    [Senate Hearing 110-442]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 110-442

                                                            Senate Hearings

                                     Before the Committee on Appropriations

    _______________________________________________________________________

                                                           Energy and Water

                                                                Development

                                                             Appropriations

                                                                Fiscal Year
                                                                       2008

                                              110th CONGRESS, FIRST SESSION

                                                          H.R. 2641/S. 1751

    DEPARTMENT OF DEFENSE--CIVIL

    DEPARTMENT OF ENERGY

    DEPARTMENT OF THE INTERIOR

    NONDEPARTMENTAL WITNESSES

     Energy and Water Development Appropriations, 2008 (H.R. 2641/S. 1751)

                                                            S. Hrg. 110-442

        ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2008

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

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                           ONE HUNDRED TENTH CONGRESS

                                 FIRST SESSION

                                       ON

                               H.R. 2641/S. 1751

     AN ACT MAKING APPROPRIATIONS FOR ENERGY AND WATER DEVELOPMENT FOR THE
         FISCAL YEAR ENDING SEPTEMBER 30, 2008, AND FOR OTHER PURPOSES

                                   __________

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

                                   __________

             Printed for the use of the Committee on Appropriations

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

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                                   __________
                          COMMITTEE ON APPROPRIATIONS

                    ROBERT C. BYRD, West Virginia, Chairman
    DANIEL K. INOUYE, Hawaii             THAD COCHRAN, Mississippi
    PATRICK J. LEAHY, Vermont            TED STEVENS, Alaska
    TOM HARKIN, Iowa                     ARLEN SPECTER, Pennsylvania
    BARBARA A. MIKULSKI, Maryland        PETE V. DOMENICI, New Mexico
    HERB KOHL, Wisconsin                 CHRISTOPHER S. BOND, Missouri
    PATTY MURRAY, Washington             MITCH McCONNELL, Kentucky
    BYRON L. DORGAN, North Dakota        RICHARD C. SHELBY, Alabama
    DIANNE FEINSTEIN, California         JUDD GREGG, New Hampshire
    RICHARD J. DURBIN, Illinois          ROBERT F. BENNETT, Utah
    TIM JOHNSON, South Dakota            LARRY CRAIG, Idaho
    MARY L. LANDRIEU, Louisiana          KAY BAILEY HUTCHISON, Texas
    JACK REED, Rhode Island              SAM BROWNBACK, Kansas
    FRANK R. LAUTENBERG, New Jersey      WAYNE ALLARD, Colorado
    BEN NELSON, Nebraska                 LAMAR ALEXANDER, Tennessee

                      Terrence E. Sauvain, Staff Director
                      Bruce Evans, Minority Staff Director
                                     ------

                  Subcommittee on Energy and Water Development

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

                               Professional Staff

                                   Doug Clapp
                                 Roger Cockrell
                             Franz Wuerfmannsdobler
                            Scott O'Malia (Minority)
                             Brad Fuller (Minority)

                             Administrative Support

                                  Robert Rich

                                C O N T E N T S

                                  ----------
                                                                       Page

                            Wednesday, March 7, 2007

    Department of Energy:
        Office of Environmental Management...........................     1
        Office of Civilian Radioactive Waste Management..............    20

                            Thursday, March 15, 2007

    Department of Defense--Civil: Department of the Army: Corps of
      Engineers--Civil...............................................    53
    Department of the Interior: Bureau of Reclamation................    74

                           Wednesday, March 21, 2007

    Department of Energy: Office of Science..........................   167

                           Wednesday, April 11, 2007

    Department of Energy.............................................   221

                           Wednesday, April 18, 2007

    Department of Energy: National Nuclear Security Administration...   321

                           Nondepartmental Witnesses

    Department of Defense--Civil: Department of the Army: Corps of
      Engineers--Civil...............................................   393
    Department of the Interior: Bureau of Reclamation................   460
    Department of Energy.............................................   487

        ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2008

                                  ----------

                            WEDNESDAY, MARCH 7, 2007

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 2:21 p.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Byron L. Dorgan (chairman)
    presiding.
        Present: Senators Dorgan, Murray, Domenici, Bennett, Craig,
    and Allard.

                              DEPARTMENT OF ENERGY

                       Office of Environmental Management

    STATEMENT OF HON. JAMES A. RISPOLI, ASSISTANT SECRETARY
                OF ENERGY FOR ENVIRONMENTAL MANAGEMENT

                  opening statement of senator byron l. dorgan

        Senator Dorgan. I call the hearing to order. Let me
    apologize for the delay, but we have had two votes on the floor
    of the Senate and they are just finishing.
        This is the first hearing of the Energy and Water
    Subcommittee this year and the first since I have assumed the
    chairmanship, and I am pleased to be in this role and working
    on so many interesting and divergent issues. I am also pleased
    to be working with my colleague Senator Domenici. I visited the
    National Laboratory at Sandia in New Mexico with Senator
    Domenici 2 weeks ago. I saw some of the scope of the
    subcommittee's jurisdiction during that visit and was very
    impressed, very interested.
        Today we have two important programs to hear from, the
    Office of Environmental Management and the Office of Civilian
    Radioactive Waste Management. I am going to put most of my
    opening statement into the record so that we can hear the
    witnesses, but let me say that the Radioactive Waste Office has
    the immediate task of submitting a license for the Yucca
    Mountain waste repository to the Nuclear Regulatory Commission
    by June 2008. The Environmental Management Office has the
    immediate and long-term task of cleaning up the contamination
    from nuclear weapons facilities that date back to the Second
    World War. It is clear to me as I look at the budget that we
    have some very serious budget problems and we will evaluate
    some of those today.

                               PREPARED STATEMENT

        I am going to put the rest of my statement in the record. I
    will be using a portion of that discussion during the question
    period. I want to thank both Mr. Sproat and Mr. Rispoli for
    being with us today.
        [The statement follows:]

                 Prepared Statement of Senator Byron L. Dorgan

        The hearing will come to order. Thank you all for being here today.
    This is the first hearing of the Energy and Water Subcommittee this
    year and the first of my chairmanship.
        I am happy to be in this role and excited by the prospect of
    working on so many interesting and divergent issues. I am also pleased
    to be working with my colleague, and long-time chairman of this
    subcommittee, Senator Domenici.
        I visited Sandia National Laboratory in New Mexico with Senator
    Domenici two weeks ago.
        During that visit I saw some of the scope of this subcommittee's
    jurisdiction and my colleague's wealth of experience on these matters.
        Today, we have two important programs to hear from--the Office of
    Environmental Management and the Office of Civilian Radioactive Waste
    Management.
        The Radioactive Waste office has the immediate task of submitting a
    license for the Yucca Mountain waste repository to the Nuclear
    Regulatory Commission by June, 2008.
        The Environmental Management (EM) office has the immediate and
    long-term task of cleaning up the contamination from nuclear weapon
    facilities that date back to World War II.
        It is clear the proposed budget for the EM program is inadequate.
        The EM program has recognized the shortfall in requested funding
    and has proposed to focus fiscal year 2008 cleanup on the highest risk
    activities across the complex. This is obviously wise.
        But I'm concerned by the budget's implied premise that it is okay
    to delay addressing lower risk activities.
        It is very clear that this budget will lead to missed milestones
    set out in cleanup agreements with the States. In fact, the Department
    is already stating it intends to work with the States to modify these
    cleanup agreements.
        I find it unfortunate that the administration proposes to modify
    cleanup agreements based purely upon lack of funding.
        Nuclear waste cleanup is difficult work involving some of the most
    dangerous materials on earth. We all understand that difficulties arise
    in this type of work that leads to missed milestones.
        But, as I understand it, the States are often understanding in
    these circumstances and have agreed to make changes to the agreements
    when legitimate obstacles to cleanup have arisen.
        It seems too much to ask that States agree to milestone changes
    simply because the Federal Government proposes to short-change such an
    important program.
        I'm also concerned by a fiscal year 2008 budget document statement
    that says the life-cycle cost of the EM program is estimated to have
    increased by $50 billion.
        We need a better explanation for this estimated cost increase and
    what the Department is doing to reverse this escalation.
        The Department of Energy's own website has a section on the history
    of the EM program and its origins in the weapons programs that produced
    the contamination. The website notes that scientists in the weapons
    program early on advised that the resulting waste stream presented
    grave problems.
        DOE's website then notes, ``The imperatives of the nuclear arms
    race, however, demanded that weapons production and testing be given
    priority over waste management and the control of environmental
    contamination.''
        This historical observation about the Cold War period still seems
    applicable today.
        The Department's budget proposes some big increases in a few
    programs, but proposes severe decreases for Environmental Management.
        I'm concerned that we are again prioritizing other activities while
    not fully recognizing the risk of nuclear waste contamination or our
    obligation to cleanup.
        This subcommittee has members with a keen interest in seeing the
    Federal Government live up to its responsibility at these waste sites.
    I look forward to working with them toward this goal.

        Senator Dorgan. Mr. Rispoli, if you will please present
    your testimony, we will include your entire testimony as part
    of the record and you may summarize.

                       STATEMENT OF HON. JAMES A. RISPOLI

        Mr. Rispoli. Thank you, Mr. Chairman. Good afternoon,
    Chairman Dorgan, and I look forward to seeing other members of
    the subcommittee, I am sure. I am happy to be here today to
    answer your questions on the fiscal year 2008 budget request
    for the Environmental Management program. I would like to thank
    you and your subcommittee for your support in this program.
        As you know, the EM program has solved a number of cleanup
    challenges, including Rocky Flats, Fernald, and other major
    facilities that process significant amounts of plutonium and
    uranium and at one time presented challenges that seemed
    unanswerable. We are making progress on many other complex
    challenges that the program still faces. EM has been able to
    achieve notable results by addressing these challenges through
    risk reduction and prioritization and judicious use of the
    resources that you entrust to us on behalf of the American
    people.
        I realize that maybe we will not get the full benefit of
    this, but I would like to just quickly run through just some of
    the posters here that give you the idea of the before and after
    of what we have accomplished, some of the sites that we have
    closed literally just in the past year and a half. So I would
    like to start with the Rocky Flats poster. You can see the
    before and after, a significant cleanup effort, 3.6 million
    square feet of buildings demolished; the site will become a
    wildlife refuge.

        The next poster is Fernald in Ohio. It is not much of a
    smaller site. Secretary Bodman and I were there with the
    Administrator of the EPA just last month to celebrate the
    closure of Fernald as well as other Ohio sites, and we will
    have a couple of shots of those as well. This will also become
    parkland, wetlands, prairie. You will notice on the right-hand
    side of the after that there actually is a 75-acre on-site
    disposal cell.

        The next two are Columbus and Ashtabula, Ohio. We
    celebrated those at the same ceremony. Columbus is a Battelle
    Memorial Institute property. It is about 31 acres and it is now
    available for reuse by the owner. The Ashtabula project is a
    similar privately owned property, 42 acres, also available for
    reuse by the owner.

        The next shot is Miamisburg, Ohio. Miamisburg also
    processed nuclear materials. In the case of Miamisburg you will
    notice there are three significant buildings still there that
    can be spotted in the before shot, and that is because this
    particular site is being taken over by a community reuse
    organization and the site will be put to a constructive reuse.

        Some ongoing projects at other places: Oak Ridge, for
    example, where we have a very large, significant EM site, but
    at Oak Ridge, this is a picture of the Melton Valley before and
    after, where we removed 600,000 tons of rock and millions of
    cubic yards of soil that was contaminated.

        At Savannah River, recently I went to the T Area
    celebration, where we demolished 28 facilities and took care of
    problems immediately adjacent to the Savannah River.

        We have a picture here next of a truck pulling into the
    Waste Isolation Pilot Plant in New Mexico with the first
    remote-handed transuranic waste shipment. We have since
    accomplished five shipments. This is very recent, within the
    past month. We have since completed five shipments of
    transuranic waste from the Idaho facility to the Waste
    Isolation Pilot Plant after getting--obtaining, with the help
    of the regulator in the State of New Mexico and the EPA, the
    permits that we needed to be able to do this, a very
    significant accomplishment for us.

        I would like to show you a shot of a troubled project. This
    is the K Basins at Hanford. It has been a very, very difficult
    and challenging project. Spent nuclear fuel on the left below
    22 feet of water, that we had to retrieve and then deal with
    all of the disintegrated pieces that derived from that fuel,
    again through 22 feet of water, with workers working with
    manipulators straight down through that to maneuver and pick up
    the pieces. You can see pictures of them in the center as well
    as on the right side of the cleanup as it was completed.

        This is important. These basins are very close to the
    Columbia River and it is important to us to get these emptied
    out so that we can get on with ensuring that there is no
    contamination to the river from those.
        The Idaho poster shows a very significant event. The
    Department had statutory authority to, after waste was removed
    from tanks, to close the tanks by grouting them with only de
    minimis material left in the tanks. It is a relatively new
    statutory authority, section 3116 of the 2005 National Defense
    Authorization Act, and this was the first application of that
    authority, at Idaho during the week of Thanksgiving, 2006.

        These cleanup successes were accomplished by the
    collaboration of DOE, the Congress, the States, and the
    national regulatory agencies, Indian nations, and communities,
    focusing on a common vision. All these completions and
    accomplishments should be recognized as results derived from
    partnerships that were founded on mutual respect and
    collaboration.
        The task before us is very complex. We face challenges of
    having to develop and deploy new technologies as we proceed. We
    recognize our regulatory commitments and must focus on our
    urgent risks. At the same time, we are improving our management
    performance and incorporating new project scope, and in many of
    the projects we discover that the contamination is far greater
    than we had anticipated. But despite all of these, we are
    resulting and achieving progress.
        First and foremost, safety is our top priority. We will
    continue to maintain and demand the highest safety performance.
    We believe that every one of our workers deserves to go home as
    healthy as he or she was when they came to work in the morning.
        One of my goals as Assistant Secretary is that at least 90
    percent of our portfolio will meet or beat our cost and
    schedule targets. Over the past year, we have personally
    conducted quarterly performance reviews of all of our projects
    with our leadership team. I can tell you today that we have
    shown measurable improvement, but we have yet to realize the
    full potential of implementing our management systems. So we
    will renew our emphasis on applying these principles as we go
    forward. We have not yet attained the appropriate skills mix to
    most effectively implement our procurement and project
    execution strategies, so we are in the process of strengthening
    those capabilities.
        Based on the results we are already seeing, I am optimistic
    that we can fulfill these multi-year objectives to be a truly
    high-performing organization.
        As Secretary Bodman stated yesterday before the House
    Appropriations Energy and Water Development Subcommittee, the
    Federal Government has an obligation to address the
    environmental legacy of nuclear weapons production. Our request
    of $5.655 billion consists of three appropriations: defense
    environmental cleanup, non-defense environmental cleanup, and
    the Uranium Enrichment Decontamination and Decommissioning
    Fund.
        In keeping with the principles of reducing risk and
    environmental liabilities, our 2008 request will support the
    following priority activities. First is stabilizing radioactive
    tank wastes in preparation for treatment. This is about 31
    percent of our request. We consider it to be the most clear and
    imminent risk that we address in our program. Storing and
    safeguarding nuclear materials and spent nuclear fuel, which is
    about 17 percent of our request. Dispositioning transuranic
    low-level and other solid waste, about 16 percent of our
    request; and remediating major areas at our sites and
    decontaminating and decommissioning excess facilities, which is
    about 26 percent of our request. Examples of milestones and
    planned activities by site-specific categories can be found in
    my formal statement, Mr. Chairman, that I request be accepted
    for the record.
        This budget requests and reflects difficult decisions to
    focus funding on activities we have identified to reduce the
    highest risks we face. Some of these funding decisions are not
    driven by existing compliance agreements. Therefore, this
    budget request does not cover some of the lower risk-reducing
    activities required under existing compliance agreements.

                               PREPARED STATEMENT

        Mr. Chairman and members of the subcommittee, let me assure
    you that we will continue to work with this subcommittee and
    our regulators in implementing our risk reduction approach,
    using the resources you provide to ensure the best possible
    protection for the public. Challenges lie ahead, but we are
    focused on our objectives--safety, performance, cleanup, and
    closure. I look forward to continuing to work with this
    subcommittee and the Congress to address your concerns and
    interests, and I would be pleased to answer your questions
    during the hearing. Thank you, sir.
        [The statement follows:]

                  Prepared Statement of Hon. James A. Rispoli

        Good morning, Chairman Dorgan and members of the subcommittee. I am
    pleased to be here today to answer your questions on the President's
    fiscal year 2008 budget request for the Department of Energy's
    Environmental Management (EM) program. I want to thank the subcommittee
    for support of the EM program.
        The EM mission was undertaken to address the safe and successful
    cleanup of the Cold War legacy brought about from five decades of
    nuclear weapons development and government-sponsored nuclear energy
    research. This mission, as I pointed out last year, is both inherently
    challenging and innately beneficial to the American people. As this
    committee knows the EM program has solved several cleanup challenges,
    including Rocky Flats and Fernald, that at one time seemed
    unanswerable. We are also making progress on the many other complex
    challenges that the program still faces. Since I last appeared before
    this committee, EM has been able to achieve notable results by
    addressing these challenges through a risk reduction and prioritization
    strategy and a judicious use of the resources that Congress entrusts to
    us. EM is implementing this prioritized, risk reduction strategy
    supported by the crucial tenets of safety, performance, cleanup, and
    closure.
        The President's fiscal year 2008 budget request will allow this
    prioritized work on these important cleanup and closure projects to
    continue across the complex. For the EM program, the President's budget
    request for fiscal year 2008 is $5.66 billion. We've been able to
    achieve a decrease of $173 million from the fiscal year 2007 request by
    employing a thoughtful balance of reducing risk and completing cleanup
    for the EM program. Nearly half of our budget request will go towards
    our highest risks activities in stabilizing tank waste, nuclear
    materials, and spent nuclear fuel, and another quarter is going to
    clean up contaminated soil, groundwater, and unused facilities. With
    this request, we are continuing on our strategic course to address high
    priority-tank waste treatment and radioactive waste disposition while
    preserving our site completion and closure drive.
        With this budget request, the Defense Waste Processing Facility at
    Savannah River Site (SRS), the Advanced Mixed Waste Treatment Facility
    at Idaho National Laboratory (INL), and the Toxic Substance Control Act
    Incinerator at Oak Ridge Reservation (ORR) will continue to operate,
    along with the initiation of operations at the Depleted Uranium
    Hexafluoride (DUF6) conversion facilities in both Ohio and
    Kentucky. Design and construction will continue at the Waste Treatment
    Plant at Hanford, the Sodium-Bearing Waste Treatment Plant at INL, and
    the Salt Waste Processing Facility at SRS. Tank farm operations will
    continue at Hanford, INL, and SRS along with spent nuclear fuel
    receipt, storage, and cleanup.
        At the SRS, this request will support ongoing nuclear material
    processing in H-Canyon and plutonium vitrification design to support
    ultimate disposition. At Hanford, it supports consolidation of
    plutonium and unirradiated category 1 and 2 nuclear fuel to an off-site
    location, pending a consolidation decision. Consolidation of enriched
    uranium from INL to an off-site location, and design and long-lead
    procurement for the U-233 disposition project at Oak Ridge Reservation
    is also supported in this request.
        This request enables transuranic (TRU) waste projects to continue
    with priority for INL and Los Alamos National Laboratory (LANL) TRU
    waste. Other contact and remote-handled TRU shipments to the Waste
    Isolation Pilot Plant (WIPP) are also supported. Low-level radioactive
    waste and mixed low-level radioactive waste activities will be
    supported at Hanford, Nevada Test Site (NTS), INL, SRS, and ORR.
        The request will allow high-priority waste retrieval, soil and
    groundwater remediation, and decontamination and decommissioning (D&D)
    of excess facilities at Hanford, INL, SRS, ORR, Portsmouth, Paducah,
    LANL, and other sites. In addition, the request supports targeted
    technology development and deployment in support of high-level waste,
    soil and groundwater, and facility D&D.
        With this budget request, EM will achieve our goals for risk
    reduction and cleanup completion at:
      --Lawrence Livermore National Laboratory-Site 300, California;
      --Inhalation Toxicology Laboratory, New Mexico;
      --Pantex Plant, Texas;
      --Sandia National Laboratory, New Mexico; and,
      --Argonne National Laboratory-East, Illinois.
        As cleanup work is completed at sites with continuing missions, EM
    will transfer long-term surveillance and monitoring activities to the
    cognizant program office or, for those sites without a continuing
    mission, to the Office of Legacy Management.
        The fiscal year 2008 budget request will allow the EM cleanup
    program to reduce risk, honor commitments and produce results worthy of
    the investment of the American people. We are committed to ensuring
    strong management of this complex cleanup work to secure safe and
    efficient progress that protects the public, our workers, and the
    environment. We have shown we can deliver meaningful results. Your
    continued support will allow us to deliver results important for today,
    as well as for generations to come.

                             RISK REDUCTION RESULTS

        The results being delivered by the EM program's risk reduction and
    prioritization strategy are proving that linking safety, performance,
    cleanup, and closure can lead to significant outcomes. We are
    communicating and discussing our challenges with our State and Federal
    regulators, Congress, the communities, and other interested parties. We
    believe that reasonable solutions are best found through open
    interaction with all interested parties. Recently, we celebrated
    another success at the completion ceremonies for the Fernald, Ashtabula
    and Columbus sites. Cleanup successes achieved with the assistance of
    representatives from Congress, the State and national regulatory
    agencies, and the communities, collaborating and focusing on a common
    vision. It is the latest demonstration of our progress following the
    earlier completion of cleanup at Rocky Flats in Colorado, the Kansas
    City Plant in Missouri, and the Lawrence Livermore National Laboratory-
    Main Site in California. All these completions should be recognized as
    results that have been borne from partnerships founded on mutual
    respect and collaboration.
        EM has also made other significant progress:
      --Stabilizing and packaging for disposition all plutonium residues,
            metals, and oxides (SRS and Hanford);
      --Producing well over 2,000 cans of vitrified high-level waste from
            radioactive tank liquid wastes (SRS and the West Valley
            Demonstration Project);
      --Retrieving and packaging for disposal over 2,100 metric tons of
            spent nuclear fuel from the K-Basins on the Hanford site to
            protect the Columbia River;
      --Characterizing, certifying, and shipping close to 37,000 cubic
            meters of TRU waste from numerous sites to WIPP for permanent
            disposal;
      --Disposing of more than 965,000 cubic meters of legacy low-level
            waste and mixed low-level waste (contaminated with hazardous
            chemicals); and
      --Eliminating 11 out of the 13 high-risk material access areas
            through material consolidation and cleanup.
        In addition, on a site-specific level, we have:
      --Initiated pre-conceptual design of the Plutonium Disposition
            Facility at SRS;
      --Completed disposal at WIPP of all legacy drummed TRU waste from
            SRS;
      --Completed demolition of the 232-Z facility at Hanford;
      --Completed clean up at the Melton Valley area and the D&D of three
            gaseous diffusion buildings at the ORR (K-29, 31 and 33) at
            ORR;
      --Disposed of over 8,500 tons of scrap metal from the Portsmouth
            site; and
      --Completed the first remote-handled TRU waste shipments to the WIPP
            from INL.

                             SOLVING THE CHALLENGES

        The task before us is extremely complex. We sometimes face the
    challenge of having to engineer new approaches or invent new
    technologies as we proceed. Technologies were not available or
    sufficiently effective, our regulatory environment has continued to
    change, performance issues have hindered progress, new scope has been
    added to our program, and greater than anticipated contamination has
    been found for some existing cleanup. But ingenuity and hard work are
    resulting in progress.
        DOE is committed to resolve this cleanup in partnership with our
    stakeholders and regulators. The consequences of inaction pose
    unacceptable risks to our environment and the public.
        In continuing to address these challenges, EM is focusing its
    cleanup efforts on the reduction of high risk issues to most
    efficiently invest the department's fiscal year 2008 funding request.
    We intend to overcome these challenges in collaboration with our
    partners, dealing openly with any impacts to previously predicted cost,
    schedule and performance. I want to assure you that we will meet these
    challenges with the energy and dedication that have demonstrated our
    steadfastness to our mission and our commitment to the public.
        First and foremost, safety is our top priority. We will continue to
    maintain and demand the highest safety performance. We have taken
    measures to fully integrate safety into our project designs at an
    earlier stage while assuring our line project teams have the necessary
    experience, expertise, and training. Every worker deserves to go home
    as healthy as she or he was when they came to work in the morning.
    Safety will remain a cornerstone in the execution of our mission
    objectives.
        We are actively engaged, both within the department and externally
    with our regulators and stakeholders, in identifying issues that impact
    our mission objectives. We have been challenged by lower than expected
    performance levels, increased scope, and unrealized planning
    assumptions. As we identify issues that could affect future performance
    and regulatory commitments, we are taking significant steps to improve
    our operations in planning and executing our work. We are applying
    lessons learned to help prevent future occurrences that will impact our
    planning and commitments.
        One of my goals as Assistant Secretary is that at least 90 percent
    of our ``projectized'' portfolio will meet or exceed our cost and
    schedule targets. We have begun the process of integrating our
    management tools into our business processes. Over the past year, I
    have personally conducted Quarterly Performance Reviews of all EM
    projects with our leadership team. I report to you that we have showed
    progress but we have yet to realize the full potential of implementing
    our management systems and better applying risk management principles--
    that is, identifying project uncertainties and developing mitigation
    measures. Some of our projects have fallen short of expected
    performance, but we are engaging our field management contractors with
    state-of-the-practice project management methods.
        Over the last year, it has become apparent that we have not yet
    attained our full potential in our procurement and execution of
    projects. We have instituted measures to strengthen our emphasis on
    program execution. This multi-year objective already is producing
    results that should provide more effective management in the future.
    This initiative is being coupled with additional training for Federal
    managers and staff to enhance project management and acquisition
    skills. This integrated approach will deliver dividends for our
    managers in the long term.
        We are improving our ability to ensure that proper procurement
    vehicles are available to meet our acquisition strategies. We are
    taking a new look at contract types and fee structures within our
    contracts. EM must acquire the best services including those of small
    business, to meet our business objectives and to become a top-
    performing organization.
        I have asked my senior leadership at Headquarters and in the field
    to take immediate actions to ensure that everyday operating processes
    reflect lessons learned. Lastly, in conjunction with the National
    Academy of Public Administration, EM has undertaken a review of our
    organization and its associated functions and authorities. To date, the
    process has identified areas for improvement, along with some
    refinements of our organizational alignment. During the next few
    months, EM will be implementing the resulting recommendations to ensure
    we have an organizational structure that will enhance our ability to
    respond to the needs of the mission.

                      THE FISCAL YEAR 2008 BUDGET REQUEST

        The department's fiscal year 2008 budget request for defense EM
    activities totals $5,655 million. The request consists of three
    appropriations, Defense Environmental Cleanup, Non-Defense
    Environmental Cleanup, and the Uranium Enrichment Decontamination and
    Decommissioning Fund.
        The fiscal year 2008 budget request reflects safety as its utmost
    priority. The Office of Environmental Management is committed to our
    safety principles and to maintaining the highest safety performance to
    protect the workers, the public and the environment.
        The budget request reflects prioritizing program work to balance
    the goals of risk reduction; completing ongoing work to achieve
    completion at four sites; and, meeting our environmental commitments.
    For fiscal year 2008, EM's funding priorities are listed in order of
    risk, to best address our cleanup challenges:
      --Requisite safety, security, and services across EM cleanup sites;
      --Radioactive tank waste storage, treatment, and disposal;
      --Spent nuclear fuel storage, receipt, and remediation;
      --Solid waste (transuranic, low-level, and mixed low-level wastes)
            treatment, storage, and disposal;
      --Special nuclear materials storage, processing, and disposition;
      --Soil and groundwater remediation; and
      --D&D of contaminated facilities.
        Examples of milestones and planned activities for fiscal year 2008
    by site-specific categories are:
    Hanford
                Richland
        Consolidate, package, and remove of spent nuclear fuel and other
    radioactively-contaminated elements within the K Basins (K-East and K-
    West).--The K Basins project is a high priority, risk reduction
    activity due to its close proximity to the Columbia River. The goal of
    this project is removal of all spent nuclear fuel, radioactive sludge,
    contaminated K Basin water, and radioactive debris from the K Basins.
    The endpoint of the K Basins cleanup will mean the removal of more than
    55 million curies of radioactivity that pose a threat of leakage to the
    surrounding environment, including the Columbia River.
        Amplify River Corridor remediation activities for Reactor Areas D,
    F, and H.--The River Corridor Closure Project will complete remediation
    of contaminated waste sites; the D&D and demolition of facilities that
    are adjacent to the Columbia River; and placement of eight reactors
    into an interim safe storage condition. The work performed within the
    River Corridor Closure Project includes digging up contaminated soil,
    constructing interim safe storage (cocooning) of the reactors,
    demolishing facilities in the old reactor complexes and facilities in
    the 300 Area, disposing of waste in the Environmental Restoration
    Disposal Facility, and constructing surface barriers or caps over
    contaminated sites.
        Continue retrieval of contact handled suspect transuranic waste and
    scheduled shipments to WIPP.--The Hanford Site contains thousands of
    containers of suspect transuranic waste, low-level, and mixed low-level
    wastes. The end point of this project will include the retrieval of
    contact-handled suspect transuranic waste in the low-level burial
    grounds, the treatment of mixed low-level waste, the disposal of low-
    level waste, and certification and shipment of transuranic waste to
    WIPP.
        Continues on track groundwater/vadose zone remediation
    activities.--Due to 40 years of vast weapon production processes,
    Hanford's groundwater has been contaminated with carbon tetrachloride,
    chromium, technetium 99, strontium, and uranium plumes. EM is dedicated
    to preventing the potential for contaminates reaching the groundwater
    by: decommissioning an additional 100 unused groundwater wells;
    monitoring 700-plus wells for contaminants of concern above drinking
    water standards; and, commencing design of final remediation actions to
    address carbon tetrachloride and technetium plumes.
                Office of River Protection
        Sustain tank farm closure processes and maintain the tanks in a
    safe and compliant condition.--The radioactive waste stored in Hanford
    tank farms has been accumulating since 1944. Due to the age of the
    tanks, a number have leaked in the past into surrounding soil and
    groundwater. In order to reduce the risk of future tank leaks into the
    environment, the overall objectives of this project include the
    stabilization of radioactive waste stored underground in tanks,
    including retrieval, treatment, disposal, and closure of the
    facilities.
        Progress on path forward for the Waste Treatment and Immobilization
    Plant.--The Waste Treatment and Immobilization Plant (WTP) is critical
    to the completion of the Hanford tank waste program by providing the
    primary facility to immobilize (vitrify) the radioactive tank waste at
    the Hanford Site. The WTP complex includes five facilities: the
    Pretreatment Facility, the High-Level Waste Facility, the Low-Activity
    Waste Facility, the Balance of Facilities, and the Analytical
    Laboratory. In fiscal year 2008, the WTP project team plans to
    complete: close-in of the annex building in the Low-Activity Waste
    Facility; installation of roofing and completion of the building shell
    for the Analytical Laboratory; construction of the water treatment
    building in the Balance of Facilities; and renewal of construction for
    the High-Level Waste Facility and the Pretreatment Facility.
    Idaho
        Transfer spent nuclear fuel from wet to secure dry storage.--
    Promote the safe and secure receipt, dry storage, and packaging and
    future transfer of the spent nuclear fuel to a Federal geologic
    repository.
        Continue shipments of transuranic waste to the WIPP.--Maintain
    program activities that support waste characterization, packaging, and
    transportation of remote-handled transuranic waste to WIPP that lead to
    reduced surveillance and operation costs.
        Pursue ongoing sodium-bearing waste treatment facility
    construction, including efforts to gain necessary regulatory approvals
    for sodium bearing waste treatment and disposal.--The overall objective
    of this project is treatment and disposal of the sodium-bearing tank
    wastes, closure of the tank farm tanks, and performance of initial tank
    soils remediation work. Construction and operation of the sodium-
    bearing waste facility will reduce potential risk to human health and
    the environment by preventing the potential migration of contamination
    into the Snake River Plain Aquifer, which is a sole-source aquifer for
    the people of Southeastern Idaho.
    Los Alamos National Laboratory
        Characterize, certify, and ship above-grade transuranic waste
    inventory.--The Solid Waste Stabilization and Disposition Project
    includes the treatment, storage, and disposal of legacy transuranic and
    mixed low-level waste generated between 1970 and 1999 at LANL. Final
    disposal of the legacy transuranic waste from LANL will reduce risk to
    workers, as well as reduce security costs associated with transuranic
    waste.
        Promote soil and water remediation and monitoring.--The LANL Soil
    and Water Remediation Project's objective is to identify, investigate
    and remediate, when necessary, areas with chemical and/or radiological
    contamination attributable to past Laboratory operations.
        In fiscal year 2008, in order to fulfill the objective of
    protecting and monitoring the regional aquifer, as well as long-term
    surveillance and monitoring to provide necessary safeguards and
    protection for surface and ground waters, the following activities are
    planned:
      --Perform groundwater monitoring at all major watersheds: LA/Pueblo;
            Mortandad; Canon de Valle; Sandia; and in close proximity to
            the major waste sites;
      --Conduct stormwater sampling and implement erosion control measures;
      --nstall and monitor four wells in Pajarito and Bayo canyons; and
      --Complete construction of 260 Outfall Corrective Measures for
            alluvial and surface water treatment system.
    Oak Ridge
        Continue design of U-233 down-blending project and begin Building
    3019 modifications.--Down-blending the Building 3019 inventory for
    disposition is in accordance with the national non-proliferation goals
    by making the U-233 material unsuitable for use in weapons and reducing
    security costs at the Oak Ridge National Laboratory.
        Ship contact-handled transuranic waste to WIPP.--Process 250 cubic
    meters of contact-handled transuranic debris and 170 cubic meters of
    remote-handled transuranic debris with shipments to the WIPP; and
    continue to dispose of low-level/mixed low-level waste at the NTS.
        Complete the Molten Salt Reactor Experiment fuel salt removal
    remediation project.--Upon completion of active remediation,
    surveillance and maintenance activities of the Molten Salt Reactor
    Experiment facility will be provided until decontamination and
    decommissioning of the site has occurred.
        Decontaminate and decommission building K-25 and K-27, including
    completing demolition of the K-25 west wing.--Surveillance and
    maintenance of the K-25 and K-27 buildings will be continued in order
    to maintain safe conditions. Demolition of K-25 east wing and K-27 will
    occur after the decontamination and decommissioning process.
    Paducah
        Complete construction and startup of the deleted uranium
    hexafluoride conversion facility (DUF6).--The Paducah
    DUF6 conversion facility is scheduled to begin operation in
    fiscal year 2008. The DUF6 conversion facility will convert
    depleted uranium hexafluoride into a more stable form, depleted uranium
    oxide, which is suitable for reuse or disposition. The depleted uranium
    oxide will be sent to a disposal facility, the hydrogen fluoride by-
    products will be sold on the commercial market, and the empty cylinders
    will be sent to disposal or reused.
        Store, treat, and dispose of legacy waste and newly generated
    waste.--The Paducah Gaseous Diffusion Plant is responsible for some
    waste streams generated by the United States Enrichment Corporation's
    operation of the Plant. In fiscal year 2008, we plan to complete
    expansion of five new sections of on-site landfill for non-hazardous
    waste disposal; perform ongoing characterization, packaging, treatment
    and disposal of 50 cubic meters of newly generated waste (mixed and
    low-level); and complete legacy low-level waste characterization,
    packaging, and disposal. The continued shipment and disposal of the
    waste will reduce potential for release into the environment from aging
    containers.
    Portsmouth
        Finalize construction and startup of the uranium hexafluoride
    conversion facility.--The Portsmouth DUF6 conversion
    facility is scheduled to begin operation in fiscal year 2008. Like the
    Paducah facility, the DUF6 conversion facility will convert
    depleted uranium hexafluoride into a more stable form, depleted uranium
    oxide, suitable for reuse or disposition.
        Store, characterize, treat, and dispose of legacy waste generated
    by activities at the Portsmouth Gaseous Diffusion Plant.--We will
    continue to characterize, treat, and dispose of any newly generated
    waste; develop the management and disposal of low-level waste
    associated with 438 converter shells in storage with potentially
    classified waste; disposition of excess site equipment (vehicles,
    scrap, etc.) and disposition of poly bottle solutions which contain
    liquids with high fissile material and are required to be treated prior
    to disposal.
        Continue transition activities from cold shutdown mode to
    decommissioning.--In fiscal year 2008, there is an increase in funding
    to support the transition of the Gaseous Diffusion Plant from a cold
    shutdown to decontamination and decommissioning. Activities include:
    conducting environmental monitoring and reporting for groundwater,
    surface water, sediment, biological, vegetation, and associated sample
    collection; performing enhanced uranium deposit mitigation measures for
    criticality concerns in the process buildings to eliminate near-term
    safety issues; and initiating soil and groundwater investigation and/or
    remediation underneath approximately 140 buildings.
    Savannah River Site
        Consolidate on-site Plutonium to K Area.--In order to meet the
    Department's Design Basis Threat criteria, plutonium at SRS is being
    consolidated into one Category 1 Special Nuclear Materials Storage
    Facility. The receipt, storage, and disposition of these special
    nuclear materials at the SRS allows for de-inventory and shutdown of
    other DOE complex sites, while providing substantial risk reduction and
    significant mortgage reduction savings to the Department.
        Ship all legacy transuranic waste to WIPP and treat low-level waste
    and mixed low-level waste.--In fiscal year 2008, SRS plans to dispose
    of transuranic waste previously characterized as mixed low-level waste;
    dispose of low-level waste and newly generated waste, including soil,
    groundwater and decontamination and decommissioning wastes; dispose of
    mixed low-level waste inventory and newly generated waste; and dispose
    of hazardous waste inventories, thus reducing potential exposure to
    project workers.
        The end-state for this project is the shipment of all legacy
    transuranic waste to the WIPP, the treatment of PUREX waste, and the
    elimination of all legacy inventories and disposition of newly
    generated low-level waste, mixed low-level waste, and hazardous waste.
        Continue groundwater corrective actions across the Site.--The SRS
    is working to prevent the spread of contamination into adjoining
    groundwater aquifers and nearby surface waters. Existing contamination
    in vadose zones, groundwater and surface water/sediments are currently
    being cleaned up, thereby reducing the risk to site workers, the public
    and the environment.
        Treat, stabilize, and dispose legacy radioactive waste stored in
    underground storage tanks.--The continuation of the design and
    construction of the Salt Waste Processing Facility will aid the Defense
    Waste Processing Facility in the process of safely disposing of the
    liquid tank wastes. The Salt Waste Processing Facility will separate
    the high-activity fraction from the low-activity fraction of the salt
    waste stored in the underground tanks at the SRS. The completion of the
    Salt Waste Processing Facility will support the mission of SRS in
    meeting its Federal Facilities Agreement commitments for waste tank
    disposition.
    Waste Isolation Pilot Plant
        Operate the WIPP in a safe manner to support disposal capabilities
    for transuranic waste.--The WIPP in Carlsbad, New Mexico, is the
    nation's only mined geologic repository for the permanent disposal of
    defense-generated transuranic waste. All of the defense-generated
    transuranic waste from eligible generator sites must come to WIPP for
    receipt, handling, and disposal.

                                   CONCLUSION

        The fiscal year 2008 budget request enables risk reduction to
    continue. Challenges lie ahead but we are focused on our objectives and
    our strategy. Safety, performance, cleanup, and closure underpin our
    actions and initiatives. We are committed to work with all interested
    parties to resolve issues. We look forward to continuing to work with
    this subcommittee and the Congress to address your concerns and
    interests. Our success relies on our effective partnerships with our
    regulators, the communities, and our contractors to produce progress in
    accomplishing meaningful results for the American public.
        I look forward to a continuing dialog with you and the
    subcommittee. This concludes my formal statement for the record. I will
    be pleased to answer any questions at this time.

        Senator Dorgan. Mr. Rispoli, thank you very much.
        We will hear from Mr. Sproat and then ask questions. But we
    have been joined by the ranking member, former chairman of this
    subcommittee, Senator Domenici. Senator Domenici, welcome.

                 OPENING STATEMENT OF SENATOR PETE V. DOMENICI

        Senator Domenici. Thank you very much, Mr. Chairman. I am
    pleased to say a few words and thank you for that.
        First, thanks to the witnesses for coming. I look forward
    to working with you as we put together this balanced bill for
    fiscal year 2008. I am glad that you are starting out this way,
    which would indicate to me that you want to get a bill; you do
    not want to go through what we did last year, with no bill.
        I look forward to addressing many important issues
    revolving around research programs that can have a real impact
    on our energy security and will support cutting edge scientific
    research. We will also face a number of challenging issues,
    such as Katrina recovery and environmental cleanup. I
    appreciate your willingness, Mr. Chairman, to visit New Mexico
    to tour our great labs and hear from the people who have
    devoted their professional careers to supporting our Nation's
    security and nuclear deterrent. You did that with me and I am
    most appreciative and will not forget that.
        Mr. Chairman, you have also selected a great staff. Doug
    Clapp and Franz Wuerfmannsdobler are exceptional and will serve
    the subcommittee well. Along with my two veteran people, I
    think we have a good team. Roger Cockrell is the best guy in
    town and you kept him on water projects and he will serve us
    well, Democrat and Republican.
        I noted earlier that there are many challenging matters.
    Two of those issues are the topic of the hearing today, Yucca
    Mountain and environmental cleanup. Yucca Mountain, the budget
    provides $494 million and makes the development and submission
    of the license application to the Nuclear Regulatory Commission
    (NRC) in 2008 a top priority.
        I am going to skip through the Yucca, assuming that you
    have covered most of it, and go to the matter that is haunting
    the laboratory at Los Alamos with reference to cleanup. I think
    you know there is a big problem there. But I would say with
    reference to Yucca just one thing. Last year Senator Reid and I
    developed legislation to address the potential that waste might
    remain on site well past 2017, opening date for Yucca Mountain.
    As Mr. Sproat pointed out in the written testimony, at the
    Federal Government legal liability increases by $500 million
    annually each year Yucca Mountain is delayed. Is that correct?
        Mr. Sproat. That is correct.
        Senator Domenici. I will continue to work with the majority
    leader and the chairman to see if we can find an acceptable
    compromise that will reduce our legal liability in the near
    future. I hope you can think about that and work with us on
    that. That is a lot of money going right out the window for
    nothing.
        Mr. Sproat. Yes, sir.
        Senator Domenici. The budget provides for environmental
    management at $5.6 billion for defense and non-defense. The
    budget is in steady decline from the fiscal year 2006 level
    that was a record at $7.3 billion. This is a reduction of
    nearly 25 percent. You have got a real job.
        In particular, I am concerned at what this will mean to Los
    Alamos. Just 2 years ago the Department entered into a consent
    agreement, Mr. Chairman, with Los Alamos and the State to clean
    this up by 2015. That is a very important document and a very
    important commitment. Unfortunately, the budget requests for
    the past 2 years have been wildly inconsistent and insufficient
    to deliver on the agreed-upon cleanup milestones.
        I have spoken with Secretary Bodman regarding my
    frustration with the lack of funding consistency and I believe
    the Department needs to set a budget baseline that matches our
    cleanup goals and then deliver on these commitments, not 1 year
    but multiple years. We simply cannot continue to make
    environmental management the bill payer for every new important
    R&D program.

                               PREPARED STATEMENT

        I also realize that I need to make this appeal directly to
    OMB. I will do that, which has held the Department's budget
    flat. But when you have a consent agreement it would seem to me
    that you have got to pay for it. I understand the Secretary
    will go to New Mexico and try to work out something that is
    more doable, but yet over 12 or 15 years will do the job. We
    will all be interested in whether that works.
        Thank you, Mr. Chairman.
        [The statement follows:]

                 Prepared Statement of Senator Pete V. Domenici

        Mr. Chairman, I would like to welcome you to your first budget
    hearing as chairman of the Energy and Water Subcommittee. I look
    forward to working with you as we put together a balanced bill for
    fiscal year 2008.
        I look forward to addressing many important research programs that
    can have a real impact on our energy security and will support cutting
    edge scientific research. We will also face a number of challenging
    issues, such as the Katrina recovery and environmental cleanup.
        I appreciate your willingness to visit New Mexico to tour one of
    our great labs and hear from the people who have devoted their
    professional careers to supporting our Nation's security and nuclear
    deterrent.
        It means a lot to me that you would make your first laboratory
    visit in New Mexico.
        Mr. Chairman, you have also selected great staff--Doug and Franz
    are exceptional and will serve the subcommittee well. We will also
    continue to share the services of Roger Cockrell--the best water guy in
    town.
        Mr. Chairman, as I noted earlier there are many challenging policy
    matters facing this subcommittee. Two of those issues are the topic of
    this hearing today--Yucca Mountain and environmental cleanup.

                                 YUCCA MOUNTAIN

        This budget provides $494 million and makes the development and
    submission of the license application to the NRC in 2008 a top
    priority.
        I believe that the Secretary recognizes the importance of ensuring
    that the license is of the highest quality and can be vigorously
    defended in 2008.
        The Department has taken a new approach to standardizing the
    canisters used to package and ship spent nuclear fuel to the repository
    for storage. I am interested in this approach, but want to make sure
    this solution will cut costs.
        I know the Department is very serious about completing Yucca
    Mountain by 2017; but the Congress still must pass authorizing
    legislation in order for Yucca Mountain to stay on even this new
    schedule. Although, I will assist in anyway I can in moving this
    legislation, I am not confident that this language will pass without
    significant changes, if at all.
        Last year, Senator Reid and I developed legislation to address the
    potential that waste might remain on site well past the proposed 2017
    opening date for Yucca Mountain. As Mr. Sproat pointed out in his
    written testimony that the Federal Government's legal liability
    increases by $500 million annually each year Yucca Mountain is delayed.
        I will continue to work with both the majority leader and Chairman
    Dorgan to see if there is an acceptable compromise that will reduce our
    legal liability in the near future.

                            ENVIRONMENTAL MANAGEMENT

        The budget provides $5.6 billion for defense and non-defense
    cleanups. This budget is on a steady decline from the fiscal year 2005
    record level of $7.3 billion. This is a reduction of nearly 25 percent.
        I understand the Department has attempted to prioritize cleanups
    based on risk in order to fit within the budget constraints. But the
    facts paint a very different picture. The budget cuts will undermine
    the Department's existing cleanup obligations and will push back
    completion dates.
        In particular, I am concerned about what this will mean for Los
    Alamos. Just 2 years ago the Department entered into a Consent
    Agreement with the State to cleanup the site by 2015.
        Unfortunately, the budget requests for the past 2 years have been
    wildly inconsistent and are insufficient to deliver on the agreed upon
    cleanup milestones.
        I have spoken with Secretary Bodman regarding my frustration with
    the lack of funding consistency. I believe the Department needs to set
    budget baselines that match our cleanups goals and then deliver on
    these commitments year after year.
        We simply can't continue to make environmental management the bill
    payer for every new important R&D initiative. I also realize I need to
    make this appeal directly to OMB, which has held the Department's
    budget flat.
        Nevertheless, I am committed to work with the laboratory, the State
    of New Mexico, the Department and Chairman Dorgan to find the
    appropriate level of funding for this cleanup effort.
        Thank you Mr. Chairman.

        Senator Dorgan. Senator Domenici, thank you very much.

           CONSEQUENCES OF A REDUCED ENVIRONMENTAL MANAGEMENT BUDGET

        Senator Dorgan. Let me make a comment that I did not make
    at the start of this and then I am going to call on Senator
    Murray for a moment. I was looking back at the web site of the
    Department of Energy. They note that scientists early on in the
    weapons programs in this country's effort to produce nuclear
    weapons advised that the resulting waste stream presented very
    grave problems, but the DOE's own web site says: ``The
    imperatives of the nuclear arms race, however, demanded that
    the weapons production and testing be given priority over waste
    management and the control of environmental contamination.''
        Well, we understand what happened and the Department of
    Energy's web site describes why it happened. Now there is a
    responsibility to address it, and I am very concerned about the
    proposed budget. What we are confronted with is a requirement
    to address these issues with a budget that is dramatically
    reduced, a budget that I think will result in substantially
    missed milestones. I am going to ask about that.
        But I know that both of you will be required today to
    support the President's budget. That is your role. But I do
    want to ask questions about the consequences. What are the
    consequences of a budget that is a 23 percent reduction in 4
    years for the EM budget? What is the basis of that, with so
    much cleanup work yet to be done across these complexes? How
    can such a great reduction in funding be proposed and what
    would be its consequences?
        So I will ask those questions, but I wanted to, following
    Senator Domenici's comments, make those observations. I am
    going to call on Senator Murray.

                       STATEMENT OF SENATOR PATTY MURRAY

        Senator Murray. Mr. Chairman, I will just submit an opening
    statement for the record. Just let me thank you for having this
    hearing. I look forward to working with you and Senator
    Domenici on the critical issues that your subcommittee is going
    to have to address this year, and I want to thank Mr. Rispoli
    and Mr. Sproat for being here today.
        I appreciate the opportunity to talk about the importance
    of cleaning up waste across the DOE complex, but particularly
    at Hanford in my home State. I do want to just say quickly I am
    pleased the administration is keeping its commitment to getting
    the vit plant back on track and fully funded. It is a long
    process. We are in it for the long haul and I appreciate that.
        I have a number of questions and I will be asking them
    after we have heard the testimony. Thank you, Mr. Chairman.
        [The statement follows:]

                   Prepared Statement of Senator Patty Murray

        Thank you Chairman Dorgan for calling this meeting to examine DOE's
    cleanup efforts across the country and thank you Mr. Rispoli and Mr.
    Sproat for coming here to testify today.
        I glad to have the opportunity to talk about the importance of
    cleaning up waste across the complex and particularly at Hanford in my
    home State.
        I am pleased that the administration is keeping its commitment to
    getting the vit plant back on track and fully funded.
        I know that this is a long process and I am it in it for the long
    haul. There are several important projects ongoing at Hanford and today
    I would just like to ask a few particular questions of you Mr. Rispoli.

        Senator Domenici [presiding]. Thank you very much.
        The chairman asked if I would just proceed with where he
    was going and ask you, Mr. Sproat to, wherever you were on the
    testimony, proceed.

                Office of Civilian Radioactive Waste Management

    STATEMENT OF HON. EDWARD F. SPROAT III, DIRECTOR
        Mr. Sproat. I had not started. Thank you, Senator.
        Good afternoon, Mr. Chairman, Senator Domenici, Senator
    Murray. Thank you very much and I appreciate the invitation of
    the subcommittee to talk about the President's fiscal year 2008
    appropriations request for the Office of Civilian Radioactive
    Waste Management, of which I am the Director. We have
    responsibility, as you know, to design, build, license, and
    operate the Yucca Mountain repository, the national high-level
    waste repository.
        Fiscal year 2008 is a major critical year for the national
    repository program. This is the year when we have major
    deliverables that are due: the supplemental environmental
    impact statement for the repository, certifying the licensing
    support network and submitting the license application to the
    Nuclear Regulatory Commission.
        The President's budget request, $494.5 million, will allow
    us to achieve those milestones, which are on the critical path
    to opening this repository by 2017, which is our best
    achievable date. In my written testimony, which I ask be
    introduced in the record, there are more specifics about our
    deliverables for 2008 and the other descriptions of funding of
    State and local oversight associated with the repository is
    also mentioned in that formal statement.
        Let me talk a little about the impact of the fiscal year
    2007 final appropriations, final authorization. For fiscal year
    2007, which as you know has only been passed here in the past 3
    or 4 days, the President----
        Senator Domenici. You mean appropriations, not
    authorizations.
        Mr. Sproat. I am sorry, appropriations.
        The President asked for $544.5 million for the Yucca
    Mountain program, of which was appropriated $444.5 million,
    which was $100 million less than what the President asked for.
    So right now my management team and I are in the middle of the
    effort to understand the impacts of that on the program. While
    we are still evaluating the impacts of the final 2007
    appropriation, it is likely but not yet certain that we will
    not be able to meet our best achievable schedule for opening
    the repository by March 2017. A 1-year slip is likely, but we
    are still evaluating the recovery options. So I have not given
    up on that 2017 date.
        However, we will meet our commitment to deliver the license
    application for the repository to the NRC by mid-2008. It is
    certain, however, that we will have a reduction in force,
    across the program later in fiscal year 2007 and in 2008, even
    with the full fiscal year 2008 appropriation request of $494.5
    million. Exactly how much of a reduction in force and when it
    will occur we are still evaluating.
        What I would like to talk about next is the issue of our
    ability to access or not access the Nuclear Waste Fund. I know
    certain members of this committee are probably very familiar
    with this issue. By 2009, fiscal year 2009, there is going to
    be a major turning point for this program. Sustained funding
    well above current and historic levels will be required
    starting in fiscal year 2009 if we are to complete this
    repository in 2017.
        The current funding levels will not be adequate to support
    design and, if necessary, concurrent capital purchases,
    construction, transportation infrastructure, and the
    transportation and disposal casks that we will need to begin to
    design and purchase to open the repository by 2017. Now, one of
    the problems, I think as the committee is well aware, is that
    the Nuclear Waste Fund was created by the Nuclear Waste Policy
    Act and is funded by a one mill per kilowatt-hour fee on all
    nuclear generation in the country. As of today, the fund has a
    balance of approximately $19.5 billion--that is with a ``b''--
    which is invested in U.S. Treasury instruments. The Government
    receives approximately $750 million per year in revenues from
    ongoing nuclear generation and the fund averages about a 5.5
    percent annual return on its investments.
        At the present time, due to technical scoring requirements,
    the Department cannot access the Nuclear Waste Fund receipts,
    interest, or corpus for their intended use without having a
    significant negative impact on the Federal budget deficit. In
    the legislation that the administration submitted to Congress
    last year and again we submitted yesterday, the President
    proposes fixing this problem by reclassifying mandatory Nuclear
    Waste Fund receipts as discretionary in an amount equal to
    appropriations from the fund for authorized waste activities.
    Funding for the program would still have to be requested
    annually by the President and appropriated by the Congress from
    the Nuclear Waste Fund.
        While the lack of access to the fund is not critical to the
    program in fiscal year 2008, it will have a serious consequence
    in fiscal year 2009 and beyond. For each year beyond 2017 the
    repository opening is delayed, the Department estimates that
    U.S. taxpayers' potential liability to contract holders will
    increase by approximately $500 million per year. This will be
    in addition to the estimated current potential liability of
    approximately $7 billion. There will also be added additional
    costs associated with keeping the defense waste sites,
    particularly the one in Senator Murray's site, open longer than
    originally anticipated.
        So in summary, the President's fiscal year 2008 budget
    request will provide the needed funds to allow us to submit the
    construction application for Yucca Mountain in mid-2008, which
    is on the critical path. The significant reduction in the
    fiscal year 2007 funds will present challenges that I and my
    management team are working on and it puts in jeopardy our
    ability to meet the March 2017 date, but we are still working
    on some potential work-arounds.

                               PREPARED STATEMENT

        Each year's delay beyond March 2017 will result in an
    increase in taxpayer liability, and therefore I respectfully
    urge the Congress to consider and pass the President's fiscal
    year 2008 budget request and the proposed Nuclear Waste
    Management and Disposal Act which we sent up to the Hill
    yesterday.
        With that, I would be pleased to answer any questions the
    committee may have.
        [The statement follows:]

                Prepared Statement of Hon. Edward F. Sproat III

        Mr. Chairman and members of the committee, I am Edward F. Sproat
    III, Director of the Department of Energy's (DOE) Office of Civilian
    Radioactive Waste Management (OCRWM). I appreciate the invitation to
    appear before the committee to discuss the President's fiscal year 2008
    budget request for my office which has the responsibility to design,
    license, construct, and operate a repository for the disposal of high-
    level radioactive waste, as defined in the Nuclear Waste Policy Act
    (NWPA) of 1982, as amended.
        When I first came to this program last summer I outlined four
    strategic objectives to implement the President's priorities during my
    tenure. They are:
      --Submit a high-quality and docketable License Application to the
            Nuclear Regulatory Commission (NRC) no later than Monday, June
            30, 2008;
      --Design, staff, and train the OCRWM organization such that it has
            the skills and culture needed to design, license, and manage
            the construction and operation of the Yucca Mountain Project
            with safety, quality, and cost effectiveness;
      --Address the Federal Government's mounting liability associated with
            unmet contractual obligations to move spent nuclear fuel from
            nuclear plant sites; and
      --Develop and begin implementation of a comprehensive national
            transportation plan that accommodates State, local, and tribal
            concerns and input to the greatest extent practicable.
        The President's fiscal year 2008 budget request of $494.5 million
    for this program is supportive and vital to achieving these objectives.

                        FISCAL YEAR 2008 KEY ACTIVITIES

        Fiscal year 2008 will be a critical year for the program. It is
    imperative that the DOE submit a high-quality License Application to
    the NRC in 2008. This activity is on the critical path to opening the
    repository and allowing the Department to meet its contractual
    obligations to begin accepting and removing spent nuclear fuel and
    high-level radioactive waste from 131 sites around the country. This
    budget request will provide the funding needed to complete that License
    Application.
        In fiscal year 2008, our objectives are to:
      --Submit a License Application for the repository to the NRC;
      --Certify the Licensing Support Network in accordance with NRC
            requirements and regulations;
      --Complete the Supplemental Yucca Mountain Environmental Impact
            Statement (EIS);
      --Begin the defense of the License Application after submittal;
      --Design the standard canisters to be used by the industry to package
            and ship spent nuclear fuel to the repository;
      --Perform critical personnel safety upgrades at the Yucca Mountain
            site;
      --Perform the analysis and deliver the report to Congress required by
            the NWPA on the need for a second repository; and
      --Resolve comments and issue the final EIS for the Nevada Rail Line
            which is required to transport spent nuclear fuel to the
            repository.
        In addition to the specific deliverables outlined above, the budget
    request also includes funds for the following activities:
      --Funding for payments-equal-to-taxes to the State of Nevada and Nye
            County, Nevada, where Yucca Mountain is located. Our fiscal
            year 2008 request also includes funding for the State of Nevada
            and affected units of local government as well as funding for
            the University System of Nevada and Nye County and Inyo County,
            California, for independent scientific studies.
      --Funding for cooperative agreements with State regional groups and
            other key parties involved in transportation planning. NWPA
            Section 180(c) pilot grants will also be pursued to support
            operational preparedness training and to refine the Section
            180(c) program.
      --Funding for program management and integration of the project
            components through formal baselines, procedures, and the system
            requirements hierarchy, and for resolving cross-cutting issues
            that impact the waste management system. This area has been
            weak in the past and is now targeted by senior management for
            improvement.
      --Funding for program direction which supports Federal salaries,
            expenses associated with building maintenance and rent,
            training, and management and technical support services, which
            include independent Nuclear Waste Fund audit services,
            independent technical and cost analyses, and University-based
            independent technical reviews.
             impact of fiscal year 2007 final budget authorization
        The President's fiscal year 2007 budget request for the Yucca
    Mountain Program was $544.5 million. The final budget authority
    received for fiscal year 2007 was $444.5 million, a $100 million
    reduction. While we are still evaluating the impact of the final fiscal
    year 2007 appropriation in conjunction with the President's fiscal year
    2008 request, it is likely but not yet certain, that we will not be
    able to meet our Best-Achievable Schedule (attached) for opening the
    repository by March 2017. A 1-year slip is likely, but we are still
    evaluating recovery options. We will, however, meet our commitment to
    deliver the License Application for the repository in mid-2008.

              IMPLICATIONS OF NON-ACCESS TO THE NUCLEAR WASTE FUND

        The NWPA established the requirement that the generators of high-
    level nuclear waste must pay for its disposal costs. As a result, the
    Nuclear Waste Fund was created and is funded by a 1 mil per kilowatt-
    hour fee on all nuclear generation in this country. As of today, the
    Fund has a balance of approximately $19.5 billion which is invested in
    U.S. Treasury instruments. The government receives approximately $750
    million per year in revenues from on-going nuclear generation and the
    Fund averages about 5.5 percent annual return on its investments. At
    the present time, due to technical scoring requirements, the Department
    cannot access the Nuclear Waste Fund annual receipts, interest or
    corpus, for their intended use without a significant negative impact on
    the Federal budget deficit. Because the monies collected are counted as
    mandatory receipts in the budgetary process, spending from the Nuclear
    Waste Fund is scored against discretionary funding caps for the
    Department. In legislation the administration submitted to Congress
    last year and has submitted again to this Congress, the President
    proposes fixing this problem by reclassifying mandatory Nuclear Waste
    Fund receipts as discretionary, in an amount equal to appropriations
    from the Fund for authorized waste disposal activities. Funding for the
    Program would still have to be requested annually by the President and
    appropriated by the Congress from the Nuclear Waste Fund.
        While lack of access to the Fund is not critical to the program for
    fiscal year 2008, it will have serious consequences in fiscal year 2009
    and beyond. Over the past 6 months, we have been developing a projected
    budget authority needs estimate by fiscal year through repository
    construction. It is based on projected funding requirements for
    construction of the repository and the transportation infrastructure
    needed to meet the Best-Achievable Schedule opening date of March 2017,
    assuming enactment of the Nuclear Waste Management and Disposal Act
    that the administration has introduced. Sustained funding well above
    current and historic levels will be required if the repository is to be
    built. Funding at current levels in future years will not be adequate
    to support design and the necessary concurrent capital purchases for
    repository construction, the transportation infrastructure, and the
    transportation and disposal casks.
        For each year beyond 2017 that the repository's opening is delayed,
    the Department estimates that U.S. taxpayers' potential liability to
    contract holders who have paid into the Nuclear Waste Fund will
    increase by approximately $500 million. This will be in addition to the
    estimated current potential liability of approximately $7.0 billion due
    to the Department's not beginning removal of spent nuclear fuel in 1998
    as required by contract. There will also be added costs associated with
    keeping defense waste sites open longer than originally anticipated.
    The Department has not yet estimated those costs. It can be seen,
    however, that each year of delay in opening the repository has
    significant taxpayer cost implications, as well as the potential for
    delaying construction of needed new nuclear power plants. Therefore,
    the administration believes it is in the country's best interest to
    expedite construction of the repository and the transportation
    infrastructure necessary to bring both defense and commercial spent
    nuclear fuel and high-level waste to Yucca Mountain.
        In summary, the President's fiscal year 2008 budget request will
    provide the needed funds to allow submittal of the construction License
    Application for Yucca Mountain by mid-2008. The significant reduction
    in requested funding for fiscal year 2007, however, will present
    challenges and puts in jeopardy the Department's ability to meet the
    March 2017 opening date. And, each year's delay beyond the March 2017
    date will result in increased potential taxpayer liability to utility
    contract holders as well as increased costs for storage at defense
    waste sites across the country. I respectfully urge the Congress to
    consider and pass the President's fiscal year 2008 budget request for
    the Office of Civilian Radioactive Waste Management.
        I would be pleased to answer any questions the committee may have
    at this time.

               BEST-ACHIEVABLE YUCCA MOUNTAIN REPOSITORY SCHEDULE
    ------------------------------------------------------------------------
                   Milestone                               Date
    ------------------------------------------------------------------------
    Design for License Application Complete  November 30, 2007.
    Licensing Support Network Certification  December 21, 2007.
    Supplemental Environmental Impact        May 30, 2008.
     Statement (EIS) Issued.
    Final License Application Verifications  May 30, 2008.
     Complete.
    Final Rail Alignment EIS Issued........  June 30, 2008.
    License Application Submittal..........  June 30, 2008.
    License Application Docketed by NRC....  September 30, 2008.
    ------------------------------------------------------------------------

                BEST-ACHIEVABLE REPOSITORY CONSTRUCTION SCHEDULE
    ------------------------------------------------------------------------
                   Milestone                               Date
    ------------------------------------------------------------------------
    Start Nevada Rail Construction.........  October 5, 2009.
    Construction Authorization.............  September 30, 2011.
    Receive and Possess License Application  March 29, 2013.
     Submittal to NRC.
    Rail Access In-Service.................  June 30, 2014.
    Construction Complete for Initial        March 30, 2016.
     Operations.
    Start up and Pre-Op Testing Complete...  December 31, 2016.
    Begin Receipt..........................  March 31, 2017.
    ------------------------------------------------------------------------

        The schedule above is based on factors within the control of DOE,
    enactment of the Nuclear Waste Management and Disposal Act,
    appropriations consistent with optimum Project execution, issuance of
    an NRC Construction Authorization consistent with the 3-year period
    specified in the Nuclear Waste Policy Act, and the timely issuance by
    the NRC of a Receive and Possess license. This schedule also is
    dependent on the timely issuance of all necessary other authorizations
    and permits, the absence of litigation related delays and the enactment
    of pending legislation proposed by the administration.

        Senator Domenici. Proceed. Do you want to go ahead?
        Senator Murray. My understanding is Senator Dorgan had to
    step out for just a short while. So if it is okay with you,
    Senator Domenici, I will go ahead and start with my questions,
    and then I am hopeful--oh, he is back.
        Senator Domenici. He has finished his statement.
        Senator Dorgan [presiding]. Thank you very much. I
    apologize. I had a relative that had a little fender-bender.
    She is fine, but needed to talk to her dad, and it was not her
    fault.
        Senator Craig. Of course, dad. I've been there.
        Senator Dorgan. Thank you both.
        Mr. Sproat, I apologize for having missed your testimony.
        Mr. Sproat. That is all right.
        Senator Dorgan. But I have read your testimony and I
    appreciate your being here.
        I will proceed to questions and I will defer my questions.
    Senator Domenici, do you want to begin?

                    NUCLEAR WASTE FUND LEGISLATIVE PROPOSAL

        Senator Domenici. Mr. Chairman, I just want to extend--I
    know you have had this, but here is a very interesting proposal
    that is included in his testimony that we have not had come up
    from the administration before. I am not so sure that--I do not
    think we ought to throw it away. This $19 billion sitting
    around in the fund is not being used and the fact that we
    continue to appropriate for the repository is driving some
    programs into bankruptcy while this grows. And they have an
    idea on how to moderate it and I think maybe we should look at
    it a little. It would just be saying maybe it ought to be used
    for its intended purpose.
        Mr. Sproat. What it is intended to be used for.
        Senator Dorgan. All right. Did you wish to ask questions
    now?
        Senator Domenici. No.
        Senator Dorgan. Senator Murray, why don't you proceed.
        Senator Murray. Thank you very much, Mr. Chairman.

                   SUPPLEMENTAL BULK VITRIFICATION TECHNOLOGY

        The environmental management budget literature indicates
    that liquid tank waste is the highest priority issue, but there
    is a reduction in funding for the work done in the tank farm
    activities and there is zero funding requested for the
    supplemental treatment. I understand the need to thoroughly
    investigate potential technology, but this budget runs out of
    money prior to the cold test in June. Can you explain the logic
    in that, Mr. Rispoli?
        Mr. Rispoli. I believe, Senator, that you are addressing
    the testing for the demonstration project, which is a----
        Senator Murray. Could you turn on your microphone.
        Mr. Rispoli. Sorry. Thank you.
        I believe you are discussing the supplemental bulk
    vitrification technology, which is a supplemental technology
    that we have been talking about for several years now. We met
    with--I met with the contractor and the contractor's team just
    last week. As you know, they have performed engineering scale,
    one-sixth scale tests on the technology, and they would like to
    do a full-scale test this summer.
        I would point out that in a review of that particular
    project that was done independently, a technical review, we did
    find a number of technical issues. The contractor as a result
    of that review has been working on those technical issues and
    they believe that they have solved the most significant one at
    least, which is the migration of a highly radioactive
    technetium, which is soluble, to the surface, which would not
    then accomplish its intended purpose of encapsulating it in the
    glass.
        They would like to demonstrate this in a full-scale test
    this summer. We have worked with them and we believe we can
    accomplish that full-scale test this summer.
        Senator Murray. Do you have money in the budget to do that?
        Mr. Rispoli. We believe we can--yes. Yes, Senator, we
    believe we can accomplish that this summer.
        Senator Murray. Okay, very good.

                  FISCAL YEAR 2008 FUNDING FOR HAMMER PROGRAM

        Let me ask you about the funding for HAMMER. Year after
    year we get budgets with no request for HAMMER. You know what
    the facility is. It is a facility that trains many people
    actually, but our workers in particular, emergency responders
    and others dealing with hazardous material. Safety is, as you
    know, at the Hanford site a top concern and we want to make
    sure they have the best training possible.
        I am concerned because we continue to see no funding, no
    funding in the CR, or in the fiscal year 2008 request. Did you
    ask for funding for the HAMMER facility?
        Mr. Rispoli. The HAMMER facility we intend to fund by
    having the contractors at Hanford buy their training through
    the HAMMER facility. That has been a model that has worked
    successfully. We do not envision that the HAMMER facility will
    not be supported. We believe we have a strong base of support
    for that facility from within the budget at Hanford through the
    contractors that require the training for their workers.
        Senator Murray. Do you need any additional funding for
    HAMMER outside of that?
        Mr. Rispoli. Pardon me, Senator?
        Senator Murray. Do you need any additional funding for
    HAMMER outside the private contractors?
        Mr. Rispoli. I believe that we can attain the support
    required for the HAMMER facility through that mechanism.
        Senator Murray. Can you give me the budget for that
    separately from this and show me how that works on paper?
        Mr. Rispoli. Yes, I can.
        [The information follows:]

                                 HAMMER Funding

        The base cost of the facility is $6.4 million. This is funded by
    distributing the cost proportionally to each project at Hanford. The
    cost to conduct classes is funded through fees paid by attendees for
    each class.

                        HANFORD SITE MANAGERS VACANCIES

        Senator Murray. Okay. I wanted to ask you about the lack of
    communication between management at the Hanford site and people
    back at headquarters. I understand that has been partly
    responsible for the struggles at the Hanford Vitrification
    plant. I know that you are working on that, but we are facing a
    situation today where two of our top manager positions are
    going to be vacant. We have Roy Schepens and the pending
    retirement of Keith Klein. There are three contracts that are
    scheduled for competition and there is a lot of work to be done
    at the site. There have been a lot of changes in the contractor
    teams and now the Federal leadership is in transition. It seems
    like a lot of musical chairs out there at a time when we
    specifically need continuity and leadership.
        Can you tell me where you are on those positions?
        Mr. Rispoli. Yes, I can, Senator. Thank you. You are
    correct. Senator and members of the subcommittee, we are losing
    two highly skilled long-term professionals to retirement at the
    site out there. Roy Schepens is already physically retired and
    Keith Klein announced his retirement. In fact, he has been
    aspiring to do this for quite some time. It is the culmination
    of a remarkable career.
        I can tell you that this week we are interviewing for Roy
    Schepens' replacement at headquarters. I would also tell you
    that we actually did something a little different for the
    Federal Government. We hired a search firm because we realized
    that not everyone would look to the Government web site to look
    for this type of a position if, for example, they are in
    private industry.
        So we did everything we could to shake the trees to get
    qualified people to apply.
        Senator Murray. Are you finding qualified people?
        Mr. Rispoli. Well, I personally know none of the names, but
    that is the way it is supposed to be. It has been paneled.
    There have been a group of experts, including some people who I
    am sure you would know, that went through and reviewed the
    candidates and then forwarded them to the selecting official
    for interviews and selection. The interviews again started this
    week. I am very optimistic that that process will have yielded
    some viable candidates that we can look at for that position.
        In the case of Keith Klein, we do have some time because
    his retirement is not until the end of May. But again, given
    the time that it takes, we know that in fact Mike Weis, the
    deputy manager, will be the acting manager there. I believe you
    know Mike Weis. I am sure that he himself will be a contender
    for that position. We all have a very high degree of confidence
    in him and I believe that that will work out very well.
        I might also mention that Shirley Olinger will be the
    acting manager of the Office of River Protection and she has
    been the deputy there for quite some time as well.
        So I think in the management end for this interim period we
    are in good hands. For the one that was more imminent, we are
    interviewing now and we can go forward. You are correct in that
    we have three contracts that are being advertised. I will tell
    you that--you may recall from last year that we did appoint a
    Deputy Assistant Secretary for Acquisition and Project
    Management. We are managing these efforts centrally. The work
    is done in the field, but we are managing the time lines
    separately. Having visited there myself, I can tell you that
    the team working on those procurements is robust, they are
    competent, they are qualified. They have got people that have
    done this before. And that, coupled with our new headquarters
    structure and oversight, I feel that we can get through this
    period even with the loss of the two managers that are out
    there.
        With all of that said, Senator, I know that it is going to
    be--for the people of the community, they are going to see it
    as a tumultuous period. I think we just have to get through
    this together.
        Senator Murray. I appreciate your personal attention to
    that.
        Mr. Chairman, I have some other questions I wanted to
    submit for the record if I could.
        Senator Dorgan. Without objection.
        Senator Murray. And I appreciate your accommodation today.
        Senator Dorgan. Without objection. Thank you very much,
    Senator Murray.
        Mr. Rispoli. Thank you, Senator.
        Senator Dorgan. Senator Domenici.
        Senator Domenici. Mr. Chairman, do you want to go?
        Senator Dorgan. I will defer.
        Senator Domenici. Do you have time to hold the whole
    meeting? I cannot do the whole.
        Senator Dorgan. Yes.
        Senator Domenici. I thank you.

              MISSED CLEANUP MILESTONES AT LOS ALAMOS NATIONAL LAB

        I want to ask some questions that are parochial and if I
    get to the others, fine. But I want to talk to you, Mr.
    Rispoli, about Los Alamos missed milestones. The Department has
    proposed $140 million for Los Alamos--write that down--which is
    insufficient to clear up and clean up the milestones contained
    within the consent order that the Department entered into with
    the State in 2005. According to that June 15, 2006, baseline
    for the project, which assumes completion of all consent order
    milestones, the budget for Los Alamos would be $283 million,
    more than double the request.
        If the Department remains on its current path proposed as
    part of the 2007-2008 budgets, cleanup milestones will be
    missed and the cleanup will be delayed 2 years beyond the
    consent order deadline of 2015.
        Now, sir, I am not sure that I understand how you can
    justify a budget that forces the Department to miss agreed-upon
    milestones and will result in fines and other penalties from
    the State. Can you tell me how you intend to keep the cleanup
    on schedule with the budget baseline you have offered for the
    2008 budget?
        Mr. Rispoli. Senator, thank you. There are actually two
    parts to my answer on your question. As you know, we have been
    funding in the current fiscal year, we have been funding at a
    rate of about $141 million per year, which is the same rate
    that we were funding at in the prior fiscal year. We did that
    notwithstanding that we were in a CR situation and that the
    budget for 2007 had about $90 million. We recognized that were
    we not to fund at the $141 million level that we would have
    jeopardized milestones in the current fiscal year.
        I personally met with Mr. Curry in his offices in Santa Fe.
    He has met with me here in Washington. I have met with his
    senior-most staff. We recognize that and we believe that we
    needed to provide the funds to the lab to be able to attain
    those milestones.
        With all of that said, as you know, the State has issued
    four and is considering issuing a fifth notice of violation in
    2007, none of which are related to funding shortfalls. They are
    basically all conduct of operations. We, both myself and
    Administrator Tom D'Agostino, are personally aware of the
    problem. We both talk with the contractor about this issue and
    it is a very difficult issue. I think we are making headway. I
    think we will be seeing some changes in the way that the
    laboratory itself approaches the management of that portion of
    the work, which I think is a good thing.
        I would also mention that in the competition for this
    contract the contractor who won, the LANS organization, did in
    fact envision efficiencies, to be able to address going forward
    in a more efficient way. For example, we believe that at Los
    Alamos today, it costs us at least five times more per drum of
    transuranic waste to ship it to WIPP than it does anywhere else
    in the complex. So we do believe that we can attain
    efficiencies with the new kind of thinking that the contractor
    said they would bring to this issue.
        Looking forward to the second part of your question, we
    know that the milestones created by the recent agreement needed
    to have a new cost and schedule baseline. The laboratory worked
    up a new cost and schedule projection so that we would know how
    to fund it. However, despite two tries to get that estimate
    through an independent audit, it has not passed.
        So the challenge we have is until we really know what those
    efficiencies will bring and what this new cost and schedule can
    do, we do not know what the right amount of funds are to put on
    it. We know that we have been funding at $141 million per year.
    We know that we have been not missing milestones with that
    level of funding. I would tell you that we need to reassess
    that once we have an independent audit of the cost and schedule
    for the environmental work at Los Alamos.
        Senator Domenici. Well, look. I have done the charts and
    looked at them. You are going to miss the milestones, there is
    no question, by 2 years. And it is important to me that I know
    that you are working with Mr. Ron Curry. He is New Mexico's
    environmental man. It is my understanding that that
    relationship between the Environment Department and Los Alamos
    is not very good. Are you doing anything to improve it or do
    you know whether anything is happening out there that might
    improve it?
        Mr. Rispoli. Senator, I will tell you that I agree fully
    with you that the relationship has not been good. I think in
    fairness that the relationship between myself and Mr. Curry is
    strong and between his senior staff and us is strong. I think
    it is also noteworthy that the Federal Government changed its
    environmental manager. They have appointed Mr. George Rael of
    the NNSA to be the new leader of the environmental program for
    the Federal staff. And you probably heard the press release
    today that the laboratory itself will be placing a new manager
    in charge of the environmental program there.
        I do think that Mr. Curry and I are clearly in agreement
    that we want to have a good relationship and I do believe that
    these steps will get us where we want to be.
        Senator Domenici. Could you please explain to me and the
    committee who is responsible for paying these fines? Is it DOE,
    University of California, or LANS?
        Mr. Rispoli. My understanding, Senator, is that because, in
    the case of the Los Alamos operation, that not all of the fines
    are attributable to LANS. In other words, some of them are, but
    some of them were direct contracts from the Los Alamos site
    office with contractors to do the work. My understanding is
    that the fines will, at least most of them will be borne by the
    Federal Government.
        I am aware that in one case the contractor indicated they
    would take a fine, but I believe in most cases it would be the
    Federal Government.
        Senator Domenici. Do you have any idea, just looking at
    them out there, to tell the chairman how many thousands of
    dollars they are allegedly fining us in those five fines, four
    fines?
        Mr. Rispoli. Senator, I only have one with me. That one
    alone is $402,000 and it is a potential notice of violation. I
    can get you the answer for that for the record.
        Senator Domenici. Would you get us the answer for the
    record?
        Mr. Rispoli. Yes, sir.
        [The information follows:]
       Fines Assessed Against DOE and Los Alamos National Security (LANS)
        In the past eight months, the New Mexico Environment Department
    (NMED) has assessed penalties against the Department and/or Los Alamos
    National Security, LLC (LANS) for five alleged violations of the
    Consent Order or other hazardous waste regulations. As of March 22,
    2007, the five violations and the responsible parties are summarized
    below:

    ----------------------------------------------------------------------------------------------------------------
                                                                                                   Actual Fine
                 Description                         Date              NMED Proposed Fine      (Responsible Party)
    ----------------------------------------------------------------------------------------------------------------
    Improper disposal of debris from       7/12/06................  $88,930................  $51,000 (DOE to
     Incinerator Ash Pile.                                                                    pay).\1\
    Late Investigation Report submittal    9/12/06................  $30,000 plus $3,000/day  $120,000 (DOE to
     on Incinerator Ash Pile.                                        from Oct 12 until        pay).\1\
                                                                     project completion.
    Failure to report new release          9/15/06................  $795,620...............  TBD (UC and/or LANS to
     associated with chromium groundwater                                                     pay--responsibility
     contamination.                                                                           under negotiation).\2\
    Improper removal of hazardous waste    10/25/06...............  $402,600...............  TBD (UC to pay).\2\
     from Sigma Mesa D&D project.
    Failure to comply with Work Plan       12/7/06................  $1,000/day for first 30  $30,000 paid to date,
     provisions for Material Disposal                                days (paid) plus         but continuing at
     Area-C characterization.                                        $3,000/day until new     $3,000/day (starting 1/
                                                                     report submitted.        5/07) until report is
                                                                                              submitted) (LANS to
                                                                                              pay).
    ----------------------------------------------------------------------------------------------------------------
    \1\ The National Nuclear Security Administration agreed to pay these penalties.
    \2\ DOE has directed the fines to the contractor, but negotiations are still pending regarding eligibility for
      reimbursement under the contracts.

        As a general rule, LANS, the current Management & Operating (M&O)
    contractor, has the responsibility (and University California (UC)
    before it) for performing environmental remediation at Los Alamos
    National Laboratory (LANL). However, to reduce costs, some years ago
    DOE decided to contract directly with companies outside the M&O
    contractor to perform several environmental remediation projects,
    including remediation work on the Incinerator Ash Pile in TA-73. In the
    two cases of penalties associated with the Airport Ash Pile, listed as
    items #1 and #2 above, DOE has acknowledged that it is responsible for
    paying the penalties and LANS was not responsible for any activities
    that led to the alleged violations.
        Under the current M&O Contract, LANS is responsible for paying for
    violations associated with environmental remediation work they are
    responsible for (see #5 above). The previous M&O contractor, the
    University of California, was likewise responsible under its M&O
    contract for fines and penalties. Some of the actions that led to the
    assessment of penalties occurred prior to the date that LANS took over
    the contract, June 1, 2006. As a result, UC may have responsibility for
    certain of the penalties and/or both UC and LANS may share in the
    liability (see #3 and #4 above). No final determinations have yet been
    made with respect to these penalties.

        Senator Domenici. I am finished. Thank you very much.
        Mr. Rispoli. Thank you, Senator.
        Senator Dorgan. Senator Craig.

                             CONTRACTOR PERFORMANCE

        Senator Craig. Jim, let us stay on the cleanup theme for a
    moment because it is important for all of us and our labs to
    try to stay on those schedules as much as we can. How do you
    rate the Idaho cleanup contractor's performance, let us say
    compared with other cleanup projects at DOE?
        Mr. Rispoli. I believe that the Idaho contractors are
    both--are doing very well. I think that they are performing at
    a level that we feel comfortable with. I am not suggesting that
    they are earning every penny of their fee because I do not
    honestly know to that level of detail. But I do know that when
    I look across the program that Idaho is performing very well
    for us.
        Senator Craig. It is my understanding that they have come
    in in most instances ahead of schedule and under budget with
    most of their cleanup effort. Is that not true?
        Mr. Rispoli. In most areas that is true. As you know, even
    in one facility, the Advanced Mixed Waste, we had to make up
    for a lot of lost time and were successful in doing that. But
    yes, Senator, I would agree.
        Senator Craig. Do you believe the best performers should be
    rewarded with additional funds to accelerate project schedules
    to achieve real cleanup results or would you expect good
    performers to do more with less because of their successes?
        Mr. Rispoli. I think the answer is a little bit of both.
    But I would offer to you that in many cases contracts provide
    incentives for contractors who can deliver more with less. In
    other words, we try to incentivize our contractors to do
    exactly that, that if they can perform work in a less than full
    funding situation they would then have opportunity to earn more
    fee.
        Senator Craig. Could you please provide me, and I think all
    of us would be interested in, a copy of the remaining fiscal
    year 2007 EM budget when finalized and an explanation as to any
    impacts it would have on these projects? Of course, I am
    interested in the Idaho cleanup.
        Mr. Rispoli. You mean for the continuing resolutions?
        Senator Craig. That is correct.
        Mr. Rispoli. Yes, Senator. That is--right now the
    continuing resolution is with OMB. It is in the final stages of
    being prepared to be brought to the Congress. But I would be
    happy to do that in a separate meeting with you.
        Senator Craig. Rumors abound and we would like to put those
    away.
        Mr. Rispoli. Yes, sir.

                  PROPOSED LEGISLATION FOR NUCLEAR WASTE FUND

        Senator Craig. Ward, again thank you for being before the
    committee and the working relationship we have with you. How
    confident are you in your ability to complete the Yucca
    Mountain license application by June 2008? You have discussed
    that some.
        Mr. Sproat. Senator, assuming that we receive the full
    amount that the President requested for fiscal year 2008, which
    is $494.5 million, I am 100 percent confident we will meet that
    date.
        Senator Craig. Does this require the Fix Yucca legislation
    you proposed, that was proposed by DOE yesterday?
        Mr. Sproat. No, Senator, it does not. In other words, the
    Fix Yucca legislation--and I am prepared to talk about any
    parts of that you would like--is not a prerequisite to the
    submittal of the license application. Parts of it are a
    prerequisite before the NRC would be able to grant us a
    construction authorization, primarily land withdrawal.
        Senator Craig. What is your opinion of the Domenici-Craig
    Nu Way bill from the last Congress? Does the certainty of
    interim storage of defense waste at Yucca hurt or help this
    project?
        Mr. Sproat. I believe it would help this project because,
    No. 1, I believe it would give us legislative clarity, if you
    will, regarding the Department's authority to do interim
    storage of high level waste and naval spent nuclear fuel, which
    right now we believe--and it has been looked at by a number of
    people over a number of years. We currently believe we do not
    have that legislative authority to do that. So that certainly
    would give us that authority and capability and would allow us
    to move forward with, probably on an expedited basis, on
    figuring out how to make that happen.
        Senator Craig. Thank you. Thank you both.
        Mr. Chairman.
        Senator Dorgan. Senator Craig, thank you very much.
        Senator Bennett.

                          ATLAS MILL SITE CLOSURE DATE

        Senator Bennett. Thank you, Mr. Chairman.
        Mr. Secretary, you probably will not be surprised that I
    want to talk about the Atlas Mill site. By nodding, I guess you
    are prepared to----
        Mr. Rispoli. Yes, sir, I am.
        Senator Bennett [continuing]. To talk about that.
        We know that the first recommendation--or first comment
    perhaps is a better term--that came out of the Department as to
    when this would be done was it would take about 7 to 10 years,
    and that would put it 2017, 10 years from today.
        Secretary Bodman before the Energy and Commerce Committee
    on the House side said it will occur around 2028. So he has
    added another 10 years to the 10 years that was the outside
    date we had, and I am not sure whether he is anticipating that
    that would take place in 1 year or if it would start in 2028
    and then take another 7 to 10 years.
        I am sure it comes as no surprise that Secretary Bodman's
    testimony set off a lot of alarm bells down in that part of my
    State. I would like to have you talk to us about that and tell
    us what you think is really going to happen, how much it is
    going to cost, and therefore help me understand what my
    responsibilities on this subcommittee ought to be to try to see
    to it that we get as close to the original projected date as we
    possibly can.
        Mr. Rispoli. Thank you, Senator Bennett. We are in the
    process now of evaluating proposals that we have in hand from
    the contractor community to do that. We expect to have an award
    this summer. The process that we would have in the Department,
    the 2028 is a good planning figure. That is the planning figure
    that we use, but it is exactly that. It is a planning figure,
    because the process that we would have will require the
    contractor to propose what technology, what efficiencies, and
    so forth they would employ.
        We are assuming there will be one trainload per day, one
    trainload per day that would be hauling that material out to
    Crescent Junction. We are assuming a certain type of conveyor
    system to load the train cars, for example. But until we
    evaluate the proposals and develop a cost and schedule that can
    be independently audited, the 2028 number, while a good number
    and the best we have, is a planning number. It could be
    significantly better than that depending upon the contract
    mechanism chosen.
        Of course, the other factor then is the annual funding.
    This year we are looking in the 2008 budget about $23 million
    is in the budget for the funding. I think until we evaluate the
    proposal and look at what is the proper baseline, I think that
    we are at that early stage where we just do not know. As soon
    as we finish that evaluation, we will have a much better handle
    on what would a reasonable schedule and baseline be.
        The 2028 is a good number, as I say, but we still have
    quite a ways to go in the evaluation process.
        Senator Bennett. Let me say back to you what I think I
    heard so you can tell me whether I am right or not. By midyear
    this year, you will have an understanding of which contractor
    you want and how that contractor will go about it?
        Mr. Rispoli. Yes, sir.
        Senator Bennett. And at that point, presumably you will
    know how soon the contractor can begin?
        Mr. Rispoli. At that point we would be ready to send in an
    independent review team to review the contractor's numbers, to
    say yes, this is a valid cost and schedule. So that will
    actually begin happening this summer, and typically the process
    is just a few months after that when we would know whether it
    is a valid cost and schedule.
        Senator Bennett. So let us go through it. Let us just put
    some dates on it. Let us say you know by July. You pick the
    contractor. Let us give you 90 days, August, September, and
    October, so you will know by November whether the contractor is
    good or not. Assuming that he or she is, you will know in
    November what the time schedule will be?
        Mr. Rispoli. I think that is a reasonable time line, yes,
    sir.
        Senator Bennett. So let us say that the first shipments can
    then start, what, 5 years from November? Will it take them that
    long to put the conveyor belt in or whatever, or 5 months? Or
    do you have any sense of the timing?
        Mr. Rispoli. No, sir, I do not know that yet, because I do
    not know what technologies or what approaches those who are
    bidding will actually propose to us. So I cannot say when they
    would have the system in place to begin loading the rail cars
    and moving the material away from there to Crescent Junction.
        Senator Bennett. Well, let us assume for just a minute that
    the contractor physically could do it in a year, within a year
    after November, so that it could start moving as early as
    November of 2008.
        Mr. Rispoli. I think that is a reasonable--at this point in
    time, I think that is a reasonable assumption. I would offer to
    you that actually once we have the proposals evaluated it would
    be very appropriate at that time for me to visit with you and
    give you more detail, once that is available information.
        Senator Bennett. Okay. But what I want to nail down and be
    absolutely sure, Secretary Bodman's use of the term ``2028''
    did not signal a determination on the part of the Department to
    put this off an extra 10 years?
        Mr. Rispoli. I think the Secretary was referring to the
    best number we have today, which is a 2028 number based upon an
    assumption of costs and assumption of annual funding profile. I
    think that once we see what the approach is and what the actual
    cost is likely to be, we can evaluate that and see how good or
    how not good the 2028 number is. But we just do not have a
    better number today.
        Senator Bennett. I understand that. But again, what I hear
    you telling me is that the Department's use of the 2028 as a
    planning date is not a signal that they have decided to slow
    this down or delay it?
        Mr. Rispoli. I would not take it to be that, no, sir. I
    would agree with you. That is true.
        Senator Bennett. Because that is the signal that got sent
    in the press, that they were thinking, gee, this could be done
    by 2018. On the timetable we have talked about, 2018 is logical
    if they start in November of 2007. It takes them a year to get
    the thing in place, 2008, and it takes them 10 years to get it
    done, it is 2018. So 2028, that is the outside year that you
    think it could happen if the Congress does not fund it properly
    or if the contractor runs into unforeseen difficulties. But for
    planning purposes, you say this will be done by 2028, but that
    is not the statement we are going to delay it to 2028?
        Mr. Rispoli. That is true because, as I mentioned earlier,
    we know we are going to move it by train. We know that our
    planning today is one train per day. That may or may not be
    optimal. It may be the best that can be done, depending upon
    the physical parameters, traffic and things like that.
        Senator Bennett. When you brief me later this year, we can
    go into all of those. But the point I wanted to make and that
    you now have confirmed is that Secretary Bodman's testimony was
    not a statement that the Department wants to delay this
    project.
        Mr. Rispoli. I do not think that we took it as a delay.
    Again, it was just a planning number that we had, and that is
    the number we gave to the Secretary to use based upon what we
    know today, which is not very much.
        Senator Bennett. Thank you.
        Senator Dorgan. Thank you.
        Senator Allard.

              LESSONS LEARNED APPLICATIONS TO OTHER CLEANUP SITES

        Senator Allard. Thank you, Mr. Chairman. I apologize for
    being late. I apologize for not hearing the testimony because
    you did talk about Rocky Flats, which I think is a success
    story that we do not talk enough about.
        Mr. Chairman, when I first got involved with Rocky Flats
    having been elected to the U.S. Senate, it was a cleanup
    project laid out over 70 years, $35 billion in costs. We were
    able to put together an accelerated program of cleanup, bring
    it down to 10 years, and we were able to finish that project 1
    year ahead of the redone schedule with savings of hundreds of
    millions of dollars. I think one of the key aspects of good
    cleanup were the incentives that we built into the contract
    which really kept things moving.
        We had very cooperative employees with the Department of
    Energy working out there and citizens in the area, who made it
    their goal to get the cleanup done. The agency had bought into
    it. But I do think that there are a lot of lessons to be
    learned by this.
        Are we going to apply some of the lessons learned in this
    cleanup to other sites? Because this is the largest cleanup I
    think in the world, frankly, where we have had a success story
    like this, where we have been under budget and ahead of
    schedule. I would like to know if there are lessons learned
    here that can be applied to other projects where we might have
    nuclear cleanup.
        Mr. Rispoli. Senator Allard, absolutely. And I believe that
    we actually touched on this at the ceremony itself out in
    Colorado last year. We are addressing lessons learned from
    Rocky Flats in a couple of ways. I will mention two of them.
        The first is that we have established a lessons learned
    section of our internal house web site, you might say. So that
    not only for the Rocky Flats situation, but many others as
    well, we can better share lessons learned. We are so spread out
    geographically that we realize that oftentimes different
    organizations are facing similar challenges, and so use the
    electronic media as best we can to get that out.
        The other is that at the Rocky Flats cleanup not only the
    prime contractor, but even a number of the subs had people with
    a lot of experience. As that job closed down, they have
    actually sent those people to other places to help with similar
    situations in other places.

                               PREPARED STATEMENT

        But I believe that you are absolutely right. We had some
    tremendous success there. I would likewise say we gave in our
    opening a few photos of places that are not as big, but
    certainly just as significant, such as the Fernald site in
    Ohio, where we again had similar successes in lessons learned,
    and we are working to promulgate those.
        Senator Allard. While I think about it, Mr. Chairman, I
    would like to make my full statement a part of the record if I
    might.
        Senator Dorgan. Without objection.
        [The statement follows:]

                   Prepared Statement of Senator Wayne Allard

        Thank you, Chairman Dorgan, for holding this hearing today. I am
    proud of the work that Senator Domenici accomplished last year and I
    look forward to working with you as the new Chairman, as well as the
    other members of this committee. I would also like to thank the panel
    for coming today and offering their testimony.
        This is my third year on this subcommittee, and I like to take
    advantage of all the opportunities to hear from the Department of
    Energy's EM Assistant Secretary about Rocky Flats. I think it is
    important for many reasons to talk about this success story, because if
    you were to visit the site today, you would see what Rocky Flats looked
    like more than 50 years ago. It is pristine and quiet with little to
    remind you that it once was the place of the most dangerous building in
    the United States.
        I remember the time-frame when the Department of Energy, then the
    Atomic Energy Commission, established Rocky Flats as a nuclear weapons
    production facility. I remember the decades of production and the many
    workers who toiled to protect our country--24 hours a day, 7 days a
    week.
        The first time I toured Rocky Flats--with the site's extensive
    security controls, enormous concrete buildings, and tons of weapons-
    grade plutonium still on site--it was unimaginable what it would look
    like today. I remember the worries of security threats, wide-spread
    contamination, industrial pollution, and radioactive fall-out. And,
    most importantly, I remember the early estimates for cleaning-up Rocky
    Flats--70 years and $35 billion.
        So, Mr. Chairman, I thought I would again touch on this success
    because we are fortunate to have come so far and to have achieved so
    much. The picturesque Rocky Flats that exists today seemed like a dream
    just 10 years ago. Few believed the site could be successfully cleaned-
    up. Even fewer believed that the clean-up could be completed early--15
    months ahead of the already accelerated schedule and hundreds of
    millions of dollars below budget. We in Congress, and the Department of
    Energy, need to celebrate this success and hopefully channel it into
    other clean-ups around our country.
        Again, thank you Mr. Chairman for bringing us here today, and I
    look forward to the testimony of the witnesses.

                            CLEANUP FUNDING STRATEGY

        Senator Allard. The other idea when we were working on
    this--I was on the authorizing side in the Armed Services
    Committee and this was under my jurisdiction at the time. Part
    of the thinking was that once we get Rocky Flats clean then
    that begins to free up dollars for cleaning up other sites. Is
    that happening, and we are getting expedited cleanup in some of
    these other sites?
        Mr. Rispoli. I think that right now we are looking at over
    the next, in 2006, 2007, 2008, 2009, at a number of sites--it
    is in my statement for the record; it is also in the budget--
    that are being cleaned up. I believe what we are looking at
    after that are essentially the really big sites that we will be
    at for a long time, driven more by schedules and technology
    problems, such as Hanford, Savannah River, Oak Ridge.
        In fact, at Oak Ridge we will even be adding more. I
    reviewed a proposal just yesterday that will add even more
    square footage to the program for D&D such as we did at Rocky
    Flats.
        Senator Allard. Well, I hope that you continue to push
    cleanup on those other sites, because they were also
    cooperative in this effort. There was an extra amount of
    dollars that went to the cleanup of Rocky Flats to speed up
    cleanup, so we could point to a success story. The idea was
    that once we got it cleaned up it would free out other dollars
    so that they could proceed at a more rapid pace in getting
    their cleanup problems handled. So I hope that you keep that in
    mind when you are putting together your budgets and working
    with those other areas.

                       GLOBAL NUCLEAR ENERGY PARTNERSHIP

        Can you give us an update on where the Department is on the
    Global Nuclear Energy Plan proposed by the administration
    several years ago?
        Mr. Rispoli. Unfortunately, Senator, I cannot. I am not----
        Senator Allard. Can you, Mr. Sproat?
        Mr. Sproat. Just so I am clear, Senator, are you talking
    about the Global Nuclear Energy Partnership?
        Senator Allard. Yes, I am.
        Mr. Sproat. That is not under my area of responsibility and
    I would prefer that if you would like an update on that, let me
    take that question for the record and ask Assistant Secretary
    Spurgeon to come back and brief you on that. That is under his
    area of responsibility.
        Senator Allard. This is where we have the MOX and all that
    and it is now a MOX Plus facility.
        Mr. Sproat. Yes, sir.
        Senator Allard. All right. If you could respond to the
    record, I would appreciate it.
        [The information follows:]

                         Advanced Fuel Cycle Initiative

        The Global Nuclear Energy Partnership (GNEP) is funded under the
    Advanced Fuel Cycle Initiative (AFCI) within the Office of Nuclear
    Energy. AFCI activities are currently focused on developing a detailed
    roadmap for implementing the GNEP initiative, including supplying
    information to support a Secretarial decision on the path forward for
    GNEP. The Secretarial decision on the path forward for GNEP, and
    subject to compliance with all applicable law and regulation, longer-
    term, AFCI activities are anticipated to include supporting supply
    arrangements among nations to provide reliable fuel services worldwide
    for generating nuclear energy. There has already been considerable
    progress internationally to encourage such arrangements.
        The GNEP Statement of Principles has been endorsed by Japan and
    France and is currently being considered by Russia, China, and the
    United Kingdom. A U.S.-Russian Action Plan was submitted to President
    Bush and President Putin in December 2006. Similar action plans are
    being prepared for Japan and France. Domestically, the Department has
    sought input from the private sector to assist the Department in
    developing an appropriate business model for the proposed nuclear fuel
    recycling center and advanced recycling reactor components of GNEP,
    including potential scope, cost, schedule, and technical risk.
        DOE is also working with the Nuclear Regulatory Commission (NRC) to
    provide information regarding potential commercial separations plants
    and advanced reactor concepts. DOE is working to develop a Memorandum
    of Understanding on interactions with the NRC for GNEP similar to that
    which is in place regarding the Next Generation Nuclear Plant.

        Mr. Rispoli. I would point out that the MOX facility in
    particular at the Savannah River site is an NNSA project, and I
    think that all of it is kind of held together and has to be
    dealt with in the context of the nuclear future for the Nation.
    But the MOX project in particular, if you have a question on
    it, that would be appropriate for the NNSA.
        Senator Allard. Okay, I appreciate it. And it all has to
    happen together.
        Mr. Rispoli. I think they are all interconnected, yes, sir.
        Senator Allard. Yes. And I think that we need to look at
    reprocessing our nuclear rods. We have got technology now where
    we can, with the reprocessed rod we bring the waste stream down
    to 5 percent. It is highly toxic, but we bring it down to 5
    percent, which I think helps take care of some of our storage
    issues. And with the new technology it is much more difficult
    to convert to a nuclear weapon, I understand. So I think that
    it would help quell some of the opposition that we have had in
    the past when we looked at reprocessing rods.
        Thank you, Mr. Chairman.
        Senator Dorgan. Senator Allard, thank you very much.
        We are coming up on some very big decisions in these areas,
    the MOX facilities, Global Nuclear Energy Partnership (GNEP)
    and Reliable Replacement Warhead program (RRW), many of which
    are related and have significant consequences. We likely will
    be holding some hearings in this subcommittee on those very
    issues. I have not set a date, but I expect to do that.
        Let me just say that I went to graduate school in Colorado,
    knew of and saw Rocky Flats at the time, and about 2 weeks ago
    flew over Rocky Flats on a commercial airline going from Denver
    to North Dakota. It is quite remarkable to look down and see
    what has been done at that site. I was duly impressed, and I
    appreciate your raising that issue. That is, I think, an
    example of great success.

                         MISSED MILESTONES CONSEQUENCES

        Mr. Rispoli, you heard the comment that I and my colleague
    Senator Domenici offered about the 23 percent reduction over 4
    years in funding. I respect that you are here to represent the
    President's request to Congress and you would not be a very
    diligent subordinate if you did not fully support that. But
    clearly there are consequences to that, and can you tell me the
    milestones that will be missed? You talked about meeting 90
    percent of the milestones. What about the milestones that are
    missed, and is the budget request simply a reflection that
    these are lesser priorities than the other issues?
        Mr. Rispoli. Mr. Chairman, if I may address it this way,
    everywhere that we operate we have milestones that are
    established by some sort of an agreement, whether it be a tri-
    party agreement with the EPA and the State or a consent order
    with the State or some other agreement. We have milestones. And
    intrinsic, built into all of those agreements generally is a
    provision to renegotiate milestones as you face technical
    difficulties and the State recognizes that you have made every
    effort to comply.
        So a normal process is in fact that we need to recognize
    that and address milestones that for one reason or another
    cannot be met.
        Senator Dorgan. Yes, but this is not about technical
    difficulties. I am talking about funding.
        Mr. Rispoli. Yes, I understand.
        Senator Domenici. And with so much cleanup work yet to be
    done and your description to Senator Allard of the big projects
    yet to be started, how does one justify reducing funding for
    these things? How do you justify it?
        Mr. Rispoli. I understand the question, yes, Senator. What
    we did was--and this may not be on the mark to answer your
    question. What we did was we recognized all the milestones and
    within those milestones we applied a risk-based approach to
    where do we get the greatest risk reduction for the funds that
    you appropriate and give us to operate our program.
        In so doing, there were some milestones that we believe
    related to low-risk activities, generally but not always,
    generally D&D of a building, for example, or D&D of a number of
    buildings. And those came to the bottom of the list. So when it
    was time to make budget decisions, we tried to focus the
    resources where the greatest risk reduction would be and leave
    for the lower end some of the D&D and other related types of
    activities.
        And you are correct that the budget could not cover all of
    those, but that is the rationale that we used.
        Senator Dorgan. But that is still not quite responsive. You
    are talking about how you focused. I am asking the question of
    why, given the body of work in front of us--which, and I am new
    to this, but it appears to me to be very substantial--why on
    earth would we be talking about a 23 percent reduction in
    funding over 4 years?
        Mr. Rispoli. Yes, sir, it is a significant difference when
    you look across the years. I would point out that the annual
    cost for funding, for example, Rocky Flats, Fernald, all these
    other closure sites, was about $1 billion a year and those
    sites did complete. So when you look at the difference between
    a year or 2 ago and today, we would certainly recognize that $1
    billion worth of annual requirement basically was completed,
    and so we had to redirect our resources and attention to other
    places.
        Senator Dorgan. But would you agree it is counterintuitive,
    given the amount of work and given the fact that we will miss
    milestones, not for technical reasons but because we are
    suggesting this is not a high enough priority to even maintain
    level funding, to be talking about budget cuts in this area?
        Mr. Rispoli. I understand your question, Senator, and I am
    not disagreeing with your point at all. But I would also point
    out that at the time those milestones were set up it assumed
    technologies that did not exist or in some cases, like at
    Hanford, we have had to use two or even three technologies
    instead of one. We assumed that certain regulatory things would
    be in place. They were not in place. There were extra
    quantities of things that had to be done that resulted in
    consuming more resources to get the work done.
        So there are many, many factors to this that led to a
    funding profile that got us to where we are today.
        Senator Dorgan. Is the reduction in funding in recent years
    a component of what has led to the estimated increase in the
    life cycle costs of the program?
        Mr. Rispoli. Any life cycle cost is a balance--I believe
    again you are correct--it is a balance between the amount that
    you can provide to that project on its funding curve and the
    life and the duration of the project. Certainly, in general if
    you have a shorter duration you would have a lower cost.
        Senator Dorgan. Do not misunderstand the intent of my
    questions. Because we have got competing interests for funding
    in this subcommittee, with some very big projects and some very
    important ones, I am trying to understand the circumstances
    that have led to certain requests, in this case a request for a
    budget cut in an area that seems to me to be in significant
    need of perhaps, at minimum, level funding, given the workload
    in front of us.
        Well, you have done the best you can to avoid directly
    answering my questions. But I think if I can find an
    interpreter I will understand what you have said. Again, I am
    not making fun of you. I understand your role here. Your role
    here is to support the President's budget. Ours is to try to
    evaluate with limited resources and nearly unlimited needs and
    wants, how to allocate and economize.
        So I appreciate you being here. And I did start in a very
    positive way, talking about Rocky Flats.
        Mr. Rispoli. Yes, sir. Thank you.
        Senator Dorgan. When we get these projects completed and
    you look at it, it is almost breathtaking to see because you
    would not believe it could be done until you have seen it after
    the fact. And I appreciate that.
        Mister--is it ``SPROUT'' or ``SPROAT?''
        Mr. Sproat. ``SPROAT.''

                        YUCCA MOUNTAIN UPDATED BASELINE

        Senator Dorgan. Mr. Sproat, does the Department of Energy
    plan to update these 6-year-old cost estimates for the project
    before it submits the license application?
        Mr. Sproat. Yes, Senator, we do. As a matter of fact, when
    we set the new best achievable milestones schedule for the
    repository last summer, basically at that point in time we were
    rebaselining the project, saying--taking a look at how long it
    would take to build the repository, the railroads, the
    transportation infrastructure. That required us to go back and
    take a look at what our budget authority request annual
    requirements should be between now through repository
    construction.
        We did that. We had it reviewed by an independent outside
    engineering construction firm. We incorporated their comments.
    That work has been completed. I just got released from the
    Office of Management and Budget this week to release those
    figures. Right now what we are doing is packaging those figures
    in a way that when people read it they can make sense out of
    it, and I suspect we will be able to send that revised budget
    authority request case flow up here to the Hill within the next
    2 weeks.

      YUCCA MOUNTAIN REDUCTION IN FISCAL YEAR 2008 TRANSPORTATION REQUEST

        Senator Dorgan. The fiscal year 2007 budget request for the
    program sought $67.7 million for transportation. In 2008 you
    are requesting $15 million for transportation. Can you describe
    to me what that precipitates, what does that mean?
        Mr. Sproat. The basic reason that reduction was made is
    because we do not need the money in fiscal year 2008.
        Senator Dorgan. Okay, so it is a timing issue.
        Mr. Sproat. That is exactly right. The primary reason is
    that in early--in 2006, we were prepared to make a record of
    decision of selecting what is called the Caliente route, the
    Nevada Rail Line route through Nevada to the repository. At
    that point in time, though, the Walker River Payute Tribe, who
    owns the land, came to us and said: We would like you to
    evaluate an alternative route through our reservation. They had
    previously not been willing to do that.
        As a result, and taking a look at that potential route, we
    see a significant opportunity for both schedule and dollar
    savings. So we are currently doing an environmental impact
    review of that route. As a result, that is pushing off the
    record of decision for the Nevada Rail Line for about a year.
        So we are putting a lot of money into transportation this
    year through the environmental impact statement work, but the
    record of decision to decide which rail line we are going to go
    with is not going to be made until probably about a year plus
    from now, and therefore we do not need as much money in
    transportation as we did in 2007.
        Senator Dorgan. A quick question. Does the DOE have the
    authority to commence construction of a rail spur to Yucca
    Mountain in the absence of the NRC construction authorization
    for the repository?
        Mr. Sproat. We believe we do. However, we have requested
    clarification of that authority in our legislation that we sent
    up here to the Hill yesterday. We do believe we have that
    authority, but we suspect that without clear legislative
    direction we will probably end up in some legal lawsuits and
    litigation regarding that. So that is why we are including that
    in our legislation.
        Senator Dorgan. Your program will not be a stranger to
    legal action, will it?
        Mr. Sproat. No, sir, it will not.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Dorgan. Let me thank both of you very much for
    being here and for being involved in these programs. Both are
    important programs.
        Do my colleagues have any additional questions?
        If not, we will be sending some additional questions to you
    and ask for your response.
        We will leave the record open until this Friday, March 9,
    at 5 o'clock, so the questions can be submitted.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                  Questions Submitted to Hon. James A. Rispoli
                 Questions Submitted by Senator Byron L. Dorgan
                          los alamos missed milestones

        Question. Mr. Rispoli, the Department has proposed $140 million for
    Los Alamos cleanup, which is insufficient to the cleanup milestones
    contained within the Consent Order the Department, has entered into
    with the State in 2005. According to the June 15, 2006 baseline for the
    project, which assumes completion of all the Consent Order Milestones,
    the budget for Los Alamos should be $283 million more than double the
    request. If the Department remains on the current path proposed as part
    of the fiscal year 2007 and fiscal year 2008 budgets, cleanup
    milestones will be missed and the cleanup will be delayed by 2 years
    beyond the Consent Order deadline of 2015. Mr. Rispoli, I am not sure I
    understand how you can justify a budget that forces the Department to
    miss agreed upon milestones and will result in fines and other
    penalties from the State. Please clarify.
        Answer. The President's request for fiscal year 2008 for LANL is an
    appropriate amount and is based on the Consent Order requirements in
    the budget year and the site contractor's performance since assuming
    responsibility for cleanup in mid-fiscal year 2006. The contractor
    continues to develop the legacy cleanup program baseline, and when
    complete later this year we anticipate that a new baseline will be
    validated. We anticipate that this will be accomplished in time to
    inform the fiscal year 2009 budget process.
        The budget level that your question refers to for Consent Order
    compliance ($283 million) is consistent with an amount that the Los
    Alamos site contractor has identified as part of a proposed revision to
    the legacy cleanup program cost and schedule baseline which it
    submitted to the Los Alamos Site Office. This revised amount addresses
    all aspects of cleanup scope at the site (soil and water remediation,
    legacy transuranic waste disposition, and decontamination and
    decommissioning), not only the environmental restoration activities
    that are subject to the requirements of the Consent Order. This
    revision has undergone an external independent review by the
    Department's Office of Engineering and Construction Management that
    revealed a number of deficiencies that require corrective actions.
        Question. Mr. Rispoli, can you tell me how you intend to keep
    cleanup on schedule with the budget baseline you have offered in the
    2008 budget?
        Answer. The Los Alamos site contractor has developed and submitted
    to the Los Alamos Site Office a proposed revision to the legacy cleanup
    program cost and schedule baseline. This revision has undergone an
    external independent review by the Department's Office of Engineering
    and Construction Management that revealed a number of deficiencies that
    require corrective actions. That process is continuing, and when
    complete later this year we anticipate that a new cost and schedule
    baseline will be validated. We anticipate that this will be
    accomplished in time to inform the fiscal year 2009 budget process.

                      RENEGOTIATING THE LANL CONSENT ORDER

        Question. Last week, I spoke with Secretary Bodman about the
    challenges facing the Los Alamos National Lab in complying with the
    various cleanup milestones. It was his belief that he needed to take
    action to find a workable cleanup strategy within the existing budget
    constraints. I believe it is important for the Department to implement
    a cleanup strategy that is sustainable within the existing budget
    constraints.
        I expect the State to push back in a very public fashion and I
    understand their frustration, but no matter how many fines or penalties
    the State levies it will not do anything to cleanup the sites. We need
    a partnership between the State and the Department to negotiate
    realistic cleanup goals. Can you tell me what your plan is to
    prioritize cleanup at LANL and work with the State on a path forward?
        Answer. The Department is committed to the cleanup of the Los
    Alamos National Laboratory. Our priorities at the site are to reduce
    risks, to improve our performance such that we can meet the
    requirements of the Consent Order, and to accomplish these goals
    efficiently. To meet these priorities, we have to make some changes.
    These changes have started already, and include personnel changes on
    the environmental side at the contractor level. We have also made a
    significant management change at the Los Alamos Site Office with the
    reassignment of Dan Glenn, previously the Pantex Site manager, to Los
    Alamos. He brings a fresh perspective to assessing and addressing the
    problems at Los Alamos. He also brings his experience in developing and
    implementing ideas leading to the successful resolution of complex
    issues at the Pantex site in Texas that should improve performance at
    Los Alamos. We anticipate that this kind of fresh start at both the
    contractor and Government management levels will foster improved
    relations with the State.
        We are in the midst of the validation process for a new,
    comprehensive and integrated baseline for the complete scope of the Los
    Alamos legacy waste cleanup. When this baseline is in place, we expect
    to see improved activity planning and efficient execution of the
    cleanup work at the site.
        Question. Based on your current budget request, will this result in
    delaying the cleanup beyond the existing 2015 deadline?
        Answer. We recognize that without efficiencies in work performance
    at the site and an executable comprehensive cost and schedule baseline
    for the work, we will have difficulty in meeting the overall cleanup
    date of 2015 in the consent order. When the Department completes its
    review of the new proposed cleanup baseline for Los Alamos and is able
    to validate it later this year, we will assess whether the completion
    date for overall cleanup of the site as contained in the consent order
    is still achievable.

                                     FINES

        Question. Mr. Rispoli, it is my understanding that there is some
    sort of provision in the consent order that says if the Department does
    not provide adequate clean up funding the Lab cannot be held
    responsible. Is that true?
        Answer. Section III.K.3 of the consent order states that no
    provision of the consent order shall require the Government to obligate
    or pay funds in contravention of the Anti-Deficiency Act, and that
    payment or obligation of funds by the Government for activities
    required by the Order shall be subject to the availability of
    appropriated funds. Based on this provision, the site cleanup
    contractor would not be responsible for non-performance if sufficient
    funds were not appropriated.

             LOS ALAMOS NATIONAL LABORATORY (LANL) SAFETY CONCERNS

        Question. Mr. Rispoli, it is my understanding that the relationship
    between the New Mexico Environment Department and Los Alamos is not
    very good. I understand that LANL had safety concerns with the drilling
    operation, what were those concerns and do you believe they were
    justified?
        Answer. The hazards involved in drilling four boreholes between two
    pits at Material Disposal Area C were a major concern for the
    Department. The borehole drilling was potentially dangerous because it
    risked penetrating the radionuclide inventory and compressed toxic
    gases at the landfill. Material Disposal Area C is a 1960s vintage
    disposal area and, as is the case with many of these old landfill
    sites, the actual distance between the pits cannot be determined
    reliably from the design drawings from that era. Similarly, the
    integrity of the soil ridges between the waste pits is difficult to
    determine after so many years since placement of the wastes.
        Therefore, the contractor had to rely on geophysics data to
    determine the safe drilling locations for the boreholes. Upon review of
    the geophysics data by all parties, Los Alamos Nuclear Services, NNSA,
    and the New Mexico Environment Department, resolution was reached that
    placement of four boreholes between waste pits in one location of
    Materials Disposal Area C could be accomplished after taking worker and
    environmental risks into account. The drilling was done using a geo-
    probe to confirm the existence of the boundary between waste pits
    without entering the waste pits. Safety procedures required that the
    geo-probe insertion and subsequent drilling be done by workers in level
    B protection consisting of breathing air and chemical protection suits.
    The use of level B protection also involves physical risk to the worker
    during the drilling activities as their vision and movement is
    restricted by their trailing breathing air hose apparatus. To mitigate
    this additional hazard, mockups were conducted of all activities with
    the protective clothing to ensure that the work could be conducted
    safely and that the field procedure could be implemented as written.
    These precautions and appropriate work planning enabled the drilling to
    be completed without incident.
        The Department requires that all work be done safely at every site.
    Given the nature of the hazards involved, I believe the concerns were
    justified and the contractor took the appropriate safety measures to
    implement the requirements set forth in the consent order.

                               TECHNICAL AREA-21

        Question. Mr. Rispoli, in fiscal year 2007 the Department requested
    $18 million in funding to initiate decommissioning of TA-21--a former
    plutonium facility--in order to characterize the extent of the
    contamination beneath this facility. However, the fiscal year 2008
    request does not provide any funding to support this cleanup which has
    a cleanup deadline of 2013. Every year this project goes without
    funding is another year delay in the consent order. Mr. Rispoli, your
    fiscal year 2007 budget requested $18 million for TA-21 cleanup, since
    Congress didn't spell out how the funds are to be used, can you tell me
    if you intend to use the funds to begin the D&D work?
        Answer. As part of the prioritization process that is associated
    with the development of the Environmental Management budget, my office
    examines the requirements to ensure safety, to provide essential
    services, and to undertake environmental compliance and risk reduction
    activities throughout the DOE complex. Typically, decontamination and
    decommissioning activities are not associated with high priority risk
    reduction requirements. The work at Technical Area 21 at Los Alamos
    falls into this latter category. In addition, Los Alamos does not have
    an approved cost and schedule baseline for the work. Once the cost and
    schedule estimates are independently verified, we will have a higher
    confidence level. We anticipate that this independent verification will
    be accomplished in time to inform the fiscal year 2009 budget process.
    At that time, the Department will review activities for Los Alamos
    National Laboratory cleanup including the decontamination and
    decommissioning work scope.
        Question. Without any funding requested in your fiscal year 2008
    budget how do you intend to recover from this delay and meet the 2013
    consent order milestone for this project?
        Answer. As part of the prioritization process that is associated
    with the development of the Environmental Management budget, my office
    examines the requirements to ensure safety, to provide essential
    services, and to undertake environmental compliance and risk reduction
    activities from across the DOE complex. Typically, decontamination and
    decommissioning activities are not associated with high priority risk
    reduction requirements. The decontamination and decommissioning work at
    Technical Area 21 does not yet have an approved cost and schedule
    baseline. An appropriate confidence level in the scope, cost, and
    schedule profiles for these work activities is needed before we
    proceed. This confidence would be indicated by the validation of the
    baseline that is expected later this year, in time to inform the fiscal
    year 2009 and out-year budget process. At that time the Department will
    review activities for Los Alamos National Laboratory cleanup and
    whether the completion data for overall cleanup of the site as
    contained in the Consent Order is still achievable.

                         LOS ALAMOS NATIONAL LABORATORY

        Question. Mr. Rispoli, the lab has been working hard to accelerate
    the disposal of high priority drums of TRU waste at WIPP.
    Unfortunately, this involves sorting through more than 12,000 drums of
    waste and then verifying their contents. This has been slowed by the
    NNSA Site Office's unwillingness to accept responsibility for the
    accelerated cleanup plan. It is my understanding that the Defense
    Nuclear Facility Safety Board supports the accelerated approach, but
    the NNSA Site Office has not yet signed off on this new plan.
        Do you favor the accelerated approach proposed by the contractor
    and do you believe it will result in the acceleration of shipments to
    WIPP?
        Answer. The Administrator of the NNSA has directed his Headquarters
    Chief of Nuclear Safety to work with the NNSA site office and the
    contractor to identify and implement an acceptable plan to dispose of
    the high priority drums presently stored above ground in fabric
    structures. This approach is focused on accelerating the safety
    documentation as well as the necessary upgrades to nuclear facilities
    required to characterize and package high priority drums for disposal
    at the Waste Isolation Pilot Plant (WIPP). In addition, the NNSA team
    is poised to evaluate and approve innovative approaches in the work
    plan that meet the intent of federal requirements and DOE Orders to
    ensure that the project is achievable. The project is now on an
    aggressive schedule with the goal of initiating shipments of high
    priority waste later this year and completing by January 2008. These
    shipments are among the Department's top priorities for waste shipments
    destined for disposal at the WIPP.

                       ACCELERATION OF TRU WASTE TO WIPP

        Question. What can your office do to help the LANL site office
    become more comfortable with this strategy?
        Answer. The Office of Environmental Management and the National
    Nuclear Security Administration (NNSA) are collaborating in various
    aspects of the project to ship the high priority drums of above-grade
    stored legacy transuranic waste to the Waste Isolation Pilot Plant. In
    addition, the Waste Isolation Pilot Project office will support the
    shipping schedule that will be identified under this project. I have
    directed my staff to be mindful of your concerns regarding the LANL
    site office in their continuing regular interactions with NNSA.

                                 SANDIA CLEANUP

        Question. Mr. Rispoli, your fiscal year 2008 budget does not
    provide any funding to complete the remaining cleanup project at Sandia
    National Lab. It is my understanding you are waiting for the State of
    New Mexico to give the final approval before you place a cap on the
    landfill. Why has the State not approved this final action and what
    source of funding do you intend to use to complete this project?
        Answer. The Sandia Site Office has been working closely with the
    New Mexico Environment Department (NMED) to satisfy additional requests
    for information to support the proposed regulatory decision to allow
    placement of a permanent cap on the mixed waste landfill. This has
    resulted in additional scope being added to the project in the form of
    a requirement for development and application of a contaminant fate and
    transport model, collection of soil gas samples from the landfill and
    immediate surroundings, participation in a formal public review and
    comment resolution on the Corrective Measures Implementation Plan, a
    Corrective Measures Implementation Report, and a Long-term Monitoring
    and Maintenance Report. These products must be delivered and accepted
    by NMED and the process activities completed before approval can be
    provided for installation of the final landfill remedy. Some measures,
    such as preparation of the landfill surface to allow emplacement of the
    cap sub-grade soil layer, have been permitted by the regulators, and
    this work has been completed.
        We had not anticipated the extent of these additional requirements.
    Unexpended project funds from fiscal year 2006 are being used to fund
    this work but the additional scope requires funds that exceed the
    available balances. Under the Revised Continuing Appropriations
    Resolution, 2007, the Department has provided an additional $4.7
    million to support these activities.

                   CONSOLIDATION OF SPECIAL NUCLEAR MATERIAL

        Question. Mr. Rispoli, the Department has inventories of special
    nuclear material including plutonium, highly enriched uranium and spent
    fuel that exceeds our national security mission needs and is very
    costly to secure. As I have expressed several times before, I believe
    the Department needs to work quickly to consolidate and dispose of this
    material to reduce costs and eliminate the proliferation risks. Can you
    please explain to the subcommittee your strategy for the consolidation
    of this material and challenges you face in consolidating this
    material?
        Answer. The Department's Nuclear Materials Disposition and
    Consolidation Coordination Committee (NMDCCC), established in 2005 to
    address nuclear material consolidation and disposition issues, recently
    completed an implementation plan (IP) for consolidation and disposition
    of surplus non-pit, weapons-usable plutonium. While the IP recommends
    consolidating this material to the Savannah River Site (SRS), any
    decisions on proposed consolidation and disposition are subject to
    review under the National Environmental Policy Act (NEPA), other
    applicable laws, and a final determination by the Secretary.
        Challenges facing the Department for consolidating plutonium
    include completing required environmental reviews, assuring support
    from the South Carolina Congressional delegation and local authorities,
    and complying with legal requirements. For example, prior to shipping
    additional weapons-usable plutonium to SRS, Public Law 107-107,
    National Defense Authorization Act for Fiscal Year 2002, requires
    submittal to Congress of a plan for disposal of plutonium that would
    have been disposed of using the Plutonium Immobilization Plant that was
    cancelled in 2002.
        With respect to highly enriched uranium (HEU) and spent fuel, the
    deputy secretary has approved the Enriched Uranium (EU) Disposition
    Project which would provide for continued operation of SRS's H-Canyon
    facilities. As part of the project, surplus HEU materials currently
    managed by the Environmental Management Office, the National Nuclear
    Security Administration (NNSA), and Naval Reactors will be sent to SRS
    and processed in the H-Canyon facilities for disposition purposes.
    Spent fuel currently stored at the Idaho National Laboratory (INL), and
    in various domestic facilities and other countries, that is aluminum-
    clad (this is the only type of cladding material that is compatible
    with the H-Canyon processing capabilities) will also be shipped to SRS
    and be disposed of through processing in H-Canyon, along with the
    aluminum-clad spent fuel already at SRS. The uranium from processing
    the spent fuel and HEU materials is planned to be blended down to a low
    enrichment and sold to the Tennessee Valley Authority for use in
    manufacturing fuel for its commercial nuclear plants. As a result,
    additional waste will be generated from continued operation of H-
    Canyon, but that amount is relatively small. Approximately 225
    additional Defense Waste Processing Facility (DWPF) canisters will
    result from operation of H-Canyon through 2019. There is sufficient
    space in the site tanks to store this waste prior to transferring it to
    DWPF for vitrification. The EU disposition plan also includes
    processing in H-Canyon of approximately two metric tons of weapons-
    usable plutonium that cannot be disposed of using the Mixed-Oxide (MOX)
    Fuel Fabrication Facility or the proposed Plutonium Disposition Project
    due to specific contaminants. Therefore, H-Canyon processing is
    critical to our efforts to consolidate plutonium.

          MIXED-OXIDE (MOX) FUEL FABRICATION FACILITY VS.VITRIFICATION

        Question. Mr. Rispoli, your budget requests $15 million to perform
    design work on the Plutonium Vitrification Demonstration project in
    South Carolina. As I understand it, this facility will be able to
    handle up to 13 tons of plutonium that can not be processed through the
    MOX plant. Could you explain to the subcommittee why you are pursuing
    this project and why this is not an acceptable solution for the 34 tons
    of U.S. surplus weapons grade plutonium the United States and Russia
    have agreed to eliminate from their stockpiles.
        Answer. We have proposed the Plutonium Vitrification Disposition
    Project in order to be able to disposition plutonium that, because of
    isotopic content and impurities such as chlorides and fluorides, are
    not suitable for processing in the MOX Fuel Fabrication Facility as
    currently designed. This plutonium was to be disposed of using the
    Plutonium Immobilization Plant, but construction of that facility was
    cancelled in April 2002 when the decision was made to proceed with only
    the MOX plant. We are required by law to have a disposition path out of
    the State for all surplus plutonium stored at the Savannah River Site
    (SRS) and the proposed Plutonium Vitrification Disposition Project,
    together with the MOX plant and continued operation of the H-Canyon
    facilities, will ensure there is a disposition path for all plutonium
    currently at SRS or that may be sent there in the future. The proposed
    Project is subject to review pursuant to the National Environmental
    Policy Act (NEPA) and compliance with other applicable laws relating to
    potential consolidation and disposition of plutonium at SRS.
        The current concept, process, and planned capability of the
    Plutonium Vitrification Disposition Project would be unsuitable to
    disposition the additional 34 metric tons (MT) of surplus plutonium
    planned to be processed in the MOX facility. Significant changes would
    be required in the design, footprint, process and throughput of the new
    project. It is envisioned that the proposed Plutonium Vitrification
    Disposition Project would be designed to fit in the basement of an
    existing facility and sized to disposition up to approximately 13 MT of
    lower purity plutonium by vitrifying it in lanthanide borosilicate
    (LaBS) glass. LaBS glass is well suited for plutonium with higher
    quantities of impurities and does not degrade the quality and
    performance of the product for long-term storage and disposal. However,
    when mixed with plutonium, LaBS glass produces a significant radiation
    field. This effect is manageable for vitrifying the plutonium not
    suitable for the planned MOX facility, but would not be desirable for a
    significantly longer campaign such as the additional 34 MT of higher
    purity plutonium. That is because in order to maintain the radiation
    exposure to operators as low as reasonably achievable, it would take
    about an additional 20 years of operation to vitrify the additional 34
    MT of plutonium or require a substantially more complex and costly
    facility. Therefore, adding the 34 MT of surplus plutonium planned to
    be processed in the MOX facility to the 13 MT planned to be vitrified
    would likely require changing the waste form from glass to ceramic in
    order to eliminate high radiation.
        Although the reaction that causes the high radiation levels does
    not occur when the plutonium is mixed with ceramic, the ceramic does
    not accept impurities and maintain its quality as well as glass. Much
    of the 13 metric tons of plutonium contains significant impurities that
    could result in cracking of the ceramic pellets. The cancelled
    Plutonium Immobilization Plant that was to immobilize plutonium in
    ceramic required blending a large amount of pure plutonium with the
    impure plutonium in order to dilute the impurities to an acceptable
    level. There is not enough pure Pu in the 13 metric tons to dilute the
    impurities to an acceptable level.
        The lanthanide borosilicate glass planned to be used in the
    vitrification process is preferred over ceramic for vitrifying
    relatively lower quantities of impure plutonium not only because it can
    accommodate more impurities than the ceramic, but also because addition
    of the lanthanide allows a larger amount of plutonium to be included in
    each can of glass. Also, the change would require construction of a new
    and larger facility (similar to that of the cancelled Plutonium
    Immobilization Plant) vs. modification of an existing facility because
    production of the ceramic waste form requires much more space than
    exists in the K-Area facility.
        Additionally, the Plutonium Vitrification Disposition Project would
    utilize the can-in-canister concept where small cans of vitrified
    plutonium are placed inside Defense Waste Processing Facility (DWPF)
    canisters and the canisters are then filled with high activity waste
    glass. The cans of vitrified plutonium need the high-level waste glass
    to surround them in order to qualify the waste package for disposal at
    Yucca Mountain; this high-level waste glass also provides resistance to
    proliferation. With a ceramic waste form and the additional 34 MT of
    plutonium, approximately 100,000 cans of ceramified plutonium would be
    generated, requiring 3,600 DWPF canisters of high activity glass. That
    would require processing beyond the planned DWPF completion date of
    2026 by approximately a decade and require about 2,000 more DWPF
    canisters of glass waste than will be produced from processing all of
    the Savannah River tank waste. Taking into account the additional waste
    resulting from the entire Enriched Uranium Disposition Project through
    2019, which is approximately 200 to 250 additional DWPF canisters,
    there is simply not enough high-level radioactive glass at SRS to over-
    pour the plutonium glass or ceramic generated from 13 MT of plutonium
    to meet the spent fuel standard required to assure proliferation
    resistance in the repository. Since neither the plutonium-ceramic nor
    the vitrified plutonium can be sent to the geologic repository without
    being inside DWPF canisters filled with glass waste, this approach is
    not viable.
        For all these reasons, the proposed Plutonium Vitrification
    Disposition Project is not viable for the disposition of the plutonium
    destined for the MOX plant.

            WASHINGTON STATE--HIGH LEVEL WASTE VITRIFICATION PROJECT

        Question. Mr. Rispoli, the Department has faced enormous challenges
    in containing the cost of this massive project to vitrify the millions
    of gallons of high level waste stored in underground tanks in
    Washington. This project was originally budgeted for $5.7 billion in
    2003. Today, after several independent evaluations, the Department
    estimates that the total projects cost will be $12.3 billion and will
    be completed by 2019. Can you please explain why the original baseline
    was so low and why you believe this new cost estimate will not escalate
    further over the next decade?
        Answer. The Department of Energy, with the advice and assistance of
    the U.S. Army Corps of Engineers has implemented several major
    initiatives to ensure that we fully understand what is required to
    successfully complete the Waste Treatment Plant (WTP) project and begin
    plant operations.
        The major reasons for the increases in the estimated cost and the
    delays in schedule result from faulty initial estimates and the overly
    optimistic treatment of uncertainty and risk for the following: (1)
    design of novel technology for a large, complex nuclear-chemical plant
    (pulse jet mixing pumps, non-Newtonian fluids, etc), (2) quantity,
    procurement and availability of equipment and materials, (3)
    availability and productivity of professional and craft labor, and (4)
    environmental and safety regulatory compliance (fire proofing, seismic
    ground motion, etc.). These were further aggravated by conditions
    created by deficiencies in the acquisition strategy and management
    approach. It is important to note that the March 2003 performance
    baseline was established with a design completion of 30 percent, using
    a majority of estimating tools which were based on parametric costs
    from similar facilities. The December 2006 performance baseline was
    established with a design completion of 78 percent, using a majority of
    estimating tools which were based on costs from material take-offs.
    This provides a more highly detailed cost estimate that enables higher
    confidence.
        The Department has increased its confidence in the success of this
    project as a result of implementing several key actions that addressed
    its project management capability, management of calculating technical
    risks, and the project's cost and schedule baseline. Over the past 18
    months, the Department has retained a broad range of external, senior
    professionals from private industry, academia, and other government
    agencies to thoroughly review the key elements of the WTP. Key
    initiatives to reinforce the confidence in the project are as follows:
    Strengthen Project Management
        The Assistant Secretary for Environmental Management has
    established a Headquarters' senior-level waste treatment and
    immobilization plant oversight team. The team is fully engaged in all
    aspects of the project;
        The Department commissioned an independent expert team that
    completed an after action fact finding review to better understand the
    management issues associated with the project. All of the
    recommendations have been or are in the process of being addressed;
        DOE has recruited talented personnel in the areas of contracting,
    procurement, contract law, and project management;
        The WTP contractor is implementing an earned value management
    system (EVMS) to track variances to the baseline. The system is being
    independently certified to be fully compliant with the requirements of
    the American National Standards Institute/Environmental Industry
    Association (ANSI/EIA) 748-A-1998. This system, currently in use by the
    contractor as a management tool, will accurately report project cost
    and schedule performance;
        A structured daily, weekly, and monthly project reporting system is
    in place, and a Quarterly Performance Review is conducted by the
    Assistant Secretary for Environmental Management;
        The Secretary of Energy is engaged in the WTP project and meets
    with senior principals of Bechtel National Inc. on a regular basis.
    Verify Technology
        The Department commissioned a broad group of distinguished
    independent senior professionals from private industry and academia to
    thoroughly review all technology aspects of the WTP process flow sheet.
    The flow sheet report was finalized in March 2006 and identified 28
    issues that have already been or currently are being addressed;
        DOE is on a path forward to having the final earthquake seismic and
    ground motion criteria approved by the Secretary of Energy. DOE has
    retained the U.S. Army Corps of Engineers to oversee the drilling of
    one core hole and three deep boreholes to confirm the geophysical
    properties of the layers of bedrock below the WTP project site.
    Borehole drilling commenced in June 2006 and was completed in October
    2006. We forecast that the Secretary of Energy will approve the final
    seismic and ground motion criteria by September 2007;
        The Defense Nuclear Facilities Safety Board has been actively
    engaged in the seismic issue and all safety related technical issues
    from the commencement of the project. Also, I meet monthly with the
    Board to share information and discuss issues.
    Establish a Credible Project Cost and Schedule
        In August 2006, the U.S. Army Corps of Engineers delivered to the
    Department an independent review of the contractor's May 2006 estimate-
    at-completion, which provided a qualified validation of the cost and
    schedule baseline--with the addition of $650 million and three months
    of schedule contingency.
        In addition, two other external independent reviews were
    implemented (March 2006 and October 2006) to confirm the quality of the
    WTP cost and schedule baseline and project management systems.
        In December, 2006, as a result of the independent reviews, the
    Department's Office of Engineering and Construction Management
    validated a final total project cost of $12.263 billion and schedule
    completion date of November 2019. The revised project cost and schedule
    was approved by the Deputy Secretary of Energy on December 22, 2006.
        Based on the actions we have taken and the reviews by independent
    industry experts, the project is now reinforced with a strong project
    management framework, a clear understanding of the technical issues,
    and a credible project cost and schedule baseline.

                     WASHINGTON STATE--TRI-PARTY AGREEMENT

        Question. Mr. Rispoli, in 1989 the Department entered into a Tri-
    Party Agreement between the U.S. EPA, the State of Washington and DOE
    to set cleanup milestone for Office of River Protection. Since the
    agreement has been signed, the Department has been forced to work
    through hundreds, if not thousands of changes to this agreement and
    renegotiate revisions to the compliance orders. It seems inevitable
    that the Department will miss milestones and will be forced to
    renegotiate the consent agreement when neither party fully understands
    the extent and the nature of the existing contamination. It appears
    that the Department is accepting an enormous amount of risk to sign-up
    to an enforceable agreement without understanding the full extent of
    the cleanup. How has the Department worked through the thousands of
    missed agreed upon milestones?
        Answer. The Department of Energy (DOE) remains committed to the
    cleanup at the Hanford site in accordance with the Tri-Party Agreement
    (TPA). It is important to remember that the TPA is a ``living''
    document that was designed to be updated. For example, there are TPA
    milestones that call for new milestones to be defined at specified
    points in time. Similarly, new sections are added to the TPA, as
    appropriate. To clarify, DOE has missed relatively few agreed upon
    milestones. In fact, DOE has completed 96 percent of the milestones
    within schedule from the start of the TPA. There were originally 161
    milestones, and today there are 950 completed milestones and 235
    milestones to go for a total of 1,185 milestones. In accordance with
    the terms of the TPA, there have been 442 approved change requests, 6
    amendments, and 3 modifications known as ``Director's Determinations.''
        As with any ``living'' document, the TPA parties explore
    opportunities to improve safety, effectiveness, efficiency, and
    flexibility of the Hanford cleanup. To do this, the parties engage in
    regular dialog to ensure the milestones make sense and further the
    intent of the TPA.
        Question. What has been the process for the Department to engage
    the other interested parties to work out an achievable solution?
        Answer. The Department of Energy (DOE), the Environmental
    Protection Agency, and the State of Washington have engaged in a series
    of large and small group meetings to understand technical and schedule
    issues regarding the Waste Treatment Plant, supplemental treatment for
    low-activity tank waste, tank waste retrieval, and groundwater
    remediation. The goal of all of the parties remains safe, timely, risk-
    informed cleanup of the Hanford site.
                                     ______

                Questions Submitted to Hon. Edward F. Sproat III
                 Questions Submitted by Senator Byron L. Dorgan

                               SECOND REPOSITORY

        Question. Mr. Sproat, I read an article that quoted you as saying
    that the threat of a second nuclear fuel repository would convince
    Congress to approve the legislation the administration sent up
    yesterday. I couldn't disagree more with this analysis. For Members to
    take your threat seriously it must be believable and I don't believe
    your statement is. Of all the options we have before us today,
    including GNEP, do you believe this administration would endorse the
    creation of a second repository?
        Answer. This was never intended to be threat of a second
    repository; rather, it was meant to communicate a statutory
    requirement. Section 161(b) of the Nuclear Waste Policy Act (NWPA), as
    amended, requires the Secretary of Energy to report on the need for a
    second repository. That report is required to be submitted to the
    President and the Congress between January 1, 2007 and January 1, 2010.
    Without passage of the provisions in the administration's proposed
    legislation that would remove the administrative capacity limitation
    provisions in section 114(d) of the NWPA limiting the capacity of Yucca
    Mountain to 70,000 metric tons of heavy metal until a second repository
    is operational, this report will likely conclude that a second
    repository is needed to dispose of the commercial spent nuclear fuel
    from the existing fleet of commercial reactors and the remaining
    defense high-level radioactive waste that cannot be disposed within the
    70,000 metric ton limit. While GNEP spent nuclear fuel recycling has
    the potential to reduce the volume of spent nuclear fuel to be disposed
    of in Yucca Mountain it will be many years before there is sufficient
    information on which to make reasonable projections as to when and to
    what extent advanced recycling facilities will be deployed.

                          YUCCA MOUNTAIN AUTHORIZATION

        Question. Yesterday, the administration sent up legislation,
    identical to the version from the 109th Congress, which I introduced on
    behalf of the administration. It is my understanding that passage of
    this legislation is critical if you are to meet the 2017 operations
    goal you have set for the project. If Congress fails to enact this
    legislation, what impact will this have on the opening or operations of
    Yucca Mountain?
        Answer. First, without passage of the administration's legislation
    the Nuclear Regulatory Commission cannot grant a construction
    authorization for Yucca Mountain because permanent land withdrawal is
    required as a condition to receive a construction authorization.
    Second, without the funding reform proposed in the legislation, the
    Department is highly unlikely to have sufficient budget authority
    available to construct the repository to our best-achievable schedule
    for initial repository operation in 2017.

                         CANISTER HANDLING AND STORAGE

        Question. Mr. Sproat, the budget discusses a new canister storage
    approach that will simplify the canister handling operations at Yucca
    Mountain. Can you please explain this new approach has [sic] how it
    will impact the overall project costs? What do utilities think of this
    new approach?
        Answer. The canistered approach, utilizes the transportation, aging
    and disposal (TAD) canister for the receipt of most of the commercial
    spent nuclear fuel expected to be disposed of at Yucca Mountain. The
    use of the TAD canister will eliminate hundreds of thousands of
    individual spent fuel assembly handling operations at the Yucca
    Mountain facilities, which will allow the Department to simplify the
    design of the repository surface facilities and their operations. This,
    in turn, will result in less costly facilities and reduced operating
    costs. Regarding overall program costs, any increased program costs for
    the purchase of the TAD canisters is expected to be off-set by
    programmatic savings in facility construction and operations. The
    Department cannot speak for utilities as to their views; on this
    approach. However, during the development of the TAD performance
    specification requirements, the Department did attend several industry
    meetings to receive technical input for the TAD performance
    specification. At these meetings the industry was generally supportive
    of the canister development effort.

                           GOVERNMENT LEGAL LIABILITY

        Question. Mr. Sproat, included in your statement you indicate that
    Federal Government's legal liability for failure to accept spent fuel
    by 1998 will increase by $500 million annually after 2017. This will be
    on top of the existing $7 billion liability. Why isn't the
    administration doing anything in the meantime to reduce or eliminate
    this well defined problem? Why wait until 2017?
        Answer. If the Department starts accepting spent nuclear fuel in
    2017, we estimate that the liability to the U.S. Government to be $7
    billion; that liability will grow by $500 million per year every year
    the repository is further delayed. The Department believes that the
    best approach to limiting the Government's liability is to begin
    acceptance of commercial spent fuel at the repository at the earliest
    possible date. The passage of the administration's proposed legislation
    to ensure the timely opening of Yucca Mountain is the most significant
    step urgently needed to limit the liability. The Department also
    believes that an interim storage facility at another location could not
    be sited, licensed, constructed and begin operations appreciably sooner
    than the Yucca Mountain repository begins accepting spent fuel.
    Moreover, under the current law, an interim storage facility could not
    be constructed until after NRC grants a construction authorization for
    the repository and then only an amount of spent fuel equivalent to
    10,000 metric tons of heavy metal could be accepted at the storage
    facility until the repository begins operations, at which time the
    limit would increase to 15,000 metric tons.
        Question. Why hasn't the administration considered an interim
    strategy to stage the fuel or set it aside for recycling in light of
    the looming legal liability?
        Answer. The Department's best-achievable schedule for commencing
    operations of the Yucca Mountain repository is 2017. The Department
    believes that interim storage could not be undertaken appreciably
    sooner than when Yucca Mountain could be open. Moreover, under the
    current law, an interim storage facility could not be constructed until
    after NRC grants a construction authorization for the repository and
    then only an amount of spent fuel equivalent to 10,000 metric tons of
    heavy metal could be accepted at the storage facility until the
    repository began operation, at which time the limit would increase to
    15,000 metric tons.

                                NEVADA RAIL LINE

        Question. Mr. Sproat, this budget requests $15 million to support
    work on the Nevada rail line, yet the legislation you have just sent to
    the Hill requires Congress to withdraw land for this rail line. Why
    would we spend any amount of funding in this project until we are
    certain that we can get access to the land we will need to build the
    project?
        Answer. The President's fiscal year 2008 budget requests $15
    million for transportation projects, which includes $5 million for work
    with States, Tribes, and other stakeholders on national transportation
    planning efforts. The $10 million requested for work on the Nevada Rail
    Line Project will be used to complete the environmental impact
    statement on possible rail alignments. This information is necessary to
    define the ultimate path a rail line to Yucca Mountain would take in
    Nevada and to support the granting of either a permanent withdrawal of
    lands or a right-of-way for the Nevada Rail Line. The proposed
    legislation would withdraw land for the repository but not for the
    Nevada Rail line.

                                    LAYOFFS

        Question. Mr. Sproat, the Department recently announced layoffs of
    contractor staff in order to restructure the workforce. Can you tell me
    how this will impact the project and if you expect additional layoffs
    during this fiscal year?
        Answer. The OCRWM prime contractor, Bechtel SAIC Company (BSC)
    located in Nevada developed a workforce restructuring plan (WRP) that
    is consistent with the level of funding provided in fiscal year 2007.
    The WRP will result in layoffs of approximately 65 BSC employees. This
    will allow BSC to assess and realign, where necessary, those skills
    that are essential to successfully completing the License Application
    by February 2008. The funding reduction and the WRP have no impact on
    the license application submission, but the program will defer non
    license application related activities in fiscal year 2007. Because the
    funding received by the program for fiscal year 2007 was $100 million
    less than the President requested, we do anticipate making additional
    reduction in force later in fiscal year 2007 and in fiscal year 2008.
    The timing and size of those further reductions are currently being
    evaluated.

                              SUBCOMMITTEE RECESS

        Senator Dorgan. This hearing is recessed.
        [Whereupon, at 3:32 p.m., Wednesday, March 7, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

        ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2008

                                  ----------

                            THURSDAY, MARCH 15, 2007

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 2:33 p.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Byron L. Dorgan (chairman)
    presiding.
        Present: Senators Dorgan, Landrieu, Reed, Domenici,
    Bennett, Craig, and Allard.

                          DEPARTMENT OF DEFENSE--CIVIL

                             Department of the Army

                           Corps of Engineers--Civil

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

                  OPENING STATEMENT OF SENATOR BYRON L. DORGAN

        Senator Dorgan. I'm going to call the hearing to order.
    This is the hearing of the Subcommittee on Energy and Water
    Development and we will take testimony today on the budget
    request and justifications for the Department of the Army, Army
    Corps of Engineers, the Bureau of Reclamation and the
    Department of the Interior.
        My ranking member is Senator Domenici. He is, at the
    moment, in the Budget Committee. They are marking up the budget
    document. I don't know how long he will be there but it might
    take some while. So he has indicated it's fine to begin without
    him because he is busy on budget votes.
        I'm joined by my colleague, Senator Craig, and we have two
    panels today. I am going to have both panels seated together
    and I appreciate that. We have a series of six votes today that
    start at 3:45 and because of that, I think because we have six
    votes that will be sequential, they will take us probably 1\1/
    2\ hours to 1 hour and 40 minutes to complete. I want to try to
    do a good hearing and a complete hearing but try to complete it
    as efficiently and effectively as we can before we start those
    votes. Because if we would have to recess and then come back 1
    hour or 1 hour-plus later, that would not be helpful to
    anybody.
        I'd like to make a brief opening statement and then I'm
    going to call on Senator Craig.
        Today the subcommittee will take testimony on the fiscal
    year 2008 budget request for the Army Corps of Engineers and
    the Bureau of Reclamation. General Strock is with us today from
    the Corps of Engineers. Sir, my understanding is that this will
    be your final hearing with us and you will soon retire from the
    Army. Let me thank you for your service to our country and
    thank you for appearing before this committee a number of times
    and we look forward to a smooth transition with your successor,
    General Van Antwerp when he is confirmed.
        Let me say that the President's budget for the Corps of
    Engineers proposes $4.87 billion. That's nearly $500 million
    below the enacted level of fiscal year 2007, $5.34 billion. The
    highlights of the fiscal year 2008 budget include general
    investigations' proposed 45 percent decrease, $90 million down
    from the current year--excuse me, proposed at $90 million, $73
    million less than the current year enacted. General
    construction is proposed at a 38 percent decrease from current
    year. We have a very substantial backlog in unconstructed
    projects. I'm very concerned about both of these
    recommendations, frankly.
        The Mississippi River and Tributaries is proposed at $260
    million, a decrease of 35 percent from the current year. The
    O&M, operations and maintenance general, is proposed at an
    increase of 25 percent. This increase is somewhat less than it
    sounds because of the $286 million shifted from the
    construction account to O&M for the sake of budget
    transparency.
        The fiscal year 2008 budget request is assembled along the
    Corps' eight business lines. I'm going to put a statement in
    the record speaking about the investigation accounts and the
    construction funding and some other thoughts about it.
        Let me just say even as I include my whole statement in the
    record that I'm disappointed by the budget because frankly, as
    I think our witnesses know and I hope the administration knows,
    we have a substantial amount of work to be done. We have
    projects that are not yet funded. We have projects underway
    that are not funded adequately and I frankly don't understand
    the budget request. I understand we have to tighten our belts
    but I also understand there is a very big difference between
    spending and investing and I think when you take a look at all
    of the appropriations requests that we receive in the Congress,
    if ever you would classify projects as investments, you would
    classify these projects as investments. These, in many cases,
    are water projects, public works projects that will provide
    dividends for years to come to this country. So I don't view
    this as typical spending. We are providing flood control, we
    are saving substantial money in flood control projects, we are
    investing in water projects that enhance our economy and
    provide opportunities that weren't otherwise provided.

                               PREPARED STATEMENT

        So I'm very concerned about the budgets. With respect to
    the Bureau of Reclamation, again I think we have budgets here
    that come to us probably expecting the committee to add back
    funding. Maybe that's the case. If it is, my hope will be that
    this expectation is realized because I think the Corps of
    Engineers and Bureau of Reclamation are critical to a whole
    range of things that represent the public good in our country
    and we must provide adequate funding for the things that they
    undertake on our behalf.
        I'm going to call on Senator Craig and ask that my entire
    statement be part of the record.
        [The statement follows:]

                 Prepared Statement of Senator Byron L. Dorgan

        Good afternoon--the hearing will come to order.
        Today, the subcommittee will take testimony on the fiscal year 2008
    budget requests for the U.S. Army Corps of Engineers and the Bureau of
    Reclamation.
        The hearing will consist of two panels. The first panel will
    consist of witnesses from the U.S. Army Corps of Engineers.
        Testifying for them will be: John Paul Woodley, Principle Deputy,
    Assistant Secretary of the Army for Civil Works, and Lieutenant General
    Carl A. Strock, Chief of Engineers for the U.S. Army Corps of
    Engineers.
        At the conclusion of this panel, we will observe a short break and
    seat the panel for the Bureau of Reclamation. Testifying for the Bureau
    of Reclamation will be: Mark Limbaugh, Assistant Secretary for Water
    and Science, Department of the Interior, and Robert Johnson,
    Commissioner, Bureau of Reclamation. Mr. Woodley, General Strock, thank
    you for appearing before us today.
        General Strock, I understand that this will be your final hearing
    with us as you will soon retire from the Army. I want to thank you for
    your service to this committee and the Nation. I look forward to a
    smooth transition with your successor, General Van Antwerp, when he is
    confirmed.
        The President's budget for the Corps of Engineers proposes $4.87
    billion, which is $469 million below the fiscal year 2007 enacted
    amount of $5.34 billion.
        Several of the highlights for the fiscal year 2008 budget include:
      --General investigations is proposed at $90 million, down 45 percent
            ($73 million) from the current year. Even if we were going to
            consider the proposed cancellation of $50 million of fiscal
            year 2007 funds, this account would still be 20 percent below
            the fiscal year 2007 enacted amount.
      --Construction, general is proposed at $1.523 billion, a decrease of
            38 percent ($813 million) from the current year which certainly
            doesn't help to reduce the more than $40 billion backlog in
            unconstructed projects. I am not sure whether we will be able
            to make up the entire deficit in this account.
      --Mississippi River and Tributaries is proposed at $260 million, a
            decrease of 35 percent ($137 million) from the current year.
      --Operation and maintenance, general is proposed at $2.471 billion,
            an increase of about 25 percent ($496 million). I wish this is
            as good as it sounds. However, this increase is inflated by
            $286 million that was shifted from the construction account to
            O&M for the sake of ``budget transparency''.

                     BUDGET PRIORITIES FOR FISCAL YEAR 2008

        Your fiscal year 2008 budget request is assembled along the Corps'
    eight business lines: Emergency Management; Environment; Flood and
    Coastal Storm Damage Reduction; Hydropower; Navigation; Recreation;
    Regulatory; and Water Supply.
        In the GI account, the budget proposal arbitrarily limits funding
    to $90 million. The only justification used is that since the Corps
    civil works program already has a large backlog of ongoing construction
    work, there is no need to study and design additional projects. There
    are many reasons why this is a shortsighted budgetary view:
      --The planning program in the Corps' GI account is the entry point
            for Federal involvement in solutions to water resource problems
            and needs.
      --It assumes that the country will stop growing and that new
            investment opportunities will not be present.
      --In truth, as the country grows, new investment opportunities will
            be presented and some previously authorized projects may no
            longer make sense or may be less competitive.
        Construction funding within the budget was prioritized primarily by
    the use of the benefit to cost ratio. While this is a more equitable
    way to compare projects than previous measures, it still does not get
    to the heart of your budgeting dilemma. That is, that your program has
    been underfunded for years.
        Your budget proposes that 16 high priority projects consume some 51
    percent of the construction budget. The remaining 52 projects that you
    recommended have to split the remaining 49 percent of the construction
    budget. This will lead to these 52 projects limping along for another
    year. Meanwhile the other 250 or so projects that are on-going from
    previous years are not even addressed in the budget.
        Our national water resource needs continue to grow as our
    population grows and shifts around the country. The American Society of
    Civil Engineers has again graded our infrastructure as a ``D''. How
    does this budget address this abysmal grade? It doesn't!
        You are budgeting in large measure as if there is a finite group of
    projects that once they are finished, investment in our national
    infrastructure will be complete. Then all that will be required is
    funding to maintain this infrastructure. You are not providing
    sufficient funding to maintain what we have, much less provide for the
    future.
        Finding a new and better prioritization system will not solve the
    problems of consistently underfunding infrastructure. Sure you may
    succeed in prioritizing your agency into irrelevance, but that does not
    help the problem nor can we allow that to happen.
        The only way to solve this problem, is for the administration to
    provide more funding for these infrastructure investments. If they
    won't then the Congress will certainly try. Note that I did not say
    spend more money, I said invest more. The funding that we provide is
    for investments not only for today but in our future.

                                BUDGET PROPOSALS

        The fiscal year 2006 budget has a number of proposals, some new for
    this year, some recycled from previous years.
        The budget has again proposed the elimination of continuing
    contracts in favor of multiple year contracting. I will have a number
    of questions for you concerning this proposal.
        The budget again proposes a beach policy that has been previously
    rejected by the Congress. I think it is safe to assume that the
    modified policy will also be rejected.
        Finally, I find it fascinating that the administration has proposed
    considerable authorizing language as a part of the budget. Perhaps you
    should consider proposing an administration WRDA bill to address these
    needed authorizing provisions.
        It is obvious from this budget proposal that the Congress has
    considerable work ahead. The President has proposed considerable
    infrastructure investments, unfortunately, they are not in our country,
    but in Iraq and Afghanistan.
        I look forward to working towards preparing a responsible budget
    for our national infrastructure.
        Our second panel will consist of witnesses from the Department of
    Interior. Testifying will be: Mark Limbaugh, Assistant Secretary for
    Water and Science, Department of the Interior, and Robert Johnson,
    Commissioner, Bureau of Reclamation.
        The two major project accounts for the Department of Interior under
    the jurisdiction of the Energy and Water subcommittee are the Central
    Utah Completion Act Account and the Bureau of Reclamation.

                            THE CENTRAL UTAH PROJECT

        The Central Utah Project Completion Act of 1992 authorized this
    element of the Colorado River Storage Project to be completed by the
    Central Utah Conservancy District.
        The Central Utah Project Completion account is proposed at $43
    million for fiscal year 2008, an increase of nearly 27 percent ($9
    million) from the current year.
        The increase in this account is primarily due to construction
    contracts planned for the project in fiscal year 2008.

                           THE BUREAU OF RECLAMATION

        The Bureau of Reclamation is proposed at $958.4 million for fiscal
    year 2008, a decrease of 6.5 percent ($66.6 million) from the current
    year.
        This budget includes: $816.2 million for the Water and Related
    Resources account, $51.6 million for the Central Valley Project
    Restoration Fund, $31.8 million for the California Bay-Delta
    Restoration account, and $58.8 million for the Policy and
    Administration account.
        Major projects funded in Water and Related Resources include: $27.2
    million for the Central Arizona Project, $124.8 million for
    California's Central Valley Project, $58 million for the Animas-La
    Plata Project in Colorado, $55 million for rural water projects, and
    $77 million for continued work to ensure the safety of dams.

                          ISSUES FOR FISCAL YEAR 2008

        I am concerned that funding for rural water projects is declining.
    We have people in my home State that can see Lake Sakakawea from their
    house, yet 50 years after the lake was constructed, they still have to
    haul water to their homes each and every week whether it is -35 degrees
    or 100 degrees outside. It should not be that way. Not in this country.
    The budget proposal further drags out completion of these projects and
    the delivery of fresh water to these impacted communities.
        Under Water 2025, $11 million is proposed to meet the challenge of
    preventing crises and conflicts over water in the west. Ten million
    dollars of the funds are proposed for the 50:50 challenge grant program
    which relies on local initiative and innovation to identify and
    formulate the most sensible improvements for local water systems.
        Another area of the budget that has been seriously underfunded is
    water reclamation and reuse. Water reclamation and reuse is a vital
    component of increasing near term water supplies for the West. The
    Federal share for most of these projects is about 25 percent or $20
    million whichever is less. In many cases, the few Federal dollars
    involved are the difference as to whether these projects can move
    forward or not. The Federal dollars are leveraged against other funding
    to make these projects a success. Only about $10 million was provided
    for these projects in the budget request. Congress normally provides
    $25-30 million.
        The administration has proposed $1 million to develop and
    administer the Loan Guarantee program. This new program is intended to
    address aging water infrastructure issues in the West. It was
    authorized by the Reclamation Rural Water Supply Act of 2006.
        Title I of this act requires the Secretary to establish a formal
    rural water supply program for rural water and major maintenance
    projects. The Secretary is also to establish programmatic and
    eligibility criteria along with other reporting requirements and
    criteria for appraisal and feasibility studies. I am glad to see that
    you are funding this initiative and hope that you will include rural
    water supply as a bigger part of your budget for fiscal year 2009.
        I look forward to working with you gentlemen as we prepare the
    fiscal year 2008 budget for your agencies.

                        STATEMENT OF SENATOR LARRY CRAIG

        Senator Craig. Mr. Chairman, I will adhere to your
    admonition about time because we do want to hear these folks
    who are before us. I must also say to the panel, a lot of what
    the Senator has said, I agree with. It's probably the result of
    him coming from the High Plains and me coming from the high
    desert. Like no one else, our States appreciate and understand
    water.
        But let me welcome, of course, Assistant Secretary Woodley
    and General Strock. Again, thank you for your service.
    Commissioner Johnson and the Assistant Secretary are in the
    back of the room and he'll be forward. Are you going to have
    everybody at the table?
        Senator Dorgan. Yes.
        Senator Craig. Then Commissioner Limbaugh, why don't you
    move down and let me ask that you go over to the right side.
    There you go. So we'll get you all at the table. There we go.
        I want to thank you all for your willingness to work with
    our offices on a variety of issues from the Corps helping
    deliver clean drinking water to many of my Idaho constituents,
    the Bureau of Reclamation storing Idaho's most precious
    resource, water. I sat through several budget hearings so far
    and one trend remains true. Declining budgets are a part of the
    current fiscal reality that we're all dealing with. I realize
    and understand you all are forced to balance priorities with
    the current fiscal constraints and I appreciate what a
    difficult task that must be.
        Now, let me turn my focused comments specifically to the
    Army Corps of Engineers. First I want to start by thanking
    members of the Corps that have served our country in Iraq. You
    will play a vital role, not only domestically but
    internationally as we pursue stable environments, both in
    Afghanistan and Iraq. We thank you for your service there.
        Second, thank you for your diligent work in my State, as I
    mentioned earlier, in drinking water, waste water
    infrastructure. Some may argue this isn't part of your core
    mission. However, you all do phenomenal work in my State and
    generally, complete projects within a reasonable timeframe,
    within budget, for which I commend you and thank you.
        The Corps also plays a vital role in operating and
    maintaining our national waterways. As has just been mentioned,
    Idaho ships a significant number of products on the Snake and
    Columbia systems. It is important that we maintain those while
    dredging has gone on. The reality of infrastructure
    maintenance, aging locks, aging gates--all of those kinds of
    things to sustain a very critical transportation system is
    important. So I am concerned about that. I'm also concerned
    about the administration's proposal that would create a lock
    tax. As you know, shippers already pay a fuel tax. I'm
    interested in hearing how this new tax will access--will be
    accessed as well as where the revenue might end up. If it's
    just a new source of revenue that gets dumped into the General
    Fund, I don't think any of our users are all that interested.
    Dedicated revenues that end up replacing used infrastructure
    makes--could make some sense.
        The Bureau of Reclamation, as you know well, Commissioner
    and Assistant Secretary--water is what makes the West what it
    is today. We have a problem with aging infrastructure and I
    appreciate your helping find long-term solutions to those
    problems. I commend the administration for acting quickly,
    setting up a guarantee loan program. Although it is only set at
    $1 million, I'm encouraged. I think it is a step clearly in the
    right direction that begins to address some of the ways we
    solve some of these problems. We need to continue looking for
    creative financing packages for our water users so they can
    rehabilitate their infrastructure in an efficient and cost
    effective way.
        We in the West are no longer at the frontier. We are a
    developed economy in an aging infrastructure and with a
    developed economy, it has resources properly leveraged that can
    assist itself when government becomes a cooperating partner and
    I'm not here nor are any of my users here to suggest that the
    government ought to be the only partner or that it ought to be
    the only supplier of resource. I've been supportive of the 2025
    Program as well as Title 16 Program and I hope to see those
    programs continue to yield results.
        One last thing--this is not only directed at your agencies
    but also at the Federal agencies that have provided budgets in
    Congress. It's been difficult to decipher which programs have
    received increases, which have received decreases and more
    specifically, what was enacted in the 2006 versus what is
    requested now. This information isn't widely available, has
    been tough not only to find areas to look at, understand and/or
    criticize. These are the realities of what we're working with
    now and I hope the administration works on this for the next
    year so that we all have a better understanding of where we
    are.
        Thank you, Mr. Chairman. I look forward to all of your
    testimony.
        Senator Dorgan. Senator Craig, thank you very much. To my
    other colleagues, let me say that we have six votes starting at
    3:45 and so I want to try to see if we can get the witnesses to
    make their statements and I want to make sure we have ample
    opportunity at the hearing to ask questions as well. If you'd
    like to make a very brief opening statement, I'll recognize
    that but I----
        Senator Bennett. I've got a page and a half, Mr. Chairman.
    Will that be enough?
        Senator Dorgan. Why don't you proceed?

                     STATEMENT OF SENATOR ROBERT F. BENNETT

        Senator Bennett. Okay. I just wanted to address the Army
    Corps and thank them for their excellent work in Utah. We've
    had their quick response to devastating floods in Washington
    County and I enjoyed working with them.
        But I do have a significant issue that I want to call
    General Strock's and Secretary Woodley's attention to. The Army
    Corps has made good progress in rural Utah by providing
    financial and technical assistance for water infrastructure
    projects. Rural Utah 595 Program--you're nodding, you're
    familiar with that. It makes it possible for rural cities and
    counties to build the critical water projects that otherwise
    they couldn't afford. So the Congress has supported this
    program and I'm asking for the subcommittee's continued
    support.
        But the committee--although the committee has provided
    specific funding to the rural Utah account, on two separate
    occasions, the Army Corps has reprogrammed nearly $1.5 million
    to spend on projects in other States and these missing funds
    could complete several infrastructure projects in Utah that are
    now on hold because of the lack of funding.
        I raised this concern with the Division Commander,
    Brigadier General McMahon, last week when he came to see me and
    he assured me that the Corps was simply borrowing the money and
    the funds would be replaced. I'm not familiar with that process
    in the Federal system, how you borrow money that has been
    earmarked for one purpose and use it for another. Maybe we
    ought to be paid interest. I don't know. But I understand that
    the Corps has formulated its work plan for fiscal 2007 and in
    that work plan, it did not include funds to restore those that
    were borrowed from the rural Utah account. So I want to raise
    the issue here and have a response on the record for replacing
    the funds and would like to know when they will be replaced.
        So that's my issue, Mr. Chairman and I raise it and it's
    there to be responded to either in the question period or if
    we're all drawn away from votes, on the record. Thank you very
    much.
        Senator Dorgan. Senator Bennett, thank you very much.
    Senator Landrieu.

                               PREPARED STATEMENT

        Senator Landrieu. I'm going to waive my opening statement
    and will submit it for the record but I do need several
    questions after the testimony.
        [The statement follows:]

                 Prepared Statement of Senator Mary L. Landrieu

        Thank you Chairman Dorgan and thank you Assistant Secretary Woodley
    and General Strock for appearing before this committee. Today, we are
    here to discuss the very important matter of the Corps budget and I
    appreciate the chance to share my thoughts with this committee and with
    you the leadership of the Corps.
        I find the President's budget request for the Corps for fiscal year
    2008 is once again woefully inadequate. The President's budget requests
    a mere $4.87 billion while we all know there is substantially more
    needed. Additionally, I am troubled by the continuation of the downward
    trend of investment in the country's infrastructure, specifically civil
    works projects. Specifically for Louisiana, several important projects
    have either been omitted or under funded in the President's budget
    request, such as: Morganza to the Gulf, SELA and others. While the
    Corps' regular fiscal year 2008 budget request is cause enough for
    concern, I am also concerned by the supplemental appropriations request
    the administration is asking Congress to consider.
        The piece-meal approach to hurricane recovery is still not
    sufficient. The request to reprogram, rather than appropriate $1.3
    billion to cover identified shortfalls for hurricane recovery is not a
    sustainable approach. Many Americans and most Louisianans recall the
    President's commitment from Jackson square to rebuild the devastated
    region; however the rhetoric has not matched the funding request.
    Robbing Peter to pay Paul will not provide adequate protection to
    prevent future disasters. Accordingly, I urge the Corps to deliver an
    estimate of the full cost of hurricane protection system recovery so
    Congress can develop a comprehensive path forward.
        The path forward must involve comprehensive wetland, navigation and
    flood protection planning. In the fiscal year 2006 Energy and Water
    Appropriations bill, this committee directed the Corps to develop a
    ``full range of flood control, coastal restoration and hurricane
    protection measures exclusive of normal policy considerations'' in
    close coordination with the State of Louisiana. I remain concerned that
    the Corps will not follow Congress' intent in either presenting options
    outside of normal policy considerations or in the development of plans
    with sufficient input for Louisiana's interests. The State of Louisiana
    has developed its plan for flood control, coastal restoration and
    hurricane protection and I urge the Corps to incorporate the State's
    findings into its Cat 5 plan.
        Finally, I look forward to having some of my questions answered and
    I again thank the chair for the opportunity to speak here today.

        Senator Dorgan. General Strock and Secretary Woodley, thank
    you both for appearing on behalf of the Corps. We appreciate
    once again your willingness to be here to present statements
    and answer questions. Why don't you proceed as you wish, Mr.
    Secretary.

                    STATEMENT OF HON. JOHN PAUL WOODLEY, JR.

        Mr. Woodley. Thank you, Mr. Chairman. I will be very brief
    and I want to begin my testimony by paying tribute to my
    colleague who is retiring later this year, the 51st Chief of
    Engineers. Lieutenant General Strock will be concluding a very
    distinguished career in which he served as Chief of Engineers
    at perhaps the most challenging time in that agency's long and
    storied history. So I want to put that directly before the
    committee before I say anything else.
        Senator Dorgan. Mr. Secretary, the committee shares your
    gratitude and the ``thank you'' that we would offer General
    Strock for his service to our country as well.
        Mr. Woodley. We have requested a 3 percent increase over
    our fiscal year 2007 request this year, providing $2.5 billion
    for the operation and maintenance account as the chairman
    noted, which represents a 9 percent increase over our request
    for fiscal year 2007.
        We have prioritized to--first of all, dam safety to
    continue to repair those projects that are in danger and to
    work on--give special priority to those projects that protect
    human health, human safety and property.
        We've also asked for an increase of funding in the
    Regulatory program to $180 million. This funding will be used
    for permit processing, enforcement and compliance, including
    our increased workload that we are anticipating because of
    recent judicial determinations by the Supreme Court.

                               PREPARED STATEMENT

        We will be working with stakeholders as Senator Craig
    indicated, to see what kind of solution we can reach about the
    depletion of the Inland Waterways Trust Fund. That fund is very
    close to depletion because of the enormous investments that we
    are making in the Nation's waterway infrastructure and
    construction and some kind of action, we believe, should be
    taken to address the question of the depletion of that fund.
        So those are the highlights of our submission. I very much
    appreciate the opportunity to appear and address your questions
    today.
        [The statement follows:]

               Prepared Statement of Hon. John Paul Woodley, Jr.

        Mr. Chairman and distinguished members of the subcommittee: thank
    you for the opportunity to testify before the subcommittee, and to
    present the President's budget for the Civil Works program of the Army
    Corps of Engineers for fiscal year 2008.

                                    OVERVIEW

        The fiscal year 2008 budget for Army Civil Works provides funding
    for development and restoration of the Nation's water and related
    resources within the three main Civil Works program areas, namely,
    commercial navigation, flood and coastal storm damage reduction, and
    aquatic ecosystem restoration. The budget also supports hydropower,
    recreation, environmental stewardship, and water supply services at
    existing water resources projects owned or operated by the Corps.
    Finally, the budget provides for protection of the Nation's regulated
    waters and wetlands; cleanup of sites contaminated as a result of the
    Nation's early efforts to develop atomic weapons; and emergency
    preparedness. The budget does not fund work that should be the
    responsibility of non-Federal interests or other Federal agencies, such
    as wastewater treatment and municipal and industrial water treatment
    and distribution.
        Total new discretionary funding in the fiscal year 2008 budget is
    $4.871 billion for fiscal year 2008, the highest amount ever in a Civil
    Works budget. Within this total, we have allocated $2.471 billion to
    activities funded in the operation and maintenance (O&M) account. This
    is the highest funding level for operation and maintenance ever
    proposed in a President's budget or enacted by the Congress. It is 9
    percent above the fiscal year 2007 budget level for the O&M account and
    $206 million above fiscal year 2006 enacted, after accounting for the
    $296 million that the budget has proposed to transfer in fiscal year
    2008 from construction to operation and maintenance.
        The budget also includes a fiscal year 2007 recommendation to re-
    allocate up to $1.3 billion of emergency supplemental appropriations
    enacted in fiscal year 2006. This would enable the Corps to use
    available, unobligated funds for measures that will provide a better
    overall level of protection for the New Orleans metropolitan area in
    the near-term. This proposal is discussed further below.
        A 5-year budget development plan (FYDP) is under development and
    will be provided to the relevant committees of Congress. The FYDP
    includes two scenarios or projections: one based on the President's
    proposed fiscal year 2008 budget; and one above that level based on the
    most recently enacted appropriations (fiscal year 2006) at the time the
    budget was prepared. The projections are formula driven. They do not
    represent budget decisions or budget policy beyond fiscal year 2008,
    but they can provide perspective on the Army Civil Works program and
    budget.
        Enclosure 1 displays the current estimate for the distribution of
    new discretionary funding among eight appropriation accounts, eight
    program areas plus executive direction and management, and five sources
    including the general fund of the Treasury and trust funds. Enclosure 2
    is a crosscut between appropriation accounts and program areas.

                          PERFORMANCE-BASED BUDGETING

        The fiscal year 2008 budget reflects a performance-based approach
    to budgeting. Competing investment opportunities for studies, design,
    construction, and operation and maintenance were evaluated using
    multiple metrics. We used objective, performance criteria to guide the
    allocation of funds among construction projects (see below).
        The budget includes initiatives leading to the development of a
    more systematic, performance-based budget and improved asset
    management. For instance, to improve investment decision making, the
    budget funds the development of economic models for navigation and
    methods for evaluating the benefits of aquatic ecosystem restoration
    efforts. To help identify, evaluate, and establish priorities for the
    maintenance and rehabilitation of existing flood and storm damage
    reduction, commercial navigation, and hydropower assets, the budget
    provides funding to develop asset management systems and risk-based
    condition indices. Finally, the budget presents information for
    operation and maintenance activities by river basin and by mission
    area, setting the stage for improved management of Civil Works assets
    and more systematic budget development in future years.
        The focus on Civil Works program performance has a number of
    foundations. First, the Civil Works Strategic Plan, which was updated
    in 2004, provides goals, objectives, and performance measures that are
    specific to program areas as well as some that are crosscutting.
    Second, each program area has been assessed using the Program
    Assessment Rating Tool (PART). Summaries of all completed civil works
    program assessments can be found on the administration's new website,
    www.ExpectMore.gov. Both the Civil Works Strategic Plan and the PART-
    based program evaluations are works in progress and will continue to be
    updated.

                HIGHLIGHTS--WATER RESOURCES DEVELOPMENT ACCOUNTS

    Studies and Design
        The fiscal year 2008 budget provides $90 million for the
    Investigations account and $1 million for studies in the Mississippi
    River and Tributaries account. The budget funds the 67 most promising
    studies and preconstruction engineering and design (PED) activities.
    Performance was assessed based on the likelihood in the near-term of
    meeting the construction guidelines discussed below. For instance,
    among the projects in PED, the projects with benefit-cost ratios of 3.0
    to 1 or higher received funding.
        Within the $90 million, $13 million is for the Louisiana Coastal
    Area study and science program for coastal wetlands restoration; $22
    million is for other project-specific studies and design; $10 million
    is to continue the national inventory of flood and storm damage
    reduction projects; $17 million is for research and development; and
    $28 million is for other coordination, data collection, and study
    activities. Priorities within research and development include the
    Navigation Economic Technologies research program and the development
    of benefit evaluation methods for aquatic ecosystem restoration.
    Construction
        The budget provides $1.523 billion in the Construction account and
    $108 million for construction projects in the Mississippi River and
    Tributaries account.
        Many more construction projects have been authorized, initiated,
    and continued than can be constructed efficiently at any one time. The
    funding of projects with low economic and environmental returns and of
    projects that are not within Civil Works main mission areas has led to
    the postponement of benefits from the most worthy projects, and has
    significantly reduced overall program performance.
        To remedy this situation and to achieve greater value to the Nation
    from the Civil Works construction program, the budget focuses
    significant funding on the projects that yield the greatest return to
    the Nation, based upon objective performance criteria. The budget again
    proposes performance guidelines to allocate funds among construction
    projects. The most significant change is the inclusion of benefit-cost
    ratio (BCR) as a metric, rather than remaining benefit-remaining cost
    ratio. The BCR compares the total benefits to the total costs of a
    project at its inception, and provides a way to establish priorities
    among projects.
        Under the guidelines, the budget allocates funds among construction
    projects based primarily on these criteria: their BCR; their
    contribution to addressing a significant risk to human safety or to dam
    safety assurance, seepage control, or static instability correction
    concerns; and the extent to which they cost-effectively contribute to
    the restoration of nationally or regionally significant aquatic
    ecosystems that have become degraded as a result of Civil Works
    projects, or to a restoration effort for which the Corps is otherwise
    uniquely well-suited. The construction guidelines are provided in
    Enclosure 3.
        The construction projects funded in the budget include 6 national
    priorities; 11 dam safety assurance, seepage control, and static
    instability correction projects; and 41 other, high-performing
    projects. The budget also funds ongoing continuing contracts, but no
    new contracts, for 11 projects with BCRs between 1.5 to 1 and 3.0 to 1.
    Operation and Maintenance
        The budget proposes $2.471 billion for the Operation and
    Maintenance account and $151 million for maintenance activities in the
    Mississippi River and Tributaries account. Even after adjusting for the
    reassignment of work, discussed below, this amount is the highest
    funding level for operation and maintenance ever proposed in a
    President's budget.
        The budget emphasizes performance of existing projects by focusing
    on the maintenance of key commercial navigation, flood and storm damage
    reduction, hydropower, and other facilities. The proposed funding would
    enable the Army Corps of Engineers to carry out priority maintenance,
    repairs, and rehabilitations, and priority initiatives such as the
    development of asset management systems.
        The operation and maintenance program now includes four types of
    activities that were funded in the Construction program until last
    year. The budget transfers responsibility and funding for these
    activities--compliance with Biological Opinions at operating projects
    pursuant to the Endangered Species Act, rehabilitation of existing
    projects, use of maintenance dredging material, and replacement of sand
    due to the operation and maintenance of Federal navigation projects--
    because they are integrally connected to the operation and maintenance
    of Corps projects. The reassignment to the Operation and Maintenance
    program is needed to improve accountability and oversight, reflect the
    full cost of operation and maintenance, and support an integrated
    funding strategy for existing projects. The budget includes proposed
    appropriations language to cover funding for these activities in the
    Operation and Maintenance account.
        The budget proposes that Congress allocate operation and
    maintenance funding by river basin, rather than on a project-by-project
    basis. The justification materials present a current estimate for each
    basin of the distribution of proposed funding among the flood and
    coastal storm damage reduction, commercial navigation, hydropower,
    stewardship, recreation, and water supply program areas. Should
    operation and maintenance work be funded using this framework, managers
    in the field would be better able to adapt to uncertainties and better
    able to address emergencies as well as other changed conditions over
    the course of the fiscal year, consistent with congressional
    appropriations decisions. The Corps has displayed its current project-
    by-project estimates for the fiscal year 2008 operation and maintenance
    program on its website.

                           HIGHLIGHTS--PROGRAM AREAS

        The Army Civil Works program includes eight program areas, plus the
    oversight/executive direction and management function. The eight
    program areas are commercial navigation, flood and coastal storm damage
    reduction, environment, recreation, hydropower, water supply, emergency
    management, and the regulatory program. Budget proposals for the nine
    areas are discussed below.
    Flood and Coastal Storm Damage Reduction, and Emergency Management
        The fiscal year 2008 budget provides $1.384 billion for flood and
    coastal storm damage reduction, and $45 million for emergency
    management.
        Among the 69 construction projects funded in the fiscal year 2008
    budget, 46 are for flood and coastal storm damage reduction, including
    8 dam safety and seepage control projects and 34 projects that address
    a significant risk to human safety or have high benefit-cost ratios.
        The budget emphasizes natural disaster preparedness and flood and
    coastal storm damage prevention. Specifically, the budget includes $40
    million in the Flood Control and Coastal Emergencies account to fund
    preparedness for flood and coastal emergencies and other disasters.
    This is a 25 percent increase for preparedness activities compared to
    the fiscal year 2007 budget, and is needed to maintain and improve our
    ability to respond to disasters. The budget also includes $20 million
    in multiple accounts to apply lessons learned from Hurricanes Katrina
    and Rita (including the 12 follow-on actions identified by the Chief of
    Engineers and stepped-up cooperation with Federal Emergency Management
    Agency programs for flood plains), $10 million to continue to inventory
    and assess flood and storm damage reduction projects across the Nation,
    and $10 million to continue to assess the safety of the Corps portfolio
    of dams (including improving ordinary, but essential, inspection
    procedures).
        The budget provides funding for all work currently planned to
    remedy the most serious (Action Class I and II) dam safety, seepage,
    and static instability problems at Corps dams. The planning, design,
    and construction of these projects are funded at the maximum amount
    that the Corps estimates that it can use efficiently and effectively.
        The budget continues to support Federal participation in initial
    construction, but not in re-nourishment, at beach nourishment projects
    that provide storm damage reduction or ecosystem restoration outputs.
    Commercial Navigation
        The fiscal year 2008 budget provides $2.009 billion for the
    commercial navigation program area.
        The amount budgeted for inland waterway construction projects
    (replacements and expansions in the Construction Account, and
    rehabilitations in the Operation and Maintenance account) is about $418
    million, the highest amount ever included in a President's budget. Half
    of the funding, or $209 million, would be derived from the Inland
    Waterways Trust Fund. The funding in the Inland Waterways Trust Fund
    will not be sufficient after fiscal year 2008 to support this level of
    investment in our principal inland waterways.
        The administration is developing and will propose legislation to
    require the barges on the inland waterways to pay a user fee. The user
    fee will address the decline in the balance in the Inland Waterways
    Trust Fund, which affects the government's ability to finance a portion
    of the continuing Federal capital investment in these waterways. The
    legislation will be offered this spring for consideration by Congress.
        The budget focuses operation and maintenance funding on those
    waterway segments and commercial harbors that support high volumes of
    commercial traffic, with emphasis on the heavily-used Mississippi,
    Ohio, and Illinois waterways. The budget also funds harbors that
    support significant commercial fishing, subsistence, public
    transportation, harbor of refuge, national security, or safety
    benefits.
        The budget continues the policy of funding beach replenishment,
    including periodic re-nourishment, where the operation and maintenance
    of Federal navigation projects is the reason for the sand loss on
    shorelines.
    Environment
        The fiscal year 2008 budget provides $514 million for the
    environment program area.
        The budget includes $274 million for aquatic ecosystem restoration,
    of which $162 million is for the Corps of Engineers share of the South
    Florida/Everglades restoration effort. Of this amount, $35 million is
    for the Modified Water Deliveries project, a key element of this effort
    that both the National Park Service and the Corps are funding. The
    budget provides $23 million for the Upper Mississippi restoration
    program and $13 million for the Louisiana Coastal Area restoration
    effort and its science program. The costs of compliance with Biological
    Opinions at existing projects are not included in the above figures.
    The budget includes these costs as part of the joint operation and
    maintenance costs of the affected projects and allocates these costs
    among the program areas served by the projects.
        The budget provides $110 million for environmental stewardship.
    Corps of Engineers-administered lands and waters cover 11 million
    acres, an area equal in size to the States of Vermont and New
    Hampshire. Funded activities include shoreline management, protection
    of natural resources, support for endangered species, continuation of
    mitigation activities, and protection of cultural and historic
    resources.
        The budget provides $130 million for the Formerly Utilized Sites
    Remedial Action Program (FUSRAP) to clean up contamination at sites
    resulting largely from the early atomic weapons program. This funding
    will enable continued progress toward completion of remedial actions at
    a number of sites.
    Regulatory Program
        The fiscal year 2008 budget provides $180 million to the Corps
    Regulatory Program to protect wetlands and other waters of the United
    States. This represents a $22 million increase over the fiscal year
    2006 enacted level of $158 million, and a $55 million increase since
    2001. The funding will be used for permit processing, for enforcement
    and compliance actions and for jurisdictional determinations, including
    additional workload necessitated by the Supreme Court's Carabell and
    Rapanos decisions.
        Investing in the Regulatory Program is a win-win proposition. The
    added funds will enable most public and private development to proceed
    with minimal delays, while ensuring that the aquatic environment is
    protected consistent with the Nation's water quality laws.
    Recreation
        The fiscal year 2008 budget provides $267 million for recreation
    operations and related maintenance.
        To help finance recreation modernizations, the budget includes an
    initiative based on a promising model now used by other major Federal
    recreation providers such as the National Park Service and the Forest
    Service. The administration is re-proposing legislation for the Corps
    to generate additional revenue to help upgrade and modernize the
    recreation facilities at the sites where this money is collected.
    Specifically, the legislation includes authority for the Corps to
    charge entrance fees and other types of user fees where appropriate,
    and to cooperate with non-Federal park authorities and districts. The
    Corps would keep collections above an annual baseline amount.
    Hydropower
        Hydropower is a renewable source of energy. The Civil Works program
    is the Nation's largest producer of hydroelectric energy, and provides
    3 percent of the Nation's total energy needs.
        The fiscal year 2008 budget provides $291 million for hydropower.
    This total includes $159 million for hydropower operation and
    maintenance costs, $43 million for the costs of replacements at four
    hydropower projects, and $89 million for the costs allocated to
    hydropower from multipurpose projects and programs. The replacement
    projects will help to reduce the forced outage rate, which is well
    above the industry average.
    Water Supply
        On average, Civil Works projects provide 4 billion gallons of water
    per day to meet the needs of municipal and commercial users across the
    country. The budget includes $4 million for operation and maintenance
    costs allocable to water storage.
    Executive Direction and Management
        The fiscal year 2008 budget provides $177 million for the Expenses
    account.
        Within this amount, $171 million is for the management and
    executive direction expenses of the Army Corps of Engineers, both at
    its Headquarters and Major Subordinate Divisions, as well as support
    organizations such as the Humphreys Engineer Center Support Activity,
    the Institute for Water Resources, and the Finance Center.
        In addition, the budget proposes to consolidate funding for
    activities related to oversight and general administration of the Civil
    Works program within the Expenses account, including funding for the
    Office of the Assistant Secretary of the Army (Civil Works). Of the
    $177 million for the Expenses account, $6 million is for the Office of
    the Assistant Secretary of the Army (Civil Works), including some
    indirect and overhead costs that previously were centrally funded by
    the Army.

                            OTHER BUDGET HIGHLIGHTS

    Protection of Greater New Orleans
        The fiscal year 2008 budget also recommends, as part of a fiscal
    year 2007 supplemental appropriations package, enactment of a statutory
    provision to authorize the Secretary of the Army to reallocate up to
    $1.3 billion of the emergency supplemental appropriations that were
    provided in fiscal year 2006, but that remain unobligated. The
    recommended statutory language would reallocate unobligated funds
    appropriated by Public Law 109-234 (the ``Fourth Emergency Supplemental
    Appropriations Act of 2006'') to fund activities specified in Public
    Law 109-148 (the ``Third Emergency Supplemental Act of 2006''), and
    would reallocate unobligated funds among certain activities specified
    in the third emergency supplemental appropriations act of 2006. Within
    the total amount that would be reallocated, $270 million would be
    reallocated from the Construction account to the Flood Control and
    Coastal Emergencies account.
        The fiscal year 2006 emergency supplemental appropriations were
    initially allocated based on ``rough order of magnitude'' estimates by
    the Corps of the amount of work that would be required to rebuild,
    complete, and raise the levees in New Orleans. Their estimate of the
    cost of the work necessary to accomplish these objectives is expected
    to increase greatly as a result of various engineering forensic
    investigations and assessments, a review of new storm surge data,
    increased material costs, and other factors. The earlier cost and
    schedule estimates have proven to be low, and actionable re-estimates
    will not be available until this summer. Without the reallocation of
    the fiscal year 2006 funds that were allocated in law, important work
    to increase the level of protection in some areas could not be
    completed in concert with similar work in other areas. The proposed re-
    allocation would enable the Corps to best apply available funding to
    those measures that will increase in the near-term the overall level of
    protection for the New Orleans metropolitan area.
    General Provisions
        The budget includes bill language to authorize continuation of
    limits on reprogramming with certain changes; replace the continuing
    contract authority of the Corps with multi-year contracting authority
    patterned after the authority available to other Federal agencies; and
    prohibit committing funds for ongoing contracts beyond the appropriated
    amounts available, including reprogramming.
        The budget also includes bill language to authorize the following:
    continuation of the national levee inventory and assessment;
    continuation of activities in Missouri River Basin to comply with the
    Endangered Species Act; completion of the two Chicago Sanitary and Ship
    Canal invasive species barriers in Illinois, subject to appropriate
    cost-sharing; and completion of the McAlpine Lock and Dam, Kentucky and
    Indiana, project.

                    WATER RESOURCES DEVELOPMENT ACT PROPOSAL

        I am working with others in the administration towards the goal of
    developing a legislative framework that will reflect the
    administration's priorities for a Water Resources Development Act for
    consideration by Congress. This proposal or a subsequent legislative
    proposal will support the budget's recommendations for the Civil Works
    program as addressed in my testimony today.
        In the coming weeks I hope to be able to make a proposal that will
    help accomplish the principles, policies, and practices that have
    proven to be successful in the past, and will seek to create incentives
    for their improvement. Working together, I believe the administration
    and the Congress can make very substantial improvements in the Civil
    Works program, and I look forward to offering a proposal that I trust
    you will find helpful.

                         PRESIDENT'S MANAGEMENT AGENDA

        The Army Civil Works program is pursuing five government-wide
    management initiatives, as are other Federal agencies, plus a sixth
    initiative on real property asset management. ``Scorecards'' for the
    Army Corps of Engineers and other Federal agencies can be found at
    http://www.whitehouse.gov/results/agenda/scorecard.html.
        Under these initiatives, the Corps is improving its efficiency
    through recently completed public-private competitions. In addition,
    the Corps is undertaking two efforts (for Logistics Management and the
    Operation and Maintenance of Locks and Dams) to improve its performance
    through re-engineering of internal business processes, rather than
    through public-private competitions.
        The Corps has also made great progress in working with the Office
    of the Department of Defense Inspector General on the fiscal year 2006
    audit. The Corps is continuing to work towards the goal of obtaining an
    unqualified opinion, on its accounts, and has been a leader within the
    Department of Defense in this area. The Corps is committed to
    addressing any concerns that may arise during the audit.

                                   CONCLUSION

        In developing this budget, the administration made explicit choices
    based on performance. The increase in O&M funding, transfer of
    activities from construction to O&M, emphasis on high-performing
    construction projects, and increase for preparedness for flood and
    hurricane emergencies and other natural disasters, for example, all
    reflect a performance-based approach.
        At $4.871 billion, the fiscal year 2008 Army Civil Works budget is
    the highest Civil Works budget in history. This budget provides the
    resources for the Civil Works program to pursue investments that will
    yield good returns for the Nation in the future. The budget represents
    the wise use of funding to advance worthy, mission-based objectives. I
    am proud to present it.
        Thank you, Mr. Chairman and members of the subcommittee, for this
    opportunity to testify on the President's fiscal year 2008 budget for
    the Civil Works program of the Army Corps of Engineers.

      ENCLOSURE 1.--DEPARTMENT OF THE ARMY CORPS OF ENGINEERS--CIVIL WORKS
                        BUDGET, FISCAL YEAR 2008--SUMMARY
    ------------------------------------------------------------------------
                                                                  Amount
    ------------------------------------------------------------------------
    Requested New Appropriations by Account:
        Investigations.....................................     $90,000,000
        Construction.......................................   1,523,000,000
        Operation and Maintenance..........................   2,471,000,000
        Regulatory Program.................................     180,000,000
        Flood Control, Mississippi River and Tributaries...     260,000,000
        Expenses...........................................     177,000,000
        Flood Control and Coastal Emergencies..............      40,000,000
        Formerly Utilized Sites Remedial Action Program....     130,000,000
                                                            ----------------
          TOTAL............................................   4,871,000,000
                                                            ================
    Requested New Appropriations by Program Area:
        Commercial Navigation..............................   2,009,000,000
            (Inland and Intracoastal Waterways)............  (1,052,000,000)
            (Channels and Harbors).........................    (957,000,000)
        Flood and Coastal Storm Damage Reduction...........   1,384,000,000
            (Flood Damage Reduction).......................  (1,356,000,000)
            (Coastal Storm Damage Reduction)...............     (28,000,000)
        Environment........................................     514,000,000
            (Aquatic Ecosystem Restoration)................    (274,000,000)
            (FUSRAP).......................................    (130,000,000)
            (Stewardship)..................................    (110,000,000)
        Hydropower.........................................     291,000,000
        Recreation.........................................     267,000,000
        Water Supply.......................................       4,000,000
        Emergency Management...............................      45,000,000
            (Flood Control and Coastal Emergencies)........     (40,000,000)
            (National Emergency Preparedness)..............      (5,000,000)
        Regulatory Program.................................     180,000,000
        Executive Direction and Management.................     177,000,000
                                                            ----------------
          TOTAL............................................   4,871,000,000
                                                            ================
    Sources of New Appropriations:
        General Fund.......................................   3,889,000,000
        Harbor Maintenance Trust Fund......................     735,000,000
        Inland Waterways Trust Fund........................     209,000,000
        Special Recreation User Fees.......................      37,000,000
        Disposal Facilities User Fees......................       1,000,000
                                                            ----------------
          TOTAL............................................   4,871,000,000
                                                            ================
    Additional New Resources:
        Rivers and Harbors Contributed Funds...............     445,000,000
        Coastal Wetlands Restoration Trust Fund............      81,000,000
        Permanent Appropriations...........................       9,000,000
                                                            ----------------
          TOTAL............................................     535,000,000
                                                            ----------------
          Total New Program Funding........................   5,406,000,000
    ------------------------------------------------------------------------

                                                      ENCLOSURE 2.--DEPARTMENT OF THE ARMY CORPS OF ENGINEERS--CIVIL WORKS BUDGET, FISCAL YEAR 2008
                                                                       [CROSSCUT BETWEEN APPROPRIATION ACCOUNTS AND PROGRAM AREAS]
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Flood/                Aq. Ec.                            Hydro-     Water      Emerg.     Regul.    Ovrsgt/
                                                               Navigation    Storm    Recreation   Restor.   Stewrdshp.    FUSRAP     Power      Supply     Mgmt.      Prog.       ED&M      TOTAL
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Investigations...........................................          19         41  ..........         30  ..........  .........  .........  .........  .........  .........  .........         90
    Construction.............................................         572        665  ..........        241  ..........  .........         45  .........  .........  .........  .........      1,523
    Operation & Maint........................................       1,383        475         251          1         106  .........        246          4          5  .........  .........      2,471
    MR&T-I...................................................  ..........          1  ..........  .........  ..........  .........  .........  .........  .........  .........  .........          1
    MR&T-C...................................................          10         96  ..........          2  ..........  .........  .........  .........  .........  .........  .........        108
    MR&T-M...................................................          25        106          16  .........           4  .........  .........  .........  .........  .........  .........        151
    FUSRAP...................................................  ..........  .........  ..........  .........  ..........        130  .........  .........  .........  .........  .........        130
    FC&CE....................................................  ..........  .........  ..........  .........  ..........  .........  .........  .........         40  .........  .........         40
    Regulatory...............................................  ..........  .........  ..........  .........  ..........  .........  .........  .........  .........        180  .........        180
    Expenses.................................................  ..........  .........  ..........  .........  ..........  .........  .........  .........  .........  .........        177        177
                                                              --------------------------------------------------------------------------------------------------------------------------------------
          TOTAL..............................................       2,009      1,384         267        274         110        130        291          4         45        180        177      4,871
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

     Enclosure 3.--Department of the Army Corps of Engineers--Civil Works
                            Budget, Fiscal Year 2008

                      CONSTRUCTION PERFORMANCE GUIDELINES

        1. Project rankings.-- All ongoing specifically authorized
    construction projects, including projects funded in the Mississippi
    River and Tributaries account, will be assigned based upon their
    primary purpose to one of the main mission areas of the Corps (flood
    and storm damage reduction; commercial navigation; aquatic ecosystem
    restoration) or to hydropower. Flood and storm damage reduction,
    commercial navigation, and hydropower projects will be ranked by their
    total benefits divided by their total costs (BCR), calculated at a 7
    percent real discount rate. Aquatic ecosystem restoration projects will
    be ranked by the extent to which they cost-effectively contribute to
    the restoration of a nationally or regionally significant aquatic
    ecosystem that has become degraded as a result of a civil works
    project, or to a restoration effort for which the Corps is otherwise
    uniquely well-suited (e.g., because the solution requires complex
    alterations to the hydrology and hydraulics of a river system).
        2. Projects funded on the basis of their economic and environmental
    returns.--Ongoing flood and storm damage reduction, commercial
    navigation, and hydropower construction projects with a BCR of 1.5 or
    higher and ongoing aquatic ecosystem restoration construction projects
    that are cost-effective in contributing to the restoration of a
    nationally or regionally significant aquatic ecosystem that has become
    degraded as a result of a civil works project or to a restoration
    effort for which the Corps is otherwise uniquely well-suited will
    receive at least the amount needed to pay estimated contractor earnings
    required under ongoing contracts and related costs. In allocating funds
    among these projects, priority will be given to those with the highest
    economic and environmental returns.
        3. Projects funded to address significant risk to human safety.--
    Flood and storm damage reduction projects that are funded to address
    significant risk to human safety will receive sufficient funding to
    support an uninterrupted effort during the budget year.
        4. Projects with low economic and environmental returns.--Ongoing
    flood and storm damage reduction, commercial navigation, and hydropower
    construction projects with a BCR below 1.5 will be considered for
    deferral, except for flood and storm damage reduction projects that are
    funded to address significant risk to human safety. Likewise, ongoing
    aquatic ecosystem restoration construction projects that do not cost-
    effectively contribute to the restoration of a nationally or regionally
    significant aquatic ecosystem that has become degraded as a result of a
    civil works project, and do not cost-effectively address a problem for
    which the Corps is otherwise uniquely well-suited, will be considered
    for deferral.
        5. New starts and resumptions.--The budget could include funds to
    start up new construction projects, or to resume work on ongoing
    construction projects on which the Corps has not performed any physical
    work under a construction contract during the past 3 consecutive fiscal
    years, only if the project would be ranked that year in the top 20
    percent of the ongoing construction projects in its mission area. The
    term ``physical work under a construction contract'' does not include
    activities related to project planning, engineering and design,
    relocation, or the acquisition of lands, easements, or rights-of-way.
    For non-structural flood damage reduction projects, construction begins
    in the first fiscal year in which the Corps acquires lands, easements,
    or rights-of-way primarily to relocate structures, or performs physical
    work under a construction contract for non-structural project-related
    measures. For aquatic ecosystem restoration projects, construction
    begins in the first fiscal year in which the Corps acquires lands,
    easements, or rights-of-way primarily to facilitate the restoration of
    degraded aquatic ecosystems including wetlands, riparian areas, and
    adjacent floodplains, or performs physical work under a construction
    contract to modify existing project facilities primarily to restore the
    aquatic ecosystem. For all other projects, construction begins in the
    first fiscal year in which the Corps performs physical work under a
    construction contract.
        6. Other cases.--Projects will receive the amount needed to ensure
    that they comply with treaties and with biological opinions pursuant to
    the Endangered Species Act, and meet authorized mitigation
    requirements. Dam safety assurance, seepage control, and static
    instability correction projects that are funded in the construction
    program will receive the maximum level of funding that the Corps can
    efficiently and effectively spend in each year.

        Senator Dorgan. General Strock.

    STATEMENT OF LIEUTENANT GENERAL CARL STROCK, CHIEF OF
                ENGINEERS
        General Strock. Thank you, Mr. Chairman. With your
    permission, I'll submit my full statement for the record.
        Senator Dorgan. Without objection.
        General Strock. I'm honored to be testifying before you
    today with Mr. Woodley and my Director of Civil Works, Major
    General Don Riley and our Director of Programs, Mr. Gary Loew
    as well as our colleagues from the Bureau of Reclamation.
        Sir, this is a performance-based budget that reflects the
    realities of a national budget that must address recent
    national disasters and the ongoing global war on terror. The
    fiscal year 2008 budget focuses construction funding on 69
    projects that will provide the highest economic and
    environmental returns on the Nation's investment.
        The 69 projects include 6 national priority projects, 11
    dam safety projects and 52 other ongoing projects. These
    projects are critical to the future success of our water
    resources and this funding will be used to improve the quality
    of our citizens' lives and to contribute to national economic
    growth and development. This budget uses objective performance
    measures to establish priorities among projects and proposes
    changes to the Corps' contracting practices to increase control
    over future costs. We believe that focusing our effort on
    funding and completing a smaller, more beneficial set of
    projects will improve overall program performance and will help
    the Nation realize the net benefits, per dollar, from its
    investment much sooner.
        The Corps has learned many lessons in the past year, since
    Hurricane Katrina struck the gulf coast in 2005. The lessons
    learned provided great insight into changes that need to be
    made with respect to parts of our organizational culture, in
    the planning, execution and life cycle management of projects
    and in how we communicate risk to the American public and our
    decision makers.
        In light of this, as an institutional response, I issued my
    12 Actions for Change in August in recognition of the need to
    continue to change our organization to better serve the Nation.
    These 12 actions also commit the Corps to ensuring the American
    public has the information necessary to fully understand and
    make decisions about risk when they live behind or near a Corps
    of Engineers project.
        The fiscal year 2008 budget includes $2.47 billion for
    operation and maintenance and $158 million under the
    Mississippi River and Tributaries Program. I can assure you
    that I will continue to do all that I can to make these
    programs as cost effective and as efficient as possible.
        Domestically, the Corps of Engineers volunteers from across
    the Nation continue to respond to the call to help construct
    and improve a comprehensive hurricane and storm damage
    protection system along our gulf coast. This critical work they
    are doing will reduce the risk of future storms to people and
    communities in the region.
        Over the past year, Corps dams, levees and reservoirs again
    provided billions of dollars in flood damage reduction and
    protected lives, homes and businesses in many parts of the
    Nation following heavy rains.
        Internationally, the U.S. Army Corps of Engineers continues
    to support the mission to help Iraq and Afghanistan build
    foundations for democracy, freedom and prosperity. Many USACE
    civilians, each of whom is a volunteer and soldiers are
    providing engineering expertise, quality construction
    management and program and project management in those nations.
    The often unsung efforts of these patriotic men and women
    contribute daily toward this Nation's goals of restoring the
    economy, security and quality of life for all Iraqis and
    Afghans.
        In closing, sir, the Corps is committed to staying on the
    leading edge of service to the Nation. In support of that,
    we're working with others to continue to transform our Civil
    Works Program. We're committed to change that ensures an open,
    transparent and performance based Civil Works budget.

                               PREPARED STATEMENT

        Ladies and gentlemen of the committee, thank you very much
    for the honor to serve you over the last 3 years. It has been a
    wonderful experience for me. I regret that I will not be
    working with you into the future but I wish you the very best
    of luck in pursuit of a sound water resources policy for the
    Nation. Thank you.
        [The statement follows:]

              Prepared Statement of Lieutenant General Carl Strock

        Mr. Chairman and distinguished members of the subcommittee: I am
    honored to be testifying before your subcommittee today, along with the
    Assistant Secretary of the Army (Civil Works), the Honorable John Paul
    Woodley, Jr., on the President's fiscal year 2008 budget for the United
    States Army Corps of Engineers' Civil Works Program.
        My statement covers the following 3 topics:
      --Summary of Fiscal Year 2008 Program Budget;
      --Construction Program; and
      --Value of the Civil Works Program to the Nation's Economy, and to
            the Nation's Defense.
                   summary of fiscal year 2008 program budget
    Introduction
        The fiscal year 2008 Civil Works budget is a performance-based
    budget, which reflects a focus on the projects and activities that
    provide the highest net economic and environmental returns on the
    Nation's investment or address significant risk to human safety. Direct
    Program funding totals $5.406 billion, consisting of discretionary
    funding of $4.871 billion and mandatory funding of $535 million. The
    Reimbursed Program funding is projected to involve an additional $2
    billion to $3 billion.
    Direct Program
        The budget reflects the administration's commitment to continued
    sound development and management of the Nation's water and related land
    resources. It proposes to give the Corps the flexibility and
    responsibility within each major watershed to use these funds to carry
    out priority maintenance, repairs, and rehabilitations. The budget
    incorporates objective performance-based metrics for the construction
    program, funds the continued operation of commercial navigation and
    other water resource infrastructure, provides an increase in funding
    for the regulatory program to protect the Nation's waters and wetlands,
    and supports restoration of nationally and regionally significant
    aquatic ecosystems, with emphasis on the Florida Everglades and the
    Upper Mississippi River. It also would improve the quality of
    recreation services through stronger partnerships and modernization.
    Additionally, it emphasizes the need to fund emergency preparedness
    activities for the Corps as part of the regular budget process.
    Reimbursed Program
        Through the Interagency and Intergovernmental Services Program we
    help non-DOD Federal agencies, State, local, and tribal governments,
    and other countries with timely, cost-effective implementation of their
    programs, while maintaining and enhancing capabilities for execution of
    our Civil and Military Program missions. These customers rely on our
    extensive capabilities, experience, and successful track record. The
    work is principally technical oversight and management of engineering,
    environmental, and construction contracts performed by private sector
    firms, and is financed by the customers.
        Currently, we provide reimbursable support for about 60 other
    Federal agencies and several State and local governments. Total
    reimbursement for such work in fiscal year 2008 is projected to be $2.0
    billion to $3.0 billion. The exact amount will depend on assignments
    received from the Federal Emergency Management Agency (FEMA) for
    hurricane disaster relief and from the Department of Homeland Security
    for border protection facilities.

                              CONSTRUCTION PROGRAM

        The goal of the construction program is to produce as much value as
    possible for the Nation from available funds. The budget furthers this
    objective by giving priority to the continued construction and
    completion of those water resources projects that will provide the best
    net returns on the Nation's investment for each dollar invested
    (Federal plus non-Federal) in the Corps primary mission areas. The
    budget also gives priority to projects that address a significant risk
    to human safety, notwithstanding their economic performance. Under
    these guidelines, the Corps allocated funding to 69 construction
    projects, including 6 national priority projects; 11 other dam safety
    assurance, seepage control, and static instability correction projects;
    and 52 other ongoing projects.
        The budget uses objective performance measures to establish
    priorities among projects, and through a change in Corps contracting
    practices to increase control over future costs. The measures proposed
    include the benefit-to-cost ratios for projects with economic outputs;
    the extent to which the project cost-effectively contributes to the
    restoration of a nationally or regionally significant aquatic ecosystem
    that has become degraded as a result of a Civil Works project or to an
    aquatic ecosystem restoration effort for which the Corps is otherwise
    uniquely well-suited; and giving priority to dam safety assurance,
    seepage control, static instability correction, and projects that
    address a significant risk to human safety. Resources are allocated
    based on Corps estimates to achieve the highest net economic and
    environmental returns and to address significant risk to human safety.
    This approach significantly improves the realization of benefits to the
    Nation from the Civil Works construction program and will improve
    overall program performance by bringing higher net benefits per dollar
    to the Nation sooner.
    Maintenance Program
        The facilities owned and operated by, or on behalf of, the Civil
    Works Program are aging. As stewards of this infrastructure, we are
    working to ensure that its key features continue to provide an
    appropriate level of service to the Nation. Sustaining such service
    poses a technical challenge in some cases, and proper operation and
    maintenance also is becoming more expensive as this infrastructure
    ages.
        The Operation and Maintenance (O&M) program for the fiscal year
    2008 budget consists of $2.471 billion in the Operation and Maintenance
    account and $158 million under the Mississippi River and Tributaries
    program, with a focus on the maintenance of key commercial navigation,
    flood and storm damage reduction, hydropower, and other facilities.
    Specifically, the operation and maintenance program supports the
    operation, maintenance, repair and security of existing commercial
    navigation, flood and storm damage reduction, and hydropower works
    owned and operated by, or on behalf of, the Corps of Engineers,
    including administrative buildings and laboratories. Funds are also
    included in this program for national priority efforts in the Columbia
    River Basin and Missouri River Basin to support the continued operation
    of Corps of Engineers multi-purpose projects by meeting the
    requirements of the Endangered Species Act. Other work to be
    accomplished includes dredging, repair, aquatic plant control, removal
    of sunken vessels, monitoring of completed costal projects, and
    operation of structures and other facilities, as authorized in the
    various River and Harbor, Flood Control, and Water Resources
    Development Acts.
      value of the civil works program to the nation's economy and defense
        We are privileged to be part of an organization that directly
    supports the President's priorities of winning the global war on
    terror, securing the homeland and contributing to the economy.
    The National Welfare
        The way in which we manage our water resources can improve the
    quality of our citizens' lives. It has affected where and how people
    live and influenced the development of this country. The country today
    seeks economic development as well as the protection of environmental
    values.
        Domestically, USACE personnel from across the Nation continue to
    respond to the call to help re-construct and improve the hurricane and
    storm damage reduction system for southeast Louisiana. The critical
    work they are doing will reduce the risk of future storms to people and
    communities in the region.
        Over the past year, Corps dams, levees and reservoirs again
    provided billions of dollars in flood damage reduction and protected
    lives, homes and businesses in many parts of the Nation following heavy
    rains.
        Mr. Chairman, we will continue to work with you, this subcommittee,
    and other Members of Congress on the ongoing study, and the
    authorization and funding proposed by the administration, for
    modifications to the existing hurricane protection system for New
    Orleans. The budget's recommendation, as part of a fiscal year 2007
    supplemental appropriations package, to re-allocate up to $1.3 billion
    of emergency supplemental appropriations enacted in fiscal year 2006
    will enable the Corps to use available, unobligated funds for measures
    that will provide a better overall level of protection for the New
    Orleans metropolitan area in the near-term.
    Research and Development
        Civil Works Program research and development provides the Nation
    with innovative engineering products, some of which can have
    applications in both civil and military infrastructure spheres. By
    creating products that improve the efficiency and competitiveness of
    the Nation's engineering and construction industry and providing more
    cost-effective ways to operate and maintain infrastructure, Civil Works
    Program research and development contributes to the national economy.
    The National Defense
        Internationally, the U.S. Army Corps of Engineers continues to
    support the mission to help Iraq and Afghanistan build foundations for
    democracy, freedom and prosperity.
        Many USACE civilians--each of whom is a volunteer--and soldiers are
    providing engineering expertise, quality construction management, and
    program and project management in those nations. The often unsung
    efforts of these patriotic men and women contribute daily toward this
    Nation's goals of restoring the economy, security and quality of life
    for all Iraqis and Afghanis.
        In Iraq, the Gulf Region Division has overseen the initiation of
    more than 4,200 reconstruction projects valued in excess of $7.14
    billion. Of those, more than 3,200 projects have been completed.
        These projects provide employment and hope for the Iraqi people.
    They are visible signs of progress.
        In Afghanistan, the Corps is spearheading a comprehensive
    infrastructure program for the Afghan national army, and is also aiding
    in important public infrastructure projects.

                                   CONCLUSION

        The Corps of Engineers is committed to staying at the leading edge
    of service to the Nation. In support of that, I have worked to
    transform our Civil Works Program. We're committed to change that
    ensures an open, transparent, and performance-based Civil Works
    Program.
        Thank you, Mr. Chairman and members of the committee. This
    concludes my statement.

        Senator Dorgan. General Strock, thank you very much. Next
    we will hear from Secretary Limbaugh and Commissioner Johnson.
    Secretary Limbaugh is from the Department of the Interior and
    represents, with Mr. Johnson, the budget for the Bureau of
    Reclamation. You may proceed.

                           DEPARTMENT OF THE INTERIOR

                             Bureau of Reclamation

    STATEMENT OF MARK LIMBAUGH, ASSISTANT SECRETARY FOR
                WATER AND SCIENCE
        Mr. Limbaugh. Mr. Chairman, thank you. Mr. Chairman,
    distinguished members of the committee, it's an honor to be
    here today on behalf of Secretary of the Interior, Dirk
    Kempthorne, to present the 2008 budget request for the Bureau
    of Reclamation and the Central Utah Project Completion Act
    Office.
        With me here today is Commissioner Bob Johnson and Reed
    Murray, the Program Director for the Central Utah Project
    Completion Act Office.
        Interior's mission lies at the confluence of people, land
    and water and Interior employees fulfill a mission that spans
    12 times zones and stretches pole to pole and we operate in
    every single State and the U.S. Territories. So how we do our
    jobs in Interior and at the Bureau of Reclamation affects
    whether 31 million people have drinking water when they turn on
    their tap or irrigation water for farms that produce 60 percent
    of the Nation's produce.
        Our work contributes to the energy security of the Nation
    through the Hydropower produced by Reclamation projects.
        Now three themes occur in our efforts to manage the
    Interior's broad portfolio. First is pursuit of management
    excellence. Second are partnerships and third is the use of
    science that informs our decisions. Applying these themes, the
    Bureau of Reclamation has embarked on a Managing for Excellence
    Initiative to enhance transparency, accountability and
    effectiveness in its future business operations.
        Now in partnership with many of our water contractors,
    power customers and stakeholders, Reclamation manages and
    delivers water while addressing competing needs through
    adaptive management programs, endangered species recovery and
    habitat conservation programs and innovative water management
    solutions in places like the Grand Canyon, the Platte River,
    the CALFED program in California and the incredible work we've
    done in partnership with the seven basin States in the Colorado
    River Basin.
        Reclamation has also teamed up with the U.S. Geological
    Survey to update our water management predictive models by
    incorporating the latest in climatic science and data that
    reflect our constantly changing snow melt and run-off patterns.
        So in formulating the 2008 budget, the Department committed
    to ensure that our programs, including the Bureau of
    Reclamation and the Central Utah Project Completion Act, would
    maintain a high level of service to the American people and
    reach even higher levels of excellence.
        The President's 2008 budget request for the Department of
    the Interior is $10.7 billion of which $958.4 million is for
    the Bureau of Reclamation. The request for the Central Utah
    Project Completion Act is $43 million, to continue with
    planning and construction of that project in cooperation with
    our partner, the Central Utah Water Conservation District.
        Now, the 2008 budget highlights two initiatives in the
    Bureau of Reclamation. To help Reclamation's water contractors
    address the impacts of drought and the many other water supply
    challenges, the President's budget includes $11 million to
    continue our Water 2025 Competitive Grants program. Continuing
    that challenge grant program will allow Reclamation to promote
    innovative, collaborative solutions in areas of the West where
    we are now experiencing or can predict that we will be
    experiencing conflict over water, all the while leveraging a
    small Federal investment with cost-share partners. We will
    again, Mr. Chairman, send legislation to the Congress
    requesting permanent authorization for this program in order to
    keep this valuable cooperative, competitive grant program
    alive.
        Another priority is a new program that Senator Craig
    mentioned, our Loan Guarantee program. Now, we propose $1
    million to kick that program off and we're trying to help
    address the challenges of financing improvements to an aging
    Federal infrastructure. This Loan Guarantee program will allow
    our contractor water users access to capital markets that they
    probably wouldn't have without it in order to assist the Bureau
    of Reclamation in rebuilding and preparing its infrastructure
    for the future.
        Finally, Mr. Chairman, I'd like to highlight two long-term
    issues that we're addressing in the 2008 budget request. First,
    our 2008 budget will help launch the recovery of the San
    Joaquin River in California. Now, this restoration program,
    which has authorizing legislation before the Congress now, is a
    result of an agreement that settles litigation that has been
    spanning 18 years. We applaud the farmers and the fishermen,
    the environmentalists and the public officials who have come
    together and worked out an agreement in order to both improve
    the environment and protect the local economy in California.
        Second, the recently-initiated Platte River Recovery
    program is equally innovative, covering three States, thousands
    of farmers, hundreds of agricultural dependent-communities and
    four endangered and threatened species. In partnership with the
    Federal Government, this recovery program will permit existing
    water and power users in the Platte River Basin to continue
    operating while allowing for future growth, all in compliance
    with the Endangered Species Act.

                               PREPARED STATEMENT

        So Mr. Chairman, in closing, I again thank you for the
    opportunity to appear before this committee. I look forward to
    working with you and the members of the committee on issues
    related to the Bureau of Reclamation's Central Utah Project
    Completion Act and other issues that come before us and
    certainly look forward to answering any questions you may have.
    Thank you.
        [The statement follows:]

                      Prepared Statement of Mark Limbaugh

        Good morning. I am pleased to be here today on behalf of the
    Secretary to discuss the President's fiscal year 2008 budget for the
    Department of the Interior and, in particular, the Bureau of
    Reclamation. I appreciate the opportunity to highlight our priorities
    and key goals.
        Developing a budget for the Department of the Interior is an
    extraordinary exercise. We have an extensive mandate that rivals just
    about any governmental agency in its breadth and diversity--and its
    importance to the everyday lives of our citizens. Our 73,000 employees
    live and work in communities across America and its territories. We
    have 2,400 field offices. We manage 145,000 assets--second only to the
    Department of Defense. Our work stretches from pole to pole from
    wildlife refuges in the Arctic to scientific research at the South
    Pole.
        Managing one in every 5 acres in the United States, we oversee land
    and resources that stretch across 12 time zones from the Caribbean to
    the Pacific Rim. The sun literally never sets on the Department of the
    Interior. We have the third largest contingent of Federal law
    enforcement officers, with 3,400 officers and agents. We oversee over
    800 dams and irrigation projects. Interior-managed lands and water
    generate one-third of the Nation's domestic energy supply. The
    Department serves American Indians, including 561 federally recognized
    Tribes, Alaska Natives, and our Nation's affiliated island communities.
    We undertake research and provide information to understand the Earth
    and assist us in the management of the Nation's water, biological and
    mineral resources, and monitor all manner of natural hazards including
    volcanoes, earthquakes, and landslides. We also work with States to
    restore abandoned mine land sites and protect communities.

                                BUDGET OVERVIEW

        Our overall 2008 request for the Department of the Interior is
    $10.7 billion. Permanent funding that becomes available as a result of
    existing legislation without further action by the Congress will
    provide an additional $5.1 billion, for a total 2008 Interior budget of
    $15.8 billion.
        The budget request for the Bureau of Reclamation and the Central
    Utah Project Completion Act (CUPCA) programs under the purview of this
    subcommittee is $1 billion; the Bureau of Reclamation's proposed budget
    is $958.4 million and the CUPCA proposed budget is $43.0 million.
        With enactment of the fiscal year 2007 Joint Resolution, we now
    have a full year appropriation of $1.0 billion for the Bureau of
    Reclamation and $34.0 million for CUPCA. This does not include
    additional funds that are authorized and will be provided for 50
    percent of the January 2007 pay raise. Based on direction in the Joint
    Resolution we are preparing a detailed operating plan for these two
    agencies for fiscal year 2007. Once our operating plans are approved we
    will submit them to Congress on March 17. At that time we will be able
    to provide comparisons at the program level with the 2008 budget
    request.
        The comparisons in our 2008 budget are with the third 2007
    continuing resolution, which was in effect through February 15.
    Throughout this testimony the comparisons will be on that basis.
        The Department's 2008 budget is carefully crafted within the
    President's commitment to continue to fund the Nation's highest
    priorities while eliminating the deficit in 5 years. The administration
    is on track to achieve this goal.
        At the heart of Department's 2008 budget are four major initiatives
    including:
      --The National Parks Centennial Initiative to enhance National Parks
            as we approach their 100th anniversary in 2016;
      --The Healthy Lands Initiative, which will allow access to public
            lands for a number of uses and provide for energy for the
            Nation while also protecting critical lands and habitat;
      --The Safe Indian Communities Initiative to combat the
            methamphetamine crisis on Indian lands; and
      --The Improving Indian Education Initiative that will enable Indian
            children to grow up in an environment that allows them to
            achieve their dreams.

                    THE NATIONAL PARKS CENTENNIAL INITIATIVE

        The President's 2008 parks budget totals a historic $2.4 billion.
    The park operating budget, at $2.1 billion, provides an increase of
    $290 million over the continuing resolution spending level, the largest
    increase in park operations funding ever proposed. This is $258.3
    million over the 2006 level and $230 million over the President's 2007
    budget for parks.
        Within our operating budget increase, we propose a $100 million
    Centennial Commitment over 10 years, for a total of $1 billion
    dedicated to park operations. Our Centennial Initiative will also
    inspire philanthropic organizations and partners to donate $100 million
    per year over 10 years to the National Park Service. The Centennial
    Challenge Federal Fund will match all private donations up to an amount
    of $100 million. These Federal mandatory matching funds and
    philanthropic contributions, together with the $100 million annual
    Centennial Commitment in discretionary funds for park operations, would
    infuse up to $3 billion into the park system over the next decade.

                            HEALTHY LANDS INITIATIVE

        Another priority for the Secretary is the Healthy Lands Initiative,
    which will ensure continued access to public lands for traditional uses
    and recreation, while maintaining strong environmental protections for
    wildlife and habitat.
        As activities on public land increase, we are seeing growing
    conflicts among recreation users, energy developers, hunters, ranchers,
    and others all competing to protect, access, and use these public
    lands. Several Interior bureaus will join together to identify,
    restore, and mitigate the potential impacts of increased energy
    production in wildlife-energy interface areas and potentially prevent
    the listing of certain species such as sage grouse.
        Focused on six strategic areas, these funds will transform land
    management from the current parcel by parcel approach to landscape-
    scale decision making, drawing upon partnerships and new policy tools
    to provide increased access for energy and other uses, while
    simultaneously preserving important habitat corridors and sites for the
    benefit of species. In 2008, including this increase, over 400,000
    acres will be restored in partnership with Federal leaseholders,
    private landowners, State, local, and tribal governments--to benefit
    wildlife. The Healthy Lands Initiative includes $22.0 million to fund
    partnerships with local communities, conservation groups, and companies
    to rehabilitate and protect working landscapes.

                  THE METHAMPHETAMINE CRISIS IN INDIAN COUNTRY

        I would like to highlight two other 2008 priorities for the
    Department of the Interior, our Safe Indian Countries and Indian
    Education Initiatives. While I recognize that the Senate Indian Affairs
    Committee has jurisdiction over these matters, I also know many of you
    represent States and tribes that are struggling with the impacts
    associated with methamphetamine.
        Methamphetamine is a highly addictive synthetic stimulant that
    creates intense euphoric highs for periods up to 24 hours. It is
    inexpensive and, unfortunately, has rapidly become the drug of choice
    for an increasing number of Americans.
        The social effects of methamphetamine use are tragic. Addicted
    mothers are giving birth to drug-addicted babies. The drug is fueling
    homicides, aggravated assaults, rape, child abuse, and other violent
    crimes. Violent crime in Indian Country is reaching crises levels at
    twice the national average.
        Our budget includes $16 million for a Safe Indian Communities
    initiative that reconfigures and tailors our focus to combat organized
    crime, break up drug trafficking, and interrupt the drug supply.

                           IMPROVING INDIAN EDUCATION

        Improving Indian education is also a priority. One of only two
    school systems operated by the Federal Government, the Bureau of Indian
    Education should oversee schools that are models of performance for the
    No Child Left Behind Act. Yet only 30 percent of the schools in the
    Bureau of Indian Education system are meeting NCLB goals.
        In recent years, we have improved school facilities by replacing 32
    schools and renovating another 39 schools. It is now time to focus on
    the classroom. Our 2008 budget proposes to invest $15.0 million to
    improve the performance of students in Indian schools. Additional
    funding will provide educational program enhancements and tools for
    lower performing schools and educational specialists to guide Indian
    schools in achieving academic success. The request also provides
    additional funding for transportation to reduce the redirection of
    education dollars to pay for buses and fuel.

                     INTERIOR PRIORITIES FOR WATER PROGRAMS

        The Department, through the Bureau of Reclamation, is the largest
    supplier and manager of water in the 17 western States. The 2008 budget
    emphasizes Reclamation's core mission of delivering water and power.
    Reclamation priorities include a focus on ensuring facility integrity
    and site security and resolving major western water challenges.
        In addition to the initiatives I described, Interior's 2008 budget
    requests resources for priority programs in the Bureau of Reclamation
    and CUPCA. The 2008 budget for the Bureau of Reclamation includes four
    major initiatives, including:
      --Improving and diversifying water supplies to prevent crises through
            cooperative, cost sharing efforts funded by Water 2025;
      --Development of a Loan Guarantee Program that will help water
            districts to repair aging infrastructure; and
      --The California Bay-Delta Restoration program which supports the
            efforts of a consortium of Federal and State agencies that are
            working to improve the health of the ecosystem and water
            management and supplies;
      --Improvements in the safety and reliability of Bureau of Reclamation
            facilities through the Safety of Dams Program.

                  WATER 2025, PREVENTING CRISES AND CONFLICTS

        The 2008 budget includes $11.0 million for Water 2025. The
    overarching goal of Water 2025 is to meet the challenge of preventing
    crises and conflicts over water in the West. Water 2025 will achieve
    this by increasing the certainty and flexibility of water supplies,
    diversifying water supplies, and preventing crises through
    cooperatively adding environmental benefits in many watersheds, rivers,
    and streams.
        The 2008 Water 2025 request includes $10.0 million for the 50/50
    challenge grant program, which relies on local initiative and
    innovation to identify and formulate the most sensible improvements for
    local water systems. The request also includes $1.0 million for system
    optimization reviews for Reclamation to work on a 50/50 cost-share
    basis with local entities to assess the potential for water management
    improvements.
        The administration will submit legislation for the authorization
    necessary to accomplish the goals of this program.

                             LOAN GUARANTEE PROGRAM

        The 2008 request includes $1.0 million for the Loan Guarantee
    program which is a critical component of Interior's strategy to address
    aging water infrastructure challenges in the West. The Loan Guarantee
    Program uses a business-like approach that recognizes the inability of
    many water districts to secure funds for expensive rehabilitative
    repairs without the capability to use Federal facilities as collateral
    to obtain bank financing. The program was authorized by the Reclamation
    Water Supply Act in 2006.
        The loan program will allow water districts to obtain long-term
    loans to address major rehabilitation and replacement projects, thereby
    addressing the key issue facing Reclamation's aging infrastructure. The
    $1.0 million included in the 2008 budget will be used for setting up
    the administrative components of the Loan Guarantee Program.

                        CALIFORNIA BAY-DELTA RESTORATION

        The 2008 budget includes $31.8 million for CALFED. The CALFED Bay-
    Delta Authorization Act was signed into law in 2004. A Consortium of
    Federal and State agencies works collaboratively, funding and
    participating in the CALFED program. Their efforts focus on improving
    the health of the ecosystem and water management and supplies. In
    addition, CALFED addresses the issues of water supply reliability,
    aging levees, and threatened water quality.
        The Bay-Delta system is critical to California's economy because
    the two rivers that flow into the Bay-Delta provide potable water for
    two-thirds of California's homes and businesses and irrigate more than
    7 million acres of farmland on which 45 percent of the Nation's fruits
    and vegetables are grown. The Bay-Delta system also provides habitat
    for 750 plant and animal species, some listed as threatened or
    endangered.
        Funding for California Bay-Delta Restoration is requested in the
    following program areas: $7.0 million for the environmental water
    account; $8.5 million for the storage program; $5.0 million for water
    conveyance, $1.5 million for ecosystem restoration; $4.8 million for
    water quality; $3.0 million for science; and $2.0 million for
    Reclamation's oversight function to ensure program balance and
    integration.

                             SAFETY OF DAMS PROGRAM

        A total of $77.0 million is requested for the Safety of Dams
    program, an increase of $8.0 million from 2007 that is primarily for
    corrective actions at Folsom Dam. The Dam Safety program continues to
    be one of Reclamation's highest priorities. The program helps ensure
    the safety and reliability of Reclamation's dams by focusing funding
    and resources on those facilities, which pose the highest risk to the
    downstream public. The program includes: investigation, identification,
    evaluation, decision-making and risk reduction activities. The program
    accomplishes three main tasks: Safety Evaluations of Existing Dams,
    Initiating Safety of Dams Corrective Actions, and conducting the DOI
    Dam Safety program.
        By focusing on the safety and reliability of Reclamation's dams,
    the Dam Safety program plays a vital role in accomplishing the
    Department's end outcome goal of delivering water consistent with
    applicable State and Federal law in an environmentally responsible and
    cost efficient manner. The efforts of the Dam Safety program are
    currently measured by the percent of water infrastructure in fair to
    good condition as measured by the Facility Reliability Rating.

                           MAINTAINING CORE PROGRAMS

        The 2008 request for Reclamation's principal operating account is
    $816.2 million, which is an increase of $60.3 million over the 2007
    continuing resolution. The budget proposal continues to emphasize
    assuring operation and maintenance of Bureau of Reclamation facilities
    in a safe, efficient, economic, and reliable manner; ensuring systems
    and safety measures are in place to protect the public and Reclamation
    facilities; working smarter to address the water needs of a growing
    population in an environmentally responsible and cost-efficient manner;
    and assisting States, tribes, and local entities in solving
    contemporary water resource issues. Funding for each project or program
    within Reclamation's budget request is based upon Departmental and
    bureau priorities, compliance with the Department of the Interior
    strategic plan, and performance accomplishments.
        The 2008 request includes a total of $429.5 million for water and
    energy, land, and fish and wildlife resource management development
    activities. Funding in these activities provides for planning,
    construction, water conservation activities, management of Reclamation
    lands including recreation, and actions to address the impacts of
    Reclamation projects on fish and wildlife.
        Reclamation's 2008 budget assumes enactment of two legislative
    proposals. First, a proposal for the Pick-Sloan Missouri Basin program
    would re-allocate the repayment of capital costs of the program. Power
    customers would be responsible for repayment of all construction
    investments from which they benefit. This change would increase
    reimbursements to the Treasury from power customers by $23.0 million in
    2008. A legislative proposal will be transmitted to the appropriate
    congressional authorizing committees for consideration.
        Second, the 2008 budget also reflects the settlement of an 18-year
    legal dispute, Natural Resources Defense Council v. Rodgers, over the
    Bureau of Reclamation's operation of Friant Dam near Fresno,
    California. Reclamation's budget presumes that implementing legislation
    will be enacted. Bills have already been introduced in the Senate and
    the House, as S. 27 and H.R. 24, which would implement the proposed
    Settlement. Consistent with this legislation, Reclamation's 2008 budget
    would redirect approximately $7.5 million per year of payments from the
    Central Valley Project Friant Division and $9.8 million from the
    Reclamation Fund into the newly-created San Joaquin Restoration Fund,
    which would be available without further appropriations to implement
    the provisions of the settlement.

                              ACHIEVING KEY GOALS

        I would like to call the attention of the subcommittee to our
    mission goals and the efforts we are making to achieve results for the
    Nation in areas that touch on the issues and programs of interest to
    the subcommittee.
        Achieving Energy Security.--In his State of the Union address,
    President Bush underscored that America must enhance energy security.
    The Department of the Interior plays a key role in advancing this goal.
    Nearly one-third of the energy produced in the United States each year
    comes from public lands and waters managed by Interior. To carry out
    the goals of the Energy Policy Act and enhance the availability of
    affordable oil, gas, and alternative energy sources, the 2008 budget
    for Interior programs includes $481.3 million for energy programs, an
    increase of $25.5 million over the 2007 continuing resolution. With
    these resources, the Department will enhance energy security through
    increased production, protect the environment, promote conservation,
    and expand the use of new technologies and renewable energy sources.
        Cooperative Conservation.--Through partnerships, Interior works
    with landowners and others to achieve conservation goals across the
    Nation and to benefit America's national parks, wildlife refuges, and
    other public lands. The 2008 budget includes $324.0 million for the
    Department's cooperative conservation programs, $34.6 million over
    2007. These programs leverage Federal funding, typically providing a
    non-Federal match of 50 percent or more. They provide a foundation for
    cooperative efforts to protect endangered and at-risk species; engage
    local communities, organizations, and citizens in conservation; foster
    innovation; and achieve conservation goals while maintaining working
    landscapes.
        Refuge Operations and Species Protection.--Targeted increases for
    the National Wildlife Refuge System and other FWS species conservation
    programs will focus new resources on conserving and restoring the
    habitat necessary to sustain endangered, threatened, and at-risk
    species and prevent additional species from being listed under the
    Endangered Species Act. A program increase of $4.7 million for refuge
    wildlife and habitat management will allow the refuge system to
    increase the number of recovery plan actions completed in 2008 by 111;
    protect or restore an additional 57,983 acres; and fill three new
    positions to manage the new Northwestern Hawaii Marine National
    Monument. The 2008 budget also includes $2.2 million in programmatic
    increases for the recovery of the gray wolf and the Yellowstone grizzly
    bear.
        Healthy Forests Initiative.--The 2008 budget for the Healthy
    Forests Initiative, a total of $307.3 million, supports the
    Department's efforts to reduce the threat of catastrophic wildfire and
    improve forest and rangeland health. The 2008 budget request funds the
    Hazardous Fuels Reduction program at $202.8 million, an increase of
    $3.0 million for fixed costs over the 2007 level. An additional $1.8
    million in the hazardous fuels program will be shifted from program
    support activities to on-the-ground fuel reduction to help treat high-
    priority acres.
        Wildland Fire Management.--The 2008 budget proposes $801.8 million
    to support fire preparedness, suppression, fuels reduction, and burned
    area rehabilitation. This amount represents a net increase of $32.6
    million above 2007, including an increase of $37.4 million for
    suppression operations. This budget will fully fund the expected costs
    of fire suppression in 2008 at $294.4 million, based on the 10-year
    average. The 2008 Preparedness program is funded at $268.3 million, a
    net reduction of $6.5 million from the 2007 level. A significant
    portion of this reduction will be achieved by eliminating management
    and support positions and lower-priority activities. The 2008 Wildland
    Fire Management program will realign its preparedness base resources to
    better support initial attack capability, which will include the
    addition of over 250 firefighters. These actions will help maintain
    initial attack success.
        Oceans Conservation.--Interior bureaus conduct ocean and coastal
    conservation activities that significantly advance understanding of the
    processes and status of ocean and coastal resources. The 2008
    President's budget includes $929.5 million to support the President's
    Ocean Action Plan. This funding will allow Interior bureaus to continue
    their high-priority work within the U.S. Ocean Action Plan and includes
    an increase of $3.0 million for USGS. In 2008, USGS will begin to
    implement the Oceans Research Priorities Plan and Implementation
    Strategy by conducting observations, research, seafloor mapping, and
    forecast models. USGS will also begin to implement an interagency
    national water quality monitoring network. Also included is $600,000
    for three new positions to support management of the new Northwestern
    Hawaiian Islands Marine National Monument.
        Indian Trust.--The 2008 request for Indian Trust programs is $489.9
    million, $17.6 million above 2007. The Indian Land Consolidation
    program is funded at $10 million, $20.7 million below 2007. The 2008
    budget also includes $4.6 million in reductions to reflect efficiencies
    and improvements in services to beneficiaries, the completion of trust
    reform tasks, the completion of project task efforts, and management
    efficiencies. The budget includes a $3.6 million increase for the
    Office of Historical Accounting to assist with the increased workload
    associated with additional tribal trust lawsuits.
        Payments in Lieu of Taxes.--PILT payments are made to local
    governments in lieu of tax payments on Federal lands within their
    boundaries and to supplement other Federal land receipts shared with
    local governments. The 2008 budget proposes $190 million for these
    payments. The 2008 request is a reduction of $8 million from the 2007
    level. This level of funding is significantly above the historical
    funding level for PILT. From the program's inception in 1977 through
    2001, the program was funded in the range of $96-$134 million.

                                   CONCLUSION

        We believe that the Department's 2008 budget will--in its
    entirety--make a dramatic difference for the American people. We will
    better conserve our public lands. We will improve our national parks.
    We will protect our wildlife and its habitat. We will help craft a
    better future for Indian country and particularly for Indian children.
    We will better manage and protect water and related resources and
    produce the energy that America needs to heat our homes and run our
    businesses. This concludes my overview of the 2008 budget proposal for
    the Department of the Interior and my written statement. I will be
    happy to answer any questions that you may have.

        Senator Dorgan. Secretary Limbaugh, thank you very much.
    Mr. Johnson.

    STATEMENT OF ROBERT W. JOHNSON, COMMISSIONER
        Mr. Johnson. Thank you, Mr. Chairman and members of the
    subcommittee. It's my pleasure to be here. This is my first
    opportunity to testify before this committee and I look forward
    to working with you now and in the future.
        The overall fiscal year 2008 appropriation request for
    Reclamation totals $958.4 million. This request provides
    funding for multiple priorities of the Reclamation program,
    consistent with the President's objective of achieving a
    balanced budget by 2012. I would like to, in my oral
    presentation, highlight three broad categories of activity that
    comprise the major portion of the Reclamation budget.
        First, our budget reflects the need to maintain our
    existing portfolio of projects. Reclamation has over 472 dams,
    348 reservoirs, 58 powerplants and many other water delivery
    facilities. Our infrastructure provides water to 31 million
    people and 10 million acres of irrigated farmland. We generate
    42 billion kilowatt hours of electricity annually, enough to
    provide power for a population of about 8 million.
        Our predecessors gave us a magnificent infrastructure that
    has helped meet our water needs in the American West amazingly
    well. Much of that infrastructure is 50 to 100 years old and
    its proper operation and maintenance is our top priority.
    Approximately $380 million of the Reclamation budget, about 40
    percent, 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, the Clean Water Act,
    the National Environmental Protection Act and other State and
    Federal environmental laws. In many cases, meeting these
    requirements have been manifested in the development of broader
    river management and/or restoration plans. Implementation of
    these plans is becoming a significant element of the
    Reclamation program. Reclamation's involvement is almost always
    necessary to meet its obligations associated with the operation
    and maintenance of its projects.
        Reclamation is currently involved in environmental
    restoration management programs on the Colorado, Middle Rio
    Grande, Platte, Klamath, Columbia, San Joaquin, Trinity and
    Sacramento Rivers. We anticipate that our efforts on these and
    other river systems will continue to be a significant part of
    the Reclamation program well into the future. Our 2008 budget
    request includes about $150 million for these activities.
        Finally, Reclamation continues to be actively involved in
    programs to develop new water supplies and infrastructure. In
    total, these programs represent approximately $175 million of
    our 2008 request. Examples of ongoing activities in our 2008
    budget include the Animas-La Plata Project. This project is
    located in southwestern Colorado and will provide water
    supplies to settle the water right claims of the Ute Mountain
    Ute and Southern Ute Indian Tribes. It will provide municipal
    and industrial water to rural communities in the Four Corners
    areas of Colorado and New Mexico and it will provide water
    service to parts of the Navajo Indian Reservation.
        Second, rural water programs. 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 rural areas where
    existing water supplies are either non-existent or of very poor
    quality.
        Three, water re-use projects. Under title XVI of Public Law
    102-575, Reclamation continues to provide some funding for
    development of projects that re-use existing waste water
    supplies. Located primarily in southern California, these
    projects provide drought-proof supplies that we hope meet
    increasing demands for water caused by fast-growing urban
    populations.
        Fourth, Indian water distribution systems in Arizona. Under
    the authority of the Central Arizona Project, Reclamation is
    funding construction of water delivery systems to serve
    Colorado River water to Indian tribes in central Arizona. These
    systems provide new water supplies to settle Indian water right
    claims and meet economic development needs on the reservations.
        Finally, water conservation programs. Through the Water
    2025 program and our Water Conservation Field Services program,
    Reclamation provides funding for implementation of water
    conservation projects. Using a challenge grant approach, these
    programs are competitive and usually leverage non-Federal
    funding to maximize the effectiveness of the Federal
    investment. These programs have been successfully applied in
    all 17 reclamation States.

                               PREPARED STATEMENT

        In conclusion, our budget represents a proper balance
    between maintaining our infrastructure and meeting our
    environmental compliance obligations with river restoration
    plans and also providing money for the development of new water
    supplies.
        Mr. Chairman, thank you and I'd be happy to answer
    questions.
        [The statement follows:]

                    Prepared Statement of Robert W. Johnson

        Thank you, Mr. Chairman, Mr. Domenici and members of the
    subcommittee, for the opportunity to appear in support of the
    President's fiscal year 2008 budget request for the Bureau of
    Reclamation. With me today is Bob Wolf, Director of Program and Budget.
        Since this is my first opportunity to present the President's
    budget, I would like to make two introductory comments. First, I truly
    appreciate the time and consideration this committee gives to reviewing
    and understanding Reclamation's budget and its support for the program.
    Second, while the development of an annual budget is a long and complex
    task, it is truly rewarding to see our institution work so hard to
    prioritize and define our program in a manner that serves the public
    and those who rely on Reclamation for their water and power.
        Our fiscal year 2008 request has been designed to support
    Reclamation's efforts to deliver water and generate hydropower,
    consistent with applicable State and Federal law, in an environmentally
    responsible and cost-efficient manner.
        The funding proposed is for key projects and programs that are
    important to the Department and in line with administration objectives.
    The budget request also supports Reclamation's participation in efforts
    to meet emerging water supply needs, to address water shortage issues
    in the West, to promote water conservation and improved water
    management, and to take actions to mitigate adverse environmental
    impacts of projects.
        The fiscal year 2008 request for Reclamation totals $958.4 million
    in gross budget authority and is partially offset by discretionary
    receipts in the Central Valley Project Restoration Fund ($51.3
    million).

                          WATER AND RELATED RESOURCES

        The fiscal year 2008 request for Water and Related Resources is
    $816.2 million. More specifically, the request for Water and Related
    Resources includes a total of $429.5 million for water and energy,
    land, and fish and wildlife resource management activities (which
    provides for construction, management of Reclamation lands, and actions
    to address the impacts of Reclamation projects on fish and wildlife),
    and $386.7 million for facility operations, maintenance, and
    rehabilitation activities.
        Providing adequate funding for facility operations, maintenance,
    and rehabilitation continues to be one of Reclamation's highest
    priorities. Reclamation continues to work closely with water users and
    other stakeholders to ensure that available funds are used effectively.
    These funds are used to allow the timely and effective delivery of
    project benefits; ensure the reliability and operational readiness of
    Reclamation's dams, reservoirs, power plants, and distribution systems;
    and identify, plan, and implement dam safety corrective actions and
    site security improvements.
    Highlights of the Fiscal Year 2008 Request for Water and Related
            Resources Include
        I would like to share with the committee several highlights of the
    Reclamation budget:
        Water 2025 ($11 million).--Water 2025 is a high priority for the
    Secretary of the Interior and will focus financial and technical
    resources on areas in the West where conflict over water either
    currently exists or is likely to occur in the coming years.
        The overarching goal of Water 2025 is to meet the challenge of
    preventing crises and conflict over water in the West. Water 2025 will
    contribute to meeting this goal by increasing certainty and flexibility
    in water supplies, diversifying water supplies, and reducing conflict
    through the use of market-based approaches and enhancing environmental
    benefits in many watershed, rivers and streams consistent with State
    and Federal laws.
        With $11 million, Water 2025 will continue to be a multifaceted
    program with projects that embody the overarching goal of preventing
    crises and conflict over water in the West. Leveraging limited Federal
    dollars through the Challenge Grant program will continue to be a major
    component of Water 2025. The Challenge Grant program will focus on
    projects that improve water management through conservation,
    efficiency, and water markets, as well as collaborative solutions to
    meet the needs of the future. Beginning with fiscal year 2007, a system
    optimization review component has been added to ensure existing water
    management systems are operated to maximize water deliveries.
    Modernization of existing systems will occur within the framework of
    existing treaties, interstate compacts, water rights, and contracts.
        In addition to the program and policy priorities reflected in the
    fiscal year 2008 budget request, the Department intends to re-submit
    permanent authorizing legislation this spring to support the Water 2025
    program.
        Loan Guarantee Program ($1 million).--The fiscal year 2008 request
    includes funding for a Loan Guarantee program, which is an important
    component of Interior's strategy to address aging water infrastructure
    challenges in the West. The loan guarantee program, which is a
    business-like approach that recognizes the inability of many water
    districts to fund expensive rehabilitative repairs without the
    capability to use Federal facilities as collateral to obtain bank
    financing, was authorized by Title II of Public Law 109-451, the Rural
    Water Supply Act of 2006.
        Klamath Project in Oregon and California ($25 million).--The fiscal
    year 2008 request will continue and increase funding for Reclamation to
    collaborate with other Federal and State agencies, tribes and the
    public to develop a basin-wide recovery plan that addresses water
    supply, water quality, fish habitat, and fish populations.
        Lower Colorado River Operations Program in California, Arizona and
    Nevada ($15.4 million).--The fiscal year 2008 request will provide
    funds for the work necessary to carry out the Secretary's
    responsibilities as water master of the lower Colorado River. The
    fiscal year 2008 request funds measures under the multi-species
    conservation program to provide long-term Endangered Species Act
    compliance for lower Colorado River operations for both Federal and
    non-Federal purposes.
        Middle Rio Grande in New Mexico ($23.2 million).--The fiscal year
    2008 request will continue funding for endangered species activities
    and Reclamation's participation in the Middle Rio Grande Endangered
    Species Act Collaborative Program as well as repair of priority river
    maintenance sites.
        Animas-La Plata in Colorado and New Mexico ($58 million).--The
    fiscal year 2008 request includes $58 million to continue construction
    of the project's major features, Ridges Basin Dam and Durango Pumping
    Plant and the Ridges Basin Inlet Conduit. The project is critical to
    implementation of the Colorado Ute Settlement Act. Funding will be
    primarily directed to these three features while other key features are
    held for future implementation.
        Savage Rapids in Oregon ($15 million).--The fiscal year 2008
    request will provide funds for continuing construction of the pumping
    facilities. Removal of this irrigation diversion dam and the
    installation of pumping facilities will allow the local farming
    community to continue irrigated agriculture and remove a migration
    barrier for the threatened Southern Oregon and Northern California coho
    salmon.
        Columbia/Snake River Salmon Recovery in Idaho, Oregon, Montana, and
    Washington ($15 million).--The fiscal year 2008 request will address
    the requirements in the biological opinions issues in December 2000 by
    the U.S. Fish and Wildlife Service and in November 2004 by the National
    Oceanic and Atmospheric Administration Fisheries (NOAA Fisheries). The
    2004 biological opinion has been remanded to NOAA Fisheries and a new
    biological opinion is due in July 2007. During the remand, the 2004
    biological opinion remains in place as Reclamation continues to
    implement actions identified in the 2004 updated proposed action. These
    requirements include significantly increased regional coordination
    efforts; actions to modify the daily, weekly, and seasonal operation of
    Reclamation dams; acquisition of water for flow augmentation; tributary
    habitat activities in selected subbasins to offset hydrosystem impacts;
    and significantly increased research, monitoring, and evaluation. The
    request includes funding for the Nez Perce Water Settlement Act.
        Platte River Endangered Species Recovery Program ($9.6 million).--
    The fiscal year 2008 budget request is for Federal participation in the
    Platte River Recovery Implementation Program. The agreement for the
    program was signed by Secretary Kempthorne and the Governors of
    Nebraska, Colorado and Wyoming in late 2006.
        Site Security ($35.5 million).--An appropriation in the amount of
    $35.5 million is requested for site security to ensure the safety and
    security of the public, Reclamation's employees and key facilities.
    This funding includes $11.7 million for physical security upgrades and
    $23.8 million to continue all aspects of Reclamation-wide security
    efforts, including law enforcement, risk and threat analysis,
    implementing security measures, undertaking security-related studies,
    and maintaining guards and patrols on the ground.
        The fiscal year 2008 budget request assumes annual costs associated
    with guard and patrol activities will be treated as project O&M costs
    subject to being reimbursed based on project cost allocations. These
    costs in fiscal year 2008 are estimated at $22.1 million of which $18.9
    million will be reimbursed. Of the funding to be reimbursed, $11.6
    million will be in direct up-front funding from power customers, while
    $7.3 million in appropriated funds will be reimbursed by irrigation
    users, M&I water users, and other customers in the year in which they
    were incurred through Reclamation's O&M allocation process. Reclamation
    will continue to treat facility fortification, studies, and anti-
    terrorism management-related expenditures as non-reimbursable.
        Safety of Dams ($77 million).--Assuring the safety and reliability
    of Reclamation dams is one of the Bureau's highest priorities. The Dam
    Safety Program is critical to effectively manage risks to the
    downstream public, property, project, and natural resources. The fiscal
    year 2008 request provides for risk management activities at 361 dams
    and dikes, which would likely cause loss of life if they were to fail.
    In fiscal year 2008, large-scale, ongoing corrective action work is
    planned at Folsom Dam. Reclamation is working closely with the U.S.
    Army Corps of Engineers to coordinate this work with the flood control
    efforts to minimize Federal costs and duration of work.
        Rural Water ($55 million).--The fiscal year 2008 request continues
    funding for ongoing rural water projects. This includes funding for
    Municipal, Rural, and Industrial (MR&I) systems for the rural water
    components of the Pick Sloan-Missouri Basin Program--Garrison Diversion
    Unit (North Dakota), the Mni Wiconi Project (South Dakota), and the
    Lewis and Clark Project (South Dakota, Iowa, and Minnesota).
        On December 22, 2006, the President signed Public Law 109-451, the
    Rural Water Supply Act of 2006. Title I of the statute requires the
    Secretary to establish a formal rural water supply program for rural
    water and major maintenance projects in the 17 western States. The Act
    requires the establishment of programmatic and eligibility criteria for
    the rural water program along with other reporting requirements and
    criteria for appraisal and feasibility studies. Implementation of the
    Act will allow the Department, the administration and Congress to set
    priorities and establish clear guidelines for project development to
    help meet the water supply needs of rural communities throughout the
    West.
        Science and Technology (S&T) ($13.4 million).--The fiscal year 2008
    request includes funding for the development of new solutions and
    technologies which respond to Reclamation's mission-related needs. We
    feel our S&T work is important and will contribute to the innovative
    management, development, and protection of water and related resources.
    Of the amount requested, about $4.4 million is planned for internal
    desalination Research & Development conducted by Reclamation.
                           policy and administration
        The $58.8 million request in fiscal year 2008 is a slight increase
    and includes funding for labor cost increases due to cost of living
    raises and inflationary costs for non-pay activities. Funding requested
    will be used to: (1) develop, evaluate, and direct implementation of
    Reclamation-wide policy, rules, and regulations, including actions
    under the Government Performance and Results Act, and implement the
    President's Management Agenda; and (2) manage and perform functions
    that are not properly chargeable to specific projects or program
    activities covered by separate funding authority.

                    CENTRAL VALLEY PROJECT RESTORATION FUND

        This fund was established by the Central Valley Project Improvement
    Act, title XXXIV of Public Law 102-575, October 30, 1992. The request
    of $51.6 million is expected to be offset by discretionary receipts
    totaling $51.3 million, which is the maximum amount that can be
    collected from project beneficiaries under provisions of section
    3407(d) of the Act. The discretionary receipts are adjusted on an
    annual basis to maintain payments totaling $30 million (October 1992
    price levels) on a 3-year rolling average basis. The request of $51.6
    million was reduced by $7.5 million (i.e., would have been $59.1
    million) due to a legislative proposal, which redirects $7.5 million
    collected from the Central Valley Project Friant Division water users
    to the new San Joaquin River Restoration Fund for fiscal year 2008.
    These funds will be used for habitat restoration, improvement and
    acquisition, and other fish and wildlife restoration activities in the
    Central Valley Project area of California.

            SAN JOAQUIN RIVER RESTORATION FUND PROPOSED LEGISLATION

        The 2008 budget also reflects the settlement of NRDC v. Rodgers.
    The administration will submit authorizing legislation, the San Joaquin
    River Restoration Settlement Act, which includes a provision to
    establish the San Joaquin River Restoration Fund. Under the settlement,
    the legislation proposes to redirect approximately $17.3 million per
    year of payments from the Central Valley Project, Friant Division water
    users into the Fund which would be available without further
    appropriations to implement the provisions of the settlement.
    Previously, $7.5 million of these funds went into the Central Valley
    Project Restoration Fund.

                 CALIFORNIA BAY-DELTA RESTORATION FUND (CALFED)

        Title I of Public Law 108-361, titled the Calfed Bay-Delta
    Authorization Act, was signed by the President on October 25, 2004. The
    act authorized $389 million in Federal appropriations over the period
    of fiscal year 2005 through fiscal year 2010. For fiscal year 2008,
    $31.8 million is requested to enable Reclamation to advance its
    commitments under the CALFED Record of Decision and with a focus
    towards implementation of priority activities included in the Calfed
    Bay-Delta Authorization Act that will contribute to resolving water
    resource conflicts in the CALFED solution area. Funds will specifically
    be used for the environmental water account, feasibility studies of
    projects to increase surface storage and improve water conveyance in
    the Delta, conduct critical science activities, implementation of
    projects to improve Delta water quality, ecosystem enhancements, and
    program planning and management activities.

