[Senate Hearing 110-37]
[From the U.S. Government Printing Office]



                                                         S. Hrg. 110-37
 
   PROPOSED BUDGET FOR FISCAL YEAR 2008 FOR THE DEPARTMENT OF ENERGY

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

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                                   TO

 RECEIVE TESTIMONY ON THE PRESIDENT'S PROPOSED FY 2008 BUDGET FOR THE 
                          DEPARTMENT OF ENERGY

                               __________

                            FEBRUARY 7, 2007


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


                                 ______

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

DANIEL K. AKAKA, Hawaii              PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota        LARRY E. CRAIG, Idaho
RON WYDEN, Oregon                    CRAIG THOMAS, Wyoming
TIM JOHNSON, South Dakota            LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana          RICHARD BURR, North Carolina
MARIA CANTWELL, Washington           JIM DeMINT, South Carolina
KEN SALAZAR, Colorado                BOB CORKER, Tennessee
ROBERT MENENDEZ, New Jersey          JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas         GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
JON TESTER, Montana                  MEL MARTINEZ, Florida

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
              Frank Macchiarola, Republican Staff Director
             Judith K. Pensabene, Republican Chief Counsel
              Jonathan Epstein, Professional Staff Member
         Elizabeth Abrams, Republican Professional Staff Member


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     1
Bodman, Hon. Samuel, Secretary, Department of Energy.............     6
Domenici, Hon. Pete V., U.S. Senator from New Mexico.............     4
Murkowski, Hon. Lisa, U.S. Senator from Alaska...................     2
Sanders, Hon. Bernard, U.S. Senator from Vermont.................     1
Smith, Hon. Gordon H., U.S. Senator from Oregon..................     3

                                APPENDIX

Responses to additional questions................................    55


   PROPOSED BUDGET FOR FISCAL YEAR 2008 FOR THE DEPARTMENT OF ENERGY

                              ----------                              


                      WEDNESDAY, FEBRUARY 7, 2007

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:40 a.m., in 
room SD-366, Dirksen Senate Office Building, Hon. Jeff 
Bingaman, chairman, presiding.

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

    The Chairman. Why don't we go ahead and get started?
    Thank you very much, Mr. Secretary, for being here, we 
appreciate it. Let me compliment you and your staff for 
bringing the Department's budget material to the Congress in a 
timely fashion, an organized fashion. We appreciate that.
    Today's hearing will examine the fiscal year 2008 
Department of Energy budget proposal. There are obviously many 
good elements in there, such as the strong commitment to the 
Office of Science, to keep our Nation globally competitive, 
commitment to bio-fuels and solar energy research in order to 
diversify our energy portfolio. There are some proposals that I 
think we need to spend additional time on, here in this 
committee, to understand them. One, of course, I've indicated 
before, is the Global Nuclear Energy Partnership, and I may 
have a question on funding there.
    The administration has also proposed doubling the capacity 
of the Strategic Petroleum Reserve; I've got some concerns 
about the priority of that at this point, and obviously there 
are some issues related to the implementation of the Energy 
Bill that we passed in 2005, which we're anxious to ask some 
questions on, as well.
    But let me defer to Senator Domenici, and any comments he 
has, and then we'll hear your statement, Mr. Secretary.
    [The prepared statements of Senators Sanders, Murkowski, 
and Smith follow:]

       Prepared Statement of Hon. Bernard Sanders, U.S. Senator 
                              From Vermont

    Chairman Bingaman, Ranking Member Domenici, submission of any 
Administration's budget to Congress represents the beginning of one of 
our most fundamental responsibilities--determining how the taxpayer 
dollars will be spent. A budget speaks to the priorities of our country 
and fortunately, we have the opportunity--really the responsibility--to 
put forward a budget that will better reflect the needs of the American 
public than does the budget our President just submitted.
    We all know that the President's budget puts forward his policy 
wish-list, all cloaked in budget gimmicks, and this year there were 
some real doozies. When it comes to energy policy, my favorite is that 
the President still has us opening up the Arctic National Wildlife 
Refuge for oil and gas drilling. If he doesn't know to focus on other 
issues, someone should fill him in.
    It is time to truly commit to funding those energy programs that 
will help us transition to a green economy, for the threat of global 
warming demands nothing less. While there was some positive movement in 
this regard in the budget, it was not nearly enough. I appreciate the 
Committee holding today's hearing, which will help us to better 
understand the Administration's proposal. Additionally, I look forward 
to working with my colleagues over the coming months to make 
significant improvements to the Department of Energy's budget for 2008.
                                 ______
                                 
  Prepared Statement of Hon. Lisa Murkowski, U.S. Senator From Alaska

    Mr. Secretary let me start out by saying there is much in this 
budget that I support and I thank you for many of the spending choices 
you have made. I know this is a tight budget year and you had to make 
difficult choices given the narrow latitude that OMB undoubtedly gave 
you in overall funding. But I believe the Department is ignoring some 
exciting energy research and development possibilities in both the 
renewables and fossil fuel areas.
    Just last month a Department study showed that geothermal energy 
from granite could produce 10% of the nation's energy needs by 2050. 
Another study recently identified 150,000 megawatts of near-term 
geothermal energy in the West that is uptapped. In my home state of 
Alaska, the Department last year had a major success in helping fund 
the first low-temperature geothermal project at Chena Hot Spring. We 
thank you for the tiny $1.5 million grant that made that success 
possible. But there is no geothermal money to follow up on that success 
by scaling up the low-temperature compressors to larger power outputs, 
or perhaps to use the same technology to tap biomass potential 
(although there is an increase in the biomass budget).
    There is no money for small hydro development, and none for ocean 
energy, although there are exciting examples of new wave, tidal and 
current technology on the drawingboards, just needing federal 
demonstration grant assistance to prove its commercial applicability. 
Look at the East River project in New York. Just last month there was a 
report that ocean energy has the conservative potential to supply 252 
million megawatts of power--6.5% of the nation's total energy needs--if 
it can just be helped over the hump to economic commercialization.
    In small hydroelectric, including low-head hydro, there is a 
tremendous possibility for increased renewable energy production, if 
there were additional federal assistance, especially an expansion of 
the Production Tax Credit to cover more forms of small hydroelectric 
than just small irrigation hydro projects.
    Even though the Energy Policy Act of 2005 that I worked on with 
Sen. Akaka authorized continued funding for methane gas hydrates 
research--supposedly $30 million in FY '08--there is no funding in your 
budget for it. Methane hydrate work was not just a ``congressional add 
on'' but was clearly supported by the Department as an existing 
research subject just two years ago--this nation probably having enough 
hydrates to fund its energy needs for 1,000 years, if the technical and 
environmental challenges can be overcome.
    I wonder whether there is still funding in the Office of Fossil 
Fuels for heavy oil research. Alaska knows we have vast heavy, viscous 
oil deposits at Prudhoe Bay, but even at today's high prices we could 
use some additional federal research to help perfect better find ways 
to produce that oil economically.
    You are proposing an increase in funding for carbon sequestration 
demonstration projects, which I support. But in the Energy Policy Act 
of '05 we specifically listed the Williston Basin in the Dakotas and 
Cook Inlet in Alaska as two places we requested you do demonstration 
projects, to show the feasibility of carbon sequestration as part of an 
enhanced oil recovery project in certain geologic types of oil fields. 
That would have both taken carbon out of the atmosphere and helped 
increase oil recovery, perhaps to the tune of 670 million barrels of 
oil in Cook Inlet alone, according to one of the Department's own 
studies. But when you issued the first grant you ignored congressional 
intent and awarded elsewhere. That I can live with, but it does make me 
wonder about the project rating process followed at the National Energy 
Technology Laboratory since the Alaska project was considered very 
sound by industry, itself.
    And in EPACT '05 we included Title V, Indian energy assistance to 
help Natives and tribes develop energy resources on their lands. You 
still have shown no interest in even starting to fund that section of 
the bill.
    And in a purely parochial matter, the Department over the past six 
years has operated an Alaska Energy Office. It has never received more 
than $7 million annually, but it has worked on some exciting projects: 
how to supply rural villages with innovative power in places where 
diesel-generated power costs up to 70 cents per kilowatt. How to 
harness coal while sequestering carbon and enhancing oil recovery from 
oil fields. How to turn coal into nitrogen and other elements through 
gasification. How to get heavy oil out of the ground. How to develop 
gas hydrates without unlocking vast amounts of greenhouse gases. How, 
most recently, to get power to the citizens of Southcentral Alaska now 
that existing supplies of natural gas are becoming more scarce and 
expensive. These are not just important questions for Alaska, but for 
the nation's energy future. I do wish the department was able to 
support funding for the office since, even facing bureaucratic 
struggles, it has done exceptional work during its short life.
    Energy is the lifeblood of my state. Energy production is our 
leading economic engine and also one of our leading costs. Alaskans on 
average pay 50% more for electricity than the national average. I would 
hope the Department would continue both renewable, alternative and 
fossil fuel research that could help to end that competitive 
disadvantage.
                                 ______
                                 
  Prepared Statement of Hon. Gordon H. Smith, U.S. Senator From Oregon

    Mr. Chairman, I appreciate your convening this hearing on the 
Department of Energy's fiscal year 2008 budget request. I also want to 
welcome Secretary Bodman here today.
    Unfortunately, the members from the Pacific Northwest are once 
again confronting the latest in a string of proposals from the Office 
of Management and Budget that would raise electricity rates in the 
Pacific Northwest. This latest proposal, which mandates that BPA's 
secondary revenues in excess of $500 million annually would be used to 
prepay debt, is nothing more than a rate increase in disguise.
    Despite language in the budget that talks about engaging the region 
in a dialogue on this proposal, it is clear that OMB expects BPA to 
implement this prepayment arrangement, and has built revenues into the 
budget assumptions from this proposal beginning in fiscal year 2008. 
While the numbers are difficult to discern in the budget documents, it 
is my understanding that OMB expects over $646 million in additional 
Treasury receipts over five years as a result of this prepayment 
requirement.
    I remain opposed to this requirement to pre-pay debt, which is bad 
public policy for numerous reasons. Northwest residents are still 
paying for the west coast energy crisis of 2000-2001. BPA's rates today 
are already about 45 percent higher than they were in 2000, as a result 
of huge price spikes during the crisis.
    While the economy of the Northwest has rebounded from the recession 
of 2000-2001, the unemployment rate in Oregon remains above the 
national average. Even with these regional economic challenges, BPA has 
made its treasury payments, and has actually prepaid over $1.8 billion 
in Treasury debt over the last six years. The difference is that rates 
were not raised to achieve these prepayments arbitrarily.
    I have been working with my colleagues for several years now to 
reduce BPA's operating costs, and to bring rate relief to BPA's 
customers. This proposal would negate all of those efforts to bring 
down retail rates and retain energy-intensive industries in the 
Northwest. A preliminary analysis by BPA customers indicates that this 
will result in rate increases between 5.5 and 11 percent.
    This proposal, which OMB claims can be done administratively, is 
inconsistent with congressional directives for the treatment of 
revenues and the rate setting requirements in BPA's governing statutes. 
Under the Transmission System Act of 1974, the BPA Administrator is to 
set rates at the lowest possible rates to consumers consistent with 
sound business principles. Also, rates are to be set in the aggregate 
with all other revenues of the Administrator to pay when due the bonds 
issued by the federal Treasury.
    Earmarking a portion of BPA's revenues sets a bad precedent, and 
fails to take into consideration ongoing uncertainties surrounding 
river operations for fish, the appropriate level of carry-over 
reserves, or BPA's ability to meet its scheduled Treasury payments. 
This year, the proposal is for revenues from surplus sales over $500 
million. What's to keep that number from being lowered in future 
budgets?
    As a self-financing agency, BPA must be able to consider all its 
revenues when setting rates and establishing its Treasury repayment 
probability. It must also have the flexibility to respond to operating 
mandates and market conditions over time. I am concerned about the 
impact of this proposal on BPA's reserves. During the energy crisis, 
BPA used over $600 million in reserves to buy power to meet its 
contractual obligations.
    Finally, from a nationwide perspective, it is my view that the 
Administration should be attempting to lower electricity and other 
energy costs across the nation, not to raise them. As U.S. companies 
struggle to compete in a global economy, they are already hampered by 
rising electricity prices and natural gas prices that are the highest 
in the industrialized world.
    This proposal sends a terrible message to energy-intensive 
industries. In essence, the federal government would rather wring more 
money out of ratepayers for deficit reduction than pursue lower energy 
rates that would help keep U.S. businesses competitive.
    I do want to express my appreciation to the Administration for its 
decision not to continue pursuing legislation that would require third-
party financing arrangements to be counted against BPA's statutory debt 
ceiling. That will help ensure that BPA can use these financing 
arrangements to maximize its statutory debt and to provide for needed 
transmission upgrades.
    Another aspect of the Department's proposed budget that is of great 
concern to me is the lack of any funding for wave and tidal energy 
technologies under the renewable energy budget. I support the 
technologies that are scheduled to receive funding, including biomass, 
solar, wind, geothermal and hydropower. However, I believe the 
Department is ignoring the growing interest in wave energy, 
particularly on the contiguous West Coast, Alaska and Hawaii.
    These innovative technologies are renewable, non-emitting resources 
that can help meet our nation's growing demand for electricity. In 
Oregon, it would be possible to produce and transmit over two hundred 
megawatts of wave energy without any upgrades to the existing 
transmission system on the coast. Already a number of preliminary 
permits have been filed at the Federal Energy Regulatory Commission for 
wave energy facilities off the Oregon coast.
    These facilities would be virtually invisible from shore, and could 
provide predictable generation that could be easily integrated with 
other electricity resources. In addition, according to a January 2005 
report issued by the Electric Power Research Institute, ``with proper 
siting, converting ocean wave energy to electricity is believed to be 
one of the most environmentally benign ways to generate electricity.''
    As with many emerging renewable technologies, wave and tidal energy 
are more costly than traditional generation using fossil fuels. Yet, 
for our environment and our energy security, we must provide incentives 
that will encourage the development and commercialization of these 
resources.
    I look forward to hearing testimony, Mr. Secretary.

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

    Senator Domenici. Senator Bingaman, Mr. Chairman, first I 
apologize for being late and coming in the back door. I thought 
I would come in and catch the Secretary in the back, since you 
and I have been trying to get him to change a few things, I 
thought it might be easier to do it that way, but he didn't 
budge. Right, slipping up on his back side, but it didn't work.
    Again, Mr. Secretary, I want to thank you for coming to the 
committee. I'm very pleased that the 2008 budget continues to 
focus on energy security and our investment in science and 
innovation. Obviously, there are some holes, as there will be, 
and as we work through the year, we'll try to fill some and 
you'll try to think that you've done it better, but if we 
continue to work together, we'll come out with a pretty good 
year, I think.
    This budget also increases funding for many of the programs 
in the Energy Policy Act of 2005. I'm just sure that 
implementing the environmental and the Energy Policy Act is the 
most significant near-term step that we can take in 
strengthening our Nation's energy security. Every time we turn 
around, there is somebody telling us that they're glad we did 
something in that Energy Act that is moving us in the right 
direction.
    This work is essential, and I'm committed to working with 
you to provide the resources necessary to fully implement that 
Act.
    I do, however, have a major concern with this budget and 
its impact on the National Laboratories in our home State. I'm 
troubled by the reduction in funding for the NNSA weapons 
program, and all the NNSA labs and overall weapons funding will 
go down at Los Alamos, by about 6 percent, and Sandia by about 
8. Those numbers are troubling to me, because as you know, I've 
fought to integrate the Nation's weapons labs and science 
infrastructure into a more cohesive research unit. I hope 
you'll work with us to advance our capabilities in this area, 
because I believe that we can do better than that, under the 
budget process available to us.
    I would like to move on to discuss the budget proposal on 
loan guarantees authorized in title XVII of the Energy Policy 
Act. I'm pleased that this budget allows for $9 billion in loan 
guarantees for clean energy and innovative technologies. This 
is a step in the right direction, but Mr. Secretary, I'm 
convinced that a much bigger step is needed to make a real 
difference in the development of clean energy technologies.
    When Congress created this loan guarantee program in the 
EPAct of 2005, we envisioned a significantly more ambitious 
scope of loan guarantees. This program provides incentives for 
clean energy projects enumerated in section 1703 that are 
critical to the fight against pollution, or global emissions of 
greenhouse gases. Implementation of this program at the scale 
envisioned in the 2005 bill could be a significant step toward 
addressing the challenge of global climate change, with little 
or no cost to the Federal Treasury, and I think you know that.
    Let me now turn to one other area of tremendous potential, 
in addressing climate change. I want to commend you for 
considering investment, and the considerable amount you have 
put into nuclear energy. I believe that these nuclear power 
initiatives hold great promise for our efforts to reduce 
greenhouse gas emissions.
    Our nuclear energy, science and technologies is increased 
in this budget by over 58 percent, to $875 million over the 
2006 level. Nuclear energy research and development programs 
have increased by 114 percent over the fiscal year 2007 level, 
to $568 million. Nuclear power 2010 has increased 75 percent 
from fiscal year 2006; this program will complete the two early 
site permits. I don't think we know very much about the early 
site permitting process, but it is a godsend if it works, and 
I'm very glad you put money in, in case it works.
    The program will complete two early site permits, Senator 
McClure, you've been talking about that for a long time, early 
site permits, Senator McClure who is not here today.
    Senator Craig. I'm honored.
    Senator Domenici. You're honored?
    Senator Craig. I'm honored to be called Senator McClure.
    Senator Domenici. Excuse me, Senator McClure, I have you on 
my mind. If he only knew why.
    As I was saying, the program will complete two early site 
permits and two generic combined construction and operating 
license demonstrations for new nuclear power plants.
    Finally, the budget provides for the implementation of a 
new program authorized in EPAct 2005 to offer risk insurance 
for the construction of six nuclear power plants.
    Each of these initiatives is important to the construction 
of 32 nuclear power plants that have been proposed.
    Now, I want to give you some numbers, and then I will be 
quiet. But I've been talking about nuclear power, and I want to 
tell everyone what they really mean in terms of climate change. 
If all of these plants are built, they will displace 270 
million metric tons of CO2 each year. When those 
plants have been operating for 5 years, it is estimated that 
they will have totally displaced the amount of CO2 
produced by the 230 million cars on the roadways of America. 
Can we talk about nuclear power as a large part of the solution 
to climate change without talking about a solution to nuclear 
waste? Obviously it does not make sense to attempt a serious 
discussion of addressing greenhouse emissions without moving 
toward a solution of nuclear waste.
    I wish you well, and hope we can move with some solutions 
in that area. I ask that the remainder of my remarks be made a 
part of the record. Thank you very much for your cooperation 
and thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Secretary Bodman, why don't you go right ahead with your 
statement, and then we'll have some questions.

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

    Secretary Bodman. Thank you. I have a brief statement, and 
then a formal statement that I would like to be included as a 
part of the record, sir.
    The Chairman. We'll include your full statement in the 
record, go ahead with any opening statements you'd like.
    Secretary Bodman. Let me begin by noting the very good 
relationship, Mr. Chairman, that I've enjoyed having with you, 
and with the ranking member over the last couple of years since 
I took on this job. I hope to strengthen that good 
relationship, and build on it, so that all of us at DOE can 
work with this committee, in order to improve our Nation's 
energy security.
    As you heard in the State of the Union address, President 
Bush announced several new energy initiatives that really will 
shape our Department's work over the next couple of years.
    The President has announced the goal of reducing American 
gasoline consumption by 20 percent over the next 10 years. 
First, by requiring that 35 billion gallons of renewable, 
alternative fuels be included, and replace a like amount of 
gasoline over the next 10 years. That would be a 15 percent 
reduction. And second, by reforming and modernizing the CAFE 
standards, or the fuel efficiency standards, for automobiles 
and extending the same rules that applied to light trucks and 
SUVs, to automobiles. That would account for the balance, or 
another 5 percent.
    Together, we believe that these measures will help reduce 
our dependence on unstable regimes, it'll also check the growth 
of carbon emissions. In addition, the President proposed 
doubling the size of the Strategic Petroleum Reserve, as you've 
already noted; we think that that is important to help protect 
our Nation from the vagaries of world oil markets.
    We look forward to working with the Congress, and other 
parts of the administration, other departments, to accomplish 
these important goals.
    Now, let me just take a moment to mention a few of the 
highlights in our $24.3 billion budget request of Congress. To 
maintain America's economic prosperity by encouraging 
scientific innovation, the President last year, proposed the 
American Competitiveness Initiative. I know that is something 
that really came out of work that you, Mr. Chairman, did along 
with Senator Alexander, who used to be on this committee, and I 
take it has moved on to other assignments.
    Our budget proposes $4.4 billion--an increase of about $300 
million over the 2007 request--to fund basic research in the 
physical sciences, and to support science and technology 
education programs. Something that is, frankly, close to my 
heart, and I hope to the committee's.
    We're also requesting $2.7 billion to accelerate the 
Advanced Energy Initiative, which was also announced last year. 
Through this initiative, we will continue to develop the most 
promising clean energy technologies, including clean coal, 
biomass, solar energy, wind power, hydrogen research and new 
technologies, as has been mentioned in nuclear energy.
    The President and I believe that nuclear power must play a 
significant role in the future energy needs, particularly the 
future electricity needs of our Nation. Our budget requests a 
total $400 million, including $10 million from the Defense 
Nuclear Nonproliferation part of the NNSA for the President's 
Global Nuclear Energy Partnership. That is an international 
effort to expand the availability of safe, proliferation-
resistant, nuclear power.
    To make the expansion of nuclear energy possible, we must 
address the matter of nuclear waste. The budget requests $495 
million for the continued development of a geologic waste 
depository at Yucca Mountain, Nevada.
    For the NNSA, the budget proposes $6.5 billion for weapons 
activities, which includes funding our complex 2030 Program. 
The idea of that is to create a smaller, more efficient weapons 
complex that is better able to respond to changing global 
security challenges. Also, within the NNSA, we request $1.7 
billion to support our Defense Nuclear Nonproliferation 
Activities.
    One of the most important responsibilities concerns our 
commitment to public health and safety. Our fiscal year 2008 
budget proposes $5.7 billion to clean up hazardous, radioactive 
waste left over from the Manhattan Project and the cold war.
    I'm proud to note that we have completed the cleanup of 81 
sites through the end of fiscal 2006, as well as three sites in 
Ohio--Fernald, Columbus, and Ashtabula--which have been 
completed during this fiscal year. We're quite pleased and 
proud of that.
    Mr. Chairman, there are many other productive and promising 
initiatives underway at our Department. I look forward to 
discussing them with you during the question and answer 
session. Thank you.
    [The prepared statement of Secretary Bodman follows:]

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

    Chairman Bingaman, Ranking Member Domenici, and members of the 
Committee, I am pleased to be with you this morning to present the 
President's FY 2008 budget proposal for the Department of Energy.
    Before I discuss the details of our budget proposal, I would like 
to briefly mention the President's energy initiatives announced during 
the State of the Union. As you know, President Bush asked Congress and 
America's scientists, farmers, industry leaders and entrepreneurs to 
join him in pursuing the goal of reducing U.S. gasoline usage by 20 
percent in the next ten years. We have named this our ``Twenty in Ten'' 
plan and I urge your support for this ambitious plan. For too long, our 
nation has been dependent on oil. America's dependence leaves us more 
vulnerable to hostile regimes, and to terrorists who could cause huge 
disruptions of oil shipments, raise the price of oil, and do great harm 
to our economy.
    America will reach the President's ``Twenty in Ten'' goal by 
increasing the supply of renewable and alternative 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. We have also proposed to reform and modernize Corporate 
Average Fuel Economy (CAFE) standards for cars and extending the 
current light truck rule. In 2017, this will reduce projected annual 
gasoline use by up to 8.5 billion gallons, a further 5 percent 
reduction that, in combination with increasing the supply of renewable 
and alternative fuels, will bring the total reduction in projected 
annual gasoline use to 20 percent.
    This plan will also strengthen America's energy security by 
stepping up domestic oil production in environmentally sensitive ways, 
and by doubling the current capacity of the Strategic Petroleum Reserve 
(SPR) to 1.5 billion barrels by 2027.
    Coupled with the Advanced Energy Initiative (AEI) and the American 
Competitiveness Initiative (ACI), which were launched a year ago, these 
proposals offer a strong plan to strengthen America's energy security, 
and I encourage members of the Committee to join us in pursuing these 
proposals.

         HIGHLIGHTS OF THE FY 2008 DEPARTMENT OF ENERGY BUDGET

    The strength and prosperity of America's economy is built on the 
security of our nation and the reliability of energy sources. Since 
2001, the Administration has invested $158 billion through the 
Department of Energy (DOE) to help drive America's economic growth, 
provide for our national security, and address the energy challenges 
that face our nation. The Department of Energy's fiscal year (FY) 2008 
budget request of $24.3 billion stays on course to address the growing 
demand for affordable, clean and reliable energy; preserve our national 
security; and enable scientific breakthroughs that will have 
significant impacts on our quality of life and the health of the 
American people. The FY 2008 budget was developed to meet those goals.
    With a total investment of $24.3 billion in FY 2008, the Department 
will seek to advance the President's American Competitiveness 
Initiative aimed at ensuring U.S. technological competitiveness and 
economic security, and implement the Advanced Energy Initiative which 
seeks to accelerate the research, development and deployment of clean 
energy technologies to diversify our nation's energy supply. These 
efforts, combined with investments to meet our commitment to protect 
the United States as stewards of our nation's nuclear weapons stockpile 
and to environmental cleanup, will foster continued economic growth and 
promote a sustainable energy future.
    This budget, while focused on delivering results to meet the 
nation's priorities, also serves as the roadmap for the future of 
America's energy security. It is a budget poised to support the 
President's pro-growth economic policies and spending restraints. In 
addition, the FY 2008 budget request was shaped to reflect the 
Department's five strategic themes consistent with the President's 
Management Agenda to improve performance and accountability across the 
Department of Energy. They are:

   Promoting America's energy security through reliable, clean, 
        and affordable energy;
   Strengthening U.S. scientific discovery, economic 
        competitiveness, and improving quality of life through 
        innovations;
   Ensuring America's nuclear security;
   Protecting the environment by providing a responsible 
        resolution to the environmental legacy of nuclear weapons; and
   Enabling the Mission through sound management.

    To highlight, the FY 2008 budget for the Department of Energy 
emphasizes investments that will:

   Advance the American Competitiveness Initiative.--Last year 
        President Bush launched the American Competitiveness 
        Initiative--(ACI)--to encourage innovation throughout the 
        economy and to give America's children a firm grounding in math 
        and science. The FY 2008 budget investment of $4.4 billion from 
        the Department, an increase of approximately $300 million from 
        the FY 2007 budget request, increases basic research in the 
        physical sciences, builds the large-scale scientific facilities 
        essential for U.S. world leadership, supports thousands of 
        scientists and students--our current and future scientific and 
        technical workforce--and encourages entrepreneurship and 
        technology discovery. Scientific and technological discovery 
        and innovation are the major engines of increasing 
        productivity--indispensable to ensuring growth, job creation, 
        and rising incomes for American families in the technologically 
        driven twenty-first century. The investment is essential if the 
        United States is to maintain its world-class, scientific 
        leadership and global competitiveness.
   Accelerate the Advanced Energy Initiative.--At a request of 
        $2.7 billion, $557 million above the FY 2007 budget request of 
        $2.1 billion, the President's Advanced Energy Initiative (AEI) 
        will continue to support clean energy technology breakthroughs 
        that will help improve our energy security through 
        diversification and could help to reduce our dependence on 
        foreign oil. The FY 2008 budget for AEI includes funding for 
        the advancement of renewable energy technologies such as 
        biomass, wind, and solar energy, as well as hydrogen research 
        and development. Also, AEI's diverse energy portfolio includes 
        accelerating the development of clean coal technology, 
        including building a near-zero atmospheric emissions coal plant 
        known as FutureGen. AEI also includes funding for nuclear 
        energy technologies, including the Global Nuclear Energy 
        Partnership, and basic science research that supports 
        developments in many of the aforementioned technologies as well 
        as fusion energy research.
   Expand the Resurgence of Nuclear Energy.--Nuclear energy is 
        an important source of energy in the United States and is a key 
        component of the AEI portfolio. Nuclear energy is clean, safe, 
        and reliable, and already supplies about 20 percent of the 
        nation's electricity. Recognizing the potential of nuclear 
        energy, the President announced in February 2006 the Global 
        Nuclear Energy Partnership (GNEP). GNEP seeks to bring about 
        significant, wide-scale use of nuclear energy through the 
        development of better, more efficient and proliferation-
        resistant nuclear fuel cycles while reducing the volume of 
        nuclear waste requiring ultimate disposal. GNEP will also help 
        reduce the threat of nuclear proliferation around the world. In 
        addition, it helps address the Department's long-term nuclear 
        waste disposal challenges. A total of $405 million ($10 million 
        in Defense Nuclear Nonproliferation) is requested in this 
        budget for GNEP, which is an increase of $155.0 million above 
        the FY 2007 budget request of $250 million.
        We can not forget that expansion of nuclear power is only 
        possible if we continue to develop a responsible path for 
        disposing of spent nuclear fuel. Therefore, $494.5 million is 
        requested in FY 2008 for the continued development of a 
        geologic waste repository at Yucca Mountain, Nevada. Not later 
        than June 30, 2008, the Department intends to complete and 
        submit a License Application to the Nuclear Regulatory 
        Commission for authorization to construct the repository. GNEP 
        has important implications for the permanent repository at 
        Yucca Mountain. The increased efficiency in recycling spent 
        nuclear fuel would ensure that even with expanded use of 
        nuclear energy, the U.S. would need only one geologic 
        repository. GNEP is consistent with the Yucca Mountain Project 
        and extends its benefits beyond the twenty-first century.
   Transform Our Nuclear Weapons Complex.--The FY 2008 budget 
        reconfirms the Department of Energy's steadfast commitment to 
        the national security interests of the United States through 
        stewardship of a reliable and responsive nuclear weapons 
        stockpile and by advancing the goals of global non-
        proliferation. Through the National Nuclear Security 
        Administration (NNSA), the Department directs $6.5 billion in 
        this request for Weapons Activities, a $103 million increase 
        from the FY 2007 request, to meet the existing requirements for 
        stewardship of the Nation's nuclear weapon stockpile, 
        technologies and facilities, as well as to continue to 
        revitalize the nuclear weapons complex with the goal of a much 
        smaller size by 2030. This effort, called ``Complex 2030,'' is 
        structured to achieve President Bush's vision to create a more 
        efficient Nuclear Weapons Complex of the future that is able to 
        respond to changing national and global security challenges.
   Reduce the Risk of Weapons of Mass Destruction Worldwide.--
        The Department has provided $1.7 billion in this request for 
        Defense Nuclear Nonproliferation, for a comprehensive set of 
        programs to meet our commitment to detect, prevent, and reverse 
        the proliferation of Weapons of Mass Destruction (WMD) in close 
        cooperation with our partners around the world. This program is 
        an Administration priority and while the funding amount shows a 
        3 percent decrease, this reflects accelerated completions in FY 
        2007. Further, the request provides significant out-year growth 
        to fulfill our international agreements and accelerate our work 
        to reduce the risk of WMD threats. Among many advances, the FY 
        2008 budget for example will further our work in the Megaports 
        program by initiating the installation of radiation detection 
        equipment at the Port of Hong Kong.
   Meet Our Commitments to Public Health and Safety and the 
        Environment.--During my first days at the Department of Energy, 
        I announced safety as my top priority and the number one 
        operating principle of the Department. To implement this 
        vision, we created a new Office of Health, Safety and Security. 
        As I said at the time, ``As Secretary of Energy, ensuring the 
        safety of workers across the DOE complex is my top priority and 
        this new office will go a long way in strengthening our safety 
        and security organization. We must be world class not only in 
        how we carry out our mission, but in the safe, secure, and 
        environmentally responsible way in which we manage operations 
        at our facilities across the country.'' The organization's FY 
        2008 budget request of $428 million, builds on a number of 
        actions the Department has taken over the past two years to 
        increase safety of DOE workers.

        The FY 2008 budget includes $5.7 billion for the Environmental 
        Management program to protect public health and safety by 
        cleaning up hazardous, radioactive legacy waste left over from 
        the Manhattan Project and the Cold War. Past investments have 
        resulted in the completed clean up of 81 sites through the end 
        of FY 2006, including Rocky Flats, Colorado, and a total of 86 
        sites by the end of FY 2007, including the Fernald site in 
        Ohio, which was completed in January 2007. This budget allows 
        the program to continue to make progress towards cleaning up 
        and closing sites and focuses on activities with the greatest 
        risk reduction.
        As the Department continues to make progress in completing 
        clean up, the FY 2008 budget request of $194 million for Legacy 
        Management supports the Department's long-term stewardship 
        responsibilities and payment of pensions and benefits for our 
        former contractor workers after site closure.
        The GNEP strategy complements the Department's Civilian 
        Radioactive Waste Management program, which is working to 
        address the problems of long-term nuclear waste disposal in an 
        environmentally sound manner. The program office is working to 
        construct a permanent repository for spent nuclear fuel at 
        Yucca Mountain. Funding of $494.5 million is proposed in FY 
        2008 to support the development of a repository that will 
        protect public health and safety in ways that are both 
        environmentally and economically viable. The funding also 
        supports the submission, not later than June 30, 2008, of a 
        comprehensive License Application to the Nuclear Regulatory 
        Commission for authorization to construct the repository.
        In light of the increased number of sophisticated cyber attacks 
        directed at all facets of our communities, from military to 
        civilian to private users, the Department is taking significant 
        steps to secure the virtual pathways and mitigate the threat 
        from cyber intrusions. Implementing these steps will be 
        seamless and will not interrupt the availability of information 
        systems resources while preserving the confidentiality and 
        integrity of the information and their contents. A budget 
        request of $170 million in FY 2008 supports the Department's 
        efforts to defend against emerging, complex cyber attacks. 
        Through these efforts, the Department will be in a better 
        position to effectively manage and monitor cyber risk across 
        the complex. In FY 2008, DOE will increase support on a 
        Department-wide basis to deploy new cyber security tools and 
        cyber security management activities to detect, analyze, and 
        reduce the threat across the complex.

   PROMOTING AMERICA'S ENERGY SECURITY THROUGH RELIABLE, CLEAN, AND 
                           AFFORDABLE ENERGY

    The FY 2008 budget request addressing energy and environmental 
security is an essential component of the Department's strategic goals. 
This priority is reflected in the increase of $506 million or 20 
percent of the Department's energy programs compared to the FY 2007 
budget request. These investments in research, development and 
deployment could strengthen America's energy security, environmental 
quality, and economic vitality through public-private partnerships that 
expand the use of cost-effective energy efficient technologies; enable 
and accelerate market adoption of clean, reliable and affordable energy 
technologies; and support the implementation of the President's 
National Energy Policy. Additionally, the energy programs at DOE are 
working with the basic research and scientific community to focus on 
development of technology components that could enable and catalyze the 
rapid development, commercialization and deployment of next generation 
energy technologies.
    This budget includes President Bush's Advanced Energy Initiative 
(AEI) which aims to reduce our dependence on foreign sources of oil and 
transforming our national energy economy by promoting development of 
cleaner sources of electricity production. For too long, our nation has 
been dependent on oil. America's dependence leaves us more vulnerable 
to disruptions to domestic production like hurricanes, to hostile 
regimes, and to terrorists--who could cause huge disruptions of oil 
shipments, raise the price of oil, and do great harm to our economy. In 
concert with the President's Twenty In Ten initiative to reduce U.S. 
gasoline usage by 20 percent in the next ten years, or by 2017, a total 
of $2.7 billion is requested in FY 2008 to support the AEI. These funds 
support a diverse portfolio of energy research and development (R&D) 
and deployment programs designed to help meet the energy challenges of 
the 21st century. Highlights of the request include the following 
components of the President's AEI:

   The President's Biofuels Initiative.--The President's goal 
        to make cellulosic ethanol cost-competitive by 2012 is the 
        focus of the biomass program. Biomass is the key renewable 
        resource supported by the Department because it is a promising 
        renewable option for producing liquid transportation fuels in 
        the near term, thereby reducing our dependence on imported oil. 
        In FY 2008, the Department is investing $179 million to support 
        the goals of the initiative.
   The President's Hydrogen Fuel Initiative.--This budget 
        request includes $309 million (an increase of $19.5 million 
        above the FY 2007 request) for the President's Hydrogen Fuel 
        Initiative and completes the President's commitment of $1.2 
        billion over five years for this initiative. Increased funding 
        is proposed to expand research in several areas, including: 
        hydrogen production from renewables; materials for hydrogen 
        storage; fuel cell stack components; and a new R&D effort on 
        cost-effective manufacturing technologies to help industry 
        build a competitive, domestic hydrogen and fuel cell supplier 
        capability.
   Vehicles Technologies and FreedomCAR.--This year's request 
        emphasizes plug-in hybrid vehicle component technologies by 
        increasing the requested research support to $81 million. These 
        technologies offer the potential to make significant additional 
        improvements in petroleum reduction beyond that achievable with 
        standard hybrid configurations. By utilizing energy drawn from 
        the nation's electricity grid at off-peak times to charge high 
        energy batteries, these technologies will be able to operate in 
        an electric vehicle mode for expanded distances, potentially 
        meeting most drivers' needs for commuting and short distance 
        driving.
   The President's Solar America Initiative (SAI).--Launched in 
        FY 2007, SAI is designed to achieve cost competitiveness for 
        photovoltaic (PV) solar electricity by 2015. With a request of 
        $148 million in FY 2008, SAI seeks to achieve its mission 
        through public-private partnerships with industry, 
        universities, national laboratories, states, and/or other 
        government entities.

    The FY 2008 budget request also supports renewable energy and 
energy efficiency R&D that could help reduce the overall demand for 
natural gas and lower emissions in the electricity sector. The FY 2008 
request for the Wind Energy program includes $40 million to continue 
wind energy research to reduce costs and overcome barriers to large-
scale use of wind power. The FY 2008 budget also includes $19 million 
to continue the accelerated development of Solid State Lighting 
technologies that have the potential to reduce commercial building 
lighting electricity consumption by 50 percent and could revolutionize 
the energy efficiency, appearance, visual comfort, and quality of 
lighting.
    Our energy portfolio also recognizes the abundance of coal as a 
domestic energy resource and remains committed to research and 
development to promote its clean and efficient use. Coal in the U.S. 
accounts for 25 percent of the world's coal reserves. The foundation of 
the Department's clean coal research program is the FutureGen project, 
which will establish the capability and feasibility of co-producing 
electricity and hydrogen from coal with near-zero atmospheric 
emissions. The Administration remains strongly committed to FutureGen 
and is requesting $108 million in FY 2008, consistent with the project 
plan to keep the project on schedule for start-up in 2012. An 
additional $246 million is requested within the Coal program to support 
research and development on technologies needed to realize the concept.
    Funding for the Coal program will be partially derived from 
transferring $166 million in prior year balances from the Clean Coal 
Technology appropriation to the Fossil Energy Research and Development 
appropriation. These prior year balances are no longer needed for 
active Clean Coal Technology projects and will be used to support 
FutureGen ($108 million) and the Clean Coal Power Initiative ($58 
million). Better utilization of these fund balances to support 
FutureGen and related technologies will generate real benefits for 
America's energy security and environmental quality. Using fund 
balances and new appropriations, in 2008 the Clean Coal Power 
Initiative will issue a solicitation for demonstration of technologies 
focusing on carbon sequestration.
    As part of the greenhouse gas mitigation strategy, the Department 
continues to develop low cost carbon sequestration technology for both 
new and existing coal plants. To that end, the Department includes $79 
million in FY 2008 for sequestration research and development, 
including initiating work on four large-scale sequestration field 
tests, each of which will inject about one million tons per year of 
carbon dioxide. The carbon sequestration program, together with 
FutureGen and other supporting research, will assure the timely 
development of this technology that will be capable of eliminating 90 
percent of carbon emissions from new coal fired plants.
    Consistent with the FY 2006 and FY 2007 budget requests, the FY 
2008 budget request continues to shift resources away from oil and gas 
research and development programs, which have sufficient market 
incentives for private industry support, to other energy priorities. 
The decision reflected strategic consideration by assessing the 
program's technical effectiveness and comparing it to other programs 
which have achieved more clearly demonstrated and substantial benefits. 
Federal staff, paid from the program direction account, will work 
toward an orderly termination of the program in FY 2008.
    The Energy Policy Act of 2005 established a new mandatory oil and 
gas research and development (R&D) program, called the Ultra-Deep and 
Unconventional Natural Gas and Other Petroleum Research program, that 
is funded from federal revenues from oil and gas leases beginning in FY 
2007. These R&D activities are more appropriate for the private-sector 
oil and gas industry to perform. Therefore the FY 2008 budget proposes 
to repeal the program through a separate legislative proposal.
    To further assure against oil supply disruptions that could harm 
our economy, this budget also proposes $168 million to begin expanding 
the Strategic Petroleum Reserve to an ultimate capacity of 1.5 billion 
barrels by 2027 as announced by President Bush in his State of the 
Union address. DOE will begin filling the Reserve to its current 
capacity of 727 MB by immediately purchasing oil for the Reserve in FY 
2007, and also placing the Department of the Interior's federal royalty 
in-kind oil into the Reserve in FY 2007 and FY 2008. The FY 2008 Budget 
requests funds to expand the capacity of the SPR to the one billion 
barrel capacity authorized by current law and funds to conduct National 
Environmental Policy Act work to expand to 1.5 billion barrels. The 
Administration will, through a separate legislative proposal, seek the 
necessary authority to increase the authorized capacity of the Reserve 
from one billion barrels to 1.5 billion barrels.
    The Energy Policy Act of 2005 authorized the establishment of a new 
Loan Guarantee Program. This budget request includes $8.4 million to 
operate a Loan Guarantee Office. This program will centralize loan 
guarantee services for the Department to ensure all processes and 
criteria are applied uniformly in accordance with established 
requirements, procedures, guidelines, regulations and manage the 
assessment of all loan guarantee applications submitted to the 
Department in compliance with Title XVII of the Energy Policy Act of 
2005. Section 1703 of that Act authorizes the Department to provide 
loan guarantees for renewable energy systems, advanced nuclear 
facilities, coal gasification, carbon sequestration, energy efficiency, 
and many other types of projects. The budget proposes an FY 2008 loan 
volume limitation of $9 billion. Of this amount, the Department will 
seek to guarantee approximately $4 billion in loans for central power 
generation facilities (for example, nuclear facilities or carbon 
sequestration optimized coal power plants); $4 billion in loans for 
projects that promote biofuels and clean transportation fuels; and $1 
billion in loans for projects using new technologies for electric 
transmission facilities or renewable power generation systems.
    Reliable energy information plays a critical role in promoting 
efficient energy markets and informing the public and policy makers. 
This budget requests a total of $105 million for the Energy Information 
Administration to improve energy data and analysis programs, reflecting 
a 17 percent increase over the FY 2007 budget request.

                             NUCLEAR ENERGY

    A staple in our energy portfolio, nuclear energy has the potential 
to drive our 21st century economy to produce vast quantities of 
economical hydrogen for transportation use without emitting greenhouse 
gases and to generate heat and clean water to support growing industry 
and populations worldwide. In FY 2008, a total of $874.6 million is 
requested for nuclear energy activities. Included in the total is $395 
million for the Advanced Fuel Cycle Initiative to support the Global 
Nuclear Energy Partnership (GNEP). GNEP is a comprehensive strategy to: 
enable an expansion of nuclear power in the United States and around 
the world; promote nuclear nonproliferation goals; and help resolve 
nuclear waste disposal issues. An additional $10 million is requested 
within the nuclear nonproliferation budget to support safeguards 
technology development as part of the far-reaching GNEP strategy.
    GNEP will build upon the Administration's commitment to develop 
nuclear energy technology and systems and enhance the work of the 
United States and our international partners to strengthen 
nonproliferation efforts. The GNEP strategy will accelerate efforts to:

   Provide abundant energy without generating carbon emissions 
        or greenhouse gases;
   Recycle used nuclear fuel to minimize waste and reduce 
        proliferation concerns;
   Safely and securely allow developing nations to deploy 
        nuclear power to meet their energy needs;
   Assure maximum energy recovery from still-valuable used 
        nuclear fuel; and
   Reduce the number of required U.S. geologic waste 
        repositories to one for the remainder of this century.

    Through GNEP, the United States will work with key international 
partners to develop new recycling technologies. Recycled fuel would be 
processed through advanced burner reactors to extract more energy, 
reduce waste and consume plutonium, dramatically reducing proliferation 
risks. As part of GNEP, the U.S. and other nations with advanced 
nuclear technologies would offer developing nations a reliable supply 
of nuclear fuel in exchange for their commitment to forgo enrichment 
and reprocessing facilities of their own, alleviating a proliferation 
concern.
    GNEP would also help resolve America's nuclear waste disposal 
challenges. By recycling spent nuclear fuel, the heat load and volume 
of waste requiring permanent geologic disposal would be significantly 
reduced, delaying the need for another repository in addition to the 
one at Yucca Mountain for the remainder of this century.
    To support the near-term domestic expansion of nuclear energy, the 
FY 2008 budget seeks $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 older designs. If successful, 
this seven-year, $1.1 billion project (50 percent to be cost-shared by 
industry) could result in a new nuclear power plant order by 2009 and a 
new nuclear power plant constructed by the private sector and in 
operation by 2014.
    The Energy Policy Act of 2005 authorized the Secretary to enter 
into standby support contracts for six new advanced nuclear reactors. 
The program will allow DOE to offer standby support/risk insurance to 
protect sponsors of the first new nuclear power plants against the 
financial impact of certain delays that are beyond the sponsors' 
control. This program would cover 100 percent of the covered cost of 
delay, up to $500 million for the first two new reactors, and 50 
percent of the covered cost of delay, up to $250 million each, for up 
to four additional reactors. This risk insurance offers project 
sponsors additional certainty and incentive to provide for the 
construction of a new nuclear power plant by 2014. In FY 2008, the 
Department will receive and evaluate applications for standby support 
contracts from sponsors of new nuclear power plants.
    The FY 2008 budget request includes $36 million to continue to 
develop next-generation nuclear energy systems known as ``Generation IV 
(GenIV)''. These technologies will offer the promise of a safe, 
economical, and proliferation resistant source of clean, reliable, 
sustainable nuclear power with the potential to generate hydrogen for 
use as a fuel. Resources in FY 2008 for GenIV will be primarily focused 
on long-term research and development of a gas-cooled very-high 
temperature reactor, the reactor technology of choice for the Next 
Generation Nuclear Plant (NGNP) project.
strengthening u.s. scientific discovery, economic competitiveness, and 
improving quality of life through innovations in science and technology
    Today our nation's ability to sustain a growing economy and a 
rising standard of living for all Americans depends in part on 
continued advances in science and technology. Scientific and 
technological discovery and innovation are engines of increasing 
productivity and are indispensable to ensuring economic growth, job 
creation, and rising incomes for American families in the 
technologically driven 21st century.
    The FY 2008 Office of Science budget request of $4.4 billion or 7 
percent above the FY 2007 request is designed to sustain the planned 
doubling of Federal support for physical sciences research by FY 2017 
under the American Competitiveness Initiative. Given the large-scale 
nature of Office of Science facilities and the thousands of scientists 
and researchers receiving DOE support for their research and education, 
sustained and predictable budgetary trajectories are essential to 
preserve America's vitality in science and avoid an attrition of U.S. 
scientific talent.
    DOE's Office of Science has played a central role over the last 50 
years in supporting and sustaining institutional research in the 
physical sciences in the United States. Among Federal agencies, it is 
the largest supporter of basic research in the physical sciences, 
providing over 40 percent of such funding. The Office of Science is the 
main builder and operator of large-scale scientific facilities and 
instruments that are increasingly important to physical sciences 
research and maintains and operates ten major national laboratories 
that have been seedbeds of scientific discovery, technological 
innovation, and economic progress. Office of Science funding also plays 
an indispensable role in training, educating, and sustaining the 
nation's scientific workforce. Each year, Office of Science facilities 
meet the needs of a diverse set of 20,000 researchers. Thousands of 
university researchers--professors, ``post-docs'', and undergraduate 
students--also rely, each year, on Office of Science support. Roughly 
half of the researchers at Office of Science-run facilities come from 
universities, and about a third of Office of Science research funds go 
to institutions of higher learning.
    The Office of Science is also the main federal sponsor of basic 
research aimed at achieving the scientific breakthroughs necessary to 
meet our nation's growing energy challenge by developing alternative, 
carbon-free or carbon neutral sources of energy to enhance our energy 
security and protect the global environment.
    Many scientists believe there is a real promise that biotechnology 
may transform the field of energy production--providing 
transformational breakthroughs that will enable the cost-effective, 
homegrown production of biofuels that can eventually meet much of our 
transportation energy demand and substantially reduce net carbon 
dioxide emissions. Today the Genomics: GTL program supports advanced 
biotechnology tools and techniques to probe for biological and 
biologically inspired solutions to Department mission challenges in 
energy, carbon sequestration, and environmental remediation. The FY 
2008 request includes $75 million for three innovative Bioenergy 
Research Centers that will bring together multi-disciplinary teams of 
some of the nation's leading researchers in a mission-driven laboratory 
setting to probe plants and microbes at all levels (molecular, 
cellular, system) in an effort to crack nature's code and achieve the 
breakthroughs that will make biofuel production cost-effective on a 
national scale.
    The capacity to create new, stronger, more durable, or more energy 
efficient materials--``smart'' materials that respond to the 
environment, improved catalysts for oil refining, better batteries, 
more efficient windows, to name only a few applications--increases as 
we gain the tools and expertise to manipulate matter at the atomic 
level. These scientific advances contribute to improving our way of 
living. This year, the Office of Science will continue this work by 
completing construction of the last Nanoscale Science Research Center 
in FY 2008, and the FY 2008 request provides $20 million each for 
operations at the Office's five Nanoscale Science Research facilities. 
In addition, construction continues on the Linac Coherent Light Source, 
the world's first x-ray free electron laser, which will enable us to 
observe chemical reactions at the molecular level in real time. Project 
engineering and design funds are also provided for the proposed 
National Synchrotron Light Source II, which would provide unique 
capabilities for probing structural biology and nanostructures and 
observing materials under extreme conditions.
    Computational power gives scientists the capability to explore 
complex systems and simulate experiments that would be impossible to 
perform in a laboratory. With the FY 2008 budget request, the Office of 
Science performance goal is attainment of roughly one petaflop, which 
is a million billion operations per second, of computational capability 
to sustain the Department's position as world leader in civilian 
computing power. The Advanced Scientific Computing Research request 
increases by $21.5 million over the FY 2007 request.
    Progress in energy-related and use-inspired basic science builds on 
the foundation of discovery in more fundamental science. These 
investigations into the very nature and origins of our universe expand 
the horizons of our knowledge, providing insight into who we are and 
where we come from. Within the $4.4 billion request for Science, $146.5 
million is provided for operations of the Relativistic Heavy Ion 
Collider (RHIC), which enables us to glimpse conditions of the very 
early universe, and $79.2 million is for the Continuous Electron Beam 
Accelerator Facility (CEBAF), which provides insight into the quark 
structure of matter.
    Within high energy or particle physics, research promises to 
radically transform our understanding of the structure of matter, 
space, and time. Within the Office of Science budget request, $158 
million is provided for operations of the Tevatron at Fermilab for 
collider and neutrino physics programs. In addition, the request 
provides $62 million to support the research of U.S. scientists at the 
Large Hadron Collider in CERN, which will be the world's most powerful 
accelerator. R&D support is maintained for the International Linear 
Collider, to maintain a strong U.S. role in the development of this 
potential next-generation accelerator, which promises to further 
illuminate the nature of matter at terascale energies.
    In the Asia-Pacific Partnership, we are a vital member of the 
international effort to promote the development and deployment of clean 
energy goods and services among our Pacific-Rim partners; Australia, 
China, Japan, India and South Korea. To date, the partnership has 
launched nearly a hundred projects that advance energy efficiency, 
clean development and common standards on which new clean energy 
technology and programs can be built. This partnership has created a 
forum where American companies can learn, compete, and innovate, in a 
region with extraordinary economic growth, energy demands and market 
potential. The $15 million requested to support the partnership will be 
in concert with contributions from private-sector and international 
partners.
    Finally, on November 21, 2006, the U.S. Department of Energy signed 
an agreement with China, the European Union, India, Japan, the Republic 
of Korea and the Russian Federation to build the international fusion 
energy project known as ITER. Under this arrangement of international 
scientific cooperation, these nations will collaborate to construct an 
experimental reactor that will put the world on a path toward 
harnessing fusion energy--the fuel that powers the stars--for the 
production of plentiful, environmentally friendly, carbon-free energy. 
The request provides $160 million for the U.S. contribution to this 
international effort.

