoration programs that are 
required for environmental compliance; and, three, funding for 
new water development.
    In addition, I would like to talk about Secretary 
Kempthorne's Water for America initiative.
    First, maintaining our existing infrastructure, Reclamation 
budget reflects the need to maintain our existing portfolio of 
projects. Reclamation has over 472 dams, 348 reservoirs, 58 
power plants and many other water delivery facilities. Our 
infrastructure provides water to 31 million people, 10 million 
acres of irrigated farmland, generates 44 billion kilowatt 
hours of electricity annually.
    Much of that infrastructure is now 50 years old or older, 
and its proper operation and maintenance is our top priority. 
Almost $400 million of the Reclamation budget is dedicated to 
making sure that our facilities are operated and maintained in 
a safe and reliable fashion.
    Second, we frequently find ourselves having to manage our 
projects to meet changes in social and public values that are 
embodied in the Endangered Species Act and other federal and 
state environmental laws. In most cases, meeting these 
requirements has been manifested in the development of broader 
river basin management and/or restoration plans.
    Implementation of these plans is becoming a significant 
element of the reclamation programs. Reclamation's involvement 
is almost always necessary to meet regulatory obligations 
associated with the operation of its water and power facilities 
and is, therefore, a critical part of our water and power 
mission.
    Reclamation is currently involved in environmental 
restoration programs on the Colorado, the middle Rio Grande, 
the Platte, the Klamath, the Columbia, the San Joaquin, the 
Trinity and the Sacramento Rivers. We anticipate that our 
efforts on these and other river systems will continue to be a 
significant part of our program. Our 2009 request contains over 
$150 million for these activities.
    Third, Reclamation continues to be actively involved in 
programs to develop new water supplies and infrastructure. In 
total, these programs represent over $150 million of our 2009 
request. Examples of ongoing activities in the 2009 request 
include the Animas-La Plata project located in southwest 
Colorado. This project will provide water supplies for Indian 
tribes and Municipal and Industrial (M&I) use in the states of 
Colorado and New Mexico.
    The Reclamation budget includes funding for water systems 
to deliver surface water to Indian and non-Indian communities 
in the rural Great Plains. These projects provide good quality 
water to areas where existing water supplies are either 
nonexistent or very poor quality.
    Three water reuse projects under Title 16 of Public Law 
102-575. Reclamation continues to provide modest funding for 
projects that allow the reuse of existing wastewater supplies. 
Located primarily in southern California, these projects 
provide drought-proof supplies that help reduce demand for new 
sources of water that would otherwise be developed with 
considerable expense and environmental controversy.
    Four, Indian water distribution systems in Arizona. Under 
the authority of the Central Arizona Project, Reclamation is 
funding the construction of water delivery systems to serve 
Colorado River water to Indian tribes in Arizona. These systems 
provide new supplies to settle Indian water right claims and 
meet economic development needs on the reservations.
    I would like to turn briefly to the secretary's Water for 
America initiative. Chronic drought, changing climate, rapid 
population growth and increased environmental and energy needs 
have created water conflicts leading to growing interstate and 
intrastate competition for water resources.
    In fiscal year 2009, Reclamation will partner with the U.S. 
Geological Survey to implement the Water for America initiative 
aimed at addressing 21st century water challenges and ensuring 
security for future generations.
    The fiscal year 2009 budget request for Water for America 
is $31.9 million. Of this amount, $19 million appears as the 
Water for America initiative line item. The remaining $12.9 
million is included in specific projects for enhanced 
endangered species recovery activities and investigations 
programs.
    The goal of the Water for America initiative is to address 
the impending confluence of three factors threatening to 
overwhelm our current ability to provide water to the arid 
West: Increased water demands, aging infrastructure and 
decreased or altered availability of water supplies.
    Reclamation's part of the Water for America initiative will 
focus on two of three strategies: One, planning for our 
nation's water future, and, two, to expand, protect and 
conserve our nation's water resources.
    Reclamation will conduct comprehensive basin-wide water 
supply and demand studies in conjunction with willing partners 
in areas where high levels of anticipated water supply-demand 
imbalances exist.
    Each study will include three elements: State-of-the-art 
projections of future water supply and demand by river basin; 
analysis of the basin's existing water and power infrastructure 
performance in light of changing water realities; and 
recommendations for adaptations and optimizing current 
operations and activities or by changing or supplementing 
existing infrastructure and operations and adopting new 
technologies.
    These activities will be carried out in concert with 
Reclamation's existing planning efforts in more narrowly 
defined geographic areas.
    Under the expand, protect and conserve our nation's water 
resources element of the Water for America initiative, we will 
use a broad-based Challenge Grant Program, building upon the 
existing Water 2025 Challenge Grant Program, to accelerate the 
implementation of cost effective actions that will conserve 
water by improving efficiency, establishing challenge grants to 
advance technology of water treatment and support proactive 
efforts to avoid the decline of sensitive species.
    This concludes my oral statement. I would be happy to 
answer questions.
    [The written statement of Mr. Johnson follows:]

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               RESTORING WETLANDS ON QUECHAN RESERVATION

    Mr. Visclosky. Commissioner, thank you very much. Mr. 
Hobson and I will defer for the time being and would recognize 
Mr. Pastor.
    Mr. Pastor. Thank you, Mr. Chairman.
    Good morning, gentlemen.
    Good morning to my colleagues.
    I think it has been over 15 years that you have had a 
working relationship, contractual relationship with Arizona 
State University Law School, and in the past 15 years, with 
your assistance, we have developed probably one of the premier 
Native American law programs that deal with water rights and 
water law, which with water settlements that expertise is 
needed. So last year we encouraged you to continue the program 
and to find ways of continuing it and there is a probability, 
high probability you will see it again.
    So we continue to encourage you to do it, and if there is 
anything we can do to help, please let us know.
    Mr. Johnson. I appreciate that.
    Mr. Pastor. With great delight, I found out from the state 
director of the Bureau of Land Management that now they are 
working with the Bureau of Reclamation in Yuma with the east 
wetlands and also the west wetlands. Last year, I think we 
appropriated about $1.4 million plus monies for the 
restoration, and we had the Quechan, who are involved in this 
project.
    So with the Bureau of Land Management, with the Bureau of 
Reclamation, the local community, Yuma County and with the 
Quechan, we want to restore that part of the Colorado River. So 
we are going to continue working with you, so if you would like 
to comment, I would----
    Mr. Johnson. It is a good program. We continue to implement 
consistent with the direction and the funding that we get. This 
next year, with the money that we have, we plan on developing 
an additional 500 acres of wetlands on the Quechan Reservation. 
And I am not sure that I know what has been developed 
previously, but it has been a very successful wetland 
development program. We will continue to work with the local 
community, and I am glad that we have got BLM as a partner in 
that. I think that is going to work very well.
    Mr. Pastor. I think it is. I think in restoring--as you 
well know, you are very familiar with it--the Colorado River 
was treated in that part of the country, and restoring it has 
not only brought life to the river but people are enjoying it 
again.
    You mentioned the CAP and relationship of the development 
of the infrastructure for the various tribes. Recently, I met 
with the leadership of Gila River, and they were concerned that 
additional money would be needed because I think the end of 
this year is the water settlement kick-in and agreement.
    What are you funding it at in this budget, and what is the 
request?

                               GILA RIVER

    Mr. Johnson. For the Gila River piece, it is $11.7 million. 
Our total request for the Central Arizona Project, I believe, 
is around $26 million, so we do have some money for working 
with some of the other tribes as well, and we also have some 
environmental commitments that are included in that total CAP 
budget.
    I think that is pretty consistent with what we have been 
requesting in past years. You are absolutely correct, in 2010, 
the funding mechanism created by the Arizona Settlement Act 
kicks in, and I think that will be able to enhance our effort 
with the tribes.
    Mr. Pastor. I don't know, I think that we are requesting 
probably an additional $4 million. I am going to put it in that 
ballpark because they felt that this year they needed to get 
ahead of the curve. But they are very grateful for the $11 
million, but they are really going to try to see if they can 
augment it.