                      FISCAL YEAR 2008 PLANNED ACTIVITIES

        Reclamation's fiscal year 2008 priority goals are directly related
    to continually fulfilling our progress in water and power contracts
    while balancing a range of competing water demands. Reclamation will
    continue to deliver water consistent with applicable State and Federal
    law, in an environmentally responsible and cost-efficient manner.
    Reclamation will strive to deliver 28 million acre-feet of water to
    meet contractual obligations while addressing other resource needs (for
    example, fish and wildlife habitat, environmental enhancement,
    recreation, and Native American trust responsibilities). Reclamation
    will work to maintain our dams and associated facilities in fair to
    good condition to ensure the reliable delivery of water. Reclamation
    will strive to meet or beat the industry forced outage average to
    ensure reliable delivery of power. Reclamation will reduce salinity by
    preventing an additional 18,500 tons of salt from entering the water
    ways.
        Moreover, the fiscal year 2008 budget request demonstrates
    Reclamation's commitment in meeting the water and power needs of the
    West in a fiscally responsible manner. This budget continues
    Reclamation's emphasis on delivering and managing those valuable public
    resources. Reclamation is committed to working with its customers,
    States, tribes, and other stakeholders to find ways to balance and
    provide for the mix of water resource needs in 2008 and beyond.

                               MANAGEMENT STUDIES

        Reclamation continues to make significant advancements in its quest
    for management excellence. Reclamation's Managing for Excellence Action
    Plan reflects specific actions to realize the underlying principles of
    the President's Management Agenda. The National Academy of Sciences, at
    Reclamation's request, completed and published its study in 2006 to
    assist Reclamation in determining the appropriate organizational,
    management, and resource configurations to meet its construction and
    related infrastructure management responsibilities associated with
    fulfilling its core mission of delivering water and power for the 21st
    century.
        The Managing for Excellence action plan, developed in response to
    the Academy's report, outlines a process and timeframe for identifying
    and addressing the specific actions that can be taken to increase
    transparency, efficiency, and accountability within Reclamation. As of
    the end of January 2007, Reclamation has completed approximately 50
    percent of the 41 action items identified. Although the philosophy of
    Managing for Excellence will continue into the future, the Managing for
    Excellence Action Plan will conclude after December 2007 and
    implementation will continue as part of Reclamation's normal business.

                                   CONCLUSION

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

        Senator Dorgan. Mr. Johnson, thank you very much. I'm going
    to ask a couple of questions and then turn to my colleagues.
    We've been joined by Senator Jack Reed as well. Senator Reed,
    others made a very brief statement. Would you like to make a
    comment?
        Senator Reed. I'll just put that in the record, Mr.
    Chairman.
        [The statement follows:]

                    Prepared Statement of Senator Jack Reed

        Senators Dorgan and Domenici, it is an honor to serve with you
    again on the Appropriations Committee. I look forward to working with
    you on this subcommittee given the importance of energy and water
    programs to Rhode Island.
        Good afternoon, Secretary Woodley and Lieutenant General Strock, I
    look forward to hearing your testimony. I want to commend the work of
    Colonel Thalken, Bobby Byrne, and the New England District. With over
    400 miles of coastline, the Corps has a number of ongoing navigation
    and ecosystem restoration projects in Rhode Island that are extremely
    important to my State's economy and environment.
        The Corps also provides an important service in the inspection of
    our Nation's dams and levees. I am interested in your efforts to help
    local communities and States ensure that these critical infrastructure
    projects are sound and able to protect the lives and properties for
    which they were designed. I am also interested in the Corps efforts to
    restore aquatic ecosystems given the number of ongoing projects in
    Rhode Island to protect our coastal ponds.

        Senator Dorgan. All right. I'm going to ask a series of
    questions about the Missouri River System and the eighth year
    of the drought now, ninth year of the drought in Montana and
    that system. But I withhold on those questions. I'm just going
    to ask a question to, I would say, Secretary Woodley and
    General Strock, on the issue of the pumps in New Orleans, which
    I expect you would come here and expect to get a question
    about.
        I've read the reports, the Associated Press reports and so
    on and I would like to have both of you comment publicly about
    it. The story that is told in these reports is that a
    substantial amount of money was committed to rush to put in
    pumps to protect New Orleans but the pumps apparently, while
    costing $26.6 million, came from a company that the U.S.
    Justice Department had sued just 4 years ago. Those pumps
    apparently did not work. People inside the Corps of Engineers
    questioned whether the pumps should be purchased, alleged that
    they would not work. In any event, at least the stories about
    this suggest that it was a profound waste of the taxpayers'
    money, an unwise decision in contracting. I want to ask you
    what we should make of these stories and what the Corps' view
    is of what has happened there.
        Mr. Woodley. Senator, the provision of pumping capacity to
    complement the temporary closure structures on the drainage
    canals at Lake Pontchartrain, is perhaps the single aspect of
    the project that has taken more of my personal attention than
    any other. I have been very deeply involved in it and have
    followed it very closely. I can tell you that the challenges of
    that effort should not be minimized. We're not talking about
    the kind of pump that you put in your birdbath. These are very
    serious installations of enormous capacity, capacity almost
    unknown elsewhere in the Nation.
        They were accomplished in time for the beginning of the
    2006 hurricane season on a schedule of unprecedented speed and
    scope and overcoming enormous challenges of the hydraulics and
    the planning and construction by people who were extremely
    dedicated to the work. I am not familiar with the
    technicalities of it. I do not pretend technical expertise. I
    do know that a great deal of technical expertise and scrutiny
    has been given to this and I believe that at the end of the
    day, when the full story is told that it will be a rather
    different story from the impressions and implications that we
    have from the initial report.
        Senator Dorgan. Well, let me ask a specific question then.
    Is it the case that a mechanical engineer from Corps wrote a
    memo to Corps officials saying the equipment being installed
    was defective, warned that the equipment would break down
    should they be tasked to run at a normal use, as it be required
    and that when the pumps were installed, they were defective,
    have broken down sufficient so that you've had to withhold 20
    percent of the funding of the contract?
        General Strock. Sir, I should probably answer that as the
    Corps of Engineers representative here. I am not aware of a
    member of the Corps of Engineers that expressed those concerns
    but his or her concerns, I think, are valid. The fact is, as
    the Secretary has said, this is a very, very complex and large-
    scale operation. I'm not sure that anything like this has ever
    been done before. In addition to focusing on the complexity,
    I'd also like to recognize that this is a tremendously
    important function, too. Our task is to keep the waters of Lake
    Pontchartrain out of the city in the event of another storm
    surge but we must do that in a way that does not interfere with
    the city's ability to pump rainwater that falls inside the
    city. So we know how important this is.
        Sir, the process that would normally be followed for a
    project of this size and complexity would take about 3 years to
    accomplish. It's been about 18 months since the Corps got this
    mission and by the end of April, we will have those pumps
    operating effectively. We know what the problems are and we
    have the solutions in place. The normal protocol is to test
    pumps in the factory. You can do that with pumps below 42
    inches in diameter. With pumps the size of these, there is no
    protocol for factory testing and we have not been able to
    identify a factory in the United States that can test these in
    the factory as the Hydraulic Institute likes to do.
        Our Engineering Research and Development Center worked with
    the Hydraulic Institute and proposed a protocol of field
    testing. That protocol was reviewed and approved by the
    Hydraulic Institute, which is the authoritative body in these
    matters and those tests have been conducted in the field. They
    did determine problems. We experienced significant vibrations
    in the pumps. We know why that occurred. We are making fixes to
    that.
        So sir, this is not unexpected. The process of
    certification and testing of the pumps, which would normally be
    done in a factory had to occur in the field in this case. We
    were faced with the challenge of running things through the
    normal process and having no pumping in place or very little
    pumping in place for the 2006 hurricane season. We chose to
    accept a calculated risk and put something in place that would
    have an effect at the beginning of the hurricane season.
        So sir, I offer no apologies for this, for the efforts of
    the Corps of Engineers. There may be some issues you touched on
    that I'm not familiar with that I will look into. The matter of
    the Department of Justice investigation, we were aware of that
    during the contract award process. Unless a contractor has been
    debarred or specifically proposed for debarment, we cannot
    prohibit a contractor--cannot deny an award to a contractor and
    that process had not occurred with the contractor.
        Senator Dorgan. General, thank you. I will have some other
    questions. Let me just point out on debarment. It's pretty hard
    to get debarred these days. That's a particular concern I have.
        General Strock. Yes sir, but as the law says, unless they
    are debarred, we cannot----
        Senator Dorgan. You cannot consider----
        General Strock. We cannot prevent them from----
        Senator Dorgan. You can't consider other issues? But my
    point is that there are a whole lot of companies, I think, out
    there of which significant questions have been raised in
    contracting that are not debarred and that I would hope we
    would think twice before contracting with again.
        But having said that, we've been joined by the ranking
    member, Senator Domenici. Senator Domenici, we have a series of
    six votes starting in 35 minutes. I'm going to start a series
    of 5-minute rounds. I apologize for that but if you have an
    opening comment, I'd be happy to recognize you for that and
    then I'm going to call on Senator Craig and we'll just use the
    early-bird rule.

                 OPENING STATEMENT OF SENATOR PETE V. DOMENICI

        Senator Domenici. Mr. Chairman, I want to take just a
    couple of minutes to explain where I have been. I happen to
    also be on the Budget Committee. Today, the Budget Committee
    was finishing its work, fellow Senators and that meant under
    their rules, you must be present in the room to vote. You can't
    vote by proxy. So we had a full house of Senators voting for
    the last 2\1/2\, 3 hours and that meant I could not be in two
    places. I knew that you all would be here and get the job done
    and I'm going to return it now to you, Mr. Chairman and then my
    turn will come. If it doesn't, I'll do my homework another way.
    Thank you.
        Senator Dorgan. Thank you, Senator Domenici. I did mention
    the Budget Committee responsibilities you have and I appreciate
    you being here.
        [The statement follows:]

                 Prepared Statement of Senator Pete V. Domenici

        Thank you Mr. Chairman, I would like to take a couple of moments
    and address a couple of priority issues.
        Like all of my colleagues, I continue to eagerly await the final
    decision by the Corps on which priorities they will choose to fund for
    the fiscal year 2007 budget. I sincerely hope that the Corps will not
    focus only on its priorities, but will continue to provide funding to
    the many ongoing projects and studies that were funded in fiscal year
    2006.
        As part of the fiscal year 2008 budget the administration has
    indicated that the Inland Waterway Trust Fund may go broke within a
    couple of years due to the large amount of rebuilding needs. The
    administration has indicated that they will be submitting a legislative
    proposal to replace the current 20-cent per-gallon diesel fuel tax with
    a user fee.
        As the author of this current fee, I have more than a passing
    interest as to how this matter is resolved. It is vital to our economy
    that we sustain a viable, operating inland waterway system. The
    continued effectiveness of the system will be determined if there is a
    reliable source of funding.
        The responsibility for solving this problem falls to EPW and the
    Finance Committee, but the solution will have a big impact on this
    subcommittee in the future.
        Mr. Chairman, I want to address an issue that I believe you and I
    share a similar interest--drought relief.
        As you are well aware many communities and rural areas in the West
    and Midwest are experiencing a severe drought. I believe we need to
    find solutions to address our long term water needs and we need more
    resources committed to this effort.
        Two programs that have not received sufficient attention in this
    budget are Water 2025 and the reclamation and reuse programs managed by
    the Bureau. I think everyone would agree that $11 million requested for
    Water 2025 will not provide the long term solutions we will need.
        Another area that has been seriously underfunded is water
    reclamation and reuse. This activity is a vital component of increasing
    near term water supplies for the West. The Federal dollars are
    leveraged to make these projects a success. Only about $10 million was
    requested for these activities in fiscal year 2008. I am proud of the
    fact that Congress has consistently provided between $25 million to $30
    million for this important work.
        Mr. Chairman, I would like to work with you to bring greater
    attention to this issue and work to raise awareness among our
    colleagues. When compared to the budget priorities of this
    administration, which increasingly includes large amounts of funding
    for environmental infrastructure projects, it is not at all
    unreasonable for this subcommittee to focus more resources on
    addressing water shortages. I am certain it will pay off in the future.
        Mr. Chairman, another priority of this subcommittee has been the
    recovery of the gulf coast following Hurricanes Katrina and Rita. Over
    the last several supplemental requests this subcommittee has provided
    over $6 billion in rebuilding assistance to the gulf coast.
        This region was devastated by these storms, and I am proud to say
    this subcommittee worked hard to address critical infrastructure
    repairs and upgrades that are needed in this region.
        I am interested in hearing from General Strock and Assistant
    Secretary Woodley regarding the rebuilding efforts.
        I am also interested to know if the Corps has been a good steward
    of the Federal resources. I am concerned about recent press reports of
    extraordinary price inflation and poor quality work being performed in
    Louisiana. I hope our witnesses can address these concerns.
        Mr. Chairman, before I close I would like to thank General Strock
    for all his hard work during the hurricane recovery efforts. The
    General is retiring from the Army and this will be his last hearing
    before this subcommittee.
        General, I am sorry you are going, but I greatly appreciate your
    hard work and dedication to this country.
        Thank you.

        Senator Dorgan. Senator Craig.
        Senator Craig. Thank you very much, Mr. Chairman. I have
    several questions. I'll ask a couple of them and submit the
    rest for the record so that we can save time and everybody get
    a round.
        To the Corps, does the 2008 budget request provide
    sufficient funding to complete the Snake River Programmatic
    Sedimentation Management Plan by its 2009 due date and if not,
    how does the Corps intend to provide potential navigation
    maintenance if it is not needed prior to the completion of the
    plan?
        General Strock. Sir, I'll need to take that for the record.
    I don't have the specifics on that study in front of me.
        Senator Craig. Okay. We'll take that for the record then
    and anticipate you responding to it. To the Bureau, Mark, can
    you please describe in more detail the new Loan Guarantee
    program that you've outlined? For instance, what kind of
    strings are attached to these loans and what kind of interest
    rates and loan durations can we look forward to?
        Mr. Limbaugh. Mr. Chairman and Mr. Craig, thank you. Before
    I answer that, I too want to add, I was remiss in not adding my
    goodwill to General Strock. Under his leadership, we have,
    between the Bureau of Reclamation and the Army Corps of
    Engineers, we've probably worked closer and better together
    than ever before. So thank you, General Strock.
        To answer your question, Senator, we are in the process of
    developing the rules and regulations for that program. It's my
    understanding in talking with the Department of Agriculture,
    who we will be working very closely with to try to administer
    this program without increasing the bureaucratic side of
    operating a program such as this. The way it works is we would
    only have to appropriate a percentage of the total loan volume
    out there as it pertains to the default rate or the possible
    estimated default rate.
        So this would allow us to be able to allow our contractors
    to obtain financing for their share of improvements to our
    system, which currently, we're just doing under the Operation
    and Maintenance contracts that we have. It's burdensome on them
    to have to come up with large amounts of money in 1 year or 2
    years from the rate payers. So this would allow a tool in the
    toolbox, if you will, in order to finance their share.
        The interest rates are generally lower than the normal
    commercial rates, from what I'm told. I have not done any
    recent analysis of those rates and what levels they are but
    they are very close to the municipal rates that are currently
    available under the tax free municipal bonds, which are also an
    opportunity for some of these contractors to use.
        But I guess the point is, Mr. Chairman and Senator Craig,
    this program is something that we don't have right now and what
    we're trying to do is take care of a problem that we see out
    there in as fiscally responsible way as possible, not to hit
    our appropriations budget as much as it would have if we did
    direct loans but also to add a tool in the toolbox that our
    contractors can use to keep these facilities viable into the
    next century.
        Senator Craig. Mr. Chairman, thank you. Secretary, thank
    you for those thoughts and as you work through this, keep us
    informed. You participated with me in the Center for the New
    West in looking at creative, out-of-the-box ideas that I think
    added a dynamic, like you say, a valuable tool in the process
    and Commissioner Johnson, you've been there looking at this.
    We've got a lot of work to do across the country and to be able
    to leverage resources in a way that multiples them beyond our
    capability here is, I think, a very valuable approach. So I'll
    watch this very closely to see if we can't assist you in making
    it happen sooner and enhancing it if at all possible.
        Mr. Limbaugh. We will keep you informed.
        Senator Craig. Thank you, Mr. Chairman. Thank you.
        Senator Dorgan. Senator Craig, thank you very much. Senator
    Bennett.
        Senator Bennett. Thank you, Mr. Chairman. I got my question
    asked in my opening statement so I won't ask it again and see
    if you remember it well enough to give me an answer.
        General Strock. Yes, Senator, we certainly do but on
    something on the detail of a program like that, we would have
    to take that for the record and get back to you. I can assure
    you that of course, any re-programming of any kind at this
    time, under the rules established by the committee would have
    to be submitted to both houses for a concurrence of some
    nature. But we will definitely be working on that. We recognize
    that prior reprogrammings have, in many cases, created an
    obligation on the part of the agency to seek repayment at the
    earliest possible time, especially when the funding could be
    usefully utilized within the program, as you indicate that it
    can be now. So we're very concerned about that and we'll
    definitely be getting back to you directly.
        Senator Bennett. Thank you. I like the phrase, the earliest
    possible time. Thank you, Mr. Chairman.
        Senator Dorgan. Thank you very much, Senator Bennett.
    Senator Landrieu.
        Senator Landrieu. Thank you. I want to begin by saying the
    three gentlemen representing the Corps before me have been
    personally supportive of our efforts in New Orleans and in the
    gulf coast to rebuild. I've spent many hours with you all,
    walking levees, looking at flood walls, walking through
    neighborhoods assuring people. So I want to start with a
    personal thank you to you.
        But after being close up for 18 months, I've come to the
    conclusion that you all may be stuck in an agency that is
    dysfunctional and I believe that your wholly inadequate budget
    is what this committee is discussing. I have two or three
    specific questions but for this committee, because I intend to
    stay on this committee for several years to try to fix it, I
    want to say to the chairman, I thank him for taking his time to
    ask the question about the pumps and I'll get to that in a
    minute.
        But the overall budget for this Corps, the way I'm looking
    at it, is a construction budget of all new construction for the
    whole country--for the whole country--of $1.5 billion of new
    construction, $2.4 billion for operation and maintenance, $180
    million for regulatory and then there are other things. Is this
    what is reflected in the documents that you've submitted?
        I want to show you all a chart that I had my office do
    since I couldn't get this information from anywhere. We just
    did it ourselves. This is a frightening chart. This shows the
    fall-off in appropriations of Civil Works projects in this
    country since 1929. We are funding less than one-tenth of the
    GDP of Civil Works projects in 2007 than we did in 1929.
        And in the year 2005, which is not even on this chart, I
    want the chairman and the ranking member to know, the levees in
    New Orleans broke. That is the end of the story. That's the
    only story that needs to be told. That's what happens when a
    government like ours will not fund critical infrastructure
    operation and maintenance and construction. Levees break.
    Cities and communities are ruined.
        The problem I have, Mr. Chairman, with this budget is it's
    the same budget. Nothing has changed. Nothing. Nothing has
    changed. There is no money in this budget for SELA. There is no
    money in this budget for adequate levee construction. I don't
    know how many people have to die. I don't know how many homes
    have to be lost. I don't know how many businesses have to be
    ruined to change the budget.
        Now, there is no sense in my arguing this with you because
    you all are not in charge of the budget. But I'm going to ask
    this chairman publicly to have someone from the administration
    that is in charge of the budget, appear before this committee.
    I would like to ask OMB that controls the budget to appear
    because I'm going to ask them how they justify this budget.
    Maybe pre-Katrina. You never really would know what would
    happen when levees broke so we could sort of pretend we didn't
    have to do anything. But after Katrina?
        This is my question. The chairman asked his question of
    this but the memo was written by a Corps, according to the AP,
    by Maria Garzino, a Corps mechanical engineer overseeing
    quality assurance at a MWI test site in Florida. In her memo,
    she warned that the pumps would break down should they be
    tasked to run under normal use, as would be required in the
    event of a hurricane. The pumps failed less strenuous testing
    than the original contract called for, according to the memo.
    Originally, each of the 34 pumps was supposed to be load
    tested, made to pump water. Of the eight pumps that were load
    tested, one was turned on for a few minutes. The other was run
    at a third of the operating pressure. Three of the other load
    test pumps experienced catastrophic failure and these are the
    pumps that we have installed in the canals that flooded the
    city of New Orleans and hurricane season is 2 months away. So
    you can imagine the calls that I'm getting to my office today,
    trying to explain this and my time is up.
        So I want to say, I have many questions I'm going to
    submit. But I am going to call for a full investigation of how
    these pumps were purchased, how they were installed, why they
    don't work but more importantly, Mr. Chairman, I think we have
    to get to the bottom of a budget that is wholly inadequate, not
    just for south Louisiana but I think it is inadequate for the
    other 49 States that are represented in this Nation and I think
    it is a dangerous budget and I think people's lives are at risk
    because I've seen their lives lost because of the levees
    breaking. I could go on but nothing has changed in this budget
    and I'm going to continue to press to get more funding, more
    fuller funding and more organizational reform at the Corps of
    Engineers. Thank you.
        Senator Dorgan. Senator Landrieu, thank you very much.
    Senator Reed.
        Senator Reed. Thank you very much, Mr. Chairman and
    gentlemen, thank you. Secretary Woodley and General Strock, in
    the wake of Katrina, you've conducted a review of levee systems
    throughout the country. One of them was in Woonsocket, Rhode
    Island and you discovered some deficiencies, which the local
    officials have estimated would cost $2 million to repair and
    also, there are some indications of even more serious
    structural issues.
        My first question is, is this a one-shot sort of inspection
    or do you have a regular program to inspect the structural
    aspects of these levies?
        General Strock. Sir, this was not a one shot effort. We
    have a program entitled, Inspection of Completed Works. When
    the U.S. Army Corps of Engineers works in partnership and
    constructs levees, they are turned over to a local sponsor for
    operation and maintenance. It is their responsibility to
    provide 100 percent of that O&M. We have a periodic inspection
    requirement that ensures that they are performing the
    maintenance and that's important that they do that so we can
    ensure that they are maintaining the Federal specifications
    when they are in the Federal program, as the levee in
    Woonsocket is, then in the event of a compromise of that
    structure under-load, if a storm overwhelms it and it needs
    repair, then we can go in and have the authority to repair
    that.
        If they do not maintain it, then when those structures are
    damaged, we do not have the authority to go in and conduct
    repairs. So this is a periodic inspection. The difference this
    time is we learned very well in New Orleans that we had to re-
    emphasize the rigor of this program and for that reason, we had
    about 120 communities that were required to show us that they
    have a plan to improve the operation and maintenance of those
    levees.
        Senator Reed. Well, it struck me that this was--if there
    was ongoing inspections, they wouldn't have quite this
    liability that they would have been corrected or at least have
    been on notice and I think a lot of the community leaders were
    surprised when the inspection took place and the extent of your
    criticism was known.
        Is this--again, you might have an inspection program on
    paper but is this done on a yearly basis? Is it done rigorously
    or is it now something?
        General Strock. Sir, it's done every 2 years and we saw a
    wide variety. We saw many cases where there were repetitive
    deficiencies noted on the levees and we simply didn't present
    an ultimatum to the community as we have now. We have just
    recognized that we have to get tough, if you will, on the
    operation and maintenance responsibilities. It's all about
    public safety. It is regrettable if we let things slip over the
    years but we have to draw the line now and that's what we're
    going to do.
        Senator Reed. Well, going forward and that's what I think
    our major objective should be is that this is one of 100-plus
    levee systems around the country in small communities. I'm
    wondering within your request of funding, will there be any
    Federal dollars requested to help these communities? And it's
    not just for Rhode Island, I would suspect it's probably every
    one of these facilities. And again, these are small communities
    who are struggling to do all sorts of things and the idea that
    within 1 year, because of your--as you described ultimatum,
    they have to put in millions of dollars of sophisticated
    engineering work without any help. Have you considered that in
    your request?
        General Strock. Sir, we don't currently have the authority
    to provide the assistance. We don't have the appropriation to
    do that and it's a policy call about whether to apply for that
    kind of capability, which we have not made at the Corps of
    Engineers.
        Senator Reed. Well, I would hope that if--it seems to me,
    the only way this is going to get done, frankly--otherwise
    you're going to have communities that just have a stark choice.
    They don't have the resources and the real consequences that
    imperil Federal flood insurance for the surrounding communities
    and that's--that leaves a too unacceptable sort of option. So
    we've got to something at every level and also local State
    level. But I would hope we could get our heads together and
    come up with something.
        General Strock. Yes, sir. And sir, I'll provide you the
    details on Woonsocket about the specifics of the progress at
    that particular level.
        Senator Reed. Colonel Thalken, by the way, your Commander,
    is an excellent district engineer and he's been very
    cooperative with us. He and his civilian colleagues should be
    complimented for the effort in New England. Please pass that on
    to him.
        General Strock. I agree, sir, and thank you.
        Senator Reed. One of the other areas that was illustrated
    in Katrina that made us all sort of sit up and take notice is
    the poor state of flood mapping. You have inundation maps, FEMA
    has flood maps. Your inundation maps will show much larger
    flooding in CAT 2 and 3 storms and many communities are living
    in sort of a never-never land where they look at 20-year-old
    FEMA maps and they think they can build in a particular where
    your inundation map shows already flooding in a serious storm.
        My time is expiring but I would hope that we could work
    together to ensure that we have a consistent mapping program
    that reflects your information and the FEMA information and do
    it in a way that all the communities know where they stand.
        General Strock. FEMA does have the lead on the Map
    Modernization program, sir, and we work very closely with them.
        Senator Reed. I have other questions, Mr. Chairman and I'll
    submit them. Thank you.
        Senator Dorgan. Thank you very much. Senator Domenici.
        Senator Domenici. Well, thank you very much, Mr. Chairman.
    I think it probably is best for us that I came along kind of
    late today because frankly, I've been at this so long that I am
    truly sick and tired of the kind of budgets we are getting from
    the executive branch of Government for the Corps of Engineers
    and the Bureau of Reclamation. I truly believe, Mr. Chairman,
    that we don't have enough time. If we had enough time, we could
    spend the next 6 or 7 months, this committee, just traveling
    this country to find out where--where we are not doing our job.
    It's got to be rampant.
        These little tiny budgets that you're sending up here to
    accomplish what we know is the problem is an absolute joke.
    Some people spent a lot of their time the last 15 years beating
    up on the Corps for not doing what people thought they should.
    I never was on that side. I tried my best to work with the
    Corps but I thought for the most part, they tried very hard. I
    still feel that way.
        I think you can slack off and make mistakes but I tell you,
    that one card that the Senator from Louisiana put up showing
    just one line, linear, what's happening to the projects of the
    Corps of Engineers is absolutely--it just convinces you that
    somebody doesn't care.
        To me, Mr. Chairman, you asked me a moment ago, what about
    OMB? They don't testify. What about OMB? They sit in the back
    room and there is no question they underfund this and they
    know, for most of the time--look at me. I've been chairman up
    here. They got a good sucker like me that I was both Budget
    Committee Chairman and chairman of this subcommittee and I'd go
    fight to get them an extra $3 billion or $4 billion every year.
    They knew it. I think I contributed to making it worse. They
    just come along and fund everything less, figuring somebody,
    some dodo down there in the Senate or the House will come along
    with an extra $3 billion or $4 billion. But that isn't right.
    We took it away from other programs here, the way we budget.
        So I have a whole bunch of questions here I'm going to give
    you. I want them answered, if you don't mind, to the committee.
    They are about my State. They are about drought out there and
    there will be one in there that will be directed to you, Mr.
    Chairman, seeing if you might come out there and go visit these
    drought areas one day, one time.
        But I actually don't think we can put a budget together
    that is meaningful that spends the kind of money that the White
    House has sent up here for the Bureau of Reclamation and the
    Corps of Engineers. I think it's just as well let a few kids
    get down there with crayons and let them draw some things.
    They'll do just as well as we do. Because we don't know what we
    can do with this little tiny bit of money they've given us and
    the messages have been there. Now they are falling apart and
    who is to blame? And then we just had Katrina knock us in the
    head. It's no longer cheap. This is big, big time business.
        So I've got about 10 for you and I hope you answer them. I
    know you're leaving us, General, as I understand it. I met your
    successor. He's not here today but he's going to do fine and we
    look forward to working with him. He will do a good job, trying
    to bear with it and I hope the first time we get him up here
    that we impose on his good judgment the fact that he is also
    responsible to us, not just to the OMB and executive branch. If
    they want to come up here and testify, they better not come up
    here with budgets like this because they are going to be
    insulted because all they do is infuriate us.
        I mean, nice, decent Senators see this kind of junk and
    then we say, what is happening? If we wait another 5 years
    before we get started, we'll never fix this stuff. You all know
    that. You can't do it, that's all. So I'm not even going to ask
    you a question. I'm just going to tell you, whatever your
    problems are, we can fix those. But we can't fix the problems
    of these--of all of this work that is under-funded and falling
    apart and conduct oversight hearings on whether we bought
    things from the right supplier or not, when the whole thing is
    falling down.
        You know, I was also the one that came along and put that
    tax on barges. You remember. I don't know if any of you were
    around. I was the Lone Ranger then but I did win. It was a
    terrific, exciting day on the floor when we took a vote and
    every big Senator that was from the South wanted to continue
    the way we were and I'll be darned if I didn't win and they had
    to pay a little bit of money for the Inland Waterways. But then
    you know, it doesn't get spent anyway but we should shock them
    a little more and make the program a real good one, in my
    opinion. But anyway, we'll see.
        Mr. Chairman, we've got a lot of work to do and I thank you
    for your dedication. But we can't get it done unless we hit
    them hard because it's not going to work out. It's just going
    to be us up here working and they're not going to be working.
        Senator Dorgan. Senator Domenici, thank you very much.
        Senator Domenici. Thank you.
        Senator Dorgan. Senator Allard.

                               PREPARED STATEMENT

        Senator Allard. Mr. Chairman, thank you. I do have a
    statement I'd like to have you put in the record, if you would,
    please.
        Senator Dorgan. Without objection.
        [The statement follows:]

                   Prepared Statement of Senator Wayne Allard

        Mr. Chairman, I would like to thank you for holding this hearing. I
    would also like to extend a special welcome to Commissioner Johnson, as
    I believe that this is the first time he has appeared before our
    subcommittee. I am currently moving back and forth between this hearing
    and mark-up in the Budget Committee, so I appreciate the chance to be
    here.
        Those of us in the West are well aware of the important work that
    the Army Corps and the Bureau of Reclamation has done over the years.
    The projects developed by both of these entities are vital in supplying
    water to many people in rural areas of my home State of Colorado. The
    value of these projects has become even more evident during the
    prolonged drought that Colorado--and the entire West--continues to
    experience.
        Mr. Woodley, I am grateful for the work that the Army Corps has
    done and continues to do in Colorado, especially with the Fountain
    Creek and Chatfield Reallocation Studies. I must however express my
    disappointment with the fact that, although both of these studies could
    be completed with another year of funding, neither project was included
    in the President's proposed budget again this year. I will have
    questions about these projects later in this hearing.
        I would also like to bring up a concern that is emerging with
    Bureau projects throughout the West, which I will also follow-up on
    with some questions. Mr. Commissioner, as I am sure you are aware, many
    federally-owned Bureau of Reclamation projects are at or past their
    life expectancy and are in severe need of rehabilitation. While the
    cost of rehabilitation is generally one-half to one-third of the cost
    of replacing a project, this is more than many communities can afford.
    The Bureau has maintained that rehabilitation is the same as operations
    and maintenance, which in many cases was turned over to local operating
    agencies long ago.
        It seems to me, however, that these two things are not the same. No
    matter how many oil changes or tune-ups you perform on a car, it will
    eventually no longer be serviceable. The same can be said of these
    projects. Local entities have worked diligently over the years to care
    for, and make repairs to, these projects. But eventually they reach the
    end of their operational life, and more extensive help is needed.
    Especially in light of ever increasing Federal water standards and ever
    diminishing water supplies. I believe that the Federal Government
    should play a role in assisting local communities in the rehabilitation
    of federally-built, federally-owned projects.
        Again, thank you for holding this hearing, Mr. Chairman. I look
    forward to working with you, the Ranking Republican Member Mr. Domenici
    and our colleagues to ensure that these two important agencies are able
    to continue moving forward with the important services that they
    provide to our communities.

        Senator Allard. Well, I have some of the same concerns, I
    guess, that Senator Domenici raised. In the State of Colorado,
    for example, we have a Fountain Creek Water Study that we
    started in 2001 and then in the President's budget, he doesn't
    continue the study. Isn't that a waste of taxpayer dollars to
    put out some money at the first part and then you don't put any
    more and you haven't even completed the study? I don't
    understand the thinking when you get these projects. It seems
    to me that when you get a study started, you complete it and
    find out what the results are and if you decide at that point
    you didn't want to move on, you've got the basis of the study
    and that's understandable. But why stop in the middle of the
    study and run the risk of wasting taxpayer dollars on the first
    half of the study because you didn't complete the last half.
        So my question is, is how do you determine your priorities
    and some of your funding and in particular, on issues like
    that? That really is a perplexing problem for me. I don't
    understand how you set your priorities when you let things like
    that happen. Secretary Woodley?
        Mr. Woodley. Senator, I can tell you that I believe that
    would be a study funded in our General Investigations account
    and that account is the single account, I would say, which is
    under the greatest pressure in all of our budget. That is the
    most difficult thing to budget something in, in my budget
    process. I'm an advocate for a strong investigations and
    studies program because I believe that it pays enormous
    dividends for the Nation. There is a view within the
    administration that the studies have an element to them that is
    counterproductive because they tend to--they lead to new
    proposals for new projects as opposed to working on our backlog
    of existing projects.
        Senator Allard. Yes, but Secretary, why would you start a
    study and then not complete it? Not provide money to complete
    it? I mean, you really haven't answered my question. I can
    understand your frustrations. There are a lot of requests but
    it seems to me, it's even more imperative that you focus your
    resources on what you have, complete those and then take the
    next step and we're all better off if we do that.
        Mr. Woodley. I think your point is very well taken,
    Senator.
        General Strock. Senator, if I could, from the Corps' side
    on this?
        Senator Allard. Yes. I didn't hear your response, Secretary
    Woodley.
        Mr. Woodley. I said it was very well taken.
        Senator Allard. Oh.
        Mr. Woodley. I said that I believe that the Senator's point
    is very well taken, Mr. Chairman.
        Senator Dorgan. So his proposition that withdrawing funding
    in the middle of a study is not the right thing to do?
        Senator Allard. Yes, that's--can we change the budget
    proposal?
        Mr. Woodley. That's what I said, Senator. Except to the
    extent that of course, that the President's budget is totally
    without flaw.
        Senator Allard. Lieutenant General.
        General Strock. Yes, sir. I certainly agree with what
    Secretary Woodley has said here. Where the Corps is concerned,
    though, we do have some flexibility in this current fiscal year
    work plan and studies like this, which are underway, are being
    considered in the development of that work plan. We do not want
    to stop a study if we don't have to. Unfortunately, that work
    plan has not been approved and I can't share with you where
    Fountain Creek is going to fall out in that. But I can assure
    you we understand the importance of this study and in putting
    together our work plan, we took that into consideration.
        Senator Allard. You know, we have flooding problems on that
    creek. We have discharge problems in that creek. We have a lot
    of things that are happening in regard to that creek and I have
    a hard time understanding, if we're really interested in water
    quality and being able to manage our river and waterways, why
    more attention isn't paid to that particular project and it
    affects more than just the Fountain Creek. You've got the
    downstream aspect of it, which the Arkansas River and a lot of
    interest there that are very keen, all the way down to the
    gulf, as to what is happening on that little creek because it
    drains out of such a large metropolitan area, which is Colorado
    Springs.
        General Strock. And that is absolutely consistent with our
    new approach, doing things on a more watershed and basin wide
    basis to understand the cumulative benefits and impacts that
    works within the watersheds. So absolutely, Fountain Creek is a
    great example of that.
        Senator Allard. Well, you know, I guess we're a little
    unique in the State of Colorado. We're head waters some six,
    seven major drainage systems. We have four--we're broken down
    into four districts and so I guess our interests get kind of
    divided out. The other thing that I want you to take a look at
    is the Chatfield Reallocation Study. It's one of those projects
    that is just an emerging problem. We've got some farmers who
    are going to be without water because of some water management
    issues in the State of Colorado and it seems like we have
    plenty of storage capacity, more than what we need for flood
    control, considering all the other resources we have on there
    but if we could just have a study again, I think it would help
    us on that. So I hope you can take a look at it. I've got a
    number of other questions that I'd like to raise with you but
    the fact that I'm running out of time and we're getting ready
    to have a vote here, we'll send those to you and if you could
    give us a response, I'd appreciate it.
        General Strock. Yes, sir.
        Senator Allard. Thank you.
        Senator Dorgan. Senator Allard, thank you.
        Senator Landrieu. Mr. Chairman, could I say one more thing
    before I leave and I really appreciate again, you using your
    time for the questions but I want the record to reflect, I'm
    also very concerned about the recommendation to move $1.3
    billion--$1.3 million--billion; thank you, Roger--$1.3 billion
    from one set of levee projects, flood control, to another. I'm
    going to oppose that. I understand that in the past, it's been
    done but I'm not going by the past anymore.
        If there was enough money in the pot, I could understand
    moving it around, based on what you're ready to fund. But when
    the pot is only one-fourth or less filled, moving money around,
    once it has been allocated, only makes it that much harder for
    those of us that have to fight to get it for you. So I am
    opposed to it. The chairman knows that and I hope it is not
    reflected in the budget that we submit to the full committee.
        Mr. Woodley. Senator, in response to that, the important
    thing is that the money be made available to the effort that
    must go forward. We are now in a state where we need additional
    money. If you can find a better source for that----
        Senator Landrieu. Well, then go get--let me suggest where
    you can get it from. You can go to 1600 Pennsylvania Avenue and
    you can ask the President for an additional $1.3 billion. You
    will not get it from this Senator or this committee. Thank you.
        Mr. Woodley. In that event, Senator, there will be delays
    in the process and the program.
        Senator Dorgan. Well, we have a vote that is starting but I
    have about--well, I have time so I'm going to ask you all some
    questions as well and let me say this. Senator Domenici and I
    think Senator Allard and Senator Landrieu all expressed
    concerns I have.
        You're all up here representing the President's budget. I
    understand that. On the other hand, I cannot believe that you
    are satisfied to be here representing, for example, in the
    Construction account, a very substantial decrease for the
    Corps. A 38 percent decrease given what Senator Landrieu showed
    you on that chart. I mean, I can't believe you're here thinking
    that makes a lot of sense.
        So you, I guess, are tied to saying to me you support the
    President's budget. We can't get the Director of OMB up here
    but everyone in this room, I would think, understands that,
    given what we have to do, cutting the construction budget of
    the Corps of Engineers by 38 percent makes no sense at all.
        My understanding is that in the Corps budget you proposed
    67 projects for construction. Now we have about 300 projects
    that we fund. That means about 230 projects you're proposing
    that we not fund. Are you saying to us you don't support those
    projects? You don't want--I guess what you're saying to us is
    that you don't want those projects funded. Is that what you're
    saying to the country? And if so, why? Why would you say that?
        Mr. Woodley. We're saying that within the constraints of
    the amounts that we've been allocated, that the projects we're
    recommending are the highest priorities but generally, we agree
    completely that this budget does not fund all of the good
    things that the Corps of Engineers could accomplish in fiscal
    year 2008.
        Senator Dorgan. So some of the projects that you are not
    funding do have merit you say?
        Mr. Woodley. Yes, Mr. Chairman, they certainly do.
        General Strock. Sir, if I could just chime in on that. In
    my humble opinion, all of those projects do. We have the most
    rigorous process in government to make recommendations to the
    administration and Congress on what could be done with our
    investments. We have a $1.3 billion backlog in O&M right now
    that should be done but we also have a--if you'd look just at
    those budgeted projects, we have about a $9 billion backlog in
    construction and with the full suite of projects, it's about a
    $50 billion backlog.
        So clearly, there is a need there and there is
    justification. Having said that, sir, I do understand the
    context in which we're working and I know that the funds are
    not unlimited, either to the Congress or the President. So we
    just make our level effort to have a process in which we can
    prioritize using performance based metrics where the money
    should be sent, where these investments should be made to
    produce the highest returns. It is tough but we think we have
    done about as well as we can, given those constraints on the
    availability of funds.
        Senator Dorgan. Yes, but because you're confronted with a
    Hobson's choice doesn't justify making the wrong choice,
    consistently the wrong choice and it seems to me, although I
    understand your point, that your point is that you're saying to
    me there are 230 other projects that have merit but we won't go
    ahead and complete them. We won't work on them this year at
    all. I mean, is that Byzantine, as my colleagues, Senator
    Allard suggests? We have 240, roughly 230 ongoing projects that
    are underway and you say, ``Sorry.'' Tell everybody in the
    country that is looking at these projects, expecting these
    projects, that they are not the priority that you thought they
    were. We're not going to do it.
        General Strock. Sir, the challenge we have on that is that
    for years, we--as we encountered this situation, we spread the
    available budget thinner and thinner and thinner and it got to
    the point that no project was receiving sufficient funds to
    complete anything. So we decided, with the administration, to
    try to concentrate the available funding into projects that
    could be completed and begin to return on those investments.
    And we've attempted to do that, sir, to pick out those high
    performing projects that will do that for us. And it is
    regrettable. They are clearly--all of our projects that I
    recommend to you will have a 1 to 1 return on investment as a
    minimum or higher.
        Senator Dorgan. Or higher?
        General Strock. Higher, yes sir. Today, in order to reach
    the funding cutoffs, they had to have at least a 1.5 benefit-
    to-cost ratio for us, where economics are concerned.
        Senator Dorgan. You all can't, I guess, express publicly
    the frustration I express. I understand what has happened to
    our fiscal policy. We were told, and I did not support it,
    ``Katy, bar the door. Let's give very big tax cuts.'' That
    reduces our revenue stream and then we have people come, and by
    the way, the same people who sat at these tables telling us
    that we're going to have future expected budget surpluses--
    people representing the President, who knows whether they felt
    that was the right thing or not, to the table representing the
    President and say, ``We're out of money'' so therefore these
    projects, that have merit and invest in the infrastructure of
    this country, we can't possibly do them. Why? Well, we gave the
    store in tax cuts and it didn't quite work out. We had a
    recession. We had a terrorist attack and two wars. So we pump
    up $500 billion, $450 billion, none of which we pay for. I
    mean, it's unbelievable to me. So I know you're here speaking
    for others and I know that if I ask you a question and ask you
    to be completely candid about your personal feelings, you will
    not do that because you're here representing the President's
    budget.
        I'm telling you, I agree with a couple of my colleagues
    here. This makes no sense and I've just taken over the
    chairmanship of this committee. I don't have the foggiest idea
    how we put this together but I'll guarantee this--when we make
    choices about this, we're not going to take a look at 240
    projects and say, yes, those projects are underway. Yes, they
    have merit. But this country really thinks that it doesn't
    matter and we'll just stop them. That is not what this
    committee is going to do.
        Now let me just say this. I've seen the Corps of Engineers
    walking the dikes in Grand Forks. I saw the dikes fail. I
    watched the Corps of Engineers people working 24 hours a day in
    a heroic struggle to fight a flood after an entire American
    city, the largest since the Civil War, was evacuated into big
    hangers on an Air Force base. I watched all that. I have
    enormous admiration for the Corps of Engineers and the men and
    women who work there. By the same token, I am the most
    frustrated person in the world about the Corps of Engineers for
    other reasons and General, you know that. I've said that
    before.
        I've watched the Bureau of Reclamation people, over
    Thanksgiving weekend, work 24 hours a day to try to get water
    back into the Fort Yates Standing Rock Indian community because
    the water was gone. The intake silted in because of the
    Missouri River problems. I watched these people from the Bureau
    of Reclamation work right through, around the clock. I have
    great admiration for their dedication and what they've done.
        And yet, I have to tell you, I also am very, very
    frustrated by the Bureau of Reclamation, which brings me to
    this question of the Missouri River. And it's probably a proxy
    for a lot of other frustrations and concerns around this
    country but let me describe it and then I'm going to ask you a
    couple of questions.
        The Missouri River System division built some dams on that
    river. We didn't go ask somebody if you could build a dam in
    North Dakota and flood 500,000 acres, the size of Rhode Island,
    permanently. We didn't go say, ``Let's give away 500,000 acres
    of our State. We'll take a flood that comes and stays so they
    can play softball in the spring in St. Louis.'' We didn't do
    that. The Federal Government came to us and said, you know
    what? You're a sparsely populated State. You've got the
    Missouri River. Can you put a dam and create a big old flood
    there that stays there forever, the size of Rhode Island and if
    you do that, we'll give you something. So that's the cost. We
    got the cost. We got the flood that comes and stays and we'll
    give you Reclamation, we'll give you a whole irrigation, a
    whole series of things, rural water and so we got this flood
    that comes and stays. Then we didn't get the benefits, as you
    know. We got a miniscule portion of the benefits and
    incidentally, this budget that is being proposed will continue
    to diminish the opportunities for us to get the full benefits.
        But having said all that, now we have a reservoir, a big
    reservoir up there that goes up and down like a cork. Now we're
    in the eighth year of a drought, ninth year for Montana. We
    should have 55 million acre feet of water in that Missouri
    River System. There is about 34 million acre feet. Already
    there should have been sirens going off and bells and whistles
    and people saying, ``Wait a second. We've got a huge drought, a
    big problem.'' That has not been the case. There have been a
    few minor adjustments here and there but we still release
    gushing water to support a minimum of an industry down south at
    the expense of a major industry up north.
        Having said all that, we're in a situation now, I mentioned
    the Standing Rock Indian Reservation, where we're out of water
    over the Thanksgiving Day holiday. The city of Parshall is up
    there currently trying to figure out, if they are going to have
    water. Walhalla will be out of water in August.
        So I asked the question of the Corps and the Bureau: How
    are you going to help us deal with this? I know you can't
    control how much water is in the snow pack and how much is
    going to come into the system. But the fact is, if it's going
    to be 20 or 30 percent less again this year, let's deal with
    these things. Let's not tell the communities, ``we're sorry,
    you're on your own.''
        Now I noticed that neither of your budgets have any money
    in it, at least that I can see, for drought issues, to be able
    to give your agencies the opportunity to deal with the drought
    issues on the Missouri River, as an example. To Mr. Johnson and
    Secretary Limbaugh, is there any money in your budget request
    for drought issues on the Missouri?
        Mr. Johnson. A small amount for administration. I think it
    is a little less than $500,000.
        Senator Dorgan. Five hundred thousand dollars?
        Mr. Johnson. Yes, around that ballpark.
        Senator Dorgan. For administration?
        Mr. Johnson. Well, yes, for----
        Senator Dorgan. That's not drought. There may be a drought
    in administration from here to there but I'm talking about
    drought relief money. There's nothing really requested.
        Mr. Johnson. Well, the drought--we do--we have two parts to
    our Drought Act. One is emergency response and the other one is
    contingency planning.
        Senator Dorgan. Let me ask about the emergency----
        Mr. Johnson. Doing drought planning. So the money would be
    for helping do drought plans.
        Senator Dorgan. You do have an emergency account for
    drought but there is no money in it and no money requested?
        Mr. Johnson. That's correct, yes.
        Senator Dorgan. All right. And why would that be the case
    if we're in the eighth year of a drought in our region, in the
    Missouri River System? Why has there not been a request?
        Mr. Johnson. Well, I think particularly on the Missouri
    River Basin, the Dakota Resources Act provides us the ability
    to deal with the tribes there and the problems that we're
    having on the Missouri River. So we have another source of
    funding there to try to deal with that. One of the problems we
    have--
        Senator Dorgan. But you are limited to that because you
    don't have other drought money?
        Mr. Johnson. Right. We don't have other money but we do
    have those funds to help and we have plans in place to address
    the problems on the reservations if they occur.
        Senator Dorgan. All right. General Strock or Secretary
    Woodley, have you requested money for drought issues on the
    Missouri River?
        General Strock. Very much like the Bureau, sir, minimal
    amounts in the funding but we do have the authorities when the
    emergencies exist, to move money to that account, much like we
    do in flood control and coastal emergencies. We have those
    authorities, we have used those in the Upper Missouri and we
    are watching very closely Walhalla and Parshall. We know there
    is a danger there. The current projections for snow pack tell
    us we probably won't have a problem this year but if we do, we
    have the authorities to go in and help, as we have in the past.
        Senator Dorgan. Wouldn't it have made more sense though,
    for both of your agencies to suggest we put a little money in
    the accounts? And I'm going to help you, no matter what your
    response is, I'm going to try to help you this year do that.
        General Strock. Yes, sir.
        Senator Dorgan. But again, I'm perplexed why we would not
    get a budget request that reflects reality.
        General Strock. That is the approach we take in our flood
    control. We have some money in the account, ready to use if we
    need it. But I assure you, sir, if there is an emergency, we
    will be there to do what needs to be done.
        Senator Dorgan. Yes but General, I'm telling you, I have
    meetings out there with all these folks. I just had a meeting
    1\1/2\ weeks ago, 60 to 80 people come from all the communities
    up and down and the Bureau and the Corps is there, wonderful
    people. But you know what they say to me? They say, well, we
    don't have money in these accounts. That's what they say. And
    then I come to a budget hearing and realize you're not asking
    for money in the accounts. That's why there is no money in the
    accounts.
        General Strock. Sir, we'll look into that. The implication
    is, therefore we cannot help and I'll make sure that they
    understand what our authorities are and what we can do to help.
    But thank you, sir.
        Mr. Woodley. Senator, we would address that with the $40
    million that we have requested for the flood control and
    coastal emergencies account on the water intake issue. So there
    is not--it is not specific to North Dakota but it is a flood
    control and coastal emergencies account request of $40 million
    to have on hand if the emergency develops, which we all are
    obviously concerned that it will.
        Senator Dorgan. But with due respect, my understanding is
    that account is not considered overfunded. If anything, it is
    considered dramatically underfunded, even at $40 million. And
    we're not exactly a coastal state, as you know.
        Mr. Woodley. But that is the funding that would be
    available. It is underfunded today because it was not funded in
    fiscal year 2006 and I believe that the request in fiscal year
    2006 was not supported by the committee and therefore, it is
    not available for funding under the continuing resolution.
        Senator Dorgan. Let me--I guess the vote has started and I
    will have to depart in a bit. But let me again express to you
    that none of this is to diminish your service. You come here in
    good faith, representing a budget from the administration but
    you understand, I hope, that this has not been one side of the
    political aisle ragging away at this budget. Almost all of
    those you have heard from say, this isn't a real request. This
    must have been knifed badly by the Office of Management and
    Budget. I know you can't answer the question but I still want
    to ask the question. I assume that you asked for considerably
    more money than this budget request comes to us with. I mean, I
    assume that the budget that you sent up the road in this budget
    process in the administration requests significantly more,
    would that be correct, Secretary Woodley?
        Mr. Woodley. Let me answer that by saying, Senator, that
    this program offers substantial opportunities for worthwhile
    investments in water resources that are not reflected in the
    budget and that is, I think, not a controversial statement.
    That is something that anyone could demonstrate with a very
    minimal knowledge and study of the program.
        General Strock. And sir, where the Corps is concerned, we
    have expressed a capability to do more if more funding were
    available and expressed what we would do with that money.
        Senator Dorgan. I want to make a final point. We, in the
    upper reaches of the Missouri, and I'm going to be parochial
    about the Missouri River system, feel aggrieved, as you know,
    by the management of this system. The river system has had a
    change in management planning and I did not think that change
    was particularly constructive because it still flushes far too
    much water downstream for a very miniscule industry. The barge
    industry has now shrunk to just a minnow of an industry and
    yet, instead of during drought retaining water in the upstream
    reservoir which you would normally do, well you'd easily
    conclude that during a drought, you try to conserve to the
    extent you can. Instead of doing that, we're still pursing an
    antiquated management plan that is almost unbelievable.
        You may say that's the fault of Congress. We've got some
    work to do and I tell you what, I'm determined to make a change
    there. But I also think that the Corps of Engineers should have
    long ago decided that you shouldn't have to get down to 31,000
    million acre feet before you take the kind of measures you
    ought to take to retain water in the upper reservoirs. We're at
    34,000 million acre feet now. That should long ago have
    triggered the response that I would have expected from the
    Corps, General Strock.
        General Strock. Sir, if I might point out, what triggered
    the revision of the Master Manual was the drought of the 1980's
    and at that time, the trigger for navigation preclude was 20
    million acre feet. So this revised Master Manual raises that by
    10 million acre feet and I think we've tried to accommodate the
    best we can. And sir, it is not about navigation versus
    recreation. We're also under a mandate to abide by a biological
    opinion of the Fish and Wildlife Service that found our
    operations to be jeopardizing several threatened and endangered
    species. We have hydropower to consider, sir. All the mission
    areas of the Corps are involved in the Missouri River and it is
    one of the largest challenges I've ever dealt with and I've
    personally dealt with its challenges, you know, sir. We tried
    to do the best we could to strike the right balance between all
    the competing problems. The basic challenge for us is that we
    are in a drought and we're in the business of distributing
    shortages so no one is happy right now.
        Senator Dorgan. The fact is, the President went to Missouri
    during a campaign and said, I'm with you. With respect to the
    Missouri River system, the reason we've not made the changes
    that we should make is because there was a heavy dose of
    politics involved in it. Now you run the Corps. I know you're
    not involved in politics. I'm not alleging that but the fact
    is, the way that Missouri River system has been managed has
    been much to the detriment of the upstream States. I believe
    that the change that was made, was made because of substantial
    pressure over a long period of time and it took 12\1/2\ years,
    even then, 12\1/2\ years to revise the Master Manual and even
    that revision didn't get what I thought was a fair result for
    the upstream States.
        General Strock. Yes, sir.
        Senator Dorgan. General Strock, I didn't mean to make your
    last day here an unpleasant one.
        General Strock. Sir, it was not at all unpleasant.
        Senator Dorgan. But I want to be honest about our feeling
    about things. I hope that I conveyed to you, you've got men and
    women in the Bureau and the Corps that we admire. I want to
    work with your agencies. I want this committee to provide the
    kind of funding that is necessary to address these serious
    issues.

                         ADDITIONAL PREPARED STATEMENT

        The subcommittee has received a statement from Reed R.
    Murray, Program Director, Central Utah Project Completion Act
    Office, Department of the Interior which will be included for
    the record.
        [The statement follows:]

     Prepared Statement of Reed R. Murray, Program Director, Central Utah
           Project Completion Act Office, Department of the Interior

        My name is Reed Murray. I serve as the Program Director of the
    Central Utah Project Completion Act Office under the Assistant
    Secretary--Water and Science in the Department of the Interior. I am
    pleased to provide the following information about the President's
    fiscal year 2008 budget for implementation of the Central Utah Project
    Completion Act.
        The Central Utah Project Completion Act, titles II-VI of Public Law
    102-575, provides for completion of the Central Utah Project (CUP) by
    the Central Utah Water Conservancy District. The act also authorizes
    funding for fish, wildlife, and recreation mitigation and conservation;
    establishes an account in the Treasury for deposit of these funds and
    other contributions; establishes the Utah Reclamation Mitigation and
    Conservation Commission to coordinate mitigation and conservation
    activities; and provides for the Ute Indian Rights Settlement.
        The act provides that the Secretary may not delegate his
    responsibilities under the act to the Bureau of Reclamation. As a
    result, the Department has established an office in Provo, Utah, with a
    program director to provide oversight, review and liaison with the
    District, the Mitigation Commission, and the Ute Indian Tribe, and to
    assist in administering the responsibilities of the Secretary under the
    act.
        The 2008 request for the Central Utah Project Completion Account
    provides $43 million for use by the District, the Mitigation
    Commission, and the Department to implement titles II-IV of the act,
    which is $8.9 million more than 2007. This funding level, if maintained
    in the out years, will allow the project to be completed by the
    scheduled date of 2021.
        The request for the District includes $39.6 million to fund the
    designs, specifications, land acquisition, and construction of the Utah
    Lake System ($23.6 million); to continue construction on the Uinta
    Basin Replacement Project ($9.5 million); to implement water
    conservation measures ($5 million); and to implement groundwater
    conjunctive use projects ($1.5 million).
        The request includes $976,000 for the Mitigation Commission to
    implement the fish, wildlife, and recreation mitigation and
    conservation projects authorized in title III ($715,000) and to
    complete mitigation measures committed to in pre-1992 Bureau of
    Reclamation planning documents ($261,000).
        Finally, the request includes $2.4 million for the Program Office
    for operation and maintenance costs associated with instream flows and
    fish hatchery facilities ($789,000) and for program administration
    ($1.6 million).
        In conclusion, we appreciate the opportunity to testify before the
    committee and would be happy to respond to any questions.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Dorgan. Additional questions will be submitted for
    the record.
        [The following questions were not asked at the hearing, but
    were submitted to the Departments for response subsequent to
    the hearing:]

                 Questions Submitted to John Paul Woodley, Jr.
                 Questions Submitted by Senator Byron L. Dorgan

                     THREE AFFILIATED TRIBES LAND TRANSFER

        Question. Secretary Woodley, can you update us on the transfer of
    lands at Lake Sakakawea to the Three Affiliated Tribes?
        Answer. The Corps of Engineers continues to research and develop
    responses to comments that were received on the draft Effects Report,
    released in June 2006. All responses will be integrated into the final
    Effects Report.
        Question. What are the remaining steps?
        Answer. The Corps is following a three step process. Phase I is
    called Determination of Authority and will determine if the Corps has
    been given the authority to declare lands no longer needed for
    construction, maintenance, and operation as lands to be held in trust
    for the benefit of the Three Affiliated Tribes. Phase II is called
    Development and will be where criteria, restrictions, land
    determination, and agreements will be discussed and determined. Phase
    III, called Implementation, will be where the decisions made in Phase
    II will be implemented.
        Question. Is there any time schedule for completing the transfer?
        Answer. If and when a decision is made to transfer the proposed
    24,000 acres it will take approximately 12 to 18 months to complete
    real estate transfer packages.

                          ESA COMPLIANCE ISSUES IN O&M

        Question. For fiscal year 2008, your budget has again proposed that
    environmental compliance activities on the Columbia/Snake and Missouri
    River systems be funded as a part for the individual projects that make
    up the system in O&M rather than in the construction account which is
    the tradition.
        Secretary Woodley, What is the rational for this change? How does
    this make your budget more transparent? Wouldn't you agree that
    including these items in the O&M projects and then aggregating the O&M
    projects into a region, actually makes the budget more opaque?
        Answer. We have made this change to improve accountability and
    oversight in their appropriate business line categories, reflect the
    full cost of operating and maintaining the existing projects, and
    support an integrated investment strategy for work at operating
    projects. These are activities, in most part, that are conducted to
    comply with the Endangered Species Act at operating projects. In
    addition, their costs are allocated among project purposes rather than
    to Aquatic Ecosystem Restoration. This explains much of the shift in
    costs among business programs. The full list and specific reasons are
    as follows:
        Endangered Species Act Biological Opinion compliance at operating
    projects.--These projects are Columbia River Fish Mitigation, Chief
    Joseph Dam modifications, Howard Hanson Dam modifications, Willamette
    River Temperature Control, and Missouri River Fish and Wildlife
    Recovery.
        Renourishment to restore sand lost to shorelines from Federal
    navigation operation and maintenance.--This includes the specifically
    authorized Assateague, Maryland, Lower Cape May Meadows, New Jersey,
    and about eight projects for storm damage reduction. This also includes
    the section 111 (Mitigation of Shore Damages) CAP program. The funds
    for this work would be derived from the Harbor Maintenance Trust Fund.
        Disposal of material from maintenance dredging.--This includes the
    program for Dredged Material Disposal Facilities at operating projects,
    plus the Indiana Harbor disposal facility project. Funds for dredged
    material disposal facilities will be derived from the Harbor
    Maintenance Trust Fund.
        Rehabilitation Projects.--These are projects that maintain and
    restore levels of service, but for which the extent of the work is not
    large enough to constitute a capital replacement. For fiscal year 2008,
    the ongoing work at Locks and Dams 11, 19, and 24 migrates to the O&M
    account. Previously unfunded rehabilitation projects at Locks and Dam
    27 and Markland Locks and Dam will be initiated in O&M.
        Beneficial use of material from maintenance dredging.--For fiscal
    year 2008, this includes Poplar Island, Maryland. In the future,
    Houston-Galveston and Hamilton Wetlands island projects will migrate;
    section 204 (Beneficial Uses of Dredged Material) and section 145
    (Placement of Dredged Material on Shores) CAP Programs.
        While the placement of funds for these activities have shifted from
    Construction to O&M the accountability for their performance continues
    to be monitored on a specific item by item basis through the Project
    Management review process at their respective Districts. The ESA
    compliance activities in particular are done to meet very specific
    milestones and targets for habitat and species improvements as required
    in BiOp and the law and therefore these specific items must be followed
    closely or risk failing their checkpoints, regardless in what account
    they are funded.
        Question. What assurance do we have that ESA compliance activity
    funds provided on these O&M projects won't be siphoned off to fund
    other maintenance needs at the individual projects?
        Answer. The amount proposed in the President's budget is adequate
    to do both ESA and O&M activities. The O&M program has strict rules and
    regulations regarding the movement of funds. In addition, any funding
    reductions would lead to a reprioritization of the ESA and O&M regional
    needs.

                          MAJOR REHABILITATIONS IN O&M

        Question. Your budget has proposed moving major rehabilitation
    projects from CG to O&M. As I understand the major rehab projects
    generally consist of work on aging locks, or power plants where the
    result may be a project that is operationally improved from its pre-
    rehab state. Major rehabs do not include constructing additional lock
    chambers or other major work or simple maintenance.
        History has obviously been ignored in this decision. Note that many
    years ago, major rehabilitations were funded in O&M. Work, at that
    time, included no operational improvements, just rehabbing the
    structure as it existed. It was funded with 100 percent O&M funding.
        However, due to O&M funding shortages, major rehabs were becoming
    backlogged. In an effort to resolve this situation, Congress and the
    administration agreed that major rehabs could be undertaken to not only
    modernize facilities such as locks, but to provide operational
    improvements as well.
        To help fund navigation rehabs, the administration and Congress
    agreed that these major rehabs would be funded in the Construction
    Account, and that half the costs would come from the Inland Waterways
    Trust Fund. The caveat in this agreement was that these would be
    considered new investment decisions for the country, and would
    therefore be considered new construction starts, having to compete with
    other new starts in the budget. This in not an unreasonable position,
    considering the rehabbed project would be operationally better than
    what was originally constructed.
        Now we have come full circle, there is a backlog of major rehabs.
    Your budget proposal recommends moving these projects back to O&M.
        Secretary Woodley, what is the basis for this recommendation? Why
    is O&M a better choice than CG?
        Answer. The administration is proposing that rehabilitations be
    funded out of the Operation & Maintenance, General appropriation when
    the rehabilitations are limited to work that will repair and restore
    the capability of a project and will not change the authorized project
    purpose or operational capability. Since this work is more closely
    aligned with the existing project authorizations, and the magnitude of
    the work is less than that of a replacement, the work was moved to the
    O&M appropriation. Rehabilitations that will result in replacements of
    locks or improved operational capability will continue to be funded out
    of the Construction appropriation due to the larger magnitude of the
    work and change in project outputs.
        Another issue that accompanies this for navigation major rehabs is
    funding. The administration also proposes that the Corps be allowed to
    use funds from the Inland Waterways Trust Fund (IWTF) in the O&M
    account. Currently, the IWTF can only be used in the Construction
    Account. The IWTF was established to pay half the cost of construction
    projects in the Construction Account. Access to the IWTF is needed in
    O&M for rehab projects to continue to cost share these projects.
        Question. Secretary Woodley, the budget proposal indicates that the
    administration is concerned that the IWTF may go bankrupt within a few
    years. How does this proposal improve the situation?
        Answer. Section 1405 of the Water Resources Development Act of 1986
    makes amounts in the Inland Waterways Trust Fund available for
    construction and rehabilitation expenditures for navigation projects on
    the inland and coastal waterways of the United States. The Corps is not
    proposing to use the IWTF to fund routine operations and maintenance
    activities. Changing rehabilitations from one appropriation to another
    (Construction or Operations & Maintenance) would not impact the balance
    within the IWTF. The amount withdrawn from the IWTF would be the same
    regardless of what appropriation is used since rehabilitations are
    eligible for cost sharing from the IWTF whether they are funded from
    the Construction or the O&M appropriations so the proposal is neutral
    in that regard.
        Question. Secretary Woodley, the administration has committed to
    proposing legislation to replace the IWTF diesel tax with a user fee
    later this year. How will this fee be assessed as well as collected?
    Will there be tollbooths on the inland waterways? Are you going to
    propose the IWTF to be taken off budget?
        Answer. The administration is finalizing the details of its
    proposal for a new lock user fee and expects to submit its proposal to
    the Congress in 2008. The Department of the Treasury will be
    responsible for promulgating regulations for the assessment and
    collection of the user fee.

                             REGIONAL O&M BUDGETING

        Question. Secretary Woodley, could you explain this concept of
    Regional O&M budgeting to me? It appears to me that you assigned region
    numbers to projects and then added the projects together to establish
    the region amount.
        Secretary Woodley, how does aggregating projects in that manner
    improve O&M budgeting?
        Answer. Aggregating Operation & Maintenance, General appropriation
    (O&M) funding by regions or systems adheres to the principles of
    managing by watersheds or basins. It will allow O&M needs to be
    assessed within the regional goals and the resource within a particular
    region to then be directed to the most critical needs, including those
    that arise outside the normal budgeting and appropriation cycle. It
    could also allow more flexibility to address critical needs.
        Question. Secretary Woodley, wouldn't you agree that regional
    budgeting tends to make you lose sight of the unique individual project
    issues that a project by project budget makes you examine?
        Answer. I would respectfully disagree. Although the O&M
    requirements are developed and then presented on a regional basis, the
    basic O&M requirements, start at the individual project level as viewed
    within the control of the required goals and objectives. Thus each
    project's unique characteristics are the foundation of the budget
    development and so considered within the larger parameters of the
    region or system.
        Question. Secretary Woodley, why not propose a single river basin
    as a demonstration and then develop the fiscal year 2009 budget from
    its inception for this basin as a system?
        Answer. We are considering that in the development of the fiscal
    year 2009 budget. We are thinking about organizing the O&M program by
    ``systems'' that better matches our watershed management principles,
    operational objectives and performance goals with the budget. We are
    also considering developing an infrastructure management plan for each
    system as well that will establish a 5 year plan for that system into
    the future.
        Question. Secretary Woodley wouldn't funding O&M by regions as
    proposed, limit your flexibility rather than enhance it? As it
    currently stands you have reprogramming authority for each line item at
    50 percent of the appropriated amount or $2 million, whichever is less.
    Under the proposed reprogramming guidance that changes to a flat $3
    million for everything but studies. That appears to limit you to $3
    million per region were we to appropriate by region. What are your
    thoughts on this?
        Answer. Budgeting by regions as the administration prepares, would
    allow more flexibility to address needs. Within a region or system, the
    overall funding can be better allocated to individual projects based on
    current needs, once O&M funds are appropriated. A better match of
    current critical needs to current funding within the region or system
    can be made during allocations. It would reduce reprogramming actions.

               CONTINUING CONTRACTS, CARRYOVER AND REPROGRAMMING

        Question. Secretary Woodley, the administration has proposed
    revisions to current Corps construction contracting authorities. Will
    you explain the contracting language that your budget proposes?
        Answer. In section 103 of the General Provisions of the Budget
    Appendix, the administration proposes amending section 2306c of title
    10, U.S.C. by replacing continuing contracts with multiyear contract
    authority. The proposal also requires authorization for contracts over
    $100 million and notification for contracts with contingent liability
    over $20 million. The advantages to this approach are that the Congress
    through its oversight, and the agency, through its more intensive
    management of such large contracts, would have greater control over
    expenditures. The multiyear contract authority expands an existing
    multiyear funding authority codified in title 10, United States Code
    and available within the Department of Defense. It also applies to the
    National Aeronautics and Space Administration and the Coast Guard.
        The proposed legislation would repeal the Corps existing continuing
    contract authority, effective October 1, 2008. It also would amend an
    existing title 10 authority for multi-year services contracting to
    include multi-year civil works contracting. Under this amended
    provision, the head of an agency may enter into contracts for
    ``services associated with the Civil Works program'' and obligate only
    the amount needed each year plus the amount of expected termination
    costs. The Corps would need specific statutory authority to use the
    multi-year contract authority for any contract over $100 million.
    Furthermore, the Corps would need to notify the specified committees at
    least 30 days prior to awarding any contract with a contingent
    liability (i.e., expected termination cost) exceeding $20 million.
        The Secretary of the Army must also ensure that the Corps limits
    the duration of each multi-year contract to the term needed to achieve
    a substantial reduction of costs on the margin. By law, multiyear
    contracts under this authority are limited to 5 years, but, the
    Secretary of the Army may approve a contract period of greater than 5
    years if he determines that a period of longer than 5 years is
    necessary to achieve the substantial cost reduction and if he notifies
    specified congressional committees at least 30 days prior to contract
    award.
        Question. Secretary Woodley, How much funding did the Corps
    carryover from fiscal year 2006 due to the limitations imposed by
    Congress in the fiscal year 2006 E&W Bill? I am not addressing
    emergency funds, only those provided in regular appropriations bills.
        Answer. The Corps carried over a total of $2,445 million, not
    including Emergency Supplemental funds, from fiscal year 2006 in the
    four accounts most sensitive to the limitations, i.e. Investigations,
    Construction, Operation and Maintenance and Flood Control, Mississippi
    River and Tributaries. Of this amount $1,006 million was obligated and
    $1,439 million was unobligated. This compares with a total carryover
    averaging $550 million over the previous 10 years and with $798 from
    fiscal year 2005 into fiscal year 2006.
        Question. In your view, how much of that was due to reprogramming
    restrictions and how much too contracting restrictions? No matter how
    you divide it, that is a lot of money. You are basically saying that
    you were unable to execute nearly 25 percent of your program in fiscal
    year 2006 due to legislative restrictions. Will this new language
    improve project execution so that we won't see a repeat of that large
    of a carryover into fiscal year 2009? How?
        Answer. By virtue of the significant increase in carryover compared
    to other years, the legislative restrictions were a major factor in
    underutilization of available funds in fiscal year 2006; however, our
    records are not sufficiently detailed to quantify exactly how much is
    attributable to the new rules versus other factors. The new language
    proposed by the administration, if enacted, is expected to allow more
    realistic scheduling with multi-year contracts as well as provide more
    flexibility in management of available funds while addressing
    congressional priorities. Much carryover is a function of funds being
    in the wrong place plus a need for more careful scheduling and an
    emphasis on meeting commitments. In addition to the new reprogramming
    and contracting language proposed by the administration, the Corps has
    aggressively taken positive steps to write up-to-date guidance and
    provide increased training for program development, defense and
    execution. Furthermore, a command emphasis has been placed on meeting
    commitments, that is, carrying out the schedules upon which the
    provided funds are based.
        Question. Secretary Woodley, Do you believe that the reprogramming
    language proposed in your budget will improve the ability of the Corps
    to utilize scarce funds? If so, how?
        Answer. Once funds are appropriated; there are physical variables
    that are unknown until a program, project or activity (PPA) is
    underway. The O&M program, in particular, is subject to weather-related
    emergencies, major accidents and structural failures that require
    immediate action without administrative delays to obtain committee
    concurrence. The reprogramming language proposed as sections 101a(4)
    and (5) under General Provisions in the Budget Appendix provide more
    flexibility to address these unknowns by raising the thresholds from $2
    million to $3 million. Section 101a(6) recognizes the urgency of taking
    action to respond to a flood, hurricane, or other natural disaster.
                                     ______

                Questions Submitted by Senator Dianne Feinstein

        Question. The Office of Management and Budget's fiscal year 2008
    cross-cut budget for the California Bay-Delta Restoration Program
    (CalFed) shows a total of $32.6 million in Army Corps of Engineers
    CalFed-related spending. This is a significant decrease from $76.6
    million in the fiscal year 2007 budget and $80.7 million in fiscal year
    2006 obligated funding. This represents a 60 percent decline in Corps
    CalFed-related spending in just 2 years. Why has the Corps CalFed-
    related spending declined so sharply?
        Answer. The main reason for the sharp decline in the CalFed-related
    budget in fiscal year 2008 is mainly due to the major decrease in the
    Santa Ana River portion of this funding. Previous year budgets for the
    Santa Ana River project ranged from $22 to $57 million; in fiscal year
    2008 this has dropped to $7.5 million. This decrease was mainly due to
    the development of new budget criteria which limited the types of work
    that we could actually include in the budget. Another contributing
    factor to this decline were the new rules on the Continuing Authority
    Program including the moratorium on signing agreements, and limits set
    by Congress on starting new phases or starting anything not named.
        Question. The 2004 CalFed authorization (Public Law 108-361)
    authorized $90 million for the Corps to improve the stability of the
    highly vulnerable levees in the Sacramento-San Joaquin Delta. In its
    May 2006 Report to Congress on the CalFed Levee Stability Program, the
    Corps described a so-called ``Strategy for Action'' that proposed $18
    million for levee stability funding and several million more in
    additional feasibility studies for fiscal year 2008.
        Nevertheless; despite this major, bipartisan authorization by
    Congress, and detailed proposals from the Corps on funding, the
    President's budget proposes no funding for Delta levee stability
    projects. Why is there no funding proposed in fiscal year 2008 for this
    major priority?
        Answer. Senator, there was a 180 day report that was prepared but
    contained no specific project details. The report laid out a strategy
    but was not a decision document per se nor contained specifics about
    projects to construct. Without any specific details or an
    administration approved report, the project did not fit into any of the
    construction guidelines that the administration used in prioritizing
    projects for this years budget.
        Question. Isn't there a similarity here to the Army Corps of
    Engineers' failure to heed warnings of a potential flood control
    disaster in New Orleans, given the widespread recognition of the high
    risk for levee failure that would cut off the drinking water supply for
    over 20 million people?
        Answer. In evaluating this as well as other projects within the
    universe of those eligible for inclusion in the budget, the guidelines
    allow for strong consideration of significant impacts to people in
    terms of risk to life. The Corps conducts a full screening of the
    factors involved in this metric such as the velocity and depth of
    potential flows during a flood event, the warning times for escape, the
    population at risk within the floodplain. This project did not fit into
    that guideline category, either for inclusion in the budget.
        Question. The Napa River Flood Protection project is a 100-year
    flood protection project coupled with recreation and the restoration of
    over 730 acres of San Francisco Bay estuary. The Corps recently
    analyzed these wetlands and rated them at the highest possible level of
    ecosystem restoration under Corps guidance.
        Upper Newport Bay is one of the last remaining coastal wetlands in
    Southern California. The Upper Newport Bay Ecosystem Restoration
    project undertaken by the Corps increases the quality of wetlands
    habitat, which supports federally endangered species, and improves
    water quality.
        While multipurpose projects such as these are encouraged in the
    Corps planning process, there is no budget guidance that recognizes the
    array of project benefits for such projects. Would you consider
    changing the budgeting process to recognize a project's full array of
    benefits?
        Answer. Evaluating multi-output projects continues to be a
    challenge and the Corps is advancing the evaluation process for such
    projects. In particular, they are refining the Environmental benefits
    evaluation process to incorporate the many facets of environmental
    project outputs and then combining them with other project outputs to
    make a comprehensive analysis for the budget prioritization process.

               SACRAMENTO RIVER, GLENN-COLUSA IRRIGATION DISTRICT

        Question. Funds are needed in fiscal year 2007 to make progress on
    addressing two outstanding obligations associated with the Sacramento
    River, Glenn-Colusa Irrigation District, Gradient Facility project: an
    outstanding obligation associated with a revegetation/mitigation
    contract of approximately $115,000 and settling a dispute with
    neighboring Butte County over damages incurred to Butte County roads
    during the construction process, an obligation that could exceed
    $300,000. While no funds were appropriated for this project
    specifically in fiscal year 2006, this is an on-going project and these
    two project obligations were incurred prior to fiscal year 2006.
    Therefore, funding these two pre-existing project obligations
    represents an eligible use of fiscal year 2007 funds. Do you agree,
    and, if not, why not?
        Is it your intent to address both of these pre-existing obligations
    using funds provided to the Corps of Engineers in fiscal year 2007?
        Answer. The fiscal year 2007 work plan guidelines prevented us from
    providing fiscal year 2007 funds to GCID. We were able to reprogram
    carried over fiscal year 2006 funding from Hamilton Wetlands to GCID to
    make the outstanding contract payment. Regarding the dispute/claim, a
    hearing was held in front of the Armed Services Board of Contract
    Appeals in February 2007, and we are still awaiting their decision.
                                     ______

                Questions Submitted by Senator Mary L. Landrieu

                           BACKLOG OF AUTHORIZED WORK

        Question. The Corps has a backlog of authorized projects that are
    slowly being constructed or have not even started with construction.
    Currently, this backlog is $40 billion to $45 billion. Additionally,
    the next WRDA bill will likely authorize another $12 billion of
    projects. Therefore, a conservative estimate of the backlog after the
    WRDA bill will be at least $50 billion. The administration has
    requested about $1.5 billion for construction in fiscal year 2008.
        Based on your current budget request and your 5 year plan, how long
    will it take for us to catch up on the backlog?
        Answer. The administration is proposing to reduce the backlog by
    the amount in the budget, which is a little over $1.6 billion. Our
    five-year development plan indicates that, under either of the two
    scenarios, the funding requirements for projects in the fiscal year
    2008 budget will tail off over time, and hundreds of millions of
    dollars will become available through fiscal year 2011 to finance
    additional work. Likewise, the requirements of projects in the fiscal
    year 2008 budget for studies and Preconstruction Engineering and Design
    tail off, leaving tens of millions of dollars for additional planning
    and design work to prepare projects for construction.

                  DECLINING INVESTMENT AS A PERCENTAGE OF GDP

        Question. As a percentage of GDP, our current investment in civil
    works is less than one-tenth of what it was in the mid 1930s and less
    than one-sixth of what it was in the early 1960s.
        This budget puts our Nation at risk. What is your plan for dealing
    with this gross under-investment in civil works?
        Answer. The budget reflects the appropriate level of investment for
    the Corps Civil Works program. It focuses resources on completing
    ongoing projects and maintaining our existing investments. The
    discretionary part of the budget is under extreme pressure due to the
    many other competing investment needs. The administration believes it
    must reduce the backlog of ongoing construction projects before we can
    provide for additional studies. With the funding that is available, we
    attempt to fund the highest performing projects. Overall, my vision
    plan is reflected in the Civil Works Strategic Plan, dated March 2004
    with the goals being:
      --Provide sustainable development and integrated management of the
            Nation's water resources.
      --Repair past environmental degradation and prevent future
            environmental losses.
      --Ensure that operating projects perform to meet authorized purposes
            and evolving conditions.
      --Reduce vulnerabilities and losses to the Nation and the Army from
            natural and man-made disasters, including terrorism.
      --Be a world-class public engineering organization.
        The 5-Year Development Plan supports the Strategic Plan by
    continuing our focus during fiscal year 2008-2012 on the ongoing
    construction projects and activities that provide the highest net
    economic and environmental returns on the Nation's investment, as well
    as on the most productive operation, maintenance, and repair
    activities, and on activities in the FUSRAP program, the Regulatory
    Program, and Emergency Management that contribute to performance goals.

                                  BEACH POLICY

        Question. Storm damage reduction projects along our coasts provide
    tremendous benefits to our national economy. Beaches are the leading
    tourist destination in the United States. California beaches alone
    receive nearly 600 million tourist visits annually. This is more
    tourist visits than to all of the lands controlled by the National Park
    Service and the Bureau of Land Management combined. Beach tourists
    contribute $260 billion to the U.S. economy and $60 billion in Federal
    taxes. People from over 400 congressional districts throughout the
    United States own property in the Bogue Banks Area of North Carolina.
    Similar ownership is true in other coastal communities demonstrating
    the national implications of these projects.
        Also, these projects are justified on the basis that they provide
    storm damage reduction benefits. As these are National Economic
    Development benefits within one of your prime mission areas of flood
    control it puzzles me as to why both yours and prior administrations
    refuse to budget for these projects. As more and more of our population
    migrate towards the coasts, it will become imperative to provide
    protection to these areas. The only other option is to continue paying
    disaster payments when these communities are impacted.
        Secretary Woodley, with this major impact on our national economy,
    what is the administration's justification for the proposed change in
    beach policy? A change, I would note, that Congress has consistently
    rejected.
        What would you recommend to make these projects more competitive in
    the budget process?
        Answer. The administration's budget policy is to put beach
    nourishment projects on the same footing as other projects, in that the
    Federal Government would participate financially in initial
    construction but non-Federal interests would be responsible for follow-
    on costs, in this case renourishment costs, except where a Federal
    navigation project has caused the erosion. This policy is a component
    of the administration's overall efforts to direct Civil Works funds to
    the most productive uses.
                                     ______

                Questions Submitted by Senator Pete V. Domenici

                   FUNDING FOR THE INLAND WATERWAY TRUST FUND

        Question. Secretary Woodley, the budget proposal indicates that the
    administration is concerned that the Inland Waterway Trust Fund may go
    bankrupt within a few years. As a solution, the administration has
    committed to proposing legislation to replace the existing diesel tax
    with a user fee later this year.
        How will this fee be assessed as well as collected and will this
    change the way the funds are allocated in the future?
        Answer. The details of the nature of the user fee, and how it will
    be assessed, collected, and allocated have not been developed. The
    details of the proposal will be developed over the next several months
    through a process that will include consultation with other interested
    Federal agencies, the users of the system, and other stakeholders.
        Question. Will this proposal seeks to take the waterway trust fund
    off budget?
        Answer. The decision on whether to recommend taking the waterway
    trust fund off budget has not been made. That issue will be considered
    as the details of the proposal are developed.

                           MIDDLE RIO GRANDE PROJECTS

        Question. Secretary Woodley, since you have held this position, I
    have been working on four critical projects along the Rio Grande
    corridor that include the following four elements.
      --Bosque Restoration Project.--This project would provide a workable
            open space for the city of Albuquerque and river habitat
            restoration.
      --Middle Rio Grande Flood Protection.--The Corps is currently
            evaluating the levees to determine if they have reached their
            design lifetime and to provide assistance in rehabilitation of
            levees where necessary.
      --Bosque Wildfire Rehabilitation.--This element provides recovery
            from a damaging series of fires between Bernalillo and Belen
            that pose a grave threat to human health, and to construct
            access points to the river for fire fighting.
      --Middle Rio Grande Endangered Species Collaborative Program.--A
            partnership with the Bureau of Reclamation to manage water
            flows on the Rio Grande and provide endangered species
            protection and recovery.
        Unfortunately the President's fiscal year 2008 budget proposal only
    provides $311,000 for only one of the four elements. The fiscal year
    2006 budget provided $5,847,000 to support the management of all four
    elements.
        Please explain how the Corps plans to meet all four critical
    obligations with the funding proposed in the fiscal year 2008 budget?
        Answer. Sir, funds to complete the feasibility study for the Bosque
    Restoration Project are in the President's budget for fiscal year 2008.
    No funds are in the 2008 budget for the Middle Rio Grande Flood
    Protection Project or the Bosque Wildfire Rehabilitation Project. Work
    will stop on those projects once fiscal year 2007 funds have been
    expended. Funds for the Middle Rio Grande Endangered Species
    Collaborative Program are provided through the Bureau of Reclamation's
    appropriation.
        Question. Although the Corps has proposed a systems management
    approach to managing major O&M responsibilities, why can't the Corps
    seem to integrate these activities along middle Rio Grande?
        Answer. Sir, the Corps of Engineers is moving towards a systems/
    watershed approach for preparing our annual budget request and planning
    and executing work. But, the budget supports only that work that is
    high-performing and contributes to the Corps main water resources
    development missions, namely commercial navigation, flood and coastal
    storm damage reduction, and aquatic ecosystem restoration.
        Question. Additionally, what role can the Corps undertake in
    reformulating the current Biological Assessment for the Rio Grande to
    bring the management of the river back to a more balanced condition?
        Answer. Sir, I believe that the Corps of Engineers, with its
    expertise in flood control, ecosystem restoration, and water resources
    planning can greatly contribute to reformulating the Biological
    Assessment. How the Biological Opinion is reformulated will impact
    virtually all of the Corps studies, designs, and projects on the Rio
    Grande. The Bureau of Reclamation is currently the lead agency for the
    Middle Rio Grande Endangered Species Act Collaborative Program. The
    Corps is actively participating in efforts to reformulate the
    Biological Assessment and is providing technical and management
    support. Funding for these activities performed by the Corps is
    provided by the Bureau of Reclamation.

                           ACEQUIAS IRRIGATION SYSTEM

        Question. Secretary Woodley, the Acequias Irrigation System Program
    was established to help small irrigation districts with historic
    significance to maintain their irrigation facilities. This program also
    helps mitigate downstream flooding. The Corps has resolved several
    significant operational issues with the State of New Mexico over the
    last 5 years. However the President's fiscal year 2008 budget proposal
    does not include any funding for this critical program.
        Please explain how the Corps of Engineers will continue to support
    these historic irrigation systems without financial resources?
        Answer. Sir, the Corps would not be able to support these historic
    irrigation systems without financial resources. The project was a low
    priority for funding under the fiscal year 2008 budget construction
    guidelines. Any additional reconnaissance studies the local sponsor has
    identified for future rehabilitation may similarly not be a funding
    priority.

                         CONTINUING AUTHORITIES BUDGET

        Question. The Corps of Engineers has several continuing authority
    programs. These programs provide the flexibility needed to address
    relatively small projects throughout the country. I was unsettled to
    see that the Presidents fiscal year 2008 budget proposal decreased the
    funding over the 2006 enacted levels by more than 65 percent.
        Is the President's budget proposal an attempt to eliminate these
    programs?
        Answer. No Senator, the administration does not intend to eliminate
    these continuing program authorities. The fiscal year 2008 budget
    proposes to use available funding to continue ongoing phases for the
    highest performing projects.
        Question. Does the Corps believe that the flexibility provided by
    these continuing authorities is no longer necessary or important to the
    Nation?
        Answer. No, we value these programs as they have the potential to
    solve many of our domestic infrastructure and environmental needs. The
    projects can be implemented in a short period of time and at little
    cost to address water resources problems.
        Question. How can the Corps attempt to meet the anticipated needs
    of the projects within these programs with the proposed budget?
        Answer. The projects in the continuing authority's universe
    competed for funding using objective metrics that were very similar to
    those used for specifically authorized projects. The highest performing
    projects were funded for the phase continuing from the fiscal year 2007
    budget.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

                         HARBOR MAINTENANCE TRUST FUND

        Question. My State of Texas has some of the Nation's largest ports
    and they pay a significant portion of the funds that go into Harbor
    Maintenance Fund. However, I continue to hear from my ports that the
    fund is idle. Can you tell me the status of the Harbor Maintenance
    Fund?
        Answer. The Harbor Maintenance Trust Fund (HMTF) was established by
    the Water Resources Development Act (WRDA) of 1986. The WRDA of 1986
    provides for a Harbor Maintenance Tax (HMT) to be collected on the
    value of cargo imported, moved into a foreign trade zone or moved
    domestically. The HMT is also assessed on the value of passenger
    tickets. HMT revenues are collected by the Bureau of Customs and Border
    Protection and deposited into the U.S. Treasury. The Department of the
    Treasury maintains accountability for the fund and transfers money out
    of the fund to reimburse authorized expenditures. The U.S. Army Corps
    of Engineers (USACE) does not receive direct appropriations from the
    HMTF and therefore USACE expenditures for navigation projects are
    limited to Congressional appropriations.
        Question. How much does the fund contain today?
        Answer. The estimated balance in the HMTF, after anticipated
    transfers to the U.S. Treasury for fiscal year 2007 expenditures by
    USACE and other agencies, is approximately $4 billion.
        Question. What are the requirements for using funds in the Harbor
    Maintenance Fund?
        Answer. The HMT is used to recover 100 percent of the USACE
    eligible operations and maintenance (O&M) expenditures for commercial
    navigation, along with 100 percent of the O&M cost of the St. Lawrence
    Seaway by the St. Lawrence Seaway Development Corporation. Section 201
    of WRDA 96 authorizes the recovery of Federal expenditures for
    construction of confined disposal facilities required for operation and
    maintenance of any harbor or inland harbor; dredging and disposal of
    contaminated sediments that are in or that affect the maintenance of
    Federal navigation channels; mitigation of operation and maintenance
    impacts, and operation and maintenance of dredged material disposal
    facilities. During the 103rd Congress, legislation was enacted which
    allows the Department of the Treasury, the USACE, and the Department of
    Commerce to share a maximum total of $5 million per year for expenses
    incurred in the administration of the HMT.
        Question. How do you prioritize projects for funding?
        Answer. There continues to be keen competition for limited
    Congressional appropriations to perform USACE's navigation mission.
    USACE therefore prioritizes navigation projects for inclusion in the
    President's budget in order to reduce the risk of failure and increase
    the reliability of our projects, and maximize public benefits for the
    investment. Factors such as volume and value of cargo moved, benefits
    of the project, criticality of work to be performed, anticipated
    impacts of not performing the work, legal mandates, safety issues,
    environmental compliance, etc. are used to prioritize projects.
        Question. How much has been paid out of the fund annually over the
    past 5 years?
        Answer. The following table reflects HMT receipts and HMTF
    transfers to the U.S. Treasury, in thousands of dollars, for fiscal
    years 2002 through 2006:

                 HMT RECEIPTS AND HMTF TRANSFERS TO THE U.S. TREASURY FOR FISCAL YEARS 2002 THROUGH 2006
                                                [in thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                          Harbor
                       Fiscal Year                      Maintenance        USACE       Other Agency        Total
                                                       Tax Receipts      Transfers       Transfers       Transfers
    ----------------------------------------------------------------------------------------------------------------
    2002............................................           652.9           639.9            16.3           656.2
    2003............................................           758.0           568.9            17.0           585.9
    2004............................................           869.7           630.9            17.3           648.2
    2005............................................         1,047.9           687.2            18.7           706.0
    2006............................................         1,206.5           779.0            19.0           798.1
    ----------------------------------------------------------------------------------------------------------------

        Question. If funds have not been expended out of the fund, why is
    that the case?
        Answer. Annual reimbursements from the HMTF are limited to
    congressional appropriations. Annual HMT revenue has consistently
    exceeded annual expenditures resulting in a growing HMTF balance.
                                     ______

                   Question Submitted by Senator Wayne Allard
        Question. Please share how the Army Corps set its priorities for
    its budget request this year. I am specifically looking for information
    that would lead me to understand why funding for the completion of the
    Fountain Creek Watershed study and funding for the Chatfield
    Reallocation Study were not included?
        Answer. Chatfield was not in the Corps' 2008 budget as it was not
    in the 2007 budget the initial criteria under the guidelines. Funding
    priority is given to studies funded in the previous year.
                                     ______

             Questions Submitted to Lieutenant General Carl Strock
                 Questions Submitted by Senator Byron L. Dorgan
        Question. How will we easily be able to tell how much we are
    investing in these endangered species recovery efforts?
        Answer. To assist us in capturing this information, we will develop
    a new system to closely monitor and track funds expended for recovery
    efforts and will make that information available upon request.
        Question. General Strock, How have the reprogramming restrictions
    imposed by the fiscal year 2006 E&W Act affected your ability to
    effectively and efficiently manage the Civil Works program?
        Answer. The reprogramming and contracting guidance contained in the
    fiscal year 2006 Energy and Water Development Appropriations Act and/or
    subsequent delays in obtaining approvals have adversely impacted
    performance rates so that, in some cases, weather or environmental
    windows were missed, contract options could not be taken advantage of
    and a larger carryover of unobligated or unexpended funds occurred with
    work still not accomplished. On the other hand, these restrictions have
    resulted in greater discipline at all management levels in preparing
    cost estimates, expressing capabilities and applying available funds as
    intended by the Congress.
        Question. General Strock, You are soon to retire so I'll ask you an
    unfair question that I know Secretary Woodley would have to avoid or be
    very careful to answer--as the outgoing Chief, what changes would you
    recommend to Corps contracting and reprogramming guidance in order to
    give your successor the flexibility needed to manage the Civil Works
    program?
        Answer. As mentioned earlier, the reprogramming and contracting
    guidance contained in the Fiscal Year 2006 Energy and Water Development
    Appropriations Act has effectively brought about greater care in
    estimating, expressing capabilities and managing funds on hand;
    however, more flexibility is needed to efficiently utilize available
    funds for the purposes intended by the Congress. I believe the proposed
    contracting and reprogramming language set forth in the President's
    budget, if adopted, provides that flexibility.

                                 MISSOURI RIVER

        Question. Gentlemen, it should come as no surprise to you that we
    are suffering through our eighth year of drought in North Dakota. What
    is the situation and outlook for Missouri River runoff this year?
        Answer. Drought continues to persist in the Missouri River Basin.
    Moderate to severe drought exists in much of Montana and Wyoming and
    the western portions of the Dakotas and Nebraska. The remainder of the
    basin is essentially drought free. Current storage in the Missouri
    River Mainstem Reservoir System is 37.3 MAF, 17.5 MAF below normal, but
    2.6 MAF higher than one year ago. The 2007 runoff forecast above Sioux
    City, Iowa is for 21.2 MAF, 84 percent of normal.
        Question. How will this impact operation of the Missouri River?
        Answer. Service to all of the congressionally authorized project
    purposes is reduced due to the ongoing drought, currently in its eighth
    year. The upper three reservoirs are drawn down 24 to 34 feet and
    releases from all projects are much below normal. Due to excellent
    runoff below the reservoir system, releases from Gavins Point were at
    record low levels during March, April and May of 2007, and were well
    below normal the remainder of the year. Power production at the Corps
    hydropower facilities in 2007 is expected to be a record low 5.0
    billion kWh, only half of normal. Lower reservoirs and releases have
    reduced access at many boat ramps and marinas throughout the region,
    and have made access for municipal and industrial water supply more
    difficult. None the less, all municipal water intakes have remained
    operational throughout 2007, and are expected to remain viable in 2008.
    Although the Corps made significant efforts on behalf of fish and
    wildlife during 2007, the drought continues to reduce the benefits of
    those efforts. All three of the upper reservoirs rose significantly
    during the forage fish spawn; however reports from the North Dakota
    Game and Fish Department indicated that the smelt spawn in Garrison was
    poor due to the lack of proper substrate at the current reservoir
    level. Efforts to conserve cold water habitat in Garrison reservoir
    were expanded this year, saving an estimated 800,000 acre-feet of cold
    water in the reservoir. Fledge ratios for both the interior least tern
    and piping plover were below the fledge ratio goals outlined in the
    2003 Biological Opinion, however there were a record number of terns
    present in the region during the nesting season. Spring pulses from
    Gavins Point dam for the benefit of the endangered pallid sturgeon were
    not implemented in 2007 due to the low system storage.
        Question. Do you anticipate a normal navigation season?
        Answer. The 2007 navigation season was shortened 35 days and
    minimum service flow support was provided throughout the shortened
    season. The 2008 navigation season will start on the normal opening
    date of April 1 at the mouth with minimum service flow support. The
    season length will be determined based on the July 1 storage check, but
    is estimated to range from 17 to 60 days based on studies provided in
    the draft Annual Operating Plan.
        Question. How much more should I expect the level of Lake Sakakawea
    to drop under the operations of the Master Manual for fiscal year 2008?
        Answer. If runoff in 2008 is near lower quartile levels, conditions
    at Garrison are expected to be similar to those experienced in 2007.
    With runoff above lower quartile, reservoir levels will improve,
    averaging about 7 feet higher than in 2007 for median runoff
    conditions, to as much as 15 to 20 feet higher with upper decile runoff
    conditions. However, if the drought deepens and runoff declines to
    lower decile conditions, the reservoir could be 5 feet lower in 2008
    than it was in 2007, and could fall below the record low pool of
    1,805.8 feet msl by early 2009.
        Question. How will this continued fall of Lake Sakakawea affect the
    Snake Creek Embankment? Will we have to draw down Lake Audubon further
    than we already have?
        Answer. Lake Audubon is historically maintained by the Bureau of
    Reclamation at a near constant elevation of 1,847.2 feet from spring
    through Labor Day. After Labor Day, the lake level is lowered to
    1,845.0 feet and held constant at this elevation throughout the ice
    fishing season. Lake Audubon reached its annual winter target elevation
    of 1,845.0 feet the first week of November 2007. The recently completed
    draw down was conducted in accordance with normal lake operation and no
    further drawdown is planned at this time.
        The Corps of Engineers implemented a 43 foot maximum water level
    difference between Lake Audubon and Lake Sakakawea in March 2007 based
    on the results of an underseepage evaluation. This restriction will
    remain in effect until additional data is obtained and can be evaluated
    under more severe lake and reservoir fluctuations.
        As of November 6, 2007 Lake Sakakawea was at elevation 1,813.1 feet
    and Lake Audubon was at elevation 1,845.0 feet, resulting in a water
    level difference of 31.9 feet. Current forecasts indicate that Lake
    Sakakawea will continue to slowly recede until the latter part of
    February 2008 and then rise to its peak elevation around mid-summer.
    Under the November 1, 2007 basic and lower basic simulations, Lake
    Sakakawea is projected to recede to 1,809.1 feet and 1,808.0 feet,
    respectively, by the end of February 2008. Utilizing the lower basic
    simulation, the projected maximum water level difference at the end of
    February will be 37.0 feet, which is well below the allowable 43 feet
    maximum difference.
        Question. How will the continued drop in water levels on Lake
    Sakakawea impact various water intakes that draw from the lake as well
    as those that draw from the river?
        Answer. Under all runoff conditions simulated in the 2007-2008
    Annual Operating Plan, all of the water intakes on Garrison reservoir
    remain operational throughout 2008. Releases from Garrison will be
    scheduled at a level sufficient for the intakes below the dam to remain
    operational throughout the year.
        Question. Why have you not proposed at least a token amount of
    funding for drought in your budget, when you know that the west has
    been suffering an extended drought?
        Answer. The Corps has proposed funding for control of noxious weeds
    associated with lower reservoir levels resulting from the drought. The
    Corps also provides significant funding for cultural resources within
    the basin which may be impacted by drought conditions.
        Question. What is your funding capability for drought emergency
    assistance?
        Answer. Emergency assistance due to drought is generally requested
    due to the loss of water meant for human consumption within a
    community. Under Public Law 84-99 the Corps is authorized to provide
    technical assistance to a local community facing an emergency. The
    Corps may also provide temporary emergency water assistance for human
    consumption/usage to a drought distressed area to meet minimum public
    health and welfare requirements. Corps assistance is supplemental to
    State and local efforts. Corps assistance under this authority may
    include transport of water to local water points, distribution of
    bottled water, temporary connection of a new supply to the existing
    distribution system, and installation of temporary filtration. Several
    areas are considered in determining the amount of Federal direct
    assistance; such as economic impact to the community, environmental
    issues, weather impacts, other water sources (wells), long term lake
    level projections, and good engineering judgment.

                                  A-76 AND HPO

        Question. In 2001 and 2002, OMB imposed arbitrary numerical
    privatization quotas on agencies. The practice was prohibited by
    Congress in February 2003, unless there was ``considered research and
    sound analysis of past activities (that) is consistent with the stated
    mission of the executive agency.'' In July 2003, OMB repudiated the use
    of government-wide quotas. Nevertheless, the Corps of Engineers (CoE)
    appears to be following the arbitrary quota imposed by OMB in 2002,
    according to CoE documents. Why did the Congressional prohibition and
    the OMB repudiation have no affect on CoE's numerical privatization
    quota? Was there any of the legally required ``considered research and
    sound analysis of past activities (that) is consistent with the stated
    mission of the executive agency'' done in connection with this? How
    many additional Federal employees are CoE obligated to OMB to review
    for privatization under OMB Circular A-76?
        Answer. The Corps is not pursuing any privatization activities.
        Question. CoE's decision to attempt to review the locks and dams
    personnel for privatization generated strong bipartisan, bicameral
    opposition. Even CoE management conceded that at least part of the
    workload performed by locks and dams personnel is inherently
    governmental. Would CoE have begun this OMB Circular A-76 privatization
    review if it had not had a ``commitment'' to OMB to review for
    privatization at least 7,500 jobs? Are there actions that CoE can
    undertake on its own to increase the efficiency of locks and dams
    operations or operations generally? Do CoE managers believe that they
    are obligated to strive to generate efficiencies? If there were no A-76
    quota for CoE to fulfill, could taxpayers and lawmakers on this
    subcommittee count on CoE management to always strive to make the
    agency's operations more efficient?
        Answer. The Corps is not studying the locks and dams personnel for
    A-76 competition. Rather, the Corps has initiated an internal study of
    business processes to improve efficiency and effectiveness of the
    Nation's inland waterway system. Any resulting changes will be
    implemented over a period of 5 years. We do not anticipate any adverse
    impact on the workforce.
        Question. How many months old is the A-76 privatization review of
    information technology and how many employees are involved? According
    to an October 12, 2006, GovExec.com story, ``Information technology
    management at the Army Corps of Engineers is being stressed to the
    breaking point by staff shortages resulting from a stalled public-
    private job competition, according to senior Corps officials. I have
    been informed that an early September meeting of senior IT leaders at
    the agency reflected concern that IT services are suffering from
    significant attrition at ``virtually every Corps [information
    management] office,'' according to a summary of the meeting at  distributed by the agency's Chief
    Information Officer, Wilbert Berrios. Some have lost as much as 35
    percent of their workforce since the inception of a competitive
    sourcing process more than 2 years ago. ``We are one missed signal away
    from a train wreck,'' officials warned at the September 6 meeting in
    Jekyll Island, GA., according to the summary, with staffing levels only
    ``one person deep in several critical areas.'' Do you agree with that
    account? If not, why not?
        Answer. The Information Management/Information Technology (IM/IT)
    competition resulted in a win by the in-house team (called the Most
    Efficient Organization (MEO)). MEO was issued the formal notice in
    April 2007 and began the transition in May 2007. Currently the MEO are
    recruiting from the existing IM/IT employees and are well underway to
    assume full responsibility for IM/IT service delivery by May 2008. We
    do not foresee any disruption of service during the transition period.
        Question. While not quite as long as the infamous Walter Reed
    privatization review, the CoE information technology A-76 is certainly
    one of the longest reviews since the circular was revised in May 2003,
    is it not? And like Walter Reed, if this GovExec.com count is to be
    believed, the affected workforce has been significantly disrupted. With
    respect to CoE's information technology privatization review, assume
    that the contractor's appeal will not prevail. After taking into
    account the dangerous levels of workforce disruption caused by the
    privatization review, the costs of carrying out the privatization
    review, and the costs of transitioning the workforce into the new
    organization, how much will there be left in unverified, projected
    savings? Please state each component in detail.
        Answer. The court case was settled and, as mentioned above, the MEO
    started the transition in May 2007. Projected savings is about $500
    million over a 6-year period. The savings are based on the MEO's bid
    and derived from the MEO's technical solution using the best business
    processes.
        Question. How many jobs and what sort of jobs will be reviewed
    under the new HPO? I understand that the HPO will involve 3,500
    employees in the locks and dams, maintenance fleets, and district
    offices, as opposed to 2,000 employees in the locks and dams? Will the
    HPO be far more wide-ranging than the A-76 review?
        Answer. Under the HPO initiative, the Corps is studying the
    business processes rather than reviewing jobs. There are approximately
    3,000 positions engaged in the operations and maintenance of navigation
    locks and dams. The Corps does not anticipate any negative impact on
    employees.
        Question. What guidelines are you working under regarding the HPO?
    I understand that the guidelines from OMB can all fit on one side of a
    single piece of paper. Would CoE need legislation or for the Congress
    to undertake any action to plan for or to implement the HPO?
        Answer. The Corps is using accepted practices for internal business
    process re-engineering such as Lean Six Sigma. No legislation is
    required for studying an HPO. However, before implementing the
    resulting organization, congressional approval may be required.
        Question. Will the HPO involve privatization, job loss, or forced
    reapplications for employment for the in-house workforce? Is the HPO
    based on any budget assumptions? If so, what are they?
        Answer. HPO will not involve privatization, job loss, or forced
    reapplication. No budget assumptions or targets are driving this
    initiative.
        Question. Has the HPO team begun work? When will the HPO team
    finish work? How long will it take before the HPO plan is implemented?
    How will the team incorporate the views of non-management employees?
    How many non-management employees will be on the HPO team? How many
    union members will be on the HPO team?
        Answer. The HPO team for locks and dams started the study in
    January 2007 and is scheduled to complete its work in July 2008. After
    that, there is a 5-year transition to attain the end-state
    configuration. The team is made up of a typical cross section of the
    locks and dams personnel, including lock masters, operations managers,
    and other district employees, The HPO team is totally independent of
    the Corps management and empowered to do the study without any
    interference. Team members have been visiting project sites, meeting
    with employees, and soliciting input by various means from all
    employees.
        Question. It seems that an extraordinary number of important issues
    could be dealt with by the HPO team, but it is unclear what they might
    consider or how broad the mandate is. For example, it appears that the
    HPO plan could propose reducing hours at some locks and dams, reducing
    capabilities at some CoE district offices, or using one CoE district's
    maintenance fleet in another CoE district even if that means the first
    CoE district's maintenance backlog might be ignored. Will such issues
    or similar issues be seriously considered? Is there any limitation on
    the consideration of such or similar issues? If so, what are they?
        Answer. The main thrust of the HPO study is to provide a safe,
    reliable, efficient and effective operations and maintenance for the
    U.S. Inland Marine Transportation System. It is not intended to cut
    corners or reduce capabilities.

                         CONTINUING AUTHORITIES PROGRAM

        Question. I realize that the Continuing Authorities Program is a
    sideline to your major mission areas. We annually fund about $150
    million to this program, where you usually budget less than $50
    million. However, you need to understand that it is a program that is
    very important to my colleagues and hundreds of local communities
    across the country. The Congress has been concerned about the
    management of this program. We recognize that we have contributed to
    some of the management issues by recommending more projects that
    funding was available for. In fiscal year 2006 and continuing in fiscal
    year 2007 there is a moratorium on projects within the CAP program from
    advancing to the next stage of project development.
        What measures have we put in place to more effectively manage the
    program?
        Answer. The following actions have been taken to improve management
    for CAP.
        In February 2006 we established a national Program Manager for CAP
    to manage and analyze large and complex data and this has greatly
    improved the overall management of CAP.
        In June 2006, we provided Congress with a 5 Year Program Management
    Plan (PMP) for CAP. The intent is to review and update the PMP
    annually. Implementation of the PMP will be an improvement action.
        Beginning with the fiscal year 2008 budget, we've implemented a
    performance based method for development of the CAP budget. This is a
    new approach for CAP budget development. It should help improve CAP by
    providing a clear and consistent method analyzing CAP for budgetary
    purposes.
        For the fiscal year 2007 program we developed a ranking methodology
    using appropriate criteria for determining fiscal year 2007
    allocations. The method helped improve CAP by providing a clear method
    for allocating fiscal year 2007 funds.
        Question. What is the outlook for fiscal year 2007?
        Answer. For fiscal year 2007 CAP funding requests exceeded
    available funds by $33,069,000. Therefore we developed a ranking
    methodology using appropriate criteria that was implemented to
    prioritize requests and optimize use of available funds. CAP funds for
    fiscal year 2007 are fenced by section. In addition, the moratorium on
    execution of new FCSA's and PCA's continues in fiscal year 2007. The
    fencing and moratorium restrictions create challenges in optimal
    management of CAP funding.
        Question. Will all funding provided in each section of the program
    be utilized in current project development phases and will some
    projects be ready to move to the next phase?
        Answer. The CAP Fiscal Year 2007 Work Plan funds $124,616,000 at
    this time with a reserve of $13,786,000. The plan provides $89,104,000
    to complete 163 project phases, $28,721,000 for continuing work, and
    $6,791,000 to initiate new phases.
        Under the current PCA moratorium, we are only able to move projects
    into construction if full funding is available to fund the entire
    construction. This significantly limits the number of CAP projects that
    can move into construction during fiscal year 2007.
        Under the current FCSA moratorium, we are required to limit Federal
    funding for feasibility work at $100,000. This restriction has caused
    numerous CAP projects to cease or postpone feasibility work.
        Question. Will we propose a package of projects to move forward?
    When?
        Answer. We provided detailed lists of active CAP projects to
    Congress in June 2006. Those reports showed FCSA and PCA execution
    status, allocation history, obligation capabilities through fiscal year
    2011, and estimated Federal costs. The June 2006 reports did not make
    specific recommendations regarding which projects should be considered
    for moving forward. It would be a better management approach if
    decisions regarding selection of CAP projects to forward were made
    using the performance based budgeting method and the fiscal year 2007
    allocation methods mentioned earlier. The nature of CAP is that these
    are smaller projects with less certainty regarding costs, scope, and
    sponsor commitments. Flexibility of management is highly desirable due
    to the nature of the program.
                                     ______

                Questions Submitted by Senator Mary L. Landrieu

                        LATEST $1.3 BILLION FUNDING NEED

        Question. Secretary Woodley, your testimony referred to the
    administration's request for reprogramming $1.3 billion in emergency
    supplemental appropriations from last year to cover shortfalls in
    hurricane protection projects in Louisiana. The Corps is developing
    estimates of future funding shortfalls with a goal of having complete
    estimates this summer.
        Does the administration intend to request supplemental
    appropriations when the future shortfalls are identified?
        Answer. Emergency authority and funding was provided by Congress
    and we are executing this mission in that manner. The Corps of
    Engineers is working with the resources provided to restore and improve
    the Hurricane Protection System as authorized and funded in fiscal year
    2006. This is the number one domestic priority of the Corps of
    Engineers, and we are committed to executing this mission in the most
    efficient and expeditious manner possible. The Corps continues to
    develop new information and incorporate it into our planning process,
    constantly working to improve the reliability of our cost estimates and
    construction schedule estimates. We are committed to developing and
    communicating these estimates in a transparent manner. We will ensure
    that the Congress and the administration have the information that they
    require in order to identify an appropriate vehicle for funding the
    completion of the 100-year system.
        Sufficient unobligated funds exist in the 4th supplemental
    appropriation to cover immediate work on those measures that will
    reduce the risk for the New Orleans metropolitan area with the proposed
    $1.3 billion reprogramming. This work includes floodwalls and levees
    that are ready for contract award. Fiscal Year 2006 4th Supplemental
    funds proposed for reallocation are not required until later in the
    year when designs and required environmental documentation are
    complete. The Corps is currently updating cost-estimates for the
    remaining work, and it would be premature to request additional funding
    until the Corps finishes these revisions. Funds reappropriated from the
    4th Supplemental will need to be replenished by additional
    appropriations at some future date, possibly in the fall of 2007.

                            CRITICAL INFRASTRUCTURE

        Question. On March 8, Homeland Security Secretary Michael Chertoff
    agreed with me that levees should be categorized as critical
    infrastructure.
        I would like to ask the Corps to begin the appropriate
    conversations and collaboration with the Department of Homeland
    Security to expedite the inclusion of levees as critical infrastructure
    and report back to me within 6 weeks on your progress. Can the Corps do
    this?
        Answer. Yes, Senator we can do this. Levees are already included
    within the framework of the National Infrastructure Protection Plan
    (NIPP). As established in the Dams Sector Specific Plan released in May
    2007: ``The Dams Sector is comprised of the assets, systems, networks,
    and functions related to dam projects, navigation locks, levees,
    hurricane barriers, mine tailings impoundments, or other similar water
    retention and/or control facilities.'' It is important to highlight
    that ``levees'' is used in this context to designate flood damage
    reduction systems (dikes, embankments, levees, floodwalls, pumping
    stations, etc.); also including conventional dams that perform critical
    functions as part of flood damage reduction systems. Therefore levees
    are clearly part of the Dams Sector as one of the 17 Critical
    Infrastructure and Key Resources (CI/KR) sectors established by the
    NIPP. The Dams Sector is currently pursuing the formal establishment of
    a Levee Sub-Sector which will include the creation of the corresponding
    Levee Sector-Coordination Council.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye

                    KIKIAOLA HARBOR, ISLAND OF KAUAI, HAWAII

        Question. Please provide me with a status of the project.
        Answer. Sir, funding for the project is being considered during
    development of the Civil Works Fiscal Year 2007 Work Plan. The Honolulu
    District is updating the plans, specifications, and permits in
    preparation for advertisement and award of a construction contract.
        Question. My records indicate that there were five reprogramming
    actions taken on the project beginning in 1980, 2001, 2002, 2003, and
    2005, and totaling $10,045,000. What are the chances of the Corps
    restoring these funds for the Kikiaola project? If so, does the Corps
    have a time table as to when these funds can be restored?
        Answer. Sir, any funds included for the project in the Corps of
    Engineers Fiscal Year 2007 Work Plan would be applied toward the Corps'
    commitment to restore previously reprogrammed funds. The Work Plan will
    be provided to the Committees shortly.
        Question. I understand that $15,000,000 in construction funds is
    needed in fiscal year 2008. Does this amount take into account the
    $10,045,000 that was reprogrammed by the Corps since 1980? Please
    explain how, if any, would the Corps factor in any reprogrammed
    amounts.
        Answer. Sir, whether a project has experienced previous net
    revocations is a consideration in development of the fiscal year 2007
    Work Plan. Any funds allocated to the project would be applied toward
    the commitment to restore previously revoked funds.
        Question. Would the $15,000,000 be sufficient to complete the
    Kikiaola Light Draft Harbor project?
        Answer. Yes, sir. The $15,000,000 would be sufficient to complete
    the project based on our current cost estimates.
                                     ______

                    Questions Submitted by Senator Jack Reed

                                 BUDGET REQUEST

        Question. The Defense Authorization Act for fiscal year 2007
    included a provision directing the Corps to assume responsibility for
    the annual operations and maintenance of the Fox Point Hurricane
    Barrier in Providence, Rhode Island. The Corps is to assume
    responsibility within 2 years after the date of the enactment of the
    Act, which I believe is October 17, 2008. Could you tell me where the
    Corps is in the process of taking over operations and control of the
    hurricane barrier? The Corps did not request funding for this project
    in the fiscal year 2008 budget, is not funding needed at this time? Do
    you plan to request funding in the President's budget request for
    fiscal year 2009?
        Answer. We have not received any funding to date for this effort.
    We have met with the city of Providence to develop a strategy; however,
    we have not initiated this work because of funding delays and at this
    time it is unlikely that we will be able to perform all of the tasks
    necessary to take over operation and maintenance of the project by 17
    October 2008. We have Construction funds currently available; however,
    these funds are for the purpose of reimbursing the city of Providence
    for the Federal share of their costs in making eligible repairs to the
    Fox Point Hurricane Barrier. We are not authorized to use these funds
    for the purpose of completing tasks necessary to take over operation
    and maintenance of the project. The fiscal year 2009 budget to be
    released in February 2008 and as of yet have not made any decisions for
    that budget.
        Question. The Corps has a number of ongoing projects in Rhode
    Island to assist with navigation and aquatic ecosystem restoration.
    These projects are funded under the Continuing Authorities Programs;
    yet, there is no funding request in the fiscal year 2008 budget for
    these projects. Could you tell me why the administration's budget
    request does not provide a list of these ongoing projects in each State
    and the amount of funding needed for their completion? Could you
    provide a national list of projects currently funded under the Corps'
    Continuing Authorities Program and the cost to complete work on these
    projects? Also, why does the administration not provide specific
    funding requests for these projects in its budget?
        Answer. Yes, sir the list requested is attached. Competition for
    Constructions funds is very keen and the budget presented the best
    allocation of funds among all the competing interest.

                        FIVE YEAR CAPABILITIES FOR CAP PROJECT PHASES IN FISCAL YEAR 2008 BUDGET
                                                [in thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                                                            Cost to
                    Project Name                  CAP Section No.          MSC              DISTRICT        Complete
    ----------------------------------------------------------------------------------------------------------------
    KWETHLUK, AK................................              14   POD...............  POA...............        100
    TALLAHATCHIE RIVER, SITE 3, TALLAHATCHIE                  14   MVD...............  MVK...............        621
     COUNTY, MS.
    14 OLD FORT NIAGARA, YOUNGSTOWN, NY.........              14   LRD...............  LRB...............        100
    27TH STREET BRIDGE, GLENWOOD SPRINGS, CO....              14   SPD...............  SPA...............        322
    ALDEN SEWER DISTRICT NO. 2..................              14   LRD...............  LRB...............        100
    ARGOSY ROAD BRIDGE, RIVERSIDE, MO...........              14   NWD...............  NWK...............        650
    BARNES CO., KATHRYN, ND.....................              14   MVD...............  MVP...............        300
    BATESVILLE WASTEWATER TREATMENT PLANT, WHITE              14   SWD...............  SWL...............        477
     RIVER, AR.
    BEAR CREEK, ROLAND, STORY CO., IA...........              14   MVD...............  MVR...............         90
    BEAVER CK WASTEWATER TREATMENT PLANT,                     14   LRD...............  LRL...............        100
     GREENE, CO.
    BELLE ISLE, DETROIT, MI.....................              14   LRD...............  LRE...............         50
    BELPRE, OH SEWER AND WATERLINE PROTECTION...              14   LRD...............  LRH...............         80
    BIG SISTER CREEK, N. COLLINS................              14   LRD...............  LRB...............        100
    BLACK RIVER, RIVER DRIVE....................              14   MVD...............  MVP...............        500
    BLANCHARD RIVER, OTTAWA, OH.................              14   LRD...............  LRB...............  .........
    BRITTON ROAD BRIDGE, JONES, OK..............              14   SWD...............  SWT...............         40
    CANADAWAY SEWERLINE.........................              14   LRD...............  LRB...............        250
    CASS LAKE, LEECH LAKE TRIBE.................              14   MVD...............  MVP...............        225
    CAULKS CREEK, ST. LOUIS COUNTY, MO..........              14   MVD...............  MVS...............        421
    CHAGRIN RIVER, GATES MILLS, OH..............              14   LRD...............  LRB...............  .........
    CITY OF BLUFFTON, WELLS CO (SEC. 14)........              14   LRD...............  LRL...............        100
    COAL CREEK, ALBIA, MONROE CO., IA...........              14   MVD...............  MVR...............        125
    COAL CREEK, ALBIA, MONROE CO., IA...........              14   MVD...............  MVR...............         38
    CONWAY, CROWS RUN, PA.......................              14   LRD...............  LRP...............        126
    CROOKED CREEK, MADISON, IN..................              14   LRD...............  LRL...............        220
    CUYAHOGA RIVER, BATH ROAD...................              14   LRD...............  LRB...............  .........
    CUYAHOGA RIVER, VAUGHN RD...................              14   LRD...............  LRB...............        100
    DEERFIELD TOWNSHIP, WARREN CO...............              14   LRD...............  LRL...............        100
    DELAWARE CANAL, PAUNNACUSSING CREEK, BUCKS                14   NAD...............  NAP...............        750
     COUNTY, PA.
    DES MOINES RVR, KEOSAUGUA, VAN BURNE CO., IA              14   MVD...............  MVR...............         90
    DUNKARD CREEK, BLACKVILLE, PA...............              14   LRD...............  LRP...............         39
    EAST FORK BIG CREEK, BETHANY, MO............              14   NWD...............  NWK...............         69
    EAST LIVERPOOL, OH..........................              14   LRD...............  LRP...............        129
    EAST POINT, NJ..............................              14   NAD...............  NAP...............        360
    EAST VALLEY CREEK, ANDOVER..................              14   LRD...............  LRB...............        100
    EIGHTEENMILE CREEK, NEWFANE.................              14   LRD...............  LRB...............        100
    EIGHTEENMILE CREEK, NORTH CREEK RD..........              14   LRD...............  LRB...............        100
    ELIZABETH RIVER, VALLEYVIEW ROAD, HILLSIDE,               14   NAD...............  NAN...............        800
     NJ.
    ELK RIVER, SHERBURNE CO.....................              14   MVD...............  MVP...............        600
    ELLICOTT CREEK, NORTH FOREST RD., AMHERST...              14   LRD...............  LRB...............        100
    ERIE BASIN MARINA, BUFFALO, NY..............              14   LRD...............  LRB...............        100
    FT. ABERCROMBIE, ND.........................              14   MVD...............  MVP...............        960
    FT. ABERCROMBIE, ND.........................              14   MVD...............  MVP...............         40
    GRAND RIVER (NOWS), GRAND HAVEN, MI.........              14   LRD...............  LRE...............         50
    GRAND RIVER, PAINESVILLE, OH, SR84 BRIDGE...              14   LRD...............  LRB...............  .........
    GRAYCLIFF HOUSE, EVANS, NY..................              14   LRD...............  LRB...............         80
    GREEN HILL RD., ASHTABULA RIVER, PLYMOUTH                 14   LRD...............  LRB...............        100
     TOWNSHIP.
    HANLOCK RD., ASHTABULA RIVER, PLYMOUTH                    14   LRD...............  LRB...............        100
     TOWNSHIP.
    HIGHWAY A, TURKEY CREEK, MO.................              14   MVD...............  MVS...............         35
    HODGENVILLE, KY.............................              14   LRD...............  LRL...............        200
    HOLMES BAY [STATE HIGHWAY RTE 191], WHITING,              14   NAD...............  NAE...............        675
     ME.
    HURON RIVER, S.R. 99........................              14   LRD...............  LRB...............        100
    IA RVR, IA CITY, JOHNSON CO., IA............              14   MVD...............  MVR...............         90
    IA RVR, SAC & FOX SETTLEMENT, TAMA COUNTY,                14   MVD...............  MVR...............        348
     IA.
    KANAWHA RIVER, CHARLESTON, WV (MAGIC ISLAND               14   LRD...............  LRH...............        960
     TO PATRICK STREET).
    KENOSHA HARBOR, RETAINING WALL, KENOSHA, WI.              14   LRD...............  LRE...............        700
    KEUKA LAKE, HAMMONDSPORT....................              14   LRD...............  LRB...............        100
    KINNICKINNIC RIVER STORM SEWER, MILWAUKEE                 14   LRD...............  LRE...............        130
     COUNTY, WI.
    MIDDLE BASS ISLAND, OH, DEIST ROAD..........              14   LRD...............  LRB...............  .........
    MONONGAHELA RIVER, W. ELIZABETH, PA.........              14   LRD...............  LRP...............         70
    MT. PLEASANT AVE., MALAPARDIS BROOK,                      14   NAD...............  NAN...............        650
     HANOVER, NJ.
    NOKOMIS RD, TEN MILE CREEK, LANCASTER, TX...              14   SWD...............  SWF...............        516
    NORTH PARK..................................              14   LRD...............  LRC...............      1,300
    NORTH SHORE DRIVE, SOUTH BEND, IN...........              14   LRD...............  LRE...............         65
    OAKLAND SEWAGE FACILITY, TN.................              14   MVD...............  MVM...............         46
    OHIO RIVER, HUNTINGTON, WV SEVENTH STREET                 14   LRD...............  LRH...............        380
     WEST SEC. 14.
    OHIO RIVER, HUNTINGTON, WV SEVENTH STREET                 14   LRD...............  LRH...............         40
     WEST SEC. 14.
    OHIO RIVER, HUNTINGTON, WV STAUNTON AVENUE                14   LRD...............  LRH...............        140
     SEC. 14.
    OHIO RIVER, HUNTINGTON, WV STAUNTON AVENUE                14   LRD...............  LRH...............         40
     SEC. 14.
    OLD CHAPPELL HILL ROAD, DAVIS CREEK,                      14   SWD...............  SWF...............        180
     WASHINGTON COUNTY, TX.
    OUACHITA RIVER, CITY OF MONROE, LA..........              14   MVD...............  MVK...............         60
    PARTRIDGE BROOK, WESTMORELAND, NH...........              14   NAD...............  NAE...............        381
    PATUXENT RIVER, PATUXENT BEACH ROAD, MD.....              14   NAD...............  NAB...............        700
    PEPPER'S FERRY RWTR, RADFORD, VA SEC. 14....              14   LRD...............  LRH...............         40
    PIPE CREEK, HAYES HOLLOW RD.................              14   LRD...............  LRB...............        100
    PLATTE CITY SEWER, PLATTE CITY, MO..........              14   NWD...............  NWK...............        260
    PLATTE RIVER BRIDGE, CONCEPTION, MO.........              14   NWD...............  NWK...............        227
    POWERS BLVD, COLORADO SPRINGS, CO...........              14   SPD...............  SPA...............        441
    QUODDY NARROWS, SOUTH LUBEC ROAD, LUBEC, ME.              14   NAD...............  NAE...............        202
    RANSOM CREEK, HOPKINS ROAD, AMHERST, NY.....              14   LRD...............  LRB...............        730
    RED DUCK--NINETH STREET, KY., NO. 14........              14   MVD...............  MVM...............        595
    RED LAKE RIVER, MN..........................              14   MVD...............  MVP...............        960
    RED LAKE RIVER, MN..........................              14   MVD...............  MVP...............         40
    ROCKPORT, IN................................              14   LRD...............  LRL...............        200
    ROUTE YY, WORTH COUNTY, MO..................              14   NWD...............  NWK...............        227
    ROUTE YY, WORTH COUNTY, MO..................              14   NWD...............  NWK...............         99
    SALAMANCA, NY...............................              14   LRD...............  LRP...............         70
    SAND COVE PARK, SACRAMENTO RIVER, CA........              14   SPD...............  SPK...............         59
    SAND HILL BRIDGE, MEDICINE CREEK, GRUNDY                  14   NWD...............  NWK...............        305
     CO., MO.
    SAND HILL BRIDGE, MEDICINE CREEK, GRUNDY                  14   NWD...............  NWK...............         79
     CO., MO.
    SARTELL, MN.................................              14   MVD...............  MVP...............        500
    SEC. 14 LINCOLN BOROUGH, PA.................              14   LRD...............  LRP...............         70
    SHOTWELL CREEK, ST. LOUIS COUNTY, MO........              14   MVD...............  MVS...............        203
    SIX-MILE CREEK, ITHACA, NY..................              14   LRD...............  LRB...............  .........
    SOUTH BRANCH, RAHWAY RIVER, WOODBRIDGE, NJ..              14   NAD...............  NAN...............        550
    SOUTH FORK CLEAR CREEK, ROUTE FF, MARYVILLE,              14   NWD...............  NWK...............        189
     MO.
    SOUTH HARRISON COUNTY, IN...................              14   LRD...............  LRL...............        200
    SOUTHERN UNIVERSITY, CAMPUS ROAD, BATON                   14   MVD...............  MVN...............        204
     ROUGE, LA.
    SPRINGDALE CREEK SPRINGDALE CEMETARY PEORIA,              14   MVD...............  MVR...............         90
     IL.
    ST JOHNS LANDFILL, OR.......................              14   NWD...............  NWP...............        809
    STRANGER CREEK AT K-32, KS..................              14   NWD...............  NWK...............        428
    STRANGER CREEK AT K-32, KS..................              14   NWD...............  NWK...............         73
    STURGEON RIVER, HOUGHTON COUNTY, MI.........              14   LRD...............  LRE...............        280
    THIEME DRIVE, FORT WAYNE, IN................              14   LRD...............  LRE...............         60
    TONAWANDA CREEK, LOCKWOOD, NIAGARA COUNTY...              14   LRD...............  LRB...............        100
    TONAWANDA CREEK, NEWSTEAD...................              14   LRD...............  LRB...............        100
    TONAWANDA CREEK, RIDDLE ROAD, NY............              14   LRD...............  LRB...............  .........
    TONAWANDA CREEK, TONAWANDA CREEK RD.,                     14   LRD...............  LRB...............        100
     AMHERST.
    TOWN OF PORTER..............................              14   LRD...............  LRB...............        100
    TOWN OF WELLS, NY...........................              14   NAD...............  NAN...............        500
    TUCKER ROAD, COMITE RIVER, LA...............              14   MVD...............  MVN...............        200
    TUSCARAWAS CO., RD. 1, (JOHNSON HILL), OH...              14   LRD...............  LRH...............        295
    U.S. HIGHWAY 71 BRIDGE, RED RIVER, OGDEN, AR              14   SWD...............  SWL...............        465
    WALKER LANE, WASHINGTON, WV, SECTION 14.....              14   LRD...............  LRH...............         80
    WALNUT BOTTOM RUN, ING-RICH ROAD, BEAVER                  14   LRD...............  LRP...............         77
     FALLS, PA.
    WEST FORK MEDICINE CREEK, GALT BRIDGE, MO...              14   NWD...............  NWK...............        119
    WEST FORK MEDICINE CREEK, GALT BRIDGE, MO...              14   NWD...............  NWK...............         11
    WESTFIELD RIVER, AGAWAM, MA.................              14   NAD...............  NAE...............        155
    WESTFIELD RIVER, OLD RTE. 9, CUMMINGTON, MA.              14   NAD...............  NAE...............        188
    WESTON, WV (US RT 19 S).....................              14   LRD...............  LRP...............         90
    WHITE RIVER, AUGUSTA, AR....................              14   SWD...............  SWL...............        100
    WHORTON BEND ROAD, ETOWAH CO., AL...........              14   SAD...............  SAM...............        524
    UNALAKLEET STORM DAMAGE REDUCTION,                       103   POD...............  POA...............        400
     UNALAKLEET, AK.
    BAYOU TECHE-CHITIMACHA......................             103   MVD...............  MVN...............        200
    COMMERCIAL PORT ROAD, GUAM 000..............             103   POD...............  POH...............      1,977
    F-1 FUEL PIER, GUAM.........................             103   POD...............  POH...............        550
    FORT SAN GERONIMO, PR.......................             103   SAD...............  SAJ...............        300
    GOLETA BEACH, CITY OF GOLETA, CA............             103   SPD...............  SPL...............      2,015
    GOLETA BEACH, CITY OF GOLETA, CA............             103   SPD...............  SPL...............        300
    INDIAN RIVER INLET, SUSSEX COUNTY, DE.......             103   NAD...............  NAP...............        544
    LAKE ERIE AT PAINESVILLE....................             103   LRD...............  LRB...............  .........
    LAKE ERIE ATHOL SPRINGS, NY.................             103   LRD...............  LRB...............      1,050
    LAKEVIEW PARK...............................             103   LRD...............  LRB...............        100
    LASALLE PARK, BUFFALO, NY...................             103   LRD...............  LRB...............  .........
    LELOALOA SHORE PROTECTION, AMERICAN SAMOA...             103   POD...............  POH...............      1,663
    NANTASKET BEACH, HULL, MA...................             103   NAD...............  NAE...............         81
    PHILADELPHIA SHIPYARD, PA...................             103   NAD...............  NAP...............      2,802
    PLEASURE ISLAND, BALTIMORE COUNTY, MD.......             103   NAD...............  NAB...............        300
    PORTER COMMUNITY PARK.......................             103   LRD...............  LRB...............        100
    PUERTO NUEVO BCH, PR........................             103   SAD...............  SAJ...............         73
    TARPON SPRINGS, FL..........................             103   SAD...............  SAJ...............        922
    VETERAN'S DRIVE SHORELINE, ST. THOMAS,                   103   SAD...............  SAJ...............        281
     U.S.V.I..
    KAHO'OLAWE SMALL BOAT HARBOR, HI............             107   POD...............  POH...............        494
    MACKINAC ISLAND HARBOR BREAKWATER, MI.......             107   LRD...............  LRE...............        200
    APRA SMALL BOAT HARBOR, GUAM................             107   POD...............  POH...............        620
    ARKANSAS RIVER, RUSSELLVILLE HARBOR, AR.....             107   SWD...............  SWL...............      2,746
    BASS HARBOR, TREMONT, ME....................             107   NAD...............  NAE...............        144
    BLACKWATER RIVER, HAMPTON HARBOR, NH........             107   NAD...............  NAE...............        144
    BLYTHEVILLE HARBOR, AR......................             107   MVD...............  MVM...............      3,280
    BUCKS HARBOR, MACHIASPORT, ME...............             107   NAD...............  NAE...............         42
    BUFFALO INNER HARBOR, NY....................             107   LRD...............  LRB...............      3,600
    CHARLESTOWN BREACHWAY & NINIGRET POND,                   107   NAD...............  NAE...............        301
     CHARLESTOWN, RI.
    CHEFORNAK NAVIGATION IMPROVEMENTS,                       107   POD...............  POA...............        400
     CHEFORNAK, AK.
    CLEVELAND LAKEFRONT STATE PARK, OH..........             107   LRD...............  LRB...............  .........
    COLD BAY NAVIGATION IMPROVEMENTS............             107   POD...............  POA...............        400
    COOLEY CREEK, OH............................             107   LRD...............  LRB...............  .........
    DOUGLAS HARBOR, AK..........................             107   POD...............  POA...............      2,778
    EAST BOAT BASIN, SANDWICH, MA...............             107   NAD...............  NAE...............        100
    EAST TWO RIVER, TOWER, MN...................             107   MVD...............  MVP...............        350
    ELIM NAVIGATION IMPROVEMENTS, ELIM, AK......             107   POD...............  POA...............        400
    ESCANABA, MI................................             107   LRD...............  LRE...............        309
    FISHERMANS COVE, NORFOLK, VA................             107   NAD...............  NAO...............        252
    GALVESTON ISLAND HARBOR, GALVESTON, TX......             107   SWD...............  SWG...............        599
    GRAND MARAIS, MN............................             107   LRD...............  LRE...............        200
    GRAND PORTAGE HARBOR, MN....................             107   LRD...............  LRE...............        130
    GUSTAVUS NAVIGATION IMPROVEMENTS, AK........             107   POD...............  POA...............        250
    IGIUGIG NAVIGATION IMPROVEMENTS, IGIUGIG, AK             107   POD...............  POA...............        400
    KNIFE HARBOR, MN............................             107   LRD...............  LRE...............        100
    KOKHANOK HARBOR, AK.........................             107   POD...............  POA...............        400
    NANTICOKE HARBOR, MD........................             107   NAD...............  NAB...............        300
    NANWALEK NAVIGATION IMPROVEMENTS, AK........             107   POD...............  POA...............        250
    NASSAWADOX CREEK, NORTHAMPTON COUNTY, VA....             107   NAD...............  NAO...............        608
    NEW RIVER INLET, ONSLOW CO., NC.............             107   SAD...............  SAW...............         80
    NFTA BOAT HARBOR............................             107   LRD...............  LRB...............        100
    NORTH KOHALA NAVIGATION, HI.................             107   POD...............  POH...............        520
    NORTHERN MICHIGAN COLLEGE, TRAVERSE CITY, MI             107   LRD...............  LRE...............      1,314
    NORTHWEST TENNESSEE REGIONAL HARBOR, LAKE                107   MVD...............  MVM...............      3,110
     COUNTY, TN.
    OAK BLUFFS HARBOR, OAK BLUFFS, MA...........             107   NAD...............  NAE...............        360
    OHIO RIVER, PROCTORVILLE, OH., SEC. 107.....             107   LRD...............  LRH...............        200
    OLCOTT HARBOR, NEWFANE, NY..................             107   LRD...............  LRB...............  .........
    ONTONAGON RIVER, MI.........................             107   LRD...............  LRE...............        125
    OUTER COVE MARINA, CNMI.....................             107   POD...............  POH...............        570
    OYSTER POINT MARINA.........................             107   SPD...............  SPN...............        650
    PALM BEACH HARBOR, FL.......................             107   SAD...............  SAJ...............        250
    POINT JUDITH HARBOR, NARRAGANSETT, RI.......             107   NAD...............  NAE...............        100
    PORT FOURCHON EXTENSION, LAFOURCHE PARISH,               107   MVD...............  MVN...............        500
     LA.
    PORT GRAHAM NAVIGATION IMPROVEMENTS, PORT                107   POD...............  POA...............        160
     GRAHAM, AK.
    PORT HUENEME, CA............................             107   SPD...............  SPL...............      4,000
    RHODES POINT, MD............................             107   NAD...............  NAB...............      3,600
    ROUGE RIVER, MI.............................             107   LRD...............  LRE...............        320
    ROUND POND HARBOR, BRISTOL, ME..............             107   NAD...............  NAE...............         80
    SEWARD MARINE INDUSTRIAL CENTER NAVIGATION               107   POD...............  POA...............        400
     IMPROVEMENT, AK.
    SHALLOTTE RIVER, BRUNSWICK COUNTY, NC.......             107   SAD...............  SAW...............         49
    SMALL NAVIGATION IMPROVEMENTS, ILIAMNA, AK..             107   POD...............  POA...............        290
    ST LAWRENCE, AK.............................             107   POD...............  POA...............      9,600
    ST. JEROME CREEK, ST. MARY'S COUNTY, MD.....             107   NAD...............  NAB...............        300
    ST. JEROME CREEK, ST. MARY'S COUNTY, MD.....             107   NAD...............  NAB...............        100
    TATITLEK, AK................................             107   POD...............  POA...............      3,105
    TATITLEK, AK................................             107   POD...............  POA...............        294
    TELLER NAVIGATION IMPROVEMENTS, TELLER, AK..             107   POD...............  POA...............        200
    TWO HARBORS, MN.............................             107   LRD...............  LRE...............        212
    WALNUT CREEK ACCESS AREA, ERIE COUNTY, PA...             107   LRD...............  LRB...............  .........
    WALTER SLOUGH, DARE COUNTY, NC..............             107   SAD...............  SAW...............        448
    WESTPORT, MA................................             107   NAD...............  NAE...............        531
    WOODS HOLE GREAT HARBOR, FALMOUTH, MA.......             107   NAD...............  NAE...............        150
    WURTLAND, KY (NAVIGATION CHANNEL                         107   LRD...............  LRH...............      7,300
     IMPROVEMENT).
    WURTLAND, KY (NAVIGATION CHANNEL                         107   LRD...............  LRH...............         50
     IMPROVEMENT).
    111 FAIRPORT HARBOR, OH.....................             111   LRD...............  LRB...............        100
    111 VERMILLION, OH..........................             111   LRD...............  LRB...............        100
    AGUADILLA COASTLINE, PR.....................             111   SAD...............  SAJ...............      3,250
    CAMP ELLIS, SACO, MAINE.....................             111   NAD...............  NAE...............        247
    LORAIN HARBOR, OH...........................             111   LRD...............  LRB...............        100
    MATTITUCK HARBOR, NY........................             111   NAD...............  NAN...............        300
    MOBILE PASS, AL.............................             111   SAD...............  SAM...............        777
    MOREHEAD CITY HARBOR, NC., SECTION 933......             145   SAD...............  SAW...............      4,100
    21ST AVE WEST CHANNEL, DULUTH, MN...........             204   LRD...............  LRE...............         20
    BARATARIA BAY WATERWAY, MILE 6.0-0.0,                    204   MVD...............  MVN...............        100
     PLAQUEMINES PH, LA.
    BLACKHAWK BOTTOMS, DES MOINES COUNTY, IA....             204   MVD...............  MVR...............        306
    CALCASIEU RIVER, MILE 5.0-14.0, CAMERON                  204   MVD...............  MVN...............      1,125
     PARISH, LA.
    ISLE AUX HERBES.............................             204   SAD...............  SAM...............        250
    MAUMEE BAY HABITAT RESTORATION, OH..........             204   LRD...............  LRB...............      1,500
    MRGO MILE -3 TO -9 MARSH RESTORATION,                    204   MVD...............  MVN...............      1,071
     (2001), PLAQUEMINES PH.
    WANCHESE MARSH CREATION AND PROTECTION, NC..             204   SAD...............  SAW...............         20
    WYNN ROAD, OREGON, OH.......................             204   LRD...............  LRB...............        600
    DAUPHIN ISLAND PARKWAY, AL..................             204   SAD...............  SAM...............        450
    HELEN WOOD PARK, AL.........................             204   SAD...............  SAM...............      1,600
    OTTAWA RIVER, OH............................             204   LRD...............  LRB...............        600
    RESTORATION OF THE CAT ISLANDS CHAIN, WI....             204   LRD...............  LRE...............        205
    BEAVER CREEK & TRIBS, BRISTOL, TN...........             205   LRD...............  LRN...............        800
    CHIPPEWA RIVER AT MONTEVIDEO, MN............             205   MVD...............  MVP...............      3,472
    EAST PEORIA, IL.............................             205   MVD...............  MVR...............        100
    FARGO, RIDGEWOOD ADDITION, ND...............             205   MVD...............  MVP...............      2,035
    HEACOCK CHANNEL, RIVERSIDE COUNTY,                       205   SPD...............  SPL...............      5,300
     RIVERSIDE, CA.
    205 LIMESTONE CREEK, FAYETTEVILLE, NY.......             205   LRD...............  LRB...............  .........
    ABERJONA RIVER, WINCHESTER, MA..............             205   NAD...............  NAE...............        150
    AITKIN, MN..................................             205   MVD...............  MVP...............      5,673
    AITKIN, MN..................................             205   MVD...............  MVP...............        216
    AMBERLEY CREEK, CINCINNATI, OH..............             205   LRD...............  LRL...............        350
    ARCHEY FORK CREEK, CLINTON, AR..............             205   SWD...............  SWL...............        108
    ARROYO, PR (205)............................             205   SAD...............  SAJ...............        271
    ATHENS, OH RICHLAND AVE. CORRIDOR...........             205   LRD...............  LRH...............        200
    BALDWIN CREEK, NORTH ROYALTON, OH...........             205   LRD...............  LRB...............  .........
    BANLICK CREEK, KENTON CO., KY...............             205   LRD...............  LRL...............        200
    BAYOU CHOUPIQUE CAP 205.....................             205   MVD...............  MVN...............        200
    BAYOU QUEUE DE TORTUE, VERMILION PARISH, LA.             205   MVD...............  MVN...............        125
    BEAVER CREEK, FRENCHBURG, KY................             205   LRD...............  LRL...............        150
    BEML MILL BROOK HIGHLAND PARK, NJ...........             205   NAD...............  NAN...............        300
    BEN HILL COUNTY, GA.........................             205   SAD...............  SAS...............      1,200
    BEPJ POPLAR BROOK...........................             205   NAD...............  NAN...............        850
    BIG SISTER CREEK, ANGOLA....................             205   LRD...............  LRB...............        100
    BLACK ROCKS CREEK, SALISBURY, MA............             205   NAD...............  NAE...............        250
    BLACKSNAKE CREEK, ST. JOSEPH, MO............             205   NWD...............  NWK...............      3,639
    BLACKSNAKE CREEK, ST. JOSEPH, MO............             205   NWD...............  NWK...............          6
    BLASDELL STP................................             205   LRD...............  LRB...............        100
    BOCA DE CACHETA, PR.........................             205   SAD...............  SAJ...............        250
    BREAKNECK CREEK, FRANKLIN...................             205   LRD...............  LRB...............        100
    BRUSH CREEK, GLADY FORK, PRINCETON, WV......             205   LRD...............  LRH...............         50
    BUCKEYE LAKE, OH............................             205   LRD...............  LRH...............        858
    BUCKEYE LAKE, OH............................             205   LRD...............  LRH...............         75
    BYRUM CREEK, ANDERSON COUNTY, SC............             205   SAD...............  SAS...............        275
    CANE BEND, BOSSIER PARISH, LA...............             205   MVD...............  MVK...............        150
    CANISTEO MINE PIT LAKE, MN..................             205   MVD...............  MVP...............      2,300
    CANISTEO MINE PIT LAKE, MN..................             205   MVD...............  MVP...............        275
    CASHIE RIVER, WINDSOR, NC...................             205   SAD...............  SAW...............         70
    CAZENOVIA CREEK, STEVENSON STREET, BUFFALO..             205   LRD...............  LRB...............        100
    CEDAR RIVER, CEDAR FALLS UTILITIES, CEDAR                205   MVD...............  MVR...............        350
     FALLS , IA.
    CEDAR RUN, PA...............................             205   NAD...............  NAB...............        200
    CITY OF BLUFFTON, WELLS CO (SEC 205)........             205   LRD...............  LRL...............        200
    CITY OF DELPHI, CARROLL CO (DEER CK LEVEE)..             205   LRD...............  LRL...............        200
    CITY OF FLEMING-NEON, LETCHER, CO...........             205   LRD...............  LRL...............        200
    CITY OF WHITTIER, CA........................             205   SPD...............  SPL...............      1,200
    CONCORDIA, KS...............................             205   NWD...............  NWK...............        125
    COSGROVE CREEK FLOOD CONTROL, CALAVERAS                  205   SPD...............  SPK...............        750
     COUNTY.
    COUSHATTA INDIAN RESERVATION FDR PROJECT,                205   MVD...............  MVN...............        125
     ALLEN PARISH, LA.
    COWSKIN CREEK, WICHITA, KS..................             205   SWD...............  SWT...............      1,100
    CROWN POINT BASIN, JEFFERSON PARISH, LA.....             205   MVD...............  MVN...............        350
    DAM BREAK EARLY WARNING SYSTEM, SILVERTON,               205   NWD...............  NWP...............        425
     OR.
    DETROIT BEACH, LAKE ERIE, FRENCHTOWN                     205   LRD...............  LRE...............      1,380
     TOWNSHIP, MI.
    DETROIT BEACH, LAKE ERIE, FRENCHTOWN                     205   LRD...............  LRE...............         50
     TOWNSHIP, MI.
    DRY CREEK, CHEYENNE, WY.....................             205   NWD...............  NWO...............         32
    DUCK CREEK, OH FWS..........................             205   LRD...............  LRH...............        200
    EIGHTEENMILE CREEK, BOSTON..................             205   LRD...............  LRB...............        100
    EIGHTEENMILE CREEK, HAMBURG.................             205   LRD...............  LRB...............        100
    ELIZABETHTOWN, KY...........................             205   LRD...............  LRL...............        150
    ELKTON, MD..................................             205   NAD...............  NAB...............        300
    EST LA GRANGE ST. CROIX.....................             205   SAD...............  SAJ...............        350
    EUREKA CREEK, MANHATTAN, KS.................             205   NWD...............  NWK...............      3,123
    FARMERS BRANCH, TARRANT COUNTY, TX..........             205   SWD...............  SWF...............      7,189
    FISH CREEK/CUYAHOGA RIVER, KENT.............             205   LRD...............  LRB...............        100
    FORT YUKON FLOOD CONTROL, FORT YUKON, AK....             205   POD...............  POA...............         75
    FRED CREEK, TULSA, OK.......................             205   SWD...............  SWT...............        350
    FULMER CREEK, VILLAGE OF MOHAWK, NY.........             205   NAD...............  NAN...............      1,112
    GOOSE CREEK, JACKSON, MO....................             205   MVD...............  MVS...............        109
    GRAND RIVER, HARPERSFIELD DAM...............             205   LRD...............  LRB...............        100
    GRANDVIEW HEIGHTS, OH.......................             205   LRD...............  LRH...............        200
    H0ODS CREEK, BOYD COUNTY, KY................             205   LRD...............  LRH...............         37
    HAIKEY CREEK, BIXBY, OK.....................             205   SWD...............  SWT...............      4,125
    HATCH, NM...................................             205   SPD...............  SPA...............        400
    HEBER SPRINGS, CLEBURNE CO., AR.............             205   SWD...............  SWL...............         50
    HESHBON TO HEPBURNVILLE, LOWER LYCOMING                  205   NAD...............  NAB...............        600
     CREEK.
    HESTER, ADAMSON & HEARTSILL CREEKS,                      205   SWD...............  SWL...............        166
     GREENWOOD, AR.
    HIDDEN VALLEY, NEEDMORE BRANCH, GREENE                   205   SWD...............  SWL...............        150
     COUNTY, MO.
    HIGH SCHOOL BRANCH, NEOSHO, MISSOURI........             205   SWD...............  SWL...............        100
    HIGHWAY 164 BRIDGE, LITTLE PINEY,                        205   SWD...............  SWL...............         70
     HARGARVILLE, AR.
    HINKSTON CREEK, MT STERLING, KY.............             205   LRD...............  LRL...............        200
    HOMINY SWAMP, WILSON, NC....................             205   SAD...............  SAW...............        100
    HOWELL CREEK, WEST PLAINS, MO...............             205   SWD...............  SWL...............        100
    HUBBLE CREEK, JACKSON, MO...................             205   MVD...............  MVS...............        106
    HUGHES CREEK, KANAWHA COUNTY, WV., SEC. 205.             205   LRD...............  LRH...............        200
    INDIAN CREEK, CEDAR RVR, CEDAR RAPIDS, IA...             205   MVD...............  MVR...............        408
    IRONDEQUOIT CREEK, PENFIELD, NY.............             205   LRD...............  LRB...............  .........
    JACKSON BROOK, MORRIS CITY, NJ..............             205   NAD...............  NAN...............        800
    JAM UP CREEK, MOUNTAIN VIEW, MO.............             205   SWD...............  SWL...............        100
    JEAN LAFITTE, FISHER SCHOOL BASIN, LA.......             205   MVD...............  MVN...............      1,851
    JORDAN, MN..................................             205   MVD...............  MVP...............        243
    KEOPU-HIENALOLI STREAM, ISLAND OF HAWAII, HI             205   POD...............  POH...............      6,110
    KESHEQUA CREEK, NUNDA.......................             205   LRD...............  LRB...............  .........
    KINGS POINT, WARREN COUNTY, MS..............             205   MVD...............  MVK...............        135
    KNOX COUNTY, KELSO CREEK, IN................             205   LRD...............  LRL...............        302
    KULIOUOU STREAM, OAHU, HI...................             205   POD...............  POH...............        397
    LAC QUI PARLE RIVER, DAWSON, MN.............             205   MVD...............  MVP...............        869
    LAFAYETTE PARISH, LA........................             205   MVD...............  MVN...............        800
    LAMOTTE CREEK, PALESTINE, IL................             205   LRD...............  LRL...............         95
    LEWIS CREEK, BULVERDE, TX...................             205   SWD...............  SWF...............        290
    LINE CREEK, CHICKASHA, OK...................             205   SWD...............  SWT...............        350
    LITTLE BRAZOS RIVER, TX.....................             205   SWD...............  SWF...............      3,500
    LITTLE DUCK CREEK, OH.......................             205   LRD...............  LRL...............        350
    LITTLE FOSSIL CREEK, HALTOM CITY, TX........             205   SWD...............  SWF...............      4,762
    LITTLE RIVER DIVERSION, DUTCHTOWN, MO.......             205   MVD...............  MVM...............        709
    LOCKPORT TO LA ROSE, LAFOURCHE PARISH, LA...             205   MVD...............  MVN...............      2,011
    LONG HILL TOWNSHIP..........................             205   NAD...............  NAN...............      3,115
    LOUISIANA, MO...............................             205   MVD...............  MVS...............        113
    LOVINGTON, IL...............................             205   MVD...............  MVS...............        166
    MACOMB COUNTY, MI...........................             205   LRD...............  LRE...............        361
    MAD CREEK, MUSCATINE, IA....................             205   MVD...............  MVR...............      3,492
    MAGAZINE BRANCH, ELK RIVER, CHARLESTON, WV..             205   LRD...............  LRH...............         75
    MAGAZINE BRANCH, ELK RIVER, CHARLESTON, WV..             205   LRD...............  LRH...............        302
    MAGPIE & DON JULIO CREEKS, SACRAMENTO,                   205   SPD...............  SPK...............      1,585
     CALIFORNIA.
    MASCATATUCK RIVER LOG JAM, SCOTT CO, IN.....             205   LRD...............  LRL...............         40
    MCKINNEY BAYOU, TUNICA COUNTY, MS...........             205   MVD...............  MVK...............      3,445
    MEREDOSIA, IL...............................             205   MVD...............  MVS...............         87
    MILL CREEK, GARFIELD HEIGHTS................             205   LRD...............  LRB...............  .........
    MILLWOOD, GRASSY LAKE, AR, SECTION 1135.....             205   SWD...............  SWL...............          5
    MINNESOTA RIVER, GRANITE FALLS, MN..........             205   MVD...............  MVP...............      6,578
    MONTOURSVILLE, LYCOMING COUNTY, PA..........             205   NAD...............  NAB...............        600
    MORRIS CREEK, KANAWHA AND FAYETTE COUNTIES,              205   LRD...............  LRH...............        200
     WV., SEC. 205.
    MOYER CREEK, VILLAGE OF FRANKFURT, NY.......             205   NAD...............  NAN...............        890
    NEWPORT, MN.................................             205   MVD...............  MVP...............      2,250
    NORTH RIVER, PEABODY, MA....................             205   NAD...............  NAE...............        100
    OAK CREEK FLORENCE CO BE710.................             205   SPD...............  SPA...............        500
    ONONDAGA CREEK, SYRACUSE....................             205   LRD...............  LRB...............        100
    PAILET BASIN, JEFFERSON PARISH, LA..........             205   MVD...............  MVN...............        300
    PALAI STREAM, HAWAII, HI....................             205   POD...............  POH...............      4,859
    PALAI STREAM, HAWAII, HI....................             205   POD...............  POH...............         62
    PALO DURO, CANYON, TX (LOCAL FLOOD                       205   SWD...............  SWT...............        350
     PROTECTION PROJECT).
    PECAN CREEK, GAINESVILLE, TX................             205   SWD...............  SWF...............      4,091
    PLATTE RIVER, FREMONT, NE...................             205   NWD...............  NWO...............        190
    PLATTE RIVER, SCHUYLER, NE..................             205   NWD...............  NWO...............        320
    PLEASANT CREEK, GREENWOOD, IN...............             205   LRD...............  LRL...............        300
    POST OAK CREEK, CORSICANA, TX...............             205   SWD...............  SWF...............        323
    PRAIRIE CREEK, RUSSELLVILLE, AR.............             205   SWD...............  SWL...............        155
    RANDOLPH, NE................................             205   NWD...............  NWO...............        224
    RED DUCK CREEK, KY., NO. 205................             205   MVD...............  MVM...............        476
    RED OAK, IOWA...............................             205   NWD...............  NWO...............        276
    RICHLAND CREEK, NASHVILLE, TN...............             205   LRD...............  LRN...............        300
    RIO CULEBRINAS-AG205........................             205   SAD...............  SAJ...............        230
    RIO DESCALABRADO (205)......................             205   SAD...............  SAJ...............        216
    RIO EL OJO DE AGUA, PR., BER................             205   SAD...............  SAJ...............      5,519
    RIO GRANDE AND UNNAMED TRIBUTARY, EAGLE                  205   SWD...............  SWF...............        432
     PASS, TX.
    RIO GUAMANI, GUAYANA, PR., BEGUM............             205   SAD...............  SAJ...............        200
    RIO JACAQUAS, PR (205)......................             205   SAD...............  SAJ...............        300
    RIO LOCO, GUANICA, PR.......................             205   SAD...............  SAJ...............        268
    RIO OROCOVIS, PR (205)......................             205   SAD...............  SAJ...............        303
    RIO PATILLAS, PR (205)......................             205   SAD...............  SAJ...............        185
    ROCKFORD, MN................................             205   MVD...............  MVP...............        200
    ROSETHORNE BASIN, JEAN LAFITTE, LA..........             205   MVD...............  MVN...............      2,000
    ROSSVILLE, KS., SEC. 205....................             205   NWD...............  NWK...............        100
    SALCHA FLOOD DAMAGE REDUCTION, SALCHA, AK...             205   POD...............  POA...............        150
    SANDY CREEK, TN., NO. 205...................             205   MVD...............  MVM...............      8,130
    SAUGATUCK RIVER, WESTPORT, CT...............             205   NAD...............  NAE...............         71
    SCOTTS CREEK, SC., CAP 205..................             205   SAD...............  SAC...............        156
    SEDGEWICK, KS, LITTLE ARK RIVER WATERSHED...             205   SWD...............  SWT...............        350
    SIX MILE CREEK, ITHACA......................             205   LRD...............  LRB...............        100
    SNOQUALMIE RIVER, WA (BESNQ)................             205   NWD...............  NWS...............         75
    SOUTH SUBURBAN AREA OF CHICAGO, IL..........             205   LRD...............  LRC...............        300
    ST. MARY'S RIVER, FORT WAYNE, IN............             205   LRD...............  LRE...............         50
    STEELE CREEK, VILLAGE OF ILION, NY..........             205   NAD...............  NAN...............        500
    STONY CREEK, ROCKY MOUNT, NC................             205   SAD...............  SAW...............         70
    SUN VALLEY, EL PASO, TX.....................             205   SPD...............  SPA...............        265
    TONGUE & YELLOWSTONE RVRS, MILES CITY, MT...             205   NWD...............  NWO...............        400
    TOOKANY CREEK, CHURCH ROAD, PA..............             205   NAD...............  NAP...............      4,804
    TOOKANY CREEK, GLENSIDE ROAD, PA............             205   NAD...............  NAP...............      4,828
    TOWN BRANCH, CORSICANA, TX..................             205   SWD...............  SWF...............        268
    TOWN BRANCH, NEWARK, AR.....................             205   SWD...............  SWL...............         50
    TOWN OF CARENCRO, LAFAYETTE PARISH, LA......             205   MVD...............  MVN...............      6,000
    TUSCARAWAS CO BEAVERDAM CREEK...............             205   LRD...............  LRH...............        200
    VILLAGE OF RUSSELLS POINT, LOGAN CO.........             205   LRD...............  LRL...............        200
    WAIAHOLE-WAIAKANE VALLEY, OAHU, HI..........             205   POD...............  POH...............        650
    WAIAKEA STREAM, HAWAII, HI..................             205   POD...............  POH...............        666
    WAILELE STREAM, OAHU, HI....................             205   POD...............  POH...............        961
    WEST VIRGINIA STATEWIDE FLOOD WARNING SYSTEM             205   LRD...............  LRH...............      2,015
    WHITE RIVER, ANDERSON, IN...................             205   LRD...............  LRL...............        340
    WHITE SLOUGH BE608..........................             205   SPD...............  SPN...............      1,648
    WHITEWATER RIVER, AUGUSTA, KS...............             205   SWD...............  SWT...............        380
    WILD RICE & MARSH RIVERS, ADA, MN...........             205   MVD...............  MVP...............      3,175
    WILLIAMSTOWN, WV............................             205   LRD...............  LRH...............        300
    WILLOWWOOD ADDITION, EDMOND, OK.............             205   SWD...............  SWT...............        270
    WINNEBAGO RVR, MASON CITY, IA...............             205   MVD...............  MVR...............        225
    WV RALEIGH CO., NORTH SAND BRANCH...........             205   LRD...............  LRH...............        100
    WYNNE, AR NO. 205...........................             205   MVD...............  MVM...............      1,125
    ZIMBER DITCH, STARK CO, OH..................             205   LRD...............  LRH...............        350
    AQUATIC ECOSYSTEM RESTORATION FOR ROSE BAY,              206   SAD...............  SAJ...............      4,362
     VOLUISIA CO., FL.
    ARKANSAS RIVER FISHERIES HABITAT                         206   SPD...............  SPA...............         25
     RESTORATION, PUEBLO, CO.
    BOTTOMLESS LAKE STATE PARK, NM..............             206   SPD...............  SPA...............      1,452
    CLEAR LAKE, IA..............................             206   MVD...............  MVR...............          2
    CONFLUENCE POINT STATE PARK, MO.............             206   MVD...............  MVS...............        186
    EUGENE DELTA PONDS, OR......................             206   NWD...............  NWP...............      1,485
    GOOSE CREEK, CO.............................             206   NWD...............  NWO...............         27
    JACKSON CREEK, GWINETT CO., GA..............             206   SAD...............  SAS...............        600
    LYNCHES RIVER, LAKE CITY, SC................             206   SAD...............  SAC...............        350
    ORLAND PARK, IL.............................             206   LRD...............  LRC...............      2,800
    ST. HELEN-NAPA RIVER RESTORATION............             206   SPD...............  SPN...............        150
    STORM LAKE, IA..............................             206   MVD...............  MVR...............         10
    WWTP, STEPHENVILLE, TX......................             206   SWD...............  SWF...............      1,508
    5TH AVE DAM REMOVAL, COLUMBUS, OH...........             206   LRD...............  LRH...............      2,250
    ALLATOONA CREEK, COBB CO., GA...............             206   SAD...............  SAM...............        300
    ALLEN CREEK, HALL CNTY, GA..................             206   SAD...............  SAS...............        275
    ARCOLA CREEK, MADISON, OH...................             206   LRD...............  LRB...............        600
    ARKANSAS RIVER, ARK CITY, KS................             206   SWD...............  SWT...............      1,120
    ARROWHEAD CREEK AT WILSONVILLE, OR..........             206   NWD...............  NWP...............      1,313
    ARROYO LAS POSITAS, CA......................             206   SPD...............  SPN...............        161
    BAYOU GROSSE TETE RESTORATION, IBERVILLE                 206   MVD...............  MVN...............        125
     PARISH, LA.
    BEARGRASS CREEK, LOUISVILLE, KY., WETLANDS &             206   LRD...............  LRL...............        350
     REPARIAN RESTORATION.
    BEAVER RUIN CREEK, GWINETT CO., GA..........             206   SAD...............  SAS...............        345
    BELLE ISLE PIERS, DETROIT, MI...............             206   LRD...............  LRE...............         50
    BELLE ISLE STATE PARK, LANCASTER COUNTY, VA.             206   NAD...............  NAO...............        754
    BIG COTTON INDIAN CREEK, GA.................             206   SAD...............  SAS...............        275
    BIG FISHWIER CREEK, FL......................             206   SAD...............  SAJ...............        163
    BIRD ISLAND RESTORATION, MARION, MA.........             206   NAD...............  NAE...............      2,270
    BLACK LAKE ECOSYSTEM RESTORATION............             206   POD...............  POA...............      3,460
    BLACK LAKE ECOSYSTEM RESTORATION............             206   POD...............  POA...............      3,460
    BLOOMINGTON, IN, WETLANDS DEVELOPMENT.......             206   LRD...............  LRL...............        150
    BLUE HOLE LAKE, NM..........................             206   SPD...............  SPA...............        224
    BLUE RIVER, CO (SEC. 206)...................             206   SPD...............  SPK...............        213
    BOOTHEEL CREEK, FL..........................             206   SAD...............  SAJ...............        200
    BOQUERON REFUGE, PR.........................             206   SAD...............  SAJ...............        345
    BRIGHTWOOD LAKE, CONCORD....................             206   LRD...............  LRB...............        100
    BROWNSVILLE BRANCH, LONOKE CO, AR...........             206   MVD...............  MVM...............        239
    BRUSH NECK COVE, WARWICK, RI................             206   NAD...............  NAE...............        180
    BUTLER CREEK, GA............................             206   SAD...............  SAM...............      3,700
    C-1 REDIVERSION/LAGOON RESTORATION, BREVARD              206   SAD...............  SAJ...............        200
     COUNTY, FL.
    CABIN CREEK, SPALDING CNTY..................             206   SAD...............  SAS...............        275
    CABIN CREEK, WEST VIRGINIA..................             206   LRD...............  LRH...............        213
    CAMP CREEK, ZUMWALT PRAIRIE PRESERVE, OR....             206   NWD...............  NWW...............        531
    CANOA RANCH AQUATIC RESTORATION, AZ.........             206   SPD...............  SPL...............        362
    CANONSBURG LAKE, PA.........................             206   LRD...............  LRP...............        300
    CARPENTER CREEK, WASHINGTON.................             206   NWD...............  NWS...............      1,754
    CARPINTERIA CREEK PARK, CA..................             206   SPD...............  SPL...............        140
    CARSON RIVER CITY, NV.......................             206   SPD...............  SPK...............        500
    CASS RIVER, CITY OF VASSAR, MI..............             206   LRD...............  LRE...............         73
    CEDAR LAKE, IN..............................             206   LRD...............  LRC...............      7,560
    CHAPEL BRANCH, SC...........................             206   SAD...............  SAC...............        340
    CHAPEL BRANCH, SC...........................             206   SAD...............  SAC...............        167
    CHARITON RIVER/RATHBUN LAKE WATERSHED, IA...             206   NWD...............  NWK...............      4,171
    CHATTACHOOCHIE RIVER DAM REMOVAL, GA........             206   SAD...............  SAM...............      2,000
    CHENANGO LAKE, NY...........................             206   NAD...............  NAB...............        200
    CHEROKEE CREEK AQUATIC ECOSYSTEM                         206   SWD...............  SWT...............        195
     RESTORATION, OK.
    CHINO CREEK, CA.............................             206   SPD...............  SPL...............        292
    CHIPPOKES STATE PARK, SURRY COUNTY, VA......             206   NAD...............  NAO...............      1,177
    CHRISTINE AND HICKSON DAMS..................             206   MVD...............  MVP...............        230
    CIENEGA CREEK AQUATIC RESTORATION, AZ.......             206   SPD...............  SPL...............        100
    CITY CREEK, UT..............................             206   SPD...............  SPK...............        225
    CITY CREEK, UT..............................             206   SPD...............  SPK...............        145
    CLEAR LAKE, IA..............................             206   MVD...............  MVR...............      2,467
    CLEARWATER LAKE, GOGEBIC COUNTY, MI.........             206   LRD...............  LRE...............         75
    CODORUS CREEK, PA...........................             206   NAD...............  NAB...............      1,200
    COFFEE LAKE AT WILSONVILLE, OR..............             206   NWD...............  NWP...............        250
    CONCORD STREAMS RESTORTION, CONCORD, NC.....             206   SAD...............  SAW...............      1,030
    CONCORDIA UNIVERSITY, WI....................             206   LRD...............  LRE...............        341
    CONFLUENCE GREENWAY.........................             206   MVD...............  MVS...............        244
    COTTONWOOD CREEK, ARLINGTON, TX.............             206   SWD...............  SWF...............        150
    CROW CREEK AQUATIC ECOSYSTEM RESTORATION,                206   SWD...............  SWT...............        195
     TULSA, OK.
    CRUTCHO CREEK, OKLAHOMA COUNTY, OK.,                     206   SWD...............  SWT...............        250
     (ECOSYSTEM RESTORATION PR).
    CUYAHOGA RIVER STREAM PROJECT, AKRON, OH....             206   LRD...............  LRB...............         40
    DAVIS LAKE RESTORATION......................             206   SAD...............  SAJ...............        300
    DEEP RUN/TIBER HUDSON, MD...................             206   NAD...............  NAB...............        400
    DENTS RUN, MD...............................             206   NAD...............  NAB...............      1,500
    DETROIT RIVER, CITY OF TRENTON, MI..........             206   LRD...............  LRE...............        325
    DOWAGIAC RIVER, CASSOPOLIS, MI..............             206   LRD...............  LRE...............        909
    DRAYTON DAM.................................             206   MVD...............  MVP...............        300
    DRY BRANCH CK, CITY OF LAWRENCE, MARION, CO.             206   LRD...............  LRL...............        100
    DUCK CREEK/FAIRMOUNT PARK WETLAND RESTOR                 206   MVD...............  MVR...............        516
     SCOTT COUNTY, IA.
    DUCK CREEK/FAIRMOUNT PARK WETLAND RESTOR                 206   MVD...............  MVR...............         78
     SCOTT COUNTY, IA.
    EAST FORK WHITE RIVER, COLUMBUS, IN.........             206   LRD...............  LRL...............         80
    EKLUTNA, AK.................................             206   POD...............  POA...............        200
    EL PASO, RIO BOSQUE WETLANDS RESTORATION, TX             206   SPD...............  SPA...............        175
    ELIZ RIVER, GRANDY VILLAGE, NORFOLK, VA.....             206   NAD...............  NAO...............        956
    ELIZ RIVER, OLD DOMINION UNI DRAINAGE CANAL,             206   NAD...............  NAO...............        195
     NORFOLK, VA.
    ELIZ RIVER, SCUFFLETOWN CREEK, CHESAPEAKE,               206   NAD...............  NAO...............        101
     VA.
    ELIZ RIVER, WOODSTOCK PARK, VIRGINIA BEACH,              206   NAD...............  NAO...............        621
     VA.
    EMIQUON FLOODPLAIN RESTORATION..............             206   MVD...............  MVR...............      4,644
    ENGLISH CREEK...............................             206   SPD...............  SPL...............      1,122
    EUGENE FIELD, IL............................             206   LRD...............  LRC...............        600
    FAIRMOUNT PARK AQUATIC ECOSYSTEM                         206   SPD...............  SPL...............        297
     RESTORATION, CA.
    FALL BROOK, PA..............................             206   NAD...............  NAB...............        500
    FALLS RUN, WHEELING CREEK, BELMONT, OH......             206   LRD...............  LRP...............        119
    FILBIN CREEK, SC............................             206   SAD...............  SAC...............        257
    FOREST PARK, ST. LOUIS, MO..................             206   MVD...............  MVS...............        225
    FOX RIVER/TICHIGAN LAKE, WATERFORD, WI......             206   LRD...............  LRE...............         75
    FREEBORN COUNTY ECOSYSTEM RESTORATION, MN...             206   MVD...............  MVR...............        214
    FREEMAN LAKE WILDLIFE REFUGE, ELIZABETHTOWN,             206   LRD...............  LRL...............        181
     KY.
    GALLA CREEK, AR.............................             206   SWD...............  SWL...............        793
    GALVESTON COUNTY MUD 12 EXOSYSTEM                        206   SWD...............  SWG...............        200
     RESTORATION.
    GIWW-MAD ISLAND MARSH, TX...................             206   SWD...............  SWG...............      4,950
    GOOSE POND/MIAMI OXBOW......................             206   LRD...............  LRL...............         98
    GRAND (NEOSHO) RIVER ABOVE MIAMI, OK........             206   SWD...............  SWT...............        206
    GRAND MARAIS RIVER, RLWSD...................             206   MVD...............  MVP...............      1,285
    GRAND MARAIS RIVER, RLWSD...................             206   MVD...............  MVP...............        200
    GRASS LAKE, FOX RIVER, IL...................             206   LRD...............  LRC...............      1,435
    GREEN RIVER, UT.............................             206   SPD...............  SPK...............        100
    GREENBURY POINT, MD.........................             206   NAD...............  NAB...............        700
    GROVER'S MILL POND, TWP OF WINDSOR, MERCER               206   NAD...............  NAP...............        800
     COUNTY, NJ.
    GUM THICKET CREEK, NC.......................             206   SAD...............  SAW...............        155
    HAY CREEK, ROSEAU COUNTY, MN................             206   MVD...............  MVP...............      3,666
    HERON HAVEN, NE.............................             206   NWD...............  NWO...............        459
    HIGGINS LAKE, MI............................             206   LRD...............  LRE...............         75
    HOCKING RIVER WETLANDS, LANCASTER, OH.......             206   LRD...............  LRH...............        662
    HOCKING RIVER WETLANDS, LANCASTER, OH.......             206   LRD...............  LRH...............        264
    HOFFMAN DAM, IL.............................             206   LRD...............  LRC...............      5,522
    HOGAN'S CREEK, FL...........................             206   SAD...............  SAJ...............        200
    HOMER LAKE, ST. JOSEPH RIVER................             206   LRD...............  LRE...............        469
    HORICON MARSH, WI...........................             206   MVD...............  MVR...............        300
    HORSESHOE LAKE RESTORATION, ALEXANDER                    206   MVD...............  MVS...............      2,193
     COUNTY, IL.
    HORSESHOE LAKE RESTORATION, ALEXANDER                    206   MVD...............  MVS...............         10
     COUNTY, IL.
    HOUGHTON LAKE, ROSCOMMON CO, MI.............             206   LRD...............  LRE...............        517
    HUFF RUN, BELDON SITE, OH...................             206   LRD...............  LRH...............        734
    HUFF RUN, BELDON SITE, OH...................             206   LRD...............  LRH...............        309
    HUNTSVILLE SPRING BRANCH, HUNTSVILLE, AL....             206   LRD...............  LRN...............        800
    HURON RIVER, ROCKWOOD, MI...................             206   LRD...............  LRE...............         75
    IA RVR/CLEAR CREEK, JOHNSON COUNTY, IA......             206   MVD...............  MVR...............      1,580
    IA RVR/CLEAR CREEK, JOHNSON COUNTY, IA......             206   MVD...............  MVR...............         80
    INCLINE & 3RD CREEKS, NV....................             206   SPD...............  SPK...............        400
    INDIAN CREEK ECOSYSTEM RESTORATION,                      206   NWD...............  NWW...............      3,664
     CALDWELL, ID.
    ISSAQUAH CREEK, WA..........................             206   NWD...............  NWS...............        709
    JACKSON FISH PASSAGE PROJECT................             206   MVD...............  MVR...............         83
    JANES-WALLACE MEMORIAL DAM, SANTA ROSA, NM..             206   SPD...............  SPA...............        200
    JOHNSON CREEK/SPRINGWATER, OR...............             206   NWD...............  NWP...............        608
    JOHNSON POND, LYNDONVILLE, NY...............             206   LRD...............  LRB...............        279
    JONESBOROUGH (206), TN......................             206   LRD...............  LRN...............        215
    KANKAKEE, KANKAKEE COUNTY, IL...............             206   MVD...............  MVR...............        196
    KELLOGG CREEK, OR...........................             206   NWD...............  NWP...............        357
    KETTLE MORAINE WET PRAIRIE RESTORATION, WI..             206   MVD...............  MVR...............        300
    KEYSTONE HERITAGE PARK WETLAND RESTORATION,              206   SPD...............  SPA...............        200
     EL PASO, TX.
    KICKAPOO CREEK, CONCHO RIVER, UPPER COLORADO             206   SWD...............  SWF...............        242
     RIVER BASIN, TX.
    KINNICKINNIC RIVER, WI......................             206   MVD...............  MVP...............        200
    KINNICKINNIC RIVER, WI......................             206   MVD...............  MVP...............         50
    KOONTZ LAKE, IN (SEC. 206)..................             206   LRD...............  LRE...............      6,302
    LA STATE PEN, LAKE KILLARNEY RESTORATION, W              206   MVD...............  MVN...............      1,600
     FELICIANA PAR, LA.
    LAKE ANNA, LOUISA, ORANGE AND SPOTSYLVANIA               206   NAD...............  NAO...............        347
     COUNTIES, VA.
    LAKE AUSTIN ECOSYSTEM RESTORATION, AUSTIN,               206   SWD...............  SWF...............        170
     TX.
    LAKE BELLE VIEW AQUATIC ECOSYSTEM                        206   MVD...............  MVR...............      3,798
     RESTORATION, WI.
    LAKE CONNESTEE, SC..........................             206   SAD...............  SAC...............        115
    LAKE CONNESTEE, SC..........................             206   SAD...............  SAC...............         27
    LAKE CYPRESS SPRINGS, FRANKLIN COUNTY, TX...             206   SWD...............  SWF...............        175
    LAKE LOU YAEGER RESTORATION, IL.............             206   MVD...............  MVS...............        175
    LAKE MAUVAISTERRE, JACKSONVILLE, IL.........             206   MVD...............  MVS...............        202
    LAKE NATOMA, CA.............................             206   SPD...............  SPK...............        437
    LAKE TSALA APOPKA...........................             206   SAD...............  SAJ...............          6
    LAKE VERRET RESTORATION, ASSUMPTION PARISH,              206   MVD...............  MVN...............        706
     LA.
    LEMAY WETLAND RESTORATION (SECTION 206).....             206   MVD...............  MVS...............         66
    LEXINGTON ROAD PARK GREENWAY--JEFFERSON                  206   LRD...............  LRL...............         84
     COUNTY.
    LICKING RIVER DAM REMOVAL, FALMOUTH, KY.....             206   LRD...............  LRL...............        100
    LITTLE CUYAHOGA RIVER, AKRON, OH............             206   LRD...............  LRB...............         60
    LITTLE RIVER WATERSHED, HALL COUNTY, GA.....             206   SAD...............  SAM...............      3,918
    LOCKPORT PRAIRIE NATURE PRESERVE, WILL                   206   LRD...............  LRC...............      1,171
     COUNTY.
    LONG LAKE, IN...............................             206   LRD...............  LRC...............        900
    LOWER BLACKSTONE RIVER, RI..................             206   NAD...............  NAE...............        150
    LOWER BOULDER CREEK, CO.....................             206   NWD...............  NWO...............        811
    LOWER HEMPSTEAD HARBOR, VILLAGE OF SEA                   206   NAD...............  NAN...............        500
     CLIFF, NY.
    LOWER MENOMONEE RIVER VALLEY, MILWAUKEE, WI.             206   LRD...............  LRE...............         75
    LOWER TRUCKEE RIVER, PAIUTE.................             206   SPD...............  SPK...............        100
    LOWER WHITE ROCK CRK, DALLAS, TX............             206   SWD...............  SWF...............        250
    LYNCHES RIVER, LAKE CITY, SC................             206   SAD...............  SAC...............      1,250
    MALDEN RIVER ECOSYSTEM, MA..................             206   NAD...............  NAE...............         81
    MALLETT'S CREEK, WASHTENAW COUNTY, MI.......             206   LRD...............  LRE...............        388
    MANHAN DAM, EASTHAMPTON, MA.................             206   NAD...............  NAE...............        410
    MANHASSET BAY, TOWN OF NORTH HEMPSTEAD, NY.,             206   NAD...............  NAN...............        350
     ECOSYSTEM RESTORATION.
    MARION MILL POND, VILLAGE OF MARION, OSCEOLA             206   LRD...............  LRE...............        414
     COUNTY, MI.
    MARYVILLE, TN...............................             206   LRD...............  LRN...............        275
    MENOMONEE, WI...............................             206   LRD...............  LRE...............        150
    MENTOR MARSH................................             206   LRD...............  LRB...............        100
    MILFORD POND, MILFORD, MA...................             206   NAD...............  NAE...............      4,300
    MILL CREEK ECOSYSTEM RESTORATION............             206   SAD...............  SAW...............         25
    MILL CREEK RESTORATION AT MOREA, SCHUYLKILL              206   NAD...............  NAP...............        215
     COUNTY, PA.
    MILL POND RESTORATION, NASHUA, NH...........             206   NAD...............  NAE...............        150
    MILL POND, LITTLETON, MA....................             206   NAD...............  NAE...............        100
    MILL RIVER, STAMFORD, CT....................             206   NAD...............  NAE...............      2,988
    MINERAL BAYOU, DURANT, OK...................             206   SWD...............  SWT...............        133
    MISSION CREEK, CA...........................             206   SPD...............  SPL...............        406
    MISSOURI STREAM RESTORATION, MO.............             206   NWD...............  NWK...............        100
    MOKUHINIA/MOKUULA ECOSYSTEM RESTORATION,                 206   POD...............  POH...............      1,356
     MAUI, HI.
    MONGAUP WATERSHED ENVIRON. RESTORTION,                   206   NAD...............  NAP...............        165
     LIBERTY, SULLIVAN, NY.
    MOSES LAKE ECOSYSTEM RESTORATION, TEXAS                  206   SWD...............  SWG...............         30
     CITY, TX.
    MUD CREEK, GREAT SOUTH BAY, PATCHOGUE, NY...             206   NAD...............  NAN...............        250
    MULBERRY PLANTATION, SC.....................             206   SAD...............  SAC...............        197
    NANTICOKE CREEK, LUZERNE COUNTY, PA.........             206   NAD...............  NAB...............        830
    NARROWS RIVER, NARRAGANSETT, RI.............             206   NAD...............  NAE...............        180
    NASHAWANNUCK POND, EASTHAMPTON, MA..........             206   NAD...............  NAE...............        715
    NC OYSTER RESTORATION, NC...................             206   SAD...............  SAW...............        130
    NEPONSET RIVER, BOSTON, MA..................             206   NAD...............  NAE...............        200
    NFTA OUTER HARBOR...........................             206   LRD...............  LRB...............        100
    NINIGRET & CROSS MILLS PONDS, CHARLESTOWN,               206   NAD...............  NAE...............        800
     RI.
    NIPPERSINK CREEK............................             206   LRD...............  LRC...............        750
    NOISETTE CREEK, SC..........................             206   SAD...............  SAC...............        194
    NORTH BEACH, MD.............................             206   NAD...............  NAB...............        600
    NORTH FORK GUNNISON, CO (206)...............             206   SPD...............  SPK...............      3,725
    NORTH OTTAWA, MN............................             206   MVD...............  MVP...............      4,597
    NORTH OTTAWA, MN............................             206   MVD...............  MVP...............        100
    NORTH PARK, ALLEGHENY COUNTY................             206   LRD...............  LRP...............      3,272
    NORTH SATUS DRAIN, YAKIMA, WA...............             206   NWD...............  NWS...............        135
    NORTHWEST BRANCH, ANACOSTIA RIVER, MD.......             206   NAD...............  NAB...............      2,500
    OAKS BOTTOM, OR.............................             206   NWD...............  NWP...............        103
    OHIO RIVER GARVIN BROWN NATURE PRESERVE,                 206   LRD...............  LRL...............        302
     JEFFERSON COUNTY, K.
    OHIO RIVER, HAYS KENNEDY PARK, LOUISVILLE,               206   LRD...............  LRL...............        100
     KY.
    OLMOS CREEK, RESTORATION, SAN ANTONIO, TX...             206   SWD...............  SWF...............        749
    ORE KNOB, NC AQUATIC RESTORATION............             206   LRD...............  LRH...............        900
    OSGOOD POND RESTORATION, MILFORD, NH........             206   NAD...............  NAE...............         65
    OTSEGO LAKE, MI.............................             206   LRD...............  LRE...............         75
    PAINT BRANCH FISH PASSAGE, MD...............             206   NAD...............  NAB...............        400
    PAINTERS CREEK, MN..........................             206   MVD...............  MVP...............      2,787
    PARADISE CREEK, CITY OF MOSCOW, ID..........             206   NWD...............  NWW...............      2,717
    PAUL DOUGLAS WOODS, SOUTH BARRINGTON, IL....             206   LRD...............  LRC...............        597
    PECK LAKE, GENEVA, IL.......................             206   LRD...............  LRC...............        475
    PIGS EYE LAKE...............................             206   MVD...............  MVP...............        410
    PITCHER LAKE OXBOW RESTORATION..............             206   LRD...............  LRL...............         99
    POCOTALIGO RIVER AND SWAMP ECOSYSTEM                     206   SAD...............  SAC...............        494
     RESTORATION, SC.
    PORT OF SUNNYSIDE, WA.......................             206   NWD...............  NWS...............      4,365
    PORT OF SUNNYSIDE, WA.......................             206   NWD...............  NWS...............         68
    POTASH BROOK, NY............................             206   NAD...............  NAN...............        500
    QUINCY BAY, IL..............................             206   MVD...............  MVR...............        300
    QUONOCHONTAUG POND, CHARLESTOWN, RI.........             206   NAD...............  NAE...............         70
    RANSOM CREEK, AMHERST.......................             206   LRD...............  LRB...............        100
    RED OAK CREEK TRIBUTARY, RED OAK, TX........             206   SWD...............  SWF...............        175
    REEDY RIVER, SC.............................             206   SAD...............  SAC...............        674
    REEDY RIVER, SC.............................             206   SAD...............  SAC...............        247
    REEVES CREEK, CLAYTON CNTY..................             206   SAD...............  SAS...............        275
    RINCON CREEK................................             206   SPD...............  SPL...............        393
    RIO GRANDE, LAREDO, TX......................             206   SWD...............  SWF...............      2,277
    RIO GRANDE, LAREDO, TX......................             206   SWD...............  SWF...............         61
    ROSCOE'S CUT, MACINTOSH.....................             206   SAD...............  SAS...............        150
    RUN POND COASTAL ECOSYSTEM RESTORATION, MA..             206   NAD...............  NAE...............        195
    SALMON RIVER, CHALLIS, ID...................             206   NWD...............  NWW...............      3,315
    SALT RIVER RESTORATON, CA...................             206   SPD...............  SPN...............        350
    SAN MARCOS RIVER, SAN MARCOS, TX............             206   SWD...............  SWF...............        439
    SAV HARBOR ECOSYSTEM RESTORATION............             206   SAD...............  SAS...............        275
    SAXIS ISLAND, ACCOMACK COUNTY, VA...........             206   NAD...............  NAO...............      1,503
    SAXMAN RUN..................................             206   LRD...............  LRP...............        188
    SECORD AND SMALLWOOD LAKES, GLADWIN COUNTY,              206   LRD...............  LRE...............        381
     MI.
    SHAMROCK LAKE, CITY OF CLARE, MI............             206   LRD...............  LRE...............         75
    SHERADEN PARK & CHARTIERS CR, PA............             206   LRD...............  LRP...............        500
    SHIREY BAY/RAINEY BRAKE WMA.................             206   SWD...............  SWL...............         50
    SOUNDVIEW PARK, CITY OF BRONX, NY...........             206   NAD...............  NAN...............        400
    SOUTH FORK NOOKSACK RIVER, WA...............             206   NWD...............  NWS...............         82
    SOUTH NEWPORT RIVER 207.....................             206   SAD...............  SAS...............        300
    SOUTH PARK LAKE.............................             206   LRD...............  LRB...............  .........
    SOUTHAMPTON CREEK, ENVIRONMENTAL RESTORATION             206   NAD...............  NAP...............        139
    SPRING CREEK, NY............................             206   NAD...............  NAN...............        350
    SPRING LAKE, MI.............................             206   LRD...............  LRE...............         75
    SPRING LAKE, SAN MARCOS, TX.................             206   SWD...............  SWF...............      1,241
    SPRINGFIELD MILLRACE, OR....................             206   NWD...............  NWP...............      3,134
    SQAW CREEK, IL..............................             206   LRD...............  LRC...............      2,947
    SQUAK VALLEY PARK RESTORATION, WA...........             206   NWD...............  NWS...............        619
    STEVENSON CREEK, CLEARWATER, FL.............             206   SAD...............  SAJ...............      2,867
    STORM LAKE, IA..............................             206   MVD...............  MVR...............      2,172
    SULPHUR CREEK AQUATIC RESTORATION, LAGUNA                206   SPD...............  SPL...............      1,200
     NIGUEL, CA.
    SWEETWATER ECOSYSTEM RESTORATION, CA........             206   SPD...............  SPL...............      1,585
    SWEETWATER ECOSYSTEM RESTORATION, CA........             206   SPD...............  SPL...............        285
    SYRACUSE LAKEFRONT, ONONDAGA, NY............             206   LRD...............  LRB...............  .........
    TAMARISK ERADICATION, CO....................             206   SPD...............  SPK...............        304
    TEN MILE RIVER, RI..........................             206   NAD...............  NAE...............        935
    THOMPSON CREEK RESTORATION..................             206   SPD...............  SPN...............        400
    THREE CREEKS ENVIRONMENTAL RESTORATION, OH..             206   LRD...............  LRH...............        902
    THREE CREEKS ENVIRONMENTAL RESTORATION, OH..             206   LRD...............  LRH...............        412
    TIDAL MIDDLE BRANCH, MD.....................             206   NAD...............  NAB...............        500
    TILLAMOOK BAY & ESTUARY, OR.................             206   NWD...............  NWP...............        150
    TOLEDO BEND RESERVOIR, TX & LA..............             206   SWD...............  SWF...............        300
    TREATS POND, COHASSET, MA...................             206   NAD...............  NAE...............        700
    TURKEY CREEK REST., FL......................             206   SAD...............  SAJ...............        320
    TURTLE BAY, CA..............................             206   SPD...............  SPK...............        250
    UNDERWOOD CREEK, WAUWATOSA, WI..............             206   LRD...............  LRE...............        295
    UNIVERSITY LAKES RESTORATION, EAST BATON                 206   MVD...............  MVN...............      1,000
     ROUGE PARISH, LA.
    UPPER JORDAN RIVER ECOSYSTEM RESTORATION, UT             206   SPD...............  SPK...............      3,270
    UPPER YORK CREEK DAM REMOVAL, CA............             206   SPD...............  SPN...............        550
    VALLEY CREEK PARK WETLAND RESTORATION, EL                206   SPD...............  SPA...............        175
     PASO, TX.
    VERMILLION RIVER ECOSYSTEM RESTORATION,                  206   MVD...............  MVN...............      1,000
     LAFAYETTE PARISH, LA.
    WALNUT BRANCH, SEGUIN, TX (SEC. 206)........             206   SWD...............  SWF...............      1,488
    WANAMAKER WETLANDS, KS......................             206   NWD...............  NWK...............        150
    WATAUGA, NC, AQUATIC RESTORATION............             206   LRD...............  LRH...............      2,240
    WATAUGA, NC, AQUATIC RESTORATION............             206   LRD...............  LRH...............        230
    WATKINS CREEK, ST. LOUIS, MO................             206   MVD...............  MVS...............        200
    WEBER RIVER, UT (SEC. 206)..................             206   SPD...............  SPK...............        100
    WEST JORDAN RIVER, UT.......................             206   SPD...............  SPK...............        480
    WEST JORDAN RIVER, UT.......................             206   SPD...............  SPK...............          7
    WESTERN BRANCH, PATUXENT, MD................             206   NAD...............  NAB...............      1,200
    WESTERN CARY STREAMS RESTORATION, CARY, NC..             206   SAD...............  SAW...............         30
    WESTMORELAND PARK, OR.......................             206   NWD...............  NWP...............      1,661
    WHITE SLOUGH WATER POLLUTION CONTROL                     206   SPD...............  SPK...............        200
     FACILITY, LODI, CA.
    WHITEBREAST WATERSHED ECOSYSTEM RESTORATION,             206   MVD...............  MVR...............      3,945
     IA.
    WHITEBREAST WATERSHED ECOSYSTEM RESTORATION,             206   MVD...............  MVR...............        121
     IA.
    WILSON BAY RESTORATION, JACKSONVILLE, NC....             206   SAD...............  SAW...............      2,356
    WILSON BRANCH, SC...........................             206   SAD...............  SAC...............         44
    WILSON PARK CREEK, MILWAUKEE COUNTY, WI.....             206   LRD...............  LRE...............         75
    WINDOM FISH PASSAGE, MN.....................             206   MVD...............  MVR...............        225
    WINNAPAUG POND, WESTERLY, RI................             206   NAD...............  NAE...............      1,120
    WISWALL DAM, DURHAM, NH.....................             206   NAD...............  NAE...............  .........
    WOLF PEN CREEK, COLLEGE STATION, TX.........             206   SWD...............  SWF...............        300
    WOOD CANYON AQUATIC RESTORATION, LAGUNA                  206   SPD...............  SPL...............        661
     NIGUEL, CA.
    WOOD CANYON AQUATIC RESTORATION, LAGUNA                  206   SPD...............  SPL...............         50
     NIGUEL, CA.
    WWTP, MERIDIAN, TX..........................             206   SWD...............  SWF...............        246
    ZEMUARRY PARK LAKE RESTORATION, TANGIPAHOA               206   MVD...............  MVN...............        225
     PARISH, LA.
    BLACKWELL LAKE, BLACKWELL, OK...............             208   SWD...............  SWT...............        310
    DICKENSON COUNTY, VA., SEC. 208.............             208   LRD...............  LRH...............         60
    ALLIN'S COVE, BARRINGTON, RI................            1135   NAD...............  NAE...............          5
    BAYOU DESIARD, MONROE, LA...................            1135   MVD...............  MVK...............      1,707
    BOYD'S SALT MARSH RESTORATION, RI...........            1135   NAD...............  NAE...............        203
    DELAWARE BAY OYSTER RESTORATION, NJ.........            1135   NAD...............  NAP...............        783
    ECOSYSTEM REVITALIZATION @ ROUTE 66.........            1135   SPD...............  SPA...............      3,637
    KANAHA POND WILDLIFE SANCTUARY RESTORATION,             1135   POD...............  POH...............      1,690
     MAUI, HI.
    LAKE ST. JOSEPH, TENSAS PARISH, LA..........            1135   MVD...............  MVK...............        142
    LOWER KINGMAN ISLAND........................            1135   NAD...............  NAB...............        110
    PRISON FARM SHORELINE HABITAT, ND...........            1135   NWD...............  NWO...............         74
    RATHBUN LAKE HABITAT RESTORATION PROJECT, IA            1135   NWD...............  NWK...............        858
    BENNINGTON LAKE DIVERSION DAM, WA...........            1135   NWD...............  NWW...............        338
    BLOOMINGTON AREA RESTORATION, LONG BRANCH               1135   NWD...............  NWK...............         25
     LAKE, MO.
    BLUE VALLEY WETLANDS, JACKSON CO., MO.......            1135   NWD...............  NWK...............         19
    FERN RIDGE LAKE MARSH RESTORATION, OR.......            1135   NWD...............  NWP...............         30
    GREEN RIVER DAM, OUTLET WORKS MODIFICATIONS,            1135   LRD...............  LRL...............        200
     KY.
    LOWER COLUMBIA SLOUGH, OR...................            1135   NWD...............  NWP...............      1,605
    STEEP BANK CREEK, FELSENTAL NWR, AR.........            1135   MVD...............  MVK...............         59
    WALLA WALLA RIVER SECTION 1135, OR..........            1135   NWD...............  NWW...............        824
    ACADEMY CREEK, HALL CNTY....................            1135   SAD...............  SAS...............        275
    AGUA FRIA RIVER RIPARIAN RESTORATION........            1135   SPD...............  SPL...............         96
    AMITE RIVER DIVERSION SPOIL BANK GAPPING,               1135   MVD...............  MVN...............        125
     LIVINGSTON PH, LA.
    AQUATIC HABITAT RESTORATION @ PUBLO OF SANTA            1135   SPD...............  SPA...............        335
     ANA, NM.
    ARK. RVR ENV REST, LK DARDANELLE,                       1135   SWD...............  SWL...............         10
     RUSSELLVILLE & FT. SMITH, AR.
    ARKANSAS RIVER, GARDEN CITY, KS.............            1135   SWD...............  SWT...............        145
    ASHLEY CREEK ECOSYSTEM RESTORATION, UT......            1135   SPD...............  SPK...............        259
    ASSUNPINK CREEK, ENVIRONMENTAL RESTORATION..            1135   NAD...............  NAP...............      2,976
    AUGRES RIVER, ARENAC COUNTY, MI.............            1135   LRD...............  LRE...............        284
    BACK RIVER, CHATHAM COUNTY, GA..............            1135   SAD...............  SAS...............        275
    BATTLE ISLAND, WI...........................            1135   MVD...............  MVP...............        530
    BATTLE ISLAND, WI...........................            1135   MVD...............  MVP...............         50
    BAYOU MACON, E&W CARROLL & FRANKLIN                     1135   MVD...............  MVK...............      2,647
     PARISHES, LA.
    BAYOU MACON, LAKE VILLAGE, AR...............            1135   MVD...............  MVK...............        600
    BELHAVEN HARBOR ENVIRON, NC.................            1135   SAD...............  SAW...............        170
    BELLEVIEW WETLANDS, CO......................            1135   NWD...............  NWO...............        150
    BIG LAKE ECOSYSTEM RESTORATION, OK..........            1135   SWD...............  SWT...............        408
    BIG SUNFLOWER RIVER, CLARKSDALE, MS.........            1135   MVD...............  MVK...............        168
    BLOOMINGTON AREA RESTORATION, LONG BRANCH               1135   NWD...............  NWK...............        150
     LAKE, MO.
    BLUE VALLEY WETLANDS, JACKSON CO., MO.......            1135   NWD...............  NWK...............        941
    BRAIDED REACH...............................            1135   NWD...............  NWS...............      4,765
    BRAIDED REACH...............................            1135   NWD...............  NWS...............        256
    BROAD MEADOWS MARSH RESTORATION, MA.........            1135   NAD...............  NAE...............      1,888
    BUFFALO RIVER HABITAT.......................            1135   LRD...............  LRB...............  .........
    BULL CREEK CHANNEL ECOSYSTEM RESTORATION, CA            1135   SPD...............  SPL...............      2,090
    C-102/103 RESTORATION, DADE COUNTY, FL......            1135   SAD...............  SAJ...............        200
    C-7 MIAMI-DADE, FL..........................            1135   SAD...............  SAJ...............        224
    C-9, MIAMI-DADE, FL.........................            1135   SAD...............  SAJ...............        250
    CALOOSAHATCHEE OXBO.........................            1135   SAD...............  SAJ...............        330
    CANNON BRAKE/LOWER VALLIER, ARK & JEFFERSON             1135   MVD...............  MVK...............      1,157
     COUNTIES, AR.
    CAYUGA LAKE INLET, ITHACA...................            1135   LRD...............  LRB...............        200
    CDF NO. 3, OREGON, OH.......................            1135   LRD...............  LRB...............        100
    CITY OF RICHLAND ECOSYSTEM RESTORATION, WA..            1135   NWD...............  NWW...............      1,327
    CONNEAUT HARBOR, OH.........................            1135   LRD...............  LRB...............        225
    CROCKERY CREEK LAMPREY BARRIER, MI..........            1135   LRD...............  LRE...............        100
    CUCAMONGA AND DEER CREEK CHANNELS ECOSYSTEM             1135   SPD...............  SPL...............        152
     RESTORATION, CA.
    DADE COUNTY, FL.............................            1135   SAD...............  SAJ...............        217
    DILLON LAKE, OH., SECTION 1135..............            1135   LRD...............  LRH...............        900
    DUCK CREEK, STODDARD COUNTY, MO.............            1135   MVD...............  MVM...............      3,243
    DUMP LAKE, YAZOO COUNTY, MS.................            1135   MVD...............  MVK...............        116
    EAGLELAND HABITAT RESTORATION, SAN ANTONIO,             1135   SWD...............  SWF...............        328
     TX.
    EAST HARBOR STATE PARK, WEST HARBOR, OH.....            1135   LRD...............  LRB...............         96
    ESTRAL BEACH, NEWPORT, MI...................            1135   LRD...............  LRE...............         75
    FAIRMOUNT DAM, PA...........................            1135   NAD...............  NAP...............      1,452
    FLINT RIVER AND SWARTZ CREEK, FLINT, MI.....            1135   LRD...............  LRE...............        390
    FRAZIER/WHITEHORSE OXBOW LAKE WEIR, LA......            1135   MVD...............  MVK...............      1,269
    GERRITESEN CREEK, BROOKLYN, NY..............            1135   NAD...............  NAN...............      3,700
    GULL POINT, PRESQUE ISLE, ERIE, PA..........            1135   LRD...............  LRB...............  .........
    HNC MILE 12-31.4 RESTORATION, TERREBONNE                1135   MVD...............  MVN...............      2,500
     PARISH, LA.
    HOOSIC RIVER, TOWN OF ADAMS, MA.............            1135   NAD...............  NAN...............        400
    HOVEY LAKE WILDLIFE AREA HABITAT                        1135   LRD...............  LRL...............        480
     DEVELOPMENT, IN.
    HOYT LAKE--SCAJAQUADA CREEK, BUFFALO, NY....            1135   LRD...............  LRB...............        100
    INDIAN RIDGE MARSH, CHICAGO, IL.............            1135   LRD...............  LRC...............      1,244
    JOE CREEK HABITAT RESTORATION, TULSA, OK....            1135   SWD...............  SWT...............      3,775
    JOPPA PRESERVE RESTORATION, TX..............            1135   SWD...............  SWF...............      3,905
    KALAMAZOO RIVER, BATTLE CREEK, MI...........            1135   LRD...............  LRE...............        409
    KAUNAKAKAI STREAM ENVIRONMENTAL RESTORATION,            1135   POD...............  POH...............        342
     MOLOKAI, HI.
    KAWAINUI MARSH ENVIRONMENTAL RESTORATION,               1135   POD...............  POH...............      4,034
     OAHU, HI.
    KEITH LAKE FISH PASS, JEFFERSON COUNTY, TX..            1135   SWD...............  SWG...............        200
    KIDS CREEK, TRAVERSE CITY, MI...............            1135   LRD...............  LRE...............         50
    LAKE CHAMPLAIN SEA LAMPREY BARRIERS.........            1135   NAD...............  NAN...............        200
    LAKE FAUSSE POINT ECOSYSTEM RESTORATION, ST.            1135   MVD...............  MVN...............        250
     MARY PARISH, LA.
    LAKE GEORGE RESTORATION, YAZOO COUNTY, MS...            1135   MVD...............  MVK...............      1,160
    LAKE JESSUP.................................            1135   SAD...............  SAJ...............      2,862
    LAKE POYGAN, WI.............................            1135   LRD...............  LRE...............        627
    LAKE ST. JOSEPH, TENSAS PARISH, LA..........            1135   MVD...............  MVK...............      3,329
    LAS CRUCES DAM ENVIRONMENTAL RESTORATION,               1135   SPD...............  SPA...............        450
     DONA ANA COUNTY, NM.
    LEWISVILLE LAKE, FRISCO, TX.................            1135   SWD...............  SWF...............      1,430
    LONG BRANCH LAKE ECOSYSTEM RESTORATION......            1135   NWD...............  NWK...............        174
    LONGWOOD COVE WETLANDS, GAINESVILLE, GA.....            1135   SAD...............  SAM...............      2,250
    LOWER CACHE RIVER, AR., 1135................            1135   MVD...............  MVM...............        750
    LOWER DECATUR BEND, NE., IA.................            1135   NWD...............  NWO...............      2,392
    LOWER DEER CREEK, MS........................            1135   MVD...............  MVK...............        171
    LOWER OBION RIVER & VICINITY, DYER COUNTY,              1135   MVD...............  MVM...............      2,709
     TN.
    LOWER ROUGE, ROTUNDA DR. AND I-94, MI.......            1135   LRD...............  LRE...............      2,710
    MANISTEE RIVER LAMPREY BARRIER, MI..........            1135   LRD...............  LRE...............        100
    MAPES CREEK, WA.............................            1135   NWD...............  NWS...............      1,961
    MARK TWAIN LAKE FISH HABITAT, MO............            1135   MVD...............  MVS...............        150
    MILLWOOD, GRASSY LAKE, AR., SECTION 1135....            1135   SWD...............  SWL...............         50
    MONROE LAKE, IN, MOIST SOIL UNITS...........            1135   LRD...............  LRL...............        100
    MORDECAI ISLAND COASTAL WETLANDS, NJ........            1135   NAD...............  NAP...............        750
    MORGANZA FOREBAY RESTORATION, POINTE COUPEE             1135   MVD...............  MVN...............        225
     PH, LA.
    MT. ETNA/MT. HOPE WETLANDS, SALAMONIE LAKE,             1135   LRD...............  LRL...............        142
     IN.
    MURPHY SLOUGH, CA...........................            1135   SPD...............  SPK...............        291
    NB PENTWATER RIVER LAMPREY TRAP, MI.........            1135   LRD...............  LRE...............        100
    NFTA OUTER HARBOR...........................            1135   LRD...............  LRB...............        100
    NMLC, BUZZARD BAY, MA.......................            1135   NAD...............  NAE...............        430
    NORFORK TAILWATER RESTORATION, AR...........            1135   SWD...............  SWL...............         50
    NORTH NASHUA RIVER, FITCHBURG, MA...........            1135   NAD...............  NAE...............        110
    NORTHPORT HARBOR, TOWN OF HUNTINGTON, NY....            1135   NAD...............  NAN...............        350
    O.C. FISHER LAKE ECOSYSTEM RESTORATION, TX..            1135   SWD...............  SWF...............      3,791
    OLD MAIN STEM TRINITY ECOSYSTEM RESTORATION,            1135   SWD...............  SWF...............        175
     DALLAS, TX.
    OLD RIVER NORTH, CONCORDIA PARISH, LA.......            1135   MVD...............  MVK...............        175
    OLD TRINITY RIVER CHANNEL WILDLIFE                      1135   SWD...............  SWF...............      1,949
     RESTORATION, DALLES, TX.
    PALM RIVER RESORATION.......................            1135   SAD...............  SAJ...............        356
    PINE MOUNT CREEK............................            1135   NAD...............  NAP...............      2,900
    PONCE DE LEON AIWW..........................            1135   SAD...............  SAJ...............        109
    POND CREEK, NJ..............................            1135   NAD...............  NAP...............        750
    RAHWAY RIVER, CITY OF RAHWAY, NJ............            1135   NAD...............  NAN...............        300
    RATHBUN SHORELINE SITE RESTORATION APPANOOSE            1135   NWD...............  NWK...............        412
     & MONROE CO., IA.
    RESTORATION OF GRASS DALE, DE...............            1135   NAD...............  NAP...............      1,012
    ROCHESTER HARBOR NAVIGATION CHANNEL, NY.....            1135   LRD...............  LRB...............  .........
    ROCK CREEK @ BOYLE PARK, LITTLE ROCK, AR....            1135   SWD...............  SWL...............        660
    ROCK CREEK @ BOYLE PARK, LITTLE ROCK, AR....            1135   SWD...............  SWL...............        150
    ROUGE RIVER OXBOW, WAYNE CO., MI............            1135   LRD...............  LRE...............        415
    RUFFY BROOK AND CLEARWATER RIVER............            1135   MVD...............  MVP...............      1,054
    SALT CEDAR INVASIVE SPECIES ERADICATION/                1135   NWD...............  NWK...............        125
     RESTORATION, NE.
    SAND HILL RIVER.............................            1135   MVD...............  MVP...............        818
    SARASOTA BAY RESTORATION, FL................            1135   SAD...............  SAJ...............        400
    SCHMIDT CREEK, PRESQUE ISLE COUNTY, MI......            1135   LRD...............  LRE...............         50
    SEA LAMPREY BARRIER, MANISTIQUE, MI.........            1135   LRD...............  LRE...............        349
    SEA LAMPREY BARRIER, PAW PAW, MI............            1135   LRD...............  LRE...............        725
    SHELBYVILLE WILDLIFE MANAGEMENT AREA                    1135   MVD...............  MVS...............      3,530
     RESTORATION, IL.
    SHELDON'S MARSH, HURON/SANDUSKY, OH.........            1135   LRD...............  LRB...............        151
    SHORTY'S ISLAND.............................            1135   NWD...............  NWS...............      4,365
    SHORTY'S ISLAND.............................            1135   NWD...............  NWS...............        679
    SMITHVILLE ACQUATIC PLANTINGS...............            1135   NWD...............  NWK...............        520
    SMOKES CREEK, ERIE COUNTY, NY...............            1135   LRD...............  LRB...............        499
    SPUNKY BOTTOMS ECOSYSTEM RESTORATION, IL....            1135   MVD...............  MVS...............         97
    STEAMBOAT CREEK, WASHOE COUNTY, NV..........            1135   SPD...............  SPK...............        120
    STEAMBOAT CREEK, WASHOE COUNTY, NV..........            1135   SPD...............  SPK...............        129
    STEEP BANK CREEK, FELSENTAL NWR, AR.........            1135   MVD...............  MVK...............        739
    SUCKER RIVER, ALGER COUNTY, MI..............            1135   LRD...............  LRE...............         87
    TAPPAN LAKE, OH., SEC. 1135.................            1135   LRD...............  LRH...............        826
    TAYLOR BAY, WOODRUFF COUNTY, AR.............            1135   SWD...............  SWL...............        124
    TAYLORS BAYOU, PORT ARTHUR, TX..............            1135   SWD...............  SWG...............        370
    TIMES BEACH ENVIRONMENTAL IMPROVEMENT,                  1135   LRD...............  LRB...............  .........
     BUFFALO, NY.
    TRAIL CREEK, LAPORTE COUNTY, IN.............            1135   LRD...............  LRE...............         50
    TUJUNGA WASH ENVIRONMENTAL RESTORATION, CA..            1135   SPD...............  SPL...............        500
    UMBRELLA CREEK, CAMDEN CNTY.................            1135   SAD...............  SAS...............        200
    UPPER DEER CREEK, MS. DELTA, MS.............            1135   MVD...............  MVK...............        161
    UPPER ROUGE, MICHIGAN AVE. TO ROTUNDA DR.,              1135   LRD...............  LRE...............      2,710
     MI.
    VIRGINIA BEACH KEY, FL (SEC. 1135)..........            1135   SAD...............  SAJ...............        300
    WELLS LOCK AND DAM, ELIZABETH, WV...........            1135   LRD...............  LRH...............        250
    WHITNEY POINT LAKE, NY......................            1135   NAD...............  NAB...............      4,300
    WHITTIER NARROWS NATURE CENTER & WILDLIFE               1135   SPD...............  SPL...............      1,559
     REFUGE RESTORATION.
    WHITTIER NARROWS NATURE CENTER & WILDLIFE               1135   SPD...............  SPL...............        270
     REFUGE RESTORATION.
    WILLS CREEK, MASON MINE 280, OH.............            1135   LRD...............  LRH...............      1,150
    WILLS CREEK, MASON MINE 280, OH.............            1135   LRD...............  LRH...............         50
    WOOD DUCK MARSH, IA.........................            1135   NWD...............  NWK...............        100
    WOODSON BRIDGE, CA (SEC. 1135)..............            1135   SPD...............  SPK...............        300
    WOODSON BRIDGE, CA (SEC. 1135)..............            1135   SPD...............  SPK...............        150
    ----------------------------------------------------------------------------------------------------------------

        Additional information in the form of Budget Justification Sheets
    is posted at: http://www.usace.army.mil/cw/cecwb/just_states/
    just_states.html
        The CAP projects approved for fiscal year 2008 budgeting are listed
    under the FDR, NAV, and ENV business line sections in the
    justifications.
                                     ______

                Questions Submitted by Senator Pete V. Domenici

                           REBUILDING THE GULF COAST

        Question. General Strock, can you please provide an update on the
    progress the Corps making with regard to levee improvements, canal
    upgrades and increased pumping capacity in New Orleans?
        Answer. Sir, we are making steady progress on the environmental
    assessments, designs and initiation of levees and floodwall
    improvements throughout the Greater New Orleans area. For the hurricane
    protection system we have awarded 34 construction contracts to date for
    levees and floodwalls, and pump station repairs. We are prepared to
    award 30 more contracts within the next 60 days subject to favorable
    bids and availability of funds.
        We have completed construction of temporary gates on the outfall
    canals at Lake Pontchartrain which provide protection from hurricane
    surge. These temporary gates provide protection to the canals beginning
    this hurricane season.
        The previously installed pumps at the three outfall canals are
    being modified to achieve their full design capacity. All pumps will be
    modified, reinstalled and tested by June 1. By 1 June with the addition
    of portable pumps at 17th Street Canal, we will achieve a capacity of
    5,200 cubic feet per second at 17th Street Canal, 2,200 cubic feet per
    second at Orleans Canal, and 2,800 cubic feet per second at London
    Avenue Canal.
        Work is underway to install additional pumps at 17th Street Canal
    and London Avenue Canal. By mid-August we will achieve pumping capacity
    of 7,600 cubic feet per second at 17th Street Canal and 5,000 cubic
    feet per second at London Avenue canal.
        Question. Can you also address the issue of poor quality control by
    contractors supporting the rebuilding effort?
        Answer. Sir, any allegation of poor quality control is taken very
    seriously and immediately addressed by the Corps. For the rebuilding
    effort we have a comprehensive quality management plan for all phases
    of the ongoing work. This is the basis for assuring that we deliver the
    hurricane protection system to meet all safety, regulatory,
    environmental and legal requirements. We implemented quality control
    and quality assurance procedures from the outset. These procedures were
    thoroughly reviewed by representatives of the Army Audit Agency
    embedded with Task Force Guardian. Army Audit Agency auditors reported
    very favorably on those procedures, which continue today and will
    continue through completion of hurricane protection system.
        Question. Are you confident the Corps is doing its best to control
    costs on this massive project?
        Answer. Sir, we are aware of increases in construction costs in the
    Greater New Orleans area in the post-Katrina environment. The Corps is
    aggressively seeking ways to manage construction costs by using
    innovative acquisition strategies including ``Design-Build'' and ``Best
    Value'' approaches to encourage innovation. We are implementing value
    engineering and earned-value management, and are seeking external
    reviews by industry experts and academia to ensure we do all we can to
    deliver this system in a cost efficient manner.

                               ALBUQUERQUE LEVEES

        Question. General. Strock, the Corps of Engineers abruptly
    announced 122 levees of concern in a press event last month. This
    public event highlighted the national concern about the adequacy of
    flood control, changes in levee design requirements, and the efficacy
    of the Corps inspection of completed works program.
        For 3 years, I have supported evaluation of levees in New Mexico
    with focus on the Albuquerque system and I am anticipating completion
    of a project report outlining rehabilitation needs this summer.
        However, the lack of coordination of the Corps national
    communication approach and the New Mexico specific activities was
    disconnected and has created a great deal of local confusion.
        Please explain how the Corps proposes to approach the need for
    rehabilitation of flood control in New Mexico and the Nation as a whole
    that was highlighted by the recent levee restoration program
    announcements?
        Answer. Sir, there has been a recent surge of concern regarding the
    condition of levees throughout the Nation as a result of Hurricane
    Katrina. Following release of the listing of national levees of
    concern, the Corps has notified levee project owners/sponsors and the
    appropriate local, State, and Federal agencies of projects with
    unacceptable inspection ratings. The Corps is currently working to
    ensure maintenance requirements are being met and will permit sponsors
    to have a one-year maintenance deficiency grace period to make repairs
    and corrections before a levee is removed from the Rehabilitation and
    Inspection Program under Public Law 84-99.
        On a national and regional level, the Corps is coordinating its
    levee inventory information with the Federal Emergency Management
    Agency (FEMA) for its use in making decisions in the National Flood
    Insurance Program. Although these are separate programs, data from the
    levee inventory will be available to support levee certification as
    part of FEMA's National Flood Insurance Program.
        In 2005, Congress provided the Corps of Engineers with
    authorization and funding to evaluate the condition of the Albuquerque
    Levees. This evaluation, scheduled for completion in May 2007, will
    describe the existing condition of the levee system and determine the
    extent and costs of rehabilitation needed. Additional authorization and
    funding would be required to proceed with levee rehabilitation.
        Question. Please explain how the Corps will balance competing
    Federal requirements for endangered species issues and habitat
    protection and flood control along the Middle Rio Grande?
        Answer. Sir, the Corps will coordinate with the U.S. Fish and
    Wildlife Service (USFWS), the State of New Mexico and our numerous
    stakeholders regarding threatened and endangered species within any
    project location in relation to the Albuquerque Levees. Species
    potentially occurring within proposed project areas include the
    Southwestern Willow Flycatcher, Rio Grande silvery minnow Critical
    Habitat, and the Bald Eagle.
        Based on this coordination, a formal consultation with the USFWS
    and a Biological Assessment regarding these species may be required.
    Additional coordination with the USFWS for preparation of a Fish and
    Wildlife Coordination Act Report would also be required.
        The Corps would work closely with USFWS as well as other
    stakeholder agencies such as the Middle Rio Grande Conservancy
    District, City of Albuquerque, New Mexico Department of Game and Fish,
    U.S. Bureau of Reclamation, Environmental Protection Agency and local
    villages and pueblos as well as interested parties such as Tree New
    Mexico, Hawks Aloft, and others to coordinate issues and comments in
    order to protect species and their habitat while implementing proposed
    construction.
        Most of the potential construction areas would be located within
    and adjacent to the existing levee alignment. Much of the vegetation in
    these areas consists of native cottonwood, Gooding's willow and non-
    native vegetation such as salt cedar, Russian olive, Siberian elm and
    Tree of Heaven. Currently, these species are not being removed while
    the levee integrity is being evaluated. If the proposed action were to
    remove trees within a certain distance of the levee, many of them would
    be non-native species but some would be the native species listed
    above. These native species, and future woody species that would have
    occupied this space, would potentially need to be mitigated for in some
    way.

      CENTRAL NM ENVIRONMENTAL INFRASTRUCTURE PROGRAM (SEC. 593) AND NEW
                  MEXICO ENVIRONMENTAL INFRASTRUCTURE PROGRAM

        Question. In what way will the Corps accelerate the resolution of
    these administrative issues so that the section 593 and 595 programs
    can proceed and be effective?
        Answer. Sir, we have recently resolved the administrative issues
    regarding the use of State grant funds for section 593 and 595 projects
    that have executed Project Cooperation Agreements (PCAs). Subject to
    the availability of funds and consistent with administration policy, a
    three party Memorandum of Agreement (MOA) can be executed for each such
    project to permit use of the State of New Mexico funding. For future
    projects, we are negotiating with the State on the use of a modified
    section 593/595 PCA format that will include the State as a limited
    participant, for purposes of reviewing and commenting on documents, and
    providing and receiving funds. This should meet the needs of both the
    State and the Government.

                                      R&D

        Question. Can you please provide my office a briefing on the
    results of these multiple demonstration programs, plans for continued
    development and propagation of these advanced decision approaches, and
    an assessment of whether additional authorities are needed to fully
    implement the program in IWR and the R&D programs?
        Answer. Yes Senator, we can arrange a briefing for you. A
    representative from my staff will contact your office in the near
    future.
        Question. Flooding, levee management, supplying water resources,
    maintaining irrigation works, reducing storage loss in reservoirs, and
    ecological restoration are all dependent on sound understanding of
    sediment movement. The Corps has an advanced program for research for
    eastern river systems. It is time to expand this program dramatically
    for rivers in the arid southwest.
        Can you please provide my office a briefing on the status of the
    Southwest Flood Damage Development and Demonstration Program, an
    overall program plan for continued research and expansion of the
    program as well as an assessment of any authorities needed to continue
    this critical work?
        Answer. Yes Senator, we can arrange a briefing for you. A
    representative from my staff will contact you office in the near
    future.
                                     ______

                Question Submitted by Senator Robert F. Bennett
        Question. Although the committee has provided specific funding to
    the Rural Utah  595 account, the Army Corps has on two separate
    occasions reprogrammed nearly $1.5 million dollars to spend on projects
    in other States. These missing funds could complete several
    infrastructure projects in Utah that are now on hold because of lack of
    funding for this program. The Army Corps has assured me that these
    ``borrowed'' funds will be replaced, but has not given a timeline. Will
    you please provide your timeline for replacing these funds?
        Answer. Sir, due to restricted funding levels and the Army Corps'
    limited ability to reprogram funds, there is no existing timeline to
    reprogram funds to the Rural Utah & 595 account to replace funds that
    were reprogrammed out of the program in prior years. However, we are
    committed to reviewing funding opportunities in future years to
    identify possible methods for reprogramming funds back into the Rural
    Utah program. For the current fiscal year (2007), we believe that there
    are sufficient unobligated funds available within the Rural Utah
    program to support any funding needs that may arise.
                                     ______

                   Questions Submitted by Senator Larry Craig

                       SNAKE RIVER PROGRAMMATIC SEDIMENT

        Question. Does the fiscal year 2008 budget request provide
    sufficient funding to complete the Snake River Programmatic Sediment
    Management Plan by its 2009 due date? If not: How does the Corps intend
    to provide potential navigation maintenance if it is needed prior to
    completion of the plan?
        Answer. The fiscal year 2008 budget does not provide sufficient
    funding to complete the plan by the date identified in the settlement
    agreement, which was December 2009. There was no funding budgeted for
    fiscal year 2006 and the entire fiscal year 2007 was spent in a CRA.
    Walla Walla District was only able to fund some scoping activities and
    minor base-line condition evaluations during this period. However, the
    bulk of the cost and schedule for the development of the management
    plan is associated with base-line conditions data collection in the
    areas of sediment transport and deposition, aquatic habitat, and water
    quality. To date, we have not been able to initiate any of this data
    collection. It has been determined that 3-years worth of data is
    required to obtain valid information in these areas. This information
    is critical to ensure that the results of the plan are credible and
    defensible. As a result of funding limitations the past 2 years, the
    schedule for this plan has slipped 2 years. The current schedule for
    the completion of this plan is now December 2011, subject to the
    availability of funding.
        The Corps typically dredges within the Snake River navigation
    channel every 3 to 5 years, the last time was in 2006. We are aware of
    two areas in the Snake River navigation channel that are already
    experiencing some sediment deposition. As a result, we fully recognize
    that some dredging of the navigation channel may be required to
    maintain adequate navigation prior to completing the management plan in
    2011. Therefore, we are closely monitoring the areas currently
    experiencing problems, and are developing contingency plans in case
    interim dredging is necessary.
        Question. I'm curious about the Corps' position on whether or not
    intrastate waters are jurisdictional under 404?
        Answer. Some intrastate waters may be found jurisdictional under
    the Clean Water Act (CWA) where they are in accordance with the Rapanos
    decision (2006). For example, lakes that are determined to waters of
    the State (i.e., the Great Salt Lake) are jurisdictional under the CWA.
    Waters that are determined to navigable waters will also be
    jurisdictional. Where the water body (i.e., lake) flows into a
    tributary system that flows into traditional navigable water are also
    likely to be jurisdictional. Truly isolated waters, including wetlands
    that are non-navigable, intrastate and lack a link to interstate or
    foreign commerce are not jurisdictional under the CWA, as per the
    SWANCC decision (2001).
        Question. When can we expect new ``Waters of the U.S.'' guidance in
    relation to the Rapanos decision?
        Answer. The Corps and EPA have signed an implementation memo
    explaining the Rapanos decision and the new program requirements. This
    document and other supporting documents can be found at: http://
    www.usace.army.mil/cw/cecwo/reg/cwa_guide/cwa_guide.htm. We are
    inviting public comments on case studies and experiences applying the
    guidance during the first 6 months of implementation. Furthermore, we,
    within 9 months from the date of issuance, will reissue, revise, or
    suspend the guidance after carefully considering the public comments
    received and field experiences with implementing the guidance. We will
    determine our course of action following a review of the comments.

                           ENERGY AND WATER QUESTIONS

        Question. During the hearing were raised to suggest that upstream
    lake levels are low. Is it not true that there currently is an historic
    drought in the basin and can you describe the extent of the drought?
        Answer. The Missouri River Basin is currently experiencing its 8th
    consecutive year of drought. Total System Storage is currently 37.3
    million acre-feet (MAF). Since operation of the System began in 1967,
    the Basin has experienced two extended drought periods; the drought
    which extended from 1989-1993 and the current drought. Total System
    Storage reached a record low of 33.9 MAF on February 8, 2007. The three
    upper Mainstem reservoirs, Fort Peck, Garrison, and Oahe experienced
    record low pools levels of 2,196.2 mean sea level (msl) 1,805.8 msl,
    and 1,570.2 msl respectively.
        Question. The Corps undertook a decade-plus long process to revise
    the Master Manual. Did the Corps not modify the manual to provide
    additional water for lake storage at the expense of traditional
    downstream needs deemed priorities by the 8th Circuit Court of Appeal
    in the case of Operation of the Missouri River System Litigation (421
    F. 3d 618) decided on August 6, 2005, which the Supreme Court refused
    to consider on appeal and issued that decision on April 24, 2006?
        Answer. Following the 14-year Missouri River Mainstem Reservoir
    System Master Water Control Manual Review and Update Study, in March of
    2004 the Corps of Engineers modified the Master Water Control Manual
    (Master Manual) to include more stringent drought conservation
    measures. Since 2004 these measures have resulted in shorter navigation
    seasons and lower releases to support navigation as compared to what
    would have occurred under the provisions of the previous Master Manual.
    The shorter navigation seasons and lower releases have retained more
    water in the System since 2004 than would have been the case under the
    previous Master Manual.
        The navigation preclude level in the previous Master Manual was set
    at 21 MAF. The 2004 Master Manual revision increased that level to 31
    MAF. The water stored in the System has not fallen below the 31 MAF
    navigation precludes since the revision in 2004. Therefore that change
    to the previous Master Manual has had no effect during the current
    drought.
        The Master Manual was again revised in 2006 to include provisions
    for a ``spring pulse,'' as required by the 2003 Amended Biological
    Opinion for the Missouri River Mainstem System.
        On June 21, 2004, the United States District Court for the District
    of Minnesota issued a decision in a series of consolidated cases by
    Basin States, tribes and stakeholders challenging the 2004 Revised
    Master Manual and the 2003 Amended Biological Opinion for the Missouri
    River Mainstem System. The District Court's decision by Judge Paul A.
    Magnuson upheld both the revised Master Manual and 2003 Amended
    Biological Opinion. On August 6, 2005 the United States Court of
    Appeals in a consolidated opinion affirmed Judge Magnuson's decision.
    Subsequent petitions for certiorari were denied by the United States
    Supreme Court.
        Question. It was suggested that water releases exist to provide
    Missouri River navigation. While that is also true, can you please
    describe how releases are also provided to support endangered species
    protection, drinking water supply, hydro energy production, downstream
    energy production cooling capacity, and Mississippi River navigation .
    . . not only Missouri River navigation as suggested?
        Answer. Releases are made from the System to support numerous
    downstream economic uses and protect environmental resources. Along
    with navigation, these economic uses include river recreation,
    municipal and industrial water supply (including cooling water for
    thermal power plants); and irrigation. Access to water has been a
    challenge during the current drought due to low river levels. These low
    river levels have also raised concerns related to the ability of
    thermal power plants to meet water quality standards for cooling water
    discharges to the river. Considerable investments have been made by
    several entities to modify their intake structures to deal with these
    low water conditions. Releases are also managed to protect threatened
    and endangered bird species that nest below the System during the
    summer months. And the spring pulse is designed to benefit the
    endangered pallid sturgeon.
        Question. Are these multiple uses a reality that the Assistant
    Secretary may consider mentioning when discussing the suggestion that
    lake levels should be maximized?
        Answer. Yes, the multiple uses are a reality that the Assistant
    Secretary mentions in discussions regarding reservoir levels. The
    Assistant Secretary has not proposed that the System be operated to
    maximize reservoir levels. Rather, the System is managed to serve the
    multiple project purposes authorized by Congress.
        Question. During this drought, is it true that very significant
    reductions have imposed upon navigation, and that pain is not limited
    to recreational fishing?
        Answer. The extended drought has negatively impacted all project
    purposes throughout the Basin, with the exception of flood control, and
    many of the people that live and work in the Basin. This includes
    impacts to navigation, water supply from both the river reaches and the
    reservoirs (including irrigation), hydropower, upstream fisheries and
    recreation along the river reaches and the reservoirs.
        Question. During this drought, is it true that reductions have
    placed burdens on large urban downstream water supply and all other
    downstream needs?
        Answer. Considerable investments have been made by water supply
    entities in the lower river to modify their intake structures to deal
    with the low water conditions during drought. Water supply entities in
    St. Joseph, Missouri and in both Kansas City, Missouri and Kansas City,
    Kansas have modified their intakes to ensure operation at lower river
    levels.
        The thermal power, municipal and industrial water intake owners
    downstream of Gavins Point Dam identified expenditures of $18.77
    million from 2000 to 2004 to access the river at the lower drought
    operations. They estimated that by 2010 they will have invested $286.1
    million in new structures, enhancements or other measures to access
    water during critical low water conditions especially during the non
    navigation periods and also during ice periods.
                                     ______

                   Question Submitted by Senator Wayne Allard
        Question. I appreciate that the Albuquerque District office has
    been working closely with the two communities--Grenada and Creede--who
    are likely to be facing compliance letters related to some maintenance
    issues with their levees. I would just like to request a commitment
    from you that the Corps will continue to work with those communities
    and will keep my office fully informed as this process continues to
    move along.
        I understand that the Corps' tamarisk removal project in Colorado
    has been very successful and is nearing completion. Could you please
    give me an update on that project?
        Because this project has been so successful and because tamarisk
    poses such a problem in Colorado, does the Corps have any plans to
    conduct additional removal projects in the State?
        Answer. Our section 206 Tamarisk Eradication project is in
    Feasibility phase. We anticipate completing the Detailed Project Report
    (including the Environmental Assessment, Engineering Report, and Real
    Estate Report) in December 2008. If the moratorium on new CAP phases is
    lifted by that time, SPD would then request funding to go to 100
    percent plans and specs. The PCA would also be prepared and ready for
    signatures at that time.
                                     ______

                      Question Submitted to Mark Limbaugh
                 Question Submitted by Senator Byron L. Dorgan

                                  RURAL WATER

        Question. Secretary Limbaugh, Your budget proposes $55 million for
    rural water projects. This amount seems to go down annually. How are we
    ever going to finish any of these projects with such meager funding?
        Answer. Reclamation is making significant progress in funding rural
    water projects throughout North and South Dakota and Montana. The Mid-
    Dakota rural water project was completed in fiscal year 2006. Also,
    numerous rural water projects serving nearly 150,000 people in North
    Dakota have been completed as part of the Garrison Diversion Unit.
                                     ______

                  Questions Submitted by Senator Wayne Allard
        Question. Secretary Limbaugh, can you explain why drought
    assistance was given so little funding in your budget?
        Answer. Reclamation prepares its budgets 2 years in advance.
    Consequently, we are unable to forecast this kind of emergency.
    However, we make every effort to address the greatest need with the
    funds available and to put our efforts into funding on-the-ground
    activities.
        Question. What drought assistance can you offer?
        Answer. The Reclamation States Emergency Drought Relief Act of 1991
    (Public Law 102-250) as amended, authorizes the Bureau of Reclamation
    to undertake drought relief measures through emergency assistance
    (Title I) and planning activities (Title II). Title I provides for
    construction, management and conservation measures to alleviate the
    adverse impacts of drought, including the mitigation of fish and
    wildlife impacts. Title I also authorizes temporary contracts to make
    available project and nonproject water and to allow for the use of
    Reclamation facilities for the storage and conveyance of water.
        Under Title I authority, Reclamation has constructed many wells for
    drinking water for smaller financially-strapped entities (towns,
    counties, tribes) that do not have the financial capability to deal
    with the impacts of drought. In many cases, Reclamation is the ``last
    resort'' for these communities.
        Question. Are the communities suffering from drought aware of the
    assistance that you can offer?
        Answer. Each of Reclamation's regional offices and many of the area
    offices have collateral duty personnel involved with the Drought
    Program. Additionally, regional directors and area managers are in
    communication with their stakeholders to remain current on the emerging
    needs of their areas. Information about the various programs
    Reclamation has is made available for consideration.
                                     ______

                    Questions Submitted to Robert W. Johnson
                 Questions Submitted by Senator Byron L. Dorgan

                                MINNOW SANCTUARY

        Question. The Reasonable and Prudent Alternatives specified in the
    2003 Fish and Wild life Service's Biological Opinion on the Rio Grande
    Silvery Minnow required the construction of two minnow refugia. In
    order to comply with this mandate, I have secured funding for the
    construction of a minnow sanctuary.
        What is the status of the sanctuary's construction and when will it
    be completed?
        Answer. Reclamation awarded a contract for the third, and final,
    phase of construction in 2007, and expects to complete construction by
    the summer of 2008.
        Question. Does the USBR have sufficient funding in fiscal year 2007
    to complete construction of the Minnow Sanctuary or will additional
    fiscal year 2008 funds be required?
        Answer. Sufficient funds have been appropriated in fiscal year 2008
    to complete construction of the minnow sanctuary. A contract for the
    final phase of construction was awarded on December 6, 2007, and
    construction is expected to be completed by October 2008.
        Question. Will you please provide my office with a long-term
    operations plan for the Sanctuary?
        Answer. Yes, Reclamation and the Fish and Wildlife Service are
    developing an operations plan and will provide it to your office once
    finalized.
        Question. Can the BOR commit to provide my office monthly reports
    on the progress of the Sanctuary construction similar to those provided
    for the Tularosa Basin Desalination Facility?
        Answer. Yes, Reclamation will provide these reports to your office.

                          CARLSBAD IRRIGATION DISTRICT

        Question. The Carlsbad Irrigation District faces significant
    rehabilitation needs on Brantley, Avalon and Sumner Dams along the
    Pecos River. The President's budget proposal for fiscal year 2008 is
    only $2,891,000, a decrease of over $700,000 from the current year
    representing a decrease of 50 percent in the operations and
    rehabilitation component of the budget.
        How can these rehabilitation activities progress with decreasing
    operations and maintenance budgets?
        Answer. Rehabilitation planning and implementation on the Carlsbad
    Project is the responsibility of the Carlsbad Irrigation District with
    Reclamation as a cost-share partner. Sufficient appropriated funds have
    been requested by Reclamation for its estimated cost-share amount for
    the rehabilitation.
        Question. Can the BOR commit to transfer the funding for the Pecos
    River Basin Water Salvage program to the Carlsbad Irrigation District
    for implementation of the invasive species control activities?
        Answer. Yes, BOR transfers both Federal and State funds based on
    monthly costs submitted by the Carlsbad Irrigation District.

                       EXCESS GOVERNMENT PROPERTY ISSUES

        Question. Historically the Bureau of Reclamation allowed irrigation
    districts to access excess Government equipment to implement
    maintenance on federally managed facilities. Two years ago this policy
    was abruptly reversed. Equipment acquired this way avoids waste and
    abuse of Government resources and has been instrumental in dealing with
    southern New Mexico flooding this last summer.
        Will the BOR rectify this situation by restoring the ability of the
    irrigation districts to access the Excess Government Equipment list?
        Answer. Public Law 89-48, June 14, 1965, states in part ``. . . In
    order to encourage the assumption of irrigation districts . . . of the
    operation and maintenance or works constructed to furnish or distribute
    a water supply, the Secretary is authorized to use appropriated funds
    available for the project involved to acquire movable property for
    transfer under the terms and conditions hereinbefore provided, at the
    time operation and maintenance (O&M) is assumed.''
        The Reclamation Supplement to Federal Property Management
    Regulations further provides direction if additional equipment is
    required at the time of transfer, by allowing it to be obtained in the
    same manner and from the same sources as prescribed for the initial O&M
    requirement but with a 1-year time frame. Thus Reclamation allows the
    water user organizations to still acquire needed excess property for 1
    year after the O&M transfer to them. The provisions of this authority
    does not include the replacement or upgrade of equipment previously
    transferred to a water users' organization. The irrigation districts
    will continue to have access to the Excess Government Equipment list
    with a 1-year time frame provision, which will require irrigation
    districts to compete with other entities for acquisition of Excess
    Government Equipment.

                       CHIMAYO AND ESPANOLA WATER SYSTEMS

        Question. The two rural northern New Mexico communities of Chimayo
    and Espanola are currently developing and rehabilitating their water
    systems. Under Public Law 108-354 both communities may receive support
    from the BOR to complete their water systems. The President's fiscal
    year 2008 budget does not include funds to support these two rural
    programs.
        Can the BOR explain their approach to support this type of rural
    community and the specific decision to not provide funding in fiscal
    year 2008?
        Answer. Public Law 108-354 requires that a feasibility study be
    completed within 3 years of the legislation. Work has only just begun
    on the plan. Until the entities can provide a comprehensive plan for
    the projects including cost sharing it is felt that a request for
    Federal dollars can be delayed. The $1,000,000 already obligated to the
    City of Espanola under this authority remains unexpended.

                            ANIMAS-LA PLATA PROJECT

        Question. Despite past claims of mismanagement and poor planning
    and oversight, the A-LP project is now proceeding at an acceptable
    rate. The President's budget calls for $58 million for the project in
    fiscal year 2008. However, some of the project beneficiaries claim that
    the project requires $75 million in fiscal year 2008 to keep it on
    schedule and to keep total project costs to a minimum.
        Do you believe that the $58 million requested is adequate to keep
    the project on schedule?
        Answer. Yes, the amount requested is adequate to maintain the
    current schedule. This schedule reflects a ``projected'' delay to the
    overall project completion of approximately 1 to 1\1/2\ years as
    compared to earlier project schedules. The most significant impact to a
    single feature is a delay of 1\3/4\ years in delivering water to The
    Navajo Nation at Shiprock, New Mexico.
        Question. What precautions are being taken to ensure that there are
    not further cost overruns with the project?
        Answer. We have refined and streamlined reporting within
    Reclamation for the A-LP. The Four Corners Construction Office is
    responsible for all matters pertaining to the construction of the
    project. This office is managed by a Project Construction Engineer who
    reports directly to the Regional Director of the Upper Colorado Region
    in Salt Lake City, Utah. The construction office continually evaluates
    ways to save costs and still maintain the project features. Cost
    tracking procedures implemented in 2004 now relate all project costs to
    the cost estimate (indexed for inflation) for early detection of
    problems. This cost information is shared with the Project Sponsors on
    a bi-monthly basis.
        Question. Will providing greater appropriations in the near-term
    keep down the total cost of the project?
        Answer. Yes. The project schedule is driven by available funds. The
    more funds that are available, the sooner the project can be completed.
    Future costs driven by inflation will be kept in check.

                                 LOAN GUARANTEE

        Question. What progress have you made with respect to the Aamodt,
    Abeyta, and Navajo settlements?
        Answer. The Aamodt and Abeyta settlements both seek Federal
    contributions of water or funding to acquire water. The Bureau of
    Reclamation has completed a study of evaporation surplus at Cochiti
    reservoir to determine if additional water from that source would be
    available to supplement un-contracted San Juan Chama supplies, and we
    have met with the parties and provided draft copies of the study to
    them and asked for comments. The study showed that some surplus is
    available. At the direction of the Secretary, Counselor Bogert has met
    with the parties to both settlements in New Mexico several times since
    this spring, most recently in October 2007, to discuss water supply
    issues. The United States has presented the parties with a proposed
    level of Federal contribution in Aamod and Abeyta. In the meantime,
    consultations with the President's Office of Management and Budget and
    Department of Justice are on-going.
        With respect to the Navajo settlement, the Department has been
    working to develop information to assist in developing a possible
    solution, including a draft environmental impact statement on the
    proposed pipeline and the hydrologic determination on water
    availability in New Mexico. The Department will have an updated
    appraisal-level estimate of the costs of constructing the pipeline
    completed this year.
        Question. When do you anticipate you will complete your study to
    determine if there is additional water available from the San Juan-
    Chama Project as a result of an over-estimation of evaporative loss
    from Cochiti Reservoir?
        Answer. The Bureau of Reclamation has completed a study of
    evaporation surplus at Cochiti reservoir to determine if additional
    water from that source would be available to supplement un-contracted
    San Juan Chama supplies. The Department provided copies of the study to
    the parties and asked for their comments. The study showed that some
    surplus is available.
        Question. When will you provide the parties to the Abeyta
    settlement an official administration position on their proposed
    settlement?
        Answer. The administration provided the position on this settlement
    at the beginning of September 2007.
        Question. Please explain why the San Joaquin Settlement and the
    Arizona Water Settlement received favorable treatment from OMB while
    the New Mexico Indian water rights settlements have not.
        Answer. OMB's analysis of Indian water rights settlements is
    predicated upon the ``Criteria and Procedures for the Participation of
    the Federal Government in Negotiations for the Settlement of Indian
    Water Rights Claims'' (55 FR 9223). With respect to Federal
    contributions, the Criteria and Procedures provide that Federal
    contributions to a settlement should not exceed the sum of the
    calculable legal exposure and additional costs related to Federal trust
    or programmatic responsibilities. Of particular interest to the
    administration in determining calculable legal exposure is the
    liability facing the United States if no legislative settlement is
    reached. In the case of the Arizona Water Rights Settlement Act, the
    settlement concluded a lawsuit over the financial repayment obligation
    of Arizona water users for the Central Arizona Project (CAP), with
    significant amounts of money at stake. The San Joaquin Settlement
    referred to in this question was not an Indian water rights settlement,
    but the calculable legal exposure was part of the analysis. The San
    Joaquin settlement would bring to an end a multiyear lawsuit, and
    continued litigation would expose the parties to the risk of
    significant costs. In situations where the proposed Federal
    contribution outweighs the litigation exposure, administration support
    for a settlement requires that the additional contribution be closely
    related to programmatic responsibilities.
        Question. Do you believe that your proposed budget of $34 million
    for the Indian Land and Water Claims Settlement Fund is adequate to
    settle unresolved Indian land and water claims in fiscal year 2008?
        Answer. The Indian Land and Water Claims Settlement Fund line item
    in the budget is adequate for its intended purpose of fulfilling BIA's
    commitment under enacted Indian land and water settlements. Funding for
    ongoing negotiations to settle unresolved Indian land and water claims
    is provided under several other items in the DOI budget, including
    Water Resources Management in BIA's budget.
        Question. How do you plan to secure a commitment from OMB that a
    reasonable Federal contribution will be made available for the New
    Mexico Indian water rights settlements?
        Answer. We will continue to meet within the Office of Management
    and Budget and the Department of Justice to keep them informed of
    developments in the New Mexico settlements and identify approaches to
    these settlements that are fair to taxpayers as well as the settling
    parties.

                                  RURAL WATER

        Question. Fifty years after Garrison Dam was constructed and Lake
    Sakakawea was impounded, many of my constituents are still without a
    good source of drinking water. I am not talking about people far
    removed from the project; I am talking about people whose homes are
    within sight of Lake Sakakawea. These people do not have good water
    when there is a lake right in front of them that could provide for
    their needs. That was part of the bargain that we thought we made. We
    gave up land in return for water when and where we need it. We gave up
    the land, but you still haven't come through with the water.
        Costs continue to escalate on these projects. Benefits to the
    public are deferred. What do you recommend to make these projects more
    of a budget priority for Reclamation?
        Answer. Reclamation balances many priorities including funding
    ongoing construction projects such as rural water, while maintaining
    existing infrastructure and other ongoing priorities, all within the
    budget targets that have been established.
        Question. As you recall, The Fort Yates intake was silted over in
    2003 and left the Standing Rock Sioux Tribe with no water source.
    Thanks to considerable efforts of the tribe and your personnel, a
    temporary water intake was installed. It is still in use today?
        Are there plans for a permanent fix?
        Answer. The Tribe's engineering firm has studied several alternate
    plans for intakes that serve Fort Yates as well as the future needs of
    the entire Reservation.
        Question. What are they?
        Answer. As a result of the fiscal year 2008 appropriations, the
    Standing Rock Sioux Tribe water treatment plant near Wakpala, South
    Dakota will have the capacity to serve the entire reservation.
    Reclamation concurs with this decision as it provides for the intake
    location that should remain viable under nearly any lake condition and
    will also minimize operation and maintenance costs.
        Because it is estimated to take 3 years to allow enough funding and
    time to construct the new Wakpala intake, water treatment plant and
    connecting pipeline to the Fort Yates system, the existing water
    treatment plant and temporary intake that serves Fort Yates will need
    to remain in service for the same time period. Reclamation is working
    with the tribe to take some precautionary measures to ensure these
    current features at Fort Yates remain operational until such time as
    the new source of water from Wakpaka is made available.
        Question. Is there a schedule for this work?
        Answer. As a result of the fiscal year 2008 appropriations, the
    Standing Rock Sioux Tribe water treatment plant near Wakpaka, South
    Dakota will have the capacity to serve the entire reservation.
    Reclamation concurs with this decision as it provides for an intake
    location that should remain viable under nearly any lake condition and
    will also minimize operations and maintenance costs.
        Because it is estimated to take 3 years to allow enough funding and
    time to construct the new Wakpala intake, water treatment plant and
    connecting pipeline to the Fort Yates system, the existing water
    treatment plant and temporary intake that serves Fort Yates will need
    to remain in service for the same time period. Reclamation is working
    with the Tribe to take some precautionary measures to ensure these
    current features at Fort Yates remain operational until such time as
    the new source of water from Wakpaka is made available.
        Question. Lake Oahe has essentially retreated out of North Dakota,
    thanks to the mismanagement of the river by the Corps of Engineers, so
    that this intake is now a river intake, instead of the lake intake they
    had. Unfortunately, there appears to be a migrating sandbar that could
    cut-off the tribe's intake from the river.
        What measures is Reclamation prepared to take to ensure that this
    intake does not get cut-off from the river?
        Answer. Reclamation has developed and exercised contingency plans
    with the tribe in the event the existing river intake stops
    functioning. These plans include connecting portable pumps to the
    intake. Further measures include excavation and/or dredging the
    material to reconnect the intake to the river. We continue to evaluate
    additional measures that would redirect river flow towards the intake,
    preventing sandbars from forming.
        Question. Do you have sufficient funding for these measures?
        Answer. Reclamation has developed cost estimates for dredging this
    material in the event it blocks the intake. Reclamation estimates
    dredging cost to be approximately $150,000. Work would need to be
    reprioritized and funds shifted to cover this type of extraordinary
    operation and maintenance work.
        Question. On a similar note, the intake at Wakpala on the
    Reservation is in serious danger of being out of the water this year.
    Have you developed contingency plans to deal with this contingency?
        Answer. Reclamation has prepared contingency plans to address the
    loss of water supply to the Wakpala water treatment plant. Since this
    plant serves a relatively small population, the immediate response is
    to truck water from the City of Mobridge to the water treatment plant.
    Further options are being investigated including installing backup
    groundwater wells and extending the intake as the lake recedes.
        Question. What is the most likely scenario?
        Answer. The Army Corps of Engineers reservoir forecast for Lake
    Oahe through February 2008 predicts sufficient water depth over the top
    of the Wakpala Intake to sustain normal operations.
        Question. Is there a permanent solution that could solve both of
    these problems?
        Answer. The tribe's engineering firm has studied options to serve
    the entire reservations needs (including both Fort Yates and Wakpala).
    Based on these studies, the tribe's preferred long-term solution is to
    construct a new surface water intake near the Indian Memorial
    Recreation Area, south of Wakpala, and a new water treatment plant to
    serve the entire southern portion of the reservation. Their preferred
    plan also includes improvements to the existing Fort Yates intake and
    water treatment plant to serve the northern portion of the reservation.
    The Wakpala intake and water treatment plant facilities are estimated
    to cost $23.9 million and the Fort Yates intake and water treatment
    plant improvements are estimated to cost $2.3 million. The highest
    priority and first phase of the Wakpala facilities will involve
    construction of the new intake and raw water pipeline at an estimated
    cost of $4.5 million to address the immediate low water conditions. The
    Supplemental Appropriations Act signed on May 27, 2007 appropriated
    $4.5 million to begin design and construction of the new Wakpala
    Intake. Designs have been completed and the contract is expected to be
    advertised and awarded in December 2007. Construction is scheduled to
    begin in the spring of 2008 and the intake should be operational by the
    end of the year.
        Question. What is the range of costs that we would be considering
    for a permanent fix?
        Answer. The tribes preferred plan to meet the reservation-wide
    needs, as described above, is estimated to cost a total of $26.2
    million. Reclamation has advised the tribe that the Fort Yates well
    field, with a capacity to meet the needs of the northern portion of the
    reservation, may be a more reliable option and is estimated to cost
    $9.2 million. This option at Fort Yates together with the tribes
    preferred plan at Wakpala would result in a total cost to secure a
    reservation-wide water supply of $33.1 million. A new intake and water
    treatment plant to completely replace the existing Wakpala and Fort
    Yates facilities and meet the full reservation-wide needs was also
    evaluated. This alternative would consist of a new intake near the
    Indian Memorial Recreation Area, a new water treatment plant, storage
    facilities, and additional transmission pipelines to interconnect the
    southern and northern portions of the reservation-wide system. This
    alternative is estimated to cost over $50 million.
        Question. Is there work on this that could be undertaken in fiscal
    year 2007 and fiscal year 2008? Could you provide me with this
    additional funding amount?
        Answer. In fiscal year 2007, work continued on the groundwater
    investigations in the Fort Yates area. These investigations, including
    drawdown tests and pilot wells, are expected to be complete in 2008. If
    the project is found to be feasible and sufficient funds are made
    available, design and specifications for the $9.2 million project to
    serve the northern portion of the reservation could begin in fiscal
    year 2008. Construction of the well field and treatment facilities
    could start, pending the availability of funds, in the later part of
    2008 and extend into 2009. If the Tribe continues to prefer the Fort
    Yates intake improvement alternative at a cost of $2.3 million, design
    and construction could be initiated in fiscal year 2008.
        Designs and specifications for the $4.5 million replacement intake
    and raw water pipeline at Wakpala were completed in fiscal year 2007.
    Construction is expected to begin in the spring of 2008.
        Question. Could you provide me with this additional funding amount?
        Answer. Sufficient funds are currently available to complete
    construction of the new Wakpala Intake in 2008. After a final decision
    is made in early 2008 on the preferred Fort Yates water source,
    Reclamation will look at the funding needs.
                                     ______

                Questions Submitted by Senator Dianne Feinstein

          SACRAMENTO VALLEY INTEGRATED REGIONAL WATER MANAGEMENT PLAN

        Question. The Sacramento Valley Integrated Regional Water
    Management Plan received $2,000,000 in fiscal year 2006, as well as, an
    allocation of $1,200,000 in the House reported bill and $2,000,000 in
    the Senate reported bill during the fiscal year 2007 appropriations
    process. As you know, preliminary California Department of Water
    Resources' study results suggest Sacramento Valley's groundwater
    formations may offer, as much as, several hundred thousand acre-feet in
    additional water supplies for agricultural, environmental, and
    municipal uses. The funds approved by the committees in fiscal year
    2007 are needed to continue the efforts begun in fiscal year 2006 to
    better characterize the process for groundwater recharge of and
    production from the main groundwater aquifer systems. Do you agree that
    the work underway in this initiative holds great promise for increasing
    the available water supply for agricultural, environmental and
    municipal uses?
        Answer. Yes, Reclamation believes the Stony Creek Fan/Lower Tuscan
    Investigation Project (an element of the Sacramento Valley Integrated
    Regional Water Management Plan) holds promise for increasing the
    available supply of water for agricultural, municipal and environmental
    purposes, by providing additional conjunctive use capability and by
    laying a foundation for future development of water banking capacity in
    the Sacramento Valley.
        Question. In your fiscal year 2007 work program, will the Bureau of
    Reclamation support an allocation of $2,000,000, again, the same level
    approved in the fiscal year 2006 appropriations process, for the
    Sacramento Valley Integrated Regional Water Management Plan, and, if
    not, what level of funding is the Bureau of Reclamation recommending
    for this initiative?
        Answer. Reclamation would need a report from the project proponents
    showing supporting analysis and data demonstrating the potential water
    supply benefits of this project. In addition, Reclamation assumes that
    cost-sharing would be a condition of any such funding.
                                     ______

                Questions Submitted by Senator Pete V. Domenici

                                    DROUGHT

        Question. When do you anticipate the remaining wells will be
    completed?
        Answer. In keeping with the work initiated in 2006, we have
    completed well drilling for the communities of Las Vegas, Ruidoso, and
    Ruidoso Downs, New Mexico. Drilling on the well for Capitan, New
    Mexico, will be completed within weeks. An equipment breakdown has
    caused a minor delay. As you know, we were not as successful with the
    well in Cloudcroft, New Mexico. Although drilling was completed, the
    quality of the water was not fit for human consumption and the yield
    was insufficient. Consequently, that well has been abandoned.
        Question. Please explain why completion of the wells has taken as
    long as it has.
        Answer. Ruidoso Downs was the only community of the five who had a
    plan in place. Consequently, it was necessary to procure the services
    of a contractor for the permitting, design, and monitoring of the
    wells, along with a well driller. Severe geologic formations, equipment
    breakdowns requiring competition with oil drillers for the same kind of
    equipment, and well conditions contributed to the time required for
    completion.
        Question. Is additional funding necessary for their completion?
        Answer. No additional funding is required. Funding for the five
    well projects has been sufficient.
        Question. What additional emergency drought activities should the
    Bureau of Reclamation undertake to address yet another year of
    devastating drought in the Southwest?
        Answer. The Reclamation States Emergency Drought Relief Act of 1991
    (Public Law 102-250) as amended, is specific in authorizing the kinds
    of activities the Bureau of Reclamation can undertake. Public Law 102-
    250 authorizes the Bureau of Reclamation to undertake drought relief
    measures through emergency assistance (Title I) and planning activities
    (Title II). Title I provides for construction, management and
    conservation measures to alleviate the adverse impacts of drought,
    including the mitigation of fish and wildlife impacts. Title I also
    authorizes temporary contracts to make available project and nonproject
    water and to allow for the use of Reclamation facilities for the
    storage and conveyance of water.
        Reclamation's regional offices will identify and prioritize
    specific projects to be undertaken with drought program funding.
    Reclamation staff understands the on-the-ground impact of the drought
    conditions currently affecting parts of the West, and has the technical
    expertise to evaluate the priority of projects proposed to cope with
    those conditions. Projects will be selected for funding based on their
    priority and the availability of funds.