                  ENSURING AMERICA'S NUCLEAR SECURITY

    The President, in his first days in office, was faced with the new 
and challenging realities of national security in the 21st century. The 
War on Terror has substantially and fundamentally reshaped the national 
security programs and activities in the Department. This budget of 
$24.3 billion for the Department is an important component of the 
President's strategy to address some of these very important issues 
facing our nation. Within the $24.3 billion request in FY 2008, $9.4 
billion or 39 percent is proposed to support DOE's contribution to the 
Federal government-wide effort to ensure the security of our nation.
    The National Nuclear Security Administration (NNSA) continues 
significant efforts to meet Administration and Secretarial priorities 
leveraging science to promote national security. The FY 2008 budget 
proposes $9.4 billion to meet defense and homeland security-related 
objectives. The budget request maintains current commitments to the 
nuclear deterrence policies of the Administration's Nuclear Posture 
Review. To implement those policies for the long term, NNSA has 
established a new planning scenario, ``Complex 2030'', to guide the 
transformation of the complex. The FY 2008 budget also continues to 
fund a high profile strategy to mitigate throughout the world the 
threat of weapons of mass destruction, and provides for the nuclear 
propulsion needs of the U.S. Navy. Key investments include:

   Transforming the nuclear weapons stockpile and 
        infrastructure while meeting Department of Defense 
        requirements, through the Reliable Replacement Warhead and 
        other Complex 2030 initiatives;
   Conducting innovative programs in the nations of the former 
        Soviet Union and other countries to address nonproliferation 
        priorities;
   Supporting naval nuclear propulsion requirements of the U.S. 
        Navy;
   Maintaining comprehensive security for facilities, employees 
        and information implementing and sustaining upgrades throughout 
        the complex;
   Providing nuclear emergency response assets in support of 
        homeland security;
   Reducing the deferred maintenance backlog and achieving 
        facility footprint reduction goals; and,
   Providing corporate management and oversight for NNSA 
        programs and operations.

    The United States continues a fundamental shift in national 
security strategy to address the realities of the 21st century. The 
Administration's Nuclear Posture Review (NPR) addressed a national 
security environment in which threats may evolve more quickly and be 
less predictable and more variable than in the past. The NPR recognizes 
the need to transition from a threat-based nuclear deterrent with large 
numbers of deployed and reserve weapons, to a deterrent consisting of a 
smaller nuclear weapons stockpile with greater reliance on the 
capability and responsiveness of the Department of Defense (DoD) and 
NNSA infrastructure to respond to threats. The NNSA infrastructure must 
be able to meet new requirements in a timely and agile manner while 
also becoming more sustainable and affordable. The Department of Energy 
has created a plan for a revitalized nuclear weapons complex called 
``Complex 2030.'' This significantly more agile and responsive complex 
will allow further reductions in the nuclear stockpile by providing an 
industrial hedge against geopolitical or technical problems and will 
reduce security costs by consolidating nuclear materials. The FY 2008 
President's Budget contains some of the resources required for 
transformation of the Complex in ongoing base program activities that 
are already underway and contributing to Complex 2030 objectives. The 
Administration is still studying plans and funding projections for 
other parts of the effort.
    The FY 2008 budget request of $6.5 billion for Weapons Activities 
includes all programs to meet the immediate needs of the stockpile, 
stockpile surveillance, annual assessment, and life extension programs. 
On November 30, 2006, the Nuclear Weapons Council determined that the 
Reliable Replacement Warhead (RRW) program was feasible as a means for 
sustaining the long-term safety and reliability of the nation's nuclear 
deterrent force. This shift in strategy from a Life Extension Program 
to a RRW program will require substantial planning and resource 
realignments by the Departments of Defense (DoD) and Energy. The 
Campaigns are focused on long-term vitality in science and engineering 
and on R&D supporting current and future stockpile stewardship and DoD 
requirements. A number of these NNSA programs and facilities also 
support scientific research users from other elements of the 
Department, Federal government, and the academic and industrial 
communities. Within the Nuclear Weapon Incident Response programs, a 
new National Technical Nuclear Forensics R&D and operations program is 
established, as well as a stabilization program through leveraged 
Render Safe R&D development of first generation equipment in support of 
homeland security. NNSA's Safeguards and Security activities are also 
encompassed within the request for Weapons Activities. The Defense 
Nuclear Security program supports the physical security needs at NNSA 
sites. These activities increase by 17 percent to sustain base program 
increases associated with the FY 2003 DBT upgrades, and a revised 
schedule for 2005 Design Basis Threat implementation at NNSA sites. 
Cyber Security activities, protecting information and information 
technology infrastructure, increase by over 15 percent. This will 
provide for the first step in a major five-year effort focused on 
revitalization, certification, accreditation and training across the 
NNSA complex.
    Preventing weapons of mass destruction from falling into the hands 
of terrorists and rogue states is one of this Administration's top 
national security priorities. The FY 2008 request of $1.67 billion for 
nuclear nonproliferation activities strongly supports the international 
programs that are denying terrorists and rogue states the nuclear 
materials, technology and expertise needed to develop or otherwise 
acquire nuclear weapons. NNSA continues unprecedented efforts to 
protect the U.S. and our allies from threats, including $265 million 
for cutting-edge nonproliferation research and development for improved 
technologies to detect and monitor nuclear proliferation and nuclear 
explosions worldwide. There are additional major efforts focused on 
potential threats abroad. For example, in the area of nuclear material 
protection and cooperation the program has completed security upgrades 
for Russian navy nuclear fuel and weapons storage at the end of FY 2006 
and will complete security upgrades for Rosatom facilities by the end 
of FY 2008. Also by the end of FY 2008, the program will complete 
security upgrades at the nuclear warhead sites of the Russian Strategic 
Rocket Forces and the 12th Main Directorate. To help complete the 
shutdown of three Russian nuclear reactors still producing 1.2 metric 
tons of plutonium per year and to replace them with conventional fossil 
fuel power plants, this budget request includes $182 million for the 
Elimination of Weapons Grade Plutonium Production program.
    The budget includes a request of $334 million for the U.S. Mixed 
Oxide Fuel Fabrication Plant project at DOE's Savannah River Site in 
South Carolina. This facility will dispose of 34 metric tons of U.S. 
surplus plutonium and facilitate complex-wide consolidation of nuclear 
material. The project is awaiting Congressional authorization to 
proceed to construction. Various programs funded by NNSA's Defense 
Nuclear Nonproliferation appropriation support the President's 
Bratislava Nuclear Security Cooperation initiative (about $293 million) 
including security upgrades at Russian nuclear warhead sites, and also 
support the Global Partnership against the Spread of Weapons of Mass 
Destruction ($537 million) to meet the U.S. commitment to the G8 
nations. In coordination with the Office of Nuclear Energy, the budget 
request also includes $10 million to support the Global Nuclear Energy 
Partnership (GNEP), which is focused on advanced safeguards technology 
development that is crucial to the ultimate success of the GNEP 
initiative.
    NNSA continues to support the United States Navy's nuclear 
propulsion systems. The FY 2008 request of $808.2 million is an 
increase of 1.6 percent over the FY 2007 request level. The funding 
increase assists the Naval Reactors program to ensure the safe and 
reliable operation of reactor plants in nuclear-powered submarines and 
aircraft carriers and fulfills the Navy's requirements for new nuclear 
propulsion plants that meet current and future national defense 
requirements.
protecting the environment by providing a responsible resolution to the 

           ENVIRONMENTAL LEGACY OF NUCLEAR WEAPONS PRODUCTION

    The Federal Government must address the legacy of our past and our 
responsibility to the American taxpayers to provide a clean, safe and 
healthy environment to live in. A total of $6.34 billion is dedicated 
in FY 2008 to support the three key pillars that set the framework for 
the Department to reach that goal. The first pillar is to continue our 
environmental cleanup ($5.7 billion) of contaminated Cold War sites 
across the country. The second pillar is to continue to provide site 
post-closure management and to carry out our responsibilities ($194 
million) to our former contractor workers. The third pillar completes 
the framework by working to construct a permanent nuclear waste 
repository at Yucca Mountain ($494.5 million) to address long-term 
nuclear waste disposal and for authorization of which the Department 
will submit a License Application to the Nuclear Regulatory Commission 
not later than June 30, 2008. And it goes without saying that my core 
principle of safe operations throughout the Department will be applied 
with vigor within this framework.
    To deliver on the Department's cleanup obligations stemming from 50 
years of nuclear research and weapons production during the Cold War, 
the Environmental Management program (EM) continues to focus its 
resources on the highest health and safety risks, such as treatment of 
over 90 million gallons of radioactive liquid waste stored in decades 
old tanks; disposition of thousands of metric tons of special nuclear 
material (surplus weapons-grade uranium and plutonium), spent nuclear 
fuel, and solid waste stored in older facilities that do not meet 
today's environmental requirements; and remediation of contaminated 
soil and groundwater. Up through FY 2007, DOE has completed cleanup of 
86 of 108 legacy nuclear waste sites, with another three site cleanup 
completions--the Pantex Plant in Texas; Lawrence Livermore National 
Laboratory-Site 300 in California, and the Inhalation Toxicology Lab in 
New Mexico--planned for completion in FY 2008.
    In FY 2008, the budget includes $5.7 billion to continue cleanup, 
giving priority to those activities that offer the greatest risk 
reduction while staying focused on completing cleanup and closing 
sites. This is a reduction from the FY 2007 request of $173 million, 
which in part reflects completion of some sites, but also reflects hard 
choices that must be made. Safety remains the utmost priority. EM is 
committed to applying my safety principles and will continue to 
maintain and demand the highest safety performance to protect the 
workers and the communities where EM operates.
    In keeping with the principles of reducing risks and environmental 
liabilities, the FY 2008 request of $5.7 billion will support the 
following priority activities:

   Stabilizing radioactive tank waste in preparation for 
        treatment (about 31 percent of the FY 2008 request);
   Storing and safeguarding nuclear materials and spent nuclear 
        fuel (about 17 percent of the FY 2008 request);
   Dispositioning transuranic, low-level and other solid wastes 
        (about 16 percent of the FY 2008 request);
   Remediating major areas of our sites and decontamination and 
        decommissioning excess facilities (about 26 percent of the FY 
        2008 request).

    One of the significant cleanup challenges the EM program faces is 
the construction of the Hanford Waste Treatment and Immobilization 
Plant (WTP), which will treat highly radioactive tank waste at Hanford. 
WTP has encountered significant technical and project management 
problems, which have caused the project to slow down while the problems 
were addressed. With the help of senior professionals from private 
industry, academia and other Government agencies, EM has undertaken an 
intensive review scrutinizing key elements of the project, including 
the technology, cost and schedule, project management, project 
controls, and earthquake seismic criteria. In December 2006, the 
Department approved a revised, validated baseline of $12.3 billion for 
WTP. The Department believes WTP is now back on a sound technical and 
project management footing, and is ready to move forward.
    Despite numerous accomplishments and successfully accomplishing 
site completions, the EM program has experienced setbacks in achieving 
its vision of accelerated cleanup. At the core of these setbacks are 
optimistic planning assumptions that have not materialized, combined 
with new scope and requirements that were not anticipated. As a result, 
EM estimates the lifecycle cost of the program could increase by $50 
billion. EM continues to take steps to address challenges and improve 
the effectiveness and efficiency of its operation. The Department 
remains committed to completing this important and necessary mission.
    After the Environmental Management program completes cleanup of 
sites throughout the DOE complex, post closure stewardship activities 
are transferred to the Office of Legacy Management (LM). Post closure 
stewardship includes long-term surveillance and maintenance activities 
such as groundwater monitoring, disposal cell maintenance, records 
management, and management of natural resources at sites where active 
remediation has been completed. At some sites the program includes 
management and administration of pension and benefit continuity for 
contractor retirees. In FY 2008, $194.2 million is requested to carry 
out legacy management functions. The majority of the funding is for 
long-term stewardship activities and pension and post-retirement 
benefits for former contractor employees at the Rocky Flats, Colorado, 
and the Fernald, Ohio, closure sites.
    Over the last 50 years, our country has benefited greatly from 
nuclear energy and the power of the atom. We need to ensure a strong 
and diversified energy mix to fuel our nation's economy, and nuclear 
power is an important component of that mix. Currently more than 50,000 
metric tons of spent nuclear fuel is located at over 100 above-ground 
sites in 39 states, and every year reactors in the United States 
produce an additional approximately 2,000 metric tons of spent fuel. In 
order to ensure the future viability of our nuclear generating 
capacity, we need a safe, permanent, geologic repository for spent 
nuclear fuel and high-level nuclear waste at Yucca Mountain. The FY 
2008 budget of $494.5 million sets us on the path to meet that goal. 
The funding will support the development of a repository including:

   Filing and defending a high quality License Application at 
        the Nuclear Regulatory Commission (NRC) based on a simpler and 
        safer approach to handling spent nuclear fuel and operating the 
        repository not later than June 30, 2008;
   Continuing the planning and design for facilities required 
        for the receipt of spent nuclear fuel and high-level waste for 
        emplacement in the repository;
   Making critical infrastructure upgrades at Yucca Mountain to 
        ensure worker, regulator, and visitor safety and operational 
        efficiency; and
   Continuing critical interactions needed to support national 
        transportation planning activities and issuance of the Nevada 
        Rail Alignment Environmental Impact Statement.

    Designing, licensing and constructing a permanent geologic 
repository for spent nuclear fuel and high level waste will resolve the 
challenge of safe disposal of these materials and make construction of 
new nuclear power plants through the President's Global Nuclear Energy 
Partnership (GNEP) more feasible, helping to expand our energy options 
and secure our economic future. In addition, a repository is necessary 
to support nuclear nonproliferation goals, contributing to national 
security objectives.
    In late 2006, the Department announced its plans to submit a 
License Application for the repository to the NRC by June 30, 2008, and 
to initiate repository operations in 2017. This opening date of 2017 is 
a ``best-achievable schedule'' and is predicated upon enactment of 
pending legislation. This proposed legislation addresses many of the 
uncertainties, currently beyond the control of the Department, that 
have the potential to significantly delay the opening date for the 
repository. The legislative proposal that the Administration submitted 
to Congress in 2006 and will resubmit in this Congress addresses 
significant funding reform and regulatory issues that, if enacted, 
would allow the Department to secure the necessary fiscal resources 
needed for program success and clears the path for the program to move 
forward expeditiously.

                               CONCLUSION

    I appreciate the opportunity to appear before you to present the FY 
2008 budget proposal for the Department of Energy. I will be happy to 
take any questions that members of the Committee may have.

    The Chairman. Thank you very much.
    Why don't we do 5-minute rounds here, and if people have 
other questions, we'll do a second or third round.
    Let me start, and ask a question about this loan guarantee 
program. Senator Domenici referred to it. That's in the energy 
bill that we passed in 2005. One of our real frustrations, and 
perhaps one of yours, Mr. Secretary, is the difficulties we've 
had in seeing this loan guarantee program get up and 
implemented. My understanding is that the Department did not 
assign anyone to work on this, because there had not been 
specific funding provided in the appropriations bill for that.
    I guess the first question would be, isn't this the kind of 
thing that could have been pursued right after the enactment, 
right after the signing of that legislation? I don't know how 
tight your budget is over there, but I would think you could 
find the funds to commit some people to this kind of activity, 
early on.
    Secretary Bodman. Mr. Chairman, we requested $1 million 
during fiscal 2006 reprogramming, so that we could start the 
process of staffing this. We have three people who work on it 
now, and who have done the work so far, but we need many more 
than that in order to manage this kind of a program. That 
request for reprogramming was denied, for whatever reason it 
was denied, and we have therefore been operating during 2007 
with the same level of funding, namely zero, that we had 
before.
    We have done our best, given the fact that there has not 
been any funding for this, even though we have requested it.
    We are hopeful that we will receive such support as a 
result of the continuing resolution, but that remains to be 
seen.
    I can tell you that we have started down the path by asking 
for preliminary indications of who is interested; this is 
without trying to get a complete body of work done, and we have 
had over 100 responses. Trying to respond to 100 responses is 
going to take some manpower and some womanpower to be able to 
do that, and we are hopeful of being able to do it.
    I would also add, as I have explained to you during my 
visits with you, that I used to work in this general area, 
evaluating these kinds of projects. This is very tough to do. 
It's tough to be right, and I would rather be right, and I 
would rather be correct in setting up this office, so that it 
works effectively for the future--than I would worry about the 
number and the quantity of programs that we are able to 
support.
    We've laid out a program to recruit people, they've 
expressed interest, we've had people ready to go, and frankly 
they have backed off a bit, given the fact that we don't have 
funding for it. As soon as we get that, we will proceed.
    The Chairman. Well, let me just follow up by saying that 
this continuing resolution, as I understand it, has the $4 
billion that Senator Domenici referred to, of authority to 
limit--it says that you're limited to issuing loan guarantees 
in the total amount of $4 billion. It also says that you need 
to promulgate a rule before you can issue any loan guarantees.
    Secretary Bodman. Yes, sir.
    The Chairman [continuing]. And that you need to do that 
within 6 months. I guess, an obvious set of questions is: is 
there any work been done to promulgate such a rule? Is this 
something which you're ready to do, once this continuing 
resolution is enacted? Or do you have a period of staffing up 
after this continuing resolution is enacted, before we can even 
begin to promulgate a rule? I mean, what I'm concerned about, 
frankly, is that the Bush administration's going to be leaving 
town before we issue any----
    Secretary Bodman. No, I understand. I'm concerned about 
that myself. But I repeat, we have done work on a rule, that 
that is something the General Counsel of the Department, David 
Hill, has focused time and attention to. We are aware of it. 
What, exactly, the schedule will be, I don't know, but I would 
be happy to take that question for the record, and give you a 
more thoughtful response, rather than trying to estimate it 
here on the fly.
    The Chairman. I would appreciate it. I think that would 
give us some indication--we had a conference last week on bio-
fuels; several of the people who testified said they had filed 
pre-applications.
    Secretary Bodman. Right.
    [The information follows:]

    Section 20320(b) of Public Law 110-5, enacted February 15, 2007, 
requires that DOE issue final regulations for the Title XVII loan 
guarantee program before issuing any loan guarantees under that 
program. Section 20320(c) states that the final regulations must be 
issued within six months of the date of enactment, i.e. by August 15, 
2007. The Department is presently preparing a Notice of Proposed 
Rulemaking (NOPR) which will propose regulations for the implementation 
and operation of the Title XVII program, and which will solicit 
comments from all interested parties. In conformance with P.L. 110-5, 
the NOPR will propose programmatic, technical, and financial 
eligibility criteria, due diligence requirements, and procedures and 
policies for the loan guarantee program. The Department anticipates 
issuing the NOPR in April 2007, and anticipates a 45-day public comment 
period on the NOPR. The Department will work to meet the August 2007 
deadline for issuing a final rule, although that deadline is 
aggressive, and whether the Department will meet it will be dependent 
on a number of different factors, including many factors external to 
DOE.

    The Chairman. But they had obvious concern as to when, if 
ever, these were going to be acted upon, or when a real 
application would be requested from them. So, the level of 
frustration, I think, has been growing on this, and I've used 
more than my time, so I'll defer to Senator Domenici.
    Senator Domenici. Senator, I don't think you've used too 
much time, so I wouldn't hold you to time because this is 
really a shame. I had somebody bring us the bill we drew, that 
you and I and others worked so hard on. If you go through it, 
you'll find that there were plenty of active mines, if we were 
looking to fill this bill with projects, we could have put them 
at 20 places. The projects for ethanol, projects for this, 
projects for that, and we could have provided loan guarantees 
at 40 places, and we could have done all of these kinds of 
things that we used to do, when you were putting projects in a 
bill, and calling for their fulfillment.
    We thought that we were going to quit doing that, and put 
one section in a bill. It couldn't be more important to this 
bill, that that whole section, the section is called, listen, 
``Incentives for innovative technologies.'' Now, there's no 
other place in this bill where we promote incentives for 
innovative technologies in the way we do in this section. It 
states in it all of the kinds of things we're trying to do as a 
Nation. To break through in technology, break through in coal, 
break through in the things the President announced in his 
speech.
    It says how they can get done by way of capital being 
furnished by the Federal Government. We have been fighting 
now--today is 18 months, I looked it up--this bill is 18 months 
old. We don't have an office, a formal office yet, and we don't 
have any personnel out there looking to give capital to people 
who want to build things that are new and different as part of 
this war that we're involved in, in breaking that stranglehold 
of the gasoline and crude oil.
    Now, Mr. Secretary, I'm not going to take long. I'm just 
going to tell you that we have fought like crazy, and we get a 
piddley little $4 billion in the CR, you come along and I think 
in your budget you've given us $8 billion? Nine billion 
dollars, and everybody says, ``Aw, that's wonderful.'' Let me 
tell you, you just sit down with a few experts and ask them, 
``What are we going to probably fund?'' With $8 billion or $9 
billion, if you're talking about the spectrum across America, 
where they're going to be asking, is nothing. You're going to 
have to find a way to do three or four times that amount, and 
do it right. Now we've gotten you the money, there's no excuse, 
and I don't say you were ever looking for an excuse, the White 
House was looking for excuses. They didn't want to do it. OMB 
didn't want to do it. But Mr. Portman told me--is that his 
name?
    The Chairman. Portman.
    Secretary Bodman. That's his name, yes, sir.
    Senator Domenici. He didn't want to be blamed for this, he 
just said, ``Please, I'm not to blame.'' Well, I said, ``Maybe 
it's because you came too late, but your OMB is to blame.'' 
``Well, I will undo it, and fix it where we can do it,'' said 
he. So, and, this doesn't cost the Treasury any money, I remind 
everybody. The way the bill's drawn, they participate in a law 
where they've got to pay for these by way of putting up their 
own money as the part of the guarantee. I don't think we could 
have a better deal to break the stranglehold of old technology, 
trying to run a modern competition.
    I beg you, Mr. Secretary, to get on with implementing this 
section.
    The Chairman. Let me next go to Senator Akaka.
    Senator Akaka. Thank you very much, Mr. Chairman. I want to 
commend you for holding this hearing so quickly after the 
release of the President's fiscal year 2008 budget on Monday.
    I also add my welcome to Secretary Bodman, and to tell him 
I really appreciate the timely manner in which your budget has 
been done. I look forward to working with you, and I want to 
ask you, Secretary, and to tell you that I'm pleased to see the 
Department has established an office of loan guarantee to 
oversee the loan guarantee applications that were in title XVII 
of the Energy Policy Act of 2005 that we're talking about.
    There were also two loan guarantees, programs in title XV, 
sections 1510 and 1516, that were for biomass, municipal solid 
waste, and sugarcane-ethanol. But, I don't see them in a 
budget. They're not mentioned in the innovative technology loan 
guarantee program.
    My question to you is: what can you tell me about where I 
might find these loan guarantees from title XV?
    Secretary Bodman. I may be mistaken, but I believe they are 
available under title XVII, sir.
    Senator Akaka. Well, let me be sure that I understand, and 
I'm glad you mentioned that. Title XV loan guarantees for 
sugarcane, biomass and MSW----
    Secretary Bodman. Right.
    Senator Akaka [continuing]. Are eligible under title XVII?
    Secretary Bodman. Right.
    Senator Akaka. Loan guarantee program, called Innovative 
Technology Loan Guarantee Program. Are they covered under that 
program? You just said yes.
    Secretary Bodman. I believe so, yes sir.
    Senator Akaka. Oh, terrific.
    That fiscal year 2008 loan volume limitation of $9 billion 
is enough to cover the title XV and title XVII loan guarantees, 
is that enough?
    Secretary Bodman. I can't answer that, in all sincerity, 
Senator, until I see them. I have not seen the pre-
applications, we've had 100 expressions of interest; for the 
reasons that I mentioned before, we simply have not had the 
wherewithal to start. We've created the office, but in order to 
staff it and run it and function it requires some financial 
resources, which have not been forthcoming. Hopefully they will 
be, and then I can answer your question more effectively.
    Senator Akaka. Well, I really appreciate your 
clarification. As you know, these loan guarantees are important 
to diversify fuel sources, and for advance technology 
businesses in my State, and others.
    Secretary Bodman. Yes, sir.
    Senator Akaka. As you may know, Senator Murkowski and I 
share an interest in the methane hydrates program, which was 
reauthorized in EPAct. Last fiscal year, the program was zeroed 
out, and again in this fiscal year, it's not funded.
    Now, given the President's commitment to reducing our 
dependence on foreign oil, and the expected long-term decrease 
in the supply of natural gas, what does it take to keep our 
investment going?
    Secretary Bodman. I believe, sir, that you're talking about 
a hybrid----
    Senator Akaka. Gas.
    Secretary Bodman [continuing]. Battery development?
    Senator Akaka. This is methane hydrates.
    Secretary Bodman. Oh, hydrates, methane hydrates.
    Senator Akaka. It is gas technology, right.
    Secretary Bodman. I'm sorry, methane hydrates; forgive me, 
I misunderstood you.
    That falls in the category of oil and gas development, and 
this President believes that given the current prices of $60 
oil, or $7.5 per MCF natural gas, that there's plenty of 
incentive for developers to proceed. I agree with you that one 
might make an exception for the methane hydrates, which do 
require a research effort in order to make it more effective, 
but that is something that this administration views as plenty 
of incentive to proceed with whatever work needs to be done.
    Senator Akaka. Thank you, my time is expired.
    The Chairman. Senator Thomas.
    Senator Thomas. Thank you, Mr. Chairman, welcome, Mr. 
Secretary.
    In some ways it seems like we're going back to the same 
game we played last year. We talk a lot about alternative 
fuels, which we should, and they'll make a real difference in 
the world. We need in the short time, however, to make fossil 
fuels cleaner and more efficient. Please explain why fossil 
fuel energy funding for national research is being decreased, 
rather than increased.
    Secretary Bodman. Same answer; the position of this 
administration has been that there's plenty of incentive in the 
system now. There's a great sense of commitment to coal, and 
there is significant commitment in this budget for clean coal 
technology. We've offered up, I think, a billion dollars of 
loan guarantees that were done, or tax credits that were done. 
There will be another $600 million done this next year, during 
this fiscal year, so there have been significant commitments to 
coal technology, clean coal technology, and then there's the 
FutureGen Project where we have increases as well.
    Senator Thomas. We haven't seen much impact. Section 413 of 
the Energy Policy authorizes Federal cost-sharing for IGCC in 
the West. We needed to pursue that with LNG terminals in highly 
populated areas. The Federal Government needs to support these 
areas. Why doesn't the budget request funding for section 413 
implementation?
    Secretary Bodman. It's strictly a matter of priority, 
Senator, I can't give you the specifics on that. If you'd like, 
I'd be happy to give you a more thoughtful response, but I can 
tell you that it's a matter of priority, where we put our 
money.
    So, it's a matter of trying to put money in the most 
effective places that will simultaneously improve our energy 
and national security on the one hand, and deal with greenhouse 
gas emissions on the other.
    [The information follows:]

    The western integrated coal gasification demonstration project 
authorized under EPACT section 413 will be eligible for funding under 
the next round of the Clean Coal Power Initiative (CCPI). The CCPI 
program, which is run by the Office of Fossil Energy, expects to issue 
the next solicitation for demonstration scale projects in FY 2008.

    Senator Thomas. Yeah, I can't think of anything more 
efficient than going where the coal is, and getting it to where 
the market is, by transferring it into a clean product. That's 
exactly what we're talking about. DOE has manufactured $257 
million for themselves out of this program, Clean Coal 
Initiative; $108 million for CCT into FutureGen, and the 
remainder will go back to the Treasury.
    Now, I don't understand the disregard for this 
congressional intent to work on this very important, close-
range thing of converting coal to another source to get to the 
market.
    Secretary Bodman. We believe that we are honoring the 
intent of Congress, the deal with coal as an important 
component----
    Senator Thomas. Have you got any loans, or incentives going 
to coal conversion?
    Secretary Bodman. We have, I just mentioned that we have, 
when you say--to coal conversion?
    Senator Thomas. Yes.
    Secretary Bodman. No, sir. That would fall in the same 
category that we just have been visiting with your colleagues 
on the committee about.
    Senator Thomas. But we're not doing it.
    Secretary Bodman. Senator, we are not doing it because I 
don't have a loan guarantee office set up and funded.
    Senator Thomas. I know. I suggest that you do.
    Secretary Bodman. We have asked for it. It's in the budget 
proposal for 2008, as I mentioned. We attempted to get in 2006 
a reprogramming so I could set up the office, and it was denied 
by Congress. I don't know how to try any harder than I have 
tried.
    Senator Thomas. We have it in our policy, our energy 
policy, to do that.
    Secretary Bodman. Yes, sir.
    Senator Thomas [continuing]. It would seem to me, you'd 
find a way, within this large administration of yours, to be 
able to do that.
    Finally, we want to convert some more of those coal, 
specifically to interstate pipelines and electrical 
infrastructure. How much money is requested for those kinds of 
items?
    Secretary Bodman. There is money requested for the support 
of our electricity office, which has responsibility for siting 
and developing the right-of-way for transmission of both 
electricity, as well as for other forms of energy. There is 
funding in the bill for that within the electricity office.
    Senator Thomas. Well, in closing, I'd still think that we 
have to give more attention to the energy that we now have 
available to fill the need between now and when we get the 
alternatives. It seems like all of the emphasis goes on these 
famous alternatives for the future, and not very much for the 
things that we know how to do, and could do, immediately, to 
fill this 10-year deal.
    So, I hope that you'll get some more----
    Secretary Bodman. I take your point, I will certainly do 
that. Thank you.
    Senator Thomas. Thank you.
    The Chairman. Senator Dorgan.
    Senator Dorgan. Mr. Chairman, thank you very much. We have 
limited time, necessarily, but I appreciate, Mr. Secretary, 
your being here to answer questions.
    Let me make just a quick comment. I'm a strong supporter of 
the renewable sources of energy, and the alternative sources of 
energy: bio-fuels, wind, solar, hydrogen-fuel cells--we need to 
work very hard on all of those issues.
    I'm concerned about the recommendations with the PMA's, and 
purchased power; some of them hearken back to the philosophy of 
some, previously, who would like to sell the PMA. Some parts of 
the country have constituents, including mine, that benefit 
from the grand bargain that was made a long, long time ago, 
saying that you play host to certain long-term floods, and you 
can use hydropower in a region with low-cost power, 
permanently. I have no problem with that; in fact, I support 
that, and don't propose that it be changed. So, the PMA issues 
in the budget are difficult, and we need to change those.
    My colleague from Wyoming raised the question of fossil 
energy, and particularly coal. We need to find a way to produce 
electricity from zero-emission coal-fired generating plants, we 
need to be able to effectively go from coal to liquids, and 
find ways to sequester emissions and all of those issues. My 
colleague raised a valid point: we have some Clean Coal 
Technology funding that is going to be rescinded--I know there 
are other coal issues in the proposal--but I do think Senator 
Thomas raised an important point about that. Wind research, 
down a bit, I think it ought to be up.
    Having said all of that, I want to ask you a more general 
question--not so much about this budget, because this budget 
represents a menu of things, and I'm trying to figure out where 
we're headed. We're talking about where we have plans for where 
you want to be 50 years from now with respect to nuclear 
warheads and the design of new warheads, safer and so on and so 
forth. We talk about 50 years from now, what the circumstance 
will be with the Social Security trust fund, and all of those 
issues.
    So, where are we going to be 40 or 50 years from now, with 
respect to energy use? What would be the predominant energy use 
for vehicles in this country? What will be the predominant 
energies for the production of electricity, and so on? How will 
we do that? Does the Department have a destination in mind? If 
so, I'd like to understand that. So, as we put together a menu, 
we develop a national goal.
    The reason I ask the question is I'm a big supporter of 
hydrogen fuel cells in the future, of conversion of our vehicle 
fleet to hydrogen fuel cells. But you can't get there with baby 
steps. You've got to decide, all right, here's the destination, 
and here's the way we move toward that destination. I know the 
President supports that, but his recommendations have been very 
timid, in fact, rather than big and bold.
    So, what do you see 40 and 50 years from now, with respect 
to the menu of energy use that we aspire to achieve?
    Secretary Bodman. First, let's talk about electricity 
generation. We're talking about doubling the demand for 
electricity over the next 20-25 years in this country. My view 
is that we can't accomplish that without having nuclear power. 
We can't accomplish it, certainly, in an environmentally 
friendly way, without having nuclear power. We have to--simply 
have to--find ways of developing nuclear power. We're working 
on every way that I know how, that we know how, in order to 
accomplish that.
    I do believe that coal will play an important role in the 
future. But that will depend upon the sequestration of carbon 
dioxide. We've got seven partnerships that we have funded, that 
are part of the research program of this Department. Those are 
ongoing to work in seven different geographic locations 
throughout the country. We are hopeful that we will then make a 
determination of where can we sequester carbon dioxide, and 
where we can effectively use coal.
    Senator Dorgan. But is this just an inquiry about whether 
we can use technology to get to a zero emission plant, using 
coal? Or is it a destination? It's a major effort to decide to 
do that.
    Secretary Bodman. It's a major effort.
    Senator Dorgan. All right.
    Secretary Bodman. We've got $1 billion committed to the so-
called FutureGen Project. We've had requests from, I think, 15 
different communities. The Department has winnowed those down 
to four; two in Illinois, and two in Texas, that we are working 
on that were selected, and we will then be working on a joint 
basis, I think it's roughly three-quarters Government funding, 
one-quarter private industry. We're finding a lot of interest--
nine companies are now a member of this, and so this is our 
goal. It is research, however, and it is something that we have 
to demonstrate that we can do.
    The goal of FutureGen is to create a process that will 
convert the energy that is in coal into a stream of hydrogen. 
You can then either burn the hydrogen, to create electricity, 
or you can use the hydrogen directly as a fuel in vehicles.
    I am personally committed to do that kind of work, and I 
don't know how to do it any faster than we're doing it.
    Senator Dorgan. I asked a very broad question, and I 
understand this isn't an appropriations hearing, but the menu 
of choices for spending on all of these issues ought to relate 
to relate to some destination that we all have in mind: where 
are we headed? And how are we going to get there?
    Secretary Bodman. Right.
    Senator Dorgan. As opposed to just shopping around, you 
know, it seems to me that you ought to decide, ``Here's the 
goal,'' out there, at some distance, and then move toward it. I 
think that is a substantial increase in nuclear, try to see if 
we can do zero emission coal-fired plants, or use fossil fuel--
--
    Secretary Bodman. That's correct.
    Senator Dorgan [continuing]. In an environmentally-friendly 
way. We haven't talked about vehicles, but let me ask the 
question: could you send to this committee, your analysis, your 
broader analysis, in response to my very general question? 
Where do you see us 40 and 50 years from now? What are we 
aiming for? What's the destination that you would persuade this 
committee to try to aspire to achieve? Would you be willing to 
do that?
    Secretary Bodman. I would be happy to do that.
    [The information follows:]

    Predicting ``where we are going to be 40 or 50 years from now with 
respect to energy use'' is indeed a challenge. Who in 1957 could have 
predicted that between that time and 50 years hence we would have put 
men on the moon and brought them safely back to Earth; the internet; 
cell phones in the place of the single black telephone that most 
households had; color televisions with access to hundreds of channels 
instead of the three or four that could be accessed on the single black 
and white TV most households had, not to mention TV remote controls; 
computers, including laptops, as ubiquitous now as ``record players'' 
were back then and so on? In February 1957, it would be another eight 
months before the Space Age officially began with the successful launch 
of Sputnik by a country called the Soviet Union. In 1957, polio had 
been conquered for only three years. I might note that in 1957, it 
would be another 16 years before the beginning of the Middle East Oil 
Embargo and another 20 years before the Department of Energy would be 
created.
    With that backdrop, let me offer some thoughts about where we need 
to be in the next 40-50 years and what the Department is doing now to 
get there. First, we need to increase our energy supply options and 
reduce dependence on oil through reliable, clean, and affordable energy 
sources. These options include biofuels and other advanced liquid 
fuels, renewable energy from solar and wind, advanced nuclear power, 
zero-emission fossil electricity generation, and potentially fusion 
energy. Second, we need to create a more flexible, reliable, and high 
capacity U.S. energy infrastructure including a modernized electrical 
grid, liquid fuels system, and future hydrogen fuel system. And lastly, 
we need to make dramatic improvements in energy efficiency.
    Underlying these needs for advances in energy production, delivery, 
and use are crosscutting and enabling science and technology 
opportunities and challenges. Fortunately, our own Office of Science is 
leading the Department's effort to address many of the elements 
required for a decades-to-century energy security strategy. A key 
strategy used by the Office are workshops, in partnership with DOE's 
applied program offices, that engage the broader scientific and 
technical community to help identify research directions to address 
these cross-cutting and enabling opportunities and challenges.
    The first of many such ``Basic Research Needs'' Workshops was held 
in October, 2002. It took aim at the overarching challenge of applying 
the latest `nano-, bio- and info-' science discoveries to 
revolutionizing production and use of energy. Enabled by the 
President's American Competitive Initiative, the Office of Science 
continues to move forward in addressing many of the major research 
challenges that lay before us. Let me give you just a few examples of 
our efforts as we look towards the nation's future energy solutions:

        The first energy technology-specific workshop was on Hydrogen 
        Production, Storage, and Use, and was held in May 2003, after 
        the President announced the Hydrogen Initiative in his 2003 
        State of the Union address. This workshop identified 
        fundamental research needs and opportunities in hydrogen 
        production, storage, and use with a focus on new, emerging, and 
        scientifically challenging areas that have the potential to 
        significantly impact the science and technologies for a 
        ``hydrogen economy.'' In such a world, by the middle of the 
        twenty-first century, an ample and sustainable supply of clean 
        burning hydrogen could become the universal energy carrier.
        To tackle energy challenges at the smallest scales, the Office 
        of Science cosponsored a workshop--with the interagency 
        National Nanotechnology Initiative--on Nanoscience Research for 
        Energy Needs in March 2004. This workshop identified nine 
        energy research targets including: highly selective catalysts 
        for near-zero waste and near-100% efficient manufacturing 
        processes, harvesting solar energy with 20% power efficiency 
        and 100 times lower cost, solid-state lighting that uses a 
        fraction of the power used by conventional lighting, low cost 
        fuel cells, batteries, and supercapacitors from nanostructured 
        materials. Advancements in nanoscale science has great 
        potential to impact the development new and revolutionary 
        energy technologies and bring significant improvements in 
        energy efficiency and manufacturing processes.
        One of the challenges we face with renewable energy 
        technologies like wind and solar is that they are intermittent. 
        The key to baseload electricity generation from wind and solar 
        is energy storage--to level the phased nature of these energy 
        sources and meet off-cycle demands. In April of this year, the 
        Office of Science is holding a workshop on the Basic Research 
        Needs for Electrical Energy Storage to identify key basic 
        research directions that could provide revolutionary 
        breakthroughs needed for meeting future requirements for 
        electrical storage. Advanced energy storage technologies will 
        have a significant impact on efficient utilization of 
        electricity generated from these renewable sources and others 
        and bring greater reliability of the U.S. electric grid.
        Two additional types of large-scale, environmentally-friendly, 
        energy technologies the Department is pursuing for future base-
        load power sources are advanced nuclear fission and fusion 
        energy. DOE's Office of Nuclear Energy is partnering 
        internationally through the Global Nuclear Energy Partnership 
        (GNEP) to develop advanced nuclear fission reactors and the 
        technologies necessary to move towards a closed nuclear fuel 
        cycle. The Office of Science is a partner in ITER, an 
        international fusion research project to demonstrate the 
        scientific and technology feasibility of fusion power. Several 
        workshops held over the past three years have identified 
        critical research and development directions for a path forward 
        in both fission and fusion energy, including the April 2004 
        workshop on Advanced Computational Materials Science: 
        Application to Fusion and Generation IV Fission Reactors and 
        the Basic Research Needs for Advanced Nuclear Energy Systems 
        held in July, 2006. Advanced nuclear power and fusion power 
        both hold the promise of an abundant fuel supply with zero air 
        emissions.
        Advanced grid technologies to take advantage of new power 
        technologies and move towards an improved future grid system 
        are also being developed at DOE. Superconducting grid 
        technology, for example, has a huge potential for increasing 
        grid capacity, reliability, and efficiency to meet the growing 
        demand for electricity over the next century. Superconducting 
        technology also was the subject of a May 2006 workshop held by 
        the Office of Science together with DOE's Office of Electricity 
        Delivery and Energy Reliability. The results of this workshop 
        support the idea that such grid technologies, together with 
        fission and fusion power plants, could form a strong backbone 
        by mid-twenty-first century for the U.S. grid or even a global 
        grid.

    I hope that these examples give you a sense of where we could be 50 
years from now. Of course, we expect our basic research and applied 
technology programs, especially Presidential initiatives such as the 
Advanced Energy Initiative and the Twenty in Ten Initiative, to provide 
key energy innovations during the next 50 years including in the areas 
of alternative fuels such as cellulosic ethanol and other biofuels, 
advanced vehicle technologies such as plug-in hybrids, and advanced 
solar energy technologies. Just as most Americans in 1957 could 
probably not come close to envisioning the huge advances that would be 
evident in 2007, so, too, we today can probably only just begin to 
imagine what scientific advances will have in store for Americans 50 
years from now.

    Secretary Bodman. I would remind you that we will be 
dependent on free markets to make determination as to which is 
more cost-effective. Which approach is more environmentally 
effective? There will be uncertainties, as we start to talk 
about forecasting, something going on 50 years from now. I will 
tell you what our hopes and our aspirations are.
    Senator Dorgan. Well, Mr. Secretary, we make markets, in 
many ways, by certain choices that we decide to follow. I'd be 
very uncomfortable with the notion, ``Well, whatever the market 
suggests, that's where we'll head.'' Let's decide where we're 
going to head, based on our choices, and you'll bring market 
prices down, based on investment and choices the Federal 
Government will make. But, that's a discussion we'll have at a 
different time, I guess.
    The Chairman. Senator Craig.
    Senator Craig. Thank you very much, Mr. Chairman.
    Mr. Secretary, again, thank you for being with us. Some 
preliminary comments.
    Senator Dorgan's frustration, and mine, are not dissimilar. 
It's bringing us together to look at something we can do in the 
immediate sense that dovetails quite responsibly with what the 
President has proposed in his State of the Union remarks to 
reduce our dependency, and to get something moving in a timely 
fashion that demonstrates that capability.
    Having said that, and reviewing your budgets, you and I 
spent a little time last year talking about Bonneville power, 
and secondary revenues, and we're not going to spend any time 
doing it this year, OK? OMB puts it back in, you shouldn't make 
apologies any more, we'll just take it out, OK?
    You have to have certain marks to get your budget in line, 
so you put AWAR in it as a revenue stream--I wish it were; it 
probably won't be. We put Bonneville in as a revenue stream; it 
won't be. We'll take those out. We'll no longer have a 
discussion about it. Nor should any apologies be made. I 
understand what OMB does to your budget, and we'll leave it at 
that.
    I'll not go any further into loan guarantees, you've heard 
the frustration of this committee, and it is significant. If 
something has not yet been done, nor has there been the 
necessary programming to accomplish it.
    There is a difference, in my opinion, between research and 
loan guarantees. Much of what is in the application of the 120 
entities that have come forth, requesting a grand total of $50 
billion--or somewhere in that range--is it research in many 
ways that has already been done? Some of this is to come off 
the shelf and go to a commercial level through a loan 
guarantee. That is significant.
    As it relates to where we would like to take this country, 
with all of the new technologies, and all of them being very 
clean: if there is any climate change title in EPAct, it's 
title XVII. And yet, 18 months later, we talk about climate 
change, we effectively have not been able to muster up whatever 
it takes, with you pointing fingers at OMB, or we pointing 
fingers at you, or you pointing fingers at us, to get on with 
the business at hand.
    Long-term research is one thing. Being able to take 
research that is nearly completed, move it to the market, 
refine it through the process of loan guarantee, stand it up in 
a commercial value, is--in my opinion--a significantly 
different thing. I'll leave it at that. I share the 
frustrations of the chairman and the ranking member, my 
colleague from Wyoming. I'll leave it at that, Mr. Secretary.
    Nuclear energy: I smile at the budget level in general. 
Clearly, we need to continue to drive in that area, and we'll 
be very supportive, I think, of those efforts. We may rearrange 
them a little differently than you've proposed them, but I 
think we're in sync as it relates to that.
    I guess my greatest disappointment, Mr. Secretary, in 
overall budgets or menus is in the hydro, geothermal, nuclear 
energy programs, nuclear university energy programs that have 
largely been zeroed out. I hope Congress can fix that 
shortcoming.
    Secretary Bodman. May I make a comment, Senator?
    Senator Craig. Please.
    Secretary Bodman. On that, I just would ask that, in 
looking at the support for universities for nuclear engineering 
departments at universities, that the committee look at the 
totality of the support that is coming from the Energy 
Department. If you all are inclined to fund the various 
initiatives that we have there, a big part of the work--or a 
significant part of the work--would be done at universities in 
GNEP.
    Senator Craig. No, I appreciate that.
    Secretary Bodman. It's important to look at, if you would, 
the totality of it. Because there is plenty of reason to 
suggest that we have an increase in support for universities, 
even though the report, the funding for fellowships, 
scholarships, and so forth, has been reduced, or has been 
zeroed out.
    Senator Craig. Thank you.
    Mr. Chairman, let me conclude with this comment. Last week, 
really one of the grand old gentlemen of foreign policy was 
here on the Hill to speak to the Senate Foreign Relations 
Committee. Usually when Henry Kissinger speaks, we all listen 
closely--sometimes he's a little hard to understand, and maybe 
that's why we listen a little more closely. But usually, we 
listen closely because he's a pretty wise fellow, who has a 
fairly broad perspective of the world, and can bring it to us 
in a way that we readily understand, and that in a bipartisan 
way, we generally appreciate.
    Let me refer to a comment he made in the text of his 
broader comments. He said--and he's speaking of the current 
debate on the floor, the current frustration of the American 
public, on our foreign policy in Iraq. And he says, ``They are 
there,'' meaning our troops, ``as an expression of American 
national interest to prevent the Iranian combination of 
imperialism and fundamentalist ideology from dominating a 
region on which the energy supplies of the industrial 
democracies depend.''
    This country is caught up in a very critical debate at this 
moment. Underlying all of it is a great dependency on an energy 
supply flowing from a region of the world that is increasingly 
unstable.
    Part of what we did in 2005, and what we're doing today, is 
to offset some of that dependency. I have yet to feel the sense 
of urgency, the sense of wartime mentality that it takes us to 
make these quantum leaps forward. A focusing of our resources, 
and our talents, in a way that makes these things happen sooner 
rather than later.
    I hope stability continues in that region while we crawl 
toward some form of energy independence. We are not running 
toward it, we are not racing toward it. Our only salvation will 
be stability in the world until we get there. So, I would hope 
that the work of this committee, your work, and the work of 
this administration expresses a sense of urgency that has yet 
to be felt by most of us who are involved in this issue.
    Thank you.
    The Chairman. Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman.
    Mr. Secretary, welcome. You heard Senator Craig's comments 
with respect to Bonneville, and I think he said it very well 
for me and Senator Smith, and our whole, you know, region. We 
are just not going to accept Bonneville being used as some sort 
of payday loan program for the administration; that's really 
what this is all about. Since you and I have had this vigorous 
debate in the past, I wanted to bring you a set of numbers that 
I thought perhaps you could look at in the days ahead.
    We, of course, believe that Bonneville is paying its bills. 
We are responsible consumers and businesses; we pay our bills. 
In fact, we pay our bills and more. Bonneville has repaid 
almost $1.8 billion of debt in advance of what is due. This 
includes over $342 million in fiscal year 2006. So, since you 
were here last year, advancing the proposal that all of us in 
our congressional delegation--all of the Republicans, all of 
the Democrats have opposed--Bonneville has repaid an additional 
$342 million in debt, ahead of schedule.
    So, I would just hope that you would see, once again, the 
intense feelings in our region on this, shared by every 
Republican, and shared by every Democrat. We will have further 
dialog on it.
    Secretary Bodman. I am aware of the intense feelings, sir.
    Senator Wyden. Very good.
    Let me ask you a question, and I'm just trying to sort it 
out. As you know, our part of the world is making a big effort 
to strengthen our economic sector as it relates to family and 
wage jobs, and pulp and paper is a very big industry in my 
State. And they are quite concerned about the cuts in funding 
for the programs that relate to industrial efficiency.
    So, then we came upon a document. We were just going 
through your materials--and I'll get this to you, it's a U.S. 
Department of Energy document--and in it you say, in the next 
24 months, there are going to be efforts to do energy-efficient 
assessments in China. So, what we're trying to figure out, is 
how does it make sense to cut the efforts that we so badly need 
in key industries in our country, like pulp and paper, and then 
somehow start new programs that will benefit those that we are 
up against in very tough global markets?
    Secretary Bodman. My understanding, sir, is that the 
request for industrial technologies, the funding requested for 
2008 is the same amount that we requested last year, $46 
million. We are working with China, in terms of trying to 
develop their attitudes and approaches on energy efficiency, as 
well as the cleanliness with which they're using coal, which is 
one of the dominant sources of energy in China.
    We are trying to do both, but I don't view it as cutting 
something here versus the efforts we're making in China. We're 
trying to do both.
    Senator Wyden. What I think is troubling to our key 
industries, is that the industry-specific program, and that's 
why I cite----
    Secretary Bodman. The industry-specific program in the 
paper industry, sir?
    Senator Wyden [continuing]. Is cut to--yeah, there's a cut 
in forest and paper products.
    Secretary Bodman. I simply don't know about it, and I'd be 
happy to respond to you on that.
    [The information follows:]

    The Office of Energy Efficiency's Industrial Technologies Program 
(ITP) has historically worked with the eight most energy-intensive 
manufacturing industries to research, develop, and implement advanced 
technologies that save energy, cut costs, and reduce emissions. While 
these activities have proven successful in reducing overall industrial 
energy consumption, the industrial landscape is evolving rapidly and 
industry is facing tougher challenges such as rising fuel prices, 
supply volatility, and global climate change. In order to more quickly 
introduce research and development (R&D) benefits to the industrial 
market and accelerate new technology deployment, ITP is focusing its 
technology research to be more broadly applicable to the U.S. 
industrial base. Thus, R&D funds in the Fiscal Year 2008 budget request 
will partially shift from specific industry areas to more crosscutting 
and higher impact energy-intensive processes, common to the industrial 
sector as a whole.
    ITP has identified four critical technology areas (Reactions & 
Separations, High Temperature Processes, Energy Conversion Systems, and 
Fabrication & Infrastructure) for research that are essential to 
traditional energy intensive industries that have been targeted by the 
program and applicable to a much broader array of industry members. 
These technology areas were identified using ITP industrial analyses, 
industrial stakeholder roadmaps, and other feedback.