                               YUMA PLANT

    How is my old desalting plant down in Yuma? I know you 
did--is it well? Are you going to run it? What were the tests? 
What were the final results of your test?
    Mr. Johnson. The test was successful. We ran it at 10 
percent capacity for 90 days, and we produced, I think, 
somewhere around 4,000 acre feet of new water by doing that. It 
actually ran a little more efficiently than we projected it to 
run. I think it achieved somewhere up around the 85 percent 
efficiency, meaning we only lost about 15 percent of the water 
in the reject stream, and we didn't expect it to do quite that 
well.
    We affirmed the costs of operation and the estimates of our 
annual O&M costs we found are fairly accurate, although costs 
are going up. The chemical and the energy costs are going up 
significantly. That water in that drainage canal requires a 
significant amount of pretreatment, and so desalting that water 
is not just as easy as running it through the desalting plant. 
You have to do a lot of chemical treatment and filtering of the 
water before you can even run it through the reverse osmosis 
filter. So it is a little more expensive than maybe other forms 
of desalting because of the nature of the water that we have to 
treat.
    One of the other things that we found is that we do have--I 
suppose it is something that we would call a design deficiency 
in the pipe that is included in the pipe that transports the 
water through the system. It is an aluminum bronze piping, and 
it deteriorates. The water chemistry causes that pipe to 
deteriorate faster than we expected. And so to get the plant in 
full operational mode, we will have to replace that aluminum 
bronze piping, and that is an additional $17 million in cost.
    So the test run had both good and bad results. We can 
operate it more efficiently, and we know it works the way it 
was intended to work. We have some problems with our aluminum 
bronze piping, and some of our costs for chemicals and other 
things are going up.
    Mr. Pastor. What is your 5-year plan. Do we have a 5-year 
plan? You know, this has been going on for how many years, 30 
some odd years, maybe?
    Mr. Johnson. As part of our test run, we are doing a 
broader study. We have an obligation to replace that Welton-
Mohawk drainage water, and the test run was part of a broader 
study to look at the best ways to replace that water supply.
    We have also been doing demonstrations, we call them system 
conservation programs, which really amount to paying farmers to 
forbear in the use of water. We did that last year with the 
Palo Verde Irrigation District in California, and I think this 
year we are doing it with some of the water users--the Yuma 
Mesa Irrigation District is participating with the program 
there.
    That is quite a bit less expensive means of replacing the 
bypass flow. We are buying water from farmers for somewhere 
around $160 to $170 an acre foot. The cost of operating the 
desalting plant, if it is operated at full capacity and all the 
best assumptions about chemical and efficiency and all those 
things, the desalting plant is well over $300 an acre foot. So 
it is quite a bit less expensive to do those system 
conservation plans.
    So we are going to be submitting a report to Congress over 
the next year that is going to lay out what we think is the 
best approach to be moving forward in terms of replacing the 
bypass flow, and that will kind of have a plan in it for what 
we are going to do.
    There are some other potential uses of the desalting plant. 
There is a significant amount of groundwater in the Yuma Valley 
that has fairly high levels of salt in it. It is not usable for 
domestic or irrigation, and that desalting plant could be used 
to desalt that water. And that water doesn't have the same 
problems that that drainage water from Welton Mohawk does. It 
doesn't require all the pretreatment, so it may actually be 
less expensive to treat that groundwater in the Yuma Valley and 
create new supplies than it would be to treat that drainage 
water.
    The other advantage of that is you don't have the impact on 
the wetland down in Mexico, because you are not shutting off 
the flow to that wetland. So that is part of what we are 
looking at in this bigger study as well.
    Mr. Pastor. Thank you, Commissioner Johnson, and I will 
yield back my time.
    Thank you, Mr. Chairman.
    Mr. Visclosky. Mr. Rehberg.
    Mr. Rehberg. Thank you, Mr. Chairman, and I want to thank 
you for your kind welcome back to the committee. It is a 
pleasure. There have been certainly some difficulties and 
irritations with the changing of the majority, but you are not 
one of them. [Laughter.]
    And the food is better than under the last chairman, so 
thank you for making me feel welcome and for your continuing 
interest. You talked to me after I was off the committee about 
my projects, and it meant a lot to me, and I intend to be an 
active participant on this committee.
    Obviously, we are going to spend a whole lot of time on 
Arizona in the next 4 years with the next president being from 
Arizona. [Laughter.]
    We will probably have more than we can stand in Arizona 
projects.
    Mr. Wolf, I have no connection to Michigan, but I am an 
advocate of Milton Erickson, so if you will look in my eyes and 
repeat after me, ``Montana's water projects deserve to be in 
the president's budget.'' Got it? [Laughter.]
    That wasn't exactly an indirect suggestion, but he was the 
master of that.

                        MONTANA'S WATER PROJECTS

    Mr. Johnson, maybe you can explain to me, I just don't get 
it, and you know I don't get it, and I continue to ask you 
about why I don't get it, how Montana's three water projects, 
which all have a major impact on not only water availability 
and clean water availability to Montanans, but each of them 
were part of an Indian compact, a reserved water rights 
settlement that the federal courts required us to complete.
    All three of these projects have been authorized by 
Congress. Everybody agrees that these projects need to be done, 
and one of them is actually kind of exciting, because it meets 
more than the thresholds you talked about, and that is St. 
Mary's. It impacts, one, Glacier National Park, it impacts the 
Blackfeet and the Fort Belknap Indian Reservations, it impacts 
Canada because the water goes into Canada and comes back into 
the United States, and it impacts virtually an eighth of our 
population, and yet it never makes it into the President's 
budget.
    And maybe then you can explain further to me how in fiscal 
year 2007 the Dry Prairie Water Project, which is in northeast 
Montana, which affects the Fort Peck Reservation, was included 
in the president's budget, and then since that time has been 
dropped back out, requiring me to go in and get an earmark for 
these water projects.
    So we meet the tribal threshold, we meet the clean drinking 
water, we meet the river restoration. And if one project blows 
out at St. Mary's, you have got a disaster on your hands. 
Unfathomable. The nation is going to go nuts when they find out 
the damage that you will have done up around the Glacier 
National Park area and into Canada, so you will have created an 
international crisis as well.
    Unfortunately, I had the opportunity to talk to your 
predecessor, and in much the same way, he sat here and he 
nodded his head, and he said, ``Yes, I entirely agree. We are 
going to have a disaster, it is going to blow out, the federal 
government will take the responsibility,'' and then he resigned 
from his position the next day. [Laughter.]
    So I don't anticipate that you are quitting your job 
tomorrow, but would you give me some confidence that there is 
some kind of rationale as to our projects being in the 
president's budget and then dropped back out? And based upon 
the criteria you brought up in your testimony, how do we 
qualify to be in the president's budget? Why do we have to 
continue to earmark the funding?
    Mr. Johnson. I would be glad to start----
    Mr. Rehberg. You have got 30 seconds. [Laughter.]
    Mr. Johnson. Congressman Pastor didn't limit me to 30 
seconds.
    Mr. Rehberg. He is in the majority. [Laughter.]
    Mr. Johnson. The St. Mary's project, I want you to know 
that the St. Mary's project was the very first project that I 
visited as Commissioner. I became Commissioner in October of 
2006, and in November, early November of 2006, I went up to 
Montana and drove through the Blackfeet Reservation, saw the 
dam, the diversion structure, the siphons, the canal and did a 
tour of the facility, so I appreciate what you are saying.
    We do include money in our budget for the operation and 
maintenance of that project. I think we have somewhere in the 
neighborhood of $3 million for St. Mary's.
    That does not address the issues that you bring up. Aging 
infrastructure is an issue. That is probably one of the best 
examples of aging infrastructure in the Bureau of Reclamation. 
That project is 100 years old. The canal still works, it still 
delivers water, but there is a lot of deterioration of the 
diversion dam. The canal is not constructed to today's 
standards. It is not an efficient canal. It doesn't have a lot 
of bank on it, so you can regulate and control deliveries. And, 
certainly, the siphons are in need of replacement. So I 
appreciate very much what you are saying.
    As you know, one of the problems we have, if we appropriate 
more money for that project, it is an O&M expense, and we have 
to charge it to the irrigators in that area, and they have a 
limited ability to pay. So as part of the Reclamation 
appropriation, it is difficult for us to include a significant 
amount of money to do that kind of rehab.
    But as you are aware, Congress did include authorization 
for the Corps of Engineers to----
    Mr. Rehberg. But how do you intend to work with the Corps?
    Mr. Johnson. We have met with the Corps, we have met with 
the local water users. We are prepared to cooperate with the 
Corps on moving forward and doing those repairs. I am not sure 
where the Corps is on their request for funding. I doubt if 
they have funding requested in their 2009 budget for that.
    Mr. Rehberg. They did not.
    Mr. Johnson. But we are certainly prepared to roll up our 
sleeves and work with them in any way we can. I think they are 
probably scratching their head a little bit over why are we 
authorized to rehab a Reclamation project. But, look, we are 
more than happy to work with them, and we will roll up our 
sleeves and of whatever we can to cooperate in moving forward.
    Mr. Rehberg. How about Dry Prairie, why was it in the 
Fiscal Year 2007 Budget and now out?
    Mr. Johnson. The funding for the Rural Water Program, and I 
go back, is a struggle to balance the objectives of getting a 
budget that meets the budget objectives of getting a balanced 
budget by 2012 with also trying to find the proper balance of 
funding our programs. And that is a real challenge.
    We used some criteria on the Rural Water Program that 
focused on a couple of things. One, it said priority goes to 
Indian tribes, and priority would also go to trying to fund 
those projects that are closest to completion. And the other 
part of that is we fund O&M first. We have to fund our O&M 
activities first; that is absolutely the first thing that we 
have to take care of.
    When we look at the projects that we have, we put our 
funding on the two projects that are farthest along: The Mni 
Wiconi project and the Garrison project. Both of those have a 
much higher percentage of completion. We would like to move 
those toward completion so that we can then focus money back on 
the other projects.
    Mr. Rehberg. Do you have a list that shows the ranking of 
the various projects, so that we have some confidence that as 
Garrison gets done, following your theory, that ours moves up 
or is next? Because it is the old scenario where you are 
driving down the road in Los Angeles and you look over the side 
and there is this bridge that just stops, and you go, ``What 
idiot in the federal government was thinking of that when they 
started the project and didn't appropriate the money to finish 
the project.''
    And we have a project that was started and into this budget 
and now it is back out of the budget, and we never get enough 
earmarks to cover the ongoing expenses. And so when you build a 
pipeline and you have got pipes sitting there and then it ends, 
it makes us all look stupid.
    And so how do we know there is this list that exists within 
the Bureau of Reclamation that is going to actually be next in 
line, because it has been authorized by Congress and recognized 
by the president in the past?
    Mr. Johnson. We would be glad to provide that. We do have a 
list of projects and how far they are along with completion and 
what the completion dates are. We can provide that.
    Mr. Rehberg. And there is nothing that can ever be jumped 
ahead of that list. And so if Dry Prairie is number 11 and you 
are funding the top 10, when one is done in the top 10, we move 
up, guaranteed.
    Mr. Johnson. There is certainly a large backlog on rural 
water, no question about it.
    Mr. Rehberg. That wasn't my question.
    [Laughter.]
    Mr. Johnson. Look, right now, we are----
    Mr. Rehberg. Take your time.
    Mr. Johnson [continuing]. We are funding the two that are 
closest to completion at this point in time, and we would be 
glad to--we can provide you the data on how far they are along 
and what their projected completion dates are.
    Mr. Rehberg. Thank you, Mr. Chairman.
    Mr. Pastor. Mr. Chairman, I just want to remind my 
colleague and friend from Montana that he mentioned the dreaded 
``E'' word at least four times, and I think the probable 
presidential nominee from Arizona doesn't like to hear that 
``E'' word. So don't ask----
    Mr. Rehberg. And I noticed that your projects are not 
considered earmarks. They are in the president's budget in 
anticipation of the next guy not having the ``E.''
    Mr. Pastor. Well, we will work with you on it. [Laughter.]
    Mr. Visclosky. Well, we have one vote, and, Mr. Calvert, I 
don't want to rush you and it is your choice if you want to do 
this tranche or if you want to wait and come back. I have a 
couple of follow ups on Mr. Rehberg's line of questioning, so 
we are coming back. Whatever works best for you.
    Mr. Calvert. I will be----
    Mr. Visclosky. You are recognized then.