                                   WATER 2025

        Question. Please describe Reclamation's future vision for the Water
    2025 program and any necessary authorities needed to implement the
    program.
        Answer. Reclamation envisions the Water 2025 program as a tool to
    meet the challenge of preventing crises and conflict over water in the
    West. This is being accomplished through the most effective low-cost
    options for increasing water supplies that are available, including:
    (1) water efficiency and conservation; (2) water markets; (3)
    collaboration; and (4) technology. In order to move forward,
    Reclamation needs Water 2025 program authority. On April 13, 2007, the
    administration transmitted a draft bill titled Reclamation Water
    Management Improvement Act that would authorize the Water 2025 program.
        Question. Please describe the major accomplishments of the Water
    2025 after its 4 years of existence.
        Answer. Since the inception of the program, the Water 2025 program
    has experienced many achievements that assist water managers in
    stretching scarce water supplies, thereby reducing the likelihood of
    conflicts over water.
        Over 122 Challenge Grants in 17 western States have leveraged $25.5
    million in Federal funding with local partnerships into $96 million in
    water management improvements. In 2007 alone, Secretary Kempthorne
    announced $9.2 million in Water 2025 Challenge Grants, targeting 44 new
    projects across the Nation that will conserve water resources and
    modernize water storage and delivery systems.
        The projects selected for award through the Challenge Grant program
    incorporate the following improvements:
      --Forty-two of the projects, collectively, will convert 134 miles of
            earthen canals to pipeline.
      --Seventy-four of the projects include installation of water
            measurement devices, Supervisory Control and Data Acquisition
            (SCADA) systems and automated water delivery systems.
      --Thirty-six of the projects include water marketing plans.
      --The 122 projects, upon completion, will save approximately 400,000
            acre-feet per year.
        In fiscal year 2008, Reclamation initiated a process to provide
    System Optimization Review grants, which are intended to fund a broad
    analysis of system-wide efficiency rather than project-specific
    planning. The final product of each grant will be a report with a plan
    of action that focuses on improving efficiency and system operations on
    a regional or basin perspective.
        Question. Specifically, how have funds that have been appropriated
    for the program reduced conflict amongst water users?
        Answer. To date, 16 projects are complete. Each Water 2025 project
    results in water better managed or saved and collaborative
    relationships developed that will reduce crisis and conflict over water
    in the west. Below are some specific examples.
      --In Lewiston, Idaho, the Lewiston Orchards Irrigation District--
            serving 18,000 customers--will save 450 acre-feet per year as a
            result of a Water 2025 project. The saved water will reduce the
            impact from a settlement with the Nez Perce Tribe over instream
            flows in the Sweetwater Creek.
      --The Central Oregon Irrigation District, a fiscal year 2004 and
            fiscal year 2006 Challenge Grant recipient, established a water
            bank in the Deschutes Basin and formed an alliance of seven
            irrigation districts, six cities, three tribes and the
            Deschutes Resource Conservancy (the ``Deschutes Water
            Alliance'' or the ``Alliance'').
      --In Utah, the Sevier River Water Users Association, a partnership of
            canal companies and river commissioners, used their fiscal year
            2005 Challenge Grant to enlarge the existing Supervisory
            Control and Data Acquisition (SCADA) system to allow for
            expansion of real-time monitoring and control systems in a
            five-county area.
      --A fiscal year 2005 Challenge Grant to the Yuma County Water User's
            Association will save 8,500 acre-feet per year that benefit the
            junior water users of the Central Arizona Project, which serves
            fast growing metropolitan areas. The 8,500 acre-feet per year
            is enough to serve approximately 25,000 households.

                           MIDDLE RIO GRANDE PROJECT

        Question. The USBR is tasked with providing water in order to
    comply with the Fish and Wildlife Service's 2003 Biological Opinion.
    However, it is unclear where the USBR will obtain this water once the
    Albuquerque-Bernalillo County Water Utility Authority begins diverting
    its allocation of San Juan-Chama Project water. The President's fiscal
    year 2008 USBR budget proposes a 17 percent decrease to the Middle Rio
    Grande Project from fiscal year 2006 enacted levels. Additionally, the
    needs in the basin are increasing dramatically, including:
      --Repairs on high-priority irrigation system levees;
      --Meeting Endangered Species Act requirements;
      --Developing an intergraded management plan; and
      --Modernizing stream gagging.
        At the same time, the administrations fiscal year 2008 request is
    17 percent below the fiscal year 2006 budget for the Middle Rio Grande
    Project.
        How can the Bureau of Reclamation meet all these increasingly
    important obligations with a decrease in Federal spending?
        Answer. For fiscal year 2008 the request for priority site levee
    maintenance of $10,195,000 is more than what was enacted in fiscal year
    2007 ($7,382,000) and should be sufficient to continue repairs. In
    developing its budget request, Reclamation anticipated funding
    contributions from Federal partners for the non-water ESA activities of
    the Collaborative Program such as minnow rescue, species and water
    quality monitoring and research, and habitat planning, construction,
    and monitoring activities.
        Question. Does the Department of the Interior support authorization
    of the Middle Rio Grande Endangered Species Collaborative Program?
        Answer. Yes, DOI supports the authorization of the Middle Rio
    Grande Endangered Species Collaborative Program. The success of the
    Program will depend on the non-Federal and other Federal partner
    contributions in addition to Reclamation.
        Question. San Juan-Chama Project water cannot be used for meeting
    the requirements of the ESA unless it is acquired by a ``willing seller
    or lessor.'' If water cannot be acquired from project contractors,
    where do you anticipate you will get the water to meet the requirements
    of the ESA in 2008?
        Answer. Some San Juan-Chama Project water will be available for
    Reclamation to lease on a voluntary basis in 2008. Most of the
    supplemental supply that will help meet Biological Opinion flow
    requirements is previously leased SJ-C water that is still in storage.
    In addition, operational flexibilities by the Middle Rio Grande
    Conservancy District, U.S. Army Corps of Engineers contribution to
    silvery minnow spawning/recruitment flows, and other voluntary
    contributions will collectively assist in meeting ESA requirements.
        Question. What are you doing to address this potential problem?
        Answer. Reclamation in cooperation with the Collaborative Program
    stakeholders is working on development of a sustainable biological
    opinion which will contain shared responsibilities for water management
    among all of the stakeholders.

                                   TITLE XVI

        Question. Secretary Limbaugh, You requested $11 million for Water
    2025 in your budget. How do you reconcile requesting funding for this
    unauthorized program when you have so many unmet authorized needs in
    the Title XVI program?
        Answer. The Water 2025 program is a high priority program to
    address the critical need for funding to prevent crises and conflicts
    over water in the West. Through the Water 2025 program, the $11 million
    requested will result in over $40 million of water infrastructure
    investment. The Bureau of Reclamation must balance competing priorities
    for funding within the Federal Government and within Reclamation.
    Reclamation's budget reflects this balance.
        Question. How much did you provide for these projects in your
    budget?
        Answer. The overall fiscal year 2008 budget request for the Title
    XVI Water Reclamation and Reuse Program is $10.1 million and provides
    $9.3 million in funding for nine authorized projects, including eight
    construction projects and one desalination demonstration project. The
    funding level reflects Reclamation's balance of the many competing
    priorities for funding within the Federal Government and within
    Reclamation.
        Question. Why is this program so unpopular?
        Answer. The administration continues to support the Title XVI Water
    Recycling and Reuse Program when it is focused on using Federal funds
    to develop innovative ways to recycle or reuse water and to construct
    projects that will help alleviate water crises or shortages in the
    West. Budget requests reflect a priority of completing those projects
    that have already been authorized for construction.
        Question. Is there anything Congress can do to modify this program
    to make it more likely to be funded?
        Answer. Public Law 102-575, Title XVI, as amended, gives
    Reclamation ample authority to investigate and identify opportunities
    for reclamation and reuse of wastewater and to conduct research for the
    reclamation of wastewater and naturally impaired ground and surface
    waters. In making its budget requests, Reclamation has placed priority
    on meeting funding obligations for projects authorized in previous
    years.
                                     ______

                   Questions Submitted by Senator Larry Craig

                                 LOAN GUARANTEE

        Question. Can you please describe in more detail the new loan
    guarantee program? For instance, what kinds of strings are attached to
    these loans and what kind of interest rates and loan duration?
        Answer. Title II of Public Law 109-451 provides the Secretary of
    the Interior authority to issue loan guarantees to assist in financing
    rural water supply projects; extraordinary maintenance and
    rehabilitation of Reclamation project facilities; and improvements to
    infrastructure directly related to a Reclamation project. Borrowers
    would apply for a loan from private lending institutions as defined in
    the statute. Interest rates for the guaranteed portion of the loan
    would not exceed a level that the Secretary determines to be
    appropriate with consideration of the private sector prevailing rate.
    For example, the Federal funds rate or higher. Loans may be provided
    for terms of up to 40 years. The Bureau is continuing to address the
    administrative requirements and the potential benefits of the program.
    We will keep the Committee informed of our progress.

                         MINIDOKA SPILLWAY REPLACEMENT

        Question. I'm concerned with what is occurring at the Minidoka Dam
    in Idaho. This is an aging dam that wasn't built to standard. This
    project supplies water for a lot of farmers, and assessments are
    already fairly expensive. Now the Bureau wants to replace the dam
    structure, leaving the irrigation district with a $10 million plus bill
    to pay back in about 3 years. Is this a situation where the loan
    guarantee can help or is there another way we can keep from bankrupting
    these farmers?
        Answer. Minidoka dam was built to the standards of the day in 1906.
    The structure has been modified three times to provide additional
    benefits such as power generation and flood control. After over 101
    years of service, the spillway portion of the dam is in need of
    replacement. Over the past 10 years, Reclamation has endeavored to
    address these concerns including repayment options with the appropriate
    Districts. As you are aware, the Rural Water Act of 2006 (Public Law
    109-451), was enacted on December 22, 2006. Among other things, this
    law directs the Secretary of the Interior to promulgate a regulation
    prior to issuing loan guarantees. Instead of relying on a loan
    guarantee, the districts have the option of raising their water
    assessments to users, thus giving them the adequate funds to begin
    construction or acquire non-Federal funding.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

                             DESALINATION RESEARCH

        Question. I am interested in the process and the schedule the
    administration will undertake to develop both a short and long-term
    strategy within your desalination research program for a viable R&D
    program that will enable communities to utilize saline aquifers.
        Please describe what the guiding principles/goals of the program
    would include.
        Answer. Over the past 10 years, as the demand for water quality and
    water quantity has increased, desalination technologies have improved
    and costs have been reduced. More and more western rural and larger
    communities are implementing groundwater desalination facilities to
    augment their water supplies. Reclamation believes there are
    opportunities to further reduce the hurdles that limit the wide use of
    existing technology, such as the problems of inland concentrate
    management, and high energy consumption.
        Within this setting, Reclamation's vision is to provide
    opportunities that expand water supplies in a sustainable manner for
    western rural communities, Native Americans, and the western basins
    supporting Reclamation projects. Our goal is to advance the state of
    the art in high risk, applied research and development to reduce the
    cost of treating impaired waters, consistent with the administration's
    R&D investment criteria, and to use partnerships to accelerate the
    implementation of improved technology.
        Question. Please describe which broad BOR mission areas would be
    supported by the desalination research.
        Answer. The research serves our broad mission of increasing the
    usable water supplies for Reclamation projects, rural communities, and
    Native Americans.
        Question. What portion of the funds do you intend to provide for
    in-house research vs. extramural grants?
        Answer. Reclamation's R&D request for desalination research
    conducted in-house consists of about $1 million through the Science and
    Technology Program and an additional $680,000 through the Colorado
    River Basin Salinity Control Project (Title I). Reclamation's request
    for extramural desalination research consists of about $2.3 million
    through the Desalination and Water Purification Research Program and an
    additional $500,000 through the Water Reclamation and Reuse Program
    (Title XVI).
        Question. Please describe how you intend to coordinate with other
    Federal/State/local and commercial entities within the desalination
    research program.
        Answer. Reclamation has contracted with the National Academy of
    Sciences (NAS) to provide a contemporary assessment of the potential
    for desalination technologies to meet current and future water supply
    needs. The NAS report will also recommend appropriate roles for the
    Federal Government, private sector, State, and local communities in
    pursuing future research.
        The report was slated for completion in December 2007. By mid-2008,
    Reclamation plans to evaluate the NAS findings and update Reclamation's
    research strategies as appropriate. We will continue to work within
    existing water research coordination forums such as the Subcommittee on
    Surface Water Availability and Quality within the White House Office of
    Science and Technology, interagency groups such as the Interagency
    Consortium for Desalination Research and the Multi-State Salinity
    Coalition, as well as research and industry associations such as the
    American Membrane Technology Association, the International
    Desalination Association, the WateReuse Foundation, and the
    International Water Association--North American Membrane Research
    Conference.

                  BUREAU OF RECLAMATION--GILA RIVER SETTLEMENT

        Question. Please explain why USBR funds for participating in this
    process are not included in the fiscal year 2008 budget.
        Answer. Reclamation's fiscal year 2008 budget request does include
    $250,000 within the Colorado River Basin Project-Central Arizona
    Project item to continue collecting and evaluating necessary
    preliminary environmental data to assist the State of New Mexico in
    deciding whether to build a New Mexico Unit. Current efforts focus on
    supporting New Mexico's collaborative efforts to create a planning
    process for evaluating the best use of potential withdrawals and
    funding provided under the Central Arizona Project, as modified by the
    Arizona Water Settlement Act, for the southwestern planning region of
    New Mexico.
        Question. How do you respond to the claim that the USBR and Fish
    and Wildlife have been less than cooperative in participating in the
    development of an environmental assessment?
        Answer. Reclamation is an active participant in the state of New
    Mexico decisionmaking process and has been since the Arizona Water
    Right Settlement Act was passed. A formal environmental assessment
    under NEPA and other environmental compliance activities including
    those under the Endangered Species Act will be performed when specific
    alternatives are proposed. Based on New Mexico's process for finalizing
    their decision to the Secretary by 2014, we anticipate the evaluation
    of alternatives and associated environmental compliance activities to
    begin in approximately 2010.
        Reclamation is an active participant in the State of New Mexico's
    decisionmaking process and has been since the AWSA was passed. Both
    Reclamation and FWS signed a Memorandum of Understanding with the New
    Mexico Interstate Stream Commission, the Southwest New Mexico Water
    Planning Group, and the New Mexico Office of the Governor in March 2006
    creating the Gila-San Francisco Coordinating Committee (GSFCC) to
    collaboratively evaluate the environmental effects of potential water
    withdrawals. Reclamation is a member of the GSFCC, one of the co-chairs
    of the Technical Subcommittee, a member of the Public Involvement
    Subcommittee, a member of Sandia National Laboratories decisionmaking
    model development team to assist in regional planning efforts, and an
    active participant in other collaborative efforts including the Gila
    Science Forums.
        Question. How do you plan to improve the Department's participation
    in the development of an environmental assessment?
        Answer. Reclamation is identified as the lead agency for
    environmental compliance with New Mexico as joint lead if they so
    request. In this role, Reclamation will continue to actively
    participate in all activities associated with the New Mexico Unit of
    the Central Arizona Project under the terms of the Arizona Water
    Settlements Act, and with the Gila-San Francisco Coordinating Committee
    and other committees as appropriate as New Mexico works through the
    collaborative decisionmaking process to determine the viability of a
    New Mexico Unit and other water utilization alternatives to meet water
    supply demands in the Southwest Water Planning Region of New Mexico.
    The Fish and Wildlife Service's support of Reclamation's environmental
    compliance activities is a key element in successfully fulfilling
    Reclamation's role.

                                  RURAL WATER

        Question. What is the status of the USBR development of eligibility
    criteria that are due no later than December 22, 2007?
        Answer. Public Law 109-451, the Rural Water Act of 2006 (the
    ``Act''), requires Reclamation to develop three sets of criteria to
    implement the Rural Water Program, within specified timeframes. The
    criteria include eligibility and prioritization criteria, which are due
    within 1 year after enactment of the Act; criteria for the evaluation
    of appraisal investigations, due within 1 year after enactment; and
    criteria for the evaluation of feasibility studies, due within 18
    months after enactment. Based on the language in the Act, Reclamation
    has determined that it is required to follow the rulemaking process in
    the Administrative Procedures Act in developing the criteria. Instead
    of conducting three separate rulemakings, Reclamation will include all
    three sets of criteria in a single rule. We believe this is a more
    timely and efficient option than conducting multiple rulemakings.
    However, because of the specific procedural requirements associated
    with the rulemaking process--which includes a 60-day public comment
    period--Reclamation will not be able to publish the rule by December
    22, 2007. Reclamation has developed a comprehensive draft of the rule,
    which includes all three sets of criteria. The draft rule is being
    reviewed internally, and we expect to publish it as an Interim Final
    Rule in the summer of 2008.
        Question. When does the USBR anticipate initiating the assessment
    of rural water needs?
        Answer. Section 104 of Public Law 109-451 requires the Secretary,
    in consultation with several other Federal departments and agencies, to
    undertake a comprehensive assessment of rural water programs and
    activities, to be completed by December 2008. Reclamation has begun
    this effort and expects to have the Assessment completed by the
    December 2008 deadline.

                                 LOAN GUARANTEE

        Question. What progress has been made in implementing the loan
    guarantee program authorized under title II?
        Answer. The Bureau is continuing to address the administrative
    requirements of the program including proposed rules and eligibility
    requirements. We will keep the Committee informed of our progress.
                                     ______

                  Questions Submitted by Senator Wayne Allard
        Question. There is potential that projects will be forced to return
    O&M to Reclamation when they cannot fund necessary replacement. Should
    this happen, how will Reclamation address problems at projects that
    fail?
        Answer. Reclamation continues to proactively seek assistance for
    responsible operating entities to be able to fund necessary
    replacements of project facilities and avoid the return of facilities
    to Reclamation for operation.
        Reclamation works with the local operators of our facilities to
    provide recommendations to reduce the risk of failure and to keep those
    facilities operable. However, if such entities are unable to afford the
    full cost of operation, maintenance and replacement (OM&R) of the
    facilities, then Reclamation has a limited set of options. If the
    entity cannot meet its OM&R responsibility (to fund necessary
    rehabilitation work), as stated in the provisions of its contract,
    Reclamation would have the option of reassuming the OM&R responsibility
    of the project facilities and billing the entity for all associated
    OM&R costs. In the extreme, Reclamation could choose to stop operation
    of the facility indefinitely and minimize OM&R costs for the local
    beneficiaries.
        Question. Does it not make sense for the Bureau to assist these
    projects before failures actually occur?
        Answer. In accordance with Reclamation law and contractual
    arrangements, Reclamation cannot directly provide financial assistance
    to the responsible operating entities in the OM&R of these project
    facilities. However, through its existing oversight and administrative
    activities, Reclamation can and will continue to provide some limited
    engineering and technical support in maintaining these project
    facilities for delivery of authorized project benefits. Additionally,
    Reclamation has been actively involved in seeking financial assistance
    for these entities.
        Question. Some Bureau projects utilize an off-river reservoir which
    depends largely on ``connecting structures''--often a canal system--to
    get water in and out of the reservoir. At such projects, without the
    canals, the dam would be useless and unnecessary. Why does the Bureau
    of Reclamation seem to place lower importance on these connecting
    structures even though they are a vital part of the project itself ?
        Answer. Historically, since 1948, Reclamation has consistently
    provided formal, routine condition assessments/inspections of all such
    ``connecting structures'' under Reclamation's ``Review of Operation and
    Maintenance Program.'' Reclamation is acutely aware of the operational
    importance of these canal systems and structures to convey and deliver
    project benefits, whether it is to a dam/reservoir or directly to a
    canal distribution system. However, high- and significant-hazard dams,
    which have the potential to cause loss of life or significant property
    damage should they fail, receive a deservedly higher level of condition
    assessment attention.
        Question. Given geographical and geological uniqueness and varied
    construction dates I find it difficult to believe all Bureau of
    Reclamation projects are identical. Is it the opinion of the Bureau of
    Reclamation that all repayment contracts include ``replacement'' even
    when it is not stated in the contracts?
        Answer. All Reclamation projects are indeed not identical, as you
    state. However, Reclamation laws and authorities do provide a generally
    consistent way in which to administer contracts relative to these
    projects and related O&M of these facilities. Under the terms of O&M
    contracts (not repayment contracts) with operating entities and project
    beneficiaries, replacements and rehabilitation are considered
    ``maintenance.'' Within the context of managing Reclamation's
    infrastructure, the O&M of project works involves a wide range of
    activities. These O&M activities encompass those actions necessary to
    achieve continued structural integrity and operational reliability in
    delivering authorized project benefits. Maintenance tasks include major
    repairs, rehabilitation, and equipment/facility replacements and
    additions.
        Question. I would like to ask that you answer this question to my
    office in writing, as a follow-up to this hearing: What is the Bureau
    of Reclamation's official definition of ``operations and maintenance''
    and ``operations, maintenance and replacement''?
        Answer. Within the context of managing Reclamation's water and
    power infrastructure, the operation and maintenance of project works
    involves a wide range of activities. These operations and maintenance
    activities encompass those actions necessary to achieve continued
    structural integrity and operational reliability in delivering
    authorized project benefits. Additionally, as stated in Reclamation's
    ``Report to the Congress, Annual Costs of Bureau of Reclamation Project
    Operation and Maintenance for fiscal years 1993-97,'' dated September
    1998, ``the most visible maintenance tasks are the major repairs and
    rehabilitations, equipment and facility replacements, and facilities
    additions that are accomplished at every project over time.'' As such,
    the ``maintenance'' term includes ``replacements'' and, therefore, the
    definitions for both ``operations and maintenance'' and ``operations,
    maintenance, and replacement'' are considered to be synonymous.
    Similarly, for contract administration purposes within Reclamation,
    replacements have always been included as part of maintenance
    responsibilities and costs.

                                    DROUGHT

        Question. Commissioner Johnson, what are the drought conditions in
    the west like today?
        Answer. All of Reclamation's 17 western States are experiencing
    some level of drought conditions ranging in intensity from abnormally
    dry to extreme. Areas of concern include the southern third of
    California through Arizona which has experienced rainfall under 50
    percent of normal over the past 60 days. In the upper portion of the
    Great Plains including portions of North and South Dakota, drought
    conditions are spreading. Much of the West is experiencing above normal
    temperatures.
        Question. Commissioner Johnson, How much funding could you utilize
    for the remainder of fiscal year 2007 and early fiscal year 2008 for
    drought assistance?
        Answer. The funding provided in the supplemental appropriations,
    U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq
    Accountability Appropriations Act, 2007, Public Law 110-28, May 25,
    2007, is sufficient for the needs of the Drought program.
        Question. Commissioner Johnson, how much funding could you utilize
    for the remainder of fiscal year 2007 and early fiscal year 2008 for
    drought assistance?
        Answer. The funding provided in the supplemental appropriations,
    U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq
    Accountability Appropriations Act, 2007, Public Law 110-28, May 25,
    2007, is sufficient for the needs of the Drought program.

                             LOAN GUARANTEE PROGRAM

        Question. I have noticed in your budget that you are providing $1
    million to initiate implementation of the Loan Guarantee Program for
    rural water projects. As more than half of your projects are more than
    50 years old, I expect that this program has raised considerable
    interest in the West. How do you envision this program working?
        Answer. The law provides authority to issue loan guarantees for
    three categories of projects: (a) rural water supply projects; (b)
    repair and rehabilitation of Reclamation facilities; and (c)
    improvements to water infrastructure directly related to Reclamation
    projects.
        The Bureau is continuing to address the administrative requirements
    and the potential benefits of the program. We will keep the committee
    informed of our progress.
        Question. What will be the eligibility criteria?
        Answer. Eligibility criteria, developed through the formal
    rulemaking process, would include factors such as financial capability
    for repayment, engineering need and feasibility, historical diligence
    in performing routine operation and maintenance, environmental impacts,
    and efficiency opportunities.
        Question. Will this solve the recapitalization problems for many of
    the older projects in the West?
        Answer. This would not likely solve the recapitalization problems
    of older projects in the West, but will be a valuable tool to assist in
    meeting this challenge.
        Question. Will this serve the small water districts?
        Answer. Yes, smaller water districts would be an important focus of
    the program.

                              SUBCOMMITTEE RECESS

        Senator Dorgan. I thank all of you for being here. I'm
    sorry about the brevity but I must now go run and catch this
    vote. This hearing is recessed.
        [Whereupon, at 4:04 p.m., Thursday, March 15, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

        ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2008

                                  ----------

                           WEDNESDAY, MARCH 21, 2007

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 2:03 p.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Byron L. Dorgan (chairman)
    presiding.
        Present: Senators Dorgan, Murray, Domenici, Craig, and
    Allard.

                              DEPARTMENT OF ENERGY

                               Office of Science

    STATEMENT OF HON. RAYMOND L. ORBACH, DIRECTOR

                  OPENING STATEMENT OF SENATOR BYRON L. DORGAN

        Senator Dorgan. The hearing will come to order. This is the
    Senate Appropriations Committee, the Subcommittee on Energy and
    Water Development. We are reviewing today the fiscal year 2008
    budget request for the Department of Energy's Office of
    Science. Mr. Orbach, we welcome you. Thank you for being here.
        The proposed budget for the Office of Science is $4.397
    billion. That represents 18 percent of the Department of
    Energy's total budget and an increase of $600 million above the
    Office of Science's budget in the year 2007.
        Mr. Orbach, perhaps sometime you can whisper to us the
    secret of your relationship with OMB, that you come here with a
    proposed $600 million budget increase. You, indeed, are a rare
    species in this coming fiscal year. However it happened,
    though, we think this is a good outcome. We're committed to
    improving our Nation's ability to compete in the ever-changing
    global market place and we recognize that we have to improve
    our Nation's capabilities in mathematics and the sciences if
    we're going to continue to lead the way in innovation.
        This is particularly true in the physical science fields,
    where the Department of Energy is the leader among Federal
    agencies. In the future our country will have to maintain
    leadership in innovation and development and the Office of
    Science will be one of the keys in our success in doing that.
        A substantial increase in funding raises some different
    questions than when programs face significant decreases. But
    underlying both circumstances is the basic question of whether
    there is a plan to accommodate the change in funding and, if
    so, what is that plan? A doubling of funding over 9 years, for
    example, is an admirable goal, but we have to make sure there
    exists a plan that meets a defined goal.
        Further, we have to have a plan to maintain our base
    infrastructure in order to take advantage of investments in new
    instruments and new facilities. It's not enough to make
    investments in new instruments and facilities here at home, or
    in partnerships abroad, if we don't maintain our base programs
    and facilities.
        So the Office of Science is exploring the development of a
    number of new projects that also could have significant future
    costs, significant costs if taken to construction. And we need
    to know that out year budgeting will assume, or is assuming the
    construction, operation, and the research cost associated with
    each of those projects.
        So, Dr. Orbach, thank you for your work. I look forward to
    hearing your testimony. But, first, I will turn to my
    colleagues for any opening statements they have.
        Senator Domenici.

                 OPENING STATEMENT OF SENATOR PETE V. DOMENICI

        Senator Domenici. Thank you very much.
        We're moving in a direction--this small office becoming a
    very large and powerful one. Maybe it can stay small and be
    powerful and you've alluded to how that might be done in early
    parts of your comments. But, in any event it's going to have a
    much bigger impact, somewhere, somehow, that seems quite
    obvious to me.
        I think you would be interested to know that Chairman
    Bingaman and I introduced an amendment to the budget resolution
    to increase funding for science research by $1 billion. In
    addition to fully funding the President's budget request, it
    also adds funding to funds like the America Competes Act. Mr.
    Chairman, I hope that you will look at this amendment.
        Dr. Orbach, you have had a very important job. It is your
    responsibility to challenge our labs with new and exciting
    scientific goals, as well as making investment in facilities
    and infrastructure to ensure U.S. leadership. The Energy Policy
    Act included a provision elevating your position from Director
    to Under Secretary to give you responsibility to set the
    science policies for the labs, including all of the NNSA
    facilities. And you will note that, the labs continue to
    support the best science in the world. Unfortunately, the
    funding provided by the Office of Science to these labs remains
    disproportionately low. The NNSA labs have great facilities
    that have been exclusively tools of the weapons program that
    should be incorporated into the Office of Science programs.
    Facilities, such as the Z machine and the MESA at Sandia will
    be open to tremendous new research opportunities to scientists
    and must be thought of as national user facilities.
        I understand that you are making some progress to develop a
    multi-agency board that will develop a high energy density
    plasma program consistent with the direction that I included in
    the 2006-2007 Energy and Water bills.
        I want you to know that I appreciate this bill. I still
    expect to see a viable research program that supports non-
    weapons research on facilities like NIF and Z. I would also
    like to remind you of the tremendous computational capability
    and experience at the NNSA labs. As you know, it was the NNSA
    stockpile stewardship mission that fostered the undeveloped,
    high performance computing architecture that enabled this
    country to be the world leader in computing. Unfortunately, I
    don't believe the Department has dedicated sufficient resource,
    nor demonstrated its commitment to developing the next
    generation of architecture that will enable our country to
    sustain its world leadership in this field.
        Finally, let me say that I believe we need to work hard to
    address our climate challenges, and science will play a
    critical role in this, I believe. And, I believe we have two
    paths to reduce the man-made greenhouse gas emissions. And
    unless we pursue both, we won't be effective at all.
        First, of course, is to reduce our dependence on foreign
    oil with biomass and alternative energy as well as developing
    low emission energy sources such as nuclear power.
    Implementation of EPACT and the American Competitiveness
    Initiative will ensure we are on the right path.
        The second is to ensure that large, fast growing economies
    like China and India adopt these same technologies. We need to
    join with these countries as full partners to ensure that
    technology development and adoption occurs. Without it, we
    won't be successful. I'm committed to developing a full
    partnership with China and India, but they need to recognize
    that this isn't a free ride. It is a partnership. They need to
    dedicate the resources to solving this problem.
        Thank you, Mr. Chairman.
        [The statement follows:]

                 Prepared Statement of Senator Pete V. Domenici

        Dr. Orbach, it is a pleasure to welcome you back to the
    subcommittee. I am pleased with the fiscal year 2008 budget request for
    the Office of Science because it continues to support objectives
    provided for in EPACT and sustains the President's commitment to double
    funding for basic science research over the next decade.
        This research is vital to our economic competitiveness and our
    ability to reduce our dependence on foreign energy, including solving
    some of the long term R&D challenges associated with solar, biomass,
    hydrogen and nuclear power.
        Dr. Orbach, you have another important responsibility and that is
    to challenge our labs with new and exciting scientific goals as well as
    making investments in facilities and infrastructure to ensure U.S.
    leadership.
        The Energy Policy Act included a provision elevating your position
    from Director to Under Secretary to give you the responsibility to set
    the science policy for all the labs, including NNSA facilities.
        As you well know, NNSA labs continue to support some of the best
    science in the world and have been recognized with Nobel prizes, E.O.
    Lawrence Awards and dozens of R&D 100 Awards. Unfortunately, the
    funding provided by the Office of Science remains disproportionately
    low.
        The NNSA labs have great facilities that have been the exclusive
    tools of the weapons program that should be incorporated into the
    Office of Science research programs. Facilities such as the Z machine
    and MESA at Sandia will open up tremendous new research opportunities
    to scientists and must be thought of as national user facilities.
        I understand that you are making some progress to develop a multi-
    agency advisory board that will develop the high energy density plasma
    program consistent with the direction that I included in the fiscal
    year 2006 and fiscal year 2007 Energy and Water bills.
        I want you to know that I appreciate this effort, but I still
    expect to see a viable research program that supports non weapons
    research on facilities like NIF and Z.
        I would also like to remind you of the tremendous computational
    capability and experience at NNSA labs. As you know, it was NNSA's
    Stockpile Stewardship mission that necessitated the development of the
    current high performance computing architecture that has enabled this
    country to be the world leader in computing.
        As a result, this has also enabled the Office of Science to deploy
    some of the fastest computers in the world at Oak Ridge, Berkeley and
    Argonne National labs.
        Unfortunately, I don't believe the Department has dedicated
    sufficient resources, nor demonstrated its commitment to developing the
    next generation architecture that will enable our country to sustain
    its leadership in this field.
        We continue to have two separate computing programs and this budget
    diverts resources to DARPA to support a separate R&D program. That must
    change.
        These problems can be solved, but it will force the Office of
    Science and NNSA to work together on improving scientific research at
    all of our labs.
        Dr. Orbach, I hope I can count on your support to breakdown the
    walls of bureaucracy to solve this problem.
        Thank you, Mr. Chairman.

        Senator Dorgan. Senator Craig.

                        STATEMENT OF SENATOR LARRY CRAIG

        Senator Craig. Mr. Chairman, I'll be brief. Mr. Secretary,
    thank you, for being here and thank you for coming to the Idaho
    lab, the INL, last August. We appreciated your presence there,
    and I am told you left impressed with the resource and the
    talent that is available. We have some phenomenal assets and
    when I'm sitting here listening to Senator Domenici, I'm
    thinking about the old admonishment in front of the United
    Nations, ``swords into plow shares.'' And, the ability for us
    to use these phenomenal laboratories that were once, in part,
    related to the cold war, some of them more so than others.
        Now with assets that they have, that were once for war, can
    not only be made for peace, but we've already begun to use the
    tremendous capabilities and talents that are there for those
    purposes. We have, at our laboratory, some of those unique
    resources, as you know, the advanced test reactor, the ability
    to relate it, not just to a Federal mission, but to private and
    quasi-public relationships, I think is extremely valuable. It
    is a national asset, unique in many ways, that--something I'll
    discuss with you later on in questioning, but making it a user
    facility, I think, becomes increasingly important as we work
    with and--I was just visiting with Clay Sell today and Dennis
    Spurgeon. New partnerships between the Federal Government and
    the private sector. The Federal Government used to be this
    great black box and DOE especially, into which all things went,
    especially money.
        Today we have phenomenal demand for what can be produced.
    We don't have the resources, unless we partner and we leverage
    with the private sector. Not just our private sector, but the
    world's private sector. Because most of what we want to do
    needs to be very transparent and available to the rest of the
    world, whether it's clean energy sources, whether it's human
    health, and all of those types of things. I'm pleased to see
    that we're focusing. We've spent a lot of money, appropriately
    so directed at, by the biological sciences over the last
    decade. Now I think it's time we pony up on the physical
    sciences because they're merging out there in a way that
    probably we could never predicted a decade ago. And, in that is
    great opportunity.
        Thank you.
        Senator Dorgan. Senator Allard.

                       STATEMENT OF SENATOR WAYNE ALLARD

        Senator Allard. Mr. Chairman, thank you for holding this
    hearing. And, welcome, Mr. Secretary. As you know, Mr.
    Chairman, you and I are co-chairmen of the Senate Renewable
    Energy and Energy Efficiency Caucus. And, I represent a State,
    which, we have the National Renewable Energy Laboratory.
    They're doing a lot of good work. They're working on basic
    technologies, moving those into the marketplace. I think that's
    a proper focus. And as a scientist, myself, I consider myself
    an applied scientist. Being a veterinarian, I understand how
    good basic research has to be done in order for me as a
    veterinarian, to be able to take care of the livestock
    industry, or pet animals, whether it's working for the CDC Lab,
    or FDA, or whatever. And, it all comes down to a lot of good
    basic research that has to be done.
        I note that the Office of Science is the primary agency in
    the Federal Government in energy-related basic research. I
    think this a very important distinction that should be pointed
    out. While basic scientific research is the basis for applied
    sciences and leads to scientific advancement, it is often not
    profitable, so industry struggles to invest in basic research.
    This is where the government comes in, by funding basic
    research. It is picked up by industry and the advanced science
    communities.
        I've had time to go and visit many of our laboratories,
    been out to Lawrence Livermore, been to Sandia Laboratory that
    Senator Domenici mentioned, Los Alamos Lab, and have been
    following much of the research in MOx Plus, for example. And, I
    feel that this is where it all starts.
        We heard a presentation this morning from Ron Sega who was
    talking about our satellite program. He talked about his cycle
    of development. It all starts with good scientific basic
    research. And then you develop it to applied, then you get your
    prototype level, and then you get into the production stage.
    And, so I really can't stress how important I think your job is
    and responsibilities are.
        More attention today is being focused on clean energy and
    energy efficiency technologies due to ever-increasing supply
    constraints and demand increases, diversification of our energy
    portfolios becoming more important than ever. This means the
    development of alternative energy sources is also more
    important than ever. Renewable energy is a very important way
    that we can begin to reduce the demand for oil, and thereby
    help to make our country more secure. Research and the input of
    both government and industries are very important allowing
    these opportunities to live up to their potential.
        We must continue to provide incentives for the
    implementation of renewable technologies and for the
    infrastructure necessary to support these renewable sources.
    These technologies are a necessary step in balancing our
    domestic energy portfolio, increasing our Nation's energy
    security, and advancing our country's technological excellence.
        So, I look forward to working with the committee to ensure
    research and development, in all fields of energy technology,
    are funded in a manner that is responsible, but sufficient to
    ensure that the development and implementation of new
    technologies continues.
        Thank you, Mr. Chairman.
        Senator Dorgan. Senator Murray.

                       STATEMENT OF SENATOR PATTY MURRAY

        Senator Murray. Mr. Chairman, thank you to you and Senator
    Domenici for having this important hearing. I think the Office
    of Science is very important and investment in research and
    development is obviously critical. Dr. Orbach, I'm glad to see
    you again. This hearing gives us another opportunity to talk
    about the Capability Replacement Laboratory for PNNL. This
    project is a top priority for the lab and I have a couple of
    questions regarding the funding for that project. As you know
    there were no funds in the fiscal year 2007 budget request but
    Congress added $10 million to the Office of Science for the
    effort. I was pleased to hear from you recently that the
    additional $10 million would be included in the fiscal year
    2007 work plan. However, I understand that funding is being
    held in reserve and can't be utilized until OMB approves the
    third party financing package. I also understand the fund
    requested in the fiscal year 2008 budget will also be held in
    reserve pending OMB approval.
        Would you share with the committee what you intend to do to
    prevent delay of this critical project?
        Senator Dorgan. Senator, actually, Mr. Orbach has not yet
    given his opening statement.
        Senator Murray. Oh, I apologize. I came in late and didn't
    realize we had not heard Dr. Orbach's opening statement.
        Senator Dorgan. I would like to give him the opportunity to
    give his opening statement.
        All right. Thank you very much.
        Senator Cochran has submitted a statement that he would
    like placed in the record.
        [The statement follows:]

                   Prepared Statement of Senator Thad Cochran

        Mr. Chairman, I am pleased to join you in welcoming the Under
    Secretary for Science, Dr. Raymond Orbach. I am pleased that we were
    able to increase the budget for the Office of Science under the
    Continuing Resolution for fiscal year 2007.
        As Under Secretary for Science and Director of the Office of
    Science, Dr. Orbach has had the responsibility of overseeing research
    and development at 17 national laboratories across the country,
    including both the National Nuclear Security Laboratories and the
    Office of Science Laboratories. I am pleased that the fiscal year 2008
    budget includes funding to continue the American Competitiveness
    Initiative, a program that has become increasingly important to our
    scientific community in America.
        Of particular interest to me is the Basic Energy Sciences program
    which supports the Advanced Energy Initiative and biomass production
    research. Mississippi has much to contribute in the emerging biomass
    arena, and it is my hope that the universities and scientists in
    Mississippi might work with your researchers in the Office of Science
    to further develop this field.
        It is a pleasure to welcome you to the committee. I look forward to
    hearing your testimony.

        Senator Dorgan. Secretary Orbach, thank you very much.
    Please proceed. Your entire statement will be a part of the
    permanent record, and you may summarize.

                      STATEMENT OF HON. RAYMOND L. ORBACH

        Dr. Orbach. Thank you, Chairman Dorgan, Senator Domenici,
    members of the committee. And, indeed, I will answer those
    questions.
        I'm very grateful. Thank you for this opportunity for me to
    present the President's fiscal year 2008 budget request for the
    Department of Energy's Office of Science.
        As some of you noted, we are the primary agency in the
    Federal Government for energy-related basic research. Our
    office interfaces with the Department's applied research and
    defense programs upon which our Nation relies for both energy
    security and national defense. Our goal is to underpin the
    applied research programs with the finest basic science and, at
    the same time, to energize our basic research with the insights
    and opportunities that come from advanced applied research.
        Transformational basic science discoveries are essential
    for the success of the Department's efforts in such renewable
    energy sources as hydrogen, solar power, and bio-fuels. And in
    electrical energy storage, which is critical for many renewable
    energy sources because they are intermittent. We are one
    department and we have been working very hard to strengthen the
    relationship between the Department's basic and applied
    research programs.
        Let me say a few words this afternoon about the critical
    role that basic science plays in addressing our Nation's energy
    challenge and the role of the Office of Science. First,
    cellulosic ethanol. To make this bio-fuel truly cost effective,
    we must produce ethanol from cellulose efficiently. The problem
    is that the lignins surrounding the cellulose in plants inhibit
    currently available enzymes from breaking down the cellulose to
    sugars that then are fermented into ethanol.
        The Office of Science will be deploying three new
    innovative bioenergy research centers, studying both microbes
    and plants, developing new methods, based on processes actually
    found in nature, to create the breakthroughs we need.
        I can give you an example. Our Department of Energy Joint
    Genome Institute recently announced in conjunction with the
    U.S. Forest Service, the identification of the metabolic
    pathway in a fungus found in the bowels of insects that holds
    the secret to effective fermentation of the sugar xylose, a key
    to making cellulosic ethanol cost-effective.
        Second, intermittent sources of electricity, such as solar
    and wind. The key to base-load electrical generation from these
    intermittent renewable sources is electrical energy storage. In
    April of this year, we'll be bringing together leading
    scientists, technologists, and industry at a major workshop to
    chart a transformational path forward for electrical energy
    storage. We shall be considering super-capacitors and other
    innovative approaches based on the latest advances in material
    science and nanotechnology to change the way we approach
    electrical energy storage. Solving this problem is a key to
    enabling renewable energy to make major contributions to
    electric base-load generation.
        These are examples of our mission in the Office of Science.
    To invest in basic research designed to create transformational
    breakthroughs for our Nation. Supporting transformational
    research also means providing cutting-edge scientific
    facilities through our national laboratories that will allow
    scientists from universities and the private sector to do the
    analysis that will give them an advantage over their colleagues
    in other countries, thereby contributing to American
    competitiveness. It means educating, training, and sustaining a
    world-class scientific workforce, thousands strong, 25,500 in
    our fiscal year 2008 budget in universities and laboratories
    across our Nation for the sake of our country's future.

                               PREPARED STATEMENT

        We are not doing this in a vacuum. Other nations are
    increasing their investment in basic research because they know
    those who dominate science will dominate the 21st century
    global economy. The President's fiscal year 2008 budget request
    for the Office of Science totals $4.4 billion, an increase of
    15.8 percent or $600 million over the fiscal year 2007
    appropriation. It is an important milestone on the path towards
    doubling Federal support for basic research and the physical
    sciences over the next 10 years.
        And, in my view, an indispensable investment in our
    Nation's energy security and America's continued
    competitiveness in the global economy.
        Thank you.
        [The statement follows:]

                  Prepared Statement of Hon. Raymond L. Orbach

        Mr. Chairman and members of the committee, thank you for the
    opportunity to testify today on the Office of Science's fiscal year
    2008 budget request. I appreciate your support for the Office of
    Science and basic research in the physical sciences, Mr. Chairman, and
    your understanding of the importance of this research to our Nation's
    energy security and economic competitiveness. I also want to thank the
    members of the committee for their support. I believe this budget will
    enable the Office of Science to deliver on its mission and enhance U.S.
    competitiveness through our support of transformational science,
    national scientific facilities, and the scientific workforce for the
    Nation's future.
        The Office of Science requests $4,397,876,000 for the fiscal year
    2008 Science appropriation, an increase of $600,582,000 over the fiscal
    year 2007 appropriated level. The fiscal year 2008 budget request for
    the Office of Science represents the second year of the President's
    commitment to double the Federal investment in basic research in the
    physical sciences by the year 2016 as part of the American
    Competitiveness Initiative. It also represents a continued commitment
    to maintain U.S. leadership in science and recognition of the valuable
    role research in the physical sciences plays in technology innovation
    and global competitiveness.
        With the fiscal year 2008 budget request the Office of Science will
    continue to support transformational science--basic research for
    advanced scientific breakthroughs that will revolutionize our approach
    to the Nation's energy, environment, and national security challenges.
    The Office of Science is the Nation's steward for fields such as high
    energy physics, nuclear physics, heavy element chemistry, plasma
    physics, magnetic fusion, and catalysis. It also supports unique
    components of U.S. research in climate change and geophysics.
        Researchers funded through the Office of Science are working on
    some of the most pressing scientific challenges of our age including:
    (1) Harnessing the power of microbial communities and plants for energy
    production from renewable sources, carbon sequestration, and
    environmental remediation; (2) Expanding the frontiers of
    nanotechnology to develop materials with unprecedented properties for
    widespread potential scientific, energy, and industrial applications;
    (3) Pursuing the breakthroughs in materials science, nanotechnology,
    biotechnology, and other fields needed to make solar energy more cost-
    effective; (4) Demonstrating the scientific and technological
    feasibility of creating and controlling a sustained burning plasma to
    generate energy, as the next step toward making fusion power a
    commercial reality; (5) Using advanced computation, simulation, and
    modeling to understand and predict the behavior of complex systems
    beyond the reach of some of our most powerful experimental probes, with
    potentially transformational impacts on a broad range of scientific and
    technological undertakings; (6) Understanding the origin of the
    universe and nature of dark matter and dark energy; and (7) Resolving
    key uncertainties and expanding the scientific foundation needed to
    understand, predict, and assess the potential effects of atmospheric
    carbon dioxide on climate and the environment.
        U.S. leadership in many areas of science and technology depends in
    part on the continued availability of the most advanced scientific
    facilities for our researchers. The Office of Science builds and
    operates national scientific facilities and instruments that make up
    the world's most sophisticated suite of research capabilities. The
    resources available for scientific research include advanced
    synchrotron light sources, the new Spallation Neutron Source, state-of-
    the-art Nanoscale Science Research Centers, supercomputers and high-
    speed networks, climate and environmental monitoring capabilities,
    particle accelerators and detectors for high energy and nuclear
    physics, and genome sequencing facilities We are in the process of
    developing new tools such as an X-ray free electron laser light source
    that can image single large macromolecules and measure in real-time
    changes in the chemical bond as chemical and biological reactions take
    place, a next generation synchrotron light source for X-ray imaging and
    capable of nanometer resolution, and detectors and instruments for
    world-leading neutrino physics research. SC will also select and begin
    funding in fiscal year 2007 for three Bioenergy Research Centers to
    conduct fundamental research on microbes and plants needed to produce
    biologically-based fuel.
        Office of Science leadership in support of the physical sciences
    and stewardship of large national research facilities is directly
    linked to our historic role in training America's scientists and
    engineers. In addition to funding a diverse portfolio of research at
    more than 300 colleges and universities nationwide, we provide direct
    support and access to research facilities for thousands of university
    students and researchers. Facilities at the national laboratories
    provide unique opportunities for researchers and their students from
    across the country to pursue questions at the intersection of physics,
    chemistry, biology, computing, and materials science. About half of the
    annual 21,000 users of the Office of Science's scientific facilities
    come from universities. The fiscal year 2008 budget will support the
    research of approximately 25,500 faculty, postdoctoral researchers, and
    graduate students throughout the Nation, an increase of 3,600 from
    fiscal year 2006, in addition to supporting undergraduate research
    internships and fellowships and research and training opportunities for
    K-14 science educators at the national laboratories.
        The approximate $600 million increase in fiscal year 2008 from the
    fiscal year 2007 appropriated level will bring manageable increases to
    the Office of Science programs for long planned for activities. The
    fiscal year 2008 request will allow the Office of Science to increase
    support for high-priority DOE mission-driven scientific research and
    new initiatives; maintain optimum operations at our scientific user
    facilities; continuing major facility construction projects; and
    enhance educational, research, and training opportunities for the
    Nation's future scientific workforce. The budget request will also
    support basic research that contributes to Presidential initiatives
    such as the Hydrogen Fuel Initiative and the Advanced Energy
    Initiative, the Climate Change Science and Technology Programs, and the
    National Nanotechnology Initiative.
        The following programs are supported in the fiscal year 2008 budget
    request: Basic Energy Sciences, Advanced Scientific Computing Research,
    Biological and Environmental Research, Fusion Energy Sciences, High
    Energy Physics, Nuclear Physics, Workforce Development for Teachers and
    Scientists, Science Laboratories Infrastructure, Science Program
    Direction, and Safeguards and Security.

                                            OFFICE OF SCIENCE FISCAL YEAR 2008 PRESIDENT'S REQUEST SUMMARY BY PROGRAM
                                                                    [In thousands of dollars]
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Fiscal Year                    Fiscal Year 2008 Request vs.
                                                                Fiscal Year     Fiscal Year        2007         Fiscal Year  -------------------------------
                                                               2006 Approp.    2007 Request     Approp.\1\     2008 Request       Request         Approp.
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Basic Energy Sciences...................................       1,110,148       1,420,980  ..............       1,498,497         +77,517  ..............
    Advanced Scientific Computing Research..................         228,382         318,654  ..............         340,198         +21,544  ..............
    Biological and Environmental Research...................         564,077         510,263  ..............         531,897         +21,634  ..............
    High Energy Physics.....................................         698,238         775,099  ..............         782,238          +7,139  ..............
    Nuclear Physics.........................................         357,756         454,060  ..............         471,319         +17,259  ..............
    Fusion Energy Sciences..................................         280,683         318,950  ..............         427,850        +108,900  ..............
    Science Laboratories Infrastructure.....................          41,684          50,888  ..............          78,956         +28,068  ..............
    Science Program Direction...............................         159,118         170,877  ..............         184,934         +14,057  ..............
    Workforce Development for Teachers and Scientists.......           7,120          10,952  ..............          11,000             +48  ..............
    Safeguards and Security.................................          68,025          70,987  ..............          70,987  ..............  ..............
    SBIR/STTR...............................................         116,813  ..............  ..............  ..............  ..............  ..............
                                                             -----------------------------------------------------------------------------------------------
          Total, Office of Science..........................       3,632,044       4,101,710       3,797,294       4,397,876        +296,166        +600,582
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ Fiscal year 2007 program allocation plan not yet finalized.

                      FISCAL YEAR 2008 SCIENCE PRIORITIES

        The challenges we face today in energy and the environment are some
    of the most vexing and complex in our history. Our success in meeting
    these challenges will depend in large part on how well we maintain this
    country's leadership in science and technology because it is through
    scientific and technological innovation and a skilled workforce that
    these challenges will be solved.
        President George W. Bush made this point in his State of the Union
    Message on January 23, 2007, when he stated,

        ``It's in our vital interest to diversify America's energy supply--
    the way forward is through technology . . . We must continue changing
    the way America generates electric power, by even greater use of clean
    coal technology, solar and wind energy, and clean, safe nuclear power.
    We need to press on with battery research for plug-in and hybrid
    vehicles, and expand the use of clean diesel vehicles and biodiesel
    fuel. We must continue investing in new methods of producing ethanol--
    using everything from wood chips to grasses, to agricultural wastes . . .

        ``America is on the verge of technological breakthroughs that will
    enable us to live our lives less dependent on oil. And these
    technologies will help us to be better stewards of the environment, and
    they will help us confront the serious challenge of global climate
    change.''

        In 2006, the President announced a commitment to double the budget
    for basic research in the physical sciences at key agencies over 10
    years to maintain U.S. leadership in science and ensure continued
    global competitiveness. This commitment received bipartisan support in
    both the House of Representatives and the Senate and the fiscal year
    2008 budget request for the Office of Science represents the second
    year of this effort. Through the fiscal year 2008 budget, the Office of
    Science will build on its record of results with sound investments to
    keep U.S. research and development at the forefront of global science
    and prepare the scientific workforce we will need in the 21st century
    to address our Nation's challenges.
        Determining and balancing science and technology priorities across
    the Office of Science programs is an ongoing process. Several factors
    are considered in our prioritization, including scientific
    opportunities identified by the broader scientific community through
    Office of Science sponsored workshops; external review and
    recommendations by scientific advisory committees; DOE mission needs;
    and national and departmental priorities. In fiscal year 2008, we will
    support the priorities in scientific research, facility operations, and
    construction and laboratory infrastructure established in the past few
    years and outlined in the Office of Science Strategic Plan and Twenty-
    year Facilities Outlook, in addition to national and departmental
    priorities and new research opportunities identified in recent
    workshops.
        National initiatives in hydrogen fuel cell and advanced energy
    technologies will be supported through our contributions to basic
    research in hydrogen, fusion, solar energy-to-fuels, and production of
    ethanol and other biofuels from cellulose. We will also continue strong
    support for other administration priorities such as nanotechnology,
    advanced scientific computation, and climate change science and
    technology.
        The Office of Science will support three Bioenergy Research Centers
    in fiscal year 2008 as part of the broader Genomics: GTL program. These
    centers, to be selected in fiscal year 2007 and fully operational by
    the end of 2008, will conduct comprehensive, multidisciplinary research
    programs focused on microbes and plants to drive scientific
    breakthroughs necessary for the development of cost-effective biofuels
    and bioenergy production. The broader GTL program will also continue to
    support fundamental research and technology development needed to
    understand the complex behavior of biological systems for the
    development of innovative biotechnology solutions to energy production,
    environmental mitigation, and carbon management.
        The Office of Science designs, constructs, and operates facilities
    and instruments that provide world-leading research tools and
    capabilities for U.S. researchers and will continue to support next
    generation tools for enabling transformational science. For example,
    the Spallation Neutron Source (SNS), the world's forefront neutron
    scattering facility, increases the number of neutrons available for
    cutting-edge research by a factor of 10 over any existing spallation
    neutron source in the world. SNS was completed and began operations in
    2006 and in fiscal year 2008 full operations are supported and
    additional experimental capabilities continue to be added.
        When it comes on line, the Linac Coherent Light Source (LCLS) at
    the Stanford Linear Accelerator Center (SLAC) will produce X-rays 10
    billion times more intense than any existing X-ray source in the world,
    and will allow structural studies on individual nanoscale particles and
    single biomolecules. Construction of LCLS continues in fiscal year
    2008.
        A next generation synchrotron light source, the National
    Synchrotron Light Source-II (NSLS-II), would deliver orders of
    magnitude improvement in spatial resolution, providing the world's
    finest capabilities for X-ray imaging and enabling the study of
    material properties and functions, particularly at the nanoscale, at a
    level of detail and precision never before possible. Its energy
    resolution would explore dynamic properties of matter as no other light
    source has ever accomplished. Support for continued R&D and project
    engineering and design (PED) are provided in fiscal year 2008.
        All five of DOE's Nanoscale Science Research Centers (NSRCs) will
    be operating in fiscal year 2008. These facilities are the Nation's
    premier nanoscience user centers, providing resources unmatched to the
    scientific community for the synthesis, fabrication, and analysis of
    nanoparticles and nanomaterials.
        We will fully fund the programs for advanced scientific computing,
    including: continued support for high-performance production computing
    at the National Energy Research Scientific Computing Center (NERSC),
    which will increase capacity to 100-150 teraflops in fiscal year 2007;
    support for advanced capabilities for modeling and simulation of
    scientific problems in combustion, fusion, and complex chemical
    reactions at Oak Ridge National Laboratory's Leadership Computing
    Facility, which should deliver 250 teraflops computing capability by
    the end of fiscal year 2008; and support for the upgrade to 250-500
    teraflop peak capacity of the IBM Blue Gene P system at Argonne
    National Laboratory's Leadership Computing Facility to extend
    architectural diversity in leadership computing.
        The Office of Science continues to be a partner in the interagency
    Climate Change Science Program focusing on understanding the principal
    uncertainties of the causes and effects of climate change, including
    abrupt climate change, understanding the global carbon cycle,
    developing predictive models for climate change over decades to
    centuries, and supporting basic research for biological sequestration
    of carbon. We also continue to support research in geosciences and
    environmental remediation towards the development of scientific and
    technological solutions to long-term environmental challenges.
        The Office of Science will continue to actively lead and support
    the U.S. contributions to ITER, the international project to build and
    operate the first fusion science facility capable of producing a
    sustained burning plasma to generate energy on a massive scale without
    environmental insult. The historic international fusion energy
    agreement to build ITER with six other international partners was
    signed in November 2006.
        We continue strong support for experimental and theoretical high
    energy physics and the study of the elementary constituents of matter
    and energy and interactions at the heart of physics. Full operations at
    the Tevatron Collider at Fermilab and the B-factory at SLAC are
    supported to maximize the scientific research and data derived from
    these facilities. Full operation of the neutrino oscillation experiment
    at Fermilab and start of fabrication of a next generation detector are
    supported to provide a platform for a world-leading neutrino program in
    the U.S. International Linear Collider (ILC) R&D and superconducting
    radio frequency technology R&D are supported to enable the most
    compelling scientific opportunities in high energy physics in the
    coming decades.
        Our research programs in nuclear physics continue to receive strong
    support. Operations at the Relativistic Heavy Ion Collider (RHIC) and
    additional instrumentation projects for RHIC are supported for studies
    of the properties of hot, dense nuclear matter, providing insight into
    the early universe. We will also support operations at the Continuous
    Electron Beam Accelerator Facility (CEBAF), the world's most powerful
    ``microscope'' for studying the quark structure of matter, and project
    engineering and design and R&D for doubling the energy of the existing
    beam at CEBAF to 12 gigaelectron volts (GeV). Support for R&D to
    develop advanced rare isotope beam capabilities for the next generation
    U.S. facility for nuclear structure and astrophysics is also provided.
        The standard of living we enjoy and the security of our Nation now
    and in the future rests on the quality of science and technology
    education we provide America's students from elementary through
    graduate school and beyond. The fiscal year 2008 budget will provide
    support for over 25,500 Ph.D.s, graduate students, engineers, and
    technical professionals, an increase of 3,600 over the number supported
    in fiscal year 2006. The Office of Science will also support the
    development of leaders in the science and mathematics education
    community through participation of K-14 teachers in the DOE Academies
    Creating Teacher Scientists program, formerly the Laboratory Science
    Teacher Professional Development program. This immersion program at the
    national laboratories is an opportunity for teachers to work with
    laboratory scientists as mentors and to build content knowledge,
    research skills, and lasting connections to the scientific community,
    ultimately leading to more effective teaching that inspires students in
    science and math. The year 2008 will also mark the 18th year of DOE's
    National Science Bowl for high school students. National Science Bowl
    events for high school and middle school students, which will involve
    17,000 students across the Nation this year, provide prestigious
    academic competitions that challenge and inspire the Nation's youth to
    excel in math and science.

                            SCIENCE ACCOMPLISHMENTS

        For more than 50 years, the Office of Science (SC) has balanced
    basic research, innovative problem solving, and support for world-
    leading scientific capabilities, enabling historic contributions to
    U.S. economic and scientific preeminence. American taxpayers have
    received good value for their investment in basic research sponsored by
    the Office of Science; this work has led to significant technological
    innovations, new intellectual capital, improved quality of life, and
    enhanced economic competitiveness. The following are some of the past
    year's highlights:
        Nobel Prize in Physics.--The 2006 Nobel Prize in physics was
    awarded to Dr. George Smoot (DOE Lawrence Berkeley National Laboratory
    and University of California, Berkeley) and Dr. John Mather (NASA
    Goddard Space Flight Center) for their discovery of ``the blackbody
    form and anisotropy of the cosmic microwave background radiation,'' the
    pattern of minuscule temperature variations in radiation which allowed
    scientists to gain better understanding of the origins of galaxies and
    stars. These two American scientists led the teams of researchers who
    worked on the historic 1989 NASA COBE satellite. The results of their
    work provided increased support for the ``Big Bang'' theory of the
    universe and marked the inception of cosmology as a precise science. SC
    supported Dr. Smoot's research during the period in which he worked on
    the COBE experiment, and continues to support his research today. One
    of the principal instruments used to make the discoveries was built at
    SC-supported facilities at Lawrence Berkeley National Laboratory and
    DOE's National Energy Research Scientific Computing Center
    supercomputers were used to analyze the massive amounts of data and
    produce detailed visual maps.
        Advancing Science and Technology for Bioenergy Solutions.--
    Harnessing the capabilities of microbes and plants holds great
    potential for the development of innovative, cost-effective methods for
    the production of biofuels and bioenergy. Sequencing of the poplar tree
    genome was completed as part of a DOE national laboratory-led
    international collaboration; the information encoded in the poplar
    genome will provide researchers with an important resource for
    developing trees that produce more biomass for conversion to biofuels
    and trees that can sequester more carbon from the atmosphere. The DOE
    Joint Genome Institute (JGI) marked a technical milestone this year
    with the 100th microbe genome sequenced; Methanosarcina barkeri fusaro
    is capable of living in diverse and extreme environments, produces
    methane from digesting cellulose and other complex sugars, and provides
    greater understanding of potential new methods for producing renewable
    sources of energy. A chemical imaging method developed using a light-
    producing cellulose synthesizing enzyme allowed researchers to observe
    the enzyme as it deposited cellulose fibers in a cell, providing
    greater understanding of the mechanism for cellulose formation.
        Delivering Forefront Computational and Networking Capabilities for
    Science.--Several 2006 advances in computing, computational sciences,
    and networking enabled greater opportunities for computational research
    and effective management of data collected at DOE scientific user
    facilities. NERSC began to increase its peak capacity by a factor of
    100 and the Oak Ridge National Laboratory (ORNL) Leadership Computing
    Facility doubled its capability to 54 teraflops to provide additional
    resources for computationally intensive, large-scale projects. The
    Energy Sciences Network expanded in 2006 to include the Chicago and New
    York-Long Island metropolitan area networks (MANs), bringing dual
    connectivity at 20 gigabits per second and highly reliable, advanced
    network services to accommodate next-generation scientific instruments
    and supercomputers. Chemistry software using parallel-vector algorithms
    developed by researchers at ORNL has enabled computations 40 times more
    complex and 100 times faster than previous state-of-the-art codes. The
    development of a multiscale mathematical framework for simulating the
    process of self-organization in biological systems has led to the
    discovery of a previously unidentified cluster state, providing
    possible applications to modeling microbial populations.
        Advances in Basic Science for Energy Technologies.--Current and
    future national energy challenges may be partially addressed through
    scientific and technological innovation. Some recent accomplishments in
    basic science that may contribute to future energy solutions include
    the following. Basic research on the molecular design and synthesis of
    new polymer membranes has lead to the discovery of a new fuel cell
    membrane that is longer lasting and three times more proton conductive
    than the current gold standard for proton exchange membrane fuel cells.
    Computational studies showing that in titanium-coated carbon nanotubes
    a single titanium atom can adsorb four hydrogen molecules opens new
    ways that the control of matter on the nanoscale can lead to the
    creation of novel materials for hydrogen storage. Recent work
    demonstrating that visible light can split carbon dioxide into carbon
    monoxide and a free oxygen atom, the critical first reaction in
    sunlight-driven transformation of carbon dioxide into methanol, makes
    it feasible to consider harnessing sunlight to drive the photocatalytic
    production of methanol from carbon dioxide. Demonstration of the effect
    known as carrier multiplication in which a single photon creates
    multiple charge carriers during the interaction of photons with a
    nanocrystalline sample could lead to substantial increases in solar
    cell conversion efficiency.
        Maintaining World-leading Research Tools for U.S. Science.--The
    Office of Science continues to construct and maintain powerful tools
    and research capabilities that will accelerate U.S. scientific
    discovery and innovation. The following highlight a few recent
    accomplishments. Construction and commissioning of the Spallation
    Neutron Source (SNS), an accelerator-based neutron source that will
    provide the most intense pulsed neutron beams in the world for
    scientific research and industrial development, was completed and began
    operations. Full operation of four of the five DOE Nanoscale Science
    Research Centers began in 2006, providing resources unmatched anywhere
    in the world for the synthesis, fabrication, and analysis of
    nanoparticles and nanomaterials. A nanofocusing lens device at the
    Advanced Photon Source at Argonne National Laboratory has set a world's
    record for line size resolution produced with a hard X-ray beam and
    enables such capabilities as three-dimensional visualization of
    electronic circuit boards, mapping impurities in biological and
    environmental samples, and analyzing samples inside high-pressure or
    high-temperature cells. A new record for performance, a 77 percent
    increase in peak luminosity in 2006 from the previous year, was
    achieved at the Tevatron, the world's most powerful particle collider
    for high energy physics research at Fermilab. Evidence of the rare
    single top quark was observed at Fermilab in 2006, bringing researchers
    a step closer to finding the Higgs boson. The Large Area Telescope
    (LAT), a DOE and NASA partnership and the primary instrument on NASA's
    GLAST mission, was completed in 2006 and will be placed in orbit in the
    fall of 2007 to study the high energy gamma rays and other
    astrophysical phenomena using particle physics detection techniques.
    During the 2006 operation of the Relativistic Heavy Ion Collider
    (RHIC), polarized protons were accelerated to the highest energies ever
    recorded--250 billion electron volts--for world-leading studies of the
    internal quark-gluon structure of nucleons.

                       PROGRAM OBJECTIVES AND PERFORMANCE

        The path from basic research to technology development and
    industrial competitiveness is not always obvious. History has taught us
    that seeking answers to fundamental questions can ultimately result in
    a diverse array of practical applications as well as some remarkable
    revolutionary advances. Working with the scientific community, the
    Office of Science invests in the promising research and sets long-term
    scientific goals with ambitious annual targets. The intent and impact
    of our performance goals may not always be clear to those outside the
    research community. Therefore the Office of Science has created a
    website (www.sc.doe.gov/measures) to better communicate to the public
    what we are measuring and why it is important.
        Further, the Office of Science has revised the appraisal process it
    uses each year to evaluate the scientific, management, and operational
    performance of the contractors who manage and operate each of its 10
    national laboratories. This new appraisal process went into effect for
    the fiscal year 2006 performance evaluation period and provides a
    common structure and scoring system across all 10 Office of Science
    laboratories. The performance-based approach focuses the evaluation of
    the contractor's performance against eight Performance Goals (three
    Science and Technology Goals and five Management and Operation Goals).
    Each goal is composed of two or more weighted objectives. The new
    process has also incorporated a standardized five-point (0-4.3) scoring
    system, with corresponding grades for each Performance Goal, creating a
    ``Report Card'' for each laboratory.
        The fiscal year 2006 Office of Science laboratory report cards have
    been posted on the SC website (http://www.science.doe.gov/
    News_Information/News_Room/2007/Appraisa_%20Process/index.htm).

                                SCIENCE PROGRAMS

    Basic Energy Sciences
                Fiscal Year 2007 Request--$1,421.0 Million; Fiscal Year
                        2008 Request--$1,498.5 Million
        Basic research supported by the Basic Energy Sciences (BES) program
    touches virtually every aspect of energy resources, production,
    conversion, efficiency, and waste mitigation. Research in materials
    sciences and engineering leads to the development of materials that may
    improve the efficiency, economy, environmental acceptability, and
    safety of energy generation, conversion, transmission, and use.
    Research in chemistry leads to the development of advances such as
    efficient combustion systems with reduced emission of pollutants; new
    solar photo-conversion processes; improved catalysts for the production
    of fuels and chemicals; and better separations and analytical methods
    for applications in energy processes, environmental remediation, and
    waste management. Research in geosciences contributes to the solution
    of problems in multiple DOE mission areas, including reactive fluid
    flow studies to understand contaminant remediation and seismic imaging
    for reservoir definition. Research in the molecular and biochemical
    nature of photosynthesis aids the development of solar photo-energy
    conversion and biomass conversion methods. BES asks researchers to
    reach far beyond today's problems in order to provide the basis for
    long-term solutions to what is one of society's greatest challenges--a
    secure, abundant, and clean energy supply. In fiscal year 2008, the
    Office of Science will support expanded efforts in basic research
    related to transformational energy technologies. Within BES, there are
    increases to ongoing basic research for the hydrogen economy and
    effective solar energy utilization. The fiscal year 2008 budget request
    also supports increased research in electric-energy storage,
    accelerator physics, and X-ray and neutron detector research.
        BES also provides the Nation's researchers with world-class
    research facilities, including reactor- and accelerator-based neutron
    sources, light sources (soon to include an X-ray free electron laser),
    nanoscale science research centers, and electron beam micro-
    characterization centers. These facilities provide outstanding
    capabilities for imaging and characterizing materials of all kinds from
    metals, alloys, and ceramics to fragile biological samples. The next
    steps in the characterization and the ultimate control of materials
    properties and chemical reactivity are to improve spatial resolution of
    imaging techniques; to enable a wide variety of samples, sample sizes,
    and sample environments to be used in imaging experiments; and to make
    measurements on very short time scales, comparable to the time of a
    chemical reaction or the formation of a chemical bond. With these
    tools, we will be able to understand how the composition of materials
    affects their properties, to watch proteins fold, to see chemical
    reactions, and to understand and observe the nature of the chemical
    bond. For fiscal year 2008, BES scientific user facilities will be
    scheduled to operate at an optimal number of hours.
        Construction of the Spallation Neutron Source (SNS) was completed
    in fiscal year 2006 ahead of schedule, under budget, and meeting all
    technical milestones. In fiscal year 2008 fabrication and commissioning
    of SNS instruments will continue, funded by BES and other sources
    including non-DOE sources, and will continue to increase power towards
    full levels. Two Major Items of Equipment are funded in fiscal year
    2008 that will allow the fabrication of approximately nine to ten
    additional instruments for the SNS, thus nearly completing the initial
    suite of 24 instruments that can be accommodated in the high-power
    target station.
        All five Nanoscale Science Research Centers will be fully
    operational in fiscal year 2008: the Center for Nanophase Materials
    Sciences at Oak Ridge National Laboratory, the Molecular Foundry at
    Lawrence Berkeley National Laboratory, the Center for Nanoscale
    Materials at Argonne National Laboratory, the Center for Integrated
    Nanotechnologies at Sandia National Laboratories and Los Alamos
    National Laboratory, and the Center for Functional Nanomaterials at
    Brookhaven National Laboratory. In fiscal year 2008, funding for
    research at the nanoscale increases for activities related to the
    hydrogen economy and solar energy utilization.
        The Linac Coherent Light Source (LCLS) at the Stanford Linear
    Accelerator Center (SLAC) will continue construction at the planned
    levels in fiscal year 2008. Funding is also provided for primary
    support of the operation of the SLAC linac. This marks the third year
    of the transition of linac funding from the High Energy Physics program
    to the Basic Energy Sciences program. The purpose of the LCLS Project
    is to provide laser-like radiation in the X-ray region of the spectrum
    that is 10 billion times greater in peak power and peak brightness than
    any existing coherent X-ray light source and that has pulse lengths
    measured in femtoseconds--the timescale of electronic and atomic
    motions. The LCLS will be the first such facility in the world for
    groundbreaking research in the physical and life sciences. Funding is
    provided separately for design and fabrication of instruments for the
    facility. Project Engineering and Design (PED) and construction for the
    Photon Ultrafast Laser Science and Engineering (PULSE) building
    renovation begins in fiscal year 2008. PULSE is a new center for
    ultrafast science at SLAC focusing on ultrafast structural and
    electronic dynamics in materials sciences, the generation of attosecond
    laser pulses, single-molecule imaging, and understanding solar energy
    conversion in molecular systems. Support continues for PED and R&D for
    the National Synchrotron Light Source-II (NSLS-II), which would be a
    new synchrotron light source, highly optimized to deliver ultra-high
    brightness and flux and exceptional beam stability. This would enable
    the study of material properties and functions with a spatial
    resolution of one nanometer (nm), an energy resolution of 0.1
    millielectron volt (meV), and the ultra-high sensitivity required to
    perform spectroscopy on a single atom, achieving a level of detail and
    precision never possible before. NSLS-II would open new regimes of
    scientific discovery and investigation.
        The Scientific Discovery through Advanced Computing (SciDAC)
    program is a set of coordinated investments across all Office of
    Science mission areas with the goal of using computer simulation to
    achieve breakthrough scientific advances that are impossible using
    theoretical or laboratory studies alone. The SciDAC program in BES
    consists of two activities: (1) characterizing chemically reacting
    flows as exemplified by combustion and (2) achieving scalability in the
    first-principles calculation of molecular properties, including
    chemical reaction rates.
    Advanced Scientific Computing Research
                Fiscal Year 2007 Request--$318.7 Million; Fiscal Year 2008
                        Request--$340.2 Million
        The Advanced Scientific Computing Research (ASCR) program is
    expanding the capability of world-class scientific research through
    advances in mathematics, high performance computing and advanced
    networks, and through the application of computers capable of many
    trillions of operations per second (terascale to petascale computers).
    Computer-based simulation can enable us to understand and predict the
    behavior of complex systems that are beyond the reach of our most
    powerful experimental probes or our most sophisticated theories.
    Computational modeling has greatly advanced our understanding of
    fundamental processes of nature, such as fluid flow and turbulence or
    molecular structure and reactivity. Soon, through modeling and
    simulation, we will be able to explore the interior of stars to
    understand how the chemical elements were created and learn how protein
    machines work inside living cells to enable the design of microbes that
    address critical energy or waste cleanup needs. We could also design
    novel catalysts and high-efficiency engines that expand our economy,
    lower pollution, and reduce our dependence on foreign oil.
    Computational science is increasingly important to making progress at
    the frontiers of almost every scientific discipline and to our most
    challenging feats of engineering. Leadership in scientific computing
    has become a cornerstone of the Department's strategy to ensure the
    security of the Nation and success in its science, energy,
    environmental quality, and national security missions.
        The demands of today's facilities, which generate millions of
    gigabytes of data per year, now outstrip the capabilities of the
    current Internet design and push the state-of-the-art in data storage
    and utilization. But, the evolution of the telecommunications market,
    including the availability of direct access to optical fiber at
    attractive prices and the availability of flexible dense wave division
    multiplexing (DWDM) products gives SC the possibility of exploiting
    these technologies to provide scientific data where needed at speeds
    commensurate with the new data volumes. To take advantage of this
    opportunity, the Energy Science Network (ESnet) has entered into a long
    term partnership with Internet 2 to build the next generation optical
    network infrastructure needed for U.S. science. To fully realize the
    potential for science, however, significant research is needed to
    integrate these capabilities, make them available to scientists, and
    build the infrastructure which can provide cybersecurity. ASCR is
    leading an interagency effort to develop a Federal Plan for Advanced
    Networking R&D. This plan will provide a strategy for addressing
    current and future networking needs of the Federal Government in
    support of science and national security missions and provide a process
    for developing a more detailed roadmap to guide future multi-agency
    investments in advancing networking R&D.
        ASCR supports core research in applied mathematics, computer
    sciences, and distributed network environments. The applied mathematics
    research activity produces fundamental mathematical methods to model
    complex physical and biological systems. The computer science research
    efforts enable scientists to perform scientific computations
    efficiently on the highest performance computers available and to
    store, manage, analyze, and visualize the massive amounts of data that
    result. The networking research activity provides the techniques to
    link the data producers with scientists who need access to the data.
    Results from enabling research supported by ASCR are used by scientists
    supported by other SC programs. This link to other DOE programs
    provides a tangible assessment of the value of ASCR's core research
    program for advancing scientific discovery and technology development
    through simulations. In fiscal year 2008 expanded efforts in applied
    mathematics will support critical long-term mathematical research
    issues relevant to petascale science, multiscale mathematics, and
    optimized control and risk analysis in complex systems. Expanded
    efforts in computer science will enable scientific applications to take
    full advantage of petascale computing systems at the Leadership
    Computing Facilities.
        In addition to its research activities, ASCR plans, develops, and
    operates supercomputer and network facilities that are available 24
    hours a day, 365 days a year to researchers working on problems
    relevant to DOE's scientific missions. Investments in the ESnet will
    provide the DOE science community with capabilities not available
    through commercial networks or the commercial internet to manage
    increased data flows from petascale computers and experimental
    facilities. In fiscal year 2008 ESnet will deliver a 10 gigabit per
    second (gbps) core Internet service as well as a Science Data Network
    with 20 gbps on its northern route and 10 gbps on its southern route.
    Delivery of the next generation of high performance resources at the
    National Energy Research Scientific Computing Center (NERSC) is
    scheduled for fiscal year 2007. This NERSC-5 system is expected to
    provide 100-150 teraflops of peak computing capacity. The NERSC
    computational resources are integrated by a common high performance
    file storage system that enables users to use all machines easily.
    Therefore the new machine will significantly reduce the current
    oversubscription at NERSC which serves nearly 2,000 scientists
    annually.
        In fiscal year 2008, the Oak Ridge National Laboratory (ORNL)
    Leadership Computing Facility (LCF) will continue to provide world
    leading high performance sustained capability to researchers through
    the Innovative and Novel Computational Impact on Theory and Experiment
    (INCITE) program. The acquisition of a 250 teraflop Cray Baker system
    by the end of fiscal year 2008 will enable further scientific
    advancements in areas such as combustion simulation for clean coal
    research, simulation of fusion devices that approach ITER scale, and
    quantum calculations of complex chemical reactions. In addition,
    further diversity with the LCF resources will be realized with an
    acquisition by Argonne National Laboratory (ANL) of a high performance
    IBM Blue Gene/P with low-electrical power requirements and a peak
    capability of up to 100 teraflops in 2007, and further expansion to
    250-500 teraflops in fiscal year 2008 will bring enhanced capability to
    accelerate scientific understanding in areas such as molecular
    dynamics, catalysis, protein/DNA complexes, and aging of material. With
    the ORNL and ANL LCF facilities SC is developing a multiple set of
    computer architectures to enable the most efficient solution of
    critical problems across the spectrum of science, ranging from biology
    to physics and chemistry.
        The Scientific Discovery through Advanced Computing (SciDAC)
    program is a set of coordinated investments across all SC mission areas
    with the goal of using computer simulation and advanced networking
    technologies to achieve breakthrough scientific advances via that are
    impossible using theoretical or laboratory studies alone. In fiscal
    year 2006 ASCR recompeted its SciDAC portfolio, with the exception of
    activities in partnership with the Fusion Energy Sciences program that
    were initiated in fiscal year 2005. The new portfolio, referred to as
    SciDAC-2, enables new areas of science through Scientific Application
    Partnerships; Centers for Enabling Technologies (CET) at universities
    and national laboratories; and University-led SciDAC Institutes to
    establish centers of excellence that complement the activities of the
    CETs and provide training for the next generation of computational
    scientists.
        Advancing high performance computing and computation is a highly
    coordinated interagency effort. ASCR has extensive partnerships with
    other Federal agencies and the National Nuclear Security Administration
    (NNSA). Activities are coordinated with other Federal efforts through
    the Networking and Information Technology R&D (NITR&D) subcommittee of
    the National Science and Technology Council Committee on Technology.
    The subcommittee coordinates planning, budgeting, and assessment
    activities of the multi-agency NITR&D enterprise. DOE has been an
    active participant in these coordination groups and committees since
    their inception. ASCR will continue to coordinate its activities
    through these mechanisms and will lead the development of new
    coordinating mechanisms as needs arise such as the ongoing development
    of a Federal Plan for Advanced Networking R&D.
    Biological and Environmental Research
                Fiscal Year 2007 Request--$510.3 Million; Fiscal Year 2008
                        Request--$531.9 Million
        Biological and Environmental Research (BER) supports basic research
    with broad impacts on our energy future, our environment, and our
    health. By understanding complex biological systems, developing
    computational tools to model and predict their behavior, and developing
    methods to harness nature's capabilities, biotechnology solutions are
    possible for DOE energy, environmental, and national security
    challenges. An ability to predict long-range and regional climate
    enables effective planning for future needs in energy, agriculture, and
    land and water use. Understanding the global carbon cycle and the
    associated role and capabilities of microbes and plants can lead to
    solutions for reducing carbon dioxide concentrations in the atmosphere.
    Understanding the complex role of biology, geochemistry, and hydrology
    beneath the Earth's surface will lead to improved decision making and
    solutions for contaminated DOE weapons sites. Understanding the
    biological effects of low doses of radiation can lead to the
    development of science-based health risk policy to better protect
    workers and citizens. Both normal and abnormal physiological
    processes--from normal human development to cancer to brain function--
    can be understood and improved using radiotracers, advanced imaging
    instruments, and novel biomedical devices.
        The fiscal year 2008 BER request continues expansion of the
    Genomics: GTL program. This program employs a systems approach to
    biology at the interface of the biological, physical, and computational
    sciences to determine the diverse biochemical capabilities of microbes,
    microbial communities, and plants, with the goal of tailoring and
    translating those capabilities into solutions for DOE mission needs. In
    fiscal year 2005 BER engaged a committee of the National Research
    Council (NRC) of the National Academies to review the design of the
    Genomics: GTL program and its infrastructure plan. The NRC committee
    report, Review of the Department of Energy's Genomics: GTL Program was
    released in fiscal year 2006 and provided a strong endorsement of the
    GTL program, recommending that the program's focus on systems biology
    for bioenergy, carbon sequestration, and bioremediation be given a
    ``high priority'' by DOE and the Nation. The report also recommended
    that the program's plan for new research facilities be reshaped to
    produce earlier and more cost-effective results by focusing not on
    particular technologies, but on research underpinning particular
    applications such as bioenergy, carbon sequestration, or environmental
    remediation.
        In response, SC revised its original single-purpose user facilities
    plan to instead develop and support vertically-integrated GTL Research
    Centers to accelerate systems biology research. BER will support the
    development of three Bioenergy Research Centers to be selected and
    initiated in fiscal year 2007, and fully operational by the end of
    2008. All three centers will conduct comprehensive, multidisciplinary
    research programs focused on microbes and plants to drive scientific
    breakthroughs necessary for the development of cost-effective biofuels
    and bioenergy production. These centers will not only possess the
    robust scientific capabilities needed to carry out their broad mission
    mandates, but will also draw upon the broader GTL program for
    technology development and foundational research. The vertically-
    integrated GTL Research Centers will not require construction of
    facilities. Moreover, the competition to establish and operate them is
    open to universities, non-profit research organizations, the national
    laboratories, and the private sector--an approach that is new for the
    Department. The first three research centers will focus on bioenergy
    research. The Department announced the solicitation for Bioenergy
    Research Centers in August 2006, and proposals were due on February 1,
    2007.
        Development of a global biotechnology based energy infrastructure
    requires a science base that will enable scientists to control or
    redirect genetic regulation and redesign specific proteins, biochemical
    pathways, and even entire plants or microbes. Renewable biofuels could
    be produced using plants, microbes, or isolated enzymes. Understanding
    the biological mechanisms involved in these energy producing processes
    will allow scientists and technologists to design novel biofuel
    production strategies involving both cellular and cell free systems
    that might include defined mixed microbial communities or consolidated
    biological processes. Within the Genomics: GTL program, BER supports
    basic research aimed at developing the understanding needed to advance
    biotechnology-based strategies for biofuel production, focusing on
    renewable, carbon-neutral energy compounds like ethanol and hydrogen,
    as well as understanding how the capabilities of microbes can be
    applied to environmental remediation and carbon sequestration.
        In 2003, the administration launched the Climate Change Research
    Initiative (CCRI) to focus research on areas where substantial progress
    in understanding and predicting climate change, including its potential
    causes and consequences, is possible over the next 5 years. In fiscal
    year 2008, BER will contribute to the CCRI by focusing on (1) helping
    to resolve the North American carbon sink question (i.e., the magnitude
    and location of the North American carbon sink); (2) deployment and
    operation of a mobile ARM facility to provide data on the effects of
    clouds and aerosols on the atmospheric radiation budget in regions and
    locations of opportunity where data are lacking or sparse; (3) using
    advanced climate models to simulate potential effects of natural and
    human-induced climate forcing on global and regional climate and the
    potential effects on climate of alternative options for mitigating
    increases in human forcing of climate, including abrupt climate change;
    and (4) developing and evaluating assessment tools needed to study
    costs and benefits of potential strategies for reducing net carbon
    dioxide emissions.
        In fiscal year 2008, BER will continue to support research aimed at
    advancing the science of climate and Earth system modeling by coupling
    models of different components of the earth system related to climate
    and by significantly increasing the spatial resolution of such models.
    SciDAC-enabled activities will allow climate scientists to gain
    unprecedented insights into interactions and feedbacks between, for
    example, climate change and global cycling of carbon, the potential
    effects of carbon dioxide and aerosol emissions from energy production
    and their impact on the global climate system. BER will also add a
    SciDAC component to GTL and Environmental Remediation research. GTL
    SciDAC will initiate new research to develop mathematical and
    computational tools needed for complex biological system modeling and
    for analysis of complex data sets, such as mass spectrometry
    metabolomic or proteomic profiling data. Environmental Remediation
    SciDAC will provide an opportunity for subsurface and computational
    scientists to develop and improve methods of simulating subsurface
    reactive transport processes on ``discovery class'' computers.
        Research emphasis within BER's Environmental Remediation Sciences
    subprogram will focus on issues of subsurface cleanup such as defining
    and understanding the processes that control contaminant fate and
    transport in the environment and providing opportunities for use or
    manipulation of natural processes to alter contaminant mobility. In
    fiscal year 2008, BER will support the development of two additional
    field research sites (for a total of 3), providing opportunities to
    validate laboratory findings under field conditions. The resulting
    knowledge and technology will assist DOE's environmental clean-up and
    stewardship missions. Funding for the William R. Wiley Environmental
    Molecular Sciences Laboratory (EMSL) at Pacific Northwest National
    Laboratory (PNNL) will be increased in fiscal year 2008 to maintain
    operations at full capacity.
        Also continuing in fiscal year 2008 is BER support for fundamental
    research in genomics, medical applications and measurement science, and
    the health effects of low dose radiation in fiscal year 2008. Resources
    are developed and made widely available for determining protein
    structures at DOE synchrotrons, and for DOE-relevant high-throughput
    genomic DNA sequencing. Building on DOE capabilities in physics,
    chemistry, engineering, biology and computation, BER supports
    fundamental imaging research, maintains core infrastructure for imaging
    research and develops new technologies to improve the diagnosis and
    treatment of psycho-neurological diseases and cancer and to improve the
    function of patients with neurological disabilities like blindness.
    Funding for Ethical, Legal, and Societal Issues (ELSI) associated with
    activities applicable to SC, increases to support research on the
    ecological and environmental impacts of nanoparticles resulting from
    nanotechnology applied to energy technologies.
    High Energy Physics
                Fiscal Year 2007 Request--$775.1 Million; Fiscal Year 2008
                        Request--$782.2 Million
        The High Energy Physics (HEP) program provides over 90 percent of
    the Federal support for the Nation's high energy physics research. This
    research advances our understanding of the basic constituents of
    matter, deeper symmetries in the laws of nature at high energies, and
    mysterious phenomena that are commonplace in the universe, such as dark
    energy and dark matter. Research at these frontiers of science may
    uncover new particles, forces, or undiscovered dimensions of space and
    time; explain how matter came to have mass; and reveal the underlying
    nature of the universe. HEP supports particle accelerators and very
    sensitive detectors to study fundamental particle interactions at the
    highest possible energies as well as non-accelerator studies of cosmic
    particles using experiments conducted deep underground, on mountains,
    or in space. These research facilities and basic research supported by
    HEP advance our knowledge not only in high energy physics, but
    increasingly in other fields was well, including particle astrophysics
    and cosmology. Research advances in one field often have a strong
    impact on research directions in another. Technology that was developed
    in response to the pace-setting demands of high energy physics research
    has also become indispensable to other fields of science and has found
    wide applications in industry and medicine, often in ways that could
    not have been predicted when the technology was first developed.
        In fiscal year 2008 HEP supports core experimental and theoretical
    research to maintain strong participation in the Tevatron, Large Hadron
    Collider (LHC) at CERN (the European Organization for Nuclear
    Research), and B-factory physics program, and supports research
    activities associated with development of potential new initiatives
    such as International Linear Collider (ILC) R&D, neutrinos, dark
    energy, and dark matter. HEP places a high priority on maximizing
    scientific data derived from the three major HEP user facilities: the
    Tevatron Collider and Neutrinos at the Main Injector (NuMI) beam line
    at Fermilab, and the B-factory at SLAC. HEP will continue to lead the
    international scientific community with these world-leading user
    facilities at Fermilab and SLAC in fiscal year 2008, but these
    facilities will complete their scientific missions by the end of the
    decade. Thus, the longer-term HEP program supported in fiscal year 2008
    begins to develop new cutting-edge facilities in targeted areas (such
    as neutrino physics) that will establish U.S. leadership in these areas
    in the next decade, when the centerpiece of the world HEP program will
    reside at CERN.
        In fiscal year 2008 HEP continues to support software and computing
    resources for U.S. researchers participating in the LHC program at CERN
    as well as pre-operations and maintenance of the U.S.-built systems
    that are scientific components of the LHC detectors. R&D in support of
    the proposed ILC is maintained in fiscal year 2008 to support U.S.
    participation in a comprehensive, coordinated international R&D program
    and to provide a basis for U.S. industry to compete successfully for
    major subsystem contracts, should the ILC be designed and then built.
    The long-term goal of this effort is to provide robust cost and
    schedule baselines to support design and construction decisions for an
    international electron-positron linear collider. The ILC would provide
    unprecedented power, clarity, and precision to unravel the mysteries of
    the next energy frontier, which we will just begin to discover with the
    LHC. In 2006 the ILC Reference Design Report was completed, and in
    fiscal year 2007 further work toward the design, including some site-
    specific studies and detector studies, will be performed. In fiscal
    year 2008 further work on both accelerator systems and detector studies
    will be performed.
        To provide a nearer-term future HEP program, and to preserve future
    research options, R&D for accelerator and detector technologies,
    particularly in the growing area of neutrino physics, will continue in
    fiscal year 2008. With Tevatron improvements completed, much of the
    accelerator development effort at Fermilab in fiscal year 2008 will
    focus on the neutrino program to study the universe's most prolific
    particle. The Neutrinos at the Main Injector (NuMI) beam allows studies
    of the fundamental physics of neutrino masses and mixings using the
    proton source section of the Tevatron complex. The NuMI beam has begun
    operations and will eventually put much higher demands on that set of
    accelerators. A program of enhanced maintenance, operational
    improvements, and equipment upgrades is being developed to meet these
    higher demands, while continuing to run the Tevatron. Fabrication of
    the NuMI Off-axis Neutrino Appearance (NOnA) Detector, which was
    originally proposed as a line item construction project in fiscal year
    2007 under the generic name of Electron Neutrino Appearance (EnA)
    Detector, is funded in fiscal year 2008 and will utilize the NuMI beam.
    This project includes improvements to the proton source to increase the
    intensity of the NuMI beam. Meanwhile, fabrication will begin for the
    Reactor Neutrino Detector and two small neutrino experiments, the Main
    Injector Experiment n-A (MINERnA) in the MINOS near detector hall at
    Fermilab and the Tokai-to-Kamioka (T2K) experiment using the Japanese
    J-PARC neutrino beam. R&D will continue for a large double beta decay
    experiment to measure the mass of a neutrino. These efforts are part of
    a coordinated neutrino program developed from an American Physical
    Society study and a joint HEPAP/Nuclear Sciences Advisory Committee
    (NSAC) subpanel review.
        To exploit the unique opportunity to expand the boundaries of our
    understanding of the matter-antimatter asymmetry in the universe, a
    high priority is given to continued operations and infrastructure
    support for the B-factory at SLAC. Final upgrades to the accelerator
    and detector are scheduled for completion in fiscal year 2007, and B-
    factory operations will conclude in fiscal year 2008. HEP support of
    SLAC operations decreases in fiscal year 2008 as the contribution from
    BES increases for SLAC linac operations in preparation for the Linac
    Coherent Light Source (LCLS).
        As the Large Hadron Collider (LHC) accelerator nears its turn-on
    date in 2007, U.S. activities related to fabrication of detector
    components will be completed and new activities related to
    commissioning and pre-operations of these detectors, along with
    software and computing activities needed to analyze the data, will
    ramp-up significantly. Support of an effective role for U.S. research
    groups in LHC discoveries will continue to be a high priority of the
    HEP program. R&D for possible future upgrades to the LHC accelerator
    and detectors will also be pursued.
        Enhanced support for R&D on ground- and space-based dark energy
    experimental concepts, begun in fiscal year 2007, will be continued in
    fiscal year 2008. These experiments should provide important new
    information about the nature of dark energy, leading to a better
    understanding of the birth, evolution, and ultimate fate of the
    universe. For example, the Super Nova/Acceleration Probe (SNAP) will be
    a mission concept proposed for a potential interagency-sponsored
    experiment with NASA, and possibly international partners: the Joint
    Dark Energy Mission (JDEM). DOE and NASA are jointly funding a National
    Academy of Sciences study to determine which of the proposed NASA
    ``Beyond Einstein'' missions should launch first, with technical design
    of the selected proposal to begin at the end of this decade. JDEM is
    one of the candidate missions in this study. In fiscal year 2008,
    fabrication for the Dark Energy Survey Project will begin.
        The HEP program re-competed its SciDAC portfolio in fiscal year
    2006. Major thrusts in theoretical physics, astrophysics, and particle
    physics grid technology will be supported through the SciDAC program in
    fiscal year 2008, as well as proposals in accelerator modeling and
    design to be selected in fiscal year 2007. These projects will allow
    HEP to use computational science to obtain significant new insights
    into challenging problems that have the greatest impact in HEP mission
    areas.
    Nuclear Physics
                Fiscal Year 2007 Request--$454.1 Million; Fiscal Year 2008
                        Request--$471.3 Million
        The Nuclear Physics (NP) program is the major sponsor of
    fundamental nuclear physics research in the Nation, providing about 90
    percent of Federal support. Scientific research supported by NP is
    aimed at advancing knowledge and providing insights into the nature of
    energy and matter and, in particular, at investigating the fundamental
    forces which hold the nucleus together and determining the detailed
    structure and behavior of the atomic nuclei. NP builds and supports
    world-leading scientific facilities and state-of-the-art
    instrumentation to carry out its basic research agenda--the study of
    the evolution and structure of nuclear matter from the smallest
    building blocks, quarks and gluons, to the stable elements in the
    universe created by stars, to unique isotopes created in the laboratory
    that exist at the limits of stability and possess radically different
    properties from known matter. NP also trains a workforce needed to
    underpin the Department's missions for nuclear-related national
    security, energy, and environmental quality.
        Key aspects of NP research agenda include understanding how the
    quarks and gluons combine to form the nucleons (proton and neutron),
    what the properties and behavior of nuclear matter are under extreme
    conditions of temperature and pressure, and what the properties and
    reaction rates are for atomic nuclei up to their limits of stability.
    Results and insight from these studies are relevant to understanding
    how the universe evolved in its earliest moments, how the chemical
    elements were formed, and how the properties of one of nature's basic
    constituents, the neutrino, influences astrophysics phenomena such as
    supernovae. Knowledge and techniques developed in pursuit of
    fundamental nuclear physics research are also extensively utilized in
    our society today. The understanding of nuclear spin enabled the
    development of magnetic resonance imaging for medical use. Radioactive
    isotopes produced by accelerators and reactors are used for medical
    imaging, cancer therapy, and biochemical studies. Advances in cutting-
    edge instrumentation developed for nuclear physics experiments have
    relevance to technological needs in combating terrorism. The highly
    trained scientific and technical personnel in fundamental nuclear
    physics who are a product of the program are a valuable human resource
    for many applied fields.
        The fiscal year 2008 budget request supports operations of the four
    National User Facilities and research at universities and laboratories,
    and makes investments in new capabilities to address compelling
    scientific opportunities and to maintain U.S. competitiveness in global
    nuclear physics efforts. In fiscal year 2008 support continues for R&D
    on rare isotope beam development, relevant to the next-generation
    facilities that will provide capabilities for forefront nuclear
    structure and astrophysics studies and for understanding the origin of
    the elements from iron to uranium.
        When the universe was a millionth of a second old, nuclear matter
    is believed to have existed in its most extreme energy density form
    called the quark-gluon plasma. Experiments at the Relativistic Heavy
    Ion Collider (RHIC) at Brookhaven National Laboratory (BNL) are
    searching to find and characterize this new state and others that may
    have existed during the first moments of the universe. These efforts
    will continue in fiscal year 2008. The NP program, together with the
    National Aeronautics and Space Administration (NASA), will continue
    construction of a new Electron Beam Ion Source (EBIS) to provide RHIC
    with more cost-effective, reliable, and versatile operations. Research
    and development activities, including the development of an innovative
    electron beam cooling system for RHIC, are expected to demonstrate the
    feasibility of increasing the luminosity (or collision rate) of the
    circulating beams by a factor of 10, which would increase the long-term
    scientific productivity and international competitiveness of the
    facility. Support for participation in the heavy ion program at the
    Large Hadron Collider (LHC) at CERN allows U.S. researchers the
    opportunity to search for new states of matter under substantially
    different initial conditions than those provided at RHIC. The interplay
    of the different research programs at the LHC and the ongoing RHIC
    program will allow a detailed tomography of the hot, dense matter as it
    evolves from the ``perfect fluid'' (a fluid with zero viscosity)
    discovered at RHIC.
        Operations of the Continuous Electron Beam Accelerator Facility
    (CEBAF) at Thomas Jefferson National Accelerator Facility (TJNAF) in
    fiscal year 2008 will continue to advance our knowledge of the internal
    structure of protons and neutrons. By providing precision experimental
    information concerning the quarks and gluons that form protons and
    neutrons, the approximately 1,200 experimental researchers who use
    CEBAF, together with researchers in nuclear theory, seek to provide a
    quantitative description of nuclear matter in terms of the fundamental
    theory of the strong interaction, Quantum Chromodynamics (QCD). In
    fiscal year 2008, the accelerator will provide beams simultaneously to
    all three experimental halls and funding is provided for engineering
    design activities for the 12 GeV CEBAF Upgrade Project. This upgrade is
    one of the highest priorities for NP and would allow for a test of a
    proposed mechanism of ``quark confinement,'' one of the compelling,
    unanswered puzzles of physics.
        Efforts at the Argonne Tandem Linear Accelerator System (ATLAS) at
    ANL and the Holifield Radioactive Ion Beam Facility (HRIBF) at ORNL
    will be supported in fiscal year 2008 to focus on investigating new
    regions of nuclear structure, studying interactions in nuclear matter
    like those occurring in neutron stars, and determining the reactions
    that created the nuclei of the chemical elements inside stars and
    supernovae. The GRETINA gamma-ray tracking array, which continues
    fabrication in fiscal year 2008, will revolutionize gamma ray detection
    technology and offer dramatically improved capabilities to study the
    structure of nuclei at ATLAS, HRIBF, and elsewhere. The Fundamental
    Neutron Physics Beamline (FNPB) under fabrication at the SNS will
    provide a world-class capability to study the fundamental properties of
    the neutron, leading to a refined characterization of the weak force.
    Support continues in fiscal year 2008 for the fabrication of a neutron
    Electric Dipole Moment experiment, to be sited at the FNPB, in the
    search for new physics beyond the Standard Model.
        Funds are provided in fiscal year 2008 to initiate U.S.
    participation in the fabrication of an Italian-led neutrino-less double
    beta decay experiment, the Cryogenic Underground Observatory for Rare
    Events (CUORE). A successful search for neutrino-less beta decay will
    determine if the neutrino is its own antiparticle and provide
    information about the mass of the neutrino. Neutrinos are thought to
    play a critical role in the explosions of supernovae and the evolution
    of the cosmos. A successful search for neutrino-less beta decay will
    determine if the neutrino is its own antiparticle and provide
    information about the mass of the neutrino.
        Following the re-competition of SciDAC projects in fiscal year
    2006, NP currently supports efforts in nuclear astrophysics, grid
    computing, Lattice Gauge (QCD) theory, and low energy nuclear structure
    and nuclear reaction theory. NP is also supporting R&D in an
    international effort to develop a larger, more sensitive neutrino-less
    beta decay experiment.
    Fusion Energy Sciences
                Fiscal Year 2007 Request--$319.0 Million; Fiscal Year 2008
                        Request--$427.9 Million
        The Fusion Energy Sciences (FES) program advances the theoretical
    and experimental understanding of plasma and fusion science, including
    a close collaboration with international partners in identifying and
    exploring plasma and fusion physics issues through specialized
    facilities. The FES program supports research in plasma science,
    magnetically confined plasmas, advances in tokamak design, innovative
    confinement options, non-neutral plasma physics and high energy density
    laboratory plasmas (HEDLP), and cutting edge technologies. FES also
    leads U.S. participation in ITER, an experiment to study and
    demonstrate the sustained burning of fusion fuel. This international
    collaboration will provide an unparalleled scientific research
    opportunity with a goal of demonstrating the scientific and technical
    feasibility of fusion power. Fusion is the energy source that powers
    the sun and stars. Fusion power could play a key role in U.S. long-term
    energy plans and independence because it offers the potential for
    plentiful, safe, and environmentally benign energy. On November 21,
    2006, the DOE signed the ITER agreement with its counterparts in China,
    the European Union, India, Japan, the Republic of Korea and the Russian
    Federation, formalizing this historic arrangement for international
    scientific cooperation.
        The U.S. Contributions to ITER project is being managed by the U.S.
    ITER Project Office (USIPO), established as an Oak Ridge National
    Laboratory (ORNL)/Princeton Plasma Physics Laboratory (PPPL)
    partnership. The fiscal year 2008 request for the U.S. Contributions to
    ITER project reflects a significant increase in procurement,
    fabrication activities, and delivery of medium- and high-technology
    components, assignment of U.S. personnel to the International ITER
    Organization abroad, and the U.S. share of common costs at the ITER
    site in Cadarache, France, including installation and testing. These
    costs are part of the Total Estimated Cost (TEC) for the U.S.
    Contributions to ITER project. There is a second category of costs,
    Other Project Costs (OPC), which is for the supporting research and
    development activity for our U.S. Contributions. Together the TEC and
    OPC make up the overall Total Project Cost which is $1,122,000,000.
        In support of ITER and U.S. Contributions to ITER, FES has placed
    an increased emphasis on its national burning plasma program--a
    critical underpinning to the fusion science in ITER. FES has enhanced
    burning plasma research efforts across the U.S. domestic fusion
    program, including: carrying out experiments on our national FES
    facilities that are exploring new modes of improved or extended ITER
    performance with diagnostics and plasma control that can also be
    extrapolated to ITER; developing safe and environmentally attractive
    technologies that could be used in future upgrades of ITER; exploring
    fusion simulation efforts that examine the complex behavior of burning
    plasmas in tokamaks; and integrating all that is learned into a
    forward-looking approach to future fusion applications. The U.S.
    Burning Plasma Organization has been established to coordinate these
    efforts.
        Section 972(c)(5)(C) of the Energy Policy Act (EPAct) of 2005,
    required the Secretary of Energy to provide ``a report describing how
    United States participation in the ITER will be funded without reducing
    funding for other programs in the Office of Science (including other
    fusion programs) . . .''. This report as well as all the other
    requirements for FES in EPAct have been or are in the process of being
    completed. The Department's fiscal year 2008 budget provides for modest
    increases for all programs within the Office of Science and supports
    the ITER request of $160,000,000 from new funds in the FES budget
    request.
        FES supports the operation of a set of experimental facilities.
    These facilities provide scientists with the means to test and extend
    our theoretical understanding and computer models--leading ultimately
    to improved predictive capabilities for fusion science. Research and
    facility operations support for the three major facilities is
    maintained in fiscal year 2008. Experimental research on tokamaks is
    continued with emphasis on physics issues of interest to the ITER
    project. The DIII-D tokamak at General Atomics will operate for 15
    weeks in fiscal year 2008 to conduct research relevant to burning
    plasma issues and topics of interest to the ITER project as well as
    maintain the broad scientific scope of the program. The Alcator C-Mod
    at the Massachusetts Institute of Technology will operate for 15 weeks
    and the National Spherical Torus Experiment (NSTX) at the Princeton
    Plasma Physics Laboratory (PPPL) will operate for 12 weeks. Fabrication
    of the major components of the National Compact Stellarator Experiment
    (NCSX) at PPPL continues and assembly of the entire device will be
    completed in fiscal year 2009.
        Funding for the FES SciDAC program continues in fiscal year 2008
    for the development of tools that facilitate international fusion
    collaborations and initiate development of an integrated software
    environment that can accommodate the wide range of space and time
    scales and the multiple phenomena that are encountered in simulations
    of fusion systems. Within SciDAC, the Fusion Simulation Project is a
    major initiative involving plasma physicists, applied mathematicians,
    and computer scientists to create a comprehensive set of models of
    fusion systems, combined with the algorithms required to implement the
    models and the computational infrastructure to enable them to work
    together.
        FES will issue a joint solicitation in fiscal year 2008, with the
    National Nuclear Security Administration (NNSA), focused on academic
    research in high energy density laboratory plasmas, which supports the
    Department's programmatic goals in inertial confinement fusion science.
    Workforce Development for Teachers and Scientists
                Fiscal Year 2007 Request--$10.9 Million; Fiscal Year 2008
                        Request--$11.0 Million
        The Department of Energy has played a role in training America's
    scientists and engineers for more than 50 years, making contributions
    to U.S. economic and scientific pre-eminence. The Nation's current and
    future energy and environmental challenges may be solved in part
    through scientific and technological innovation and a highly skilled
    scientific and technical workforce. The Workforce Development for
    Teachers and Scientists (WDTS) program acts as a catalyst within the
    DOE for the training of the next generation of scientists. WDTS
    programs create a foundation for DOE's national laboratories to provide
    a wide range of educational opportunities to more than 280,000
    educators and students on an annual basis. WDTS's mission is to provide
    a continuum of educational opportunities to the Nation's students and
    teachers of science, technology, engineering, and mathematics (STEM).
        WDTS supports experiential learning opportunities that compliment
    curriculum taught in the classroom and: (1) build links between the
    national laboratories and the science education community by providing
    funding, guidelines, and evaluation of mentored research experiences at
    the national laboratories to K-12 teachers and college faculty to
    enhance their content knowledge and research capabilities; (2) provide
    mentor-intensive research experiences at the national laboratories for
    undergraduate and graduate students to inspire commitments to the
    technical disciplines and to pursue careers in science, technology,
    engineering, and mathematics, thereby helping our national laboratories
    and the Nation meet the demand for a well-trained scientific/technical
    workforce; and (3) encourage and reward middle and high school students
    across the Nation to share, demonstrate, and excel in math and the
    sciences, and introduce these students to the national laboratories and
    the opportunities available to them when they go to college.
        In fiscal year 2008, the DOE Academies Creating Teacher Scientists
    (DOE ACTS) program, formerly the Laboratory Science Teacher
    Professional Development (LSTPD) program, will support the
    participation of approximately 300 teachers. All 17 of DOE's national
    laboratories will participate in this program. Each national laboratory
    can elect to implement either or both of the two types of teacher
    professional development models in DOE ACTS: (1) Teachers as
    Investigators (TAI) is geared towards novice teachers typically in the
    elementary to intermediate grade levels; and (2) Teachers as Research
    Associates (TARA) for teachers with a stronger background in science,
    mathematics, and engineering.
        The Science Undergraduate Laboratory Internship (SULI) program,
    which provides mentor intensive research experiences for undergraduates
    at the national laboratories, will support approximately 340 students
    in fiscal year 2008. The Albert Einstein Distinguished Educator
    Fellowships, the College Institute of Science and Technology (CCI)
    program, the Pre-Service Teacher activity for students preparing for
    teaching careers in a STEM discipline, and the National and Middle
    School Science Bowls will all continue in fiscal year 2008.
    Science Laboratories Infrastructure
                Fiscal Year 2007 Request--$50.9 Million; Fiscal Year 2008
                        Request--$79.0 Million
        The mission of the Science Laboratories Infrastructure (SLI)
    program is to enable the conduct of DOE research missions at the Office
    of Science laboratories by funding line item construction projects and
    the clean up for reuse or removal of excess facilities to maintain the
    general purpose infrastructure. The program also supports Office of
    Science landlord responsibilities for the 24,000 acre Oak Ridge
    Reservation and provides Payments in Lieu of Taxes (PILT) to local
    communities around ANL, BNL, and ORNL.
        In fiscal year 2008, SLI will fund four construction subprojects:
    Seismic Safety Upgrade of Buildings, Phase I, at the Lawrence Berkeley
    National Laboratory (LBNL); Modernization of Building 4500N, Wing 4,
    Phase I, at ORNL; Building Electrical Services Upgrade, Phase II, at
    ANL; and Renovate Science Laboratory, Phase I, at BNL. Funding for
    fiscal year 2008 includes $35,000,000 held in reserve pending
    resolution of issues related to capability replacement and renovation
    at PNNL. If the issues are resolved, DOE will initiate a reprogramming
    request to use these funds to replace and/or upgrade mission-critical
    facilities currently located in the Hanford Site 300 Area. The SLI
    program continues funding for demolition of the Bevatron at LBNL in
    fiscal year 2008, and funding is also provided for the demolition of
    several small buildings and trailers at ORNL.
    Science Program Direction
                Fiscal Year 2007 Request--$170.9 Million; Fiscal Year 2008
                        Request--$184.9 Million
        Science Program Direction (SCPD) enables a skilled, highly
    motivated Federal workforce to manage the Office of Science's basic and
    applied research portfolio, programs, projects, and facilities in
    support of new and improved energy, environmental, and health
    technologies. SCPD consists of two subprograms: Program Direction and
    Field Operations.
        The Program Direction subprogram is the single funding source for
    the Office of Science Federal staff in headquarters responsible for
    managing, directing, administering, and supporting the broad spectrum
    of Office of Science disciplines. This subprogram includes planning and
    analysis activities, providing the capabilities needed to plan,
    evaluate, and communicate the scientific excellence, relevance, and
    performance of the Office of Science basic research programs.
    Additionally, Program Direction includes funding for the Office of
    Scientific and Technical Information (OSTI) which collects, preserves,
    and disseminates DOE research and development (R&D) information for use
    by DOE, the scientific community, academia, U.S. industry, and the
    public to expand the knowledge base of science and technology. The
    Field Operations subprogram is the funding source for the Federal
    workforce in the Field responsible for management and administrative
    functions performed within the Chicago and Oak Ridge Operations
    Offices, and site offices supporting the Office of Science laboratories
    and facilities.
        In fiscal year 2008, Program Direction funding increases by 8.2
    percent from the fiscal year 2007 request. Most of the increase will
    support an additional 29 FTEs, to mange the increase in the SC research
    investment that is a key component of the President's American
    Competitiveness Initiative; four new FTEs to support NSLS-II, and ITER
    project office activities; and 35 FTEs--the staff of the New Brunswick
    Laboratory--transferring from the Office of Security and Safety
    Performance Assurance. Twenty-four FTEs are reduced across the SC
    complex in fiscal year 2008 consistent with SC's corporate workforce
    planning strategy. The SCPD fiscal year 2008 increase also supports a
    2.2 percent pay raise; an increased cap for SES basic pay; other pay
    related costs such as the Government's contributions for employee
    health insurance and Federal Employees' Retirement System (FERS);
    escalation of non-pay categories, such as travel, training, and
    contracts; and increased e-Gov assessments and other fixed operating
    requirements across the Office of Science complex.
    Safeguards and Security
                Fiscal Year 2007 Request--$71.0 Million; Fiscal Year 2008
                        Request--$71.0 Million
        The Safeguards and Security (S&S) program ensures appropriate
    levels of protection against unauthorized access, theft, diversion,
    loss of custody, or destruction of DOE assets and hostile acts that may
    cause adverse impacts on fundamental science, national security, or the
    health and safety of DOE and contractor employees, the public, or the
    environment. The Office of Science's Integrated Safeguards and Security
    Management strategy uses a tailored approach to safeguards and
    security. As such, each site has a specific protection program that is
    analyzed and defined in its individual Security Plan. This approach
    allows each site to design varying degrees of protection commensurate
    with the risks and consequences described in their site-specific threat
    scenarios. The fiscal year 2008 budget includes funding necessary to
    protect people and property at the 2003 Design Basis Threat (DBT)
    level. In fiscal year 2008, funding for the Cyber Security program
    element addresses the promulgation of new National Institute of
    Standards and Technology (NIST) requirements that are statutorily
    required by the Federal Information Security Management Act (FISMA) to
    improve the Federal and Office of Science laboratory cyber security
    posture.
                                   conclusion
        I want to thank you, Mr. Chairman, for providing this opportunity
    to discuss the Office of Science research programs and our
    contributions to the Nation's scientific enterprise and U.S.
    competitiveness. On behalf of DOE, I am pleased to present this fiscal
    year 2008 budget request for the Office of Science.
        This concludes my testimony. I would be pleased to answer any
    questions you might have.

                          SCIENTIFIC RESEARCH AT NREL

        Senator Dorgan. Dr. Orbach, thank you very much. I want to
    ask a series of questions and then I will turn to my
    colleagues.
        First and foremost, my colleague from Colorado mentioned
    that NREL, I had the opportunity to be in Golden, Colorado
    recently, is also working on issues like cellulosic ethanol.
    Tell me what the relationship is between your Office of Science
    and the three facilities you're going to designate, how that
    relates to NREL, what the coordination is, and so on?
        Dr. Orbach. We work very closely, Mr. Chairman, with NREL,
    and, in fact, we fund research at NREL. And, very generally, we
    support the basic end of the research continuum that leads to
    market placement of these new technologies. NREL focuses on the
    applied research, the step needed to take the basic ideas and
    convert them to the market. It's not a sharp division. In order
    to communicate, we need to understand the applied sector and
    they also do basic research, so that we can communicate most
    effectively. So, our relationship with NREL is a very close
    one, we work very closely with the program in the Department,
    Energy Efficiency and Renewable Energy for joint workshops and
    joint enterprises.
        Senator Dorgan. So the significant difference here is
    applied versus basic?
        Dr. Orbach. That's correct.

                     ADVANCED SCIENTIFIC COMPUTING RESEARCH

        Senator Dorgan. In 2008 the budget proposes $340 million
    for advanced scientific computing research. These funds will
    help complete the acquisition of a 250 teraflop system at Oak
    Ridge. What's the relationship between the computing facility
    at Oak Ridge, when it's completed, with the computing facility
    at Argonne or at Berkeley, for example?
        Dr. Orbach. Well, the one at Berkeley is what we call a
    capacity machine, which services about 2,500 users. The machine
    at Oak Ridge is what we call a capability machine. We reserve
    it for a smaller number so they can get larger amounts of time.
    There are only about 400 users at Oak Ridge.
        Also, the architectures are different. We're exploring
    speeds that have never been achieved before. Nobody knows which
    scientific problems are most efficient on which architecture.
    So, at Oak Ridge, you'll find an architecture which is a Cray
    architecture. At Argonne, you'll find a Blue GeneP architecture
    and you'll find a Power5 architecture at NERSC at Berkeley. We
    believe that different science problems will be solved more
    efficiently on different machines. We don't know. So, we want
    to have the opportunity to explore which machine is best for
    which class of scientific problems.

                              CARBON SEQUESTRATION

        Senator Dorgan. Let me also ask you about the role of the
    Office of Science in carbon sequestration. You're doing
    research in those areas?
        Dr. Orbach. Yes, we are.
        Senator Dorgan. Again, basic research as opposed to applied
    research?
        Dr. Orbach. That's correct, sir. We have it in two of our
    programs: biological and environmental research and basic
    energy sciences. The latter focuses on the geologic issues
    associated with carbon storage. The former talks about the
    earth and the ability to store carbon in roots, in the surface,
    also with biological microbes, for example, that will absorb
    carbon dioxide. It looks at the biological side for
    sequestration.

                  TRANSITION OF RESEARCH INTO THE MARKETPLACE

        Senator Dorgan. You know, there's a phrase that people
    refer to. I was unaware of it, but it is called the DOE's
    valley of death. Have you heard of that?
        Dr. Orbach. Yes.
        Senator Dorgan. And, it's a phrase that people use to
    describe, I guess, how too little research really translates
    into new technologies that move to the marketplace. And,
    therefore, the valley of death. There seems to me to be a fair
    question about how effectively we translate the product of
    research into practical applications in the marketplace. Tell
    us a little about your view of that.
        Dr. Orbach. Well, it's very difficult. We're not the only
    country that struggles with that transition. The applied
    programs, in fact, are charged with that responsibility, but
    we're trying something new. The bioenergy research centers are
    a construct where we hope that the private sector will join
    with us in the basic research. The Federal money buys down the
    risk for the private capital so they can invest smaller amounts
    with this very high risk, as it is basic research. But, what
    we're hoping is that with the private sector as a partner, that
    when basic research pays off, they will then transfer that to
    the marketplace. So, we're looking at new methods. The Energy
    Policy Act gave us the Other Transactions Authority, so we have
    new funding structures now, that we can use with the private
    sector. We are attempting to come up with innovative ways to
    cross the ``valley of death.''
        Senator Dorgan. Mr. Orbach, sometimes those of us without
    strong science backgrounds have difficulty visiting with
    scientists because we don't always understand exactly what
    they're saying. We have great respect for those that work in
    the sciences, obviously, but would you do me a favor? Would you
    send the committee a list, with an analysis, of a dozen or so
    of the most interesting, promising, perhaps some controversial,
    but breathtaking research projects that you see in your agency
    and in the future of your agency so that we can try to
    understand? If you can translate all that into the kind of
    thing that those of us who are non-scientists can understand I
    think it would give us a better idea of what you are doing and
    what you see ahead of you. But, I for one, appreciate your
    being here and appreciate especially the importance of this
    office. It is not the highest profile office in the Federal
    Government, but in many ways it holds the key to tomorrow's
    opportunities for our country.
        [The information follows:]
    Interesting and Promising Research Projects in DOE and in the Future of
                                      DOE
        We are very grateful to the chairman for giving us this opportunity
    to explain the significance of what we do in terms that non-scientists
    can understand. Before we describe some of the projects we view as most
    promising, just a few words to put our answer into context:
        To describe the far-reaching impact of DOE Office of Science-
    supported research on our economy, our technology, and our national
    life over the past five decades--and to predict the potential of Office
    of Science-supported research to transform Americans' lives for the
    better in the decades ahead--is an exciting task. Numbers only begin to
    tell the story. Forty-five Nobel laureates. Scores of fundamental
    discoveries in a wide array of fields from high energy physics, to
    biological research, to high-speed computing (the Office of Science
    website lists just a ``top 100''). Countless new products,
    technologies, and even whole industries owe their existence to
    scientific research first supported by the Office of Science. But lists
    alone barely convey the true scope of the transformation we have
    generated, or the potential for new discoveries to transform our
    Nation's future.
        Our lives have been fundamentally reshaped by Office of Science-
    supported discoveries. The entire field of nuclear medicine arose
    largely as an outgrowth of ``accelerator science'' spearheaded by the
    Office of Science and its predecessor agencies to support research in
    high energy and nuclear physics. At the core of MRIs are
    superconducting magnets, a technology first successfully developed by
    Office of Science-supported scientists at Fermilab to build the atom-
    smashing Tevatron. PET Scans grew out of pioneering advances by the
    Office of Science and predecessor agencies in particle accelerators,
    biological radiotracer molecules, photodetectors, and high-speed
    computers. Today particle accelerators producing X-rays, protons,
    neutrons, or heavy ions--once built mainly as research tools for
    physicists--provide advanced cancer treatment for millions of patients
    and are found at every major medical center in the United States.
        The Information Age itself would have been impossible without the
    fundamental breakthroughs produced by research supported by the Office
    of Science--including key discoveries essential to the development of
    the Standard Model of high energy physics. Our world of ``smart''
    cellular phones, cameras, music players, and appliances rely on the
    utilization of such phenomena and tools as the giant magnetoresistive
    effect and plasma chambers first investigated by Office of Science-
    sponsored researchers.
        In short, Office of Science-sponsored discoveries are part of the
    very fabric of our contemporary high-tech world--a legacy of its
    historic role as the primary Federal sponsor of basic research in the
    physical sciences.
        Here are some of the most promising major areas of research we are
    pursuing today:
        Harnessing Nature for New Sources of Energy.--Since initiating the
    Human Genome Project in 1986, DOE has played a leading role in
    advancing modern biotechnology. We are applying these advances and
    sophisticated new tools to the task of probing microbes for solutions
    to energy production, carbon capture, and environmental cleanup. One of
    the most promising potential applications of biotechnology today lies
    in bioenergy production. Microbes are experts at harvesting energy from
    almost any form, from solar radiation to photosynthesis-generated
    organic chemicals to minerals in the deep subsurface. For example,
    there are some 200 microbes in the hindgut of the termite. They
    contribute to the termite's super-efficiency in breaking down cellulose
    into sugars that can be fermented into fuel. We now have at our
    disposal the tools and insights for cracking nature's code for
    accomplishing these marvels. Developing cost-effective ways of
    producing ethanol from cellulose is the key to making ethanol truly
    commercially viable, and biotech likely holds the solution to this
    challenge; biofuels also are one major means of reducing net carbon
    dioxide emissions into the atmosphere.
        Our Joint Genome Institute is already sequencing the DNA in these
    microbes to identify the metabolic pathways by which these micro-
    organisms accomplish their mission. To seize upon these and other
    scientific opportunities, the Office of Science is establishing three
    new Bioenergy Research Centers, funded at $25 million each per year for
    5 years, to bring together multidisciplinary teams of top scientists to
    accelerate the breakthroughs necessary for the development of cost-
    effective production of cellulosic ethanol and other biofuels.
    Universities, national laboratories, nonprofit organizations, and
    private firms have been invited to compete for these grants, singly or
    in partnerships. Proposals were due on February 1, 2007; awards will be
    announced this June; and Centers will be underway by early in fiscal
    year 2008. We estimate biofuels can replace 30 percent of the
    transportation fuels we currently consume, reducing our dependence on
    imported oil, and providing energy security for our Nation.
        Making Fusion Power a Reality.--Fusion powers the sun and the
    stars. Through our participation in ITER, a major international fusion
    research project, we are seeking to overcome the technical barriers to
    bringing fusion energy to the electric grid. In November 2006, the
    United States signed an agreement with 6 other partners. Scientists
    supported by the DOE Office of Science will be working side by side
    with counterparts from China, the European Union, India, Japan, the
    Republic of Korea and the Russian Federation to build and operate a
    reactor that demonstrates the scientific and technological feasibility
    of fusion energy.
        The fusion process occurs in the sun or stars when lighter
    elements, hydrogen for example, fuse together under incredibly high
    temperatures (10-100 million degrees Celsius) to make heavier elements,
    thereby releasing energy and forming a stew of charged subatomic
    particles known as plasma. The key challenge is containing this plasma
    on earth. ITER will contain the plasma through use of extremely
    powerful magnetic fields. ITER, if successful, will put the world one
    step away from construction of a commercial fusion power plant. Fusion
    has the potential to provide abundant, clean, carbon-free energy for
    the world's growing electricity needs.
        Extending the Frontiers of Science with the World's Fastest
    Computers.--The supercomputer is science's newest and most powerful
    tool, enabling researchers to model and simulate experiments that could
    never be performed in a laboratory. Some see computer modeling and
    simulation as a new ``third pillar'' of scientific discovery, side by
    side with scientific experiment and scientific theory. Supercomputing
    has enormous implications for U.S. competitiveness, for it holds out
    the promise of enabling U.S. industry to perform ``virtual
    prototyping'' of complex systems and products, substantially reducing
    development costs and shortening time to market. The Office of Science
    has been leading the way in developing the Nation's civilian
    supercomputing capabilities, acquiring ever-faster machines, nurturing
    the complex software development knowledge necessary to take advantage
    these unprecedented processing capabilities, and helping to bootstrap
    the U.S. supercomputer industry. Thousands of scientists from DOE labs
    and universities are taking advantage of these capabilities. Two
    private firms, Pratt & Whitney and Boeing, won time on the Office of
    Science fastest computer as part of the INCITE competition--in which
    national laboratory, university, and corporate researchers vie for time
    on Office of Science machines--and are performing important simulations
    of turbine operation and aerodynamic design. This has reduced their
    cost of production and time to market, giving them more of a
    competitive edge over their rivals on the international scene.
        The Office of Science is building the world's most powerful
    supercomputing centers for open science. The Oak Ridge National
    Laboratory Leadership Computing Facility includes a Cray XT4 system
    that will be upgraded to 250 teraflop (trillions of calculations per
    second) peak capability. The Argonne National Laboratory Leadership
    Computing Facility will acquire an IBM Blue Gene/P this year with a
    peak capability of 100 teraflops. We are exploring these two different
    computer system architectures because we believe that different
    architectures will be better suited for different types of scientific
    problems. The National Energy Research Computing Center will reach 100-
    150 teraflop peak capacity this year and will serve over 2,500
    scientists from DOE laboratories, universities, and companies,
    nationwide. Office of Science computing capabilities are expected to
    reach a petaflop (1,000 teraflops) by the end of 2008, far ahead of any
    foreign competition.
        Leading the Nanotech Revolution.--The Office of Science is
    positioning the United States as the global leader of the
    nanotechnology revolution, perhaps the most economically promising
    technological revolution of our era. Our five Office of Science-
    supported Nanoscale Science Research Centers (four of which are now
    operational, with a fifth coming on line this year) provide our
    Nation's research community with the world's most advanced tools for
    exploring and manipulating matter at the nanoscale. Coupled with the
    world-leading high-intensity light sources at our National
    Laboratories, which enable scientists to image matter at the molecular
    level, these capabilities will have a dramatic impact on our national
    economy and energy security in the coming years. Fundamental research
    at the nanoscale may lead to methods to split water with sunlight for
    hydrogen production; technologies for harvesting solar energy with
    greater power efficiency and lower costs; super-strong lightweight
    materials to improve efficiency of vehicles; ``smart materials'' that
    respond dynamically to their environment; and low-cost fuel cells,
    batteries, supercapacitors, and thermoelectronics.
        Manipulating matter at the atomic scale takes us into the realm
    where the chemical, physical, optical, and mechanical properties of
    materials can be dramatically different, creating the potential for the
    basis of new technologies. For example, both diamonds and graphite
    found in pencil lead are made of the same element--carbon. Their vastly
    different properties arise from differences in the arrangement of
    carbon atoms at the atomic scale. Carbon nanotubes (where the carbon
    atoms are arranged in a tube shape, a nanometer in diameter and with
    walls a single atom thick) have the right properties to be the building
    blocks for a range of novel energy technologies and electronic devices:
    they are incredibly tiny, stronger than steel, can withstand high
    temperatures, and have a range of controllable electronic properties.
    Nanotubes are already finding applications in energy technologies such
    as novel Lithium-ion batteries and supercapacitors; but realizing the
    full potential of nanotubes will require addressing challenges
    associated with fabricating and manipulating these molecular scale
    objects.
        The Big Bang Machine.--Researchers at Brookhaven National
    Laboratory's Relativistic Heavy Ion Collider (RHIC) are pushing the
    frontiers of human knowledge by using a powerful particle accelerator
    to recreate conditions as they existed in the universe just
    microseconds after the Big Bang. In a headline-making development, RHIC
    has identified a new and entirely unexpected form of matter, a
    ``perfect liquid'' composed of quarks and gluons, the tiny components
    that make up the core of atoms. Work at RHIC will provide scientists
    with a deeper fundamental understanding of nuclear matter and its
    interactions, knowledge that is likely to prove invaluable not only to
    research in nuclear physics, but also to research in energy, materials
    science, astrophysics, and national security.
        RHIC accelerates two beams of gold nuclei to high energies and
    brings them into head-on collisions inside state-of-the-art detectors
    designed to observe the particles that emerge. The collision
    disintegrates the nuclei and momentarily produces the unimaginably hot
    and dense matter called the quark-gluon plasma.
        Understanding our Climate.--The Office of Science leads Federal
    agencies in the field of climate modeling. Office of Science-supported
    researchers are advancing climate models through the use of
    sophisticated field measurement tools as well as the Office of
    Science's supercomputing resources, the fastest in the world available
    for civilian research. Ultimately we need to be able to understand the
    factors that determine the Earth's climate well enough to predict
    climate and climate impacts decades or even centuries in the future.
    Advanced climate and Earth system models are needed to describe and
    predict the roles of oceans, the atmosphere, sea ice, and land masses
    on climate, including the interactions and feedbacks between the
    various components of the climate system. The role of clouds and
    aerosols in controlling solar and terrestrial radiation onto and away
    from the Earth also needs to be better understood if we are to reduce
    uncertainty in climate prediction. The Office of Science is addressing
    this need through the Atmospheric Radiation Measurement (ARM) program
    which is providing scientists new insights into the effect of aerosols
    from air pollution on clouds and the consequent heating and cooling of
    the atmosphere.
        Restoring Sight to the Blind.--Diseases of the retina are the
    leading cause of blindness in the United States. The Artificial Retina
    Project, involving six DOE national laboratories, three universities,
    and an industrial partner, is utilizing the DOE labs' unique expertise
    in materials science, advanced microelectronics, and micro-fabrication
    to design and construct the most advanced device to restore sight to
    the blind. The pliable, biocompatible 60-electrode artificial retina
    has been approved by the FDA for human trials. Plans call for 30
    patients to receive artificial retinas this year.
        The artificial retina captures visual signals and sends them to the
    brain in the form of electrical impulses. The device is a miniature
    disc that contains an array of electrodes that can be implanted in the
    back of the eye to replace the damaged retina. Visual signals are
    captured by a small video camera located in eyeglasses worn by the
    blind person and processed through a microcomputer worn on a belt. The
    signals are transferred to the electrode array in the eye. The array
    stimulates the optical nerves which then carry a signal to the brain.
    The Office of Science goal for the project is to develop the technology
    to fabricate a 1000-electrode device that should allow a blind person
    to read large print and recognize faces. Technologies developed for
    this project may also be applicable to the general field of neuron
    prostheses.
        The Elusive Higgs . . . Solving the Mystery of Mass.--The Standard
    Model of particle physics, developed with the contributions of numerous
    Office of Science-supported scientists and Office of Science
    experimental facilities over many years, is an extraordinarily
    powerful, accurate, and far-reaching physical theory that explains the
    behavior of matter down to the level of tiny quarks. Yet a critical
    piece of this theory--the so-called Higgs particle--has never been
    observed. According to the Standard Model, the Higgs particle and its
    associated field are actually responsible for giving all matter its
    mass. Yet the Higgs remains the only particle predicted by the Standard
    Model that has not yet been detected. Discovery of the Higgs and its
    properties--or discovery of some tantalizing alternative possibilities
    instead of the Higgs--would open new vistas in particle physics and
    provide new clues to some of the deepest mysteries of space, time, and
    matter. Recently, work at the Tevatron at Fermilab in Illinois--
    currently the world's most powerful particle accelerator--zeroed in on
    a lower range for the Higgs mass that suggest it might conceivably be
    detected at the energies achieved at the Tevatron. This would be the
    crowning discovery of the Standard Model and would mark the birth of a
    ``new physics'' with the potential to transform our basic understanding
    of the physical universe.
        Using Microbes to Clean-up the Environment.--The Office of Science
    is looking at ways microbes can be used to degrade or transform
    contaminants such as toxic metals and radionuclides. Microbes have
    evolved over 3.5 billion years as masters at living in almost every
    environment. Thriving in some of the harshest environments on the
    planet, these single-celled organisms have developed powerful and
    diverse capabilities that, if harnessed through biotechnology, may
    provide cost-effective restoration strategies for many of the
    contaminated sites DOE is committed to cleaning up. Through research in
    areas such as genomics, geochemistry, imaging, and modeling and
    simulation, Office of Science-sponsored scientists are studying the
    complex interactions of microbes with contaminants in the subsurface
    environment and exploring remediation methods that rely on naturally
    occurring microbes. Several potential candidates are already being
    tested in the field. Geobacter species, for example, can transform
    uranium from a soluble form to an insoluble form, effectively removing
    it from groundwater and preventing its further mobility. A Shewanella
    species commonly found in soils is capable of reducing a wide range of
    organic compounds, metal ions, and radionuclides to less toxic forms or
    forms that are immobilized in the soil.
        Building New Tools for Basic Science.--The world-leading large
    scale instruments designed, built, and operated by the Office of
    Science and its predecessor agencies--synchrotron light sources,
    neutron scattering facilities, and particle colliders--have not only
    driven entire fields like high energy and nuclear physics, but have
    also become essential tools for studying and understanding the
    arrangement of atoms in biological molecules, pharmaceuticals, and
    materials from metals to ceramics to plastics. Particle accelerators
    have been the primary sources of light and other forms of radiation for
    these facilities. Critical to development of the next generation of
    scientific user facilities--ones that will allow researchers to observe
    matter (and its components) at increasingly smaller scales and follow
    atomic motions and chemical reactions in real time--are advances in
    accelerator sciences such as superconducting radiofrequency (SCRF)
    technology.
        The Office of Science is leading a national effort at several
    national laboratories and universities aimed at developing SCRF
    accelerator technology. This technology utilizes the remarkable
    properties of superconducting materials to greatly reduce the size and
    cost of accelerators while increasing their efficiency. These advances
    are being driven, in part, by the scientific opportunities at the very
    highest energies--SCRF is critical to realizing the proposed
    International Linear Collider, a thirty kilometer long particle
    collider which will be capable of exploring fundamental physics
    questions such as the physics responsible for the origin of mass as
    well as the nature of dark matter. However, the impact of this
    technology will be far wider, enabling next generation accelerator-
    based facilities such as free electron lasers (FELs), which will
    provide world-leading tools for transformational basic science in areas
    such as materials, nanotechnology, and biotechnology in the coming
    decades. The many applications of FELs include industrial processes
    such as laser penning to toughen ship propellers, high power laser
    weapons systems for naval defense, laser surgery, as well as imaging
    fundamental chemical and biological processes.
        Basic research in science pursues the frontiers of discovery. While
    we expect discoveries to follow our instincts, we are often surprised,
    sometimes with wonderful consequences. What we have listed above is our
    present understanding of things to come, but there will be more--
    opportunities that we did not anticipate. With sufficient investment
    and consistent support, we can discover, apply, and improve the quality
    of our lives.

        Senator Dorgan. Senator Domenici.

                            CLIMATE CHANGE RESEARCH

        Senator Domenici. Let me just echo what you just said. You
    will find within the Federal Government and outside the Federal
    Government are gigantic research institutions and researchers
    that will be knocking at your door and trying to become part of
    the success that is, what they hope it's going to be because of
    what you have and what we have made available to you and what
    we're going to give you and the challenge we are going to place
    upon you. We wish you very, very much success.
        Climate research, which is being spoken of very, very
    heavily by many, many people. The Department has requested $138
    million to support climate change research. It is my
    understanding that this supports DOE's role in the
    administration's multi-agency climate change research
    initiative. It appears, from budget documents, that the
    Department has primary responsibility for carbon science cycle
    and the climate impacts. That doesn't mean you're in charge of
    the whole program, but obviously this does give you a very big
    role in climate change research by the United States and on
    behalf of the Department of Energy.
        We very much want to help you with that as the source of
    your money, the source of your policy direction. There are so
    many things that one would ask, but this is not the time. This
    is, sort of, an opening round here. Staff will initiate a
    number of other ones and many will be submitted on behalf of
    both sides of the isle. So, we won't be trying for one-side to
    get up on, take over from the other. This is going to be a very
    wonderful venture together. And, I look forward to it and I
    hope you do. We have some great laboratories that you are going
    to be working with and when they see the relationship that is
    given to them in this legislation, in this funding, they will
    be very, very surprised.
        Mr. Chairman, thank you for yielding to me and I appreciate
    the opportunity to work with you on this committee with him and
    other people in these areas.
        Senator Dorgan. Senator Craig.

                         IMPORTANCE OF NEUTRON SOURCES

        Senator Craig. Thank you very much, Mr. Chairman. And,
    again, Mr. Secretary, we thank you for being here. As you can
    hear by our chairman and ranking member, there are tremendously
    high levels of expectation and we're all very excited about
    getting more heavily involved in both basic research and then
    its application.
        I had mentioned earlier, you were at the National Lab in
    Idaho. You visited and you saw, it's my understanding, the
    Advanced Test Reactor. It's a valuable national asset and the
    question is, how to make the ATR a successful national user
    facility. You manage many user facilities successfully and
    because of your experience in this area, I would like to ask
    that you work very closely with DOE NE too, and Assistant
    Secretary Dennis Spurgeon, in an effort to make the ATR a
    world-class user facility.
        You know and I'm told that all neutrons are not created
    equally. The Office of Science uses HFIR at Oak Ridge for basic
    neutron physics research, while Navy DOE NE uses the ATR for
    nuclear energy research. How important is it for science that
    you have access to these complementary neutron sources for
    varying fluxes and energies?
        Dr. Orbach. It's extraordinarily important because the
    excitations we look at, in various structures, have different
    energies. And they also are sometimes very difficult to see
    with low fluxes. The power of the ATR is exceptional and it's
    an exceptional resource in that regard.
        Senator Craig. Well, I look forward to working with you and
    you working with the lab. As I say, we have these marvelous
    resources at hand, and now we're in the business of
    transforming them into plow shares. And that's an exciting
    opportunity for us and for the world and we thank you.
        Senator Dorgan. Senator Allard.
        Senator Allard. Thank you, Mr. Chairman.

                                    EARMARKS

        Senator Allard. I want to cover the renewable energy lab
    there in Colorado at Golden. They do basic research and as well
    as applied research. And one of the criticisms I've gotten from
    the lab is that they begin to count on a certain amount of
    money and then all of sudden earmarks come in and take away
    from what they were counting on in the budget process. What
    portion of your budget is dispersed based on earmarks and what
    portion is given out in grants?
        Dr. Orbach. Well, I can only give you the fiscal year 2006
    numbers, because the fiscal year 2007 grants are still
    underway.
        In 2006, we had $129 million that were congressionally
    directed out of a total budget of $3.6 billion.
        Senator Allard. Three-point-six billion dollars?
        Dr. Orbach. Yes.
        Senator Allard. Okay. All right. And, how much of your
    proposed funding will be directed to programs--well, let me
    see, no--and how has that split changed over the last 5 to 10
    years?
        Dr. Orbach. It's increased quite substantially. In previous
    years it was around $60 million, but it more than doubled in
    fiscal year 2006.
        Senator Allard. So, you're saying from fiscal year 2005 to
    fiscal year 2006 that earmarks doubled?
        Dr. Orbach. Yes.
        Senator Allard. Really. That is a very significant
    increase. And, then in the bill that we had last year I think
    there was a lot of earmarks in that again. So, that trend was
    continuing. It started out that way at least, didn't it?
        Dr. Orbach. The fiscal year----
        Senator Allard. It never made it to the floor, maybe, did
    it?
        Dr. Orbach. I'm sorry.
        Senator Allard. Did it make it to the floor? I was trying
    to remember, on the Energy Bill. I don't think it did.
        Dr. Orbach. Well, the Senate bill did not make it to the
    floor. The House bill passed.
        What we are doing is that I sent out a letter, actually
    today and tomorrow, to all those who received congressionally
    directed funds in fiscal year 2006 and gave them the
    opportunity to apply through our normal process of peer review
    in fiscal year 2007.
        Senator Allard. Based on ability to do the research?
        Dr. Orbach. Based on the mission of the Department and the
    quality of the research that will be determined through peer
    review.
        Senator Allard. Research institutions in Colorado and
    agencies seem very comfortable with the grant process where
    you're rewarded the grant based on your ability to do the
    research and your proven record of performance. And so, I'm
    very comfortable with that grant process. And, you know, we'll
    be looking at ways with what we can do to make sure we sustain
    the grant process.
        Dr. Orbach. Thank you.
        Senator Allard. Now, as I mentioned, renewable energy and
    energy efficiency are important to me and the chairman has a
    specific interest in that too. How much of your proposed
    funding will be directed to programs that involve research in
    renewable energies and conservation?
        Dr. Orbach. I can give you some specific numbers, but it's
    a very complex calculation. And the reason is that many of our
    research programs support renewable research, but indirectly.
    For example, our light sources for structures for biological
    systems, the Joint Genome Institute. I would prefer to answer
    that for the record, if I could, in detail, but also to go into
    the richness of the way in which we support renewable energy.
    The AEI, the Advanced Energy Initiative, that's one crosscut
    that we've done, is around $700 million. That includes fusion
    energy. And so, part of this depends on how you define
    renewables. And, I would prefer that, so as not to mislead you,
    to give you the numbers for the record, but the numbers in our
    biology and environmental research exceed $100 million in the
    2008 budget, $75 million of which are the three bioenergy
    centers that we'll be funding in fiscal year 2008.
        Senator Allard. Well, I'm interested in how much goes
    toward renewable energy. I assume maybe the chairman of the
    committee might be too. So, I would get those figures to me and
    I think the committee----
        Dr. Orbach. It's a very significant fraction, but I would
    urge you to include the resources that we use for the purposes
    of renewable energy.
        [The information follows:]

       Proposed Funding for Research Programs in Renewable Energies and
                                  Conservation
        The DOE Office of Science supports an enormous range of basic
    scientific research relevant to renewable energy and energy efficiency.
    To convey the full scope of this research and the relevant funding, I
    would like to take a moment to explain the complex process by which
    basic research ultimately informs, shapes, and transforms our energy
    economy by providing new technologies, approaches, and products.
        Basic research differs from applied research in a key respect: in
    basic research there is often no one-to-one correspondence between a
    discovery or breakthrough, on the one hand, and an application, on the
    other. Breakthroughs often lead to multiple applications. Applications
    often rely on multiple breakthroughs. The relationship between the
    explicit goal of a basic research program and its ultimate impact on
    the energy economy may be quite unexpected and surprising.
        For example, as I pointed out in my opening remarks, one of the
    major breakthroughs needed to make intermittent renewable energy
    sources such as solar and wind power part of electrical baseload is a
    major improvement in our methods of electrical storage. A major
    breakthrough in electrical storage would likely change the entire
    technological and economic calculus affecting solar and wind power. It
    could bring solar and wind into their own.
        But, for budget purposes, analysts would not tend to classify
    funding for research in electrical storage as research in renewable
    energy--even though it could have a far more profound effect on the
    technological and commercial viability of these renewables than some of
    the research that is focused more explicitly on solar and wind
    technologies themselves.
        There is a second and related point. Basic research in the physical
    sciences today is critically dependent on advanced facilities and
    instruments. The materials research sponsored by our Basic Energy
    Sciences (BES) program--which has enormous implications for both energy
    efficiency and the development of more effective solar and other
    renewable energy sources--relies on a set of advanced, high-intensity
    light and neutron sources. These light sources--and we own and are
    building the very best in the world--are expensive to create, and a
    large portion of BES's budget goes to the construction and operation of
    these facilities. Yet they provide the critical tools our scientists
    need to push the boundaries in such areas of research. BES's four
    Nanoscale Science Research Centers (soon to become five) provide tools
    that will revolutionize materials, create vast new energy efficiencies
    throughout the economy, and also enable us to overcome at the nanoscale
    many of the barriers that prevent solar and other renewable energy
    sources from being truly efficient. Our Joint Genome Institute (JGI),
    built and operated by our Biological and Environmental Research (BER)
    program, is playing a critical role in the biofuels revolution. JGI is
    using its high-throughput capabilities to sequence the genomes of key
    bioenergy crops such as the poplar tree and key organisms, such as the
    200 microbes in the hindgut of the termite, which hold Nature's secret
    to the super-efficient breakdown of cellulose, a critical step in
    producing cellulosic ethanol.
        Yet if a conventional budget analyst were asked to identify our
    funding for renewable energy and energy efficiency, none of these
    facilities might show up in the analyst's total, because they are not
    classified in that way--even though they are playing a critical role in
    our ability to make progress in these fields.
        A third point is that many of the breakthroughs we achieve in the
    search for more efficient materials and motors, or more effective
    conversion of solar energy to fuels, will have multiple applications
    throughout the economy, improving quality of life for Americans and
    strengthening U.S. global economic competitiveness. The National Energy
    Policy noted that the U.S. economy grew by 126 percent since 1973, but
    energy use increased by only 30 percent. Half to two-thirds of these
    energy savings came from technological improvements throughout the
    American economy, but of course these technological improvements also
    had a major effect on the strength of the U.S. economy and Americans'
    quality of life.
        So I want to encourage the committee to view this basic research
    and its relevance in its totality.
        With that preface, here is a programmatic profile of where our
    transformational basic research relevant to renewable energy and energy
    efficiency is to be found.
        Basic Energy Sciences ($1.5 billion under the fiscal year 2008
    request). BES is our largest ``use-inspired'' energy-related research
    program. Virtually every research program under BES's Materials Science
    and Engineering Division is pursuing research relevant to increased
    efficiency in energy production and use through the development of
    lighter-weight, stronger materials, more efficient engines, and more
    effective transmission and storage of electrical power, to name only a
    few examples. The Chemical Sciences, Geosciences, and Biosciences
    Division is also providing transformational research aimed at
    efficiencies through improved catalysis and combustion. In addition,
    within the BES program, $94.6 million is specifically directed toward
    research in renewable energy, including solar, biomass, hydrogen, and
    wind.
        Biological and Environmental Research (Genomics: GTL Program:
    $154.8 million under the fiscal year 2008 request; Joint Genome
    Institute: $60 million under the fiscal year 2008 request). BER's GTL
    program is devoted to basic research aimed primarily at discoveries
    relevant to renewable energy, providing the Nation's major thrust
    toward basic science breakthroughs leading to the development of cost-
    effective commercially viable cellulosic ethanol and other forms of
    biofuels. GTL is the heir to the Human Genome Project, which the DOE
    Office of Science (then known as Energy Research) initiated in 1986.
    GTL has been applying the major advances in biotechnology that have
    grown out of that monumental effort to the advanced study of microbes
    and plants for energy production, environmental remediation, and carbon
    sequestration. This includes $75 million for the establishment of three
    new Bioenergy Research Centers, for which proposals have been received;
    results of this competition will be announced in June. In addition, as
    mentioned, BER's Joint Genome Institute is playing a critical role by
    providing high throughput sequencing of the plants and microbes for
    biofuels.
        Fusion Energy Sciences (FES) ($427.9 million under the fiscal year
    2008 request). Fusion is not usually classified as a renewable energy
    source, but it offers essentially the same benefits: a theoretically
    almost limitless supply of energy with minimal impact on the
    environment. Fusion holds out the promise of delivering plentiful,
    clean, carbon-free energy using elements that are available in abundant
    quantities on earth with virtually no adverse environmental impact. As
    the planet's consumption of energy rapidly increases, fusion holds out
    one of the most formidable potential solutions to growing global energy
    demand; and, like renewables, fusion will produce energy that is carbon
    dioxide and greenhouse gas free. Side by side with renewables and
    greater energy efficiencies throughout our economy, fusion in all
    likelihood will play a major role in our energy portfolio of the
    future. The request includes $160 million for the U.S. contribution to
    ITER, the major international fusion reactor that the United States has
    joined with the European Union, Japan, China, the Russian Federation,
    South Korea, and India to build, starting this year.
        Advanced Scientific Computing Research (ASCR) (approximately 25
    percent of the $340.2 requested for the program in fiscal year 2008).
    Finally, though the amounts are difficult to quantify because of the
    in-kind nature of the contribution, the Advanced Scientific Computing
    Research program contributes substantially to Office of Science efforts
    on renewable energy, energy efficiency, and fusion energy by providing
    computer time, resources, and technical assistance at its
    supercomputing facilities. ASCR provides a very small amount (a few
    million dollars) of direct support for renewables research but provides
    a significant amount for relevant research (about 25 percent of the
    program) through partnerships with BES, BER, and FES. These
    partnerships include the Fusion Simulation Project, computational
    chemistry, materials simulations, computational biology, and supporting
    efforts in computer science and applied mathematics. In addition, the
    National Energy Research Scientific Computing (NERSC) facility provides
    computing time to researchers supported by the Office of Science. Over
    60 percent of the fiscal year 2007 allocations at NERSC are to BES
    (chemistry, materials, geosciences, and engineering), FES, or BER
    researchers. The ASCR Innovative and Novel Computational Impact on
    Theory and Experiment (INCITE) program provides access and computing
    time to the best research from academe, industry, and government labs
    without regard to source of support. In 2007, nearly half of the INCITE
    projects are in fusion, materials, chemistry, engineering, or biology
    representing over 35 million hours of computer time for research in
    these areas.
        This answer necessarily excludes crucial areas of basic science
    research for which the Office of Science is steward, including climate
    modeling, research toward environmental remediation of DOE sites, and
    fundamental research in nuclear and high energy physics, among others.
    Furthermore, it is reasonable to expect some of the fundamental
    research in nuclear and high energy physics to also have energy
    implications, but on a much longer time scale. This very fundamental
    research provides the broader scientific foundation for our ``use-
    inspired'' basic research related to energy.

        Senator Allard. That would be fine.
        Dr. Orbach. Good.
        Senator Allard. Thank you, Mr. Chairman.
        Senator Dorgan. Senator Murray.

                                300 AREA AT PNNL

        Senator Murray. Thank you, Mr. Chairman. And, we'd love to
    have you come out and visit PNNL and see some of those great
    research projects. It really is amazing what they're doing.
    And, going back to my questioning. You know that the
    replacement of the 300 Area is top priority for PNNL, and as I
    said, it's apparently hung up over this third party financing
    that OMB is demanding. If you can share with this committee how
    you're dealing with that, I would really appreciate it.
        Dr. Orbach. Well, it's important to us too. What we have
    done, and thanks to you for the help you have given us in
    fiscal year 2007, is to steer $10 million in 2007, which would
    complete the $20 million that fits the profile for the physical
    sciences facility and the 325 building. The replacement process
    is a package and it relies on the third party financing of two
    buildings. We have worked very closely with the laboratory and
    we believe we now have a package that will meet the
    requirements for third party financing. We have had to take
    into account market prices. It's really a good value for the
    taxpayer and we believe that we now have a package which the
    taxpayer will find valuable.
        Senator Murray. And will OMB approve it?
        Dr. Orbach. We will be submitting it to OMB. We hope to
    have final release from our department by the end of this week
    and then submit it to OMB. We have an understanding with them
    that within a month we will get a response. So that we can
    release those funds, hopefully, by the end of April or
    beginning of May.
        Senator Murray. Okay. Do you have a contingency plan if
    they say no?
        Dr. Orbach. We would probably go back to the drawing board
    and try and fix the third party financing. We think this will
    work, but third party financing of two parts is essential to
    successful departure from the 300 Area. And, I'd hate to give
    them up. We have both a biology and a computational facility.
    PNNL's role in computation is going to be very important in the
    future and that building is a stand alone building, which
    primarily will be Department of Homeland Security, large data
    sets. I think that's essential for the future of the
    laboratory. So, I'm going to do the best I can to get those
    third party packages approved.
        Senator Murray. Okay. Well, so within 1 month we should
    hear from OMB on----
        Dr. Orbach. Yes. My best estimate is that it will leave the
    Department, hopefully, by the end of this week and then we have
    an understanding with OMB that we'll get a response within
    roughly 1 month.
        Senator Murray. Well, there are two other Federal partners,
    NNSA and DHS, DHS you mentioned. Neither of them have any funds
    in the fiscal year 2008 budget request, and I was told that if
    funds were added by Congress to the Department of Homeland
    Security budget in 2007, which I was able to do, that they
    would include funds in 2008. We added $2 million, yet there are
    no funds in the budget request. Are you working with NNSA and
    DHS to ensure adequate funds are included?
        Dr. Orbach. Yes. We're working very closely with them. We
    have an MOU that you're aware of. The funding in 2007 has $7.9
    million from NNSA and $2 million from DHS in addition to our
    $10 million. The $2 million is set, so is the $7.9 million, so
    I think we can deliver on the 2007 committment. We're sort of
    taking one year at a time. In 2008, for the reasons you
    understand----
        Senator Murray. They did not include any money in the 2008
    request.
        Dr. Orbach. Yes. I have spoken with Admiral Cohen about
    that and we hope that some resolution will be found.
        Senator Murray. Will be found. Okay, that's not a very
    definitive answer. I hope that as a steward of the PNNL and all
    the laboratories that you really take a leadership role and
    push them in coming together with us on that.
        Dr. Orbach. I will promise you that. I have been doing it
    and I will continue to do that.

                                  5-YEAR PLAN

        Senator Murray. Okay. I also was disconcerted that the 5-
    year plan made no mention of this project either. And I was
    curious if this is a priority and we're all moving toward, why
    it wasn't part of the 5-year plan?
        Dr. Orbach. Well, the 5-year plan came to us at a bizarre
    time. We didn't have a 2007 budget and we were trying to put
    together the 5-year plan. So we didn't know how the 2007 budget
    would fit into the 2008 and then, from then on. It's not a one-
    year-at-a-time, but a continuum. And, frankly, we had no time
    to go through the review process with OMB that we normally
    would in a 5-year plan. So, what you have, as you noted, is
    really just a simple extrapolation of the 2008 budget out for 5
    years on a proportional basis. It's not a 5-year plan, it's
    2008----
        Senator Murray. It's a budget based on current numbers and
    it's not a plan.
        Dr. Orbach. That's correct. It's based on the President's
    request for 2008 and then extrapolated out.
        Senator Murray. It's disconcerting to see that because we
    need that kind of leadership in the 5-year plan to make sure
    we're all----
        Dr. Orbach. Absolutely, and in the previous year, in fiscal
    year 2007, we had a 2006 budget so we could put a 5-year plan
    together. But, the budget process this year just didn't give us
    the opportunity to do that.
        Senator Murray. Thank you, Mr. Chairman.
        [The statement follows:]

                   Prepared Statement of Senator Patty Murray

        Thank you Chairman Dorgan for holding this hearing today and giving
    us the opportunity to discuss these important DOE programs.
        I'm very pleased the Administration is continuing to increase
    funding for basic and physical sciences. It is vital to build robust
    research and development budgets and to maintain a healthy level of
    investment in our national laboratory system in order to attract the
    best and brightest minds in the sciences.
        If the United States is to remain on the cutting edge of research
    and development, the work of the Office of Science is a resource we can
    not afford to under fund. As a long time advocate of increased funding
    for the Office of Science, I'm pleased to see the administration has
    requested $4.4 billion for fiscal year 2008. These investments are
    necessary to keep us on track as leaders in discovery and technology
    advancements.
        I also take great pleasure in representing one of our national
    laboratories. The Pacific Northwest National Laboratory does cutting
    edge work that is an integral part of the future growth of Washington
    State and our Nation. It's important to make full use of all our
    resources to advance science, and the national lab system should play a
    key role.
        One critical project the PNNL has been working on in Washington
    State is the capability replacement project. I look forward to getting
    the opportunity to ask you several questions on that project shortly
    and other matters vital to the Hanford cleanup project.
        Thank you for coming today to testify, Dr. Orbach.

        Senator Dorgan. Senator Murray, thank you very much.

                                RENEWABLE ENERGY

         Secretary Orbach, my colleague Senator Allard is
    absolutely correct that many of us will be interested in the
    issue of renewable energy and the work that you're doing in
    those areas and will want to keep abreast of the relationship
    with the other parts of the Energy Department that are doing
    research in those areas as well.
        Senator Domenici, did you have additional questions?
        Senator Domenici. Mr. Chairman, I believe that if we do,
    and I would prefer to submit them through my staff to the
    Secretary if you don't mind and then back to the committee. I
    would wrap it up from my standpoint by saying, while your
    office has been kind of put in the limelight, by the
    President's remarks in his State of the Union Address and some
    that followed. For many of us, we now know that you have a very
    broad charter. You are not limited to one thing or another. You
    have a very broad base of activities that come within your
    jurisdiction and in your power. And, I hope, and from what I
    can see, I think I'm right, that our chairman is going to be
    looking for places where we can make a real contribution to
    America's energy unpreparedness, in terms of our being too
    heavily committed and too big a user of petroleum products for
    our lifestyle, which carries with it significant negative
    baggage. And, you have been given an opportunity to do, to lead
    a research effort in a number of areas to change that situation
    that exists and is not doing us a bit of good as a people.
        That's a fun situation to be in, if in fact you are given
    some tools.
        Dr. Orbach. Senator, thank you. We have an opportunity here
    that I think we have not had before. The scientific community
    understands exactly your words and has made decisions, personal
    decisions to get involved in energy research. What we are going
    to do is the best basic research in the world that, as I said
    in my opening remarks, will make renewables contribute in a
    significant fashion, not at the 1 and 2 percent, but at the 30
    percent level in our economy.
        Senator Domenici. That's your goal, you say.
        Dr. Orbach. Yes.

                          MAJOR CONSTRUCTION PROJECTS

        Senator Dorgan. Secretary Orbach, I too am going to send
    you a list of questions and I'm interested in visiting some of
    the laboratories and to try to see some of the work, visit with
    the scientists, and so on. It must be almost nirvana to be able
    to hire scientists to operate a department like yours and just
    inquire what's happening in the universe. So, I imagine that
    you have some unbelievably bright staff, some of America's
    best, working on some breathtaking scientific projects. I'm
    also going to be asking our staff here to do some visits to the
    laboratories and will keep in close touch with you.
        I want to ask, you don't have any major construction
    projects in your 2008 budget request, but we know of course
    that you have several projects envisioned in the longer term.
    The International Linear Collider, the ITER and the National
    Synchrotron Light Source II, apparently. Do you have the out-
    year cost estimates for these projects? How confident are you
    in the estimates? Will you be able to accommodate, you think,
    in future budgets, large construction projects? Are these
    projects or other projects, in your 20-year facilities plan or
    is that 20-year facilities plan being modified to accomplish
    these projects? So, these are, I'll let you answer that
    question, but these are the kind of questions we're also going
    to submit to you because we want to work with you to make sure
    that you have a funding plan for the longer term, not just
    2008, a funding plan that works.
        Dr. Orbach. Yes, actually, we take pride in that. The
    Spallation Neutron Source was just finished last year. It was
    $1.4 billion. It came in slightly under budget and slightly
    ahead of schedule. Project management is very, very serious to
    us. In terms of ITER, we can give you the explicit numbers out
    to 2014 when the construction is intended to end. And, we have
    been the primary driver for project management in the ITER
    construction process.
        Senator Dorgan. What does ITER look like physically?
        Dr. Orbach. It's huge. It's about eight stories high. It
    looks like a donut. It's a way of containing a fusion plasma at
    200 million degrees of sufficient density to generate half a
    gigawatt of power. So, it's a big donut. If you imagine a donut
    and you put your hand in the middle and open up your fingers,
    you have a d-like cross section, and that's now thought to be
    the appropriate geometry for stability of these plasmas at
    these huge temperatures. It will burn deuterium and tritium.
    These are two isotopes of hydrogen. It's the way the sun works.
    And, they will produce nothing but energy and helium gas. It's
    completely benign.
        Senator Dorgan. You know, Secretary Orbach, your
    personality changes when I ask you a question that allows you
    to provide an answer you know I won't understand.
        Dr. Orbach. I'm sorry. I think----

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Dorgan. But, let me tell you something. I hope I
    speak for Senator Domenici as well. If he understood all that,
    then I'm in serious trouble as a chairman. We really are very
    interested in these things and interested in what our
    scientists are doing. And, I asked the question to elicit your
    response. I hope that our subcommittee, all of the members of
    our subcommittee will be interested in working with you on
    these really fascinating projects.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                Questions Submitted by Senator Dianne Feinstein

                     BIOLOGICAL AND ENVIRONMENTAL RESEARCH

        Question. The Department of Energy's Office of Biological and
    Environmental Research (DOE-OBER) has a robust program for monitoring
    carbon cycles on land, but does not address ocean carbon. DOE
    traditionally has not examined ocean acidification in the context of
    global warming. Increases in atmospheric carbon dioxide make the ocean
    more acidic, and ocean acidification has a large impact on global
    carbon cycles. Please answer the following questions:
        Do you believe that monitoring of oceanic carbon cycles is within
    the scope of the Office of Biological and Environmental Research?
        Answer. The uptake of carbon dioxide by the ocean has a chemically
    well-understood effect on the acidity of ocean water. Since the
    industrial revolution, the pH of the ocean has been reduced slightly.
    This fact was brought to the attention of the scientific community in
    part through global ocean carbon cycle modeling carried out at DOE
    laboratories, with the support of the Biological and Environmental
    Research (BER) program. Changes in ocean pH may have an effect on the
    ocean carbon cycle in the future, and the BER climate modeling program
    will attempt to account for those effects in the development of the
    coupled climate-carbon cycle models supported by the program. The BER
    climate change research program conducts basic research and develops
    advanced climate modeling. Supported research includes studying the
    effects of climate change on important terrestrial ecosystems, but does
    not include environmental monitoring. Monitoring of the oceanic carbon
    cycle is outside the present scope of BER; however, it is supported by
    other Federal agency partners in the Climate Change Science Program
    (CCSP), including the National Oceanic and Atmospheric Administration
    (NOAA) and the National Science Foundation (NSF).
        Question. If so, how much of the 17 percent increase in funding
    provided by the President's fiscal year 2008 budget would be needed to
    initiate such a program? Is more funding needed? If so, how much?
        Answer. As stated above, environmental monitoring is outside the
    scope of the BER basic research program. Monitoring of ocean carbon
    cycles is supported by other Federal agencies.
        Question. If not, how can other Federal agencies best take
    advantage of DOE's expertise in this realm? What types of programs do
    you envision where the Office of Biological and Environmental Research
    provides important support to this national need?
        Answer. One of the most robust methods of studying the carbon cycle
    of the entire ocean, and the chemistry of ocean water, including its
    acidity, is through detailed, three-dimensional models of the
    biogeochemistry of the ocean. When such a model is coupled to a model
    of the atmosphere, uptake of atmospheric carbon dioxide by the ocean is
    accounted for. This approach is central to the BER climate modeling
    program, which includes leading-edge three-dimensional modeling of the
    coupled atmosphere-ocean system. Other Federal agencies can best take
    advantage of DOE's expertise in this realm by communicating their
    process research results to the modeling teams so that the models
    account for the most up-to-date scientific results.
        Question. The Department of Energy's Office of Biological and
    Environmental Research (DOE-OBER) has developed unique capabilities to
    monitor and predict chemical and physical interactions between fluids
    and subsurface environments. This capability is essential to
    understanding the behavior of carbon dioxide in the deep subsurface;
    and the application of this knowledge to the permitting and monitoring
    of carbon sequestration sites. Please answer the following questions:
        In addition to technology development, what efforts are you making
    to improve our scientific understanding of the behavior of carbon
    dioxide at potential sites for geologic carbon sequestration?
        Answer. Within the Office of Science, the Basic Energy Sciences
    (BES), Biological and Environmental Research (BER), and Advanced
    Scientific Computing Research (ASCR) programs support research that
    underpins efforts to understand the behavior of carbon dioxide
    sequestered in deep geological formations. BES-supported research
    focuses on areas where improved understanding is needed to evaluate the
    potential for deep underground sequestration, including understanding
    the mechanical stability of porous and fractured reservoirs/aquifers,
    understanding multiphase fluid flow within the aquifers, and
    understanding the geochemical reactivity within the reservoirs/
    aquifers. BER supports research towards the development of methods or
    strategies to enhance carbon sequestration in long-term stable forms in
    plants and soils. This research includes the development of functional
    genomic, genetic, and proteomic approaches that may lead to improved
    biomass systems for carbon fixation and sequestration. ASCR leads the
    development of high-performance computers for related scientific
    applications and supports research in multiscale mathematics and
    computation science needed to develop optimal codes for modeling
    complex systems such as subsurface biogeochemical processes. ASCR has
    also partnered with BER to support research on groundwater reactive
    transport modeling and simulation through the Scientific Discovery
    through Advanced Computing (SciDAC) program.
        Additionally, the Office of Science has led a series of workshops
    that engaged the broader scientific community to identify the
    challenges associated with terrestrial and subsurface geological carbon
    sequestration and promising research areas that, if pursued, could lead
    to further understanding of related biochemical and geochemical
    processes and enable the development of long-term sequestration
    technology options. More information on these workshops can be found in
    the subsequent reports: ``GTL: Genomics Roadmap--Systems Biology for
    Energy and Environment,'' August 2005 (http://genomicsgtl.energy.gov/
    roadmap); the Basic Research Needs for Geosciences: Facilitating 21st
    Century Energy Systems workshop held in February 2007, (report to be
    released soon); and Computational Subsurface Sciences Workshop, held in
    January 2007 (http://subsurface2007.labworks.org/report/).
        Question. At the current level of investment, how long before we
    have sufficient scientific knowledge to begin permitting various sites
    around the country in the near future?
        Answer. Sufficient scientific understanding currently exists to
    support planned large-scale demonstrations of carbon sequestration in
    depleted oil and gas reservoirs. Only after these large-scale
    demonstrations are conducted will there be sufficient understanding of
    the long-term stability and environmental impacts of geological storage
    of carbon dioxide in such reservoirs. DOE's Office of Fossil Energy is
    pursuing this applied research and development path. Knowledge about
    deep saline aquifers is far less extensive, and many substantial issues
    need to be addressed through research and demonstration before it will
    be possible to permit sequestration in saline aquifers at a commercial
    scale.
        Question. In addition to current efforts in carbon capture and
    sequestration technology; what additional programs are needed to
    develop carbon sequestration science to the point where we can safely
    permit and monitor sequestration sites? How much additional funding is
    needed to implement these programs?
        Answer. The Office of Science, in coordination with the Office of
    Fossil Energy, is supporting a range of basic research activities that
    will provide a sound scientific basis for carbon sequestration. Such
    research includes the study of geophysical imaging methods needed to
    measure and monitor below-ground reservoirs of carbon dioxide resulting
    from geological sequestration, multiscale modeling to understand and
    visualize saline aquifers and other geological reservoirs, and studies
    to enhance long-term sequestration processes and the stability of
    stored carbon in terrestrial vegetation and soils. The recent Office of
    Science-led workshops on Basic Research Needs for Geosciences:
    Facilitating 21st Century Energy Systems, February 2007, and
    Computational Subsurface Sciences Workshop, January 2007, identified
    priority research areas needed to develop carbon sequestration science.
    The results of these workshops will help inform ongoing research
    planning and future budget requests.
        Question. In fiscal year 2007, some compromises had to be made for
    new facility construction and for user facility operations in the
    synchrotron radiation/photon science area. How do you see the fiscal
    year 2008 budget addressing the objective of maintaining the on-time,
    on-budget completion of major construction projects and also achieving
    a level of funding for facility operations which is needed to ensure
    scientific accomplishment commensurate with the large investments that
    have been made in major scientific user facilities?
        Answer. To support users and to maintain the facilities and
    instruments, the fiscal year 2008 budget funds facility operations
    generally at or near optimal levels, with the exception of Fusion
    Energy Sciences facilities, which would be operated at about half of
    optimal levels as part of a balanced fusion program, consistent with
    the fiscal year 2007 request and fiscal year 2006 appropriation. The
    fiscal year 2008 budget provides funding for the major construction
    projects and major items of equipment at a level that assumes full
    funding of construction in fiscal year 2007; i.e., the fiscal year 2008
    budget was submitted to Congress prior to passage of the final fiscal
    year 2007 appropriation. Therefore, impacts on construction projects
    from the fiscal year 2007 appropriation are not addressed in the fiscal
    year 2008 budget.
        Question. California is, and has been an R&D leader, contributing
    greatly to the U.S. economy through its scientific and technical
    talent. The challenge is sustaining this talent with increasing
    pressures on the Federal budget. The Nation needs to leverage its
    investments across agencies and throughout the U.S. scientific
    enterprise to effectively and synergistically apply its world-class R&D
    capabilities. I am interested in how the DOE plans to leverage the
    investments and accomplishments of the NNSA complex, such as its
    tremendous supercomputing capability and the fusion capability of the
    National Ignition Facility, to support our civilian science programs?
    Will you and the Office of Science be able to reap benefits from the
    investments made to develop NNSA's scientific capabilities to support
    DOE's national security mission? How do you plan to leverage the
    capabilities at universities, Office of Science laboratories, and the
    NNSA laboratories to capitalize on the strengths and capabilities
    across the DOE complex?
        Answer. The Office of Science (SC) utilizes investments made by
    NNSA in the field of High Energy Density Physics (HEDP) as well as in
    high-performance computing in a number of ways.
        Increased cooperation between these two programs will have benefits
    for both. The NNSA HEDP infrastructure, represented by facilities such
    as the National Ignition Facility (NIF) in California, OMEGA at the
    University of Rochester, and the Z-Pinch at Sandia, are all used by SC
    funded researchers to advance the field of High Energy Density
    Laboratory Plasmas (HEDLP), which is a subset of HEDP. These facilities
    will be used by SC to perform research on extreme states of matter, for
    example, simulating in a laboratory physical properties of phenomena
    that once could only be viewed from afar by telescope. These facilities
    may also serve to move forward research on inertial fusion energy.
        Many of the facilities that NNSA uses for stockpile stewardship,
    including Z-Pinch, Omega, and NIF (which will begin operations in
    2010), can be used for both national security and energy-related HEDP
    research. The joint NNSA-SC Fusion Energy Sciences (FES) HEDLP program
    is currently being put together. A workshop to consider integration of
    NNSA and FES program elements is planned for May 2007. Details of the
    joint HEDLP program are contained in the DOE NNSA and SC fiscal year
    2008 President's Budget Request narratives.
        In the area of computation, there has been a high level of
    collaboration to advance the state-of-the art in computation. NNSA is a
    world leader in mission-driven computation for its stockpile
    stewardship program. SC laboratories have assisted in the development
    of software codes, for instance, and have also benefited from NNSA's
    experience in running machines like Cray's Red Storm and the IBM
    BlueGene/L.
        Researchers from NNSA and SC labs as well as university researchers
    are already reaping benefits from the array of facilities within the
    DOE complex. We are examining ways to increase collaboration with NNSA
    facilities without compromising national security or NNSA's mission. We
    expect this collaboration to develop further and help keep the United
    States at the forefront of many areas of physical science.
                                     ______

                Questions Submitted by Senator Pete V. Domenici

                      LOW DOSE RADIATION EFFECTS RESEARCH

        Question. Dr. Orbach, you and I have worked on understanding the
    effects of low dose radiation for some time. It appears that the
    science indicates that the linear no-threshold model theory does not
    hold up scientifically.
        Can you tell me what the conclusions of the Department's research
    indicate and when you will complete this evaluation?
        Answer. Until recently, biophysical models of response to radiation
    exposure have assumed independent action of ionization events in cells
    and tissues. The models assume that the single cell is the unit of
    function. The models also assume that every ionization event increases
    the probability of DNA breaks. Together, these physical/biological
    assumptions supported linear, no-threshold models of radiation risk and
    cancer. Historically, measurements of initial radiation damage such as
    cell death, chromosome aberrations, or micronuclei formation in
    cellular systems showed a fairly linear response with dose, but these
    experiments seldom encompassed the lower doses of interest.
        New research from DOE's Low Dose Program directly challenges the
    old fundamental assumptions. The new findings provide compelling
    evidence that ionization events in cells and tissues are not completely
    independent and that tissues have surveillance mechanisms that
    dramatically affect the development of cancer and the behavior of
    cancer cells. The research is establishing the importance of studying a
    tissue's biological response to an exposure, rather than studying just
    the initial events within an individual cell.
        This new research includes recent studies that highlight biological
    signaling between irradiated cells and nearby non-irradiated cells.
    This crosstalk cannot be explained with the older biophysical
    paradigms, which assume that the single cell is the unit of function.
    These data also show that cells within a tissue are not independent of
    each other in a multi-cellular organism. Indeed, the signaling from
    non-irradiated cells can actually eliminate damaged cells from a
    tissue. These and other results are consistent with the conclusions of
    the recent French National Academy Report ``Dose-effect Relationships
    and Estimation of the Carcinogenic Effects of Low Doses of Ionizing
    Radiation'' (March 2005).
        We believe that investments being made to study the effects of low
    doses of radiation in 3 dimensional tissues, a significant advance over
    traditional isolated cell approaches, will provide substantial results
    in the next 3 to 5 years. Research to understand the variability and
    genetic susceptibility of individuals to low doses of radiation is much
    more difficult but will have significant payoffs in 5 to 7 years.
        Question. How will you work to see that this information is used to
    make informed decisions about environmental and worker safety?
        Answer. In addition to verifying and expanding research findings,
    we are working to communicate the new biological paradigms to the
    larger scientific communities in the United States and around the
    world. We feel that the quickest and most appropriate route to
    establish the need for reconsideration of risk estimate models is to
    gain understanding and acceptance from the scientific community first,
    while informing the regulating agencies and the general public along
    the way.
        The growing body of research from the Low Dose Program now provides
    a scientific basis for reconsideration of models used to set regulatory
    standards. The Low Dose Program is supporting research to help in the
    development of new mechanistic models that would incorporate all
    aspects of radiation biology, from cellular and molecular actions
    within tissues, to the evolution of cancer as a multi-cellular disease.
    Ongoing research in the Low Dose Program and advances in systems
    biology hold promise in providing this modeling framework, which can
    facilitate moving new biological paradigms into the regulatory process.

                       SCIENTIFIC INTERACTION WITH CHINA

        Question. I have been talking for quite some time about the need
    for a U.S. global climate change policy that incorporates all world
    economies, including the developing world. The foundation of our
    success will be the development of affordable technologies.
        Today, the United States is the largest emitter of greenhouse
    gases, but China will soon overtake us in this regard. I believe it is
    critical that we engage China as a partner in our efforts to curb
    reductions in greenhouse gases. We need to launch a serious, ambitious
    effort to reduce greenhouse gas emissions in both of our nations
    through technology deployment and other coordinated efforts.
        Please tell me about the current collaborative efforts between the
    United States and China to advance technologies that will reduce
    greenhouse gas emissions, including any bilateral R&D programs.
        Answer. The fossil energy protocol is a bilateral agreement on
    energy technology cooperation that has a goal of reducing the impact of
    China's growing demand on global hydrocarbon markets; some of the
    activities in the Protocol relate to modeling and technologies for
    control of greenhouse gas emissions in China. Additionally, both China
    and the United States are charter members of the Carbon Sequestration
    Leadership Forum (CSLF), which is an international climate change
    initiative focused on development of improved cost-effective
    technologies for the separation and capture of carbon dioxide for its
    transport and long-term safe storage. The United States and China are
    co-sponsors of a CSLF-recognized project for ``Regional Opportunities
    for CO2 Capture and Storage in China''.
        Question. Can you please tell me what additional steps this
    administration plans to take to address this important issue?
        Answer. The fossil energy protocol was renewed in 2006 for an
    additional 5 years.

               WORKFORCE DEVELOPMENT FOR TEACHERS AND SCIENTISTS

        Question. I am pleased to see that the fiscal year 2008 budget
    request would increase this account to $11 million, an increase of 57
    percent over the operating plan for fiscal year 2007.
        I believe the Department of Energy can make an important
    contribution to the quality of math and science teaching in this
    country, which is so critical to our Nation's continued economic
    competitiveness.
        I understand that the Department is developing a strategic plan for
    the scale-up of its activities in this area.
        Could you describe the main elements you are including in this
    strategic plan?
        Answer. A strategic plan is being developed in the Office of
    Science for its Office of Workforce Development for Teachers and
    Scientists (WDTS). It is not a Departmental-wide blueprint for this
    program area. As the strategic plan is under development, I regret that
    I am unable to provide a substantive answer to your question at this
    time. As to a ``scale-up'' of our activities, I point you to
    recommendation number five of the just-released interagency Academic
    Competitiveness Council report (located at http://www.ed.gov/about/
    inits/ed/competitiveness/acc-mathscience/index.html), which states that
    ``funding for Federal STEM education programs designed to improve STEM
    education outcomes should not increase unless a plan for rigorous,
    independent evaluation is in place, appropriate to the types of
    activities funded.'' We have begun working with the other members of
    the Council under the auspices of the National Science and Technology
    Council to implement the recommendation in this report. Overall, the
    fiscal year 2008 request to Congress of $11.0 million is an increase of
    38 percent over the fiscal year 2007 appropriated level of $8.0
    million.
        Question. How will you ensure that the expanded program will
    include the widest possible cross-section of our Nation's educational
    system?
        Answer. In January 2007, WDTS held a series of 9 focus groups
    designed to gather advice and information from a very wide cross-
    section of STEM education leaders from universities, educational
    associations, under-represented populations, the private sector, other
    Federal agencies, and other groups. These entities remain part of the
    planning process for WDTS and will help ensure that the program
    includes the widest possible cross-section of participants from our
    Nation's educational system.

                          HIGH ENERGY DENSITY PHYSICS

        Question. Dr. Orbach, as you are aware, this subcommittee has
    carried language in the fiscal year 2006 and draft fiscal year 2007
    bill directing the Department to integrate the Federal research in High
    Energy Density Physics among DOE's Office of Science and the NNSA and
    other Federal agencies.
        I want to thank you for supporting the multi agency effort to
    establish the High Energy Density Laboratory Plasmas program, including
    the establishment of a multi agency advisory group to oversee the
    establishment of research priorities and goals.
        One objective of my proposal was to expand the use of critical NNSA
    facilities such as the Z machine for non weapons research.
        What is the DOE's plan to maintain the United State's leadership in
    this area of science?
        Answer. As part of the new joint program on High Energy Density
    Laboratory Plasmas (HEDLP), SC and NNSA are initiating a series of
    focused workshops to engage the research community in identifying
    promising research opportunities that merit increased investment as the
    joint program is implemented. The first workshop is scheduled for this
    May. These workshops will examine the use of NNSA facilities for world-
    class HEDLP science. The workshops will be used to guide development of
    new research efforts in fiscal year 2009, which will be competitively
    solicited and peer reviewed, to ensure top-quality science for this
    investment.
        Question. Has the Department included any funding for this
    scientific research as a joint program? If not, why not?
        Answer. Funding will be provided from existing support for HEDLP
    within SC's Fusion Energy Sciences (FES) program and NNSA in fiscal
    year 2008. As the program matures, it is expected to compete for
    funding against the other programs in SC and NNSA.
        Question. What is the Department's plan for stewardship of this
    important area of scientific research?
        Answer. HEDLP will be nurtured under the joint program by NNSA and
    FES to steward this emerging field of physics. DOE plans to establish a
    new advisory committee to give technical advice and help develop a
    scientific roadmap for the joint program.

                      INTEGRATION OF SCIENCE AND THE NNSA

        Question. With passage of the Energy Policy Act of 2005, your
    position has been elevated to the Under Secretary level. In this
    position, you now have responsibility for setting the scientific agenda
    for both the Office of Science labs as well as integrating the
    capabilities of the NNSA facilities, which have tremendous scientific
    capabilities and facilities. This budget is the first year that you
    would have had to integrate the research at all labs.
        How has this budget request changed to integrate research of NNSA
    and Office of Science facilities?
        Answer. The Office of Science (SC) and NNSA have always had a high
    level of collaboration in a number of areas, including high-performance
    computing and high-energy density physics (HEDP). These collaborations
    are being expanded, and new areas are currently being added. I think
    the key to any collaboration is to take advantage of both NNSA and SC
    strengths. Increased cooperation between these two programs will have
    benefits for both.
        In the area of computation, there has been a high level of
    collaboration to advance the state-of-the-art in computation. NNSA is a
    world leader in mission-driven computation for its stockpile
    stewardship program. SC laboratories have assisted in the development
    of software codes, for instance, and in turn have benefited from NNSA's
    experience in running machines such as Cray's Red Storm and the IBM
    BlueGene/L.
        Many of the facilities NNSA uses for stockpile stewardship,
    including Z-Pinch, Omega, and the National Ignition Facility (which
    will begin operations in 2010) can be used for HEDP and energy-related
    HEDP research. The joint NNSA-SC Fusion Energy Sciences (FES) program
    in High Energy Density Laboratory Plasmas (HEDLP) is currently being
    put together. A workshop to consider the integration of NNSA and FES
    program elements is planned for May 2007. Details of the joint HEDLP
    program are contained in the NNSA and SC fiscal year 2008 President's
    Budget Request narratives.
        Question. Which NNSA research facilities do you believe offer the
    best opportunity to support the Science research priorities?
        Answer. There are a number of ongoing collaborations between NNSA
    in computation and HEDLP. With the start of the joint program in HEDLP,
    and the workshop planned for May, we expect to learn more about how to
    maximize the potential for collaboration. At a minimum, I expect this
    cooperation will improve the effectiveness of both programs' missions
    and use of facilities.

                           HIGH PERFORMANCE COMPUTING

        Question. High Performance Computing developed by the NNSA to
    support the weapons stockpile stewardship program, and the research
    within the Office of Science has enabled breakthrough advances in
    science and engineering in the United States. These advances contribute
    to the Nation's economic competitiveness. Even today, industry looks to
    the Department to define future computing architecture and code
    development.
        What is the DOE long term strategy to keep the Nation at the
    forefront of High Performance Computing?
        Answer. As a partner in the President's American Competitiveness
    Initiative, we are committed to keeping America at the forefront of
    High Performance Computing (HPC) and the computational sciences. The
    first petascale computer resource for open science will be operating at
    the Leadership Computing Facility (LCF) at Oak Ridge National
    Laboratory in late 2008. Experts expect that, for at least the next
    decade, chip transistor counts will continue to follow Moore's law, but
    fundamental physics will significantly limit chip speeds. Consequently,
    increased parallelism will be essential for continued chip performance
    improvement, and increased transistor counts will allow radical
    departures from traditional CPU designs. To prepare for future systems,
    we are partnering with the National Nuclear Security Administration
    (NNSA), the Defense Advanced Research Projects Agency (DARPA), and the
    National Security Agency (NSA) through the High Productivity Computer
    Systems program to foster development of the next generation of
    hardware. Further, SC and NNSA have entered into a research contract
    with IBM to develop the next generation of the IBM Blue Gene.
        In addition, we will redirect a portion of our computer science
    research portfolio to address major obstacles constraining the ability
    of a broad range of computational scientists to use petascale computers
    effectively in areas important to DOE missions. Also, our Scientific
    Discovery through Advanced Computing (SciDAC) program has created a
    powerful, integrated research environment for advancing scientific
    understanding through modeling and simulation. Through SciDAC, applied
    mathematicians, computer scientists and computational scientists are
    working in teams to create the comprehensive, scientific computing
    software infrastructure needed to enable scientific discovery in the
    physical, biological, and environmental sciences at the petascale and
    to develop efficient and scalable data management and knowledge
    discovery tools for large data sets. Further, SciDAC-2 expanded the
    original program by collaborating with the NNSA and the National
    Science Foundation as new funding partners.
        Finally, we will continue the successful Computational Science
    Graduate Fellowship with NNSA to develop the next generation of
    computational science leaders.
        Question. What is the DOE doing to establish a R&D roadmap with
    industry and labs to support long term research of advanced computing
    architecture concepts, algorithms, and software in order to meet the
    next technological changes?
        Answer. The 2004 report of the Federal High-End Computing
    Revitalization Task Force (HECRTF) coordinated by the National Science
    and Technology Council (NSTC) established the R&D roadmap, which we are
    actively pursuing through government-wide interagency working groups.
    Both the Office of Science (SC) and NNSA are formal mission partners in
    Phase III of the DARPA High Productivity Computing Systems (HPCS)
    research program. Phase III of the HPCS program is focused on the
    generation of HPC systems that will be available from Cray and IBM in
    the 2011 timeframe. In addition, both SC and NNSA will participate in
    an NSA workshop which is intended to bring together key experts across
    related interdisciplinary fields to consider and define the
    opportunities and challenges in six technical thrusts for improving
    power efficiency, chip input/output (I/O), interconnect, resilience,
    productivity, and file system I/O.
        The long term architectural strategy for system vendors is in a
    period of significant change. Both SC and NNSA are working with vendors
    to help them better understand our mission needs. Examples include
    working with Cray on its XMT multithreaded architecture and with IBM on
    the Road Runner architecture and the design of the next generation of
    the Blue Gene architecture.
        SC and NNSA continue to work together in the area of HPC software
    environments. A recent example is SC participation in the NNSA workshop
    on its TriLab L2 petascale user environment milestone that was held
    after the 2007 Advanced Simulation and Computing principal investigator
    meeting. As a next step, SC and NNSA are co-sponsoring a workshop on
    petascale tools in Washington, DC this August. Results from this
    workshop will inform SC funding plans in petascale tool research to
    meet both SC and NNSA needs.

        INTEGRATION OF HIGH PERFORMANCE COMPUTING AMONG SCIENCE AND NNSA

        Question. Both the DOE/Office of Science (SC) and NNSA have
    national High Performance Computing programs for their respective
    missions. Both offices support acquisition plans with decidedly
    different goals. The Office of Science seeks to expand computing
    capacity to other labs, while the NNSA is seeking to reduce the number
    of labs with High Performance Computing from 3 to 2 labs.
        What is the plan within DOE to acquire new high performance
    computing platforms and how is it integrated and coordinated between
    the Office of Science and the NNSA?
        Answer. To support open scientific discovery, we must maintain our
    balanced high performance computing (HPC) resources portfolio that
    includes two types of HPC facilities. In the case of the National
    Energy Research Scientific Computing (NERSC) Center, we have
    established a mission-critical high performance production computing
    center. NERSC provides HPC resources for open science to support the
    needs of the Office of Science program offices. Currently, NERSC
    supports over 400 projects with 2,500 users and is predominately
    characterized by capacity computing. Within the current NERSC funding
    profile we have established a stable 3-year upgrade cycle which is
    consistent with the life cycle of HPC production resources.
        The second priority in our ``Facilities for the Future of Science:
    A Twenty Year Outlook'' is establishment of HPC capability computing
    facilities. In contrast to NERSC, which supports thousands of users
    with small allocations of time, the high performance computing
    resources at the Leadership Computing Facilities (LCFs) at Oak Ridge
    and Argonne provide large allocations to a small number of projects
    with the potential for breakthrough scientific impact. Because access
    to capability computing is so important to our national
    competitiveness, we have made the HPC resources at the LCFs available
    to the open scientific community, including industry, through the
    Innovative and Novel Computational Impact on Theory and Experiment
    (INCITE) program. Over the past 3 years we have focused our efforts on
    establishing capability computing centers to provide a variety of HPC
    resources for open science.
        In 2003, we signed a memorandum of understanding with NNSA to
    establish a framework for planning and coordinating research,
    development, engineering, and test and evaluation activities related to
    high-end technical computing. The acquisition of both the Red Storm
    (Cray XT3) computer at the LCF at Oak Ridge National Laboratory and the
    proposed IBM Blue Gene/P at the Argonne LCF were a result of a
    partnership between NNSA Advanced Simulation and Computing (ASC) and
    the Office of Science. More recently, Lawrence Livermore National
    Laboratory, Argonne National Laboratory, and IBM have entered a
    research and development contract to develop the next generation of
    Blue Gene-based products. Oak Ridge is working with Sandia National
    Laboratories and Cray to develop a quad-core version of the Catamount
    operating system. As we go forward, we will continue to rely on our
    close collaboration with NNSA in the area of high performance computing
    research and testbeds. However, NNSA's requirements for classified
    computing are inconsistent with the Office of Science's mission to
    support open science; therefore, ASCR does not share production systems
    with NNSA-ASC.

                                GENOME RESEARCH

        Question. Are we making sufficient investments in the scientific
    underpinnings that would support our Nation's biofuels goals?
        Answer. The Department recognizes the significant scientific and
    technological barriers that need to be overcome in order to achieve our
    Nation's biofuels goals, and is investing a significant portion of our
    research budget to support fundamental research underpinning microbial
    and plant research relevant to biofuels. Three GTL Bioenergy Research
    Centers, representing a total investment of $375 million over the next
    5 years, will conduct comprehensive, multidisciplinary, and integrated
    basic research programs in bioenergy-related systems and synthetic
    biology. Research at the Centers will focus on developing the science
    underpinning biofuel production that will ultimately lead to technology
    deployable in the Nation's energy economy. The Centers will draw
    heavily on technology and basic science generated in the entire
    portfolio of Genomics: GTL activities. The Department also provides
    significant investments in a broad suite of scientific user facilities,
    such as the Production Genomics Facility and structural biology user
    stations at DOE synchrotrons and neutron sources, with unique
    instrumentation, computational capabilities, and experimental capacity
    to enable scientists in universities, Federal laboratories, and
    industry to conduct research underpinning the goals of biofuels
    production.
        Question. With the need to support the DNA characterization of many
    more plants to support our biofuels goals, why has the Department
    reduced funding for the Joint Genome Initiative?
        Answer. The DOE Joint Genome Institute (JGI) receives a significant
    fraction of the overall budget for Biological and Environmental
    Research (BER), indicating our commitment to provide genome sequencing
    resources supporting the Department's missions and its biofuels goals.
    The level of fiscal year 2008 funding has increased significantly
    relative to that of fiscal year 2006. The budget request for the JGI,
    in addition to reflecting a realistic funding balance among the entire
    portfolio of BER research supporting our biofuels goals, also reflects
    the need to replace aging sequencing equipment with more advanced
    instrumentation capable of greater throughput. JGI receives funds from
    sources other than the ``operating'' line in the budget. In fiscal year
    2008, $10 million is requested for JGI from the Genomics: GTL
    Sequencing portion of the BER budget. JGI also receives funding from
    external sources. In fiscal year 2006, JGI received $2.9 million for
    sequencing from ``work for others''; about $1.3 million of which was
    from the intelligence community and the rest from a variety of other
    sources.

                                CLIMATE RESEARCH

        Question. Dr. Orbach, the Department has requested $138 million to
    support Climate Change Research. It is my understanding that this
    supports DOE's role in the Administration's multi agency Climate Change
    Research Initiative. It appears from budget documents, the Department
    has primary responsibility for carbon cycle science and climate
    impacts.
        Can you please explain the administration's research priorities and
    how the Department supports those efforts?
        Answer. The administration's Climate Change Research Initiative
    (CCRI) is a set of cross-agency activities in areas of high priority
    climate change research where substantial progress is anticipated over
    the next 2 to 4 years. The specific focus areas include: climate
    forcing (atmospheric concentrations of greenhouse gases and aerosols);
    climate observations, climate feedbacks, and sensitivity; climate
    modeling, including enabling research; regional impacts of climate
    change, including environment-society interactions; and climate
    observations.
        In fiscal year 2008, the Biological and Environmental Research
    (BER) program will continue to participate in specific research areas
    of the CCRI. These areas include climate forcing, climate modeling, and
    climate change observation. Climate forcing, which includes modeling
    carbon sources and sinks, especially those in North America and
    quantifying the magnitude and location of the North American carbon
    sink, is a high priority need identified in the interagency Carbon
    Cycle Science Plan. In climate modeling, DOE's contribution to the CCRI
    will continue to involve the production of future potential climate
    scenarios for use in assessing the environmental implications of
    different future possible climate states. In the climate observations
    area of the CCRI, the DOE Atmospheric Radiation Measurement (ARM)
    program mobile facility will be deployed to a location where data are
    needed to fill gaps in understanding key atmospheric properties and
    processes, and their effect on the Earth's radiation balance and
    climate. The Integrated Assessment Research contribution to the CCRI
    will continue to be the development of tools for use in assessing the
    costs and benefits of human-induced climate change, including those
    associated with different policy options for mitigating such change.
    The requested BER budget to support these specific CCRI activities in
    fiscal year 2008 is $23.7 million. The remainder of BER's $138 million
    climate change research request supports research in the long-standing
    U.S. Global Change Research Program (USGCRP) and climate change
    mitigation research.
        Question. Does the Office of Science support climate research
    modeling to determine what effect climate change may have on regional
    rainfall patterns? What does the DOE research tell us?
        Answer. The BER climate modeling program supports the development
    and testing of coupled ocean-atmosphere-land surface climate models.
    Those models are used to project climatic change based on specified
    atmospheric greenhouse gas concentrations. Those model runs are
    performed at horizontal grid cell resolution of about 150 kilometers
    (or about 90 miles). There are systematic biases in the precipitation
    patterns in these model runs, particularly in the tropics due to
    processes like convection that are apparently not being represented
    accurately in the atmospheric component of the model. Researchers are
    working in a concerted way to address these systematic biases. Such
    biases notwithstanding, results such as earlier spring snow melt over
    large parts of the Southwestern United States and a northward shift of
    storm-tracks are fairly robust results in the climate change
    projections so far.

                              CARBON SEQUESTRATION

        Question. The Department plays a large role in supporting carbon
    research, including the possibility for long term sequestration within
    the Climate Change Research program.
        What is your opinion of the technological potential for this
    country to safely sequester large amounts of carbon?
        Answer. Carbon capture and storage technologies through geological
    storage and terrestrial sequestration provide options for reducing
    greenhouse gas emissions. Successful research, development, and
    demonstration are expected to result in widespread, safe deployment of
    these technologies.
        Question. How long do you believe it will be before we will be able
    to utilize large scale carbon sequestration in this country?
        Answer. Although several commercial-scale projects currently
    operate outside the United States, we believe it will be several years
    before the United States will be able to utilize large-scale carbon
    sequestration. Sufficient scientific understanding currently exists to
    support planned large-scale demonstrations of carbon sequestration in
    depleted oil and gas reservoirs. Only after these demonstrations are
    conducted, however, will there be sufficient understanding of the long-
    term stability and environmental impacts of geological storage of
    carbon dioxide in these reservoirs to proceed on a large scale.
    Knowledge about deep saline aquifers is far less extensive, and many
    substantial issues must be addressed through research and demonstration
    before we could consider permitting the injection of carbon dioxide
    into saline aquifers at a commercial scale.
        Question. What does the scientific data indicate about our domestic
    capacity to store CO2?
        Answer. Scientific data indicate that the United States has a large
    number of geological formations amenable to storage of large quantities
    of carbon dioxide--e.g., oil and gas reservoirs, unminable coal seams,
    and deep saline reservoirs. Current estimates indicate that hundreds of
    years of total domestic carbon dioxide emissions could be stored in
    such formations. In a recent Department study led by the National
    Energy Technology Laboratory (NETL)--``Carbon Sequestration Atlas of
    the United States and Canada''--the DOE Regional Carbon Sequestration
    Partnerships identified over 3.5 trillion tons of possible carbon
    dioxide storage capacity in the U.S. and Canada. Again, greater
    scientific understanding and demonstration of feasibility are needed
    before use of such storage capacity on a commercial scale can be safely
    implemented. There is also significant potential for terrestrial carbon
    sequestration in soils and plants, which is an ongoing area of research
    for the Office of Science as well as other Federal agencies.

                    OFFICE OF SCIENCE--ENERGY-WATER PROGRAM

        Question. The Energy Policy Act of 2007 included in section 979 an
    authority for the Office of Science to pursue research, development,
    demonstration, and commercial applications to address issues associated
    with the management and efficient use of water in the production of
    energy. As you are well aware, water plays a big role in the production
    of electricity, and the development of technologies to minimize water
    usage will be critical in areas facing drought conditions.
        Unfortunately, the budget request doesn't provide any funding to
    support this important activity.
        Can you tell me what if anything the Department is doing to carry
    out the direction in section 979?
        Answer. The Department is undertaking activities responsive to
    section 979. For example, Science (SC), Energy Efficiency and Renewable
    Energy (EERE), and Environmental Management staff are working together
    to track existing DOE-wide research, development, and demonstration
    projects relevant to water needs in energy production. SC and EERE
    representatives participate in the National Science and Technology
    Council's Water Availability and Quality Subcommittee. SC and EERE
    representatives are working with the national laboratories to develop a
    broad-based understanding of technology and development needs that
    could improve water efficiency for energy production. Lastly, the
    Department is in the process of preparing a report to Congress
    responsive to section 979(f).

                 BIOLOGICAL AND ENVIRONMENTAL RESEARCH FUNDING

        Question. I understand there has been discussions about changing
    the funding model for the Office of Biological and Environmental
    Research to adopt a block funding model that would send the bulk of
    research funding to a single ``core lab.'' I believe this would
    discourage competition among labs to come up with creative research and
    discourage the development of broad multidisciplinary approach at each
    lab.
        Is the Department considering changing the BER program to a block
    funding model?
        Answer. BER will transition its research and technology development
    portfolio at the national laboratories into one with three key thrusts.
    First, BER will maintain its use of and reliance on rigorous merit-
    review for research selection. Second, it will focus on support of
    team-based research efforts. Third, it will fund a portfolio of
    laboratory research focused on one or more BER Scientific Focus Areas.
    There is no plan to support a Scientific Focus Area exclusively at a
    single ``core'' national laboratory. The purpose of this new funding
    strategy is to better align BER's approach with that used by the other
    major DOE Office of Science programs.
        Question. Would this approach impede the other DOE labs from
    promoting relevant new ideas and quickly responding to emerging
    national problems when a single lab has been designated for funding as
    the lead lab?
        Answer. Impeding competition is contrary to the principles in the
    Administration's R&D Investment Criteria, and any new approach should
    encourage, not impede, competition.

                           JOINT DARK ENERGY MISSION

        Question. Over the past few years, this committee has consistently
    demonstrated its strong support for the Joint Dark Energy Mission.
    However, other priorities in the Office of Sciences 20 Year Facilities
    Plan are moving forward, even some ranked lower than the Joint Dark
    Energy Mission (JDEM). This program seems to be stuck and moving
    nowhere--especially in light of the Department's budget priorities.
        I am specifically concerned that the Administration's fiscal year
    2008 request for JDEM will hinder the Department's capacity to move
    forward aggressively either in partnership with NASA or as a single
    agency mission in 2008.
        Unfortunately, this budget reduction may also discourage
    international collaborations interested in a near term launch.
        What do you and the Office of Science plan to do in the remainder
    of 2007 and in 2008 to get JDEM moving? What can Congress do to help
    you ensure that JDEM doesn't become a missed opportunity?
        Answer. The DOE fiscal year 2007 appropriation and the President's
    fiscal year 2008 budget request have allocated resources for continuing
    the dark energy program, including funding R&D for the SuperNova/
    Acceleration Probe (SNAP), a concept for JDEM. In addition, there is
    funding for mid-term or longer-term ground- or space-based dark energy
    R&D of approximately $3 million in fiscal year 2007 and $5.8 million
    requested for fiscal year 2008. This research will be competitively
    selected.
        In fall 2006, DOE and NASA began jointly funding a National
    Research Council (NRC) study, to be completed by September 2007, to
    advise NASA on which of the 5 proposed NASA Beyond Einstein missions,
    including JDEM, should be developed and launched first. If the
    recommended top priority by the NRC study is JDEM, DOE and NASA could
    request to proceed jointly on this mission, leading to construction and
    launch during the next decade.
        In response to a Congressional directive for DOE to begin planning
    for a single-agency dark energy mission and explore other launch
    options, DOE has been investigating a scenario of participation with
    international partners, in particular France and Russia.
        There are also other international efforts towards a space-based
    dark energy mission. CNES is supporting an equivalent amount of R&D
    towards DUNE, a French dark energy concept. The European Space Agency
    (ESA) has recently completed a feasibility study for a dark energy
    mission and is planning to have a competition and decision in 2009 for
    its next mission.
        DOE and CNES officials have discussed a possible partnership and
    have agreed to work together until fall 2007 to document possible
    cooperation on the SNAP mission. Whether CNES will eventually
    participate in SNAP, DUNE, or other missions depends on the results of
    the NRC study and other policy considerations. DOE officials have also
    discussed possible Russian collaboration with the Federal Agency for
    Science and Innovations of the Russian Federation. The Department's
    path forward will be determined following the results of the NRC study
    and we continue to support dark energy R&D.

                                CLIMATE MODELING

        Question. The DOE plays a leadership role in the Nation's Climate
    Change Science Program that includes self-consistent modeling of the
    world's atmosphere, land, and oceans. For more than 20 years, Los
    Alamos National Laboratory scientist [sic] have utilized their
    substantial know-how and computational facilities to develop the best
    ocean and sea ice models, and have applied them to the coupled earth
    system models. This is a strong successful collaboration among the best
    and brightest from almost every national laboratory. What is the Office
    of Science program strategy for modeling and remote sensing in response
    to recent observations of the Greenland ice melt? Isn't there a sense
    of urgency to produce even more accurate sea ice predictions as Arctic
    ice thins, and also to build a model of Greenland glacial melting?
        Answer. The BER strategy is to continue its support for the
    leading-edge coupled ocean-sea ice modeling (COSIM) group at LANL as
    part of BER's broader climate change research subprogram. DOE
    researchers examined Arctic sea-ice under various emission scenarios
    for the IPCC Fourth Assessment Report using the Community Climate
    System Model. Because Arctic sea-ice is already in the ocean, its
    melting does not directly affect sea level, though it does affect
    navigability of the northern ocean. Researchers at LANL are currently
    examining the Greenland ice melt using an interactive ice-sheet model
    coupled to the other components of the climate model: land surface,
    sea-ice, and atmosphere. Ice-sheet models need to resolve fast-flow
    features such as ice streams, subglacial process physics, and marine
    processes, and also to include stress coupling. Thus, the challenge to
    get all these extremely complex processes well-represented in the
    models is immense. For glacial melt, the increased lubrication of
    glacier beds by increased summer melt water that drains down crevasses
    and moulins to the beds needs to be represented in the land-ice models.
    DOE does not carry out remote sensing, but we do use the results of
    remote sensing supported by other Federal agencies to evaluate or test
    the results of our modeling activities.

                               COMPUTER QUESTIONS

        Question. These big parallel supercomputers have always been very
    difficult to program and the knowledge to do so is only understood by
    specialists that exist in our Nation's National Laboratories and
    Universities. Now that computer manufacturers have started to produce
    multi-core processors, the technology needed for advancement in
    scientific understanding has become even more complicated and
    inaccessible.
        Can you describe the complete DOE investment strategy in this area,
    and speak specifically to how these investments go beyond simply
    supporting procurement of large hardware and represent tangible
    investments in the specialized scientists needed to make these machines
    available to the country?
        Answer. As a partner in the President's American Competitiveness
    Initiative, we are committed to keeping the United States at the
    forefront of High Performance Computing (HPC) and the computational
    sciences. In addition to acquiring large high performance computing
    resources that will generate millions of gigabytes per year of data,
    ESnet has entered into a long term partnership with Internet 2 to build
    the next generation optical network infrastructure needed for U.S.
    science. Further, SC will redirect a portion of its computer science
    and research portfolio to address major obstacles that would constrain
    the ability of a broad range of computational scientists to use
    petascale computers effectively in areas important to DOE's missions.
    Within our Applied Mathematics research program, for example, we are
    conducting a petascale data workshop to identify the next-generation
    mathematical techniques that will enable scientists to extract the
    scientific phenomena buried in massive complex data sets.
        Through our Scientific Discovery through Advanced Computing
    (SciDAC) program, applied mathematicians, computer scientists, and
    computational scientists are working in teams to create the
    comprehensive, scientific computing software infrastructure needed to
    enable scientific discovery in the physical, biological, and
    environmental sciences at the petascale and to develop efficient and
    scalable data management and knowledge discovery tools for large data
    sets. In 2006, we re-competed SciDAC (SciDAC-2) and introduced the
    concept of SciDAC Institutes to increase the presence of the program in
    the academic community and to complement the efforts of the SciDAC
    Centers. Our SciDAC Institutes will infuse new ideas and community
    focus into the SciDAC program, as well as provide students with
    valuable computational science experiences. In addition to SciDAC
    Institutes, SciDAC-2 expanded the original program by collaborating
    with the NNSA and the National Science Foundation as new funding
    partners.
        Finally, SC and NNSA will continue the successful Computational
    Science Graduate Fellowship to develop the next generation of
    computational science leaders.
        Question. There is a trend toward managing and extracting
    actionable knowledge from very large amounts of data. This trend has
    grown faster than traditional scientific simulation and has immediate
    importance in national security matters.
        How do you plan to ensure that your investment strategy is
    applicable to these new trends?
        Answer. Using the NSTC High-End Computing Revitalization Task Force
    report as our roadmap, we are undertaking a broad investment strategy
    for the deployment and utilization of new HPC resources. Our Leadership
    Computing Facilities provide architectural diversity so that
    researchers have the resources they need to tackle challenging
    scientific questions. The first petascale computer resource for open
    science will be operating at the Leadership Computing Facility (LCF) at
    Oak Ridge National Laboratory in late 2008. Additionally, the HPC
    resources at NERSC have undergone a significant upgrade so that they
    can continue to meet SC mission-critical needs and help prepare our
    researchers to make optimum use of the Oak Ridge LCF, as well as the
    LCF at Argonne National Laboratory. Because access to capability
    computing is so important to our national competitiveness, we have made
    the HPC resources at the LCF available to the open scientific community
    across Federal agencies and national laboratories, in universities, and
    in industry, through the Innovative and Novel Computational Impact on
    Theory and Experiment (INCITE) program.
        We are coupling our investment in hardware with a corresponding
    investment in our base computer science and applied mathematics
    research programs to develop system software and tools as well as new
    algorithms for analysis of multi-scale and complex data. Through our
    SciDAC Outreach Center we are disseminating SciDAC accomplishments to
    the broader HPC community.
        Within DOE, NNSA and SC have entered a research and development
    contract with IBM to develop the next generation of Blue Gene-based
    products. Oak Ridge is working with Sandia National Laboratories and
    Cray to develop a quad-core version of the Catamount operating system.
    Although the two programs are managed differently because of the NNSA's
    requirements for classified data, SC and NNSA will continue and grow
    our close collaboration in high performance computing research and
    testbeds.
        Within the broader community, we closely coordinate our activities
    with other Federal agencies through the Networking and Information
    Technology Research and Development (NITRD) subcommittee of the
    National Science and Technology Council (NSTC). Lastly, both SC and
    NNSA are formal mission partners in Phase III of the DARPA High
    Productivity Computing Systems (HPCS) research program. Phase III of
    the HPCS program is focused on the generation of HPC systems that will
    be available from Cray and IBM in the 2011 timeframe.
        Question. DOE has two major programs in computational sciences: the
    Office of Science program and the NNSA ASC program. These two programs
    seem to be managed very differently, and I am struck by the lack of
    synergy between them. Further, NSF and DARPA are pushing their own
    computer initiatives.
        Why isn't the DOE maintaining its leadership for the country in
    terms of a national investment strategy for technology and scientific
    investment for computing, computational sciences, and computer sciences
    for the future?
        Answer. DOE continues to maintain a leadership role in
    computational science and high end computing systems for open science.
    The first petascale computer resource for open science will be
    operating at the Leadership Computing Facility at Oak Ridge National
    Laboratory in late 2008. Within SciDAC we created a powerful,
    integrated research environment for advancing scientific understanding
    through modeling and simulation. NSF and NNSA have joined SC as funding
    partners for SciDAC-2. Through the INCITE program, we are making 80
    percent of the leadership computing facilities available to the open
    science community through a peer-reviewed process.
        Question. It appears that there is very little mission coordination
    among the various agencies in order to sustain a long term R&D program
    that goes beyond the purchase of a faster computer.
        How are you going to bring these various pieces together?
        Answer. Through the American Competitiveness Initiative, we will
    continue to work with our partners within DOE and NITRD on a national
    roadmap for the future. In addition, the Office of Science has focused
    partnerships with the mission agencies including NNSA, NSA, DOD, and
    DARPA.

                               SUPERCONDUCTIVITY

        Question. Given the fundamental science challenges inherent in
    superconductivity and recent successes in technology demonstration
    projects using second generation coated conductors, what is the Office
    of Science investment strategy for seizing basic and applied research
    opportunities in this area?
        Answer. In May, 2006, SC's Office of Basic Energy Sciences
    sponsored a workshop entitled Basic Research Needs for
    Superconductivity. The workshop identified seven ``priority research
    directions'' and two ``crosscutting research directions'' that capture
    the promise of revolutionary advances in superconductivity science and
    technology. The first seven directions set a course for research in
    superconductivity that will exploit the opportunities uncovered by the
    workshop panels in materials, phenomena, theory, and applications.
    These research directions extend the reach of superconductivity to
    higher transition temperatures and higher current-carrying
    capabilities, create new families of superconducting materials with
    novel nanoscale structures, establish fundamental principles for
    understanding the rich variety of superconducting behavior within a
    single framework, and develop tools and materials that enable new
    superconducting technology for the electric power grid that will
    dramatically improve its capacity, reliability, and efficiency for the
    coming century. The seven priority research directions identified by
    the workshop take full advantage of the rapid advances in nanoscale
    science and technology of the last 5 years. Superconductivity is
    ultimately a nanoscale phenomenon. Its two composite building blocks--
    Cooper pairs mediating the superconducting state and vortices mediating
    its current-carrying ability--have dimensions ranging from a tenth of a
    nanometer to a hundred nanometers. Their nanoscale interactions among
    themselves and with structures of comparable size determine all of
    their superconducting properties.
        The workshop participants found that superconducting technology for
    wires, power control, and power conversion had already passed the
    design and demonstration stages. Second generation (2G) wires have
    advanced rapidly; their current-carrying ability has increased by a
    factor of 10, and their usable length has increased to 300 meters,
    compared with only a few centimeters five years ago. However, while 2G
    superconducting wires now considerably outperform copper wires in their
    capacity for and efficiency in transporting current, significant gaps
    in their performance improvements remain. The fundamental factors that
    limit the current-carrying performance of 2G wires in magnetic fields
    must be understood and overcome to produce a five- to tenfold increase
    in their performance rating.

                              SUBCOMMITTEE RECESS

        Senator Dorgan. We thank you very much for coming here
    today and thank you for your work.
        This hearing's recessed.
        [Whereupon, at 2:54 p.m., Wednesday, March 21, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

        ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2008

                                  ----------

                           WEDNESDAY, APRIL 11, 2007

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 2:33 p.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Byron L. Dorgan (chairman)
    presiding.
        Present: Senators Dorgan, Murray, Reed, Domenici, Craig,
    Bond, Allard, and Stevens.

                              DEPARTMENT OF ENERGY

    STATEMENT OF HON. DENNIS R. SPURGEON, ASSISTANT
                SECRETARY NUCLEAR ENERGY

                  OPENING STATEMENT OF SENATOR BYRON L. DORGAN

        Senator Dorgan. We'll call the hearing to order. This is
    the Senate Appropriations Subcommittee on Energy and Water
    Development. We thank our witnesses for being here today. This
    is a hearing on the Office of Nuclear Energy, the Office of
    Energy Efficiency and Renewable Energy, the Office of Fossil
    Energy and the Office of Electricity Delivery and Energy
    Reliability.
        We're here to take testimony from the four program offices
    I've just described within the Department of Energy which
    oversee major aspects of the U.S. Government's energy R&D
    demonstration and deployment programs. I have a great deal of
    interest in these issues, as do others on this subcommittee,
    and I look forward to hearing today from our witnesses.
        Passage of the Energy Policy Act of 2005 (EPACT), thanks to
    my colleagues, Senator Domenici and Senator Bingaman and their
    leadership, was, I think, a step in the right direction. I was
    pleased to be on the authorizing committee and to be a part of
    the work in the passage of that legislation.
        But it was only a step. More needs to be done and we will
    continue to work in the authorization process to do that. The
    Energy Policy Act, however, only has its full impact if it is
    properly funded and implemented. Our ability to meet head on
    the challenges that we tried to describe in our Energy Policy
    Act will be hobbled by continued baby steps if we do not fully
    fund many of the issues that we care about. We need to be more
    deliberate, I believe, in addressing the major challenges that
    are associated with energy, since it is the central
    underpinning of our other economic, social, environmental, and
    foreign policy goals.
        So I believe we should set goals. We need to know where we
    are going and how we are going to get there; so there are two
    points that I think are very relevant to this hearing.
        First, we need to do a much better job of investing in our
    energy future. Second, we need to begin making these
    investments within and across entire energy systems rather than
    picking and choosing pieces of an energy puzzle.
        Note chart 1. In December 2006, a Government Accountability
    Office (GAO) study gave us this information. The total budget
    authority for energy research and development has dropped by
    over 85 percent in real terms between 1978 and 2005. We need to
    put our energy challenges front and center and we will never be
    able to move forward with declining investments like that.
    Research and development figures in a chart like this should
    indicate increasing funding but regrettably, that has not been
    the case.
        Chart 2 shows that of the Energy Department's $24.3 billion
    budget request for 2008, only $3.1 billion is directed toward
    energy matters. Let me say that again: Of $24.3 billion in the
    Department of Energy budget request, $3.1 billion is directed
    toward energy matters and of that only $2.5 billion is directed
    at energy technology programs. While I realize the Department
    has very broad and important mandates, this means that, in
    simple terms, only $1 in $8 in the Department of Energy request
    is actually going toward energy issues.
        On the second point, energy systems have many elements to
    them and we must undertake improvements along the R&D chain to
    these systems as wholes. We have two major systems at work, the
    transportation system and a power generation system. We must be
    prepared to understand these systems and address them at every
    stage, not just in bits and pieces.
        For example, if we want to promote renewable fuels, and I
    do, then we need to look at feed stocks, bio-refineries, fuel
    transportation, infrastructure, vehicles, public education, and
    marketplace acceptance. The Department of Energy suggests it
    does not pick winners and losers but I think in many ways
    that's very disingenuous.
        We can see many examples where, with tight budgets and
    different priorities, some areas have been done well and others
    not so well. One needs to look only at the Department's fiscal
    year 2007 spending plan. It demonstrates that two of our
    witnesses' programs had windfall budget increases while two saw
    cutbacks.
        The Department's consistency in those areas, I think, is an
    inconsistency in following through on long-term commitments and
    recognizing the Government's role in investing and directing
    policies along each stage of the energy system. I understand
    that we have limited resources and nearly unlimited wants. But
    we must find a way of addressing those key areas that are
    crucial to our energy success in the future.
        If our energy policy is going to be central to our Nation's
    future, and energy will be central to our Nation's future, then
    we're not going to be able to do it on the cheap or do it at
    the margins. I'm very interested in hearing today from the four
    witnesses, whose direct activities in the Department of Energy
    are, I believe, essential and central to the question of
    whether we will succeed in meeting our energy needs.
        Senator Domenici.

                 OPENING STATEMENT OF SENATOR PETE V. DOMENICI

        Senator Domenici. Mr. Chairman, I realize that we have a
    full load of witnesses and many people here to hear what they
    have to say, including Senators but I would like to give just a
    brief opening statement. It will not be long.
        First let me say, I greatly appreciate the statement you
    made. I listened to it attentively. Obviously, I'm not sure
    that I agree with the conclusions that were arrived at by you
    and your helpers. But I do agree wholeheartedly with the
    premise and the thesis of what you've said.
        Actually, Mr. Chairman, we didn't have a Department of
    Energy for a long time. It was a Department put together by
    just piecing all kinds of agencies and then for a long time,
    nobody knew what the Department of Energy was supposed to do.
    You knew that from afar. I knew it from inside. We didn't know
    whether we were supposed to be for nuclear power. We didn't
    even know if there should be nuclear power mentioned within the
    Department of Energy for a number of years, Senator Bond. It
    just wasn't even thought of. So that accounts for many of the
    ups and downs that you have spoken of.
        Today, these four witnesses from the Department of Energy
    represent major energy supply R&D accounts. They've developed
    innovative research initiatives such as cellulosic biomass
    programs, the Global Nuclear Energy Partnership (GNEP),
    FutureGen and Solar America, which have the potential of
    deploying cleaner burning fossil fuel technology as well as
    zero emission technologies such as nuclear, solar and wind
    generation.
        This budget supports many of the research priorities
    included in EPACT, the bill you alluded to that we passed 2\1/
    2\ years ago. One important goal of EPACT has been to make sure
    that innovative energy technology doesn't stay in the lab but
    will be deployed to reduce our greenhouse gas emissions as well
    as our country's less dependence on foreign energy sources.
        It is a fact that our energy markets are based on low cost,
    conventional generation. High cost renewable energy
    technologies face a serious challenge in the cost competitive
    environment.
        In addition to supporting additional R&D efforts, I've been
    focused on implementing the title XVII Loan Guarantee Program.
    This initiative can be effective--an effective tool in the
    leveraging of the Federal balance sheet to make the first of a
    kind renewable and alternative energy technology cost
    competitive.
        I've been surprised by the challenges facing the
    implementation of loan guarantee programs that we provided in
    the energy bill, especially in light of the fact that the
    export/import bank provides $18 billion in loan coverage to
    support U.S. commercial investments overseas. This is twice the
    level provided to support DOE's title XVII.
        I know investment overseas is important but I believe we
    have a serious problem when the administration provides greater
    assistance to support the sale of nuclear reactors to China
    than it provides for the deployment of nuclear reactors in our
    own country. I believe that's wrong and I think somehow we must
    fix it. It is very hard for us to fix it. I mean, we are going
    to have to pass specific laws that specifically direct whatever
    it is we want in this area that we're talking about in terms of
    loan guarantees.
        I'd like to also make a brief point about the Global
    Nuclear Energy Partnership--GNEP. This is a very exciting
    initiative. It proposes to close the nuclear fuel cycle. I
    understand there could be questions about it but I think once
    it gets on the table, let's the daylight see it all and see how
    it comes out. It is apt to be a very exciting thing that we
    should put together and work on.

                              PREPARED STATEMENTS

        I ask that the balance of my statement be made a part of
    the record and thank you, Mr. Chairman, for giving me an
    opportunity to address these issues and thank you, witnesses.
    It's good to have you all here.
        Senator Dorgan. Without objection. Senator Reed has also
    submitted a statement for the record.
        [The statements follow:]

                 Prepared Statement of Senator Pete V. Domenici

        Mr. Chairman, today we have four witnesses representing the
    Department of Energy's major energy supply R&D accounts. These offices
    have developed innovative research initiatives such as the cellulosic
    biomass program, GNEP, FutureGen and Solar America, which have the
    potential of deploying cleaner burning fossil fuel technology as well
    as zero emission technologies such as nuclear, solar, and wind
    generation.
        This budget supports many of the research priorities included in
    EPACT. One important goal of EPACT has been to make sure that
    innovative energy technology doesn't stay in the lab but will be
    deployed to reduce our greenhouse gas emissions as well as make our
    country less dependent of foreign energy sources.
        It is a fact that our energy markets are based on low cost,
    conventional generation and that high cost, renewable energy
    technologies face a serious challenge in a cost competitive
    environment.
        In addition to supporting additional R&D efforts, I have been
    focused on implementing the title 17 loan guarantee program. This
    initiative can be an effective tool in leveraging the Federal balance
    sheet to make the first of a kind renewable and alternative energy
    technologies cost competitive.
        I have been surprised by the challenges facing the implementation
    of the loan guarantee program, especially in light of the fact that the
    Export-Import Bank provides $18 billion in loan coverage to support
    U.S. commercial investment overseas. This is twice the level provided
    to support DOE's title 17 program.
        I know investment overseas is important, but I believe we have a
    serious problem when the administration provides greater assistance to
    support the sale of nuclear reactors to China, than it provides for the
    deployment of nuclear reactors in our own country.
        Mr. Chairman, I would like to make a brief point about the Global
    Nuclear Energy Partnership (GNEP). This is a very exciting initiative.
    It proposes to close the nuclear fuel cycle and make a significant
    reduction on our spent fuel inventories.
        The world has begun to embrace nuclear power as a cost effective
    energy solution that does not contribute to greenhouse gases. Today,
    there are plans to build an additional 200 new nuclear plants in
    countries all across the world.
        I commend the administration for their efforts to develop a
    comprehensive plan that will address spent fuel management and to
    optimize this energy resource in a safe and secure manner.
        This issue is not going away and this country should be part of the
    global solution.
        I am looking forward to hearing from our witnesses, who are working
    very hard to make our country more energy independent and to reduce
    greenhouse gas emission to the lowest levels possible.
        Gentlemen, I appreciate your service very much.
                                     ______

                    Prepared Statement of Senator Jack Reed

        Chairman Dorgan and Senator Domenici, I want to thank you for
    holding this hearing to review the Department of Energy's fiscal year
    2008 budget request. Federal funding for energy efficiency and
    renewable energy programs is very important to me. I want to express my
    disappointment at the Department of Energy's budget proposal for the
    Office of Energy Efficiency and Renewable Energy. The fiscal year 2008
    budget proposes only $1.24 billion for EERE--a $230 million decrease
    compared to the fiscal year 2007 Continuing Resolution funding level.
        Our Nation faces significant challenges as we strive to ensure our
    energy security, reduce the economic risks of high energy prices, and
    address global climate change. Energy efficiency and renewable energy
    programs that improve technologies for our homes, our businesses, and
    our vehicles must be the ``first fuel'' in the race for secure,
    affordable, and clean energy.
        Energy efficiency is the Nation's greatest energy resource. We now
    save more energy each year from energy efficiency than we get from any
    single energy source, including oil, natural gas, coal, and nuclear
    power. A 2001 National Research Council report found that for every
    dollar invested in the 17 Department of Energy energy-efficiency
    research and development programs, nearly $20 is added to the U.S.
    economy in the form of new products, new jobs, and energy cost savings
    to American homes and businesses.
        Unfortunately, under this administration, efficiency funding has
    fallen alarmingly since 2002. Adjusting for inflation, funding for
    efficiency has been cut by one-third. The fiscal year 2007 Continuing
    Resolution provided $1.473 billion for efficiency and renewable energy.
    I want to thank Senators Dorgan and Domenici for this increased
    funding. The $300 million added in fiscal year 2007 will help to
    restore the cuts of recent years, but increased investment is
    necessary. The Energy Policy Act of 2005 authorized over $3.8 billion
    for the EERE account. In order to reduce our dependency on fossil fuels
    and enhance our energy security, this is a time to grow our Nation's
    investment in energy efficiency, not cut funding.
        I want to add that I am disappointed that the Department of
    Energy's fiscal year 2007 spending plan submitted to Congress cut
    funding to the Weatherization program. The Senate passed an amendment
    to the Supplemental Appropriations bill to restore funding to $237
    million. While I hope this amendment will prevail in conference, it is
    my hope that the Department will reconsider its spending plan and
    restore the funding for weatherization while maintaining funding for
    other programs in the intergovernmental account.
        In closing, I want to say that I am glad to see the
    administration's support for cellulosic ethanol and an increase in
    funding to support cost-shared projects with industry for enzyme
    development to produce low cost sugars from biomass and for improved
    organism development for converting those sugars to ethanol. I want to
    make sure that the Department of Energy is aware of important research
    being conducted by the University of Rhode Island and Brown University
    in this field. Researchers in my State are developing biotechnology
    strategies to increase biomass of native grasses and enzymes for post-
    harvest digestion of cellulose to improve efficiency of cellulosic
    ethanol production.

        Senator Dorgan. My colleagues, I would prefer to go to the
    witnesses but if you have a very brief opening statement that
    you feel like you must make, I'd certainly be happy to respect
    that.
        Senator Bond. That's a challenge, Mr. Chairman. I was going
    to spend most of my time praising you and the ranking member
    for the money you put in, the $300 million increase in funding
    through the continuing resolution.
        Senator Dorgan. Take as much time as you want.
        Senator Bond. For efficiency of renewable energy. I
    strongly support renewable energy, nuclear power, clean coal
    research. We have a lot of problems in Missouri if we have
    carbon caps or taxation. For low-income people, LIHEAP only
    covers one-sixth of them. We've lost jobs overseas from the
    increased cost of natural gas.
        These impose tremendous burdens and the best way we can
    work, I think, for the future, is through clean coal technology
    because right now, I just heard--I don't know, I just heard
    this fact that by 2012, the timeframe when Kyoto is going to go
    into place--by that time, China and India will build almost 800
    new coal-fired powerplants. The combined carbon emissions from
    those plants will be five times as much as the total reductions
    mandated by the Kyoto Accords and even though nobody is meeting
    them and we can't get China and India to meet them and curb
    their growth unless we are able to provide them the technology.
    I commend the President's Asia Pacific Partnership because
    that--developing the technology here, making it comparable in
    cost to current technology for coal-fired energy is absolutely
    essential. We've got to get over the foot dragging and the
    bureaucracy, get the money released for the EPA Act and I
    support your efforts and more authorization. I just think this
    is a critical element if we're going to take care of the needs
    in our country and not see our efforts overwhelmed by the
    growth in new coal-powered plants in China and India.
        Senator Dorgan. Thank you, Senator Bond. Others?
        Senator Craig. With reason and concern, I will only accept
    a slight bump up in the Idaho Lab budget. Other than that, I'll
    make my comments during the questioning period.
        Senator Dorgan. Thank you, Senator Craig.
        Senator Craig. Dennis, did you hear that?
        Mr. Spurgeon. Yes, sir, I heard that.
        Senator Craig. Thank you very much.
        Senator Dorgan. Senator Allard.

                               PREPARED STATEMENT

        Senator Allard. Mr. Chairman, I have some comments. I'll
    just submit them in the record.
        Senator Dorgan. Without objection.
        [The statement follows:]

                   Prepared Statement of Senator Wayne Allard

        Mr. Chairman, thank you for holding this hearing today. I think it
    is very appropriate that you have asked the offices that are
    responsible for dealing with some of the most common ways of producing
    electricity to be here with the Office of Delivery and Reliability. And
    as we are all aware, no amount of electricity does us any good if we
    cannot get it to where it is needed.
        No one can argue that we are dangerously reliant on foreign sources
    of energy. We must decrease our reliance on foreign sources of energy
    by diversifying our energy sources and increasing conservation. I have
    long felt that a balanced energy portfolio that takes no technology off
    of the table is what is best for this Nation.
        For this reason I am a strong supporter of nuclear energy. Nuclear
    generation facilities produce vast and reliable quantities of
    electricity. I am pleased with the recent movement toward increasing
    our nuclear capacity, which has been the result of the Energy Policy
    Act passed in 2005. I am hopeful that we can continue this progress.
        I would like to extend a special welcome to Mr. Karsner, who
    oversees the Office of Energy Efficiency and Renewable Energy, which in
    turn oversees the National Renewable Energy Laboratory in Colorado.
    NREL makes a major contribution to the development of renewable energy
    technology and the technologies that are developed at NREL will remain
    vital to our Nation's energy progress.
        Renewable energy is a very important way that we can begin to
    reduce the demand for oil and, thereby, help make our country more
    secure. There are great opportunities for solar, wind, geothermal,
    biomass, fuel cells and hydro to make significant contributions.
    Research and the input of both government and industry partners are
    very important to allowing these opportunities to live up to their
    potential.
        Finally, fossil energy will remain important to energy production
    in this country. Technological advancements have made the use of coal
    cleaner and more efficient than ever before. In the United States we
    have vast amounts of domestic resources from traditional oil, coal and
    gas resources to unconventional sources such as oil shale. I firmly
    believe that we can and must continue to use these resources
    responsibly.
        I look forward to working with the committee to ensure that
    research and development in all fields of energy technology are funded
    in a manner that is responsible, but sufficient to ensure that the
    development and implementation of new technologies continues.

        Senator Dorgan. Thank you very much. Well, let me, on
    behalf of the entire subcommittee, thank the witnesses. We will
    begin today by hearing from the Honorable Dennis Spurgeon, who
    is the Assistant Secretary of the Office of Nuclear Energy. Mr.
    Spurgeon, let me say to all four of you that your full comments
    will be made a part of the permanent record and you may
    summarize. Mr. Spurgeon.

                      STATEMENT OF HON. DENNIS R. SPURGEON

        Mr. Spurgeon. Thank you very much, Mr. Chairman. Chairman
    Dorgan, Ranking Member Domenici and members of the
    subcommittee, it is a pleasure to be here today to discuss the
    fiscal year 2008 budget request for the Department of Energy's
    Office of Nuclear Energy.
        The Office of Nuclear Energy has made progress in the last
    several years in advancing our Nation's energy security and
    independence in support of the Department's strategic plan. It
    is my highest near-term priority to enable industry to deploy a
    new generation of nuclear power plants. We have also made steps
    toward the developing of advanced nuclear reactor and fuel
    cycle technologies while maintaining a critical national
    nuclear infrastructure.
        Today, 103 nuclear reactors generate roughly 20 percent of
    America's electricity, with the 104th reactor, Browns Ferry
    Unit 1, about to enter service. U.S. electricity demand is
    anticipated to grow 50 percent in the next 25 years, the
    equivalent of 45 to 50 1,000 megawatt nuclear reactors must be
    built just to maintain that 20 percent share.
        The United States is at a critical juncture in the future
    of nuclear power in the United States. Unlike many of our
    international research partners, our nuclear industry has not
    been heavily supported, financially and politically, over the
    past 30 years. Today, the need for increased electrical
    generation capacity is clear and hopefully undisputed.

                               NUCLEAR POWER 2010

        Fortunately, we do have a growth option that allows us to
    have a diversified electrical generation portfolio that
    includes a significant carbon emissions-free component and that
    is nuclear power. To support near term domestic expansion of
    nuclear energy, the fiscal year 2008 budget requests $114
    million for the Nuclear Power 2010 Program, to support
    continued cost shared efforts with industry to reduce the
    barriers to deployment of new nuclear power plants in the
    United States.
        In the past few weeks, we have seen major milestones met in
    the expansion of safe and clean nuclear power. In early March,
    the NRC voted to approve the early site permit for the Exelon
    Generation Company's Clinton site in central Illinois and 2
    weeks ago, the NRC approved the early site permit for the
    Entergy Corporation's Randolph site in Mississippi. The
    approval of these two sites is a step toward the ordering of
    new nuclear powerplants for construction on American soil, a
    feat that hasn't happened in 30 years.
        Why nuclear power? Nuclear power is the only proven base
    load producer of electricity for new capacity that does not
    emit greenhouse gases. It is vital that our current fleet of
    reactors be expanded in order to meet our needs for carbon-
    free, dependable electric power.

                       GLOBAL NUCLEAR ENERGY PARTNERSHIP

        Any serious effort toward expanded global use of nuclear
    energy will inevitably require us to address the spent fuel and
    proliferation challenges that accompany such an expansion. To
    meet these challenges, President Bush initiated the Global
    Nuclear Energy Partnership or GNEP, a comprehensive approach to
    enable the expansion of nuclear power in the United States and
    around the world, to promote nonproliferation goals, to more
    efficiently use our nuclear fuel resources and to help resolve
    nuclear waste management issues.
        Domestically, GNEP provides a solution to the ever-growing
    issue of spent nuclear fuel. In conjunction with Yucca
    Mountain, GNEP provides a solution that outlines a closed fuel
    cycle, where energy is harvested from spent fuel before the end
    product is disposed of in a permanent geologic repository. The
    spent fuel will be recycled in a manner that will be more
    proliferation resistant than current processes used around the
    world. A closed fuel cycle will also alleviate some of the
    burden placed on Yucca Mountain and will possibly eliminate the
    need for a second geologic repository throughout the remainder
    of this century. We reiterate though that no fuel cycle
    scenario will eliminate the need for a geologic repository.
        We are all aware of the enormous amount of energy available
    from nuclear fission. One pound of uranium fuel in a reactor
    makes the same amount of electricity as 125 million pounds of
    coal. Recycling, as we planned in GNEP, while decreasing the
    overall mass of spent nuclear fuel, will also make it possible
    to use the energy remaining in the used fuel. A recycling
    facility processing fuel from existing U.S. light water
    reactors could recover the energy equivalent of the oil
    delivered by the Alaska Pipeline.
        Internationally, GNEP promises to address the growing
    global energy demand in an environmentally friendly manner. A
    global regime of countries able to provide a complete portfolio
    of nuclear fuel services, including Russia, France and possibly
    Japan, China and Britain, will provide these services to
    countries wanting to use nuclear power to meet their basic and
    growing energy needs without the cost and risk associated with
    the nuclear fuel cycle infrastructure. By providing these
    services to other countries, we hope to dissuade future states
    from developing enrichment capabilities like we are
    encountering in Iran today.
        The fact is, the United States is not currently positioned
    to be an active member of the global regime. We have limited
    enrichment capabilities and no back end recycling capabilities.
    Creating the capabilities needed to participate in the global
    expansion of nuclear power will take at least 15 to 20 years,
    meaning that in order to become an active participant of the
    global nuclear expansion, we need to begin now.
        Taking those necessary steps enables us to better assure
    that the imminent expansion will be safe, beneficial and will
    not promote the proliferation of nuclear weapons.
        The Department requests $405 million in fiscal year 2008 to
    begin work on developing a detailed, technically sound roadmap
    for implementing all aspects of the GNEP vision.

                               PREPARED STATEMENT

        Mr. Chairman, we appreciate the support we have received
    from the subcommittee as we seek to address the challenges
    surrounding the global expansion of nuclear power. We remain
    confident and optimistic about the role of nuclear energy in
    providing a solution to our Nation's energy stability and
    independence.
        I would be pleased to answer your questions, sir.
        Senator Dorgan. Secretary Spurgeon, thank you very much for
    your testimony. We appreciate it.
        [The statement follows:]

                 Prepared Statement of Hon. Dennis R. Spurgeon

        Chairman Dorgan, Ranking Member Domenici, and members of the
    subcommittee, it is a pleasure to be here to discuss the fiscal year
    2008 budget request for The Department of Energy's (DOE) Office of
    Nuclear Energy.
        The Department of Energy's strategic plan portrays a long-term
    vision of a zero-emission future, free from the reliance on imported
    energy. A portfolio of nuclear programs is provided for in this plan
    for near-term, medium-term, and long-term sustained advances in nuclear
    technology.
        The Office of Nuclear Energy has made progress in the last several
    years in advancing our Nation's energy security and independence in
    support of the Department's strategic plan. The Department remains
    committed to enabling industry to deploy a new generation of nuclear
    power plants. We have also made steps forward in developing advanced
    nuclear reactor and fuel cycle technologies while maintaining a
    critical national nuclear infrastructure.
        Today, 103 nuclear reactors generate roughly 20 percent of
    America's electricity, with the 104th reactor, Browns Ferry unit 1,
    about to enter service. U.S. electricity demand is anticipated to grow
    50 percent over the next 25 years--the equivalent of 45 to 50 one-
    thousand megawatt nuclear reactors must be built just to maintain that
    20 percent share. With nuclear power as the only proven base load
    producer of electricity that does not emit greenhouse gases, it is
    vital that our current fleet of reactors be expanded in order to meet
    our needs for carbon-free, dependable and economic electric power.
        Any serious effort to stabilize greenhouse gases in the atmosphere,
    while providing the increasing amounts of energy needed for economic
    development and growth, requires the expanded use of nuclear energy.
    This will inevitably require us to address the spent fuel and
    proliferation challenges that confront the expanded, global use of
    nuclear energy. To meet these challenges, the Department initiated the
    Global Nuclear Energy Partnership (GNEP), a comprehensive approach to
    enable an expansion of nuclear power in the United States and around
    the world, promote non-proliferation goals, and help minimize the
    amount of nuclear waste disposal.
        GNEP is a perfect example of where global cooperation is required
    to address a changing global energy landscape. The United States has a
    unique opportunity to influence global energy policy, and more
    specifically global nuclear energy policy. However, for the United
    States to have influence abroad, we must have an established domestic
    policy supportive of a significant role for nuclear power in our energy
    future, an aggressive nuclear research and development program, and a
    viable nuclear technology infrastructure. Through the GNEP program, we
    are pursuing in parallel the development of the policies, technologies,
    and facilities necessary for the United States to be a global leader in
    the nuclear energy enterprise and to ensure our energy security and
    national security objectives.
        The Department's fiscal year 2008 budget request proposes an $874.6
    million investment in nuclear research, development and infrastructure
    for the Nation's future. This budget request supports the President's
    priorities to enhance the Nation's energy security while enabling
    significant improvements in environmental quality. Our request supports
    development of new nuclear generation technologies and advanced energy
    products that provide significant improvements in sustainability,
    economics, safety and reliability, and proliferation and terrorism
    resistance.
        While we have made progress in all program areas, much remains to
    be done. Our fiscal year 2008 request moves us in the right direction
    and I will now provide you a report of our activities and explain the
    President's request for nuclear energy.

                               NUCLEAR POWER 2010

        To support near-term domestic expansion of nuclear energy, the
    fiscal year 2008 budget requests $114 million for the Nuclear Power
    2010 program to support continued cost-shared efforts with industry to
    reduce the barriers to the deployment of new nuclear power plants in
    the United States. The technology focus of the Nuclear Power 2010
    program is on Generation III+ advanced, light water reactor designs,
    which offer advancements in safety and economics over the existing
    fleet of nuclear power plants already operating in the United States.
    To reduce the regulatory uncertainties and enable the deployment of new
    Generation III+ nuclear power plants in the United States, it is
    essential to demonstrate the untested Federal regulatory processes for
    the siting, construction, and operation of new nuclear plants. In
    addition, design finalization of two standard plant designs and NRC
    certification of these Generation III+ advanced reactor concepts are
    needed to reduce the high initial capital costs of the first new plants
    so that these new technologies can be competitive in the deregulated
    electricity market and deployable within the next decade.
        The fiscal year 2008 budget request continues the licensing
    demonstration activities started in previous years. Activities include
    completion of the last Early Site Permit demonstration projects and
    continuation of the New Nuclear Plant Licensing Demonstration projects
    that will exercise the untested licensing process to build and operate
    new nuclear plants and complete and obtain certification of two
    advanced Generation III+ advanced reactor designs. Engineering
    activities in support of the submission of two combined Construction
    and Operating License (COL) applications to the NRC will continue. In
    addition, two reactor vendors will continue first-of-a-kind design
    activities for two standard nuclear plants.
        In the past few weeks we have seen major milestones met in the
    expansion of safe and clean nuclear power. Earlier this month the NRC
    voted to approve the Early Site Permit for the Exelon Generation
    Company's Clinton site in central Illinois, and just yesterday the NRC
    approved the Early Site Permit for the Entergy Corporation's Grand Gulf
    site in Mississippi. The approval of these two sites is a step towards
    the ordering of new nuclear power plants for construction on American
    soil, a feat that hasn't happened in 30 years. With nuclear power as
    the only proven base load producer of electricity that does not emit
    greenhouse gases, it is vital that our current fleet of reactors be
    expanded in order to meet our needs for carbon-free, dependable and
    economic electric power.
        The project teams, Dominion Energy and NuStart Energy Development
    LLC., involved in the licensing demonstration projects represent power
    generating companies and reactor vendors that operate more than two-
    thirds of all the U.S. nuclear power plants in operation today. As a
    result of the Nuclear Power 2010 program and Energy Policy Act of 2005
    financial incentives (e.g. standby support), 14 power companies have
    announced their intentions to apply for combined construction and
    operating licenses. Several have specifically stated that they are
    building on work being done in the Nuclear Power 2010 program as the
    basis for their applications.
        The United States is at a critical juncture in the future of
    nuclear power in the United States. Unlike many of our international
    research partners, our nuclear industry has not been heavily supported
    financially and politically over the past 30 years. Today the need for
    increased electrical generating capacity is clear and hopefully
    undisputed. Fortunately, we do have a growth option that allows us to
    have a diversified electrical generation portfolio that includes a
    significant carbon emissions-free component, and that is nuclear power.
    To realize this option, we are asking private companies to build plants
    whose collective cost could be a significant percentage of their net
    worth. This represents an enormous financial risk that few companies or
    lenders will be willing to assume without demonstrated certainty in the
    regulatory process and project cost.
        If one accepts the fact that we need more electrical generation
    capacity, and if one desires to have a component of that new capacity
    that is carbon free, and one recognizes the financial considerations
    associated with such a large private investment in technologies that we
    have not supported in 30 years, then the importance of this program to
    our future energy security is self-evident. These companies will be
    building new generating capacity in the very near future, but the
    question they must first answer is whether this generation will come
    from clean, safe, nuclear technologies or not.
        If widely deployed in the United States these new technologies will
    create significant business opportunities and will support the rapid
    growth of heavy equipment fabrication, high technology and commercial
    construction industries in this country. Moreover, these American
    technologies and industrial capabilities will be highly competitive
    internationally and would support our leadership role in the global
    expansion of safe, clean nuclear power.

                         ADVANCED FUEL CYCLE INITIATIVE

        One of the most important and challenging issues affecting future
    expansion of nuclear energy in the United States and worldwide is
    dealing effectively with spent nuclear fuel and high-level waste. For
    the medium-term, the Advanced Fuel Cycle Initiative (AFCI) will develop
    fuel cycle technologies that will support the economic and sustained
    production of nuclear energy while minimizing waste in a proliferation-
    resistant manner. To support the development of these technologies, the
    fiscal year 2008 Budget request includes $395.0 million for AFCI.
        AFCI's near-term goals are to develop and demonstrate advanced,
    more proliferation-resistant fuel cycle technologies for treatment of
    commercial light water reactor spent fuel, to develop an integrated
    spent fuel recycling plan, and to provide information and support on
    efforts to minimize the amount of material that needs disposal in a
    geologic repository. AFCI conducts research and development of spent
    fuel treatment and recycling technologies to support an expanding role
    for nuclear power in the United States and to promote world-wide
    expansion of nuclear energy in a proliferation-resistant manner as
    envisioned for the Global Nuclear Energy Partnership (GNEP). AFCI is
    the U.S. technology component of the GNEP.
        Specifically, in fiscal year 2008, the Department intends to
    complete industry-led conceptual design studies for the nuclear fuel
    recycling center and the advanced recycling reactor Demonstration
    Analysis. Additionally, DOE will continue start-to-finish
    demonstrations of recycling technologies, which are expected to produce
    separated transuranics for use in transmutation fuel development, as
    well as conduct systems analysis and advanced computing and simulation
    activities focused on a variety of deployment system alternatives and
    supporting technology development. As part of GNEP Technology
    Development, the Department also intends to evaluate small,
    proliferation-resistant reactors for potential U.S. manufacture and
    export to reactor user nations.
        GNEP seeks to bring about a significant, wide-scale use of nuclear
    energy, and to take actions now that will allow that vision to be
    achieved while decreasing the risk of nuclear weapons proliferation and
    effectively addressing the challenges of nuclear waste disposal. GNEP
    will advance the nonproliferation and national security interests of
    the United States by reinforcing its nonproliferation policies and
    limiting the spread of enrichment and reprocessing technologies, and
    will eventually eliminate excess civilian plutonium stocks that have
    accumulated. The AFCI budget request supports the Department's goal of
    realizing the GNEP vision. AFCI activities in fiscal year 2007 and
    fiscal year 2008 are focused on developing a detailed roadmap for
    implementing all aspects of the GNEP vision and informing a Secretarial
    decision in June 2008 on the path forward for GNEP.
        Long-term goals for AFCI/GNEP will develop and demonstrate an
    advanced, more proliferation-resistant closed nuclear fuel cycle system
    involving spent fuel partitioning and recycling of long-lived
    radioactive elements for destruction through transmutation in fast
    reactors that could result in a significant increase in the effective
    capacity of the planned Yucca Mountain repository. This capacity
    increase could ensure enough capacity to accommodate all the spent fuel
    generated in the United States this century from any reasonably
    conceivable deployment scenario for nuclear energy. Yet, under any fuel
    cycle scenario a geologic repository is necessary. Therefore, GNEP and
    Yucca Mountain are proceeding on parallel tracks.

                GENERATION IV NUCLEAR ENERGY SYSTEMS INITIATIVE

        The fiscal year 2008 budget request includes $36.1 million to
    continue development of next-generation nuclear energy systems within
    the Generation IV program. For the long term, the Generation IV program
    will develop new nuclear energy systems that can compete with advanced
    fossil and renewable technologies, enabling power providers to select
    from a diverse group of options that are economical, reliable, safe,
    secure, and environmentally acceptable. In particular, the Next
    Generation Nuclear Plant (NGNP) reactor concept will be capable of
    providing high-temperature process heat for various industrial
    applications, including the production of hydrogen in support of the
    President's Advanced Energy Initiative.
        The NGNP, with an investment of $30 million within the Generation
    IV Nuclear Energy Systems Initiative, will utilize a Generation IV Very
    High Temperature Reactor configured for production of high temperature
    process heat for the generation of hydrogen, electricity, and other
    industrial commodities. The Energy Policy Act of 2005 (EPACT)
    authorized the Department to create a two-phased NGNP Project at the
    Idaho National Laboratory (INL). The Department is presently engaged in
    Phase I of the EPACT defined scope of work which includes: developing a
    licensing strategy, selecting and validating the appropriate hydrogen
    production technology, conducting enabling research and development for
    the reactor system, determining whether it is appropriate to combine
    electricity generation and hydrogen production in a single prototype
    nuclear reactor and plant, and establishing key design parameters.
    Phase I will continue until 2011, at which time the Department will
    evaluate the need for continuing into the design and construction
    activities called for in Phase II.
        The fiscal year 2008 budget request maintains critical R&D that
    will help achieve the desired goals of sustainability, economics, and
    proliferation resistance. Further investigation of technical and
    economical challenges and risks is needed before a decision can be made
    to proceed with a demonstration of a next-generation reactor.

                          NUCLEAR HYDROGEN INITIATIVE

        Hydrogen offers significant promise as a future energy technology,
    particularly for the transportation sector. The use of hydrogen in
    transportation will reduce U.S. dependence on foreign sources of
    petroleum, enhancing our energy security. The fiscal year 2008 budget
    request for the Office of Nuclear Energy includes $22.6 million to
    continue to develop enabling technologies, demonstrate nuclear-based
    hydrogen production technologies, and study potential hydrogen
    production strategies to support the President's vision for a future
    hydrogen economy.
        Currently, the only economical, large-scale method of hydrogen
    production involves the conversion of methane into hydrogen through a
    steam reforming process. This process produces ten kilograms of
    greenhouse gases for every kilogram of hydrogen, defeating a primary
    advantage of using hydrogen--its environmental benefits. Another
    existing method, electrolysis, converts water into hydrogen using
    electricity. Electrolysis is typically used for small production
    quantities and is inherently less efficient because electricity must
    first be produced to run the equipment used to convert the water into
    hydrogen. Additionally, the environmental benefits of electrolysis are
    negated unless a non-emitting technology, such as nuclear or renewable
    energy, is used to produce the electricity. The Nuclear Hydrogen
    Initiative is developing processes that operate across a range of
    temperatures for the various advanced reactors being researched by the
    Generation IV Nuclear Energy Systems Initiative. These processes,
    coupled with advanced nuclear reactors, have the potential for high-
    efficiency, large-scale production of hydrogen.
        The objective of this program is to demonstrate the technologies at
    increasingly larger scales ultimately culminating in an industrial
    scale that would be technically and economically suited for commercial
    deployment. Fiscal year 2005 and fiscal year 2006 activities were
    focused on the validation of individual processes and components;
    fiscal year 2007 and fiscal year 2008 are focused on the design,
    construction and operation of integrated laboratory scale experiments.
    In fiscal year 2008, the Department will complete construction of
    integrated laboratory-scale system experiments and begin testing to
    enable the 2011 selection of the technology that could be demonstrated
    in a pilot scale hydrogen production experiment.

                       RADIOLOGICAL FACILITIES MANAGEMENT

        The Office of Nuclear Energy's fiscal year 2008 budget request also
    includes $53.0 million to maintain critical research and production
    facilities for medical isotopes and radioisotope power systems at the
    Idaho National Laboratory, the Oak Ridge National Laboratory, the Los
    Alamos National Laboratory, the Sandia National Laboratory, and the
    Brookhaven National Laboratory. This request also includes funding for
    University Research Reactors.
        These funds assure that the infrastructure for the facilities meet
    essential safety and environmental requirements and are maintained at
    operable user-ready levels. Programmatic activities, including
    production and research, are funded either by other DOE programs, by
    the private sector, or by other Federal agency users.
        The Department seeks $14.9 million to maintain one-of-a-kind
    facilities at the Idaho, Oak Ridge, Brookhaven, and Los Alamos National
    Laboratories for isotope production and processing. These isotopes are
    used to help improve the accuracy, effectiveness, and continuation of
    medical diagnoses and therapy, enhance homeland security, improve the
    efficiency of industrial processes, and provide precise measurement and
    investigative tools for materials, biomedical, environmental,
    archeological, and other research. Actual operations, production,
    research or other activities are funded either by other DOE programs,
    by the private sector, or by other Federal agency users.
        The Department also maintains unique facilities and capabilities at
    the Idaho, Oak Ridge, and Los Alamos National Laboratories that enable
    the Department to provide the radioisotope power systems for space
    exploration and national security applications. The fiscal year 2008
    budget requests $35.1 million to maintain the basic facilities and
    associated personnel whereas mission specific development or hardware
    fabrication costs are provided by the user agencies. This arrangement
    is essential in order to preserve the basic capability regardless of
    periodic fluctuations in the demand of the end product users.
        Finally, the Department requests $2.9 million in fiscal year 2008
    to provide research reactor fuel to universities and dispose of spent
    fuel from university reactors. Currently, there are 27 operating
    university research reactors at 27 institutions in the United States.
    Many of these facilities have permanent fuel cores and therefore do not
    require regular fuel shipments. However, DOE supplies approximately a
    dozen universities with fresh fuel and shipments of spent fuel as
    needed.

                          IDAHO FACILITIES MANAGEMENT

        The Department is working to transform Idaho National Laboratory
    into one of the world's foremost nuclear research laboratories. As
    such, the fiscal year 2008 budget request seeks $104.7 million for the
    Idaho Facilities Management Program to maintain and enhance the
    laboratory's nuclear energy research infrastructure.
        The Idaho Facilities Management Program operates and maintains
    three main engineering and research campuses and the Central Facilities
    Area at the Idaho National Laboratory. The 3 main engineering and
    research campuses are: (1) the Reactor Technology Complex which houses
    the world-renown Advanced Test Reactor, (2) the Materials and Fuels
    Complex, and (3) the Science and Technology Campus. As the Idaho
    National Laboratory landlord, the Office of Nuclear Energy also
    operates and maintains the Central Facilities Area at Idaho National
    Laboratory, providing site-wide support services and from which various
    site infrastructure systems and facilities, such as electrical utility
    distribution, intra-laboratory communications systems, and roads are
    managed and maintained. Also included within the Central Facilities
    Area is the Radiological and Environmental Sciences Laboratory operated
    by the Office of Nuclear Energy.

                    IDAHO SITE-WIDE SAFEGUARDS & SECURITIES

        The mission of the Idaho Site-wide Safeguards and Security program
    is to protect the assets and infrastructure of the Idaho National
    Laboratory from theft, diversion, sabotage, espionage, unauthorized
    access, compromise, and other hostile acts that may cause unacceptable
    adverse impacts on national security; program continuity; or the health
    and safety of employees, the public, or the environment.
        The fiscal year 2008 Budget Request includes $72.9 million to
    provide protection of nuclear materials, classified matter, government
    property, and other vital assets from unauthorized access, theft ,
    diversion, sabotage, espionage, and other hostile acts that may cause
    risks to national security, the health and safety of DOE and contractor
    employees, the public or the environment.

          UNIVERSITY REACTOR INFRASTRUCTURE AND EDUCATIONAL ASSISTANCE

        While the University Educational Assistance program has concluded,
    funding will continue to be provided to the Nation's nuclear science
    and engineering universities through our applied research and
    development programs by means of our Nuclear Energy Research Initiative
    (NERI). NERI funds are competitively awarded to support research
    objectives of the Advanced Fuel Cycle Initiative, the Generation IV
    Energy Systems Initiative and the Nuclear Hydrogen Initiative. By
    increasing the opportunities for university participation in our
    research programs, the Department seeks to establish an improved
    education and research network among universities, laboratories,
    industry and government. Approximately $62 million in funding for
    universities is included in the research programs for fiscal year 2008,
    a 21 percent increase over the fiscal year 2007 request.

                                   CONCLUSION

        This concludes my prepared statement. Your leadership and guidance
    has been essential to the progress the program has achieved thus far
    and your support is needed as we engage the task ahead of investing in
    our energy security.
        I would be pleased to answer any questions you may have.

        Senator Dorgan. Next, we will hear from Secretary Karsner.
    Secretary Karsner is Assistant Secretary for the Office of
    Energy Efficiency and Renewable Energy. Secretary Karsner, we
    welcome you.