    Senator Wyden. Let me just read you the cuts in the 
specific programs for our industries; forest and paper 
products, steel, aluminum, metal casting, glass, chemicals, 
mining--each of those is cut. We could have a debate about the 
overall level, but I would just hope that once again, you could 
work with us on a bipartisan basis. Because when our 
industries--and all of us share these concerns, we're doing so 
much heavy lifting to be energy-efficient--to look at these 
documents and say, ``Well, we're going to have a new effort in 
China,'' when pulp and paper is such a concern in our country, 
I hope we can revisit it.
    I've got 20 seconds to follow up on the question Senator 
Dorgan talked about and just give you an opportunity to share 
your views. I think this country wants the Congress, again, on 
a bipartisan basis, to be far bolder, and far more aggressive, 
in terms of our energy future. And I think we can do a lot, lot 
more, really, because this is a national security issue.
    What do you see as the boldest features of the President's 
energy proposal? What are the features, in your view, that 
really push all of us together to a more secure energy future?
    Secretary Bodman. The boldest proposal relates to replacing 
15 percent of our gasoline with renewable energy, or 
alternative forms of energy, but it's, in effect, renewable 
energy, and to do that in 10 years. That's a major project. It 
will involve in all likelihood, the development of cellulosic 
ethanol, which we haven't done yet, to make it cost-
competitive. The cost of manufacturing methanol or a fuel, a 
replacement fuel today, is about $1.10 a gallon, the cellulosic 
ethanol is about $2.20 a gallon, so we've got to cut the cost 
in half, it's a major undertaking. Part of this budget requests 
funding for that endeavor.
    We're also--having had efforts in the past where we have 
worked with industry--and I think, sir, as a venture 
capitalist, long before I had the brilliant idea of coming to 
Washington to help run the Government, and I will tell you that 
this is the first time in the 43 years that I have followed 
venture capital, and have been having some interest in it, that 
the venture capital community of this country are putting big 
money into energy. They're putting it into ethanol, cellulosic 
ethanol, they're putting it into photovoltaics, they're putting 
it into wind energy. I am very encouraged by the new companies 
that are being started and also by the efforts that these 
higher prices have stimulated, a lot of economic activity.
    Senator Wyden. My time is up, I would only say, Mr. 
Secretary, we all are pleased to see what the private sector is 
doing, and you're absolutely right about venture capital. I 
just think the Government is way behind the private sector, way 
behind the American people, and we could be doing more, and I 
look forward to that discussion.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Corker.
    Senator Corker. Mr. Secretary, thank you for this 
presentation. Mr. Chairman, for the time. I want to applaud 
your efforts on clean coal technology, I come from a State with 
TVA, with Oak Ridge, with an abundance of coal, we have 
companies there pursuing clean coal technology, and I want to 
thank you for your pursuit and what you're doing in that 
regard.
    I was interested in the comments that Senator Craig made, 
and Senator Wyden, and I would like to, if possible, spend some 
time with your staff, I know I'm new on this committee--both 
talking a little bit about the intricacies of what we're doing 
energy-wise, and I hope you'll make them available, the tax 
credits that we're actually using to stimulate investment, and 
then the loan program that's been so highly discussed. I was 
baffled that a million-dollar reprogramming effort would slow 
down an $8 billion loan program. A staff member sort of made me 
aware of how that works here in Washington; I'm sure that'll be 
rectified soon. But I'd like to talk a little bit about--we 
talk about the ``no cost'' of that, because of the way it's 
designed--but I'd like to talk to a staffer if I could, a 
little bit----
    Secretary Bodman. Of course.
    Senator Corker [continuing]. The intricacies of that, and 
so if you all could make that available.
    Secretary Bodman. Be happy to make that available, we'll 
contact your staff.
    Senator Corker. Perfect, perfect.
    Secretary Bodman. Make arrangements for that.
    Senator Corker. To be parochial, and get back to Tennessee, 
Oak Ridge is a tremendous asset to our country, and certainly 
to our State, and I'm convinced that Oak Ridge is going to be a 
big part of our energy security, homeland security into the 
future. I know that there's a huge push to make them a super 
computing entity that really can help our Nation, on many 
fronts, and I know that they have a program right now with the 
Cray computers to, in essence, go to a lease-to-own program, I 
noticed that the funding that is put in this budget to help 
make that happen is actually below the 5-year profile. 
Typically, lease-to-own efforts like this take place over a 3-
year period, I don't know if you know the specifics of that, 
but it looks like we may, in efforts to cause our budget to not 
look as extraordinary as it might be, it looks like we might be 
slow-walking that effort. I don't know if you might respond to 
that.
    Secretary Bodman. Well, we're certainly not--I can't 
comment on the specifics of Oak Ridge. I can tell you that the 
science budget--which is where the support for the 
supercomputing effort comes from--is very important to the 
Department. We've got a very significant increase in the 
funding that's there, that will be forthcoming if the Congress 
passes this 2008 budget. I don't understand why we would have 
the focus on efforts broadly--Oak Ridge is one of the leaders 
that we have in the country in supercomputing, so I'd be happy 
to try to take that question on the record, sir.
    [The information follows:]

    While many of our lease-to-own agreements for high performance 
computers have been for three-year terms, there is no ``one-size-fits-
all'' term for managing these unique resources. Our recent experience 
with the Power 3 at National Energy Research Scientific Computing 
Center (NERSC) has proven that the three-year rule can be extended when 
circumstances show it is prudent. The Department has determined that 
the Leadership Computing Facility (LCF) at Oak Ridge National 
Laboratory (ORNL) is better suited to a five-year term for a number of 
reasons. First, the challenges of petascale computing and the thousands 
of multi-core processors contained therein are significant. This will 
be the research community's first real experience with this 
dramatically different computing environment. The research community 
will need sufficient time with this machine to effectively utilize its 
potential and prepare to push beyond one petaflop to the next 
generation of machines. Second, the Defense Advanced Research Projects 
Agency (DARPA) High Productivity Computing Systems (HPCS) program is 
expected to begin to deliver that next generation of machines in the FY 
2012 timeframe. The Department is convinced that the ORNL LCF machine 
will continue to be a vital tool for leadership computing for at least 
the next five years, making the five year term a reasonable and 
responsible management decision.

    Senator Corker. Well, I appreciate that, and I think with 
my newness on the committee, we'll just set aside some time 
with your staff to go through those details, and thank you very 
much for your testimony.
    Secretary Bodman. Thank you.
    Senator Corker. Thank you.
    The Chairman. Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for being here.
    Secretary Bodman. Yes, sir.
    Senator Menendez. I look at the budget, and I certainly 
appreciate the increase in funding for the Office of Science, I 
think that's a positive thing. I look at the administration 
taking, what I believe is a small step, in the right direction, 
with increases in energy efficiency and renewable energy 
relative to last year's request, and I think the Congress is 
taking a bigger step in the CRs, so I hope we can continue that 
momentum.
    I want to join in Senator Craig's comments about a need of 
the sense of urgency as it relates to our pursuit of energy 
independence. I think we need a greater sense of urgency, and I 
want to also associate myself with Senator Wyden, in terms of 
the boldness of the type of energy programs that we pursue in 
order to achieve energy security in the country.
    But, for the purposes of today's hearing, I just want to 
ask you about what I do believe is one of the big losers in the 
energy budget--something that, certainly in my home State of 
New Jersey is an incredibly important program, and that's the 
weatherization program. Here's a program that helps people that 
are most in need of help: people in the lower levels of 
economic opportunity in society. It helps the elderly, poor 
families with children, disabled; it makes sure they're warm in 
the winter; it saves money on their energy bills; it saves 
energy as a Nation; and I think it's one of the finest examples 
of how Government can help people while making society a whole 
lot better off. I think your own Department said it best in the 
flyer that it has, which says, ``Weatherization works.'' 
Weatherization works.
    Now, last year, the administration tried to cut this 
program by a third, Congress rightly rejected that cut. This 
year the administration wants to cut it more, by 41 percent.
    So, Mr. Secretary, let me try to get a couple of things 
straight. In your budget justification, you state that the 
weatherization program saves households about $274 a year, is 
that correct?
    Secretary Bodman. I think it costs about $2,500 per 
household to do the weatherization, and it's roughly a 10 
percent return.
    Senator Menendez. OK, as I look at the justification 
figures that the budget has, it says $274, but your fact sheet 
says $358 per year, creates an energy savings of $358 per year.
    Secretary Bodman. I can't respond--I'd be happy to 
reconcile that, sure.
    Senator Menendez. Well, we'd love to know.
    [The information follows:]

    For an up-front investment of $3,000 from the Weatherization 
Assistance Program, household first-year savings on energy bills is 
$358, on average. The $274 figure for first-year energy savings does 
not reflect the most recent forecast of fuel prices and was based on an 
earlier evaluation. The return on investment over the lifetime of the 
energy-saving measures is approximately $4,600, and the benefit-cost 
ratio is 1.53.
    The cost-effectiveness of investing in Weatherization refers to the 
economic return relative to all of the Department of Energy's research 
and development (R&D) programs and technology investments, for each 
Federal dollar invested. Investments in energy efficiency and renewable 
energy R&D have multiplicative returns, such as improvements to 
appliances and the building envelope, that benefit the entire American 
population.

    Senator Menendez. We'd love to know what the difference is.
    Secretary Bodman. Sure.
    Senator Menendez. Because obviously it's part of a 
justification for the program itself.
    Now, as I understand it, that $274 figure came from the Oak 
Ridge National Lab Survey of the years 1993 through 2002, is 
that right?
    Secretary Bodman. I just was handed a paper that suggests 
that we've had over 5.5 million American households participate 
in the program, and the average cost savings have been $358 per 
household.
    Senator Menendez. OK, that's what the flyer says.
    Secretary Bodman. That's the same number you have.
    Senator Menendez. So, that's good, because I think, 
ultimately, what it goes to show is that this is a program that 
is cost-efficient, and as you say, weatherization works.
    Now, the reason I bring this up--in addition to the 
additional cut beyond last year's effort to cut--at the hearing 
last year, I asked you about the weatherization program, and 
you told me, ``It's not a particularly good rate of return,'' I 
didn't understand that then, and I don't understand it now, I 
don't know if that's still your view. Because, as I look at it, 
Oak Ridge tells us that it's a $3.71 to every $1 spent by the 
Federal Government, a cost-benefit ratio. And when I look at 
it, I see, in the budget justification, I don't quite 
understand how we could say it's not efficient. If you look at 
a few different factors, one of them is annual carbon 
emissions, weatherization does better in 2030 than both 
hydrogen and biomass, under your own budget justification--two 
programs that see enormous increases in the budget.
    Another is oil import reduction. Weatherization saves us 
100,000 barrels of oil per day by 2030; it sounds pretty good 
to me. There's only one program that actually saves 
significantly more, and that's the vehicle technology, so when 
you look at all of the consumer savings that takes place, 
helping those who have some of the biggest struggles in our 
society, as it relates to staying warm, and at the same 
context, you see all of these different indicators from your 
own budget justification, speaking that it exceeds other 
programs that get huge increases. Why are we not funding the 
weatherization program at the level we should be?
    Secretary Bodman. It's strictly a matter of priority, 
Senator. I think it's a question that I carry around in my 
head, that we're spending $2,500 or $3,000 per household, and 
that we're getting a return of roughly 10 percent on our money. 
If you look at that on an after-tax basis, you know, it cuts 
it----
    Senator Menendez. Your justification says you get $3.7 
dollars for every $1 you invest; that's far beyond a 10 percent 
rate of return.
    Secretary Bodman. No, sir. I mean, if it costs you $3,000, 
$3,500, and the savings are roughly $300, it costs you ten 
times as much as you are receiving. I don't know where the 
number, 3- or 4-to-1, comes from.
    Senator Menendez. Well, we're happy to go through it with 
your Department. I mean, Congress rejected it last year, I hope 
it rejects it this year. Otherwise we're going to tell 40,000 
families in this country, ``You can spend another freezing 
winter paying exorbitant fuel bills, simply because we don't 
believe this is a high enough rate of return,'' when in all of 
these different categories, the weatherization program exceeds 
beneficial outcomes, compared to others that have enormous 
increases.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Thank you, Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    And, thank you, Secretary, for being here.
    Mr. Secretary, I do appreciate you being here, I know that 
these hearings on the budget aren't the easiest, and it's tough 
as we try to work through the priorities.
    I will admit a little bit of disappointment in your 
explanation to Senator Akaka about the lack of funding for the 
gas hydrates, the methane hydrates research. A couple of years 
ago, we had an opportunity before this committee to present a 
legislation that Senator Akaka and I had worked about, and 
there was a great deal of excitement about the prospect of 
literally a thousand years of energy being supplied to this 
Nation through the prospect of gas hydrates. That technology is 
not advanced. Just because the price of natural gas is higher 
than what we were sitting at 2 years ago, doesn't mean that we 
shouldn't be encouraging that technology to advance.
    I listened very carefully to your comments, Senator Thomas, 
about the frustration that, perhaps, as we move toward the 
alternatives and the renewables, in this transition time from 
the more traditional fuels, we're not getting the help and the 
assistance that we might need with the traditional fuels. We're 
focusing on the alternatives and the renewables.
    Well, there are areas within alternatives and renewables--
in my opinion, geothermal, ocean energy--where we're saying, 
right off the bat, ``You're a loser category, we're not going 
to help with the funding for these projects,'' so we're in this 
transition, and we're not giving the assistance that we might 
possibly be considering for the more traditional fuels, and 
we're not doing adequate measure to advance us in that next 
generation of technology.
    So, there's a frustration here, as we try to prioritize--
it's difficult, but it's necessary. I would just put in, again, 
a pitch for the assistance that we had requested and received 
under the Energy Policy Act for the gas hydrates, as well as 
the more renewable alternatives that we're looking at with 
geothermal--great potential. Great potential for ocean energy. 
It's difficult as we look at that and say, ``Well, there's not 
going to be anything in the budget for that, for the short 
term.''
    I need to ask you a very specific question. Again, a couple 
of years ago, we were very excited, very enthusiastic about the 
prospects of bringing Alaska's natural gas online to meet the 
country's needs here, we were successful in passing that 
legislation, the State of Alaska is working through issues now, 
but in looking at the budget and the funding for fiscal year 
2008, there is no funding for the Alaska Gas Pipeline 
Coordinator's Office.
    This is going to be critical, and key, as we advance the 
prospect of this. Am I missing something in the budget? Is it 
there in some other area? What can we expect in terms of 
assistance on the gas line coordinator's office?
    Secretary Bodman. I think that the unfortunate situation is 
that, in Alaska, they have not gotten their act together to 
deal with this. We have not--to my knowledge--I think it's not 
there. The reason that it's not there is that we don't see the 
need for spending money on something that there isn't call for.
    Senator Murkowski. Well, that's a tough message to take 
home to the State, where they are working to try to put 
together a deal. If the legislature is successful, and the new 
Governor presents a plan that is going to work, a project that 
is going to work, and that is approved within the next, say, 9 
months or so. If we don't have a Federal Pipeline Coordinator's 
Office in play, working the permits, working all of the other 
aspects that they have hoped to be doing, then it's going to be 
the Federal end that will be behind. There needs to be a 
coordination between what's going on with the State, as well as 
the Federal end, and we're going to miss a whole cycle if we 
don't fund this office in fiscal year 2008.
    Secretary Bodman. We will try to respond if they can get 
this done in the next 6 to 9 months, I would be very pleased.
    Senator Murkowski. I would be, as well.
    One last question for you, Mr. Secretary, and this relates 
to Indian Energy Assistance.
    Secretary Bodman. Yes.
    Senator Murkowski. Also in the Energy Policy Act, we called 
for aid for the Native tribes to help develop energy resources 
on their native lands. Apparently, the Department is not 
seeking to fund this in the Act. There's great potential out 
there, as well in areas where they very seriously could use 
some assistance.
    Secretary Bodman. No, I'm sure they----
    Senator Murkowski. Why this lapse?
    Secretary Bodman. I'm sure they could, and it's purely a 
matter of priority. Not every title in the Energy Policy Act is 
something that we have pursued--that's one of those that fell 
off the table.
    We have, however, funded through our environmental 
management activity, and through the Renewable Energy Office 
and the Department of Energy, tribal activities. We have tried 
to get ourselves better organized--the Assistant Secretary of 
Congressional and Intergovernmental areas of responsibility, 
Jill Sigal, heads up an internal group within the Energy 
Department--we're trying to serve, and do a better job of 
serving the tribes. But it has not been something that we felt, 
in terms of the Energy Policy Act, that ranked up there with 
other priorities.
    Senator Murkowski. Thank you, Mr. Chairman. I think we 
should give Senator DeMint a little extra time. Thank you.
    The Chairman. The normal course would be to go to Senator 
Cantwell at this time; can you wait another 5 minutes?
    Senator Cantwell. Thank you, Mr. Chairman.
    Secretary Bodman, it's good to see you, and----
    Secretary Bodman. Good to see you again.
    Senator Cantwell. Good to see your--I think that was humor 
this morning--about the brilliant idea of coming to Washington, 
or maybe it was very sincere.
    Secretary Bodman. Oh, it was meant to be humorous.
    Senator Cantwell. Well, we're glad, we're glad you're 
sticking with it.
    Let me ask you a couple of questions, obviously my 
colleagues from the Northwest articulated our ``Groundhog Day'' 
frustration with revisiting, again, the BPA privatization by 
the administration, and I don't have to remind you, but maybe 
remind other people that this kind of impact to the Northwest, 
we believe, is in the hundreds of millions of dollars, and 
basically a rate increase, if it went through.
    Do you think the Agency, and the administration really does 
have the--after looking at this for an hour--do you really 
think that the administration has the legal authority to do 
this? On its own?
    Secretary Bodman. I don't know the answer to that question. 
I do think that it is a--you and I had this discussion a year 
ago, as I remember, it is a little bit like ``Groundhog Day'', 
in that sense. I do think it's a prudent business practice, and 
paying down the debt, as long as you're not losing it, I think 
makes sense. I know your views on it, and I know the views of 
your colleagues on that subject.
    Senator Cantwell. Obviously we do have a different 
philosophy, and I have so many questions I want to ask you, so 
I won't belabor that, other than to say I think we provided you 
with information that says that the administration doesn't have 
the legal authority to do this, only Congress does. And so I 
was curious as whether you----
    Secretary Bodman. Let me ask--I don't know any more than I 
knew about it last year, and I will be happy to give you a more 
thoughtful response, as to whether we have the legal authority 
to do this.
    [The information follows:]

    The legal authority for the Administration's position is thoroughly 
set forth in the following letter and memorandum dated June 23, 2006, 
from Department of Energy General Counsel David R. Hill to Senators 
Burns, Cantwell, Craig and Smith.

    Senator Cantwell. Thank you.
    I would like a response, as well, on your budget. I 
appreciate the Hanford Cleanup Budget, and would like to focus 
on how that is a priority for the Nation. Certainly it is of 
regional interest to Washington State. The tank waste cleanup 
budget, though, I think over a 3-year period of time now, has 
seen about a 25 percent cut, and even your own budget talks 
about 70--roughly 67 tanks are believed to have leaked about 1 
million gallons of waste into the soil, and that continued 
leakage could cause, obviously, incredible damage to the 
Columbia River.
    So, why the 25 percent cut over several years' period of 
time? Why not move this tank waste while we're waiting for the 
vitrification plant? Why not move this tank waste into the 
double-shelled tanks that exist?
    Secretary Bodman. My understanding, Senator, is that all of 
the liquid that can be pumped, that can be moved, has been 
moved, and is moved into the double-shelled tanks. That the 
part that remains is sludge, and the goal is trying to move 
this and trying to build more double-shelled tanks in order to 
accommodate the sludge that's there. It would cost the 
Government a half a billion dollars and 8 to 10 years to build 
enough tanks in order to accommodate that. Hopefully by that 
time, we will have gotten the low active waste facility up and 
going, and we would be moving ahead with the program that we 
now have.
    Senator Cantwell. But, could we get in writing how much 
capacity are in the double-hulled tanks? Could we get that in 
writing from the Agency?
    Secretary Bodman. Sure.
    Senator Cantwell. Because, obviously the Tri-Party 
Agreement under this current proposal is not going to be lived 
up to, and so I know you're saying you think these numbers are 
better to continue on the vitrification plant. I'm looking at 
the million gallons that's leaking into the groundwater 
contamination, going toward the Columbia River, and obviously 
looking at this challenge. So, I think getting more specifics 
is very important to the Northwest.
    Secretary Bodman. I'd be happy to provide that to you.
    [The information follows:]

   CAPACITY OF DOUBLE-HULLED TANKS AT HANFORD FOR STORAGE OF HIGHLY 
                           RADIOACTIVE WASTE

    Hanford has 28 double-hulled tanks for storage of highly 
radioactive waste. These tanks, known as double-shell tanks, have a 
total capacity of 32,260,000 gallons. The tanks currently contain 
27,000,000 gallons of waste. Not all of the empty space can be filled 
with waste retrieved from the single-shell tanks, as some of it is 
needed for other purposes, including 1,200,000 gallons as emergency 
space, should one of the double-shell tanks start to leak, and 
1,760,000 gallons of space spread among nine tanks, that cannot be used 
because doing so would mix incompatible waste types. Therefore, the 
currently available space is 2,300,000 gallons. Some of this available 
space is needed to accommodate transfer and receipt of waste in the 
tank farms and to operate the waste evaporator. Operation of the waste 
evaporator is important as it reduces the waste volume by boiling off 
excess water. Five million gallons of liquid waste currently stored in 
the double-shell tanks will be processed through the waste evaporator 
in order to free up an additional two million gallons of double-shell 
tank space to support single-shell tank retrievals.
    Waste retrieval has been completed on six single-shell tanks. 
Retrievals are in progress at three. single-shell tanks, and double-
shell tank space should be adequate to complete waste retrieval from 
these three tanks, and nine more, for a total of eighteen single-shell 
tanks that will be retrieved by the time the Waste Treatment Plant 
starts operation.

    Senator Cantwell. A couple of other questions. I think you 
heard a theme from my colleagues here this morning about the 
credibility of the President's State of the Union Address, and 
then the budget itself, in backing that up, and prioritization. 
So, I have a couple of questions for you.
    One, would you recommend that the President sign an RPS, 
similar to what Senator Bingaman has proposed? A Renewable 
Portfolio Standard reduction, or basically using 15 percent of 
our energy from renewables on the electricity grid: would you 
recommend the President sign that?
    Secretary Bodman. I wouldn't. It seems to me that that is 
something that's best handled at the State level. The State of 
Texas, when this President was the Governor of Texas had a very 
high RPS, locally developed standard. Some States have very 
good access to renewable fuels, others don't.
    Senator Cantwell. I obviously disagree on that.
    One other question, if I could.
    Secretary Bodman. OK, sure.
    Senator Cantwell. But, I really appreciate your indulgence 
in these questions.
    Secretary Bodman. Sure.
    Senator Cantwell. The other issue as it relates to this 
committee on a bipartisan basis--2005 legislation supported 
much higher tax breaks and incentives for renewables with the 
administration's support, either a 5- or 10-year extension on 
renewable energy tax credits. We don't see that in the budget, 
either. So, I'm talking about a longer horizon, shifting the 
playing field away from the very mature fossil fuel industry to 
the renewables, and an MIT technology guy, and as you just 
said, you're amazed at how much investment's going in there, 
but yet we still are only giving them about a 2-year horizon. 
Does the administration support changing the tax credits to 
give them longer horizons? The committee, on a bipartisan 
basis, has supported a 10-year horizon for some of those 
renewables; would the administration support that? Or even a 5-
year?
    Secretary Bodman. I think that the administration is 
unlikely to support either. I can't say that categorically, 
because I don't know, I haven't questioned it. But I do think 
it's a matter of the budgetary impact, and you make that kind 
of a commitment that, you then extend it well out into the 
future. That's the reason for the more conservative standard 
for renewable fuel incentives.
    Senator Cantwell. Thank you, Mr. Secretary, I'm sure we'll 
have a hearty debate about these issues.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator DeMint.
    Senator DeMint. Thank you, Mr. Chairman.
    And, thank you, Mr. Secretary.
    I'm about to lose my voice, so I'll have to be brief.
    I want to thank you, personally, for how responsive you've 
been to our questions and the meetings we've requested, and the 
professional way you go about your job. I've just got a few 
questions, maybe more global. You know I have a particular 
interest in the Savannah River site in South Carolina.
    Secretary Bodman. Yes, sir.
    Senator DeMint. But, my questions are more national.
    Just, as it relates to budget, and our recent debate on 
earmarks. A number of the agencies had let us know that 
congressional earmarks diverted their attention from national 
priorities, and we have made the pledge here in the Congress to 
eliminate unauthorized earmarks. But, there's still talk that 
report language has earmarks that our administration and 
different agencies are going to feel pressured to honor.
    I just wanted to ask you, do you feel empowered at this 
point to apply your budget toward national priorities, and to 
ignore unauthorized report language earmarks that relate to 
your Agency?
    Secretary Bodman. Yes, sir.
    Senator DeMint. That's all I needed to hear.
    Let me ask a broader question. I've got a lot of questions 
about the Savannah River site, and Savannah is a sister site to 
other sites in other parts of the country. But, as you know, 
there are multiple missions at this site, and others. It seems 
that every year we go back through the same process of not only 
fighting for budgets for the different missions, but actually 
fighting and arguing about if these missions really are a 
priority, and if they're going to continue.
    It seems that what we're missing is a national vision for 
these sites, waste cleanup, recycling, as you in a recent 
letter committed to our Governor about salt-waste processing. 
But next year, we're likely to be debating again--which of 
these we will continue, which is a priority--and it would seem 
that DOE at this point needs to maybe help lead us with what is 
a national vision for all of these different missions, and at 
which sites are they going to be, so that when we, at least, 
argue about budget, we're arguing within the parameters of a 
national vision for our energy and alternative fuels, and 
recycling, and waste cleanup. The way we're doing it now, it 
seems so piecemeal, that we fund something and the next year 
we're not sure if we're going to fund it. I'm afraid in the 
process we're wasting a lot of money, losing a lot of time. Is 
there that goal within your Department to put all of the pieces 
together in a grand vision, and relate it back to these sites?
    Secretary Bodman. There is the desire to do that. There are 
limits as to how far we can go in terms of looking out into the 
future. Those limits are largely imposed by our friends at OMB, 
who look hard at whatever financial commitments we're making 
into the future.
    I do think that the Department has, in making the judgments 
on this particular budget, used a so-called ``risk-adjusted 
approach'' where we have looked at where the risks are, and the 
largest risks are at Savannah River, at the Idaho facility, and 
at Hanford. That's where the priority was. It doesn't mean 
we've eliminated funding elsewhere, that's where the largest 
risks are. We are trying to adjust the focus there.
    I would say this to you, Senator. This government has a 
major problem with respect to its long-range planning. We do 1-
year budgets, we do it one at a time. I'm looking at changes in 
the committee, here--2, or 3 years from now, for sure, you'll 
have a different Secretary here who will be making judgments. 
We do this one at a time. And having a game plan that we all 
live by is something that our Government has a terrible time 
doing. But I agree with you, it's a desirable thing.
    Senator DeMint. Well, the Congress has that problem with 
short-term thinking, too. But I know, if I could just leave you 
with one thought, and you know from your time in the business 
world, if you do your planning based on what you can afford, 
and pay for, you often miss the big opportunities. Many times, 
if that vision is clearly established, and laid out, and 
priorities are made clear, that tends to drive what we're 
willing to spend, and how we pay for it. I think Congress needs 
that leadership from the Energy Department right now. If we 
know it's a national priority, and we know you know how to make 
it work, I think we're much more likely to come up with the 
funding.
    Secretary Bodman. We will try to do a better job.
    Senator DeMint. And we will, too. Thank you, sir.
    The Chairman. Senator Salazar.
    Senator Salazar. Thank you very much, Chairman Bingaman, 
and Ranking Member Domenici.
    And, welcome Secretary Bodman. First, let me say that I 
continue to be thankful to the attention that you and the 
President have paid to the National Renewable Energy Lab in 
Colorado, and was thankful for the President's statement, also, 
with respect to energy in the State of the Union.
    My question today has to do with the follow-up, relative to 
the resources that we're putting behind the technological and 
alternative fuels efforts, to try to get us to the goals that 
the President articulated in the State of the Union.
    Secretary Bodman. Right.
    Senator Salazar. I would like you--with all due respect, 
Mr. Secretary--to respond to the proposed changes in funding 
for the National Renewable Energy Lab which I--on first blush--
have found quite troublesome.
    The reduction that I have seen with respect to NREL shows 
that, with respect to wind energy, which is one of the big 
things happening across the country, and in the West, we are 
proposing a 26 percent change--a 26 percent decrease over the 
funding from last year. And then with respect to the total EERE 
programs, there is a decline of 3.6 percent from last year.
    I look at the numbers in the budget--they don't quite match 
up to the vision and the program that the President articulated 
in his State of the Union, or that we have talked about in 
terms of the robustness of the effort that we need here. I 
think, at the end of the day, you and I both very much agree 
that this is one of the most important things that we could do 
to protect this country.
    Secretary Bodman. Well, it is. I have not looked at the 
NREL budget, so I don't know what it is. I've looked at the 
EERE budget, and that's up by 5 percent. I would be happy to 
give you a response at some point in time in the future about 
the NREL budget, in particular. I do believe that we are 
properly funding the efforts at EERE, in terms of their focus 
on renewable energy.
    Senator Salazar. If you could do that later on, Secretary 
Bodman, I would appreciate it, just in terms of the impacts of 
the budget, related to NREL.
    Secretary Bodman. Yeah.
    [The information follows:]

    The Department of Energy's Fiscal Year 2008 budget request 
indicates a reduction in funding for the National Renewable Energy 
Laboratory (NREL), but these numbers do not tell the whole story. 
Throughout every fiscal year, NREL has the opportunity to compete for 
additional funds for new research for specific projects. A conservative 
approach is taken when formulating the budget request. The Office of 
Energy Efficiency and Renewable Energy only designates the minimum 
amount of funding for known, ongoing operations--not the estimated 
value of new research that NREL may conduct. Unfortunately, this 
creates the appearance that funding going to NREL will be lower. In 
fact, actual funding to NREL has historically been higher than the 
original budget estimate. For example, in Fiscal Year 2006 NREL 
ultimately received $9 million more than the estimate shown in the FY 
2006 request.

    Senator Salazar. The other thing I would ask you to also 
focus on--and it may be part of the conversation that we have 
with respect to the continuing resolution, but there are some 
major aspects of the NREL capital construction program that are 
necessary in order for us to get to the level of alternative 
fuel production that we want to get to in this country.
    Secretary Bodman. Right.
    Senator Salazar. They include the Integrated Bio Refinery 
Research Facility, the capital requirements for the Science and 
Technology Facility, and the Research Support Facility. Those 
are facilities that I know you became familiar with----
    Secretary Bodman. Right.
    Senator Salazar [continuing]. When you were at NREL last 
year. So, I would ask for an update with respect to those three 
facilities.
    Let me ask one more quick question while I have my 
remaining time here. We are in the midst this morning of 
another hearing in another committee, the Agricultural 
Committee on the 2007 Farm Bill. There are major initiatives 
within the Farm Bill related to alternative fuels, including 
investments of several hundred millions of dollars into 
cellulosic ethanol, and certain assumptions that are being made 
there.
    In your view, does our budget here for the Department of 
Energy do everything that it possibly can do to unlock those 
keys which--do we still need to find the key to unlock the 
answers to get to commercialization of cellulosic ethanol?
    Secretary Bodman. Are we doing everything we could do? No. 
Are we doing what is reasonable? Have we made a reasonable 
tradeoff among the various areas for which I'm responsible? I 
think we have. I do know that there is an effort to coordinate 
what we're doing in our efforts particularly at NREL on 
cellulosic ethanol, with what the Ag people are doing. One of 
our former staff members' deputies is now over at Agriculture, 
and he has done a very good job at coordinating with us. So, 
we're trying to do a better job.
    If you asked me, are we doing everything that I could 
imagine doing? The answer is no. Are we doing what I think is 
reasonable--have we made reasonable tradeoffs? I think we have.
    Senator Salazar. OK, but at a committee hearing that 
Senator Bingaman put together on biofuels, I think the experts 
from around the country were telling us that it's impossible 
from their point of view for us to achieve the 30 billion 
gallon RFS that the President articulated in the State of the 
Union. What, quickly, is your view on that, and can this budget 
help us get to that, or is it impossible, given the budget 
constraints that we have in this budget?
    Secretary Bodman. No, I think we can get there. The morning 
after the State of the Union address, I actually accompanied 
the President to visit the DuPont Company, up in Wilmington, 
Delaware and to look at the results of a solicitation that was 
done 3 years ago. We jointly funded with DuPont efforts to 
create a bio-refinery to manufacture cellulosic ethanol. 
Totally different than anything going on at NREL. They reported 
great progress. I have to tell you, I felt much better having 
left there; I was much more encouraged by that experience.
    I would also tell you, before you came in, sir, I mentioned 
I did start out life as a venture capitalist. I have a 40-plus 
year history of watching that industry, and this is the first 
time in my 40 years of observing the industry that we have seen 
serious money--billions of dollars--going in from the venture 
capitalists, to the creation of cellulosic ethanol, as well as 
other raw materials. It's a big deal.
    It's going to be Government, we're working hard on it, the 
Ag Department is working hard on it, but my guess is--like a 
lot of other things--the solution will probably come from the 
private sector, by taking some of the technology that we've 
developed. DuPont, for example, bases a lot of their work on 
what goes on at NREL. They work with the refining facilities 
there.
    Senator Salazar. Well, I appreciate it. I see my time is 
up, and I don't want to infringe on my colleagues. But thank 
you so, so much, for your comments.
    The Chairman. Thank you very much. We'll have a few more 
questions; I know Senator Domenici's coming right back.
    Let me ask you about a couple of issues, Mr. Secretary. One 
is this 35 billion goal that the President has established for 
35 billion gallons of renewable fuel by 2017.
    Secretary Bodman. Right.
    The Chairman. We had a conference last Thursday on 
biofuels, and several of the witnesses said, in their view, the 
maximum amount of biofuels that could be reasonably produced 
from corn was about 15 billion gallons per year. That was----
    Secretary Bodman. I agree with that.
    The Chairman. OK. Dr. Dan Arviso, who's head of your 
renewable energy laboratory----
    Secretary Bodman. Right.
    The Chairman [continuing]. Was asked how much he thought 
could be produced from cellulosic sources by 2017, and he said 
that their most ambitious, or optimistic, projection was that 
it would be 6 billion gallons. So, I added the 15 and the 6, 
and I didn't get to 35.
    Secretary Bodman. Right.
    The Chairman. How do you see us getting to the 35?
    Secretary Bodman. Well, first of all, I don't know. We're 
talking about 10 years, Mr. Chairman. I do believe that you 
will see efforts--there are scores of private companies that 
have been funded and are working in the private sector that are 
funded by some of my former colleagues in that industry, and 
they're very upbeat, and encouraging.
    We have seen efforts by larger companies, and DuPont will 
have--they claim--a semiworks up and built within the next 
couple of years. They're working with a partner, I'm sure they 
would like to have a loan guarantee--to get back to one of your 
previous points--but they will be working with a partner to try 
to get that up and going.
    We're talking about 10 years. Ten years in the high 
technology business is an eternity. Trying to forecast these 
things is very tough. I think this can be done. I have great 
regard for Dan Arviso, he's a very capable man. I wouldn't want 
to question whatever he told you. But I believe that the 
combination of alternatives--this is not just ethanol, or not 
just cellulosic ethanol--it is biodiesel, it is biobutanol. 
Butanol is a better feed additive to gasoline than ethanol. It 
has advantages, in that it doesn't take up water, and therefore 
it can be pumped around the country. I think it also counts 
hybrid and battery technology that will help.
    There are different ways of looking at this, and I think 
that it's not unreasonable to assume that this thing can be 
met. I would be kidding you if I were to say anything other 
than this is a stretch goal. It's going to keep all of us on 
our toes, but I think it's worth doing.
    The Chairman. Let me ask, also, a question about your 
proposed increase--400 percent increase for funding for GNEP.
    Secretary Bodman. Yes, sir.
    The Chairman. I'm a little unsure, and I think we're 
probably going to have to have a hearing here, later on this 
spring, maybe, and look at this issue. Last year, the 
Department's justification for GNEP talked about phasing out 
old recycling technologies. This year, the Department's asking 
for engineering design funds for spent fuel treatment and 
recycling facilities.
    Secretary Bodman. Right.
    The Chairman. As I understand it, there have been no 
breakthroughs in fuel recycling science and technology in the 
last year, so the Department is now proposing to design a 
recycling facility. I'm just not clear--are we abandoning 
current recycling technologies? Or, are we proposing to build 
facilities based on current recycling technologies?
    Secretary Bodman. The latter. The people at Argon 
Laboratory, out in Chicago, have developed bench-scale 
separation technologies to separate out the transuranic 
elements--plutonium, americium, curium and, I think, neptunium, 
whatever the fourth one is--from spent fuel. So, they've done 
it at the bench-scale.
    The goal is to, therefore, get this scaled up, and to make 
it real. That's what all this money is for. When people say 
that we are not--whatever your first summary was, that, as you 
looked back, that we, last year the justification was that we 
were----
    The Chairman. The statement was that we were going to be 
phasing out old recycling technologies.
    Secretary Bodman. I have no idea what that means.
    The Chairman. Yeah, I didn't either. I think what we need 
is a better fix on how expensive this is going to be, how long-
term this is going to take--we're starting to spend real money.
    Secretary Bodman. Oh, I know.
    The Chairman. Under your budget here----
    Secretary Bodman. I understand.
    The Chairman. We're getting it up to a level here, where 
Congress needs to know what it's investing in, in a little more 
specificity.
    Secretary Bodman. We would be happy to provide that for 
you, sir.
    [The information follows:]

    There have been successes this past year in the areas of fuel 
recycling. We have made substantial progress relating to the advanced 
separations and recycling technologies proposed for use as part of the 
Global Nuclear Energy Partnership (GNEP) initiative. The Department's 
national laboratories have repeatedly demonstrated, in laboratory 
settings, the final process step of the separation of the transuranics. 
Separation of transuranics from spent nuclear fuel, would allow for 
their reuse in fuel elements in an advanced recycling reactor. 
Additionally, the Department has initiated end-to-end testing of 
advanced separations technologies to further validate the transuranics 
processing steps and to provide data leading to an even larger-scale 
demonstration of separations technologies.
    In response to the reference to phasing out old technology, the 
Department is not proposing to build facilities based on the PUREX 
process, which separates pure plutonium from spent nuclear fuel and is 
currently in use by the international community. Instead, we are 
proposing to use advanced technologies that allow spent nuclear fuel 
recycling without separating pure plutonium. Many of the individual 
steps from processes already demonstrated on a large scale can be 
selectively used by incorporating advanced separations processes 
without separating plutonium.
    The Department's FY 2008 budget request would allow the 
continuation of vital research and development activities, including 
the expansion of ongoing modeling and simulation efforts. The FY 2008 
budget request also supports continuation of conceptual design 
activities for the advanced fuel research facility and the design of 
the nuclear fuel recycling center and advanced recycling reactor. 
International activities are also planned to accelerate in FY 2008 and 
efforts on a proliferation resistant nuclear reactor suitable for use 
in developing economies would be initiated. The FY 2008 budget request 
supports these activities all of which will inform my decision on the 
path forward for GNEP and for continuing our critical advanced fuel 
cycle development.

    Secretary Bodman. I think it is fair to say that this is 
going to be a multi-decade problem. This is not going to yield 
to something that's going to happen in 3, 4, or 5 years. This 
is going to be 10-years-plus to accomplish GNEP.
    There are four parts of it--it is recovery of the 
transuranics from the spent fuel. It is the creation--taking 
those transuranics, and converting them into a fuel element 
that can be used in a fast reactor. It is the creation of that 
fast reactor, and it is, fourthly, the reprocessing of the 
spent fuel from the fast reactor.
    The goal of all of this is to create a mechanism, such that 
we can produce the energy, use the energy that is already 
stored in the spent fuel, but in a different chemical form. 
That's what the goal is, and to do it in a proliferation-
resistant fashion. So that, in a summary, is what we're trying 
to accomplish. The challenges are substantial. It is a research 
program.
    The Chairman. As I indicated, we'll probably have to have 
an additional hearing on this. I appreciate your explanation.
    Senator Domenici.
    Senator Domenici. Thank you very much, Mr. Chairman.
    I wish some of the Senators that were here earlier could 
participate in the discussion about how do we do what some of 
them have said we ought to do. I have some questions on 
unconventional fuels, like oil shale, that I want to get in.
    But, Mr. Secretary, I think the committee's activity today 
and questions leaves you with a challenge that I would put 
forth, and if you think it has merit, maybe you can do it. If 
you think it's wasteful, just tell us.
    But, I think the questions that are raised by a couple of 
Senators who say, ``We need a bigger goal, we need a `shoot the 
moon' idea,'' they didn't use that word, I did. But that's what 
they're saying. I think they're mistaken, because I don't think 
we're going to solve our energy problem with one technology, 
and one fix. I think the problem is going to require--it might 
be a little bit too spread out, but I think it's going to 
require something like that.
    I wonder if you might challenge your Department, or add 
somebody to it, and put down on paper, and submit to us for the 
record what the war on energy, on using oil, what is it, in 
terms of what we are doing? Because, I think you'll find, if 
somebody inventories it--we're doing a lot of things.
    Secretary Bodman. Yes, sir.
    [The information follows:]

    The Department of Energy is indeed engaged in many, many activities 
designed to increase America's energy security and reduce our 
dependence on foreign sources of energy, particularly petroleum and 
petroleum products. We currently import almost two-thirds of our oil.
    Last October, I released the Department's Strategic Plan, and 
Energy Security was listed as the Plan's number one strategic theme. 
Another of the Plan's strategic themes is Scientific Discovery and 
Innovation, and I would like to outline for the Committee some of the 
important and wide-ranging activities in these two areas. I agree with 
your assertion that we are not ``going to fix our energy problem with 
one technology, with one fix.''
    Probably the most important aspect of increasing our energy 
security is increasing our diversity of supply. This is especially 
critical in terms of the transportation sector, where petroleum 
accounts for more than 95 percent of the fuel consumed. DOE is 
investing in both energy efficiency and alternative fuels technologies 
to reduce the energy-intensity and increase the fuel-flexibility of 
America's economy while maintaining and improving our environment. We 
are making tremendous strides in two transportation sector-related 
areas: fuels and vehicles.
    In the area of fuels, the Department is moving ahead to transform 
the nation's domestic biomass resources into affordable biofuels and to 
make cellulosic ethanol cost competitive by 2012. Achieving this goal 
could allow market penetration of significant amounts of ethanol that 
could help reduce our dependence on oil. Biomass is a critical 
renewable resource, as it is the only renewable option for producing 
liquid transportation fuels in the near term and reducing our 
dependency on imported oil. Because we cannot increase our use of corn 
grain indefinitely, we need to increase our use of cellulosic ethanol--
which can be made from a variety of non-food or energy crops like 
switchgrass, agricultural residues like corn stover, various straws and 
hulls, as well as forest resources. Although it requires a more complex 
refining process, cellulosic ethanol contains more net energy and 
results in lower greenhouse gas emissions than traditional corn-based 
ethanol. On February 28, I announced that DOE will invest up to $385 
million for six cellulosic ethanol biorefinery projects over the next 
four years. On May 1, I announced that DOE will provide up to $200 
million over five years to support the development of small-scale 
cellulosic biorefineries. DOE believes that these cost share projects 
will lead to commercial demonstration of advanced biorefineries that 
use cellulosic feedstocks to produce ethanol and co-produce bioproducts 
and electricity.
    In the area of vehicles, DOE's Vehicle Technologies program is 
seeking to enable personal and commercial highway vehicles to become 
more fuel efficient. Technology research includes lightweight 
materials, advanced batteries, power electronics and electric motors 
for hybrid and plug-in hybrid vehicles, and advanced combustion engines 
and fuels. These technologies contribute to reducing America's use of 
oil. For instance, advanced passenger vehicle diesel engines have the 
potential to achieve significant efficiency gains with near-zero 
emissions. We continue to focus on expanding efforts to promote the 
adoption and use of petroleum-reducing fuels, technologies and 
practices.
    While all of these technologies show great promise in reducing our 
dependence on foreign oil, the Administration and DOE believe that we 
must maintain and indeed expand our ``insurance policy'' that helps 
protect us from severe energy supply interruptions. Accordingly, we 
have maintained the level of our Strategic Petroleum Reserve and we are 
in fact significantly increasing the amount of oil stored in it in 
accordance with our statutory obligations under the Energy Policy Act 
of 2005 to increase the inventory of the Reserve to one billion 
barrels. Additionally, we have proposed to increase the overall 
capacity and inventory to 1.5 billion barrels.
    I would be remiss if I did not emphasize the importance of our 
Scientific Discovery and Innovation strategic theme. We are entering a 
new era of increasingly rapid changes in the pace of discovery and 
innovation. These changes present both opportunities and challenges, 
requiring a new U.S. commitment to science and innovative approaches 
for accelerating the realization of benefits from our research 
enterprise. We must remain vigilant as other nations invest heavily in 
science and technology in an attempt to match our economic productivity 
and compete with U.S. industry.
    The Department of Energy has a laboratory system second to none in 
the world, and I would like to offer two examples of the kind of work 
that our labs do which contributes to U.S. efforts to become less 
dependent on foreign sources of oil. First, through a partnership 
between Chevron Energy Technology Company and DOE's Los Alamos National 
Laboratory (LANL) in New Mexico, new technologies developed at LANL are 
being transferred into commercial application that are being used to 
enhance oil and gas production. For the oil industry, methods to 
communicate down the well had been generally unreliable due to 
corrosive conditions. Los Alamos National Laboratory's wireless 
communication technology, INFICOMM, is being adapted for use in oil and 
gas wells. The wireless communication allows data rates up to a million 
times faster than conventional techniques, so that real-time, broadband 
production data can be obtained. The wireless communication system 
allows production data to be sent from remote wells to a platform or a 
flow station without the need for batteries or other power. This 
initial agreement has led to a cooperative research and development 
agreement between Chevron and LANL to advance energy security. The 
agreement has led to further technology development used in acoustic 
sensing and fluid flow characterization through a pipeline.
    In another area where DOE's lab system has been instrumental in 
contributing to reducing our reliance on foreign oil, our efforts to 
develop cellulosic ethanol as a viable commercial motor fuel have been 
supported by work of the National Renewable Energy Laboratory (NREL) in 
Golden, Colorado. A new genus and species discovered by NREL scientists 
has the potential for widespread use in the biomass industry.
    NREL packaged its discovery into an enzyme technology that has the 
potential to improve productivity for biorefineries. This technology, 
E1 Thermostable Endoglucanase (E1), allows manufacturers to create 
industrial chemicals at a greatly reduced temperature, as well as at a 
greatly accelerated process, which translates into cost savings for the 
biomass industry. This platform technology is designed to utilize a 
renewable technology based on enzymes to convert organic materials into 
sugars, for further development of ethanol/fuel, as well as other 
chemicals and products.
    NREL entered into a license agreement with Genencor International 
for the E1 suite of patents. This license agreement between NREL and 
Genencor provides an opportunity for the biotechnology industry to 
begin production from plants and other renewable resources, which 
promote both environmental and industrial sustainability in addition to 
being cost competitive with those synthesized through traditional 
chemistry.
    These examples are representative of the efforts DOE is undertaking 
on an ongoing basis to reduce our reliance on imported oil. As you 
know, our FY08 Budget documents provide additional details of these 
efforts.