                             DESALINIZATION

    Mr. Calvert. I have known Commissioner Johnson for a number 
of years, and we have worked on a number of projects together.
    As you know, in the state of California, we have a federal 
judge who just ruled in the California Delta to curtail water 
exportation to the south. We have got problems on the Colorado 
River. There are reports that Lake Mead and Lake Powell are 
drying up. I know this year we have had a pretty good snow 
melt, but it has been a difficult number of years.
    And I was looking through your budget proposal and one of 
the things that I think that we are going to have to do to meet 
the water requirements in the state of California is to look 
toward desalinization, and I see where you have zeroed out the 
Long Beach experimental facility, which is a concern of mine, 
along with a number of others. Can you explain why you did that 
or do you believe that desalinization is not part of the long-
term answer for the water in the Southwest?
    Mr. Johnson. No, not at all. I think desal has a lot of 
promise. We have participated in the funding of that project. 
In fact, I think we have put quite a bit of money into that 
demonstration project, and we are very proud of it, and we are 
very proud of our interaction.
    In the context of our overall priorities, however, and 
trying to find the right balance, that one just didn't get to 
the higher level that we felt like we had the ability to fund 
it. We do have money for desal in our budget for desal 
research, trying to advance technology. We have a research 
facility in Yuma in association with our Yuma desalting plant. 
We are also doing research at the Tularosa desal research 
facility, which came on, just completed this last year. So we 
are putting some efforts into research and trying to advance 
the technology of desalinization.
    Mr. Calvert. Well, as you know, this technology is 
different than the technology you are referring to.
    Mr. Johnson. It is.
    Mr. Calvert. And it has a lower energy threshold to develop 
substantial water supply. And we have talked in the past about 
potentially working with states like Nevada who are up to their 
limit, 300,000 acre feet, they are just out of water, possibly 
doing maybe some water transfers along the river if we can 
agree to that under the Quantification Agreement.
    But that type of activity is going to have to take place if 
the Southwest is going to be able to have adequate water 
supplies in the future, because if we believe these reports, 
the Colorado River is going to have substantial problems in the 
future.

                           ALL-AMERICAN CANAL

    One other question, the All-American Canal is under 
construction at the present time. I understand the Mexican 
government has an individual meeting with Interior, I think, 
today, or they met yesterday, maybe, with the secretary. I 
would hope that there is no problem and the construction is 
going to move forward and be completed on time. Is everything 
going all right with that?
    Mr. Johnson. Everything is going great.
    Mr. Calvert. Great.
    Mr. Johnson. Full guns. There is no intent to slow down 
anything on the All-American Canal. There are discussions with 
Mexico in the broader context but not anything related to the 
All-American Canal. That is moving forward.

                       VOLUNTARY WATER TRANSFERS

    Mr. Calvert. On the subject of water in the future, some of 
these water transfer agreements that are voluntary--I believe 
in voluntary water transfer agreements--with agencies like 
Imperial Irrigation District and others, Palo Verde and others, 
I would hope that we work on a long-term effort to work with 
these farming communities in a mutually positive way in which 
we can work out these water transfer agreements that I think 
can work and be positive for farmers and positive for the urban 
community.
    Mr. Johnson. We have had a policy for many, many years that 
supports voluntary water transfers, willing buyer-willing 
seller transfers, and that is probably one of the very viable 
tools for meeting future urban growth that is going on in the 
West. There are lots of opportunities for that.
    And, so, yes, that is something--there are sensitive issues 
there. Rural communities have a lot of concern about water 
transfers--``If our water goes to the city, we are going to dry 
up and go away''--so you have got to be careful to structure 
them in a way that protects that. But there are lots of ways to 
structure transfers where rural communities actually thrive and 
don't lose.
    In the Imperial transfer, I think the Imperial Valley is 
going to be a lot better off with that transfer. It is all 
going to come through conservation.
    Mr. Calvert. Well, I think so too. The board doesn't think 
that way, but----
    Mr. Johnson. Not always, but I think as that gets developed 
and they see how it works, there will be a lot of support.
    The Palo Verde, another example of one.
    So we keep trying to tell that story in these rural areas 
about the benefits of transfers and how to structure them in 
ways that it doesn't have a negative impact on the rural areas, 
and I think that is the key point that we need to make when we 
are talking to those folks.
    Mr. Calvert. Right. Right.
    Well, I guess we have got to go to a vote, Mr. Chairman, so 
if you go another round, I may ask a couple of questions.
    Mr. Pastor [presiding]. I am going to go ahead and wait 
till the chairman comes back or one of the other members.

                        GLEN CANYON DAM RELEASE

    Is the water being released on the Glen Canyon Dam to 
restore the banks and some of the habitat? Has that happened 
yet?
    Mr. Johnson. We are completing the environmental assessment 
and the Endangered Species Act compliance to allow that to 
occur.
    Mr. Pastor. Okay.
    Mr. Johnson. So it is not a final decision, but assuming 
that got completed, that could happen as early as March 5, yes.
    Mr. Pastor. Because I think Monday a big article in the 
Arizona Republic that this was the third one that was coming 
down. And the thrust of the article that I read said this will 
be the third one, and I guess there has been mixed reviews on 
the other two. And I am trying to remember if there was a woman 
who either works for Fish and Wildlife or she is a scientist.
    Mr. Johnson. Park Service.
    Mr. Pastor. Park Service, that was saying that, what we 
ought to do is make a decision how often and what really works. 
The science has been shown. We just need to make a decision.
    Would you like to comment on that since obviously it 
affects Arizona and the Colorado River?
    Mr. Johnson. Well, certainly, more surge releases--I don't 
know if that is the right word or not----
    Mr. Pastor. I think that is what they used, surge, yes.
    Mr. Johnson [continuing]. Through the Grand Canyon could 
help enhance the habitat in the Grand Canyon for fish and also 
for recreation.
    Right now, the scientists think that the canyon is primed 
for a successful release, and the reason for that is that we 
have had some very large tributary inflows that have deposited 
a lot of silt in the bottom of the river, and these high flows 
really help when you have a lot of silt in the river, because 
those high flows pick up that silt and sand and they deposit it 
up on the banks of the river, they create warmer water areas 
for fish and they also provide really nice places for the 
recreationists that are enjoying the Grand Canyon.
    So scientists are advising us that doing that kind of a 
test right now could really be productive, and so that is the 
basis of the EA.
    I think that our sense is that we use an adaptive 
management science-based approach to doing those sorts of 
things, and we have got to look at the data and make our 
decisions on a case-by-case basis as we move forward with that.
    Will there be more of these in the future? My guess is 
probably, yes, but I think you have to wait for the right kinds 
of conditions. If your river doesn't have any sand and sediment 
in it, it probably doesn't make a lot of sense to do it. All 
you are going to do is scour out what is already there. But if 
you have a good build up of sand and silt, then it may make 
more sense to do those things.
    Mr. Pastor. Because people are saying, ``Well, it is the 
third one. How many more?'' The crux of the article was, I 
guess, that the Bureau of Reclamation get into a pattern that, 
based on scientific data, will be more successful. I guess that 
was the crux of the story.
    Now, is it your agency that is dealing with the drought?
    Mr. Johnson. Certainly, the trout fishery below Glen Canyon 
is something that we take into consideration as we do our 
operations at Glen Canyon. I think the Park Service and the 
Fish and Wildlife Service certainly have a big role in that as 
well.
    Mr. Pastor. Okay.
    Mr. Johnson. Yes.
    Mr. Pastor. They told me that we better adjourn to go vote, 
and I guess the chairman will be here shortly, so we will see 
you the next round.
    Mr. Johnson. Very good. Thank you.
    [Recess.]

                            GLACIER PROJECT

    Mr. Visclosky [presiding]. I would like to reconvene.
    If I could, what I would like to do is pick up on Mr. 
Rehberg's line of questioning relative to the project at 
Glacier, and staff provided me with a technical description of 
its current condition and that said, ``falling apart,'' and 
would want to follow up because it was mentioned in the 
dialogue that the authorization now exists for the Corps to 
also work in consultation with the commissioner.
    You had mentioned that you apparently have had some 
conversations with the Corps. They have no money in their 
budget request. You have O&M of $3 million, as I understand it, 
but no construction dollars.
    Is there a proposal of how you would work with the Corps on 
this project or is that pending money to support discussions 
about what the scope of the work would be?
    Mr. Johnson. Yes. I think it probably is pending. Our 
discussions at this point are pretty preliminary with the 
Corps. We have had a meeting with them and indicated our 
interest in sitting down with them and figuring out how they 
want to move ahead. They will have to get the appropriations 
and I don't think the Corps has a lot of background on the 
project or a lot of money to put a lot of effort in it at this 
point in time, in fiscal year 2008. Unless they have money, 
they are not going to be able to put a lot of resources in 
working on it.
    Now, a lot of work has been done. We have done some 
studies, the state has done some studies. So we have a general 
sense of what is required out there. There have to be detailed 
designs done and then move into the construction. But there is 
a pretty good sense of what needs to be done from the studies 
that have already been carried out.
    Mr. Visclosky. For those studies, do you have an estimated 
cost as far as the various project elements, realizing you 
haven't gotten to the point of design?
    Mr. Johnson. We do, and I am trying to remember. About $150 
million, and that is just ballpark.
    Mr. Visclosky. And have you worked with the Corps on other 
projects similar to what may be envisioned with the 
authorization they now have on this matter?
    Mr. Johnson. This is probably--we have worked with the 
Corps and let me just start by saying, we have a great 
relationship with the Corps. As a matter of fact, I met with 
their management team and our management team just last week to 
talk about it, and there is no competition, there is no 
duplication of effort between the two agencies.
    We do have some areas where we are doing cooperative 
projects. Folsom Dam is probably the best example. They needed 
to do a flood control project for the Sacramento Valley, we 
needed to repair the dam for safety purposes. We put a joint 
project together where we are going to do the dam safety work, 
and they are going to do the raising of the dam to provide 
additional flood control. And by working together and 
coordinating our work with theirs, we are saving a significant 
amount of money over what would be spent if we did the project 
separately. It is in the hundreds of millions of dollars that 
we are saving by doing the project in a cooperative way.
    We are also doing a cooperative project with them on 
Yellowstone Dam. It is a dam in Intake, Montana. And it is 
actually a fish screen or a fish passage, and it is for the 
sturgeon in the Missouri River system. We are going to do a 
fish passage with the Corps on a bureau facility as part of 
their ESA requirements for the Missouri River system. So we 
have got a really good cooperative effort with them to move 
forward with that project on a joint basis as well.
    Mr. Visclosky. And I assume it would be premature to talk 
about what in this situation would be the appropriate roles for 
the Bureau of Reclamation and the Corps, pending which elements 
of the project you proceed with.