    STATEMENT OF HON. ALEXANDER KARSNER, ASSISTANT
                SECRETARY FOR ENERGY EFFICIENCY AND
                RENEWABLE ENERGY
        Mr. Karsner. I appreciate that. Chairman Dorgan, Ranking
    Member Domenici, members of the subcommittee, thank you for
    this opportunity to testify on the President's fiscal year 2008
    budget request for the Office of Energy Efficiency and
    Renewable Energy, EERE.
        The request includes $1.24 billion for EERE, approximately
    $60 million more than the fiscal year 2007 request to Congress.
    To be clear, my statement today is presented primarily in
    comparison with the administration's fiscal year 2007 request;
    however, because the Department has now submitted its fiscal
    year 2007 operating plan, I'm also going to highlight some of
    the key allocations from that appropriation.
        The fiscal year 2008 budget request addresses pressing
    energy and environmental challenges by accelerating the
    development of renewable energy and advanced energy efficiency
    technologies. Much of EERE's funding is an integral part of the
    President's Advanced Energy Initiative (AEI). The AEI was
    launched in 2006 to confront our Nation's addiction to oil,
    lessen dependence on foreign resources and reduce emissions by
    developing clean sources of electricity generation.
        In the 2007 State of the Union Address, the President
    raised the bar further by seeking legislative action to reduce
    gasoline consumption by 20 percent within the decade, the 20 in
    10 plan. The 20 in 10 legislative proposals include an
    increased alternative fuel standard and reduced fuel
    consumption through raising and reforming corporate average
    fuel economy with a CAFE&ogram.
        The President's budget request increases funding for
    programs that support the 20 in 10 goal, including biomass and
    biofuels R&D to expand the availability of alternative
    transportation fuels. While the fiscal year 2007 continuing
    resolution is a substantial increase over the President's
    fiscal year 2008 budget proposal, the funds will be used to
    accelerate critical components of the Advanced Energy
    Initiative. EERE is directing an additional $30 million to
    commercial biorefinery demonstrations, $10 million additional
    for plug-in hybrid battery development, and over $100 million
    for improvements at the National Renewable Energy Laboratory,
    NREL. The increase will accelerate the completion of NREL's
    research support facility, a state-of-the-art building complex.
    As a national model of LEED certified advanced design, it's
    going to showcase the renewable energy and energy efficiency
    technologies that NREL develops and reduce its operating costs.
    Preliminary analyses indicate the potential to achieve up to
    $122 million of life cycle savings.
        The increase will also support expansion of NREL's
    Integrated Bio-Refinery Research Facility, which provides the
    industry with a very unique test bed for emerging technologies.
        Returning to fiscal year 2008, EERE's overall budget
    request reflects the goals of accelerating new energy R&D and
    expanding commercialization and deployment of emerging
    technologies. The request for biomass and biorefinery systems
    R&D is $179.3 million, an increase of $29.6 million or almost
    20 percent over the previous year. This proposal highlights the
    essential role of the Biofuels Initiative in increasing
    America's energy security.
        The program is focused on making cellulosic ethanol cost-
    competitive by 2012. EERE will continue to support cost-shared
    efforts with industry to develop and demonstrate cellulosic
    biorefinery technologies that enable the production of
    transportation fuels and co-products. In addition, EERE is
    engaging in cost-shared projects with industry for enzyme
    development and for improved organism development or
    ethanologens for converting the sugars into ethanol. These two
    projects address major barriers to meeting our 2012 targets.
        For the Vehicle Technologies Program, the Department is
    requesting $176.1 million for fiscal year 2008 to advance the
    development of energy-efficient, environmentally friendly,
    flexible platform technologies for cars and trucks that use
    significantly less oil and enable industry to comply with the
    proposed reformed CAFE standards. This request is $10.1 million
    higher than the fiscal year 2007 request and will advance the
    state of the art for energy storage batteries, power
    electronics and motors, and drive systems and testing needed to
    accelerate the viability and delivery of plug-in hybrid
    electric vehicles.
        Battery technologies have made significant progress,
    reducing the cost of next generation hybrid vehicle batteries
    in each of the past 3 years, from almost $1,200 per vehicle to
    $750 per vehicle. In fiscal year 2008, we expect to bring that
    down further to $625 per vehicle and to increase our emphasis
    on batteries specifically optimized for plug-in hybrid
    applications.
        Next, hydrogen is an important element of our strategy for
    energy security and environmental stewardship. The President's
    $309 million budget request for the Hydrogen Fuel Initiative
    fulfills his 5-year commitment of $1.2 billion. The portion of
    this under EERE is $213 million, which reflects a $7.2 million
    increase over the fiscal year 2007 budget request.
        Much progress has been made since the announcement of the
    Hydrogen Fuel Initiative in 2003. The research has reduced the
    high volume cost of automotive fuel cells from $275 per
    kilowatt in 2002 to $107 per kilowatt in 2006, a major step
    toward the ultimate cost target of $30 per kilowatt.
        Our research is going to continue to sharpen its focus to
    meet hydrogen production objectives through renewable pathways,
    including performing with bioderived liquids and electrolysis.
        For solar energy, the fiscal year 2008 request is $148.3
    million, a level that is nearly twice the enacted 2006 level.
    The Department's photovoltaic R&D focuses on those technology
    pathways that have the greatest potential to achieve more cost
    competitiveness and grid parity by or before 2015. Industry-led
    partnerships with universities, State groups and national
    laboratories, known as Technology Pathway Partnerships, will
    continue in fiscal year 2008 to address the issues of cost,
    performance, and reliability.
        Other priority key program areas of EERE include Building
    Technologies, which targets the long-term goal in 2020 of net-
    zero energy buildings--houses that can produce as much energy
    as they use on an annual basis. We're going to help industry
    produce a white light-emitting diode, or LED, lamp, which has
    already set the world record for LED brightness and efficacy in
    a power chip.
        Wind energy focuses on reducing wind power costs and
    removing siting and transmission barriers to expand and use
    wind energy up to potentially 20 percent of our grid capacity
    in the United States.
        Industrial Technologies, which in addition to leveraging
    successful partnerships with energy intensive industries, will
    support the development of next generation technologies that
    can revolutionize the U.S. industrial processes and deliver
    dramatic energy and environmental benefits.

                               PREPARED STATEMENT

        My written statement, of course, includes greater detail on
    these and other programs but this concludes my opening remarks
    and I'm happy to answer any questions the subcommittee members
    may have of me.
        Senator Dorgan. Secretary Karsner, thank you very much for
    your testimony.
        [The statement follows:]

                  Prepared Statement of Hon. Alexander Karsner

        Mr. Chairman and members of the committee, thank you for this
    opportunity to testify on the President's fiscal year 2008 budget
    request for the Office of Energy Efficiency and Renewable Energy
    (EERE).
        The President's fiscal year 2008 budget request includes $1.24
    billion for EERE, approximately $60 million (5 percent) more than the
    fiscal year 2007 request to Congress. To be clear, because of timing in
    drafting this testimony and finalizing the Department's operating plan
    for the fiscal year 2007 year-long Continuing Resolution (CR), my
    written testimony on the fiscal year 2008 budget request is presented
    primarily in comparison to the administration's fiscal year 2007
    request. EERE received a $300 million increase in funding under the CR.
    I am grateful to Congress for its vote of confidence in the energy
    efficiency and renewable energy programs, but note that this level is
    above the allocation in the President's request. In allocating the
    additional $300 million, EERE will accelerate the priorities reflected
    in administration initiatives such as the ``20 in 10'' plan and the
    Advanced Energy Initiative (AEI), while still carrying out
    implementation of the Energy Policy Act of 2005 (EPACT).
        The fiscal year 2008 budget request addresses pressing energy and
    environmental challenges facing our country today by accelerating the
    development of both renewable energy technologies to increase the
    amount of clean energy produced in the United States and advanced
    energy efficient technologies, standards, and practices that use less
    energy. Much of EERE's funding is an integral part of the President's
    AEI, launched in 2006 to confront our addiction to oil, lessen
    dependence on foreign resources, and reduce emissions by developing
    clean sources of electricity generation. Together, new technologies can
    help change the way we power our homes, businesses, and automobiles.
        In his 2007 State of the Union address, the President raised the
    bar by seeking legislative action for our country to reduce gasoline
    consumption by 20 percent in the next 10 years, the ``20 in 10'' plan.
    The fiscal year 2008 budget request increases funding for programs that
    may help the Nation achieve the ``20 in 10'' goal, including, for
    example, biomass/biofuels R&D that may help to expand the availability
    of alternative transportation fuels.
        EERE's applied science R&D contributes to the foundation for
    transforming the Nation's energy options and energy use. For example,
    one of this year's R&D 100 awards went to the Department's Idaho
    National Laboratory for its work with Xtreme Xylanase, an enzyme
    produced by bacteria found in the hot, acidic waters of Yellowstone
    National Park. Work on Xtreme Xylanase was funded in part by EERE's
    Biomass Program. The metabolic versatility of this enzyme (it breaks
    down cellulose and hemicellulose over a broad range of temperatures and
    acidic pH conditions) could help make cellulosic ethanol more
    efficiently and economically. In the field of solar energy, a new
    world-record 40 percent efficient concentrating photovoltaic solar cell
    was developed as a result of collaboration between DOE, the National
    Renewable Energy Laboratory, and Spectrolab. For general lighting
    applications with solid-state lighting, Cree, Inc., with DOE R&D
    funding, has released the new XLamp 7090 power white light-emitting
    diode (LED), setting a world record for LED brightness and efficacy (at
    85 lumens/Watt) in a power chip.
        It is essential, however, that, we work not only to accelerate R&D
    for new energy technologies, but address the accelerated adoption of
    technologies into commercial products that are widely available at
    reasonable cost to all Americans. Thus, in addition to its historical
    role of leading Federal applied science on emerging technologies, EERE
    is taking aggressive steps to catalyze the rapid commercialization and
    deployment of critical energy advances through innovative partnerships
    and collaboration with lenders and investment groups, the States, and
    industry leaders. We seek to help enable and accelerate market
    transformation toward the use of more efficient and cleaner
    technologies.
        EERE's overall budget request reflects the funding needed to meet
    our goals. The following EERE programs target and support sectors of
    energy use and supply that will help lead our Nation to a secure energy
    future:

                      BIOMASS AND BIOREFINERY SYSTEMS R&D

        The fiscal year 2008 budget request for Biomass and Biorefinery
    Systems R&D is $179.3 million, an increase of $29.6 million, almost 20
    percent above the fiscal year 2007 request. This proposed funding
    increase reflects the essential role of the Biofuels Initiative in
    increasing America's energy security. Biomass is the most viable
    renewable option for producing liquid transportation fuels in the near
    term, with the potential to help reduce our dependence on imported oil.
        The focus of the program is to make cellulosic ethanol cost-
    competitive by 2012. EERE will continue in fiscal year 2008 to support
    its cost-share efforts with industry to develop and demonstrate
    technologies to enable cellulosic biorefineries for the production of
    transportation fuels and co-products. The fiscal year 2008 funding
    increase also supports the validation of advancing biomass conversion
    technologies and feedstocks in biorefineries at approximately 10
    percent of commercial scale. This effort enables industry to resolve
    remaining technical and process integration uncertainties for the
    ``next generation'' of biorefinery process technologies being examined
    at a significant, but less-costly scale. Ultimately, 10-percent scale
    demonstrations have the potential to reduce the overall cost and risk
    to industry along with improving the likelihood of obtaining financing
    for commercial-scale facilities.
        The fiscal year 2008 funding increase will also support EERE cost-
    shared projects with industry for enzyme development for producing low
    cost sugars from biomass and for improved organism development or
    ``ethanologen'' for converting those sugars to ethanol. These two
    industry cost-share projects address major barriers to meeting the 2012
    cost goal. Overall knowledge gained from section 932 projects, 10
    percent validation scale projects, enzyme development, and ethanologen
    R&D, combined with other key R&D activities, should accelerate
    industry's ability to produce cost-competitive cellulosic ethanol.
        To address biomass resource availability and feedstock
    infrastructure to reduce the cost and improve the storage of delivered
    biomass in different geographical areas of the United States, EERE will
    continue to support the Regional Feedstock Partnership work with the
    U.S. Department of Agriculture (USDA) and land grant colleges. These
    partnerships will help identify the regional biomass supply, growth,
    and biorefinery development opportunities.
        In order to capture and coordinate Federal-wide activities
    supporting the President's goal, the Biomass Program is developing a
    National Biofuels Action Plan commissioned through the Biomass Research
    and Development Initiative. The Biomass Program will also establish the
    framework for an ethanol reverse auction in accordance with section 942
    of EPACT 2005. The auction will award incentives on a per gallon basis
    of cellulosic biofuels produced.

                          VEHICLE TECHNOLOGIES PROGRAM

        In fiscal year 2008, the Department is requesting $176.1 million
    for the Vehicle Technologies Program to advance development of
    increasingly more energy-efficient and environmentally friendly,
    flexible platform technologies for cars and trucks that will use
    significantly less oil and enable the auto industry to comply with
    reformed CAFE standards. This request is $10.1 million higher than the
    fiscal year 2007 request, and will advance the state of the art for
    energy storage batteries, power electronics and motors, and the hybrid
    drive systems and testing needed to accelerate manufacturing viability
    and delivery of plug-in hybrid electric vehicles.
        Activities in the Vehicle Technologies Program contribute to two
    cooperative government/industry activities: the FreedomCAR and Fuel
    Partnership (where CAR stands for Cooperative Automotive Research) and
    the 21st Century Truck Partnership. The FreedomCAR and Fuel Partnership
    is a collaborative effort among the U.S. Council for Automotive
    Research (USCAR--representing the three domestic automobile
    manufacturers), five energy suppliers, and DOE for cooperative, pre-
    competitive research on advanced automotive technologies having
    significant potential to reduce oil consumption. The 21st Century Truck
    Partnership focuses on commercial vehicles. The partnership involves
    key members of the commercial vehicle industry, (truck equipment
    manufacturers and engine manufacturers) along with three other Federal
    agencies. The R&D centers on improving advanced combustion engine
    systems and fuels and on reducing vehicle parasitic losses, meaning
    frictional and aerodynamic losses, extra loads like air conditioning,
    and other vehicle inefficiencies that increase fuel consumption.
        Vehicle Technologies Program activities that support the goals of
    the FreedomCAR and Fuel Partnership focus on high-efficiency and
    flexible platform vehicle technologies such as advanced combustion
    engines and their enabling fuels, hybrid vehicle systems (including
    plug-in hybrids), high-power and high-energy batteries, lightweight
    materials, and power electronics. These technologies could lead to
    substantial oil savings if adopted by industry participants and
    included in their manufacturing plans.
        The FreedomCAR goals include reducing the volume production cost of
    a high-power 25kW battery for use in hybrid passenger vehicles from
    $3000 in 1998 to $500 by 2010. In 2006 we projected through the
    modeling of research data that lithium ion battery cost could be
    reduced to $750 per 25 kW battery system when produced in mass
    quantities. This year's request increases the emphasis on plug-in
    hybrid vehicle component technologies. Cited by the President as a key
    part of the strategy for reducing America's dependence on oil, these
    technologies offer the potential to make significant additional
    improvements in petroleum reduction beyond that achievable with
    standard hybrid configurations.
        Combustion engine efficiency has made good progress over the past 3
    years (2004-2006), with our R&D increasing the efficiency of light-duty
    passenger vehicle diesel engines from 35 to 41 percent. This means that
    if manufacturers were to produce these more efficient engines, a car
    that previously got the CAFE average of 27 miles per gallon on gasoline
    could potentially get 37 miles per gallon with an advanced, clean
    diesel. In fiscal year 2008, we expect to reach 43 percent efficiency
    for passenger vehicle diesel engines, approaching the 2010 goal of 45
    percent. These advanced combustion engines have the potential to
    achieve the efficiency goals for cars and trucks while maintaining cost
    and durability with near-zero emissions. Battery technologies have also
    made significant progress toward program goals, having reduced the cost
    of next-generation hybrid vehicle batteries in each of the past 3
    years, from almost $1,200 per vehicle at the beginning of fiscal year
    2004 to $750 at the end of fiscal year 2006. In fiscal year 2008, we
    expect to bring that down to $625 per vehicle, and to increase our
    emphasis on batteries specifically optimized for plug-in hybrid
    vehicles to have battery technology ready by 2014 that will enable
    automobile manufacturers to economically produce competitive plug-in
    hybrid vehicles having a 40 mile all-electric range.
        R&D programs will also continue to accelerate materials research
    directed at light, strong vehicle structures to enable the production
    of lighter vehicles that could result in higher efficiency fleets, and
    to develop thermoelectric materials for efficient energy recovery from
    heat. Other activities will focus on expanding efforts to promote the
    adoption and use of petroleum-reducing fuels, technologies, and
    practices, principally by working with industry partners, fuel
    providers, Clean Cities coalitions and their stakeholders, and end-
    users on activities ranging from using more alternative fuel vehicles
    and renewable fuel blends to driving smarter, minimizing wasteful idle
    time, and purchasing vehicles that get better fuel economy.
    Accordingly, the Vehicle Technologies Deployment budget request
    (including Clean Cities) will increase by over 100 percent relative to
    the fiscal year 2007 request.

                          HYDROGEN TECHNOLOGY PROGRAM

        Hydrogen is an important element of our Nation's long-term strategy
    for energy security and environmental stewardship. It could enhance our
    energy security by providing a transportation fuel that may be produced
    from a variety of domestic resources; and it should serve our
    environmental interests by allowing vehicles to operate using fuel
    cells, without generating any tailpipe emissions. The Department's
    research is focused on pathways that produce and deliver hydrogen from
    diverse origins including emission-free nuclear, and renewable
    resources.
        The President's $309 million fiscal year 2008 budget request for
    DOE for the Hydrogen Fuel Initiative fulfills his commitment of $1.2
    billion over 5 years. The portion of this under our purview in EERE is
    $213 million, which reflects a $17.2 million increase over the fiscal
    year 2007 budget request. The proposed increase will accelerate and
    expand efforts to research and develop hydrogen-storage systems to
    improve performance, and fuel cell materials and components to reduce
    their cost, and improve durability. It will also support accelerating
    cost reduction of renewable hydrogen production technologies as well as
    critical delivery technologies.
        Much progress has been made since the announcement of the Hydrogen
    Fuel Initiative in 2003. The research has reduced the high-volume cost
    of automotive fuel cells from $275 per kilowatt in 2002 to $107 per
    kilowatt in 2006--a major step towards the ultimate cost target of $30
    per kilowatt. In fiscal year 2008, we will continue projects on fuel
    cell catalysts and membranes, and cold-weather start-up and operation.
    In addition to reducing cost and improving performance, this work will
    help us achieve our 2010 durability target of 5,000 hours, which should
    enable a vehicle lifetime of 150,000 miles.
        We have also achieved our 2006 hydrogen cost goal of $3 per
    gasoline-gallon-equivalent for hydrogen produced by distributed
    reforming of natural gas, a potentially economical early market
    pathway. Our research will sharpen its focus to meet the same objective
    through renewable pathways--including reforming of bio-derived liquids
    and electrolysis. We are also working with the Department's Offices of
    Nuclear Energy, Fossil Energy, and Science to develop nuclear-based
    hydrogen production, hydrogen from coal--exclusively with carbon
    sequestration--and longer-term biological and photoelectrochemical
    hydrogen production pathways.
        Our diverse hydrogen-storage portfolio is also showing promising
    results, with innovative materials being developed in areas such as
    metal hydrides, chemical hydrides, and carbon-based materials. Research
    conducted at our ``Centers of Excellence,'' and by independent
    projects, has continued to increase material storage capacity.
    Substantial breakthroughs are required to reach our goal of providing
    consumers with enough storage for a 300-mile driving range, without
    compromising a vehicle's interior space.
        Developing hydrogen technologies that can be manufactured
    domestically will also improve our economic competitiveness. Our
    manufacturing R&D effort addresses the need for high-volume fabrication
    processes for fuel cells and many other components, which are all
    currently built one-at-a-time. This is essential to lowering the cost
    of these technologies, and to developing a domestic supplier base.
        In addition to these R&D activities, we are addressing other
    challenges significant to realizing the benefits of hydrogen fuel
    cells. Our Technology Validation Program has brought together teams of
    automobile manufacturers and energy companies to operate and evaluate
    fuel cell vehicles and hydrogen stations under real-world conditions.
    To date, the program has placed 69 fuel cell vehicles on the road,
    served by 10 hydrogen fueling stations.
        Furthermore, we are working to ensure safe practices, and--through
    support of existing codes and standards development organizations--we
    are laying the groundwork for developing technically sound codes and
    standards, which are essential to implementing hydrogen technologies.
        Finally, our education activities focus on overcoming the knowledge
    barriers inherent in the introduction of new technology. Last month, we
    released a multimedia web-based course that introduces hydrogen to
    first responders. In the coming year, we will continue to expand the
    availability of training and conduct outreach to raise awareness of the
    technology.
        The effects of the Department's broad-based efforts in the Hydrogen
    Program are being seen nationwide, and progress has been substantial.
    Investments are not only occurring at the Federal level, but also at
    state and local levels. These diverse investments increase our
    probability of success in overcoming existing technological barriers,
    which will allow industry to make fuel cell vehicles that customers
    will want to buy, and encourage investment in a hydrogen refueling
    infrastructure that is profitable.

                              SOLAR ENERGY PROGRAM

        The Solar Energy Program sponsors research, development, and
    deployment of solar energy technologies and systems that can help our
    Nation meet electricity needs and reduce the stress on our electricity
    infrastructure. Through the Solar America Initiative (SAI), the Solar
    Program aims to accelerate the market competitiveness of solar
    electricity as industry-led teams compete to deliver solar systems that
    are less expensive, more efficient, and highly reliable. The Solar
    Program supports three technology areas: photovoltaics (PV),
    concentrating solar power (CSP), and solar heating and lighting. The
    fiscal year 2008 budget request for Solar Energy is $148.3 million, a
    level that is nearly twice the enacted fiscal year 2006 level.
        To lower costs more rapidly and improve performance, the
    Department's PV R&D, budgeted in fiscal year 2008 at $137.3 million,
    focuses on those technology pathways that have the greatest potential
    to reach cost-competitiveness and grid parity by or before 2015.
    Industry-led partnerships with universities, state groups and National
    Laboratories, known as ``Technology Pathway Partnerships,'' will
    continue in fiscal year 2008 to address the issues of cost,
    performance, and reliability associated with each pathway. Work on PV
    modules, the heart of PV systems, will be conducted, as well as other
    ``balance-of-system'' components.
        To catalyze market transformation, DOE will promote the expansion
    of the solar marketplace by seizing opportunities for growth and by
    lowering barriers to entry. The Department will provide technical
    outreach to States and utilities, continue pressing work on codes and
    standards issues, and solicit new applications for its Solar America
    Cities activity. These market transformation activities help pave the
    way for technologies developed by our industry partnerships to enter
    the marketplace.
        We will emphasize the importance of interconnection standard
    procedures and net metering regulations that are designed to
    accommodate solar and other clean distributed energy systems. A
    precondition for large-scale solar market penetration in America is to
    have the proper means for homeowners and businesses to connect solar
    systems to the grid, as well as to be paid for excess electricity they
    feed back into the grid. We are working with our colleagues in the
    Department's Office of Electricity Delivery and Energy Reliability to
    develop ``best practice'' recommendations for States to use as they
    undertake consideration of interconnection procedures and net metering
    regulations and make implementation decisions pursuant to sections 1251
    and 1254 of EPACT 2005. Fiscal year 2008 funding will also be used to
    offer technical outreach to States and utilities to enhance solar
    connectivity issues.
        Work will continue on the multi-year solicitations launched in
    fiscal year 2007 that promote adoption of market-ready solar
    technologies and a new effort will support benchmarking, modeling, and
    analysis for the systems driven approach, and market, value and policy
    analysis needed to support the SAI. EERE's PV activities are
    increasingly coordinated and when possible convergent with solar energy
    activities in the Building Technologies and the Federal Energy
    Management programs, and the research activities of the DOE Office of
    Science.
        The fiscal year 2008 budget request for CSP--systems that utilize
    heat generated by concentrating and absorbing the sun's energy to drive
    a heat engine/generator to produce electric power--is $9.0 million. The
    development of advanced thermal energy storage technologies will be
    expanded, along with continued support to develop next generation
    parabolic trough concentrators, solar engines, and receivers. For
    distributed applications, research will focus on improving the
    reliability of dish systems through the operation and testing of
    multiple units. Technical assistance will be provided to industry in
    its development of a 1.0 MW dish system in California that is expected
    to be the precursor of several much larger plants. Technical support
    will also be provided to the Western Governors' Association and several
    southwestern utilities to assist their CSP deployment activities.
        The Solar Heating and Lighting program, a $2.0 million request,
    will focus on R&D to reduce the cost of solar heating in freezing
    climates. The program will also support collaboration with EERE's
    Building Technologies programs to integrate photovoltaic systems, solar
    water heating, and solar space heating into home design and structure.
    Such deployment efforts will help to seize market expansion
    opportunities.

                         BUILDING TECHNOLOGIES PROGRAM

        Energy use by residential and commercial buildings accounts for
    over one-third of the Nation's total energy consumption, including two-
    thirds of the electricity generated in the United States. Addressing
    that significant sector of energy consumption, the $86.5 million
    requested this year for the Building Technologies Program represents a
    $9.1 million increase of 12 percent over the fiscal year 2007 request.
    The funding supports a portfolio of activities that includes solid
    state lighting, improved energy efficiency of other building components
    and equipment and their effective integration using whole-building-
    system design technique, the development of codes and standards for
    buildings and appliances, and education and market introduction
    programs, including ENERGY STAR and EnergySmart Schools.
        Funding for Residential Buildings Integration aims to enable
    residential buildings to use up to 70 percent less energy, and to
    integrate renewable energy systems into highly efficient buildings to
    achieve the long-term goal in 2020 of net Zero Energy Buildings--houses
    that produce as much energy as they use on an annual basis. During
    fiscal year 2008, research for production-ready new residential
    buildings that are 40 percent more efficient will continue for four
    climate zones.
        The $19.3 million request for solid state lighting will advance
    development of the organic and inorganic LEDs that has the potential to
    double the efficiency of fluorescent lighting technology. The fiscal
    year 2008 requested funding will be used to develop general
    illumination technologies with the goal of achieving energy
    efficiencies of up to 93 lumens per Watt with improved visual comfort
    and quality of light and focus on applied research that enables the
    industrial base to manufacture LEDs.
        The fiscal year 2008 request reflects the Department's commitment
    to clear the backlog of equipment standards and test procedures that
    had accumulated in the prior 12 years and meet the statutory schedule
    for rulemakings for new products covered by EPACT 2005. The Department
    will continue to implement productivity enhancements that will allow
    multiple rulemaking activities to proceed simultaneously, while
    maintaining the rigorous technical and economic analysis required by
    statute.
        Funds for the Building Technologies Program will also support
    development of highly insulating and dynamic window technologies and
    integrated attic-roof systems needed to achieve long-term zero energy
    building goals. Efforts to accelerate the adoption of efficient
    building technologies by consumers and businesses include expanded
    ENERGY STAR specifications and labels for more products, promotion of
    advanced building efficiency codes, and public-private partnerships to
    advance efficient schools, hospitals, commercial lighting, and home
    building.

                       FEDERAL ENERGY MANAGEMENT PROGRAM

        The Federal Energy Management Program (FEMP) assists Federal
    agencies, including DOE, in increasing their use of energy efficiency
    and renewable energy technologies through alternative financing
    contract support and technical assistance, and coordinates Federal
    reporting and evaluation of agency progress each year. As the single
    largest energy consumer in the United States, the Federal government
    must set an example and lead the Nation toward becoming a cleaner, more
    efficient consumer by using existing energy efficiency and renewable
    energy technologies and techniques. On January 24, 2007, President Bush
    signed a new Executive Order to strengthen the environmental, energy,
    and transportation management of Federal agencies which includes a
    requirement for agencies to reduce their energy intensity by 3 percent
    each year until 2015, compared with a 2003 baseline.
        The fiscal year 2008 request for FEMP is $16.8 million, a slight
    decrease of $0.1 million from the fiscal year 2007 request. We are
    requesting $7.9 million for FEMP alternative financing programs that
    help agencies access private sector financing to fund energy
    improvements without the use of current appropriations. We expect to
    achieve not less than $160 million in private sector investment through
    Super ESPCs, Energy Savings Performance Contracts, and Utility Energy
    Service Contracts (UESCs), which will result in about 15 trillion Btus
    in energy saved over the lifecycle of the projects. Furthermore, we are
    requesting $6.5 million for Technical Guidance and Assistance to help
    Federal energy managers identify, design, and implement new
    construction and facility improvement projects that incorporate energy
    efficiency and renewable energy. FEMP will assist Federal agencies in
    meeting the increased energy efficiency goals, established by the new
    Executive Order, by orienting its Technical Guidance and Assistance,
    Training, and Outreach activities towards attracting private-sector
    financing for investment into energy efficiency at Federal facilities.
    In addition to the focus on facility energy consumption, FEMP also
    tracks alternative fuel use in Federal vehicle fleets.
        In fiscal year 2008, the Departmental Energy Management Program
    (DEMP) is being discontinued. FEMP will still provide policy guidance
    and technical assistance to the Department, but DOE has determined that
    the management of energy efficiency and renewable investments at its
    facilities can be more effectively conducted by those facilities. While
    not reported separately, DOE national labs and other facilities spend
    significant funding (direct and indirect) on energy efficiency
    improvements, while also using ESPCs and UESCs where appropriate.

                              WIND ENERGY PROGRAM

        The Wind Program focuses on reducing wind power costs and removing
    barriers to resource utilization of wind energy technology in the
    United States. The program's fiscal year 2008 request is $40.1 million.
        As a result of 30 years of R&D, wind turbines can now provide cost-
    effective, reliable clean energy in high wind speed areas. While we
    will continue to do R&D to improve wind energy technologies in low wind
    speed areas, we are also focusing on near-term actions to remove
    existing barriers to increasing the use of wind energy, building on the
    current robust market for wind energy in the United States. These
    efforts could help to set the path for the wind industry to accelerate
    its penetration of delivered emission-free energy, significantly
    expanding beyond the roughly one percent of installed electrical
    generating capacity today.
        The program is expanding application and deployment-related
    activities. The $12.9 million requested for Systems Integration and
    Technology Acceptance will help wind technologies entering the market
    to overcome key obstacles such as grid integration, siting, permitting,
    and environmental barriers. In addition, there will be increased
    support to address issues of pre-competitive turbine reliability and
    performance via efforts of National Laboratories and Cooperative
    Research and Development Agreements or ``CRADAs'' with industry. The
    Wind Program will also establish a Federal interagency siting group to
    minimize regulatory delays on wind projects.
        The Wind Program is funding a broader effort on distributed wind
    technologies and applications to advance the full scope of diverse
    opportunities for wind energy on the distribution side of the electric
    power system.
        A U.S. wind industry-wide roadmapping analysis, being supported by
    the DOE wind program, is underway to determine the technical
    feasibility for wind energy to generate 20 percent of our Nation's
    electricity. To achieve this vision it would require grid
    modernization, expansion, and integration, and removal of other
    deployment barriers. Success would enable delivery of more than 300
    gigawatts of new, clean, affordable, and domestic production capacity
    to our urban load centers and be a substantial contributor to economic
    growth, manufacturing, and rural prosperity. EERE will work with DOE's
    Office of Electricity Delivery and Energy Reliability on several
    studies aimed at expanding electricity transmission between remote wind
    resources and urban areas.

                  WEATHERIZATION AND INTERGOVERNMENTAL PROGRAM

        In fiscal year 2008, we are requesting $204.9 million for
    Weatherization and Intergovernmental Activities, a $20.1 million
    decrease from the fiscal year 2007 request. The reduction is primarily
    related to the decrease in the amounts requested for the Weatherization
    Assistance Program, which will enable greater investments in advanced
    R&D within the EERE portfolio to address national priorities: reducing
    dependence on foreign oil, accelerating the development of clean,
    emission-free electricity supply options, and developing highly
    efficient new technologies, products, and practices for our homes and
    buildings.
        The requested $144 million for the Weatherization Assistance
    Program will fund energy efficiency audits and upgrades for at least
    54,599 low-income homes. DOE works directly with States and certain
    Native American Tribes that contract with local governmental or non-
    profit agencies to deliver weatherization services to homes in need of
    energy assistance.
        The $45.5 million requested for the State Energy Program provides
    financial and technical assistance to State governments, enabling them
    to target their high priority energy needs and expand clean energy
    choices for their citizens and businesses. This request includes $10.5
    million for a competitive solicitation that will seek regional and
    state partnerships to replicate smart energy policies and programs
    among States. The regional context is outlined in EPACT and aligns with
    our electricity transmission infrastructure.
        Clean electricity generation is targeted by the Renewable Energy
    Production Initiative, which provides financial incentive payment to
    public and Tribal utilities and not-for-profit electric cooperatives
    for renewable generation systems that use solar, wind, geothermal, or
    biomass technologies. The Tribal Energy Program aims to facilitate the
    installation of 100 MW of renewable energy generation by Native
    American tribes by 2010.
        The Asia Pacific Partnership (APP) for Clean Development and
    Climate requests funding at the $7.5 million level. This international
    partnership is an important and innovative accord to accelerate the
    development and deployment of clean energy technologies among the six
    member countries: Australia, China, India, Japan, South Korea, and the
    United States. Representing about half of the world's economy,
    population, energy use, and emissions, the six countries have agreed to
    work together and with private sector partners to set and meet goals
    for energy security, national air pollution reduction, and global
    warming, employing policies and practices that promote sustainable
    economic growth and poverty reduction, while addressing the serious
    challenge of climate change.

                        INDUSTRIAL TECHNOLOGIES PROGRAM

        Industry consumes more energy than the residential, commercial, and
    transportation end-use sectors, and it is also the Nation's second
    largest emitter of CO2. Advancements in industrial energy-
    efficient technology could improve U.S. competitiveness, and contribute
    to our national effort to reduce oil imports, alleviate natural gas
    price pressure, and pre-empt the need for new power plants and
    consequent emissions.
        The fiscal year 2008 budget request for Industrial Technologies is
    $46.0 million, a $0.4 million increase over the fiscal year 2007
    request. The program will leverage its innovative technology transfer
    practices and partnerships with energy-intensive industries, while
    shifting toward more crosscutting and higher-impact R&D activities that
    will bring innovative energy solutions to a much broader group of
    industrial companies, at a more accelerated pace.
        The Industrial Technologies Program (ITP) has a track record for
    moving innovative technologies from R&D through commercialization and
    onto the floors of industrial plants. In 2006 alone, 8 technologies
    funded by ITP received prestigious R&D 100 awards. New technologies
    emerging from ITP's R&D program are being adopted to help solve some of
    industry's toughest energy and competitiveness challenges. In many
    cases, this is occurring through the industrial energy assessments that
    ITP is conducting at 250 of the Nation's largest energy-consuming
    manufacturing plants as part of Secretary Bodman's ``Easy Ways to Save
    Energy'' initiative. We estimate that ITP-sponsored technologies and
    deployment activities have contributed to industrial energy savings of
    over $3.1 billion in one year (2004).
        The $7.2 million requested for the new activity, Energy-Intensive
    Process R&D, will support R&D in 4 crosscutting areas to better deliver
    technology solutions for the industrial processes that consume the most
    energy. These four areas are Energy Conversion Systems, Industrial
    Reaction and Separation, High-Temperature Processing, and Fabrication
    and Infrastructure. One example of a technology that cuts across the
    industrial sector to deliver savings is ITP's ultra-high efficiency,
    ultra-low emissions, industrial steam generation ``Super Boiler.''
    Since steam is used in every major sector, the potential benefits are
    tremendous. The Super Boiler is 10 to 20 percent more efficient than
    current technology and can reduce NOX emissions to below 5
    parts per million, which represents an approximately 90 percent
    reduction in emissions from a conventional boiler.
        The $4.9 million request for the new Inter-Agency Manufacturing R&D
    activity working with the National Science and Technology Council will
    support the development or adaptation of next-generation technologies
    that can revolutionize U.S. industrial processes and deliver dramatic
    energy and environmental benefits. These next-generation technologies,
    such as entirely new processing routes and supply chains, can have
    broad applications across industry, yet they typically require the type
    of high-risk, high-return R&D that one industry cannot usually
    undertake. Our initial research focus will include development of
    techniques and processes needed for nanomanufacturing. We aim to help
    transform industrial processes by enabling the mass production and
    application of nano-scale materials, structures, devices, and systems
    that provide unprecedented energy, cost, and productivity benefits in
    manufacturing.
        Deployment efforts such as ``Best Practices'' activities and
    Industrial Assessment Centers will continue to deliver the results of
    energy-efficiency R&D and energy-saving practices to industrial plants
    nationwide. A vehicle for educational outreach, the university-based
    Industrial Assessment Centers train engineers and scientists in the
    energy field, providing opportunities for students to conduct energy
    assessments at no cost to small and medium-sized manufacturing plants
    in the United States.

                         FACILITIES AND INFRASTRUCTURE

        The fiscal year 2008 budget request of $7.0 million for Facilities
    and Infrastructure, an increase of $1.0 million from the fiscal year
    2007 request, supports the operations and maintenance of the National
    Renewable Energy Laboratory (NREL) in Golden, CO. NREL is a single-
    purpose National Laboratory dedicated to R&D for energy efficiency,
    renewable energy, and related technologies that provides EERE, as well
    as DOE's Office of Science and the Office of Electricity Delivery and
    Energy Reliability, with R&D, expert advice, and programmatic counsel.

                     PROGRAM DIRECTION AND PROGRAM SUPPORT

        The Program Direction budget supports the management and technical
    direction and oversight needed to implement EERE programs at both
    headquarters and the Project Management Center. Areas funded by this
    request include: Federal salaries, information systems and technology
    equipment, office space, travel, and support service contractors. The
    fiscal year 2008 budget request for Program Direction totals $105.0
    million, a $14.0 million increase over the fiscal year 2007 request.
    This increase reflects EERE's updated staffing needs, which more
    closely align critical skills to mission requirements and adds staff to
    support technical program staffing shortfalls and implementation of the
    AEI and EPACT 2005 priorities.
        The Program Support budget request provides resources for
    crosscutting performance evaluation, analysis, and planning for EERE
    programs and for technical advancement and outreach activities. The
    information developed by the Program Support components provides
    decision makers at every level the information they need to make
    choices related to energy alternatives that can help the Department
    achieve its goals. The fiscal year 2008 budget request for Program
    Support activities totals $13.3 million, representing a $2.4 million
    increase from the fiscal year 2007 budget request. The increase
    reflects the expansion of EERE's market transformation and
    commercialization analysis and expanded efforts in the Technology
    Advancement and Outreach Office.

                                   CONCLUSION

        Accelerating research, development, and deployment of America's
    abundant clean sources of energy and making more efficient use of all
    energy consumed is central to EERE's mission, and to a secure and
    competitive economic future that enhances our environmental well-being
    for our Nation and our world. We believe the administration's fiscal
    year 2008 budget request for energy efficiency and renewable energy
    programs strategically positions the stepping stones that will
    continuously catalyze and accelerate new energy sources, technologies,
    and practices into the marketplace, and hasten the transformation of
    how our homes, businesses, and vehicles use energy.
        This concludes my prepared statement, and I am happy to answer any
    questions the Committee members may have.

        Senator Dorgan. Next we will hear from the Honorable Tom
    Shope, the Assistant Secretary of the Office of Fossil Energy.
    Mr. Shope, thank you for being with us.

    STATEMENT OF HON. THOMAS D. SHOPE, ACTING ASSISTANT
                SECRETARY FOR FOSSIL ENERGY
        Dr. Shope. Thank you, Mr. Chairman, thank you, Ranking
    Member Domenici and members of the subcommittee. It is an honor
    for me to appear before you today to present the Office of
    Fossil Energy's proposed budget for fiscal year 2008.
        Fossil Energy's $863 million budget request for fiscal year
    2008 will allow the office to support the President's top
    initiatives for energy security, clean air, climate change and
    coal research as well as DOE's strategic goal of protecting our
    national and economic security by promoting a diverse supply
    and delivery of reliable, affordable, and environmentally sound
    energy.
        Let me begin the presentation of our budget with coal, our
    most abundant and lowest cost domestic fossil fuel. Coal today
    accounts for nearly one-quarter of all of the energy and more
    than one-half of the electricity produced in the United States.
    Because coal is so important to our energy future, our proposed
    budget of $448 million for the President's coal research
    initiative, related fuel cell R&D and program direction
    accounts for more than one-half of our total budget. Our
    overarching goal is to conduct research and development that
    will improve the competitiveness of domestic coal in future
    energy markets, allowing the Nation to tap the full potential
    of its abundant fossil energy resources in an environmentally
    sound and affordable manner.
        This year's request completes 3 years ahead of schedule the
    President's commitment to invest $2 billion on clean coal
    research over 10 years. Our coal research initiative is broken
    down into the following components. We are requesting $73
    million for the Clean Coal Power Initiative, a cooperative,
    cost-shared program between the Government and industry to
    demonstrate emerging technologies in coal-based power
    generation so as to help accelerate commercialization. Work on
    promising technologies selected in two prior solicitations will
    continue in fiscal year 2008 and we plan to announce a third
    solicitation during the year.
        The first of a kind, high priority FutureGen project will
    establish the capability and feasibility of co-producing
    electricity and hydrogen from coal with near zero atmospheric
    emissions, including carbon dioxide. FutureGen's proposed
    budget of $108 million for fiscal year 2008 will be used to
    support detailed plant design and procurement and other
    preliminary work. Technology development supporting FutureGen
    is embodied in our Fuels and Power Systems Program. Included in
    the Program's proposed budget for fiscal year 2008 of $245.6
    million, you will find the research and development for carbon
    capture and sequestration, membrane technologies for oxygen and
    hydrogen separation, advanced combustion turbines, fuel cells,
    coal to hydrogen conversion and gasifier related technologies.
        The high priority carbon sequestration program with a
    proposed budget for fiscal year 2008 of $79 million for
    developing a portfolio of technologies with great potential to
    reduce greenhouse gas emissions. The goal is to achieve
    substantial market penetration after 2012. In the long term,
    the program is expected to contribute significantly to the
    President's goal of developing technologies to substantially
    reduce greenhouse gas emissions.
        In addition, the network of seven regional carbon
    sequestration partnerships and the International Carbon
    Sequestration Leadership Forum established by DOE in 2003 will
    continue their important work, including conducting vital,
    diverse geologic CO2 storage tests. Research and
    development carried out by the Coal to Hydrogen Fuels Program,
    funded at a proposed $10 million, will make the future
    transition to a hydrogen-based economy possible by reducing the
    costs and increasing the efficiency of hydrogen production from
    coal.
        We have requested $62 million in fiscal year 2008 to
    continue the important work of a Solid State Energy Conversion
    Alliance, the goal of which is to develop the technology for
    low cost, scalable, and fuel flexible fuel cell systems.
        Consistent with our fiscal year 2006 and 2007 budget
    requests, the Petroleum Oil Technology and Natural Gas
    Technologies Research and Development Programs are proposed to
    be terminated in fiscal year 2008. However, the Office of
    Fossil Energy will continue to carry out important
    responsibilities in the oil and natural gas sector, such as
    management of the ultra-deep water and unconventional resources
    research program mandated by the Energy Policy Act of 2005.
        In addition, fossil energy will continue to authorize
    natural gas imports and exports, collect and import data on
    natural gas trade, operate the Rocky Mountain Oil Field Testing
    Center and oversee the Loan Guarantee Program for the Alaska
    Natural Gas Pipeline.
        The Energy Policy Act of 2005 directs the strategic
    petroleum reserve to prepare to increase its oil storage to 1
    billion barrels. Additionally, the President recently
    recommended expanding the reserve's capacity to 1.5 billion
    barrels. Our budget request of $331 million, almost double last
    year's request, will fund the reserve's continued readiness as
    well as the immediate filling of the reserve to its current
    capacity of 727 million barrels. The budget includes $168
    million to begin expansion at existing and new sites towards
    the 1.5 billion barrels.

                               PREPARED STATEMENT

        Mr. Chairman and members of the subcommittee, this
    completes my prepared statement. I'd be happy to answer any
    questions you may have.
        Senator Dorgan. Secretary Shope, thank you very much for
    your testimony.
        [The statement follows:]

                   Prepared Statement of Hon. Thomas D. Shope

        Mr. Chairman, members of the committee, it's a pleasure for me to
    appear before you today to present the Office of Fossil Energy's (FE)
    proposed Budget for fiscal year 2008
        Fossil Energy's $863 million budget request for fiscal year 2008,
    one of the largest FE requests made by this administration, will allow
    the Office to achieve 2 fundamental objectives: first, to support the
    President's top priorities for energy security, clean air, climate
    change and coal research; and second, to support the Department of
    Energy's strategic goal of protecting our national and economic
    security by promoting a diverse supply and delivery of reliable,
    affordable, and environmentally-sound energy.
        More specifically, the proposed budget emphasizes early initiation
    of an expansion of the Strategic Petroleum Reserve; rapid development
    of technologies to manage and dramatically reduce atmospheric emissions
    of the greenhouse gas carbon dioxide from fossil fuel use in power
    generation and other industrial activity; and design and other
    preparatory work on the FutureGen project to combine in one plant the
    production of electric power and hydrogen fuel from coal with near-zero
    atmospheric emissions.

                    THE PRESIDENT'S COAL RESEARCH INITIATIVE

        I will begin the detailed presentation of our proposed budget with
    coal, our most abundant and lowest cost domestic fossil fuel. Coal
    today accounts for nearly one-quarter of all the energy--and about half
    the electricity--consumed in the United States. Because coal is so
    important to our energy future, our proposed budget of $448 million for
    the President's Coal Research Initiative, related fuel cell R&D and R&D
    by Federal employees within program direction accounts for more than
    half our total budget.
        I should mention here that our fiscal year 2008 Budget focuses our
    research and development on activities that support the President's
    Advanced Energy Initiative and key provisions of the Energy Policy Act
    of 2005. These activities will be conducted largely through cost
    sharing and industry collaboration. As a result of the evaluations
    under the Research and Development Investment Criteria, and the Program
    Assessment Rating Tool, activities throughout the program emphasize
    research and development for technologies that will be used in the
    FutureGen project.
        The goal of the overall coal program, which includes the
    President's Coal Research Initiative, is to conduct research and
    development that will improve the competitiveness of domestic coal in
    future energy markets. The administration strongly supports coal as an
    important component of our energy portfolio. This year's budget request
    completes the President's commitment to invest $2 billion on clean coal
    research over 10 years, 3 years ahead of schedule. Our coal budget
    request is broken down into the following components:
    Clean Coal Power Initiative
        We are requesting $73 million in fiscal year 2008 for the Clean
    Coal Power Initiative (CCPI), a cooperative, cost-shared program
    between the Government and industry to demonstrate emerging
    technologies in coal-based power generation so as to help accelerate
    commercialization. CCPI allows the Nation's power generators, equipment
    manufacturers and coal producers to help identify the most critical
    barriers to coal use in the power sector. Technologies to eliminate the
    barriers are then selected with the goal of accelerating development
    and deployment of applications that will economically meet
    environmental standards while increasing plant efficiency and
    reliability. Work on promising technologies selected in two prior
    solicitations will continue in fiscal year 2008, and we plan to
    announce a third solicitation during the year, which will focus on
    advanced technology systems that capture carbon dioxide for
    sequestration and beneficial reuse.
        Some activities of the Clean Coal Power Initiative will help drive
    down the costs of Integrated Gasification Combined Cycle (IGCC) systems
    and other technologies for near-zero atmospheric emission plants that
    are essential to the FutureGen concept.
    FutureGen
        FutureGen is a high-priority project that will establish the
    capability and feasibility of co-producing electricity and hydrogen
    from coal with near-zero atmospheric emissions including carbon
    dioxide. FutureGen is a public/private partnership designed to
    integrate technologies that ultimately will lead to new classes of
    plants that feature fuel flexibility, multi-product output, electrical
    efficiencies of over 60 percent, and near-zero atmospheric emissions.
    FutureGen's goals include electricity at costs no more than 10 percent
    above power from comparable plants that are incapable of carbon
    sequestration. The capture and permanent storage of atmospheric carbon
    emissions is a key feature of the FutureGen concept, as is the
    capability to use coal, biomass, or petroleum coke. The project should
    help retain the strategic value of coal--the Nation's most abundant and
    lowest cost domestic energy resource. FutureGen's proposed budget of
    $108 million for fiscal year 2008 will be used to support detailed
    plant design and procurement, as well as ongoing permitting,
    preliminary design and site characterization work.
        To help fund both the CCPI and FutureGen projects in fiscal year
    2008, our proposed Budget redirects $58 million in unexpended sums and
    $257 million in deferred appropriations from the original Clean Coal
    Technology program. Specifically, the Budget proposes to transfer $108
    million of the $257 million deferral to the FutureGen project, and
    cancel the remaining $149 million from the deferral. Of the unobligated
    balances carried forward at the start of fiscal year 2008, $58 million
    is transferred to the Clean Coal Power Initiative (CCPI).

                            FUELS AND POWER SYSTEMS

        Technology development supporting FutureGen is embodied in the core
    research and development activity of the Fuels and Power Systems
    program. The Fuels and Power Systems program's proposed budget for
    fiscal year 2008 is $245.6 million. Of this total amount, $183.6
    million will fund research and development for carbon capture and
    sequestration, membrane technologies for oxygen and hydrogen
    separation, advanced combustion turbines, coal-to-hydrogen conversion,
    and gasifier-related technologies. The remaining balance of $62 million
    will support Fuel Cells.
        The program breaks down as follows:
    Advanced Integrated Gasification Combined Cycle
        With proposed funding of $50 million for fiscal year 2008, the
    Advanced Integrated Gasification Combined Cycle program will continue
    to concentrate efforts on gas stream purification to meet quality
    requirements for use with fuel cells and conversion processes, on
    impurity tolerant hydrogen separation, on elevating process efficiency,
    and on reducing the costs and energy requirements for oxygen production
    through development of advanced technologies such as air separation
    membranes.
    Advanced Turbines
        A funding request of $22 million will allow the Advanced Turbines
    program to continue its concentration on the creation of a turbine-
    technology base that will permit the design of near-zero atmospheric
    emission IGCC plants and a class of FutureGen-descended plants with
    carbon capture and sequestration. This research emphasizes technology
    for high-efficiency hydrogen and syngas turbines and builds on prior
    successes in the Natural Gas-based Advanced Turbine Systems Program.
    Advanced Research
        The Advanced Research program bridges basic and applied research to
    help reduce the costs of advanced coal and power systems while
    improving efficiency and environmental performance. The proposed $22.5
    million budget for Advanced Research will fund projects aimed at a
    greater understanding of the physical, chemical, biological and thermo-
    dynamic barriers that currently limit the use of coal and other fossil
    fuels.
    Carbon Sequestration
        The Carbon Sequestration program, with a proposed budget for fiscal
    year 2008 of $79 million, is developing a portfolio of technologies
    with great potential to reduce greenhouse gas emissions. This high-
    priority program's primary concentration is on dramatically lowering
    the cost and energy requirements of pre- and post-combustion carbon
    dioxide capture. The goal is to have a technology portfolio by 2012 for
    safe, cost-effective and long-term carbon mitigation, management and
    storage, which will lead to substantial market penetration after 2012.
    In the long term, the program is expected to contribute significantly
    to the President's goal of developing technologies to substantially
    reduce greenhouse gas emissions.
        The Carbon Sequestration program's activities in fiscal year 2008
    will concentrate on research and development projects for carbon
    dioxide (CO2) capture and storage, as well as measurement,
    monitoring and verification technologies and processes.
        In coordination with the current partnerships, the program will
    determine the ``highest potential'' opportunities for the initial
    expedited round of large scale sequestration tests in saline, coal,
    and/or oil and gas bearing formations. This work will begin with a
    physical characterization of the surface and subsurface, reservoir
    modeling, and NEPA review.
        The Partnerships will also move on to the next phase of the Weyburn
    project, where CO2 is being injected into a producing
    oilfield. Weyburn's success would deliver both decreased carbon
    emissions and increased domestic oil production.
        Finally, DOE formed the international Carbon Sequestration
    Leadership Forum (CSLF) in 2003 to work with foreign partners on joint
    carbon sequestration projects, and to collect and share information.
    That work will in continue in fiscal year 2008.
        Several members of the CSLF have also signed on to the FutureGen
    project, and others have signaled strong interest in joining.
    Fuels
        Research and development carried out by the Coal-to-Hydrogen Fuels
    program, funded at a proposed $10 million, will make the future
    transition to a hydrogen-based economy possible by reducing the costs
    and increasing the efficiency of hydrogen production from coal. This
    program is an important component of both the President's Hydrogen Fuel
    Initiative and the FutureGen project.
    Fuel Cells
        Within Fuel Cells, we have requested $62 million for fiscal year
    2008 to continue the important work of the Solid State Energy
    Conversion Alliance, the goal of which is to develop the technology for
    low-cost, scalable and fuel flexible fuel cell systems that can operate
    in central, coal-based power systems as well as in other electric
    utility (both central and distributed), industrial, and commercial/
    residential applications.
    Research by Federal Staff
        In addition to the funding levels reflected for Fuels and Power
    Systems, there is $20 million provided within the Program Direction
    account that directly supports the President's Coal Research
    Initiative, plus $1 million for fuel cells. This funding supports
    Federal staff directly associated with conducting the research
    activities of specific Fuels and Power Systems subprograms.
    Petroluem and Natural Gas Technologies
        Consistent with the fiscal year 2006 and fiscal year 2007 Budget
    Requests, the Petroleum-Oil Technology and Natural Gas Technologies
    research and development programs will be terminated in fiscal year
    2008.
        The Oil and Gas group will manage the Ultra-Deepwater and
    Unconventional Resources Research Program mandated by the Energy Policy
    Act of 2005. However, I should point out that the 2008 Budget proposes
    to repeal this legislation, consistent with the fiscal year 2007 Budget
    Request.
        In addition, FE will continue to authorize natural gas imports and
    exports, collect and report data on natural gas trade, and operate the
    Rocky Mountain Oilfield Testing Center.
        FE will also oversee the loan guarantee program for the Alaska
    Natural Gas Pipeline.
    Strategic Petroleum Reserve
        The Strategic Petroleum Reserve (SPR) exists to ensure America's
    readiness to respond to severe energy supply disruptions. The Reserve
    reached its highest inventory level--700 million barrels of oil--in
    2005 The Energy Policy Act of 2005 directs DOE to fill the SPR to its
    authorized 1 billion barrel capacity, as expeditiously as practicable.
    Additionally, in the 2008 Budget, the President proposed expanding the
    Reserve's capacity to 1.5 billion barrels.
        Our budget request of $332 million for fiscal year 2008--almost
    double last year's request--will fund the Reserve's continued readiness
    through a comprehensive program of systems maintenance, exercises, and
    tests, as well as beginning expansion to 1 billion barrels at existing
    and new sites and NEPA work to expand to 1.5 billion barrels. DOE will
    begin immediately to fill the reserve to its current capacity of 727
    million barrels through purchases of oil with available balances as
    well as through placement of the Department of the Interior's royalty
    in-kind oil into the SPR.
    Northeast Home Heating Oil Reserve
        The Northeast Home Heating Oil Reserve was established in July 2000
    when the President directed the Department of Energy to establish a
    reserve capable of assuring home heating oil supplies for the Northeast
    states during times of very low inventories and significant threats to
    immediate supply. The Reserve contains 2 million barrels of heating oil
    stored at commercial terminals in the Northeast and is in good
    condition. The current 5-year storage contracts expire in September
    2007. A request for bids was issued in February 2007. The proposed
    fiscal year 2008 budget requests $5.3 million for continued operations.
    Naval Petroleum and Oil Shale Reserve
        The fiscal year 2008 budget request of $17.3 million for the Naval
    Petroleum and Oil Shale Reserve (NPOSR) will allow it to continue
    environmental remediation activities and determine the equity
    finalization of Naval Petroleum Reserve 1 (NPR-1); operate NPR-3 until
    its economic limit is reached, and while operating NPR-3, maintain the
    Rocky Mountain Oilfield Test Center..
        Because the NPOSR no longer served the national defense purpose
    envisioned in the early 1900s, the National Defense Authorization Act
    for Fiscal Year 1996 required the sale of the Government's interest in
    Naval Petroleum Reserve 1 (NPR-1). To comply with this requirement, the
    Elk Hills field in California was sold to Occidental Petroleum
    Corporation in 1998. Subsequently, the Department transferred 2 of the
    Naval Oil Shale Reserves (NOSR-1 and NOSR-3), both in Colorado, to the
    Department of the Interior's (DOI) Bureau of Land Management. In
    January 2000, the Department returned the NOSR-2 site to the Northern
    Ute Indian Tribe. The Energy Policy Act of 2005 transferred
    administrative jurisdiction and environmental remediation of Naval
    Petroleum Reserve 2 (NPR-2) in California to the Department of the
    Interior. DOE retains the Naval Petroleum Reserve 3 (NPR-3) in Wyoming
    (Teapot Dome field).

                          ELK HILLS SCHOOL LANDS FUND

        The National Defense Authorization Act for fiscal year 1996
    authorized the settlement of longstanding ``school lands'' claims to
    certain lands by the State of California known as the Elk Hills
    Reserve. The settlement agreement between DOE and California, dated
    October 11, 1996, provides for payment, subject to appropriation, of 9
    percent of the net sales proceeds generated from the divestment of the
    Government's interest in the Elk Hills Reserve. Under the terms of the
    Act, a contingency fund containing 9 percent of the net proceeds of the
    sale was established in the U.S. Treasury and was reserved for payment
    to California.
        To date, DOE has paid $300 million to the State of California. The
    first installment payment of the settlement agreement was appropriated
    in fiscal year 1999. While no appropriation was provided in fiscal year
    2000, the Act provided an advance appropriation of $36 million that
    became available in fiscal year 2001 (second installment). The next 4
    installments of $36 million were paid at the beginning of fiscal year
    2002, fiscal year 2003, fiscal year 2004, and fiscal year 2005
    respectively. A seventh payment of $84 million was made in fiscal year
    2006.
        The fiscal year 2008 budget proposes no funding for the Elk Hills
    School Lands Fund. The timing and levels of any future budget requests
    are dependent on the schedule and results of the equity finalization
    process.

        FOSSIL ENERGY'S BUDGET MEETS THE NATION'S CRITICAL ENERGY NEEDS

        In conclusion, I'd like to emphasize that the Office of Fossil
    Energy's programs are designed to promote the cost-effective
    development of energy systems and practices that will provide current
    and future generations with energy that is clean, efficient, reasonably
    priced, and reliable. Our focus is on supporting the President's top
    priorities for energy security, clean air, climate change, and coal
    research. By reevaluating, refining and refocusing our programs and
    funding the most cost-effective and beneficial projects, the fiscal
    year 2008 budget submission meets the Nation's critical needs for
    energy, environmental and national security.
        Mr. Chairman, and members of the committee, this completes my
    prepared statement. I would be happy to answer any questions you may
    have at this time.

        Senator Dorgan. Finally, we will hear from the Honorable
    Kevin Kolevar, Director of the Office of Electricity Delivery
    and Energy Reliability. Director, you may proceed.

    STATEMENT OF KEVIN M. KOLEVAR, DIRECTOR, OFFICE OF
                ELECTRICITY DELIVERY AND ENERGY RELIABILITY
        Mr. Kolevar. Thank you, Mr. Chairman, members of the
    subcommittee for the opportunity to testify on the President's
    fiscal year 2008 budget request for the Office of Electricity
    Delivery and Energy Reliability.
        The mission of the Office is to lead national efforts to
    modernize the electricity delivery system, enhance the security
    and reliability of America's energy infrastructure, and
    facilitate recovery from disruptions to energy supply.
        The President's budget request includes $114.9 million for
    OE in fiscal year 2008, which represents a 16 percent decrease
    from the fiscal year 2007 operating plan. This request includes
    $86 million for Research and Development activities, $11.6
    million for Operations and Analysis activities and $17.4
    million for Program Direction.
        I will first address the activities of OE's Research and
    Development program. Our request of $86 million for fiscal year
    2008 will fund the following four main activities--high
    temperature superconductivity, visualization and controls,
    energy storage and power electronics, and renewable and
    distributed systems integration. The development of these
    advanced electricity technologies will influence the future of
    all aspects of the electric transmission and distribution
    systems.
        The first activity I would like to highlight is the science
    and development of high temperature superconductivity.
    Superconducting cables transmit electricity through conductors
    of temperatures approaching absolute zero, thus preventing
    resistance to electrical voltage, which allows large amounts of
    electricity to be transmitted over long distances with little
    line loss. Superconductivity, therefore, hold the promise of
    alleviating capacity concerns while moving power efficiently
    and reliably.
        Another critical piece of a resilient and reliable modern
    grid is enhancing the security of our control systems. Our
    visualization and control activity focuses on improving our
    ability to measure and address the vulnerabilities of control
    systems. The research in this area will allow us to detect
    cyber intrusion, implement protective measures and response
    strategies, and sustain cyber security improvements over time.
        Using our understanding from previous energy storage
    demonstration activities, we are researching and developing
    new, advanced higher energy density materials and storage
    devices for utility scale application. The program also focuses
    on research in power electronics to improve material and device
    properties that are needed for transmission level applications.
        Finally, in 2007, the renewable and distributed systems
    integration activity will complete the transition away from
    generation technology activities and will then focus on grid
    integration of distributed and renewable systems in 2008. This
    is a logical step in advancing clean energy resources to
    address future challenges.
        I will now discuss DOE's Permitting, Siting and Analysis
    Office, which is tasked with implementing mandatory EPACT
    requirements to modernize the electric grid and enhance the
    reliability of the energy infrastructure. These requirements
    include analyzing transmission congestion, proposing energy
    corridors for the Secretary's consideration and coordinating
    Federal agency review of applications to site transmission
    facilities on Federal lands. The President's budget requests
    $5.7 million for this Office in fiscal year 2008.
        On August 8, 2006, the Department published its National
    Electric Transmission Congestion Study in compliance with
    section 1221(a) of the Energy Policy Act. This study
    highlighted more than 15 geographic areas where electric
    congestion or capacity constraints exist. The Department has
    announced that, due to the significant public interest in the
    national corridor issues, before the Secretary designates any
    national corridor, he will first issue any designations in
    draft form to facilitate focused review and comment by affected
    States, regional entities, and the general public.
        Another major effort involves the implementation of section
    368 of the Energy Policy Act, which requires the designation of
    energy right-of-way corridors on Federal lands in the 11
    contiguous western States. The agencies plan to publish a draft
    programmatic environmental impact statement for the designation
    of the energy corridors in the late spring of this year and
    will solicit public comments.
        Finally, this Office is preparing to implement DOE's
    responsibilities under the new section, 216(h) of the Federal
    Power Act. Section 216(h) provides for the Department to act as
    the lead agency for purposes of coordinating all applicable
    Federal authorizations and related environmental reviews
    required to site an electro-transmission facility.
        OE's Office of Infrastructure Security and Energy
    Restoration facilitates the protection of the Nation's critical
    energy infrastructure. This Office is responsible for
    coordinating and carrying out the Department's obligations for
    critical infrastructure identification, prioritization,
    protection, and national preparedness within the energy sector.
    The President's 2008 budget request includes $5.9 million for
    this Office.
        In times of declared emergencies, this Office coordinates
    Federal efforts under the National Response Plan to assist
    State and local governments and the private sector in the
    restoration of electrical power and other energy-related
    activities. DOE personnel deployed in regions affected by
    large-scale electrical outages to assist in recovery efforts.
    The Infrastructure Security and Energy Restoration Office also
    works with States to foster greater awareness of the regional
    scope of energy interdependencies and to develop energy
    assurance plans that address the potential cascading effects of
    energy supply disruptions.
        In his 2007 State of the Union Address, the President
    emphasized the importance of continuing to change the way
    America generates electric power and highlighted the
    significant progress we have already made in integrating clean
    coal technology, solar and wind energy, and clean safe nuclear
    energy into the electric transmission system.
        Technology such as power electronics, high temperature
    superconductivity and energy storage hold not only the promise
    of lower costs and greater efficiency but also directly enhance
    the viability of clean energy resources by addressing issues
    such intermittency, controllability and environmental impact.
        We cannot simply rely on innovative policies and
    infrastructure investment. We must also invest Federal dollars
    in the research, development, and deployment of new technology
    in order to improve performance and ensure our national
    security, economic competitiveness, and environmental well-
    being.
        Mr. Chairman, this concludes my statement. I look forward
    to any subcommittee questions.
        Senator Dorgan. Dr. Kolevar, thank you very much for your
    statement.
        [The statement follows:]

                     Prepared Statement of Kevin M. Kolevar

        Mr. Chairman and members of the committee, thank you for this
    opportunity to testify on the President's fiscal year 2008 budget
    request for the Office of Electricity Delivery and Energy Reliability.
        The mission of the Office of Electricity Delivery and Energy
    Reliability (OE) is to lead national efforts to modernize the
    electricity delivery system, enhance the security and reliability of
    America's energy infrastructure, and facilitate recovery from
    disruptions to energy supply. These functions are vital to the
    Department of Energy's (DOE) strategic goal of protecting our national
    and economic security by promoting a diverse supply and delivery of
    reliable, affordable, and environmentally responsible energy.
        The President's fiscal year 2008 budget includes $114.9 million for
    OE in fiscal year 2008, which is an 8 percent decrease from the fiscal
    year 2007 request. This includes $86.0 million for Research and
    Development activities, $11.6 million for Operations and Analysis
    activities, and $17.4 million for Program Direction. As DOE is
    currently preparing a spending plan in accordance with the terms of the
    2007 Continuing Resolution, my testimony on the fiscal year 2008 budget
    request reflects a comparison to the administration's fiscal year 2007
    request.
        When Thomas Edison opened the Pearl Street Station in lower
    Manhattan on September 4, 1884, he could hardly have foreseen the role
    electricity would play in the development of American society. Although
    the demand for electric lighting and power initially drove the
    station's construction, electricity ultimately stimulated and enabled
    technological innovations that reshaped America. Today, the
    availability and access to electricity is something that most Americans
    take for granted. Most people cannot describe what it is or where it
    comes from. Yet, it is vital to nearly every aspect of our lives from
    powering our electronics and heating our homes to supporting
    transportation, finance, food and water systems, and national security.
        The Energy Information Administration has estimated that by the
    year 2030, U.S. electricity sales are expected to increase by 43
    percent from their 2005 level. Although this is a positive indicator of
    a growing economy, it is also a significant amount of new demand on an
    electricity infrastructure that is already stressed and aging. With
    this in mind, OE's fiscal year 2008 budget request reflects a
    commitment to implement the directives of the Energy Policy Act of 2005
    (EPACT), support research of breakthrough technologies, and coordinate
    Federal response to temporary disruptions in energy supply to ensure a
    reliable and secure electricity infrastructure for every American in
    the coming decades.
        Meeting our future electricity needs will not be solved by focusing
    only on expanding our generation portfolio or on energy conservation.
    Perhaps the greatest challenge today, as it was in Edison's time, is
    building the elaborate network of wires and other facilities needed to
    deliver energy to consumers reliably and safely.

                            RESEARCH AND DEVELOPMENT

        The fiscal year 2008 budget request of $86.0 million for the
    Research and Development (R&D) program within OE funds 4 activities:
    High Temperature Superconductivity; Visualization and Controls; Energy
    Storage and Power Electronics; and Renewable and Distributed Systems
    Integration.
        Over the past 18 years, DOE has invested more than $500 million in
    the science and development of high temperature superconductivity.
    Superconductivity holds the promise of addressing capacity concerns by
    maximizing use of available ``footprint'' and limited space, while
    moving power efficiently and reliably. It also supports advanced
    substation and interconnection designs that allow larger amounts of
    power to be routed between substations, feeders, and networks using
    less space and improving the security and reliability of the electric
    system.
        Today, the High Temperature Superconductivity activity continues to
    support second generation wire development as well as research on
    dielectrics, cryogenics, and cable systems. This activity is being
    refocused to address a near-term critical need within the electric
    system to not only increase current carrying capacity, but also to
    relieve overburdened cables elsewhere in the local grid. The
    superconductivity industry in the United States is now at the critical
    stage of moving from small business development to becoming a part of
    our manufacturing base.
        Enhanced security for control systems is critical to the
    development of a reliable and resilient modern grid. The Visualization
    and Controls Research & Development activity focuses on improving our
    ability to measure and address the vulnerabilities of controls systems,
    detect cyber intrusion, implement protective measures and response
    strategies, and sustain cyber security improvements over time. The
    fiscal year 2008 request reflects an increase of $7.75 million related
    to support this effort.
        This activity is also developing the next generation system control
    and data acquisition (SCADA) system that features GPS-synchronized grid
    monitoring, secure data communications, custom visualization and
    operator cueing, and advanced control algorithms. Advanced
    visualization and control systems will allow operators to detect
    disturbances and take corrective action before problems cascade into
    widespread outages. The need to improve electric power control systems
    security is well-recognized by both the private and public sectors.
        The Energy Storage and Power Electronics activity proposes an
    increase of $3.80 million in fiscal year 2008 to: (1) leverage
    understanding gained from previous Energy Storage demonstration
    activities to research and develop new advanced higher energy density
    materials and storage devices for utility scale application; and (2)
    focus on enhanced research in Power Electronics to improve material and
    device properties needed for transmission-level applications.
        Large scale, megawatt-level electricity storage systems, or
    multiple, smaller distributed storage systems, could significantly
    reduce transmission system congestion, manage peak loads, make
    renewable electricity sources more dispatchable, and increase the
    reliability of the overall electric grid.
        The Renewable and Distributed Systems Integration Research &
    Development activity completed the transition away from generation
    technology activities in fiscal year 2007 and will focus on grid
    integration of distributed and renewable systems in fiscal year 2008,
    which is a logical step in advancing clean energy resources to address
    future challenges.

                        PERMITTING, SITING, AND ANALYSIS

        In fiscal year 2008, the Department is requesting $5.7 million for
    the Permitting, Siting, and Analysis (PSA) Office within the Operations
    and Analysis subprogram, which implements mandatory requirements set by
    EPACT to modernize the electric grid and enhance reliability of the
    energy infrastructure by contributing to the development and
    implementation of electricity policy at the Federal and State level.
    The Permitting Siting and Analysis Office is also tasked with analyzing
    transmission congestion, proposing energy corridors for the Secretary's
    consideration, and coordinating Federal agency review of applications
    to site transmission facilities on Federal lands.
        The Department published its National Electric Transmission
    Congestion Study on August 8, 2006, in compliance with section 1221(a)
    of EPACT, which requires DOE to prepare a study of electric
    transmission congestion every 3 years. The study named more than 15
    areas of the Nation with existing or potential transmission congestion
    problems. The study identifies Southern California and the East Coast
    from New York City to Washington, DC, as ``Critical Congestion Areas,''
    because transmission congestion in these densely populated and
    economically vital areas is especially significant.
        During the development of the study, which relied on extensive
    consultation with States and other stakeholders, the Department
    provided numerous opportunities for discussion and comment by States,
    regional planning organizations, industry, and the general public. OE
    intends to supplement the tri-annual Congestion Studies study by
    publishing annual progress reports on transmission improvements in the
    congested areas.
        Section 1221(a) also requires the Secretary to issue a report based
    on the August 8 Congestion Study. In this report, if consumers in any
    geographic area are being adversely affected by electric energy
    transmission capacity constraints or congestion, the Secretary may, at
    his discretion, designate such an area as a National Interest Electric
    Transmission Corridor (National Corridor).
        Because of the broad public interest in the implementation of
    section 1221(a), the Department invited and received over 400 public
    comments on the designation of National Corridors. The Department
    continues to evaluate these comments, and has not yet determined
    whether, and if so, where, it would be appropriate to propose
    designation of National Corridors. Prior to issuing a report that
    designates any National Corridor, the Department will first issue a
    draft designation to allow affected States, regional entities, and the
    general public additional opportunities for review and comment.
        Another major effort involves the implementation of section 368 of
    EPACT, which requires the designation of energy right-of-way corridors
    on Federal lands in the 11 contiguous Western States. An interagency
    team, with DOE as the lead agency, conducted public scoping meetings
    concerning the designation of corridors in each of the 11 contiguous
    Western States. The agencies plan to publish a draft Programmatic
    Environmental Impact Statement for the designation of the energy
    corridors in late spring of 2007 and will solicit public comments.
        In August 2006, DOE and 8 other Federal agencies signed a
    Memorandum of Understanding (MOU) that clarifies the respective roles
    and responsibilities of Federal agencies, State and tribal governments,
    and transmission project applicants with respect to making decisions on
    transmission siting authorizations. DOE is preparing to implement its
    responsibilities under the new section 216(h) of the Federal Power Act
    to coordinate with these 8 other Federal agencies to prepare initial
    calendars, with milestones and deadlines for the Federal authorizations
    and related reviews required for the siting of transmission facilities.
    DOE will maintain a public website that will contain a complete record
    of Federal authorizations and related environmental reviews and will
    work closely with the lead Federal NEPA agency to encourage complete
    and expedited Federal reviews. DOE is currently considering the
    procedures it will use in carrying out this program.

                 INFRASTRUCTURE SECURITY AND ENERGY RESTORATION

        The President has designated the Department of Energy as the Lead
    Sector Specific Agency responsible for facilitating the protection of
    the Nation's critical energy infrastructure. The Infrastructure
    Security and Energy Restoration (ISER) activity of the Operations and
    Analysis subprogram is responsible for coordinating and carrying out
    the Department's obligations to support the Department of Homeland
    Security in this important national initiative. The fiscal year 2008
    request is for $5.9 million in funding for Infrastructure Security and
    Energy Restoration within the Operations and Analysis subprogram.
        The Infrastructure Security and Energy Restoration activity
    fulfills DOE's responsibilities as defined in Homeland Security
    Presidential Directives 7 and 8 for critical infrastructure
    identification, prioritization, and protection and for national
    preparedness. In times of declared emergencies, this Office also
    coordinates Federal efforts under the National Response Plan to assist
    State and local governments and the private sector in the restoration
    of electrical power and other energy-related activities.
        In the event of a large-scale electrical power outage caused by
    natural disasters such as hurricanes, ice storms, or earthquakes, DOE
    personnel will deploy to the affected region to assist in recovery
    efforts. During the 2005 hurricane season, DOE was specifically
    deployed to respond to 5 hurricanes: Dennis, Katrina, Ophelia, Rita and
    Wilma. In such instances, DOE coordinates all Federal efforts to assist
    local authorities and utilities in dealing with both measures to
    restore power and to resolve other issues related to fuel supply.
        The Infrastructure Security and Energy Restoration Office also
    fosters greater awareness of the regional scope of energy
    interdependencies by working with States to develop energy assurance
    plans that address the potential cascading effects of energy supply
    problems. Exercises are conducted with States and Federal partners to
    help sharpen this focus. Finally, staff work with States and DHS in
    emergency situations to help resolve issues brought on by temporary
    energy supply disruptions, such as the winter 2007 propane shortage in
    Maine.

                                   CONCLUSION

        In his 2007 State of the Union address, President Bush emphasized
    the importance of continuing to change the way America generates
    electric power and highlighted significant progress in integrating
    clean coal technology, solar and wind energy, and clean, safe nuclear
    energy into the electric transmission system.
        Technologies such as power electronics, high temperature
    superconductivity, and energy storage hold the promise of lower costs
    and greater efficiency, and also directly enhance the viability of
    clean energy resources by addressing issues such as intermittency,
    controllability, and environmental impact.
        Federal investment in the research, development, and deployment of
    new technology combined with innovative policies and infrastructure
    investment, is essential to improving grid performance and ensuring our
    energy security, economic competitiveness, and environmental well-
    being.
        This concludes my statement, Mr. Chairman. I look forward to
    answering any questions you and your colleagues may have.

                              FOSSIL ENERGY BUDGET

        Senator Dorgan. Let me begin with a couple of questions and
    then I'll call on my colleagues.
        First, Secretary Shope, the ability to use the abundant
    supplies of coal that we have in this country depends a lot on
    the research and development capability in the fossil energy
    R&D programs. I was looking at your numbers and if you take out
    the 25 percent for FutureGen and then take out the strategic
    petroleum reserve money, isn't it then the case that the
    administration budget is proposing less money for fossil energy
    R&D?
        Mr. Shope. Well Senator, we do take a portfolio approach to
    not only the coal aspect of the program, the entire fossil
    energy program, as I mentioned, focusing on energy security
    both in the domestic economic impacts as well as economic
    opportunities that it provides. So when we talk about our coal
    budget, we really are looking at a $426 million coal budget
    going forward. That's the amount of money we will be advancing
    in 2008.
        Senator Dorgan. But isn't that a substantial reduction?
        Mr. Shope. Compared to our 2006 budget, we had $366 million
    that was applied in 2006.
        Senator Dorgan. Applied by 2007 numbers?
        Mr. Shope. In 2007, we're going to be applying $425
    million.

                                 COAL RESOURCES

        Senator Dorgan. My point was not about your portfolio
    approach, admirable as that might be. My point was with respect
    to the use of our coal resources, abundant resources that can
    probably only be used in the future, in the way that many of us
    would like them to be used, if we, through research and
    development, unlock the mystery of this technology to be able
    to sequester carbon and burn coal in a way that's clean,
    doesn't just spoil our atmosphere and so on. My question is, if
    you remove SPRO and remove FutureGen, isn't the case, with
    respect to the issue of being able to use our coal resources
    and able to devote research and development funds, that there
    is a substantial reduction there?
        Mr. Shope. If you're looking at strictly the MMG research
    and the research and development, our fuels and power systems,
    that's correct. There's a decrease in there but there is an
    increase again--we've looked at our program and said, what is
    it that we need to accomplish our goals?
        Senator Dorgan. I understand that but then how does one
    justify at this moment--it seems to me that we've come to an
    important intersection here in energy policy. Some regions have
    coal resources, others have oil, nuclear power and so we're
    talking about a lot of issues here. We have hundreds of years
    of coal resources. We can only use them, in my judgment, if
    we're able to make the investment to unlock the mystery of how
    to avoid putting effluents into the air and causing all kinds
    of issues. How do we use research and development to get to
    that point? So how does one justify coming to this
    intersection, saying to us, ``Oh, by the way, with respect to
    that account, we want to cut funding.''
        Mr. Shope. Well, Senator, I agree with your statements
    about that. That's exactly what we need to do is to move
    forward and we're looking for a technology approach forward. I
    would say to you that the research and development--we still
    have a very active, vibrant portfolio in our research and
    development area. But we also are looking forward to moving
    these--the technologies out, getting them applied. So that's
    why we do have the FutureGen project going forward. It's part
    of our--that's actually a research project in and of itself so
    all the money that we are using in FutureGen are research
    dollars.
        But in addition, we're trying to look at carbon capturing
    storage, the issue that is really preeminent in our program and
    saying we need to move forward and get these technologies
    deployed so we'll increase in our sequestration budget as well,
    to bring this to fruition.
        Senator Dorgan. You know, the problem is, it's never much
    fun to inquire of someone who I think, in a less guarded
    moment, would probably say, I understand your point. We should
    be asking for more money but this is the President's budget.
    I'm here to support the President's budget. That's what I'm
    paid for. So I can't get, perhaps, as candid an answer as I
    would hope on whether it makes a lot of sense at this
    intersection, to cut that portion of the budget. It just seems
    nuts to me. With all due respect, if we want to use that
    resource, we're going to have to find ways to be able to use it
    and unlocking those ways, in my judgment, would require some
    directed funding to our priorities. We're going to do that
    rather than cutting funding.

                 ENERGY EFFICIENCY AND RENEWABLE ENERGY BUDGET

        But I understand your answers, Mr. Secretary. I don't mean
    to badger you. Let me ask Secretary Karsner a similar type of
    question. You and I visited the Renewable Energy Laboratory at
    Golden, Colorado. I was enormously impressed by it. I, of
    course, have a great interest in all of these accounts and a
    good many of them are going to be decreased, as you know and I
    suspect if I asked you the same question, I'll get an answer--
    --
        Mr. Karsner. I support the President's budget.
        Senator Dorgan. So is there any chance after the hearing,
    we could have a cup of coffee and find out where I could ask
    you the same questions? But more seriously, you know, we here
    in Congress added money to this bill, as you know $300 million.
    When you take that with the 2007 level and then the plus up of
    $300 million, the 2008 request, in virtually every area, with,
    I think, maybe two exceptions, is going to be a cut in funding
    2008 versus 2007.
        We're talking, on the authorizing committee, Senator
    Bingaman, Senator Domenici, myself and Senator Craig, and
    others about this notion of how to put together another follow-
    on energy bill and what parts are necessary, so we understand
    the urgency. It seems to me there is a confluence of events
    here with respect to what has become sort of a consensus on
    climate change, our vulnerability with respect to oil and
    foreign oil. There is a greater urgency to these issues and it
    seems to me out of step with that greater urgency to see
    proposed reductions in spending in most of the accounts dealing
    with renewable and energy efficiency issues. Would you agree
    with me, Secretary Karsner?
        Mr. Karsner. In substance, in the character of what you're
    saying, I do agree. I think the differential is largely
    accounted for by the idiosyncrasies of the budgeting process.
    This 2008 budget originated more than 2 years ago, just as I'm
    currently preparing a 2009 budget 2 years into the future for
    an administration I won't be a part of. Technology, of course,
    moves much faster, as do these priorities, and when we had the
    opportunity for the spend plan, which is really the first
    budget that I've had the opportunity to exercise influence
    over, it does very accurately reflect our priorities in a
    contemporaneous, real-time snapshot of the portfolio approach
    and there is a heavier emphasis on efficiency.
        Senator Dorgan. I think it is important to note that the
    Congress, on a bipartisan basis, in putting together the fiscal
    year 2007 appropriation bills, combined, I believe, 10 bills
    into one omnibus because we were required to do that.
    Republicans and Democrats together said ``You know what? We're
    under funded in the renewables area and so we added to all of
    these accounts.'' There are priorities that come from the
    administration and then priorities that come from the Congress
    and we will try to work our will in terms of what we believe
    the right priorities will be. I mentioned the renewable energy
    and fossil fuel accounts and I think it's important to
    understand that there is a renewed urgency here with respect to
    both and so your area is going to be critically important to
    us. We need to get out of your area some very significant
    opportunities and changes for the future.

                             NUCLEAR ENERGY BUDGET

        Secretary Spurgeon, can you tell me how the $114 million
    for shared costs of efforts to reduce barriers to deploy
    nuclear power, would be spent? I don't quite understand from
    the description how that would be dispersed.
        Mr. Spurgeon. It's spent through two consortia. The NuStart
    Consortia, which consists of 10 electric generating companies
    plus two manufacturers and the Dominion Power Group, which has
    one utility and manufacturer and architect engineers associated
    with it. The whole objective of the Nuclear Power 2010 Program
    is to remove the barriers to entry of these first nuclear
    powerplants into the marketplace. So what we are doing is we're
    spending money on design standardization costs. We're spending
    money in design standardization and in preparing the combined
    operating licenses for two different types of reactors, one a
    boiling water reactor and the second, a pressurized water
    reactor.
        So it's to get the first ones through the process so that
    those that follow can reference the first ones and shorten the
    time scale and thus, cost for introducing nuclear power in the
    United States.

                  ELECTRICITY DELIVERY TECHNOLOGICAL ADVANCES

        Senator Dorgan. I don't know as much about that area.
    That's why I asked the question. I will submit further
    questions as well, just so that I understand more. And,
    finally, then I will turn to my colleagues.
        Director Kolevar, it seems to me that we have not seen any
    substantial change in the technology of delivering electricity
    for perhaps three-quarters of a century. We string lines and we
    run electricity over the lines and we run these lines through a
    corridor. I know some companies are working on new
    technologies--composite conductors, to name one, and there are
    others. If we could see dramatic advances there, we might be
    able to use existing corridors to double or triple the
    capability of moving electricity to where it's needed and
    that's part of what your investment is about, I understand.
        With what hope can we approach a future with new
    technologies for the transmission of electricity? Thus far, we
    have had very few advances in those areas.
        Mr. Kolevar. You're correct, Mr. Chairman. It is certainly
    challenging space. There have been a variety of new
    technological advances that we have not seen penetrate the
    system in any significant fashion. I do believe the opportunity
    is there for a couple of reasons. One, the system today is
    increasingly stressed and in two parts of the country, we
    either came close to or experienced blackouts. I think that
    will drive greater technological penetration of transmission
    scale applications and distribution scale applications that can
    enhance reliability.
        I also think it's the case that the work that is going on
    with the Federal Energy Regulatory Commission (FERC) and the
    Nuclear Regulatory Commission (NRC) in pushing new mandatory
    reliability standards will help some of these technologies to
    be pushed into the market.

               ELECTRICITY DELIVERY AND ENERGY RELIABILITY BUDGET

        Senator Dorgan. Director Kolevar, I'll give you the
    opportunity to learn from Secretary Shope on this subject but
    you're probably not happy to see a $132 million research and
    development budget drop to $86 million. I assume that this is
    probably not advancing our pursuit of new technologies.
        Mr. Kolevar. We were able to leverage a number of synergies
    in the program where we saw the drop that you reference from
    fiscal year 2006 to 2008. Mr. Chairman, I would also note that
    the majority of that reduction was scheduled for phase-out. It
    was in some reciprocating engine work and in some combined heat
    and power work where we had achieved or came very close to
    achieving some pre-established milestones. There was a general
    thought that when we achieve what we set out to achieve that we
    ought to then discontinue that project and focus on some other
    applications.
        Senator Dorgan. Would you prefer at least the minimum level
    of funding for the pursuit of research and development for new
    technology in electric transmission?
        Mr. Kolevar. I'm sorry, I don't understand your question.
    At the minimum 2008 level?
        Senator Dorgan. At least in the pursuit of research and
    development and in the area where there has been so little
    progress for so long and where so much is necessary for us to
    be able to produce in one area and transmit to another. I was
    wondering whether you would prefer level funding, at a minimum
    level, for this function of research and development.
        Mr. Kolevar. Yes, sir. Level funding at a minimum would be
    appreciated.
        Senator Dorgan. Thank you. Senator Domenici.
        Senator Domenici. Well, Mr. Chairman, you succeeded.
        Senator Dorgan. I did. I didn't want to mention that but I
    did.
        Senator Domenici. Three witnesses and three shots but you
    got there. Let me make an observation first. Obviously, he's
    sitting in the chair and I'm sitting next to him as ranking
    member. That got turned around just a few months ago but I
    think that it should be--it would be appropriate for me to
    indicate to the four of you that I can recall your coming
    before the subcommittee to get confirmed for your jobs and I
    was obviously sitting in this position with my friend and
    ranking member--who came before the Energy and Natural
    Resources Committee, which frequently gets confused with this
    subcommittee. This isn't the subcommittee.
        And I was quite impressed when we finished getting all of
    you, the four of you, that this late in this administration, we
    were going to get such qualified people. I openly expressed
    myself as saying that the Secretary of Energy and his Under
    Secretary, Clay Sell, have done some exciting work in getting
    the four of you to take these jobs. And I repeat that. I hope
    you're as enthused now as you were when you told us why you
    would take this job, knowing full well that whether it is a
    Republican or a Democrat, there is a big chance you will not be
    around for 5 or 6 years to see your dreams achieved.
        I do believe I was right in my assessment about you. Your
    work has been exciting. I think you are challenged even though
    you had a terrible start with the lousy work that the United
    States Senate did and we were in charge, not them, in not
    getting an appropriation bill and then throwing upon you the
    kind of appropriation that we did and then you having to
    address questions like you are here, when this appropriation
    process is all out of focus for the year 2005, 2006, 2007, and
    2008. But I commend you.

                         PREVENTING REGIONAL BLACKOUTS

        Now I want to just start with you on the right hand side.
    When we passed the energy bill, the authorizing bill, those of
    us who were very thrilled with the bill had a check-off list
    and almost everybody had one item that said that if this works,
    it should not be too long before America can say, we will not
    have any more regional blackouts in our grid across the
    country. I didn't ask you, Director Kolevar, whether I could
    make that statement. We thought that's what we did. I'm sure
    Senator Craig said the same thing. He had it on his list. What
    we had done is created authority in you so that we should avoid
    the pitfalls that cause the grid failures.
        Now quickly, without too much elaboration, did we give you
    the right authority and are you pursuing--is this being pursued
    with vigor so that what we told the American people may become
    a reality in terms of the stability of the grid system?
        Mr. Kolevar. Yes, sir, I would say that you did. We believe
    that the provisions contained in the Energy Policy Act of 2005,
    when executed, will dramatically assist reliability of the
    overall transmission and distribution systems.
        Senator Domenici. I want to say to you, I think they're
    right and I certainly would not want you to operate under this
    law if it is deficient. If it is, I think you ought to tell us
    because we don't want you to go 4 years or so trying to give us
    stability in the grid and then tell us, the law was short. You
    got it?

                             LOAN GUARANTEE PROGRAM

        Mr. Kolevar. Yes, sir.
        Senator Domenici. Now let me move over to Secretary
    Karsner.
        Secretary Karsner, I'll try to hurry up but I can't resist.
    If you or any of the other witnesses are talking about a budget
    and you're talking about the amount of money the Federal
    Government is putting into an account and you look to the
    energy bill and found that there is a section that provides for
    loan guarantees for new technology or technologies that
    implement this act, would it be fair to think that you would
    assume that maybe some loan guarantees would be added to your
    portfolio so that more money could be spent by the
    entrepreneurs and business people that took advantage of this
    law?
        Mr. Karsner. That would be fair.
        Senator Domenici. Let me just say, that is fair and that
    is--the chairman knows that and he was not talking against that
    in his questions but the truth of the matter is and Senator
    Craig, would you believe that we still do not have a packaged
    set of regulations from the Department of Energy----
        Senator Craig. Twenty months after the passage of the act.
    Yes, I'm counting, month by month, week by week, day by day.
        Senator Domenici. No, I'm telling you that I understand
    that every time we turn around, we run into another stalwart
    and they are stalwarts--in this administration that say, I
    don't like loan guarantees and therefore, they get them
    stalled. We write them. They pass judgment based on their
    existence in life and say, well, I don't like them. I submit
    and Mr. Chairman, that on loan guarantees, when we're finished,
    even though we're not an authorizing committee, that we ought
    to ask our staff how to write loan guarantee provisions in this
    bill that if signed by the President, we will be rid and
    finished with them having any judgment with reference to how to
    write the loan guarantee bills. And I'm going to try to do
    that, if you would help, we'll do it bipartisan and get it
    written and get that out of the way so loan guarantees will be
    finished in terms of having to look at authorizing language.
    Would that help you and would that help you, Secretary Shope,
    in your part of this law, too?
        Mr. Shope. The loan guarantee provisions are beneficial to
    our program.
        Senator Domenici. Not yours; Secretary Karsner?
        Mr. Karsner. They are essential to the growth of
    commercialization in our----
        Senator Domenici. What about you, Secretary Spurgeon?
        Mr. Spurgeon. Essential.
        Senator Domenici. Even in the big nuclear program, you need
    it?
        Mr. Spurgeon. Yes, sir.
        Senator Domenici. Oh and the administration loves the
    nuclear program. Have they said anything to you as to why we
    can't get the loan guarantees going?
        Mr. Spurgeon. Senator Domenici, the administration--the
    Department of Energy is moving very aggressively to implement
    the loan guarantee program. Now that we have the requisite
    authorization to move forward with creating the office, which
    was established, which was received 1 month ago. It is a matter
    of public record that the Department has prepared a notice of
    proposed rulemaking and that has been received and is under
    review at the Office of Management and Budget as of March 16.
        Senator Domenici. So you must be part of driving this
    thing?
        Mr. Spurgeon. Yes, sir.

                                   COAL USAGE

        Senator Domenici. Well, that's good. I like the way you
    drive things. It's apt to get done. It's very important that
    you understand what's going on or it won't happen. We'll be
    through another Congress.
        I have one last question to ask of the Secretary who is in
    charge of coal. People think that the United States is going to
    stop using coal because of environmental problems. Everything I
    read about the future says that there will be more coal used in
    the next decade than this previous--this decade past. Is that
    the assumption you're operating under?
        Mr. Shope. Yes, it is, Senator. I would agree with that.
        Senator Domenici. And is it not true that we must convert
    coal to things like liquids and other usable products and that
    requires a lot of technology and innovative--and money to be
    invested?
        Mr. Shope. It does, Senator and it is part, again, of the
    President's alternative fuel strategy to include clean coal to
    liquids technologies, to make it part of our strategy. So yes,
    the entire use of coal is essential to our Nation's energy
    security.

                       GLOBAL NUCLEAR ENERGY PARTNERSHIP

        Senator Domenici. My last question is, who knows anything
    about the GNEP Program? Secretary Spurgeon, how much money did
    the President put in to start this program?
        Mr. Spurgeon. To start it in 2008?
        Senator Domenici. Yes.
        Mr. Spurgeon. Four hundred and five million dollars, sir.
        Senator Domenici. That's what you are here asking us for.
        Mr. Spurgeon. Yes, sir.
        Senator Domenici. That won't get you ready in terms of
    specifications?
        Mr. Spurgeon. Yes, sir. That gets us to the point where we
    can define a technology pathway forward with sufficient
    information so that we're not guessing at what the right answer
    might be. We need to offer it to the Secretary for the
    Secretary to make a decision on a pathway forward and you need
    to inform that decision by good information from industry, from
    our national laboratories and from our universities.
        Senator Domenici. Thank you very much.
        Senator Dorgan. Senator Craig.
        Senator Craig. Thank you, Mr. Chairman. I didn't make an
    opening statement so let me react not unlike the ranking member
    has, by agreeing certainly with the premise of your opening
    statement as it relates to our energy future and where we need
    to go and what we've done to date and what I hope we will do in
    the future.
        Let me also say that last Wednesday, I stood on the top of
    a reactor core, EBR-1. For those of you who don't know what
    EBR-1 was, it's now an historic site. I didn't think we'd been
    involved in the nuclear business long enough to describe it as
    a historic event but it was, is an historic site so designated
    by President Lyndon Johnson. EBR-1 was first constructed in
    1949. It started producing power in 1951. It lit the first
    light bulb ever powered by nuclear generated electricity in
    1951 out on the high deserts of Idaho.
        When I was standing on top of that reactor core, Dennis, I
    thought, oh, if we had only continued from that point forward
    at the rate we were moving at that time. We might not even be
    so dependent upon the Middle East today or anybody else for
    that matter and my guess is, we wouldn't be generating
    electricity at the rate of only 20 percent total nuclear. It
    would be substantially greater than that and we'd have the
    waste problem solved a decade or so ago. But we stalled out
    politically. We simply--we were fearful of where we were even
    though the technology argued there was nothing to fear. We've
    changed that. We've adjusted and thank goodness America is
    awakening to a new reality and that new reality is embodied in
    the Energy Policy Act of 2005 that deals primarily with power
    generation, in something that the chairman and I introduced
    just recently that deals primarily with transportation sector
    fuels, the SAFE Act and all I am saying to all of you in your
    presentation today is, too many good ideas and not enough
    money.
        Because we can help drive industry in the right direction
    by creating some of the safeguards, some of the buffers and
    some of the incentives. But the marketplace is doing a
    marvelous job at this moment. I say this publicly and loudly,
    even though I don't like saying it. The good news of last year
    is that we got $3 gas. We may get it again this summer. The bad
    news is we got $3 gas but the good news, is it's probably
    creating and generating in the marketplace, one of the greatest
    resurgent and investment in energy than the total energy
    portfolio ever in the history of our country. And that's good
    because I find it shameful of a great power to be so reliant
    upon those who would jerk our diplomatic chain and change our
    foreign policy in a way simply so that we can continue to serve
    our habits and I'm talking about hydrocarbon habits.

                       NEXT GENERATION NUCLEAR POWERPLANT

        Now, having said that, let me switch back to EBR-1 or
    should I fast-forward to GNEP and NGNP because that's really
    where we are today. Since the time that Pete Domenici and I and
    Jeff Bingaman and everybody else on that committee crafted
    EPACT, 33, 34 nuclear reactors on the drawing board? What is it
    today, Dennis?
        Mr. Spurgeon. The number can be either but it's either 33
    or 34.
        Senator Craig. Somewhere in that range. Now, let me say
    this to you as a statement because I don't disagree with any
    direction you're headed in. I just wish we could head there a
    little faster. You're going to find too many of us on this--not
    too many of us on this subcommittee would in any way disagree
    with you as it relates to nuclear power and the role it plays
    and the value of it in the future--our security, our
    competitiveness, reduction of greenhouse gases--all of that.
    And I would suspect that you would not hear any complaints from
    myself, Senator Domenici or the chairman regarding the strong
    emphasis you've placed on the budget for securing nuclear power
    through your R&D efforts in the advanced fuels cycle initiative
    or NGNP or GNEP.
        My only advice to you would be that you remain flexible. In
    dealing with both chambers, both parties as it relates to a
    broad goal that we all seem to support. The resurgence of
    nuclear power in the United States, I think, is upon us. I'm
    not sure where a new administration will take us but I'm
    confident that the two committees of authority in the House and
    the Senate, in a bipartisan way, will advance the cause we
    started with the passage of EPACT.
        However, you may find that the narrow goals of GNEP that
    must follow may not be pursued as aggressively as some of us
    might like. Instead, we all need to keep focused on moving the
    ball forward for nuclear and maintaining the momentum of what
    we've done. I think you understand what I'm saying. If the
    nuclear budget remains whole but it doesn't reflect exactly
    what any one of us might ask for, we can all agree that the
    nuclear resurgence continues and will be as a positive step
    forward for this country. My guess is that we'll tinker around
    the edges and we may add a few dollars here or there to all of
    your budgets. They are woefully inadequate.
        I'm willing to shift the priorities in the entire budget to
    give you greater ability in your budget. I am just growing so
    very tired, as the American people are, of finding this great
    Nation jerked around by puppet governments around the world,
    largely because of a dependency we've now developed and a lack
    of vision decades ago in where we needed to get.
        Thank you all for your presentations today. You are very
    skillful in doing it. If the Secretary had been here, he'd have
    got 10 minutes. You each got 10 minutes. So we were glad to see
    you and not the Secretary.
        Because I think it was important that all that you said be
    said for the sake of the country and the policy you project.
    Thank you. Thank you, Mr. Chairman.
        Senator Dorgan. Senator Craig, thank you very much. Senator
    Allard?

                     NAVAL OIL SHALE RESERVE CERTIFICATION

        Senator Allard. Thank you, Mr. Chairman. Thank all of you
    for your testimony. Secretary Shope, you're familiar with the
    naval oil shale reserve legislation and the agreement that was
    worked out by the Department of Energy and the Department of
    the Interior when there was a transfer of management of that
    particular property in Colorado?
        Mr. Shope. I am, yes sir.
        Senator Allard. My understanding is that the Department of
    the Interior is ready to certify that you're not ready to
    certify because you're waiting for a cleanup to be completed.
    What is your estimate it is going to cost to finish that
    cleanup?
        Mr. Shope. Again, Senator, the reserve has been transferred
    to the Department of the Interior, so actually----
        Senator Allard. I'm sorry. I got that turned around.
        Mr. Shope. Yes, sir.
        Senator Allard. I apologize for that.
        Mr. Shope. So we actually will wait until the Department of
    the Interior certifies the plant.
        Senator Allard. They need to certify and I've been told
    that we're waiting for your certification but you're not
    willing to give that until they have cleaned up the Anvil Point
    facility.
        Mr. Shope. Senator, I'll have to take that particular
    question for the record because that's inconsistent with what
    my current knowledge is of that matter, Senator.
        Senator Allard. Okay, well that's what we've been told by
    the Department of Energy is that you're waiting for the cleanup
    of that and we've been estimated that the cleanup is around $13
    million at the high end. It's not anticipated to go over $13
    million--that's a high figure and yet, there is revenue being
    generated from that property now. I've been told that equals
    about $70 million. The legislation directs that the revenue
    from the natural resources on that property be returned to the
    local communities and the State of Colorado and you have $13
    million of outside costs and you're holding $70 million in
    there that you're not redistributing back to the State of
    Colorado.
        It seems to me that there ought to be more of a concerted
    effort to get that return. Why are you sitting on that money?
        Mr. Shope. Well again, Senator, the Department of the
    Interior has the lead on it. We would certify after their
    certification--and you're indicating----
        Senator Allard. According to our information, they have
    certified it.
        Mr. Shope. And that has not been made known to me but I
    will immediately look into it and address that in the record.
        Senator Allard. They had indicated--they indicated to my
    staff that they are willing to certify. The legislation
    requires joint certification, which means the Department of
    Energy also has to certify. So that's our understanding and I
    would hope that you would get back to us because that's
    important. For the life of me, I don't understand why you're
    sitting on $70 million when the maximum estimate on cleanup on
    that is around $13 million. Heck, even if you wanted to raise
    your estimate to $20 million, if you could get the other $50
    million or so to the local communities because they're being
    impacted right now because of the oil shale development that is
    happening in that particular area of the State. So they need
    that to meet their challenges that they are facing with that
    development. So, we'll continue to stay in touch with you on
    that and if you'll respond back. We'll get a formal question to
    you and then if you could respond back to us, we'd appreciate
    it.
        Mr. Shope. Absolutely, Senator.
        [The information follows:]

                             Anvil Points Mine Site
        When the management of Anvil Points mine site was transferred to
    the Department of the Interior there was environmental remediation work
    that needed to be completed. The Department of the Interior assumed
    responsibility for the cleanup of Anvil Points; however, the Secretary
    of Energy must approve the cleanup plan.
        To the best of our knowledge the Department of the Interior has
    completed a feasibility study and the detailed engineering plan. The
    final cleanup plan appears to be in draft form; however, the cleanup
    plan has not been submitted to the Department of Energy for approval.
        It is also our understanding that part of the cleanup plan involves
    removal of the mine access road. However, before this can happen the
    U.S. Geological Survey must get into the mine and remove drilling cores
    that have been stored there.
        The Department of Energy remains ready to review and approve the
    Anvil Points environmental remediation plan once it is submitted by the
    Department of the Interior.

                  PROGRAM ASSESSMENT RATING TOOL (PART) SCORES

        Senator Allard. Also, you're familiar with the PART Program
    of the President. I suppose all of you have done that. It's
    where you measure--you put goals out there that are measurable
    and then you are evaluated. Actually, the Department of Energy
    has done better than most of the agencies and I want to
    compliment you on that.
        But there are six areas in which I think there are some
    issues that need to be addressed and I'm just going to call
    them quickly to your attention. In the Department--and I'm not
    calling these up because I support them but what I want to make
    sure is that the taxpayer dollars that are going in there are
    creating results. There are two programs that have been
    measured and this is done by the Office of Management and
    Budget (OMB), by the way. There are two areas where you have
    been rated as ineffective. I don't know who has jurisdiction
    over the Natural Gas Technology Program.
        Mr. Shope. I do, Senator.
        Senator Allard. Why is that rated ineffective?
        Mr. Shope. It's rated ineffective based upon the other
    priorities within the Office of Fossil Energy. So it's
    ineffective in the sense of--not that the program is
    mismanaged, not that there has been any inappropriate
    activities or misspending of money----
        Senator Allard. What's happening to the money they're
    getting?
        Mr. Shope. It's now being effectively utilized, all the
    dollars have been and our reviews demonstrate that. What the
    ineffectiveness refers to is the balance of putting money
    toward natural gas research and development in light of the
    high costs, the high price of hydrocarbons as they are being
    received today.
        Senator Allard. Is that a correctable problem?
        Mr. Shope. Well, we corrected it by terminating the
    program.
        Senator Allard. Okay, so it's terminated.
        Mr. Shope. At the end of 2008.
        Senator Allard. Okay, very good. All right, what about oil
    technology? That's rated as ineffective.
        Mr. Shope. Again, the same thing. This is not ineffective
    in the sense of mismanagement or any inappropriate--it's a
    matter, is this--is the taxpayer dollars being best spent by
    investing in this research in 2008?
        Senator Allard. It will be terminated?
        Mr. Shope. Yes.
        Senator Allard. It will be terminated. All right. Now there
    are some that don't demonstrate any results. It's all--there is
    the National Nuclear Infrastructure Program and they haven't
    bothered to set any goals at all or measure them so why haven't
    they bothered to do that? I guess that's you, Secretary
    Spurgeon.
        Mr. Spurgeon. I think that's another program within the
    Department that's being referred to there, sir.
        Senator Allard. And that will be terminated or what?
        Mr. Spurgeon. I'm not sure which program that is, so. I
    think it's a Defense program.
        Senator Allard. It's called the national nuclear
    infrastructure. If you go on Expectmore.gov on the Internet,
    you'll see it there.
        Mr. Spurgeon. Let me take that for the record for the
    Department, sir.
        [The information follows:]

                         Program Assessment Rating Tool
        The National Nuclear Infrastructure Program Assessment Rating Tool
    (PART) is focused on activities carried out by the Office of Nuclear
    Energy's Idaho Facilities Management and Radiological Facilities
    Management programs at Idaho National Laboratory (INL).
        Performance measures were established for the INL during the fiscal
    year 2005 merger of the Idaho National Engineering and Environmental
    Laboratory (INEEL) and the Argonne National Laboratory-West (ANL-W).
    The National Nuclear Infrastructure PART assessment was completed
    during the fiscal year 2006 budget formulation process, concurrent with
    activities associated with creation of INL.
        The overall rating of ``Results Not Demonstrated'' is not due to
    the lack of performance measures, but the inability to demonstrate
    results against the established performance measures during the short
    period of time between the establishment of the new laboratory and
    completion of the PART assessment. The Department continues to track
    its performance against cost and schedule baselines. Further, the
    Department employs a Facility Operability Index performance measure
    that assesses the readiness of the infrastructure to support NE, other
    DOE and Work-For-Others milestones. The Department continues to
    evaluate and look for improvements in the operation of INL.

                  PROGRAM ASSESSMENT RATING TOOL (PART) SCORES

        Senator Allard. All right. And then on the University
    Nuclear Education Program--results not demonstrated. Why is
    that?
        Mr. Spurgeon. What was that, Senator?
        Senator Allard. It's the University Nuclear Education
    Programs. Results are not demonstrated. In other words, they
    haven't been able to establish goals that show that they're
    getting anything accomplished.
        Mr. Spurgeon. We have a--I think our university dollars are
    being very well spent. It's sometimes very difficult to
    quantify goals for research that is happening and support of
    developing education programs for us. I'll give you a better
    answer than I'm able to give up here.
        Senator Allard. When they make application, you can insist
    on them giving you----
        Mr. Spurgeon. We are. We are moving the university research
    programs to be program based and so that we will be able to
    have a better measure of performance against objective.
        [The information follows:]
              PART Score for University Nuclear Education Program
        The mission of the University Reactor Infrastructure and Education
    Assistance program has been to enhance the national nuclear educational
    infrastructure to meet the manpower requirements of the Nation's
    energy, environmental, health care, and national security sectors. More
    specifically, the program was designed to address declining enrollment
    levels among U.S. nuclear engineering programs.
        A PART assessment was completed for the University Reactor
    Infrastructure and Education Assistance program during the fiscal year
    2007 budget formulation process. The assessment, conducted under the
    title ``University Nuclear Education Programs,'' determined that
    enrollment target levels of the program had been met and that Federal
    assistance was no longer needed to encourage students to enter into
    nuclear-related disciplines. Since the late 1990s, enrollment levels in
    nuclear education programs have tripled, reaching upwards of 1,500
    students in 2005, the program's target level for the year 2015. In
    addition, the number of universities offering nuclear-related programs
    also has increased. These trends reflect renewed interest in nuclear
    power. Students continue to be drawn into this course of study and
    universities, along with nuclear industry societies and utilities,
    continue to invest in university research reactors, students, and
    faculty members. However, the assessment also concluded that the
    program performance measures that did not clearly communicate the
    linkage between Federal funding and growth in enrollment in nuclear-
    related disciplines. This led to the rating of ``Results Not
    Demonstrated''.
        The Department is using part of its fiscal year 2007 funds to
    support all students currently on an Office of Nuclear Energy
    fellowship or scholarship for the period of their initial appointment.
    No student is in danger of losing his/her funding assuming that they
    stay within the original guidelines of the program with regard to
    course of study and grades. No additional funds are requested in fiscal
    year 2008 for these activities, effectively closing out the program.
    However, $2.9 million was requested in fiscal year 2007 to provide
    fresh reactor fuel to universities and to dispose of spent fuel from
    university reactors. Under the fiscal year 2007 CR, these activities
    are also being funded. In fiscal year 2008, $2.9 million is requested
    for these activities under Research Reactor Infrastructure, within the
    Radiological Facilities Management program.
        In addition to funding research reactor activities, the Department
    remains committed to supporting university research through its Nuclear
    Energy Research Initiative (NERI). In fiscal year 2007, $38.3 million
    will support NERI grants to universities within NE's R&D programs. The
    fiscal year 2008 budget request includes $58.6 million to support NERI
    grants to universities within NE's R&D programs.

                  PROGRAM ASSESSMENT RATING TOOL (PART) SCORES

        Senator Allard. Now there's one other program, the State
    energy programs. What's happening there? They are--who has
    those?
        Mr. Karsner. That's me.
        Senator Allard. Why aren't those--why aren't there any
    results being demonstrated there?
        Mr. Karsner. I can't speak to the report. I feel like there
    are results being demonstrated there but I'm happy to analyze
    that report.
        Senator Allard. The Office of Management and Budget did an
    evaluation on that and said they----
        Mr. Karsner. It will not be the first time I disagree with
    the Office of Management and Budget.
        Senator Allard. Well, if you could get something back to us
    on those. As policy makers, if we knew----
        Mr. Karsner. Absolutely, sir.

        [The information follows:]

                        State Energy Program PART Score
        In 2004, the State Energy Program (SEP) received a rating of
    ``Results Not Demonstrated'' for the OMB Performance Assessment Rating
    Tool (PART) exercise. This rating is ``given when programs do not have
    acceptable long-term and annual performance measures'' (quoted from OMB
    PART Tool Guidance No. 2007-02, Jan 29, 2007). The Program had offered
    information for the PART based on an evaluation conducted by Oak Ridge
    National Laboratory (ORNL). OMB cited the need for a more comprehensive
    impact methodology for the study as well as an independent evaluator.
        DOE has taken several actions in response to OMB's concerns. In
    2005, SEP requested an independent review of the ORNL report by the
    Board of Directors of the International Energy Program Evaluation
    Conference, Inc. This independent review found the ORNL study to be a
    ``reasonable foundation from which to estimate the national effects of
    the SEP program.'' In 2006 the program finalized the SEP Strategic
    Plan, which established long-term goals, objectives, and strategies to
    set a new direction for the program in response to the OMB assessment.
    In 2007 SEP initiated a comprehensive evaluation of the program by an
    independent evaluator to quantify program performance and identify
    areas for improvement.

                      UNIVERSITY NUCLEAR EDUCATION PROGRAM

        Senator Allard. Some of these programs, I think--they look
    good and sound good so I want to--and like all the rest, I want
    to see us move forward on that. So I just want to follow up
    that. Thank you, Mr. Chairman.
        Senator Domenici. Mr. Chairman?
        Senator Dorgan. Yes?
        Senator Domenici. With reference to the program you asked
    about, it referred to----
        Senator Dorgan. University, yes.
        Senator Domenici. I want to say that in 1995, when there
    was nothing going on and this Senator decided we should get
    started on some and we started by putting back into the
    university system what had been there for many years and
    terminated and that was some assistance to encourage youngsters
    who had the proclivity for nuclear engineering and the like,
    excited them about--and it was working and we spent about $25
    million a year at the maximum and then the President, because
    he didn't have enough money, terminated it and I don't think
    I've been able to put it back. But that's the history.
        Senator Dorgan. Thank you for that response and I'd agree
    that we need to encourage students to get into these areas.
    It's probably important when you have a shortage there.
        Senator Domenici. Thank you.
        Senator Dorgan. Senator Murray.
        Senator Murray. Thanks very much, Mr. Chairman, for holding
    this hearing and Senator Domenici and all of our panelists. I
    think it's been a very interesting discussion. I think we all
    are looking for ways to provide alternative energy and I think
    there are a lot of great ideas out there. This has been a great
    panel and chance to hear all that. I was out in my state over
    the last week and had a chance to talk to my sorghum grain
    farmers there, very interested in the opportunities that are
    out there and obviously, my dairy farmers are talking about
    biowaste. We've got nuclear, biodiesel, hydrogen--so many
    opportunities and a lot of work ahead of us.
        I think we have to remember, we've got to be careful what
    we do. Every source of energy seems to have a challenge to it
    and how we move forward is really important but I appreciate
    all the work that you're doing.

                               VEHICLE EFFICIENCY

        Secretary Karsner, let me start with you. I really
    appreciate the President's initiative to cut our dependency on
    oil through the greater use of biofuels but there are other
    things we can do as well. We not only need to introduce
    alternative fuels but we have to look at how we can get
    efficiency in vehicles as well. Your efficiency programs--we've
    seen a significant increase in the 2007 spending plan and the
    increase in the 2008 EERE budget seems to emphasize funding for
    hybrid electric systems and decreases funding for research and
    materials and advance combustion. According to the Department's
    own estimates, these activities would have a lot more dramatic
    and near term impact on CO2 emissions and reducing
    our dependency. Can you comment on whether you agree that
    improvements in combustion processes could greatly enhance our
    fuel economy by new lightweight materials, things like that?
        Mr. Karsner. I do agree that improvements will remain a
    central focus. I think some of the diminishing, programmatic
    budgeting there might reflect some of these successes,
    actually. In other words, there are natural limits to what
    gains can be had from the physical properties of internal
    combustion efficiency and it's going to ultimately be balanced
    against the emissions that come out of those engines. So the
    idea is, optimizing the efficiency to the maximum degree as a
    physical device and minimizing the emissions in some of those
    cases, for example, heavy trucks, is what that applies to.
    We're getting right up to that optimum barrier.
        Senator Murray. Do you think we know everything we need to
    know?
        Mr. Karsner. No, absolutely not.
        Senator Murray. Okay. Well, how much of the 2007 spending
    plan was directed to advanced combustion R&D?
        Mr. Karsner. I can report back with the precise numbers but
    we did have a substantial increase in the 2007 spend plan to
    vehicle technologies.
        [The information follows:]
                      Funding For Advanced Combustion R&D
        For fiscal year 2007, $49,706,000 is being directed to advanced
    combustion R&D in the Vehicle Technologies Program.

                    FUNDING FOR ADVANCED COMBUSTION RESEARCH

        Senator Murray. And your 2008 is reduced funding?
        Mr. Karsner. Well, of course, the 2008 was submitted ahead
    of the 2007, so as Senator Dorgan pointed out, it's a bit of an
    anomaly this year.
        Senator Murray. Okay. Well, it just seems to me that we
    need to keep focusing on all kinds of programs and reducing the
    research on that is not going to help us improve our--or help
    us get off our dependency of oil. So I'm a little bit concerned
    about that.

                                    BIOFUELS

        I also wanted to ask you, DOE seems to be putting a lot of
    their focus on cellulosic ethanol but there are other biofuels
    that contribute to the mix as my farmers tell me, constantly.
    What is the Department doing to support really a diversified
    approach to reducing our Nation's dependence with fuel such as
    biodiesel or biomethane?
        Mr. Karsner. Well, of course, we support all biofuels and
    of course, the President's approach is to have the broadest
    scope available to alternative sources to gasoline. That's the
    subject of a hearing tomorrow but the administration endorses
    all of those.
        Some of them are more mature than others in terms of their
    efficiency process and their competitiveness so they don't need
    the level of breakthrough that cellulosic ethanol needs. The
    other sort of metric that we look at is the quantitative or
    volumetric capacity to make an impact of those biofuels and,
    although all of these are important and we want to maximize
    what each of them can contribute, there is no question that
    ethanol, through various forms of biomass, volumetrically will
    contribute much, much more than any of those that you named and
    so that's why it gets a greater emphasis.
        Senator Murray. Are there projects out there that do cross
    funding that help both of them----
        Mr. Karsner. Well, codes and standards, by way of example--
    in fact, I would say we have more emphasis on the codes and
    standards for biodiesel so that we can certify them. Since we
    have a fairly competitive biodiesel industry that is growing
    very rapidly, it's very important to us that engine
    manufacturers be able to warrant the use of those in different
    ambient conditions so that's a big focus with biodiesel. We've
    just certified B-5 in some of the engines. I understand we're
    looking at B-20 levels and so codes and standards will be one
    of those that is cross funded.

             GRID RESEARCH AT PACIFIC NORTHWEST NATIONAL LABORATORY

        Senator Murray. Okay, thank you. I appreciate that and
    Director Kolevar, I just wanted to mention, I heard Senator
    Dorgan talking to you about the grid and modernizing our grid
    and moving to better technologies and what we needed to do and
    I just wanted to make sure you knew about the Pacific Northwest
    National Lab and the work that they're doing out of my State to
    help efficiency on the grid. Have you ever visited there?
        Mr. Kolevar. I have not, Senator. I intend to this year.
    I'm aware they're pulling real time data from Bonneville Power
    and visualizing, from a layman's perspective and then in more
    detail on some of the work that is going on there. It sounds to
    be very promising.
        Senator Murray. Yes, the Grid Wise Program is really
    starting to look at how we can really focus on some
    efficiencies and better transmission. We'd really love to have
    you come out and take a look at it. Mr. Chairman, you might
    want to, too. I think you're right to mention that we need to
    have some efficiencies with that system and there is some work
    being done. I think we need to do more but we'd love to have
    both of you visit. So, thank you very much.

                    RETRIEVABLE ENERGY IN SPENT NUCLEAR FUEL

        Senator Dorgan. Thank you very much. Just a couple other
    queries. Secretary Spurgeon, you talked about the closed fuel
    cycle. Can you tell me, just for my own information, how much
    energy is retrieved from spent fuel? You talked about
    retrieving the energy from spent fuel. What percent of the
    energy?
        Mr. Spurgeon. Well, if we do a recycle and if we just
    recycle one time, in a light water reactor, you would recover
    20 percent roughly of the input fuel. Now there are ways,
    looking to the future, where you could recover substantially
    more than that. But just one recycle and that's where I made
    the comparison base when I said as much as the Alaska Pipeline
    provides in energy value. It's just based on one recycle, 20
    percent saving existing reactors, not including new ones that
    might be built in the future.

                                 WEATHERIZATION

        Senator Dorgan. Secretary Karsner, the issue of
    weatherization. I did not ask you about that. I assumed since I
    come from North Dakota that you would have expected me to so I
    don't want to disappoint you here. As you know, in the
    weatherization account, the proposal is to make a cut in that
    account. It was $242 million in fiscal year 2006. In fiscal
    year 2008, it will be $144 million, which is the budget
    request. Tell me what you think the consequences of that would
    be, to cut $100 million from weatherization?
        Mr. Karsner. Well, there are lots of consequences. One of
    the primary consequences is that we have more funding to
    accelerate biofuels for national security and lower greenhouse
    gas emissions. That's on the positive side. On the negative
    side, it will mean, because that is an additive program for
    returns; that is, that there is a correlation between dollars
    spent and houses weatherized. It will obviously mean a
    diminution in the amount of houses we can achieve in a fiscal
    year.
        Senator Dorgan. I've been out to watch what they do in the
    weatherization program to substantially improve some of these
    older homes in order to reduce the amount of heat loss. Is that
    program effective? Also, is it a part of our energy efficiency
    efforts? Because we're saving energy by insulating homes and so
    on, so tell me how you view that program.
        Mr. Karsner. I view any efficiency improvements as
    effective but with a limited pool of dollars and an enormous
    task, as I said, for the larger aggregate goals of lowering
    greenhouse gas emissions and enhancing national security, it
    has the unfortunate disposition of competing against other
    efficiency investments in our applied research and development
    portfolio that have enormous returns that are multiplicative
    across the population. Although this is a very important
    segment of the population and it is a worthy program to focus
    on, in the context of competing in our portfolio to achieve
    those same efficiency objectives, the returns are very, very
    low.
        Senator Dorgan. Are these mostly lower income people that
    are competing?
        Mr. Karsner. For the weatherization dollars?
        Senator Dorgan. Right.
        Mr. Karsner. It is all low income people.
        Senator Dorgan. So the competition, we've put them in here
    as the lower income people that own old homes that are leaking
    heat and terribly inefficient, trying to struggle through the
    winter to pay a heat bill. They're put in competition with all
    the other accounts and so they get hit with a $100 million
    reduction in funding. Is that something you support?
        Mr. Karsner. Well, I don't support the phrasing of it in
    that particular way but I do support the cut in the sense that
    I have to look at it as a portfolio. I have no other choice but
    to look at the precious taxpayer dollars that way. In fact in
    reality, this cut is really restoring what the Clinton
    administration budgetary year appropriations were in terms of
    apportionment of the portfolio. The President, in his first
    term push for poverty alleviation, substantially injected new
    funding into the weatherization program, I think at a time
    before most of the other technologies were reasonably
    commercial where they are today and at a time before we felt
    this kind of pressure from $3 gas and other pressing
    priorities.
        So we are sort of putting it back into balance to where it
    had historically been, which still makes it one of the largest
    programs in the Nation's applied research and development
    portfolio for new energy developments. And these are difficult
    choices but we feel like turning the housing stock itself
    quicker in the aggregate through working on the building
    envelope, insulation, better windows across the board is at
    least as important ultimately.
        Senator Dorgan. Mr. Karsner, we added $25 million in the
    Supplemental here in the Senate for weatherization. Do you
    support that?
        Mr. Karsner. No, I do not.
        Senator Dorgan. Do you oppose it?
        Mr. Karsner. I do oppose that.
        Senator Dorgan. Why?
        Mr. Karsner. The first reason is a little bit personal. We
    submitted a $160 million budget for fiscal year 2007 and though
    we had the authority of the spend plan through Congress'
    generous markup of our budget, of my own volition and push, I
    sought to meet the Senate written mark of $204 million and
    added $40 million to the weatherization program in the spend
    plan. Much of that money this late in the year will roll over
    into next year so it is well funded to begin with and it is at
    the level that the Senate itself had written into the budget,
    albeit I understand it was the last Senate. Every new dollar
    that we add for that is taking a dollar away from the other
    efficiency programming markups that we have and the returns on
    those are 20 to 1, according to the National Academy of
    Sciences, and I think the returns are too big to forfeit.
        Senator Dorgan. Let me--well, first of all, thank you. You
    know, while we might agree and disagree about certain
    priorities and the importance of certain accounts, I agree with
    Senator Domenici's statement earlier. I think all four of you
    are significant public servants whose background and
    capabilities give you the opportunity to do a good job for this
    country and coming to serve in an administration that is not so
    long for this town, what 20 or 21 months left? I mean, you've
    not signed on for a 6- or 8-year term in most cases.
        You've come from various disciplines to assume leadership
    in these accounts and I appreciate that. I think all four of
    you have a lot to offer this country, even when we might
    disagree about priorities. It's my intent that I and the other
    members of this subcommittee work with you as we want to learn
    from you and want to help you meet the challenges ahead. While
    we might disagree on the exact amounts that should be invested
    in certain activities, at the end of the day, I think, we all
    share a common interest in success in your four areas. All four
    of these areas are very, very important as functions in the
    Department of Energy and your coming here today to respond to
    our questions and to give us a glimpse of what you're doing is
    very important.
        I understand Senator Domenici has made a career of this
    during the Clinton administration, having agency witnesses come
    up and defend the President's budget. That's what they're paid
    to do. It's what they are required to do and if they didn't do
    that, they'd probably go back and find out that their desk was
    cleaned out. So it is a little frustrating for us sometimes but
    having recognized that, we appreciate working with you and we
    appreciate you being here today.
        Senator Domenici, do you have anything to add at the
    conclusion?
        Senator Domenici. One last one. First, Mr. Chairman, I want
    to thank you for your last remarks. I have great admiration for
    a Senator who speaks as you have just spoken and I don't know
    you that well even though we've been here a long time but the
    more I learn, the more I like what I hear and I thank you for
    that.
        I want to say and ask which one of you would be--would
    represent global warming, the problems with global warming,
    proposed solutions. Which one would have----
        Mr. Karsner. I think that's the Department, sir.
        Senator Domenici. The Department. So we'll talk to the
    Department on that, okay? I think that's okay. I'll talk to the
    Department because I want to just make a statement.
        You know, we're soon going to be called upon to perhaps
    vote on a program, an American program to help contain
    CO2, one way or another. There are various ways to
    do that, one of which is the simplest one was to put a tax on
    carbon.
        I think that has lost favor quite a bit. In between there,
    there are various ways. I'd just like to make a point that I
    have spent a substantial amount of time and continue to spend
    more on analyzing the amount of CO2 that China and
    India are producing and emitting and the lack of positive
    action on the part of either of those countries to diminish the
    carbon dioxide and to the contrary, a dramatic increase in
    power plants that are fed by dirty coal. That's your area,
    Secretary Shope. You know about that. You're not in charge of
    the big picture but you know about that. They are unfortunate--
    they have a lot of coal but it's dirty coal. At least the Lord
    could have made it clean and it wouldn't have had an ambient
    problem. They don't even clean up the first stage in the
    countries I just spoke of. They burn it without anything on
    there to clean up the pollutants as it is burned.
        But I'm going to close with this remark. As of now, we
    understand that they produce in China--not India, China, about
    one reactor that is somewhere between 500 and 750 kilowatts--
    megawatts, excuse me, a week, about one a week. Now, you can't
    hardly imagine that being an American even though we claim we
    are the biggest gobblers of energy and we do nothing like that,
    such that if we were asked to spend great amounts of money to
    constrain carbon dioxide, the question will be asked of those
    who are for it, what is China and India going to do?
        And if the answer is nothing, then it would appear to me
    that the American people would have a very big, big issue to
    raise with the Congress that would do something because all we
    would do would be to tie our own hands and legs, do nothing
    significant to help the problem of CO2 in the outer
    atmosphere because, as a matter of fact, it is global in nature
    not American. And I'm not going to support unilateral
    containment without some hope--no, without some real evidence
    that China and India will join us in research and development
    and expenditure of substantial money to contain CO2
    in their countries.
        I think that's important that those of us who are involved
    get our heads together and see what all this means. It may mean
    that China might have to think a little sooner rather than
    later about what they'll do because I don't know that we'll sit
    by and buy their products forever either at the prices that are
    reduced because they spend nothing to clean it up while we
    spend much. That's a true impediment to us selling any products
    worldwide or vice versa. I thank you, Mr. Chairman. I yield.
        Senator Dorgan. Senator Domenici, thank you. If in fact it
    is a global economy and we all live in the same fishbowl then
    global pollution affects all of us as well and the Senator has
    expressed himself with respect to a vote on the Kyoto Treaty,
    believing that you cannot begin to deal with these issues,
    leaving China and India out of the equation. Especially because
    it's a global economy, those industries, those manufacturing
    plants and others that want to belch pollutants into the air
    have no regulatory costs of doing so and can simply move their
    plant overseas, fire their American workers and accelerate the
    job loss in this country.
        Having said all that, I think the testimony today, for
    example, with respect to the search for new technologies, the
    search for carbon sequestration, the search of this country to
    unlock the mysteries from these new technologies is very
    important because I assume that we will want very quickly to
    share those technologies with everyone around the world. I
    would say to you, Senator Domenici, I was persona non grata in
    my State for some long while with the coal industry when I
    served in the State capitol. I was one of those that led the
    fight to demand that, with respect to strip mining of coal,
    there would be segregation of topsoil, that companies ensure
    the contouring of the land for reclamation and that every new
    plant producing electricity had to have the latest available
    technology, wet scrubbers for instance.
        You can well imagine the way the industry responded. I was
    an enemy of the industry. Well, guess what? Twenty years later,
    twenty-five years later, they are all glad they did it and all
    of us in North Dakota are glad they did it.
        We produce a lot of coal. We're the first State in the
    country to meet the ambient air standards, even though we had
    substantial plants, because we spent the money to put those wet
    scrubbers on. We now see contoured land that looks great. It
    was land from which coal seams were extracted and topsoil was
    segregated and the contour was redone. You drive past there
    these days and see the vegetation, you can't tell there was
    coal mined from it.
        It is always harder at ground zero to begin to push these
    issues. You're absolutely right. If we decide to proceed and
    China and India do nothing, we will have accomplished very
    little and yet, in many ways, just as with stopping the spread
    of nuclear weapons, it falls on our country's shoulders. We
    must at least, at a minimum, begin a series of no regret steps
    as we begin to address all of these issues.

                         ADDITIONAL COMMITTEE QUESTIONS

        So, Senator Domenici, you and I will have a lot of work to
    do and I'll enjoy doing it with you because you have a great
    deal of experience and have offered a lot to this subcommittee
    over many, many years.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                 Questions Submitted to Hon. Dennis R. Spurgeon
                 Questions Submitted by Senator Byron L. Dorgan

                       GLOBAL NUCLEAR ENERGY PARTNERSHIP

        Question. I have heard Secretary Bodman talk about the Global
    Nuclear Energy Partnership (GNEP) as being an initiative that will take
    a couple of decades. Yet, your testimony refers to a Secretarial
    decision in June 2008. Further, your testimony refers to the
    development of commercial-scale reprocessing facilities in conjunction
    with industry. I understand many in industry feel more research and
    development is necessary on GNEP before moving forward on facilities.
        So, I am confused by the disconnect between Secretary Bodman's own
    observation of GNEP being a couple decade long process and this rush to
    a Secretarial decision in June 2008 and development of commercial scale
    reprocessing facilities.
        First, can you please explain to me what the Secretarial decision
    in June 2008 will be about? And second, can you explain why we would be
    turning so soon to development of commercial scale facilities?
        Answer. The Secretarial decision in 2008 is intended to determine
    the GNEP path forward. The Department intends for this decision to
    include a decision on whether or not and how to proceed with a nuclear
    fuel recycling center and an advanced recycling reactor. This will
    require compiling information regarding the requisite technologies,
    economics, and environmental impacts. The specific elements supporting
    the decision are a credible technology pathway and progress on its
    implementation; a business plan; definition of a government-private
    partnership that could be formed; completion of NEPA requirements; and
    a nonproliferation assessment.
        In addition, a path forward on the Advanced Fuel Cycle Facility is
    anticipated to be part of the Secretarial decision.
        The Department's work with industry at this stage will focus our
    research and development in support of future commercial-scale
    facilities. Engaging industry at this time could save the United States
    nearly a decade in time and a substantial amount of money, while still
    engaging and reinvigorating the nuclear community with new facilities
    and continued long-term R&D. Development of a credible U.S. program for
    construction of commercial fuel cycle facilities is a critical element
    of a strategy to convince other States considering nuclear energy
    programs that they can rely on the United States for their fuel cycle
    needs. Making the United States an influential participant in fuel
    cycle technology is vital to fulfilling the GNEP vision.
        Question. Under GNEP, I understand it will take one new fast
    reactor to burn the reprocessed fuel from approximately every three to
    four light water reactors. If this is correct and today there are 103
    existing light water reactors, we will need 25 to 34 new fast reactors
    to burn just the reprocessed fuel from existing light water reactors. I
    understand the nuclear power industry is not interested in building
    fast reactors. For GNEP to work properly, will the Federal Government
    have to build 30+ fast reactors or will industry be mandated to build
    them?
        Answer. Deployment of advanced fast reactors is currently
    envisioned as a commercial activity, with revenues being generated from
    the production of electricity while the transuranic material is
    simultaneously consumed. One goal for GNEP is to establish a business
    case that supports the commercial deployment of advanced recycling
    reactors, which are fast reactors. The number of advanced recycling
    reactors required to use the fuel recovered from LWR spent nuclear fuel
    depends on a number of factors. For example, a key factor is the rate
    at which an advanced recycling reactor would destroy the transuranic
    elements, recovered from the spent nuclear fuel, while generating
    electricity. Other factors include the initial core loading of an
    advance recycling reactor and the ability to recycle the spent fuel
    from the advanced recycling reactors.
        Question. A primary goal of GNEP is to develop a reprocessing
    technology that is ``proliferation resistant.'' Some claim DOE's
    proposed separations technologies all provide less than 1 percent of
    the International Atomic Energy Agency's ``self-protection'' standard
    for plutonium. Given these considerations, how can DOE's GNEP proposal
    meet the nonproliferation goal?
        Answer. One goal of GNEP is to develop a reprocessing technology
    that is ``more'' proliferation resistant than those currently used
    throughout the world which separate pure plutonium. The separations
    technologies being considered by the Department would not separate pure
    plutonium and would, therefore, be more proliferation resistant than
    those currently in use. The Department's fiscal year 2008 budget
    request supports over $88 million for further research and development
    on advanced reprocessing technologies.
        Question. Another goal of GNEP is to confine reprocessing and
    uranium enrichment to ``countries that already have substantial, well-
    established fuel cycles.'' Does DOE's fiscal year 2008 budget request
    include funds for cooperation with the Korea Atomic Energy Research
    Institute (KAERI) for pyroprocessing research and development?
        Answer. Bilateral collaboration with South Korea on nuclear energy
    R&D occurs under the International Nuclear Energy Research Initiative
    (I-NERI). All I-NERI joint projects employ cost sharing on an
    approximately equal basis by the participating countries. Each country
    is responsible for funding its side of joint projects. In the case of
    the United States, current-year approved program budgets provide the
    funding for our contributions to the joint projects. As part of I-NERI
    collaborations, Korea, as represented by KAERI, is actively engaged in
    relevant work in fiscal year 2007 and supported in the fiscal year 2008
    budget request.
        It is important to note, however, that KAERI does not process spent
    fuel or special nuclear material as part of this cooperation. All
    pyroprocessing-related research and development activities involving
    use of spent fuel or special nuclear material under these I-NERI
    projects or work-for-others programs is done at DOE National
    Laboratories. Annual meetings between the U.S. Government, National
    Laboratory and KAERI officials have been instituted since 2006 to
    monitor cooperative activities in the area of pyroprocessing and
    advanced fuel cycle technologies.
        Question. Does DOE intend to offer the Republic of Korea, a country
    that the United States to date has not permitted to reprocess due to
    proliferation concerns, a role in GNEP as a ``supplier'' country?
        Answer. The Republic of Korea has the sixth largest nuclear power
    program in the world. The Government of the Republic of Korea has made
    the decision not to possess reprocessing or enrichment facilities and
    is limiting the scope of its research and development on pyroprocessing
    technologies. Nevertheless, the Republic of Korea is actively engaged
    in the development of advanced reactor and fuel cycle technology,
    nuclear safety, radioactive waste management, and other related work
    programs on the national, bilateral and multilateral levels. We gain a
    great deal by working with these experts. The Republic of Korea is
    engaged in research and development that supports GNEP involving small-
    reactors, advanced burner reactors, computer modeling, safeguards and
    basic science, but not separations of spent fuel.
        At this point, DOE has not specifically invited countries to
    participate in GNEP as ``supplier countries.'' It is generally
    anticipated that the expansion of civilian nuclear power could be
    provided by countries already possessing the infrastructure to
    manufacture nuclear power plants as well as provide fuel supply
    services.
        Question. Which countries has DOE invited to participate in GNEP as
    ``supplier'' countries?
        Answer. At this point, DOE has not specifically invited countries
    to participate in GNEP as ``supplier countries.'' It is generally
    anticipated that the expansion of civilian nuclear power could be
    provided by countries already possessing the infrastructure to
    manufacture nuclear power plants as well as provide fuel supply
    services.
        Question. Which countries has DOE invited to be ``users''?
        Answer. DOE believes it is advantageous to seek partnerships for
    the expansion of civilian nuclear power worldwide by providing support
    on infrastructure development for countries newly considering nuclear
    power (e.g., legal, regulatory, safety, knowledge base, experience,
    etc.). DOE does not plan to invite countries as ``users'' or
    ``suppliers,'' but rather seeks partners. The GNEP partnership is open
    to all countries agreeing to the statement of principles. The benefit
    of partnership is having access to products and services on the front
    and back end of the fuel cycle while relieving countries of the
    liability, infrastructure and expense associated with such facilities.
    Ultimately, there will be technology partners, materials partners
    (e.g., uranium) and infrastructure partners. In December 2006, the
    United States co-hosted, along with several other IAEA Member States
    (Canada, China, France, India, Japan, Russia, and South Korea), a
    workshop in Vienna, Austria, on ``Issues for the Introduction of
    Nuclear Power.'' Twenty-six countries currently without nuclear power--
    yet considering it as a potential addition to the energy portfolio--
    attended this workshop.

                             NUCLEAR ENERGY'S ROLE

        Question. The Energy Information Administration's Annual Energy
    Outlook 2007 reference case indicates that nuclear power provided 19
    percent of the Nation's electricity in 2005 and is expected to provide
    15 percent of the Nation's electricity in 2030.
        How do you reconcile the fact that, even as the U.S. Government is
    providing greater Federal assistance to the nuclear power industry
    through various research programs and deployment incentives than ever
    before, that portion of electricity generated from nuclear power
    facilities is expected to decrease as a percentage of our overall
    electricity production in the next 25 years?
        Answer. As you know, there has been no new construction of nuclear
    plants in the United States in 30 years. However, nuclear power still
    supplies a significant percentage of our electrical needs, because
    plant efficiencies have increased electricity production equivalent of
    27 1000 megawatt plants without new construction. As such, there is
    little additional efficiency to be gained with the existing fleet of
    reactors.
        According to the Energy Information Administration's (EIA) Annual
    Energy Outlook 2007, America's demand for electric power is projected
    to increase at an average annual rate of 1.5 percent between now and
    2030. In the Annual Energy Outlook 2007, EIA assumes that the
    equivalent of 12 new nuclear plants (1,000 megawatts each) would be
    built by 2030. The capacity lost from the few currently operating
    plants that will be retired by 2030 is assumed to be offset by power
    uprates at existing plants and the restart of TVA's Browns Ferry Unit
    One. Therefore EIA estimates total nuclear capacity to increase from
    100 GW today to 112 GW in 2030. Based on EIA's assumptions, all the
    nuclear plants operating in 2030 would produce only about 15 percent of
    the generation mix in the United States.
        The Department is aggressively pursuing actions through our Nuclear
    Power 2010 program to ensure the growth of electricity produced by
    nuclear power. To date, 15 power companies have notified the Nuclear
    Regulatory Commission of their intentions to submit 19 applications for
    combined Construction and Operating Licenses for 33 new reactor plants.
    Therefore, we expect that much more than the 12 gigawatts of new
    nuclear capacity projected by EIA will be realized before 2030. New
    nuclear plants would only need to be brought on line at a rate of three
    or four per year, a rate lower than that already proven achievable in
    some years in the 1970s, in order for nuclear power to provide 20
    percent of the mix in 2030.
                                     ______

                 Questions Submitted to Hon. Dennis R. Spurgeon
                Questions Submitted by Senator Pete V. Domenici

            GNEP ADVANCED FUEL CYCLE FACILITY--LUXURY OR NECESSITY?

        Question. Mr. Spurgeon, the Department has requested funding for
    the Advanced Fuel Cycle Facility. This new research facility is
    intended to perform all of the critical advanced reactor fuel
    development. However, it seems to me that this brand new facility
    actually duplicates the numerous older facilities located across the
    DOE complex that are still in use today.
        This funding would go a long way in upgrading several existing
    facilities and would have the added benefit of supporting a diverse
    scientific mission such as medical isotopes, environmental
    characterization, and support for the space mission.
        This new facility seems to be more of a luxury, rather than a
    necessity.
        Can you please explain your rationale for deciding to build a
    single brand new facility rather than make the necessary investments in
    our existing laboratory infrastructure?
        Answer. The Advanced Fuel Cycle Facility (AFCF) project is in the
    early stages of the conceptual design; no decision has been made to
    construct the facility and DOE is evaluating reasonable alternatives.
    The Department is aware that facilities exist that, with refurbishment
    or upgrades, could perform some, but not all, of the functions
    currently planned for the AFCF. A full examination of the trade-offs
    between constructing a new facility and upgrading existing ones is
    required in accordance with the Department orders for a major system
    acquisition.
        The AFCF would allow the Department to perform R&D, technology
    development, and demonstrate the integrated operations and processes
    involved in the recycling of spent nuclear fuel. These operations would
    include receiving the spent nuclear fuel, separating its various
    constituents, fabricating new fuel, containing transuranic elements,
    for an advanced recycling reactor, manufacturing lead test assemblies
    that are necessary for fuel qualification, and waste handling. This
    facility would have a continuous throughput rate from start to finish,
    from reprocessing both spent thermal and fast reactor fuel to
    fabricating new fuel types yet to be fully developed. Currently, no
    single facility with that capability exists.

                                NP 2010 PROGRAM

        Question. Mr. Spurgeon, your budget provides $113 million for the
    Nuclear Power 2010 program. This is significantly below the $183
    million needed to fulfill the 50/50 cost share agreement to prepare the
    detailed engineering designs needed to resolve the technical,
    engineering and regulatory challenges needed to license a new reactor.
        What is the Department's justification for failing to meet its cost
    share commitment and how will this impact the cost and schedule of this
    project?
        Answer. The Department of Energy (DOE) is meeting its cost-share
    funding commitment for these important nuclear energy projects. DOE
    remains committed to spend $586.5 million as Federal cost share as
    agreed to with industry. DOE's cost-share primarily supports the
    demonstration of the ``untested'' regulatory process for the combined
    Construction and Operating Licenses for two new nuclear plants. It also
    supports the completion of the first-of-a-kind engineering for two
    reactor designs. The designs will be completed in sufficient detail to
    give power companies the cost and schedule information they need to
    make plant orders. If the fiscal year 2008 budget request of $114
    million is appropriated by Congress, DOE will have provided industry
    with over $300 million of the $586.5 million total of Federal cost
    share by the end of fiscal year 2008.
        In November 2006, the industry proposed DOE increase its cost-share
    for these two projects by $161 million to a new total DOE cost-share of
    $727 million. With this increase, industry proposes activities worth
    $183 million in fiscal year 2008. DOE declined this industry request
    because its cost and scope went beyond DOE's original commitments.
        Question. Based on the budget shortfall, are you able to predict
    which design, engineering, or regulatory activities will not be funded.
    Do you believe this will impact one reactor design over the other?
        Answer. DOE does not believe one particular reactor design would
    have an advantage over the other based on DOE's fiscal year 2008 budget
    request.
        The fiscal year 2008 budget request of $114 million for the Nuclear
    Power 2010 program is sufficient for funding necessary activities in
    fiscal year 2008. The request is consistent with the agreed-to cost-
    share funding commitment.

                            NP 2010 PROGRAM REFORMS

        Question. Last year, I raised a number of tough questions about the
    cost controls of the NP 2010 program and whether or not the NuStart
    team would be able to deliver on the budget commitments they had agreed
    to. This criticism seemed to force the reactor vendors to sharpen their
    pencils and improve the work product.
        Do you believe the DOE's private partners have made the necessary
    improvements to get this program back on track?
        Answer. Given that these are uncharted waters for industry and DOE,
    substantial improvements have occurred on the NuStart and Dominion
    projects and the Department recognizes some risks remain. These known
    risk areas and the contingency plans to address them are under constant
    NuStart and Dominion management review.
        One of the more substantial improvements has been the integration
    of the reactor vendor engineering and power company combined
    Construction and Operating License (COL) application development
    efforts. These integration efforts are evident through formal review
    teams such as the Economic Simplified Boiling Water Reactor and the AP
    1000 Engineering Review Teams and the Design Control Document/
    Construction and Operating License Integration Team. DOE believes these
    industry efforts significantly improve the likelihood two COL
    applications will be submitted to the Nuclear Regulatory Commission in
    the first quarter of fiscal year 2008.
        Question. Are you confident that this program will be able to
    deliver two reactor designs that the NRC will be able to license?
        Answer. The Department of Energy (DOE) is highly confident the
    licensing demonstration projects with Dominion and NuStart will yield
    approved Nuclear Regulatory Commission (NRC) design certifications and
    combined Construction and Operating Licenses (COL) for the two advanced
    light water reactor designs: the Westinghouse Advanced Passive (AP)
    1000 and the GE Economic Simplified Boiling Water Reactor (ESBWR). The
    NRC already certified the reactor design for the AP 1000 in December
    2005. NRC has projected the ESBWR design certification could occur in
    fiscal year 2010. DOE expects COL applications to be submitted to NRC
    in the first quarter of fiscal year 2008 and NRC issuance of approved
    licenses in fiscal year 2010.

                       FOREIGN INTEREST IN NUCLEAR ENERGY

        Question. Mr. Spurgeon, it seems everyday that I pick up a
    newspaper, another country or company is announcing that they are going
    forward with a new nuclear plant, or expanding their existing fleet to
    meet their growing energy needs. Countries such as India, China,
    Pakistan, Russia, Romania, Finland, Argentina and the United States all
    have plants under construction. Worldwide there are another 200 new
    plants on the drawing boards.
        The countries that have expressed an interest in a nuclear plant
    also need to make plans for uranium fuel supplies and a solution for
    their nuclear waste. Not all of these questions have been answered and
    this has forced the IAEA to think about how the world can safely expand
    civilian nuclear power without increasing the proliferation threat.
        It occurs to me that the rest of the world is moving ahead with
    civilian nuclear power regardless of what the United States does.
        What do you think about the worldwide nuclear effort and how will
    GNEP play a role in this?
        Answer. Worldwide, nations are becoming more concerned with meeting
    energy demands, providing energy security and engaging in energy
    practices that are acceptable for sustaining the environment. DOE sees
    nuclear power as a safe, clean, and efficient means to meet these
    needs. The expansion of nuclear power can satisfy these needs and must
    be expanded in a safe and proliferation resistant manner. For that
    reason, DOE, through the Global Nuclear Energy Partnership (GNEP),
    plans to assist countries newly interested in nuclear power to work
    toward developing sound infrastructure. In December, 2006, the U.S. co-
    hosted a workshop in Vienna, Austria, on ``Issues for the Introduction
    of Nuclear Power.'' Twenty-six countries currently without nuclear
    power--yet considering it as a potential addition to the energy
    portfolio--attended this workshop.
        While a key goal of GNEP is expansion of nuclear energy, GNEP has
    other roles. Another key objective of GNEP is to reduce the
    proliferation risks that might otherwise be associated with the global
    expansion of nuclear energy. GNEP supports the goals and objectives
    outlined in the Energy Policy Act of 2005 which calls for diversifying
    the U.S. energy supply with sources such as nuclear power which is an
    important emissions-free component of the U.S. energy portfolio. GNEP
    provides a vision for future energy needs worldwide in a way that
    reduces waste burdens and proliferation risks. GNEP aims to reinforce
    nonproliferation policies by offering reliable nuclear fuel services to
    discourage the spread of enrichment and reprocessing technologies. GNEP
    also aims to draw down and eventually to eliminate excess stocks of
    separated civil plutonium that have accumulated. In addition, GNEP
    facilities aim to reduce proliferation and security risks by using
    materials that are less easily used in nuclear weapons than separated
    plutonium.

                                      GNEP

        Question. Mr. Spurgeon, the budget request for the GNEP program is
    extremely complicated. The budget seems to fund three separate
    activities including fundamental R&D, technology design and then a
    third category known as ``technology development.'' This third
    category, which consumes one-third of the GNEP budget, seems to
    duplicate the other activities.
        Can you please clarify this and provide me with a detailed written
    accounting of the spending plan for the GNEP Technology Development
    Account.
        Answer. The GNEP Technology Development activity includes
    activities within the Advanced Fuel Cycle Initiative that provide
    support to each of the three Global Nuclear Energy Partnership (GNEP)
    projects: the nuclear fuel recycling center, advanced recycling
    reactor, and an advanced fuel cycle research facility. Whereas the work
    associated with GNEP R&D activities such as Separations and Advanced
    Fuels Development involves basic research and bench-scale or
    laboratory-scale experiments of a variety of potential technologies,
    the Technology Development activity funding will be used to further
    develop technology that has been shown to be feasible at the laboratory
    or engineering scale, as well as to optimize design parameters and size
    equipment. This account also supports the small reactor and
    international collaboration efforts.
        As the Department continues its research and development, industry
    engagement, and other activities, the specific allocations for fiscal
    year 2008 for GNEP Technology Development activity could change.
    However, for fiscal year 2008, the Department currently anticipates
    allocating approximately $50 million for the nuclear fuel recycling
    center, $34 million for an advanced recycling reactor, $38 million for
    an advanced fuel cycle research facility, $6 million for international
    collaborations and agreements, and $5 million for grid-appropriate
    reactors in developing countries.

               GNEP--COORDINATING RESEARCH WITH OTHER NE PROGRAMS

        Question. The committee would like to understand the Department's
    view on the plans to tie together the various elements that make up its
    nuclear programs such as NGNP and GNEP. First, there is the potential
    to cooperate on fuel technologies that would benefit the high
    temperature gas reactor being considered for NGNP as well as Advanced
    Reactors being developed under the GEN IV program.
        Will the Department conduct the appropriate analysis high
    temperature gas cooled reactor's capability to burn nuclear waste and
    the potential for synergy with the NGNP and GNEP?
        Answer. One of the key objectives of the Global Nuclear Energy
    Partnership (GNEP) is to make nuclear power an attractive alternative
    to fossil fuels for developing countries around the world. Because the
    power demand requirements are limited for these countries, they will
    likely need smaller reactors. A Very High Temperature Reactor (VHTR),
    such as that being developed in the Next Generation Nuclear Plant
    (NGNP) program, is a small modular reactor design that could
    potentially be well suited in meeting the objectives of GNEP for global
    deployment of nuclear power to developing countries. While the
    Department (DOE) has conducted studies regarding the use of VHTRs for
    actinide destruction, DOE chose to utilize fast reactors initially for
    this component (actinide destruction) of the GNEP mission, while DOE
    continues research and development on VHTR and other technologies. The
    decision to use fast reactors is detailed in DOE's December 2006
    report, The U.S. Generation IV Fast Reactor Strategy. The Sodium-Cooled
    Fast Reactor (SFR) was chosen as the most promising fast reactor
    concept for meeting DOE's strategic goals. The United States has
    extensive experience with SFRs, and an SFR deployed as the Advanced
    Burner Reactor under GNEP could be operational in the 2020-2025
    timeframe.
        DOE is performing research and development on the NGNP consistent
    with the timeline established in the Energy Policy Act of 2005.
    Additional research and development on the use of high-temperature gas-
    cooled reactor for actinide burning could be performed after the
    underlying concepts supporting VHTR operation with uranium have been
    thoroughly validated.

                 COOPERATIVE NUCLEAR FUEL RESEARCH WITH RUSSIA

        Question. I understand that NNSA, in conjunction with Rosatom, is
    developing the technology such as fuel and advanced power conversion
    systems for high temperature gas cooled reactors in a cost-shared
    program whose purpose it is to ultimately burn surplus Russian weapons
    plutonium.
        How much has been committed to this program and under what program?
    What is the nature of the research and how will this benefit the GNEP
    effort? Is this research being coordinated with NE?
        Answer. Between fiscal year 1999 and fiscal year 2006, the
    Department provided $17.1 million to Russian Institutes to develop the
    Gas Turbine-Modular Helium Reactor (GT-MHR) for plutonium disposition
    in Russia. During that timeframe, Rosatom provided an equivalent $17.1
    million of matching Russian funds as well. This program is managed
    through the National Nuclear Security Administration (NNSA) and has
    been in place for over 8 years. The current scope of this cooperation
    is to conduct research and development in high risk technology areas
    such as the development of plutonium particle fuel and power conversion
    unit technologies. The advanced recycling reactor component of the GNEP
    program may benefit from this effort as it continues to develop
    advanced fuel forms and power conversion technologies. The Office of
    Nuclear Energy receives and considers reports summarizing the Russian
    GT-MHR research program.
        Question. Based on the Russian's level of indecision on MOX; why
    does the Department believe this would be a prudent use of resources at
    this time. Is this being cost shared?
        Answer. The Russian view of weapon grade plutonium is that it is a
    valuable national resource and that disposition in Russian Light Water
    Reactors (LWRs), such as the VVER, is not the most efficient use of
    this resource. Originally, both the United States and Russia had agreed
    to MOX disposition in LWRs. However, over time, the Russians expressed
    misgivings with LWR disposition, although they have never specifically
    excluded use of LWRs for disposition. The Russians have since proposed
    consideration of two additional approaches, which they consider to be a
    more efficient use of their plutonium. These two additional approaches
    are disposition in the BN-800 fast reactor, which is under construction
    (the plutonium disposition program has always considered the
    disposition of a limited quantity of plutonium in the BN-600 fast
    reactor); and development of a High Temperature Gas Cooled Reactor for
    possible use for plutonium disposition, should this reactor become
    available in time.
        The current Russian proposal includes cost sharing in every
    scenario under discussion, including LWRs, although specific details
    have yet to be negotiated.

                               NUCLEAR FUEL CYCLE

        Question. Mr. Spurgeon, much of the focus of the Department since
    the passage of the Energy Policy Act 2005 toward nuclear power has been
    on the development of new nuclear reactors. As you know, there are
    other valued components of the domestic nuclear fuel cycle. Currently,
    our country has only one functioning aging enrichment facility and
    another soon to come on-line in the next few years. These facilities
    will provide the fuel of the nuclear renaissance in America and build
    upon the President's energy security programs.
        Can you tell me what the Office of Nuclear Energy is doing to
    encourage development in the front end of the U.S. nuclear fuel cycle,
    in the enrichment areas of the fuel cycle?
        Answer. With 104 nuclear power plants currently licensed in the
    United States and the announcements by power companies for license
    applications for over 30 new plants, the Department of Energy (DOE)
    believes that U.S. energy security would be significantly enhanced by
    private sector investment in new domestic uranium enrichment capacity.
    Currently, the aging and energy-intensive gaseous diffusion plant at
    Paducah, Kentucky is the Nation's only operating enrichment plant.
    Three private companies, General Electric (GE), Louisiana Energy
    Services (LES), and USEC Inc. (USEC) are at various stages of deploying
    new U.S. enrichment plants featuring advanced technology. LES is the
    furthest along with construction having started on its National
    Enrichment Facility in New Mexico that will utilize gas centrifuge
    technology commercially deployed by Urenco in Europe. USEC and GE are
    working to demonstrate commercial viability of the American Centrifuge
    and SILEX projects, respectively.
        With respect to the Department working with private enrichers, DOE
    and USEC signed an agreement in June 2002, whereby USEC Inc. made a
    commitment to deploy an enhanced version of DOE's previously developed
    gas centrifuge technology at the Portsmouth Gaseous Diffusion Plant
    site. USEC, in order to demonstrate its American Centrifuge, is funding
    a Cooperative Research and Development Agreement with the DOE's Oak
    Ridge National Laboratory. In December 2006, DOE and USEC signed a
    long-term lease agreement for USEC to build its commercial plant at DOE
    facilities at Portsmouth, Ohio. At the same time, DOE granted USEC a
    patent license for DOE's gas centrifuge technology that requires USEC
    to pay royalties to the U.S. Government on annual sales of enriched
    uranium from centrifuge plant production. While LES and GE are pursuing
    other technical approaches, DOE encourages all three companies in their
    efforts to deploy reliable and competitive advanced enrichment
    technology.
        Question. Does the Department need any new authorities in this
    regard?
        Answer. Both LES and USEC are seeking to use DOE's uranium
    inventories to facilitate the startup of their new enrichment
    facilities. At this time, DOE does not need additional authorization to
    sell or transfer uranium to a private company.
                                     ______

                 Questions Submitted to Hon. Alexander Karsner
                 Questions Submitted by Senator Byron L. Dorgan

                   BALANCING RENEWABLE AND EFFICIENCY FUNDING

        Question. DOE has strongly backed many of the programs in your
    office and the President highlighted initiatives to be pursed by the
    Office of Energy Efficiency and Renewable Energy in his State of the
    Union address. This includes work on hydrogen technology, biomass and
    biorefinery R&D, solar energy, and vehicle technologies. These are all
    important.
        However, it seems that there is much greater emphasis on targeted
    renewable energy programs than other programs within your office such
    as energy efficiency programs, the Weatherization Assistance Program,
    and the State Energy Programs. In your opinion, do you have the right
    balance between the renewable side of your office and the energy
    efficiency side of your office? Why are these energy efficiency
    programs not seeing the same funding increases as the renewable energy
    programs are?
        Answer. Yes, the Office of Energy Efficiency and Renewable Energy
    maintains a balanced portfolio that supports achievement of programs'
    goals and ensures optimal use of resources.
        The fiscal year 2008 budget request includes increases for many of
    our energy efficiency programs. The Building Technologies Program
    budget request is $9.1 million greater than the fiscal year 2007
    request, the Vehicle Technologies Program budget request is $10.1
    million greater than the fiscal year 2007 request and the Industrial
    Technologies Program is $435,000 greater than the fiscal year 2007
    request.
        Many of the Department's efficiency programs have very high returns
    at low cost, such as FEMP, appliance standards, energy efficiency
    building codes, ``Save Energy Now'', and Energy Star rating system, to
    name a few.

                   BALANCING RESEARCH WITH DEPLOYMENT FUNDING

        Question. I recognize that money at DOE is being devoted to R&D
    but, voluntary deployment and market transformation programs also are
    needed to move new technologies into the marketplace, and standards and
    codes are needed to set a minimum threshold for using cost-effective
    technologies. By some accounts, just over 50 percent of your $1.24
    billion in your fiscal year 2008 budget request is for research and
    development activities. Is this an appropriate amount? What portion of
    funding is being applied to renewable energy R&D and what portion to
    energy efficiency R&D? What is the Department doing, beyond the basic
    R&D, to transition new technologies into the marketplace on the
    efficiency side?
        Answer. The Office of Energy Efficiency and Renewable Energy (EERE)
    maintains a balanced portfolio of programs to advance renewable power
    generation, diversify transportation fuels, and promote energy
    efficiency. In our fiscal year 2008 request, almost 52 percent is R&D
    with the balance invested in regulation, commercialization and grant
    programs. This balance is appropriate because many of the Department's
    efficiency programs are lower cost programs, such as FEMP, appliance
    standards, energy efficiency building codes, ``Save Energy Now'', and
    Energy Star rating system, to name a few.
        The Office of Energy Efficiency and Renewable Energy (EERE)
    programs related to energy efficiency comprise approximately 46 percent
    of the total EERE proposed fiscal year 2008 budget (including program
    direction and support funds).
        The Department's approach to promoting new technologies couples
    technology push with market demand pull, and works to address barriers
    to the market adoption of advanced technologies through various program
    initiatives. For example, the Department plans to lead by example with
    the Executive Order 13423 and become an early adopter of energy
    efficient and renewable energy technologies. By identifying markets
    where the life-cycle costs of advanced energy technologies currently
    form a compelling economic argument, the Federal Government will create
    demand pull which will increase the economies of scale and drive the
    technologies down the cost curve. The Department is also looking to
    stimulate the commercialization of advanced technologies by bridging
    the gap between R&D and the market place. To this end, the Department
    has designated a Director of Commercialization and Deployment, located
    within the Energy Efficiency and Renewable Energy Program, to oversee
    and guide our deployment-related efforts. However, ultimately
    commercialization decisions are up to industry.

                       WEATHERIZATION ASSISTANCE PROGRAM

        Question. The Weatherization Assistance Program funding has been
    cut from $242.5 million in fiscal year 2006 to $204.5 million in the
    fiscal year spending plan, and the fiscal year 2008 request is for $144
    million. That is a 41 percent cut from fiscal year 2006. Why is the cut
    so significant? Is the Department still interested in moving the
    Weatherization Assistance Program to another Federal agency?
        Answer. The 2007 operating plan optimizes resources and provides
    the appropriate amount of resources to support the achievement of goals
    and priorities. We have chosen to prioritize investments in energy
    efficiency and renewable energy R&D that have multiplicative returns
    such as improvements to appliances and the building envelope that
    affect the whole American population rather than additive returns not
    associated with technological R&D that target a single segment of the
    population. For example, the National Academy of Sciences studied the
    benefits of the energy efficiency portfolio and found that the return
    on the research and development (R&D) investment was roughly 20 to 1.
    In contrast, the Weatherization Assistance Program has a return on
    investment of 1.5 to 1.
        The Department of Energy has no current proposal to move the
    Weatherization Assistance Program to another Federal agency.

                              APPLIANCE STANDARDS

        Question. As you know, DOE has been plagued for years by long
    delays in issuing appliance efficiency standards. So far, you seem to
    be meeting the aggressive schedule you set last year for getting the
    required standards out, and I am pleased that you asked for additional
    funds. However, a recent GAO report said additional changes are needed
    in the program, and I am concerned that recent proposed standards have
    been weak and are not using the tremendous potential of this program to
    address our energy needs.
        The GAO report said the program faces a 600 percent increase in
    workload with a 20 percent resource increase in the fiscal year 2007
    budget. Have you analyzed the staffing and funding requirements to
    carry through the standards plan, and can you share that with us?
        Answer. Yes, the Department has conducted a thorough assessment of
    resource needs for the efficiency standards program. On January 31,
    2006, the Department submitted an aggressive plan to Congress,
    addressing both the history and the future plans for the Appliance
    Standards Program. That plan does in fact commit to a rulemaking
    schedule that is six times the historical rulemaking rate for this
    program. The actions detailed in that plan are expected to dramatically
    increase the efficiency of the process and the output rate. In addition
    in our fiscal year 2007 operating plan, we have directed resources
    necessary to improve the program. Early improvements in the program are
    evidenced by the timely issuance of final test procedures for various
    products and final standards for commercial products, as set out in the
    plan DOE provided to Congress. . Changes in our process include
    implementing product bundling within a single rulemaking and organizing
    staff into seven technology teams.
        Since committing to this schedule for the standards program, the
    Department has met 100 percent of its scheduled deadlines. We have
    completed eight rulemakings since EPACT 2005, including test procedure
    rulemakings and codification of prescribed standards, and have made
    significant progress on others that were underway prior to EPACT 2005.
    In 2006, we initiated standards rulemaking for 12 additional products
    and remain on schedule for all future deadlines.
        Question. Some of the largest possible savings, for example from
    standards on furnace fans and refrigerators, are not included in the
    plan, and thus will not be considered for at least 5 years. Can you
    tell us how much additional resources you would need to begin work on
    the most important standards now?
        Answer. You correctly note that the plan did not include provisions
    for new refrigerator and furnace fan efficiency standards. Current
    statutory requirements for refrigerator standards have been met and
    refrigerators of today consume approximately 70 percent less energy
    than they did in the early 1970s. The Energy Policy Act of 2005 gave
    DOE the authority to set standards for furnace fans but did not specify
    a statutory deadline. The plan provided to Congress is focused on
    implementing all statutorily required rulemakings, which are numerous.
    We continue to evaluate our published schedule for opportunities to
    accelerate and expand to additional products, such as furnace fans,
    while staying on schedule.
        Question. DOE has rejected some recent suggested standards because
    they were not deemed consistent with current law. Do you need any
    additional legal authority to issue standards that make the most sense
    for consumers?
        Answer. In February, Secretary Bodman sent legislation to Congress
    requesting authorization to streamline the standards process and bring
    more efficient products to market sooner. This fast-track legislative
    proposal would allow the Department to move directly to a Final Rule
    for certain products when a clear consensus for a standard exists among
    manufacturers, efficiency advocates, and other stakeholders. By using
    this process, we would be able to promulgate an energy efficiency
    standard directly when all relevant interests jointly have negotiated
    and submitted an agreed proposed standard that meets all statutory
    criteria. In some cases, directly issuing a final rule would shorten
    the time to a completed standard by nearly a third and shave months off
    the rulemaking process. To be clear, if the Department determines that
    a consensus does not exist, this proposal would not preclude
    rulemaking; it would simply require the Department to use the
    traditional three-stage process.
        Other pending legislative proposals would fix various problems with
    the existing statute, provide DOE with needed flexibility in some
    areas, establish statutory efficiency standards for several products,
    and mandate DOE to develop standards for other products. We are hopeful
    that constructive legislation in this area will be enacted before the
    end of this year.

                                 BUILDING CODES

        Question. A small DOE program to assist States in setting and
    achieving compliance with their building energy codes leverages a few
    million dollars to improve the efficiency of every new building in much
    of the country. It has been rated the most cost-effective of all DOE
    programs assisting States. Yet the proposed fiscal year 2008 budget
    request would cut it.
        Several studies have shown we are wasting huge amounts of energy
    because of poor compliance with codes. EPACT 2005 authorized a program
    to help States improve compliance. With so much building occurring
    around the country, wouldn't this be a good time to add a little
    funding to help make sure these buildings are up to code?
        Answer. Yes, we are currently restarting and reinvigorating the
    codes program under the fiscal year 2007 Continuing Resolution which
    provided approximately $2 million to the State building energy codes
    activities. The fiscal year 2008 request is $3.8 million. The
    Department has effectively provided technical assistance and training
    through the Building Energy Code Program website,
    (www.energycodes.gov), technical support, web-based training, stand-up
    training, webcasts, and Setting the Standard newsletter. Efficient use
    of funds allows the Department to continue to provide assistance to
    improve compliance to national, regional, and State building code
    officials and stakeholders. For example, there are over 3 million hits
    a month on the Department's www.energycodes.gov website and some 6,000
    residential code compliance tools are downloaded monthly by designers,
    builders and code officials. The Department trains approximately 2,000
    code officials, designers, and builders to implement these codes and
    updates and improves the core materials and code compliance software to
    reflect recent changes in the model energy codes and emerging energy
    efficiency technologies.

                       FEDERAL ENERGY MANAGEMENT PROGRAM

        Question. I understand that you are big supporter of improving
    energy efficiency in Federal facilities. I am concerned about the
    ability of your office to sufficiently train, educate, and support
    other agencies of the Federal Government related to the Federal Energy
    Management Program (FEMP). In January, President Bush signed an
    Executive Order with new and updated energy savings targets and other
    requirements. Yet the proposed budget would cut the Federal Energy
    Management Program, which leads the Government-wide effort to save
    energy, by another 12 percent.
        What is DOE's role in implementing the new Executive Order? What
    funding is provided in the budget for this purpose?
        Wouldn't additional funding for FEMP save the Federal Government
    more money than it would cost by reducing energy waste?
        Answer. The Department's role is to provide specific and
    authoritative guidance to Federal agencies on the provisions of the
    Executive Order and to support agency efforts to meet the goals through
    assistance with third party financing and design assistance. Virtually
    all of FEMP's fiscal year 2008 budget request of $16.8 million will be
    used for the implementation of the Executive Order and associated
    statutory requirements in some way.
        The private sector will be the most important funding source for
    saving energy at Federal agencies. FEMP's third party financing
    activities, in conjunction with the private sector, can potentially
    fund projects needed to meet the Executive Order goals.

                                PUBLIC EDUCATION

        Question. Public education is the quickest way to reduce energy use
    and address current energy prices and supply-demand imbalance. Yet
    there is almost no money for public education on energy efficiency in
    the budget, despite a $90 million authorization in EPACT 2005.
        How much funding would be available for proactive energy-efficiency
    public education programs under this budget? Where is that funding in
    the budget?
        What is your plan for using those funds, including plans for
    partnering or contracting with other organizations?
        Answer. Within our fiscal year 2008 budget request, we include $4.9
    million in funding to support public information activities within our
    Program Support budget line and within each program's budget.
        The funding supports a range of activities and programs including
    websites, Energy Saver fact sheets, development of publications, the
    EnergyStar program, and the Energy Efficiency and Renewable Energy
    Information Center. In the past we have partnered with the
    Environmental Protection Agency (EPA), the Alliance to Save Energy,
    retailers and utilities to promote energy efficiency through public
    awareness campaigns such as ``Powerful Savings,'' ``Easy Ways to Save
    Energy'' and the ``Power Is In Your Hands.'' We have also collaborated
    with EPA and retailers to promote EnergyStar qualified products through
    the EnergyStar program. The 2008 budget supports our partnerships with
    business and non-governmental organizations to help leverage funding to
    promote education on energy efficient technologies and products as well
    as alternative sources of energy and fuel.

                                  OIL SAVINGS

        Question. In the State of the Union address, President Bush called
    for reducing our gasoline use by 20 percent in 10 years. This budget
    increases some budget areas important to that goal, such as DOE's
    Biomass program, but decreases others, including DOE's Vehicle
    Technologies program.
        If we are serious about addressing our ``addiction'' to oil, don't
    you think we need to invest more in vehicle efficiency as well as in
    new fuels, and in improving trucks and buses as well as cars?
        Answer. The Department's balanced portfolio of investments
    addressing both efficiency improvements and alternative energy sources
    outlined in the 2008 budget optimizes the use of resources and supports
    the achievement of stated goals. The 2008 Budget for the Vehicle
    Technologies Program is approximately $10 million above the 2007
    request. Most of the increase is to support the development of plug-in
    hybrid technologies, which show great promise of increasing light duty
    vehicle fuel economy.
        Question. The president's goal assumes a 4 percent annual fuel
    economy improvement in new cars and light trucks, but the light truck
    fuel economy standards issued so far only increase by 2 percent a year.
    What will change to get a 4 percent increase in the future? Do we need
    more research to support this goal?
        Answer. The President's goal to reduce gasoline consumption is
    ambitious and would require the use of more advanced fuel economy
    technologies in the new vehicle fleet. The Department believes that
    accelerated consumer adoption of hybrid and plug-in hybrid electric
    vehicles and advance combustion engines offers the potential to
    significantly reduce oil consumption in the near-term. However, any
    requirements to improve new car and light truck fuel economy would also
    have to be technologically feasible, economically practicable, and
    ensure that vehicle safety is not compromised.
        The Department of Energy's role in this effort is to accelerate
    advanced technology vehicles including through significant new
    investments in advanced batteries for hybrid and plug-in hybrid
    electric vehicle applications. Also, the Department is continuing
    research and development of advanced combustion engines to address the
    technical barriers to the commercialization of more efficient advanced
    internal combustion engines. Specific goals for combustion research are
    to improve, by 2012, the efficiency of internal combustion engines from
    30 percent to 45 percent for light-duty applications while meeting
    cost, durability, and emissions constraints.

                       EPACT 2005 AND GEOTHERMAL PROGRAMS

        Question. The Energy Policy Act of 2005 provides specific
    directives for DOE's renewable energy research efforts. In general, the
    overall approach is spelled out in section 931, which states: (a)(1)
    OBJECTIVES.--The Secretary shall conduct programs of renewable energy
    research, development, demonstration, and commercial application,
    including activities described in this subtitle. Such programs shall
    take into consideration the following objectives: (A) Increasing the
    conversion efficiency of all forms of renewable energy through improved
    technologies. (B) Decreasing the cost of renewable energy generation
    and delivery. (C) Promoting the diversity of the energy supply. (D)
    Decreasing the dependence of the United States on foreign energy
    supplies. (E) Improving United States energy security. (F) Decreasing
    the environmental impact of energy-related activities. (G) Increasing
    the export of renewable generation equipment from the United States.
        Subsection (c) of this section of EPAct specifically provides
    direction for geothermal energy research. It states:
        GEOTHERMAL.--The Secretary shall conduct a program of research,
    development, demonstration, and commercial application for geothermal
    energy. The program shall focus on developing improved technologies for
    reducing the costs of geothermal energy installations, including
    technologies for: (i) improving detection of geothermal resources; (ii)
    decreasing drilling costs; (iii) decreasing maintenance costs through
    improved materials; (iv) increasing the potential for other revenue
    sources, such as mineral production; and (v) increasing the
    understanding of reservoir life cycle and management.
        For the fiscal year 2007 Spending Plan and the fiscal year 2008
    budget request, how do the Department's decisions in each of those
    documents with respect to the geothermal energy research and
    development program comport with the statutory direction provided by
    Congress in section 931 of Public Law 109-58?
        Answer. Since the 1970s, the Department of Energy has conducted a
    research and development program in geothermal technology valued in
    excess of $1.3 billion. That investment has helped to produce the
    strong market for geothermal energy we see today. In fiscal year 2007
    and fiscal year 2008, the Department requested zero funds for the
    Geothermal Program because the program has achieved key research
    objectives for conventional hydrothermal technology development and
    there are substantial incentives that support the near-term development
    of the technology and deployment of the geothermal resource base.
    Consequently, power production from high-temperature, shallow resources
    is now a relatively mature technology. Projects under construction, or
    which have both power purchase agreements and are undergoing production
    drilling, amount to 489 megawatts in eight Western States. The fiscal
    year 2007 operating plan for the Department included $5 million to
    support geothermal power co-produced with oil and gas demonstration
    efforts, for an evaluation of enhanced geothermal systems to help
    industry prioritize its technology needs, and to bring to completion
    selected projects on exploration, drilling, and/or conversion
    technologies. In addition, some fiscal year 2006 unspent or uncosted
    funds will also be used to conclude research projects on exploration,
    drilling, and/or conversion technologies.

      GEOTHERMAL PROGRAM AND THE NATIONAL RESEARCH COUNCIL RECOMMENDATIONS

        Question. The administration's repeated efforts to close down and
    defund the geothermal research program also appears to contradict the
    recommendations of the last external review of the Department of
    Energy's renewable programs, the 2000 report of the National Research
    Council entitled Renewable Power Pathways. That National Research
    Council's examination of the geothermal program states in clear terms
    the importance of the program, and the recommendation that it continue
    to be funded: ``In light of the significant advantages of geothermal
    energy as a resource for power generation, it may be undervalued in
    DOE's renewable energy portfolio.''
        Does the Department agree with the National Research Council that
    the U.S. geothermal resource base holds significant potential to
    contribute to national energy needs?
        What actions did the Department take to implement the
    recommendations made by the National Research Council in 2000?
        Has the Department had further communications with the National
    Research Council about its assessment and any follow-up by the
    Department?
        Answer. Yes, the U.S. geothermal resource base is large, and can
    contribute to diversification of our national energy portfolio through
    increased private sector development. DOE's Geothermal Program has
    achieved its key research objectives for conventional geothermal
    resources. There are substantial incentives that support development of
    the geothermal resource base without further investment in R&D. The
    fiscal year 2007 operating plan for the Department included $5 million
    to support geothermal power co-produced with oil and gas demonstration
    efforts, for an evaluation of enhanced geothermal systems to help
    industry prioritize its technology needs, and to bring to completion
    selected projects on exploration, drilling, and/or conversion
    technologies. In addition, some fiscal year 2006 unspent or uncosted
    funds will also be used to conclude research projects on exploration,
    drilling, and/or conversion technologies.
        Since 2000, the Department has taken actions to implement all 10
    recommendations made by the National Research Council. These actions
    include new or expanded research initiatives, technology demonstration
    projects, increased collaboration with other agencies, and improved
    international cooperation.
        The Geothermal Program has not had any further communication with
    the National Research Council; however the Department has continued to
    work with the National Research Council in other areas of renewable
    energy.
                                     ______

                Questions Submitted by Senator Dianne Feinstein

                             GEOTHERMAL TERMINATION

        Question. The President's budget for fiscal year 2008 proposes to
    eliminate funding for geothermal energy research. Based on reports by
    the National Renewable Energy Laboratory (NREL) and the Massachusetts
    Institute of Technology, the Geothermal Energy Association estimates
    that, with a relatively small amount of research funding, geothermal
    energy can meet up to 20 percent of U.S. power needs by 2030. Please
    answer the following questions:
        Given the critical need to develop low-carbon electricity
    generation technologies, why does the DOE propose to stop conducting
    research into geothermal energy?
        Answer. The Department's geothermal program has achieved its key
    research objectives and there are substantial incentives that support
    the near-term development of the technology and deployment of the
    geothermal resource base. Geothermal power production from high-
    temperature, shallow resources is now a relatively mature energy
    technology. Projects under construction, or which have both Power
    Purchase Agreements and are undergoing production drilling, amount to
    489 megawatts in eight Western States. The Western Governors
    Association geothermal task force recently identified over 100 sites
    with an estimated 13,000 megawatts of near-term power development
    potential.

                        WIND AND SOLAR PRODUCTION COSTS

        Question. The Massachusetts Institute of Technology (MIT) has
    released a report suggesting that, for less than the cost of a single
    clean-coal power plant, the United States could conduct the research
    needed to enable production of up to 100 GWe of low carbon energy from
    enhanced geothermal systems by 2050. How much would it cost for EERE
    research programs to enable production of 100 GWe of energy from wind
    and solar sources by 2050?
        Answer. The primary factors contributing to production of 100 GWe
    of wind and solar energy are no longer exclusively or even
    substantially driven by government funded research projects. The rate
    at which potential capacity is converted to productive projects will
    depend on the amount and type of private capital investments in
    projects, and on the durability and scope of policy incentives. The
    goal of the Wind Program and Solar Program is to enable these renewable
    energy technologies to compete with conventional electricity throughout
    the Nation by helping to reduce costs. Under the President's Solar
    America Initiative, the goal is to improve the performance and reduce
    the cost of solar energy systems to make photovoltaics cost-competitive
    with conventional electricity sources by 2015. The President's fiscal
    year 2008 budget request of $40 million for wind and $148 million for
    solar contributes to these goals being met. Also, the Department's
    investment in technology development of next-generation systems may
    help enable solar companies to invest more private capital in scaling
    up manufacturing, as well as accelerate cost reductions to help
    increase demand for solar as it reaches cost-competitiveness in more
    markets.
        If the research goals are met, DOE estimates 177 GW of wind power
    and 190 GW of solar power by 2050. These estimates are in accordance
    with the Government Performance and Results Act (GPRA) analysis that
    accompanies the President's budget.

                          ENHANCED GEOTHERMAL SYSTEMS

        Question. The Massachusetts Institute of Technology (MIT) report
    only considers the potential to tap geothermal energy from putative
    ``Enhanced Geothermal Systems (EGS).'' What is the additional untapped
    capacity of more conventional geothermal technologies? How much of this
    capacity could be tapped by 2030 with sustained investment of $50-$100
    million per year? By 2050?
        Answer. Currently, conventional geothermal production is
    approximately 3,000 MWe. A recent Western Governor's Association report
    indicates that there is potential for up to 5,600 MWe by 2015.
        The rate at which potential capacity is converted to productive
    projects will largely depend on the amount and type of private capital
    investments in projects.
        Question. In the Energy Policy Act (EPACT), the Secretary of Energy
    was instructed to ``promulgate regulations which describe in detail
    methods for calculating and verifying energy and power consumption and
    cost, based on the provisions of the 2005 California Non-Residential
    ACM manual.'' Please answer the following questions:
        What is the DOE's progress towards this goal?
        Can DOE provide a detailed comparison between proposed regulations
    and the California Non-Residential ACM manual, with justification for
    deviations? If not, how much additional funding is needed to complete
    this effort?
        If such funding were provided, when would these new regulations be
    issued?
        Answer. EPACT section 1331 directs the Secretary of the Treasury,
    in consultation with the Secretary of Energy, to promulgate methods of
    calculation for energy consumption and cost. On June 26, 2006, the
    Department of the Treasury and the Internal Revenue Service (IRS)
    issued Notice 2006-52, Deduction for Energy Efficient Commercial
    Buildings, that set interim guidance relating to the deduction for
    energy efficient commercial buildings under  179D of the Internal
    Revenue Code. The Department of Energy provided technical guidance for
    the Notice. It is my understanding that Treasury elected to adopt the
    provisions of the California ACM manual that do not conflict with
    ASHRAE Standard 90.1-2001.
        At this time, the IRS has only promulgated interim guidance in
    advance of proposed regulations. The justification for any potential
    deviation from the California manual and proposed Federal rules would
    rest with the Department of Treasury.
        At this time, I am not able to provide an answer as to when the
    Department of Treasury might request funding for this rule nor when
    Treasury might promulgate a proposed rule.
        Question. Can DOE provide similar updates for progress towards all
    other energy efficiency regulatory requirements of the Energy Policy
    Act (EPACT)?
        Answer. I am pleased to report progress on a number of energy
    efficiency requirements of EPAct. On January 31, 2006, the Department
    submitted a report to Congress on its standards activities prepared in
    response to section 141 of EPACT 2005. The report publicly laid out our
    action plan and schedule for rulemakings out to the year 2011. Since
    committing to this schedule for the standards program, the Department
    has met 100 percent of its targets. We have completed eight rulemakings
    since EPACT 2005, including test procedure rulemakings and codification
    of prescribed standards, and have made significant progress on others
    that were underway prior to EPACT 2005. The Department has also
    established guidelines regarding the use of energy metering in Federal
    buildings, as outlined in section 103. A standard for premium efficient
    electric motors was published in the Federal Register on August 18,
    2006, per section 104. The section 109 requirement for a determination
    on whether the revised ASHRAE (American Society of Heating,
    Refrigeration and Air-Conditioning Engineers) code requires revisions
    to Federal building performance standards is on track. In addition, an
    acquisition plan for an energy efficiency pilot program for states has
    been completed and a procurement requirements document developed to
    fulfill section 140.

                       GLOBAL NUCLEAR ENERGY PARTNERSHIP

        Question. The Department of Energy's Office of Nuclear Energy (DOE-
    NE) has given many different reasons for the need to invest in the
    nuclear fuel reprocessing aspects of the Advanced Fuel Cycle Initiative
    through the program known as the ``Global Nuclear Energy Partnership
    (GNEP).'' This initiative represents a significant change from long-
    standing U.S. nuclear policy, but no consensus has been established and
    program goals have not yet been fully vetted by an independent
    authority. The President's budget requests an increase of $152 million
    over fiscal year 2007 levels for this program, and an even greater
    increase with respect to fiscal year 2006 levels. These increases are
    much greater than the combined increases for research into all
    renewable resources such as wind, solar, geothermal, and biological.
    Please answer the following questions:
        What is the primary justification for this program? In order of
    priority, what are the secondary justifications for this program?
        Answer. Today, 103 nuclear reactors generate roughly 20 percent of
    America's electricity. U.S. electricity demand is anticipated to grow
    50 percent over the next 25 years--the equivalent of 45 to 50 one-
    thousand megawatt nuclear reactors must be built just to maintain that
    20 percent share. With nuclear power as the only proven base load
    producer of electricity that does not emit greenhouse gases with the
    ability to increase output substantially, it is vital that our current
    fleet of reactors be expanded in order to meet our needs for carbon-
    free, dependable and economic electric power.
        Any serious effort to stabilize greenhouse gases in the atmosphere,
    while providing the increasing amounts of energy needed for economic
    development and growth, requires the expanded use of nuclear energy.
    This will inevitably require us to address the spent fuel and
    proliferation challenges that confront the expanded, global use of
    nuclear energy. To meet these challenges, the Department initiated the
    Global Nuclear Energy Partnership (GNEP), a comprehensive approach to
    enable an expansion of nuclear power in the United States and around
    the world, promote non-proliferation goals, and help minimize the
    amount of nuclear waste disposal.
        Additionally, many formerly non-nuclear countries are now
    considering the nuclear option to meet their energy needs. It is vital
    for the United States to be able to influence the safety, security and
    proliferation characteristics of nuclear reactors intended for these
    emerging nuclear states, as well as position U.S. industry for
    leadership in this growing international market. Together with the
    assurance of reliable fuel services, GNEP provides an attractive energy
    solution for many countries that could serve to eliminate the need for
    them to develop the more proliferation-vulnerable parts of the nuclear
    fuel cycle. Coupled with the spent fuel recycling and actinide burning
    technologies of GNEP, the United States has the potential to meet its
    growing energy demands and those of developing countries in a manner
    that minimizes potential negative impact to the United States and the
    world.
        Question. The GNEP implementation plan calls for rapid construction
    of demonstration facilities for nuclear fuel reprocessing. Can you
    provide a consensus statement from our international partners
    describing what their contribution will be and what their requested
    contribution from the United States is?
        If such a consensus is not available, then what level of funding is
    needed to establish the needed international consensus prior to
    building new facilities on U.S. soil? Please justify.
        Answer. Discussions are currently in progress with several of our
    international partners to help define the parameters of and potential
    deployment strategies for the GNEP facilities. Those discussions are
    not yet at the point where a consensus on the amount of cost sharing,
    or if cost share at all, could be established. At this time, given the
    undefined technical, political, financial, and strategic aspects of
    GNEP, it is not possible to pursue quantitative discussions with our
    partners. Likewise, those same undefined factors render it impractical
    to make a reasonable estimate of the level of funding required to
    establish an international consensus prior to constructing the GNEP
    facilities in the United States. When GNEP has developed sufficiently
    to develop those estimates, the Department would be able to provide
    them.
        Question. In his statement, Assistant Secretary Spurgeon stated
    that ``Any serious effort to stabilize greenhouse gases in the
    atmosphere, while providing the increasing amounts of energy needed for
    economic development and growth, requires the expanded use of nuclear
    energy''. No further documentation was provided to support this
    conclusion. Can DOE provide a comparison of the complete lifecycle
    costs to produce nuclear energy and safely manage nuclear waste as
    compared to producing a comparable amount of energy from renewable
    energy resources? If such a comparison cannot be provided, then please
    provide scientific, peer-reviewed support for this statement.
        Answer. A recent study by the European Commission (``External
    Costs--Research results on socio-environmental damages due to
    electricity and transport,'' European Commission, 2003, p. 12, [http://
    ec.europa.eu/research/energy/pdf/externe_en.pdf]) states, ``Nuclear
    power in general generates low external costs, although the very low
    probability of accidents with very high consequences and the fuel cycle
    impacts are included. It is also a technology with very [lifecycle] low
    greenhouse gas emissions.'' On page 13 of the report, a table shows
    that nuclear power's external costs are on a par with renewables. While
    this study considered European experiences, it is expected the
    situation in the United States would not differ significantly.
        Other reports may contradict this. What can be said is that there
    is currently in operation no clean, base-load, fossil-fuel power-
    generation technology; solar and wind power have great potential in
    their limited ranges of operations; hydroelectric is essentially fully
    subscribed; and that leaves nuclear power. Nuclear power now provides
    over two-thirds of our Nation's non-emitting electricity while
    renewables, primarily hydropower, account for the rest. Until such time
    as we can efficiently store the power produced by wind and solar power,
    they will continue to augment but cannot replace base-load power
    generation. Nuclear power is the only non-emitting technology that is
    ready today to be deployed in quantities sufficient to meet our growing
    demand for electricity.

                                 FOSSIL ENERGY

        Question. The Department of Energy's Office of Fossil Energy (DOE-
    FE) has proposed extensive new investments in coal energy, yet proposes
    cuts in funding for oil and gas research. Acting Assistant Secretary
    Shope justifies this change with an argument that can be summarized as,
    ``because coal is a critical domestic energy resource today, it will
    continue to be so in the future.'' This may happen, but continued
    innovation may well replace coal with improved new technologies. Coal
    is a valuable energy resource over the near-term, but its long-term
    future is still uncertain. Please answer the following questions:
        A recent study by the Climate Group indicates that the global
    market for biofuels, wind power, solar photovoltaic, and fuel cells
    will be $167 billion by 2015; with $523 million of venture capital
    invested in these technologies in California in 2005. What is the
    comparable global market for clean coal technologies? How will
    continued investment in coal research and development improve American
    competitiveness in a global, carbon-constrained economy? How does the
    return on investment for coal compare to that for other technologies?
        Answer. Recent estimates indicate large markets for clean coal
    technologies through the near-term and continuing out to 2030. The
    International Energy Agency (IEA) World Energy Outlook (WEO) 2006
    projects that coal will remain the dominant source of electricity to
    2030 in both scenarios investigated (a reference scenario and an
    alternate scenario that significantly reduces the rate of increase in
    demand and emissions). Coal-based power generation in 2030 will be at
    least 60 percent higher than today, remaining the world's largest
    source of electricity in 2030. Investment in electricity generation is
    expected to exceed $5.2 trillion cumulatively by 2030, resulting in
    more than 5000 GW of new capacity. Over 144 GW of integrated
    gasification combined cycle (IGCC) capacity is expected over that
    timeframe. Assuming a conservative capital cost of $1,000 per kilowatt
    for new coal plants, this equates to roughly a $150 billion market for
    the expected new IGCC plants alone.
        With the increased demand for coal, R&D investments in clean coal
    technology development aimed at near-zero emissions, while improving
    its efficient use, could help coal remain a competitive and
    environmentally-sound energy option for future generations of power
    plants, as well as for production of alternative fuels. As energy
    demand rises, coal will continue to compete by deploying new systems
    and innovative technologies that will keep it, and the existing fleet
    of coal-fueled generating stations, viable well into the future.
        We will continue to rely on all forms of energy sources to meet the
    growing energy needs. Coal will continue to be relied upon for baseload
    power generation. Continued investment in coal R&D (including low cost
    carbon capture and storage) will help produce clean, economical, and
    efficient coal-based power plants to keep the United States at a
    competitive advantage and poised to take advantage of global
    opportunities even in a carbon-constrained scenario. Meeting future
    global energy needs will require the introduction of a variety of
    technologies to meet growing electricity demands with stringent
    emission regulations. Coal will remain in the near-term and beyond.
        Question. The United States Geological Survey (USGS) has recently
    completed a series of studies indicating that only 10-20 percent of
    total U.S. coal resources may be economically recoverable. How does
    this compare with prior estimates by the Department of Energy? If the
    USGS estimates are correct, to what extent does this limit the
    capability of coal to power America's future?
        Answer. The Department of Energy's coal resource estimates are all
    based on U.S. Geological Survey (USGS) data. It is our understanding
    that USGS has not completed any full basin studies that validate the
    findings of the several local studies referred to. We look forward to
    reviewing the systematic inventory of the U.S. coal reserve base
    currently underway by the USGS, once it is available. The coal resource
    in the United States is vast; estimated to be 4,000 to 9,600 billion
    tons. Current usage is about 1 billion tons/year. Coal will be able to
    power America for the foreseeable future.
        Question. Energy experts at the Electric Power Research Institute
    (EPRI) have suggested that the technology to separate carbon dioxide
    from the emissions of coal fired utilities is ready for commercial
    demonstration, and that the biggest challenge is demonstrating the
    ability to safely sequester carbon dioxide. Is this true? If so, then
    why does the proposed fiscal year 2008 budget direct significantly more
    funding to research into coal combustion and carbon dioxide separation
    than to research into carbon sequestration?
        Please provide a comparison between total requested funding for
    carbon sequestration, and that for coal combustion and carbon capture.
        Answer. The emphasis of the funding for Carbon Sequestration
    (capture and storage) remains focused on the storage component of
    sequestration, including CO2 field injection tests. However,
    cost and efficiency penalties of existing capture technologies remain a
    challenge in terms of affordability and net plant output impacts. While
    certain post-combustion CO2 capture technologies, such as
    amine-based systems, could be ready for commercial demonstration in the
    next several years, several other advanced systems are only at the
    laboratory, bench-, and pilot-scale stage of development. Because of
    differences in plant age, size, configuration, and other site-specific
    factors, it is expected that a suite of CO2 capture
    technologies will be employed by electric utilities in order to achieve
    significant reductions in emissions from coal-based power plants
    without significantly increasing the cost of electricity.
        The Department of Energy (DOE) estimates that based on current
    amine scrubbing technology, the removal of CO2 from the flue
    gas of an existing coal-fired power plant would constitute as much as
    90 percent of the total cost of carbon capture, transport, and storage.
    Hence, the criticality of continued research and development of
    CO2 capture technologies. DOE's coal program targets
    improved performance and cost savings based on a system-wide approach
    that targets the most effective avenues for advancing carbon capture
    and storage technology. DOE conducts R&D on technologies that will
    enable carbon capture and storage in the following program areas:
    Integrated Gasification Combined Cycle, Turbines, Sequestration, Fuels,
    Fuel Cells, and Advanced Research.
        The DOE Carbon Sequestration Program aims to develop technologies
    that will lower both the cost of the carbon capture technology, but
    also the amount of additional power capacity required due to efficiency
    loses. It is the goal of the Program, by 2012, to develop technologies
    resulting in less than a 20 percent increase in the cost of electricity
    for post-combustion capture and oxycombustion technologies. Pre-
    combustion (integrated gasification combined cycle related)
    technologies are targeting less than a 10 percent increase in the cost
    of electricity. Of the approximately $86 million requested for the
    Carbon Sequestration Program (including roughly $7 million of R&D by
    Federal employees under the Program Direction line item), about $15
    million (or about 18 percent) is intended to be used for carbon capture
    technology research. These technologies are based on application to
    both coal combustion and gasification systems.
                                     ______

                    Questions Submitted by Senator Jack Reed

                         EPACT AND EFFICIENCY PROGRAMS

        Question. Mr. Karsner, you have recognized energy efficiency as a
    critical response to the Nation's energy challenges, but the budget
    proposed by the President does not. Funding for the President's
    Advanced Energy Initiative programs is coming mostly from cuts in
    efficiency programs. Given that efficiency is the Nation's fastest and
    most abundant clean energy resource, how can you justify a budget that
    continues to cut research, development, and deployment in this
    strategically critical area? Do you believe that the funding for
    energy-efficiency programs in the budget match the Nation's need for
    saving energy? What would be the impacts of the proposed budget cuts,
    including for industrial and vehicles R&D, and for weatherization
    assistance?
        Answer. The fiscal year 2008 budget adequately funds a balanced
    portfolio of activities at levels that support achievement of programs'
    goals. It is important to note that the Office of Energy Efficiency and
    Renewable Energy (EERE) programs related to energy efficiency comprise
    approximately 46 percent of the total EERE proposed fiscal year 2008
    budget (including program direction and support funds). For example,
    the Building Technologies Program budget request is $9.1 million
    greater than the fiscal year 2007 request and the Vehicle Technologies
    Program budget request is $10.1 million greater than the fiscal year
    2007 request and the Industrial Technologies Program is $435,000
    greater than the fiscal year 2007 request.
        EERE maintains a balanced portfolio that uses an integrated
    strategy of energy efficiency and renewable energy to increase our
    energy security and reduce our dependence on oil. The 2008 budget
    request optimizes resource use and appropriately funds all energy
    efficiency programs to support achievement of stated goals.
        The fiscal year 2008 budget request includes funding increases for
    both the Industrial Technologies Program and the Vehicle Technologies
    Program. In general we have chosen to prioritize investments in energy
    efficiency and renewable energy R&D that have multiplicative returns
    such as improvements to appliances and the building envelope that
    affect the whole American population rather than additive returns not
    associated with technological R&D that target a single segment of the
    population. For example, the National Academy of Sciences studied the
    benefits of the energy efficiency portfolio and found that the return
    on the research and development (R&D) investment was roughly 20 to 1.
    In contrast, the Weatherization Assistance Program has a return on
    investment of 1.5 to 1.
        Question. Mr. Karsner, the Energy Policy Act of 2005 (EPACT 2005)
    authorized a number of new energy-efficiency programs on public
    education, utility efficiency programs, building codes, appliance
    rebates, and other areas. Are any new energy-efficiency programs
    authorized in EPACT funded in the proposed budget? Does this budget
    allow you sufficient funding to implement the energy bill, including
    the added requirements on the appliance standards, Federal energy
    management, and Energy Star programs?
        Answer. Yes, we are implementing numerous energy efficiency
    programs authorized by EPACT 2005. Here are some selected examples. The
    fiscal year 2008 requests funds for the establishment of new
    EnergyStar qualification levels for clothes washers, as directed in
    EPACT section 131; the issuance of grants to establish Advanced Energy
    Efficiency Technology Transfer Centers as directed in EPACT section
    917; reporting on the establishment of a program to inform the public
    on various aspects of energy efficiency as directed in section 134 and
    developing the next generation of low-emission, high efficiency diesel
    engine technologies as directed in section 754. We have also requested
    funds under section 140 to provide financial assistance to States to
    carry out energy efficiency pilot programs.
        Yes, the fiscal year 2008 budget request includes adequate funding
    for a balanced portfolio that supports achievement of goals, including
    sufficient funding for appliance standards, Federal energy management
    and EnergyStar.

                        WEATHERIZATION FUNDING DECREASE

        Question. Mr. Karsner, I led a bipartisan letter to Secretary
    Bodman supporting the fiscal year 2007 funding level of $242.5 million
    for Weatherization. You chose to cut that program to $204.5 million,
    and in recent House testimony I think you referred to Weatherization as
    a ``welfare program.'' As you know, in the fiscal year 2007
    Supplemental Appropriations bill passed by the Senate, we included an
    additional $25 million for Weatherization. Weatherization provides
    almost 25 percent in energy savings for every house we improve, and
    well over 100,000 homes were done this past year. It is clearly a
    successful deployment program that helps lower-income homeowners and
    neighborhoods today. It is not a welfare program, it is an energy
    program. With the administration's support and focus on reducing energy
    demands, why wouldn't you also strongly support Weatherization?
        Answer. The 2008 budget optimizes resources and adequately supports
    the achievement of the program's goals and priorities. We have chosen
    to prioritize investments in energy efficiency and renewable energy R&D
    that have multiplicative returns such as improvements to appliances and
    the building envelope that affect the whole American population rather
    than additive returns not associated with technological R&D that target
    a single segment of the population. The National Academy of Sciences
    studied the benefits of the energy efficiency portfolio and found that
    the return on the research and development (R&D) investment was roughly
    20 to 1. In contrast, the Weatherization Assistance Program has a
    return on investment of 1.5 to 1.

                 INDUSTRIAL EFFICIENCY PROGRAM FUNDING DECREASE

        Question. Mr. Karsner, the industrial energy efficiency program has
    been slashed from well over $100 million just a few years ago to
    approximately $50 million in fiscal year 2007. The fiscal year 2008
    budget request would further reduce this effort. With over one-third of
    our energy use in this sector, what is the justification for this cut?
        Answer. The fiscal year 2008 request for the Industrial
    Technologies Program (ITP) is $435,000 higher than the fiscal year 2007
    request. Also, under the discretion given to the Department by Congress
    under the fiscal year 2007 Continuing Resolution, this program was
    increased by $11 million. ITP has historically worked with the eight
    most energy-intensive manufacturing industries to research, develop,
    and implement advanced technologies that save energy, reduce costs, and
    improve environmental performance. These activities have contributed to
    significant reduction in energy use. As the program evolves, we are
    seeking more effective and efficient ways to develop technologies that
    are high impact and applicable to multiple industries. ITP has
    developed a new strategy with more emphasis on crosscutting R&D which
    will allow ITP to continue partnership with end-user industries while
    broadening industry participation to include other growth industries
    and technology developers.

                MATERIALS MANUFACTURING AND INDUSTRIAL MATERIALS

        Question. Mr. Karsner, in fiscal year 2006, research and
    development for the materials manufacturing industry was $21 million.
    There is only $9 million in your budget for fiscal year 2008, a 55
    percent cut, and research and development for industrial materials is
    slashed by 57 percent to $5 million. These low numbers reflect a
    decision to back away from development of key new technologies that
    could significantly strengthen our manufacturing global competitiveness
    while reducing carbon emissions in a sector that consumes more energy
    than any other sector of the economy. Materials manufacturers co-fund
    this research and development effort and outlined a program in the
    range of $250 million to support the development of the next generation
    of production process technologies needed by their industries to be
    able to dramatically reduce their energy use per unit of output, cut
    carbon emissions, and compete globally. What is the rationale for
    cutting back investment in research and technology in materials
    manufacturing and industrial materials?
        Answer. The Industrial Technologies Program (ITP) has invested
    approximately $21 million in fiscal year 2006 through the Industries of
    the Future on technology development, focusing on industry-specific
    research needs. However, ITP is seeking more effective and efficient
    ways to develop technologies that have higher impacts and are
    applicable to multiple industries. ITP has developed a new strategy
    with more emphasis on crosscutting R&D which will minimize duplicative
    efforts and allow ITP to develop technologies meeting the needs of
    multiple industries. This approach will also accelerate technology
    development with broader industry participation to include other growth
    industries and technology developers. Materials manufacturing R&D will
    continue to play an important part of this program.

                          ``SAVE ENERGY NOW'' CAMPAIGN

        Question. Mr. Karsner, EERE has implemented the ``Save Energy Now''
    campaign to audit the 200 largest industrial customers/facilities in
    the United States. Could you specifically detail what facilities have
    been audited and most importantly, what energy measures have been
    implemented in those facilities? If changes have not been implemented,
    could you please explain why? Do you think funding support through the
    industrial program would help on the implementation side?
        Answer. As of December 31, 2006, the first 200 Energy Savings
    Assessments, with the firms listed in the following pages, were
    conducted. Several companies had more than one plant audited.
    Approximately half a billion dollars per year in energy savings was
    identified from those audits. Typical energy savings identified
    consisted of 5 to 15 percent of a plant's total energy use, consistent
    with a potential reduction of 3.3 million tons per year in
    CO2 emissions. The audited firms are being contacted 6
    months, 1 year, and 2 years after the audit to determine implementation
    of these recommendations. To date, the energy measures most commonly
    implemented in the plants as a result of these audits are in the areas
    of process heat and steam.
        It is entirely the choice of the audited company as to whether
    savings recommendations are implemented and the cost-effectiveness of
    the recommendations is dependent on interest rates, and equipment,
    labor, materials prices, and other considerations in addition to the
    energy prices. Often the purchases must wait for the next capital
    acquisition cycle or the next time that the plant shuts down for
    routine maintenance. Nevertheless, as of April 24, 2007, $116 million
    of the potential $494 million per year of energy savings has already
    been implemented or is in the process of being implemented.
        The fiscal year 2008 budget funding level is appropriate and
    sufficient to support achievement of the program's mission and goals.
    The program is not designed to be an implementation mechanism--it is
    the choice of the audited company as to whether it is worthwhile and
    cost-effective to implement the audit findings. The Save Energy Now
    initiative has demonstrated it can provide useful information to inform
    these industry decisions.

                         APPLIANCE EFFICIENCY STANDARDS

        Question. Mr. Karsner, DOE has been plagued for years by long
    delays in issuing appliance efficiency standards. So far you seem to be
    meeting the aggressive schedule you set last year for getting the
    required standards out, and I am pleased that you asked for additional
    funds. However, a recent GAO report said additional changes are needed
    in the program, and I am concerned that recent proposed standards have
    been weak and are not using the tremendous potential of this program to
    address our energy needs.
        The GAO report said the program faces a 600 percent increase in
    workload with a 20 percent resource increase in the fiscal year 2007
    budget. Have you analyzed the staffing and funding requirements to
    carry through the standards plan, and can you share that with us?
        Some of the largest possible savings, for example from standards on
    furnace fans and refrigerators, are not included in the plan, and thus
    will not be considered for at least 5 years. Can you tell us how much
    additional resources you would need to begin work on the most important
    standards now? DOE has rejected some recent suggested standards because
    they were not deemed consistent with current law. Do you need any
    additional legal authority to issue standards that make the most sense
    for the American people?
        Answer. Yes, the Department has conducted a thorough assessment of
    resource needs for the efficiency standards program. On January 31,
    2006, the Department submitted an aggressive plan to Congress,
    addressing both the history and future plans for the Appliance
    Standards Program. That plan does in fact commit to a rulemaking
    schedule that is six times the historical rulemaking rate for this
    program. The actions detailed in that plan will dramatically increase
    the efficiency of the process and the output rate. In addition, in the
    2007 operating plan and 2008 budget, the Department directed resources
    to support these efforts. Changes in our process include implementing
    product bundling within a single rulemaking and organizing staff into
    seven technology teams.
        Since committing to this schedule for the standards program, the
    Department has met 100 percent of its scheduled deadlines. We have
    completed eight rulemakings since EPACT 2005, including test procedure
    rulemakings and codification of prescribed standards, and have made
    significant progress on others that were underway prior to EPACT 2005.
    In 2006, we initiated standards rulemaking for 12 additional products
    and remain on schedule for all future deadlines.
                                     ______

                Questions Submitted by Senator Pete V. Domenici

                           LOAN GUARANTEE REGULATIONS

        Question. I understand that the Department sent its proposed draft
    regulations at the end of March to OMB for approval. It has been nearly
    3 weeks without any action.
        Based on the delays in approving the regulations, will you be able
    to meet the August deadline for the implementation of regulations as
    established in the Joint Funding Resolution?
        Answer. The Department is working to meet the August 2007 deadline
    contained in the Revised Continuing Appropriations Resolution, 2007,
    Public Law 110-5. A Notice of Proposed Rulemaking was published in the
    Federal Register on May 16, 2007 and is open for public comment until
    July 2, 2007. It is not possible to guarantee that the rule will be
    completed by the August deadline but an aggressive effort is underway
    to make that happen.

                  LOAN GUARANTEE PROGRAMS (TITLE 17 OF EPACT)

        Question. The Export-Import Bank of the United States is planning
    to provide over $18 billion in new loan guarantees in fiscal year 2008,
    more than double the level proposed for the Department of Energy. A
    portion of these loan guarantees will be for new advanced technology
    power generation facilities being built overseas.
        Can you explain why the administration has such a difficult time in
    providing adequate loan authority to implement a no-cost loan guarantee
    program at the similar level as we support foreign economic development
    under the Export-Import Bank program?
        Answer. The nature of the Energy Policy Act of 2005 Title XVII loan
    guarantee program is unique among other Federal loan guarantee programs
    in that it encourages the employment of new or significantly improved
    and innovative technologies to reduce or sequester pollutants or
    greenhouse gas emissions, while at the same time requiring a
    ``reasonable prospect of repayment.'' Other programs are primarily
    concerned with commercial market risk. To manage the inherent risks of
    this loan guarantee program, DOE is planning for an initial small
    portfolio of projects in order to gain experience and expertise and to
    ensure that the program is implemented correctly.

         LOAN GUARANTEE--TECHNICAL EVALUATION AND FINANCIAL EVALUATION

        Question. It is my understanding that the Department is attempting
    to recruit staff that has strong project development experience to
    evaluate these applications from a financial standpoint.
        At the same time, the evaluations are currently undergoing a
    technical evaluation by DOE staff to determine whether or not the
    technology is commercially viable.
        How are the evaluations proceeding and when do you expect these
    evaluations to be completed?
        Answer. The Department is completing a preliminary review of the
    143 pre-applications submitted in response to the August 2006
    solicitation and guidance has been issued to program offices to begin
    the technical reviews of the pre-applications. Until the program
    offices have had the opportunity to complete the technical reviews on a
    sufficient number of pre-applications, the Department cannot say
    precisely how long it will take to complete the evaluations.
        Separately, the Loan Guarantee Office will be reviewing each pre-
    application for compliance with the financial, commercial, and other
    criteria set forth in the August 2006 solicitation and accompanying
    guidelines. Ultimately, the goal is to complete the pre-application
    evaluations this summer.

                            DEPLOYING NEW TECHNOLOGY

        Question. Mr. Karsner, our energy sector has developed around low
    cost energy technologies such as coal. We have spent decades and
    billions of dollars supporting alternative energy sources such as wind
    and solar, yet these technologies still only make up a small portion of
    our generation mix. Tax credits have helped, but the intermittent
    nature of these incentives has undermined their effectiveness.
        It appears that we need to come up with a new model that will
    encourage the commercial deployment of alternative energy sources
    utilizing private capital. Obviously, this is something we have
    attempted through the loan guarantee program, but I wonder if we need a
    larger more aggressive solution in order to transform our energy
    sector--similar to the Export Import Bank or Overseas Private
    Investment Corporation.
        I assume you have met with investors and venture capital groups
    interested in deploying new technology. What is the major concern of
    these groups and what can we do to encourage investment in new
    alternative energy technology to get it out of the lab and into the
    market?
        Answer. In general, investment decisions center on maximizing the
    expected return for a given level of risk. With respect to alternative
    energy technology investments in particular, private sector investors
    repeatedly voice at least three primary concerns: an unstable and
    irregular policy environment and the negative economic incentive to
    build first-of-a-kind plants.
        By creating a stable and standardized policy environment with
    reasonable investment incentives, the Federal Government can help to
    lower risk and to increase private sector support of alternative energy
    technologies.
        Question. What about the deployment of high cost investments such
    as nuclear power?
        Answer. The principal causes of the financial risk surrounding
    nuclear power are political and regulatory uncertainties. By
    demonstrating the new Nuclear Regulatory Commission licensing process,
    codified at 10 CFR part 52, via our partnership program, Nuclear Power
    2010, the political and regulatory uncertainties of nuclear power would
    be significantly reduced. Further, the Department has just released a
    Notice of Public Rulemaking and has not yet solicited expressions of
    interest for loan guarantees by the nuclear power utilities, so it is
    not clear how the industry will respond to such an offering.
    Consequently, it is too early for the Department to assess whether a
    more aggressive solution would be needed to encourage more nuclear
    power plant construction.

                                  BATTERY R&D

        Question. Mr. Karsner, your budget for Vehicles Technology is
    presented in a new format that provides fewer details about specific
    research projects.
        I am interested to learn what the budget provides for battery R&D.
    As you are well aware the gasoline/electric hybrid car technology has
    become very popular. However, batteries continue to be the greatest
    technology challenge facing auto manufacturers.
        How much funding has the President requested for battery research
    in fiscal year 2008 and how has that changed over the past 2 years?
        Answer. The fiscal year 2008 budget includes $42 million to support
    advanced battery R&D, such as batteries for plug-in hybrid vehicles.
    This includes work on long-life, abuse-tolerant lithium batteries and
    more advanced high-power batteries along with power-control systems and
    components that are optimized for plug-in hybrids. The fiscal year 2008
    request for energy storage R&D is a 70 percent increase over the fiscal
    year 2006 appropriations, and is level with the fiscal year 2007
    operating plan.
        Question. Please explain to the subcommittee what your goals are
    for battery research? What can we expect in terms of performance
    improvements over the next 5 years?
        Answer. Energy storage research aims to reduce costs and help
    overcome specific technical barriers related to performance, life, and
    abuse tolerance. The current cost of high energy, plug-in hybrid
    vehicle battery is $1,000/kWh; our cost goal in support of the AEI is
    to reduce the cost of these batteries to $300/kWh by 2014. These
    barriers are being addressed collaboratively by the DOE's technical
    research teams and battery manufacturers.

                                  SOLAR ENERGY

        Question. Mr. Karsner, during the past 6 years there has been
    explosive growth (+45 percent) in solar cell manufacturing worldwide.
    However, the United States currently produces only about 10 percent of
    the solar cells produced worldwide and has only grown by 7 percent
    since 2001. The current manufacturing leaders are Japan and Europe.
        Clearly there are many factors that contribute to this outcome, but
    I am interested to know if the United States is behind because we lack
    the technical capability or if policies being pursued in Europe and
    Japan are driving this demand growth.
        Answer. The capabilities in U.S. industry and at national
    laboratories and universities are strong. Indeed, U.S. companies are
    producing the highest-performance products in a variety of PV
    technologies, including crystalline silicon, amorphous silicon, and
    concentrating PV. Additionally, the leading global producer of
    polysilicon feedstock is a Michigan-based subsidiary of Dow-Corning
    (Hemlock Corporation).
        The United States has lost market share in solar photovoltaic (PV)
    manufacturing because in recent years solar companies have sited
    manufacturing facilities near locations with the highest demand for the
    technology. Installations have increased significantly in Japan and
    Germany due to their long-term policies and incentives. Similarly, the
    solar manufacturing capacity in these countries has increased steadily
    as well, a fact that can be linked to the policies. For example, the
    German feed-in tariff program guarantees the owner of the panel a
    steady price for generated energy (that is even higher than the price
    of electricity) for 20 years following the installation; this tariff
    established a long-term, stable investment environment that has been
    attractive to companies looking to site facilities for adding
    manufacturing capacity. In addition, Germany and the European Union
    have also bundled cash grants, cost savings and other incentives for
    companies building new manufacturing facilities--offsetting up to 40
    percent of the capital expenditure required to build a new plant--which
    has resulted in U.S. companies announcing plans to site facilities in
    Germany.
        Question. What is the Department of Energy doing to improve the
    efficiency and deployment of solar technology in the United States?
        Answer. The Solar America Initiative (SAI) in February 2006 will
    make solar photovoltaics (PV) cost-competitive by 2015. Achieving the
    goal of the SAI will require a significant investment in reducing the
    cost of PV systems. Funding in fiscal year 2007 for the Solar America
    Initiative totals $159 million.
        There are critical areas where the Department is focusing its
    efforts to help increase efficiency, cost-effectiveness and deployment
    of solar technologies. First, solar thermal concentrating solar power
    plants (CSP) have the potential to contribute significantly to
    electricity supply in the Southwest, home to 15 of the 20 fastest-
    growing metro areas in the country. Second, by focusing on the
    development of building efficiency design and technologies coupled with
    distributed PV, the Department could help enable Americans nationwide
    to buy new ``zero energy'' homes and to work in ``zero energy'' office
    buildings--which will produce as much energy as they use.
        Question. What can we expect in terms of technology or
    manufacturing improvements over the next 5 years?
        Answer. On March 8, 2007, under the SAI, the Department announced
    the selection of 13 industry-led solar technology development projects
    expected to receive up to $168 million in Federal funding over the next
    3 years (subject to appropriations). These projects may ultimately help
    to expand the annual U.S. manufacturing capacity of PV systems. These
    projects are specifically focused on developing new photovoltaic
    components or manufacturing equipment, or even complete photovoltaic
    systems.

                      CELLULOSIC BIOMASS--REVERSE AUCTION

        Question. The fiscal year 2008 budget request includes $5 million
    to develop options to establish a reverse auction for biofuels as
    proscribed in section 942 of EPACT. This incentive program is intended
    to help make cellulosic biofuels cost competitive by 2015. It is my
    understanding that the reverse auction would require DOE to solicit
    bids from eligible producers. The lowest bid on a per gallon basis
    would receive the incentive funding.
        This is a first of a kind proposal for biofuels. Do you believe
    that we are ready technologically or economically, to support this
    auction?
        Answer. The Department is evaluating section 942 of EPACT 2005,
    which directs the establishment of a reverse auction incentive program
    for the production of cellulosic biofuels. The fiscal year 2008 budget
    request includes $5 million to develop background knowledge and
    evaluate options for this incentive program.

                          IMPROVED BUILDING EFFICIENCY

        Question. Mr. Karsner, the fiscal year 2008 budget requests an
    increase in funding for building efficiency R&D including improvements
    to window, lighting, and insulation designs. At the same time, funding
    for weatherization has been reduced.
        Are you able to quantify the benefits of investing in innovative
    building technologies over the weatherization program? In other words,
    can we save more energy by investing in building technologies R&D and
    deployment as opposed to the weatherization assistance?
        Answer. EERE is evaluating the potential benefits of the Building
    Technologies Program and the Weatherization Assistance Program. In
    addition, the National Academies of Science has indicated that the
    Weatherization Program's return on investment is 1.5 to 1, compared to
    an approximately 20 to 1 return on investment for the Building
    Technologies Program.

                              CONCENTRATING SOLAR

        Question. I have been very interested in the commercialization of
    the concentrating solar power (CSP) technology. What is DOE's plan for
    supporting this dish technology deployment in the fiscal year 2007 and
    fiscal year 2008 budgets?
        In the fiscal year 2006 budget, DOE provided about $3.3 million to
    Sandia to support the development of a 1 MW dish engine pilot project.
    Is the plan to increase that funding in fiscal year 2007 budget to
    continue these efforts? If so, for how much money and when will it
    become available?
        Answer. The Department is working with industry on the development
    of two CSP technologies: parabolic trough and dish-engine systems. The
    Department is providing technical assistance to the first commercial
    U.S. CSP project, a 64 MW trough system near Las Vegas, by Solargenix/
    Acciona Solar Power, which is expected to become operational in May
    2007. Stirling Energy Systems (SES), a dish system developer, plans to
    commercialize dish technology through two projects (300 MW and 500 MW)
    in California. The Department is supporting the SES effort by providing
    technical assistance in improving the reliability of their Stirling
    engine, and helping in the design-for-manufacture of the system. The
    effort will continue through fiscal year 2008.
        In fiscal year 2007, the Department is funding Sandia at the $1.5
    million level to support technical assistance to SES for system
    deployment. At this time, Sandia has access to the entire $1.5 million.
        As I understand it, there are two solar projects targeted to start
    actual construction (``hardware in the ground'') in late 2008 or early
    2009. A major program to commercialize the dish engine systems for
    high-volume, low-cost manufacture is underway. When the transformation
    from low-volume to high-volume production of this hardware is
    completed, it will pave the way for U.S.-based companies to take a very
    big step into the large-scale solar market.
        Question. How can the Department most effectively support the
    commercial deployment of this technology in the near term in order to
    realize large scale commercial deployment?
        Answer. We believe our support for technical assistance to
    companies pursuing trough and dish technologies as designed and funded
    in the fiscal year 2008 budget is very effective. Large scale, near-
    term CSP commercialization is ultimately the decision of industry and
    depends on competitive Net Present Value (NPV) assessments by capital
    markets, which can only be realized through life cycle cash flows.

                            EXISTING BIOMASS AWARDS

        Question. Recipients of the alternative hydrogen production and
    utilization competitive grants (No. DE-PS26-06NT42801) are telling
    Congress that DOE's fiscal year 2008 budget does not includes funds for
    their awards and that they need to cease work.
        Can you clarify the funding commitment for this competitively
    awarded program to the subcommittee and provide details on how DOE will
    fund the competitively awarded grant in the future?
        Answer. The fiscal year 2008 budget request for the Fuels program
    is $10 million, which is a reduction of $12 million from the fiscal
    year 2007 operating level. Fiscal year 2008 funding will only support
    areas of research and development (R&D) that are central to the
    production of hydrogen from coal. We will continue Hydrogen from Coal
    Research to develop improved, novel technology for the production of
    hydrogen including research in scale-up technologies which will
    simultaneously produce and separate coal-derived hydrogen from the
    other gas constituents in one membrane reactor. All research in high-
    hydrogen content liquid fuels will be terminated because these are
    mature but evolving technologies where the private sector has the
    resources and incentives to conduct R&D. All research in hydrogen
    utilization for mobile applications (e.g., car engines) will be
    terminated because this research is conducted by the Office of Energy
    Efficiency and Renewable Energy (EERE). This research terminated within
    the Office of Fossil Energy would include projects selected as a result
    of Funding Opportunity Notice No. DE-PS26-06NT42801 since they are
    aimed at ethanol production and mobile applications of hydrogen
    utilization. Termination of this work is proceeding in an orderly
    manner and contractors have been properly notified.

                  DEPLOYMENT OF RENEWABLE ENERGY TECHNOLOGIES

        Question. In a GAO report to Congress dated December 2006, it is
    repeatedly stated that DOE has made steady incremental progress in
    making each of the renewable energy technologies more cost competitive.
        As I have mentioned in my opening statement, I am more concerned at
    this point about deployment of these technologies.
        What is the Department doing to take these technologies that are
    more cost competitive and fully deploy them into the marketplace?
        Answer. The Department's approach to promoting new technologies
    couples technology push with market demand pull, and works to address
    barriers to the market adoption of advanced technologies through
    various program initiatives. For example, the Department plans to lead
    by example with the Executive Order 13423 and become an early adopter
    of energy efficient and renewable energy technologies. By identifying
    markets where the life-cycle costs of advanced energy technologies
    currently form a compelling economic argument, the Federal Government
    will create demand pull which will increase the economies of scale and
    drive the technologies down the cost curve. The Department is also
    looking to stimulate the commercialization of advanced technologies by
    helping to bridge the gap between R&D and the market place. To this
    end, the Department has designated a Director of Commercialization and
    Deployment, located within the Energy Efficiency and Renewable Energy
    Program, to oversee and guide our deployment-related efforts. However,
    commercialization decisions are ultimately up to industry.
                                     ______

                   Question Submitted by Senator Thad Cochran

        Question. Secretary Karsner, it is my understanding that your
    office is willing to consider funding for renewable energy programs
    through an ``unsolicited proposal'' process. Mississippi State
    University has submitted an unsolicited proposal to your office for its
    Sustainable Energy Research Center (SERC), a program which was funded
    in fiscal year 2006 and included in the fiscal year 2007 Senate Energy
    and Water Appropriations report. What is the status of this proposal?
    Will the SERC receive fiscal year 2007 funding?
        Answer. On February 27, 2007 the Office of the Biomass Program
    received the SERC unsolicited proposal via email. The Program responded
    on March 6, 2007 by directing Mississippi State University to the
    formal channels for submitting an unsolicited proposal and by inviting
    them to meet with the Program. For any proposal to be considered
    unsolicited, it must be unique and not covered by any current or
    proposed solicitation. The Biomass Program hosted Dr. Glenn Steele and
    Dr. William Batchelor at DOE on April 12, 2007 and informed them of
    upcoming competitive solicitations that would be applicable to their
    area of focus. We will provide a formal response to the unsolicited
    proposal. Currently, the Program is in the process of preparing that
    response.
        The Office of Biomass Program is in the process of evaluating the
    SERC proposal. The Program needs to make a determination that the
    proposal is meritorious and compliant with criteria for unsolicited
    proposals, and meets and supports the Program's Research, Development
    and Deployment plans to be recommended for funding.
                                     ______

                   Question Submitted by Senator Wayne Allard

                  ELECTRICITY DELIVERY AND ENERGY RELIABILITY

        Question. What is being done to increase available transmission
    from the often remote sites where renewable energy is produced to the
    more populated areas where the electricity is needed and how are your
    offices working together on that?
        Answer. The transmission grid needs to be sufficiently large and
    robust to accommodate the increased level of renewable energy resources
    that are becoming available, as well as to meet the many other
    challenges of the 21st century.
        The Department is implementing the provisions of the Energy Policy
    Act of 2005 (EPACT) to help ensure that consumers receive electricity
    over a dependable, modern infrastructure. These provisions include
    EPACT section 368 that requires designation of energy corridors on
    Federal lands; section 1221(a) that requires a study of electricity
    transmission congestion once every 3 years, coupled with the authority
    given to the Secretary of Energy to designate national interest
    electric transmission corridors; and the new Federal Power Act section
    216(h) that requires the Department to act as the lead agency for
    purposes of coordinating all applicable Federal authorizations and
    related environmental reviews to site an electric transmission
    facility.
        The Department also provides technical assistance to States,
    regional bodies, and others on issues such as methods and tools to
    increase regional planning and coordination of transmission, improving
    transmission siting, better understanding the location of suitable
    renewable resources (``resource characterization''), and improving the
    ability of the grid to plan for and operate with renewables that are
    intermittent (``grid integration issues''). Technical assistance is
    provided to the Department's Power Marketing Administrations as they
    explore what role they can play in providing access to additional
    renewable generation through transmission. With some types of
    assistance, such as renewable grid integration, the technical
    assistance is informed by research and development that is sponsored by
    the Department.
        At the distribution level of the grid, the Department continues to
    provide technical assistance to States that wish to adopt more
    favorable interconnection standards, metering, demand response, and
    related methods that enable greater use of distributed renewables
    generation. For example, the Department funded the national voluntary
    ``IEEE 1547'' interconnection standard that is referenced in EPACT
    section 1254 regarding ``Interconnection Standards'' for States to
    consider.
        In addition, using funding under the Renewable & Distributed
    Systems Integration activity line of the fiscal year 2007 Operating
    Plan, the Office of Electricity Delivery and Energy Reliability (OE) is
    soliciting for projects that would integrate renewable and distributed
    energy systems into the grid. By successfully demonstrating this
    integration, the use of renewable and distributed energy technologies
    to support electric distribution operations should substantially
    increase for supplying power and other ancillary services during peak
    load periods. The project would also demonstrate the ability of these
    technologies to reduce power required by the distribution feeder. This
    will be accomplished through modeling, design, integration, and R&D of
    renewables and distributed energy integration into the distribution
    system; low-cost sensors; advanced monitoring; and consumer
    information.
        The Office of Energy Efficiency and Renewable Energy (EERE)
    typically focuses research and development activities on improving the
    efficiency, cost, and emissions profiles of generation technologies,
    including renewables.
        OE and EERE understand that for this policy to succeed, it is
    crucial to collaborate not only on grid-scale innovations, but also on
    bringing the applications to the consumer. In coordinating near-term
    and long-term goals, OE and EERE remain alert to changes in need and
    demand. Both offices also support State and regional efforts to
    integrate renewable and distributed energy resources in their electric
    system planning efforts. In this spirit, OE and EERE have formed a
    focus group to concentrate on integration issues with renewables. OE
    and EERE are closely coordinating fiscal year 2007 activities under the
    operating plan in this area.
        Question. I am also curious what research is being done to develop
    electricity storage, especially electricity manufactured from renewable
    sources?
        Answer. The energy storage program of the Office of Electricity
    Distribution and Energy Reliability has conducted a research program on
    basic storage mechanisms, devices, and systems for over a decade. The
    program is considered worldwide to be one of the leaders in this field.
    Research is conducted on advanced batteries, flow batteries,
    supercapacitors, and flywheels, as well as the necessary megawatt level
    power electronics. Major demonstrations are fielded in partnership with
    utilities, the California Energy Commission (CEC), and the New York
    State Energy Development Authority. In particular, we are involved with
    the CEC in the development of a microgrid which incorporates 500kW of
    supercapacitors to harmonize wind and hydro power. We also work with
    the Bonneville Power Administration on a power electronics device which
    will smooth short term wind and wave power fluctuations when combined
    with storage. A project with the Iowa municipalities explores the
    possibility of using 200MW of compressed air storage in conjunction
    with a 75MW wind farm and inexpensive off-peak power.
        Energy storage can significantly increase the integration of
    renewable sources of energy into the electric system. Storage increases
    the reliability of intermittent resources like wind and photovoltaics,
    allowing these sources to become relatively constant sources of power.
    Renewable power produced in off-peak periods can be stored and used
    during periods of greater demand, thus making renewables dispatchable.
    Likewise, energy storage can bridge the gap during decreased periods of
    renewable production and, when combined with appropriate electronics,
    it can also eliminate short term flutters that decrease power quality
    and impact digital equipment on the grid.
                                     ______

                  Questions Submitted to Hon. Thomas D. Shope
                 Questions Submitted by Senator Byron L. Dorgan

                          FOSSIL ENERGY BUDGET REQUEST

        Question. Your testimony suggests that your fiscal year 2008 budget
    request of $863 million is one of the largest fossil energy requests by
    this administration. Yet, there are only two large program requests in
    your budget--a doubling of funds for the FutureGen project and a
    doubling of funds for the Strategic Petroleum Reserve (SPR) expansion.
    The FutureGen request now makes up 25 percent of the coal R&D request.
        With the extraction of the requests for FutureGen and the SPR
    expansion from your budget request, are you not actually cutting many
    other fossil energy R&D programs?
        Answer. The FutureGen project is a key Presidential priority in the
    Office of Fossil Energy's portfolio and is an important component of
    the Coal Research Initiative. It remains a significant step towards
    realizing the goal of creating a near-zero atmospheric emission energy
    option for coal. The Strategic Petroleum Reserve provides an emergency
    oil stock to bolster U.S. energy security and a possible mitigation
    when disruptions in commercial oil supplies threaten the U.S. economy.
    We believe the current budget represents a balanced Fossil Energy
    Program portfolio that addresses all of the highest priority
    requirements to meet the program goal.

                           COAL R&D RESEARCH FUNDING

        Question. The President's fiscal year 2008 Budget Request
    recommends $245.6 million for the coal R&D program, is approximately
    $55.7 million less than the fiscal year 2006 enacted budget level. This
    is largely due to some programs being zeroed out or severely cut back.
    This includes the Innovations for Existing Plants (IEP) program and the
    Advanced Research program. For example, defunding the IEP program will
    eliminate work for testing mercury control technologies and research on
    the energy-water nexus. This program is extremely important in
    validating mercury control technologies to insure different coals will
    be competitive under the mercury control (mercury MACT) rules, which
    require utilities to begin making reductions of mercury from their
    emissions by 2012. Without this program, there is a very real
    possibility that technologies will not be available by 2012 that can
    capture the mercury emitted from the combustion of coals.
        Why has the Department requested elimination or reduction of
    important coal research and development programs?
        Answer. The fiscal year 2008 Coal Research and Development budget
    request proposes a balanced research and development (R&D) program
    portfolio in support of the overall goal of near-zero atmospheric
    emissions coal.
        Within the Advanced Research Program, bioprocessing was determined
    too long term to have an appreciable impact and certain other topics
    are not focused on technology being developed in the Coal R&D Program
    aimed at achieving the overall goal of near-zero emissions coal.
        The IEP Program was developing low-cost technologies for reducing
    emissions from existing coal power plants and has been very successful.
    However, the industry now has regulatory drivers to incentivize them to
    continue development and deployment on their own of such technologies.
    EPA promulgated the Clean Air Interstate Rule (CAIR) to reduce
    emissions of sulfur dioxide and nitrogen oxides and the Clean Air
    Mercury Rule (CAMR) to reduce mercury emissions. These regulations
    provide industry with incentives to fund R&D for technologies for low-
    cost compliance to meet the emissions standards. Therefore, further
    Federal investment in mercury removal and other emission control
    technology is not needed.

                          CARBON SEQUESTRATION FUNDING

        Question. The carbon sequestration program request is proposed at
    $79 million for fiscal year 2008, and the Department funded $100
    million in the fiscal year 2007 Spending Plan. I have noted that the
    DOE budget justification states that DOE will conduct demonstrations in
    3 or 4 sites across the country with the $79 million sequestration
    budget, as opposed to conducting large-scale demonstrations in each of
    the 7 regional sequestration partnerships--which is necessary to insure
    this technology can be used in every region of this country.
        Are the funds requested for fiscal year 2008 sufficient enough to
    conduct the several large-scale carbon sequestration demonstrations in
    every region of this country that are necessary to insure carbon
    sequestration is a valid option to insure carbon capture and storage
    from coal fired power plants? What is the Department's longer-term
    strategy related to the carbon sequestration program?
        Answer. The Department's long-term strategy is to conduct large-
    scale field tests to determine that carbon capture and storage is a
    safe, effective approach to reduce greenhouse gas emissions. In 2007,
    the program is beginning work on the ``highest potential''
    opportunities for an initial expedited round of four large scale
    sequestration tests (approximately 1 million tons CO2 per
    year for each site). DOE has provided additional funding in the fiscal
    year 2007 budget for the Carbon Sequestration Program to award these
    initial large volume sequestration tests. The fiscal year 2008 budget
    request is sufficient to continue the four large-volume sequestration
    injection projects that were accelerated with additional funding
    received in fiscal year 2007.

                      CLEAN COAL POWER INITIATIVE FUNDING

        Question. The DOE request for the Clean Coal Power Initiative
    (CCPI) is $73 million for fiscal year 2008. Although this has increased
    by $68 million over the President's request of $5 million in fiscal
    year 2007, it still seems inadequate. The CCPI program is the only
    mechanism through which those clean coal technologies can be
    demonstrated in order to determine their commercial acceptable. It is
    through the demonstration program at DOE that this country has achieved
    significant reductions in NOX, SOX and
    particulate matter because of technologies that were developed and
    demonstrated with DOE support. As a result, our Nation has
    significantly reduced criteria pollutants from coal-fired power
    generation, while both maintaining low cost electricity for the
    consumer and increasing the amount of coal-fired electric power
    generation over the last 3 decades. Given the success of this program,
    it would be a prudent decision to increase the budget for this program
    so that DOE can work with industry to conduct several large scale
    projects to demonstrate carbon capture and sequestration technologies
    that can be applied to both the existing fleet and new coal plants if
    we are going to achieve meaningful reductions of carbon dioxide
    emissions.
        Is it not the case that, of the $73 million requested in fiscal
    year 2008, $58 million was returned from a previous project that did
    not go forward? Does this mean that the Department is only asking for
    $15 million in new funding for the CCPI program in fiscal year 2008?
    The Department has made much larger requests for the CCPI program in
    previous years so why is the Department not committed to funding this
    program to the same extent in fiscal year 2008?
        Answer. The Department's strategy has been to accumulate sufficient
    funds over several years and issue a solicitation to support the Clean
    Coal Power Initiative (CCPI). The $68 million increase for CCPI in
    fiscal year 2008 over the fiscal year 2007 request is derived in part
    from the transfer of $58 million in balances from the Clean Coal
    Technology Program that are no longer needed to complete active
    projects. This increase allows for the solicitation of a third round of
    demonstration projects in fiscal year 2008. In addition the fiscal year
    2007 funding level which was increased by $55 million over the request
    will be used for the third round solicitation.

       RESCISSION OF $149 MILLION FROM THE CLEAN COAL TECHNOLOGY ACCOUNT

        Question. The President's fiscal year 2008 budget request
    recommends rescinding $149 million of previously appropriated clean
    coal technology funds. Rescinding these dollars would effectively
    cancel that money for future clean coal demonstration projects and send
    these funds back into the Federal Treasury. The clean coal program is
    under funded in a time when accelerated investments in coal technology
    development have never been more important. We should not be rescinding
    clean coal funds, but adding new funds to the program to insure we
    develop, in a timely manner, cost effective coal technologies.
        Why does the administration insist on rescinding this funding,
    which was previously appropriated and can be directed for clean coal
    demonstration projects in future years?
        Answer. All project funding commitments in the CCT Program have
    been fulfilled and only project closeout activities remain. The
    administration proposes to transfer $108 million of the $257 million
    deferral to the FutureGen project, and cancel the remaining $149
    million. Of the $66 million in unobligated balances carried forward at
    the start of fiscal year 2008, $58 million is transferred to the Clean
    Coal Power Initiative (CCPI). CCPI will complete the Round 3
    solicitation using unobligated funds from projects that were selected
    but not awarded, plus appropriations that have not yet been committed
    to projects. We believe that the cumulative available funding will be
    sufficient for a Round 3 CCPI solicitation.

                    UNIVERSITY OIL AND GAS RESEARCH FUNDING

        Question. I am very concerned about the impacts of the cuts in oil
    and gas research funding for a number of reasons but am particularly
    worried about the impacts of these cuts on the education of our next
    generation of energy technologists who are graduate students today.
        Can you tell me how many universities will be affected by the
    scheduled elimination of almost all oil and gas R&D by DOE in its
    fiscal year 2007 Spending Plan?
        Can you please list those universities that currently receive
    funding? Can you tell me if and when you intend to issue a stop work
    order to these institutions?
        Will these universities be forced to shut down their oil and
    natural gas research programs?
        Answer. There are 25 projects at universities that will be affected
    by the funding reduction in the operations plan. Federal funding for
    oil and gas research and development activities is not needed because
    industry has the incentives and resources to accomplish such activities
    on its own. Given the private sector's incentives and capabilities, we
    believe that private industry is best positioned to fund R&D at
    universities and elsewhere, which will provide educational
    opportunities for our next generation of energy technologists.
        The universities that currently receive funding are: University of
    Alaska, Fairbanks; University of Alabama; University of Arkansas;
    University of Arizona; Baylor University; California Institute of
    Technology; Carnegie Mellon University; Clemson University; Colorado
    School of Mines; Stanford University; University of Illinois;
    University of Kansas; Florida International University; Georgia Tech
    University; Kansas State University; Louisiana State University;
    Massachusetts Institute of Technology; Michigan Tech University;
    Western Michigan University; University of Mississippi; Mississippi
    State University; University of Southern Mississippi; Montana State
    University; Montana Tech--Bureau of Mines; New Mexico Institute of
    Mining and Technology; State University of New York; University of
    Columbia; University of Oklahoma; Oklahoma State University; Prairie
    View A&M University; University of North Carolina; University of Tulsa;
    University of Pittsburgh; Penn State University; University of Texas--
    Austin; University of Texas--Bureau of Economic Geology; Texas A & M
    University; University of Houston; Rice University; University of Utah;
    West Virginia University; Woods Hole Oceanographic Institute; and the
    University of Wyoming.
        The Oil and Natural Gas program has previously sent letters to all
    program participants notifying them of the potential shortfalls in the
    fiscal year 2007 budget. These researchers are currently working using
    existing (prior year) funds. Subsequently, all universities with
    existing cooperative agreements impacted by the decrease in funds were
    contacted and informed of the lack of funding for fiscal year 2007. The
    majority of DOE projects are grants or cooperative agreements, for
    which a stop work order is not issued.
        Each university program will have to examine its particular
    situation. In many cases, other Government and/or industry funding may
    be available to the university.

                               NATURAL GAS CARTEL

        Question. In his 2006 State of the Union speech, President Bush
    indicated he wanted to reduce our reliance on ``imported energy
    sources.'' At the same time, DOE and FERC have launched an aggressive
    campaign to import more liquefied natural gas (LNG) into the United
    States.
        The two largest suppliers of imported liquefied natural gas to the
    United States are Trinidad Tobago and Algeria. Trinidad Tobago has only
    around 23 trillion cubic feet of gas reserves and will ultimately have
    to get gas supplies from Venezuela if it wants to continue its
    liquefaction enterprise. Algeria is a member of OPEC. Further, I note
    that Russia, Iran, Qatar, Algeria, and Venezuela announced recently
    they are meeting in Doha this week to discuss forming a natural gas
    cartel. This is very troubling.
        Finally, I would point out that according to DOE's 2003 National
    Petroleum Council Gas Supply Study, the United States has almost 60
    years of technically recoverable natural gas, but we need new
    technologies to produce them.
        How does the administration's policy of reducing our reliance on
    imported energy sources square with its policies to encourage the
    imports of very large volumes of LNG, especially in light of this very
    disturbing news about a possible gas cartel?
        Answer. Historically, U.S. imports of natural gas have come
    primarily from Canada by pipeline with small amounts of LNG imported
    from various countries. In the Energy Information Administration's most
    recent Annual Energy Outlook natural gas imports from Canada are
    forecast to decline and LNG imports are expected to rise to fill this
    gap.
        The administration's role in addressing LNG imports is to ensure
    that importing facilities are permitted in a timely manner. The market
    will decide what facilities are economic, which ones will be built, and
    how much LNG to import. Furthermore, we don't believe intense
    discussions of a gas cartel are likely to result in the development of
    a cartel at this point, considering the relative infancy of the global
    LNG spot market.
        The administration's policy of reducing our reliance on imported
    energy also includes research and development that will strengthen the
    Nation's energy security. For example, the administration has proposed
    to make the R&D investment tax credit permanent. Under the Advanced
    Energy Initiative, the 2008 Budget includes initiatives for hydrogen
    fuel, biofuels, plug-in hybrid vehicles, clean coal, nuclear, and solar
    photovoltaics to help displace future demand for oil and natural gas.
    The administration also supports removing unnecessary barriers to
    developing existing reserves of oil and gas including, for instance,
    the environmentally responsible exploration and development of reserves
    in Alaska.
        Question. Is the administration aware of the fact that if all LNG
    import facilities approved by the administration were built and
    operating at capacity we would be importing almost 60 percent of our
    natural gas most of it from many of the same countries that hold us
    hostage to imported oil?
        Answer. The administration is responsible for permitting proposed
    LNG import facilities. However, the market will decide which ones will
    ultimately be built and become operational. It is unlikely that it
    would be economical to construct every LNG import facility that has
    been proposed, and historically LNG importing facilities have typically
    operated below their peak capacity levels. Also, Australia and Norway,
    countries that are viewed as reliable energy suppliers, are developing
    LNG exporting facilities that could supply U.S. markets.
        Question. Who are the 10 largest U.S. investors and partners in
    building and operating regasification facilities in the United States?
        Answer. There are currently only five built and operating LNG
    import terminals in the United States. These include the Distrigas
    terminal in Everett, Massachusetts owned by Suez; the Cove Point,
    Maryland terminal owned by Dominion; the Elba Island, Georgia terminal
    owned by El Paso; the Trunkline terminal in Lake Charles, Louisiana
    owned by Southern Union; and the Energy Bridge terminal in the Gulf of
    Mexico offshore Louisiana owned by Excelerate Energy.
        Question. Why would the administration propose eliminating all
    funding at DOE for natural gas supply research when we have 60 years of
    technically recoverable gas reserves in the United States but need new
    technologies to produce them?
        Answer. Natural gas production is a mature industry that has every
    incentive, particularly at today's prices, to enhance production and
    continue research and development of technologies on their own. There
    is no need for taxpayers to subsidize natural gas companies in these
    efforts.
                                     ______

                 Questions Submitted by Senator Robert C. Byrd

                                   FUTUREGEN

        Question. Mr. Secretary, in 2004, the President announced the
    initiation of the FutureGen project, a $950 million, 10-year
    demonstration project to construct the world's first coal-fueled, near-
    zero emissions electricity and hydrogen power plant.
        I have been supportive of the concept behind FutureGen. FutureGen,
    if successful in meeting the intended goals, could be a major
    breakthrough for a clean and efficient use of coal and good for the
    economic and environmental well being of our country and the world.
    However, ever since the inception of this project, I have been very
    vocal about my major concerns about the project--namely how the
    administration intends to pay for its $700-plus million share of this
    project without robbing the basic Fossil Energy research and
    development programs and the total cost growth potential of this
    project, given increasing costs of construction and the types of
    unanticipated costs that usually accompany first-of-its-kind projects.
        The Department of Energy's press release, dated April 10,
    announcing that the price of construction materials and equipment,
    labor, and other heavy construction expenses have significantly driven
    the estimated total costs of the FutureGen project to $1.7 billion
    through fiscal year 2016 came as no surprise to this Senator. Even with
    the Department assuming $300 million in anticipated power sales to
    offset the costs of the project, the Federal Government is still left
    with a hefty cost share of $1.1 billion--at least $300 million more
    than anticipated.
        Despite the many inquiries I have submitted to the Department of
    Energy in the past, the Department has never been able to adequately
    explain to me how it is planning to fund its $700 million-plus share
    for the FutureGen project. Can you explain to me how the Department
    plans to pay for this major escalation of an additional $300 million?
        Answer. The initial cost estimate for FutureGen was developed by
    the National Energy Technology Laboratory (NETL), which estimated the
    total cost of the FutureGen Project at approximately $950 million in
    constant 2004 dollars. This cost estimate was included in the 2004
    Report to Congress. While the Department has acknowledged that costs
    for some of the currently planned components of the FutureGen plant
    have generally increased, the Department has made no commitment beyond
    the $39 million Government cost-share in Budget Periods Numbers 0 and
    1. Budget Period No. 1 will begin the detailed design for the plant and
    re-scoping of the project may be necessary to remain within budget. The
    cost for the FutureGen Project is shared between the Department of
    Energy, the FutureGen Industrial Alliance, and contributions from
    foreign governments. The Department anticipates requesting sufficient
    appropriations for the Government's cost-share for FutureGen to meet
    the objectives and schedule for this initiative.
        Question. I have helped to provide funding for many major
    Government construction projects in the past and know that
    unanticipated costs are commonplace. Beyond inflation increases that
    DOE has just projected, how does the Department plan to cope with
    unforeseen costs that might arise with the construction of this first-
    of-its-kind project? How much funding has been set aside for future
    contingencies?
        Answer. The project is structured in phases such that progression
    to the next phase depends on the successful accomplishment of
    objectives and milestones from each preceding phase.
        To date, the cost basis estimate has remained the same as the
    original cost estimate identified in the March 2004 Program Summary to
    Congress. Contingencies are inherent in the base cost estimate as a
    function of design definition and technology development. The inherent
    contingency in the FutureGen cost estimate is consistent with industry
    recommended practices for a conceptual design with substantial advanced
    technologies. The costs associated with these contingencies are
    included in anticipated funding profile.
        Cost and schedule risks are very real for large, first-of-a-kind
    projects and cannot be eliminated completely until construction is
    completed. We are making our best efforts to maintain budget for this
    important validation of the coal-based near-zero atmospheric emissions
    concept.
        Question. In fiscal year 2008, the FutureGen program is funded at
    $108 million, a 500 percent increase from the fiscal year 2006 level,
    while the Natural Gas R&D program, the Oil R&D program, and the
    Innovations for Existing Plants program under the Coal R&D program were
    zeroed out. This is a very disturbing trend, and one that I suspect
    will only worsen as the project goes to construction in future years.
    Will you be cutting into the Coal R&D program even deeper to fund cost
    growths in FutureGen?
        Answer. During the 2000 campaign, the President committed to spend
    $2 billion over 10 years on clean coal technology. The budget completes
    that commitment 3 years ahead of schedule, with $385 million in funding
    for the Coal Research Initiative in 2008. The funding levels in the
    budget for clean coal activities are among the highest in this
    administration and also from any President in the last 2 decades.
        The fiscal year 2008 budget request for FutureGen, when adjusted
    for inflation, is consistent with the funding profile as disclosed in
    the FutureGen Program summary as reported to Congress in fiscal year
    2004. The fiscal year 2008 funding request is to cover NEPA compliance,
    significant design activities, and procurement of long-lead items.
    FutureGen is integral to the Coal R&D program, and continual
    investments in the coal R&D program are necessary in order to support
    the development of technologies to drive towards the goal of near-zero
    atmospheric emissions coal, which includes the integrated, scale-up
    testing of the necessary R&D.
        The Natural Gas research and development (R&D), the Oil R&D, and
    the Innovations for Existing Plants programs are proposed for
    termination because the Federal R&D role in these areas have been
    completed and industry should take on that responsibility. The oil and
    gas industry has the incentives and resources to accomplish oil and gas
    R&D without additional Federal subsidies, which are unwarranted in
    today's price environment. Promulgation of CAIR and CAMR provided a
    market incentive for developing many advanced, cost-effective emissions
    controls and has ended the need for Federally funded R&D in areas under
    the Innovations for Existing Plants program. The current fiscal year
    2008 budget request has been formulated based on the needs of the
    Fossil Energy Program and is consistent with meeting the goals and
    objectives of the Department's Strategic Plan.
        Question. What role will the National Energy Technology Laboratory
    play in FutureGen? Enough to support the approximately 1,200 Federal
    and contractor staff who currently support Fossil Energy Research and
    Development program?
        Answer. The National Energy Technology Laboratory (NETL) has the
    lead responsibility for managing the FutureGen project as well as the
    many other projects that it has under its purview to advance the
    Department's goals and carry out its mission.
        Question. If FutureGen is successful, will the Department be able
    to deploy FutureGen-type technologies in other locations across the
    country in coming decades or will additional resources, studies, tests,
    and demonstrations to expand deployment of these technologies be
    necessary?
        Answer. The goals of the FutureGen project are to prove the
    technical feasibility and economic viability of a near-zero atmospheric
    emission coal energy option, thus leading to the broad acceptance of
    the concept. The FutureGen project has been designed to operate under
    real-world conditions and at large enough scale to adequately prove the
    viability of the concept. The key is to prove that near-zero
    atmospheric emissions coal is technically viable and that its costs are
    not prohibitive. The coal research and development program of which
    FutureGen is a part, is designed to advance the development of
    technologies that reach the goal of near-zero atmospheric emissions
    while increasing efficiencies, increasing clean energy production, and
    decreasing costs. Ultimately, the market will determine when and how
    many of these plants are deployed, yet a successful operation of the
    first FutureGen plant is an important prerequisite to the widespread
    deployment of near-zero atmospheric emission coal plants.

                          CLEAN COAL POWER INITIATIVE

        Question. The administration has included $73 million for the Clean
    Coal Power Initiative (CCPI) in the fiscal year 2008 budget, which is a
    considerable improvement over the $5 million that the President sought
    in his fiscal year 2007 budget request.
        I understand that two CCPI Round II projects are experiencing cost
    growths. Will the fiscal year 2008 CCPI funds be used to make up these
    cost growths and how much would be made available to each project? How
    much fiscal year 2008 funding and how much prior-year funding will be
    applied to a third CCPI solicitation?
        Answer. Additional funding provided by DOE to an awarded project to
    help cover project cost growth due to the increase in material,
    equipment, and skilled labor cost comes from unobligated funds
    appropriated to the coal demonstration program before fiscal year 2006.
    These are funds previously committed to projects which have withdrawn
    from the demonstration program since selection and would be used for
    the Round III solicitation absent cost growth in projects from previous
    rounds. Funds provided to a project to cover cost growth will not be
    available to fund projects selected in CCPI Round 3. No fiscal year
    2008 funds will be used to cover any cost growth for existing projects
    but cost growth will reduce the funding available for the next round of
    solicitations. The CCPI program operates under the fiscal constraints
    of the Clean Coal Technology program, so the maximum allowable increase
    in the Government share to these projects is 25 percent over the
    Government's original estimate of costs. In the case of the Southern
    Company, Orlando IGCC project, this means a maximum increase in the
    Government share of $59 million, and $59 million in cost growth has
    been approved. In the case of the Western Greenbrier Cogen. WVa FBC
    project, this means a maximum potential increase in the Government
    share of $28 million, but no cost growth has been approved. Combined,
    the maximum potential net reduction in the planned fiscal year 2008
    CCPI solicitation is $87 million, of which $59 million has been
    approved.
        CCPI will complete the Round 3 solicitation using unobligated funds
    from projects that were selected but not awarded, plus appropriations
    that have not yet been committed to projects. We believe this
    cumulative amount is sufficient for proceeding with a Round 3 CCPI
    solicitation.

                           COAL-TO-LIQUIDS INITIATIVE

        Question. It is my understanding that the coal-to-liquids process
    is only commercially feasible when the price for crude oil is at $40
    per barrel or higher. What is the Department of Energy doing to provide
    price guarantees or other financial incentives for investors? Does the
    administration support legislation that promotes coal-to-liquids
    projects?
        Answer. The Department is closely following the response to the
    incentives established by the Energy Policy Act (EPACT) of 2005 which
    include coal-to-liquids deployment projects being eligible for
    incentives such as tax credits and/or loan guarantees as authorized in
    EPACT.
        The President has set a goal of increasing the supply of renewable
    and alternative fuels, including coal-derived liquid fuels, by setting
    a mandatory fuels standard to require 35 billion gallons of renewable
    and alternative fuels in 2017--nearly five times the 2012 target now in
    law. In 2017, this will displace 15 percent of projected annual
    gasoline use.
        The administration wants to work with Congress to allow coal-
    derived liquids to be eligible under the proposed alternative fuels
    standard. The standard should be structured to allow the market to
    determine the most efficient way to meet the standard, including to
    what extent coal-derived fuels will be used.
        Question. I understand that there are environmental concerns
    associated with the coal-to-liquids process. What support can the
    Office of Fossil Energy provide to industry in identifying ways to
    incorporate the capture and storage of carbon dioxide emissions from
    the coal-to-liquids process and from using the fuel produced by the
    process?
        Answer. The Office of Fossil Energy is supporting industry in this
    area through its carbon sequestration technology development effort.
    This Carbon Sequestration Program includes laboratory and pilot-scale
    research aimed at developing new technologies and systems for
    greenhouse gas mitigation, which could be applied to coal-to-liquids
    processes as well as other industrial processes, though the primary
    objective is to apply them to power generation systems. In 2007, the
    program is beginning work on the ``highest potential'' opportunities
    for an initial expedited round of large scale sequestration tests
    (approximately 1 million tons CO2 per year for each site).
    DOE has provided additional funding in the fiscal year 2007 budget for
    the Carbon Sequestration Program to award several large volume
    sequestration tests.