    Senator Domenici. The problem is, nobody knows it, and once 
they know it, they forget it by the next week, and they're 
looking for some more. We don't have to worry about that, 
because we're just working at it--you and I, and Jeff and 
others, are just busy at it. But, I think it might be 
worthwhile, trying to put a plan together saying what we are 
doing.
    You tell us, every time we meet, you mention things that I 
am not aware of, like you mentioned that we have three plants 
with such-and-such that are going to do such-and-such.
    Secretary Bodman. Oh, the bio-centers, sir?
    Senator Domenici. Right.
    Secretary Bodman. Yes.
    Senator Domenici. I don't know enough about them to 
participate in a discussion with you. That's my fault, not 
yours. But those are big-time things. They would fit into a map 
and narrative of: what is it we are doing? What is the goal, 
and what are we doing? I think it's pretty good.
    Secretary Bodman. I--thank you, I agree with you. I think 
it's pretty good, too.
    Senator Domenici. Do you think it's worth evolving it out?
    Secretary Bodman. Sure, we'll be happy to. That's frankly 
what we attempted to do in the budget.
    Senator Domenici. It's too cumbersome.
    Secretary Bodman. A lot of what we say will be related to 
the budget, but we'll try to do it.
    Senator Domenici. I think it's just got to be smaller.
    Secretary Bodman. Yes.
    Senator Domenici. It's got to be less verbose, and it's got 
to be a little more artistic in the sense of people looking at 
it and saying, ``This is the American Energy Program.'' I think 
if you don't do it, it's--other Departments claim pieces of it. 
I'm glad you're working with the farmers, the people at 
Agriculture, because there's no question, there can and may 
still be a big fight--whether they should do a $100 billion 
loan program, or whether we should be doing it--and I'm glad 
you know that's a problem.
    Secretary Bodman. Yes, sir.
    Senator Domenici. I'll be a couple of more minutes.
    Now, having said that, let me ask you this. The Department 
of Energy estimates that technologically recoverable oil shale 
in the United States is roughly equivalent to three times Saudi 
Arabia's oil in their reserves. Section 369 of the Energy Bill, 
which we keep referring to, again, has a very interesting 
proposition. It directs you to accelerate the commercial 
development of this conventional fuel. Are you aware of that?
    Secretary Bodman. Yes, sir.
    Senator Domenici. You're working on it. First question: 
explain your progress in facilitating the commercial 
development of these resources, and what you believe is the 
greatest impediment to the commercial development of 
unconventional fuels. When do you believe the United States 
will have a commercial oil shale program, and how can this 
process be expedited?
    Secretary Bodman. Well, we do this, first of all, without 
incentives for oil and gas. That is the standard by which we 
operate, and therefore we do have a number of private companies 
that are working--Shell, in particular, has got a very exciting 
program. I think you visited out there, if I'm not mistaken.
    Senator Domenici. Yes, sir.
    Secretary Bodman. I think their goals and aspirations are 
very consistent with what you just said. That's why they're 
there. I think their commitment to a process for the recovery 
of oil is a multi-year research program, but one that they're 
very committed to. One that they claim pays off at roughly the 
$30-$35 a barrel level. So when you ask what the impediments 
are--the impediments are, this is a very, very tough 
environment in which to operate. Because heretofore it has 
involved, basically, a mining operation, where you dig the 
stuff up. That proved to be a very expensive way to do 
business.
    What is now being undertaken is to do it underground, and I 
think there is reason to believe that they can do it.
    Senator Domenici. Oh, Mr. Secretary, stop there. You see, 
what I'm thinking is, if you wrote up what America is doing, to 
try to solve our problem, under the rubric of trying to produce 
conventional fuels.
    Secretary Bodman. Right.
    Senator Domenici. But some people think we should stop 
trying that and go some other way--I don't think we should stop 
if some can be developed that are usable, and I think this is 
one--let them push, that is, the private sector, but you be as 
accommodating as you can under the law, and you count this as 
something we are doing. It's an American effort that some 
people in the world will look at, and say, ``My, they may make 
it,'' right? It's right up there near Canada, where they're 
making it up----
    Secretary Bodman. Sure.
    Senator Domenici [continuing]. Using tar sands.
    Secretary Bodman. Sure.
    Senator Domenici. But, you have no inhibitions about Shell, 
or anybody else, working on those leases. You do take the 
language seriously, where we had said, in the law, that you, as 
Secretary, are to accelerate commercial development. You take 
that seriously?
    Secretary Bodman. Yes, I do.
    Senator Domenici. My last point is, could you look at 
whether working with the United States military might help 
matters, with reference to shale? If we passed a little statute 
that gave the Defense Department authority to purchase long-
term contracts, to purchase tar sands oil, diesel, that met 
their needs. If they could have authority to make contracts, it 
would seem to me that eliminates one of the real problems that 
Shell has.
    Secretary Bodman. I have visited with the Secretary of the 
Air Force--their interest in using coal-based liquids to run 
one of their aircraft. They also have an interest in making use 
of, gasifying, the coal and then converting it over using this 
Fischer-Troppes process that the South Africans developed. My 
concern is the length of time that they feel that they can 
commit to.
    So, you're right, I think that that's a good subject, and 
in order to do that, we need to get the people who are funding, 
you need to get an investment banker who knows about these 
kinds of projects who are funding them, and to get some sense 
of how long the commitment must be, in order to get the project 
financed.
    Senator Domenici. Thank you.
    Secretary Bodman. So, I think you have a good idea.
    Senator Domenici. Thank you, Senator.
    The Chairman. Senator Akaka.
    Senator Akaka. Thank you very much, Mr. Chairman.
    Mr. Secretary, Hawaii has the highest electricity rates in 
the country, and in response, we have become one of the largest 
markets for solar energy in the country. As our demand for 
electricity continues to rise, we increasingly must turn toward 
renewable energy there.
    Secretary Bodman. What's your electricity cost, Senator, if 
I could ask you? Do you know?
    Senator Akaka. You know, I haven't paid my bill in Hawaii 
in a while.
    Secretary Bodman. In a while, forgive the question.
    Senator Akaka. But it is 27 cents per kilo----
    Secretary Bodman. Per kilowatt hour?
    Senator Akaka. Yes.
    Secretary Bodman. Wow, that's very high, that's for sure.
    Senator Akaka. Yes.
    Secretary Bodman. So, solar energy works.
    Senator Akaka. Solar energy is something that would 
certainly help the cause there.
    Secretary Bodman. Sure.
    Senator Akaka. Yet, the budget presented by the Secretary 
significantly decreases funding for renewable energy 
technologies. In particular, when our government should be 
increasing investment in new technologies like solar energy, 
the administration has decided to keep funding flat.
    My question to you is, according to the President's Solar 
America Initiative, the second year of the program was expected 
to be funded at $175 million--why did the administration decide 
to curb this program after only 1 year?
    Secretary Bodman. I don't know the specific program that 
you refer to, but it is supposed to be flat, at least, 
according to the figures I have. We've got a hundred, roughly 
$150 million that we had asked for in 2007, and we have asked 
for the same amount in 2008, if that's what you refer to in 
your----
    Senator Akaka. Yes.
    Secretary Bodman [continuing]. Your suggestion was that we 
had originally said that the 2008 number should be $175 
million?
    Senator Akaka. That's correct.
    Secretary Bodman. I don't know the answer to that. I can 
tell you I believe that this is enough, such that we can 
accomplish that which we need to accomplish, in terms of 
funding the development of photovoltaic technology. Here again, 
I feel that it's very important to observe what is going on in 
the private sector. I will tell you that a lot of people are 
coming out of the memory business in Silicon Valley and are 
starting their own PV businesses. That's a major source of 
activity to the venture capital community in Silicon Valley.
    I think you're going to find a lot of interest, and you're 
going to find it at the kind of prices you're talking about. 
You'll find a lot of takers, I would think, in California, in 
terms of the industrial activity there.
    I can't give you any more on this, other than we think, 
between what they're doing, what's going on in other private 
companies, in other parts of our country, together with this 
$148 million, that that's quite a sizable--and that's largely 
at NREL, out at the Renewable Energy Laboratory out in 
Colorado. It's a very substantial commitment.
    Senator Akaka. Well, let me quickly, then, ask you a 
question about hydrogen.
    I'm pleased to see the increase of $19.5 million in fiscal 
year 2008 requests for hydrogen fuel initiative in, what we 
call, EERE.
    Secretary Bodman. Yes.
    Senator Akaka. The budget states that increased funding is 
supposed to expand research, in several areas for hydrogen, 
such as hydrogen production from renewables. Can you explain 
how much of the increase across all parts of the DOE budget, is 
allocated to renewable production of hydrogen, not just the 
portion from EERE?
    Secretary Bodman. I have the figures--I happen to have the 
figures here in the 2008 budget. The total is $306 million--
that's how much money is in the budget, that has been proposed 
by the President. Of that, two-thirds, $213 million, is in 
EERE, and the balance is in the creation of hydrogen using 
nuclear energy. In nuclear energy, the advanced fuel cycle, 
that's $22 million, the fossil energy is $11 million, and the 
Office of Science has been focusing almost $60 million. That 
would also fall into the category of renewable energy.
    All of that is up some, almost $20 million from the request 
for last year. It is up $60 million, $70 million from 2006. 
It's a substantial increase.
    Senator Akaka. Yes. Well, I appreciate that.
    Let me close by asking you, and for the record, if you 
could provide what the budget proposals for the budget of 
hydrogen from non-renewable sources, and I--just for the 
comparison--I would really appreciate that.
    Secretary Bodman. From non-renewable sources?
    Senator Akaka. Yes. It's for comparison purposes. I just 
wanted some information about that.
    Secretary Bodman. OK. I'd be happy to do it.
    [The information follows:]

    Funding requested in the Department's FY 2008 budget for hydrogen 
production as part of the Hydrogen Fuel Initiative includes $12.45 
million for fossil-based activities. The request also includes $22.6 
million for nuclear-related hydrogen production. The remaining $272.5 
million in the request funds all other activities, including renewable-
based hydrogen production ($40.0M), basic science, hydrogen storage and 
fuel cell research and development, and technology validation.

    Senator Akaka. Yes.
    Thank you very much, Mr. Chairman.
    The Chairman. Senator Thomas.
    Senator Thomas. Two very quick ones.
    Thank you, Mr. Chairman.
    Mr. Secretary, the budget eliminates funding for the 
improvement to existing electric-producing plants. Half of our 
electricity, of course, is already produced there. Does this 
elimination sign that the DOE's giving up on improving the 
generation that's already in place?
    Secretary Bodman. No, it's just a question of where we 
wanted to put the moneys that we were spending this year. We 
haven't given up on improving the cost of producing electricity 
using current technologies.
    Senator Thomas. Well, if you took the money away, you're 
giving up the improvement budget, right?
    Secretary Bodman. In that sense, but I don't expect them to 
give it up. I don't expect them----
    Senator Thomas. I'm asking if you are going to help them. 
The answer is no.
    Secretary Bodman. The answer is no.
    Senator Thomas. Very specifically, the Rocky Mountain 
Oilfield Testing Center----
    Secretary Bodman. Yes, sir.
    Senator Thomas [continuing]. Is a Department facility, who 
runs and uses it. Every year, I've had to earmark it to get it 
in there. Do you intend to have money for that?
    Secretary Bodman. That is not in the budget, sir, no.
    Senator Thomas. So, what does that mean?
    Secretary Bodman. It means that it is not in the budget. It 
means that we do not feel that, at these prices, one needs to 
provide incentive for the oil and gas business.
    Senator Thomas. Well, of course, the fact is that the 
system generates its own funds that go into the Treasury.
    Secretary Bodman. Yes, sir.
    Senator Thomas. So, that it can support itself.
    Secretary Bodman. Well, then if it can support itself, then 
it can support itself, and it doesn't need money from me.
    [Laughter.]
    Senator Thomas. All right. I don't think that's a very good 
answer for a function within your Department.
    Secretary Bodman. I will be happy to look at that more 
carefully, and provide you a more thoughtful answer, that you 
would consider to be better than the one I just I just gave 
you.
    Senator Thomas. I think you have a good chance to make a 
better one, yes.
    Secretary Bodman. All right, sir.
    [Laughter.]
    Senator Thomas. Thank you.
    [The information follows:]

    Yes, the Department does request funding annually for the Rocky 
Mountain Oilfield Testing Center (RMOTC) in the budget process. 
However, the RMOTC budget request is not part of Fossil Energy's Office 
of Oil and Natural Gas request. Rather, the RMOTC budget request is 
included with the budget for the operation of Naval Petroleum Reserve 
No. 3 (NPR-3), which is part of the larger Naval Petroleum and Oil 
Shale Reserve (NPOSR) request. For FY 2008 we are requesting $10.110 
million for RMOTC and NPR-3 operations. Projected revenues for FY 2008 
are $4.4 million.

    The Chairman. Thank you, Mr. Secretary. Thank you very 
much. You've been very patient with us, and I think we've all 
asked the questions we can think of, if there are other 
questions that members have, or statements they want to put in 
the record, we would have them submitted by the end of 
tomorrow, and we appreciate your time, and your continued 
interaction with the committee.
    Secretary Bodman. Thank you very much, Mr. Chairman. I 
appreciate it.
    The Chairman. Thank you.
    [Whereupon, at 11:40 a.m., the hearing was adjourned.]

                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

    Responses of Secretary Bodman to Questions From Senator Bingaman

                 ENERGY POLICY ACT (EPACT 2005) FUNDING

    Question 1. EPACT 2005--Secretary Bodman, similar to last year our 
staff has completed their analysis of Department funding of the Energy 
Policy Act of 2005, would your staff please review this and make 
comments or corrections?
    Answer. The Energy Policy Act contains authorizations for a variety 
of initiatives. As the Administration noted in the July 15, 2005, 
letter to the conference committee on H.R. 6, the House and Senate 
versions include authorization levels that set unrealistic targets and 
expectations for future program-funding decisions. Furthermore, many of 
the activities in the FY 2008 Budget support more than one 
authorization. Therefore a one-to-one correspondence between the Budget 
and authorizations in the Energy Policy Act would necessarily be 
incomplete and a matter of judgment. In formulating the FY 2008 Budget, 
the Administration has proposed funding levels to advance its energy 
policy priorities and objectives and successfully implement EPACT 2005. 
The Administration will continue to plan for efficient implementation 
of EPACT 2005 through budget requests in future years.
    Question 2. Section 1001 EPACT Technology Transfer, P.L. 109-58: 
(a) Where is the technology transfer coordinator as mandated by law?; 
(b) Where is the 0.9 percent set aside to promote technology transfer 
as mandated by law?; and, (c) Where is the report as mandated by law?
    Answer. Under the direction of the Under Secretary for Science, the 
Department has a working group studying implementation of the statutory 
requirements of section 1001 of EPACT 2005, including alternatives for 
the coordinator position and supporting organizational structure. Based 
on input from the working group, the Department will be in a position 
to determine the steps to be taken under section 1001 including the 
preparation of an implementation plan.
    Question 3. Section 1102(c) EPACT, P.L. 109-58: 0.3 percent set 
aside for education--where is it as mandated by law?
    Answer. Our initial estimate of the Department's spending on 
science education and training programs indicated that we currently 
spend more than 0.3 percent of the Department's R&D budget on the 
education activities authorized in EPAct or previous authorities. We 
are currently in the process of quantifying our figures for both total 
Department funding for research, development, demonstration and 
commercial application activities, and total Department funding for 
authorized education activities. The Department is in the process of 
collecting this information from the laboratories and will provide 
those figures to you as soon as they are available.
    In addition, although Section 1102(a) is titled the ``Science 
Education Enhancement Fund,'' the legislative language does not 
establish a fund. DOE's General Counsel advises that the language does 
not require DOE to establish a fund. General Counsel advises that so 
long as DOE uses at least 0.3 percent of the applicable appropriated 
funds for the authorized education activities, the Department is in 
compliance with section 1102 of EPAct.

                          SOLID STATE LIGHTING

    Question 4a. Why did the Department keep it level at $19 million 
for the Fiscal Year 2007 amount when nearly every other conservation 
account increased?
    Answer. Over the last five years, the Department has steadily 
increased funding for SSL RD&D. Funding for solid state lighting 
research has more than doubled since FY 2003 and the Department's FY 
2008 budget request reflects the resources needed to maintain this 
activity at a high level of output. As authorized by EPACT 2005, we 
launched the Next Generation Lighting Industry Alliance and attracted 
world-class scientists to our cost shared R&D. We have also launched an 
ENERGY STAR product certification process which is on track to be 
completed by March 2007 resulting in SSL products receiving an ENERGY 
STAR label by fall of 2008.
    Question 4b. Solid State Lighting nearly accounts for 20 percent of 
our electricity needs
    Why did the Office of Science hold a workshop on solid state 
lighting and not develop a follow on initiative as it has done with 
other measures such as solar, hydrogen and nuclear energy?
    Answer. Nearly one dozen workshops have taken place or are planned 
in the ``Basic Research Needs'' series, including specialty workshops 
on the needs of the hydrogen economy, solar energy utilization, 
advanced nuclear energy, superconductivity, solid-state lighting, 21st 
century transportation fuels, electrical energy storage, earth sciences 
and sequestration of energy wastes, advanced materials for energy 
applications, and catalysis. Together, these workshops have helped 
clarify the distinct yet synergistic roles of the Office of Science and 
the DOE technology offices. Consistent with other budget priorities, 
the Office of Science is now considering ways to smoothly integrate the 
large number of workshop topics into the portfolio of the Basic Energy 
Sciences program. This is expected to occur over the next year or two.

                     NUCLEAR ENGINEERING EDUCATION

    Question 5a. For FY2007, 23 bipartisan senators signed a letter to 
the Senate Energy and Water Appropriations subcommittee supporting this 
important program.
    Why did you terminate a program that has trained undergraduate and 
graduate students since the Atomic Energy Act was implemented?
    Answer. In FY 2006, university engineering programs reached the 
highest level of enrollment in more than a decade. Increased enrollment 
allowed the Department to meet its goal set for the University Reactor 
Infrastructure and Education Assistance Program. The Administration has 
not requested funding for the University Reactor Infrastructure and 
Education Assistance program because the program's recruitment targets 
have been met, and DOE believes that limited budget dollars are better 
spent conducting essential research at universities. In this vein, the 
Office of Nuclear Energy continues to provide significant funding for 
university research and development. Specifically, the FY 2008 budget 
request includes approximately $62 million for university research and 
development ,which is a 21% increase over the FY 2007 request. This 
money goes to fund research and development at universities to 
complement DOE's Advanced Fuel Cycle Initiative, Generation IV, and 
Nuclear Hydrogen Initiative programs.
    Question 5b. Do you believe the Department has a unique 
responsibility under the Atomic Energy Act in acting as a steward for 
training nuclear engineers and helping maintain university training 
reactors?
    Answer. Section 31a of the Atomic Energy Act states, in pertinent 
part, that ``[t]he Commission is directed to exercise its powers in 
such manner as to insure the continued conduct of research and 
development and training activities in the fields specified . . . by 
private or public institutions or persons, and to assist in the 
acquisition of an ever-expanding fund of theoretical and practical 
knowledge in such fields.'' Accordingly, DOE has a stewardship 
responsibility in the nuclear energy field and this is why the Office 
of Nuclear Energy (NE) continues to support Nuclear Engineering and 
related university programs. The scholarship and grant program has been 
replaced with a competitive, program sponsored research program; the 
Nuclear Energy Research Initiative. In this approach, support for 
universities can increase as nuclear energy programs grow and 
universities will be directly contributing to NE successes.
    Question 5c. I would like the Departments comments to the six 
recommendations found in recent American Nuclear Society's report 
``Nuclear Human Element''.
    Answer. With regard to the first recommendation DOE believes that a 
detailed Nuclear Science and Engineering workforce study to determine 
the aggregate demand for nuclear engineering graduates over the next 5-
10 years would be useful, but should be undertaken by a non-Department 
of Energy entity funded by the nuclear industry. A comprehensive study 
of the workforce has not been done previously, although a few studies 
have been conducted for segments of the nuclear industry.
    The second recommendation concerning the revision of the University 
Program along the lines of the ``Chicago Framework'' to make it more 
research driven, mission oriented and peer-reviewed is precisely what 
the Department plans to do within the Nuclear Energy Research 
Initiative program. The Chicago meeting was sponsored by NE to gather 
the collective input of the nuclear community and we have taken the 
recommendations offered in Chicago and plan to include them in a 
revised and expanded Nuclear Energy Research Initiative program.
    DOE believes that the third recommendation for maintaining a 
separate line item for University Programs can be better accomplished 
by imbedding university research and infrastructure to support that 
research within our mission related research and development programs 
such as Advanced Fuel Cycle Initiative/Global Nuclear Energy 
Partnership, Generation W and the Hydrogen Initiative.
    The reports fourth recommendation that Congress increase funding 
commensurate with the levels authorized under the Energy Policy Act of 
2005 may be achieved over time as NE's nuclear research programs grow. 
NE's funding for university research will exceed $50 million in fiscal 
year 2007 and would be in excess of $60 million in our proposed fiscal 
year 2008 budget.
    The fifth recommendation that Congress should enact and fund the 
Department's Office of Science-administered ``Nuclear Science 
Education'' program included in S. 2127, the ``PACE Energy Act,'' and 
S. 3936, the ``National Innovation Competitiveness Act,'' may 
duplicate, in the case of nuclear engineering, many of the initiatives 
under the Nuclear Energy Research Initiative program. Also, the Office 
of Science already funds research activities at laboratories and 
universities in areas related to the Department of Energy's missions. 
Those activities receiving funding have been through a robust proposal 
and peer-review process, and such support results in high quality 
science that in turn attracts outstanding students to the field. The 
model used by the Office of Science is consistent with the 
recommendations resulting from the Chicago Framework.
    DOE disagrees with the final recommendation to have an interagency 
working group on the Nuclear Science and Engineering convened that 
would provide high-level guidance on the overall structure of the NE's 
University Program, as well as the technical thrusts of its 
solicitations. NE intends to target university efforts towards its 
specific research and development needs that are determined by other 
merit based reviews involving the entire Department and other agencies.

                     ADVANCED FUEL CYCLE INITIATIVE

    Question 6a. The administration proposes a 400 percent increase in 
the AFCI program over FY 2006 appropriated levels which the Department 
is currently operating under yet we have not any form of programmatic 
milestones and timelines for the program as a whole.
    When will the Department be able to provide the Committee with 
cost, scope and schedule data so staff can track the program no 
differently than we track the Waste Treatment Plant or the National 
Ignition Facility?
    Answer. The Department is developing a Global Nuclear Partnership 
Program Management Plan (GNEP PMP) that outlines high-level 
programmatic milestones, cost schedules, and timelines for GNEP. In 
addition, DOE plans to further engage industry to provide additional 
input for consideration leading, to an informed Secretarial decision by 
June 2008. We anticipate that the plan will be available in time to 
inform a Secretarial decision by June 2008.
    Question 6b. When will the Department provide an end-to-end cost 
and time to completion of the three phases of the project: (1) the 
advanced fuel treatment center; (2) reprocessing (recycling) 
demonstration; and, (3) the breeder (burner) reactor?
    Answer. The Department has developed preliminary milestones and 
timelines based on the GNEP Technology Development Plan and industry 
engagement on both a nuclear fuel recycling center (sometimes referred 
to as the Consolidated Fuel Treatment Center (CFTC) (reprocessing)) and 
the advanced recycling reactor (Advanced Burner Reactor) to develop a 
better end-to-end cost and timetable to complete these projects. 
Currently, the plan is to seek industrial participation to provide a 
conceptual design study and a business case analysis. Under the current 
schedule, the Department anticipates having the results of these 
efforts from industry in time to inform a Secretarial decision by June 
2008.
    For the Advanced Fuel Cycle Facility (AFCF), the Department plans 
to use its national laboratories and industry to develop a conceptual 
design level cost, scope, and schedule in time to inform a Secretarial 
decision by June 2008.
    Question 6c. Nominally, the physics of a reprocessing/fast reactor 
require one fast reactor for every three light water reactors. We have 
not even commercially built a generation III+ reactor in the United 
States. Is it reasonable to assume industry will be able to build 
commercial fast reactors when they have not even demonstrated the 
economics of generation III+ reactors?
    Answer. Yes, it is reasonable to believe industry can build 
commercial fast reactors as there are mature domestic and international 
designs of fast reactors that could be modified to meet GNEP 
requirements. Information provided as input to the Department's request 
for Expressions of Interest indicated that industry could have a fast 
reactor that meets the GNEP requirements operational in the 2020-2025 
timeframe. France, Japan, and Russia have all announced their intention 
to have commercial fast reactors in operation in the 2020-2025 
timeframe.
    Contributions through international collaborations paired with the 
advanced modeling and simulation tools, currently in development, could 
greatly decrease the time needed to improve and revise reactor designs. 
Those efforts are targeted at enabling commercial fast reactors to be 
cost competitive with commercial light-water reactors for electricity 
generation. The Department believes that while economics will drive 
industry's decision on construction and operation of fast reactors, 
once first of a kind costs are spent, the business case for fast 
reactors that consume transuranic elements from spent fuel can make 
them competitive with light water reactors.
    Question 6d. One of your department's analysts, recently presented 
a paper in which he calculated that the cost of implementing the GNEP 
program over a 100-year period would be $2.7/MWh greater than the cost 
of direct disposal for a baseline scenario. This would work out to a 
cost increment of hundreds of billions of dollars over a 100-year 
period. Overall, he concluded that ``most of the scenarios presented 
indicate a cost advantage for direct disposal,'' with the highest 
increment being $4/MWh.
    Given that no commercial entity will pursue construction of any 
GNEP facility with such a large cost penalty compared to the once-
through cycle with direct disposal, government subsidies (or 
``incentives'') will be required to attract the interest of commercial 
entities in GNEP. Do you support the use of such subsidies, or are you 
will to let the market decide whether GNEP is viable on a level playing 
field?
    Answer. DOE's goal is to encourage the nuclear industry to become 
fully engaged in GNEP and provide us with credible business plans or 
models that support the notion of a private or government-private 
partnership to recycle SNF.
    Question 6e. On your stated goal of no separated plutonium, in the 
Notice of Intent published in the Federal Register in January, it is 
stated that ``DOE envisions that a nuclear fuel recycling center and an 
advanced recycling reactor could begin operation before DOE has fully 
completed its research and development of the transmutation fuel 
recycling at an advanced fuel cycle research facility. During this 
interim period, DOE may use a nuclear fuel recycling center to separate 
light-water reactor SNF and support the fabrication of fast reactor 
driver fuel which would be consumed in the advanced recycling reactor. 
This fuel could be made of uranium and plutonium, but would likely not 
contain other transuranics.''
    To produce conventional fast reactor driver fuel, the ``nuclear 
fuel recycling center'' would have to engage in a process very similar 
to PUREX to produce separated plutonium. The fuel elements would 
necessarily contain more than 10% plutonium, and therefore would be 
Category I items according to DOE's material categorization. Therefore, 
the nuclear fuel recycling center and the advanced recycling reactor 
would both be Category I facilities.
    Assuming that the throughput of the nuclear fuel recycling center 
is 2000 MT per year, it would separate 20 MT of plutonium annually, 
roughly doubling the current plutonium separation worldwide.
    Given these considerations, how can this GNEP proposal meet your 
nonproliferation goal?
    Answer. With regard to GNEP non-proliferation goals, GNEP plans to 
use separations technology different from PUREX that does not result in 
separated plutonium. In the long term, the vision is to move the world 
away from Light Water Reactor Mixed-Oxide fuel and replace it with an 
advanced ``actinide fuel'' which has a mixture of uranium and 
transuranic elements and therefore can only be used in fast reactors 
which would be located in Fuel Cycle States.
    Question 6f. FY 2008 budget includes work on a decision package for 
you to announce a public-private partnership for building a nuclear 
fuel-recycling center and a prototype advanced recycling reactor. When 
in 2008 will this be ready? Will this plan propose building just two 
facilities?
    Answer. The Department is planning to support a Secretarial 
decision in June 2008 on the path forward for GNEP. To support that 
decision, the Department is planning to engage industry on conceptual 
design and engineering analysis for a nuclear fuel recycling center and 
an advanced recycling reactor. At the same time the Department is 
continuing conceptual design efforts at the national laboratories for 
an advanced fuel cycle research facility to better understand cost and 
schedule. Consequently, the Secretarial decision could propose three 
facilities. The Secretarial decision may propose any of a number of 
paths to meet the goals and objectives of GNEP.
    Question 6g. You have already provided funds for 11 potential sites 
for building GNEP facilities. Have you provided additional funds to 
these communities in your FY08 budget?
    Answer. The siting studies called for in the FY 2006 Energy and 
Water Development Conference Report will be completed with FY 2007 
funding and therefore DOE did not propose using any of the FY08 budget 
funding in these communities.
    Question 6h. How far along is GNEP in completing bilateral 
agreements with other nations on global nuclear cooperation?
    Answer. The first GNEP bilateral Action Plan between the United 
States and the Russian Federation was completed and submitted to 
Presidents Bush and Putin on December 15, 2006. The first U.S./Russian 
GNEP workshop is scheduled for March 13-14, 2007, in Russia. GNEP 
bilateral Action Plans between the United States and Japan and the U.S. 
and France are being discussed with a goal of completion in 2007.
    Question 6i. You have proposed $10 million for NNSA to begin work 
on GNEP. What is this for?
    Answer. The $10M identified for NNSA would support key GNEP 
nonproliferation activities including work on advanced safeguards and 
monitoring and small proliferation-resistant reactors. NNSA would 
participate in the design and development of a nuclear fuel recycling 
center, an advanced recycling reactor, and an advanced fuel cycle 
research facility. NNSA would also support international 
nonproliferation activities in a manner that is consistent with U.S. 
policy.
    Question 6j. Do you believe that advanced fuel cycle technologies 
reducing volume, thermal output and radio-toxicity will allow Yucca Mt. 
to accommodate all of the spent fuel generated in the U.S. this 
century? (This assertion came from their new brochure ``Recycling Spent 
Nuclear Fuel'' pg. 2)
    Answer. Yes, the Department believes that the recycling of SNF 
envisioned by GNEP could reduce the volume, thermal output and 
radiotoxicity of waste requiring disposal in a geologic repository, 
such as Yucca Mountain, and thereby significantly defer the time at 
which a second repository would be needed. High-level waste comprises 
only approximately 5% of the SNF that requires disposal in a geological 
repository. GNEP would separate the 5% of the SNF and place it in a 
form acceptable for disposal in a geologic repository.

                            OIL AND GAS R&D

    Question 7. For the third year in a row the Department proposes to 
zero out oil and gas research and development when the price of oil and 
gas is climbing and 90 percent of all domestically produced oil and gas 
in the lower 48 is through small independent producers.
    Question 7a. Does the Department believe zeroing out these programs 
will not affect the small independent producers who cannot afford large 
research programs like the majors?
    Answer. Oil and gas are mature industries and both have every 
incentive, particularly at today's prices, to enhance production and 
continue research and development of technologies on their own. There 
is no need for taxpayers to subsidize oil companies in these efforts. 
Although independent operators may not fund technology development 
directly, the service industry that supplies them with equipment funds 
significant development of applicable technologies. The Department 
expects the service industry to continue to provide technological 
innovations for use by major and independent producers.

                                HYDROGEN

    Question 8. The administration says in their budget request they 
will complete the $1.2 billion commitment to the Hydrogen Program yet 
it does not have final achievable goals until 2014 to field a 
commercially acceptable fuel cell vehicle--where does this leave you 
all meeting this 2014 milestone after only five years of funding?
    Answer. While the President's funding commitment was for five years 
(FY 2004--FY 2008), the Administration anticipated continued support in 
line with meeting long-term goals. The Hydrogen Fuel Initiative is on 
track to develop the critical technologies that will enable hydrogen 
and fuel cell technology readiness in 2015 and the potential for 
commercial viability by 2020 (i.e., fuel cell vehicles and the hydrogen 
infrastructure to support them). Commercialization is entirely 
determined by the private sector participants, who, under partnership 
agreement with the Department, have committed to commercialize 
technologies as soon as a business case can be made.

                     WEATHERIZATION AND LIHEAP CUTS

    Question 9. Mr. Secretary--I am very concerned about the 
Administration's $98.5 million budget cuts for the low income 
weatherization program (FY08 $144 million compared to $245.5 
appropriated in 2006) We had this conversation last year and I regret 
that we are having it again. Not only are federal funds being reduced 
but the cut will result in the loss of $30 to $50 million in matching 
funds from states, utilities and non-profits. The National Association 
of State Community Services Programs estimates that approximately 
40,000 low-income families will be denied weatherization assistance if 
this cut is approved.
    And when you combine the DOE cuts with the Administration's 
proposal to cut (HHS) LIHEAP funding from $3.2 billion in FY 2006 to 
$1.8 billion you are truly sending a message that low-income families 
cannot expect any help in controlling their energy costs and saving 
energy.
    How do you justify this 41% reduction in the weatherization 
program?
    Note: Last November, you, along with Senator Domenici sent a letter 
to Bodman and Portman expressing your opposition to a proposed transfer 
of the weatherization program from DOE to HHS (to be managed along with 
the LIHEAP program). Such a transfer would likely have resulted in 
lower aggregate funding for both programs. OMB stopped the transfer 
proposal but it appears they are going ahead with the funding cuts).
    Answer. Weatherization is the largest-funded program in EERE, at 
the expense of other research, development and deployment programs. In 
order to address this country's energy challenges with the urgency it 
deserves, 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, 
albeit an important one.
    Moreover DOE is not seeking to transfer the Weatherization 
Assistance Program to the Department of Health and Human Services. This 
information is included in a letter sent February 6, 2007 responding to 
your previous inquiry.
    In addition, the expected benefits of each EERE program are shown 
in our Congressional justification materials. A summary is present on 
page 31 and 32 of Energy Supply and Conservation (Volume 3). The table 
shows that the Weatherization and Intergovernmental Program has the 
lowest or near lowest expected benefits in all three benefit categories 
(consumer expenditure savings, carbon emissions reductions, and avoided 
oil imports). Details of our modeling efforts that produce these 
results will be available online by March 31, 2007 at http://
www1.eere.energy.gov/ba/pba/gpra.html.

                            IMPACT OF THE CR

    Question 10. May I have your assurance that, even as we debate and 
I hope defeat, the proposed FY2008, you will maintain Weatherization 
funding at the FY06 level in the Continuing Resolution and ensure that 
this program remains the valuable energy efficiency deployment program 
that it should be?
    Answer. Under the Continuing Resolution for FY 2007, the Department 
will carefully weigh the costs and benefits of allocating resources to 
Weatherization and other programs in the EERE portfolio.

                       EPACT EFFICIENCY PROGRAMS

    Question 11. Mr. Secretary, I was pleased to see that you have 
requested some additional funding for building technologies, including 
building energy codes and appliance efficiency standards.
    Do you intend to implement the EPACT provisions relating to 
building efficiency in FY2008? For example sec 124--providing grants to 
states to set up energy efficient appliance rebate programs, sec 125 
for energy efficient public buildings, and sec 128 providing incentives 
to the states to adopt and enforce building codes?
    As you know, the energy used to operate the buildings in the US 
accounts for about 40 percent of total annual energy consumption and 
43% of GHG emissions. The buildings we are constructing today will be 
around for another 50 years. The most up-to-date model energy codes 
have been adopted in only a handful of states (Residential: WA, CA, UT, 
IA, LA, OH, PA. Commercial: WA, OR, CA, UT, IA, IL, OH, PA, VT, ME, VA, 
NC, GA, FL).
    I believe we should have a sense of urgency about improving 
building efficiency. This is an area where federal funds for outreach 
and training, as well as technology transfer can really make a 
difference.
    Answer. The Department is implementing numerous activities that are 
consistent with EPACT authorities identified in your question. 
Specifically, the Department has many activities which provide both 
financial and technical assistance to state and local government to 
accelerate the adoption of energy efficient technologies and practices, 
including the State Energy Program (SEP) which provides financial 
assistance through formula and competitive grants to States. As you 
mentioned, outreach, training, and technology transfer are essential to 
accelerating market transformation. Consistent with that approach, the 
Department has requested funding in FY 2008 for building energy codes 
program which will provide both financial and technical assistance to 
states to adopt and implement energy efficient building codes.
    Question 12. Please provide for the record a summary of DOE's 
activities to improve residential and commercial building efficiency in 
new and existing buildings.
    Answer. The Buildings Technologies Program (BT) researches and 
deploys new technologies to make homes and commercial buildings more 
affordable, energy efficient, and better performing. It is implementing 
an integrated and aggressive plan required to achieve cost-neutral Zero 
Energy Homes by 2020, and Commercial Buildings by 2025. This plan also 
includes the acceleration of market adoption of these technologies and 
practices.
    The Department is accelerating the adoption of clean and efficient 
domestic energy technologies through such activities as ENERGY STAR, 
Rebuild America, and Building Energy Codes. ENERGY STAR activities 
work to remove technical, financial and institutional barriers to the 
widespread awareness, availability, and purchase of highly efficient 
appliances, compact fluorescent lighting products, windows and 
otherproducts. DOE ENERGY STAR is beginning to encompass advanced 
technology; for example, DOE recently issued a solid state lighting 
specification for ENERGY STAR. The Building Technologies Program 
jointly administers, with EPA, Home Performance with ENERGY STAR 
energy efficient home contracting project for existing homes. This 
project assists existing home owners make their homes approximately 30% 
more energy efficient through partnerships with state energy offices, 
utilities and non-governmental organizations. The project has completed 
about 22,000 homes thus far.
    Our Rebuild America activities remove technical, financial and 
institutional barriers to the widespread awareness, availability and 
application of highly efficient buildings including building design, 
construction, retrofit and operations practices in commercial buildings 
such as schools and hospitals. The Building Energy Code activities will 
support the development and implementation of energy efficient building 
codes which increases the construction of more energy efficient 
buildings. Recently the Department issued building energy codes that 
are 30% more stringent than American Society of Heating, Refrigeration 
and Air Conditioning Engineers (ASHRAE) 90.1-2004 and the International 
Energy Conservation Code (IECC) (2004). The Department is supporting 
efforts to encourage states and localities to adopt these aggressive 
higher levels.
    The Department of Energy's research activities to improve 
efficiency in new residential building is coordinated through the 
Building America Program. These activities support efforts to develop 
strategies to integrate solar energy technologies and practices along 
with energy efficient designs and technologies into buildings with the 
goal of designing net zero energy buildings. To date, the. Building 
America Program has researched and developed Best Practices for 30% 
whole house energy savings in new homes for all U.S. climates evaluated 
against The Building America benchmark (Building America Benchmark, 
version 3.1, November 2003, National Renewable Energy Laboratory). 
Building America also provides research information for the ENERGY 
STAR new homes program. These activities have resulted in more than 
30,000 research homes and over 700,000 high efficiency homes being 
built in the past 10 years.
    To improve the efficiency of commercial buildings, the Building 
Technologies Program is partnering with ASHRAE to develop Advanced 
Energy Design Guides for new commercial buildings that are 30% more 
efficient than the ASHRAE 90.1-2004 building code. We have completed 
the guides for small offices and retail stores. Advanced Energy Design 
Guides for schools, warehouses and lodging will be completed in FY 2007 
and FY 2008.
    Question 1. General idea: Why isn't DOE following its own policy of 
integrating cleanup with restoration? DOE's guidance regarding natural 
resource damage assessments, (Damage Assessment and Environmental 
Restoration Activities at DOE Facilities, October 1993, pp.40-41), 
states, ``Whether a decision to prepare an NRDA [natural resource 
damage assessment] is made or not, the information derived from 
properly conducting the ecological risk assessment portion of the RI/FS 
[remedial investigation/feasibility study] which is part of cleanup 
process] can and should be used to address NRDA concerns to improve 
remedial action decisionmaking.'' How is DOE currently using the NRDA 
process at LANL to improve remedial action decisionmaking?
    Answer. The state regulator (New Mexico Environment Department) has 
issued a Consent Order (March, 2005) for cleanup activities at LANL 
that requires the Department to evaluate releases of hazardous 
constituents and to cleanup up those releases that pose a health risk. 
This Consent Order requires the Department to extensively sample the 
environment to identify contaminants and determine their impacts 
primarily through risk assessment techniques, including ecological risk 
assessments The Consent Order has been described by the New Mexico 
Environment Department as a comprehensive ``fence-to-fence'' legally 
binding order. The Department believes that the extensive sampling and 
cleanup action underway at LANL under this order may reduce or 
eliminate the potential for natural resource damages in the vicinity of 
LANL. Further, the Department believes that once sufficient data are 
collected under the Consent Order, it would be appropriate to conduct a 
Natural Resource Damage Assessment (NRDA). The Department has entered 
into discussions with the State of New Mexico, Native American Pueblos, 
and the Federal trustee representatives to form a Natural Resource 
Trustee Council for LANL. The purpose of the Council would be to ensure 
that protection and restoration of natural resources are integrated 
throughout the cleanup and to determine what assessments or sampling, 
if any, may be needed in addition to that conducted under the Consent 
Order. The Department intends to follow the integrated approach during 
the cleanup effort at LANL.
    Question 2. General idea: Why isn't DOE taking advantage of cost 
savings that result from integrating cleanup and restoration? This 
policy also states that integration of NRDA and remediation activities 
should lower the total costs of a hazardous substance release to the 
public (p.43). For example, integration should lead to,the restoration 
of natural resource services sooner than a sequential approach, whereby 
natural resource damage are addressed only after the RUFS process is 
completed. Sooner restoration means less total damages, since NRDA 
damages accrue over time. Also, integrating the two processes will help 
ensure the selection of remedial actions that reduce the potential for 
natural resource damages, thereby minimizing the United States' 
liability for NRDA. How is DOE taking advantage of these potential cost 
savings at LANL?
    Answer. The purpose of the DOE Policy of integrating the cleanup 
and restoration is to assure that there is enough sampling and analyses 
done so that the selected remedy will be effective, and will meet all 
requirements. The cost savings that is referred to, is the cost that 
would be incurred, if the final remedy were not effective, based on 
incomplete (or inappropriate) sampling and analysis. The ongoing 
sampling and analysis programs that the Department funds at Los Alamos 
National Laboratory are designed to assure that the ``nature and 
extent'' of contamination is fully understood, and informs the remedy 
selection. In 2005, after a lengthy negotiation process, the Department 
entered into an Order on Consent (Consent Order) with the State of New 
Mexico, under the Resource Conservation and Recovery Act (RCRA). This 
Order is very prescriptive, regarding sampling and analyses, and does 
meet the intent of DOE's policy to integrate cleanup and restoration. 
Because the cleanup is under RCRA authority, the state of New Mexico is 
the regulator, not the Environmental Protection Agency, which has lead 
regulatory authority under Comprehensive Environmental Response 
Compensation and Liability Act (CERCLA) cleanups. DOE believes that 
once sufficient data has been collected under the Consent Order, it 
would be appropriate to conduct a Natural Resource Damage Assessment 
(NRDA). It appears that an NRDA would be premature at this time.
    Question 3. General idea: Is it possible that the cost savings from 
integration would cover the cost of NRDA, thereby conserving taxpayer 
dollars? It is my understanding that conducting a NRDA process is 
generally less expensive than conducting the remediation process, often 
by orders of magnitude. How much money does DOE estimate will be needed 
to conduct full remediation at LANL, and how does that compare to how 
much it will cost to conduct NRDA? Couldn't the cost savings from 
integration of the cleanup and restoration processes cover the cost of 
the restoration process?
    Answer. The Natural Resources Damage Assessment (NRDA) process 
refers to the process of developing the correct sampling and analysis 
program that, in turn, would determine the extent of damages to natural 
resources, and would inform the scope for additional natural resource 
damage restoration. At the Los Alamos National Laboratory, the 
requirements for sampling and analyses are prescribed in the 2005 Order 
on Consent. The current planning estimates that the lifecycle cost of 
the LANL cleanup will be in excess of 1 billion dollars. The cost of 
the NRDA, if needed, cannot be estimated at this time.

                      ORPHANED AND ABANDONED WELLS

    Question 4. Does the President's budget include funding for this 
important program? If not, why not?
    Answer. The Department of Energy has not requested funding for 
section 349 of EPACT. The Departments of the Interior and Agriculture 
have primary responsibility for onshore oil and gas permitting on 
Federal land and are responsible for ensuring that industry complies 
with permit stipulations, including the proper plugging and abandonment 
of wells, and for cleaning up wells where the responsible party cannot 
be identified.

                            NUCLEAR MEDICINE

    Question 5. For nearly 60 years, the Department of Energy has 
funded essential, fundamental nuclear medicine research. There is no 
funding elsewhere for this research. However, my understanding is that 
under this Administration there has been a significantly reduced level 
of funding. As you know, we anticipate providing more funding under the 
CR for the Office of Science.
    Please tell me about the availability of funding for continuation 
or transition of this vital research.
    This program has an amazing track record and if the Department of 
Energy does not allocate funding for this research in FY 2007 valuable 
research will not be conducted, and we will lose the researchers we 
need to ensure breakthroughs continue.
    Answer. The Department appreciates your interest in nuclear 
medicine research. Currently, with the help of the National Academy of 
Science, the Department and the National Institutes of Health are 
conducting a study on ``State of the Science in Nuclear Medicine'' to 
gain perspective on the future of this program.

                    INDIAN ENERGY--TITLE V OF EPACT

    Question 1a. Indian lands contribute 11% of the nation's onshore 
oil and natural gas production, and 11% of its coal production. Indian 
lands also contain a large number of untapped renewable energy 
opportunities. In recognition of this, congress established an Office 
of Indian Energy at DOE in Title V of the Energy Policy Act. Yet, the 
2008 budget provides no funding for this Office. Instead, it merely 
continues a preexisting tribal energy program at a reduced funding 
level ($1.0 million proposed cut).
    During last year's budget process you indicated that DOE was 
searching for a suitable candidate to run the office. A year later, 
there is no indication that DOE is attempting to comply with Title V of 
EPACT. Is there a timetable for getting the Office of Indian Energy up 
and running?
    Answer. Since last year, the Department did meet with several 
potential candidates for the position of Director of the Office of 
Indian Energy Policy and Programs. However, as I have testified there 
are a number of requirements and provisions in the Energy Policy Act of 
2005 (EPACT) that we have not funded because they are lower priority 
than activities included in the President's Budget, and establishing 
the Office of Indian Energy Policy and Programs as directed under Title 
V is one of them.
    While there is no ``timetable,'' we have taken several steps to 
properly manage and monitor Tribal issues at the Department in a 
consistent way. The Department has solicited input from interested 
tribal governments and tribal organizations on how it is envisioned 
that a new office would interact with the DOE missions, and how this 
office can improve on the current organizational structure. In 
addition, to assist us in coordinating our Tribal policies among 
various DOE programs, we have created a Tribal Energy Steering 
Committee comprised of representatives from all major program offices 
to address cross cutting Tribal issues.
    Question 1b. You also represented last year that DOE was 
establishing a Tribal Energy Steering Committee. Has this group had any 
effect in helping Tribes access support from other DOE energy programs 
to promote Indian energy development and help increase electricity 
access on Indian lands?
    Answer. The Tribal Energy Steering Committee (``Committee'') has 
served as an important vehicle to address cross cutting Tribal issues. 
Composed of representatives from all of the major program offices that 
have interactions with tribes, the Committee has improved the 
communications about Tribal issues within the Department. This has 
allowed program offices to work together to assist tribes in a way that 
has not happened before. For example, the Committee worked together to 
provide technical assistance to a Tribal Colleges and Universities 
symposium. Also, the Committee worked with each program office's tribal 
constituents to ensure that all interested tribes had an opportunity to 
respond to drafts of the EPACT section 1813 report on energy rights-of-
way across tribal lands. The Committee has also been an important 
sounding board to evaluate the effectiveness of the Department's 
American Indian and Alaska Natives Tribal Government Policy in order to 
ensure that the Department is properly carrying out its obligations in 
working with sovereign Indian nations. Lastly, because several tribal 
organizations have expressed an interest in meeting with the Committee 
to present tribal perspectives on issues of mutual interest, we will be 
making arrangements to meet with these tribal organizations.
    Question 2. Section 979 of EPACT directs DOE to establish a 
research, development, and demonstration program that helps to address 
energy and water related issues affecting communities across the 
nation. Is there any funding for implementing Section 979 in the FY2008 
budget? If not, why not? Please describe in detail any current activity 
within DOE related to the subject matter of Section 979, which may be 
ongoing as a result of funding provided in prior years.
    Answer. The Department of Energy is evaluating options for both the 
management and implementation of Section 979 of EPACT and as such, the 
FY2008 budget does not contain funding for this program.
    In FY 2005, in accordance with Congressional direction, the 
Department provided $12,400,000 to support a research and demonstration 
program to study energy-related issues associated with water resources 
and sustainable water supplies for energy production, including 
$1,984,000 to initiate planning and creation of a water-for energy 
technology roadmap; $3,472,000 for water technical assistance; 
$2,976,000 to continue the arsenic removal research in conjunction with 
the American Water Works Research Foundation; and $3,968,000 in support 
of desalination research consistent with the Water Purification 
Technology Roadmap in partnership with the Bureau of Reclamation. The 
Department also provided $496,000 for a report to Congress on the 
interdependency of energy and water focusing on the threat to national 
energy production resulting from limited water supplies, utilizing the 
multi-laboratory Energy-Water Nexus Committee. This report was sent to 
Congress on January 12, 2007.
    In addition, in response to the FY 2006 Congressional direction 
accompanying the FY 2006 Energy and Water Development Appropriations 
Act, the Department funded $12,375,000 for energy and water resource 
management, including: $6,930,000 for advanced concept desalination and 
arsenic treatment in partnership with American Water Works Research 
Foundation and WERC: A Consortium for Environmental Education and 
Technology originally known as the Waste-management Education and 
Research Consortium; $1,980,000 for water supply technology 
development; and $3,465,000 for water management decision support 
including demonstration programs in partnership with the New Mexico 
Office of the State Engineer and international water partnerships.