                                WRDA ACT

    Mr. Johnson. Yes, I don't think we are that far along. I 
think the act says that the Corps will do it in consultation 
with us--I think that is the word that is used--and we have 
gone to the Corps and said, ``We are flexible, we will work 
with you however--what makes the most sense. How can we do this 
in the most efficient way?'' And I think the Corps is open to 
that, it is just that this is something fairly new, it is in 
the WRDA bill. I am sure there are a lot of things in the WRDA 
bill that they are lining up and getting organized around. I 
just don't think they are that far along on this one at this 
point in time.
    Mr. Rehberg. Excuse me, Mr. Chairman? Did you ask the 
question, do they believe they have the legal authority to work 
together on this?
    Mr. Visclosky. I have not.
    Mr. Johnson. I sure don't think we have any obstacles from 
an authority perspective. Clearly, the act says, ``Work in 
consultation with the bureau.'' That is all the authority we 
need. In fact, it is a Reclamation project, and we have 
authority to do on a Reclamation project under the project's 
authorization.
    Mr. Rehberg. Mr. Chairman, the only reason I bring that up 
is that question had been raised after it was authorized in the 
WRDA bill, and we are trying to come together from two 
different directions on the same answer, so we are asking the 
question in the Senate of the Corps, and it is important for us 
to get the same answer from the Bureau of Rec.
    Mr. Visclosky. And we will have the Corps in shortly before 
our subcommittee as well then, too.
    Mr. Rehberg. Thank you.
    Mr. Visclosky. And two other questions on this issue: 
Because there will be a series of elements--and, again, I 
understand you don't have precise numbers and if you can't now, 
for the record--what is the first project, what is that first 
tangible step between yourselves and the Corps, do you have a 
reasoned ballpark figure? If nothing else, as we look at 2009, 
acknowledging that in neither of your budgets do you have a 
request, we would know what the dollar figure would be.
    And coupled with that, because you had mentioned the 
irrigators, from a Reclamation point of view, they would have 
to reimburse you, I assume. Again, Mr. Rehberg and you would 
know the situation on the ground out there, but they would not 
likely have the kind of money to invest themselves.
    Mr. Johnson. No.
    Mr. Visclosky. Is there, again, an estimate as to how much 
they could reimburse so we would know at least proportionately 
for that first step, what potential responsibilities the bureau 
could assume and what the Corps could assume if we do decide to 
proceed?
    Mr. Johnson. I think the WDRA Act is pretty clear on that. 
I think it provides that there has to be a 25 percent cost 
share, and I think the state of Montana is actually going to 
step up and help provide that funding. So that is kind of the 
way--my guess is the irrigators there, that is a far north 
area, their ability to make significant contributions is pretty 
limited, I think.
    Mr. Visclosky. Okay.
    One other question along Mr. Rehberg's line and then I 
would recognize Mr. Simpson, he had a specific project in 
talking about rural water that was dropped. I would also have 
one, if I could, and that is in the budget submissions for 
2006, 2007 and 2008, the Lewis and Clark Rural Water Project in 
South Dakota was included but it no longer is. What is the 
justification for leaving that out?
    Mr. Johnson. It is the same explanation that I gave to 
Congressman Rehberg, and that one actually falls short on two 
of the criteria. One was, priority was given to projects that 
serve Indian tribes, and that project does not have an Indian 
component. And then the second part is, what projects are the 
farthest along, and that one is not as far along as the other 
two that we funded either, I don't believe.
    Mr. Visclosky. Okay.
    Mr. Simpson.
    Mr. Simpson. Thank you, Mr. Chairman.
    I am tempted to ask how you are going to solve the Medicare 
and Medicaid problem, but that was the last hearing I was at, 
so I suspect you don't have an answer for that.
    Mr. Johnson. I would have to pass on that one.
    Mr. Simpson. If you come with any, let us know. [Laughter.]

                     INTERSTATE TRANSFERS OF WATER

    The bureau has selected an option for the Garrison 
Diversion Project that includes an inter-basin transfer of 
water. This has not been a very popular choice and I am sure 
will continue to be debated over some time. Would you explain 
to the committee why you chose this option, especially since 
you are apparently not authorized to implement it without 
further action from Congress? And could you have chosen an in-
basin solution, which you were authorized to implement?
    Mr. Johnson. Yes. Those studies were done over a several-
year period in concert with the state and also all of the 
surrounding areas. It is in the eastern-northeastern part of 
Red River Valley part of North Dakota.
    The in-basin supplies are just not adequate to meet the 
future demands, so there are no local water supplies to meet 
the projected needs of the area. My understanding is there are 
some water supplies that could be used that are in the basin 
but they are in the state of Minnesota, and the state of 
Minnesota has not been willing, I don't think, to allow that 
interstate kind of transaction, as you know, the sensitivity on 
interstate transfers of water.
    But within North Dakota and the resources within North 
Dakota, they are just not adequate, and so that is why the 
inter-basin transfer piece was selected as the preferred 
alternative.
    You are right, it does require additional authorization to 
move forward. That was provided for in the act. The act 
recognized that an out-of-basin transfer might be necessary and 
directed us that if that was selected, that we needed to send 
the report back to Congress for Congress' consideration.
    Mr. Simpson. As I understand it, Minnesota offered access 
to their aquifers.
    Mr. Johnson. Well, you know, that is not the same--I am not 
sure that it is quite that straightforward. I think if that 
were the case, that could be a solution, but my understanding 
is that was an offer that only applied--and I am not an expert 
on this at all--but that was an offer that only applied to 
emergencies. That if there were a dire emergency and they were 
literally out of water for a short period of time, that they 
would be willing to provide some assistance. That was the way 
that that has been explained to me.
    Mr. Simpson. Did you follow your standard down-selection 
process in choosing this option, and can you satisfy us that 
this process is adequate to ensure that all options were fully 
considered?
    Mr. Johnson. Certainly, that is documented in the EIS. We 
had a draft EIS that was controversial. We received a lot of 
comments. We went back and did a lot of work to try to respond 
to those comments, and that is certainly documented in the 
planning report and the environmental documents that we have 
completed. So, yes, there was very much a process that we went 
through to get to the alternative that was selected.
    The report is currently undergoing a review in the Office 
of Management and Budget.

                          BOISE RIVER PROJECT

    Mr. Simpson. Let me ask about the Boise River Project, just 
a general question. Recently, the legislature heard from the 
Army Corps of Engineers about the Dworshak Dam, that there is a 
potential problem. It was rated as a two--one being, I guess, 
the worst, five being the safest--that there is leaking around 
the dam and so forth. You are doing studies, I guess, on the 
safety of the four dams in the Boise River Project?
    Mr. Johnson. We are always doing dam safety reviews. We 
have a regular periodic process where we look at dams and the 
risk and their structural integrity, the hydrology and whether 
or not the potential for design floods are still good. So we 
are constantly doing that.
    Mr. Simpson. What is the safety standard on those four 
dams? Are they in good shape?
    Mr. Johnson. As far as I know. I am not aware of any safety 
issues on those dams, but I would want to go back and check 
that for the record.
    Mr. Simpson. Because you can imagine that some people 
downstream from the Dworshak are concerned.
    Mr. Johnson. I am sure they are, yes. I am sure they are.
    Mr. Simpson. I appreciate it, thank you.
    Mr. Johnson. You are welcome.
    Mr. Visclosky. Mr. Calvert.
    Mr. Calvert. Thank you, Mr. Chairman.