    IMPACT OF THE FISCAL YEAR 2008 BUDGET ON THE NATIONAL ENERGY TECHNOLOGY
                                   LABORATORY

        Question. If this fiscal year 2008 budget is enacted, how many
    Federal, contractor, and construction jobs will be eliminated at the
    National Energy Technology Laboratory, which is based in Morgantown,
    West Virginia; Pittsburgh, Pennsylvania; and Tulsa, Oklahoma; with
    smaller offices in Tulsa, Oklahoma; and Fairbanks, Alaska?
        Answer. We are managing our human resources effectively to achieve
    our program goals and do not anticipate significant changes in staffing
    levels.
        Question. In the past, NETL has received approximately $2 million
    per year in General Plant Projects, which covers critical maintenance
    needs. Can you tell me why the past several Fossil Energy budgets have
    zeroed out funds for critical maintenance at the major NETL sites, all
    of which are more than 40 years old? Will this impact the health and
    safety of the workers?
        Answer. NETL received almost $2 million in fiscal year 2006 for
    General Plant Projects and $4 million in fiscal year 2007. It is
    anticipated that NETL has sufficient funds to continue these activities
    in fiscal year 2008.

                   CLEAN ENERGY TECHNOLOGY EXPORTS INITIATIVE

        Question. I initiated the Clean Energy Technology Exports (CETE)
    Initiative in the fiscal year 2001 Energy and Water Appropriations
    bill. The administration then completed a 5 Year Strategic Plan in
    2002. From fiscal year 2004-2006, I helped provide $1.6 million in
    funding to help further this initiative.
        Please provide me with a detailed account on how these appropriated
    funds were utilized.
        Answer. The Department remains committed to the goals of the Clean
    Energy Technology Export (CETE) Initiative. I have attached a matrix of
    our spending allocations in 2005 and 2006. In summary, we have funded
    programs that support direct partnership with industry, as well as
    programs that coordinate interagency efforts and improve the efficacy
    of Federal activities to support deployment.

                                                      CETE PROJECTS
    ----------------------------------------------------------------------------------------------------------------
                                                                                                      Funding Amount
            Activity/Short Title           Project Partners/ Leverage         Summary Comments        (In thousands)
    ----------------------------------------------------------------------------------------------------------------
              Fiscal Year 2005

    CETE Website........................  GETF........................  Provides central site for                $25
                                                                         CETE info dissemination,
                                                                         and to summarize
                                                                         opportunities from other
                                                                         donor organizations like
                                                                         EBRD, ADB and GEF. Allows
                                                                         both novice and
                                                                         sophisticated market
                                                                         players to find appropriate
                                                                         points of contact for
                                                                         questions. Could eventually
                                                                         be used to track
                                                                         performance metrics.
    DOE-USAID Hydropower Partnership....  U.S. Hydropower Council for   Fiscal year 2005 focus on                100
                                           International Development.    project development and
                                           $200k from USAID and          closure in India, Mexico
                                           private sector.               and Guatemala. Track record
                                                                         of success. Multiple
                                                                         private sector partners.
    Sustainable Finance.................  Resource Mobilization         Continue work in Poland and              175
                                           Advisors (RMA). $200k from    Mexico. Initiate work in
                                           U.K. Govt, NADBank and        Philippines to build
                                           World Bank.                   portfolio of viable EE
                                                                         projects for investment.
                                                                         Initiated study on
                                                                         Financing Mechanisms to
                                                                         support clean energy with
                                                                         input from private partners
                                                                         and U.S. agencies.
                                                                         Supported Resource Guide as
                                                                         outreach tool for U.S.
                                                                         exporters.
    Management Plan.....................  ORNL........................  ............................              75
    Tsunami Study.......................  Argonne.....................  ............................              75
    Sustainable Communities.............  GTI.........................  ............................              35
    Green Olympics/Beijing..............  ORNL........................  ............................              45
    REEEP...............................  ............................  ............................              50
    Africa Geothermal...................  ............................  ............................              15
                                                                                                     ===============
              Fiscal Year 2006

    CETE Website........................  Global Environment            Provides central site for                 40
                                           Technology Foundation         CETE info dissemination,
                                           (GETF).                       and to summarize
                                                                         opportunities from other
                                                                         donor organizations like
                                                                         EBRD, ADB and GEF. Allows
                                                                         both novice and
                                                                         sophisticated market
                                                                         players to find appropriate
                                                                         points of contact for
                                                                         questions. Could eventually
                                                                         be used to track
                                                                         performance metrics.
    DOE-USAID Hydropower Partnership....  U.S. Hydropower Council for   Fiscal year 2006 focus on                150
                                           International Development.    project development and
                                           $400k from USAID and          closure in India and
                                           private sector.               Guatemala. Track record of
                                                                         success with more than $50
                                                                         million in projects
                                                                         finalized in the past 2
                                                                         years. Multiple private
                                                                         sector partners.
    Sustainable Financing for EE........  Resource Mobilization         Expect to close on $10                   100
                                           Advisors (RMA). $500k from    million in EE project with
                                           Philippine Govt, NADBank,     U.S. partners in Mexico in
                                           USTDA and World Bank.         next 6 months. New deals in
                                                                         Poland and Philippines in
                                                                         next 18 months.
    Africa Geothermal Mission...........  EERE, Govt of Kenya.........  Reverse trade mission                     30
                                                                         bringing officials from
                                                                         Kenya to U.S. Geothermal
                                                                         Conference to meet multiple
                                                                         vendors.
    Energy Efficiency Initiative in       IRG, Govt of Ukraine. $600k   Create audit fund and                     50
     Ukraine.                              from USAID.                   project development support
                                                                         with U.S. ESCO's and local
                                                                         partners in Ukraine. CETE
                                                                         money will piggyback USAID
                                                                         to help engage U.S.
                                                                         technology vendors.
    Clean Tech in Thailand with Southern  FE, SSEB, Govt of Thailand..  Good exposure to technology               40
     States Energy Board (SSEB).                                         vendors in 16 States
                                                                         through SSEB. Track record
                                                                         of success. Multiple SME
                                                                         private partners. Potential
                                                                         projects include biomass/
                                                                         coal hybrid and upgrades to
                                                                         existing thermal plants.
    India Coal Beneficiation............  FE, Govt. of India..........  Builds on previous studies.               45
                                                                         Necessary to mitigate
                                                                         negative environmental
                                                                         impacts of near-term coal
                                                                         expansion in huge market.
                                                                         Multiple potential private
                                                                         partners. Could expand
                                                                         under Asia Pacific
                                                                         Partnership. Possible USAID/
                                                                         India buy-in.
    China Ombudsman for Renewable.......  U.S. companies attending      Goal is to set up side                    29
                                           Renewable Conference.         meetings with interested
                                                                         parties in China around
                                                                         conferences where U.S.
                                                                         companies are participating
                                                                         and/or exhibiting. First
                                                                         event is in September 2006.
    China Combined Heat and Power (CHP).  LBNL, U.S. CHP Association..  Seed funding to develop a                 45
                                                                         market plan, consider tech
                                                                         options and get U.S.
                                                                         vendors involved. Huge
                                                                         market potential.
    Caribbean--New Energy sources.......  IDB, CARICOM, USAID.........  Support for new initiative                20
                                                                         to explore alternatives to
                                                                         fossil fuel in the broad
                                                                         Caribbean market. Launch
                                                                         Conference in September.
                                                                         CETE funding used to engage
                                                                         U.S. vendors for wind,
                                                                         hydropower and biofuels
                                                                         technology.
    PI-Kazakhstan Nuclear power tour....  ORNL. Nuclear Energy          Responds to S-1 trip.                     45
                                           Institute (NEI), Govt of      Reverse trade mission to
                                           Kazakhstan.                   visit U.S. sites with
                                                                         potential vendors and
                                                                         investors. Large market and
                                                                         potential for U.S. sales.
    PI-Kazakhstan Petrochemical Industry  GOK.........................  Responds to S-1 trip.         ..............
     Tour.                                                               Reverse trade mission. U.S.
                                                                         industry interest unclear.
                                                                                                     ---------------
            Total.......................  ............................  ............................             594
    ----------------------------------------------------------------------------------------------------------------

        In fiscal year 2006, we instituted performance metrics to measure
    the specific and tangible impact of the CETE program and we also
    solicited input on jointly funded projects. As a result, we are now co-
    funding projects with USAID, TDA and the DOE Offices of Fossil Energy
    and Energy Efficiency and Renewable Energy.
        We have supported programs in 13 different countries in partnership
    with more than 20 private companies and 10 international organizations.
    Our funding is being leveraged at least 2:1 with other resources from
    private partners and other donor organizations.
        The programs we are supporting are intended to benefit multiple
    projects with multiple U.S. vendors and developers, and yet could not
    be accomplished by any one U.S. company acting alone.
        Regarding interagency coordination, we host CETE Working Group
    meetings on a quarterly basis. Representatives from all nine
    participating agencies regularly attend. We have also developed the
    ``Clean Energy Exports Assistance Network'' (www.cleean.net) as a tool
    to better inform U.S. clean technology partners of specific energy
    market conditions and opportunities, and to better coordinate
    interagency resources.
        We also supported the preparation of a report titled ``Financing
    Mechanisms for Clean Energy Technology Exports'' with input from
    industry and CETE participating agencies. The report may be found at
    the website.
        Question. Because the Department of Energy has discretion to fund
    programs though the fiscal year 2007 Joint Funding Resolution, what is
    the Department doing to further develop and integrate the CETE
    Initiative into its overall international energy technology deployment
    strategies?
        What does the Department plan to do to continue to pursue the goals
    of the CETE Initiative in fiscal year 2008?
        Answer. The Office of Policy and International Affairs and the
    Office of Energy Efficiency and Renewable Energy are working together
    to define useful projects for fiscal year 2007 and an overall strategy
    for programs in fiscal year 2008. The goal is to focus on projects that
    may create lasting institutional abilities, and that have the potential
    to transform markets.
        Programs we are considering in fiscal year 2007 include further
    input to the website (www.cleean.net), and a training program on clean
    energy technologies for foreign service and foreign commercial service
    officials. We also plan to support industry events focused on new
    market opportunities in China, Central American, and the Caribbean.
        In fiscal year 2008, we want to pursue a strategy of integrating
    the CETE goals into our international programs by ensuring better
    industry participation and more effective coordination with other
    agencies and with large donor organizations such as the World Bank and
    the Global Environment Facility. We expect to narrow our focus to fewer
    strategic markets, and to support activities in those markets that
    offer the greatest potential for commercial implementation.
        Question. How is the Department and the administration integrating
    CETE with other administration activities such as the Asia-Pacific
    Partnership?
        Answer. As you know, the CETE program encompasses all clean
    technologies and is global in focus whereas the Asia-Pacific
    Partnership (APP) has seven technology-based working groups and is a
    partnership of six countries: Japan, Australia, S. Korea, India, China
    and the United States. Further, the goals of the CETE program are to
    support the efforts of U.S. industry, while the APP more broadly
    supports green-house gas emission reductions with participation by
    industries from all member countries.
        Question. How is the Department working with other Federal agencies
    as well as the private sector on all of these initiatives?
        Answer. Despite the differences in focus, we are coordinating
    efforts through the CETE interagency working group and on the website
    (www.cleean.net). Many of our industry partners under the CETE umbrella
    also participate in the APP. We anticipate that some projects supported
    under the CETE program in India and China may be good candidates for
    funding under the APP and vice-versa.

                                   GAO REPORT

        Question. In December 2006, the GAO issued a report entitled ``Key
    Challenges Remain for Developing and Deploying Advanced Energy
    Technologies to Meet Future Needs.''
        The report summarized that despite the United States being more and
    more reliant on imported energy resources, the DOE's total budget
    authority for fossil energy R&D dropped from $1.9 billion (in real
    terms) in fiscal year 1979 to $434 million in fiscal year 2006. With
    the Energy Information Administration projecting that total U.S. energy
    demand will increase by about 28 to 35 percent between 2005 and 2030,
    GAO recommended that the Congress consider further stimulating the
    development and deployment of a diversified energy portfolio by
    focusing R&D funding on advanced energy technologies.
        I note with disappointment that DOE had no comment on this
    recommendation. Would you please provide me with your comments on GAO's
    recommendations?
        Answer. The GAO report provides valuable information that will be
    useful to the Department and the Government (in general terms) in
    connection with our research and development activities. Success in R&D
    is measured by its transition to commercial application. Examples in
    the oil and gas sector include down-hole telemetry, horizontal
    drilling, 3-D seismic analyses, and polycrystalline diamond drill bits,
    all of which have been adopted by the industry. Examples in the area of
    renewable energy are geothermal energy and hydropower, both now
    considered as fully developed technologies. The GAO report also notes
    that there is over $5 billion in tax expenditures (financial
    incentives) targeted at energy suppliers and users of advanced
    technology. The Energy Policy Act of 2005 augments these incentives
    with an estimated $11 billion worth of additional financial incentives
    over 10 years. The primary role for Government in this area is to fund
    high-risk, basic energy research, as was explicitly outlined by this
    administration in the Research and Development Investment Criteria
    issued in 2003. The GAO study fails to take stock of the increases over
    the last 2 decades in funding in this area, offsetting some of the
    declines in applied R&D. Taking into account all of these factors, we
    believe that DOE R&D is sufficient to meet our Nation's energy needs.

                         OIL AND GAS PRICE RELATIONSHIP

        Question. Would you please provide comments on EIA forecasts of
    natural gas and oil prices in its Annual Energy Outlook (2005 to 2007).
    It appears that each year, EIA significantly underestimates future
    prices of these fuels, specifically:
        In EIA's Annual Energy Outlook 2006 and 2007, natural gas price
    forecasts depart from a traditional price relationship to oil based on
    Btu parity, as demonstrated in the 2005 version. This departure is
    evident in both the reference case and the high oil price scenario.
    What is the basis for this significant departure? Why do industry
    analysts continue to stick with the traditional gas-oil price
    relationship while EIA sees the price ratio as almost doubling as in
    the high oil price case? (EIA)
        Answer. The historical record shows substantial variability in oil
    and natural gas prices and in the relationship between them. The ratio
    between the annual average prices of a barrel of West Texas
    Intermediate (WTI) oil and one million British Thermal Units (BTU) of
    natural gas at the Henry Hub has varied since 1990 from a high of 14.5
    to a low of 5.7.
        Historically, fuel switching between oil and gas was thought to
    have been a major contributor to the price relationship, but there has
    recently been some decline in the capacity to switch between these
    fuels in many end-use applications. While oil and natural gas continue
    to compete in some applications, oil and natural gas prices are also
    linked to the availability of alternative sources of supply;
    competition between coal, nuclear power, renewables, and natural gas as
    fuels for electricity generation; the availability and cost of inter-
    fuel conversion technologies, such as gas-to-liquids; environmental
    restrictions; and the relative importance of transportation costs in
    the total delivered price of energy from each source, which affects the
    regional scale of inter-fuel competition. EIA expects there to be a
    relationship between oil and natural gas prices that varies somewhat
    depending on many factors, not necessarily a constant ratio of price
    between oil and gas that is closely linked to the ratio of their energy
    content that some industry analysts expect.
        Tighter markets, as we have experienced in recent years, result in
    greater price impacts from similar shifts in demand or supply than
    would be seen in looser markets. On the supply side, higher oil prices
    result in increased drilling for oil and thus higher costs for oil and
    gas drilling, placing upward pressure on gas prices. Higher oil prices
    also generally result in increased cash flow and the potential for
    greater investment in oil and gas prospects, placing downward pressure
    on gas prices. Over the longer-term, world markets will play a larger
    role in determining the relationship between oil and natural gas prices
    in the United States due to increasing trade in liquefied natural gas.
    This relationship will be influenced by worldwide fuel switching
    capability, exploration and production costs (E&P) costs, and the
    potential for a growing gas-to-liquids market.
        Numerous changes occur from one Annual Energy Outlook (AEO) to
    another. Nothing was specifically implemented in the model to change
    the oil-to-natural gas price relationship. For example, natural gas
    prices in the AEO2006 and AEO2007 are higher compared to the AEO2005,
    partially as a result of much higher costs. Higher prices resulted in
    slower projected growth in residential, commercial, and industrial gas
    consumption through conservation and inter-fuel substitution. In the
    power generation market, higher natural gas prices dramatically lower
    the future natural gas generation share and raise the coal share from
    what it might have been with lower natural gas prices. However,
    notwithstanding the possibility of significant policy changes affecting
    energy use over the next 25 years, AEO reference case projections
    generally assume that current laws and policies remain in place
    indefinitely, in order to provide a baseline for policy analyses
    requested by Congress and the administration. Should future policy
    actions to mitigate greenhouse gas emissions preclude significant
    growth in coal-fired generation, and if new nuclear power plants that
    would be economically attractive under such circumstances are blocked
    by other concerns, continued growth in gas-fired generation would
    likely reduce the future ratio of oil-to-natural gas prices from that
    projected in AEO2007.
                                     ______

                Questions Submitted by Senator Dianne Feinstein

                                   ELK HILLS

        Question. As compensation for the Federal Government's sale of the
    Elk Hills Reserve, Congress mandated in the fiscal year 1996 National
    Defense Authorization Act (Public Law 104-106) that 9 percent of the
    net sales proceeds be provided to California for its claims to State
    school lands located in the Reserve. Of the $317.7 million owed to the
    State under the terms of this settlement, approximately $300 million
    has been paid to date.
        The Department of Energy's fiscal year 2008 budget does not provide
    for the remaining compensation. It is my understanding that California
    has already agreed to allow the Department to hold $6 million of the
    remaining compensation as a ``worst case scenario'' to complete the
    equity finalization process. The State is willing to come to a
    compromise with the Department over the remaining payment, and has
    offered to complete the claim with a final appropriation of $9.7
    million. Would this be an acceptable solution to the Department, and if
    not, why?
        Answer. If the State of California wishes to submit a proposal to
    the Department, we are open to considering it.
        Question. What is the Department's timeline to complete this
    settlement with the State of California?
        Answer. The equity finalization process is a complicated matter,
    and thus the timeline is uncertain.
                                     ______

                Questions Submitted by Senator Pete V. Domenici

                              CARBON SEQUESTRATION

        Question. Mr. Shope, as you are well aware, coal is the most
    CO2 intensive source of energy. Today, 75 percent of coal
    reserves are held by the United States, Russia, China, India and
    Australia, and it is clear that coal will be a major energy provider
    for each of these nations for the foreseeable future.
        The recently released MIT report, The Future of Coal, stresses the
    importance of large-scale demonstration projects for carbon capture and
    storage technologies. The authors conclude that projects inject less
    than 1 million tons of carbon dioxide per year and will not be large
    enough to replicate the geological stresses that a full commercial
    scale operation would produce. I understand that the current carbon
    injection projects are on a much smaller scale.
        Do you agree that such large-scale demonstrations are needed, and
    in what timeframe? What is the Department doing to expand its R&D
    efforts in this area?
        Answer. The Department of Energy (DOE) agrees that large-scale
    projects are necessary to demonstrate that carbon sequestration
    technologies are necessary to replicate commercial-scale operations.
    DOE has been planning for large-scale sequestration tests since 2004.
    The Regional Carbon Sequestration Partnerships are currently conducting
    some smaller tests that are helping to build the infrastructure and
    demonstrate the technology on a small scale. In 2007, the program is
    beginning work on the ``highest potential'' opportunities for an
    initial expedited round of large scale sequestration tests
    (approximately 1 million tons CO2 per year for each site).
    DOE has provided additional funding in the fiscal year 2007 budget for
    the Carbon Sequestration Program to award several large volume
    sequestration tests. The DOE is in the process of negotiating these
    large volume tests with the Regional Partnerships and plans to make
    some of the awards by the end of fiscal year 2007. The Regional
    Partnerships have come forward with a portfolio of project
    opportunities, a variety of geologic conditions, and future
    commercialization opportunities.
        Question. Has the Department developed a R&D roadmap to address the
    challenges facing adoption of carbon capture and sequestration?
        Answer. The DOE Carbon Sequestration Program issues a revised
    roadmap annually in May. It contains a discussion of the program's
    structure, challenges, and goals for technology development. This
    roadmap can be downloaded from the following website: http://
    www.netl.doe.gov/publications/carbon_seq/refshelf.html.

                   CHINA--CARBON SEQUESTRATION COLLABORATION

        Question. The MIT study also calls for up to 10 other large-scale
    demonstration projects in other countries. China in particular is
    building coal-fired power plants at a spectacular rate.
        Would you support a major initiative to partner with China to
    develop carbon capture and storage technologies?
        Answer. The Department is actively engaged with China on the
    development of carbon capture and storage technologies. China is
    involved in the FutureGen Alliance. China is also a member of the
    Carbon Sequestration Leadership Forum, whose purpose is to make
    information on viable carbon capture and storage projects broadly
    available internationally and identify and address wider issues
    relating to carbon capture and storage. Finally, carbon sequestration
    is within the purview of the Asia Pacific Partnership's Cleaner Fossil
    Energy Task, in which both China and the United States participate. We
    look forward to continued collaborations with China in the area of
    carbon capture and storage.
        Question. In your view, how can we best encourage China to
    collaborate with the United States in developing these technologies?
        Answer. The Department of Energy (DOE) will continue to encourage
    China through involvement in the Carbon Sequestration Leadership Forum,
    the FutureGen Alliance, and the Asia Pacific Partnership on Clean
    Development and Climate. China is a member of the Carbon Sequestration
    Leadership Forum, whose purpose is to make information on viable carbon
    capture and storage projects broadly available internationally and
    identify and address wider issues relating to carbon capture and
    storage. China is also involved in the FutureGen Alliance. Finally, the
    DOE and China are members of the Asia Pacific Partnership on Clean
    Development and Climate, which has a mission to promote the technical
    transfer and demonstration of clean coal technologies. We would look
    forward to this continued collaboration with China.

                               CARBON CAPTURE R&D

        Question. Developing carbon capture and storage technologies will
    require progress on several research fronts. First, the costs of carbon
    capture must be brought down to affordable levels. Second, the
    feasibility of injection technologies must be demonstrated at
    commercial scales. Third, monitoring and verification technologies must
    be developed.
        Which of these research areas do you believe to be the most
    challenging given today's technologies?
        Answer. The Department of Energy (DOE) believes that the
    demonstration of carbon storage at the appropriate scale and the
    development of low-cost carbon capture technologies are equally
    important. The need to demonstrate carbon storage at scale is needed to
    stress the injection operations and determine the effects on the
    storage formations. Different geological conditions and settings need
    to be assessed to show that the capacity and injectivity exists for
    full scale deployment. Protocols for the site selection,
    characterization, well construction, permitting, monitoring, and
    closure need to be developed from these projects so that full scale
    deployment can occur. Carbon capture technologies exist today in
    industrial applications, but have not been demonstrated at full scale
    in conjunction with electricity generation. In addition, the commercial
    systems that exist today would increase the cost of electricity by
    approximately 30 percent to 80 percent, for pre and post combustion
    technologies, respectively. Novel capture technologies are being
    researched in the laboratory and have the potential to reduce the
    increase in cost of electricity to DOE's goal of not more than 10
    percent. Continued research and demonstration of these technologies is
    needed at a pilot-scale and in full-scale integrated demonstration.
    Monitoring, mitigation, and verification technologies are necessary but
    new technologies are not critical to deployment of carbon capture and
    storage as a greenhouse gas mitigation technology. Existing
    technologies can be adapted for monitoring CO2 in geologic
    formations. Advancement in this area could improve our knowledge of the
    fate of CO2 and drive down the associated cost of
    monitoring.
        Question. In your view, how should the Office of Fossil Energy
    allocate its resources between these areas?
        Answer. The Department of Energy (DOE) has issued a roadmap for
    technology development, which is working to stage the funding
    requirements for the capture and storage demonstration projects. Early
    emphasis is on the demonstration of storage projects and bringing down
    the cost of CO2 capture. As the capture program has success
    in developing novel technologies for low cost capture, DOE is
    supporting pilot and demonstration tests to demonstrate that these
    capture technologies are ready for commercial deployment.
        Question. How should the Federal Government and the private sector
    share the cost burden of developing these technologies?
        Answer. The Department's Carbon Sequestration Program administers
    research and development awards through cooperative agreements, which
    require that participating organizations provide a minimum of 20
    percent cost share. For demonstration projects selected under a Clean
    Coal Power Initiative solicitation, the recipient would need to provide
    a minimum of 50 percent cost-share and agree to a schedule to reimburse
    the Government based on future revenues from sales of the
    commercialized technology.

                          TAXATION OF COAL R&D DOLLARS

        Question. Under the Clean Coal Power Initiative, Round 2, the
    Department of Energy has authorized funding of various private sector
    projects to demonstrate advanced clean coal technology, including
    advanced gasifier technology.
        It is my understanding that the IRS has changed its long standing
    policy toward Federal research funding to make these funds taxable as
    corporate income. The practical effect of this policy change is that
    one branch of government is providing funding to encourage a public
    purpose activity, while another branch of government is reducing that
    funding by taxing it.
        I have worked too hard on this subcommittee and as Chairman of the
    Energy Committee to make Federal energy R&D research a priority. Now to
    have the IRS change it's policy to levy a huge tax on the Federal R&D
    funds would be devastating in our effort to increase our energy
    independence.
        Can you please explain the logic behind this decision and what
    impact it will have on Federal R&D efforts to have upwards of one-third
    of the funding going toward tax payments instead of research?
        Answer. I would refer you to the Department of Treasury for an
    explanation and rationale of their decisions.
        Question. Has Secretary Bodman contacted Treasury Secretary Paulson
    to discuss this matter?
        Answer. The Department of Energy has been in contact with the
    Treasury Department to understand the rationale behind this ruling and
    what options may be available under current law to utilize allocated
    research and development funding.
                                     ______

                   Question Submitted by Senator Wayne Allard

                 NAVAL OIL SHALE RESERVES ROYALTY DISTRIBUTION

        Question. As you may be aware, when Congress transferred Naval Oil
    Shale Reserves (NOSR) Numbers 1 and 3 from the Department of Energy to
    the Department of the Interior in 1998 the legislation stated that DOI
    could not begin the ``normal'' process of royalty distribution until
    DOE was compensated for their ``original investment'' and for the costs
    of cleanup of the Anvil Points facility. To ensure this happened
    section 7439 (f)(2) of the Transfer Act stated that the Secretaries of
    Interior and Energy must jointly certify to Congress that the monies
    have been recouped prior to making revenue available for distribution
    to the State of Colorado.
        Oil and gas receipts collected from production within NOSR Number 3
    have now far surpassed the estimate of what was needed to fully
    reimburse DOE for their original investment as well as covering the
    cost of environmental remediation at the Anvil Points site. It is my
    understanding that the agencies will not agree to certification until
    the necessary clean-up is complete. As you and I both know, that will
    likely take several more years.
        I was serving in the Senate at the time and played an active role
    in the passage of this provision. It is my view that DOE and DOI have
    misread the intent of Congress in determining that the clean-up must be
    complete. Can you please tell me what this position was based on?
        Answer. Although the Department of the Interior assumed
    responsibility for the environmental remediation of Anvil Points, the
    Secretary of Energy must certify that there are adequate funds in the
    account to offset all costs incurred by the Government, including the
    Department of the Interior's proposed cleanup plan. It is our
    understanding that Department of the Interior has not finalized its
    cleanup plan; consequently the cost of that plan remains to be
    estimated.
        At such time as the Department of the Interior completes the plan
    along with the estimate of costs, the Department of Energy stands ready
    to quickly review and certify whether the funds generated exceed the
    total costs. We will continue to work closely with the Department of
    the Interior to facilitate the completion of the necessary measures to
    initiate the appropriate distribution of the royalty payments from the
    former Reserves.
                                     ______

                    Questions Submitted to Kevin M. Kolevar
                 Questions Submitted by Senator Byron L. Dorgan

                       CONSOLIDATION OF RESEARCH PROGRAMS

        Question. I have noticed that the Distributed Energy Systems has
    been renamed to Renewable and Distributed Systems Integration. The
    funding has been reduced and the focus changed to distributed
    generation technologies on the utility side of the meter. What has
    happened to development of technologies on the customer side of the
    meter? Has it been reduced, eliminated, or moved to another research
    area? Why was this done?
        Answer. The Office of Electricity Delivery and Energy Reliability's
    (OE) Distributed Energy Systems budget line has been renamed to reflect
    the fact that distributed generation technologies have been completed.
    The Distributed Energy Program has met its performance targets of: (1)
    achieving three integrated energy systems (combined heat and power
    systems) of greater than 70 percent efficiency; (2) demonstrating a 38
    percent efficient microturbine; and (3) demonstrating a 44 percent
    efficient reciprocating engine. The research efforts will now address
    Renewable and Distributed Systems Integration (RDSI), as reflected in
    the budget request. This research will concentrate on the integration
    of renewable and distributed energy technologies into the grid at the
    distribution system level.
        The successful demonstration of this integration could
    substantially increase the use of renewable and distributed energy for
    supplying power and other ancillary services during peak load periods
    in support of electric distribution operations. These projects will
    also demonstrate the ability of these technologies to reduce power
    required to the distribution feeder. This will be accomplished through:
    modeling, design, integration, and RD&D of renewables and distributed
    energy integration into the distribution system; low-cost sensors;
    advanced monitoring; and consumer information. The goal of RDSI is to
    demonstrate a peak load reduction of 20 percent by 2015 and improve
    asset management on distribution feeders. This will be accomplished
    through the implementation of distributed energy (including renewables)
    and energy management systems that are cost competitive with system
    capacity upgrades.
        The development of technologies on the customer side of the meter
    is the responsibility of the Office of Energy Efficiency and Renewable
    Energy. Currently, only renewable technologies that can be placed on
    the utility side of the meter are being supported in this office. The
    Distributed Energy activities were moved by Congress in the fiscal year
    2006 appropriations.
        Question. DOE has developed programs such as GridWise and GridWorks
    to facilitate grid systems integration while fostering development of
    the ``smart grid'' concept. Your office has restructured and
    streamlined your R&D programs in fiscal year 2007 and into fiscal year
    2008.
        Thus, what is the status of these efforts? What has your office
    done since the 2003 Blackout to address the role of advanced
    technologies to avoid similar situations and to coordinate with the
    private sector to shepherd these technologies into the marketplace?
        Answer. In fiscal year 2005, the Department issued a solicitation
    and awarded cooperative agreements in support of the Gridwise and
    Gridworks research plans. Some of these awards are completed and others
    are still in progress. The Department remains committed to completing
    the activities initiated under this solicitation for Gridwise and
    Gridworks. As a result of these activities, the Department has
    recognized the need to promote advanced grid control technologies
    (Gridwise) and improved hardware (Gridworks) in a systematic manner.
        We have identified the causes of the 2003 blackout and have made
    progress in implementing the recommendations made by the U.S.-Canada
    Power System Outage Task Force (Task Force). The most important
    recommendation of the Task Force was for the U.S. Congress to enact
    legislation to make compliance with reliability standards mandatory and
    legally enforceable, which the Congress did in the Energy Policy Act of
    2005. The Federal Energy Regulatory Commission implements this policy
    through oversight of the North American Electric Reliability Council as
    the Nation's ``Electric Reliability Organization.''
        The electricity delivery system is extremely complex and remains
    subject to combinations of mechanical and human failures. Although
    improvements have been made to the grid since 2003 in areas such as
    operator training, we can never entirely prevent blackouts from
    occurring. What we can do is improve our ability to identify and
    isolate problems on the grid when they arise. That is why my office
    works with transmission system operators on the next level of
    technologies that will increase the ability of operators to receive
    real-time information regarding transmission problems.
        It is also important that we are not just prepared for a blackout
    similar to that of August 14, 2003; we must be well-prepared for a
    wider range of possible events. The Office of Electricity's (OE)
    Infrastructure Security and Energy Reliability program provides hands-
    on expertise to assist in the recovery of the transmission network, no
    matter what the cause of the failure. Finally, under authority from the
    Energy Policy Act of 2005, OE assists State and regional planners by
    identifying areas of electric congestion, coordinating Federal
    authorizations required to site new transmission, and where
    appropriate, designating national interest electric transmission
    corridors to enable the FERC, under certain circumstances, to site
    transmission facilities.

                  HIGH TEMPERATURE SUPERCONDUCTIVITY RESEARCH

        Question. I note that the funding level for high temperature
    superconductivity research and development has been cut by 42 percent
    from the funding level in fiscal year 2006. Why such a significant cut?
    What technology applications are being reduced because of these cuts?
        Answer. The cut was to focus the high temperature superconductivity
    program on higher priority wire development and cable demonstrations
    (including fault current limiters). The cut in high temperature
    superconductivity reflects phasing out of motor research and completing
    flywheel cooperative agreements.

                  ELECTRICITY TRANSMISSION AND ENERGY DELIVERY

        Question. I have noted your office's work on determining areas of
    congestion and defining national corridors as well as your work in
    siting and permitting. North Dakota has a variety of energy resources
    that are stranded and that are not able to move to markets. What is
    your office doing to help promote and expand transmission delivery and
    efficiency in North Dakota and around the country?
        Answer. My office is involved in four major activities to help
    transmission delivery and improve efficiency in North Dakota and around
    the country.
        First, in August 2006, in accordance with section 1221(a) of the
    Energy Policy Act of 2005 (EPACT), the Department of Energy (DOE)
    released the National Electric Transmission Congestion Study
    (Congestion Study), which examined transmission congestion and
    constraints and identified constrained transmission paths in many areas
    (except Texas) that are facing growing demand. The congestion study
    identified three categories of congestion areas that merit further
    attention throughout the continental United States. The third type of
    congestion areas in the study, ``Conditional Congestion Areas,''
    identified areas where congestion is not presently acute, but could
    become so if considerable new electric generation were to be built
    without associated transmission capacity. The region from the Dakotas-
    Minnesota falls into this category because it contains potential
    locations for new large-scale wind and coal generation that could serve
    distant load centers.
        Second, in addition to fulfilling the EPACT requirement that the
    Department update the Congestion Study every 3 years, DOE will also
    issue annual reports in the interim that detail the progress made in
    addressing the congestion challenges as identified in the 2006
    Congestion Study. My office is preparing a draft for the Department's
    Congestion Alleviation Update that will be published in fall 2007. This
    update will detail the transmission, generation, and demand reduction
    activities that have occurred in the areas of transmission congestion
    that the Department identified in its August 2006 study.
        Third, my office is implementing two other areas of EPACT that
    relate to transmission delivery. One of these is in accordance with
    EPACT section 368 and is a joint effort with the Departments of
    Agriculture, Commerce, Defense, and Interior to designate energy
    corridors on Federal lands for oil, gas, and hydrogen pipelines in
    addition to electricity transmission and distribution facilities. A
    record of decision for the 11 contiguous Western States, is expected to
    be completed in fiscal year 2008. Corridor designation for the Eastern
    United States, Alaska, and Hawaii will begin in early fiscal year 2008.
    The second area of EPACT is in accordance with the new Federal Power
    Act section 216(h) created under EPACT section 1221(a). The Department
    is now beginning this process of coordinating all applicable Federal
    authorizations and related environmental reviews that are required to
    site an electric transmission facility.
        Fourth, my office has been and continues to support the efforts of
    States and transmission planners to work on a regional basis to better
    coordinate electric infrastructure improvements. For example, for a
    number of years we have given direct funding support, as well as in-
    kind support from various technical analyses and studies, to the
    Western Governor's Association for its ``Committee on Regional Electric
    Power Coordination,'' which is an ad-hoc group of Western State
    officials who meet regularly to better coordinate and encourage needed
    electric infrastructure improvements in the Western Interconnection. A
    number of regional and sub-regional transmission planning and study
    groups in the West have emerged as a result of the encouragement of
    these State officials and their Governors. In fact, the Department
    reviewed many of the documents these groups have produced in conducting
    analysis for the Congestion Study. As a result of the Congestion Study,
    the western region, with oversight by a body of State officials, has
    now developed regional transmission planning through the Western
    Electricity Coordinating Council.
        Similarly, in the Eastern Interconnection, grid planners are
    undertaking efforts to conduct interconnection-wide analyses. The new
    Eastern Reliability Working Group has brought together all of the
    regional transmission operators, independent system operators, and
    reliability councils in the Easter Interconnection.
        The Office of Electricity also coordinates with the Office of
    Energy Efficiency and Renewable Energy to provide technical assistance
    to transmission planners and grid operators seeking to integrate wind
    generation into the transmission grid. This includes working with the
    Midwest Independent System Operator to identify possible transmission
    upgrades that will enable wind generation in North Dakota to be
    developed.

                            LOAN GUARANTEE QUESTIONS

        Question. Since the passage of the fiscal year 2007 Joint Funding
    Resolution, the Department has moved forward on several fronts related
    to the loan guarantee program. Please tell the committee where the
    Department stands in terms of setting up the new loan guarantee office,
    issuing final regulations for this program, and reviewing the pre-
    applications submitted last year.
        Answer. The Department has advertised the position for the Director
    of the Loan Guarantee Program Office. A number of resumes have been
    received to date, and the Department will review the resumes for
    qualified candidates. In addition, two senior Department of the
    Treasury employees with experience in Federal loan guarantee programs
    have joined the Loan Guarantee Program Office on 6 month details to
    help establish the office. Once the Director has been hired, the
    Director will make a determination on required staffing expertise and
    those positions will be recruited.
        With respect to the issuance of final regulations, the Department
    is working to meet the August 2007 deadline contained in the Revised
    Continuing Appropriations Resolution, 2007, Public Law 110-5. A Notice
    of Proposed Rulemaking was published in the Federal Register on May 16,
    2007 and is open for public comment until July 2, 2007.
        Finally, the Department is completing a preliminary review of the
    applications to determine which applications are responsive to the
    solicitation. Guidance has been issued to program offices to begin the
    technical reviews of the pre-applications. Separately, the Loan
    Guarantee Office will be reviewing each pre-application for compliance
    with the financial, commercial, and other criteria set forth in the
    August 2006 solicitation and accompanying guidelines. Ultimately, the
    goal is to complete the pre-application evaluations this summer.
        Question. With all of these activities underway, when do you think
    that the Department can reasonably expect to make the public
    announcements regarding awards to industry?
        Answer. The Department anticipates that it will take until at least
    the first quarter of calendar year 2008 to issue the first loan
    guarantees.
        Question. In the fiscal year 2007 Long-term Funding Resolution,
    Congress provided funding to support establishment of a loan guarantee
    office. Congress authorized up to $4 billion in loan guarantees to be
    available immediately and directed that no loan guarantee awards can be
    made until final loan guarantee regulations are in place, 6 months from
    the date of enactment of the fiscal year 2007 Long-term Funding
    Resolution. Furthermore, in fiscal year 2008, the Department is seeking
    additional funding to support the loan guarantee office, and you are
    requesting $9 billion in additional authority with a caveat that this
    amount would be reduced from amounts previously provided.
        If the request is for $9 billion to be reduced by the amount
    previously provided, is that amount previously provided, the $2 billion
    the Department previously announced would be available late last year
    or the $4 billion that the Long-term Funding Resolution provided?
        Answer. As the Department anticipates that it will take until at
    least the first quarter of calendar year 2008 to issue the first loan
    guarantees, DOE anticipates issuing $9 billion in loan guarantees in
    fiscal year 2008.
        Question. Does the Department believe that new coal and nuclear
    power plants are very capital intensive and thus requiring additional
    assistance to construct first-of-a-kind technologies? The committee is
    aware of information that the costs of these plants are very large
    relative to the market capitalization of some of the utility companies
    that are interested in constructing such facilities.
        What is the Department's current assessment of the economic
    viability of new commercial coal and nuclear power plants?
        How would Federal loan guarantees affect the relative economics of
    these new coal and nuclear power plant projects?
        In view of the uncertainties and regulatory risks associated with
    the initial deployment of a new fleet of IGCC carbon capture-ready and
    nuclear power plants, in your judgment would the loan guarantee program
    play an important role bringing these planned projects to fruition?
        Answer. Advanced, environmentally friendly, clean coal technologies
    are poised to enter the market, but some require a price premium
    relative to more conventional technology. In spite of the higher cost,
    the private sector has shown great interest in these technologies. The
    2008 budget continues robust funding for the President's Advanced
    Energy Initiative to develop and accelerate the deployment of advanced
    energy technologies, including new coal and nuclear technologies. Long-
    term regulatory drivers, such as the Clean Air Interstate Rule (CAIR)
    and the Clean Air Mercury Rule (CAMR), also provide an incentive for
    the private sector to invest in these technologies.
        The Department received 143 pre-applications requesting more than
    $27 billion in loan guarantee protection for this initial round of
    guarantees. Twenty-three projects, representing $16 billion in loan
    guarantees were for advanced fossil technology.
        Loan guarantees, along with other provisions in the Energy Policy
    Act of 2005, can play a role in accelerating the deployment of advance
    coal and carbon capture technologies.
                                     ______

                    Question Submitted by Senator Jack Reed

                             DISTRIBUTED GENERATION

        Question. Mr. Kolevar, the 2008 request essentially zeroes out the
    Distributed Energy Resource program, which used to be a $60 million
    program aimed at helping Combined Heat and Power and other clean and
    efficient technology get onto the grid. This program was shifted to the
    Office of Energy Distribution and Energy Reliability last year and now
    is slated for elimination. Has EDER abandoned its commitment to develop
    clean distributed generation, and focus only on transmission and power
    delivery issues?
        Answer. The focus on the development of distributed generation
    technologies has been completed. The Distributed Energy Program has met
    its performance targets of: (1) achieving three integrated energy
    systems (combined heat and power systems) of greater than 70 percent
    efficiency; (2) demonstrating a 38 percent efficient microturbine; and
    (3) demonstrating a 44 percent efficient reciprocating engine. The
    research has now shifted to Renewable and Distributed Systems
    Integration (RDSI) work. This research will concentrate on the
    integration of renewable and distributed energy technologies into the
    grid at the distribution system level. By successfully demonstrating
    this integration, the use of renewable and distributed energy in
    support of electric distribution operations should substantially
    increase for supplying power and other ancillary services during peak
    load periods.
        These projects will also demonstrate the ability of these
    technologies to reduce power required to the distribution feeder. This
    will be accomplished through modeling, design, integration, and RD&D of
    renewables and distributed energy integration into the distribution
    system; low-cost sensors; advanced monitoring; and consumer
    information. The goal of the RDSI is to demonstrate peak load reduction
    of 20 percent by 2015, and improve asset management on distribution
    feeders with the implementation of distributed energy (including
    renewables), and energy management systems that are cost competitive
    with system capacity upgrades.
                                     ______

                Questions Submitted by Senator Pete V. Domenici

          OFFICE OF ENERGY ELECTRICITY DELIVERY AND ENERGY RELIABILITY

        Question. Mr. Kolevar, I understand that your office has had the
    responsibility for complying with section 1221 of the Energy Policy Act
    that requires the Secretary to designate ``National Interest Electric
    Transmission Corridors''
        We all know how difficult it is to site electric transmission
    lines, but with a projected 19 percent increase in electricity demand
    over the next decade; we must work through the NIMBY issues.
        What is the status of this report and what are the next steps in
    designating these critical infrastructure corridors.
        Answer. Section 216(a) of the Energy Policy Act of 2005 authorizes
    the Secretary, in his discretion, to designate geographic areas where
    transmission congestion or constraints adversely affect consumers as
    national interest electric transmission corridors (National Corridors).
    On April 26, 2007, DOE issued two draft National Corridor designations,
    in relation to the two Critical Congestion Areas identified in the
    Department's August 2006 Congestion Study. The first is the draft Mid-
    Atlantic Area National Corridor and the second is the draft Southwest
    Area National Corridor. If, after consideration of all comments on
    these drafts and consultation with the affected States, the Secretary
    of Energy decides that designation of either or both areas is
    appropriate, he will issue one or more orders doing so.
        DOE welcomes comments on the draft National Corridor designations
    and has opened a 60-day public comment period, which will end on July
    6, 2007. Please refer to the Federal Register Notice for information on
    the comment process. The full text of the notice is available at http:/
    /nietc.anl.gov. During the public comment period, the Department
    intends to hold seven public meetings to discuss these drafts.
        In 2006, the Department announced that, in addition to the
    statutory requirement under section 216(a) of FPA that the Department
    release a congestion study every 3 years, DOE would issue annual
    progress reports in addition to the triennial studies. Accordingly, the
    Department is beginning a review of mitigation activities underway in
    each of the congestion areas identified in last year's Congestion
    Study. The activities that will be examined include the status of
    transmission projects that are proposed, permitted and completed since
    last August. We will also be identifying new or proposed local
    generation, demand response programs, and energy conservation and
    efficiency programs affecting congestion in the identified congestion
    areas. The Department intends to issue this congestion alleviation
    progress report in fall 2007.

                               ENERGY STORAGE R&D

        Question. Mr. Kolevar, your fiscal year 2007 spending plan provides
    only $5 million to support R&D storage. This level of funding is
    woefully inadequate considering the biggest challenge to the deployment
    of renewable generation is the intermittent nature of these
    technologies. It is vitally important that your office work with Asst.
    Secretary Karsner's team to ensure that energy storage R&D compliments
    the renewable research.
        Can you explain why this important R&D effort has received so
    little in spending? If Congress provided and additional $5 million or
    $10 million how would you spend this funding?
        Answer. Funding requests for energy storage research during the
    last 5 years have fluctuated between approximately $5 million and $3
    million. However, this amount has been augmented by up to $11 million
    in congressionally directed funding and by some $7 million in annual
    cost share from our State and utility partners. The program is
    considered worldwide as one of the leaders in this field.
        An extra $5 million or $10 million would expand the scope of OE's
    research program.

                         ENERGY INFRASTRUCTURE SECURITY

        Question. Mr. Kolevar, your fiscal year 2007 spend plan recommends
    a significant increase in funding for infrastructure security, which
    was not included in your fiscal year 2007 request and it is unclear
    from the spend plan how this funding is being used and for what
    purpose.
        Is this funding being used to improve foreign energy infrastructure
    security--are these Middle East countries?
        Answer. In fiscal year 2007 the Office of Electricity (OE) has been
    tasked as the technical lead assisting the State Department in
    executing the Critical Energy Infrastructure Protection (CEIP)
    initiative, which is overseen by the National Security Council (NSC).
    The Department of Energy's (DOE) role is to assess and advise foreign
    countries who have requested U.S. assistance on needed improvements to
    their energy infrastructure security. Our teams of expert teams travel
    to the host country and assess current security measures and recommend
    improvements. The host country funds and implements the actual
    improvements that are identified in the development of a CEIP security
    program.
        The specific countries targeted by this program were selected by
    the intelligence community, were coordinated through the interagency
    process, and were provided in a report to the NSC. To date, CEIP
    Initiative activities have been limited to the Middle East, although
    DOE and the Department of Homeland Security have provided similar
    support to Canada and Mexico because of the interconnected nature of
    our energy systems.
        Question. Is this funding being cost shared by the nation that is
    benefiting from this security evaluation? Is there any reason why the
    country can't or should not pay for this activity?
        Answer. Each host country has shared the cost of the consultation
    with the U.S. Government, although specific cost-sharing mechanisms
    vary depending on the country. The Office of Electricity funds travel
    and lodging of U.S. Government employees and required security training
    for U.S. Government employees traveling to dangerous areas. It also
    provides for the participation of contractors with specific expertise
    relevant to energy security in a high-threat environment and Federally-
    funded national lab experts and scientists. Finally, OE reimburses U.S.
    Embassies for their support efforts. All participating host foreign
    nations have agreed to pay for the technical experts' internal travel
    while in country. They have also provided aircraft and watercraft that
    the teams have needed and have supported the teams' security needs.
    While DOE helps to evaluate security requirements, the host country has
    the sole responsibility for funding all such security enhancements to
    the critical energy infrastructure.
        Question. Is this a free service we intend to provide to other
    countries in the future or, do we have a special obligation to these
    nations?
        Answer. The United States is not responsible for the entire cost of
    the consultation--the costs are shared with the host nation. The fiscal
    year 2007 initiative is limited to those nations the intelligence
    community has identified in a classified document to the NSC.

                              SUBCOMMITTEE RECESS

        Senator Dorgan. We thank the witnesses for appearing. This
    hearing is recessed.
        [Whereupon, at 4:15 p.m., Wednesday, April 11, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

        ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2008

                                  ----------

                           WEDNESDAY, APRIL 18, 2007

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 2:35 p.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Byron L. Dorgan (chairman)
    presiding.
        Present: Senators Dorgan, Murray, Feinstein, Reed,
    Domenici, Craig, and Allard.

                              DEPARTMENT OF ENERGY

                    National Nuclear Security Administration

    STATEMENT OF HON. THOMAS P. D'AGOSTINO, ACTING UNDER
                SECRETARY FOR NUCLEAR SECURITY AND
                ADMINISTRATOR, NATIONAL NUCLEAR SECURITY
                ADMINISTRATION
    ACCOMPANIED BY:
            WILLIAM H. TOBEY, DEPUTY ADMINISTRATOR FOR DEFENSE NUCLEAR
                NONPROLIFERATION, NATIONAL SECURITY ADMINISTRATION
            ADMIRAL KIRK DONALD, DIRECTOR, NAVAL NUCLEAR PROPULSION, U.S.
                NAVY

                  OPENING STATEMENT OF SENATOR BYRON L. DORGAN

        Senator Dorgan. This is a hearing of the Appropriations
    Subcommittee on Energy and Water Development. We will be joined
    shortly by ranking member, Senator Domenici. And, I welcome
    Senator Craig.
        The hearing today will be for the purpose of reviewing the
    fiscal year 2008 budget request for the National Nuclear
    Security Administration (NNSA). The proposed budget for NNSA is
    nearly $9.4 billion. That's 39 percent of the Department of
    Energy's total budget for fiscal year 2008, an increase of $306
    million above fiscal year 2007's operating plan, but only a $71
    million increase over the administration's fiscal year 2007
    budget request. The weapons activities request is $6.5 billion.
    The nuclear nonproliferation request is $1.67 billion. This
    represents about 18 percent of the NNSA total budget. The
    remainder of the NNSA's budget is made up of $808 million for
    naval reactors and $394 million for the Office of the
    Administrator.
        NNSA's fiscal year 2008 budget request appears measured
    when weighed against fiscal year 2006 and 2007, but if you go
    back a few years, we see a very substantial increase in funding
    has taken place in these accounts. In 2001, NNSA's budget was
    $6.7 billion. That has grown by about $2.7 billion in the past
    eight fiscal years.
        I'm trying to, as a new chairman of this subcommittee,
    understand as much as I can about what this budget means, what
    these activities are. This is, obviously, an interesting,
    complicated area of the Federal budget and it's an interesting
    and complicated set of policy issues.
        Mr. D'Agostino, you represent an organization that is
    involved in very important and very complicated matters. And,
    we appreciate your being here today to testify. You are
    involved in our nuclear weapons programs in this part of our
    Department of Energy. There's not much that we do that is more
    important than those issues, including the issue of
    nonproliferation. Mr. Tobey, you are involved in that issue.
        I'll be asking some questions later about the issue of the
    construct of nuclear weapons, the RRW program, the issue of the
    nonproliferation efforts that are underway. This is a, just a
    critically important function of our Government. We need to try
    to make sure we get this right. It's about national security.
    It's about stopping the spread of nuclear weapons around the
    world, stopping the spread of nuclear technology.
        We face, at this time, very significant issues with
    countries like Iran and North Korea over the issue of
    enrichment capabilities and nuclear weapons production. The
    list of nuclear weapon countries, both rogue and nonrogue,
    could very well grow in future years. If that's the case, that
    will, in my judgment, increase the threat to our country.
        And so, all of these things are very, very important. I
    can't have answers, don't have answers to all of the questions
    that are posed by these issues that we'll talk about today.
    But, I think we need to continue to explore and ask questions
    about them all and try to understand where we're headed.
        Let me call on Senator Craig. If you have any opening
    comments, Senator Craig.

                        STATEMENT OF SENATOR LARRY CRAIG

        Senator Craig. Well, Mr. Chairman, there is a portion of
    this budget that I know a good a deal about, so let me tell you
    about it. And, I say that because few understand and oftentimes
    are quite surprised when I say out in the middle of the high
    deserts of Idaho rests a nuclear submarine or at least the
    ingredients of it as it relates to nuclear propulsion. And, I
    say that because I'm talking about the construct, or the
    construction of, in 1953, a Nautilus prototype reactor, which
    really started our nuclear Navy and I suspect--Admiral, did you
    train in Idaho?
        Admiral Donald. I did not, sir.
        Senator Craig. You did not.
        Mr. D'Agostino. I did. Yes, sir, I did.
        Senator Craig. There, Mr. D'Agostino did. And, quite often
    when you talk to those of the nuclear Navy, they will have
    spent time in Idaho. Now, having said that, that is really, as
    we all know, one of the great success stories of the nuclear
    side of us, as a country. Not only what we've done with the
    nuclear Navy, the successes, the changes in the type of
    reactors, the fuel cycle.
        I say this publicly, loudly, as often as I can, had we been
    as dedicated to the commercial side of nuclear electrical
    generation as we were to nuclear propulsion and the refinement
    of reactor and fuel cycle, we would without question be leading
    the world today in highly efficient reactors of a kind that we
    are attempting to imagine. But, we're not there because we
    stopped. We did not do that with the nuclear Navy.
        Also, I will say that in 1967, the advanced test reactor at
    the INL, our national lab, began to tackle the nuclear fuels
    reliability and materials testing issue. It was commissioned in
    1967 to support the Navy's nuclear propulsion program. And, all
    I can say is that all of us can be extremely pleased with those
    successes. There is none finer in the world today than what we
    have accomplished with our nuclear Navy.
        And, as a result of that, I am, you know, pretty open,
    pretty direct, and extremely proud that so much of that was
    accomplished at the national laboratory in southeastern Idaho.
    So, obviously I look at the broader issues involved in this
    portion of the budget, but I focus very closely on a portion of
    it that deals with the Idaho facility and the ongoing work that
    we do and the science. The Office of Energy, Nuclear Energy and
    Science and transitioning the ATR to a national users facility
    that industry and the academic community can access for all
    that we're attempting to do today, Mr. Chairman, as it relates
    to the dynamics of the nuclear industry and the fuels that will
    ultimately be part of that growing industry as we now see it.
        Senator Dorgan. Senator Craig----
        Senator Craig. Again, gentlemen, thank you.
        Thank you, Mr. Chairman.
        Senator Dorgan. Thank you very much.
        Senator Reed.
        Senator Reed. Mr. Chairman, I have no opening statement.
    Thank you though.
        Senator Dorgan. Let me make one additional comment, because
    I think it's important to say that the issues we will talk
    about today, RRW, nonproliferation, and so on, are not issues
    that we deal with in isolation. These issues are part of a
    larger national and international discussion about nuclear
    weapons policies, about stock, our stockpile, reliability,
    about nonproliferation, about test ban treaties, and so on.
    There's a, so my point is, these are big issues. You know, we
    work everyday in areas here in Congress that have some big
    issues and some small issues. These are very big issues that
    have national and international consequences.
        And, Mr. D'Agostino, thank you for being here. It's been a
    pleasure to meet you and begin to work with you in these
    months. And, I would include your entire statement as a part of
    the permanent record and ask you to summarize and introduce as
    well, Admiral Donald and Mr. Tobey.

                     STATEMENT OF HON. THOMAS P. D'AGOSTINO

        Mr. D'Agostino. Thank you, Mr. Chairman and members of the
    subcommittee. I'm Tom D'Agostino, the Deputy Administrator for
    Defense Programs and I'm accompanied today by Will Tobey, on my
    left, who is the Deputy Administrator for Defense Nuclear
    Nonproliferation. And, Admiral Kirk Donald, on my right, the
    Deputy Administrator for Naval Reactors.
        As you mentioned earlier, the President's fiscal year 2008
    budget request for the NNSA is $9.4 billion. It supports three
    basic national security missions. The first is to assure the
    safety, security, and the reliability of the U.S. nuclear
    stockpile, while at the same time transforming that stockpile,
    making it smaller essentially, and the associated
    infrastructure. The second major mission is to reduce the
    threat posed by nuclear proliferation. The third is to provide
    a reliable and safe nuclear reactor propulsion system for the
    United States Navy.
        In order to accomplish this mission, we developed a vision,
    which we call Complex 2030. And simply put, this vision has
    four main portions to it. The first is to transform the nuclear
    weapons stockpile by making it smaller, by making it safer, and
    by making it more secure. The second element is to reduce the
    size of the nuclear weapons infrastructure, decreasing the
    footprint in the United States of that infrastructure and the
    impact on the environment. The third is to change the way we do
    business, drive more efficient business processes. And, the
    fourth is to sustain and improve the science and technology
    base that's gotten us to this point and allows us to have such
    a strong national security.
        I'm pleased to report today that stockpile stewardship is
    working. This program has successfully sustained the safety,
    security, and reliability of the U.S. nuclear arsenal without
    the need to conduct an underground nuclear test. Many actions
    to transform the size and operations of the complex, transform
    the stockpile, and drive the science and technology base are
    well underway.
        We are reducing the number of sites with large quantities
    of special nuclear materials and consolidating these materials
    within the remaining sites. We're maintaining an accelerated
    rate of dismantlement of retired warheads. We want to take
    these weapon systems apart. We are reconstituting the nuclear
    weapons production capability and we have revived our ability
    to extract tritium for use in the stockpile at our new tritium
    extraction facility in South Carolina.
        I'd like to emphasize that our recent Reliable Replacement
    Warhead announcement addressed the selection of a baseline for
    further study. It was not an announcement to actually, or a
    decision to actually, build a replacement warhead.
        Over the next 9 to 12 months, our plans are simply to
    develop a detailed cost, scope, and schedule baseline for a
    Reliable Replacement Warhead for the Trident submarine launched
    ballistic missile. With this baseline, we'll be able to develop
    the details and the plans necessary for us to evaluate whether
    we need to make a decision on further reducing the number of
    life extensions that we have planned and reducing the overall
    size of the stockpile itself. We will work very closely with
    the Congress as we move forward, to ensure that we proceed in a
    step-wise measured and well understood manner in this respect.
        One of the major benefits of a Reliable Replacement Warhead
    approach is that it reinforces our nonproliferation commitments
    and objectives. This strategy will allow us to increase our
    warhead dismantlement rate, sending a strong message to the
    world that we're taking meaningful steps toward further
    stockpile reductions. Additionally, increased long-term
    confidence and the credibility of the U.S. nuclear deterrent
    will assure allies and obviate any need for them to develop and
    field their own nuclear forces.
        Finally, the improved security features of a Reliable
    Replacement Warhead concept will prevent unauthorized use,
    should this warhead ever fall in the hands of terrorists. In
    the area of nuclear nonproliferation, the NNSA has worked with
    over 100 international partners to detect, prevent, and reverse
    proliferation of weapons of mass destruction. We're securing
    and reducing the quantity of nuclear and radiological
    materials, bolstering border security overseas, strengthening
    international nonproliferation and export control regimes, and
    conducting cutting-edge research and development of nuclear
    detection technologies. All of these are key mission areas for
    the nonproliferation program.
        Meeting our commitment under the Bratislava Agreement, to
    conclude security upgrade activities at the Russian nuclear
    sites by the end of 2008, is our highest priority. As a result
    of our efforts to accelerate this work, we are well positioned
    to successfully reach this milestone on schedule. In addition
    to our work with Russia, some of the highlights in the 2008
    budget include completing installation of radiation detection
    monitors at ports in Belgium, Oman, and the Dominican Republic
    and continuing the MOX fuel fabrication facility project to
    eventually dispose of surplus U.S. plutonium and support in the
    U.S. role in international nonproliferation efforts.
        The Naval Reactors Program includes development work
    necessary to ensure nuclear propulsion technology provides
    options for maintaining and upgrading current capabilities, as
    well as meeting future threats to U.S. security.
        A majority of funding supports the top priority of ensuring
    the safety and reliability of the 103 operating naval nuclear
    propulsion plants. This work involves continual testing,
    analysis, and monitoring of plant and core performance, which
    becomes more important as the reactor plants age.
        The nature of this business demands a careful and measured
    approach to developing and verifying nuclear technology.
    Designing needed component systems and processes and
    implementing them in existing and future plant designs.
        Long-term program goals have been to increase core energy,
    to achieve life-of-the-ship cores and to eliminate the need to
    refuel nuclear powered ships. Efforts associated with this
    objective have resulted in plant core lives that are sufficient
    for a 30-plus year submarine and an extended core life planned
    for the next generation aircraft carrier.
        In summary, there is an effective synergy between the
    NNSA's weapons activities and nonproliferation activities. For
    example, we have dismantled more than 13,000 weapons since
    1988. Plans are operationally deployed, United States, Russian,
    and strategic nuclear warheads will not exceed 1,700 to 2,200
    by December 2012. In 2003, the Department of Energy completed
    dismantlement of most nonstrategic nuclear warhead, nuclear
    weapons, limiting our stockpile of these systems to less than
    one-tenth of cold war levels.
        In 2004, President Bush approved a plan that will cut the
    U.S. stockpile by almost one-half from the 2001 level. And, by
    the end of 2012, the Department's efforts will have reduced the
    stockpile to its smallest level in several decades. In addition
    to weapons dismantlement, the Department is making tremendous
    progress to reduce and eliminate fissile material made surplus
    to defense requirements.

                               PREPARED STATEMENT

        I'm confident the NNSA is heading in the right direction in
    the coming fiscal year. This concludes my statement and I look
    forward to your questions.
        Thank you, Mr. Chairman.
        [The statement follows:]

                Prepared Statement of Hon. Thomas P. D'Agostino

        Thank you for the opportunity to discuss the President's fiscal
    year 2008 budget request for the National Nuclear Security
    Administration (NNSA). This is my first appearance before this
    committee as the Acting Under Secretary for Nuclear Security and NNSA
    Administrator, and I want to thank all of the members for their strong
    support for our vital national security missions.
        In the 7th year of this administration, with the strong support of
    Congress, NNSA has achieved a level of stability that is required for
    accomplishing our long-term missions. Our fundamental national security
    responsibilities for the United States include:
      --assuring the safety, security and reliability of the U.S. nuclear
            weapons stockpile while at the same time transforming the
            stockpile and the infrastructure that supports it;
      --reducing the threat posed by nuclear proliferation; and
      --providing reliable and safe nuclear reactor propulsion systems for
            the U.S. Navy.
        The fiscal year 2008 budget request for $9.4 billion, an increase
    of $306 million from the fiscal year 2007 operating plan, supports the
    crucial missions to ensure the Nation's nuclear security.

                               WEAPONS ACTIVITIES

        Stockpile Stewardship is working--the nuclear weapons stockpile
    remains safe, secure and reliable. Throughout the past decade, the
    Stockpile Stewardship Program (SSP) has proven its ability to
    successfully sustain the safety, security and reliability of the
    nuclear arsenal without resorting to underground nuclear testing. The
    SSP also enables the United States to provide a credible strategic
    deterrent capability with a stockpile that is significantly smaller. To
    assure our ability to maintain essential military capabilities over the
    long-term, however, and to enable significant reductions in reserve
    warheads, we must make progress towards a truly responsive nuclear
    weapons infrastructure as called for in the Nuclear Posture Review
    (NPR). The NPR called for a transition from a threat-based nuclear
    deterrent, with large numbers of deployed and reserve weapons, to a
    deterrent that is based on capabilities, with a smaller nuclear weapons
    stockpile and greater reliance on the capability and responsiveness of
    the Department of Defense (DOD) and NNSA infrastructure to adapt to
    emerging threats.
        To meet these objectives, we developed a transformation vision and
    strategy, the cornerstones of which are Complex 2030 and the Reliable
    Replacement Warhead (RRW). We are boldly moving forward to implement
    this strategy now, bringing us closer to achieving an even smaller
    stockpile, one that is safer and more secure, one that offers a reduced
    likelihood that we will ever again need to conduct an underground
    nuclear test, and ultimately, one that enables a much more responsive
    nuclear weapons infrastructure.
        Over the next several years, our performance will not only be
    measured by the success of our continuing efforts to maintain the
    nuclear stockpile, but also, by the success of our efforts to plan and
    achieve a truly responsive nuclear weapons infrastructure for the long-
    term strategic needs of the Nation. What do we mean by ``responsive
    nuclear weapons infrastructure?'' By ``responsive'' we refer to the
    resilience of the nuclear enterprise to unanticipated events or
    emerging threats, and the ability to anticipate innovations by an
    adversary and to counter them before our deterrent is degraded.
    Unanticipated events could include complete failure of a deployed
    warhead type or the need to respond to new and emerging geopolitical
    threats.
        The elements of a responsive infrastructure include the people, the
    science and technology base, the facilities and equipment to support a
    right-sized nuclear weapons enterprise as well as practical and
    streamlined business practices that will enable us to respond rapidly
    and flexibly to emerging needs. More specifically, a responsive
    infrastructure must provide proven and demonstrable capabilities, on
    appropriate timescales, and in support of national security
    requirements.
        We are focused on four implementing strategies to achieve our
    transformational objectives: (1) transform to a modernized, more cost-
    effective safe and secure complex; (2) transform the nuclear stockpile
    in partnership with the DOD; (3) create a fully integrated and
    interdependent complex; and, (4) drive the science and technology base
    essential for long-term national security.
        We are taking many concrete steps today to make this transformation
    vision a reality. The completion of a Supplemental Programmatic
    Environmental Impact Statement (PEIS) for Complex 2030 in accordance
    with the National Environmental Policy Act (NEPA) will mark the most
    significant of these steps. Although the original notice of intent for
    the PEIS did not include a Consolidated Nuclear Production Center
    (CNPC), we have determined that it is important to include this concept
    as an alternative to be evaluated in the draft PEIS. The scoping period
    concluded in January 2007, and a Record of Decision for the future
    configuration of the Complex is anticipated in 2008. While we await the
    results of the NEPA process, many actions to transform the stockpile,
    transform the operation of the Complex, and drive the science and
    technology base are already well underway. Specifically, we are:
      --Reducing the number of sites with Category I/II special nuclear
            material (SNM) and consolidating such material within the
            remaining sites. This process has begun with the initial
            shipment in 2006 of plutonium from Lawrence Livermore National
            Laboratory (LLNL) and the removal of Category I/II material
            from Los Alamos National Laboratory (LANL) Technical Area 18.
            Within the next 5 years, we expect to eliminate the need for
            Category I/II SNM security at Sandia National Laboratory (SNL).
      --Dramatically accelerating the dismantlement of retired weapons. The
            Pantex Throughput Improvement Program has resulted in a
            significant improvement in throughput and we expect our
            dismantlement rate for fiscal year 2007 to exceed that of
            fiscal year 2006 by nearly 50 percent. Additional activities
            are also underway to increase the rate at which weapons can be
            dismantled and dispositioned at Y-12.
      --Reconstituting the Nation's nuclear weapon production capability by
            implementing our plans to ramp up to 30-50 pits per year at
            LANL by 2012.
      --Reviving our ability to extract tritium for use in the stockpile at
            the new Tritium Extraction Facility at the Savannah River Site
            (SRS).
      --Developing a weapons program Science and Technology roadmap to
            define the full set of capabilities needed to sustain the
            future stockpile.
      --Streamlining and improving business practices by adding multi-site
            incentives to current contracts, enhancing line management
            structures to strengthen accountability, consolidating facility
            organizations and establishing a systems integration structure.
        To foster confidence in the transformation process and to ensure
    that the Complex remains focused on meeting our current commitments, we
    established a ``Getting the Job Done'' list for the nuclear weapons
    complex in April 2006. By January 2007, the following commitments were
    complete: (1) delivering B61-7 and B61-11 Alt 357 Life Extension
    Program (LEP) first production units; (2) delivering the full
    capability of the Advanced Simulation and Computing Purple Machine; (3)
    updating pit lifetime estimates; (4) supporting the Nuclear Weapons
    Council (NWC) decision in November 2006 to proceed with the RRW
    strategy; and (5) extracting tritium for use in the stockpile at the
    new Tritium Extraction Facility.
        The weapons complex is also on track to fulfill the remaining
    fiscal year 2007 commitments of: (1) continuing to deliver our products
    (e.g., limited life components) to DOD; (2) eliminating the backlog of
    surveillance units consistent with an enhanced evaluation strategy
    (except the W84 and W88); (3) accelerating the dismantlement of retired
    weapons in fiscal year 2007 by 50 percent; (4) delivering the W76-1 LEP
    first production unit; and (5) certifying the W88 with a new pit and
    manufacturing 10 W88 pits in fiscal year 2007. Delivery on these and
    future near-term commitments during transformation of the weapons
    complex is essential to the continued safety, security and reliability
    of the stockpile.
        Another area where we are making tremendous progress to transform
    the Complex is in our efforts to secure nuclear weapons, weapons-usable
    materials, information, and infrastructure from theft, compromise or
    harm. We established and staffed within the Office of Defense Nuclear
    Security, a Program Evaluation Office to ensure the effectiveness of
    both our implemented security programs and security line management
    oversight. Additionally, we have met the requirements of the 2003
    Design Basis Threat and are firmly on track to meet the requirements of
    the 2005 DBT at all sites by fiscal year 2011. We are also rapidly
    improving our cyber security standards and practices. As the committee
    is aware, we recently experienced a major cyber security incident at
    LANL. While this incident has highlighted some additional areas for
    improvement, NNSA has been vigorously implementing measures over the
    last 2 years to strengthen the cyber security posture across the
    Complex. We are strongly committed to and are actively addressing the
    issues identified by the LANL incident and applying the lessons learned
    complex-wide. Sustaining and improving the security of the nuclear
    weapons complex is an integral component of NNSA's core mission, and
    thus represents one of our highest priorities.
        As we continue to draw down the stockpile, we have become concerned
    that our current path--successive refurbishments of existing warheads
    developed during the cold war and to stringent cold war
    specifications--may pose an unacceptable risk to maintaining high
    confidence in system performance over the long-term. Specifically, the
    directors of our nuclear weapons laboratories have raised concerns
    about their ability to assure the reliability of the legacy stockpile
    over the very long-term absent nuclear testing. Our DOD partners share
    these concerns. The evolution away from tested designs through a LEP
    approach, resulting from inevitable accumulations of small changes over
    the extended lifetimes of these highly optimized systems, is what gives
    rise to these concerns.
        Our decision to embark on the path to an RRW does not result from a
    failure of the stockpile stewardship program, as some have suggested,
    but is a reflection of its success. The SSP has revealed the need to
    pursue this new RRW path. Moreover, aggressive pursuit of the new
    scientific tools currently in use and being developed under the SSP is
    essential, not only to sustain existing warheads as long as they are
    needed, but to our efforts to design, develop and produce replacement
    warheads that are safer, more reliable, and cost-effective over the
    long term without nuclear testing.
        We are pursuing the RRW strategy to ensure the long-term
    sustainment of the military capabilities provided by warheads in the
    existing stockpile, not to develop warheads for new or different
    military missions. Another major driver for the RRW approach was the
    realization after 9/11 that the security threat to our nuclear
    stockpile had fundamentally changed. The security features in today's
    stockpile are commensurate with technologies that were available during
    the cold war and with the threats facing the United States at that
    time. Major enhancements in security are not readily available through
    system retrofits via the LEP approach.
        We believe that features of the RRW concept will serve as the key
    ``enabler'' for achieving a smaller, more efficient and responsive
    infrastructure and opportunities for a smaller stockpile. The RRW will
    relax cold war design constraints that maximized yield to weight ratios
    and thereby allows us to design replacement components that are easier
    to manufacture, are safer and more secure, eliminate environmentally
    dangerous materials, and increase design margins, thus ensuring long-
    term confidence in reliability. Moving forward with the RRW program
    will further allow us to take advantage of the scientists and engineers
    who are retiring soon and who possess the unique skills and experience
    of designing, developing, and producing nuclear weapons.
        Moreover, the benefits of the RRW approach reinforce our
    nonproliferation commitments and objectives. Because these warheads
    would be designed with more favorable performance margins, and be less
    sensitive to incremental aging effects, they would reduce the
    possibility that the United States would ever be faced with a need to
    conduct a nuclear test to diagnose or remedy a stockpile reliability
    problem. This will bolster efforts to dissuade other countries from
    testing. Moreover, once a transformed production complex demonstrates
    that it can produce replacement warheads on a timescale in which
    geopolitical threats could emerge, or respond in a timely way to
    technical problems in the stockpile, then we can eliminate many spare
    warheads, reducing further the nuclear stockpile. The RRW strategy will
    allow us to increase our warhead dismantlement rate, sending a strong
    message to the world that we are taking meaningful steps towards
    further stockpile reductions. Additionally, increased confidence in the
    U.S. nuclear deterrent will assure allies and obviate any need for them
    to develop and field their own nuclear forces. Finally, the improved
    security features of RRW will prevent unauthorized use should a warhead
    ever fall into the hands of terrorists.
        On November 30, 2006, the NWC established the feasibility of the
    RRW program as a long-term strategy for maintaining a safe, secure and
    credible nuclear deterrent. On March 2, 2007, the Nuclear Weapons
    Council (NWC) approved a design for a joint NNSA and U.S. Navy program
    to provide a replacement warhead for a portion of the Nation's sea-
    based nuclear weapons. We have begun the process for the RRW design
    definition and cost study, the results of which will inform the
    decisionmaking process within the administration and Congress as to
    whether to proceed to the next phase, engineering development.

                            NUCLEAR NONPROLIFERATION

        Acquisition of nuclear weapons, weapons of mass destruction (WMD)
    capabilities, technologies, and expertise by rogue states or terrorists
    stands as one of the most potent threats to the United States and
    international security. The continued pursuit of nuclear weapons by
    terrorists and states of concern underscores the urgency of NNSA's
    efforts to secure vulnerable nuclear weapons and weapons-usable nuclear
    materials, to improve capabilities to detect and interdict nuclear
    weapons or materials, to halt the production of fissile material, and
    ultimately, to dispose of surplus weapons-usable materials. The fiscal
    year 2008 budget request will enable NNSA to continue the activities
    that support these crucial threat reduction initiatives.
        Preventing access to nuclear weapons and material has many
    dimensions. Our number one highest priority is to keep these dangerous
    materials out of the hands of the world's most dangerous actors. Absent
    access to sufficient quantities of key fissile materials, there can be
    no nuclear weapon. Much of our emphasis has focused on Russia because
    that is where most of the poorly secured material was located. We have
    made remarkable progress cooperating with Russia to strengthen
    protection, control, and accounting of its nuclear weapons and
    materials. Meeting our commitment under the Bratislava Joint Statement
    to conclude security upgrade activities at Russian nuclear sites by the
    end of 2008 will be our chief priority in fiscal year 2008. As a result
    of our efforts to accelerate this work in the wake of 9/11 and the
    momentum created by the Bratislava process, we are well-positioned to
    reach this significant milestone on schedule. Although our direct
    upgrade efforts are drawing to a close after over a decade of work, we
    will continue to work cooperatively with Russia to ensure the long-term
    sustainability of the systems and procedures we have implemented.
        Not all nuclear material of concern is located in Russia. We are
    working with other partners to secure weapons-usable nuclear materials
    worldwide and to strengthen security at civil nuclear facilities. One
    area of concern is research reactors, which often use a highly enriched
    uranium (HEU) fuel suitable for bombs. Our Global Threat Reduction
    Initiative (GTRI) seeks to convert research reactors worldwide from HEU
    to low enriched uranium (LEU) fuel and further to repatriate U.S. and
    Russian-supplied HEU from these facilities to its country of origin. A
    major accomplishment was the return of 268 kilograms of Soviet-origin
    HEU from Germany to Russia, where it will be down blended to LEU fuel.
    This repatriation operation represents the largest shipment of Soviet-
    origin HEU conducted to date under the GTRI.
        We are taking aggressive steps to interdict weapons-usable nuclear
    materials and to prevent dissemination of nuclear related technology
    via strengthened export controls and improved international
    cooperation. As a complement to improving physical security, the Second
    Line of Defense Program works to enhance our foreign partners' ability
    to interdict illicit trafficking in nuclear materials. Under this
    program, we deploy radiation detection systems at high-risk land-border
    crossings, airports and seaports, increasing the likelihood of
    interdiction of diverted nuclear materials entering or leaving the
    country.
        The Megaports Initiative, established in 2003, responds to concerns
    that terrorists could use the global maritime shipping network to
    smuggle fissile materials or warheads. By installing radiation
    detection systems at major ports throughout the world, this initiative
    strengthens the detection and interdiction capabilities of our partner
    countries.
        To prevent the diffusion of critical technologies, we are training
    front line customs officers around the world. We are working to
    implement U.N. Security Council Resolution 1540, which establishes a
    requirement to criminalize proliferation involving non-state actors and
    encourages states to strengthen export control laws and improve
    enforcement. Because keeping terrorists from acquiring materials will
    be easier if we limit enrichment of uranium or reprocessing of spent
    fuel, the President proposed in 2004 a new initiative, the Global
    Nuclear Energy Partnership (GNEP), which would provide nations which
    refrain from developing or deploying enrichment and reprocessing
    technology assured access to the benefits of nuclear power.
        These are critical steps but they alone cannot address the problem.
    Indeed, there is enough fissile material in the world today for tens of
    thousands of weapons. An integral part of our strategy, therefore, has
    been to induce other states to stop producing materials for nuclear
    weapons, as the United States did many years ago. We recently tabled a
    draft treaty at the Conference on Disarmament in Geneva to do just
    that. We also supplement international diplomatic efforts with
    bilateral programs. For example, Russia still produces weapons-grade
    plutonium, not because it needs it for weapons, but because the
    reactors that produce it also supply heat and light to local
    communities. We are replacing these reactors with fossil fuel plants.
    By 2008, two of the existing three plutonium-producing reactors in
    Russia will shut down permanently, with the third shut down by 2010.
        As previously indicated, there are a number of effective synergies
    between NNSA's weapons activities and our nuclear nonproliferation
    objectives. For example, we are disposing of the substantial quantities
    of surplus weapons grade material that resulted from the thousands of
    warheads that we have dismantled by down-blending it to lower
    enrichment levels suitable for use in commercial reactors. We are also
    working with Russia to eliminate Russian HEU. Under the HEU Purchase
    Agreement, nearly 300 metric tons of uranium from Russia's dismantled
    nuclear weapons--enough material for more than 11,000 nuclear weapons--
    has been down-blended for use in commercial reactors in the United
    States. Nuclear power generates 20 percent of American electricity and
    half of that is generated by fuel derived from Russian HEU. As a
    result, one-tenth of the U.S. electrical energy need is powered by
    material removed from former Soviet nuclear weapons. In addition to the
    efforts on HEU, the United States and Russia have each committed to
    dispose of 34 metric tons of surplus weapon-grade plutonium.
        If we are to encourage responsible international actions, the
    United States must set the example. We have dramatically improved
    physical security of U.S. nuclear weapons and weapons usable materials
    in the years since the attacks of 9/11. We recently withdrew over 200
    metric tons of HEU from any further use as fissile material in nuclear
    weapons, a portion of which will be devoted to powering our nuclear
    navy for the next 50 years, obviating the need over that period for
    high-enrichment of uranium for any military purpose. Seventeen tons
    will be blended down and set aside as an assured fuel supply as part of
    global efforts to limit the spread of enrichment and reprocessing
    technology.
        The risk of nuclear terrorism is not limited to the United States
    and the success of our efforts to deny access to nuclear weapons and
    material is very much dependent on whether our foreign partners share a
    common recognition of the threat and a willingness to combat it. Last
    July, just before the G-8 summit, Presidents Bush and Putin announced
    the Global Initiative to Combat Nuclear Terrorism to strengthen
    cooperation worldwide on nuclear materials security and to prevent
    terrorist acts involving nuclear or radioactive substances. Paired with
    U.N. Security Council Resolution 1540, we now have both the legal
    mandate and the practical means necessary for concrete actions to
    secure nuclear material against the threat of diversion.

                                 NAVAL REACTORS

        Also contributing to the Department's national security mission is
    the Naval Reactors Program, whose mission is to provide the U.S. Navy
    with safe, militarily effective nuclear propulsion plants and ensure
    their continued safe, reliable and long-lived operation. Nuclear
    propulsion enhances our warship capabilities by providing the ability
    to sprint where needed and arrive on station, ready to conduct
    sustained combat operations when America's interests are threatened.
    Nuclear propulsion plays a vital role in ensuring the Navy's forward
    presence and its ability to project power anywhere in the world.
        The Naval Reactors Program has a broad mandate, maintaining
    responsibility for nuclear propulsion from cradle to grave. Over 40
    percent of the Navy's major combatants are nuclear-powered, including
    aircraft carriers, attack submarines, and strategic submarines, which
    provide the Nation's most survivable deterrent.

                   FISCAL YEAR 2008 BUDGET REQUEST BY PROGRAM

        The President's fiscal year 2008 budget request for NNSA totals
    $9.4 billion, an increase of $306 million or 3.4 percent over the
    fiscal year 2007 operating plan. We are managing our program activities
    within a disciplined 5-year budget and planning envelope, and are
    successfully balancing the administration's high priority initiatives
    to reduce global nuclear danger as well as future planning for the
    Nation's nuclear weapons complex within an overall modest growth rate.
        The NNSA budget justification contains information for 5 years as
    required by sec. 3253 of Public Law 106-065. This section, entitled
    Future Years Nuclear Security Program, requires the Administrator to
    submit to Congress each year the estimated expenditures necessary to
    support the programs, projects and activities of the NNSA for a 5-year
    fiscal period, in a level of detail comparable to that contained in the
    budget.
        The fiscal year 2008-2012 Future Years Nuclear Security Program--
    FYNSP--projects $50 billion for NNSA programs though 2012. This is an
    increase of about $1.5 billion over last year's projections in line
    with the administration's strong commitment to the Nation's defense and
    homeland security. The fiscal year 2008 request is slightly smaller
    than last year's projection; however, the outyears are increased
    starting in 2009. Within these amounts, there is significant growth
    projected for the Defense Nuclear Nonproliferation programs to support
    homeland security, including new initiatives and acceleration of threat
    reduction programs and increased inspection of seagoing cargoes
    destined for ports in the United States.

                           WEAPONS PROGRAM ACTIVITIES

        The fiscal year 2008 budget request for the programs funded within
    the Weapons Activities Appropriation is $6.51 billion, an approximately
    3.8 percent increase over the fiscal year 2007 operating plan. It is
    allocated to adequately provide for the safety, security, and
    reliability of the nuclear weapons stockpile and supporting facilities
    and capabilities.
        This request supports the requirements of the SSP consistent with
    the administration's NPR and subsequent amendments, and the revised
    stockpile plan submitted to the Congress in June 2004. Our request
    places a high priority on accomplishing the near-term workload and
    supporting technologies for the stockpile along with the long-term
    science and technology investments to ensure the design and production
    capability and capacity to support ongoing missions. This request also
    supports the facilities and infrastructure that must be modernized to
    be responsive to new or emerging threats.
        The Department has made significant strides over the past year to
    transform the nuclear weapons complex. The ``Complex 2030'' planning
    scenario was introduced in 2006 and has already resulted in a number of
    accomplishments. We have not created a separate budget line for our
    transformational activities in the fiscal year 2008 President's
    Request. Implementation actions to bring about transformation are
    incorporated into existing program elements: Directed Stockpile Work
    (DSW), Campaigns, Readiness in Technical Base and Facilities (RTBF),
    and Secure Transportation Asset. The approach to transformation relies
    extensively on existing line program organizations taking
    responsibility for individual actions required to change both the
    stockpile and its supporting infrastructure. While the administration
    continues to assess the plans and funding projections for certain
    elements of NNSA's complex transformation strategy, this budget
    contains resources to support a number of transformational initiatives
    underway within our base program activities.
        In fiscal year 2008, we are requesting $1.45 billion for DSW, an
    increase of $21.5 million over the fiscal year 2007 operating plan. We
    will continue an aggressive dismantlement plan for retired warheads and
    consolidation of special nuclear material across the nuclear weapons
    complex. Both of these efforts will contribute to increasing the
    overall security at NNSA sites. In fiscal year 2007, funding was
    increased to cover upfront costs associated with tooling procurement,
    procedure development, Safety Authorization Basis work, hiring of
    production technicians, and equipment purchases, which will support
    future-year dismantlement rates. The fiscal year 2008 request reflects
    the required funding to support the planned dismantlement rates
    reported to Congress. Funding at higher levels was unnecessary once the
    dismantlement process was improved with fiscal year 2005 and fiscal
    year 2006 funding. In May 2006, the NWC directed that the W80 LEP be
    deferred to support NNSA efforts to transform the nuclear weapons
    complex and continue work on a RRW. At the same time, the B61 and W76
    LEP workloads are increasing, since they both will have entered the
    production phase by fiscal year 2008. DSW also supports routine
    maintenance and repair of the stockpile and supports managing the
    strategy, driving the change, and performing the crosscutting
    initiatives required to achieve responsiveness objectives envisioned in
    the NPR. Our focus remains on the stockpile, to ensure that the nuclear
    warheads and bombs in the U.S. nuclear weapons stockpile are safe,
    secure, and reliable.
        Progress in other elements of the SSP continues. The fiscal year
    2008 request for the six Campaigns is $1.87 billion, a $113 million
    decrease from the fiscal year 2007 operating plan. The decrease in
    program funding is required to balance overall weapon activity
    priorities, specifically the transition of the W76 LEP from R&D to
    production, the consolidation of computing facilities, and a large
    decrease in Readiness Campaign activities associated in part to the
    transition of Tritium Extraction Facility to full operations. The
    Campaigns focus on scientific and technical efforts and capabilities
    essential for assessment, certification, maintenance, and life
    extension of the stockpile and have allowed NNSA to continue ``science-
    based'' stockpile stewardship. These Campaigns are evidence of NNSA's
    excellence and innovation in science, engineering and computing that,
    though focused on the nuclear weapons mission, have broader application
    and value. The use of DOE Office of Science facilities in supporting
    Stockpile Stewardship science and engineering will increase modestly at
    the same time that access to NNSA's science facilities is extended to a
    broader community of users.
        Specifically, $425.8 million for the Science and Engineering
    Campaigns provides the basic scientific understanding and the
    technologies required to support DSW and the completion of new
    scientific and experimental facilities in the absence of nuclear
    testing.
        The Readiness Campaign, with a request of $161.2 million, develops
    and delivers design-to-manufacture capabilities to meet the evolving
    and urgent needs of the stockpile and supports the transformation of
    the nuclear weapons complex into an agile and more responsive
    enterprise. In February 2007, startup of the Tritium Extraction
    Facility at the Savannah River Site was completed, making possible the
    use of new tritium in the U.S. stockpile for the first time in 18
    years.
        The Advanced Simulation and Computing (ASC) Campaign is a key
    example of NNSA excellence and innovation in science and engineering,
    establishing world leadership in computational simulation sciences with
    broad application to national security. The request of $585.7 million
    for the ASC Campaign supports the development of computational tools
    and technologies necessary to support the continued assessment and
    certification of the refurbished weapons, aging weapons components, and
    the RRW program without underground nuclear testing. As we enhance and
    validate the predictive science capabilities embodied in these tools,
    using the historical test base of more than 1,000 cold war era nuclear
    tests to computer simulations, we can continue to assess the stockpile
    to ensure that it is safe, secure, and reliable.
        The $412.3 million request for the Inertial Confinement Fusion
    Ignition and High Yield Campaign is focused on the execution of the
    first ignition experiment at the National Ignition Facility (NIF) in
    2010, and provides facilities and capabilities for high-energy-density
    physics experiments in support of the SSP. To achieve the ignition
    milestone, $147 million will support construction of NIF and the NIF
    Demonstration Program and $232.2 million will support the National
    Ignition Campaign. The ability of NIF to assess the thermonuclear burn
    regime in nuclear weapons via ignition experiments is of particular
    importance. NIF will be the only facility capable of probing in the
    laboratory the extreme conditions of density and temperature found in
    exploding nuclear weapons.
        NIF will join the Z pulsed-power machine at Sandia National
    Laboratories and the Omega Laser at University of the Rochester's
    Laboratory for Laser Energetics as world leading facilities in
    providing quantitative measurements that close important gaps in
    understanding nuclear weapons performance. NIF, Omega, and Z are
    complementary in their capabilities, allowing scientists from both
    inside and outside the nuclear weapons complex to contribute to a
    better understanding of the high energy density physics of nuclear
    warheads. NIF will provide the only access in the world to
    thermonuclear ignition conditions and the Omega laser with its
    symmetric illumination and very high repetition rate provides a large
    amount of quantitative information. The Z facility is especially suited
    for accurate measurement of materials properties that are crucial to
    weapons performance. These facilities will be operated as national user
    facilities in order to obtain the best return on investment and maximum
    contribution to the Stockpile Stewardship mission.
        The Pit Manufacturing and Certification Campaign request of $281
    million builds on the success of manufacturing and certifying a new W88
    pit in 2007 and addresses issues associated with manufacturing future
    pit types including the RRW and increasing pit production capacity at
    LANL. There are plans to increase pit production capacity at LANL to
    meet national security needs. LANL is not only an interim capability
    for pit manufacturing at the present time, but it serves as the United
    States' sole capability. We continue to be the only nuclear weapon
    state without a true manufacturing capability.

     READINESS IN TECHNICAL BASE AND FACILITIES (RTBF) AND FACILITIES AND
                 INFRASTRUCTURE RECAPITALIZATION PROGRAM (FIRP)

        In fiscal year 2008, we are requesting $1.96 billion for the
    maintenance and operation of existing facilities, remediation and
    disposition of excess facilities, and construction of new facilities.
    Of this amount, $1.66 billion is requested for RTBF, an increase of $49
    million from the fiscal year 2007 operating plan, with $1.36 billion
    reserved for Operations and Maintenance and $307 million for RTBF
    Construction. Some new facility construction (e.g., NIF, MESA, TEF, and
    DARHT) is budgeted in applicable Campaigns.
        This request also includes $293.7 million for the Facilities and
    Infrastructure Recapitalization Program (FIRP), a separate and distinct
    program that is complementary to the ongoing RTBF efforts. The FIRP
    mission is to restore, rebuild and revitalize the physical
    infrastructure of the nuclear weapons complex, in partnership with
    RTBF. This program assures that facilities and infrastructure are
    restored to an appropriate condition to support the mission, and to
    institutionalize responsible and accountable facility management
    practices. In response to NNSA's request, Congress extended the FIRP
    end date from 2011 to 2013 to enable successful completion of the FIRP
    mission. The Integrated Prioritized Project List (IPPL) is the vehicle
    that the FIRP program will rely on to prioritize and fund outyear
    projects to reduce legacy deferred maintenance. These projects
    significantly reduce the deferred maintenance backlog to acceptable
    levels and support the SSP mission and transformation of the complex.
        These activities are critical for the development of a more
    responsive infrastructure and will be guided by decisions resulting
    from the Complex 2030 Supplemental Programmatic Environmental Impact
    Statement and the National Environmental Policy Act (NEPA) process.
    Since a significant fraction of our production capability resides in
    World War II era facilities, infrastructure modernization,
    consolidation, and sizing consistent with future needs is essential for
    an economically sustainable Complex. Facilities designed according to
    modern manufacturing, safety, and security principles will be more
    cost-effective and responsive to a changing future. For example, a
    facility could be designed to support a low baseline capacity and
    preserve the option, with a limited amount of contingent space, to
    augment capacity if authorized and needed to respond to future risks.
        Having a reliable plutonium capability is a major objective of NNSA
    planning. Options for plutonium research, surveillance, and pit
    production are being evaluated as part of the Complex 2030 NEPA process
    with a Record of Decision anticipated in 2008. The baseline Complex
    2030 planning scenario relies on Los Alamos National Laboratory
    facilities at Technical Area 55 to provide interim plutonium
    capabilities until a consolidated, long-term capability can be
    established. This interim strategy relies on the proposed Chemistry and
    Metallurgy Research Replacement-Nuclear Facility (CMRR-NF) to achieve
    all the objectives of (1) closing the existing Chemistry and Metallurgy
    Research (CMR) facility, (2) replacing essential plutonium capabilities
    currently at Lawrence Livermore National Laboratory, and (3) achieving
    a net manufacturing capacity of 50 pits per year. However, the
    increasing cost of the CMRR-NF and the need to ensure that near- and
    long-term planning for plutonium facilities are integrated requires
    that we complete our Complex 2030 decision process before committing to
    construction of the CMRR-NF. Since the CMRR Radiological Laboratory,
    Utility, and Office Building (CMRR-RLUOB) is required under all
    scenarios, this project will proceed as planned.
        The Highly Enriched Uranium Materials Facility (HEUMF) and the
    proposed Uranium Processing Facility (UPF) will allow a reduction of
    the high security area at the Y-12 National Security Complex from 150
    acres to 15 acres. This reduction will combine with the engineered
    security features of the two structures to meet the DBT at
    significantly reduced costs, to lower non-security costs, and to
    provide a responsive highly enriched uranium manufacturing capability.
    UPF planning is consistent with the timing of decisions from the
    Complex 2030 PEIS process.

                          SECURE TRANSPORTATION ASSET

        In fiscal year 2008, the budget request includes $215.6 million for
    Secure Transportation Asset (STA) Program, an increase of $6 million
    from the fiscal year 2007 operating plan, for meeting the Department's
    transportation requirements for nuclear weapons, components, and
    special nuclear materials shipments. The workload requirements for this
    program will escalate significantly in the future to support the
    dismantlement and maintenance schedule for the nuclear weapons
    stockpile and the Secretarial Initiative to consolidate the storage of
    nuclear material. The challenge to increase secure transport capacity
    is coupled with and impacted by increasingly complex national security
    concerns. To support the escalating workload while maintaining the
    safety and security of shipments, STA is increasing the number of
    SafeGuards Transporters (SGT) in operation by 2 per year, with a target
    total of 51 in fiscal year 2014. Due to resource constraints, SGT
    production has been slowed from three to 2 per year, extending the
    original 2011 endpoint target date.

                     ENVIRONMENTAL PROJECTS AND OPERATIONS

        The Environmental Projects and Operations/Long-Term Stewardship
    Program is requested at $17.5 million in fiscal year 2008. This program
    serves to reduce the risks to human health and the environment at NNSA
    sites and adjacent areas by: operating and maintaining environmental
    clean-up systems; performing long-term environmental monitoring
    activities; and, integrating a responsible environmental stewardship
    program with the NNSA mission activities.

                       NUCLEAR WEAPONS INCIDENT RESPONSE

        The Nuclear Weapons Incident Response (NWIR) Program responds to
    and mitigates nuclear and radiological incidents worldwide as the
    United States Government's primary capability for radiological and
    nuclear emergency response. The fiscal year 2008 request for these
    activities is $161.7 million, of which $28 million is reserved for the
    implementation of two new initiatives that will strengthen the Nation's
    emergency response capabilities--the National Technical Nuclear
    Forensics (NTNF) and the Stabilization Implementation programs.
        The National Technical Nuclear Forensics Program will establish a
    DOE capability to support post-detonation activities and enhance DOE
    Technical Nuclear Forensics capabilities. The development of this
    capability will facilitate the thorough analysis and characterization
    of pre- and post-detonation radiological and nuclear materials and
    devices as well as prompt signals from a nuclear detonation. Developing
    forensic capabilities of this nature is crucial to the overall
    objective of nuclear material or device attribution.
        Stabilization is a new concept and a new capability aimed at using
    advanced technologies to enhance the U.S. Government's ability to
    interdict, delay and/or prevent operation of a terrorist's radiological
    or nuclear device until national assets arrive on the scene to conduct
    traditional ``render safe'' procedures. NNSA has actively sponsored new
    research in this area and, additionally, is leveraging emerging
    technologies that have been demonstrated successfully by the DOD in
    support of the global war on terrorism. In the implementation phase,
    NNSA will transfer these matured projects into operational testing,
    potentially followed by their transition into the collection of tools
    available to Federal response teams.

                            SAFEGUARDS AND SECURITY

        The fiscal year 2008 request for Defense Nuclear Security is $744.8
    million, an increase of $121 million above the fiscal year 2007
    operating plan. This increase will accommodate the increased cost of
    sustaining the implementation of the 2003 DBT and the phased
    implementation of the 2005 DBT in 2008 and the outyears. Full
    implementation of the 2005 DBT will occur at: the Pantex Plant in
    fiscal year 2008; Lawrence Livermore National Laboratory in fiscal year
    2008; the Nevada Test Site in fiscal year 2009; the Y-12 National
    Security Complex in fiscal year 2011; and, LANL in fiscal year 2011.
    During fiscal year 2008, the program's efforts will largely be focused
    on eliminating or mitigating identified vulnerabilities across the
    nuclear weapons complex by bolstering protective force training,
    acquiring updated weapons and support equipment, improving physical
    barrier systems and standoff distances, and reducing the number of
    locations with ``targets of interest.'' Physical security systems will
    be upgraded and deployed to enhance detection and assessment, add delay
    and denial capabilities, and to improve perimeter defenses at several
    key sites.
        The fiscal year 2008 request for Cyber Security of $102.2 million
    is focused on sustaining the NNSA infrastructure and upgrading elements
    designed to counter cyber threats and vulnerabilities from external and
    internal attacks. This funding level will support cyber security
    revitalization, identify emerging issues, including research needs
    related to computer security, privacy, and cryptography. Additionally,
    the funding will provide for enhancement, certification, and
    accreditation of unclassified and classified systems to ensure proper
    documentation of risks and justification of associated operations for
    systems at all sites. The funding within this request will also be
    applied to foster greater cyber security awareness among Federal and
    contractor personnel. NNSA will sponsor a wide range of educational
    initiatives to ensure that our workforce possess the ever-expanding
    cyber security skills critical to safeguarding our national security
    information. Funding provided to NNSA sites will be conditioned upon
    their implementation of a risk-based approach to cyber security.

                        DEFENSE NUCLEAR NONPROLIFERATION

        The Defense Nuclear Nonproliferation Program mission is to detect,
    prevent, and reverse the proliferation of weapons of mass destruction
    (WMD). Our nonproliferation programs address the danger that hostile
    nations or terrorist groups may acquire weapons-usable material, dual-
    use production or technology, or WMD capabilities. The fiscal year 2008
    request for these programs totals $1.673 billion, a slight decrease
    from the fiscal year 2007 operating level. This reduction is the result
    of NNSA achieving and approaching important milestones in our nuclear
    security work in Russia, including the completion of major security
    upgrades at several sites under the Material Protection, Control, and
    Accounting (MPC&A) Program and the anticipated end of construction of a
    fossil fuel plant in Seversk by the end of calendar year 2008 under the
    Elimination of Weapons Grade Plutonium Production (EWGPP) Program.

                       GLOBAL THREAT REDUCTION INITIATIVE

        The administration's fiscal year 2008 request of $119 million for
    the Global Threat Reduction Initiative (GTRI) is an increase of $4
    million over the fiscal year 2007 operating plan. The GTRI reduces the
    risk of terrorists acquiring nuclear and radiological materials for an
    improvised nuclear or radiological dispersal device by working at
    civilian sites worldwide to: (1) convert reactors from the use of WMD-
    usable HEU to LEU; (2) remove or dispose of excess WMD-usable nuclear
    and radiological materials; and (3) protect at-risk WMD-usable nuclear
    and radiological materials from theft and sabotage until a more
    permanent threat reduction solution can be implemented. Specific
    increases in the GTRI budget reflect, for example, the serial
    production and delivery of 27 100-ton casks for transportation and
    long-term storage of 10,000 kg of HEU and 3,000 kg of plutonium removed
    from the BN-350 reactor site in Kazakhstan.

               INTERNATIONAL MATERIAL PROTECTION AND COOPERATION

        NNSA's International Material Protection and Cooperation fiscal
    year 2008 budget request of $372 million is a decrease of $101 million
    from the fiscal year 2007 operating plan. This decrease reflects the
    successful completion of nuclear security upgrade work at Russian
    Strategic Rocket Forces and Russian Navy sites. International material
    protection work continues in other areas, including the continuation of
    security upgrades at a significant number of sites within the Russian
    nuclear complex, including those operated by the Federal Atomic Energy
    Agency (Rosatom), and the 12th Main Directorate of the Ministry of
    Defense. Security upgrades for Russian Rosatom facilities will be
    completed by the end of 2008--2 years ahead of the original schedule,
    consistent with the Bratislava Initiative.
        The MPC&A Program is also focused on reducing proliferation risks
    by converting Russian HEU to LEU and by consolidating weapons-usable
    nuclear material into fewer, more secure locations. In fiscal year
    2008, we will eliminate an additional 1.2 metric tons of HEU for a
    cumulative total of 10.7 metric tons.
        Our Second Line of Defense (SLD) Program, a natural complement to
    our efforts to lock down vulnerable nuclear material and weapons,
    installs radiation detection equipment at key transit and border
    crossings, airports and major ports to deter, detect and interdict
    illicit trafficking in nuclear and radioactive materials. During fiscal
    year 2008, the SLD Program plans to install detection equipment at an
    additional 51 strategic overseas transit and border sites. Under the
    Megaports Initiative, we have deployed radiation detection and cargo
    scanning equipment at six ports to date in Greece, the Netherlands,
    Bahamas, Sri Lanka, Singapore and Spain. During fiscal year 2008, we
    plan to install detection equipment at three additional large ports:
    the port of Antwerp in Belgium, the port of Caucedo in the Dominican
    Republic, and the port of Salalah in Oman.
        Additionally, we are joining elements of the Megaports Initiative
    and the Container Security Initiative (CSI) under a new maritime
    security initiative, the Secure Freight Initiative (SFI) Phase I. This
    new initiative is a partnership between host governments, commercial
    container shipping entities and the U.S. Government that serves to
    increase the number of containers physically scanned for nuclear and
    radiological materials and to create a detailed record of each U.S.-
    bound container. Data from radiation detection equipment provided by
    NNSA and from non-intrusive imaging equipment provided by the
    Department of Homeland Security (DHS) will enhance the identification
    of high-risk containers and facilitate the prompt resolution of
    potential nuclear or radiological threats.

                  NONPROLIFERATION AND INTERNATIONAL SECURITY

        While the thrust of GTRI and MPC&A is to secure nuclear sites,
    convert reactors, and repatriate fuel from reactors worldwide, NNSA's
    Office of Nonproliferation and International Security (ONIS) provides
    technical and policy expertise in support of U.S. efforts to strengthen
    international nonproliferation arrangements (e.g., the Nuclear
    Suppliers Group, United Nations Security Council Resolution 1540 and
    the Global Initiative to Combat Nuclear Terrorism). The ONIS staff also
    fosters implementation of global nonproliferation requirements through
    engagement with foreign partners and the redirection of WMD expertise,
    and helps develop and implement mechanisms for transparent and
    verifiable nuclear reductions. The fiscal year 2008 budget request for
    the Office of Nonproliferation and International Security is $124
    million. This request includes funds for providing technical support to
    strengthen the International Atomic Energy Agency safeguards system and
    supports programs to improve foreign governments' export control
    systems. This request will augment U.S. nonproliferation cooperation
    with China and India, and enhance transparency and scientist
    redirection activities with Russia, Ukraine, Kazakhstan, Libya and
    Iraq.
        The budget request also supports activities to build up the
    nonproliferation component of the Global Nuclear Energy Partnership
    (GNEP) initiative. While GNEP is a long-term vision for the future of
    expanded use of nuclear power, NNSA plays an important role by
    providing leadership and technical expertise in the areas of safeguards
    technology, safeguards cooperation, and fuel supply arrangements to
    mitigate the proliferation risks that otherwise might accompany the
    expansion of nuclear power around the world envisioned by GNEP.

               ELIMINATION OF WEAPONS GRADE PLUTONIUM PRODUCTION

        Turning to programs that focus on halting the production of nuclear
    materials, the Elimination of Weapons Grade Plutonium Production
    (EWGPP) Program staff are working toward completing the permanent
    shutdown of two of the three remaining weapons-grade plutonium
    production reactors in Seversk and Zheleznogorsk, Russia. The fiscal
    year 2008 budget request of $182 million is a decrease of $44 million
    from the fiscal year 2007 operating plan, reflecting the planned
    completion of the fossil fuel heat and electricity facility at Seversk.
    The budget request provides the funding required to shut down these
    reactors permanently and to replace the heat and electricity these
    reactors supply to local communities with energy generated by fossil
    fuel plants by December 2008 in Seversk and by December 2010 in
    Zheleznogorsk. The reactors will be shut down immediately once the
    fossil-fuel plants are completed, eliminating the annual production of
    more than one metric ton of weapons-grade plutonium.

                         FISSILE MATERIALS DISPOSITION

        In addition to curbing the production of dangerous nuclear
    materials, NNSA is working to reduce the existing stockpiles of nuclear
    materials in both Russia and the United States. To that end, the fiscal
    year 2008 Fissile Materials Disposition budget request of $609 million
    will contribute to the elimination of surplus U.S. and Russian weapon-
    grade plutonium and surplus U.S. highly-enriched uranium. Of this
    amount, $522.5 million will be allocated toward disposing of surplus
    U.S. plutonium, including $333.8 million for the Mixed Oxide (MOX) Fuel
    Fabrication Facility and $60 million for the Pit Disassembly and
    Conversion Facility (PDCF) and the Waste Solidification Building. Of
    the remaining amount, $66.8 million will be devoted to the disposition
    of surplus U.S. HEU and $20.2 million will be focused on supporting
    activities common to both programs.
        This budget request also provides funding for ongoing efforts to
    dispose of surplus U.S. HEU, including down blending 17.4MT of HEU in
    support of establishing the Reliable Fuel Supply Program, available to
    countries with good nonproliferation credentials that face a disruption
    in supply that cannot be corrected through normal commercial means.
    This initiative marks the first step towards a key GNEP policy aim of
    creating a reliable nuclear fuel mechanism, providing countries a
    strong incentive to refrain from acquiring enrichment and reprocessing
    capabilities.

           NONPROLIFERATION AND VERIFICATION RESEARCH AND DEVELOPMENT

        The fiscal year 2008 budget requests $265 million for
    Nonproliferation and Verification Research and Development. This effort
    includes a number of programs that make unique contributions to
    national security by researching the technological advancements
    necessary to detect and prevent the illicit diversion of nuclear
    materials. Within the Proliferation Detection Program, fundamental
    research is conducted in fields such as radiation detection, which
    supports national and homeland security agencies. It also advances
    basic and applied technologies for the nonproliferation community with
    dual-use benefit to national counter-proliferation and counter-
    terrorism missions. Specifically, this program develops the tools,
    technologies, techniques, and expertise for the identification,
    location, and analysis of the facilities, materials, and processes of
    undeclared and proliferant WMD programs. As the sole provider for the
    science base to the U.S. national nuclear test monitoring system, the
    Nuclear Explosion Monitoring Program produces the nation's operational
    sensors that monitor from space the entire planet to detect and report
    surface, atmospheric, or space nuclear detonations. This program also
    produces and updates the regional geophysical datasets enabling
    operation of the Nation's ground-based seismic monitoring networks to
    detect and report underground detonations.

                                 NAVAL REACTORS

        The Naval Reactors fiscal year 2008 budget request of $808 million
    is an increase of $26 million from the fiscal year 2007 operating plan.
    Naval Reactor's development work ensures that nuclear propulsion
    technology provides options for maintaining and upgrading current
    capabilities, as well as for meeting future threats to U.S. security.
        The majority of funding supports Naval Reactor's number-one
    priority of ensuring the safety and reliability of the 103 operating
    naval nuclear propulsion plants. This work involves continual testing,
    analysis, and monitoring of plant and core performance, which becomes
    more critical as the reactor plants age. The nature of this business
    demands a careful, measured approach to developing and verifying
    nuclear technology, designing needed components, systems, and
    processes, and implementing them in existing and future plant designs.
    Most of this work is accomplished at Naval Reactors' DOE laboratories.
    These laboratories have made significant advancements in extending core
    lifetime, developing robust materials and components, and creating an
    array of predictive capabilities.
        Long-term program goals have been to increase core energy, to
    achieve life-of-the-ship cores, and to eliminate the need to refuel
    nuclear-powered ships. Efforts associated with this objective have
    resulted in planned core lives that are sufficient for the 30-plus year
    submarine (based on past usage rates) and an extended core life planned
    for CVN 21 (the next generation aircraft carrier). The need for nuclear
    propulsion will only increase over time as the uncertainty of fossil
    fuel cost and availability grows.
        Naval Reactors' Operations and Maintenance budget request is
    categorized into six areas: Reactor Technology and Analysis; Plant
    Technology; Materials Development and Verification; Evaluation and
    Servicing; Advanced Test Reactor (ATR) Operations and Test Support; and
    Facility Operations.
        The $218 million requested for Reactor Technology and Analysis will
    support work that ensures the operational safety and reliability of
    reactor plants in U.S. warships and extends the operational life of
    Navy nuclear propulsion plants. This work includes continued
    development of the Reactor System Protection Analysis for the next
    generation aircraft carrier, CVN 21. These efforts also support
    continued work on core design concepts for submarines.
        The increasing average age of our Navy's existing reactor plants,
    along with future extended service lives, a higher pace of operation
    and reduced maintenance periods, place a greater emphasis on our work
    in thermal-hydraulics, structural mechanics, fluid mechanics, and
    vibration analysis. These factors, along with longer-life cores, mean
    that for years to come, these reactors will be operating beyond our
    previously-proven experience base.
        The $115 million requested for Plant Technology provides funding to
    develop, test, and analyze components and systems that transfer,
    convert, control, and measure reactor power in a ship's power plant.
    Naval Reactors is developing components to address known limitations
    and to improve reliability of instrumentation and power distribution
    equipment to replace aging, technologically obsolete equipment.
    Development and application of new analytical methods, predictive
    tests, and design tools are required to identify potential concerns
    before they become actual problems. This enables preemptive actions to
    ensure the continued safe operation of reactor plants and the
    minimization of maintenance costs over the life of the ship. Additional
    technology development in the areas of chemistry, energy conversion,
    instrumentation and control, plant arrangement, and component design
    will continue to support the Navy's operational requirements.
        The $110 million requested for Materials Development and
    Verification supports material analyses and testing to provide the
    high-performance materials necessary to ensure that naval nuclear
    propulsion plants meet Navy goals for extended warship operation and
    greater power capability. These funds support the test assemblies for
    use in ATR, post irradiation examination of the materials tested at
    ATR, and destructive and non-destructive examinations of spent navy
    nuclear fuel and reactor component materials.
        The $204 million requested for Evaluation and Servicing sustains
    the operation, maintenance, and servicing of Naval Reactors' operating
    prototype reactor plants. Reactor core and reactor plant materials,
    components, and systems in these plants provide important research and
    development data and experience under actual operating conditions.
    These data aid in predicting and subsequently preventing problems that
    could develop in fleet reactors. With proper maintenance, upgrades, and
    servicing, the two prototype plants will continue to meet testing needs
    for at least the next decade.
        Evaluation and Servicing funds also support the implementation of
    the dry spent fuel storage production lines that will put naval spent
    fuel currently stored in water pools at the Idaho Nuclear Technology
    and Engineering Center (INTEC) on the Idaho National Laboratory (INL)
    and at the Expended Core Facility (ECF) on the Naval Reactors facility
    in Idaho into dry storage. Additionally, these funds support ongoing
    decontamination and decommissioning of inactive nuclear facilities at
    all Naval Reactors sites to address their ``cradle to grave''
    stewardship responsibility for these legacies and minimize the
    potential for any environmental releases.
        The $58.8 million requested for Advanced Test Reactor Operations
    and Test Support sustains the ongoing activities of the INL ATR
    facility, owned and operated by the Office of Nuclear Energy (NE),
    Science and Technology.
        In addition to the budget request for the important technical work
    discussed above, facilities funding is required for continued support
    of Naval Reactor's operations and infrastructure. The $60 million
    requested for facilities operations will maintain and modernize the
    program's facilities, including the Bettis and Knolls laboratories as
    well as ECF and Kesselring Site Operations (KSO), through capital
    equipment purchases and general plant projects.
        The $10 million requested for construction funds will be used to
    support the project engineering and design of a materials research
    technology complex and ECF M290 receiving and discharge station and to
    support the design and construction of a shipping and receiving and
    warehouse complex.

                          OFFICE OF THE ADMINISTRATOR

        This account provides for all Federal NNSA staff in Headquarters
    and field locations except those supporting Naval Reactors and the
    Secure Transportation Asset couriers. The fiscal year 2008 budget
    request is $394.7 million, an increase of $54 million over the fiscal
    year 2007 operating level.
        This budget request is consistent with the funding trajectory
    needed for personnel support in an account that is comprised of over 70
    percent salaries and benefits. NNSA needs to attain a steady-state
    staffing level of about 1,950 FTEs in fiscal year 2008 to support
    current mission needs and to implement workforce planning for
    succession. Information Technology (IT) for the Federal staff is also
    included in this account, and the fiscal year 2008 IT Request reflects
    efficiencies planned for A-76 efforts initiated in fiscal year 2006.
    The outyear budget addresses significant challenges due to the impacts
    of escalation on payroll and needed support to the NNSA Federal staff.
        The budget request includes funding for activities that were
    previously funded by the former Offices of Environment, Safety, and
    Health and Security and Safety Performance Assurance that transferred
    to the NNSA. Pursuant to section 3117 of the John Warner National
    Defense Authorization Act for fiscal year 2007 (Public Law 109-364),
    beginning in fiscal year 2008, the functions, personnel, funds, assets,
    and other resources of the Office of Defense Nuclear
    Counterintelligence of the NNSA are transferred to the Secretary of
    Energy, to be administered by the Director of the Office of
    Counterintelligence of the Department of Energy.
          historically black colleges and universities (hbcu) support
        A research and education partnership program with the HBCUs and the
    Massie Chairs of Excellence was initiated by Congress through earmarks
    in the Office of the Administrator Appropriation in fiscal year 2005,
    fiscal year 2006 and fiscal year 2007. The NNSA has implemented an
    effective program to target national security research opportunities
    for these institutions to increase their participation in national
    security-related research and to train and recruit HBCU graduates for
    employment within the NNSA. The NNSA goal is a stable $10 million
    annual effort. In fiscal year 2008, the Office of the Administrator
    appropriation will provide continued funding of $1 million to support
    certain HBCU activities. The programs funded in the Weapons Activities
    Appropriation will provide approximately $4 to $6 million of support to
    HBCU programs. In addition, the Defense Nuclear Nonproliferation
    Appropriation will provide approximately $2 to $3 million to this
    program. Lastly, the Naval Reactors Program will fund approximately $1
    million of HBCU programs in fiscal year 2008.

                                   CONCLUSION

        I am confident that NNSA is headed in the right direction in the
    coming fiscal year. The budget request will support continuing our
    progress in protecting and certifying our Nation's strategic deterrent,
    transforming our nuclear weapons stockpile and infrastructure, reducing
    the global danger from proliferation and weapons of mass destruction,
    and enhancing the force projection capabilities of the U.S. nuclear
    Navy. It will enable us to continue to maintain the safety and security
    of our people, information, materials, and infrastructure. Taken
    together, each aspect of this budget request will allow us to meet our
    national security responsibilities during the upcoming fiscal year and
    well into the future.
        A statistical appendix follows that contains the budget figures
    supporting our Request. I look forward to answering any questions on
    the justification for the requested budget.

                         Fiscal Year 2008 Budget Tables

       NATIONAL NUCLEAR SECURITY ADMINISTRATION--APPROPRIATION AND PROGRAM
                                     SUMMARY
                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                    Fiscal Year
                                      Fiscal Year       2007     Fiscal Year
                                     2006 Current    Operating       2008
                                    Appropriations      Plan       Request
    ------------------------------------------------------------------------
    National Nuclear Security
     Administration (NNSA):
        Office of the                       354.2         340.3        394.7
         Administrator............
        Weapons Activities (after         6,355.3       6,275.6      6,511.3
         S&S WFO offset)..........
        Defense Nuclear                   1,619.2       1,683.3      1,672.6
         Nonproliferation.........
        Naval Reactors............          781.6         781.8        808.2
                                   -----------------------------------------
          Total, NNSA.............        9,110.3         9,081      9,386.8
    ------------------------------------------------------------------------
    NOTE: The fiscal year 2006 column includes an across-the-board
      rescission of 1 percent in accordance with the Department of Defense
      Appropriations Act, 2006, Public Law 109-148.

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

                   OUT-YEAR APPROPRIATION SUMMARY--NNSA FUTURE YEARS NUCLEAR SECURITY PROGRAM (FYNSP)
                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                 Fiscal     Fiscal     Fiscal     Fiscal     Fiscal
                                                               Year 2008  Year 2009  Year 2010  Year 2011  Year 2012
    ----------------------------------------------------------------------------------------------------------------
    NNSA:
        Office of the Administrator..........................        395        405        415        425        436
        Weapons Activities (after S&S offset)................      6,511      6,705      6,904      7,111      7,324
        Defense Nuclear Nonproliferation.....................      1,673      1,798      1,845      1,893      1,942
        Naval Reactors.......................................        808        828        849        870        892
                                                              ------------------------------------------------------
          Total, NNSA........................................      9,387      9,736     10,013     10,299     10,594
    ----------------------------------------------------------------------------------------------------------------

                WEAPONS ACTIVITIES--FUNDING PROFILE BY SUBPROGRAM
                            [In thousands of dollars]
    ------------------------------------------------------------------------
                                                    Fiscal Year
                                      Fiscal Year       2007     Fiscal Year
                                      2006 Current   Operating       2008
                                     Appropriation      Plan       Request
    ------------------------------------------------------------------------
    Weapons Activities:
        Directed Stockpile Work....     1,372,327     1,425,722    1,447,236
        Science Campaign...........       276,670       270,458      273,075
        Engineering Campaign.......       247,907       162,786      152,749
        Inertial Confinement Fusion       543,582       489,706      412,259
         Ignition and High Yield
         Campaign..................
        Advanced Simulation and           599,772       611,973      585,738
         Computing Campaign........
        Pit Manufacturing and             238,663       242,392      281,230
         Certification Campaign....
        Readiness Campaign.........       216,567       201,713      161,169
        Readiness in Technical Base     1,654,840     1,613,241    1,662,144
         and Facilities............
        Secure Transportation Asset       209,979       209,537      215,646
        Nuclear Weapons Incident          117,608       133,514      161,748
         Response..................
        Facilities and                    149,365       169,383      293,743
         Infrastructure
         Recapitalization Program..
        Environmental Projects and   .............  ...........       17,518
         Operations................
        Safeguards and Security....       797,751       761,158      881,057
        Other......................  .............       17,000  ...........
                                    ----------------------------------------
          Subtotal, Weapons             6,425,031     6,308,583    6,545,312
           Activities..............

    Use of Prior Year Balances:
        Security Charge for               -32,000       -33,000      -34,000
         Reimbursable Work.........
        Use of Prior Year Balances.       -37,734   ...........  ...........
                                    ----------------------------------------
          Total, Weapons Activities     6,355,297     6,275,583    6,511,312
    ------------------------------------------------------------------------
    Public Law Authorization: John Warner National Defense Authorization Act
      for fiscal year 2007 (Public Law 109-364).

                     OUT-YEAR FUNDING PROFILE BY SUBPROGRAM
                            [In thousands of dollars]
    ------------------------------------------------------------------------
                                    Fiscal     Fiscal     Fiscal     Fiscal
                                  Year 2009  Year 2010  Year 2011  Year 2012
    ------------------------------------------------------------------------
    Weapons Activities:
        Directed Stockpile Work.  1,483,417  1,520,502  1,558,515  1,597,478
        Science Campaign........    282,741    275,622    270,390    275,626
        Engineering Campaign....    147,090    144,448    142,614    145,417
        Inertial Confinement        406,098    413,186    411,851    407,487
         Fusion Ignition and
         High Yield Campaign....
        Advanced Simulation and     598,241    583,643    570,873    582,243
         Computing Campaign.....
        Pit Manufacturing and       291,945    339,462    357,622    347,269
         Certification Campaign.
        Readiness Campaign......    190,477    184,703    180,357    183,946
        Readiness in Technical    1,698,403  1,765,458  1,862,729  1,952,633
         Base and Facilities....
        Secure Transportation       228,300    237,749    253,037    262,118
         Asset..................
        Nuclear Weapons Incident    169,835    178,327    187,243    196,605
         Response...............
        Facilities and              286,572    297,096    304,330    312,000
         Infrastructure
         Recapitalization
         Program................
        Environmental Projects       32,471     29,923     30,864     31,574
         and Operations.........
        Safeguards and Security.    924,410    969,881  1,017,575  1,067,604
                                 -------------------------------------------
          Subtotal, Weapons       6,740,000  6,940,000  7,148,000  7,362,000
           Activities...........
        Security Charge for         -35,000    -36,000    -37,000    -38,000
         Reimbursable Work......
                                 -------------------------------------------
          Total, Weapons          6,705,000  6,904,000  7,111,000  7,324,000
           Activities...........
    ------------------------------------------------------------------------

         DEFENSE NUCLEAR NONPROLIFERATION--FUNDING PROFILE BY SUBPROGRAM
                            [In thousands of dollars]
    ------------------------------------------------------------------------
                                                    Fiscal Year
                                      Fiscal Year       2007     Fiscal Year
                                      2006 Current   Operating       2008
                                     Appropriation      Plan       Request
    ------------------------------------------------------------------------
    Defense Nuclear
     Nonproliferation:
        Nonproliferation and              312,658       270,387      265,252
         Verification Research and
         Development...............
        Nonproliferation and               74,250       128,911      124,870
         International Security....
        International Nuclear             422,730       472,730      371,771
         Materials Protection and
         Cooperation...............
        Global Initiatives for             39,600   ...........  ...........
         Proliferation Prevention..
        HEU Transparency                   19,288   ...........  ...........
         Implementation............
        Elimination of Weapons-           187,100       225,754      181,593
         Grade Plutonium Production
        Fissile Materials                 468,773       470,062      609,534
         Disposition...............
        Global Threat Reduction            96,995       115,495      119,626
         Initiative................
                                    ----------------------------------------
          Subtotal, Defense Nuclear     1,621,394     1,683,339    1,672,646
           Nonproliferation........

    Use of Prior Year Balances.....       -92,215   ...........  ...........
                                    ----------------------------------------
          Total, Defense Nuclear        1,619,179     1,683,339    1,672,646
           Nonproliferation........
    ------------------------------------------------------------------------
    NOTE: The fiscal year 2006 Current Appropriation column includes
      additions for international contributions to the Elimination of
      Weapons-Grade Plutonium Production Program in the amount of
      $12,677,000, and the use of prior year balances in the amount of
      $2,215,000 for an approved appropriation transfer action to the Office
      of the Administrator.
    Public Law Authorization: John Warner National Defense Authorization Act
      of 2007, (Public Law 109-364).

                     OUT-YEAR FUNDING PROFILE BY SUBPROGRAM
                            [In thousands of dollars]
    ------------------------------------------------------------------------
                                    Fiscal     Fiscal     Fiscal     Fiscal
                                  Year 2009  Year 2010  Year 2011  Year 2012
    ------------------------------------------------------------------------
    Defense Nuclear
     Nonproliferation:
        Nonproliferation and        305,105    335,564    353,047    364,528
         Verification Research
         and Development........
        Nonproliferation and        133,041    158,693    166,479    174,276
         International Security.
        International Nuclear       408,209    402,458    407,161    414,009
         Materials Protection
         and Cooperation........
        Elimination of Weapons      138,929     24,507  .........  .........
         Grade Plutonium
         Production.............
        Fissile Materials           660,796    771,190    802,786    813,378
         Disposition............
        Global Threat Reduction     151,920    152,588    163,527    175,809
         Initiative.............
                                 -------------------------------------------
          Total, Defense Nuclear  1,798,000  1,845,000  1,893,000  1,942,000
           Nonproliferation.....
    ------------------------------------------------------------------------

                  NAVAL REACTORS--FUNDING PROFILE BY SUBPROGRAM
                            [In thousands of dollars]
    ------------------------------------------------------------------------
                                                    Fiscal Year
                                      Fiscal Year       2007     Fiscal Year
                                      2006 Current   Operating       2008
                                     Appropriation      Plan       Request
    ------------------------------------------------------------------------
    Naval Reactors Development:
        Operations and Maintenance        734,877       747,648      765,519
         (O&M).....................
        Program Direction..........        29,997        31,380       32,700
        Construction...............        16,731         2,772       10,000
                                    ----------------------------------------
          Total, Naval Reactors           781,605       781,800      808,219
           Development.............
    ------------------------------------------------------------------------
    Public Law Authorizations: Public Law 83-703, ``Atomic Energy Act of
      1954'' ``Executive Order 12344 (42 U.S.C. 7158), ``Naval Nuclear
      Propulsion Program'' Public Law 107-107, ``National Defense
      Authorizations Act of 2002'', title 32, ``National Nuclear Security
      Administration'' John Warner National Defense Authorization Act for
      Fiscal Year 2007, (Public Law 109-364).

                     OUT-YEAR FUNDING PROFILE BY SUBPROGRAM
                            [In thousands of dollars]
    ------------------------------------------------------------------------
                                    Fiscal     Fiscal     Fiscal     Fiscal
                                  Year 2009  Year 2010  Year 2011  Year 2012
    ------------------------------------------------------------------------
    Naval Reactors Development:
        Operations and              771,700    795,700    822,500    836,800
         Maintenance............
        Program Direction.......     33,900     35,100     36,400     37,700
        Construction............     22,400     18,200     11,100     17,500
                                 -------------------------------------------
          Total, Naval Reactors     828,000    849,000    870,000    892,000
           Development..........
    ------------------------------------------------------------------------

        Senator Dorgan. Mr. D'Agostino, thank you very much for
    your testimony.
        I'd like to ask a few questions, then I will call on my
    colleagues and then I will finish with the remainder of my
    questions so that my colleagues have ample time as well.

                          RELIABLE REPLACEMENT WARHEAD

        Let me ask first about the RRW program. I want to have you
    tell us how that came to be. What was, what created the
    existence of RRW? Some colleagues here in the Congress say that
    is an outgrowth of the program that was rejected, the Earth
    Penetrater Bunker Buster program and it morphed into an RRW
    program. Can you tell me, what is the origin of the RRW
    program?
        Mr. D'Agostino. Certainly, Mr. Chairman. But, I'd like to
    dispel the notion that it is an outgrowth of any, so-called
    bunker buster. The RRW program is a natural piece or element in
    the stockpile stewardship strategy. As you're aware, in the
    early 1990s the country decided to forego underground testing
    and a few years after that we endorsed a strategy of stockpile
    stewardship. This is the idea of spending resources into
    upgrading our science facilities to understand what happens as
    weapons age and to embark, essentially, on what we are in right
    now, a life extension program strategy.
        Life extension program means taking the existing warheads
    that we have and investing money to build those warheads
    exactly like they were built 10, 20, 30, 40, 50 years ago to
    make sure that they would perform as in the past because we
    aren't going to do a test anymore, underground test.
        RRW came out as a result of confluence of two things. One,
    our science tools expanded greatly. Our computing capability,
    the models and codes that we use to simulate the aging
    warheads, as well as this life extension program, made us
    realize that we're dealing with warheads that were designed
    quite differently. They were designed to maximize the yield of
    a warhead to the weight of the warhead itself. We wanted the
    most tightly designed warhead on the top of that missile
    because the Department of Defense, at the time, was interested
    in lots of weapons and being able to launch them long
    distances. And, it was also at a time when we were constantly
    designing new warheads every 10, 20 years we were exercising
    our capability. We never worried about the aging of weapons.
        And so, as we looked at what happens in the future, can a
    weapon that was designed to be replaced every 20 to 25 years
    last 30, 40, 50, 60 years? And, especially what does that do to
    our margins and more importantly, what does that do to our
    confidence? We don't want to be in a situation where we have to
    conduct an underground test.
        So, we decided to embark on an RRW approach because our
    concern was that we wanted to be able to add more design margin
    into the warhead. We wanted to put security features into the
    warhead which addressed the future threats, not the threats
    that we had in the past. And, we're also concerned about not
    wanting to replicate cold war processes and cold war techniques
    because these are very expensive.
        Senator Dorgan. Mr. D'Agostino, I want to be able to ask
    you a second question.
        Mr. D'Agostino. Oh,----
        Senator Dorgan. Thank you.
        Mr. D'Agostino. [continuing]. Certainly.
        Senator Dorgan. I want to ask a couple questions about RRW.
    I do have some questions for Mr. Tobey. But, several weeks ago,
    you and General Cartwright were in front of the Senate Armed
    Services Committee. Senator Reed asked you a question and I
    reviewed that because part of RRW relates to the question of
    whether there needs to be testing. And, let me read you the
    transcript because I want to try to understand what this means.
        Quoting Senator Reed, ``If it becomes clear at some point
    that it is not possible to certify without testing, would you
    support terminating the effort?'' General Cartwright, ``I would
    come back to this subcommittee and tell you why we've got to
    that position and what the criteria or what the detail was
    behind that and then we would have that discussion.'' Then
    Senator Nelson said, ``If it becomes clear at some point that
    it wouldn't be possible to certify the RRW without nuclear
    testing, would you support terminating the effort?'' Mr.
    D'Agostino, you indicated, I'm quoting you, ``I would say that
    because it's one of the most significant criteria that we've
    had to proceed down this path, we would have to examine that. I
    mean, we'd have to say, `Why would we go forward and continue
    with the effort.' ''
        Today's testimony, you talk about offering a reduced
    likelihood that we will ever again need to conduct an
    underground nuclear test. The question is, is there any reason
    for someone to read some subtle shift here? It seemed to me
    there might be a subtle shift. I think most of us proceed under
    the assumption that the, the understanding is, that RRW will
    not require testing. Is that still your position?
        Mr. D'Agostino. My position is certification of an RRW
    design will not require underground testing. There's a broader
    question: As weapons age there's no guarantee, in fact no one
    can guarantee today's stockpile might not require an
    underground test. We don't know all of the details on how
    materials age. And so, to certify the RRW, in my view, based on
    the information I've reviewed and the proposal submitted by Los
    Alamos and Lawrence Livermore, would not require underground
    testing to certify it.
        I'd like to add, because the design margins on the RRW are
    based solidly on tested history that already existed. The
    country's invested a lot of money in developing a nuclear test
    database. Taking advantage of that I'm confident that what we
    have in an RRW design, at this point, again, it's only on paper
    and that's where it will stay until we decide to move forward,
    but that we are further away and have a reduced likelihood
    compared to a cold war stockpile. I'm concerned that if we stay
    with a cold war stockpile, as it currently exists, that our
    chances are testing are much greater than if we shifted to an
    RRW strategy.
        Senator Dorgan. The, my understanding is that the State
    Department has not done any studies. And, I wonder if the
    Department of Energy has with respect to whether the activities
    of an RRW will have any impact on our objectives with respect
    to nonproliferation. I mean, this will be a larger
    international debate. Has there been an analysis of that, the
    consequences of that by the Department of Energy? I believe it
    has not been done by the Department of State.
        Mr. D'Agostino. If I could answer that, I could ask Mr.
    Tobey to follow with me. When we, before we made an RRW
    decision and announcement, we did consult with our allies in
    NATO and we also talked to Russia and China about the strategy
    we're approaching. In almost all cases, we had, it was well
    understood why we were proceeding down this path. There was no
    study to my knowledge, per se, of directly taking, essentially
    a straw vote if you will, on exactly how things were done.
        Mr. Tobey. Mr. Chairman, we have given that matter some
    thought. And, I think, frankly, the questions that you're
    asking are exactly the right ones.
        In analyzing nonproliferation or disarmament impacts of
    such a system, I think the right questions relate to whether or
    not such a system would reduce or increase the need for nuclear
    testing, whether it would reduce or increase pressures to, or
    would enable a reduction or an increase, pressure for an
    increase in the size of arsenals, and whether or not it would
    improve the safety and security in weapons. I think by most
    standards, and certainly the objectives of the RRW Program
    would be to lead to conditions that would actually improve
    nonproliferation and disarmament objectives. So therefore, it
    is entirely consistent with our nonproliferation policy.
        Senator Dorgan. I have one additional question, then I will
    defer to my colleagues and then I will ask some questions at
    the end.
        Back in 1974, then Secretary of State indicated that he
    felt it was urgent to create ``global standards for nuclear
    security.'' And, it's been now roughly 30 years. We're still
    not quite there. We do have some standards, but without the
    kind of definition, I think, most people feel is necessary. Mr.
    Tobey, can you describe to me what efforts are underway, from
    your standpoint, with respect to those issues?
        Mr. Tobey. Certainly, and one of the most important
    nonproliferation efforts we have underway is meant to address
    exactly that. Last year, Presidents Bush and Putin, just before
    the G-8 Summit in St. Petersburg, announced the global
    initiative to combat nuclear terrorism. I think there are two
    ways to look at this program. One, it's an effort to apply the
    lessons we've learned and the standards we've developed and the
    practices we put into place in former Soviet states worldwide.
        Another one is to allow for the practical means to
    implement the legal requirements of U.N. Security Council
    Resolution 1540. We've started with a small core of states, the
    G-8 plus four others, Kazakhstan, Australia, China, and Turkey.
    We were joined later by Morocco. We adopted, first, the
    statement of principles. We've since had a meeting to adopt a
    work program and we hope to greatly expand the organization in
    a meeting next month in June in Kazakhstan.
        Senator Dorgan. Mr. Tobey, thank you very much.
        We've been joined by the ranking member, Senator Domenici.
    I will call on Senator Domenici, then I will call on Senators
    in order of appearance.
        Senator Domenici.
        Senator Domenici. Mr. Chairman, I think that would be a bit
    unfair, so I would ask that we not do it. And, because I was
    late and it was my own fault. I attest that to everyone. Please
    don't think it was more important than any old meeting. I just,
    it just got away from me. So, you can assume it was a very fun
    meeting or a lot of fun or something.
        I just didn't get away from it. And, I looked up and I
    thought, ``My God, D'Agostino is finished and I'm almost
    finished.''
        So, I would rather go about third and that will be fair for
    you and fair for me.
        Senator Dorgan. All right. Well, as former chairman you
    certainly, we would certainly want to recognize your right to
    proceed next----
        Senator Domenici. I'll go after----
        Senator Dorgan [continuing]. As ranking member. All right.
        Senator Craig.
        Senator Craig. Thank you very much, Mr. Chairman.

                       GLOBAL NUCLEAR ENERGY PARTNERSHIP

        The NNSA's 2008 budget includes $10 million for
    nonproliferation activities within Global Nuclear Energy
    Partnership (GNEP). Is this enough to provide the global
    security that is required for a program of this magnitude?
        Mr. Tobey.
        Mr. Tobey. Senator, I think it's a good start. As you know,
    we're at the very early stages of the Global Nuclear Energy
    Partnership. I think it would be fair to regard GNEP as a
    nonproliferation program. I believe it is such for four
    reasons. First, it should diminish incentives on States to have
    indigenous enrichment programs. Second, it should allow us to
    reduce separated stock, stockpiles of separated plutonium.
    Third, we intend to use it to improve proliferation resistant
    reactor technology. And fourth, we aim to improve safeguards
    technology.
        Senator Craig. So, you referenced it as a good start,
    therefore, I used the word is it enough, is it adequate based
    on where we are with this initiative, to fund it appropriately?
        Mr. Tobey. Yes sir, it is. I meant good start in the sense
    that the GNEP program will proceed. We will need to spend more
    money on nonproliferation efforts related to it in the future.
        Senator Craig. Europeans have been recycling used nuclear
    fuel for over 30 years without an incident or hint of separated
    material theft. Are you looking at their programs and
    incorporating their experiences into GNEP?
        Mr. Tobey. We're certainly looking at their programs.
    Although I think what we're trying to do is to reach a
    situation in which we would not have, as I mentioned, separated
    stocks of plutonium, pure plutonium or nearly pure plutonium,
    which are a greater nonproliferation threat. If you look at
    incidents that have been made public about nuclear materials
    that have gotten loose I think it would tend to indicate that
    those are the cases in which we need to be concerned about. So,
    we hope to use advanced technology to avoid pure plutonium or
    nearly pure plutonium.
        Senator Craig. I think my concern, as it relates to the
    program and the long-term character of getting it online,
    costs, and all of that, is that as much of the successes around
    the world that we can incorporate, we ought not be spending our
    time, therefore, reinventing when there are successes out there
    that are measurable and usable.
        Mr. Tobey. Well, we certainly would like to learn from the
    experience of others. I think we would also like to be
    technology leaders, in this regard. And hopefully improve the
    nonproliferation characteristics of the technology for
    recycling fuel.
        Senator Craig. Thank you, Mr. Chairman.
        Gentlemen, thank you.
        Senator Dorgan. Senator Craig, thank you.
        Senator Reed.
        Senator Reed. Thank you very much, Mr. Chairman.
        And, thank you gentlemen for your testimony.

                  PIT PRODUCTION/RELIABLE REPLACEMENT WARHEAD

        Mr. D'Agostino, do you know how many and what types of pits
    the complex would require to make in 2030 as part of your
    forward looking analysis?
        Mr. D'Agostino. I'm sorry Senator Reed. I missed the first
    part of the question.
        Senator Reed. Do you know how many and what type of pits
    the complex will be required to make in 2030, if you're doing
    your 2030 planning now?
        Mr. D'Agostino. Right now our plan is to build an interim
    capability of between 30 and 50 pits by the 2012 timeframe and
    to increase our capability, given our current requirements. The
    DOD, the Department of Defense, which sets the requirements for
    the Department of Energy, has currently projected, based on
    what I would say a pre-RRW type stockpile, of a need to go to
    about 125 pits per year. Which is the idea of being able to,
    over a 40-year period, replace the pits in the ongoing in
    steady state, nuclear stockpile. Every 30 or 40 years you'd be
    replacing a pit. The size, the number and type of pits, are
    clearly very dependant on the size of the stockpile itself and
    so there's that linkage there.
        Senator Reed. And, also dependant upon the progress on the
    RRW?
        Mr. D'Agostino. I think so for a couple of reasons. One,
    because of the RRW, we'll have an opportunity when we look at
    the RRW replacement strategy to look at pits that we already
    have built, essentially, in the past that can potentially be
    reused in future stockpiles.
        As you're probably aware, we had tasked our laboratories to
    take a hard look at the design and to look at the lifetimes of
    plutonium metal and the pits itself. That analysis was
    completed last year and we had the JASONS take an independent
    look at that and they validated the fact that our plutonium pit
    life, metal life times are a bit longer than we had expected.
    Up to between 85 and 100 years in some cases. That's good news
    because it provides us the flexibility to look at pits that
    we've already built. And, I think, ultimately, will allow us to
    have the smallest plutonium capability that the country might
    need instead of getting in to building a pit capability of 125
    and up. We might be looking at 125 and down from the size of
    plutonium capability.
        Senator Reed. The pit manufacturing and certification
    campaign also includes $24.9 million for the consolidated
    plutonium center.
        Mr. D'Agostino. Yes, sir.
        Senator Reed. Specifically indicate how you're going to
    spend that money.
        Mr. D'Agostino. That money would be used to do preliminary
    design. I don't like to look at it as a building right now
    because it's far from that. It's to do the studies that need to
    be done to determine the exact size that it needs to be to
    handle our future stockpile, and to take a look at the
    technologies that might need to be in this facility.
        As I mentioned earlier in my opening, one of the answers
    that I gave earlier, we're interested in making a design that's
    manufacturing a simple and as environmentally safe and as
    worker safe as possible. In the past, that was not a
    consideration. It's not that people in the past didn't care
    about these topics, it's that 30-40 years later we know a lot
    more about impacts of these materials on human safety. So,
    those types of studies, technology development activities and
    siting studies to support the work that we're going to be doing
    because we're looking at a number of different sites. That's
    what the $24 million is for.
        Senator Reed. I think the chairman opened up some very
    important questions with respect to RRW and I want to follow
    up. Some of these are very specific.
        First, the RRW schedule presently is in phase what?
        Mr. D'Agostino. Right now we are in what we call phase 2A,
    which is a design definition and cost study phase. That's what
    I would propose that we were going to be doing in fiscal year
    2007. That's what we were authorized to do, and into fiscal
    year 2008. That phase is very important because it will
    provide, what I call the detailed cost, the detailed scope, and
    the detailed schedule. That is not just the Department of
    Energy's cost, scope, schedule, but includes our work with the
    United States Navy, because it's their interface with the Navy
    systems. That needs to be done in order for us to be in a
    situation where we can look at how that influences the size of
    the stockpile, our life extension strategy, and the number of
    different types of systems, which I think are so important for
    both the committee and as well as myself to understand.
        Senator Reed. Thank you very much.
        I have additional questions, but I'll wait for another
    round, Mr. Chairman. Thank you.
        Senator Dorgan. Senator Murray.
        Senator Murray. Thank you very much, Mr. Chairman.

                     PACIFIC NORTHWEST NATIONAL LABORATORY

        And, I just have a quick parochial issue I wanted to query
    you about. And, it's an issue of the Pacific Northwest National
    Laboratory that's in my home State of Washington and I think
    you're aware of the need to replace the unique facility that
    supports an important national security mission. It's going to
    be affected by the Hanford clean up schedule. And, I wanted to
    thank you for your active support in this project that involves
    partners from the Office of Science and Department of Homeland
    Security (DHS) as well. And, I noticed that the NNSA budget
    does not include funds in 2008 for this project, and I wanted
    to find out from you if you continue to support this project.
        Mr. D'Agostino. I'll answer the question. I'd like to ask
    my colleague to amplify if he could. I appreciate your
    comments. We do support this project. The type of relationship
    we have with the Department of Homeland Security and my sister
    organization within the Department, the Office of Science, lays
    out what I would say, a commitments page on how we are going to
    integrate funding requests. In fiscal year 2008, the NNSA
    element of that is zero dollars. There are more details and
    probably Will can take it from here and talk about how we've
    integrated the three organizations together.
        Senator Murray. Mr. Tobey.
        Mr. Tobey. Certainly, Senator Murray. The zero dollars is
    really a reflection of the fact that the NNSA has been out
    ahead of the other two partners, well ahead of the other two
    partners in our spending rate on this. And frankly, I think it
    just made sense for us to be at approximately the same rate of
    spending as the other two partners. It doesn't reflect a lack
    of support for the program.
        Senator Murray. And, I assume that you would not object if
    money's added to the budget for this project?
        Mr. Tobey. Well, of course I support the President's
    budget, Senator.
        Senator Murray. Okay. Well, I would then ask, I assume
    you're going to request additional, or sufficient funding in
    the 2009 request for where you need to be.
        Mr. Tobey. We're certainly going to try and make sure that
    we support the project, we would very much like it to go
    forward. We would like the spending for it to be proportionate
    among the partners that are funding it.
        Senator Murray. Okay. Thank you very much, Mr. D'Agostino.
        Mr. D'Agostino. Thank you, Senator.
        Senator Murray. We do appreciate your support of this. This
    is very critical and we want to make sure it continues to move
    forward. And, we know the importance of all the partners
    involved in it, but we've got to keep it moving. So, thank you
    very much.
        Mr. D'Agostino. Thank you, Senator.
        Senator Dorgan. Thank you, Senator Murray.
        Senator Domenici.
        Senator Domenici. Thank you very much, Mr. Chairman.
        Senator Feinstein, it's good to see you here. I didn't
    think I would see you on this issue as soon as this. And, I
    assume I will hear you address this issue in a negative manner,
    the new nuke formation. I hope not.

                               PREPARED STATEMENT

        But, I want to say, I have an opening statement that I
    would just ask you make a part of the record.
        Senator Dorgan. Without objection.
        [The statement follows:]

                 Prepared Statement of Senator Pete V. Domenici

        Thank you Mr. Chairman, I would like to welcome our witnesses. We
    have Tom D'Agostino, Acting Administrator for NNSA who is joined by
    Admiral Kirkland Donald, Naval Reactors, and Mr. Will Tobey, Nuclear
    Nonproliferation.
        Gentlemen, I appreciate your participation and hard work at the
    NNSA. You have a challenging job and these budgets make your job an
    even greater challenge.
        Mr. D'Agostino, I would like to congratulate you for executing the
    Reliable Replacement Warhead design competition and making a difficult
    selection between the two extremely innovative designs.
        As an original sponsor of the RRW program, I continue to believe
    that this program provides the best opportunity to transform the
    stockpile and reduce the overall number of warheads and weapons
    systems.
        It is clear to me that without a demonstrated capacity to produce a
    weapon that applies state-of-the-art use controls, increased
    reliability margins, and the ability to be certified without testing,
    military leaders will not accept a significantly smaller stockpile than
    we have today as they manage future risks through a massive inventory
    of weapons. Mr. D'Agostino, I want to compliment you for your advocacy
    of this program. You have worked hard to articulate the vision for this
    program since its inception in the fiscal year 2005 Energy and Water
    Conference Report.
        However, if this program is to survive and we are to realize the
    goal of a smaller deterrent, then it is vital for this administration
    to defend this program.
        Today, I will be sending a letter to the Secretary of Defense,
    Secretary of State and the National Security Advisor urging them to
    take a more active role in supporting the RRW program and to answer the
    concerns that have been raised with the creation of the RRW weapon
    system.
        This administration has a strong record on reducing our nuclear
    stockpile. They are committed to reducing the stockpile to its lowest
    levels since the Eisenhower Administration, and the RRW is consistent
    with this objective.
        For anyone interested in further reducing our nuclear stockpile and
    building on the current momentum--now is the time for action, and the
    RRW program is the right vehicle.
        Now let me turn to the other aspects of this budget request.
        I do have concerns about the cuts to the science, engineering and
    experimental activities that support the science-based stockpile
    stewardship activities. Funding for these activities has been cut by
    more than $113 million in this request. I believe the focus on
    transformation puts too much emphasis on facilities and not enough on
    science.
        Going forward it is vital that we sustain our scientific
    capabilities, especially with an RRW design. The JASONs, an independent
    team charged with evaluating the RRW program, also indicated that
    resolving important scientific questions is critical to having
    confidence in the stockpile without underground testing.
        The facts speak for themselves; all three of the labs received a
    net reduction in funding, while funding for the manufacturing plants
    was increased despite the fact there is $60 million in unobligated
    balances at the plants.
        I am surprised by the differences between the Office of Science and
    NNSA budget requests for fiscal year 2008. The Office of Science is
    committed to fully utilizing its experimental facilities and expanding
    its computational and simulation capabilities.
        The NNSA budget has taken the opposite strategy and reduced funding
    for science and experimental activities and proposes to reduce the
    number of NNSA computers from three machines to two.
        I do not believe this strategy is sustainable.
        Now let me turn to Nonproliferation. One of the most challenging
    projects before this subcommittee has been the MOX plant. This facility
    remains the preferred alternative to eliminating 34 tons of excess
    weapons-grade plutonium and fulfills our commitments under the Fissile
    Materials Agreement with Russia.
        I am told by NNSA that the MOX plant remains the most cost
    effective and timely solution to eliminate this material.
        I continue to support this initiative and believe DOE should do
    more to dispose of excess plutonium as a means to mitigate the rising
    security costs. The fiscal year 2008 request includes $881 million for
    security, an increase of $120 million above the fiscal year 2007 level.
    I am concerned that security costs continue to take a larger and larger
    bite out of the mission.
        Mr. D'Agostino, your testimony only makes brief mention of your
    consolidation efforts. I would like to learn more about NNSA's strategy
    to permanently dispose of our excess material and put a stop to the
    rising security costs.
        Mr. Chairman, I believe we need to give very close scrutiny to the
    level of assistance we are providing Russia. When we initiated many of
    the projects under the Cooperative Threat Reduction initiative, Russia
    did not have the financial means to protect and secure nuclear material
    within its country.
        Now, that picture has changed and Russia enjoys a budget surplus as
    they have profited immensely from the high price of crude oil and
    natural gas. I no longer support providing massive subsidies to
    Russia's military establishment and believe they should now be expected
    to pay for their full share of the nonproliferation obligations.
        I intend to work with the NNSA to identify areas where we can
    reduce our subsidies to Russia.
        Finally, I would like to make mention of the success of the Naval
    Reactor program. This program supports the safe and reliable operations
    of 103 nuclear plants in our naval warships.
        I am very proud of the long-term record of success of this program
    and I wish you well in the future.
        Mr. Chairman, I appreciate your patience and I will have several
    questions for our witnesses.

        Senator Domenici. But, I want to say, for a small
    committee, we have a very big sized plate that is full, not
    just full of money, but full of some of the most important
    issues to the American people that any subcommittee, any full
    committee should have, much less this small subcommittee that
    you chair. That people wonder, what in the world is energy and
    water anyway.
        And, we have a series of funds in here for Russia. Let's go
    back about 8 or 10 years, and I want to look at this with you
    very in-depth because I'm wondering whether we ought to give
    them anything. I was the proponent of the Russian programs.
    But, Russia's got more money than we do to spend. If they don't
    care about the nonproliferation, I'm just wondering why we
    should. These are nonproliferation programs, pure American
    dollars. That's one program.
        We've got GNEP in here, at least we've got to fund some of
    it. It's a huge program to finish the closed fuel cycle on
    nuclear energy, of nuclear waste and the development of nuclear
    power. Big monster program with three or four stopover points
    where buildings would be built, technology would be applied
    that is, as much as the biggest we've got around would be built
    anew. Do we do it or not? Do we have enough money? Good
    questions. Clearly, we have some big problems with whether or
    not the entity that you run today, Mr. D'Agostino, NNSA,
    whether it's working right or not. We're not going to have a
    long time in my opinion.
        Mr. D'Agostino. Right.
        Senator Domenici. Before it's determined that you cleaned
    it up and fixed it, or you didn't and it failed.
        Mr. D'Agostino. Right.

                          RELIABLE REPLACEMENT WARHEAD

        Senator Domenici. That's a giant job after we had so much
    faith in that new approach to handling the weaponry. Then we
    have last, but not least, the RRW program.
        I want to say to you, sir. If you represent the
    administration, and if they favor this program like I assume
    they do. And, if they assume, like I do, that it is a
    tremendous approach to reducing the stockpiles of nuclear
    weapons dramatically in the United States, both in number and
    size, within a reasonable time. And, that the same should occur
    and accrue to the Soviet Union, Russia, who has big monsters
    and they keep rebuilding them, monstrous bombs. And, we are
    supposed to set the world on edge here by telling that we are
    for the newest of technology in the RRW and to get on with the
    first, the second little batch of funding, which is going to
    bring a huge debate. And sir, if you represent the
    administration, you better leave this hearing and advise them
    that we better hear from some very big members of this
    administration who are charged with this problem and who have
    credibility. Because they are going to be attacked, this
    program is going to be attacked as being not what we say it is,
    or what you say it is, but something else, without any
    question.
        Mr. D'Agostino. Yes, sir.
        Senator Domenici. The opposite. I have found lacking, and I
    told the chairman, I found lacking the Secretary of Defense's
    ideas and yet, this is a defense program as much as it is not.
    I found that Secretary Rice was not forthcoming, at least had
    not been. And, I found that the Secretary of Defense has not
    been forthcoming. And, I believe that in short order this
    subcommittee ought to know from all of them, how they stand and
    why, and can we really do this, and is it good for the country
    and why.
        It's not too tough for me. I don't need much explaining
    right now. I'm not that smart, but I got a jump start because
    we funded a little bit of it last year. I think you know that.
    But, to me, if we can not convince people that it is time to
    have a new generation, completely different kind of nuclear
    weapons, a complete gigantic build down.
        Incidentally, this administration has a done a terrific job
    of building down the nuclear stockpile. They are the only
    administration that comes close to reducing to the levels of
    the Eisenhower administration, in reducing warheads that
    Americans had available for war use. This administration did it
    in spades. Now they want, without testing, they aren't saying,
    ``Let us test.'' They're adding to this that they won't test,
    right? Is that right, Mr. D'Agostino?
        Mr. D'Agostino. Yes, sir. To certify the warhead, that's
    right.
        Senator Domenici. This whole new thing will say, ``We'll
    produce the weapon and we'll produce assurance it will work. It
    will be small, it will be different, and you won't have to test
    it.'' Right?
        Mr. D'Agostino. That's right, sir. That's right. To certify
    the warhead we will not have to test. I believe it will reduce
    the likelihood, certainly, especially compared to the stockpile
    we have right now, we would ever need to test.
        Senator Domenici. Mr. Chairman, I have about 20 more that
    I'll put in later. I do want to thank you for your diligence
    and say what a great start this subcommittee's had, and is
    going to have under your leadership. In my opening remarks, if
    I don't get any more of them in here, I will put them in the
    record.
        I'll close by saying, Admiral, I hope that every time you
    appear before this subcommittee, the fact that you are asked no
    questions does not mean that, that we have anything but the
    greatest admiration for the work you do. If every department of
    the Federal Government could accomplish its mission pursuant to
    its goal as set and never miss the pencil point, we would have
    short hearings and great praise.
        Admiral Donald. Yes, sir. Thank you very much. It's an
    honor to appear before this subcommittee, and I do appreciate
    the support the subcommittee's provided over the years to this
    program. It's been a large part of the success.
        Senator Dorgan. Senator Domenici, thank you.
        Senator Allard.

                               PREPARED STATEMENT

        Senator Allard. Thank you, Mr. Chairman. I have a statement
    I'd like to make a part of the record if I might.
        Senator Dorgan. Without objection.
        [The statement follows:]

                  Prepared Statement of Senator Wayne Allard

        Thank you, Mr. Chairman, for holding this important hearing today
    on the National Nuclear Security Administration budget request for the
    coming fiscal year 2008.
        Over the years I have consistently supported sustaining our nuclear
    weapons stockpile, as well as efforts to develop concepts for future
    weapons. I believe that our Nation's national security is strengthened
    by our possession of such weapons.
        Some opponents of these weapons believe that they are a threat to
    our civilization. Others believe our possession of such weapons raises
    the possibility that they might be used. Many believe that if the
    United States dismantled its nuclear stockpile, then other nations
    would follow suit. And, unfortunately, some believe that nuclear
    weapons should be destroyed no matter the cost to our national
    security.
        These arguments do not always reflect the global security
    environment. First, as more than 50 years of deterrence has proven, the
    best way to ensure that a nuclear weapon is not used is to have a
    strong national defense, including nuclear weapons.
        Additionally, opponents have attacked the Bush Administration's
    nuclear weapons initiatives over the past few years, including the
    feasibility study for the Robust Nuclear Earth Penetrator, the
    development of Advanced Concepts, enhanced test readiness, and the
    construction of a new modern pit facility.
        The question that I continue to raise is where do we go from here?
    After the test moratorium went into effect and the stockpile
    stewardship program ramped up, most of our efforts became centered on
    sustaining our current nuclear stockpile. Given the political dynamics
    of the post-cold war era, this strategy seemed to make sense. But, we
    must all recognize that this decision only put off, at least for the
    time being, a larger policy decision about the future of the U.S.
    nuclear weapons stockpile. We must face the facts that our current
    stockpile is on average approaching 20 years in age.
        Again, thank you Mr. Chairman for bringing us here today and I look
    forward to hearing Mr. D'Agostino's testimony today on these and many
    other issues.

                       SECURITY AT NATIONAL LABORATORIES

        Senator Allard. It seems like the Department of Energy
    consistently has problems that raise concerns about being able
    to protect our Nation's secrets. And, we've just got a
    inspector general's report, March 2007, where we have computers
    that are missing, as far as inventories are concerned. And, I'm
    brought back to--was it 1997, 1998 I--think, Senator Domenici,
    where we had computer and security problems related to
    computers at Los Alamos and our national laboratories.
        Senator Domenici. Yes.
        Senator Allard. And, we are back in with the agencies that
    have some of our Nation's top secrets losing computers again.
    And, I'm wondering if you can explain to us how that happens?
        Mr. D'Agostino. This is my question?
        Senator Allard. Yes.
        Mr. D'Agostino. Admiral?
        Senator Allard. How do you pronounce your name?
        Mr. D'Agostino. D'Agostino, Senator.
        Senator Allard. D'Agostino. Okay.
        Mr. D'Agostino. Yes.
        Senator Allard. Got you.
        Mr. D'Agostino. Thank you. It's hard. I believe you might
    be referring to the counterintelligence laptops.
        Senator Allard. This is an inspector general report and it
    was on the counterintelligence section, yes.
        Mr. D'Agostino. That's right. With respect to control of
    material, of computers and security in general because I think
    it's not just a problem that exists at one site. It's something
    that the Secretary and I are very concerned about across all
    areas.
        Most recently, as you are well aware, we had a concern at
    Los Alamos National Laboratory last fall that resulted in
    multiple inspections by the inspector general, and the
    Government Accountability Office to look at what is going on
    with respect to cyber-security. We call it cyber-security. What
    we have found as a result of that, we had too many directives
    that were issued, by memo or email and not enough, actually,
    written down in a clear concise way and put into the contracts
    themselves. So the contractors had, what I would say, is too
    much conflicting information.
        Since that time, the Secretary had directed our Chief
    Information Officer to look at this particular problem
    specifically and the inspector general investigation that was
    done. He commissioned a special task force to look at that
    specific problem. Mr. Pike, who is the Chief Information
    Officer, provided a report. I was part of that task force that
    looked at that. We came out with a number of recommendations to
    deal with it.
        The Secretary is implementing those recommendations, in
    fact, two of the biggest recommendations were to start from
    scratch and simplify the cyber-security directives to make sure
    that it's clear what we expect from our contractors, how we
    expect our contractors to perform. And, more importantly, put
    those requirements in the contracts themselves.
        Those contract modifications are being put into the
    contracts themselves and then the next step is follow through
    with oversight by the Federal site offices and headquarters to
    make sure that we tie expectations and performance, money, and
    reward fee that we have to it. I can't explain that specific
    incident and I apologize. I don't have the details behind that
    particular incident on the laptops, but I know the Secretary is
    very concerned about this particular problem and we're taking a
    look at it, not just at the nuclear weapons laboratories and
    not just across the eight nuclear weapons sites, but across all
    17 laboratories within the Department of Energy.
        Senator Allard. It's my experience here in the Senate that
    this is a chronic problem with the Department of Energy losing
    track of computers. We always set up a committee to check it
    out and recommendations are applied and, you know, 4 or 5 years
    later it erupts again. And, I'm hoping that somebody around
    here is beginning to take this problem seriously. I think it's
    intolerable, from my point of view.
        Mr. D'Agostino. Right.
        Senator Allard. My question is, do you have money to make
    sure that you have proper controls over our Nation's classified
    information?
        Mr. D'Agostino. I know the answer to that question is yes
    and I'll explain how. In fact, right now within the NNSA our
    cyber-security budget has gone up by more than 15 percent
    compared to fiscal year 2007. But, actually there's more to it
    than that.
        For fiscal year 2009--we're putting our budget together for
    that right now--we're applying what we call risk-based and risk
    management decision processes to make sure that we know what it
    takes to fund that area. My expectation in 2009 is we'll be
    seeing additional resources in this area to address these
    particular problems. Resources are part of the problem, but the
    other part of the problem is attitude and understanding and
    having clear expectations.
        The one thing I've learned in this job over the last couple
    of years and in Defense programs is that setting clear, simple
    expectations is very important, having the expectations defined
    in contracts and in performance expectation, performance
    evaluation plans, and tying financial resources to those
    expectations so it actually drives behavior. I think that's how
    were going to get to solving this problem.
        Senator Allard. Mr. Chairman, I have one more question. I
    can either ask it now, if you'd like, or wait for another
    round.
        Senator Dorgan. You may proceed.
        Senator Allard. Okay, thank you.
        Senator Dorgan. Then I'll call on Senator Feinstein.
        Senator Allard. Thank you.

                     MIXED OXIDE FUEL FABRICATION FACILITY

        I strongly support the Mixed Oxide Program in Savannah. I
    think it's also referred to as MOX Plus, am I correct?
        Mr. D'Agostino. We just call it MOX.
        Senator Allard. Okay. When do you plan to complete your
    design work for the facility and then when do you plan on to
    begin construction and have you got any thoughts about cost
    scheduling?
        Mr. Tobey. Senator, the design is some 90 percent complete
    at this point. Small portions of the designs balance will go on
    for years because it just makes sense to do some of the design
    as the building is completed. We're ready to begin construction
    as soon as we're permitted by law, after August 1 of this year.
    And, it would, the construction would go on for some 15 years,
    is the baseline.
        Senator Allard. And, when do you think you'll be able to
    process materials?
        Mr. Tobey. The construction will be complete in 2016. We'd
    be able to process materials immediately thereafter.
        Senator Allard. Thank you.
        Mr. Tobey. And, it would run for 15 years after that.
        Senator Allard. Thank you, Mr. Chairman.
        Senator Dorgan. Senator Allard, thank you.
        Senator Feinstein.
        Senator Feinstein. Thank you very much, Mr. Chairman.
        Mr. D'Agostino, I want to thank you for the time you spent
    with me on Monday.
        Mr. D'Agostino. Yes, ma'am.

                          RELIABLE REPLACEMENT WARHEAD

        Senator Feinstein. I want to say that you're a straight
    shooter and that you're honest and direct. And, I want you to
    know that I really appreciate this.
        Mr. D'Agostino. Thank you.
        Senator Feinstein. I believe I now have a very good idea of
    what is involved in this warhead. This is a real point of
    conscious for me. I grew up following Hiroshima, 15 kilotons,
    and Nagasaki, 7 kilotons. And, I saw the wake of that all
    during my childhood. And, the mushroom cloud was the thing we
    most feared growing up----
        Mr. D'Agostino. Right.
        Senator Feinstein [continuing]. In this very great country.
    A December 2006 report by the national laboratories, has showed
    us that the plutonium pits have a lifespan of at least 85
    years. And, it's my understanding that next week, the American
    Association for the Advancement of Science is expected to issue
    a report calling on the administration to develop a bipartisan
    policy on the future of nuclear weapons and nuclear weapons
    policy before moving ahead with the RRW. My vote on this,
    depends on whether I believe this is, in fact, a new nuclear
    warhead. I told you that Monday. I have thought about it all
    day Tuesday. I've gone over in my mind, those things that we
    shared in that classified briefing.
        I worked with Sam Nunn, when he was in the Senate of the
    United States. And, I want to quote for a moment, his testimony
    on March 29 before the House Energy and Water Appropriations
    Subcommittee. And he noted, and a quote, ``On the RRW itself,
    if Congress gives a green light to this program in our current
    world environment. I believe that this will be misunderstood by
    our allies, exploited by our adversaries, complicate our work
    to prevent the spread and use of nuclear weapons and make
    resolution of the Iran and North Korea challenges all the more
    difficult.'' That's Sam Nunn, who's the chairman of the Nuclear
    Threat Reduction. And, I think very well respected for his
    background and work in this area.
        I would hope that every member of this subcommittee would
    get a classified briefing on this proposed new, proposed change
    in the warhead. Let me ask this question. Has the NNSA assessed
    the impact of the United States development of a new warhead on
    U.S. nonproliferation efforts, including efforts to convince
    other countries not to acquire nuclear weapons? And, how do you
    justify this cost to our nonproliferation efforts?
        Mr. D'Agostino. Thank you, Senator. I appreciate your
    comments earlier.
        I'm going to answer it and I'd like Mr. Tobey, as well, to
    talk a little bit about the international piece. His folks
    spend a tremendous amount of time overseas talking about this
    very subject. I don't recall if you were in the room when I
    responded earlier to the idea.
        Before we made the announcement on the Reliable Replacement
    Warhead concept, we did talk to our allies, the North Atlantic
    Treaty Organization (NATO), as well as other allies, including
    Russia and China about the strategy and the understanding that
    we want to reduce the size of our stockpile. As I mentioned to
    you earlier this week, I'm committed to making sure that when
    we reduce the size of our stockpile and we look at a future
    nuclear deterrent, that my responsibility is to make sure that
    that deterrent is as safe and as secure as humanly possible, as
    our technology allows it to be. I'm convinced that our cold war
    stockpile has, even though we assess it on an annual basis
    right now.
        Senator Feinstein. You assess that it's safe and secure on
    an annual basis?
        Mr. D'Agostino. Assess it, assess it's safe and secure on
    an annual basis. That over time, we'll be put into a situation
    where this country will be faced with a question that I don't
    want the President, whomever the President may be in the
    future, to have to decide whether we need to conduct an
    underground test. I want to stay as far away from the
    underground test question as possible.
        The question in my view, becomes if there is a future
    nuclear deterrent, and I do understand Senator Nunn's comments,
    then how should, what should it look like? I believe it should
    be small, as small as possible.
        I believe the nuclear footprint on the United States, how
    many sites and the size of the sites and how much money the
    Nation invests over a lifetime, should be commensurate with
    that. I believe that the Nuclear Posture Review that was put
    out a few years ago, which was the concept of replacing the
    large number of nuclear warheads as a nuclear deterrent during
    the cold war is not as good as having a small number of very
    safe and secure warheads with the ability of the Nation to
    respond in the future.
        Right now we are faced, I believe, with a fairly important
    point, as you are absolutely right, on what strategy is the
    right strategy. I'm concerned that if we go down a track of,
    without considering this, without understanding what RRW really
    means, then we won't actually have the information that I can
    present to you and say, ``This is what it really means with
    respect to how small the stockpile can be.''
        Senator Feinstein. Which you don't have yet.
        Mr. D'Agostino. I don't have that, that's right, ma'am.
    And, that's what I'd like to do in the next 9 to 12 months, is
    to develop the cost, the schedule, and scope with the United
    States Navy to give you a real number. How much it costs? What
    are the offsets? How small does the stockpile get as a result
    of this? What does this mean to nuclear testing, exactly what
    does this mean to nuclear testing? And, how many more nuclear
    weapons should we be dismantling? I want to be able to put that
    in writing, almost like a contract, if you will.
        Senator Feinstein. Could you speed it up and do it before
    we vote on whether to approve this appropriation?
        Senator Dorgan. Would the Senator yield on that point?
        Does the appropriation request for this coming fiscal year
    also include some small amount of money for an RRW-2, which
    would be a follow up, follow-on contract? And, if so, what,
    what's the purpose of talking about a second RRW before the Air
    Force, prior to making the decision the Senator from California
    is asking?
        Mr. D'Agostino. That's a good question, sir. We have to
    look at our B61 bomb. The B61 bomb is an Air Force bomb. It was
    designed in the early 1960s, essentially, almost 40, 45, 50
    years ago. It's got vacuum tubes inside the system itself. We
    have other concerns that I'll be glad to talk specifically in a
    classified session, I'll be glad to talk about that.
        And so, the idea was, do we--right now, we're going to be
    doing a life-extension plan, starting in the 2012, 2010 to 2012
    timeframe. And the question is, does it make sense to rebuild a
    bomb? As we will do if we don't move forward in a different
    direction or we build bombs the same way we did back in the
    1950s and 1960s? I think that's irresponsible to do that. The
    technology has changed so much in the last 50 years. The
    threats have changed so much in the last 50 years. It would be
    irresponsible for us to replicate the past.
        I don't think it's right for our workforce, it makes them
    work on components like Beryllium. Beryllium is a very
    hazardous material, and causes berylliosis, which is a disease
    we didn't know about 50 years ago. In fact, this Nation is
    spending money right now, essentially compensating our workers
    who, over the past 40 years have devoted their life to national
    security, and now are finding themselves sick. I don't want to
    get into that in the future.
        Senator Feinstein. Would you go back to your proposal?
        Mr. D'Agostino. I think it would make sense and I want to
    make sure the subcommittee gets the detailed information on the
    cost, the scope and the schedule of what an RRW could do, and
    that's what we're working on right now. We are authorized and
    appropriated to do that, and we are doing that. And it's going
    to carry forward into 2008.
        When we get that information together, and when we can look
    at what this means to the size of the stockpile, to what things
    we take off the table from our current plans, and how does this
    impact the actual infrastructure--and I use that term to
    describe buildings and processes--and how much money we save
    from that, I think the actual data that I have right now is
    compelling, but I want it to be, what we call, budget quality.
    In other words, the quality that I feel I can stand behind, and
    come to this.
        Senator Feinstein. I thought what you had said to me
    earlier, that it might be possible to actually speed up the
    reduction of the nuclear fleet, so to speak.
        Mr. D'Agostino. Oh, okay, yes, ma'am. We were talking about
    dismantling warheads.
        Senator Feinstein. Right.

                             WARHEAD DISMANTLEMENT

        Mr. D'Agostino. Yes, ma'am. A little bit different from
    RRW, we're going as quickly as possible given the resources to
    work with the Navy to get the picture right.
        On dismantlements, what we did last year was we made a
    unilateral decision outside of the Defense Department space, to
    accelerate by about 25 percent, on average, our dismantlements
    of cold war nuclear warheads.
        In fact, in fiscal year 2007, this year, we're in right
    now, we had made a commitment, I made the commitment to the
    Secretary, and the Secretary talked to the Secretary of
    Defense, of a 49 percent increase in the number of warheads
    we're dismantling, compared to fiscal year 2006.
        In all likelihood, we're going to not only hit that target,
    we're going to exceed it. We'll probably dismantle twice as
    many warheads this year as last year. The key will be keeping
    on that pace year in and year out. Right now, even though we've
    dismantled 13,000 warheads in the timeframe I mentioned
    earlier, in the 1990s, and we have a number of warheads to
    dismantle, that what we've got is a plan that takes us out into
    the early 2020 decade. And, ultimately, in the end, we need to
    pull that date, the end date, up forward.
        Senator Feinstein. How many warheads are in the RRW, long-
    term program?
        Mr. D'Agostino. If you take the concept to its end. If we
    believe that we're going to have fewer and safer and securer,
    it would be the number of warheads that I can talk about
    publicly, it's the Moscow Treaty number of 1,700 to 2,200
    warheads plus, a number of what we call reliable spares.
        Because, when we say operationally deployed, these are
    warheads that are with the Department of Defense, whether
    they're in silos or at Navy bases, and we need to maintain a
    fraction of that number within the Department of Energy because
    we do surveillance. We take some systems out and we replace
    them to check on their quality.
        That is ultimately the number that you need to understand
    and that I need to understand that the Department of Defense
    can collectively come to. I have in my mind what it could be,
    it would be not appropriate, I don't believe, to discuss it in
    public until I've had a chance to talk to the Defense
    Department.
        Senator Feinstein. So, we could sit down with you, again,
    in a classified way and go over some of this?
        Mr. D'Agostino. Yes, ma'am----
        Senator Feinstein. Because it's very important.
        Mr. D'Agostino. [continuing]. Yes ma'am, I'd be glad to do
    that, I will look forward to it, thank you.
        Senator Feinstein. Thank you.
        Thank you, Mr. Chairman.
        Senator Dorgan. Senator Feinstein, thank you.
        I think that might be a good idea, I'm interested in this
    issue of deployed weapons, versus total weapons, and the
    circumstances surrounding that, weapons spares, et cetera.
        Mr. D'Agostino. Yes, sir.
        Senator Dorgan. And I think that is most appropriately
    discussed, I think, in a classified setting.
        Senator Domenici, did you have other questions you wish to
    ask?
        Senator Domenici. First I want to say to the members of the
    subcommittee that are here, and in particular, Senator
    Feinstein, that it is quite amazing, as a Senator, to be able
    to say in the record this afternoon that great issues like the
    one we are discussing are frequently done without a lot of
    television, via a hardworking subcommittee. I'd say this one
    works hard, it couldn't produce anything if it didn't, it's so
    complex, unless we just abdicated to someone and said, ``We
    don't want to do anything,'' and your questioning indicates to
    me that you can join in a discussion that is predicated upon
    good sense of the past, and some good thinking about the
    future, even if it's in the most complicated, and almost
    horrific context, that has to do with building nuclear weapons
    and dismantling and destroying them.
        I do want to say to you that someone like me whose age you
    would just have to guess, because I'm in such great shape,
    nobody knows I'm a very old man, and people think I'm 55--
    pretty good, right? But, what I wanted to say to you, whatever
    generation I came from, I had the same recollection of the
    bombs, and I learned an awful lot more about it by being not
    too far from Los Alamos for my childhood.
        When we used to drive to Los Alamos as a family, in our
    family car, just for the pleasure of being turned down by the
    armed guards at Los Alamos who would tell this wonderful little
    American family, ``Well, you can go no further, make a U-turn
    and go home.'' And we used to all wonder in our car, and talk
    with my dad, who had only a fourth grade education, about all
    of the things we imagined that were going on behind that high
    wall. That was it, that was the central focus for all of the
    building that has occurred since then, that you are aware of.
        I then involved myself very deeply in the next phase around
    here, which had to do with stopping testing, underground
    testing, unless the American future was at stake. And, I
    learned all I could about that, and for the first time, in
    spite of my great friend Sam Nunn, who just called me yesterday
    for a wonderful, ever-so-often conversation, if I had that I
    would have asked him about it, but I forgot. Because we agree
    on most things, but I would ask him if he would sit down with
    me, and discuss the alternatives, which I think he must do.
    Because his voice is too loud to remain unfettered, he must
    tell us what he will do, if he won't do this.
        Because that's going to end up being the question--if we're
    not going to do this, in terms of a dismantlement and change,
    what are we going to do? Are we going to leave this stockpile
    as our legacy, this one, and say, ``We just hope we never have
    to test.'' I don't want to do that, because I feel kind of
    confident that this subcommittee could make a good decision.
    And I think we ought to make the decision, not leave it for 10
    years from now, when somebody will make it secretively, and
    you'll hear about it as a puff out there in Nevada, because we
    can't tell the world what we did.

                     MIXED OXIDE FUEL FABRICATION FACILITY

        Now, having said that, I wanted to ask you about MOX, and
    the facility--how is it coming, and if we budget what the
    President asks for, where will we be? Whose got MOX?
        Mr. D'Agostino. Well, I'm going to ask Mr. Tobey to comment
    on that, and I can follow through.
        Mr. Tobey. Senator, as you probably know, we are ready to
    start construction after August 1 of this year. We're eager to
    do so, we believe it's an important program. It's consistent
    with U.S. national security and nonproliferation interests. We
    would aim to have the facility complete by 2016, and to operate
    it for at least 15 years thereafter.
        Senator Domenici. What is it going to do, so we'll all have
    on the record--we're going to build this building and do
    something, what are we going to do?
        Mr. Tobey. In the first instance, we will dispose of at
    least 34 metric tons of U.S. plutonium access to defense needs.
        Senator Domenici. Where did we get that?
        Mr. Tobey. Pardon me?
        Senator Domenici. Where did we get that?
        Mr. Tobey. From the dismantlement of weapons.
        Senator Domenici. Our own?
        Mr. Tobey. Yes sir. And it will also, it is part of an
    agreement with Russia under which Russia would also dispose of
    34 metric tons of weapons-grade plutonium.
        Senator Domenici. And I'm very glad to say, as a member of
    this subcommittee, I had something to do with that. In fact, I
    sat over there in Russia, with the President of the United
    States, seeing if they would agree. They agreed, and it took 3
    more years before we could get started. Now, we have people
    saying, we shouldn't build in the United States--shouldn't
    proceed in the United States.
        I knew all the answers that I, questions I asked, but it's
    absolutely impractical to me to have a facility that over the
    ages, we could not build because of political problems. It
    approved on all sides, and then the Russians agree to dismantle
    and deliver the equivalent of 34 tons of plutonium to be run
    through a MOX facilitating plant to produce mixed oxide fuel.
    That's what it is, isn't it?
        Mr. Tobey. Yes, sir.
        Senator Domenici. Where it gets its name--that's going to
    be reusable, isn't it?
        Mr. Tobey. Yes, it would become fuel for U.S. reactors.
        Senator Domenici. Fuel for U.S. reactors----
        Mr. Tobey. With significant value.
        Senator Domenici [continuing]. And we have people not
    wanting to do it. I wonder what they would want to do with the
    residual that is high-flying plutonium. And we get to run it
    through this piece of equipment, and it changes from that to
    something much less maligned than its current status, is that
    right?
        Mr. Tobey. Yes, sir, it is. There are no good alternatives,
    certainly none that would provide the nonproliferation
    benefits. And frankly, simply continuing to store the material,
    using 50-year life cycle costs, is the most expensive thing we
    could do with it.
        Senator Domenici. You got it.
        Mr. Tobey. And, given that the half-life of plutonium is
    24,000 years, it's not unreasonable to use a 50-year life cycle
    cost standard.
        Senator Domenici. I thank you very much, and I want to say
    to the chairman that I would like to join in a more in-depth
    briefing if you would like that, and of course, the Senator
    from California wants to do that, and I would like to go with
    you so we don't have to do it twice if you think that's a good
    idea.
        Senator Dorgan. Senator Domenici, I think what we will do
    is arrange a classified briefing and invite members of the
    subcommittee to it, so that we can have a fuller discussion in
    a classified setting of all of these issues.
        Mr. Tobey. Yes, Mr. Chairman.
        Senator Dorgan. Senator Reed. I have no further questions.
        Senator Reed. Thank you very much, Mr. Chairman.

                          RELIABLE REPLACEMENT WARHEAD

        I want to just cover some specifics. I think the questions
    have been asked, but I just want to nail things down. We're in
    phase 2A right now in the RRW, when do you anticipate
    requesting permission from the Nuclear Weapons Council and the
    Congress to start phase 3?
        Mr. D'Agostino. Senator, I'd expect it'll take us 9 to 12
    months to finish this phase 2A activity, probably putting us in
    the January/February timeframe of next year, roughly. Then we
    would take that decision to the Nuclear Weapons Council. I sit
    on the Nuclear Weapons Council with Mr. Krieg and others from
    the Defense Department.
        We will look at that phase 2A study. In particular, we will
    look at what it does to what we call the nuclear weapons
    stockpile memorandum. This is a memorandum the President
    ultimately signs and sends over to Congress, which provides the
    details on the size of the stockpile. And, I think what I--not
    only do I believe as a matter of course, but I think it's
    important for this Congress is to understand how RRW drives the
    size of that and provides the details of the stockpile.
        We will have a vote within the Nuclear Weapons Council on
    whether to move forward on what we call phase 3, which is a
    little bit of a development phase, or design development phase,
    where we would do some engineering work. We would run more
    calculations, maybe do some materials tests, so that would be
    later on next year.
        Senator Reed. Later on, being July, June, August--just to--
    --
        Mr. D'Agostino. We're having our first meeting with the
    Navy out at Lawrence Livermore on May 1, so I'll have a
    schedule, probably in another 2 months that I can come talk to
    you about, sir.
        Senator Reed. Just, specifically, and you've already, I
    think, answered this in response to other questions--the RRW
    design is a new warhead, will be a new warhead, correct?
        Mr. D'Agostino. It is a new design for an existing warhead.
    I'm not a lawyer, but it's an existing military capability.
    It's a replacement warhead, but it's a new design for that
    warhead.
        Senator Reed. The warhead is the one for the Navy program,
    the D-5 missile program?
        Mr. D'Agostino. It's to replace the W76, that's right, sir.
        Senator Domenici. Senator?
        Senator Reed. Yes, sir.
        Senator Domenici. Can I ask you if you would do me a favor?
        Senator Reed. Yes, sir.
        Senator Domenici. Out in the audience are 10 trainees from
    the NNSA Training Program, Mr. D'Agostino, it's your training
    program for students from up in your country?
        Mr. D'Agostino. Yes, Senator, they are what we call Future
    Leaders. The average age in the NNSA is close to 50 years, and
    we recognize that we need to train and bring in the best folks
    we can, similar to the model that Admiral Rickover and Admiral
    Donald go off and interview and bring in bright people, bring
    new ideas into the organization. Ten of them are here, sir.
        Senator Domenici. Could they stand up?
        Mr. D'Agostino. Sir.
        Senator Domenici. Mr. Chairman, I greatly appreciate you
    permitting us to do this, and could I just welcome them, thank
    you for coming, and we hope you have a good time.
        Mr. D'Agostino, thank you for being so cordial to them.
        Mr. D'Agostino. Thank you, sir. I appreciate it, it's good
    to see them here. I appreciate having them here.
        Senator Dorgan. All of us welcome you, and we hope that
    you've enjoyed the subcommittee hearing, and we appreciate your
    service to our country by serving in public service, which is a
    very honorable and important thing to do. So, we welcome you
    here.
        Senator Reed.
        Senator Reed. I think a critical question here, with
    respect to RRW is the issue of testing. Is it a specific
    objective of the program to be able to eliminate the need for
    testing in the future? Yes or no, is that going to be a
    specific objective?
        Mr. D'Agostino. I want to be very precise in my answer, I
    think it's a little bit more difficult than a yes or no. But,
    here's what I'm going to say--we will not move forward with
    RRW, if it requires a test to certify that warhead. That is not
    something I would recommend to the Nuclear Weapons Council. It
    would be a long discussion in the Nuclear Weapons Council
    before that happened.
        Now, we do assess, on an annual basis, our stockpile for
    testing. I can't predict what might happen 40 years from now,
    as that warhead ages, but that's not, my view, is not moving
    forward.
        Senator Reed. Because Admiral Donald's been so cooperative,
    he never gets asked a question.

                               NAVY HOME PORTING

        Admiral Donald--how does your Office of NAVSEA and the
    Department of Energy participate in the overall EIS process for
    Navy home porting changes for potential additional submarines
    for Guam? In 20 words or less.
        Admiral Donald. Yes, sir, we participate with the Navy
    anytime there's an environmental impact statement or a home
    port change or a significant--potential significant impact to
    the environment. We participate as part of that team, obviously
    with concerns about the facilities that may be needed to
    support the nuclear-powered ships in the area, obviously with
    our environmental record, that subject is a matter of public
    record as well. And that's part of that consideration should
    that, any expansion be required in that area.

                   NONPROLIFERATION RESEARCH AND DEVELOPMENT

        Senator Reed. Thank you, sir. The chairman's been very
    kind, but I have one additional question, Mr. Tobey. You might
    want to take this for the record, because we, we talked about
    this before, I think, in the Armed Services Committee, which
    is--if additional funding were available for nonproliferation
    research and development, how would you use it? And--would you
    like to take that one back and send us a note, or----
        Mr. Tobey. I think I actually would like to answer that, if
    that's all right, Senator?
        If the Congress appropriated, and the President signed
    additional funding for research and development, I think we
    would direct that funding toward greater efforts on
    radiological detection. That's a critical effort that will
    support our abilities across the board, as you may understand,
    and as we've discussed. We're moving our efforts from those
    that are concentrated mainly on the former Soviet states, to
    threats that are originating elsewhere, and also from the
    immediate facilities that house nuclear weapons and material
    where our work is coming to closure, to being more vigilant on
    borders, and in other places.
        And, in order to meet the emerging threat, we do need to
    work on radiological detection, we are working on radiological
    detection, and the President's budget does support that. But,
    that would be an area of additional interest.
        Senator Reed. Thank you very much.
        Thank you, Mr. Chairman, you've been very kind.
        Senator Dorgan. Senator Reed, thank you very much.
        These are--as I indicated when I started--very complicated
    issues. And I have tried very hard to meet with a lot of
    people, study these issues, try to understand these issues in
    recent months. And there's a lot to know, and a lot to
    understand, and many answers that you don't have, Mr.
    D'Agostino, and I don't have, and Senator Domenici doesn't
    have--but we have to try to, as best we can, think through
    these issues, in the context of what is in the best long-term
    interest of this country.
        The survival of this planet, I think, depends on our
    getting these things right. We've been very lucky that for 60
    years, we have not had another nuclear weapon used in anger.
    Because once one is, a planet in which there are 15,000 to
    20,000 nuclear weapons, and the release of them back and forth,
    this civilization will cease to exist, at least as we know it.
        I said earlier, at another hearing, that I very much
    opposed and felt it reckless for those at a time, who talked
    about the potential use of nuclear weapons, the need to build
    new nuclear weapons, the need to build designer nuclear
    weapons, the need to be able to burrow into caves and create
    bunker busters, and some talked about nuclear weapons were
    simply another weapon, and they were usable, were needed to be
    used under certain circumstances, I view that as pretty
    reckless, and pretty troubling, personally.
        Because there are a lot of nuclear weapons that exist, and
    because our country has signed up to a treaty that says we
    agree to some sort of goal at some point, not described with
    respect to time, that we would like to abolish nuclear weapons.
    Because of all of that, I mean, the question for all of us now
    is how do we reach into the future, and describe a future
    without nuclear weapons, or at least moving toward the
    reduction of nuclear weapons?
        I want to just tell you, I read a book awhile back that
    describes something I'd previously read in a--I believe, Time
    or Newsweek, about October 11, I believe it was exactly 1 month
    after September 11, 2001. A time during which a CIA agent code
    named Dragon Fire reported that a small, I believe 10 kiloton,
    at least, a small Russian nuclear weapon had been stolen, and
    had been smuggled into either New York City or Washington, DC,
    by terrorists, and was to be detonated in a major American
    city. That didn't hit the press, was not a part of a public
    story, but for about 1 month, at least, there was great, great
    concern about whether or not that report was accurate.
        It was later discovered to have not been an accurate
    intelligence report, but in the post-mortem, the evaluation was
    that it was perfectly plausible, that perhaps someone could
    have stolen a 10 kiloton nuclear weapon. Perhaps, if stolen,
    and gotten by a terrorist organization, it was plausible that
    it could have been smuggled into an American city, and
    plausible that such a weapon could have been detonated. And
    then we wouldn't be talking about several thousand casualties,
    we'd perhaps be talking about several hundred thousand
    casualties.
        That is the angst about the potential loss of, or stealing
    of one nuclear weapon. One. There are about, we believe, 20,000
    on this Earth. I think the survival of our planet depends on
    our getting all of this right--we've been very lucky for 60
    years. Maybe we'll be lucky for the next 600 years, I don't
    know.
        We have, in fact, a Stockpile Stewardship program in this
    country, that goes on, has gone on for some while. That means
    that we work on the weapons that exist, to make sure that they
    are weapons that are available in the event that we were
    threatened as a country, so there's nothing new about stockpile
    stewardship, about people in your organization that routinely
    do this kind of work.
        The RRW program, my colleague from California raises
    definitional questions, I don't know the answers to those. I
    think the discussions that will continue now in the early
    stages of this program, we'll try to find those definitions,
    and try to think through--what are the consequences, Senator
    Domenici asked, what are the consequences of not proceeding?
    Senator Feinstein would ask, what are the consequences of
    proceeding? That's the sort of thing, it seems to me, that this
    country needs to grapple with as a set of policies.
        Senator Domenici today has said that--and he showed me the
    letters--that he has written to the Secretary of State,
    Secretary of Defense, and one other--and I think, this is--as
    I--the reason I describe all of this at the end of this
    hearing, is this is not just some other issue. Senator Domenici
    is right--this subcommittee has in its lap some very serious
    questions to answer.
        You, Mr. D'Agostino, run an organization that is very, very
    important, and also needs to get this right, working with us to
    get it right, and I've said previously, with some of the folks
    who have appeared, I'm impressed with the quality of some of
    the folks who have come to public service, I'm very impressed,
    Mr. D'Agostino, with your willingness to sit with us----
        Mr. D'Agostino. Thank you.
        Senator Dorgan [continuing]. You and I have had a chance to
    visit on a couple of occasions, and have traveled to New Mexico
    to Sandia. I thank you for serving our country.
        I'm not sure how I come out on all of this at this point.
    I'm trying to understand it all, it's very complicated. And I
    don't think my colleague, Senator Domenici, would allege it's
    simple at all----
        Senator Domenici. Oh.
        Senator Dorgan [continuing]. It's very complicated, for
    everybody on all sides.
        But I pledge that I, and I think all members of this
    subcommittee want to try to find a way to get to the right
    answer here on these issues. Because I think the survival of
    the planet, at some point, I don't think it's expressing it too
    starkly--depends on our doing the right thing.
        And, so I want to thank the witnesses for coming. Mr.
    Tobey, thank you, you have a very important part of this. I'm
    going to submit to you some questions, and Mr. D'Agostino, I'm
    going to submit some additional questions to you.
        Mr. D'Agostino. Sure.
        Senator Dorgan. Admiral, thank you for your service.
        And, let me again, to the new leaders, say to you--I think
    public service is an unbelievable honor. Those of you who come
    to Government and say, ``I want to be a part of this,'' thanks
    for doing that, and it's nice to see an agency that worries
    about the future. I think it's sort of crass and unbelievably
    inept of you, Mr. D'Agostino, to define 50 years of age as old.
        Mr. D'Agostino. I apologize.
        Senator Dorgan. But, we welcome to those of you, if you
    choose to have them, it does you no service on this
    subcommittee, does it?
        But in any event, thanks for being worried about renewal
    for those old codgers who are nearing 50.
        Mr. D'Agostino. I don't have much hair.
        Senator Dorgan. Senator Domenici, thank you, and let me
    thank the witnesses, this hearing is recessed.
        Senator Domenici. Mr. Chairman?
        Mr. D'Agostino. Thank you, Mr. Chairman.
        Senator Dorgan. Yes?
        Senator Domenici. I just want to say, and then you
    certainly are welcome to comment, you used the word that we
    have been ``lucky'' for the last 60 years, I think you really
    mean, we have been fortunate. We have not been lucky--we have
    spent more brain power of the highest quality, and more money,
    if money means anything, than on any other issue or program
    that has to do with military, we've spent more on nuclear
    weapons and the defense that goes with them, and defending from
    them, and making sure they're never used. Because most of what
    we spend money on is to make sure nobody uses them, because
    they know they can't use them, because they know for absolutely
    for certain, that it would be a useless gesture. We spend much
    on that. And there's much to learn from how well we've done as
    we move ahead with what we contemplate in the future.
        And I know what you meant, and you know what I meant. I
    sounded flippant a couple of times, in speaking about Sam Nunn,
    I didn't intend to be, and you don't intend to be, and use any
    of the words here, they're all most difficult.
        Senator Dorgan. No, I think, but I use the word luck for
    this reason. I think in 1945 had someone said, ``You know what?
    We're going to build thousands of additional nuclear weapons,
    thousands of them, and by the way, in the next 62 years, none
    will be used in anger, that's going to require some
    unbelievably good work, and a little luck.''
        Senator Domenici. You got it.
        Senator Dorgan. I think most people would believe that to
    be the case.

                         ADDITIONAL COMMITTEE QUESTIONS

        The subcommittee will submit the balance of the questions
    for your response in the record.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                Questions Submitted to Hon. Thomas P. D'Agostino
                Questions Submitted by Senator Pete V. Domenici

                                  COMPLEX 2030

        Question. Mr. D'Agostino, Last year GAO reviewed the NNSA's Complex
    2030 and had several recommendations that NNSA address as part of its
    $1.5 billion transition plan. The GAO was critical of the NNSA decision
    to proceed with a plan, without knowing the military requirements for
    the stockpile.
        GAO recommended that DOD should provide clear, long-term
    requirements for the stockpile, including quantity, type and mission.
    Based on this information NNSA could then develop cost estimates based
    on the military requirements and then develop a transformation plan to
    support the preferred stockpile.
        Mr. D'Agostino, it appears that without the Department of Defense
    requirements it would be tough to develop an accurate or precise
    transformation plan.
        Has the Department of Defense provided its long-term requirements
    for the stockpile? What about pit capacity and future RRW requirements?
        Answer. The President defines the size and composition of the
    nuclear weapons stockpile by his Nuclear Weapons Stockpile Plan (NWSP),
    which is reviewed annually. The official requirements documents, such
    as the NWSP, may lag expectations relative to the size and composition
    of the future stockpile. Consequently, our transformation plans must be
    sufficiently robust to cover a realistic range of future requirements.
        With the President's commitment to achieving the smallest possible
    stockpile size consistent with national security, future production
    requirements are likely to support a much smaller stockpile. In
    evaluations led by the Department of Defense, we have established a
    range of possible stockpile scenarios that bound the most likely threat
    environments of the future. For each scenario, we have determined
    warhead production capabilities and capacities, including the
    manufacturing quantities needed for plutonium and highly enriched
    uranium components. Thus, the range of possible scenarios provides
    bounds for production capabilities and capacity ranges that we might
    need in the future. The capabilities to design, certify, and produce
    Reliable Replacement Warhead (RRW) concepts and to manufacture 125
    (net) pits per year are consistent with these evaluations.
        As warhead quantities are reduced, it is important to recognize
    that defining future capability requirements becomes more important
    than specifying capacities. We must have a given capability (e.g.,
    manufacturing uranium parts with specific characteristics) regardless
    of whether we are making one or several hundred warheads. We frequently
    find that the capacity provided by the mere existence of a specific
    capability is sufficient to provide quantities needed to support a
    small stockpile. For example, a new plutonium facility designed
    according to modern lean manufacturing, safety, and security practices
    could have a minimum capacity in the range of 125 RRW pits per year and
    a lower value for legacy pits. Reducing the design capacity further
    would not result in significant reductions in facility square footage
    or cost. However, eliminating a specific capability requirement reduces
    the floor-space and fixed-cost for maintaining that capability in a
    state of readiness. One benefit of an RRW approach is that fewer
    challenging or problematic capabilities must be maintained when
    compared to legacy systems, thus, enabling better optimization of the
    Complex in the long-term.
        Question. Without the DOD requirements, how has the NNSA adopted
    the transformational plan? What if one or more of the elements such as
    the RRW isn't implemented?
        Answer. We need to transform the nuclear weapons complex
    infrastructure whether we proceed with Reliable Replacement Warhead
    (RRW) concepts or retain legacy designs. However, RRW concepts enable
    better optimization of the Complex in the long-term because some
    specific capabilities (e.g., beryllium component production) do not
    have to be retained. A primary objective of nuclear weapons complex
    transformation is to establish a responsive infrastructure capability
    that is sustainable and cost-effective for the long-term. There are key
    capabilities that must be present to meet this objective. The Complex
    must have functional capabilities to: (1) design, develop, and certify
    nuclear weapons; (2) manufacture and surveillance of plutonium
    components; (3) manufacture and surveillance of uranium components; (4)
    produce and manage tritium; (5) manufacture and surveillance of non-
    nuclear components; (6) assemble and disassemble nuclear weapons and
    components; (7) storage and transport of nuclear weapons and material;
    and (8) provide the science, engineering, and technology essential to
    our nuclear deterrent and our ability to respond to technological
    surprise. In the absence of detailed projections of stockpile size and
    composition for future decades or without an RRW, transformation plans
    must be sufficiently robust to cover a realistic range of future
    requirements.
        Question. Have you reviewed the GAO findings and how has this
    changed your strategy as a result?
        Answer. The Government Accountability Office (GAO) findings in
    Views on Proposals to Transform the Nuclear Weapons Complex (GAO-06-
    606T) reiterated that decisions regarding nuclear weapons complex
    transformation must be based on good information. We concur and thus
    the GAO findings have not changed our strategy. Specific findings
    identified four actions that the GAO felt were critical to successful
    transformation:
      --Clear long-term requirements from the Department of Defense (DOD)
            for the nuclear stockpile.
        The National Nuclear Security Administration has been working
    jointly with the DOD to establish a range of possible stockpile
    scenarios that bound the most likely threat environments of the future.
    For each scenario, we have determined required warhead production
    capabilities and capacities, including plutonium and highly enriched
    uranium operations with some sprint capacity. This set of possible
    scenarios bounds the range of production capacities that we might need
    in the future to plan proposed production facilities. Given that
    stockpile projections will never be exact or remain stable for decades
    into the future, bounding future estimates of required production
    capabilities and capacity ranges are sufficient.
      --Accurate cost estimates of the proposals for transforming the
            weapons complex.
        We have undertaken a process in compliance with the National
    Environmental Policy Act before issuing a Record of Decision containing
    specifics for the plan to transform the physical infrastructure of the
    Complex. Transforming the physical infrastructure is costly and impacts
    other transformation actions. Cost estimates of the alternatives for
    transforming the weapons complex are being prepared in parallel with
    the ongoing preparation of the Complex 2030 Supplement to the Stockpile
    Stewardship and Management Programmatic Environmental Impact Statement
    (PEIS). Business case studies are progressing concurrently with the
    PEIS, which are considering life cycle costs, decontamination and
    demolition costs, present worth analyses, cash flow analyses,
    qualitative analyses, and comparative costs. These business case
    studies will be instrumental in determining the course of action to be
    chosen in the late 2008 Record of Decision.
      --A clear transformation plan containing measurable milestones.
        We are committed to establishing annual ``Getting the Job Done''
    lists and multi-year Complex 2030 transformation progress measures.
    These represent measurable milestones that are meaningful to
    stakeholders. However, a number of the progress measures of greatest
    interest to stakeholders are dependent on the Complex 2030 Record of
    Decision to be released in late 2008.
      --An Office of Transformation with the authority to make and enforce
            its decisions on transformation.
        In order for transformation to be successful, new approaches must
    be firmly anchored in the culture of the entire enterprise. This means
    implementing line organizations and programs must own the new
    approaches to ensure changes are sustainable and will outlast any
    single office. The Office of Transformation, which was established in
    June 2006, is my agent of change within the National Nuclear Security
    Administration (NNSA) for nuclear weapons complex transformation. It is
    establishing transformation implementation strategies and ensuring
    ownership of changes by existing line organizations. While the Office
    of Transformation has my full support, I am the one responsible for
    seeing that the commitments we make to transformation are implemented.
    I have the authority to make and enforce decisions on transformation.
        Let me clarify one comment about the cost of transformation. There
    is no $1.5 billion transition plan in our documents or the April 2006
    GAO report. Some media and non-governmental organizations have
    incorrectly quoted a November 2006 GAO report estimating a total $150
    billion cost of the NNSA nuclear weapons enterprise over the next 25
    years as equal to the cost of transformation. NNSA plans to achieve
    transformation to Complex 2030 through existing programs and management
    structure, and within projected funding levels. If major new facilities
    are justified, incremental funding requests for capital projects will
    be supported by business case analyses.

                     CLOSING LOS ALAMOS NATIONAL LABORATORY

        Question. Some Members of Congress have suggested closing LANL. It
    strikes me that this would be contrary to our Nation's national
    security needs and unachievable based on the LANL mission
    responsibilities.
        It's no secret that I am a supporter of our national laboratories
    and I believe we should continue to take necessary steps to improve the
    safety and security at the labs--as well as make the necessary
    investments to continue to support world class scientific research.
        Mr. D'Agostino, can you detail for us why we need LANL and what
    role they play in our national security.
        Answer. From a National Nuclear Security Administration (NNSA)
    perspective, Los Alamos National Laboratory (LANL) is responsible for
    the majority of warheads in the nuclear weapons stockpile. Personnel at
    the laboratory are intimately involved with the maintenance,
    surveillance, and assessment of the warheads designed at LANL. LANL
    plays a key role in the annual assessment of the safety and reliability
    of the nuclear weapons stockpile, in the absence of nuclear testing. We
    are presently still tied to our underground test data for our legacy
    systems. Advances in science and technology enable a Reliable
    Replacement Warhead (RRW) strategy and will provide a future predictive
    capability for legacy and RRW-type systems; LANL is critical in the
    advance of our science and technology base. The experienced staff and
    the premier facilities at LANL are key to our nuclear weapons program.
    LANL also contributes to other aspects of national security such as
    threat reduction and support to the Department of Defense and the
    Department of Homeland Security and analysis of intelligence
    information. Overall, LANL is a critical contributor of science and
    technology that underpins U.S. national security.
        Question. Can you also elaborate the practical impacts to science
    and research if we were to shut down the lab and divide up the
    workforce?
        Answer. Los Alamos National Laboratory (LANL) continues to have a
    critical role in the National Nuclear Security Administration (NNSA)
    science and research program through its people and facilities. Closing
    LANL would seriously damage the science and research for the Stockpile
    Stewardship Program.
        People can be encouraged to move but a move cannot be mandated.
    With the demographics of the designer community, it is likely that we
    would lose the majority of the remaining experienced designers. In
    addition, we will also loose experienced staff in other LANL areas of
    key technical expertise: weapons materials and chemistry support for
    the complex, nuclear physics, and computational science.
        Within the areas of defense science and research, LANL provides at
    least three major and unique elements required for Stockpile
    Stewardship: neutron cross-sections to reduce uncertainties in nuclear
    weapon performance calculations; radiography to assess implosion
    performance; and an integrated plutonium production and research
    facility. LANL's Los Alamos Neutron Science Center (LANSCE) is a multi-
    purpose facility that supports materials research and hydrodynamics
    research through proton radiography and neutron scattering in a
    classified environment. This is unique in the complex and has supported
    Reliable Replacement Warhead (RRW) designs already, as well as
    supporting improved understanding and predictive capability for legacy
    as well as RRW designs. LANSCE also supports basic neutron science
    through the Lujan Center. The Dual Axis Radiographic Hydrodynamic Test
    (DARHT) Facility is a unique radiographic facility and, when the second
    axis becomes available with multi-pulse capability, DARHT will be
    unique in the world. The multi-axis and multi-pulse capabilities of
    DARHT will significantly enhance our understanding of the implosion
    phase of nuclear weapons, especially as we assess the legacy systems or
    implement improved safety and surety features without nuclear testing.
    The plutonium complex at LANL has an integrated research capability to
    support the pit manufacturing activities. Such capabilities could not
    be replicated somewhere else without a severe loss of capability and a
    decade gap in restarting the operations. Superblock, which NNSA is
    presently committed to move out from, does not have the capacity to
    take over all TA-55 functions.
        In addition, LANL has numerous smaller scale research and
    development (R&D) capabilities required for Stockpile Stewardship,
    responding to emerging threats, and advancing science broadly for
    national security. Among these are the capability for classified
    beryllium manufacturing R&D, plutonium-238, high explosives chemistry,
    actinide chemistry, uranium R&D, and tritium R&D. LANL is an
    international leader in criticality science and its applications in
    safety, materials transportation and detection. LANL makes significant
    contributions in astrophysics, climate analysis, biology and forensics.
    Shutting down LANL and reassigning people would have an immediate and
    possible irreparable impact on the nuclear weapons program and, to a
    lesser degree, the broad national security science infrastructure.

                          RELIABLE REPLACEMENT WARHEAD

        Question. As you know, I was hopeful that the New Mexico RRW design
    team would be named the lead design. However, that was not the case.
    You selected the Livermore design based on several criteria, but it was
    clear that avoiding underground testing was a key driver in your
    decision.
        As an original sponsor of the RRW design competition I continue to
    support the project as it is vital if we are to transform the stockpile
    to a significantly smaller stockpile that is cheaper and safer to
    maintain.
        Your budget provides $88 million for the RRW program. Can you
    please tell me how this funding will be spent and how this will support
    a Congressional decision to proceed with the engineering design
    authorization next year?
        Answer. The fiscal year 2008 request funds the Reliable Replacement
    Warhead (RRW) Phase 2A study. The National Nuclear Security
    Administration's (NNSA) intent is to develop high fidelity baseline
    schedules and cost estimates. The laboratories will further refine the
    concept design and work with the plants concurrently during the Phase
    2A study to support a sound planning effort. This activity will
    include: some revising and extending of the selected design, analyzing
    and scheduling the required development work, planning and executing
    any required peer reviews, developing the detail cost estimate. As and
    example the certification plan will be prepared in detail including
    identifying and scheduling the hydrodynamic experiments required and
    computational analyses necessary for certification. Some computations
    and potentially some technology tests will be performed during the
    study to assure that the project scope is correctly assessed. NNSA will
    return to Congress at the appropriate time to seek both authorization
    and appropriations to proceed into the engineering development phase,
    if the Nuclear Weapons Council decides to proceed with development of
    the RRW.
        Question. Can you tell me what role Los Alamos will play in the RRW
    design and how they will be integrated into the project?
        Answer. Los Alamos National Laboratory (LANL) will lead the
    independent peer review team for the Reliable Replacement Warhead (RRW)
    and participate in development of technologies and advanced science
    analysis for potential insertion in the future stockpile. Until a long-
    term pit manufacturing capability is in place, the pit manufacturing
    facility at LANL will implement the manufacturing process for the RRW
    pits eventually manufacture them during Phase 3A.

                    COMPLEX 2030--FACILITIES BEFORE SCIENCE

        Question. Mr. D'Agostino, I am deeply concerned about the funding
    profile for the Science and Technology accounts within the NNSA.
        It is clear from recent budget requests that the NNSA has put more
    emphasis on facilities and security than on supporting the science
    based stockpile stewardship activities.
        However, considering the fact that the Complex 2030 transformation
    is based around the Reliable Replacement Warhead, I believe this
    warrants more scientific research in order to develop the weapon system
    without underground testing.
        The JASONs study group, which is undertaking a review of the RRW
    design, found that, ``though we see no insurmountable obstacles to
    certification of the RRW at present, there are substantial scientific
    challenges to developing a new stockpile system . . .''
        Mr. D'Agostino, how can you meet all the life extension
    responsibilities for existing weapons systems and support the RRW
    program with declining science and technology budgets?
        Answer. The current Life Extension Programs for the B61 and W76 are
    either in the production phase or entering into the production phase at
    the end of this fiscal year. The research for these existing life
    extensions is largely complete. The National Nuclear Security
    Administration strategy provides that Nuclear Weapons Council (NWC)
    approved Life Extension Programs would continue as directed, but
    Reliable Replacement Warhead (RRW) programs would be developed to
    replace legacy Life Extension Program efforts. In the science and
    technology arena, we are committed to the work required to support the
    stockpile and to develop predictive capabilities. We are at a period
    where we are completing the construction of major science facilities,
    and the associated development and construction costs are decreasing.
    We are moving to exploit these new facilities to advance the science
    and technology base for the program. However, we believe that we can do
    more within the present planned budgets by integrating our science and
    technology efforts across the laboratories, for example: ensuring
    access to the premier facilities and computational capabilities and
    developing integrated science and technology roadmaps. The broader
    science and technology needed to support the health of our nuclear
    weapon design and production can be augmented via enhanced integration
    with other agencies, and broader interaction with the general
    scientific community. The Complex would then be operated in a more cost
    effective manner. The combination of these factors (replacing life
    extensions with RRW, reductions in construction costs, and integration
    of resources) should allow us to meet needs within decreased science
    and technology budgets.
        Question. Can you please provide for me in writing your science and
    engineering R&D plan for the next 5 years that will answer the
    technical questions surrounding the RRW program and show me where this
    plan is financed in our budget?
        Answer. Science and engineering research and development (R&D)
    necessary for fundamental support of Weapon Activities as well as
    direct support of the Reliable Replacement Warhead (RRW) program is
    programmed within Defense Programs' Campaign structure. The Science,
    Engineering, Inertial Confinement Fusion Ignition and High Yield, and
    Advanced Simulation and Computation Campaigns together comprise about
    $1.42 billion in the fiscal year 2008 budget, while an additional $0.44
    billion is requested for addressing manufacturing and production
    readiness in the Readiness and Pit Manufacturing and Certification
    Campaigns. The basic R&D activities within each Campaign are described
    in the fiscal year 2008 budget request, consistent with the Program
    Plans maintained for each of the six Campaigns. Collectively the R&D
    activities that the Campaigns undertake are described in the fiscal
    year 2007-2011 Stockpile Stewardship Plan. As a relevant technology
    becomes more mature and the technical questions more unique to the
    specific weapon, the effort shifts to Directed Stockpile Work and the
    RRW program.
        An integrated planning effort by the program efforts above, the
    predictive capability framework, is ongoing to ensure timely delivery
    of science and technology to the program. The end goal of a predictive
    capability for nuclear weapons should in of itself increase efficiency
    by ensuring validated models that can be applied to all systems to
    increase confidence and decrease the repeat work frequently done system
    by system. The predictive capability framework plan will be completed
    this fiscal year. Due to the complexity of these activities, some of
    the scientific advances cannot be completed in time for the first RRW
    certification process, but the first RRW is designed to have sufficient
    margin and tie to nuclear test history to offset the higher
    uncertainties.

                     INSUFFICIENT FUNDING FOR Z OPERATIONS

        Question. In the fiscal year 2007 NNSA budget, hearing last year
    Ambassador Brooks promised that I would be pleased with the funding
    provided for Z machine--I am not pleased. This budget continues to
    support past practice of providing everything and more for NIF, while
    providing insufficient funding for Z.
        This budget continues funding Z from three separate accounts and
    fails to fully fund operations at a full shift. This is in direct
    contrast with the priorities of the Office of Science budget, which
    makes operational runtime a top priority.
        (NNSA provided $26 million to High Average Power Laser R&D in
    fiscal year 2007, which NNSA admits has little to no bearing on the
    weapons program)
        Why does the Department continue to play games with the Z budget
    when it funds projects like the High Average Power Laser program that
    does not support the weapons program?
        Answer. The National Nuclear Security Administration (NNSA) has
    requested $63.9 million for operation and use of the Z Facility at
    Sandia National Laboratories (SNL) in fiscal year 2008. These funds are
    provided for activities in pulsed power fusion and other areas of high-
    energy-density weapons physics. This amount of funding will enable a
    solid program of experiments which meets high priority NNSA
    requirements as defined in joint plans developed by the Science,
    Inertial confinement Fusion Ignition and High Yield, and Advanced
    Simulation and Computing Campaigns. Compared to the fiscal year 2007
    request, funding was shifted from other activities in fiscal year 2008
    to increase funding for Z activities to this level. Requested
    enhancements of the SNL pulsed power program beyond this level were
    carefully considered, but determined to be of insufficient priority for
    funding based on program requirements.
        NNSA allocated $26 million to Inertial Fusion Technology for these
    activities ($10 million for the Nike laser at the Naval Research
    Laboratory and $16 million for the High Average Power Laser (HAPL)
    program) in the fiscal year 2007 Operating Plan submitted to Congress
    on March 16, 2007. No funds are requested for the Nike or HAPL
    activities in the fiscal year 2008 budget request due to the need to
    fund higher priority activities.
        Question. Why does the Department continue to fund Z from 3 or more
    accounts, when NIF is funded from a single account (Inertial
    Confinement Fusion)?
        Answer. Funding for the Z facility at Sandia Laboratories is
    currently provided from three different accounts: Readiness in
    Technical Base and Facilities (RTBF), the Inertial Confinement Fusion
    (ICF) program, and the Science Campaign. Funding provided by the ICF
    program and the Science Campaign covers their areas of responsibility,
    namely, pulsed power fusion and non-ignition weapon physics,
    respectively. The Department is aware of the unintended confusion
    arising from these multiple categories. In the fiscal year 2009 budget
    submission, the National Nuclear Security Administration has proposed
    consolidating all operational funding for Z in the ICF Campaign in the
    same manner as currently done for Omega and the National Ignition
    Facility.

             CHEMISTRY AND METALLURGY RESEARCH FACILITY REPLACEMENT

        Question. The Departments commitment to long-term support of the
    CMR-Replacement facility seems to have changed substantially over the
    past 2 years.
        Mr. D'Agostino, when you attended the groundbreaking in Los Alamos,
    you declared this facility vital to the mission. The fiscal year 2006
    budget request proposed $160 million for fiscal year 2008 and now the
    fiscal year 2008 request has been reduced to $95 million. Your budget
    request now seems to reflect a wait and see attitude as it pertains to
    the CMR-Replacement.
        At the same time, the NNSA has provided $25 million to initiate
    design work on the Consolidated Plutonium Center as part of your
    Complex 2030 plan, despite the fact that the Defense Department has not
    provided you with a total pit requirement or justification for any
    additional pits beyond what can be already produced.
        With flat budgets, I do not believe the NNSA has the luxury of
    spending money on new facilities without a clear justification or need.
        Mr. Schoenbauer, do you recall when the House and Senate Energy and
    Water bill eliminated funding for the proposed Modern Pit Facility in
    fiscal year 2006?
        Answer. The termination of the Modern Pit Facility project did not
    eliminate the need to manufacture plutonium pits in sufficient
    quantities to support the nuclear weapons stockpile. In the year 2000,
    our plutonium strategy assumed two facilities to meet our long-term
    mission requirements. One facility would support plutonium research and
    development (R&D) and surveillance and a second would support pit
    manufacturing at a capacity greater than 50 net pits per year to the
    stockpile. The Chemistry and Metallurgy Research Replacement (CMRR)
    Facility and other buildings in the Los Alamos National Laboratory
    (LANL) TA-55 complex were to execute plutonium R&D mission. The Modern
    Pit Facility, as a separate facility at a site to be determined, was to
    execute the mission to manufacture pits in sufficient quantities to
    support the legacy stockpile.
        The events of September 11, 2001, evolving information on plutonium
    aging, current stockpile projections, and development of reliable
    replacement warhead concepts have changed our strategy from the year
    2000. Increasing physical security costs for special nuclear materials
    (SNM) are driving us to fewer sites with Category I/II quantities of
    SNM and increased reliance on hardened, engineered-security facilities.
    Thus, our Complex 2030 planning scenario assumes that we will have
    Category I/II quantities of plutonium at only one site (e.g., a
    consolidated plutonium center (CPC)) in the long-term for R&D,
    surveillance and manufacturing. Los Alamos is one of five sites under
    consideration for the plutonium mission.
        Our Complex 2030 planning scenario also assumed that we would rely
    on TA-55 at LANL, supported by a CMRR, for interim pit production until
    a CPC became available in 2022. Our business case analyses indicated
    this was an appropriate choice for a CMRR with a total project cost
    estimate in the range of $850 million. In late 2006, LANL completed an
    independent review of the planned CMRR and the revised the cost
    estimate for the Nuclear Facility (NF) approximately doubled. This
    greatly weakened the business case for CMRR-NF to only support interim
    pit production and would have required an unacceptable budget re-
    alignment over the next 5 years to retain the original CMRR schedule.
    Thus, our revised CMRR approach to best manage risks includes: (1)
    completing the CMRR Radiological Laboratory and Utilities Office
    Building; (2) continuing with design of the CMRR-NF, and (3) deferring
    commitments to construct the CMRR-NF until completion of the Complex
    2030 Record of Decision in late 2008. In parallel with preparation of a
    Complex 2030 Supplement to the Stockpile Stewardship and Management
    Programmatic Environmental Impact Statement, we are evaluating business
    cases for all plutonium facility alternatives. These alternatives
    include several CMRR-NF options and long-term consolidation of all
    plutonium functions to Los Alamos.
        Question. What makes you think that by changing the name and
    doubling the request, we would be interested in funding a similar
    facility, just 2 years later?
        Answer. The consolidated plutonium center (CPC) is not a name
    change for the Modern Pit Facility. The CPC would be the one site in
    the nuclear weapons complex in long-term for all research and
    development, surveillance and manufacturing involving Category I/II
    quantities of plutonium. The CPC would represent a consolidation of
    many functions performed at Lawrence Livermore National Laboratory
    Building 332, and Los Alamos National Laboratory plutonium facilities.
    The fiscal year 2008 funds are requested to provide conceptual CPC
    design definition and alternative evaluations necessary to support
    upcoming plutonium facility decisions. These alternative evaluations
    include options for Los Alamos as a possible site for a CPC.

                            EXPERIMENTAL HYDRO TESTS

        Question. What impacts do you foresee on hydro testing as a result
    of funding reductions you have recommended within the Directed
    Stockpile Work Account?
        Answer. The total funding for the hydrodynamic experimental program
    in the Directed Stockpile Work (DSW) account is not changing. However,
    the total funding has been re-aligned from one line (Stockpile
    Services) to three lines: Stockpile Systems, Life Extension Programs,
    and Stockpile Services. The reason for this change was to fund
    activities more consistent with the scope of the newly established DSW
    Work Breakdown Structure.
        Question. What are the likely impacts to the Life Extension Program
    as a result of reductions in funding for hydro tests in fiscal year
    2008?
        Answer. No major impact. All major hydrodynamic experiments funded
    by the Directed Stockpile Work Hydrodynamic testing program scheduled
    to support current Life Extension Programs have been conducted.

                           HIGH PERFORMANCE COMPUTING

        Question. Mr. D'Agostino, as you know, the NNSA and its
    laboratories have developed the world's fastest computing architecture.
    This was developed in response to establishment of the stockpile
    stewardship program and the necessity to simulate weapons performance
    in order to maintain the existing underground testing moratorium.
        I am concerned that NNSA does not have a long term R&D strategy to
    keep the Nation at the forefront of High Performance Computing. It is
    my understanding that both NNSA and the DOE Office of Science are
    contributing less than $20 million to be a minority partner in a much
    larger DOD R&D program.
        Due to the rapid technological advance in this field, I believe the
    Department of Energy must establish a 10-year R&D roadmap for High
    Performance Computing by integrating the NNSA and Office of Science
    efforts.
        Why doesn't the NNSA and the DOE Office of Science work together on
    a joint engineering R&D program to develop the next computing
    breakthrough rather than take a minor stake in a DOD computing R&D
    program as provided in this request?
        Answer. The National Nuclear Security Administration (NNSA) has a
    proven track record of successful research and development (R&D).
    However, while computing R&D is important to providing the capabilities
    we will need to be successful, it is not our main driver. Our system
    investments are strongly influenced by NNSA mission need. We are
    investing in the Roadrunner architecture, which we took unilateral
    responsibility for developing, but are expanding to include a wider
    science community. We are also acquiring a capability to attack the
    problem of quantifying and aggregating uncertainties in our simulation
    tools with a system designated ``Sequoia,'' to be located at Lawrence
    Livermore National Laboratory. This too will be a unilateral effort to
    start, but will involve a larger community as it takes shape. We
    exercise strong control over Roadrunner and Sequoia as we expect those
    machines to make critical mission contributions to the NNSA.
        NNSA's advanced architecture investments include an important, co-
    funded collaboration with the Office of Science for Blue Gene R&D to
    capitalize on the success of Blue Gene/L and produce future generations
    of high-performance, low-power systems.
        Our participation in the Department of Defense High Productivity
    Computing Systems (HPCS) program, which includes participation by other
    Government agencies, including the DOE Office of Science, is but one
    investment in our portfolio of advanced system developments. While we
    invest a small amount in HPCS compared to the source selection
    authority, we participate as an equal in technical debates. The Defense
    Advanced Research Projects Agency (DARPA) recognizes that much of the
    technical experience of designing and deploying supercomputers lies in
    other agencies. Consequently, our small investment belies our larger
    technical influence. The result is a win-win situation for both DARPA
    and NNSA.
        Currently NNSA is meeting other programmatic needs for computing
    R&D and contributing meaningfully to the Nation's overall computing
    R&D. All of these investments are captured in the Advanced Simulation
    and Computing (ASC) program 2020 Roadmap as well as the ASC Platform
    Acquisition Strategy.
        Question. Do you believe the NNSA labs could contribute to the
    development of a High Performance R&D program that would support
    research into advanced architectures, software and algorithm
    development?
        Answer. The National Nuclear Security Administration's (NNSA)
    laboratories could and they do make such contributions. The Advanced
    Simulation and Computing (ASC) program and the NNSA laboratories have
    historically been world leaders in these areas and continue to be so
    today. Our need to predict with confidence the performance of a nuclear
    weapons systems will drive us to exa-scale computing, 1,000 times peta-
    scale, by 2018 as defined in our Roadmap. We are focused on and driven
    by that need for predictivity not only for Stockpile Stewardship, but
    also for broad national security issues. As a consequence, we are
    investing in advanced architectures, operating environments and
    algorithms that we believe are essential to meeting our mission
    responsibilities. We share our technology advances and should
    participate in any national program to advance architecture, software
    and algorithm development.
        Question. I find it a little disappointing that the Office of
    Science is expanding its purchase of high performance computers for DOE
    labs as part of the American Competitiveness Initiative, while NNSA is
    cutting the number of high-speed computers it supports from 3 to 2. Why
    is the Office of Science expanding, while NNSA is contracting?
        Answer. Funding for the Advanced Simulation and Computing (ASC)
    program has been declining since fiscal year 2005, while the American
    Competitiveness Initiative is infusing new money into basic science.
    With respect to ASC, the nuclear weapons complex has been challenged to
    reduce its footprint. One method being pursued is to reduce duplicate
    capabilities across the complex and computer operations is one area
    where such savings are possible. It should be noted that the National
    Nuclear Security Administration (NNSA) has drawn down by moving to two
    major facilities, one in New Mexico and one in California. The enabling
    technologies associated with secure distance computing make it possible
    for scientists at one site to compute seamlessly and effectively at any
    other of the Department's classified sites and thus the ability for
    computing to meet mission needs is not eroded. Our consolation was
    motivated by both budget constraints and NNSA's commitment to support
    the transformed ``Complex 2030.''
        The Office of Science has been explicitly funded to increase its
    capability at the high end of computing and simulation. While NNSA will
    be more challenged by budget tightening, our mission will force us to
    continue our long tradition of supporting American competitiveness. Our
    recent partnerships in bringing Red Storm and Blue Gene to market are
    stellar examples of improving our Nation's competitiveness while
    supporting our primary mission driver. NNSA's mission is national
    security and classified while the Office of Science's is general and
    open. The Department of Energy is well positioned for collaboration
    with all the elements of the American Competitiveness Initiative.
        Question. In your budget justification I can find no mention of the
    Roadrunner platform, but did see that the Department is ready to
    embrace a new system called Sequoia. What is the Department's strategy
    on deployment on new computing platforms?
        Answer. Both Roadrunner and Sequoia are included in the National
    Nuclear Security Administration's Platform Acquisition Strategy, and
    are key steps in achieving our long range strategic goal of predicting
    with confidence the performance of a nuclear weapon. The Roadrunner
    final delivery is scheduled for fiscal year 2008, pending a favorable
    technical review of this high-risk, high-reward system. Sequoia final
    system delivery is scheduled for fiscal year 2011, also pending
    favorable technical reviews, with delivery of a smaller-scale early
    technology system in late fiscal year 2008 on which to begin software
    porting and scaling in preparation for the final system. Both system
    delivery schedules are contingent on projected budget appropriations

              ESTABLISHMENT OF A JOINT HIGH ENERGY PLASMA PROGRAM

        Question. The fiscal year 2006 Conference Report and the fiscal
    year 2007 Senate E&W bill urged the Department to bring together the
    NNSA and the Office of Science to support a joint high energy density
    physics program to provide non-weapons scientists access to NNSA
    facilities such as Z machine. This would also expand the R&D
    possibilities for weapons programs as well. While it is still in its
    early stages, I want you to know I appreciate your efforts to enable
    this level of cooperation.
        However, I am disappointed to find out that this program, which
    supports research in high-energy physics consistent with the ICF
    program is largely funded out of the Science Campaign.
        Considering that the ICF campaign is flush with cash and has
    expanded every year, what is the justification for not funding this
    research out of this program?
        Answer. Both the National Nuclear Security Administration (NNSA)
    and the Office of Science recognize the importance of stewarding high
    energy density physics and have established a joint program in high
    energy density laboratory plasmas (HEDLP). The funding request for this
    program is more than $24 million, split almost equally between NNSA and
    the Office of Science. Due to the late date in the fiscal year 2008
    budget request preparation cycle when the joint program was
    established, the fiscal year 2008 request supports the joint program
    which represents primarily existing activities.
        In formulating the fiscal year 2008 submission, funding for
    university grants and centers in HEDLP were moved from the Inertial
    Confinement Fusion (ICF) Ignition and High Yield Campaign to the
    Science Campaign. This was done in order to simplify program execution
    by placing all university accounts in a single Budget & Reporting
    Classification code. Thus, the joint program has not placed additional
    financial burdens on the Science Campaign. Programmatic oversight of
    university activities will continue to be performed by the ICF Ignition
    and High Yield and Science Campaigns as it has in the past, and the ICF
    Ignition and High Yield Campaign will serve as the NNSA integration
    point for execution of the NNSA and Office of Science joint program.
        The President's request for the ICF Ignition and High Yield
    Campaign has decreased annually since 2005.
        Question. Can you identify other NNSA programs that are appropriate
    for similar collaboration? What about High Performance Computing?
        Answer. The Office of Defense Programs within the National Nuclear
    Security Administration (NNSA) and the Office of Science created the
    Defense Programs/Office of Science Strategic Council to appropriately
    integrate strategic planning on science of significant mutual interest.
    The goal is to assure senior planning leaders, including the Deputy
    Administrator for Defense Programs and the Under Secretary of Energy
    for Science, have awareness of each organization's plans and budgets to
    enable these program elements to leverage total value.
        The Council exchanges information at least two strategic times
    during the budget process: (1) as budgets are in final preparation for
    submission to the Office of Management and Budget and (2) after
    submission of the President's budget to Congress as staff briefings and
    testimony are being prepared. Such exchanges are deemed necessary to
    guarantee planning information is shared at these strategic planning
    phases.
        With respect to high performance computing, the NNSA requirement
    for classified computing is inconsistent with the Office of Science's
    mission to support open science. Consequently, the two offices do not
    share production computing systems. In addition, NNSA supercomputers
    are sized to meet mission needs and operate 24 hours per day performing
    weapons calculations.

                         RELIABLE REPLACEMENT WARHEAD-2

        Question. The Nuclear Weapons Council has directed the Department
    to proceed with a RRW-2 conceptual study. As part of this study, will
    the NNSA consider the reuse of existing pits as a priority? With the
    positive news on pit aging, it only makes sense to consider using pits
    that are already in the stockpile.
        How would pit reuse impact the administration's Complex 2030
    strategy? How many fewer pits would be required as a result of such a
    reuse decision?
        Answer. Pit reuse has the potential to relax near-term demand for
    quantities of new pits manufactured at the interim Los Alamos National
    Laboratory production facilities. This provides additional time to
    improve long-term pit manufacturing capacities. Long-term demand for
    new pits would not be significantly reduced unless we forego the safety
    and security advantages that can only be provided through newly-
    manufactured Reliable Replacement Warhead (RRW) pits. If we want to
    achieve proposed RRW safety and security objectives without an
    underground nuclear test, the number of existing pits applicable for
    reuse in RRWs is limited to the hundreds, not thousands.
        Plutonium aging results should not be extrapolated to have a much
    broader meaning in predicting the life of legacy stockpile weapons than
    is technically justified. The plutonium aging study only addressed one
    particular aging phenomenon (intrinsic radiation damage) in one
    component (a pit) among dozens of nuclear explosive package components
    and thousands of other components in a typical nuclear weapon.

                           NATIONAL IGNITION FACILITY

        Question. It is my understanding that the NIF project is now in its
    final year of construction and will cost $3.5 billion, nearly $2.5
    billion over estimate and 7 years late. Now NNSA will proceed with the
    National Ignition Campaign, which is estimated to cost over $4 billion,
    and it is already experiencing programmatic and budget growth just as
    the construction project enjoyed. As an example of this lack of budget
    discipline, I understand the NIC program will now support direct drive
    experiments on what was billed as an indirect drive machine.
        What assurances does this subcommittee have that this program will
    stick to the programmatic and budget discipline we were promised when
    the program was re-baselined in 2005?
        Answer. The National Ignition Facility (NIF) Construction Project
    is now over 90 percent complete and has maintained the identical scope
    and essentially the same schedule and budget that were determined and
    agreed to when it was rebaselined in 2001. The only minor changes to
    the schedule and budget were in response to Congressional redirection
    in 2005.
        The National Ignition Campaign (NIC) was initiated in June 2005. It
    is being pursued under the discipline of Enhanced Management methods
    including earned value accounting. It has not experienced any scope or
    budget growth beyond the $1.6 billion that was specified in its
    original baseline (detailed in the NIC Execution Plan which was signed
    by all of the participating organizations: General Atomics, Lawrence
    Livermore National Laboratory, Los Alamos National Laboratory, Sandia
    National Laboratories and the Laboratory for Laser Energetics at the
    University of Rochester); in fact the fiscal year 2008 submission
    reduces the NIC approximately $8 million below the June 2005 baseline.
    The rigorous reporting required under Enhanced Management and a
    detailed milestone structure provides the basis for monitoring
    programmatic and budget discipline.
        The NIC involves preparation of the NIF for experimentation in
    conjunction with NIF Project completion, and is thus a highly facility
    intensive activity. NIF completion and the NIC are managed as an
    integrated activity using the same discipline and successful project
    management tools developed for the NIF Project. The execution of
    complex ignition experiments in late fiscal year 2010, only 1\1/2\
    years after NIF Project completion, would not be possible without this
    discipline.
        Question. The National Ignition Campaign (NIC) goal is to conduct
    ignition experiments on NIF in 2010. The baseline approach is indirect
    drive with beryllium ablators. Please provide information and
    justification for all other elements within NIC that are NOT directly
    related to the baseline approach? For example, is it credible to
    believe that the direct drive approach--including the necessary
    targets--can be ready for experiments in the same time frame? What is
    the metric for switching ignition baselines in the NIC program?
        Answer. Direct drive both reduces risk for the indirect drive
    program and provides an additional ignition option, which is prudent
    given the unprecedented challenge of achieving ignition in the
    laboratory.
        Direct drive studies at Omega are currently examining physics and
    technology issues critical to the success of indirect drive. An
    important recent example is the University of Rochester achievement of
    record compressed densities in cryogenic deuterium-tritium capsules.
    This critically important result provided important new knowledge
    regarding capsule physics and the operation of cryogenic systems. This
    knowledge will directly benefit the indirect drive program.
        From its inception, the National Ignition campaign (NIC) has
    included direct drive as a backup risk mitigation strategy (contained
    in the approved NIC Execution Plan). A milestone in fiscal year 2009
    provides a decision point for moving forward with facilitization of
    polar direct drive on the National Ignition Facility (NIF). The
    mainline strategy remains indirect drive, and the bulk of NIF resources
    will be devoted to it. Only if major unforeseen problems arise with
    indirect drive will a change to direct drive be considered. No
    provision is being made to conduct direct-drive ignition experiments
    (with appropriate targets etc.) in the same time frame as indirect-
    drive experiments. However, the direct drive concept will continue to
    be developed and tested on the Omega laser system at the University of
    Rochester as part of the NIC effort in order to minimize the delay in
    achieving ignition in the unlikely event that the indirect approach
    fails, and because the direct-drive approach may provide higher gain at
    lower energy than indirect-drive ignition, potentially providing
    additional capabilities for Stockpile Stewardship in the post-NIC time
    frame.
        Many of the key scientific and technical issues associated with
    ignition are common to both direct and indirect drive. Because of this
    commonality, the University of Rochester team provides scientific
    leadership for both direct drive and certain key aspects of indirect
    drive. It is thus appropriate to consider the University of Rochester
    program not as a ``backup'' but rather a critical intellectual
    component of the Inertial Confinement Fusion Ignition and High Yield
    Campaign and the NIC.

                SANDIA NATIONAL LABORATORIES ION BEAM LABORATORY

        Question. Mr. D'Agostino, I understand the Sandia has managed the
    MESA project in such a fashion that it will come in under budget and
    ahead of schedule. The lab has proposed to use the budget savings to
    support a small project known as the Ion Beam Lab, which has fallen
    into disrepair.
        Does NNSA support this project? When do you expect to provide
    approval for this funding transfer to occur?
        Answer. The National Nuclear Security Administration (NNSA)
    supports building a replacement Ion Beam Laboratory at Sandia National
    Laboratories in New Mexico. The project team has submitted a
    justifiable mission need for the project which is under review. NNSA
    has provided justifications in the President's fiscal year 2008 budget
    requesting Congress to authorize the project. Upon congressional
    authorization and completion of the Microsystems and Engineering
    Sciences Applications (MESA) facility, NNSA will request Congress to
    approve transferring the uncosted balance from MESA project to start
    the Ion Beam Laboratory in fiscal year 2009. MESA is scheduled to be
    completed at the end of fiscal year 2008 and we expect the cost under-
    run to be sufficient to pay for the project capital costs. Additional
    expenditures from the operating expense funds will be required to
    complete the Ion Beam Laboratory.

                             HEAVY WATER INVENTORY

        Question. Mr. D'Agostino, it is my understanding that the
    Spallation Neutron Source located at the Oak Ridge National Laboratory
    is in need of heavy water to support experiments on that machine. I
    recall that the Savannah River Site is storing a large amount of such
    material that it might provide to this Office of Science laboratory.
    Can NNSA help the Oak Ridge Lab and provide sufficient quantities of
    heavy water to support the experiments on the SNS?
        Answer. The Savannah River Site does hold a large inventory of
    surplus heavy water, assigned to the Office of Environmental Management
    (EM) for disposition. The quality of this material is lower (more
    tritium contamination) than the material in the National Nuclear
    Security Administration (NNSA) reserve, but portions of this material
    may be adequate to meet Spallation Neutron Source (SNS) requirements.
    There is also a possibility the material may not meet the SNS
    requirements. In that case, this material could be used as barter to
    exchange for material meeting the SNS specification, from a commercial
    heavy water producer. There is material in the NNSA inventory that
    meets the SNS requirements, but it is critical that this material be
    retained to support planned Defense Programs activities. NNSA cannot
    replace the material from commercial sources due to use restrictions.
        The NNSA will work with EM and the Office of Science to identify
    suitable materials at Savannah River, and to have those materials
    transferred to SNS.

                      SECURITY GUARDS AT PANTEX ON STRIKE

        Question. Mr. D'Agostino, I understand the security guards at the
    Pantex Plant have been on strike since Sunday evening and you are
    operating the plant using security personnel from various sites around
    the complex.
        Can you please update us on the status of the negotiations and if
    you are optimistic this strike can be resolved in the near future?
        Answer. Negotiations have been ongoing since February 22, 2007. The
    Pantex Guards Union (PGU) voted to strike effective April 16, 2007, at
    0001 hours. BWXT and the PGU have continued to negotiate since then,
    although the Federal mediator and negotiating parties agreed to a week-
    long ``cooling off '' period that ended May 2, 2007. The PGU has
    offered various reasons for maintaining the work stoppage but the most
    recent central issues appear to be wages, medical benefit cost shares,
    and the desire for two additional paid days off each year. We are
    optimistic that an agreement can be reached quickly if both sides
    continue to negotiate in good faith.
        Question. How long can the Department sustain it security readiness
    using this substitute guard force?
        Answer. Security of the Pantex Plant will not be degraded at any
    time during the strike, regardless of its duration. Contingency force
    planning assumptions called for up to 60 days of continuous security
    readiness while maintaining plant operations through the use of non-
    union augmentation personnel from other sites and the Office of Secure
    Transportation. If the strike begins to approach the 60 day threshold,
    several additional alternatives will have to be considered, including
    but not limited to additional contingency force augmentation and a
    reduction of plant operations.

                                  MOX PROGRAM

        Question. The Department recently produced the independent cost
    estimate and corrective action plan for the Mixed Oxide Fuel
    Fabrication Facility as required by the Defense Authorization Act for
    fiscal year 2007. The new project baseline is now $4.7 billion. In
    addition, you have agreed to the recommendations for the Inspector
    General to improve project oversight, establish achievable milestones,
    and include performance goals into future contract negotiations. With a
    new project baseline are you prepared to move forward with construction
    once the congressional moratorium expires in August?
        Answer. Yes, DOE is prepared to move forward with construction once
    the congressional moratorium expires in August.

                                MOX ALTERNATIVES

        Question. I noticed in the budget request that the Office of
    Environmental Management has decided to proceed with a $500 million
    vitrification plant for an estimated 13 tons of non-MOXable plutonium.
    This plant seems to confuse many people who believe this is an
    acceptable solution for the weapons grade material identified for
    destruction in the MOX facility. Can you please clarify the
    Department's position regarding its plutonium disposal strategy?
        Answer. The Department's proposed baseline approach for disposition
    of surplus weapons-usable plutonium consists of a MOX Fuel Fabrication
    Facility, a Pit Disassembly and Conversion Facility, and a Waste
    Solidification Building to dispose of at least 34 metric tons (MT) of
    weapon-grade plutonium, a proposed Plutonium Vitrification process to
    vitrify up to 13 MT of non-pit plutonium, and the operation of the H-
    Canyon/HB-Line facilities to process approximately 2 MT of plutonium
    bearing materials. DOE is currently evaluating the cost and feasibility
    of reducing or eliminating the mission that is currently being
    considered for the small-scale plutonium vitrification process and
    fabricating more surplus plutonium into MOX fuel. If feasible, it could
    permit DOE to use the MOX Facility and H-Canyon/HB-Line facilities to
    dispose of approximately 43 MT of surplus plutonium.
        Question. Specifically, can the Department add the 34 tons of
    weapons grade material to the smaller vitrification plant? What impact
    would it have on the cost and schedule of this project? Are there any
    technical challenges that remain unanswered?
        Answer. No. The small-scale vitrification process cannot be scaled-
    up to dispose of an additional 34 metric tons of weapon-grade
    plutonium. The radiation exposure from vitrifying plutonium in
    lanthanide borosilicate glass for up to 13 metric tons is manageable
    because the process will limit worker radiation exposure to levels well
    within acceptable limits. However, managing worker radiation exposure
    becomes problematic for much greater quantities of plutonium.
    Therefore, DOE would have to consider using ceramic immobilization
    instead. However, the amount of time needed to immobilize an additional
    34 metric tons of surplus plutonium with high level waste would extend
    beyond the planned operating life of the Defense Waste Processing
    Facility at the Savannah River Site, and an insufficient quantity of
    high-activity waste remains to be processed at the Defense Waste
    Processing Facility to immobilize all of the surplus plutonium.
    Moreover, immobilization of plutonium in a ceramic form has never been
    done before and would require significant research and development
    before the facility could be designed and constructed. This approach is
    likely to take an additional 12-14 years before operation could begin
    and would likely result in significant cost increases and schedule
    delays. There would also be legal, political, and environmental
    concerns with redirecting the disposition strategy at this point.

                                  GNEP AND MOX

        Question. I have heard speculation that the MOX facility could be
    easily redesigned to process spent nuclear fuel and could serve as both
    a recycling facility and fuel fabrication facility. Has the Department
    looked at modifying this facility to serve as either a spent fuel
    recycling facility or as a fuel fabrication facility for advanced
    reactors? If so, what do you believe is the most promising option for
    expanding the mission of this facility? How will this impact the
    schedule and cost of this project?
        Answer. The MOX Facility is a fuel fabrication facility and does
    not have the capability to recycle spent nuclear fuel; a separate,
    dedicated recycling facility would be required. With regard to
    fabricating fuel for advanced reactors, the MOX Fuel Fabrication
    Facility may be capable of fabricating start-up fuel for fast reactors
    as part of the Global Nuclear Energy Partnership (GNEP), if an oxide
    fuel form is selected for that program. Currently, DOE is evaluating
    both metal and oxide fuel forms for the start-up fuel. A decision on
    the fuel form for fast reactors will be made at a future time. The MOX
    Facility would not be able to produce transmutation fuel loads for
    advanced fast reactors as envisioned by GNEP because that fuel would
    contain all the transuranic elements from the recycled light water
    reactor fuel.
        Given that the necessary GNEP fuel-related decisions are in the
    future, it is not reasonable to delay construction of the MOX facility
    to incorporate the potential GNEP required design and construction
    changes. Continued delays in MOX construction will result in increased
    costs and postpone the start of facility operations. DOE will continue
    to evaluate the option to use the MOX Facility in support of fast
    reactor start-up fuel as the requirements for GNEP are developed. In
    2008, the Secretary of Energy plans to determine a path forward for
    GNEP.
        In addition to the possibility of fabricating start-up fuel for
    GNEP advanced reactors, the MOX Facility could potentially provide the
    following capabilities:
      --Disposition of additional surplus impure plutonium (currently
            planned for the proposed Plutonium Vitrification process at the
            Savannah River Site), if the chemical and isotopic impurities
            can be economically removed from the material; and
      --Disposition of additional weapons plutonium (beyond the 34 MT) that
            is expected to be declared surplus as plutonium requirements
            are reevaluated, in connection with transformation of the
            nuclear weapons stockpile.

                            RUSSIA'S MOX COMMITMENT

        Question. It is my understanding that the Russians have proposed to
    fulfill their commitment under the Fissile Materials Agreement to burn
    the plutonium in the existing BN-600 reactors and add an additional 6
    reactors to burn MOX fuel. This will of course require the Russians to
    build a MOX fabrication facility. As far as I can tell, the Russians
    have yet to provide a firm commitment on their funding or schedule.
        In addition, Russia's financial outlook has changed substantially
    from when this program was initiated. Russia now enjoys a budget
    surplus and earned $315 billion in oil and gas revenue last year, an
    increase of 96 percent from 1999.
        Will U.S. negotiators demand to see a much larger contribution to
    the project costs from the Russians?
        Answer. Rosatom recently provided DOE with a proposed technical
    plutonium disposition plan that is consistent with Russia's future
    nuclear energy strategy. Under this plan, Russia would irradiate
    weapon-grade plutonium as MOX fuel in fast reactors. Although no
    agreement has been reached on specific cost sharing arrangements
    pending final Russian Government approval of its technical disposition
    program, senior Rosatom officials have indicated that Russia could
    provide significant funding. We are currently reviewing Russia's
    proposed disposition plan to ensure that it is technically and
    financially credible, and will be discussing it further with Russian
    officials in the near future.

                                EXPANSION OF MOX

        Question. When this program was first conceived back in 1998, the
    United States identified upwards of 50 tons of weapons-grade plutonium
    that was excess to the mission. Is this material still available and
    theoretically able to be used in producing Mixed Oxide Fuel?
        Answer. In 1995, the U.S. Government declared 52.5 metric tons (MT)
    of plutonium (both weapon-grade and non-weapon-grade) excess to
    national security needs. Of that quantity, approximately 4 MT have been
    retained for a non-military programmatic use, approximately 3 MT of
    scraps and residues have been disposed of at the Waste Isolation Pilot
    Plant, and approximately 7 MT in the form of spent fuel are designated
    for direct disposal in a high-level waste geologic repository. Of the
    remaining approximately 38.5 MT, a minimum of 25.6 MT is suitable for
    fabrication into MOX fuel, an additional approximately 4 MT is
    considered likely to be suitable for MOX fuel, and another
    approximately 5 MT might be suitable for MOX fuel after additional
    material analysis and characterization can be performed. To the extent
    the latter approximately 9 MT proves unsuitable for MOX, that material
    could be vitrified, and would be replaced in the 34 MT planned for
    disposition under the 2000 U.S.-Russian Plutonium Management and
    Disposition Agreement with future declarations of additional excess
    plutonium from weapons pits. The remaining approximately 4 MT (out of
    the approximately 38.5 MT) is considered unsuitable for use as MOX
    fuel, and would be disposed of either through vitrification or
    processing through Savannah River Site's H-Canyon/HB-Line facilities
    and subsequent disposal with the SRS waste stream. See chart below.

        Question. Would the economics or design of the plant change
    significantly if a policy decision were made to increase the amount of
    plutonium to be processed through this plant?
        Answer. The MOX facility is nominally designed for a 40-year life.
    The 34 metric tons disposition mission will require approximately 13
    years. As a result, the MOX facility is capable of fabricating
    significant additional quantities of plutonium into MOX fuel. Once
    built, it will cost approximately $185 million per year to operate the
    MOX facility. Changes to the design of the facility are dependent on
    the specific characteristics of the plutonium to be fabricated into
    fuel in the future.

            NNSA'S PLUTONIUM CONSOLIDATION AND DISPOSITION STRATEGY

        Question. I am very concerned about the growing security budget and
    the financial impact it has on the defense and nonproliferation
    missions. Instead of waiting for a new multi billion dollar
    consolidated plutonium facility that is still years away from
    construction, I am more interested in taking steps now to consolidate
    and dispose of excess plutonium.
        Can you please provide me with a written explanation of the
    Department's overall plutonium disposition strategy that includes
    schedule, estimated cost and potential impact it might have on out-year
    security funding.
        Answer. The Department has prepared a ``Business Case, Proposed
    Baseline Approach for Disposing of Surplus Plutonium,'' dated April
    2007 (attached). The estimated cost, schedule, and future year funding
    requirements are contained in the Business Case.

     BUSINESS CASE--DEPARTMENT OF ENERGY'S PROPOSED BASELINE APPROACH FOR
                   DISPOSING OF SURPLUS PLUTONIUM, APRIL 2007

    Executive Summary
        This report presents DOE's plan to dispose of inventories of
    surplus weapons-usable plutonium \1\ and includes a discounted cash
    flow analysis which takes into account the time value of money.\2\ Data
    contained in the analysis are based on information provided by the
    National Nuclear Security Administration and the offices of
    Environmental Management and Nuclear Energy with input provided by Dr.
    David Kosson, Chair of Civil and Environmental Engineering, Vanderbilt
    University; Dr. Ian Pegg, Professor of Physics and Associate Director
    of the Vitreous State Laboratory, Catholic University; and Dr. David
    Gallay, Program Director, LMI Government Consulting.
    ---------------------------------------------------------------------------
        \1\ This report addresses surplus weapons-usable plutonium covered
    by Public Law 107-107 and section 4306 of the Atomic Energy Defense
    Act, as amended. Surplus weapon-grade plutonium, as defined in the
    U.S.-Russia Plutonium Management and Disposition Agreement (less than
    10 percent Pu-240 and withdrawn from nuclear-weapons programs) is a
    subset of surplus weapon-usable fissile materials.
        U.S. national security and nonproliferation objectives include the
    disposition of 43 MT of surplus plutonium by rendering it unusable for
    nuclear weapons use and encouraging Russia to dispose of its surplus
    weapons plutonium. The 43 MT includes plutonium which has been declared
    surplus and some plutonium which may be declared surplus to national
    security defense needs in the future. This does not include surplus
    plutonium that already has a disposition pathway such as spent fuel,
    scraps, and residues. The analyses pursuant to the National
    Environmental Policy Act addressed the environmental impacts of
    disposition of up to 50 MT of such surplus weapons-usable plutonium,
    including plutonium that may be declared surplus in the future.
        \2\ This is consistent with the information used previously in
    DOE's 2006 report entitled, Disposition of Surplus U.S. Materials,
    Comparative Analysis of Alternative Approaches, and with DOE's 2007
    Business Case Analysis of the Current U.S. Mixed Oxide (MOX) Fuel
    Strategy for Dispositioning 34 Metric Tons of Surplus Weapon-Grade
    Plutonium, although those reports: (1) do not discount future cash
    flows, and (2) the earlier studies analyzed the combined plutonium and
    uranium storage costs in lieu of the plutonium storage cost as
    described in this study.
    ---------------------------------------------------------------------------
        DOE's proposed baseline approach is designed to accomplish the
    following three objectives:
      --Dispose of \3\ approximately 43 metric tons of surplus weapons-
            usable plutonium (both weapon and non-weapon grade) so that
            this material is rendered inaccessible and unattractive for
            weapons use while protecting human health and the environment.
            This goal is consistent with long-standing United States
            national security and nonproliferation policy with respect to
            eliminating, where possible, the accumulation of stockpiles of
            highly enriched uranium and plutonium;
    ---------------------------------------------------------------------------
        \3\ The phrase ``dispose of '' is used in this paper, consistent
    with the phraseology appearing in the 2000 U.S.-Russia Plutonium
    Management and Disposition Agreement. This paper addresses the costs of
    disposition prior to ultimate disposal (of mixed oxide spent fuel and
    vitrified plutonium with high-level waste) in the planned geologic
    repository for spent fuel and high-level waste at Yucca Mountain,
    Nevada.
    ---------------------------------------------------------------------------
      --Encourage Russia to dispose of 34 MT of its surplus weapons
            plutonium consistent with the September 2000 U.S.-Russia
            Plutonium Management and Disposition Agreement; and
      --Consolidate surplus non-pit plutonium currently stored throughout
            the DOE Complex in order to reduce the risks associated with
            storage of such materials at multiple sites and to help reduce
            storage and safeguards and security costs for nuclear
            materials.
        DOE's current proposed baseline approach \4\ for disposing of
    approximately 43 metric tons of surplus plutonium involves the
    following:
    ---------------------------------------------------------------------------
        \4\ The proposed actions described in the following bullets are
    subject to appropriate review under the National Environmental Policy
    Act (NEPA), subsequent decisions, and compliance with other applicable
    law.
    ---------------------------------------------------------------------------
      --Construct and operate a Mixed Oxide (MOX) Fuel Fabrication
            Facility, a Pit Disassembly and Conversion Facility (PDCF), and
            a Waste Solidification Building (WSB) to dispose of at least 34
            MT of weapon-grade plutonium;
      --Design, construct and operate a small-scale plutonium vitrification
            process in the basement level of the K-Reactor Building to
            vitrify up to 13 MT of non-pit plutonium \5\ with high level
            waste; and
    ---------------------------------------------------------------------------
        \5\ This 13 MT includes approximately 2 MT of material currently
    proposed to be processed in the HB-Line, and vitrified in the Defense
    Waste Processing Facility and approximately 4 MT of material currently
    proposed to be fabricated into MOX fuel.
    ---------------------------------------------------------------------------
      --Operate the existing H-Canyon/HB-Line facilities to process
            approximately 2 MT of plutonium-bearing materials for disposal
            through the Savannah River Site radioactive waste system (for
            vitrification with high level waste in the Defense Waste
            Processing Facility) concurrent with the recovery of enriched
            uranium for subsequent down-blending to low enriched uranium
            and sale.
        Based on a recent review by outside experts (cited above), and an
    assessment by Shaw-AREVA MOX Services (MOX contractor) of what
    plutonium materials can likely be fabricated into MOX fuel, DOE is
    currently evaluating the cost and feasibility of reducing or
    eliminating the mission that is currently being considered for the
    proposed small-scale Plutonium Vitrification process. Preliminary
    indications are that this approach could result in cost savings of
    approximately $500 million (estimated total project cost in constant
    2006 dollars, excluding operating costs), although actual savings may
    change as the design of the small-scale Plutonium Vitrification process
    progresses. The Department is evaluating the feasibility of the
    following approach:
      --Construct and operate a Mixed Oxide (MOX) Fuel Fabrication
            Facility, a Pit Disassembly and Conversion Facility (PDCF), and
            a Waste Solidification Building (WSB) to dispose of at least 39
            MT of weapon-grade plutonium;
      --Operate the existing H-Canyon/HB-Line facilities to process
            approximately 4 MT of plutonium-bearing materials for disposal
            through the Savannah River Site radioactive waste system (for
            vitrification with high level waste in the Defense Waste
            Processing Facility) concurrent with the recovery of enriched
            uranium for subsequent down-blending to low enriched uranium
            and sale.
        Constructing and operating a Mixed Oxide (MOX) Fuel Fabrication
    Facility at the Savannah River Site for disposing of surplus plutonium
    is in the U.S. national interest and consistent with national security
    and nonproliferation objectives. Doing so will convert plutonium into
    forms not readily usable for weapons, and will encourage Russia to
    dispose of 34 metric tons of its excess weapons plutonium in accordance
    with the 2000 U.S.-Russia Plutonium Management and Disposition
    Agreement. Proceeding with the U.S. MOX program will also help reduce
    storage costs for nuclear materials, reduce safeguards and security
    costs, and support the Department's efforts to consolidate nuclear
    materials throughout the DOE Complex. The Department of Energy believes
    that irradiating plutonium as MOX fuel in existing commercial reactors
    is a prudent and effective means for disposing of surplus plutonium
    compared to other less mature disposition technologies.
        MOX is a proven technology that has been in widespread use in
    Europe for over three decades. Moreover, the design of the U.S. MOX
    facility is 90 percent complete, the Nuclear Regulatory Commission
    (NRC) has issued a construction authorization, and DOE's contractor has
    submitted a license application to the NRC for operation of the MOX
    facility. In addition, MOX fuel lead assemblies, made from surplus
    weapons plutonium, are currently being successfully tested in a
    commercial reactor in South Carolina. Thus far, DOE has spent
    approximately $735 million on the MOX program for design, licensing,
    and site preparation activities as well as for the fabrication and
    irradiation of MOX fuel lead assemblies.\6\
    ---------------------------------------------------------------------------
        \6\ The approximately $735 million in sunk costs are not included
    in this baseline financial analysis. Sunk costs were included in the
    calculation of life cycle costs provided to the House Committee on
    Appropriations in March 2007, in accordance with specific direction
    from that Committee.
    ---------------------------------------------------------------------------
        DOE's proposed baseline approach provides a disposition path for
    the currently identified surplus plutonium that is or will be declared
    surplus in the future. It enables the Department to consolidate special
    nuclear material (SNM), including the removal of all surplus plutonium
    from Hanford as well as reducing the inventory of surplus plutonium at
    the Lawrence Livermore National Laboratory (LLNL) and the Los Alamos
    National Laboratory (LANL) by 2009. This would result in a reduction of
    existing Category I special nuclear materials storage (CAT I)
    facilities, and ultimately would result in the fewest number of DOE CAT
    I storage facilities, at the earliest date in time. The proposed
    consolidation would also facilitate the Department's plan to achieve
    its ``Complex 2030'' objectives, a more modern, smaller and efficient
    weapons complex.
        As evidenced in the financial analysis, this proposed baseline
    approach would recover uranium and plutonium from the disposition of
    surplus fissile materials for energy production providing over $2
    billion in revenues \7\ (in constant 2006 dollars) to the U.S.
    Treasury. Included in this proposed baseline approach is approximately
    2 MT of plutonium-bearing materials to be processed through H-Canyon/
    HB-Line at Savannah River. The net present value cost of this proposed
    approach (i.e. MOX, the proposed small-scale Vitrification, and H-
    Canyon) over a 28-year period is approximately $11.1 billion.
    ---------------------------------------------------------------------------
        \7\ Revenue is comprised of approximately $1.5 billion from the
    sale of MOX fuel and $700 million from the sale of uranium from
    dismantled nuclear weapons pits. Both are based on the prevailing price
    of uranium, which has been extremely volatile in recent years The
    discounted cash flow analysis used in this Business Case conservatively
    assumes that uranium and enrichment market prices that prevailed in
    November 2006 will prevail throughout the period of interest when the
    fuel materials will enter the market.
    ---------------------------------------------------------------------------
        In addition to encouraging Russia to dispose of 34 metric tons of
    weapons plutonium, the capability to disassemble large numbers of
    nuclear weapons pits in the United States and fabricate the resulting
    plutonium into MOX fuel utilizes a mature technology and could
    potentially provide the following capabilities:
      --Disposition of additional weapons plutonium (beyond the 34 MT) that
            is expected to be declared surplus as plutonium requirements
            are reevaluated, in connection with transformation of the
            nuclear weapons stockpile. While additional declarations would
            have to be approved by the President based on advice from the
            Secretaries of Defense and Energy, the MOX and PDCF facilities,
            once constructed and operating, could readily be used for this
            purpose. The Deputy Administrator for Defense Programs will
            specifically raise this request with the Nuclear Weapons
            Council.
      --Currently, DOE is evaluating both metal and oxide fuel forms for
            use as the start-up fuel for fast reactors in support of the
            Global Nuclear Energy Partnership (GNEP). A decision on the
            fuel form for the fast reactors will be made at a future time.
            Given that the necessary GNEP fuel-related decisions are in the
            future, it is not reasonable to delay construction of the MOX
            facility to incorporate the potential GNEP required design and
            construction changes. Continued delays in MOX construction will
            result in increased costs and postpone the start of facility
            operations. DOE will continue to evaluate the option to use the
            MOX facility in support of fast reactor start-up fuel as the
            requirements for GNEP are developed. In 2008, the Secretary of
            Energy plans to determine a path forward for GNEP.
      --Disposition of additional impure plutonium, e.g. plutonium
            containing levels of chlorides, fluorides and Pu-240, currently
            proposed to be dispositioned in DOE's proposed small-scale
            Plutonium Vitrification process. The Department is evaluating
            the cost and technical feasibility of maximizing the use of the
            MOX facility and reducing the mission that is currently being
            considered for the proposed small-scale Plutonium Vitrification
            process.
        In conclusion, DOE's proposed baseline approach for disposing of
    surplus plutonium (MOX, the proposed small-scale Plutonium
    Vitrification process, and H-Canyon) would meet U.S. national security
    and nonproliferation objectives for disposing of 43 MT of surplus
    plutonium by rendering it unusable for nuclear weapons use, and
    encouraging Russia to dispose of its surplus weapons plutonium. In
    addition, the proposed baseline approach will help reduce storage costs
    for nuclear materials, reduce safeguards and security costs, and
    support the Department's efforts to consolidate nuclear materials
    within the DOE Complex.