                      STRATEGIC PETROLEUM RESERVE

    Question 1. The most serious recent oil disruption was during 
Hurricanes Katrina and Rita, and the more pressing shortages were for 
refined product rather than crude oil. Could you explain how storing 
more crude oil in the hurricane-prone Gulf Coast makes our supply more 
secure?
    Answer. When Hurricane Katrina came ashore on the Gulf Coast, it 
closed refineries, terminals, pipelines, and knocked out electrical 
power all along the coast. The first problem to surface was the 
inability of still operable refineries located throughout the South and 
Midwest to obtain feedstock. The Strategic Petroleum Reserve was able 
to satisfy the shortage by direct loans of oil to refiners from our 
Bayou Choctaw facility. However, that site has a small inventory and 
has a very limited drawdown capability. The new Reserve site in 
Richton, Mississippi is located about 85 miles inland from the Gulf, 
outside of the reach of truly devastating hurricanes. The design of the 
site provides for a pipeline connection with Capline, the large 
diameter pipeline delivering oil to refineries along the Mississippi 
River throughout the Midwest. The connection will be north of the area 
where electric power would be expected to be seriously disrupted by 
hurricanes. Furthermore, the site will have a direct pipeline linkage 
with a large refinery in Pascagoula and provide marine distribution to 
service the refineries southeast of New Orleans which are now 
vulnerable to crude oil disruptions.
    Question 2. Have you conducted a study to determine what kind of 
price effect we should expect from a doubling of the reserve?
    Answer. We have not conducted a study on the price effect of 
doubling the Strategic Petroleum Reserve. We anticipate filling the 
Reserve at about 100,000 b/d and this rate should have a negligible 
effect on market prices.
    Question 3. Has the Department considered having an ``escape 
value'' so that the reserve would not be filled during times of 
escalating oil prices, potentially adding further upward price 
pressure?
    Answer. The Department intends to comply fully with the acquisition 
procedures for the Strategic Petroleum Reserve oil required by Section 
160 of the Energy Policy and Conservation Act, 42 U.S.C. 6239, as 
amended by Section 301(e) of the Energy Policy Act of 2005, 42 U.S.C. 
6240. Those procedures, contained in a Final Rule issued on November 8, 
2006 (71 F.R. 65376), were written to assure that the Department gives 
due consideration to virtually every aspect of markets before it begins 
an acquisition. We take very seriously the proviso of section 301(e) of 
the Energy Policy Act of 2005 that the Department should minimize the 
costs to the Department of the Interior and the Department of Energy 
and avoid adversely affecting current and future prices and supplies, 
and inventories of oil.
    Question 4. Has the Department considered offering any guidelines 
on when reserve oil should be released?
    Answer. The authority to drawdown and sell oil from the Strategic 
Petroleum Reserve is reserved to the President upon a finding of a 
``severe energy supply interruption'' and is not delegated. The Energy 
Policy and Conservation Act defines ``a severe energy supply 
interruption'' and no President has constrained his discretion to 
interpret the definition to respond to any specific event. However, the 
Administration has been very clear that it will not use the Reserve to 
control oil prices.

    Responses of Secretary Bodman to Questions From Senator Domenici

                     SOLID STATE LIGHTING RESEARCH

    Question 1. As you know, Sandia National Laboratories is a world 
leader in solid state lighting technologies. In May 2006, the Office of 
Science released a report entitled Basic Research Needs for Solid-State 
Lighting which was based on a workshop sponsored by Basic Energy 
Sciences. The report notes in its executive summary that solid state 
lighting has the potential to drastically reduce energy use for 
producing artificial light, and that achieving efficiencies approaching 
100 percent are conceivable. However, several ``grand challenges'' will 
require basic research to achieve this potential in reality.
    Why then does the FY 2008 budget include no funding for basic 
research in solid-state lighting?
    Answer. The FY 2008 budget includes increases in the Materials 
Sciences and Engineering subprogram in the physical behavior of 
materials, in synthesis and processing, and in materials chemistry that 
address fundamental condensed matter and materials physics underpinning 
aspects of solid-state lighting. In particular, there is funding for 
new activities in inorganic and organic light-emitting materials, with 
emphasis on novel materials or concepts, including nanophotonics and 
other nanoscale material assemblies and architectures; in the design 
and synthesis of nanoscale materials; and in the design and synthesis 
of biomolecular organic materials for electronic applications. The 
total requested for these activities is $6,000,000.

                    TECHNOLOGY TRANSFER COORDINATOR

    Question 1. Section 1001 a the Energy Policy Act of 2005 directs 
the Department to appoint a technology transfer coordinator, and to 
create a technology commercialization fund using 0.9 percent of the 
amount made available to the Department for applied energy research, 
development, demonstration, and commercial application. The section 
also requires the Department to produce a report on its plan to execute 
these requirements, along with regular updates on its progress in this 
area.
    When will the Department appoint a technology transfer coordinator 
as required by the statute?
    Answer. Under the direction of the Under Secretary for Science, the 
Department has a working group studying implementation of the statutory 
requirements of section 1001 of EPACT 2005, including alternatives for 
the coordinator position and the supporting organizational structure. 
Based on input from the working group, the Department will be in a 
position to determine the steps to be taken under section 1001 and 
prepare an implementation plan for my consideration.
    Question 2. Why does the FY 2008 budget fail to describe how the 
Department will and [sic] use the Technology Commercialization Fund?
    Answer. The Department has not made specific allowances for the 
technology transfer fund in the FY 2008 request pending appointment of 
a technology transfer coordinator and development of an implementation 
plan.

                   SCIENCE EDUCATION ENHANCEMENT ACT

    Question 1. Section 1102 of the Energy Policy Act of 2005 requires 
the Department to establish a Science Education Enhancement Fund, 
comprised of not less than 0.3 percent of the amount made available to 
the Department for applied energy research, development, demonstration, 
and commercial application. The intent of the provision was to create a 
centralized fund that would be administered by a single Department 
official specializing in science education.
    When will the Department establish a centralized Science Education 
Enhancement Fund as directed in statute?
    Answer. The Department of Energy's General Counsel advises that 
Section 1102 does not require establishment of a ``centralized'' Fund. 
General Counsel advises that so long as DOE uses at least 0.3 percent 
of the applicable appropriated funds for the authorized education 
activities, the Department is in compliance with section 1102.
    Question 2. How will the Department use the Fund to support science 
education and outreach programs at the National Laboratories?
    Answer. Consistent with the principles of the Academic 
Competitiveness Council (established by Section 8003 of the Deficit 
Reduction Act of 2005; it is chaired by Secretary Spellings and I am a 
member), the Department is working with other agencies to undertake a 
thorough, merit-based review of government-wide education and outreach 
efforts to ensure that they are effective and have the ability to 
measure their outcomes. The Department will be a much better position 
to address your question once this review is complete in the near 
future.

                HYDROGEN TECHNOLOGY/ADVANCED BATTERY R&D

    Question 1. The request for Hydrogen Technology includes over $190 
million for fuel cell R&D for vehicle applications. The FY 2008 budget 
also includes $42 million for advanced battery R&D for advanced 
vehicles such as plug-in hybrids. However, fuel cell vehicles are 
significantly further away from commercialization than plug-in 
hybrids--perhaps even decades further away.
    Why is the Department investing nearly five times as much in fuel 
cell R&D than in advanced battery R&D when advanced batteries could 
produce significant petroleum savings in a far shorter timeframe?
    Answer. The Department's investments in hybrids, plug-in hybrids 
and batteries exceeds investment in fuel cell R&D. The FY 2008 budget 
request includes $54.5 million to support fuel cell technology for 
vehicle applications. Both fuel cell technology and advanced battery 
R&D are components of the President's Advanced Energy Initiative (AEI), 
which is designed to change the way we power our homes, businesses, and 
vehicles. The President's FY 2008 budget includes over $80 million for 
hybrid vehicle R&D, $42 million of which supports 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 $54.5 million to support fuel 
cell technology for vehicle applications includes $44.0 million for 
Fuel Cell Stack Components R&D, $8.0 million for Transportation Fuel 
Cell Systems, and $2.5 million for Manufacturing R&D.

                             INDIAN ENERGY

    Question 1. Mr. Secretary, there are vast untapped energy resources 
on American Indian lands. The ODE estimates that 890 million barrels of 
oil and 5.6 trillion cubic feet of natural gas are located on American 
Indian land. Title V of the Energy Policy Act of 2005 directs the 
Secretary of Energy to undertake several activities to help the Indian 
nations develop these resources. This has not been done, nor has any 
money to implement Title V been requested by DOE for FY2008.
    Why was no money requested to carry out Title V of the Energy 
Policy Act of 2005?
    Answer. Title V is one of a number of requirements and provisions 
in the EPACT that we have not funded because it is lower priority than 
other activities included in the President's Budget. However, the 
Office of Energy Efficiency and Renewable Energy has requested $2.9 
million for Fiscal Year 2008 to fund projects for Native American 
peoples. From 2002 to 2006, approximately $12.5 million has been made 
available to Native American tribes to assess the potential for 
development of renewable energy technologies on tribal lands. Overall, 
the Department provides approximately $10 million annually to tribal 
programs nationwide.
    Question 2. When do you anticipate you will create the Office of 
Indian Energy Policy and Programs?
    Answer. The Department is actively seeking a suitable candidate to 
serve as Director of the Office of Indian Energy Policy and Programs. 
Until such a candidate is found, I have asked the Under Secretary of 
Energy and the Assistant Secretary for Congressional and 
Intergovernmental Affairs to closely monitor and manage Tribal issues. 
The Department also has solicited input from interested tribal 
governments and tribal organizations on how it is envisioned that a new 
office would interact with the DOE missions, and how this office can 
improve on the current organizational structure. In addition, to assist 
us in coordinating our Tribal policies among various DOE programs, we 
have created a Tribal Energy Steering Committee comprised of 
representatives from all major program offices to address cross cutting 
Tribal issues.
    Question 3. Please describe your progress in establishing the 
Department of Energy Indian Energy Education Planning and Management 
Assistance Program.
    Answer. Given that the Office of Indian Energy Policy and Programs 
has not been established, the Administration has not requested funding 
in FY 2008 for the Indian Energy Planning and Management Assistance 
Program.
    Question 4. Please describe your progress in establishing the 
department of Energy Guarantee Program in Title V.
    Answer. EPACT contains several loan guarantee provisions. The 
Department is proceeding to use the broad authority provided in Title 
XVII-Incentives for Innovative Technologies. For this loan guarantee 
program, the Department anticipates loan guarantees of $9 billion in FY 
2008 and has requested $8.4 million for operating expenses in FY 2008.

                    ENERGY RIGHTS-OF-WAY DESIGNATION

    Question 1. Mr. Secretary, Section 368 of the Energy Policy Act of 
2005 directs the Secretary Energy, in collaboration with other 
agencies, to designate energy rights-of-way corridors. Please provide 
the Committee with an update of your activities under this provision.
    Answer. The agencies affected by Section 368 began work shortly 
after the Energy Policy Act of 2005 was enacted in August 2005. At that 
time, an interagency team was established with the Department of Energy 
(DOE) as the lead agency. The Bureau of Land Management is a co-lead, 
and the Forest Service, the Department of Defense, the Fish and 
Wildlife Service and the States of California and Wyoming are 
cooperating agencies. The Coeur d'Alene tribe is also a cooperating 
agency. In addition, the Department of Commerce is involved as a 
consulting agency. Pursuant to EPACT Section 372(a), a Memorandum of 
Understanding (MOU) was signed by the four main agencies in February 
2006 with respect to cooperative implementation of Section 368.
    There is ongoing involvement from the States, tribes and various 
stakeholders as the Federal agencies affected by Section 368 continue 
progress of the energy right-of-way corridor designations on Federal 
lands. In this regard, the Federal agencies have conducted joint public 
scoping meetings concerning the designation of such corridors in each 
of the eleven contiguous western states. Currently, agencies are 
conducting NEPA activities.

                NATURAL GAS AND OIL TECHNOLOGY PROGRAMS

    Question 2. Consistent with the President's FY 2006 and FY 2007 
budgets, you again propose the elimination of the natural gas and oil 
technology programs within the Office of Fossil Energy for FY 2008.
    Are there activities currently undertaken by either the Natural Gas 
or Oil Technology Programs that you plan to continue if those programs 
receive no funding in FY 2008?
    Answer. The FY 2008 Budget provides no money for activities 
currently undertaken by either the Natural Gas or Oil Technology 
Programs. However, prior years' appropriations for Natural Gas and Oil 
Technology Programs will be used for the activities specified, which 
could extend beyond the year in which funds were appropriated.

             ULTRA-DEEPWATER AND UNCONVENTIONAL NATURAL GAS

    Question 1. What steps, if any, has the DOE taken to implement this 
program?
    Answer. DOE has completed all of the milestones required by section 
999, including soliciting proposals for the program consortium and 
selecting a winning proposal. On December 29, 2006, a contract was 
awarded to the Research Partnership to Secure Energy for America to 
manage the R&D program. DOE has also established the two Federal 
Advisory Committees required by the statute. Through a separate 
legislative proposal, the Administration in FY 2008 proposes to repeal 
the Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum 
Resources program. This is consistent with our proposal to end all 
Departmental oil and natural gas research and development in FY 2008. 
Oil and gas are mature industries and both have every incentive, 
particularly at today's prices, to enhance production and continue 
research and development of technologies on their own. There is no need 
for taxpayers to subsidize oil companies in these efforts.
    Question 2. Have any potential applicants demonstrated an interest 
in the program?
    Answer. Although the private sector consortium, Research 
Partnership to Secure Energy for America (RPSEA), is responsible for 
issuing solicitations, we presume that a number of organizations are 
interested in submitting project proposals for the program.
    Question 4. What role, if any, do you believe the DOE should have 
in advancing technology for the development of ultra-deepwater and 
unconventional fossil fuels?
    Answer. Oil and gas are mature industries and both have every 
incentive, particularly at today's prices, to enhance production and 
continue research and development of technologies on their own. There 
is no need for taxpayers to subsidize oil companies in these efforts.

                               HYDROPOWER

    Question 1. Once again, the budget proposes to terminate the DOE 
Hydropower program (-$500,000) and transfer the R&D results to 
industry. However, the Energy Policy Act of 2005 (Section 931) directs 
DOE to conduct a research, development, demonstration and commercial 
application program for cost competitive technologies for new and 
incremental hydropower capacity. In the FY 2007 Energy and Water 
Appropriations bill, $4 million was included for advanced hydropower 
R&D, such as the development of ocean energy.
    Does the Administration believe that federal R&D work is needed to 
develop new hydropower technologies, such as ocean and wave energy?
    Answer. The Department completed its hydropower program in fiscal 
year 2005, consistent with congressional direction over the previous 
years. With regard to new hydropower technologies, at that time the 
Department completed an assessment of undeveloped U.S. hydropower 
resources, the technologies needed to develop the resources, and the 
feasibility of developing the resources. The Department has contributed 
the necessary tools to industry to pursue development of these 
hydropower resources.
    The Department is observing the growth of interest, activity, and 
investment in wave and tidal technologies. We recognize that several 
states have promising opportunities for harnessing these forms of ocean 
and tidal energy, and thus we are monitoring domestic and worldwide 
progress in ocean energy technologies in collaboration with the 
Electric Power Research Institute and the International Energy Agency. 
Some countries with higher resource potential than the United States, 
relative to their overall energy needs, are active in ocean and tidal 
energy R&D. Ocean, wave, and current technologies are still in their 
infancy, with a small number of demonstration systems operating 
worldwide. The Department will continue to consider emerging 
technologies like these in evaluating its research, development and 
deployment programs.
    The Department is also supporting a wave energy technology R&D 
project via the Small Business Innovation Research Program. The U.S. 
Navy also supports ocean energy research.

                 ENERGY SAVINGS PERFORMANCE CONTRACTING

    Question 1. The ESPC program was reauthorized in EPACT 2005.
    Has the Administration taken advantage of the ESPC reauthorization 
in the Energy bill?
    Answer. Yes, the Administration, through the Department of Energy, 
is very actively promoting the use of Energy Savings Performance 
Contracting (ESPC) across all Federal agencies. Assistant Secretary 
Karsner challenged all agencies to increase their use of the program at 
the July 2006 Senior Officials meeting, by kicking off an ``ESPC 
Blitz'' to bring focus and commitment to these private sector financing 
tools, and sought to double volume to help the government stay on track 
to meet the new EPACT energy efficiency goals (two percent per year 
energy intensity reduction compared with 2003 baseline). The four-month 
Blitz resulted in Awards of over $130 million and helped propel 2006 to 
over $321 million in awards--the second highest amount of annual 
contract awards made in the history of the program. The total 2006 
investment will produce cumulative guaranteed energy savings of 48,880 
billion Btus over 24 years at no net cost to taxpayers.
    Question 2. What are your plans for engaging those agencies that 
are not currently using ESPCs to improve their energy performance?
    Answer. The President's new Executive Order 13423, Strengthening 
Federal Environmental, Energy, and Transportation Management requires 
all Agencies to improve their energy performance. We anticipate 
continued use of ESPCs to help agencies meet the new, aggressive energy 
intensity reduction goal of Executive Order 13423 (three percent per 
year compared with 2003 baseline). Our efforts to spur widespread use 
of ESPCs include the designation of Energy Champions at a senior level 
in all agencies to ensure that these contracts are successfully and 
widely implemented. DOE's Federal Energy Management Program provides 
training, project facilitation, promotional materials, and program 
advocacy to senior agency officials. FEMP is also involved with 
specific outreach and support to agencies not actively using the 
contract.

                 ELECTRIC TRANSMISSION AND DISTRIBUTION

    Question 1. Last August, the Department released the first National 
Electric Transmission Congestion Study, as required by EPAct. The study 
identified two areas of critical transmission congestion: southern 
California and the eastern coastal area from metropolitan New York 
south to Northern Virginia. However, no corridor designations have been 
made yet.
    When will DOE designate National Interest Electric Transmission 
Corridors?
    Answer. Section 1221(a) requires the Secretary to issue a report 
based on the August 8, 2006 Congestion Study. In that report, the 
Secretary, at his discretion, may designate any geographic area 
experiencing electric energy transmission capacity constraints or 
congestion that adversely affects consumers as a National Interest 
Electric Transmission Corridor (National Corridor).
    In the August 8, 2006 Congestion Study, the Department invited the 
public to comment on the designation of National Corridors. The 
Department continues to evaluate these comments, and has not yet 
determined whether, and if so, where, it is appropriate to designate 
National Corridors. Because there is broad public interest in the 
implementation of Section 1221(a), the Department has decided that, 
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.
    Question 2. Why haven't designations been made yet?
    Answer. Departmental staff have been reviewing the 400 plus 
comments received in response to the August 8 Congestion Study. The 
staff is continuing to analyze the data developed in the Congestion 
Study and provided by commenters, as it develops a recommendation for 
the Secretary as to whether, and if so, where, one or more National 
Corridors should be proposed.
  power marketing administrations--bpa net secondary revenue proposal
    Question 1. The Administration has re-proposed an administrative 
action to direct BPA to use any net secondary-market revenues in excess 
of $500 million per year to make advance payments to the U.S. Treasury 
on Bonneville's bond obligations. This proposal was vehemently opposed 
by the Pacific Northwest Senators last year. You carried language in 
the 2006 supplemental appropriations bill that prohibited funding for 
this initiative. The prohibition is set to expire in April 2007.
    Last year, the Administration's proposal to tie up Bonneville's net 
secondary market revenues was met with fierce opposition in Congress--
so much so that its implementation was stopped. Do you think the 
sentiment in Congress has changed?
    Answer. The Administration is hopeful that the sentiment of all the 
involved parties is open to working collaboratively to address issues 
raised in the budget. The President's budget for FY 2008 allows for and 
encourages a regional discussion to address the concerns expressed by 
the Pacific Northwest Congressional delegation and Bonneville Power 
Administration (BPA) customers. The budget proposal continues to seek 
means to extend limited BPA access to capital for regional 
infrastructure investment with minimal rate impact.
    Question 2. It is my understanding the BPA has voluntarily paid 
$1.8 billion in advanced payments to the Treasury on its bond 
obligation. It has also invested heavily in its transmission system. 
Why then, does the Administration continue to pursue this action--
especially since you concede that ``due to the volatility of energy 
prices, these net secondary revenues could be higher or lower depending 
on a number of factors, including hydro variability''?
    Answer. The $1.8 billion in voluntary advance amortization payments 
BPA has made in recent years, as of the end of FY 2006, has enabled BPA 
to prudently preserve the availability of its authorized borrowing for 
infrastructure investment. Similarly, the budget proposal is about 
developing further sound business practices that would use a portion of 
any higherthan-historical net secondary revenues, greater than $500 
million, to invest back into energy infrastructure in the region and to 
pay down debt. Revenues from this source, while highly variable, can be 
significant. Without this proposal, the budget projects BPA will reach 
its U.S. Treasury borrowing cap in FY 2012; however, if the net 
secondary revenue proposal is implemented and combined with other debt 
management tools, BPA likely would not reach its borrowing cap until FY 
2016.

             POWER MARKETING ADMINISTRATION--SEPA/SWPA/WAPA

    Question 1. The Administration re-proposes an administrative action 
to raise the interest rate for power-related investments incurred by 
the PMAs and paid to the Treasury from the ``yield'' rate to the 
``agency rate.''
    This PMA proposal also faced significant Congressional opposition 
last year. Both the FY 2007 Energy and Water Appropriations bill and 
the Continuing Resolution (CR) currently under consideration carry a 
prohibition on its implementation. The Budget, however, proposes to 
make the new interest rate retroactive to the beginning of FY 2007.
    Given the significant opposition to this proposal last year, along 
with it modest revenue gains (only $2-3 million annually), why does the 
Administration continue to pursue this?
    Answer. The Administration believes it is prudent to charge the 
PMAs (excluding Bonneville Power Administration), a risk-adjusted 
interest rate that more accurately reflects the probability of 
repayment of the Federal investment in power systems infrastructure and 
all costs associated with producing power. Although the PMAs pose a low 
risk of default to the U.S. Treasury, the risk is not zero. This is 
because the ability of the PMAs to repay the Treasury is dependent on 
their ability to collect revenues from the sale of power and related 
services. For example, physical catastrophes (e.g. a dam failure), 
electricity market volatility, problems with customer credit, or 
availability of cheaper energy sources could adversely affect the PMAs' 
ability to market their power in the future.
    The ``yield'' rate is the rate paid on securities backed by the 
full faith and credit of the United States Government. The ``agency 
rate'' of interest paid by government corporations and the Bonneville 
Power Administration better reflects the risk of default than the 
``yield'' interest rate the three PMAs currently use on investments 
whose interest rates are not set by law.
    Question 2. The Administration re-proposes an administrative action 
to raise the interest rate for power-related investments incurred by 
the PMAs and paid to the Treasury from the ``yield'' rate to the 
``agency rate.''
    This PMA proposal also faced significant Congressional opposition 
last year. Both the FY 2007 Energy and Water Appropriations bill and 
the Continuing Resolution (CR) currently under consideration carry a 
prohibition on its implementation. The Budget, however, proposes to 
make the new interest rate retroactive to the beginning of FY 2007.
    Does the Administration believe it can make this retroactive to the 
beginning of FY 2007 even with the prohibition contained in the CR?
    Answer. No. The provision in the recently enacted Continuing 
Resolution, Public Law 110-5, will delay implementation of this change 
until FY 2008. The Administration will seek to apply the new interest 
rate on capital investments occurring in FY 2008 and later.

                   PMA CONTINUING AND EMERGENCY FUNDS

    Question 1. The Administration proposes to set the recovery period 
for future emergency Purchase Power and Wheeling costs funded through 
the PMA Continuing and Emergency Funds from ratepayers within one year 
from the time costs are incurred. Currently, PMAs can recover costs 
anywhere from one year to as long as five years.
    If these funds are being tapped due to an emergency situation, why 
put such a severe restriction on the time for repayment? Won't a more 
reasonable amount of time help ease the burden of increased rates to 
ratepayers?
    Answer. The Administration believes that expenses paid through the 
Continuing/Emergency Funds, associated with purchasing power and 
transmission wheeling services, should be considered annual expenses 
and repaid within one year. This proposal does not apply to the use of 
the Continuing/Emergency Funds for the purpose of performing emergency 
maintenance, or any activities other than the provision of purchase 
power and wheeling services. Additionally, while the current power 
marketing administration (PMA) repayment processes assure that over 
time the Federal Treasury is made whole for all purchase power and 
wheeling expenses, with interest when those expenses are deferred into 
future years, they do not preclude unplanned impacts to the Federal 
budget deficit in the short term. When the PMAs use the Continuing/
Emergency Funds and do not increase revenues to compensate for the use 
of those funds in the short term, the budget deficit for the current 
fiscal year is negatively impacted. The Administration's proposal would 
mitigate these deficit impacts. Finally, it should be noted that the 
Administration's budget provides additional authority to the 
Southeastern and Southwestern Power Administrations to use power 
receipts (offsetting collections) to fund these purchases, and Western 
Area Power Administration's budget continues to provide substantial 
budget authority in this area. This reduces the need to rely on the 
Continuing Funds and Emergency Fund, by allowing the PMAs to fund 
purchase power and wheeling expenses through their power receipts. The 
Administration is working to implement this budget proposal in a manner 
that will treat annual expenses appropriately and mitigate deficit 
impacts, while keeping power rate impacts in check.

                           NUCLEAR POWER 2010

    Question 1. Mr. Secretary, the Joint Resolution for FY 2007 
provides the Department a significant amount of latitude to meet your 
funding priorities. With regard to nuclear power, the Energy and Water 
Appropriations Subcommittee also provided an additional $41 million in 
funding for nuclear power R&D.
    I am very concerned about the Nuclear Power 2010 program. This 
program, as you know is a 50/50 cost share effort between reactor 
designers and the federal government to develop the detailed 
engineering and design plans necessary to submit a successful license 
application to the Nuclear Regulatory Commission.
    Also, as I understand it, one of the goals of the NP2010 program is 
to support the engineering designs for the various reactor types. It is 
my impression that in the absence of engineering specifications for the 
designs, the vendors are unable to provide reliable pricing information 
to their potential customers. Obviously, this is an obstacle to the 
customers actually placing orders and making a commitment to build.
    Can I count on the Department to make the NP2010 program a priority 
in FY 2007 and use the funding flexibility provided in Joint Resolution 
to fully fund this initiative?
    Answer. The Nuclear Power 2010 Program remains a very high priority 
for DOE. The Department will use the funding flexibility provided in 
the Joint Resolution to appropriately fund the approved projects of 
this important nuclear energy initiative.
    Question 2. What is the department doing to accelerate the 
completion of the design engineering for reactor types?
    Answer. In addition to supporting the reactor vendor activities for 
design certification and completion of the reactor design and 
engineering required to support the power companies' combined 
construction and operating licenses, the Office of Nuclear Energy is 
supporting the reactor vendor design scope through a more flexible cost 
share ratio each fiscal year under the cooperative agreements that will 
allow the reactor vendors to accelerate design work in fiscal year 2007 
originally planned in the outyears. As allowed for in the solicitation 
and in the negotiated awards, the industry or the government can 
provide more than 50 percent cost share during any given fiscal year 
provided by the end of the project industry has paid at least 50 
percent of the total project costs.

  LOS ALAMOS NATIONAL LABORATORY (LANL) RESPONSE TO SECURITY FAILURES

    Question 1. Mr. Secretary, Director Anastasio has taken steps to 
increase security at LANL by increasing random searches and drug 
testing. As I understand it, Los Alamos security now exceeds all other 
DOE labs and even DOE Headquarters.
    Do you believe the Lab has taken appropriate action and will you 
consider applying the same level of security to the NNSA and its other 
facilities?
    Answer. At this stage, Los Alamos National Security (LANS) is 
aggressively tackling the long-standing security issues at the 
Laboratory. However, I remain concerned that we may yet see a repeat of 
the past practices, where the Laboratory has started off well in fixing 
their problems, but gradually loses interest as time passes. DOE and 
NNSA will be watching LANS carefully to ensure this is not the case.
    All of our sites conduct random searches based upon their unique 
site configuration. It is my sense that because of the way in which 
LANL security areas are spread out, the Laboratory has a greater need 
for outbound searches than other sites.
    Drug testing employees is something we are paying close attention 
to and I will consider this option for wider use after I hear the 
recommendations from the Personnel Security Task Force I established to 
identify policy and procedure weaknesses in our current personnel 
security program.

                         LOSS OF PERSONNEL DATA

    Question 1. 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. Consistent with the requirements of the Privacy Act and 
Office of Management and Budget direction, the Department has issued 
direction to all Departmental elements to implement procedures and 
controls for the protection of personal employee data. The controls 
include removal of sensitive data from computers and devices unless it 
is required for business reasons; encryption of all removable disks and 
portable computers (laptops) containing the sensitive information; 
encryption of emails and attachments containing sensitive information; 
delegation of management responsibility for the review of personally 
identifiable data; and regular management reviews of the personally 
identifiable information which may be retained on the portable 
computers and removable media. Additional controls include reporting of 
actual or suspected loss of personally identifiable information within 
45 minutes of the detection of the loss.

                              MOX PROJECT

    Question 1. What is the Department doing to control costs of this 
project and bring the project in on budget?
    Answer. The Department is taking a number of actions to ensure that 
the MOX facility can be built within its cost and schedule baseline. 
The design of the U.S. MOX facility is approximately 85% complete and 
is based on existing French facilities that have been operating 
successfully for decades. In addition, the Department's contractor has 
proven the performance of key process units. Following extensive 
environmental and safety reviews, the Nuclear Regulatory Commission has 
authorized the Department's contractor to proceed with construction. 
This past summer, the Department conducted an External Independent 
Review of the MOX project to validate its cost and schedule baseline. 
The review involved a thorough examination of technology maturity, 
facility design, contractor bases of estimates, project risk, and many 
other areas. The EIR resulted in a $359 million increase to the project 
baseline and provision made for 28% contingency. The Department will 
also incorporate an incentive fee structure in the construction and 
operations contract to control cost growth and schedule slippage and 
require the contractor to develop cost ceilings (i.e., target costs 
tied to incentive fees) that must be agreed to by DOE. The current 
baseline of $4.7 B is contingent upon adequate funding support from the 
Congress, consistent with the schedule and baseline. Bids received to 
date on a number of large construction and long-lead equipment 
procurement packages are within the project's cost estimates and well 
within the baseline range.
    Question 2. If the MOX facility does not go forward as planned, 
what impact will this have on the Department's efforts to consolidate 
and dispose of special nuclear material in Washington, California, 
Idaho, New Mexico, Tennessee and South Carolina?
    Answer. The Nuclear Materials Disposition and Consolidation 
Coordination Committee (NMDCCC), which was created in 2005, recently 
recommended that Pu-239 not intended for use in the MOX Facility be 
consolidated at SRS. This decision whether to consolidate Pu-239 at SRS 
is dependent on appropriate NEPA review and on compliance with current 
law. The current law would require the Department to identify a path 
out of the State for Pu-239 before we begin to consolidate. Our current 
path includes MOX, Pu Vitrification, and H-Canyon.
    I am currently reviewing this recommendation.

                        BIOFUELS/LOAN GUARANTEES

    Question 2. What other steps is the Department taking to facilitate 
efforts to accelerate the deployment of this technology?
    Answer. In addition to a comprehensive research and development 
portfolio, the Department strongly supports the commercialization of 
cellulosic ethanol technologies. We conduct cost-shared projects to 
accelerate the reduction in the costs associated with feedstock 
production, collection, storage and transportation, thereby addressing 
a major barrier to realizing cost competitive cellulosic ethanol. We 
are leading efforts with industry to further reduce costs by validating 
the integrated biorefinery process at the engineering pilot scale. We 
expect these efforts to reduce the overall risks of deployment and 
improve the likelihood that private sector entities may obtain 
financing for commercial scale biorefineries. We also plan to support 
at least one public/private cost-shared commercial-scale demonstration 
of innovative biorefinery technology that will produce cellulosic 
ethanol and provide documentation on both feedstock and conversion 
process economics.
    Furthermore, a ready infrastructure is necessary to encourage 
continued market growth for ethanol fuels. To this end, the Department 
is working to enable the availability of retail stations and terminals, 
analyze ethanol pipelines and alternative distribution mechanisms, and 
support vehicle technologies to ensure there is adequate demand for 
ethanol supply.
    Question 3. Will you report to us regarding the prospect for 
commercial production of cellulose ethanol to begin as early as 2009?
    Answer. The cellulosic ethanol industry is beginning to take shape. 
Recently, announcements have been made in the press by industry leaders 
on construction plans for the first U.S. cellulosic ethanol facilities. 
Additionally, winners of DOE's solicitation for cost-shared commercial-
scale demonstrations will soon be announced and are expected to break 
ground within 12-18 months, after negotiations of terms of the 
agreement. These cellulosic ethanol facilities have the potential to be 
operational in the 2009-10 timeframe. Assuming the commercial 
operations proceed in line with development plans that have been made 
public by private sector participants at this time, we estimate that up 
to approximately 130 million gallons may be in commercial production 
each year by 2012.

    Responses of Secretary Bodman to Questions From Senator Cantwell

    Question 1a. Secretary Bodman, the Administration has once again 
proposed to confiscate BPA's net secondary revenues, this time for an 
estimated $646 million over the next five years. This is money that 
would otherwise go to keep Northwest business competitive and keep 
electricity rates for Northwest families affordable.
    Please provide any analysis that was done on how this proposal 
would impact the Northwest economy?
    Answer. BPA has not done an analysis on how the proposal would 
affect the Northwest economy. BPA is seeking to work with the Northwest 
parties to find ways of minimizing rate impacts of the proposal, if 
any, and any consequent impacts.
    Question 1b. How much would this proposal increase electricity 
rates for the typical residential customer?
    Answer. In general, we believe that the prepayments in most years 
are unlikely to cause a rate increase although it may reduce a BPA rate 
decrease. It is difficult to predict how a customer utility would pass 
on this impact to retail residential customers because each customer 
differs in terms its fmancial situation and its reliance on BPA.
    Question 1c. How many Northwest jobs will be lost from this rate 
increase?
    Answer. BPA has not done any analysis of job impacts of this 
proposal. BPA is seeking to work with Northwest parties to find ways of 
minimizing rate impacts of the proposal, if any, and any consequent 
economic impacts.
    Question 1d. How much money will be taken out of the Northwest 
economy each year under this proposal?
    Answer. The FY 2008 budget includes estimates of expected 
incremental revenues associated with the net secondary revenue 
proposal. The estimates are included within the gross revenue and net 
outlays estimates for BPA for the fiscal years 2008 through 2012. The 
incremental revenue estimates are: $91 million for FY 2008; $112 
million for FY 2009; $107 million for FY 2010; $116 million for FY 
2011, and $107 million for FY 2012, for a total of $533 million for the 
FY 2008 through FY 2012 period.
    These incremental revenues are expected values, or averages, based 
on a range of possible net secondary revenues. BPA's net secondary 
revenues vary considerably due to the variability and unpredictability 
of the water supply in the Columbia River basin and the volatility of 
market prices. Therefore, the actual amounts could be much lower or 
higher than these expected values, depending on BPA's actual secondary 
revenues.
    Finally, any value that might leave the region would eventually be 
returned to the region through reduced interest and principal payments 
on BPA's current Federal debt as well as increased access to capital 
from the Treasury.
    Question 2. Secretary Bodman, as you know BPA's authority to set 
rates is provided for in several federal statues. These statutes direct 
that the BPA Administrator ``shall transmit and dispose of such power 
and energy in such manner as to encourage the most widespread use 
thereof at the lowest possible rates to consumers consistent with sound 
business principles.'' BPA has consistently interpreted this 
congressional direction to mean repayment occurs ``over the period that 
Congress specified in an appropriations bill or in the term for the 
bonds used to finance the project.'' Combined with the ``lowest 
possible rates consistent with sound business principles'' standard, 
this means that the rates should be no lower, nor higher than necessary 
to repay the rates in the period specified. The ``sound business 
principles'' means-repayment on the scheduled repayment date and does 
not mean prepayment of long-term debt. Otherwise the ``lowest 
possible'' portion of the equation would be violated. Given these 
existing statutes, please explain the Administration's rational the 
legal basis for proposal to expropriate BPA's net secondary revenues.
    Answer. The rationale and legal basis for the Administration's 
proposal is thoroughly set forth in a letter and attached memorandum 
dated June 23, 2006, from Department of Energy General Counsel David R. 
Hill to Senators Burns, Cantwell, Craig and Smith.
    Question 3. Secretary Bodman, we are pleased that this year's 
budget does not include the onerous and counterproductive proposal that 
would have counted third-party financing against BPA's borrowing 
authority from the U.S. Treasury. BPA has stated that it plans to move 
forward immediately to seek third-party financing opportunities. This 
will remove the need in the near future for any increase in borrowing 
authority. Therefore, based on OMB's assertion that the net secondary 
revenue plan is needed in order for BPA to be able to invest in new 
transmission projects without hitting the borrowing cap; can you 
explain the justification for including it in this year's budget when 
clearly hitting the cap is not an issue? Based on OMB's assertion that 
the net secondary revenue plan is needed in order for BPA to be able to 
invest in new transmission project without hitting the borrowing cap; 
can you explain the justification for including it in this year's 
budget when clearly hitting the cap is not an issue?
    Answer. While hitting the Treasury bonds outstanding cap, is not an 
immediate concern, it is the Administration's belief that it is 
nevertheless prudent and consistent with sound business principles to 
plan to in advance to preserve Bonneville's existing borrowing 
authority for as long as possible. The President's 2008 budget proposal 
is intended to provide BPA with needed financial and planning 
flexibility to invest back into the Northwest's economic energy 
infrastructure by paying down existing Federal bonded debt more 
quickly. The Administration is concerned about the adequacy of 
financing needed for BPA investments in transmission and other 
infrastructure needs. It believes that in times of historically very 
high net secondary revenues, it is prudent to bank some of these 
revenues by making advance bond amortization payments.
    The proposal would extend the period before BPA runs out of 
available borrowing authority, thus helping BPA fund needed energy and 
transmission infrastructure investment. Without this proposal, the 
budget projects BPA will reach its U.S. Treasury borrowing cap in 2012; 
however, if the proposal is implemented and combined with other debt 
management tools, BPA likely would not reach its borrowing cap until 
2016.
    Question 4. Secretary Bodman, as you may know, the Northwest has 
led the nation in building new transmission, investing more than $1 
billion in system upgrades since 2001. In fact, the Northwest alone 
accounted for a third of all the transmission built nation-wide in 
2004. Since, it is a stated goal of the Administration's energy policy 
to build more transmission capacity, how does the net secondary revenue 
proposal improve investments in transmission infrastructure?
    Answer. The budget proposal seeks to extend BPA's limited access to 
capital needed for funding future regional infrastructure investment. 
Without this proposal, the budget projects BPA will reach its U.S. 
Treasury borrowing cap in 2012; however, if the proposal is implemented 
and combined with other debt management tools, BPA likely would not 
reach its borrowing cap until 2016. If budget estimates are met, the 
proposal should provide an additional $646 million over the FY 2008-
2012 time period, which would be available for investments in 
transmission system infrastructure.
    Question 5. Secretary Bodman, BPA is not only paying down its debt 
to the treasury on time, but is doing so ahead of schedule at an above 
market interest rate; that is the government is actually making money 
by financing Northwest infrastructure investments. If BPA is to pre-pay 
its long term debt to the U.S. Treasury as proposed under this plan, 
how much would that lower total revenues to the Treasury from BPA?
    Answer. As BPA issues new bonds to the Treasury, it does so at 
prevailing market interest rates. By law the rate on BPA's Federal 
bonded debt is equivalent to the Government Agency Rate, a market 
interest rate based on Government corporations' debt. This rate is 
typically slightly higher than the Treasury rate to reflect the risk 
associated with Government corporations. Because these rates are 
indexed to market rates, BPA's Federal debt will inevitably be above or 
below prevailing market rates as the market rates move up or down over 
time. BPA also has outstanding appropriated debt obligations. The 
current average rate on the outstanding appropriations is higher than 
the prevailing market interest rates. However, the Administration's 
proposal does not anticipate paying appropriations early, only bonded 
debt.
    The net secondary proposal anticipates that in years when net 
secondary power revenues are above $500 million, BPA would pay bonded 
Treasury debt in excess of that scheduled to be paid. BPA has not done 
any analysis of Treasury impacts of this proposal.
    Question 6. Secretary Bodman, since the Department of Energy first 
announced its plans to reorganize by merging the Environment, Safety, 
and Health and Security and Safety Performance Assurance Offices, I 
have expressed concern and disappointment over the implementation of 
this new Office of Health, Safety and Security. I remain unconvinced 
that dismantling the office chiefly responsible for overseeing worker 
safety and health will actually strengthen worker health and safety. In 
the past, I worked with former Assistant Secretary John Shaw to ensure 
that the Former Worker Medical Surveillance Program continue to be 
funded, providing the medical screening services to the thousands of 
workers potentially exposed to hazardous materials during their 
employment at Hanford. How will the new HSS Office ensure the Former 
Worker Medical Surveillance Program remains in place? What are your 
plans to improve and expand occupational safety programs under HSS?
    Answer. Senator Cantwell, the Department of Energy did not abolish 
any office or function when I created the new Office of Health, Safety 
and Security (HSS). In fact, during the first five months after its 
creation, HSS has redoubled efforts regarding worker health and safety. 
Additionally, HSS has in place a performance-based independent 
oversight program that assesses contractor self-assessments, line 
management evaluations, and worker performance. HSS identifies 
weaknesses in our worker safety and health programs and their 
implementation through program reviews and performance testing. The 
effectiveness and value of our assessments enables us to take timely 
corrective action to address any weakness.
    Specifically, with respect to the Former Worker Medical 
Surveillance Program (FWP), we are ensuring that the program continues 
to provide medical screening to former federal and contractor employees 
from all DOE sites and that workers are screened in close proximity to 
their residences through regional programs and a supplemental program 
to serve workers who no longer live near the sites at which they 
worked. The restructuring of the DOE environment, safety, and health 
functions at DOE Headquarters did not result in any changes to 
operations of the FWP. More than 46,000 individuals have been screened 
to date, and DOE intends to screen over 10,000 individuals in FY 2007. 
In the past six months, screening has been extended to workers from 
multiple small DOE sites not previously served. Individuals from all 
sites with abnormal findings are referred for medical follow-up and/or 
to the Department of Labor's (DOL) program under the Energy Employees 
Occupational Illness Compensation Program Act (EEOICPA).
    In FY 2007, the Department has increased interactions with DOL and 
the National Institute for Occupational Safety and Health (NIOSH) to 
ensure work and exposure history information and test results obtained 
during medical screening through the FWP can be effectively used by 
these agencies, upon request by the claimant, in adjudicating claims 
filed under EEOICPA. The Department will host a meeting in Oak Ridge in 
May 2007 during which principal investigators from the FWP projects, 
representatives from DOL and NIOSH, and records contacts from DOE sites 
will address FWP and EEOICPA-related priorities and ways participating 
organizations can best work together to support the current and former 
worker community.
    With the promulgation of 10 CFR 851, Worker Safety and Health 
Program, HSS has undertaken an extensive effort to assist DOE federal 
and contractor staff in implementing this worker safety and health 
rule. HSS has partnered with the Headquarters Program Offices, the 
Office of General Counsel, and the HSS Office of Enforcement to develop 
implementation guidance and tools to assist the DOE complex with coming 
into compliance with 10 CFR 851. Through the use of workshops, 
televideo, and conference calls, we have addressed and resolved 
hundreds of issues and used this information in the development of the 
Implementation Guide for 10 CFR 851. In addition to the Worker Safety 
and Health Rule we have identified the need for developing policy for 
the use of Nanoscale materials within the DOE. We have formed a working 
group that includes the Office of Science and the National Nuclear 
Security Administration which will leverage the knowledge and expertise 
of those organizations to assure the proper Nanoscale policy is 
developed. We are in the final stages of amending 10 CFR 835, 
Occupational Radiation Protection, to improve our assessment of 
worker's occupational radiation exposures taking into account new 
international standards. The Chronic Beryllium Disease Prevention 
Program (10 CFR 850) will be amended to reflect the lessons learned 
during the past seven years that this rule has been in place. In all 
cases we are better poised to capitalize on the synergy of the various 
functions in the new HSS organization and relationships with the DOE 
field organizations to develop policy and guidance which will improve 
the safety of the entire DOE workforce.
    Our long-term plans call for HSS to work with line managers to 
provide greater assurance that management systems adequately identify 
and analyze hazards and provide appropriate controls to protect the 
health and safety of workers. In doing so, we will continue to use the 
Integrated Safety Management framework, which has been in place for 
more than ten years and has positively contributed to DOE worker 
safety. As part of this effort, HSS will coordinate its efforts to 
examine the specific types of problems that are being experienced and 
recommend specific solutions (e.g., new methods, tools, guides). A 
major focus will be on determining the systemic causes of deficient 
performance in order to take corrective actions that address root 
causes and contributing factors. For example, HSS is supporting the 
Human Performance Initiative concept. This Initiative is a systematic 
process of discovering and analyzing important human performance gaps, 
planning for future improvements in human performance, designing and 
developing cost-effective and justifiable interventions to close 
performance gaps, implementing the interventions, and evaluating the 
results. Its purpose is to minimize the frequency and severity of 
adverse events that impact the safety and health of workers, the 
public, and the environments.
    Question 7a. Secretary Bodman, worker's compensation is a basic 
benefit to injured workers that should not be reduced. I've recently 
spoken to some Hanford workers about a recent Request for Proposal 
(RFP) for an extension of the Flour Hanford Contract with DOE. There 
seems to be some confusion with regard to a worker's compensation 
clause and whether worker's compensation is considered an allowable 
cost to the contractor.
    What is the Department's general policy regarding workers' 
compensation?
    Answer. Federal Acquisition Regulation 28.307-2 mandates contractor 
compliance with applicable Federal and State workers' compensation 
laws. Pursuant to this regulation, the Department reimburses its 
contractors' costs of providing workers' compensation coverage.
    DOE policy regarding reimbursement of worker's compensation 
programs, as set forth in DOE Order 350.1, Chg. 1, Contractor Human 
Resource Management Programs, provides that DOE also may reimburse 
contractors for the costs of supplemental benefits (such as paid time 
off) to the extent that total benefit payments from all sources do not 
exceed 100 percent of an employee's net pay. In addition, any 
supplemental benefit program must be part of a total employee benefit 
program that meets the tests of allowability established by FAR.31.205-
6.
    During discussions last summer and fall to extend the Fluor 
Hanford, Inc. contract (as well as the recently extended contract with 
CH2M Hill Hanford), the parties agreed that DOE would only reimburse 
the contractors for the amount of workers' compensation required by 
Washington State law unless such compensation is otherwise required by 
an existing Hanford Site labor agreement.
    Question 7b. Does the agency intend to restructure this policy in 
the near future? Please explain.
    Answer. DOE does not plan to change its policy for reimbursement of 
site and facility management contractor workers' compensation.
    Question 8. Secretary Bodman, as you may know, the HAMMER program 
is an important worker safety training tool for Hanford workers. You 
have stated that worker safety is a priority of your Department. Yet in 
FY 2008, funding for the HAMMER worker safety program has been gutted 
for the second year in row. Can you explain how cutting funding for the 
HAMMER program entirely is consistent with your Department's policy 
objectives? How is your Department ensuring that workers at Hanford are 
properly trained and certified?
    Answer. The Department's policy has not changed. DOE remains 
committed to ensuring that our workers at Hanford are properly trained 
and certified. Work cannot be done without appropriate training and 
each project includes funds to meet this requirement. Under our 
performance-based contacts, it is up to each of the contractors to 
decide how best and where to obtain the training as long as it is cost-
effective and meets site-wide requirements. HAMMER has the capability 
to provide this service for the Hanford contractor workforce, but the 
Department's budget request supports the training essential for cleanup 
without specifying precisely how or where.
    Question 9. Secretary Bodman, I remain concerned about the decline 
in funding for Hanford Tank Farm activities, which has dropped from 
$364 million in 2005 and $327 million in 2006 to $273 million in FY 
2008. In 2001 the Nuclear Regulatory Commission reported that Hanford's 
High Level Waste tanks ``represent immediate concerns'' particularly 
because of aging and deterioration. The emphasis on the Waste 
Processing Plant, the Nuclear Regulatory Commission pointed out, should 
not overshadow the waste tanks because of ``considerable environmental 
and public risk posed by continued operation of the tanks with their 
associated leakage and potential for collapse and explosion.'' What is 
the extent of funding for the Department's high-level waste tank 
maintenance and surveillance activities, such as flammable gas 
monitoring, structural integrity ascertainment, corrosion controls, and 
radiation controls? What is the status of addressing potentially 
serious corrosion in the steel liner of one of the Hanford double-shell 
tanks?
    Answer. The funding for the Department's tank maintenance and 
surveillance activities, such as flammable gas monitoring, structural 
integrity ascertainment, corrosion controls, radiation controls and 
other base operations activities for the tank farms has not declined 
during the period identified. The Department's budget in FY 2007 of 
$274 million is approximately the same as its FY 2008 budget request of 
$273 million.
    The Department performs regular video and ultrasonic testing and 
although no conclusive report has been developed, corrosion does not 
appear to impact tank integrity.
    Question 10. Secretary Bodman, you have said that pumping waste out 
of the single shell tanks has been discontinued because all pumpable 
waste has been pumped and that is left to pump is sludge. Your 
Department has confirmed that of the 67 single-shell tanks have leaked 
waste or are believed to have leaked. According to your FY 2008 budget 
request, these leaks have caused an additional 1 million gallons of 
liquid waste to seep in to the soil. Can you confirm whether the 
leaking from the 67 single-shell tanks has abated since pumping all of 
pumpable waste has been pumped was completed? Can you confirm that 
there is no risk of the remaining sludge leaking from the 67 single-
shell tanks? Can you confirm that the waste in the double shell tanks, 
some of which are past their useful life, are not and will not leak?
    Answer. On March 2004, the Department declared all pumpable liquids 
were removed from all single shell tanks (SSTs), limiting any risk for 
leakage. The Department continues to empty SSTs. To date, the 
Department has completed or essentially completed waste retrieval from 
six SSTs and other SST retrieval activities are underway. The 
Department has not detected any signs of SST leakage during those 
retrievals.
    For the Department's RCRA-compliant double-shell tanks (DSTs), 
systems are in place in the annulus between the two tank shells to 
detect any leakage. No waste leakage has been detected. While there are 
no absolute assurances regarding long-term DST integrity, the 
Department's ongoing maintenance and monitoring activities effectively 
mitigate DST integrity-related risks.