                             CALFED PROGRAM

    Commissioner, we didn't spend any time, really, on CALFED, 
and I just want to give you the opportunity to let the 
committee know how that is moving along, especially the storage 
studies that are taking place. Are they moving along fine and 
at what point in time do you think we will get to the point 
where we are actually ready to start construction on one of 
these projects?
    Mr. Johnson. We are still doing the storage studies. Let me 
tell you what has happened to us. This litigation that we have 
had and the ruling from the judge in California has required us 
to do a new consultation with the Fish and Wildlife Service on 
how we operated the Central Valley Project. That means we are 
taking a fresh look at the operations and consulting with the 
Fish and Wildlife Service on those operations. We anticipate 
that those operations will change.
    Mr. Calvert. Does that mean we will be able to move more 
water through?
    Mr. Johnson. Well, no. I think we will just have to see 
what the outcome is. My guess is we probably won't find that we 
can move more water with the changed operations. I think we 
will just have to see what the outcome of those are, but, 
obviously, we have got a problem with the endangered species 
there. There is concern that the water moving through our pumps 
has a tendency to move the Delta smelt in the wrong direction.
    Mr. Calvert. Are you aware the governor, apparently, is 
prepared to enter into an executive order to initiate a study 
of going ahead to build a peripheral canal?
    Mr. Johnson. Yes, I am aware of that.
    Mr. Calvert. A bypass, or whatever you want to call it.
    Mr. Johnson. Yes, I am aware of that.
    Mr. Calvert. Are they going to be working with you?
    Mr. Johnson. We are working with the state and all the 
efforts in the Delta Vision process, and we are committed to 
continue to be a part of that.
    Mr. Calvert. If in fact that is built, does that resolve 
the issue with the smelt?
    Mr. Johnson. Personally, I think it would help 
tremendously. You know, I think you have to look at the 
specific studies, but my understanding of the way that would 
work is it would stop that flow of the water in the Delta 
moving toward our pumps and allow that water to be moved around 
and a better control of the flow through the Delta, and that, 
in fact, it would help that situation. That is the feedback 
that I have gotten from folks over the years on the peripheral 
canal.
    I know there are lots of other controversies associated 
with that, and I don't know where ultimately they will end up, 
but, in general, I think it could help deal with that 
situation.
    Our storage studies--getting back to the storage studies--
we have had to delay completion of the storage studies, because 
the project is likely to be operated differently. We won't know 
exactly how that operation will be different until next 
September. That is when the biological opinion has to be given 
back.
    Mr. Calvert. When you say delay the storage studies, is 
that all storage studies, including Shasta and Sites Reservoir?
    Mr. Johnson. Right. Because how the storage interacts with 
the rest of the system is affected by our operations. So if we 
have a new operation of the facility, our hydrology changes, 
and the need for storage and the benefits of the storage 
change. And we feel like in order to do a good study, we need 
to have that operational pattern incorporated into those 
storage studies.
    Mr. Calvert. Temperance Flat, you have to delay that too?
    Mr. Johnson. Well, that may be one that you don't have to, 
because that is on the other side, but the completion of the 
storage studies, we do have them funded, you know, and the 
completion studies have actually been pushed out till 2010.
    Mr. Calvert. Well, anything you can do to rush this thing 
along, we have been working on this, as you know, for a number 
of years, and with the quantification agreement now in effect, 
we are going to lose 1 million acre feet out of the Colorado 
River, we are losing a third of our exports out of the Delta, 
we are not building quick enough reclamation projects in the 
South, and we need help on that, and it seems to me we are 
having some delays here on desalinization. So all of that we 
could have a little motion car crash coming up here real quick.
    Appreciate it, Mr. Chairman.
    I asked him about, what, the All-American Canal that is 
under construction and--oh, you are talking about----
    Mr. Hobson. Folsom Dam? Yes, we did talk about Folsom Dam. 
Well, I don't know if we did or not. I think I just mentioned 
it in the context of----
    Mr. Johnson. You are probably mentioning the dam below 
Folsom Dam.
    Mr. Calvert. I think he is thinking of Auburn Dam.
    Mr. Hobson. I am talking about Auburn Dam.
    Mr. Johnson. Oh, Auburn.
    Mr. Hobson [continuing]. Where we spent $400 million and 
acquired all the ground, it is still sitting there, and 
California is crying for water but nobody wants to build.
    Mr. Johnson. I don't think that is considered one of the 
optimum storage sites. I think most of the other storage sites 
that are being looked at are ranked higher than that in terms 
of----
    Mr. Calvert. I would guess that it will be built when 
Sacramento gets flooded. We are a reactive body here. It is 
almost as much flood control as it is water storage, because 
Sacramento is in a precarious situation.
    I think it should be built.
    Mr. Hobson. It probably won't be built for a long time, but 
we have spent, what, $400 million acquiring land----
    Mr. Johnson. Yes, back in the 1970s.
    Mr. Hobson [continuing]. Building the foundation.
    Mr. Johnson. Yes, back in the 1970s.
    Mr. Hobson. And we have built other dams on equally 
difficult seismic areas in California. Namely, one that we just 
somewhat finished in the southern part of the state I looked at 
some years ago. It is easier to bring water, apparently, from 
other states and power from other states than it is for 
California to solve its own problems. The rest of the country 
is not really excited about that, to be frank with you.
    But I know you can't do anything about it. People need to 
continue to talk--excuse me, Mr. Chairman, I jumped in here--
but it is a frustrating thing to spend $400 million of 
taxpayers' dollars and having it sitting there doing nothing 
and not solving some of the problems that we know are going to 
happen in this region. I wish we would have invested that $400 
million in something else that would solve these problems. 
Right now it is down the tube.
    Mr. Johnson. As it relates to the state of California, in 
general, there is, I think, a fairly aggressive effort by the 
California water interests and the state to address their water 
issues. In fact, I think the legislature and the governor are 
working on an $11 billion bond to try to fund the water 
infrastructure in California, including significant amounts of 
storage. And I think they are focusing on Temperance and one up 
on Sacramento.
    Mr. Calvert. Well, we have got to have sites, because you 
have got to be able to----
    Mr. Johnson. Right.
    Mr. Calvert [continuing]. Flow into the peripheral----
    Mr. Johnson. And then Los Vaqueros is being pushed pretty 
hard too in the Delta region there that will actually help 
store and move more water through the Delta in the wintertime 
and serve that Delta area.
    Mr. Calvert. But I bet you they come back and ask for 
federal help also in that.
    Mr. Johnson. I don't know to what extent. Certainly, we are 
doing studies and we are looking at how the federal project 
would fit into that. There has been some talk about them 
funding it and having us, kind of, rent the facility on an 
annual basis as part of our O&M, have our users pay a surcharge 
that would help repay the project as part of our O&M rather 
than having us fund. That has kind of been a concept that is 
being talked about.
    But the details of how they would get built and who would 
pay what, I think is something that has not been worked out. I 
think they have still got to get their bond issue passed to 
move ahead with those.
    Mr. Hobson. Can I switch subjects on that? What about the 
levies along the Sacramento River, the tree-infested levies 
along the Sacramento River? Nobody knows who built this one, 
who built that one, who maintains this. I think the state is 
working heavily on that.
    Mr. Johnson. I think that that has been something that the 
Corps has been more involved in than the bureau, the bureau has 
not had a lot of active involvement in dealing with the levies 
in the Delta. The Corps is the one that has been playing that 
role.
    Mr. Hobson. But you don't have any role in the zoning? For 
example, there are all these bowls out in that region that 
suddenly get developed. The next thing we know everybody is 
back at the feds, ``You didn't provide flood control.'' Now, 
most of that is the Corps, but do you guys play any role in 
that or in the zoning or in what goes on in flood protection?
    Mr. Johnson. Those are state and local issues, and we don't 
play any significant role as it relates to that. I think that 
is something that is being talked about in California as part 
of its Delta Vision where they are looking at the whole Delta 
and how it develops over time and what the best way is to 
manage it.
    Bob points out to me that FEMA probably has a role as it 
relates to the levies as well.
    Mr. Hobson. The problem is, sir, that everybody tells me 
these are state and local things, but when there is a flood it 
becomes a federal issue, and we wind up paying for the 
mismanagement of the zoning regulations in that area, because 
they allow these people to go in and build all these 
subdivisions and they don't make the rules such that when they 
develop the subdivision that they handle the problems when they 
get excess water. When you get excess water in that area, there 
is no place for it to really go except it floods everything, 
and then we come back in.
    And I don't know how the feds--you can't be inhumane when 
it happens, but better planning and intervention by somebody as 
this process goes through would certainly lessen the burden to 
all the taxpayers of this country for the lack of planning. And 
that is not just for California, it is true other places, but 
it is particularly apparent in this--after I looked at it--that 
the Sacramento River area is particularly prone to all this, 
and that Delta region are particularly prone to it.
    And I won't be on this committee when it is addressed but 
it is certainly something that the state and the feds need to 
look at, in my opinion, and I don't know how you all fit into 
that.
    Mr. Johnson. We are not playing a direct role as it relates 
to those kinds of issues. I don't know what kind of 
requirements the Corps or FEMA may have, as it relates to 
providing flood control and development and those sorts of 
things. They may have some things from a federal perspective 
that they bring to the table on those issues.
    The Bureau of Reclamation doesn't.
    Mr. Calvert. If the gentleman would yield, just one quick 
comment on your statement. What could happen in the Delta, 
potentially, is, quite frankly, worse than what happened in 
Katrina, because the islands of subsidence that is happening 
there, if there was an earthquake in California, which we have 
a history of having, there could be a significant problem in 
that region, which would have, quite frankly, much denser 
population.
    And not just new suburbs. Downtown Sacramento, quite 
frankly, is in trouble, and we have not maintained those 
levies. They need to be fixed and raised. And, quite frankly, 
Auburn Dam, even though it does have water benefit to it, it 
was also thought of as flood control for downstream. And so it 
has that benefit. Because the cost of Auburn Dam will be minor 
compared to the cost of Sacramento being flooded out down the 
road.
    Mr. Hobson. If the gentleman would yield, I am told that if 
one of those levies fails, it puts 20 feet of water in downtown 
Sacramento within an hour or 2. That will make Katrina and the 
loss of life look like a cake walk. Frankly, I think as a 
result of Katrina, the state of California, at least, has 
gotten more interested in trying to affect those levies in a 
positive way. However, you have houses and subdivisions that 
are almost in those levies. There is no protection other than 
the levy.
    The integrity of those levies can be negatively impacted by 
the trees that grow on them. An earthquake or any sudden burst 
of water into the area, and it is really one of the most 
pressing needs in the entire country.--The potential loss of 
life and property that exists out there today.
    I think the governor of California is trying, and I am 
hoping that the legislature is too. This is a catastrophe 
waiting to happen. It doesn't need to happen with the proper 
work on those levies. Also, the communities have got to be 
careful how they enhance--and when I say ``enhance'' I don't 
mean in a positive way--enhance the pressures on this area by 
the continued development without making the proper ways to 
handle the excess water that everybody knows floods into this 
area from time to time.
    I know I am ranting, but I went out and looked at it. If 
you see what happens, you know what happens, what water can do 
and you know you can prevent it, it becomes very frustrating 
when it doesn't happen.
    So, sorry, Mr. Chairman.
    Mr. Johnson. I know it is a big issue, and I know it is 
part of the Delta Vision of trying to establish a new concept 
of how the Delta in California is going to be managed, and I 
know that is part of what is being talked about there. But it 
is beyond, certainly, the purview of the Bureau of Reclamation.
    Mr. Hobson. The Bonneville Dam, is that yours?
    Mr. Johnson. That is Corps. That is right. That is Corps of 
Engineers' dam, yes, on the Columbia system.
    Mr. Hobson. You lucked out.
    Mr. Johnson. We got Grand Cooley.
    Mr. Hobson. Okay.
    Mr. Visclosky. We are joined by Mr. Fattah. He does not 
have questions at this time, but, because I have a series of 
questions for the committee, I will begin. If any of the 
members who are here have additional questions, just jump in at 
any point.
    Mr. Commissioner, I want to follow up on Mr. Hobson's 
opening statement and his discussion of the 5-year plan. I 
would add my thank you to his that it was submitted with the 
2009 budget request but would point out that this was an 
initial initiative when Mr. Hobson chaired the committee in 
2006, and so it has taken a number of years.
    And the disappointment. He mentioned the placeholders, and 
that is the administration's term, not ours, that were used. I 
supported the Chairman's initiative, and do today, of the 5-
year plan. The intent of the plan is to outline the expected 
and necessary expenses associated with the inventory of your 
existing and new investments necessary to meet Reclamation's 
mission. And it seems that the administration has selected an 
arbitrary funding level and then force fed its programs into a 
number.
    The thought was to take a clean view and picture the future 
and what does the future hold. And I would ask that you 
comment. And it does look like you just took a series of 
existing projects, plugged them in and that is the plan, as 
opposed to from foresight, if you would.
    Mr. Johnson. I think what you described is accurate on what 
we have provided.
    Let me just say this: That plan gets updated, I think, 
every year, and I think we would be more than happy to have our 
folks sit down with your staff and look at what the Corps has 
done--your view was that the Corps has done a pretty good job--
and see if we can't----
    Mr. Hobson. It is better. It gets sanitized by OMB, and 
that is a problem. We all need to work with OMB better to make 
sure that they understand what we want and we understand what 
they want. We understand what they go through, but we don't 
totally appreciate it.
    Mr. Johnson. Yes.
    Mr. Hobson. I think you do.
    Mr. Visclosky. And the intent is to not get you--boy, what 
are the needs so we can start anticipating as we look at the 
budget on an annual basis.