                                   BACKGROUND

        The end of the cold war left a legacy of surplus weapons-usable
    fissile materials both in the United States and the former Soviet
    Union, leaving substantial quantities of plutonium, no longer needed
    for defense purposes. The global stockpiles of weapons-usable fissile
    materials pose a danger to national and international security in the
    form of potential proliferation of nuclear weapons and the potential
    for environmental, safety, and health consequences if the materials are
    not properly safeguarded and managed. In September 1993, in response to
    these concerns, President Clinton issued a Nonproliferation and Export
    Control Policy which committed the United States to seek to eliminate,
    where possible, the accumulation of stockpiles of highly enriched
    uranium or plutonium, and to ensure that where these materials already
    exist, they are subject to the highest standards of safety, security,
    and international accountability.
        In early 1994, the U.S. National Academy of Sciences issued a
    report evaluating a number of plutonium disposition alternatives
    ranging from sending it into space to burying it under the ocean floor,
    before recommending two promising alternatives for further study: (1)
    fabrication and use as fuel, without reprocessing, in existing or
    modified nuclear reactors, or (2) immobilization in combination with
    high-level radioactive waste. To achieve a high degree of proliferation
    resistance, the National Academy of Sciences recommended that the
    national objective should be to make the surplus weapon-grade
    ``plutonium roughly as inaccessible for weapons use as the much larger
    and growing quantity of plutonium that exists in spent fuel from
    commercial reactors,'' a state they defined as the spent fuel standard.
    This standard would require a form from which extraction and use in
    weapons of any residual plutonium and other fissile materials would be
    as difficult or unattractive as the recovery of residual plutonium from
    spent commercial fuel.
        On March 1, 1995, approximately 200 metric tons of U.S.-origin
    weapons-usable fissile materials were declared surplus to U.S. defense
    needs (38.2 MT of weapon-grade plutonium and 174.3 MT of highly
    enriched uranium). In addition, DOE announced that it had 14.3 metric
    tons of other than weapon-grade plutonium that would be included in the
    disposition program.
        Subsequently, the Department of Energy convened a team of
    laboratory, independent oversight and interagency experts to determine
    a range of reasonable disposition alternatives. Following a number of
    nationwide scoping meetings, the team released a screening report in
    March 1995 that pared 37 potential disposition options down to 11; 5
    for reactor, 4 for immobilization and 2 for direct geologic disposal
    (deep borehole). The screening process led the Department to conclude
    that going beyond the spent fuel standard using advanced technologies,
    such as fast reactors and accelerators, was not appropriate. Such
    advanced options were found to require substantial additional research
    and development, with related increased costs and time, in order to
    provide the same assurance of technical viability as other, more
    readily available technologies.
        At the April 1996 Moscow Nuclear Safety Summit, the leaders of the
    seven largest industrial countries and the Russian Federation issued a
    joint statement endorsing the need to render the surplus fissile
    materials (both highly enriched uranium and plutonium) in Russia and
    the United States to a high degree of proliferation resistance.
    Subsequently, former Russian President Yeltsin declared up to 50 metric
    tons of plutonium and 500 metric tons of highly enriched uranium as
    surplus to Russia's defense needs in September 1997.
        Following the preparation of a Programmatic Environmental Impact
    Statement which evaluated various storage and disposition options, DOE
    issued a Record of Decision (ROD). In the 1997 ROD, DOE decided that it
    would consolidate the storage of weapons-usable plutonium at upgraded
    and expanded existing and planned facilities at the Pantex Plant in
    Texas and the Savannah River Site (SRS) in South Carolina, and continue
    the storage of weapons-usable HEU in upgraded facilities at DOE's Y-12
    Plant at the Oak Ridge Reservation in Tennessee. After certain
    conditions were met, most plutonium stored at the Rocky Flats
    Environmental Technology Site in Colorado would be moved to Pantex and
    SRS. Plutonium stored at the Hanford Site, the Idaho National
    Engineering and Environmental Laboratory (INEEL), and the Los Alamos
    National Laboratory (LANL) would remain at those sites until
    disposition (or moved to storage prior to disposition). In accordance
    with the ROD, DOE would provide for disposition of surplus plutonium by
    pursuing a strategy that allowed: (1) immobilization of surplus
    plutonium for disposal in a repository pursuant to the Nuclear Waste
    Policy Act, and (2) fabrication of surplus plutonium into mixed oxide
    (MOX) fuel for use in existing domestic commercial light-water
    reactors.
        In July 1998, the Department issued a draft Surplus Plutonium
    Disposition Environmental Impact Statement (SPD EIS) which analyzed
    candidate sites for plutonium disposition. The environmental
    consequences of siting, constructing, operating, and ultimately
    decommissioning the facilities under consideration for the plutonium
    disposition mission at one or more of four DOE sites was described in
    the draft SPD EIS issued in July 1998. In addition to assessing the
    environmental consequences of the disposition alternatives, DOE
    analyzed the cost and schedule differences between alternatives, taking
    into account information obtained during site visits, similar nuclear/
    industrial project costs, informal vendor quotations, previous
    estimates for similar equipment, parametric cost models, site-specific
    labor rates, and operational staffing requirements and salaries. A cost
    report was issued in July 1998 that focused on the differences in cost
    for siting the facilities at the different locations. In September
    1998, at the Clinton-Yeltsin Summit, the two leaders committed their
    countries to enter into a bilateral plutonium disposition agreement.
        In April 1999, DOE issued a Supplement to the draft SPD EIS, to
    address, among other things, impacts at the specific reactor sites
    which were identified pursuant to the contract with DOE's newly
    selected MOX contractor. In November 1999, DOE issued the Surplus
    Plutonium Disposition Final Environmental Impact Statement. This
    follow-on EIS evaluated the environmental impacts of conducting
    plutonium disposition activities at the following DOE locations:
    Hanford, Savannah River, Idaho National Engineering and Environmental
    Laboratory (INEEL) and the Pantex Plant. This was followed, in January
    2000, by a decision that: the Pit Disassembly and Conversion Facility,
    the Mixed Oxide Fuel Fabrication Facility, and the Plutonium
    Immobilization Facility would be located at SRS; up to 33 MT of
    plutonium would be fabricated as mixed oxide fuel at the Savannah River
    Site; and up to 17 MT of plutonium would be immobilized at the Savannah
    River Site.\8\ The Department reasoned that pursuing this approach
    provided the best opportunity for U.S. leadership in working with
    Russia to implement similar options for reducing Russia's excess
    plutonium. Further, it would send the strongest possible signal to the
    world of U.S. determination to reduce stockpiles of surplus weapons-
    usable plutonium as quickly as possible and in an irreversible manner.
    ---------------------------------------------------------------------------
        \8\ About 4 MT of the 17 MT has been subsequently designated for
    programmatic use.
    ---------------------------------------------------------------------------
        Also in November 1999, DOE issued an additional cost report,
    Plutonium Disposition Life-Cycle Costs and Cost-Related Comment
    Resolution Document, which provided the full life-cycle costs for the
    Preferred Alternative as stated in the draft SPD EIS.
        Making good on a pledge made at a 1998 Summit, the United States
    and Russia entered into a Plutonium Management and Disposition
    Agreement in September 2000 that committed each country to dispose of
    34 metric tons of surplus weapon-grade plutonium.
        In 2001, DOE undertook a review of U.S. plutonium disposition
    cooperation with Russia so as to identify a more cost-effective
    approach. The review considered more than 40 approaches for plutonium
    disposition, with 12 distinct options selected for detailed analysis
    (six MOX-based reactor disposition options, two advanced reactor
    disposition options, and four non-reactor options (immobilization and
    long-term storage). This resulted in a refined approach under which the
    United States would rely on the irradiation of MOX fuel to dispose of
    surplus plutonium. After preparation of a Supplemental Analysis
    pursuant to the National Environmental Policy Act, the Department
    issued an amended Record of Decision which, among other things,
    cancelled immobilization. Under the new approach, 34 MT of surplus
    plutonium would be fabricated into MOX fuel, including approximately
    6.5 metric tons of impure plutonium previously destined for
    immobilization.
        In 2006, DOE again evaluated its strategy for disposing of
    currently identified surplus weapons-usable plutonium, plus 26 MT of
    surplus highly enriched uranium for which viable disposition paths had
    not been identified. DOE's 2006 report titled, Disposition of Surplus
    U.S. Materials, Comparative Analysis of Alternative Approaches showed
    that all of the ``going forward'' various alternatives were within a
    few percentages of each other (in constant 2006 dollars), illustrating
    that monetary cost was not a major discriminating factor. In the case
    of storage, DOE would still have to incur the cost of disposition at
    the conclusion of the storage mission.
        In March 2007, the Department also submitted to Congress a report
    titled, Business Case Analysis of the Current U.S. Mixed Oxide (MOX)
    Fuel Strategy for Dispositioning 34 Metric Tons of Surplus Weapon-Grade
    Plutonium, which included a business case rollup of going forward costs
    (in constant 2006 dollars) of various disposition alternatives. This
    report reconfirmed that the MOX approach was the most suitable
    disposition alternative and showed that continued storage was the most
    expensive alternative over time.

                 DESCRIPTION OF DOE'S SURPLUS FISSILE MATERIALS

        In accordance with the U.S.-Russia Plutonium Management and
    Disposition Agreement, the MOX facility will fabricate at least 34 MT
    of surplus weapon-grade plutonium into MOX fuel for subsequent
    irradiation in existing commercial reactors. The majority of the
    material is comprised of surplus pits, clean plutonium metal, and clean
    oxide (approximately 25.6 MT). The remaining quantity of plutonium is
    comprised of weapon-grade oxides that are acceptable to the MOX process
    and from future weapons dismantlements. Some of the metal and oxides
    are impure, and until physical sampling, analysis and characterization
    can be performed on individual cans containing this material, the final
    quantities could vary. Based on currently available information, the 34
    MT of weapon-grade plutonium is comprised of the following:
      --25.6 MT of surplus plutonium pits, clean metal, and clean oxide;
      --Approximately 4 MT of other metal and oxide; and
      --Approximately 4.4 MT from future declarations of additional surplus
            pits.
        In August 2006, DOE identified a small-scale plutonium
    vitrification process that could be used to dispose of up to 13 MT of
    plutonium. This 13 MT includes 4 MT of other metal and oxide that DOE
    currently believes are suitable for MOX and approximately 2 MT that is
    currently planned to be processed in the H-Canyon facility.
        Based on currently available information, the 13 MT of plutonium is
    proposed to be distributed among the three facilities (MOX, the
    proposed small-scale Plutonium Vitrification process, and H-Canyon)
    based on the following material characteristics:

    ------------------------------------------------------------------------
            Disposition Approach           Quantity      Characteristics
    ------------------------------------------------------------------------
    MOX.................................       4 MT  Other Metal & Oxide:
                                                      Clean WG (Weapon-
                                                      Grade) (less than 10
                                                      percent Pu-240) Oxide
                                                      and Slightly Impure WG
                                                      Oxide.
    Plutonium Vitrification Facility....   \1\ 5 MT  Impure Metal & Oxide:
                                                      Clean FG (Fuel-Grade)
                                                      (greater than 10
                                                      percent but less than
                                                      19 percent Pu-240)
                                                      Metal; Clean FG Oxide;
                                                      Impure Plutonium Oxide
                                                      with Chloride; Impure
                                                      Plutonium Metal with
                                                      Chloride.
                                           \2\ 2 MT  Impure Metal & Oxide:
                                                      Power-Grade Oxide (19+
                                                      percent Pu-240); Fast
                                                      Flux Test Facility
                                                      Green Fuel (70 percent
                                                      Uranium); Plutonium
                                                      Oxide with Fluoride;
                                                      Plutonium Oxide with
                                                      Beryllium (Be);
                                                      Plutonium Oxides and
                                                      Metal with Thorium.
    H-Canyon............................       2 MT  Very Impure Materials:
                                                      Material from 3013
                                                      Container
                                                      Surveillances;
                                                      Plutonium-Beryllium
                                                      Metal; Plutonium-
                                                      Vanadium Metal; Pu-
                                                      Depleted Uranium
                                                      Metal; Plutonium-
                                                      Tantalum Metal; and
                                                      Oxide with High
                                                      Uranium Content.
    ------------------------------------------------------------------------
    \1\ As discussed elsewhere in this analysis, some or all of this
      material may be fabricated into MOX fuel in the MOX facility.
    \2\ As discussed elsewhere in this analysis, some of this material may
      be processed in H-Canyon.

        DOE will evaluate how to maximize the use of the MOX Facility for
    disposition of the non-pit plutonium currently being considered for the
    proposed small-scale Plutonium Vitrification process which is in the
    very early stages of design (less than 5 percent complete). DOE will
    continue to address technical and cost uncertainties as part of the
    Conceptual Design process and will arrive at a decision as to the need
    for the Plutonium Vitrification project as part of Critical Decision-1,
    planned for late 2007. The following is a graphical presentation
    showing the potential pathways for disposing of 52.5 MT of U.S.
    weapons-usable plutonium, which was declared surplus in 1995 (including
    spent fuel and fresh fuel retained for programmatic use), as well as
    plutonium which may be declared surplus in the future:

      FINANCIAL ANALYSIS OF DOE'S PROPOSED BASELINE PLUTONIUM DISPOSITION
                                    APPROACH

        DOE's proposed baseline approach includes a MOX Fuel Fabrication
    Facility, a Pit Disassembly and Conversion Facility (PDCF), and a Waste
    Solidification Building (WSB) to dispose of 34 MT of weapon-grade
    plutonium; a proposed Plutonium Vitrification process in the basement
    level of the K-Reactor Building to vitrify an expected 7 MT of non-pit
    plutonium (but potentially up to 13 MT of non-pit plutonium) currently
    unsuitable for fabrication into MOX fuel; and the H-Canyon/HB-Line
    facilities to process approximately 2 MT of plutonium bearing materials
    at the Savannah River Site to recover enriched uranium for subsequent
    down-blending and sale.
        DOE uses a discounted cash flow analysis (or DCF) as the basis for
    its Business Case which takes into account the time value of money. The
    DCF method determines the present value of future cash flows by
    discounting them to the present using the U.S. Government's appropriate
    discount rate, as prescribed by OMB. This is necessary because cash
    flows (project related cost outflows and revenue stream inflows from
    the sale of MOX fuel and down-blended low enriched uranium) occur in
    different time periods. This approach is consistent with the
    information used previously in DOE's 2006 report entitled, Disposition
    of Surplus U.S. Materials, Comparative Analysis of Alternative
    Approaches, and with DOE's 2007 Business Case Analysis of the Current
    U.S. Mixed Oxide (MOX) Fuel Strategy for Dispositioning 34 Metric Tons
    of Surplus Weapon-Grade Plutonium, although those reports do not
    discount future cash flows.
        The underlying conditions of the economic analysis are as follows:
      --The analysis is based on estimates published previously in DOE/NNSA
            budget documentation (updated, where appropriate) and on the
            approved, externally reviewed and validated MOX total project
            cost baseline. The analysis did not independently develop or
            verify any of those estimates.
      --Revenues from the sale of MOX reactor fuel and uranium from
            dismantled pits are included, where applicable.
      --All cash flows represent relevant differences in expected current
            and future costs and revenues among the alternatives. Previous
            sunk costs are not considered.
      --The net present value costs are in discounted 2006 dollars.
      --The common time period is 2007 through 2034 and therefore includes
            current year expenditures.
      --The discount rate (representing the Government's time value of
            money) is 3 percent, as prescribed in OMB Circular A-94.
        The ``going forward'' cost, in net present value terms and
    excluding sunk costs, of DOE's proposed baseline approach is
    approximately $11.1 billion. A detailed analysis and assumptions
    follow:

     NET PRESENT VALUE COST TO DOE OVER A 28-YEAR PERIOD--MOX, VITRIFICATION
                             AND H-CANYON OPERATIONS
                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                                Net Present
                          Cost Element                          Value Cost
    ------------------------------------------------------------------------
    MOX.....................................................           3,402
    PDCF....................................................           2,214
    WSB.....................................................             544
    Other Plutonium Disposition Costs \1\...................             333
    Vitrification...........................................             797
    H-Canyon................................................             340
    Storage.................................................           3,426
                                                             ---------------
          Net Present Value.................................          11,056
    ------------------------------------------------------------------------
    \1\ Includes estimated costs associated with reactor modifications,
      reactor irradiation services, procurement of uranium feed materials,
      and fuel qualification.

        Assumptions:
      --MOX construction begins August 1, 2007; the facility becomes
            operational in 2016 and operates through 2029.
      --PDCF becomes operational in 2019 and operates through 2026.
      --WSB becomes operational in 2013 and operates through 2029.
      --Proposed Plutonium Vitrification process becomes operational in
            2013 and operates through 2019.
      --For surplus non-pit plutonium, approximately 2 MT is processed
            through H-Canyon/HB-Line, approximately 4 MT is processed
            through the MOX facility, and the remaining 7 MT is vitrified
            in the proposed Plutonium Vitrification process.
      --All cash flows are represented in 2006 (real) dollars.
      --Consolidation of surplus, non-pit plutonium to SRS begins in 2007
            and is completed in 2009.
      --H-Canyon/HB-Line are maintained as a safeguards Category II
            facility.
      --The primary mission for H-Canyon/HB-Line is to process aluminum
            clad spent fuel and recover enriched uranium, which continues
            through 2019. The costs associated with the ``with other
            missions'' are the costs attributable to operating the facility
            for processing plutonium whereas the costs associated with the
            ``without other missions'' are the costs to operate the
            facility if the plutonium mission carries the full costs of
            facility operations. The numbers are derived from the actual
            annual operating costs.
      --The MOX total project cost is based on the current approved project
            baseline ($4.8 billion). Note: The Revised Continuing
            Appropriations Resolution, 2007 (Public Law 110-5) provides
            that the Secretary of Energy may not make available funds for
            construction activities for the MOX facility until August 1,
            2007. This delay results in an increase to the MOX total
            project cost which is included in the net present value
            calculations.
      --The project cost for PDCF and WSB is based on the project data
            sheet in the fiscal year 2008 President's budget.
      --The project costs for Plutonium Vitrification are based on the pre-
            conceptual cost range approved at CD-0, and are the same as
            those appearing in the fiscal year 2008 President's budget.
      --Costs for all storage facilities are based on actual operating
            costs and/or those costs projected by each of the sites.
      --Storage costs for LLNL and LANL continue until programmatic
            materials are removed consistent with Complex 2030 goals in the
            years 2014 and 2022 respectively. Pantex storage costs continue
            due to continued storage of programmatic material. Storage
            costs are based on the total, actual operating costs of the
            storage facilities for both surplus and non-surplus
            programmatic materials. These costs include security costs and
            the required staffing to operate and maintain a Category 1
            Security facility. Such costs are incurred regardless of the
            quantity of materials stored in the facility and would be
            incurred so long as surplus or programmatic materials are
            stored at the facilities. The facilities at Pantex, LLNL, and
            LANL contain both programmatic and surplus materials and
            accordingly, storage costs would be incurred until all of the
            materials (surplus and programmatic) have been removed. For
            these reasons, it is not appropriate to allocate incremental
            storage costs for only surplus plutonium.
      --The estimated nearer-term plutonium storage costs of $3.4 billion
            represent the storage costs to the Department until removal of
            surplus plutonium from Hanford, LLNL, and LANL pursuant to
            DOE's Complex 2030 and material consolidation goals. If
            consolidation of the surplus plutonium does not proceed and the
            materials continue to be stored at present locations, then an
            incremental storage cost of approximately $6 billion would be
            incurred, in addition to the future cost to dispose of the
            materials at a later time. Storage (without disposition) would
            be the most expensive option because the discounted (net
            present value) storage costs are within 10 percent of the
            proposed baseline approach and do not account for the
            additional cost to dispose of the material.
      --The net present value costs are consistent with the information
            used previously in DOE's 2006 report entitled, Disposition of
            Surplus U.S. Materials, Comparative Analysis of Alternative
            Approaches, and with DOE's 2007 Business Case Analysis of the
            Current U.S. Mixed Oxide (MOX) Fuel Strategy for Dispositioning
            34 Metric Tons of Surplus Weapon-Grade Plutonium, but differ in
            that: (1) the earlier studies did not discount the costs, and
            (2) the earlier studies analyzed the combined plutonium and
            uranium storage costs in lieu of the plutonium storage cost as
            described in this study. If DOE continues to store surplus
            materials at Hanford, LANL, and LLNL, cost savings from
            removing plutonium pursuant with Complex 2030 initiative and
            materials consolidation would not be realized.
      --Costs are included for construction of six magazines to increase
            storage efficiency for surplus pits in Zone 4 at Pantex.
      --Costs of operating H-Canyon/HB-Line without other missions
            represent the total cost of operating H-Canyon/HB-Line and are
            based on actual annual operating costs. This scenario would
            occur if other planned missions do not take place and H-Canyon/
            HB-Line was operated solely for plutonium disposition.
      --Revenues from the sale of MOX fuel and the uranium from dismantled
            pits are based on the price of uranium as of November 2006.
      --A terminal value is used to assign an equivalent financial value to
            those activities assumed to continue indefinitely, such as
            storage and surveillance and monitoring.
          evaluation of alternative storage and disposition approaches
        The following section compares the Department's proposed baseline
    approach with other storage and disposition approaches on the basis of
    nonproliferation aspects, institutional factors, technical maturity and
    technical uncertainty, and cost and schedule considerations. Plutonium
    disposition approaches are grouped into two distinct categories. Those
    approaches in the first category meet U.S. national security and
    nonproliferation objectives concerning the disposition of surplus
    plutonium by rendering it unusable for nuclear weapons, and encourage
    Russia to dispose of its surplus weapons plutonium. Specific approaches
    in this category include: DOE's proposed Baseline Approach (MOX, the
    proposed small-scale Plutonium Vitrification process and H-Canyon/HB-
    Line) and Maximize Utilization of MOX and H-Canyon/HB-Line. The second
    category contains those approaches that fail to accomplish these
    objectives and include: large-scale (41 MT) Immobilization Facility and
    H-Canyon, Consolidate and Vitrify (13 MT) Non-Pit Plutonium at SRS
    While Continuing to Store Surplus Pits at Pantex, Consolidate the
    Storage of Non-Pit Plutonium (13 MT) at SRS and Store Surplus
    Plutonium (43 MT) In-Place at Current Locations.

       APPROACHES THAT MEET U.S. NATIONAL SECURITY AND NONPROLIFERATION
                                   OBJECTIVES

        Proposed Baseline Approach (MOX, Plutonium Vitrification and H-
    Canyon).--The proposed baseline approach consists of: (1) construct and
    operate a MOX Fuel Fabrication Facility, a Pit Disassembly and
    Conversion Facility, and a Waste Solidification Building to dispose of
    34 MT of weapon-grade plutonium; (2) design, construct and operate a
    plutonium vitrification process in the basement level of the K-Reactor
    Building to vitrify up to 13 MT of non-pit plutonium; and (3) operate
    the existing H-Canyon/HB-Line facilities to process approximately 2 MT
    of very impure plutonium bearing materials at the Savannah River Site,
    along with the mission to recover enriched uranium for subsequent down
    blending and sale.
        DOE's proposed baseline approach for disposing of surplus plutonium
    meets all of the programmatic objectives. The detailed design of the
    MOX facility is about 90 percent complete, and the technology has been
    in use throughout Europe for three decades. The proposed Plutonium
    Vitrification process, on the other hand, is in the very early stages
    of design (less than 5 percent complete). As such, there remains
    uncertainty associated with the design and cost estimates and
    therefore, future cost growth is likely. DOE will continue to address
    technical and cost uncertainties as part of the Conceptual Design
    process. The MOX fuel fabrication facility, once operational, could
    potentially provide the following capabilities: disposition of
    additional plutonium from future weapons dismantlement, if declared
    surplus; possible fabrication of start-up fuel for GNEP fast reactors
    depending on fuel form selected and the 2008 determination of the GNEP
    path forward by the Secretary of Energy; and disposition of additional
    surplus impure plutonium (currently planned for Plutonium
    Vitrification), if the chemical and isotopic impurities can be
    economically removed from the material. This approach will incur
    additional costs if there is delay in pursuing the currently planned
    program.
        Maximize Utilization of MOX and Operate H-Canyon (MOX and H-
    Canyon).--Construct and operate a MOX Fuel Fabrication Facility, a Pit
    Disassembly and Conversion Facility, and a Waste Solidification
    Building to dispose of approximately 39 MT of weapon-grade and fuel-
    grade plutonium, and to operate the existing H-Canyon/HB-Line
    facilities to process approximately 4 MT of certain impure and very
    impure plutonium bearing materials at the Savannah River Site, together
    with the mission to recover enriched uranium for subsequent down
    blending and sale.
        As with the proposed baseline approach, this approach meets all of
    the programmatic objectives. Overall, it has the highest degree of
    technical maturity and is therefore likely to have the least unplanned
    programmatic cost growth. The proposed small-scale Plutonium
    Vitrification process is in the very early stages of design (less than
    5 percent complete). As such, there remains uncertainty associated with
    the design and cost estimates and therefore, future cost growth is
    likely. DOE will continue to address technical and cost uncertainties
    as part of the Conceptual Design process. Engineers are currently
    evaluating the cost and technical feasibility of maximizing the use of
    the MOX facility and reducing the mission that is currently proposed
    for the small-scale Plutonium Vitrification process. If feasible, it
    could permit DOE to use MOX and H-Canyon to dispose of the
    approximately 43 metric tons of surplus plutonium. Preliminary
    indications are that this approach may result in cost savings of
    approximately $500 million (estimated total project cost in constant
    2006 dollars, excluding operating costs) when compared to the proposed
    baseline approach, although actual savings may change as the design of
    the small-scale Vitrification process progresses. Moreover, this
    approach would require minor modifications to the H-Canyon. As
    mentioned above, the MOX fuel fabrication facility, once operational,
    could potentially provide the following capabilities: disposition of
    additional plutonium from future weapons dismantlement, if declared
    surplus; and possible fabrication of start-up fuel for GNEP fast
    reactors depending on a decision by the Secretary of Energy on the
    scope of the GNEP program scheduled for June 2008.

            APPROACHES THAT FAIL TO MEET U.S. NATIONAL SECURITY AND
                          NONPROLIFERATION OBJECTIVES

        Immobilization Facility and H-Canyon.--Under this approach, DOE
    would design, construct, and operate a new, large-scale (approximately
    41 MT) stand-alone Plutonium Immobilization Plant (using ceramification
    technology, since immobilization of such a large amount of plutonium
    would not be feasible using vitrification in a borosilicate glass due
    to the high radiation levels produced). A Pit Disassembly and
    Conversion Facility would be needed to take apart nuclear weapons cores
    and convert the resulting plutonium metal to an oxide form for
    ceramification as would a Waste Solidification Building. Operation of
    the existing H-Canyon/HB-Line facilities would be used to process
    approximately 2 MT of plutonium bearing materials at the Savannah River
    Site, together with the mission to recover enriched uranium for
    subsequent down blending and sale.
        This approach is likely to be seen by Russia as being inconsistent
    with the U.S.-Russia Plutonium Management and Disposition Agreement and
    is unlikely to encourage Russia to dispose of its surplus weapon-grade
    plutonium. Russia continues to view immobilization as another form of
    storage because it does not degrade the isotopics of the weapon-grade
    plutonium as would irradiation in a nuclear reactor. Therefore, Russia
    continues to believe that weapon-grade plutonium from the immobilized
    waste form could be retrieved for use in new nuclear weapons. This
    approach does support the program objectives of consolidating and
    disposing surplus plutonium in support of Complex 2030 and related DOE
    goals. Plutonium immobilization maintains the commitment to U.S.
    nonproliferation goals by potentially dispositioning 43 MT of plutonium
    in an intrinsically theft resistant form. The ability to complete the
    41 MT immobilization mission with high level waste located at the
    Savannah River Site is not possible, however, because of an
    insufficient quantity of high level waste needed to fill the waste
    canisters, in order to provide an intrinsically self protecting theft-
    resistant form. Immobilization \9\ of plutonium in a ceramic matrix
    also has a high degree of technical uncertainty because of the
    relatively low technical maturity associated with this technology. As a
    result, substantial future cost growth to accomplish plutonium
    immobilization is likely, and the overall programmatic cost is expected
    to be greater than DOE's current planned baseline program. In addition,
    significant program delays are likely because of the currently low
    technical maturity of this option, coupled with required new
    evaluations associated with such a major program change (e.g.,
    extensive research and development, facility design and construction
    are likely to mean that an Immobilization Facility could not become
    operational for an additional 12-14 years).
    ---------------------------------------------------------------------------
        \9\ Immobilization of plutonium in a ceramic form has never been
    done before and designs for an immobilization facility do not exist.
    This approach would require extensive research and development followed
    by a detailed engineering effort to design an immobilization facility.
    This approach is likely to take between 10-12 years before construction
    can begin and result in significant cost increases and schedule delays.
    ---------------------------------------------------------------------------
        Consolidate and Vitrify Non-Pit Plutonium at SRS and Continue to
    Store Pits at Pantex.--Design, construct and operate a Plutonium
    Vitrification process in the basement level of the K-Reactor Building
    to vitrify up to 13 MT of non-pit plutonium; operate the existing H-
    Canyon/HB-Line facilities to process approximately 2 MT (included in
    the preceding 13 MT) of plutonium bearing materials at the Savannah
    River Site, with the mission to recover enriched uranium for subsequent
    down blending and sale, and continue to store DOE's inventory of
    surplus pits at Pantex.
        This alternative approach would result in the disposition of
    approximately 13 MT of mostly non-weapon-grade plutonium but leaves
    thousands of surplus nuclear weapon pits in storage at Pantex. Thus,
    this approach does not meet U.S. national security and nonproliferation
    objectives with respect to rendering DOE's entire inventory of surplus
    plutonium unusable for future weapons use and does not encourage Russia
    to dispose of its surplus weapons plutonium. Upgrades would be needed
    at Pantex to continue to store the surplus nuclear weapons pits. As
    stated previously, the proposed small-scale Plutonium Vitrification
    process is in the very early stages of design (less than 5 percent
    complete). As such, there remains uncertainty associated with the
    design and cost estimates and therefore, future cost growth is likely.
        Consolidate the Storage of Non-Pit Plutonium at SRS.--Under this
    approach, DOE would: consolidate the storage of up to 13 MT of non-pit
    plutonium from Hanford, Los Alamos National Laboratory and Lawrence
    Livermore National Laboratory at SRS; continue to operate the existing
    H-Canyon/HB-Line facilities to process approximately 2 MT of plutonium
    bearing materials together with the mission to recover enriched uranium
    for subsequent down blending and sale; and continue to store
    indefinitely DOE's inventory of surplus nuclear weapons pits at Pantex.
        This alternative approach would not meet U.S. national security and
    nonproliferation objectives with regard to disposing of 43 MT of
    surplus plutonium by rendering it unusable for nuclear weapons use and
    would not encourage Russia to dispose of its surplus weapons plutonium.
    Since it would also fail to provide a disposition pathway out of the
    Savannah River Site for surplus plutonium brought there for
    disposition, existing law currently prohibits the further shipment of
    this plutonium to SRS under certain circumstances to achieve
    consolidation. This approach would not prevent the accumulation of
    stockpiles of surplus plutonium, deferring final disposition decisions
    and costs until the future. Upgrades would still be needed at Pantex to
    continue to store thousands of surplus nuclear weapons pits.
        Store Surplus Plutonium In-Place at Current Locations.--DOE would
    continue to store surplus plutonium at current locations, i.e.,
    Savannah River Site, Pantex, Hanford, Los Alamos National Laboratory
    and Lawrence Livermore National Laboratory. Under this approach, the
    existing H-Canyon/HB-Line facilities would process approximately 2 MT
    of plutonium bearing materials already at the Savannah River Site, with
    the mission to recover enriched uranium for subsequent down blending
    and sale.
        This alternative approach would not meet U.S. national security and
    nonproliferation objectives. It would not meet U.S. obligations under
    the 2000 U.S.-Russia Plutonium Management and Disposition Agreement and
    would not encourage Russia to dispose of its surplus weapons plutonium.
    This approach would defer final disposition decisions and costs until
    some time in the future. Storage costs, discounted to the present, are
    within approximately 10 percent of DOE's planned baseline disposition
    costs, over the equivalent time period.\10\ At the conclusion of the
    storage period, DOE would still have to fund an expensive disposition
    program, or continue to pay storage costs.
    ---------------------------------------------------------------------------
        \10\ The 2007 Business Case Analysis of the Current U.S. Mixed
    Oxide (MOX) Fuel Strategy for Dispositioning 34 Metric Tons of Surplus
    Weapon-Grade Plutonium showed that storage costs in constant 2006
    dollars for 50 years of storage would be $15.45 billion and would
    exceed the base case costs.
    ---------------------------------------------------------------------------
                                   CONCLUSION

        DOE's proposed baseline approach for disposing of surplus plutonium
    (MOX, proposed small scale Plutonium Vitrification process, and H-
    Canyon) would meet U.S. national security and nonproliferation
    objectives for disposing of 43 MT of surplus plutonium by rendering it
    unusable for nuclear weapons use, and would provide the best chance of
    encouraging Russia to dispose of its surplus weapons plutonium. In
    addition, the proposed baseline approach would help reduce storage
    costs for nuclear materials, reduce safeguards and security costs, and
    support the Department's efforts to consolidate nuclear materials
    within the DOE Complex.
        The detailed design of the MOX facility, a key element of the
    baseline approach, is about 90 percent complete, and the technology has
    been in use throughout Europe for three decades. The Nuclear Regulatory
    Commission (NRC) has authorized construction and DOE's contractor has
    submitted a license application to the NRC for operation of the MOX
    facility. In addition, MOX fuel lead assemblies, containing surplus
    weapons plutonium, are currently being successfully tested in a
    commercial nuclear reactor in South Carolina and the irradiation of MOX
    fuel will generate electricity through which revenues are produced for
    the U.S. Treasury. Moreover, the MOX fuel fabrication facility, once
    operational, could potentially provide the following capabilities:
    disposition of additional plutonium from future weapons dismantlement,
    if declared surplus; possible fabrication of start-up fuel for GNEP
    fast reactors depending on a decision by the Secretary of Energy on the
    scope of the GNEP program scheduled for June 2008; and disposition of
    additional surplus impure plutonium (currently planned for Plutonium
    Vitrification), if the chemical and isotopic impurities can be
    economically removed from the material.

            CYBER SECURITY FUNDING--INSUFFICIENT TO ADDRESS THE RISK

        Question. It is clear that the cyber budgets have failed to keep
    pace with the enormous investment in physical security, despite the
    fact that every day of the year our classified network is attacked
    thousands of times by foreign entities looking for access to our
    national security secrets.
        Has the NNSA requested a risk analysis of the Department's massive
    physical security buildup vs. the limited investment it has made in
    cyber security?
        Answer. In December 2006, the NNSA Chief Information Officer (CIO)
    requested that a cyber security risk analysis be completed by each
    Site. The preliminary analyses were to be completed by February 2007,
    and the final analyses and reports are due to be completed in May 2007.
    After the NNSA CIO works with sites to identify and quantify the risks,
    the Administrator must review the risks of both cyber and physical and
    distribute the budget submission accordingly. In addition to the risk
    analysis, in 2007, the NNSA OCIO will publish a cyber security threat
    statement and risk assessment methodology to be used consistently
    across the NNSA complex.
        Question. Considering that our country is constantly under cyber
    attack, wouldn't you agree that an independent review of the investment
    over the past several years would be helpful to know if we accurately
    assessed the risks by making physical security our priority?
        Answer. Independent reviews of cyber and physical security are
    conducted annually by the Office of Independent Assessment (OA) and by
    the Office Inspector General (OIG). Cyber security has increasingly
    become a priority over the past several years, and budget requests
    reflect a change in the ``balancing'' of risks based on a
    revitalization of the cyber security program within DOE and NNSA.
    Loss of Personal Data
        Question. It greatly disturbs me that a subcontractor was able to
    walk out of Los Alamos lab with classified material last October, but I
    am equally frustrated with the numerous instances where the Federal
    Government has failed to protect personal information of employees.
    Last year, computer hackers were able to steal 1,500 names from NNSA's
    Albuquerque Service Center.
        What is the Department doing to encrypt and protect personal
    employee data to ensure that information has the same level of
    protection that applies to classified information?
        Answer. The Department's CIO published policy on the handling of
    Personally Identifiable Information (PII) in July 2006. The NNSA CIO
    further published implementing guidance in August 2006 that outlines
    the requirements for protection and reporting of PII and PII related
    information. These guidelines are in compliance with the OMB
    requirements for PII. In addition, the DOE and NNSA procured encryption
    software for use throughout the Department to facilitate the
    requirements implementation.

                              SUBCOMMITTEE RECESS

        Senator Dorgan. This hearing is recessed.
        [Whereupon, at 4:04 p.m., Wednesday, April 18, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

        ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2008

                                  ----------

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

                           NONDEPARTMENTAL WITNESSES

        [Clerk's note.--At the direction of the subcommittee
    chairman, the following statements received by the subcommittee
    are made part of the hearing record on the Fiscal Year 2008
    Energy and Water Development Appropriations Act.]

                          DEPARTMENT OF DEFENSE--CIVIL

                             Department of the Army

                           Corps of Engineers--Civil

            Prepared Statement of the Fifth Louisiana Levee District
        The Board of Commissioners for the Fifth Louisiana Levee District
    respectfully requests that construction funding for Mississippi River
    Levees be increased from the $28,767,000 contained in the proposed
    budget for fiscal year 2008, to the U.S. Army Corp of Engineers'
    capability of $98,352,000, and the Mississippi River Levee maintenance
    allocation be increased from the proposed $10,726,000 to $34,538,000.
        Reduced funding, combined with the inability to let construction
    contracts under a continuing contract clause, has left thousands in
    Louisiana vulnerable to the adverse effects of a deficient levee
    system. Construction of levee enlargements is essential if the levee is
    to contain high river stages that are sure to come eventually.
        The effect of fully funded contracts for levee construction, now
    required under Public Law 109-103, (Sec. 106 and 108), adopted by the
    109th Congress in 2005, as opposed to the previous system of continuing
    contract clauses, has virtually halted enlargement of the Mississippi
    River Levee System in Louisiana. This comes at a time when the State of
    Louisiana is still reeling from the effects of devastation caused by
    serious lack of funding for levees in the past. Administration after
    administration has cut funding for levee systems and flood control,
    providing less and less with each new Federal budget. The current
    proposed budget is no exception, with only $260,000,000 allocated for
    the entire Mississippi River and Tributaries (MR&T) project. We request
    that be increased to the Corp's capabilities of $500,000,000.
        Less than $10 billion has been invested in the MR&T Project since
    its authorization following the great flood of 1927, a fraction of the
    billions that have been spent trying to restore the damage to lives and
    property created by levee failures following Hurricane Katrina.
    Billions spent that have made almost no impact.
        We urge Congress to increase funding to the Corps of Engineers in
    fiscal year 2008, to ensure that the Corps is not forced to halt of
    delay contracts for levee construction essential to the well-being of
    this Nation. It is vital that the MR&T project(s) be completed at the
    earliest possible date. This can only be accomplished through adequate
    funding and repeal of the mandate for contracts to be fully funded
    prior to the beginning construction. Prior to August 2005, the MR&T
    projects had a performance-to-cost ratio of 24-to-1 on work completed.
    Hurricane Katrina changed that ratio drastically. The economic
    justification for increased funds for levee construction in Louisiana
    cannot be questioned or disputed.
                                     ______

     Prepared Statement of the Clark County Regional Flood Control District

        Testimony for the United States Army Corps of Engineers Tropicana
    and Flamingo Washes Flood Control Project, Las Vegas, Nevada.--
    $12,500,000 construction appropriations, which includes appropriations
    for work performed pursuant to Section 211 of the Water Resources
    Development Act of 1996.
        Presented herewith is testimony in support of $12,500,000 for the
    final construction appropriation necessary for the U.S. Army Corps of
    Engineers (Corps) to complete the Tropicana and Flamingo Washes flood
    control project (hereafter referred to as the Project) in Clark County,
    Nevada, and to reimburse the non-Federal sponsors, Clark County and the
    Clark County Regional Flood Control District, for work performed in
    advance of the Federal Project pursuant to Section 211 of the Water
    Resources Development Act (WRDA) of 1996.
        The President's fiscal year 2008 Civil Works budget request to
    Congress identifies no funding for this Project. It is imperative that
    we receive the requested Federal funding to protect residents of the
    rapidly growing Las Vegas Valley in Southern Nevada from devastating
    floods.
        Some history of previous funding requests and budgeting challenges
    associated with bringing this Project to a close need to be explained
    and outlined. On March 6, 2006, we learned that fiscal year 2004 and
    2005 appropriations for the Project were reprogrammed to other projects
    in the Los Angeles District in the amount of approximately $7,000,000.
    While a commitment was made to us by the Corps to reinstate these funds
    in fiscal year 2006, they were not made available to us due to language
    changes in the Conference Report that accompanies H.R. 2419. In order
    to see the construction of the Project continue, we asked and received
    permission to use the $3 million of Section 211 funds from fiscal year
    2006 appropriations to increase funding of Construction General. We
    also contributed an additional $1 million to the Project by advancing
    our 5 percent cash commitment earlier than originally anticipated.
    These steps were necessary to prevent the Project from shutting down in
    mid-construction. In fiscal year 2007, we submitted testimony
    requesting $22 million for Construction General and Section 211. We now
    learn that under current Continued Resolution Authority, the Project
    may receive Federal funding in fiscal year 2007 in the amount of only
    $12.4 million--the lesser of the two budgets authorized by the House
    and Senate. This is almost $10 million less than the original request.
    And to further muddy the waters, the President's fiscal year 2008 Civil
    Works budget request to Congress identifies no funding to complete this
    Project.
        Because the Corps' budget requests are made well in advance of the
    fiscal year 2008 budget being announced, the Corps may have assumed--
    that if we had received the $22 million request in 2007--the Project
    would have been completed and no further funding for Section 211 or
    construction would have been requested or necessary. Clearly, now,
    that's not what occurred and another $12.5 million is necessary to
    bring the Project to a close and provide what is due under Section 211.
        The non-Federal sponsors are, therefore, requesting $12.5 million
    for both the final construction funding and reimbursement to the local
    sponsors of this Project. Funding at this level will allow the Federal
    commitments made in the past to be finally realized and completed in
    fiscal year 2008.
        The Feasibility Report for the Project was completed in October
    1991, and congressional authorization was included in the WRDA of 1992.
    The first Federal appropriation to initiate construction of the Project
    became available through the Energy and Water Resources Development
    Appropriations Bill signed into law by the President in October 1993.
    The Project Cooperation Agreement (PCA) was fully executed in February
    1995. Federal appropriations to date have totaled $281.7 million
    (allocations $239.1 million), allowing continued Project construction.
    The total cost of the flood control portion of the Project is currently
    estimated at $336.3 million, higher than originally anticipated
    primarily due to the delay in Federal appropriations which has resulted
    in increases in real estate and construction costs.
        In order to provide the required flood protection in a timely
    fashion, the non-Federal sponsors are implementing certain features in
    advance of the Federal Government pursuant to Section 211 of WRDA 1996.
    An amendment to the PCA was fully executed on December 17, 1999, that
    formalizes the provisions of Section 211 of WRDA 1996. Section 211(f)
    of WRDA 1996 recognized the Project as one of eight projects in the
    Nation to demonstrate the potential advantages and effectiveness of
    non-Federal implementation of Federal flood control projects. The work
    funded by the non-Federal sponsors and completed is substantial and
    includes features that were designed by the non-Federal sponsors and
    constructed by either the Federal Government or the non-Federal
    sponsors. The language contained in the fiscal year 2000 Energy and
    Water Development Bill, Senate Report 106-58, states in part, ``The
    Committee expects . . . every effort to even out reimbursement payments
    to lessen future budgetary impacts.'' To date, only $13.5 million has
    been reimbursed of the previously authorized $20.6 million.
        The local community had constructed certain elements of the Project
    prior to the execution of the PCA. These Project elements required
    modifications in order to fit into the Corps' plan and fulfill the need
    for a ``total fan approach'' to the flooding problems in the Las Vegas
    Valley. The work performed by the non-Federal sponsors, construction of
    Red Rock Detention Basin and Flamingo Detention Basin, has been
    accounted for in Section 104 credits and totals $9,906,000.
        We have already realized some benefits from construction of flood
    control features on the Project We have removed 18.7 square miles of
    flood zones from Federal Emergency Management Agency's (FEMA) Flood
    Insurance Rate Maps. This was accomplished through the completion of
    various project elements. We anticipate removal of additional flood
    zones when the Project is completed.
        In summary, the Project is an important public safety project
    designed to provide flood protection for one of the fastest growing
    urban areas in the Nation. We ask that the committee provide the
    Secretary of the Army with $12.5 million, in fiscal year 2008, in order
    to meet prior requests to complete the Project and to reimburse the
    non-Federal sponsors the Federal proportionate share of the work
    completed by the sponsors in advance of the Federal Government.
        The committee is aware that flood control measures are a necessary
    investment required preventing loss of life and damages to people's
    homes and businesses. Flood control is a wise investment that will pay
    for itself by preserving life and property and reducing the probability
    of repeatedly asking the Federal Government for disaster assistance.
    Therefore, when balancing the Federal budget, we believe a thorough
    analysis will show that there is substantial future Federal savings in
    disaster assistance that supports sufficient appropriations through the
    Civil Works Budget.
        las vegas growth, specific project benefits and flooding history
        The Las Vegas Valley continues to experience unprecedented growth.
    In the past 20+ years, people have moved into our area from all parts
    of the Nation to seek employment, provide necessary services, retire in
    the Sunbelt, and become part of this dynamic community. Approximately
    6,000 people relocate to the Las Vegas Valley every month of the year.
    Currently the population exceeds 1.9 million. The latest statistics
    show that more than 31,000 residential units are built annually. Once
    all of these factors are combined, the result is that the Las Vegas
    Valley continues to be one of the fastest-growing metropolitan areas in
    the Nation.
        The Project being constructed by the Corps is designed to collect
    flood flows from a 174-square-mile contributing drainage area. The
    Project includes three debris basins, five detention basins, 28 miles
    of primary channels, and a network of lateral collector channels. The
    debris basins collect flood flows from undeveloped Federal lands at the
    headwaters of the alluvial fans and trap large bedload debris before it
    enters the channels and causes erosion damage. The detention basins
    greatly reduce the magnitude of the flood flows so that the flows can
    be safely released and conveyed through the urbanized area at non-
    damaging rates. A primary system of channels collects outflows from the
    debris and detention basins and conveys these floodwaters through our
    urban area. Lateral collector channels, which are funded locally,
    collect runoff from smaller developed watersheds and deliver it to the
    primary channels. Since flood flow over the alluvial fans, which ring
    the Las Vegas Valley, is so unpredictable in terms of the direction it
    will take during any given flood, all of the components of the Project
    are critical.
        In recent history, torrential rains deluged the Las Vegas Valley
    the morning of July 8, 1999, causing widespread drainage problems and
    major damages to public and private properties. Some of the greatest
    rainfall depths occurred over the southwest portions of the Las Vegas
    Valley resulting in significant flows in the Tropicana and Flamingo
    Washes. The runoff from this intense rainfall caused widespread street
    flooding and record high flows in normally dry washes and flood control
    facilities. The news media reported two deaths during this flood event,
    one of which was a drowning in the Flamingo Wash. Damages to public
    property caused by this storm were estimated at $20.5 million. The
    President declared Clark County a Federal Disaster Area on July 19,
    1999, recognizing the severity of damages to public and private
    properties. Significant damages could have been avoided if the Project
    had been fully implemented. However, those features of the Project that
    were completed did help to mitigate damages.
        On August 19, 2003 another flash flood hit the Las Vegas Valley and
    damaged hundreds of homes and businesses. Again in the winter of 2004-
    2005, the area experienced heavier then normal rainfall amounts. That
    winter brought twice the area's average annual rainfall causing
    flooding along the Virgin and Muddy Rivers in Clark County, Nevada.
    Several areas in the Las Vegas Valley also experienced drainage
    problems. While the flood control features built as part of the Project
    helped to protect vast areas of our community, storms of this magnitude
    only reinforce the need to expeditiously build all flood control
    projects in the Las Vegas Valley.
                                     ______

              Prepared Statement of the City of Flagstaff, Arizona

                       RIO DE FLAG FLOOD CONTROL PROJECT

        Chairman Dorgan, Ranking Member Domenici, and distinguished members
    of the subcommittee, thank you for allowing me to testify on behalf of
    the city of Flagstaff, Arizona in support of $8 million in the Army
    Corps of Engineers budget for the Rio de Flag flood control project in
    fiscal year 2008 and for an increased authorization, or 902(b) fix, for
    the project. The Rio de Flag flood control project is critically
    important to the city, to northern Arizona, and, ultimately, to the
    Nation.
        As you may know, Mr. Chairman, with this subcommittee's help over
    the last 3 fiscal years, Rio de Flag received more than $11 million to
    continue construction on this important project. We are extremely
    grateful that the subcommittee boosted this project well above the
    President's request both years, and we would appreciate your continued
    support for this project in fiscal year 2008.
        Like many other projects under the Army Corps's jurisdiction, Rio
    de Flag received no funding in the President's fiscal year 2008 budget,
    although the Corps has expressed a capability of $8 million to continue
    construction on the project. We are hopeful that the subcommittee will
    fund the Rio de Flag project at $8 million when drafting its bill in
    order to keep the project on an optimal schedule.
        Flooding along the Rio de Flag dates back as far as 1888. The Army
    Corps has identified a Federal interest in solving this long-standing
    flooding problem through the Rio de Flag, Flagstaff, Arizona--
    Feasibility Report and Environmental Impact Study (EIS). The
    recommended plan contained in this feasibility report was developed
    based on the following opportunities: (1) flood control and flood
    damage reduction; (2) environmental mitigation and enhancement; (3)
    water resource management; (4) public recreation; and (5) redevelopment
    opportunities. This plan will result in benefits to not only the local
    community, but to the region and the Nation.
        The feasibility study by the Corps of Engineers has revealed that a
    500-year flood could cause serious economic hardship to the city. In
    fact, a devastating 500-year flood could damage or destroy
    approximately 1,500 structures valued at more than $450 million.
    Similarly, a 100-year flood would cause an estimated $100 million in
    damages. In the event of a catastrophic flood, over half of Flagstaff
    's population of more than 60,000 would be directly impacted or
    affected.
        In addition, a wide range of residential, commercial, downtown
    business and tourism, and industrial properties are at risk. Damages
    could also occur to numerous historic structures and historic Route 66.
    The Burlington Northern & Santa Fe Railway (BNSF), one of the primary
    east-west corridors for rail freight, could be destroyed, as well as
    U.S. Interstate 40, one of the country's most important east-west
    interstate links. Additionally, a significant portion of Northern
    Arizona University (NAU) could incur catastrophic physical damages,
    disruptions, and closings. Public infrastructure (e.g., streets,
    bridges, water, and sewer facilities), and franchised utilities (e.g.,
    power and telecommunications) could be affected or destroyed.
    Transportation disruptions could make large areas of the city
    inaccessible for days.
        Madame Chairwoman, the intense wildfires that have devastated the
    West during the last several years have only exacerbated the flood
    potential and hazard in Flagstaff. An intense wildfire near Flagstaff
    could strip the soil of ground cover and vegetation, which could, in
    turn, increase runoff and pose an even greater threat of a catastrophic
    flood.
        In short, a large flood could cripple Flagstaff for years. This is
    why the city believes it is important to ensure that this project
    remains on schedule and that the Corps is able to utilize its expressed
    capability of $8 million in fiscal year 2008 for construction of this
    flood control project.
        In the city's discussions with the Corps, both the central office
    in Washington and its Los Angeles District Office also believe that the
    Rio de Flag project is of the utmost importance and both offices
    believe the project should be placed high on the subcommittee's
    priority list. We are hopeful that the subcommittee will consider this
    advice and also place the project high on its priority list and fully
    fund the project at $8 million for fiscal year 2008.
        It is important to note that the city has secured the necessary
    property rights to begin construction, and the city is prepared to
    assume the costs for the non-Federal portion of the cost-sharing
    agreement.
        Finally, I strongly support inclusion of a 902(b) fix that was
    included in the fiscal year 2007 Senate Energy and Water Development
    Appropriations bill (as Section 113), which will increase the
    authorization of the project from $35 to $54 million, but was not
    included in the final bill due to the passage of the continuing
    resolution for fiscal year 2007. Nevertheless, because of the Corps'
    commitment to this project, on November 9, 2006, the Corps announced
    that they had approved a waiver to their policy to allow the
    construction contract award of Clay Avenue Wash Detention Basin prior
    to reauthorization of the total project. The current estimate for
    construction of the basin is $4.6 million. Without this increased
    authorization for the project, it cannot move forward as planned.
    Therefore, it is critically important that this provision is inserted
    in the bill:

        ``Sec. __. The project for flood damage reduction, Rio de Flag,
    Flagstaff, Arizona, authorized in section 101(b)(3) of the Water
    Resources Development Act, 2000, is modified to authorize the Secretary
    to construct the project, at a total cost of $54,130,000, with an
    estimated Federal cost of $34,970,000, and an estimated non-federal
    cost of $19,160,000.''

        As you may know, project construction and implementation of Rio de
    Flag was authorized in the Water Resources Development Act (WRDA) of
    2000. The total project cost is now estimated to be $54,100,000 in and
    above the reconnaissance study or the feasibility study. The non-
    federal share is currently $24,000,000 and the Federal share is
    currently $30,000,000. Final project costs must be adjusted based on
    Value Engineering and final design features. It is important to note
    the City of Flagstaff has already committed more than $10,500,000 to
    this project, and an additional $2,000,000 in excess of its cost share
    agreement. This clearly demonstrates the city's commitment to
    completing this important project. Through this investment in the
    project, the city has entered into the Project Cooperation Agreement
    (PCA) with the Department of the Army.
        The city of Flagstaff, as the non-federal sponsor, is responsible
    for all costs related to required Lands, Easements, Rights-of-Way,
    Relocations, and Disposals (LERRD's). The city has already secured the
    necessary property rights to begin construction in 2004. Implementation
    of the city's Downtown and Southside Redevelopment Initiatives
    ($100,000,000 in private funds) are entirely dependent on the
    successful completion of the Rio de Flag project. The Rio de Flag
    project will also provide a critical missing bike/pedestrian connection
    under Route 66 and the BNSF Railroad to replace the existing hazardous
    at grade crossings.
        Both design and construction are divided into two phases. Phase I
    construction commenced in 2004. Phase II of the project commenced in
    2005.
        Mr. Chairman, the Rio de Flag project is exactly the kind of
    project that was envisioned when the Corps was created because it will
    avert catastrophic floods, it will save lives and property, and it will
    promote economic growth. In short, this project is a win-win for the
    Federal Government, the city, and the surrounding communities.
        Furthermore, the amount of money invested in this project by the
    Federal Government--approximately $30 million--will be saved
    exponentially in costs to the Federal Government in the case of a large
    and catastrophic flood, which could be more than $450 million. It will
    also promote economic growth and redevelopment along areas that are
    currently underserved because of the flood potential.
        In conclusion, the Rio de Flag project should be considered a high
    priority for this subcommittee, and I encourage you to support full
    funding of $8 million for this project in the fiscal year 2008 Energy
    and Water Development Appropriations bill. I also strongly support the
    inclusion of an increased authorization, or 902(b) fix, for the project
    from $35 to $54 million. Thank you in advance for your consideration.
                                     ______

      Prepared Statement of the Arkansas River Basin Interstate Committee

        Mr. Chairman and members of the committee, I am Paul Latture II,
    Arkansas Chairman of the Arkansas River Basin Interstate Committee,
    from Little Rock, Arkansas.
        It is my privilege to present this statement on behalf of the
    Arkansas members of our committee in support of adequate funding for
    water resource development projects in our area of the Arkansas River
    Basin. Other members of the committee are: Mr. Jack Long, Little Rock;
    Mr. Jeff Pipkin, Russellville; Mr. Scott McGeorge, Pine Bluff; and Mr.
    Buck Shell, Van Buren.
        The public investment in the McClellan-Kerr has paid significant
    dividends over the life of the project. The most recent investment
    included the completion of the Montgomery Point Lock and Dam. Since the
    opening of Montgomery Point, there has been a 10 percent increase in
    total tonnage on the system. In 2005, there was an 8 percent increase
    in tonnage. This is a direct result of the increased reliability of the
    system. Without Montgomery Point Lock and Dam, the river system would
    have been closed 25 percent of the time, according to Corps of
    Engineers officials. We fully expect that tonnage will continue to
    increase. But maintaining the high reliability of the system depends on
    protecting the investment by funding projects such as the significant
    backlog of Operations and Maintenance that has built up over the years,
    by completing the Arkansas-White River Cut-off study and construction,
    and by fulfilling the wish of Congress in completing the 12-foot
    channel project.
        Mr. Chairman, Public Law 108-137 authorized a 12-foot channel on
    the McClellan-Kerr Arkansas River Navigation System. The Corps is now
    obligated to operate and maintain the system as a 12-foot channel. Over
    90 percent of the system currently is adequate for a 12-foot channel.
    Deepening the remainder of the channel to 12 feet will allow carriers
    to place 43 percent more cargo on barges, which will reduce the amount
    of fuel consumed and emissions released. Funds in the amount of $7.0
    million were allocated in fiscal year 2005. Those funds were used to
    complete the Feasibility Study and Environmental Impact Statement with
    the balance used on engineering, design, and construction activities.
    Environmental benefits include the creation of new aquatic habitat
    through new dike construction and the construction of Least Tern
    islands through beneficial use of dredged material. The Corps of
    Engineers has developed a comprehensive plan to execute the project in
    the States of Arkansas and Oklahoma to the best advantage of both
    States and the best use of the funds.
        Therefore, we request $40 million to maintain the authorized depth
    and execute the plan to its full capability in fiscal year 2008. This
    investment will increase the cost competitiveness of this low cost,
    environment-friendly transportation mode and help us combat the loss of
    industry and jobs to overseas.
        Arkansas-White Rivers Cutoff Study is to determine a permanent
    solution to prevent the developing cutoff from joining the Arkansas and
    White River near the confluence of the McClellan-Kerr Arkansas River
    Navigation System and the Mississippi Rivers. If not corrected this
    occurrence could have a dramatic adverse affect on the navigation
    system. Unless corrected, this will effectively drain the water from
    the navigation system and halt the movement of commerce on the system.
        We request an appropriation of $3.5 million of which $400,000 will
    complete the study and $3.1 million will be used for design and
    construction activities at Jim Smith Lake and along the banks of the
    Arkansas and White Rivers to support navigation.
        Maintenance of the Navigation System.--In preparation for the
    deepening of the navigation system from 9 to 12 feet, there is a
    backlog of maintenance items that has been deferred due to insufficient
    budgets to allow proper maintenance. These maintenance items are
    required even to support navigation at the 9-foot depth in order to not
    jeopardize the reliability of the system. Therefore, we request funding
    for the Little Rock District of the Corps of Engineers to be at least
    $26 million for the upcoming fiscal year for routine and deferred
    channel maintenance. These funds would be used for such things as
    repair of bank stabilization work, needed advance maintenance dredging,
    and other repairs needed on the system's components that have
    significantly deteriorated over the past three decades.
        Mr. Chairman, we respectfully request that the committee consider
    these requests as the most important to our transportation system at
    this time. We must maintain this country's transportation
    infrastructure or little else will matter in the future.
                                     ______

     Prepared Statement of the Board of Levee Commissioners for the Yazoo-
                               Mississippi Delta
        On behalf of the thousands of citizens in its 10-county district in
    Mississippi, the Yazoo-Mississippi Delta Levee Board respectfully urges
    Congress to fund the Mississippi River and Tributaries Project (MR&T)
    to the full U.S. Army Corps of Engineers' 2008 capability of $500
    million.
        While the totality of the Mississippi Valley Flood Control
    Association's requested fiscal year 2008 Civil Works Requested Budget
    (documentation for which is attached) represents badly needed work
    items throughout the Mississippi Valley, we shall speak specifically to
    those critically important flood control needs within our levee
    district in this space allotted us.
        The Mainline Mississippi River levee system is one of the great
    engineering successes in America. For 75 years it has protected lives
    and livelihoods within the shadow of the Father of All Waters, and it
    will continue to do so in the years ahead--but only if properly
    strengthened and maintained. We urge Congress to appropriate the needed
    $98.352 million to maintain our levees and keep our citizens safe and
    dry. Within that we will be able to do two seepage control projects at
    Farrell and Trotter's.
        It is only through a lack of required funding that one of the most
    successful and non-controversial flood control projects in the United
    States has come to a grinding halt in our district. The Upper Yazoo
    Project (UYP), which our board is proud to sponsor, is the prototypical
    example of what a flood control project should be--effective,
    environmentally sound, universally favored. While flood control efforts
    in other areas are threatened or stalled by lawsuits and citizen
    upheaval, the UYP has everyone's blessing, and is absent only the funds
    to complete it.
        Restoring the Yazoo/Coldwater/Tallahatchie river system to its flow
    capacity and stopping interbasin transfer of flood waters, the UYP is
    about two-thirds complete. The city of Greenwood, Mississippi, is
    already receiving its benefits. But upstream, such areas as Marks,
    Lambert, Moorhead, Mississippi Delta Community College, Tutwiler,
    Glendora, Sumner and Webb are not--and will not unless Congress
    dedicates the $22.5 million which the Corps of Engineers needs for
    scheduled work in 2008.
        We implore Congress to appropriate the needed $22.5 million for the
    UYP so that structures might be constructed, a bridge relocated, and
    another section of the river system restored to its proper capacity.
    Thousands of our citizens remain unprotected from flood waters; we turn
    to Congress to give them relief.
        Working hand-in-hand with the UYP in a common sense approach to
    flood control is the Mississippi Delta Headwater Project, through which
    waters and the stream-filling silts which they carry, are controlled.
    The UYP would clear out our waterways, the Delta Headwater Project
    would reduce the rate at which they would re-silt. We urge Congress to
    appropriate the needed $25 million for this effort to continue in 2008.
        Without proper mitigation practices, of course, all flood control
    projects would be threatened. Our levee district is very concerned that
    mitigation lands, once acquired, are not being rapidly enough turned
    over to Federal and State wildlife management agencies to ensure the
    desired public benefits. A lack of management monies is frequently
    blamed for that, so we are asking that adequate funds be appropriated
    and designated for proper management authority and practice on
    mitigation lands.
        Mississippi's four flood control reservoirs play a critical role in
    managing water from the hills and avoiding untimely releases into the
    low-lying Delta where they can wreak havoc. But as critical as these
    facilities are, they are aging and maintenance monies are deeply needed
    to ensure their integrity. Therefore we ask that respective maintenance
    funds be allocated for these reservoirs as follows:
      --Sardis Lake--$14.784 million.
      --Arkabutla Lake--$9.975 million.
      --Enid Lake--$10.927 million.
      --Grenada Lake--$11.299 million.
        Due to the nature of its alluvial soils, bank stabilization is a
    critical need in the Delta and within our district. In the past, the
    Corps had the authority to prioritize this pervasive problem and deal
    directly with those situations in which significant public importance
    was involved--hospitals, major thoroughfares, schools and the like. One
    example in our district is where bank failure threatens major
    transportation arteries near the Rising Sun community south of
    Greenwood. But the empowering language for such no longer exists. We
    urge that either this language be restored for such projects
    nationwide, or, in the alternative, we urge Congress to specifically
    allocate the needed $820,000 needed to address this problem which
    potentially affects thousands.
        The Big Sunflower River Maintenance Project is jointly sponsored by
    Mississippi's two levee boards. The Draft Supplemental Environmental
    Impact Statement for this project, which would restore flood control
    capacities to 130 miles of channels by removing sediment built up over
    the past 40 years, will be released later this year and we request that
    $2.5 million be appropriated to allow right-of-way acquisition to
    continue and to award the dredging contract.
        The Corps of Engineers has the capacity to Initiate Tributaries
    Reformulation on inland feeder streams, many of which lie in our
    district, and we urge that Congress appropriate the $2 million Corps
    2008 capacity for this needed work.
        In another issue specific to our district, funds are needed to
    initiate a study of Gunn Bayou, south of Belzoni. Poor drainage causes
    localized flooding in this area.
        There are, however, two policy issues which combine to potentially
    threaten not only these, but every flood control project in the
    country--the recently abandoned principles of Continuing Contracts and
    Reprogramming. Now absent these two longstanding practices, the Corps
    has lost the flexibility to continue works in progress and reallocate
    funds by priority. We urge Congress to restore the practices of
    Continuing Contracts and Reprogramming throughout the MR&T.
        Finally, through the implementation of revised Levee Certification
    guides and some unfortunate and ill-advised flood insurance zone
    language, the Federal Emergency Management Agency has created a
    situation in which both future investment in the Delta and homeowner
    finances are threatened. The new FEMA levee protection guide and
    subsequent flood zone rating appears to ignore the protection afforded
    by the levee system for 75 years and stands to send homeowner insurance
    costs skyrocketing, according to one estimate, anywhere from 500 to
    1,600 percent.
        We urge Congress to seriously review and address this issue.
                                     ______

      Prepared Statement of the Arkansas River Basin Interstate Committee
        Mr. Chairman and members of the committee, I am James M. Hewgley,
    Jr., Oklahoma Chairman of the Arkansas River Basin Interstate
    Committee, from Tulsa, Oklahoma.
        It is my privilege to present this statement on behalf of the
    Oklahoma members of our committee in support of adequate funding for
    water resource development projects in our area of the Arkansas River
    Basin. Other members of the committee are: Mr. Ted Coombes, Tulsa; Mr.
    A. Earnest Gilder, Muskogee; Mr. Terry McDonald, Tulsa; and Mr. Lew
    Meibergen, Enid, who also serves as Chairman of the combined Arkansas
    River Basin Interstate Committee representing the five States within
    the Arkansas River Basin.
        Mr. Chairman, Public Law 108-137 authorized a 12-foot channel on
    the McClellan-Kerr Arkansas River Navigation System. The Corps is now
    obligated to operate and maintain the system as a 12-foot channel. Over
    90 percent of the system currently is adequate for a 12-foot channel.
    Deepening the remainder of the channel to 12 feet will allow carriers
    to place 43 percent more cargo on barges, which will reduce the amount
    of fuel consumed and emissions released. Funds in the amount of $7.0
    million were allocated in fiscal year 2005. Those funds were used to
    complete the Feasibility Study and Environmental Impact Statement with
    the balance used on engineering, design, and construction activities.
    Environmental benefits include the creation of new aquatic habitat
    through new dike construction and the construction of Least Tern
    islands through beneficial use of dredged material. The Corps of
    Engineers has developed a comprehensive plan to execute the project in
    the States of Arkansas and Oklahoma to the best advantage of both
    States and the best use of the funds.
        Therefore, we request $40 million to maintain the authorized depth
    and execute the plan to it's full capability in fiscal year 2008. This
    investment will increase the cost competitiveness of this low cost,
    environment-friendly transportation mode and help us combat the loss of
    industry and jobs to overseas.
        Tow Haulage Equipment--Oklahoma.--We request funding of $6.5
    million to initiate the installation of tow haulage equipment on the
    locks located along the Arkansas River portion of the McClellan-Kerr
    Arkansas River Navigation System. Total cost for these three locks is
    $6.5 million. This project will involve installation of tow haulage
    equipment on W.D. Mayo Lock and Dam No. 14, Robert S. Kerr Lock and Dam
    No. 15, and Webbers Falls Lock and Dam No. 16, on the Oklahoma portion
    of the waterway. The tow haulage equipment is needed to make
    transportation of barges more efficient and economical by allowing less
    time for tows to pass through the various locks.
        Arkansas-White Rivers Cutoff Study is to determine a permanent
    solution to prevent the developing cutoff from joining the Arkansas and
    White River near the confluence of the McClellan-Kerr Arkansas River
    Navigation System and the Mississippi Rivers. If not corrected this
    occurrence could have a dramatic adverse affect on the navigation
    system. Unless corrected, this will effectively drain the water from
    the navigation system and halt the movement of commerce on the system.
        We request an appropriation of $3.5 million of which $400,000 will
    complete the study and $3.1 million will be used for design and
    construction of a permanent fix at Jim Smith Lake.
        Maintenance of the Navigation System.--In preparation for the
    deepening of the navigation system from 9 to 12 feet, there is a
    backlog of maintenance items that has been deferred due to insufficient
    budgets to allow proper maintenance. These maintenance items are
    required even to support navigation at the 9 foot depth in order to not
    jeopardize the reliability of the system. Therefore, we request
    additional funding in the amount of $1,549,000--plus the amount from
    Little Rock, over and above normal funding, for deferred channel
    maintenance. These funds would be used for such things as repair of
    bank stabilization work, needed advance maintenance dredging, and other
    repairs needed on the system's components that have deteriorated over
    the past three decades.
        In addition to the system-wide needed maintenance items mentioned
    above, the budget for the Corps of Engineers for the past several years
    has been insufficient to allow proper maintenance of the McClellan-Kerr
    Arkansas River Navigation System--Oklahoma portion. As a result, the
    backlog of maintenance items has continued to increase. If these
    important maintenance issues are not addressed soon, the reliability of
    the system will be jeopardized. The portion of the system in Oklahoma
    alone is responsible for returning $2.6 billion in annual benefits to
    the regional economy. The fiscal year 2006 O&M President's budget for
    Tulsa District was $8.2 million less (over 11 percent) than the fiscal
    year 2005 appropriation, which will result in no funding being
    available for critical infrastructure maintenance in fiscal year 2006.
    The fiscal year 2007 O&M President's budget is currently proposed at
    $72.4 million which is presently $10 million more than the fiscal year
    2006 budget. This $10 million increase is offset by higher energy,
    labor, and construction costs. We therefore request that $2.1 million
    be added to the budget to accomplish critical infrastructure
    maintenance items on the Oklahoma portion of the system as follows:
        McClellan-Kerr.--$600,000 to repair plate seals for the weirs;
        Robert S. Kerr.--$1,500,000 to repair erosion and construct
    emergency mooring wood dolphins.
        Mr. Chairman, we respectfully request that the committee consider
    these requests as the most important to our transportation system at
    this time. We must maintain this country's transportation
    infrastructure or little else will matter in the future.
                                     ______

      Prepared Statement of the Upper Mississippi River Basin Association
                                    (UMRBA)

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                President's        UMRBA
                                                  Request     Recommendation
    ------------------------------------------------------------------------
    Construction General:
        Upper Miss. River Restoration                  23.46           33.52
         Program (aka EMP)..................
        Lock and Dam 3 (Major                 ..............            5.0
         Rehabilitation) \1\................
        Lock and Dam 11 (Major                          6.3             6.3
         Rehabilitation) \1\................
        Lock and Dam 19 (Major                          0.70            1.47
         Rehabilitation) \1\................
        Lock and Dam 24 (Major                          0.34            0.49
         Rehabilitation) \1\................
        Locks 27 (Major Rehabilitation) \1\.            7.54           11.26
        Upper Mississippi and Illinois        ..............           16.2
         Rivers Navigation and Ecosystem
         Sustainability Program (if
         construction is authorized)........
    Operation and Maintenance: O&M of the             187.23          279.41
     Upper Mississippi and Illinois Rivers
     Navigation System \2\..................
    General Investigations: Upper             ..............           24.0
     Mississippi and Illinois Rivers
     Navigation and Ecosystem Sustainability
     Program (PED)..........................
    ------------------------------------------------------------------------
    \1\ Funding for major rehabilitation projects would be shifted to the
      O&M account under the President's budget proposal. Major
      rehabilitation would still be cost-shared 50 percent from the Inland
      Waterways Trust Fund.
    \2\ The administration has modified the structure of the O&M account in
      its fiscal year 2008 budget. Rather than budgeting for individual
      projects, the O&M request is organized by region and by business line
      within region. The UMRBA is addressing its testimony to that portion
      of the Region 7 navigation business line that is attributable to O&M
      of the Upper Mississippi and Illinois Rivers navigation system. Thus,
      we have disaggregated numbers from the President's budget.

        The Upper Mississippi River Basin Association (UMRBA) is the
    organization created in 1981 by the Governors of Illinois, Iowa,
    Minnesota, Missouri, and Wisconsin to serve as a forum for coordinating
    river-related State programs and policies and for collaborating with
    Federal agencies on regional issues. As such, the UMRBA works closely
    with the Corps of Engineers on a variety of programs. Of particular
    interest to the basin States are the following:
             upper mississippi and illinois rivers navigation study
        It has been more than 2 years since the Corps completed its 14-year
    Upper Mississippi and Illinois Rivers Navigation Study, issuing the
    final feasibility report in September 2004 and the Chief's Report in
    December 2004. While Congress has not yet authorized the recommended
    integrated plan for navigation improvements and ecosystem restoration,
    it has provided preconstruction engineering and design (PED) funding to
    insure that necessary planning and design work can proceed, in
    anticipation of construction authorization. Congress appropriated $13.5
    million for PED in fiscal year 2005 and $10.0 million in fiscal year
    2006. A similar bridging strategy will be necessary in fiscal year 2008
    if authorization remains pending.
        PED.--The UMRBA supports $24.0 million for PED in fiscal year 2008,
    despite the fact that the administration has once again not included
    PED in its budget request. Many of the large scale projects, such as
    new locks or fish passage at dams, require 3 years or more of PED
    before they can move to construction. It is thus critical that PED work
    continue without pause and be sustained over time. In the past, PED
    funding has been directed to both navigation improvements and ecosystem
    restoration projects. This has not necessarily meant providing
    identical amounts to these two major components on an annual basis, but
    has involved attempting to ensure meaningful and substantial progress
    in planning for both navigation improvements and ecosystem restoration.
    If the Corps were to receive PED funding of $24.0 million in fiscal
    year 2008, it is anticipated that approximately $1.5 million would be
    directed to program management and completion of the economic
    reevaluation interim report, with the $22.5 million balance divided
    roughly evenly between navigation measures (including small scale
    measures and lock design at three sites) and ecosystem restoration plan
    formulation and evaluation. (Note.--The PED allocation for fiscal year
    2007 remains to be determined. It is imperative that the Office of
    Management and Budget permit the Corps to allocate reasonable and
    necessary funds to PED in fiscal year 2007. Approximately $18.0 million
    is needed for fully functional PED this year.)
        Construction.--If the integrated navigation and ecosystem
    restoration program is authorized for construction this year,
    construction could be initiated on several projects in fiscal year
    2008. In that event, UMRBA would recommend construction funding of
    $16.2 million. This funding would support mooring cells at 3 sites,
    switchboats, channel work upstream of Lock 22, fish passage at L&D 22,
    and several other ecosystem restoration projects, with approximately
    $7.6 million going to navigation improvements and $8.6 million going to
    ecosystem projects. This initial fiscal year 2008 construction
    increment would also enable the Corps to launch major construction
    activities, including work on large scale measures, in fiscal year
    2009, with full program implementation possibly beginning in fiscal
    year 2010.

             UPPER MISSISSIPPI RIVER RESTORATION PROGRAM (AKA EMP)

        In fiscal year 2007, the Upper Mississippi River Restoration
    Program, commonly known as the Environmental Management Program (EMP),
    marked 20 years as the premier program for restoring the river's
    habitat and monitoring the river's ecological health. Members of
    Congress, agency leaders, stakeholder groups, and members of the public
    all joined the Corps of Engineers in celebrating the EMP's many
    successes, including both significant contributions to river science
    and dramatic on-the-ground habitat improvements. Given this tremendous
    record of success, the UMRBA is pleased that the administration has
    again identified the EMP as one of six construction projects considered
    to be national priorities. Even with this emphasis, however, the
    administration has requested only $23.46 million for the EMP in fiscal
    year 2008. This would continue the trend of the past 10 years, in which
    the annual EMP appropriation has fallen short of the authorized funding
    level. The UMRBA strongly urges Congress to appropriate full funding of
    $33.52 million for the EMP in fiscal year 2008.
        The administration's proposed $23.46 million budget would support
    planning, engineering, design, and construction work on 23 habitat
    restoration projects. In addition, the fiscal year 2008 request would
    support modest expansion of targeted research and data acquisition and
    management efforts under the Long Term Resource Monitoring Program
    (LTRMP), which has suffered substantially from the funding shortfalls
    in recent years. However, to realize its full promise, the EMP requires
    funding at the full authorized amount of $33.52 million. This would
    support construction on three additional projects. It would also permit
    accelerated work on several other projects, thereby increasing overall
    program efficiency. Finally, funding at the full capability level would
    support LTRMP research on critical science questions and the
    acquisition of data needed for balanced river management, such as LIDAR
    terrain data. Therefore, the UMRBA urges Congress to fund the EMP at
    its full authorized amount of $33.52 million.
        UMRBA remains concerned about a 2006 directive from OMB that $3
    million of fiscal year 2007 EMP funding be devoted to development of a
    ``10-year aquatic ecosystem restoration plan.'' Such a plan is
    unnecessary and would duplicate plans that the Corps completed as part
    of the 2004 Navigation Study. It is unclear whether OMB will renew this
    directive now that fiscal year 2007 funding allocations are being made,
    or attempt to apply it in fiscal year 2008. However, given the backlog
    of EMP habitat restoration projects awaiting construction, and the vast
    number of unmet needs under the LTRMP, it would be misguided to divert
    construction funds from this important work to develop a plan that is
    largely duplicative. Congress should direct the Corps to use EMP funds
    exclusively for construction of habitat restoration projects and long
    term monitoring, as authorized in the 1999 Water Resources Development
    Act.
        UMRBA recognizes that one of the biggest challenges facing future
    restoration efforts on the Upper Mississippi River (UMR) will be
    integrating the work that is currently done under EMP with the new
    ecosystem/navigation authority being proposed. Congress is currently
    considering authorization of a new dual-purpose authority for the
    Corps, as recommended in the navigation feasibility study. For now,
    however, the EMP remains the single most effective and long-standing
    UMR ecosystem restoration program. Moreover, the EMP's monitoring
    element is entirely unique and would not be replicated under some
    versions of the proposed new authority. Therefore, fully funding the
    EMP is as important today as it has ever been. The EMP must not
    languish as questions related to future program streamlining and
    coordination are being addressed.

                  MAJOR REHABILITATION OF LOCKS AND DAMS (L&D)

        Most of the locks and dams on the Upper Mississippi River System
    are over 60 years old and many are in serious need of repair and
    rehabilitation. For more than 20 years, the Corps has been undertaking
    major rehabilitation of individual facilities throughout the navigation
    system in an effort to extend their useful life. This work is critical
    to ensuring navigation reliability and safety.
        The UMRBA supports the President's fiscal year 2008 budget request
    for major rehabilitation work at L&D 11 ($6.3 million) and supports
    increasing the President's request for rehabilitation work at L&D 19
    ($1.47 million), L&D 24 ($0.49 million), and Locks 27 ($11.26 million).
    Funding at these levels will permit timely and efficient rehabilitation
    of these critical navigation structures. Major rehabilitation of L&D 11
    and L&D 19 could be completed in fiscal year 2008. The planned work
    spans a broad range, including gate repair/replacement, concrete work,
    and mechanical and electrical upgrades.
        The UMRBA also supports funding for a major rehabilitation project
    that is not included in the President's request: L&D 3 at $5.0 million.
    Navigation safety and embankment failure have been a concern for over
    20 years at L&D 3, and river pilots agree that this is the most
    dangerous stretch of the Upper Mississippi to navigate. Should there be
    an accident, the adjacent embankments, which have been severely
    weakened by age and past accidents, could be breached. In this event,
    commercial navigation would be curtailed and two large power plants
    would be forced to shut down.

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

        The Corps is responsible for operating and maintaining the Upper
    Mississippi River System for navigation. This includes channel
    maintenance dredging, placement and repair of channel training
    structures, stream gaging and water level regulation, and routine care
    and operation of 29 locks and dams on the Mississippi River and 7 locks
    and dams on the Illinois River. The fiscal year 2008 budget request
    totals approximately $187.23 million for O&M of this river system.
    These funds are critical to the Corps' ability to maintain a safe and
    reliable commercial navigation system, while protecting and enhancing
    the river's environmental values.
        Unfortunately, the President's fiscal year 2008 budget represents a
    further widening of the gap between the amount requested and the amount
    required for adequate operation and maintenance of the navigation
    system. In fiscal year 2006, the gap between the President's request
    and the Corps' capability was $52.14 million. In fiscal year 2008, this
    shortfall has increased to $92.18 million. For segments of the Upper
    Mississippi System, this will mean multiple years during which
    resources have not supported even baseline operation and maintenance,
    resulting in an increasing backlog, elimination of important stream
    gages, and a growing risk of failures and service interruptions.
    Responses to these continued fiscal pressures may include reductions in
    lock operating hours and cancellations of ongoing contracts. Funding
    beyond the President's request is needed to restore basic service
    levels, coordinate major maintenance with major rehabilitation at L&D
    11 and 19, and undertake a variety of other critical O&M work.
        The UMRBA supports increased funding for O&M of the Upper
    Mississippi and Illinois River System to meet routine operation and
    maintenance needs, and to address the growing unfunded maintenance
    backlog. The Upper Mississippi River System is simply too valuable to
    invite disaster through chronic underfunding of basic O&M. For fiscal
    year 2008, O&M funding totaling $279.41 million is needed on the Upper
    Mississippi River System to address ongoing needs and critical backlog
    items.

                           INLAND WATERWAYS USER FEES

        In releasing the President's fiscal year 2008 budget request for
    the Corps of Engineers, Assistant Secretary of the Army John Woodley
    announced that the administration plans to propose a new inland
    waterways user fee. There are many important unknowns, including most
    notably the form and magnitude of this new fee and its relationship to
    the existing inland waterways fuel tax, authorized as part of the 1986
    Water Resources Development Act. Given the lack of specifics, the UMRBA
    has not taken a position, but would urge Congress to proceed with great
    care in response to any such proposal. The impacts on operators and
    shippers are potentially profound and issues such as economic
    disruption, equity among waterways beneficiaries, and implications for
    the Nation's intermodal system must be fully understood and evaluated.
    The UMRBA States would be very concerned with any proposal that would
    undermine the vitality and efficiency of the Upper Mississippi River
    System, which is so central to the region's economy.
                                     ______

     Prepared Statement of the Mississippi Valley Flood Control Association
        My name is M.V. Williams and I reside in Germantown, Tennessee. I
    am the president of the West Tennessee Tributaries Association. It is
    also my pleasure and a privilege afforded me by the other nine members
    of the executive committee, to serve as chairman of that committee that
    has the responsibility for the management and direction of the
    Mississippi Valley Flood Control Association in accordance with
    policies duly adopted by the association. This statement on behalf of
    the association presents their views on the fiscal year 2008 budget for
    the Mississippi River and Tributaries Project and their request for
    $500 million.
        Since there are new members on the subcommittee and to refresh the
    memory of those that have served previously, I will briefly discuss the
    Mississippi Valley Flood Control Association which is an agency
    composed almost entirely of public bodies having local responsibility
    for flood control, drainage, bank stabilization and navigation
    improvements in parts of Illinois, Kentucky, Tennessee, Missouri,
    Arkansas, Mississippi and Louisiana. Our members are public officials
    who for the most part are elected by the people. The Association
    represents practically all of the levee and drainage districts,
    municipalities, port and harbor commissions and other State agencies in
    the Mississippi River Valley. These organizations and agencies are
    political subdivisions of the various States in which they are
    organized and function. We provide an agency through which all the
    people of the Mississippi River Valley may speak and act jointly on all
    flood control, navigation, bank stabilization and major drainage
    problems. We have appeared before the subcommittee and served the
    people in the Mississippi River Valley for over 70 years.
        Our Association is comprised of a very large group of individuals
    who are businessmen, property owners, conservationists, farmers,
    attorneys, doctors, wildlife enthusiasts, engineers, accountants,
    environmentalists, civil servants and elected officials from all
    political parties. Since 1935, our president and two vice presidents
    have been members of the United States Congress, a fact of which we are
    extremely proud. Our president this year is that great public servant
    and one of the real heroes of the Vietnam conflict, the Congressman
    from the Third District of Iowa, the Honorable Leonard Boswell. Our two
    vice presidents are Congressmen Roger Wicker from Mississippi and
    Edward Whitfield from Kentucky.
        The value of flood control and economic reality of the need for
    waterborne commerce is well known by the Congress. Therefore I will not
    go into details but for the sake of confirming what is already known,
    let me tell you that since 1928 the Nation has invested $12 billion for
    the Mississippi River and Tributaries Project. For that investment the
    Nation has realized a return of $425.5 billion that includes savings on
    transportation costs and flood damages prevented. That's a return on
    investment of $35.50 for every $1 invested. What a wonderful investment
    of taxpayers' dollars.
        Today we find ourselves again faced with an inadequate budget from
    the executive department but fortunately for us and the other citizens
    of this great Nation, the Congress in its wisdom has always recognized
    the value of such an investment and has consequently, with only rare
    exceptions, appropriated more dollars for the Mississippi River and
    Tributaries Project than has been requested by the executive
    department. We hope that happens again this year.
        We are in Washington for our 72nd Annual Spring Meeting and as
    improbable as it may seem we find the U.S. Army Corps of Engineers
    under fire from within the executive branch and of course the so-called
    environmentalists. This is the same Corps of Engineers that has in
    peace time for over 225 years built the infrastructure that is the envy
    of the rest of the civilized world and that has also defended our
    Nation in times of conflict. My war of participation was World War II
    which as all of you know involved numerous amphibious landings. Leading
    each of those landings were the U.S. Army Amphibious Engineers who were
    competently led by General Daniel Noce who served as District Engineer
    in the Memphis District during the record flood of 1937. General Noce
    was well aware of the training and experience that both young army
    officers and civilians had gained while part of the Mississippi Valley
    Division and he recruited the cadre of the amphibious engineers from
    that group. In fact the Corps of Engineers has defended our Nation from
    the War for Independence to the war on terror, from Bunker Hill to
    Baghdad. I know of no justification for the attitude that some have
    taken concerning the Corps of Engineers. This attitude is having and
    will continue to have a detrimental impact on economic development in
    this country.
        I am well aware that the purpose of this statement is to discuss
    fiscal year 2008 appropriations for the Mississippi River and
    Tributaries Project but I believe it is appropriate to mention at this
    time new policies being implemented by the Federal Emergency Management
    Agency in their map modernization program. This program is a 5-year
    program that was initiated in 2004 and consists of updating the flood
    insurance rate maps. We've been told that 20 percent of all counties
    nationwide are scheduled for update.
        Of great concern to us and should be of concern to everyone is a
    new zone designation known as Zone X (shaded) which will be all the
    areas outside the 100-year flood zone protected by levees. In the case
    of the lower Mississippi River Valley, from approximately Cape
    Girardeau, Missouri to the Gulf of Mexico, this is an area of some
    35,000 square miles or 22,400,000 acres. A warning will be placed on
    the new flood insurance rate maps that will, among other things, state
    that within this area communities should issue evacuation plans and
    encourage property owners to purchase flood insurance.
        This large area that is protected not only by the Mississippi River
    and Tributaries Levees but also by the entire Comprehensive Flood
    Control System consisting of not only levees but bank revetments, river
    cut-offs, floodways, floodwalls, diversions, flood storage reservoirs,
    control structures and many other improvements that have made certain
    that no Mississippi River Main Line Levee has failed since 1928, the
    year that the Congress directed the Corps of Engineers to build the
    system. There have been a number of floods of record proportions since
    then but not one failure. The design flood for the Mississippi River
    and Tributaries Project is to protect against a flood predicted by the
    weather bureau as the ``maximum possible'' and provides for the
    disposal of all water predicted as possible.
        This unwarranted new Zone X on Flood Insurance Rate Maps will have
    a dramatic and costly burden on all the residents, businesses and
    industries along the lower Mississippi River and its tributaries and
    this economic disaster will be felt over this entire Nation. The
    language proposed will frighten lenders and companies looking for
    industrial sites, impact crop loans as well as causing millions of
    dollars to be spent for unnecessary flood insurance premiums. This is
    such a serious matter that we would suggest strongly that the
    appropriate congressional committees hold hearings on this matter to
    determine what if any engineering basis the Federal Emergency
    Management Agency used to develop this new policy.
        Again, this statement is in support of the Mississippi River and
    Tributaries Appropriations and our request is being made only after
    careful and thoughtful considerations of the amount necessary to
    prevent the cancellation of on going contracts and to do the minimum
    amount of required maintenance work. The Mississippi River and
    Tributaries Project is unique in the fact that the appropriations
    allocated are used not only for construction but also for maintenance
    and not only for flood control but also for navigation and includes all
    environmental considerations including mitigation and restoration as
    well as irrigation and water supply.
        It is our collective opinion that to meet the requirements outlined
    above, the appropriation for the Mississippi River and Tributaries
    Project for fiscal year 2008 should be $500 million. In order to
    preserve the integrity of our flood control and navigation systems that
    represents a large investment of national assets and to preserve and
    enhance the natural environment of the Mississippi River Valley and to
    continue the authorized work that is underway, the appropriation
    request is justified and should be considered as a wise investment in
    the future well-being of this great Nation.
        As we noted in our statement last year, of utmost importance to the
    overall success of the project is the completion of the work in both
    Louisiana and Mississippi to bring the deficient levees up to the
    required grade and section. Additional funds are needed here and
    because of the scope of the work the restrictions on reprogramming
    authorities and the elimination of the use of continuing contracts both
    need to be waived in order that this work to protect thousands of acres
    of valuable land and the lives of thousands of citizens can be
    completed as rapidly as possible. Because of these restrictions,
    contracts had to be shut down at considerable cost and the loss of
    valuable construction time. We ask the subcommittee for help in this
    important matter.
        With the help of the Congress over the years, we have made progress
    in the Mississippi River Valley and for that we are extremely grateful
    but there is much to be done before the job is completed and the people
    in the valley and the entire Nation may reap the benefits of what has
    been done.
        We have attached a sheet to this statement that reflects the
    Mississippi Valley Flood Control Association's request for
    Appropriations for the Mississippi River and Tributaries Project for
    fiscal year 2008.

      MISSISSIPPI VALLEY FLOOD CONTROL ASSOCIATION--FISCAL YEAR 2008 CIVIL
    WORKS REQUESTED BUDGET--MISSISSIPPI RIVER AND TRIBUTARIES APPROPRIATIONS
    ------------------------------------------------------------------------
                        PROJECT AND STATE                      MVFCA REQUEST
    ------------------------------------------------------------------------
    SURVEYS, CONTINUATION OF PLANNING AND ENGINEERING &
     ADVANCE ENGINEERING & DESIGN:
        Memphis Harbor, TN..................................  ..............
        Germantown, TN......................................  ..............
        Lower Steele Bayou..................................  ..............
        Homochitto River....................................  ..............
        Fletcher Creek, TN..................................  ..............
        Memphis Metro Storm Water Management, TN............  ..............
        Bayou Meto, AR......................................      $2,550,000
        Southeast Arkansas..................................         800,000
        Coldwater Basin Below Arkabutla Lake, MS............         425,000
        Quiver River, MS....................................  ..............
        Spring Bayou, LA....................................         500,000
        Point Coupee to St. Mary Parish, LA.................  ..............
        Atchafalaya Basin Floodway Land Study, LA...........         200,000
        Alexandria, LA to the Gulf of Mexico................       1,950,000
        Morganza, LA to the Gulf of Mexico..................       6,350,000
        Donaldsonville, LA to the Gulf of Mexico............       3,500,000
        Tensas River, LA....................................  ..............
        Donaldsonville Port Development, LA.................  ..............
        Collection & Study of Basic Data....................         495,000
                                                             ---------------
          TOTAL GENERAL INVESTIGATIONS......................      16,770,000
                                                             ===============
    CONSTRUCTION:
        St. John's Bayou-New Madrid Floodway, MO............      13,300,000
        Eight Mile Creek, AR................................  ..............
        Helena & Vicinity, AR...............................  ..............
        Grand Prairie Region, AR............................      37,800,000
        Bayou Meto, AR......................................      22,450,000
        West Tennessee Tributaries..........................  ..............
        Nonconnah Creek, TN.................................         500,000
        Wolf River, Memphis, TN.............................  ..............
        August to Clarendon Levee, Lower White River, AR....  ..............
        St. Francis Basin, MO & AR..........................       7,000,000
        Yazoo Basin, MS.....................................      67,125,000
        Atchafalaya Basin, LA...............................      34,000,000
        Atchafalaya Basin Floodway, LA......................      10,894,000
        MS Delta Region, LA.................................         722,000
        Channel Improvements, IL, KY, MO, AR, TN, MS & LA...      64,547,000
        Mississippi River Levees, IL, KY, MO, AR, TN, MS &        98,352,000
         LA.................................................
                                                             ---------------
          SUBTOTAL--CONSTRUCTION............................     356,690,000
          SUBTOTAL--MAINTENANCE.............................     283,669,000
                                                             ---------------
          SUBTOTAL--MISSISSIPPI RIVER & TRIBUTARIES.........     657,129,000
    LESS REDUCTION FOR SAVINGS & SLIPPAGES..................     157,129,000
                                                             ---------------
          GRAND TOTAL--MISSISSIPPI RIVER & TRIBUTARIES......     500,000,000
    ------------------------------------------------------------------------

                                     ______

     Prepared Statement of the Louisiana Department of Transportation and
                              Development (LADOTD)
        On behalf of LADOTD and the Association of Levee Boards of
    Louisiana (ALBL), we present recommendations for fiscal year 2008
    appropriations for U.S. Army Corps of Engineers Civil Works Projects in
    Louisiana.
        Hurricanes Katrina and Rita in 2005 totally devastated Louisiana
    and had a ripple effect throughout the Nation. Over 1,500 Louisiana
    residents lost their lives, over 200,000 homes were severely damaged or
    destroyed, and over 400,000 Louisiana citizens are still displaced. The
    true cost of these storms in lives, property, and wetlands loss--will
    never be known. Coastal Louisiana may never fully recover. All of the
    coastal infrastructure--ports, oil and gas pipelines, refineries (two
    large refineries in St. Bernard parish were out of service for months),
    chemical plants, production platforms, offshore supply depots,
    navigation channels, locks, etc.--were severely damaged whether or not
    they were protected by levees. The impact on Louisiana left a ripple
    effect on the economy of the whole country which cannot be ignored.
    Energy prices increased significantly because of the disruptions in
    production, delivery and refining. Damages to Louisiana's deepwater
    ports, which export nearly 60 percent of the Nation's grain products,
    disrupted agricultural markets worldwide. This was truly a national
    tragedy requiring a national response. The levee system intended to
    protect the New Orleans area completely failed. Worse yet, the project
    remains incomplete 40 years after authorization--due mostly to funding
    constraints. Ironically, one protection system, Larose to Golden
    Meadow, survived these two storms, but has been completely overlooked
    for accelerated funding. Present funding is not enough to bring it to
    100 percent completion, and when complete, this would still not provide
    protection against the 1 percent chance of flooding.
        It is equally tragic that another protection system still remains
    incomplete and vulnerable to a project flood. The Mississippi River and
    Tributaries Project (MR&T) has been underway since 1928 and isn't
    scheduled for completion until beyond 2031. Flooding from the
    Mississippi River would produce damages of a magnitude much greater
    than what was experienced during Hurricanes Katrina and Rita. A far
    greater portion of the State would be impacted. For these reasons, we
    consider the administration's proposed budget for the MR&T Project of
    $260 million for fiscal year 2008 to be entirely unacceptable. This
    amount is not enough to adequately fund the Corps projects in the New
    Orleans and Vicksburg Districts, let alone the entire Mississippi River
    Valley. We strongly support the Mississippi Valley Flood Control
    Association's request of $500 million for the MR&T Project.
        Supplemental funding has previously been received to complete
    numerous on-going hurricane protection projects and the SELA project.
    This is not enough, however, to provide protection against the 1
    percent chance, or greater, of flooding in any given year. We
    respectfully encourage this committee to look at newly revised cost
    estimates and necessary funding required to raise the system to a
    protection level above the original project storm. Although these
    projects are important, there are still numerous other projects for
    navigation, flood protection, and coastal restoration that either are
    unfunded or lack adequate funds to continue in a timely manner. In
    making the following funding recommendations for Louisiana projects
    regarding specific construction, studies, and operation and maintenance
    items, we would hope that Congress and the administration will honor
    their prior commitments to infrastructure development and continue to
    fund our requests. We believe these types of water resources projects
    are the most cost effective projects in the Federal budget, having to
    meet stringent economic criteria not required by other programs.

       FLOOD CONTROL, NAVIGATION, HURRICANE PROTECTION & WATER RESOURCES
      PROJECTS SUMMARY OF RECOMMENDED APPROPRIATIONS FISCAL YEAR 2008 FOR
                                   LOUISIANA

        LADOTD & ALBL requests funding for the following projects that
    differs from what is in the fiscal year 2008 administration budget or
    is a project of particular importance for the State. Those items that
    have been appropriately funded have not been included.

    ------------------------------------------------------------------------
                                              ADMINISTRATION     LOUISIANA
               LOUISIANA PROJECTS                 BUDGET          REQUEST
    ------------------------------------------------------------------------
    GENERAL INVESTIGATIONS:
        STUDIES:
            Amite River--Ecosystem            ..............      $1,000,000
             Restoration, LA................
            Amite River & Tributaries, LA     ..............       1,000,000
             Bayou Manchac..................
            Atchafalaya River, Bayous Chene,  ..............         500,000
             Boeuf & Black..................
            Calcasieu Lock, LA..............  ..............         600,000
            Calcasieu River Basin, LA.......        $395,000         395,000
            Calcasieu River & Pass            ..............         360,000
             Navigation, LA.................
            Plaquemines Parish, LA..........  ..............         500,000
            Southwest Coastal LA Hurricane    ..............       2,000,000
             Protection, LA.................
            St. Charles Parish Urban Flood    ..............         400,000
             Control, LA....................
            West Baton Rouge Parish, LA.....  ..............         543,000
            West Shore--Lake Pontchartrain,   ..............         778,000
             LA.............................
            Bossier Parish Levee & FC.......  ..............         300,000
            Cross Lake Water Supply.........  ..............         384,000
        PED:
            Bayou Sorrel Lock, LA...........       1,371,000       2,500,000
            Port of Iberia, LA..............  ..............       1,500,000
            Southwest, AR (AR, LA)..........  ..............         400,000
        NEW STUDIES:
            Baptiste Collette, LA...........  ..............         300,000
            Donaldsonville Port Development.  ..............         500,000
            Red River Waterway, LA-12 Foot    ..............         100,000
             Channel........................
        CAP:
            Port Fourchon Enlargement, LA...  ..............       1,300,000
        CONSTRUCTION GENERAL:
            Comite River, LA................  ..............      24,000,000
            East Baton Rouge Parish, LA.....  ..............       2,000,000
            Inner Harbor Navigation Canal     ..............       6,000,000
             Lock, LA.......................
            Larose to Golden Meadow.........  ..............      14,700,000
            Southeast, LA...................  ..............     169,000,000
            Red River Below Den Dam (AR, LA)  ..............      10,000,000
            Red River Emergency (AR, LA)....  ..............       6,000,000
            J Bennett Johnston WW, Miss. R.        1,500,000      15,000,000
             to Shreveport..................
            Ouachita River Levees...........  ..............       1,600,000
            Ouachita River Bank               ..............       5,000,000
             Stabilization..................
        OPERATIONS & MAINTENANCE GENERAL:
            Atchafalaya River, Bayous Chene,       6,717,000      42,000,000
             Boeuf & Black..................
            Arataria Bay Waterway...........  ..............       3,800,000
            Bayou Lacombe...................  ..............         900,000
            Bayou Lafourche.................       1,273,000       3,500,000
            Bayou Segnette..................  ..............       1,500,000
            Bayou Teche.....................         209,000         209,000
            Calcasieu River & Pass..........      16,108,000      32,000,000
            Calcasieu River Dredge Disposal        2,000,000       2,000,000
             Plan...........................
            Freshwater Bayou................       5,570,000      11,000,000
            Gulf Intracoastal Waterway......      21,851,000      36,000,000
            Houma Navigation Canal..........         135,000       4,200,000
            Mermentau River.................       1,685,000       6,300,000
            Mississippi River, Baton Rouge        59,424,000     120,000,000
             to the Gulf....................
            Mississippi River Gulf Outlet at         290,000       6,000,000
             Veince.........................
            Waterway Empire to the Gulf.....  ..............       5,000,000
            WW. IWW to Bayou Dulac..........  ..............         250,000
            Ouachita & Black Rivers (AR, LA)       9,865,000      20,143,000
            Bayou Bodcau....................         766,000       2,226,000
            Caddo Lake......................         196,000         261,000
            Wallace Lake....................         211,000         278,000
            Bayou Pierre....................          35,000          35,000
            J Bennett Johnston Waterway.....      10,431,000      16,471,000
            Lake Providence Harbor..........          25,000         546,000
            Madison Parish Port.............           4,000          81,000
    ------------------------------------------------------------------------

       MISSISSIPPI RIVER AND TRIBUTARIES PROJECT SUMMARY OF RECOMMENDED
                 APPROPRIATIONS FISCAL YEAR 2008 FOR LOUISIANA

        LADOTD & ALBL requests funding for the following projects that
    differs from what is in the fiscal year 2008 administration budget or
    is a project of particular importance for the State. Those items that
    have been appropriately funded have not been included.

    ------------------------------------------------------------------------
                                              ADMINISTRATION     LOUISIANA
               LOUISIANA PROJECTS                 BUDGET          REQUEST
    ------------------------------------------------------------------------
    FC, MR&T GENERAL INVESTIGATIONS:
        Alexandria to the Gulf..............        $200,000      $1,950,000
        Donaldsonville to the Gulf..........  ..............       3,500,000
        Morganza to the Gulf, PED...........  ..............       6,500,000
        Spring Bayou Area, LA...............  ..............         500,000
    NEW STUDIES:
        Atchafalaya Basin Floodway System            200,000         200,000
         Land Study, LA.....................
    FC, MR&T CONSTRUCTION:
        Atchafalaya Basin...................      23,800,000      34,000,000
        Atchafalaya Basin Floodway System...       1,800,000      10,000,000
        Channel Improvement (N.O. Dist.)....      15,747,000      15,747,000
        Mississippi Delta Region............  ..............         722,000
        Mississippi River Levees, LA (N.O.         5,267,000      10,200,000
         Dist.).............................
        Mississippi River Levees (AR, LA,         18,500,000      47,300,000
         MS) (V. Dist.).....................
        Morganza to the Gulf (pending         ..............      14,000,000
         authorization in WRDA).............
        Channel Improvement (AR, LA, MS) (V.      23,585,000      29,585,000
         Dist.).............................
    FC, MR&T MAINTENANCE:
        Atchafalaya Basin...................      11,019,000      28,000,000
        Atchafalaya Basin Floodway System...       2,291,000       2,700,000
        Baton Rouge Harbor (Devil's Swamp)..          17,000          70,000
        Bayou Cocodrie and Tributaries......          41,000          41,000
        Bonnet Carre Spillway...............       2,367,000       5,000,000
        Channel Improvement (N.O. Dist.)....      12,025,000      16,500,000
        Dredging (N.O. Dist.)...............         700,000         700,000
        MS Delta Region.....................         125,000         225,000
        Old River...........................       9,045,000      20,000,000
        Mississippi River Levees (LA) (N.          3,702,000       3,774,000
         Dist.).............................
        Mississippi River Levees (AR, LA,          2,100,000       2,700,000
         MS) (V. Dist.).....................
        Revetments & Dikes (AR, LA, MS) (V.       15,400,000      15,400,000
         Dist.).............................
        Boeuf & Tensas Rivers...............       2,667,000       6,047,000
        Red River Backwater.................       2,500,000       6,550,000
        Lower Red River.....................          45,000          45,000
    ------------------------------------------------------------------------

        Please note that the needed additional funds to give the New
    Orleans Area that protection that is needed is not included in the
    above request. We believe it is proper that the funds for repairing and
    improving the existing hurricane protection systems continue to be
    provided through emergency supplemental appropriations so as not to
    detract from projects that must go through the normal appropriations
    process. We solicit your continued support in providing the
    supplemental funding necessary to complete the work.
                                     ______

            Prepared Statement of the Little River Drainage District

        My name is Dr. Sam M. Hunter, DVM of Sikeston, Missouri. I am a
    veterinarian, landowner, farmer and resident of Southeast Missouri.
        I am the President of the Little River Drainage District, the
    largest such entity in the Nation. Our District serves as an outlet
    drainage and flood control District to parts of seven counties in
    Southeast Missouri. We provide flood control protection to a sizable
    area of Northeast Arkansas as well. Our District is solely tax
    supported by more than 3,500 private landowners in Southeast Missouri.
        My remarks will be directed toward the President's budget for the
    Civil Works portion of the U.S. Army Corps of Engineers for fiscal year
    2008. The President's budget requests of $4.871 billion for Civil Works
    by the U.S. Army Corps of Engineers for the next fiscal year is totally
    inadequate and only represents 60 percent of the Corps capability. An
    amount of $8 billion is more realistic.
        Those funds when properly expended are INVESTMENTS yielding a
    return of substantial benefits to the American taxpayer throughout this
    Nation. They are used to prevent flooding to much of our valuable
    farmland, to industrial sites, and to upgrade our ever aging locks and
    dam system on our navigable streams which will prevent unscheduled lock
    closures, modernize our hydro-electric plants, and restore some of our
    environmental assets.
        Over 50 percent of our locks and dams are 50 to 60 years old. These
    facilities have exceeded their life expectancy by 10 to 20 years. In 10
    years that percentage will have grown to almost 60 percent unless
    improvements are made.
        We are witnessing unscheduled lock outages now and to continue as
    we are that number will continue to grow if we do not step forward with
    a specific plan to restore, rebuild and reconstruct lock and dams on
    our waterway systems. We already have leaking gates, crumbling lock
    walls and frequent unscheduled closures occurring which hurt and
    curtail economic growth to our Nation. Parts are actually having to be
    made for some repairs because manufactures no longer exist and such
    parts are not available.
        Today our fuel needs alone are 75 percent dependent upon foreign
    oil sources. Waterborne transportation is far more energy efficient
    than truck or rail modes. Our Nation, our consumers and our producers
    will all benefit from more use of our river navigation upgrades. Less
    fuel would be needed to move mass quantities of goods, lives would be
    saved due to the more safer means of transportation, the many miles of
    highways throughout our Nation would not be adversely impacted, our
    environment would be enhanced because of less exhaust emissions and our
    farmers, manufacturers and other producers could compete with the world
    markets.
        Further, to have a modern water transportation system would provide
    an excellent means to transport mass military equipment and troops
    throughout our Nation should such a need arise. How sad it would be to
    have an aging lock and dam system in place and fail during such a
    crisis. This Nation can construct modern infrastructure for others but
    seems to let its own taxpayers depend upon ancient features with no
    immediate plans to improve them. We can and we must set in order a
    program to modernize this valuable part of our infrastructure. It is
    past time to get this done.
        Our competing nations such as Brazil and China have committed much
    more for fiscal year 2008. China has committed more than $12 billion to
    their waterway infrastructure yet we are pleading for only two-thirds
    of that amount. We have a backlog within this part of our
    infrastructure of improvements that has grown from $200 million in 1998
    to more than $1 billion in fiscal year 2008 just for operations and
    maintenance. We appreciate very much Congress stepping forward as they
    did in 2006 and increasing the needed funds substantially. You should
    not be burdened with this task each year.
        We believe Congress needs to intervene and reverse the trend of
    OMB, and of past and present administrations. We have not seriously
    invested in our waterway infrastructure for decades but we must. Local
    economies will be affected positively by these investments. Local labor
    will be used as well as local businesses who will provide needed
    materials.
        We believe the improvement and modernization and the growth of our
    waterway infrastructure should be done, but we believe it needs to be
    done with a plan. We believe the Corps of Engineers has the capability
    and they should and must develop a plan for construction of any new
    projects. We also believe they need to complete projects that are
    already started before we begin new ones. We also believe the backlog
    of operations and maintenance of the existing system needs to be done
    before any new starts are authorized, however, there may be some
    emergency new starts which would be wise to commence provided the funds
    are available and provided a systematic modernization is ongoing. We
    must get away from ``knee jerk'' emergency type repairs and
    replacements.
        We must prioritize projects and eliminate projects that are not
    returning benefits back to this Nation. We must have our Federal
    Government live up to the commitments they have made to the citizens of
    this Nation. Private interest have made many investments based upon
    faith in the Federal Government following through on what it promised
    and what they had been told would be provided to them within a
    reasonable period of time. If a project is to be funded entirely by the
    Federal Government as directed by Congress then we must fulfill that
    obligation. If local interest is to provide a portion of the cost then
    local interest must meet that mandate as well. However, we do not need
    to hold any projects up because local interests are not financially
    able to meet their cost sharing needs provided that project returns a
    benefit back to this Nation. Let us move forward with a plan and let us
    work that plan and rebuild and bring our waterway infrastructure into
    the 21st Century properly.
        I will now turn my comments to one specific project which the U.S.
    Army Corps of Engineers has been authorized by Congress to administer,
    namely, the Mississippi River and Tributaries Project (MR&T) and one
    portion of that project which benefits the citizens of Southeast
    Missouri and Northeast Arkansas, namely, the St. Francis Basin Project.
        The Corps of Engineers has a stated capability of $500,000,000 for
    fiscal year 2008 in the MR&T Project. We ask you to give consideration
    to provide funding levels at $500,000,000. This will provide some
    limited but needed new construction and some major maintenance. The
    President's budget contains only $260,000,000 which is far from
    adequate.
        The Mississippi River and Tributaries Project was authorized
    following a record flood in 1927 that inundated more than 26,000 square
    miles of the Mississippi River Valley. Over 700,000 people were left
    homeless and many lives were lost. Most, if not all, East-West commerce
    was stopped and it adversely effected the economy and the environment
    of our Nation. After that devastating event Congress in its infinite
    wisdom passed a bill and established the Mississippi River and
    Tributaries Project (MR&T) and authorized the U.S. Army Corps of
    Engineers to develop a plan to prevent such a disaster in the future.
    This project currently is a separate line item in the budget. To remove
    it will destroy the continuity of this much needed project.
        To date the MR&T Project has prevented flood damages and provided
    other benefits resulting in acurrent benefit/cost ratio of $28 to $1.
    Truly this is a wise investment for our Nation. Likewise countless
    lives have been spared from the construction of this great project.
    Also our Nation receives nearly $1 billion of navigational benefits
    each year due to this project. It is readily seen this project had
    merit from the beginning and continues to reward the citizens not only
    of the valley itself but of the citizens of the entire Nation. It is a
    wise investment for this country and it is good for our economy. It
    will be a vital link to the defense of our Nation in the event of an
    attack by our enemies. This project must be targeted for swift
    completion and then properly maintained. What an investment for our
    great Nation this project has been! Find any other project of any
    nature which approaches this ratio.
        Further, we are very concerned and strongly opposed to the
    administration's recommendation in its fiscal year 2008 budget to use
    funds from the Inland Waterways Trust Fund to pay for part of the
    operation and maintenance cost of the inland waterways as well as some
    construction. The trust fund was established in 1978 and was to be made
    available for construction and rehabilitation for navigation on the
    inland and coastal waterways not for operations and maintenance. This
    is not what our Nation agreed to in 1978 and is not what was renewed
    under WRDA in 1986. We petition this Congress to stand up and have our
    Nation live up to the promises made to the contributors of that trust
    fund and abide by past agreements.
        Investing in our waterways is a great way to stimulate the economy
    and at the same time be building and making investments into a system
    for the future which will return back more dollars than expended. We
    petition you to give this vital industry of our Nation a strong
    endorsement and do all you can to ensure our waterways systems stay
    competitive with our foreign competitors.
        At a time when we need to stimulate our economy, at a time that
    safety from terrorist activities needs to be enhanced and at a time
    that many in our Nation are concerned about cleaner air, cleaner water,
    etc., we have a great opportunity to meet those needs. We must make
    sound investments into our infrastructure which will give back more
    monies to the taxpayers of this country than was invested while at the
    same time be increasing our defense capabilities should our Nation be
    attacked from an outside force.
        Our District, as well as other Drainage and Levee Districts in
    Missouri and Arkansas, is located within the St. Francis River Basin.
    This is a project item of the Mississippi River and Tributaries
    Project.
        The St. Francis Basin Project was authorized by Congress in 1928
    for improvements by the U.S. Army Corps of Engineers. The initial
    authorization was justified by a projected benefit-cost ratio of 2.4:1.
    Today this ratio is 3.6:1 and the project is still not completed. As
    you can see this also has been a wise investment of our Federal tax
    dollars. Few projects, such as this one, where funds are provided by
    the Federal Government return more than they cost. This one does and we
    need to complete it in a timely fashion.
        Local interests have done their part in providing rights of way,
    roads, utilities and the like. Our government now needs to fulfill
    their obligatory part of the project and bring it to completion as
    quickly as possible.
        The amount allocated for maintenance in the St. Francis Basin
    Project for fiscal year 2007 was $880,000,000. This is a funding level
    that permits adequate funding to maintain the features within that
    project on which the Corps of Engineers has made improvements and which
    it is the responsibility of the Federal Government to maintain. As a
    matter of information the Memphis District U.S. Army Corps of Engineers
    was able to execute 99 percent of the available funds for maintenance
    within that project for fiscal year 2006.
        The President's budget for fiscal year 2008 contains no monies for
    construction whereas the Corps of Engineers has the capability of $7
    million. We request $7 million for construction for this project.
        The President's budget has $4.725 million for maintenance for the
    St. Francis Project. The Corps of Engineers has a stated capability of
    $23.475 million.
        We believe the Corps could adequately use $15 million each year for
    maintenance within this basin. We realize there are budgetary
    restraints this year and respectively request Congress to approve
    funding for maintenance in the St. Francis Basin Project for fiscal
    year 2008 in the amount of $23.475 million. This should provide funds
    for adequate maintenance of the features within this basin which need
    attention annually.
        Many positive changes have occurred to and within our sector of our
    Nation because of this project. We who live there welcome these
    changes. We, local interest, in Southeast Missouri and Northeast
    Arkansas want this project brought to completion and adequately
    maintained. We have waited over 70 years and we believe it is time to
    complete this wise investment for our Nation.
        A question that could and should be asked is where will we get the
    money? True, our Nation is facing record deficits but surely some of
    the monies planned to be sent abroad to build, restore and improve
    other nations' infrastructure could be reduced substantially and be
    used for the benefit of our taxpayers and Nation. Please give this
    proposal some thought.
        I wish to thank you very much for your time and kind attention and
    for taking the time to review the above. We would be very appreciative
    of anything this committee can do to help us improve our environment,
    improve our livelihood, and improve the area in which we live and work
    which ultimately is good for America. We are also very appreciative of
    all this committee has done for us in the past. We trust you will hear
    our pleas once more and act accordingly.
                                     ______

              Prepared Statement of the City of San Marcos, Texas

                 SAN MARCOS RIVER ECOSYSTEM RESTORATION PROJECT

        Mr. Chairman and members of the subcommittee: on behalf of the city
    of San Marcos, Texas, I am pleased to submit this statement in support
    of our request for an earmark of $439,000 for a U.S. Army Corps of
    Engineers Section 206 Ecosystem Restoration Project for the San Marcos
    River in the fiscal year 2008 bill.
        The city of San Marcos seeks this allocation for the development of
    the Detailed Project Report/Integrated Environmental Assessment (DPR/
    EA) as the next step toward completing a $4,520,000 project with
    Federal and local match to restore degraded aquatic and terrestrial
    habitat in the upper San Marcos River.
        San Marcos is located in south central Texas in Hays County,
    approximately 30 miles southwest of Austin, Texas. The proposed
    restoration area is located within the city limits of San Marcos along
    and within the San Marcos River and its headwaters. The study area
    consists of an approximate 1.0-mile stretch of the San Marcos River and
    associated riparian corridor. The ecosystem restoration project will
    restore and enhance degraded aquatic and terrestrial habitat along and
    within the San Marcos River.
        The spring-fed San Marcos River offers one of rarest aquatic
    ecosystems found in the United States. The headwaters of the river
    originate from underground springs from the Edwards Aquifer, producing
    millions of gallons of crystal clear, constant temperature water daily.
    The river creates a unique ecosystem supporting five threatened or
    endangered species that live in the San Marcos River (San Marcos
    salamander, fountain darter, Texas wild rice, San Marcos gambusia, and
    Comal Springs riffle beetle).
        The San Marcos River has attracted humans to its banks for more
    than 12,000 years, making San Marcos one of the oldest continuously
    inhabited places in the United States. The city of San Marcos has
    strived for the past 40 years to protect the river by establishing
    parks along its banks and restricting intense development.
        Still, the constant use of the popular river over many decades has
    impacted the riparian and aquatic habitat of the river, requiring
    restoration of this valuable waterway. The San Marcos River and
    associated tributaries have experienced aquatic ecosystem degradation
    due to a variety of human factors. Impoundment of water upstream, in
    its tributaries, and within the study area has altered the normal flow
    regime of the San Marcos River. The native aquatic plant communities
    within the San Marcos River have been diminished by invasive exotic and
    generalist plant species.
        Increased nutrient and sediment loads from overland surface flow,
    tributary runoff, non-point sources and storm water drainage have
    reduced water quality and in-stream habitat values within the river.
    The majority of the bottomland plant community within the study area is
    highly disturbed and fragmented due primarily to urban encroachment,
    installation of hardpan surfaces, recreational disturbance and invasion
    of non-native plant species.
        This degradation has resulted in the loss of high quality in-stream
    and riparian habitat for plant and wildlife species within the study
    area. The proposed restoration plan will help restore aquatic and
    terrestrial habitat that has degraded due to human activity, including
    critical habitat for the federally-listed species.
        The city of San Marcos applied for U.S. Army Corps of Engineers
    Section 206 Aquatic Restoration Grant funds in 2002 to turn around the
    trend toward degradation in our river corridor. A Preliminary
    Restoration Plan (PRP) was developed by the U.S. Army Corps of
    Engineers and submitted in March 2003. The PRP was approved and moved
    forward to the next phase, the development of a Detailed Project Report
    (DPR).
        However, at this stage, Federal funding for this program was
    reduced, placing the city of San Marcos PRP on the backburner. Funding
    this project is essential to restore integrity to the San Marcos River,
    the central point of our community for tourism, recreation, and quality
    of life.
        This project will directly benefit the environment by increasing
    biodiversity, carrying capacity, stability and productivity of native
    plant and wildlife species endemic to the area. Additional benefits
    include improvement of existing recreational opportunities, enhancement
    of water quality, and improvement of natural aesthetics.
        Specifically, the project will restore and sustain approximately
    22.0 acres of riparian woodland habitat, 6.0 acre of tall grass prairie
    habitat, 4.0 acres of emergent wetland habitat and 16.0 acres of
    aquatic habitat within a highly urbanized area. The total project cost
    is estimated at $4,520,000, which will be cost-shared 65 percent
    Federal Government and 35 percent city of San Marcos. The Federal share
    is $2,938,000 with a local match of $1,582,000.
        The only COE Section 206 projects that will now receive funding are
    those that have congressional support.
        Therefore, we ask you to approve a special appropriation earmark
    for $439,000 for the San Marcos River Section 206 Project to fund the
    restoration. Thank you for your consideration of this project.
                                     ______

        Prepared Statement of the St. Francis Levee District of Arkansas

                               EXECUTIVE SUMMARY

        The Mississippi Valley Flood Control Association fiscal year 2008
    Civil Works budget, Mississippi River and Tributaries Appropriations--
    Requesting Appropriations of $7 million for Construction and $23.475
    million for Maintenance and Operation in the St. Francis Basin Project
    and a total of $500 million for the Mississippi River and Tributaries
    Project. The reason for this seemingly large request is to be assured
    that the Corps of Engineers may fully fund on-going and future
    construction contracts as directed in the fiscal year 2006
    appropriations act. Our requests are detailed in the tables attached to
    this statement.

                             BACKGROUND INFORMATION

        My name is Rob Rash, and my home is in Marion, Arkansas, located on
    the west side of the Mississippi River and in the St. Francis Basin. I
    am the CEO/Chief Engineer of the St. Francis Levee District of
    Arkansas. Our District is the local cooperation organization for the
    Mississippi River and Tributaries Project and the St. Francis Basin
    Project in Northeast Arkansas. Our District is responsible for the
    operation and maintenance of 160 miles of Mississippi River Levee and
    75 miles of St. Francis River Tributary Levee in Northeast Arkansas.
        The St. Francis Basin is comprised of an area of approximately
    7,550 square miles in Southeast Missouri and Northeast Arkansas. The
    basin extends from the foot of Commerce Hills near Cape Girardeau,
    Missouri to the mouth of the St. Francis River, 7 miles above Helena,
    Arkansas, a total distance of 235 miles. It is bordered on the east by
    the Mississippi River and on the west by the uplands of Bloomfield and
    Crowley's Ridge, having a maximum width of 53 miles.
        The Mississippi River and Tributaries Project and the St. Francis
    Basin Project provide critical flood protection to over 2,500 square
    miles in Northeast Arkansas alone. This basin's flood control system is
    the very lifeblood of our livelihood and prosperity. Our resources and
    infrastructure are allowing the St. Francis Basin and the Lower
    Mississippi Valley to develop into a major commercial and industrial
    area for this great Nation. The basin is quickly becoming a major steel
    and energy production area. The agriculture industry in Northeast
    Arkansas and the Lower Mississippi Valley continues to play an integral
    role in providing food and clothing for this Nation. This has all been
    made possible because Congress has long recognized that flood control
    in the Lower Mississippi Valley is a matter of national interest and
    security and has authorized the U.S. Army Corps of Engineers to
    implement a flood control system in the Lower Mississippi Valley that
    is the envy of the civilized world. With the support of Congress over
    the years, we have continued to develop our flood control system in the
    Lower Mississippi Valley through the Mississippi River and Tributaries
    Project and for that we are extremely grateful.
        Although, at the current level of project completion, there are
    areas in the Lower Mississippi Valley that are subject to major
    flooding on the Mississippi River. The level of funding that has been
    included in the President's Budget for the overall Mississippi River
    and Tributaries Project is not sufficient to adequately fund and
    maintain this project. The level of funding will require the citizens
    of the Lower Mississippi Valley to live needlessly in the threat of
    major flood devastation for the next 30 years. Timely project
    completion is of paramount importance to the citizens of the Lower
    Mississippi. Ten and Fifteen Mile Bayou improvements are just one of
    many construction projects necessary for flood relief in the St.
    Francis Basin. Ten and Fifteen Mile Bayou improvements were
    reauthorized by Congress through the Flood Control Act of 1928, as
    amended. Section 104 of the Consolidated Appropriation Act of 2001
    modified the St. Francis Basin to expand the project boundaries to
    include Ten and Fifteen Mile Bayous and shall not be considered
    separable elements. Total project length of 38 miles includes Ten and
    Fifteen Mile Bayou, Ditch No. 15 and the 10 Mile Diversion Ditch that
    provide flood control for West Memphis and Vicinity. Without additional
    funds, construction would be delayed and West Memphis and Vicinity will
    continue to experience record flooding as seen December 17, 2001. West
    Memphis and Vicinity would experience immediate flood relief when the
    first item of construction is completed.
        Next I feel that it is imperative that I mention at this time new
    policies being implemented by the Federal Emergency Management Agency
    in their Map Modernization Program. This is a 5-year program that was
    initiated in 2004 and consists of updating the Flood Insurance Rate
    Maps. We've been told that 20 percent of all counties nationwide are
    scheduled for update.
        Of great concern to us and should be of concern to everyone is a
    new Zone Designation known as Zone X (Shaded) which will be all the
    areas outside the 100-year flood zone protected by levees. In the case
    of the Lower Mississippi River Valley, from Cape Girardeau, Missouri to
    the Gulf of Mexico, this is an area of some 35,000 square miles or
    22,400,000 acres. A warning will be placed on the new Flood Insurance
    Rate Maps that will, among other things, state that within this area,
    communities should issue evacuation plans and encourage property owners
    to purchase flood insurance.
        This large area is protected by the Mississippi River and
    Tributaries Levees but also by the entire Comprehensive Flood Control
    System consisting of not only the well designed, well constructed, well
    maintained, massive levees but also bank revetments, river cut-offs,
    floodways, floodwalls, diversions, flood storage reservoirs, control
    structures and many other improvements that have made certain that no
    Mississippi River Main Line Levee has failed since 1928, the year that
    Congress directed the Corps of Engineers to build the system. There
    have been a number of floods of record proportions since 1928 but not
    one failure. The American Taxpayer has invested billions of dollars in
    this system and their money up to now has been well spent. The Federal
    Emergency Management Agency seems to think it has been wasted. Not so!
        The Design Flood for the Mississippi River and Tributaries Project
    is to protect against a flood predicted by the Weather Bureau as the
    ``Maximum Possible'' and provides for the disposal of all water
    predicted as possible. This unwarranted new Zone X (Shaded) on Flood
    Insurance Rate Maps will have a dramatic and costly burden on all the
    residents, businesses and industries along the Lower Mississippi River
    and its Tributaries and this economic disaster will be felt over this
    entire Nation. The language proposed will frighten Lenders and
    Companies looking for Industrial Sites, impact Crop Loans as well as
    causing millions of dollars to be spent for unnecessary flood insurance
    premiums. This is such a serious matter that we would suggest strongly
    that the appropriate congressional committees hold hearings on this
    matter to determine what if any engineering basis the Federal Emergency
    Management Agency used to develop this new policy.

                                PROPOSED FUNDING

        We support the amount of $500 million requested by the Mississippi
    Valley Flood Control Association for use in the overall Mississippi
    River and Tributaries Project. This is the minimum amount that the
    Executive Committee of the Association feels is necessary to maintain a
    reasonable time line for completion of the overall Mississippi River
    and Tributaries Project. Also, the amounts that have been included in
    the President's budget for the St. Francis Basin Project; construction,
    operation and maintenance have not been sufficient to fund critical
    projects. These declined amounts have resulted in a significant backlog
    of work within the St. Francis Basin. Therefore, our District is
    requesting capabilities of $7 million for the St. Francis Basin Project
    construction funds and $23.475 million for the St. Francis Basin
    operation and maintenance funds. The amounts requested for the St.
    Francis Basin Project are a part of the total amounts requested for the
    Mississippi River and Tributary Appropriations of the Civil Works
    Budget.

                                   SUMMATION

        With the tragedy that struck the Gulf Coast, we must now turn our
    attention to the future and attempt to make certain that at least the
    flooding does not take place again. We can prevent that; the Dutch, the
    English and the Italians have done it and so can we if we treat flood
    control as something that we must do. The citizens of this great Nation
    deserve it.
        There are four anomalies of nature that cause death and destruction
    to our Nation. They are: (1) earthquakes; (2) hurricanes; (3)
    tornadoes; and, (4) floods. The first three we can do very little if
    anything about except to prepare for the worst. We can build protection
    against floods, against the ``maximum probable flood,'' one that has an
    ``improbable occurrence but nevertheless a remotely possible one.''
        In order to provide such protection we believe that three things
    must be done.
        First, the environmental laws, or at least the way they are
    interpreted for flood control projects, must be changed or we stand to
    lose more lives and have another absolute environmental catastrophe
    such as the one we have witnessed in New Orleans and along the Gulf
    Coast. Second, cancel all cost-sharing for flood control projects
    unless we do intend to only protect those that can afford it and ignore
    those that can not. Third, relax the requirements for the benefits-to-
    cost ratio for flood control projects for one reason, it is impossible
    to assign a dollar value to a human life. It is our opinion that these
    things must be done, for without flood control, nothing else really
    matters.
        Again, we thank the Congress and this committee for all your help
    in the past and thank you in advance for your kind considerations of
    our requests for fiscal year 2008.

    ------------------------------------------------------------------------
                        PROJECT AND STATE                      MVFCA REQUEST
    ------------------------------------------------------------------------
    Wappapello Lake, MO.....................................     $14,000,000
    Mississippi River Levees................................      34,538,000
    Mississippi River Channel Maintenance...................      72,549,000
    Memphis Harbor, TN......................................       2,866,000
    Helena Harbor, AR.......................................         563,000
    Greenville Harbor, MS...................................         372,000
    Vicksburg Harbor, MS....................................         445,000
    St. Francis River & Tribs., AR..........................      23,475,000
    White River Backwater, AR...............................       1,440,000
    North Bank, Arkansas River, AR..........................         270,000
    South Bank, Arkansas River, AR..........................         257,000
    Boeuf & Tensas Rivers, LA...............................       7,447,000
    Red River Backwater, LA.................................       5,500,000
    Yazoo Basin, Sardis Lake, MS............................      14,784,000
    Yazoo Basin, Arkabutla Lake, MS.........................       9,975,000
    Yazoo Basin, Enid Lake, MS..............................      10,927,000
    Yazoo Basin, Grenada Lake, MS...........................      11,299,000
    Yazoo Basin, Greenwood, MS..............................       2,438,000
    Yazoo Basin, Yazoo City, MS.............................         694,000
    Yazoo Basin, Main Stem, MS..............................       3,525,000
    Yazoo Basin, Tributaries, MS............................       1,018,000
    Yazoo Basin, Whittington Aux Channel, MS................         191,000
    Yazoo Basin, Big Sunflower, MS..........................       2,196,000
    Yazoo Basin, Yazoo Backwater, MS........................         979,000
    Lower Red River, South Bank, LA.........................          80,000
    Bonnet Carre, LA........................................       4,857,000
    Old River, LA...........................................      21,243,000
    Atchafalaya Basin, LA...................................      28,641,000
    Atchafalaya Basin Floodway, LA..........................       2,609,000
    Baton Rouge Harbor Devil's Swamp, LA....................         717,000
    Mississippi Delta Region, LA............................         225,000
    Bayou Cocodrie & Tribs, LA..............................          41,000
    Inspection of Completed Works...........................       1,987,000
    Mapping.................................................       1,521,000
                                                             ---------------
          TOTAL MR&T MAINTENANCE............................     283,669,000
                                                             ===============
    CONSTRUCTION:
        Surveying and Mapping...............................      16,770,000
        St. John's Bayou-New Madrid Floodway, MO............      13,300,000
        Grand Prairie Region, AR............................      37,800,000
        Bayou Meto, AR......................................      22,450,000
        Nonconnah Creek, TN.................................         500,000
        St. Francis Basin, MO & AR..........................       7,000,000
        Yazoo Basin, MS.....................................      67,125,000
        Atchafalaya Basin, LA...............................      34,000,000
        Atchafalaya Basin Floodway, LA......................      10,894,000
        MS Delta Region, LA.................................         722,000
        Channel Improvements, IL, KY, MO, AR, TN, MS & LA...      64,547,000
        Mississippi River Levees, IL, KY, MO, AR, TN, MS &        98,352,000
         LA.................................................
                                                             ---------------
          SUBTOTAL--CONSTRUCTION............................     356,690,000
          SUBTOTAL--MAINTENANCE.............................     283,669,000
          SUBTOTAL--MISSISSIPPI RIVER & TRIBUTARIES.........     657,129,000
    LESS REDUCTION FOR SAVINGS & SLIPPAGES..................     157,129,000
                                                             ---------------
          GRAND TOTAL--MISSISSIPPI RIVER & TRIBUTARIES......     500,000,000
    ------------------------------------------------------------------------

                                     ______

       Prepared Statement of the Board of Mississippi Levee Commissioners
        Mr. Chairman and members of the committee: This statement is
    prepared by Peter Nimrod, Chief Engineer for the Board of Mississippi
    Levee Commissioners, Greenville, Mississippi, and submitted on behalf
    of the Board and the citizens of the Mississippi Levee District. The
    Board of Mississippi Levee Commissioners is comprised of 7 elected
    commissioners representing the counties of Bolivar, Issaquena, Sharkey,
    Washington, and parts of Humphreys and Warren counties in the Lower
    Yazoo Basin in Mississippi. The Board of Mississippi Levee
    Commissioners is charged with the responsibility of providing
    protection to the Mississippi Delta from flooding of the Mississippi
    River and maintaining major drainage outlets for removing the flood
    waters from the area. These responsibilities are carried out by
    providing the local sponsor requirements for the congressionally
    authorized projects in the Mississippi Levee District. The Mississippi
    Levee Board and the Mississippi Valley Flood Control Association
    support an appropriation of $500 million for fiscal year 2008 for the
    Mississippi River & Tributaries Project. This is the minimum amount
    that we consider necessary to allow for an orderly completion of the
    remaining work in the Valley and to provide for the operation and
    maintenance, as required, to prevent further deterioration of the
    completed flood control and navigation work.
        It is apparent that the administration loses sight of the fact that
    the Mississippi River & Tributaries Project provides protection to the
    Lower Mississippi Valley from waters generated across 41 percent of the
    continental United States. These waters flow from 31 States and 2
    provinces of Canada and must pass through the Lower Mississippi Valley
    on its way to the Gulf of Mexico. We will remind you that the
    Mississippi River & Tributaries Project is one of, if not the most cost
    effective project ever undertaken by the United States Government. The
    foresight of the Congress in their authorization of the many features
    of this project is exemplary.
        The many projects that are part of the Mississippi River &
    Tributaries Project not only provide protection from flooding in the
    area, but the award of construction contracts throughout the Valley
    provides assistance to the overall economy of this area that is also
    encompassed by the Delta Regional Authority. The employment of the
    local workforce and purchases from local vendors by the contractors
    help stabilize the economy in one of the most impoverished areas of our
    country.
        Thanks to the additional funding provided by the Congress over the
    last several years over and above the administration's budget, work on
    the Mainline Mississippi River Levee Enlargement Project is continuing.
    Of the original 69 miles of deficient levees in the Mississippi Levee
    District, 12.7 miles of work has been completed, 19.3 miles are
    currently under contract, and another 7.9 miles will be awarded in
    fiscal year 2008. Right of way has been acquired and the bids for 3.4
    miles of work were opened in November 2005. With the combined crippling
    effect of the elimination of continuing contracts and the restrictions
    on reprogramming authorities, this item was terminated. Of the 19.3
    miles currently under contract, the Corps had to negotiate a work
    ``slow-down'' because of a lack of sufficient funds for the contractor
    to work at full performance. This will push completion of these
    deficient areas out another year! We are requesting $98.35 million for
    construction on the Mainline Mississippi River Levees in the Lower
    Mississippi Valley Division which will allow the Vicksburg and Memphis
    districts to keep existing contracts on schedule and award contracts to
    avoid any future unnecessary delays in completing this vital project.
    We are all well aware that the Valley some day will have to endure a
    Project Flood, we just don't know when. We must be prepared.
        The President's fiscal year 2008 budget did not include funding for
    any construction projects within the Yazoo Basin. These are all
    projects authorized and funded so wisely by the Congress. This action
    is especially difficult to understand during a time when our Nation
    needs an economic boost. All of these projects are encompassed in the
    footprint of the Delta Regional Authority, an area recognized by the
    Congress as requiring special economic assistance to keep pace with the
    rest of our great Nation. We can not lose sight of the fact that all of
    these projects are required to return more than $1 in benefits for each
    $1 spent. No project authorized and funded by the Congress should be
    indiscriminately terminated without the benefit of having the
    opportunity to complete the study process and subsequent construction
    after complying with the Corps Policy and Guidelines.
        The Final Report for the Yazoo Backwater Project will be released
    this year. The Yazoo Backwater Project will provide economic and
    environmental benefits to parts of six counties in the south
    Mississippi Delta. This project will build a pump that will evacuate
    floodwater that is generated over 4,093 square miles in the Mississippi
    Delta. The pump will lower the 100 year flood event by 4.5 feet thereby
    reducing urban and rural structural damages, providing benefits to the
    remaining agricultural lands, and reducing the frequency and duration
    of floods. Reforestation easements will be purchased on up to 55,600
    acres of existing agricultural land which will provide benefits in
    every environmental category--wetlands, terrestrial, aquatics, and
    waterfowl resources as well as vastly improving water quality. The
    recommended plan for the Yazoo Backwater Project will balance economics
    with the environment. This is a model project that should be the
    standard for future public works projects in the United States. We are
    requesting this project be funded by the Congress in the amount of $15
    million. These funds will allow the Corps to begin acquisition of the
    reforestation easements and initiate the award of the pump supply
    contract.
        The Draft Supplemental Environmental Impact Statement for the Big
    Sunflower River Maintenance Project will be released later this year.
    This maintenance project will restore flood control capacities to 130
    miles of channels by removing sediment that has built up over the past
    40 years since the channels were originally improved. Our request for
    $2.196 million will allow right-of-way acquisition to continue and for
    the award of the first dredging contract. The residents in the
    Mississippi Delta continue to suffer damages from flooding while they
    wait for this maintenance project to reach their area.
        Work on the Delta Headwaters Project has proven effective in
    reducing sediments to downstream channels. To discontinue this project
    will only increase sediment in downstream channels diminishing water
    quality, reducing the level of protection to the citizens of the Delta
    and increasing required maintenance. We are requesting $25 million to
    continue this project.
        The Upper Yazoo Project is critical to the Delta. The Corps of
    Engineers operates 4 major flood control reservoirs on the bluff hills
    overlooking the Mississippi Delta. These reservoirs hold back heavy
    spring rains and must have adequate outlet channel capacity to pass
    this excess runoff during the summer and fall months. Without
    completion of the Upper Yazoo Project, the Corps is forced to hold
    flood water from the previous spring, thereby reducing the ability to
    provide protection from the current year's flood water. We urge the
    Congress to provide $22.5 million allowing construction to continue and
    the award of additional channel enlargement items. With this
    appropriation, work can be completed to Glendora which will provide
    relief to Marks, Mississippi.
        Maintenance of completed works cannot be overlooked. The four flood
    control reservoirs overlooking the Delta have been in place for 50
    years and have functioned as designed. Required maintenance must be
    performed to avoid any possibility of failure during a flood event. We
    are asking for $10.875 million for Arkabutla Lake, $15.042 million for
    Sardis Lake, $10.927 million for Enid Lake, and $11.38 million for
    Grenada Lake. Additional funding will be used to place rip rap, add
    needed infrastructure, and repair and upgrade existing infrastructure
    around all the lakes.
        We are requesting $34.5 million for Maintenance of the Mainline
    Mississippi River Levees in the Lower Mississippi Valley Division which
    will provide for repair of levee slides, slope repair, and repair of
    the gravel maintenance roadway which is so vital to access during high
    water.
        I have reviewed a great deal of information regarding the needs of
    providing flood protection to our area. Another major feature of the
    Mississippi River & Tributaries Project relates to navigation interests
    along the Mississippi River. Several of our ports have been informed
    that the President's budget does not include enough funding for
    Critical Harbor Dredging necessary to keep these harbors opened for
    navigation. Our port commissioners have been notified that lack of
    annual dredging will cause these ports to be a hazard to navigation and
    be shut down. This will impact the movement of over 4.5 million tons of
    cargo being shipped on our waterways annually from these ports. This
    equates to an additional 180,000 truck loads per year of products on
    our highways. It is imperative that funding be made available for
    Critical Harbor Dredging to allow continued operation of these
    facilities, which are key features to the economic growth of the
    region.
        The Conference Report for Energy & Water Development Appropriations
    Act, 2006 funded the MR&T Project with $400 million. Unfortunately, the
    Conference Report included detrimental language that has crippled the
    Corps ability to get the MR&T Project done in a timely, efficient, and
    economically feasible way. The Conference Report eliminated the
    Continuing Contracts Clause that allowed the Corps to bid projects
    without all the funding in place before the project starts. This will
    significantly slow down all of our Corps projects. There have been no
    new starts in fiscal year 2006 or fiscal year 2007 for our critical
    Levee Enlargement & Berms Project because of this elimination. The
    Corps has used Continuing Contracts since 1922! The Corps of Engineers
    must be able to utilize Continuing Contracts on the MR&T Project.
        The Conference Report also included Reprogramming Authorities
    restrictions which is limiting the Corps of Engineers ability to shift
    monies within the MR&T Project. Reprogramming Authorities allow money
    to move from one project that is behind schedule to another project
    that is ahead of schedule. The reprogramming authority is now very
    limited. Money is being wasted to ``slow-down'' and stop existing on-
    going work because of the language! The Reprogramming Authority
    restrictions must be relaxed for the MR&T Project in order for the
    Corps of Engineers to make maximum use of appropriations that Congress
    provides.
        In conclusion, the Conference Report for 2006 was a record year for
    funding levels for the MR&T Project. The inclusion of the detrimental
    language of Reprogramming Authority restrictions and the elimination of
    Continuing Contracts Clause has crippled the Corps of Engineers ability
    to wisely spend that money that Congress has so wisely appropriated. We
    must remove this detrimental language in the fiscal year 2008
    appropriations. The President's fiscal year 2008 budget for the MR&T
    Project provides only $260 million which is terribly inadequate and
    will not allow the Corps to proceed in the most economical manner.
        On another note, new policies are being implemented by the Federal
    Emergency Management Agency (FEMA) in their Map Modernization Program.
    A new zone designation will show a shaded ``Zone X'' outside the 100
    year flood zone but protected by levees. The entire Mississippi Delta
    is protected by the levee! An attached ``Warning'' will be on new Flood
    Insurance Rate Maps (FIRM) stating that the levee could fail! This will
    have a dramatic & costly affect to residents, businesses & industries
    along the Lower Mississippi River. New businesses will be frightened to
    build in a ``flood zone.'' Flood insurance rates will increase. Our
    Mainline Mississippi River Levee system has not failed since the Corps
    built the current levee system in 1928! This is a needless and reckless
    act by FEMA as a result of failures on some hurricane protection levees
    in New Orleans in 2005 during Hurricane Katrina.
        As members of the Congress representing the citizens of our Nation
    who live with the Mississippi River everyday, you clearly understand
    both the benefits provided by this resource, and the destructive force
    that must be controlled during a flood. On behalf of the Mississippi
    Levee Board, I cannot express enough, our appreciation for your efforts
    in providing adequate funding over the last several years that has
    allowed construction to continue on our much needed projects and thank
    you in advance for your kind considerations of our requests for fiscal
    year 2008.
                                     ______

               Prepared Statement of the City of Arlington, Texas

        Mr. Chairman and members of the subcommittee: On behalf of the city
    of Arlington, Texas, I am pleased to submit this statement for the
    record in support of our request for funding in the amount of $9.75
    million in the fiscal year 2008 Appropriation Bill for Energy and Water
    Development to support the city's continued efforts to reduce flood
    damage, improve public safety, reduce erosion and sedimentation, and
    enhance wildlife habitat and passive recreation within the Johnson
    Creek corridor through Arlington, Texas.

                           PROJECT EXECUTIVE SUMMARY

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

                              PROJECT DESCRIPTION

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

                                 FUNDING NEEDS

        The modified plan, which includes completed components of the 1999/
    2005 plan and new Johnson Creek projects as described above, has a
    total estimated cost of $79,997,666, of which 35 percent will be
    provided by the city.
        For fiscal year 2008, the city of Arlington, Texas is seeking $9.75
    million from the U.S. Army Corps of Engineers Programs account through
    your Energy and Water Development Appropriations Subcommittee.
        Thank you for your consideration of our request.
                                     ______

                  Prepared Statement of the State of Illinois

        The State of Illinois supports the following projects in the
    administration's fiscal year 2008 budget proposal:

    ------------------------------------------------------------------------
                                                                  Amount
    ------------------------------------------------------------------------
    SURVEYS:
        Illinois River Basin Restoration....................        $400,000
        Great Lakes Navigation System Study.................         800,000
    CONSTRUCTION:
        Chain of Rocks Canal................................       4,500,000
        Chicago Shoreline...................................       9,000,000
        Des Plains River--Phase 1...........................       6,620,000
        East St. Louis Flood Protection Rehab...............       2,500,000
        Illinois Waterway, Lockport Lock & Dam (Dam Safety).      20,445,000
        McCook and Thornton Reservoir.......................      33,500,000
        Miss River Btwn. Ohio & Mo Rivers (Reg. Works)......       2,100,000
        Olmsted Lock & Dam..................................     104,000,000
        Upper Mississippi River Restoration.................      23,464,000
    ------------------------------------------------------------------------

                           OPERATION AND MAINTENANCE

        Illinois supports the Corps' budget for continued satisfactory
    maintenance and operation of navigation, flood control and multipurpose
    projects, as well as adequate manpower for public service activities
    related to the water resources in and bordering the State. Although,
    the administration's budget request contains nearly $142.4 million for
    operation and maintenance for the Corps Districts in Illinois, the
    administration has modified the structure of the O&M account by
    shifting the funding for rehabilitation projects to this account. This
    skews the O&M account funds, and the disaggregated numbers form the
    administration's budget indicate the Corps' future viability and
    commitment to maintain the inland waterway system, water supply and
    recreational reservoirs, and to maintain an operational and forecast
    dependent streamgaging network, can severely be impacted. As an
    example, there is a need for an additional $14.7 million to satisfy
    dredging needs and the backlog of maintenance for the Illinois River
    Waterway. Backlog of maintenance items for the Mississippi River in
    Rock Island and St. Louis Corps Districts is an additional $27.5
    million.
        Illinois also supports the administration's funding to the Corps
    for Lake Michigan diversion accounting. However, we request an
    additional $350,000 for the Corps to ensure that they have adequate
    appropriations to reconvene the Technical Committee for the accounting
    system to fulfill their dual measurement and accounting
    responsibilities.
        Additionally, the contamination in the Inner Harbor area of
    Waukegan Harbor warrants designation of the harbor as an ``Area of
    Concern'' by the International Joint Commission. There is an ongoing
    USEPA Legacy Act project to identify an acceptable disposal site for a
    total clean up of the contaminants in the inner Harbor. The Corps of
    Engineers is a partner in that effort. One million dollars is the
    minimum needed to complete maintenance dredging of the contaminated
    outer harbor shoaling.

                         ADDITIONAL FUNDING PRIORITIES

        The State of Illinois also recommends that additional funding be
    provided for the following projects, which are listed in the general
    priority order, in the fiscal year 2008 Corps of Engineers' budget:
    Chicago Sanitary & Ship Canal Dispersal Barrier
        The State of Illinois has been working closely with the Chicago
    District and other Great Lakes agencies at both the Federal and State
    level to keep Asian Carp from reaching the Great Lakes through the
    Chicago Waterway system. We entered into a Project Cooperation
    Agreement with the Corps to construct a second, more effective and
    permanent electrical barrier in the Chicago Sanitary and Ship Canal
    using the Corps' section 1135 program, and have contributed $1.8
    million in State funds along with $475,000 from the other 7 Great Lakes
    States to match the Corps' contribution. Also, there has been unanimous
    agreement throughout the Great Lakes community that Congress needs to
    authorize and fund the U.S. Army Corps of Engineers to construct,
    operate and maintain a barrier control system. However, for the first
    time since Congress authorized the Corps to construct an aquatic
    nuisance species demonstration barrier in 1990 at 100 percent Federal
    cost, the President's proposed budget is asking the State of Illinois
    to contribute 25 percent of the total cost to make this barrier
    permanent. The President's proposed budget is also requiring the State
    of Illinois to contribute an additional $1,725,000 (this is in addition
    to the $1.8 million Illinois has already contributed along with
    $475,000 from the other 7 Great Lakes States) to allow the Corps to
    complete construction of Barrier II. Finally, this budget requires
    Illinois to fully fund the operation and maintenance of both barriers,
    which the Corps has estimated could run as high as $1.0 million per
    year. Therefore, the State of Illinois urges that the Corps receives
    $1.1 million to start construction on making the demonstration barrier
    permanent, and $6.9 million to complete Phase IIB of the Barrier II
    construction at full Federal expense, and an additional $1.0 million to
    carry out the operation and maintenance of both Dispersal Barrier
    projects annually.
    The Chicago Harbor Lock Rehabilitation
        The Chicago River Lock Rehabilitation is an important project for
    the State of Illinois. It will reduce leakage of Lake Michigan water
    into the Chicago Sanitary and Ship Canal and thus will reduce Illinois'
    Lake Michigan diversion. Reducing leakage at the Chicago River Lock is
    specifically mentioned in the list of activities in the 1996 Memorandum
    of Understanding that Illinois, the other Great Lakes States and the
    U.S. Department of Justice signed to resolve the dispute over Illinois'
    alleged over diversion of Lake Michigan water. As part of the move to
    lakefront diversion accounting, improved control of Lake Michigan water
    used at the Chicago River Lock is essential. This project is also
    needed to ensure the safe operation of the lock itself. This lock is
    the second busiest lock in the country, and while almost all of the
    traffic is recreational, its value and importance to Chicago and the
    State is enormous. Currently, no funding is included in the fiscal year
    2008 budget for this purpose. To rehabilitate the lock in fiscal year
    2008, Illinois requests $7.0 million, which would primarily be used to
    fund the fabrication of two new gates for the west end of the lock.
    Illinois River Basin Restoration
        Section 519 of Water Resources Development Act 2000 authorized the
    Illinois River Basin Restoration. The fiscal year 2008 budget request
    proposes $400,000 in General Investigations funds for a comprehensive
    plan. However, the State of Illinois requests that this be increased to
    $2.0 million in General Investigation funds to complete much of the
    comprehensive plan that has been developed under other authorizations.
    Additionally, the State of Illinois requests $8.5 million of
    Construction General funds to continue construction in fiscal year 2008
    of the projects that were authorized in section 519 as providing
    substantial restoration and environmental benefits through the
    comprehensive plan.
    Des Plaines River--Phase One
        Section 101(b-10) of the Water Resources Development Act of 1999
    authorized Phase I of the Upper Des Plaines River Flood Control Project
    at a total cost of $68.3 million for the implementation of the six
    recommended projects. The Federal share is approximately $44.4 million
    (65 percent) and the estimated non-Federal cost is $23.9 million. While
    $6.6 million is designated to the levee 37 element of this project in
    this year's budget request, we are requesting an additional $3.0
    million in the fiscal year 2008 budget to continue work with the
    remaining elements of the project.
    Upper Mississippi and Illinois Waterway System Navigation Project
        It has been more than 2 years since the Corps completed the
    feasibility phase of the Upper Mississippi and Illinois Waterway System
    Navigation Study, issuing the final feasibility report and Chief's
    Report in 2004. While Congress has not authorized construction yet, it
    has provided funding for Pre-construction, Engineering and Design
    (PED). Thus, Illinois is requesting an appropriation of $24.0 million
    for the Corps of Engineers to continue PED, and if authorized for
    construction, we recommend construction funding of $16.0 million. The
    proposed fiscal year 2008 budget contains no funding for this project.
    Chouteau Island (Ecosystem Restoration)
        The Corps of Engineers, St. Louis District, is continuing the
    feasibility study for ecosystem restoration for the Chouteau Island,
    Illinois, project authorized under section 514 (Missouri and Middle
    Mississippi Rivers Enhancement Project) of the Water Resources
    Development Act of 1999 (Public Law 106-53). The project is focusing on
    ecosystem restoration on IDNR-owned land on Chouteau, Gabaret, and
    Mosenthein Islands in Madison County. Illinois requests an
    appropriation of $150,000 for the Corps of Engineers to complete the
    Feasibility Study and initiate Design for the Chouteau Island,
    Illinois, project. The fiscal year 2008 budget contains no specific
    funding for this project.
    Peoria Riverfront Development
        We request the addition of $250,000 in General Investigations funds
    to finalize the design of the Lower Island of the Peoria Riverfront
    project. The fiscal year 2008 budget contains no funding for this
    purpose. The increase is needed to meet the design and construction
    schedule.
    Des Plaines River Feasibility Study--Phase Two
        An expansion of the Phase I Upper Des Plaines River study was
    authorized in section 419 of the Water Resources Development Act of
    1999. The projected $25,000,000 in average annual damages, which will
    remain in the tributary floodplains of the Des Plaines River after the
    completion of Phase I project construction, is the basis for the
    expanded study of Phase II. State of Illinois, Lake County, Cook
    County, and Kenosha County all have appropriated funds under contract
    for cost sharing in the Phase II study effort. Currently, the fiscal
    year 2008 budget contains no funding to continue the Phase II study
    effort. Illinois requests an appropriation of $500,000 of General
    Investigation funds to continue the feasibility study in fiscal year
    2008.
    East St. Louis & Vicinity (Ecosystem Restoration & Flood Damage
            Protection)
        The Corps of Engineers, St. Louis District, is continuing design of
    the project for ecosystem restoration and flood damage reduction at
    East St. Louis and Vicinity, Illinois (East Side Levee and Sanitary
    District), authorized by section 204 of the Flood Control Act of 27
    October 1965 (Public Law 89-298). The project is focusing on ecosystem
    restoration within the American Bottoms area. The Water Resources
    Development Act of 2000 modified section 204 of the Flood Control Act
    of 1965, to make ecosystem restoration a project purpose. Accordingly,
    ecosystem restoration will be included with the flood control project.
    Illinois requests an appropriation of $700,000 for the Corps of
    Engineers to continue the Pre-Engineering and Design and documentation
    of the East St. Louis and Vicinity Project. Currently, the fiscal year
    2008 budget contains no funding for this purpose.

                              KANKAKEE STATE LINE

        We urge you to include $300,000 to fund the design and
    implementation phase of the State Line Kankakee Aquatic Ecosystem
    Restoration Act Project that was authorized under section 206 of the
    Water Resources Development Act of 1996, as amended. We are concerned
    that the funding level for section 206 Continuing Authorities Projects
    requested in the President's budget for fiscal year 2008 is not
    adequate to insure continuation of this project.
    Wood River Levee
        The Wood River Drainage and Levee District protects an urban and
    industrial area in the Mississippi River flood plain in Madison County,
    Illinois, upstream of the city of East St. Louis. Problems with the
    integrity of the flood protection system were documented during the
    1993 flood including unexpected seepage problems that had to be handled
    as an emergency. The proposed project addresses both design deficiency
    and reconstruction issues. The design deficiency portion of the project
    has been approved; the reconstruction portion requires new
    authorization. The recommended actions are required to maintain the
    system's authorized level of protection. Illinois requests an
    appropriation of $700,000 for the design deficiency portion of the
    project for the Corps of Engineers to execute a Project Cooperation
    Agreement, construct a portion of the relief wells, and continue relief
    well design. The fiscal year 2008 budget contains no funding for this
    project.
    Melvin Price Lock and Dam
        The State of Illinois also requests $750,000 funding for the Corps
    to continue the cost-shared recreation facilities with the city of
    Alton and $2,400,000 to continue design and construction of punch list
    items. The fiscal year 2008 budget contains no funding for this
    project.
    Upper Mississippi River Environmental Management Plan
        Section 509 of the Water Resources Development Act of 1999
    reauthorized the Upper Mississippi River System Environmental
    Management Program (EMP). In its 20 years of existence, the EMP has
    become the most significant effort to restore and protect the natural
    resource values of the Upper Mississippi River. While $23.64 million is
    in this year's budget request, we believe this level of funding is
    below the point that Corps can efficiently continue with the program.
    To pursue this program efficiently, we believe this program should be
    pursued at the reauthorized level of $33.25 million as described in
    section 509 of the Water Resources Development Act of 1999.
    Upper Mississippi River Comprehensive Plan
        Section 459 of the Water Resources Development Act of 1999
    authorized the Upper Mississippi River Comprehensive Plan for the Corps
    to develop a 3-year study to address water resource and related land
    resource problems and opportunities in the Upper Mississippi and
    Illinois River Basins. We are requesting that $686,000 be provided in
    the Corps of Engineers General Investigations funding to advance the
    Upper Mississippi Comprehensive Plan to completion.
    Sections 204, 206, and 1135 Enhancement Projects
        Section 204, 206, and 1135 programs offer a wide range of
    opportunities to address fish and wildlife habitat needs which exist
    due to past Corps projects and ongoing ecosystem and dredging
    activities. The section 206 program provides a proactive tool for
    Federal participation in aquatic ecosystem restoration initiatives
    where the need for the aquatic restoration activity does not have to
    directly relate to a prior Corps sponsored project. The State of
    Illinois strongly urges full funding of these continuing authorities.
                                     ______

    Prepared Statement of the Salt River Pima-Maricopa Indian Community and
                           the City of Mesa, Arizona

        Chairman Dorgan, Ranking Member Domenici, and distinguished members
    of the subcommittee, thank you for allowing us to testify on behalf of
    the Salt River Pima-Maricopa Indian Community (SRPMIC) and the city of
    Mesa in support of a fiscal year 2008 appropriation of $1.6 million for
    the Va Shly'ay Akimel, Arizona, project of the U.S. Army Corps of
    Engineers. This project will restore a degraded stretch of the Salt
    River in central Arizona, and it is critically important to the
    environmental ecosystem for the tribe, the city, and the region.
        Construction of dams on the Salt River has damaged vegetation and
    wetlands along the Salt River basin. The Va Shly'ay Akimel project will
    restore ecosystem functions and value to a 14-mile reach of the river,
    within the Indian Community and the City of Mesa. The restoration
    project will improve approximately 1,487 acres of habitat, including
    883 acres of cottonwood/willow community, 380 acres of mesquite bosque,
    200 acres of wetlands, and 24 acres of Sonoran Desert scrub shrub.
    Restoration of this resource is particularly significant within the
    urban setting because riparian areas in the Southwest represent only 1
    percent of the landscape, yet the survival of 75-90 percent of wildlife
    in the West is dependant on riparian areas. In Arizona, over 90 percent
    of riparian areas have been lost due to impacts from European
    settlement and urbanization.
        Mr. Chairman, because of this subcommittee's efforts, over $4
    million has been appropriated for the feasibility and preconstruction
    engineering and design phases of the Va Shly'ay Akimel project over the
    last 6 fiscal years. We are extremely grateful for the subcommittee's
    ongoing support of the project.
        As a result of this prior funding, substantial progress is being
    made and the work needs to be continued. A Feasibility Study and
    Environmental Impact Study were completed in January 2005, determining
    the preferred plan for environmental restoration. Further project
    accomplishments in fiscal year 2006 and fiscal year 2007 included
    initiation of the design phase, mapping, completion of a value
    engineering study, initiation of Geotech Investigations, and
    preliminary engineering.
        For fiscal year 2008, the Corps has a capability to utilize $1.6
    million for continued PED, but the President's budget proposal only
    includes $658,000 for the project. Therefore, we request that the
    subcommittee will provide this higher level of funding in order to
    contain long-term costs and maintain an optimal project schedule.
        As non-federal sponsors of this project, the SRPMIC and the city of
    Mesa fully recognize the importance of restoring the Salt River's
    environmental integrity as soon as possible. As a consequence, the
    tribe and city are committed to discharging the requisite cost-sharing
    obligations associated with the project at the higher funding level
    next year.
        We also note that, as far as we know, this project is the only one
    in the Nation featuring a joint cost-share agreement between an Indian
    tribe and a local community. This makes it a unique project of the
    Corps of Engineers. We believe that our example of municipal-tribal
    cooperation can serve as a model for future joint projects of tribal
    communities and local governments.
        In conclusion, given the progress thus far, scope, and
    environmental impacts, it is critically important that the Va Shly'ay
    Akimel project remain on an optimal schedule. Again, because the Corps
    has a maximum capability of fully utilizing $1.6 million for continued
    PED on this project in fiscal year 2008, we ask that the subcommittee
    fund that amount.
        Thank you for your favorable consideration.
                                     ______

       Prepared Statement of the Chambers County-Cedar Bayou Navigation
                                District, Texas

        We express full support of the inclusion of the full capability of
    the USACE for fiscal year 2008 for construction of the project to
    deepen and widen Cedar Bayou, Texas.
        President's budget included $0.
        Funds needed in fiscal year 2008--$9,056,000 (Construction
    General).

                             HISTORY AND BACKGROUND

        The Rivers and Harbor Act of 1890 originally authorized navigation
    improvements to Cedar Bayou. The project was reauthorized in 1930 to
    provide a 10-foot deep and 100-foot wide channel from the Houston Ship
    Channel to a point on Cedar Bayou 11 miles above the mouth of the
    bayou. In 1931, a portion of the channel was constructed from the
    Houston Ship Channel to a point about 0.8 miles above the mouth of
    Cedar Bayou, approximately 3.5 miles in length. A study of the project
    in 1971 determined that an extension of the channel to project Mile 3
    would have a favorable benefit-to-cost ratio. This portion of the
    channel was realigned from Mile 0.1 to Mile 0.8 and extended from Mile
    0.8 to Mile 3 in 1975. In October 1985, the portion of the original
    navigation project from project Mile 3 to 11 was deauthorized due to
    the lack of a local sponsor.
        In 1989, the Corps of Engineers, Galveston District completed a
    Reconnaissance Report dated June 1989, which recommended a study for an
    improvement to a 12-foot by 125-foot channel from the Houston Ship
    Channel Mile 3 to Cedar Bayou Mile 11 at the State Highway 146 Bridge.
    The Texas Legislature created the Chambers County-Cedar Bayou
    Navigation District in 1997 as an entity to improve the navigability of
    Cedar Bayou. The district was created to accomplish the purpose of
    Section 59, Article XVI, of the Texas Constitution and has all the
    rights, powers, privileges and authority applicable to Districts
    created under Chapters 60, 62, and 63 of the Water Code--Public Entity.
    The Chambers County-Cedar Bayou Navigation District then became the
    local sponsor for the Cedar Bayou Channel.

                    PROJECT DESCRIPTION AND REAUTHORIZATION

        Cedar Bayou is a small coastal stream, which originates in Liberty
    County, Texas, and meanders through the urban area near the eastern
    portion of the City of Baytown, Texas, before entering Galveston Bay.
    The bayou forms the boundary between Harris County on the west and
    Chambers County on the east. The project was authorized in Section 349
    of the Water Resources Development Act 2000, which authorized a
    navigation improvement of 12 feet deep by 125 feet wide from Mile 2.5
    to Mile 11 on Cedar Bayou. Corps studies have indicated that the
    preferred plan is to widen the channel to 100 feet and deepen it to 10
    feet which is the current plan of action.

                       JUSTIFICATION AND INDUSTRY SUPPORT

        First and foremost, the channel must be improved for safety. The
    channel is the home to a busy barge industry. The most cost-efficient
    and safe method of conveyance is barge transportation. Water
    transportation offers considerable cost savings compared to other
    freight modes (rail is nearly twice as costly and truck nearly 4 times
    higher). In addition, the movement of cargo by barge is environmentally
    friendly. Barges have enormous carrying capacity while consuming less
    energy, due to the fact that a large number of barges can move together
    in a single tow, controlled by only one power unit. The result takes a
    significant number of trucks off of Texas highways. The reduction of
    air emissions by the movement of cargo on barges is a significant
    factor as communities struggle with compliance with the Clean Air Act.
    Several navigation-dependent industries and commercial enterprises have
    been established along the commercially navigable portions of Cedar
    Bayou. Several industries have docks on at the mile markers that would
    be affected by this much-needed improvement. These industries include:
    Reliant Energy, Bayer Corporation, Koppel Steel, CEMEX, U.S. Filter,
    Recovery Services and Dorsett Brothers Concrete, to name a few.

                           PROJECT COSTS AND BENEFITS

        Congress appropriated $100,000 in fiscal year 2001 for the Corps of
    Engineers to conduct the feasibility study to determine the Federal
    interest in this improvement project. The study indicated a benefit to
    cost ratio of the project of 2.8 to 1. The estimated total cost of the
    project is $16.8 million with a Federal share estimated at $11.9
    million and the non-federal sponsor share of approximately $4.9
    million. Total annual benefits are estimated to be $4.8 million, with a
    net benefit of $3 million. Congress thus far has appropriated nearly
    $1.7 million for this project.
        It has also become an important project for the Port of Houston
    Authority--the Nation's busiest port in foreign tonnage. They hope to
    institute a container on barge facility as soon as this project is
    accomplished. We would appreciate the subcommittee's support of the
    required add of the $9,056,000 for construction of this important
    improvement project. The users of the channel deserve to have the
    benefits of a safer, most cost-effective Federal waterway.

                                 CURRENT STATUS

        In July 2006, the project feasibility report was accepted and
    approved by Asst. Secretary of the Army John P. Woodley. The PED will
    be completed early fall this calendar year. The project will then be
    ready for construction. The USACE capability of $9,056,000 for fiscal
    year 2008 represents the total Federal share of construction of the
    project.
                                     ______

      Prepared Statement of the Brazos River Harbor Navigation District,
                                Freeport, Texas

        We express full support of the inclusion in the fiscal year 2008
    budget for the full capability of the USACE of $721,000--General
    Investigation; $11,738,000--O&M.
        President's budget included $721,000--General Investigation;
    $5,735,000 O&M.
        Additional funds needed for fiscal year 2008 $4,003,000--O&M.

                             HISTORY AND BACKGROUND

        Port Freeport is an autonomous governmental entity authorized by an
    act of the Texas Legislature in 1925. It is a deep-draft port, located
    on Texas' central Gulf Coast, approximately 60 miles southwest of
    Houston, and is an important Brazos River Navigation District
    component. The port elevation is 3 to 12 feet above sea level. Port
    Freeport is governed by a board of six commissioners (soon to increase
    to seven) elected by the voters of the Navigation District of Brazoria
    County, which currently encompasses 85 percent of the county. Port
    Freeport land and operations currently include 186 acres of developed
    land and 7,723 acres of undeveloped land, 5 operating berths, a 45-foot
    deep Freeport Harbor Channel and a 70-foot deep sink hole. Future
    expansion includes building a 1,300-acre multi-modal facility, cruise
    terminal and container terminal.
        Port Freeport is conveniently accessible by rail, waterway and
    highway routes. There is direct access to the Gulf Intracoastal
    Waterway, Brazos River Diversion Channel, and, State Highways 36 and
    288. Located just 3 miles from deep water, Port Freeport is one of the
    most accessible ports on the Gulf Coast.

                              PROJECT DESCRIPTION

        The fiscal year 2002 Energy and Water Appropriations signed into
    law included a $100,000 appropriation to allow the United States Army
    Corps of Engineers (USACE) to conduct a reconnaissance study to
    determine the Federal interest in an improvement project for Freeport
    Harbor, Texas. The USACE, in cooperation with the Brazos River Harbor
    Navigation District as the local sponsor, has completed that study. The
    report indicates that ``transportation savings in the form of National
    Economic Development Benefits (NED) appear to substantially exceed the
    cost of project implementation,'' thus confirming ``a strong federal
    interest in conducting the feasibility study of navigation improvements
    at Freeport Harbor.'' Congress has to date appropriated over $2.6
    million for this project.
        Port Freeport has the opportunity to solidify significant new
    business for Texas with this improvement project. In addition, the
    improvement to the environment by taking a huge number of trucks off of
    the road, transporting goods more economically and environmentally
    sensitive by waterborne commerce is infinitely important to the
    community, the State, and the Nation. Moreover, the enhanced safety of
    a wider channel cannot be overstated. The emergence of an LNG facility
    at Port Freeport--a joint venture of Conoco-Philips and Cheniere Energy
    further solidifies the importance of keeping this critical waterway at
    optimum depth and width.

                        ECONOMIC IMPACT OF PORT FREEPORT

        Port Freeport is 13th in foreign tonnage in the United States. It
    is responsible for augmenting the Nation's economy by over $7 billion
    annually and generating over nearly 24,000 jobs in Texas, over 7,000
    direct. It also augments the economy by providing annual State and
    local taxes of over $150,000 and an additional of over $300 million in
    Federal tax revenues. Its chief import commodities are bananas, fresh
    fruit and aggregate while top export commodities are rice and
    chemicals. The port's growth has been staggering in the past decade,
    becoming one of the fastest growing ports on the Gulf Coast. Port
    Freeport's economic impact and its future growth is justification for
    its budding partnership with the Federal Government in this critical
    improvement project.

                         DEFENSE SUPPORT OF OUR NATION

        Port Freeport is a strategic port in times of National Defense of
    our Nation. It houses a critically important petroleum oil reserve--
    Bryan Mound. Its close proximity to State Highways 36 and 288 make it a
    convenient deployment port for Fort Hood. In these unusual times, it is
    important to note the importance of our ports in the defense of our
    Nation and to address the need to keep our Federal waterways open to
    deep-draft navigation.

                         COMMUNITY AND INDUSTRY SUPPORT

        This proposed improvement project has wide community and industry
    support. The safer transit and volume increase capability is an
    appealing and exciting prospect for the users of Freeport Harbor and
    Stauffer Channel. The anticipated positive benefit to cost ratio that
    was indicated from the Corps of Engineers reconnaissance study firmly
    solidified the Federal interest.

             WHAT WE NEED FROM THE SUBCOMMITTEE IN FISCAL YEAR 2008

        The administration's budget included the full Corps capability for
    the continuation of the feasibility study which will be conducted at a
    50/50 Federal Government/local sponsor share. This will keep this
    project on an optimal and most cost-efficient time frame for the
    Federal Government and the local sponsor. We respectfully request that
    the full amount in the administration's budget remain in the Senate
    mark-up. In addition, the Corps capability for maintenance dredging for
    fiscal year 2008 is $11.738 million. The administration budget included
    $5.735 million. We respectfully request the addition of $6,002,000 in
    O&M.
                                     ______

             Prepared Statement of the Red River Valley Association

        Mr. Chairman and members of the committee, I am Wayne Dowd, and
    pleased to represent the Red River Valley Association as its president.
    Our organization was founded in 1925 with the express purpose of
    uniting the citizens of Arkansas, Louisiana, Oklahoma and Texas to
    develop the land and water resources of the Red River Basin, Enclosure
    1.
        The resolutions contained herein were adopted by the Association
    during its 82nd Annual Meeting in Shreveport, Louisiana, on February
    22, 2007, and represent the combined concerns of the citizens of the
    Red River Basin area as they pertain to the goals of the Association.
    Enclosure 2 represents a summary of the projects and funding levels
    supported by the Association.
        The President's budget included $4.871 billion for the civil works
    programs. Even though it is $138 million more than fiscal year 2007 it
    is $458 million less than what Congress appropriated in fiscal year
    2007, $5.329 billion (9 percent reduction). The problem is also how the
    funds are distributed. A few projects received their full ``Corps
    Capability'' to the detriment of many projects that received no
    funding. The $4.871 billion level does not come close to the real needs
    of our Nation. A more realistic funding level to meet the requirements
    for continuing the existing needs of the civil works program is $8
    billion in fiscal year 2008. The traditional civil works programs
    remain at the low, unacceptable level as in past years. These projects
    are the backbone to our Nation's infrastructure for waterways, flood
    prevention, water supply and ecosystem restoration. We remind you that
    civil works projects are a true ``jobs program'' in that up to 85
    percent of project funding is contracted to the private sector; 100
    percent of the construction, as well as much of the architect and
    engineering work. Not only do these projects provide jobs, but provide
    economic development opportunities for our communities to grow and
    prosper, creating permanent jobs.
        There are several policy changes proposed by the administration
    that we have concerns with.
      --Major rehabilitation and endangered species projects were moved
            from the CG account to the O&M account. When you take out these
            major rehab projects the O&M proposed budget is actually less
            than fiscal year 2007. They have ``disguised'' an actual
            reduction in O&M project funding.
      --They also propose to continue using the Inland Waterway Trust Fund
            (ITWF) to fund 50 percent of the major rehab projects that were
            moved to O&M. The IWTF was authorized for CG projects, not O&M.
            If this is allowed, it will then be easy to recommend that all
            O&M funding be taken from the IWTF and this can never be
            allowed to happen.
      --Another proposal allocates O&M funding by region and eliminates
            funding by individual project. We do not accept this concept
            since you will loose ownership and identity of each project;
            therefore, losing grass root support. If this was done, due to
            reprogramming constraints, then reprogramming should be
            addressed. Major reprogramming issues are with CG projects, not
            with O&M projects.
        We have great concerns over the issue of ``earmarks''. Civil Works
    projects are not earmarks! Civil Works projects go through a process;
    reconnaissance study, feasibility study, benefit-to-cost ratio test,
    EIS, peer review, review by agencies, public review and comment, final
    Chief of Engineer approval, authorization by all of Congress in a WRDA
    bill and signed by the President. Soon they may be subject to
    independent review. No other Federal program goes through such a
    rigorous approval process. Each justified project ``stands alone'', are
    proven to be of national interest and should be funded by project. For
    most projects there is local sponsor cost sharing during the
    feasibility study, construction and for O&M. Those who have
    contributed, in most cases--millions of dollars--to the process, must
    have the ability to have a say for their projects to get funded. That
    voice is through their congressional delegation. If Congress provides a
    lump sum appropriation, to the Corps, for GI, CG and O&M, who will
    decide what gets funded? The answer is OMB and the administration.
    Congress will have given up its responsibility to provide a national
    budget. We believe that earmarks are not in the national interest, but
    it does not pertain to the civil works program. For civil works it is
    an issue of priorities and who will determine that, OMB or Congress! We
    hope Congress keeps their responsibility to set civil works priorities.
        We want to express our concern for ``fully funded'' contracts. In
    our fiscal year 2007 testimony we addressed this concern stating: ``It
    is possible that the Corps will have a carryover that exceeds $1
    billion.'' In fact the Corps had a $1.4 billion carryover. Our fear
    became reality and will grow to $3 billion at the end of fiscal year
    2007 if this policy is not changed. Hundreds of projects are neglected
    that could be funded each year and will drastically increase in cost
    when actually done. This is a true waste of Federal funds and unfair to
    local sponsors who also share the increase in cost. Another serious
    consequence is that it neglects the workload distribution of Corps
    Districts. Are we prepared to consolidate and close down Districts that
    do not have the workload to support their current workforce?
        The inland waterway tributary rivers continue to face scrutiny on
    what determines a successful waterway. This has an impact on the
    operations and maintenance funding a waterway receives. Using criteria
    that only considers tons, actually moved on the waterway, neglects the
    main benefit that justified the original waterway project,
    transportation cost savings. Currently there is no criteria used to
    consider ``water compelled rates'' (competition with rail). We know
    that there are industries not using our waterway because rail rates
    were reduced, to match the waterborne rates, the same year our waterway
    became operational. If the operation of our waterway were terminated
    the rail rates would increase. Many industries have experienced great
    ``national'' transportation savings without using the waterway, which
    is why the project was authorized.
        The main problem is that there is no ``post-project'' evaluation
    for navigation projects. We support the development of such an
    evaluation and volunteer the J. Bennett Johnston Waterway and our
    efforts to develop one. Such an evaluation could be made once every 5
    years to insure the waterway continues to meet the determined criteria.
    We also believe any evaluation adopted must have input from and be
    validated by the administration, Congress and industry. Too much money
    has been expended to use an evaluation that is unfair and disregards
    the true benefits realized from these waterway projects.
        I would now like to comment on some of our specific requests for
    the future economic well being of the citizens residing in the four
    State Red River Basin regions.
        Navigation.--The J. Bennett Johnston Waterway is living up to the
    expectations of the benefits projected. We are extremely proud of our
    public ports, municipalities and State agencies that have created this
    success. This upward ``trend'' in usage will continue as new industries
    commence operations. At the Port of Shreveport-Bossier ``Steelscape''
    became operational in April 2006 processing steel, eventually employing
    250 people and moving 500,000 tons per year on the Waterway. A major
    power company, CLECO, is investing $1 billion in its Rodemacher Plant
    near Boyce, Louisiana, on the lower Red River and is expected to move
    over 3 million tons of Coal and ``petroleum coke'', by the Waterway, in
    2009. These projects are a reality and there are many more customers
    considering using our Waterway.
        You are reminded that the Waterway is not complete; 6 percent
    remains to be constructed, $121 million. We appreciate Congress's
    appropriation level in fiscal year 2006 of $13 million; however, the
    President's fiscal year 2007 budget drastically cuts that to $1.5
    million, which is unacceptable. There is a capability for $19.5 million
    of work, but we realistically request $12 million to keep the project
    moving toward completion.
        Now that the J. Bennett Johnston Waterway is reliable year round we
    must address efficiency. Presently a 9-foot draft is authorized for the
    J. Bennett Johnston Waterway. All waterways below Cairo, Illinois are
    authorized at 12-foot, to include the Mississippi River, Atchafalaya
    River, Arkansas River and Gulf Intracoastal Waterway. A 12-foot channel
    would allow an additional one-third capacity, per barge, which will
    greatly increase the efficiency of our Waterway and further reduce
    transportation rates. This one action would have the greatest, positive
    impact to reduce rates and increase competition, bringing more
    industries to use waterborne transportation. We request a 1-year
    reconnaissance study be funded to evaluate this proposal, at a cost of
    $100,000. Fact: approximately 95 percent is already at 12-foot year
    round.
        The feasibility study to continue navigation from Shreveport-
    Bossier City, Louisiana, into the State of Arkansas will be completed
    in calendar year 2007. There is great optimism that the study will
    recommend a favorable project; however, the administration must
    consider the benefit analysis by modern day criteria, not by 25-year-
    old standards. Benefit analysis is by administration policy and they
    can consider externality benefits that impact society today. This
    region of SW Arkansas and NE Texas continues to suffer major
    unemployment and this navigation project, although not the total
    solution will help revitalize the economy. We request funding of
    $400,000 to initiate planning, engineering and design, PED.
        Flood Prevention.--The recent events in New Orleans have
    demonstrated what will happen when we ignore our levee systems. We know
    the Red River levees in Arkansas do not meet Federal standards, which
    is why we have the authorized project, ``Red River Below Denison Dam,
    TX, AR & LA''. Now is the time to bring these levees up to standards,
    before a major flood event, which will occur.
        We continue to consider flood control a major objective and request
    you continue funding the levee rehabilitation projects ongoing in
    Arkansas. Five of 11 levee sections have been completed and brought to
    Federal standards. Appropriations of $5 million will construct one more
    levee section in Lafayette County, AR.
        The levees in Louisiana have been incorporated into the Federal
    system; however, they do not meet current safety standards. These
    levees do not have a gravel surface roadway, threatening their
    integrity during times of flooding. It is essential for personnel to
    traverse the levees during a flood to inspect them for problems.
    Without the gravel surface the vehicles will cause rutting, which can
    create conditions for the levees to fail. A gravel surface will insure
    inspection personnel can check the levees during the saturated
    conditions of a flood. Funding has been appropriated in the past and
    approximately 50 miles of levees in the Natchitoches Levee District
    were completed this year. We request $2 million to continue this
    important project in Louisiana.
        Bank Stabilization.--One of the most important, continuing
    programs, on the Red River is bank stabilization in Arkansas and North
    Louisiana. We must stop the loss of valuable farmland that erodes down
    the river and interferes with the navigation channel. In addition to
    the loss of farmland is the threat to public utilities such as roads,
    electric power lines and bridges; as well as increased dredging cost in
    the navigable waterway in Louisiana. These bank stabilization projects
    are compatible with subsequent navigation into Arkansas and we urge
    that they be continued in those locations designated by the Corps of
    Engineers to be the areas of highest priority. We appreciated the
    congressional funding in past fiscal years and request you fund this
    project at a level of $6 million in fiscal year 2008.
        Water Quality.--Nearly 3,500 tons of natural salts, primarily
    sodium chloride, enter the upper reaches of the Red River each day,
    rendering downstream waters unusable for most purposes. The Truscott
    Brine Lake project, which is located on the South Fork of the Wichita
    River in King and Knox Counties, Texas became operational in 1987. An
    independent panel of experts found that the project not only continues
    to perform beyond design expectations in providing cleaner water, but
    also has an exceptionally favorable benefit-to-cost ratio.
        The Assistant Secretary of the Army (Civil Works), in October 1998,
    agreed to support a re-evaluation of the Wichita River Basin tributary
    of the project. The re-evaluation report was completed and the Director
    of Civil Works signed the Environmental Record of Decision. The plan
    was found to be economically justified. This year the ASA (CW) directed
    that construction would not proceed until a local sponsor was found to
    assume 100 percent of the O&M for the project. This is based on a
    policy decision, although legal decisions state otherwise. We strongly
    disagree with this position, since the current local sponsor signed a
    cooperation agreement that did not include responsibility for O&M, no
    project documents require this and the project truly benefits four
    States, which makes it unreasonable to place the O&M burden on one
    local sponsor. Since 1987 the Federal Government has funded over $1.5
    million per year for O&M. Completion of this project will reclaim Lake
    Kemp as a usable water source for the City of Wichita Falls, Sheppard
    AFB and the region. This project will provide improved water quality
    throughout the four States of the Red River providing the opportunity
    to use surface water and reduce dependency on ground water. We request
    appropriations of $2,500,000 to continue the Wichita River features in
    Texas.
        Over the past year there has been a renewed interest by the Lugart-
    Altus Irrigation District to evaluate construction of Area VI, of the
    Chloride Control Project, in Oklahoma. They have obtained the support
    of many State and Federal legislators, as well as a letter from the
    Oklahoma Governor in support of a re-evaluation report. We request an
    appropriation of $1,625,000 to continue with this effort. Total request
    for the Chloride Control Project.--$4,125,000.
        Water Supply.--Lake Kemp, just west of Wichita Falls, TX, is a
    major water supply for the needs of this region. Due to siltation the
    available storage of water has been impacted. A reallocation study is
    needed to determine water distribution needs and raising the
    conservation pool. Total O&M of $892,000 is requested for fiscal year
    2008 ($210,000 is required for the base annual O&M, $467,000 for the
    study and $215,000 for backlog grouting & dam repair).
        Operation & Maintenance.--Full O&M capability levels are not only
    important for our Waterway project but for all our Corps projects and
    flood control lakes. The backlog of critical maintenance only becomes
    worse and more expensive with time. We urge you to appropriate funding
    to address this serious issue at the expressed full Corps capability.
        We are sincerely grateful to you for the past support you have
    provided our projects. We hope that we can count on you again to fund
    our needs and complete the projects started that will help us diversify
    our economy and create the jobs so badly needed by our citizens. We
    have included a summary of our requests for easy reference, Enclosure
    2.
        Thank you for the opportunity to present this testimony and project
    details of the Red River Valley Association on behalf of the
    industries, organizations, municipalities and citizens we represent
    throughout the four State Red River Valley region. The Civil Works
    program directly relates to national security by investing in economic
    infrastructure. If waterways are closed companies will not relocate to
    other parts of the country--they will move over seas. If we do not
    invest now there will be a negative impact on our ability to compete in
    the world market threatening our national security.
                   enclosure 1.--red river valley association
        The Red River Valley Association is a voluntary group of citizens
    bonded together to advance the economic development and future well
    being of the citizens of the four-State Red River Basin area in
    Arkansas, Louisiana, Oklahoma and Texas.
        For the past 81 years, the Association has done notable work in the
    support and advancement of programs to develop the land and water
    resources of the Valley to the beneficial use of all the people. To
    this end, the Red River Valley Association offers its full support and
    assistance to the various Port Authorities, Chambers of Commerce, Levee
    and Drainage Districts, Industry, Municipalities and other local
    governing entities in developing the area along the Red River.
        The Resolutions contained herein were adopted by the Association
    during its 82nd Annual Meeting in Shreveport, Louisiana on February 22,
    2007, and represent the combined concerns of the citizens of the Red
    River Basin area as they pertain to the goals of the Association,
    specifically:
      --Economic and Community Development;
      --Environmental Restoration;
      --Flood Control;
      --Bank Stabilization;
      --A Clean Water Supply for Municipal, Industrial and Agricultural
            Uses;
      --Hydroelectric Power Generation;
      --Recreation; and,
      --Navigation.
        The Red River Valley Association is aware of the constraints on the
    Federal budget, and has kept those constraints in mind as these
    resolutions were adopted. Therefore, and because of the far-reaching
    regional and national benefits addressed by the various projects
    covered in the resolutions, we urge the members of Congress to review
    the materials contained herein and give serious consideration to
    funding the projects at the levels requested.

                        RED RIVER VALLEY ASSOCIATION FISCAL YEAR 2008 APPROPRIATIONS--CIVIL WORKS
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                  Fiscal Year  Fiscal Year   President   RRVA Fiscal
                                                                      2006         2007     Fiscal Year   Year 2008
                                                                    Approp.      Approp.    2008 Budget    Request
    ----------------------------------------------------------------------------------------------------------------
    Studies (GI):
        Navigation into SW Arkansas: Feasibility................          150  ...........  ...........          400
        Red River Waterway, LA--12 Channel, Recon...............  ...........  ...........  ...........          100
        Bossier Parish, LA......................................           75  ...........  ...........          300
        Cross Lake, LA Water Supply Supplement..................           99  ...........  ...........          384
        SE Oklahoma Water Resource Study: Feasibility...........           40  ...........  ...........          300
        SW Arkansas Ecosystem Restoration: Recon Study..........          100  ...........  ...........          200
        Cypress Valley Watershed, TX............................  ...........  ...........  ...........          100
        Sulphur River Basin, TX.................................          152  ...........  ...........        1,000
        Washita River Basin, OK.................................  ...........  ...........  ...........          250
        Mangum Lake, OK.........................................  ...........  ...........  ...........  ...........
        Wichita River Basin, TX, Watershed Rehab: Recon.........           50  ...........  ...........          100
        Red River Above Denison Dam, TX & OK: Recon.............  ...........  ...........  ...........          100
        Red River Waterway, Index, AR to Denison Dam............  ...........  ...........  ...........  ...........
        Mountain Fork River Watershed, OK & AR, Recon...........  ...........  ...........  ...........  ...........
    Construction General (CG):
        Red River Waterway:
            J. Bennett Johnston Waterway, LA....................       13,000  ...........        1,500       12,000
            Index to Denison Reach, Bendway Weir Demo (Note.--    ...........  ...........  ...........  ...........
             Need language for full federal funded).............
        Chloride Control Project, TX & OK.......................        1,500  ...........  ...........        4,125
            Wichita River, TX...................................        1,125  ...........  ...........        2,500
            Area VI, OK.........................................          375  ...........  ...........        1,625
        Red River Below Denison Dam; AR & LA:
            AR & LA Levee Rehabilitation........................        3,000  ...........  ...........        5,000
            Bowie County Levee, TX..............................  ...........  ...........  ...........  ...........
        Red River Emergency Bank Protection.....................        3,200  ...........  ...........        6,000
        Big Cypress Valley Watershed, TX: Section 1135..........          530  ...........  ...........          500
        Palo Duro Creek, Canyon, TX: Section 205................  ...........  ...........  ...........          200
        Millwood, Grassy Lake, AR: Section 1135.................          100  ...........  ...........          350
        Little River County/Ogden Levee, AR, PED................  ...........  ...........  ...........          300
        McKinney Bayou, AR, PED.................................  ...........  ...........  ...........  ...........
    Operation and Maintenance (O&M):
        J. Bennett Johnston Waterway, LA........................       11,804  ...........       10,431       14,000
        Lake Kemp, TX--Total Need...............................  ...........  ...........  ...........          892
            Basic Annual O&M....................................  ...........  ...........  ...........          210
            Reallocation Study..................................  ...........  ...........  ...........          467
            Dam Repair/Grouting.................................  ...........  ...........  ...........          215
        Lake Texoma, TX & OK--Total Need........................  ...........  ...........  ...........        9,587
            Basic Annual O&M....................................  ...........  ...........  ...........        7,087
            Suppl. EIS..........................................  ...........  ...........  ...........          500
            Backlog Maintenance.................................  ...........  ...........  ...........        2,000
    ----------------------------------------------------------------------------------------------------------------
    NOTE.--Due to Continuing Resolution (CR)--Rules and funding levels for fiscal year 2007 are not known for this
      submission.

                                     ______

      Prepared Statement of the Riverside County Flood Control and Water
                             Conservation District

           FISCAL YEAR 2008 WATER RESOURCES DEVELOPMENT APPROPRIATIONS
    ------------------------------------------------------------------------
                             PROJECT                              REQUEST
    ------------------------------------------------------------------------
    MURRIETA CREEK FLOOD CONTROL PROJECT: Construction           $13,000,000
     General................................................
    HEACOCK AND CACTUS CHANNELS: Special Authorization under      16,000,000
     WRDA...................................................
    FUNDING FOR CERTIFICATION OF CORPS LEVEES: Inspection of         ( \1\ )
     Completed Works........................................
    NORCO BLUFFS BANK STABILIZATION PROJECT: Construction          1,000,000
     General................................................
    SAN JACINTO & UPPER SANTA MARGARITA RIVER WATERSHEDS             532,000
     SPECIAL AREA MANAGEMENT PLAN (SAMP): General
     Investigations.........................................
    SANTA ANA RIVER--MAINSTEM: Construction General.........      67,840,000
    ------------------------------------------------------------------------
    \1\ To be determined.

    riverside county flood control and water conservation district board of
     supervisors resolution no. f2007-01 supporting federal appropriations
                for flood control projects for fiscal year 2008
        WHEREAS, the United States House of Representatives Committee on
    Appropriations, Subcommittee on Energy and Water Development, and the
    United States Senate Committee on Appropriations, Subcommittee on
    Energy and Water Development are holding hearings to consider
    appropriations for Flood Control and Reclamation Projects for fiscal
    year 2008 and have requested written testimony to be submitted to the
    committees during March 2007; and
        WHEREAS, the Riverside County Flood Control and Water Conservation
    District supports the continuation of construction efforts on the
    critical flood control project on Murrieta Creek; the furtherance of
    construction activities on the Santa Ana River Mainstem project,
    including Prado Dam; the establishment of Special Legislation
    addressing the design and construction of the Heacock and Cactus
    Channels providing flood protection to March Air Reserve Base; the
    repair and completion of the Norco Bluffs Bank Stabilization Project:
    the establishment of a National Policy addressing the certification of
    Corps constructed levees, and the continuation of Corps efforts in
    completing the Special Area Management Plan for the San Jacinto and
    Santa Margarita River Watersheds; now, therefore,
        BE IT RESOLVED by the Board of Supervisors of the Riverside County
    Flood Control and Water Conservation District in regular session
    assembled on February 6, 2007 that they support appropriations by
    Congress for fiscal year 2008 for the following projects:

                          U.S. ARMY CORPS OF ENGINEERS
    ------------------------------------------------------------------------
                             PROJECT                              REQUEST
    ------------------------------------------------------------------------
    Murrieta Creek Flood Control,Environmental restoration       $13,000,000
     and Recreation Project: Construction--General..........
    Heacock and Cactus Channels (MARB): Special Legislation.      16,000,000
    Norco Bluffs Bank Stabilization Project: Construction--        1,000,000
     General................................................
    Certification of Corps Constructed Levees: National              ( \1\ )
     Policy.................................................
    San Jacinto & Upper Santa Margarita River Watersheds             532,000
     (Riverside County): Special Area Management Plan (SAMP)
    Santa Ana River Mainstem: Construction--General.........      96,500,000
    ------------------------------------------------------------------------
    \1\ To be determined.

        BE IT FURTHER RESOLVED that the General Manager-Chief Engineer is
    directed to distribute certified copies of this resolution to the
    Secretary of the Army, Members of the House of Representatives
    Committee on Appropriations and Subcommittee on Energy and Water
    Development, the Senate Committee on Appropriations and Subcommittee on
    Energy and Water Development, and the District's Congressional
    Delegation--Senators Dianne Feinstein and Barbara Boxer, Congressmen
    Ken Calvert and Darrell Issa, and Congresswoman Mary Bono.

    MURRIETA CREEK FLOOD CONTROL, ENVIRONMENTAL RESTORATION AND RECREATION
                                    PROJECT

        Murrieta Creek poses a severe flood threat to the cities of
    Murrieta and Temecula. Overflow flooding from the undersized creek with
    a tributary watershed area of over 220 square miles has periodically
    wreaked havoc on the communities--most recently in 1993 when nearly $20
    million in damages was incurred by the public and private sectors. As
    the area continues to develop, the potential damages (direct and
    indirect) will only continue to increase. In 1997 the U.S. Army Corps
    of Engineers initiated studies on the Creek. The final outcome of this
    endeavor was congressional authorization in 2000 of the $90 million,
    multifaceted project known as the Murrieta Creek Flood Control,
    Environmental Restoration and Recreation Project.
        This project is being designed and will be constructed in four
    distinct phases. Phases 1 and 2 include channel improvements through
    the city of Temecula. Phase 3 involves the construction of a 250-acre
    detention basin, including 160 acres of new environmental habitat and
    over 50 acres of recreational facilities. Phase 4 will include channel
    improvements through the city of Murrieta. Equestrian, bicycle and
    hiking trails as well as a continuous vegetated habitat corridor for
    wildlife are components of the entire 7-mile long project.
        The Omnibus Appropriations Bill for fiscal year 2003 provided $1
    million for a new construction start for this critical public safety
    project and construction activities commenced in the fall of 2003 on
    Phase 1. Appropriations for fiscal year 2004 and additional funds
    allocated allowed the Corps to continue construction on Phase 1, which
    was completed in December 2004. Phase 2 traverses Old Town Temecula,
    one of the hardest hit areas during the flooding of 1993. The Corps
    anticipates having a Phase 2 construction contract ready to award in
    the winter of 2007. The District, therefore, respectfully requests the
    committee's support of a $13,000,000 appropriation in fiscal year 2008
    to allow the Corps to complete the Design Documentation Report, and
    initiate construction on Phase 2 of the long awaited Murrieta Creek
    Flood Control, Environmental Restoration and Recreation Project.

       HEACOCK AND CACTUS CHANNELS--PROTECTION OF MARCH AIR RESERVE BASE

        Heacock and Cactus Channels are undersized, earthen channels that
    border the eastern and northern boundary of the March Air Reserve Base
    (MARB). Substantial vegetation becomes established within both channels
    and impedes the conveyance of tributary storm flows to an existing
    outlet located downstream. Storm flows overtop the Cactus Channel and
    traverse MARB causing major disruption of the Base's operation,
    including the fueling of airplanes and transport of troops and
    supplies. The record rainfall of 2004/2005 also caused extensive
    erosion along Heacock Avenue jeopardizing existing utilities within the
    road right of way and cutting off access to approximately 700
    residences within the city of Moreno Valley.
        Under section 205 of the Continuing Authorities Program (CAP), the
    Corps received $100,000 in fiscal year 2005 and completed an Initial
    Appraisal Report which determined the feasibility of proceeding with a
    project to provide flood protection to this sensitive area. With the
    $546,000 received in fiscal year 2006 the Corps completed a Project
    Management Plan, executed a Feasibility Cost Sharing Agreement and is
    nearing completion of the Feasibility Study. However, this study found
    that MARB would receive approximately 85 percent of the benefits from
    constructing this project making the use of section 205 funds
    inappropriate. Therefore, the project will require Special
    Authorization under WRDA to approve and authorize the project and
    appropriate the $16,000,000 needed to provide flood protection to the
    base.
        The District requests support from the Committee for Special
    Authorization under WRDA approving the project and authorizing
    appropriations of $16,000,000 to complete the design and construct the
    project providing this critical military installation flood protection.

                   CERTIFICATION OF CORPS CONSTRUCTED LEVEES

        As part of the Federal Emergency Management Agency's (FEMA) Map
    Modernization Program, the District, as well as all other agencies,
    cities and counties in the Nation are being required to provide
    certification of the reliability of all levee structures providing
    flood protection to our citizens. Many of these projects were
    constructed by the U.S. Army Corps of Engineers and in these cases,
    FEMA is requesting that the certification be provided by the Corps.
    Certification involves an extensive amount of geotechnical analysis,
    including field and lab material testing, slope stability and seepage
    checks, hydrologic and hydraulic verification and other costly and time
    consuming activities, as well as the review of operation and
    maintenance records. These projects have an established Federal
    interest. Therefore, a National Policy needs to be established
    addressing the need for these federally constructed projects to be
    certified by the Corps and authorizing the Corps to perform the
    required analysis. Furthermore, the Corps should also be authorized to
    provide Federal assistance for design and construction costs associated
    with any necessary rehabilitation, repair or reconstruction of projects
    that are found not to meet the CFR 65.10 FEMA criteria. Non-conforming
    levees put the public at risk and should be a Federal priority. Within
    our District, there are three Corps constructed levees requiring this
    Federal certification: Santa Ana River Levees constructed in 1958,
    Chino Canyon Levee constructed in 1972 and San Jacinto River Levee
    constructed in 1982.
        The District requests support from the committee for the
    establishment of a National Policy addressing this issue and the
    authorization and funding needed for the Corps to meet its obligations
    to the numerous local sponsors of federally constructed levees
    throughout the country. The Los Angeles District needs an appropriation
    of $3,000,000 for fiscal year 2008 under the Inspection of Completed
    Works--CA Operations and Maintenance Appropriation 3123 to accomplish
    the needed certification work.

                    NORCO BLUFFS BANK STABILIZATION PROJECT

        The Norco Bluffs Bank Stabilization project consists of a soil
    cement toe protection structure constructed to the 100-year flood level
    at the base of the bluff, and a stable earthen buttress fill
    constructed to the top of the bluff along the Santa Ana River, in the
    city of Norco. The bluff stabilization work extends easterly from the
    Interstate 15 bridge to near Center Avenue. The estimated total cost of
    the project was approximately $14 million. The Corps received a total
    of $7.2 million in construction funds in the fiscal year 1998, fiscal
    year 1999 and fiscal year 2000 Federal budgets for the project. Since
    the available Federal funding fell short of that necessary to construct
    the entire project at once, the project was broken into two phases and
    Phase 1 was completed in May 2000. This included a soil cement toe
    protection structure along the entire length of the project, as well as
    construction of approximately 1,300 feet of buttress fill in the most
    critical reach of the bluffs, between Valley View and Corona Avenues.
    The Phase 2 contract involved the construction of the balance of the
    buttress fill and construction of most of Phase 2 was completed in
    December 2003, with the exception of hydroseeding the slopes, which was
    deferred until the appropriate season to ensure successful
    establishment of the native vegetation. Unfortunately, the record
    rainfall of the 2004/2005 season caused damages to the project that
    must be repaired in order to complete the project.
        The District requests support from the committee for a fiscal year
    2008 appropriation of $1,000,000 to complete the repairs, hydroseed the
    slopes and turn the project over to the District.

                           SANTA ANA RIVER--MAINSTEM

        The Water Resources Development Act of 1986 (Public Law 99-662)
    authorized the Santa Ana River--All River project that includes
    improvements and various mitigation features as set forth in the Chief
    of Engineers' Report to the Secretary of the Army. The Boards of
    Supervisors of Orange, Riverside and San Bernardino Counties continue
    to support this critical project as stated in past resolutions to
    Congress.
        For fiscal year 2008, an appropriation of $67,840,000 is necessary
    to provide funding for the following activities: $20,000,000 for Reach
    9 of the Santa Ana River immediately downstream of Prado Dam,
    $2,840,000 for the Seven Oaks Dam project and $45,000,000 for Prado
    Dam.
        The District respectfully requests that the committee support an
    overall $67,840,000 appropriation of Federal funding for fiscal year
    2008 for the Santa Ana River Mainstem Project.
                                     ______

         Prepared Statement of the Sacramento Area Flood Control Agency

        Dear Mr. Chairman and members of the subcommittee: On behalf of the
    Sacramento Area Flood Control Agency (SAFCA), its member agencies and
    the millions of people that may be directly or indirectly impacted by
    floods in Sacramento, we extend our sincere appreciation to the
    committee for the past consideration and support extended to the
    ongoing local, State and Federal effort to reduce flood risk in the
    Capital of California.
        According to the U.S. Army Corps of Engineers (Corps), Sacramento's
    flood risk continues to be the highest of major urban areas in the
    country. Located at the confluence of the Sacramento and American
    Rivers, the Sacramento floodplain contains 165,000 homes, over 488,000
    residents, 1,300 government facilities including the State Capital, and
    businesses providing 200,000 jobs. It is the hub of a 6-county regional
    economy that provides 800,000 jobs for 1.5 million people. A major
    flood along the American River or the Sacramento River would cripple
    this economy, cause between $7.0 billion and $16.0 billion in direct
    property damages and likely result in significant loss of life.
        The devastating flood of February 1986 revealed that Sacramento's
    defenses provided less than 100-year flood protection, far less than
    previously thought. SAFCA was created in 1989 to work with the Corps
    and the State to improve the Sacramento region's flood protection as
    rapidly as possible. Much progress has been made since then, with a
    combined investment of over $428 million in levee improvements,
    reservoir operations, and floodplain restoration. Nevertheless, much
    remains to be done. In collaboration with the Corps and the State,
    SAFCA is pursuing completion of levee improvements needed to achieve
    the minimum 100-year level of flood protection, while advancing
    measures which will lead to better than 200-year flood protection over
    the next decade.
        SAFCA's Federal fiscal year 2008 Federal budget requests are shown
    in order of priority in Table 1. Consistent with previous years'
    requests, SAFCA top priority is achieving 100-year level flood
    protection for the Sacramento area. While this goal has now been
    achieved for most of the community, work along the tributaries of
    Morrison Creek needs to move forward at Corps capability to achieve
    this level of protection for about 6,000 residential properties (about
    16,000 people). Therefore the South Sacramento Streams Group Project
    remains the top priority.
        The American River Common Features Project needs to continue at
    capability as well, to complete project elements needed to safely
    convey 160,000 cfs in the Lower American River.
        The Folsom Dam Joint Federal Project relies on the authority of the
    Folsom Dam Modifications Project and Reclamation's Dam Safety Program
    for the construction of an auxiliary spillway on the south abutment of
    the dam. This is the cornerstone of Sacramento's 200-year flood
    program, for which planning and design need to proceed at Corps
    capability levels. SAFCA supports the continuing planning for up to a
    3.5 foot raise of Folsom Dam embankments, as well as construction of
    the Folsom Dam Bridge through fiscal year 2008.

                               TABLE 1.--FEDERAL FISCAL YEAR 2008 APPROPRIATIONS REQUESTS
                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                       Proposed 2008    SAFCA 2008
                                 PROJECT                              Federal Budget    Request Feb      Requested
                                                                         Feb 2007          2007          Increase
    ----------------------------------------------------------------------------------------------------------------
    South Sacramento Streams Group: Construct levee and channel                8.000          11.000           3.000
     improvements to prevent flooding in south Sacramento where
     floodwaters from four creeks threaten 100,000 residents........
    American River Common Features: Raise and reinforce levees to             12.000          34.800          22.800
     assure 100-year flood protection for the urban Sacramento area
     from the American and Sacramento Rivers........................
    Folsom Dam Outlet Modifications: Enlarge and retrofit Folsom Dam           6.000           6.000  ..............
     outlet gates to more efficiently manage flood storage in Folsom
     Reservoir......................................................
    American River Plan (Folsom Dam Mini-Raise): Continue design of            4.500           5.000           1.500
     the Folsom Mini-Raise..........................................
    American River Plan (Folsom Dam Mini-Raise, Bridge Component):            14.000          46.700          31.700
     Construct permanent bridge to replace the Folsom Dam Road......
    Natomas Phase I Reimbursement: Previously appropriated funds,     ..............           4.500           4.500
     not yet received by SAFCA for federally authorized and
     completed work on the North Area Local Project.................
    Sacramento River Bank Protection: Repair critical erosion sites           21.528          64.800          43.272
     and mitigate for impacts throughout the Sacramento River Flood
     Control System, including the urban Sacramento area............
                                                                     -----------------------------------------------
          TOTAL.....................................................          66.028         172.800         106.772
    ----------------------------------------------------------------------------------------------------------------

        Updates on progress on each of the referenced projects is provided
    in the following paragraphs.

                 SOUTH SACRAMENTO COUNTY STREAMS GROUP PROJECT

        This project will provide a minimum of 100-year flood protection
    from the Morrison Stream Group, including Morrison Creek, Florin Creek,
    Elder Creek, and Union House Creek when completed. This project
    protects the existing community, as well as helps facilitate the city's
    economic development goals for the South Sacramento region. SAFCA, the
    State, and the Corps are working together to expedite construction of
    this project. Levee improvements around the Regional Wastewater
    Treatment Plant were completed in 1996. The Morrison Creek north levee
    from the Sacramento River east to the Union Pacific Railroad, and north
    to Brookfield Drive were completed in 2005-2006. In 2007 levee
    improvements will be constructed on Morrison Creek and tributaries as
    far east as Franklin Boulevard. SAFCA's goal is to implement Phase 2
    levee improvements eastward to Highway 99 by 2012 to provide 100-year
    flood protection from Morrison Creek flooding.

                     AMERICAN RIVER COMMON FEATURES PROJECT

    American River Levees
        Construction of the Mayhew levee improvements has been a high
    priority and construction is planned for late summer 2007. Additional
    levee improvements to address gaps in the slurry walls along the
    American River levees on both sides of the river, and to provide levee
    height parity are expected to go to construction in 2008. This work
    will go a long way towards meeting the goal of safely conveying 160,000
    cubic feet per second through Sacramento, which will be required to
    provide 200-year flood protection on the American River.
    Natomas General Re-evaluation Report (GRR)
        The Corps is studying alternatives for levee improvements needed to
    provide the Natomas basin with 200-year flood protection. The Corps
    study will proceed concurrently with SAFCA's construction of those
    improvements. The State Reclamation Board has requested section 104
    Credit for levee improvements constructed by SAFCA, with the goal of
    obtaining Federal reimbursement for State and SAFCA funding for
    construction of these improvements over the next several years. Funding
    for the Corps study effort is needed to keep the Corps study on
    schedule for completion of the GRR in 2009, thus paving the way for
    Congressional reimbursement for State and SAFCA expenditures in 2010
    and beyond.
    Pocket General Re-Evaluation Report (GRR)
        SAFCA has initiated reconnaissance planning for measures which may
    be needed to provide 200-year flood protection for the Sacramento River
    East levee south of the American River. SAFCA will request that the
    Corps initiate a second GRR under the American River Common Features
    Authority, with the goal of expediting the alternative formulation
    process for any levee improvements which may be needed in this reach.

                FOLSOM DAM MODIFICATIONS: JOINT FEDERAL PROJECT

        This project will include construction of a new auxiliary spillway
    on the east abutment to Folsom Dam. This new spillway will both provide
    sufficient release capacity to allow Folsom Dam to control the 200-year
    flood, as well as to safely pass a Probable Maximum Flood without
    overtopping the dam. Since June of 2005 the Corps, Reclamation, the
    State of California, and SAFCA have rapidly advanced planning for this
    project, including a joint EIR/EIS, a Corps Post Authorization Change
    (PAC) Report by the Corps, and a Reclamation Dam Safety Modifications
    Report. All these reports will be completed by late Spring 2007,
    setting the stage for excavation to begin on the auxiliary spillway and
    related Reclamation dam safety work in October 2007. The project will
    be jointly constructed by the Corps and Reclamation, with the State and
    SAFCA serving as non-Federal cost sharing partners. The Corps will
    continue to design their portion of the JFP with construction starting
    in following years.

                            FOLSOM DAM RAISE PROJECT

        Based on current Corps design studies, a raise of up to 3.5 feet of
    the dikes and wingdams around Folsom Lake may be constructed under this
    project authority in conjunction with the Folsom Dam Modifications
    project. The Folsom Dam Bridge, an authorized part of this project, is
    currently under construction by the Corps, with a planned opening for
    traffic by the end of 2008. Ecosystem restoration is also an authorized
    component of this project, focusing on improving salmonid habitat in
    the Lower American River through improved temperature control for
    Folsom Dam releases.

                         NATOMAS PHASE I REIMBURSEMENT

        SAFCA is seeking reimbursement for work completed on Natomas levees
    under Federal authority. A total of $21 million in reimbursements have
    been authorized and appropriated, of which $16.5 million has been paid
    to SAFCA, leaving about $4.5 million which has been appropriated but
    not reimbursed to SAFCA. SAFCA needs the $4.5 million to help fund
    SAFCA's flood control improvement efforts.

                    SACRAMENTO RIVER BANK PROTECTION PROJECT

        During the Construction season of 2006, an impressive amount of
    bank protection was completed along the Sacramento River including nine
    critical erosion sites along the Sacramento River east levee protecting
    Sacramento. The work has continued in 2007, during which another three
    sites were under construction. This program, executed by the Corps in
    close collaboration with the State, has been very effective in rapidly
    addressing serious erosion defects in levees protecting the Sacramento
    area and in other parts of the central valley. Additional funding, as
    well as new implementation authority, will be needed to continue
    repairs of critical erosion issues within the river system.
                                     ______

          Prepared Statement of the National Corn Growers Association

        The National Corn Growers Association (NCGA) appreciates the
    opportunity to share with the subcommittee our energy and water
    development appropriations priorities for fiscal year 2008. In general,
    our appropriations priorities include an overall increase in U.S. Army
    Corps of Engineers' funding to address the needs of our failing inland
    waterways system; $24 million for pre-construction engineering and
    design (PED) for the project entitled ``UMR-IWW System Navigation
    Study, IL, IA, MN, MO, & WI'' (Authority: section 216, Flood Control
    Act of 1970 (Public Law 91-612)); and continued support for the
    Department of Energy's Biomass Technologies Program.
        NCGA represents nearly 33,000 corn farmers from 46 States. NCGA
    also represents more than 300,000 farmers who contribute to corn check
    off programs and 26 affiliated State corn organizations across our
    country, working together to create new opportunities and markets for
    corn growers.
        America's corn producers continue to make a significant and
    important contribution to our Nation's economy. Over the last 5 years,
    the Nation's corn crop has averaged 10.3 billion bushels resulting in
    an annual average farm gate value of almost $22 billion. The relatively
    stable production over the past 10 years, made possible by innovation
    in production practices and technological advances, has helped to
    ensure ample supplies of corn for livestock, an expanding ethanol
    industry, new biobased products and a host of other uses in the corn
    industry.
        Key to our success is reliable, cost-effective and efficient
    transportation--whether by barge, truck or rail. Competition among
    these modes of transportation helps farmers receive their farm inputs,
    meet their customers' demand for timely delivery of products and
    successfully compete with foreign producers. Without a competitive
    transportation system, the promise of expanded trade and commercial
    growth is empty, job opportunities are lost, and we will be unprepared
    for the global challenges of this new century.

                          U.S. ARMY CORPS OF ENGINEERS

        Our country's inland navigation system plays a critical role in our
    Nation's economy, moving more than a billion tons of domestic commerce
    valued at more than $300 billion. Each year, more than 1 billion
    bushels of grain (over 60 percent of all grain exports) move to export
    markets via the inland waterways system. Inland waterways relieve
    congestion on our already over-crowded highways and railways that run
    through cities. One jumbo barge has the same capacity as 58 trucks or
    15 rail cars. A typical 15-barge tow on our Nation's rivers is
    equivalent to 870 trucks.
        Additionally, navigation offers transportation with unparalleled
    environmental benefits. Barges operate at 10 percent of the cost of
    trucks and 40 percent of the cost of trains, while releasing 20 times
    less nitrous oxide, 9 times less carbon monoxide, 7 times less
    hydrocarbons, and burning 10 times less high-price fuel.
        Unfortunately, investment in the inland waterways system has not
    kept pace with its needs and is deteriorating. Funding (in constant
    dollars) for operations and maintenance (O&M) on America's inland
    navigation system has remained flat for more than two decades. During
    this period, an increasing amount of routine maintenance on waterways
    infrastructure has been deferred. This deferred maintenance has become
    unfunded maintenance, and the aging waterways infrastructure, combined
    with the growing O&M backlog, has created today's average of 30
    unscheduled lock shutdowns per year.
        Over the past 5 years the U.S. Army Corps of Engineers reported
    more than 150 emergency lock closures on America's inland navigation
    system. Several high-profile closures have raised reliability concerns
    among shippers, carriers, the U.S. Army Corps of Engineers, and
    ultimately consumers who pay increased costs for expensive
    transportation delays.
        Tight O&M funding and the resultant ``fix-as-fail'' policy have led
    to a self-defeating cycle where routine maintenance dollars are now
    needed for emergency repairs. As critical maintenance needs grow, they
    become candidates for major rehabilitation--a trend that is not good
    for the waterways industry or for the Nation.
        NCGA is appreciative of the successful efforts made by this
    subcommittee in recent years to increase the budget for the U.S. Army
    Corps of Engineers. NCGA strongly supports continuing this trend with a
    significant increase over last year's funding levels to address the
    critically needed repairs and delayed construction schedules facing the
    Corps. It's important to get our inland waterways infrastructure back
    on track so we can meet the ever-increasing demands of the global
    marketplace.

                    PRE-CONSTRUCTION ENGINEERING AND DESIGN

        The Upper Mississippi River and Illinois Waterway's infrastructure
    was built in the 1930's with a life expectancy of 50 years. As a
    result, the infrastructure is approaching 80 years of age, is
    undersized for efficient passage of today's tows, and is deteriorating
    from a lack of investment in both operation and maintenance and
    necessary capital improvements to rehabilitate these antique
    structures. As with our highways and interchanges, the purpose of
    modernization on the Upper Mississippi and Illinois Rivers is to make
    the entire system more efficient.
        NCGA supports funding pre-construction engineering and design as a
    means to accelerate the precursor to construction of 7 new 1,200 foot
    locks on the Upper Mississippi River and Illinois Waterway in
    anticipation of authorization through the Water Resources Development
    Act. Specifically, NCGA requests $24 million in PED funding for Locks
    20, 21, 22, 24, and 25 on the Upper Mississippi and the LaGrange and
    Peoria locks on the Illinois Waterway (Project: ``UMR-IWW System
    Navigation Study, IL, IA, MN, MO, & WI'' Authority: section 216, Flood
    Control Act of 1970 (Public Law 91-612)).
        The PED program is overseen by the Navigation & Ecosystem
    Sustainability Program (NESP), formed with the conclusion of the
    navigation study. NESP continues the research and monitoring
    recommended under the dual purpose river plan outlined in the Corps of
    Engineers' November 2004 Chief 's Report.
        In previous years, PED funding was used for preparations of a re-
    evaluation report and detailed planning and design activities including
    8 projects for navigation efficiency and 19 projects for ecosystem
    restoration. Projects included lock design, fish passage studies,
    detailed planning and design for mooring cells and switch boat
    implementation and detailed planning for ecosystem restoration projects
    including island building, backwater restoration, side channel
    restoration, wing dam alteration, island-shoreline protection and dam
    embankment lowering.
        We strongly encourage the committee to support continued PED
    funding as part of an initial process to modernize our aging and
    deteriorating infrastructure and for much needed ecosystem restoration
    for the Upper Mississippi and Illinois Rivers.

                          BIOMASS TECHNOLOGIES PROGRAM

        The United States needs to displace imported petroleum with
    ethanol. Corn grain ethanol is the only economically viable solution
    over the next decade and is one of the leading ways to start weaning
    the United States from imported oil. Using starch from corn grain to
    produce ethanol provides farmers with higher profit margins even while
    fuel customers pay lower prices. Over the next decade, corn grain can
    meet all of the growth in ethanol demand and still meet growth in the
    livestock feed, human food and export sectors.
        The current Federal biomass technologies program is focused on
    long-term cellulose research. Cellulose research will not have any
    meaningful economic impact for a decade or more. A successful research
    and development (R&D) portfolio always balances near, mid and long-term
    goals, and biomass research should use a similar strategy.
        In the near term, R&D investments in corn grain ethanol production
    technology could have a strongly positive economic impact while
    immediately decreasing dependence on imported oil. Examples of R&D
    investment opportunities include improving production and utilization
    of animal feed (DDGS), co-production of biobased chemicals, utilization
    of corn kernel fiber, and decreasing natural gas use in ethanol plants.
    Sufficient supply of affordable ethanol will ensure the markets and
    infrastructure will be poised for the larger impacts coming in the mid
    to long-term.
        NCGA recommends the committee commit at least 25 percent of the
    fiscal year 2008 allocation for the biomass technologies program
    towards near-term research that enables corn grain.
        Thank you for the support and assistance you have provided to corn
    growers over the years.
                                     ______

     Prepared Statement of the Confederated Tribes of the Umatilla Indian
                                  Reservation

        We respectfully request fiscal year 2008 appropriation of funds for
    two priority watershed restoration and agricultural water supply
    protection projects in Oregon and Washington, the Umatilla Basin Water
    Supply Project (previously funded under the Umatilla Basin Project
    Phase III, OR) and the Walla Walla General Investigation Stream Flow
    Restoration Feasibility Study (previously funded under the Walla Walla
    River Watershed, OR & WA).
      --For the Umatilla Basin Water Supply Project, Oregon, we request an
            appropriation of $1 million in the Bureau of Reclamation,
            Pacific Northwest Region, Water and Related Resources budget.
            This request will build upon the $450,000 committed by the
            Bureau of Reclamation to the Project in fiscal year 2007.
      --For the Walla Walla River Watershed, Oregon and Washington, we
            request an appropriation of $650,000 in the U.S. Army Corps of
            Engineers, Portland Division, Walla Walla District, General
            Investigations budget. This project is also known as Walla
            Walla River Basin Feasibility Report/Environmental Impact
            Statement.
        Both the Umatilla Basin Water Supply Project and the Walla Walla
    General Investigation Stream Flow Restoration Feasibility Study are
    ongoing projects and have had administration and/or congressional line
    item funding in past fiscal years.

               UMATILLA RIVER BASIN, OREGON WATER SUPPLY PROJECT

        By letter dated March 19, 2007, the Office of the Secretary of
    Interior responded favorably to the formal requests of the Washington
    and Oregon delegations and of the Confederated Umatilla Tribes,
    Westland Irrigation District and Governor Theodore Kulongoski to
    initiate Umatilla Basin water development projects and concurrent
    settlement of the Tribe's reserved water rights. Counselor to the
    Secretary, L. Michael Bogert, wrote ``I will ask the Secretary's Indian
    Water Rights Office to appoint an Assessment Team . . .'' and ``I will
    also ask the Bureau of Reclamation to move forward with a concurrent
    appraisal level study of water supply options, including a full Phase
    III exchange . . . to help resolve the Tribe's water rights claims.''
        The Bureau of Reclamation, subsequent to issuance of the March 19
    letter from Counselor Bogert, has committed $450,000 to fiscal year
    2007 work on the Umatilla Basin water supply appraisal study.
        The Umatilla Basin Water Supply Project is authorized by the
    Reclamation Feasibility Studies Act of 1966, 80 Stat. 707, Public Law
    89-561 (Sept. 7, 1966).
        The fiscal year 2008 request of $1 million to the U.S. Bureau of
    Reclamation will follow up the $450,000 fiscal year 2007 work and
    should complete the majority of the estimated 2-year appraisal level
    study. It is anticipated that the full appraisal study project will be
    completed in 2009 in order to inform the concurrent Interior Department
    Indian Water Rights Assessment Team's work products. In 2009, Interior
    should have a clear project or suite of projects necessary to satisfy
    water rights of the Confederated Umatilla Tribes on the Umatilla Indian
    Reservation and in the Umatilla River.
        This fiscal year 2008 request follows on the work of the Bureau of
    Reclamation, authorized by the Umatilla Basin Project Act of 1988
    (Public Law 100-557; 102 Stat. 2782 Title II), to construct and operate
    the Phase I Exchange with West Extension Irrigation District and the
    Phase II Exchange with Hermiston and Stanfield Irrigation Districts.
    Heralded as one of the most successful stream flow restoration and
    salmon recovery projects in the Columbia River Basin, the Umatilla
    Basin Project resulted in partially restored stream flows in the
    Umatilla River and successful reintroduction of spring Chinook, fall
    Chinook and Coho salmon. After nearly a century of dry river bed in
    summer months and extinction of all salmon stocks, there has been an
    Indian and non-Indian salmon fishery nearly every year in the Umatilla
    River since the project was completed in the mid-1990s.
        Completion of the Water Supply Study and the concurrent Tribal
    Water Rights Assessment is supported and endorsed by the Honorable
    Governor Ted Kulongoski and by local irrigation districts including
    specifically Westland Irrigation District, the Umatilla County
    Commission, and local municipalities including specifically the City of
    Irrigon.
         walla walla basin, oregon and washington, gi feasibility study
        In its sixth and final full year prior to completion, the U.S. Army
    Corps of Engineers' feasibility study will select the project necessary
    to restore stream flows in the Walla Walla River. Drained nearly dry
    during summer months by irrigation in Oregon and Washington, the Walla
    Walla River is within the aboriginal lands of the Confederated Umatilla
    Tribes and the complete loss of salmon violates the agreement by the
    United States in the Treaty of 1855 to protect these fish.
        Approximately $2.6 million of Federal funds have either been
    budgeted or appropriated through fiscal year 2007 (this includes an
    estimate $300,000 for fiscal year 2007 based upon continuing resolution
    uncertainties).
        The Feasibility Study Project is authorized by the Senate Committee
    on Public Works, July 27, 1962 (Columbia River and Tributaries), 87th
    Congress, House Document No. 403 and initiated as a result of a
    positive Reconnaissance Report for the Walla Walla River Watershed
    (1997) under a General Investigation study.
        The Confederated Tribes of the Umatilla Indian Reservation is the
    formal sponsor of the Corps of Engineers Feasibility Study and has
    provided over $3.1 million in in-kind contributions. Additionally, the
    State of Washington Department of Ecology has provided $400,000 to the
    Feasibility Study.
        Support for the completion of the Feasibility Study and moving to
    construction of the project is strong and diverse and includes the
    Honorable Governor of Washington Christine Gregoire, the Honorable
    Governor of Oregon Ted Kulongoski, the Walla Walla Watershed Alliance,
    the Walla Walla Basin Watershed Council, basin irrigation districts,
    local State legislators and many local and regional advocacy groups.
        In closing, the CTUIR appreciates the opportunity to provide this
    testimony in support of adding funds for the ongoing projects, Umatilla
    River Basin Water Supply Project, Bureau of Reclamation, and for the
    Army Corps of Engineers Walla Walla River Basin Watershed Restoration
    Feasibility Study. Both projects are critically important to protecting
    existing agricultural economies, completing future water supply
    development and concurrently restoring stream flows and recovering
    threatened salmon and other Columbia River Basin fish stocks.
        Thank you.
                                     ______

                  Prepared Statement of The Nature Conservancy

        Mr. Chairman and members of the Subcommittee, I appreciate the
    opportunity to present The Nature Conservancy's recommendations for the
    Army Corps of Engineers' fiscal year 2008 appropriations. We understand
    that the Subcommittee's ability to fund programs within its
    jurisdiction is limited by the tight budget constraints but appreciate
    your consideration of these important programs.
        The Nature Conservancy is an international nonprofit organization
    dedicated to the conservation of biodiversity. Our mission is to
    preserve the plants, animals and natural communities that represent the
    diversity of life on Earth by protecting the lands and waters they need
    to survive. Our on-the-ground conservation work is carried out in all
    50 states and in 30 countries with the support of approximately one
    million members. To date, we have helped conserve more than 117 million
    acres and 5,000 river miles around the world. The Conservancy owns and
    manages approximately 1,400 preserves throughout the United States--the
    world's largest private system of nature sanctuaries. However, we
    recognize that our mission cannot be achieved by protected areas alone;
    thus, our projects increasingly seek to accommodate compatible human
    uses, especially in the developing world, to address sustained human
    well-being.
        The Conservancy has several concerns with the new starts/project
    advancement ban in the fiscal year 2006 Energy and Water Appropriations
    bill. As the largest nonfederal sponsor of ecosystem restoration
    projects (by number of projects, not total funding), this policy has
    significantly impacted the Conservancy's ecosystem restoration efforts.
    The ban has halted a number of restoration projects that are widely
    supported by local communities, that are important to biodiversity, and
    that have received significant prior investment of both federal and
    nonfederal resources. The Conservancy urges the Subcommittee not to
    renew the ban on new starts/project advancement.
        The Conservancy urges the Subcommittee to support the following
    appropriation levels in the fiscal year 2008 Energy and Water
    Development Appropriation bill:
    Construction General Priorities
        Section 1135: Project Modification for the Improvement of the
    Environment.--The Section 1135 Program authorizes the Army Corps of
    Engineers (Corps) to restore areas damaged by existing Corps projects.
    This program continues to be in extremely high demand with needs far
    greater than the $30 million appropriated in fiscal year 2006. While we
    recognize that the fiscal year 2006 appropriations were in excess of
    the authorized levels, funding shortfalls continue to hold up many
    important projects. The Conservancy is the nonfederal cost share
    partner on five ecologically significant Section 1135 projects
    including Spunky Bottoms (IL), a floodplain restoration/reconnection
    project on the Illinois River that needs $150,000 to continue planning;
    Chain Bridge Flats (DC), a floodplain restoration on the Potomac River
    that needs $210,000 to initiate the reconnaissance phase; Jim Woodruff
    Lock and Dam Fish Passage (FL), a river habitat restoration on the
    Apalachicola River that needs $100,000 to initiate the reconnaissance
    phase; and Village of Oyster Ecosystem Restoration (VA), a restoration
    of intertidal wetlands and upland habitat that needs $99,000 to
    continue the feasibility study. In order to reduce the funding backlog,
    the Conservancy strongly encourages full funding of $25 million for
    Section 1135 in fiscal year 2008, an increase over the President's
    $11.2 million request.
        Section 206: Aquatic Ecosystem Restoration.--Section 206 is a newer
    program that authorizes the Corps to restore aquatic habitat regardless
    of past activities. This is another popular restoration program with
    demand far exceeding both the authorized level and the fiscal year 2006
    appropriation. The Conservancy is the nonfederal cost-share partner on
    four Section 206 projects that restore important habitats, including
    Camp Creek (OR), a headwaters stream restoration project that needs
    $525,000 to continue the feasibility study; Bootheel Creek (FL), a wet
    flatwood and depression marsh habitat restoration project that needs
    $85,000 to initiate the planning and design analysis phase; and Emiquon
    Preserve (IL), a floodplain reconnection and restoration project that
    needs $300,000 to continue planning. To reduce the funding backlog, the
    Conservancy strongly encourages $25 million for Section 206 in fiscal
    year 2008, an increase over the President's $11.3 million request.
        Upper Mississippi River System Environmental Management Program.--
    The Environmental Management Program (EMP) is an important Corps
    program that restores habitat and conducts long-term resource
    monitoring of the Upper Mississippi and Illinois Rivers. EMP is a
    unique federal-state partnership involving five states (IL, IA, MN, MO
    and WI). EMP was reauthorized in WRDA 1999 with an increased
    authorization of $33.2 million. The Conservancy supports full funding
    of $33.2 million for fiscal year 2008, an increase over the President's
    $23.5 million request.
        Estuary Habitat Restoration Program.--The Estuary Restoration Act
    was approved by Congress in 2000 to recognize the importance of a
    national strategic plan and multi-level partnerships to address
    problems plaguing our nation's estuaries. With a goal of restoring a
    million acres of estuary habitat by 2010 through the Estuary Habitat
    Restoration Program, the Act encourages coordination among all levels
    of government, and engages the strengths of the public, nonprofit and
    private sectors. The Conservancy supports the President's $5.0 million
    request for the Estuary Habitat Restoration Program to promote
    restoration projects that benefit fish, shellfish and wildlife; improve
    surface and groundwater resources; provide flood control; and enhance
    recreational opportunities.
        Missouri River Fish and Wildlife Recovery.--The Missouri River
    contains more than 500 species of mussels, fish, amphibians, reptiles,
    birds and mammals, five of which are either listed or candidates for
    listing under the Endangered Species Act. The Corps has completed 30
    projects along the river in the lower four states (IA, KS, MO and NE)
    resulting in more than 40,000 acres of restored aquatic and floodplain
    habitat. This program enhances these restorations and complements
    protection and restoration efforts by many federal agencies. The
    Conservancy supports $85.0 million in fiscal year 2008 and pending
    passage of the Water Resources Development Act, supports using funding
    basin-wide, including $15 million for the Yellowstone River Intake
    project in Montana.
        South Florida Everglades Ecosystem Restoration Program.--The
    Everglades are home to a profusion of birds and wildlife with at least
    347 bird species recorded in Everglades National Park alone. For the
    last sixty years, the Corps has built projects that shunted water away
    from the Everglades. These flood control projects and agricultural and
    urban development have degraded the wetlands ecosystem. Restoration of
    this globally significant region is a priority for the Conservancy. The
    Conservancy requests $249.1 million in the South Florida Everglades
    Ecosystem Restoration Program in fiscal year 2008, an increase over the
    President's $162.4 million request. This request includes funds for
    five programs: Modified Water Deliveries to Everglades National Park
    ($35 million), Critical Projects Construction ($8.3 million), Kissimmee
    River Restoration Construction ($50 million), Comprehensive Everglades
    Restoration Plan (CERP) Project Construction ($35 million), Central &
    Southern Florida Project ($120.8 million).
        Puget Sound and Adjacent Waters.--Assessments of Puget Sound's
    nearshore habitat indicate that the ecological health of the ecosystem
    is in steep decline. As urban areas continue to expand, an
    extraordinary heritage of native species and ecosystems is at risk. The
    Puget Sound and Adjacent Waters Program provides funding for early
    action projects to restore the Puget Sound and its watershed.. The
    Conservancy requests $5.0 million for Puget Sound and Adjacent Waters
    in fiscal year 2008. Identification of these early action projects is
    informed by the Puget Sound Nearshore Ecosystem Restoration General
    Investigation, for which the Conservancy requests $1.9 million in
    fiscal year 2008, an increase over the President's $400,000 request.
    General Investigation Priorities
        Penobscot River Restoration.--This project involves the purchase
    and decommissioning of three dams on the Penobscot River, New England's
    second largest river. Two dams will be removed and a state-of-the-art
    fish bypass will be constructed around the third. Restoration of
    massive runs of migratory fish in the Penobscot River will expand
    recreational fishing opportunities and tourism resources, will provide
    culturally significant fishing resources to the Penobscot Indian
    Nation, and will greatly enhance recovery of Atlantic salmon and other
    ESA-listed species. The Conservancy supports $450,000 in fiscal year
    2008. This study is not included in the President's Budget.
        Hamilton City Flood Damage Reduction and Ecosystem Restoration.--
    This project will increase flood protection for Hamilton City. CA and
    surrounding agricultural lands and restore over 1,500 acres of riparian
    habitat. Currently, the town is only marginally protected by a degraded
    private levee. The PED phase for this project is nearly complete.
    Pending fiscal year 2007 funding and passage of WRDA, the project will
    be ready to begin construction next year. The Conservancy supports $1.6
    million in fiscal year 2008 to complete PED and $7.5 million to begin
    construction. This study is not included in the President's Budget.
        Savannah Basin Comprehensive Water Resources Study--Phase II.--The
    Savanna River basin is experiencing tremendous growth, increasing
    demands on this limited water resource. Phase I of the study evaluated
    water management in the reservoirs based on current operations and
    indicated that future needs may not be met under current management
    practices. Phase II evaluates implementation of a new set of rules
    (e.g. hydropower contracts, recreation needs, ecological flows) that
    could meet future demands while protecting essential river habitat.
    Without Phase II, changes in dam operations are limited by outdated and
    unsustainable management rules. The Conservancy supports $250,000 in
    fiscal year 2008. This study is not included in the President's Budget.
        Willamette River Floodplain Study.--This project contributes to
    long-term restoration of floodplain habitat, an important step toward
    the recovery of several ESA-listed threatened fish species. The
    restoration goals include increasing floodplain connectivity and
    replanting riparian forests, which will contribute to the Corps'
    ability to reduce river temperatures and meet their obligations under
    the Clean Water Act. The Conservancy supports $436,000 in fiscal year
    2008. This study is not included in the President's Budget.
        Lower Mississippi River Resource Assessment.--This study will
    assess management, habitat and public access issues in the Lower
    Mississippi River Valley (LMV). Restoring and actively managing the
    natural resources of the LMV will contribute to the recovery of nine
    ESA-listed species without impacting navigation or flood control.
    Restored functionality of wetlands will also help attenuate floods and
    capture river sediment, reducing stress on the flood control system and
    the amount of nutrients transported down river to the Gulf of Mexico.
    The Conservancy supports $500,000 in fiscal year 2008. This study is
    not included in the President's Budget.
        Connecticut River Watershed Study.--This project will restore 410
    miles of river flow and thousands of acres of associated riparian,
    aquatic and floodplain natural communities in the Connecticut River
    Basin. The basin is a priority landscape for the Conservancy due to the
    high-quality tributary systems, unique natural communities and
    multitude of ESA-listed species. The study identifies dam management
    modifications for environmental benefits while maintaining beneficial
    human uses such as water supply, flood control and hydropower
    generation. The Conservancy supports $450,000 in fiscal year 2008. This
    study is not included in the President's Budget.
        Yellowstone River Corridor Comprehensive Study.--This study is
    assessing cumulative effects to the Yellowstone system and will develop
    conservation-based management practices for the river main stem. As the
    longest free-flowing river in the lower United States, the Yellowstone
    is a rare model of the structure and function of large western rivers.
    It supports a wide variety of fish, including the ESA-listed pallid
    sturgeon. The Conservancy supports $1 million in fiscal year 2008, an
    increase over the President's $200,000 request.
        Thames River Basin.--The Thames River Basin is the second largest
    freshwater contributor to Long Island Sound and provides critical
    connective habitat between freshwater and marine systems. This study
    will evaluate options to restore more natural flows and improve
    watershed management to reduce nutrient inputs, as well as options for
    ecological restoration throughout the Basin. The Conservancy supports
    $450,000 in fiscal year 2008. This study is not included in the
    President's Budget.
    Operations and Maintenance Priority
        Bill Williams River--Alamo Dam.--Due to the historic loss of
    woodland habitat in the Southwest and limited restoration ability along
    other portions of the Colorado River, the Bill Williams River corridor
    provides critical opportunities for both conserving and restoring
    habitat. This plus-up request will provide additional baseline
    information about the geomorphology and sediment transport
    characteristics of the Bill Williams River and continue critical long-
    term hydrologic and biological monitoring in order to construct a
    programmatic plan to support adaptive management of the river system.
    The Conservancy supports $250,000 plus-up over the President's
    Operations and Maintenance request of $1,783,000, for a total of
    $2,033,000 in fiscal year 2008.
        Thank you for the opportunity to present The Nature Conservancy's
    comments on the Energy and Water Appropriations bill. We recognize that
    you receive many worthy requests for funding each year and appreciate
    your consideration of these requests and the generous support you have
    shown for these and other conservation programs in the past. If you
    have any further questions, please do not hesitate to contact me or
    Jason Albritton, Policy Associate (703/841-4105).
                                     ______

          Prepared Statements of the Santa Clara Valley Water District

               STATEMENT OF SUPPORT--COYOTE CREEK WATERSHED STUDY

        Background.--Coyote Creek drains Santa Clara County's largest
    watershed, an area of more than 320 square miles encompassing most of
    the eastern foothills, the city of Milpitas, and portions of the cities
    of San Jose and Morgan Hill. It flows northward from Anderson Reservoir
    through more than 40 miles of rural and heavily urbanized areas and
    empties into south San Francisco Bay.
        Prior to construction of Coyote and Anderson Reservoirs, flooding
    occurred in 1903, 1906, 1909, 1911, 1917, 1922, 1923, 1926, 1927, 1930
    and 1931. Since 1950, the operation of the reservoirs has reduced the
    magnitude of flooding, although flooding is still a threat and did
    cause damages in 1982, 1983, 1986, 1995, and 1997. Significant areas of
    older homes in downtown San Jose and some major transportation
    corridors remain susceptible to extensive flooding. The federally-
    supported lower Coyote Creek Project (San Francisco Bay to Montague
    Expressway), which was completed in 1996, protected homes and
    businesses from storms which generated record runoff in the northern
    parts of San Jose and Milpitas.
        The proposed Reconnaissance Study would evaluate the reaches
    upstream of the completed Federal flood protection works on lower
    Coyote Creek.
        Objective of Study.--The objectives of the Reconnaissance Study are
    to investigate flood damages within the Coyote Creek Watershed; to
    identify potential alternatives for alleviating those damages which
    also minimize impacts on fishery and wildlife resources, provide
    opportunities for ecosystem restoration, provide for recreational
    opportunities; and to determine whether there is a Federal interest to
    proceed into the Feasibility Study Phase.
        Study Authorization.--In May 2002, the House of Representatives
    Committee on Transportation and Infrastructure passed a resolution
    directing the Corps to ``. . . review the report of the Chief of
    Engineers on Coyote and Berryessa Creeks . . . and other pertinent
    reports, to determine whether modifications of the recommendations
    contained therein are advisable in the interest of flood damage
    reduction, environmental restoration and protection, water conservation
    and supply, recreation, and other allied purposes . . .''
        Fiscal Year 2006 Administration Budget Request and Funding.--The
    Coyote Watershed Study was one of only three ``new start'' studies
    proposed for funding nationwide in the administration's fiscal year
    2006 budget request. Congress did not include funding for the study in
    the final fiscal year 2006 appropriations bill.
        Fiscal Year 2007 Funding.--An appropriation add-on of $100,000 was
    requested in fiscal year 2007, and $100,000 was included in the Senate
    Appropriation bill. No funds were appropriated in the fiscal year 2007
    Corps Work Plan.
        Fiscal Year 2008 Funding Recommendation.--It is requested that the
    Congressional Committee support an appropriation add-on of $100,000 to
    initiate a multi-purpose Reconnaissance Study within the Coyote Creek
    Watershed.

     STATEMENT OF SUPPORT--COYOTE/BERRYESSA CREEK PROJECT, BERRYESSA CREEK
                                PROJECT ELEMENT

        Background.--The Berryessa Creek Watershed is located in northeast
    Santa Clara County, California, near the southern end of the San
    Francisco Bay. A major tributary of Coyote Creek, Berryessa Creek
    drains 22 square miles in the city of Milpitas and a portion of San
    Jose.
        On average, Berryessa Creek floods once every four years. The most
    recent flood in 1998 resulted in significant damage to homes and
    automobiles. The proposed project on Berryessa Creek, from Calaveras
    Boulevard to upstream of Old Piedmont Road, will protect portions of
    the cities of San Jose and Milpitas. The flood plain is largely
    urbanized with a mix of residential and commercial development. Based
    on the U.S. Army Corps of Engineers (Corps) 2005 report, a 1 percent or
    100-year flood could potentially result in damages exceeding $179
    million. Benefit-to-cost ratios for the 6 project alternatives being
    evaluated range from 2:1 to 7.3:1.
        Study Synopsis.--In January 1981, the Santa Clara Valley Water
    District (District) applied for Federal assistance for flood protection
    projects under section 205 of the 1948 Flood Control Act. The Water
    Resources Development Act of 1990 authorized construction on the
    Berryessa Creek Flood Protection Project as part of a combined Coyote/
    Berryessa Creek Project to protect portions of the cities of Milpitas
    and San Jose.
        The Coyote Creek element of the project was completed in 1996. The
    Berryessa Creek Project element proposed in the Corps' 1987 feasibility
    report consisted primarily of a trapezoidal concrete lining. This was
    not acceptable to the local community. The Corps and the District are
    currently preparing a General Reevaluation Report which involves
    reformulating a project which is more acceptable to the local community
    and more environmentally sensitive. Project features will include
    setback levees and floodwalls to preserve sensitive areas (minimizing
    the use of concrete), appropriate aquatic and riparian habitat
    restoration and fish passage, and sediment control structures to limit
    turbidity and protect water quality. The project will also accommodate
    the city of Milpitas' adopted trail master plan. Estimated total costs
    of the General Reevaluation Report work are $5 million, and should be
    completed in the spring of 2007.
        Fiscal Year 2007 Funding.--$100,000 in the fiscal year 2007 Corps
    Work Plan for the Coyote/Berryessa Creek Flood Protection Project to
    continue the General Reevaluation Report and environmental documents
    update.
        Fiscal Year 2008 Funding Recommendation.-- Based on the continuing
    threat of significant flood damage from Berryessa Creek and the need to
    continue with the General Reevaluation Report, it is requested that the
    Congressional Committee support an appropriation add-on of $1.35
    million, in addition to the $950,000 in the Administration's fiscal
    year 2008 budget request, for a total of $2.3 million for the Berryessa
    Creek Flood Protection Project element of the Coyote/Berryessa Creek
    Project.

                 STATEMENT OF SUPPORT--GUADALUPE RIVER PROJECT

        Background.--The Guadalupe River is a major waterway flowing
    through a highly developed area of San Jose, in Santa Clara County,
    California. A major flood would damage homes and businesses in the
    heart of Silicon Valley. Historically, the river has flooded downtown
    San Jose and the community of Alviso. According to the U.S. Army Corps
    of Engineers (Corps) 2000 Final General Reevaluation & Environmental
    Report for Proposed Project Modifications, estimated damages from a 1
    percent flood in the urban center of San Jose are over $576 million.
    The Guadalupe River overflowed in February 1986, January 1995, and
    March 1995, damaging homes and businesses in the St. John and Pleasant
    Street areas of downtown San Jose. In March 1995, heavy rains resulted
    in breakouts along the river that flooded approximately 300 homes and
    business.
        Project Synopsis.--In 1971, the local community requested that the
    Corps reactivate its earlier study. Since 1972, substantial technical
    and financial assistance have been provided by the local community
    through the Santa Clara Valley Water District in an effort to
    accelerate the project's completion. To date, more than $85.8 million
    in local funds have been spent on planning, design, land purchases, and
    construction in the Corps' project reach.
        The Guadalupe River Project received authorization for construction
    under the Water Resources Development Act of 1986; the General Design
    Memorandum was completed in 1992, the local cooperative agreement was
    executed in March 1992, the General Design Memorandum was revised in
    1993, construction of the first phase of the project was completed in
    August 1994, construction of the second phase was completed in August
    1996. Project construction was temporarily halted due to environmental
    concerns.
        To achieve a successful, long-term resolution to the issues of
    flood protection, environmental mitigation, avoidance of environmental
    effects, and project monitoring and maintenance costs, a multi-agency
    ``Guadalupe Flood Control Project Collaborative'' was created in 1997.
    A key outcome of the collaborative process was the signing of the
    Dispute Resolution Memorandum in 1998, which modified the project to
    resolve major mitigation issues and allowed the project to proceed.
    Energy and Water Development Appropriations Act of 2002 was signed into
    law on November 12, 2001. This authorized the modified Guadalupe River
    Project at a total cost of $226.8 million. Subsequent to the
    authorization, the project cost has been raised to $251 million.
    Construction of the last phase of flood protection was completed in
    December 2004 and a completion celebration held in January 2005. The
    remaining construction consists of railroad bridge replacements and
    mitigation plantings. The overall construction of the project including
    the river park and the recreation elements is scheduled for completion
    in 2006.
        Fiscal Year 2007 Funding.--$5.6 million in the fiscal year 2007
    Corps Work Plan to continue Guadalupe River Project construction.
        Fiscal Year 2008 Funding Recommendation.--It is requested that the
    congressional committee support an appropriation add-on of $8 million
    to continue construction of the final phase of the Guadalupe River
    Flood Protection Project.

                   STATEMENT OF SUPPORT--LLAGAS CREEK PROJECT

        Background.--The Llagas Creek Watershed is located in southern
    Santa Clara County, California, serving the communities of Gilroy,
    Morgan Hill and San Martin. Historically, Llagas Creek has flooded in
    1937, 1955, 1958, 1962, 1963, 1969, 1982, 1986, 1996, 1997, 1998, and
    2002. The 1997, 1998, and 2002 floods damaged many homes, businesses,
    and a recreational vehicle park located in areas of Morgan Hill and San
    Martin. These are areas where flood protection is proposed. Overall,
    the proposed project will protect the floodplain from a 1 percent flood
    affecting more than 1,100 residential buildings, 500 commercial
    buildings, and 1,300 acres of agricultural land.
        Project Synopsis.--Under authority of the Watershed Protection and
    Flood Prevention Act (Public Law 566), the Natural Resources
    Conservation Service completed an economic feasibility study in 1982
    for constructing flood damage reduction facilities on Llagas Creek. The
    Natural Resources Conservation Service completed construction of the
    last segment of the channel for Lower Llagas Creek in 1994, providing
    protection to the project area in Gilroy. The U.S. Army Corps of
    Engineers (Corps) is currently updating the 1982 environmental
    assessment work and the engineering design for the project areas in
    Morgan Hill and San Martin. The engineering design is being updated to
    protect and improve creek water quality and to preserve and enhance the
    creek's habitat, fish, and wildlife while satisfying current
    environmental and regulatory requirements. Significant issues include
    the presence of additional endangered species including the red-legged
    frog and steelhead, listing of the area as probable critical habitat
    for steelhead, and more extensive riparian habitat than were considered
    in 1982. Project economics are currently being updated as directed by
    Corps Headquarters to determine continued project economic viability.
        Until 1996, the Llagas Creek Project was funded through the
    traditional Public Law 566 Federal project funding agreement with the
    Natural Resources Conservation Service paying for channel improvements
    and the District paying local costs including utility relocation,
    bridge construction, and right of way acquisition. Due to the steady
    decrease in annual appropriations for the Public Law 566 construction
    program since 1990, the Llagas Creek Project had not received adequate
    funding to complete the Public Law 566 project. To remedy this
    situation, the District worked with congressional representatives to
    transfer the construction authority from the Department of Agriculture
    to the Corps under the Water Resources Development Act of 1999 (section
    501). Since the transfer of responsibility to the Corps, the District
    has been working with the Corps to complete the project. Efforts are
    underway to reauthorize the project at its current project cost in the
    recently introduced Water Resources Development Act of 2007.
        Fiscal Year 2007 Funding.--$250,000 in the fiscal year 2007 Corps
    Work Plan.
        Fiscal Year 2008 Funding Recommendation.--Based upon the high risk
    of flood damage from Llagas Creek, it is requested that the
    Congressional Committee support an appropriation add-on of $368,000 in
    fiscal year 2008 for planning, design, and environmental updates for
    the Llagas Creek Project.

    STATEMENT OF SUPPORT--SAN FRANCISQUITO CREEK FLOOD DAMAGE REDUCTION AND
                         ECOSYSTEM RESTORATION PROJECT

        Background.--The San Francisquito Creek watershed comprises 45
    square miles and 70 miles of creek system. The creek mainstem flows
    through five cities and two counties, from Searsville Lake, belonging
    to Stanford University, to the San Francisco Bay at the boundary of
    East Palo Alto and Palo Alto. Here it forms the boundary between Santa
    Clara and San Mateo Counties, California and separates the cities of
    Palo Alto from East Palo Alto and Menlo Park. The upper watershed
    tributaries are within the boundaries of Portola Valley and Woodside
    townships. The creek flows through residential and commercial
    properties, a biological preserve, and Stanford University campus. It
    interfaces with regional and State transportation systems by flowing
    under two freeways and the regional commuter rail system. San
    Francisquito Creek is one of the last natural continuous riparian
    corridors on the San Francisco Peninsula and home to one of the last
    remaining viable steelhead trout runs. The riparian habitat and urban
    setting offer unique opportunities for a multi-objective flood
    protection and ecosystem restoration project.
        Flooding History.--The creeks mainstem has a flooding frequency of
    approximately once in 11 years. It is estimated that over $155 million
    in damages could occur in Santa Clara and San Mateo counties from a 1
    percent flood, affecting 4,850 homes and businesses. Significant areas
    of Palo Alto flooded in December 1955, inundating about 1,200 acres of
    commercial and residential property and about 70 acres of agricultural
    land. April 1958 storms caused a levee failure downstream of Highway
    101, flooding Palo Alto Airport, the city landfill, and the golf course
    up to 4-feet deep. Overflow in 1982 caused extensive damage to private
    and public property. The flood of record occurred on February 3, 1998,
    when overflow from numerous locations caused severe, record
    consequences with more than $28 million in damages. More than 1,100
    homes were flooded in Palo Alto, 500 people were evacuated in East Palo
    Alto, and the major commute and transportation artery, Highway 101, was
    closed.
        Status.--Active citizenry are anxious to avoid a repeat of the
    February 1998 flood. Numerous watershed based studies have been
    conducted by the Corps, the Santa Clara Valley Water District, Stanford
    University, and the San Mateo County Flood Control District.
    Grassroots, consensus based organization, called the San Francisquito
    Watershed Council, has united stakeholders including local and State
    agencies, citizens, flood victims, developers, and environmental
    activists for over 10 years. The San Francisquito Creek Joint Powers
    Authority was formed in 1999 to coordinate creek activities with five
    member agencies and two associate members. The Authority Board has
    agreed to be the local sponsor for a Corps project and received
    Congressional authorization for a Corps reconnaissance study in May
    2002. The Reconnaissance Study was completed in March 2005 and the
    Feasibility Study was initiated in November 2005.
        Fiscal Year 2007 Funding.--$300,000 in the fiscal year 2007 Corps
    Work Plan.
        Fiscal Year 2008 Funding Recommendation.--It is requested the
    congressional committee support an appropriation add-on of $700,000 to
    continue the Feasibility Study.