                    GLOBAL NUCLEAR ENEMY PARTNERSHIP

    Question 11. Secretary Bodman, the Department is proposing to spend 
$395 million in FY 2008, nearly half of all funds dedicated for nuclear 
energy R&D, on spent reactor fuel reprocessing. According to the GNEP 
Strategic Plan, DOE seeks to establish a large-scale nuclear 
``recycling center'' in the United States that would reprocess spent 
reactor fuel from domestic and international sources so as to reduce 
nuclear waste volumes and ultimately destroy stocks of weapons usable 
materials. According to the Department's Energy Information Agency, 
potential nuclear growth is the greatest in the Far East and India. 
Based on the GNEP strategic Plan and projected international nuclear 
power growth, please estimate how much spent power reactor fuel, and 
over what period of time, would be sent to the United States for 
reprocessing?
    Answer. At this time, no decision has been made regarding whether 
or not the U.S. would reprocess spent fuel from sources other than 
domestic utilities. It is anticipated that the initial U.S. capacity to 
recycle SNF would be approximately the amount generated by the U.S. 
commercial power reactors.
    Question 12. Secretary Bodman, DOE officials at the sites and the 
Hanford Advisory Board (HAB) have indicated that the budget request is 
probably not adequate to meet Tri-Party Agreement compliance 
milestones. DOE is obligated to submit an adequate compliance budget to 
the Office of Management and Budget (OMB), so if this budget is not in 
compliance, that means it was cut by OMB. An acknowledgement by DOE 
that the budget is not adequate for compliance builds the case for 
Congress to add money, which has been the practice for the past few 
years. Is the Department's budget request for Hanford cleanup adequate 
to ensure compliance with all Tri-Party Agreement milestones--both in 
FY 2008 and beyond?
    Answer. The Hanford site has experienced significant technical, 
management, and regulatory challenges with such projects as the K-
Basins, Waste Treatment Plant, and Plutonium Finishing Plant. The 
Department anticipates that these and other challenges may affect its 
ability to meet some Tri-Party Agreement milestones in 2008 and beyond. 
DOE will continue to evaluate project management and, where necessary, 
may seek to use flexibility in the Tri-Party Agreement framework to 
negotiate new milestone dates.
    Question 13. Secretary Bodman, supplemental technologies are needed 
to address low-activity tank waste at Hanford to allow the Waste 
Treatment Plant to meet its missions. Bulk vitrification is being 
demonstrated, but technology problems have developed and DOE has 
stopped funding the demonstration. However, the need for supplemental 
technologies is still compelling, and if bulk vitrification is not the 
answer, perhaps other supplemental technologies, like steam reforming, 
should be funded. The FY-2008 request appears to include no funding for 
the demonstration of bulk vitrification to treat low-activity waste at 
Hanford. Does the Department plan to fund the demonstration and testing 
of promising alternative technologies, like steam reforming, to reduce 
the amount of waste that has to be treated in the Waste Treatment 
Plant?
    Answer. An independent external review panel of subject matter 
experts reviewed the Demonstration Bulk Vitrification System (DBVS) 
Project last summer. The DBVS Project team is currently addressing 
issues raised by that panel, none of which were fatal to the project. 
The project team is also preparing DBVS for a DOE Order 413.3-A 
Critical Decision (CD)-2 evaluation, which, if successful, will 
establish a project baseline. A CD-2 baseline is prerequisite to the 
Department requesting additional DBVS funding.
    The Department is also funding steam reforming tests, primarily in 
support of the Idaho sodium-bearing waste project. The steam reforming 
test activities include creating a mineralized waste form, which is the 
type of waste form that would be necessary for Hanford low activity 
waste (LAW). Other alternative technologies have been evaluated by the 
Department both to determine whether more cost-effective technologies 
are available without diminishing safety and also to provide treatment 
diversity for the various compositions of tank waste. The Department's 
decision process regarding which supplemental LAW technology will be 
used to complete the LAW mission (for example, bulk vitrification, 
steam reforming, or a second WTP LAW facility) will be made in 
accordance with the National Environmental Policy Act (NEPA) process 
and in accordance with the Tri Party Agreement. A Tank Closure and 
Waste Management Environmental Impact Statement is currently being 
prepared that addresses supplemental LAW treatment and other Hanford 
waste treatment and closure-related matters.
    Question 14. Secretary Bodman, the Hanford Waste Treatment Plant is 
currently estimated to start up in 2019 and cost in excess of 12 
billion dollars. There are concerns that this cost estimate is 
incomplete and does not include all facilities to treat Hanford's high-
level radioactive tank wastes. For instance, I understand that the 
Hanford Waste Treatment Plant is being designed so that it will only 
accommodate 40 percent of the Hanford tank wastes, while the remaining 
60 percent are expected to be treated with a supplemental technology, 
known as bulk vitrification. Given these circumstances, does the Energy 
Department's current estimate include treatment of the residual 60 
percent of tank wastes? If so, how many bulk vitrification boxes are 
expected to be generated and what are the life-cycle costs for this 
project?
    Answer. The Waste Treatment Plant (WTP) is designed to pretreat and 
vitrify 100% of the high-activity waste. The WTP is planned to vitrify 
about 50% of the low activity waste (LAW). In addition, the Department 
is evaluating alternative technologies to treat the remaining LAW 
fraction of the tank wastes in order to better align the LAW treatment 
processes with the waste characteristics. If, as a result of the 
ongoing baseline reviews and National Environmental Policy Act process, 
bulk vitrification is selected to treat the LAW that will not be 
treated in the WTP LAW facility, the Department estimates that 
approximately 4,000 boxes of LAW bulk vitrification glass would be 
generated.
    The Department's estimates for the Office of River Protection 
include treatment of all tank wastes. Life-cycle cost estimates that 
are specific to the deployment of bulk vitrification at an operational 
scale will be generated as part of the Critical Decision (CD-2) process 
(formal Departmental approval process of a cost and schedule 
performance baseline) if that technology is ultimately selected for 
deployment.
    Question 15. Secretary Bodman, the Energy & Water Appropriations 
Subcommittees have added money the last two years for Hanford 
groundwater, specifically for technologies to mitigate the migration of 
radioactive contaminants towards the River. This is recognized as 
perhaps the ``single greatest'' environmental threat at Hanford, yet 
DOE's request apparently fails to provide funding for this technology 
development. The central environmental threat at Hanford is seepage of 
radioactive contaminants through the groundwater into the Columbia 
River. Funding was added the past two years by congressional committees 
to address such contaminant migration. What does your budget request do 
to continue, and accelerate, efforts to fund new technologies to 
mitigate such groundwater contamination at Hanford?
    Answer. The Department is requesting a significant increase ($30 
million, or a nearly 39 percent increase) in these activities in its 
request for the Hanford site. In addition, movement of radioactive 
contaminants into the groundwater and migration of contaminated 
groundwater to the Columbia River are the highest priorities for the 
Technology Development and Deployment Program (TDD). In FY 2006, a $10 
million increase directed the Department to analyze contaminant 
migration to the Columbia River and to introduce new technology 
approaches to solve contamination issues. Subsequently, nine projects 
have been selected which are designed to remediate chromium, strontium-
90, uranium, and carbon tetrachloride plumes at the Hanford site. The 
projects are designed to assess the viability of alternative treatment 
technologies that have the potential for performing better than the 
baseline technology currently being utilized. Both FY 2007 and FY 2008 
TDD Program funding will be used to test and deploy the new 
technologies and approaches developed and assessed in FY2006 and FY2007 
to mitigate or reduce contaminate movement toward the Columbia River. 
Additionally, Hanford will be increasing focus on the groundwater 
remediation systems to address contaminated plumes along the Columbia 
River, as well as in the Central Plateau, utilizing the results of the 
TDD program.
    Question 16. Secretary Bodman, at today's hearing, I asked whether 
you would recommend the President sign a 15% Renewable Portfolio 
Standard bill send to his desk by Congress. You replied that you would 
not recommend the President sign such a bill based on your belief that 
RPS statues should be enacted by the states, not by federal law. Could 
you please further explain your reasoning? Do you think it is helpful 
to have several dozen different state RPS laws, with differing 
regulations, in order to achieve our shared goal of increasing 
renewable energy production? Would a national interconnection standard 
for renewable energy units to connect to the grid be a positive 
development?
    Answer. The Administration has supported the development of State 
Renewable Portfolio Standards because power generation options and 
renewable resources vary widely from state to state, because states 
hold different views of the types of resources that they would like to 
support, and because retail electricity sales are regulated largely at 
the state level.
    With 21 states moving forward with renewable portfolio standards, 
covering over 80% of the population, we have not seen analysis that 
indicates the benefits or utility of replacing existing State standards 
and regulatory structures with new and undefined National regulations. 
Supporting State efforts to meet their renewable goals, especially 
through utilization of EPACT authorities for transmission line 
development is our preferred approach.
    Regarding interconnection standards for renewable energy, the 
Department is aware that a lack of standards for interconnection, as 
well as for trading of renewable energy credits, presents barriers to 
renewable power project development. The Department supports efforts to 
address these barriers.
    Question 17. Secretary Bodman, at today's hearing, I asked whether 
you would recommend the President sign a bill that extended tax 
incentives for renewable energy and fuels production. You replied that 
you would not recommend the President sign such a bill. Could you 
further explain your reasoning? Do you think Section 45 production tax 
credits have had any effect on helping bring new renewable energy 
production online versus what it would have been without their 
existence? Are there any clean energy tax incentives you would support, 
and if yes please name them.
    Answer. At the time of the Hearing, I indicated that we do not have 
a categorical response in the affirmative or negative for each of the 
many tax incentives that were signed into law by the President in the 
Energy Policy Act, some of which have, of course, been subsequently 
extended.
    Moreover, the probability of Congress and the Administration 
agreeing to changes in the characteristics of existing tax policy, such 
as duration, eligibility period, transference and the like, requires, 
as suggested, some detailed cost-benefit analyses balancing the desired 
objectives of such policies with their respective budgetary impacts.
    In that regard, we have begun inquiries with the Department of the 
Treasury (which has jurisdiction on these issues), to better understand 
and analyze actual growth and pricing impacts and cost-benefits of any 
potential changes to the characteristics of such tax policy, such as 
duration, eligibility, transferable value, etc.
    The context of my earlier response was specific to the question on 
renewable energy, and ethanol, in particular. Of course, solar, 
geothermal, biomass, and wind technologies all benefit from tax credits 
listed under the Energy Policy Act of 2005, such as Section 45 
Production Tax Credit; Section 48A Investment Tax Credit, Section 25C 
homeowners energy efficiency tax-credit; Section 30B alt fuel/hybrid 
vehicles tax credit; and Section 40A biodiesel tax credit.
    Question 18. Secretary Bodman, please provide me with a history of 
the hydropower research goals, specifically I'd like to better 
understand the length of the program, how many taxpayer dollars were 
invested in it, and what results it achieved.
    Answer. The Department's Hydropower Program was established in 
1977. In the 1970s, the Hydropower Program focused on small hydropower 
technology assessment and strategic planning. In the 1980's, activities 
expanded substantially into a Small Hydropower Loan Program, plus 
resource assessment and analysis of environmental, economic, and policy 
issues facing new hydropower development. After several years of zero 
funding (fiscal years 1988-1990), the Hydropower Program reformed with 
a focus on new technology development to improve the environmental 
performance of hydropower projects. From 1994 to the present, the 
Hydropower Program has been focused largely on Advanced Turbine 
research, but it did expand further into new research topics like 
integration of hydropower with wind energy. The total funding since 
inception was approximately $128 million ($49 million of that was in 
fiscal years 1979 and 1980 when the Small Hydro Loan Program was 
operating).
    Under the Small Hydro Loan Program (1978-1985), 20 new projects 
were developed with a total installed capacity of 133 megawatts in 18 
states. More than two dozen guidance manuals, resource assessments, and 
technical analyses were produced in that early phase of the program, 
all related to small-scale hydropower development.
    Since the Hydropower Program was restarted in 1990, the major 
accomplishments and technology transfers were:

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

    Question 19. Secretary Bodman, there is growing worldwide interest 
in the utilization of ocean energy, particularly tidal and wave energy. 
Has the Department considered funding non-OTEC ocean energy R&D? If 
they have, what conclusions has the Department reached about its 
potential and a possible federal role?
    Answer. The Department is observing the growth of interest, 
activity, and investment in wave and tidal technologies. We recognize 
that several states have promising opportunities for harnessing these 
forms of ocean and tidal energy, and thus we are monitoring domestic 
and worldwide progress in ocean energy technologies in collaboration 
with the Electric Power Research Institute and the International Energy 
Agency. Some countries with higher resource potential than the United 
States, relative to their overall energy needs, are active in ocean and 
tidal energy R&D. Ocean, wave, and current technologies are still in 
their infancy, with a small number of demonstration systems operating 
worldwide. The Department will continue to consider emerging 
technologies like these in evaluating its research, development and 
deployment programs.
    The Department is also supporting a wave energy technology R&D 
project via the Small Business Innovation Research Program. The U.S 
Navy also supports ocean energy research. In addition there may be 
opportunities for a Federal agency to satisfy the green power purchase 
requirements of the Federal Government mandated by the Energy Policy 
Act of 2005.
    Question 25. Secretary Bodman, could you please provide EIA's 
analysis of how the President envisions reaching his State of the Union 
goal of production [of] 35 billion gallons of biofuels by 2017?
    Answer. The Energy Information Administration (EIA) has not been 
asked to prepare an analysis of the President's Alternative Fuel 
Standard proposal. Any such analysis would be sensitive to program 
details, such as the list of fuels eligible for the program and the 
trigger levels at which the ``safety valve'' mechanisms that are 
included in the program would come into play. The analysis would also 
be sensitive to assumptions made regarding the availability of imports 
of eligible fuels, future yield assumptions for corn and other ethanol 
feedstocks, and the rate of progress in reducing the costs of emerging 
biofuels technologies, such as the production of ethanol from 
cellulosic biomass.
    Question 26. Secretary Bodman, how many flex fuel vehicles would 
have to be on the road in 2017 in order to consume 35 billion gallons 
of biofuels?
    Answer. Theoretically, if Flex Fuel Vehicles (FFVs) refueled 100 
percent of the time with E85, assuming convenient, ready-access and 
wide availability--and never used conventional gasoline--approximately 
24 million FFVs (approximately four times the number currently in use) 
would need to be on the road by 2017 to achieve the 35 billion gallon 
goal. Of course this is not a likely scenario, but it provides a solid 
quantitative baseline for all variables, such as consumer awareness of 
their vehicles flexible fuel capabilities, relative fuel prices, ease 
of access to E-85 dispensers, convenient station locations and relative 
vehicle performance. If, hypothetically, FFV owners chose E85 twenty-
five percent of the time, approximately 96 million FFVs could be 
needed. To make such choices convenient to consumers, we estimate that 
E85 would need to be available between, at least, one fourth to one 
half of all gasoline retail outlets. In any scenario, FFV growth is 
essential to achieving the President's goal of reducing gasoline 
consumption by twenty percent in ten years.
    Question 27. Secretary Bodman, the Office of Energy Efficiency and 
Renewable Energy received a huge $300 million increase as part of the 
FY 2007 continuing resolution. Could you please describe in detail, by 
program, how the Department plans to spend these monies and what 
results you have to achieve with these onetime funds.
    Answer. In accordance with the provisions of H.J. Res. 20, the 
Department will submit to the Congress a plan for how the Office of 
Energy Efficiency and Renewable Energy plans to allocate the $300 
million increase within 30 days of enactment.
    Question 29. Secretary Bodman, please describe any advances in 
vehicle technologies that have resulted from DOE R&D and have been 
passed on to industry since the end of the Partnership for a New 
Generation of Vehicles. Do any of these technology advances appear in 
cars available to consumers today?
    Answer. Partnership for a New Generation of Vehicles (PNGV) 
transitioned to the FreedomCAR and Fuel Partnership beginning in 2002. 
The automotive industry partner, the U.S. Council for Automotive 
Research (whose members are General Motors, Ford and DaimlerChrysler) 
continued as a participant and five energy companies joined. In terms 
of successful research efforts, the partners make their own decisions 
on commercialization independently. The decision for these technologies 
to be integrated in the vehicles they manufacture is entirely up to the 
automobile industry participants. However, in the partnership agreement 
with DOE, U.S manufacturers have committed to commercialize new 
technologies as soon as a business case can be made.
    Several Department of Energy cost-shared technologies have been 
introduced by partners into vehicles and fuels, such as:

   Cummins (a diesel engine manufacturer) developed a light-
        duty diesel engine that will be manufactured for 2009 model 
        DaimlerChrysler light-trucks and SUVs.
   Research into heavy hybrid technology with Allison 
        Transmission has accelerated the development of the dual mode 
        hybrid system that General Motors will offer for sale in its 
        2008 Chevy Tahoe full size hybrid sport utility vehicle.
   DaimlerChrysler and BMW will offer variations of the same 
        technology in several vehicle applications, such as the 2008 
        Dodge Durango.
   DOE investigated the different effects of sulfur levels on 
        emission control devices. The data generated by that research 
        allowed industry and government to reach consensus on the 15 
        parts per million standard for low sulfur diesel fuel. This 
        fuel is now available across the country and is enabling the 
        introduction of clean and efficient light-duty diesel vehicles.
   Emission control technologies developed with Cummins appear 
        on the 2007 Dodge Ram truck that meets the EPA 2010 emission 
        standards three years early.
   Several modeling codes developed by the national labs as 
        part of the Vehicle Technologies research program to simulate 
        combustion and emission controls are now being used by industry 
        to design and optimize their engine systems.
   Advanced casting technologies for magnesium and aluminum 
        that were. developed under FreedomCAR are now used in 
        production passenger vehicles. The aluminum casting 
        technologies are used in the production of other consumer 
        products.

    Additional items can be found at: http://www1.eere.energy.gov/
vehiclesandfuels/resources/fcvt_success_stories.html

    Responses of Secretary Bodman to Questions From Senator Sanders

                             WEATHERIZATION

    Question 1. I can't articulate to you the depth of my concerns 
about this Administration's attempts to cut funding for weatherization. 
I fought for weatherization funds for years when I was a member of the 
other body and I will continue as a member of this body.
    What other programs administered by the Department of Energy are 
cutting energy use and energy bills for low-wage workers and fixed-
income retirees this year? Since we know the answer is NONE, I wonder 
where the fairness is since low-income taxpayers' payroll taxes are 
being used to provide tax incentives to upper-income families to buy 
hybrid SUV's.
    In response to a question from Sen. Menendez, you indicated that 
weatherization does not provide enough of a return on investment for it 
to be a priority--and yet you have no information, according to your 
budget, about the consumer savings associated with the program. When do 
you expect to have such information? And, why would you cut the program 
without having that information?
    Answer. The Department's budget request presents estimated per-
household consumer savings on page 429 of Energy Supply and 
Conservation (Volume 3). Those savings, $274, are estimated first-year 
cost savings per-household, using historical results from 1993-2002, 
for homes weatherized in 2006, based on energy prices in the 2005 EIA 
Annual Energy Outlook. As you are aware, energy costs vary over time, 
and we regularly update our estimated consumer savings to reflect 
changing energy prices.
    Our most recently published fact-sheet, available on our web-site, 
updates the per-household first-year cost savings estimate to $358 
based on energy prices in the 2006 EIA Annual Energy Outlook.
    In addition, the expected benefits of each EERE program are shown 
in our Congressional justification materials. A summary is presented on 
page 31 and 32 of Energy Supply and Conservation (Volume 3). The table 
shows the Weatherization and Intergovernmental Program has the lowest 
or near lowest expected benefits in all three benefit categories 
(consumer expenditure savings, carbon emissions reductions, and avoided 
oil imports). Details of our modeling efforts that produce these 
results will be available online by March 31, 2007 at http://
www1.eere.energy.gov/ba/pba/gpra.html.
    Weatherization is the largest-funded program in EERE, at the 
expense of other research and development (R&D) programs. In order to 
address this country's energy challenges with the urgency it deserves, 
we have chosen to prioritize investments in efficiency 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, albeit an important one.
    The Department administers and invests in programs to continuously 
yield technological products, services, appliances, building and 
vehicles that improve efficiency each and every year, and thus cut 
energy use and bills for all Americans.

                             NUCLEAR POWER

    Question 3a. Nuclear Power 2010, a government-industry cost-share 
program to license new reactors, has received more than $186 million 
since FY 2001. President Bush has said that Nuclear Power 2010 will be 
a $1.1 billion program. On what specifically will the $1.1 billion be 
spent?
    Answer. The $1.1 billion dollar estimate represents the total 
estimated costs for the two New Nuclear Plant Licensing Demonstration 
Projects of which the Federal government will cost share 50 percent. 
The estimate is the commitment to support the activities to see the 2 
combined Construction and Operating License (COL) applications through 
to completion but there are additional aspects of the 2010 program not 
included in that estimate, such as three Early Site Permits, and the 
Standby Support Programs.
    These two projects, cost shared with Dominion Energy and NuStart 
Energy Development LLC, support activities for industry to apply for 
and receive two COLs from the Nuclear Regulatory Commission (NRC) and 
for reactor vendors to complete sufficient final designs on two 
Generation III+ reactors, the AP 1000 and the Economic Simplified 
Boiling Water Reactor (ESBWR) that will enable an industry decision by 
2010 to build a new nuclear power plant. Activities include COL 
application preparation, support of the NRC review and approval of two 
applications, design engineering work in support of the COL 
applications, support of NRC design certification of the AP1000 and 
ESBWR, site-specific engineering for the COL reference sites, first-of-
a-kind engineering for the two reactors, and final design.
    Question 3b. The Department has granted $260 million to a 
consortium of utilities and manufacturing companies, called NuStart, 
for only one construction and operation license application. On what 
specifically have the Nuclear Power 2010 funds been spent? How much has 
been given to which companies to do what?
    Answer. Since 2001, the Nuclear Power 2010 Program has implemented 
feasibility and suitability studies and is supporting three Early Site 
Permit Projects, two New Nuclear Plant Licensing Demonstration (or 
combined Construction and Operating License (COL) Demonstration) 
projects, the COL Guidance and Generic Issues Project, and the Standby 
Support Programs. The Nuclear Power 2010 program also supported a 
number of economic and infrastructure-related studies, which can be 
found on the Department's Nuclear Power 2010 public information website 
at http://nuclear.energy.govinp2010/neNP2010d.html.
    One of the two New Nuclear Plant Licensing Demonstration Projects 
was awarded to NuStart Energy Development, LLC with an original project 
estimate of $260 million at the time of award selection in November 
2004. The current NuStart project estimate is $322 million. Department 
cost-share funding provided to NuStart through FY 2006 is $77.4 
million. This cost share has been divided between the three major 
companies participating in the project as follows: NuStart--$11.2 
million, Westinghouse--$45.9 million and GE--$20.3 million.
    Activities performed with these funds ($77.4 million) include 
project setup, management and administrative costs including 
subcontract establishment with Westinghouse and General Electric, site 
evaluations and selection, reactor technology bid specification 
development, preparation (including design) of two combined 
Construction and Operating License (COL) applications for the AP1000 
and ESBWR, and licensing interaction with the Nuclear Regulatory 
Commission (NRC) on regulatory requirements and associated regulatory 
guidance related to the COL application.
    Major future activities during the FY 2007 through FY 2011 include 
completion of the COL application process with the NRC, licensing 
interactions, and completion of engineering on the AP 1000 and ESBWR 
designs.

                   GLOBAL NUCLEAR ENERGY PARTNERSHIP

    Question 4. At today's hearing, Mr. Bodman said that GNEP is going 
to be a multi-decade program. At what point does the Department intend 
to tell Congress how much the entire lifecycle cost of GNEP will be? 
Why is Department in the process of approving a full-scale reprocessing 
facility when the research is at the lab-bench scale, as Mr. Bodman 
said in the hearing today? Why is DOE in the process of approving a 
fast reactor when, according to the DOE's Generation IV documents the 
fast reactor is at the Technical Readiness level of ``concept 
development'' and not ready for full-scale construction, as proposed?
    Answer. The Department is developing a Global Nuclear Partnership 
Program Management Plan (GNEP PMP) that outlines high-level 
programmatic milestones, cost schedules, and timelines for GNEP. In 
addition, DOE plans to further engage industry to provide additional 
input for consideration leading to an informed Secretarial decision by 
June 2008.
    The Department is not in the process of approving a full-scale 
reprocessing facility, but rather exploring alternatives with 
stakeholders and industry. The Department is also engaging industry to 
determine the technology development needs that exist for the large-
scale or full-scale deployment of nuclear fuel recycling centers and 
advanced recycling reactors.
    The Generation IV fast reactor technology program differs from GNEP 
in that they are proposing to develop the ``next-generation'' of fast 
reactor technology for the 2040 timeframe. By 2025, GNEP would apply, 
the best available existing fast reactor technology similar to that 
currently used in France, Japan, and Russia.

      Response of Secretary Bodman to Question From Senator Corker

    Question 1. Mr. Secretary, I would like to call your attention to 
solar technology originally developed and now being commercialized in 
my home state of Tennessee that appears to have fallen through the 
cracks in this budget request. The technology, developed by Oak Ridge 
National Laboratory, is called solar lighting. Solar lighting systems 
collect sunlight on the roof-top of buildings and pipe it through 
optical fibers to illuminate the inside buildings and save energy on 
light bills. This past year, Oak Ridge and its private industry partner 
commercializing the technology won an R&D 100 award as one of the top 
100 research developments of 2006. Unfortunately, it is my 
understanding that the Administration's request has largely overlooked 
the funding line that supports this area of research, and I'm told that 
momentum may be lost in this exciting new solar field unless solar 
heating and lighting research is more adequately funded.
    Would you please explain your rationale for this year's request 
concerning the solar energy R&D portfolio?
    Answer. The hybrid solar lighting R&D being conducted by Oak Ridge 
National Laboratory is scheduled to undergo an in-depth technical 
review at the end of FY 2007. This review is meant to coincide with the 
completion of a market study and several improvements in the operation 
and performance of the technology.

    Responses of Secretary Bodman to Questions From Senator Sessions

                           NUCLEAR POWER 2010

    Question 1. NP 2010 was authorized to provide a 50/50 cost share 
between the government and private industry regarding development of 
first-of-a-kind engineering for new nuclear reactors. In order for 
nuclear power companies to move forward to develop the next generation 
of reactors, they need to be certain that NP2010 program will be 
funded. What do you expect to accomplish with the $114 million for 
NP2010 in FY2008? Is NP2010 your highest priority in nuclear energy? 
Given our need for baseload power, should we not seek to develop more 
than 2 COL licenses nationwide?
    Answer. The $114 million in FY 2008 for Nuclear Power 2010 (NP 
2010) will support the submission of two combined Construction and 
Operating License (COL) applications and the initiation of the Nuclear 
Regulatory Commission (NRC) review of these applications including 
responses to NRC's Requests for Additional Information as well as the 
NRC review fees. In addition, the design certification review of the 
Economic Simplified Boiling Water Reactor (ESBWR) by the NRC will be 
funded through industry by the NP 2010 Program. The reactor vendors 
will continue their design engineering work including first-of-akind 
engineering on the two Generation III+ reactor designs, AP 1000 and 
ESBWR.
    The NP 2010 Program with its near-term goal of an industry decision 
to build a new nuclear power plant is a very high priority for DOE. 
Although NP 2010 is funding the development, submission, and NRC review 
of two COL applications for approval, 15 utilities have notified NRC 
that they intend to file up to 21 COL applications between 2007 and 
2009. Up to 32 new units are planned by these utilities, of which 15 
plants are planned by utilities involved in NP 2010.
    The submission of the two NP 2010 funded COL applications will 
provide critical information that benefits all subsequent COL 
applications.
    The COL applications being developed outside the NP 2010 program 
demonstrate that the baseload power needs can be met without expanding 
the program beyond its original scope.
    Question 2. I want to commend the Department for their partnership 
with the metalcasting industry on the EnergySMART program, but I am 
concerned that over the last two years funding for the EnergySMART 
program has been diverted to other projects. My understanding is that 
this underfunding has delayed progress. What is the DOE doing to ensure 
proper funding and adequate progress of the EnergySMART program?
    Answer. The Industrial Technologies Program (ITP) has historically 
worked with the eight most energy-intensive manufacturing industries to 
research, develop, and implement advanced technologies that save 
energy, cut costs, and reduce emissions. While these activities have 
contributed to reducing overall industrial energy consumption, the 
industrial landscape is changing rapidly. ITP is focusing its 
technology research to be widely applicable to the U.S. industrial 
base. ITP is working to leverage developments through Original 
Equipment Manufacturers (OEMs) and end-users. ITP has identified four 
critical technology areas (Reactions & Separations, High Temperature 
Processes, Energy Conversion Systems, and Fabrication & Infrastructure) 
for research which includes all the technology areas and interests of 
the traditional energy intensive industries (including metal casting) 
and is applicable to a much broader array of industry members. These 
technology areas were identified using ITP industrial analyses, 
industrial stakeholder roadmaps and other feedback. In FY 2007, ITP is 
issuing two solicitations based on these technology areas. All U.S. 
industries, which includes metal casting, are encouraged and expected 
to participate.
    The Energy-Saving Melting and Revert Reduction Technology (E-
SMARRT) portfolio fits within two of the new technology areas (``High 
Temperature Processing'' and ``Fabrication and Infrastructure'') 
specifically address casting technologies for melting, high-temperature 
processing, fabrication, and forming of ferrous and non-ferrous metals. 
This research has the capability to significantly improve productivity 
and competitiveness of the domestic automobile industry. It contributes 
to savings in casting energy use.
    ITP recognizes the value of E-SMARRT and plans, to provide 
appropriate funding when projects are meeting their milestones and ITP 
objectives. ITP's strategy is to direct its investments and resources 
to those projects that can provide the largest impact for reaching its 
goals.
    Question 3. The US manufacturing industry has considerable 
challenges with global competitiveness. Nanotechnology has been 
promising for several years to change the entire US industrial base, 
changing products and manufacturing processes. These new products and 
processes are touted to make manufacturing more energy efficient 
resulting in lower carbon dioxide (GHG) emissions. How is the 
Department accelerating nanotechnology into the industrial marketplace?
    Answer. As a partner in the National Nanotechnology Initiative 
(NNI), the Department of Energy (DOE) fully supports NNI's four goals, 
one of which is ``Facilitate transfer of new technologies into products 
for economic growth, jobs, and other public benefit.'' To meet this 
goal the NNI has chartered a member of outreach groups in which DOE 
participants, including the Nanotechnology Innovation and Liaison with 
Industry Working Group. This group interacts with various industrial 
sectors, including the chemicals and electronics industries, to promote 
nanotechnology development and use.
    Specifically within DOE, the Office of Science's Basic Energy 
Sciences program is responsible for development and support of five 
Nanoscale Science Research Centers, which make unique capabilities and 
world-leading expertise available to industrial users for both pre-
competitive and proprietary work.
    In addition, DOE has sponsored meetings with the NanoBusiness 
Alliance, With representatives of other industry groups like the 
Semiconductor Industry Association and the Semiconductor Research 
Corporation, with community business groups like the Arlington, Texas 
Chamber of Commerce, and with representatives from specific companies 
like Motorola.
    Support has also been provided for industrial activities through 
the Department's Office of Energy Efficiency and Renewable Energy, 
particularly for the chemicals industry, including support for the 
Chemical Industry Vision2020 workshop on nanomaterials by design.

     Responses of Secretary Bodman to Questions From Senator DeMint

    Question 1. In the FY 2007 Department of Energy (DOE) budget, the 
Site Completion section for the Savannah River Site (SRS), said that 
``SRS is a site with an enduring mission and is not a closure site.'' 
This language is missing from the FY08 budget documents. Does DOE still 
believe SRS is a national priority with resources that exist nowhere 
else in the United States?
    Answer. The SRS mission and status has not changed.
    Question 2. Is it DOE's intention to maintain SRS and its enduring 
missions?
    Answer. Yes, the Department continues to believe that SRS is a site 
with an enduring mission.
    Question 3. While I appreciate DOE adding an additional $121 
Million to the critical Defense Cleanup work at Savannah River Site, I 
am concerned that DOE cut over $235 Million from the 2012 accelerated 
completions. What programs will be affected by this reduction?
    Answer. There are no programmatic impacts related to this transfer 
of funding.
    The FY 2008 budget does not represent a decline in 2012 Completion 
Projects, but simply a shift in funding from the 2012 Completion 
Projects at Savannah River to the 2035 Completion Projects account. 
This shift is due to the transfer of the F-Area and H-Area activities 
to the 2035 Completion Projects account. These activities include the 
operation of H-Canyon and HB-Line to support the processing of legacy 
nuclear materials and aluminum-clad spent nuclear fuel for disposition 
consistent with the site cleanup strategy, and continue support for 
efforts to blend highly enriched uranium solutions to low enriched 
uranium that will be packaged and shipped to the Tennessee Valley 
Authority. In addition, the Site will continue to monitor the F-Canyon 
Complex facilities in a minimum surveillance and maintenance condition. 
The only remaining activity in the 2012 account is the construction 
funding for the 3013 Container Surveillance and Storage Capability 
project.
    Question 4. Secretary Bodman, do you believe this budget fully 
funds the current scope of cleanup activities at the SRS and maintains 
the current size of the workforce?
    Answer. The proposed budget supports the risk-based cleanup 
priorities at the site. The focus of the program in FY 2008 is 
plutonium/uranium disposition and the reduction of the risk associated 
with long-term storage of radioactive liquid waste. Adjustments to the 
workforce will be necessary as some programs are completed and others 
ramp up. It is anticipated that the site's overall workforce will 
remain relatively stable in FY 2008.
    Question 5. Secretary Bodman, if the budget is not adequate to 
fully fund the scope of work and maintain the size of the workforce at 
SRS, what is DOE's plan to meet the budget?
    Answer. The proposed budget supports the risk-based cleanup 
priorities at the site. The focus of the program in FY 2008 is 
plutonium/uranium disposition and the reduction of the risk associated 
with long-term storage of radioactive liquid waste. Adjustments to the 
workforce will be necessary as some programs are completed and others 
ramp up. It is anticipated that the site's overall workforce will 
remain relatively stable in FY 2008.
    Question 6. Secretary Bodman, with an understanding that there have 
already been setbacks with the Salt Waste Processing Facility (SWPF), 
are you willing to commit DOE's time and resources to ensure that the 
SWPF does not experience further delay?
    Answer. The Department is committed to completing this critical 
project. Based on ongoing facility design, SWPF Project is in the 
process of formally establishing a performance baseline in accordance 
with DOE Order 413.3A that takes into account all delays and impacts 
encountered over the last two-year period. This baseline will establish 
the cost and schedule for the project and should be in place late 
summer or early fall. DOE will provide the oversight required to ensure 
that the baseline schedule is maintained.
    Question 7. Secretary Bodman, will DOE be issuing a draft Request 
for Proposal (RFP) for the Savannah River Site Liquid Waste Management 
contract?
    Answer. Yes, the Department is working on the draft RFP. We 
anticipate releasing it for public and industry comment during the 
second quarter Fiscal Year 2007.
    Question 8. Secretary Bodman, when will the RFP come out?
    Answer. The Department anticipates releasing the draft RFP for the 
Savannah River Site Liquid Waste contract for public and industry 
comment during the second quarter Fiscal Year 2007.
    Question 9. Secretary Bodman, what is the schedule for bid 
deadlines and decisions to be made both for the Liquid Waste contract 
and the Management and Operations contract at SRS?
    Answer. Upon release of the final request for proposals, bidders 
will have approximately 60 days to respond to the request for 
proposals. The Department will then diligently review the proposals 
received and award the contracts with the goal of doing so within the 
time period in the current SRS contract extension (June 2008).
    Question 10. Secretary Bodman, we have over 2,000 canisters of 
Defense waste at SRS and a commitment was made to SC to remove that 
material. I understand DOE will submit its license to operate Yucca in 
2008. Under your current timeline, when can South Carolinians expect to 
see some of these Defense waste canisters leave South Carolina?
    Answer. The Department intends to submit a high quality license 
application to the NRC not later than June 30, 2008. Our current best 
achievable schedule for opening the repository and accepting waste is 
March 2017. This schedule, however, is based on appropriations 
consistent with optimum Project execution, issuance of a Nuclear 
Regulatory Commission (NRC) Construction Authorization consistent with 
the three year period specified in the Nuclear Waste Policy Act, and 
the timely issuance by the NRC to DOE of a Receive and Possess License. 
This schedule is also dependent on the timely issuance of all necessary 
other authorizations and permits, the absence of litigation related 
delays and the enactment of legislation proposed by the Administration. 
In addition, the extent to which we could ship high-level waste from 
Savannah River to Yucca Mountain is dependent on the availability of a 
rail line to Yucca Mountain. Once the repository is opened, we believe 
that the vitrified waste from Savannah River would be an excellent 
candidate for early waste acceptance and disposal at the Yucca Mountain 
Repository.
    Question 11. Secretary Bodman, what is your plan to dispose of the 
waste at the Savannah River Site (SRS) in the most environmentally safe 
and secure way possible if Yucca does not open?
    Answer. The Department is currently vitrifying high-level waste and 
storing the glass canisters, a stable and safe waste form, on-site at 
SRS. The Department is also safely storing spent nuclear fuel on-site, 
until such time that it can be processed and prepared for disposal at 
Yucca Mountain. The Department currently projects Yucca Mountain 
availability in 2017.

     Responses of Secretary Bodman to Questions From Senator Smith

    Question 1. First, let me say that I appreciate the fact that the 
Administration is no longer pursuing legislation to make BPA's third-
party financing arrangements count against BPA's statutory debt 
ceiling. However, the requirement in the budget proposal that BPA 
dedicate net secondary revenues in excess of $500 million annually is 
opposed by me and other members of the NW delegation.
    Does the President's budget proposal include revenues from this 
proposal? If so, please provide those annual revenue numbers, beginning 
with fiscal year 2008.
    Answer. Yes, the FY 2008 budget estimates assume incremental 
revenues associated with the net secondary revenue proposal. These 
estimates are embedded within the gross revenue and net outlays 
estimates for BPA for the fiscal years 2008 through 2012. The 
incremental revenue estimates are:. $91 million for FY 2008; $112 
million for FY 2009; $107 million for FY 2010; $116 million for FY 
2011, and $107 million for FY 2012, for a total of $533 million for the 
FY 2008 through FY 2012 period.
    These estimates are based on expected values. Actual incremental 
revenues would depend on how the net secondary proposal is implemented 
in BPA's power rate structure. Actual net secondary revenues vary 
significantly from year to year due to many variables, including the 
volatility of secondary power market prices and the variability of 
annual stream flows.
    Question 2a. What are the process and the schedule for the proposed 
dialogue with the region?
    Answer. The dialogue on the secondary revenue proposal would be 
best conducted within the Pacific Northwest, and this would most likely 
yield an approach that would meet the basic goals of the budget 
proposal while positively addressing the needs and concerns of BPA's 
customers. This discussion is planned to take place concurrent with the 
discussions expected later this spring surrounding the rate structure 
and contracts that will implement the Long Term Regional Dialogue 
policy.
    Question 2b. What Administration officials would be involved with 
these discussions?
    Answer. I have asked BPA Administrator Wright to work with 
Northwest parties to convene this discussion. If the discussion does go 
forward and yields a recommended approach, as I hope it will, I would 
expect you and other members of the Northwest delegation will have an 
opportunity to provide input on that approach before it is acted upon.
    Question 3a. There is recognition in the budget (p.385 of the 
Appendix) of contingencies that may arise for BPA, and there is 
discussion in BPA's press release about ``access to any prepayments 
should BPA's fortunes wane . . .''.
    How does the Administration intend to address this need for access 
to capital under certain conditions, primarily bad water years?
    Answer. The anticipated regional discussions will address a desire 
to balance the basic goals of the net secondary proposal with the 
ability of BPA to access any prepayments should its financial fortunes 
wane, such as in bad water years, and also mechanisms for assuring 
durability of any agreements around the implementation of this 
proposal, if and when such agreements are reached.
    Question 3b. Would this require legislation?
    Answer. The current proposal is intended to be administrative in 
nature and it is premature to speculate whether the use of some yet-to-
be-determined implementation mechanism would require legislation.
    Question 4. While I am a supporter of all renewables, I remain 
concerned that the Department is ignoring the growing interest in wave 
and tidal energy, particularly on the contiguous West Coast, Alaska, 
and Hawaii. These innovative technologies are renewable, non-emitting 
resources that can help meet our nation's growing demand for 
electricity. In Oregon, it would be possible to produce and transmit 
over two hundred megawatts of wave energy without any upgrades to the 
existing transmission system on the coast. Already a number of 
preliminary permits have been filed at the Federal Energy Regulatory 
Commission for wave energy facilities off the Oregon coast.
    These facilities would be virtually invisible from shore, and could 
provide predictable generation that could be easily integrated with 
other electricity resources. In addition, according to a January 2005 
report issued by the Electric Power Research Institute, ``with proper 
siting, converting ocean wave energy to electricity is believed to be 
one of the most environmentally benign ways to generate electricity.''
    As with many emerging renewable technologies, wave and tidal energy 
are more costly than traditional generation using fossil fuels. Yet, 
for our environment, and our energy security, we must provide 
incentives that will encourage the development and commercialization of 
these resources. Can you please explain to me why the budget for 
renewable energy ignores these technologies again this year?
    Answer. The Department is observing the growth of interest, 
activity, and investment in wave and tidal technologies. We recognize 
that several states have promising opportunities for harnessing these 
forms of ocean and tidal energy, and thus we are monitoring domestic 
and worldwide progress in ocean energy technologies in collaboration 
with the Electric Power Research Institute and the International Energy 
Agency. Some countries with higher resource potential than the United 
States, relative to their overall energy needs, are active in ocean and 
tidal energy R&D. Ocean, wave, and current technologies are still in 
their infancy, with a small number of demonstration systems operating 
worldwide. The Department will continue to consider emerging 
technologies like these in evaluating its research, development and 
deployment programs.
    The Department is also supporting a wave energy technology R&D 
project via the Small Business Innovation Research Program. The U.S. 
Navy also supports ocean energy research. In addition there may be 
opportunities for Federal agency procurement in order to satisfy the 
green power purchase requirements mandated by the Energy Policy Act of 
2005.
    Question 5. For the remainder of this fiscal year, how does the 
Department intend to allocate funds to institutes that have received 
funding in the past years, such as the Geo-Heat Center at Oregon 
Institute of Technology?
    Answer. With the enactment of the FY 2007 budget for the 
Department, we will be preparing and submitting a spending plan within 
30 days. As we prepare that plan, we will carefully consider funding 
options for projects that have contributed in the past and have the 
potential to continue contributing to our research, development and 
deployment goals.

    Responses of Secretary Bodman to Questions From Senator Salazar

                  RENEWABLE ENERGY & ENERGY EFFICIENCY

    Question 1. Secretary Bodman, you have been quite supportive of the 
National Renewable Energy Laboratory in Golden, Colorado, as well as 
Energy Efficiency and Renewable Energy programs in general. I recall 
your visit to NREL in July of 2006, when we both cut the ribbon the new 
Science and Technology Facility there. But when it comes to presenting 
budgets like this one, there is a lack of strong leadership by this 
administration for supporting EERE programs, and in particular for 
NREL, where this administration proposes a cut of $6 million dollars 
compared to last year's request. In inflation adjusted dollars, the 
request is actually a cut in spending compared to FY06. What happened 
between your visit to Colorado and now in Washington?
    Answer. The Department of Energy (DOE) Office of Energy Efficiency 
and Renewable Energy (EERE) provides 87% of the funding for the 
National Renewable Energy Laboratory (NREL). Approximately 4% is funded 
by DOE's Office of Science and 9% from other government sources and 
technology partnership agreements.
    Recently, some media reports have caused alarm by inaccurately 
speculating on the potential for a decrease in NREL funding in fiscal 
year 2008. Unfortunately, these media reports have been based on 
budgetary numbers that were taken out of context and do not tell the 
whole story of NREL funding. In fact, actual funding to NREL has 
historically been much higher than the published budgetary numbers 
referred to in the media reports. This is because, every fiscal year, 
the Department of Energy awards new research grants for specific 
projects above and beyond a lab's published budgetary numbers. 
Government budgeting guidelines take a conservative approach and permit 
publication of only the minimum amount of funding required to maintain 
known, ongoing operations--not the estimated value of new research 
grants.
    For example in fiscal year 2006, the Government budgetary numbers 
showed NREL funding of $143 million from EERE. In that year, NREL 
actually received $183 million from EERE--$40 million above the 
original forecast. In addition, NREL received another $18.4 million 
from other DOE offices and other Federal Agencies. Overall in fiscal 
year 2006, total Federal funding to NREL was 40% more than shown in the 
Government budgetary numbers.
    Question 2. This year's budget request shows a 5.2% increase in 
spending for EERE programs over FY 2006 spending levels, the first time 
in five years that the Bush administration has requested an increase in 
spending over its previous year's requested when adjusting for 
inflation. However, with the newest GDP deflators in this budget 
request, the total EERE FY08 request is only a 0.2% increase over FY06 
total EERE, due to the 5% difference in inflation between FY06 and 
FY08. Again, if these programs are such a priority for the 
Administration, why do the increases in spending for EERE in FY08 
barely match inflation?
    Answer. The Budget reflects our Nation's highest priorities, 
including combating terrorism and protecting the homeland, keeping the 
economy strong with low taxes, and spending taxpayer dollars wisely 
while holding non-security spending growth to one percent. The 
President's pro-growth economic policies, coupled with greater spending 
restraint, put us on a path to reduce deficits every year and achieve a 
balanced budget by 2012.
    The FY 2008 EERE budget maintains support for key components of the 
President's Advanced Energy Initiative (AEI), proposing increases for 
the Biofuels Initiative to develop affordable, bio-based transportation 
fuels from a wide variety of feedstocks and agricultural waste products 
by 2012, and for the Hydrogen Fuel Initiative to develop technology 
options for domestic hydrogen infrastructure and for hydrogen-powered 
fuel cell vehicles by 2020. Further, the request maintains strong 
support for: the Solar America Initiative to accelerate the development 
of materials that convert sunlight directly to carbon-free electricity 
cost competitively by 2015; wind--energy research to reduce costs and 
address barriers to large-scale use of wind power in the U.S.; and 
Vehicle Technologies, to support a range of advanced automobile 
technologies including plug-in hybrid vehicles.
    Question 3. The President has repeatedly stated his desire to 
reduce America's ``addiction'' to oil. Given the proposed cuts to 
NREL's budget--the nation's leading laboratory for biomass and biofuels 
research, as well as solar and wind energy technologies--please explain 
how DOE plans to replace 35 billion gallons per year of gasoline with 
cellulosic ethanol and other alternative fuels while at the same time 
cutting funding for the very programs likely to help us achieve that 
goal?

                             FUNDING SUMMARY
                         [Dollars in Thousands]
------------------------------------------------------------------------
                                             FY 2006   FY 2007   FY 2008
             Program/Activity                Approp.   Request   Request
------------------------------------------------------------------------
NREL/Biomass & Biorefinery Systems R&D....    14,662    27,500    27,500
------------------------------------------------------------------------

    Answer. The Department of Energy (DOE) is substantially increasing 
funding for programs that can reduce our ``addiction to oil.'' For 
example, the Biomass Program budget, which is focused on Biofuels, has 
been increased by $29 million or approximately 20% between the FY 2007 
and FY 2008 Budgets (and by $88 million from FY 2006 enacted to FY 2008 
Budget).
    Responding specifically to the question concerning the budget 
request for NREL, the Biomass Program has substantially increased the 
proposed workload of this laboratory between fiscal year 2006 and 2007. 
The fiscal year 2008 request is maintained at the same level as 2007. 
However, the Department maintains the labs should be utilized only 
where they provide unique facilities or expertise. The Department 
strives to increase funding allocated for competitive awards to 
universities and industry wherever possible. It is important to note 
that the proposed 35 billion gallon Alternative Fuel Standard has no 
direct link to funding for any DOE programs.
    Question 4. President Bush requested $10 million more ($176 
million) than last year for vehicle technologies ($166 million), but 
that is still $8 million less than we will spend in FY 2007 ($184 
million, according to the Administration's estimate) and $6 million 
less than was spent in FY 2006 ($182.1 million). It is puzzling to me 
how requesting a cut in this program will help our ``need to press on 
with battery research for plug-in and hybrid vehicles'' and ``reduce 
gasoline usage in the United States by 20 percent in the next 10 
years'' as President Bush stated in his State of the Union address only 
two weeks ago. I read the definition of ``vehicle technologies'' in the 
budget request, and it sounds like a program that should have an 
increase in funding, given the President's priorities. Here is the 
definition:

Vehicle Technologies
    This program supports the FeedomCAR and Fuel Partnership and the 
21st Century Truck Partnership with industry. Program activities 
encompass a suite of technologies needed for hybrid, plug-in hybrid, 
and fuel cell vehicles, including lightweight materials, electronic 
power control and electric drive motors, and advanced energy storage 
devices. This program also supports research to improve the efficiency 
of advanced combustion engines, using fuels with formulations developed 
for such engines, and incorporating non-petroleum based components. In 
general, program R&D seeks technology breakthroughs that will enable 
America's highway transportation to greatly reduce petroleum use. The 
program also includes community-based outreach via Clean Cities 
collations, competitive awards, and other activities to facilitate the 
market adoption of alternative fuels and highly efficient automotive 
technologies.
    Mr. Secretary, why was this programs funding cut?
    Answer.