                        AGING DAM INFRASTRUCTURE

    The committee has often made a point that the nation's 
infrastructure, not simply that under your jurisdiction, is 
aging. For example, 50 percent of the Reclamation dams were 
built between 1900 and 1950, 70 are over 90 years old, and it 
seems intuitively to point to the need for increasing 
investment to keep facilities that are past their design life 
operating. And, yet again, the base scenario, essentially, is 
flat funding looking ahead.
    Is that a reasonable investment strategy, and when is the 
anticipated increased investment in this infrastructure going 
to take place from your perspective?
    Mr. Johnson. Well, certainly, aging infrastructure is a 
concern. In my oral testimony, I talked about our first 
priority is the safe operation and maintenance of our 
facilities. And of our water and related resources budget, over 
50 percent of that budget goes to maintaining infrastructure, 
including our Safety of Dams Program. We do have an increase in 
our request this year for the Safety of Dams Program. We have a 
$15 million increase in our request there.
    Longer term, one of the things that we are doing is taking 
a hard look at our infrastructure----
    Mr. Visclosky. That was for dam safety?
    Mr. Johnson. That was for dam safety, that is correct.
    Mr. Visclosky. Okay.
    Mr. Johnson. But on a longer-term basis, we are taking a 
look at--because a lot of people are asking, ``What is the 
total amount that is out there and what is your deferred 
maintenance, what is your aging infrastructure needs,'' and 
those sorts of things. So we are trying to put some data 
together that would give us a better handle on that.
    From a deferred maintenance standpoint, we don't think we 
have a lot of deferred maintenance. We think we do a pretty 
good job of maintaining the facilities that we do operation and 
maintenance on.
    Now, we have a lot of facilities that we have transferred 
to water users, and they do the operation and maintenance on, 
and the extents to which they have deferred maintenance, quite 
frankly, we don't have a real detailed handle on. They pay 
those costs anyway. Very few of those costs are actually part 
of our budget request. Those are funds that they provide from 
their own resources. But we are working hard to get a better 
handle on what we think the total need is in terms of aging 
infrastructure.
    Aging infrastructure is really a different issue than 
deferred maintenance. I mean, aging infrastructure, as a 
facility gets so many years old, there is nothing you can do, 
or very little you can do, in terms of operation and 
maintenance to stop concrete deterioration, and that is really 
the kinds of things that we are talking about or a dirt canal 
that has been there for 50 or 100 years and you have had rodent 
holes and a lot of other things. There is not a whole lot of 
maintenance on those kind of facilities that can prevent the 
gradual deterioration that occurs.
    So it is an issue, it is an area of concern, it is 
something that we are looking at, no question.
    Mr. Visclosky. Last year, you testified that Reclamation 
would begin gathering data on transferred works, those operated 
and maintained by local beneficiaries but federally owned, that 
would characterize a potential need for major O&M work that 
could not be accomplished under routine programs, which you are 
suggesting as far as routine activities, you are in reasonably 
good shape.
    Do you feel you have adequately defined the need for 
rehabilitation and replacement demands now for that major O&M?
    Mr. Johnson. Not completely, no. I think that is something 
that we are still working on. We have asked all of our area 
offices and regional offices to put together a complete 
inventory of this aging infrastructure concern, and they are 
working on putting that together.
    Mr. Visclosky. When do you think that will be done?
    Mr. Johnson. I hope over the next year we will be able to 
have a better handle on that.
    Mr. Visclosky. Do you think that will be included in the 
2010 budget submission or with the 2010 budget submission?
    Mr. Johnson. You know, I don't imagine that we would have a 
lot of--I mean, it is information. It wouldn't necessarily be 
part of the 2010 budget submission. It is certainly information 
that we can provide.
    Mr. Visclosky. Let me put it this way: If you think you 
will do it over the next year, will it be available to the 
committee before the 2010 budget submission, do you believe?
    Mr. Johnson. You know, I wouldn't want to make an absolute 
commitment to that, but we can go back and see what our 
schedule is and try to give you an answer on that.
    Mr. Visclosky. Given the work to date and the scope of the 
program as you understand it, would we be talking about tens or 
hundreds of millions of dollars or would we be talking some 
factor of $1 billion or more? Do you have any sense of that?
    Mr. Johnson. I would guess that it--you know, we have a $77 
billion infrastructure, so my guess is we could easily have 
more than $1 billion in aging infrastructure.
    Mr. Visclosky. Commissioner--and I don't want to beat a 
dead horse, but I will do it one more time, just as far as the 
budget submission essentially being reduced--last year, you 
testified that facility and maintenance of an aging 
infrastructure increased needs to dam safety, and you did 
mention the $50 million increase.
    Population growth in many areas within the western United 
States, increased Endangered Species Act requirements are all 
examples of trends that will impact Reclamation's budget for 
the future. And, again, I will simply emphasize that I assume 
those trends are referred to be up, not flat or not down.
    Mr. Johnson. That is absolutely true.
    Mr. Visclosky. Okay.
    Commissioner, if you had additional funding--and if you 
would, for the record, answer--to allocate among ongoing 
projects, on the theory that for the last several years, it is 
my sense, that in the end Congress increased the funding for 
the bureau, where could it most be usefully be spent, and where 
would a modest amount of additional funding have the biggest 
impact? If you could provide that to us, that would be 
terrific.
    Mr. Johnson. Yes. I would just say that I support the 
President's budget.
    Mr. Visclosky. No, I know.
    Mr. Johnson. Certainly, there is capability to spend money 
in other areas. I am sure Congressman Rehberg and Congressman 
Calvert, both rural water and Title 16, I am sure, would come 
high on their lists. Certainly, we could spend more money on 
our Dam Safety Program. Some of our research activities, I 
imagine, we could probably spend more money on. I am sure there 
would be a long list of activities.
    Mr. Visclosky. A recent article in the Journal of Water 
Resources Research predicted a 50 percent chance that live 
storage in Lakes Mead and Powell will be gone by the year 2013. 
Does Reclamation agree with the trends projected in the 
article?
    Mr. Johnson. You know, I am not familiar with the details 
of that study. My guess is, from some limited conversations 
with people, that that study is probably based on some pretty 
extreme worst-case scenarios. I think that a number of things 
would happen before Lake Mead and Lake Powell would be allowed 
to decline to that kind of a level.
    For instance, reduction in demand. I mean, we just put in 
place on the Colorado River system a new set of criteria for 
managing water deliveries under times of shortage. So, in fact, 
when Lake Mead begins to drop to lower levels, we begin to 
implement reduction and deliveries to water users.
    And we actually just put guidelines in place. Secretary 
Kempthorne signed in September a final record of decision that 
defines how we will operate that system. I doubt very seriously 
that this study considered reductions in demand that would be 
implemented as declines in reservoir conditions occur.
    Mr. Calvert. Mr. Chairman, can I add to that?
    Mr. Visclosky. Sure.
    Mr. Calvert. Did that study look at the unexpected snow 
pack we have had in the Rockies this year?
    Mr. Johnson. I am sure it didn't.
    Mr. Calvert. And we are, what, about 125 percent of normal 
now?
    Mr. Johnson. That is about the current projection.
    Mr. Calvert. And we are looking at at least a 50 percent 
rise on Lake Powell based upon the estimates for the melt?
    Mr. Johnson. Fifty feet.
    Mr. Calvert. Fifty feet.
    Mr. Johnson. I don't know if that would translate into 50 
percent, but it is 50 feet.
    Mr. Calvert. Does that have any additional water flow-in 
from Mead from that?
    Mr. Johnson. It depends on how much more we get in Powell 
under our new criteria that we put in place that defines how we 
do that. If we got 50 feet, we probably would see some new 
releases come down to Lake Mead as well. So there would be some 
rise at Lake Mead as well, yes.
    Mr. Calvert. Thank you.
    Thank you, Mr. Chairman.
    Mr. Johnson. I don't think that the situation is nearly as 
dire that has been portrayed in the press on that report.
    Certainly, you know, there is concern about climate change 
and what impact it has on future water supplies, and we are not 
ignoring that. I mean, we are looking at that, and we have done 
on the Colorado River Basin studies of climate change. We have 
looked at tree rings. We have simulated a 500-year record now 
on the Colorado River to look at what has happened in the past.
    We are doing a lot of work with a lot of universities on 
climate models to give us a better idea of what we think might 
happen. I am not aware of any of them that give us results. Of 
course, the jury is still out.
    We are getting a lot of new data coming in. In general, the 
broad climate models tend to show that there will be some 
reduction in precipitation in most of the western states. Now, 
how that translates into specific basins and specific water 
supplies isn't clear, but I don't think that very many are 
expecting declines to be as great as was projected in that 
study.
    I might also add that our Water for America initiative that 
I talked about earlier, one of the pieces of that is to look at 
this issue and doing river basin studies that try to take a 
broad look at the basin, how is climate change going to affect 
that basin, how should that affect how we operate our 
facilities? Does that mean we should change our operations? 
What are the future demands on the system, and what kinds of 
changes in management of the system and infrastructure would be 
needed to try to meet those needs?
    So that is actually part of our Water for America 
initiative to start to take a look at those kinds of things.