         STATEMENT OF SUPPORT--SOUTH SAN FRANCISCO BAY SHORELINE STUDY

        Background.--Congressional passage of the Water Resources
    Development Act of 1976, originally authorized the San Francisco Bay
    Shoreline Study, and Santa Clara Valley Water District (District) was
    one of the project sponsors. In 1990, the U.S. Army Corps of Engineers
    (Corps) concluded that levee failure potential was low because the
    existing non-Federal, non-engineered levees, which were routinely
    maintained by Leslie Salt Company (subsequently Cargill Salt) to
    protect their industrial interests, had historically withstood
    overtopping without failure. As a result, the project was suspended
    until adequate economic benefits could be demonstrated.
        Since the project's suspension in 1990, many changes have occurred
    in the South Bay. The State and Federal acquisition of approximately
    15,000 acres of South Bay salt ponds was completed in early March 2003.
    The proposed restoration of these ponds to tidal marsh will
    significantly alter the hydrologic regime and levee maintenance
    activities, which were assumed to be constant in the Corps' 1990 study.
    In addition to the proposed restoration project, considerable
    development has occurred in the project area. Many major corporations
    are now located within Silicon Valley's Golden Triangle, lying within
    and adjacent to the tidal flood zone. Damages from a 1 percent high
    tide are anticipated to far exceed the $34.5 million estimated in 1981,
    disrupting business operations, infrastructure, and residences. Also,
    historical land subsidence of up to 6 feet near Alviso, as well as the
    structural uncertainty of existing salt pond levees, increases the
    potential for tidal flooding in Santa Clara County.
        In July 2002, Congress authorized a review of the Final 1992 Letter
    Report for the San Francisco Bay Shoreline Study. The final fiscal year
    2004 appropriation for the Corps included funding for a new start
    Reconnaissance Study.
        Project Synopsis.--At present, large areas of Santa Clara, Alameda
    and San Mateo Counties would be impacted by flooding during a 1 percent
    high tide. The proposed restoration of the South San Francisco Bay salt
    ponds will result in the largest restored wetland on the West Coast of
    the United States, and also significantly alter the hydrologic regime
    adjacent to South Bay urban areas. The success of the proposed
    restoration is therefore dependent upon adequate tidal flood
    protection, and so this project provides an opportunity for multi-
    objective watershed planning in partnership with the California Coastal
    Conservancy, the lead agency on the restoration project. Project
    objectives include: restoration and enhancement of a diverse array of
    habitats, especially several special status species; tidal flood
    protection; and provision of wildlife-oriented public access. A Corps
    Reconnaissance Study was completed in September 2004 and the
    Feasibility Study was initiated in September 2005.
        Fiscal Year 2007 Funding.--$1.3 million in the fiscal year 2007
    Corps Work Plan to continue the Feasibility Study.
        Fiscal Year 2008 Funding Request.--It is requested that the
    Congressional Committee support an appropriation add-on of $2.5 million
    to continue the Feasibility Study to evaluate integrated flood
    protection and environmental restoration.

              STATEMENT OF SUPPORT--UPPER GUADALUPE RIVER PROJECT

        Background.--The Guadalupe River is one of two major waterways
    flowing through a highly urbanized area of Santa Clara County,
    California, the heart of Silicon Valley. Historically, the river has
    flooded the central district and southern areas of San Jose. According
    to U.S. Army Corps of Engineers (Corps) 1998 feasibility study, severe
    flooding would result from a 100-year flooding event and potentially
    cause $280 million in damages.
        The probability of a large flood occurring before implementation of
    flood prevention measures is high. The upper Guadalupe River overflowed
    in March 1982, January 1983, February 1986, January 1995, March 1995,
    and February 1998, causing damage to several residences and businesses
    in the Alma Avenue and Willow Street areas. The 1995 floods in January
    and March, as well as in February 1998, closed Highway 87 and the
    parallel light-rail line, a major commute artery.
        Project Synopsis.--In 1971, the Santa Clara Valley Water District
    (District) requested the Corps reactivate an earlier study of Guadalupe
    River. From 1971 to 1980, the Corps established the economic
    feasibility and Federal interest in the Guadalupe River only between
    Interstate 880 and Interstate 280. Following the 1982 and 1983 floods,
    the District requested that the Corps reopen its study of the upper
    Guadalupe River upstream of Interstate 280. The Corps completed a
    reconnaissance study in November 1989, which established an
    economically justifiable solution for flood protection in this reach.
    The report recommended proceeding to the feasibility study phase, which
    began in 1990. In January 1997, the Corps determined that the National
    Economic Development (NED) Plan would be a 2 percent or 50 year level
    of flood protection rather than the 1 percent or 100 year level. The
    Corps feasibility study determined the cost of the locally preferred
    100-year plan is $153 million and the Corps NED 50-year plan is $98
    million. The District requested that the costs of providing 50-year and
    100-year flood protection be analyzed during the preconstruction
    engineering design phase. The Corps is now proceeding with the
    preconstruction engineering design phase and has refined the NED Plan
    to address the District's comments and Endangered Species Act issues
    and has reevaluated the locally preferred plan for full Federal cost
    sharing. The findings were submitted to Corps Headquarters for approval
    in March 2004 in a Limited Reevaluation Report on the Proposed Project
    Modifications. This report contains an evaluation of the revised NED
    Plan project and the Locally Preferred Plan project, which costs $165
    million with a benefit-to-cost ratio of 1:1.42 and $212 million with a
    benefit-to-cost ratio of 1:1.24, respectively. The Report was approved
    by the Corps in October 2005. The report recommended full cost-sharing
    on the Locally Preferred Plan project. Current efforts are underway to
    reauthorize the project at its current project cost in the recently
    introduced Water Resources Development Act of 2007.
        Fiscal Year 2007 Funding.--No funds were appropriated in the fiscal
    year 2007 Corps Work Plan for the Upper Guadalupe River Project.
        Fiscal Year 2008 Funding Recommendation.--It is requested that the
    congressional committee support an appropriation add-on of $10.5
    million in fiscal year 2008 to complete final design and continue
    construction on the Upper Guadalupe River Flood Protection Project.

      STATEMENT OF SUPPORT--UPPER PENITENCIA CREEK FLOOD PROTECTION PROJECT

        Background.--The Upper Penitencia Creek Watershed is located in
    northeast Santa Clara County, California, near the southern end of the
    San Francisco Bay. In the last two decades, the creek has flooded in
    1980, 1982, 1983, 1986, 1995, and 1998. The January 1995 flood damaged
    a commercial nursery, a condominium complex, and a business park. The
    February 1998 flood also damaged many homes, businesses, and surface
    streets.
        The proposed project on Upper Penitencia Creek, from the Coyote
    Creek confluence to Dorel Drive, will protect portions of the cities of
    San Jose and Milpitas. The floodplain is completely urbanized;
    undeveloped land is limited to a few scattered agricultural parcels and
    a corridor along Upper Penitencia Creek. Based on an August 2004 U.S.
    Army Corps of Engineers' (Corps) Economics Analysis, over 5,000 homes
    and businesses in the cities of San Jose and Milpitas are located in
    the 1 percent or 100 year flood area. Flood damages were estimated at
    $455 million. Benefit to cost ratios for the 9 project alternatives
    range from 2:1 to 3.1:1.
        Study Synopsis.--Under authority of the Watershed Protection and
    Flood Prevention Act (Public Law 83-566), the Natural Resources
    Conservation Service (formerly the Soil Conservation Service) completed
    an economic feasibility study (watershed plan) for constructing flood
    damage reduction facilities on Upper Penitencia Creek. Following the
    1990 U.S. Department of Agriculture Farm bill, the Natural Resources
    Conservation Service watershed plan stalled due to the very high ratio
    of potential urban development flood damage compared to agricultural
    damage in the project area.
        In January 1993, the Santa Clara Valley Water District (District)
    requested the Corps proceed with a reconnaissance study in the 1994
    fiscal year while the Natural Resources Conservation Service plan was
    on hold. Funds were appropriated by Congress for fiscal year 1995 and
    the Corps started the reconnaissance study in October 1994. The
    reconnaissance report was completed in July 1995, with the
    recommendation to proceed with the feasibility study phase. The
    feasibility study, initiated in February 1998, is currently scheduled
    for completion in 2007.
        Advance Construction.--To accelerate project implementation, the
    District submitted a section 104 application to the Corps for approval
    to construct a portion of the project. The application was approved in
    December 2000. The advance construction is for a 2,600-foot long
    section of bypass channel between Coyote Creek and King Road. However,
    due to funding constraints at the District and concerns raised by
    regulatory agencies, the design was stopped and turned over to the
    Corps to complete.
        Fiscal Year 2007 Funding.--$319,000 in the fiscal year 2007 Corps
    Work Plan for continued project investigation.
        Fiscal Year 2008 Funding Recommendation.--It is requested that the
    congressional committee support an appropriation add-on of $109,000, in
    addition to the $191,000 in the administration's fiscal year 2008
    budget request, for a total of $300,000 for the Upper Penitencia Creek
    Flood Protection Project to continue the Feasibility Study.
                                     ______

           Prepared Statement of the Calaveras County Water District

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

                      COSGROVE CREEK FLOOD CONTROL PROJECT

        The Cosgrove Creek Flood Control Project will address flooding that
    occurs along the lower reaches of the creek, as well as flooding that
    occurs on Spring Creek. Flooding in these areas impacts over 400 people
    and 100 structures located in the 100-year floodplain. Within the
    context of the flood control effort, the project will also address
    options for the beneficial use of peak flows and address other local
    concerns such as the need for recreational opportunities in the area.
        The Calaveras County Water District respectfully requests $100,000
    for this project in fiscal year 2008 from the Corps of Engineers
    Construction General account.

      NEW HOGAN RESERVOIR/CALAVERAS COUNTY REGIONAL WATER AND WASTEWATER
                                 FACILITY STUDY

        This project will address regional water and wastewater facility
    needs for the region. New uses for recycled water, including wetlands
    creation, groundwater recharge and conjunctive use, are key elements of
    the project and will meet critical water use efficiency and
    environmental needs of the area. This project will also fund the New
    Hogan Lake Reoperation study to examine if operation of the project
    should be changed to more closely meet the contemporary needs of the
    area, including problems associated with downstream flooding and
    conjunctive use of water.
        The Calaveras County Water District respectfully requests
    $1,000,000 from the Corps of Engineers under section 205 in fiscal year
    2008, switching to section 219 depending on WRDA.
                                     ______

         Prepared Statement of the California State Coastal Conservancy

                                    SUMMARY

        The following testimony is in support of the California State
    Coastal Conservancy's fiscal year 2008 Energy and Water Appropriations
    requests. The Conservancy respectfully requests needed funding for the
    following critical projects: $7.65 million for the Hamilton Bel-Marin
    Keys Wetland Restoration Project, Army Corps of Engineers, Construction
    General; $2.5 million for the South San Francisco Bay Shoreline Study,
    Army Corps of Engineers, General Investigations; $750,000 for the Napa
    River Salt Marsh Restoration Project, Army Corps of Engineers, General
    Investigations; $13.59 million for the Upper Newport Bay Ecosystem
    Restoration Project, Army Corps of Engineers, Construction General;
    $3,000,000 for the Matilija Dam Ecosystem Restoration Project, Army
    Corps of Engineers, General Investigations and $300,000 for the San
    Pablo Bay Watershed Restoration Program.

                             CONSERVANCY BACKGROUND

        The California Coastal Conservancy, established in 1976, is a State
    agency that uses entrepreneurial techniques to purchase, protect,
    restore, and enhance coastal resources, and to provide access to the
    shore. We work in partnership with local governments, other public
    agencies, nonprofit organizations, and private landowners.
        To date, the Conservancy has undertaken more than 950 projects
    along the 1,100 mile California coastline and around San Francisco Bay.
    Through such projects, the Conservancy: protects and improves coastal
    wetlands, streams, and watersheds; works with local communities to
    revitalize urban waterfronts; assists local communities in solving
    complex land-use problems and protects agricultural lands and supports
    coastal agriculture to list a few of our activities.
        Since its establishment in 1976, the Coastal Conservancy has:
    helped build more than 300 access ways and trails, thus opening more
    than 80 miles of coastal and bay lands for public use; assisted in the
    completion of over 100 urban waterfront projects; joined in partnership
    endeavors with more than 100 local land trusts and other nonprofit
    groups, making local community involvement an integral part of the
    Coastal Conservancy's work and completed projects in every coastal
    county and all 9 San Francisco Bay Area counties. In addition, we
    currently have over 300 active projects that are benefiting the
    citizens of California.
    Hamilton Bel-Marin Keys Wetland Restoration Project
        In fiscal year 2008 the California Coastal Conservancy is seeking
    $7.65 million, consistent with Corps of Engineers' capability, for the
    continued construction of this project.
        This project is of critical importance as it will provide nearly
    700 acres of restored tidal and seasonal wetlands at a former Army
    base, in Marin County, California and provide much needed habitat for
    several threatened and endangered species; as well as, shorebirds and
    waterfowl migrating along the Pacific Flyway. In addition, this project
    beneficially uses dredged material from the San Francisco Bay which
    provides for increased navigation and maritime commerce for the Bay
    Area, a much needed economic stimulus for the region.
        The first phase of construction, which started last year, is taking
    place on the former Army Airfield. Miles of levees are currently under
    construction, after which the main runway and taxiways will be buried
    under millions of cubic yards of clean dredged sediment. Subsequently,
    the easterly levee will be breached allowing tidal waters to once again
    flood the site. Later in the project, the Corps will work on the
    adjacent Antenna field and Bel Marin Keys V property (subject to WRDA
    approval) resulting in a total project area of nearly 2,500 acres. This
    phased approach will be used to complete the design and construction
    tasks in conjunction with the availability of land and dredged
    material.
    South San Francisco Bay Shoreline Study
        The Conservancy is seeking $2.5 million in funding in order to
    continue the Feasibility Study for this project. The study was
    initiated in fiscal year 2005 and has been ongoing, receiving $600,000
    in funds in fiscal year 2006.
        This project is of national significance as it will create the
    largest restored wetland on the West Coast of the United States and
    will provide extensive habitat for federally endangered species and
    migratory waterfowl. In addition, the project is also critical to the
    region as it will provide tidal and fluvial flood protection for the
    South San Francisco Bay Area protecting approximately 42,800 acres,
    7,400 homes and businesses, and significant urban infrastructure, to
    include major highways, hospitals and airport facilities.
        In order to continue to advance this important study it is
    imperative that local interests and the Federal Government work
    together to ensure a reliable funding stream for the project. In
    accordance, substantial cost-sharing has already begun among the land
    management agencies. The U.S. Fish and Wildlife Service contributed $8
    million toward the $100 million acquisition of the salt ponds. The
    State of California provided $72 million and the Hewlett Foundation,
    Packard Foundation, Moore Foundation, and Goldman Fund provided $20
    million. The foundations are providing an additional $15 million for
    restoration planning and $9 million for land management. The State of
    California is providing $8 million for planning and $6 million for land
    management.
    Napa River Salt Marsh
        For fiscal year 2008, we are seeking $750,000 in Federal funds in
    order to complete preconstruction engineering and design (PED) for this
    project which will allow construction to commence as soon as the
    project is authorized by Congress. Last year, $125,000 was appropriated
    to the Corps of Engineers for PED activities.
        The funds requested would allow the Corps of Engineers to complete
    design of the Napa River Salt Marsh Project. Upon authorization of the
    project in WRDA, the Corps will be able to construct the project.
    Construction of the project will provide extensive benefits to the
    region, to include: providing extensive wetland habitat in San
    Francisco Bay; the beneficial use for recycled water in the North Bay;
    improve open space and recreational opportunities; and resolve urgent
    issues associated with deterioration of the site's levee, water control
    structures, and water quality.
        The 10,000 acre Napa River Salt Marsh was purchased by the State of
    California from Cargill in 1994 and is managed by the California
    Department of Fish and Game. The State Coastal Conservancy has been the
    non-Federal sponsor working with the Corps on the Feasibility Study.
    The Corps' Feasibility Study was completed and the Chief's Report was
    signed in December of 2004. Preconstruction engineering and design is
    currently taking place with construction commencing once the project is
    authorized in WRDA.
    Upper Newport Bay Ecosystem Restoration
        In fiscal year 2008, we are seeking $13.59 million in funding to
    complete construction and avoid cost increases and project delays.
        Upper Newport Bay, one of the largest remaining tidal wetlands in
    Southern California, provides significant habitat for numerous
    federally endangered species, migratory waterfowl and shorebirds along
    the Pacific Flyway, and anadromous fish and other aquatic species. To
    ensure the long-term viability of this diverse salt marsh ecosystem as
    well as the stability of the region's ecosystem, the Army Corps of
    Engineers and the County of Orange developed the Upper Newport Bay
    Ecological Restoration Project, which was authorized in the Water
    Resources Development Act of 2000.
        The project will address the habitat conversion resulting from
    sedimentation in the upper bay, increase the quantity and quality of
    wetlands habitat, improve water quality by reducing sediment inflows
    and algal blooms and preserve both Federal and local navigational
    channels, which if unaddressed will require costly maintenance
    dredging.
        A construction contract was awarded in September 2005 and
    construction is underway. The available funds (Federal and non-Federal)
    will be expended by late summer 2006. The funding request of $18
    million for fiscal year 2007 will complete construction of this project
    and avoid cost increases from re-mobilizing equipment and inflation.
    Matilija Dam Ecosystem Restoration Project
        In fiscal year 2008 we are seeking $3 million for the Army Corps of
    Engineers General Investigation account to complete the U.S. Army Corps
    of Engineers' engineering and Design work of the project.
        The Matilija Dam Ecosystem Restoration Project is a project of
    vital importance as the project seeks to remove the 200-foot tall
    Matilija Dam on a tributary to the Ventura River. This critical project
    is designed to reestablish runs of the endangered southern steelhead
    trout and to allow sand to flow to coastal beaches. This project is one
    of the largest dam removal projects in the Country and enjoys broad
    support from many local, State and Federal agencies.
        In order to remove the dam, 6 million cubic yards of sediments
    trapped behind the dam will be moved or recontoured. A high flow
    sediment bypass system will be constructed at a water diversion
    downstream. A silt removal system will be installed along the diversion
    canal. In addition, levees will be built in several places along the
    river channel to protect property from flooding due to the expected
    increases in stream channel elevation in the first years after removal
    of the dam. The project also involves removal of invasive plants and
    the installation of replacement water wells
    San Pablo Bay Watershed Restoration Program
        We are seeking $300,000 in fiscal year 2008 appropriations for the
    U.S. Army Corps of Engineers General Investigations account.
        This critical program provides technical, planning and design
    assistance to local partners in one of the Nation's most treasured
    estuaries. Partnership collaboration and outreach guarantees that the
    program provides the services needed by local entities to improve
    habitat and flood protection throughout the watershed. By working with
    local entities, long-term water resources protection and restoration
    has increased.
        The support of the program would facilitate technical and planning
    assistance that will expand wetland habitat for numerous endangered
    species, migratory waterfowl and shorebirds, andramodous fish and other
    aquatic species. The project will also improve open space and
    recreation opportunities as well as resolve the following; issues
    surrounding levees on the Sears Point project, channel restoration on
    Gallinas Creek, water quality issues on the Black Point Antenna Field
    site as well as conduct environmental restoration and flood protection
    surveys on Wildcat Creek.
        We thank you for your consideration of these requests and look
    forward to working with you on these and other matters throughout the
    year.
                                     ______

              Prepared Statement of the American Chemical Society

        The American Chemical Society (ACS) would like to thank Chairman
    Byron Dorgan and Ranking Member Peter Domenici for the opportunity to
    submit testimony for the record on the Energy and Water Development
    Appropriations bill for fiscal year 2008. For fiscal year 2008, ACS
    requests the Department of Energy Office of Science be fully funded at
    the administration request of $4.398 billion.
        ACS is a non-profit scientific and educational organization,
    chartered by Congress, representing more than 160,000 individual
    chemical scientists and engineers. The world's largest scientific
    society, ACS advances the chemical enterprise, increases public
    understanding of chemistry, and brings its expertise to bear on State
    and national matters.
        As Congress and the administration seek to bolster the economy,
    economists agree that investments in basic research boost long-term
    economic growth more than other areas of Federal spending. Numerous
    recent reports cite the growing challenges American faces from global
    competitors, including the National Academies of Science report Rising
    Above the Gathering Storm.
        Basic physical science investments foster the new technologies and
    train the scientific workforce which drive the Nation's public health,
    defense, energy security, and environmental progress. Although industry
    funds the bulk of national R&D, the Federal Government provides 60
    percent of basic research funding and, remarkably, 40 percent of
    patents cite Federal research as their source. Yet Federal research in
    the physical sciences and engineering has been cut in half since 1970
    as a percentage of GDP. Fortunately, the President, top congressional
    leaders, and members of science and industry have all recognized the
    need to boost investment in physical sciences and engineering research.
    This investment has never been more important given its central role in
    advancing the Nation's economic, energy, and homeland security.
    ACS Budget Recommendations
        Current Federal efforts to advance energy efficiency, production,
    and new energy sources while reducing air pollution and other
    environmental impacts will demand increased investment in long-term
    energy research. By supporting people, research, and world-class
    science and engineering facilities, the Department of Energy's Office
    of Science expands the frontiers of science in areas critical to DOE's
    energy, environment, and national security missions.
        The President's budget request represents leadership to ensure
    American competitiveness and innovation by providing the largest
    investment in DOE Office of Science in over 2 decades. Many in Congress
    have joined with the President in calling for expanded investment in
    basic physical science research. The President's request for $4.398
    billion is essential to ensuring the strength of our innovation
    economy.
        Increases in the Office of Science will help reverse the declining
    Federal support for physical science and encourage more students to
    pursue degrees in these fields. The Office of Science is the largest
    Federal supporter of research in the physical sciences, funding almost
    40 percent of research in these fields. The Office of Science fosters
    the new discoveries and technical talent that will continue to be
    essential to advances in coal, hydrogen, biomass, genomics, and many
    other technology areas. Additional funds should be directed to increase
    the number of grants, especially in core energy programs, and to
    improve research facilities. The Office is the primary source of
    Federal support in many research areas essential to our energy security
    and economy, such as catalysis, carbon cycle research, photovoltaics,
    combustion, and advanced computing. Increased investment is also
    important given the declining private support for long-term energy
    research.
    Increase Grants in Core Programs
        ACS recommends that increases for the Office of Science be directed
    to advancing core energy research across disciplines, which enables DOE
    to respond rapidly to new challenges. For example, DOE capitalized on
    long-term atmospheric chemistry research, particularly in aerosols, and
    quickly developed a single anthrax-bacterium detector. DOE must
    strengthen its ability to attract scientists and train the next
    generation of scientists and engineers by increasing the number of
    grants in its core programs without reducing their size and duration.
    Current appropriations allow the DOE Office of Science to fund one
    third the proposals as the National Institutes of Health and the
    National Science Foundation. This rate is considerably lower than those
    of other agencies and amounts to lost opportunities for both
    significant discoveries and the education of the next generation of
    scientists and engineers.
        Within the Office of Science, ACS particularly supports the Basic
    Energy Sciences and Biological and Environmental Research programs. As
    the cornerstone of the Office, the Basic Energy Sciences (BES) program
    supports an array of long-term basic research to improve energy
    production and use and reduce the environmental impact of those
    activities. The BES program manages almost all of DOE's scientific
    user-facilities, and provides leading support for nanotechnology and
    advanced computing research--two priority research areas that will have
    important implications for energy efficiency and security. The
    Biological and Environmental Research (BER) program advances
    fundamental understanding in fields such as waste processing,
    bioremediation, and atmospheric chemistry to better understand
    potential long-term health and environmental effects of energy
    production and use and identify opportunities to prevent pollution.
    Progress in these fields is also needed to develop and advance new,
    effective, and efficient processes for the remediation and restoration
    of DOE weapons production sites. ACS supports a strong role for DOE in
    Federal efforts to advance pollution prevention and climate change
    research.
    DOE and the Scientific Workforce
        As the largest supporter of research in the physical sciences, DOE
    can greatly affect the training and number of scientists in industry,
    government and academia. Inadequate investment in any research field
    constricts the supply of trained scientists and engineers who apply
    research and develop new technology. For instance, declining support
    for nuclear science and engineering will greatly affect the nuclear
    sector as a majority of today's nuclear scientists and engineers near
    retirement. Another example is the synergistic relationship between the
    need for radiochemists and NIH's ability to conduct clinical trials.
    Advances in diagnosis and treatment in nuclear medicine are dependent
    on the synthesis of highly specific radiopharmaceuticals that target
    biological processes in normal and diseased tissues. The Office of
    Science, through BER supported research, occupies a critical place in
    the field of radiopharmaceutical research. The NIH relies on the Office
    of Science's basic research to enable clinical trials.
        Another way for DOE to help attract students and retain talented
    scientists and engineers is to renew investments in scientific
    infrastructure. The Office of Science operates one of the most
    extensive and remarkable collection of scientific user facilities in
    the world, providing tools for research for more than 25,000 scientists
    funded by DOE, other Federal agencies, and industry. Many facilities
    are in poor condition or have outmoded instrumentation. Additional
    funding would allow for increased operating time, upgrades,
    instrumentation, and technical support. The proposed cuts could result
    in established facilities lying idle, allowing taxpayer investments to
    go unused.
        National laboratories also play an important role in providing
    research and training opportunities to enhance the university
    curriculum. ACS supports the initial plan by DOE to utilize its
    national laboratories to help mentor and train science teachers.
    Students at all levels clearly learn better when their teachers have a
    deep understanding of the subject, and the first-rate multidisciplinary
    research and scientific professionals at the national laboratories
    certainly could be a rich resource for science and math teachers. ACS
    urges stronger coordination among agencies with significant K-12 math
    and science programs in order to maximize the Federal investment in
    this area.
        ACS praises the work of Department of Energy leadership, and
    particularly Office of Science Director Ray Orbach, to establish a
    vision of America's scientific future with the 20 year facilities plan
    and a forward thinking departmental strategic plan. ACS views these
    documents, along with the Secretary of Energy's Advisory Board report
    ``Critical Choices: Science, Energy, and Security'' as key elements of
    America's research and development portfolio. Growth in DOE Science
    funding is essential to realizing the goals in these documents, and ACS
    urges Congress to act to ensure this vision of a technologically
    advanced and safe America comes to fruition.
                                     ______

         Prepared Statement of the Napa County Flood Control and Water
                             Conservation District

        On behalf of the Napa County Flood Control and Water Conservation
    District (District), I want to thank the subcommittee for this
    opportunity to present our priorities for fiscal year 2008 and, at the
    same time, express our appreciation for your support of the District's
    projects in the years past. The District is the local sponsor for the
    Corps of Engineers award-winning Napa River Flood Control project and
    we are requesting the subcommittee's full support of this project to
    ensure that it stays on schedule. Specifically, we request the
    subcommittee to support our request of $19 million from the Army Corps
    of Engineers Construction General account for the Napa River Flood
    Control Project. We are also seeking $3.615 million for the maintenance
    dredging of the Napa River from the Army Corps of Engineers (Operation
    and Maintenance, General account). The following text outlines these
    projects and the need for the requested funding.

                        NAPA RIVER FLOOD CONTROL PROJECT

    Background
        In the last 50 years, 19 floods have struck the Valley region,
    exacting a heavy toll in loss of life and property.
        The most recent flooding event, the New Years flood of 2006, to hit
    our area is estimated to have caused some $70 million in damage within
    the city of Napa--with the vast majority of that damage in areas that
    will be protected by the Project that is currently under construction.
        The flood in 1986 killed three people and caused more than $100
    million in damage in 1986 dollars. Damages throughout Napa County
    totaled about $85 million from the January and March 1995 floods. The
    floods resulted in 27 businesses and 843 residences damaged countywide.
    Almost all of the damages from the 1986, 1995, and 1997 floods were
    within the Project area.
        Congress had authorized a flood control project in 1965, but due to
    expense, lack of public consensus on the design and concern about
    environment impacts, a project had never been realized. In mid-1995,
    Federal and State resource agencies reviewed the plan and gave notice
    to the Corps that this plan had significant regulatory hurdles to face.
        The project is located in the city and county of Napa, California.
    The population in the city of Napa, approximately, 67,000 in 1994, is
    expected to exceed 77,000 this year. Excluding public facilities, the
    present value of damageable property within the project flood plain is
    well over $500 million. The Napa River Basin, comprising 426 square
    miles, ranging from tidal marshes to mountainous terrain, is subject to
    severe winter storms and frequent flooding. In the lower reaches of the
    river, flood conditions are aggravated by local runoff. Floods in the
    Napa area have occurred in 1955, 1958, 1963, 1965, 1986 (flood of
    record), 1995, 1997 and 2005. In 1998, the river rose just above flood
    stage on three occasions, but subsided before major property damage
    occurred. In December of 2002, flooding occurred from the Napa Creek at
    the transition to the Napa River, resulting in damage to numerous
    residents and several businesses.
    Approved Plan--Project Overview
        In an effort to identify a meaningful and successful plan, a new
    approach emerged that looked at flood control from a broader, more
    comprehensive perspective. Citizens for Napa River Flood Management was
    formed, bringing together a diverse group of local engineers,
    architects, aquatic ecologists, business and agricultural leaders,
    environmentalists, government officials, homeowners and renters and
    numerous community organizations.
        Through a series of public meetings and intensive debate over every
    aspect of Napa's flooding problems, the Citizens for Napa River Flood
    Management crafted a flood management plan offering a range of benefits
    for the entire Napa region. The Corps of Engineers served as a partner
    and a resource for the group, helping to evaluate their approach to
    flood management. The final plan produced by the Citizens for Napa
    River Flood Management was successfully evaluated through the research,
    experience and state-of-the-art simulation tools developed by the Corps
    and numerous international experts in the field of hydrology and other
    related disciplines. The success of this collaboration serves as a
    model for the Nation.
        Acknowledging the river's natural state, the project utilizes a set
    of living river strategies that minimize the disruption and alteration
    of the river habitat, and maximizes the opportunities for environmental
    restoration and enhancement throughout the watershed.
        The Corps has developed the revised plan, which provides 100-year
    protection, with the assistance of the community and its consultants
    into the Supplemental General Design Memorandum (SGDM) and its
    accompanying draft Environmental Impact Statement/Environmental Impact
    Report (SEIS/EIR). Construction of the project began 2 years ago. The
    coalition plan now memorialized in the Corps final documents includes
    the following engineered components: lowering of old dikes, marsh plain
    and flood plain terraces, oxbow dry bypass, Napa Creek flood plain
    terrace, upstream and downstream dry culverts along Napa Creek, new
    dikes, levees and flood walls, bank stabilization, pump stations and
    detention facilities, and bridge replacements. The benefits of the plan
    include reducing or elimination of loss of life, property damage,
    cleanup costs, community disruption due to unemployment and lost
    business revenue, and the need for flood insurance. In fact, the
    project has created an economic renaissance in Napa with new
    investment, schools and housing coming into a livable community on a
    living river. As a key feature, the plan will improve water quality,
    create urban wetlands and enhance wildlife habitats.
        The plan will protect over 7,000 people and over 3,000 residential/
    commercial units from the 100-year flood event on the Napa River and
    its main tributary, the Napa Creek, and the project has a positive
    benefit-to-cost ratio under the Corps calculation. One billion dollars
    in damages will be saved over the useful life of the project. The Napa
    County Flood Control District is meeting its local cost-sharing
    responsibilities for the project. A countywide sales tax, along with a
    number of other funding options, was approved 4 years ago by a two-
    thirds majority of the county's voters for the local share. Napa is
    California's highest repetitive loss community. This plan is
    demonstrative of the disaster resistant community initiative, as well,
    as the sustainable development initiatives of FEMA and EPA.

                          NAPA RIVER DREDGING PROJECT

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

            Prepared Statement of the City of St. Helena, California
    City Of St. Helena
        The city of St. Helena is located in the center of the wine growing
    Napa Valley, 65 miles north of San Francisco. The area was settled in
    1834 as part of General Vallejo's land grant. The city of St. Helena
    was incorporated as a city on March 24, 1876 and reincorporated on May
    14, 1889.
        The city of St. Helena is a General Law City and operates under the
    Council-City Manager form of government. St. Helena is a full service
    city and encompasses an area of 4 square miles. The City Council is the
    governing body and has the power to make and enforce all laws and set
    policy related to municipal affairs. The official population of the
    city of St. Helena as of January 1, 2003, is 6,041. Because of its size
    and its rural nature, St. Helena has serious infrastructure, as well
    as, flood protection and environmental needs that far exceed its
    financial capabilities.
        The city from its inception has served as a rural agricultural
    center. Over the years, with the growth and development of the wine
    industry, the city has become an important business and banking center
    for the wine industry. The city also receives many tourists as a result
    of the wine industry. While, the main goal of the city is to maintain a
    small-town atmosphere and to provide quality services to its citizens,
    this is becoming increasingly difficult. Regulatory, administrative and
    resource requirements placed on the city through the listing of
    threatened and endangered species under the Endangered Species Act on
    the Napa River, as well as significant Clean Water Act requirements
    require the city with a small population base to face significant
    financial costs.
        The Napa River flows along the east boundary of the city of St.
    Helena in northern Napa County. The overall Napa River Watershed
    historically supported a dense riparian forest and significant wetland
    habitat. Over the last 200 years, approximately 6,500 acres of valley
    floor wetlands have been filled in and 45,700 acres of overall
    watershed have been converted to urban and agricultural uses. This
    degradation of natural habitats has had a significant effect on water
    quality, vegetation and wildlife, and aquatic resources within the Napa
    River Watershed.
        Surface water quality of the Napa River is dependent upon time of
    year, runoff from York and Sulphur Creeks, and urban area discharges.
    During the winter months when stream flow is high, pollutants are
    diluted; however, sedimentation and turbidity is high as well. During
    the summer months when stream flow is low, pollutants are concentrated
    and oxygen levels are low, thereby decreasing water quality.
    Agricultural runoff adds pesticides, fertilizer residue, and sometimes
    sediment. Discharges from urban areas can include contaminated
    stormwater runoff and treated city wastewater. The Napa River has been
    placed on the Clean Water Act 303(d) list and TMDL Priority Schedule
    due to unacceptable levels of bacteria, sedimentation, and nutrients.
    It is against this backdrop that the city of St. Helena faces its
    biggest challenges.
    St. Helena Comprehensive Flood Control Project
        The project site is in the City of St. Helena in Napa County,
    California (County), along the Napa River and adjacent areas. Within
    and adjacent to this reach of the River, the city proposes various
    flood control components, ranging from widening the floodplain and
    constructing new floodwalls and levee, to relocating homes. An
    additional component includes flood protection at the Wastewater
    Treatment Plant (WWTP) south of the city.
        With this project, the city of St. Helena seeks to develop and
    implement a plan that will reduce damage resulting from Napa River
    flooding in a manner that is economically feasible, acceptable from a
    public policy standpoint, and environmentally sensitive. In particular,
    the city wishes to reduce flooding in a manner that will result in
    overall improvement to the health of the ecosystem in the project
    reach.
        The project will re-connect the Napa River to its historic
    floodplain, thereby reducing water surface elevations through the area
    by several feet, avoiding large flood control structures and
    canalization, and would provide 100-year flood protection to the area.
    It will also restore habitat of the natural floodplain terraces,
    including riparian and aquatic habitat. Within and adjacent to this
    reach of the river, the city proposes various flood control components,
    ranging from widening the floodplain and constructing new floodwalls
    and levee, to relocating homes. The St. Helena Comprehensive Project
    will also restore native plant and tree communities through re-
    vegetation efforts.
        The city of St. Helena respectfully requests the committee's
    support for $450,000 under the Corps of Engineers General
    Investigations Account.
    Upper York Creek Dam Removal And Restoration Project
        The Upper York Creek Watershed originates at the western side of
    the Napa Valley watershed and the creek flows through a narrow canyon
    before joining the Napa River at a 225 foot elevation.
        This project will improve fish passage and ecological stream
    function for the York Creek, a key Napa River Tributary. The project
    will open an additional 2 miles of steelhead habitat upstream from the
    current dam location by removing an earthen dam and accumulated
    sediment necessary to restore fish passage to provide unimpeded
    upstream adult and downstream juvenile fish passage.
        Revegetation, as part of the project, will restore a self-
    sustaining native plant community that will help exclude non-native
    invasive species.
        The city of St. Helena respectfully requests the committee's
    support for $1.371 million under the Corps of Engineers section 206
    Aquatic Ecosystem Restoration Program to design and initiate
    construction under a design build contract in fiscal year 2008.
    St. Helena Napa River Restoration Project
        The Napa River and its riparian corridor are considered Critical
    Habitat for steelhead and salmon recovery. The steelhead is one of six
    federally-listed threatened and endangered species within the Napa
    River and its adjoining tributaries which requires attention. Current
    conditions are such that natural habitats and geomorphic processes of
    the Napa River are highly confined with sediment transport and
    geomorphic work occurring in a limited area of the streambed and
    channel banks. Napa River's habitat for the steelhead is limited in its
    ability to provide prime spawning habitat. Limitations include
    urbanization removing significant amounts of shading and cover
    vegetation within and adjacent to the river; and a detrimental lack of
    pool habitat.
        In an effort to address these Federal environmental issues, the St.
    Helena Napa River Restoration Project, a section 06 Aquatic Ecosystem
    Restoration Project, was identified in the Napa Valley Watershed
    Management Feasibility Study of April 2001 as a specific opportunity
    for restoration.
        This project will develop riparian planting regimes to maximize
    habitat values for species, in particular, steelhead, California
    freshwater shrimp and young salmon.
        This project will address the lack of shading and cover vegetation
    along the river which has impaired the river's ability to serve as a
    critical habitat for many different species of fish and wildlife. It is
    necessary to ensure and improve the viability of Federal and State
    listed species by providing rearing, resident and migratory habitat in
    the project's three-mile stream corridor. The project will also work to
    improve area habitat to benefit the migration of steelhead to high
    value fisheries habitat in upper watershed channel reaches.
        The city of St. Helena respectfully requests $300,000 in fiscal
    year 2008 funding from the Corps of Engineers section 206 Aquatic
    Ecosystem Restoration Program to complete the feasibility study. This
    study will recommend actions not only for maximizing habitat for
    species by removing obstacles and hard bank stabilization, but to
    implement improvements to in-stream habitat such as woody debris,
    boulders and establishment of pools.
                                     ______

     Prepared Statement of the Metropolitan Water Reclamation District of
                                Greater Chicago

        On behalf of the Metropolitan Water Reclamation District of Greater
    Chicago (District), I want to thank the subcommittee for this
    opportunity to present our priority for fiscal year 2008 and, at the
    same time, express our appreciation for your support of the District's
    projects in the years past. The District is the local sponsor for the
    Corps of Engineers priority projects of the Chicagoland Underflow Plan:
    the O'Hare, McCook and Thornton Reservoirs. We are requesting the
    subcommittee's full support for McCook and Thornton Reservoirs, as the
    O'Hare Reservoir has been completed. Specifically, we request the
    subcommittee to support the President's fiscal year 2008 budget request
    of $33,500,000 from the Army Corps of Engineers Construction, General
    account in the fiscal year 2008 Energy and Water appropriations bill.
    The following text outlines these projects and the need for the
    requested funding.
    The Chicagoland Underflow Plan
        The Chicagoland Underflow Plan (CUP) consists of three reservoirs:
    the O'Hare, McCook and Thornton Reservoirs. These reservoirs are a part
    of the Tunnel and Reservoir Plan (TARP). The O' Hare Reservoir Project
    was fully authorized for construction in the Water Resources
    Development Act of 1986 (Public Law 99-662) and completed by the Corps
    in fiscal year 1999. This reservoir is connected to the existing O'Hare
    segment of the TARP. Adopted in 1972, TARP was the result of a multi-
    agency effort, which included officials of the State of Illinois,
    County of Cook, city of Chicago, and the District.
        TARP was designed to address the overwhelming water pollution and
    flooding problems of the Chicagoland combined sewer areas. These
    problems stem from the fact that the capacity of the area's waterways
    has been overburdened over the years and has become woefully inadequate
    in both hydraulic and assimilative capacities. These waterways are no
    longer able to carry away the combined sewer overflow (CSO) discharges
    nor are they able to assimilate the pollution associated with these
    discharges. Severe basement flooding and polluted waterways (including
    Lake Michigan, which is the source of drinking water for millions of
    people) is the inevitable result. We point with pride to the fact that
    TARP was found to be the most cost-effective and socially and
    environmentally acceptable way for reducing these flooding and water
    pollution problems. Experience to date has reinforced such findings
    with respect to economics and efficiency.
        The TARP plan calls for the construction of the new ``underground
    rivers'' beneath the area's waterways, connected to large CSO storage
    reservoirs. The ``underground rivers'' are tunnels up to 35 feet in
    diameter and 350 feet below the surface. All 109.4 miles of the tunnels
    have just recently been completed. The tunnels capture the majority of
    the pollution load by capturing all of the small storms and the first
    flush of the large storms.
        The completed O'Hare CUP Reservoir provides 350 million gallons of
    storage. This Reservoir has a service area of 11.2 square miles and
    provides flood relief to 21,535 homes in Arlington Heights, Des Plaines
    and Mount Prospect. The Thornton and McCook Reservoirs are currently
    under construction, but until and unless they are completed,
    significant areas will remain unprotected. Without these reservoirs as
    outlets, the local drainage has nowhere to go when large storms hit the
    area.
        Since its inception, TARP has not only abated flooding and
    pollution in the Chicagoland area, but has helped to preserve the
    integrity of Lake Michigan. In the years prior to TARP, a major storm
    in the area would cause local sewers and interceptors to surcharge
    resulting in CSO spills into the Chicagoland waterways and during major
    storms into Lake Michigan, the source of drinking water for the region.
    Since these waterways have a limited capacity, major storms have caused
    them to reach dangerously high levels resulting in massive sewer
    backups into basements and causing multi-million dollar damage to
    property.
        Since implementation of TARP, 823 billion gallons of CSOs have been
    captured by TARP, that otherwise would have reached waterways. Area
    waterways are once again abundant with many species of aquatic life and
    the riverfront has been reclaimed as a natural resource for recreation
    and development. Closure of Lake Michigan beaches due to pollution has
    become a rarity. After the completion of both phases of TARP, 99
    percent of the CSO pollution will be eliminated. The elimination of
    CSOs will reduce the quantity of discretionary dilution water needed to
    keep the area waterways fresh. This water can be used instead for
    increasing the drinking water allocation for communities in Cook, Lake,
    Will and DuPage counties that are now on a waiting list to receive such
    water. Already, these counties have received millions of gallons of
    additional Lake Michigan water per day, partially as a result of the
    reduction in the District's discretionary diversion since 1980.
    Additional allotments of Lake Michigan water will be made to these
    communities, as more water becomes available from reduced discretionary
    diversion.
        With new allocations of lake water, many communities that
    previously did not get lake water are in the process of building, or
    have already built, water mains to accommodate their new source of
    drinking water. The new source of drinking water will be a substitute
    for the poorer quality well water previously used by these communities.
    Partly due to TARP, it is estimated by IDOT that between 1981 and 2020,
    283 million gallons per day of Lake Michigan water would be added to
    domestic consumption. This translates into approximately 2 million
    additional people that would be able to enjoy Lake Michigan water. This
    new source of water supply will not only benefit its immediate
    receivers but will also result in an economic stimulus to the entire
    Chicagoland area by providing a reliable source of good quality water
    supply.
    The McCook and Thornton Reservoirs
        The McCook and Thornton Reservoirs of the Chicagoland Underflow
    Plan (CUP) were fully authorized for construction in the Water
    Resources Development Act of 1988 (Public Law 100-676). These CUP
    reservoirs, as previously discussed, are a part of TARP, a flood
    protection plan that is designed to reduce basement flooding due to
    combined sewer back-ups and inadequate hydraulic capacity of the urban
    waterways.
        These reservoirs will provide annual benefits of $115 million. The
    total expected annual benefits of these projects are approximately
    twice as much as their total annual costs. The District, as the local
    sponsor, has acquired the land necessary for these projects, and will
    meet its cost sharing obligations under Public Law 99-662.
        These projects are a very sound investment with a high rate of
    return. The remaining benefit/cost ratio for these 2 reservoirs
    together is 3.0. They will enhance the quality of life, safety and the
    peace of mind of the residents of this region. The State of Illinois
    has endorsed these projects and has urged their implementation. In
    professional circles, these projects are hailed for their
    farsightedness, innovation, and benefits.
        Based on two successive Presidentially-declared flood disasters in
    our area in 1986 and again in 1987, and severe flooding in the last
    several years, we believe the probability of this type of flood
    emergency occurring before implementation of the critical flood
    prevention measure is quite high. As the public agency for the greater
    Chicagoland area responsible for water pollution control, and as our
    past sponsorship for flood control projects, we have an obligation to
    protect the health and safety of our citizens. We are asking your
    support in helping us achieve this necessary and important goal of
    construction completion.
        We have been very pleased that over the years the subcommittee has
    seen fit to include critical levels of funds for these important
    projects. It is important that we receive a total of $33,500,000 in
    construction funds in fiscal year 2008 to maintain the commitment and
    finish these projects. This funding is critical in order to construct
    the McCook Reservoir Stage 1 Grout Curtain, Stage 2 Slurry Wall, and
    Stage 1 Rock Wall Stabilization Contracts and to continue the
    engineering design of other McCook and Thornton Reservoir projects. The
    community has waited long enough for protection and we need these funds
    now to move the project in construction. We respectfully request your
    consideration of our request.
    Summary
        To emphasize the areas plight, I would like to relate a flooding
    event that occurred when just under 4 inches of rain fell on the
    greater Chicagoland area. Due to the frozen ground, almost all of the
    rainfall entered our combined sewers, causing sewerage back-ups
    throughout the area. When the existing TARP tunnels filled with
    approximately 1.2 billion gallons of sewage and runoff, the only
    remaining outlets for the sewers were our waterways. Between 9:00 p.m.
    and 3:00 a.m., the Chicago and Calumet Rivers rose 6 feet. For the
    first time since 1981 we had to open the locks at all three of the
    waterway control points; these include Wilmette, downtown Chicago, and
    Calumet. Approximately 4.2 billion gallons of combined sewage and
    stormwater had to be released directly into Lake Michigan.
        Given our large regional jurisdiction and the severity and
    regularity of flooding in our area, the Corps was compelled to develop
    a plan that would complete the uniqueness of TARP and be large enough
    to accommodate the area we serve. With a combined sewer area of 375
    square miles, consisting of the city of Chicago and 51 contiguous
    suburbs, there are 1,443,000 structures within our jurisdiction, which
    are subject to flooding at any given time. The annual damages sustained
    exceed $150 million. With the TARP CUP Reservoirs in place, these
    damages could be eliminated. We must consider the safety and peace of
    mind of the 2 million people who are affected as well as the disaster
    relief funds that will be saved when these projects are in place. As
    the public agency in the greater Chicagoland area responsible for water
    pollution control, and as the regional sponsor for flood control, we
    have an obligation to protect the health and safety of our citizens. We
    are asking your support in helping us achieve this necessary and
    important goal. It is absolutely critical that the Corps' work, which
    has been proceeding for a number of years, now proceeds on schedule
    through construction.
        Therefore, we urgently request that a total of $33,500,000 in
    construction funds be made available in the fiscal year 2008 Energy and
    Water Development Appropriations Act to continue construction of the
    McCook and Thornton Reservoir Projects.
        Again, we thank the subcommittee for its support of this important
    project over the years, and we thank you in advance for your
    consideration of our request this year.
                                     ______

      Prepared Statement of the Western Coalition of Arid States (WESTCAS)
        My name is Larry Libeu, and I am President of the Western Coalition
    of Arid States. The Western Coalition of Arid States (WESTCAS) is
    submitting this testimony regarding the Presidents fiscal year 2008
    budget request for the United States Army Corp of Engineers.
        WESTCAS is a coalition of approximately 125 water and wastewater
    districts, cities and towns and professional organizations focused on
    water quality and water quantity issues in the States of Arizona,
    California, Colorado, Idaho, Nevada, New Mexico, Oregon and Texas. Our
    mission is to work with Federal, State and regional water quality and
    quantity agencies to promote scientifically-sound law, regulations,
    appropriations and policies that protect public health in the
    environment of the arid West.
        Providing adequate budget for the Army Corps of Engineers is
    crucial for the immediate and long term delivery of adequate water
    supplies, hydropower, flood control, and flood and coastal restoration
    within the arid west. As such WESTCAS supports the performance criteria
    established which will ensure projects are funded and completed within
    a timely fashion. We also believe the issue of reprogramming of funds
    out of projects needs to be addressed in a more thorough manner and
    have welcomed your interest in this area of the Corps program.
        We are greatly concerned that the Corps Construction budget is down
    38 percent, the General Investigations are down 45 percent and the O&M
    budget is ever increasing. The Corps infrastructure is one of the
    foundations of our Nation's economy--and the infrastructure is aging.
    When we look at the number of projects funded by Congress last year, it
    appears the Corps is only submitting a budget that funds one-quarter of
    that work. This is not a solution for success but a path way to
    cataclysmic failure which could have devastating consequences to the
    economy.
        The Army Corps of Engineers provides funding and oversight for many
    projects within the WESTCAS States including but not limited to the
    following:

    ------------------------------------------------------------------------

    ------------------------------------------------------------------------
    Alamogordo, New Mexico.....................................   $4,200,000
    National Dam Safety Program................................   10,000,000
    Oakland Harbor, California.................................   42,000,000
    Sacramento River Bank Protection, CA.......................   21,528,000
    Success Dam, Tule River, California........................   18,000,000
    Sims Bayou, Houston, Texas.................................   24,154,000
    ------------------------------------------------------------------------

        As such, the Corps is a critical partner for WESTCAS organizations
    to provide quality water services both today and tomorrow. We look with
    interest in seeing the 5-year budget development plan that will be
    provided to Congress in the near future. This will provide a level of
    greater transparency and ability for the stakeholders of the Corps to
    better understand future budgetary trends.
        To that end, we believe it is important for the committee to
    provide greater direction for the Corps to undertake an integrated
    water management and watershed approach that will assist in focusing on
    the needs of today and with projecting future needs. What we have
    witnessed over the years of looking at agencies budgets is the lack of
    intergovernmental cooperation and cooperative planning. The planning
    should be taking place with the States and the interested parties at
    the watershed level. We believe there is widespread support for such
    approaches throughout the West.
        We note a slight increase in the Corps Regulatory program, a
    program to protect wetlands and other waters of the United States.
    Permits, and the ability to get timely consideration of such is an
    important element for our agencies. We are interested in seeing greater
    detail with regard to the Corps request in this area since they
    indicate the funding is needed because of the Supreme Court's Carabell
    and Rapanos decisions. These cases hold the potential for greater
    resource allocations on our members' part and believe this request
    needs careful attention.
        Though not in your jurisdiction, we look with interest on the
    current Water Resources Development Act authorization effort because of
    the consequences to future budgets of the agency. Reform is a good idea
    if it is not used as a tool for delay. With the Corps having over a $50
    billion backlog of projects it is important to recognize the need to
    fund this budget at a level that meets the needs in a timely manner and
    keeps the economy strong and protects the public.
        Thank you for considering our request.
                                     ______

                           DEPARTMENT OF THE INTERIOR

                             Bureau of Reclamation

       Prepared Statement of the New Mexico Interstate Stream Commission

      COLORADO RIVER BASIN SALINITY CONTROL PROGRAM, TITLE II, BUREAU OF
                                  RECLAMATION
                                    SUMMARY

        This statement is submitted in support of fiscal year 2008
    appropriations for the Colorado River Basin salinity control program of
    the Department of the Interior's Bureau of Reclamation. Congress
    designated the Bureau of Reclamation to be the lead agency for salinity
    control in the Colorado River Basin by the Colorado River Basin
    Salinity Control Act of 1974, and reconfirmed the Bureau of
    Reclamation's role by passage of Public Law 104-20. A total of $17.5
    million is requested for fiscal year 2008 to implement the authorized
    Colorado River salinity control program of the Bureau of Reclamation.
    The President's appropriation request of $7.85 million, falling again
    below previous appropriations for the program, is inadequate because
    studies have shown that the implementation of the salinity control
    program has fallen behind the pace needed to control damages from
    salinity. An appropriation of $17.5 million for Reclamation's salinity
    control program is necessary to protect water quality standards for
    salinity and to prevent unnecessary levels of economic damage from
    increased salinity levels in water delivered to the Lower Basin States
    of the Colorado River. In addition, funding for operation and
    maintenance of existing projects and sufficient general investigation
    funding is required to identify new salinity control opportunities.

                                   STATEMENT

        The water quality standards for salinity of the Colorado River must
    be protected while the Basin States continue to develop their compact
    apportioned waters of the river. The salinity standards for the
    Colorado River have been adopted by the seven Basin States and approved
    by EPA. While currently the standards have not been exceeded, salinity
    control projects must be brought on-line in a timely and cost-effective
    manner to prevent future effects that could cause the numeric criteria
    to be exceeded, and would result in unnecessary damages from higher
    levels of salinity in the water delivered to Lower Basin States of the
    Colorado River.
        The Colorado River Basin Salinity Control Act was authorized by
    Congress and signed into law in 1974. The seven Colorado River Basin
    States, in response to the Clean Water Act of 1972, formed the Colorado
    River Basin Salinity Control Forum, a body comprised of gubernatorial
    representatives from the seven States. The Forum was created to provide
    for interstate cooperation in response to the Clean Water Act and to
    provide the States with information necessary to comply with Sections
    303(a) and (b) of the Act. The Forum has become the primary means for
    the Basin States to coordinate with Federal agencies and Congress to
    support the implementation of the salinity control program for the
    Colorado River Basin.
        Bureau of Reclamation studies show that quantified damages from the
    Colorado River to United States water users are about $330,000,000 per
    year. Unquantified damages are significantly greater. Damages are
    estimated at $75,000,000 per year for every additional increase of 30
    milligrams per liter in salinity of the Colorado River. Control of
    salinity is necessary for the States of the Colorado River Basin,
    including New Mexico, to continue to develop their compact-apportioned
    waters of the Colorado River.
        Timely appropriations for the funding of the salinity control
    program are essential to comply with the water quality standards for
    salinity, prevent unnecessary economic damages in the United States,
    and protect the quality of the water that the United States is
    obligated to deliver to Mexico. The Basin States and Federal agencies
    agree that increases in the salinity of the Colorado River will result
    in significant increases in damages to water users in the Lower
    Colorado River Basin. An appropriation of only the amount specified in
    the President's budget request is inadequate to protect the quality of
    water in the Colorado River and prevent unnecessary salinity damages in
    the States of the Lower Colorado River Basin. Although the United
    States has always met the water quality standard for salinity of water
    delivered to Mexico under Minute No. 242 of the International Boundary
    and Water Commission, the United States through the U.S. Section of
    IBWC is currently addressing a request by Mexico for better quality
    water. Thus, continued strong support and adequate funding of the
    salinity control program is required to control salinity-related
    damages in the United States and Mexico.
        Congress amended the Colorado River Basin Salinity Control Act in
    July 1995 (Public Law 104-20). The salinity control program authorized
    by Congress by the amendment has proven to be very cost-effective, and
    the Basin States are standing ready with up-front cost sharing.
    Proposals from public and private sector entities in response to the
    Bureau of Reclamation's advertisement have far exceeded available
    funding. Basin States cost sharing funds are available for the $17.5
    million appropriation request for fiscal year 2008. The Basin States
    cost sharing adds $0.43 for each Federal $1 appropriated.
        Public Law 106-459 gave the Bureau of Reclamation additional
    spending authority for the salinity control program. With the
    additional authority in place and significant cost sharing available
    from the Basin States, it is essential that the salinity control
    program be funded at the level requested by the Forum and Basin States
    to protect the water quality of the Colorado River. Some of the most
    cost-effective salinity control opportunities occur when Reclamation
    improves irrigation delivery systems concurrently with on-farm
    irrigation improvements undertaken by the U.S. Department of
    Agriculture's Environmental Quality Incentives Program (EQIP). The
    Basin States cost-share funding is available for both parts, on-farm
    and off-farm, and EQIP funding appears to be adequate to accomplish
    needed on-farm work. Adequate funding for Reclamation off-farm work is
    needed to maintain timely implementation and effectiveness of salinity
    control measures.
        Maintenance and operation of the Bureau of Reclamation's salinity
    control projects and general investigations to identify new cost-
    effective salinity control projects are necessary for the continued
    success of the salinity control program. Investigation of new
    opportunities for salinity control are critical while the Basin States
    continue to develop and use their compact-apportioned waters of the
    Colorado River. The water quality standards for salinity and the United
    States water quality requirements pursuant to treaty obligations with
    Mexico are dependent on timely implementation of salinity control
    projects, adequate funding to maintain and operate existing projects,
    and sufficient general investigation funding to determine new cost-
    effective opportunities for salinity control.
        Continued funding primarily through Reclamation's Facility
    Operation activity to support maintenance and operation the Paradox
    Valley Unit and the Grand Valley Unit is critically needed. General
    Investigation funding through Reclamation's Colorado River Water
    Quality Improvement Program has been lacking in the recent past, and
    needs to be restored to a level that supports the need for
    identification and study of new salinity control opportunities to
    maintain the levels of salinity control to meet water quality standards
    and control economic damages in the Lower Colorado River Basin.
        I urge the Congress to appropriate $17.5 million to the Bureau of
    Reclamation for the Colorado River Basin salinity control program,
    adequate funding for operation and maintenance of existing projects and
    adequate funding for general investigations to identify new salinity
    control opportunities. Also, I fully support testimony by the Forum's
    Executive Director, Jack Barnett, in request of this appropriation, and
    the recommendation of an appropriation of the same amount by the
    federally chartered Colorado River Basin Salinity Control Advisory
    Council.
                                     ______

               Prepared Statement of the Jicarilla Apache Nation

                                  INTRODUCTION

        On behalf of the Jicarilla Apache Nation in New Mexico, I am
    pleased to submit this statement regarding the fiscal year 2008
    proposed budget for the Bureau of Reclamation, Department of the
    Interior. The Jicarilla Apache Nation (``nation'') is a federally
    recognized Indian Tribe, and our Reservation is located in Northern New
    Mexico. We have over 3,500 members and 85 percent of the population
    lives on our Reservation in the town of Dulce, which serves as our
    tribal headquarters. For the last 8 years we have been working with the
    Federal Government to deal with a severe problem that has been plaguing
    us--the failing public drinking water and wastewater systems on our
    Reservation.
        As more described below, the Nation has worked tirelessly to take
    corrective action to address this public health crisis by committing
    significant funds and resources, and by successfully working with
    Congress to authorize a project to replace this dilapidated
    infrastructure. The nation has done everything possible to implement
    the statutory directive placed on the Secretary of the Interior to
    comply with the law and construct our project. Unfortunately, since
    Congress authorized the project which President Bush signed into law in
    December 2002, the Bush administration has repeatedly failed to include
    funding in its annual budget to Congress to develop and construct our
    project. Notably, ours is the only project Congress has authorized
    which is fully encompassed in an Indian reservation and which has 100
    percent Indian project beneficiaries. We also understand our project is
    the only one that acknowledges and mandates corrective action for the
    Federal Government's liability in establishing and creating a deficient
    and unsafe public drinking water system serving an Indian reservation
    population.
        The nation respectfully calls upon this committee to provide
    funding in fiscal year 2008 for our project and see that the
    administration is accountable for constructing it, as set forth in our
    project's authorizing statute.

                                   BACKGROUND

        The problem with the condition of the current public water system
    and waste water infrastructure on the Jicarilla Apache Reservation
    stems from generations of neglect by the Bureau of Indian Affairs
    (BIA), which, as creator, owner and operator of the system, did not
    properly design, plan for, manage, repair and upgrade portions of the
    system over the last 90 years. The system diverts water from the Navajo
    River--a pristine water source, and its initial structures served the
    original BIA facilities on the Reservation. As the community of Dulce
    became the center of activity, members began moving there from other
    areas of the Reservation. In response to the growth, the BIA expanded
    the water line to allow members to access the water from common areas.
    As the area grew with housing and other facilities, water lines were
    extended, on an ad hoc basis, with no planning or recording. By the
    1990's the community's system had every type of water piping, including
    clay, asbestos lined, other metals, as even some wood piping has been
    unearthed.
        In October 1998, the system collapsed at the river and left the
    nation without water for 6 days. The home of one of our elders burned
    down, with no water to put out the fire. The National Guard brought in
    bottled water and portable restrooms. The nation funded emergency
    efforts to restore water delivery, and received no funding from the
    BIA.
        The BIA's neglect and failure to manage and maintain its public
    water system serving our people has caused many dire health threats and
    circumstances including degraded water quality in the lines, obsolete
    and non-compliant sewage lagoon ponds which were operating without
    properly permits because the ponds did not meet the Federal standards,
    pollution from unlined sewage ponds spilling into the community and
    into nearby arroyo which fed back into the Navajo River towards
    downstream users. The most disturbing circumstance, however, is that a
    large number of tribal members are experiencing serious intestinal and
    other internal diseases, more community members have been diagnosed and
    are dying from stomach and other forms of cancer. We suspect this can
    be attributed to unsafe drinking water.

                        STATUTORY PROJECT AUTHORIZATION

        A combination of the water outage and the dire health related
    circumstances led the nation's leaders to go to Washington, DC to
    request assistance to repair the Federal Government's broken system.
    Our first step was to approach the BIA in Washington. They told us they
    had no funds to address the problem. The nation sought help from other
    Federal agencies, who were sympathetic but generally unable to assist
    because the BIA owned and operated the system. They also informed us
    that the enormity of the problems with the system required a
    significant investment of resources that they would not be able to
    accommodate.
        We then turned to our delegation from New Mexico for help. Working
    with them, the nation pursued the legislative route to authorize a
    project specifically to repair the system. The idea was not to turn to
    the BIA, which was not equipped to deal with a major water system
    infrastructure improvement project, either as a technical or funding
    matter. Based on our location in the Southwest and the work of the
    Bureau of Reclamation (BOR) working on significant projects in the
    region, we decided to work toward authorizing a project through the
    BOR. In 2000, Congress passed a bill which directed the Department of
    the Interior, through the BOR, to do a feasibility study on upgrading
    the system. See Public Law 106-243. The nation worked directly with the
    agency on the study which was completed in September of 2002.
        The study determined that $45 million would be needed to replace
    the existing water delivery and wastewater infrastructure. The report
    acknowledged the nation's efforts in taking on $15 million of debt to
    improve portions of the system including: replacement of the diversion
    structures and pipeline at the river and up to the water treatment
    plant; building a new water treatment plant and expanding its capacity;
    repairing and replacing old water towers; replacement of infrastructure
    on the expansion Mundo Ranch property.
        Based on this completed report, in 2001, our delegation introduced
    legislation to direct the Secretary of the Interior to repair and
    replace the infrastructure based on the recommendations in the
    feasibility report; the legislation also authorized the Department to
    expend funding to undertake this project. During this timeframe, with
    Senator Domenici's leadership, Congress appropriated $2.5 million in
    the fiscal year 2002 Energy and Water Development bill for the
    project's planning, design and other work needed to prepare for
    initiation of the project's construction.
        On December 13, 2002, President Bush signed into law Public Law
    107-331, which includes as Title VIII our legislation, the Jicarilla
    Apache Reservation Rural Water System Act, which directs the Secretary
    of the Interior to proceed with a project to replace the defunct
    infrastructure, as outlined and recommended in the feasibility report,
    and which authorizes the appropriations of funds ($45 million) for our
    project.

          INADEQUATE FEDERAL FUNDING AND FAILURE TO IMPLEMENT THE LAW

        Since the law's enactment, the nation has made repeated efforts to
    secure funding for the development of our project through the Bureau of
    Reclamation's account in the Energy and Water Development
    Appropriations bill and through the Executive budget process. In spite
    of our efforts, we were unable to secure funding in the fiscal year
    2003 through fiscal year 2005 appropriations cycles. Finally, in fiscal
    year 2006, Congress provided $250,000 for our project in the Energy and
    Water Development Appropriations bill. Last year, the House bill
    provided $500,000 for our project, but since Congress did not complete
    this and other appropriations bills, it remains unclear whether we will
    receive any funding this year.
        Our efforts have been further stymied by the Bush administration's
    failure to include any funds for our project in its annual budget
    submission to Congress. We have visited with the Office of Management
    and Budget, the Assistant Secretary for Water and Science and the BOR
    Commissioner urging them to implement the law and take action to help
    us address this serious pubic health crisis. Unfortunately, we have
    been told that the Bush administration is not willing to provide
    funding in its budget for ``new starts'' for water construction
    projects, and we were further informed by OMB that under their
    philosophy, local governments should bear the burden for public water
    system. Contrary to these ``views'', the law requires the Secretary to
    act, and the system at issue was federally owned and operated and its
    defunct condition was caused exclusively by Federal neglect so the
    nation should not be left with the burden of the Federal Government's
    liability. On top of these considerations, the United States has a
    trust responsibility to the nation, our citizens and our trust
    resources. These are all compelling reasons to include funding for this
    project in the budget process, and the administration must act to meet
    its obligations.
        With respect to section 104 of Public Law 109-451, we believe the
    committee should provide the Department with additional direction to
    make sure our project is funded on an expeditious and emergency basis.
    We have waited far too long and our people have suffered enormously
    while the administration refuses to address this on-going and shameful
    situation on our Reservation, which was created by the Federal
    Government itself.
        In fact, this new law explicitly recognizes that such factors as
    the ``urgent and compelling need'' for a rural water supply projects
    that are necessary to ``improve the health'' and/or ``meet applicable
    requirements established by law'' are factors for assessing the
    priority of such projects. Both of these factors apply to this project.
        On a regional level, the nation has been a good neighbor and
    steward of our resources. We have helped water users in both the Rio
    Grande and San Juan basins to resolve delicate water issues. We have a
    proven record of managing our lands and water. All we are asking is for
    support to ensure that, pursuant to statutory directives, the
    Department meets its obligations and provides the people on the
    Jicarilla Apache Reservation a safe and reliable source of drinking
    water for the betterment of our citizens.

                                   CONCLUSION

        Since the legislation's enactment in December 2002, the nation has
    been forced to borrow millions of additional dollars on the project
    because of the urgency and crisis facing our people. The nation used
    tax exempt bonds to pay for the repairs and has reached its debt
    capacity. It is time for the Federal Government to step up to the plate
    and meet its statutory and moral obligations owed to the nation. We are
    asking for your help today! Please hold the Department of the Interior
    accountable for constructing our project, as directed in the 2002
    statute, and for requesting the necessary funding from Congress to do
    so. We also respectfully ask that the committee grant the nation's
    fiscal year 2008 $3 million funding request for our project.
        Thank you for your time and consideration of our views, concerns
    and requests.
                                     ______

          Prepared Statement of the Colorado River Board of California

        This testimony is in support of fiscal year 2008 funding for the
    Department of the Interior for the Title II Colorado River Basin
    Salinity Control Program (Public Law 93-320). By statute, Congress
    designated the Department of the Interior, Bureau of Reclamation
    (Reclamation) to be the lead agency for salinity control in the
    Colorado River Basin. This successful and cost effective program is
    carried out pursuant to the Colorado River Basin Salinity Control Act
    and the Clean Water Act (Public Law 92-500). California's Colorado
    River water users are presently suffering economic damages in the
    hundreds of million of dollars per year due to the River's salinity.
        The Colorado River Board of California (Colorado River Board) is
    the State agency charged with protecting California's interests and
    rights in the water and power resources of the Colorado River system.
    In this capacity, California and the other six Basin States through the
    Colorado River Basin Salinity Control Forum (Forum), the interstate
    organization responsible for coordinating the Basin States' salinity
    control efforts, established numeric criteria in June 1975 for salinity
    concentrations in the River. These criteria were established to lessen
    the future damages in the Lower Basin States, as well as, assist the
    United States in delivering water of adequate quality to Mexico in
    accordance with Minute 242 of the International Boundary and Water
    Commission.
        To date, Reclamation has been successful in implementing projects
    for preventing salt from entering the River system; however, many more
    potential projects for salt reduction have been identified that could
    be implemented through Reclamation's Basin-wide Salinity Control
    Program. In the past, the Forum has presented testimony to Congress in
    which it has stated that the rate of implementation of the program
    beyond that which has been funded in the past is essential. This is
    still the case, and California urges the Congress to fully fund
    Reclamation's continuing implementation of this critical program.
        In 2000, Congress reviewed the salinity control program as
    authorized in 1995. Following hearings, and with the administration's
    support, the Congress passed legislation (Public Law 106-459) that
    increased the ceiling authorization for this program from $75 million
    to $175 million. Reclamation has received proposals to move the program
    ahead and the seven Basin States have agreed to up-front cost sharing
    on an annual basis, which adds 43 cents for every Federal dollar
    appropriated.
        In recent years, the President's requests have dropped to below $10
    million. In the judgment of the Forum, this amount is inappropriately
    low. Water quality commitments to downstream United States and Mexican
    water users must be honored while the Basin States continue to develop
    their Compact apportioned waters from the Colorado River.
    Concentrations of salts in the River cause about $330 million in
    quantified damage in the United States. However significant
    unquantified damages also, occur. For example, damages occur from:
      --A reduction in the yield of salt sensitive crops and increased
            water use for leaching in the agricultural sector;
      --A reduction in the useful life of galvanized water pipe systems,
            water heaters, faucets, garbage disposals, clothes washers, and
            dishwashers, and increased use of bottled water and water
            softeners in the household sector;
      --An increase in the use of water for cooling, and the cost of water
            softening, and a decrease in equipment service life in the
            commercial sector;
      --An increase in the use of water and the cost of water treatment,
            and an increase in sewer fees in the industrial sector;
      --A decrease in the life of treatment facilities and pipelines in the
            utility sector;
      --Difficulty in meeting wastewater discharge requirements to comply
            with National Pollutant Discharge Elimination System permit
            terms and conditions, an increase in desalination and brine
            disposal costs due to accumulation of salts in groundwater
            basins, and fewer opportunities for recycling and reuse of the
            water due to groundwater quality deterioration; and
      --Increased use of imported water for leaching and the cost of
            desalination and brine disposal for recycled water.
        For every 30 milligram per liter increase in salinity
    concentrations, there are $75 million in additional damages in the
    United States. The Forum, therefore, believes implementation of the
    program needs to be accelerated to a level beyond that requested by the
    administration.
        Some of the most cost-effective salinity control opportunities
    occur when Reclamation can improve irrigation delivery systems in a
    coordinated fashion with the activities of the U.S. Department of
    Agriculture's (USDA) program through working with landowners
    (irrigators) to improve on-farm irrigation systems. With the USDA's
    Environmental Quality Incentive Program, more on-farm funds are
    available and adequate funds for Reclamation are needed to maximize
    Reclamation's effectiveness in addressing water delivery system
    improvements. The Forum, at its meeting in October 2006, in Scottsdale,
    Arizona recommended a funding level of $17,500,000 for Reclamation's
    Basin-wide Salinity Control Program to continue implementation of
    needed projects and begin to reduce the ``backlog'' of projects.
        In addition, the Colorado River Board recognizes that the Federal
    Government has made significant commitments to the Republic of Mexico
    and to the seven Colorado River Basin States with regard to the
    delivery of quality water to Mexico. In order for those commitments to
    be honored, it is essential that in fiscal year 2008, and in future
    fiscal years, that Congress provide funds to the Bureau of Reclamation
    for the continued operation of completed projects.
        The Colorado River is, and will continue to be, a major and vital
    water resource to the 18 million residents of southern California,
    including municipal, industrial, and agricultural water users in
    Ventura, Los Angeles, San Bernardino, Orange, Riverside, San Diego, and
    Imperial counties. Preservation and improvement of Colorado River water
    quality through an effective salinity control program will avoid the
    additional economic damages to users in California and the other States
    that rely on the Colorado River.
                                     ______

     Prepared Statement of the Colorado River Basin Salinity Control Forum

        This testimony is in support of funding for the Title II Colorado
    River Basin Salinity Control Program. The Congress has designated the
    Department of the Interior, Bureau of Reclamation (Reclamation), to be
    the lead agency for salinity control in the Colorado River Basin. This
    role and the authorized program were refined and confirmed by the
    Congress when Public Law 104-20 was enacted. A total of $17,500,000 is
    requested for fiscal year 2008 to implement the needed and authorized
    program. Failure to appropriate these funds will result in significant
    economic damage in the United States and Mexico.
        In recent years, the President's requests have dropped to below $10
    million. In the judgment of the Colorado River Basin Salinity Control
    Forum (Forum), this amount is inappropriately low. Water quality
    commitments to downstream United States and Mexican water users must be
    honored while the Basin States continue to develop their Colorado River
    Compact-apportioned waters. Concentrations of salts in the river cause
    about $330 million in quantified damage in the United States with
    significantly greater unquantified damages. Damages occur from:
      --a reduction in the yield of salt sensitive crops and increased
            water use for leaching in the agricultural sector,
      --a reduction in the useful life of galvanized water pipe systems,
            water heaters, faucets, garbage disposals, clothes washers, and
            dishwashers, and increased use of bottled water and water
            softeners in the household sector,
      --an increase in the use of water for cooling, and the cost of water
            softening, and a decrease in equipment service life in the
            commercial sector,
      --an increase in the use of water and the cost of water treatment,
            and an increase in sewer fees in the industrial sector,
      --a decrease in the life of treatment facilities and pipelines in the
            utility sector,
      --difficulty in meeting wastewater discharge requirements to comply
            with National Pollutant Discharge Elimination System permit
            terms and conditions, and an increase in desalination and brine
            disposal costs due to accumulation of salts in groundwater
            basins,
      --increased use of imported water for leaching and the cost of
            desalination and brine disposal for recycled water.
        For every 30 mg/l increase in salinity concentrations, there is $75
    million in additional damages in the United States. The Forum,
    therefore, believes implementation of the program needs to be
    accelerated to a level beyond that requested by the President.
        The program authorized by the Congress in 1995 has proven to be
    very successful and very cost effective. Proposals from the public and
    private sector to implement salinity control strategies have far
    exceeded the available funding and Reclamation has a backlog of
    proposals. Reclamation continues to select the best and most cost-
    effective proposals. Funds are available for the Colorado River Basin
    States' cost sharing for the level of Federal funding requested by the
    Forum. Water quality improvements accomplished under Title II of the
    Colorado River Basin Salinity Control Act also benefit the quality of
    water delivered to Mexico. Although the United States has always met
    the commitments of the International Boundary & Water Commission's
    (Commission) Minute No. 242 to Mexico with respect to water quality,
    the United States Section of the Commission is currently addressing
    Mexico's request for better water quality at the International
    Boundary.
        Some of the most cost-effective salinity control opportunities
    occur when Reclamation can improve irrigation delivery systems at the
    same time that the U.S. Department of Agriculture's (USDA) program is
    working with landowners (irrigators) to improve the on-farm irrigation
    systems. Through the USDA Environmental Quality Incentives Program,
    adequate on-farm funds appear to be available and adequate Reclamation
    funds are needed to maximize the effectiveness of the effort. These
    salinity control efforts have secondary water conservation benefits at
    the point of use and downstream at the point of reuse.

                                    OVERVIEW

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

                                 JUSTIFICATION

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

                         ADDITIONAL SUPPORT OF FUNDING

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

           Prepared Statement of the San Diego County Water Authority

        Dear Chairman Dorgan: your support is needed to secure adequate
    funding for the Department of Interior for the Colorado River Basin
    Salinity Control Program (Program). To continue the essential work of
    the Program, the Water Authority urges funding of $17.5 million for
    fiscal year 2008. By statute, Congress designated the Department of
    Interior, Bureau of Reclamation (Reclamation) to be the lead agency for
    salinity control in the Colorado River Basin. The Program is carried
    out through the Colorado River Basin Salinity Control Act (1974)
    (Public Law 93-320) and the Clean Water Act.
        The salinity control projects through the Program benefit water
    users from seven States through more efficient water management and
    reduced salinity concentrations in Colorado River water. The Colorado
    River is the primary and single most important source of drinking water
    for more than 3 million people in San Diego County. Excess salinity
    causes economic damages in the San Diego region worth millions of
    dollars annually.
        Notably, concentrations of salts in the Colorado River annually
    cause about $330 million in quantified damages in the United States.
    For every 30 milligrams per liter increase in salinity concentrations
    there are $75 million in additional damages in the United States.
    Locally, impacts of excess salinity in the San Diego region include,
    but are not limited to, the following:
      --Reduced crop yields, impacting more than $1 billion of agricultural
            products in the San Diego region.
      --Decreased useful life of commercial and residential water pipe
            systems, water heaters, faucets, garbage disposals, clothes
            washers, and dishwashers.
      --Increased household use of expensive bottled water and water
            softeners.
      --Increased water treatment facility costs and a decrease in the life
            of the treatment facilities.
      --Increased treatment to meet Federal and California wastewater
            discharge requirements.
      --Fewer opportunities for water recycling due to excess salt in the
            product water, which limits usefulness for commercial and
            agricultural irrigation.
        To date, Reclamation has been successful in implementing projects
    for preventing salt from entering the River system; however, many
    potential projects for salt reduction have been identified that could
    be implemented through the Program. The rate of implementation of the
    Program beyond that which has been funded in the past is essential, and
    the Water Authority urges Congress to fully fund Reclamation's
    continuing implementation of this critical program.
        Some of the most cost-effective salinity control opportunities
    occur when Reclamation can improve irrigation delivery systems in a
    coordinated fashion with the activities of the U.S. Department of
    Agriculture's Environmental Quality Incentive Program through working
    with landowners (irrigators) to improve on-farm irrigation systems.
    Adequate funds from Reclamation are needed to maximize this coordinated
    effort and effectiveness in addressing water delivery system
    improvements.
        The Program has proven to be a very cost-effective approach to
    mitigate the impacts of increased salinity in the Colorado River, which
    is an investment that avoids millions of dollars in economic damages
    caused by excess salinity. In addition, the Program assists the
    delivery of quality water to Mexico in accordance with Minute 242 of
    the 1944 Water Treaty.
        The Colorado River Basin Salinity Control Forum (California and the
    other six Basin States) has recommended that a funding level of $17.5
    million for Reclamation's Basin-wide Salinity Control Program is
    necessary and appropriate to continue implementation of needed
    projects.
        The Water Authority supports the recommendation for funding and
    urges this subcommittee to support this level of funding for fiscal
    year 2008. The Water Authority appreciates your assistance in securing
    adequate funding for this vital water resource.
                                     ______

                  Prepared Statement of the Mni Wiconi Project

    Fiscal Year 2008 Request
        The Mni Wiconi Project beneficiaries respectfully request
    appropriations totaling $41.113 million for fiscal year 2008. The
    request consists of $30.909 million for construction and $10.204
    million for operation and maintenance (OMR) activities) in fiscal year
    2008:

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                                       Fiscal Year--
                                                                     -----------------------------------------------
                                                                        2007 House      2008 Budget    2008 Request
    ----------------------------------------------------------------------------------------------------------------
    Construction....................................................          22.914  ..............          30.909
    OMR.............................................................           9.256  ..............          10.204
                                                                     -----------------------------------------------
          Total.....................................................  ..............  ..............          41.113
    ----------------------------------------------------------------------------------------------------------------

    Construction Funds
        Construction funds would be utilized as follows:

    ------------------------------------------------------------------------
                          Project area                           Millions
    ------------------------------------------------------------------------
    Oglala Sioux Rural Water Supply System:
        Core................................................          $5.400
        Distribution........................................          11.085
    West River/Lyman-Jones RWS..............................           6.842
    Rosebud RWS.............................................           6.482
    Lower Brule RWS.........................................  ..............
    Reclamation Oversight...................................           1.100
                                                             ---------------
          Total.............................................          30.909
    ------------------------------------------------------------------------

        As shown on the table below, the Project will be 73 percent
    complete at the end of fiscal year 2007. Construction funds remaining
    to be spent after fiscal year 2007 will total $119.184 million.
        Amendment of the Project authorization is proposed for the first
    session of the 110th Congress to extend the construction completion
    date from fiscal year 2008 through fiscal year 2012. Additional
    administrative, overhead and other costs of the extension are projected
    at $14.635 million, bringing total remaining costs at the end of fiscal
    year 2007 to $133.820 million (in October 2006 dollars).
        Cost indexing over the last 5 years has averaged from 4.83 percent
    for pumping plants to 7.88 percent for pipelines, which are the notable
    Project components yet to be completed (see chart below). Assuming an
    average 5 percent inflation in construction costs during the remaining
    5 years necessary to complete the Project, average funding of $30.909
    million is required to complete the Project by fiscal year 2012. Costs
    of extending the Project and cost indexing from fiscal year 2008
    through fiscal year 2012 increase the remaining costs to $154.545
    million. Therefore, the funding request for fiscal year 2008 is based
    on the annual average of $30.909 million necessary to complete the
    Project by the end of fiscal year 2012.

    ------------------------------------------------------------------------
                                                                  Amount
    ------------------------------------------------------------------------
    Total Federal Construction Funding (Oct 2006)...........    $445,718,000
    Estimated Federal Spent Through Fiscal Year 2007........    $326,533,882
    Percent Spent Through Fiscal Year 2007..................           73.26
    Amount Remaining after 2007:
        Total Authorized (Oct 2006).........................    $119,184,118
        Overhead Adjustment for Extension to Fiscal Year        $133,819,527
         2012...............................................
        Adjustment for 5 percent Annual Inflation...........    $154,544,690
    Completion Fiscal Year (Statutory Fiscal Year 2008;                 2012
     Public Law 107-367)....................................
    Years to Complete.......................................               5
    Average Annual Required for Finish......................     $30,908,938
    ------------------------------------------------------------------------

    Oglala Sioux Rural Water Supply System
        All of the Pine Ridge Indian Reservation, parts of the Rosebud
    Indian Reservation and parts of West River/Lyman-Jones remain without
    delivery of Missouri River water from the Oglala Sioux Rural Water
    Supply System (OSRWSS) core pipeline, the central element of the Mni
    Wiconi Project. The OSRWSS core pipeline will supply four rural water
    systems, including three Indian Reservations.
        The fiscal year 2008 funding level will connect Missouri River
    water to the central portion of the Pine Ridge Indian Reservation at
    Kyle where it can deliver water to OSRWSS distribution systems built
    previously. This will be the first opportunity to serve a significant
    portion of the population on the Pine Ridge Indian Reservation with
    Missouri River water and discontinue use of inadequate and unsafe
    groundwater supplies. Only 31 percent of the distribution system on the
    Pine Ridge Indian Reservation is complete and 69 percent remains to be
    completed.
        OSRWSS will use $5,600,000 in fiscal year 2007 funds to begin
    construction of the pipeline link between the OSRWSS North core and
    South core. When completed, this essential pipeline will permit the
    delivery of water to the Pine Ridge Indian Reservation and parts of
    West River/Lyman-Jones by alternative pipeline routes, according to the
    original strategy in the Final Engineering Report.
        The Oglala Sioux Tribe supports the funding request of West River/
    Lyman-Jones for fiscal year 2008 which focuses on building the OSRWSS
    North Core westerly from Hayes toward Phillip in the West River/Lyman-
    Jones service area. The intent is to complete the OSRWSS North Core and
    all other OSRWSS core facilities in fiscal year 2008. West River/Lyman-
    Jones is acting as the Tribe's contractor on the OSRWSS North Core.
        The fiscal year 2008 funding request will complete the OSRWSS core.
    Earlier stages of the OSRWSS core facilities served the Lower Brule
    Indian Reservation, Rosebud Indian Reservation and eastern regions of
    West River/Lyman-Jones beginning in year 2000. Missouri River water was
    delivered to the northeastern corner of the Pine Ridge Indian
    Reservation for the first time in fiscal year 2007 but only the far
    northeastern corner of the Reservation was reachable. fiscal year 2008
    funding of $11.085 million will permit construction of the main or
    ``backbone'' pipeline within the Reservation to Kyle and delivery of
    Missouri River water to distribution systems built in advance.
    West River/Lyman-Jones Rural Water System
        Proposed fiscal year 2008 construction for WR/LJ includes Phase 2
    of the North Core and distribution pipelines from existing core
    pipeline to WR/LJ members between Ft. Pierre and the city of Philip.
    Phase 1 of the North Core was constructed in fiscal year 2006 and
    distribution pipelines are being extended to 200 WR/LJ members with
    fiscal year 2006 & fiscal year 2007 funding. Funding provided in fiscal
    year 2008 will complete construction of distribution pipelines that can
    be served by Phase 1 of the North Core and initiate construction of
    Phase 2.
        The North Core pipeline is the permanent water source for half of
    the WR/LJ membership. That membership includes the cities of Wall and
    Philip which are presently served from wells. Construction of Phase 2
    of the North Core remains a high priority because extended drought
    conditions in Western South Dakota threaten production from these
    groundwater sources. Upon completion the North Core will also provide
    an alternate source of water to the South Core pipeline serving the
    Oglala Sioux Tribe.
        WR/LJ members proposed to be served in fiscal year 2008 are in
    desperate need of water. Recent surveys indicate that most of those
    members haul water for domestic use and half of them haul water for
    livestock. Completion of a reliable supply of water meeting Safe
    Drinking Water Act (SDWA) standards offers immediate relief and
    economic assistance to this drought affected area.
    Rosebud Rural Water System (Sicangu Mni Wiconi)
        The Rosebud Sioux Tribe and the Sicangu Mni Wiconi have made great
    strides in improving the quality of life for people connected to the
    Mni Wiconi Project. The progress made has not been without sacrifice
    and many people remain to be served. Our plans for fiscal year 2008
    address both these situations.
        The major initiative for the Sicangu Mni Wiconi is the completion
    of the Surface Water Improvements. The history of the Surface Water
    Improvements goes back to 1998 when the Tribe agreed to export
    groundwater from the Rosebud Well Field, in Southern Todd County to
    drought stricken Mellette County as an interim source of supply. A 12-
    inch pipeline was constructed from near the Well Field to the town of
    White River with the understanding that a second pipeline and pump
    stations would follow and the facilities would bring high quality
    surface water to Todd County.
        Providing high quality groundwater to WR/LJ and their customers in
    Mellette County was not part of the original plan for the Sicangu Mni
    Wiconi. In addition, the city of Mission has come to rely on water from
    the Rosebud Well Field to meet their demands during periods of peak use
    in the summer months. The combination of these two factors has resulted
    in an immense burden on the Well Field. In summer months during periods
    of peak demands the wells pump constantly and do not have adequate time
    to recover.
        The easements for the parallel pipeline were obtained in 1998 and
    construction of the new pipeline will soon begin. However, available
    funds in fiscal year 2007 are not sufficient for completion and the
    majority of the Tribe's fiscal year 2008 request will go towards
    completion of the pipeline and the two pump stations required to bring
    the water to Todd County. These improvements will eliminate the stress
    to the Rosebud Well Field and provide high quality surface water from
    Mni Wiconi to Eastern Mellette and Todd County.
        The remainder of the funding request is for service lines and
    connections. The availability of high quality water has allowed people
    to inhabit lands that were allotted to their grandparent or great
    grandparent. People are anxious to live on their land and new homes are
    ``sprouting up'' around the Sicangu Mni Wiconi pipelines after they are
    completed.
        These smaller pipelines are also used to provide water to
    livestock. The livestock business on range lands is an economic pillar
    for the Rosebud Reservation. By providing water, the Mni Wiconi Project
    helps improve the utilization of these lands, thereby improving the
    situation for the livestock operator, the landowner and the reservation
    economy.
        Mni Wiconi means ``Water is Life'' and we see that this is true on
    the Rosebud Reservation. Help us improve the quality of life for the
    people that are still waiting.
    Lower Brule Rural Water System--Distribution
        The Lower Brule Rural Water System (LBRWS) has gained the support
    of the other sponsors to complete its portion of the Project prior to
    the completion of the other portions of the Project. This agreement to
    complete the LBRWS first is due to the relatively small portion of the
    Project that the LBRWS represents as well as the ability to save $1.5
    million to the Project as a whole by doing so. As a result, LBRWS will
    be completing its portion of the Project during 2007.
        The LBRWS continues to be grateful to the other sponsors and
    Congress for their cooperation and support in completing the funding of
    the LBRWS in this manner, and especially the South Dakota delegation
    past and present, for their continued support of this truly needed
    project. It should be noted, however, that this will not end LBRWS's
    involvement in the Project. LBRWS will continue to work with and
    support the other sponsors in seeing the entire Project come to
    fruition.
    Operation, Maintenance and Replacement Budget
        The sponsors will continue to work with the Bureau of Reclamation
    to ensure that budgets are adequate to properly operate, maintain and
    replace (OMR) the core and distribution systems. The sponsors will also
    continue to manage OMR expenses to achieve a balance between
    construction and OMR. The Project has been treating and delivering more
    water each year from the OSRWSS Water Treatment Plant near Fort Pierre.
    Completion of significant core and distribution pipelines has resulted
    in more deliveries to more communities and rural users. The need for
    sufficient funds to properly operate and maintain the functioning
    system throughout the Project has grown as the Project has now reached
    73 percent completion. The OMR budget must be adequate to keep pace
    with the system that is placed in operation.
        The Mni Wiconi Project tribal beneficiaries (as listed below)
    respectfully request appropriations for OMR in fiscal year 2008 in the
    amount of $10,204,000:

    ------------------------------------------------------------------------
                                                                Fiscal year
                             System                                2008
    ------------------------------------------------------------------------
    OSRWSS Off-Reservation Core.............................      $2,300,000
    OSRWSS Distribution.....................................       2,500,000
    RRWS....................................................       2,350,000
    LBRWS...................................................       1,450,000
    Reclamation.............................................       1,604,000
                                                             ---------------
          Total, Mni Wiconi.................................      10,204,000
    ------------------------------------------------------------------------

                                     ______

                  Prepared Statement of the Mni Wiconi Project

        Senator Dorgan: We, the Mni Wiconi Project sponsors submit this
    letter to you in order to supplement our fiscal year 2008 Mni Wiconi
    Project Formal Testimony. Hopefully, this Supplemental Testimony will
    assist all members of the subcommittee on Energy and Water Development
    to further understand the truly unique needs of the Mni Wiconi Project.
        This Project covers much of the area of western South Dakota that
    is the Great Sioux Reservation established by the Treaty of 1868. Since
    the separation of the Reservation in 1889 into smaller more isolated
    reservations, including Pine Ridge, Rosebud and Lower Brule, relations
    between the Lakota population and the non-Lakota settlers on Great
    Sioux Reservation lands have been improving in successive generations.
    The Mni Wiconi Project is perhaps the most significant opportunity in
    more than a century to bring the diverse cultures of the two societies
    together for a common good. After all, ``Mni Wiconi'' is a Lakota
    phrase meaning ``water is life.'' Much progress has been made due to
    the good faith and genuine efforts of both the Lakota and non-Lakota
    sponsors. The Project is an historic basis for renewed hope and dignity
    among the Lakota people. It is a basis for substantive improvement in
    relationships.
        Each year the Mni Wiconi Project sponsor testimony addresses the
    fact that the project beneficiaries, particularly the three Indian
    Reservations, have the lowest income levels in the Nation. The health
    risks to our people from drinking unsafe water are compounded by
    reductions in health programs. We respectfully submit that our Project
    is unique and that no other project in the Nation has greater human
    needs. Poverty in our service areas is consistently deeper than
    elsewhere in the Nation. Health effects of water home diseases are
    consistently more prevalent than elsewhere in the Nation, due in part
    to (1) lack of adequate water in the home and (2) poor water quality
    where water is available. Higher incidences of impetigo,
    gastroenteritis, shigellosis, scabies and hepatitis-A are well
    documented on the Indian Reservations of the Mni Wiconi Project area.
    Progress has been made in reducing the occurrence of these diseases.
        At the beginning of the third millennium one cannot find a region
    in our Nation in which social and economic conditions are as
    deplorable. These circumstances are summarized in Table 1.\1\ Mni
    Wiconi builds the dignity of many, not only through improvement of
    drinking water, but also through direct employment and increased
    earnings during planning, construction, operation and maintenance and
    from economic enterprises supplied with Project water. We urge the
    subcommittee to address the need for creating jobs and improving the
    quality of life on the Pine Ridge, Lower Brule and Rosebud Indian
    Reservations of the project area.
    ---------------------------------------------------------------------------
        \1\ Table 1 was based on census data that understates population
    and poverty on the reservations and overstates income when compared
    with Interior sources. The purpose of Table 1 is to compare statistics
    from a single source between decades, namely the United States Census,
    but use of the data does not imply acceptance of census statistics by
    the Tribes.

                              TABLE 1.--PROFILE OF SELECTED ECONOMIC CHARACTERISTICS--2000
    ----------------------------------------------------------------------------------------------------------------
                                                                             Income
                                                             Change  ---------------------- Familities
           Indian Reservation/State             2000       from 1990     Per       Median      below    Umemployment
                                             population    (percent)    capita   household    poverty     (percent)
                                                                      (dollars)  (dollars)   (percent)
    ----------------------------------------------------------------------------------------------------------------
    Pine Ridge Indian Reservation........          15,521      27.07      6,143     20,569        46.3         16.9
    Rosebud Indian Reservation...........          10,469       7.97      7,279     19,046        45.9         20.1
    Lower Brule Indian Reservation.......           1,353      20.48      7,020     21,146        45.3         28.1
    State of South Dakota................         754,844       8.45     17,562     35,282         9.3          3.0
    Nation...............................     281,421,906      13.15     21,587     41,994         9.2          3.7
    ----------------------------------------------------------------------------------------------------------------

        Employment and earnings among the Lakota people of the Project area
    are expected to positively impact the high costs of health-care borne
    by the United States and the Tribes. Our data suggest clear
    relationships between income levels and Federal costs for heart
    disease, cancer and diabetes. During the life of the Mni Wiconi
    Project, mortality rates among the Lakota people in the Project area
    for the three diseases mentioned will cost the United States and the
    Tribes more than $1 billion beyond the level incurred for these
    diseases among comparable populations in the non-Lakota community
    within the Project area.
        While this Project alone will not raise income levels to a point
    where the excessive rates of heart disease, cancer and diabetes are
    significantly diminished, the employment and earnings stemming from the
    Project will, nevertheless, reduce mortality rates and costs of these
    diseases. Please note that between 1990 and 2000 per capita income on
    Pine Ridge increased from $3,591 to $6,143, and median household income
    increased from $11,260 to $20,569, due in large part to this Project,
    albeit not sufficient to bring a larger percentage of families out of
    poverty (Table 1).
        Financial support for the Lakota membership has already been
    subjected to drastic cuts in funding programs through the Indian Health
    Service and the Bureau of Indian Affairs. This Project is a source of
    strong hope that helps off-set the loss of employment and income in
    other programs and provide for an improvement in health and welfare.
    Tribal leaders have seen that Welfare Reform legislation and other
    budget cuts nation-wide have created a crisis for tribal government
    because tribal members have moved back to the reservations in order to
    survive.
        The Mni Wiconi Project Act (Public Law 100-516, as amended)
    provides that the United States will work with us:
      --the United States has a trust responsibility to ensure that
            adequate and safe water supplies are available to meet the
            economic, environmental, water supply and public health needs
            of the Pine Ridge, Rosebud and Lower Brule Indian Reservations
            . . .
        Lakota support for this project from the Oglala, Rosebud and Lower
    Brule Sioux Tribes has not come easily because the historical
    experience of broken commitments to the Lakota people by the Federal
    Government is difficult to overcome. The argument was that there is no
    reason to trust the Federal Government and that the respective Sioux
    Tribal Governments are being used to build the non-Lakota segments of
    the project and the Lakota segments would linger to completion. These
    arguments have been overcome by better planning, an amended
    authorization and hard fought agreements among the parties. The
    subcommittee is respectfully requested to take the steps necessary to
    complete the critical elements of the Project proposed for fiscal year
    2008.
                                     ______

         Prepared Statement of the Colorado River Commission of Nevada
        As a Nevada representative of the Colorado River Basin Salinity
    Control Forum, the Colorado River Commission of Nevada (CRC) supports
    funding the fiscal year 2008 budget request for $17,500,000 for the
    Bureau of Reclamation's Colorado River Basin Salinity Control Program.
    The CRC urges the Congress to appropriate funds requested by the
    Administration to continue to maintain and operate salinity control
    facilities as they are completed and placed into long-term operations.
    Reclamation has completed the Paradox Valley unit which involves the
    collection of brines in the Paradox Valley of Colorado and the
    injection of those brines into a deep aquifer through an injection
    well. The continued operation of this project and the Grand Valley Unit
    will be funded primarily through the Facility Operations activity. The
    CRC also supports funding to allow for continued general investigation
    of the Salinity Control Program as requested by the Administration for
    the Colorado River Water Quality Improvement Program.
        Salinity remains one of the major problems in the Colorado River.
    Congress has recognized the need to confront this problem with its
    passage of Public Law 93-320 and Public Law 98-569. Your support of the
    Forum's current funding recommendations in support of the Colorado
    River Basin Salinity Control Program is essential to move the program
    forward so that the congressionally directed salinity objectives
    embodied in Public Law 93-320 and Public Law 98-569 are achieved.
                                     ______

      Prepared Statement of the Western Coalition of Arid States (WESTCAS)
        The Western Coalition of Arid States (WESTCAS) would like to submit
    the following statement concerning the fiscal year 2008 Budget Request
    for the Department of the Interior's Bureau of Reclamation. My name is
    Larry Libeu and I am the President of the organization.
        WESTCAS is a coalition of approximately 125 water and wastewater
    agencies, cities and towns, and professional associated focused on
    water quality and quantity issues in the States of Arizona, California,
    Colorado, Idaho, Nevada, New Mexico, Oregon and Texas.
        The Bureau's overall Budget for fiscal year 2008 is $958.4 million.
    The portion of the Budget that WESTCAS has interest in, the Water and
    Related Resources Account has $816.1 million dollars, which represents
    a decrease of $17,227,000 from fiscal year 2007. It is within this
    account that Water Reclamation/Reuse Title XVI is funded. The proposed
    funding level for fiscal year 2008 is $10.1 million. The Title XVI
    program was authorized by Public Law 102-575. This program provides a
    central focus for Reclamation's efforts and expertise in planning,
    environmental review and construction of new projects.
        The Title XVI water recycling program within the BOR provides a
    excellent cost-share mechanism for helping to drought proof the West.
    Projects developed by this program allow agencies to reduce their
    dependence on the scarce imported supplies from the Colorado River and
    other western watersheds. WESTCAS believes that increased funding for
    the program is needed to begin reducing the ever increasing backlog of
    authorized, but unfunded projects as well as assist in addressing the
    serious drought conditions throughout Reclamation states. We believe
    that funding this at least at the level of $50 million a year is
    necessary to clear the approximate backlog of $350 million for this
    program.
        We have two caveats in this regard. We believe the Committee should
    provide directive language to the Bureau of Reclamation to convene a
    meeting of all of the project sponsors for authorized projects in this
    program, ask them to bring their construction schedules and financing
    information so a 5 year schedule for completion can be worked out
    consistent with increased levels of funding for the program. We would
    be pleased to lend our expertise and experience to such a meeting. We
    further believe, and we are just as disappointed as the Committee, that
    the Bureau should have already produced an overall 5 year funding
    program consistent with the directive in last years Committee report.
        Our second caveat is for the Appropriations Committee to have a
    dialogue with the authorizing Committees regarding this program
    indicating that any new project for the Title 16 program will not be
    funded until after the backlog of all ready authorized projects is
    complete. Further, in order to receive funding, the priority should be
    set by those projects that are consistent with the individual State's
    Water Plan, and recommended and supported by that State's Governor and
    shall not have elements funded by other Federal agency programs.
    Priority shall be placed on cost effectiveness of the water and
    technology being developed and how the project fits into the
    comprehensive water plan for the area.
        Another program that WESTCAS would recommend increased funding is
    the Colorado River Salinity Control Program, Title II. Increased
    agricultural use and drainage as well as continued degradation caused
    by natural elements such as shale and return flows from urban centers
    are creating an increased salinity content to the waters of the
    Colorado River. WESTCAS firmly believes that this element of the
    Bureau's budget should be funded at the $26 million level. This would
    represent an increase of $13 million over the proposed fiscal year 2008
    budget amount.
        WESTCAS supports increased funding for the CAL-FED program. The
    fiscal year 2008 budget indicates a decrease from prior years. WESTCAS
    strongly recommends that this item in the Bureau's budget be increased
    to $40.52 million. The current proposed budget has funding set at
    $31.75 million. WESTCAS would recommend the following adjustments in
    the BOR CAL-FED funding proposal: Los Vaqueros Storage Study, +$3.27
    million, Lower San Joaquin River Fish Screen Projects, +$3.50 million,
    Refuge Water Supply Diversification, +$.50 million, Environmental Water
    Account +$3.0 million, and Administration -$1.50 million. With these
    adjustments the new budget amount would be $40.52 million.
        WESTCAS also would recommend increased funding for the Middle Rio
    Grande Project to $24 million and the Lower Colorado River Operations
    Program to $17 million.
        We would like to be able to support funding for the Bureau's Water
    2025 program, but absent authorization we withhold our support at this
    time. We do believe greater integrated resource planning and water
    resource planning is need for the West. We would hope the Committee
    would consider using the information that is being developed by the
    Western States Water Council report in this area as a tool for
    evaluation future budget requests.
        We also believe the Bureau of Reclamation should be doing more with
    regard to drought preparedness. The title XVI program is important in
    this regard, but it is not intended to be used throughout the West.
    Relying on an ``emergency'' approach to drought is not an effective way
    to address this issue. There are emergencies associated with drought,
    but better planning and an ongoing well funded program in each of the
    states is needed. We recommend at least $1 million per state to address
    this ongoing issue.
        We believe that overall a $150 million increase for the Bureau's
    Water and Related Resources Account would be helpful in addressing the
    water resource needs of the West before water quality and quantity
    issues become a greater crisis as the infrastructure ages, the
    population grows and environmental needs continue to be addressed.
                                     ______

       Prepared Statement of the Garrison Diversion Conservancy District

        Mr. Chairman, members of the committee: My name is Dave Koland; I
    serve as the general manager of the Garrison Diversion Conservancy
    District. The mission of Garrison Diversion is to provide a reliable,
    high quality and affordable water supply to the areas of need in North
    Dakota. Over 77 percent of our state residents live within the
    boundaries of the District. I would like to comment on the impact the
    President's fiscal year 2008 budget request for the Garrison Diversion
    Unit (GDU) has on the effort to provide reliable, high quality and
    affordable water supplies to the citizens of North Dakota.
        The President's fiscal year 2008 budget request was pitifully
    inadequate in meeting the commitments the Federal Government has made
    to North Dakota. In return for accepting a permanent flood on 500,000
    acres of prime North Dakota river valley the Federal Government
    promised the State and tribes that they would be compensated as the
    dams were built. The dams were completed over 50 years ago and still we
    wait for the promised compensation. At the rate of payment the
    President's budget proposes the Federal Government will not even be
    able to stay current with the indexing applied by law on their
    commitment to North Dakota.
        The Municipal Rural & Industrial (MR&I) program was started in 1986
    after the Garrison Diversion Unit (GDU) was reformulated from a
    million-acre irrigation project into a multipurpose project with
    emphasis on the development and delivery of municipal and rural water
    supplies. The statewide MR&I program has focused on providing grant
    funds for water systems that provide water service to previously
    unserved areas of the State. The State has followed a policy of
    developing a network of regional water systems throughout the State.
    Every rural water system that has been built in North Dakota is still
    operating. They are providing safe, clean water to their members,
    paying 100 percent of the operation and maintenance costs, reducing
    their debt, putting money in reserve, complying with every State and
    Federal regulation, and doing so with a stable, affordable rate
    structure.
    North Dakota's Success Story
        Rural water systems are being constructed using a unique blend of
    local expertise, state financing, rural development loans, MR&I grant
    funds to provide an affordable rate structure, and the expertise of the
    Bureau of Reclamation (BOR) to deal with design and environmental
    issues. The projects are successful because they are driven by a local
    need to solve a water quantity or quality problem. The solution to the
    local problem is devised by the community being affected by the
    problem. The early, local buy-in helps propel the project through the
    tortuous pre-construction stages.
        The MR&I program has been so successful and so important to North
    Dakota that the North Dakota Legislature loaned the program $18 million
    to help deal with the severe lag time that has developed in the Federal
    appropriations process.
        The desperate need for clean, safe water is evidenced by the
    willingness of North Dakota's rural residents to pay water rates well
    above the rates EPA considers affordable. The EPA Economic Guidance
    Workbook states that rates greater than 1.5 percent of the median
    household income (MHI) are not only unaffordable, but also ``may be
    unreasonable.''
        The average monthly cost on a rural water system for 6,000 gallons
    of water is currently $48.97. The water rates in rural North Dakota
    would soar to astronomical levels without the 75 percent grant dollars
    provided by the MR&I program. For instance, current rates would have to
    average a truly unaffordable $134.19/month or a whopping 3.8 percent of
    the MHI. Rates would have ranged as high as $190.80/month or a
    prohibitive 5.3 percent of MHI without the assistance of the MR&I
    program.
        The people waiting for water in our rural communities are willing
    to pay far more than what many consider an affordable, or even
    reasonable, price for clean, safe water. But there is a limit to how
    much they should be expected to pay.
    Budget Impacts On Garrison Diversion Unit
        Let me begin by reviewing the various elements within the current
    budget request and then discuss the impacts that the current level of
    funding will have on the program.
        The President's budget request for fiscal year 2008 is $20.22
    million. This year, Garrison Diversion Conservancy District is asking
    the Congress to appropriate a total of $65 million for the GDU.
    Attachment 1 is a breakdown of the elements in Garrison Diversion's
    request. To discuss this in more detail, I must first explain that the
    GDU budget consists of several different program items. For ease of
    discussion, I would like to simplify the breakdown into three major
    categories. The first I would call the base operations portion of the
    budget request. This amount is nominally $23 million annually when you
    include underfinancing. However, as more Indian MR&I projects are
    completed, the operation and maintenance costs for these projects will
    increase and create a need that will need to be addressed.
        The second element of the budget is the MR&I program. This consists
    of both Indian and non-Indian funding. The Dakota Water Resources Act
    contains an additional $200 million authorization for each of these
    programs. It is our intent that each program reaches the conclusion of
    the funding authorization at the same time. We believe this is only
    fair.
        The MR&I program consists of a number of projects that are
    independent of one another. They are generally in the $20 million
    category. Some are, of course, smaller and others somewhat larger, but
    one that is considerably larger is the Northwest Area Water Supply
    Project (NAWS). The first phase of that project is under construction.
    The optimum construction schedule for completion of the first phase has
    been determined to be 5 years. The total cost of the first phase is
    $125 million. At a 65 percent cost share, the Federal funding needed to
    support that project is $81 million. On the average, the annual funding
    needed for that project alone is over $16 million. Several other
    projects have been approved for future funding and numerous projects on
    the reservations are ready to begin construction. These requests will
    all compete with one another for funding. It will be a delicate
    challenge to balance these projects. Nevertheless, we believe that once
    a project is started, it needs to be pursued vigorously to completion.
    If it is not, we simply run the cost up and increase the risk of
    incompatibility among the working parts.
        An example of the former would be the certain impact of the
    increased cost of construction over time through inflation but also by
    protracting the engineering and administration costs.
        The third element of the budget is the Red River Valley Water
    Supply Project (RRVWSP) construction phase. The Dakota Water Resources
    Act authorized $200 million for the construction of facilities to meet
    the water quality and quantity needs of the Red River Valley
    communities. Over 42 percent of North Dakota's citizens rely on the
    drought-prone Red River of the North as their primary or sole source of
    water. It is my belief that the final plans and authorizations, if
    necessary, should be expected in approximately 3 years. This will
    create an immediate need for greater construction funding.
        This major project, once started, should also be pursued vigorously
    to completion. The reasons are the same as for the NAWS project and
    relate to good engineering and construction management. Although
    difficult to predict at this time, it is reasonable to plan that the
    RRVWSP features, once started, should be completed in approximately 3
    years. This creates the need for additional funding of $30 million/year
    starting in fiscal year 2009.
        Using these two projects as examples frames the argument for a
    steadily increasing budget. There is a need to accelerate the MR&I
    program now to assure the timely completion of the NAWS project and
    then to accommodate the need for additional construction funds when the
    RRVWSP construction is underway.
        It is simply good management to blend these needs to avoid drastic
    hills and valleys in the budget requests. By accelerating the
    construction of NAWS and other projects which are ready for
    construction during the next few years, some of the pressure will be
    off when the RRVWSP construction funding is needed. A smoother, more
    efficient construction funding program over time will be the result.
        Attachment 2 shows such a program. It begins with a $65 million
    budget this year and gradually builds over time to over $140 million
    when the RRVWSP construction could be in full swing (fiscal year 2010).
    Mr. Chairman, this is why we believe it is important that the budget
    resolution recognize that a robust increase in the budget allocation is
    needed for the Bureau of Reclamation. We hope this testimony will serve
    as at least one example of why we fully support the efforts to increase
    the overall allocation in the Bureau of Reclamation Water and Related
    Resources Account in fiscal year 2008 to a total of $1 billion.
        The Bureau of Reclamation, Rural Development, Garrison Diversion
    Conservancy District, North Dakota State Water Commission and local
    rural water districts have formed a formidable alliance to deal with
    the lack of a high quality, reliable water source throughout much of
    North Dakota. This cost-effective partnership of local control, state-
    wide guidance and Federal support has provided safe, clean, potable
    water to hundreds of communities and thousands of homes across North
    Dakota.
       attachment 1--garrison diversion unit (gdu) justification for $65
                     million appropriation fiscal year 2008
        North Dakota's Municipal, Rural and Industrial (MR&I) water supply
    program funds construction projects state-wide under the joint
    administration of the Garrison Diversion Conservancy District (GDCD)
    and the State Water Commission (SWC).
        Northwest Area Water Supply Project (NAWS) is under construction
    after 16 years of study and diplomatic delay. Construction costs
    (Federal) are estimated to be $81 million. Designs are based on a 5-
    year construction period; thus, over $16 million is needed for NAWS
    alone.
        Indian MR&I programs on four reservations are also under
    construction. Tribal and State leaders have agreed to split the Indian
    and non-Indian MR&I allocation on a 50/50 basis.
        The SWC has advanced the MR&I program $18 million to allow
    construction to continue on several critical projects. One project is
    the $22 million Williston Water Treatment Plant upgrade.

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                                  Amount
    ------------------------------------------------------------------------
    OPERATION AND MAINTENANCE OF INDIAN MR&I SYSTEMS AND                4.76
     JAMESTOWN DAM..........................................
                                                             ===============
    BREAKDOWN OF $51.29 MILLION CONSTRUCTION REQUEST:
        Operation and Maintenance of existing GDU system....            5.16
        Wildlife Mitigation & Natural Resources Trust.......            3.49
        Red River Valley Special Studies and EIS............            5.51
        Indian and non-Indian MR&I..........................           42.00
        Oakes Test Area and Miscellaneous...................            1.28
        Under financing 5 percent...........................            2.80
                                                             ---------------
          Total for Construction............................           60.24
                                                             ===============
          Grand Total.......................................           65.0
    ------------------------------------------------------------------------

                                     ______

          Prepared Statements of the Santa Clara Valley Water District
    statement of support--san jose area water reclamation and reuse program
                      (south bay water recycling program)
        Background.--The San Jose Area Water Reclamation and Reuse Program,
    also known as the South Bay Water Recycling Program, will allow the
    city of San Jose and its tributary agencies of the San Jose/Santa Clara
    Water Pollution Control Plant to protect endangered species habitat,
    meet receiving water quality standards, supplement Santa Clara County
    water supplies, and comply with a mandate from the U.S. Environmental
    Protection Agency and the California Water Resources Control Board to
    reduce wastewater discharges into San Francisco Bay.
        The Santa Clara Valley Water District (District) collaborated with
    the city of San Jose to build the first phase of the recycled water
    system by providing financial support and technical assistance, as well
    as coordination with local water retailers. The design, construction,
    construction administration, and inspection of the program's
    transmission pipeline and Milpitas 1A Pipeline was performed by the
    District under contract to the city of San Jose.
        Status.--The city of San Jose is the program sponsor for Phase 1,
    consisting of almost 60 miles of transmission and distribution
    pipelines, pump stations, and reservoirs. Completed at a cost of $140
    million, Phase 1 began partial operation in October 1997. Summertime
    2004 deliveries averaged 10.6 million gallons per day of recycled
    water. The system now serves over 517 active customers and delivers
    approximately 7,200 acre-feet of recycled water per year.
        Phase 2 is now underway. In June 2001, San Jose approved an $82.5
    million expansion of the program. The expansion includes additional
    pipeline extensions into the cities of Santa Clara and Milpitas, a
    major pipeline extension into Coyote Valley in south San Jose, and
    reliability improvements of added reservoirs and pump stations. The
    District and the city of San Jose executed an agreement in February
    2002 to cost share on the pipeline into Coyote Valley and discuss a
    long-term partnership agreement on the entire system. Phase 2's near-
    term objective is to increase deliveries by the year 2010 to 15,000
    acre-feet per year.
        Funding.--In 1992, Public Law 102-575 authorized the Bureau of
    Reclamation to work with the city of San Jose and the District to plan,
    design, and build demonstration and permanent facilities for reclaiming
    and reusing water in the San Jose metropolitan service area. The city
    of San Jose reached an agreement with the Bureau of Reclamation to
    cover 25 percent of Phase 1's costs, or approximately $35 million;
    however, Federal appropriations have not reached the authorized amount.
    To date, the program has received $26.62 million of the $35 million
    authorization.
        Fiscal Year 2007 Funding.--No funds were appropriated in fiscal
    year 2007.
        Fiscal Year 2008 Funding Recommendation.--It is requested that the
    congressional committee support an appropriation add-on of $8.8
    million, in addition to the $200,000 in the administration's fiscal
    year 2008 budget request, for a total of $9 million to fund the
    Program's work.
     statement of support--san luis reservoir low point improvement project
        Background.--San Luis Reservoir is one of the largest reservoirs in
    California, and is the largest ``off-stream'' water storage facility in
    the world. The Reservoir has a water storage capacity of more than 2
    million acre-feet and is a key component of the water supply system
    serving the Federal Central Valley Project (CVP) and California's State
    Water Project. San Luis is used for seasonal storage of Sacramento-San
    Joaquin delta water that is delivered to the reservoir via the
    California Aqueduct and Delta-Mendota Canal. The San Luis Reservoir is
    jointly owned and operated by the U.S. Bureau of Reclamation and the
    California Department of Water Resources.
        The San Luis Reservoir provides the sole source of CVP water supply
    for the San Felipe Division contractors--Santa Clara Valley Water
    District (District), San Benito County Water District and, in the
    future, Pajaro Valley Water Management Agency. When water levels in San
    Luis Reservoir are drawn down in the spring and summer, high water
    temperatures result in algae blooms at the reservoir's water surface.
    This condition degrades water quality, making the water difficult or
    impractical to treat and can preclude deliveries of water from San Luis
    Reservoir to San Felipe Division contractors. In order to avoid the
    ``low point'' problem, the reservoir has been operated to maintain
    water levels above the critical low elevation--the ``low point''--
    resulting in approximately 200,000 acre-feet of undelivered water to
    south of the Delta State and Federal water users
        Project Goals and Status.--The goal of the project is to increase
    the operational flexibility of storage in San Luis Reservoir and ensure
    a high quality, reliable water supply for San Felipe Division
    contractors. The specific project objectives are to: (1) Avoid supply
    interruptions when water is needed by increasing the certainty of
    meeting the requested delivery schedule throughout the year to south of
    Delta contractors dependent on San Luis Reservoir; (2) Increase the
    reliability and quantity of yearly allocations to south of Delta
    contactors dependent on San Luis Reservoir; (3) Announce higher
    allocations earlier in the season to south of Delta contractors
    dependent on San Luis Reservoir without sacrificing accuracy of the
    allocation forecasts. In addition to the above objectives, identify
    opportunities to provide for ecosystem restoration.
        Preliminary studies by the District have identified six potential
    alternatives to solve the problem. More funding is needed to fully
    explore these alternatives.
        The passage of H.R. 2828 in 2004 reauthorized Federal participation
    in the CALFED Bay-Delta Program. The San Luis Reservoir Low Point
    Improvement Project was one of six new projects, studies or water
    management actions authorized in the bill to receive a share of up to
    $184 million authorized under the conveyance section of the bill.
        Fiscal Year 2007 Funding.--$1.485 million was appropriated in the
    fiscal year 2007 under the CALFED appropriation.
        Fiscal Year 2008 Funding Recommendation.--It is requested that the
    congressional committee support the administration's fiscal year 2008
    budget request of $1.4 million for the San Luis Reservoir Low Point
    Improvement Project. The San Luis request is included in the $50
    million CALFED Bay-Delta appropriation request.

                 STATEMENT OF SUPPORT--CALFED BAY-DELTA PROGRAM

        Background.--In an average year, half of Santa Clara County's water
    supply is imported from the San Francisco Bay/Sacramento-San Joaquin
    Delta estuary (Bay Delta) watersheds through three water projects: The
    State Water Project, the Federal Central Valley Project, and San
    Francisco's Hetch Hetchy Project. In conjunction with locally developed
    water, this water supply supports more than 1.7 million residents in
    Santa Clara County and the most important high-tech center in the
    world. In average to wet years, there is enough water to meet the
    county's long term needs. In dry years, however, the county could face
    a water supply shortage of as much as 100,000 acre feet per year, or
    roughly 20 percent of the expected demand. In addition to shortages due
    to hydrologic variations, the county's imported supplies have been
    reduced due to regulatory restrictions placed on the operation of the
    State and Federal water projects.
        There are also water quality problems associated with using Bay
    Delta water as a drinking water supply. Organic materials and
    pollutants discharged into the Delta, together with salt water mixing
    in from San Francisco Bay, have the potential to create disinfection by
    products that are carcinogenic and pose reproductive health concerns.
        Santa Clara County's imported supplies are also vulnerable to
    extended outages due to catastrophic failures such as major earthquakes
    and flooding.
        Project Synopsis.--The CALFED Bay Delta Program is an
    unprecedented, cooperative effort among Federal, State, and local
    agencies to restore the Bay Delta. With input from urban, agricultural,
    environmental, fishing, and business interests, and the general public,
    CALFED has developed a comprehensive, long term plan to address
    ecosystem and water management issues in the Bay Delta.
        Restoring the Bay Delta ecosystem is important not only because of
    its significance as an environmental resource, but also because failing
    to do so will stall efforts to improve water supply reliability and
    water quality for millions of Californians and the State's trillion
    dollar economy and job base.
        The passage of HR 2828 (Public Law 108-361) in 2004 reauthorized
    Federal participation in the CALFED Bay-Delta Program and provided $389
    million in new and expanded funding authority for selected projects,
    including the San Luis Reservoir Low Point Improvement Project. The San
    Luis Project is one of six new projects, studies or water management
    actions authorized to receive a share of up to $184 million under the
    conveyance section of the bill. It is critical that Federal funding be
    provided to implement the actions authorized in the bill in the coming
    years.
        Fiscal Year 2007 Funding.--$33.6 million was appropriated for
    CALFED activities in fiscal year 2007.
        Fiscal Year 2008 Funding Recommendation.--It is requested that the
    committee support an appropriation add-on of $18.2 million, in addition
    to the $31.8 million in the administration's fiscal year 2008 budget
    request, for a total of $50 million for California Bay-Delta
    Restoration.
                                     ______

     Prepared Statement of the Confederated Tribes of the Umatilla Indian
                                  Reservation

        Honorable Chairman Byron Dorgan and members of the committee: We
    respectfully request fiscal year 2008 appropriation of funds for two
    priority watershed restoration and agricultural water supply protection
    projects in Oregon and Washington, the Umatilla Basin Water Supply
    Project (previously funded under the Umatilla Basin Project Phase III,
    OR) and the Walla Walla General Investigation Stream Flow Restoration
    Feasibility Study (previously funded under the Walla Walla River
    Watershed, OR & WA).
      --For the Umatilla Basin Water Supply Project, Oregon, we request an
            appropriation of $1 million in the Bureau of Reclamation,
            Pacific Northwest Region, Water and Related Resources budget.
            This request will build upon the $450,000 committed by the
            Bureau of Reclamation to the Project in fiscal year 2007.
      --For the Walla Walla River Watershed, Oregon and Washington, we
            request an appropriation of $100,000 in the U.S. Army Corps of
            Engineers, Portland Division, Walla Walla District, General
            Investigations budget--to initiate Pre-engineering and Design
            (PED) phase after fiscal year 2008 completion of Feasibility
            Study. This project is also known as Walla Walla River Basin
            Feasibility Report/Environmental Impact Statement.
        Both the Umatilla Basin Water Supply Project and the Walla Walla
    General Investigation Stream Flow Restoration Feasibility Study are
    ongoing projects and have had administration and/or congressional line
    item funding in past fiscal years.
    Umatilla River Basin, Oregon Water Supply Project
        By letter dated March 19, 2007, the Office of the Secretary of
    Interior responded favorably to the formal requests of the Washington
    and Oregon delegations and of the Confederated Umatilla Tribes,
    Westland Irrigation District and Governor Theodore Kulongoski to
    initiate Umatilla Basin water development projects and concurrent
    settlement of the Tribe's reserved water rights. Counselor to the
    Secretary, L. Michael Bogert, wrote ``I will ask the Secretary's Indian
    Water Rights Office to appoint an Assessment Team . . .'' and ``I will
    also ask the Bureau of Reclamation to move forward with a concurrent
    appraisal level study of water supply options, including a full Phase
    III exchange . . . to help resolve the Tribe's water rights claims.''
        The Bureau of Reclamation, subsequent to issuance of the March 19
    letter from Counselor Bogert, has committed $450,000 to fiscal year
    2007 work on the Umatilla Basin water supply appraisal study.
        The Umatilla Basin Water Supply Project is authorized by the
    Reclamation Feasibility Studies Act of 1966, 80 Stat. 707, Public Law
    89-561, (Sept. 7, 1966).
        The fiscal year 2008 request of $1 million to the U.S. Bureau of
    Reclamation will follow-up the $450,000 fiscal year 2007 work and
    should complete the majority of the estimated 2 year appraisal level
    study. It is anticipated that the full appraisal study project will be
    completed in 2009 in order to inform the concurrent Interior Department
    Indian Water Rights Assessment Team's work products. In 2009, Interior
    should have a clear project or suite of projects necessary to satisfy
    water rights of the Confederated Umatilla Tribes on the Umatilla Indian
    Reservation and in the Umatilla River.
        This fiscal year 2008 request follows on the work of the Bureau of
    Reclamation, authorized by the Umatilla Basin Project Act of 1988 (100
    Public Law 557; 102 Stat. 2782 Title II), to construct and operate the
    Phase I Exchange with West Extension Irrigation District and the Phase
    II Exchange with Hermiston and Stanfield Irrigation Districts. Heralded
    as one of the most successful stream flow restoration and salmon
    recovery projects in the Columbia River Basin, the Umatilla Basin
    Project resulted in partially restored stream flows in the Umatilla
    River and successful reintroduction of spring Chinook, fall Chinook and
    Coho salmon. After nearly a century of dry river bed in summer months
    and extinction of all salmon stocks, there has been an Indian and non-
    Indian salmon fishery nearly every year in the Umatilla River since the
    project was completed in the mid-1990s.
        Completion of the Water Supply Study and the concurrent Tribal
    Water Rights Assessment is supported and endorsed by the Honorable
    Governor Ted Kulongoski and by local irrigation districts including
    specifically Westland Irrigation District, the Umatilla County
    Commission, and local municipalities including specifically the City of
    Irrigon.
    Walla Walla Basin, Oregon and Washington, GI Feasibility Study
        In its sixth and final full year prior to completion, the U.S. Army
    Corps of Engineers' feasibility study will select the project necessary
    to restore stream flows in the Walla Walla River. Drained nearly dry
    during summer months by irrigation in Oregon and Washington, the Walla
    Walla River is within the aboriginal lands of the Confederated Umatilla
    Tribes and the complete loss of salmon violates the agreement by the
    United States in the Treaty of 1855 to protect these fish.
        Approximately $3 million of Federal funds have either been budgeted
    or appropriated through fiscal year 2007 (this includes a estimate of
    $797,000 for fiscal year 2007 based upon recent communication with
    Corps of Engineers). As a result of the allocation of $797,000 in
    fiscal year 2007, the Corps will finish the Feasibility Study in 2008
    without additional appropriations and CTUIR's request for $100,000 will
    enable the initiation of the next PED phase.
        The Feasibility Study Project is authorized by the Senate Committee
    on Public Works July 27, 1962 (Columbia River and Tributaries), 87th
    Congress, House Document #403 and initiated as a result of a positive
    Reconnaissance Report for the Walla Walla River Watershed (1997) under
    a General Investigation study.
        The Confederated Tribes of the Umatilla Indian Reservation is the
    formal sponsor of the Corps of Engineers Feasibility Study and has
    provided over $3.1 million in in-kind contributions. Additionally, the
    State of Washington Department of Ecology has provided $400,000 to the
    Feasibility Study.
        Support for the completion of the Feasibility Study and moving to
    construction of the project is strong and diverse and includes the
    Honorable Governor of Washington Christine Gregoire, the Honorable
    Governor of Oregon Ted Kulongoski, the Walla Walla Watershed Alliance,
    the Walla Walla Basin Watershed Council, basin irrigation districts,
    local State legislators and many local and regional advocacy groups.
        In closing, the CTUIR appreciates the opportunity to provide this
    testimony in support of adding funds for the ongoing projects Umatilla
    River Basin Water Supply Project, Bureau of Reclamation, and for the
    Army Corps of Engineers Walla Walla River Basin Watershed Restoration
    Feasibility Study. Both projects are critically important to protecting
    existing agricultural economies, completing future water supply
    development and concurrently restoring stream flows and recovering
    threatened salmon and other Columbia River Basin fish stocks.
                                     ______

           Prepared Statement of the Oregon Water Resources Congress

        I am Anita Winkler, Executive Director, Oregon Water Resources
    Congress. This testimony is submitted to the United States Senate
    Appropriations Committee, Energy and Water Development Subcommittee,
    regarding the fiscal year 2008 Budget for the Bureau of Reclamation and
    Oregon Projects. The Oregon Water Resources Congress (OWRC) was
    established in 1912 as a trade association to support member needs to
    protect water rights and encourage conservation and water management
    statewide. OWRC represents non-potable agriculture water suppliers in
    Oregon, primarily irrigation districts, as well as member ports, other
    special districts and local governments. The association represents the
    entities that operate water management systems, including water supply
    reservoirs, canals, pipeline and hydropower production.

                             BUREAU OF RECLAMATION

        OWRC continues to support an increase in funding for the Bureau of
    Reclamation's Water and Related Resources program above the
    administration's proposed fiscal year 2008 budget request for the
    Bureau of Reclamation's programs west-wide. The administration's
    current budget proposal is approximately $150 million less than what we
    in the water community feel is necessary to carryout an effective 21st
    Century water program for the West.
    Water 2025
        As our membership works to meet water-related challenges, we have
    found the Water 2025 program of the Bureau beneficial in providing the
    extra financial assistance necessary for the proper planning and
    actions to help prevent future crisis.
        OWRC supports the $11 million fiscal year 2008 budget request for
    the Water 2025 program. Funding this program will support our member
    districts' efforts to improve water delivery systems, conserve water,
    and implement innovative projects to meet the water needs in our State.
        With many Western States confronting significant budget deficits,
    increased emphasis is being placed on targeted Federal aid. In
    addition, we continue to be confronted by looming shortages associated
    with the on going drought in the West. While we appreciate the
    administration's request for $11 million for the Water 2025 program, we
    believe this seriously under represents the need for this program and
    the financial assistance in provides Western States to address water
    supply needs. We support a larger appropriation for the program once it
    is reauthorized and will provide a recommended dollar amount at that
    time.

                                  OREGON NEEDS

        We are concerned with the overall reduction in the fiscal year 2008
    request for Oregon projects in the Bureau of Reclamation's fiscal year
    2008 budget compared to the fiscal year 2007 request. With the
    exception of the Crooked River Project and the Savage Rapids Dam
    Removal, every project is down in requested dollars. Given the aging
    infrastructure, the surging population and environmental requirements
    we feel this is shortsighted given the needs in the State. We recognize
    that the Rural Water Supply Act passed in the last Congress instituting
    a new loan guarantee program for the Bureau of Reclamation. We believe
    this may prove to be an important new tool in the Reclamation Tool Box.
    However, it should not be viewed as a substitute for a robust Water And
    Related Resources Budget.
        We are disappointed that Reclamation has not come forward with
    their 5-year budgeting plan as requested by the committee, This
    absence, coupled with not having the spending plan for the fiscal year
    2007 funding provided make it difficult to provide more thorough
    judgments and recommendations on the fiscal year 2008 budget request
    Conservation Implementation
        The largest need for funding for OWRC's members is to implement
    water conservation projects. Irrigation districts in Oregon continue to
    line and pipe open waterways to enhance both water supply and water
    quality. But the ability to continue this work depends on some public
    investment in return for the public benefits. Districts have conserved
    water and provided some of the saved or conserved water to benefit the
    fishery in-stream while also building reservoir supplies.
        While some of these districts will continue to benefit from the
    funding requested in the fiscal year 2008 Bureau budget request, others
    are going through a reauthorization process or new authorizations for
    projects in their districts that will continue this conservation ethic.
    Rogue River Basin
        Medford Irrigation District
        Rogue River Valley Irrigation District
        Talent Irrigation District
        Grants Pass Irrigation District
        Three contiguous districts in the Rogue Project (Medford, Rogue
    River and Talent irrigation districts) are members of OWRC. We support
    their ongoing program request in this area.
        The Grants Pass Irrigation District (GPID) continues to address the
    eventual removal of the Savage Rapids Dam. The $15 million in the
    fiscal year 2008 budget is an important continuation of the effort to
    address the agreements made in this area. OWRC supports the GPID
    request.
    Deschutes Basin
        Tumalo Irrigation District
        Deschutes Resource Conservancy
        Ochoco Irrigation District
        The Tumalo Irrigation District and the Deschutes Resource
    Conservancy are currently working on new program and project
    authorizations. We appreciated the committee efforts to add $1 million
    in last years appropriation bill for the DRC.
        The Ochoco Irrigation District (Prineville, Oregon) has worked with
    the Bureau of Reclamation, along with the North Unit Irrigation
    District (Madras, Oregon) for the better part of a decade to determine
    the use of unallocated water in the district's reservoir. It is
    important that this type of approach continues to address the needs in
    these areas.
    Umatilla/Columbia Basins
        Stanfield Irrigation District
        Westland Irrigation District
        Hermiston Irrigation District
        West Extension Irrigation District
        East Valley Water District
        East Fork Irrigation District
        The Umatilla districts draw their water supply from the Umatilla
    and Columbia Rivers. The districts have been in the process of
    completing boundary changes and seeking supplemental contracts as part
    of the conclusion of the boundary process. This process has taken
    nearly a decade. The districts recognize the need to move forward with
    Phase III of the project and support the $374,000 in the fiscal year
    2008 Budget for project conservation assistance and water quality
    improvements.
    Eastern Basins
        Burnt, Malheur, Owyhee and Powder River Basins Water Optimization
    Study.
         The irrigation districts in these basins continue to seek support
    for this optimization study to seek alternatives for more effective
    water management through conservation projects and enhancement of water
    supply. This project has been identified by the Bureau of Reclamation
    as a regional need.
        OWRC supports the fiscal year 2008 Oregon Investigations program
    request that contains $810,000 to continue studies for these basins as
    well as several other basins in the State.
        In addition, we support ongoing State of Oregon efforts on Water
    Supply Investigations in the State. As districts and the State continue
    their efforts at better planning, there is a fundamental need for
    better information. This would help with assessing existing and future
    water needs in Oregon, completing a comprehensive inventory of above
    and below ground storage and quantify surplus winter water.
    Klamath Basin
        The Klamath Project districts continue to require support for the
    work in their area. We appreciate the $25 million request for the
    collaborative efforts of all involved and recommend continued scrutiny
    by the committee to make sure the needs and issues of the water
    community are met in this area. We continue to encourage the
    administration and in particular, the various Department of the
    Interior agencies, to work closely with the districts in the project
    area on the overall funding and planning necessary for ongoing
    solutions.

                                   CONCLUSION

        Thank you for the opportunity to provide testimony regarding the
    fiscal year 2008 Federal Bureau of Reclamation budget. While we support
    existing proposals, we feel that given the record-setting droughts we
    have suffered in the past few years and in anticipation of another
    drought this year, we need to support an increased budget to stabilize
    the Nation's water supply for the many needs it must meet. Providing a
    stable water supply feeds the economy locally and at the national
    level. The needs in this area should not have to rely on emergency
    approaches and funding to be addressed in a timely manner. There is a
    storing need for integrated water management and systems and watershed
    approaches. An emphasis on improved intergovernmental cooperation,
    working with State, regional and local organizations can make for
    better collaborative planning models for everyone to benefit. We would
    encourage the subcommittee to request a briefing from the Western
    States Water Council on the study they have underway in this policy
    area.
                                     ______

     Prepared Statement of the Fort Peck Assiniboine and Sioux Tribes and
                            Dry Prairie Rural Water

                             BUREAU OF RECLAMATION

    Fiscal Year 2008 Budget Request
        The Fort Peck Assiniboine and Sioux Tribes and Dry Prairie Rural
    Water respectfully request fiscal year 2008 appropriations in the
    amount of $36,851,000 for the Bureau of Reclamation from the
    Subcommittee on Energy and Water Development. Funds will be used to
    construct critical elements of the Fort Peck Reservation Rural Water
    System, Montana, (Public Law 106-382, October 27, 2000). The amount
    requested is based on need to build critical project elements and is
    well within capability to spend the requested funds as set out below:

      FISCAL YEAR 2008 WORK PLAN--FORT PECK RESERVATION RURAL WATER SYSTEM
                              (PUBLIC LAW 106-382)
    ------------------------------------------------------------------------
                                                                   Aount
    ------------------------------------------------------------------------
    Fort Peck Tribes:
        Water Treatment Plant:
            Phase I, Clear Well Wash Water Recover..........      $3,504,000
            Phase II, Main Treatment........................      22,475,000
        FP OM Buildings.....................................         765,000
                                                             ---------------
          Total.............................................      26,744,000
                                                             ===============
    Dry Prairie:
        Branch Pipelines:
            St. Marie to Nashua and St. Marie to Opheim:
                Federal.....................................      10,107,000
                State and Local.............................       3,192,000
                                                             ---------------
                  Total.....................................      13,299,000
                                                             ===============
                  Total:
                      Federal...............................      36,851,000
                      State and Local.......................       3,192,000
    ------------------------------------------------------------------------

        The sponsor Tribes and Dry Prairie greatly appreciate the previous
    appropriations from the subcommittee that have permitted building the
    Missouri River intake, the critical water source, elements of the water
    treatment plant, the Culbertson to Medicine Lake Pipeline Project and
    branches serving rural users outside the Fort Peck Indian Reservation.
    Without funds to complete the water treatment plant, service to tribal
    users and communities has not been possible within the Fort Peck Indian
    Reservation.
        The request is comparable to the average annual appropriations
    needed to complete the project in fiscal year 2012 ($35,110,000), as
    provided by the authorizing legislation, but is within our capability
    to use:

    ------------------------------------------------------------------------
                                                            Fiscal Year 2008
    ------------------------------------------------------------------------
    Total Federal Funds authorized (October 2005 $).......      $258,977,000
    Federal Funds Expended Through fiscal year 2006.......       $48,318,000
    Percent Complete......................................             18.66
    Amount Remaining......................................      $210,659,000
    Average Annual Required for fiscal year 2012 Finish          $35,110,000
     (Public Law 106-382).................................
    Fiscal year 2008 Amount Requested.....................       $36,851,000
    Years to Complete.....................................                 5
    ------------------------------------------------------------------------

        Note that cost indexing from last year due to inflation increased
    the cost of the project from $247 million to $259 million, an increase
    of $12 million. Increases in the level of appropriations are needed to
    outpace inflation.
    Proposed Activities
        Public Law 106-382 (October 27, 2000) authorized this project,
    which includes all of the Fort Peck Indian Reservation in Montana and
    the Dry Prairie portion of the project outside the Reservation.

                          FORT PECK INDIAN RESERVATION

        On the Fort Peck Indian Reservation the Tribes have used
    appropriations from previous years to construct the Missouri River raw
    water intake, a critical feature of the regional water project. The raw
    water pump station has also been constructed, and the raw water
    pipeline between the Missouri River and the water treatment plant has
    been constructed to within 2 miles of the water treatment plant. The
    sludge lagoons at the water treatment plant are completed.
        The critical Missouri River water treatment plant will begin
    construction in spring 2007 and will use $15.3 million of funds on hand
    to build the first two phases of the facility. An additional $3.5
    million in fiscal year 2008 funds is needed to Complete Phase I and an
    additional $22.475 million is needed to complete the main water
    treatment plant process building in Phase II.
        This project was delayed a year due to the reduction in level of
    appropriations in fiscal year 2007 (from $16 million in fiscal year
    2006 to $6 million in fiscal year 2007) and the uncertainty of adequate
    funding to complete the project. The project was bid in fiscal year
    2006 as a complete unit, combining Phase I and Phase II, but bidders
    increased prices significantly to reflect the uncertainty of funding to
    complete the project. The project has now been separated into the two
    phases to accommodate the funding setback, but the separation into two
    phases has increased the total cost of the facility.
        The request for fiscal year 2008 does not provide for construction
    of essential pipelines from the water treatment plant to the
    communities of Poplar and Wolf Point. These are the principal core
    pipelines that extend east and west of the water treatment plant to
    serve the Fort Peck Indian Reservation and to eventually connect to Dry
    Prairie facilities on the east and west boundaries of the Reservation.
    The funds needed for the pipeline projects to Poplar and Wolf Point are
    $11.0 and $4.0 million, respectively, in addition to the fiscal year
    2008 funding request. These care critical elements of the work plan for
    fiscal year 2009.
        The pipeline project from the water treatment plant to Poplar will
    provide a replacement water supply for the community of Poplar and a
    rural section of the Fort Peck Indian Reservation contaminated by brine
    from oil drilling operations, which is the subject of EPA orders
    against the responsible oil company. There is urgency in completing the
    pipeline to Poplar before the advancing plume of contamination reaches
    existing community wells in Poplar. Projections of the date that
    contamination will reach the Poplar community wells are variable, but
    the anxiety of the Tribes' leadership and membership can be overcome by
    completing the water treatment plant and connecting the pipeline to
    Poplar in fiscal year 2009. This is a critical time frame for the
    Tribes. The staff and members of the subcommittee are urged to review
    this matter with the Tribes and Bureau of Reclamation to clarify the
    urgency of the completing necessary project facilities and alleviating
    the threat of contamination of the public water supply for the Tribes'
    headquarters community of Poplar.
        The Tribes will also use $765,000 for an administration, operation
    and maintenance building. The Bureau of Reclamation can confirm that
    the use of funds proposed for fiscal year 2008 is well within the
    project's capability to spend.

                                  DRY PRAIRIE

        Dry Prairie has used previous appropriations to construct core
    pipelines and a booster pump station from the community of Culbertson
    to serve the communities of Froid and Medicine Lake. This project
    represents a significant portion of the main core pipeline for the
    eastern half of the Dry Prairie Project. Pipelines were sized to serve
    the area north of the Missouri River, south of the Canadian border and
    between the Fort Peck Indian Reservation and the North Dakota border.
        The project relies on interim water supplies. The regional water
    treatment plant will provide finished water when pipelines are
    constructed to the interconnection point for Dry Prairie between Poplar
    and Culbertson, scheduled for completion in fiscal year 2012. The
    project between Culbertson, Froid and Medicine Lake is in full
    operation and serves the last two mentioned communities.
        In fiscal year 2006 in first quarter fiscal year 2007, Dry Prairie
    built branch pipelines and connected nearly 200 rural services to the
    Culbertson to Medicine Lake pipeline in the eastern half of the Dry
    Prairie Project. Bainville, McCabe and Dane Valley residents can be
    served with the existing system capacity that is now constructed and in
    operation.
        The request for fiscal year 2008 funds of $10,107,000, supplemented
    by a non-Federal cost share of $3,192,000, will be used to begin
    construction of pipelines to rural services on the west side of the Dry
    Prairie project between the communities of St. Marie and Nashua. An
    existing water treatment plant owned by the Boeing Co., at the former
    Glasgow Air Force Base will provide an interim water supply to serve
    the west side project until the regional water treatment plant of the
    Tribes is completed and pipelines from Wolf Point to Nashua can be
    completed as scheduled in fiscal year 2012. The facilities constructed
    on the west side of the project are the same facilities required after
    connection of the regional water treatment plant. Therefore, no
    duplication of facilities or increases in costs are associated with the
    interim project.
    Master Plan
        The project master plan is provided for review as an attachment.
    The request for fiscal year 2008 is shown in relation to the project
    components that remain to be completed by 2012.
    Administration's Support
        The Tribes and Dry Prairie worked extremely well and closely with
    the Bureau of Reclamation prior to and following the authorization of
    this project in fiscal year 2000. The Bureau of Reclamation has heavily
    reviewed and commented on the Final Engineering Report, and all
    comments were incorporated into the report and agreement was reached on
    final presentation. OMB reviewed the Final Engineering Report prior to
    its submission to Congress in the final step of the approval process.
    The Commissioner, Regional and Area Offices of the Bureau of
    Reclamation have been consistently in full agreement with the need,
    scope, total costs, and the ability to pay analysis that supported the
    Federal and non-Federal cost shares. There have been no areas of
    disagreement or controversy in the formulation of the project.
        The Bureau of Reclamation collaborated with the Tribes and Dry
    Prairie to conduct and complete value engineering investigations of the
    Final Engineering Report (planning), the Culbertson to Medicine Lake
    pipeline (design), the Poplar to Big Muddy River pipeline (design), the
    Missouri River intake (design) and on the regional water treatment
    plant (design). Each of these considerable efforts has been directed at
    ways to save construction and future operation, maintenance and
    replacement costs as planning and design proceeded. Agreement with
    Reclamation has been reached in all value engineering sessions on steps
    to take to save Federal and non-Federal costs in the project.
        The Bureau of Reclamation conducted independent review of the final
    plans and specifications for the Missouri River raw water intake, the
    regional water treatment plant and the Culbertson to Medicine Lake
    Project. The agency participated heavily during the construction phases
    of those projects and concurred in all aspects of construction from
    bidding through the completion of construction. (The regional water
    treatment plant has not yet been constructed).
        Cooperative agreements have been developed and executed from the
    beginning phases to date between the Bureau of Reclamation and the
    Tribes and between Bureau of Reclamation and Dry Prairie. Those
    cooperative agreements carefully set out goals, standards and
    responsibilities of the parties for planning, design and construction.
    All plans and specifications are subject to levels of review by the
    Bureau of Reclamation pursuant to the cooperative agreements. The
    sponsors do not have the power to undertake activities that are not
    subject to oversight and approval by the Bureau of Reclamation. Each
    year the Tribes and Dry Prairie, in accordance with the cooperative
    agreements, develop a work plan setting out the planning, design and
    construction activities and the allocation of funding to be utilized on
    each project feature.
        Clearly, the Fort Peck Reservation Rural Water System is well
    supported by the Bureau of Reclamation. Congress authorized the project
    with a plan formulated in full cooperation and collaboration with the
    Bureau of Reclamation, and major project features are under
    construction with considerable oversight by the agency.
                                     ______

                              DEPARTMENT OF ENERGY

          Prepared Statement of the State Teachers' Retirement System

    Summary
        Acting pursuant to congressional mandate, and in order to maximize
    the revenues for the Federal taxpayer from the sale of the Elk Hills
    Naval Petroleum Reserve by removing the cloud of the State of
    California's claims, the Federal Government reached a settlement with
    the State in advance of the sale. The State waived its rights to the
    Reserve in exchange for fair compensation in installments stretched out
    over an extended period of time.
        The State respectfully requests an appropriation of at least $9.7
    million in the subcommittee's bill for fiscal year 2008, in order to
    meet the Federal Government's obligations to the State under the
    Settlement Agreement.

    Background
        Upon admission to the Union, States beginning with Ohio and those
    westward were granted by Congress certain sections of public land
    located within the State's borders. This was done to compensate these
    States having large amounts of public lands within their borders for
    revenues lost from the inability to tax public lands as well as to
    support public education. Two of the tracts of State school lands
    granted by Congress to California at the time of its admission to the
    Union were located in what later became the Elk Hills Naval Petroleum
    Reserve.
        The State of California applies the revenues from its State school
    lands to assist retired teachers whose pensions have been most
    seriously eroded by inflation. California teachers are ineligible for
    Social Security and often must rely on this State pension as the
    principal source of retirement income. Typically the retirees receiving
    these State school lands revenues are single women more than 75 years
    old whose relatively modest pensions have lost as much as half or more
    of their original value to inflation.

    State's Claims Settled, as Congress Had Directed
        In the National Defense Authorization Act for Fiscal Year 1996
    (Public Law 104-106) that mandated the sale of the Elk Hills Reserve to
    private industry, Congress reserved 9 percent of the net sales proceeds
    in an escrow fund to provide compensation to California for its claims
    to the State school lands located in the Reserve.
        In addition, in the Act Congress directed the Secretary of Energy
    on behalf of the Federal Government to ``offer to settle all claims of
    the State of California . . . in order to provide proper compensation
    for the State's claims.'' (Public Law 104-106,  3415). The Secretary
    was required by Congress to ``base the amount of the offered settlement
    payment from the contingent fund on the fair value for the State's
    claims, including the mineral estate, not to exceed the amount reserved
    in the contingent fund.'' (Id.)
        Over the year that followed enactment of the Defense Authorization
    Act mandating the sale of Elk Hills, the Federal Government and the
    State engaged in vigorous and extended negotiations over a possible
    settlement. Finally, on October 10, 1996 a settlement was reached, and
    a written Settlement Agreement was entered into between the United
    States and the State, signed by the Secretary of Energy and the
    Governor of California, under which the State would receive 9 percent
    of the sales proceeds in annual installments over an extended period.
        The Settlement Agreement is fair to both sides, providing proper
    compensation to the State and its teachers for their State school lands
    and enabling the Federal Government to maximize the sales revenues
    realized for the Federal taxpayer by removing the threat of the State's
    claims in advance of the sale.

    Federal Revenues Maximized by Removing Cloud of State's Claim in
            Advance of the Sale
        The State entered into a binding waiver of rights against the
    purchaser in advance of the bidding for Elk Hills by private
    purchasers, thereby removing the cloud over title being offered to the
    purchaser, prohibiting the State from enjoining or otherwise
    interfering with the sale, and removing the purchaser's exposure to
    treble damages for conversion under State law. In addition, the State
    waived equitable claims to revenues from production for periods prior
    to the sale. The Reserve thereafter was sold for a winning bid of $3.53
    billion in cash, a sales price that substantially exceeded earlier
    estimates.

    The Money Is There to Pay the State
        The funds necessary to compensate the State have been collected
    from the sales proceeds remitted by the private purchaser of Elk Hills
    and are now being held in the Elk Hills School Lands Fund for the
    express purpose of compensating the State. Taking into account the 1
    percent government-wide rescission in the fiscal year 2006 Defense
    Appropriations Act, the Elk Hills School Lands Fund should have a
    positive balance of at least $18.18 million.

    Congress Should Appropriate $9.7 Million for the Fiscal Year 2008
            Installment of Elk Hills Compensation
        As noted above, the State's 9 percent share of the adjusted Elk
    Hills sales price of $3.53 billion is $317.70 million. To date,
    Congress has appropriated seven installments of $36 million and one
    installment of $48 million that was reduced to $47.52 million by the 1
    percent across-the-board rescission under the fiscal year 2006 Defense
    Appropriations Act, for total appropriations to date of $299.52 million
    of Elk Hills compensation owed to the State. Accordingly, the Elk Hills
    School Lands Fund should have a positive balance of at least $18.18
    million.
        We understand that Department of Energy personnel have proffered 3
    purported grounds for suspending further payments of Elk Hills
    compensation to the State. Each of these is a ``red herring.''
        Red Herring No. 1: Finalization of respective equity shares of
    Federal Government and ChevronTexaco as selling co-owners of Elk Hills
    oil field still not completed.--The President's fiscal year 2008 budget
    request says that ``the timing and levels of any future budget request
    [for Elk Hills compensation] are dependent on the schedule and results
    of the equity finalization process'' between the Federal Government and
    ChevronTexaco to determine the relative production over the years from
    their respective tracts in the Elk Hills field (Fiscal Year 2008 Budget
    Appendix, at p. 373). But DOE already has held back $67 million,
    including $6.03 million from the State's share, to protect the Federal
    Government's interests in a ``worst case scenario'' for this equity
    process, which is in its final stages after nearly a decade. The State
    has agreed to a ``hold-back'' of that amount to protect the Federal
    Government's interest. This reduces the available balance in the Elk
    Hills School Lands Fund to $12.15 million. Remaining uncertainty in the
    equity process thus provides no basis for withholding further payment
    of the State's Elk Hills compensation.
        Red Herring No. 2: No payment can be made to the State because of
    pending litigation between ChevronTexaco and DOE.--DOE has pointed to
    pending litigation brought by ChevronTexaco against DOE in the U.S.
    Court of Federal Claims (Docket No. 04-1365C) as a reason to suspend
    further payments to the State. This litigation alleges DOE personnel
    committed misconduct in the equity finalization process by having
    improper ex parte contacts and having the same DOE staff serve as both
    advocate for DOE's position and advisor preparing the decision
    documents for the decisionmaker. However, the California State Attorney
    General has analyzed this litigation and advised that this litigation
    is a claim for money damages for DOE staff misconduct that has no
    effect on the Federal Government's equity share, and so there is no
    effect on the State's share of compensation. (See Memorandum of the
    California State Attorney General, dated May 16, 2006). Indeed, under
    the governing agreement between DOE and Chevron, Chevron had waived any
    right to contest the final equity determination in court. Hence this
    litigation provides no basis for withholding the rest of the State's
    compensation.
        Red Herring No. 3: No payment can be made to the State because the
    State's share must be reduced by the equity finalization costs and
    environmental remediation costs and the final amount of such costs is
    not yet known.--The State's share of compensation is properly reduced
    by the ``direct costs of sale'' as required by Congress. Since the sale
    took place nearly a decade ago, those costs are fixed and known. The
    State has agreed to bear its share of these sales expenses. However,
    DOE is seeking to charge against the State's share two additional
    categories of costs--costs of determining the equity ownership and
    environmental remediation--that constitute ongoing costs of operating
    the oil field, not sales expenses. The California State Attorney
    General advises that these do not properly constitute sales expenses
    chargeable against the State's share.
        More specifically, the Settlement Agreement between the Federal
    Government and the State provides that the Federal Government shall pay
    the State ``nine percent of the proceeds from the sale of the Federal
    Elk Hills Interests that remain after deducting from the sales proceeds
    the costs incurred to conduct such sale.'' This reflects the
    congressional direction that, ``In exchange for relinquishing its
    claim, the State will receive seven [nine in the final legislation]
    percent of the gross sales proceeds from the sale of the Reserve that
    remain after the direct expenses of the sale are taken into account.''
    (House Rept. No. 104-131, Defense Authorization Act for Fiscal Year
    1996, Public Law 104-106).
        The State agrees that the $27.13 million incurred for appraisals,
    accounting expenses, reserves report, and brokers' commission are
    appropriate sales expenses. (See Letter of the California Attorney
    General to DOE, dated February 10, 2005). Accordingly, the State's 9
    percent share of these proper sales expenses reduces the available
    balance of the Elk Hills School Lands Fund by $2.44 million to $9.7
    million.
        Costs of conducting the equity adjustment are properly viewed as
    ongoing costs incurred due to the joint operation of the Elk Hills oil
    field by the Federal Government and ChevronTexaco, since the equity
    adjustment already was required under their joint operating agreement
    and related to pre-sale production revenues. Similarly, costs of
    environmental remediation of the Elk Hills field was a cost
    attributable to the prior operation of the field, which created any
    environmental problems that exist. The ongoing operational nature of
    this cost is underscored by the fact that the Federal Government is
    currently engaged in the phased environmental remediation of a Naval
    Petroleum Reserve that it is not selling--NPR-3 (Teapot Dome), as
    evidenced by its fiscal year 2006 budget request.

    Conclusion
        Therefore, of the current Elk Hills School Lands Fund balance of
    $18.18 million, taking into account the ``hold-back'' for worst case
    scenario under equity finalization and deducting the appropriate direct
    costs of conducting the sale, the State respectfully requests the
    appropriation of at least $9.7 million for Elk Hills compensation in
    the subcommittee's bill for the fiscal year 2008 installment of
    compensation, in order to meet the Federal Government's obligations to
    the State under the Settlement Agreement.
                                     ______

      Prepared Statement of the Consortium for Fossil Fuel Science (CFFS)

     PRODUCTION OF TRANSPORTATION FUELS FROM COAL AND BIOMASS WITH REDUCED
                            CARBON DIOXIDE EMISSIONS

        Chairman Dorgan and members of the subcommittee: We request $3
    million in funding for a congressionally directed project in the Fuels
    Program of the Office of Fossil Energy budget to initiate a program of
    research to produce transportation fuels from coal and biomass. The
    focus of this program will be to minimize the amount of carbon dioxide
    emitted by both the fuel conversion process and by fuel utilization to
    achieve overall emissions comparable to or less than emissions
    resulting from the production and utilization of similar transportation
    fuels from petroleum.

                                    OVERVIEW

        Traditional petroleum fuels and vehicles will remain our dominant
    transportation mode for at least the next 20 years. The United States
    imports over 10 million barrels of oil per day at a cost exceeding $220
    billion/year, most of it from unstable regions of the world. Expert
    testimony has been presented to the Congress showing that the true cost
    of imported petroleum goes far beyond the price of a barrel of crude
    oil, with some estimates reaching to $825 billion for 2006. Increasing
    global demand, coupled with an expected peaking in the world oil
    supply, will cause shortages and markedly increased prices in the
    future, which could lead to economic recessions due to ``oil shock.''
        It is essential that we produce transportation fuels from our own
    national resources, especially focusing on our most abundant energy
    resource, coal. It is equally essential, however, that we do so without
    harming the environment. The National Research Center for Coal and
    Energy (NRCCE, West Virginia University) and the Consortium for Fossil
    Fuel Science (CFFS, University of Kentucky) have formed an integrated
    team of fuels experts from five universities (West Virginia University,
    University of Kentucky, University of Pittsburgh, University of Utah,
    and Auburn University) to conduct a basic research program focused on
    producing Fischer-Tropsch fuels using mixtures of coal and biomass as
    the feedstock. We believe that costs can be reduced, a superior
    transportation fuel can be produced, and carbon emissions can be
    minimized through such research.
        The NRCCE and the CFFS have extensive experience and broad
    expertise in research on the conversion of coal into clean liquid
    transportation fuels and the conversion of coal into hydrogen. We have
    made significant breakthroughs in such areas as: (1) catalysis of coal
    conversion reactions; (2) C1 chemistry processes (including Fischer-
    Tropsch (F-T) synthesis) to produce transportation fuels from coal-
    derived syngas; (3) co-processing of coal with waste materials,
    including plastic, rubber, and cellulose (biomass); (4) development of
    novel processes to produce hydrogen from fossil fuels; and, (5)
    environmental research.
        We are now proposing a research program focused on development of
    processes that use biomass as a co-feed with coal for the production of
    clean transportation fuels with reduced carbon emissions.
        The motivations for this approach include: First, co-feeding coal
    with biomass will extend the lifetime of the Nation's coal resources;
    second, we can make use of biomass wastes that are not currently
    utilized; and, third, combined coal and biomass processes have the
    potential to yield a significant net reduction in carbon dioxide
    emissions compared to coal-only processes.
        Recent studies indicate that the total carbon dioxide emissions
    from a liquid fuel produced by F-T synthesis of syngas derived from
    mixtures of coal and biomass may be reduced by as much as 60-80 percent
    relative to those from the same fuel produced from coal alone.

                              GOALS OF THE PROGRAM

        The primary goal of the NRCCE-CFFS research program is to develop
    technology that will enable the United States to produce clean liquid
    transportation fuel from its largest domestic energy resource, coal, in
    a manner that is both sustainable and environmentally friendly.
    Incorporating biomass into the feedstock can help to achieve these
    objectives. A short summary of more specific goals is given below.
      --Investigate the pyrolysis and gasification of coal-biomass mixtures
            to determine the role that hydrogen from biomass can play in
            the production of syngas with the optimum composition for the
            production of liquid fuels (gasoline, diesel fuel, and jet
            fuel). Improvements in the gasification step will have a great
            impact on the ultimate cost of the liquid fuels produced from
            syngas derived from coal-biomass mixtures, since gasification
            costs are 60-70 percent of the total cost.
      --Develop catalysts and thermochemical processes that will yield
            transportation fuel products from coal-biomass mixtures with
            properties better than those produced from petroleum, while
            reducing the total carbon dioxide emissions from both
            production and use of the fuels.
      --Develop computational models to simulate catalytic chemical
            reactions by quantum mechanics, thereby reducing the need for
            experimental testing and decreasing the cost of the on-going
            research program.
      --Utilize systems analysis modeling to simulate plant performance and
            cost factors in order to determine whether or not processes
            developed in the laboratory are commercially viable.
      --Produce hydrogen and synthetic natural gas from coal-biomass
            mixtures while reducing the carbon dioxide footprint.
      --Establish a more active collaboration with scientists at the
            National Energy Technology Laboratory (NETL) who are focused on
            this and related areas of research. Develop an exchange program
            in which professors and graduate students from the five
            participating universities conduct research at NETL and NETL
            scientists have access to facilities and expertise available at
            the universities.
        Legislation introduced in both houses of the 110th Congress
    includes tax credits and loan guarantees to hasten the deployment of
    plants which produce alternative fuels from coal. Widespread deployment
    of such plants will require a large number of fuel scientists and
    engineers. An ancillary benefit of our program will include educating
    the U.S.-based human resource pool needed to meet personnel demands for
    a coal-to-liquids industry.

                                    SUMMARY

        We request your support for $3 million in funding for this program
    to the National Research Center for Coal and Energy (West Virginia
    University) from the Fossil Energy budget for fiscal year 2008. The
    funding will be shared with the other four CFFS universities (Kentucky,
    Pittsburgh, Auburn, and Utah) to support the first year of a proposed
    three-year research program for producing liquid transportation fuels
    from coal and biomass. The NRCCE-CFFS consortium will provide $750,000
    in cost-sharing.
        Achievement of our program goals will accelerate the development of
    a domestic industry for the production of clean liquid transportation
    fuels using our own natural resources, thereby strengthening the energy
    and economic security of our Nation. An alternative fuels industry will
    also provide many new jobs in the mining industry, fuel synthesis
    plants, and biomass processing.
        Thank you for the opportunity to offer testimony to the
    subcommittee.
                                     ______

         Prepared Statement of the Coalition of Northeastern Governors

        The Coalition of Northeastern Governors (CONEG) is pleased to
    provide this testimony to the Senate Subcommittee on Energy and Water
    Development regarding fiscal year 2008 appropriations for the Energy
    Conservation and Renewable Energy programs of the U.S. Department of
    Energy (DOE). The Governors recognize the difficult funding decisions
    which confront the subcommittee this year. We appreciate the
    subcommittee's continued support for energy efficiency, energy
    conservation, and renewable energy programs--all of which promote sound
    energy management and improve the Nation's energy security. Consistent
    with this thinking, the CONEG Governors request that funding for the
    State Energy Program be increased to $74 million, and funding for the
    Weatherization Assistance Program be provided at a level of $300
    million in fiscal year 2008. The Governors support the President's
    request to fund the Northeast Home Heating Oil Reserve at $7 million
    and the Energy Information Administration at $105 million in fiscal
    year 2008. At this time of heightened interest in expanded use of
    indigenous renewable energy resources, we request that the subcommittee
    require the Department of Energy to again provide modest funding of
    $7.5 million to continue the critical networks and market development
    work of the National Biomass Partnership (previously known as the
    Regional Biomass Energy Program).
        These very successful energy programs take on new significance as
    the Nation strives to strengthen the security and reliability of
    domestic energy supplies and to reduce dependence on foreign sources of
    energy. Energy efficiency, conservation and renewable energy, which
    offer near-term opportunities and results, are important complements to
    longer-term Federal investments in domestic production and emerging
    technologies. Federal resources for research and program implementation
    must also emphasize programs that can bring alternative energy and
    energy saving technologies quickly to the marketplace. The State Energy
    Program, the Weatherization Assistance Program, and the Regional
    Biomass Partnership provide established networks and Federal-State-
    local government and private sector partnerships which can achieve
    timely energy savings and encourage renewable energy development.
    Modest Federal investment in these programs provides substantial
    energy, economic and environmental returns to the Nation, leveraging
    additional State and private sector investment, and contributing to
    sound energy management. These resources are undisputed clear winners
    when compared to conventional energy technologies.
        State Energy Program (SEP).--The State Energy Program (SEP) is the
    major State-Federal partnership program addressing energy efficiency
    and conservation in all sectors of the economy. It assists States' work
    in support of the national goals of greater energy efficiency, reduced
    energy costs, and development of alternative and renewable energy
    resources. The State Energy Program also helps States improve the
    security of the energy infrastructure and prepare for natural
    disasters. SEP programs increase the awareness of the opportunities
    available in States to improve energy efficiency, reduce energy costs,
    create jobs, and diversify energy use. Their transformative effects in
    the market have been repeatedly demonstrated and proven.
        Working with DOE, States tailor their renewable energy and energy
    efficiency programs in a way that makes the most sense for their market
    opportunities, thus maximizing the effectiveness of the program's
    resources. For example, the Northeast States have used SEP supported
    projects to provide technical assistance and financial incentives that
    have spurred building designers and owners to adopt energy-efficient
    design features in the commercial, institutional, multifamily, and
    industrial sectors. Our States have also used SEP resources in programs
    that monitor and enhance the reliability of the energy supply and
    delivery infrastructures, support the timely updating of energy
    emergency preparedness plans, and promote the use of alternative fuels
    in the transportation sector and other initiatives that will lead to a
    lowering of fuel consumption and cleaner air.
        The modest Federal funds provided to the SEP are an efficient
    Federal investment, as they are leveraged by non-federal public and
    private sources. According to the most recent data from the Department
    of Energy, for every $1 of Federal investment, $3.58 is leveraged by
    State and local governments, and private companies and results in $7.23
    in reduced energy bills. In its evaluation of the program, Oak Ridge
    National Laboratory estimated that the program results in annual cost
    savings of $256 million while providing environmental and public health
    benefits through reduced energy use and emission reductions.
        Weatherization Assistance Program (WAP).--Weatherization is taking
    on an increased importance as an immediate, effective tool to manage
    energy use, particularly at a time of high energy prices. Through a
    network of more than 900 local weatherization service providers, the
    Weatherization Assistance Program (WAP) improves the energy efficiency
    of more than 100,000 low-income dwellings a year, thereby reducing the
    home energy bills of the Nation's most vulnerable citizens. Increased
    and consistent funding is key to the effectiveness of this program that
    invests in training weatherization personnel.
        While an average household pays roughly 2.7 percent of annual
    income on home energy, low income households pay more than four times
    that amount. Some elderly recipients who live on fixed incomes pay as
    much as 35 percent of their annual incomes for energy bills. WAP
    provides immediate and lasting benefits and reduces the energy burden
    of low-income families by improving energy efficiency and permanently
    reducing home energy bills.
        Weatherization can reduce, on average, heating bills by 31 percent
    and overall energy bills by $358 per year at current prices through
    energy efficiency measures that address a home's heating and cooling
    systems, its electrical system, and electricity consuming appliances.
    In terms of energy savings, weatherization clients save $1.83 for every
    $1 of DOE investment, according to recent DOE information.
    Weatherization services can also improve the safety of a home by
    identifying carbon monoxide hazards from old boilers, furnaces and
    water heaters, and fire hazards from outdated electrical equipment and
    wiring.
        The WAP also provides numerous non-energy benefits. Oak Ridge
    National Laboratory has concluded that for every $1 of DOE investment,
    there are non-energy benefits worth $1.88, and the WAP contributes to
    more than 8,000 jobs nationwide. In addition, the decreased energy use
    resulting from weatherization measures also provides environmental
    benefits through decreased carbon dioxide emissions.
        Renewable Energy and the National Biomass Partnership.--Renewable
    energy plays a vital role in meeting the Nation's goal of reduced
    reliance on imported fossil fuels, a more balanced, diverse energy
    resource mix, and reduction of greenhouse gases. Modest but timely
    support for research and commercialization opportunities for near-term
    bioenergy technologies is a vital component in meeting that goal. Using
    government funding to support private market development and technology
    commercialization for biofuels offers one of the most promising hopes
    for reducing the Nation's energy vulnerabilities. States contribute
    significant resources to support the development of biomass fuels,
    technology, and infrastructure. However, State funds are not available
    for coordination of these activities across the Nation.
        The National Biomass Partnership (formerly known as the Regional
    Biomass Energy Program) brings together varied networks of State,
    private, and Federal bioenergy activities, and is a critical link in
    the chain of research, resource production and technology
    commercialization. The Partnership has successfully contributed to the
    adoption of State policies supportive of bioenergy resource and
    technology development, public awareness of the benefits and uses of
    bioenergy, greater leveraging of Federal funding and State resources,
    and increased intensity of biomass use. For example, according to a
    DOE-directed program review, the Northeast Regional Biomass Partnership
    (NRBP) directly influenced $24 million in biomass investments--69
    percent of the overall biomass investment made in the region in 2003.
    It helped create biomass working groups in nine northeast States, which
    along with the NRBP personnel, provided bioenergy education and
    training to nearly 3,000 people in the region--and greater
    participation in State-developed bioenergy policies and programs.
        Northeast Home Heating Oil Reserve.--The Nation's heightened
    emphasis on energy security places renewed importance on the Northeast
    Home Heating Oil Reserve. The Northeast, with its reliance upon
    imported fuels for both residential and commercial heating, is
    particularly vulnerable to the effects of supply disruptions and price
    volatility. The Northeast region of the country is literally at the end
    of the energy product pipeline. Any disruption along the delivery
    infrastructure anywhere in the country negatively affects the
    Northeast. The Reserve provides an important buffer to ensure that the
    States will have prompt access to immediate supplies in the event of a
    supply emergency.
        Energy Information Administration (EIA).--EIA provides timely,
    reliable and credible information and analysis on the energy produced,
    imported and consumed in the United States. At this time of volatile
    global energy markets and renewed focus on the safety and security of
    the Nation's energy supply, the information provided by the Energy
    Information Administration (EIA) is a vital tool in keeping energy
    markets functioning efficiently. In addition, States rely on EIA data
    as the core of their information for energy emergency planning.
    Increased funding in fiscal year 2008 will help ensure that EIA can
    continue to collect, analyze and make available this vital data.
        In conclusion, the Coalition of Northeastern Governors request that
    you provide $74 million for the State Energy Program, $300 million for
    the Weatherization Assistance Program and $7.5 million for the National
    Biomass Partnership in fiscal year 2008. These programs promote sound
    energy management by encourage development of alternative energy
    resources and helping manage the Nation's energy use. The Governors
    also request $7 million for the Northeast Home Heating Oil Reserve and
    $105 million for the Energy Information Administration in fiscal year
    2008. CONEG welcomes the opportunity to continue a dialogue on these
    important matters as Congress and the administration consider budget
    and energy project and policy initiatives.
                                     ______

                      Prepared Statement of Cummins, Inc.

        Cummins Inc. is pleased to provide the following statement for the
    record regarding fiscal year 2008 funding for programs in the
    Department of Energy's Offices of Energy Efficiency and Renewable
    Energy; Electricity Delivery and Energy Reliability; and Fossil Energy.
    Cummins Inc., headquartered in Columbus, Indiana, is a corporation of
    complementary business units that design, manufacture, distribute and
    service engines and related technologies, including fuel systems,
    controls, air handling, filtration, emission solutions and electrical
    power generation systems. The funding requests outlined below are
    critically important to Cummins' research and development efforts and
    represent a sound Federal investment towards a cleaner environment and
    improved energy efficiency for our Nation. We request that the
    committee fund the programs as identified below.

                OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY

    Office of FreedomCAR and Vehicle Technologies/Vehicle Technologies
        Advanced Combustion Engine R&D.--Cummins recommends an increase in
    the administration's request of $34.55 million by $15.20 million to
    bring the program total to $49.75 million in fiscal year 2008. This
    program includes two important research areas--the Heavy Truck Engine
    and the Waste Heat Recovery programs. Both of these relate to heavy
    duty diesel engines and are significantly under-funded in the
    administration's fiscal year 2008 request. Formerly separate programs,
    these research areas were folded into the umbrella Advanced Combustion
    Engine R&D program in this year's request. The Heavy Truck Engine
    portion of the administration's request was reduced to $3.2 million for
    fiscal year 2008, down from $12.2 million in fiscal year 2007 and
    fiscal year 2006. The requested increase would allow for funding for
    heavy truck engine research of $15.4 million in fiscal year 2008. The
    Waste Heat Recovery program of the administration's request was reduced
    to zero, down from $4 million in fiscal year 2007 and fiscal year 2006.
    The requested increase would allow $3 million for waste heat recovery
    research in fiscal year 2008. These programs are critically important
    to the heavy duty diesel engine industry efforts to meet stringent
    emissions requirements through better understanding of combustion
    technologies. Heavy truck engines consume nearly 25 percent of all
    surface transportation fuels used in the United States, and the Heavy
    Truck Engine program is critical to engine manufacturers' efforts to
    increase on-highway fuel efficiency while meeting EPA's near zero 2010
    emissions regulations. Significant technology hurdles remain in the
    areas of engine efficiency improvements, co-fuels development,
    aftertreatment requirements and subsystem durability, on-board
    diagnostics and fuel penalty minimization due to the use of
    aftertreatment. Hybrid technologies are also becoming attractive for
    heavy duty engine applications, warranting additional research effort.
    The Waste Heat Recovery program is critical because over 50 percent of
    fuel energy is lost in diesel engines through wasted heat in exhaust,
    lubricants and coolants. This program is focused on identifying and
    developing innovative energy recovery technologies, such as
    thermoelectric, turbo-compounding and Rankine cycle technologies. It
    seeks to improve truck energy efficiency by 10 percent through better
    waste heat recovery technologies.
    Office of FreedomCAR and Vehicle Technologies/Fuel Technologies
        Non-Petroleum Based Fuels and Lubricants.--Cummins recommends an
    increase in the administration's request of $6.9 million by $3.0
    million to bring the program total to $9.9 million in fiscal year 2008.
    This program funds research to better understand renewable (such as
    biodiesel and ethanol) and synthetic fuel properties and their effect
    on engine system performance when blended with petroleum fuels. While
    biodiesel fuel blends are becoming acceptable in the marketplace, their
    effect on various engine components, including fuel systems, lubricants
    and aftertreatment systems, is unknown. Current fuel filters are less
    effective for separating emulsified water in biodiesel blends and are
    likely to cause problems in the field. The increase in funding will
    help develop efficient techniques to remove water from biodiesel fuel
    blends, better understand biodiesel fuel effects on particulate
    filters, and evaluate biodiesel and lubricant interactions.
        Advanced Petroleum Based Fuels (APBF).--Cummins recommends an
    increase in the Administration's request of $6.5 million by $1.0
    million for a program total of $7.5 million for fiscal year 2008. This
    requested increase would allow additional study of fuel properties to
    enable heavy duty diesel engines to operate in the most efficient mode
    while meeting future emissions standards. Engine companies are required
    to prove emissions compliance for over 435,000 miles of useful engine
    life. The goal of this program is to study the impacts of fuel and lube
    oil sulfur content on durability and reliability of particulate
    aftertreatment systems.
    Office of FreedomCAR and Vehicle Technologies/Materials Technologies
        Propulsion Materials Technology--Heavy Vehicle Propulsion Materials
    Program.--Cummins recommends an increase in the administration's
    request of $4.8 million by $1.0 million to bring the program total to
    $5.8 million in fiscal year 2008. This program supports research and
    development of next generation materials to enable diesel engine
    efficiency improvements, improved reliability and reduced
    aftertreatment system costs. Traditional engine materials may not be
    adequate for the next generation of advanced combustion concepts, such
    as low temperature combustion (LTC). High pressure injection fuel
    systems are needed to support these combustion technologies. Smaller
    hole size and clearance in emerging fuel systems requires new material
    capabilities to remove submicron particles from the fuel. Further
    research is also needed on advanced materials to mitigate cost issues
    relating to the use of precious metals required for advanced nitrogen
    oxides (NOX) reduction technologies. Increased funding for
    the program will support studies on a range of advanced materials
    technologies, including lightweight high strength materials for engine
    components, composites, catalysts and soot oxidation, filtration media
    modeling and nano-fiber filter technologies.
    Office of Hydrogen, Fuel Cells and Infrastructure Program/Hydrogen
            Technology
        Transportation Fuel Cell Systems.--Cummins requests that the
    committee support the administration's requested amount of $8.0 million
    for fiscal year 2008. As designed, the program provides support for R&D
    and system integration of energy efficient auxiliary power unit (APU)
    technologies for mobile or off-road applications. The goal of this
    effort is the demonstration of a solid oxide fuel cell (SOFC) based APU
    for Class 7/8 on-highway diesel trucks. Reduction of diesel fuel
    consumed in the idling of large diesel trucks is widely recognized as
    an important element in reducing exhaust emissions from heavy trucks.
    It would also reduce our Nation's overall dependence on foreign sources
    of oil. It is estimated that a potential reduction of up to 800 million
    gallons of diesel fuel is possible annually if SOFC systems can be used
    to provide the heating, cooling and electrical needs of truck fleets in
    lieu of idling. In 2005, Cummins Power Generation and our partner,
    International Truck and Engine Company, conducted analysis and design
    work to accurately define the requirements for such an APU, and we
    believe the goal is achievable. Increased funding in fiscal year 2008
    would allow the demonstration of a practical SOFC prototype that is
    integrated on a typical truck platform.
             office of electricity delivery and energy reliability
    Research and Development/Distributed Energy Resources
        Distributed Generation Technology Development--Advanced
    Reciprocating Engine Systems (ARES).--Cummins recommends an increase in
    the administration's request of $0 million by $1.5 million to bring the
    program total to $1.5 million in fiscal year 2008. The objective of
    this program is to develop high efficiency, low emissions and cost
    effective technologies for stationary natural gas systems between 500-
    6,500 kw by the year 2010. Natural gas-fueled reciprocating engine
    power plants are preferred for reliability, low operating costs and
    point of use power generation. Technologies sponsored by the ARES
    program have demonstrated 44 percent engine efficiency (an increase
    from the 32-37 percent baseline) and higher power densities than
    current products, with an expected reduction in life cycle costs and
    carbon dioxide (CO2) emissions. Improved combustion, air
    handling and controls developments have been successfully implemented
    in a field test engine and genset. Further technical challenges include
    combustion development for system efficiency, nitrogen oxides
    (NOX) reductions, advanced sensors and controls, hardware
    durability and lower life cycle costs. The development of distributed
    power generation supports national energy security needs, improves
    protection of critical infrastructure to address homeland security
    concerns, and decreases dependence on the national electrical grid
    system through point of use energy production.

                            OFFICE OF FOSSIL ENERGY

    Office of Clean Coal and Natural Gas Power Systems/Fuel Cell Research
            and Development
        Innovative Concepts--Solid State Energy Conversion Alliance
    (SECA).--Cummins requests that the committee support the
    administration's request of $62.0 million for fiscal year 2008. The
    goal of the SECA project is the development of a commercially viable 3-
    10 kw solid oxide fuel cell (SOFC) module that can be mass-produced in
    modular form for RV, commercial mobile and telecommunications markets.
    The modular nature of SOFCs makes them adaptable to a wide variety of
    stationary and mobile applications. SOFCs can play a key role in
    securing the Nation's energy future by providing efficient,
    environmentally sound electrical energy from fossil fuels or hydrogen.
    A Cummins prototype successfully completed Phase 1 of the SECA program,
    operating for approximately 2,000 hours at Cummins Power Generation in
    Minneapolis, and meeting (pending DOE confirmation) SECA targets for
    durability and cost. Phase 2 of the program will bring a critical
    transition from current fuels used with SOFC (LPG or natural gas) to
    diesel fuel for mobile applications including RV, marine and truck
    auxiliary power units (APUs). The program is moving forward toward
    development, leading to possible commercial production in 2013. This
    program combines the efforts of the DOE national laboratories, private
    industry and universities. Federal funding is critical to support the
    research needed to keep this technology moving from the laboratory to
    commercial viability.
        Thank you for this opportunity to present our views on these
    programs which we believe are of great importance to our Nation's
    energy and economic security as well as continued environmental
    progress. These programs are critical to needed advancements in the
    transportation and power generation sectors.
                                     ______

                 Prepared Statement of the University of Tulsa

        Dear Respected Members, Senate Appropriations Subcommittee on
    Energy and Water: I respectfully ask for the continuation of the
    funding of the project titled ``Development of Next Generation
    Multiphase Flow Prediction Tools'' for the fiscal year of 2008. This
    project was selected in response to DOE's Oil Exploration and
    Production solicitation DE-PS26-02NT15375-02, Public Resources Invested
    in Management and Extraction (PRIME), July 15, 2002. The project
    started on June 1, 2003 and scheduled to be completed by August 31,
    2008. The anticipated DOE contribution for 2008 is $107,940. This
    funding is significantly leveraged by The University of Tulsa ($151,355
    (58 percent of total cost)). In the rest of my testimony I would like
    to emphasize the importance and results of the project.
        The ``easy'' oil and natural gas finds are becoming a rarity as we
    depleted them posing a significant problem of energy shortage. Oil and
    gas industry, academia and government are working to improve enabling
    technology to facilitate more production from existing resources and
    exploitation of ``difficult to produce resources including ultra deep
    water resources, heavy oils, and unconventional natural gases.''
        The developments of fields in deep and ultra-deep waters (5,000 ft
    and more) are becoming more common. It is inevitable that production
    systems will operate under multiphase flow conditions (simultaneous
    flow of gas-oil-and water possibly along with sand, hydrates (ice-like
    structures, and waxes)). Recovery of resources from deep waters poses
    special challenges and requires accurate multi-phase-flow predictive
    tools for several applications, including the design and diagnostics of
    the production systems, separation of phases in horizontal wells, and
    multiphase separation. The available tools cannot properly account for
    the three-phase flow. At best, they lump oil and water phases as a
    single liquid phase, assuming homogeneous liquid flow. Therefore, the
    development of revolutionary next-generation multiphase flow predictive
    tools is needed.
        Multiphase flow prediction is essential for every phase of
    hydrocarbon recovery, from design to operation. Recovery from deep
    waters poses special challenges and requires accurate multiphase-flow
    predictive tools for several applications, including the design and
    diagnostics of production systems, separation of phases in horizontal
    wells, and multiphase separation. The overall objective of the proposed
    work is to develop new technologies that will enable future
    exploitation of hydrocarbons from deep waters through the development
    of revolutionary next-generation predictive tools for the simultaneous
    flow of gas-oil-water in pipes.
        The novel software tool developed in this project help design
    proper production and transportation systems. There are many impacts of
    the new tool being developed. For the industry, it is imperative to
    have accurate predictive tools for the production and transportation of
    hydrocarbons and associated water. The lost production from a single
    offshore pipeline due to inadequate design can cost $500,000 or more
    per day. More importantly, the lack of technology can result in overly
    conservative designs that can render some projects cost-prohibitive.
    Any technological improvement towards increases in producible reserves
    and efficient production practices, such as the novel software
    developed in this project, will realize more hydrocarbon production and
    increase U.S. employment. Moreover, the new technologies may give U.S.
    companies a technological advantage to exploit similar fields or
    technical services in other countries, creating possibly more job
    opportunities for U.S. residents. For the public at large, the
    availability of additional domestic hydrocarbon reserves will reduce
    the dependency of the United States on hydrocarbon imports, bringing
    more stability to U.S. energy markets and the U.S. economy as a whole.
        Significant progress has been made in this project. The model,
    engine of the software, has already been developed for the prediction
    of flow behavior during production and transportation of gas, oil, and
    water through wellbores and pipelines. Closure relationships describing
    the distribution between the liquid phases--namely mixing and inversion
    are proposed. Significant improvements are observed over the
    predictions by the two-phase unified models that assume a fully mixed
    liquid phase. The three-phase unified model is currently being enhanced
    by improving the closure relationships. The model is being incorporated
    in various software packages by the software companies.
        In conclusion, DOE's contribution to this project has already been
    invaluable. The results and deliverables of the project are being
    incorporated in available design software for design engineers to use.
    Moreover, two graduate students funded through the project are employed
    in oil and gas by companies operating in the United States serving the
    public through working on oil and gas development projects in the
    United States. One more year of support is needed to fully complete the
    project. We ask that the funding for this project to be continued in
    fiscal year 2008.
                                     ______

               Prepared Statement of the Gas Technology Institute

        This submittal is intended for the Senate Subcommittee on Energy
    and Water. Comments are for consideration for establishing the fiscal
    year 2008 Fossil Energy Oil and Natural Gas Program budgets. Thank you
    for the opportunity to provide the subcommittee with information for
    use during deliberations.
        Recently, a new record was established! The technically recoverable
    gas resource base in North America hit a 30-year high based on the
    latest estimate by the National Petroleum Council in their
    comprehensive Year 2003 study. Our understanding of the gas resource
    base has resulted in a five-fold increase over the last 30 years (See
    Figure No. 1).

     Figure 1.--Technically Recoverable Gas Resource Base Estimates (Tcf)
           Modified from William Fisher, et. al. University of Texas

        With the resource base at record highs--expectations might be for
    gas prices to be at record lows. Having just paid our winter heating
    bills everyone is aware of current natural gas prices. Understanding
    this dichotomy requires and understanding of both our remaining oil and
    gas resource base.
        Our resource base while large and diverse is also heavily explored
    and difficult to access. Oil and gas is found in rocks that are deeper
    in depth onshore greater than 15,000 ft. Oil and gas is found in lower
    permeability formations, in deeper waters offshore, in environmentally
    sensitive areas (Rocky Mountains) and is at greater distances from
    markets (Alaska). All of these factors combine to the point where our
    large technically recoverable resource is also technically challenging.
        The resource is there however . . . and located within North
    America. Our remaining oil and gas endowment is a considerable asset
    and is being overlooked.
        We continue to drill an increasing number of oil and gas wells but
    they produce less resource for many of the reasons just discussed.
        Demand exceeds supply and we all know the consequence of that
    situation whether the commodity be a gallon of gasoline or a gallon of
    milk. We are experiencing record high oil and gas prices that will lead
    to significant economic hardship if action is not taken.
        The action to be taken is a renewed emphasis on technology. New
    technology must be developed and applied. Ten years ago, Coalbed
    Methane was part of the technical resource base with little production.
    A focused research program initiated by the Department of Energy
    resulted in gas production that now satisfies 7 percent of our gas
    demand (Figure No. 2 Coalbed Methane Production).

           Figure 2.--Coalbed Methane Production in the United States

        Funding for Oil and Gas R&D was almost cut in half during the
    1990's. Adequate gas supplies and $2.00 wellhead prices put pressure on
    the bottom line. The industry, for sound business reasons, was not
    investing in supply R&D sufficient to meet mid-term demand. The super-
    majors, while they may have significant research budgets, have other
    more profitable options overseas. The service companies, which meet
    many of the research needs of large producers, do so at the direction
    of their clients. The smaller independents, which develop most of our
    onshore oil and gas resources, do not have the resources to invest in
    the R&D. Now, with gas prices at $6.00 and oil at $60 abandoned R&D
    capabilities are sorely missed.
        We require a renewed focus on our domestic resource base to fully
    utilize our significant and valuable natural gas and remaining oil
    endowment. New technology is the key to converting ``Resource to
    Production.''
        The National Petroleum Council as part of their 2003 study on
    natural gas estimated the impact of various actions on natural gas
    supplies and prices. Figure No. 3 illustrates the fact that new
    technology can have as high or greater impact than most other options.
    With this level of impact new technology programs should be receiving
    top priority during budget deliberations.

           Figure 3.--NPC Sensitivity Studies on Gas Price and Supply

        The Department of Energy Oil and Gas program is the last remaining
    organized R&D effort with a focus on our remaining domestic oil and gas
    resource base. Important projects have been developed in several
    strategic areas including:
      --Unconventional gas resources such as tight gas sands, coalbed
            methane and gas from shales.
      --Microhole drilling for remote exploration and minimum land impact.
      --Stripper or low production oil wells.
      --Environmental issues including water produced from oil and gas
            operations.
      --Access to Federal lands with minimum impact.
      --Technology transfer for Independent producers.
        Just when the need is greatest and at a time when research efforts
    of this type should be significantly increased in size, the
    administration has recommended that the programs be eliminated.
        I strongly believe that meeting domestic oil and gas supply has
    value to the Nation on par with all other federally supported programs,
    and that congressional and administration program and funding
    priorities should reflect that importance.
                                     ______

      Prepared Statement of the Interstate Oil and Gas Compact Commission
        Mr. Chairman and members of the Subcommittee, on behalf of the
    Interstate Oil and Gas Compact Commission (IOGCC), I am submitting this
    testimony in support of fiscal year 2008 funding for a new U.S.
    Department of Energy program that would address a serious public safety
    and environmental problem that affects all the states that historically
    drilled for oil and gas. Specifically, IOGCC is supporting a $10
    million appropriation to permanently plug abandoned and ``orphaned''
    oil and gas wells.
        The member states of the Interstate Oil and Gas Compact Commission
    account for more than 99 percent of the oil and natural gas produced
    onshore in the United States. Formed by Governors in 1935, the IOGCC is
    a congressionally-ratified interstate compact of 30 member states. The
    mission of the IOGCC is two-fold: to conserve our nation's oil and gas
    resources and to protect human health and the environment.
        The orphan oil and gas well plugging program for states was
    authorized in Section 349(g) and (h) of the Energy Policy Act of 2005.
    For lack of congressional appropriation, the U.S. Department of Energy
    has yet to establish the program, however, the section authorizes up to
    $20 million annually in federal matching funds to states for the
    purpose of plugging abandoned wells--some of which are over a century
    old. The program matches existing state funds to speed the plugging and
    clean-up of old wells for which there is no responsible party.
        No new orphan wells can be created, since today's state regulatory
    structures, which require adequate bonding or insurance coverage,
    ensure that the costs of plugging will be covered if the responsible
    party becomes unwilling or unable to perform the task. Plugging the
    remaining orphan wells by supplementing state programs will create no
    new bureaucracy and will provide a lasting solution to the problem.
        States have taken the lead in addressing the orphan well issue, and
    thousands of sites have been reclaimed and wells permanently plugged by
    the states. All oil and gas producing states have established plugging
    funds, but they are insufficient to address a timely cleanup and
    plugging of the remaining orphan wells. It is estimated that
    approximately 60,000 orphan wells remain that have the potential to
    cause public safety or environmental harm. The requested $10 million
    appropriation to match state oil and gas plugging funds will
    permanently plug the nation's remaining orphan wells over the next 5
    years.
        The potential for groundwater contamination is the primary
    environmental concern associated with orphan wells. Unplugged wells can
    potentially serve as a conduit for the migration of fluids into a
    ground water aquifer. In some cases, fluids could flow all the way to
    the surface, potentially contaminating surface soils surrounding the
    well.
        Public safety is also in jeopardy from unplugged wells. Escaping
    methane gas from undiscovered pre-Civil War era wells can migrate to
    the surface where unsuspecting homeowners and businesses may be
    required to evacuate until the danger can be ameliorated. Similarly,
    farm equipment and equipment operators can be seriously injured by the
    unearthing of unknown oil or gas wells buried under decades of soil on
    agricultural land. States have excellent programs to find and identify
    such public safety hazards, but plugging and cleaning up the sites is
    dependent on adequate funding.
        This program is not an earmark, but rather an authorized U.S. DOE
    program. Funding of the orphan well plugging program would set in place
    an efficient and simple program to direct funding to state plugging
    efforts. The appropriation would be directed to the U.S. Department of
    Energy, which in turn would utilize the IOGCC as the fund
    administrator, as directed by the authorizing statute. IOGCC would help
    ensure that federal dollars would be dedicated to dealing with the
    wells that pose the greatest danger to public safety and the
    environment. An IOGCC Task Force has developed a prioritization
    schedule to guide the well selection process. States would match the
    federal funding, and submit a completed plugging report to the IOGCC
    for reimbursement. The long-range goal is to plug every orphan well in
    the nation that poses a threat to the environment or public safety.
        Thank you for this opportunity to submit our testimony. We urge the
    Subcommittee's favorable consideration of this request. For questions
    or further information, please feel free to contact Diane S. Shea,
    IOGCC Washington Representative, at dsshea60@verizon.net, or 301-913-
    5243.
                                     ______

           Prepared Statement of the Nuclear Waste Strategy Coalition

        Mr. Chairman and distinguished members of the Committee, the
    Nuclear Waste Strategy Coalition (NWSC or Coalition) appreciates this
    opportunity to present a Statement for the Record regarding the status
    of the fiscal year 2008 Department of Energy (DOE) Budget Request.

                                 ABOUT THE NWSC

        The NWSC is an ad hoc group of state utility regulators, state
    attorneys general, electric utilities and associate members
    representing 46 member organizations in 26 states. The Coalition was
    formed in 1993 out of frustration at the lack of progress DOE had made
    in developing a permanent repository for spent nuclear fuel (SNF) and
    high-level radioactive waste (HLRW), as well as Congress's failure to
    sufficiently fund the nuclear waste disposal program (Program) since
    1982. The mission and purpose of the NWSC is to achieve:
      --Removal of commercial spent nuclear fuel and high-level radioactive
            waste from temporary civilian and decommissioned storage sites
            located in 33 states.
      --Authorization of a temporary, centralized commercial spent nuclear
            fuel storage facility.
      --Appropriations from the Nuclear Waste Fund (NWF) sufficient to
            enable the DOE to fulfill its statutory and contractual
            obligations.
      --Augmentation of transportation planning and regulations to
            facilitate transportation systems plan.
      --Capping of the NWF fee at the present one-tenth of a cent per
            kilowatt-hour.
      --Operation of a permanent repository at Yucca Mountain that is
            capable of receiving waste as soon as possible upon
            authorization by the Nuclear Regulatory Commission (NRC).

                        FISCAL YEAR 2008 APPROPRIATIONS

        Fiscal year 2008 is a pivotal year for the Program, and the NWSC
    strongly supports the DOE's fiscal year 2008 budget request. Congress
    has the opportunity to determine the direction of the Program by
    appropriating the full $494.5 million as requested by the DOE in its
    fiscal year 2008 budget. As stated by Mr. Ward Sproat, Director, DOE/
    Office of Civilian Radioactive Waste Management (OCRWM), during his
    March 7, 2007 testimony, it is absolutely vital for Congress to fully
    fund the Program in order for the DOE to carry out the latest projected
    Best-Achievable Schedule opening date of March 2017 for the permanent
    repository that includes the filing of the license application to the
    NRC in June 2008.
        Other DOE objectives in the fiscal year 2008 request include
    certifying the licensing support network, completing the supplemental
    Yucca Mountain Environmental Impact Statement, designing the standard
    canisters to be used by the industry, performing critical personnel
    safety upgrades at the Yucca Mountain site, analyzing and reporting to
    Congress on the need for a second repository, resolving comments and
    issuing the final EIS for the Nevada rail line that is required to
    transport SNF and HLRW to the permanent repository, and funding
    independent scientific studies by the State of Nevada, Nye County, Inyo
    County, the University of Nevada and affected units of local
    government.

                               NUCLEAR WASTE FUND

        There are adequate funds available in the NWF to implement the
    federal policy for permanent disposal of SNF and HLRW, provided
    Congress appropriates them. Since 1983, ratepayers from 41 states have
    paid more than $28 billion, including interest, into the NWF. The NWF
    was established by the U.S. Congress for safe, timely, and cost-
    effective centralized storage and the development of a permanent
    repository. The nation's ratepayers who receive electricity from
    nuclear generating utilities pay over $750 million per year into the
    NWF, and with interest credits, this amount exceeds $1.2 billion
    annually. To date, approximately $10 billion has been spent to assure
    the national repository is developed in the most responsible manner to
    protect the health, safety, and security of every American, including
    those in Nevada, as well as each of the States with a nuclear power
    plant. The Fund now holds more than $18 billion, including interest.
        Regrettably, the NWF account balance has been used to support other
    programs and camouflage the federal deficit rather than to develop the
    permanent repository. Consequently, more than 55,000 metric tons of SNF
    and HLRW are presently stranded at more than 100 sites (commercial and
    defense) in 39 states. The NWSC asks that Congress codify the NWF
    annual receipts as offsetting collections to ensure that every cent
    collected from the ratepayers will be delivered to the Program, as
    intended by the 1982 Nuclear Waste Policy Act, as amended (NWPA).

                           NUCLEAR WASTE FUND REFORM

        NWSC members believe it is vitally important that Congress ensure
    the Program is funded in a manner that will allow the DOE to implement
    the federal Program in accordance with the NWPA. The Program is already
    in default of the NWPA requirement to begin waste acceptance by 1998,
    and continues to slip further behind schedule.
        For instance, the DOE's fiscal year 2007 budget request for the
    Program was $544.5 million. However, Congress appropriated $444.5
    million, a $100 million reduction. Consequently, three dozen workers at
    the Yucca Mountain project have already lost their jobs and several
    hundred others may face layoffs in the months ahead. Such cuts will
    likely result in further setbacks to the Program schedule.
        Additionally, in March 2007 the DOE submitted to Congress the
    ``OCRWM Budget Projection fiscal year 2009-fiscal year 2023 Executive
    Summary,'' that projected annual budget expenditures of integrated
    Program needs through completion of the repository surface facilities.
    The projected budget is based on funding requirements for construction
    of the repository and the transportation infrastructure needed to meet
    the Best-Achievable Schedule opening date of March 2017, assuming
    enactment of the Administration's legislative proposal the Nuclear Fuel
    Management and Disposal Act.
        To help keep the Program on track and the Best-Achievable Schedule,
    the NWSC strongly supports the Administration's proposal for reforming
    the mechanism for funding the Program. In March 2007, the
    Administration submitted to Congress a legislative proposal that, among
    other things, would provide a stable source of funding for this Program
    by reclassifying mandatory NWF receipts as discretionary, in the amount
    equal to appropriations from the NWF for the disposal program. Funding
    for the Program would still have to be requested annually by the
    President and appropriated by the Congress from the NWF.
        While not calling for carte blanche funds for the DOE without
    Program oversight, the NWSC has been very supportive of the OCRWM
    program over the years and has worked to ensure that Congress
    appropriate sufficient funds for the nuclear waste transportation and
    disposal program. We continue those efforts today as we encourage
    Congress to introduce comprehensive legislation that reforms the NWPA,
    such as the ``Nuclear Fuel Management and Disposal Act,'' proposed by
    the Administration on March 6, 2007. Congress has an opportunity to
    enhance the management and disposal of SNF and HLRW, ensure protection
    of public health and safety and the territorial integrity and security
    of the permanent repository through legislative reform. Moreover,
    reforming the annual funding for the Program, assures the 41 states'
    ratepayers that their payments into the NWF are being used for their
    intended purpose--the removal of SNF and HLRW from commercial and
    decommissioned nuclear power plants.
        Continued under-funding will have dire consequences on the
    completion of the nation's permanent repository, the transportation
    infrastructure system plans and the transportation and disposal of
    canisters. As several members of Congress have commented in the past,
    ``This Program has been starved for funding''--the 2010 deadlines for
    waste fuel acceptance at Yucca Mountain was, ``a pipe dream at existing
    funding levels.'' We hope that the 2017 deadline is not another ``pipe
    dream.''

                                    LAWSUITS

        It has been more than ten years since the DOE defaulted on its
    obligations, as stated in the Nuclear Waste Policy Act of 1982, as
    amended, to remove SNF and HLRW from the nation's nuclear power plants.
    In its 1996 Indiana-Michigan decision, the U.S. Court of Appeals
    affirmed that the DOE was obligated to start moving waste on January
    31, 1998, ``without qualifications or condition.''
        More than 60 utilities have sued the federal government for damages
    associated with DOE's default to meet its 1998 obligations. The 11th
    Circuit Court of the U.S. Court of Appeals has ruled that these damage
    payments will not come from the Nuclear Waste Fund. Meanwhile, the U.S.
    Court of Claims has awarded more than $220 million to plaintiffs so
    far. As stated in Mr. Sproat's testimony, DOE has estimated that each
    year the repository's opening is delayed beyond 2017, the U.S.
    taxpayers' potential liability to contract holders will increase by
    approximately $500 million per year. The longer Congress withholds
    adequate annual funding from DOE and declines to reform the NWPA, the
    greater the potential liability will be to the nation's taxpayers.
        If the DOE fails to meet vital Program milestones such as
    submitting the license application to the NRC, the financial liability
    the DOE faces through lawsuits will continue to mount. As the DOE
    continues to delay honoring its contracts with utilities to remove
    spent fuel from plant sites, both the amount of SNF and HLRW stored,
    and the costs associated with storing it increase. NWSC members are
    concerned about the increased costs that ratepayers must bear as a
    result of these delays.

                   TRANSPORTATION--RIGOROUS SAFETY STANDARDS

        The DOE has proven that it can safely transport SNF and HLRW from
    plant sites across the nation. Since the 1960s, more than 3,000
    shipments of spent nuclear fuel from nuclear power plants, government
    research facilities, universities and industrial facilities traveling
    over 1.6 million miles, ``without a single death or injury due to the
    radioactive nature of the cargo.'' \1\ This equates to more than 70,000
    metric tons of SNF, an amount equal to what the NWPA authorizes for
    Yucca Mountain. Shipments include 719 containers from the Naval Nuclear
    Propulsion program between 1957 and 1999, and 2,426 highway shipments
    and 301 railway shipments from the U.S. nuclear industry from 1964 to
    1997. In addition, since 1996, shipments of spent nuclear fuel have
    been safely transported to the United States from 41 countries to the
    DOE facilities; \2\ again, without a single death or injury--not one.
    If a repository is licensed at Yucca Mountain, the DOE projects
    approximately 4,300 shipments over a 24-year period, averaging 175
    shipments of spent nuclear fuel per year, a relatively small amount
    compared with the approximately 300 million annual shipments of
    hazardous materials (explosives, chemicals, flammable liquids,
    corrosive materials, and other types of radioactive materials) that are
    currently transported around the country every day.
    ---------------------------------------------------------------------------
        \1\ National Conference of State Legislatures' Report, January
    2000.
        \2\ U.S. Department of Energy Report to the Committees on
    Appropriations, January 2001.
    ---------------------------------------------------------------------------
        Furthermore, the DOE has safely and successfully made more than
    5,542 transuranic waste shipments at the Waste Isolation Pilot Plant
    (WIPP) in New Mexico as of March 12, 2007.\3\ The Western Governors'
    Association (WGA) signed an agreement with the DOE in April 1996 that
    affirmed regional planning processes for safe transportation of
    radioactive material. All regional high-level radioactive waste
    transportation committees also endorsed the WGA approach. The WIPP
    transportation planning system is setting the standard for safety and
    proving to be a critical step toward solving the nation's spent nuclear
    waste disposal transportation program.
    ---------------------------------------------------------------------------
        \3\ U.S.DOE/Waste Isolation Pilot Plant Shipment Figures, March
    2007.
    ---------------------------------------------------------------------------
        To ensure safety at on-site spent fuel storage facilities and
    during transportation, the material is stored in containers that meet
    the NRC's rigorous engineering and safety standards testing. To satisfy
    the NRC's rigorous standards for subsequent transportation approval,
    these containers have been dropped 30-feet onto an unyielding surface,
    dropped 40 inches onto a 6-inch vertical steel rod, exposed for 30
    minutes to a 1,475 F fire, submerged under 3 feet of water for eight
    hours, immersed in 50 feet of water for at least eight hours (performed
    in a separate cask), and immersed in 656 feet of water for at least one
    hour.\4\
    ---------------------------------------------------------------------------
        \4\ Nuclear Regulatory Commission Testing Requirements, 10 CFR
    Sections, 71.61, 71.71, and 71.73.
    ---------------------------------------------------------------------------
                                   CONCLUSION

        The federal government's failure to deliver extends back several
    decades and the U.S. Congress must immediately address the growing need
    of disposal of SNF and HLRW. Therefore, it is vitally important that
    the leadership in Congress fully fund the nuclear waste disposal
    program for fiscal year 2008 and pass legislation that reforms Program
    funding for the continued progress of the permanent repository. While
    the Program continues to face complex challenges, passage of
    legislation will allow the Program to remain viable and afford the
    opportunity for ultimate success.
        In contrast, the NWSC does not support competing legislation that
    would have the DOE take title of SNF at plant sites. This previously
    introduced bill proposes stranding fuel indefinitely throughout the
    nation while the nation's ratepayers continue to pay in perpetuity into
    the NWF, which is not an acceptable option.
        Based on DOE reports, the NWSC understands the Global Nuclear
    Energy Partnership (GNEP) program would reduce the volume, heat and
    toxicity of byproducts placed in the permanent repository. However,
    this program does not diminish in any way the need for, or the urgency
    of, a geologic permanent repository at Yucca Mountain, particularly
    because the Navy, research and legacy fuel are not candidates for the
    recycling program.
        The DOE fiscal year 2008 budget contains $2 million for a study
    ordered by Congress to determine whether a second repository should be
    built, and where, as required under Section 161(b) of the NWPA. The DOE
    has already stated that it would start its review with the two-dozen
    candidate sites that were under consideration prior to selection of the
    Yucca Mountain site. Therefore, it is clear that all states have a
    stake in following through with the nuclear waste disposal policy that
    Congress selected when it passed the NWPA and reinforced when it voted
    in 2002 to support the President's selection of Yucca Mountain as a
    site suitable for development of the national repository.
        The members of the NWSC urge Congress to take a long-term view of
    our nation's energy needs, national security interests, and fairness to
    both ratepayers and electric utilities by appropriating full funding
    for the Program for fiscal year 2008. The Coalition members believe
    receipt of requested annual funding will make it possible for DOE to
    meet its projected schedule and eventually bring the nuclear waste
    disposal program to fruition as promised and mandated by the 1982
    Nuclear Waste Policy Act, as amended.
                                     ______

       Prepared Statement of the University Corporation for Atmospheric
                                Research (UCAR)

        On behalf of the University Corporation for Atmospheric Research
    (UCAR) and the university community involved in weather and climate
    research and related education, training and support activities, I
    submit this written testimony for the record of the Senate Committee on
    Appropriations, Subcommittee on Energy and Water Development.
        UCAR is a 70-university member consortium that manages and operates
    the National Center for Atmospheric Research (NCAR) and additional
    programs that support and extend the country's scientific research and
    education capabilities. In addition to its member research
    universities, UCAR has formal relationships with approximately 100
    additional undergraduate and graduate schools including several
    historically black and minority-serving institutions, and 40
    international universities and laboratories. UCAR's principal support
    is from the National Science Foundation with additional support from
    other federal agencies including the Department of Energy (DOE).
    DOE Office of Science
        The atmospheric and related sciences community appreciates
    Congress' continued support for the Administration's American
    Competitiveness Initiative, and its goal to double the DOE Office of
    Science budget by fiscal year 2016. We are pleased that the fiscal year
    2008 request again makes the Office of Science a high priority. The
    needs of the country demand that DOE continue to produce a world-class
    program in science and energy security research. The Office of Science
    manages fundamental research programs in basic energy sciences,
    biological and environmental sciences, and computational science, and
    supports unique and vital parts of U.S. research in climate change,
    geophysics, genomics, life sciences, and science education. Continuing
    to implement the doubling of basic research funding within DOE will
    result in educating, training and sustaining thousands in the nation's
    workforce (28,000 in fiscal year 2008) in our laboratories and
    universities.
        I urge the Subcommittee to fund the DOE Office of Science at the
    level of the President's fiscal year 2008 budget request of $4.4
    billion, and to enable the agency to apply that entire amount toward
    planned agency research priorities. As Director of the Office of
    Science Raymond Orbach recently stated, ``These are extraordinary times
    for science.'' This investment in our country's scientific leadership
    will enable many researchers to make extraordinary progress in numerous
    areas of discovery.

    Biological and Environmental Research (BER)
        Within the Office of Science, the Biological and Environmental
    Research (BER) program develops the knowledge necessary to identify,
    understand, and anticipate the potential health and environmental
    consequences of energy production and use. These are issues that are
    absolutely critical to our country's well being and security, and now
    more than ever, they are being scrutinized by Members of Congress and
    the media in light of the recent Intergovernmental Panel on Climate
    Change (IPCC) report that states that warming of the climate is
    ``unequivocal.'' Peer-reviewed research programs at universities,
    national laboratories, and private institutions play a critical role in
    the BER program by involving the best researchers the nation has to
    offer, and by developing the next generation of researchers.
    Approximately 27 percent of BER basic research funding supports
    university-based activities directly and 40 percent supports basic
    research at national laboratories. All BER research projects, other
    than those that have been in the ``extra projects'' category, undergo
    regular peer review and evaluation.
        The President's BER Request for fiscal year 2008 is $531.9 million,
    a 15 percent increase over the fiscal year 2007 Joint Resolution. While
    this is a substantial increase, it should be seen in the context of
    past appropriations, the President's higher fiscal year 2007 request
    for BER, and the decline of BER funding that has taken place in the
    recent past. With the elimination of congressionally directed projects,
    BER received a three percent increase in the final fiscal year 2007
    Joint Resolution. The fiscal year 2008 request, therefore, makes up
    much lost ground. I urge the Subcommittee to fund Biological and
    Environmental Research at the level of the fiscal year 2008 Budget
    Request, $531.93 million, a 4.5 percent increase over the fiscal year
    2007 Request, and to enable BER to apply that entire amount toward
    planned agency research priorities that are peer-reviewed and that
    involve the best researchers to be found within the nation's university
    research community as well as the DOE labs.
    BER's Climate Change Research Program
        The International Polar Year (IPY) 2007-2008 officially began March
    1, with over 200 scientific projects planned, involving thousands of
    scientists from over 60 nations examining a wide range of physical,
    biological and social research topics. The scientific need to focus on
    the remote areas of the Earth will provide better understanding of the
    current global climate.
        DOE's IPY activities are supported by the DOE Office of Science's
    Climate Change Research Program in which research is focused on
    understanding the basic chemical, physical, and biological processes of
    the Earth's atmosphere, land, and oceans and how these processes may be
    affected by energy production and use, primarily the emission of carbon
    dioxide from fossil fuel combustion. DOE's Climate Change Prediction
    Program's contribution to the IPY includes improving climate change
    projections using state-of-the-science coupled climate models in time
    scales of decades to centuries and space scales of regional to global.
        BER's Climate Change Research also contributes substantially to the
    nation's Climate Change Research Initiative (CCRI) goals of
    understanding and predicting climate change, including its causes,
    consequences, and potential for abrupt change. The long-term DOE goal
    is to deliver improved climate data and models for policy makers and to
    substantially reduce differences between observed temperature and model
    simulations at regional scales. This work is critical to the ability of
    policy makers and stakeholders to provide stewardship resulting in a
    healthy planet--and it is particularly important as signs of
    increasingly dramatic change in our climate and environment appear.
        The Climate Change Research Request of $138.1 million for fiscal
    year 2008 is a 2.4 percent increase over the fiscal year 2007 Request.
    I urge the Subcommittee to fund Climate Change Research at an fiscal
    year 2008 level that is consistent with the requested increase for BER
    stated above, a 4.5 percent increase over the fiscal year 2007 Request,
    for a total of $144.3 million, and to enable DOE to apply the entire
    amount toward planned national research priorities.

    Advanced Scientific Computing Research (ASCR)
        Within DOE's Office of Science, Advanced Scientific Computing
    Research (ASCR) delivers leading edge computational and networking
    capabilities to scientists nationwide, enabling advances in computer
    science and the development of specialized software tools that are
    necessary to research the major scientific questions being addressed by
    the Office of Science. Development of this capacity is a key component
    of DOE's strategy to succeed in its science, energy, environmental
    quality, and national security missions.
        ASCR's continued progress is of particular importance to
    atmospheric scientists involved with complex climate model development,
    research that takes enormous amounts of computing power. By their very
    nature, problems dealing with the interaction of the earth's systems
    and global climate change cannot be solved by traditional laboratory
    approaches.
        Within ASCR, several programs are of particular importance to
    climate change computer modeling work. The Leadership Computing
    Facility (LCF) at Oak Ridge National Laboratory (ORNL) provides a high
    performance computing resource for the Climate Science End Station and,
    in 2008, will continue its development into a world class facility with
    over 80 percent of its resources being made available to unclassified
    scientific research. In addition, the National Energy Research
    Scientific Computing Center (NERSC) operated by Lawrence Berkeley
    National Laboratory, and the Energy Sciences Network (ESnet) are also
    important enablers for climate research. These computational and
    networking resources play a vital role in the progress of U.S. climate
    research.
        The high performance computing facilities for the Office of Science
    serve thousands of scientists throughout the country at laboratories,
    universities, and other Federal agencies. Computing time is awarded to
    research groups based on peer review of submitted proposals. Basic
    research accomplished at these facilities covers a wide range of
    disciplines including climate modeling. ESnet enables researchers at
    laboratories, universities and other institutions to communicate with
    each other using collaborative capabilities that are unparalleled. This
    high-speed network enables geographically distributed research teams to
    collaborate effectively on some of the world's most complex problems.
    Researchers from industry, academia and national labs, through this
    program, share access to unique DOE research facilities, support the
    frequent interactions needed to address complex problems, and speed up
    discovery and innovation.
        LCF, NERSC, and ESnet play complementary roles in advancing the
    complex and challenging science of climate change and other scientific
    areas of extreme importance to the security and quality of life of our
    citizens. I urge the Committee to support the President's fiscal year
    2008 request of $340.2 million for DOE Advanced Scientific Computing
    Research, a 6.8 percent increase over the fiscal year 2007 request, and
    to enable DOE to apply the entire amount toward planned national
    priorities.

    Scientific Discovery Through Advance Computing (SciDAC)
        BER and ASCR partner to support SciDAC, a progressive, breakthrough
    program that includes the creation of a first-generation Earth System
    model based on the extremely successful Community Climate System Model.
    A major SciDAC goal is to understand basic chemical, physical, and
    biological processes of the Earth's atmosphere, land, and oceans and
    how these processes may be affected by energy production and use. Much
    of the research is designed to provide the data that will enable an
    objective assessment of the potential for, and consequences of, global
    warming. This work is becoming increasingly critical as evidence mounts
    that regions of Earth are warming at an alarming rate. SciDAC research
    activities are competed via a merit review process and carried out at
    universities, national laboratories, and private institutions.
        Fiscal year 2008 funding will provide support for SciDAC activities
    including Centers for Enabling Technologies (CETs) that provide the
    innovations in computational research and development for petascale
    computational and data management endeavors, including climate
    research.
        BER funding for SciDAC is requested at $7.7 million for fiscal year
    2008 with ACSR supporting SciDAC Computational Partnerships at $50.2
    million, $21 million of which will fund the CETs. I urge the Committee
    to support the President's fiscal year 2008 requests within BER and
    ASCR for overall SciDAC funding.
        DOE plays a vital role in sustaining U.S. scientific leadership and
    generating U.S. competitiveness in a time when other countries are
    investing heavily in scientific research and technology. On behalf of
    UCAR and the atmospheric sciences research community, I want to thank
    the Subcommittee in advance for your attention to the recommendations
    of our community concerning the fiscal year 2008 budget of the
    Department of Energy. We understand and appreciate that the nation is
    undergoing significant budget pressures at this time, and support
    absolutely the effort to enhance U.S. security and quality of life
    through the American Competitiveness Initiative, of which the DOE
    Office of Science is a critical component.
                                     ______

                  Prepared Statement of FuelCell Energy, Inc.

        FuelCell Energy, Inc. appreciates the opportunity to submit this
    statement in support of the Department of Energy's Fossil Energy, Fuels
    and Power Systems, Fuel Cell Program. We urge the Subcommittee to
    continue to support this breakthrough program by appropriating $80
    million for development of this highly efficient, clean, and secure
    energy technology.
        DOE's Fossil Energy Fuel Cell Program, through the Solid State
    Energy Conversion Alliance (SECA) fuel cell activity, is developing
    technology to allow the generation of highly efficient, cost-effective,
    carbon-free electricity from domestic coal resources with near-zero
    atmospheric emissions in central station applications. The program
    directly supports the president's FutureGen project through the
    development of cost-effective, highly efficient, power blocks that
    facilitate sequestration in coal-based systems. The technology will
    also permit grid independent distributed generation applications by
    2010.
        SECA fuel cell systems operating on coal gas are building blocks
    for zero emissions power, the ultimate goal of the President's
    FutureGen Program. These systems are projected to be available at a
    cost of $400/kw. In addition, the technology developed in this program
    will produce electricity at up to 60 percent efficiency in coal-based
    systems, produce near-zero emissions, and be compatible with carbon
    sequestration.
        In all applications SECA fuel cells will be both low-cost, with the
    above-stated goals of $400/kw, as well as highly efficient. Integrated
    with coal gasification, such systems will approach 60 percent
    efficiency compared to the existing coal-based power generation fleet
    average of about 33 percent efficiency. In distributed generation
    applications even higher efficiencies may be reached, and cogeneration
    opportunities can further increase efficiency.
        Along with these attributes fuel cells are one of the cleanest
    technologies available in terms of atmospheric emissions, which
    enhances their attractiveness for urban applications or applications in
    areas of non-attainment for Clean Air Act emissions. They also provide
    24 hour, silent operation.
        Finally, coal-based fuel cell systems will increase energy security
    by using domestic resources. In distributed generation applications
    fuel cells can eliminate transmission and distribution system
    infrastructure concerns and issues by providing generation near the
    point of use and by being able to operate in a grid-independent mode.
        The SECA Program consists of six integrated industrial
    manufacturing teams designing fuel cell systems, developing the
    necessary materials, and ultimately responsible for deploying the
    technology. These teams are complemented by two to three dozen core
    technology performers providing generic problem-solving research needed
    to overcome barriers to low-cost, high performance technology as
    identified by DOE and the manufacturing teams. The core technology
    teams are universities, national laboratories, and other research
    oriented organizations. This unique structure assures that a variety of
    approaches to solving the problems associated with fuel cells will be
    undertaken in a manner that will increase the chances of success for
    this highly complex technology.
        Several of the manufacturing teams are developing systems for
    application to large central generation systems characterized by
    FutureGen. The remaining manufacturing teams are developing fuel cells
    for possible use in both these large systems as well as in distributed
    generation applications such as auxiliary power units, military power
    applications and remote or on-site power generation.
        The DOE budget request for this program for fiscal year 2008 is
    $62.0 million, approximately the same level anticipated for fiscal year
    2007 funding. This level of funding will continue to support the
    current program, which involves larger-scale Phase II development work
    on the part of manufacturing teams in the program and continued effort
    by the core technology performers. However, in order to deliver full
    scale fuel cell system hardware for the FutureGen project additional
    support is necessary to assist and accelerate the creation of
    manufacturing capability by the formation of teams between existing
    fuel cell stack developers and industry with the goal of delivering
    hardware by the scheduled date of 2011 and also to keep the base
    program on schedule.
        We believe that the SECA fuel cell program has achieved the
    progress to date as anticipated by the program managers, and will
    continue to display such progress given sufficient funding support by
    DOE and the Congress. Hybrid technology has been successfully
    integrated into the program and an emphasis on use with coal-based
    systems has been established. Industry partners in the program have
    continued and increased cost-sharing support. All major stack
    developers have met the initial goals of the program allowing
    continuance to more advanced stages of development. This technology is
    essential to meeting the efficiency and emissions goals of the
    President's FutureGen program and will also provide low-cost, low-
    emissions alternatives for distributed generation applications.
    Therefore, we urge you to support our request for $80 million to
    execute the DOE Fossil Energy, Fuels and Power Systems, Fuel Cell
    Program in fiscal year 2008.
                                     ______

           Prepared Statement of the Ground Water Protection Council

        The following request by the Ground Water Protection Council (GWPC)
    is to restore Congressional appropriations of $64 million for the
    Department of Energy's (DOE) Office of Fossil Energy (FE) Research and
    Development (R&D) program. This appropriation will continue to fund the
    RBDMS system and electronic commerce applications at $1,500,000. These
    programs developed by the Ground Water Protection Council (GWPC)
    streamline data management for oil and gas permitting, enhance oil and
    gas production, and protect the environment. Restoring the funding for
    these programs is an urgent priority for the continued development of
    domestic oil and gas and sustained environmental protection.
        The GWPC is a respected national organization of state ground
    water, UIC, and oil and gas regulatory agencies with a successful track
    record of providing solutions to ground water protection related issues
    that are environmentally protective, scientifically based, cost
    effective and publicly accepted. Through the GWPC, states work together
    to strengthen their ability to protect ground water resources in more
    effective and cost efficient ways. We are the proud recipient of the
    Secretary of Energy's ``Energy 100 Award''--given to the top 100 most
    successful and publicly beneficial projects (RBDMS) in the last 30
    years of the USDOE.
        RBDMS/CERA Accomplishments.--Data utilities from the Risk Based
    Data Management System are used in 25 states and one Indian Nation.
    RBDMS streamlines state oil and gas permit and response times, enhances
    ground water protection, and provides improved public and industry
    joint access to data, saving money for state and federal agencies,
    increasing production for small independent domestic operators, and
    creating real time efficiencies in state and federal domestic oil and
    gas programs. Over the life of these successful programs, the states
    have matched federal funding with their own funds at a 3:1 ratio.
    RBDMS/CERA projects have resulted in:
      --Improved Environmental Protection.--State agencies have achieved
            higher levels of environmental protection through information
            management tools developed with DOE FE R&D funding. For
            example, current RBDMS application development efforts are
            making it possible to overlay oil and gas well and coal mining
            location information on source water protection area maps to
            assess areas of review and protect underground sources of
            drinking water. These same technologies are allowing regulatory
            agencies to track the quality and quantity of fresh and
            produced waters and to make important policy decisions about
            how these resources should be managed.
      --Increased Domestic Oil and Gas Production and Increased State
            Revenues.--Regulatory agencies have documented that the
            information access and technology research afforded by the DOE
            FE R&D program has helped industry maximize the recovery of oil
            and gas from marginal wells. Nationwide, many marginal wells
            are being reworked and brought back online at a significant
            cost savings. For example, in North Dakota, more than 250 wells
            over the last 5 years have been re-entered and drilled
            horizontally at a cost savings of at least $300,000. By keeping
            these wells available, industry has saved in excess of
            $75,000,000 in North Dakota alone. If such technology was not
            made readily available through the DOE FE R&D program, many
            wells with recoverable product would have been plugged or shut
            in.
      --Increased Data Sharing.--Improved access to oil and gas agency data
            gives exploration geologists the ability to develop prospects
            remotely and to drill and operate their leases more
            efficiently. The DOE FE R&D funding has given regulatory
            agencies the opportunity to share data with small, independent
            operators that would not otherwise have the ability to access
            such accurate information, thus aiding exploration and
            development efforts.
        Fiscal Year 2008 Funding for RBDMS/CERA.--DOE Fossil Energy
    Research and Development program funding is a sound investment in
    domestic energy production and environmental protection. The DOE FE R&D
    program funds research projects that are encouraging small- and medium-
    sized industry operators to expand into previously cost-prohibitive
    areas increasing the industry's ability to make more knowledgeable
    decisions about resource deployment, exploration, and well management
    and is reducing overhead costs associated with regulatory compliance.
    Fiscal year 2008 funding would provide:
      -- E-Commerce.--The development of new RBDMS e-commerce applications
            in fiscal year 2008 will increase environmental monitoring and
            compliance and at the same time decrease both cost and time
            allocation for small oil and gas producers. The result is money
            saved by state governments and federal agencies and increased
            domestic oil and gas production.
      --Cost Effective Regulatory Approaches.--Cost Effective Regulatory
            Approach (CERA) projects are designed to facilitate the
            development of petroleum resources in an efficient and
            environmentally friendly manner. For example, we are currently
            working on minimizing ground water impacts from oil shale
            production. Projects such as these are critical to the
            continued enhancement of oil shale production capacity in the
            United States.
      --Energy-Water Nexus.--The USDOE has a goal of minimizing water
            consumption by energy-producing industries. The GWPC will
            develop software applications that will aid state agencies in
            tracking water quality and quantity data related to oil and gas
            production. Automated data will assist states in the analysis
            of related water consumption.
      -- CO2 Geosequestration.--Capture and geologic storage
            (geosequestration) of CO2 from power plants is one
            important tool for decreasing the release of this greenhouse
            gas to the atmosphere. However, geosequestration of
            CO2 in underground formations presents a potential
            threat to underground sources of drinking water. The GWPC will
            facilitate the development of regulations to manage
            CO2 geologic sequestration by:
        --Creating a stakeholders workgroup made up of state agencies,
                environmental groups, energy resource companies and other
                affected parties focused on regulatory needs.
        --Evaluating the legal basis for regulations development including
                federal and state authorities and rules.
        --Working with the scientific and technical communities to
                incorporate the best available information to assure the
                process is environmentally sound.
        --Expanding the successful RBDMS system to track and monitor
                CO2 Geosequestration wells.
        Many domestic oil and gas fields are no longer economical for the
    major oil and gas companies to operate but still hold vast resources.
    Without small independent operators, these resources would not be
    recoverable. By increasing its recoverable resources by only 5 percent,
    the United States would produce billions of barrels of additional
    domestic oil. Conversely, failure to use new technologies to fully
    recover these resources would result in the loss of billions of dollars
    of revenues that would instead be sent overseas for oil imports.
        About 5,000 domestic independent companies drill 90 percent of the
    nation's wells and produce 68 percent of our domestic oil and 82
    percent of the natural gas. While efficient in their operations, these
    companies lack the necessary research programs to fully develop our
    domestic resources. The partnerships created between these independent
    producers and universities through the DOE FE R&D program are the focus
    of 85 percent of the program's resources. The DOE FE R&D program
    increases environmental protection, access to adequate supplies of oil
    and gas, and tax revenues generated through oil and natural gas
    production. This funding allows states to help expand oil production
    while at the same time better protect the environment through increased
    data access and more efficient data sharing between state agencies and
    producers. RBDMS and CERA projects help further these benefits.
        The Ground Water Protection Council requests continued funding in
    the amount of $1,500,000 for RBDMS and CERA programs and encourages
    restoration of Congressional appropriations of $65 million for the
    Department of Energy's (DOE) Office of Fossil Energy (FE) Research and
    Development (R&D) program.
                                     ______

               Prepared Statement of Southern Company Generation

        Mr. Chairman and Members of the Committee: Southern Company
    operates the Power Systems Development Facility (PSDF) (http://
    psdf.southernco.com) in Wilsonville, AL for the U.S. Department of
    Energy's (DOE's) National Energy Technology Laboratory (NETL) and
    several industrial participants.\1\ The PSDF was conceived as the
    premier advanced coal power generation research and development (R&D)
    facility in the world. It has fulfilled this expectation. I would like
    to thank the Senate for its past support of the PSDF and request the
    committee's continued support. This statement supports the
    Administration's budget request for DOE coal R&D which includes $25
    million for work at the PSDF. These funds are necessary to conduct the
    future test program agreed to with DOE which includes wide-ranging
    support of the DOE Clean Coal Technology Roadmap. A major highlight of
    the PSDF test program is carbon capture technology development for
    coal-based power generation (see details below). Also included is
    support for FutureGen--the integrated hydrogen and electric power
    production and carbon sequestration research initiative proposed by
    President Bush. DOE has identified the PSDF as one of the primary test
    centers to support FutureGen through sub-scale component testing of
    technologies under consideration for inclusion in the FutureGen full-
    scale project.
    ---------------------------------------------------------------------------
        \1\ Current PSDF participants include Southern Company, the
    Electric Power Research Institute (EPRI), KBR, Siemens Power
    Generation, Inc. (Siemens), Peabody Energy, the Burlington Northern
    Santa Fe Railway Company, and the Lignite Energy Council. The Lignite
    Energy Council includes major producers of lignite (who together
    produce approximately 30 million tons of lignite annually); the
    nation's largest commercial coal gasification project; and investor-
    owned utilities and rural electric cooperatives from a multi-state area
    that generate electricity from lignite, serving two million people in
    the Upper Midwest region. The Council also has over 250 contractor/
    supplier members who provide products and services to the plants and
    mines. In addition to the Wilsonville plant site major work is planned
    for the PSDF, or components are being developed at the following
    locations: Grand Forks, ND (sub-scale gasifier testing), Houston, TX
    (gasifier development); Orlando, FL (gas turbine low-NOX
    burner), Pittsburgh, PA (filter fabrication), Deland, FL (filter
    fabrication), and Holly Springs, MS (gasifier fabrication).
    ---------------------------------------------------------------------------
        A key feature of the PSDF is its ability to test new coal-based
    power generation systems at an integrated, semi-commercial scale.
    Integrated operation allows the effects of system interactions,
    typically missed in un-integrated pilot-scale testing, to be
    understood. The semi-commercial scale allows the maintenance, safety,
    and reliability issues of a technology to be investigated at a cost
    that is far lower than the cost of commercial-scale testing. Capable of
    operating at pilot to near-demonstration scales, the PSDF is large
    enough to produce industrial scale data, yet small enough to be cost-
    effective and adaptable to a variety of technology research needs.
        In addition to semi-commercial scale testing, the PSDF has slip-
    stream testing capability for cost effective technology screening.
    Future test work at PSDF will include the scale-up and continued
    development of several CO2 capture technologies being
    developed either at DOE's NETL facility, at private R&D laboratories or
    at PSDF. These CO2 capture technologies are envisioned for
    integration with existing or future Integrated Gasification Combined
    Cycle (IGCC) plants to reduce the cost penalties associated with the
    removal of CO2 from syngas prior to combustion for power
    generation. As a part of the effort to capture CO2,
    substantial new technologies, such as improved catalysts for water gas
    shift technology are needed and will be tested at PSDF. Also included
    in the PSDF research plans are efforts to enhance the coal feeding
    systems to enable wider ranges of coal as well as biomass to be
    economically and reliably introduced into many different versions of
    IGCC technology under consideration commercially today. PSDF has
    already demonstrated proof-of-concept of this new DOE-funded fuel feed
    system and will continue technology development to commercial ready
    scale.
        A part of DOE's goals are to encourage the commercial deployment of
    technologies for which DOE has contributed R&D funding. Consistent with
    these goals, the PSDF will also provide process technology support to
    efforts to commercialize transport gasifier technology. DOE has
    partnered with Southern Company and the Orlando Utilities Commission
    (OUC) as part of a competitive solicitation under the Clean Coal Power
    Initiative (CCPI) to build an advanced 285-megawatt transport gasifier-
    based coal gasification facility at OUC's Stanton Energy Center in
    central Florida. The facility will use sub-bituminous coal and include
    state-of-the-art emission controls to demonstrate the cleanest, most
    efficient coal-fired power plant technology in the world. In addition,
    the PSDF will also provide process support to a recently announced
    commercial deployment of the transport gasifier to be constructed in
    Mississippi. This project will showcase the first ever application of
    modern IGCC technology on Gulf Coast lignites. The PSDF will also
    support the deployment of other emerging commercial technologies for
    use on other IGCC systems, including coal feed and particulate control
    technologies.
        Southern Company also supports the goals of the Clean Coal
    Technology Roadmaps developed by DOE, EPRI, and the Coal Utilization
    Research Council (CURC). These Roadmaps identify the technical,
    economic, and environmental performance that advanced clean coal
    technologies can achieve over the next 20 years. Over this time period
    coal-fired power generation efficiency can be increased to over 50
    percent (compared to the current fleet average of 32 percent) while
    producing de minimis emissions and developing cost-effective
    technologies for carbon dioxide (CO2) management. EPRI
    estimated the value of advanced coal R&D using the modern financial
    technique called ``Real Options''. The major conclusion of this study
    \2\ is that the value to U.S. consumers of further coal R&D for the
    period 2007-2050 is at least $360 billion and could reach $1.38
    trillion. But, for these benefits to be realized the critically
    important R&D program outlined in the Clean Coal Technology Roadmap
    must be conducted.
    ---------------------------------------------------------------------------
        \2\ EPRI Report No. 1006954, ``Market-Based Valuation of Coal
    Generation and Coal R&D in the U.S. Electric Sector'', May 2002.
    ---------------------------------------------------------------------------
    Summary
        The United States has historically been a leader in energy
    research. Adequate funding for fossil energy research and development
    programs, including environmental and climate change technologies will
    provide our country with secure and reliable energy from domestic
    resources while protecting our environment. Current DOE fossil energy
    research and development programs for coal, if adequately funded, will
    assure that a wide range of electric generation and hydrogen production
    options are available for future needs. Congress faces difficult
    choices when examining near-term effects on the Federal budget of
    funding energy research. However, continued support for advanced coal-
    based energy research is essential to the long-term environmental and
    economic well being of the United States. Prior DOE clean coal
    technology research has already provided the basis for $100 billion in
    consumer benefits at a cost of less than $4 billion. Funding the
    Administration's budget request for DOE coal R&D and long-term support
    of the Clean Coal Technology Roadmap can lead to additional consumer
    benefits of between $360 billion and $1.38 trillion.
        One of the key national assets for achieving these benefits is the
    PSDF. The fiscal year 2008 funding for the PSDF needs to be $25 million
    to support construction of new technologies that are critical to the
    goals of the Clean Coal Technology Roadmap and to the success of the
    development of cost-effective climate change technologies, of the type
    that will be demonstrated in the FutureGen project. The major
    accomplishments at the PSDF to date and the future test program planned
    by DOE and the PSDF's industrial participants are summarized below.
    PSDF Accomplishments
        The PSDF has developed testing and technology transfer
    relationships with over 50 vendors to ensure that test results and
    improvements developed at the PSDF are incorporated into future plants.
    Major subsystems tested and some highlights of the test program at the
    PSDF include:
        Transport Reactor.--The transport reactor has been operated
    successfully on sub-bituminous, bituminous, and lignite coals as a
    pressurized combustor and as a gasifier in both oxygen- and air-blown
    modes and has exceeded its primary purpose of generating gases for
    downstream testing. It is projected to be the lowest capital cost coal-
    based power generation option, while providing the lowest cost of
    electricity and excellent environmental performance.
        Advanced Particulate Control.--Two advanced particulate removal
    devices and 28 different filter elements types have been tested to
    clean the product gases, and material property testing is routinely
    conducted to assess their suitability under long-term operation. The
    material requirements have been shared with vendors to aid their filter
    development programs.
        Filter Safe-Guard Device.--To enhance reliability and protect
    downstream components, ``safe-guard'' devices that reliably seal off
    failed filter elements have been successfully developed.
        Coal Feed and Fine Ash Removal Subsystems.--The key to successful
    pressurized gasifier operation is reliable operation of the coal feed
    system and the filter vessel's fine ash removal system. Modifications
    developed at the PSDF and shared with equipment suppliers allow current
    coal feed equipment to perform in a commercially acceptable manner. An
    innovative, continuous process has also been designed and successfully
    tested that reduces capital and maintenance costs and improves the
    reliability of fine ash removal.
        Syngas Cooler.--Syngas cooling is of considerable importance to the
    gasification industry. Devices to inhibit erosion, made from several
    different materials, were tested at the inlet of the gas cooler and one
    ceramic material has been shown to perform well in this application.
        Syngas Cleanup.--A syngas cleanup train was constructed and has
    proven capable of meeting stringent syngas decontamination
    requirements. This module that provides an ultra clean slip stream is
    now available for testing a wide variety of technologies.
        Sensors and Automation.--More than 20 instrumentation vendors have
    worked with the PSDF to develop and test their instruments under
    realistic conditions. Automatic temperature control of the Transport
    Reactor has been successfully implemented.
        Fuel Cell.--Two test campaigns were successfully completed on 0.5
    kW solid oxide fuel cells manufactured by Delphi on syngas from the
    transport gasifier marking the first time that a solid oxide fuel cell
    has been operated on coal-derived syngas.
    PSDF Future Test Program
        Future testing at the PSDF is focused on supporting CO2
    capture technologies (of the type to be used by FutureGen) and the
    Technology Roadmaps. These programs aim to eliminate environmental
    issues that present barriers to the continued use of coal including
    major reductions in emissions of SO2, CO2,
    NOX, particulates, and trace elements (including mercury),
    as well as reductions in solid waste and water consumption. Since
    FutureGen will require testing evaluations and scale-up of emerging
    technologies, DOE has identified the PSDF as a key location for support
    testing of the new technologies prior to consideration for inclusion in
    FutureGen.
        With adequate funding, work at the PSDF will include:
        H2/CO2 Separation Technologies.--Integrate
    and test advanced and potentially lower cost H2/
    CO2 separation technologies to assess their performance on
    coal-derived syngas.
        Water Gas Shift Enhancements.--A variety of water gas shift reactor
    configurations and sizes can be tested at the PSDF. Optimizing the
    operation of shift catalysts when exposed to syngas at the PSDF and
    evaluating their economics will provide valuable input for the
    FutureGen project.
        Advanced Syngas Cleanup.--Test new advanced syngas cleanup systems
    for reducing hydrogen sulfide, hydrochloric acid, ammonia, and mercury
    to near-zero levels.
        New Particulate Control Device Programs.--Evaluate alternative
    filter system internal designs, on-line detector of particle
    breakthrough, and improved resistance probes.
        Improved Fuel Feed Systems.--Evaluate alternatives that have been
    identified to conventional lock hopper feed systems and coal
    preparation methods.
        Biomass Co-Feed.--Evaluate co-feed options with biomass and coal.
    Design and run a test to gasify up to a 20 percent mixture of biomass
    with coal in the Transport Gasifier.
        Transport Gasifier.--Continue transport gasifier testing to expand
    useable feedstocks, including low- and high-sodium lignites and
    bituminous coals as well as biomass mixtures with these coals and
    provide syngas for testing of syngas clean-up and downstream systems.
        Syngas Cooler.--Test alternative designs that are less complex,
    have lower capital cost, and offer better control of the syngas exit
    temperature.
        High-Temperature Heat Exchangers.--Test high-temperature heat
    exchangers as they become available for use in both advanced combustion
    and gasification technologies.
        Fuel Cell.--Support NETL fuel cell development with slip-stream
    testing. Install and test a 5 to 10 MW hybrid fuel cell/gas turbine
    module.
        Sensors and Automation.--Evaluate automation enhancements that
    simulate commercial control strategies. Further development at
    gasification operating conditions is planned for measuring coal feed
    rate, temperature, gas analysis, dust at low levels, and hazardous air
    pollutants.
                                     ______

          Prepared Statement of the American Public Power Association

        The American Public Power Association (APPA) is the national
    service organization representing the interests of over 2,000 municipal
    and other state and locally owned utilities throughout the United
    States (all but Hawaii). Collectively, public power utilities deliver
    electricity to one of every seven electric consumers (approximately 44
    million people). We appreciate the opportunity to submit this statement
    outlining our fiscal year 2008 funding priorities within the Energy and
    Water Development Subcommittee's jurisdiction.
    Federal Power Marketing Administrations (PMAs)
        Power Marketing Administration Interest Rate Proposal.--The
    Administration's fiscal year 2008 budget includes a recommendation that
    would raise electricity rates by changing the interest rate charged by
    the Southeastern Power Administration (SEPA), the Southwestern Power
    Administration (SWPA), and the Western Area Power Administration (WAPA)
    on all new investments in projects whose interest rates are not set by
    law. Specifically, the Department of Energy's (DOE) budget calls for
    the these three Power Marketing Administrations (PMAs) to set their
    interest rates at the level that government corporations pay to borrow
    funds from the federal government. To implement this proposal, DOE will
    amend the regulation that governs how the PMAs establish their rates
    and will do so administratively, without any consultation with or
    action from Congress.
        The Administration's budget proposes to increase the interest rate
    charged on all new investments in these hydroelectric facilities to a
    level that is charged to government corporations--the rate that
    reflects the interest cost for the federal government to provide loans
    to government corporations. SEPA, SWPA and WAPA are neither government
    corporations nor do they borrow funds from the U.S. Treasury. All rates
    are set to recover the dollars appropriated by Congress for the
    investment in the hydroelectric facilities and to cover the cost to
    operate these projects. If implemented, this proposal could increase
    rates considerably for customers served by most of the Power Marketing
    Administrations.
        This proposal creates a serious precedent and should be rejected,
    because: (1) the process for implementing the proposal can be done
    without congressional involvement or approval; (2) the proposal would
    arbitrarily raise revenue from electric customers for deficit
    reduction; and (3) the proposal reverses decades of rate making
    precedent and accepted cost recovery practices by administrative fiat.
    We urge the Subcommittee to block the implementation of this proposal.
        Bonneville Power Administration ``Net Secondary Revenue''
    Proposal.--Also included in DOE's fiscal year 2008 budget is a proposed
    administrative action that would direct the Bonneville Power
    Administration (BPA) to use any net ``secondary market revenues'' in
    excess of $500 million per year towards accelerated federal debt
    repayment. Because the change would be made through the rulemaking
    process, congressional approval is not needed for the policy to go into
    effect. This proposal was strongly opposed by Congress in fiscal year
    2007, and was ultimately blocked by Congress for that year. The Office
    of Management and Budget (OMB) calculates that this plan would provide
    a total of $924 million from fiscal year 2007-2016 from these ``higher-
    than-historical net secondary revenues.'' OMB believes that this
    measure is needed to free up BPA borrowing authority. However, experts
    in the Northwest have calculated that the proposal would result in a 10
    percent wholesale rate increase that BPA would be forced to pass on to
    ratepayers. The Congressional Budget Office has calculated that the
    effect of the Administration's proposal on the U.S. Treasury would be
    $300 million over 10 years beginning in 2008. We urge the Subcommittee
    to block the implementation of this proposal.
        ``Emergency'' Purchase Power and Wheeling.--This new Administration
    proposal for fiscal year 2008 would require that any funds used from
    the ``Continuing or Emergency Funds'' be paid back within a year of
    being used. Like the Agency rate and net secondary revenue proposals,
    this one can be implemented administratively. Currently, in most cases,
    the PMAs have 3-5 years to recoup those funds from the customers--paid
    back with interest. Emergency funds are available to the PMAs when an
    unforeseen emergency situation (such as a drought) causes them to go
    beyond their allotted ceiling for purchase power and wheeling
    expenditures in a given fiscal year. Similar to the Agency rate
    proposal, this change is unjustified from a practical standpoint and is
    also problematic from a precedent-setting perspective. We urge the
    Subcommittee to block implementation of this proposal.
        Purchase Power and Wheeling.--We urge the Subcommittee to authorize
    appropriate levels for use of receipts so that the Western Area Power
    Administration (WAPA), the Southeastern Power Administration (SEPA) and
    the Southwestern Power Administration (SWPA) can continue to purchase
    and wheel electric power to their municipal and rural electric
    cooperative customers. Although appropriations are no longer needed to
    initiate the purchase power and wheeling (PP&W) process, the
    Subcommittee continues to establish ceilings on the use of receipts for
    this important function. The PP&W arrangement is effective, has no
    impact on the federal budget, and is supported by the PMA customers who
    pay the costs. We agree with the Administration's budget requests for
    PP&W for fiscal year 2008, which are as follows: $425.2 million for
    Western Area Power Administration (WAPA); $62.2 million for
    Southeastern Power Administration (SEPA); and $45 million for
    Southwestern Power Administration (SWPA).
        Costs of Increased Security at Federal Multi-Purpose Projects.--
    Following the attacks of September 11, 2001, the Bureau of Reclamation
    (Bureau) embarked upon an aggressive program to enhance the security of
    federal dams to protect the facilities against terrorist attacks. Based
    on historical precedent, the Bureau initially determined that the costs
    of increased security measures should remain a non-reimbursable
    obligation of the federal government. In fiscal year 2005, however, the
    Bureau reversed its position and asked for some of these costs to be
    reimbursed from power customers. That year, Congress disagreed with the
    Bureau's request that these expenses be reimbursable, but the following
    year, Congress directed that $10 million of the estimated $18 million
    for guards and patrols be provided by reimbursable funding. The bill
    also directed the Bureau to provide a report to Congress within 60 days
    that would delineate the planned reimbursable security costs by
    project. The report (issued in March 2006) was similar to the previous
    (May 2005) report, except that it also included ``facility
    fortification upgrades'' as a reimbursable cost. Previously, the Bureau
    had assured its stakeholders that only the costs of guards and patrols
    would be reimbursable. There has been some clarification on that
    position, but it is not entirely clear how replacement/upgrades would
    be treated. The Administration's fiscal year 2008 request for the
    Bureau's site security is $35.5 million, of which $18.9 million (for
    guards and patrols) would be designated reimbursable from water and
    power customers. This additional obligation in essence makes everything
    reimbursable at some point. Regardless of the details of the Bureau's
    report, APPA continues to believe in the validity of the historic
    rationale established in the 1942 and 1943 Interior Department
    Appropriation Acts for treating costs of increased security at multi-
    purpose federal projects as non-reimbursable obligations of the federal
    government. We therefore urge Congress to add language to the Energy
    and Water Development Appropriations Act of 2008 to clarify that all
    costs of increased security at dams owned and operated by the Bureau be
    non-reimbursable.
        Renewable Energy Production Incentive (REPI) and Renewable Energy
    Programs.--The Department of Energy's REPI program was created in
    1992's Energy Policy Act (EPAct) as a counterpart to the renewable
    energy production tax credits made available to for-profit utilities,
    and was recently reauthorized through 2016 in the Energy Policy Act of
    2005 (EPAct05). EPAct05 authorizes DOE to make direct payments to not-
    for-profit public power systems and rural electric cooperatives at the
    rate of 1.5 cents per kWh (1.9 cents when adjusted for inflation) from
    electricity generated from a variety of renewable projects. According
    to DOE sources, in order to fully fund all past and current REPI
    applicants, over $80 million would be needed for fiscal year 2008.
    Despite the demonstrated need, however, DOE has asked for only $4.96
    million for fiscal year 2008, citing budgetary constraints. We greatly
    appreciate the Subcommittee's interest in this small but important
    program as evidenced by its support of funding for the program either
    at or above the Administration's budget requests in the last few years
    despite the tight budgetary environment. We urge the Subcommittee to
    continue its support with an even greater increase.
        Storage for High-level Nuclear Waste.--We support the
    Administration's efforts to finalize the location of a permanent
    storage site at Yucca Mountain, Nevada. The Administration requested
    $494.5 million for fiscal year 2008, a decrease of $50 million from its
    fiscal year 2007 request, for the nuclear waste repository at Yucca
    Mountain. We encourage the Subcommittee to provide funding for the
    project at or above the Administration's request.
        Advanced Hydropower Turbine Program.--APPA is disappointed with the
    Administration's decision to phase out this important program to
    develop a hydroelectric turbine that will protect fish and other
    aquatic habitats while continuing to allow for the production of
    emissions-free hydroelectric power. We urge the Subcommittee to
    consider providing funding for this important initiative.
        Energy Conservation.--APPA appreciates the Subcommittee's interest
    in energy conservation and efficiency programs at DOE and we hope that
    the Subcommittee will once again allocate a funding level over and
    above the Administration's request for fiscal year 2008.
        Weatherization and Intergovernmental Activities.--APPA is
    disappointed with the Administration's request of $204.9 million for
    fiscal year 2008, a decrease of $20.1 million from its fiscal year 2007
    request, for helping to increase the efficiency of commercial and
    residential buildings, including weatherization assistance, and to
    support the state and community energy conservation programs.
        Clean Coal Power Initiative and FutureGen.--APPA supports the
    Administration's request of $73 million for fiscal year 2008 for the
    Clean Coal Power Initiative. This is consistent with the President's
    commitment to fund this program at $2 billion over 10 years. We also
    urge the Subcommittee to provide the $108 million in newly requested
    funding for fiscal year 2008 for the FutureGen program.
        Distributed Generation Fuel Cells.--APPA is disappointed with the
    Administration's request of $62.03 million for fiscal year 2007 for
    distributed generation fuel cell research and development, and urges
    the Subcommittee to allocate additional funding for this program.
        Hydrogen Fuel Initiative and Vehicle Technologies.--APPA supports
    the Administration's efforts to improve the feasibility of making
    available low-cost hydrogen fuel cells, and supports its request of
    $309 million for hydrogen research and development in fiscal year 2008.
    APPA also supports the Administration's fiscal year 2008 request for
    $176 million for vehicle technologies that would apply hydrogen fuel
    cell technology to vehicles as well as provide for research for hybrid
    and electric vehicle technologies to facilitate widespread deployment
    of these technologies.
        Navajo Electrification Demonstration Program.--APPA supports full
    funding for the Navajo Electrification Demonstration Program at its
    full authorized funding level. The purpose of the program is to provide
    electric power to the estimated 18,000 occupied structures in the
    Navajo Nation that lack electric power.
        National Climate Change Technology Initiative (NCCTI).--APPA
    supports the Administration's efforts to promote greenhouse gas
    reductions through voluntary programs and investments in new
    technologies. We encourage the Subcommittee to consider allocating
    additional funds for the policy office of the NCCTI.
        Federal Energy Regulatory Commission (FERC).--DOE has requested
    $255.4 million for the overall operations of the Federal Energy
    Regulatory Commission (FERC) for fiscal year 2008. APPA supports this
    request, which is an appropriate increase of $24.6 million over the
    fiscal year 2007 request given FERC's additional responsibilities under
    EPAct05.
                                     ______

                 Prepared Statement of the University of Tulsa

    Background and Issues
        September 11, 2001, confirmed that both Middle East oil dependence
    and fragile infrastructure threaten national security. Domestic energy
    systems aren't secure unless they're designed to make large-scale
    failures impossible and local failures benign. Today the opposite is
    true in the oil and gas sector: The United States' extraordinarily
    concentrated energy flows could allow a devastating attack. Production
    of oil and gas, especially in the United States are also dwindling with
    each passing year. So has the ability to process the oil into valuable
    products such as gasoline to drive our vehicles. The United States
    depends on oil to move people and goods. Ninety five percent of the
    energy for transportation in the United States comes from oil.
    Transportation's demand for oil drives the market. Transportation
    accounts for two-thirds of total U.S. petroleum use, and nearly all of
    the high value petroleum products, like gasoline and distillate fuel.
        In the past, dependence on oil has cost our economy dearly. Oil
    price shocks and price manipulation by the OPEC cartel from 1979 to
    2000 cost the U.S. economy about $7 trillion, almost as much as we
    spent on national defense over the same time period and more than the
    interest payments on the national debt. Each major price shock of the
    past three decades was followed by an economic recession in the United
    States. With growing U.S. imports and increasing world dependence on
    foreign oil, future price shocks are possible and would be costly to
    the U.S. economy.
        On the government side, money has dried up, or is drying up, for
    oil and gas research as well. The Gas Research Institute (GRI) at one
    time funded close to $200 million per year in gas-related research.
    GRI's support came from a Federal Energy Regulatory Commission-mandated
    surcharge on interstate gas sales. The surcharge was phased out;
    however, producing an estimated $70 million in 2001, $60 million in
    2002-2004. In July 2005, Subtitle J Ultra-Deepwater and Unconventional
    Natural Gas and Other Petroleum Resources were passed into law. The
    program under this subtitle addresses three areas: (1) Ultra-deepwater
    architecture and technology in the Outer Continental Shelf to depths
    greater than 15,000 feet, (2) unconventional natural gas and other
    petroleum resources, and (3) the technology challenges of small
    producers. The program guarantees to provide $50,000,000 per year with
    the potential of an additional $100,000,000 per year over the next 10
    years. These funds should provide some long term solutions, but it
    should be noted that only a small portion of these funds (7.5 percent)
    will be used on conventional oil and gas studies that benefit the small
    producers. Furthermore, with this passage, additional pressure will be
    applied to close the National Energy Technology Office in Tulsa
    (formerly the National Petroleum Technology Office which was
    consolidated into the NETL in December 2000). Ironically, the Energy
    Bill provides almost no support for domestic oil production which
    desperately needs new technologies for mature fields to continue to
    support the Nation's energy future.
        Research and Development (R&D) funding for major oil companies and
    service companies hit bottom around 2003 and increased significantly
    each year until at least 2005. The major oil companies during this
    period were increasing funding at around 20 percent year-over-year and
    the service companies were increasing funding at 10-15 percent. The
    real issue is what are the major companies researching. In general it
    is not things that benefit independent operations in the United States.
    Major integrated oil and gas producers have largely moved offshore or
    overseas. This has left onshore production increasingly in the hands of
    small independent producers who lack the resources to conduct R&D.
        TU has been one of the leaders in providing new technologies for
    the oil and gas industry for almost a half century. DOE funding of our
    programs over the past 10 years has been integral to our growth. This
    growth is now being threatened. So, where will the funds come from to
    support conventional oil and gas research?