                             FUNDING SUMMARY
                         [Dollars in Thousands]
------------------------------------------------------------------------
                                             FY 2006   FY 2007   FY 2008
             Program/Activity                Approp.   Request   Request
------------------------------------------------------------------------
Vehicle Technologies......................   178,351   166,024   176,138
------------------------------------------------------------------------

    The FY 2008 estimates and proposals are based on the FY 2007 Budget 
request. Relative to that request, our FY 2008 budget represents a $10 
million increase for the Vehicle Technologies Program. The FY 2006 
appropriation after adjustment for $24.3 million in Congressional 
Directed Activities is below the FY 2007 and the FY 2008 requests. We 
understand that Congress is moving to reduce and/or eliminate these 
types of Congressional Directed Activities in appropriations and this 
effort will help the program achieve its goals.
    Question 5. For the second year in a row, the Administration would 
zero out funding for research and development on geothermal and 
hydropower--both energy sources that have the potential of supplying 
large quantities of clean base-load power. Why?
    Answer. 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 the eight 
Western States. The Western Governors Association's geothermal task 
force recently identified more than 100 sites with an estimated 13,000 
MW of near-term power development potential.
    The MIT report, titled, ``The Future of Geothermal Energy,'' 
specifically points to the potential benefits of Enhanced Geothermal 
Systems (EGS) as a long-term energy option for the Nation. For some 
time, the Department has been aware of the large resource potential of 
geothermal energy, including those resources accessible with EGS 
technology. EGS constitutes a potential alternative energy resource for 
which industry can decide if and when further investment is warranted.
    The Government has provided substantial incentives that support the 
near-term development and deployment of the large geothermal resource 
base. Geothermal enjoys both an investment tax credit and a production 
tax credit that improve the technology's competitive position. 
(Qualifying facilities can claim one or the other, but not both.) The 
Energy Policy Act of 2005 (EPACT) contains provisions that streamline 
and accelerate the geothermal leasing process. And state-enacted 
renewable portfolio standards give geothermal energy ready market 
access in those areas of the country.
    Since the 1970s, the Department of Energy has funded research and 
development 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. The Department will continue to monitor the growth 
of this industry and the emergence of new technological approaches to 
geothermal power to determine to what extent a further government role 
is warranted, if any.
    Similarly, industry has demonstrated the ability to achieve 
hydropower efficiency optimization and fish survivability performance 
targets without further DOE direct investment. In the fiscal year 2006 
Appropriations Conference Report, the conferees recommended $500,000 
for hydropower research, directing the Department to ``complete 
integration studies and close out outstanding contracts in advanced 
hydropower technology.''
    Question 6. The additional 9% cut to DOE's weatherization program 
of $20.1 million, on top of a $78.4 million cut in FY07, brings the 
total cut up to 35% compared to FY2006. This will make it even more 
difficult for low income residents to save energy so they can afford 
their utility bills. Weatherization assistance helps low income 
families control their energy costs over the long term, through the 
installation of cost-effective energy efficiency technologies. What is 
the rationale for such drastic cuts in this program in particular?
    Answer. Weatherization is the largest-funded program in EERE, at 
the expense of other research and development (R&D) programs. In order 
to address this country's energy challenges with the urgency it 
deserves, 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, 
albeit an important one.
    In addition, the expected benefits of each EERE program are shown 
in our Congressional justification materials. A summary is presented on 
page 31 and 32 of Energy Supply and Conservation (Volume 3). The table 
shows that the Weatherization and Intergovernmental Program has the 
lowest or near lowest expected benefits in all three benefit categories 
(consumer expenditure savings, carbon emissions reductions, and avoided 
oil imports). Details of our modeling efforts that produce these 
results will be available online by March 31, 2007 at http://
www1.eere.energy.gov/ba/pba/gpra.html.

                        CLEAN COAL TECHNOLOGIES

    Question 7. Background: Coal is the most abundant domestic energy 
source. It provides more than 50% of our Nation's electricity needs, 
and America has enough coal to last more than 200 years. In Colorado, 
71% of the electricity we consume is generated with coal. Colorado 
consumed 18.9 million tons of coal in 2004, generating 37.5 million 
megawatts of electricity. Most of this coal is from Colorado, but some 
is from Wyoming.
    Based on my review of the President's budget for the coal research 
initiative, which includes the base coal research program, the Clean 
Coal Power Initiative (CCPI) and FutureGen, it appears that the two-
fold increase in funding for FutureGen ($54 million in FY 07; $108 
million for FY 08) once again would come at the expense of basic coal 
research.
    The CCPI program is essential to accelerate development and 
deployment of coal technologies that will increase the efficiency and 
reliability of coal-fired power plants. What is the justification for 
the substantial increase in funding for FutureGen, while CCPI would 
receive only $15 million in new funding? What about advanced 
combustion? What about developing alternative methods to capture 
CO2 from the fleet of existing coal combustion plants?
    Answer. The Administration's FY 2008 Clean Coal budget request 
supports a balanced R&D portfolio, including the development of 
advanced combustion technology and methods that could be applied to 
capturing CO2 from existing plants. It should also be noted 
that FutureGen and the basic coal R&D are one and the same coal 
research program to develop technologies aimed at achieving near-zero 
emissions from coal plants, including carbon sequestration. As coal 
research progressively advances from bench-scale to larger scale R&D, 
their scale-up viability will need to be verified. The most cost-
effective and cost-efficient demonstration of these technologies would 
be to integrate them into a large size facility like FutureGen that 
combines gasification, advanced coal combustion, power generation, 
hydrogen production, and carbon capture and sequestration. Integrated 
demonstration not only saves the cost of testing in separate 
facilities, it provides data on individual component performance as 
well as reliable data on how these components interact under varying 
integrated system operating conditions.
    The FutureGen funding requests of $54 million and $108 million for 
FY 2007 and FY 2008, respectively, are consistent with the funding 
profile estimate (adjusted for escalation) that the Department 
submitted to Congress in a program summary dated March 2004.
    The FY 2008 funding request of $73 million for the Clean Coal Power 
Initiative (CCPI), includes $58 million of funds from the Clean Coal 
Technology (CCT) account that are no longer needed for ongoing 
projects. Available unobligated prior year funds from projects that did 
not go forward in CCT and CCPI, combined with CCPI FY06, FY07, and FY08 
funding are expected to be sufficient to issue the next round CCPI 
solicitation in FY 2008 for advanced clean coal demonstrations, which 
will focus on advanced technology systems that capture carbon dioxide 
for sequestration and beneficial reuse. Using unobligated balances from 
stalled projects will help CCPI reduce its backlog of unobligated 
balances, currently at about $500 million.
    Many of the technologies being developed in the clean coal research 
portfolio are applicable to advanced combustion. These technologies 
include high temperature materials for supercritical combustion system 
boilers and steam turbine blades, advanced oxygen production applicable 
to oxy-fuel combustion, and capture and sequestration technologies and 
methods for CO2 emissions from existing coal combustion 
plants.

   Responses of Secretary Bodman to Questions From Senator Murkowski

                               GEOTHERMAL

    Question 1. Alaska has a host of excellent geothermal prospects 
involving both high temperature and lower-temperature geothermal 
prospects, as do most of the western states. Is there any way to 
convince the Department to continue funding research and providing 
grants to help identify good geothermal prospects, because while the 
technology for high-temperature geothermal is proven, the technology 
for low-temperature is still evolving as you proved just last summer at 
Chena Hot Springs in Alaska. Recent studies show that geothermal energy 
could meet 10 percent of the nation's total energy needs by 2050. But 
it won't meet such a goal without any federal assistance.
    Answer. The DOE Geothermal Program has achieved key research 
objectives for conventional hydrothermal technology development. 
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 the eight Western 
States. The Western Governors Association's geothermal task force 
recently identified over 100 sites with an estimated 13,000 MW of near-
term power development potential.
    The MIT report, titled, ``The Future of Geothermal Energy,'' 
specifically points to the potential benefits of Enhanced Geothermal 
Systems (EGS) as a long-term energy option for the Nation. For some 
time, the Department has been aware of the large resource potential of 
geothermal energy, including those resources accessible with EGS 
technology. EGS constitutes a potential alternative energy resource for 
which industry can decide if and when further investment is warranted.
    The Government has provided substantial incentives that support the 
near-term development and deployment of the large geothermal resource 
base. Geothermal enjoys both an investment tax credit and a production 
tax credit that improve the technology's competitive position. 
(Qualifying facilities can claim one or the other, but not both.) The 
Energy Policy Act of 2005 (EPACT) contains provisions that streamline 
and accelerate the geothermal leasing process. And state-enacted 
renewable portfolio standards give geothermal energy ready market 
access in those areas of the country.
    Since the 1970s, the Department of Energy has funded research and 
development 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. The Department will continue to monitor the growth 
of this industry and the emergence of new technological approaches to 
geothermal power to determine to what extent a further government role 
is warranted, if any.

                              OCEAN ENERGY

    Question 2. Coming from Alaska, where we have at least 80 towns and 
villages on the coast or on major rivers, ocean energy, leashing the 
power of the tides, current and waves, seems like an excellent 
renewable, non-greenhouse gas emitting technology to be promoting. The 
new technology is showing true promise. Why is the Department providing 
no research or technology implantation support in your budget?
    Answer. Department is observing the growth of interest, activity, 
and investment in wave and tidal technologies. We recognize that 
several states have promising opportunities for harnessing these forms 
of ocean and tidal energy, and thus we are monitoring domestic and 
worldwide progress in ocean energy technologies in collaboration with 
the Electric Power Research Institute and the International Energy 
Agency. Some countries with higher resource potential than the United 
States, relative to their overall energy needs, are active in ocean and 
tidal energy R&D. Ocean, wave, and current technologies are still in 
their infancy, with a small number of demonstration systems operating 
worldwide. The Department will continue to consider emerging 
technologies like these in evaluating its research, development and 
deployment programs.
    The Department is also supporting a wave energy technology R&D 
project via the Small Business Innovation Research Program. The U.S. 
Navy also supports ocean energy research. In addition there may be 
opportunities for Federal agencies to satisfy the green power purchase 
requirements mandated by the Energy Policy Act of 2005.

             CARBON SEQUESTRATION AND ENHANCED OIL RECOVERY

    Question 3. EPACT '05 called for funding a demonstration project to 
increase oil recovery from aging fields by pumping carbon dioxide into 
the fields-both increasing oil production and sequestering carbon. You 
did award a demonstration grant last year (Oil and gas program 
announced this in FY'06). Your budget talks about funding 4 large 
projects Nationwide. Can you talk more about what and where you 
anticipate those projects being and what the Department hopes to learn. 
Alaska's Cook Inlet and the Williston Basin in the Dakotas were both 
specifically stated as good places for such demonstrations to be held 
in EPACT and neither was chosen. Given that DOE studies indicate that 
the Cook Inlet could yield an additional 670 million barrels of oil if 
helped by a CO2 recovery effort, I'm trying to understand 
why Cook Inlet wasn't funded last year and whether it might yet be 
considered for assistance.
    Answer. Regarding the funding of four (4) large-scale carbon 
sequestration projects nationwide, DOE eventually hopes to demonstrate 
and validate the capability to safely store at least 1 million tons of 
carbon dioxide in multiple, diverse geological formations, consistent 
with the goals of the Department's Sequestration Program. The 
Sequestration R&D Program's highest priority is to demonstrate and 
validate the capability to safely and predictably store large volumes 
of CO2 over millennia. Before the sites are selected, 
preparatory work including site evaluation, site characterization R&D, 
and completion of National Environmental Policy Act (NEPA) review must 
be completed.
    While the four large projects discussed in the FY 2008 Budget are 
to be funded from the Sequestration Program, the demonstration project 
award last year was funded from the Oil and Gas Program. That 
demonstration project was selected through a peer review process of all 
the proposals received as a result of the competitive solicitation 
issued by the DOE's National Energy Technology Laboratory. Because of 
the recommendation in the FY 2008 budget to terminate the Oil and 
Natural Gas Program, it is unlikely to issue another solicitation.
    On the other hand, the Sequestration Program has and will continue 
to pursue initiatives in the research of CO2 sequestration 
in various geologic reservoirs such as depleted oil and gas fields, 
producing oil fields to enhance recovery, saline formations, coals 
seams with enhanced coal-bed methane production, and other promising 
formations. Within the Regional Partnership Program, there are twenty-
five (25) small-scale sequestration injection tests being planned. 
These tests include depleted oil and gas fields, saline reservoirs, 
stacked saline and enhanced oil recovery reservoir tests, and coal 
seams with enhanced coal-bed methane production. In addition to the 
Regional Partnership Program, research and testing are continuing in 
other sequestration field tests including an injection test in a saline 
formation in Frio, Texas, and enhanced oil recovery projects at the 
Weyburn and Apache oilfields in Saskatchewan, Canada that utilize 
CO2 produced at the Great Plains Coal Gasification Plant.
    No decision has been made as to whether the Sequestration Program 
in FY 2008, or subsequently, will fund projects in Alaska's Cook Inlet 
or the Williston Basin.

                               HEAVY OIL

    Question 4. I understand the Department is reducing fossil fuels 
research given current high market prices for oil. But I would suggest 
there are still good research areas out there in the fossil arena: 
``heavy oil'' production being one of them. You were going to fund a 
production test well at Prudhoe Bay to research a new technology to 
coax heavy oil out of the ground, but there was a problem last year 
with drill availability. Are you going to continue that work this year 
or next year, and if not, why not? When we know there is more than 30 
billion barrels of heavy oil in place, it is hard to argue that 
research to get it out of the ground is not worthwhile.
    Answer. The Department did not fund a heavy oil test well in 
Prudhoe Bay. However, the Department had planned a 2006 methane hydrate 
test well in Milne Point oilfield, which was delayed because of 
problems with drilling rig availability. The well was finally spudded 
on February 3, 2007, and completed February 19. Over 400 feet of core, 
including two thick, hydrate-bearing units, were collected. After on-
site analysis, the core was preserved for future laboratory study. 
Fluid and reservoir flow-properties data was collected from several 
hydrate-bearing zones. Detailed well information is available at 
www.fe.doe.gov or www.net1.doe.gov. Test results and analysis will be 
available in a few months.

    Responses of Secretary Bodman to Questions From Senator Menendez

    Question 1. Secretary Bodman, you claimed that you thought the 
Weatherization Program was a bad investment because for the roughly 
$3,000 cost of weatherizing a home, the program only returned about 
$300 in benefits. You failed to note that it provides those $300 in 
benefits, which is actually $358 in benefits, each year. On average, 
these savings persist for 17 years, making the program a tremendous 
return on the investment. Do you agree that, despite your statement 
during the hearing, each weatherized house returns greater savings than 
the initial investment?
    Answer. As I testified, first-year per household savings are 
roughly $300 for an up-front investment of roughly $2,500, on average. 
Indeed, our internal program assessment shows a positive return on 
investment over the assumed life of the weatherization improvements 
using EIA projections of energy costs. Our latest study shows a 
benefit-cost ratio of 1.5. A comprehensive external assessment is 
underway. Of course, the benefit-cost ratio represents a wealth 
transfer: the costs are borne by all taxpayers, while the benefits 
accrue to those whose homes are weatherized. The context of my comments 
referred to economic return relative to all our research and 
development programs and technology investments, for each program 
dollar invested. The expected benefits of each EERE program are shown 
in our Congressional justification materials. A summary is presented on 
page 31 and 32 of Energy Supply and Conservation (Volume 3). The table 
shows that the Weatherization and Intergovernmental Program has the 
lowest or near lowest expected benefits in all three benefit categories 
(consumer expenditure savings, carbon emissions reductions, and avoided 
oil imports). Details of our modeling efforts that produce these 
results will be available online by March 31, 2007 at http://
www1.eere.energy.gov/ba/pba/gpra.html.
    Question 2. Would you agree that a greater than 10% return on an 
investment per year is actually a very good return?
    Answer. As noted above, the expected benefits of the Weatherization 
program are low when compared to other investments in Energy Efficiency 
and Renewable Energy technology programs.
    Question 3. Could you explain why weatherization doesn't have any 
consumer savings benefit listed under the GPRA table in your budget 
justification?
    Answer. The Department's budget request presents estimated per-
household consumer savings on page 429 of Energy Supply and 
Conservation. Those savings, $274, are estimated first-year cost 
savings per-household, using historical results from 1993-2002, for 
homes weatherized in 2006, based on energy prices in the 2005 EIA 
Annual Energy Outlook. We do have analysis that models how those 
consumer benefits can be projected over time for presentation in the 
GPRA table, but those estimates were not ready before the budget went 
to print. We will be publishing a revised GPRA table as an amendment to 
the FY 2008 budget. Details of our modeling efforts that produce these 
results will be available online by March 31, 2007 at http://
www1.eere.energy.gov/ba/pba/gpra.html.
    Question 4. Given that the budget claims a yearly savings from 
weatherization of $274 per year (on page 429 of the EERE Congressional 
Justification), yet you have confirmed that the actual savings is $358 
per year, does this change the calculation of future benefits from the 
weatherization program?
    Answer. As you are aware, energy costs vary over time, and we 
regularly update our estimated consumer savings to reflect changing 
energy prices. Our most recently published information, available on 
our web-site, updates the per-household first-year cost savings 
estimate to $358 based on energy prices in the 2006 EIA Annual Energy 
Outlook.

    Responses of Secretary Bodman to Questions From Senator Johnson

    Question 1. The FY 2008 Budget Request provides that the interest 
rate for future debt obligations owed to the Treasury by Southwestern, 
Southeastern, and Western for all power-related investments whose 
interest rates are not specified in law be raised to equal the ``agency 
rate'' governmental corporations borrow from the Treasury--reportedly 
to reflect the potential ``risk'' of non-payment, but more 
realistically just a ``tax'' on select electric consumers.
    What evidence can you show that the PMAs pose a default risk to 
treasury to justify this unilateral interest rate increase?
    Answer. Although the power marketing administrations (PMAs) pose a 
low risk of default to the U.S. Treasury, the risk is not zero. This is 
because the ability of the PMAs to repay the Treasury is dependent on 
their ability to collect revenues from the sale of power and related 
services. For example, physical catastrophes (e.g. a dam failure), 
electricity market volatility, problems with customer credit, or 
availability of cheaper non-Federal energy sources could adversely 
affect the PMAs' ability to market their power in the future.
    The ``yield'' rate is the rate paid on securities backed by the 
full faith and credit of the United States Government. The ``agency 
rate'' of interest paid by government corporations and the Bonneville 
Power Administration better reflects the risk of default than the 
``yield'' interest rate the three PMAs currently use on investments 
whose interest rates are not set by law.
    Question 2. Congress rejected this proposal for FY '07 by including 
language in the Continuing Resolution (H.J. Res 20) that would prevent 
the Administration from implementing this proposal without legislation. 
Where does the Administration derive the authority to administratively 
change the future debt obligations by the four federal power marketing 
administrations?
    Answer. The Executive Branch has the authority to administratively 
change interest rates for those power systems where the rate is not 
specified in law. The authority to set interest rates for the power 
marketing administrations is based on sections 301(b), 302(a) and 644 
of the Department of Energy Organization Act (42 U.S.C.  7101 et 
seq.), section 5 of the Flood Control Act of 1944 (16 U.S.C. 825s), and 
the Reclamation Act of 1902 (43 U.S.C. 372 et seq.), as amended and 
supplemented by subsequent enactments, particularly section 9(c) of the 
Reclamation Project Act of 1939 (43 U.S.C. 485h(c)). This budget 
proposal only applies to three power marketing administrations; it does 
not apply to Bonneville Power Administration.
    Question 3. The Department of Interior's FY 2008 Budget Request 
also calls for a reassignment of the costs of unbuilt irrigation 
projects in the Pick-Sloan region to federal power customers in the 
region. This proposal would require legislation to be implemented, and 
Congress has soundly rejected it in each of the past two years.
    Has the Department of Interior consulted with you on this proposal?
    Answer. No. The Department of the Interior did not consult with the 
Department of Energy when it proposed in the FY 2008 budget request to 
include a call for reassignment of the costs of undeveloped irrigation 
projects of the Pick-Sloan program to federal power customers in the 
region. However, at the staff level, we were informed by the Bureau of 
Reclamation at a meeting in January 2007 that Interior would again 
propose the cost reassignment for FY 2008.
    Question 4. If and when you do hear from Interior, do you intend to 
share with them the fact that any change in project cost allocation 
must be holistic and reflect all changes in project benefits?
    Answer. Yes. Pick-Sloan is an ultimate development project with 
many functions and features. The authorized purposes for the project 
are flood control, navigation, irrigation, municipal and industrial 
water supply and power, with a relatively small amount of costs 
assigned to recreation and other purposes (benefits which were 
difficult to quantify at the time the existing cost allocation was 
established). The budget proposal focuses only on transferring costs 
from undeveloped irrigation to the Federal power customers; however, we 
believe that all aspects of the cost allocation should be reviewed. For 
example, the dams on the Missouri River have provided flood control 
benefits worth many millions of dollars to downstream states. This 
benefit is not adequately reflected in the existing allocation of 
costs.

     Responses of Secretary Bodman to Questions From Senator Akaka

                          RADIOLOGICAL SOURCES

    Question 1. I see that your proposed budget for the international 
radiological threat reduction program in NNSA (National Nuclear 
Security Administration) has steadily been reduced since FY 2006. 
However, to my knowledge, much work to control high-radiological 
sources around the world remains to be done. Can you explain why this 
program continues to be reduced, while other fissile material control 
programs have gone up considerably?
    Answer. NNSA is committed to securing and removing vulnerable 
radiological sources around the world. Over the past several years, 
NNSA has accelerated efforts to secure vulnerable sources and NNSA has 
secured more than 500 vulnerable radiological sources worldwide since 
2002. However, much work remains to be done to control high-risk 
radiological sources and there are thousands of additional vulnerable 
radiological sources that need to be secured worldwide.
    With regard to the FY 2008 budget request, there were several 
factors that led to the funding request of $6 million for GTRI's 
International Radiological Threat Reduction program. First, GTRI's 
highest priority is to ensure that Presidential commitments are fully 
met in accordance with the Bratislava Joint Statement on Nuclear 
Security Cooperation. GTRI has three program elements that are part of 
the February 2005 Bratislava Joint Statement between Presidents Bush 
and Putin. These include converting research reactors from the use of 
HEU to LEU under our Reduced Enrichment for Research and Test Reactors 
(RERTR) Program, returning Russian-origin fresh and spent fuel under 
our Russian Fuel Return program, and returning U.S.-origin spent fuel 
under the U.S. Foreign Research Reactor Spent Nuclear Fuel Acceptance 
Program. These elements are fully funded in the FY '08 budget request. 
A second factor in our budget process was to fully fund those GTRI 
elements that had firm Secretarial completion dates. For example, when 
GTRI was established in May 2004, former Secretary of Energy Abraham 
committed that GTRI would convert 105 research reactors from the use of 
HEU to LEU by 2014. In addition, he stated publicly that all Russian-
origin spent fuel would be removed by 2010. Therefore, the FY '08 
budget request ensures that these program elements are fully funded. 
However, GTRI's International Radiological Threat Reduction (IRTR) 
program does not have any firm Secretarial completion dates. Lastly, 
NNSA's internal prioritization process places a higher priority on 
reducing the risk of terrorists stealing HEU that could be used in an 
Improvised Nuclear Device over reducing the risk of terrorists stealing 
a radiological source that could be used in a Radiological Dispersal 
Device (RDD) or ``dirty bomb''. This is due to the catastrophic and 
devastating consequences of a terrorist detonating a nuclear bomb. To 
this end, the FY 2008 budget request also seeks a significant increase 
for the safe and secure storage of BN-350 spent fuel in Kazakhstan. The 
BN-350 project has a firm completion date of 2010 (completion of 
movement to Baikal-1 storage facility) as agreed with the Kazakh 
government. Therefore, within budget limitations, these factors played 
a key role in determining the budget request for GTRI's International 
Radiological Threat Reduction program in FY '08. However, the IRTR 
program remains a priority for NNSA since it is the only U.S. 
Government program that secures vulnerable sources internationally.

                              SOLAR ENERGY

    Question 2. Based on the EPACT of 2005, all solar water heaters 
that are eligible for the tax credit must be certified by the Solar 
Rating and Certification Corporation (SRCC). There is currently an 18-
month backlog at this facility--almost as long as the remaining credit. 
This seems to me to be a market barrier to solar expansion. Why, then, 
did the Department decide to fund the solar heating program at only $2 
million, and what are you doing to address the backlog?
    Answer. There is no relationship between the Solar program's R&D 
budget for solar heating and lighting and certification by the SRCC. 
But we are helping the industry in other ways. We just held a workshop 
(January 2007) with the solar water heating industry and other 
stakeholders (e.g. utilities, builders, state energy offices) to 
discuss market barriers and the actions needed to expand the market for 
the technology. The Department of Energy (DOE) is committed to helping 
industry increase and accelerate the market acceptance of solar water 
heaters. DOE is working with Solar Rating and Certification Corporation 
(SRCC) to help it decrease its backlog. In the interim, there are many 
collectors and systems that are already certified and eligible for the 
tax credit. There is also a second facility near Toronto which does 
testing for SRCC that does not have a lengthy backlog.

     Responses of Secretary Bodman to Questions From Senator Wyden

                              OCEAN ENERGY

    Question 1. Mr. Secretary, recent estimates suggest that 
utilization of new, carbon-free, technologies to tap energy from waves, 
and tidal and ocean currents, could provide nearly 10% of total U.S. 
electricity requirements with technology now being developed, and 
perhaps far more. Yet, last year, you requested no money whatsoever for 
hydropower, and this year, the same . . . nothing. You are asking for 
over $500 million for next year to develop the next generation of 
nuclear power plants, but nothing to develop the next generation of 
hydroelectric plants, such as ocean energy. Why not?
    Answer. The Department is observing the growth of interest, 
activity, and investment in wave and tidal technologies. We recognize 
that several states have promising opportunities for harnessing these 
forms of ocean and tidal energy, and thus we are monitoring domestic 
and worldwide progress in ocean energy technologies in collaboration 
with the Electric Power Research Institute and the International Energy 
Agency. Some countries with higher resource potential than the United 
States, relative to their overall energy needs, are active in ocean and 
tidal energy R&D. Ocean, wave, and current technologies are still in 
their infancy, with a small number of demonstration systems operating 
worldwide. The Department will continue to consider emerging 
technologies like these in evaluating its research, development and 
deployment programs.
    The Department is also supporting a wave energy technology R&D 
project via the Small Business Innovation Research Program. In addition 
there may be opportunities for Federal agencies to satisfy the green 
power purchase requirements mandated by the Energy Policy Act of 2005.

                               GEOTHERMAL

    Question 2. Mr. Secretary, MIT, where you received your doctorate 
and taught chemical engineering, recently issued a report on the future 
of geothermal energy. The MIT team noted that the potential energy 
available from geothermal in the U.S. is thousands of times our total 
energy consumption. The report concluded that with a reasonable 
investment in new geothermal technologies, the U.S. could have 100,000 
megawatts of geothermal-powered electricity capacity within the next 50 
years. That's equivalent to 166 large coal plants of base-load capacity 
with a minimal release of greenhouse gases. The European Union is 
spending money on this research, but not DOE. Last year, you requested 
no funding for geothermal. And this year, again, you are not requesting 
any funding for geothermal. You are asking for more money in this 
budget for fusion energy research for one year ($428 million), than the 
MIT report proposes for the entire advanced geothermal research 
program. Why isn't any funding being requested for geothermal research?
    Answer. The DOE Geothermal Program has achieved key research 
objectives for conventional hydrothermal technology development. 
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 the eight Western 
States. The Western Governors Association geothermal task force 
recently identified over 100 sites with an estimated 13,000 MW of near-
term power development potential.
    The MIT report, titled, ``The Future of Geothermal Energy,'' 
specifically points to the potential benefits of Enhanced Geothermal 
Systems (EGS) as a long-term energy option for the Nation. For some 
time, the Department has been aware of the large resource potential of 
geothermal energy, including those resources accessible with EGS 
technology. EGS constitutes a potential alternative energy resource for 
which industry can decide if and when further investment is warranted.
    The Government has provided substantial incentives that support the 
near-term development and deployment of the large geothermal resource 
base. Geothermal enjoys both an investment tax credit and a production 
tax credit that improve the technology's competitive position. 
(Qualifying facilities can claim one or the other, but not both.) The 
Energy Policy Act of 2005 (EPACT) contains provisions that streamline 
and accelerate the geothermal leasing process. The Department's $9 
billion request for loan guarantees, authorized by EPACT, will help to 
spur on new development. And state-enacted renewable portfolio 
standards give geothermal energy ready market access in those areas of 
the country.
    Since the 1970s, the Department of Energy has funded research and 
development 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. The Department will continue to monitor the growth 
of this industry and the emergence of new technological approaches to 
geothermal power to determine to what extent a further Government R&D 
role is warranted, if any.

                           CELLULOSIC BIOMASS

    Question 3. The Department's ``Billion Ton'' study of the potential 
energy from biomass identified forest biomass as making up more than 
quarter of available biomass. Yet, I am hard pressed to find where in 
your budget you are devoting any resources to the development of forest 
biomass. For the record, I would like you to provide the specific 
activities within the Department aimed at developing forest biomass and 
the funding for those activities.
    Answer. Our biomass program is requesting more than $20 million in 
its FY 2008 budget request to fund cutting-edge methods of producing 
ethanol from agricultural residues, wood and forest residues.

   Under the ``Platform R&D'' line item, the Thermochemical 
        Platform is focused on developing gasification and pyrolysis 
        technologies that will utilize primarily woody and forest 
        resources for biofuels.
   Under the ``Feedstock Interface Platform'' line item, we 
        request funds to establish Regional Feedstock Partnerships with 
        a number of organizations, including USDA, several 
        universities, industrial partners, and State organizations. 
        This work will facilitate the development of regional biomass 
        resources, including woody and forest resources. The Department 
        of Energy plans to work with and through the regional 
        partnerships to develop and validate accurate cost supply 
        information and improved understanding of all key components of 
        the supply chain of all feedstocks under consideration, with a 
        substantial emphasis on woody biomass, due to its prevalence in 
        many regions.
   Under the ``Utilization of Platform Outputs'' line item, 
        companies that own processes converting woody biomass (forest 
        products and wood waste) into ethanol have been eligible to 
        participate into the section 932 solicitation for a commercial 
        biorefinery.

    The Departments of Energy; Agriculture and Interior have worked for 
4 years under a Memorandum of Understanding (MOU) for Woody Biomass 
Utilization for Restoration and Fuel Treatments on Forest, Woodlands, 
and Rangelands. This MOU aims to maximize the coordination and 
effectiveness of the three departments in developing complementary 
policies to encourage harvest and use of woody biomass by-products. To 
further facilitate our collaborative efforts, we formed an 
Interdepartmental Woody Biomass Utilization Working Group (Federal 
Working Group). New partners include the Environmental Protection 
Agency, and the Department of Defense.

                         INDUSTRIAL EFFICIENCY

    Question 4. According to EIA, about one third of our total U.S. 
energy consumption is consumed by the industrial sector. These 
companies, as we all know, must now compete in the global economy and 
for many industries--such as the pulp and paper industry in my state--
energy costs are major factor in their ability to compete. Last year, 
your budget request cut funding for industrial technologies by more 
than $10 million to $45 million and this year you are requesting the 
same level--at $45 million. In the process, however, you also propose 
to cut every single industry-specific program. Funding for the forest 
and paper products industry is cut to $1.7 million. You propose to cut 
funding for the aluminum industry to $1.7 million. Funding for the 
glass industry you propose to cut to zero. Funding for the mining 
industry also would be cut to zero. Instead of giving these industries 
the help they need to become more competitive, you are going to work on 
technologies that are ``crosscutting.'' Please explain, for each 
industry in the industrial technology program, what industry-specific 
programs will be cut and how, for each industry, the new ``cross-
cutting'' research will replace and improve upon the assistance that it 
replaces including the economic competitiveness of those industries 
over the next one, two, three, four, and five years, respectively.
    Answer. The Industrial Technologies Program (ITP) has historically 
worked with the eight most energy-intensive manufacturing industries to 
research, develop, and implement advanced technologies that save 
energy, cut costs, and reduce emissions. While these activities have 
contributed to reducing overall industrial energy consumption, the 
industrial landscape is changing rapidly. ITP is focusing its 
technology research to be widely applicable to the U.S. industrial 
base. ITP is working to leverage developments through Original 
Equipment Manufacturers (OEMs) and end-users. ITP has identified four 
technology areas (Reactions & Separations, High Temperature Processes, 
Energy Conversion Systems, and Fabrication & Infrastructure) for 
research which include all the technology areas and interests of the 
traditional energy intensive industries (e.g. Forest Products, Glass, 
Aluminum and Mining) and is applicable to a much broader array of 
industry members. These technology areas were identified using ITP 
industrial analyses, industrial stakeholder roadmaps and other 
feedback. In FY2007, ITP is issuing two solicitations based on these 
technology areas. All U.S. industries are encouraged and expected to 
participate.

                             WEATHERIZATION

    Question 6. It's not in your budget, Mr. Secretary, but the 
President's budget requests $1.8 billion in Low Income Home Energy 
Assistance to help states and Indian tribes assist people in paying 
their utility bills. Unfortunately, that number isn't big enough to 
help everyone that needs help. But what is in your budget is the 
Weatherization Assistance Program which is intended to help these same 
people weatherize their homes so they won't get hit with these big 
bills in the first place. You requested just $144 million for this 
program, a cut of $20 million. Please explain why the Administration 
chose to cut $20 million from this program request? Please also 
explain, why the Administration believes that it makes more sense to 
provide millions of dollars in low-income energy assistance each year 
than it does to weatherize the homes of the recipients of this aid so 
that the impacts of energy bills can be alleviated in the first place.
    Answer. Weatherization is the largest-funded program in EERE, at 
the expense of other research and development (R&D) programs. In order 
to address this country's energy challenges with the urgency it 
deserves, 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, 
albeit an important one.
    In addition, the expected benefits of each EERE program are shown 
in our Congressional justification materials. A summary is presented on 
page 31 and 32 of Energy Supply and Conservation (Volume 3). The table 
shows that the Weatherization and Intergovernmental Program has the 
lowest or near lowest expected benefits in all three benefit categories 
(consumer expenditure savings, carbon emissions reductions, and avoided 
oil imports). Details of our modeling efforts that produce these 
results will be available online by March 31, 2007 at http://
www1.eere.energy.gov/ba/pba/gpra.html.

                 STRATEGIC PETROLEUM RESERVE EXPANSION

    Question 7. The budget proposes to begin increasing the size of the 
Strategic Petroleum Reserve to 1.5 billion barrels. What is the cost of 
this increase, from (1) the current level, and (2) the 1 billion barrel 
level authorized in EPACT 2005 in terms of the following: (1) total 
capital construction of storage and transport facilities, and the 
schedule of annual outlays, (2) acquisition of the additional oil, and 
the schedule of annual outlays, (3) the additional operational costs of 
maintaining this additional capability.
    Answer. For facilities expansion to one billion barrels from the 
current capacity of 727 million barrels, the estimated cost will 
approach almost $4 billion over several years. The costs include 
expanding capacity at two existing sites by developing additional 
caverns at an estimated cost of over $700 million, and constructing a 
new site capable of storing 160 million barrels of crude oil near 
Richton, Mississippi at an estimated cost of about $3 billion, based on 
very preliminary designs. These cost estimates will likely increase as 
we develop more detailed plans. Facilities expansion from 1 billion 
barrels to 1.5 billion barrels is estimated to cost almost $7 billion.
    The total value of oil required to reach a 1.5 billion barrel 
inventory is about $53 billion.
    The Department's FY 2008 budget request includes $168 million to 
begin facilities expansion activities to 1 billion barrels by acquiring 
land and rights of way, and to begin detailed design work. It also 
includes funding for NEPA activities for facilities expansion from 1 
billion barrels to 1.5 billion barrels.
    The estimated increase in the level of operations and maintenance 
resulting from the expansion to 1 billion barrels is $40 million per 
year. The increase associated with increasing the capacity from 1.0 to 
1.5 billion barrels is $70 million per year.

            ALBANY, OREGON RESEARCH LABORATORY PRIVATIZATION

    Question 9. Mr. Secretary, your Department has proposed to 
privatize one of your laboratories located in Albany, Oregon. This 
laboratory is staffed by some six dozen federal employees and 
specializes in research on the formulation, fabrication, testing and 
analysis of metals, alloys and ceramics. They do not have multi-billion 
dollar user facilities such as light or neutron sources. What they do 
have is people--people who specialize in this particular area of 
materials research. Unlike most every other DOE lab where most 
employees simply go to work for the new contractor, these are federal 
employees who will stop being federal employees if they go to work for 
the new contractor or they will need to go to some other federal 
agency. Why do you personally think it makes sense to split up this 
small research team and bring in a contractor? Please describe how the 
contractor will increase the effectiveness of the research done at this 
facility, over the next five years and the next ten years, 
respectively. Please also itemize the cost savings to the taxpayer of 
this change, including the net costs of contractor overhead, award 
fees, pension payments, insurance, etc. compared with the costs of a 
federally-owned, federally-operated facility.
    Answer. DOE launched its competitive sourcing program, part of the 
President's Management Agenda, in March 2002. Since that time, seven of 
the Department's nine completed OMB Circular A-76, Performance of 
Commercial Activities public-private competitions have been won by the 
Government's in-house team. The Department anticipates savings and 
costs avoidance of approximately $540 million, compared to baseline 
costs, as a result of these competitions. The Department's ongoing 
studies are also expected to yield significant savings and operational 
efficiencies.
    The current on-going A-76 competition associated with the 
commercial activities performed at NETL-ARC laboratory does not pre-
suppose bringing in a new contractor to do the work currently being 
performed by Federal employees. The objective is to allow the current 
NETL-ARC laboratory to compete with private sector organizations in 
order to determine which service provider could provide the best value 
to the American taxpayer. The use of competition has helped the 
Department avoid unnecessary costs and operate more effectively. DOE 
employees have successfully used this process to eliminate 
inefficiencies in their activities and demonstrate their value to the 
taxpayer. As the NETL-ARC competition is on-going, cost and efficiency 
data associated with any of the bids is procurement sensitive and 
cannot be released at this time.

     Responses of Secretary Bodman to Questions From Senator Thomas

    Question 1. We talk a lot about alternative fuels and we need to be 
doing things. The ability alternatives to make a real difference is a 
ways off, however. We need to in the short term to make fossil fuels 
cleaner and more efficient. On a federal level, it is the Department of 
Energy's job to make sure that happens. Fossil Energy funding is being 
reduced by $25 million. The EIA shows that fossil energy will play an 
important role in our energy mix for decades to come.
    Please explain why fossil energy funding for national research is 
being decreased rather than increased?
    Answer. We agree that fossil energy will play an important role in 
our energy mix for decades to come. We believe that the President's 
fiscal year 2008 budget request reflects a commitment to a strategic 
coal research program, including a significant increase in funding, 
which will allow us to achieve that goal of making fossil fuels cleaner 
and more efficient. We also believe it represents a balanced portfolio 
of critical coal research that will allow us to achieve our program 
goals. The oil and gas programs are terminated, because industry has 
the resources and incentive to conduct this research and development on 
their own. Savings from the oil and gas programs are slightly greater 
than the increase in funding for the coal program.
    During the 2000 campaign, the President committed to spend $2 
billion over 10 years on clean coal technology. The 2008 budget request 
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 2008 budget request for clean coal activities are among the 
highest in this Administration and also from any President in the last 
two decades. This budget supports key activities to keep coal an 
important part of our domestic energy solution:

   The FutureGen project and a strong supporting R&D program 
        will advance near-zero emissions technology, including large-
        scale tests of carbon sequestration.
   A new solicitation in the Clean Coal Power Initiative will 
        demonstrate near-commercial advanced technologies, 
        complementing the $1.65 billion in tax incentives for 
        deployment of early commercial clean coal technologies that the 
        Administration is implementing under the Energy Policy Act of 
        2005.

    The oil and gas R&D programs focus on technologies that can be 
commercialized quickly. Especially with high oil and gas prices, oil 
companies have strong incentives to figure out ways to get the oil out 
of the ground more cheaply and safely. Analysis of the program shows 
that it has not been very effective.
    The Administration strongly supports a variety of research and 
development that will strengthen the Nation's energy security, and is 
proposing to make the R&D investment tax credit permanent. 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 2. Numerous successes have resulted from the DOE Oil & Gas 
Programs this year. Small independent producers have testified to 
Congress about the need for federal R&D. They have also emphasized the 
importance of continuing government collaboration and research. Yet 
again, as was the case last year, funding for the oil and gas programs 
has been zeroed out. I fully understand that the Department does not 
want to fund major oil and gas producers. However, 94 percent of the 
funding for fossil R&D is directed to the needs of the 5,000 
independent oil and gas companies. These companies employ less than 20 
people, on average. We must not let politics overshadow responsible 
policy decisions.
    How can you justify zeroing out these R&D programs when our nation 
is, at this very time, trying to lessen its dependence on imported oil 
& gas?
    Answer. The Administration strongly supports a variety of research 
and development that will strengthen the Nation's energy security, and 
is proposing to make the R&D investment tax credit permanent. 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.
    Oil and gas are mature industries and both have every incentive, 
particularly at today's prices, to enhance production and continue 
research and development of technologies on their own. There is no need 
for taxpayers to subsidize oil companies in these efforts. Although 
independent operators may not fund technology development directly, the 
service industry that supplies them with equipment funds significant 
development of applicable technologies. The Department expects the 
service industry to continue to provide technological innovations for 
use by major and independent producers.
    Question 5a. The DOE budget request terminates $23 million in 
funding for ``Improvements to Existing Plants''. There are over 1,500 
coal-fired electricity plants in the United States. These plants 
provide Americans with more than half of the electricity that they 
need. I am aware of many technologies, which are available now and can 
improve environmental performance. DOE must support the 
commercialization of these technologies, however.
    Is the Elimination of this funding a sign that DOE has given up on 
improving the generation fleet that we already have in this country?
    Answer. The IEP program has been developing low cost technologies 
for reducing emissions from existing coal power plants in anticipation 
of regulatory limits that are now being implemented through the Clean 
Air Interstate Rule and the Clean Air Mercury Rule. The IEP program has 
been very successful, and CAIR and CAMR were promulgated in 2005. These 
regulatory drivers provide industry an incentive to continue 
development and deployment of such technologies on their own. The 
government role in development of these technologies has shifted to the 
private sector.
    Question 5b. The DOE budget request terminates $23 million in 
funding for ``Improvements to Existing Plants''. There are over 1,500 
coal-fired electricity plants in the United States. These plants 
provide Americans with more than half of the electricity that they 
need. I am aware of many technologies, which are available now and can 
improve environmental performance. DOE must support the 
commercialization of these technologies, however. What other components 
of the Department's budget are capable of supporting environmental 
improvements at existing plants and how much money is included therein?
    Answer. There are three other, principal components of the DOE 
budget, all under FE, which support the development of environmental 
control technology that could be applicable to existing coal fired 
power plants:

   The Clean Coal Power Initiative, by 2010 will initiate 
        demonstration of advanced coal-based power generation 
        technologies capable of achieving: 45 percent electrical 
        efficiency; greater than 90 percent mercury removal at'a cost 
        of 70 percent of current technology; and 0.15 lb/MMBtu 
        NOX at 75 percent of the cost of current technology 
        (selective catalytic reactors). These technologies could be 
        configured to co-produce heat, fuels, chemicals or other useful 
        byproducts, and provide a deployment-ready suite of advanced 
        technologies that can produce substantial near-, mid-, and 
        long-range economic and environmental public benefits. (FY 2008 
        Request $73,000,000)
   The FutureGen project will prove the technical feasibility 
        and economic viability of the ``near-zero atmospheric 
        emission'' (including carbon) coal concepts (FY 2008 Request 
        $108,000,000).
   By 2012, begin operation of a nominal 275-megawatt prototype 
        plant that will produce electricity and hydrogen with ``near-
        zero'' atmospheric emissions and prove the effectiveness, 
        safety, and performance of CO2 sequestration.
   The Carbon Sequestration program, by 2012 will develop 
        technologies to separate, capture, transport, and sequester 
        carbon using either direct or indirect systems that result in a 
        less than 10 percent increase in the cost of electricity. (FY 
        2008 Request $79,077,000)

    Near-term derivatives from these programs can be expected to 
contribute significantly to improving the performance of the current 
fleet.
    Question 6. DOE has manufactured $257 million for themselves in 
this request by eliminating the Clean Coal Technology (CCT) account, 
which has been replaced by the Clean Coal Power Initiative. The 
Department is hoping to move $108 million from CCT elimination to 
FutureGen. The remaining $149 million would go back to the Treasury. 
When Congress appropriated those funds, they were meant to advance 
clean coal technologies. How do you justify the disregard for 
congressional intent as evidenced by the proposed rescission of the 
aforementioned $149 million?
    Answer. The $149 million rescission and the $108 million 
reprogramming requests are proposals to the U.S. Congress to act on and 
are not unilateral actions in disregard to the original Congressional 
intent. The $257 million represents prior year available funds from 
Clean Coal Technology (CCT) demonstration projects that did not go 
forward. CCT demonstration projects that were awarded have been 
successful in demonstrating early advances coming out of the clean coal 
research effort. The Clean Coal Power Initiative (CCPI) builds on the 
successes of the original CCT demonstration program, and focuses on the 
next generation technologies from coal research advances made since the 
last CCT demos (Round 5). Technologies from the clean coal R&D effort 
have progressed to the point where they can be integrated into a near-
zero atmospheric emissions coal facility, namely FutureGen, the world's 
first such facility that will also capture and sequester CO2 
(a greenhouse gas) from a power plant.
    The Administration believes the FY 2008 request is consistent with 
the goals of advancing clean coal technologies.
    Question 7. It is the people at the National Energy Technology 
Laboratory that facilitates research for the goals. I am concerned 
about National Energy Lab employees are professionals and do incredible 
work. Yet their account has a $15M shortfall in your request. We need 
to pay the folks that are doing this work. Can you explain the decision 
to ask for less money than is needed to do so?
    Answer. The current request reflects the program direction savings 
associated with the termination of the Oil and Gas programs. Overall 
total NETL Program Direction funding is sufficient to meet the ongoing 
goals of the Fossil Energy program while providing for continued 
support of the valued employees of the lab.
    Question 8a. The people of Wyoming want to convert our coal to a 
more valuable resource. We want to generate clean power and produce 
clean diesel fuel. These options are clearly better than digging up 
coal and shipping it out on railcars. We dig a lot of it up too, 36 
percent of the supply in the United States comes from Wyoming.
    What provisions in the Energy Policy act do you think are best 
suited to helping Wyoming's goal of exporting value-added coal 
products? Please provide as comprehensive a response as possible.
    Answer. Several provisions in the Energy Policy Act of 2005 are 
well suited to helping Wyoming's goal of exporting value-added coal 
products. The fiscal year 2008 budget request for the Clean Coal R&D 
Program is focused on achieving many key goals set in the legislation 
that would also contribute to achieving Wyoming's goal.
    Title IV Subtitle A Section 403 report to Congress transmitted on 
August 8, 2006, details the goals of the CCPI program.
    Title IX Subtitle F Section 962(b)(2)(C) report to Congress 
transmitted on April 28, 2006, details the goals of the FE R&D program.
    Besides these Clean Coal research, development, and demonstration 
activities being carried out by the Department of Energy, the following 
EPACT Sections may also support Wyoming's goal of exporting value-added 
coal products:

   Under EPACT Sections 48A and 48B incentives are related to 
        gasification technologies including co-production facilities 
        that produce both electric power and liquid fuels from coal.
   EPACT Section 1703 authorizes the Department to provide loan 
        guarantees for coal gasification, carbon sequestration, and 
        many other types of projects.
                                 ______
                                 
    Responses of Secretary Bodman to Questions From Senator Bingaman

                       GENERIC CELLULOSE ETHANOL

    Question 1. The potential of cellulose ethanol to make a valuable 
contribution to our energy goals has gotten the attention of many of us 
in Congress lately. A robust commercial market for cellulose ethanol 
may achieve many policy objectives, including reduced dependence on oil 
imports, improved energy security, rural economic development, and 
reduced greenhouse gas emissions. Given that, we want to be sure that 
the Department of Energy is working to use the loan guarantee program 
to support commercialization efforts of companies that have 
demonstrated a technical and financial readiness to develop a 
commercial-scale cellulose ethanol project. Can you tell us what the 
department is doing to specifically support ethanol commercialization 
through the loan guarantee program?
    Answer. Proposals to commercialize cellulosic ethanol fit within 
the category of renewable energy projects eligible for loan guarantees 
under Title XVII of EPACT 2005. Even in advance of enactment of the 
Joint Resolution, Public Law 110-5, which provided $7 million in 
funding for administrative expenses of the Loan Guarantee Program and 
the necessary authority to issue loan guarantees, the Department began 
activities under the Title XVII loan guarantee program. Specifically, 
on August 8, 2006, the Department issued Guidelines and an initial 
Solicitation Announcement (Solicitation No. DE-PS01-06LG00001). The 
deadline for submitting Pre-Applications in response to that 
solicitation (including for biomass or cellulosic ethanol projects), 
closed on December 31, 2006. The Guidelines provided that technologies 
for project proposals must be mature enough to assure dependable 
commercial operations. These materials and other relevant documents are 
available at http://www.lgprogram.energy.gov.
    Among the more than 100 Pre-Applications received by the December 
31, 2006 deadline were a number of biomass and cellulosic ethanol 
projects. All of the timely filed Pre-Applications are currently under 
preliminary review. This preliminary review will be followed by 
invitations to selected entities to submit full Applications. P.L. 110-
5 requires that DOE issue final regulations for the loan guarantee 
program before issuing any loan guarantees, and the Department is 
actively working on a notice of proposed rulemaking that it intends to 
issue soon.
    Question 2a. The Joint Resolution providing funding for Fiscal Year 
2007 contains the required appropriations authorization for DOE's loan 
guarantee program, and established a $4 billion cap on the program.
    Section XVII of EPACT 2005 permits DOE to guarantee up to 80 
percent of a project's cost. Yet, language in the Joint Resolution 
suggests the cap should apply to a project's ``total principal amount, 
any part of which is to be guaranteed.'' As a point of clarification, 
does this mean that the entire cost of the project--rather than just 
the percentage of costs guaranteed by DOE--will count toward the $4 
billion cap?
    Answer. No. Title XVII of EPACT 2005 limits the amount of debt that 
can be guaranteed to 80 percent of project costs. P.L. 110-5 sets a $4 
billion cap for all guaranteed debt instruments, measured by the 
``total principal amount, any part of which is to be guaranteed.'' 
Thus, the Joint Resolution provides that the $4 billion cap is to be 
measured by the face amount of the debt instruments that are 
guaranteed, even if the Department does not guarantee 100% of the debt 
instruments.
    Question 2b. The President's Fiscal Year 2008 budget would provide 
for $9 billion in potential loan guarantees under Section XVII of EPACT 
2005. Again, as a point of clarification, is this $9 billion in 
addition to the $4 billion provided by the Fiscal Year 2007 Joint 
Resolution? Or, alternately, does the President's budget request merely 
constitute an additional $5 billion of loan guarantee authority, 
presuming enactment of the Joint Resolution?
    Answer. The Department anticipates $9 billion in loan guarantees in 
FY 2008.
    Question 3a. I understand there are a number of key steps DOE must 
take in order to structure a loan guarantee program which results in a 
workable financial instrument for project developers and, at the same 
time, a sensible risk management strategy for American taxpayers. The 
Committee is concerned that the Department take these steps as 
expeditiously as possible:
    Given the Department's August 2006 solicitation for loan guarantee 
pre-applications, the Committee assumes DOE has taken steps to begin 
developing guidelines for financial due diligence in its review of 
these projects. What is the process and timeline by which DOE intends 
to complete its development of these guidelines?
    Answer. The Department is preparing a Notice of Proposed Rulemaking 
that will propose eligibility criteria and due diligence requirements 
for the Title XVII loan guarantee program. DOE is working to write and 
issue that proposal as soon as possible. With the enactment of Public 
Law 110-5, the Department also is moving forward expeditiously to 
complete its review of the timely filed Pre-Applications, and to fully 
implement the loan guarantee program.
    Question 3b. Please detail the Department's plans for consulting 
with members of the financial community and other federal agencies with 
experience in successfully administering loan guarantee programs.
    Answer. The Department has met with other federal agencies and the 
financial community on several occasions in order to learn from their 
experiences and gain their insights. This consultation process is 
ongoing. In addition, the Department is preparing to issue a Notice of 
Proposed Rulemaking for the Title XVII program, and all members of the 
public, including the financial community, will have the opportunity to 
review and comment on that proposal.
    Question 3c. One of the key issues in administering this program is 
development of a methodology for assessing subsidy cost payments from 
project developers. What steps has the Department taken to date to 
develop this methodology, in consultation with the Office of Management 
and Budget? Has DOE performed any analysis of whether prepayment of a 
subsidy fee may prove a prohibitive factor for any particular 
technologies or class of pre-applicants?
    Answer. The Credit Subsidy Cost constitutes the estimated long-term 
liability or risk to the Federal government in issuing a loan 
guarantee, and is calculated on a net present value basis. Prior to 
entering into any loan guarantee agreements, the Department will 
perform its own independent calculation of the Credit Subsidy Cost. OMB 
will review and must approve this estimate.
    The amount of equity participation, the percentage of debt 
guaranteed by the Federal government, the term of the debt, the 
interest rate on the debt, the strength of off-take and other revenue 
generating agreements, and the other material aspects of the financial 
and business structure of the project, are all factors that the 
Department may consider in computing the Credit Subsidy Costs. Other 
Federal agencies that issue loan guarantees must account for similar 
financing considerations in calculating Credit Subsidy Cost. While the 
wide range of technologies eligible under the Act represent a unique 
variable in the calculation of the Credit Subsidy Cost for loan 
guarantees, the Department may be able to employ aspects of those 
agencies' Credit Subsidy Cost models in developing its own methodology.
    The Department has not performed an analysis of whether prepayment 
of a subsidy fee may prove a prohibitive factor for any particular 
technologies or class of pre-applicants. However, section 1702(b) of 
the Energy Policy Act of 2005 requires that the Credit Subsidy Cost be 
paid in full prior to the issuance of a loan guarantee.
    Question 4a. We understand that more than 100 developers submitted 
responses to the Department's 2006 solicitation for loan guarantee pre-
applications.
    How many of these projects will DOE be able to fully review given 
the funding level for administrative expenses included in the Fiscal 
Year 2007 Joint Resolution?
    Answer. The Department received over 100 Pre-Applications by the 
December 31, 2006 deadline for submission of proposals under the 
initial Solicitation Announcement (Solicitation No. DE-PS01-06LG00001), 
issued August 8, 2006. These timely filed Pre-Applications are already 
under preliminary review. Once all of the preliminary reviews are 
completed, invitations will be extended to selected entities to submit 
full Applications. Until such time as the preliminary reviews are 
completed and the number and complexity of projects receiving an 
invitation to file a complete Application are known, the Department 
will not know how many projects it will fully review.
    Question 4b. We heard testimony at a recent Committee Biofuels 
Conference to the effect that it would be wise for the Department to 
begin the process of evaluating those pre-applications now, so that 
decisions about advancing to the application stage can be made as 
expeditiously as possible. Is the Department planning to move forward 
with this analysis? What is the time frame in which DOE intends to 
begin this process?
    Answer. On August 8, 2006, the Department issued Guidelines and an 
initial Solicitation Announcement (Solicitation No. DE-PS01-06LG00001). 
The initial Solicitation and the Guidelines provided that technologies 
for project proposals must be mature enough to assure dependable 
commercial operations. These materials and other relevant documents are 
available at www.lgprogram.energy.gov.
    The timely filed Pre-Applications are currently under preliminary 
review. This preliminary review will be followed by invitations to 
selected entities to submit full Applications. With the enactment of 
Public Law 110-5, the Department is moving forward to review these Pre-
Applications; to develop regulations for the program; and to fully 
implement the loan guarantee program. So, even though P.L. 110-5 
prohibits DOE from issuing any loan guarantees until it has promulgated 
applicable final regulations, P.L. 110-5 does not prohibit DOE from 
working to evaluate responses to the first solicitation prior to the 
issuance of those final rules.