                      COLORADO RIVER MEASURED FLOW

    Mr. Visclosky. If I could ask--and I would appreciate your 
comment, because, obviously, you take exception to the 
projections in the journal article--but there was an indication 
or at least an observation that under Reclamation's most recent 
operating plan, you would have a deficit of water in the plan 
realized under most optimistic estimates of the Colorado River 
flow. Do you want to comment on that?
    Mr. Johnson. I think what they are probably talking about 
is that the Colorado River is over-allocated. If we look at 
the--we have a 100-year record of measured flow on the Colorado 
River, and that 100-year record shows that the average annual 
flow over that 100-year period has been about 15 million acre 
feet.
    The Colorado River has allocated about 16.5 million acre 
feet. There are 15 million acre feet that is allocated for use 
in the United States, and there are 1.5 million acre feet that 
was allocated to the country of Mexico under the Mexican Water 
Treaty. So we have got more water allocated for use than we 
have average annual flow over the 100 years.
    Now, the climate models and some of the projections, some 
of the points that have historically been made on the Colorado 
River is that that 100 years of record that we have may be high 
and that the flow may not be 15 million acre feet; maybe it is 
13 million acre feet or maybe it is 12 million acre feet, which 
means that the flow is even less than the allocated resource.
    So that certainly gives everybody cause for concern. So 
far, that full 16.5 million acre feet has not been developed. 
The actual use on the system today is closer to 14 to 15 
million acre feet.
    Mr. Visclosky. Counting the water to Mexico?
    Mr. Johnson. Counting the water to Mexico. The upper basin 
states have not developed their full entitlement. They have the 
right to do that, but it has not occurred. Now, over time, they 
will, and you could expect that they will develop more of their 
uses over time, and that will put more pressure on the system.
    But I come back to the point that I made earlier. That is 
why we put new operational guidelines in place, so we have 
provisions for cutting back use. If we got 12 million acre feet 
of average annual flow, we have a set of operating criteria 
that will adjust how much water gets released and how shortages 
would be----
    Mr. Visclosky. And my observation about the implication of 
evaporation and infiltration of another 1.7 million, so what 
you are saying is, as you look ahead with the current plan, you 
would have, if you would, mechanisms in place to begin to 
reduce the flow if in fact it declined.
    Mr. Johnson. Right, to reduce the demand, the releases, the 
releases, right.
    That is not to say that if you are reducing releases, that 
there aren't water problems out there that people are going to 
have to deal with. Certainly, the folks that are having the 
impact of those releases, there will have to be things that are 
done to manage around those. But, quite frankly, what our 
guidelines----
    Mr. Visclosky. Could I ask you about that----
    Mr. Johnson. Yes.
    Mr. Visclosky [continuing]. Because it will be one thing to 
reduce demand and then management, on some level, doesn't cost 
money; it calls for good judgment. But to have options as far 
as managing that supply and that flow, and I don't understand 
all the intricacies of storing water and what have you, but you 
would still need to make an investment in that infrastructure 
to give you those management options.
    Mr. Johnson. Right. And that is happening.
    Mr. Visclosky. It still gives me concern as far as the 
level of funding you have in your budget.
    Mr. Johnson. Yes. There is a lot of state and local funding 
that is being put in to developing options. In Arizona, they 
have a groundwater bank. They have a large groundwater system, 
and their plan for dealing with reductions, and they are a 
state that is impacted significantly if we cut back on flows on 
the Colorado system, but they have a groundwater storage system 
where they have put a tremendous amount of water in the 
groundwater basin, and they will be able to fall back on that 
groundwater basin during times of drought.
    In California, the Metropolitan Water District is doing 
similar kinds of things. The other thing that Metropolitan is 
doing--it is part of this whole overall California plan that 
was put together 3 or 4 years ago--is most of the water use in 
California from the Colorado River is agriculture water use, 
and there are provisions between the Metropolitan area and the 
agricultural areas in California to allow the agricultural 
users to give up their supplies for use by the urban areas. So 
kind of a form of water sharing or water transfers, willing 
buyer, willing seller markets to help meet needs when those 
kinds of reductions occur.
    Mr. Calvert. In the state of Nevada, it seems to me 
Arizona, California, the upper basin states are in better shape 
than Nevada. It seems to me Nevada has an immediate problem. 
They are desperate for water supply, they are pulling out 
people's front yards and paying for it, subsidizing that and so 
forth.
    How can they sustain the rate of growth that they have 
experienced here in the last number of years, and they can't 
expand their right within the Colorado River? What is the state 
of Nevada doing to address that problem?
    Mr. Johnson. They are doing a lot of things, and some of it 
involves the Colorado River. They are looking at an in-state 
water project where they are going to tap groundwater basins in 
the central part of the state and transport that water down 
to----
    Mr. Calvert. How about the adjoining states? Obviously, 
they are going to take them to court on that, right?
    Mr. Johnson. In some of those basins, not all of them, 
there are disputes between Nevada and Utah over the sharing of 
those groundwater basins, and that is something that the two 
states are going to have to work on.
    Mr. Calvert. Who is in charge of that water basin area? Is 
your department----
    Mr. Johnson. No.
    Mr. Calvert. If they drain that basin, how is that going to 
affect the state of Utah?
    Mr. Johnson. The groundwater management in both of those 
states is carried out and managed under state law.
    Mr. Calvert. Okay.
    Mr. Johnson. The Bureau of Reclamation is not a part of any 
of those projects.
    Mr. Calvert. But it is a dispute between two states. Are 
they going to end up in federal court?
    Mr. Visclosky. Is the basin bi-state?
    Mr. Calvert. The basin extends both in Nevada and in Utah, 
yes.
    Mr. Johnson. Not all of the basins do. There are some 
groundwater basins that are just in Nevada, and they are going 
to tap those. There is one groundwater basin that as you move 
farther north that is shared by both states, and there are 
studies that are on in that----
    Mr. Calvert. Isn't that the largest one, though?
    Mr. Johnson [continuing]. And discussions. I couldn't say. 
I don't know if they are.
    But Nevada is doing some other things. One of the things 
that Nevada is going to do is they are going to pay--and, in 
fact, the bureau is going to do the construction--they are 
going to pay for the drop-to reservoir. I don't know if you 
have heard of the drop-to reservoir. This is a storage 
facility, a regulatory facility, that we are going to build 
along the All-American Canal in California.
    What it does, it is going to allow us to more efficiently 
regulate our flows on that lower end of that river. There are 
times when--the travel time from the last point of storage to 
the point of diversion at the southern end of the river is 3 
days. There are times when we release water for use down at the 
lower end of the basin, and over that 3-day period, if you get 
a rain storm or something happens, the demand for that water 
diminishes, and we have all this water coming and no place to 
put it and it ends up being lost to the system.
    And so we are going to build a small storage facility down 
on the lower end of the system and we will be able to capture 
those flows. We estimate that we can probably conserve about 
60,000 acre feet of water a year by implementing that.
    The state of Nevada is going to pay--it is about $170 
million facility--they are going to pay for the facility. We 
are going to construct it, operate and maintain, conserve that 
water, and Nevada is going to get the use of it.
    And so those are the kinds of creative things that we can 
do on the Colorado River.
    One of the other things that we are talking about--you 
mentioned it earlier--the idea of desalinization on the Pacific 
Ocean and exchanges between California and Nevada to 
supplement, but we are also talking about that with the country 
of Mexico, and are there opportunities for Nevada or Los 
Angeles or Phoenix or Tucson or anybody that gets Colorado 
River water to pay for desal in Mexico and then do exchanges 
with Mexico?
    Mr. Calvert. Now, you have been the water master on the 
river for some time. Do you think you can get all the guys with 
the successive water rights to allow that transfer to take 
place without giving up their right within the river?
    Mr. Johnson. I think that it is doable. I think that it 
is--nobody is harmed. You can measure the water, you can back 
it up in the system. Certainly, I am not saying that it is 
easy. It is complicated, and there are a lot of legal and 
institutional issues that you have got to work through, and 
when you deal with Mexico, you have another country, so it is 
complicated. But, certainly, I wouldn't think that it is 
impossible.
    I mean, if we can do the quantification settlement in 
California, which took years to develop, and if we can do the 
shortage arrangement that we put in place in the Colorado River 
that helps us manage the system differently, this drop-to 
reservoir that I talked about can only be implemented because 
we put those new operation criteria in place.
    We actually put provisions in there to allow those kinds of 
conservation projects to be paid for locally and developed and 
allow that water supply to be dedicated to the use in the area 
that paid for it.
    And I guess my point is, that there are lots going on and 
lots of investment occurring that is outside of the federal 
funding. Nevada is spending a lot of money to develop new 
resources--their own money. The state of California is bringing 
a lot of money for infrastructure to develop facilities. There 
are probably some opportunities for federal but, quite frankly, 
most of that investment is being incurred at state and local 
levels.
    Mr. Visclosky. Just don't think about the Great Lakes.
    Mr. Johnson. Nobody is thinking about--the Great Lakes are 
not on the list, I can assure you.
    Mr. Visclosky. Commissioner, there was a requirement to 
establish a formal rural water supply program for rural water 
major maintenance projects in the 17 western states. What is 
the current status of that program, and is there a target date 
for when it will be completed?
    Mr. Johnson. Yes. I think we are developing--the 
legislation requires us to put regulations in place on how we 
would administer and carry that program out. Those regulations 
are being drafted, and we anticipate going through a public 
process over the next year to put those in place.
    And I think we have got $1 million in our 2009 budget to 
begin the administration of that project.
    Mr. Visclosky. So that would be completed by this time next 
year.
    Mr. Johnson. We should have the regulations in place by 
this time next year, yes.

                      WATER FOR AMERICA INITIATIVE

    Mr. Visclosky. Commissioner, you mentioned a couple of 
times the Water for America initiative, and with all due 
respect, in looking at the details, it does appear that the 
activities that Reclamation is already executing, specifically 
Water 2025, water conservation field services, investigations 
and Endangered Species Act are essentially, if you would, 
repackaged, essentially, for the same amount, if not a bit 
less, money.
    What is the difference, because an initiative would imply 
there is something new going on?
    Mr. Johnson. I think there are a couple of things that are 
new. One is the basin studies that I have talked about. That is 
not something that we have been doing, trying to take this 
broader look, given climate change, given population growth, 
those sorts of things. So the basin studies is a new piece of 
what we are doing.
    The other part that is new or maybe different is we are 
expanding the concept of the Water 2025 Program. That has been 
focused more narrowly on just traditional water conservation 
type projects.
    Under this proposal, that would be broadened to continue to 
have challenge grants for conservation project but to also have 
challenge grants for demonstration projects that would advance 
water treatment technology and then also projects that would 
focus on the environment, challenge grant programs that would 
focus on trying to advance species recovery and those sorts of 
things. So we broadened the concept of Water 2025 to cover a 
broader range of activities.
    The USGS component actually has some new pieces as well. 
Their new piece focuses primarily on the water census and 
getting a better handle on what the surface and groundwater 
resources are on a nationwide basis, and that is not something 
that has been going on as part of the previous programs.