                                    SOLUTION

        Ultimately, the solution to the oil dependence problem lies in
    technological progress: developing technologies to find, process, and
    use energy more efficiently, and by creating new energy sources that
    can replace petroleum cleanly and inexpensively. However, if the
    science is not done now, the technology will not be available in the
    future when it is critically needed.
        Energy security requires a program that focuses on infrastructure
    security, energy diversification and energy efficiency while facing
    energies challenges. This must be accomplished with environmentally
    friendly technologies using global partnerships and collaboration
    efforts. The University of Tulsa has many components of such a system
    in place and is now working on a plan to include others. In the
    meantime, our federal government must focus more of its funds on
    conventional oil and gas upstream and downstream research while other
    alternatives are developed, such as those through Subtitle J. These
    technologies can't be abandoned because potential replacement
    technologies are years away. It is critical that congress increase its
    commitment to oil and gas research. According to House Rpt. 108-542
    Department of Interior and Related Agencies Appropriation Bill, 2005:
    ``Oil and natural gas research is critical to improving current
    technology and ensuring the best use of our domestic oil and gas
    reserves. Despite the Committee's urging to the contrary, these
    research areas continue to be seriously under funded in annual budget
    requests.'' Unfortunately, trends in industry are working against this
    need of additional funds as well.
        The DOE allocates less than 0.3 percent of its budget to actual oil
    and gas research yet ninety five percent of the energy for
    transportation in the United States comes from oil. We urge you to
    reverse the trend and insure that funding is in proportion to the
    problems faced for the sake of our national security.
        Complicating this year's funding issues is the Administration's
    support for major hydrogen energy research at the expense of a 20
    percent reduction in energy efficiency and renewable energy efforts at
    DOE. The hydrogen fuel concept is not generating new energy, but merely
    using hydrogen as a carrier for natural gas or other energy sources
    without any infrastructure to support its wide deployment, whereas
    energy efficiency is the cheapest and quickest way to create more
    available energy for the Nation's future growth. Renewable energy is
    critically important for Oklahoma which possesses abundant wind and
    solar energy potential as well as a fledgling, but rapidly growing,
    biofuel industry. Biodiesel and cellulosic ethanol R&D are very
    important for the Nation while the corn ethanol boom actually diverts
    much needed fossil fuels to its production at very little gain in
    overall energy. Corn ethanol competes directly with beef and other
    livestock production which will adversely impact Oklahoma and other
    states. Further expanding its use at taxpayers' expense will not
    achieve desired energy goals and will create problems in other
    commodities.
        We urge you to reduce hydrogen fuel research and continue robust
    energy efficiency and renewable energy R&D at DOE as well as to
    reinstate a federally managed oil and gas program which complements the
    Energy Policy Act of 2005's consortium approach to natural gas R&D.
    This will have the additional benefit of supporting academic programs
    in petroleum, geosciences, and engineering which are shortchanged in
    the Administration's new approach.
        We thank you for the opportunity to submit this testimony and look
    forward to working with you to ensure that funding for conventional oil
    and gas research continues.
                                     ______

          Prepared Statement of the American Museum of Natural History

    About the American Museum of Natural History
        The American Museum of Natural History [AMNH] is one of the
    nation's preeminent institutions for scientific research and public
    education. Since its founding in 1869, the Museum has pursued its
    mission to ``discover, interpret, and disseminate--through scientific
    research and education--knowledge about human cultures, the natural
    world, and the universe.'' It is renowned for its exhibitions and
    collections of more than 32 million specimens and cultural artifacts.
    With nearly four million annual visitors, its audience is one of the
    largest and most diverse of any museum in the country. Museum
    scientists conduct groundbreaking research in fields ranging from all
    branches of zoology, comparative genomics, and bioinformatics to earth,
    space, and environmental sciences and biodiversity conservation. Their
    work forms the basis for all the Museum's activities that seek to
    explain complex issues and help people to understand the events and
    processes that created and continue to shape the Earth, life and
    civilization on this planet, and the universe beyond.
    Support for Department of Energy Science Mission and Goals
        The Department of Energy (DOE) is a leading science agency,
    committed to enhancing U.S. competitiveness by providing world-class
    scientific research capacity and by advancing scientific knowledge in
    physical sciences and areas of biological, medical, environmental, and
    computational sciences-including genomic science. The American Museum
    of Natural History, in turn, is home to one of the world's largest
    natural history collections and to a preeminent molecular research
    program, which aligns with key areas of DOE's mission areas and
    research priorities.
        Building on its strengths in genomic science, in 2001 the Museum
    launched the Institute for Comparative Genomics. The importance of
    comparative genomics cannot be overstated, as investigating genomics
    with a natural history perspective enlarges our understanding of the
    evolutionary relationships among organisms, including threat agents,
    and offers important applications for human health. The Institute's
    research programs leverage the Museum's unique expertise in
    evolutionary biology and draw on its unparalleled facilities, including
    a 700 CPU parallel computing cluster (the fastest, we believe,
    installed in an evolutionary biology laboratory and one of the fastest
    in a non-defense environment), high throughput sequencing capacity, and
    an ultra-cold tissue collection that stores specimens with preserved
    DNA, as well as expertise in using remote sensing and Geographical
    Information System (GIS) technologies to applied research questions.
        The Institute has already enjoyed significant research
    achievements, which include advancing understanding of bacterial
    genomics and the evolution of pathogenicity, developing computational
    techniques to analyze chromosomal sequence data, and winning grants to
    lead international teams in assembling the ``Tree of Life'' and for
    large-scale collaborative projects in the frontiers of integrative
    biology and in plant genomics. Other current projects include
    sequencing pathogens and, with NIH support, tracing the evolution of
    pathogenicity and transfer of disease-causing genes over time and
    between species-contributing to the advancement of national security
    research by increasing the knowledge base of current pathogen
    distribution and motility in the landscape. With this distinguished
    record, the Institute now seeks to advance its microbial genomics and
    computation research and training programs, including upgrading high
    throughput instrumentation, expanding the supercomputing cluster for
    biocomputation, supporting postdoctoral trainees to build the
    scientific workforce to sustain America's competitiveness, and
    expanding related public education and outreach in a teaching
    laboratory located in the new Hall of Human Origins.
        Recognizing its potential to support the Department of Energy in
    its goals to strengthen U.S. scientific discovery and economic
    competitiveness, advance the frontiers of knowledge in areas of
    biological and computational sciences, and provide the laboratory
    capabilities and infrastructure required for U.S. scientific primacy,
    the Museum seeks in fiscal year 2008 to draw on the unparalleled
    resources of its Institute of Comparative Genomics in a partnership
    with DOE to advance these shared goals.
                                     ______

           Prepared Statement of the American Wind Energy Association

       increased r&d investments are crucial for wind energy to become a
     mainstream power source and help significantly reduce global warming
                                   pollution
        The American Wind Energy Association \1\ (AWEA) appreciates this
    opportunity to provide testimony for the record on the Department of
    Energy's fiscal year 2008 wind energy program budget before the Senate
    Appropriations Subcommittee on Energy and Water Development.
    ---------------------------------------------------------------------------
        \1\ The American Wind Energy Association or AWEA, was formed in
    1974. The organization represents virtually every facet of the wind
    industry, including turbine and component manufacturers, project
    developers, utilities, academicians, and interested individuals.
    ---------------------------------------------------------------------------
        For fiscal year 2008, the Bush Administration requested wind energy
    research and development (R&D) investments of only $40.1 million--a $4
    million cut below current spending. This funding request does not
    recognize the strong contribution that wind energy is making--and can
    make--to produce clean energy, new jobs, and significant reductions in
    global warming pollution.
    Request for the Department of Energy Wind Program: $110 million
        AWEA requests a funding level of at least $110 million for the wind
    energy program at the Department of Energy (DOE) to support wind energy
    development at the national, state, and local levels. Working in
    conjunction with the U.S. wind industry, power producers, suppliers,
    industrial consumers and residential users, DOE provides important
    technical support, guidance, information, and limited cost-shared
    funding for efforts to explore and develop wind energy resources.
        AWEA would like to commend the DOE wind program for its efforts to
    involve the industry in its program planning process. As a whole, the
    department has solicited input from AWEA on the direction of its
    program and has been responsive to comments received from the industry.
                Overview
        Wind energy could ``supply up to 20 percent of our nation's
    electricity.''--President George W. Bush, February 20, 2006.
        Wind energy development in the United States is coming off a record
    year, with nearly 2,500 megawatts (MW) of new wind energy installed
    across 22 states. The industry expects to break that record in 2007. At
    the beginning of 2007, over 11,000 MW of wind energy facilities are
    operating in the United States, producing the equivalent amount of
    electricity needed to power about 3 million average American
    households.
        Wind energy works for the environment and the economy because it
    generates energy without fuel, while providing a reliable hedge against
    rising energy costs. In addition, wind lowers consumer energy prices by
    offsetting increased costs in fossil fuels, offers significant rural
    economic development opportunities for communities, strengthens the
    nation's security by lessening our reliance on foreign sources of
    energy, and provides clean, emission-free electricity.
        The industry believes that with smart investments today, wind can
    grow to supply fully 20 percent of America's electric power. During his
    2006 State of the Union speech, President Bush stated that wind could
    eventually supply 20 percent of our electric supply and proposed
    spending more on R&D. With these factors in mind, wind energy is on the
    verge of becoming a major player in energy supply for the nation.
    However, a number of obstacles must be eliminated in order for wind to
    reach its full potential and become fully cost competitive with
    traditional energy technologies.
        The work that takes place at DOE's wind program is a vital
    component in helping to eliminate those obstacles. AWEA appreciates the
    support the subcommittee has provided to the DOE wind program in recent
    years.
        For fiscal year 2008, the Administration requested only $40.1
    million, which is a $4 million cut below current spending of $44
    million. This funding request is not consistent with the President's
    call for more R&D in this area and does not recognize the strong
    contribution that wind energy is making--and can make--to produce clean
    energy, new jobs, and significant reductions in global warming
    pollution.
        We strongly believe that the funding provided by the subcommittee
    should reflect the important work conducted by the wind program and
    respectfully request that funding be significantly increased above the
    request level.
        The wind energy program at the Department of Energy has a strong
    history of success. Over the last twenty years, the cost of wind energy
    has dropped by more than 80 percent, to a level that is close to
    competitive with traditional energy technologies. The cost of wind
    energy is currently between 5.5 to 9.5 cents per kilowatt hour (kWh),
    not including the Production Tax Credit (PTC). Over the last 2 years,
    however, the cost of wind energy--and all other sources of producing
    electric power--has actually been going up due to increases in
    commodity prices and short-term extensions of the renewable energy PTC.
        Cost shared industry/government research and development activities
    at DOE and the National Renewable Energy Laboratory (NREL) have played
    an important role in this achievement. Programs such as Wind Powering
    America have been extremely effective in educating interested parties
    across the country on the benefits of wind power. We strongly support
    the continuation of the project.
    Utility-Scale, Land-Based Turbine Technology: $50 million
        The requested funding for further development of utility-scale,
    land-based turbine technology is very important to the wind industry.
    The wind industry requests $50 million for this program in order to
    reduce capital cost, improve capacity, and provide a foundation for
    wind energy technologies.
        The primary focus of this program is to reduce costs and increase
    reliability of the technology. Federal investments are needed because
    there are fundamental technical issues that are not yet understood that
    are decreasing reliability and increasing costs. In addition, dramatic
    cost reductions will almost certainly require application of unproven,
    high risk concepts, such as those below:
                Component Development
        Rotor blades.--There are multiple opportunities for advanced
    materials and blade configurations to reduce the cost of energy from
    wind turbines. Promising areas for additional support are in developing
    turbine blades that can be easily assembled on-site and developing
    aeroelastically tailored blades, or blades that are able to change
    shape in response to the wind as a means of limiting stress.
        Controls Sensors.--Advanced sensors to monitor the loading and
    position of wind turbine blades and other components that can be cost-
    effectively combined with modern control theories.
        Other Components.--Towers and drive train systems are other major
    components where innovation is needed to reduce the cost of energy. In
    particular, developing a tower system that addresses transportation and
    installation constraints currently preventing further cost savings in
    these areas is of crucial importance.
                Advanced Controls and Models Research
        The application of innovative turbine control strategies shows
    considerable promise in helping to reduce loads and thus reduce the
    cost of energy. Substantial work is needed to fully understand the
    complex relationship between atmospheric conditions and wind turbine
    dynamics and how to utilize controls to optimize performance and
    minimize costs.
                Resource Characterization
        For advanced control theory to optimally reduce loads, the
    characteristics of the atmosphere within which the turbines are
    operating must be better understood. Research dollars focused on
    achieving the best means of characterizing the variations in wind
    across the rotors depending on wind speeds and height of the turbines,
    tools to measure these characteristics, and models to represent the
    inflow for analytical purposes are all important efforts.
    Market Acceptance/Transformation: $34 million
        We request $34 million for market acceptance/transformation
    activities at DOE. Increased funding in this area would be targeted
    toward better understanding the impact of wind turbines on wildlife as
    well as developing tools and educational materials for policy makers
    and regulators to assist them in better understanding the environmental
    impact of wind energy projects. Funds are used for cost-shared research
    programs with industry and wildlife organizations to address targeted
    issues with avian and bat species.
        States and permitting officials also seek technical assistance on
    project siting issues. DOE could serve as a clearinghouse for
    information and resources in these areas. Outreach to these audiences
    is also required so permitting authorities feel they are making
    informed choices. In addition, resources in this area would also be
    used to develop updated resource maps at an elevation of 100 meters
    above ground level. These maps have identified previously unknown wind
    resources in several states, spurring interest in the resource from
    state policy makers and regulators.
    Reliability and Testing: $10 million
        We would like to see $10 million provided for reliability and
    testing. Increased funding in this area would be used for three primary
    purposes:
      --Support for a public/private partnership to build blade and
            dynamometer test facilities;
      --Initiation of research that will increase the reliability of wind
            project energy projections, and;
      --Expansion of research into the causes of premature failure of major
            wind turbine components such as gearboxes and generators.
    Advanced Applications: $10 million
        The Advanced Applications research will be targeted toward the
    integration of wind energy into generation of hydrogen, deep-water
    offshore technology research, resource characterization, loads and
    environment characterization and the environmental impacts of offshore
    applications. The wind industry requests $10 million to fund research
    in these areas. Such research is needed to identify the potential for
    wind energy in these areas as well as position the United States to
    play a leading role in the development of environmentally compatible
    wind energy applications.
        AWEA believes that offshore wind energy facilities can play an
    important role in meeting the long-term energy needs of the country.
    However, we also believe that the focus of the DOE program in the near
    future should be placed on R&D efforts for land-based turbines.
    Distributed Wind Systems (100 kW and below): $6 million
        AWEA is encouraged by DOE's proposed increase for small wind R&D,
    but believes an even greater emphasis is needed for this technology
    (used to power an individual home, farm or small business). Distributed
    generation with small customer-sited power plants has great potential
    for reducing energy costs, promoting competition in the marketplace,
    and strengthening the nation's electrical supply network.
        This program has provided invaluable support for the development
    and testing of more reliable small turbines for homes and businesses.
    The development of computer simulation tools allows designers to
    understand the furling behavior (when a turbine turns itself out of the
    wind during periods of very high wind speeds) of the turbines. AWEA
    believes that a $6 million DOE small wind budget would ensure that
    additional support is provided for certification testing of small wind
    generators. $6 million would also adequately fund research into
    manufacturing techniques to produce high-volume, low-cost components,
    with aerospace material properties and performance. These are all areas
    where support is needed to reduce the cost of energy and increase the
    reliability of small turbines.
        The high up-front costs of small wind systems make it very
    difficult for this technology to gain wide acceptance in the domestic
    market. This would change if DOE had the resources to work with
    America's small wind manufacturers to achieve cost reductions similar
    to those achieved by the large, utility-scale wind industry. In some
    states that provide a rebate for purchasers, small wind turbine
    manufacturers have experienced a surge in sales, demonstrating the
    public support for cost-effective small wind turbines.

                       ADDITIONAL WIND INDUSTRY PRIORITY

    Wind Energy Integration Efforts within DOE's Electricity Delivery and
            Energy Reliability Office (This funding is not located in the
            DOE Wind Account.)
        DOE has requested only $115 million--an 8 percent cut--for its
    Electric Delivery and Energy Reliability Office responsible for
    assisting in modernization of the electric grid, including transmission
    corridor designation and federal line permitting under the Energy
    Policy Act of 2005. This work is crucial to growing the wind industry
    because it holds the key to moving wind energy from generally rural
    areas where it is produced to population centers where it is needed.
        Resources would be focused on continuing the educational activities
    that allow utilities and policy makers to make informed decisions
    regarding the impact of wind on the electric transmission system. As
    the industry grows and the size of wind projects increases, additional
    case studies showing the impact of these large projects on the grid are
    needed. The industry has experienced considerable success in completing
    integration studies of major portions of the Midwestern grid. These
    studies have been well received by regulators and transmission
    providers and have helped to quantify the impact of wind on the
    transmission system. Similar studies of the western portion of the
    country and studies of higher wind penetration levels are needed.
    Additionally, educational materials for utility control room operators
    to help them understand the impact of wind power plants and how they
    can manage operational impacts with new forecasting tools would be
    helpful.

                                   CONCLUSION

        The President and the Congress have called for an increased
    commitment to the development of domestic renewable energy resources,
    particularly wind energy, to meet our nation's growing demand for
    electricity. Continued investments in wind energy R&D are delivering
    value for taxpayers by developing a domestic energy source that
    strengthens our national security, fosters rural economic development,
    creates new high-tech jobs, and helps protect the environment.
        While the wind industry continues adding new generation capacity, a
    number of challenges still exist. Continued support for the Department
    of Energy's wind program is vital to helping wind become a mainstream
    energy source that helps significantly reduce global warming pollution.
    We believe that the funds appropriated to the wind program need to be
    commensurate with the President's call for more renewable energy, and
    urge the subcommittee to approve a significant increase in funding for
    the wind program.
        AWEA appreciates the opportunity to provide this testimony to the
    Subcommittee. Thank you.
                                     ______

     Prepared Statement of the National Research Center for Coal and Energy

      PROGRAMS IN FOSSIL ENERGY, ENERGY EFFICIENCY, AND ENERGY RELIABILITY

        Thank you for considering testimony from the National Research
    Center for Coal and Energy (NRCCE) on programs in Fossil Energy, Energy
    Efficiency, and Electricity Delivery. Comments and recommendations are
    provided in the following sections of our testimony.
    Office of Fossil Energy
        Our focus is on the core Fossil Energy R&D program, for which the
    Administration has recommended insufficient funding for fiscal year
    2008.
    Innovations for Existing Plants Program
        The United States currently has more than 300 GW of coal-fired
    capacity that supplies over 50 percent of the Nation's electricity.
    Twenty years from now, most of these plants will still be providing
    base-load power. The Innovations for Existing Plants Program addresses
    the continuing critical role these plants will play in the future.
    However, the Administration has chosen not to fund this program in
    fiscal year 2008. It is prudent to invest in improving the operation of
    our existing workhorse power generation fleet. Our nation will benefit
    from advanced technology's ability to reduce the environmental impact
    of energy generation. This program should be restored to its previous
    level of $25 million for fiscal year 2008.
      --Mercury Research.--Recent field tests on mercury control technology
            have shown that more research is required to obtain sufficient
            understanding of the chemistry of mercury for different coal
            types and the effectiveness of capture processes. Of the
            funding recommended, $10 million should be directed to the
            control of mercury emissions.
      --Optimal Water use in Power Generation.--Power generation accounts
            for 40 percent of all water withdrawals in the United States,
            second only to agriculture, and competes with other industrial,
            agricultural, and consumer needs. Water scarcity exists not
            only in the arid Western States but also in the East where even
            large rivers like the Potomac and Susquehanna are unable to
            support additional power plants. Of the funding recommended,
            $10 million should be directed toward optimizing the use of
            water in power generation.
      --Use of Combustion By-Products.--The By-Products sub-element of the
            Existing Plants Program keeps combustion by-products such as
            coal ash and scrubber sludge out of waste streams from power
            plants by developing environmentally friendly and economically
            attractive alternative uses. Before this sub-program was
            implemented, only 25 percent of combustion byproducts were
            beneficially used. That number is now over 40 percent. Without
            continued support, we expect increasing amounts of byproduct to
            enter the Nation's landfills. Of the funding recommended, $3
            million should be directed toward the combustion by-products
            program.
    Fuels Program
        NRCCE recommends adding $9 million to the Fuels Program to
    reinstate a national liquid fuels program as a major thrust area and $3
    million for the advanced separations research program.
      --Coal-to-Liquids.--The promise of coal-to-liquids (CTL) technology
            for producing transportation fuels and chemicals has stimulated
            expressions of interest from at least 10 governors, the U.S.
            Department of Defense, and over 15 companies for constructing
            plants to promote energy independence. Developers cite the need
            for R&D to reduce plant costs, to improve conversion
            efficiency, to reduce the environmental footprint of CTL
            technologies, and to qualify CTL fuels for use in legacy and
            future transportation vehicles.
        We need a national advanced core research program to ensure success
    of these new CTL plants, which in most cases will be first-of-a-kind
    commercial deployments in the United States. Funds should be directed
    toward computational research on process development and economic
    modeling, co-production with biomass and other technology advances to
    minimize CO2 emissions, and advanced research in catalysis,
    wax separation, and reactor design engineering. Ancillary benefits
    include educating the U.S.-based human resource pool needed to meet
    personnel demands created by deployment of CTL industries on a large
    scale. Of the amount recommended, $1 million should be directed to
    continue the work initiated under Annex II of the U.S.-China Protocol
    for Energy Research to obtain information about China's CTL technology
    and the environmental /economic impacts of CTL plants in Shanxi
    Province. This valuable information will be obtained at a small
    fraction of the cost of financing a similar program in the United
    States.
      --Advanced Separations Research.--The current emphasis on obtaining
            clean gas streams in gasification plants and on reducing
            mercury and other pollutant emissions from pulverized coal
            plants warrants continued research in advanced separations.
            This research will yield cleaner coals that combust more
            efficiently, thereby reducing carbon emissions as well.
    Carbon Sequestration
        The Zero Emissions Research and Technology (ZERT) Center is a
    consortium of five national labs and two universities that conducts
    coordinated research on geologic sequestration of carbon dioxide. The
    Center's fundamental research complements the Regional Carbon
    Sequestration Partnership and FutureGen programs and should be
    continued at $8 million in fiscal year 2008.
    Oil and Natural Gas Programs
        The Fossil Energy program in oil and natural gas supports small and
    independent producers--companies which do not have the money and may
    not have the expertise to undertake advanced research to extract the
    harder-to-get resources from mature fields. The oil and natural gas
    programs are largely responsible for training our next generation of
    petroleum engineers and geologists. Projects funded by the oil and gas
    programs support more graduate student degrees in these areas than any
    other single source. The natural gas program is laying the groundwork
    for substantial future resource recovery, including production from
    methane hydrates (which represent a potential 100 years supply for the
    United States) and from deep reserves such as the three mile well
    recently completed in Texas. The enhanced oil recovery program has the
    potential to provide the United States with more than 89 billion
    barrels of domestic oil that is currently not recoverable while
    sequestering large quantities of CO2. Curtailment of these
    programs will severely restrict our ability to produce our oil and gas
    reserves. We recommend restoration of these programs to their previous
    historic levels.
      --Petroleum Technology Transfer Council.--We recommend continued
            funding at a level of $2.8 million for the programs
            administered by the Petroleum Technology Transfer Council
            (PTTC). The PTTC, working regionally through 10 universities,
            operates resource centers for oil and natural gas information,
            training, and conferences, all directed to the needs of small
            producers. PTTC programs play a critical role in providing
            independent producers throughout the country access to the best
            technology to explore for and to develop new and innovative
            domestic energy opportunities while remaining competitive in a
            global energy market. Federal support will be equally matched
            with state and private dollars.
    Advanced Research
        NRCCE recommends the addition of $5 million to the Advanced
    Research Program to support computational energy sciences and materials
    research.
      --Supercomputing Science Consortium.--One of the major components of
            the Computational Energy Sciences program is support for
            advanced computational research at universities and national
            labs through time allocations at facilities such as the
            Pittsburgh Supercomputing Center (PSC). This activity is
            coordinated by the SuperComputing Science Consortium
            (SC2), an organization consisting of the National
            Energy Technology Laboratory (NETL), the PSC, and higher
            education and advanced research organizations in the region
            near NETL. The SC2 also conducts activities at the
            K-12 educational level that stimulate students to undertake
            science and engineering careers. Of the funds recommended, $2
            million should be directed to the Computational Energy Sciences
            budget to support the SC2 program.
      --Materials Research.--An expanded suite of advanced materials is
            needed to improve the energy efficiency and environmental
            performance of coal-based power systems. NRCCE recommends that
            the Administration request for this program sub-element be
            increased by $3 million to a level of $10.1 million for fiscal
            year 2008. The additional funding should be directed toward the
            development of specialty metals, new alloys, and surface
            coatings that can function at substantially higher temperatures
            and/or withstand highly corrosive environments in applications
            such as sensors and controls, fuel cells, and harsh
            environments in multiphase flow energy systems. Of the added
            funding, $2 million should support initiatives at NETL-Albany
            and universities, for which cost sharing from industry should
            be required.
              office of freedom car and vehicle technologies/eere
        NRCCE recommends $3 million for two programs in vehicle
    technologies that promote reduced emissions and energy savings in the
    transportation sector.
      --Transportable Emissions Testing Laboratory.--U.S. DOE established a
            specialized Transportable Emissions Testing Laboratory in 1989
            for research on improving fuel economy, advancing alternative
            fuels technology, and reducing exhaust emissions of heavy duty
            vehicles. The Laboratory provides valuable data to government
            agencies to establish reasonable emission level standards and
            to assess the effectiveness of new technologies. Heavy-duty
            engine emission standards established in 2007, and increasing
            interest in biodiesel, ethanol, hydrogen, natural gas and coal-
            to-liquids fuel necessitate further advanced fleet performance
            measurements. Of the funds recommended, the Transportable
            Emissions Testing Laboratory program should be continued at $2
            million in fiscal year 2008.
      --Lightweight Composite Materials.--Advanced composite materials
            improve energy efficiency by reducing structural weight to
            allow a higher fraction of payload for vehicles limited to the
            80,000 pound maximum weight restrictions on national highways.
            Results from this program enable the design and fabrication of
            lighter-weight trailers, trucks, and buses. Significant fuel
            savings and reduced emissions are obtained through improved
            fuel efficiency associated with lighter vehicles and/or a
            reduced number of trips to deliver multiple payloads. Of the
            funds recommended, the Lightweight Composite Materials for
            Heavy-Duty Vehicles Program should be continued at $1 million
            for fiscal year 2008.

                     OFFICE OF INDUSTRIAL TECHNOLOGIES/EERE

        Wasted energy is the single largest source of currently available
    energy in the United States. The Industrial Technologies Program (ITP)
    in EERE is the DOE's lead agency for improving industrial energy
    efficiency through high-value research, plant assessments, software
    tools, and training. Enhanced industrial energy efficiency is the most
    cost-effective strategy for improving U.S. industrial competitiveness
    while reducing greenhouse gas emissions from energy-intensive
    manufacturing plants. In addition, the U.S. trade deficit can be
    reduced through export of industrial energy efficiency technologies and
    equipment to developing countries such as China and India. The ITP
    budget should be restored to its 2005 level of $73 million.

             OFFICE OF ELECTRICITY DELIVERY AND ENERGY RELIABILITY

        In fiscal year 2006, the Subcommittee appropriated funds for the
    Integrated Control of Next Generation Power Systems. This program
    enhances the reliability and security of the power grid through
    technology which is based on advanced communication, computer control,
    and electronics that enable real-time detection of system problems. The
    electrical circuits are then automatically reconfigured to minimize the
    potential impact of a natural disaster, human error, or a terrorist
    attack. This project will enable DOE to design system architectures to
    effectively control the intelligent, interoperable electric grids of
    the future. This program should be continued in fiscal year 2008 at $2
    million.
                                     ______

           Prepared Statement of the American Iron & Steel Institute

        The basis for this testimony is to urge Congress to restore funding
    of the Industrial Technologies Program (ITP) line item for Steel within
    the Energy Efficiency and Renewable Energy section at the Department of
    Energy [DOE] to the original level of $10 million.
        The stated goal of the ITP is to reduce the energy intensity of the
    U.S. industrial sector through coordinated research and development,
    validation, and dissemination of energy-efficiency technologies and
    operating practices. The Department of Energy and domestic steelmakers
    co-fund cutting-edge research that addresses the needs of the nation
    and our industry. The goal of these projects is to reduce energy
    consumption [thereby diminishing the nation's dependence on foreign
    sources of oil], lessen environmental impact [through emissions
    reductions] and increase the competitiveness of domestic manufacturers.
    Furthermore, what makes the ITP program so unique and appropriate is
    that only those projects with ``dual benefits'' [i.e., a public benefit
    such as reduced emissions or petroleum use, which justifies the DOE
    investment; and an industry benefit such as a more efficient
    steelmaking process, which justifies the industry investment] are
    initiated. It is important to note that federal funding does not go to
    steel companies, it is pooled with steel industry funds and awarded to
    qualified universities, national labs, and private research
    organizations through a competitive process.
        In 2003, Congress appropriated $10 million to fund the Steel
    component of ITP. Unfortunately, in recent years the program [and the
    projects it supported] suffered deep budget cuts. This is the case once
    again, as for fiscal year 2008, the administration requested
    approximately $1.6 million.
        It must be noted, that without restoring funding to fiscal year
    2003 levels, true breakthrough programs cannot be fully developed.
    Universities, research labs and steelmakers have reached the threshold
    of what can be accomplished [in energy-efficiency improvements and
    emissions reductions] under the current funding structure.
        The chart below is representative of the gains in energy efficiency
    made by materials manufacturers since 1990, i.e., during the time they
    have partnered with DOE.

        This chart clearly shows that steelmakers have become very
    efficient for the processes they operate today. It is not coincidental
    these gains have occurred during the time the DOE ITP program for Steel
    was funded at $10 million annually. To make the type of gains in the
    future that have been seen since 1990, new process development is
    required and new process development requires funding be restored to
    historical levels. Some of the most promising new process development
    projects with the potential to reduce steelmaking CO2
    emissions by more than 70 percent are Ironmaking by Molten Oxide
    Electrolysis [now underway at the Massachusetts Institute of
    Technology] and Ironmaking by Flash Smelting using Hydrogen [University
    of Utah]. Both of these technologies show great promise and need fiscal
    year 2008 funding to proceed.
    Summary
        The Industrial Technology Program-Steel selects projects that have
    both public and private benefits, justifying the investment of both DOE
    and industry. In addition, the research is conducted at the most
    qualified facilities in North America, with over 80 percent of funding
    supporting tasks at universities, national labs and technology
    developers, many of which are small businesses. ITP-Steel is a unique
    and successful program that is not only beneficial to the domestic
    steel industry; it is beneficial to the nation as we attempt to become
    more energy-efficient while significantly improving the environment.
        Please consider restoring ITP-Steel funding to the original level
    of $10 million so that its public and private benefits can reach even
    further into our economy. Thank you for your consideration.
                                     ______

        Prepared Statement of the Nuclear Engineering Department Heads
     Organization (NEDHO) and the National Organization of Test, Research,
                          and Training Reactors (TRTR)

        Chairman Dorgan, Ranking Member Domenici, members of the
    Subcommittee, we appreciate the opportunity to provide testimony to the
    Subcommittee regarding fiscal year 2008 Energy and Water Development
    Appropriations legislation. Together, NEDHO and TRTR provide
    representation for the entire U.S. academic nuclear engineering
    community on issues related to federal policy and funding.
        NEDHO and TRTR urge the Congress to provide funding for University-
    based nuclear engineering programs and research reactor programs
    commensurate with the authorized levels of the Energy Policy Act of
    2005, which is $50.1 million for fiscal year 2008.
        The chart below provides a recommended breakdown of funding.

                                                  [Dollars in millions]
    ----------------------------------------------------------------------------------------------------------------
                                                         Fiscal Year
                           Item                         2008 Funding                Justification/Benchmark
    ----------------------------------------------------------------------------------------------------------------
    Research.......................................              $30.1  Basic and mission-specific (applied)
                                                                         research.
    Facilities.....................................               10    University-based research reactor fuel,
                                                                         instrumentation, safety, and security
                                                                         upgrades.
    People Support and infrastructure..............               10    Nuclear Engineering/Health Physics
                                                                         fellowships, scholarships, matching grants
                                                                         and minority outreach.
                                                    -------------------
        TOTAL REQUEST..............................               50.1  Fiscal year 2008 funding level authorized in
                                                                         the Energy Policy Act of 2005 (Public Law
                                                                         109-58).
    ----------------------------------------------------------------------------------------------------------------

        As you well know, Nuclear Science and Engineering (NSE) plays a
    critical role in ensuring the U.S. energy supply, reduction of the
    global warming gases, and the national security. With regard to energy
    independence, nuclear reactors are currently generating about 20
    percent of the nation's electricity needs, and have contributed to the
    reduction of nearly 700 million tons of carbon dioxide and over one
    million tons of nitrogen oxide. These are equivalent to 96 percent of
    carbon dioxide and 41 percent of nitrogen oxide emissions from
    automobiles in the United States.
        In order to meet the anticipated increase in electricity demand,
    utilities are planning to build new nuclear reactors. There will be a
    corresponding increase in demand for scientists and engineers to
    design, license, operate, and maintain these new reactors. Nuclear
    utilities, nuclear vendors, and the Nuclear Regulatory Commission (NRC)
    need hundreds of well-trained nuclear engineers and scientists.
    Moreover, a large number of nuclear scientists and engineers are needed
    to work within the DOE complex in such programs as the NP2010,
    Generation IV, Nuclear Hydrogen Initiative, and the Global Nuclear
    Energy Partnership (GNEP).
        In its early years, nuclear science and engineering received
    significant federal funding that led to major developments such as
    nuclear submarines, research reactors, and commercial power reactors.
    However, the TMI accident, cheap fossil fuels, significant delays in
    construction of nuclear plants due to changing regulations, public
    interventions, and a surplus of electricity led to a perception that
    nuclear engineering was a field without a future and as a result,
    undergraduate enrollments decreased. Graduate enrollments also
    decreased but at a somewhat slower rate since they are not linked as
    strongly to the nuclear power industry. This situation was exacerbated
    by the reduction of federal support for NSE, including research
    support, fellowships, and scholarships.
        The downturn in enrollments and reduction in federal funding led to
    the demise of over half of the NSE programs and university nuclear
    reactors from 1980 to 2000, leading to a seven-fold reduction in the
    number of BSE graduates over this period of time. Efforts to reduce and
    reverse these alarming trends in enrollments, departments, and reactors
    led to the revitalization of the University Programs within the Nuclear
    Energy office of DOE including funding for fellowships/scholarships,
    Nuclear Engineering Education and Research (NEER), Nuclear Energy
    Research Initiative (NERI), University Reactor Sharing and University
    Reactor Instrumentation programs, revitalization of radiochemistry,
    DOE-Industry Matching grant, Innovations in Nuclear Infrastructure and
    Education (INIE), and more recently, the Young Faculty awards. These
    programs contributed mainly to the graduate education and training of
    engineers and scientists needed for national laboratories, but they
    also helped to improve departmental and reactor facility
    infrastructure.
        Historically, Congress has provided funding for the nuclear
    engineering discipline through a separate line item in the U.S.
    Department of Energy, Office of Nuclear Energy entitled ``University
    Reactor Infrastructure and Education Assistance.'' This program has
    received modest increases in funding since the end of the 1990s when it
    was nearly zeroed out. In the fiscal year 2007, both the U.S. House and
    Senate Energy and Water bills recommended funding of $27 million.
        The existing funds are not stable and flexible enough to meet the
    current and the anticipated demand for NSE graduates (BS, MS, and PhD)
    over the next decade. Therefore, we believe that the nation's policies
    on energy and national security require the significant expansion of
    the U.S. nuclear engineering education enterprise. Driving factors for
    this expansion include the anticipated Nuclear Power Renaissance,
    increased focus and interest in developing advanced fuel cycle
    technologies and reactor designs, and the expanding need for
    development and deployment of nuclear materials detection technologies
    for homeland security and monitoring and prevention of nuclear
    proliferation.
        The U.S. nuclear engineering education community stands ready to
    meet these approaching challenges. However, it will require increased
    resources from the federal government--beyond the levels enacted in
    previous fiscal years--and include funding for scholarships and
    fellowships, support of university-based reactor facilities, and basic
    and applied research.
        As such, NEDHO and TRTR believe the federal government should
    provide funding for University-based nuclear engineering programs
    commensurate with the authorized levels of the Energy Policy Act of
    2005, which is $50.1 million for fiscal year 2008.
        Also, as we are sure the committee is aware; the Administration has
    proposed the termination of funding for the University Reactor
    Infrastructure and Education Assistance account line in its fiscal year
    2007 and fiscal year 2008 budget requests. DOE NE has indicated that
    its preference is to fund academic nuclear engineering research efforts
    through its existing program lines. This means the funds for
    infrastructure and fellowships/scholarships are significantly reduced
    or completely eliminated! It is quite unfortunate and unusual that in
    this time of great need for new nuclear engineers and scientists, the
    federal government is not providing funding for nuclear engineering and
    education.
        NEDHO and TRTR are not in a position to make recommendations as to
    the specific budgetary mechanics of providing funding to university
    programs. However, our two organizations believe strongly that
    university funding must be increased, stabilized, and flexible to allow
    for the current and expected growth to support expanded research, as
    well as reinvestment in human, reactor infrastructure, and major
    research equipment.
        Finally, we recommend that the Subcommittee consider the recent
    report by the American Nuclear Society, entitled ``Nuclear's Human
    Element.'' NEDHO and TRTR endorse the principal findings and
    conclusions of this report, which lays out a framework for improving
    federal investments in nuclear science and engineering education in the
    longer term. We believe to maintain the nation's competitiveness, it is
    essential that Congress and the Executive Branch take the necessary
    steps in establishing a strong and effective platform for meeting the
    technological and human resources need in nuclear science and
    engineering.
        We look forward to working with you in formation and implementation
    of a progressive program for nuclear engineering research and
    education.
        Thank you.
                                     ______

        Prepared Statement of the North American Die Casting Association

        As President of the North American Die Casting Association (NADCA),
    I respectfully submit this testimony in support of the HyperCAST
    funding request for $1.5 million in the U.S. Department of Energy,
    Energy Efficiency and Renewable Energy, Vehicle Technologies Program
    filed with the Subcommittee by Senators Edward Kennedy and Ken Salazar.
        NADCA is the nation's leading not-for-profit technical organization
    representing all facets of the U.S. die casting industry. NADCA exists
    to support our domestic industry and to maintain our global competitive
    lead through the continued development of cutting edge technology.
        NADCA has decades of successful experience coordinating research
    and development activities between various U.S. funding agencies (DOE
    and DOD), government laboratories, universities, and metalcasting
    companies. The technology and processes developed through these
    programs is rapidly transferred by NADCA to small, medium and large
    casting companies nationwide. Past programs have earned strong bi-
    partisan support from Congress.

                                    OVERVIEW

        Congress has long recognized the overwhelming need to dramatically
    curtail wasteful automotive and vehicle energy consumption in our
    nation. Maximizing energy efficiency in our domestic transportation
    system is a matter of economic security and environmental necessity.
        The North American Die Casting Association is collaborating with
    the U.S. Department of Energy, Vehicle Technologies Office in an effort
    to rapidly and dramatically advance these goals. This innovative and
    dynamic program is HyperCAST.
        The HyperCAST program goal is to support our nation's
    transportation energy efficiency goals by developing technology for
    high performance, light weight, cast metal components for energy
    savings in commercial and military vehicles and trucks.
        The HyperCAST program will deliver a variety of important benefits
    including:
      --Providing significant new energy savings in transportation
            technology, commercial and military vehicles and trucks;
      --Developing new alloy and process development to maintain our
            domestic casting industry as a technology leader in the world
            market;
      --Conducting university based research at Ohio State University, Case
            Western Reserve, the Colorado School of Mines, and Worchester
            Polytechnic Institute;
      --Transfering new technology broadly to small and medium casting
            shops across the United States . . . 80 percent of metalcasting
            companies have fewer then 100 employees; and
      --Matching every federal dollar with contributions from industry.
        There is no doubt that enhanced fuel efficiency and alternative
    fuel vehicles contribute to our nation's energy security. High
    performance light weight components are necessary in making petroleum
    fueled cars and trucks more energy efficient. In addition, advanced
    high strength light weight materials and processes for the design of
    components offer the greatest opportunities for the development of new
    vehicles that do not require petroleum fuels.
        The HyperCAST research is targeted at the development of high
    performance light weight aluminum and magnesium castings for energy
    efficient components for transportation. More specifically, this
    project entails the development of materials and processes for cast
    light weight frame, body, chassis and powertrain components for fuel
    efficient passenger cars and both commercial and military trucks.
    Therefore, the project is cross-cutting as it serves to meet goals of
    the FreedomCAR and 21st Century Truck programs. The advanced materials
    and processes developed will have a focus on fuel efficiency and cost
    effectiveness.
        These important technological advancements will also enhance the
    U.S. metalcasting industry's ability to maintain a lead role in the
    world market. It is technology that enables this vital industry to
    compete globally and to keep jobs in the United States.
        The objective of HyperCAST is to develop materials and processes
    for high strength light weight cast components for vehicles that are
    affordable and offer the potential for 60 percent weight reduction and
    related improvement in energy efficiency. NADCA and university
    researchers are confident that these goals can be met without
    compromising vehicle performance, cost, safety or recyclability.
        The following examples are offered to describe the energy saving
    opportunities offered by the HyperCAST Program.
        Example 1: A cast aluminum engine block with cast iron sleeves
    currently weighs 85 pounds. Moving to a magnesium composite material
    would result in about the same productivity improvement but would yield
    a casting weight of 49 pounds--a savings of 36 pounds or 42 percent.
        Example 2: An aluminum transmission case casting currently weighs
    31 pounds. Casting this component with a new aluminum composite
    material and considering a 20 percent strength increase would yield a
    casting weight of 27 pounds. Produced as a magnesium composite
    material, the casting would weigh 22 pounds--a savings of 9 pounds or
    29 percent.
        The HyperCAST numbers show a dramatic potential for improvement in
    our nation's fuel efficiency and environmental impact. There is an
    average of 280 pounds of aluminum in a car. It is estimated that the
    HyperCAST technology can reduce that weight by 100 to 120 pounds
    without compromising strength, safety or performance. In addition, for
    every pound reduced automakers can cut two more pounds or 200 to 240
    more pounds, from the drive train. Finally, for every pound reduced in
    the car's weight, estimated at almost 360 pounds, an environmental
    benefit will be realized through an annual reduction in carbon monoxide
    of 2 pounds for every one reduced. That would be 720 pounds of carbon
    monoxide reduced annually for every car manufactured with the HyperCAST
    technology.
        This project will utilize researchers from the premier universities
    (Ohio State University, Case Western Reserve University, Colorado
    School of Mines, and Purdue University) and government laboratories
    with experience in cast materials and processes for the research
    activities, premier casting companies for demonstration of the research
    results, and the industry associations for coordination of efforts and
    technology transfer. The request is supported by the following:
      --Dr. Diran Apelian, Director of Metals Processing Institute at
            Worcester Polytechnic Institute;
      --Dr. John Moore, Head of the Metallurgy Department at the Colorado
            School of Mines;
      --Dr. David Schwam, Director of the Metal Casting Laboratory at Case
            Western Reserve University;
      --Dr. Allen Miller, Professor in College of Engineering at Ohio State
            University;
      --Tim Stewart, President and CEO of Yoder Industries in Dayton, OH;
      --Richard Rogel, President and CEO of Empire Die Casting., Inc in
            Macedonia, OH;
      --Paul Head, Vice President of Operations at Empire Die Casting.,
            Inc.;
      --Robert Hopkins, Vice President of Administration at Empire Die
            Casting., Inc.;
      --Robert Stuhldreher, Director of Casting Operations at Metaldyne in
            Twinsburg, OH;
      --Scott A. Frens, Senior Sales & Tool Engineer at Fort Recovery
            Industries in Fort Recovery, OH; and
      --Barry S. Houndshell, Director of Manufacturing at Fort Recovery
            Industries.
        Finally, the technology developed will be distributed by NADCA
    solely to North American metalcasters in order to provide the North
    American industry with a globally competitive advantage and assist in
    maintaining the viability of metalcasting in North America.
        We hope we can depend on your support to fund this valuable and
    important program.
                                     ______

             Prepared Statement of the Fuel Cell Power Association

        The Fuel Cell Power Association appreciates the opportunity to
    submit this statement in support of the Department of Energy's Fossil
    Energy, Fuels and Power Systems, Fuel Cell Program. We urge the
    Subcommittee to continue to support this breakthrough program by
    appropriating $80 million for development of this highly efficient,
    clean, and secure energy technology.
        DOE's Fossil Energy Fuel Cell Program, through the Solid State
    Energy Conversion Alliance (SECA) fuel cell activity, is developing
    technology to allow the generation of highly efficient, cost-effective,
    carbon-free electricity from domestic coal resources with near-zero
    atmospheric emissions in central station applications. The program
    directly supports the president's FutureGen project through the
    development of cost-effective, highly efficient, power blocks that
    facilitate sequestration in coal-based systems. The technology will
    also permit grid independent distributed generation applications by
    2010.
        SECA fuel cell systems operating on coal gas are building blocks
    for zero emissions power, the ultimate goal of the President's
    FutureGen Program. These systems are projected to be available at a
    target cost of $400/kw. In addition the technology developed in this
    program will produce electricity at up to 60 percent efficiency in
    coal-based systems, produce near-zero emissions, and easily enables
    carbon sequestration.
        In all applications SECA fuel cells will be both low-cost, with the
    above-stated goals of $400/kw, as well as highly efficient. Integrated
    with coal gasification, the system's 60 percent efficiency compares
    very favorably to the existing coal-based power generation fleet
    average of about 33 percent efficiency. In distributed generation
    applications even higher efficiencies may be reached, and cogeneration
    opportunities can further increase efficiency.
        Along with these attributes fuel cells are one of the cleanest
    technologies available in terms of atmospheric emissions, which
    enhances their attractiveness for urban applications or applications in
    areas of non-attainment for Clean Air Act emissions. They have already
    achieved NOX and SOX emission levels of less than
    0.05 ppm compared to orders of magnitude higher for conventional
    technologies. They also provide 24 hour, silent operation.
        Finally, coal-based fuel cell systems will increase energy security
    by using domestic resources. In distributed generation applications
    fuel cells can eliminate transmission and distribution system
    infrastructure concerns and issues by providing generation near the
    point of use and by being able to operate in a grid-independent mode.
        The SECA Program consists of six integrated industrial
    manufacturing teams designing fuel cell systems, developing the
    necessary materials, and ultimately responsible for deploying the
    technology. These teams are complemented by up to three dozen core
    technology performers providing generic problem-solving research needed
    to overcome barriers to low-cost, high performance technology as
    identified by DOE and the manufacturing teams. The core technology
    teams are universities, national laboratories, and other research
    oriented organizations. This unique structure assures that a variety of
    approaches to solving the problems associated with fuel cells will be
    undertaken in a manner that will increase the chances of success for
    this highly complex technology.
        Several of the manufacturing teams are developing systems for
    application to large central generation systems characterized by
    FutureGen. The remaining manufacturing teams are developing fuel cells
    for possible use in both these large systems as well as in distributed
    generation applications such as auxiliary power units, military power
    applications and remote or on-site power generation.
        The DOE budget request for this program for fiscal year 2008 is
    $62.0 million, slightly below the fiscal year 2007 funding level of
    $63.4 million. Funding of $65 million will continue to support the
    current program, which involves larger-scale Phase II development work
    on the part of manufacturing teams in the program and continued effort
    by the core technology performers. However, in order to deliver full
    scale fuel cell system hardware for the FutureGen project additional
    support of $15 million is necessary to assist and accelerate the
    creation of manufacturing capability by the formation of teams between
    existing fuel cell stack developers and industry, with the goal of
    delivering hardware by the scheduled date of 2011, and also to keep the
    base program on schedule. A rapid advancement to large-scale
    manufacturing is critical to the successful use of fuel cells in the
    FutureGen project and subsequent use in Integrated Gasification
    Combined Cycle (IGCC) facilities on a commercial basis. Significant
    funding over the next several years will allow development of such
    capacity by 2010 so that fuel cell modules can be manufactured and
    delivered to the FutureGen project by 2011. These large-scale modules
    will lead to the higher efficiencies and cleaner performance necessary
    to assure the use of clean coal technologies in the long run.
        We believe that the SECA fuel cell program has achieved the
    progress to date as reported by the program managers, and has excellent
    prospects for achieving program objectives given sufficient funding
    support by DOE and the Congress. Hybrid technology has been
    successfully integrated into the program and an emphasis on use with
    coal-based systems has been established. Industry partners in the
    program have continued and increased cost-sharing support. All major
    stack developers have met the initial goals of the program allowing
    continuance to more advanced stages of development. This technology is
    essential to meeting the efficiency and emissions goals of the
    President's FutureGen program and will also provide low-cost, low-
    emissions alternatives for distributed generation applications.
    Therefore, we urge you to support our request for $80 million to
    execute the DOE Fossil Energy, Fuels and Power Systems, Fuel Cell
    Program in fiscal year 2008.
                                     ______

      Prepared Statement of the Center for Plasma Science and Technology,
     Florida A&M University, and the Department of Physics, West Virginia
                                   University

        Chairman Dorgan and Members of the Subcommittee: We request an
    appropriation of $5 million to the Fusion Energy Science Program, U.S.
    DOE Office of Science, for basic research on the control of turbulent
    hot plasma in fusion power reactors. This program contributes to the
    work of the International Thermonuclear Experimental Reactor (ITER)
    program, an international fusion effort to which the United States is
    committed as a full partner.
    Introduction
        As global population increases and the standard of living of third
    world countries rises, the demand for energy will increase
    substantially over current levels. The report, Future of Coal, released
    March 14, 2007 by researchers at MIT, projects that fossil energy will
    be the dominant fuel source well into the future. Generating electric
    energy and powering our transportation sector with fossil fuels will
    substantially increase CO2 emissions, thereby exacerbating
    concerns about greenhouse gas emissions which can alter the global
    climate.
        Near term, we accept the reality that fossil fuels will power the
    global economy. Carbon sequestration offers the prospect of reducing
    the environmental impact of fossil fuel use. Even with such advances,
    however, we must recognize that fossil fuel resources are limited.
    Beginning in 2020, the total world demand for energy will exceed
    substantially all available energy from fossil, hydro and non-breeding
    nuclear fission reactors, exceeding by 10 percent the total energy
    available. The shortfall will grow to nearly 50 percent of the total
    energy available by 2060. Longer term, science and technology must find
    alternative sources of energy if we are to meet the needs of our global
    population.
        Since construction of a new power plant based on existing
    technology can take as much as ten years from concept to operation, we
    must act now to plan the orderly implementation of alternative sources
    of electricity. Experience has shown that the odyssey of a new
    technology from conception to commercial deployment can exceed 20
    years.
    Potential of Fusion Energy
        Fusion energy is one of our global options for providing energy in
    the future. Fusion processes create energy from super-hot plasmas using
    magnetic confinement to avoid the problems of developing materials to
    withstand temperatures exceeding 50,000 degrees K. Fusion energy
    technology has emerged as a safe and reliable option with a large fuel
    reserve--we can generate energy from sea water.
        Among the many confinement options for fusion, a spheromak
    configuration enables the attainment of the necessary high temperatures
    without requiring massive magnets, extraordinary infrastructure
    complexity and the associated costs for fusion conditions to be
    achieved. The spheromak configuration, if successful, can provide
    electricity from fusion on a scale which can be built by traditional
    energy companies in the United States. However, much of the physics of
    this option is still uncertain.
    Spheromak Turbulent Plasma Experiment (STPX)
        We request support from the Energy & Water Development Subcommittee
    for a program of research called the Spheromak Turbulent Plasma
    Experiment (STPX). This joint Florida A&M University (FAMU)-West
    Virginia University (WVU) project is focused on developing basic fusion
    science with tangible benefits to the nation.
        At FAMU Center for Plasma Science and Technology, a spheromak will
    be built by a team of faculty and students already significantly
    involved in fusion funded research. A full spectrum of traditional and
    innovative diagnostic techniques for the STPX will be developed at WVU
    and a host of other collaborating Universities and National
    Laboratories along with those developed at FAMU. Although similar in
    size and generic features to an existing spheromak, the STPX detailed
    design will be driven by the need to obtain the desired physics
    outcomes. Our design will be dramatically different in several
    important features from any existing fusion facility in the world.
        STPX will make important and unique contributions to the Department
    of Energy Fusion Science Mission through the development of a more
    compact containment technology. In addition, 20 Ph.D. plasma physicists
    from currently underrepresented groups will be produced in time to
    support the U.S. contributions to ITER. These new scientists will
    thereby be the next generation of the fusion scientific workforce, the
    first group to benefit from the advances obtained through the ITER
    project. More importantly, they will find employment in basic
    scientific research.
        The other benefits from our programs consist of contributions to
    technologies for materials fabrication and processing (e.g., computer
    chips), advanced lighting, and in transportation fuels synthesis.
    Outcomes from Program
        This project will use the three approaches of theory, experiment,
    and simulation to quickly obtain information and develop the tools for
    full kinetic modeling of the spheromak plasma's makeup. This project
    will enable us to understand better how turbulent plasmas are heated, a
    key step towards progress in controlled thermonuclear fusion as well as
    towards understanding astrophysical systems. The relationships between
    ion heating in fusion plasmas, reconnection events, and microparticle
    transport will also be determined through this project in a manner
    enabling the manipulation and enhancement of core plasma heating.
    Period of Support
        We seek a three-year commitment of support from the Subcommittee
    totaling $15 million for construction and the development of diagnostic
    tools and processes. FAMU will share the costs by providing renovated
    housing for the STPX, (estimated cost share of $3.7 million), and the
    infrastructure support normally associated with research projects.
    Construction and diagnostics research will be finished in three years
    with the expectation that we will generate our first plasma in May of
    2011. We expect annual operations (at roughly $500K/yr) to be funded
    after attaining first plasma through normal research funds from DOE,
    NSF, and other public and private entities to FAMU, WVU, and other
    participating institutions.
    Summary of Request
        We request support of $5 million for fiscal year 2008 from the
    USDOE Office of Science, Fusion Energy Sciences Program, for the
    Spheromak Turbulent Plasma Experiment.
        Thank you for the opportunity to offer testimony to the
    Subcommittee.
                                     ______

               Prepared Statement of the Nuclear Energy Institute

        On behalf of the nuclear energy industry, the Nuclear Energy
    Institute (NEI)\1\ appreciates the opportunity to provide the
    subcommittee with its perspective on the nuclear-related programs under
    the subcommittee's jurisdiction, and on the President's proposed budget
    for those programs in fiscal year 2008.
    ---------------------------------------------------------------------------
        \1\ The Nuclear Energy Institute is responsible for developing
    policy for the U.S. nuclear energy industry. NEI's 297 corporate and
    other members represent a broad spectrum of interests, including every
    U.S. utility that operates a nuclear power plant. NEI's membership also
    includes nuclear fuel cycle companies, suppliers of equipment and
    services, engineering and consulting firms, national research
    laboratories, manufacturers of radiopharmaceuticals, universities,
    labor unions and law firms.
    ---------------------------------------------------------------------------
        NEI supports fiscal year 2008 funding for the following programs:
    Office for the Energy Loan Guarantee Program ($8.4 million), Nuclear
    Power 2010 ($183 million), Generation IV reactor programs ($100
    million), Nuclear Hydrogen Initiative ($35 million), University
    programs ($50.1 million), Office of Radioactive Waste Management
    ($494.5 million), Advanced Fuel Cycle Initiative (increased funding
    over fiscal year 2007), and the Nuclear Regulatory Commission ($913
    million).
        The nuclear energy industry produces one-fifth of America's
    electricity, and is preparing to build advanced-design nuclear power
    plants to meet growing electricity demand. Nuclear energy is an
    essential component of a diverse energy portfolio, and NEI appreciates
    the leadership on nuclear energy's issues by members of this committee.
        NEI's statement for the record addresses the industry's highest
    priorities. In several cases, NEI believes America's energy security
    justifies increases in fiscal year 2008 funding above the President's
    request.
        Establishing an Effective Energy Loan Guarantee Program.--The
    energy loan guarantee program was created by the 2005 Energy Policy Act
    to support private sector investment in advanced energy technologies,
    including new nuclear power plants. The loan guarantee program is
    designed to be self-financing, with project sponsors responsible for
    underwriting the cost to the federal government of providing the credit
    support. Properly implemented, there will be no cost to the taxpayer.
        This program is essential for companies planning to invest billions
    of dollars in licensing and construction of new nuclear power plants in
    the United States. The electric industry faces major capital investment
    requirements ($750 billion-$1 trillion) over the next 15-20 years (in
    distribution, transmission, generation, and environmental control
    technology). The capital investment required will strain the electric
    sector's financing capability. The size of the capital investments (at
    least $3-4 billion for new nuclear plants in today's dollars) is very
    large relative to the size of the companies making the investments, and
    the loan guarantee program provides the credit support necessary to
    finance these new plants.
        The nuclear industry believes that the loan guarantee program
    requires disciplined management and rigorous project evaluation, with
    the cost of loan guarantees covering the government's potential
    exposure. NEI appreciates the subcommittee's leadership (in the fiscal
    year 2007 continuing resolution) in providing the funding and statutory
    language necessary to establish the Loan Guarantee Office at DOE. We
    endorse the Department of Energy's request for $8.4 million to cover
    the program's administrative costs in fiscal year 2008. The nuclear
    industry notes, however, that the President's fiscal year 2008 budget
    proposes a $9 billion loan volume limitation, with only $4 billion of
    the $9 billion allocated to large power projects like nuclear power
    plants. Given the cost of new energy infrastructure projects (including
    new nuclear plants, coal gasification plants and coal-to-liquids
    projects), a robust and viable loan guarantee program will require
    larger annual loan volumes in future fiscal years.
        Maintaining the Momentum in the Nuclear Power 2010 Program.--The
    Nuclear Power 2010 Program supports the design and engineering work
    necessary to bring two advanced reactor designs (the Westinghouse
    AP1000 and the General Electric ESBWR) to the level of design
    completion necessary for companies to develop firm cost estimates, and
    to file applications for licenses to build and operate these plants.
    Approximately two-thirds of the 33 new nuclear reactors announced
    publicly depend on successful, timely completion of the first-of-a-kind
    engineering on the two advanced reactor designs supported by the
    Nuclear Power 2010 program. Through its investment in the Nuclear Power
    2010 program, the federal government achieves enormous leverage on
    behalf of the American taxpayer: The $727 million total expected
    government investment in Nuclear Power 2010, matched by equal industry
    funding, will stimulate tens of billions of dollars of investment in
    new nuclear projects by 2015.
        The Department of Energy's proposed fiscal year 2008 budget
    proposes $114 million for Nuclear Power 2010. This level of funding
    will not maintain the program's momentum, and NEI recommends fiscal
    year 2008 funding of $183 million, to be matched equally by private
    sector funding.
        Ensuring Adequate Funding for the Nuclear Regulatory Commission and
    Oversight.--The industry supports NRC's fiscal year 2008 budget request
    of $913 million to provide effective oversight of operating nuclear
    plants, timely processing of applications for license renewal and
    requests for power uprates, and efficient review of applications for
    combined construction/operating licenses, early site permits and design
    certification. We believe this level of funding should also ensure NRC
    readiness to begin review of DOE's Yucca Mountain license application
    next year. The industry also encourages the subcommittee to support
    NRC's need for additional office space to fulfill its regulatory
    responsibilities.
        Given the increase in the NRC's budget--$200 million in the last
    two years and $425 million in seven years--NEI urges the subcommittee
    to require regular progress reports from the agency on the status of
    its licensing and other regulatory activities. Such reporting will
    allow the subcommittee to determine whether the agency is achieving the
    desired operational efficiency--by reducing the time required to
    process new plant license applications as it gains experience, for
    example. The industry also urges the subcommittee to require greater
    transparency in where NRC funds are being spent, by requiring full
    disclosure of planned staffing and resource needs in individual NRC
    divisions. This would demonstrate to Congress and the industry, which
    pays up to 90 percent of NRC's budget, that more of the requested
    budget is being allocated toward licensee-specific charges rather than
    general license fees.
        Developing An Integrated Used Fuel Management Program.--The nuclear
    industry appreciates the subcommittee's leadership in the area of used
    fuel management. In 2008, the federal government will be nine years
    behind on its commitment to start moving used nuclear fuel from nuclear
    power plants across the nation to a federal repository. The nuclear
    industry supports the Administration's proposed budget of $494.5
    million for fiscal year 2008 to enable the Office of Civilian
    Radioactive Waste Management to submit a license application for the
    Yucca Mountain project by June 2008.
        The Yucca Mountain project is a key component of a three-part
    integrated used fuel management strategy that includes: (1) interim
    storage until recycling or permanent disposal--or both--are available;
    (2) research, development and demonstration to close the nuclear fuel
    cycle and reduce the volume, heat and toxicity of byproducts placed in
    the repository; and (3) developing a permanent disposal facility.
    Continued, demonstrable progress on all three elements of this
    integrated used fuel management system is important to preserve
    confidence in nuclear energy, and to support licensing and construction
    of new nuclear plants.
        The nuclear industry has consistently supported research and
    development of the advanced fuel cycle technologies incorporated in the
    Advanced Fuel Cycle Initiative (AFCI). The industry recognizes that the
    Congress has important questions about the Administration's Global
    Nuclear Energy Partnership (GNEP). Nonetheless, the industry supports
    increased funding for the Advanced Fuel Cycle Initiative in fiscal year
    2008 to continue this technology research and development program, and
    to achieve better definition of the program, which is critical to a
    long-term integrated strategy for used fuel management.
        Preparing for the Next Generation of Nuclear Power Plants.--The
    large light water reactors operating today are well-suited for baseload
    electricity production, and the nuclear industry will continue to build
    and operate these reactor types well into the 21st century. It is
    clear, however, that the promise of nuclear energy technology extends
    beyond electricity production to include production of hydrogen and
    process heat. Next-generation high-temperature reactors, using advanced
    hydrogen production technologies, can produce hydrogen for
    transportation or for upgrading coal and heavy crude oils into usable
    products, thereby relieving pressure on natural gas supply (the source
    of most hydrogen produced today). High-temperature reactors can also
    generate process heat for desalination, to extract oil from tar sands,
    and for scores of other industrial applications.
        This enormous potential justifies continued federal investment. NEI
    urges the subcommittee's support for the next-generation nuclear plant
    at the Idaho National Laboratory, funded through the Generation IV
    Nuclear Energy Systems Initiative program. NEI recommends funding for
    this program of $100 million in fiscal year 2008, higher than the $36.1
    million proposed by DOE. NEI also recommends higher funding for the
    Nuclear Hydrogen Initiative--$35 million in fiscal year 2008, rather
    than the $22.6 million proposed by DOE.
        Investment in people is as important as investment in technology,
    and the nuclear industry urges the subcommittee to restore funding of
    $50.1 million in fiscal year 2008 for university programs managed by
    the Office of Nuclear Energy to support vital research and educational
    programs in nuclear science and health physics at the nation's colleges
    and universities. NEI also encourages the subcommittee to consider
    supporting a new program within the Office of Science for undergraduate
    and graduate programs in radiochemistry and other disciplines important
    to medical, energy and other applications of commercial nuclear
    technology.
        Conclusion: Closing the Energy R&D Gap.--NEI has recommended modest
    funding increases, above the Administration's request, in several
    strategic nuclear energy programs, including Nuclear Power 2010, the
    Next Generation Nuclear Plant, the Nuclear Hydrogen Initiative, support
    for university programs and others.
        NEI sees a growing body of evidence that increases in energy R&D
    will be necessary in the years ahead to create a sustainable energy
    supply infrastructure that meets national needs. In an analysis
    provided to the Congress in February, the Government Accountability
    Office found that DOE's budget authority for renewable, fossil and
    nuclear energy R&D declined by over 85 percent (in inflation-adjusted
    terms) from 1978 through 2005. The need for new technologies to address
    critical energy needs has not diminished over the same time period,
    however, nor have the energy and environmental imperatives facing the
    United States become any less urgent.
        Similarly, the Electric Power Research Institute is conducting a
    broad-based assessment of the electricity supply and demand-side
    technologies necessary to achieve meaningful reductions in electric
    sector greenhouse gas emissions in the United States. Although still in
    progress, EPRI's analysis demonstrates that a broad-based portfolio of
    technologies and techniques--including substantial improvements in
    efficiency, aggressive deployment of new nuclear and renewable
    generating capacity, improvements in coal-fired power plant efficiency,
    carbon capture and storage--will be required. EPRI's initial estimate
    suggests that successful development and deployment of this portfolio
    between now and 2030 will require additional R&D investment of
    approximately $2 billion per year. Although the federal government
    cannot be expected to finance all of that, there is clearly a need and
    a rationale for increased federal support for energy research,
    development, demonstration and deployment, in the nuclear energy area
    and across the portfolio.
                                     ______

                        Prepared Statement of GE Energy

        The following testimony is submitted on behalf of GE Energy (GE)
    for the consideration of the Committee during its deliberations
    regarding the fiscal year 2008 budget requests for the Department of
    Energy (DOE). Among GE's key recommendations are: (1) an additional $73
    million for the Nuclear Power 2010 program to develop new U.S. nuclear
    generation; (2) $40 million in added funding for the GNEP program to
    start the necessary activities for technology demonstration and to help
    industry provide DOE with the information necessary to support the 2008
    Secretarial Record of Decision; and (3) $18 million additional for the
    Advanced Turbines program, DOE's major research effort focusing on gas
    turbines for electricity production which also addresses key needs for
    hydrogen turbines. Investments in these and the other important
    programs discussed below will help to meet the challenges of assuring a
    diverse portfolio of domestic power generation resources for the
    future.

                            NUCLEAR ENERGY PROGRAMS

        Nuclear Power 2010.--The NP2010 Program provides vital funding in
    three areas that are essential to the development of new nuclear
    generation capacity in this country. The program provides support for
    the (1) certification of new reactor designs, such as GE's advanced
    light water reactor technology (ESBWR); (2) advancement of detailed
    design and deployment planning to support new nuclear plant
    construction in fiscal year 2010; and (3) preparation, submittal and
    NRC approval of two Combined Construction and Operating Licenses (COL).
    These activities are currently advancing with co-funding support from
    GE and Toshiba Westinghouse. Adequate DOE funding in fiscal year 2008
    is necessary to maintain the schedules supporting certification, COL
    license approval and construction initiation in fiscal year 2010.
        The Administration has requested $110 million for fiscal year 2008
    to support the NP2010 Program. This request is insufficient to keep the
    program on schedule. This amount is below the amount that was
    determined to be necessary for fiscal year 2008 at the time the initial
    estimate of the total program development cost was provided by GE,
    Toshiba Westinghouse, NuStart and Dominion in 2005. Since that time, as
    new information has been developed, the Reactor Vendors and Industry
    have recognized the need to accelerate detailed design and the
    construction planning process to achieve enhanced certainty of cost and
    schedule risks. At the same time, regulatory costs have increased. As a
    result, the Reactor Vendors and Industry have determined that funding
    of $183 million in fiscal year 2008 is required, an increase of $73
    million above the Administration's budget request.
        The Advanced Fuel Cycle Initiative and the Global Nuclear Energy
    Partnership (GNEP).--The Global Nuclear Energy Partnership (GNEP),
    initiated in early 2006, benefits from the research and development
    work conducted under the Advanced Fuel Cycle Initiative (AFCI). GNEP
    seeks to expand the use of nuclear power in a proliferation-resistant
    manner, and to solve the nuclear waste issue by reducing the long-term
    radiotoxicity of spent nuclear fuel. The key emphases are on solutions
    for proliferation resistant fuel separations and long-term nuclear
    waste reduction.
        In January 2007, DOE released the updated GNEP Strategic Plan,
    which outlines an implementation strategy to ``enable a world-wide
    increase in the use of nuclear energy safely, without contributing to
    the spread of nuclear weapons capabilities, and in a manner that
    responsibly disposes of the waste products of nuclear power
    generation.'' The GNEP Strategic Plan outlines government's and
    industry's roles in the development of the technologies and facilities
    required to implement the U.S. commitment to GNEP. To achieve a
    commercial solution for GNEP, DOE recognized in the Strategic Plan the
    need for industry involvement and active participation.
        In support of the broad GNEP goals, and to help the DOE prepare for
    the 2008 Secretarial Record of Decision to proceed with a government-
    industry partnership to build a nuclear fuel recycling center and a
    prototype advanced recycling reactor, DOE in January issued awards to
    11 commercial and public consortia. GE has expressed interest in
    designing, licensing, building and operating a demonstration nuclear
    fuel recycling facility and advanced recycling reactor, and was among
    those selected to conduct detailed siting studies for integrated spent
    fuel recycling facilities as part of GENP. Pursuant to this DOE award,
    GE is preparing a site characterization report for a site in Morris,
    IL. GE's technology solution, called the Advanced Recycling Center, is
    based on pyroprocessing and PRISM reactor technology developed during
    the Advanced Liquid Metal Reactor program. This technology is ready for
    commercial-scale development and could provide an economically viable
    technical solution to solving the nuclear waste issue. GE believes that
    the GNEP program would be advanced if the Office of Nuclear Energy
    updates the AFCI Comparison Report to Congress with qualitative and
    quantitative information on the proven PRISM reactor and pyroprocessing
    technologies.
        For fiscal year 2008, an additional $40 million above the
    Administration's budget request, for total GNEP funding of $435
    million, is needed. Such additional funding should be used to help
    industry conduct technology demonstration projects, such as the
    demonstration of: (1) key reactor components (e.g., reactor vessel),
    (2) electro-refiner based fuel separation, and (3) a reactor and fuel
    separation simulator, and to provide the technical, economic and
    business information to DOE necessary to support the 2008 Secretarial
    Record of Decision. GE further recommends that adequate funding be
    provided for pyroprocessing and the PRISM reactor in support of DOE's
    GNEP policy goals.

                             FOSSIL ENERGY PROGRAMS

        Cleaner coal technology is the key to maintaining coal as a
    significant part of the U.S. energy mix into the future. DOE's Clean
    Coal Power Initiative, Integrated Gasification Combined Cycle, and
    Carbon Sequestration Programs all have important roles to play in
    advancing the solutions that allow coal to be used in the most
    economical and environmentally acceptable manner.
        Clean Coal Power Initiative.--GE supports the Administration's
    request to increase the funding level for the Clean Coal Power
    Initiative (CCPI) in fiscal year 2008. We encourage Congress to
    recognize that a commercial demonstration program for advanced coal
    power technologies provides a critical pathway for the technologies
    that will preserve coal's place in the U.S. energy portfolio. There is
    a continuing need for the CCPI to serve as the vehicle for the scale-
    up, plant integration, and initial deployment of advanced IGCC
    technologies, which will help IGCC technology move down the experience/
    cost curve. Another critically important role of the CCPI going forward
    will be in providing a means for the demonstration of carbon
    sequestration technologies.
        GE welcomes DOE's commitment to move forward with a third round of
    the CCPI in fiscal year 2008. Further multi-project solicitations for
    later rounds of projects targeting advanced technology systems for
    CO2 capture and sequestration also will be required as part
    of the overall response to the climate change challenges facing coal-
    based generation.
        IGCC.--IGCC, with its capability for pre-combustion carbon capture,
    presents a significant advantage over combustion technology. Even with
    its current 20 percent to 25 percent cost premium over pulverized coal
    combustion, IGCC can provide a lower cost of electricity with carbon
    capture. Based on the incremental cost that carbon capture will add to
    all coal-based power generation, cost reduction must be pursued
    vigorously for IGCC to realize its potential in maintaining coal
    competitiveness in a carbon-constrained environment.
        While widespread deployment is key to bringing IGCC costs down,
    technology advancements also are needed to minimize the impact of
    carbon capture. This requires a pipeline of new technologies that are
    moving toward demonstration and deployment. While the development of
    several large-scale commercial IGCC plants is underway, candidate
    technology advancements have already been identified for the next
    generation of IGCC. These technologies can significantly lower cost and
    improve performance in key areas of carbon shift, CO2
    capture, overall process efficiency plus advancing IGCC's economics for
    application on subituminous coals. However, it will not be possible to
    even begin moving these technologies forward without increasing the
    fiscal year 2008 funding request for IGCC.
        DOE's goal of a 10 percent premium for carbon capture with IGCC is
    aggressive but appropriate to the magnitude of the economic benefit
    that would be gained. Achieving this goal will require increased
    funding for technology development. The Administration's proposal to
    reduce funding for the IGCC program to $50 million in fiscal year 2008
    is not sufficient to provide the resources that are needed. We
    therefore urge that fiscal year 2008 funding for IGCC be increased by
    $16 million.
        Carbon Sequestration.--GE endorses the requested increase in
    funding for carbon sequestration technologies. Carbon sequestration and
    storage is a critical and necessary component of a total solution for
    low carbon coal. A focus of the program activity needs to be on the
    development of requirements for CO2 quality necessary for
    long-term, secure and environmentally acceptable storage. These
    requirements are needed for carbon capture system design that is
    suitable for a wide variety of geological environments. The planning
    for large-scale field tests needs to identify candidate sources of
    large and reliable quantities of CO2.
        Advanced Turbines.--GE recommends that funding be increased by $18
    million to a total of $40 million for the Advanced Turbines program.
    This program represents the Department's primary research effort
    focusing on the development of enabling technologies for high
    efficiency hydrogen turbines for advanced gasification systems. Gas
    turbine R&D is focused on advanced combustion and high temperature
    turbine technology for syngas/hydrogen fuels that will result from IGCC
    and FutureGen type power plants. The program addresses those gas
    turbine elements where the technology required for the use of syngas/
    hydrogen fuels differs from the requirements for natural gas fueled gas
    turbines. Unless the fiscal year 2008 budget for the Advanced Turbines
    program is increased, funding will be inadequate for this promising
    high priority work, and the progress and benefits of this research will
    be delayed accordingly.
        GE has experience with gas turbines operating on fuel blends
    containing hydrogen, and has performed laboratory demonstration tests
    on high hydrogen content fuel. This experience highlighted the need for
    development of advanced combustion technology in order to drive down
    NOX emissions and enable advanced hydrogen generation
    processes. In addition, current strategies for effective integration of
    all major subsystems need to be reviewed and redefined for use with
    hydrogen fuel.
        Continued funding of DOE's program is essential for FutureGen to
    meet its goal of substantial improvement in the cost of carbon capture.
    FutureGen is being structured to serve as a test bed for advanced
    technology that is needed to reduce the performance penalty and improve
    the economics of carbon capture. If it is to meet its goals, the
    FutureGen program will need to draw on advancements resulting from the
    Advanced Turbines program.
        GE recommends the Committee's attention to the testimony submitted
    by the Gas Turbine Association relative to the allocation of additional
    funding above the budget submission within the Advanced Turbines
    program budget. In particular, GE encourages the Committee to provide
    adequate funding to sustain the University Turbine Systems Research
    Program.
        Advanced Research.--To enable future technological advances, within
    the funds provided for Advanced Research, the emphasis should be placed
    on investments to foster better understanding of gasification
    fundamentals. An improved physics-based understanding of gasification
    processes will facilitate improved gasifier and systems designs that
    may achieve 45-50 percent efficiency with integrated CO2
    separation, capture, and sequestration with near-zero emissions with
    less than 10 percent increase in cost-of-electricity.

                           RENEWABLE ENERGY PROGRAMS

        Solar.--GE Energy fully supports the DOE budget request for the
    development of Solar technology. GE Energy is pleased to be able to
    work with the DOE on the recently awarded Solar America Initiative.
    This program involves a diverse team of industry, universities, and
    national labs working together to develop the technologies needed to
    drive down the cost of electricity to make solar competitive with other
    power generation technologies, leading to widespread application in the
    U.S.
                                     ______

     Prepared Statement of the Health Physics Society (HPS) and the Health
                 Physics Program Directors Organization (HPPDO)

        This written testimony for the record for fiscal year 2008 requests
    $500,000 for the Health Physics Fellowships and Scholarships program
    through the Department of Energy's Office of Nuclear Energy (DOE-NE) to
    help address the shortage of health physicists, which is an issue of
    extreme importance to the safety of our nation's workers, members of
    the public, and our environment.
        Health Physics is the profession that specializes in radiation
    safety, which is necessary for the safe and successful operation of the
    nation's energy, healthcare, homeland security, defense, and
    environmental protection programs. Although radiation safety is
    fundamental to each of these vital national programs, there is no
    single federal agency in the Executive Branch that serves as a home and
    champion for the health physics profession. This is due to the fact
    that health physics is a profession that cuts across all these sectors
    and is necessary for all these sectors to exist. However, it is a
    support profession for the principle disciplines in these programs,
    such as engineers, medical professionals, law enforcement
    professionals, military personnel, and environmental scientists, which
    are championed by corresponding federal agencies.
        As the nation's development and use of radioactive materials grew
    following the end of World War II, the nation's energy, defense, public
    health, and environmental protection needs for health physicists were
    supported through student fellowships and scholarships largely from the
    Atomic Energy Agency (energy and defense) and Public Health Service
    (public health and environmental protection). However, over the years
    agencies and their missions changed, the nuclear power industry
    faltered and the DOE nuclear weapons complex downsized following the
    end of the cold war. This resulted in the academic program support from
    federal agencies dwindling until the last remaining support from DOE
    was terminated in fiscal year 1999. This lack of academic support was
    despite the continued need for health physicists in the energy,
    defense, public health, and environmental protection programs and an
    exponential growth for need in the medical and academic community.
        As the health physics human capital crisis grew and loomed in the
    early years of the 21st century, a sector receiving increasing
    attention in the human capital shortage area was the nuclear energy
    industry, particularly with its ability to provide energy without
    producing ``greenhouse gases.'' Congress and the Department of Energy
    (DOE) took action to add support to the nuclear engineering academic
    programs through DOE programs in the Office of Nuclear Energy (NE)
    (previously the Office of Nuclear Energy, Science and Technology) and
    eventually agreed that this was an appropriate support mechanism for
    the health physics academic program. In fiscal year 2005, just 3 years
    ago, Congress appropriated money to DOE-NE for a health physics
    fellowship and scholarship program as part of the University Reactor
    Fuel Assistance and Support budget item. At that time, then Director of
    DOE-NE, William Magwood, agreed this support was needed as he testified
    to this Committee that the DOE recognized ``. . . a small but important
    element [of the University Support budget item was] to provide
    scholarships and graduate fellowships to students studying the vital
    and too-often overlooked discipline of health physics.'' Shortly
    thereafter, Congress reinforced its position that DOE needed to support
    the health physics academic programs in provisions of Section 954 of
    the Energy Policy Act of 2005. However, even though the need for
    increased numbers of health physics professionals continued to exist,
    after only two fiscal years of funding the NE Health Physics Fellowship
    and Scholarship programs at minimal levels, the DOE has requested to
    cease funding this Congressionally authorized program.
        In their fiscal year 2008 Budget Request, DOE states ``Enrollment
    target levels of the University Reactor Infrastructure and Education
    Assistance program have been met and the program is no longer
    considered essential to encourage students to enter into nuclear
    related disciplines'' (emphasis added). Similarly, in the Office of
    Management and Budget's (OMB) performance assessment of the University
    Nuclear Education Programs, they conclude ``Enrollments have tripled
    since the late 1990's, reaching upwards of 1,500 students. In addition,
    more universities are offering nuclear-related programs and there is a
    growing interest in nuclear energy'' and ``While enrollments have
    reached the program's target level of 1,500 students ten years ahead of
    schedule, the program is unable to demonstrate that it caused these
    results.''
        This DOE statement and the OMB assessment are patently wrong with
    regards to health physics programs. Since DOE has only funded health
    physics programs for 2 years, we do not believe they have ever
    established ``target levels'' for health physics program enrollments
    nor has there been time to assess the effect of those 2 years of
    funding on health physics program enrollments. The DOE-NE HP fellowship
    and scholarship program thus far has provided 3 graduate fellowships in
    fiscal year 2006 and 0 undergraduate scholarships. In 2004, the HPPDO
    developed a plan for revitalizing the academic programs to a level that
    could meet the projected shortfall of health physicists. The HPPDO plan
    calls for an initial target of 20 graduate fellowships and 20
    undergraduate scholarships, i.e., target levels well above the actual
    performance of the Nuclear Education Programs. In addition, the number
    of health physics programs graduating at least 5 students annually
    decreased from 20 programs in 1995 to less than half that number in
    2005.
        Although we consider it would take approximately $1,000,000 to get
    to the HPPDO plan of 20 fellowships and 20 scholarships, we consider it
    important to address immediately the HP Graduate Fellowship program so
    we have between 15 and 20 fellows in a two-year Masters Degree program
    and up to 10 undergraduate scholarships to start meeting our nation's
    workforce needs for radiation safety personnel. Funding of $500,000
    should allow for up to approximately 12 to 15 fellows and up to 10
    scholarships with allowance for overhead administration costs.
    Considering the DOE budgets for the HP Fellowship and Scholarship
    programs for fiscal year 2005 and fiscal year 2006 combined have
    totaled $500,000 and only produced 3 fellowships, we feel this request
    is very modest and we recognize it will not begin to provide the long
    term support that will eventually be required if we are to have enough
    safety professionals for our energy, healthcare, homeland security,
    defense, and environmental protection programs.
        The Committee's favorable consideration of this request will help
    meet our nation's radiation safety needs of the future.
                                     ______

            Prepared Statement of the University of Texas at Austin

        I draw the Subcommittee's attention to the importance of the
    National Methane Hydrates R&D Program in the National Energy Technology
    Laboratory of the Department of Energy. This is the premier federal
    program that deals with a unique geologic phenomenon. Though this
    program is housed in the Office of Fossil Energy, methane hydrates are
    more than a large potential resource--they are fundamental to the
    carbon cycle on our planet.
        Methane hydrates present a basic science challenge of the first
    order. The scientific community is only beginning to figure out where
    hydrates are, how they got there, what quantities really exist, and
    what would happen if the prevailing conditions of temperature,
    pressure, salinity, and microbial symbiosis were to change. But even
    from the little we know about hydrates so far, one important conclusion
    emerges. The amount of carbon currently locked up in hydrates easily
    exceeds the total carbon in all the oil, natural gas and coal on the
    planet. So trying to make sense of how the carbon cycle works without
    studying hydrates is like learning how to drive a car when you only
    have a key to the glove box.
        Methane is also a potent greenhouse gas, even more so than the
    widely discussed carbon dioxide. The behavior of methane hydrate
    deposits--when they form, when they dissociate, and how fast these
    processes take place--very likely holds some of the keys to
    understanding how Earth's climate has changed in the past. Fully
    understanding the past would have enormous impact on predictions of how
    our climate might change in the future. Considering the political,
    social and economic ramifications of climate predictions, investment in
    understanding the scientific basis for change is wise.
        Energy supply and climate change both fall within DOE's core
    mission. The National Methane Hydrates R&D Program in NETL is therefore
    ideally situated to drive our nation's effort to understand the science
    as well as the economics of these deposits. This is not news to this
    Subcommittee, for the previous session of Congress recommended steadily
    increasing support for the program over the next five years. I urge the
    Subcommittee to maintain its commitment to this uniquely important
    program.
                                     ______

                        Prepared Statement of NGVAmerica
    Introduction
        NGVAmerica appreciates the opportunity to provide the subcommittee
    the following statement concerning the fiscal year 2008 appropriations
    for the U.S. Department of Energy (DOE). NGVAmerica is a national
    organization of over 100 member companies, including: vehicle
    manufacturers; natural gas vehicle (NGV) component manufacturers;
    natural gas distribution, transmission, and production companies;
    natural gas development organizations; environmental and non-profit
    advocacy organizations; state and local government agencies; and fleet
    operators. NGVAmerica is dedicated to developing markets for NGVs and
    building an NGV infrastructure, including the installation of fueling
    stations, the manufacture of NGVs, the development of industry
    standards, and the provision of training.
    Summary of Appropriations Requests
        Fund the NGV RDD&D Program at $20 Million for fiscal year 2008
        Fund the Clean Cities Program at $20 million for fiscal year 2008
        Clarify that Biogas-to-Biomethane Production Projects Qualify Under
    Existing DOE-funded Programs
    Statement in Support of Appropriations Request
        Increasing the use of natural gas vehicles (NGVs) can: (1) reduce
    America's dependence on foreign oil, (2) improve air quality in urban
    areas, (3) reduce the production of greenhouse gases, and (4) pave the
    way for the more rapid introduction of hydrogen transportation
    technologies. However, to achieve all these benefits, more NGV RDD&D is
    urgently needed.
        DOE funding has been instrumental in supporting the development and
    introduction of alternative fueled technologies. Over the years, DOE
    funding has supported the development and refinement of natural gas
    engines, fueling infrastructure, codes and standards, and fleet
    demonstration projects. DOE emission testing programs and fleet case
    studies also have been critical to demonstrating the real-world air
    quality and economic benefits of using natural gas vehicles. DOE has
    also been a key player in integrating new natural gas engines into new
    vehicle platforms. As such, DOE has been an instrumental partner with
    industry in developing new and better products. As a result of these
    efforts, natural gas use for transportation displaced over 200 million
    gallons of petroleum in 2006. Most of this fuel is consumed by high
    fuel-use fleets (e.g., transit, refuse, and short-haul trucking)
    located in major urban areas. NGVAmerica members have focused their
    marketing efforts mostly on heavy-duty truck and bus applications.
    Fleets operating these vehicles provide the best opportunity for
    increased petroleum displacement as well as reduced emissions of
    harmful pollutants.
        Some of the major successes to date for our industry include full-
    commercialization of several of the cleanest internal combustion
    engines in the world, a growing share of the U.S. transit bus fleet,
    the use of hydrogen-blended fuels, installation of stations that
    simultaneously dispense CNG, LNG, hydrogen blends, and hydrogen, and
    the production and use of biomethane fuel produced from landfills. Many
    of our member companies also are experiencing a robust and growing
    export market for NGV products as a result of increasing interest in
    overseas markets. However, the U.S. market continues to represent a
    challenge, particularly due to the lack of long-term governmental
    support and a lack of vehicle product offerings.
        DOE's efforts have led to some impressive developments over the
    years. Many of the products developed or supported by DOE funding will
    continue to provide benefits for many years. The heavy-duty vehicles
    that DOE help demonstrate and deploy often continue in service for 10-
    15, or more years. And because these applications mostly involve high
    fuel use fleets, the continued use of these vehicles will displace a
    large amount of petroleum. A single heavy-duty natural gas urban
    transit bus, for instance, over its lifetime will displace between
    175,000-200,000 gallons of petroleum. That is a far greater amount of
    petroleum than even the most fuel-efficient light duty vehicle will
    ever replace. The point is not to stop encouraging light duty fuel
    efficiency but rather to highlight the potential petroleum displacement
    of continuing to develop more heavy-duty natural gas applications.
        The tax incentives enacted as part of the Energy Policy Act of 2005
    and SAFETEA-LU are helping to support the market for NGVs and other
    alternative fuels. These incentives significantly improve the economics
    for users of alternative fuels. Unfortunately, a compelling economic
    case alone is not sufficient to commercialize new technologies,
    particularly not when developing new products costs millions of dollars
    and is fraught with risks. In transportation, this problem is
    particularly acute because of the economic problems facing U.S.
    manufacturers and the cost these manufacturers already must incur to
    ensure their petroleum fueled products meet increasingly stringent
    emission standards.
        The NGV industry's RDD&D efforts are directed at bringing to market
    advanced NGV technology that will extend NGV use into more applications
    and lower the cost of purchasing and operating NGVs in all markets.
    Significant NGV RDD&D is needed to (1) improve engine efficiency, (2)
    further reduce engine emissions, (3) reduce the cost and improve the
    reliability of fueling infrastructure and (4) demonstrate alternative
    fuel systems in new applications--including natural gas/hybrid electric
    applications. In order to achieve these objectives and deliver the
    benefits provided by NGVs, our industry needs DOE to be a ready and
    willing partner. Given the importance of this continued effort, we
    request funding for the following specific activities:
    Fund the NGV RDD&D Program at $20 Million for fiscal year 2008
        At one time, the Department of Energy had a robust on-road NGV
    RDD&D program based on a joint public/private sector plan. Several
    years ago, DOE's Energy Efficiency and Renewable Energy programs
    shifted emphasis to long-term, high-risk R&D (e.g., hydrogen vehicles).
    Since then, the Administration has requested no funding for NGV RDD&D.
    That is unfortunate since such a program is even more necessary today.
    For NGVs to achieve their market potential, federally funded RDD&D is
    needed to expand product offerings of engines to meet a wider range of
    applications. In addition, the process of integrating those natural gas
    engines into additional medium- and heavy-duty vehicle platforms must
    be accelerated. Those platforms include school buses, transit buses,
    trash trucks, delivery trucks and over-the-road trucks. Natural gas
    hybrid-electric platforms must be expedited, too. In addition, the cost
    and weight of compressed and liquefied natural gas on-board storage
    systems must be reduced. Finally, work must continue on improving NGV
    and NGV fueling safety codes and standards. Given the current priority
    to move America away from reliance on foreign oil and the potential of
    NGVs to play a significant role, Congress should restore funding for an
    NGV RDD&D program.
    Fund the Clean Cities Program at $20 million for fiscal year 2008
        The Clean Cities program, which includes 89 public-private
    partnerships operating in 39 states, is one of the most effective means
    available for (1) educating the public about non-petroleum alternative
    fuels, (2) accelerating the market penetration of those fuels and
    vehicles and (3) laying the groundwork for public acceptance of
    hydrogen-based transportation. Given the need to move America away from
    dependence on petroleum-based fuels, increased funding for the Clean
    Cities program is a prudent and necessary investment. The
    Administration's request of $9.593 million for Clean Cities in fiscal
    year 2008 is inadequate given the role that Clean Cities can play in
    reducing U.S. oil dependence, which is an Administration and
    Congressional priority. We recommend and support increasing the funding
    level to $20 million.
    Clarify that Biogas-to-Biomethane Production Projects Qualify Under
            Existing DOE-funded Programs
        Biomethane is a biofuel with huge potential to offset petroleum
    reliance and reduce greenhouse gas emissions. Analysis previously
    conducted for DOE estimated that a feasible annual production capacity
    in the United States is about 1.25 quadrillion Btu or 10 billion
    gasoline-gallon-equivalent from landfills, animal waste and sewage
    alone. However, biomethane use has been overshadowed by efforts to
    produce renewable electricity and the promotion of ethanol. These
    efforts should be viewed as complementary. Federal programs for the
    production of all biofuels should be fuel neutral. As noted above, a
    huge potential exists in the United States to produce biomethane from
    landfill gas, animal and crop waste and sewage--an even cellulosic
    energy crops. In Europe, biomethane from cellulosic crops is being
    pursued as a viable alternative transportation fuel. There are a number
    of new funding programs (demonstrations, production grants, loan
    guarantees) enacted as part of the Energy Policy Act of 2005. These
    programs in some cases have been narrowly tailored to exclude
    applications that do not involve the production of electricity or, in
    the case of transportation fuels, fuels that are not ethanol or
    biodiesel. Congress should continue to fund these programs but clarify
    that biomethane projects also qualify.
    Conclusion
        Mr. Chairman, natural gas vehicles help reduce America's use of
    foreign oil, improve the air quality in our urban areas, reduce the
    production of greenhouse gases, and pave the way for the more rapid
    introduction of hydrogen transportation technologies. We greatly
    appreciate your past support and consideration of these proposals.
                                     ______

     Prepared Statement of the Independent Petroleum Association of America

        On behalf of the Independent Petroleum Association of America
    (IPAA), representing over 7,000 producers of domestic oil and natural
    gas, I would like to bring to your attention a matter of significant
    importance to America's independent oil and natural gas producers.
        For the third consecutive year, the Administration's Budget request
    for the Department of Energy (DOE) for fiscal year 2008 proposed to
    eliminate the existing oil and gas technologies (core) programs, and in
    addition, proposed to repeal the Sec. 999 or non-conventional onshore/
    ultra-deep/small producer program authorized in the Energy Policy Act
    of 2005 (EPACT). In the ``guidance'' document provided to DOE by the
    Office of Management and Budget (OMB) for fiscal year 2007, and in
    accordance with the recent Continuing Resolution or ``CR,'' the core
    program is assumed to be transitioning toward a ``close-out'' or
    shutting down of most of it's current activities, allotting $2.7
    million to be applied for close-out purposes. Similarly, the OMB
    guidance document assumes that repeal of the Sec. 999 program is
    imminent. IPAA would urge the subcommittee to consider rectifying this
    ``yo yo'' funding effect that serves to undermine the deliverability of
    these two programs. Both the ``core'' program and the Sec. 999 program
    are of vital importance to independent producers, who develop 90
    percent of all U.S. wells, producing 82 percent of American natural gas
    and 68 percent of all American oil. In fact, historically 85 percent of
    the focus of the existing or ``core'' program has been devoted to the
    exploration and production activities associated with the independent
    producer.
        Although the Sec. 999 program received $50 million in mandatory
    funding annually in EPACT, it is not structured to assume all of the
    functions of the core program, especially as they pertain to inherently
    governmental functions or providing grants to university researchers.
    The core program continues to house programmatic functions of equal
    importance to independent producers, such as gas hydrates, the Stripper
    Well Consortium, regulatory analysis, tech transfer and on-going
    university research and development projects. These efforts
    collectively represent important efforts related to development and
    deployment of technologies that assist in maintaining and increasing
    American oil and gas production. Therefore, IPAA requests that the core
    program be appropriated $29.9 million to continue ongoing research and
    development activities for fiscal year 2008. Regarding the Sec. 999
    program, IPAA requests that the program receive an additional $25
    million appropriation to apply to areas that are expected to be assumed
    by Sec. 999, such as enhanced oil recovery for small producers and the
    University Internship Program.
        IPAA believes that during these times of elevated concerns over our
    increasing reliance on foreign sources of oil, now is not the time to
    diminish our efforts in the area of American produced oil and natural
    gas. We thank you for your prompt attention to this matter.
                                     ______

                      Prepared Statement of Austin Energy

        This testimony supports funding for development and deployment of
    plug-in hybrid vehicles (PHEVs) within the Department of Energy's
    fiscal year 2008 budget request. Specifically, Austin Energy supports
    the $80.6 million for Hybrid Electric Systems within the Vehicle
    Technologies account of the Advanced Energy Initiative of the Energy
    Efficiency and Renewable Energy budget. Within the Hybrid Electric
    Systems sub-accounts, Austin Energy supports funding of: (1) $21
    million for Vehicle and System simulation and testing; (2) $41.8
    million for Energy Storage Research and Development; (3) $15.6 million
    for Advanced Power Electronics and Electric Motors Research and
    Development; and (4) $2.1 million for the SBIR/STTR program. Austin
    would request that the Committee consider these funding requests within
    the fiscal year 2008 budget request: (1) $10 million for Section 706 of
    the Energy Policy Act of 2005 (``EPACT'')--Joint Flexible Fuel/Hybrid
    Commercialization Initiative; (2) $15 million for Sections 711/911 of
    EPACT--Hybrid Vehicles for system and component development for plug-in
    hybrid vehicles; and (3) $2.5 million for Title 8 of EPACT--Advanced
    Vehicles for a fuel cell vehicle developed with a plug-in hybrid drive
    platform. Funding of $27.5 million within these three areas should be
    included within the Hybrid Electric Systems sub-accounts section of the
    Vehicle Technologies account of the Energy Efficiency and Renewable
    Energy budget.
        Austin Energy, the Nation's 10th largest community-owned electric
    utility, serves 360,000 customers within the City of Austin and Travis
    and Williamson Counties, Texas. Austin provides electricity to the
    capital city of Texas through a diverse generation mix of nuclear,
    coal, natural gas and renewable resources. Austin Energy has been
    nationally recognized for its Green Choice renewable electricity
    program. For the last four years Austin Energy has sold more renewable
    electricity, primarily wind, than any other utility in the country.
        Austin Energy has also been a national leader in energy efficiency.
    Austin's Green Building program for both commercial and residential
    buildings has been a national model in the use of sustainable building
    technologies.
        As the President has stated frequently in the last two years, the
    United States needs to break its addiction to imported supplies of
    petroleum. One of the principle uses of imported petroleum is to
    produce gasoline to power the transportation sector, particularly
    automobiles. Already popular hybrid vehicles demonstrate that there is
    now a technologically feasible way to power automobiles with both an
    internal combustion and an electric engine. The plug-in hybrid vehicle
    is a modification of current hybrids. Plug-in hybrids can be charged
    from the existing electrical grid by plugging the car into an ordinary
    wall socket while the internal combustion engine can be a flexible fuel
    engine that will run on domestically produced biofuels.
        PHEVs will run on a dedicated electric charge for a number of miles
    (20-60, depending on the size of the battery pack), then shift to
    liquid fuel. The General Motors concept car, the Volt, unveiled at the
    recent Detroit Auto Show in January of this year, is an example of this
    type of vehicle. It has an all electric range of 40 miles.
        PHEVs have the ability to significantly increase efficiency of fuel
    use over both conventional cars and existing hybrids. Instead of the
    constant switching between gasoline and electric power as is done in a
    hybrid today, the PHEV runs on electric power until the batteries are
    drained; only then does the fuel engine engage to power the car. If the
    driver's daily commute is within the electric range (20-60 miles), or
    if driving is within a small geographical area (city delivery trucks),
    then gasoline consumption is minimized, thus starting us down the road
    to reduced imports.
        Austin Energy is convinced that PHEVs will be a significant
    contributor to reducing our nation's reliance on imported oil. Unlike
    other transportation alternatives, PHEVs require neither new fueling
    infrastructure nor driver behavioral changes. The infrastructure for
    PHEVs, standard electric sockets, already exists and Americans have
    already become accustomed to plugging-in Blackberries, cell-phones and
    lap-top computers. In the event that one forgets or is unable to plug-
    in the car, it will run as usual on gasoline or flexible fuel.
        The funding initiatives recommended by the President in the DOE
    fiscal year 2008 budget submission will speed the day when PHEVs are
    widely available to American citizens. DOE's research will help achieve
    the battery technology needed to move the PHEV from a concept car to
    automobile dealer showrooms. Other DOE programs support plug-in hybrid
    technology developed as part of flexible fueling operations for cars as
    well as integrated within the advanced fuel cell vehicle. PHEV
    technology will complement any existing automobile fueling system or
    one envisioned for the future. The DOE budget submission will provide
    for deployment of PHEVs in demonstration activities to allow for
    different commercial applications of the vehicles. PHEV technology is
    adaptable to all vehicle platforms--from large trucks to commuter cars.
        Austin Energy supports Congressional appropriations to increase the
    availability of PHEVs and demonstrate its capacity as a solution to our
    ``oil addiction.'' Austin Energy is also willing to support the federal
    effort by overseeing a national grass-roots campaign to demonstrate the
    consumer market for PHEVs, a project underway for more than a year now.
        Austin Energy's ``Plug-In Partners'' is an initiative to
    demonstrate to the automobile manufacturers that a consumer market
    already exists for PHEVs. Utility rebates and incentives, state, county
    and municipal government endorsements, and citizen petitions are
    evidence of an expanding interest in PHEVs. A key aspect of the Plug-In
    Partners campaign is the ``soft'' fleet orders. Fleet owners, both
    private and governmental, sign a pledge to strongly consider purchasing
    a certain number of PHEVs when available from an original equipment
    manufacturer. While the fleet owner understands that the cars are not
    presently on line, the belief in the concept of a PHEV is sufficient
    for them to make the soft fleet order. This helps demonstrate a market
    to automakers. After one year of the Plug-In Partners campaign, over
    8,400 vehicles have been pledged by soft fleet orders.
        Austin Energy's Plug-In Partners campaign was founded nationally on
    January 24, 2006 at the National Press Club in Washington, DC. This
    past January, in the Russell Senate Office Building, Plug-In Partners
    celebrated its one year anniversary. Senator Orrin Hatch of Utah spoke
    at both events of the importance of PHEVs to ending our reliance on
    foreign oil. The Plug-In Partners campaign has been joined by more than
    500 partners in 41 states, including the cities of Austin, Albuquerque,
    Aspen, Baltimore, Boston, Boulder, Chicago, Cleveland, Colorado
    Springs, Dallas, Fort Worth, Denver, Des Moines, Honolulu, Las Vegas,
    Los Angeles, Kansas City, MO, Milwaukee, Minneapolis, Philadelphia,
    Phoenix, Portland, OR, Sacramento, Salt Lake City, San Antonio, San
    Francisco and Seattle. The New York State Energy & Research Development
    Authority (NYSERDA), American Corn Growers Association, Soybean
    Producers of America, Alliance To Save Energy, American Council on
    Renewable Energy, American Wind Energy Association, Consumer Federation
    of America, Energy Future Coalition, Environmental and Energy Study
    Institute and the South Shore Clean Cities of Northeast Indiana support
    the Plug-In Partners campaign. The Center for American Progress and Set
    America Free are among the many public interest groups that are members
    of the coalition. Finally, Plug-In Partners has been endorsed by the
    American Public Power Association and almost 200 of its members around
    the country as well as the Edison Electric Institute, National Rural
    Electric Cooperative Association and the Washington Public Utility
    District Association.
        Austin Energy has also committed $1 million for rebates to Austin
    Energy customers who purchase plug-in hybrids when they become
    available.
        The Congress, by funding DOE initiatives to develop and deploy
    PHEVs, will help speed the commercialization by auto manufacturers and
    will be a significant step in lessening American dependence on imported
    oil.
                                     ______

        Prepared Statement of the National Association of State Energy
                                   Officials

        Mr. Chairman and members of the Subcommittee, I am Peter Smith of
    New York and Chair of the National Association of State Energy
    Officials (NASEO). NASEO is submitting this testimony in support of
    funding for a variety of U.S. Department of Energy programs.
    Specifically, we are testifying in support of no less than $80 million
    for the State Energy Program (SEP). We wanted to take this opportunity
    to thank the Subcommittee for its support for an increase for this
    program in fiscal year 2007. We were also pleased that the Subcommittee
    added $300 million to the final fiscal year 2007 Continuing Resolution
    for energy efficiency and renewable energy programs. Recently, 30
    members of the Senate wrote to you to fund SEP at least at $74 million
    and Weatherization at a $275 million level in fiscal year 2008. SEP is
    the most successful program operated by DOE in this area. Within an $80
    million funding level for SEP we would support the Administration's
    proposed $10.5 million competitive program, but we do not support such
    an effort at the proposed funding level of $35 million for the core SEP
    activities. SEP is focused on direct energy project development, where
    most of the resources are expended. SEP has set a standard for state-
    federal cooperation and matching funds to achieve critical federal and
    state energy goals. We also support $300 million for the Weatherization
    Assistance Program (WAP). These programs are successful and have a
    strong record of delivering savings to low-income Americans,
    homeowners, businesses, and industry. We also support the increase
    proposed in the President's budget for the Energy Information
    Administration (EIA) to $105 million, including an increase of $600,000
    for EIA's State Heating Oil and Propane Program, in order to cover the
    added costs of increasing the frequency of information collection (to
    weekly), the addition of natural gas, and increasing the number of
    state participants. EIA's new state-by-state data is very helpful. EIA
    funding is a critical piece of energy emergency preparedness and
    response. This funding will permit EIA to maintain key Forms 182, 856
    and 767 (involving crude oil and emissions). NASEO continues to support
    funding for a variety of critical deployment programs, including
    Building Codes Training and Assistance ($7.5 million), Rebuild America
    ($3.8 million), Energy Star ($6.8 million) and Clean Cities ($9.6
    million). NASEO supports funding for the Office of Electricity Delivery
    and Energy Reliability, at least at the fiscal year 2006 request of
    $161.9 million, with specific funding for the Division of
    Infrastructure Security and Energy Restoration of $18 million, which
    funds critical energy assurance activities. We strongly support the R&D
    function, Operations and Analysis and Distributed Energy activities
    within this office. The industries program should be funded at a $74.8
    million level, equal to the fiscal year 2005 levels, to promote
    efficiency efforts and to maintain U.S. manufacturing jobs, especially
    in light of the loss of millions of these jobs in recent years.
    Proposed cuts in these programs are counter-productive and are
    detrimental to a balanced national energy policy. We remain concerned
    that a number of programs authorized in the Energy Policy Act of 2005
    (EPACT 2005) have received no funding. Of special interest are sections
    124, 125, 126, and 128 of EPACT 2005. We were pleased that funding has
    been provided for the pilot program under Section 140 of EPACT 2005.
        Over the past five years, both oil and natural gas prices have been
    rising in response to international events, increased domestic use and
    the result of the 2005 hurricanes. We expect $60 oil to continue for an
    extended period of time, with an expanded problem as summer approaches.
    Gasoline prices have been spiking recently. In addition, we now have
    quantifiable evidence of the success of the SEP program, which
    demonstrates the unparalleled savings and return on investment to the
    federal taxpayer of SEP. Every state gets an SEP grant and all states,
    the District of Columbia and territories support the program.
        In January 2003, Oak Ridge National Laboratory (ORNL) completed a
    study and concluded, ``The impressive savings and emissions reductions
    numbers, ratios of savings to funding, and payback periods .  .  .
    indicate that the State Energy Program is operating effectively and is
    having a substantial positive impact on the nation's energy
    situation.'' ORNL updated that study and found that $1 in SEP funding
    yields: (1) $7.22 in annual energy cost savings; (2) $10.71 in
    leveraged funding from the states and private sector in 18 types of
    project areas; (3) annual energy savings of 47,593,409 million source
    BTUs; and (4) annual cost savings of $333,623,619. The annual cost-
    effective emissions reductions associated with the energy savings are
    equally significant: (1) Carbon--826,049 metric tons; (2) VOCs--135.8
    metric tons; (3) NOX -6,211 metric tons; (4) fine
    particulate matter (PM10)--160 metric tons; (5)
    SO2--8,491 metric tons; and (6) CO--1,000 metric tons. The
    report done by DOE's Inspector General in April 2006 criticized DOE
    monitoring of SEP but affirmed that state actions were consistent with
    the applicable law and regulation. State monitoring and verification
    has confirmed SEP's effectiveness.
        State Energy Program Special Projects and Other Deployment
    Programs.-- Through fiscal year 2005, SEP Special Projects provided
    matching grants to states to conduct innovative project development. It
    had been operated for ten years and has produced enormous results in
    every state in the United States. We could support funding of DOE's
    new, proposed SEP competitive program, but only within an $80 million
    SEP appropriation. The other deployment programs, including Rebuild
    America, Building Codes Training and Assistance, Clean Cities and
    Energy Star, should receive funding of $27.7 million in fiscal year
    2008.
        Industrial Energy Program.--A funding increase to a level of $74.8
    million for the Industrial Technologies Program (ITP) is warranted.
    This is a public-private partnership in which industry and the states
    work with the Department of Energy to jointly fund cutting-edge
    research in the energy area. The results have been reduced energy
    consumption, reduced environmental impacts and increased competitive
    advantage of manufacturers (which is more than one-third of U.S. energy
    use). The states play a major role working with industry and DOE in the
    program to ensure economic development in our states and to try to
    ensure that domestic jobs are preserved.
        Examples of Successful State Energy Program Activities.--The states
    have implemented thousands of projects. Here are a few representative
    examples.
        California.--The California Energy Commission has operated energy
    programs in virtually every sector of the economy. The state has
    upgraded residential and non-residential building codes, developed a
    school energy efficiency financing program, industrial partnerships in
    the food and waste industry, instituted a new replacement program for
    school buses utilizing the newest natural gas, advanced diesel and
    hybrid technologies. The buildings program has reduced consumption by
    enormous amounts over the past few years, through alternative financing
    programs and outreach. The state has worked closely with the western
    governors to implement a variety of new programs. California's
    greenhouse gas mitigation plans and a new solar initiative are moving
    forward.
        Colorado.--The state has initiated new energy legislation this year
    and is greatly expanding both renewable energy and ethanol/biofuels
    development. In addition, the state is working to assist new and
    existing building energy efficiency projects. Fifty new building
    projects have received assistance and the state has arranged $170
    million of investments in 80 performance contracting projects.
        Hawaii.--Three major pieces of energy legislation were passed in
    2006. The state energy office is working with state agencies to satisfy
    LEED Silver requirements and utilize Energy Star products. The state
    has been promoting ethanol and biodiesel development, developing a new
    Hawaii Energy Strategy in 2007, developing a major hydrogen energy
    program and implementing a large Renewable Portfolio Standard. The
    energy efficient buildings program has saved $10 million annually and
    the ``Green Business Program'' has saved $175 in water, energy and
    waste minimization for every $1 in SEP funds invested.
        Idaho.--In Idaho the state has rated homes utilizing the Energy
    Star tools and signed-up 93 new builders to participate in the program.
    An aggressive energy efficiency financing program has produced more
    than 2,500 loans, totaling over $16 million, resulting in significant
    energy savings. The agricultural energy program has focused on reducing
    irrigation costs and usage to improve agricultural productivity and
    costs. The state has initiated a new industrial program.
        Kentucky.--The programs supported by SEP have assisted in
    construction of high energy performance K-12 schools, developed $45
    million in energy savings performance contracts and funded energy
    efficiency and renewable energy projects at universities and local
    governments. The state is a leader in promoting Energy Star and they
    have an R&D grant program for energy efficiency and renewable energy.
        Louisiana.--The state energy office within the Department of
    Natural Resources is still heavily involved in post-Katrina relief. In
    addition, the state operates a cash rebate program of up to $2,000 for
    homeowner energy efficiency improvements. Thus far, almost 16,000
    rebates and loans have been issued totaling $21 million, and leveraging
    $199 million more in private funds. The state has also been expanding
    renewable energy development, working to enact stronger energy codes
    and promoting alternative transportation fuels.
        Mississippi.--The state operates an energy investment loan program
    targeted to schools, hospitals and manufacturers. They are focused on
    reducing energy consumption in state and school facilities and they
    have developed 50 energy management plans. Mississippi has been very
    active in the Energy Star program and has been attempting to conduct
    post-Katrina reconstruction in an energy efficient manner. They have
    also developed a rural business opportunity program.
        Missouri.--The energy office in Missouri has been operating a low-
    interest energy efficiency loan program for school districts, colleges,
    universities and local governments. Thus far, public entities have
    saved more than $75 million each year, with more than 400 projects. The
    state energy office has also worked with the Public Utility Commission
    and the utilities within the State to get $20 million invested in
    residential and commercial energy efficiency programs. A new revolving
    loan for bio-diesel has also been initiated.
        New Jersey.--The state's Clean Energy Program has invested over
    $124 million thus far with resulting bill reductions to consumers
    projected to be almost $2 billion. 36 MW of solar has already been
    installed, and the state is implementing rebates, net metering,
    standardized interconnections and a Solar Renewable Energy Certificate
    trading program. The state also has an alternative fuel, bio-heat and
    bio-diesel rebate program.
        New Mexico.--With new state legislation, the state energy office is
    supporting and expanding renewable energy usage, tax incentives for
    hybrid vehicles, school energy efficiency programs, technical
    assistance to the wind and solar industries, and expansion of
    geothermal resources. The state has arranged approximately 40 energy
    performance contracts with annual energy savings in the millions. There
    has also been an expansion in the use of ethanol and bio-fuels.
        North Dakota.--As Kim Christianson testified before Chairman
    Dorgan's Subcommittee on Energy on February 12, 2007, the state energy
    office is supporting programs for wind, ethanol and bio-diesel
    promotion. 578 MW of wind projects have been developed, with nine
    ethanol and bio-diesel plants in various stages of development.
    Projects in 412 buildings has led to $24 million in energy efficiency
    improvements. The state has also funded energy efficiency programs for
    local builders, schools and for lower income households.
        Rhode Island.--The state has reorganized and elevated the energy
    agency, instituted new renewable energy and energy efficiency programs,
    joined with the neighboring states in expanded cooperative efforts and
    also focused on energy emergency preparedness.
        South Dakota.--The state has focused on supporting wind, ethanol
    and bio-diesel development. In addition, a matching energy efficiency
    grant program has been established for heating controls, lighting, etc.
    The state also operates an energy loan program for state-run facilities
    and a technical energy analysis program for those facilities.
        Texas.--The Texas Energy Office's Loan Star program has long
    produced great success by reducing building energy consumption and
    taxpayers' energy costs through efficient operation of public
    buildings. This saved taxpayers more than $200 million through energy
    efficiency projects. Over the next 20 years, Texas estimates that the
    program will save taxpayers over $500 million. In another example, the
    state promoted the use of ``sleep'' software for computers, which is
    now used on 136,000 school computers, saving 42 million kWh and
    reducing energy costs by $3 million annually. The state has initiated
    the Texas Emissions Reduction Plan/Texas Energy Partnership in 41 urban
    counties to reduce emissions through cost-effective energy efficiency
    projects.
        Utah.--SEP funds have been utilized to support solar and wind
    programs, as well as implementation of a stronger energy building code
    through training programs. The state has also supported local
    government energy efficiency and has developed a public building energy
    efficiency pilot.
        Washington.--The state energy agency works with the Northwest
    Energy Efficiency Alliance to target over $20 million in funding for
    energy efficiency and renewable energy projects. The state is also
    closely involved in energy emergency preparedness and response. The
    Resource Efficiency Managers Program, supported by SEP, conducts on-
    site training for energy savings. For example, working with Ft. Lewis
    and Puget Sound naval facilities, the program has saved over $2.5
    million. A major focus on energy efficiency programs in buildings has
    been successful.
        West Virginia.--The energy office has focused on industrial energy
    programs savings, including identified savings of $3.7 million in 2006
    alone. Energy projects in the industrial sector have totaled $33
    million during the past 10 years. The state has also supported dramatic
    expansion of renewable energy programs and is projecting $3 million in
    school energy cost savings each year through energy efficiency
    programs. Other project areas include lighting demonstrations and
    energy audits, poultry house bio-filters, building energy use in
    conjunction with West Virginia University and innovative energy
    technology opportunities in conjunction with Marshall University.
                                     ______

              Prepared Statement of BP Exploration (Alaska), Inc.

      GAS HYDRATE RESOURCE ASSESSMENT ON THE NORTH SLOPE OF ALASKA, APRIL
                                      2007

        The 2002 through present cooperative research between BP
    Exploration (Alaska), Inc. (BPXA) and the U.S. Department of Energy
    (DOE) in collaboration with the U.S. Geological Survey is helping to
    assess Alaska North Slope (ANS) methane hydrate resource potential.
    Since gas hydrate resource potential is unconventional and unproven,
    industry would not be able to perform this research without external
    support. Industry provides shallow 3D seismic and well data and access
    to infrastructure and DOE provides major research funding. This region
    is unique in that it combines known gas hydrate presence and existing
    production infrastructure. Continued full funding of the DOE Methane
    Hydrate program authorized by the Methane Hydrate Acts of 2000 and 2005
    is essential to the success of this research. Reservoir
    characterization, reservoir modeling, and associated studies culminated
    in the drilling of an approximately $4.3MM Stratigraphic Test well,
    MtElbert-01, in early 2007. This well successfully acquired critical
    gas hydrate-bearing formation and fluid data, which will help mitigate
    potential recoverable resource uncertainty. Future production testing
    is a key goal of the Federal Research and Development program and may
    follow, but this remains to be decided following Stratigraphic Test
    data analyses. Future studies, if approved, would acquire additional
    static data and would include production testing, likely from a gravel
    pad within production infrastructure.
        Methane hydrate may contain a significant portion of world gas
    resources within offshore and onshore arctic regions petroleum systems.
    In the United States, accumulations of gas hydrate occur within
    pressure-temperature stability regions in both offshore and also
    onshore near-permafrost regions. USGS probabilistic estimates indicate
    that clathrate hydrate may contain a mean of 590 TCF in-place ANS gas
    resources (Figure 1). Over 33 TCF in-place potential gas hydrate
    resources are interpreted within shallow sand reservoirs beneath ANS
    production infrastructure within the Eileen trend (Figure 2). Regional
    reservoir modeling studies indicate that from 0 to 12 TCF of this 33
    TCF in-place might potentially be recoverable, but future exploitation
    of gas hydrate would require developing feasible, safe, and
    environmentally-benign production technology, initially within areas of
    industry infrastructure. In the United States, the ANS onshore and Gulf
    of Mexico (GOM) offshore are currently known to favorably combine these
    factors. In addition to the clear benefits that would accrue to the
    State of Alaska through realization of gas hydrate as an energy
    resource, the information and technology being developed in this
    onshore ANS program will be an important component to assessing the
    possible productivity of the potentially much larger marine hydrate
    resource. The resource potential of gas hydrate remains unproven, but
    if proven, could lead to greater U.S. energy independence.
        Although up to 100 TCF in-place gas may be trapped within the gas
    hydrate-bearing formations beneath existing ANS infrastructure, it has
    been primarily known as a shallow gas drilling hazard to the hundreds
    of well penetrations targeting deeper oil-bearing formations and has
    drawn little resource attention due to no ANS gas export infrastructure
    and unknown potential productivity. There remain significant challenges
    in quantifying the fraction of these in-place resources that might
    eventually become a technically-feasible or possibly a commercial
    natural gas reserve.
        If gas can be technically produced from gas hydrate and if future
    studies help prove production capability at economically viable rates,
    then methane dissociated from ANS gas hydrate could help supplement
    fuel-gas, provide additional lean-gas for reservoir energy pressure
    support, sustain long-term production of portions of the
    geographically-coincident 20-25 billion barrels viscous oil resource,
    and/or potentially supplement conventional export-gas in the longer
    term. Continued government-industry collaborative support of this
    research is needed to help determine this future resource potential.

        Figure 1.--ANS Gas Hydrate Stability Zone Extent. The USGS has
       estimated 590 TCF methane in place in hydrate form in this region
                                (Courtesy USGS).

          Figure 2.--Eileen and Tarn Gas Hydrate Trends and ANS Field
                 Infrastructure (modified after Collett, 1998).

                                     ______

        Prepared Statement of the Alliance for Materials Manufacturing
                                   Excellence
        AMMEX organizations include the basic materials manufacturing
    sector (aluminum, chemicals, forest products, glass, metal casting,
    steel) in the U.S. economy along with several stakeholders in materials
    manufacturing, such as the Northeast Midwest Institute, the National
    Association of State Energy Officials and the American Council for an
    Energy-Efficient Economy. We are writing to urge Congress to restore
    funding to the Industrial Technologies Program (ITP) at the Department
    of Energy at a level of $125 million dollars and to restore the
    structure of the program to one that emphasizes new process development
    is all six materials industries as opposed to cross-cutting research.
        ITP is a true public-private partnership. DOE and materials
    manufacturers jointly fund cutting-edge research that addresses the
    needs of the Nation and materials manufacturers. All projects have the
    shared goals of reducing energy consumption, reducing environmental
    impact and increasing competitive advantage of U.S. materials
    manufacturers. The program is unique because we select only projects
    with ``dual benefits''--a public benefit such as reduced emissions or
    petroleum use, and an industry benefit such as a more efficient
    process.
        The Department of Energy's Industrial Technology Program (ITP) and
    U.S. materials manufacturers have a long history of joining forces to
    develop and deploy new technologies which save energy, improve our
    environment and enable U.S. materials manufacturers to have the world's
    most advanced technology on the plant floor.
        The chart below is representative of the gains in energy efficiency
    made by materials manufacturers since 1990, i.e., during the time they
    have partnered with DOE.

        This chart also shows that materials manufacturers have become very
    efficient for the processes they operate today and that to make the
    type of gains in the future that have been seen since 1990, new process
    development is required.
        The chart below shows the funding history of the DOE ITP program
    since 1990.

        In the years 1990-1996 the program consisted largely of ``industry
    funding'' and averaged $100 million annually. There were some ``cross-
    cutting'' projects in this time, but they were a small percentage of
    the total. Even in the years 1999-2003, spending on industry projects
    [black] vs. crosscutting [white] was approximately 2:1.
        Beyond 2003, the ITP program was not only the target of drastic
    cuts but remaining funds were rebalanced to favor crosscutting vs.
    industry specific projects. As shown in Figure 1, the level of energy
    efficiency of materials industries dictates that new process
    development (``industry specific'' projects) are required vs. the
    crosscutting (incremental) projects.
        Our request entails two parts:
      --A return to a total program level of $125 million.
      --A re-structuring of the program so as to return to the structure
            that was so successful from 1990-2003--a focus on new process
            development via industry specific research with at least a
            ratio of 2:1 of new process research to crosscutting
            (incremental) investments.
        AMMEX members have identified their top new process development
    concepts (not in priority order) which would be pursued at the funding
    levels and structure defined above;
    Aluminum
        Improved, energy-efficient burners and furnaces for aluminum
    melting.
        Improved energy efficiency and recovery rates for recycling
    technologies.
    Chemicals
        Development of alternative feedstocks for the chemical industry to
    reduce dependence on petroleum and natural gas derived feedstocks.
        Nano-manufacturing scale-up methodologies for key unit operations:
    synthesis, separation, purification, stabilization, and assembly.
        Development of low-energy, low-capital membrane or hybrid
    separations technology.
    Glass
        Submerged Combustion Melter.
        Waste Heat Recovery and Use as Electrical or Chemical Energy.
        Low Residence Time Glass Refining Technologies.
    Forest Products
        Advanced water removal and high efficiency pulping.
        Gasification of Spent Pulping Liquors and Biomass Residuals.
    Metal Casting
        Simulation of Dimensional Changes and Hot Tears.
        Engineered Coatings for Aluminum Pressure Dies.
        Developing a lightweight production cast aluminum metal matrix
    composite alloy.
    Steel
        Ironmaking by Molten Oxide Electrolysis.
        Ironmaking by Flash Smelting using Hydrogen.
        Demonstration of the Paired Straight Hearth Furnace Process.
                           ammex member organizations
    Kurtz Bros.
    American Iron and Steel Institute
    Glass Manufacturing Industry Council
    Aluminum Association
    Waupaca
    American Foundry Society
    Chemical Industry VISION 2020 Technology Partnership
    American Forest and Paper Association
    Hyatt Die Cast
    North American Die Casting Association
    National Association of State Energy Officials
    Northeast Midwest Institute
    Gibbs Die Casting
    Intermet Corning Glass
    Smith Foundry Co.
    Anheuser Busch--Longhorn Glass
    Glass Service, Inc.
    Carteret Die Casting Corp
    Leone Industries Glass Packaging
    North Carolina Industries of the Future
    Armstrong
    North Carolina Industries of the Future
    Diagnostic Instrumentation & Analysis Laboratory (Mississippi State
    Univ.)
    Society for Glass Science and Practices
    Praxair, Inc.
    Siemens Energy and Automation, Inc.
    Gas Technology Institute
    Nucast
    Varicast
    Clinkenbeard
    AVALON Precision Casting Company
    Industries of the Future West Virginia
    Visteon
    Bremen Castings Incorporated
    Savannah River Technology Center
    Indiana Industries of the future
    Bridesburg Foundry
    Oshkosh
    Federal Bronze, A Division of the One Source Casting Corporation
    West Virginia Development Office
    Weyerhaeuser
    Columbia Steel Casting Co., Inc.
    Cunningham Pattern & Engineering, Inc.
    GSC Investment Castings, Machining & Assembly
    Delvest, Inc.
    Fan Steel
    Weatherly Casting & Machine Co.
    Citation Innovative Metal Components
    Magma
    Atchison Casting
    Yankee Casting
    Saint Clair Die Casting, LLC
    Ahresty
    The BOC Group
    Saint Paul Metalcraft Inc.
    Thakar Aluminum Corporation
    Eclipse Inc./Combustion Tec
    Briggs & Stratton
    Johns Manville a Berkshire Hathaway Company
    University Center for Glass Research
    Owens Corning
    CPI Cast Products Inc.
    Pennsylvania Industries of the Future
    Callen Manufacturing Corporation
    CertainTeed
    ABCO Diecasters Inc.
    Energy Industries of Ohio
    U.S. Silica Company
    Borax
    A&B Die Casting
    PPG Industries
    Brillcast, Inc.
    Durametal
    May Foundry & Machine
    NEENAH Foundry Company
    Citation Innovative Metal Components
    SECAT
                                     ______

                 Prepared Statement of IMPACT Technologies LLC
        Dear Honorable Senators: I am a citizen, tax payer, small business
    owner, engineer, inventor and developer of new technology covering
    several industries. I am also a small oil producer and investor in the
    oil and gas industry. I have worked for a very large (major) oil and
    gas company (Chevron) and smaller independent oil and gas producers.
    After establishing my own companies I have obtained bank financing,
    industry financing, angel financing, personal investments, state
    investment groups and directly with the U.S. Department of Energy (DOE)
    and other groups supported by DOE funding, including the Petroleum
    Technology Transfer Council (PTTC), Stripper Well Consortium (SWC) and
    several universities. In fact, I have invested my time by (previously)
    serving on the governing boards of the SWC and PTTC.
        The return on public investments (DOE, NASA, others) in properly
    vetted technologies is tremendous. I have found that industry will not
    support a new technology unless it is proven. For higher technologies
    that proving process is expensive and risky--too risky or requiring too
    long a time frame for all banks, most angel financing and too small for
    venture capital groups. I have invested significant personal monies in
    my own projects, but that will only go so far in developing significant
    technologies. That investment GAP must be filled (fully or partially)
    by public investment yielding tremendous returns in dollars and in
    public good.
        Industry wide, that tremendous return on public investment through
    DOE has included the coal bed methane resource development (measured in
    the trillion of cubic feet of natural gas) for the public benefit.
    Unconventional oil and gas shale development will only occur with DOE
    support of key technologies. The public investment of the DOE (directly
    and through SWC) has allowed technologies to be developed and tested so
    that private groups can then invest to take the products commercial.
    Most of these technologies would not become commercial if not for this
    public investment boost.
        Specifically and on a more direct and personal level, approximately
    $170,000 in DOE and SWC (cost share) funds has allowed Impact to design
    and prove of a new, patented pump technology that will gross an
    estimated $305 million over 10 years, generating taxes and jobs. This
    new pump technology will impact the oil and gas, construction,
    demolition, environmental and job shop industries. It will be licensed
    to existing pump manufacturers after the 5 years. That small, but
    significant, DOE and SWC investment will allow private angel investors
    to see proven technology and feel comfortable enough to invest and take
    the company to the next commercialization level. It will yield a direct
    return on investment of over 1,800:1 not counting the benefits it will
    generate for the impacted industries! It would not have occurred
    without DOE and SWC funding.
        A second technology now being commercialized by Impact is based on
    a $180,000 (cost share) investment from DOE and the SWC plus (funds
    used to leverage other state funds including) Oklahoma's OCAST
    investment group. With that public investment Impact has built a
    patented motor prototype and is now building on that success to
    commercialize these new motors for drilling. This new motor technology
    will impact the oil and gas, environmental, geothermal, resource
    mining, utilities and construction industries. That DOE and SWC
    investment will generate an estimated $228 million over 10 years, based
    on our conservative business plan forecasts. That is a return on public
    investment of over 1,300:1 not including the benefits to the impacted
    industries and the public through taxes, jobs and improved competition!
        A third technology Impact has developed with others is the SPI Gel
    Technology which is directly a result of the Department of Energy's
    investment in the Stripper Well Consortium. This is a new patent-
    pending silicate based gel for reducing water production and pipe
    repairs. It is environmentally safe for fresh water applications. We
    are in the field test stage of this technology right now and will
    license it out later this year. The public investment of $203,000 (cost
    share) will return over a 1,000:1 return in gross sales and other
    benefits to society through jobs, taxes and continued resource
    production. This technology would not be developed without DOE and SWC
    funds.
        I have personally seen the investments of the DOE directly in and
    through the SWC and PTTC on small oil and gas producers. These new
    technologies are significant and will have a major impact on the public
    energy resources. These investments are small but have a extremely high
    return (over 1,000:1) and should be continued. These public funds fill
    the gap between concept and private funding to commercialize good
    ideas.
                                     ______

          Prepared Statement of the National Mining Association (NMA)

                              NMA RECOMMENDATIONS

    Department Of Energy (DOE)
        $108 million for the FutureGen project; $257 million in previously
    appropriated funds should be designated for FutureGen; $300 million for
    base coal research and development programs; $273 million for the Clean
    Coal Power Initiative (CCPI); $8.4 million for the loan guarantee
    office and $9 billion cap on federal loan guarantee commitments; $15
    million for DOE's participation in the Asia-Pacific Partnership on
    Clean Development and Climate.
    U.S. Army Corps Of Engineers
        Civil Works Program.--$180 million for the Regulatory Program. See
    the table below for NMA's list of priority lock and dam projects and
    recommendations for levels of funding required for their completion.

                                   BACKGROUND

    Office of Fossil Energy
        NMA strongly supports: the $108 million requested for the FutureGen
    project; as a zero cost action, the $257 million in unused Clean Coal
    Technology Program funds should be deferred to fiscal year 2009 for the
    FutureGen project (this action is essential to maintaining private
    sector cost-share and financing construction); and recommends at least
    $300 million be appropriated for base coal research and development
    programs.
        In addition, NMA recommends that CCPI be funded at a level of $273
    million, which would enable DOE to conduct a third solicitation
    targeting advanced technology systems that capture carbon dioxide for
    sequestration.
        The FutureGen public-private partnership will design and build, in
    the United States, the first-of-a-kind commercial-scale power plant
    that will provide the technological capability to: (1) capture and
    permanently store 90 percent or more of the plant's CO2
    emissions; (2) power about 150,000 American homes with the clean
    electricity it generates from coal; and (3) co-produce hydrogen and
    potentially other useful by-products from coal.
        The FutureGen Industrial Alliance, comprised of the largest coal
    producers and users in the world, has signed a cooperative agreement
    with the DOE to provide $250 million toward the cost of the project.
    The alliance members have extensive experience in building large-scale
    coal-fueled projects, while meeting budget and performance
    requirements. The alliance remains committed to moving the FutureGen
    project to its targeted completion in 2012, provided a multi-year
    funding scenario is secure, and its funding does not come at the
    expense of other coal research and demonstration programs.
        Technological advancements achieved in the base coal research and
    demonstration programs such as gasification, advanced turbines, and
    carbon sequestration, provide the component technologies that will
    ultimately be integrated into the FutureGen project. NMA believes these
    programs should be funded at a level of at least $300 million (which
    should include $109 for carbon sequestration--$30 million above the
    president's fiscal year 2008 budget request). In addition, the advanced
    turbine program should be funded at $40 million instead of the
    requested level of $22 million. The increase in funding for these and
    other programs will ensure the FutureGen project meets the intended
    goals.
        In addition, NMA recommends a $3 million level of funding for the
    Center for Advanced Separation Technology (CAST), which is led by a
    consortium of seven universities with mining research programs. The
    advanced separation program conducts high-risk fundamental research
    which will lead to revolutionary advances in separation processes for
    the coal industry and develop technologies that crosscut the full
    spectrum of mining and minerals industries.
    Asia-Pacific Partnership on Clean Development and Climate (APP)
        NMA supports the administration's total request of $52 million for
    this partnership and specifically, the request of $15 million to fund
    the U.S. DOE's participation.
        The APP will spur development of cutting edge technologies and
    practices that support economic growth while reducing emissions,
    including greenhouse gas emissions. It will result in expansion of
    market opportunities for U.S. mining and equipment companies and other
    U.S. businesses.
        The APP, involving the United States, Australia, China, India,
    Japan and South Korea, is important for a number of reasons:
      --It will result in real emissions reductions. With the participation
            by China and India, APP is the only international agreement
            addressing rapid emissions growth in the developing world,
            which is forecast to surpass emissions of industrialized
            nations in 2010. APP is a voluntary, technology-based approach
            to emissions reduction geared towards future economic growth
            and energy security and will be more effective than unrealistic
            mandates or treaties.
      --It builds on Methane-to-Markets and other successful programs that
            reduce greenhouse gas emissions. The U.S. coal industry has
            captured and re-used 308 billion cubic feet of coal mine
            methane--the equivalent of removing 40 million automobiles per
            year from the roads. APP, working with the EPA's Methane-to-
            Markets program will use U.S. experience and expertise to
            accelerate large-scale capture and recycling of methane in
            China and India.
      --It helps preserve coal as an important energy source. The United
            States, China, India and Japan will be at the center of a
            significant rise in population, economic activity and energy
            use in the next 50 years. Coal is essential to sustaining
            America's competitiveness and vitality in a changing world, as
            it is in China and India. APP supports improvements in
            efficiency in both coal mining and use through the acceleration
            of clean coal technologies, industrial technology strategic
            planning and energy efficiency best practices.
      --It creates new markets for U.S. companies in the emerging economies
            of China and India.
    U.S. Army Corps Of Engineers
        Regulatory Program.-- NMA supports the Administration's request of
    $180 million for administering the Corps' Clean Water Act (CWA),
    Section 404 permit program and for implementing the Memorandum of
    Understanding (MOU).
        The Corps' Regulatory Branch plays a key role in the U.S. economy
    since the Corps currently authorizes approximately $200 billion of
    economic activity through its regulatory program annually. The ability
    to plan and finance mining operations depends on the ability to obtain
    CWA Section 404 permits issued by the Corps within a predictable
    timeframe. In addition, NMA recommends that a portion of such
    regulatory program funding be used for implementing the MOU issued on
    February 10, 2005, by the Corps, the U.S. Office of Surface Mining, EPA
    and the U.S. Fish and Wildlife Service. The MOU encourages a
    coordinated review and processing of surface coal mining applications
    requiring CWA Section 404 permits.
        Below is a table indicating NMA's fiscal year 2008 Priority
    Navigation Projects.

                                    NMA FISCAL YEAR 2008 PRIORITY NAVIGATION PROJECTS
    ----------------------------------------------------------------------------------------------------------------
                                                              Fiscal Year 2007   Fiscal Year 2008         NMA
                          Construction                            Request            Request        Recommendations
    ----------------------------------------------------------------------------------------------------------------
    Robert C. Byrd Lock and Dams Ohio River, OH/WV.........         $1,800,000         $1,000,000         $1,800,000
    Kentucky River Lock Addition, Tennessee River, KY......  .................        $52,000,000        $52,000,000
    Marmet Lock and Dam, Kanawha River, WV.................        $50,800,000        $25,000,000        $27,000,000
    McAlpine Locks and Dams, Ohio River, IN/KY.............        $70,000,000        $45,000,000        $45,000,000
    Locks and Dams 2, 3, 4, Monongahela River, PA..........        $62,772,000        $70,300,000        $70,300,000
    J.T. Myers Locks and Dams, Ohio River, IN/KY...........  .................  .................        $10,500,000
    Olmsted Locks and Dams, Ohio River, IL/KY..............       $110,000,000       $104,000,000       $104,000,000
    Winfield Lock and Dam, Kanawha River, WV...............         $4,300,000  .................  .................
    Emsworth Dam, Ohio River, PA...........................        $17,000,000        $43,000,000        $43,000,000
    Greenup Lock and Dam, Ohio River, KY/OH................  .................  .................        $12,100,000
    ----------------------------------------------------------------------------------------------------------------

                                     ______

               Prepared Statement of the American Nuclear Society

        Chairman Dorgan, Ranking Member Domenici, members of the
    subcommittee, on behalf of the more than 10,000 members of the American
    Nuclear Society, I am pleased to provide testimony on fiscal year 2008
    appropriations for the U.S. Department of Energy.
        First, as you know, ANS represents a diverse cadre of nuclear
    professionals. As such, our members' opinions on nuclear issues are
    often wide-ranging, and perhaps sometimes different from the
    subcommittee. However, the ANS truly appreciates the thoughtful and
    deliberate manner in which the subcommittee approaches issues related
    to nuclear energy, science, and technology.
        For fiscal year 2008, the ANS supports a strengthened portfolio of
    Federal investments in nuclear energy, science and technology.
    Specifically, the ANS recommends that the subcommittee fully fund the
    DOE Office of Nuclear Energy's fiscal year 2008 request, including the
    Advanced Fuel Cycle Initiative, the Nuclear Hydrogen Initiative, and
    the Generation IV reactor programs.
        The ANS also supports full funding for the Yucca Mountain
    repository program, so that DOE can proceed with its plans to submit a
    license application to the NRC by June 2008, and $913 million for the
    Nuclear Regulatory Commission.
        The ANS is aware that the Bush administration has proposed
    terminating funding for the University Reactor Infrastructure and
    Education Assistance program line in its fiscal year 2007 and 2008
    budget requests.
        In response, the ANS created the Special Committee on Federal
    Investment in Nuclear Education to review the issues and make
    recommendations on the issue. This report, entitled ``Nuclear's Human
    Element,'' focuses on longer term issues that need to be addressed by
    Congress and the executive branch in order to ensure the health and
    vitality of the U.S. nuclear science and engineering enterprise. It has
    generated a lot of positive discussion within the nuclear community,
    and we hope the subcommittee will use it to help guide the scope and
    structure of future Federal investments in this area.
        For fiscal year 2008, the ANS supports the request by the Nuclear
    Engineering Department Heads Organization (NEDHO) and the National
    Organization of Test, Research, and Training Reactors (TRTR) to provide
    $50.1 million in fiscal year 2008 in funding for university-based
    nuclear engineering programs, the level authorized by the Energy Policy
    Act of 2005.
        The ANS is aware that the DOE Office of Nuclear Energy has
    indicated its desire to continue funding university programs through
    its existing R&D programs and we recognize the debate over funding
    vehicles is more nuanced than ``line-item or nothing.'' However, we
    agree with NEDHO and TRTR that, regardless of the mechanism through
    which it is provided, DOE funding for university programs must be
    predictable, growth-oriented, and focused on longer-term scientific and
    workforce development milestones.
        Regarding the Global Nuclear Energy Partnership (GNEP), the ANS
    recognizes that there are concerns about the aggregate costs and
    technological pathways associated with implementation of the GNEP
    initiative. However, the Society supports the administration's proposed
    increase in fiscal year 2008 funding for the Advanced Fuel Cycle
    Initiative which will allow the pertinent cost and design questions to
    be explored at an expedient pace.
        Finally, the ANS supports an fiscal year 2008 funding level of $100
    million for the Next-Generation Nuclear Plant, funded through the
    Generation IV Nuclear Energy Systems Initiative account. The NGNP holds
    great promise to employ nuclear energy to meet U.S. hydrogen production
    and industrial process heat needs, and its development should be
    accelerated to meet the milestones set forth in the Energy Policy Act
    of 2005.
                                     ______

            Prepared Statement of the American Geological Institute

        To the chairman and members of the subcommittee: Thank you for this
    opportunity to provide the American Geological Institute's perspective
    on fiscal year 2008 appropriations for geoscience programs within the
    subcommittee's jurisdiction. The President's budget request for
    Department of Energy (DOE) research programs provides no funding for
    oil and gas research and development. Not only would the request
    terminate basic research for oil and gas, it would also repeal the
    ultradeep water and unconventional natural gas and other petroleum
    research funding proposed in the Energy Policy Act of 2005. Given the
    interest of the administration and Congress to reduce the Nation's
    foreign oil dependence and reduce prices on oil and natural gas, it
    seems like an inopportune time to eliminate programs that could help
    with these objectives. We are especially concerned about the reduction
    or outright termination of oil and gas research funding for
    universities. These programs not only support innovations in oil and
    gas exploration and extraction, but the teaching and training of the
    next generation of professionals and faculty in these vital areas. AGI
    applauds the requested 7 percent increase for the largest supporter of
    physical science research in the United States, DOE's Office of
    Science, and encourages the subcommittee's full support for this
    increase. We also support increased funding requests for clean energy
    research, which focuses spending on solar, biomass/biofuels, hydrogen
    fuel, FutureGen and nuclear power, however, spending for other clean
    energy alternatives, such as geothermal, could be included in
    appropriations while remaining consistent with national needs and
    objectives.
        AGI is a nonprofit federation of 44 geoscientific and professional
    associations that represent more than 100,000 geologists,
    geophysicists, and other earth scientists. The institute serves as a
    voice for shared interests in our profession, plays a major role in
    strengthening geoscience education, and strives to increase public
    awareness of the vital role that the geosciences play in society's use
    of resources and interaction with the environment.

                   DOE FOSSIL ENERGY RESEARCH AND DEVELOPMENT

        AGI urges you to take a critical look at the Department of Energy's
    Fossil Energy Research and Development (R&D) portfolio as you prepare
    to craft the fiscal year 2008 Energy and Water Development
    Appropriations bill. Over the past 7 years, Members of Congress have
    strongly emphasized the need for a responsible, diversified and
    comprehensive energy policy for the Nation. The growing global
    competition for fossil fuels has led to a repeated and concerted
    request by Congress to ensure the Nation's energy security. Energy
    Information Administrator Guy Caruso has noted the Nation's need for
    fossil fuels over the next 30 years and thus the critical need to
    continue R&D on fossil fuels and all other energy resources. The
    President's proposal, which provides no funding for oil and gas R&D, is
    short sighted and inconsistent with congressional concerns. No funding
    for oil and gas R&D will hinder our ability to achieve energy stability
    and security.
        The research dollars spent by Fossil Energy R&D go primarily to
    universities, State geological surveys and research consortia to
    address critical issues like enhanced recovery from known fields and
    unconventional sources that are the future of our natural gas supply.
    This money does not go into corporate coffers, but it helps American
    businesses remain competitive by giving them a technological edge over
    foreign companies. All major advances in oil and gas production can be
    tied to research and technology. AGI strongly encourages the
    subcommittee to ensure a balanced and diversified energy research
    portfolio that does not ignore the Nation's primary sources of energy,
    fossil fuels, for at least the next 30 years.
        Today's domestic industry has independent producers at its core.
    With fewer and fewer major producing companies and their concentration
    on adding more expensive reserves from outside of the contiguous United
    States, it is the smaller independent producers who are developing new
    technologies to extract our domestic resources efficiently and cleanly.
    However, without Federal contributions to basic research that drives
    innovation, small producers cannot develop new technologies as fast, or
    as well, as they do today. The DOE program has produced many key
    successes among the typical short-term (1 to 5 year) projects. And even
    failed projects have proven beneficial, because they've often resulted
    in redirection of effort toward more practical exploration and
    production solutions. Ideally, DOE and private sector participants
    share the programs R&D funding on a 50-50 basis, with the government
    contributing actual dollars and the company contributing dollars or
    ``in kind'' products and services. To justify the use of public funds,
    new technology developed from such projects is made available to
    industry.
        In 2003, at the request of the House Interior Appropriations
    Subcommittee, the National Academies released a report entitled Energy
    Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy
    Research 1978 to 2000. This report found that Fossil Energy R&D was
    beneficial because the industry snapped up the new technologies created
    by the R&D program, developed other technologies that were waiting for
    market forces to bring about conditions favorable to commercializing
    them and otherwise made new discoveries. In real dollars from 1986-2000
    the government invested $4.5 billion into Fossil Energy R&D. During
    that time, realized economic benefits totaled $7.4 billion. This
    program is not only paying for itself, it has brought in $2.9 billion
    in revenue.
        Unfortunately, despite this success, the President's fiscal year
    2008 budget request continues the alarming reduction of energy R&D
    funding by eliminating all funding for our primary energy resources,
    oil and gas. There has been an 85 percent drop in renewable, fossil and
    nuclear energy R&D funding at DOE since 1978. Federal funding for
    renewable, fossil and nuclear R&D has decreased dramatically from $5.5
    billion in 1978 to $793 million in 2005 according to a Government
    Accountability Office (GAO) report entitled Key Challenges Remain for
    Developing and Deploying Advanced Energy Technologies to Meet Future
    Needs and released in December 2006. Such significant under-investment
    in energy R&D over many decades hinders progress on cost-effective and
    environmentally-sound exploration and extraction of raw energy
    resources and clean and efficient development, production and use of
    energy products.
        The Federal investment in energy R&D is particularly important when
    it comes to longer-range research with diversified benefits. In today's
    competitive markets, the private sector focuses dwindling research
    dollars on shorter-term results in highly applied areas such as
    technical services. In this context, DOE's support of fossil energy
    research, where the focus is truly on research, is very significant in
    magnitude and impact compared to that done in the private sector, where
    the focus is mainly on development. Without more emphasis on research,
    we risk losing our technological edge in the highly competitive global
    market place.
        As we pursue the goal of reducing America's dependence on unstable
    and expensive foreign sources of oil, we must continue to increase
    recovery efficiency in the development of existing domestic oilfields,
    conserving the remaining in-place resources. Since the 1980s, 80
    percent of new oil reserves in this country have come from additional
    discoveries in old fields, largely based on re-examination of
    previously collected geoscience data. These data will become even more
    important in the future with the development of new recovery
    technologies.
        Perhaps one of the most promising areas of R&D for domestic oil
    supplies are in the ultradeep waters where drilling is allowed in the
    Gulf of Mexico. The Energy Policy Act of 2005, set aside $50 million
    annually from collected offshore royalties for ultradeep water and
    other unconventional oil and gas R&D to support clean and efficient
    exploration and extraction in the Gulf. The President's budget request
    would repeal this program and provide no funding for ultradeep water
    and other unconventional oil and gas R&D. AGI asks that you consider
    R&D spending or other incentives to encourage the private sector to
    invest in clean and efficient technological advances to enhance our
    unconventional fossil fuel supply in offshore regions where drilling is
    allowed and significant infrastructure already exists.
        The research funded by DOE leads to new technologies that improve
    the efficiency and productivity of the domestic energy industry.
    Continued research on fossil energy is critical to America's future and
    should be a key component of any national energy strategy. The societal
    benefits of fossil energy R&D extend to such areas as economic and
    national security, job creation, capital investment, and reduction of
    the trade deficit. The Nation will remain dependent on petroleum as its
    principal transportation fuel for the foreseeable future and natural
    gas is growing in importance. It is critical that domestic production
    not be allowed to prematurely decline at a time when tremendous
    advances are being made in improving the technology with which these
    resources are extracted. The recent spike in oil and natural gas prices
    is a reminder of the need to retain a vibrant domestic industry in the
    face of uncertain sources overseas. Technological advances are
    necessary to maintaining our resource base and ensuring this country's
    future energy security.

                             DOE OFFICE OF SCIENCE

        The DOE Office of Science is the single largest supporter of basic
    research in the physical sciences in the United States, providing more
    than 40 percent of total funding for this vital area of national
    importance. The Office of Science manages fundamental research programs
    in basic energy sciences, biological and environmental sciences, and
    computational science and, under the President's budget request, would
    grow by 7 percent from about $4.1 billion last year to $4.4 billion.
    AGI asks that you support this much needed increase.
        Within the Office of Science, the Basic Energy Sciences (BES)
    program supports fundamental research in focused areas of the natural
    sciences in order to expand the scientific foundations for new and
    improved energy technologies and for understanding and mitigating the
    environmental impacts of energy use. BES also discovers knowledge and
    develops tools to strengthen national security.
        The Basic Energy Sciences (BES) would remain the largest program in
    the office with an increase of 5.5 percent from $1.420 billion in
    fiscal year 2007 to $1.498 billion in fiscal year 2008 in the
    President's request. Within the BES, Chemical Sciences, Geosciences and
    Biosciences would receive a $15.4 million increase over their fiscal
    year 2007 budget. AGI strongly supports the requested increases for
    these programs.

                   DOE ENERGY EFFICIENCY AND RENEWABLE ENERGY

        Within DOE Energy Efficiency and Renewable Energy, the President's
    fiscal year 2008 budget request would not support any R&D in geothermal
    technology. AGI asks that the subcommittee consider supporting
    geothermal R&D at the fiscal year 2006 level of $23 million.
                                     ______

               Prepared Statement of the Alliance to Save Energy

        The Alliance to Save Energy (the Alliance) is a bipartisan,
    nonprofit coalition of business, government, environmental, and
    consumer leaders committed to promoting energy efficiency worldwide to
    achieve a healthier economy, a cleaner environment, and greater energy
    security. The Alliance, founded in 1977 by Senators Charles Percy and
    Hubert Humphrey, currently enjoys the leadership of Senator Mark Pryor
    as chairman; Duke Energy President and CEO James E. Rogers is the co-
    chairman; and Representatives Ralph Hall, Zach Wamp and Ed Markey and
    Senators Jeff Bingaman, Susan Collins, Larry Craig and Byron Dorgan as
    its vice-chairs. More than 120 companies and organizations support the
    Alliance as Associates. The Alliance recommends increases of $41.3
    million for several existing energy-efficiency deployment programs, and
    $55 million for new programs in fiscal year 2008.

                                   BACKGROUND

        Energy Efficiency--Our Greatest Resource.--Gasoline, natural gas,
    and electricity prices have all reached all-time highs in the last
    couple of years. These price increases cost American families and
    businesses over $300 billion each year. The President recognized energy
    security as a major issue in the State of the Union message. And many
    of the world's top scientists recently reaffirmed the urgent need to
    address global warming in a timely manner. Energy efficiency is the
    quickest, cheapest, and cleanest way to address the linked issues of
    energy prices, energy security, air pollution, and global warming.
    Energy efficiency already is the Nation's greatest energy resource--we
    now save more energy each year due to actions since 1973 to increase
    energy efficiency than we get from any single energy source, including
    oil. But much more can and needs to be done.
        A Record of Success.--DOE programs play a key role in developing
    the energy-efficiency resource through the research and development
    (R&D) of new energy-efficient technologies, and by helping to deploy
    these technologies. A 2001 National Research Council report found that
    every dollar invested in 17 DOE energy-efficiency R&D programs returned
    nearly $20 to the U.S. economy in the form of new products, new jobs,
    and energy cost savings to American homes and businesses. Environmental
    benefits were estimated to be of a similar magnitude.
        Efficiency-Related Budget Authorizations and Studies.--Several
    reports and legislative authorizations have supported major increases
    in funding for DOE energy efficiency programs. The Energy Policy Act of
    2005 (EPAct 2005) authorized $865 million for energy efficiency R&D in
    fiscal year 2007, more than $1 billion for deployment programs, and
    additional funds for hydrogen and fuel cells and for electric energy
    R&D. This follows calls for expanding energy efficiency research by the
    National Commission on Energy Policy, the President's Committee of
    Advisors on Science and Technology, the Energy Future Coalition, and
    the President's National Energy Policy Development Group.
        Summary of the President's Energy Efficiency Fiscal Year 2008
    Budget Request.--The President's overall fiscal year 2008 budget
    request for energy-efficiency programs within DOE's Office of Energy
    Efficiency and Renewable Energy is $515 million, down nearly $117
    million (18 percent) from the fiscal year 2006 appropriated level. This
    large cut follows a gradual slide from the $695 million that was
    appropriated for these programs in fiscal year 2002. Funding for these
    programs has decreased by one-third (37 percent) since 2002, after
    adjusting for inflation. In addition, the request for electricity R&D
    programs, many of which focus on efficiency, is $86 million, a decrease
    of $50.3 million (37 percent) from the fiscal year 2006 appropriated
    level. Several deployment programs, along with industrial R&D, have
    experienced some of the biggest funding cuts.

                            ALLIANCE RECOMMENDATIONS

        In order to address the critical energy problems facing our Nation,
    the Alliance recommends funding DOE energy-efficiency programs in line
    with the EPAct 2005 authorized levels. Some specific funding requests
    are outlined below:
        It is important to maintain a broad portfolio of programs. The
    impact of DOE energy-efficiency programs has been multiplied by the
    combination of research to develop new technologies, voluntary
    deployment and market transformation programs to move them into the
    marketplace, and standards and codes to set minimum thresholds for
    using cost-effective technologies. And while the combination of
    programs has had tremendous impact, the government has often not been
    successful at picking winning technologies.
        Thus, it is important that the increases proposed in the
    administration's budget and those proposed below not be paid for
    through cuts to other highly-effective efficiency programs, which also
    address critical national energy needs. While the fuel cell and
    alternative fuels programs are important, they do not take the place of
    core programs that can have broader, more certain, and more near-term
    energy savings impacts. In particular, the Alliance opposes repeated
    cuts that threaten the viability of Industrial Technologies research
    programs and the dramatic proposed cuts to the distributed energy R&D
    program and the Weatherization Assistance Program.
    Key Existing Deployment Programs (Office of Energy Efficiency and
            Renewable Energy)
        Building Energy Codes (Building Technologies).--While residential
    and commercial building codes are implemented at the State level,
    States rely on DOE for technical specifications, training, and
    implementation assistance. The Alliance estimates that building energy
    codes could save 7.2 quads of energy by 2025. The new 2006 IECC model
    residential code includes measures to simplify the code and ease
    implementation, and thus presents exciting opportunities to increase
    code adoption and compliance. Yet the administration has proposed
    cutting funding for building codes by one-third.
        EPAct 2005 (sec. 128) authorized $25 million per year for building
    codes, including $10 million for a new program to help States improve
    compliance with their codes. Several studies have found poor rates of
    compliance with building codes, causing unnecessary energy waste. This
    new program would assist states that have adopted up-to-date building
    codes to implement a plan to achieve 90 percent compliance through
    better training, enforcement, or other measures. Thus the Alliance
    recommends a $19.4 million increase above the fiscal year 2006
    appropriated level, for a total of $25 million.
        Federal Energy Management Program.--This program helped cut Federal
    building energy use by 24 percent from 1985-2001--a reduction that now
    saves Federal taxpayers roughly $1 billion each year in reduced energy
    costs. But funding has steadily decreased for this program, even though
    large savings remain untapped. EPAct 2005 and Executive Order 13423, in
    addition to setting aggressive new Federal energy saving targets,
    require DOE to implement rules, guidelines, and reports on the targets,
    Federal building standards, Federal procurement, and metering. A needed
    funding increase for this program will actually save taxpayers money in
    lower Federal energy bills. The Alliance recommends a $5 million
    increase above the fiscal year 2006 level, for a total funding level of
    $24 million.
        Equipment Standards and Analysis (Building Technologies).--
    Appliance energy efficiency standards (e.g. for refrigerators) have
    already reduced U.S. electricity use by an estimated 2.5 percent and
    reduced peak power demand by the output of 70 power plants, at minimal
    cost to the Federal Government, and saving consumers billions of
    dollars in their energy bills. But the program is years behind on
    issuing standards for close to 20 products. EPAct 2005 requires
    additional rulemakings. DOE has issued an ambitious plan to catch up,
    and has requested a $3.5 million increase to do so. But a new GAO
    report says that is not enough to meet a 600 percent increase in
    workload, and some of the most important standards are not even in the
    plan. The Alliance recommends a $10 million increase over the fiscal
    year 2006 level for total funding of $20.2 million.
    New Deployment Programs (see also Building Energy Codes above)
        Energy Efficiency Pilot Program (Office of Electricity Delivery and
    Energy Reliability).--State and utility energy-efficiency programs have
    been remarkably successful at reducing electricity demand, strain on
    the grid, and the need for costly new power plants. However, they have
    been starved for funds due to electric utility restructuring. A few
    states are experimenting with innovative performance-based policies to
    prioritize efficiency resources before increasing energy supplies.
    EPAct 2005 (sec. 140) authorized $5 million per year for a new program
    to provide funding to several States to assist in the design and
    implementation of energy-efficiency resource programs that will lower
    electricity and natural gas use by at least 0.75 percent a year. The
    Alliance recommends $5 million for this new program.
        Zero Energy Commercial Buildings Initiative (Building
    Technologies).--Buildings are a major part of the problem and solution
    of high natural gas and electricity use and climate change. The
    buildings sector in the United States accounts for about 40 percent of
    total energy consumption and 40 percent of carbon dioxide emissions,
    and about half of that is from commercial buildings. There is a growing
    consensus on the need and opportunity for aggressive action to
    dramatically improve building energy efficiency; the American Institute
    of Architects (AIA) has called for reducing fossil fuel use in new and
    renovated buildings by 50 percent by 2010 and eventually by 100
    percent. DOE has a zero energy homes program, but achieving this goal
    for the many kinds of commercial buildings is even more difficult and
    more complicated. A large concerted multi-year initiative is critical
    to achieve these deep savings throughout the commercial sector.
        The Alliance, along with the AIA, American Society of Heating
    Refrigerating and Air-conditioning Engineers, Lawrence Berkeley
    National Laboratory, U.S. Green Building Council, and World Business
    Council for Sustainable Development, are the founding sponsors of an
    initiative for zero-energy commercial buildings by 2030. This public-
    private collaboration will combine better tracking of real energy
    performance, demonstrations of replicable solution packages for
    different building types, strategic research, and a market
    transformation plan. The Alliance recommends $20 million for this new
    program in fiscal year 2008, to add to and complement the existing
    funding request for commercial buildings R&D.
        Energy Efficiency Public Information Initiative (Program
    Support).--The quickest way to reduce energy demand and bring high
    energy prices down is through consumer education. EPAct 2005 (sec. 134)
    authorizes $90 million per year for a public education program to
    provide consumers the information and encouragement necessary to reduce
    energy use. Such programs have a proven track record of success, as in
    the 2001 ``Flex Your Power'' campaign in California, which
    significantly reduced consumer electricity demand and assisted in
    avoiding further blackouts. DOE has contributed small amounts of
    funding to effective education campaigns, but much more is needed. The
    Alliance recommends $30 million for this new program in fiscal year
    2008.
    Additional Priorities
        Industrial Best Practices (Industrial Technologies--
    Crosscutting).--One of the most effective DOE industrial programs
    conducts plant-wide energy assessments, develops diagnostic software,
    conducts training, develops technical references, and demonstrates
    success stories. Oak Ridge National Laboratory reports that DOE-ITP's
    Best Practices outreach saved 82 trillion Btu in 2002, worth $492
    million. The Alliance recommends a $3 million increase for Best
    Practices, for total funding of $10.9 million.
        Energy Star (Building Technologies).--Energy Star is the most
    successful voluntary, public-private deployment program at EPA and DOE,
    making it easy for consumers to find and buy numerous energy-efficient
    products. And it functions on a very small budget. Every Federal dollar
    spent on the Energy Star program results in an average savings of more
    than $75 in consumer energy bills and a reduction of about 3.7 tons of
    carbon dioxide emissions. With additional funding, the Energy Star
    program could update its criteria, expand the program to other areas
    and add more product categories. The Alliance recommends a $2 million
    increase over the fiscal year 2006 appropriated level for total funding
    of $7.9 million.
        Building Technologies R&D.--Of all the DOE energy-efficiency
    programs, Building Technologies continues to yield perhaps the greatest
    energy savings. The 2001 National Research Council study found that
    just three small R&D programs--in electronic ballasts for fluorescent
    lamps, refrigerator compressors, and ``low-e'' glass for windows--have
    already achieved cost savings totaling $30 billion, at a total Federal
    cost of only about $12 million. Buildings R&D should be a priority for
    funding increases, especially in the areas of Windows and Insulation
    and Materials R&D.
        Energy Information Administration (EIA) Energy Consumption
    Surveys.--EIA's Energy Consumption Surveys provide unique and
    invaluable data to policy makers, industry, and researchers. The
    Alliance recommends an increase of $1.9 million, for total funding of
    $5.5 million, in order to reinstate the residential transportation
    survey, last conducted in 1994, and to conduct the Residential,
    Manufacturing, and Commercial Buildings Energy Consumption Surveys
    (RECS, MECS, and CBECS) every 3 years, as required by the Energy Policy
    Act of 1992, instead of the current 4-year schedule.
                                     ______

            Prepared Statement of Western Michigan University (WMU)

        R&D activities administered through DOE's Fossil Energy programs
    play a vital role to discover, develop and produce a significant
    portion of the Nation's domestic natural energy needs.
        Western Michigan University (WMU) provides invaluable research to
    develop new technologies for improved exploration and production of
    hydrocarbons in an environmentally responsible manner. WMU also
    disseminates this information through workshops to Michigan's small
    independent oil companies that cannot develop such technologies on
    their own.
        Most of the oil companies in Michigan consist of a few employees,
    often referred to as ``Mom and Pop'' independent producers. In the
    Midwest, there are thousands of such companies that produce many tens
    of millions of barrels of oil and equivalent natural gas a year.
        Ten years ago, in a consortium with private industry, with funding
    by DOE, WMU developed and proved a new drilling technology to recover
    oil from abandoned fields. Subsequent application of this technology
    has produced more than 20 million barrels of oil and more than 500
    billion cubic feet of natural gas in Michigan. We are now studying the
    origins and evolution of some of Michigan's major oil and gas
    reservoirs and using newly developed computer-based 3D models for
    predicting their distribution. This will create the ability to produce
    energy more efficiently, in larger quantities, and with less drilling.
    WMU is one of a limited number of universities nationwide capable of
    this type of research.
        WMU has presented its research results and techniques to several
    thousand participants at interactive workshops for industry and
    government. And WMU has an increasing enrollment of undergraduate and
    graduate students who are being trained to meet an urgent need for
    geoscientists.
        WMU's website, which receives more than 6,000 hits per month,
    connects producers, the research community and support services
    industries that produce hydrocarbons.
        This program would not be possible without DOE funding.
        WMU is nearing the final year in our current multi-year research
    program. To cut off funding now, as we are just coming to fruition with
    new results and technologies would be such a loss of taxpayers' money
    already invested.
        There are those who ask why tax dollars should support oil and gas
    research and programs such as ours at WMU. My response is that these
    are vital to the Nation's security and to the domestic economy. This
    research can improve the domestic supply of oil and gas, which in turn
    will drive down the price. When constituents of each member of Congress
    ask what the government is doing about the current high price of oil,
    one logical response is to say that they support efforts that will
    improve the domestic supply through R&D funds.
        Eighty-five percent of DOE's R&D programs are tailored to the
    exploration and development activities of the independent producer.
    These small companies drill 90 percent of the Nation's oil wells and
    they produce 85 percent of the Nation's natural gas. For these
    companies, undertaking costly research activities is not a viable
    option. They must gain education and access to technology from outside
    their doors, a key function provided by WMU.
        There is another benefit to government-supported R&D that is rarely
    recognized--training urgently needed geoscientists. The research spawns
    Master's and Ph.D. students who will take critical roles in an industry
    that suffers from a shrinking population of professionals, particularly
    American professionals. Where will the domestic industry be in the
    future if skilled students do not enter the oil and gas industry? All
    aspects of these professional jobs require increasingly complex skills
    and abilities. Who will be the explorers and developers of oil and gas
    for the next generation?
        I urge you to reinstate full funding for the DOE Oil and Gas
    research program at WMU. This is desperately needed for the American
    economy and its security. We are increasingly dependent on foreign oil
    and gas to run our economy. When will our dependency on imports be too
    great? Sixty-five percent? We are there now! Seventy-five percent?
    Eighty-five percent? I think that such high levels make us very
    vulnerable to supply interruptions, huge price spikes, and an unstable
    economy.
                                     ______

         Prepared Statement of the American Forest & Paper Association

        The Agenda 2020 Technology Alliance, a Special Project of the
    American Forest & Paper Association (AF&PA) welcomes this opportunity
    to provide the committee with its views on our industry's key public-
    private partnerships within the Office of Energy Efficiency and
    Renewable Energy (EERE) and to urge increased funding to adequately
    address industry's challenges in fiscal year 2008. The Industrial
    Technologies Program (ITP) and the Office of Biomass Programs (OBP)
    provide vital funding for research, development, and demonstration
    (RD&D) of technologies that dramatically reduce the forest products
    industry's energy intensity and transforms our industry into producers
    of carbon-neutral biofuels--thus addressing strategic national needs
    associated with energy efficiency, energy security, diversified energy
    supply, and environmental performance. We recommend industry specific
    funding of $6 million for forest products industry in ITP. We support
    the President's request for $179 million for Biomass and Biorefinery
    Systems R&D in OBP and ask that the Committee work to ensure
    eligibility of forest biorefineries in these programs and keep the
    appropriations unencumbered to allow for full funding of competitive
    biomass systems and biorefinery RD&D grants. Furthermore, we recommend
    that the Committee restore OBP Platforms Research and Development
    funding of $10 million for competitive R&D for black liquor
    gasification, a key enabling technology of the forest biorefinery.
        The Agenda 2020 Technology Alliance is an industry-led partnership
    with government and academia that holds the promise of reinventing the
    forest products industry through innovation in processes, materials and
    markets. The collaborative, pre-competitive research, development, and
    deployment supported through Agenda 2020 provide the foundation for new
    technology-driven business models that will enable our industry to meet
    competitive challenges, while also contributing solutions to strategic
    national needs. The technology solutions developed through Agenda 2020
    are aligned to provide solutions to the competitive challenges faced by
    the U.S. forest products industry, which accounts for approximately 6
    percent of the total U.S. manufacturing output, employs more than a
    million people, and ranks among the top 10 manufacturing employers in
    42 States with an estimated payroll exceeding $50 billion.
        As is the case with many U.S. manufacturing industries, we face
    serious domestic and international challenges. Since early 1997, 136
    pulp and paper mills have closed in the United States, contributing to
    a loss of 84,000 jobs, or 39 percent of our workforce. An additional
    60,000 jobs have been lost in the wood products industry since 1997.
    New capacity growth is now taking place in other countries, where
    forestry, labor, and environmental practices may not be as responsible
    as those in the United States. Several drivers have heightened the need
    to develop new energy efficiency technologies: the recent volatility of
    energy markets, especially for natural gas; renewed national focus on
    climate change and environmental performance; and aging process
    infrastructure. Global competition, coupled with massive industry
    restructuring due to financial performance pressures from Wall Street,
    continue to hinder the ability of U.S. companies to make new
    investments. Each year without new investments, new technologies and
    new revenue streams, we lose ground to our overseas competitors.
        Currently, energy is the third largest manufacturing cost for the
    forest and paper industry at 18 percent for pulp and paper mills--up
    from 12 percent just 3 years ago. For some of our mills, the cost of
    energy is about to eclipse employee compensation.
        Since 1994, the forest products industry has been one of DOE's
    ``Industries of the Future,'' partnering with ITP through the Agenda
    2020 Technology Alliance in RD&D that has yielded successful advances
    towards our national energy and environmental goals. Agenda 2020 stands
    as an example of successful industry-government collaboration to
    develop technologies that hold the promise of reinventing industry,
    while providing real solutions for strategic national energy needs.
    Every Federal dollar spent on ITP saves $7.06 in annual energy costs
    and 1.3 million in annual source BTUs (2004 estimates). As recently as
    2003, the ITP/Agenda 2020 portfolio included a total shared DOE and
    industry investment of almost $48 million, with nearly 55 percent
    coming from direct project cost shares by industry.
        Today, after several years of continuous and substantial cuts, the
    ITP/Agenda 2020 budget has been reduced by over 83 percent since fiscal
    year 2002. This undermines our progress in achieving crucial energy
    efficiencies at a time when energy and response to climate change are
    major factors in the survival of the U.S. forest products industry.
    Projects rescoped or cut in recent years due to budget shortfalls
    resulted in a lost energy savings potential of 5 trillion BTUs/yr.
    Recent reductions make us unable to pursue projects in key priority
    areas such as advanced water removal and high efficiency pulping, which
    represents a lost savings potential of 100-200 trillion BTUs/yr. In
    fiscal year 2008, a further funding reduction is proposed and emphasis
    shifted from industry specific funding. Unfortunately, the type of
    technologies that cross all industries are not those from which we can
    achieve the maximum savings for energy and environmental emissions.
    Furthermore, the proposed funding of $1.752 million, is barely
    sufficient to fund ongoing projects, let alone address the high
    priority R&D needs specific to the forest products industry that have
    been jointly identified by industry with the DOE.
        This comes at a crucial time when the forest products industry,
    like many energy-intensive industries, is facing unprecedented
    pressures due to the rising costs of energy and potential climate
    change mandates. Although we are nearly 60 percent self-sufficient
    (using biomass), it is imperative that we seek solutions as diverse as
    fuel switching, finding new energy sources, and options for reducing
    energy consumption. Thus we are in greater need than ever for the
    technology-based energy efficiency solutions that could be provided
    through our Agenda 2020 partnership with ITP. AF&PA's recommended ITP
    funding for forest products research ($6 million) would help our
    industry partially recover its capacity to develop and deploy vital
    energy efficiency technologies. Restoring Agenda 2020 funding to pre-
    fiscal year 2005 levels will not only help the competitive position of
    American industry, but will also serve national strategic goals for
    reduced dependence on foreign oil.
        The Integrated Forest Products Biorefinery (IFPB) is a key Agenda
    2020 technology platform and a top technical and economic priority for
    our industry. The objective is to develop and deploy core technologies
    that can be integrated into existing processing infrastructure, which
    would be transformed into geographically distributed production centers
    of renewable ``green'' bioenergy and bioproducts. This can be done
    while co-producing existing product lines, creating higher skilled and
    better paying jobs, strengthening rural communities, and opening new
    domestic and international markets for U.S. forest products companies.
        The IFBP technology has the potential to integrate agricultural
    wastes, agricultural producers, forest landowners, agricultural
    landowners, forest product producers, and the petrochemical industry to
    produce clean renewable bio-fuels to support our local economies and
    the Nation. Widespread application of this technology would not only
    reduce environmental impact of burning fossil fuels, it would also
    increase the viability of agricultural, forest products, and other
    industries that use waste heat. It will create new high paying jobs,
    both direct and indirect, increasing tax revenue. From an energy
    perspective, the IFPB has the benefit of making the forest products
    industry even more energy self-sufficient, serving the DOE strategic
    goal of reduced energy intensity in industry by reducing fossil energy
    consumption. In addition, the IFPB would permit the industry to become
    a producer of renewable, carbon-positive bioenergy and biofuels,
    contributing to DOE strategic goals to dramatically reduce dependence
    on foreign oil and to create new domestic bioindustry.
        AF&PA supports the President's announced $179 million budget
    initiative in fiscal year 2007 for biorefinery research and
    demonstration.--This initiative provides much needed funding to advance
    core enabling IFPB technologies, as well as providing major capital
    cost-share for commercial scale biorefinery demonstration. The forest
    products industry is an ideal partner to develop and commercialize
    integrated biorefineries. We have much of the infrastructure and
    expertise--wood harvesting, transportation and storage, manufacturing
    and conversion infrastructure, waste handling and recovery--needed to
    achieve the goals of integrated biorefineries. By and large, they are
    located in rural communities where they can help realize important
    synergies between agricultural and forest-based feedstocks. Recent
    estimates from Princeton University show significant potential for net
    environmental benefits of IFPBs, inclusive of offsetting other fossil
    fuel consumption in the mill. The industry-wide potential is to reduce
    nearly 100 million tons of carbon emissions annually from IFPBs. The
    study also estimates the cumulative value of savings due to reduced
    CO2, SO2, and NOX emissions is $6
    million to $40 billion.
        However, private/public investments in RD&D are critical to bring
    IFPB technologies into full commercial use. Co-investment for RD&D can
    help mitigate the technical risks (especially integration with capital-
    intensive, legacy infrastructure) of early adopters of emerging IFPB
    technologies. Risk mitigation is an important factor in achieving the
    benefits of IFPBs, especially for integrating biorefinery technologies
    with existing manufacturing infrastructure. Federal support through
    research funding and other investments, such as loan guarantees and tax
    credits, is critical.
        In order to achieve the promise of IFPB technologies for the
    industry and for the Nation, we need greater stability and availability
    of funds provided through the OBP budget. We urge the committee to
    preserve the proposed $179 million funding of Biomass and Biorefinery
    Systems R&D, so that there will be sufficient appropriations to fund
    biorefinery demonstration and commercialization projects. We also urge
    the committee to ensure that forest-based materials are eligible for
    this and future biorefinery research and demonstration funding. Forest-
    based materials can sustainably produce enough biofuels to displace up
    to 10 percent of the country's petroleum production. They are a vital
    feedstock for achieving reduced dependence on foreign oil and
    facilitating bioindustries domestically and should be included in
    programs for biomass and biorefinery RD&D.
        A core enabling technology for part of the IFPB is black liquor
    gasification (BLG), which converts the by-product of the chemical
    pulping process into a synthetic gas. The synthetic gas can
    subsequently be burned to directly produce clean, efficient energy, or
    converted to other fuels such as hydrogen, renewable transportation
    fuels, and/or other high value chemicals. If fully developed and
    commercialized, a biorefinery based on BLG can produce up to 10 billion
    gallons of other renewable transportation fuels, and as much as 20,000
    MW of biomass power.
        In fiscal year 2006, DOE eliminated funding for BLG and related
    research, despite recent technical progress to bring the technology to
    pre-commercial demonstration. BLG is a core enabling technology for the
    IFPB, and is identified as a priority technology area for biorefineries
    in technology roadmaps created by industry, as well as in research
    plans developed by OBP to accelerate biorefineries and development of
    national bioindustry. Critical research areas identified by OBP
    include: integrated biorefinery support for thermochemical
    biorefineries, products core R&D in chemicals and fuels from syngas;
    thermochemical platform core R&D in BLG and syngas cleanup. AF&PA is
    recommending that $10 million be restored in the OBP budget for
    competitive research in these critical areas and to complete BLG core
    research and projects that were eliminated in recent cuts. This funding
    will provide the groundwork needed for next vital steps leading to
    large-scale demonstration of biofuels and biochemicals production in
    association with the industry's dominant Kraft pulping process.
        We appreciate the committee's interest in ensuring sustained and
    adequate funding for RD&D partnerships and look forward to working with
    you to advance industry and national interests.
                                     ______

    Prepared Statement of the Center for Advanced Separation Technologies,
              Virginia Polytechnic Institute and State University

        Chairman Dorgan and Ranking Member Domenici of the subcommittee, I
    represent the Center for Advanced Separation Technologies (CAST), which
    is a consortium of seven leading U.S. mining schools. I appreciate the
    opportunity to submit this testimony requesting your committee to add
    $3 million to the 2008 Fossil Energy Research and Development budget,
    U.S. Department of Energy, for Advanced Separations research. Research
    in Advanced Separations Technology Development is authorized by the
    Energy Policy Act of 2005, title IX, subtitle F, section 962. I am
    joined in this statement by my colleagues from the consortium: Richard
    A. Bajura: West Virginia University; Peter H. Knudsen: Montana Tech of
    the University of Montana; Richard J. Sweigard: University of Kentucky;
    Jan D. Miller: University of Utah; Ibrahim H. Gundiler: New Mexico
    Tech; and Maurice C. Fuerstenau: University of Nevada-Reno.
        funding request for center for advanced separation technologies
        The Center for Advanced Separation Technologies (CAST) is a
    consortium of seven universities with expertise in separations science
    as applied to energy research. It was established in 2001 to develop
    advanced technologies that can be used to efficiently produce cleaner
    fuels in an environmentally acceptable manner and to study the basic
    sciences and engineering involved. The new technologies developed and
    the highly skilled personnel produced as a result of its research
    activities will help the United States develop its domestic energy
    resources and achieve energy independence.
        The United States faces an energy crisis created by an imbalance
    between domestic supply and demand. While the United States makes up
    only 4.6 percent of the world's population, it consumes 24 percent of
    the world's energy resources, 25 percent of oil, and 44 percent of
    motor gasoline, while its domestic energy production lags behind. As a
    result, the United States imported 30 percent of its energy needs in
    2005, which is expected to grow in the future. On the other hand, the
    United States has large amounts of untapped energy resources within its
    borders, which include 271 billion tons of recoverable coal, 2.6
    trillion barrels of oil in the form of oil shale, and 20 billion
    barrels of oil in oil sands. In addition, the United States has 200,000
    trillion cubic feet (Tcf) of methane (CH4) deposited in the form of
    hydrates in ocean floors and permafrost. The amount of energy deposited
    as methane hydrates alone far exceeds the amounts of all fossil energy
    resources combined. There is a dire need to exploit these untapped
    domestic energy resources by developing advanced separation
    technologies.
    Organization
        The Center for Advanced Separation Technologies (CAST) was formed
    initially between Virginia Tech and West Virginia University with the
    objective of developing technologies that can help the U.S. coal
    industry produce cleaner solid fuels with maximum carbon recovery in
    environmentally acceptable ways. The scope of work was limited to
    studies on solid-solid and solid-liquid separation methods that are
    used in the coal industry. In 2002, five other universities listed
    above joined the consortium to develop crosscutting technologies that
    can also be used in a broader spectrum of the U.S. resources
    industries. Therefore, the scope of CAST research was expanded to
    include studies of chemical/biological separations and environmental
    control.
        By working together as a consortium, the center can take advantage
    of the diverse expertise available in its member universities and
    address the interests of different geographical regions of the country.
    Working together as a consortium is consistent with the recommendations
    of a recent National Research Council (NRC) report. It stated that
    ``consortia are a preferred way of leveraging expertise and technical
    inputs to the mining sector,'' and recommended that DOE should support
    ``academia, which helps to train technical people for the industry.''
    Progress And Next Step
        At present, a total of 59 research projects are being carried out
    at the 7 CAST member universities. Of these, 20 projects are in solid-
    solid separation, 5 in solid-liquid separation, 15 in chemical/
    biological separation, 9 in modeling and control, and 10 in
    environmental control. These projects were selected by industry panels
    in accordance with the priorities set forth in the CAST Technology
    Roadmap, which was developed by an industry panel in 2002. Research
    results are presented at workshops to provide a forum to exchange
    ideas, create synergy, and interact with industry. The next workshop
    will be held during July 24-26, 2007, in Blacksburg, Virginia.
        Despite the high price of coal, many coal companies are losing
    significant amounts of their mined coal due to the lack of appropriate
    solid-solid and solid-liquid separation processes. In general,
    efficiencies of removing ash, sulfur and mercury from coal using these
    processes deteriorate sharply with decreasing particle size. As a
    result, many companies discard coal fines to impoundments. According to
    a National Research Council (NRC) report, the U.S. coal industry
    discards approximately 70 to 90 million tons of fine coal annually,
    which represents a significant loss of valuable national energy
    resource and at the same time creates serious environmental concerns.
    The NRC report was produced as a result of a congressionally directed
    investigation of a major impoundment failure that occurred on October
    11, 2000, in Martin County, Kentucky. The report recommended a study to
    identify technologies that can eliminate (or reduce) the need for
    slurry impoundments.
        There are more than 760 impoundments in the eastern United States,
    many of which are rated ``high risk.'' Companies have been recovering
    some of the fine coal from the waste impoundments by taking advantage
    of the section 29 Synfuels Tax Credit. However, this tax credit is due
    to expire in 2007; therefore, there is an impending need to develop
    advanced fine coal cleaning and dewatering technologies that can be
    used not only to recover the fine coal from impoundments without the
    benefit of a tax credit but also to eliminate the waste from the source
    so that there is no need to create future impoundments.
        For the reasons described above, CAST has been focusing on
    developing advanced fine coal cleaning and dewatering technologies. In
    one project, pilot-scale tests were conducted on the coal slurry from
    an impoundment (Pinnacle) in Pineville, West Virginia. Based on the
    successful test results obtained by CAST on the coal samples taken from
    the impoundment, Beard Technologies constructed a recovery plant in
    late 2006, and is currently in the process of shakedown testing. This
    is the first plant designed to recover practically all of the coal in a
    waste impoundment without the benefit of tax credit. If successful, the
    company plans to build additional plants using the advanced separation
    technologies developed by CAST. It is estimated that there are more
    than 2.5 billion tons of coal discarded in numerous impoundments in the
    United States.
        In another fine coal dewatering project, CAST is developing a
    hyperbaric centrifuge that can remove water from fine coal using a
    combination of air pressure and centrifugal force. Recently, a semi-
    continuous bench-scale test unit has been designed and constructed. In
    a series of preliminary tests conducted on a coal sample finer than
    0.15 mm in size, moisture was reduced to less than 10 percent by
    weight, which is substantially lower than those obtainable using
    conventional methods. Decanter Machine Company in Johnson City,
    Tennessee, has acquired a license from CAST to market the new
    technology, and is planning to construct a large-scale prototype unit
    for onsite testing. There are several other dewatering research
    projects carried out at CAST, all of which are promising. These include
    a flocculant injection system, which is already in use in many coal
    cleaning plants, and a deep-cone thickener which is designed to
    increase the consistency of refuse materials (mainly clay) so that they
    can be disposed of without using impoundments.
        Traditionally, the western United States subbituminous coals are
    not cleaned before burning for power generation. However, depletion of
    higher quality reserves may soon force companies to remove impurities
    prior to shipping to eastern markets. Unfortunately, the water-based
    coal cleaning methods employed for cleaning eastern coal cannot be used
    for the western coal due to the lack of water. To address this problem,
    CAST researchers have been developing ways to clean western coal using
    a dry solid-solid separation method. A pilot-scale test conducted
    onsite showed that about one-quarter of the ash and one-third of the
    sulfur can be removed with high recoveries. Further, the dry cleaning
    process also removed more than 50 percent of the mercury originally
    present in the coal. It is anticipated that the technology will be
    commercialized in 2007.
        CAST has also developed metallic filters that can remove mercury
    from flue gas. The process has been tested successfully at an operating
    power plant in Colstrip, Montana, with over 90 percent removal
    efficiencies. The spent filter can be cleaned of the captured mercury
    and reused, while the mercury stripped off the filter can be stored
    permanently in stable forms.
        Many of the separation technologies developed by CAST can also be
    used to upgrade fertilizer minerals such as potash and phosphate. In
    2006, Mosaic Potash Carlsbad, Inc. implemented a new method of
    minimizing the harmful effect of clay in processing potash ores and
    increased recovery by 6 percent. An improvement such as this has
    allowed mining companies in New Mexico, which produce more than 70
    percent of potash in the United States, retain 600 high-paying jobs. At
    present, CAST is developing new methods of processing difficult potash
    ores. These new methods will make it possible to mine 50 million tons
    of langbeinite ores, which will greatly increase the life of the U.S.
    potash industry.
        The United States is the second largest copper producer in the
    world; however, much of the ores are of too low grade to be
    economically recovered using the conventional solid-solid separation
    methods such as flotation. Therefore, CAST has been developing an
    alternate method of extracting copper from low-grade ores using a
    chloride-based leaching, followed by direct electrowinning of dissolved
    copper. This could replace the traditional methods involving fine
    grinding, flotation, and smelting, which are energy intensive and,
    therefore, are not amenable for processing low-grade ores in western
    United States. The energy savings that can be realized by using this
    new method can be as high as 25 million Btu per metric ton of copper.
        In addition to the more practical projects described above, CAST
    has also conducted fundamental research. As an example, a mathematical
    model has been developed to describe froth flotation--the most widely
    used solid-solid separation process in both the coal and minerals
    industries. The model is based on first principles so that it has
    predictive and diagnostic capabilities. In another project,
    computational fluid dynamic (CFD) simulation techniques have been
    employed to design optimal flotation machines. This project is cost-
    shared by Dorr-Oliver EIMCO, Salt Lake City, Utah, the world's largest
    coal and minerals processing equipment manufacturer. In still another
    project, the forces acting between two microscopic surfaces immersed in
    water have been measured using an atomic force microscope (AFM) and a
    surface force apparatus (SFA). The results showed that strong
    attractive forces are present between hydrophobic surfaces, the origin
    of which is not yet known. The new surface force, which is referred to
    as ``hydrophobic force'' plays an important role in processing energy
    minerals, such as coal, oil sands, oil shale, petroleum, and methane
    hydrates, that are naturally hydrophobic.
        Many of the separation processes being developed at CAST can be
    used for water clean up. For example, the flotation technique which was
    developed originally for separating one type of mineral from another is
    used to remove suspended solids from waste water streams. Furthermore,
    the basic scientific knowledge gained from the solid-liquid and
    biological separations research at CAST can be used to remove toxic
    elements present in waste water, mine effluents, and ground water.
    Water treatment research is of critical importance worldwide,
    particularly to the western United States which has been under drought
    conditions since 1999. A recent study showed that by 2050 untreated
    wastewater could reduce the supply of renewable water supply by one
    third.
                         funding request and rationale
        The United States is by far the largest mining country in the
    western world. In 2005, the industry produced $73.8 billion worth of
    raw materials, including $22.3 billion for coal, and $51.5 billion for
    minerals. Australia is a smaller mining country, but has five centers
    of excellence in advanced separations as applied to coal and minerals
    processing. In 2005, Australia established the Mineral Science Research
    Institute with a funding of $22.6 million for 5 years. In the United
    States, CAST is the only consortium serving the U.S. energy and
    minerals resources industry.
        CAST is developing a broad range of advanced separation
    technologies. Although it is a relatively new center, many of our
    research projects have yielded technologies that have already been
    deployed to industry. Many other promising projects are on-going and
    require financial support. Continued funding will allow CAST to develop
    advanced technologies that can be used to exploit the abundant national
    energy resources in a manner that is acceptable to the environment. For
    fiscal year 2008, CAST is requesting $3 million for its research
    activities.
                                     ______

        Prepared Statement of the Petroleum Technology Transfer Council

        Mr. Chairman and members of the subcommittee, on behalf of the
    Petroleum Technology Transfer Council (PTTC) and its partners
    throughout its domestic oil and natural gas industry network, I would
    like to express our concern if Federal funding for technology research
    and development is terminated.
        The administration has proposed to completely stop Department of
    Energy natural gas and oil R&D funding through the appropriations
    process and to rescind R&D funding previously authorized in the 2005
    Energy Policy Act (EPACT).
        PTTC strongly opposes this policy and believes it will be harmful
    over the near- and long-term. Among those that will be negatively
    impacted are:
      --The academic community where tomorrow's scientific professionals
            gain valuable seasoning through participation in DOE-supported
            projects in their graduate years;
      --The young and newly trained scientific professional which is
            already entering the workforce at near low historic levels; and
      --The domestic petroleum supply, which is developed primarily by
            independent producers that rely heavily on evolving
            technologies to exploit mature and problematical petroleum
            resources.
        The R&D Consortium created and funded through EPACT, which will be
    implemented by the Research Partnership to Secure Energy for America
    (RPSEA), enables focused research in areas critical to the U.S.'s
    energy future: deepwater offshore and unconventional resources. These
    needs should be addressed.
        Still, there are significant R&D gaps that the Consortium will not
    cover that must be supported through R&D funding through the
    appropriations process:
      --Enhanced oil recovery, particularly the interplay of CO2
            flooding with carbon capture;
      --Field demonstration and technology transfer of newly developed
            technologies in topic areas outside those addressed by EPACT;
            and
      --Technology transfer for proven yet under-applied technologies.
        Rightly so, there is recognition that alternative energy sources
    are important to the U.S.'s energy future. It will take time for
    alternative energy R&D spending to lead to sound and significant
    sources of alternative fuels. The scientific professionals being
    seasoned in today's natural gas and oil R&D programs will more than
    likely be those participating in tomorrow's alternative energy
    research. The academic pipeline that provides those professionals
    cannot be stopped up by intermittent starts and stops of R&D funding.
    Our country deserves better.
      why the federal investment in research and development is important
        PTTC primarily serves the upstream domestic energy industry by
    facilitating the transfer of applied technology between technology
    developers and independent producers who are the driving forces in the
    domestic natural gas and oil exploration and production (E&P) industry.
    Independents drill 90 percent of the U.S.'s natural gas and oil wells,
    produce 82 percent of the natural gas and 68 percent of oil produced
    domestically. According to the Independent Petroleum Association of
    America (IPAA), independent producers have been recently investing 150
    percent of their domestic cash flow back into domestic oil and natural
    gas development. Much of that investment is for proven technology that
    is essential for developing the more difficult to recover
    unconventional resources that are a primary target of today's
    exploration effort.
        It's a reality that the ``easy'' natural gas and oil in the U.S.
    has already been developed. Those resources that remain--deep water,
    unconventional gas, enhanced oil recovery, even oil shale--are
    increasingly complex, requiring both more manpower and new
    technologies, not to mention a tremendous capital investment. Where
    will those new technologies come from?
        Major oil companies have scaled their R&D back, and what research
    they do fund is focused on larger international opportunities. The
    technology provider/service sector R&D dollars logically follow this
    high volume, high profit mark. Technologies that are developed have
    some application in mature U.S. producing basins, but they often need
    adaptation and resizing/simplification. And when they are developed, it
    is more costly for the service sector to connect with ``thousands'' of
    dispersed independents.
        Independents are the dominant players in the domestic industry and
    their human resources have reached critical low levels. The few who do
    have the capital and human resources--not already dedicated to drilling
    and production activities--typically do not have the technical
    experience or knowledge to effectively invest R&D dollars.
        Collaborative research, partially supported with Federal funding to
    keep it focused and broadly applicable, makes good economic sense.
    History is well documented to show that federally funded R&D has led to
    significant increases in domestic energy supplies. This research also
    seasons scientific professionals emerging from the academic pipeline,
    improving their productivity to successfully exploit natural gas and
    oil reserves and making America more competitive in global energy
    markets. This higher productivity leads to more natural gas and oil
    recovery, faster.
        In conclusion the Congress has a responsibility to the United
    States to take logical actions towards a secure energy future. One of
    those steps is continuing support for natural gas and oil R&D--to both,
    recover more domestic oil and natural gas and to feed the pipeline for
    future scientific professionals.
                                     ______

      Prepared Statement of the Interstate Oil and Gas Compact Commission

        Chairman Dorgan, Ranking Member Domenici and members of the
    subcommittee, thank you for the opportunity to submit testimony on the
    appropriation to the U.S. Department of Energy (DOE) and specifically
    the Office of Fossil Energy. My testimony represents the views of an
    organization of governors of 30 member States of the Interstate Oil and
    Gas Compact Commission (IOGCC). These States account for virtually all
    of the onshore domestic production of crude oil and natural gas.
        The States strongly and unequivocally support an appropriation to
    the Fossil Energy Research and Development ``Gas--Natural Gas
    Technologies'' and ``Petroleum--Oil Technology'' programs in an amount
    no less than that appropriated in fiscal year 2005 ($78.76 million),
    which was the budget year before the President's budget called for the
    complete elimination of funding for these vital functions. States
    strongly oppose the administration's fiscal year 2008 budget request
    that would terminate these programs, which would also effectively
    eliminate the DOE's Office of Oil and Natural Gas within the Office of
    Fossil Energy. This would be a colossal mistake for a variety of
    reasons, set out more fully below. Taxpayers are very supportive of
    Federal investments in energy security, and there is no better
    investment than in Research and Development (R&D).
        In spite of the fact that the country operates under a constant
    threat of another ``energy crisis,'' government is proposing to do less
    to ensure the Nation's resources are fully produced. The U.S. domestic
    oil industry today is the Nation's largest single supplier of crude
    oil, providing about 40 percent of the national demand for oil. The
    rest is imported--and the percentage of imports grows every year--
    making us more and more vulnerable to international crises and foreign
    economic manipulation. Our dependence on others for our energy security
    has never been greater. However, domestic natural gas suppliers provide
    about 85 percent of all of the natural gas demand in the Nation, with
    most imports coming from Canada. The United States even exports natural
    gas and has an abundant supply.
        One thing we can count on, however, is that domestic supplies of
    crude oil and natural gas are our best hedge against this vulnerability
    and increasing import dependency. In addition to energy security, there
    are a myriad of other reasons why domestic production is preferable to
    imports:
      --Our domestic resources are produced under the world's most
            effective environmental protections, which have been
            established and are enforced primarily by the States.
      --Domestic resources create high-quality jobs here at home and
            provide the energy that powers our standard of living. For
            example, few realize that stripper oil wells (wells producing
            less than 10 barrels per day) account for about one-quarter of
            the lower 48 States' onshore domestic oil production and
            stripper gas wells (wells producing 60 Mcf per day or less)
            about 10 percent of onshore domestic gas production. This is a
            critical natural resource and it should not be abandoned in
            favor of imported energy.
      --Despite perceptions to the contrary, large quantities of oil and
            natural gas remain onshore in the United States. These
            resources represent the most stable and secure energy
            available. These resources may exist in fields that have
            already been discovered and await a new technology that results
            in cost-effective recovery. Or they may lie in reservoirs yet
            undiscovered due only to a lack of technology appropriate for
            deeper horizons or greater geologic complexity. The bottom line
            is vast reserves remain untapped. While recovery rates have
            increased dramatically in the past 50 years and exciting new
            tools have been developed for exploration, still more can be
            done to reach the full production potential for reservoirs.
        The U.S. Department of Energy's Office of Oil and Natural Gas,
    which is funded by the programs set forth above, is the only place in
    the U.S. Government that is responsible exclusively for oil and natural
    gas policy. It is also the only place in the U.S. Government that fully
    understands and is thus able to represent within the administration the
    critical importance of domestic oil and natural gas to our country, our
    economy, and our national security. This resident expertise is a
    national asset--one that is especially important as other agencies
    embark on rulemaking and take other actions which impact our domestic
    oil and natural gas industry. Terminating this office and its programs,
    including its critical Research and Development programs, would be a
    tragic mistake. For these reasons the IOGCC and its member States
    strongly support the continued existence and viability of DOE's Fossil
    Energy Office of Oil and Natural Gas and an appropriation in fiscal
    year 2008 at least equal to the fiscal year 2005 appropriation.
        Turning to critical area of R&D specifically, many experts believe
    R&D is the most important factor in maximizing the availability and
    utilization of petroleum resources, especially domestic reserves.
        A recent report compiled by the IOGCC confirms the declining trend
    in R&D expenditures while the country is experiencing a corresponding
    increase in reliance on imports. Major oil companies once poured
    millions into research and development. Today, however, many large
    companies have shirted their focus overseas and offshore. Eighty five
    percent of the wells in the United States are drilled by independent
    oil and natural gas producers (producing roughly 40 percent of the
    domestic oil and 65 percent of the domestic natural gas). Such smaller
    independents lack both the resources and infrastructure for significant
    R&D and it is here where government--State and Federal--can fill an
    obvious void.
        The decline of Federal and private support for oil and gas research
    is well documented. The reasoning for cutting government support seems
    steeped in politics and a failure to understand the importance of
    Federal R&D to our domestic oil and gas industry and our energy
    security. However, this is a new era of uncertainty in our energy
    security that requires a fresh look at spending priorities.
        An IOGCC publication entitled ``Who Will Fund America's Energy
    Future?'' states that ``A strong domestic energy policy demands a
    strong R&D component. As the largest holder of domestic oil and gas
    resources, the Nation benefits from their production. Domestic
    production creates wealth for other royalty owners, contributes
    significantly to State, Federal and local economies and tax bases,
    offsets imports on a barrel-per-barrel basis, and cuts into trade
    deficits that are running at record levels.''
        If the United States is to maintain its ability to produce its
    domestic supplies of oil and natural gas, Federal expenditures on R&D
    must fill the leadership role left behind by private industry. Federal
    funding on oil and natural gas must increase if the United States is to
    maintain its ability to produce the domestic oil and natural gas
    resources our country so desperately needs. But instead the
    administration's budget for fiscal year 2008 eliminates oil and natural
    gas research.
        In fact, the proposed budget calls for cutting the petroleum
    technology R&D program at the very moment that our country could
    benefit the most from technology breakthroughs that can be applied to
    our own resources.
        Informed taxpayers support funding R&D to protect the environment
    and produce more energy--precisely the mission of DOE's oil and gas
    research program. Much promising work lies ahead including developing
    new methods of drilling that reduce impacts to the environment;
    inventing new materials that allow better, faster drilling; creating
    new chemicals and biological tools that increase production;
    identifying better uses of renewables in the production of fossil
    fuels; minimizing waste; and creating high quality jobs.
        There have been many success stories from the DOE oil and gas
    research program. One recent, striking example of how DOE makes a real
    contribution to advances in environmental protection, energy production
    and innovation comes from a DOE-IOGCC project in California. Under
    DOE's Preferred Upstream Management Practices (PUMP) program, the
    project is proving that unmarketable gas can be used on site to provide
    power to oil wells previously idle. At the same time, the project is
    meeting the strict air quality standards in the Los Angeles area. DOE
    funding for this project was matched 100 percent by other partners,
    which enabled the government to double its R&D investment. Every
    government program investment should be as effective.
        This is but one example of DOE helping provide leadership in
    demonstrating a technology that may have much broader implications for
    operators in 30 other oil and gas producing States who now won't have
    to reinvent the well in order to satisfy environmental restrictions and
    the urgent need for domestic energy.
        Through careful regulation, IOGCC member States have helped
    maximize production and minimize wasteful practices that can lead to
    the premature abandonment of reservoirs. States have also developed
    innovative approaches to deal with temporarily idled wells, created
    incentives that maximize production and supported R&D that improves
    recovery rates and lowers finding costs.
        Going forward, the IOGCC believes that a balanced and effective
    energy policy must encompass a number of fundamental principles, with
    R&D serving as a centerpiece in each. Other guiding principles include
    conservation of resources both in the producing and consuming sectors,
    encouraging domestic production to create economic growth and
    stability, increasing access to public lands for responsible
    development and prolonging production from wells at economic risk.
        We strongly encourage the subcommittee's support of funding oil and
    gas research and development as a positive step toward our national
    security today and our energy security in the future.
                                     ______

                   Prepared Statement of Strand Energy, L.C.

        Dear Sirs or Madams: I am the project manager for a small DOE award
    (DE-FG26-00BC15254) granted to Strand Energy, L.C. (Strand) under the
    Technology Development with Independents program which is administered
    by the National Energy Technology Laboratory (NPTL). This $75,000 grant
    is for the optimization and implementation of an improved oil recovery
    project in a small oil field operated by Strand and located in
    southwest Arkansas, the St Mary Barker Sand Unit (SMWBSU).
        I am writing you to present testimony concerning the benefits of
    this award in fostering the development of technical skills for Strand
    Energy that are allowing us to add value to this domestic energy asset
    through local and regional job development and increased reserves that
    are benefiting the citizens of Arkansas through increased tax revenues
    and royalties. Specifically, the award has allowed Strand engineering
    and geological staff to develop a skill set in the science of reservoir
    modeling; computer characterization and simulation of reservoir
    processes. This is guiding Strand in our efforts to reduce development
    risk while increasing oil reserves for this property.
        Although less than $5,000 of the $75,000 award has been used to
    date it is expected the remainder of the award will be invested during
    2007 and early 2008 in new technologies for this active small domestic
    independent exploration, exploitation and production company operating
    in the southwestern U.S. and specifically in adding further value to
    the SMWBSU. Strand Energy and our Partners have invested to date in
    access of $600,000 in equipment and well workovers in the SMWBSU
    property to implement the improved oil recovery project.
        The DOE-NPTL grant program requires that technologies and practices
    developed as a result of the project award be published publicly to the
    domestic oil and gas independents community. This will further benefit
    development of our domestic energy resources through improved oil
    recovery projects implemented by other active operators as well as by
    Strand as we acquire additional mature oil properties for redevelopment
    through secondary and tertiary recovery processes and practices
    experienced successfully at the SMWBSU field.
        I hope, as well as do the professors and graduate students I have
    worked with on this project, that the DOE will be allowed to continue
    the administration and development of additional programs like the
    NPTL's Technology Development with Independents in the future.
                                     ______

          Prepared Statement of the Coal Utilization Research Council

        CURC submits this testimony in support of an increase of $288
    million in the fiscal year 2008 Department of Energy Fossil Energy
    budget request, as follows: $88 million for the Coal R&D program (for a
    total of $333.5 million); and $200 million for the CCPI program (for a
    total of $273 million). CURC supports the administration's request to
    fund FutureGen at $108 million. Details supporting these
    recommendations are discussed below.

                                  INTRODUCTION

        Coal is our country's most abundant, low cost source of fossil
    energy providing more than one-half of the electricity generated
    domestically and capable of supplying transportation fuels, chemical
    feedstocks, and pipeline quality synthetic natural gas. The challenge
    has been to sustain cost effective ways to use this abundant domestic
    energy resource in a manner that continues to provide low cost power
    and products for the American consumer while meeting environmental
    goals and national energy security needs. In large measure, technology
    is the means to these ends.
        More than three decades of experience has proven that any barriers
    to the use of coal can be overcome through the collaborative efforts of
    industry and government in jointly pursuing technology solutions. Now,
    global warming and concerns that the use of fossil fuels is an
    important factor in causing changes to the climate are a central focus
    of technology development. Equally important is the need for reliable,
    safe, and cost effective energy (and electricity) for the American
    consumer. These dual needs should be the focus of the Department of
    Energy's clean coal program.
        In light of the growing concerns over climate change and the need
    for reliable, domestically secure energy resources, it is vitally
    important that the DOE's technology research, development,
    demonstration and deployment programs, undertaken in partnership with
    the private sector, be robust and occupy a key spot on the national
    agenda. Unfortunately, even while there is acknowledgement over the
    importance of technology, there is not the corresponding commitment in
    dollars and focus. The DOE fiscal year 2008 budget request must be
    focused specifically upon the dual needs of energy security and
    achieving our Nation's environmental goals, and that budget must be
    dramatically increased if we are to succeed in developing technologies
    to address these needs.

                       THE CLEAN COAL TECHNOLOGY ROADMAP

        The CURC-EPRI Roadmap defines the steps necessary to achieve near
    zero emissions from coal use, including the cost effective capture and
    long-term storage of CO2. The Roadmap includes a technology
    development program for carbon management, defined as the capture and
    storage of carbon dioxide. The Roadmap targeted two approaches to
    carbon management: (1) higher efficiency; and (2) capture and storage
    of CO2 in geologic reservoirs. The goal of the Roadmap is to
    have, by 2025, new combustion and gasification based systems that can
    reduce emissions of traditional pollutants an order of magnitude beyond
    the performance of current technologies, capture and store 90 percent
    or more of the carbon in the coal, achieve improved efficiency over
    today's systems, and do all of these things while maintaining
    competitive low cost power generation. Our analysis suggests that the
    combined Federal and industry investment necessary to achieve the goals
    of the Roadmap is approximately $11 billion between now and 2025.
        When the Roadmap costs were first estimated, the cost of steel and
    other key power plant commodities had been relatively stable. In the
    last 2 years, these prices alone have risen by more than 50 percent and
    there is every likelihood that such prices will not lower. This means
    that the estimate of the Roadmap's projected cost to develop and
    demonstrate these improved technologies will likely increase
    dramatically as well. That analysis is underway, but was not completed
    in time for this written statement. At a minimum, demonstration
    programs will be most clearly impacted by these increased costs.
    Secondly, while much of technology development simply requires time to
    initiate and complete, it is also true that focusing efforts upon
    carbon capture and storage (CCS) technologies and augmenting funding in
    related areas will best insure the availability of such technologies in
    a timely fashion. Adequate funding for CCS technology development and
    demonstration is critical to addressing climate change; reduced funding
    levels that stretch out the time required to complete RD&D is not an
    option.
        The ``good news'' finding from the Roadmap is that there is a clear
    pathway to reach our technology performance goals for coal, and the
    ultimate technology products will be highly competitive if we conduct
    the needed RD&D. And industry stands ready to contribute its part, in
    money and intellectual resources, to the program of collaborative
    research. The ``bad news'' is that government funding, to date, has not
    been adequate and moreover, the fiscal year 2008 budget request is not
    sufficient. In sum, CURC believes that current funding for R&D is
    substantially inadequate, and funding for demonstrations is totally
    inadequate.
        Recognizing the fact that we are operating within a severely
    constrained budget, and Congress is intending to develop legislation to
    address global warming, CURC believes that funds provided for the
    entire DOE Clean Coal Program should focus primarily on those
    technology development programs that will enable both short- and long-
    term CCS technology development and an extended near term program for
    mercury control technology. Activities that do not support these
    activities should be considered lower priority and only funded if
    additional funding is made available for those activities.

                                RECOMMENDATIONS

        Using the roadmap as a tool to identify our Nation's coal research,
    development and development (RD&D) needs, CURC has examined the
    President's fiscal year 2008 budget request for coal and submits the
    following recommendations.
        Clean Coal Power Initiative (CCPI).--The funding proposed for the
    CCPI, $73 million in fiscal year 2008, is wholly inadequate to meet the
    needs that this program was created to address. This is DOE's only
    program that can support the demonstration of CO2 capture
    technologies that might be retrofitted to the existing fleet of coal
    fired power generation. Equally important, funding for this program
    will support demonstrations of CO2 capture and storage
    technologies integrated with advanced combustion and IGCC based
    systems. The CURC-EPRI Roadmap recommends approximately $5.6 billion in
    funding for these types of demonstrations through 2015. The President's
    request is clearly not enough to fund the scale and magnitude of the
    projects needed. CURC recommends that funding for CCPI in fiscal year
    2008 be increased by an additional $200 million. Combined with other
    resources currently available for the program, this should be
    sufficient to allow a 3rd CCPI solicitation for project proposals to be
    issued in calendar year 2007, with anticipated awards made in 2008.
    CURC also recommends that the next CCPI solicitation primarily focus on
    large scale, fully-integrated power generation and carbon capture and
    storage demonstrations.
        FutureGen.--The Roadmap recognizes the benefits to technology
    development that the FutureGen project can provide and CURC supports
    this important R&D program that can serve as a test bed for validating
    technologies developed out of the DOE's R&D program. To succeed as
    originally envisioned, basic R&D activities must continue to provide
    the technology components needed in FutureGen. The administration seeks
    to use previously appropriated funds to support FutureGen in fiscal
    year 2008, which CURC supports. The administration also seeks to
    rescind $149 million in prior year appropriations. CURC recommends that
    this $149 million be deferred for future use. The FutureGen Industrial
    Alliance has stated previously that FutureGen, CCPI and the coal R&D
    programs each must be adequately funded because all of these programs
    are necessary to support commercial deployment of advanced clean coal
    technologies. CURC also endorses this position.
        Coal R&D Program.--The coal R&D program should be focused on
    technology R&D designed to address efficiency improvements to reduce
    CO2 emissions and on alternative CO2 capture
    technologies that might provide long term technology options, one
    result of which would be to drive down the costs of carbon management.
    CURC has concluded that the basic R&D needs identified in the CURC-EPRI
    Roadmap cannot be met with the fiscal year 2008 budget request for the
    coal R&D programs. CURC recommends that funding in fiscal year 2008 be
    increased by $88 million, without funding for earmarks, and be directed
    to the coal R&D program as follows:
      --Innovations for Existing Plants (IEP).--Much progress has been made
            in developing and deploying technologies to reduce emissions
            from existing coal-fired power plants. However, there is a need
            to focus additional attention on mercury emissions control.
            Expert opinion concluded initially that controlling and
            capturing mercury emitted from combusting bituminous coals
            would be the least problematic, while the lower rank (western)
            coals would be most challenging. With this focus, control
            problems related to western coals have been solved, but
            unexpected issues arose with bituminous coals and problems
            remain in that area. It is imperative that funding for this
            program be restored to $25 million in order to continue long-
            term (more than 30 day) mercury control field tests so that
            industry can be equipped with the technologies necessary to
            comply with the USEPA Clean Air Mercury Rule.
      --Carbon Sequestration.--CURC recommends an increase of $30 million
            to support the front end of a multi-year carbon sequestration
            RD&D program. CURC recommends that DOE expand the focus of the
            program that is supporting novel approaches to capturing
            CO2 from the existing fleet of coal plants as well
            as pre- and post-combustion and oxy-coal combustion. CURC also
            recommends that sufficient funds be made available to initiate
            or complete the Phase II CO2 injection pilot-scale
            tests in reservoirs other than oil/gas reservoirs, unless tests
            in oil and gas reservoirs would add significant knowledge to
            the monitoring, measurement and verification of injecting
            CO2 into other reservoirs. It is very important that
            these recommended additional funds support those projects that
            advance the science of sequestration in reservoirs other than
            oil/gas reservoirs, which is a commercial technology in use
            today. Additionally, the DOE budget justification indicates 3
            or 4 large scale CO2 injection demonstrations will
            be initiated to validate carbon storage techniques through
            Phase III of the regional partnerships. CURC supports the DOE
            shift to Phase III, but recommends that DOE conduct numerous
            large scale demonstrations in a variety of permanent storage
            reservoirs other than applications for enhanced oil recovery,
            which is a commercial activity. These demonstrations need to be
            undertaken in multiple regions of the country with uniquely
            different reservoir characteristics. Finally, every effort
            should be made to couple Phase III demonstrations with coal-
            based energy projects that include CO2 capture (if
            such CCS projects are undertaken then significantly more
            funding for demonstrations will be required).
      --Advanced Turbines.--This program should be increased by $12 million
            to insure that the development of the hydrogen turbine is not
            delayed. The hydrogen turbine is an essential component of
            FutureGen. It is also important that other advanced turbines
            that will use synthesis gas derived from coal should be
            supported, as well. In both instances, such turbines are
            essential to increase plant efficiencies and reduce carbon
            emissions. The primary objective of this program must be to
            focus upon the development of large scale turbines needed to
            support advanced generation coal power facilities. University
            research programs to ensure long term technology development
            are also important.
      --Advanced Research.--CURC recommends an additional $8 million for
            ultra supercritical materials research activities. This
            program, which has been under funded for the past 2 years,
            supports the development of high temperature materials that
            will enable boiler systems and steam turbines to become more
            efficient, resulting in the reduction of power plant
            CO2 emissions. Advanced materials derived from a
            successful high temperature materials program will enable
            efficiency gains which, in turn, will reduce CO2
            emissions. Therefore, this program is very important for its
            applicability to new ultra supercritical and IGCC systems.
      --IGCC.--CURC recommends an additional $5 million to continue
            important ongoing R&D at the Power Systems Development Facility
            and on alternative gasification based systems that are critical
            to supporting both FutureGen and future gasification technology
            needs.
      --Coal to Liquids.--CURC recommends an increase of $8 million to
            focus on coal to liquids activities. Any funding increase
            should be directed towards activities that will achieve the
            dual goal of increased energy security and reduced
            CO2 emissions from coal to liquids facilities.
        CURC is concerned that the practice of earmarking funds undermines
    the competitive nature and fundamental goals of the DOE clean coal
    program. Understanding that some earmarks may be consistent with the
    DOE program goals and those of the CURC-EPRI Roadmap, CURC believes
    that Congress and DOE should consider a set of principles to govern the
    earmark process. These principles would insure that the earmarks have
    been reviewed by Congress through hearings or through other measures to
    make certain they are consistent with the goals of the program and
    focus on the development of critical CCS technologies.

                                   CONCLUSION

        Continued long term use of coal, and realization of its benefits,
    will only occur if an extensive commitment to technology development
    allows coal to overcome environmental challenges. The fiscal year 2008
    budget request does not reflect such a commitment. Congress must
    support the development of FutureGen, and substantially increase
    funding for the R&D and CCPI programs with broad support for the
    development of both combustion- and gasification-based technologies, if
    we are to develop effective technology solutions to address climate
    change.
                                     ______

      Prepared Statement of the Electric Drive Transportation Association

        The Nation has come to understand that achieving real national
    security and addressing climate change will require a concerted effort
    to end America's oil dependence. The electric drive technologies being
    developed by the Department of Energy's Office of Energy Efficiency and
    Renewable Energy (EERE), in particular, the Vehicle Technologies and
    Hydrogen and Fuel Cell Technologies programs, are integral to the
    success of that effort. As you assemble the fiscal year 2008 Energy and
    Water Development budget, we respectfully request that you fund these
    programs at levels commensurate with their major contribution to ending
    our oil dependence.
        At the Electric Drive Transportation Association (EDTA), our
    mission is promotion of electric drive technologies, which reduce
    petroleum consumption and decrease emissions of greenhouse gases and of
    air pollutants. Using electricity, by itself or in conjunction with
    another fuel, electric drive technologies power the wheels of vehicles
    that are being used today throughout the transportation sector,
    including passenger vehicles, trucks, tractors, locomotives and ground
    support equipment. Electric drive also powers transportation
    infrastructure, such as truck refrigeration and truck stop
    electrification facilities, which allow idled trucks to power with
    clean, alternative electricity.
        Electric drive technologies also complement the national effort to
    increase the use of biofuels with their ability to use renewable fuels
    in hybrid applications and to use renewable power in exclusively
    electric operation.
        Multiple fuel and vehicle technologies, including hybrids, battery
    electric vehicles, fuel cell vehicles, and plug-in versions of these
    electric drive vehicles, need to be part of the national plan to end
    America's oil dependence. A substantial and consistent level of Federal
    support for research, development and deployment is essential to moving
    these technologies fully into the mainstream.
        EERE's Hydrogen and Fuel Cell Technologies Programs and the Vehicle
    Technologies Programs are the leading edge of the Federal effort to
    advance these technologies and to bring us closer to our energy goals.
    For instance, increased energy storage technologies, such as advanced
    batteries, are the foundation of the next wave of electric drive. They
    are the key to commercialization of plug-in electric drives and will
    accelerate advances in all electric drive vehicles. The
    administration's $41 million request for energy storage research and
    development is a step in the right direction. However, it is too small
    a step when considered against what is at stake and what can be
    achieved.
        For Fuel Cell and Hydrogen Technology Programs, the administration
    wisely maintains its overall commitment to hydrogen and fuel cell
    development, but the request falls short in two key areas. In the
    Technology Validation program, hydrogen infrastructure and fuel cell
    systems are certified under real world conditions. This work guides
    research agendas and helps establish the ``real world'' data collection
    necessary to develop fuel cell vehicles. However, DOE's allocation of
    fiscal year 2007 funds for this work is unclear at this time and the
    $30 million fiscal year 2008 program request is $3 million lower than
    the fiscal year 2006 appropriated level and nearly a third ($9.5
    million) lower than the 2007 request. We urge you to provide the
    appropriate guidance and ensure continuous and credible funding for the
    Technology Validation program's critical work.
        An additional tool in speeding commercialization of hydrogen fuel
    cells was created in the Title VII Federal procurement programs of
    EPAct05. The programs were designed to use the power of the Federal
    Government to promote increased overall fuel cell production and reduce
    costs by helping Federal agencies defray the incremental costs of
    purchasing hydrogen energy systems and fuel cell vehicles and
    equipment. Unfortunately, these market transition programs have not yet
    been funded and were not included in the administration's fiscal year
    2008 request.
        We ask you to implement the EPAct05 procurement programs with
    sufficient funds to maximize agencies' hydrogen and fuel cell purchases
    and leverage the Federal Government's purchasing power to increase and
    build the market for these clean, efficient energy systems.
        The Clean Cities program is another deployment program with a
    record of success. The Clean Cities program consists of voluntary local
    and regional coalitions working to build clean and efficient fleets,
    including schools, airports, and municipal buses, with advanced
    technology and alternative fuel vehicles. The program's ability to help
    more communities reduce petroleum consumption is limited only by lack
    of resources.
        The administration's $9.6 million request for the program is a
    welcome increase over the prior year's request, but still represents a
    missed opportunity for oil savings and clean technology deployment. We
    request that you provide technology- and fuel-neutral funds above the
    requested level to maximize the program's proven ability to reduce
    petroleum use and emissions while helping to commercialize new
    technologies, fuels and infrastructure.
        Other important demonstration and deployment efforts are advanced
    in the EPAct fleet programs. By requiring the use of alternative
    vehicles and fuels in Federal, State and utility fleets, the EPAct
    program requirements reduce petroleum consumption while helping to
    demonstrate and build markets for new technologies. Implementation of
    the EPAct05 alternative compliance waiver, which recognizes hybrid
    vehicles in compliance efforts for the first time, will also be part of
    the program's fiscal year 2008 responsibilities.
        The administration's request of $1.8 million will not support
    effective implementation of these key fleet programs. We request that
    you provide funding at a level that will allow the program to work as
    intended and to secure the oil savings, environmental benefits and new
    technology deployment that Congress intended.
        EDTA appreciates the committee's support for EERE's vehicle and
    hydrogen and fuel cell technology programs. We ask that you make the
    necessary investments to help transform the fuel consumption of the
    U.S. fleet with electric drive technologies and finally break our
    dependence on oil. Only then can we achieve real national security and
    a cleaner and more sustainable environment.
                                     ______

          Prepared Statement of the American Society for Microbiology

        The American Society for Microbiology (ASM) is pleased to submit
    the following testimony on the fiscal year 2008 appropriation for the
    Department of Energy (DOE) science programs. The ASM is the largest
    single life science organization with more than 42,000 members. The ASM
    mission is to enhance the science of microbiology, to gain a better
    understanding of life processes, and to promote the application of this
    knowledge for improved health and for economic and environmental well-
    being.
        The DOE Office of Science supports research that drives discovery
    and innovation to create alternative energy sources, efficient energy
    production, and a sustainable environment. Increased resources for the
    DOE Office of Science are necessary to meet these challenges and the
    ASM supports the President's request of $4.398 billion for the DOE
    Office of Science, an increase of $602 million over the fiscal year
    2007 funding level.
        The requested increase is consistent with the American
    Competitiveness Initiative (ACI) and the Advanced Energy Initiative
    (AEI). DOE supported research on microbial biology is essential in
    meeting the goals of these initiatives. Microbial biology research is
    critical for advances in bioenergy. Microbial research contributions
    includes:
      --Novel bioenergy production methods, and improved biofuel production
            by microbes. Different microbes produce a variety of energy
            products such as ethanol, hydrogen, oils and even electrical
            current. Discovery of new processes that use microbes and
            microbes that enhance the efficiency of these processes,
            genetic engineering microbes that achieve this goal and
            learning to manage consortia of microbes to optimize biofuel
            production are all needs that will enhance the economics of
            bioenergy.
      --Discovery of novel plant cell wall decomposition enzymes. Microbes
            have a tremendous diversity of undiscovered biochemical
            capabilities, including enzymes that naturally recycle biomass.
            Capturing this diversity for more efficient release of plant
            carbon for conversion to energy is a central need for better
            bioenergy processes.
      --Efficient, sustainable plant-soil systems for biofuel production.
            Healthy, low-cost, and productive plant communities require a
            supportive soil microbial community to recycle nutrients,
            protect against root pathogens, produce plant growth factors,
            fix nitrogen and aid soil structure. Furthermore, management of
            these plant-soil systems must be done to minimize greenhouse
            gas production.
        The ASM strongly encourages DOE to support a balanced research
    portfolio as it seeks to increase production of bioenergy sources.
    While the ASM recognizes that the AEI and ACI are critical for meeting
    the Nation's competitiveness and energy challenges, it also encourages
    the DOE to maintain support for other science and technology solutions
    to long-term environmental challenges, such as climate change and
    environmental remediation.

                     BIOLOGICAL AND ENVIRONMENTAL RESEARCH

        Within the DOE Office of Science, the Biological and Environmental
    Research (BER) division uses peer-reviewed research at national
    laboratories, universities, and private institutions to build a
    science, technology, and knowledge base for understanding and
    harnessing the capabilities of microbial and plant systems that will
    lead to cost-effective, renewable energy production, greater energy
    security, clean-up of legacy wastes, and mitigation of increases in
    atmospheric carbon dioxide. The ASM supports the President's request to
    fund the BER at $510 million, an increase of $70 million over fiscal
    year 2007 for base BER programs, with $75 million directed to GTL
    Bioenergy Research Centers.
        BER research programs such as the Genomic: GTL program,
    Environmental Remediation Sciences Division (ERSD), the Joint Genome
    Institute (JGI), and Climate Change programs are instrumental for
    understanding microbial biology, how microorganisms interact with and
    respond to their environments, and how microorganisms can be harnessed
    to produce clean, efficient energy, remove excess carbon from the
    atmosphere, and help clean up the environment.
        The fiscal year 2008 request for BER would support about 1,500
    graduate students and post-doctoral investigators at universities and
    national laboratories. Fellowship programs are also supported by BER
    for undergraduate and graduate students through its Global Change
    Education Program. This support for undergraduate and graduate students
    and post-doctoral investigators is critical for the development of the
    next generation of scientists, engineers, and science educators.

                                 GENOMICS: GTL

        GTL research conducts explorations of microbes and plants at the
    molecular, cellular, and community levels. The goal is to gain insights
    about fundamental biological processes and, ultimately, a predictive
    understanding of how living systems operate. The resulting knowledge
    base--linked through DNA sequence and freely available--will catalyze
    the translation of science into new technologies for energy and
    environmental applications.
        Microbes make up the foundation of the biosphere and sustain all
    life on earth. DOE has sponsored the genome sequencing of key model
    plants and some 200 microbes relevant for generating clean energy,
    cleaning up toxic waste from nuclear weapons development, and cycling
    carbon from the atmosphere.
        In May 2006, the National Research Council of the National
    Academies of Science completed an independent review of the Genomics:
    GTL program that endorsed the systems biology approach of the program,
    applauded the research conducted by its grantees, and recommended the
    formation of interdisciplinary research centers focused on fundamental
    research addressing DOE mission needs, including bioenergy. The DOE
    embraced this recommendation, and is currently reviewing proposals for
    GTL Bioenergy Research Centers. The administration requested that $75
    million be provided in fiscal year 2008 for three of these centers. The
    ASM believes the GTL Bioenergy Research Centers are an important step
    forward to addressing national energy needs but they must be
    supplemented by a vigorous and well funded research effort. Funding for
    the GTL centers should not be at the expense of the core BER science
    programs.

                  ENVIRONMENTAL REMEDIATION SCIENCES DIVISION

        The Environmental Remediation Sciences Division (ERSD) sponsors and
    supports fundamental scientific research to understand the complex
    physical, chemical, and biological properties of contaminated sites for
    new solutions to environmental remediation. DOE is responsible for the
    largest, most complex, and diverse collection of environmental
    remediation challenges in the Nation.
        DOE's remediation challenges occur in the field where highly
    interactive natural processes, over a broad range of scales, control
    the fate and transport of contaminants. The ERSD goal is to help
    provide the basis for development of innovative remediation measures to
    support decision making critical to long-term stewardship. Of the 144
    sites where DOE has remediation, waste management, or nuclear materials
    and facility stabilization responsibilities, nearly 100 have soils,
    sediments, or groundwater contaminated with radionuclides, metals, or
    organic materials.
        The ASM is concerned with the steady decline in funding for the
    ERSD from fiscal year 2004 to fiscal year 2007. The ERSD research
    conducted on microbes is an essential component in developing
    effective, sustainable remediation technologies. ASM urges Congress to
    provide at least the President's fiscal year 2008 request of $97.4
    million for ERSD.

                             JOINT GENOME INSTITUTE

        The DOE Joint Genome Institute (JGI) has completed the sequence of
    the 100 microbial genomes and released this information for the benefit
    of the global research community. The JGI is the primary source of
    genomic data for non-medical microbiology and immensely benefits the
    community.
        The JGI's Community Sequencing Program (CSP) devotes all of its
    sequencing capacity to the merit-reviewed sequencing needs of the
    broader non-medical scientific community, while addressing the DOE
    mission-relevant criteria of energy production, carbon sequestration,
    research and bioremediation research, and low dose radiation research.
    JGI is an integral component as the area of metagenomics for both
    energy and carbon sequestration grows.
        The ASM supports the President's fiscal year 2007 request of $62
    million for JGI, a $10.5 million increase over fiscal year 2006, and a
    $2 million increase over the President's fiscal year 2008 request.

                            CLIMATE CHANGE RESEARCH

        The mission of the Climate Change Research subprogram is to provide
    the scientific base for making predictions and assessments of the
    potential effects of greenhouse gases and aerosol emissions on climate
    and the environment, such as abrupt climate change, understanding the
    global carbon cycle and the development of approaches for enhancing
    biological carbon sequestration in terrestrial ecosystems. The ASM
    supports the President's fiscal year 2008 request of $138 million for
    Climate Change Research.
        Research exploring the responses and behavior of microorganisms in
    ecosystems is necessary in understanding the changes in the expanded
    plant and animal systems. Greater collaboration with the Genomics: GTL
    program and climate change research would provide a stronger basis for
    understanding the core elements of the ecosystem and its responses. The
    ASM urges greater linkages between the GTL program and Climate Change
    Research, similar to the current collaborative relationship between GTL
    and the ERSD.

                             WORKFORCE DEVELOPMENT

        Cultivating a well-trained workforce of teachers and scientists is
    vital for maintaining our Nation's competitiveness, and meeting the
    challenges of the future. The ASM supports the President's request of
    $11 million for Workforce Development for Scientists and Engineers
    within the DOE Office of Science, through undergraduate research
    internships, graduate and faculty fellowships, and pre-college
    activities. These programs build links between the national
    laboratories and the science education community, provides mentor
    intensive research experiences at national laboratories for
    undergraduate and graduate students, and encourages middle and high
    school students in the fields of math and science.

                                   CONCLUSION

        The ASM supports the President's 16 percent increase for the DOE
    Office of Science in fiscal year 2008, and urges Congress to provide
    adequate funding for the BER, including ERSD, Genomics: GTL, JGI, and
    Climate Change Research programs, which are essential in meeting DOE's
    mission. The DOE Office of Science programs enhance U.S.
    competitiveness through fundamental research for advanced scientific
    breakthroughs that will revolutionize our approach to the Nation's
    energy and environment challenges.
        The ASM appreciates the opportunity to provide written testimony
    and would be pleased to assist the subcommittee as it considers the
    fiscal year 2008 appropriation for the DOE.

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page

    Allard, Senator Wayne, U.S. Senator From Colorado:
        Prepared Statements of.............................36, 96, 226, 352
        Questions Submitted by.................115, 151, 152, 163, 299, 314
        Statement of.................................................   171
    Alliance for Materials Manufacturing Excellence, Prepared
      Statement of the...............................................   547
    Alliance to Save Energy, Prepared Statement of the...............   555
    American Chemical Society, Prepared Statement of the.............   451
    American Forest & Paper Association, Prepared Statement of the...   559
    American Geological Institute, Prepared Statement of the.........   553
    American Iron & Steel Institute, Prepared Statement of the.......   523
    American Museum of Natural History, Prepared Statement of the....   516
    American Nuclear Society, Prepared Statement of the..............   552
    American Public Power Association, Prepared Statement of the.....   512
    American Society for Microbiology, Prepared Statement of the.....   572
    American Wind Energy Association, Prepared Statement of the......   517
    Arkansas River Basin Interstate Committee, Prepared Statements of
      the..........................................................397, 400
    Austin Energy, Prepared Statement of.............................   540

    Bennett, Senator Robert F., U.S. Senator From Utah:
        Question Submitted by........................................   149
        Statement of.................................................    59
    Board of Levee Commissioners for the Yazoo-Mississippi Delta,
      Prepared Statement of the......................................   398
    Board of Mississippi Levee Commissioners, Prepared Statement of
      the............................................................   416
    BP Exploration (Alaska), Inc., Prepared Statement of.............   545
    Brazos River Harbor Navigation District, Freeport, Texas,
      Prepared Statement of the......................................   426
    Byrd, Senator Robert C., U.S. Senator From West Virginia,
      Questions Submitted by.........................................   304

    Calaveras County Water District, Prepared Statement of the.......   448
    California State Coastal Conservancy, Prepared Statement of the..   449
    Center for Advanced Separation Technologies, Virginia Polytechnic
      Institute and State University, Prepared Statement of the......   562
    Center for Plasma Science and Technology, Florida A&M University,
      and the Department of Physics, West Virginia University,
      Prepared Statement of the......................................   529
    Chambers County-Cedar Bayou Navigation District, Texas, Prepared
      Statement of the...............................................   424
    City of Arlington, Texas, Prepared Statement of the..............   419
    City of Flagstaff, Arizona, Prepared Statement of the............   396
    City of Mesa, Arizona, Prepared Statement of the.................   424
    City of San Marcos, Texas, Prepared Statement of the.............   412
    City of St. Helena, California, Prepared Statement of the........   455
    Clark County Regional Flood Control District, Prepared Statement
      of the.........................................................   394
    Coal Utilization Research Council, Prepared Statement of the.....   568
    Coalition of Northeastern Governors, Prepared Statement of the...   491
    Cochran, Senator Thad, U.S. Senator From Mississippi:
        Prepared Statement of........................................   172
        Question Submitted by........................................   299
    Colorado River Basin Salinity Control Forum, Prepared Statement
      of the.........................................................   465
    Colorado River Board of California, Prepared Statement of the....   464
    Colorado River Commission of Nevada, Prepared Statement of the...   473
    Confederated Tribes of the Umatilla Indian Reservation, Prepared
      Statements of the............................................438, 480
    Consortium for Fossil Fuel Science (CFFS), Prepared Statement of
      the............................................................   489
    Craig, Senator Larry, U.S. Senator From Idaho:
        Questions Submitted by.....................................149, 160
        Statements of..........................................57, 170, 322
    Cummins, Inc., Prepared Statement of.............................   493

    D'Agostino, Hon. Thomas P., Acting Under Secretary for Nuclear
      Security and Administrator, National Nuclear Security
      Administration, Department of Energy...........................   321
        Prepared Statement of........................................   326
        Questions Submitted to.......................................   366
        Statement of.................................................   323
    Domenici, Senator Pete V., U.S. Senator From New Mexico:
        Opening Statements of..............................16, 89, 168, 223
        Prepared Statements of........................18, 89, 169, 224, 349
        Questions Submitted by..112, 147, 157, 209, 278, 294, 312, 319, 366
    Donald, Admiral Kirk, Director, Naval Nuclear Propulsion, U.S.
      Navy...........................................................   321
    Dorgan, Senator Byron L., U.S. Senator From North Dakota:
        Opening Statements of..........................1, 53, 167, 221, 321
        Prepared Statements of....................................... 2, 55
        Questions Submitted by....41, 49, 106, 115, 152, 275, 282, 300, 315

    Electric Drive Transportation Association, Prepared Statement of
      the............................................................   571

    Feinstein, Senator Dianne, U.S. Senator From California,
      Questions Submitted by........................110, 157, 206, 287, 312
    Fifth Louisiana Levee District, Prepared Statement of the........   393
    Fort Peck Assiniboine and Sioux Tribes and Dry Prairie Rural
      Water, Prepared Statement of the...............................   484
    Fuel Cell Power Association, Prepared Statement of the...........   528
    FuelCell Energy, Inc., Prepared Statement of.....................   506

    Garrison Diversion Conservancy District, Prepared Statement of
      the............................................................   474
    Gas Technology Institute, Prepared Statement of the..............   496
    GE Energy, Prepared Statement of.................................   533
    Ground Water Protection Council, Prepared Statement of the.......   507

    Health Physics Society (HPS) and the Health Physics Program
      Directors Organization (HPPDO), Prepared Statement of the......   536
    Hutchison, Senator Kay Bailey, U.S. Senator From Texas, Questions
      Submitted by.................................................114, 161

    IMPACT Technologies LLC, Prepared Statement of...................   549
    Independent Petroleum Association of America, Prepared Statement
      of the.........................................................   540
    Inouye, Senator Daniel K., U.S. Senator From Hawaii, Questions
      Submitted by...................................................   121
    Interstate Oil and Gas Compact Commission, Prepared Statements of
      the..........................................................499, 566

    Jicarilla Apache Nation, Prepared Statement of the...............   461
    Johnson, Robert W., Commissioner, Bureau of Reclamation,
      Department of the Interior.....................................    81
        Prepared Statement of........................................    82
        Questions Submitted to.......................................   152

    Karsner, Hon. Alexander, Assistant Secretary for Energy
      Efficiency and Renewable Energy, Department of Energy..........   234
        Prepared Statement of........................................   236
        Questions Submitted to.......................................   282
    Kolevar, Kevin M., Director, Office of Electricity Delivery and
      Energy Reliability, Department of Energy.......................   250
        Prepared Statement of........................................   252
        Questions Submitted to.......................................   315

    Landrieu, Senator Mary L., U.S. Senator From Louisiana:
        Prepared Statement of........................................    60
        Questions Submitted by.....................................111, 120
    Limbaugh, Mark, Assistant Secretary for Water and Science, Bureau
      of Reclamation, Department of the Interior.....................    74
        Prepared Statement of........................................    75
        Question Submitted to........................................   152
    Little River Drainage District, Prepared Statement of the........   409
    Louisiana Department of Transportation and Development (LADOTD),
      Prepared Statement of the......................................   407

    Metropolitan Water Reclamation District of Greater Chicago,
      Prepared Statement of the......................................   457
    Mississippi Valley Flood Control Association, Prepared Statement
      of the.........................................................   404
    Mni Wiconi Project, Prepared Statements of the.................468, 471
    Murray, Reed R., Program Director, Central Utah Project
      Completion Act Office, Department of the Interior, Prepared
      Statement of...................................................   105
    Murray, Senator Patty, U.S. Senator From Washington:
        Prepared Statements of......................................20, 204
        Statements of...............................................20, 172

    Napa County Flood Control and Water Conservation District,
      Prepared Statement of the......................................   453
    National Association of State Energy Officials, Prepared
      Statement of the...............................................   542
    National Corn Growers Association, Prepared Statement of the.....   437
    National Mining Association (NMA), Prepared Statement of the.....   550
    National Organization of Test, Research, and Training Reactors
      (TRTR), Prepared Statement of the..............................   524
    National Research Center for Coal and Energy, Prepared Statement
      of the.........................................................   520
    New Mexico Interstate Stream Commission, Prepared Statement of
      the............................................................   460
    NGVAmerica, Prepared Statement of................................   538
    North American Die Casting Association, Prepared Statement of the   526
    Nuclear Energy Institute, Prepared Statement of the..............   531
    Nuclear Engineering Department Heads Organization (NEDHO),
      Prepared Statement of the......................................   524
    Nuclear Waste Strategy Coalition, Prepared Statement of the......   500

    Orbach, Hon. Raymond L., Director, Office of Science, Department
      of
      Energy.........................................................   167
        Prepared Statement of........................................   174
        Statement of.................................................   173
    Oregon Water Resources Congress, Prepared Statement of the.......   482

    Petroleum Technology Transfer Council, Prepared Statement of the.   564

    Red River Valley Association, Prepared Statement of the..........   427
    Reed, Senator Jack, U.S. Senator From Rhode Island:
        Prepared Statements of......................................86, 225
        Questions Submitted by................................121, 292, 318
     Rispoli, Hon. James A., Assistant Secretary of Energy for
      Environmental Management, Office of Environmental Management,
      Department of
      Energy.........................................................     1
        Prepared Statement of........................................    10
        Questions Submitted to.......................................    41
        Statement of.................................................     3
    Riverside County Flood Control and Water Conservation District,
      Prepared Statement of the......................................   431

    Sacramento Area Flood Control Agency, Prepared Statement of the..   434
    Salt River Pima-Maricopa Indian Community, Prepared Statement of
      the............................................................   424
    San Diego County Water Authority, Prepared Statement of the......   467
    Santa Clara Valley Water District, Prepared Statements of the..443, 478
    Shope, Hon. Thomas D., Acting Assistant Secretary for Fossil
      Energy, Department of Energy...................................   244
        Prepared Statement of........................................   246
        Questions Submitted to.......................................   300
    Southern Company Generation, Prepared Statement of...............   509
    Sproat, Hon. Edward F., III, Director, Office of Civilian
      Radioactive Waste Management, Department of Energy.............    20
        Prepared Statement of........................................    22
        Questions Submitted to.......................................    49
    Spurgeon, Hon. Dennis R., Assistant Secretary Nuclear Energy,
      Department of Energy...........................................   221
        Prepared Statement of........................................   229
        Questions Submitted to.....................................275, 278
        Statement of.................................................   227
    St. Francis Levee District of Arkansas, Prepared Statement of the   413
    State of Illinois, Prepared Statement of the.....................   420
    State Teachers' Retirement System, Prepared Statement of the.....   487
    Strand Energy, L.C., Prepared Statement of.......................   568
    Strock, Lieutenant General Carl, Chief of Engineers, Corps of
      Engineers--Civil, Department of the Army, Department of
      Defense--Civil.................................................    70
        Prepared Statement of........................................    71
        Questions Submitted to.......................................   115

    The Nature Conservancy, Prepared Statement of....................   440
    Tobey, William H., Deputy Administrator for Defense Nuclear
      Nonproliferation, National Nuclear Security Administration,
      Department of Energy...........................................   321

    University Corporation for Atmospheric Research (UCAR), Prepared
      Statement of the...............................................   504
    University of Texas at Austin, Prepared Statement of the.........   537
    University of Tulsa, Prepared Statements of the................495, 514
    Upper Mississippi River Basin Association (UMRBA), Prepared
      Statement of the...............................................   401

    Western Coalition of Arid States (WESTCAS), Prepared Statements
      of the.......................................................459, 473
    Western Michigan University (WMU), Prepared Statement of.........   558
    Woodley, Hon. John Paul, Jr., Assistant Secretary of the Army
      (Civil Works), Corps of Engineers--Civil, Department of the
      Army, Department of Defense--Civil.............................    53
        Prepared Statement of........................................    61
        Questions Submitted to.......................................   106
        Statement of.................................................    60

                                 SUBJECT INDEX

                                  ----------

                          DEPARTMENT OF DEFENSE--CIVIL

                             Department of the Army

                           Corps of Engineers--Civil

                                                                       Page

    Acequias Irrigation System.......................................   113
    Additional Committee Questions...................................   106
    Albuquerque Levees...............................................   147
    A-76 and HPO.....................................................   117
    Backlog of Authorized Work.......................................   111
    Beach Policy.....................................................   112
    Budget:
        Priorities for Fiscal Year 2008..............................    55
        Proposals....................................................    56
        Request......................................................   121
    Central NM Environmental Infrastructure Program (sec. 593) and
      New Mexico Environmental Infrastructure Program................   148
    Construction:
        Performance Guidelines.......................................    69
        Program......................................................    72
    Continuing:
        Authorities:
            Budget...................................................   114
            Program..................................................   119
        Contracts, Carryover and Reprogramming.......................   109
    Critical Infrastructure..........................................   120
    Declining Investment as a Percentage of GDP......................   112
    ESA Compliance Issues in O&M.....................................   106
    Energy and Water Questions.......................................   150
    Funding for the Inland Waterway Trust Fund.......................   112
    Harbor Maintenance Trust Fund....................................   114
    Highlights:
        Program Areas................................................    63
        Water Resources Development Accounts.........................    62
    Issues for Fiscal Year 2008......................................    57
    Kikiaola Harbor, Island of Kauai, Hawaii.........................   121
    Latest $1.3 Billion Funding Need.................................   120
    Major Rehabilitations in O&M.....................................   107
    Middle Rio Grande Projects.......................................   113
    Missouri River...................................................   116
    Other Budget Highlights..........................................    65
    Overview.........................................................    61
    Performance-based Budgeting......................................    62
    President's Management Agenda....................................    66
    R&D..............................................................   148
    Rebuilding the Gulf Coast........................................   147
    Regional O&M Budgeting...........................................   108
    Sacramento River, Glenn-Colusa Irrigation District...............   111
    Snake River Programmatic Sediment................................   149
    Summary of Fiscal Year 2008 Program Budget.......................    71
    The Bureau of Reclamation........................................    56
    The Central Utah Project.........................................    56
    Three Affiliated Tribes Land Transfer............................   106
    Value of the Civil Works Program to the Nation's Economy and
      Defense........................................................    73
    Water Resources Development Act Proposal.........................    66

                              DEPARTMENT OF ENERGY

    Additional Committee Questions...................................   275
    Advanced Fuel Cycle Initiative...................................   231
    Anvil Points Mine Site...........................................   265
    Appliance:
        Efficiency Standards.........................................   294
        Standards....................................................   283
    Balancing:
        Renewable and Efficiency Funding.............................   282
        Research With Deployment Funding.............................   282
    Battery R&D......................................................   296
    BioFuels.........................................................   270
    Biomass and Biorefinery Systems R&D..............................   237
    Building:
        Codes........................................................   284
        Technologies Program.........................................   240
    Carbon:
        Capture R&D..................................................   313
        Sequestration................................................   312
            Funding..................................................   301
    Cellulosic Biomass--Reverse Auction..............................   297
    China--Carbon Sequestration Collaboration........................   313
    Clean Coal Power Initiative......................................   306
        Funding......................................................   302
    Clean Energy Technology Exports Initiative.......................   307
    Coal:
        R&D Research Funding.........................................   301
        Resources....................................................   255
        -To-Liquids Initiative.......................................   306
        Usage........................................................   261
    Concentrating Solar..............................................   297
    Consolidation of Research Programs...............................   315
    Cooperative Nuclear Fuel Research With Russia....................   281
    Deploying New Technology.........................................   295
    Deployment of Renewable Energy Technologies......................   298
    Distributed Generation...........................................   318
    Electricity:
        Delivery:
            And Energy Reliability...................................   299
                Budget...............................................   258
            Technological Advances...................................   258
        Transmission and Energy Delivery.............................   316
    Elk Hills........................................................   312
        School Lands Fund............................................   249
    Energy:
        Efficiency and Renewable Energy Budget.......................   256
        Infrastructure Security......................................   319
        Storage R&D..................................................   319
    Enhanced Geothermal Systems......................................   288
    EPACT:
        And Efficiency Programs......................................   292
        2005 and Geothermal Programs.................................   286
    Existing Biomass Awards..........................................   298
    Facilities and Infrastructure....................................   243
    Federal Energy Management Program..............................241, 285
    Foreign Interest in Nuclear Energy...............................   279
    Fossil Energy....................................................   290
        Budget.......................................................   255
            Request..................................................   300
    Fossil Energy's Budget Meets the Nation's Critical Energy Needs..   250
    Fuels and Power Systems..........................................   247
    Funding for Advanced Combustion:
        R&D..........................................................   270
        Research.....................................................   270
    FutureGen........................................................   304
    GAO Report.......................................................   310
    Generation IV Nuclear Energy Systems Initiative..................   231
    Geothermal:
        Program and the National Research Council Recommendations....   287
        Termination..................................................   287
    Global Nuclear Energy Partnership (GNEP)........228, 262, 275, 280, 289
        Advanced Fuel Cycle Facility--Luxury or Necessity?...........   278
        Coordinating Research With Other NE Programs.................   280
    Grid Research at Pacific Northwest National Laboratory...........   270
    High Temperature Superconductivity Research......................   316
    Hydrogen Technology Program......................................   239
    Idaho:
        Facilities Management........................................   233
        Site-Wide Safeguards & Securities............................   233
    Impact of the Fiscal Year 2008 Budget on the National Energy
      Technology Laboratory..........................................   307
    Improved Building Efficiency.....................................   297
    Industrial:
        Efficiency Program Funding Decrease..........................   293
        Technologies Program.........................................   243
    Infrastructure Security and Energy Restoration...................   254
    Loan Guarantee:
        Program......................................................   260
        Programs (Title 17 of EPACT).................................   295
        Questions....................................................   317
        Regulations..................................................   294
        Technical Evaluation and Financial Evaluation................   295
    Materials Manufacturing and Industrial Materials.................   293
    Natural Gas Cartel...............................................   303
    Naval Oil Shale:
        Reserve Certification........................................   264
        Reserves Royalty Distribution................................   314
    Next Generation Nuclear Powerplant...............................   263
    Nuclear:
        Energy Budget................................................   257
        Energy's Role................................................   277
        Fuel Cycle...................................................   281
        Hydrogen Initiative..........................................   232
        Power 2010 (NP 2010).......................................227, 230
            Program..................................................   278
                Reforms..............................................   279
    Office of Energy Electricity Delivery and Energy Reliability.....   319
    Oil:
        And Gas Price Relationship...................................   311
        Savings......................................................   285
    Permitting, Siting, and Analysis.................................   253
    Preventing Regional Blackouts....................................   260
    Program Assessment Rating Tool (PART)............................   266
        Score for University Nuclear Education Program...............   267
        Scores................................................265, 267, 268
    Program Direction and Program Support............................   244
    Public Education.................................................   285
    Radiological Facilities Management...............................   232
    Rescission of $149 Million From the Clean Coal Technology Account   302
    Research and Development.........................................   253
    Retrievable Energy in Spent Nuclear Fuel.........................   271
    ``Save Energy Now'' Campaign.....................................   293
    Solar Energy.....................................................   296
        Program......................................................   240
    State Energy Program PART Score..................................   268
    Taxation of Coal R&D Dollars.....................................   314
    The President's Coal Research Initiative.........................   246
    University:
        Nuclear Education Program....................................   268
        Oil and Gas Research Funding.................................   302
        Reactor Infrastructure and Educational Assistance............   233
    Vehicle:
        Efficiency...................................................   269
        Technologies Program.........................................   238
    Weatherization...................................................   271
        And Intergovernmental Program................................   242
        Assistance Program...........................................   283
        Funding Decrease.............................................   292
    Wind:
        And Solar Production Costs...................................   287
        Energy Program...............................................   242

                    National Nuclear Security Administration

    Additional Committee Questions...................................   366
    Approaches:
        That Fail to Meet U.S. National Security and Nonproliferation
          Objectives.................................................   390
        That Meet U.S. National Security and Nonproliferation
          Objectives.................................................   389
    Business Case--Department of Energy's Proposed Baseline Approach
      for Disposing of Surplus Plutonium, April 2007.................   380
    Chemistry and Metallurgy Research Facility Replacement...........   371
    Closing Los Alamos National Laboratory...........................   368
    Complex 2030.....................................................   366
        Facilities Before Science....................................   369
    Cyber Security Funding--Insufficient to Address the Risk.........   392
    Defense Nuclear Nonproliferation.................................   335
    Description of DOE's Surplus Fissile Materials...................   384
    Elimination of Weapons Grade Plutonium Production................   336
    Environmental Projects and Operations............................   334
    Establishment of a Joint High Energy Plasma Program..............   374
    Evaluation of Alternative Storage and Disposition Approaches.....   389
    Expansion of MOX.................................................   378
    Experimental Hydro Tests.........................................   372
    Financial Analysis of DOE's Proposed Baseline Plutonium
      Disposition Approach...........................................   385
    Fiscal Year 2008 Budget:
        Request by Program...........................................   330
        Tables.......................................................   339
    Fissile Materials Disposition....................................   336
    Global:
        Nuclear Energy Partnership...................................   345
        Threat Reduction Initiative..................................   335
    GNEP and MOX.....................................................   378
    Heavy Water Inventory............................................   376
    High Performance Computing.......................................   372
    Historically Black Colleges and Universities (HBCU) Support......   338
    Insufficient Funding for Z Operations............................   370
    International Material Protection and Cooperation................   335
    Mixed Oxide Fuel Fabrication Facility..........................354, 359
    MOX:
        Alternatives.................................................   377
        Program......................................................   377
    National Ignition Facility.......................................   375
    Naval Reactors.................................................330, 337
    Navy Home Porting................................................   362
    NNSA's Plutonium Consolidation and Disposition Strategy..........   379
    Nonproliferation:
        And International Security...................................   336
        And Verification Research and Development....................   336
        Research and Development.....................................   362
    Nuclear:
        Nonproliferation.............................................   329
        Weapons Incident Response....................................   334
    Office of the Administrator......................................   338
    Pacific Northwest National Laboratory............................   348
    Pit Production/Reliable Replacement Warhead......................   346
    Readiness in Technical Base and Facilities (RTBF) and Facilities
      and Infrastructure Recapitalization Program (FIRP).............   333
    Reliable Replacement Warhead...............342, 350, 355, 361, 369, 374
    Russia's MOX Commitment..........................................   378
    Safeguards and Security..........................................   334
    Sandia National Laboratories Ion Beam Laboratory.................   376
    Secure Transportation Asset......................................   333
    Security:
        At National Laboratories.....................................   352
        Guards at Pantex on Strike...................................   376
    Warhead Dismantlement............................................   357
    Weapons:
        Activities...................................................   326
        Program Activities...........................................   331

                Office of Civilian Radioactive Waste Management

    Additional Committee Questions...................................    41
    Advanced Fuel Cycle Initiative...................................    37
    Canister Handling and Storage....................................    49
    Fiscal Year 2008 Key Activities..................................    22
    Global Nuclear Energy Partnership................................    37
    Government Legal Liability.......................................    50
    Impact of Fiscal Year 2007 Final Budget Authorization............    23
    Implications of Non-access to the Nuclear Waste Fund.............    23
    Layoffs..........................................................    50
    Nevada Rail Line.................................................    50
    Nuclear Waste Fund Legislative Proposal..........................    25
    Proposed Legislation for Nuclear Waste Fund......................    32
    Second Repository................................................    49
    Yucca Mountain:
        Authorization................................................    49
        Reduction in Fiscal Year 2008 Transportation Request.........    40
        Updated Baseline.............................................    40

                       Office of Environmental Management

    Acceleration of TRU Waste to WIPP................................    44
    Additional Committee Questions...................................    41
    Atlas Mill Site Closure Date.....................................    32
    Cleanup Funding Strategy.........................................    36
    Consequences of a Reduced Environmental Management Budget........    19
    Consolidation of Special Nuclear Material........................    45
    Contractor Performance...........................................    31
    Environmental Management.........................................    19
    Fines............................................................    43
        Assessed Against DOE and Los Alamos National Security (LANS).    30
    Fiscal Year 2008 Funding for HAMMER Program......................    26
    HAMMER Funding...................................................    26
    Hanford Site Managers Vacancies..................................    27
    Lessons Learned Applications to Other Cleanup Sites..............    35
    Los Alamos:
        Missed Milestones............................................    41
        National Laboratory (LANL)...................................    44
            Safety Concerns..........................................    43
    Missed:
        Cleanup Milestones at Los Alamos National Lab................    28
        Milestones Consequences......................................    38
    Mixed-Oxide (MOX) Fuel Fabrication Facility vs.Vitrification.....    45
    Renegotiating the LANL Consent Order.............................    42
    Risk Reduction Results...........................................    11
    Sandia Cleanup...................................................    44
    Solving the Challenges...........................................    12
    Supplemental Bulk Vitrification Technology.......................    25
    Technical Area-21................................................    43
    The Fiscal Year 2008 Budget Request..............................    13
    Washington State:................................................
        High Level Waste Vitrification Project.......................    47
        Tri-Party Agreement..........................................    48
    Yucca Mountain...................................................    18

                               Office of Science

    Additional Committee Questions...................................   206
    Advanced Scientific Computing Research...........................   192
    Biological and Environmental Research............................   206
        Funding......................................................   215
    Carbon Sequestration...........................................192, 215
    Climate:
        Change Research..............................................   197
        Modeling.....................................................   216
        Research.....................................................   214
    Computer Questions...............................................   217
    Earmarks.........................................................   199
    Fiscal Year 2008 Science Priorities..............................   177
    5-Year Plan......................................................   203
    Genome Research..................................................   213
    High:
        Energy Density Physics.......................................   210
        Performance Computing........................................   212
    Importance of Neutron Sources....................................   198
    Integration of:
        High Performance Computing Among Science and NNSA............   213
        Science and the NNSA.........................................   211
    Interesting and Promising Research Projects in DOE and in the
      Future of DOE..................................................   194
    Joint Dark Energy Mission........................................   216
    Low Dose Radiation Effects Research..............................   209
    Major Construction Projects......................................   205
    Office of Science--Energy-Water Program..........................   215
    Program Objectives and Performance...............................   180
    Proposed Funding for Research Programs in Renewable Energies and
      Conservation...................................................   200
    Renewable Energy.................................................   204
    Science:
        Accomplishments..............................................   179
        Programs.....................................................   181
    Scientific:
        Interaction with China.......................................   210
        Research at NREL.............................................   192
    Superconductivity................................................   218
    300 Area at PNNL.................................................   202
    Transition of Research Into the Marketplace......................   193
    Workforce Development for Teachers and Scientists................   210

                           DEPARTMENT OF THE INTERIOR

                             Bureau of Reclamation

    Achieving Key Goals..............................................    79
    Additional Committee Questions...................................   106
    Animas-La Plata Project..........................................   154
    Budget Overview..................................................    76
    Bureau of Reclamation--Gila River Settlement.....................   161
    California Bay-Delta Restoration.................................    78
        Fund (CALFED)................................................    85
    Carlsbad Irrigation District.....................................   153
    Central Valley Project Restoration Fund..........................    85
    Chimayo and Espanola Water Systems...............................   153
    Desalination Research............................................   161
    Drought........................................................157, 164
    Excess Government Property Issues................................   153
    Fiscal Year 2008 Planned Activities..............................    85
    Healthy Lands Initiative.........................................    77
    Improving Indian Education.......................................    77
    Interior Priorities for Water Programs...........................    77
    Loan Guarantee............................................154, 160, 163
        Program.....................................................78, 164
    Maintaining Core Programs........................................    79
    Management Studies...............................................    86
    Middle Rio Grande Project........................................   159
    Minidoka Spillway Replacement....................................   160
    Minnow Sanctuary.................................................   152
    Policy and Administration........................................    85
    Rural Water...............................................152, 155, 162
    Sacramento Valley Integrated Regional Water Management Plan......   157
    Safety of Dams Program...........................................    78
    San Joaquin River Restoration Fund Proposed Legislation..........    85
    The Methamphetamine Crisis in Indian Country.....................    77
    The National Parks Centennial Initiative.........................    76
    Title XVI........................................................   160
    Water:
        And Related Resources........................................    83
        2025.........................................................   158
            Preventing Crises and Conflicts..........................    78

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