    Responses of Secretary Bodman to Questions From Senator Domenici

     LOAN GUARANTEES FOR INNOVATIVE TECHNOLOGIES (EPACT TITLE XVII)

    Question 1. While your budget says you plan to do $9 billion in 
loan guarantees for FY 2008, that number simply represents the total 
face value of loan guarantees the administration chooses to grant. In 
other words, there is no limitation in EPACT on the total amount of 
guarantees that could be granted, correct? You could have said you 
would do $9 billion, right?
    Answer. No. You are correct that Title XVII of EPACT does not 
contain any limitations on the total amount of loan guarantees that may 
be issued under specific loan volume limitations provided in 
appropriations acts. However, under the Federal Credit Reform Act of 
1990, authority must be provided for in an appropriations act to enter 
into new loan guarantee commitments.
    Question 2. Furthermore, regardless of what that total face value 
amount is, you do not have to seek appropriation of it. Under EPACT and 
the Federal Credit Reform Act, only the ``cost'' or risk factor,'' if 
you will needs to be set aside in the treasury in the event of default. 
Under EPACT, as implemented by your program, the borrower can pay that 
amount into the treasury, so no appropriation is required for that 
either, correct?
    Answer. The Federal Credit Reform Act of 1990, section 504, is 
clear that for any discretionary federal credit program new loan 
guaranteecommitments may not be made unless authority has been provided 
in an appropriations act. EPACT and FCRA together mean that DOE is 
authorized to carry out a loan guarantee program, but that DOE may not 
actually issue guarantees until it receives new budget authority or is 
otherwise provided authority to make guarantees in an appropriations 
act.
    Question 3. Lastly, EPACT also directs you to collect 
administrative costs from the borrowers to offset any costs of running 
the program, so there's no cost to the treasury there either because 
those will be offsetting receipts, isn't that right?
    Answer. The Department will incur administrative expenses as part 
of its review of Pre-Applications and Applications. EPACT section 
1702(h) requires that the Department ``charge and collect fees for 
guarantees . . . sufficient to cover applicable administrative 
expenses.'' P.L. 110-5 appropriates $7 million in FY 2007 for 
administrative expenses. The Department anticipates addressing the 
subject of fees in its incoming notice of proposed rulemaking.
    The appropriations language in P.L. 110-5 and proposed in the 
Administration's FY 2008 Budget for administrative expenses reflects 
the offsetting nature of the 1702(h) collections. This provides the 
Department the necessary authority to carry out the Loan Guarantee 
Program, while also reflecting that the costs will ultimately be borne 
by the Applicants/Borrowers and not the general Treasury.
    Question 4. The point is, Mr. Secretary, there is no appropriation 
required of the total face value of the loan guarantees, nor has 
Congress set any limit on how many of these you can grant except at 
your request. Isn't that your understanding?
    Answer. EPACT and FCRA together mean that DOE is authorized to 
carry out a loan guarantee program, but that DOE may not actually issue 
guarantees until it receives new budget authority or is otherwise 
provided authority to make guarantees in an appropriations act. DOE 
previously conveyed this to this Committee and to the Government 
Accountability Office. For example, on May 1, 2006, DOE Under Secretary 
David K. Garman testified before this Committee that DOE would need an 
authorization, such as a loan volume limitation, in an appropriations 
act before DOE would be able to issue loan guarantees under the Title 
XVII program.
    Question 5. I understand that you have over 160 pre-applications 
under review for this program to get these new technologies in the 
marketplace. Can you commit to me that you'll move as quickly as 
possible to get this program off the drawing board and into action? Can 
we be confident that the Department will begin reviewing pre-
applications in the very near future?
    Answer. I am committed to moving the program forward expeditiously. 
The Department received over 100 Pre-Applications by the December 31, 
2006 deadline for submissions under the Department's Solicitation 
Announcement (Solicitation No. DE-PS01-06LG00001), issued August 8, 
2006. These timely filed Pre-Applications are already under preliminary 
review. Once all of the preliminary reviews are completed, invitations 
will be extended to selected entities to submit full Applications. The 
Department also is preparing to issue a Notice of Proposed Rulemaking 
(NOPR) for this program.

                NATURAL GAS AND OIL TECHNOLOGY PROGRAMS

    Question 1. Consistent with the President's FY2006 and FY2007 
budgets, you again propose the elimination of the natural gas and oil 
technology programs within the Office of Fossil Energy for FY2008.
    You state in the FY2008 budget that the Natural Gas Technology 
Program was rated ``ineffective''. Will you please explain how you came 
to this conclusion?
    Answer. In 2003, the Natural Gas Technologies Program received an 
overall PART score of 44%. The Program and Assessment Rating Tool 
(PART) is an OMB designed tool to rate programs. PART consists of four 
sections: 1. Program Purpose and Design, 2. Strategic Planning, 3. 
Program Management, 4. Program Results. Each section consists of a 
number of questions most of which are scored ``yes'' or ``no''. Scores 
from the four sections are weighted (20%, 10%, 20% and 50%, 
respectively) to obtain an overall score. Programs with PART scores 
less than 50 out of 100 are rated ``ineffective.'' The program was 
rated ``Ineffective'' in the PART analysis based primarily on not 
demonstrating clear results of the research effort. Full PART 
reassessments are conducted based on the level of new information 
available. The Natural Gas Technology Program has not indicated 
evidence of a significant change in performance and has not been 
selected for a reassessment.
    Question 3. Consistent with the President's FY2006 and FY2007 
budgets, you again propose the elimination of the natural gas and oil 
technology programs within the Office of Fossil Energy for FY2008.
    What role, if any, do you believe DOE should have in advancing 
technology which promotes the more efficient exploration, production 
and transportation of natural gas and oil?
    Answer. Oil and gas are mature industries and both have every 
incentive, particularly at today's prices, to enhance production and 
continue research and development of technologies on their own. There 
is no need for taxpayers to subsidize oil companies in these efforts. 
The Administration's Research and Development Investment Criteria 
direct programs to avoid duplicating research in areas that are 
receiving funding from the private sector, especially for evolutionary 
advances and incremental improvements.
    The 2008 Budget proposes to expand access to oil and gas resources, 
streamline permitting processes, and make the R&D investment tax credit 
permanent. These changes will leverage private sector ingenuity and are 
preferred ways to increase domestic production of oil and gas rather 
than Federally funded R&D.
    Question 4. Consistent with the President's FY2006 and FY2007 
budgets, you again propose the elimination of the natural gas and oil 
technology programs within the Office of Fossil Energy for FY2008.
    Is your decision to terminate these programs a function of budget 
constraints, program ineffectiveness, other priorities, or a 
combination of the three? Please explain.
    Answer. Budget discipline necessitated close scrutiny of all Fossil 
Energy programs, using strict guidelines to determine their 
effectiveness and compare them to other programs offering more clearly 
demonstrated and substantial benefits. The Program Assessment Rating 
Tool (PART) was developed by OMB to provide a standardized way to 
assess the effectiveness of the Federal Government's portfolio of 
programs. The structured framework of the PART provides a means through 
which programs can assess their activities differently than through 
traditional reviews. A PART assessment of the Natural Gas R&D program 
was conducted for the FY 2004 Budget and a reassessment was conducted 
for the FY 2005 Budget. The program was rated ``Ineffective'' in the 
PART analysis based primarily on not demonstrating clear results of the 
research effort.
    Question 3. Please explain your rationale for terminating this 
program.
    Answer. The Administration strongly supports research and 
development that will increase the Nation's energy independence, and is 
proposing to make the R&D investment tax credit permanent. The FY 2008 
Budget includes initiatives for hydrogen fuel, biofuels, 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.
    The oil and gas R&D programs focus on technologies that can be 
commercialized quickly. Oil companies have strong incentives to figure 
out ways to get the oil out of the ground cheaply and safely. They have 
shown, along with the oil services industry, remarkable engineering 
prowess, including when it comes to offshore engineering. There is no 
need for taxpayers to subsidize oil companies in these efforts.

                        BIOFUELS/LOAN GUARANTEES

    Question 1. I am interested in whether the Department is working to 
use the loan guarantee program to support commercialization efforts of 
cellulose ethanol projects.
    What is the Department doing to specifically support cellulose 
ethanol commercialization through the loan guarantee program?
    Answer. Proposals to commercialize cellulosic ethanol fit within 
the category of renewable energy projects eligible for loan guarantees 
under Title XVII of EPACT 2005. Even in advance of enactment of the 
Joint Resolution, Public Law 110-5, which provided $7 million in 
funding for administrative expenses of the Loan Guarantee Program, the 
Department began activities under the Title XVII loan guarantee 
program. Specifically, on August 8, 2006, the Department issued 
Guidelines and an initial Solicitation Announcement (Solicitation No. 
DE-PS01-06LG00001). The deadline for submitting Pre-Applications in 
response to that solicitation (including for biomass or cellulosic 
ethanol projects), closed on December 31, 2006. In addition, the 
Guidelines provided that technologies for project proposals must be 
mature enough to assure dependable commercial operations. These 
materials and other relevant documents are available at http://
www.lgprogram.energy.gov.

    Responses of Secretary Bodman to Questions From Senator Cantwell

    Question 20. Secretary Bodman, you testified that the 
Administration does not believe that the oil and gas industry need 
incentives to expand drilling when world prices are so high. Could you 
please say whether you would recommend the President sign legislation 
repealing expensing of exploration and production costs and if you 
recommend not signing such a bill, please explain why and how much you 
estimate this tax provision current costs the federal treasury.
    Answer. While I would have to see the details of particular 
legislation before commenting on it, I am not likely to make 
recommendations on issues that involve tax policy, which is the 
jurisdiction of the Department of Treasury.
    Question 21. Secretary Bodman, you testified that the 
Administration does not believe that the oil and gas industry need 
incentives to drill when world prices are so high. Could you please say 
whether you would recommend the President sign legislation repealing 
excess of percentage over cost depletion? If you recommend not signing 
such legislation, please explain why and how much you estimate this tax 
provision current costs the federal treasury.
    Answer. While I would have to see the details of particular 
legislation before commenting on it, I am not likely to make 
recommendations on issues that involve tax policy, which is the 
jurisdiction of the Department of Treasury.
    Question 22. Secretary Bodman, you testified that the 
Administration does not believe that the oil and gas industry need 
incentives to drill when world prices are so high. Could you please say 
whether you would recommend the President sign legislation repealing 
tax credits for enhanced oil recovery costs? If you recommend not 
signing such legislation, please explain why and how much you estimate 
this tax provision current costs the federal treasury.
    Answer. While I would have to see the details of particular 
legislation before commenting on it, I am not likely to make 
recommendations on issues that involve tax policy, which is the 
jurisdiction of the Department of Treasury.
    Question 23. Secretary Bodman, you testified that the 
Administration does not believe that the oil and gas industry need 
incentives to drill when world prices are so high. Could you please say 
whether you would recommend the President sign legislation repealing 
tax credits in EPACT 2005 including the election to expense certain 
refineries, treatment of natural gas distribution lines as 15-year 
property, treatment of natural gas gathering lines as 7-year property, 
and the new rule for determining small refineries? If you recommend not 
signing such legislation, please explain why and how much you estimate 
this tax provision current costs the federal treasury.
    Answer. Yes, I would recommend the repeal of some EPACT tax 
incentives to reduce the revenue losses to the Federal treasury. For 
example, the Administration's FY2008 budget recommends the repeal of 
the EPACT provision for an acceleration of depreciation of natural gas 
distribution lines. Treasury's estimated revenue increase for the 
proposal is $906 million for FY 2008--2017. The FY 2008 Budget also 
proposes to increase the amortization period from two to five years for 
geological and geophysical expenditures (G&G) incurred by independent 
oil and gas producers in connection with all oil and gas production in 
the United States. The Administration's proposal recognizes that high 
energy rices provide incentives for investment in exploration and that 
additional p incentives in the form of accelerated amortization of G&G 
are not necessary. In addition, the Budget proposal provides consistent 
treatment of G&G for all oil and gas producers while retaining the 
simplification benefits provided by EPACT. The estimated revenue 
increase for the proposal is $582 million for FY 2008--2017.
    I would add, however, that I support certain EPACT provisions that 
provide significant tax simplification. For example, EPACT clarified 
the tax treatment of natural gas gathering lines, resolving an issue 
that had resulted in a substantial amount of litigation between IRS and 
taxpayers and providing equal treatment of such gathering lines among 
different types of owners.
    Although I do not have an estimate of the rest of the EPACT tax 
incentives, the Joint Committee on Taxation prepared such estimates in 
connection with the EPACT conference agreement. Those estimates can be 
found in the Joint Committee publication JCX-59-05.
    Question 24. Secretary Bodman, you testified that the 
Administration does not believe that the oil and gas industry need 
incentives to drill when world prices are so high. Could you please say 
whether you would recommend the President sign legislation adjusting 
the LIFO and FIFO accounting rules for the big 5 oil companies?
    Answer. The Administration has opposed proposed modifications of 
inventory accounting rules for certain large oil companies. There is no 
basis in sound tax accounting for requiring the adjusting of LIFO and 
FIFO accounting rules for only 5 companies. Thus, it would be 
inappropriate to single out 5 large oil companies for inventory tax 
treatment that would differ from that allowed other firms in the oil 
industry or other industries.
    Question 28. Secretary Bodman, as you know China's energy demands 
are rising at an incredible pace. Could you please describe any and all 
programs the Department is conducting with the Chinese government, or 
within China, besides the Asia Pacific Partnership?
    Answer. Driven by economic growth, China's demand for energy has 
been rising rapidly. This rapid growth is expected to continue over the 
next decades. To help alleviate pressure on the world oil market, the 
Department of Energy has actively engaged with China on strategies for 
diversifying its energy supply. Our cooperation with China is focusing 
on increasing China's use of clean and more efficient energy to lower 
its impact on energy markets and the environment. Our energy programs 
in China are described below.
    Fossil Energy Programs in China: The major area of cooperation on 
fossil energy is the Protocol between DOE and China's Ministry of 
Science and Technology (MOST), signed in 2000, which is a bilateral 
agreement that promotes scientific and technological cooperation and 
exchanges in the field of fossil energy. These exchanges will help to 
reduce the adverse environmental impacts of power production from coal 
in China, provide commercial opportunities for U.S. businesses, and 
acquire scientific and technical information of interest to DOE. DOE's 
Office of Fossil Energy spent an estimated $430,000 on activities under 
the China Protocol in 2006. DOE has also engaged in forums and 
information exchanges through the U.S. China Oil and Gas Industry Forum 
and the U.S./China Energy and Environmental Technology Center.
    Energy Efficiency and Renewable Energy Programs in China: On 
December 15, 2006, the DOE and MOST renewed an energy efficiency and 
renewable energy Protocol, which started in 1995, for cooperation on 
solar, wind, and biomass and energy efficiency technologies. In the 
area of energy efficiency, current activities include evaluating gaps 
in China's energy efficiency policies and promoting dialogue and 
collaboration on energy efficiency measures. The Department is working 
to promote energy efficiency through industrial efficiency assessments 
that will promote the use of advanced efficiency technology and reduce 
air pollution. This will also increase the market for U.S. products. 
China's industrial sector accounts for 60% of its total energy 
consumption, so this is a major target of opportunity.
    The building sector is another key area for energy conservation. 
The Agenda 21 Building in Beijing, completed in 2004 through a 
cooperative effort between DOE and MOST, obtained a Leadership in 
Energy and Environmental Design (LEED) Gold rating and demonstrated the 
potential contribution to energy conservation these technologies could 
make. The Department's support of the Agenda 21 Building will encourage 
private sector participation by featuring state-of-the-art U.S. 
building technology and serving as a training and exhibition center for 
American products.
    The Department also supports projects and programs in China in the 
area of renewable energy, focusing on biofuels, solar, and wind 
technologies. DOE is working with its Chinese counterparts to exchange 
information on advances in technologies, specifically helping the 
Chinese map and evaluate feedstock resources for biofuels and 
approaches to expanding the use of flex fuel vehicles to reduce the 
amount of oil that China will need for its growing automobile fleet. 
The Office of Energy Efficiency and Renewable Energy (EERE) spent 
approximately $140,000 on programs with China in 2006.
    The U.S.-China Energy Policy Dialogue: Established in May 2004, the 
Dialogue aims to improve mutual understanding of our respective energy 
policies; to offer relevant U.S. experiences to help Chinese policy 
makers improve the legal and regulatory framework for energy 
investment; and to mitigate the environmental affects of China's rising 
fossil energy consumption. The second and most recent Dialogue was held 
in September 2006, in China.
    The U.S.-China Strategic Economic Dialogue: DOE actively 
participates in this Dialogue, which was established in 2006 and is led 
by the Treasury Department. I co-chaired a session on ``Energy and 
Environment'' with EPA Administrator Stephen Johnson and addressed 
various aspects of the linkage between the use of energy and natural 
resources and their impact on the environment, and sustainable economic 
development.
    Peaceful Uses of Nuclear Technology (PUNT) Cooperation:Established 
in 1998 by the U.S. and Chinese governments, the PUNT cooperation aims 
to positively influence China on nuclear nonproliferation policy and to 
promote various areas of nuclear energy research and development 
cooperation. The areas of cooperation are the control of exports of 
nuclear materials, equipment and technologies; nuclear material control 
and accounting; physical protection of nuclear materials and nuclear 
facilities; nuclear reactor power plant safety; and nuclear safeguards 
technology development.
    DOE also cooperates with China in a number of multilateral energy 
activities including:
    FutureGen: The FutureGen project, announced by President Bush in 
2003, is a $950 million multilateral initiative to build a near-zero 
atmospheric emissions coal-fired power plant. The China Huaneng Group 
is already part of the FutureGen Industry Alliance, which is a 
consortium of coal producers and users who partner with DOE on the 
FutureGen project. In December 2006, the Chinese government formally 
expressed its willingness to join other interested foreign governments 
on the U.S.-led FutureGen Government Steering Committee, which will 
provide recommendations to the Alliance on development of the FutureGen 
project.
    Carbon Sequestration Leadership Forum (CSLF): Another potentially 
transforming technology is the focus of the Department's Carbon 
Sequestration Leadership Forum (CSLF). Given the potential technical 
contributions and the importance of future markets, the Chinese have 
been important partners in this initiative. China has been an active 
member of the CSLF since its inception in 2003.
    International Partnership for a Hydrogen Economy (IPHE): The U.S. 
and China are also working together through the International 
Partnership for a Hydrogen Economy (IPHE), which President Bush 
envisages as helping to bring hydrogen-based vehicles to market 
worldwide. China hosted the IPHE Steering Committee meeting in May 2004 
in Beijing and the IPHE Implementation-Liaison Committee meeting in 
January 2006 in Shanghai.
    GenIV: In November 2006, China, together with the Russian 
Federation became a member of the Generation IV International Forum 
(GIF), composed of the energy ministries and agencies of 11 countries 
and the European Atomic Energy Community. The Forum is a framework for 
international research and development collaboration for the next 
generation of nuclear systems that satisfactorily address the GIF's 
criteria of safety, economy, sustainability, proliferation resistance, 
and physical protection. China has announced its intention to accede to 
the multilateral Framework Agreement for International Collaboration on 
Research and Development of Generation IV Nuclear Energy Systems 
(signed February 28, 2005), joining the governments of Canada, France, 
Japan, the Republic of Korea, Switzerland, the United Kingdom, and the 
United States.
    ITER: President Bush announced on January 30, 2003, that the U.S. 
was joining the negotiations for the International Thermal Nuclear 
Experimental Reactor, now referred to as ITER, whose mission is to 
demonstrate the scientific and technological feasibility of clean 
fusion energy. In June 2005, the ITER parties, namely China, the 
European Union, Japan, the Republic of Korea, Russia and the U.S., 
agreed to build the ITER facility in Cadarache, France, the main 
research center of the French Atomic Energy Commission. India joined 
the project in December 2005, and the ITER Agreement was signed by the 
seven ITER parties on November 21, 2006. The U.S. and China, as non-
host partners, will each participate in the construction phase at the 
level of 9.09 percent.

     Response of Secretary Bodman to Question From Senator Sanders

                            LOAN GUARANTEES

    Question 2. The budget proposes to allow the Department to support 
$4 billion in proposed loan guarantees for nuclear and coal plants in 
FY2008, compared to a $5 billion cap for biofuels, electricity 
transmission and the vast array of renewable energies. Your Department 
set these amounts, but according to your own budget request, you have 
yet to evaluate the financial risks for US taxpayers. A 2003 estimate 
by the Congressional Budget Office concluded the risk of loan default 
for a new nuclear plant would be ``well above 50 percent.'' How did the 
Department make its decision on the total amount and allocations for 
loan guarantees without having evaluated the financial risks?
    Answer. DOE anticipates $9 billion in loan guarantees in FY 2008. 
The sub-limits in the Budget are reasonable goals for the allocation of 
authority among eligible projects. That being said, there is no magic 
as to how the sub limits were set. As the Budget itself states, ``[p] 
recisely how any authorized would be alloca- 
ted . . . ultimately would depend on the merits and benefits of 
particular project proposals and their compliance with statutory and 
regulatory requirements.''

     Response of Secretary Bodman to Question From Senator Sessions

    Question 4. Many major U.S. industries are currently under 
significant competitive pressure from offshore producers that have 
access to lower cost supplies and relaxed environmental regulations. 
Will investments in energy efficiency [and] carbon reduction R&D help 
support those industries and encourage them to stay here in the U.S.?
    Answer. Energy efficiency provides a cost-effective option to save 
energy, reduce greenhouse gas emissions, and help with companies' 
bottom lines. One example is the Save Energy Now campaign I announced 
in late 2005. Through DOE's Industrial Technologies Program, Energy 
Saving Teams visited 200 of the most energy-intensive manufacturing 
facilities in the country over the past 12 months. Working with plant 
personnel, the teams identified savings opportunities that typically 
amounted to 5 to 15 percent of a plant's total energy use, with an 
average potential savings of about $2.5 million per plant if our 
recommendations are implemented. In total, these assessments identified 
opportunities to save over 50 trillion Btu--roughly equivalent to the 
natural gas used in 700,000 American homes--and close to $500 million 
per year in energy costs (including electricity). We did not calculate 
the plants' investment necessary to achieve these energy cost savings, 
but in many cases, our recommendations are low-cost or no-cost process 
improvements. These energy savings equate to reducing carbon dioxide 
emissions by 3.3 million metric tons annually. We are expanding the 
program to cover another 250 plants in fiscal year 2007. In addition, 
the Industrial Technologies Program promotes R&D for advanced, energy 
efficient manufacturing process technologies that will improve 
efficiency even more. These types of programs can help enhance our 
energy security, reduce greenhouse gas emissions, and keep American 
industry competitive.

    Responses of Secretary Bodman to Questions From Senator Salazar

                       TITLE XVII LOAN GUARANTEES

    Question 8. Mr. Secretary, The Energy Policy Act of 2005 authorized 
loan guarantees for a variety of new clean energy technologies. It is 
absolutely critical that the Department finally establish an Office of 
Loan Guarantees. I am glad to see that you propose to issue $9 billion 
in loans, but I remain concerned with the Department's lack of progress 
establishing the loan guarantee program. Please provide me and the 
Members of the Committee with a written update and statement of your 
plan to implement Congress's intent in Title XVII of EPAct 2005.
    Answer. In May 2006, the Department requested Congressional 
approval for an appropriations transfer of $2.7 million to fund start-
up of a DOE Loan Guarantee Office. The Senate approved this request but 
the House of Representatives rejected it. As a result, until the 
enactment of P.L. 110-5 on February 15, 2007, which provided for funds 
and authority to fully implement the Title XVII program, DOE's ability 
to carry the program forward was extremely limited. The Department did 
issue Guidelines and an initial Solicitation Announcement on August 8, 
2006, and is currently reviewing the pre-applications received under 
that solicitation. Now that it has been provided necessary funding and 
legal authority, DOE intends to move forward expeditiously to implement 
this program.
    Among other things, the Department is preparing to issue a Notice 
of Proposed Rulemaking for the program, and will move forward 
expeditiously to complete its review of the completed, timely filed, 
Pre-Applications submitted in response to the first solicitation.

                       TITLE XVII LOAN GUARANTEES

    Question 9. I am particularly anxious to learn what solicitations 
for project proposals the Department will issue for Integrated 
Gasification Combined Cycle (IGCC) demonstration project in the western 
U.S. Will you please update me on the Department's plans in that 
regard?
    Answer. The Clean Coal Power Initiative (CCPI) is the primary 
vehicle used by the Department of Energy to fund demonstration scale 
advanced coal technology projects such as IGCC. In FY 2008 CCPI will 
complete the Round 3 solicitation, proposal evaluations, and project 
selections to assemble the initial portfolio of advanced technology 
systems that capture carbon dioxide for sequestration and beneficial 
reuse.

    Response of Secretary Bodman to Question From Senator Murkowski

                          ALASKA ENERGY OFFICE

    Question 5. DOE for the past six years has operated an Alaska 
Energy Office. It has never received more than $7 million annually, but 
it has worked on some exciting projects: how to supply rural villages 
with innovative power in places where diesel-generated power costs up 
to 70 cents per kilowatt (fuel cells). How to harness coal while 
sequestering carbon and enhancing oil recovery from oil fields. How to 
turn coal into nitrogen and other elements through gasification. How to 
get heavy oil out of the ground. How to develop gas hydrates. How, most 
recently, to get power to the citizens of Southcentral Alaska now that 
existing supplies of natural gas are becoming more scarce and 
expensive. I'm sorry to see your decision not to return the office 
again for the coming year. Could you tell me any substantive reason why 
you made that decision or was it purely budget driven?
    Answer. Consistent with the FY 2006 and FY 2007 Budgets, the Oil 
and Natural Gas Technology programs are being terminated in FY 2008. 
Budget discipline necessitated close scrutiny of all Fossil Energy 
programs, using strict guidelines to determine their effectiveness and 
to compare them to other programs offering more clearly demonstrated 
and substantial benefits. The Program Assessment Rating Tool (PART) was 
developed by OMB to provide a standardized way to assess the 
effectiveness of the Federal Government's portfolio of programs. The 
structured framework of the PART provides a means through which 
programs can assess their activities differently than through 
traditional reviews. A PART assessment of the Natural Gas R&D program 
was conducted for the FY 2004 Budget and a reassessment was conducted 
for the FY 2005 Budget. The program was rated ``Ineffective'' in the 
PART analysis based primarily on not demonstrating clear results of the 
research effort.

     Responses of Secretary Bodman to Questions From Senator Wyden

    Question 5. You have also apparently decided that part of your 
Department's mission is to help factories in China become more energy 
efficient by helping them to perform energy assessments. Please provide 
a detailed explanation of exactly what your Department is doing in 
China with regard to each program within the Department, e.g. 
Efficiency and Renewable Energy, Fossil Energy, etc., and the funding 
that will be used for these activities.
    Answer. Driven by economic growth, China's demand for energy has 
been rising rapidly. This rapid growth is expected to continue over the 
next decades. To help alleviate pressure on the world oil market, the 
Department of Energy has actively engaged with China on strategies for 
diversifying its energy supply. Our cooperation with China is focusing 
on increasing China's use of clean and more efficient energy to lower 
its impact on energy markets and the environment. Our energy programs 
in China are described below.
    Fossil Energy Programs in China: There are major area of 
cooperation on fossil energyis the Protocol between DOE and China's 
Ministry of Science and Technology (MOST), signed in 2000, which is a 
bilateral agreement that promotes scientific and technological 
cooperation and exchanges in the field of fossil energy. These 
exchanges will help to reduce the adverse environmental impacts of 
power production from coal in China, provide commercial opportunities 
for U.S. businesses, and acquire scientific and technical information 
of interest to DOE. DOE's Office of Fossil Energy spent an estimated 
$430,000 on activities under the China Protocol in 2006. DOE has also 
engaged in forums and information exchanges through the U.S. China Oil 
and Gas Industry Forum and the U.S./China Energy and Environmental 
Technology Center.
    Energy Efficiency and Renewable Energy Programs in China: On 
December 15, 2006 the DOE and MOST renewed an energy efficiency and 
renewable energy Protocol, which started in 1995, for cooperation on 
solar, wind, and biomass and energy efficiency technologies. In the 
area of energy efficiency, current activities include evaluating gaps 
in China's energy efficiency policies and promoting dialogue and 
collaboration on energy efficiency measures. The Department is working 
to promote energy efficiency through industrial efficiency assessments 
that will promote the use of advanced efficiency technology and reduce 
air pollution. This will also increase the market for U.S. products. 
China's industrial sector accounts for 60% of its total energy 
consumption, so this is a major target of opportunity.
    The building sector is another key area for energy conservation. 
The Agenda 21 Building in Beijing, completed in 2004 through a 
cooperative effort between DOE and MOST, obtained a Leadership in 
Energy and Environmental Design (LEED) Gold rating and demonstrated the 
potential contribution to energy conservation these technologies could 
make. The Department's support of the Agenda 21 Building will encourage 
private sector participation by featuring state-of-the-art U.S. 
building technology and serving as a training and exhibition center for 
American products.
    The Department also supports projects and programs in China in the 
area of renewable energy, focusing on biofuels, solar, and wind 
technologies. DOE is working with its Chinese counterparts to exchange 
information on advances in technologies specifically helping the 
Chinese map and evaluate feedstock resources for biofuels and 
approaches to expanding the use of flex fuel vehicles to reduce the 
amount of oil that China will need for its growing automobile fleet. 
The Office of Energy Efficiency and Renewable Energy (EERE) spent 
approximately $140,000 on programs with China in 2006.
    The U.S.-China Energy Policy Dialogue: Established in May 2004, the 
Dialogue aims to improve mutual understanding of our respective energy 
policies; to offer relevant U.S. experiences to help Chinese policy 
makers improve the legal and regulatory framework for energy 
investment; and to mitigate the environmental affects of China's rising 
fossil energy consumption. The second and most recent Dialogue was held 
in September 2006, in China.
    The U.S.-China Strategic Economic Dialogue: DOE actively 
participates in this Dialogue, which was established in 2006 and is led 
by the Treasury Department. I co-chaired a session on ``Energy and 
Environment'' with EPA Administrator Stephen Johnson and addressed 
various aspects of the linkage between the use of energy and natural 
resources and their impact on the environment, and sustainable economic 
development.
    Peaceful Uses of Nuclear Technology (PUNT) Cooperation: Established 
in 1998 by the U.S. and Chinese governments, the PUNT cooperation aims 
to positively influence China on nuclear nonproliferation policy and to 
promote various areas of nuclear energy research and development 
cooperation. The areas of cooperation are the control of exports of 
nuclear materials, equipment and technologies; nuclear material control 
and accounting; physical protection of nuclear materials and nuclear 
facilities; nuclear reactor power plant safety; and nuclear safeguards 
technology development.
    DOE also cooperates with China in a number of multilateral energy 
activities including:
    FutureGen: The FutureGen project, announced by President Bush in 
2003, is a $950 million multilateral initiative to build a near-zero 
atmospheric emissions coal-fired power plant. The China Huaneng Group 
is already part of the FutureGen Industry Alliance, which is a 
consortium of coal producers and users who partner with DOE on the 
FutureGen project. In December 2006, the Chinese government formally 
expressed its willingness to join other interested foreign governments 
on the U.S.-led FutureGen Government Steering Committee, which will 
provide recommendations to the Alliance on development of the FutureGen 
project.
    Carbon Sequestration Leadership Forum (CSLF): Another potentially 
transforming technology is the focus of the Department's Carbon 
Sequestration Leadership Forum (CSLF). Given the potential technical 
contributions and the importance of future markets, the Chinese have 
been important partners in this initiative. China has been an active 
member of the CSLF since its inception in 2003.
    International Partnership for a Hydrogen Economy (IPHE): The U.S. 
and China are also working together through the International 
Partnership for a Hydrogen Economy (IPHE), which President Bush 
envisages as helping to bring hydrogen-based vehicles to market 
worldwide. China hosted the IPHE Steering Committee meeting in May 2004 
in Beijing and the IPHE Implementation-Liaison Committee meeting in 
January 2006 in Shanghai.
    GenIV: In November 2006, China, together with the Russian 
Federation, became a member of the Generation IV International Forum 
(GIF), composed of the energy ministries and agencies of 11 countries 
and the European Atomic Energy Community. The Forum is a framework for 
international research and development collaboration for the next 
generation of nuclear systems that satisfactorily address the GIF's 
criteria of safety, economy, sustainability, proliferation resistance, 
and physical protection. China has announced its intention to accede to 
the multilateral Framework Agreement for International Collaboration on 
Research and Development of Generation IV Nuclear Energy Systems 
(signed February 28, 2005), joining the governments of Canada, France, 
Japan, the Republic of Korea, Switzerland, the United Kingdom, and the 
United States.
    ITER: President Bush announced on January 30, 2003, that the U.S. 
was joining the negotiations for the International Thermal Nuclear 
Experimental Reactor, now referred to as ITER, whose mission is to 
demonstrate the scientific and technological feasibility of clean 
fusion energy. In June 2005, the ITER parties, namely China, the 
European Union, Japan, the Republic of Korea, Russia and the U.S., 
agreed to build the ITER facility in Cadarache, France, the main 
research center of the French Atomic Energy Commission. India joined 
the project in December 2005, and the ITER Agreement was signed by the 
seven ITER parties on November 21, 2006. The U.S. and China, as non-
host partners, will each participate in the construction phase at the 
level of 9.09 percent.
    Asia-Pacific Partnership (APP) for Clean Development and Climate: 
APP is an effort to accelerate the development and deployment of clean 
energy technologies. Founding partners Australia, China, India, Japan, 
Republic of Korea, and the United States have agreed to work together 
and with private sector partners to meet goals for energy security, 
national air pollution reduction, and climate change in ways that 
promote sustainable economic growth and poverty reduction. The 
Partnership will focus on expanding investment and trade in cleaner 
energy technologies, goods and services in key market sectors. The 
Partners have approved eight public-private sector task forces: 
Aluminum, Buildings and Appliances, Cement, Cleaner Use of Fossil 
Energy, Coal Mining, Power Generation and Transmission, Renewable 
Energy and Distributed Generation, and Steel. China has been actively 
engaged in the task forces and hosted two task force meetings last year 
(Power Generation and Transmission in Beijing and Cement in Xian).

              ULTRA-DEEPWATER NATURAL GAS RESEARCH PROGRAM

    Question 8. Mr. Secretary, a last minute provision tucked into the 
Energy Policy Act of 2005 set aside $50 million a year in mineral 
royalties and $100 million a year in authorized appropriations for an 
industry research consortium to help the oil and gas industry with new 
exploration methods for ultra-deepwater gas. The DOE budget proposes to 
repeal this program and zeroing it out in your 2008 budget. Why does 
the Administration believe that this program should be repealed?
    Answer. The Administration strongly supports research and 
development that will increase the Nation's energy independence, and is 
proposing to make the R&D investment tax credit permanent. The 2008 
Budget includes initiatives for hydrogen fuel, biofuels, 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.
    The oil and gas R&D programs focus on technologies that can be 
commercialized quickly. Oil companies have strong incentives to figure 
out ways to get the oil out of the ground cheaply and safely. They have 
shown, along with the oil services industry, remarkable engineering 
prowess, including when it comes to offshore engineering. There is no 
need for taxpayers to subsidize oil companies in these efforts.

     Responses of Secretary Bodman to Questions From Senator Thomas

                 ROCKY MOUNTAIN OILFIELD TESTING CENTER

    Question 3a. Our ability to produce energy here at home is reliant 
upon advances in technology. Increasing responsible domestic production 
lowers prices and increases our security. The Rocky Mountain Oilfield 
Testing Center is located in Wyoming. It's not a private company. It's 
not a University or a non-profit organization. It is the Department of 
Energy that owns it, runs it, and uses it to advance technologies. Yet 
I have to seek an earmark every year to run a facility that belongs to 
DOE.
    Why do you not request money for the rocky mountain oilfield 
testing center in your budget?
    Answer. DOE does request funding for the Rocky Mountain Oilfield 
Test Center (RMOTC) annually in the budget process. The RMOTC budget 
request is included with the budget for operation of Naval Petroleum 
Reserve No. 3, which is part of the larger Naval Petroleum and Oil 
Shale Reserve (NPOSR) request. The past three Congressional Budget 
Requests are as follows:

                         [Dollars in Thousands]
------------------------------------------------------------------------
                                             FY 2006   FY 2007   FY 2008
                                              Cong.     Cong.     Cong.
                                             Request   Request   Request
------------------------------------------------------------------------
RMOTC/NPR-3...............................     9,004    10,258    10,110
Other NPR.................................     9,496     8,552     7,191
Total NPOSR...............................    18,500    18,810    17,301
------------------------------------------------------------------------

    Question 3b. Why does the money generated from the sale of oil 
produced at RMOTC go to the Federal Treasury?
    Answer. Proceeds from the sale of hydrocarbons are deposited into 
the U.S. Treasury as mandated by law. Section 7432 of the Naval 
Petroleum Reserves Production Act of 1976 [Public Law 94-258] 
established a special account for the deposit of all proceeds realized 
from the sale of the U.S. share of production. For three years Congress 
made appropriations for the Naval Petroleum Reserves out of this 
special account. In 1979, Public Law 96-137 abolished the Naval 
Petroleum Reserves special account and specified that all monies 
accruing to the United States after December 12, 1979, from the Naval 
Petroleum Reserves shall be conveyed to the U.S. Treasury as 
miscellaneous receipts. This law is still in effect and revenues 
continue to be deposited into the miscellaneous receipts account.
    Question 3c. Do you support giving that money back to RMOTC to 
reinvest in the important work they do?
    Answer. The FY 2008 President's Budget reflects the 
Administration's policy for RMOTC and NPR 3. The 2008 Budget doesn't 
propose any change in the use of receipts from the sale of oil and gas 
produced at NPR 3.
    Question 4. Section 413 of the Energy Policy Act authorized a 
federal cost share to demonstrate IGCC in the west. The west is 
experiencing enormous demand growth in its electricity sector. Wyoming 
is ready to help meet those needs by building clean coal power plants. 
We ought to pursue clean coal instead of LNG import terminals in highly 
populated areas. The people who live on our coasts do not want LNG 
terminal and increasing imports of natural gas is terrifically harmful 
to our nation's energy security. Why doesn't the budget request seek 
funding for section 413 implementation?
    Answer. The Clean Coal Power Initiative (CCPI) is the primary 
vehicle used by the Department of Energy to fund demonstration scale 
advanced coal technology projects such as the IGCC demonstration 
authorized under section 413 of EPACT 2005. In FY 2008 CCPI will 
complete the Round 3 solicitation, proposal evaluations, and project 
selections to assemble the initial portfolio of advanced technology 
systems that capture carbon dioxide for sequestration and beneficial 
reuse.
    Question 8b. The people of Wyoming want to convert our coal to a 
more valuable resource. We want to generate clean power and produce 
clean diesel fuel. These options are clearly better than digging up 
coal and shipping it out on railcars. We dig a lot of it up too, 36 
percent of the supply in the United States comes from Wyoming. How much 
money is requested for these things in your 2008 budget?
    Answer. The fiscal year 2008 budget request for the Clean Coal R&D 
Program is focused on achieving many key goals that would also 
contribute to achieving Wyoming's goal.
    DOE's request for 2008 includes $448 million for clean coal 
research, development, and demonstration. Of that:

   $73 million is for CCPI,
   $108 million is for FuturGen,
   $246 million is for coal R&D in the Fuels and Power Systems 
        program, and
   $21 million is for coal R&D by federal researchers within 
        the Fossil Energy R&D Program Direction line.

    Title IV Subtitle A Section 403 report to Congress transmitted on 
August 8, 2006, details the goals of the CCPI program.
    Title IX Subtitle F Section 962(b)(2)(C) report to Congress 
transmitted on April 28, 2006, details the goals of the FE R&D program.
    Besides these Clean Coal research, development, and demonstration 
activities being carried out by the Department of Energy, the following 
EPACT Sections may also support Wyoming's goal of exporting value-added 
coal products:

   Under EPACT Sections 48A and 48B investment tax credits are 
        authorized for advanced coal technologies, which could include 
        gasification technology, coproduction facilities that produce 
        both electric power, and liquid fuels from coal. $1 billion in 
        investment tax credits were awarded in 2007 under this 
        mandatory program, and the Department expects that the 
        Department of Treasury will award the remaining $650 million in 
        2008.
   EPACT Section 1703 authorizes the Department to provide loan 
        guarantees for coal gasification, carbon sequestration, and 
        many other types of projects. The 2008 budget request includes 
        $8.4 million to operate a Loan Guarantee Office. The Department 
        anticipates $9 billion in loan guarantees in FY 2008.

    Question 8c. What is DOE doing to encourage growth of interstate 
pipeline and electrical infrastructure? Please provide as comprehensive 
response as possible.
    Answer. In response to the Energy Policy Act of 2005, the 
Department of Energy (DOE) is working cooperatively with other Federal 
and state agencies, local governments, and industry to expedite the 
permitting of interstate natural gas pipelines. Section 372(b) of the 
Energy Policy Act of 2005 (EPACT) requires the signatories to a May 
2002 Interagency Agreement to submit to Congress a report on the 
actions Federal agencies are taking with respect to permitting 
activities with interstate natural gas pipelines. The purpose of the 
May 2002 Interagency Agreement is to streamline and otherwise improve 
the regulatory oversight of the permitting activities of natural gas 
pipelines. The draft report is titled, ``How the Federal agencies are 
Incorporating and Implementing the Provisions of the May 2002 
Interagency Agreement on Early Coordination of Required Environmental 
and Historic Preservation Reviews Conducted in Conjunction with the 
Issuance of Authorizations to Construct and Operate Interstate Natural 
Gas Pipelines Certificated by the Federal Energy Regulatory 
Commission.'' The report was drafted by the Department's Office of 
Fossil Energy in cooperation with the Depirrtment of Army, the 
Department of Agriculture, the Department of Commerce, the Department 
of the Interior, the Department of Transportation, the Advisory Council 
on Historic Preservation, the Federal Energy Regulatory Commission, the 
Council on Environmental Quality, and the Environmental Protection 
Agency. The report, which is currently under review, will summarize the 
progress by Federal agencies with respect to permitting activities of 
interstate natural gas pipelines.
    The new authorities concerning electrical infrastructure under 
EPACT include calling on DOE to cooperate with the Federal land 
management agencies to designate specific energy corridors crossing 
Federal land (Section 368), to coordinate Federal authorizations 
required to site transmission facilities (Section 216(h)), to conduct 
periodic transmission congestion studies to identify areas of concern, 
and, as the Secretary determines appropriate, designate National 
Interest Electric Transmission Corridors.
    The agencies affected by Section 368 began work shortly after the 
Energy Policy Act of 2005 was enacted in August 2005. At that time, an 
interagency team was established with DOE as the lead agency. The 
Bureau of Land Management is a co-lead, and the Forest Service, the 
Department of Defense, the Fish and Wildlife Service and the States of 
California and Wyoming are cooperating agencies. The Coeur d'Alene 
tribe is also a cooperating agency. In addition, the Department of 
Commerce is involved as a consulting agency. Pursuant to EPACT Section 
372(a), a Memorandum of Understanding (MOU) was signed by the four main 
agencies in February 2006 with respect to cooperative implementation of 
Section 368.
    A draft Programmatic Environmental Impact Statement (PETS) for the 
proposed action is expected to be published in the late spring of 2007. 
The agencies anticipate there will be a 90-day comment period for 
review, including hearings in each of the eleven western states. After 
the final PETS is published, the land use plans are expected to be 
amended by a record of decision in December 2007.
    On August 8, 2006, the Department and eight other Federal agencies 
signed a MOU on Early Coordination of Federal Authorization and Related 
Environmental Reviews Required in Order to Site Transmission Facilities 
on Federal Lands. Since that time, DOE has assembled a team to 
implement Section 216(h), and is finalizing the Department's 
procedures, including the roles and responsibilities of Federal 
agencies and transmission project applicants. I am encouraged by the 
potential benefits of systematic coordination among Federal agencies 
and appropriate state agencies, Indian tribes, and multi-state entities 
to prepare the initial calendars with milestones and deadlines for the 
Federal authorizations and related reviews required for the siting of 
transmission facilities. We are currently preparing procedures to 
implement this section.
    Section 1221(a) requires the Secretary to issue a report based on 
the August 8, 2006 Congestion Study. In that report, the Secretary, at 
his discretion, may designate any geographic area experiencing electric 
energy transmission capacity constraints or congestion that adversely 
affects consumers as a National Interest Electric Transmission Corridor 
(National Corridor).
    In the August 8, 2006 Congestion Study, the Department invited the 
public to comment on the designation of National Corridors. The 
Department continues to evaluate these comments, and has not yet 
determined whether, and if so, where, it is appropriate to designate 
National Corridors. Because there is broad public interest in the 
implementation of Section 1221(a), the Department has decided that, 
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. The Department notes that Section 
1221(a) does not require this additional comment period.
    Departmental staff have been reviewing the 400 plus comments 
received in response to the August 8 Congestion Study. The staff is 
continuing to analyze the data developed in the Congestion Study and 
provided by commenters, to develop a recommendation for whether, and if 
so, where, one or more National Corridors should be proposed. Thus far, 
the staff has not presented a recommendation to the Secretary.