                         LOAN GUARANTEE PROGRAM

    Mr. Visclosky. Okay. Last year, you testified on loan 
guarantee programs, that it was anticipated draft rules for the 
program would be completed by the end of the calendar year 
2007.
    Was the schedule met, and if so, could you elaborate on the 
structure of the program, and given that there is no budget 
request for this activity for fiscal year 2009, where is the 
program?
    Mr. Johnson. We have not been successful in getting the 
regulations in place. We have run into some issues related to 
providing loan guarantees on federally owned facilities in the 
process of developing the regulation. In the review of those, 
in the review of the legal framework, there has been an 
interpretation that the Credit Reform Act does not allow loan 
guarantees on federal facilities. So that is an issue that we 
are currently working through within the Administration. We 
still have hopes of getting the program in place, but we have 
run into some bumps in the road as we have tried to get our 
regulations in place.
    Mr. Visclosky. Did you anticipate on the theory that this 
bill will not be completed for some time and there may be an 
internal issue for us as well as far as whether or not there 
will be a score to our allocation that if something happens 
with that program and you are successful and you want to 
proceed in 2009, that you would let the committee know as soon 
as possible?
    Mr. Johnson. We sure could.
    Mr. Visclosky. All right. And I would not make 
representation we would be in a position to help you, but we 
can't if we do not know.
    Mr. Johnson. Sure.
    Mr. Visclosky. And right now we don't have a space there 
for that program.
    Mr. Johnson. We will certainly let you know as we work 
through the issue.

                             REPROGRAMMING

    Mr. Visclosky. We have a number of questions, several of 
which will be submitted for the record, on reprogramming but 
would ask two now.
    One is, are all movements of funds from the level specific 
in the reports of the committee treated as reprogrammings and, 
as such, submitted to the subcommittee for approval? If not, 
how many reprogrammings does the bureau do annually that are 
not submitted to the subcommittee for approval?
    Mr. Johnson. We do what we call fund transfers, which are 
very limited from one category to another, and it is my 
understanding that we have provided detailed information on 
those programs to the committee. In fact, we are committed to 
report quarterly on those transfers. Those are limited to 15 
percent, I think, of the line item amount. Anything beyond that 
we come to the committees for approval.
    Mr. Visclosky. If it is more than $2 million.
    Mr. Johnson. Or if it is more than $2 million, right. No, 
that is not----
    Mr. Visclosky. No, it is 15 percent if it is more than $2 
million, and if it is under $2 million----
    Mr. Johnson. And then $300,000.
    Mr. Visclosky [continuing]. Then it is $300,000.
    Mr. Johnson. That is correct. That is correct.
    Mr. Visclosky. Does the bureau--and, I guess, in a sense, 
you have answered it, but let me ask it--does the bureau 
consider the levels provided for individual projects in the 
reports advisory or does it treat the conference allocations 
contained in the statement of managers as definitive?
    I wish Mr. Hobson was here to hear this.
    [Laughter.]
    This is my favorite question.
    Mr. Johnson. You know, could I respond for the record on 
that, because there are some technicalities there that I am 
just not aware of or may not be, so I don't want to say the 
wrong thing. If I could respond for the record on that, I would 
appreciate it.
    Mr. Visclosky. You have answered the question.
    Just one or two.
    Mr. Fattah, yes.
    Mr. Fattah. You mentioned this Mexican Water Treaty.
    Mr. Johnson. Yes.
    Mr. Fattah. And you said that our obligations under the 
treaty was 1 million?
    Mr. Johnson. One million and a half acre feet.
    Mr. Fattah. A million and a half. And the longevity of the 
treaty is what, do we know?
    Mr. Johnson. It is perpetuity.
    Mr. Fattah. In perpetuity. And you have $29 million 
allocated for security?
    Mr. Johnson. Yes.
    Mr. Fattah. Is that across all of your facilities?
    Mr. Johnson. Yes, it is.
    Mr. Fattah. And how is that basically handled? Do you 
contract with local governments for that? Do you reimburse?
    Mr. Johnson. There are a number of components of that. A 
big part of it is guards and surveillance activities at our 
facilities. Exactly how we do that varies on a case-by-case 
basis. Our preference is to use local law enforcement to the 
extent we can. There are cases where they don't want to do that 
or for whatever reason it is just not practical. Sometimes we 
contract with security firms to do that. And in other cases----
    Mr. Fattah. Is $29 million sufficient, in your mind----
    Mr. Johnson. Yes, it is.
    Mr. Fattah [continuing]. To meet all of your security 
obligations?
    Mr. Johnson. Yes, it is. I believe so.
    Mr. Fattah. Could you supply some additional detail on the 
security efforts to the committee? Thank you.
    Mr. Johnson. Be glad to.
    Mr. Visclosky. The National Research Council suggests, 
among other things, that the Reclamation's water program should 
implement stronger controls over project planning and 
development. Would you agree with the suggestion, and if so, 
what steps have the bureau taken in this regard?
    Mr. Johnson. You know, I am trying to place that study and 
exactly--is that the national NRC report that we had related to 
our Managing for Excellence Program? And could you----
    Mr. Visclosky. All right, let me ask you--and if you want 
to answer for the record, just so we are talking apples and 
apples, that would be fine----
    Mr. Johnson. Yes.
    Mr. Visclosky [continuing]. But the question again would 
be, the National Research Council suggests, among other things, 
that Reclamation's water program should implement stronger 
controls over project planning and development. And then, 
obviously, what specific steps is Reclamation taking in this 
situation?
    Mr. Johnson. Okay.
    Mr. Visclosky. If you could, for the record.
    Mr. Johnson. We are responding to--we have had a program 
called Managing for Excellence that we have been working on 
since that report was completed. We have identified 41 areas, 
41--there was not 41 recommendations from the NRC report, but 
we actually identified 41 areas where we are evaluating how we 
carry out our business and how we can improve that.
    On the planning, on this particular one, what I would like 
to do is respond in detail in the record, because I am just not 
remembering off the top of my head exactly how we have 
responded on that one.

                              CONTRACTORS

    Mr. Visclosky. And one last question--and it is going to be 
a question we are going to ask across the board on 
contracting--is how do you collect and use information on the 
performance of contractors? For example, a contractor performs 
poorly in Utah. How do you ensure that a contract review board 
in Arizona has access to that information and can take that 
into account? And is such information institutionalized 
throughout the bureau so people know in advance, here is 
someone who is simply not acting appropriately, is not a good 
contractor, is not going to do a good job, to save everybody a 
lot of time, heartburn and money?
    Mr. Johnson. You know, I would like to respond for the 
record on that as well, if I can. I think we do, in general, 
share information within the bureau about our contractors and 
our procurement activities, but I would want to respond in more 
detail, if I could.
    Mr. Visclosky. If you could. I think it is an important 
principle, and, again, we are going to ask it across the 
board----
    Mr. Johnson. Sure.
    Mr. Visclosky [continuing]. With the Department of Energy--
--
    Mr. Johnson. It is a good question.
    Mr. Visclosky [continuing]. Too that it would be helpful to 
people intra-department and elsewhere to save a lot of time and 
heartburn. So if you could, that would be great.
    Mr. Johnson. We would be happy to do that.
    Mr. Visclosky. Mr. Fattah?
    If not, appreciate, gentlemen, your work and the bureau's. 
And, again, if you could make every effort to make sure that 
the questions for the record and other information are supplied 
within 4 weeks, that would be terrific.
    And the hearing is adjourned.
    [Questions and answers for the record follow:]

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                           W I T N E S S E S

                              ----------                              
                                                                   Page
Dinneen, Bob.....................................................     1
Greene, D. L.....................................................     1
Hillebrand, Don..................................................     1
Johnson, R. W....................................................    97
Stanek, M. B.....................................................     1
Stricker, Tom....................................................     1
Ziegler, L. L....................................................     1


                               I N D E X

                              ----------                              

          Overview Hearing--Vehicle Technology and Gas Prices

                                                                   Page
Chairman Visclosky's Opening Statement...........................     1
Mr. Hobson's Opening Statement...................................     2
Mr. Greene's Opening Statement...................................     4
Mr. Dinneen's Opening Statement..................................    21
Mr. Stanek's Opening Statement...................................    31
Mr. Hillebrand's Opening Statement...............................    42
Ms. Ziegler's Opening Statement..................................    53
Mr. Stricker's Opening Statement.................................    59
Algae............................................................    77
Lithium-ion Battery..............................................    77
Battery Manufacturing............................................    78
Chemistry Research...............................................    79
CO2 Emissions.........................................    81
Plug-in-Hybrid Readiness.........................................    82
Cost for Lithium-ion Battery Research & Manufacturing............    83
Mileage Performance..............................................    85
CO2 Reduction.........................................    86
Consumer Interest in Alternative Vehicle Technologies............    90
Green Retailer Program...........................................    91
Nickel Metal Hydride.............................................    93

                         Bureau of Reclamation

Chairman Visclosky's Opening Statement...........................    97
Mr. Hobson's Opening Statement...................................    98
Mr. Johnson's Opening Statement..................................    99
Restoring Wetlands on Quechan Reservation........................   109
Gila River.......................................................   109
Yuma Plant.......................................................   110
Montana's Water Projects.........................................   112
Desalinization...................................................   115
All American Canal...............................................   115
Voluntary Water Transfers........................................   116
Glen Canyon Dam Release..........................................   116
Glazier Project..................................................   118
WRDA Act.........................................................   119
Interstate Transfers of Water....................................   120
Boise River Project..............................................   121
CALFED Program...................................................   122
Aging Dam Infrastructure.........................................   127
Colorado River Measured Flow.....................................   131
Water For America Initiative.....................................   134
Loan Guarantee Program...........................................   135
Reprogramming....................................................   136
Contractors......................................................   137